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Olduvai III: Catacylsm
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IceCap: Every Fed Chair Has A Plan, Until…

IceCap: Every Fed Chair Has A Plan, Until…

It’s Easy

In the world of knitting, stitching and crocheting; threading the needle is easy. Line-up your thread, needle and a good cup of tea and you’re all set.

In most other worlds – it can be tricky.

If executed perfectly – threading the needle can be rewarding, exhilarating and thrilling all at the same time.

If executed imperfectly – it can end in disaster.

In American football, 49ers quarterback Nick Mullens expertly threaded the football between 4 different Raiders players, landing it perfectly in the hands of his teammate George Kittle, who then galloped 60 yards for a touch down.

That was thrilling.

Sporting a human-wingsuit, Jeff Corlis dove off a 12,000 foot mountain and expertly threaded the needle known as “The Crack” in the Swiss Alps.

That was exhilarating.

Unknown to many, threading the needle is also being attempted in the high stakes game of global finance.

Leaders at the world’s central banks are all trying to steer their domestic economies through a small opening while avoiding the pitfalls created by a lifetime of excessive borrowing and ill-fated policy responses.

In the minds of these financial maestros, they have the tools, the doctorate degrees and the blessings of governments to thread the financial needle.

In an effort to resolve any financial crisis, the world’s central banks have always tried to thread the needle by changing interest rates and/or changing the amount of money in the system.

The central banks and their supporters all claim that only through their actions, was a serious crisis resolved allowing everyone to live happily thereafter.

What the central banks and their supporters do not tell you, is that the actions to save one crisis, have always sowed the seeds for the next crisis.

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The Crisis Is Spreading: China, Australia, Brazil, Canada, Sweden…

The Crisis Is Spreading: China, Australia, Brazil, Canada, Sweden…

Earlier today, we posted an excerpt from IceCap Asset Management’s latest letter to investors focusing on the farce that is the Greek bailout #3, which can be summarized simply by the following table…

… and Keith Dicker’s assessment which was that “for Greece, it’s mathematically impossible to repay its debt” and that the Greek “economy continues to plummet to deeper depths and is now -33% less than where it was in 2008.”

But the truth is that for all the endless drama, Dicker continues, “the Greek debt crisis isn’t THE crisis. Rather it is simply a symptom of a much larger global debt crisis.”

The problem is that the “larger global debt crisis” is finally metastasizing and spreading to more places, all of which are large enough that they cannot be simply swept under the rug, like Greece.

* * *

IceCap’s Keith Dicker continues:

We’ve written before that governments all around the world have borrowed too much money and the weight of these debts are choking economic growth.

And to make matters worse – these very same governments and their central banks have implemented various plans that have only made matters worse.

Our view has not changed – the global debt crisis has escalated to a point where the government bond bubble has inflated itself to become the mother of all bubbles. It’s going to burst, and when it does it wont be pretty.

Further evidence to support our view is as follows:

Canada – the collapse in oil and commodity markets has pushed the country into recession and the Canadian Dollar to decline to levels lower than that reached during the 2008 crisis.

Oil dependent provinces Alberta and Newfoundland remain in deep denial. Since everyone in these provinces have only ever experienced a booming oil market, many naively believe things will bounce back – and quickly.

Meanwhile, both Toronto and Vancouver housing markets also remain in denial as they continue to go gangbusters. Buyers today are likely buying at all-time highs.



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Olduvai IV: Courage
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Olduvai II: Exodus
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