Von Greyerz: "We Are Now In The Frightening Endgame"

Tyler Durden's picture

Via King World News,

Today the man who has become legendary for his predictions on QE, historic moves in currencies, warned King World News that we are now in the frightening endgame.

Fear And Propaganda

Egon von Greyerz: 

“Stock investors are rejoicing about stock markets making new highs in many countries, totally oblivious of the risks or the reasons.  It seems that this is an unstoppable rally in a “new normal” market paradigm. No major increase is expected in the inflation rate or the historically low interest rates. The present rally has lasted 8 years since the 2009 low. There is virtually no fear in the stock market so investors see no reason why this favorable climate would not continue for another 8 years at least.

Yes, of course it could. All that is needed is that governments worldwide print another $20-50 trillion at least and that global debt goes up by another $200-500 trillion…Egon von Greyerz continues: 

The gullibility of people today is exacerbated by the power of the internet and social media. Anything we read is accepted as fact or the truth, while a major part of it is just fake news. This is of course nothing new as it has been used by governments for centuries. Goebbels, the Nazi Propaganda Minister, who was an expert at manipulating the German people, said: “If you tell a big lie often enough and keep repeating it, people will eventually believe it.”

The power of the internet and other media has facilitated spreading news and propaganda to billions of people and very few can distinguish if they hear or read “real” news or “fake” news.

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Anyone in government is incapable of telling the truth. Automatically when someone assumes an elected position their Pinocchio nose grows extremely long since their entire purpose is then to be all things to all people in order to be re-elected. This is why virtually no elected official has a backbone nor any morals or principles. Because if they had, telling the truth would make them unelectable.

My Life As A London Banker (1960s-1970s)

During my early professional years as a banker at the end of the 1960s and early 1970s, I spent some time with a prominent UK Merchant Bank. This is what the old-style Investment Banks used to be called before the Americans came to dominate the sector. The senior bankers used to arrive at work around 10am and then go to lunch at 1pm. The lunch would consist of at least one gin and tonic to start with and then a good three course meal with a bottle of wine or two. Afterwards some Port with cheese and maybe a beer or two at the pub to finish off. Then back to the office at around 3pm for 4-5 hours of work. And this is how the City of London would operate when it was the financial centre of the world. 

Any transaction was based on a handshake and a brief contract. Lawyers played a very small role in this process. Deals were based on trust and personal relationships. Banks displayed total loyalty to their staff and employees did not fear for their jobs. Major deals were concluded with a minimum of legal interference and compliance hardly existed. And still there was very little deception or fraud.

Contrast That To Today…

Today the financial world in London and major parts of the world is dominated by the US investment banks, the US legal system and the US government. Trust and loyalty is gone. Handshakes are worth nothing. Lawyers dominate everything and contracts are now running to hundreds of pages. Staff fear for their jobs since the banks have no loyalty to them. The only thing that counts is short term performance. This makes staff totally disloyal as they know they can be fired on a whim. 

Investment bankers are now Masters of the Universe and as the former Goldman Sachs CEO said, “Doing God’s work.. Well, one thing is certain, there is certainly no humility in the financial world today or as Michael Lewis said in his book “Liar’s Poker,” major parts of US investment banks are dominated by “Big swinging di–s”. (ALTERNATIVE: traders with very big egos.)

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The system we now have is based on Fake News, Fake Money with no morals, no principles and no moral or ethical values. In spite of, or more correctly because of, all the lawyers, government legislation, compliance and regulations, the financial system is today functioning much worse than ever with more fraud, more government intervention and more manipulation of markets. Also, clients today are secondary. Instead, it is all about lining the pockets of the bankers with their multi-billion dollar deals and multi-million dollar bonuses and options. As we experienced in 2006-9, profits are for the bankers and losses for governments and customers. During that time of the Great Financial Crisis, many Investment Bankers received the same bonuses during the crisis years as before, in spite of the fact that most of them would have gone under without the government support they benefitted from to the extent of $25 trillion.  

