Very interesting times we now live in; the financial system is running out of options very quickly and “blowing up the world” seems to be the only final option. I know, that sounds grandiose and dire but let me explain.
The above introductory comments are edited excerpts from an article* by Bill Holter (blog.milesfranklin.com) entitled Collapse is coming…what will take the blame?
Holter goes on to say in further edited excerpts:
We are finally seeing some very big volatility in global stock markets. I say “finally” because it has been almost 3 years of a steady grind upward where all drops were “aborted” and volatility kept to a minimum…[but] “something” has changed. We are now red for the year in the closely followed Dow Jones and actually approaching “bear market” territory on the Russell 2000. European bourses have also been very weak and took out some important support levels this past week.
So what has changed?
- The dollar has had a spike upwards in its biggest rally in 4 years. I believe this to be a result of the Fed “only” printing an extra $10 billion (soon to be zero?) per month versus the previous $85 billion per month. This “lack of extra liquidity” has affected the dollar market (I believe short term) and also upset the leverage in the stock market…
- The euro, as an inverse to the dollar, has been quite weak. Deflation is taking over Europe. In what would have been “heresy” 10 or more years ago, the calls for a very real and very large “QE” are being heard throughout Europe…all the sovereign nations where (understated) debt is at or above the banana republic threshold of 100% debt to GDP ratio. You can now see it as clear as day, “inflate or die” and in either case there unfortunately will be no middle ground.
- The oil price has cracked well below $90 per barrel for both WTI and Brent crude. Why is this with all of the unrest and potential production damage caused by warring factions?…[Because] the standard operating procedure prior to war is to make your opponent weaker financially by hook or by crook. The U.S. has strengthened the dollar and pushed the ruble into new low territory. The price of oil has been pushed down which affects two foes, both the Iranians and Russians. Iran has a breakeven cost for budget purposes of $140 per barrel and Russia budgeted $100. They are being squeezed in the hopes that Syria can be finally toppled without Iranian or Russian interference. I believe this to be a faulty plan…
- It was said that the spread of Ebola couldn’t reach our shores but it has…Fast forward 2 or 3 months [and just consider] how likely you will be to get on a plane – or go to a restaurant, a shopping mall, a grocery store, or anywhere else for that matter, if it means becoming infected?…
The situation we are now in, financially and economically, was known about years ago but it just wasn’t known how far down the road the can could be kicked. Now, the ruse all around the world is beginning to collapse and as I have said for the last several months – something or someone will need to be “blamed”. A war, a plague, a computer hack attack, an “un” natural disaster or whatever will be pointed at as the cause for the financial system’s collapse when in fact the table is now in the process being kicked over purposely…
The current [economic/financial] ship, in its current form, is going to mathematically sink. “Blame” will come, the only question being “on what” and the extent of the following reaction. The rest of the world is becoming fully aware of this which is why the demand for gold has increased so dramatically…
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
*http://blog.milesfranklin.com/collapse-is-comingwhat-will-take-the-blame (Copyright 2011 Miles Franklin Ltd. All Rights Reserved)
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