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The Next Round of the Great Crisis Has Just Begun

Phoenix Capital Research's picture




 

As we have been noting throughout 2015 thus far:

 

There is no recovery. There is only the bond bubble. And everything has been done to prop it up because when it bursts (as all bubbles do), entire countries (including the US) will go bust.

 

Greece is just the first domino to fall.

 

Indeed the front pages of the financial media today show an interesting tale: both China and Greece are experiencing debt implosions, the former being a margin debt fueled stock market bubble crashing while the latter is on the verge of defaulting on its sovereign debt.

 

China is long held to be the engine

 

As we wrote in April:

 

China is thought to be the great growth story of the post-2008 era. China’s economy not only bottomed before the developed world, but by most accounts, China was thought to be the engine that pulled the world out of recession, thanks to its near-clocklike hitting of 7%+ in GDP growth per year.

 

Today, China remains central to the notion that the world is in recovery. As Japan’s Abenomics gamble sputters out economically while Europe continues to deteriorate and seems at risk of even breaking apart, it is China and the US that are held up to be the last remaining sources of economic growth for global economy.

 

At that we noted that China’s “real” economy was imploding with rail traffic and electricity consumption suggesting real GDP growth of 3.5% at best and negative at worst.

 

Today, we find that all China really did was engage in arguably the single largest credit expansion in monetary history. The China credit bubble dwarfs even Japan’s bubble of the 1980s (a period of such excess that the land under the Japanese Imperial Palace was valued greater than the entire State of Caifornia!).

 

 

When the Real Estate bubble burst, China pushed for a stock market bubble. Now that bubble is bursting. The implications will be significant throughout the globe.

 

As for Greece… the EU has been desperately trying to prop up this house of cards since 2012. AS we noted in February 2015:

 

The European banking system as a whole is leveraged at over 26 to 1. That’s the ENTIRE European Banking system leveraged at near Lehman levels (Lehman was 30 to 1 when it collapsed).

 

To put this into perspective, with a leverage level of 26 to 1, you only need a 4% drop in asset prices to wipe out ALL capital. What are the odds that European bank assets have fallen 4% in value in the last two years?

 

The European crisis is not over. And when the next round really hits, whether it be from Greece leaving the Euro or some other issue, both capital and border controls will be implemented.

 

Fast forward to today and the EU banking system is indeed imploding and capital controls are already underway with border controls to follow (once people start trying to smuggle physical cash across the border).

 

The real issue is just how much collateral will disappear when Greece goes bust. Because whatever happens in Greece will be used as a template for much larger problems AKA Spain and Italy.

Spain and Italy, by comparison, have €1.78 trillion and €1.87 trillion in external debt respectively.

That is a heck of a lot of collateral that would be in BIG trouble in the event of a bond crash for either country.

The next round of the great crisis is approaching. 2008 was A Crisis… what’s begun is THE Crisis.

If you've yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis "Round Two" Survival Guide that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.

 

We made 1,000 copies available for FREE the general public.

 

As we write this, there are less than 50 left.

 

To pick up yours, swing by….

http://www.phoenixcapitalmarketing.com/roundtwo.html

 

Best Regards

 

Phoenix Capital Research

 

 

 

 

 

 

 

 

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Mon, 06/29/2015 - 15:33 | 6250849 SurlysonofaBitch
SurlysonofaBitch's picture

Sell The F*****g Dip!

Mon, 06/29/2015 - 14:47 | 6250628 silentboom
silentboom's picture

We won't have to worry about any of this when the new carbon credit economy is in place.  I can't wait until I can shit in my hand and trade it for a cupcake.

Mon, 06/29/2015 - 15:55 | 6250930 tenpanhandle
tenpanhandle's picture

The cupcake you'd get is the previous guys shit with a little icing on top.  The icing is the TPTB's cost of keeping the ponzi going.  Same with gold.  A little cheap gold need be sacraficed to keep the ponzi alive.

Mon, 06/29/2015 - 13:59 | 6250346 Meremortal
Meremortal's picture

And yet all the Gold Sellers will sell you gold at today's prices when they say it's going through the roof. 

 

 

Mon, 06/29/2015 - 13:40 | 6250223 Radical Marijuana
Radical Marijuana's picture

"Greece is just the first domino ..."

FLASHBACK:

http://www.zerohedge.com/news/2015-02-11/small-grexit-dominoes-global-crises-grow

From Small 'Grexit' Dominoes, Global Crises Grow

http://www.youtube.com/watch?v=5JCm5FY-dEY

Domino Chain Reaction

http://www.youtube.com/watch?v=8yYWILv91YU

Largest Toppling Dominoes

Skip to the 2 minute mark, to watch that as a metaphor for leveraged derivatives, as financial weapons of mass destruction ...

Mon, 06/29/2015 - 13:02 | 6250018 tangent
tangent's picture

I disagree that Greece is start of THE collapse. I believe Greece will be contained, and THE collapse will not be until next year.

Why is Phoenix Capital convinced that an ECB bail-out program cannot keep Greece temporarily contained? Finally, the IMF can ALSO do a bail-out. That is two cards left to play before THE collapse.

Mon, 06/29/2015 - 11:55 | 6249682 messymerry
messymerry's picture

The global stewpot is boiling!!!  As I've told you many times, we are not witnessing an economic collapse.  We are witnessing a global socio-economic collapse.  The economic part is a symptom of the social collapse that the West is spearheading.  Like a hurricane blowing in, the winds will just get stronger and stronger.  

Gird yourselves ZHers,,,

;-D

Mon, 06/29/2015 - 12:07 | 6249714 Nick Jihad
Nick Jihad's picture

Perhaps it's just that polictical arrangements that evolved in a time when there were fewer old folks, and more young folks, are not sustainable when this changes?  That's most of the problem in Greece, China, Japan, and soon in the USA.

Mon, 06/29/2015 - 14:04 | 6250368 Meremortal
Meremortal's picture

Yes, much of the current problems are the result of demographics.

This has happened before but it is larger this time due to the size of the worldwide population boom.

It's also temporary as old people die. Japan is already starting out of it. The USA looks a lot better by 2025, as does Europe. China is screwed for quite a while as even during the China boom, 3/4 of the country was lucky to get a bowl of rice to eat every day. The China boom only benefited a small minority of the population.

Mon, 06/29/2015 - 11:50 | 6249662 fowlerja
fowlerja's picture

I knew what was going to happen...now why didn't I short all the stock markets of the world...wait..just maybe by Wednesday all the losses will recover and life will go on..

Mon, 06/29/2015 - 11:46 | 6249648 dogismycopilot
dogismycopilot's picture

I think the real shit show starts in October 2015. This is just the opening act.

Mon, 06/29/2015 - 10:51 | 6249384 Pliskin
Pliskin's picture

China might 'Crash' but NONE, and I repeat NONE of the western puppet regimes, you know, the ones that suck USSA cock (Including the USSA) will crash, it would never be allowed.  Greece has been allowed to fail as an example to all the others who might have 'Big Ideas' of disobeying their masters.

Mon, 06/29/2015 - 10:49 | 6249374 KnuckleDragger-X
KnuckleDragger-X's picture

Monday is in full stupid mode, things can get even more fun by the end of the day......

Mon, 06/29/2015 - 10:44 | 6249349 Wild Bill Steamcock
Wild Bill Steamcock's picture

Anyone know how these "advertising is content, content is advertising" adverts compare, cost-wise, with traditional web ads? 

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