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We Are Now In The Frightening Endgame

All of this is proof of the fact that we are at the end of a major financial era that started either with the Renaissance, which came after the Dark Ages, or since the end of the South Sea Bubble in the mid 1700s. I doubt that the cycle is of a smaller degree, like 100 years since the creation of the Federal Reserve in 1913. Only future historians will tell us the magnitude of the current cycle. 

What is certain is that we are now in the final stages of a major era. It has been clear to me for quite some time that this will end badly. The inevitable implosion of the asset and debt bubbles that the world is now experiencing is guaranteed. But governments and central banks have for some time been able to fool most of the people by telling them that the emperor is wearing a suit of gold when he is actually naked. 

We have bubbles in every aspect of society. Stocks are at ridiculous valuations. The Schiller PE is at 30, which is where it was in 1929. Still, it is below the 2000 level which tells us that it could extend for a bit longer.

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On many other measures like valuation to GDP or sales revenue, markets are past or near the all-time highs. The graph below shows the margin debt on the New York Stock Exchange which is substantially above the 2000 and 2007 levels.

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Not just stocks but virtually all assets are at record levels, whether we talk about the biggest bubble in the world, which is bonds, or property values, which are inflated by interest rates manipulated down to the lowest levels in history.

I have in many previous interviews and articles stressed the problem of both US and global debts which have grown exponentially in the last half a century. These high debts have inflated asset prices, benefitting a small minority and at the same time impoverishing ordinary people. 

Just look at the real earnings of a US worker. As the chart below shows, they peaked in 1973 and since then, the perceived improvement of Americans has been achieved with the aid of debt.

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The chart below shows that the gap been wages and the standard of living has been filled by an increase in consumer credit. The sad thing is that most Americans or ordinary people in the industrial world do not realize that they are now enslaved by debt which they can never repay.

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Sadly, a big number of people in the world will be unemployed within the next few years. At that point, governments will be insolvent and print money which will be worthless. There will be no social security and no pension system. The health care system will also fail in many countries with disastrous consequences. 

With most individuals totally unaware of what will hit them in the next few years, they continue to accumulate debt while a small minority continue to speculate to accumulate wealth.

The Biggest Wealth Destruction In History

These speculators don’t realize that most of the wealth they have today is due credit expansion combined with governments printing money. Any future increase in asset prices will merely be due to the music playing faster and louder and will have nothing to do with real economic growth. Very few people realize that soon the music will stop, and at that point, all the assets inflated by debt will implode. This will lead to the biggest wealth destruction in history. But as always happens at the end of a major cycle, it only turns when the maximum number of investors has been sucked in. This is why we could easily see even higher stock prices before it all collapses. 

Just look at the Nasdaq in 1999-2000. From January 1999 to March 2000 the Nasdaq went up 2 ½ times. In the final stages of that euphoria, more and more investors were sucked in. The same could very well happen again.

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The nearer a peak the market is, the bigger the number of participants. Markets have a horrible tendency to punish as many as possible. 

Instead of riding the final rally and then lose 80%, as Nasdaq investors did after the March 2000 peak, now is the time to exit the market and protect your profits. Just look at what happened to the Nasdaq in relation to gold since the Nasdaq 2000 peak. As the chart below shows, the Nasdaq has lost 71% against gold since the 2000 peak.

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Don’t Try To Time The Markets

No one can pick the top, and when a market is heavily overbought, this is not necessary either. I am taking the Nasdaq as the extreme example here, but all stock markets are overbought globally. It makes no sense to pick the final rise, if it happens. Now is the time to take protective measures and be concerned about the “Return OF your money rather than the return ON your money.” The perfect wealth preservation asset is of course real assets and especially physical gold and silver, stored safely outside the financial system.  For anyone who still wants to speculate in the final stages of a secular bull market, options are the only sensible method – with options losses are limited to the premium paid, which is the only acceptable risk in a bubble market. 

