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The world is teetering on the brink of a new financial shock
Material posted: Publication date: 12-07-2014

The global financial system again pushes the world economy into the pit of the crisis. Even deeper than in 2008. Not easy to have and Russia. We are still linked to the US and EU with one umbilical cord. As before, the EU accounts for 50 percent of Russian exports and imports (the figure for January-April 2014). And trade with the U.S. has even increased by 9 percent. Would be bad for those economies will be bad and Russia. There will be problems with finances there and see the collapse and bankruptcy and we on the native earth.

The red lights on the dashboard

The biggest risk a bubble on the US stock market. The Dow Jones during the half year grew by 25 percent. With the "bottom" of the spring 2009 in 2.6 times. So much for "developed market" USA. He's usually more solid, goes not so vraskachku and Bouncing like a mad thing, "emerging markets". Another red signal — the indicator "market capitalisation to GDP". And here for the USA together with great Britain too. Exceeded pre-crisis values of 2008. After the markets have picked six years ago — all boomed. What happens in the finances of these famous "kingdoms"? Yes, almost the same as that of the flood in August 2002 in Europe.

Remember how in August 2002 under water were Germany, Czech Republic and Austria. And all because before the rivers were dried up. In the early days when the rains came, the water quickly absorbed. But then it ended in a technological disaster. Disturbed "absorption" in the mountains and the water flooded the plains. The second unexpected impact was the result of ordinary human negligence. Europeans forgot how to adjust the flows using the reservoir. The above is a "physical example" of what is happening in the Finance world Finance. Bubbles threaten to burst. And then the "flood" of all.

Six-year-old the money rain

The basis of a bubble — a policy of "quantitative easing" the Federal reserve system. Since the end of 2008 to the 1st quarter of 2014, the fed assets increased by 1.9 times. Its investments in the U.S. national debt has grown over the same period, 4.9 times. But this is just the effect of the printing press, the issue of money through fiscal spending. Investments in the fed's "credit market instruments" has increased in 4 times (credit the issue of money through banks in the economic cycle). Rapid growth in monetization of the US economy (Saturation money. Money/GDP).

The rain of money was designed to spur the U.S. economy. But she still grew very slowly, with the rebound down. Time since the end of 2008 the gross domestic product of the USA in current prices (including inflation) grew by only 14 percent. Now the situation is the same as floods in Europe affected the ability to "absorb" the economy of money.

So, the monetary economy has grown 2-4 times. Real, current prices — 14 percent. Even considering the fact that you cannot directly compare the growth of money and real measurement of the national economy, the gap is very large. In the end, money, not being absorbed by the real economy of the USA, without turning to inflation, rising prices (inflation in the US is only 1 to 2 percent), is spent on local financial market and there prices are rising. It was there, and first of all in stock. Of course, financial market of the USA, being bulky, branched dishwasher, has a very high absorptive capacity. This same mechanism supports the US dollar relatively weak, and commodity prices — oil, gas, food — high. But "absorption" is not unlimited. The fed leaving policy of "quantitative easing", even a very careful and balanced, and can (or should) at some point "to pierce" a soap bubble.

Where subtly there and tear

The Dow Jones has exceeded 17 thousand points. It is a historical record for large, stable companies included in this index. But there is also the NASDAQ. She ozornie and more fun. There are more medium and small businesses. A lot of them disappear along the road in the dust of bankruptcies and someone gives profits. It is the NASDAQ did in 2000 with the famous dot-com bubble (Internet companies). And then three years of falls and road on the most famous stock exchanges of the USA and Europe.

Today stock prices NASDAQ just approaching historical peaks of 2000. But is there anyone on this exchange who is more fun and stronger than the dot-com fifteen years ago? Of course, there is. That magic word "biotech". Biotechnology. In fact, the same bubble, but in Cuba. On the U.S. NASDAQ stock market companies, biotech firms beat all records (NBI Index). Since January 2010, these courses have tripled.

Stop, stop, stop. Maybe the business of biotechnology profitable, successful? And this is different from the dot-com of 2000, appeared just a zero with the same name? No, all the same. There is such a wonderful indicator under the mystic name P/E. It shows how many times the stock price exceeds the slice of profit that it represents. Now, the market is large, steady companies of the new York stock exchange such about 14-17. On the NASDAQ market, where many small and medium, fast, financially unsustainable P/E is $ 30-35. But the biotech today it is about 800! Moreover, these Himalayas of stock prices is built on the market totally unprofitable companies.

Their value is overrated. And this is the portrait of another bubble. Which clearly indicates the financial storm, rushing toward us over the horizon.

All the fortress stands?

World disasters fall of 2008 began with the collapse of the fortress "Lehman brothers" — one of the largest U.S. investment banks. The state refused to help, and it was a mistake. And then off they went. Today, the world's biggest banks are under increasing regulatory pressure. Pay multibillion-dollar fines. For 2009-2013 they had paid 64 billion. Over the last six months — $ 32 billion. What names! JP Morgan, Bank of America, Credit Suisse, BNP Paribas. Sometimes the fines higher net profit earned during the year.

For the global financial system this is also a risk. The risk that any of the financial giants will not stand and, with hands raised high, surrender to the mercy of nature. Collapse could begin a chain reaction. Finance, if not to protect, worse than nuclear weapons.

On the charts the Dow Jones and the NASDAQ index is still not affected Exhibitor vertically. But the index of biotechnology companies (NASDAQ Biotechnology) is graphically "wall up". And that's usually look like soap bubbles before the burst. The bubble may burst in a period of one year and a half. If only the fed did not manifest miracles of balancing act, relieving the overheating of the financial market.

Why should we care?

And how will this affect us? We are exhausted by sanctions, bans and insults. We, I fear, will even be glad if someone something will happen and this cannot be blamed Russia. But life is arranged differently. The financial woes of the U.S. will immediately respond in Europe and around the world. An example is the fall of 2008. "Financial infection" walked on each side of the light. Everywhere is the fall of demand, production, and in Russia — all this is to double the size.

Another example is the slowdown of the domestic economy in late 2013. The reason is poor conditions in Europe. The reduced demand for Russian raw materials. So to sit in the quiet Harbor will still fail. And at the helm while other countries and continents. And we on the deck and wait, whether will carry our proud battleship past the wrinkled rocks, or he will fly at them.

Forecasts are often erroneous. It is possible that, seeing a clear picture of the bubble in the US and partly in the UK, we are faced with a new reality. The world economy adjusts to a new long rising or some other your model and will not pay attention to small financial boils. That biotechnology, and, in General, the bubble in the U.S. market will be seen as a small raffle financial type bitcoin. The global economy is going to grow, will pass and all will not notice.

The chances for an optimistic scenario are very small. You're lucky — it will be happiness. Because it makes no sense to add to their own problems (and so many in Russia), and others.

Yakov Mirkin

Source: "Tape.Ru"

Tags: crisis , finances


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