Back in 2008, Lehman Brothers was not “perfectly fine” one day and then suddenly collapsed the next. There were problems brewing under the surface well in advance.
Well, the same thing is happening now at banking giants such as Deutsche Bank, and at commodity trading firms such as Glencore, Trafigura and The Noble Group.
And of course a lot of smaller fish are starting to implode as well. I found this example posted on Business Insider recently:
On Sept. 11, Spruce Alpha, a small hedge fund which is part of a bigger investment group, sent a short report to investors.
The letter said that the $80 million fund had lost 48 percent in a month, according the performance report seen by Business Insider.
There was no commentary included in the note. No explanation. Just cold hard numbers.
Wow—how do you possibly lose 48 percent in a single month?
It would be hard to do that, even if you were actually trying to lose money on purpose.
Sadly, this kind of scenario is going to be repeated over and over as we get even deeper into this crisis.
Meanwhile, our “leaders” continue to tell us that there is nothing to worry about. For example, just consider what former Fed Chairman Ben Bernanke said:
Former Federal Reserve chairman Ben Bernanke doesn’t see any bubbles forming in global markets right now.
But he doesn’t think you should take his word for it.
And even if you did, that isn’t the right question to ask anyway.
Speaking at a Wall Street Journal event on Wednesday morning, Bernanke said, “I don’t see any obvious major mispricings. Nothing that looks like the housing bubble before the crisis, for example. But you shouldn’t trust me.”
I certainly agree with that last sentence. Bernanke was the one telling us that there was not going to be a recession back in 2008, even after one had already started. He was clueless back then and he is clueless today.
Most of our “leaders” either don’t understand what is happening or they are not willing to tell us.
So that means that we have to try to figure things out for ourselves the best that we can. And right now there are signs all around us that another 2008-style crisis has begun.
Personally, I am hoping there will be a lot more days like today, when the markets were relatively quiet and not much major news happened around the world.
Unfortunately for all of us, these days of relative peace and tranquility are about to come to a very abrupt end.
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