In the next 3-5 years most asset classes, be it stocks, bonds, property, or just currencies, are likely to lose 75% to 99% against gold and silver. Certainly not a risk worth taking.”

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European American's picture

Deja vu...hasn't Von Greyerz been saying this every year since "08?

Rentier88's picture

Exactly, same doom goom click bait used for better part of decade....Zzzzzz...show me something real.

Derezzed's picture

We are far from the endgame, we are just at the endgame of the beginning !
This shit will last much longer than you can imagine because as long as you are paying taxes, and your money is in the bank, you are paying for it !

Dead Canary's picture

I know. King Whirled Snooze is weak tea.

J S Bach's picture

The end game begins when the dollar loses its status as world-reserve-currency... period.  Until then, it's game on - funny business as usual.

JRobby's picture

The level of slaughter will be so profound? Even though there continues to be messages that all confidence in CBs is lost, CBs continue to buy to the delight of all. Insanity.

francis scott falseflag's picture

Or when the big one (7.9 Richter) hits Santa Monica and Highland.

MalteseFalcon's picture

sO SCARED..... sO SCARED....

francis scott falseflag's picture

Yep.  

Denial will buy you another 50 years.

 

Bay of Pigs's picture

Point taken but the charts look pretty real to me and so does the risk that some of these bubbles are already beginning to pop. RE in particular. Warning people about it isn't necessarily promoting financial doomsday. Burying your head the sand isn't all that smart either.

August's picture

I'll echo the author a bit:

I'm skeptical re Immediate Doom, and most of my assets are in real estate and securities denominated in fiat currency of one sort or another;

however, a significant proporton of assets is of the physical variety - and held outside the financial sector, in three jurisdictions.  Prudence.

francis scott falseflag's picture

You're like the boy in the Aesop story who cried

"doom gloom click bait"

and one time it was the real thing.

 

So sad.

Jack Oliver's picture

It has been true every year - any fool can see that the FED and WALL st have almost milked the cow dry !

jamesmmu's picture
VERTU GOES BANKRUPT & SHUTS DOWN – Luxury Smartphone Maker Is No Longer

http://investmentwatchblog.com/vertu-goes-bankrupt-shuts-down-luxury-sma...

Too-Big-to-Bail's picture

Checkmate for King Dollar soon to be revealed as the Pawn-zi that it is

Latitude25's picture

I'm shocked.  KWN shows up on ZH

Kotzbomber747's picture

Desperate times, desperate measures I guess.

wisebastard's picture

Anyone in government is incapable of telling the truth............LMFAO

alangreedspank's picture

Hmm. Premise of the article saying everyone rejoicing about market gains is false. The MSM tone is definitely bearish.

shizzledizzle's picture

Yea, you know they aren't going to pull the plug when the media is warning people. Can't have the muppets on the right side of the trade... That's not how this works. It will be a blindside when complacency abounds. 

NobodyNowhere's picture

As long as cheap Chinese goods can be sold at inflated prices to the West, the Wall Street Joos make money.  It will go on until the US consumer has lost all buying power.  A janitor in the US can still take home more than a CEO of a Chinese company with 50+ employees.  So there is still lot of blood to be sucked by the WS leeches.

Justin Case's picture

As long as merican corporations operating in China can sell goods cheaper to mericas with borrowed money, and be sold at inflated prices , the Wall Street Joos make money. It will go on until the US consumer has lost their ability to go deeper into debt. Merica is relatively a small market compared to Asia and it makes sense to make yoar product close to the biggest market and ship distances to the smaller ones, like merica.

 

aloha_snakbar's picture

Masters of the Universe and as the former Goldman Sachs CEO said, “Doing God’s work

 

I think he meant to say Yahwehs work...

Sick Monkey's picture

God is a title. Yahweh is a name.

francis scott falseflag's picture

I'm sure the Supreme Being doesn't care care what you call it. 

