Monday, July 27, 2015

Legend Who Oversees $175 Billion Warns Global Ponzi Scheme Now Showing Signs Of Coming Unraveled

"On the heels of more weak economic data releases from the United States, a legendary chairman & CEO overseeing more than $175 billion, who is one of the most respected men in the financial world, issued a major warning.

Rob Arnott: “Commodities have crashed. Emerging-market bonds have cratered. Emerging-market stocks have had a grinding 4 1/2-year bear market. TIPS are down. High-yield bonds are down. So pretty much everything outside of mainstream stocks is flat to down over the last 30 months.

Mainstream Media Propaganda Ramps Up As The World Begins To Unravel
So when the talking heads on TV are talking about ‘New high, new high, new high. Isn’t this wonderful?,’ what they are talking about is the one and only market that is going up, which is mainstream stocks.
It’s plausible that the Fed decides, ‘No, we can’t afford to take the risk of raising rates. Let’s continue to extend and pretend.  Let’s continue to keep rates artificially low and let’s add more fuel to the problems that we’ve already got with this mono-polar bull market — stocks-only bull market. Let’s try to keep that going.’ At some point the markets stop paying attention to the Fed, stop giving it credibility because of this silly game.”
The Global Ponzi Scheme Is Headed For Melt Down
Eric King: “Rob, we’ll bring Greece into the conversation. There’s been a lot of turmoil over there. But with the interconnectivity of global markets and what many of the billionaires and top people in the world are talking about is instability, almost a terrifying instability in the global financial system because of the interconnectivity of more $1 quadrillion of derivatives. It has people on edge. You and I both know that you cannot have banks levered to where they are many multiples of their country’s entire GDP. The madness going on out there and the instability that is ever-present in the system — you talk about pillars — it feels as if at any time a pillar could come out from underneath what some have called ‘The global Ponzi scheme,’ and it could just melt down.”
Rob Arnott: “I like the expression ‘Global Ponzi scheme’ because that’s what it is. Greece is caught between a rock and a hard place because they are the poster child for ‘Don’t go here if you belong in the euro. Don’t let your country go down this path.’ And so they are being turned into an object lesson.
The simple fact is that their debt burden is too large and they can’t afford to pay it. Reciprocally, the eurozone can’t afford to acknowledge default because if they say, ‘These bonds are bust,’ then they have to write them off and a lot of banks go under. The too-big-to-fail problem comes into play..."


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