Economic Predictions for Summer 2016: The Epocalypse Keeps Crashing
by Knave Dave
Jun 28, 2016 1:35 AM
This article by David Haggith was first published on The Great Recession Blog.
Brexit — the second major landslide in the Year of the Epocalypse —
has bankers all over the world scrambling to pick up and prop up their
crumbled facades this week. This is one more jolt in the
developing global economic collapse that I predicted for 2016.
The ground of an entire nation just
dropped several feet. Aftershocks from a drop that size will be felt
frequently throughout the summer and to some extent for years to come.
As I’ve said before, US
politicians will find it increasingly difficult this year to keep
shoring up the US economy until the end of the election cycle. This
collapse just made things a lot worse for them. Brexits, Grexits and
other exits, oil defaults, job decay, manufacturing malaise and a host
of other planet-sized problems are piling up so fast that it will become
almost impossible to hold off collapse much longer as global problems
press in on the US and other nations.
Brexit — the second major landslide in the Year of the Epocalypse —
has bankers all over the world scrambling to pick up and prop up their
crumbled facades this week. This is one more jolt in the
developing global economic collapse that I predicted for 2016.
The ground of an entire nation just
dropped several feet. Aftershocks from a drop that size will be felt
frequently throughout the summer and to some extent for years to come.
As I’ve said before, US
politicians will find it increasingly difficult this year to keep
shoring up the US economy until the end of the election cycle. This
collapse just made things a lot worse for them. Brexits, Grexits and
other exits, oil defaults, job decay, manufacturing malaise and a host
of other planet-sized problems are piling up so fast that it will become
almost impossible to hold off collapse much longer as global problems
press in on the US and other nations.
Entire nations are now making for the exits
Near the start of 2016, I described the
anti-establishment forces that were shaping up to define the year ahead
and the impact those nationally divisive forces would have on the
world’s banking system this year:
The
resources of all nations and their central banks are just too depleted
to handle such a massive rupture of the global economy as we saw in
2008. Yet, this one is appearing that it could be far greater because it
is developing all over the world simultaneously. The
capacity of nations and their banks is fully taken up by huge monstrous
national debts and balance sheets that have swelled beyond anything
anyone would have imagined a decade ago.
At the same time, the people of all nations are fatigued from years of hearing about recession. In nations like Greece this is true at a level that is already explosive. If
a recession like the Great Recession happens now, it will deplete all
hopes because of all the talk of recovery that proved false after the
last recession. They will have scaled the mountain — or tried to — only
to find themselves shaken to the bottom again. Who would have faith in
the central bankers to save the economy this time when all their plans
to save it from the last recessionary period blew up in their faces?
Anger,
albeit late in coming, is showing itself in US elections this round in
the form of a movement in both parties away from the establishment. Who
believes, however, that newly elected officials could find a solution
once the central banks are proven to have failed? In moving away from
the establishment, Democrats are moving further left and Republicans
further right. There is little likelihood of agreement on a solution,
especially one profound enough to right the entire world. (“Hell Week for the Global Economy“)
Later in May, I focused on the
immigration tensions that were amplifying the anti-establishment
discontent in Europe and here at home:
We
don’t know what will happen with a Brexit or whether a Grexit will
raise its ugly head again or whether immigration tensions will
spontaneously combust in Europe … but I think the frying pan will
certainly be sizzling this summer to cook up the last of the market’s
bully beef for the bears to feast upon.
The increasingly scarce market bulls are dead cattle walking thanks to zombie economics. (“Zombie Economy Soon to Have its Zombie Epocalypse“)
In other words, I wouldn’t bet back
then on exactly what national breakaway would happen first in the EU,
but was certain national tensions would heat up to where Europe started
falling apart this summer, particularly over immigration tensions. The
falling apart began right on cue. One cannot always see what section of
land will give way first, but one can certainly see that so many pieces
are ready to give way that collapse is certain and imminent.
