ShadowStats’ Williams: Cyprus Might Spark Meltdown of Global Finance System

Wednesday, 20 Mar 2013 10:21 AM

By Dan Weil

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The Cyprus crisis could spill over into the United States and the rest of the world, with disastrous results, says John Williams, publisher Shadow Government Statistics newsletter.

The European Union has demanded a tax on Cypriot bank accounts in exchange for a bailout. That threw the nation into a tizzy and dented financial markets around the world.

“The Cyprus banking crisis indeed has the potential for unraveling the stability of the U.S. and global financial systems,” Williams writes in a commentary.

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

“There is little behind the carefully crafted, post-2008 facade of systemic normalcy and stability, and it can shatter easily.”

On another subject, Williams maintains that those who are jumping up and down about the U.S. housing rebound should just hold their horses.

“With structural liquidity issues besetting the consumer, and with ongoing instabilities in the banking system, the chances of any sustainable, near-term rebound in housing activity remain remote,” he writes.

Williams wasn’t too impressed with Tuesday’s news that housing starts rose 0.8 percent in February from January. A gain that small is “statistically indistinguishable from a contraction,” he says.

“Although housing starts are well off their trough level of April 2009, the series has shown no meaningful recovery and appears to be stagnating anew at 60 percent below its 2006 high.”

Yale economist Robert Shiller is cautious on the housing market too. “People shouldn’t assume the housing market is off to the races and you’re going to regret it if you don’t go in,” he tells Yahoo.

“[For] the country as a whole it’s rather unlikely that we’ll have another boom like the one we recently had because that's such a rare and unusual event. … Prices could well go down. It’s a risk.”

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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