Financial Armageddon

June 5, 2012

Global Macro

By Greg McKenna

Readers know that I am a student of history, particularly of economic and financial market history. I was lucky enough in the early days of the crisis to read a book written in 1996 by David Hackett-Fischer called the Great Wave. It was a history of inflation and prices going back a thousand years but for me I also read it as a history of markets and banking crashes and crises.

So I have had a very jaundiced view of the supposed recovery all the way through the GFC and the work of Reinhart and Rogoff simply reinforced to me that this current crisis was going to get much worse before it gets better.

Politicians and Policy makers however remain constraint by their intellectual arrogance or ineptitude – I’ll leave you to be the judge but the crisis in Europe is but the latest Act in a series of Acts which continue to show the ineptitude of their thinking and self-interest.

Early this morning I spied an interesting presentation, well half a presentation actually, on Business Insider by Raoul Pal of GLobal Macro Investor. It is his take on where we are now and it is no understatement to say that it is very bearish.

He said it was ok for us to publish it here but he wanted me to say that this presentation was aimed at professionals not individual investors (general advice warning at the very least in Australian terms) and that it is only half the presentation with the opportunities he sees being kept for his clients. Equally the end slide is not saying that the world is going back 3000 years or into the dark ages but that there is a global financial reset coming.

If I can add my own thought and a picture that I have been using in presentations since I read Hackett-Fischers book. The above is the unfinished Nave of the Siena Cathedral which was the victim of a Banking Crisis in 1269 the precursor of which was very similar to what caused the GFC.

These things take a long time to wash through – there are always profitable opportunities and we are very bullish on capital protection but at 5 years young the GFC is not over yet.

Raoul Pal’s presentation is linked below

raoul pal – 2012shanghai presentation

Gregory McKenna

www.twitter.com/gregorymckenna

Please remember these are not recommendations for you to trade these are my views and I have my risk management tools and risk parameters that you do not have access to. Thus, this blog is for information only and does not constitute advice. Neither Greg McKenna nor Lighthouse Securities has taken your personal circumstances, objectives or financial situation into account. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.

If however you do need advice on Investments, Economics, Funding and Liquidity, Interest Rates and Forex and Derivative markets we are happy to help.

Please Email the team at Lighthouse at info@lighthousesecurities.com.au or Greg directly on greg@lighthousesecurities.com.au

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