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 only listed many of the warnings issued by both the IMF and the BIS here on this blog. You can see that list here. This is because 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 June 1st on what I see from a variety of sources on this issue. This update includes some direct quotes given me from some of the sources listed below. In other cases some sources reviewed and approved my comments on their view.
Jim Sinclair/Bill Holter - 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). Bill gave me this direct quote by email to use for this article:
"Larry, thanks for including us, we both (Jim and Bill) believe we are and have been in crisis mode for quite some time. Something has already broken in derivatives, we just don't know who it is or where. We believe the odds favor Deutsche Bank as a culprit, especially now that they are offering 5% to attract money. This is CRAZINESS ...unless they cannot attract money in any other manner."
Jim Sinclair recently wrote this article which indicates he expects some very dramatic events to take place soon in the gold market. Events like he describes in the gold market would imply there is also turmoil in the overall financial system as well.
Jim Rickards - Jim still believes we will see a major crisis that will lead to big monetary system changes (the SDR replacing the US dollar as global reserve currency). However,Jim does not give a specific time frame for this change to take place. He has said for a couple of years now that it can happen at any time or could take several years, but has indicated he felt it would not be later than the 2018-2020 time frame in some interviews. Jim is always doing a lot of public interviews so I hear him regularly. Basically, Jim says he cannot predict the precise timing for the next crisis 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 as a form of insurance. I asked Jim to review this write up for this update and he did. He said it looked fine to him as written above.
Nomi Prins - Nomi has much the same view as Jim Rickards. She sees a crisis coming in the future, but does not try to give a specific time frame. She did this interview recently where she talks about why she thinks we are headed for a crisis.
Willem Middelkoop - Willem wrote his book The Big Reset which is all about a coming reset for the global monetary system based on economic turmoil and the need to replace the US dollar as the global reserve currency. Willem is a member of the OMFIF Advisory Board. Here is what Willem had to say about possible timing for a new crisis in a recent twitter post.
"New crisis/crash coming? One day it will, but timing always difficult. Could be next week or 2018/2019. Central Banks will do all to avoid."
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, Peter Schiff, Mike Maloney and many others. We can assume this group will not change their view and is on constant alert for an event which might trigger the next crisis.
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. June update: So far Bo has missed his prediction that gold and silver would start into a massive spike higher in April and May, but he continues to stick to his forecast that the US stock market will crash by this fall. If he misses that forecast, I will drop Bo from this monthly update report.
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. In this article, The Street.com quotes Trump from an interview in January as follows:
"We're in a bubble," he said. "And, frankly, if there's going to be a bubble popping, I hope they pop before I become president because I don't want to inherit all this stuff. I'd rather it be the day before rather than the day after, I will tell you that."
In an April interview with the Washington Post, Trum reiterated his doomsday view of the economy, suggesting we might be headed for recession. But this time around, he appeared more open to the idea of his being in charge of finding remedies. "I can fix it. I can fix it pretty quickly," he said."
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.
Added note for this update: I recently reached out to a very well connected high credibility source (who was on his way to a G20 meeting in China) to get a current update. Here is what that source told me:
"I'm pretty sure there is not a major crisis looming..."
I believe this source would give me a heads up if he saw anything new on this coming our way. I will add that this source has been extremely accurate over the past two years when providing me input. For example he told me he expected the dollar to be strong at at time when many were predicting it to take a sharp drop. He now tells me that any further future volatility in the dollar will probably increase calls for a more stable supranational currency around the world (either the SDR or a digital version of a supranational currency of some kind).
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. Added note for this update: Bloomberg did run this article noting that defaults are increasing and spreading outside the energy sector. Also, Bloomberg reports here that Japenese PM Abe recently told G7 leaders the world could be at risk for another "Lehman like" major crisis if the correct policies were not implemented. He wants to delay implementing a sales tax increase in Japan.
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 (anywhere from very soon to a decade from now).
- the IMF and BIS have issued numerous warnings about systemic risks that exist.
- 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. The dollar has stabilized some in the past month but it could be temporary.
- 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 (on the first of each month normally). 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 notes: In June 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. Also, I plan to have an article that looks at recent comments by Jim Rickards and Warren Coats on the idea of a gold backed SDR.
A thank you to Willem Middelkoop for putting a link to this article on his twitter feed here. As an aside, Willem is right that the design of the blog here is pretty basic. That is partially by design since the blog started out as just a hobby and partially because I am an accountant and not an expert in website construction. Initially this blog was really only intended for myself and a few friends and relatives. Over time, it grew into an information site that a lot people have visited that I didn't anticipate. I thought about trying to upgrade the design of the blog, but decided against it because of the time involved and because this blog is really just trying to reach the average person with accurate information so the design was not a priority. Hopefully the content of information here will be helpful enough to visitors to offset the lack of professional design. I hope that does not cause anyone to miss looking at the information archived here. If it does I apologize for overlooking the visual design aspect of the blog because I do understand that it can impact a first impression someone may have.
Here are the links I will repost sometime in June:
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"
Claudio Borio (BIS) Talks about SDRs
List of all articles here on SDR's