The Beginning Of The End
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15 Potentially Massive Threats To The U.S. Economy Over The Next 12 Months

We live in a world that is becoming increasingly unstable, and the potential for an event that could cause "sudden change" to the U.S. economy is greater than ever.  There are dozens of potentially massive threats that could easily push the U.S. economy over the edge during the next 12 months.  A war in the Middle East, a financial collapse in Europe, a major derivatives crisis or a horrific natural disaster could all change our economic situation very rapidly.  Most of the time I write about the long-term economic trends that are slowly but surely ripping the U.S. economy to pieces, but the truth is that just a single really bad "black swan event" over the next 12 months could accelerate our economic problems dramatically.  If oil was cut off from the Middle East or a really bad natural disaster suddenly destroyed a major U.S. city, the U.S. economy would be thrown into a state of chaos.  Considering how bad the U.S. economy is currently performing, it would be easy to see how a major "shock to the system" could push us into the "next Great Depression" very easily.  Let us hope that none of these things actually happen over the next 12 months, but let us also understand that we live in a world that has become extremely chaotic and extremely unstable.

In the list below, you will find some "sudden change" events that are somewhat likely and some that are quite unlikely.  I have tried to include a broad range of potential "black swan events", but there are certainly dozens more massive threats that could potentially be listed.

The following are 15 potentially massive threats to the U.S. economy over the next 12 months....

#1 War With Syria - U.S. Senator John McCain is now publicly calling for U.S. airstrikes against Syria.  A military conflict with Syria becomes more likely with each passing day.

#2 War With Iran - A war in the Middle East involving Iran could literally erupt at any time.  The following is from a Reuters news report that was issued on Monday....

President Barack Obama appealed to Benjamin Netanyahu on Monday to give sanctions time to curb Iran's nuclear ambitions, but the Israeli prime minister offered no sign of backing away from possible military action, saying his country must be the "master of its fate."

#3 A Disorderly Greek Debt Default - Many reporters in Europe seem to think that this is becoming increasingly likely.  So what would a disorderly Greek debt default mean for the global financial system?  A leaked report that was authored by the Institute of International Finance says that a disorderly Greek debt default would have some very serious consequences.  You can read the full text of that leaked report right here.

#4 An Economic Collapse In Spain - Spain has one of the largest economies in Europe and it is rapidly becoming a basket case.  As I have written about previously, the unemployment rate in Spain has hit 19.9 percent, and the unemployment rate for workers under the age of 25 is up to 49.9 percent.  Unfortunately, the situation in Spain continues to deteriorate.  The following is from a recent article by Marc Chandler....

However, the devolution in Spain is particularly troubling. The new fiscal compact had just been signed last week, which includes somewhat more rigorous fiscal rule and enforcement, when Spain's PM Rajoy revealed that this year's deficit would come in around 5.8 percent of GDP rather the 4.4 percent target. This of course follows last year's 8.5 percent overshoot of the 6 percent target.

The problem that for Spain is that the 4.4 percent target was based on forecasts for more than 2 percent growth this year. However, in late February, the EU cuts its forecast to a 1 percent contraction. This still seems optimistic. The IMF forecasts a 1.7 percent contraction, which the Spanish government now accepts.

#5 The Price Of Gasoline - The average price of a gallon of gasoline in the United States has risen for 27 days in a row and is now up to $3.77.  Virtually all forms of economic activity are affected by the price of gasoline, and if the price of gas keeps going up it is eventually going to have dramatic consequences for the U.S. economy.

#6 The Student Loan Debt Bubble - Just like we saw with the housing bubble, the student loan debt bubble just continues to grow and grow and grow.  At some point the nearly 1 trillion dollar bubble is going to burst.  What effect will it have on our financial system when that finally happens?

#7 State And Local Government Debt Crisis - It is being reported that California is running out of cash again and there are cities all over the country that are on the verge of bankruptcy.  Could we see a significant municipal bond crisis in the next 12 months?

#8 The Collapse Of A Major U.S. Bank - A number of top U.S. banks are looking increasingly shaky.  In a recent article, David Trainer explained why he has such serious concerns about Bank of America right now....

In my opinion, there are four actions taken by financial services that signal the company is headed to serious trouble.

1. Management shake-up and major layoffs - lots of layoffs over the past year

2. Exploiting accounting rules to boost earnings - SFAS 159

3. Drawing down reserves to boost earnings: to the tune of $13.3 billion in 2011 and 2012

4. Bilking customers with new fees: tried it before and trying it again

Bank of America has taken all four steps.

