It is now exactly two weeks until the end of 2018, and even though the year is coming to a close, the market selloff isn't. Get ready for a long 2019. Just how bad is it going to get? Here are just a few of the buzzwords and phrases that analysts were throwing around this weekend to describe what's coming next: "a flurry of sell offs"... "a sign of things to come"... "a precursor to an epic market collapse"... and lastly "shades of 1929". Well now, doesn't that sound fun?
The umbrella group for the world's central banks, The Bank of International Settlements, put out a little under the radar warning yesterday, and it isn't pretty. They're saying that the market selloff that's been going on the past few months isn't isolated… this is about to get worse, and it isn't stopping anytime soon. Ron Paul went on CNBC last week and agreed. He said the developments we're seeing right now could be leading to something that's quote, "worse than 1929."
I CAN NOT believe how no one is talking about this. It's eerily familiar to 2008, when all the big banks were fudging their financial statements to give the appearance that everything was A OK. In reality, possibly the biggest bubble in human history is set to explode. Quantitative easing since the 2008 financial crisis, or the method of printing money like crazy to inject money into the system, is now about to come for its reckoning. The Fed is planning to make three rate hikes in 2019. The U.S./China trade war is still moving forward. The economy is slowing towards recession. And all of this is coming during record amounts of spending.
Consider this. The White House is estimating this year's budget deficit will total 1.1 TRILLION! That's over four percent of GDP. Let's look back in history for a quick second and compare that number to the other times the deficit went over 4% GDP. Here are a few years when it happened: 1933, 1942, 1983, 2009 and then today. 1933 was FDR's attempt to get out of the Great Depression enacting the New Deal. 1942 was World War 2. 1983 was the height of the Cold War. 2009 was the bank bailout after the crash. So basically, this only happens either during times of war or in response to a financial crisis. So why are we still spending at record levels?
We're neither at war nor are we responding to a recent crash, but we're spending as if we were!
We're neither at war nor are we responding to a recent crash, but we're spending as if we were! Let me rephrase that, a GOP government - that controls all branches of government - is spending money at record levels not seen since the Japanese bombed Pearl harbor or the recovery from both the Great Depression AND the Great Recession. It might be the largest bubble in history. The only question now is, will this be the year that it bursts?