Royal Bank of Scotland issues Crash Alert

Last Thursday, the Royal Bank of Scotland issued a report to its clients warning of a Global market Crash within the next three months. Below are some of the points of the report:

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. Such a slide on world bourses would amount to one of the worst bear markets over the last century.
“Cash is the key safe haven. This is about not losing your money, and not losing your job,” said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.
US Federal Reserve and the European Central Bank both face a Hobson’s choice as workers start to lose their jobs in earnest and lenders cut off credit. The authorities cannot respond with easy money because oil and food costs continue to push headline inflation to levels that are unsettling the markets.
“The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets,” he said.

These seem extremely strong words from a strategist at the fifth largest bank in the world, and I’m guessing it probably won’t make the evening news. The article goes on to say that the equities markets (basically stocks) will go down heavily within the next three months bringing with it as big a bear market as we’ve ever seen in the past 100 years.

Now panic is never a good thing. But awareness is. These are pretty good times to carefully consider the question, “How would we handle life if our present economic structure broke down?” These days I am beginning to look around me, and noticing how much I take for granted – I can easily go to ATM, withdraw some money, then head to the store and buy a loaf of bread, or hop on a plane to visit family. What if all that were to change? Sounds gloomy, but maybe some things should be looked at, even if they are unpleasant.

These letters are not going to be all doom and gloom, predicting disaster and complaining about politicians. True, we are in a most challenging place in the world, but I like to think of a challenge as training ground to discover our own strength and humanity, the very best within us. That’s why I am dedicating this entire effort to solid solutions I believe in and am using, and real sharing between visitors.