It has started – that train has derailed and their are 196 countries in the world (yes 196 countries including Taiwan) which will be effected.
Yes we are now standing on the edge of the abyss – that small black hole is getting larger – day by day.
Image courtesy of otakunoeiyaku.blogspot.com
The rating agencies – your best friend and worst enemy – Let us see – ripples in Puerto Rico, no way out (1) – Brazil – downgraded to junk (2).
But hold on – Moody’s (a rating agency) recently stated to Reuters that “”We don’t have many countries in Latin America on a negative outlook. Most are on a stable outlook.”(3)
Oh – my apologies it was S&P that downgraded Brazil to junk status. .
Do you really believe this shit?
These rating agencies dictate the ratings that in turn indicate the interest rate applied to sovereign debt – these so called professional agencies rate a country’s position in the global economy – the difference between investment grade and junk status can be huge for countries – because many global investors tend to steer away from those with lower ratings.
Lower ratings equals higher interest rates – equals lower currency values – equals less foreign investment- equals a really f&cked up economy ….
Anyway Rating Agencies are whores – users and abusers and do not look at the future – they usually look at the historical figures (with exception to Russia – as that in itself was politically motivated).
I look at the past – to see into the future – history repeating – what is happening is necessary to clear the system of the stupidity of central banks and inept economists and just plain dumb politicians.
Anyway what will trip the wire – the future of this financial farce and allow a global financial re-jig…
1. Yellen and the Federal Reserve increasing interest rates – I have written about this previously- it has to happen. It will happen – otherwise I lose my bet – hate losing bets.
2. U.S. Government to close through lack of authorized funding from Congress (3) – this is a high probability in light of one John Boehner (4) – his personality is one of an outrageous pompous dipshit – that is my opinion by the way– and in order to maintain his position he will take a firm stand on funding.
To appease his detractors- to maintain power.
Image courtesy of Fox News. The Tan Man
3. Defaults – banks and the derivatives exposure – that huge leveraged exposure on downgraded countries – companies – look no further than Brazil and Petrobas – ripples turn to waves.
All European banks are technically under capitalized- all banks scrambling to raise funds to cover a possible devaluation of internal assets – too little too late. And no – Government’s have learned their lesson after the 2008 financial crisis – no bailouts.
Turkey next for ratings review?
United Kingdom skating on thin ice.
4. China continues devaluation or de-pegs along with the Saudi Riyal. Yes folks tough call – but with the trend in oil prices – with a drop well below current prices – means that their is no demand. This is not a ‘conspiracy’ by the ‘House of Saud’ – this is due to no demand in all commodities – and yes gold is a commodity.
China is caught in my ‘useless loop’ for each rise in the USD they have to devalue – to avoid the criticism of the U.S. Congress – no better way to do it than piggy-back your devaluation along with another Country’s attempt to boost their exports.
With China comes that domino theory. Transferring devaluation throughout the region.
Saudi Arabia pegged to the USD and therefore the situation is such that ‘income’ severely restricted – hence overproduction to fill the void – all middle eastern oil exporters are hurting – all are borrowing and when one starts a war – one must finish it – whatever the cost.
5. Immigration- those economic refugees – not humanitarian refugees that are sitting in UN compounds – those economic refugees seeking a better life with social security – free food, free medical and free shelter – costs a lot of money to support. Merkel has a big mouth – typical socialist in that ‘Germany’ will do anything it takes to look after these people.
Frau Merkel – ignoring the people.
Now I am not being sarcastic – but maybe the bleeding hearts may one day look at the videos of these economic refugees – destroying food and water – because ‘not Halal certified’ – the riots in Hungary where these so called refugees deny requests to act in an orderly manner – ummm I could go on …
Michael Smith a nice bloke – says it as it is – check out his videos at this link – may have to scroll through the TURC
And what will happen – when the world is governed by morons?
The stage is set with the destruction of wealth – the first stage completed with the majority of funds leaving the stock markets for bonds – the so called smart money.
Flight-to-quality in fixed income: 10 straight weeks of inflows to Government /Treasury bond funds… longest inflow streak.
Image courtesy of BoA. Merrill Lynch. Click on chart to emblazon.
With the impending Country defaults and anticipated increased interest rates from the Federal Reserve is anyone really aware of a position called ‘cash’?
The bond bubble is setting up to bust – big time – now ballooned higher than the USD76 trillion reported in May 2015.
It is okay though – the stock market has rid itself of the unfaithful – a clean sweep to start again.
Mind you – when a country defaults – who supports the banks?
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