Awaiting Our Archduke Ferdinand Moment?

It’s not clear what this article by Bill Frezza is doing at the Huffington Post, next to a right sidebar that beckons readers to see what porn stars look like without their makeup and to learn how Halle Berry’s cleavage was a distraction to Jay Leno, but it’s hard to disagree with this assessment of where things are headed.

Not surprisingly, Bill’s background is as an engineer, not an economist or lawyer, and, as such, he sees our collective future a bit differently than policy makers as detailed in the excerpts below:

1) The global currency system is headed for collapse.

This will be unlike any currency collapse we have ever seen. It will not be geographically containable, and will leave no safe havens. For the first time in history, central banks around the world are debauching their currencies in unison.

…

2) The perceived elimination of counterparty risk is financial crack cocaine.

The subprime mortgage meltdown gave us fair warning of what happens when investors believe they will be protected by government intervention when parties with whom they do business fail … This has profound consequences on trading behavior, as it distorts the incentives that should inform institutional risk management.

…

3) There is no safe exit from ZIRP.

Future historians will puzzle in amazement about how otherwise sophisticated people allowed the entire global monetary system to come crashing down because some Princeton professor got his hands on a printing press. Fed Chairman Ben Bernanke’s unshakable commitment to a Zero Interest Rate Policy (ZIRP) has impoverished savers, driven investors dangerously out along the risk curve, and baked a ticking time bomb into the federal budget cake.

…

4) We only await our Archduke Ferdinand moment.

No one knows what will trigger the panic that wipes away the unfounded confidence upon which our entire fractional reserve banking system is perched … There are so many potential triggers to choose from. We will know that the moment is near when the smart money starts heading for the sidelines, to be followed by everyone else.

In the words of former Citigroup CEO Chuck Prince in mid-2007, “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing” and that about sums up where

via Iacono Research http://iaconoresearch.com/2013/03/14/awaiting-our-archduke-ferdinand-moment/