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Wall Street Is Collapsing, not China

Aug. 31, 2015, 2015 (EIRNS)—The extreme stock exchange losses and volatility happening because "some underlying events have occurred" (to quote JPMorgan Chase) originated in the Wall Street-London financial system, which is breaking down—not in China. Reasoned economic experts in the trans-Atlantic countries are admitting and explaining that the crash is trans-Atlantic.

Like the German banking economist who told EIR that the crash driver is the enormous piles of leveraged debt in the U.S. financial system, a noted senior U.S. energy industry analyst wrote "We Could See an Economic Collapse As Defaults Pile Up" in the industry website "OilPrice." Gail Tverberg writes,

"Both the stock market and oil prices have been plunging. Is this just another cycle, or is it something much worse? I think it is something much worse."

After recapitulating what she had written a year ago in the same location—that low incomes in the United States and Europe were dragging down oil and other commodity prices—Tverberg points out that commodities collapsed in the Summer before the crash of 2008—then rose as long as Federal Reserve "QE" lasted. When it ended, "there was a big downdraft in prices." But

"The big thing that is happening, is that the world financial system is likely to collapse. Back in 2008, the world financial system almost collapsed. This time, our chances of avoiding collapse are very slim."

Included, is the danger of insolvency to the world’s largest commodity sales corporation, Glencore, which is reporting large and "unexpected" half-year losses and trying to restructure its $31, 2015 billion in debts.

The London Guardian headlines its "Business Leader" editorial statement Monday, "Central Banks Can’t Save the Markets from a Crash."

And Counterpunch published Monday "The $2 Trillion Buyback Binge," describing the 98% of all earnings and borrowings of major U.S. corporations going into stock market purchases, as crushing capital investment and driving economic collapse. The measure of leveraged debt to GDP in the U.S. economy, 4.0%, is higher even than the record peak levels it reached in 1999, and again in late-2007. That debt is what collapses to trigger a crash.

Stock markets in Europe and the United States resumed their fall today.