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Birth Pangs Of The Coming Great Depression

Birth PangsThe signs of the times are everywhere – all you have to do is open up your eyes and look at them.  When a pregnant woman first goes into labor, the birth pangs are usually fairly moderate and are not that close together.  But as the time for delivery approaches, they become much more frequent and much more intense.  Economically, what we are experiencing right now are birth pangs of the coming Great Depression.  As we get closer to the crisis that is looming on the horizon, they will become even more powerful.  This week, we learned that the Baltic Dry Index has fallen to the lowest level that we have seen in 29 years.  The Baltic Dry Index also crashed during the financial collapse of 2008, but right now it is already lower than it was at any point during the last financial crisis.  In addition, “Dr. Copper” and other industrial commodities continue to plunge.  This almost always happens before we enter an economic downturn.  Meanwhile, as I mentioned the other day, orders for durable goods are declining.  This is also a traditional indicator that a recession is approaching.  The warning signs are there – we just have to be open to what they are telling us.

And of course there are so many more parallels between past economic downturns and what is happening right now.

For example, volatility has returned to the markets in a big way.  On Tuesday the Dow was down about 300 points, on Wednesday it was down another couple hundred points, and then on Thursday it was up a couple hundred points.

This is precisely how markets behave just before they crash.  When markets are calm, they tend to go up.  When markets get really choppy and start behaving erratically, that tells us that a big move down is usually coming.

At the same time, almost every major global currency is imploding.  For much more on this, see the amazing charts in this article.

In particular, I am greatly concerned about the collapse of the euro.  The Swiss would not have decoupled their currency from the euro if it was healthy.  And political events in Greece are certainly not going to help things either.  Economic conditions across Europe just continue to get worse, and the future of the eurozone itself is very much in doubt at this point.  And if the eurozone does break up, a European economic depression is almost virtually assured – at least in the short term.

And I haven’t even mentioned the oil crash yet.

There is only one other time in all of history when the price of oil collapsed by more than 60 dollars, and that was just prior to the horrific financial crisis of 2008.

Since the last financial crisis, the oil industry has been a huge source for job growth in this country.  The following is an excerpt from a recent CNN article

The oil sector has added over a half million jobs — many of them high paying — since the recession ended in June 2009. That’s 13% of all US job growth over that period.

Now energy companies and related sectors are laying off thousands. Expect that trend to continue, bears say.

But losing good jobs is just the tip of the iceberg of this oil crisis.

At this point, the price of oil has already dropped to a catastrophically low level.  The longer it stays at this level, the more damage that it is going to do.  If the price of oil stays at this level for all of 2015, we are going to have a complete and total financial nightmare on our hands

For the first time in 18 years, oil exporters are pulling liquidity out of world markets rather than putting money in. The world is now fast approaching a world reserve currency shift. If we see 8 to 12 months at these oil prices; U.S. shale industry will be wiped out. The effect on junk bonds will cascade to the rest of the stock market and U.S. economy.

…and this time there will be nothing left to catch the falling knife before it hits the American economy right in the heart. Not the FED nor the U.S. government can stop what’s coming. Liquidity will freeze up, our credit will be downgraded, the stock market will start to collapse, and then we can expect the FED to come in and hyper-inflate the dollar. This will cause the world to finish abandoning the world reserve currency in the last rungs of trade. This will be the end of the petrodollar.

Something that I have not discussed so far this year is the looming crisis in emerging market debt.

As economic problems spread around the world, a number of “emerging markets” are in danger of having their debt downgraded.  And many investment funds have rules that prohibit them from holding any debt that is not “investment grade”.  Therefore, we could potentially see some of these giant funds dumping massive amounts of emerging market debt if downgrades happen.

This is a really big deal.  As a Business Insider article recently detailed, we could be talking about hundreds of billions of dollars…

Russia this week became the first of the major economies to lose its investment grade status from Standard & Poor’s, falling out off the top ratings category for credits deemed to have a low risk of default for the first time in a decade.

If Moody’s and Fitch follow, conservative investors barred from owning junk securities must sell their holdings. JPMorgan estimates this means they may ditch $6 billion in Russian government rouble and dollar debt.

Russia may have company. Almost $260 billion worth of sovereign and corporate bonds – nearly a tenth of outstanding emerging market (EM) debt – is in danger of being relegated to junk, according to David Spegel, head of emerging debt at BNP Paribas, who calls such credits “falling angels”.

And no article of this nature would be complete without mentioning derivatives.

I could not possibly overemphasize the danger that the 700 trillion dollar derivatives bubble poses to the global financial system.

As we enter the coming Great Depression, derivatives are going to play a starring role.  Wall Street has been pumped full of funny money by global central banks, and our financial markets have been transformed into the greatest casino in the history of the world.  When this house of cards comes crashing down, and it will, it is going to be a financial disaster unlike anything that the planet has ever seen.

And yes, global central banks are very much responsible for setting the stage for what we are about to experience.

I really like the way that David Stockman put it the other day…

The global financial system is literally booby-trapped with accidents waiting to happen owing to six consecutive years of massive money printing by nearly every central bank in the world.

Over that span, the collective balance sheet of the major central banks has soared by nearly $11 trillion, meaning that honest price discovery has been virtually destroyed. This massive “bid” for existing financial assets based on credit confected from thin air drove long-term bond yields to rock bottom levels not seen in 600 years since the Black Plague; and pinned money market costs at zero—-for 73 months running.

What is the consequence of this drastic financial repression along the entire yield curve? The answer is bond prices which keep rising regardless of credit risk, inflation or taxes; and rampant carry trade speculation that can’t get out of its own way because  central banks have made the financial gamblers’ cost of goods—the “funding” cost of their trades—-essentially zero.

Of course I am not the only one warning that a new Great Depression is coming.  For instance, just consider what British hedge fund manager Crispin Odey is saying…

British hedge fund manager Crispin Odey thinks we’ve entered an economic downturn that is “likely to be remembered in a hundred years,” and central banks won’t be able to stop it.

In his Odey Asset Management investor letter dated Dec. 31, Odey writes that the shorting opportunity “looks as great as it was in 07/09.”

“My point is that we used all our monetary firepower to avoid the first downturn in 2007-09,” he writes, “so we are really at a dangerous point to try to counter the effects of a slowing China, falling commodities and EM incomes, and the ultimate First World Effects. This is the heart of the message. If economic activity far from picks up, but falters, then there will be a painful round of debt default.”

Even though most average citizens are completely oblivious to what is happening, many among the elite are heeding the warning signs and are feverishly getting prepared.  As Robert Johnson told a stunned audience at the World Economic Forum the other day, they are “buying airstrips and farms in places like New Zealand“.  They can see the horrifying storm forming on the horizon and they are preparing to get out while the getting is good.

It can be very frustrating to write about economics, because things in the financial world can take an extended period of time to play out.  Sadly, most people these days have extremely short attention spans.  We live in a world of iPhones, iPads, YouTube videos, Facebook updates and 48 hour news cycles.  People no longer are accustomed to thinking in long-term time frames, and if something does not happen right away we tend to get bored with it.

But the economic world is not like a game of “Angry Birds”.  Rather, it is very much like a game of chess.

And unfortunately for us, checkmate is right around the corner.

