All signs are telling us that we are heading for another downturn.
According to this European Bulletin, $US15 trillion of 'ghost' assets are about to go up in smoke and get written down. That means we will see the collapse of asset prices and another downturn after just over a year of political cosmetics that tried burying this fundamental problem under truckloads of cash. "For the financial world's players, the Autumn 2011 shock will literally be the ground giving way beneath their feet, since it's really the foundation of the global financial system, the US Treasury Bond, which will plunge sharpl,y,'' the Bulletin says.
Add to that the fallout if the US defaults. As The Economist explains, it could happen even if Congress reaches an agreement to lift the debt ceiling. At this stage, no one can rule out a US default. What happens to the global economy if the world's most trustworthy borrower reneges on its debt? The trigger could be California.
Columnist Brett Arends says nothing has changed, the US is destined to tank again and we are about to go through a repeat of 2008. No one has been punished, the game is rigged and the banks are making bigger profits than ever before, stocks are skyrocketing again, the derivatives time bomb, the kind that destroyed Lehman Brothers, is ticking away and Wall Street firms are now carrying $248 trillion of risky assets on their book which is many times more than the size of the US economy, US debt continues to climb and the economy is tanking.
All this tell us one thing: the next downturn has been triggered.
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