Global Economic Crash has become Unavoidable
The Bank for International Settlements (BIS), describes the current situation at the world´s financial markets as worse than before the crash of Lehmann Brothers. In its quarterly report, the BIS described the situation as critical and directly mentioned the possible end of the deluge of paper money. Experts imply the risk of a sudden, overnight financial crash in 2014 – 2015.
Christof Lehmann (nsnbc) : The realistically pessimistic BIS report could be one of the motivating factors behind the decision of the U.S. Federal Reserve Bank to continue its unlimited flood of new banknotes as if there was no tomorrow.
Experts warn, that precisely that is likely to be the case. No tomorrow. The central banks are about to throw the towel into the ring. Experts agree, that the Federal Reserve and European Central Banks have lost control over the deluge of money and debt.
The problem with quantitative easing has been taken to such an extreme that the Deputy Governor of China´s Central Bank, Yi Gang, earlier this year warned that China would like to avoid a global currency war but that it is prepared for the eventuality. The problem with the Western economies is that the illusion of apparent liquidity only lasts until someone checks the books or calls the hand. All set, game over. Creating more debt does not create wealth nor liquidity.
It is not unlikely that Ben Bernanke and the Federal Reserve have decided to continue as if nothing could rock the boat, simply because the reality of the situation is, at least if one gives credence to the BIS report, near catastrophic.
So why worry if the sh.. paper is hitting the fan anyway ? Again, if one is to give credence to the experts at the BIS – and applies the most elementary rules of logic – speeding up the printing press and elevating the helicopter to even greater heights to spread the sh.. paper does not help a thing. Besides, the world is suffering from deforestation already.
The trouble for Ben Bernanke, the Federal Reserve, and not to forget, the European Central Bank alike is, that it is impossible to get the paste back into the tube while stepping on the tube. Reading the BIS quarterly report it becomes evident, that even the experts at the BIS have no idea how to get the paste back into the tube again, and that, even if Ben et al stopped jogging their feet on the tube.
One problem for the experts at the BIS is, that they are bound by certain house rules and regulations and understandably, like most others in their position would, they don´t really want to lose a great job and miss out on the golden handshake at the end, by really saying things as open and direct as things could and should be said. With something as un-trivial as a global economic crash being expected within 4 to 15 months, the urge to make unequivocal statements is understandable.
Therefore, in situations like the one we are in at the moment, it may be a really good idea to listen to someone who already has gotten his golden handshake from the BIS and who, so to speak, has nothing more to lose. One such expert is William White, the former BIS Chief Economist, and White announces nothing less than the arrival of the great crash. No, you don´t need to wipe your spectacles, he said … ….. ….. .
THE GREAT CRASH ! White warns, as unequivocally as only a “former” BIS chief economist can warn us, that we are headed for a Global Economic Crash. The global credit bubble is, according to White, about to burst. White points towards the fact, that the percentage of leveraged loans or extreme risk loans was at the all times high of 45 percent in the middle of 2013.
That is 10 percentage points higher than at the onset of the financial crisis in 2007, one year before the Lehmann Brothers crash. The situation now is worse than prior to the Lehmann Brothers crash, said White to the British newspaper The Telegraph. White points out that:
“All the previous imbalances are still there. Total public and private debt levels are 30pc higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets that are ending in a boom-bust cycle”.
The trouble is, according to White, that the US financial policy has become unpredictable, and that it is an illusion to believe that a market under stress would retain its liquidity.
White´s statements are not only corroborated by the BIS report. They are also corroborated by the fact that we are experiencing a de facto backwardation of the gold market. Nobody really wants to speak too openly about it in order to scratch as much gold in at an already high-priced “bargain” as possible, but it has become almost impossible to buy any larger amounts of gold. That is, especially if one also wants the gold delivered. The fact that the USA denied Germany an audit of the German gold reserves in the USA should be a pretty good indicator for how difficult it is to buy gold if one wants the commodity delivered.
Nobody wants to sell at almost any price. The moment that this situation turns permanent the, world will see the sudden end to global trade and the global economies. The crash may come, or most probably will come overnight, some time in 2014 or 2015.
And no, the City of London won´t be a safe haven. Not this time around and neither will the Central Bank of England if one gives credence to the experts of the BIS. The BIS openly criticizes the central banks insufficient measures, mentioning explicitly the Governor of the Bank of England, Mark Carney and his colleague from the European Central Bank, ECB Chief Mario Draghi.
Claudio Bori, who is responsible for Research and Development at the BIS said, that forwarding guidance as a means of defining long term interest rates for keeping national debt low is nothing but rhetoric and bound to fail. Borio stressed, that there are limits for the extent, to which good communication alone can control the markets, saying that these limits are all too obvious.
The “guidance ” of the European central Bank is the announcement to buy unending amounts of government bonds. The Federal Reserve Bank and the Bank of England have tied their “measures” to unemployment rates. How revolting and which revolt this policy may cause may be understood when one realizes, that Pope Francis deviated from his written speech to unemployed Sardinians, improvised freely for 20 minutes, and said that the a global economic system could no longer be based on a god called money. Evil tongues might add that the Vatican most likely has a good stock of gold and investments in the military industrial complex. In times of crisis, war is traditionally one of the best investments, even for The Holy Sea.
It is also noteworthy that the BIS has already in 2012/2013 described the Credibility of the industrialized nations as desolate, and advised to reduce their debt as soon as possible.
In 2012 the World Bank´s Chief Economist, Kaushik Basu warned that a wall of debt is coming at us. It seems that that wall will hit the world financial markets, and that it will hit hard. Looking at the behavior of the likes of Ben Bernanke, which unless it is directly and willfully destructive, cannot be described as other than avoidant. The Newtonian laws come to mind. After all, it really does not matter whether one is hit by the wall or whether one is running straight into it with a smile on the face, like helicopter Ben Bernanke.
The Word Bank´s Chief Economist has also warned that in 2014 and 2015, one has to expect further, major tremors in the world economy and the world financial systems. Statements from World Bank insiders, like World Bank whistleblower Karen Hudes, strongly indicate that these major tremors may even come before 2014 and 2015, because a major cartel or super entity, as Hudes describes it, denies to address corruption within the Bretton Woods system and its institutions. As a consequence, confidence in the US dollar is waning even more than it does due to Bernanke running the dollar into the wall with a smile on his face.
Although Karen Hudes seems to have an unshakable optimism and confidence in the Bretton Woods system`s ability to right itself, a global currency war and the end of the Bretton Woods system are foreseeable for all who can see the writing on the proverbial wall of debt that will hit the world economies. The gold market has already been unsettled by the looming currency war.
The World Bank Chief Economist may in fact be very close to having forecast when the global financial collapse will set in, when he spoke about the major tremors which must be expected in 2014 and 2015.
The hypothesis that the world will see an end to the Bretton Woods system and the dollar as exchange currency – alongside with the unavoidable financial crash – in 2014 or 2015 – is strongly supported by a recent development that happened at the sidelines of the G20 in St. Petersburg, Russia.
During the G20, the BRICS members Brazil, Russia, India, China and South Africa decided to capitalize the planned BRICS Development Bank with 100 billion US dollar and for the bank to begin operations already in 2014 – 2015.
When exactly the crash will happen is anybody´s guess, but the global financial collapse has, according to the majority of experts become unavoidable. One day in 2014 or 2015, and most likely close to a date when even Western mainstream media begin reporting about the BRICS Development Bank opening for operations would be a reasonable forecast.