Rising interest rates are all that is necessary to trigger the round two collapse of the ongoing financial crisis.
The magnitude and momentum of expanding government deficits, debt and unfunded liabilities, the monetization of Treasury debt by the Federal Reserve Board using manufactured money acquired through the somewhat mystical process labelled ‘Quantitative Easing’, the strong prospect of higher interest rates necessitated by an inflating and devaluing currency followed inevitably by increasing price inflation.
Global Financial Crash Inevitable: Agree or Disagree?
JMCC
2012/08/28 15:44:25
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9 votes
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1 vote
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2 votes
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8% | ||
It is now believed that irrespective of any political measures or positioning, a market collapse is inevitable and that is most like to happen this fall, possibly as early as September:
Market crash 'could hit within weeks', warn bankers
A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets.
Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group's implosion nearly three years ago.
Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender's bonds against default is now £343,540.
The cost of insuring RBS bonds is now higher than before the taxpayer was forced to step in and rescue the bank in October 2008, and shows the recent dramatic downturn in sentiment among credit investors towards banks.
"The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008," said one senior London-based bank executive.
"I think we are heading for a market shock in September or October that will match anything we have ever seen before," said a senior credit banker at a major European bank.
Market crash 'could hit within weeks', warn bankers
A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets.
Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group's implosion nearly three years ago.
Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender's bonds against default is now £343,540.
The cost of insuring RBS bonds is now higher than before the taxpayer was forced to step in and rescue the bank in October 2008, and shows the recent dramatic downturn in sentiment among credit investors towards banks.
"The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008," said one senior London-based bank executive.
"I think we are heading for a market shock in September or October that will match anything we have ever seen before," said a senior credit banker at a major European bank.
Read More: http://www.telegraph.co.uk/finance/financialcrisis...
Top Opinion
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LibertyCaroline 2012/08/28 15:58:03
Yet does it make sense in the long run to periodically implode and rebuild in such a destructive manner?
Especially as it is becoming more and more challenging to obtain the resources to do so?
Periodically there is a population expansion at the bottom of the social structure and it is met by a resistance to move over, make space and provide enough opportunity for self improvement.
The same cycle has repeated itself over and over again throughout history - irrespective of the form of government or policy.
After all, the Pharaohs had the same problem - the slaves kept on reproducing and there were insufficient capital projects to keep them all occupied and fed....
For the "haves" rarely want to share with the "have nots"...
Free Enterprise is a bit of a myth too, as SME's do not get the same breaks as the corporates...
It's a rigged game to maintain the status quo.
Those rates were still high, but they were the first cuts since the 1920s and sent the message that businesses could keep much of what they earned. The year 1946 was not without ups and downs in employment, occasional strikes, and rising prices. But the “regime certainty” of the 1920s had largely returned, and entrepreneurs believed they could invest again and be allowed to make money.
As Sears, Roebuck and Company Chairman Robert E. Wood observed, after the war “we were warned by private sources that a serious recession was impending. . . . I have never believed that any depression was in store for us.”
With freer markets, balanced budgets, and lower taxes, Wood was right. Unemployment was only 3.9 percent in 1946, and it remained at roughly that level during most of the next decade. The Great Depression was over.
The magnitude and momentum of expanding government deficits, debt and unfunded liabilities, the monetization of Treasury debt by the Federal Reserve Board using manufactured money acquired through the somewhat mystical process labelled ‘Quantitative Easing’, the strong prospect of higher interest rates necessitated by an inflating and devaluing currency followed inevitably by increasing price inflation.