Pollygotacracker's picture

I am certain that we will see an epic 'wipeout' when the final wave rolls in. Be warned.

Consuelo's picture

 

 

You know you gots it bad when even seeing just his last name 'Greyerz' and I knew it was Weekly World News ------ I mean...  'King World News', of course...

PontifexMaximus's picture

a very good swiss cheese btw, but egon greyerz is not swiss, et il s'entend bien parler

c2nnib2l's picture

biggeat construction company in UK emoloyer of almost 50 K peoole is about to go bust

Pollygotacracker's picture

The bubble pops in slooooowwww motion. By the time it is happening, for most it will be too late.

lakecity55's picture

Holy Fear Porn! Oh, no! KWN on The Hedge?

Say it isn't so, Batman!

Michigander's picture

Timing is irrelevant. The message is relevant. One would be smart to heed it. Why risk a maximized market return to substantive losses when you can use the currently minimized bullion markets to maximize returns when the paper markets fail?

 

Bullion, cryptos, and modest rental houses are the only places to be right now.

Dragon HAwk's picture

I got a whole slew of Tools that says, even during the End Game, People are going to need something fixed, ass grass or canned goods nobody works for free. call ahead if you want to pay in Beer.

LeftandRightareWrong's picture

ass, GAS, or grass -- nobody rides for free

Rebelrebel7's picture

Fractional reserve benking by privately owned central banks is the problem.

People are onto the bankers scam. We are slow learners.  It only took us two thousand years to realize it. It dates back to Jesus, Pontius Pilot, and King Herod.

el buitre's picture

Well before then - Sumer.

squid's picture

"Fractional reserve benking by privately owned central banks is the problem."

 

I disagree....the Bank of Canada is owned by parliament and it is no different than the bullshit that goes on in the states.

 

The problem is fracional reserve banksing and paper money full stop.

 

Squid

Lucky Leprachaun's picture
"We Are Now In The Frightening Endgame"

 

Wish we were. But I've been hearing the same warning for nigh on ten years now and the avalanche still rolls on.

sunny's picture

"In the next 3-5 years most asset classes, be it stocks, bonds, property, or just currencies, are likely to lose 75% to 99% against gold and silver. Certainly not a risk worth taking.”"

Howz that for sticking your neck way out.  In this climate a prediction 3-5 years out is just nonsense.

jmack's picture

married puts.

pparalegal's picture

Everything is only worth what someone else is willing & able to pay for it.  So buy the DOW at 20, sell at 30 or 40 or 50. Buy Bitcoin at 900 sell at 2000, or 3000, or 4000, or 30,000.  Do you feel lucky?  Sell me that tulip bulb comrade. 

the Dutch, who developed many of the techniques of modern finance, created a market for tulip bulbs, which were durable goods. Short selling was banned by an edict of 1610, which was reiterated or strengthened in 1621 and 1630, and again in 1636. Short sellers were not prosecuted under these edicts, but their contracts were deemed unenforceable.

Tulip mania reached its peak during the winter of 1636–37, when some bulbs were reportedly changing hands ten times in a day. No deliveries were ever made to fulfil any of these contracts, because in February 1637, tulip bulb contract prices collapsed abruptly and the trade of tulips ground to a halt.

SurlysonofaBitch's picture

How many different ways to write the same article ...

squid's picture

Tyler.....

Just so Nutrogena is aware.....

There was a FWoS (flying window of shit) that went across my phone while trying to read this....a Nutrogena advert.

 

For the next 365 days, my house hold will buy NOTHING that has Nutrogena on the package.  The counter gets reset back to 365 every add I see.

 

That goes for all FWoSs.

 

Squid

August's picture

Commendable idea, squid.  

FWIW, K. Denninger is conducting a personal boycott of any firm that advertises on Facebook.  

I'd do the same if I had any idea who the hell runs ads on Facebook.