China jitters could trigger global market bloodbath, IMF warns

Jitters over the health of the Chinese economy could trigger a bloodbath on financial markets if a hard landing materialises, the International Monetary Fund has warned.

The IMF said policy choices in the world’s second largest economy would also have “increasing implications for global financial stability” in the coming years as the country opens up its bond and equity markets.

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The Global Credit Market Is Now A Lit Powderkeg

And markets are totally unprepared

The financial markets have had a bit of a tough time going anywhere this year.

2015 stands in relative contrast to largely upward stock and bond market movement over the past three years.  What’s different this year and what are the risks to investment outcomes ahead?

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Government Has Gone Insane – That’s What a Phase Transition Is All About

Whom the gods would destroythey first make mad,” was spoken by Prometheus in Henry Wadsworth Longfellow’s poem “The Masque of Pandora”. This seems to be very appropriate to explain our government officials for they are truly insane when it comes to economics. This is all about them sustaining a failed system that is unsupportable. They refuse to look at what they are doing and instead they are clamping down on everyone destroying the very fabric of the world economy. Continue reading

Greece warns it does not have the money to make IMF repayment

Because of the interconnectedness of the world economy, if Greece does truly fall apart and cause the currency bloc to crumble, it will spread to South America. South America’s weakest countries, such as Argentina or Venezuela or both, would be the most likely to take the hit and then collapse. From there, it will spread north up to Mexico which would then take a hit and go through the same process. When the falling dominoes reach Mexico, the United States has two weeks before it will suffer the same fate. Respectively, ordinary Americans will have a buffer of two weeks time to withdraw all the cash they can from the bank.

Keep your eyes wide open and remain on guard. The world is too interconnected and is one catastrophe away from implosion.

 

Greece cannot make debt repayments to the International Monetary Fund next month unless it achieves a deal with creditors, Interior Minister Nikos Voutsis said on Sunday, the most explicit remarks yet from Athens about the likelihood of default if talks fail.

Meanwhile, Finance Minister Yanis Varoufakis said it would be “catastrophic” if Greece left the euro, predicting it would be “the beginning of the end of the common currency project”.

Shut out of bond markets and with bailout aid locked, cash-strapped Athens has been scraping state coffers to meet debt obligations and to pay wages and pensions. Continue reading

Fed official warns ‘flash crash’ could be repeated

Please see the source for the video.

 

A senior Federal Reserve official has warned that last autumn’s “flash crash” in US Treasurys could happen again due to the changing nature of the US government debt market, and urged banks, investors and exchanges to adopt a revised set of guidelines in response to the turmoil.

However, Simon Potter, executive vice-president of the Federal Reserve Bank of New York, warned in a speech on Monday that the unintended consequences of regulatory and market changes could mean that “that sharp intraday price moves become more common” in the future. Continue reading

U.S. Stocks Tumble as Volatility Returns

On Thursday, fears seemed to prevail once again, with the Dow Jones Industrial Average tumbling more than 300 points, reversing Wednesday’s big rally.

It was the third move in a row of more than 200 points by the blue-chip index—a roller-coaster ride that ranks as the most volatile stretch for the Dow since August 2011 Continue reading

Russia braces for crippling US sanctions as Ukraine turns deadly

A continued escalation could mean a further and more serious step towards debasing the petro-dollar, which would in turn break the backbone of the American economy.

Deadly clashes in eastern Ukraine and warnings of broader US sanctions against Russia have sent tremors through Moscow’s financial markets and forced the country to cancel a sovereign debt auction yet again.

Russia’s RTS equities index fell to a one-month low, with Gazprom and Sberbank both down 3.5pc in volatile trading. Russia’s treasury pulled a 20bn rouble (£330m) bond auction intended to test the waters, saying there were no buyers at an acceptable cost. Yields on 10-year Russian bonds have jumped to 9.17pc.

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Fallout from Fed tightening will be worse than 1994, warns ECB policymaker

BRUSSELS — The spillover effects of the U.S. central bank unwinding its policy stimulus risk being greater now than in 1994, and that episode highlights the importance of clearly communicating exit strategies from expansionary policies, an ECB policymaker said.

The Federal Reserve is expected to start slowly reducing its bond purchases when it meets later this month, beginning to unwind a policy that has helped foster recovery in the world’s largest economy and buoyed financial markets.

“In early 1994, when the U.S. recovery gained strength, the Fed started a tightening cycle and bond markets crashed not only in the U.S. but also around the world,” European Central Bank Executive Board member Joerg Asmussen said on Tuesday. Continue reading

Resource-rich Mongolia an outpost of the wild, wild east

Mongolia’s fairytale economic boom is developing cracks. The failure of the country’s fifth-largest bank and delays to the development of its giant copper mine underscores fears that its growth potential is built on shaky foundations. Yet greater economic realism may ultimately be welcome.

The surprise insolvency of Savings Bank, which controlled about 8 per cent of Mongolia’s banking assets, has rattled the country’s economic cheerleaders. The central bank closed down the lender and transferred its deposits to a state-owned rival after it ran up bad loans worth $109-million (U.S.) – more than twice its capital, according to Fitch Ratings. Some of these loans appear to have been made to Just Group, controlling corporate shareholder in Savings Bank, despite regulations designed to limit such exposures. Continue reading

Four Signs That We’re Back in Dangerous Bubble Territory

The United States is already experiencing a false recovery to begin with. While the Dow Jones might very well be going up, it’s quite a poor indicator of the economy’s overall health. Jobs are still being lost while entire sectors are propped up and subjugated through government bailouts. Meanwhile, the healthcare industry will soon be in shambles under the weight of heavy politics, law and regulation.

The next economic crash will hit harder than the last due to this current false recovery already being a mere sugar high from ‘quantitative easing’ and accounting tricks. Yet, the real crippling crash to worry about is likely to be the tsunami not seen after the markets already received the next hit. This is the one that will make the Geat Depression look like a Sundays picnic. The United States is not untouchable and is one significant event away from a total meltdown.

As the global equity and bond markets grind ever higher, abundant signs exist that we are once again living through an asset bubble or rather a whole series of bubbles in a variety of markets. This makes this period quite interesting, but also quite dangerous. Continue reading