Anyone who has read this blog for very long knows I'm a real Chicken Little when it comes to the economy. Beginning with George Bush's 2002 reckless and excessive tax cuts I've worried out-loud -- and getting louder by the month -- that this trickle-down Pied Piper was leading us and the world off a fiscal cliff.
Well, the cliff is now before us and, frankly, it's too late to do a damn thing about it but sit back and watch the ugly show that's about to play itself out. (Memo to Dick Cheney: Hey, Dick, seems deficits DO matter after all -- you numbskull.)
It's been a lonely six year vigil for us naysayers out here. But suddenly our little group of worry-beaders is getting crowded.
Fortis Bank predicts US Financial market meltdown within weeks
(Fortis is a large bank and insurer in the Netherlands and Belgium.)
BRUSSELS/AMSTERDAM - Fortis expects a complete collapse of the US financial markets within a few days to weeks. That explains, according to Fortis, the series of interventions of last Thursday to retrieve € 8 billion.
“We have been saved just in time. The situation in the US is much worse than we thought”, says Fortis chairman Maurice Lippens. Fortis expects bankruptcies amongst 6000 American banks which have a small coverage currently. But also Citigroup, General Motors, there is starting a complete meltdown in the US”
Financial Times of London
The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.
“A very nasty period is soon to be upon us - be prepared,” said Bob Janjuah, the bank’s credit strategist.
A report by the bank’s research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as “all the chickens come home to roost” from the excesses of the global boom, with contagion spreading across Europe and emerging markets.
“The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets,” he said.”
Business Editor, Financial Times
"Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall “below zero”.