Central banks have been trying to prevent a global recession for seven years. Ever new interventions (QE, Operation Twist, Abenomics, NIRP, etc.) suggest control to investors. The fact is that the structural problems have not been fixed. Rather, interventions entail major risk potential for investors.
Many readers will be familiar with the game Jenga: one builds an ever higher tower by removing building blocks from the base and placing them on top. The game ends when the tower collapses.
The central banks have been playing Jenga since 2008. The current state of affairs: the tower is still standing, but it’s shaking dangerously. An analysis of market trends from 2009 to the end of 2015 for investors in government bonds, shares, commodities and currencies showed that the risk for investors has increased dramatically. Extreme situations, which should take place only once every 62 years, were assessed for each asset class.
The graph shows that since 2009 the number of extreme events has been increasing steadily in all asset classes.
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