If DEFLATION has arrived, then why would the Fed ever raise rates? The fear of an uptick in rates is unfounded if deflation is now consuming the world. Even with free money the consumer price index is hovering around zero, and this portends a drop into negative price changes – deflation.
The REAL FEAR now is that the Fed is impotent, the Fed game only works if there is inflation, but that long term trend is now ending and 7 years of near zero interest rates that failed to kickstart the economy. What can the Fed do since zero is the the new ceiling – are negative interest rates possible?
As predicted the many stocks and indices are taking out the previous mini-crash, many stocks have already penetrated the 24 Aug 2015 crash low and are continuing lower. Placid investors have yet to realize that we are just starting a bigger crash than 2008, the huge off the scale panic is about to begin according to the charts.
The entire system is insolvent and a huge bet on inflation, trillions upon trillions of debt is betting on inflation and the devaluation of the currency making the debt sustainable and palatable. But deflation is here, so the entire debt structure will be threatened with massive defaults across the board. Forget inflation – the threat is hyper-deflation, where the entire debt structure implodes like a black hole consuming itself in a self reinforcing debt death spiral.
What the hell are Junk Bonds really worth anyways? They are JUNK and they will eventually go to zero value. Wall Street pedaled this crap and made worthless paper an investible asset. But now the Piper has to be paid, someone has to be left holding the bag. If trillions of debt is worthless, then Junk Debt will go down with lightning speed.
Other giants leading the way down are Glencore, Deutsche Bank, and Volkswagon. Pay no attention to the reasons offered for the decline, pay attention to the charts. One by one the Aug 24th low is taken out on individual stocks, then as the major indices make a new low the realization that it is over sets in, that pit in the stomach turns into a knot, and fear spreads through the body until the brain is overwhelmed and panic sets in.
The Next Lehmans – Deutsche Bank and Glencore
Could this happen to Deutsche Bank?
“First, we must state the obvious: If Deutsche Bank is the next Lehman, we will not know until events are moving at an uncontrollable and accelerating speed. The nature of all fractional-reserve banks — who are by definition bankrupt at all times – is to project an aura of stability until that illusion has already begun to implode.
By the time we are aware of a crisis – if one is in the offing — it will already be a roaring blaze by the time it is known publicly. It is by now well-established that truth is the first casualty of all banking crises. There will be little in the way of early warnings.”
My best German source informs me that 3 major banks are in trouble, and these 3 banks are fighting every single night to fight off insolvency and failure. He says CitiGroup in New York, Barclays in London, and Deutsche Bank in Germany- every single night are in trouble.
The important thing to keep in mind about Deutsche Bank is that it won’t go down alone if it goes down at all. If it fails, it will take along with it 3,4,5,6 or 10, or 15 other banks! It will be 1 or 2 quickly, then a 3rd and 4th a few weeks later, another, then before you know it, all of Italy and their major banks would be kaput.
Wall Street is trapped like rats in the hull of the Titanic, where are you going to run to now? Bonds? Real Estate? The entire system is about to be pulled under into a suckhole of Biblical proportions. Judgment Day has arrived for the inflated stock market, before this shit storm is over stocks could easily trade in triple digits again, the Dow less than 1,000.