Rising Rates And The Coming Systemic Reset

By Graham Summers – Re-Blogged From http://www.Gold-Eagle.com

Remember how the Fed, ECB and others all claimed ZIRP and QE were about generating economic growth, making mortgages more affordable, and helping consumers?

Well, that was a gigantic lie. The truth is that every major policy employed by Central Banks since 2008 have been about one thing…

Maintaining the bond bubble.

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Sovereign Debt – What Could Go Wrong?

By GE Christenson – Re-Blogged From http://www.Gold-Eagle.com

It has been reported that about $10 Trillion of sovereign debt “yields” negative interest. Assume total global sovereign debt is about $60 Trillion.

Therefore, about one-sixth of all sovereign debt has negative interest rates. This brings to mind a few questions.

  1. Do negative interest rates sound absurd, even insane?
  2. Would bankers and central bankers in 2012 have believed that interest rates could be pushed so low they actually went negative?
  3. Does anyone see a problem with negative interest rates?

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Real Estate Bubble Part II

By Michael Pento – Re-Blogged From http://www.PentoPort.com

It shouldn’t be hard to understand that nearly 90 months of ZIRP has regenerated the equity and real estate bubbles that first pushed the global economy off a cliff back in 2007. In fact, the Fed’s unprecedented foray with interest rate manipulation has caused these assets to become far more detached from underlying fundamentals than they were prior to the start of the Great Recession.

The prima facie evidence for the stock market bubble can be found in the near record valuation of the S&P500 in relation to GDP and in its median PE multiple. But perhaps the best metric to illustrate this overvaluation of equities is the current 1.8 Price to Sales ratio of the S&P. This is the highest ratio exhibited outside of the Tech Bubble…and is especially absurd given 5 quarters in a row of falling revenue.

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True State Of The Financial System

By Graham Summers – Re-Blogged From http://www.Gold-Eagle.com

For six years the world has operated under a complete delusion that Central Banks somehow fixed the 2008 Crisis.

All of the arguments claiming this defied common sense. A 5th grader would tell you that you cannot solve a debt problem by issuing more debt. If the below chart was a problem BEFORE 2008… there is no way that things are better now. After all, we’ve just added another $10 trillion in debt to the US system.

Similarly, anyone with a functioning brain could tell you that a bunch of academics with no real-world experience, none of whom have ever started a business or created a single job can’t “save” the economy.

federal reserve

However, there is an AWFUL lot of money at stake in believing these lies. So the media and the banks and the politicians were happy to promote them. Indeed, one could very easily argue that nearly all of the wealth and power held by those at the top of the economy stem from this fiction.

So it’s little surprise that no one would admit the facts: that the Fed and other Central Banks not only don’t have a clue how to fix the problem, but that they actually have almost no incentive to do so.

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List of IMF and BIS Systemic Risk Warnings

Re-Blogged From http://lonestarwhitehouse.blogspot.com

Over the past year we have documented numerous warnings which the IMF and the Bank for International Settlements (BIS) have issued in regards to risks that exist to the stability of the global financial system. Some of the warnings come directly from IMF and BIS officials and publications. One comes from a speech by BIS General Manager Jaime Caruana. Others come from articles appearing on the IMF Direct blog. One is a link to former IMF Peter Doyle who says despite issuing risk warnings, the IMF has failed in providing early warnings for systemic crisis.

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Investment Legends Warn Of A Systemic Event

By Graham Summers – Re-Blogged From http://www.Gold-Eagle.com

More and more insiders are warning of a potential systemic event. The first sign of real trouble concerned a number of investment legends choosing to close shop and return investors’ capital.

The first real titan to bow out was Stanley Druckenmiller. Druckenmiller maintained average annual gains of nearly 30% for 30 years. He is arguably one of if not the greatest investor of the last three decades.  In 2010, he chose to close shop, foregoing billions in management fees.

Druckenmiller was not alone. In 2011, investment legend Carl Icahn closed his hedge fund to outside investors. Again, here was an investment legend who could lock in billions in investment management fees choosing to close up shop.  He has since stated he is “extremely worried” about stocks.

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How To Identify A Classic Bubble

By Michael Pento – Re-Blogged From http://www.Silver-Phoenix500.com

One of the most ironic and fascinating characteristics about an asset bubble is that central banks claim they can’t recognize one until after it bursts. And Wall Street apologists tend to ignore the manifestation of bubbles because the profit stream is just too difficult to surrender.

The excuses for piling money into a particular asset class and sending prices several standard deviations above normal are made to seem rational at the time: Housing prices have never gone down on a national basis and people have to live somewhere, the internet will replace all brick and mortar stores, and perhaps the classic example is that variegated tulips are so rare they should be treated like gold.

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