 

Why The Damage To The Economy Caused By The Oil Crash Is Going To Get Progressively Worse

Oil Price Crash - Public DomainWe are really starting to see the price of oil weigh very heavily on the economy and on the stock market.  On Tuesday, the Dow was down 291 points, and the primary reason for the decline was disappointing corporate sales numbers.  For example, heavy equipment manufacturer Caterpillar is blaming the “dramatic decline in the price of oil” for much lower than anticipated sales during the fourth quarter of 2014.  Even though Caterpillar is not an “energy company”, the price of oil is critical to their success.  And the same could be said about thousands of other companies.  That is why I have repeatedly stated that anyone who believes that collapsing oil prices are good for the U.S. economy is crazy.  The key to how much damage this oil collapse is going to do to our economy is not how low prices ultimately go.  Rather, the key is how long they stay at these low levels.  If the price of oil went back to $80 a barrel next week, the damage would be fairly minimal.  But if the price of oil stays at this current level for the remainder of 2015, the damage will be absolutely catastrophic.  Just think of the price of oil like a hot iron.  If you touch it for just a fraction of a second, it won’t do too much damage.  But if you press it against your skin for an hour, you will be severely damaged for the rest of your life at the very least.

So the damage that we are witnessing right now is just the very beginning unless the price of oil goes back up substantially.

When the price of oil first started crashing, most analysts focused on the impact that it would have on energy companies.  And without a doubt, quite a few of them are likely to be wiped out if things don’t change soon.

But of even greater importance is the ripple effects that the price of oil will have throughout our entire economy.  The oil price crash is not that many months old at this point, and yet big companies are already blaming it for causing significant problems.  The following is how Caterpillar explained their disappointing sales numbers on Tuesday

The recent dramatic decline in the price of oil is the most significant reason for the year-over-year decline in our sales and revenues outlook.  Current oil prices are a significant headwind for Energy & Transportation and negative for our construction business in the oil producing regions of the world.  In addition, with lower prices for copper, coal and iron ore, we’ve reduced our expectations for sales of mining equipment.  We’ve also lowered our expectations for construction equipment sales in China.  While our market position in China has improved, 2015 expectations for the construction industry in China are lower”

We also learned on Tuesday that orders for durable goods were extremely disappointing.  Many analysts believe that this is another area where the oil price crash is having an impact

Orders for business equipment unexpectedly fell in December for a fourth month, signaling a global growth slowdown is weighing on American companies. Bookings for non-military capital goods excluding aircraft dropped 0.6 percent for a second month, data from the Commerce Department showed. Demand for all durable goods − items meant to last at least three years − declined 3.4 percent, the worst performance since August.

Let’s keep an eye on the durable goods numbers in coming months.  Usually, when the economy is heading into a recession durable goods numbers start declining.

Meanwhile, a bunch of other big companies reported disappointing sales numbers on Tuesday as well.  The following summary comes from the Crux

Microsoft lost 9.9 percent as software-license sales to businesses were below forecasts. Caterpillar plunged 7.3 percent after forecasting 2015 results that trailed estimates as plunging oil prices signal lower demand from energy companies. DuPont Co. dropped 2.8 percent as a stronger dollar cuts into the chemical maker’s profit. Procter & Gamble Co. and United Technologies Corp. declined at least 2 percent after saying the surging greenback will lower full-year earnings.

What the economy could really use right now is a huge rebound in the price of oil.

Unfortunately, as I wrote about the other day, that is not likely to happen any time soon.

In fact, a top executive for Goldman Sachs recently told CNBC that he believes that the price of oil could ultimately go as low as 30 dollars a barrel.

And hedge fund managers are backing up their belief that oil is heading even lower with big money

Hedge funds boosted bearish wagers on oil to a four-year high as US supplies grew the most since 2001.

Money managers increased short positions in West Texas Intermediate crude to the highest level since September 2010 in the week ended January 20, US Commodity Futures Trading Commission data show. Net-long positions slipped for the first time in three weeks.

US crude supplies rose by 10.1 million barrels to 397.9 million in the week ended January 16 and the country will pump the most oil since 1972 this year, the Energy Information Administration says. Saudi Arabia’s King Salman, the new ruler of the world’s biggest oil exporter, said he will maintain the production policy of his predecessor despite a 58 percent drop in prices since June.

Sadly, the truth is that anyone that thought that the stock market would go up forever and that the U.S. economy would be able to avoid a major downturn indefinitely was just being delusional.

Our economy goes through cycles, and every financial bubble eventually bursts.

For example, did you know that the S&P 500 has never had seven up years in a row?  The following comes from a CNBC article that was posted on Tuesday…

Doubleline Capital founder Jeff Gundlach, more known for his bond prowess than as an equity market expert, pointed out that the S&P 500 has never had seven consecutive up years.

Of course, records are made to be broken, and each year is supposed to stand on its own.

But in a market that faces an uncertain future regarding monetary policy, the specter of a global economic slowdown, and an oil price plunge that is dampening capital investment, Gundlach’s little factoid sparked a lot of chatter at ETF.com’s InsideETFs conference in Hollywood, Florida.

Hmm – that reminds me of the seven year cycles that I discussed in my article yesterday.

If the price of oil stays this low for the rest of 2015, there is no way that we are going to avoid a recession.

If the price of oil stays this low for the rest of 2015, there is no way that we are going to avoid a stock market crash.

So let’s hope that the price of oil starts going back up.

If it doesn’t, the damage that is inflicted on our economy is going to get progressively worse.

The Shemitah: The Biblical Pattern Which Indicates That A Financial Collapse May Be Coming In 2015

The Shemitah- Financial Collapse In 2015Does a mystery that is 3,500 years old hold the key to what is going to happen to global financial markets in 2015?  Could it be possible that the timing of major financial crashes is not just a matter of coincidence?  In previous articles on my website, I have discussed some of the major economic and financial cycle theories and their proponents.  For example, in an article entitled “If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States“, I examined a number of economic cycle theories that seem to indicate that the second half of this decade is going to be a nightmare economically.  But the cycle that I am going to discuss in this article is a lot more controversial than any of those.  In his most recent book, Jonathan Cahn has demonstrated that almost all of the major financial crashes in U.S. history are very closely tied to a seven year pattern that we find in the Bible known as “the Shemitah”.  Since that book was released, I have been asked about this repeatedly during radio appearances.  So in this article I am going to attempt to explain what the Shemitah is, and what this Biblical pattern seems to indicate may happen in 2015.  If you are an atheist, an agnostic, or are generally skeptical by nature, this article might prove quite challenging for you.  I would ask that you withhold judgment until you have examined the evidence.  When I first heard about these things, I had to go verify the facts for myself, because they are truly extraordinary.

So precisely what is “the Shemitah”?

In the Bible, the people of Israel were commanded to let the land lie fallow every seven years.  There would be no sowing and no reaping, and this is something that God took very seriously.  In fact, the failure to observe these Sabbath years was one of the main reasons cited in the Scriptures for why the Jewish people were exiled to Babylon in 586 BC.

But there was more to the Shemitah year than just letting the land lie fallow.

On the last day of the Shemitah year, the people of Israel were instructed to perform a releasing of debts.  We find the following in Deuteronomy chapter 15

At the end of every seven years you shall grant a relinquishing of debtsThis is the manner of the relinquishing: Every creditor that has loaned anything to his neighbor shall relinquish it. He shall not exact it of his neighbor, or of his brother, because it is called the Lord’s relinquishment.

