Sunday, June 28, 2015

Crisis Forecasters are Pointing Towards this Fall

In doing research for this blog I read hundreds of news articles from a wide variety of sources. Everything from the mainstream media sources to the most alternative of news sites out there. I mostly stay with well known sources here because I know many readers of this blog are new to the issues covered and will not recognize many of the alternative news sites and analysts out there. Also, some of these sites/analysts have questionable credibility for a variety of reasons.

In this post I have the opportunity to let readers see the array of alternative news sites that are predicting that a huge financial crisis is coming this fall. It is clear if you follow the internet that a consensus has developed around this view on many of these sites.

In this case we can use just one article about this to provide a window into the thinking that exists. This article on The Economic Collapse Blog not only issues a "red alert" to its readers for the rest of 2015, it has a long list of links to a variety of other sources all expecting a crisis sometime this fall. You can use this one article to get the picture of what is out there. I will add that these sites combined have a substantial following of readers, so they do impact public opinion.


I present this article not because I know a major crisis is coming this fall. I have stated many times here that I do not know if or when another major crisis might happen

Instead, the purpose here is to show readers that there are a lot of people out there who do think a major crisis is coming soon. Of course we know that credible experts like Jim Rickards and others are also predicting another major crisis (although not necessarily this fall). I heard Jim warn a group of influential investors in Dallas in person. He does this same presentation all over the world to influential groups of investors. There is a lot of interest and concern about this topic out there.

In addition, we have documented here on the blog numerous warnings from both the IMF and the Bank for International Settlements about systemic risks that do exist. The IMF and the BIS are not crazy fringe groups, but even they are issuing warnings about the systemic risks that do exist (while also believing the risks will be managed).

All of this means we cannot just ignore the idea that another crisis could be coming.There are a lot of people expecting one at some point in the future coming from a wide variety of view points. Even the IMF and BIS say it is possible.

The other side of this coin is that I do think (based on input from very credible sources) that there is a belief inside the system that these systemic risks can be managed to either avoid another crisis or contain one it if does arise. I feel sure there are more tools available that we are not aware of that could be used if need be. The problem is that the public is not aware these tools exist, so they don't have that information available to consider. 

The key to all this will be public trust and confidence. It's really that simple. When the next event emerges that tests the system (maybe Greece will be such an event, who knows), the public response will determine how severe any new crisis will be. The public response in a complex system is something no one can predict. We can actually use the reaction of the markets and of the Greek people to their current crisis as potential guide in this regard. 

If Greece melts down and there is widespread chaos and civil disobedience, that will tell you something important about how people reacted to this crisis. If we get severe market reactions, that will also tell you something.

If the situation remains fairly calm and some kind of agreement is made to at least kick the can down the road for awhile longer in Greece, it will indicate the public is still willing to go along with those currently in charge of the present system. 

Also, watch to see if there is a giant bank run by the Greek people to get their money out of the banking system. If you see that, it is an indicator they have lost confidence in their banking system. The lines outside Greek banks are already forming, but that can change quickly if a deal is reached soon. EU and Greek officials have assured everyone that they had this situation under control for months. Now we will find out if they really do or not and if they can maintain public confidence. We sort of have a real live beta test running in Greece right now. The world is watching to see how it gets resolved.

The most important thing to do is to stay alert and informed. Keep an open mind to a variety of points of view and watch to see which views pan out and which ones don't as events take place. We can't know the future so it is wise to stay informed and have a plan in mind in case we do get another crisis at some point. 

People in Greece today who have some emergency funds outside the system are better off right now than those who don't. That is just a fact. Those that ignore facts are unwise in my view. So here is direct proof from a real live situation in progress that it is wise to have some kind of backup plan in mind beyond standing in a line hoping you can get some money if you need it

Added note: Article from the Guardian  - here is a key quote regarding confidence:

"If the experiment has been a disaster for Greece, it is also a colossal failure for Europe, with the result that at the very apex of leadership the EU nowadays resembles an unhappy assembly of squabbling politicians locked in what could not be called an “ever closer union”.

. . . .

Three days, three crises, and a collective performance that inspires little hope or confidence in their crisis management."

Added note 6-30-15: At the end of this year we will revisit this post to see if these crisis forecasts turned out to be right or wrong. What matters is what actually happens.

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