Posted on 01/12/2015 7:29:48 PM PST by blam
January 12, 2015
Michael Pento
Politicians and central bankers are desperately trying to convince investors that the economy has returned to what they deem as a “pre-crisis normality”. But the truth is the global economy has never been in a more fragile condition. In an example of just how precarious the Fed-engineered asset bubbles have become, all of the 2014 U.S. equity market gains were wiped out by just a few really bad trading days in October.
The Dow Jones, S&P 500 and the NADAQ averages were all negative after the first 10 months of last year. Investors were better off sitting on the sidelines in cash, waiting for the better entry point that appeared in mid-October. The strength of markets and the economy is completely illusory.
Investors need to strategically allocate their portfolios for volatility like we've never seen before, because government manipulations of formerly-free markets have caused equities to repeatedly lose half their value. That’s what happened in 2000 and in 2008-’09. We are due for just such another crash in the very near future. The investing rollercoaster ride that results from the building and busting of asset bubbles is becoming more extreme as central bank intervention grows ever more intrusive.
We have now reached the point where central banks can never stop buying bonds because they cannot risk the normalization of interest rates. The best example of this is Japan. Allowing interest rates to mean revert would now cause nearly all of Japanese government revenue to be used for debt service. Once a market becomes aware that all of a nation’s revenue must be used to pay interest on current outstanding debt, it becomes a mathematical certainty that it must default on the principal. This condition has always led to a currency, bond, equity and economic crises.
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(Excerpt) Read more at marketoracle.co.uk ...
I still think there will be a general default — call it a Jubilee if you like — and a massive reset. The global financial system is a meaningless house of cards. It’s propped up because “whatever” and eventually it’s just going to crash.
When it does crash, just like GM, those bailed out will be parties preferred by the government, AKA, the donor class, including corporations.
I’m not anti-corporation. I’m anti-corporate-government alliances.
There is no separation of church/state. But. There OUGHT to be a separation of free market/state.
I heard the host of a mechanic show Saturday talking about how all but $6 billion loaned to GM has been paid back. He went on to say “That’s chickenfeed.” I thought “This guy needs to stick to fixing cars.” It never crosses his mind that the taxpayers gave money to a private company so they could pay pensions to the union. Idiots like this is why we’re going down the tubes.
With morals and ethics at all time lows, it is a culture of “stick it to the next guy” whenever possible. In the end someone has to lose.
"Though central banks are constantly claiming their policies are intended to spark "growth," their over-riding motivation is sustaining the colossal mountain of debt that is the foundation of the Status Quo's wealth and power. If interest rates rise, the debt can no longer be serviced without ballooning deficits (i.e. more borrowing just to pay the rising interest) or the extreme pain of budget cuts--cuts that will necessarily come of discretionary government spending or entitlements."
As I understand it when the crash happens the bailouts will have stopped working. The next thing will be a bail-in. It will be announced as a cyber attack, bank holiday or whatever they anounce it as and then take your savings, 401K, etc. Anything you have in a financial institution will be gone.
Probably a global devaluataion, tho I expect that the Fed would be made whole.
I agree. But you won’t be totally wiped out. The government will allow you to have a little. (a sudden lowering of FDIC insured amounts) Those that are politically connected will have moved their funds to safer locations, of course.
A Cypriot financial crisis.
Your scenarios and proposed outcomes seem highly plausible.
Crash-Cyberattack false flag occurs.
Panic ensues, DHS FEMA are ready and able.
IMF-FED-EU urge calm, talk of nat’l debt jubilees worldwide.
We’ll be told of the necessity for all to sacrifice, since we’re All in it together - bank acct confiscations (reinvestments) occur.
New cashless worldwide currency emerges, partially to eliminate cash based underground economy / black market.
Terrorism threats necessitate citizens accept a citizen ID “mark”.
Barrack, Clinton, Soros and similar ilk, smile on.
*okay, I know, that sounds like a cheesey Left Behind plot..
If inflation starts going up, then this guy was right!
If inflation eases, then this guy was right!
If inflation varies, then we're riding the roller coaster, and once again, this guy was right!
It is all set up to fail in 2016. The Free Money Jones industrial average cannot truly be at 17000, well a bit less now. We have nothing but government debt paying government debt. The movers and shakers set up a big 17000 rally and now they will take their ball and go home. At some point interest rates must rise again, then debt won’t be able to pay debt.
The democrats have played every card but the fatal one and there is NO way they will do that with a democrat president. I think Hillary would be the perfect 2016 president, they wouldn’t dream of playing that card yet.
Truth is, they are big wall street players.
If a republican wins buy lots and lots of food, cause they will play the death card. They played it back in the faux collapse by a bank run. We don’t have anyone who can stop their bank run, they have all the real money. The last crisis will look like a dry run compared to their next one.
And they will seize them. The legal framework to take them in an "emergency" has already been laid down.
Obama was so bold about it that he proposed a "MyIRA" for "every American" last February, and then started worked with the lawyers to make the seizure a done deal once he decides to accomplish it.
They will "invest" what you had in "bonds", and link EVERYTHING to your Social Security, any pension you may have, any annuity, Medicare, or your current health insurance.
They will have everyone by the short hairs.
That is sitting on top of a foundation of a QE house of cards.
I fully agree. And the day after it happens will be the first with blood in the street.
Yes Americans need to prepare for the Cyprus haircut. Coming to a Bank of America near you soon.
Precisely.
As some Christians say, things are not really falling apart, but falling together in God's plan.
Tht's the last big pot of ready assets. When the next crisis comes there will be some "mandate" to include guaranteed government debt as part of any portfolio. It will be a "one time" temporary measure that will never be rescinded but extended - just like an Illinois temporary income hike.
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