Top Economist – Who Predicted the 2008 Crash – Confirms What Alternative Financial Sites Have Been Saying for a Decade

And Wise People Have Been Saying for Thousands of Years

William White is one of the world’s top economists.

He was the head economist for the Bank for International Settlements (BIS) – the world’s most prestigious financial institution, called the “central banks’ central bank – comprised of the world’s central banks.  He is now the chief economist for OECD, made up of most of the world’s richest and most powerful countries.

As chief economist for BIS, White predicted the 2008 crash.

While the mainstream financial media like CNBC has been trumpeting fake, happy news for many years, White confirmed yesterday what the best alternative financial sites have said for a decade, telling the Telegraph (at the World Economic Forum in Davos):

The global financial system has become dangerously unstable [he’s right] and faces an avalanche of bankruptcies that will test social and political stability …. [Uhhuh]

“The situation is worse than it was in 2007. [Accurate] Our macroeconomic ammunition to fight downturns is essentially all used up” …. [True]

***

“Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief,” he said.  [Indeed]

“It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something” [Yup]

***

“The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians.” [Exactly!]

***

The European banking system may have to be recapitalized on a scale yet unimagined, and new “bail-in” rules mean that any deposit holder above the guarantee of €100,000 will have to help pay for it. [Unfortunately.]

***

“Emerging markets were part of the solution after the Lehman crisis. Now they are part of the problem too,” Mr White said. [Could be bad.]

Mr White, who also chief author of G30’s recent report on the post-crisis future of central banking, said it is impossible know what the trigger will be for the next crisis since the global system has lost its anchor and is inherently prone to breakdown. [Due to such factors as soaring leverage, incestuous levels of interconnectedness between financial institutions, runaway inequality, a government policy of letting criminals get away with fraud, etc.]

***

Mr White said QE and easy money policies by the US Federal Reserve and its peers have had the effect of bringing spending forward from the future in what is known as “inter-temporal smoothing”.  [Very true.] It becomes a toxic addiction over time and ultimately loses traction. In the end, the future catches up with you. “By definition, this means you cannot spend the money tomorrow,” he said.

***

“Policy makers were seduced into inaction by a set of comforting beliefs, all of which we now see were false. They believed that if inflation was under control, all was well,” he said. [Hmmm…]

In retrospect, central banks should have let the benign deflation of this (temporary) phase of globalisation run its course. By stoking debt bubbles, they have instead incubated what may prove to be a more malign variant, a classic 1930s-style “Fisherite” debt-deflation. [Oops.]

***

“It was always dangerous to rely on central banks to sort out a solvency problem when all they can do is tackle liquidity problems [Wrong diagnosis]. It is a recipe for disorder, and now we are hitting the limit,” he said.

Indeed, it’s not just the past decade … the mainstream has willfully ignored key economic wisdom which is hundreds or thousands of years old.

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  • jadan

    Debt jubilee, you say? That’s like crying “Uncle”! This BIS is the
    pustule on top of the festering boil of the private central banking
    system, which has proven itself not merely corrupt, but also incompetent
    in the management of financial affairs in every country. Time to throw
    in your towel, Mr. White, bail out of your globalization dream and go
    find some honest work, such as a job with some of the alternative media.
    Maybe Michael Hudson can use you to do research, far from the levers
    of power & influence….

    • Keith Liberty

      Mr. White has his SHORTS ready to go….he’s just trying to start the avalanche….

  • Jan 17, 2016 Nomi Prins-US at Center of Financial Black Hole

    Don’t think the U.S. is immune from trouble. The U.S. is at the center of the black financial hole. So, will the U.S. eventually implode with the rest of the world? Former top Wall Street banker and best-selling author, Nomi Prins says, “Yes, because the U.S. is a trading partner with these countries.
    https://youtu.be/R7puB7g8qHA

  • Jan 19, 2016 Switzerland: World Economic Forum kicks off in Davos

    The World Economic Forum (WEF) Executive Chairman Klaus Schwab gave the opening speech at the annual conference in Davos, Tuesday, to an audience of global economic and political elites. Davos welcomed attendees at the exclusive event, which is now in its 46th year. Political and business leaders from around the world are set to gather for the 46th edition of the meeting under the theme “The Fourth Industrial Revolution.”

    https://youtu.be/uytZTNwo2uU

  • Sarastro92

    You know things are bad when the Bank for International
    Settlements is talking global “Debt Jubilee”. Indeed, the situation
    is dire and will only end in short order with strife and conflagration unless a
    radical plan to re-write the Global Economic Order is implemented fast.

    The overall formula is direct and certainly includes the
    elements you have stressed in recent years; 1) Debt Jubilee (orderly write down
    of the derivative and related bubble) + 2) Central Bank financed massive
    infrastructure investments and related economic stimulants + 3) Tobin/ Wall
    Street sales tax and related measures to replace the FIRE economy with high
    growth, high productivity industries plus 4) an end to off-shoring and
    out-sourcing replaced with protectionist managed trade and market competition;
    5) restoration of Glass-Steagall and outlawing speculative derivative transactions.

    If Central Banker types such as William White don’t take the lead quickly on
    such a program, then it will be up to Corbyn- Bernie Sanders types to install a
    new order. If they fail, we’re all doomed.

    • jadan

      With legislation such as HR 2990 proposed by former pres candidate, Dennis Kucinich, the US could reassert the Constitutional mandate of the US state to issue its own debt-free money and eliminate the power of the Fed interloper to control banking abd the money supply. It’s possible that Bernie Sanders will opt to end the Fed rather than reform it as this financial storm begins to tear up the landscape.

    • John Francis

      Socialism is never the answer,

      • Sarastro92

        Mr White is a banker, not a socialist. You don’t understand capitalism in decay.

    • I don’t belief that is good enough. I would like to end the super-rich, by law. 1) Debt Jubilee, of course, but that is not enough. We want our currency back, and we want the E.U. (and the United Nations) out of our lives (at least I do). At the extreme this means every single account will be zeroed, every debt will be zeroed, everything financial will be completely destroyed. Reason: the mess is just too great, already. Sounds tough ? Compare it to hyper inflation, and then you have the same, but uncontrollably so. Hence we pull it forward while we can still manage it. The soup will then not be eaten as hot as it is served. We can still save bank accounts up to – say – 40 000,- euro or so. We can still try to take over the mortgages in our new currency, we can still set over pension funds, and we can try everything we can to destroy all the money in the investment banks and the super-rich (which won’t be easy). 2) We initiate a new Mint, fractional reserves will be outlawed, and the high treason of a private central bank will be investigated. The trade in loans and such certificates will be outlawed, by which the stock exchange becomes illegal. Oops, we don’t need gambling with our economy, go to the race track, the speculators should leave the real world to normal people. 3) Offshoring can be stopped by forcing the medium-large businesses to become owned by the workforce by law, because they won’t offshore their own jobs. Offshoring is a side effect to dictatorial companies, where the dictator abuses the serfs some more. The beauty is that you don’t need cumbersome protectionist policies to prevent outsourcing, although there is nothing wrong in my view with banning slave made goods for moral and economic stability reasons. 5) Yes why not, the more law that makes investment banker life hard and impossible, the better, bring it all in. We need a law that prohibits Governments to take on debt, and to make it a Constitutional law.

      We don’t need a banker to take the lead, we need a banker who will come clean on his guilt and the horrible things that they have all done. We the people will order our Government what to do, and those that still take bribes from banks should end up in jail. Some laws that will make it impossible for politicians to accept post-fact bribes, such as high payed soft cushion jobs later, need passing. It may be a good idea to outlaw investment finance altogether (oh they so think the world revolves around them, don’t they; but it doesn’t, the collapse however, yes that does revolve around them …..) Sorry, my opinion.

      • Sarastro92

        Well what do you want: write downs or bailouts? You condemn both.

        • Perhaps I worded it strange, but it is obvious that bailouts with taxation money is a violation of the free market principle. These banks must be pushed through bankruptcy. The creditors in my view at the head of the line, should be the ordinary deposit holders, starting with the least money. How exactly these banks should go bankrupt is a matter for the courts. It seems necessary to try to ascertain how much money the owners and managers have sucked out of the bank for themselves before it went bankrupt, in order to retrieve this money for the depositors. If there is a deposit insurance by the Government (didn’t they do that, i seem to recall it), then that would have to be activated for the deposit holders. Everything remaining is in principle destroyed.

