Sunday, August 23, 2015

It’s Always Worse Than You Think

Via avordvet

Reuters: “Financial markets, like religions, are faith-based networks. The complex structures of assets and liabilities that comprise markets are held together by a set of underlying beliefs. Unlike religions, however, financial dogmas are occasionally shown to be false. We experienced such a moment last week, when the Chinese authorities chose to devalue their currency.”

Contemporary global finance is a complex “system” of interwoven (electronic) “faith-based networks.” As the bursting of the global Bubble unfolds, myriad “financial dogmas” will be exposed as bogus. Too many have been little more than chicanery.

For the most part, global finance is comprised of a labyrinth of IOUs. And IOU value hinges on confidence, faith and trust. Over recent years too much of global finance has been underpinned - directly and indirectly - by concerted efforts of the world’s central bankers. Trillions of newly minted government finance have been validating tens of Trillions more of private-sector obligations and asset prices. Now, faith in the almighty power of central bank Credit and fiscal deficits, unquestioned for far too long, has begun to dim. The unfolding global crisis of confidence expanded and accelerated this week.

Global financial tumult has now attained sufficient momentum so that even U.S. markets can no longer remain comfortably oblivious.


  1. Poetic justice.
    What the world needs more of.

    -Angry investors capture head of China metals exchange-

    The head of a Chinese exchange that trades minor metals was captured by angry investors in a dawn raid and turned over to Shanghai police, as the investors attempted to force the authorities to investigate why their funds have been frozen.

    1. Rich! Thanks.

  2. I suspect this isn't as random as it appears. I further suspect there will be more unsettling of what are joking called "markets" these days. At some point it is likely the IMF will step in with SDRs to "stabilize" the markets and currencies. "If I control the money I care not who makes the laws."

    Average Joe

    1. "If I control the money I care not who makes the laws."

      Indeed, until the people refuse to accept it except at ridiculous exchange rates, but just think of this, the Vietnamese Piaster was still being accepted April 30 1975, although at huge discounts.