These days, the word ‘BUBBLE’ is the new YOLO on Wall Street. Everyone, from PIMCO’s Bill Gross, to notorious short seller Jim Chanos, to the muppets/clowns on CNBC, are worried about asset bubbles forming as a result of the relentless printathon undertaken by the Global Central Bankers, in order to pump the nominal prices of Stocks, Bonds, Commodities, etc… to new all time highs.
Most of them seem to be focused on China, and rightfully so, because China is where most of this fiat money being printed, eventually ends up. Given the recent volatility in Chinese Stocks Markets, the Property Prices, and the rapid increase in Bankruptcies being filed, China for sure, is — DONE !!! But, while everyone seems to focused on China, we have a serious Black Swan emerging – INDIA.
The social and political issues in India are already world famous, so I wont be diving into that. Just type the words ‘Corruption’ or ‘Rape’ in Google, and pretty much the first 100 million pages are basically the auto-biographical accounts of all-you-need-to-know-about-
If you were to compare the property prices in India, from 2005 to Present, in some cases, the prices have increased by as much as 1000%; this is especially true in metropolitan areas like Mumbai, Bangalore, New Delhi, etc…India is following the exact path that led us to the collapse of Lehman and with it the whole Global Economy. Though India imploding might not have much of an impact on the Global Markets, esp. the Western World, it will however, put a dent in the Global Economic Recovery, and add one more printing press to the noble cause, otherwise know as Competitive Currency Devaluation.
If India were to implode, I believe the Reserve Bank of India (RBI) will cut its interest rates by at least 250 basis points, from 7.50% to 5%, and the India Rupee (INR) will hit 70 per USD, by mid 2015. Anymore than that, and there will be uber social unrest/violent mass protests in India, as people wont be able to afford even their basic necessities. India’s Unemployment rate could hit 15+ by the end of 2014.
A Dramatic Rise In Inflation + High Unemployment + Rise In Bad Loans/Delinquencies + A Failed Government = You’re heading for a disaster !!!
The Indian banks are levered up to the Hilt. All I can say is: Good Luck !!!