This happened at the end of every seven years on Elul 29 – the day right before Rosh Hashanah on the Biblical calendar.

So what does this have to do with us today?

Well, if you go back to the last day of the Shemitah year in 2001, you will find that there was an absolutely horrifying stock market crash.

On September 17th, 2001 (which was Elul 29 on the Jewish calendar), we witnessed the greatest one day stock market crash in U.S. history up to that time.  The Dow fell an astounding 684 points, and it was a record that held for precisely seven years until the end of the next Shemitah year.

At the end of the next Shemitah year in 2008, another horrifying stock market crash took place.  On September 29th, 2008 the Dow plummeted 777 points, which still today remains the greatest one day stock market crash of all time.  It turns out that September 29th, 2008 corresponded with Elul 29 on the Jewish calendar – the precise day when the Bible calls for a releasing of debts.

So on the very last day of the last two Shemitah years, the stock market crashed so badly that it set a brand new all-time record.

And now we are in another Shemitah year.  It began last fall, and it will end next September.

Could it be possible that we will see another historic market crash?

Author Jonathan Cahn has correctly pointed out that we should never put God in a box.  Just because something has happened in the past does not mean that it will happen again.  But we should not rule anything out either.

Perhaps God is using His calendar to make a point.  Cahn believes that if we are going to see something happen, it will probably occur as the Shemitah year comes to an end

Cahn has pointed that, according to his research, the worst of the worst usually happens at the end of the Shemitah year, not at the beginning. In fact, the last day of the year, Elul 29 on the Hebrew calendar, which will occur on Sept. 13, 2015, is the most dreaded day.

The pattern revealed in “The Mystery of the Shemitah” is that the beginning of the Shemitah’s impact is often subtle, but leads to a dramatic climax.

“The beginning may mark a change in direction, even a foreshadow of what will come to a crescendo at the Shemitah’s end,” he said.

And this time around, far more people are paying attention.  Back in 2001 and 2008, most Americans had absolutely no idea what a “Shemitah year” was.  But now it is being talked about on some of the most prominent alternative news websites on the Internet.  For example, the following is what Joseph Farah of WND has to say about the Shemitah year…

Farah believes the date Sept. 13, 2015 bears close watching – though he is quick to admit he has no idea what, if anything, will happen in America.

“A clear pattern has been established,” he says. “I don’t believe it’s a coincidence what happened in America on Elul 29 in 2001 and 2008. It would be foolish to ignore the possibility that a greater judgment might be in the works – especially if America continues to move away from God and His Word.”

The Shemitah year that we are in now does end on September 13th, 2015 – and that falls on a Sunday so the markets will be closed.

But what it comes to the Shemitah, we aren’t just looking at one particular day.

And it is very interesting to note that there will also be a solar eclipse on September 13th, 2015.  Over the past century, there have only been two other times when a solar eclipse has corresponded with the end of a Shemitah year.  Those two times were in 1931 and 1987, and as Jonathan Cahn has told WND, those solar eclipses foreshadowed major financial disasters…

In 1931, a solar eclipse took place on Sept. 12 – the end of a “Shemitah” year. Eight days later, England abandoned the gold standard, setting off market crashes and bank failures around the world. It also ushered in the greatest monthlong stock market percentage crash in Wall Street history.

In 1987, a solar eclipse took place Sept. 23 – again the end of a “Shemitah” year. Less than 30 days later came “Black Monday” the greatest percentage crash in Wall Street history.

Is Cahn predicting doom and gloom on Sept. 13, 2015? He’s careful to avoid a prediction, saying, “In the past, this ushered in the worst collapses in Wall Street history. What will it bring this time? Again, as before, the phenomenon does not have to manifest at the next convergence. But, at the same time, and again, it is wise to take note.”

So what is going to happen this time?

We will just have to wait and see.

But without a doubt so many of the same patterns that we witnessed just prior to the financial crash of 2008 are happening again right before our very eyes.

It has been said that those that do not learn from history are doomed to repeat it.

Perhaps you believe that there is something to “the Shemitah”, or perhaps you think that it is all a bunch of nonsense.

But at least now you know what everyone is talking about.  What you choose to do with this information is up to you.

 

12 Signs That The Economy Is Really Starting To Bleed Oil Patch Jobs

Oil Rig Texas - Public DomainThe gravy train is over for oil workers.  All over North America, people that felt very secure about their jobs just a few weeks ago are now getting pink slips.  There are even some people that I know personally that this has happened to.  The economy is really starting to bleed oil patch jobs, and as long as the price of oil stays down at this level the job losses are going to continue.  But this is what happens when a “boom” turns into a “bust”.  Since 2003, drilling and extraction jobs in the United States have doubled.  And these jobs typically pay very well.  It is not uncommon for oil patch workers to make well over $100,000 a year, and these are precisely the types of jobs that we cannot afford to be losing.  The middle class is struggling mightily as it is.  And just like we witnessed in 2008, oil industry layoffs usually come before a downturn in employment for the overall economy.  So if you think that it is tough to find a good job in America right now, you definitely will not like what comes next.

At one time, I encouraged those that were desperate for employment to check out states like North Dakota and Texas that were experiencing an oil boom.  Unfortunately, the tremendous expansion that we witnessed is now reversing

In states like North Dakota, Oklahoma and Texas, which have reaped the benefits of a domestic oil boom, the retrenchment is beginning.

“Drilling budgets are being slashed across the board,” said Ron Ness, president of the North Dakota Petroleum Council, which represents more than 500 companies working in the state’s Bakken oil patch.

Smaller budgets and less extraction activity means less jobs.

Often, the loss of a job in this industry can come without any warning whatsoever.  Just check out the following example from a recent Bloomberg article

The first thing oilfield geophysicist Emmanuel Osakwe noticed when he arrived back at work before 8 a.m. last month after a short vacation was all the darkened offices.

By that time of morning, the West Houston building of his oilfield services company was usually bustling with workers. A couple hours later, after a surprise call from Human Resources, Osakwe was adding to the emptiness: one of thousands of energy industry workers getting their pink slips as crude prices have plunged to less than $50 a barrel.

These jobs are not easy to replace.  If oil industry veterans go down to the local Wal-Mart to get jobs, they will end up making only a very small fraction of what they once did.  Every one of these jobs that gets lost is really going to hurt.

And at this point, the job losses in the oil industry are threatening to become an avalanche.  The following are 12 signs that the economy is really starting to bleed oil patch jobs…

#1 It is being projected that the U.S. oil rig count will decline by 15 percent in the first quarter of 2015 alone.  And when there are less rigs operating, less workers are needed so people get fired.

#2 Last week, 55 more oil rigs shut down.  That was the largest single week decline in the United States in 24 years.

#3 Oilfield services provider Baker Hughes has announced that it plans to lay off 7,000 workers.

#4 Schlumberger, a big player in the energy industry, has announced plans to get rid of 9,000 workers.

#5 Suncor Energy is eliminating 1,000 workers from their oil projects up in Canada.

#6 Halliburton’s energy industry operations have slowed down dramatically, so they gave pink slips to 1,000 workers last month.

#7 Diamondback Energy just slashed their capital expenditure budget 40 percent to just $450 million.

#8 Elevation Resources plans to cut their capital expenditure budget from $227 million to $100 million.

#9 Concho Resources says that it plans to reduce the number of rigs that it is operating from 35 to 25.

