The big story here is China, which is fast approaching its “Lehman” moment with interbank liquidity drying up rapidly and overnight rates are soaring.

As I’ve warned Private Wealth Advisory subscribers before, China’s shadow banking system equal to over $18 trillion (more than 200% of China’s GDP), so this could be the mother of all bubbles bursting.

Indeed, China’s stock market has now fallen 20% and is in a free fall.

The Central Bank of China spoke yesterday to assure the market that there was ample “liquidity” in the system. But the market isn’t buying it. Smart investors shouldn’t either.

In the US, two Fed Presidents (Fisher and Kocherlakota) engaged in verbal intervention yesterday, trying to convince investors that the market misinterpreted Ben Bernanke last week when he said the Fed could taper QE by late 2013 or the middle of 2014.

There isn’t much to interpret here. The Fed has failed miserably to generate economic growth of any significance. All it’s done is create a stock market bubble while draining high quality collateral from the system. Put another way, it’s created a situation in which leverage is even worse today than it was before 2008.

Bernanke knows this and is desperately trying to let the bubble down easily without it bursting. This is impossible. And as the bond and stock market action of the last week shows us, the very second the Fed backs off the system is at risk.

This is just the start. I warned Private Wealth Advisory subscribers in our most recent issue that higher rates were coming noting a collapse in bonds in Europe and the emerging market space.

This could easily become truly catastrophic. The world is in a massive debt bubble and the Central banks are now officially losing control. The stage is now set for a collapse that could make 2008 look like a joke.

If you are not preparing in advance for this, the time to get started is NOW.

I’ve been warning subscribers of my Private Wealth Advisory that we were heading for a dark period in the markets. I’ve outlined precisely how this will play out as well as which investments will profit from another bout of Deflation.

To join us…

Clicking Here Now!!!

Graham Summers

Chief Market Strategist

Good Investing!

http://gainspainscapital.com

PS. If you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.

I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).

Again, this is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com and click on FREE REPORTS.

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

© 2013 Copyright Graham Summers - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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