Charles Hugh Smith – Once global assets roll over for good, it’s important to recall that somebody owns these assets all the way down. These owners are called bagholders, as in “left holding the bag.”

Those running the rigged casino have to select the bagholders in advance, lest some fat-cat cronies inadvertently get stuck with losses.

In China, authorities picked who would be holding the bag when Chinese stocks cratered 40%: yup, the poor banana vendors, retirees, housewives and other newly minted punters who borrowed on margin to play the rigged casino.

Corrupt Chinese officials, oil oligarchs and everyone else who overpaid for flats in London, Manhattan, Vancouver, Sydney, etc. will be left holding the bag when to-the-moon prices fall to Earth.

Anyone buying Neil Young’s 2-acre estate in Hawaii for $24 million will be a bagholder.

(If nobody buys it at this inflated price, Neil may end up being the bagholder.) Continue reading →