'The Everything Bubble': Why The Coming Collapse Will Be Even Worse Than The Last

Tyler Durden's picture

The next crash is coming, and the decision by central banks to paper over their economy's troubles with a massive injection of debt likely means that the next crash is already overdue.

Soon, investors will be forced to reconcile a massive expansion of debt and falling productivity and growth with a host of potentially disruptive crises: The advent of government-sponsored cyberwarfare, followed by the collapse of the global dollar-based monetary system. Whereas the last crisis trigger massive devaluations in the real estate and stock markets, the next crash will be the result of a triple bubble in stocks, real estate and bonds as investors bail out of traditional assets in favor of the safety of gold, silver and - perhaps - cryptocurrencies like bitcoin.

Gold analyst Mike Maloney believes that traditional assets will plunge, and gold, silver and cryptocurrencies like bitcoin will outperform, as investors seek protection from the coming collapse of the global dollar system. Maloney explains his thinking in a new YouTube video "The Everything Bubble."

In the U.S., housing prices have experienced a halting recovery since the subprime crisis. But in other markets, like New Zealand, Canada, a frenzy of buying by wealthy Chinese hoping to stash their money abroad kept prices afloat, driving the ratio of home prices to incomes to all time highs. In Canada, the affordability index - the ratio of housing prices to incomes - has risen to an all-time high of 1.4.


In the stock market, a few vulnerabilities have emerged; the ratio of debt borrowed against investors' brokerage account balances has reached all-time highs, which tells you that recent gains are vulnerable to a short-squeeze - which is when brokerages close clients out of their positions.

Worth noting: the rise in margin debt has traced the run-up in the S&P 500.

The VIX - a gauge of expected volatility - has fallen to multi-decade lows, suggesting that markets have grown complacent in the face of the coming crash. Earnings-per-share ratios are looking precariously stretched to dot-com-era levels.

And, finally, a look at intraday trading patterns also reveals signs of strain: Maloney, borrowing from the research of John Hussman of Hussman Funds, the former University of Michigan finance professor who famously predicted the 2008 crisis, explains that lately he's seen what he calls "exhaustion gaps" appearing with increasing frequency. Hussman defines an "exhaustion gap" as any time the S&P 500 opens 0.5% above its previous close while its within 2% of its all-time high. These gaps show that the supply of capital pouring into the market is thinning, or " that there are no more suckers willing to buy at the top."

Bonds have been in a "perfect bull market" for 36 years, Maloney says. But historical patters suggest that the coming shock will likely trigger its demise: Over a span of decades, interest rates have tended to spend about equal time on either side of a peak. If this pattern holds, it would mean that the decadeslong bond-market rally only has two or three years left to run, which brings us to another important question: when the crash comes, what's it going to look like?

Maloney believes it will unfold in two stages:

In the first, investors will flood into the perceived safety of bond markets, causing a temporary spike, as stocks and real estate markets collapse.


Then all three markets will plummet as the collapse of a catastrophic pile of debt brings about the end of the global dollar-based monetary system.

In the 20th Century, shifts in the global monetary paradigm have occurred about every 30-50 years.

And shifts in secular bond-market trends have tended to mirror them. Maloney, who has long advocated owning gold and silver, also revealed that he has purchased a small share of bitcoin and other cryptocurrencies, though he cautions against owning an outside position. Rising demand in the East has been offsetting falling demand in the U.S. So far, excess capacity in the U.S. market has helped compensate for this as the East has attracted Western gold.

But soon this imbalance will be ameliorated, and the price of gold - which has already risen modestly year-to-date - will see a large, sustained rise.

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Miss Informed's picture

Surely "everything" can't be in a bubble at the same time.

Cognitive Dissonance's picture

He means everything of traditional 'value'.

Still waiting for my Beanie Babies to recover in price.


RICKYBIRD's picture

Hold on to your Valentino bear!

slimycorporatedickhead's picture

When it comes to beanie babies you always BTFD.. limited edition? ya limited to as many as we can sell

The Real Tony's picture

The art market has been dead since 1984.

O C Sure's picture

—Surely "everything" can't be in a bubble at the same time.—

Why not? If the Big Bang is true and the Universe is the biggest of all bubbles, always expanding and expanding (though few stop to ask if this is true then expanding into what?), then why cannot Interest On Excess Reserves also appear ex nihilo and expand ad infinitum?

Miss Informed's picture

Point taken, but the resources on this planet are finite.

O C Sure's picture

Indeed, and the universe at all moments is finite too but it is a very, very, large place!

sessinpo's picture

Oy vey

A bubble in bubbles?

runnymede's picture

Fiat money does exactly that. All that counterfeit has to go somewhere. So does the debt. If you could implement the perfect 'legal' organized crime for the benefit of the <1% and the debt enslavement of the >99, it would be just what we have. A greater professional criminal enterprise has never been done. Its the perverse testament of what the cleverest humans are. The only species that systematically preys on it's own kind. 

We live in a fiat world; fiat money is the logical extrapolation. 8/15/71


CHX13's picture

Gold and Silver (managed price) are certainly not at the moment and are looking good from a contrarian perspective.

Cordeezy's picture

Housing is due to crash, the past 5 years prices have skyrocketed world wide. I think investors will flee to China with the belt and road initiative after a crash starts


Give Me Some Truth's picture

This "housing bubble" never made it to my neck of the woods. Home prices are falling. If you are lucky they are staying the same. I think there are about 25 to 30 trendy or hot markets in America. The rest of "fly over country" is seeing the equity in their home fall. BTW, my home has been on the market for six months. No way I'll get what I paid for it six years ago or what it was appraised for with a re-fi three years ago. And I have made some major improvements.