Near the start of 2016, I described the
anti-establishment forces that were shaping up to define the year ahead
and the impact those nationally divisive forces would have on the
world’s banking system this year:
The resources of all nations and their central banks are just too depleted to handle such a massive rupture of the global economy as we saw in 2008. Yet, this one is appearing that it could be far greater because it is developing all over the world simultaneously. The capacity of nations and their banks is fully taken up by huge monstrous national debts and balance sheets that have swelled beyond anything anyone would have imagined a decade ago.
At the same time, the people of all nations are fatigued from years of hearing about recession. In nations like Greece this is true at a level that is already explosive. If a recession like the Great Recession happens now, it will deplete all hopes because of all the talk of recovery that proved false after the last recession. They will have scaled the mountain — or tried to — only to find themselves shaken to the bottom again. Who would have faith in the central bankers to save the economy this time when all their plans to save it from the last recessionary period blew up in their faces?
Anger, albeit late in coming, is showing itself in US elections this round in the form of a movement in both parties away from the establishment. Who believes, however, that newly elected officials could find a solution once the central banks are proven to have failed? In moving away from the establishment, Democrats are moving further left and Republicans further right. There is little likelihood of agreement on a solution, especially one profound enough to right the entire world. (“Hell Week for the Global Economy“)
Later in May, I focused on the
immigration tensions that were amplifying the anti-establishment
discontent in Europe and here at home:
We don’t know what will happen with a Brexit or whether a Grexit will raise its ugly head again or whether immigration tensions will spontaneously combust in Europe … but I think the frying pan will certainly be sizzling this summer to cook up the last of the market’s bully beef for the bears to feast upon.
The increasingly scarce market bulls are dead cattle walking thanks to zombie economics. (“Zombie Economy Soon to Have its Zombie Epocalypse“)
In other words, I wouldn’t bet back
then on exactly what national breakaway would happen first in the EU,
but was certain national tensions would heat up to where Europe started
falling apart this summer, particularly over immigration tensions. The
falling apart began right on cue. One cannot always see what section of
land will give way first, but one can certainly see that so many pieces
are ready to give way that collapse is certain and imminent.
Banks and bankers are trembling all over the world
To sum up where we are now now, I’ll
turn to former Fed Chair Allan Greenspan who said that the Brexit event
“may be just the tip of the iceberg” for Europe’s problems. When asked
what he meant by that, he responded with the following:
This is the worst period I recall since I’ve been in public service. There’s nothing like it, including the crisis —
remember October 19th, 1987, when the Dow went down by a record amount
23 percent? That I thought was the bottom of all potential problems. This has a corrosive effect that will not go away….
This problem that’s causing the British problem is far more widespread. Fundamentally,
what we are looking at is a massive slowing in the rate of real of
incomes across the whole European spectrum…. Real incomes are not going
anywhere, and that is creating a serious political problem, which is not
easy to resolve….
I
think the euro currency is the immediate problem… There’s this whole
movement toward European political integration…. The euro area was a
major step in that direction, and it’s failing. Greece is in real
serious trouble. It is not going to continue in the euro very much
longer, irrespective of what’s going on currently. (CNBC)
While Greenspan was one of the
absent-minded architects of the Great Recession with his rabid
debt-expansion policies, I quote him because he is speaking against his
own longtime centrist bias when he claims that Grexit is certain for its
own reasons and that the euro “is failing.”
In other words, if even Greenspan says Europe is falling apart and the euro “is failing,”
it must be bad. He’s a centrist saying the center is not holding. It’s
not the nature of a central banker — even a former one — to be alarmist
by saying an entire economic zone run by his comrades, which he has
applauded, is now collapsing into chaos.
Don Quijones, an editor of Wolf Street, adds a note to Greenspan’s candid observations:
Another
serious problem (on which Greenspan was somewhat less forthcoming) is
Europe’s swelling ranks of heavily leveraged, scantily capitalized,
bad-loan bedeviled, zombified banks. It was they whose stocks plunged
the most [on Friday]….
The prophets of
Project Fear reaped what they’d sown, as financial carnage spread across
global markets on news that a slim majority of British voters had done
the unthinkable by drowning out the relentless doomsaying and voting to
leave the European Union. The pound sterling plunged 8% against the
dollar, to $1.37, its lowest level in three decades. The euro fell
1.93%, in itself a huge one-day move for a major currency. UK stocks
surrendered over 3% of their value. But that was nothing compared to the
havoc unleashed in other European stock markets….
