The New Crisis is Coming

The world has never been a stable place: wars, market volatility, financial crises, geopolitical instability – all these things have always been hitting the world time to time. Usually, the world lives by cycles: crisis – recovery – prosperity – crisis – recovery and so on and so on. Do you remember when the last big crisis was? When was the one before that? The one before all these? The answers are a 2007-2008 crisis, Asian crisis, and Black Monday in 1987. So, as we can see, every 10 years there is some downfall happening in the world causing the collapses on financial markets. This figure – 10 years – can be somehow called the cycle time for modern economic systems. How it all corresponds to the probability of the next crisis coming soon? Let’s go deeper inside and try to get to know the potential reasons.

First of all, all over the world, we can see the growth. Growing of markets, consumption, credits, stock markets, even Bitcoins (I will mention this later). People and businesses have plenty of money and capitals (in cash or to borrow) to invest. This makes entrepreneurs invest in more risky projects. The more people get into this process, the more money is raised, the more risks are born… and the closer we are to the fall from the cliff called “crisis.” Just refresh your memory about the things that happened before the crises: we observed the huge increase in all spheres of economy, and there were no worries about the future. But this situation puts the market in the mind haze in which everyone is underestimating risks and is in the pursuit of easy money. The last statement leads me to further reflections about…

Bitcoin that is about to fall sooner or later. The speculative demand can’t keep the prices high all the time. And in case of the fall just imagine the market capitalization decreasing 20 times just in a week or two (huge volatility of the prices makes me make the conclusion that the fall will be very fast). Taking in consideration the fact that regular Americans start taking loans and their savings and investing them in Bitcoin in hope to make easy profits (that is exactly the thing I was talking about before considering risks underestimation), this may have serious consequences to the global economy. One more thing to be mentioned is that downfall will probably happen when some big players decide to exit the market causing everyone else to exit as well. Of course, these first players will have the most profits, but these are not the money that can be reinvested into stock markets and real sector. The guys that will direct the next fall are not professional investors (at least not even a small part of them). This will tie the huge capitals on the bank accounts without the possibility of working on the renewal after the crisis what can make the consequences even more horrible.

There are lots of other factors that can make their mite to the collapse like instability at the Middle East, the new Cold War between Russia and the USA, North Korea may say their word here as well. Geopolitical uncertainty may multiply the existing risks that will lead to the even faster forthcoming of crisis.

So, as for now, there are no particular crisis precursors, but considering the complex of all facts and trends some very unpleasant forecast may be made for the next 1-2 years. But well, as Donald Trump said, the crisis is the time for possibilities, so be ready to exit the markets in time and reinvest in the destroyed starting to recover markets! Reed more.

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