David Stockman Warns, ‘Don’t Forget About the Red Swan’

The comments above & below is an edited and abridged synopsis of an article by David Stockman

Given current anti-Trump sentiment, Stockman believes that a Swan is coming. If that doesn’t dissuade the dip buyers, perhaps the impending arrival of a Red Swan will give them pause.

David Stockman Warns, ‘Don’t Forget About the Red Swan’ | BullionBuzzChina’s fixed investment chart puts the lie to the latest Wall Street belief that the global economy is accelerating, and that surging corporate profits justify the market’s latest manic rip.

A short-lived global credit/growth impulse is coming from China. Beijing panicked last year and opened up the capital expenditure spigots at the state-owned enterprises for fear that China’s great machine was heading for a stall.

But the sell-by date has expired on China’s latest credit impulse. During the first quarter of this year, total social financing reached $4 trillion per annum (nearly 1/3 of China’s GDP), and politicians are reeling in China’s debt machine.

The great China Debt Retrenchment is coming. Expect a global braking that has the potential to drastically weaken the global economy, and the effect on corporate profits should not be underestimated.

Beijing probably cannot orchestrate a soft landing.  It will not permit the nation’s debt load to quadruple again during the next 8 years, meaning that China’s days as the world’s ultimate stimulus machine are over.

China’s slowing growth shows that most countries have been swimming naked from a fiscal perspective, leaving the world vulnerable to a renewed wave of funding crises as central banks attempt to launch monetary normalization.

During the last 19 months China propagated a false upturn in the global economy that is now reversing, and at the same time central banks are bringing their printing presses to a halt.

Central bankers realize that their balance sheets have become egregiously extended. China is the epicenter of the world’s 2-decade plunge into central bank monetary fraud, and they have destabilized the global economy.

So even as the Orange Swan stumbles toward the White House, there is a Red Swan following closely behind.

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