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Rickards: Brace For Financial Storm 6x Larger Than 2008
INVESTMENT WATCH BLOG ^

Posted on 01/21/2015 12:09:48 PM PST by alexmark1917

Over the coming months, I believe we could see an economic meltdown at least six times the size of the 2007 subprime mortgage meltdown...

The next financial collapse, already on our radar screen, will not come from hedge funds or home mortgages. It will come from junk bonds, especially energy-related and emerging-market corporate debt. The Financial Times recently estimated that the total amount of energy-related corporate debt issued from 2009-2014 for exploration and development is over $5 trillion. Meanwhile, the Bank for International Settlements recently estimated that the total amount of emerging-market dollar-denominated corporate debt is over $9 trillion.

Energy-sector debt has been called into question because of the collapse of oil prices. And emerging markets debt has been called into question because of a global growth slowdown, global deflation, and the strong dollar.

The result is a $14 trillion pile of corporate debt that cannot possibly be repaid or rolled over under current economic conditions. Not all of this debt will default, but a lot of it will. Most of the energy related debt was issued in theexpectation that oil would remain in the $80 to $130 dollar per barrel range.Most of the emerging markets debt was issued with the expectation that the dollar would remain at its weak 2011 levels. Instead oil is down, and the dollar is up, which capsizes these expectations. The moves have been swift and dramatic. Over the past six months, oil has crashed 52%, while the U.S. Dollar Index rose 15%. If default rates are only 10% — a conservative assumption — this corporate debt fiasco will be six times larger than the subprime losses in 2007.

http://dailyreckoning.com/perfect-storm-approaches/

My guess is multiple bubbles will start popping...we have another housing/subprime bubble that will be popped

http://www.theburningplatform.com/2015/01/16/pin-meet-housing-bubble-2-0/

There's also the student loan bubble and even a subprime auto bubble among others...point being, is this is ALL the FED knows how to do...blow asset bubbles to stay afloat.

Also check out David Morgan talking about oil derivatives wrecking the economy with a 4-5 month lag time...

Dec. 31 (Bloomberg) — James Rickards, chief global strategist at West Shore Funds, explains why commodities are crashing. He speaks with Bloomberg’s Pimm Fox and Scarlet Fu on “Street Smart.” (Source: Bloomberg)

Currency Wars: Jim Rickards on Financial Warfare

http://jessescrossroadscafe.blogspot.com/2010/06/jim-rickards-on-economic-war.html


TOPICS: Business/Economy
KEYWORDS: 2008; bondmarket; commodities; corporatedebt; crash; crisis; currency; derivatives; economy; energy; financialstorm; oil; rickards
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Comment #21 Removed by Moderator

To: alexmark1917

But Obama said we are back from the brink and the economy was doing great.

I guess “if you like your good economy you can keep....”


22 posted on 01/21/2015 12:59:01 PM PST by RedMDer (I don't listen to Liars but when I do I know it's Barack Obama.)
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To: alexmark1917

N-CDS (NON-Collateral Debt Securities)
More fraud paper makers

Securities=Backstopped by Extortion-Care


23 posted on 01/21/2015 1:01:26 PM PST by Varsity Flight (Extortion-Care is is the Government Work-Camp: Arbeitsziehungslager)
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To: alexmark1917

“The Crisis is Over.”

“We hold the Extortion-Care theft bag, which can be leveraged at will against you little people, for all our banks-and insurance companies (which are really N-CDS investment houses), all your government retirements belong to us.”


24 posted on 01/21/2015 1:07:36 PM PST by Varsity Flight (Extortion-Care is is the Government Work-Camp: Arbeitsziehungslager)
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To: F15Eagle
"It was high-dollar oil futures that brought down AIG, wasn’t it?"

AIG still seems to be flying. They shoulda been allowed to auger in.....

25 posted on 01/21/2015 1:07:58 PM PST by Paladin2
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To: alexmark1917
From last week's thread discussion on the same topic:

Boom Goes The Dynamite: Oil's Price Crash Is Going To Rip The Global Economy To Shreds

26 posted on 01/21/2015 1:08:41 PM PST by SkyPilot ("I am the way and the truth and the life. No one comes to the Father except through me." John 14:6)
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To: DuncanWaring

No derivatives are based on those bonds?


27 posted on 01/21/2015 1:08:54 PM PST by Paladin2
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To: VanDeKoik
While I think stuff wont be great in the economy for a while, I really have grown tired of these people constantly predicting stuff like this, as they have for years, usually followed with a pitch for some book or “survival” product they are hawking.

