Sunday, June 28, 2015

Ponzi Schemes Collapse From the Bottom To the Top

Emerging Markets are the weakest dominoes. Totally ignored. 

The weakest dominoes are the submerging markets which have been completely left behind since 2008, when the "miracle" of Globalized trickle down growth stopped working. An advent totally ignored by Globalization's cheerleaders. The BRICs turned to Bricks overnight.  

Meanwhile, faith in the almighty power of Central Banks to contain and absorb ALL global risks is pervasive. It's the central tenet of Ponzi investing. 
Now, pundits wide and far tell us that today's risks are "random", "uncorrelated", and "contained". When commodities collapsed this past year, it was deemed a "tax cut" for jobless "consumers". Leave aside that it monkey hammered Emerging Markets which are substantially dependent upon resources for GDP and tax revenues. 

And then when the dollar rose based upon interest rate expectations, Emerging Markets were shellacked due to the hot money carry trades that experienced massive outflows. These risks are fully ignored right now, with all "containment" focused on supporting European Ponzi bonds and the S&P futures. 

Ironically, it will be the developed world's total neglect and blindside for how the 'others' live that causes the ultimate unwinding.

Another leg down here and shit gets real:

EM stocks with oil stocks:
In no way supported by any "plunge protection team"

Ponzi schemes collapse from the bottom to the top. Those at the top are always the last to know.

The developed world must do penance for monetizing poverty instead of trying to fix it before it spread globally.