Serious Trouble Brewing In The Global Financial Markets

Japan: A break below 17000 will imply a 4000 point fall coming

India  - Break below 25k could lead to a level of around 33% lower

Russia – Market already broken down. Expect Russia to become extremely belligerent

USA – Dow Stock Index

China – Shanghai Index (Finger problem. Should read Point A is now below Point B)

Bloom Observation: China’s debt is spiralling out of control and the “party’ line that there will be a shift from manufacture to consumption and services is gobbledegook nonsense. A service industry can only exist to support primary and secondary industry. If the world’s primary manufacturing is in China and that is contracting, then where will China’s “peasants” get the money to buy what the government hopes they will buy? And who will the service industries provide services to? In retrospect, the reason that China’s debt levels have spiralled flows from mal-investment into assets that were not needed. $6 trillion invested into ghost cities might or might not be a sensible long term investment but in the short term all this served to achieve was a “Brooklyn Bridge” sales pitch to the world that their economy was growing faster than it really was. And now the money is “dead”.

Conclusion

If markets don’t bound up from here (for reasons which I cannot see at this point in time), then a break down will be extraordinarily serious. In my view we are standing on the edge of the SECOND down leg of the Global Financial Crisis. Technically speaking, every Bear Market has three phases:

1. First down leg of fear and loathing
2. Upleg of misplaced hope
3. Second Down Leg of capitulation

Gold

Technically, if $1190 is breached on the upside, all hell could break loose. Remember the catapult to which I have been alluding for the last few weeks/months?

In terms of the chart below, a break above $1200 might lead to a swift move up to around $1500

Final Observation:

Anyone still wondering why I stopped blogging?  In recent months I have turned my attention to trying to convince the Australian Federal Government that they need to think outside the box. Result? Zip. Who the hell is Brian Bloom to tell them and their highly paid advisors what they should/should not be doing? Why should we pay any attention to him?

Bloom response: Let’s watch if the blood starts to flow and, if it does, whether that flow can be stemmed using Keynesian techniques. And, if it does, let’s watch to see if the Central Banks can dig us out of the coming mess. Unfortunately, by then it will be too late to act.

Bottom line: Markets go up and they come down. The oil price is falling NOW. When the uneconomic wells have been closed down we will be facing shortages and resulting RISING energy prices. The time to act is BEFORE the crisis hits, not after it hits.

Unlike the US President, it seems to me, golf has kept me sane. J

Brian Bloom

Tea Gardens, NSW, Australia