          Example: I do not want to see a bank operating in my nation, with the name ING, who have already been bankrupt. I don’t want to see these same bankers work there still. I don’t want my Government to put an entire year worth of taxation intake on the line for a bunch of bankers. If they are too big, then there is the solution, because everything that is “too big” will hence need to be reduced in size. We then now have practical experience when something is too big, and hence we can pass law that never again will banks / financiers or other types of corporations be allowed to even approach a fraction of that size. Violations should result in high fines and possible possession of assets. Many companies competing has always been a core idea of the free market, and you can obviously only maintain that if companies do not grow beyond a certain size, because then there will only be a few, or a few will dominate. These laws could have been passed in 1800, and all this nonsense could have been avoided.

          I hope to have clarified: I don’t want “bail outs” I want these banks passed through bankruptcy and these bankers tossed to the curb where they can join the masses of unemployed that they have been directly and indirectly been responsible for. I want “write offs” of debt, of banks, and of the super-rich, by law. The matter of “bail ins” is perhaps a bit more subtle, because the depositors have taken a certain risk if they knew the bank was speculating with their money. I belief however that we must do everything we can to bankrupt and destroy these banks, and then make them illegal, and hence I don’t like the idea of bail-ins either.

          • Sarastro92

            Ok. Well since so many assets are at stake, this process has to be orderly since the entire top tier of the financial sector is bankrupt.

            The US government may need to step in and nationalize large institutions, keep vital operations functioning ( forex and commercial paper , for example, and clearinghouse operations), separate out viable assets and then eventually consolidate and sell the assets on the open market.

            What we don’t need is Schumpeter style “creative destruction” to linger i a prolonged Depression. AND we have to add in all the other recovery elements, including tax reforms to deter speculation and large Fed financed stimulus.

      • Sarastro92

        Some of this is too radical and unnecessary… but the details are too complicated to address in this forum

        • Thank you for your reply. In my view the Government will have to step in to guarantee basic survival because this could be a rather great economic shock. I would suspect masses of bankruptcies in all sectors, but it doesn’t have to be a complete disaster in everything.

          I understand if you say that what I proposed is too radical, and in America you may not require a new currency (we in the Netherlands do, we are our own Country). It depends on what exactly is the objective, how much of the Oligarchy you would want to do away with. Even if you would want to do less then I proposed, it is still good to consider the most drastic program as well, so as to have a backup in case things are worse then expected.

          In practice it may be better to pass some laws against big businesses, and slowly one by one take down one of the too big companies and attempt to shatter them in at least half viable components. The pain will be bad, but it could lead to long term stability.

  • John Francis

    The memory of W. Bush and thoughts of Obama sicken me. Both doubled the national debt. Had they been wise and prudent they had every opportunity to get the nation’s finances on a more stable footing. Instead they both proved themselves corrupt traitors who should have been impeached! And, as Devvy Kidd once said, “Half of Congress is mentally ill” – no argument there.

    • Libertybellle

      Only half?

    • Here is your sign! Jan 17, 2016 SouthWest Farmland Being Sold To Foreign Countries For Its Resources

      Saudi Arabia and other Persian Gulf countries are scooping up farmland in drought-afflicted regions of the U.S. Southwest, and that has some people in California and Arizona seeing red.

      https://youtu.be/hMAQxUCSGyo

  • Jan 14, 2016 World Rushes to De-Dollarize Oil Trade Before US Economy Crashes and Burns

    Slowly, but surely Russia, China and other emerging economies are beginning to reduce their dependency on the US dollar. Russia plans to trade oil using rubles by undermining the current US oil price monopoly.

    http://sputniknews.com/us/20160114/1033153676/us-economy-bankrupt-multipolar-world.html#ixzz3xFj2txqT

  • Jan 19, 2016 When Free Trade Fails, War Follows

    Populist cries for trade protectionism are again ringing out, as politicians seek to blame China for bad US monetary and economic policy. But destroying trade will not only make us poorer, it is usually the harbinger of war.

    https://youtu.be/UMYhR5WbCC4

  • Jan 21, 2016 Central Bank Debt Bubble Will Wipe Out Large Portion Of Global Population. By Gregory Mannarino

    https://youtu.be/j3KWSEV2bu0

  • marki

    Government debt has doubled? Funding the War Machine? To the profit of Skull&Bones polarisers – Cheney, Bush – the 1%? Who are now 44% richer than 2010?
    Solution at hand – Wealth Tax! 1% for the 1% ! Bit by bit a wealth tax can claw back 50 years of profiteering and pay back public debt. The more it gets put off, the more likely we are to need it a wealth tax at 10% for the 1%.