by Charles Hugh Smith
Of Two Minds
As the inverted pyramid collapses, the effects will be non-linear.
Round about late March, we entered a Financial FantasyLand in which all the sins and excesses of rampant financialization were going to be painlessly washed away. Mever mind the entire U.S. economy is an inverted pyramid of balance-sheet “value” and debt resting on a shrinking foundation of collateral; everyone would be made whole in the Federal Reserve’s Financial FantasyLand.
You are now leaving FantasyLand: trillions of dollars of phantom value have already vanished, and these catastrophic losses will be taken by somebody. The question is: who will get the concrete overshoes? Whose balance sheets will collapse to negative numbers, erasing all their phantom wealth?