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View Full Version : GOLDMAN SACHS: Welcome to the '3rd wave' of the financial crisis



Camilo
12th October 2015, 14:45
Here we go again....the question is What's the US governemen going to do this time around?

From: GOLDMAN: Welcome to the '3rd wave' of the financial crisis (BusinessInsider.com) (http://uk.businessinsider.com/goldman-sachs-were-in-the-the-third-wave-of-the-2008-financial-crisis-2015-10)

Remember the 2008 financial crisis? Well, it's back.

The financial disaster, which started seven years ago with the collapse in US real estate and investment banking, has entered its third phase, according to a team of Goldman Sachs analysts.

This wave is characterised by rock-bottom commodities prices, stalling growth in China and other emerging-markets economies, and low global inflation, Goldman Sachs analysts led by Peter Oppenheimer said in a big-picture note.

This triple whammy has its roots in the response to the first two waves of crisis — the banking collapse and European sovereign-debt crisis — and it is all part of the so-called debt supercycle of the past few decades.

Central banks all rushed to lower interest rates in response to the first two debt-fueled crises, encouraging investors to lend in emerging markets such as China for a decent return.

Now that interest rates are looking as if they might go up, lenders are heading for the exits and investors are pulling out of commodities, which are closely linked to the fate of the emerging economies.

That's what links the emerging-market wave, or EM, to the first wave. As the US housing market collapsed, low interest rates "helped fuel credit growth and increased leverage, particularly in China," according to the note. Combine that with China's attempt to transform itself (http://uk.businessinsider.com/chinas-economic-transition-from-investment-to-consumption-is-working-2015-10) and escape the middle-income trap, and the plunge in global commodity prices, and you have a new crisis.

Chinese investment has exploded since the crisis, but trillions of dollars (http://uk.businessinsider.com/china-economy-waste-malinvestment-slowdown-2014-11)' worth has most likely been extremely inefficient, or even wasteful. Slower growth means the debt that investment produced will be harder to service. At best, that will be a painful readjustment period for China.

Here's the breakdown from Goldman Sachs (emphasis ours):


But with bond yields in real terms close to zero, and policy rates at historical lows, this extraordinary combination of events has raised concerns about the sustainability of the financial returns on a forward-looking basis, particularly if deflationary forces continue to develop.
As central banks in the developed economies start talking about raising interest rates, rates on safer assets, government bonds, should go up.

This creates less incentive for debt investors to take risks overseas to get a decent yield. They move their money out of emerging markets, making it harder for EM companies to refinance themselves and making it more expensive for them to fund big projects with debt, slowing the global economy.

And here's what that looks like:

http://thepythoniccow.us/goldmansax_gs%20gfc.png

The problem is that the different stages of the crisis keep interacting with each other, stalling the recovery. The emerging-markets collapse has hit the EU at just at the wrong time, in the same way the EU sovereign-debt crisis derailed the US economic recovery in 2010 and 2011.

Here's Goldman Sachs again:


EM markets were moving into Optimism, supported by very accommodative US policy and credit growth. But as Europe finally entered a 'Growth' phase in 2012, bolstered by aggressive policy easing, EMs were just entering their next 'Despair' phase.
So while this could be the last phase of the financial crisis, it won't be over until all the excess lending in emerging markets is worked through. And losses taken.

boutreality
12th October 2015, 16:09
I got online specifically to address this matter and low and behold! Thank you Camilo!

I'd like to offer an angle which may appeal to "our set" here on PA:

Banks divested from internet firms as the market collapsed, then over extended into the real estate market as the constraints of certain regulations were removed. (Bear Stearns and on and on; B of A 'bought-merged' with Morgan Stanley or JP Morgan was it? -A move only allowed by the removal of applicable banking regulations) causing the real estate portion (largest agreed upon cause) of the 2008 collapse- Bush admiinstration accounting tricks that made war costs the responsibility of future administrations did not not help, nor did some (how many?) trillions vanishing from the pentagon under Rumsfeld, who openly stated he could not account for what happened.

Any source citing "Experts" regarding this matter that does not address these prescient factors, knowingly or not, plays into the hands of our enemy.
I simply have not the time to cite what I consider common knowledge, so in this, as in all my posts: Look into it, or don't.

"This is war, we expect some losses, and we're coming for the heads of the bosses." -Talib Kweli (on "Lost Desire" by The Roots)

robinr1
13th October 2015, 01:22
kinda losses all credibility imo with the low global inflation comment.

Paul
13th October 2015, 06:00
kinda losses all credibility imo with the low global inflation comment.

