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 August 1st on what I see from a variety of sources on this issue. This update includes some direct quotes given me earlier this year from some of the sources listed below. In other cases some sources reviewed and approved my comments on their view. Last month we looked at the Brexit situation. While that did rattle markets, it did not lead to a full blown crisis. Below, I have updated new interview links below where I could find them and added a few updates where appropriate. For the most part the basic views of those listed below remain unchanged.
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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. Here is the most recent new interview done by Bill Holter who continues to hold the view that we are in the midst of an ongoing crisis now. Jim Sinclair wrote this recently on his blog and has not changed his view either. Later he added this article.
Bill Holter gave me this direct quote by email to use in May 2016:
"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."
We published this news note here on the blog about Deutsche Bank in mid July and CNBC ran this article. A major Italian bank fared poorly in its recent stress test and its rescue plan faces some hurdles. We should keep an eye on this.
Greg Hunter also did a new interview with both Jim Sinclair & Bill Holter recently in June which you can listen to here. Both confirm that they see a major crisis coming soon and explain why they feel that way.
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 and he did. He said it looked fine to him as written above. For this update, here is a recent interview between Jim and Egon Von Greyerz where they discuss timing for a future crisis. Here is another recent interview. Jim also recently said we should keep an eye on the G20 meeting in China in September in regards to possible significant news.
Robert Pringle - The Money Trap - Robert Pringle has recently said this in regards to a future potential crisis:
"There will doubtless be further crises before we re-learn the old truth. Money fulfills its crucial social functions only when it is held to an inflexible standard – one that is expected to endure for generations."
If you think that is an interesting quote, wait until you see the quote he gave me to use in a new article that will run here on 8-4-16. It's powerful and important given the source. Mr. Pringle is highly respected and connected in the central banking community (former Director of the Group of 30 and editor for Centralbanking.com). You are not going to find a more credible source in my view and its clear he is not impressed with the monetary policies being used currently. He says they are immoral and explains why in the quote he gave me to use.
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, Micheal Belkin, 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. 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. July update: So far Bo has missed his prediction that the US stock market would start into a steep dive heading into October. In addition, the US stock market (Dow, S&P) rose to all time highs which he predicted would not happen and may negate the triple top charts he has been talking about for the stock market. Bo now says until the Nasdaq makes a new all time high he is sticking with his forecast. If the stock market does not start into the dive Bo has predicted by early fall, we will drop his section from this monthly report as his market crisis prediction will have failed.
Dan Popescu - Dan released this video recently in which he points out that Brexit did not trigger a new major financial crisis. He covers China, G20, SDRs, and Gold in this discussion.
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 (May 2016) 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). July update: This source continues to advise me that he does not see evidence that there is concern within the system about an imminent crisis, but does note that many big banks are struggling with earnings (see our article on Deutsche Bank for example). This source also told me he agrees with Robert Pringle's assessment of the current state of monetary policies and called it "quite brilliant" (article coming on this on 8-4-16).
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 ran this article about Morgan Stanley forecasting a weak US economy and a weaker dollar, but it does not suggest this will lead to a major crisis. There was also widespread coverage of the weaker than expected Q2 GDP number in the US, but no predictions of a new major crisis.
BIS/IMF Warnings: We had a new warning from a BIS official in June that we noted here. The concern was that US monetary policy leading to a stronger US dollar was "putting strains on global financial markets and the banking system." BIS continues to issue warnings on debt, but so far has not said they see a new major crisis coming. IMF did issue a statement that Deutsche Bank is the big bank with the most risk to the global financial system. In late July, the Indendendent Evaluator of the IMF issued a report stating that the IMF failed to see the Eurozone crisis coming so we should not be surprised if they also fail to see the next crisis ahead of time.
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Summing Up: Pros and Cons for a Major Crisis Event
Pros:
- 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 few months but it could be temporary.
Cons:
- 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.
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Added notes:
Here are links to some of the more popular recent articles here:
Bank of England Studying a Central Bank Digital Currency (CBDC)
IMF to Study SDR Denominated Assets that Could be "Held by any Parties"
SDR - An Emerging Global Currency (Video)
Why Dr. Coats thinks the world needs the SDR with a "hard anchor"
Keeping an Eye on Deutsche Bank
List of all articles here on SDR's
Thanks Larry. Crisis fatigue is a good name. Like death, everyone can predict it will occur, but not the timing.
ReplyDeleteThanks Doug. Excellent comment.
ReplyDelete