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Ten Years After the Last Meltdown: Is Another One Around the Corner?

Ten Years After the Last Meltdown: Is Another One Around the Corner?

September marked a decade since the bursting of the housing bubble, which was followed by the stock market meltdown and the government bailout of the big banks and Wall Street. Last week’s frantic stock market sell-off indicates the failure to learn the lesson of 2008 makes another meltdown inevitable.In 2001-2002 the Federal Reserve responded to the economic downturn caused by the bursting of the technology bubble by pumping money into the economy. This new money ended up in the housing market. This was because the so-called conservative Bush administration, like the “liberal” Clinton administration before it, was using the Community Reinvestment Act and government-sponsored enterprises Fannie Mae and Freddie Mac to make mortgages available to anyone who wanted one — regardless of income or credit history.

Banks and other lenders eagerly embraced this “ownership society”’ agenda with a “lend first, ask questions when foreclosing” policy. The result was the growth of subprime mortgages, the rush to invest in housing, and millions of Americans finding themselves in homes they could not afford.

When the housing bubble burst, the government should have let the downturn run its course in order to correct the malinvestments made during the phony, Fed-created boom. This may have caused some short-term pain, but it would have ensured the recovery would be based on a solid foundation rather than a bubble of fiat currency.

Of course Congress did exactly the opposite, bailing out Wall Street and the big banks. The Federal Reserve cut interest rates to historic lows and embarked on a desperate attempt to inflate the economy via QE 1, 2, and 3.

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Inverted Global Yield Curve Creates “The Perfect Cocktail For A Liquidity Crunch” As The IMF Warns Of “A Second Great Depression”

Inverted Global Yield Curve Creates “The Perfect Cocktail For A Liquidity Crunch” As The IMF Warns Of “A Second Great Depression”

Why would the IMF use the phrase “a second Great Depression” in a report that they know the entire world will read?  To be more precise, the IMF stated that “large challenges loom for the global economy to prevent a second Great Depression”.  Are they saying that if we do not change our ways that we are going to be heading into a horrific economic depression?  Because if that is what they are trying to communicate, they would be exactly correct.  At this moment, global debt levels are higher than they have ever been before in all of human history, and in their report the IMF specifically identified “global debt levels” as one of the key problems that could lead to “another financial meltdown”

The world economy is at risk of another financial meltdown, following the failure of governments and regulators to push through all the reforms needed to protect the system from reckless behaviour, the International Monetary Fund has warned.

With global debt levels well above those at the time of the last crash in 2008, the risk remains that unregulated parts of the financial system could trigger a global panic, the Washington-based lender of last resort said.

And the IMF report also seemed to indicate that global central banks were responsible for the situation in which we now find ourselves.

In the report, an “extended period of ultralow interest rates” was blamed for “the build-up of financial vulnerabilities”

The IMF Global Financial Stability report read: “The extended period of ultralow interest rates in advanced economies has contributed to the build-up of financial vulnerabilities.

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Why Is The Mainstream Media Suddenly Buzzing About “Another Global Financial Crisis”?

Why Is The Mainstream Media Suddenly Buzzing About “Another Global Financial Crisis”?

All of a sudden, the mainstream media is starting to sound a lot like The Economic Collapse Blog.  Throughout the Obama years, the mainstream media in the United States always seemed extremely hesitant to suggest that difficult economic times may be ahead, but now talk of “another global financial crisis” seems to be all over the place.  Is this because they truly believe that one is coming, or is it just another angle that they can use to attack Donald Trump?  In any event, it is undeniable that evidence is mounting that big trouble could be right around the corner.  European financial markets are already in meltdown mode, a major international trade war has just erupted, the worst “retail apocalypse” in modern U.S. history is accelerating, and our debt problems continue to grow with each passing day.  Normally the mainstream news is much more subdued than I am about all of this stuff, and so I was very surprised to see reporter James Pethokoukis come out with an article entitled “Here comes another global financial crisis”

Investors are increasingly worried that an escalating political crisis in Italy could lead to a populist, euroskeptic government taking power. As a result, there’s rising uncertainty about whether the country might eventually abandon the euro currency zone or default on its giant debt pile. To make things worse, the Trump administration continues to toy with the idea of a trade war with Europe and China. That would be the last thing the global economy would need if the Italian situation deteriorates further. Debt crises and trade wars are a toxic combination.

And remember, this comes just days after George Soros ominously declared that “we may be heading into another major financial crisis.”

So what has changed?

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Fed Scared to Death of Causing Global Financial Crash – Nomi Prins

Fed Scared to Death of Causing Global Financial Crash – Nomi Prins

Two time, best-selling author Nomi Prins says central bankers have no idea how to stop the easy money policies that they started after the financial meltdown of 2008. Prins explains, “So, when the Fed says they are going to remove assets from their $4.5 trillion book by not reinvesting the interest payment . . . the reality is they haven’t really done that.  They have reduced their book by about $10 billion off of $4.5 trillion since they mentioned they were going to start ‘tapering.”  The media discusses this as a major tightening move.  Somehow all of our economies have finally worked because of central bank activity.  Growth is real.  It’s all positive.  The markets are evidence of that because of the levels they are at; and, therefore, these central banks, starting with the Fed, are going to reverse course of these last 10 years.  The reality is if you look at the actual activity of the central banks, beyond the Fed raising rates by a little bit, there hasn’t been and there isn’t being a reversal of course because they are scared to death that too much of a reversal is going to cause a major crash throughout the financial system. Everything is connected.  All the banks are connected.  Money flows around the world in less than nanoseconds, and all of it has the propensity to collapse if that carpet the central banks have created is dragged from beneath the floor of all this activity.”Prins, who just finished traveling the globe to research her upcoming book, thinks there is one big thing that can take the entire system down. Prins, a former top Wall Street banker, contends, “There hasn’t been any real growth in the real economy.  That is an indication of the misfire of this entire plan.

