We have concluded here on this blog that really the only thing left to watch for is another major financial crisis so large that it could lead to major monetary system change. Because such an event is impossible to predict from a timing standpoint, I decided to end daily articles here since it could be a long time before another crisis unfolds.
On the other hand, we have established from many highly credible sources that the conditions for another major crisis do exist and are pretty much present all the time. There are many credible analysts who expect this kind of crisis, but we have just listed many of the warnings issued by both the IMF and the BIS here on this blog. You can see that list here. Most people accept these as highly credible sources.
This creates a dilemma for me in trying to serve readers here responsibly. I need to make sure readers are aware of the legitimate warnings and forecasts of credible sources that believe another major crash is either possible or will actually happen. At the same time, I need to make sure that I am not presenting fear based hyperbole if no new major crisis arises any time soon. It's the most difficult issue I struggle with here on this blog.
I have given this problem a lot of thought and my solution is to try and do periodic updates I will title as "Crisis Watch". I will provide a brief summary of all the primary sources of information I follow as to what they are saying regarding the prospects for a new major crisis/crash/collapse. This will hopefully assist readers in a responsible way without me having to make any kind of prediction myself because I freely admit that I have no way to forecast a major event like this unless someone inside the system gives me direct input that they see such a crisis ready to unfold. So far, no one inside the system has done so.
With all that said, here is the rundown for May on what I see from a variety of sources on this issue.
Jim Sinclair/Bill Holter - These two have begun a subscription service that I won't have access to so all I can do is present what I can see from any public comments they make. I believe both Jim and Bill still firmly believe we will see the kind of major crisis we have talked about here this year. In fact, I think Bill Holter thinks it is actually underway now, but is simply unfolding in waves over time rather than in one big sudden event. Bill Holter released this interview recently (he says we may not make it until October).
Jim Rickards - Jim still believes we will see a major crisis that will lead to a big monetary system change (the SDR replacing the US dollar as global reserve currency). However, it is virtually impossible to get Jim to commit to any kind of hard time frame for the crisis. He has said for a couple of years now that it can happen at any time or could take several years, but has always indicated he felt it would not be later than the 2018-2020 time frame. Jim is doing a ton of free interviews now in promotion of his new book on gold so I have heard him quite a bit lately. He has clearly hedged on the timing for the crisis, saying in some interviews it could still be years away, but he is still always warning it could also happen much sooner than people expect. Basically, Jim admits he cannot predict the precise timing so he advises people to prepare as soon as possible because once such a crisis did unfold, it would likely be too late to take any meaningful actions to help weather the storm. Jim says everyone should try to own at least some physical gold. For those who cannot afford gold, I think he would advise them to try and own some physical silver.
Various precious metals advocates - Here we include a number of analysts who regularly do interviews on alternative media sites such as King World News. This group remains virtually unanimous that a huge crisis is coming and most think it will be sooner rather than later. They all advise people to acquire physical precious metals as insurance against such a crisis. In this group would be people like Eric Sprott, John Embry, James Turk, Egon Von Greyerz, Andrew Maguire, David Morgan, and many others. We can assume this group will not change their view. No change with this group in May.
Former IMF Chief Economist Olivier Blanchard - Mr. Blanchard attracted a lot of attention in this UK Telegraph article when he talked about the possibility of debt problems in Japan spilling over into the global economy with some level of crisis potential in the global bond markets.
Bo Polny - Bo is a cycles forecaster who uses methods some find questionable to try and predict future market highs and lows. He has a mixed track record having made some remarkably accurate forecasts while also missing on some major forecasts (which to his credit he admits). In this recent interview with Greg Hunter he puts everything on the line by forecasting that we absolutely will see a major financial crisis by this fall which will see the US stock market take an enormous dive downward and will see gold and silver prices sky rocket higher. Bo has missed on similar calls for gold in both 2014 and 2015, but admits that in this interview and makes his case as to why he thinks he will be right this year. I don't know if Bo will be right or wrong, but if he is right, it will be important to start thinking about some kind of backup plan right away. If you are considering acquiring any precious metals as an insurance policy and Bo is right, you only have a few weeks to months left at most. Jim Rickards basically says that same thing, but is not suggesting that he thinks a crisis will emerge this year. This interview is a perfect example of how hard it is to try and decide what to present to readers here. If Bo is off base, his forecast will seem like needlessly worrying people. But if he were to be right, people would ask why no one one gave them the opportunity ahead of time to try and make some preparations. All I can say is I don't know at all, but I do know that having some kind of insurance plan is wiser than assuming nothing could ever happen. That's just common sense. Here is the latest Youtube release from Bo. No change for him.
