Global Contagion of Bank Failures Coming…
The short-dollar carry trade tidalwave inversion vortex I wrote about in the Footnotes of my Get Ready for a World Currency blog is well underway— which contrary to popular beliefs will temporarily drive the USD dollar and the USA stock markets sky high while the rest of the world collapses into economic recession (and in Europe likely a Great Depression).
The Dollar – The Greatest Short Position Perhaps in History
This vortex and its timing was also discussed in the context of the recent DJIA/Bitcoin crash in my recent blog POSSIBLE SLINGSHOT BITCOIN CRASH AHEAD. This has also been discussed by myself especially in the Martin Armstrong thread under my numerous pseudonyms including the last CRED.me discussing why the global crisis is necessary and the role Bitcoin may play.
2019 - 2021 are likely to be very bad years for all countries except the USA. And after 2021, the USA is likely to also begin to politically and economically self-destruct (aka ideological suicide). Asia is likely to bottom 2020ish and begin climbing up while Europe falls into the economic and political abyss. Note there’s a bit of uncertainty on that timing, as we’re still observing to determine if the dollar and DJIA decline into a low for 2020, delaying and extending the short-dollar vortex, but I’m leaning towards that not being as likely an outcome.
I’m copying three recent Armstrong blogs here as follows to make sure his messages attains more exposure. I’m refusing any payouts (implying that you can upvote without diminishing/consuming your voting power) on this blog because this is being done as a public service.
Here’s the first one:
The Coming Banking Crisis & The End of Bailouts
Posted Feb 21, 2018 by Martin Armstrong
Behind the curtain, there is a growing concern about a serious banking crisis beginning once again in Europe. Many governments are talking about the crisis behind-the-curtain and we are now beginning to see steps that are being taken to end the TO-BIG-TO-FAIL policies that dominated the 2007-2009 Crash.
The United States is looking at a new radical bank rescue policy where the government is proposing to revise a central pillar of the idea of bailing out banks creating new financial regulation with a new Chapter 14 bankruptcy procedure. They are looking at eliminating the risk of taxpayers’ costs to bail out banks. They are investigating the means for an orderly resolution so that the taxpayers do not have to bail out the banks. This development is causing some concern among the high-flying Wall Street banks, for if that is the case, then another crisis as 2007-2009 will result in even Goldman Sachs closing. The proposal looks to shift the burden to the shareholders and creditors of that bank. This means depositors who are thus creditors.
In Australia, we see similar legislation being proposed. This is the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017. This also authorizes bail-ins bringing an end to the bailout.
And here’s the second one:
Rising Interest Rates
Posted Feb 22, 2018 by Martin Armstrong
While the stock market crashed as the pundit looked in their bag to try to come up with an excuse, they blamed rising inflation and interest rates. Yet, nobody is really paying attention to the underlying trend. The cost of carrying debt has been rising gradually and there are noticeable measurable impacts that the pundits are of course oblivious to since they have to explain every day’s movements and not the real trend.
Already, the 10-year rate is piercing above the 2.6% area. There is an impact on the currency once people begin to comprehend the trend. The 10-year German bond rate is 0.70%, and this has been maintained by the ECB buying 40% of European government debt to no avail for nearly 10 years.
The real crisis comes when they realize that the ECB will not be there to buy government debt. The bidders will demand a higher yield so rates will rise very rapidly.
Meanwhile, the Fed will pursue higher interest rates as they need to be normalized to help pensions funds that are rapidly collapsing. This idea of a lower dollar will raise the price of imports and with tariffs, inflation in consumer products will rise.
Mueller is still not ending his investigation [he’s on a politically motivated witch hunt]. Why should he? He would have to go get a real job in the private sector. Keep the investigation alive to pay the light bills. He shows no sign of embracing unemployment. His pretend indictment is dancing between raindrops, indicting people in Russia knowingly there will never be a trial. We cannot count him out yet as a factor that will undermine the economic confidence.
So we stand at the threshold of rising rates that will then feed into the market and create a bid for the dollar it appears after March.
Here’s the third one:
India Enters the Sovereign Debt Crisis
Posted Feb 22, 2018 by Martin Armstrong
I have warned continually that the Sovereign Debt Crisis will unfold not so much by people selling government debt, but by the lack of people buying new debt. The greatest peril is when there is NO BID for the new issues because all governments are operating a PONZI scheme. The sell new debt to pay off maturing debt. Currently, holders of Indian government debt have been dumping 4.7 billion rupees ($73 million) of government bonds on average every day this year, according to data from the Clearing Corp. of India. Last year, their net daily sales totaled 368 million rupees.
The Sovereign Debt Crisis emerges when the government is unable to raise enough cash to pay off the maturing debt. India has crossed that threshold so as we have warned, the Sovereign Debt Crisis will begin from outside the USA and spread to the core. This is how all Empires, nations, and city-states collapse.