{"id":107502,"date":"2022-02-20T10:31:19","date_gmt":"2022-02-20T14:31:19","guid":{"rendered":"http:\/\/stateofthenation.co\/?p=107502"},"modified":"2022-02-20T10:31:36","modified_gmt":"2022-02-20T14:31:36","slug":"everything-points-to-the-biggest-bubble-of-all-time-popping-in-2022-big-time","status":"publish","type":"post","link":"https:\/\/stateofthenation.co\/?p=107502","title":{"rendered":"

Everything points to “The Biggest Bubble of All Time” popping in 2022—BIG TIME!!!<\/h1>"},"content":{"rendered":"

Existing Global Order Is “One Serious Catalyst Away From A Megaquake”<\/strong><\/h1>\n

Excerpted from Doug Noland\u2019s Credit Bubble Bulletin<\/em><\/a>\u00a0(emphasis ours),<\/em><\/p>\n

Bubbles are sustained only by ever increasing amounts of Credit.<\/strong><\/p>\n

The most pernicious Bubbles are those fueled by \u201cmoney\u201d \u2013 perceived safe and liquid Credit instruments.<\/p>\n

Bubbles are mechanisms of wealth redistribution and destruction.<\/strong><\/p>\n

Structural impairment caused by Bubble excess escalates over the life of the boom.<\/p>\n

The pain and dislocation unleashed during the bust is proportional to the excesses of the preceding boom.<\/strong><\/p>\n

Though we\u2019re in uncharted waters when it comes to global Bubble Dynamics, I\u2019ll suggest that geopolitical risks expand exponentially over time.<\/p>\n

My thesis holds that 2022 is a pivotal year for a historic multi-decade Bubble period. On multiple fronts, things have come to a head.\u00a0<\/strong>Today, more than ever, historical context is invaluable for making sense of current developments, while also recognizing the dynamics behind unfolding instability, turmoil and Crisis Dynamics.<\/p>\n

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Following 1999\u2019s manic blow-off excess, I thought the Bubble had burst in 2000. I had to reverse course in 2002, warning that Fed reflationary policies were unleashing a \u201cmortgage finance Bubble\u201d. The \u201cMoneyness of Credit\u201d \u2013 the transformation of Trillions of risky loans into perceived safe and liquid AAA securities \u2013 was instrumental in, at the time, unparalleled Credit and risk-intermediation excesses.<\/p>\n

I thought the bubble had burst in 2008. I reversed course (again) in 2009, warning of an unfolding \u201cglobal government finance Bubble\u201d \u2013 the \u201cGranddaddy of all Bubbles.\u201d The so-called \u201cGreat Financial Crisis\u201d (GFC) gave cover to a perilous \u2013 and fateful \u2013 escalation of government inflationism.<\/p>\n

I feared QE \u2013 the wholesale inflation of central bank Credit \u2013 would prove a slippery slope.<\/strong>\u00a0In the markets, Bernanke\u2019s coercion of savers into the risk markets created a dynamic whereby the markets would become only more integral to system financial conditions, perceived wealth and economic performance. I worried about a \u201cmoneyness of risk assets\u201d dynamic that would see the Fed entrapped in market liquidity and price backstopping operations, crystallizing the already dangerous market misperception that securities entail minimal risk. Stock prices always rise over time, with occasional downdrafts sure to induce Federal Reserve reflationary measures.<\/p>\n

While memories have faded, mortgage finance Bubble consequences were horrible, levying a steep cost on our social wellbeing. From my analytical perspective, the global government finance Bubble created a whole new level of risk. For one, it unleashed capricious inflationary forces globally. Importantly, the custodian of the world\u2019s reverse currency succumbing to rank inflationism (central bank Credit and government debt) freed nations everywhere to do the same.<\/p>\n

Post-GFC reflationary measures opened the monetary floodgates.\u00a0<\/strong>I don\u2019t see how China\u2019s incredible Bubble is sustained without U.S. QE, massive federal deficits, and ongoing Bubble excess. China\u2019s international reserve holdings inflated from about $200 billion to $1.5 TN during the mortgage finance Bubble period, only to then rise parabolically to a high of $4.0 TN in 2014 (as the Fed ratcheted up QE2). Massive reserves, with enormous and unending trade surpluses with the U.S., empowered China to recklessly inflate Credit without the traditional risk of currency instability.<\/p>\n

