-- Published: Monday, 15 May 2017 | Print | Disqus
All the signs of peak bubble conditions are back – levels comparable to 1929, 2000, and the 2008 financial crisis. Artificially low interest rates coupled with quantitative easing (QE) has brought back the same dynamics that caused previous bubbles to pop as a result of unsustainable extremes, with runaway debt levels up and down the line at center. Yes, the cake eaters have been running rampant since 2008, however even with low interest rates sponsoring the largest debt bubble in history, this madness can’t continue indefinitely. The debt bubble(s) will be popped at some point (soon?).
This is evidenced in bank runs emerging in periphery economies – periphery economies that are coming closer to the core every day. As with the last such instances few saw coming at the time, the next unwinding will most assuredly arrive as well, this time likely exhibiting characteristics of previous episodes as well. Like the Canadian mortgage lender that recently crashed some 60% in one day, the single biggest surprise when they start will likely be the speed at which things can unravel, as cake eaters have become desensitized to such risk with the market interventions these past years.
Certainly some of the cake eaters in Canada have had their bell’s rung in past few weeks – with many more such instances likely on the way later this year – ‘the bell toll’s for thee’.
Indeed, the ‘sell in May and go away’ meme may be very appropriate this year if the past is prologue, given in the most extreme bubble exemplars (with the present sequence being the most profound ever in many important respects), the buying can go on well into summer, and perhaps even into fall. The thing about cake eaters is they generally don’t know when to stop – they just keep eating until they explode. This characteristic is now being played out in the real estate and stock markets all around the world via central bank largesse, with these scoundrels (and their benefactors – bankers, brokers, and bureaucrats) being the fattest cake eaters on the planet.
They simply don’t know when to stop – and they will not cease their insane behavior until they blow up – of this you can be sure. The Toronto housing market is a perfect example of this. Thieving foreigners like Canadian real estate for laundering their booty based on the belief this is a ‘safe jurisdiction’ in which they can store wealth. Unfortunately for these people however, Canadian bureaucrats are just like all the others around the world, and have now imposed predatory taxes on such investments, which has caused the bubble to burst.
And while American market managers may not be as stupid as Toronto bureaucrats, purposefully (yet not knowingly) popping their own bubbles, still, being greedy cake eaters as well, at some point they too will have gorged too much to handle – and the bubbles will burst eventually. As can be seen in Canada, Europe, etc., the cake eaters on the periphery are starting to increasingly suffer from their gluttony; which again, is a condition that will be exposed at the core as well in good time (this year?). Will it be Trump’s doing – unexpected consequences of his proposed tax cuts, or something else? While nobody knows right now – make no mistake – a price for the gluttony will be paid. (See Figure 1)
That’s all for today folks. If you want to see more charts, observations, and conclusions that go along with them from this commentary, please visit our site at treasurechests.info and subscribe.
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The above was an excerpt from commentary that originally appeared at Treasure Chests for the benefit of subscribers on Monday, May 8, 2017.
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-- Published: Monday, 15 May 2017 | E-Mail | Print | Source: GoldSeek.com