Why Are The IMF, The UN, The BIS And Citi All Warning That An Economic Crisis Could Be Imminent?

Tyler Durden's picture

Submitted by Michael Snyder via The Economic Collapse blog,

The warnings are getting louder.  Is anybody listening?  For months, I have been documenting on my website how the global financial system is absolutely primed for a crisis, and now some of the most important financial institutions in the entire world are warning about the exact same thing.  For example, this week I was stunned to see that the Telegraph had published an article with the following ominous headline: “$3 trillion corporate credit crunch looms as debtors face day of reckoning, says IMF“.  And actually what we are heading for would more accurately be described as a “credit freeze” or a “credit panic”, but a “credit crunch” will definitely work for now.  The IMF is warning that the “dangerous over-leveraging” that we have been witnessing “threatens to unleash a wave of defaults” all across the globe…

Governments and central banks risk tipping the world into a fresh financial crisis, the International Monetary Fund has warned, as it called time on a corporate debt binge in the developing world.

 

Emerging market companies have “over-borrowed” by $3 trillion in the last decade, reflecting a quadrupling of private sector debt between 2004 and 2014, found the IMF’s Global Financial Stability Report.

 

This dangerous over-leveraging now threatens to unleash a wave of defaults that will imperil an already weak global economy, said stark findings from the IMF’s twice yearly report.

The IMF is actually telling the truth in this instance.  We are in the midst of the greatest debt bubble the world has ever seen, and it is a monumental threat to the global financial system.

But even though we know about this threat, that doesn’t mean that we can do anything about it at this point or stop what is about to happen.

The Bank of England, the UN and the Bank for International Settlements have all issued similar ominous warnings.  The following is an excerpt from a recent article in the Guardian

The IMF’s warning echoes a chorus of others. The Bank of England’s chief economist, Andy Haldane, has argued that the world is entering the latest episode of a “three-part crisis trilogy”. Unctad, the UN’s trade and development arm, would like to see advanced economies boost public spending to offset the downturn in emerging economies. The Bank for International Settlements believes interest rates have been too low for too long, encouraging too much risk-taking in financial markets. All of them fear that the global financial system is primed for a crisis.

I particularly like Andy Haldane’s likening our current situation to a “three-part crisis trilogy”.  I think that is perfect.  And if you are familiar with movie trilogies, then you know that the last episode is usually the biggest and the baddest.

Citigroup economist Willem Buiter also believes that big trouble is on the horizon.  In fact, he is publicly warning of a “global recession” in 2016

Citigroup economist Willem Buiter looks at the world landscape and sees an economy performing substantially below potential output, which he uses as the general benchmark for the idea of a global recession. With that in mind, he said the chances of a global recession in 2016 are growing.

 

“We think that the evidence suggests that the global output gap is negative and that the global economy is currently growing at a rate below global potential growth. The (negative) output gap is therefore widening,” Buiter said in a note to clients. He added, “from an output gap that was probably quite close to zero fairly recently, continued sub-par global growth is likely to put the global economy back into recession, if indeed the world ever fully emerged of the recession caused by the global financial crisis.”

Usually when we are plunged into a new crisis there is some sort of “trigger event” that creates widespread panic.  Yesterday, I wrote about the ongoing problems at commodity giants such as Glencore, Trafigura and The Noble Group.  The collapse of any of them could potentially be a new “Lehman Brothers moment”.

But something else happened just yesterday that is also extremely concerning.  Just a couple of weeks ago, I warned that the biggest bank in Germany, Deutsche Bank, was on the verge of massive trouble.  Well, on Wednesday the bank announced a loss of more than 6 billion dollars for the third quarter of 2015

Deutsche Bank’s new boss John Cryan set about cleaning up Germany’s biggest bank on Thursday, revealing a record pre-tax loss of 6 billion euros ($6.7 billion) in the third quarter and warning investors of a possible dividend cut.

 

Write downs, impairments and litigation costs all contributed to the loss, the bank said.

