by Darryl Robert Schoon, Gold Seek: In May 2007, in Subprime America Infects Asia and Europe I predicted a severe financial crisis was imminent: the risks that have lain dormant beneath globalization's foundation are about to erupt and a reordering of the world's financial geography is about to ensue. It's spring 2007 and the sun is shining in the US, backyard BBQs are being cleaned in anticipation of summer’s use. A severe financial crisis, however, is in the offing; a crisis as unexpected as the Golden State Warrior’s last minute steak to the NBA playoffs.
An unexpected financial crisis, however, will be much more consequential than Don Nelson’s magical resurrection of the Warrior’s NBA hopes. There, at least, the Warriors will have a chance. But because most people don’t know a financial crisis is coming, they will have little chance of survival. This summer, America’s subprime CDOs are coming home to roost, and not just to the US.
In July 2007, two multi-billion dollar subprime hedge funds collapsed. One year later, the greatest financial crisis since the 1930s bankrupted Wall Street banks; real estate fell 40–70%; and central banks flooded markets with zero-cost credit and trillions of dollars in quantitative easing to keep stocks from crashing, setting in motion a still-inflating stock market bubble to replace the collapsed 2002-2007 real estate bubble that revived markets after the 2000 dot.com crash.
After the 2008 crisis, unprecedented central bank efforts to prevent the bankers’ endgame temporarily delayed its inevitable resolution. Today, however, the banker’s edifice of debt has reached such levels that systemic dangers, e.g. speculative bubbles, low inflation, low growth, etc. increasingly threaten global markets. The bankers’ endgame is accelerating.
THE BANKERS’ ENDGAME
The bankers’ historic run at capitalism’s casino of luck, i.e. 300-years of profiting from constantly compounding interest on debt-based paper money, is now ending; collapsing from the additional debt central bankers created in the aftermath of the 2008 financial crisis.
Capitalism’s uneasy balance between credit and debt has been fatally destabilized. Debt levels are so high, credit can no longer create sufficient growth to pay down or service what is owed. The bankers’ endgame has entered its final stage.
Rather than address the underlying over-indebtedness that detonated systemic risk and culminated in a full-blown catastrophe, [central bank] policy had simply catalyzed further indebtedness…From a starting point of the end of 2007 through mid-year 2014, global debt rose by $57 trillion to $199 trillion. As a percentage of global gross domestic product (GDP), global debt had risen to 286 percent from 269 percent.
Danielle DiMartino Booth, former advisor to Fed President Richard Fisher, July 5, 2017
Modern economics isn’t rocket science. It’s a debt-based ponzi-scheme dependent on constantly-expanding growth needed to pay down the constantly compounding interest accruing from the bankers’ issuance of money as debt.
In the bankers’ endgame, the demand for credit, i.e. loans, collapses. This is where we are today. Loan growth has now entered negative territory; and, as a consequence, the world is on the precipice of another financial crisis.
One key measure of US corporate borrowing [loan growth] is falling at the fastest rate since the onset of the Lehman Brothers  crisis. Money supply growth in the US has also slowed markedly. These monetary and credit signals tend to be leading indicators for the real economy...Net corporate bond issuance has also stalled, indicating that borrowing by US firms as a whole is in decline.