…click on the above link to read the rest of the article…

Is This How the Next Global Financial Meltdown Will Unfold?

Is This How the Next Global Financial Meltdown Will Unfold?

In effect, a currency crisis is simply the abrupt revaluation of the currency to reflect new realities.

I have long maintained that the structural imbalances of debt and risk that triggered the Global Financial Meltdown of 2008-2009 have effectively been transferred to the foreign exchange (FX) markets.

This creates a problem for the central banks that have orchestrated the “recovery” by goosing asset bubbles in stocks, real estate and bonds: unlike these markets, the currency-FX market is too big for even the Federal Reserve to manipulate for long.

The FX market trades roughly the entire Fed balance sheet of $4.5 trillion every day or two.

Currencies are in the midst of multi-year revaluations that will destabilize the tottering towers of debt, leverage and risk that have propped up global growth since 2009.

Though the relative value of currencies is discovered in the global FX market, there are four fundamental factors that influence the value of any currency:

1. Capital flows into and out of the currency (and the nation that issues the currency).

2. Perceived risk, specifically, will this currency preserve my global purchasing power (i.e. capital) or erode it?

3. The yield or interest rate paid on bonds denominated in this currency.

4. The scarcity or over-abundance of the currency.

If we dig even deeper, we find that currencies reflect the income streams and assets of the issuing nation. Consider the currency of an oil exporting nation that has seen both its income from selling oil and the underlying value of its oil in the ground fall by more than 50%.

Why shouldn’t that nation’s currency decline in parallel with the erosion of income and asset valuation? As a nation’s income and asset base decline, there is less national income to pay interest on sovereign bonds, less private income to tax, and a reduced asset base for additional borrowing.

…click on the above link to read the rest of the article…

US-NATO Military Deployments, Economic Warfare, Goldman Sachs and the Next Financial Meltdown

US-NATO Military Deployments, Economic Warfare, Goldman Sachs and the Next Financial Meltdown

Is There a Relationship?

What is the relationship between war in a military theater and “economic warfare”? 

An act of war is invariably an economic undertaking which supports dominant corporate interests. The conduct of US-NATO military operations is carried out on behalf of powerful financial institutions. 

US led wars in the Middle East under the humanitarian mantle of the “global war on terrorism” largely serve the interests of Wall Street, the Anglo-american oil conglomerates, the so-called ‘defense contractors”, the biotech conglomerates (Monsanto et al), Big Pharma and the corporate media.

But modern warfare is by no means limited to the sphere of military and intelligence operations. Washington not only imposes economic sanctions on countries which do not support its imperial agenda, it also fosters the outright destabilization of national economies. While the Pentagon and NATO coordinate military operations against sovereign countries, Wall Street carries out concurrent destabilizing actions on financial markets including the rigging of the oil, gold and foreign exchange markets directed against Russia and China.

It’s called “financial warfare”, it’s part of the same global agenda, it’s implemented alongside and in coordination with the Worldwide deployment of the US-NATO’s military machine.

In this regard, Obama’s “Pivot to Asia” directed against China involving the deployment of US naval forces in the South China Sea, is reinforced through concurrent destabilizing actions on the Shanghai stock exchange. The ultimate intent is to undermine –through non-military means– the national economy of the People’s Republic of China.

War and Financial Warfare

Is financial warfare coordinated with political decision-making pertaining to major military and intelligence operations?

 

Acts of financial warfare require intelligence;  they often require consultation and coordination at the highest levels of government. While the decision making process between the military-intelligence apparatus and the corporate financial system is by no means integrated, it nonetheless overlaps through a system of cross appointments and consultations.

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And So It Begins – Greek Banks Get Shut Down For A Week And A ‘Grexit’ Is Now Probable

And So It Begins – Greek Banks Get Shut Down For A Week And A ‘Grexit’ Is Now Probable

Greece Financial MeltdownIs this the beginning of the end for the eurozone?  For years, European officials have been trying to “fix Greece”, but nothing has worked.  Now a worst case scenario is rapidly unfolding, and a “Grexit” has become more likely than not.  On Sunday, the European Central Bank announced that it was not going to provide any more emergency support for Greek banks.  But that was the only thing keeping them alive.  In order to prevent total chaos, Greek banks have been shut down for at least a week.  ATMs are still open, but it is being reported that daily withdrawals will be limited to 60 euros.  Of course nobody knows for sure if or when the banks will reopen after this “bank holiday” is over, so needless to say average Greek citizens are pretty freaked out right about now.  In addition, the stock market in Greece is not going to open on Monday either.  This is what a national financial meltdown looks like, and the nightmare that has been unleashed in Greece will soon start spreading to much of the rest of Europe.

This reminds me so much of what happened in Cyprus.  Up until the very last minute, politicians were promising everyone that their money was perfectly safe, and then the hammer was brought down.

The exact same pattern is playing out in Greece.  For example, just check out what one very prominent Greek politician said on television on Saturday

“Citizens should not be scared, there is no blackmail,” Panos Kammenos, head of the government’s coalition ally, told local television. “The banks won’t shut, the ATMs will (have cash). All this is exaggeration,” he said.

…click on the above link to read the rest of the article…

 

 

 

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