Today the man who remarkably predicted the collapse of the euro against the Swiss franc warned King World News that worldwide markets are going to see total panic as the massive derivatives bubble implodes!
Egon von Greyerz: "Eric, there are four people whose words and actions are considered to be critical for the world economy. I call them the three not-so-wise men and a lost woman….
"On the one hand Janet Yellen removed the word ‘patient,’ and on the other hand she then states that 'The Fed is not impatient.' Then she states that ‘This does not mean that the Fed will not raise rates in June,’ but then she said on the other hand that ‘We can’t rule it out.’ Eric, you can’t make this stuff up. This is the most whimsical and confused Fed statement(s) I’ve ever read.
Fed Then Asks JP Morgan Or Goldman Sachs What To Do
This just goes to prove what I’ve always said, ‘That the Fed hasn’t got a clue.’ They have never been able to predict anything and they are consistently wrong in their forecasts and views. All they do is react to events and even then they must ask JP Morgan or Goldman what to do.
Clearly the U.S. economy would be a lot stronger and a lot more stable if there was no Fed, and the U.S. instead had a free market which would not be affected by intervention or manipulation. But of course the Fed is not alone. We have the three not-so-wise men in Japan, China and Europe. They are also presiding over major economies based on debt, deficits and money printing.
No Way To Save A Bankrupt World
Coming back to the Fed, I find it hard to understand why the market pays so much attention to every single word of their statement. We know that the Fed can’t change anything. All their statement did was create short-term volatility. The destiny of the U.S. and the world economy has already been set and no central bank can save a bankrupt world.
Also, the Fed cannot and will not raise interest rates. We have a world which has seen 24 interest rate reductions in 2015. Don’t believe that a massively indebted U.S. economy could go against this trend. First, the U.S. stock market bubble would burst. Second, the U.S. dollar would continue to strengthen. Third, the economy could not cope with higher rates on its debt.
50 Million In U.S. On Food Stamps
The U.S. has now had almost 7 years of zero rates, but in spite of that the real economy is not improving. 50 million people are on food stamps — the modern equivalent of breadlines. And almost every single economic indicator is either well below expectations or negative, such as housing, retail sales, industrial production, etc.
This weakening trend points to a negative GDP in Q1. And the stock market as a percentage of GDP is at a 100 year high, with the exception of the 1999 – 2000 period. That is a very important bubble indicator. But the biggest bubble of them all is of course the $100 trillion bond market and the $500 trillion in derivatives linked to the bond market.
Worldwide Markets To See Total Panic As Massive Derivatives Bubble Implodes!
Eric, it will not be central banks that raise interest rates, instead it will be bond investors who realize the bond issuers can never repay the bonds with real money. And as bondholders start liquidating their bonds, markets will panic and the derivatives bubble will implode.
I expect interest rates to eventually be substantially higher than the 15 – 20 percent we saw in the late 1970s and early 1980s. Just look at a couple of borrowers who are in trouble already. It is now expected that Fannie Mae and Freddie Mac will require a new bailout. And the debt linked from oil and gas has gone from one trillion dollars in 2006 to $2.5 trillion today. With oil prices at $47.50, a major part of that is underwater.
Greek Drama Continues
Over in Europe the Greek saga continues. Greece is bankrupt and does not have enough funds to pay salaries or expenses. So the Greek government is raiding state pensions and utilities. The market is now starting to prepare for a Greek default, which would involve a loss of 320 billion euros. The problem is that it wouldn’t stop there. it would immediately spread to Spain, Italy, Portugal, France, etc. This why the troika — the ECB, EU and the IMF — will try to prevent a Greek exit at all costs but I doubt they will succeed.
Turning to the gold and silver markets, it’s too early to tell if this was the conclusive turn in these market. Regardless, gold and silver will see substantially higher levels in 2015 and they should be seen as bargains at their current prices.”
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