During a Bubble\u2019s upswing, perceptions hold that the pie is getting bigger.<\/strong>\u00a0The forces of cooperation, coordination and integration hold sway.\u00a0But eventually, the reality of wealth inequities is unmasked.<\/strong>\u00a0Stagnation and fear of a shriveling pie foment animosity, disintegration and conflict.<\/p>\n

China doesn\u2019t become so powerful \u2013 financially, economically, militarily, geopolitically \u2013 without the protracted U.S. (and then global) Bubble.<\/strong><\/p>\n

For today\u2019s heated rivals, the days of cooperation are over. The enemy of my enemy is my friend.<\/p>\n

Hostile to a U.S. global order it views as deeply unjust and contra to its interests, Russia is jubilant over the opportunity to partner closely with a likeminded Beijing.<\/strong>\u00a0Russia gains the security of a vast market for its energy resources outside of U.S. influence, while a military alliance creates the most powerful opposition to U.S. global dominance in decades. Without his harmonious partnership with Xi, Putin doesn\u2019t take the risk of such a confrontational approach with Ukraine, the U.S. and NATO.\u00a0Might the U.S. and its allies being bogged down with a war in Europe embolden Beijing\u2019s Taiwan aspirations?<\/strong><\/p>\n

President Biden believes Putin has \u201cMade the Decision\u201d to invade Ukraine. The situation in eastern Ukraine is rapidly deteriorating. A car explosion at a government building. Gas pipelines bombed. Satellite imagery showing aggressive Russian military positioning along the Ukraine border \u2013 in Russia, Belarus and Crimea. Russian-supported separatists announcing plans to evacuate women and children to Russia. Aggressive cyberattacks.<\/p>\n

While the administration stresses it\u2019s not too late for diplomacy, the situation appears increasingly dire. U.S. intelligence believes Russia is now executing its plan of \u201cfalse flag\u201d attacks and provocations (i.e. accusations of Ukrainian genocide) that it will use as justification for an invasion. \u201cNearly half of Russian forces surrounding Ukraine are in attack position.\u201d Defense Secretary Lloyd Austin: \u201cI don\u2019t believe it\u2019s a bluff.\u201d<\/p>\n

Chinese Bubble developments this week were no less ominous.<\/strong>\u00a0A Friday Bloomberg headline: \u201cCrisis in China\u2019s Property Industry Deepens With No End in Sight.\u201d And Thursday: \u201cChina Builders Miss More Deadlines as Yango Fails to Pay Coupons.\u201d \u201cChinese high-yield dollar bonds fall 1-3 cents on the dollar Thursday\u2026, putting them on track for a fourth day of declines.\u201d One cannot overstate the significance of the ongoing spectacular collapse of China\u2019s massive (and massively levered) developer industry.<\/p>\n

From the nineties \u201ctech\u201d Bubble to the grander \u201cmortgage finance\u201d Bubble to the unbelievably colossal and historic \u201cglobal government finance\u201d Bubble. Bubble inflation not only made it to every nook and cranny across the global landscape. Wild excess went to the very foundation of global finance \u2013 central bank Credit and government debt.\u00a0This is it. Nearing the end of the road. There\u2019s no fledging Bubble waiting to heroically save the day this time around.<\/strong><\/p>\n

Moreover, the amount of monetary inflation necessary to sustain aged financial and economic Bubbles has fueled dangerous inflationary dynamics.\u00a0<\/strong>The Fed and global central bank community are being forced into action, with the tightening of finance necessary to rein in inflation, placing myriad Bubbles in danger. There is today acute fragility throughout global finance. \u201cMoney\u201d and Credit have been severely degraded. Financial manias and speculative leverage have destabilized markets and economies virtually across the board.\u00a0Gross inequities have destabilized societies and international relationships<\/strong>.<\/p>\n

In sum, the existing global order appears one serious catalyst away from a megaquake.<\/strong><\/p>\n

___
\nhttps:\/\/www.zerohedge.com\/markets\/noland-existing-global-order-one-serious-catalyst-away-megaquake<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Existing Global Order Is “One Serious Catalyst Away From A Megaquake”<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-107502","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/stateofthenation.co\/index.php?rest_route=\/wp\/v2\/posts\/107502","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stateofthenation.co\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateofthenation.co\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateofthenation.co\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stateofthenation.co\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=107502"}],"version-history":[{"count":0,"href":"https:\/\/stateofthenation.co\/index.php?rest_route=\/wp\/v2\/posts\/107502\/revisions"}],"wp:attachment":[{"href":"https:\/\/stateofthenation.co\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=107502"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateofthenation.co\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=107502"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateofthenation.co\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=107502"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}