#10 Tullow Oil has reduced their exploration budget from approximately a billion dollars to about 200 million dollars.

#11 Henry Resources President Danny Campbell has announced that his company is reducing activity “by up to 40 percent“.

#12 The Federal Reserve Bank of Dallas is projecting that 140,000 jobs related to the energy industry will be lost in the state of Texas alone during 2015.

And of course it isn’t just workers that are going to suffer.

Some states are extremely dependent on oil revenues.  Just take the state of Alaska for instance.  According to one recent news report, 90 percent of the budget of Alaska comes from oil revenue…

But oil is also a revenue source in more than two dozen states, especially for about a third of them. In Alaska, where up to 90 percent of the budget is funded by oil, new Gov. Bill Walker has ordered agency heads to start identifying spending cuts.

Sadly, it looks like oil is not going to rebound any time soon.

China, the biggest user of oil in the world, just reported that economic growth expanded at the slowest pace in 24 years.  And concerns about oversupply drove the price of U.S. crude down another couple of dollars on Monday

Oil declined about 5 percent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast on lower fuel demand and key producer Iran hinted prices could drop to $25 a barrel without supportive OPEC action.

U.S. crude, also known as West Texas Intermediate or WTI, settled 4.7 percent lower at $46.39 a barrel, near its intraday bottom of $46.23.

There is only one other time in history when we have seen an oil price crash of this magnitude.

That was in 2008, just before the greatest financial crisis since the Great Depression.

Many believe that we are now on the verge of the next great financial crisis.

I hope that you are getting ready.

89 Tips That Will Help You Prepare For The Coming Economic Depression

89 Tips That Will Help You Prepare For The Coming Economic DepressionWhat do we need to do in order to prepare for the coming economic collapse?  Are there practical steps that we can take right now that will help us and our families survive the economic depression that is approaching?  As the publisher of The Economic Collapse Blog, I get asked these kinds of questions a lot.  Once people become convinced that an economic collapse is coming, they want to know what they should do.  And so in this article I am going to share some key pieces of advice from some of the top experts in the entire country.  If you are not convinced that economic disaster is on the way, this article might not be for you.  Instead, I would encourage you to go to my website where you will find more than 1,200 articles that set out the case for the coming economic collapse in excruciating detail.  For those of you that are interested in getting prepared, I apologize in advance for the outline format of this article.  To examine each of these points in detail would take an entire book.  In fact, I am the co-author of a book that will soon be published that discusses many of these things in great depth.  But you don’t have to wait for a book to get prepared.  Mostly, it comes down to common sense.  In this article, I share 89 common sense tips that will help you get prepared for the coming economic depression.  Hopefully a lot of people will find these to be very helpful.

This first set of tips are 11 things that I strongly encourage my readers to do…

#1 Have An Emergency Fund – This is so important that I wrote an entire article about this recently.

#2 Don’t Put All Of Your Eggs Into One Basket – In addition to having an emergency fund, you will also want to have gold, silver and other hard assets.  It is also a very good idea to keep a limited amount of cash at home in case you can’t access an ATM during a major emergency of some sort.

#3 Reduce Your Expenses And Get Out Of Debt – During a time of crisis you want to be as “lean and mean” as possible.  If you simplify your life and reduce your debt load now, you will be in much better shape when the next economic depression does arrive.

#4 Move Your Money Away From Unsafe Investments – When the financial world falls apart, you don’t want your finances to be exposed.  Markets tend to go down much faster than they go up, and during the next great financial crisis millions of Americans that have their life savings in stocks and bonds are going to get totally wiped out.

#5 Store Food And Supplies – Your dollars will never stretch farther than they do right now.  You probably will not need emergency food and supplies in the short-term, but the truth is that none of us ever knows when a major emergency will strike.  During 2014, my wife and I felt more of an urgency to stock up then ever before, and I hope that people are using this brief period of relative stability to do what they can to get prepared.

#6 Learn To Grow Your Own Food – Anything that you can do to become more independent of the system is a good thing.  This includes growing your own food.  And the truth is that some of the most expensive items in the grocery store these days are fresh fruits and vegetables.

#7 Defending Yourself And Your Family – As our world become increasingly unstable, people are going to become a lot more desperate.  And desperate people do desperate things.  You are going to need to have a plan for that.

#8 Move Away From The Big Cities If Possible – For a lot of people that are dependent on their current jobs, this is simply not possible right now.  But if it is possible for you, this is something that I strongly recommend that you think about.  Being stuck in the middle of a major city is not going to be a good place to be in the years ahead.

#9 Be Ready To Bug Out – There may come a time when you are forced to evacuate from your current location.  This may happen with very short notice.  If this ever does happen to you, the key will be to be prepared for it.

#10 Build A Community – Your neighbors and close friends can be an invaluable resource.  A cord of multiple threads is not easily broken, and if you have people that you can depend upon during a crisis that can make a world of difference.

#11 Have A Back-Up Plan And Be Flexible – Mike Tyson once aptly observed that everyone has a plan until they get punched in the mouth. The years ahead are going to require a great deal of flexibility, and you may find that the plans that you have made need to be altered.  So don’t get fixated on just one approach.

When there is a major emergency, some of the most simple items suddenly become some of the most important.

The following are 11 items that I recommend that every household have on hand…

– an axe

– a can opener

– flashlights

– battery-powered radio

– extra batteries

– lighters or matches

– fire extinguisher

– blankets

– sewing kit

– duct tape

– tools

And here are about a dozen more key items that should be on your list from Survival Mom

  • Lightsticks.  You can pick up one of these every time you wander into a Home Depot.  They don’t need batteries and can be hung around the neck with a string making it easier to spot everyone in your party when it gets dark. An alternative is the UVPaqlite, which never needs batteries.
  • Wool socks and sweaters.  People have literally frozen to death wearing their layers of cotton knit tees and hoodies.  For true survival conditions, nothing beats wool.
  • Upholstery needles and thread.  What if a sleeping bag or tent rips and you have no way of mending it?
  • Roll of quarters.  Handy for phone calls, although payphones aren’t as common as they used to be, and laundromats, but if you put it in a sock and wield it like a sling, you have a handy-dandy weapon! If the quarters are pre-1965 and 90% silver, you have a whole new type of currency.
  • Pencils.  Forget the pens.  They can run out of ink and freeze in cold weather.  With a pocket knife, you’ll always have a sharp pencil.
  • Super glue.  Professional hockey players always have this on hand to seal up small cuts, and the glue itself is harmless.  Unless you get it in your eye, like I did.  But that’s a story for a different type of post!
  • Rubber bands.  String just doesn’t cut it when what you really need is a rubber band
  • Tampons in a cardboard tube.  Did you know a tampon can be fit snugly into a bullet wound?  Guys on the battlefield carry these with them.  Just be aware that the blood in the wound will begin to clot.  Leave it to a medical professional to remove the tampon from the wound.  They’re also good for kindling.
  • Paracord belt.  It’s an accessory and survival tool in one!
  • Waterproof wrist watch.  Makes perfect sense.  I had just never thought of it.
  • Animal repellant trash bags.  Use these when you’re camping and animals will stay the heck away from your trash.
  • Safety pins.
  • Dental floss.  Besides helping to keep your teeth clean, it makes sturdy thread for mending.

But don’t just get focused on acquiring things.

Some of the most important elements of preparation involve things that we need to do for ourselves.

