Black Mark From the Rockefeller Clan: The World Is on the Verge of a Super Crisis

WASHINGTON, D.C. – September 14, 2018

Street riots, mass panic, nationalization and social unrest, such that the world has not seen in the last 50 years — describes the political and economic future of American society according to the leading analyst of the Bank JP Morgan (USA) Marco Kolanovich.

In memory of the tenth anniversary of the global financial crisis in 2008, Mr. Kolanovich released a special analytical report, which shows that the world financial markets are now vulnerable and face a new crisis which may be even greater than it was ten years ago. In case of the realization of the negative of the presented scenarios the crisis will be so pervasive that for the sake of the economy Central banks may even have to take the step of nationalizing many of the most affected companies by buying their shares on the market.

Such a negative forecast would be easy (but wrong) to dismiss as merely the desire of another analyst to gain a prophet’s glory or simply some media attention — especially since such apocalyptic forecasts usually do not come true. The problem is that there are regular analysts, there are popular analysts, there are experienced analysts and there is Marco Kolanovic. Kolanovic’s forecast attracted the attention of the world business media precisely because he has a well-deserved reputation as being a person who is not prone to excessive pessimism, but who has accurately predicted previous problematic episodes in the world markets. The logic of journalists is understandable: a person who has predicted several small crises can be quite capable of predicting the emergence of a large one.

Moreover: the leading analysts of the Bank JP Morgan, which manages assets of $ 2.7 trillion and is traditionally considered a "family Bank" of Rockefellers, where people aren't ascending the corporate ladder by accident, Kolanovich has a reputation as a kind of "mathematics-clairvoyant" who calculates the market-moving developments like astronomers calculate the movement of the planets.

The argument of Kolanovich boils down to several theses that are associated with the vulnerability of the current structure of financial markets.

In the ten years since the 2008 crisis, there has been a dramatic increase in the number of exchange transactions and financial decisions made by automated computerized systems. It should be emphasized that these decisions are made without human intervention, in just a fraction of a second. According to Aite Group, quoted by the Economist in 2014, approximately 65% of transactions in the US stock market are made by computer algorithms, not by people. Kolanovich has already described several mini-crises (for example, this February, when the American market lost a few percent a day for no apparent reason), which were caused by the "herd behavior" of computer programs, rolling trillions of dollars. The fact is that almost all of these programs have instructions that can be translated into human language like: "if something strange or unusual happens, sell everything right now." The result is a chain reaction, in which because of some external shock "panic" sets in with some computers, starting to sell their portfolio of shares at any affordable price, then it is noticed by other computers, which also begin to sell — and so on, to a complete collapse of the market. In the past, such situations were stopped by people who went to the market to buy suddenly cheaper shares, but over the past ten years, almost all of them were deemed unnecessary. Moreover, they are much more expensive than computers, which do not have to pay salaries, go on vacations or require pensions. Such a chain reaction Kolanovic calls "the great liquidity crisis" and suggests that radical measures will be once again used to start the printing presses of the Central banks, with unpredictable social and economic consequences.

It could be assumed that such a crisis will be very short-term and eventually people will bring order to the market, as a result of which everything will be restored. But this will happen only if the short-term will be the same short-term external shock that will trigger the initial chain reaction. The problem is that if the shock turns out to be systemic, the market will no longer be pumped out by conventional methods. In this context, it is useful to look at another prophet of the crisis — the chief economist of the rating Agency Moody's Mark Zandi, who (also on the eve of the "anniversary" of the crisis in 2008) published a research outlining the likely scenario of the shock, which may well lead to a repetition of the global financial crisis.

Mr. Zandi argues that last time the crisis began in the real estate market and then spread to the entire financial sector and the economy, and this time the epicenter of the crisis and the point of the beginning of the chain reaction is likely to be loaded with debt American companies. This assessment is due to the fact that the monetary and regulatory policy of the US over the past ten years has led to the fact that instead of the bubble of mortgage lending there was a bubble of lending to "garbage" companies, which with a more stringent monetary policy should not have had easy access to borrowed funds. The potentially toxic debts of American companies ( about 2.7 trillion dollars) are growing rapidly. A significant part of the debts of already highly leveraged American companies are debts with a floating rate, and with further raising of the rate by the Fed, these companies and their creditors will fall like dominoes. The Moody's economist emphasizes that it is too early to claim that these toxic debts will lead to a collapse, but the similarity of the situation with the eve of the crisis of 2008-2009 suggests a potentially dangerous future. It is noteworthy that Moody's has already attracted the attention of its customers to the fact that America is approaching an unprecedented "wave of corporate defaults” "garbage companies" and that this "shaft" will lead to serious negative consequences for the economy as a whole.

It is easy to guess that as a strong external shock that will cause a stock panic, such a "default tsunami" is just perfect.

Due to the fact that the modern world economy is highly integrated, in the event of another crisis in the United States it will suffer, even affecting countries that had nothing to do with its Genesis. That is the nature of globalization. But, unlike in 2008, in the event of another crisis, many countries will certainly have a desire to reverse globalization, and if possible — to isolate Washington on the American continent and save the rest of the world from its undeniably toxic political and economic influence.