Executive Summary

• Geopolitical unity is fracturing as countries are forced to compete more
• LIBOR is signaling a credit emergency in Europe
• The market is sending signs a major war and/or a major recession may be imminent
• The last remaining heroes for risk-on capital, the FANG stocks, are quickly becoming villains

If you have not yet read Part 1: The Future Ain't What It Used To Be, available free to all readers, please click here to read it first.

The central banks of the world have failed: colossally, completely and dangerously.  Yes, they will try to rescue the “markets” once again, as they did in 2011 and 2016 when things similarly looked to be falling apart.

The reason they might not be able to succeed this time?

They are out of maneuvering room. 

Nothing will happen if interest rates are clubbed back down a percent or two.  To do that, though, would require the same sort of lock-step coordination as prior times.  The ECB, BoJ and Fed would all have to operate seamlessly again. 

The most immediate of my concerns, even more than the tech-wreck that began a few weeks ago, is the rise in the LIBOR interest rate.  Why?  Because trouble always moves from the outside in.

Let’s do the math  With $350 trillion worth of assets tied to LIBOR, that means each 1% rise in the LIBOR rate translates into $3.5 trillion dollars of increased interest costs.

LIBOR is now at its highest rate since 2009, and it's spiking for reasons nobody can fully explain. In my mind, higher LIBOR means that there’s less trust and/or liquidity in the system.  It also means borrowing costs are heading up for... » Read more

In this week's Off The Cuff podcast, Chris and Charles Hugh Smith discuss:

• Nearly Every Market Is At A Record Bubble High
  • But 95% of the population is living under recessionary conditions
• What Can Investors Rotate Into For Value/Safety?
  • There are a few asset classes that make sense
• The High Cost Of Pursuing Continued Economic Growth
  • We're destroying essential components of the ecosphere
• Money And Work Unchained
  • Charles lays out the key insights of his new book

Chris and Charles begin with a romp through the near-endless list of asset classes that have risen to nose-bleed overvaluations in today's markets. The gap between price and value is absolutely insane right now. Where can a cautious investor park their capital in conditions like this? Chris and Charles have several candidates to recommend.

They then dig into an important and fascinating discussion of Universal Basic Income. Make no mistake: we will be hearing an increasing chorus of politicians and the populace clamor for such a solution -- but it's a fool's errand; one that would be tremendously destructive to both our economy and our social fabric. This is the topic of Charles new book, Money And Work Unchained. (If you'd like to read the first few chapters of the book for free, Charles is making them available for free to Peak Prosperity readers here).