Wednesday, May 27, 2015

Caveat Emptor, The Greatest Show On Earth.......

Caveat Emptor, The Greatest Show On Earth

If there is one thing that I think I've learned when it comes to sell offs it's that you can be an hour early to the party but never a minute late.

There is an enormous crisis coming and we'll be sitting around watching each of the world's central bankers attempting to deal with the fallout of their own creation. 

It promises to be very entertaining:

The Brits, being British, will get all hot and flushed and then splutter and pardon with a few "crikey's" and "goshes" as things in the U.K. get even worse.

The Europeans will handle this by blaming each other, especially the Germans.

The Germans, in turn will flush the sauerkraut with a large beer, don their lederhosen and get on with fixing the problem. This particular problem will be akin to wrestling a man eating tiger in a Japanese nuclear power station: impossible. Not even German technology will fix this!

The French will set up a committee to investigate how they may be able to tax individuals on losing money rather than making it, never acknowledging their own part in the fiasco. Do the French even matter anymore?

The Japanese. Well, they'll do the honorable thing and fall on their sword. Seppuku! Almost 30 years and nothing else has worked!

And the Americans will search the nation to find the man with the shiniest teeth, put him on Oprah where he'll open his arms in an apology and reassure everyone that everything will be fine, even though it won't.

Central bankers, the proud parents of the largest debt bubble this world has ever seen, have tried to spoil and appease the markets when they deserved to be disciplined. Instead of allowing the markets to correct themselves and showing discipline, central bankers flooded the world with liquidity and soaked up many problems.

In doing so they've created a truly wild monster both in the sovereign debt markets directly, and indirectly in the corporate debt markets as market participants seeking some sort of yield (heck, any sort of yield) have been driven down the risk curve. The terrible misconception that many people have about a so-called global deleveraging post 2008. Never happened!

Central bankers have created this monster which requires continuous feeding. But feeding him more just makes him more dangerous. 


Let's get ready for the show but for goodness sake make sure you're prepared for it!

WITH EVERY MAJOR CENTRAL BANK STANDING ON THE EDGE OF THE ABYSS, ONE OR MORE OF THEM IS GOING OVER THE EDGE THIS TIME!

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