Acclaimed survival expert James Wesley Rawles has put together a “personal list” of things that everyone should think about before a crisis strikes.  A lot of these things are topics that “preppers” never seem to write about…

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Spare glasses.

Prescription and nonprescription medications.

Birth control.

Keep dentistry up to date.

Any elective surgery that you’ve been postponing

Work off that gut.

Stay in shape.

Back strength and health—particularly important, given the heavy manual tasks required for self-sufficiency.

Educate yourself on survival topics, and practice them. For example, even if you don’t presently live at your retreat, you should plant a vegetable garden every year. It is better to learn through experience and make mistakes now, when the loss of crop is an annoyance rather than a crucial event.

“Comfort” items to help get through high stress times. (Books, games, CDs, chocolates, etc.)

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If you have a serious illness or disease, that is going to need to be one of your top priorities when making preparations for the coming crisis.

This next tip comes from an excellent article that Dave Hodges published recently…

If you or your family has a chronic health condition, it is critical that you have 6 months to a year in medicine. Also, you should research natural alternatives to treatment for health conditions in case you are not able to meet this goal due to the inability to obtain prescriptions. Don’t forget to obtain some pain medication and antibiotics in case of unforeseen emergencies.

Probably one of the most popular topics for preppers to write about is food storage.

But those that are new to prepping are often very confused about how to get started.

It doesn’t have to be complicated.  If you start out by focusing on staples that you eat all the time, you should be in great shape.  The following are some recommendations about food storage that Pat Henry of the Prepper Journal has shared…

  • Rice – First off, buy a 50lb. bag of rice. These contain 504 servings and I don’t know too many people who won’t eat rice. It is simple to cook and stores for years if you keep it cool and dry. This bag at Sam’s costs about $19 now.
  • Beans – Next buy a bag of dry beans. This will check off the Beans part of your Beans, Bullets and Band-Aids list. A good size bag is about $5 and makes 126 servings. Buy two if you think your family would like them.
  • Canned meat – Cans are great for fruits and vegetables and anyone can find something they will eat. For canned meat, I recommend tuna or chicken because it tastes a heck of a lot better than Spam and you can easily mix that into your rice. For the meat you will need approximately 35 cans. Each can has about 3 servings and this will be the most costly, but they last over a year usually and your family probably eats chicken or tuna on a semi-regular basis anyway so restocking this should be simple.
  • Canned Vegetables – you will need about 40 cans of vegetables and again this can be whatever your family will eat. Expect to pay around a dollar each so $40 for veggies to last your family a month.
  • Canned Fruit – again, simple fruits that your family will eat. These can even be fruit cocktail if that is the safest thing. At Costco they have the #10 cans of fruit like pears or apple slices and each of these has 25 servings. 5 of these will cost about $25 and give your family their daily dose of fruit.
  • Oatmeal – Good old-fashioned oatmeal is simple to cook and store. A normal container has 30 servings each so purchase about 4 of these and your family won’t starve for breakfast. At $2 each that is about $8 for breakfast for a month for a family of four. Could you exchange Pop-tarts? Maybe, but I find oatmeal more filling and less likely to be snacked on.
  • Honey- Honey is a miracle food really as it will never go bad if you keep it dry and cool. Honey will last you forever and Sam’s has large containers that hold 108 servings. You can use this in place of sugar to satisfy the sweet tooth. Honey even has medicinal properties and you can use this to add some flavor to your oatmeal for breakfast.
  • Salt – Same as honey, salt will never go bad if you keep it dry and helps the flavor of anything. You can buy a big box of salt for around $1 and that will last your whole family a month easily.
  • Vitamins – I recommend getting some multivitamins to augment your nutrition in the case of a disaster or emergency. Granted, rice and beans aren’t the best and you won’t be getting as many nutrients from canned fruit and vegetables so the vitamins help to fill in the gaps and keep you healthy. One big bottle costs about $8. You will need to get a kids version too if you have children small enough that they can’t or won’t swallow a big multivitamin.

And as I mentioned above, another key to getting prepared is self-defense.  If you make all the preparations in the world, but somebody comes along and steals them from you, they won’t end up doing you any good.

The following are some basic tips about home security from prepping expert Todd Sepulveda

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Front Door – Your front door is a layer. But it shouldn’t be your only layer. Besides reinforcing the strike plate with 2 inch screws, you should have a solid deadbolt. Another layer could be a storm door with a lock or even burglar bars. A good latch is valuable too! If you want to add even more layers, utilizing a security door bar is a good idea. But you don’t only want to make sure that your front door is securely layered. Take some time to layer all the doors in your home.

Windows – Every window has a lock. But you can add a layer by including sliding window locks for about $5. Other options would include tint or blinds, which would make it harder for someone to look inside your house.

Burglar Alarm – A burglar alarm is a serious layer. Alarms can be monitored by an alarm company or they can be self-monitored. Self-monitored systems have greatly advanced and will even allow you to view your home on your smartphone.

Dogs – A dog or dogs can be a great layer, especially if they bark. My dogs alert me the minute someone is in the front of the yard. They run and bark at the door and don’t stop until I open it. Outside dogs are a layer to your perimeter. A big dog on the other side of the fence will make any criminal think twice.

Outside Lights – Lights that are mounted on the outside of your home, especially ones that are triggered by motion sensors are a must! Roaches run when you turn on the lights! Someone who is watching your house will not want to approach it if they know the lights are going to draw attention to them.

Outside Landscaping – Bushes can be a layer around windows. It is important that you don’t create an environment that will create a hiding place for someone to lay in waiting. Make sure that the bushes you choose to plant are thorny and cause a lot of discomfort if someone wants to go through them.

Personal Defense – A firearm is a layer that you would want to have if needed. If you want to use something that is not so deadly, you can always pick up a can of ColdSteel Inferno to spray in someone’s face. Having a few of these cans hidden in different parts of the house is a good idea.

Safe Room – A safe room would be a last ditch layer. Some people are putting them into their homes. If this is a scenario you want to take, you should research the necessary components for a “safe” safe room.

Neighborhood Watch – Although a Neighborhood Watch isn’t just focused on your home, it is a layer that could cause the bad guys to go looking in a different neighborhood altogether. Neighborhoods that have a Neighborhood Watch usually post signs in the entrances of their neighborhood.

Neighbors – Even if you don’t have a Neighborhood Watch, you should get to know your neighbors, especially those pesky ones that stay in everyone’s business…because they are going to keep a lookout! You gotta take some bad with the good!

Street Lights – Sticking with your neighborhood, it would be a good idea to immediately report any street lights that are out to the city or county that manages them. Again, light causes the roaches to run for cover!

Signs – Don’t underestimate the power of a cheap sign. A sign on a fence that reads “Beware of Dog” or a Security company sign on the front lawn somewhere will cause the bad guys to think twice before attempting to break into your house.

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If you do need to leave your home during a crisis, you should have a “bug out bag” ready for each member of your family.

The following are 7 key items that Survival Cache recommends including in each bug out bag…

1. Water

2. Food

3. Clothing

4. Shelter

5. First Aid Kit

6. Basic Gear

7. Weapons

Finally, it is important to remember that nobody is perfect and that everyone makes mistakes.

