We are facing 2014 perhaps with blinders on as a society. Western investors have largely ignored the trend in Europe, Japan, and China and are more likely than not going to be dramatically surprised. In Chine, the high in the Shanghai market remains 2007 and new lows are still possible going into 2014. The cash crunch in China back in 2013 was important from the perspective of demonstrating the conflicting perception of China internally compared to externally. China is not the bulwark of economic growth that the world has suspected. Its retracement back to support has been bearish for the commodity markets as a whole.
The crisis in Europe not merely remains a major disruption to the entire world economy that again the public and general media have failed to grasp its potential significance. This Euro Crisis has the capacity to totally destabilize the world economy sending capital fleeing into the dollar. The Eurozone’s very existence is hanging in the balance. The urgent cry from the French controlled IMF to seize people’s accounts is about as practical as exposing Europe to radiation and just see what happens.
This alone has the potential to destroy the Eurozone as civil unrest is already starting in Greece, Italy, and Spain. Will this become a North v South crisis? This weakening of Europe as a whole invites the rise of Russia. Where people in the old communist block have a different attitude and do not trust government sleeping always with one-eye open, in the West, people still see government as God on earth who really cares.
Switzerland we will be covering in-depth at the WEC Conference. We can see from the chart that the decline in the dollar has been consistent since World War I. However, the Swiss have made the fatal mistake of trying to beat the free markets not merely sacrificing their banking industry on the altar of governments demanding taxes and the end of secrecy, but they have bought so many euros they stand to take the biggest loss from the collapse of the Euro than any nation. Their real estate cycle is approaching a 26 year high and the downside for Switzerland appears to be foreshadowing the fall of Europe.
The USA share market has surprised most. Its pushing to new highs has been a relentless journey that the vast majority of analysts still do not believe and have missed calling as always for one more a Great Depression back in 2010-2011. Even the oscillators on a yearly level are turning up at the close of 2013. These repeated crises around the world are a sign that the foundations of the global economy are crumbling and the economic growth model coming out of World War II is falling to dust beneath our feet. This unsettling economic decline is underscored with rising unemployment among the youth in Europe and 65% of graduating American students unable to find employment in the field that they majored in. This has demonstrated the collapse in education and the institutionalization of a field that historically had been built upon a structure of apprenticeship since ancient days. Doing is simply fat better than talking about how to do something led by people who have never done it to begin with.
The implication for the rest of the global economy from the combination of these trends has been monumental. We are looking at a contagion of untold proportions that can fly around the world perhaps faster than ever before. The rise in taxation and hunting down the rich has caused capital to withdraw from investing and thus liquidity has not recovered to its former levels back in 2007. This only opens the door to wild times and the bull market in volatility we first announced would begin back 1985 is still in motion. We should now start to move into the Phase Transition stage of volatility as we approach the peak that will unfold in 2032.
This is indeed the time that will try the souls of human kind. We face a rising trend of violence and stubborn politicians desperate to retain their current power as these press down upon the brow of everyone more and more draconian measures born of their self-interest. No one will stop and look at the trend in motion and that ensures the future can only offer a trend that must crash and burn.
The key is CAPITAL FLOW ANALYSIS – only then will you come to see the world as a whole and comprehend how markets rise and fall. It is not the standard domestic analysis that is put on TV and newsletters. This is a dynamic world we live in and you better start opening your eyes if you wish to survive.
