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Could An Interest Rate Hike Be The Last Straw Before War?
The world today sits upon a very precarious point. Today’s tipping point is unlike most yet, extremely similar to a select few. Those “few” are the one’s usually reserved and noted in the old analogy of “The straw that broke the camel’s back.”
What makes these different from most are two things. First: It’s realized as well as scrutinized by a growing chorus that indeed things are not well and on the verge of not just failing, but falling apart all together in complete and utter catastrophe. The second: To many observers before, and after the fact it’s clear – all it will take (or took) is just the slightest of increments to bring it about. This is why one should pay close attention when this analogy fits the circumstances. For they portend outright total disaster – not some measured or partial one.
This isn’t a conversation about fear mongering or any of the such. This is about understanding where we might be within a given reflexive point based on empirical observations as well as an understanding of the true possibilities that may play out, and how that may affect or disrupt any business both large and small in the near future.
Some will say, “they don’t have time to pay attention to such things.” Or, “they’ll cross that bridge when they get to it.” The problem is as I’ve explained many times, “What happens when you find there is no bridge? That it’s gone. Now what?” I’m sorry, but if you’re in business: not having an informed understanding of macro events as well as micro, and how they can possibly disrupt or wreak havoc on your business, is inexcusable for anyone who takes business seriously. Period. e.g., A port strike on one coast (or in another country) can cause product or food shortages on the other. In a “just in time” inventory supplied world. Everything is now weekly if not daily dependent. Forget monthly.
So with that said here we sit just days away from the Federal Reserve’s decision on whether to raise interest rates or not. The anticipated implications for stock market volatility has never been higher. And where it goes – nobody knows. It’s all guessing.
Yet, based on common sense observations; weight has to side on the market reacting negatively. How much so will be in a matter of degrees with the potential for outright pandemonium as witnessed in August when all the major index futures were halted before the opening. Why? Because the Fed’s decision is exponentially more connected to global carry trades and others that are holding up the markets. Again – globally.
We witnessed how precarious China’s market (which is #2) was to the slightest of changes and the spill over effect that washed ashore here. This time – it’s the #1 market. How the reversing of over 100 months of no hikes will be met once again is anyone’s guess.
One thing that’s not a “guess” is the way nations or economies have dealt with economic turmoil. History is far too littered with varying forms of “war” as not only the response, but also as the direct consequence of failed economic policies. Either of their own making or brought about by another. It doesn’t matter whether self-inflicted or not. The end game is the same: Currency war, Trade war, Diplomatic war, right down to actual combative kinetic war. e.g. WW1, WW2, etc.
Why “It’s not different this time” is like so many others in history It’s where economic upheaval that turns into political unrest breeds the perfect situation where tyrants, dictators, and others of that ilk routinely look for scapegoats as to direct the public’s ire away from their own ineptitude, and focus it elsewhere. And a Fed. raising interest rates that could further send these teetering economies into outright free-fall and disarray could be the very thing (or excuse) needed for conspicuous consumption and deflection.
Right now as I type this not only is China throwing everything it has including the kitchen sink at its stock market and economy desperately trying to hold it all from falling off the precipice entirely. So too is the entire emerging market arena. And what is the primary tool they are using? Cutting rates, and devaluing their currency.
What could (or would?) all but seal their fate for outright calamity? A hiking of U.S. interest rates which in turn would surely cause the Dollar to rise, as well as pull scared investment dollars out of those struggling economies right into U.S. based “safe” asset vehicles.
The Federal Reserve would be doing precisely, as well as solely, the exact opposite of what most of the world is doing. While at the same time possibly setting up for a massive heave of capital outflows crippling already embattled emerging markets both in their stock markets, currency, exports, right down to their political. It’s a situation made for a Hollywood movie yet it’s not a movie this time – it’s all a real possibility with gargantuan consequences.
Last year I wrote an article titled “Will History Record The Ending Of QE As An Archduke Moment?” In that article I posited the idea that with the upcoming ending of QE and the distortions it had created throughout the financial markets globally, that one needed to pay very careful attention to tensions as well as reaction with a far more focused eye than at any time previous, for the implications and their resulting conclusions could have truly catastrophic outcomes. Here are a few excerpts from that article.
“Nothing rallies a nation faster than the threat of an enemy. And nothing serves a political class born of dictators than using any and every tool at their disposal as to rally the glaring eyes of political unrest and affix it to another as to release their ire. And what better straw-man has the world offered the tyrannical powers of the world at large than the interventionist monetary policies of the Federal Reserve via their QE program.”