Not in my view :).

The "printing" of money (trillions by the Federal Reserve) is not causing inflation in the general economy. Rather it's causing inflation in the high end economy where the banking money plays, increasingly divorced from the rest of the world economy.

Meanwhile, the collapse that's beginning in the general economy, due to the failure of the debt-based monetary system to be able to continue to exponentially increase lending into the general economy, is causing all manner of price stresses. Commodities, such as oil, tin, copper, ... are collapsing in price. Essentials such as food are becoming more difficult to purchase, as the collapse in the labor market (lowest participation of working age adults in generations) reducing spending power.

The US Dollar is becoming desperately short in supply by Emerging Markets (a key point of the above BusinessInsider article), as the EM debt increases, while the revenue and profits from selling resources causes EM income to collapse. From the perspective of a debt burdened EM nation, this is immense deflation (scarcity of the US Dollars they need to make payments on their US Dollar denominated debt.)

muxfolder
13th October 2015, 10:26
As predicted by Martin Armstrong some time ago.

KAxlp8s7YfA

idiit
13th October 2015, 10:54
Benjamin Fulford 10-13-15… “The Khazarian mob is on the run as US military takes over Federal Reserve Board”
Posted on 2015/10/12


According to the Wayback Machine, FederalReserve.org and .net and .com have never been in operation, from what I can tell. Perhaps Ben made an error with all of that. A few of the commenters pointed this out. However, this does not mean that the scenario Ben describes did not happen.

The highlights below do indicate that massive geopolitical changes are occurring, however.

“The Chinese coordinated with this [Fed takeover] move by announcing their China International Payments System alternative to the Khazarian controlled SWIFT system meaning their take-over of the US dollar system outside of the United States was proceeding as planned. The implosion of the big Khazarian mafia banks is now just a matter of time.

https://kauilapele.wordpress.com/2015/10/12/benjamin-fulford-10-13-15-the-khazarian-mob-is-on-the-run-as-us-military-takes-over-federal-reserve-board/

mgray
13th October 2015, 11:37
kinda losses all credibility imo with the low global inflation comment.

If I may comment on low inflation. The trillions of "liquidity" provided by global central banks have what is called in economics "zero velocity."

The money is propping up the largest banks damaged balance sheets and never getting to the real economy.

As central bankers know and are practicing, if there is no wage growth caused by high unemployment you will not see inflation. Bank lending is at decades low, so none of that "liquidity" is making into circulation.

Hence low inflation.

Paul
13th October 2015, 12:56
If I may comment on low inflation. The trillions of "liquidity" provided by global central banks have what is called in economics "zero velocity."

The money is propping up the largest banks damaged balance sheets and never getting to the real economy.
My take is that the term "zero velocity", as used in this way, is a bit of a misnomer. I suspect that those trillions have quite fine velocity, in a small arena that includes some high frequency traders, the Fed's repo window, the Exchange Stabilization Fund, and the off balance sheets of a few hedge funds, central banks and major banks.

But that small arena has reached "escape velocity" from the rest of the economy ... it has become the arena where the higher quality debt is going to die, as opposed to the lower quality debt that is and will be defaulting in more ordinary ways.

Those trillions, sloshing about rapidly in that inner circle, don't reach the rest of us. If and when they do, then we can speak of inflation in the general economy. Meanwhile, the rest of us who are outside this small arena, whether nations, corporations, or individuals, are finding it increasingly difficult to make payments on any debt we might have.

The amount of debt-paper, and other promises of future returns, including over priced real estate and stocks, promises of social benefits, under-funded retirement plans, etc, has been rising exponentially, for a half century, and now vastly exceeds what can be paid back, in goods, services and property of actual value. So, per force, a debt jubilee is required.

This is all just our elaborate, modern day, reincarnation of the debt jubilee at the end of a fifty year cycle <grin>.

idiit
13th October 2015, 13:14
the terms inflation and deflation are used differently by people. they are misnomers imo. inflation often implies something is getting more expensive yet the truth often is that the fiat currency losing purchasing power is the cause for a certain class like meat at the grocery store costing more and more fiat currency notes/# (ie $price/pound of hamburger ). the hamburger is not more expensive; the fiat currency is losing purchasing power.

http://images.angelpub.com/2011/07/7388/dollar-chart-1792-2011.gif

the correct terminology imo is "purchasing power" or "exchange value". some assets go up in "purchasing power" during it's wealth cycle. some assets lose purchasing power aka exchange values during their waning valuation cycle.

