(The Yen let go with their massive QE, then the price of crude crashed, then the Euro let go with their QE and drove the U.S. dollar to spike. The spike in the dollar is driving agricultural commodities down and is pinching foreign markets, especially those with heavy dollar debts outstanding. Perhaps the bail-in of the Austrian bank, Heta Asset Resolution AG, is a result of this liquidity squeeze. More to come. The dollar spike should be driving the U.S. stock market down, but it is not … yet. The exuberance of a 6-year bull run is a stampede that is hard to stop. So what’s the next tidal wave? Michael Snyder, below, says, “A rapidly rising U.S. dollar is extremely deflationary for the overall global economy. … It has been estimated that emerging markets have borrowed more than 3 trillion dollars since the last financial crisis. But now the process that created the emerging markets “boom” is starting to go into reverse.”)
The Last, Great Run For The U.S. Dollar, The Death Of The Euro And 74 Trillion In Currency Derivatives At Risk
Michael Snyder, on March 10th, 2015
… The U.S. dollar index has now risen an astounding 23 percent in just the last eight months. … A strong U.S. dollar hurts U.S. exports, thus harming our economy. In addition, a weak U.S. dollar has fueled tremendous expansion in emerging markets around the planet over the past decade or so. When the dollar becomes a lot stronger, it becomes much more difficult for those countries to borrow more money and repay old debts. In other words, the emerging market “boom” is about to become a bust. Not only that, it is important to keep in mind that global financial institutions bet a tremendous amount of money on currency movements. According to the Bank for International Settlements, 74 trillion dollars in derivatives are tied to the value of the U.S. dollar, the value of the euro and the value of other global currencies. When currency rates start flying around all over the place, you can rest assured that someone out there is losing an enormous amount of money. If this derivatives bubble ends up imploding, there won’t be enough money in the entire world to bail everyone out.
Do you remember what happened the last time the U.S. dollar went on a great run like this? … As you can see from the chart below, it was in mid-2008, and what followed was the worst financial crisis since the Great Depression …
Today, there are five U.S. banks that each have more than 40 trillion dollars of total exposure to derivatives of all types. Those five banks are JPMorgan Chase, Bank of America, Goldman Sachs, Citibank and Morgan Stanley. …
As I have said so many times before, derivatives are going to be at the heart of the next great global financial crisis. And thanks to the wild movement of global currencies in recent months, there are now more than 74 trillion dollars in currency derivatives at risk.
Posted here by https://icliks.wordpress.com
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