#9 A Derivatives Crisis - The International Swaps and Derivatives Association recently ruled that the Greek debt deal will not trigger payouts on credit default swaps.  This is seriously shaking confidence in the global market for derivatives.  But the global financial system simply cannot afford a major derivatives crisis.

Estimates of the notional value of the worldwide derivatives market range from $600 trillion all the way up to $1.5 quadrillion.  The notional value of all derivatives held by Bank of America is approximately $75 trillion.  JPMorgan Chase is holding derivatives with a notional value of approximately $79 trillion.

When the derivatives bubble finally bursts it is going to be a financial horror show unlike anything we have ever seen.

#10 The Fall Of The Japanese Economy - The Japanese economy shrank at a 2.3 percent rate during the fourth quarter of 2011.  Japan has a debt to GDP ratio of over 200 percent and a major debt crisis involving Japan could erupt at any time.

#11 A "Solar Megastorm" - Scientists tell us that there is a "1 in 8 chance" that a "solar megastorm" will hit the earth by 2014.  A recent Daily Mail article detailed what some of the consequences of such an event would be....

'We live in a cyber cocoon enveloping the Earth. Imagine what the consequences might be,' Daniel Baker, of the University of Colorado's Laboratory for Atmospheric and Space Physics told National Geographic when asked about a potential 'megastorm'.

'Every time you purchase a gallon of gas with your credit card, that's a satellite transaction.

'Imagine large cities without power for a week, a month, or a year. The losses could be $1 to $2 trillion, and the effects could be felt for years.

#12 A Major West Coast Earthquake Or Volcanic Eruption - On Monday, there was a 4.0 earthquake in San Francisco and a 6.1 earthquake in Argentina.  Is the "Ring of Fire" waking up again?

#13 Tornado Damage To Major U.S. Cities - Last year, the U.S. experienced one of the worst tornado seasons of all time.  This year, we have already seen the worst tornado outbreak ever recorded in the United States in the month of March.  A couple of towns in Indiana were completely wiped out by that outbreak.  So what should we expect when we get to the heart of tornado season this year?

#14 Severe Drought In The United States - Last summer was one of the driest summers on record in the United States, and in many areas there is simply not enough water available for farmers this year.  Some are even projecting that we could see "dust bowl conditions" return to some areas of the country eventually.

#15 An Asteroid Strike In 2013 - Although scientists tell us that the probability is extremely low, the truth is that there is a slight chance that a sizeable asteroid could hit the earth in February 2013.  The asteroid is estimated to be between 60 and 100 meters wide, and it is projected to pass by our planet "at a distance of under 27,000 km".  If it did hit us (and scientists say that the odds of that happening are very low) it would potentially be as serious an event as the Tunguska Event in Siberia in 1908.  Mac Slavo of shtfplan.com recently described how awesome the Tunguska Event really was....

On June 30, 1908 an incoming meteor exploded approximately 5 miles above Siberia. The force of the air burst explosion, estimated at between 15 and 30 megatons, or about 1000 times bigger than the atomic bomb that destroyed Hiroshima, was so powerful that it annihilated everything in an 830 square mile area, and reports suggest that that explosion was heard up to 1000 miles away. Because of the remoteness of the impact zone, the Tunguska Event over Siberia had very little effect on the human population in the region, but the destruction of some 80 million trees in the area shows just how powerful a blast was created.

Of course there are so many other "sudden change" events that could potentially happen - a terror event in a major U.S. city, a deadly pandemic, an EMP attack, cyberterrorism or a major political scandal could all possibly cause a stock market crash and an economic collapse in the United States.

In the world that we are living in today, you just never know what is going to happen.

So what are all of you concerned about over the next 12 months?

Do you see the potential for some "black swan events" to happen?

Please feel free to post a comment with your thoughts below....

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  • http://yahoo.com richard swank

    don’t know why i have to fill this out again. are you having problems?

  • http://yahoo.com richard swank

    michael, you still have a problem. when i got to your website it takes me back to your articale of unemployment 10.7

    • Michael

      Richard:

      When did it do this? Just now?

      Is anyone else having this same problem?

      Michael

  • Gary2

    #1 War With Syria –
    #2 War With Iran –

    All these ****** clowns who want war so much need to take their sorry butts over there and be the first in line to fight.

    Its easy for the rich ***** to send poor kids to be killed in some arm chair adventure. This is not a game of risk. People die and for what? to sooth Bushes ego for Iraq defying his daddy?

    No More War! *******, **** Iran, ****** Syria NONE of them are worth Americans dying for.

    • Snoopy_The_Economist

      Gary2: Only pathetic liberals continue to blame thinkgs on Bush 3 yrs after he left. You must be so happy that Obama is delivering the promised CHANGE that will ultimately destroy USA. If Obama is against war why did the wars continue for 3 yrs into his presidency? It’s because war makes a elite richer and they make the decisions.

