ABCs Of The Coming Credit Crunch? - By Staff & News Analysis (25/3/15) PDF Print E-mail
Staff & News Analysis   
Wednesday, 25 March 2015 08:09

The Daily Bell

Dominant Social Theme
: Markets go up and down. Not to worry.

Free-Market Analysis:
This is a good analysis of what could go wrong with world markets (especially Western and US ones) and why ... It touches on a number of memes: Sort through them to better understand what's taking place, or what could take place – and could not.

More:

Maybe it's too quiet. Last week, Ray Dalio, the founder of the $165bn (£110bn) hedge fund Bridgewater Associates, wrote a widely-circulated note warning his clients that the US Federal Reserve risked setting off a 1937-style crash when it starts raising interest rates again.

Dalio provides us with a grim forecast here, and also offers us a question. Can even a modest rate increase destabilize markets worldwide? Are they that fragile? And what about vaunted central bank interference in the market place, not to mention the "plunge protection team"?

With all the buying power at its disposal, does not the Fed along with other central banks have the wherewithal to conquer any sudden downturn at least in the short term?



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The World's Next Credit Crunch Could Make 2008 Look Like A Hiccup - Is This Why Central Bankers Are So Scared Of Raising Interest Rates? - By Ben Wright (25/3/15) PDF Print E-mail
Ben Wright   
Wednesday, 25 March 2015 08:06

The Telegraph, UK

A solar eclipse, a super moon, the FTSE 100 breaching 7,000 and the US Federal Reserve speaking in tongues - truly some kind of financial apocalypse must be nigh. Well, maybe.

We are certainly living in strange times. An unprecedented monetary experiment is coming to a staggered end and no one knows the potential repercussions - a plague of frogs cannot be entirely ruled out.

For the time being, the markets remain sanguine, expecting, for example, a gentle increase in the Bank of England’s main interest rate to just 1.5pc by the end of the decade. And, who knows, maybe the markets are right.

But maybe it’s too quiet. Last week, Ray Dalio, the founder of the $165bn (£110bn) hedge fund Bridgewater Associates, wrote a widely-circulated note warning his clients that the US Federal Reserve risked setting off a 1937-style crash when it starts raising interest rates again.

Then, as now, the central bank had spent years printing money in order to help the American economy recover from the 1929 crash. But the side effect was a stock market bubble, which promptly burst when the Fed prematurely increased rates. Mr Dalio is worried about a repeat performance: “We don’t know - nor does the Fed - exactly how much tightening will knock over the apple cart.”



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US$11 Trillion But, The Song Remains The Same - By Economic Cycle Research Institute (ECRI) (25/3/15) PDF Print E-mail
Economic Cycle Research Institute (ECRI)   
Wednesday, 25 March 2015 08:05

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The Maritime Silk Road — 1405 And 2013 - By Mike Billington (25/3/15) PDF Print E-mail
Mike Billington   
Wednesday, 25 March 2015 08:04

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Contagion Deja Vu - By James Rikards (24/3/15) PDF Print E-mail
James Rikards   
Tuesday, 24 March 2015 07:03

The Daily Reckoning

As my flight from New York to Hong Kong touched down on Sept. 17, 1997, and taxied to the gate, I was startled by the plane parked at the next gate.

It was an old Boeing 707 with the words “United States of America” on top of the fuselage in a configuration eerily reminiscent of the original Air Force One that carried President Kennedy’s body to Washington from Dallas after his assassination in 1963.

But this plane did not have the familiar light blue trim of the presidential fleet. Instead, it had a dark green trim in a shade I refer to as “Treasury green.” This was the government plane transporting U.S. Treasury Secretary Bob Rubin and other officials to the annual meeting of the IMF.

I was there for the same meeting, representing Long Term Capital Management, the then mysterious hedge fund that dominated trading in government bonds of countries around the world. With me were several LTCM partners, including David W. Mullins Jr., a former assistant secretary of the Treasury in charge of federal finance and vice chairman of the Federal Reserve.

A year later, LTCM would come to grief, but we didn’t know that at the time. In September 1997, we were still on top of the world. It made perfect sense for us to join this gathering of central bankers, heads of state, finance ministers and private bankers from around the world. We were in the mix.

The September 1997 IMF meeting was the most momentous and memorable of all the semiannual gatherings the IMF conducts. It occurred shortly after the outbreak of the Asian financial crisis that started in Thailand in July 1997 with the devaluation of the Thai currency, the baht. Prior to that devaluation, the baht had been firmly pegged to the U.S. dollar.



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