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Bankers warn global crash could arrive ‘with a vengeance’

Bankers warn global crash could arrive ‘with a vengeance’ thumbnail

A new financial crisis is brewing in the emerging economies and it could hit “with a vengeance”, an influential group of central bankers has warned.

Emerging markets such as China are showing the same signs that their economies are overheating as the US and the UK demonstrated before the financial crisis of 2007-08, according to the annual report of the Bank for International Settlements (BIS).

Claudio Borio, the head of the BIS monetary and economic department, said a new recession could come “with a vengeance” and “the end may come to resemble more closely a financial boom gone wrong”.

The BIS, which is sometimes known as the central bank for central banks and counts Bank of England Governor Mark Carney among its members, warned of trouble ahead for the world economy.

It predicted that central banks would be forced to raise interest rates after years of record lows in order to combat inflation which will “smother” growth.

The group also warned about the threat poised by rising debt in countries like China and the rise in protectionism such as in the US under Donald Trump, City AM reported.


32 Comments on "Bankers warn global crash could arrive ‘with a vengeance’"

  1. dave thompson on Mon, 26th Jun 2017 12:11 pm 

    Looking at any graph, showing the historical time between recessions, any fool can figure out that we are most likely over due.

  2. Outcast_Searcher on Mon, 26th Jun 2017 1:53 pm 

    dave thompson — since when is anything close to an ordinary recession, anything remotely like “a crash”?

    If the experts can’t predict things like when the next recession is due, why do you presume you can by looking at a chart?

  3. Davy on Mon, 26th Jun 2017 3:03 pm 

    Times have changed making normal economic wisdom null and void. What is going to crash things is more than an economic process although this will surely play a part. Combine a difficult economic environment with some kind of shock.

    The problem today for recession Hawk’s is the world is so coordinated that any and every moral hazard is available to do whatever it takes. Some other event beyond human control will shatter this human economic facade. We have become complacent and habituated to an average growth environment. This is the other trip wire. People will freek when shit happens because it has been years since shit happened. Confidence is the glue today keeping this irrational and dysfunctional system working.

  4. Apneaman on Mon, 26th Jun 2017 3:55 pm 

    Podcast interview. Chris, peak-prosperity, Martenson talks with author and anthropologist Joseph Tainter

    Published on Jun 26, 2017

    “Joseph Tainter: The Collapse Of Complex Societies

    Full Description and Comments at:

    By popular demand, we welcome Joseph Tainter, USU professor and author of The Collapse Of Complex Societies (free book download here).

    Dr. Tainter sees many of the same unsustainable risks the audience focuses on — an overleveraged economy, declining net energy per capita, and depleting key resources.

    He argues that the sustainability or collapse of a society follows from the success or failure of its problem-solving institutions. His work shows that societies collapse when their investments in social complexity and their energy subsidies reach a point of diminishing marginal returns. From Tainter’s perspective, we are likely already past the tipping point towards collapse but just don’t know it yet.”

  5. Jerome Purtzer on Mon, 26th Jun 2017 5:35 pm 

    None of the experts at the Wall Street Journal, The Fed., Forbes etc.,etc. were able to predict the 2008 meltdown. Matt Tiabbi at Rolling Stone Magazine was finally able to deconstruct the toxic brew of Mortgages, derivatives, credit default swaps, merging commercial banks with stock brokerages into a giant casino only bested in 1929. Nothing has changed except the numbers are much bigger now. The coming crash will be that much bigger. The banks are betting they will be bailed out again.

  6. Apneaman on Mon, 26th Jun 2017 5:41 pm 

    Jerome, predicting crashes is not in their job description. They are the legitimizers of the system. A secular priesthood whose main purpose is to keep the disciples hoping and believing and attack any form of heresy.

