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The Global Economy – The Upcoming Collapse

 6 min read / 

We have witnessed the global economists saying that 2008 was a major market crash. Did the markets really crash? Lehman Brothers was just the tip of the iceberg. Ben Bernanke, the then Federal Reserve Chairman, along with Merwyn King of The Bank of England and Jean-Claude Trichet of The European Central Bank, came together to formulate Quantitative Easing. The economics had no precedent. The trio only knew that they had to contain the threat which could bring down the global financial system. After the collapse of Lehman Brothers, the waves were so intense throughout the entire financial system that emergency measures had to be administered. 2008 was not a major crash, it was a trailer. The major crash is yet to come.

Is The Worst Yet To Come?

Were the emergency measures taken? What were the emergency measures? Were these measures certified? The knowledgeable economists had certainly advised against unconventional measures to curtail the crisis. More rather, allow some nasty institutions which had created the mess fail. Now the doctrine of economics was with the top central bankers who thought the unconventional way was a band-aid technique which will stop the haemorrhage. Quantitative Easing started: extensive money supply, printing trillions of dollars, buying financial assets from commercial banks and other financial institutions of their choice. This raised the prices of said financial assets, lowered the yields, and there was no target value. According to some of the economists, the problems were mitigated. However, when the funds for the real economy were needed, they were pushed to an artificial  system which bailed out the Too Big To Fail Banks. In The United States, this was an endorsement for ‘good work’ carried out by Freddie Mac and Fannie Mae in concurrence with the Banks. Why was AIG Bailed Out? Could Lehman Brother have been saved in the same way? This is now called a “Failed Experimental Economics”.

Bubbles And Wild Economics

One has seen Q1, Q2, Q3 from the Federal Reserve in the United States before the bond buying stopped. Bank of Japan recently decided to continue and add more stimulus to their economy. Well, stimulus is a very soft word for bubbles and wild economics. Ben Bernanke was recently in Japan to advocate his idea of Helicopter Money to the Japanese Central Bank. However, the Japanese people have been saving money at home rather than spend on any luxuries.

Perpetual Bonds are the Bonds without any maturity date. Now, these instruments are lethal economic weapons known to the mankind. If Perpetual Bonds are released, the user never gets their money back. These instruments can be traded in the future, and since these bonds have no maturity dates, inevitably the Government and the Financial Systems will collapse. These experiments are carried out at some costs and who bears the cost? We can see that whatever measures are taken or thought of by these powerful politicians and unprecedented. The real economy is throttled, the Real Economy is suffering. What is the precedent to the relationship between capitalism and state? Money printing has robbed savers of their assets. By printing money, no meaningful development is achieved, it is just ‘easy money’.

The New Bubbles

Bubbles act like an active volcano that can burst, taking along civilisations with them. By increasing credit, it allows borrowers to buy into markets that they couldn’t afford with cash and hikes the bank’s big profits. The asset bubbles have grown so big that now there is the point of no return. We almost all know how much money has been printed, how much debts have been created and how the balance sheets have expanded.

Too Big To Jail?

All the Central bankers who have continued the Easing measures have now decided to continue asset purchasing, and this is getting more dangerous. Recently concluded meetings of the Central Bankers resulted in a decision to move into infrastructures for asset purchases. Now this is getting not only dangerous, but an unprecedented bubble is about to burst.
In practice, it is the real economy, the real jobs, the real money that matter. Where are the jobs? Where is the growth? Why are stock markets the preferred to defence against the danger of collapse of the badly functioning institutions? Why are stock markets in the world so inflated? Why are real estate markets in the world so over priced and over extended rallies? The collapse is imminent. Now who is responsible for the collapse? Is there no punishment for them? Why are the Central Bankers Too Big To Jail? Why does the society punish ordinary people who default on payments of mortgages?

Why does the society punish the students who have been unable to get jobs to pay back the loans they have taken for advanced studies? Why does this same society of mega thinkers and many thought leaders not punish the ‘Experimenting’ Central Bankers? Whose money is used to experiment on the common people? What is the income of Central bankers? Does anyone keep records of how much money is spent on the G20 meetings?

It is estimated that every G20 meeting expenses are close to $500m. Can this money not be used for the creation of jobs? Can this money not be used for setting up new industries?

The Major Market Crash of 2016

Now, given the above situation and unprecedented Quantitative Easing, everyone, including the major central bankers, is of the opinion that the haemorrhage has stopped so the situation is normal and under control.  But the 2016 collapse of the global economy will be so intense, so severe that 2008 will seem like a walk in the garden. The banks and the real estate companies should have been allowed to collapse. At least in such situations the recovery is healthy.

The attitude that caused the collapse is still found in markets worldwide. The disease has spread to every nook and corner of the world. The contagion has now spread to the housing markets everywhere. In some places in the world, the prices have inflated more than 2400%, some places in Asia and the Asia-Pacific have grown 6000%. What is the rationale? Where is the money flow going? The asset prices, the stock markets worldwide have gone up uncontrollably.

December 2016 will see the Dow Jones Industrial Index at 9000, S&P 500 at 700 and Nasdaq at 2300. No one can stop the storm. It is all about which domino falls first. It is a house of cards. Whichever card falls will bring the end of the game. The effects will be devastating. No one can foresee how intense the crash will be.

The prices will defy all fundamentals and crash to unprecedented lows. The fall will be of epic proportions, never before found in history. But then, there was no QE in history either. The door is small, avoid the panic.

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