Non-Corporate Entity's picture

I see bubbles...and bubbles inside of bubbles. So many bubbles.

Golden Showers's picture

Nothing is True. All is permitted.


The absurd and the sublime are the best of friends in the best of times, or when you stare into the markets... the markets stare into you.

Occams_Chainsaw's picture

Well....a friends daughter who has bad credit and a shit job just bought a house.  She had to get a loan for the down payment to get the mortgage loan.  It's a fucking bubble folks.  It will pop again soon.

I got a loan to get the loan to get the loan to get the big loan.  Amerika....Fuck yeah!

SeuMadruga's picture

And Mr Ponzi was caught in the 1920's for...?

FinsterF's picture

The 20% down standard was the key to keeping things from getting out of hand. Lender has collateral, borrower has skin in the game. When you see that start to slip, you know it's getting crazy.

Jack Oliver's picture

Of course it will be FUCKING worse than 2008 !!

2008 just gave the FED an excuse to print more money !!

oDumbo's picture

Barry obama has used several names and at least three social security numbers... but today he calls Trump a bullshitter...  good one oDumbo!

lasvegaspersona's picture

So...when trust is lost in all our major institutions the people will turn to.......Bitcoin?...really?

JamesBond's picture

Citizens in other countries will turn to their own lousy currencies and then break out into a very cold sweat...


CJgipper's picture

Yes.  When your currency and banks are tanking and you can't move into hard greenbacka, but you can electronic xfer into bitcoin, you will.  Just like the Chinese have and the Europeans will.

FreeShitter's picture

We can always NIRP some folks.

BigFatUglyBubble's picture

Let's see how big we can get this azz...

Bring on the ho ho's!

Linglishboy's picture

Mike Baloney, selling gold to suckers. lol.

rejected's picture

Mike has some very good videos explaining this bullshit monetary system we're forced to use. And yes,,, he sells gold, but I'll wager the 'suckers' are heavy into stocks leveraged up to their asses. 

As always, Those who laugh last,,, laugh best.

Linglishboy's picture

you will be laughing in 30 years

opaopaopa's picture

no margine call this time - everybody will be bailed out (or in)

peippe's picture

maybe 33% forgiveness for those only 45 days late?

that way some people still get to feel they are moral.

Anarchyteez's picture

The contrarian is betting on it.

That's perdy much everyone here...minus the trolls.

Your Good Friend's picture

Remember my good friend..... Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.

smallbedbug's picture

No worries, build your career in social media, all your friends will help you in face book, lease a tesla and pretent to be will off...life good. Invest all your money in 401k..etc.

Able Ape's picture

You become wealthy by producing and selling substantive things that other people want or need to buy... Anything saying otherwise is bullshit....

Pop3y3too's picture

Soon. Such a relative word. And soothing, too. Repeat after me....Soooon....SSSSOOOOooooooooonnnn.


Mike 2010


Don't get me wrong, I wholeheartedly agree with the premise but when it comes to "markets" defying all logic that train left the station years ago.  It must've traded in its old steam engines for nuclear reactors, too.

Catahoula's picture

Cash is king. Global cyber attacks will continue and worsen in scale. When those attacks infiltrate financial institutions shit will hit fan. Waiting on it. Expecting it. IC about as useful as tits on boar

Mpizzie's picture

Is this a repost from 2012?  Or 2013?  Or 2015?  Or 2016?


Herdee's picture

Atm's and banks closed, electrical grid down, no gas stations open and grocery stores closed, no internet and phone. What else could possibly go wrong in a mad max scenario?

PitBullsRule's picture

He toured the world with Robert Kiyosoki?  Is that supposed to impress?  This is what happens to people that don't want to work a 9 to 5 job.  They have to support themselves selling some kind of scam like this.  This one is Doom Porn.

cornflakesdisease's picture

Pete Schiff's twin brother.  Both collapse-a-tarians.

Concertedmaniac's picture

These guys never put a date on their doom porn scenarios. I think it's going to between now and 2020 due to many issues but I won't bother to elaborate. I'm working hard to clear all debt by 2019 while trying to put myself in a good position when SHTF because it will eventually, no doubt about it.

Schmuck Raker's picture

The picture-in-picture chart convinced me the end of 'chart porn' is nigh.

xrxs's picture

Better get the fed funds rate up before this hits or we're going to NIRPville.

Cassandra.Hermes's picture

I've just watched Norwegian news, Norway pension fund will divest from USA coal industry, 600M from Peabody Energy and 300M from Arch Coal and slowly will divest 20B from ExxonMobil

The Real Tony's picture

Where I live in a 60 mile radius I've seen maybe a dozen cities where residential real estate doubled in price in the last two years. Yes doubled in price in the last two years. Burlington, Ontario Canada. Barrie, Ontario Canada. Oshawa, Ontario Canada. Bradford, Ontario Canada. Clarington, Ontario Canaada. Brock, Ontario Canada. Georgina, Ontario Canada. Carrington, Ontario Canada. Tweed, Ontario Canada. Norwood, Ontario Canada. And others.

Blankfuck's picture

No No No....The Fed Fucker Bankster Ponzi will continue-----JUST BUY THE FUCKING DIP-------No No No....The Fed Fucker Bankster Ponzi will continue-----JUST BUY THE FUCKING DIP-------No No No....The Fed Fucker Bankster Ponzi will continue-----JUST BUY THE FUCKING DIP-------

Blankfuck's picture

Fed will be announcing soon PRINTING MORE FUN BOGUS BUCKS!, yes added to the triilions more  of the fed reserve ponzi game. Best game in town for the wealthY FUCKERS!