SAN LUIS OBISPO, Calif. (MarketWatch) — Imagine, you’re in the exciting new 21st century. Civilization still exists on Planet Earth. Wall Street’s still in business. But you’re still asking: Why can’t we hear the next crash? Are we deaf? No. The warnings are always long and loud. So why can’t we “hear” them? In fact, it’ll get worse. Here’s why…
Yes, crashes will keep coming: History lesson: The 1929 crash led to the Great Depression. On March 20, 2000 we warned: “Next crash? Sorry, you’ll never hear it coming.” Few listened. The 1990’s dot-com mania led to Wall Street losing $8 trillion in the 2000-2003 bear-market recession. Nothing changed. Another round of warnings roared from 2004 into 2008. Few listened. Another crash. Wall Street lost even more, $10 trillion. Continue reading
Combine this with Bank of America’s warning that “the US Dollar is in trouble” and you can see that the cliff America is heading towards without brakes isn’t too far away.
While we will have more to say about the disastrous December TIC data shortly, which was released early today, and which showed a dramatic plunge in foreign purchases of US securities in December – the month when the S&P soared to all time highs and when everyone was panicking about the 3% barrier in the 10 Year being breached and resulting in a selloff in Tsy paper – one thing stands out. The chart below shows holdings of Chinese Treasurys (pending revision of course, as the Treasury department is quite fond of ajdusting this data series with annual regularity): in a nutshell, Chinese Treasury holdings plunged by the most in two years, after China offloaded some $48 billion in paper, bringing its total to only $1268.9 billion, down from $1316.7 billion, and back to a level last seen in March 2013! Continue reading
China’s Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons.
The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China’s $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.
This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications. Brazil, Russia, South Africa, and the commodity bloc are already in the cross-hairs. Continue reading
That at least is the conclusion reached by a frightening chart that has been making the rounds on Wall Street. The chart superimposes the market’s recent performance on top of a plot of its gyrations in 1928 and 1929.
The picture isn’t pretty. And it’s not as easy as you might think to wriggle out from underneath the bearish significance of this chart. Continue reading
Last week’s ‘thunderbolt’ ruling on eurozone rescue policies by Germany’s top court marks a serious escalation of Europe’s governance crisis and may ultimately force Germany to withdraw from the euro, the country’s most influential magazine has warned.
A sweeping report by Der Spiegel said the court ruling amounts to a full-blown showdown between Germany and the European Central Bank over the methods to shore up southern Europe’s debt markets.
“It is nothing less than a final reckoning with the crisis-management strategy pursued by the ECB. The German justices insist that the German constitution sets limits on the ECB’s crisis strategy. In a worst-case scenario, the Court could forbid Berlin from contributing to efforts to save the euro or even force Germany to leave the currency zone entirely,” it said. Continue reading
“Absolutely awful” factory figures as new orders suffer worst slump since 1980 recession
Factory orders in the US suffered their steepest fall for 33 years in January and also slowed further in China, raising fresh concerns about the strength of the world’s two biggest economies.
The shock figures set off a renewed flight to safety in New York, where yields on US 10-year Treasuries fell to a three-month low of 2.60pc. The Dow Jones index tumbled 326 points, breaking through crucial technical support levels. Continue reading
US Treasury Secretary Jacob Lew warned Monday that the US is on course to hit its so-called debt ceiling, the limit to which it can legally borrow, by the end of the month.
He called on Congress to raise it immediately to prevent the issue from harming the economic recovery, adding that the government would start defaulting on its debt “very soon” if it failed to act.
Today the man who remarkably predicted months ahead of time that the Fed would taper in December, then again in January, and who also predicted the global market plunge that we are now seeing, warned KWN that there is no way out this time for central planners as the global Ponzi scheme has now begun to collapse. He also discussed the incredible turmoil taking place around the world. Below is what Gerald Celente, founder of Trends Research and the man considered to be the top trends forecaster in the world, had to say in this remarkable interview.
Eric King: “Gerald, so far this chaos is unfolding exactly as you said it would with the market turmoil around the world. Some of the market participants are becoming a bit shocked at what’s unfolding here, but you called it to perfection. My question to you is, where do we go from here?”
Celente: “Global markets are headed down, but it may not be in a straight line because you are going to start seeing the Fed, (Washington) D.C., and the Wall Street gang move in to stop the slide in global equities. Continue reading
Germany has signalled it is preparing a third rescue package for Greece – provided the debt-stricken country implements “rigorous”austerity measures blamed for record levels of unemployment and a dramatic drop in GDP.
The new loan, outlined in a five-page position paper by Berlin’s finance ministry, would be worth between €10bn to €20bn (£8bn-16bn), according to the German weekly Der Spiegel, which was leaked the document. Continue reading
And he’s right about the FDIC having less funds available than what it needs to cover its obligations.
Last week I had over $1,000,000 in a checking account at Bank of America. Next week, I will have $10,000.
Why am I getting in line to take my money out of Bank of America? Because of Ben Bernanke and Janet Yellen, who officially begins her term as chairwoman on Feb. 1.
Before I explain, let me disclose that I have been a stopped clock of criticism of the Federal Reserve for half a decade. That’s because I believe that when the Fed intervenes in markets, it has two effects — both negative. First, it decreases overall wealth by distorting markets and causing bad investment decisions. Second, the members of the Fed become reverse Robin Hoods as they take from the poor (and unsophisticated) investors and give to the rich (and politically connected). These effects have been noticed; a Gallup poll taken in the last few days reports that only the richest Americans support the Fed. (See the table.) Continue reading
The world is one financial downturn, one major terrorist attack or one regional war away from collapse. 9/11 happened when the U.S. was on the brink of another economic bubble whereas the downturn of 2008 was a bubble created during the Clinton years in which it was only a matter of time before it popped.
As matters stand, the next recession will push the Western economic system over the edge into deflation
Half the world economy is one accident away from a deflation trap. The International Monetary Fund says the probability may now be as high as 20pc.
It is a remarkable state of affairs that the G2 monetary superpowers – the US and China – should both be tightening into such a 20pc risk, though no doubt they have concluded that asset bubbles are becoming an even bigger danger. Continue reading
The World Bank’s former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.
“The dominance of the greenback is the root cause of global financial and economic crises,” Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. “The solution to this is to replace the national currency with a global currency.” Continue reading