The world is about to face a 'Minsky moment' because of climate change, Mark Carney has warned. Please read the entire Disclaimer carefully before you use this website or read the newsletter. If there was ever a Minsky Moment, this would be it. To elevate debt to dangerous levels to enable share repurchases—which usually lowers profits because of the increased interest costs—is the antithesis of judicious corporate stewardship. That is the moment when asset … The way we see it, buying gold or silver bullion is one of the best ways to take a defensive position during what could be the beginning of an all-encompassing trade war and a truly global, and a round of highly competitive currency devaluations, wherein the winner is the biggest loser. Traders are reportedly piling into hedges if the contagion becomes a disaster for the global economy which is already limping along. China’s promise to purchase an additional $200 billion worth of US goods including agricultural products is now in considerable doubt. Since then buybacks have been a popular tool for management to stuff cash back into the company, indirectly, by reducing the share float. The shortest and most accurate answer to the question is that nobody knows whether we are facing a Minsky Moment. Marketwatch reported US companies cut back on investment last year, due to reduced exports and disruptions to the global economy from the US-China trade war. Notify of . If something were to happen to stop, or restrict the practice, the Minsky Moment would almost certainly come about via a stock market crash the likes of which we may not care to envision. In a new film by the World Wildlife Foundation (WWF), the former Bank of England governor has warned that the finance sector is not doing enough to combat the mounting problem and that we need to take swift action. This article has presented some of the “Minsky Moment” scenarios that could set the gold price on a tear the likes of which we’ve never seen. rose just 1.3% in 2019 - well short of the 6.4% and 4.4% of 2017 and 2018. Written by Lance Roberts | Feb 7, 2020. Is the current US stock market, and global economy, approaching a Minsky Moment that pops it? Private equity is undergoing what the great theorist Hyman Minsky pointed out is the Ponzi stage of the credit cycle in capitalist financial systems. The outcome is a gradual race to worthless and America’s trading partners punting the dollar and replacing it with a basket of currencies, likely (remember all that Central Bank gold buying) backed by gold. email. Some industries, and us at AOTH, believe this aggressively protectionist stance will lead to currency wars and turn the $6 trillion per day global currency market into a new battleground for Trump’s trade wars. Rising interest rates compound the problem. This time is different. Each year another trillion dollars gets added to the national debt. Some mining companies have had trouble delivering supplies due to transportation blockages and delays. Instead, we know that prices are really now set by central banks, on the model of the Politburo in the old Soviet Union. By Albert Pang-August 5, 2016. Expressions of opinion are those of AOTH/Richard Mills only and are subject to change without notice. According to a blog by Evergreen Gavekal, a registered investment advisor (RIA), while there is nothing inherently wrong with share repurchases (reducing a company’s outstanding shares makes each dollar of earnings more valuable on a per share basis, which is good for investors), the problem is that companies are borrowing at an alarming rate in order to repurchase their own shares. But instead of selling Treasuries and converting dollars into renminbi, causing the latter to rise, choking off Chinese exports, Roubini points out the Chinese could instead convert their dollars into gold. The Trump administration is going down a very dangerous road with its new Currency Rule that imbues the US Commerce Department with incredibly strong powers to invoke across-the-board trade protectionism from countries all the way down to individual companies. Before long the recession in the US would spread like a cancer, to the rest of the world. Linkedin. The former Bank of England governor has made an intervention on climate change, Secondary schools to extend Christmas holidays by a week to enable rollout of mass testing, 'We would have finished the job': Putin denies Russia involvement in Navalny poisoning, Have you had a treatment or operation cancelled due to Covid? As a general rule, the most successful man in life is the man who has the best information. Bloomberg ran a story saying it could infect a shocking two-thirds of the globe. White swans include the US rivalries with China, Russia, Iran and North Korea: These countries all have an interest in challenging the US-led global order, and 2020 could be a critical year for them, owing to the US presidential election and the potential change in US global policies that could follow. Business confidence would plummet, mass layoffs would occur, growth would stop, and the US would enter a recession. AOTH/Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Last year Germany slipped into a manufacturing recession and the largest economy of the Eurozone area does not appear to be improving. FABRICE COFFRINI/AFP/Getty Images Beijing is reportedly being urged to invoke “force majeure” - a clause allowing the two parties to consult one another if a natural disaster or force beyond its control delays either party from meeting its obligations under the agreement. Print Friendly. – it did. Two years ago, Zhou Xiaochuan, then China’s central bank governor, told a press conference at the 19th Communist party Congress in Beijing that too many procyclical factors in the economy and excessive optimism risked generating “accumulating contradictions that … We have written before on how this extreme polarization is killing America. AOTH/Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified. New Heights they could be canceled by legislation should the Democrats gain power in ’! S economy higher than long-term yields, is a $ 4 trillion trifecta occurring presently makes no guarantee, or. 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