  7. twocats on Mon, 26th Jun 2017 5:52 pm 

    on purely the economic front, many of the big players know full well the game is rigged… in their favor, more so now than ever. they stay heavily invested because to go AGAINST this machine is to get positively steamrolled. the economy is a hideous mutated beast from what it was.

    will the party end? sure, at some point. and they’ll try to limit their losses. but with everything so massively correlated it will be difficult to get a recession without a crash. it will be very difficult to navigate the next downturn – whatever the cause.

  8. makati1 on Mon, 26th Jun 2017 7:33 pm 

    Economists are nothing more than fortune tellers with a degree. They are always wrong in their timing.

    Anyone with two brain cells that still work knows that a big crash/reset is overdue, like some earthquake zones in the U$. No one can predict with any accuracy when they will happen, just that they will.

    If you are not prepared for this one, it is your own fault. There will not be a “recovery”. We have not recovered from the last one. The next one will be the end of the 1st world. But, that is the plan. Level the playing field so there can be a world government. Make conditions so bad that there will be a demand for it from the serfs. That’s how I see it. Otherwise some very intelligent people are making a series of very stupid decisions. Not likely.

  9. Go Speed Racer on Mon, 26th Jun 2017 7:45 pm 

    If there is an economic crash, will my iPhone quit working?
    Of course there will be another crash, cause the bailout
    billions are deposited into the personal checking accounts of the banksters who caused the crash.

  10. dave thompson on Mon, 26th Jun 2017 10:27 pm 

    Hey Outcast, “any fool can figure out that we are most likely over due.” I guess you think you are not a fool too?

  11. Outcast_Searcher on Mon, 26th Jun 2017 11:23 pm 

    dave thompson: Well, if calling people fools made you smart, then I suppose you’d be credible.

    If that’s your best answer is to repeat yourself, and not even attempt to answer a couple simple questions, then you lack any credibility.

  12. brough on Tue, 27th Jun 2017 2:50 am 

    Why worry about a banking crash in China. Its still a communist country and recessions are probably illegal.

  13. makati1 on Tue, 27th Jun 2017 3:59 am 

    Brough, the current China bashing is the work of the U$ MSM propaganda machine. China is on the Imperial Shit List because it will not kneel and kiss the U$’ ass. Ditto for Russia and Iran and any other country that dares to be independent of the Empire. They have even turned the ISIS ‘terrorist’ army they sponsor on the Philippines because it has decided to not be an American colony anymore and had the balls to start negotiations with China and Russia for protection and trade.

  14. Davy on Tue, 27th Jun 2017 5:09 am 

    Sure makati, tell that to all the rich Chinese leaving China and going to Vancouver and the US. They are leaving for a reason. The numbers don’t lie. They show China in multiple bubbles. China has a problematic banking sector with huge amounts of bad debt. Its stock market and bond markets are unstable. They have a shadow banking system that is little more than a Ponzi shell. They show a lack of normal due diligence with collateral and value. This has allowed loose credit extension that when combined with all the nonperforming loans makes this particular dangerous cocktail of dysfunctional finance. Extend and pretend is the most pronounced in China with a Government doing whatever it takes to maintain public calm. China has extend and pretend tools the Fed could only dream of.

    China also has many things going for it. It currently has a huge export economy with adequate foreigner reserves to cover some of these inconsistencies. I say currently has foreign reserves because they are dangerously low. China’s economic miracle is dying because Chinese growth cannot happen forever on a finite planet. When that happens the Chinese Ponzi will crash and burn. With it will go the west that is heavily invested in the same system China is part of. The west has its own problems of debt and bad banks. It is the combination of the biggest economies all having these problems that makes our future global economy problematic.

    makati, see that is fair and balanced. If I did not say enough about the west’s problems it is because it is covered by you anti-Americans excessively and obsessively pointing to an emotional extremism of which you are the worst. This site that draws heavily on Zero Hedge cover US problems adequately so that I don’t have to add much. This is an anti-American site full of anti-Americans both from Anglosphere and home grown American ones like you.

