'Crash Alert' Flag Still Flying

Aug. 30, 2013 2:19 PM ETSPY13 Comments
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Acting Man

By Bill Bonner

We hoisted our "Crash Alert" flag last week. So far, no crash. The US stock market came back a bit on Wednesday, with a 48 point gain on the Dow. Gold was flat. The flag is not a prediction. It's merely a warning - like the flag at the beach that warns of a dangerous riptide. You can still go in the water. But watch out. You could get washed out to sea. Syria? Tapering? The return of the debt-ceiling debate? Anemic real economic growth? A preponderance of negative earnings guidance? Rising Treasury yields? A panic in the emerging markets?

And here's the Financial Times warning that central bankers may not be willing to protect investors from every danger:

The world is doomed to an endless cycle of bubble, financial crisis and currency collapse. Get used to it. At least, that is what the world's central bankers - who gathered in all their wonky majesty last week for the Federal Reserve Bank of Kansas City's annual conference in Jackson Hole, Wyoming - seem to expect.

Despite the success of unconventional monetary policy and recent big upgrades to financial regulation, we still have no way to tackle imbalances in the global economy.

A New Kind of Financial System?

Dear readers are urged not to pay too much attention to the FT. Its news is solid. But its editorials are mush. Robin Harding continues:

Five years ago, after the collapse of Lehman Brothers, there was appetite and momentum for a new kind of international financial system. That appetite is gone - but we desperately need to get it back.

What "new kind of international financial system" does he propose?

…boosting the IMF's resources and handing more voting power to emerging markets so they can rely on it in

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Acting Man has been named after the title of the first chapter of Ludwig von Mises' book "Human Action" - the best treatise on economics ever written. The blog's main author is Pater Tenebrarum, an independent analyst who has been involved with financial markets for 34 years and is writing economic and market analyses for independent research organizations and a European hedge fund consultancy. Acting Man presents articles on the markets and the economy, a mixture of commentary on current events as well as economic theory and history, mainly from an Austrian School of Economics viewpoint. As more authors have joined the site, we have begun to broaden our palette a bit, but our orientation remains the same: pro-free market, anti-state, pro peace.

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