This coming week is setting up to be a real peach in the financial markets.
We had the 4 small-medium sized banks collapse in the U.S. a couple weeks ago. Then we had Credit Suisse completely implode and they were bought out by UBS. Friday, Deutsche Bank finally started their death spiral. (Neither Credit Suisse nor Deutsche Bank were a surprise; the only surprise is that they took this long to finally die.) Another big European bank to keep an eye on this week is Societe Generale.
This weekend Janet Yellen (The Shrew) called a big meeting of the Fed, the major U.S. banks and the Federal Government to try and stave off a complete collapse of the entire financial sector in the United States because they are starting to see the writing on the wall and there is no way out of the mess they put us in. Watch closely when they start announcing the results of this weekend's meetings as it will tell you everything that is going to happen over the next 6 or so months.
The Fed is in a really BAD situation right now. They claim to be done with the interest rate hikes, but if they are going to get inflation under control they are going to have to raise rates at least another 1-2%. But even if they leave the rates where they are now for the next 6-12 months, there will be a bloodbath in the major banks. They have absolutely NO good options right now.
The federal government, for its part, wants to go on a MASSIVE spending binge. That will do nothing but stoke inflation even more.
I think this may be it boys and girls. I think we are starting the final death spiral for the Federal Reserve Note as we currently know it. These things do not usually move fast, but by the end of this week we should know if the petro-dollar will survive the summer, only to blow up in 2-3 years, or if it will go down in flames by August. If the Fed decides to restart QE-Infinity by reducing interest rates, look for hyper inflation by the end of the summer. If they instead decide to hold rates steady or even raise them, we will start a long, slow slog into a significant recession/depression led by the financial sector.
Fun fun fun 'till her daddy took the T-Bird away!
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