“One can’t help but find the timing hauntingly coincidental that Vladimir Putin decided the window of opportunity to make his move on former parts of the Soviet Union was in near unison with the Fed. Revelations that in fact QE was being wound down. i.e., In February when the announcement of the 2nd $10 Billion dollar reduction made manifest that in fact the QE wind down was on schedule. (A schedule many across the financial media said wouldn’t happen.) Now economies such as Russia and others would find themselves once again at the center of any political unrest, while simultaneously being economically hamstrung screamed opportunity to use it to their advantage with Machiavelli inspired actions.
Tag onto this that other land mass with far more people to cast political upheaval than Putin has to contend with: China.
Suddenly the economy touted as “the” economy that will save us all is not only slowing, it’s contracting at a pace far more quickened as a direct result of QE being pulled.”
And where do we find ourselves today?
Over the last few weeks not only has China for the first time in history sent warships off the coast of Alaska in an obvious showing of “Hey, nice place you have here. It would be horrible if anything ever happened to it.” But so too did Russia within the same time period. Oh yeah, all at the same time the President toured it for the first time ever by a sitting president. All coincidence we’re asked to accept. Sure it is.
Now there’s the ever-growing Syrian escalation crisis. Refugees are now fleeing into Europe at such a pace old world means of border enforcement not seen since the fall of Eastern Europe are being not only revitalized, but implemented at Blitzkrieg speeds reminiscent of WW2. Armed military checkpoints behind walls of razor-wire are being constructed and deployed over hundreds of miles within days.
China supported U.S. agitator N.Korea is once again openly threatening U.S. interests. Russia? They’ve now moved heavy arms and soldiers directly into Syria in what can only be taken as an “in your face” move.
Russia and China have publicly announced as well as propagated a means as to circumvent Dollar denominated trade and clearing measures with their own. And many of the emerging markets that will be thrown into chaos with a Federal Reserve mandate of a rate hike are far more aligned with these two countries than the U.S. A conflict of any magnitude would be just what the dictator doctor ordered to suspend any or all protocols of settlement demands.
Europe is right now contending with utter chaos within, as well as, its surrounding borders throughout the Zone. The EZ is made up of countries, not states as in the U.S. Political, as well as social fears, become a tinderbox ripe for flash-points with the breaking of; as well as the forging of new alliances that can happen in what seems as mere moments; as opposed to a time where people have breathing room and can think clearly. Rash decisions usually get made out of frustration. Sometimes with disastrous consequences.
The outbreak for WW1 from the incident in Sarajevo took a mere month. And that was in response to a direct assassination. It’s now been a little under a year since the ending of QE and many have been outright vocal in their accusations that the Federal Reserve has their economies directly in their cross-hairs as to bolster U.S. hegemony. And one would not be too far off the mark if looking at the current disruptions as well as fore-footing of military arm flexing and parading of weaponry being flexed by countries directly effected in obvious ways via the capital markets and central bank policies that a precipice may in fact have been reached – with onerous resolutions at the waiting.
Surveying the global landscape regardless of one’s political views or leanings along with weighing the possibilities for either any obvious business disruptions, as well as possible long-term interruptions, whether one is a sole practitioner or CEO of a global concern is a must, and needs to be included right alongside any other calculations that may come with an interest rake hike. Even if that hike (right now the consensus is for .25 basis points) in the scheme of things appears inconsequential. For that is exactly my point.
When one views the global landscape both politically as well as economically with an eye of understanding through the old adage of, “History doesn’t usually repeat, but it sure does rhyme.” We are at an extraordinarily precarious moment in time.
Things can go in any direction. And yes, even all the above can be for not and we rocket back towards “everything is awesome” land filled with rainbows and soon to be IPO’s unicorns. However, I must state again, although it is possible – it’s still all up in the air in a coin toss like state. We can only wait, react, then watch and see how it all plays out. For right now the most truthful of the known is: Nobody knows.
Yet, one thing is clear. Many are either looking or won’t look till they see an event large enough to peak their interest for concern, for only then do they feel is it the proper time for concern. However, it is the diligent that doesn’t rely on hubris or laziness as to not be inquisitive about what is happening around them and think about possible scenarios. Along with how they might deal with them and how it might affect their families, businesses, employees, suppliers, et al before hand. Not after the fact. For that may be too late.
Remember, why the camel analogy might suit all the above so fittingly is just for that reason: A 100lb. bag of straw vs 1 single stem produces the same effect. And all we’re talking about here is a raising of 1/4 of 1%.
Has so much weight on world markets ever been so close to the edge – for so little?
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Seems reasonable to me. They are banksters. That's what banksters do. They are like pedophiles, can't and won't stop until they are locked up.
