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Page added on June 15, 2016

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During the Next Crisis, Entire Countries Will Go Bust

Business

For seven years, the world has operated under a complete delusion that Central Banks somehow fixed the 2008 Crisis.

All of the arguments claiming this defied common sense. A 5th grader would tell you that you cannot solve a debt problem by issuing more debt. Similarly, anyone with a functioning brain could tell you that a bunch of academics with no real-world experience, none of whom have ever started a business or created a single job can’t “save” the economy.

However, there is an AWFUL lot of money at stake in believing these lies. So the media and the banks and the politicians were happy to promote them. Indeed, one could very easily argue that nearly all of the wealth and power held by those at the top of the economy stem from this fiction.

So it’s little surprise that no one would admit the facts: that the Fed and other Central Banks not only don’t have a clue how to fix the problem, but that they actually have almost no incentive to do so.

 

So here are the facts:

 

1)   The REAL problem for the financial system is the bond bubble. In 2008 when the crisis hit it was $80 trillion. It has since grown to over $100 trillion.

 

2)   The derivatives market that uses this bond bubble as collateral is over $555 trillion in size.

 

3)   Many of the large multinational corporations, sovereign governments, and even municipalities have used derivatives to fake earnings and hide debt. NO ONE knows to what degree this has been the case, but given that 20% of corporate CFOs have admitted to faking earnings in the past, it’s likely a significant amount.

 

4)   Corporations today are more leveraged than they were in 2007. As Stanley Druckenmiller has noted, in 2007 corporate bonds were $3.5 trillion… today they are $7 trillion: an amount equal tot nearly 50% of US GDP.

 

5)   The Central Banks are now all leveraged at levels greater than or equal to Lehman Brothers was when it imploded. The Fed is leveraged at 78 to 1. The ECB is leveraged at over 26 to 1. Lehman Brothers was leveraged at 30 to 1.

 

6)   The Central Banks have no idea how to exit their strategies. Fed minutes released from 2009 show Janet Yellen was worried about how to exit when the Fed’s balance sheet was $1.3 trillion. Today it’s over $4.5 trillion.

Today, Central Bankers are now actively punishing depositors and bond holders with negative interest rates. Globally, over $10 trillion in debt currently have negative yields in nominal terms, meaning the bond literally has a negative yield when it trades. In the simplest of terms this means that investors are PAYING to own these bonds.

Bonds are not unique in this regard. Switzerland, Denmark and other countries are now charging deposits at their banks. In France and Italy, you are not allowed to make cash transactions above €1,000. So if get fed up with the banks and want to pull your money out, you cannot.

We are heading for a crisis that will be exponentially worse than 2008. The global Central Banks have literally bet the financial system that their theories will work.  They haven’t. All they’ve done is set the stage for an even worse crisis in which entire countries will go bankrupt.

On that note, we are already preparing our clients for this with a 21-page investment report titled the Stock Market Crash Survival Guide.

In it, we outline the coming crash will unfold…which investments will perform best… and how to take out “crash” insurance trades that will pay out huge returns during a market collapse.

We are giving away just 1,000 copies of this report for FREE to the public.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

ZeroHedge



13 Comments on "During the Next Crisis, Entire Countries Will Go Bust"

  1. penury on Wed, 15th Jun 2016 1:52 pm 

    I agree mostly with the analysis but, I am sorry ‘free” is too high a price for this report.

  2. Apneaman on Wed, 15th Jun 2016 2:38 pm 

    Another zero sledge article confusing symptoms for cause. Lib tard tarian ideology does not allow for overshoot or human destruction of the biosphere. All of mankind’s problems are caused by Keynesian economics including the common cold.

  3. Davy on Wed, 15th Jun 2016 2:57 pm 

    Phoenix capital is a regular on ZH promoting doom so you buy their financial doom product. I guess they buy space or something. Some of what Phoenix says is worthy.

    ZH, is the best alternative financial news amalgamator on the net. They give great in house analysis also. They have been front running all major financial events for years now.

    No wonder this site regularly draws from them and no wonder the MSM despises them. Some extremist despise them which I find hilarious because ZH is politically very anti-American. Extremist are never happy in any case because that is the nature of extremism.