The following are 14 common mistakes that Backdoor Survival says a lot of preppers make…

1. Failure to inventory stored food supplies

2. Failure to perform a risk analysis and prepping for the most likely disruptive events first

3. Preparing mostly to bug out rather than bugging in

4. Failure to evacuate at just the right time

5. Having the gear but not knowing how to use it

6. Underestimating other humans as a threat

7. Spending your entire budget on gear instead of on food, water, and medical supplies

8. Lacking the knowledge to properly store your food supplies

9. Buying gear and supplies while ignoring the need to develop skills

10. Relying only on yourself and ignoring like-minded members of your community

11. Just because someone else does something does not mean that you should do it to

12. Falling victim to prepper procrastination

13. Obsessing about being behind the curve-ball

14. Forgetting that there is a life beyond prepping

Are there any additions that you would make to this list of tips?

Please feel free to add to the discussion by posting a comment below…

 

On The Verge Of The Next Economic Crisis, 62 Percent Of Americans Are Living Paycheck To Paycheck

Money Emergency Funds - Public DomainNearly two-thirds of all Americans are completely and totally unprepared for the next economic crisis.  As you will read about below, a new survey has found that only 38 percent of Americans have enough money on hand to cover “a $500 repair bill or a $1,000 emergency room visit”.  That essentially means that 62 percent of the people in this country do not have an emergency fund.  Even after the extremely bitter financial lessons that millions of Americans learned during the last recession, most of us are still choosing to live on the edge.  That is utter insanity, and when the next major economic downturn strikes most people are going to find themselves totally unprepared.

The number one thing that you need to do to get ready for the coming economic collapse is to build up an emergency fund.

I know that is not the most “sexy” piece of advice in the world, but it is the truth.  Just think about it.  During the last recession, millions of Americans suddenly lost their jobs.  Because they did not have any cushion to fall back on, millions of them also suddenly could not pay their bills and their mortgages.  Foreclosures skyrocketed and countless families went from living a very comfortable middle class lifestyle to being out on the street in very short order.

And now because the people of this country have been so foolish it is going to happen again.

Because of my website, people are constantly asking me what they should do to prepare for the coming economic collapse.

I think that they expect me to say something like this…

“Sell everything that you possibly can and buy gold and silver, go purchase a llama farm, and dig a bunker where you can bury 10,000 cases of MREs.”

Not that there is anything wrong with those kinds of preparations.

But before you do anything else, you have got to have an emergency fund.  My recommendation is to have an emergency fund that can cover at least six months of expenses in case something happens.

Sadly, a solid majority of Americans do not have any emergency cash at all.  The following comes from the Wall Street Journal

Only 38% of those polled said they could cover a $500 repair bill or a $1,000 emergency room visit with funds from their bank accounts, a new Bankrate report said. Most others would need to take on debt or cut back elsewhere.

“A solid majority of Americans say they have a household budget,” said Bankrate banking analyst Claes Bell. “But too few have the ability to cover expenses outside their budget without going into debt or turning to family and friends for help.”

The survey found that an unexpected bill would cause 26% to reduce spending elsewhere, while 16% would borrow from family or friends and 12% would put the expense on a credit card. The remainder didn’t know what they would do or would make other arrangements.

And of course this is not the only poll that has come up with these kinds of results.  In fact, a Federal Reserve survey from last year produced similar numbers

The findings are strikingly similar to a U.S. Federal Reserve survey of more than 4,000 adults released last year. “Savings are depleted for many households after the recession,” it found. Among those who had savings prior to 2008, 57% said they’d used up some or all of their savings in the Great Recession and its aftermath. What’s more, only 39% of respondents reported having a “rainy day” fund adequate to cover three months of expenses and only 48% of respondents said that they would completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money.

Meanwhile, the financial condition of most American families is far worse than it was just prior to the last major economic crisis.  As a recent MarketWatch article detailed, the average family currently has far less wealth than it did back then…

But while the jobs market is improving and the Affordable Care Act has given an estimated 15 million people access to medical care, the Great Recession does appear to have taken its toll on Americans’ finances; in fact, they’re 40% poorer today than they were in 2007. The net worth of American families — that is, the difference between the values of their assets, including homes and investments, and liabilities — fell to $81,400 in 2013, down slightly from $82,300 in 2010, but a long way off the $135,700 in 2007, according to a report released last month by the nonprofit think tank Pew Research Center in Washington, D.C.

So we have a lot less wealth, and almost two-thirds of us have no emergency cushion to fall back on whatsoever.

What could go wrong?

In addition, there is lots of evidence that much of the country has not bothered to make any preparations at all for even a basic emergency that would last for just a few days.  For example, the following are results from a survey conducted by the Adelphi Center for Health Innovation that I featured in a previous article

  • 44 percent don’t have first-aid kits
  • 48 percent lack emergency supplies
  • 53 percent do not have a minimum three-day supply of nonperishable food and water at home
  • 55 percent believe local authorities will come to their rescue if disaster strikes
  • 52 percent have not designated a family meeting place if they are separated during an emergency
  • 42 percent do not know the phone numbers of all of their immediate family members
  • 21 percent don’t know if their workplace has an emergency preparedness plan
  • 37 percent do not have a list of the drugs they are taking
  • 52 percent do not have copies of health insurance documents

What are all of those people going to do if there is an extended crisis or disaster in this nation?

That is a very good question.

Meanwhile, the signs that we are on the verge of the next major economic crisis just continue to grow.  Yesterday, I shared 10 things that happened just prior to the financial crisis of 2008 that are happening again right now.

Today, we learned that a major oil driller down in Texas has just declared bankruptcy, and many more energy companies are expected to follow suit in the coming months.  The following is from the Wall Street Journal

[S]igns of strain are building in the oil patch, where revenue growth hasn’t kept pace with borrowing. On Sunday, a private company that drills in Texas, WBH Energy LP, and its partners, filed for bankruptcy protection, saying a lender refused to advance more money and citing debt of between $10 million and $50 million. Neither the Austin-based company nor its lawyers responded to requests for comment.

Energy analysts warn defaults could be coming. “The group is not positioned for this downturn,” said Daniel Katzenberg, an analyst at Robert W. Baird & Co. “There are too many ugly balance sheets.”

And we also learned today that teen retailer Wet Seal is going to be closing two-thirds of its stores.

Dozens more retailers are expected to make similar announcements over the coming months.

We are moving into the most chaotic time for the U.S. economy that any of us have ever seen, and most Americans are totally oblivious to what is happening and are totally unprepared.

So what is our country going to look like when tens of millions of unprepared people are blindsided by a crisis that they never saw coming?

10 Key Events That Preceded The Last Financial Crisis That Are Happening Again RIGHT NOW

10 Key Events That Preceded The Last Financial CrisisIf you do not believe that we are heading directly toward another major financial crisis, you need to read this article.  So many of the exact same patterns that preceded the great financial collapse of 2008 are happening again right before our very eyes.  History literally appears to be repeating, but most Americans seem absolutely oblivious to what is going on.  The mainstream media and our politicians are promising them that everything is going to be okay somehow, and that seems to be good enough for most people.  But the signs that another massive financial crisis is on the horizon are everywhere.  All you have to do is open up your eyes and look at them.

Bill Gross, considered by many to be the number one authority on government bonds on the entire planet, made headlines all over the world on Tuesday when he released his January Investment Outlook.  I don’t know if we have ever seen Gross be more negative about a new year than he is about 2015.  For example, just consider this statement

“When the year is done, there will be minus signs in front of returns for many asset classes. The good times are over.”

