Can Things Get Worse? It Appears So!

With slaughter in the US and France and now bombs and slaughter in Turkey, not to mention the daily menu in the Middle East, the Guardian notes an RBS report for 2016 that the financial markets will drop by another 20%! This is without a housing bubble.

The Guardian states:

In a note to its clients the bank (ie RBS) said: “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.” It said the current situation was reminiscent of 2008, when the collapse of the Lehman Brothers investment bank led to the global financial crisis. This time China could be the crisis point.

 They also state:

Morgan Stanley has said oil could fall to $20 a barrel, while Standard Chartered has predicted an even bigger slide, to as low as $10. Standard said: “Given that no fundamental relationship is currently driving the oil market towards any equilibrium, prices are being moved almost entirely by financial flows caused by fluctuations in other asset prices, including the US dollar and equity markets. “We think prices could fall as low as $10 a barrel before most of the money managers in the market conceded that matters had gone too far.”

This may very well have more impact on the US elections than anything else. In the US the Government has exploded Medicare costs to those with a modicum of a pension while promising the young unemployed, and due to our educational system, unemployable, near free health care. 

Tonight we will again hear about the State of the Union. Doubtful we will hear anything factual. It is reminiscent of a Five Year Plan in Russia in the 1930s. And how well did that go for them?

Fear is both contagious and a driver of mass economic instability. Fear comes from lack of reality and leadership. Pretending does not work, political world views which deny reality does not work.