Global Crisis VulnerabilitiesDoug Noland gives a good explanation of the unfolding global financial crisis in this week's CreditBubbleBulletin:
Credit Bubble Bulletin : Weekly Commentary: Global Crisis Dynamics Update
My Comment: I don't think we have long to wait before a global financial crisis overwhelms the central banks. There are so many weak points and I expect the dominoes to fall soon.
Excerpts:
There are key differences: Global Crisis Dynamics are systemic these days, as opposed to the regional blowups from the nineties. The scope of the bursting China Bubble is without precedent. Moreover, post-Bubble U.S. markets are today acutely fragile. Indeed, I can see a scenario where Crisis Dynamics gain further momentum in China, Europe and EM. U.S. stocks, taking out recent lows, commence another tumultuous leg lower, with some panic sparking dislocations in equities and already liquidity-challenged corporate debt markets. And if this scenario is delayed, the Fed hammers global markets on the 27th with another 75 bps hike. :
China has for years operated as banker to the EM “Periphery.” Now Beijing faces the predicament of throwing good “money” after bad or cutting bait and watching the dominoes begin to fall. And, by the way, how much of China’s $3.0 TN international reserve position is locked up in junk EM loans? We cannot today overstate the ramifications of Chinese financial instability.