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Wolf Richter: How Will The Global Asset Bubbles Unfold? “A Situation That Spirals Out Of Control Quickly”

  • Wolf Richter: How Will The Global Asset Bubbles Unfold? “A Situation That Spirals Out Of Control Quickly”
    by , http://wolfstreet.com/  
    Here is my interview with Rory Hall on “The Shadow of Truth.” Enjoy!

    By Shadow of Truth, The Daily Coin:
    Stock bubble, credit market bubbles and housing market bubbles.  Unfettered money printing by Central Banks globally have created massive bubbles of unprecedented proportions across all asset classes.


    Once Government and the Central Banks lose the power to stop markets from going down, you’ll have situation that spirals out of control quickly.  
    – Wolf Richter, The Shadow of Truth


    Wolf sees China eventually emerging as the world’s new number one, but believes that first it must “cleanse” the massive excesses – asset bubbles fueled by a massive credit bubble – with a painful financial and economic correction.

    He also thinks that there’s a strong possibility that the 30% stock market correction in China is a preview of what is coming to the United States:

    I am convinced that it’s very difficult to impossible to make a significant amount of money in U.S. stocks going forward. I think they’re all pretty much overpriced – way overpriced.
    – Wolf Richter


    The biggest problem Wolf sees with the United States is the Federal Reserve.  The Fed’s money printing has enabled the Government to incur a massive load of a debt and enables Congress to operate free from any budgetary contstraints:

    As long as the Fed can buy Government bonds, Congress does not need to address this country’s fiscal problems.

    Finally, we take a look at the reinflation of the housing bubble by the Fed.  Wolf is one of the few blog writers who offers insightful analysis on the housing market. By Shadow of Truth, The Daily Coin

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July 9, 2015 Posted by | Economics | , , , , , , , , , , , , , , , , , | Leave a comment

Breaking: NYSE Halted Trading Due To A Technical Glitch

July 9, 2015 Posted by | Economics | , | Leave a comment

‘Glitches’ Shut Down ‪‎NYSE‬, United Airlines & WSJ on Same Day

  • Published on Jul 8, 2015
    The NYSE is reportedly rushing to fix the “technical problem,” but there has been no official explanation why all floor trading has been halted. The exchange said it was canceling all open orders as well.

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July 9, 2015 Posted by | Economics | , | Leave a comment

China Crashes Most Since 2007 Amid “Panic Sentiment”; Over Half Stocks Suspended, PBOC Promises “Liquidity Support”

China_stock_market_CSI-300_futures-20150707

  • China Crashes Most Since 2007 Amid “Panic Sentiment”; Over Half Stocks Suspended, PBOC Promises “Liquidity Support”
    by Tyler Durden, http://www.zerohedge.com  
    … For a record 12th day in a row, Chinese margin debt balances have dropped with today’s 8.5% collapse the largest in history. As of last night, there were around 570/1694 Shenzhen stocks halted/suspended and hundreds more on the Shanghai bourse leaving more than 54% of all Chinese stocks frozen ($2.6 trillion or 40% of value). China continues to try tomanage leverage down (raising margin requirements on stock futures) while encouraging speculation (easing rules for insurers to buy blue chips and financing the purchase of smaller company shares directly) and CYNK’ing the entire marketif it’s not open, you can’t sell it and the price cannot fall! It’s not working as CSI-300 futures are now down 7.9% in the preopen.

    *CHINA TRADING HALTS FREEZE $2.6 TRILLION, 40% OF TOTAL VALUE

    China appears to be trying to manage leverage… 


    *CHINA RAISES MARGIN REQUIREMENT FOR CSI 500 INDEX FUTURES
    *SHANGHAI MARGIN DEBT FALLS 8.5%, BIGGEST ONE-DAY DROP ON RECORD

    read more.

