Kaye:  “While the carnage in the emerging markets has been intense, what we have seen in major Western markets has not been that big of a deal.  But if we look out to 2015 and beyond, it’s likely to be very ugly for the West.  We are extremely bearish just because the fundamentals in our view are bearish....

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“But eventually the ‘Bernanke Put’ is likely to be replace by the ‘Yellen Put.’  I think if things do get markedly worse than what we’ve seen, if mid single-digit losses in Western markets turn into double-digit losses, you are going to see much more aggressive action by the major central banks.

Then, we will have to see how the markets respond to that.  But if they respond the way they have since 2009, you could also get another spike higher, certainly by the second quarter, that could touch or even slightly exceed the prior highs before Armageddon sets in.”

Eric King:  “KWN has been warning for years that all of this money printing was not going to do anything for these economies.  It just creates misallocation of capital and asset bubbles.  The reality is that the world financial system is going to implode if it stays on its current course.”

Kaye:  “Well, that right.  Everything the central bankers are doing around the world is not making things better -- it’s making things worse.  One of the ways it’s making things worse is by disconnecting financial markets from economic reality.  That’s a major problem.

At some point that disconnect gets resolved, whether it’s later this year or 2015.  I am confident that I can see the medium-to-longer-term outlook here:  You simply can’t continue policies that are destructive to real economies.  You also cannot continue with destructive policies that are damaging to employment and real incomes.

In the US, for example, we are back to labor participation rates that were last seen when the United Sates was in a deep recession in 1977 to 1978.  This was the last time that labor participation rates were as poor as they are now in America.  That’s when I was at Goldman Sachs, so I have a pretty clear recollection of that time period.

It was incredibly difficult for people graduating from top colleges to find a job during the late 1970s.  Well, that’s exactly where we are once again in the United States.  So the propaganda being issued from the United States government and the mainstream media that the US is on a recovery path is an outright lie.

If you look at Europe, in much of Europe the situation is even worse.  So all these disastrous central bank policies have accomplished is to markedly increase the net worth of the super-wealthy, and impoverish virtually everybody else.  And this simply can’t continue.  You cannot have policies persist that create such disturbing imbalances. 

And if we look at what they are doing over in Japan, ‘Abenomics’ is destroying the purchasing power and the savings of its own population.  This should be a crime.  But what Japan is doing, just like the Western nations, is leading to a global situation that is entirely untenable.  In a way, we can throw in China as well with it’s shadow banking fiasco.

But the reality is that the debt bubble is just way beyond the Rubicon.  There is just no way that any sensible measures can be taken globally to deal with the immense debts that have accumulated and continue to be accumulated around the world.  So we are going to reach that point of reckoning, whether it’s this year or 2015.  But my guess is that the ‘big crash’ is going to occur in 2015.

And as soon as interest rates are reset to a level that approximates anywhere close to an historic norm, the citizens of the world are going to be subjected to financial seizures that are going to make 2008/2009 look like a warm up act.  That’s the end game.”

© 2014 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

IMPORTANT - KWN will be releasing interviews all day today with William Kaye, Eric Sprott and many others.

The audio interviews with Eric Sprott, Bill Fleckenstein, Egon von Greyerz, Dr. Paul Craig Roberts, Nigel Farage, James Dines, Gerald Celente, Andrew Maguire, Rob Arnott, David Stockman, Art Cashin and Dr. Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

Eric King

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rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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