One day in the not too distant future, a major emergency will strike this nation, and that will set off a round of hoarding unlike anything we have ever seen before. Just think about what happens when a big winter storm or a hurricane is about to hit one of our major cities – inevitably store shelves are stripped bare of bread, milk, snow shovels, etc. Even though winter storms and hurricanes are just temporary hurdles to overcome, they still cause many people to go into panic mode. So what is going to happen when we have a real crisis on our hands?
We can get some clues about which items will disappear first during a major national emergency by taking a look at where such a scenario is already playing out. One recent survey found that over 80 percent of all basic foodstuffs are currently unavailable in Venezuela, and about half the country can no longer provide three meals a day for their families. Thankfully, some stores still have a few things that they are able to offer, but other key items are completely gone. The following comes from USA Today…
Oh, there are some things to buy. Besides salt, there are fresh vegetables and fruits, dairy products but no milk, some cereal, lots of snacks and a few canned goods.
The only meat is sausages; there are three kinds of cheese. The only problem: A kilogram of each costs more than a fourth of our monthly minimum wage of 15,050 bolivars.
But basic foodstuffs – the things most Venezuelans want to eat such as corn meal, wheat flour, pasta, rice, milk, eggs, sugar, coffee, chicken, mayonnaise, margarine, cooking oil and beef – are conspicuous by their absence. And there is no toilet paper, no sanitary napkins, no disposable baby diapers, no shampoo, no toothpaste, no hand soap and no deodorant.
Do you have plenty of the items in bold above stored up?
If not, you may want to stock up while you still can.
Someday similar things will happen in the United States and Europe too.
When that day arrives, will you be prepared?
One of the things that got my attention from the article quote above was the lack of milk. My wife is always telling me that we should store up more dried milk, and I believe that she is right.
Just imagine not having any milk and not being able to get any more.
What would you do?
Another thing that really stood out to me in the article was the fact that there is a severe shortage of personal hygiene items. Most people don’t really think of those as “prepper goods”, but the truth is that life will become very uncomfortable without them very rapidly.
What would you do if there was no more toilet paper?
And if you have a little one, how are you going to manage without any diapers?
In general, it is wise to always have an extra supply of just about everything that you use on a daily basis stored away somewhere in your home. The generation that went through the Great Depression of the 1930s understood this concept very well, but most of us that are younger have had it so good for so long that we don’t even really grasp what a real crisis looks like.
Another thing that we are seeing happen right now in Venezuela is the rise of a barter economy…
Many of my urban friends are now planting vegetables in their outdoor spaces – if they have any – or in pots. Another friend, who is a hairdresser, is charging clients food to do their hair. For a shampoo and dry, she charges a kilo of corn meal, saying that she doesn’t have time to stand in line like some of her clients.
As you prepare for what is ahead, you may want to consider stocking up on some items that would specifically be used for bartering in a crisis situation.
For example, you may not drink coffee, but there are millions upon millions of people that do. In a crisis situation, there will be many that will be extremely desperate to get their hands on some coffee, and so any coffee that you store away now may become a very valuable asset.
We live in a world where one out of every eight people already goes to bed hungry each night, and where one out of every three children is underweight. As global weather patterns become more extreme, as natural disasters continue to become more frequent and more intense, and as terror and war continue to spread, it is inevitable that the stress on the global food system is going to continue to grow.
Today you can waltz into Wal-Mart and buy giant cartloads of very inexpensive food, but it will not always be that way.
Unfortunately, more than half the country is currently living paycheck to paycheck, and most Americans do not have any emergency food stored up at all.
In addition to food and personal hygiene supplies, here are some other items that are likely to disappear very rapidly during a major national emergency…
-Anything Related To Self-Defense
-First Aid Kits
So in addition to food and personal hygiene items, you may want to do an inventory of the items that I have listed above and see where you may have some holes in your preparation plans.
I understand that there will be some people that will read this article and think that all of us “preppers” are being just a tad ridiculous.
But when a major emergency strikes this nation and you haven’t done anything to prepare, you will dearly wish that you had bothered to take action while there was still time remaining to do so.
If you were hungry enough, would you kill and eat zoo animals? To most of us such a notion sounds absolutely insane, but this is actually happening in Venezuela right now. This is a country where people are standing in lines for up to 12 hours hoping that there will be food to buy that day, and where rioting and looting have become commonplace. So even though the U.S. economy is in dreadful shape at this moment, we should be thankful for what we have, because at least we are not experiencing a full-blown economic collapse yet like Venezuela currently is.
Black stallions can be some of the most beautiful horses on the entire planet, but things are so desperate down in Venezuela this summer that everything looks like food to some people at this point. What happened at the Caricuao Zoo on Sunday is so horrible that I actually debated whether or not to share it with you. Desperate people do desperate things, and when people get hungry enough they will do things such as this…
Venezuela’s worsening food shortages had tragic consequences for a rare show horse last weekend, when a group of intruders broke into the zoo, pulled the black stallion from its cage, then slaughtered it for meat.
Prosecutors say the crime occurred in the small hours of Sunday morning at Caracas’ Caricuao Zoo, when “several people” sneaked into the state-run park under the cover of darkness and busted into the stallion’s pen. The horse, the only one of its kind in the zoo, was then led to a more secluded area and butchered on the spot. Only its head and ribs were left behind in a gruesome pile for zookeepers to find after sunrise.
Unfortunately, this precious animal was not even the first victim at that particular zoo.
