Today one of the greats in the business warned King World News that the world is now on the brink as we begin 2015. He also said 2015 will be a historic year of major trend changes that will have an incredible impact not only people but also major markets and economies around the globe.
Egon von Greyerz: “Eric, as we begin 2015 I am looking at a world full of dichotomies. Risk is greater than ever and the world is now borrowing more than ever, but even at zero interest rates the world cannot afford the debt. And record debt of roughly $300 trillion does not rhyme with zero interest rates….
"Depositors are getting no reward for the massive risks they are taking. Bearing in mind that most of the $300 trillion can never be repaid with real money, rates today should be 10 percent or even 20 percent. Of course they will be within the next few years.
Japan is totally bankrupt. Lately we’ve seen wages crashing and the savings rate has become negative. Take my word for it, Japan will collapse within the next few years.
Ghost Cities And A Global Slowdown
Moving on to China, I am extremely concerned about their financial system. In more than 50 cities buildings are less than 50 percent occupied and many are totally empty. This is the ultimate malinvestement and will lead to massive writeoffs in coming years. That will put the whole Chinese banking and shadow banking system in jeopardy.
And what is happening in the oil market is not just oversupply, it is lower consumption. This is the main reason the oil price is falling. Other commodities are also crashing. Iron-ore plunged nearly 50 percent this year. The same thing is true for steel.
Remember that China has been the big consumer of all these commodities in recent years. China’s steel industry, for example, grew 12-times in size since the mid-1990s to over 1 billion tons. That is 10-times the size of the U.S. steel industry.
As the investment boom in China slows down and eventually comes to a halt, it will have an enormous impact not just on China, but also on commodities producers worldwide, especially in emerging markets. The implication of this slowdown will be extraordinary for the world economy.
And in Europe the problems are just getting worse. The Greek economy is collapsing and stocks are now at a 2-year low. A radical party is poised to takeover in Greece that will seriously challenge the EU system. This is the world we are living in today in a nutshell.
Economic And Social Collapse
Everyone seems to want the state to provide but is not willing to pay for it. This is why we will eventually have economic collapse around the world, followed by social collapse. This will radically alter the world as we know it.
Many global stock markets are ignoring this and in the U.S. we are very close to all-time highs. So we have two worlds, where the small minority can benefit from printed money, and the majority who are being burdened with ever-greater debt. And since this is the end of at least a 100-year era, stock markets could have an explosion to higher levels.
But the risk are now enormous. A recent report on the S&P 500 profits noted they are 86 percent higher than they would be without the accounting gimmicks currently being utilized. That’s the world we live in today, Eric, where virtually all figures are pure propaganda, and most markets are rigged, particularly the gold and silver markets.
Talking about gold, Deutsche Bank is now closing vaults in Singapore with 200 tons capacity, and in London with 1,500 tons capacity. They have ceased gold trading and there is no need for big vaults, particularly in London because all the gold has already gone from LBMA banks to China and other countries in the East.
But anyone who doesn’t own gold and who wants to preserve their wealth should buy now because we will most likely see the previous all-time high of $1,920 assaulted in 2015. We are continuing to see short-term volatility that is totally irrelevant in a manipulated market. By the end of 2015 we will see a very different gold price because the manipulators will have lost control.
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