Locked up? I'm not going to feed and care for them.There is a far more economical solution.
Stage is certainly set. Everyone and their mother has told the FED not to hike, including China. All theatre folks, setting the stage for whatever fucked up plan these psychopaths have.
Could An Interest Rate Hike Be The Last Straw Before War?
No.
Yes, it could. They already want war, and plan on it. All they need is an excuse, or do you still think nations are sovereign and act rationally of their own free will? *Chuckle*
problem is all these leaders worship the money....ideology is so passe. Who would they fight? Maybe more like French Revolution stuff...I think!
How dare you raise rates! We're going to send a bunch of our 18-25 year olds into your country now!
Was it over when Yellen bombed Pearl Harbor?
Don't stop him, he's on a roll.
Regards,
Cooter
No nation on earth not even looney ones like North Korea despite their bluster would seriously take on America,the only threat to the USA is the USA.
footnote .... Iran's GDP is the size of Indiana's
At this point we have the possibility that our men and women in uniform remember to stand up for their oath to defend the US Constitution. If they do that, and they may, this can be stopped.
Not likely. The best you can hope for is an East-German stand-down.
Ladies and Gentlemen, Prepare to defend yourselves... and get gardening. It's a great week to build a solar heated greenhouse.
Haha. Hahaha. Hahahaha!
History says it won't happen that way. Goes double for a mercenary army... which is what we have.
I can certainly imagine a nation state (take your pick: Russia, China, Nork, Iran, combination there-of) using an intermediary (Jihadi terrorist, Narco trafficer, Bankster rap-artist's guild) to drive freighters loaded with Scud missiles up to our coast and firing them to detonate multiple EMP weapons. There would be no USA for some time. Maybe never again. Not bloody likely but definately doable within the budget of Iran's newly minted $150 billion, with lots of change leftover to nuke Israel.
Yes it is possible.
I think you meant the CIA would drive WMDs up the coast and try to blame it on NK or Iran. Iran hasn't attacked anyone since the 1700s. The CIA and Israeli goofball government on the other hand... what time is it? Yea, not so much.
History bears out that virtually all cross-border "terrorist attacks" are government ops of some sort or another. Look up operation Gladio, "NATO's secret armies". It's a peer reviewed academic study. In it, is documented that the Brits and the US ran it. Some of their work included murdering random people in a grocery store in Belgium, all in order to push ultra-right (otherwise known as neocons) into office. Yea, nice guys.
If you think my criticism of Israel is somehow anti-semetic, don't take it from me. Take it from a real, live former IDF (Israeli Defense Force) soldier: http://stormcloudsgathering.com/an-honest-israeli-soldier-speaks
Oh, and I didn't downvote you.
"Iran hasn't attacked anyone since the 1700s" = nonsensical statement. Even Iran does not conceal it's operations in Lebanon, Gaza, Yemen, Iraq, nor it's connection to what we in the West call "terror" groups. They advertise their operations as recruiting tools.
"CIA would drive WMDs up the coast " = again, nonsensical. The CIA couldn't create a threat if our lives depended upon it! 10 years to find Bin Laden? don't make me laugh. The CIA is not a threat and Iran certainly is.
I didn't down vote you either....
USA is compromised, or haven't you been paying attention? Obama has gutted all good people and capabilities, and besides, the same power controls the US as controls Russia and China, so the outcome is already determined.
Would you idiots PLEASE. STOP. BLAMING. OBAMA.
Fuck. The fact that you fucking morons keep focusing your energy on the powerless figure heads is maybe THE main reason it will be forever impossible to take effective action.
http://market-ticker.org/
Bill Still pontificates that potus is letting them do this as part of his plan to sell out the US
Someone smart posted on this site that if the assholes open a front in Ukraine, they will automatically open a second front here at home.
This probably holds true for any foreign conflict the owners of this country start this time around. Those 4th turning people are too focused outward. There are cycles of death and rebirth, but renewal doesn't always take the form of strengthening central rule and obedience to authority. That is just the anomaly of World War 2 in this country that was used to temporarily beat the American people into submission.
That's what makes the culture of the US different from most of the world; deeply ingrained distrust of authority and an unquenchable desire for freedom. No amount of psych conditioning is going to remove that from the public. That is why America is exceptional, not this propaganda rebranding of that essential feature of the American psyche into the false military adventurism of the Neo Con traitors.
America represents an evolutionary step away from authoritarianism and into a future of freedom from slavery. It's a long road with many bumps, but never doubt that we trod the righteous path.
Okay, so the math. Please correct me if I'm wrong.
18,000,000,000,000 x .0025 = 45,000,000,000.
