Sunday, August 23, 2015

Is This the Start of the Crisis?

Readers here know that we have two major questions we are following here:

1) Will we get another major financial crisis worse than 2008?
2) Will the SDR used at the IMF become a global reserve currency?

We have covered this extensively now for many months. We have posted the various systemic risk warnings that have been issued over the last year on a separate blog page

With the substantial drop in US and global markets, it is only natural that people will be wondering if this is the start of the big crisis or just a simple market correction? It's too early to tell of course right now. But we need to keep in mind that if and when we do get another major financial crisis, we are not likely to get any warning and it will could start out in a similar fashion to what we have seen here lately. We also need to remember that because the global system is so interconnected, a problem anywhere can lead to a problem everywhere.

There is just no way to know ahead of time. We have encouraged readers here to have a backup plan in mind in case we do get another major crisis (which is possible at any time).

Below we have some reactions pouring in to the big market selloff we are seeing. It is also worth noting that gold is up against all major currencies in the last 30 days including the US dollar. 
As always, the reader can review the various reactions and decide for themselves what to think. 


CNBC - Dow, Nasdaq Plunge

Bill Holter - "We are Witnessing a Credit Collapse"  - he adds this later

Fox Business - Crushed - Dow Enters Correction Territory

Bill Fleckenstein - Stock Market Plunge Will Accelerate

Bloomberg - Stocks Fall Most in Four Years

CNN Money - Dow Plunges 531 Points

Art Cashin - Prepare for More Downside

CNBC - Jim Cramer - Where is the Fed?

Bob Pisani CNBC - Are we at a Bottom?

AP News - Sinking Currencies in Emerging Economies

Egon von Greyerz - World Headed for Full Blown Panic

Meanwhile - Here is what gold has been doing the last 30 days

Also, whenever you see CNBC promoting a special report entitled "Markets in Turmoil" for viewers on Sunday night for the market opening in Asia, you know people are taking this situation seriously.  Fox Business will also provide special coverage Sunday at 9pm ET.

added note - At the same time as we have world markets on edge, we have some unusual events going on that could add to global tension:

- two major explosions in China (cause unknown)

- ramp up of tension between N. Korea and S. Korea (talks to ease tension underway)

- today a huge explosion (cause unknown) at a US military facility in Japan

added note 8:20 pm: CNBC special report was a non event. No indication that the markets are moving into a crisis mode so far. We'll see how they do on Monday. Bill Holter provides his Sunday night comments here.

added note 10:05 pm: Asian markets are in a pretty sharp selloff right now which has dragged down the US Dow futures quite a bit (down over 300 points right now). We'll check in tomorrow morning to see how it looks.

update 6:15 am (8-24-15) - Chinese market falls 8% and US futures look to open sharply down. We need to watch for markets tripping so called circuit breakers and also to see if any markets are closed. Here is update on CNBC.

Bloomberg - More than $5 Trillion lost in Equity Markets since August 11

Update 8-26-15 (3pm): US Market finally has a strong up day. It's still too early to tell if we are seeing the start of the crisis yet. All this volatility (both up and down) is the opposite of systemic stability and it could be weeks before we know what we are seeing.

Update 8-27-15 (9am): Markets seem to be stabilizing now. Jeffrey Saut of Raymond James offers this more optimistic view of the market on King World News.

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