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July 8, 2015 Posted by | Economics | , , , | Leave a comment

Chinese Stocks Plunge Again, “VIX” Hits Record, “Nasdaq” Down 40% From Highs

20150706_china_stock_market

  • Chinese Stocks Plunge Again, “VIX” Hits Record, “Nasdaq” Down 40% From Highs
    by Tyler Durden, http://www.zerohedge.com  
    Despite all the hopes and prayers of illiterate farmers everywhere, Chinese stocks refuse to hold a bid and down 3-4% at the open amid suspension of around 160 individual securities. In the pre-open to open, Shanghai Composite is down 3.2%, Shenzhen is off 3.5%, and China’s Nasdaq – ChiNext is down 3.8%. This leaves ChiNext down over 40% from its highs as the cost of insuring downside in Chinese stocks explodes to record highs. As China goes through the 1929 playbook to save its ‘market’, it appears “momentum” has shifted.

    *SHANGHAI MARGIN DEBT BALANCE DECLINES FOR RECORD ELEVENTH DAY
    *HKEX DROPS AS MUCH AS 4.2%, FALLING FOR 8TH STRAIGHT SESSION

    Not a good start to the day… 


    read more.

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July 7, 2015 Posted by | Economics | , , , | Leave a comment

Panicked Chinese Government Imposes Desperate Measures to “Aggressively” Rescue a Lot More Than Just Crashing Stocks

A_Week_In_China_Stocks-4July2015

  • Panicked Chinese Government Imposes Desperate Measures to “Aggressively” Rescue a Lot More Than Just Crashing Stocks
    by  • July 5, 2015, http://wolfstreet.com/
    Stock-market rescue measures, concocted by the government, have been hailing down for days, including an interest rate cut by the People’s Bank of China a week ago. But the collapse proceeded with brutal relentlessness. So now, Premier Li Keqiang pulled out all stops and the State Council is calling the shots in the market, the craziest, most desperate shots.


    From July 4 last year through June 12 this year, the Shanghai Stock Exchange (SSE) soared 150%. It was the era when stocks would create unlimited wealth out of nothing in no time, when all comers, from street vendors to farmers, would get their government-promoted chance to get rich quick.

    “When our national economy is in its worst shape in more than a decade and many corporates have run into trouble, our stock market suddenly shot up to make everybody happy,” George Chen, Managing Editor for the International Edition of the South China Morning Post, wrote in mid-April. He described the phenomenon this way:

    The bulls can always find reasons to defend why the market was up, but I rarely heard anyone explaining the disconnect between the weak real economy and the so-called bull run.

    Even the state media probably got over-excited. One Chinese newspaper commentary tried to name the surprising market performance as the latest achievement of President Xi Jinping because the top leadership in the country wanted to “create a new opportunity for wealth redistribution for everyone” to narrow the income gap. Redistribute wealth through the stock market in a socialist country like China? Sounds an exciting new economic theory.

    He must have caught some flak from the bulls at the time.

    Then came June 13. In the three weeks since, the SSE plunged nearly 30%, including 5.8% on Friday, wiping out nearly $3 trillion in get-rich-quick riches, despite the efforts undertaken by the government and the PBOC to put a stop to it.

    read more.

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July 7, 2015 Posted by | Economics | , , , | Leave a comment

Panic: China Central Bank Steps In To Bailout Stocks As Underwater Traders Pray For A Rebound

A_Week_In_China_Stocks-4July2015

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July 6, 2015 Posted by | Economics | , , , | Leave a comment

Bank of England Warns Greece Threatens Financial Stability

domino

  • Bank of England Warns Greece Threatens Financial Stability
    by JASON DOUGLAS and JON SINDREU, http://www.wsj.com/
    LONDON—The Bank of England said Wednesday the outlook for financial stability in the U.K. has deteriorated in recent days as the crisis in Greece intensifies, underscoring how the Mediterranean nation’s debt troubles are reverberating outside the eurozone.


    Presenting the BOE’s twice-yearly Financial Stability Report, the central bank’s governor Mark Carney said the risks associated with Greece and its failure so far to reach a deal with its international creditors have grown acute, and threaten to trigger a selloff in financial markets that could ripple through to the wider global economy.

    Mr. Carney told reporters that although U.K. banks’ direct exposure to Greece through loans and deposits is minimal, that doesn’t mean the British economy would necessarily be immune to the fallout should Greece exit the eurozone.

    “The situation remains fluid, and it is possible that a deepening of the Greek crisis could prompt a broader reassessment of risk in financial markets,” Mr. Carney said. That could ultimately hurt the confidence of businesses and households in Britain, he said.