 

Cryan became chief executive in July with a promise to cut costs. The Briton is accelerating plans to shed assets and exit countries to shrink the bank and is preparing to ax about 23,000 jobs, or a quarter of the bank’s staff, sources told Reuters last month.

Keep an eye on Germany – the problems there are just beginning.

Something else that I am closely watching is the fact that major exporting nations such as China that used to buy up lots of U.S. government debt are now dumping that debt at an unprecedented pace.  The following comes from Wolf Richter

Five large purchasers of US Treasuries – China, Russia, Norway, Brazil, and Taiwan – have changed their minds. They’re dumping Treasuries, each for their own reasons that are now coinciding. And at the fastest rate on record.

 

For the 12-month period ended July, sales of Treasuries by central banks around the world reached a net of $123 billion, “the biggest decline since data started to be collected in 1978,” the Wall Street Journal reported.

 

China, the largest foreign owner of Treasuries – its hoard peaking at $1.317 trillion in November 2013 – has been unloading with particular passion. By July, the latest data available from the US Treasury Department, China’s pile was down to $1.241 trillion.

Yes, I know, the stock market went up once again on Thursday, and all of the irrational optimists are once again telling us that everything is going to be just fine.

The truth, of course, is that everything is not going to be just fine.  Ever since I started the Economic Collapse Blog, I have never wavered in my belief that the greatest economic crisis that the United States has ever seen is coming, and I have written well over 1000 articles setting forth the case for the coming collapse in excruciating detail.  Nobody is going to be able to say that I didn’t try to warn them.

Those that have blind faith in Barack Obama, Wall Street, the Federal Reserve and the other major central banks around the planet will continue to mock the idea that a major collapse is coming for as long as they can.

But when the day of reckoning does arrive and crisis coming knocking at their doors, what will they do then?

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Dubaibanker's picture

Me too...

I hear the Sound of Silence.

Nobody doing nothing...means you will hear nothing :)

Duhhhh....:)

You and I are very smart, I tell you! :)

SoilMyselfRotten's picture

Me either <pencils jammed in ears>

Macchendra's picture

Basel III is the guy on all fours sneaking behind the smaller banks and waiting for the push.  These risk management/insurance schemes are merely small guy tax.  The smaller you are, the riskier you are, therefore you should pay more.  Really it's about taking out competition banksters and letting the remaining big guys have more power and wealth.

ZerOhead's picture

The BIS and IMF are primary architects of the current fiscal and soon global economic collapse.

What do they want?

More power. Beware the BIS, UN the IMF and their new Russia-China centric New World Order.

In the meantime feel free to cheeer Putin and Jinping on as they decapitate ISIS and stare down the West in a fake nuclear showdown engineered to distract the muttonheads from the global economic meltdown as the "phoenix" emerges from the ashes...

 

pocomotion's picture

The BIS is European mucka-de-mucks, right?  and the IMF is European and American smaller mucks, right?

ZerOhead's picture

All mucks are banker mucks... and the BIS is the Crime Central Headquarters for the world's Central Banks run for the sole benefit of the Global Financial Elite

That's all you need to know.

gdogus erectus's picture

Why?  Because the plan from the guys at the top has always been to throw the Fed, BOE and all central banks under the bus at the end.  So that they can sit back and say, "See?  We told you that countries can't handle their own finances.  Look what the Federal Reserve has done!  Now we need to roll out a world wide governance over finance.  Hey - look!  We were right.  Choose us!" 

Son of Loki's picture

Barry needs to send them a horses head in their bed ... convince them "everything is wonderful."

 

"Strong economy" ... "lots of money sitting on the sidelines" ... "green shoots" ... and always, "There's never been a better time then now to buy a house!"

ceilidh_trail's picture

Are there no limits to your depravity? How would you like it if YOU woke up with john kerry lying next to you? Huh?

ZerOhead's picture

Correct.

They are just trying to nail control of the planet down for all of eternity so their Luciferian banker children can have a better life than they did. To do that they need to get rid of the sovereignty of Nation States through empowering their UN and IMF/BIS creations. The Rockefellers Council on Foreign Relations was created to achieve this precise goal.

