Tag: markets

Humbled but undeterred- a reminder of the exceptionally dangerous current financial environment

Humbled but undeterred- a reminder of the exceptionally dangerous current financial environment

Since 2009, I’ve been so very, very wrong about how the markets would play out.  (I was wrong for about 6 years before THAT, until I wasn’t.  But being right didn’t last.  Anyways…)  But in the same way that we need to worry about climate change, even though many near and even intermediate term forecasts have been so off- and make no mistake, they have been- the core reasons why I jumped up and down about the markets all those years has only gotten worse, and that’s not even counting what’s going on with our current President.  Maybe it will, somehow, someway, keep going up for a while longer.  I honestly don’t know, and I came to terms with that a few years back.  But my beliefs that trouble is ahead at SOME point have never been stronger.
You don’t have to take my word for it, though, because I’m not alone.  There are still TWO of us roaming the earth!  Doug Noland is a guy I used to read regularly, back at the turn of the century.  He’s one of the few so-called “permabears” remaining.  He is an even rarer breed among those who can acknowledge that things haven’t played out the way that was expected, and yet still hold onto his beliefs.  I hadn’t read him in years, but I checked out his webpage, just to see what he had to say.  His posts are REALLY long, so I cut and pasted the most relevant part.  If you want to read the whole thing, the link is included below.

Happy trading, and check your 401K before they wreck your 401K.  Be careful out there….

“When I began posting the CBB almost twenty years ago, my focus was on “money,” Credit and the U.S. boom. I didn’t anticipate geopolitical developments would some day play a role in my analysis. But I also never contemplated a global Bubble of today’s dimensions and characteristics.

I never imagined how an explosion of government debt and central bank Credit would be used so recklessly to inflate intertwined Bubbles spanning the globe. Never did I contemplate how this new age global “system” (already highly unstable two decades ago) would be nurtured, backstopped and resuscitated into today’s monstrosity. I never could have envisioned how the U.S. would run huge Current Account Deficits for another 20 years and still maintain such command over a dollar-based global financial apparatus. Who would have believed a global financial arms race was even possible – especially amidst such escalating animosity and hostility?

This is a strange period. It’s strange here at home – in society, in politics and in the markets. It is strange globally. The unprecedented nature of what we see at home, abroad and in the markets provides a lot of leeway with interpretation and analysis. Somehow, there’s a dominant contingent that believes the U.S. is on the right course – that the economic boom will accelerate, markets will, as they always do, continue to rise. The future is bright, all the polarization and social angst notwithstanding. Markets offer unassailable confirmation.

It would be great if the optimists were right. But this was a week that corroborated a much darker interpretation of developments. A decade of unrelenting easy “money” and booming finance has masked a metastasis of festering issues – financial, economic, social and geopolitical. And we’re now only a more general bursting of the global financial Bubble away from having to simultaneously face a bevy of very serious issues. As they tend to do, developments can seem to move at glacial pace – and then, rather suddenly, they can be more akin to lava.

As I have posited repeatedly and expounded in more detail last week, the global Bubble has been pierced at the “periphery.” I also believe the backdrop is now conducive to contagion at the “periphery” (finally) gravitating toward the “core.” The Turkey-induced risk aversion that erupted this week in European equities (bank shares!) is an important escalation in “Periphery to Core Crisis Dynamics.” “Risk off” is gaining a firm foothold, and global financial conditions now tighten by the week. Market pundits expect cooler heads in Ankara and Washington to prevail over the weekend. If not, it could intensify what was already a particularly long and hot summer. ”

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