All Hell is Breaking Loose in The Global Markets

Wednesday, February 10, 2016
By Paul Martin

Although Americans might have been sufficiently distracted this week not to have noticed, it seems a perfect storm of bad news is making its way around the world, almost like a giant whirlpool circling around a drain.

By James Corbett
TheInternationalForecaster.com
February 10 2016

With American attention divided between the Super Bowl distraction and the New Hampshire distraction and the Zika “pandemic” distraction, the rest of the world is sliding into financial meltdown.

In Japan the entire “Abenomics” pipe dream blew up in convincing fashion this week, with the yen surging, the Nikkei plunging into the red and Japanese 10-year bonds dropping into negative territory for the first time ever. With the benchmark rate now negative, investors are essentially paying the government to buy its debt from them, knowing that they will lose on the deal if they hold it to maturity. All of this follows last month’s surprise move into negative interest rates by the Bank of Japan, meaning the central bank is now charging the nation’s banks for parking money in reserve.

Banking woes are likewise causing headaches in Europe where as of press time the STOXX Europe 600 bank sub-index was down 9% on the week (with a number of Italian banks being suspended from trading), the .SX7E bank index was down for its seventh straight week (on par with its 1998 losing streak record), and the FTSEurofirst 300 was down for a seventh straight day. Market jitters are spurred on by lingering concerns over Deutsche Bank, which last week had to assure markets that it actually has enough reserves to make its AT1 bond payments. The bank’s stock is continuing its downward slide.

And as bad as things are in Europe and Japan, they may be even gloomier in South America. Brazil is still ravaged by political and economic turmoil, with the real plunging and GDP plummeting along with it; after a 3.7% contraction last year, the economy shows no signs of pulling out of a nosedive. In Argentina, newly-minted President Mauricio Macri is giving hopes to vulture creditors around the world by promising to make good on their defaulted bonds, which were bought up for pennies on the dollar by hedge funds and international investors during the depths of the crisis. And Venezuela is officially a basket case, with the economy contracting 7.1% in fiscal 2015 with inflation up 141.5% and counting.

The Rest…HERE

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