    I think your reference to ISIS in the Philippines is completely lame. ISIS is just a brand name and the one in the P’s has legitimate gripes for an oppressive government that does not respect the local population. Yea the US is wrong to have been involved in his fight. Now these people have been radicalized. So yea, indirectly in the P’s the US has help radicalize a local population that just wanted more autonomy from a Christian country that has sought to oppress them. See makati that is fair and balanced. Who is the extremist?

  15. Davy on Tue, 27th Jun 2017 5:29 am 

    The economy look pretty sad in Europe if one digs deeper.

    “Draghi Doesn’t See “Bubbles” – Let Me Show You Some”

    “No signs of bubble”? I’ll show you some of them myself. The percentage of debt of major countries “bought” by the ECB: Germany, 17%, France 14%, Italy 12%, and Spain 16%. In all cases, in 2016 and 2015 the ECB was the largest buyer of said countries’ net emissions.”

    Ask yourself a question: On the day the ECB stops buying, which of you would buy peripheral or European bonds at these prices? Clearly, the first sign of a bubble is the absence of demand in the secondary that offsets the impact of the ECB. It indicates that the current price is simply unacceptable in an open market, even if the recovery is confirmed, especially because rates do not even reflect a minimum real return, being below inflation. European Union high-yield bonds are trading at record-low yields despite the fact that cash generation and debt repayment capacity, according to Moody’s and Fitch, have not improved significantly. European largest stocks (Eurostoxx 50) trade at 20x PE and 8.3x EV/EBITDA despite eight years of flat earnings and downgrades, which have only just recently reversed. Infrastructure deals’ multiples have increased five-fold in three years to an astonishing average of 16-19x EBITDA. Excess liquidity in the euro zone already reaches 1.2 trillion euros. It has multiplied by almost seven since the “stimulus” program was launched.

    “There is a problem in the huge amount of assets bought by the ECB, whose balance sheet already exceeds 25% of the European Union’s GDP. At the beginning of the repurchase program, it could be argued that risky assets, especially sovereign bonds, could have been cheap or under-valued because of the risk of break-up of the euro and overall negative sentiment. However, that statement cannot be made today, with bond yields at historic lows and debt levels at historic highs. Monetary policy is a perverse incentive to spend more and add more debt.”

  16. Davy on Tue, 27th Jun 2017 5:56 am 

    Here is an example of what I despise about my country. I may talk about Chinese ghost cities and highways to nowhere plenty but the US is full of the same. Here is an American version of dwellings with no future in a world of less.

    “McMansions Are Back And They’re More Hideous Than Ever”

    “The McMansion rose to prominence in the early-to-mid-2000s and to this day is the epitome of the excesses created by the biggest mortgage bubble in the history of mankind. In suburbs all across America, these 3,000 – 5,000 square foot, cookie-cutter monstrosities, with their foam pillars and lots that were just barely larger than the footprint of the houses themselves, were popping up faster than you could say “subprime mortgage.” Unfortunately, as we’re forced to report frequently here, Americans tend to have very short-term memories and can’t seem but help but constantly repeat the sins of their past. As such, it’s hardly a surprise that the average size of new homes in the U.S. is once again skyrocketing at an even faster rate than the early part of this century.”

    “And, since Americans will never stop building these hideous dwellings, McMansion Hell should be able to provide us with hours of entertainment for years to come. “They were built to sell in the year they were selling, not for future generations,” said Wagner. “These houses are kind of disfigured, because they were built from the inside out, to have the most amenities to sell faster.” A culture of house flipping helped to quantify certain home improvements, like the addition of colossal marble islands and palatial foyers designed to grab the attention of buyers. That gave these houses even more of a cookie-cutter feel. “It’s about invoking the symbolism of having a lot of money, but not spending a lot of money on the house,” says Wagner.”

  17. Cloggie on Tue, 27th Jun 2017 5:57 am 

    The economy look pretty sad in Europe if one digs deeper.