In Spain and
Italy: the IBEX 35 plummeted 12.3% and the FTSE MIB 12.5%. It was their
worst day on record. The UK economy may be in for a hellishly bumpy ride
in the months and years ahead, but the fact that London’s FTSE 100 was
Europe’s least worst performing stock market on this day of all days
suggests that Europe’s biggest financial risks probably lie elsewhere.
And that is in euro land, in particular on its southern flank….
The shares of
Italy’s biggest bank (and global systemically important institution),
Unicredit, slid more than 23% on Friday. They are down 59% since
January. The stock of Banco Populare, Italy’s fifth biggest bank, also
lost 23% on Friday and is down over 80% since the beginning of this
year. The fourth biggest institution, the perpetually failing Banca
Monte dei Paschi di Siena whose loss-making derivatives bets were made
under Mario Draghi’s watch as Bank of Italy’s governor, fell by 16.5%. (Wolf Street)
Spain’s banks suffered as badly as
Italy’s, with Bankia shares losing 20% of their value. Spain’s largest
bank, Santander, already suffering heavy losses from its operations in
Brazil, also lost 20% of its value overnight, as did a third mega bank
in Spain, Sabadell. Expect to see more major bank bailouts in Europe.
In the UK, Barclay’s shares plunged
20.5%. HSBC dropped 9%, and the Royal Bank of Scotland fell off a cliff,
taking a 27.5% pounding.
Mood
in the restaurants and coffee shops in the high-rise banking hub of
Canary Wharf, home to JPMorgan, Citi , HSBC and Barclays, was sober and
contemplative, with job security fears rising to levels unseen since the
2008 financial crisis. Major investment banks have
already warned they could move thousands of jobs elsewhere if Britain
opts out of the EU, while the European Central Bank has signaled it
could force euro trading out of London, the world’s largest foreign
exchange market….
“We’ll have a crash and big layoffs,” a senior investment banker at a U.S. bank told Reuters….
“This is the biggest vote in my lifetime. Black Wednesday and the impact of Lehman Brothers collapsing – these other big events don’t even compare in magnitude to this,” said
Mark Boleat, Chairman of the City of London’s Policy and Resources
Committee…. “We are just beginning to think through what will have to
happen legally andit is massive, absolutely massive….”
“Leave’s
victory [Brexit’s victory] has delivered one of the biggest market
shocks of all time … Panic may not be too strong a word,” Joe Rundle, Head of Trading at ETX Capital said. (Newsmax)
Bankers are shaking in their hip waders as they congregate in a swamp full of alligators.
As individual bankers bemoaned what
they see as a crushing shock, central banks ran in for emergency
rescues. The Bank of England offered a quarter of a trillion pounds plus
substantial access to foreign currencies, promising additional measures
as required. The US Federal Reserve assured the entire world it was
standing by to supplement liquidity through its swap lines with global funding
markets. The ECB said it would provide additional liquidity to protect
euro stability, and the People’s Bank of China assured other nations it
would maintain a stable yuan (though on Monday, China weakened the yuan
by its most since the big sell-off last August). Even neutral
Switzerland ran to the rescue.
In
a rare move for a major central bank, the Swiss National Bank openly
intervened in currency markets to weaken the safe-haven franc, promising
to do even more if needed. (Newsmax)
To sum up where we are now now, I’ll
turn to former Fed Chair Allan Greenspan who said that the Brexit event
“may be just the tip of the iceberg” for Europe’s problems. When asked
what he meant by that, he responded with the following:
This is the worst period I recall since I’ve been in public service. There’s nothing like it, including the crisis — remember October 19th, 1987, when the Dow went down by a record amount 23 percent? That I thought was the bottom of all potential problems. This has a corrosive effect that will not go away….This problem that’s causing the British problem is far more widespread. Fundamentally, what we are looking at is a massive slowing in the rate of real of incomes across the whole European spectrum…. Real incomes are not going anywhere, and that is creating a serious political problem, which is not easy to resolve….
