Zacarias Pereira da Mata/Shutterstock

Deflation Warning: The Next Wave

The global economic slump is accelerating
Wednesday, September 30, 2015, 11:36 PM

The signs of deflation are now flashing all over the globe. In our estimation, the possibility of an associated financial crisis is now dangerously high over the next few months. » Read more


Anthony Aneese Totah Jr |

Buckle Up, The Ride Is Going To Get Wilder

High probability of greater market turmoil ahead
Tuesday, September 1, 2015, 4:01 PM

The recent stock market and financial turbulence is going to get worse -- possibly a lot worse. This will be true even in the 'core' countries (US, Europe, Japan), while peripheral countries are suffering unusual levels of turmoil.

It’s nothing personal. This is simply how things were always destined to end. » Read more



What Happens Next Will Be Determined By One Thing: Capital Flows

Follow the money
Friday, August 28, 2015, 1:28 PM

Executive Summary

  • Why global capital flows will determine everything
  • What impact euphoria and fear wil have on liquidation and valuation
  • The importance of debt denominated in other currencies
  • What's likely as capital shifts from Risk-On to Risk-Off assets

If you have not yet read Part 1: Here's Why The Markets Have Suddenly Become So Turbulent available free to all readers, please click here to read it first.

In Part 1, we listed five interlocking trends that will severely limit the scale and effectiveness of official responses to the next recession. In effect, the world will not be able to “borrow and spend” its way out of recession.

In Part 2, we’ll examine the single most important dynamic in any asset value: capital flows.

The Tidal Forces of Capital

Let’s start with the most basic building blocks of supply and demand.

Capital flowing into an assets class (buying) in excess of capital flowing out (selling) increases demand and pushes prices up.

If supply increases even faster than demand, prices may decline despite rising demand.

If capital flows out (selling) in excess of inflows (buying), prices will decline.

Prices are set on the margin.  If 5 homes out of a neighborhood of 100 homes sell for 25% below the previous price level, the valuation of the other 95 homes also drops 25%.

Risk on = seeking asset appreciation and taking on more risk in exchange for higher yields.

Risk off = seeking capital preservation and accepting lower yields in exchange for reduced risk.

Assets have two ways to appreciate/depreciate: the nominal price, and the underlying currency the asset is priced in.

If a Mongolian bond yields 7%, the owner earned a nominal 7% on the capital. But if the currency the bond is denominated in dropped 20%, the owner suffered a 13% loss when the investment is priced in other currencies.

The consequences of capital flows can be counter-intuitive.

For example, if the Federal Reserve creates $1 trillion out of thin air, our initial expectation would be... » Read more



Trouble South Of The Border

Mexico's vulnerabilities pose a huge risk to the U.S.
Wednesday, August 26, 2015, 11:02 PM

Too big to fail is a seven-year phenomenon created by the most powerful central banks to bolster the largest, most politically connected US or European banks. More than that, it’s a global concern predicated on that handful of private banks controlling too much market share and elite central banks infusing them with boatloads of cheap capital and other aid. Synthetic bank and market subsidization disguised as ‘monetary policy’ has spawned artificial asset and debt bubbles - everywhere. » Read more



Is Mexico The Next Greece?

The risk factors investors should watch most closely
Wednesday, August 26, 2015, 11:02 PM

Executive Summary

  • The biggest Mexico risk factors investors need to watch
    • Remittance risk
    • Currency risk
    • Capital flight risk
    • Oil price risk
    • Debt risk
  • What Mexico must prioritize going forward to secure its future

If you have not yet read Part 1: Trouble South Of The Border available free to all readers, please click here to read it first.

Republican presidential candidate, Donald Trump has nabbed many a headline with his disparaging remarks on how Mexico is sending ‘bad’ Mexicans over the border to ostensibly steal US jobs and sell drugs. He has called US leaders ‘stupid’ for letting this happen. The truth of the US-Mexico economic relationship is entirely different.

