Has the next giant financial crash already begun?

Discussion in 'Financial Cents' started by Yard Dart, Nov 9, 2015.

  1. Yard Dart

    Yard Dart Vigilant Monkey Moderator

    The 1st of October came and went without financial armageddon. Veteran forecaster Martin Armstrong, who accurately predicted the 1987 crash, used the same model to suggest that 1 October would be a major turning point for global markets. Some investors even put bets on it. But the passing of the predicted global crash is only good news to a point. Many indicators in global finance are pointing downwards – and some even think the crash has begun.

    Let’s assemble the evidence. First, the unsustainable debt. Since 2007, the pile of debt in the world has grown by $57tn (£37tn). That’s a compound annual growth rate of 5.3%, significantly beating GDP. Debts have doubled in the so-called emerging markets, while rising by just over a third in the developed world.

    John Maynard Keynes once wrote that money is a “link to the future” – meaning that what we do with money is a signal of what we think is going to happen in the future. What we’ve done with credit since the global crisis of 2008 is expand it faster than the economy – which can only be done rationally if we think the future is going to be much richer than the present.

    Dutch government index, while the value of global trade in primary commodities, which scored 150 on the same index a year ago, now stands at 114.

    In these circumstances, the only way in which the expanding credit mountain can be an accurate signal about the future is if we are about to go through a spectacular productivity boom. The technology is there to do that, but the social arrangements are not. The market rewards companies that create labour exchanges for minicab drivers with multibillion-dollar valuations. Hot money chases after computing graduates with good ideas, but that is – at this phase of the cycle – as much an indicator of the stupidity of the money as the brightness of the ideas.

    China – the engine of the post-2009 global recovery – is slowing markedly. Japan just revised its growth projections down, despite being in the middle of a massive money-printing programme. The eurozone is stagnant. In the US, growth, which recovered well under QE, has faltered after the withdrawal of QE.

    In short, as the BIS economists put it, this is “a world in which debt levels are too high, productivity growth too weak and financial risks too threatening”. It’s impossible to extrapolate from all this the date the crash will happen, or the form it will take. All we know is there is a mismatch between rising credit, falling growth, trade and prices, and a febrile financial market, which, at present, keeps switchback riding as money flows from one sector, or geographic region, to another.

    A better exercise is to image what archetypes a dramatist might use if they tried to write a farce describing the state of society on the eve of yet another disaster. There would be a character obsessed with property: London is fizzing with young professionals trying to clinch property deals right now. The riverbanks of the Thames are forested with cranes, show apartments and half-occupied speculative developments that will, after the crash, make great social housing.

    Then there would have to be a hapless central banker, optimistically “looking through” the figures for low growth, stagnant prices and collapsing trade in order to justify doing nothing.

    But the protagonist would have to be a politician. The Kingston University economist Steve Keen points out that, in the run up to 2008, the flawed ideology of neoliberal economics made a dangerous situation worse. Economists put their professional imprimatur on the idea that risky investments were safe. Today, the stable door of economics is firmly shut. Even mainstream bank economists are calling for radical measures to revive growth: Nick Kounis, ABN Amro’s macro-economics chief, called on central banks to raise their inflation targets to 4% and flood the world with money in a coordinated survival strategy.

    Instead, it is in the world of geopolitics that the danger of elite groupthink is clearest. The economic danger becomes clear if you understand that printing $12tn incentivises every country to dump the final cost of anti-crisis measures on someone else. But there is now also clear geopolitical risk.

    The oil price collapsed because the Saudis wanted to stymie the US fracking industry. Right now, although Russian and American diplomats are capable of sitting together in Vienna, their strike-attack pilots do not communicate as they attack their variously selected enemies on the ground in Syria. Europe, weakened by the Greek crisis, its cross-border institutions thrown into chaos by the refugee crisis, looks incapable of doing anything to anybody.

    So, the biggest risk to the world, despite its growing seriousness, is not the deflation of a bubble. It is the risk of that becoming intertwined with geopolitics. Any politician who minimises or ignores this risk is doing what the purblind economists did in the run up to 2008.
    Apocalypse now: has the next giant financial crash already begun? | Comment is free | The Guardian
    pearlselby and Gopherman like this.
  2. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

    The problem with many of the myths and prophetic imaginings of others, is there's almost no consideration for the real truth which sits at the heart of this topic. America has been destined for financial ruin since the banking reorganization of 1933, and every attempt to rekindle the economy will fail, because all that will happen is a refinancing of a debt which can never, ever be paid. We have a 100% FIAT usury scheme which is owned and managed by an international private banking cartel. When a crash comes, it will be at the time chosen by the financiers of this incredibly deceptive scheme, not before. All the math and economic wizardry crafted by analysts and experts will not define the precise moment of collapse because it will happen when the money masters make it happen.

    The age of actual dollars and cents with value has long evaporated, confined to history books and current day tools of propaganda. This is the age of the debt-slave, it's a new world, and we're just getting started.
    Ganado, pearlselby, Yard Dart and 3 others like this.
  3. Gopherman

    Gopherman Sometimes I Wish I Could Go Back to Sleep

    When I was a young boy, there was a toy I used to love. It was a bubble maker. Basically a large hoop that we dipped in dish soap and pulled through the air. We got some really impressive bubbles to appear and with a little practice, after time, we were able to create Epic, Humungus Bubbles!!!
    Even with all the practicing we did, we were never able to figure out how to keep them from bursting!
    Ganado, pearlselby, Yard Dart and 5 others like this.
  4. UncleMorgan

    UncleMorgan I like peeling bananas and (occasionally) people.

    The Great Crash is already happening. However. it's not like flipping a light switch. It's more like a massive wave rolling onto shore. Some places the water's moving up, some places down, but nothing will stop the wave from moving forward.
    History tends to compress events. The French Revolution started on such-and-such a day, etc. It didn't. It had been building and occurring for years. And it took a while to be defined as "over". It's like watching a house burn, and dating it as an event that occurred at the instant the roof caved in.
    Every person's freedoms and security will be (is being) imperiled, and many people will not survive the duration of the Great Crash.
    Those that wish to do so must batten down the hatches and get out of the herd before the balloon goes up.
    Otherwise they may get their metaphors mixed.
  5. VisuTrac

    VisuTrac Ваша мать носит военные ботинки Site Supporter+++

    As long as everyone keeps buying sovereign debt securities and doesn't state the obvious that this thing is unsustainable. It will continue.

    The debtor nations can not pay their obligations in full (at least without hyperinflating their economies) with their fiat currencies.

    All it's going to take is one major to say .. erm, how about something tangible like gold/diamonds/oil .. we don't want your paper money no more.

    if fiat dies, so does the economy of many nations. So they are going to do their damnedest to make sure it doesn't happen, up to including declaring war on those that step out of line.
  6. Dunerunner

    Dunerunner Brewery Monkey Moderator

    And, just when the housing market has started to rebound.... :rolleyes:
  7. BTPost

    BTPost Stumpy Old Fart,Deadman Walking, Snow Monkey Moderator

    I like the idea that inhabitants of the Planet, just agree to cancel ALL National Debt, for ALL Nations... That will not hurt, but the Banking Cartels, and we all just do a Massive RESET....
    Ganado and VisuTrac like this.
  8. Yard Dart

    Yard Dart Vigilant Monkey Moderator

    The problem is, the inhabitants of the world can not agree on hardly anything.......
    pearlselby and Ganado like this.
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