Like everybody, I have no idea when the next market crash will occur, but I do happen to hold the view that a market crash is on the way. In fact, my view is that the entire future from here onward will be marked by sharp plunges (both crashes and regular market declines), followed by periods of stability, if not apparent recovery.
What I track instead are imbalances and risks. Sort of like being a fire marshal who takes note of an outlet with fifteen things plugged into it, some with frayed cords, located near a pile of old cleaning rags. I can't tell you for sure that a fire will result, only that the odds are elevated. A prudent person will take steps to remedy the situation or at least prepare for the possibility of a fire.
"If they cannot address this [the sovereign debt crisis in Europe] in a credible way, I believe within perhaps two to three weeks, we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We're not just talking about a relatively small Belgian bank, we're talking about the largest banks in the world. The largest banks in Germany, the largest banks in France that will spread to the UK in part through the sovereign debt problems in Ireland. It will spread everywhere because the global financial system is so interconnected, all those banks are counterparties to every significant bank in the US and in Britain, and in Japan and around the world. This would be a crisis, in my view, more serious than the crisis in 2008." (Source)
The stakes could not be higher. Normally staid politicians are letting their guard down and saying previously unthinkable things.
monetary unions do not break up without civil war or some other form of authoritarian reaction
You know, after all these political shocks, economic shocks, it is very rare indeed that in the next 10 years we could avoid a war'. A war ladies and gentlemen. I am really thinking about obtaining a green card for my kids in the United States".
In short, there's every chance here that an even worse repeat of 2008 could happen at any time
Phoenix-area real estate collapse echoed troubles Oct 9, 2011 A look at metro Phoenix's foreclosure crisis over the past five years shows an economic crash moving through time and space. The collapse started in new-housing areas on the fringes and then swept inward,
Similarly, the European debt crisis began in the weakest locales first (Ireland and Greece), then infected the middle countries (Portugal, Italy, and Spain) and now threatens to overrun the core (Germany and France). A wave of sovereign defaults will sweep across the region, progressing from the outside in with a self-sustaining and self-reinforcing dynamic, unless somehow stopped.
This means Belgium is potentially on the hook for $78.6 billion in bailout funds for a single institution, which amounts to 17% of GDP (2010 figure). To put this into perspective for our US readers, that would be the equivalent of the USA guaranteeing $2.6 trillion...for a single bank
Anybody care to guess whether the amount that they decided to guarantee will be ultimately sufficient to cover the actual amount of the total potential losses? My guess is that over time the number will prove to be far, far below the final and true cost.
With the triggering of a default, the fear of contagion will spread, because, frankly, nobody really knows where the time bombs are located in the credit default swap (CDS derivative) markets.
The bottom line here is that the European situation is quite far from resolved, and as we've been saying all along, it really can't until large losses are taken by someone.
The key point to understand about our economy is that it is anything but straightforward and linear. It is a complex system, meaning that it has two characteristics of which we should be aware: It requires energy to maintain and/or increase its complexity, and it is unpredictable. One typical feature of complex systems is that they tend to jump rather abruptly from one state to the next. Where they can exist in some sort of seeming equilibrium for quite a while, a sufficient exogenous shock (or a change in conditions, such as becoming energy-starved) can often cause them to transition rather suddenly to the next point of 'equilibrium'. Said more simply, systems often have tipping points
That's why it's best to be pre-positioned in your financial, physical, and emotional preparations, so that when the next bout of extreme volatility exerts itself, little to no immediate action is needed on your part during the tumult
Sorry for all the cut and past Chris Martenson - TOO Damn Many Really Good and Important Points that I wanted to emphasize for anyone coming to my blog - so hopefully directing people to your site for more is compensation enough. Thanks again. Here's the link for more of what the fuck to do about it from Chris: