Collapse of Financial System Will Come in August, Maybe September: Market-Watchers
Who said the dog days are over?
Disappointed by the lack of aggressive action by the U.S. Federal Reserve at the meeting of its powerful rate-setting committee last week, and assuming a wait-and-see posture on results from this week’s European summit, pessimistic market-watchers are turning once again to guessing when the clock atop the euro zone time-bomb will finally run to 0.
The consensus? The world economy has entered a final countdown with three months left, and investors should pencil in a collapse in either August or September.
Citing a theory he has been espousing since 2010 that predicts “a future lack of policy flexibility from the monetary and fiscal side,” Jim Reid, a strategist at Deutsche Bank, wrote a note Tuesday that gloated “it feels like Europe has proved us right.”
“The U.S. has the ability to disprove the universal nature of our theory,” Reid wrote, but “if this U.S. cycle is of completely average length as seen using the last 158 years of history (33 cycles), then the next recession should start by the end of August.”
