The war has already begun. China is still in the Shaping phase in the physical sphere, but their economic power and our economic vulnerabilities have been advancing steadily for decades. Is your life and investment portfolio ready.
I feel for Liz Truss. She could very well be the shortest-serving Prime Minister in UK history. Central bankers and bond markets have merrily accommodated many a crazy budget. Now they’re running scared, leaving stunned politicians to try to figure out what can work in today’s new reality.
I’m here today with what I believe is a critically important message. The global Bubble – history’s greatest Bubble – is bursting. The previous cycle has ended, and a new cycle has begun to unfold. We are about to commence an adjustment period that I fear will shake us to the core.
Some refer to a “Lehman” or a “Minsky moment.” I call it the “holy crap moment”. Suddenly, things are not as we thought; they might be spiraling out of control, and our government benefactor no longer has an answer.
There are a lot of financial nuclear land mines that will be going off as rates are normalized. Maybe that is why the Fed is having an emergency meeting Monday.
When wall street analyst start talking about deflation, they are talking about financial asset prices NOT consumer inflation. Sorry wall street, but bubbles have to deflate.
The Super Credit Bubble is at the brink.
I fear the next phase of financial asset repricing will be both disorienting and destabilizing.
This dynamic has become all too familiar: when instability turns sufficiently serious, markets instinctively anticipate dovish central bank policy responses.
And if the recent loosening of financial conditions has been spectacular, just wait until the next de-risking/deleveraging-induced tightening. Let’s call it what it is: Epic Monetary Disorder.