Global Markets: It's Getting Ugly Out There

September 30th, 2015
in contributors

by Charles Hugh Smith, Of Two Minds

You'd have to be in full denial mode not to see that it's getting ugly out there in global markets: currencies are melting down, trade and shipping are tanking, commodities are swooning and global stock markets are increasingly on central-bank life support.

Follow up:

Gordon Long and I recently discussed just how ugly it might get in a 28-minute video program.

We also discussed the most critical systemic sources of risk in global markets.

One focus was Gordon's forecast that the market may yet recover from its current downtrend and trace out a M Top: one more buy the dip rally that would then be followed by a bone-crushing downtrend as the wheels completely fall off the global "growth" story.

We also discussed a few of the most critical systemic sources of risk in global markets:

  1. There's too much debt globally; public and private debt has skyrocketed since 2008.
  2. Mal-investment due to perverse incentives: corporations borrow money for stock buybacks rather than to invest in new productive capacity
  3. Stagnant income/revenues: households, companies and nations cannot support more debt
  4. The rise of high-frequency trading (HFT) has increased the odds of flash crashes and instability
  5. The rising U.S. dollar has triggered capital flight from emerging markets and China
  6. China's economy is grinding to a halt, crushing demand for commodities and commodity-dependent economies
  7. Opaque banking: shadow banking in China, dark pools in offshore banking centers, etc. True totals of debt, leverage and the quality of collateral are all unknown
  8. Deteriorating collateral globally. How many of the 60 million empty "investment" flats in China can be sold in an illiquid marketplace with little demand for existing housing? What's the real value of assets listed on U.S. balance sheets that are marked to fantasy?

We cover a lot of ground in this program.

It's Getting Ugly Out There (28:20 video, with Gordon T. Long)


Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved