Saturday, June 20, 2015

Market Tremors Portend "Systemic Event"

If you listen real carefully, you can hear rumblings from concerned market watchers and investors.  This is reminiscent of the years leading up to the 2008 housing bubble implosion.  Here is a warning from one investment banker as reported by the Telegraph:

Ian Spreadbury, who invests more than £4bn of investors’ money across a handful of bond funds for Fidelity, including the flagship Moneybuilder Income fund, is concerned that a “systemic event” could rock markets, possibly similar in magnitude to the financial crisis of 2008, which began in Britain with a run on Northern Rock.

“Systemic risk is in the system and as an investor you have to be aware of that,” he told Telegraph Money.

The best strategy to deal with this, he said, was for investors to spread their money widely into different assets, including gold and silver, as well as cash in savings accounts. But he went further, suggesting it was wise to hold some “physical cash”, an unusual suggestion from a mainstream fund manager.

His concern is that global debt – particularly mortgage debt – has been pumped up to record levels, made possible by exceptionally low interest rates that could soon end, and he is unsure how well banks could cope with the shocks that may await.

The housing market crisis is not over.  The bailout of banks and their accomplices was just a band-aide.  The next crisis will make 2008 look like a tremor.


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