Thread by @Crashonomics1

The imminent default of #Evergrande and the hawkish tilt of #Fed is sparking a global risk off event. This has similarities to all 3 of the last major crashes; 97 (LTCM - leverage), 2000 (tech - overvaluation), and 2008 (real estate - highly rated assets defaulting) #QQQ 1/9

97 started with the currency crisis of Thailand, a small economically unimportant country but set off a chain of currency crisis and defaults in Indonesia, Malaysia, Brazil, Argentina & Russia. Culminating in the collapse of the massively over-leveraged LTCM
#QQQ #BTC #SPY 2/9

It started small and took significant time (1 yr) to fully play out, feeding on the most overexposed and over leveraged investors. I expect it to play out much faster this time as we are starting with the 2nd largest economy, and the debt levels are significantly higher
#ETH 3/9

In 2000 it was tech valuations fueled by excess liquidity fueled by the #Fed 's misguided productivity revolution and Y2K fears. Once the liquidity was withdrawn in Mar of 2000 the market crashed. We are seeing that now from even more extreme valuation levels #Taper 4/9

The #Fed 's reverse repo has already withdrawn $1.4 trillion in liquidity from the system, equal to almost a years worth of QE. Other central banks have stopped QE or are tightening. This stealth tightening has set the table for the equity declines that are just starting 5/11

In 2008 it was a real estate crisis fueled by the #Fed 's excess liquidity and super charged by derivatives and CDOs. However what caused the devastation was the shift in perception from these securities being AAA with low expectations of loss to close to Junk rated. #JNK 5/9

This is the misunderstood part of the #Evergrande default. While the losses may be contained initially the fact that China did not bail out investors means that wide swaths of the Chinese corporate sector are not AAA but close to #JNK. China credit growth will collapse #SPX 6/9

In addition once the Chinese defaults happens credit default swaps will spread the risk widely destroying surprising victims, ala AIG. I expect HSBC and DB to be at the epicenter of this maelstrom. Once it hits major hedge funds and financial institutions... #HSBC #DB #QQQ 7/9

The deleveraging will be fast and catastrophic given the amounts of leverage in the system. This leverage comes from numerous areas, massive option activity, leveraged trading accounts, standard and exotic derivatives, and a #Fed induced chronic over allocation to equities 8/10

As the margin calls play out I expect the stable coins to bust as crypto players need to convert to fiat, I believe we are seeing that with the Chinese developers cashing out their #BTC to try and make debt payments. Crypto losses will be close to 100% as well as #NFTs #QQQ 9/10

This process was kicked off by deleveraging by Chinese developers and the impact on its real estate market. It has begun and like dominoes cannot be stopped. The question now only is the timing, will it be as rapid as an equity crash on Monday or take a year to play out. 10/10

Sorry this tweet string was sent prematurely and the tweets are not ordered properly.

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