    Wishful thinking. In fact Eurozone public debt to GDP ratio is actually sinking:

    Largest money bag in the western world BlackRock thinks golden decade ahead for Europe:

    In Hildebrand’s eyes the rest of the world isn’t doing bad either.

    There is a problem in the huge amount of assets bought by the ECB, whose balance sheet already exceeds 25% of the European Union’s GDP

    Why is it a “problem” if a central bank holds 3 months worth of debt of its economic tax farm?!

    It isn’t.

  18. Davy on Tue, 27th Jun 2017 6:18 am 

    Numbers don’t lie cloggie and the situation is getting worse you just refuse to see it because you are heavily invested emotionally in a makati style budding phoenix of empire and greatness. This dovetails with your white supremist racism which is dead on arrival when one looks at reality. Your haze the US and praise Europe is little different from makati and his Asian fantasy phoenix.

  19. makati1 on Tue, 27th Jun 2017 7:08 am 

    Recent U$ financial news:
    “The Age Of No Privacy: The Surveillance State Shifts Into High Gear”
    “James Rickards: The Fed Is Going To Cause Recession”
    “CBO Says 22 Million More Uninsured Under Senate Bill, Premiums Initially 20% Higher Then 30% Lower”
    “GM Will Raise $3 Billion In Debt To Fund Pensions”
    “Seattle Min Wage Hikes Crushing The Poor: 6,700 Jobs Lost, Annual Wages Down $1,500 – UofW Study”
    “The End Of A Growing Consumer Base… And The Beginning Of The Decline”
    “Are Illinois & Puerto Rico Our Future?”
    “Jim Rickards Exclusive: Dollar May Become “Local Currency of the U.S.” Only”
    “Pension liabilities surpass $4 trillion and are set to rise”

    Good news? None that I could find.

  20. Davy on Tue, 27th Jun 2017 7:54 am 

    Lets see some happy Asian news makati. If you have any I will check you with just as much bad news. Please in the future reference your headlines with links. You are extremely sloppy and show a lack of professionalism.

  21. joe on Tue, 27th Jun 2017 9:22 am 

    Don’t let cloggie fool you. Things might be good for currency manipulating Germans, things don’t look so rosy in Greece, in (illegally, but let’s pretend it is legal) Italy the bailouts continue, France (state of emergency) nuff said……

  22. Apneaman on Tue, 27th Jun 2017 11:45 am 

    Greece: Garbage piles mount in capital as heat wave looms

    “With a heat wave expected later this week, Greece’s government on Monday failed to persuade striking garbage collectors to return to work after a 10-day protest left huge piles of trash around Athens.

    Striking workers scuffled with riot police in central Athens outside the stuttered entrance of the Interior Ministry building, where a union delegation presented its demands.”

  23. bobinget on Tue, 27th Jun 2017 2:22 pm 

    It, the crash, already here for Egypt, Syria, Yemen, Sudan,
    Venezuela and shortly Saudi Arabia and UAE.

    The real news behind the scenes…The mysterious (and continuing) fall in Saudi foreign reserves

    One of the things I continue to think is going to be a real motive to see changes in the oil market is the drop in the Saudi reserves (of hard currency not oil).

    This part is key:

    The government has said it plans to resume domestic bond issues later this year after a gap of more than half a year. A senior finance ministry official estimated last month that local bonds would cover 25 to 35 percent of the 2017 deficit; this would leave a sizeable amount to be covered with foreign assets. At $493 billion as of the end of April, SAMA’s net foreign assets remain enough to defend the riyal for years — they would pay for four years of imports. Nevertheless, a rise in the cost of insuring Saudi debt against default this month, to its highest level since early February, suggests concern may be increasing.