I think the euro currency is the immediate problem… There’s this whole movement toward European political integration…. The euro area was a major step in that direction, and it’s failing. Greece is in real serious trouble. It is not going to continue in the euro very much longer, irrespective of what’s going on currently. (CNBC)
While Greenspan was one of the
absent-minded architects of the Great Recession with his rabid
debt-expansion policies, I quote him because he is speaking against his
own longtime centrist bias when he claims that Grexit is certain for its
own reasons and that the euro “is failing.”
In other words, if even Greenspan says Europe is falling apart and the euro “is failing,”
it must be bad. He’s a centrist saying the center is not holding. It’s
not the nature of a central banker — even a former one — to be alarmist
by saying an entire economic zone run by his comrades, which he has
applauded, is now collapsing into chaos.
Don Quijones, an editor of Wolf Street, adds a note to Greenspan’s candid observations:
Another serious problem (on which Greenspan was somewhat less forthcoming) is Europe’s swelling ranks of heavily leveraged, scantily capitalized, bad-loan bedeviled, zombified banks. It was they whose stocks plunged the most [on Friday]….
The prophets of Project Fear reaped what they’d sown, as financial carnage spread across global markets on news that a slim majority of British voters had done the unthinkable by drowning out the relentless doomsaying and voting to leave the European Union. The pound sterling plunged 8% against the dollar, to $1.37, its lowest level in three decades. The euro fell 1.93%, in itself a huge one-day move for a major currency. UK stocks surrendered over 3% of their value. But that was nothing compared to the havoc unleashed in other European stock markets….
In Spain and Italy: the IBEX 35 plummeted 12.3% and the FTSE MIB 12.5%. It was their worst day on record. The UK economy may be in for a hellishly bumpy ride in the months and years ahead, but the fact that London’s FTSE 100 was Europe’s least worst performing stock market on this day of all days suggests that Europe’s biggest financial risks probably lie elsewhere. And that is in euro land, in particular on its southern flank….
The shares of Italy’s biggest bank (and global systemically important institution), Unicredit, slid more than 23% on Friday. They are down 59% since January. The stock of Banco Populare, Italy’s fifth biggest bank, also lost 23% on Friday and is down over 80% since the beginning of this year. The fourth biggest institution, the perpetually failing Banca Monte dei Paschi di Siena whose loss-making derivatives bets were made under Mario Draghi’s watch as Bank of Italy’s governor, fell by 16.5%. (Wolf Street)
Spain’s banks suffered as badly as
Italy’s, with Bankia shares losing 20% of their value. Spain’s largest
bank, Santander, already suffering heavy losses from its operations in
Brazil, also lost 20% of its value overnight, as did a third mega bank
in Spain, Sabadell. Expect to see more major bank bailouts in Europe.
In the UK, Barclay’s shares plunged
20.5%. HSBC dropped 9%, and the Royal Bank of Scotland fell off a cliff,
taking a 27.5% pounding.
Mood in the restaurants and coffee shops in the high-rise banking hub of Canary Wharf, home to JPMorgan, Citi , HSBC and Barclays, was sober and contemplative, with job security fears rising to levels unseen since the 2008 financial crisis. Major investment banks have already warned they could move thousands of jobs elsewhere if Britain opts out of the EU, while the European Central Bank has signaled it could force euro trading out of London, the world’s largest foreign exchange market….
“We’ll have a crash and big layoffs,” a senior investment banker at a U.S. bank told Reuters….“This is the biggest vote in my lifetime. Black Wednesday and the impact of Lehman Brothers collapsing – these other big events don’t even compare in magnitude to this,” said Mark Boleat, Chairman of the City of London’s Policy and Resources Committee…. “We are just beginning to think through what will have to happen legally andit is massive, absolutely massive….”
“Leave’s victory [Brexit’s victory] has delivered one of the biggest market shocks of all time … Panic may not be too strong a word,” Joe Rundle, Head of Trading at ETX Capital said. (Newsmax)
Bankers are shaking in their hip waders as they congregate in a swamp full of alligators.
