Royal Bank of Scotland issues global stock/credit crash warning

It’s rare that a major institution puts out bad news in such an unvarnished & direct manner

The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

“A very nasty period is soon to be upon us – be prepared,” said Bob Janjuah, the bank’s credit strategist.

A report by the bank’s research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as “all the chickens come home to roost” from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

The Royal Bank of Scotland is one of the major banks in Scotland, and is definitely part of the mainstream banking industry in the UK.  This warning is coming from one of the big players in the global finance market, not some lone voice crying in the wilderness.    If you read between the lines, you can also infer that the problems we have been seeing in earnest since last fall are just a warm-up to the real financial pain that may be coming our way.

As the article points out, the normal tools for dealing with such a problem (i.e. massive injections of liquidity a.k.a. inflation) are not as palatable an option as it used to be, since citizens are already seeing notable increases in price of such staples as food & energy.   Do you jack up inflation to save the market and hammer average citizens, or do you risk the market falling apart, with major job losses, again hammering average citizens?

A major credit crisis some time in the next three months would have the fecal matter impacting the fan during the thick of the general election race here in the States.  Anyone wonder what kind of effect that would have on the outcome?

HT: 321gold

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4 Responses to Royal Bank of Scotland issues global stock/credit crash warning

  1. […] banks are piling onto the “USA is in serious trouble” bandwagon, similar to the Royal Bank of Scotland warning I posted about earlier this […]

  2. travellerev says:

    Hi Bart,

    I found your blog because someone linked through to my blog via yours. I think you and I are kindred spirits and I’m going to put you on my blogroll.

    I’m a Dutch woman living in New Zealand with my kiwi husband.
    We moved there three years ago and we have changed our life from being gadget obsessed to living in a perma culture community with an emphasis on community and communal food production. We are not survivalists but like you intend on supporting our family and friends during the transition time that we feel is inevitable. We are lucky in that we have spend our entire live accumulating the old skills like weaving, spinning, wood working, cheese making to name a few. So we feel we are well situated in comparison to our poor city dwelling brothers and sisters.

    Any way it’s good to know there is people like you out there.

    Evelyn

  3. Bart says:

    Greetings,

    Thanks much for your comment. I’m glad you find things of worth in my writing… it’s what makes doing this worthwhile.

  4. Brian says:

    Bart,

    I stumbled across your post. We are like minded in many ways!

    Interesting call from RBS, but not suprising…

    Protect the assets, protect the family, and protect friends, the global financial crisis is not something to be taken lightly. We saw the banks rally here in the states today, my guess is the market will be down for the week by Friday.

    Be sure to checkout my site, and another like minded site called: bigbigbet.blogspot.com

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