Beware the great 2016 financial crisis, warns leading City pessimist

Albert Edwards joins RBS in warning of a new crash, saying oil price plunge and deflation from emerging markets will overwhelm central banks, tip the markets and collapse the eurozone

The City of London’s most vocal “bear” has warned that the world is heading for a financial crisis as severe as the crash of 2008-09 that could prompt the collapse of the eurozone.

Albert Edwards, strategist at the bank Société Générale, said the west was about to be hit by a wave of deflation from emerging market economies and that central banks were unaware of the disaster about to hit them. His comments came as analysts at Royal Bank of Scotland urged investors to “sell everything” ahead of an imminent stock market crash.

Away From Dollar: Russia, China to Create Entirely Different Gold Market

Sometime in the short-term of mid-term future, China and Russia will come out and say “We have all (or most) of the world’s gold. We will now make the rules.”

This also could be the “event” that a lot of experts are talking about regarding late September and early October crisis predictions. Former Reagan advisor, Martin Armstrong predicts October 1st, 2015 (2015.75) as a turning point in world history, for example.

Ironically, this article comes from a state-run source, which could be the Kremlin’s own way of dropping a hint.

 

While key Western banks are artificially restraining gold prices to breathe life into the diluted and devalued dollar system, Russia, China and other emerging economies are involved in “the genial move” to establish an entirely different gold market, F. William Engdahl underscores.

Key central banks, particularly the Federal Reserve and Bank of England, and Western market players have long been accused of clandestine gold price manipulating aimed at preserving the dollar’s role “as world reserve currency primus,” American-German economic researcher and historian F. William Engdahl writes.

“The COMEX gold futures market in New York and the Over-the-Counter (OTC) trades cleared through the London Bullion Market Association do set prices which are followed most widely in the world. They are also markets dominated by a handful of huge players, the six London Bullion Market Association gold clearing banks — the corrupt JP MorganChase bank; the scandal-ridden UBS bank of Zurich; The Bank of Nova Scotia — ScotiaMocatta, the world’s oldest bullion bank which began as banker to the British East India Company, the group that ran the China Opium Wars; the scandal-ridden Deutsche Bank; the scandal-ridden Barclays Bank of London; HSBC of London, the house bank of the Mexican drug cartels; and the scandal and fraud-ridden Societe Generale of Paris,” Engdahl narrated.

Furthermore, Western banks are issuing numerous paper “gold-futures” and other speculative contracts which are in fact disconnected from real physical gold.

‘Timebomb’ UK economy will explode after election, says Albert Edwards

The UK economy is a ticking time bomb set to explode after the general election, according to a leading City commentator who has warned of a fresh crisis for the pound.

Albert Edwards, who heads the global strategy team at investment bank Société Générale and is well known for downbeat views, chides the coalition for a legacy of “grotesquely wide deficits” in both the public sector finances and on the UK’s current account – its overall trading position with the rest of the world.

These black swans pose biggest threats to market, says SocGen

 

SAN FRANCISCO (MarketWatch) — So-called black-swan events are by definition highly improbable. But that hasn’t stopped the economists at Société Générale from attempting to identify a few scenarios that could blindside the market.

In its ‘Global Economic Outlook’ report released on Monday, SocGen listed six such unlikely events that pose the biggest threats. Those include a hard economic landing in China and the possibility of a referendum in the U.K. on whether to remain in the European Union.

Russia Contagion Spreads To European Banks : French SocGen, Austrian Raiffeisen Plummet

We recently noted the rise of counterparty risks in the financial system due to oil prices dropping (and leveraged derivative exposures) but as the Russia situation has deteriorated so dramatically this week, a renewed focus on bank exposures has sent stocks reeling (and credit risk soaring) among many European (and US) banks. As Bloomberg reports, Raiffeisen Bank International and Societe Generale, the European banks with most at stake in Russia, led European lenders lower.

World economy so damaged it may need permanent QE

Markets are realising that the five-and-a-half year recovery since the financial crisis may already be over, says Ambrose Evans-Pritchard

Combined tightening by the United States and China has done its worst. Global liquidity is evaporating.

What looked liked a gentle tap on the brakes by the two monetary superpowers has proved too much for a fragile world economy, still locked in “secular stagnation”. The latest investor survey by Bank of America shows that fund managers no longer believe the European Central Bank will step into the breach with quantitative easing of its own, at least on a worthwhile scale.

Markets are suddenly prey to the disturbing thought that the five-and-a-half year expansion since the Lehman crisis may already be over, before Europe has regained its prior level of output. That is the chief reason why the price of Brent crude has crashed by 25pc since June. It is why yields on 10-year US Treasuries have fallen to 1.96pc, and why German Bunds are pricing in perma-slump at historic lows of 0.81pc this week.

We will find out soon whether or not this a replay of 1937 when the authorities drained stimulus too early, and set off the second leg of the Great Depression.

Banks could lose monopoly on gold fix

Other industry groups such as miners may join process of setting crucial benchmark following allegations that process is open to rigging

Banks could lose sole responsibility for setting the gold price benchmark under new rules proposed by the industry.

Other parties such as miners and refiners may enter the London gold fix, which has been controlled by banks for almost a century but has come under scrutiny following allegations that the system is open to manipulation.

World asleep as China tightens deflationary vice

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.

Yuan now one of world’s most tradable currencies

Within the next few years, look for the yuan/renminbi to become one of the world’s ‘convertable currencies.’ There are only seven at the time being.

For the first time ever, the Chinese yuan is one of the world’s ten most frequently traded currencies, according to a Bank of International Settlements (BIS) survey.

The currency ranked ninth on the bank’s top-ten list, jumping eight places from the seventeen spot it held when the survey was last conducted three years ago.

BRICS risk ‘sudden stop’ as dollar rally builds

The stock of capital flowing into emerging markets has doubled from $4 trillion to $8 trillion since the Lehman Crisis, chasing a catch-up growth story that looks tired and has largely sputtered out in Brazil, Russia and South Africa.

Much of the money has gone into debt, with falling economic returns. This is the next shoe to drop in the festering saga of global imbalances. All it will take is a gear-shift by the US Federal Reserve and the inevitable dollar surge that follows. It was the Volcker Fed that set off Latin America’s defaults in the early 1980s. It was the mighty dollar that set off Mexico’s Tequila crisis, and then the East Asian chain-reaction in the 1990s.