Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Gold’s Major Reversal to Create the “Handle” - 5th July 20
Gold Market Manipulation And The Federal Reserve - 5th July 20
Overclockers UK Custom Build PC Review - 1. Ordering / Stock Issues - 5th July 20
How to Bond With Your Budgie / Parakeet With Morning Song and Dance - 5th July 20
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

The Great Inevitable a singular name for the financial, banking, credit, mortgage crisis, meltdown, depression, deflation..

Stock-Markets / Credit Crisis 2009 Jul 15, 2009 - 03:11 PM GMT

By: Adrian_Ash

Stock-Markets

Best Financial Markets Analysis ArticleSO SUDDENLY EVERYONE'S NOTICED what a handful of nutty doomsters said about the financial crisis, long before it broke.

The end of the bubble was inevitable. Only the timing was ever in doubt.


From the Wall Street Journal's 2009 guide to the crisis starting two years ago...to new BBC drama, set "when the bubble was yet to burst"...it doesn't matter. Whatever you want to call this on-going crisis (and the Great Depression didn't get its name until perhaps 1934), it was plain to see ahead of Bear Stearns' collapse and the Lehman's failure.

Those who missed it all nod in agreement today. And here at BullionVault, we flatter ourselves that, once or twice, we somehow managed to spy it looming before us as well.

"One day there will be an uncontained financial accident. Within hours credit facilities will be withdrawn, and there will be forced derivative position liquidations at organizations around the world. Modern derivatives will be the brokers’ loans of 1929, resulting in margin calls, liquidations, the evaporation of confidence, spectacular losses, a credit squeeze and financial chaos. The liquidations of assorted off-balance sheet positions will cause the realization of big losses in many highly geared positions. This will in turn cause dramatic re-ratings of the creditworthiness of many borrowers..."
 – Dead Cats & Live Rabbits, summer 2004

"Nothing will stop the markets rediscovering risk in 2007, we guess...And the search for yield, when it blows up, will become a scramble for settlement, a rush into anything offering simple ownership over complexity, real value instead of gearing. If that sounds a little like gold to you, you might be advised to pick up some more at today's fire-sale prices..."
 – Quantum Finance & the Scramble for Gold, 22 December 2006

"Once everyone gets back from vacation and starts to focus on what's really going on, we may be in for a torrid few months in the financial markets. I believe the current lull in gold prices could offer a good opportunity to defend yourself before the real trouble begins..."
 – Email to BullionVault users, 25 August 2007

Of course, "Like most predictions these particularly wild ones [were] almost certainly wrong" as BullionVault director Paul Tustain wrote some five years ago. Because even as we dared hazard them, these stabs at what the coming crisis would look like remained mere guesswork. Albeit guesswork built on the history of how all bubbles end, with the inevitable hilarious consequences for over-geared debtors and speculators.

Regardless of our attempts to judge what's now been upon us for almost 24 months, however, investors and savers – let alone central banks and their financial watchdogs – really should have paid closer attention to what respected, sober economists were also saying way back when.

"As far back as 2003," reports Germany's weekly Spiegel, William White – then chief economist at the Bank for International Settlements (BIS) in Basel, Switzerland – "implored central bankers to rethink their strategies, noting that instability in the financial markets had triggered inflation and become the new 'villain' in the global economy."

Come 2005, even the bubble-blowers themselves could see what was coming. The Mortgage Insurance Companies of America (MICA), a trade body for US mortgage providers, wrote to the Fed on 23 September that year to say it was "very concerned". (The FDIC also received the letter, but seems to have filed it under "mosrgagce" rather than "mortgage".)

At the same time, veteran banking analyst Richard Bove at Punk, Ziegel & Co. in New York sent clients a report that deemed the inevitable blow up so inevitable, it was titled "This Powder Keg Is Going to Blow". In it, Bove stated that America's "nuclear mortgages" had no secondary market once they'd been dumped – like so much Investment Landfill – into institutional and banking portfolios.

"One hopes it will not require a disorderly unwinding of current excesses to prove convincingly that we have indeed been on a dangerous path," said White of the BIS in 2006. But too late! The dangerous path had led right to the top of the cliff, only to crumble away behind us. That's what made it so dangerous – the fact it would inevitably lead to an inevitable plunge.

Economists, policy-makers, newspaper editors and TV critics who didn't even know there was trouble two years ago are now queuing up to agree. So in lieu of a better name, how about precisely that – the Great Inevitable. It couldn't be avoided. Not with cheap money, PhD finance and government-mandated cuts in lending standards all stoking the furnace that kept credit growth boiling.

Only the first of those three is still at work today, so the next crisis may well look different at first. The other two are on sabbatical only, however, rather than permanent leave. The outcome when they return is sure to be ugly once more.

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2009

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules