Counsel To Big Money Around The World Issues Dire Warning

正是QE製出來的陷阱, 人人都認為借平錢買乜都必賺, 到個市一轉勢好多人會沒頂 !

kingworldnews.com

Today the man who counsels prominent hedge funds, investment banks, institutional money managers, mutual funds, pension funds, and high net worth individuals across the globe, told King World News that he believes we are facing a massive selloff where the global stock markets will get badly shaken.  Michael Belkin, President of Belkin Limited, also warned that we are now witnessing the “biggest speculative bubble” of his entire career.  Below is what Belkin had to say in this fascinating and timely interview.

Belkin:  “I do a Google trend word search.  It tells you the number of times people have looked for a term.  And when you do that on the term ‘speculative bubble,’ it doesn’t even register.  In July, zero.  Hardly anything in the headlines of news stories (about this). 

I consider this to be the biggest speculative bubble of my career, beyond 2000, beyond 2007 -- this is the ‘everything bubble.’  Junk bonds, stocks, tech stocks, you name it.  Everybody is in here for one reason and one reason only, because interest rates are at a low....

“That’s the definition of a speculative bubble -- it’s created by phony interest rates.  So when things start going down and you start getting redemptions, the market could fall 20 or 30 percent for starters.”

Eric King:  “Do you think it will be something worse than that?

Belkin:  “Ultimately, yes.  Janet Yellen, I’ve had to sit through her presentations, and let me just say I don’t think portfolio managers will be paying $250,000 to have lunch with her when her tenure is over, the way they are with Bernanke. (Laughter).

She’s a single-minded devotee to old-school Keynesian economics.  This is really dead stuff.  It’s not what rules markets.  She doesn’t understand leverage.  She’s there printing money and she says, ‘Well, we will just do QE, markets will go up and unemployment will go down,’ and everybody in the room is falling asleep in her speeches.

But what she doesn’t understand is the leverage.  When the Fed does this QE and prints money, the leverage goes out into all these hedge funds in midtown Manhattan and they leverage up the wazoo in all these weird, arcane derivatives.  And whatever they can make money in, they borrow huge, as much as they can, and they do everything on leverage.

And when it goes into reverse, you get a deleveraging.  And a deleveraging is when the value of your asset goes down and you get a margin call and you have to sell and it drives the price down (even further).  And then you get another margin call and somebody else gets a margin call and they have to sell, etc..  It’s like a vortex, a whirlpool of deleveraging.

And so, to answer your question, whenever you get into a deleveraging cycle it gets kind of ugly.  And, actually, from a free market perspective it’s great because at the bottom you get what you had in gold stocks late last year -- stuff down 90 percent.  It’s a buy.  So looking forward, yes, the market will become a buy after a huge liquidation.  But in the meantime, it’s a long way from point A to point B, and point B is a long way down.”