What is now?

The short term bull market finally reached its peak. It is resuming its down trend. We may still have rises in stock market, the year end might still see small plus, but I am now not convinced that Euro crisis will be contained. We can very well see market crash that trigs the circuit breaker, however government wants to set it.

We have global debt implosion. It works like this:
I am a Bank A and you are a country B. Now B can not pay back the A, B defaults. For A it means that it lost $$ amount, evaporated, disappeared into the heavens. So A is now short of cash, remember A borrowed this money from primary banks. So A will start default as well.

This phenonemom happens just like Euro crisis. It is the banking crisis. Since Euro banks are entangled with US banks and many more, to save their buddies again, FED and Euro central banks extending their hands to loan banks more in order to prevent the western banking system collapses. The currency swap, works just like that.

But by printing those money, it is and will be bring the currency crisis to those countries. That bond investors will stop buying the bonds. By then, all scenarios are possible. Stock market drop big time now indicates that investors are not convinced that 1 trillions are enough, 2 trillions are enough... For the 4 plus trillion euro debts, there are hundreds trillions of derivatives.

So here we go, we have the prelude of currency crisis. It will spread to US. The world of fiat currency is crumbling. The euro capital flee to US is a temporary thing, soon enough, investors will realize it. Fleeing from USD will teach all of a lesson - that is, Hyman Minsky is right, we are the Ponzi borrowers. There is no cure for that until all countries get together to agree the debts settlements.

Be forwarned.....