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Monday, April 6, 2015

Fed Rate Rise Would Smoke Derivatives – Bill Holter with Greg Hunter

Bill Holter – Global Black Hole of Derivatives

by Greg Hunter

USA Watchdog

Financial writer Bill Holter says don’t expect the economy to get better anytime soon. Holter says, “We’re probably in recession again . . . the economy has been quite weak. It looks to me we could be breaking down in the stock market. This is going to be a really critical week.”

On the Federal Reserve raising interest rates, Holter contends, “From a credibility standpoint, the Fed has to raise rates.

In a real world, I don’t think they can raise rates. If they raise rates, my guess within two weeks you will see all the markets close. A rate rise, even a quarter of a point in Fed Funds, would smoke derivatives. You would see a chain reaction, and we would probably see a chain reaction even before they raise rates.”

Holter contends the banking system is interconnected and very weak and explains his point by saying, “Look at what happened when the Swiss dropped their peg to the euro. That basically has tanked the Austrian banking system. The Austrian banking system is on the verge of collapse because they lent in Swiss Francs. The strength in the Swiss Franc makes those loans much more difficult to pay back. That’s thrown the entire (Austrian) banking system out of kilter. If you do that with the dollar and you raise rates, and the dollar gets strong or spikes up 5% or 10% overnight, what’s that going to do to banks all over the world? That’s going to create a smoking black hole of derivatives.”

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