  4. makati1 on Wed, 15th Jun 2016 5:59 pm 

    Has anyone considered that the job of the Central Banks is to level the playing field, not keep it safe? ALL events since they were formed point in that direction. Move money/resources to the top and turn everyone else into serfs. A One World Government anyone? IMF SDRs? Even the Chinese are on-board for those instead of USDs.

  5. theedrich on Thu, 16th Jun 2016 3:34 am 

    Whatever the economic situation may be, it is certainly outclassed by Ø’s importation of massacre-loving Allahists into the U.S., camouflaged by inflooding masses of “peaceful” Muslim muddies.  Dissatisfied with such small events as the Orlando anti-LGBT slaughter, the White House darkie is hoping for some biggies so that he can look more “presidential” and push his and Hotflash’s various “progressive” agendas to impose a totalitarian dicatatorship on the nation.

    Of course, the ostensibly “gay-friendly” MSM prefers not to notice such inconsistencies as the maniacal hatred of Mohammedanism for homosexuals.  In their own countries, the Sand Negroes hang them from cranes, throw them off of buildings and burn Lesbians alive in cages.  Our glorious leader, however, tells us that when Arabistanians cross the U.S. border illegally from Mexico, they perforce embrace the “values” beloved of all traditional Americans.  And the leopard changes its spots.  Maybe the LGBT crowd should think twice before voting for Hotflash.

  6. Hello on Thu, 16th Jun 2016 8:04 am 

    Money and debt and such doesn’t matter much.
    It’s the productivity of a nation that leads to prosperity.

  7. efarmer on Thu, 16th Jun 2016 10:27 am 

    When it manifests all the major central banks will agree to parse real money and fantasy money since they have the right to create money and destroy it. The derivatives and hedge folks have to figure out how to pass their folly on to the masses somehow and tap retirement investments to save their own hiney again. I personally feel all of this stems from an upset in the cosmos that was created when the Cubs became good and started winning, where it goes from here is all riding on the Cubs, like it or not.

  8. penury on Thu, 16th Jun 2016 10:47 am 

    “Hello” You are somewhat correct in your statement that “productivity of a nation that leads to prosperity:” however your other assertion that “money and debt don’t matter much” is not really true. Look at Japan, China, Greece, Puerto Rico, etc.etc. The U.S is also in trouble due to debt but the Fed is buying most of the debt so nothing matters. Until it does and then it will really matter.

  9. Robert Spoley on Thu, 16th Jun 2016 11:20 am 

    Whatever happened to self discipline. The lack of it is what has caused the vast majority of the worlds problems. Who do we see about that?

  10. Hello on Thu, 16th Jun 2016 11:55 am 

    penury:

    A nation is not an individual and as such common sense financial rules don’t apply.

    As long as the nation is industrious and has a high productivity, debt can be shed through default, inflation and other financial gimmicks, with hardly a hiccup in standard of living (Japan et al.)

    If the nation is a basket case to begin with and dependent on welfare from the international community. Well, then debt matters. (Greece et al)

  11. Apneaman on Thu, 16th Jun 2016 1:20 pm 

    There is nothing I enjoy more than reading a collection retard white know it all men reduce highly complex interconnected global problems that span centuries (that no one individual could ever hope to understand)down to one simple cause.

    Yep, it’s that damn rap music what did it.

    Grandpa blamed the commies

    Great grandpa blamed the Italian immigrants

    Great great grandpa blamed the Irish immigrants

    Great great great great grandpa blamed it on Lincoln

    Great great great great great grandpa blamed the British

    Oh, and they all blamed the Jews too.

  12. penury on Thu, 16th Jun 2016 2:15 pm 

    Hello, would you like to name just three or maybe two nations which meet your criteria of high level of industrious and has a high productivity. And you are correct nations can do and will default on the debt. That is one of the advantages of having the FED buy all the debt, default is easier. Just the citizens of that nation are screwed.

  13. makati1 on Thu, 16th Jun 2016 7:55 pm 

    Blame is the name of the game (sorry about that rhyme) in most of the Western world today, and again, the Us is Number One! There are no mirrors in America, just pointing fingers.

    Ah, blow-back is going to be an especially bad bitch in America.

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