Talk Is Cheap…”The next move by the Fed in my opinion will be a massive QE4 to try to stop a tsunami of panic engulfing everything financial.”

Thursday, March 19, 2015
By Paul Martin

By Bill Holter
GoldSeek.com
Thursday, 19 March 2015

Yesterday the Fed made their announcement and deleted the famous word “patient”. I have never seen such a nonsensical frenzy over anything, never mind a single word. The reaction was everything …except the dollar was bid. Sadly, reality has also been deleted as the Fed cannot “go there”, if they did and when they do (are forced to), life as we knew it will be history. Reality is the global economy has stalled. Most of Europe is in recession, China’s growth has stalled and the U.S., even with fudged numbers will not be able to show any growth.

As recent examples, China’s real estate crashing at the fastest pace ever, Canada’s wholesale trade crashing, the Fed growth model show only .03% growth, housing starts dropped 17% and car sales have turned horrible. The sovereigns Ukraine and Greece are clearly bankrupt and currencies have already been more volatile than any time in history. Add to the previous an oil market that has collapsed and clearly a margin call has been issued.

My topic today of a global margin call is a serious one and one which should be looked at with an eye towards the debt and derivatives markets. For example, can the oil markets handle a 60% drop in product price without creating some dead and insolvent bodies? Oil is the largest and most important commodity market in the world with $trillions borrowed to drill, frack, produce, refine and ship to market. Some of this debt has been impaired and will never be paid back, who will take the losses? Someone, somewhere MUST take the losses, ultimately it will be whoever originally lent the capital. Ah yes, we will hear “but they were hedged”. I would ask how and by whom because as just mentioned, “someone must eat the loss”. The funny thing about debt is this, unless it is paid off, it never goes away and must be accounted for somewhere and by someone or entity.

Oil is just one market. What about the derivatives on currencies? Or sovereign treasury securities? What about stock markets? I ask these questions because one must question whether any central bank on the planet can ever actually tighten or if any treasury can employ austerity? Think about this long and hard. Central banks all over the world have been easing and printing while nearly all treasuries are deficit spending …and yet here we are with real economies stuck in the mud and financial markets with more leverage and less ability to perform than ever before.

The Rest…HERE

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