  24. Harquebus on Tue, 27th Jun 2017 5:49 pm 

    “The idea that economic growth can continue forever on a finite planet is the unifying faith of industrial civilization. That it is nonsensical in the extreme, a deluded fantasy, doesn’t appear to bother us.”
    “Things end unhappily: “The most probable result … will be a rather sudden and uncontrollable decline in both population and industrial capacity.””
    “And so, as we blunder along with business-as-usual, awaiting the techno-messiah promised by the cornucopians with their free markets and their profit-inspired geniuses, an alternate future awaits us.”
    “No wonder it was the mainstream economists who mounted the strongest attacks on Limits, those whose paychecks depend on elite capitalist institutions, who construct for the public the ideology that rationalizes endless growth, who assure that we will never need to share our piece of the pie if we just keep on growing the pie.”
    “Only the tyrannical state, with its monopoly on violence, its enormous bureaucracies, its tentacles reaching into every facet of life, will have the power to save us from the stupidity that we called the freedom to grow forever.”

  25. Go Speed Racer on Tue, 27th Jun 2017 6:10 pm 

    Set the Greece garbage piles on fire.
    Makes it all go away.
    Add sour cream, and it’s just like Falafel Gyro.

  26. makati1 on Tue, 27th Jun 2017 7:15 pm 

    Davy, plug the headline into your search engine and it will pop up in all of the sites it was posted on. Don’t be lazy.

    “Kunming and the New Burma Road: Building Up not Bombing Down.”
    “New Silk Road Strengthens China’s Position in Southeast Asia.”
    “Eastern Europe Tilts to OBOR and Eurasia”
    “Eurasian Economic Transformation Goes Forward”
    “Local Elections in Cambodia: Wake Up Call for the Ruling Elites?”
    “Thai-Russian Cooperation Seeks Thai Alternatives to Facebook, Google”
    “Global Energy Association’: the New Chinese Mega-project”
    “Russian-Singaporean Cooperation Keeps Growing”

  27. Davy on Tue, 27th Jun 2017 7:55 pm 

    makati plug your fake news into your butt and fart. Real news has links

  28. makati1 on Tue, 27th Jun 2017 9:07 pm 

    Look in the mirror, hypocrite Davy. The “fake news” is what you are fed daily in the FSofA. Asia is still growing at 5-6%/ year vs the West shrinking if real numbers were available. Even if Asia is only growing by half that, it is still growing, not dying. You just don’t have any positive real facts to rebut my assertion and it pains your ass. That happens in a collapsing empire.

  29. makati1 on Tue, 27th Jun 2017 9:35 pm 

    “CNN Is Dead: Network Loses All Credibility As Producer Admits That The Entire Russia Narrative Is Fake News”

    Only the first to admit that fake news is the norm, not the exception, in America. And the serfs suck up the Koolaid. LMAO

  30. makati1 on Tue, 27th Jun 2017 10:04 pm 

    Pushin’ the USD aside…

    “Yuan the key to expansion of Sino-Russian economic ties”

    “Russia made the Chinese yuan a reserve currency in 2015, raising the prospect of deeper economic cooperation between the countries. … An inadvertent beneficiary of US/EU sanctions against Russia, China stands to gain more by working to deepen commercial ties with its neighbor.”

  31. Davy on Wed, 28th Jun 2017 6:02 am 

    “Pushin’ the USD aside…”
    Makati, here is some perspective if you think that is supposed to be a sign of something fantastic.

    “Russia–China trade up almost 30% this year”
    “In 2016, trade between Russia and China grew by 2.2 percent to $69.5 billion”

    “U.S.-Canada Trade Facts”
    “U.S. goods and services trade with Canada totaled an estimated $627.8 billion in 2016.”

  32. Davy on Wed, 28th Jun 2017 6:05 am 

    “Look in the mirror, hypocrite Davy. The “fake news” is what you are fed daily in the FSofA. Asia is still growing at 5-6%/ year vs the West shrinking if real numbers were available. Even if Asia is only growing by half that, it is still growing, not dying. You just don’t have any positive real facts to rebut my assertion and it pains your ass. That happens in a collapsing empire.”

    How does Asian growth relate to your fake news tendencies makati? All you have to do is quit being a college drop out and start putting links with references. It is not a big deal makati.

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