Loading ...Summing it up, there’s a strong case that global markets are at the cusp of succumbing to Crisis Dynamics, which will be especially difficult to shake this time around. The Super Credit Bubble is at the brink. Quoting Jeremy Grantham: “If history repeats, the play will once again be a Tragedy. We must hope this time for a minor one.” I’m holding out hope, but nothing I see points to “a minor one.”
Probably the more germane discussion would center around the impact of Fed liquidity withdrawals in a backdrop of de-risking/deleveraging and waning market liquidity. Moreover, it’s worth pondering potential market function issues for the global derivatives marketplace in the event of a serious bout of de-risking/deleveraging in conjunction with QT and central bank liquidity support (i.e. “Fed put”) ambiguity. Market liquidity and dislocation concerns make selling market protection an only riskier proposition.