Does this 45 Billion need to be paid every day, month , year, minute?
To whom?
thats a good question...with credit cards isnt it monthly? My guess that the extra .025 would be quarterly? Xlnt question, your mind thinks like mine. I am always asking questions like this...enquiring minds need to know...I have another one also. 280 gold contracts to every one ounce coin. First I wonder who is buying them. Are the bankers just buying them with free money? and/or people who actually think they will get their money when gold goes up?
If your mind thinks like his you're both dumb basses. Interest is annually computed regardless of when paid
Logged in just to downvote you.
thanks oquities (sp)...so jason, 45 billion a year? if they stopped giving israel money they could cover it easy. whats the problem. If they stopped bombing other countries they would get change back...lol
One of us is waking up from a time warp. Tell me, who's the current president of the United States and who voted him in office?
The president is Barry Fucktard Obamalamadingdong.
He was elected by people who didn't know any better. Twice.
We had other choices.
McCain/Palin, Romney/Devo hair, H.R. Puffinstuff.
Some choices.
Oh Jesus fuck. You don't really believe the votes are counted, do you?
>>deeply ingrained distrust of authority and an unquenchable desire for freedom<<
Demonstrably false on both the right and the left. Liberty is like virginity. People say they like it and it's a good thing, but 99% of the populace (including the vast majority of posters on here) can't wait to give it away to someone else.
Another story about "will they or won't they"; they won't unless they do, but that won't happen unless it happens and that can't unless they want an intentional implosion of the global markets. So kick the can down the road till October or December or whenever...this suspense novel is getting quite boring.
------------------
THEY CANNOT RAISE RATES BY 25 BASIS POINTS WITHOUT KILLING THE MARKETS. I HOPE THEY RAISE RATES BY 50 BASIS POINTS.
The FED is not here to do anything but make money for themselves.
Raise rates, crush the EM and send everyone into a recession or depression, start QE 4.
Paper money for real assets.
Bankers make money if the market is going up or down.
The FED is a globalist controlled org, and doesn't need to "make money for itself" because...
IT CAN PRINT ALL IT WANTS JACKASS!!
"Hey, I know we own a printing press and can create money at will in any amount, but how can we get stinkin rich?"
Fuck, not too bright are we?!
That is my thinking.
They have already hinted that it is time to get back to "real" valuations.
Strain Russia and China further. Yes the US will get strained. But the real question is the differential strain.
Differential strain is pretentious BS...
I see you are no fan of calculus or engineering. Typical. Math is hard.
But I can give you a hint. The strongest will survive. If the rate increase makes the US relatively stronger the FED will increase. Maybe the powers have determined that getting rid of dead wood is a good idea. Esp if China has the most dead wood.
We shall see.
I hope they raise it by 4 or 5 HUNDRED basis points. Jeez. Back in the late 70s I remember my very first savings account gave 4 point something interest, and the economy sucked then too. Why are we stuck in this little band of 0 - 0.5 percent? Those bastards need to get it back so that people actually are able to grow savings. This crap with 0.1 percent interest when inflation is pretty obviously well north of 5 pct and maybe north of 10 pct and even THEY admit inflation (disregarding stuff people buy the most of) is 1.5 or something...the whole damn thing is just a joke.
On the upside...my retired parents got sick of getting nothing for their money and they're seriously considering pulling it all out and doing our mortgage for 2%. That would be sweet.
Bring it on!!! Lets reset this fat pig.
MOAR WAR .......
Would not the first step in this woar be for the U.S. to say fuck off to everyone outside the U.S. that they owe?
There will be no rate hikes. They must promise a rate hike is just around the next corner, but it can never come. QE and helicopter money will be here long before the ever anticipated rate hike.
If they ever do hike rates, it will be in the attempt to slow a hyperinflation crack up. The only problem is hyperinflation is a loss of confidence, not necessarily a M1-3 quantity issue.
^ that
Duck and cover.
The big war is the superpower war. US military power was based on economic power and that economic power was stolen by the banking mafia so unless there's some kind of coup the US is going down. In the interim the neocons will try and provoke Russia/China to make them back off and Russia/China will play defense and wait for the US economy to choke. I don't think anyone but the neocons will risk the big war as they can just wait.
However at the same time there are always hundreds of little conflicts in the world just under the surface and what happens whenever the banking mafia trash the economy is all those little conflicts come to the surface. In my opinion the risk is one of those little wars accidentally sparking the big war.
So yes if the interest rate hike causes another shock then it might light the fuse but not neccessarily in a direct way.