Donald Trump - Here is a fascinating new forecaster to consider. Trump is proclaiming he thinks we are in a bubble and about to enter a "major recession". He says many of the same things that those predicting a major crisis above are also saying. In his case, this is a major gamble because if we arrive at November 2016 and no major crisis or recession has happened, he will look really off base and will no doubt take a huge political hit with voters who will assume he is unable to assess things properly. On the other hand, if we do get a crisis like Bo Polny (above) is predicting by this fall, Trump will look like a genius and will no doubt reap gigantic political benefit. I believe he would be elected President if such a thing did happen. Based on that, we must assume that Janet Yellen and the Fed have a vested interest in doing everything in their power to avoid such a crisis event happening this year. The very last thing I suspect they would want is Donald Trump as President. He has already announced he favors a full audit of the Fed and would certainly blame the Fed heavily for any major crisis that unfolded this year and of course would take credit for predicting it ahead of time. Most of the Ted Cruz and Bernie Sanders followers also are skeptical of the Fed. If we get a big crisis this year, expect major political fireworks. If we don't I expect the next President will likely be the Democratic nominee. No change from Donald Trump in May.
Sources who have connections inside the system - These are sources I cannot name because comments they give me are off the record. I hate to do that, but there is no choice. If you promise someone you will keep a comment off the record, you must honor that for moral and ethical reasons. What I can say here is that no sources like this have indicated to me that they see the kind of crisis we are talking about here happening this year. In fact, all the evidence I have from these kinds of sources indicates that they feel pretty good about the stability of the system right now and don't see any reason to make any kind of major changes to it any time soon. Of course, if a crisis did happen, I'm sure they would change their view on making major changes to try and deal with the crisis. But every indication I have is that if there were a major crisis this year, these sources would be surprised by that.
Mainstream media sources (CNBC, Bloomberg, etc) - The overwhelming majority of these kinds of sources are not expecting a major crisis or forecasting one any time soon. If that changes, you probably won't need my blog to know about it.
Summing Up: Pros and Cons for a Major Crisis Event
- virtually all the sources I follow agree a major crisis is possible at some point in the future unless somehow the current unsustainable debt growth in the US and globally is dealt with. Their time frames vary a lot.
- the IMF and BIS have issued numerous warnings about systemic risks that exist.
- many credible experts from a variety of sources genuinely believe a crisis is coming. They vary on the timing for such a crisis.
- the law of averages - since we know that a major crisis has happened in the past and that they tend to happen in somewhat regular time frames (cycles, etc) it's only common sense to assume we will get another one at some point. The question remains when and how severe.
- the US dollar has shown signs of increasing weakness and the precious metals have sustained strong moves up as well. These are some indicators to keep an eye on.
- we can assume the US Fed and US government will do everything in their power to avoid a major financial crisis during an election year which would help their adversaries make a case against them with the general public.
-while the IMF and BIS have issued many risk warnings, neither is forecasting a crisis event at this time. Both have only expressed concern over slow global GDP growth. Christine Lagarde says this:
"She (Lagarde) said the world economy isn't in a crisis but that slow growth risks becoming ingrained as a "new mediocre." She noted the outlook for the next six months has weakened, suggesting the IMF may be revising down its forecasts."
- people have been forecasting a big crisis now every year for the past several years and have been wrong so far. This tends to lead to what I call "crisis fatigue" for the average person who quits listening to such forecasts because nothing major ever seems to happen. Another year of no crisis will just reinforce this feeling.
- mainstream media and mainstream financial analysts continue to see no major crisis coming even though there are some exceptions here and there.
Conclusion: I will try to do an update like this every so often (at least once a month). If events indicate something significant might be happening I will try to jump in with an article at that point. Otherwise, this will hopefully provide some useful information to readers without beating this topic to death every day. Overall, there is not much change in this report from the one last month.
Added note: In May I will re-post some key articles on SDRs so the links to those articles will show up on the right side of the blog during the month of May. The articles with Dr. Warren Coats direct comments (given for this blog) will be re-posted every month as they are some of the best information you are going to find on the prospects for the SDR replacing the US dollar anywhere in the world that I know of.
Here are those links:
SDR - An Emerging Global Currency (Video)
Followup - Dr. Coats Answers a readers questions
Why Dr. Coats thinks the world needs the SDR with a "hard anchor"
New Article Proposes Using SDR to "Finance Global Reflation"
List of all articles here on SDR's