{"id":30520,"date":"2018-02-05T06:54:28","date_gmt":"2018-02-05T11:54:28","guid":{"rendered":"http:\/\/olduvai.ca\/?p=30520"},"modified":"2018-02-05T06:54:28","modified_gmt":"2018-02-05T11:54:28","slug":"carmot-capital-the-next-crisis-wont-be-a-flash-crash-it-will-be-a-flash-flood","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=30520","title":{"rendered":"Carmot Capital: “The Next Crisis Won’t Be A Flash Crash; It Will Be A Flash Flood”"},"content":{"rendered":"
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Carmot Capital: “The Next Crisis Won’t Be A Flash Crash; It Will Be A Flash Flood”<\/span><\/a><\/h3>\n<\/div>\n
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THE STRAIGHT FLUSH CRASH<\/strong><\/p>\n

AN ILLUSION OF SIMPLICITY, AN ENTANGLEMENT OF COMPLEXITY<\/em><\/p>\n

Lately, there has been talk of so-called \u201celevated\u201d markets. Equity markets, real estate markets and bond markets are indeed reaching new highs regularly. But how long will this last? Can it last indefinitely? Or as is often said, \u201cIt\u2019s different this time,\u201d; is it really? We posit that it is not different this time. In fact, there are very real parallels that should concern every investor. What could catalyze the next global financial crisis (\u201cGFC II\u201d)? We suggest that it won\u2019t be a \u201cFlash Crash.\u201d Instead it will be a flash flood that could be caused by very real systemic risk. In other words, the system will flush itself of the market detritus accumulated over the last 8-9 years. We are calling it The Straight Flush Crash. This paper will explain why.<\/p>\n

For anyone that has studied the sequence of events leading up to the Global Financial Crisis (\u201cGFC\u201d) of 2008-09, it would not be hard to put together the shape of the new crisis. <\/strong>The first GFC began with the New Century Financial bankruptcy that caused the first market hiccup on February 27, 2007 (when the VIX indicator jumped a record 60% in one day) and escalated to Bear Stearns, to Lehman Brothers, then to the whole GFC debacle. In our opinion, the market blip on August 24, 2015 (affectionately known as the ETF Flash Crash) was the first indication of the shape of things to come. <\/strong>During each crisis, a flashpoint has ignited the existing structure, which then toppled and in turn caused enormous losses for investors. For example, in the GFC of 2008-09, subprime lending was a small fraction of lending which ignited the whole structured finance pyramid and caused the liquidity crisis that bankrupted multiple banks.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Carmot Capital: “The Next Crisis Won’t Be A Flash Crash; It Will Be A Flash Flood” THE STRAIGHT FLUSH CRASH AN ILLUSION OF SIMPLICITY, AN ENTANGLEMENT OF COMPLEXITY Lately, there has been talk of so-called \u201celevated\u201d markets. Equity markets, real estate markets and bond markets are indeed reaching new highs regularly. But how long will […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[8,10661,18347,154,18345,1450,2240,18348,5415,501,18346,4318],"class_list":["post-30520","post","type-post","status-publish","format-standard","hentry","category-economics","tag-8","tag-bear-stearns","tag-carmot-capital","tag-complexity","tag-dr-george-sokoloff","tag-equity-markets","tag-global-financial-crisis","tag-incline-investment-management","tag-lehman-brothers","tag-market-crash","tag-ted-parkhill","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30520","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=30520"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30520\/revisions"}],"predecessor-version":[{"id":30521,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/30520\/revisions\/30521"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=30520"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=30520"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=30520"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}