Excerpts: I now feel that it's highly likely we will face a major financial crisis, if not later this year, then by the end of 2018 at the latest. Just a few months ago, I thought we could avoid a crisis and muddle through. Now I think we’re past that point.
From the BIS: And the unprecedented period of ultra-low rates heightens uncertainty about reactions in financial markets and the economy. [My comment: Markets are hooked on low rates]
... keeping interest rates too low for long could raise financial stability and macroeconomic risks further down the road, as debt continues to pile up and risk-taking in financial markets gathers steam. End of BIS:
Debt isn’t simply piling up; it’s up to the ceiling and pouring out the windows. Risk-taking in financial markets can hardly gather any more steam without blowing its top.
Without major reforms in place, the Trump Fed will face a recession, serious global economic issues, and a resulting major equity bear market. Think they will continue to raise rates? How long before they start to talk about supplying a little more QE to appease the markets?
The parlous state of the economy is not just an American problem, or a European or UK or Japanese or Chinese one. It is global.
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