What will trigger the next phase of this Crisis? No one knows for sure, but based on the fault lines already evident, these are a possibility:
- The inevitable breakup of the European Union with the consequences of massive bank defaults in Europe triggering worldwide bank defaults as the interconnected trillions of derivatives are lit like a string of firecrackers.
- A sudden Greece like surge in interest rates on Japanese bonds results in a collapse of their debt ridden economic system, with reverberations throughout the world.
- The Middle East tinderbox explodes as Israel attacks Iran and the law of unintended consequences takes hold. Alliances and treaties would draw Turkey into war with Syria and Iran. Russia and China could side against the U.S. Iran and their vassals would unleash terrorist attacks and disruption of Middle Eastern oil would drive prices over $200 per barrel, crushing the American economy.
- A showdown on the debt ceiling and/or fiscal cliff results in a stock market crash, derailing the pitiful fledgling recovery created by Ben Bernanke’s QE to infinity measures.
- A tipping point is reached with regards to the amount of debt that can be accumulated by our Federal, State and Local governments. A cascade of defaults could lead to a loss of faith in the U.S. dollar and a surge in interest rates. The defaults and increased interest on the national debt could lead to mass depression or in a worst case scenario – hyperinflation.
- A large terrorist attack in one or more American cities would cause chaos, panic and fear, leading to more government control over our daily lives. This could trigger a counter response by those fed up with an overbearing government presence.
- A catastrophic natural disaster or series of natural disasters would reveal the fragile nature of our just in time economic system. A breakdown of our logistical and infrastructure systems would lead to chaos and mass hysteria as the citizens who believed their government leaders would keep them safe, secure, warm, and fed realized it was all a sham. Their leaders were in it for the power and riches, not looking out for the best interests of the common folk.
No one knows for sure what will trigger the next leg down during this Crisis, but I can guarantee you that things will not be getting better in the near future.