    The BOE has been working with the U.K. Treasury and authorities across Europe to draw up contingency plans to shield the U.K. economy from harm, Mr. Carney said, although he declined to elaborate. He did say regulators have in stepped up their scrutiny and engagement with the U.K. branches of some Greek lenders.

    On Wednesday, U.K. Treasury chief George Osborne said Britain is hoping for the best but “preparing for the worst.” “We stand ready to do whatever is necessary to protect our economic security at this uncertain time.”

    read more.

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July 2, 2015 Posted by | Economics | , , , , , , , | Leave a comment

16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World

Global financial tsunami coming??!

Global financial tsunami coming??!

  • 16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World
    by Michael Snyder, http://theeconomiccollapseblog.com/  
    As we enter the second half of 2015, financial panic has gripped most of the globe.  Stock prices are crashing in China, in Europe and in the United States.  Greece is on the verge of a historic default, and now Puerto Rico and Ukraine are both threatening to default on their debts if they do not receive concessions from their creditors.  Not since the financial crisis of 2008 has so much financial chaos been unleashed all at once.  Could it be possible that the great financial crisis of 2015 has begun?  The following are 16 facts about the tremendous financial devastation that is happening all over the world right now…

    1.
    On Monday, the Dow fell by 350 points.  That was the biggest one day decline that we have seen in two years.

    2. In Europe, stocks got absolutely smashed.  Germany’s DAX index dropped 3.6 percent, and France’s CAC 40 was down3.7 percent.
    3. After Greece, Italy is considered to be the most financially troubled nation in the eurozone, and on Monday Italian stocks were down more than 5 percent.
    4. Greek stocks were down an astounding 18 percent on Monday.
    5. As the week began, we witnessed the largest one day increase in European bond spreads that we have seen in seven years.
    6. Chinese stocks have already met the official definition of being in a “bear market” – the Shanghai Composite is already down more than 20 percent from the high earlier this year.
    7. Overall, this Chinese stock market crash is the worst that we have witnessed in 19 years.

    read more.

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July 1, 2015 Posted by | Economics | , , , , , , , , , , | Leave a comment

Gross Says Hold Cash, Prepare For “Nightmare Panic Selling”

investor-fear

Panic_Button

  • Gross Says Hold Cash, Prepare For “Nightmare Panic Selling”
    by Tyler Durden, http://www.zerohedge.com  
    … In his latest Investment Outlook, Bill Gross addresses the above, describes what events might trigger a retail exodus (thus tipping the first domino), and says investors should hold enough cash to ride out the storm without participating in a firesale caused by rising rates or some manner of exogenous shock.
    *  *  *
    From “It Never Rains In California”:
    Mutual funds, hedge funds, and ETFs, are part of the “shadow banking system” where these modern “banks” are not required to maintain reserves or even emergency levels of cash.
    Since they in effect now are the market, a rush for liquidity on the part of the investing public, whether they be individuals in 401Ks or institutional pension funds and insurance companies, would find the “market” selling to itself with the Federal Reserve severely limited in its ability to provide assistance.

    That an ETF can satisfy redemption with underlying bonds or shares, only raises the nightmare possibility of a disillusioned and uninformed public throwing in the towel once again after they receive thousands of individual odd lot pieces under such circumstances.

    So what to do? Hold an appropriate amount of cash so that panic selling for you is off the table.

    read more.

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July 1, 2015 Posted by | Economics | , , , , , , | Leave a comment

This Great Unwind Will Be Catastrophic As The Grand Deception Of The Masses Continues

The-Grand-Deception-Continues-Illusion-Magic-show

  • This Great Unwind Will Be Catastrophic As The Grand Deception Of The Masses Continues
    by http://www.kingworldnews.com  
    With continued uncertainty in global markets, today a 50-year market veteran warned King World News that the Great Unwind will be catastrophic as the grand deception of the masses continues.

    John Embry: 
    “The central banks and their various allies go into overdrive to control all key markets in order to not let things get out of hand and possibly result in a public loss of confidence….  


