“Sell everything except high quality bonds” because 2016 is going to be a “cataclysmic year,” the credit chief of the Queen’s own Royal Bank of Scotland wrote in a recent note to clients, according to a January 11 article by Ambrose Evans-Pritchard published in the London Telegraph. RBS’s Andrew Roberts, while stupidly calling China the “epicenter” of what is actually a meltdown of the entire trans-Atlantic financial system, forecast stock market plunges in the U.S. and the U.K. of up to 20%, an oil price that could hit as low as $16 per barrel (a 50% drop from Tuesday’s Brent crude price of just under $32), and that a panicked Fed and Bank of England will have to reverse field and start up with quantitative easing again in short order.

The ongoing carnage in commodities, and oil in particular, is on the mind of every speculative banker on the planet. Morgan Stanley is warning of a $20 per barrel price; Goldman Sachs says that oil storage tanks could soon reach a limit, which would “force an immediate halt to some production;” and a Barclay’s research note advises that “recent price declines for major commodities are now greater than in any crisis of the past 30 years, and speculative positioning much more negative than it was even in the depths of the financial crisis.” Bloomberg wire service characterized Monday’s oil trading as simply “madness,” and the Wall Street Journal warned that U.S. oil and gas producers are currently losing $2 billion per week, and that at current price levels—let alone the additional drops that are coming—fully one third of such oil and gas companies will go bankrupt over the course of this year.

But the meltdown did not originate in the oil and commodities markets, and it certainly doesn’t end there. The British housing market is also about to implode, as noted by the Telegraph in a Jan. 10 piece headlined “UK house prices set to crash as global asset prices unravel.” They write that the global asset meltdown has already struck commodities and stocks, and it will soon slam the housing sector, which they describe as a “ticking time bomb.” A big problem in the British housing bubble is what they call “buy-to-let,” i.e. people who have bought housing units not to live in them, but to rent them to others while speculating on what they hope will be an unending asset bubble—much like the “flipping” phenomenon and the sub-prime mortgages in the U.S. in the mid-2000s. “A survey of landlords suggested 200,000 plan to exit the sector. The rapid growth of buy-to-let during the past decade looks set to be slammed into reverse.” And this will intersect a related bubble: “U.K. households are simply drowning in about 40 billion pounds of debt, according to the latest figures from the Office of Budget Responsibility.”

And then there is increasingly panicked capital flight as fear of bail-in expropriations set in—both from carry trade destinations such as Brazil back to the U.S. and Europe; and within Europe from southern tier countries Italy, Spain, Portugal, etc., into German and Dutch banks. But those banks are not lending out those increased funds, not to consumers or businesses, and not even to fellow banks on the interbank overnight market. Instead they are parking the funds at the ECB, where they earn a negative interest rate.

The British policy response to the ongoing meltdown is, predictably, to kill people with bail-in looting, as we have documented on larouchepac.com. 

At a forum celebrating the 50th anniversary of the founding of the National Committee on US-China Relations, in which four former U.S. defense secretaries were doing a “look-back” on the US-China relationship during their tenures, Helga Zepp-LaRouche, the president of the Schiller Institute, brought a dose of reality to what was becoming a much-too-comfortable exchange of views between colleagues, such as might have occurred on the deck of the Titanic before it hit the iceberg. The secretaries were Harold Brown, William Cohen, Chuck Hagel, and (by video) William Perry. While the nuclear weapons issue had not been broached, especially by Perry, who has previously expressed great concern over the danger of nuclear proliferation and the danger of nuclear conflict with Russia, there was not the sense of urgency corresponding to the reality we face today.

While the moderator, NCUSCR chairman Steve Orlins, was doing his best to find someone other than Helga to ask the first question, she succeeded in getting the floor. Helga introduced herself as the president of the Schiller Institute.

“There are many military experts internationally who are saying that we are closer to nuclear war than at the height of the Cold War period, due to a variety of reasons,” she said. “Now, if that would happen by accident or otherwise, it would lead to the elimination of mankind. There are many other destabilizing factors. One is that the World Bank just said that we are in front of the perfect political storm because of the new financial crash. The EU is about to detonate over the refugee crisis.” We have ISIS.

Here a rather impatient Orlins interrupted Helga, “What is your question?” he asked.

Helga replied: “My question is, why can we not make a new paradigm where we answer President Xi Jinping’s offer which he made to President Obama at the APEC meeting in 2014, that the United States should cooperate in a win-win strategy with the New Silk Road? And in his New Year’s Address he again said we must build a community of the common destiny of mankind. Why can’t we build an international security architecture based on common economic cooperation?”

First to reply was Harold Brown, who had been Jimmy Carter’s Secretary of Defense.

“I think we have,” he said. “I think that things would be much worse if there weren’t economic cooperation,  but to say you are in favor of peace and cooperation is just the very first step. The mechanics of the details are everything.”

Then Bill Cohen wanted to reply. Cohen said he wanted Perry to talk about this issue, but would comment on his own behalf. “I think we have become too lax in our concern about nuclear weapons,” he said. “I go back to Churchill, who said that one day we would return to the Stone Age on the gleaming wings of science. I think what we are seeing with the proliferation of nuclear weapons — Pakistan is building more and more, North Korea is building more, Iran certainly may be building more in the not-too-distant future. So I think this existential threat has to cause us, as well as climate change, to really think or rethink about how we are going to survive on this planet. Because I believe the threat of the spread of nuclear weapons is much greater today, because more and more individuals and radical groups are trying to get their hands on them. So I would put that in the context of an overall architecture, that we have to be concerned about, perhaps more than before, because we had rational governments dealing with this issue, coming even to the point of brinkmanship and possible extinction.”

Orlins then focused the discussion on terrorism, and ignored Cohen’s suggestion that Perry make his own comments on the issue.  The forum was aired live on C-Span. See the full exchange here.