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Charles Hugh Smith: Something Changed (And The Mainstream Financial Sector Dares Not Talk About It)

  • Charles Hugh Smith: Something Changed (And The Mainstream Financial Sector Dares Not Talk About It)
    by Charles Hugh Smith via Of Two Minds via
    The illusion that risk can be limited delivered three asset bubbles in less than 20 years.

    Has anything actually changed in the past two weeks?
     The conventional bullish answer is no, nothing’s changed; the global economy is growing virtually everywhere, inflation is near-zero, credit is abundant, commodities will remain cheap for the foreseeable future, assets are not in bubbles, and the global financial system is in a state of sustainable wonderfulness.

    As for that spot of bother, the recent 10% decline in stocks:
     ho-hum, nothing to see here, just a typical “healthy correction” in a never-ending bull market, the result of flawed volatility instruments and too many punters picking up dimes in front of the steamroller.

    Now that’s winding up, we can get back to “creating wealth” by buying assets–$2 million homes in Seattle that were $500,000 homes a few years ago, stocks, bonds, private islands, offshore wealth funds, bat guano, you name it. Just borrow whatever you need to borrow to buy more.

    (But don’t buy bitcoin. No no no, a thousand times no. It is going to zero, Goldman Sachs guaranteed it.)

    Ahem. And then there’s reality: something has changed, something important.
    What changed? The endlessly compelling notion that risk has magically vanished as the result of financial sorcery is now in doubt. If risk hasn’t been made to disappear, and even worse, can’t be corralled into a shortable instrument like VIX, then–gasp–every asset and instrument might actually be exposed to some risk.

    read more.


February 14, 2018 - Posted by | Economics, Social Trends | , , , , , , , , , ,

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