Jack discusses the consequences and likely developments from the historic vote yesterday for the UK to leave the European Union. The deep origins of the Brexit vote are first discussed, including rising discontent with neoliberal policies of free trade by working classes, small businesses, and local producers everywhere, the overlay of fiscal austerity policies compressing incomes, and the almost total reliance in advanced economies on central bank monetary policies that boost financial asset incomes and corporate profits (and capital gains of investors and the rich) since 2009. How UK prime minister Cameron struck a ‘Faustian’ bargain in 2015 to win the election and now had to repay the ‘devil’ with the Brexit vote he thought he could control, but did not. The consequences of the vote for UK politics in the near term, and for forces—political and economic—behind the potential break up of the EU itself. Political party realignments underway everywhere, including EU and US. Implications for US November elections. Jack concludes with an assessment and economic predictions for the UK and EU economies, for currency volatility worldwide, stock and bond markets, real estate prices, and global commodity prices. Impact on the US dollar, interest rates, FED policies, and US recession for 2017. Severe results for emerging markets, especially Latin America (markets, capital flight, recessions) and for China’s Yuan eventual currency devaluation.
Jack discusses the global bond market conditions today, many times the size of the world’s stock markets and far more important. Bond guru, Bill Gross, this week forewarned of a ‘supernova’ explosion coming in global bond markets as a consequence of the $10 trillion (and growing) in government bond negative interest rates (not counting corporate bonds). Is there a ‘bubble’ in global bonds? Will it bust? When and Where? Jack agrees with Gross and explains why there is—located so far in Europe and Japan but spreading to the US and taking off in corporate bonds as well. How the bond bubble is the consequence of central banks’ (US, UK, Europe, Japan) monetary policies since 2008. How tens of trillions of dollars in money injections by the central banks—in quantitative easing and zero rate programs—have done little for stimulating real investment, jobs, incomes and consumption—and instead have pumped up global stock and other financial markets. The bond bubble as the latest consequence. Jack predicts why central banks’ NIRP policies fail to boost real investment and real growth, but are already having negative consequences for retirees’ and workers’ wage incomes, growing financial instability, and the slowing real economy. Central banks’ monetary policies have failed miserably. What’s next? Talk of ‘helicopter money’, ‘guaranteed income’, and bank ‘bail ins’ after the next bust. Jack warns of likely major global stock market correction coming soon—in the wake of likely Brexit, NIRP, global oil prices again falling, and US economic slowdown and predicts a US recession for 2017. NEXT WEEK: ‘Will There Be a BREXIT?’