Sunday, July 27, 2014

CNBC Contributor Art Cashin on his Global Concerns

In this interview with King World News, Art Cashin talks about his concerns about various threats facing the global economy. With over 50 years experience on Wall Street, Cashin is one of the more respected financial media contributors. Below we paste some of his comments from this article that are relevant to what we follow here.

Here are some of his comments with my comments added below that:

Eric King:  “Art, is there an alliance forming between Germany, Russia, and China?”

Cashin:  “I don’t think a full, specific alliance.  But I think what you are seeing is Russia demonstrating to the West that they can find customers elsewhere, and they are utilizing China.  The most interesting conversation in that area is that all of the BRIC nations are looking to find an alternative for the U.S. dollar as a reserve currency.  That could be a black swan that not many people are thinking about.

And the Germans would not be disappointed in that either.  So I think you want to keep an eye on what’s going on here and see if under the cover of some of these geopolitical strains we find that there is going to be a currency problem building that could be global.”

Eric King:  “You were one of the youngest traders to ever earn a seat on the exchange and you’ve been doing this for over half a century.  What are your big worries going forward?  I know we’ve covered geopolitics but what has you concerned?”

Cashin:  That (geopolitics) still remains at the top.  I think the ISIS group in Iraq can present a very clear, present, and almost instantaneous danger.  Second, the connectivity and possible contagion of the financial systems.  Europe in particular looks a little strange to me.  They don’t have the same kind of central government bond system that we have.  Certain benefits and protections that the Fed might still be able to find here will be denied there.  And the mystery that is the Chinese banking system -- that would be my third worry.

So from a financial standpoint, Europe and China.  And in geopolitics, primarily what’s going on with ISIS.


My added comments:  Art Cashin lists a number of issues we have also mentioned here on the blog. So it means we are covering the right issues for readers to keep track of. Listing them by bullet points would look like this:

-Global efforts to find alternatives to the US dollar based system (he mentions BRICS specifically). He says it could be an overlooked possible "black swan".

-the "connectivity and possible contagion of the financial systems". This is something we must always keep in mind. A problem anywhere can lead to a problem everywhere because things are so interconnected and there are huge interest rate related derivatives contracts out there (many still OTC and not really publicly reported anywhere).

-the "mystery that is the Chinese banking system". This somewhat ties in to #2 above since trouble in China now can lead to trouble globally. Also, Jim Rickards has written that he expects some investment products in China to fail eventually.  He believes this will lead to problems in the banking system in China as Cashin hints at. He also thinks it will cause the Chinese people to allocate more investment funds into hard assets.

At times it seems like trying to cover our topic here is overwhelming. There are so many issues than can impact the global monetary system at any time. So far, the change we believe is coming seems orderly and likely to unfold over time in a step by step process. We think this is certainly what the current financial institutions hope for and are planning for. We hope whatever change happens is orderly and  benefits the people as much as possible. 

We live in historic times with all kinds of outcomes possible. Everything from another GFC (Global Fiancial Crisis) to an orderly transition to a more stable system over time is still on the table. And all kinds of outcomes in between.

What we will do here is try our best to follow it all for readers who just don't have time to keep up with it all. We can attest it takes some time to follow it. We read at least 5 articles for every 1 that we may post here on the blog (sometimes more than that).

Hopefully, we select articles and factual information (IMF and BIS documents, etc) that keep readers as informed as possible. We try to provide links so readers can research and verify information on their own. We think it is very important for people to know as much as possible since global monetary system change will impact most people in their daily lives. 


  1. Hi Larry, Thank you for your writings on this blog.

    Just as a thought - it seems unlikely to me that they would go through so much trouble to make sure that the system is interlinked and leveraged to such a high degree unless they were planning to make a less orderly transition.

    As you say - perhaps most anything is possibly at this stage. However, judging the amount of efforts undertaken it seems to me that they would like to accomplish much in this transition. And that in order to make sure that they obtain the necessary degree of motivation - they would make use of the position that has been created (high leverage and great potential for contagion via derivatives, huge debts moved upwards towards sovereign level, geopolitical instability and general turmoil.)

    Also, it seems to me that - from a 'reputation' point-of-view it would be more beneficial to go with BRICS rather then existing IMF & World Bank. It just seems that the reputation of those institutions are to damaged to be seriously respected again. Also, moving towards Russia-China would both allow for breaking of existing US power structures (regime change on a preiodical basis is probably considered beneficial since it decreases risk of local political entrechment) as wel as allow centering of global power to be placed in a more 'natural' position (Russia-China.)

    Well, just some thoughts. :)

  2. Thank you for your thoughts. I am not ruling out any outcome at this point. You make some good points that are consistent with some of the articles we have posted here on the blog. One of the interesting (and unexpected by me) results from doing this blog is that I have gotten some input from some sources well connected in the present system. It has given me some encouragement that there are some good people in the present system working on trying to make things better.

    But I also understand it is unknown if that will succeed or not. All I can do is try to stay informed as much as possible and relay what I can find to readers so they can decided for themselves what they think is likely to happen and how best to prepare. I am dedicated to doing that the best I can and hope readers will benefit and also point others to the blog that may not have much awareness on this topic. That's the real purpose of this blog. To reach out to the "average guy" like myself and try to encourage them to think about and research this important topic.

    When I get comments like yours, it tells me I am accomplishing that goal. Thank you again for your thoughts.