And this is how he ended the letter

And so that is why – at some future date – at some future Ides of March or May or November 2015, asset returns in many categories may turn negative. What to consider in such a strange new world? High-quality assets with stable cash flows. Those would include Treasury and high-quality corporate bonds, as well as equities of lightly levered corporations with attractive dividends and diversified revenues both operationally and geographically. With moments of liquidity having already been experienced in recent months, 2015 may see a continuing round of musical chairs as riskier asset categories become less and less desirable.

Debt supercycles in the process of reversal are not favorable events for future investment returns. Father Time in 2015 is not the babe with a top hat in our opening cartoon. He is the grumpy old codger looking forward to his almost inevitable “Ides” sometime during the next 12 months. Be cautious and content with low positive returns in 2015. The time for risk taking has passed.

So why are Gross and so many other financial experts being so “negative” right now?

It is because they can see what is happening.

They can see the same patterns that we saw in early 2008 unfolding again right in front of us.  I wanted to put these patterns in a single article so that they will be easy to share with people.  The following are 10 key events that preceded the last financial crisis that are happening again right now…

#1 A really bad start to the year for the stock market.  During the first three trading days of 2015, the S&P 500 was down a total of 2.73 percent.  There are only two times in history when it has declined by more than three percent during the first three trading days of a year.  Those years were 2000 and 2008, and in both years we witnessed enormous stock market declines.

#2 Very choppy financial market behavior.  This is something that I discussed yesterday.  In general, calm markets tend to go up.  When markets get choppy, they tend to go down.  For example, the chart that I have posted below shows how the Dow Jones Industrial Average behaved from the beginning of 2006 to the end of 2008.  As you can see, the Dow was very calm as it rose throughout 2006 and most of 2007, but it got very choppy as 2008 played out…

The Dow 2006 to 2008

As I also mentioned yesterday, it is important not to get fooled if stocks soar on a particular day.  The three largest single day stock market gains in history were right in the middle of the financial crisis of 2008.  When you start to see big ups and big downs in the market, that is a sign of big trouble ahead.  That is why it is so alarming that global financial markets have begun to become quite choppy in recent weeks.

#3 A substantial decline for 10 year bond yields.  When investors get scared, there tends to be a “flight to safety” as investors move their money to safer investments.  We saw this happen in 2008, and that is happening again right now.

In fact, according to Bloomberg, global 10 year bond yields have already dropped to low levels that are absolutely unprecedented…

Taken together, the average 10-year bond yield of the U.S., Japan and Germany has dropped below 1 percent for the first time ever, according to Steven Englander, global head of G-10 foreign-exchange strategy at Citigroup Inc.

That’s not good news. The rock-bottom rates, which fall below zero when inflation is taken into account, show “that investors think we are going nowhere for a long time,” Englander wrote in a report yesterday.

#4 The price of oil crashes.  As I write this, the price of U.S. oil has dipped below $48 a barrel.  But back in June, it was sitting at $106 at one point.  As the chart below demonstrates, there is only one other time in history when the price of oil has declined by more than $50 in less than a year…

Price Of Oil 2015

The only other time there has been an oil price collapse of this magnitude we experienced the greatest financial crisis since the Great Depression shortly thereafter.  Are we about to see history repeat?  For much more on this, please see my previous article entitled “Guess What Happened The Last Time The Price Of Oil Crashed Like This?

#5 A dramatic drop in the number of oil and gas rigs in operation.  Right now, oil and gas rigs are going out of operation at a frightening pace.  During the fourth quarter of 2014, 93 oil and gas rigs were idled, and it is being projected that another 200 will shut down this quarter.  As this Business Insider article demonstrates, this is also something that happened during the financial crisis of 2008 and it continued well into 2009.

#6 The price of gasoline takes a huge tumble.  Millions of Americans are celebrating that the price of gasoline has plummeted in recent weeks.  But they were also celebrating when it happened back in 2008 as well.  But of course it turned out that there was really nothing to celebrate in 2008.  In short order, millions of Americans lost their jobs and their homes.  So the chart that I have posted below is definitely not “good news”…

Gas Price 2015

#7 A broad range of industrial commodities begin to decline in price.  When industrial commodities go down in price, that is a sign that economic activity is slowing down.  And just like in 2008, that is what we are watching unfold on the global stage right now.  The following is an excerpt from a recent CNBC article

From nickel to soybean oil, plywood to sugar, global commodity prices have been on a steady decline as the world’s economy has lost momentum.

For an extended discussion on this, please see my recent article entitled “Not Just Oil: Guess What Happened The Last Time Commodity Prices Crashed Like This?

#8 A junk bond crash.  Just like in 2008, we are witnessing the beginnings of a junk bond collapse.  High yield debt related to the energy industry is on the bleeding edge of this crash, but in recent weeks we have seen investors start to bail out of a broad range of junk bonds.  Check out this chart and this chart in addition to the chart that I have posted below…

High Yield Debt 2015

#9 Global inflation slows down significantly.  When economic activity slows down, so does inflation.  This is something that we witnessed in 2008, this is also something that is happening once again.  In fact, it is being projected that global inflation is about to fall to the lowest level that we have seen since World War II

Increases in the prices of goods and services in the world’s largest economies are slowing dramatically. Analysts are predicting that inflation will fall below 2pc in all of the countries that make up the G7 group of advanced nations this year – the first time that has happened since before the Second World War.

Indeed, Japan was the only G7 country whose inflation rate was above 2pc last year. And economists believe that was because its government increased sales tax which had the effect of artificially boosting prices.

#10 A crisis in investor confidence.  Just prior to the last financial crisis, the confidence that investors had that we would be able to avoid a stock market collapse in the next six months began to decline significantly.  And guess what?  That is something else that is happening once again…

Investor confidence that the US will avoid a stock-market crash in the next six months has dropped dramatically since last spring.

The Yale School of Management publishes a monthly Crash Confidence Index. The index shows the proportion of investors who believe we will avoid a stock-market crash in the next six months.

Yale points out that “crash confidence reached its all-time low, both for individual and institutional investors, in early 2009, just months after the Lehman crisis, reflecting the turmoil in the credit markets and the strong depression fears generated by that event, and is plausibly related to the very low stock market valuations then.”

Are you starting to get the picture?

And of course I am not the only one warning about these things.  As I wrote about earlier in the week, there are a whole host of prominent voices that are now warning of imminent financial danger.

