Despite all the warnings of a new market crash, no government, bank, or, international organization, are taking effective measures to deal with it. The excuse is that the international financial system has become so complex that no one knows how to avoid a new crisis.
But several recent developments in the markets and contradictory advice and statements by experts, can be explained only if some try to profit from a collapse of the markets, and are betting in a giant "shorting".
When markets go up, the result is accumulated profits due to the increased value of the shares and other financial products. But investors can bet also on the fall of the markets and values of the shares, through the so-called shorting.
In simple words, the shorting works as follows: an investor borrows shares from a broker, betting that the price will fall. After the shares are sold, the investor's account is credited accordingly. After a period of time, the investor must return the borrowed shares to the broker. If the price has dropped in the meantime, the investor will make a profit proportional to the fall in equity prices. How is done? “It's the virtual economy, stupid!”
The profitable side of a crash
In today's capitalism, even a crash of the markets could bring profit. First, the coverage of losses through public funds is a given fact. The losses of most banks in 2008 were covered by state funds. Something similar is done for every non-negligible falling of the markets through "quantitative easing" and similar interventions. The ECB, the Bank of England, the US Federal Reserve, or, the People's Bank of China, are throwing huge sums in the corresponding markets to buy stocks and bonds, for the purpose of recovering the stock markets.
The big banks and large investment institutions are well aware of what to do when they will come across a new market crash: they will resort again to the central bank of the state, which will support them again, with the excuse that they are «too big to fail ", as in 2008.
Second, the large-investors know how to steer the markets, how to bet on a new crisis, and how to take advantage. Therefore, it should not be surprising that the warnings about the upcoming crash, come not only from "well-meaning" analysts who worry about the economy, but also by large-investors. No one would expect by them to proclaim that a new crisis comes.
Even if a crash is inevitable because of the bubble in the international economy, the timing and the manner through which it will occur can be affected by targeted interventions in the markets. The amounts needed for such a shorting of the the market are huge. The hedge funds, which have at their disposal a total of more than 2 trillion dollars are holding a leading position among the usual suspects for interventions of this magnitude.
Controversial actions and statements
Several recent developments indicate that something is "cooked" in the markets. During the first week of January, some hedge funds and companies, through only one US bank, made the largest investment in the US since 2010, through shares of total value of 3 billion dollars.
In August, the Chinese government banned the shorting and the operation of certain hedge funds in the markets of China. Of course, the Chinese plutocrats who gained about one trillion dollars from China in 2015, shorted the Chinese market indirectly. This money was not invested in other markets, but in deposits and luxury properties in London and the US.
In January, international banks warned investors to sell everything because a crash is coming. But these warnings serve those who intend to buy the "sold out" shares cheaply, waiting for a temporary recovery in the stock markets, in order to "short" the market and receive the earnings later, as soon as the crash happens.
The various Croesus of the international economy, urged the investors at this year's Forum in Davos not to invest their money. They also urged central banks not to intervene in the economy. But they didn't explain, why the last eight years did not complain at all about the interventions of central banks from which they got richer, and why now, they believe that the markets will recover without new investments and state interventions.
The objectives of the deliberate confusion
In 2008, the experts were seeing the bubble, did nothing to prevent the crisis and came out winners. In 2016, they seem to be better prepared. They spread confusion deliberately, to gain even more from the next crisis.
A peculiar war of impressions has already begun. For example, the big investor George Soros is stating that he bets on the decline of Asian currencies, and the Chinese Government responds that any movement against the Chinese currency will fail.
A more likely target for shorting is Eurozone, as the euro, with the complexities of the refugee issue and the Brexit, is becoming increasingly an easy prey. Whatever the goal, there must be first a non-negligible rise of the markets, on which to build a shorting and the subsequent fall.
When such a rise will be observed with the subsequent fall of the markets, should not be seemed strange the fact that behind the pin that will prick the bubble of the global economy, lies a giant shorting.
Article by Michalis Gianneskis, translated from the original source : tvxs.gr