Wednesday, June 1, 2011

Governments Never Fixed the Underlying Economic Problems, So We'll Have Another Crash...

While the snake oil salespeople at the retail investing level and the bobble heads on the kool aid selling financial channels have been saying for years that we're in a "recovery" (albeit a slow one), billion dollar fund managers say that nothing has changed and we'll have another crash.

As Bloomerg reports:

Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved.

“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said ...“Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”

The total value of derivatives in the world exceeds total global gross domestic product by a factor of 10, said Mobius, who oversees more than $50 billion. With that volume of bets in different directions, volatility and equity market crises will occur, he said.

The global financial crisis three years ago was caused in part by the proliferation of derivative products tied to U.S. home loans that ceased performing, triggering hundreds of billions of dollars in writedowns and leading to the collapse of Lehman Brothers Holdings Inc. in September 2008.

Jeffrey Gundlach notes that we've still got a quadrillion dollar derivative overhang which dwarfs the size the of real global economy, the government hasn't done anything to fix the basic problems in our economy, and so we'll have another crash:

Pimco co-CEO Bill Gross has repeatedly said that the U.S. is running a Ponzi scheme and says:

Ultimately creditors and investors are at the behest of a central bank and policymakers that will rob them of their money.

Pimco co-CEO Mohamed El-Erian predicts that "financial repression" in the form of a negative real rate of return for savers is coming to America.

The New York Times reports:

Even some senior Wall Street executives acknowledge the lack of change surprises them, given how poorly the industry performed last fall and the degree of government support necessary to keep it from collapsing.

“There was a general feeling that an enormous amount of additional regulation should be put in place to prevent what happened that weekend from happening again,” said Byron Wien, vice chairman of Blackstone Advisory Services and the former chief investment strategist for Morgan Stanley and Pequot Capital. “So far, we haven’t seen a lot of action.”

Robert J. Shiller, the Yale University economics professor who predicted the dot-com crash and the housing bust, said the window for change may be closing. “People will accept change at a time of crisis, but we haven’t managed to do much, and maybe complacency is coming back,” Professor Shiller said. “We seem to be losing momentum.”

Kenneth C. Griffin, founder and chief executive of the Citadel Investment Group, a Chicago-based hedge fund that manages $13 billion, said that regulators and lawmakers needed to impose rules so failing banks could be shut, rather than allowed to operate indefinitely with taxpayer support.

“We’ve taken a lot of steps for the worse, and not for the better, in terms of the structural underpinnings of our capital markets,” Mr. Griffin said. “We have to change the rules and correct the fundamental flaws in the financial system.”

Eurozone crisis risks 'systemic' fallout, says Draghi.

'Perfect storm' looms for world's food supplies. Food prices set to double by 2030, aid group says.
* Demand for food will rise 70 per cent by 2050

The prices of some staple foods will more than double by 2030 unless world leaders reform the global food system, Oxfam has warned.

The aid charity warned that millions more people could suffer food shortages in two decades due to a 'perfect storm' of ecological and sociological factors.

Read more

While the big boys try to sell the "dumb money" on a recovery under a "greater fool" theory, the smart money knows the score...

Meanwhile in Asia:

In China, It is "the mountain going to Buddha, not Buddha going
to the mountain" is not rural-urban migration...but
industries and factories migrating to rural China.!

Mostly, China is helped by perhaps these two things: 1) the Chinese
people, along with their leaders, are keen on finding solutions to
whatever problems which are confronting them, whatever they may be -
the can-do attitude - but not on frivolous activities like trying to
grow bigger balls :) or sending in 79 SEALs on a bunch of Blackhawks
to murder somebody who was unarmed and yet without anything to show
for- and 2) China is not burdened down by wars, not to mention
trillion-dollar Hubris wars, and the infamous White House Murder INC,
like in the Zioconned USA.

For the bigger balls reference, please see Rowson's cartoon at :

For the 79 SEALs, it's Noam Chomsky's count on the number sent to kill
Bogey/phony "bin Laden" and then eliminate all the forensic evidence on
those they killed....?

This is the kind of game of deception the Nobel Peace Prize winner
Manchurian candidate Barack Obomba plays in order to remain spokesman for the war
machine which has increasingly administered blows to Mother Earth and
the defenseless ones of our brothers and sisters on this same planet, from
central America to Darfur and a whole host of other places in between.

Shame on you, teleprompter Obomba who has betrayed the trust of so many in
America who have elected you in hope that you would do better than
your criminal predecessors and of so many of those in the vast continent of
Africa & MENA who thought you would share their hope and dream: to be once
and for all respected, instead of being ignored and trampled upon.

Oh, Libya, Granddaughter of Io, Grandmother of Europa, and Incarnation
of the falling rain, a land of the ancient Mediterranean civilization
and the miracle of the Great Man Made River of the modern times, the
Europeans and their servants are heaving with a pulsating lust after
your luscious goods....

The Inside Job of 9-11 & the sneaky-snake false-flag terrorists: The Big Six...

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