Sunday, July 03, 2016

Brexit & The Precipice:
Governments Will Now Intensify 
Financial Repression
"With the victory of the 'Leave' camp in the June 23rd referendum in the United Kingdom, the world finds itself on the edge of a financial precipice. Crucially - we are not over the edge, not yet. But it is right in front of us. This is far more serious than anything that we have seen since the financial crisis .. And if we go over that edge then something potentially much worse than the financial crisis is in front of us. Which is exactly why Alan Greenspan is saying this is the worst financial situation of his lifetime, and why George Soros is now predicting that the disintegration of the EU and the euro is 'practically irreversible' .. We still have a world of 'too-big-to-fail' financial institutions that are interlocked in a massive web of counterparty risk and other exposures, facing the possibility on a daily basis that some combination of counterparty risk, contagion risk and liquidity risk could bring down the whole system, as explained here – absent the power of central banks to prevent that from happening. However, as I've been writing about for some years now, the dysfunctional fundamentals do not translate to some sort of collapse being inevitable. Far from it. Rather, central banks and governments working in combination have extraordinary powers which can be used to force artificial stability on the system. Creating dollars by the trillions out of nothingness in the form of quantitative easing is one tool, even while changing the very laws and rules as needed to maintain that stability is another tool .. We do indeed stand on the edge of a precipice. Crucially - we are not over the edge, not yet. But it is right in front of us."
- Daniel Amerman
LINK HERE to the essay

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