      • Gary2

        I am not blaming Bush, merely using his lies to war as an example.

        Same goes for Obama as his policies on this are the same as Bush.

        You are 100% correct in your criticism of Obama on following Bushes policies.

  • old soldier

    Good Article! Agree: there are alot more “black swan” events that were not on the list, some not on anyone’s “radar” Disagree totally with the comment “why list them..there is nothing anyone can do.” Just finished reading an article on the will to survive, that is Ernest Shackleton, the guy who survived a number of black swan events and lived to tell about it.THERE is always a way to plan, improvise for an event, whatever..if you have the will. Just because something seems hopeless don’t give up. A book to recommend on “black swan” events: Armageddon Survival. As for comments regarding the “saved” and “unsaved”, read “When Bad Things Happen to Good People”. I’m religious and pray daily, but please save “saved” comments. Remember the comment “judge not lest thee be judged.”

  • Buster

    Who gives a rat’s arse? Find a job and stop trying to scare people with your bull-hit.

  • Mind Candy

    Why does it seem like there’s more … conflict in the replies to this topic than usual?

    Also, why is it so hard for some people to accept that good information is good information, regardless of whether or not you agree with the source’s political or religious beliefs?

    Should I discount everything Michael says because I disagree with him on some things? No! We’re travelers on the same road, we’re just carrying different things in our backpack, so to speak.

    Thank you for all the time and effort you put into your sites, Michael. The overall value in what you do is not a point of debate (at least not for me), whether or not I share your ideology.

    • Michael

      That is good to hear Mind Candy.

      There is nobody out there that is going to agree with me 100% on everything. :)

      Michael

    • Rhynn

      @MindCandy:

      As denial becomes more difficult and the fall from the bliss of ignorance becomes greater it is the nature of Man to address this not by opening his eyes, but by concluding that he has not denied hard enough and then redoubling his efforts to do so.

  • Thomas James

    Nothing better happen until I see “The Hobbit” movie on December 14th !!!

    • Mind Candy

      Now THAT is something I can get behind. Saw a great picture online about a month ago that said “The Mayans were just counting down to the release date for The Hobbit.”

  • Starbucks

    Micheal,
    Although maybe not as high in possibility as some of the financial chaos we are facing, it might be much more serious should it occur. If we were unfortunate enough to experience an E.M.P. event, or a powerful solar flare event,(they have happened before) we potentially could lose a large portion of our power grid, maybe all of it, for months or years. We simply no longer have the manufacturing facilities to construct the huge transformers that could be fried, they are now built overseas.
    If we lose the power grid, there are I believe, well over a hundred nuclear reactors in the U.S. that could face meltdown in a matter of days if they lose cooling capability. Even with emegency power, at some point without a power grid, we could no longer keep them fueled. If you are not familiar with what is happening at Fukushima, Japan, they have 3 reactors now that appear to be completely in meltdown. The amount of radiation, and the problems that the Japanese people are facing is enormous and their future uncertain, and that’s with 3 units failing, what happens here, should we lose any large number of reactors. I won’t speculate, but I don’t think any of us can get far enough away to be safe. We face a lot of unknowns in the near future, but this one concerns me most. The facts are, we can take protective actions that can keep this from happening, or at least minimize the damage, but it costs money that no one wants to spend. Our priorities really need to be reconsidered.

  • Lennie Pike

    Absolutely correct.

    There are only about four countries remaining in the world that ARE NOT part of the rothschild satanic empire, and China is not one of them no matter what you hear on the mainstream news – the “West’s” corporations are located there for crying out loud.

    China poses no danger to the West especially to the U.S. because China’s totalitarian system is the model for the coming world government, and the U.S. has already accepted it and implemented much of it.

    But Russia is one of those four countries that remain and trouble is being stirred up there by the evil banking empire also. I’m sure Russia is also on the list for military invasion by our “patriotic” military members – good luck!

    Most Americans will overwhelmingly be in favor of invading those evil Ruskie commies just as they have been in favor of every other recent invasion. The American Public are exactly as you described them – a joke. In their defense though, they have been intentionally dumbed down now for decades, and for this very reason – to be able to achieve a one world prison. There are four countries remaining to make it happen, and incredibly it is all coinciding with the collapse of the present financial system – diabolical timing.

    The Russians could be the toughest, most intelligent, and pragmatic people in the world, and for some reason I like them a lot. I predict going up against them or their allies will be a big mistake, and the retaliation for it will be well deserved.