    I saw some propaganda suggesting that U.S. Treasuries would be a safe haven in this environment.  Really?  The U.S. has $18 trillion in debt and another $6 trillion off balance sheet and at least $100 trillion in unfunded liabilities in Social Security and Medicaid, etc.  The United States continues to run large fiscal and current account deficits.  This doesn’t represent a safe haven, but rather a bankrupt nation.  And that’s just addressing the federal finances.  That doesn’t include the state and local government debt, which are staggering.

    read more.

Hitler-Propaganda_make_people_see_heaven_as_hell_wretched_life_as_paradise

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July 1, 2015 Posted by | Economics | , , , , , , , , , , , , , , , , | Leave a comment

The REAL Crisis Has Just Begun

Global financial system Titanic hits iceberg!

Global financial system Titanic hits iceberg!

  • The REAL Crisis Has Just Begun
    by Graham Summers, http://www.goldseek.com/  
    As we have been noting throughout 2015 thus far: 
    There is no recovery. There is only the bond bubble. And everything has been done to prop it up because when it bursts (as all bubbles do), entire countries (including the US) will go bust.

    Greece is just the first domino to fall. Indeed the front pages of the financial media today show an interesting tale: both China and Greece are experiencing debt implosions, the former being a margin debt fueled stock market bubble crashing while the latter is on the verge of defaulting on its sovereign debt.

    China is long held to be the engine. As we wrote in April:
    China is thought to be the great growth story of the post-2008 era. China’s economy not only bottomed before the developed world, but by most accounts, China was thought to be the engine that pulled the world out of recession, thanks to its near-clocklike hitting of 7%+ in GDP growth per year.

    Today, China remains central to the notion that the world is in recovery. As Japan’s Abenomics gamble sputters out economically while Europe continues to deteriorate and seems at risk of even breaking apart, it is China and the US that are held up to be the last remaining sources of economic growth for global economy.

    At that we noted that China’s “real” economy was imploding with rail traffic and electricity consumption suggesting real GDP growth of 3.5% at best and negative at worst.

    Today, we find that all China really did was engage in arguably the single largest credit expansion in monetary history. The China credit bubble dwarfs even Japan’s bubble of the 1980s (a period of such excess that the land under the Japanese Imperial Palace was valued greater than the entire State of Caifornia!).

    When the Real Estate bubble burst, China pushed for a stock market bubble. Now that bubble is bursting. The implications will be significant throughout the globe.

    read more.

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July 1, 2015 Posted by | Economics | , , , , , , , , , | Leave a comment

Collapsing CDS Market Will Lead To Global Bond Market Margin Call

Global financial storm approaching!

Global financial storm approaching!

  • Collapsing CDS Market Will Lead To Global Bond Market Margin Call
    by Daniel Drew, http://www.dark-bid.com/home.html  
    As Zero Hedge previously noted, liquidity is there when you don’t need it, and it promptly disappears once it is in demand. Consider it “cocktease capitalism.” If liquidity lasts longer than 4 hours, call the CFTC because you may be experiencing a spoof. Right now, the ultimate spoof is setting up as the credit default swap market collapses, and a global bond market margin call is just around the corner.

    The most serious risk at the moment is the lack of bond market liquidity. This problem was created by the Federal Reserve. By flooding the market with liquidity, the Federal Reserve paradoxically destroyed the liquidity it sought to create. Initially, the Federal Reserve’s actions helped stem the panic selling when it stepped in as the buyer of last resort. However, the Fed is quickly becoming the buyer of first resort. The CME even has a Central Bank Incentive Program to encourage foreign central banks to buy S&P 500 futures. It’s not a stretch of the imagination to presume the Federal Reserve is buying S&P 500 futures alongside the foreign banks.

    As the Fed’s balance sheet expanded ever larger, they transformed from being a mere market participant to becoming the market itself. The Federal Reserve, along with the rest of the world’s central banks, are essentially engaging in a multi-year effort to corner the global bond market. As we have seen in every case, no one has ever successfully cornered a market indefinitely. From the Hunt Brothers in the 1980 silver market to the Saudi royal family in the modern fractured oil market to the Duke brothers in the frozen concentrated orange juice market, it simply has not worked. Running a monopoly is an uphill battle that eventually results in a spectacular blowup. Why would the central banks be any different?

    As Zero Hedge pointed out recently, the run on the central banks has already begun. For the first time ever, QE failed. The first casualty was the Riksbank in Sweden.

    read more.