Hillary Clinton tells you who actually runs the US Government in 33 seconds > https://www.youtube.com/watch?v=Ba9wxl1Dmas

Former CFR Director Dick Cheney chimes in... > https://www.youtube.com/watch?v=XOAk-7F1EVU

 

Yes they already own Russia and yes they already own China as even a person with a moderate understanding of history already knows which is why Rockefellers NWO Production manager 93 year old Henry Kissinger is always so busy visiting Putin and now Jinping.

 

"Mr. Putin has cited Mr. Kissinger as a trusted foreign policy adviser. In the book “First Person,” Mr. Putin admiringly recalled a conversation in the early 1990s when, as an aide to the mayor of St. Petersburg, Mr. Putin was asked to pick up Mr. Kissinger at the airport."

"The two men are “old friends” who have met 8 or 10 times over the years, once dining at Mr. Kissinger’s home in New York, he said. Mr. Peskov said Mr. Putin was interested in Mr. Kissinger’s counsel about domestic politics, among other subjects."

http://www.nytimes.com/2012/01/20/world/europe/henry-kissinger-to-meet-w...

 

Now go back to your regularly scheduled programming and enjoy the "End of the World" Kabuki performance they are PUTIN on for you...

Fish Gone Bad's picture

This will be the first epic disaster everyone saw coming and yet... still did not get out of the way.  And so it goes.

Billy the Poet's picture

I'd rather be on Tralfamadore with Montana Wildhack.

BandGap's picture

I don't get why the Glencore and the Douche Bank's situations aren't causing at least some heavy duty tremors. Then throw in VW and Alcoa woes.....

The kool aid is strong this go around.

Son of Loki's picture

Take two aspirin washed down with a liter of Roundup and call me in the morning.

KnuckleDragger-X's picture

The group's named ARE the problem and things can't be fixed, so they won't be fixed, but they all have somebody else to blame......

Billy the Poet's picture

Vlad should open a Russian restaurant called Putin Takeout.

abyssinian's picture

We only listen to CNBC.  Everything else is just noise!  Steve Lies man, Dennis flipflopping Gartman, and clown Cramer are the true voices! 

Nobody For President's picture

Alas, the 'market' can stay irrational a LOT longer than I can stay solvent.

mianne's picture

Deafness to bad economic news is always the result of efficient propaganda . The USA is about to be bankrupt, about to lose the ability to print dollars out of the blue, as the US dollar is no longer the only international currency and becomes worthless. Since 2014, the most populated and least indebted nations, the BRICS ( Brazil, Russia, India, China, South Africa) and their allies have signed contracts in order to use their own currencies in international trade . Since May 2015, together with most of the E.U. countries (France, Germany, Britain etc ...), the BRICS and their allies  use 2 Chinese international banks ( China Development Bank and AIIB ) to replace the old monopoly of NATO banks, IMF and the World Bank . The times are changing for the USA. 

mianne's picture

Deafnesss  baaic news is always the result of efficient propaganda . The USA is about to be bankrupt, about to lose the ability to print dollars out of the blue, as the US dollar is no longer the only international currency and becomes worthless. Since 2014, the most populated and least indebted nations, the BRICS ( Brazil, Russia, India, China, South Africa) and their allies have signed contracts in order to use their own currencies in international trade . Since May 2015, together with most of the E.U. countries (France, Germany, Britain etc ...), they use 2 Chinese international banks ( China Development Bank and AIIB ) to replace the old monopoly of NATO banks, IMF and the World Bank . The times are changing for the USA. 

mianne's picture

Deafnesss  baaic news is always the result of efficient propaganda . The USA is about to be bankrupt, about to lose the ability to print dollars out of the blue, as the US dollar is no longer the only international currency and becomes worthless. Since 2014, the most populated and least indebted nations, the BRICS ( Brazil, Russia, India, China, South Africa) and their allies have signed contracts in order to use their own currencies in international trade . Since May 2015, together with most of the E.U. countries (France, Germany, Britain etc ...), they use 2 Chinese international banks ( China Development Bank and AIIB ) to replace the old monopoly of NATO banks, IMF and the World Bank . The times are changing for the USA. 

