Michael Burry, medical doctor and hedge fund manager, became the hero of The Big Short, arguably Hollywood’s most successful dramatisation to date of financial crisis. Burry made a fortune by bothering to do what others felt quite unnecessary: he actually examined the CDOs, the packages of home mortgages the big US banks were selling as investment grade securities. He found what he had suspected, that at ground level many of the mortgages so neatly packaged were not being serviced – neither capital nor interest were being paid down. He bet on the CDOs failing, and made a fortune for himself and his fund’s investors when in 2007-8 the sub-prime crisis exploded.

But here’s what Burry told New York Magazine back in December last year:

“Well, we are right back at it: trying to stimulate growth through easy money. It hasn’t worked, but it’s the only tool the Fed’s got. Meanwhile, the Fed’s policies widen the wealth gap, which feeds political extremism, forcing gridlock in Washington. It seems the world is headed toward negative real interest rates on a global scale. This is toxic. Interest rates are used to price risk, and so in the current environment, the risk-pricing mechanism is broken. That is not healthy for an economy. We are building up terrific stresses in the system, and any fault lines there will certainly harm the outlook.”

So, are we heading inexorably towards yet another financial crisis – the fourth to date this century?

That’s what we asked the I Ching at 16:05h CET on 30th March 2016.

The oracle replied thus:

The hexagram is no. 48, Ching/The Well. The hexagram depicts the eternal reserves of life-giving water under the ground. Whatever changes above ground will not affect the availability of refreshing, clear drinking water.

The one moving line is the yin line at the bottom, and for this the Taoists gave the following reading:

One does not drink the mud of the well.
No animals come to an old well.

In this context, the ‘reserves’ are the Federal Reserve Board, which is reaching down far too low, to the muddy base of the well. In financial policy terms, it means interest rates are far too low, leading not to economic rejuvenation but to stagnation.

So, yes, another financial crisis is on its way, though the secondary hexagram suggests it has some time to go before reaching a critical point, possibly some months yet.


Are you curious as to how the I Ching works? Why not go to www.intuitiveiching.com, where a good explanation can be found.