Global Stocks Dropping, Rubble and Peso Trade at Record Lows – Is There A Derivatives Collapse on the Horizon?

by Scott Creighton

I don’t do much on this website concerning economic forecasting or “the sky is falling” Henny Penny doom-mongering, but I thought today might be a good day to pay a little attention to the global financial markets since so many economists like Max Keiser said last year that we might be in trouble in the start of this one.

As we all know, stocks have been tumbling a little bit since the start of the year. It’s a historic “correction” from what I understand. Of course I’m not a financial analyst, but I know the DOW is down over a thousand points since Jan. 4th and today looks like it’s going to continue on that trend.


Global markets have been tumbling this morning leaving forecasters worried about Wall Street and what will happen when the market opens this morning.

Turmoil returned to global markets as oil plunged and European stocks sank to the lowest levels in 13 months, fueling a rush into haven assets.

Earnings exacerbated the rout, sending MSCI Inc.’s gauge of global equities to the brink of a bear market. Russia’s ruble and Mexico’s peso fell to record lows, while bets mounted on an end to Hong Kong’s dollar peg. Yields on 10-year Treasuries dropped below 2 percent and the yen jumped to a one-year high. Bloomberg

dow 2While there was no explicit trigger for Wednesday’s falls, strategists say the moves come amid a perfect storm for markets: falling oil prices, concerns about slowing growth in China and other emerging markets and the Federal Reserve raising interest rates. Wall Street Journal

As the WSJ points out, the dip in oil prices down below $28 shouldn’t effect global markets this severely. Yeah, Janet Yellen did report they expect a drop in global growth over 2016 and to that end she said there may be a slight increase in the prime interest rate (a quarter point) but I can’t see how that news could result in this kind of movement.

Of course, again, I am not a financial analyst. I just want to make that clear.

Peter Schiff thinks this might be a pretext to them setting up another round of global Quantitative Easing (QE 4) where countries have to print more money to flood into the financial industry so they can reap more wealth and we can be locked into more debt.

For a while now, people have been saying the $1.5 quadrillion derivatives bubble is about come crashing down. To put that into perspective, it’s about 20% larger than the one that they used back in 2008 to remake the economy in the model they wanted.

I think the bubble is probably a little larger than that, because they’ve been using that number to describe Armageddon since 2013.

I’ll wait and see what Max says about this today. If you have any insight let us know.


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5 Responses

  1. Some additional insights for you:

    Title: China-Canary in the Global Economy Coalmine?

  2. Ignore Schiff for starters. And I wouldn’t place too much faith in Keiser either. They are both in the gold business,

    • Gold and Bitcoin for Keiser, right? I know that. But you can’t help but wonder how long til the next derivatives implosion. And of course, for all of them who have been forecasting the next implosion doom and gloom, eventually, like a broken clock, they will have to be right at some point. DOW is down 540 today. Looks like it might be time for their clock to finally be right.

      • It looks like there’s a few (financial instrument) bubbles in danger, yes. But that isn’t to say that the Schiffs and Keisers of this world are right about anything much.

        Keiser doesn’t show much sign of knowing any macroeconomics. And Schiff is pretty much wrong about everything.

        Libertarians and Austrian School devotees are just anti-government nuts and worse. Unfortunately they’ve had far too much influence and effect in the neoliberal era and the results are in.

        They should be ignored.

        • To be fair to Keiser I haven’t read his site or watched his show for a few years. Mostly because it was going libertarian in flavour.

          I can’t stand them.

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