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Thursday, June 16, 2011

Global Stocks to Collapse

Oh my... Here we go again!

Global Stocks to Collapse by 50%

Fuelled by Credit Crunch - Markets Melt

WNN Business News (AP)
Breaking Report, June 17, 2011

The Greek debt crisis whether today or at some point in the future is certain to send the Global Banking System back into a death spiral. An unprecedented collapse is expected as major Banks in France, Germany, Great Britain and the United States will field the brunt of this new meltdown. Loans to Greece are estimated to top $100 billion US. This number comes right out of the equity boxes of the Banks and destabilizes a system still recovering from the 2008 financial shocks. Fear is the rippling effects of a liquidity contraction will take more than One Trillion dollars in leverage out of the system. One banker reported “this is the last thing the struggling global economies need, credit will just dry up and again this will see a ripple down effect to Main Street.
Expect this to extend the global recession for sometime.”

Worse yet. This credit tightening parallels the events of 1932 that saw the world slide into a long deep depression after the 1929 stock crash. Experts say there is little that can be done to stop the spill over into the Equity Markets as the system is highly levered on a global basis. Markets can go down 40 to 50% globally; there is little anyone can do about it.

WNN Business News spoke to Terry A McNeil, a world leading financial advisor who had forecasted the 2008 financial meltdown in 2007. He said, “We are at a crossroad in human history and the markets. What we have seen over the past 50 years is an anomaly that was caused by cheap energy and commodities. It cannot be repeated when populations are expanding and key elements are dwindling. There is no Santa Claus to bring more presents of infinite resources. The world needs to wake up.

WNN pressed Mr McNeil further to explain where he believed markets were going and why they would go there? “Sure a tumble of 50% or so is quite realistic and we expect they are going to stay down, if not get worse. Our firm, First Financial Insights has determined seven key drivers that will set the stage for this long extended decline in markets. WNN asked, “Do mind sharing these with our readers? “Certainly” Mr McNeil responded, “there are seven inter-related drivers as our firm sees it”

“One, the leverage in the system created by the Banks which is ten times World GDP bears no relationship at all to the utilities of the global productive capacity of nations. It is funny money and implicitly worthless. That is a huge burden to overcome.

Secondly the globe is running out of oil and no one right now has a firm grasp on just where supplies are and how long they will last. This is like telling a diabetic insulin supplies are about to run out, Science may or may not have an answer in both cases. Sorry.

We see the third factor as being commodity prices that are set to rise dramatically. Having gone through an extended 50 year period where prices have declined we are seeing a logical breakout to the upside as populations grow, and land, fertilizers and water become scarce. This is a physical conundrum.

Global warming is another biggy that Governments have failed to address for years. Now, it’s all coming home to roost. The impacts of severe changes in weather patterns and water levels affect the whole food chain and infrastructure.  This is a biblical event.

Five, we see expanding populations being an untenable algebra. We are in huge overshoot relative to what our planet will sustain. Some leading scientist say the earth can ideally house 1.5 billion and we are at 7 billion and climbing to 10 billion. A mean reversion is set to occur that is not good for business.

Interest rates will soon rise sharply as monetary policies will chase a voodoo belief that it controls inflation by raising rates. Silly, because people will have to eat. Add to the brew that supplies are declining, and then prices will climb no matter what. This is not a textbook. It’s life.

Against this background we see global unemployment going to 25 or 30% with food and supply shortages a daily occurrence. This is not a good business landscape and thus GDP’s will shrink by 10 to 20%. Real GDP will contract even more as currencies everywhere debase without supporting resources.”

So how long do you think it will take for this to correct or turn the corner? WNN asked. “Listen the days of economic growth are over and markets ultimately reflect reality. The real physical relationships among resources, population, ecology, climate and mathematics simply caught up to us. Market metric and currency values are pretty much irrelevant” he lamented.

WNN Business News (AP)
Special Report
June 17, 2011

Swept away by the Invisible Foot