A Liquidity Crisis Is Coming Soon As The Global Debt Bubble Bursts

Between August 9, 2010 and August 20, 2010 the world stock market, VT, fell 6% and the 20 to 30 year US Treasuries, TLT, rose 6 percent, creating a huge bubble that is about to burst.

Dr Housing Bubble in article Southern California Home Sales Collapse By 21 Percent Year Over Year writes that home sales in Southern California have collapsed in near synchronization with the ending of tax credits and tighter lending guidelines.  The July sales figures fell on a year over year basis by 21.4 percent.  This is a significant drop in a summer month that usually has solid home sales.  This is the proof that the market is merely being held up by massive government intervention and incredibly expensive tax credits that serve really no purpose except to provide a short term sugar high for the market. 

IrvineRenter in Irvine Housing relates that price reductions are starting to appear now as sales are starting to fall off. And soon there will be no sales when the global debt bubble bursts.

Doug Noland of Prudent Bear writes on the Mother Of All Bubbles in his Prudent Bear August 20, 2010 article entitled Let’s Change The Debate stating: “I have posited that the 2008 bursting of the mortgage/Wall Street finance Bubble unleashed an even bigger “mother of all” bubble throughout global fixed-income marketplaces.  I trace today’s Bubble back at least to the Greenspan Fed’s 1987 post-crash systemic reliquefication.  Recent history of monetary disorder fueling serial boom and bust cycles is unequivocal. From my analytical perspective, we’re in the midst of history’s greatest and most perilous financial Bubble.  And I am beside myself that nobody in a position of influence seems to care.  We’ve witnessed momentous analytical and policy errors over the years – and these blunders are allowed to repeat themselves without thorough analysis and review.  All this talk about fighting deflation and helping Main Street misses the point – and only feeds the Bubble.  It is fundamental to our nation’s future that we stabilize the government debt Bubble and secure the integrity of our monetary system.  The chorus of calls for larger deficits and greater Fed monetization is fueling distortions that risk financial calamity”.

As I look at the chart of the 20 to 30 year US Government Bonds, TLT, I see just part of the massive amount of debt, BND. And I believe we have gone blown the debt bubble so large, there is going to be a mad rush to the exit doors to sell, where there will not be enough buyers for sellers, resulting in a liquidity evaporation, and a liquidity crisis.

Out of the chaos, I believe that a Financial Regulator will be announced who will oversee lending and credit, as well as money market and brokerage accounts. He will be what I call a credit boss or credit seignior who funds economic operations with an emphasis on seeing that the strategic needs of the country are met and that monies for food stamps keeps flowing. I believe the government will become the first, last and only provider of liquidity and money. 

I believe the Financial Regulator will exercise Discretionary Governance, and announce a Home Leasing Program administered by the banks on their REO properties and those of Freddie Mac, Fannie Mae and the US Federal Reserve. Mortgage lending and securitization of loans will cease, and leasing of homes will be a public private partnership cooperative endeavor. Companies that have created and serviced mortgage-backed securities, such as Anworth Mortgage Asset Corporation, ANH, and Annaly Capital Management, NLY, will quickly disappear from the economic landscape, as mortgage bond funds such as Goldman Sachs Mortgage Bonds, GSUAX, tumble in value.

And I envision that out of bank bond defaults like those of Anglo Irish Bank where some bond holders are not paid in whole by the national central bank and out of a continuing falling EUR/JPY will result in further stock deflation, and then a stock liquidity crisis will emerge, where there will not be enough buyers for sellers of bonds as well as stocks, causing small business failures and banks to become sorely decapitalized, resulting in the president of the ECB arising to be an “Eurozone credit seignior” and provider of liquidity to Europe. I also believe that framework agreements will be announced in Europe providing for fiscal federalism giving a whole new meaning to the term European Economic Governance. Yes, I foresee a greater fiscal union. Fiscal federalism will result in the Eurozone evolving into a region of global governance where national sovereignty is a concept of a bygone era.

The coming financial market collapse was foreseen and recorded in Bible prophecy.

The Apostle John, was exiled to the Isle Of Patmos, where in his 90s, had a dream, that is a prophetic vision, of today’s events, where he saw a Beast System rising to rule mankind, that is a world-wide system of global governance Revelation 13: 1, consisting of ten regions as called for by the Club of Rome in 1974, rising from the sea of humanity; one of these regions is the Eurozone, another is the North American Continent, and another is the ASEAN trading group. The behemoth operates through mankind’s seven institutions. The sea he referred to is the sea of humanity being tossed about in all of its economic, political and governmental activity, by the process of globalization and Milton Friedman neoliberal inspired economic activity where currency traders are “free to choose” whatever currency they desire to speculate in.  

The beast’s characteristics and the world’s response to the beast is found in Revelation 13:2-4: ”The beast which I saw was like unto a leopard, and his feet were as the feet of a bear, and his mouth as the mouth of a lion: and the dragon gave him his power, and his seat, and great authority. And I saw one of his heads as it were wounded to death; and his deadly wound was healed: and all the world wondered after the beast. And they worshipped the dragon which gave power unto the beast: and they worshipped the beast, saying, Who is like unto the beast? who is able to make war with him?”

One of the beast’s heads that takes an apparent mortal wound: this is the global financial system experiencing a breakdown; which will according to the prophecy, will be healed, that is have a recovery to function to some degree. The world’s population are amazed by the recovery; and accept and provide allegiance to the beast system. 

Soon a sovereign will come to rule universally (Revelation 13:5-10); he will be complemented by a great spiritual leader who has a unifying vision for humanity; this individual will also be the seignior, meaning top dog banker who takes a cut (Revelation 13:11-18) who will direct the 666 credit system (Revelation 13:17-18), which is the seigniorage system whereby one will be given the charagma, or mark, necessary to conduct commercial activity.

keywords: fiscalfederalism, financialregulator, creditseignior, beastsystem


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