We Are On The Edge of Something Really Bad: Roubini Warns of New Bubble, Bigger Than ’06, Citi Warns Of Italian Rebellion Could Be Contagious, Ron Paul Warns of Imminent Dollar Collapse, And China Ratings Firm Warns Of Global ‘Currency Crisis’

Roubini: Fed’s Credit Bubble May Be Bigger Than 2003-06

Nouriel Roubini, the respected New York University economist, says the Federal Reserve’s quantitative easing (QE) is brewing a credit bubble that means trouble down the road.

Through QE, the Fed has injected more than $2 trillion into the financial system over the last five years,

“The risk from QE isn’t goods inflation; it’s not going to be a rout in the bond market, because the Fed will exit slowly,” Roubini tells Yahoo. “The risk is like during the 2003-06 cycle. We exited very slowly, and we got an asset bubble.”

But he thinks this bubble could be “bigger than 2003-06.”


Citi Warns Of Italian Rebellion Could Be Contagious

Citi‘s currency guru Steven Englander weighs in on what we just saw in Italy.

This is the first European election in which voters didn’t do the right thing. Instead they gave surprising support to politicians who reject austerity and, in some cases, the euro. This could become a major problem if it proves contagious. The feel-good from the runup in Italian asset markets was not enough to offset the feel-bad from austerity, low growth and unemployment. If all it would take to fix this was an ECB rate cut, they would do so immediately, but euro zone politicians may need to ease fiscal constraints  and find ways to quickly stimulate growth. Elections are more problematic than market scares or sentiment shifts as they can’t be undone by printing money. Still the outcome does not seem so dire that a bit of growth and ECB flexibility could not turn it around.

Meanwhile, SocGen currency analyst Sebastien Galy titles his note: “Instability Cubed.”


Italy Senate “Ungovernable”; No Coalition Possible

La Republica confirms what we long thought highly likely: The Italian Senate is Ungovernable.

A Senate majority takes 158 seats and no party has more than 123 at the moment. The current results look like this:

Senate Seat Projections

  • Bersani 104
  • Berlusconi 123
  • Grillo 57
  • Monti 17

There are 315 total seats and the total above is only 301. Although 14 seats remain, not even a Monti-Bersani coalition in addition to those 14 seats would bring Bersani’s total to 158.

Curiously, it appears Bersani received a plurality of the Senate popular vote with 32% compared to Berlusconi’s 30.2%. Grillo weighs in with 23.9%, and Monti at 9.1%…


Ron Paul: Dollar Collapse Imminent!

TheAlexJonesChannelPublished on Feb 25, 2013

Article Continues Below

On today’s program, Alex welcomes former Congressman Ron Paul to break down the use of force by federal agents to enforce unjust and unconstitutional laws and the victimization of Americans for simply engaging in commercial transactions.

DEBT BATTLE ROYALE: Santelli Vs. Dean Baker: ‘We’re The NEXT Greece!’

Biderman’s Daily Edge: U.S. Government’s Path to Demise Similar to Roman Empire’s

CrossTalk – Bubble Building – Who Can Print the Most Money the Fastest

The US, UK, Japan & eurozone are desperate to grab a slice of someone else’s growth if they can’t generate any of their own. How badly will this go down with the developing world? & are we seeing a money printing competition? Is printing mone…

Trade protectionism looms next as central banks exhaust QE


China Ratings Firm Warns Of Global ‘Currency Crisis’

Rising sovereign debt levels in advanced economies are spawning a crisis that threatens to topple the dollar and other reserve currencies, AFP reports citing a Chinese credit ratings agency.

Dagong Global Credit Rating said developed economies were spawning a “currency crisis” by trying to prop up their economies through loose monetary policies following the 2008-2009 financial meltdown.

Dagong says it is an independent private company but its chairman has previously advised the Chinese government, which has the world’s largest foreign exchange reserves.

“In this stage, the world will more actively look for a new currency other than the US dollar, euro, Japanese yen and British pound to replace the current international currency system,” the report said.

France seeks extra 6 billion euros in taxes in 2014 – minister
UK AAA downgrade weighs on pound – live
China ratings firm warns of global ‘currency crisis’ (other link to the news)
Japan seen nominating “deflation basher” as BOJ head: sources
France to pause austerity, cut spending next year instead: Hollande


Is This The Chart That Everyone Is Concerned About?

We have seen this all before…

US Consumers Hit By Payroll Taxes, Rising Gas Prices: Up Next, Government Austerity!



Follow IWB on Facebook and Twitter