According to Pew Research, between 2005 and 2010, 1.4 million immigrants moved back to Mexico from the US, 90 percent of them voluntarily.  The total amount of 11.3 million unauthorized immigrants to the US has remained stable, not increased, over the past five years, having risen from about 3.5 million in 1990 to a peak of 12.2 million in 2007. The figure dropped between 2007-09, mainly due to a decrease in immigration from Mexico. Since 2009, an average of about 350,000 new unauthorized immigrants have entered the US annually, of which less than a third are from Mexico, compared to one half before the financial crisis of 2008. (Source)

There are other misunderstandings about the economic and financial relationship between the US and Mexico that transcend raising constituent anger about faux population movements. There is the matter of... » Read more


Off The Cuff: Why Commodities Are Getting Crushed

Reports of econonic growth are 'fluffed-up fakery'
Thursday, July 23, 2015, 7:17 PM

In this week's Off The Cuff podcast, Chris and John Rubino discuss:

  • The Commodity Beat-Down
    • Why are gold, oil, etc so weak?
  • Fluffed-Up Fakery
    • Official economic reports are just pure fiction these days
  • The End Of The Long Cycle
    • The devastation when this bubble pops will be epic
  • Stock market roll-over?
    • It's increasingly looking like we'll finally see a material correction

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio and other premium content today. » Read more


flickr creative commons

Greece Humiliated

The Troika wants Greece to be a warning to the other PIIGS
Monday, July 13, 2015, 6:50 PM

Well, that went badly. For the Greeks in general and for Tsipras specifically. After many years and rumors and brinksmanship, and a powerful "No" referendum from the people of Greece, Tsipras managed to ‘secure’ for Greece a deal worse than any other offered to date. » Read more



Why Greece Is The Precursor To The Next Global Debt Crisis

The Eurozone fantasy will be one of the early casualties
Friday, July 10, 2015, 10:48 AM

There is no way for Greece to fix its debt problem if it keeps the euro as its currency.  Every purported solution that doesn’t address the core cause of the debt is mere theater. » Read more


George Tsartsianidis |

More Sovereign Defaults Are Coming

Prepare for the turmoil beforehand
Friday, July 10, 2015, 10:47 AM

Executive Summary

  • Energy plays a key role in sovereign economic (un)sustainability
  • The export boom is imploding
  • The neofeudal model is collapsing as 'serf' nations enter default
  • Take preparation now, while it still matters

If you have not yet read Part 1: Why Greece Is The Precursor To The Next Global Debt Crisis available free to all readers, please click here to read it first.

In Part 1, we examined the core dynamics that expanded Greek debt to its current unmanageable size—currency/trade deficits and bailouts—and the enormous transfer of private bank debt to the public ledger via the Troika bailouts, only 10% of which trickled down to the Greek people.

There are two other dynamics beneath the surface theater, dynamics which are not unique to Greece but are characteristic of the most heavily indebted nations.

Food and Fuel Imports Drive Structural Imbalances and Debt/Currency Crises

In our recent podcast, Chris mentioned this chart of imported energy by nation. Note that the nations with crushing structural debt loads (the so-called PIIGS—Portugal, Ireland, Italy, Greece and Spain) also happen to be major importers of energy.

What does this have to do with Greece’s debt crisis? Let’s go back to the key driver of Greek debt—imports that far exceeded exports, not occasionally but structurally, year in and year out.  Money was borrowed to pay for those imports, interest accrued on the loans and then austerity was pressed on the debtor nations by the lenders as a means of extracting interest on the rising debts.

If a nation does not generate a significant percentage of its own energy and food needs, or export enough goods and services to offset its imports of energy and food... » Read more



In A World Of Artificial Liquidity – Cash Is King

And you'd better have some stashed out of the system
Friday, July 3, 2015, 11:19 AM

It's more crucial now than ever for people to consider extracting a portion of cash from their bank accounts. » Read more