Oct 20, 2017
FILE PHOTO: View of the floor of the New-York Stock Exchange where the Dow Jones dropped over 500 points, 19 October 1987 © Maria Bastone / AFP
Thirty years ago Wall Street slid into the abyss, suffering the biggest one-day market fall of over 22 percent. Since then the Dow Jones has risen from 1,738 points to an all-time high of over 23,000, raising fears another historic crash is on the cards.
RT talked to Keiser Report host Max Keiser about the root causes of the 1987 crash and the possibilities of another market meltdown.
Today’s stock market has parallels to the 1987 market, said Keiser, adding that “valuations are at historic highs.”
“The Fed (and central bank counterparts) are pumping money, and sentiment is wildly bullish.”
Analysts have been warning recent stock market moves look eerily similar to just before 1987’s ‘Black Monday.’ Investors also raised concerns steep valuations might mean a correction is overdue.
On October 19, 1987, stock markets around the world crashed, shedding billions in value very quickly. The crash began in Hong Kong and spread to Europe, hitting the United States after other markets had already declined by a significant margin. The Dow Jones Industrial Average which comprises the 30 largest US publicly traded companies, lost 22.6 percent of its value that day.
Keiser says to understand what happened with the market we have to recall the global financial crisis of 2008.
According to him, “unprecedented amounts, over $20 trillion in cash, was printed and thrown at Wall St. creditors to repair their technically insolvent balance sheets.”
“There was no reform or attempt to reign in the crooked behavior of bankers at all. In turn, they interpreted this as a ‘green light’ to keep doing what they had been doing that led to the crash; namely, engage in extreme, reckless borrowing to speculate.”
A former stockbroker, Keiser said that now in 2017, the debt pyramid has never been higher. “Just one indicator of this would be the sovereign bond market in the US and UK that are trading at multi-hundred-year highs thanks to the Ponzi-economics of central bank debt monetization (printing money and buying back their own debt).”
Talking about the risks of another Black Monday equities crash, Keiser said it is impossible to say exactly when “this truckload of market risk explodes but it’s 100 percent guaranteed and will be by far the biggest loss of wealth ever recorded.”
He added that “countries like Russia are smart to be loading into Gold and initiating crypto strategies ahead of the ‘bond-pocalypse’ and equity inferno.”
Individual investors should be doing the same, Keiser said.
Oct 18, 2017 by Greg Hunter
Former Assistant Treasury Secretary in the Reagan Administration, Dr. Paul Craig Roberts, says the record highs you see in the stock markets are based on “phony profits” that come from global central banks “propping up” the financial system. Roberts says, “Any of these central banks are really only there for a handful of big banks. That’s all they are concerned with. All the Federal Reserve has been concerned with for the last decade is the welfare of a handful of mega banks. Of course, the banks are too large. They should have never been allowed to get that large. When you have a bank too big to fail, then your policy has failed. You’ve allowed too much concentration. Where is anti-trust? Where is the Sherman Act? Everything that was legislated in the past to prevent the kind of looming catastrophe that is hanging over our heads, this looming catastrophe is produced by central banks. They are perpetuating it because they don’t know how to get out of it.”