Beware the great 2016 financial crisis, warns leading City pessimist

Albert Edwards joins RBS in warning of a new crash, saying oil price plunge and deflation from emerging markets will overwhelm central banks, tip the markets and collapse the eurozone
Traders give the thumbs down at a stock trading hub
Are the doommongers right ? are we heading for a big global economic fall? Photograph: Dennis M. Sabangan/EPA

Larry Elliott Economics editor

Tuesday 12 January 2016 19.25 GMT
Last modified on Wednesday 13 January 2016 00.20 GMT



The City of London?s most vocal ?bear? has warned that the world is heading for a financial crisis as severe as the crash of 2008-09 that could prompt the collapse of the eurozone.

Albert Edwards, strategist at the bank Soci?t? G?n?rale, said the west was about to be hit by a wave of deflation from emerging market economies and that central banks were unaware of the disaster about to hit them. His comments came as analysts at Royal Bank of Scotland urged investors to ?sell everything? ahead of an imminent stock market crash.
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?Developments in the global economy will push the US back into recession,? Edwards told an investment conference in London. ?The financial crisis will reawaken. It will be every bit as bad as in 2008-09 and it will turn very ugly indeed.?

Fears of a second serious financial crisis within a decade have been heightened by the turbulence in markets since the start of the year. Share prices have fallen rapidly and a slump in the cost of oil has left Brent crude trading at barely above $30 a barrel.

?Can it get any worse? Of course it can,? said Edwards, the most prominent of the stock market bears ? the terms for analysts who think shares are overvalued and will fall in price. ?Emerging market currencies are still in freefall. The US corporate sector is being crushed by the appreciation of the dollar.?

The Soc Gen strategist said the US economy was in far worse shape than the country?s central bank, the US Federal Reserve, realised. ?We have seen massive credit expansion in the US. This is not for real economic activity; it is borrowing to finance share buybacks.?

Edwards attacked what he said was the ?incredible conceit? of central bankers, who had failed to learn the lessons of the housing bubble that led to the financial crisis and slump of 2008-09.
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?They didn?t understand the system then and they don?t understand how they are screwing up again. Deflation is upon us and the central banks can?t see it.?

Edwards said the dollar had risen by as much as the Japanese yen had in the 1990s, an upwards move that pushed Japan into deflation and caused solvency problems for the Asian country?s banks. He added that a sign of the crisis to come was the collapse in demand for credit in China.

?That happens when people lose confidence that policymakers know what they are doing. This is what is going to happen in Europe and the US.?

Europe has shown tentative signs of recovery in the past year, but Edwards said the efforts of the European Central Bank to push the euro lower and growth higher would come to nothing in the event of a fresh downturn. ?If the global economy goes back into recession, it is curtains for the eurozone.?

Countries such as France, Spain and Italy would not accept the rising unemployment that would be associated with another recession, he said. ?What a disaster the euro has been: it is a doomsday machine in favour of the German economy.?
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The warning from Edwards came as stock markets had a respite from the wave of selling seen since the start of the year. The FTSE 100 index rose by 57 points to close at 5,929, while the Dow Jones Industrial Average was up by 10 points in early trading in New York.

The mood in equity markets was helped by intervention by the People?s Bank of China overnight to support the yuan, with the Chinese currency moving higher on foreign exchange markets.

But the slide in the oil price continued, with Brent crude falling a further 3.5% to close in London at $30.45. Oil has not been below $30 a barrel since 2003.

Edwards joked that after years in which he has tended to be a lone voice, other institutions were also becoming a lot gloomier about global prospects.

He was referring to the RBS advice, which warned that investors face a ?cataclysmic year? where stock markets could fall by up to 20% and oil could slump to $16 a barrel.

In a note to its clients the bank said: ?Sell everything except high-quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.? It said the current situation was reminiscent of 2008, when the collapse of the Lehman Brothers investment bank led to the global financial crisis. This time China could be the crisis point, RBS said.

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mor

Whenever you experience joy, peace, security, equanimity or purity, it is only because you are aligned with ALMIGHTY.

Western Capitalism:

You have two cows.

You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank,

then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.

The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights for all seven cows back to your listed company.

The annual report says the company owns eight cows, with an option on one more.

You sell one cow to buy a new President of the United States, leaving you with nine cows.

No balance sheet provided with the release. The public buys your bull.


Its a joke but bitter truth of Financial engineering where it is attempted to make money out of thin air. We all subscribed to this idea, we should always be ready to suck it up.

When everything fails, then there is always an option of world war Rel 3, Rel 4 etc., etc.,


Sadly, the average joe1 who just works in agriculture (Primary need for a human being) and joe2 works in the logistics industry which helps transports the food and another joe3 who works in the hospital and other joes who work around the industry revolving around the primary need are all sucked in to this fictious system.

"The system of currency / money is perhaps biggest scam invented in the world."

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The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM

Things are indeed looking a bit sideways, with dollar plunging further. Not sure, how it would impact the housing market. There was some analysis that further bump in the Chinese market would result into money being sent in droves outside of China, and drive the housing market even further up in Toronto and Vancouver.

2016 will be interesting. Hold on to your jobs.

Search You tube, with "Financial crisis 2016, and there are lots of videos , predicting the scenario to come in 2016.
CAD Dollar expected to drop, to historic lows, oil to touch $ 20.00, makes us really wonder, Are these guys making the predictions, qualified indeed to make such predictions?
What happened to those justifications given to justify Oil @ $ 200.00, Gold beyond $ 3000.00

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mor

Whenever you experience joy, peace, security, equanimity or purity, it is only because you are aligned with ALMIGHTY.

so its back to "Gold", eh?
People predicted that gold will go down to $500/ounce, today it has jumped to USD $1370/ounce because of Brexit and other factors in play in the world's financial markets.

Rocky times ahead guys, hold on tight!!

Quote:

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Originally posted by peacock1

Search You tube, with "Financial crisis 2016, and there are lots of videos , predicting the scenario to come in 2016.
CAD Dollar expected to drop, to historic lows, oil to touch $ 20.00, makes us really wonder, Are these guys making the predictions, qualified indeed to make such predictions?
What happened to those justifications given to justify Oil @ $ 200.00, Gold beyond $ 3000.00

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I looked at the word 'Pessimist' and stopped reading thereafter.

Every 4 to 7 years, I can also throw a pessimistic tantrum and I'll be half correct. Reason - it's called the economy. It will go up and down.

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Dimple2001