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The Titanic Sinks At Dawn What Titanic? The RMS Titanic, or any of the following:
The titanic creation of paper assets such as bonds, currencies, and stocks has created substantial risk. That risk has spilled over into the crude oil, gold and silver markets since they are strongly influenced by the paper derivative markets – paper contracts for crude oil, paper gold, and paper silver. Leverage and derivatives magnify risk. The instability will eventually create a second version of the 2008 recession/depression. MORE SPECIFICS: Business Inventories to Sales Ratio looks like 2008: This ratio is discussed here. When people and businesses are buying less inventories increase and that affects businesses down the chain including manufacturing, retail, and transportation. More Crazy Stuff Coming: Read David Stockman's article. Margin Debt on US stock exchange: Margin debt peaks along with S&P 500 index. See discussion here. Ten Year Yields: Yields are low in the United States and Europe. German five year yields went negative this week and ten year yields are less than 0.3%. Such negative yields would have been unthinkable a few years ago. I think a titanic disappointment is coming. Martin Armstrong discussed negative interest rates in his article, "Negative Interest Rates – Brain-dead Thinking that Will Implode the World." S&P Earnings per Share versus price: Graham Summers discusses in his article, "This Divergence is Worse Than That of The 2007 Top." S&P Prices up 200% in Six Years: The S&P 500 Index has been levitated by central banks "printing" money. In March of 2009 the S&P was below 680 and today it is above 2,000. See this article for discussion and warning. Examine this monthly chart of the S&P 500 for a 20 year perspective. The chart shows three massive tops in 2000, 2007, and 2015. I have circled the "over-bought" conditions shown in three technical indicators at the bottom. Note that all three have "rolled over" as they did in 1999-2000, and 2007. Perhaps the final peak has occurred or perhaps it is still a few months away, but regardless it is a time for caution. Bill Bonner has written about crash conditions and specifics surrounding the 2008 crash, here and here. Regarding September 15, 2008 he quoted Representative Paul Kanjorski of the 11th congressional district of Pennsylvania: "The Treasury opened up its window to help and pumped $105 billion into the system. And it quickly realized it could not stem the tide. We were having an electronic run on the banks. They decided to close down the operation… to close down the money accounts. […] If they had not done so, in their estimation, by 2 p.m. that day $5.5 trillion would have been withdrawn. That would have collapsed the US economy. Within 24 hours, the world economy would have collapsed. We talked at that time about what would have happened. It would have been the end of our economic and political system as we know it. People who say we would have gone back to the 16th century were being optimistic." CONCLUSIONS: Our financial system has titanic problems, leverage and debt worse than 2008, and is vulnerable to a crash. Large icebergs lie ahead and I suspect that our financial ship has already been struck by several – crude oil price collapse, dollar parabolic rally, Greek exit from the Euro, and escalating war in the Ukraine. Ten minutes after the RMS Titanic struck the iceberg and began filling with water, the "party was still on" for almost all of the passengers on the Titanic. Less than three hours later the "unsinkable" Titanic was gone. Over 100 years later some items have been recovered from the Titanic. Three items that survived the icy depths were diamonds, gold, and silver. Repeat: Lives were lost, paper stock certificates were gone, bonds did not survive, dollar bills were destroyed, but gold and silver endured the sinking of the Titanic over a century ago.Are you prepared for the possibility of a titanic failure in our financial system? More reading: Chris Martenson: Is It Time To Prepare for War? James Rickards: Three Catalysts for the Price of Gold Alasdair Macleod: An Austrian Take on Inflation Gary Christenson The Deviant Investor
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