Syrin's picture

Pay attention to what the global overlords say.   After all, they determine the outcome rather than predict it.

slaughterer's picture

This writer is bearish with a Biblical intensity.  Next.  

mayhem_korner's picture

 

 

Bearish and bullish are irrelevant unless you are on a fool's errand of trying to time the HFT-manipulated securities "markets".  What matters is who is right.  Widespread financial insolvency cannot be reconciled.  Defaults cannot be avoided, only deferred.  Time is the only variable left in the equation.

Livermore Legend's picture

Indeed....On All Points....

Most Especially the Latter.......

Clowns on Acid's picture

You have been describing a slow motion train wreck. The Central Banks have slowed the train wreck to a crawl a couple of times ... but the train is still heading toward its wrecking...or is t reckoning..?

 

LawsofPhysics's picture

Well they helped to create it,they should know I guess...

Debugas's picture

Because they plan on printing fiat as if there was no tomorrow

Space Animatoltipap's picture

Financial and economic collapse is a normal phenomenon in Kali yuga. 

mayhem_korner's picture

 

 

If Deutche has a fat counterparty position with Glencore, it could be a double lehman moment.

Double, secret probation, sir?

Thisisbullishright's picture

The broken clock mantra and so forth and so on....

 

VWAndy's picture

What? Are the printers running low on ink? None of those cats give a shit about the economy. They all exist in a fiat utopia.

roadhazard's picture

I'm doing all I can do, Gun Show tomorrow time to ammo up.

Soul Glow's picture

Whatever.  I've been saying it for 7 years.

Billy the Poet's picture

That ought to keep the Knights of Ni at bay.

Batman11's picture

Have a look around the world to see what has happened to the global consumer base:

1) The once wealthy Western consumer has had all their high paying jobs off-shored. As a stop gap solution they were allowed to carry on consuming through debt. They are now maxed out on debt.

2) Japanese consumers have been living in a stagnant economy for decades.

3) Chinese and Eastern consumers were always poorly paid and with nonexistent welfare states are always saving for a rainy day. Western demand slumped in 2008 and the debt fuelled stop gap has now come to an end.

4) The Middle Eastern consumers are now too busy fighting each other to think about consuming anything and are just concerned with saying alive.

5) South American and African consumers are busy struggling with economies that are disintegrating fast.

It doesn't look good.

viahj's picture

hmm, here's an idea.  let's take the North Korean currency, establish it as the GRC, let them print up as much as they need and "voila!"  all of that pent up demand unleashed, the world will beat a path to sell their goods to the NORKS.  rather that than a BIS/IMF NWO.

FutureShock's picture

1000 articles?  The author should put more effort put into timing or at least a chain of events leading to a crisis than the prediction insteading of waiting to be right. Everyone knows the direction we are in.

Not My Real Name's picture

Snyder talks like he is the guy who uncovers all of this trouble, when all he does is regurgitate the work done by others.

Tinky's picture

That's an unoriginal criticism.

Syrin's picture

No, no he doesn't.   He has dozens of links per article.   He picks a topic and sites numerous sources validating his point then comments on it. 

 

Jelly much?

Ranger4564's picture

To clean the corrupt system, they will crash the corrupt system. Rob from the criminals, erase the derivatives fraud, Isolate the US, and restore Asset Backed Currency, global fairness, and a eliminate the uni-polar mentality prevalent in US foreign policy.

MEAN BUSINESS's picture

Ranger4564, Where ya been? 

Isolation coming post-Paris is what I have been saying all year. TROW is moving on. Syriasly.

I Write Code's picture

Yeah but this market is a reverso-bizarro market, and in any case "a bull market climbs a wall of worry".  Conventional economists (and most ZH posts) have predicted disaster since 2008 - as they should have, based on the economics texts everyone studied in the last fifty years.

But it's all different now.

You're never supposed to say it's all different now, but - it's all different now!