As individual bankers bemoaned what
they see as a crushing shock, central banks ran in for emergency
rescues. The Bank of England offered a quarter of a trillion pounds plus
substantial access to foreign currencies, promising additional measures
as required. The US Federal Reserve assured the entire world it was
standing by to supplement liquidity through its swap lines with global funding
markets. The ECB said it would provide additional liquidity to protect
euro stability, and the People’s Bank of China assured other nations it
would maintain a stable yuan (though on Monday, China weakened the yuan
by its most since the big sell-off last August). Even neutral
Switzerland ran to the rescue.
In a rare move for a major central bank, the Swiss National Bank openly intervened in currency markets to weaken the safe-haven franc, promising to do even more if needed. (Newsmax)
The Epocalypse is here
We
have now entered a global period of bailouts heaping up against the
back of earlier bailouts and attempted recovery coming on the back of
already failed recovery. Why? Because it is all the same Great
Recession, and as I’ve maintained since I began this blog several years
ago the “recovery” is nothing but a prop under the Great Recession’s
monstrous belly. That prop, I said would fail this year, and we would
slide into the abyss of an economic apocalypse in a series of
jolting plunges and rallies.
As I quoted David Stockman in an earlier article,
At
long last the tyranny of the global financial elite has been slammed
good and hard. You can count on them to attempt another central bank
based shock and awe campaign to halt and reverse the current sell-off,
but it won’t be credible, sustainable or maybe even possible….
The central
bankers and their compatriots … have well and truly over-played their
hand. They have created a tissue of financial lies; an affront to the
very laws of markets, sound money and capitalist prosperity…. So there will be payback, clawback and traumatic deflation of the bubbles. Plenty of it, as far as the eye can see….
When I say “the Epocalypse is here” or
“the end is here,” I don’t mean we are now on the final leg down or that
there will be no leveling off or no rally — that its finished. Heck,
the central bankers aren’t going to give up the show that easily, and
this is an election year in the US where they can expect totally
subservient assistance from establishment politicians on both sides of
congress. The majority of elected politicians clearly deplore the
possibility that Donald Trump could not only be proven right about
economic collapse but could be hoisted to a success big enough to give
him a political mandate to tear the establishment apart in 2017!
What I mean when I claim “the end is here” is that this is one more enormous jolt like we saw in January that is a part of the end. We are, in other words, going through the
end. I’ve consistently stated the Epocalypse will take, at least, a
year and half to find its bottom; so it is far from over. This is just
the beginning of the end.
Each of these jolts does huge damage to
the global economy, weakens banks and central banks and other
corporations in substantial ways, and takes us further into the
Epocalypse. This one is massive to such a degree that its damage to the
establishment will only be discovered over a period of weeks or more
likely months. Along the way, we also have smaller jolts like we saw
when I quoted Dennis Gartman as saying a month ago:
The Bulls and the Bears left scratching their heads and wondering aloud, “What the hell just happened?” …Yesterday
was our worst day of the year thus far, as that which we were long of
fell and that which we were short of closed unchanged…. Yesterday was a disaster which we wish to put behind us. (Zero Hedge)
By “Epocalypse” I mean an economic
collapse on the scale of things predicted in The Apocalypse (i.e. on the
same scale as biblically prophesied disasters in the Book of
Revelation). The “Epocalypse” is my name for our second and deeper
plunge into the belly of the Great Recession — a drop so great it will
make the first slump look like it was just a dress rehearsal for the
real show.
I am sure many bulls who were long on
Brexit are feeling the sizzle of the frying pan in the summer heat now
as they try to recover from foolhardy long positions. Those were just
the first ones who didn’t listen, and they just lost over two trillion
dollars. The price of continuing to bet on the bull will grow worse each
time something hits. You’re going to smell a lot more barbecued bull
this summer … and beyond:
A few major banks that were already
stressed will likely fail in the months ahead because Brexit added more
stress than they can absorb. That will probably mean more bailouts, but
the populace is not inclined to accept any more bailouts, so that will
mean more civil unrest if bailouts happen.
