The Second Leg

What will it take to launch a second spectacular market downleg in the new millennium?

Another major U.S. bank (financial) collapse? Yup. That would do it. U.S. banks (and banks elsewhere) are hiding behind monumental legally sanctioned “Off Balance Sheet” liabilities, while they once again mercilessly rack up stratospheric profits at the hands of their clients – just as if the subprime crisis had never seen the light of day.

The subprime crisis was nurtured by a system-wide collapse of integrity on Wall Street that spread throughout the western world. Nothing has changed since the market melt-down. Today we are right back into the fantasy earnings game of musical chairs on Wall Street. All pyramid schemes collapse upon running their course. It’s easy to predict.

The sharp market recovery that began in the first quarter of 2009 would not have come to pass if it had been possible to miraculously fix the industry-wide integrity haemorrhage in the financial community. The recovery has occurred out of the ongoing absence of integrity rather than because of a return to ethical practices.

The ship continues to sink with no one at the helm.