by Tom Luongu, Russia Insider:

There is real power in the word “No.”

In fact, I’d argue that it is the single most powerful word in any language.

In the midst of the worst market meltdown in a dozen years which has at its source problems within global dollar-funding markets, Russia found itself in the position to exercise the Power of No.

Multiple overlapping crises are happening worldwide right now and they all interlock into a fabric of chaos.

Between political instability in Europe, presidential primary shenanigans in the U.S., coronavirus creating mass hysteria and Turkey’s military adventurism in Syria, the eastern Mediterranean and Libya, markets are finally calling the bluff of central bankers who have been propping up asset prices for years.

But, at its core, the current crisis stems from the simple truth that those prices around the world are vastly overvalued.

Western government and central bank policies have used the power of the dollar to push the world to this state.

And that state is, at best, meta-stable.

But when this number of shits get this freaking real, well… meeting the fan was inevitable.

And all it took to push a correction into a full-scale panic was the Russians saying, “No.”

The reality has been evident in the commodity markets for months.  Copper and other industrial metals have all been in slumps while equity markets zoomed higher.

But it was oil that was the most confounding of all.

Most of 2019 we saw oil prices behaving oddly as events occurred with regularity to push prices higher but ultimately see them fall.

Since peaking after the killing of Iranian General Qassem Soleimani oil prices have been a one-way trade. Down.

Our inept leaders are trying to blame coronavirus as the proximate cause for all of the market’s jitters.

But that masks the truth. The problems have been there for months, pushed to the back burner by incessant Fed intervention in the dollar-funding markets.

The 2008 financial crisis was never dealt with, just papered over.

The repo crisis of last September never ended, it’s still there.

And it reappeared with ferocity this week as people sold dollars and bought U.S. treasuries pushing U.S. yields on the long end of the curve to absurd levels.

Credit markets are melting down. Stock markets are the tail, credit markets are the dog. And this dog was run over by a bus.

The Fed intervenes to keep short term interest rates from rising to preserve the fiction it is still in control.

The market wants higher rates for short-term access to dollars.

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