Don’t you just hate the smuggish guys that sit behind desks and that say ‘I told you so’? There’s probably only one thing you hate more and that’s the racers that are running to predict the end of the world. Doom and gloom. The financial world that is! But, it’s going to happen sooner or later this year, probably towards the end of the year and the start of 2015. The Federal Reserve and other world central banks have seen to that. Isn’t it surprising how the financial markets got themselves into a mess, and then the stuff hit the fan when the loose monetary policies started being bandied about as if it were the next thing since sliced bread? Pump up the volume and spray the money all over the place and then wonder why things go wrong. They sit at the Federal Reserve and wonder WCPGW. Unbridled optimism when Murphy’s Law predominates as it all goes pear-shaped.
Anything that can go wrong usually does. This is where it starts to go wrong today.
The Federal Reserve tried to put the fire out by spraying the cinders that had just been kindled with more banknotes. That Quantitative Easing didn’t ease a lot else than taking the weight off the governments that thought it would be a good idea around the world, momentarily making their lives easier. But, the game of falling dominos was bound to have endless repercussions around the planet.
The first in the long line to go were the commodities that erupted in a big bang in 2011, posting the biggest drops in gold and crude oil as the European leaders failed to stop the crisis when they should have done, with the ensuing erosion of energy, metal and crops. We all paid the price of that one. In December 2011 the Standard & Poor’s GSCI index (24 raw materials) fell by over 4% in one day and gold fell to its lowest price for 5 months. Oil also fell by 5%.
The escalator went up and the lift just plummeted to the bottom of the shaft as investors wanted to get out of risk.
Then emerging markets dropped into the abyss and we now have a situation where the currencies of those economies (Turkey, Argentina, India and South Africa, amongst others) are to be off-loaded as quick as look at them, because the Dollar is going home as tapering starts. The Argentinian Peso has plummeted 84% against the Dollar in just a year.
Some are now predicting (just as they predicted the previous reactions) that it will be the housing bubble that blasts and goes pop (it will be a pop, because the rise was nothing like spectacular, but, it will blow all the same). The housing market has been propped up and credit has become easier to get even when there was no money in the pocket of the borrower. Dirty insolvency is still a problem. Bank on the increase of the economy and things will be ok was the order of the day and blindly turn your gaze away from the smacks of the housing crisis of the big financial crisis.
After the housing bubble bursts this year yet again, the stock market will crumble. Remember the lift will fall faster than the escalator that tried painfully to get us back to the top but that must have conked out half way up.
The ‘fall of man’ will be bigger than in the past. The original sin has been committed yet again and we shall fall from grace. Inflation has been handed to us as we enter a period of deflation; there’s no growth of any substance and there are no real gains in the economy in terms of employment try as they might to tell us ‘it’s just around the corner’. WCPGW?
Some specialists are predicting that there will be a fall in the S&P 500 to below 1,770 within the next couple of weeks, going as low in March as 1,600. The F**ederal Reserve** in the hands of Janet Yellen will have no other opportunity than to go all dovish and the market will act upon that immediately.
Predictions are bad because they are just that: only predictions. But, we all know deep down that the fall is on the books after the fools played with fire.