Investment Guru Warns: “The Market Is Very Crash-Prone… Very Fragile”

Mac Slavo

economy-fragile

Ahead of the collapse of 2008 well known investment manager Bill Fleckenstein warned that real estate and stocks were headed for a crash. He positioned himself and his clients to absorb the brunt of the imminent hit that was coming to financial markets. Unlike the millions of people who saw some 40% of their wealth vaporized by mid-2012, Fleckenstein survived and actually profited by betting against the official propaganda.

And though most Americans have likely bought into the government’s recovery narrative, Fleckenstein isn’t convinced and he’s sounding the alarm once again.

In an interview with Eric King of King World News, Fleckenstein warns that the same machinations and corruption responsible for the collapse of our economic and financial systems in 2008 remain a serious threat today.

There’s no chance that the outcome in the financial markets in America is a pleasant one because we’ve gotten here because of the printed money.

This can’t possibly end well.  This has gone on for so long. 

It’s still not possible to say when it’s going to change and what’s going to be the catalyst.

The important thing to understand is that this is a very fragile structure.  The market is very crash-prone.  There’s not going to be any liquidity on the downside because of what’s happened in the banks — the algorithms and all that other stuff.

More capital has been misallocated and more people have behaved imprudently.  They were kind of lured into it because of the Fed.  You’ve got more bad paper out there in terms of junk paper and things like that.

But to know, is it going to be that much worse?  Well, it likely will be and almost surely will be, but how much worse and in what way is going to be a function of what we find out that we don’t (already) know.  For instance, when the housing bubble started to burst I knew that the economy was going to get destroyed because the housing bubble had been driving the economy.

As Fleckenstein notes, when the next sell off starts it’s going to be very difficult to stop it because there isn’t enough liquidity in the system. Panic selling will lead to a negative feedback loop and the crash will simply build upon itself.

Bottom line: the whole system’s going to detonate and it will probably be a whole lot worse than what we saw in 2008.

And Fleckenstein is not alone. One of the world’s most followed investors seems to have also lost faith in the purported economic recovery and health of U.S. financial markets. According to a recent analysis highlighted by Drudge Report, billionaire financier George Soros is betting pretty heavily on a crash.

Among the highlights, Soros Fund Management increased a bear-call bet on the S&P 500 in a huge way. The fund lifted a put position — a bet the market will go lower — on the S&P 500 ETF SPY  to its biggest size yet, in terms of value and portfolio percentage, making a 605% leap over the previous quarter.

Trend forecaster Gerald Celente, also on King World News, says that the next global collapse is just getting started.

Now Walmart sales are soft.  And you hear it from virtually every one of the major companies.

They are looking at either flat or declining store sales.

Why?  Because people have lousy jobs or no jobs at all.  

It’s a statistical fact echoed by Shadow Stats economist John Williams, who recently said that the system is so far gone there’s nothing that can save it. Williams cites the negative GDP growth rate for the first quarter of 2014 and the fact that Americans are financially tapped out as evidence for a continued degradation in the economy.

We’re turning down again.

The reason for this is that the consumer is strapped… doesn’t have the liquidity to fuel the growth in consumption.

Income… the median household income, net of inflation, is as low as it was in 1967. The average guy is not staying ahead of inflation…

Personal consumption is more than two thirds of the economy – there’s no way you can have positive sustainable growth in the U.S. economy without the consumer being healthy.

It’s just not going to happen.

The mainstream pundits and government officials can tout recovery all they want, but the fact is that the economy is still in shambles. Millions of jobs have disappeared anddecent paying new jobs are few and far between. Moreover, we are rapidly approaching 50 million people dependent on emergency government assistance just to meet their most basic food needs.

The system as it exists right now is simply unsustainable and it’s only a matter of time before it comes unhinged.

And though none of us can predict how this will play out in the United States, looking towards the periphery nations that took the brunt of the force over the last five years may be an indicator of what we can expect.

It got so bad in Greece, a developed EU nation, that people had no access to life saving medicines or food, and underground barter markets quickly appeared to meet demand in a society that ran out of traditional currency to pay for goods.

If the same fate is to befall the United States it could be a whole lot worse here. It is for this reason that preparing in advance is so important. We’ve already seen what happens when the Electronic Benefits System locks up for just half a day.

In the midst of the next financial crisis, which may well affect the government’s ability to make good on the billions of dollars in social promises, people are going to panic.

We don’t know how bad it can get, but if it’s anything like Argentina’s economic collapse of 2001, people are going to be rushing to get their hands on food, precious metals, medicine, and other critical supplies.

Thus, stockpiling goods that you can use and barter will, at the very least, provide some level of insulation when the masses are fighting for scraps.

Prepare today, because the signs point to an inevitable collapse of our way of life in the very near future.

This, as Bill Fleckenstein notes, can’t possibly end well.

TLB recommends you visit SHTF Plan

for more great articles and pertinent information.

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