´´Right now as I type this not only is China throwing everything it has including the kitchen sink at its stock market and economy desperately trying to hold it all from falling off the precipice entirely. So too is the entire emerging market arena. And what is the primary tool they are using? Cutting rates, and devaluing their currency.´´
The Chinese are ONLY THROWING US$ NOT EVERYTHING to merely gently deflating their stock market bubble back to mid 2014 share prices - currently levels are still above what they were 13 months ago. This is a face saving way to get rid of US$ that can no longer be spent on physical gold by buying the next best safe assets, ie those physically located in China while encouraging foreign investors to voluntarily cash in now for ´´SAFE $´´before their imagined paper losses become a fire sale........
US stock market bubble is much bigger than the Chinese one and will fall much further much faster when it does go because the US$ is not actually backed by much in the way of productive income earning assets relative to the size of the bubble but with the Fed and their BIS partners controlling markets there is no telling how long they can continue to soak up all the US$ being dumped by Russia, China and their allies
the US$ is not actually backed by much in the way of productive income earning assets relative to the size of the bubble
The US is the 2nd largest mfg economy in the world. If you trust Chinese stats.
#2 son lived in Russia for the last 3 years. He reports Russia is full of US mfg machinery. He has decided the prospects are now better in the US. The US makes tools so everyone else can make consumer goods. You have to go to factories to find made in America. When was the last time a factory was on your vacation itinerary?
To find out what is going on you have to know where to look.
QE never ended....hate to break it to ya buddy!
I could see them pulling the rug out from under everybody at some point, it's not like this ride will last forever either way. Everybody always says "follow the money" but this isn't just about money it's about control. There is no telling what these people have in mind, they are probably jacking off a goat right now.
Clue: Stay off the rug!
Reading through the comments has me convinced none of the Zerohedge faithful have a clue what will happen.
Long term, I am in the more QE camp long but there is not one solid argument outside of best guessing fortune tellers here today.
He probably knows way more than me as regards economics and financial markets. But his Geo-Political view is very weak and ill informed. He does not know what is going on, he just see incidents like Ukraine and Crimea and makes a broad sweeping uneducated guess at what happened.
I agree though, War grows more likely every day. The official Russian press has made no secret out of the fact that leaders in that country now believe the west is building up to an attack, Russians are preparing for a major war. They publish openly their official views that they are going to be forced to fight a major war in the next few years. Only NATO can bring that war, the USA commands all of NATO. So if you expect war, then focus your eyes on Washington DC and watch with care everything they do from here on in. Russia has no benefit to gain from any war, they expect to fight on their own soil, thus the defensive networks stretching back decades are being put in order for a long hard slog to kick an invader out.
Neocon leaders make no attempt to hide their desire to either rule Russia via a puppet, or take it down and rule it the hard way. Insane as that sounds, Washington IS insane.
Wow..I didn't realize a .25% increase was going to cause all this havoc..someone needs to hand deliver this article to Janet Yellen before she makes a mistake...time is of the essence..
An increase by .25% is roughly equivalent to an increase in interest payments of 45 billiion USD on the outstanding 18 T "official" debt. So I'm sure this is all baked in the cake already, right (/s) ?
Every adjustable-rate financial instrument in the entire universe
will adjust upward for the first time in nine years.
Should be quite a financial shock, with aftershocks and collapse as strong possibilities. Do the math. The Federal Reserve System is bankrupt. Time to turn their bench over and post a closed for business sign. In some States, a group of creditors can sue for a bankruptcy ruling by a Court and thereby liquidate assets until claims are paid in part or full. Now, how does one sue a System, a cabel of banksters doing robbery across the country. RICO for sure - just a thought, Mr. U.S. Attorney General. Enforce Existing Law !!
Oops, never mind, got carried away - have to check the doorbell ... think it is ringing ...
Disturbing thought "Every adjustable-rate financial instrument in the entire universe" and no wonder the murmurs about "cashless society" abound. Look at just the sheer number of credit cards out there. IF "they" can pull it off even without going cashless we've just been raped again.
One does not sue. One takes Washington DC apart brick by brick and use those bricks to pave a large square where we The People may all gather to witness the many guillotines working away industriously. Lady Liberty looking on. And if they do not raise the rates, raze the place anyway.
They will hike by some silly small amount that will not matter like 0.01% per month or so, just to say they start the process of normalizing... only to be able to revert back to lowering and officially QE-ing when things "officially" start falling apart (it's a completely broken "market" already). The rise in interest rates over the last few days could be the sign that the insiders already sold off some of their bonds. We'll see soon enough. Paper games by our ever liquid but insolvent fiat money masters. Any true normalization would bust the US government with its ++18T debt and the FED with its ++4T treasuries and debt instrument holdings.