    Right now is a good time for real Patriots to reclaim our freedom and restore our Constitutional Republic.

  • Gil

    An asteroid strike? Talk about clutching for straws.

  • BigJim

    What really is pitiful is that the Obama Administration has no interest in going after financial crooks who have swindled and manipulated the economic downfall every politician gripes about. Trillions of dollars were involved there. As for Bank of America, what do you expect from the rocket scientists who will close your account when you did not have a single late payment in 8 years because you did not use your credit card for one month after you paid off your balance- but who will increase the credit limits on deadbeats who miss payments for months on end. Darwins Theory In Action works on Banks and other business who THINK they are too big to fail too.

  • TtT Engine

    The U.S.A. under Pres. Obama paved the way for Muslim terrorism by over throwing Mubarack in Egypt and Quadaffi in Libya. The real enemy is/has been for along time Achmadenijad in Iran. This web talk of “Black Swan” events/ Planet Earth destroyers, this is as likely as any of them. Our passive/reactive posture and giving a mad man like the “Hitler of Iran” the freedom of taking the first move may prove to be fatal for mankind. Christi Fidelis

  • Capt’n Tin Foil Hat

    Michael, I’m disappointed that you didn’t mention the imminent ALIEN attack on its way. Sure, you tangentially alluded to asteroids and meteorites, but lest we forget the aliens. That’s when it’s really gonna get ugly.

    In the meantime, our fearless (clueless?) leaders at the helm are racing full steam ahead into that big white hard thing floating in the water. I believe we truly are on a crash course with destiny. Hold on.

  • http://shelter101.com Dave Shelter

    Number eleven (#11) Solar Storms could be a major disaster. Imagine if everything from the internet to wall street lost all of it’s electronic communications? There would be a major collapse of the financial and social frame work that keeps us all functioning. If you see a spike in the upper X range prepare your bug out bag and get ready to leave the city. You don’t want to be in the city when the lights go out. http://www.shelter101.com/solar-flare-activity-chart.html

  • rockclimber

    Hi Michael,

    Have you ever wrote about Iceland’s success at rejecting the debt that the international bankers tried to enslave them with and why it’s important that we do the same when that time comes? I support a global jubilee myself.

    • Michael

      That is a good topic – I should do an article about that some time.

      Michael

  • http://www.reformation.org Niall Kilkenny

    The Euro was created to destory Orthodox Greece because they will not recognize the Vatican!!

    http://www.reformation.org/greek-orthodoxy-under-assault.html

    • Patrick

      The Euro was created as a currency that all European Union countries would use, provided they meet the standards. The Greek government lied about meeting the standards in order to use the Euro.

  • http://www.montgomerycountymd.gov Montgomery County Police in Rockville, Md.

    This article from NewsCore News is here for you to read before enrolling in any college or school for your safety. Read article below!

    Mississippi State University Being Trashed By Crime Dut To The Trayvon Martin Case
    By Regina Ball of NewsCore News reporting:
    10:25 AM, Mar 26, 2012

    STARKVILLE, Miss. (NewsCore News) – A student was shot to death at a Mississippi State University residence hall late Saturday night, prompting campus-wide alerts as authorities searched for suspects who fled the scene and local police tell NewsCore that the frenzy of the Trayvon Martin case down south has fueled passions that contributed to the rise in crime such as robberies and murders across the U.S. and abroad.
    University spokeswoman Maridith Geuder said police received a call about the shooting at Evans Hall around 10 p.m. Saturday. The victim was taken to a hospital where he subsequently died.
    Three male suspects fled the building in a blue Crown Victoria. As of early Sunday, no arrests had been made and the campus remained under emergency conditions.
    Shortly after the shooting, the university began sending a series of text message alerts to students. Geuder said a team of university officials and police was meeting early Sunday to discuss the probability of the Trayvon Martin case in Sanford, Florida “reating conditions for terrorist related crime to sweep the country” and crime has hit several colleges and schools in at least 36 states so far, according to FBI and local police reports.
    The four-story Evans Hall holds about 300 male students and is located on the north side of campus but a special alert is formed by police and security until further notice.

  • KLM

    I wish it collapses ,those white excreta eating americans deserve it ,and american deserve 9/11. Pray to god the $ depreciates & depreciates

    • MGReigns

      Roughly 44% of but only one of the major metropolitan areas in the U.S. consists of new Americans… primarily of people who are not ‘white’ and are from countries other than the U.S…people from all over the world… with differing outlooks on life…they are wanted and accepted here…and they are people who desire life, liberty, and the pursuit of happiness. You are gravely mistaken to think all americans are white… and you are greatly mistaken to think that all americans are exactly the same…

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