National economies that were already
crumbling like Greece, Brazil, Italy, Spain and France, will fall
faster. As a result, other parts of the Eurozone will likely break off
like icebergs in the summer heat. They may not announce their break from
the EU this summer, but you’ll see major cracks form around their
circumference.
Areas of marginal economic weakness
will develop visible fault lines and experience serious tremors. In the
US that would include jolts to jobs and wages, more falloff in GDP,
increasing social unrest, increasing corporate collapse.
In the midst of that there will likely
be periods of calm created by massive central bank infusions. You’ll see
central banks invent new tricks that even they didn’t know they could
come up with … out of desperation to save their “recoveries.” Those
eddies of calm that run as counter currents to the main flow of
events may beguile some rosy-eyed optimists into thinking the earth has
stabilized, but it hasn’t and it won’t, and those beguiled will be hurt
just as many were massively hurt by this jolt. As soon as you think the
earth is steady, the next nation will fall.
The calm between January and Brexit was
longer than I expected between legs down, and the expected intervening
rally went twice as high as I thought it would, but this is an election
year. Regardless of the extended pause, global economic breakdown is
continuing along the fault lines where I’ve indicated it would and in
the year when I said things would all come apart, and the scale of
Brexit is as huge as I said each leg of our journey into the Epocalypse
will be.
The journey into our decline has now
resumed. Each part that gives way makes all the other parts weaker and
their own collapse more certain and more imminent. It’s going to be a
summer filled with aftershocks.
You cannot stop this collapse, nor can you talk it into happening with negativity either. It is going to happen because it has to
happen. It has inevitability all over it. Economic structures that
should never have been created in the first place are giving way in what
will become total structural failure. They are giving way because of
their own flawed design:
- You cannot create mountains of enduring wealth by carving out caverns of debt beneath them.
- You cannot create stable economies by focusing all the benefits
toward the rich industrialists and hoping they will trickle down to
create demand later.
- You cannot deplete your nation’s treasure with endless wars around
the world by putting the wars of budget and beguiling yourself to
think that means there was no cost to your own greatness.
- You cannot cram people from divergent cultures together by the
millions without creating huge social costs that become economic costs.
- You cannot bail out rich bankers without creating moral hazard that entices them to repeat their sins.
- You cannot centrally manage economies in a way that benefits the periphery.
The list could be bigger. The
earthquake has happened. The aftershocks will come. And then there is
autumn, the time called “fall” because many things will.
We
have now entered a global period of bailouts heaping up against the
back of earlier bailouts and attempted recovery coming on the back of
already failed recovery. Why? Because it is all the same Great
Recession, and as I’ve maintained since I began this blog several years
ago the “recovery” is nothing but a prop under the Great Recession’s
monstrous belly. That prop, I said would fail this year, and we would
slide into the abyss of an economic apocalypse in a series of
jolting plunges and rallies.
As I quoted David Stockman in an earlier article,
At long last the tyranny of the global financial elite has been slammed good and hard. You can count on them to attempt another central bank based shock and awe campaign to halt and reverse the current sell-off, but it won’t be credible, sustainable or maybe even possible….
The central bankers and their compatriots … have well and truly over-played their hand. They have created a tissue of financial lies; an affront to the very laws of markets, sound money and capitalist prosperity…. So there will be payback, clawback and traumatic deflation of the bubbles. Plenty of it, as far as the eye can see….
When I say “the Epocalypse is here” or
“the end is here,” I don’t mean we are now on the final leg down or that
there will be no leveling off or no rally — that its finished. Heck,
the central bankers aren’t going to give up the show that easily, and
this is an election year in the US where they can expect totally
subservient assistance from establishment politicians on both sides of
congress. The majority of elected politicians clearly deplore the
possibility that Donald Trump could not only be proven right about
economic collapse but could be hoisted to a success big enough to give
him a political mandate to tear the establishment apart in 2017!
What I mean when I claim “the end is here” is that this is one more enormous jolt like we saw in January that is a part of the end. We are, in other words, going through the
end. I’ve consistently stated the Epocalypse will take, at least, a
year and half to find its bottom; so it is far from over. This is just
the beginning of the end.