Today, I would like to add one more name to the list.  He is respected author James Howard Kunstler, and what he predicts is coming in 2015 is absolutely chilling

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Here are my financial forecast particulars for 2015:

  • Early in 2015 the ECB proposes a lame QE program and is laughed out of the room. European markets tank.
  • Greek elections in January produce a government that stands up to the EU and ECB and causes a fatal slippage of faith in the ability of that project to continue.
  • Second half of 2015, the rest of the world gangs up and counter-attacks the US dollar.
  • Bond markets in Europe implode in first half and the contagion spreads to the US as fear and distrust rises about viability of US safe haven status.
  • Derivatives associated with currencies, interest rates, and junk bonds trigger a bloodbath in credit default swaps (CDS) and the appearance of countless black holes through which debt and “wealth” disappear forever.
  • US stock markets continue to bid upward in the first half of 2015, crater in Q3 as faith in paper and pixels erodes. DJA and S & P fall 30 to 40 percent in the initial crash, then further into 2016.
  • Gold and silver slide in the first half, then take off as debt and equity markets craters, faith in abstract instruments evaporates, faith in central bank omnipotence dissolves, and citizens all over the world desperately seek safety from currency war.
  • Goldman Sachs, Citicorp, Morgan Stanley, Bank of America, DeutscheBank, SocGen, all succumb to insolvency. American government and Federal Reserve officials don’t dare attempt to rescue them again.
  • By the end of 2015, central banks everywhere stand in general discredit. In the US, the Federal Reserve’s mandate is publically debated and revised back to its original mission as lender of last resort. It is forbidden to engage in further interventions and a new less-secretive mechanism is drawn up for regulating basic interest rates.
  • Oil prices creep back into the $65 – $70 range by May 2015. It is not enough to halt the destruction in the shale, tar sand, and deepwater sectors. As contraction in the failing global economy accelerates, oil sinks back to the $40 range in October…
  • …unless mischief in the Middle East (in particular, the Islamic State messing with Saudi Arabia) leads to gross and perhaps fatally permanent disruption in world oil markets — and then all bets are off for both the continuity of advanced economies and for peace between nations.

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Personally, I don’t agree with Kunstler on all of the particulars and the timing of certain events, but overall I think that we are going to look back when the year is done and say that he was a lot more right than he was wrong.

We are moving into a time of extreme danger for the global economy.  There has never been a time when I have been more concerned about a new year since I began The Economic Collapse Blog back in 2009.

Over the past couple of years, we have been very blessed to be able to enjoy a bubble of relative stability.  But this period of stability also fooled many people into thinking that our economic problems had been fixed, when in reality they have only gotten worse.

We consume far more wealth than we produce, our debt levels are at record highs and we are at the tail end of the largest Wall Street financial bubble in all of history.

It is inevitable that we are heading for a tragic conclusion to all of this.  It is just a matter of time.

 

11 Predictions Of Economic Disaster In 2015 From Top Experts All Over The Globe

2015 - Public DomainWill 2015 be a year of financial crashes, economic chaos and the start of the next great worldwide depression?  Over the past couple of years, we have all watched as global financial bubbles have gotten larger and larger.  Despite predictions that they could burst at any time, they have just continued to expand.  But just like we witnessed in 2001 and 2008, all financial bubbles come to an end at some point, and when they do implode the pain can be extreme.  Personally, I am entirely convinced that the financial markets are more primed for a financial collapse now than they have been at any other time since the last crisis happened nearly seven years ago.  And I am certainly not alone.  At this point, the warning cries have become a deafening roar as a whole host of prominent voices have stepped forward to sound the alarm.  The following are 11 predictions of economic disaster in 2015 from top experts all over the globe…

#1 Bill Fleckenstein: “They are trying to make the stock market go up and drag the economy along with it. It’s not going to work. There’s going to be a big accident. When people realize that it’s all a charade, the dollar will tank, the stock market will tank, and hopefully bond markets will tank. Gold will rally in that period of time because it’s done what it’s done because people have assumed complete infallibility on the part of the central bankers.”

#2 John Ficenec: “In the US, Professor Robert Shiller’s cyclically adjusted price earnings ratio – or Shiller CAPE – for the S&P 500 is currently at 27.2, some 64pc above the historic average of 16.6. On only three occasions since 1882 has it been higher – in 1929, 2000 and 2007.”

#3 Ambrose Evans-Pritchard, one of the most respected economic journalists on the entire planet: “The eurozone will be in deflation by February, forlornly trying to ignite its damp wood by rubbing stones. Real interest rates will ratchet higher. The debt load will continue to rise at a faster pace than nominal GDP across Club Med. The region will sink deeper into a compound interest trap.”

#4 The Jerome Levy Forecasting Center, which correctly predicted the bursting of the subprime mortgage bubble in 2007: “Clearly the direction of most of the recent global economic news suggests movement toward a 2015 downturn.”

#5 Paul Craig Roberts: “At any time the Western house of cards could collapse. It (the financial system) is a house of cards. There are no economic fundamentals that support stock prices — the Dow Jones. There are no economic fundamentals that support the strong dollar…”

#6 David Tice: “I have the same kind of feel in ’98 and ’99; also ’05 and ’06.  This is going to end badly. I have every confidence in the world.”

#7 Liz Capo McCormick and Susanne Walker: “Get ready for a disastrous year for U.S. government bonds. That’s the message forecasters on Wall Street are sending.”

#8 Phoenix Capital Research: “Just about everything will be hit as well. Most of the ‘recovery’ of the last five years has been fueled by cheap borrowed Dollars. Now that the US Dollar has broken out of a multi-year range, you’re going to see more and more ‘risk assets’ (read: projects or investments fueled by borrowed Dollars) blow up. Oil is just the beginning, not a standalone story.

If things really pick up steam, there’s over $9 TRILLION worth of potential explosions waiting in the wings. Imagine if the entire economies of both Germany and Japan exploded and you’ve got a decent idea of the size of the potential impact on the financial system.”

#9 Rob Kirby: “What this breakdown in the crude oil price is going to spawn another financial crisis.  It will be tied to the junk debt that has been issued to finance the shale oil plays in North America.  It is reported to be in the area of half a trillion dollars worth of junk debt that is held largely on the books of large financial institutions in the western world.  When these bonds start to fail, they will jeopardize the future of these financial institutions.  I do believe that will be the signal for the Fed to come riding to the rescue with QE4.  I also think QE4 is likely going to be accompanied by bank bail-ins because we all know all western world countries have adopted bail-in legislation in their most recent budgets.  The financial elites are engineering the excuse for their next round of money printing . . .  and they will be confiscating money out of savings accounts and pension accounts.  That’s what I think is coming in the very near future.”

#10 John Ing: “The 2008 collapse was just a dress rehearsal compared to what the world is going to face this time around. This time we have governments which are even more highly leveraged than the private sector was.

So this time the collapse will be on a scale that is many magnitudes greater than what the world witnessed in 2008.”

#11 Gerald Celente: “What does the word confidence mean? Break it down. In this case confidence = con men and con game. That’s all it is. So people will lose confidence in the con men because they have already shown their cards. It’s a Ponzi scheme. So the con game is running out and they don’t have any more cards to play.

What are they going to do? They can’t raise interest rates. We saw what happened in the beginning of December when the equity markets started to unravel. So it will be a loss of confidence in the con game and the con game is soon coming to an end. That is when you are going to see panic on Wall Street and around the world.”

If you have been following my website, you know that I have been pointing to 2015 for quite some time now.

For example, in my article entitled “The Seven Year Cycle Of Economic Crashes That Everyone Is Talking About“, I discussed the pattern of financial crashes that we have witnessed every seven years that goes all the way back to the Great Depression.  The last two major stock market crashes began in 2001 and 2008, and now here we are seven years later.

Will the same pattern hold up once again?

In addition, there are many other economic cycles that seem to indicate that we are due for a major economic downturn.  I discussed quite a few of these theories in my article entitled “If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States“.

But just like in 2000 and 2007, there are a whole host of doubters that are fully convinced that the party can continue indefinitely.  Even though our economic fundamentals continue to get worse, our debt levels continue to grow and every objective measurement shows that Wall Street is more reckless and more vulnerable to collapse than ever before, they mock the idea that a financial collapse is imminent.

So let’s see what happens in 2015.

I have a feeling that it is going to be an extremely “interesting” year.

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