the terms inflation and deflation are confounded, vague, and misleading.

idiit
14th October 2015, 19:19
Illinois To Delay Pension Payments Amid Budget Woes: "For All Intents And Purposes, We Are Out Of Money Now"
10/14/2015

http://www.zerohedge.com/news/2015-10-14/illinois-delay-pension-payments-amid-budget-woes

idiit
14th October 2015, 19:31
A Third Of All Containers Shipped From Long Beach Port Are Empty



The magnitude of the shipping container "contagion" is stunning: in September, the Port of Long Beach handled a near record 197,076 outbound empty boxes. "They accounted for nearly a third of all containers that moved through the port last month. September was the eighth straight month in which empty containers leaving Long Beach outnumbered those loaded with exports."

As the chart below shows, the situation at LA and Long Beach is so dire, the amount of empty container has surpassed the 2008 crisis period, and is about to take out the all time highs from the peak of the 2006 credit bubble:

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/10/20151014_EMPTY.jpg


And here is the "record" West Coast port traffic in all its unglory: as noted above, empty containers now amount to a third of all West Coast port traffic in the US.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/10/20151014_EMPTY1_0.jpg


What is an empty container? The WSJ explains that after under normal conditions, containers filled with consumer goods are delivered to the U.S. and unloaded, they return to export hubs. There, they typically are stuffed with American agricultural products, certain high-end consumer goods and large volumes of the heavy, bulk refuse that is recycled through China’s factories into products or packaging.

Not any more:

Last month, however, Long Beach and the Port of Oakland both reported double-digit gains in exports of empty containers. So far this year, empties at the two ports are up more than 20% from a year earlier.


Outbound empties have mounted this year at other big gateways, too. In August, the Port of Los Angeles, the country’s largest single container port, handled more than 225,000 empty outbound containers, counted in twenty-foot equivalent units, a standard maritime industry measure. That was 21% more than a year earlier. The Port Authority of New York and New Jersey expanded its empty-container exports nearly 31.5% in the first eight months of this year, and empties outnumbered loaded container exports over that time.


There is, however, a silver lining: if the containers remain empty, and once the US slides back into depression, they can always be used for housing, just like now in San Francisco's unicorn bubble mania


http://www.zerohedge.com/news/2015-10-14/third-all-containers-shipped-port-long-beach-are-empty

idiit
15th October 2015, 12:40
Illinois Commits "Fraud On Taxpayers", Lowers Maximum Lottery Payout To Just $600

http://www.zerohedge.com/news/2015-10-15/illinois-commits-fraud-taxpayers-lowers-maximum-lottery-payout-just-600

anything paper; lottery tickets, ira's, pensions, stocks, bonds, annuities.... are paper lies from psychopathic liars.

wise up . you gots to get your horses out of the barn before the barn burns down.

Alpha141
15th October 2015, 13:09
The emerging markets only gained as peripheries to the core economies. As soon as 'liquidity' dries up relative to the absence of money printing. They return to where they were once before. Just because a number is bigger absolutely does not indicate a greater value. It is relative to those things of a similar nature around it.

Remember this. The Financial System will aim to save itself. Not people or their well being. There is going to be an effort to make it stronger. By raising interest rates. This won't work this time round (as they need to withdraw alot of the money printed to save the system) as most countries are in very high debt to GDP ratios. Raising interest rates mean they need to pay an even greater amount of interest relative to the already unsustainable debt. Obviously, the debt on the debt fire 2008 etc was one last gasp and eliminating that option. Delaying the inevitable.

My attitude about this i put into a documentary called 'Money - The Ultimate Consciousness Pacifier' (http://www.servantoftruth.org/money-system.html) as imho. Not being attached to it and having very little means you have no vested interest. Randomness and Synchronicity go off your charts etc. That i my own choice. Something many consider as a last resort but while not having much seems like a great unknown for the materialistic. It is a very liberating on and the universe really opens up to you. As, the age of the Money Changers and their false human value's time is up on this planet. Contemplating the approach i suggest means you do not empower it's imposition over us. As we are all co-creators being in this reality

idiit
15th October 2015, 13:33
^^ I don't want to live in a system where money determines so much of our lives. the ed's are saying soon we'll have no money system here on earth. money is an enslavement system and quite rare on other planets in other galaxies...

even advanced sentient entities aka extra-dimensionals use the barter system. ppl trade. even advanced civilizations trade.

physical metals may not be viable as trade mediums for long but I need to purchase some of my necessities until all necessities are provided for free.