Spring is a time when everything comes to life again, a time when what was dead yesterday, reappears, but it is always preceded by winter. Likewise with the economy, the cycle of economic growth begins with a fall.
The word “crisis” itself is Greek, and means “judgment” or “retribution”. The crisis is the price paid for swollen stock markets and the wealth of previous years. It is not naive to think that the rich become poorer during the crisis, it is only a tool for the redistribution of capital. For example, a large investment fund wants to enter the market and buy shares in a company, but the current price is too high, and the growth potential is already limited, the fund will choose another instrument, postponing the purchase of shares until the right moment. And the crisis gives this moment about once every 10 years. We will now look at the prerequisites for the crisis next year, 2019.
The first and basic premise, as well as 90 years ago, is that economic growth is finite and cannot last forever, but human greed is truly limitless.
Most private investors, funds and banks cannot invest in high-yield investments, they take stocks with leverage, and are welded when everything goes well. But it is worth experiencing shock to the market, as borrowers, being unable to pay their obligations, begin to sell off assets, which entails a second prerequisite.
Rise of the robots. No, this is not an iron terminator with a machine gun, these are trading robots, programs used by large capital for speculative trading within a day, an hour or even a minute. All these programs are united by one thing; they have a drawdown limit. And if this algorithm sees that a certain paper is devalued, then it sells it, without waiting for the limit to be reached. Thus, the shock on the market, and the initial short-term panic, are reinforced by robots that trigger a chain reaction. And as all assets and markets are interconnected, then a general panic of people and robots begins, and in any incomprehensible situation, investors take profits by placing sell orders. But no one is in a hurry to buy them, and the price falls, a crisis begins.
The third is China. In 2008, the PRC has not yet been able to claim the role of world leader and challenge the US championship. But now China is full of determination and economic power, and he is not satisfied with the place of the second world economy. And we see the trade war between the states and heaven under way. It is not known who will win it, but this is in any case an important prerequisite for the global economic crisis.
The fourth prerequisite is to gradually raise the Fed's key rate for the first time since 2014. This means that money becomes more expensive. Thus, the Fed is preparing to become a beneficiary of the crisis, and you can say, “spreading straw”.
The fifth prerequisite, but rather the marker of the coming crisis, and why I expect it in 2019 year. This is a recession. Treasuries, US federal bonds. This means that America’s short-term debt is more expensive than long-term debt. On the picture attached at the bottom, we see two-year bonds intersect with ten-year bonds, and this happens before each crisis (marked with gray stripes). And vertical volatility, shows the magnitude of the future fall. Of course, there are more preconditions, like, for example, a split in Europe, a crisis in France, a fall in oil prices, world indices rollbacks from maximum points, and so on.
Someone will say: "These are the problems of America, and here I am, an ordinary Russian person?" During a crisis, any currency depreciates, but weak currencies depreciate more strongly. Salaries are reduced, and the price tags in stores are rising, employees are being laid off, housing prices are falling, loans are getting more expensive. This is a scenario of a moderate crisis, and I want to believe that the likely 2019 crisis of the year will follow exactly this scenario. But the “supercrisis” can also be used to incite more ambitious plans, including mass pogroms, revolutions, looting and military conflicts in Europe and the Middle East, destabilization of the world order and the rest of their dreams of globalists.
Will there be a crisis in 2019 year? Frankly, I do not know, but I'm preparing for it.
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