I do as well. I decided to put my ultimate trust in God, and do my utmost to be the best father, husband, and friend I could be. The rest, I leave up to him.

"For he will hide me in his shelter in the day of trouble; he will conceal me under the cover of his tent; he will lift me high upon a rock." Psalm 27:5

There are those who spend a great percentage of their time preparing to survive every type of calamity: natural disasters, fiscal collapse, etc. Don't get me wrong, we should be prepared and be responsible. But without God, we will fail in that (or any) endeavor.

Myself, I see the storm clouds gathering as evidence that we may be approaching the last days. My blessed hope is in Jesus Christ.

I do, however, believe that a fiscal collapse is coming. The stock market is a fictitious, QE pumped, overinflated nightmare. Our debt and unfunded liabilities are a ticking bomb. We have been living on borrowed time for decades. The piper has to be paid at some point.


28 posted on 01/21/2015 1:17:28 PM PST by SkyPilot ("I am the way and the truth and the life. No one comes to the Father except through me." John 14:6)
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To: alexmark1917
"Not all of this debt will default, but a lot of it will. Most of the energy related debt was issued in theexpectation that oil would remain in the $80 to $130 dollar per barrel range."

One heluva assumption to "bet" Trillions on.

29 posted on 01/21/2015 1:19:16 PM PST by SkyPilot ("I am the way and the truth and the life. No one comes to the Father except through me." John 14:6)
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To: safetysign

“But Obama says the crisis is over.”

It is, because he said it is. Now, when the really bad stuff happens it’s not his fault.


30 posted on 01/21/2015 1:22:35 PM PST by ryan71 (The Partisans)
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To: Paladin2
The Fed will print money to buy them, too.

Unfortunately for them (and us) you can't print your way out of hyperinflation.


31 posted on 01/21/2015 1:23:27 PM PST by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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To: F15Eagle
From the article:

"There’s also the student loan bubble and even a subprime auto bubble among others…point being, is this is ALL the FED knows how to do..."

We need a global "savior" to give us solutions.


32 posted on 01/21/2015 1:27:15 PM PST by SkyPilot ("I am the way and the truth and the life. No one comes to the Father except through me." John 14:6)
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To: safetysign

If Obama says the crisis is over, it means that it is just beginning. When he says our world is more at peace then ever before, it means World War is about to break open. When he says the planet is warming, it means the planet is cooling. When he says Islam is a religion of peace, it means Islam is a religion of war. You can almost set your clock by asking him what time it is and subtracting 12 hours from what he says.


33 posted on 01/21/2015 2:11:07 PM PST by justa-hairyape (The user name is sarcastic. Although at times it may not appear that way.)
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To: alexmark1917

bkmk


34 posted on 01/21/2015 2:34:05 PM PST by AllAmericanGirl44
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To: alexmark1917

“we have another housing/subprime bubble that will be popped”

but house prices have not risen all that much. Where I am, prices rise exorbitantly, then dropped like a rock. But now, they are just a tad above where they were in 2003. I wouldn’t call that a bubble by any means.


35 posted on 01/21/2015 10:03:37 PM PST by Hardens Hollow (Formerly yorkiemom. I couldn't find Galt's Gulch, so created our own Harden's Hollow. Join us!)
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To: alexmark1917

A flaw in the analysis is that it equate default rates to losses. A default may ultimately result in a 15% loss on the principal amount. By the author’s own calculations, that would make the forthcoming unpleasantness equal in severity to 2008, not six times as bad.


36 posted on 01/21/2015 10:32:53 PM PST by Praxeologue
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To: F15Eagle

yw. i’m in finance so i lived it. wasn’t fun.


37 posted on 01/22/2015 12:40:36 AM PST by wiggen (#JeSuisCharlie)
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To: SkyPilot
“We need a global “savior” to give us solutions.”

Have the government let it happen and not do anything to help!!!

in the depression of 1920 the government stayed completely out of it and it was over in just over a year.

In 1929 government stuck their nose into it and extended it 12 years!!!

Get the hell out of the way and let the economy self correct, those that lose everything are the ones that cause it and deserve to lose everything.

38 posted on 01/22/2015 1:03:38 AM PST by dalereed
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To: alexmark1917

dotcom bubble, housing bubble, stock bubble, social bubble... a circle of life?


39 posted on 01/22/2015 3:15:53 PM PST by alexmark1917
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