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June 30, 2015 Posted by | Economics, GeoPolitics | , , , , , , , , , , , , | Leave a comment

Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy

The BIS warned that the low rate environment could result in a backlash from ordinary people whose savings were being eroded away Photo: AFP

Photo: AFP

  • Grexit?, BIS Warning, Chinese Market Crash & Systemic Risk Shake the Global Economy
    by Mark O’Byrne, http://www.goldcore.com/us/  
    – Persistent low rates leave central banks with no ammunition to fight next crisis
    – BIS says short-sighted central banks and governments contributed to current weaknesses
    – Lack of policy options have forced some central banks to stretch “boundaries of the unthinkable”
    – Bust in developed economies the main risk facing global economy
    – Greece prepares to default
    – China markets routed overnight
    – Gold will be last man standing when currencies collapse

    Greece embarked on capital controls as talks over the weekend between Tsipras’ leftist government and foreign lenders fell apart.

    All banks and the Greek stock exchange are closed today. Greek citizens cued in long lines at ATMs or cash machines over the weekend and a run on the banks left most ATMs empty. There is a €60 limit on withdrawals from cash machines under strict capital controls. The ATMs will reopen tomorrow. Citizens are also lining up for petrol and food.

    Central banks have run out of options to deal with the next global financial crisis the Bank of International Settlements (BIS) has warned in its annual report. Failure to make difficult policy decisions and raise rates throughout the “recovery” have left central banks with no stimulus options with which to juice the economy when the next downturn arrives.

    The BIS, which is central bank of the central banks based in Basel, Switzerland, points to the short-sighted policies of governments and national central banks over the past few years who preferred to try keep their economies afloat using excessive debt rather than take unpopular steps to reform their economies.

    read more.

Eurozone_on_fire

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June 30, 2015 Posted by | Economics, GeoPolitics, Social Trends | , , , , , , , , , , , , , , , | Leave a comment

“Risk of Collapse” and “Panic” in the Air, China Cuts Rates

Global financial tsunami fast approaching!

Global financial tsunami fast approaching!

  • “Risk of Collapse” and “Panic” in the Air, China Cuts Rates
    by , http://wolfstreet.com/  
    It didn’t take long: the frazzled People’s Bank of China tries to put a stop to the worst 2-week crash since 1996. The whole world piled into what had been the hottest stock market in the universe. Chinese stocks had been endlessly hyped in the US and elsewhere. For the smart money, it was a game of chicken; ride it up and get out just before the crash.

    Chinese stock markets had more than doubled in 12 months, propelled also by margin debt, cheap credit all around, and the irresistible desire to get rich quick. Everyone in China, from street vendors to housewives, suddenly opened margin accounts in Hong Kong and mainland China, and borrowed money to buy stocks. Outstanding margin debt ballooned to $348 billion, even while insiders were reportedly dumping stocks. A well-oiled wealth-transfer machine.

    It was one heck of a party. By early June, it had created $6.5 trillion in “value” over a period of 12 months; 63% of China’s 2014 GDP! The Chinese government continued to aid and abet that wealth transfer by touting stocks. Even in March, as stocks had already reached dizzying heights, a spokesman for the China Securities Regulatory Commission said that the soaring valuation for Shanghai-listed shares had its own “inevitability and rationality,” such as China’s “improving economic conditions.”

    Then someone accidentally turned off the juice. Over the last ten trading days, the Shanghai Composite Index has plunged 19%, including 7.4% on Friday – the steepest two-week plunge since December 1996. The Shenzhen Composite has given up 20%, and the startup-focused ChiNext Index has plummeted 27% over the last three weeks, including 8.9% on Friday. According to Bloomberg, by Thursday, margin debt has dropped four days in a row. Markets were running out of propellant.

    And on Saturday, the People’s Bank of China tried to put a stop to it. It cut its benchmark interest rates by 25 basis points, to 4.85% for the one-year lending rate and to 2% for the one-year bank deposit rate. The fourth cut since November. The last cut on May 10 had stemmed a much smaller rout and had re-ignited the propellants to drive stocks to greater highs. But the descent since has been brutal.

    read more.

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June 29, 2015 Posted by | Economics | , , , , , , , , , | Leave a comment

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