Each of these jolts does huge damage to
the global economy, weakens banks and central banks and other
corporations in substantial ways, and takes us further into the
Epocalypse. This one is massive to such a degree that its damage to the
establishment will only be discovered over a period of weeks or more
likely months. Along the way, we also have smaller jolts like we saw
when I quoted Dennis Gartman as saying a month ago:
The Bulls and the Bears left scratching their heads and wondering aloud, “What the hell just happened?” …Yesterday was our worst day of the year thus far, as that which we were long of fell and that which we were short of closed unchanged…. Yesterday was a disaster which we wish to put behind us. (Zero Hedge)
By “Epocalypse” I mean an economic
collapse on the scale of things predicted in The Apocalypse (i.e. on the
same scale as biblically prophesied disasters in the Book of
Revelation). The “Epocalypse” is my name for our second and deeper
plunge into the belly of the Great Recession — a drop so great it will
make the first slump look like it was just a dress rehearsal for the
real show.
I am sure many bulls who were long on
Brexit are feeling the sizzle of the frying pan in the summer heat now
as they try to recover from foolhardy long positions. Those were just
the first ones who didn’t listen, and they just lost over two trillion
dollars. The price of continuing to bet on the bull will grow worse each
time something hits. You’re going to smell a lot more barbecued bull
this summer … and beyond:
A few major banks that were already
stressed will likely fail in the months ahead because Brexit added more
stress than they can absorb. That will probably mean more bailouts, but
the populace is not inclined to accept any more bailouts, so that will
mean more civil unrest if bailouts happen.
National economies that were already
crumbling like Greece, Brazil, Italy, Spain and France, will fall
faster. As a result, other parts of the Eurozone will likely break off
like icebergs in the summer heat. They may not announce their break from
the EU this summer, but you’ll see major cracks form around their
circumference.
Areas of marginal economic weakness
will develop visible fault lines and experience serious tremors. In the
US that would include jolts to jobs and wages, more falloff in GDP,
increasing social unrest, increasing corporate collapse.
In the midst of that there will likely
be periods of calm created by massive central bank infusions. You’ll see
central banks invent new tricks that even they didn’t know they could
come up with … out of desperation to save their “recoveries.” Those
eddies of calm that run as counter currents to the main flow of
events may beguile some rosy-eyed optimists into thinking the earth has
stabilized, but it hasn’t and it won’t, and those beguiled will be hurt
just as many were massively hurt by this jolt. As soon as you think the
earth is steady, the next nation will fall.
The calm between January and Brexit was
longer than I expected between legs down, and the expected intervening
rally went twice as high as I thought it would, but this is an election
year. Regardless of the extended pause, global economic breakdown is
continuing along the fault lines where I’ve indicated it would and in
the year when I said things would all come apart, and the scale of
Brexit is as huge as I said each leg of our journey into the Epocalypse
will be.
The journey into our decline has now
resumed. Each part that gives way makes all the other parts weaker and
their own collapse more certain and more imminent. It’s going to be a
summer filled with aftershocks.
You cannot stop this collapse, nor can you talk it into happening with negativity either. It is going to happen because it has to
happen. It has inevitability all over it. Economic structures that
should never have been created in the first place are giving way in what
will become total structural failure. They are giving way because of
their own flawed design:
- You cannot create mountains of enduring wealth by carving out caverns of debt beneath them.
- You cannot create stable economies by focusing all the benefits toward the rich industrialists and hoping they will trickle down to create demand later.
- You cannot deplete your nation’s treasure with endless wars around the world by putting the wars of budget and beguiling yourself to think that means there was no cost to your own greatness.
- You cannot cram people from divergent cultures together by the millions without creating huge social costs that become economic costs.
- You cannot bail out rich bankers without creating moral hazard that entices them to repeat their sins.
- You cannot centrally manage economies in a way that benefits the periphery.
The list could be bigger. The
earthquake has happened. The aftershocks will come. And then there is
autumn, the time called “fall” because many things will.
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