Sadly, this horse wasn’t the first zoo animal to suffer the effects of Venezuela’s crippling food shortages. Some Vietnamese pigs and sheep were reportedly stolen from the same zoo earlier this month.
Dozens of other zoo animals are slowing starving to death because there is no food available to give to them. In fact, it is being reported that at least 50 animals have died from lack of food at one zoo alone…
At least 50 animals have died in the last six months at the Caricuao zoo in Caracas, Venezuela, due to widespread food shortages that are affecting both man and beast in the socialist nation.
Marlene Sifontes, a union leader for employees of state parks agency Inparques which oversees zoos, told Reuters that the zoo lost Vietnamese pigs, tapirs, rabbits and birds after the animals went weeks without eating. Others animals at the zoo are in danger of severe malnutrition. Lions and tigers, which should be on a carnivorous diet, are being fed mango and pumpkin just to get something in their empty stomachs, while an elephant is being fed tropical fruit instead of its usual diet of hay, the union leader said. According to one report, the big cats are being fed slaughtered thoroughbred racehorses from a nearby race track.
If what you have just read hurts your heart, let us not forget that it is not just the animals that are suffering. There are millions of precious people down there that are living on the very edge of starvation as you read this article.
Earlier this year, one mayor came forward and admitted to the world that some people are so hungry that they are actually hunting “cats, dogs and pigeons” for food…
Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Venezuela are filled with people killing animals for food.
Through Twitter, Muchacho reported that in Venezuela, it is a “painful reality” that people “hunt cats, dogs and pigeons” to ease their hunger. People are also reportedly gathering vegetables from the ground and trash to eat as well.
The crisis in Venezuela is worsening everyday due in part to shortages reaching 70 percent […] six Venezuelan military officials were arrested for stealing goats to ease their hunger, as there was no food at the Fort Manaure military base.
With each passing week, the situation in Venezuela keeps on getting worse.
And even though the United States has made many of the exact same mistakes that Venezuela has made, most of us just assume that what is happening down there could never happen up here.
After all, we have “the greatest economy in the world” and we are “the wealthiest nation on the entire planet”, right?
And Barbra Streisand is so thrilled that Hillary Clinton is going to be our next president that she launched into a rousing rendition of “Happy Days Are Here Again” as she kicked off her farewell tour in Los Angeles. The following account comes from the Drudge Report…
So long sad times Go along bad times We are rid of you at last Howdy gay times Cloudy gray times You are now a thing of the past Happy days are here again The skies above are clear again So let’s sing a song of cheer again…
Streisand suddenly interrupted the lyric, realizing a Democrat was currently in the White House!
“By the way, I love Obama.”
Altogether shout it now There’s no one Who can doubt it now So let’s tell the world about it now Happy days are here again
So what is the truth?
Are we going to end up just like Venezuela, or are happy days here once more?
Unfortunately, I have a feeling that we are not going to have to wait too long to find out…
We just got another extremely disappointing GDP number. It was being projected that U.S. GDP would grow by 2.5 percent during the second quarter of 2016, but instead it only grew by just 1.2 percent. In addition, the Census Bureau announced that GDP growth for the first quarter of 2016 had been revised down from 1.1 percent to 0.8 percent. What this means is that the U.S. economy is just barely hanging on by its fingernails from falling into a recession. As Zero Hedge has pointed out, the “average annual growth rate during the current business cycle remains the weakest of any expansion since at least 1949″. This is not what a recovery looks like.
In addition, Barack Obama remains solidly on track to be the only president in all of U.S. history to never have a single year when the economy grew by at least 3 percent. Every other president in American history, even the really bad ones, had at least one year when U.S. GDP grew by at least 3 percent. But this has not happened under Obama even though he has had two terms in the White House.
And many are anticipating that this latest extremely disappointing GDP number will discourage the Federal Reserve from raising interest rates any time in the near future…
The disappointing report could keep the Federal Reserve on hold longer as it considers another interest rate hike. The Fed lifted its key rate in December for the first time in nine years but has held it steady since.
According to the pundits in the mainstream media, this was supposed to be the year when the U.S. economy finally returned to “normal”, but that has not happened at all. In fact, in recent days we have gotten a spate of bad news about the economy. We just learned that the homeownership rate in the United States has hit the lowest level ever, and Gallup’s U.S. economic confidence index has fallen to the lowest level so far this year.
With the election coming up rapidly, this is the kind of news that Hillary Clinton definitely does not need. She needs to be able to sell the American people on the idea that the Obama years have been very good for the U.S. economy. If things take a sharp turn down in the coming months, that may be enough to cost her the election.
So far, Hillary Clinton’s economic agenda has not received that much scrutiny, but the truth is that she hopes to increase taxes in a whole bunch of ways which would be very harmful for the economy. The following comes from an excellent piece by John Kartch and Alexander Hendrie…
Hillary has endorsed several tax increases on middle income Americans, despite her pledge not to raise taxes on any American making less than $250,000. She has said she would be fine with a payroll tax hike on all Americans, she has endorsed a steep soda tax, endorsed a 25% national gun tax, and most recently, her campaign manager John Podesta said she would be open to a carbon tax. It’s no wonder that when asked by ABC’s George Stephanopoulos if her pledge was a “rock-solid” promise, she slipped and said the pledge was merely a “goal.” In other words, she’s going to raise taxes on middle income Americans.
Hillary’s formally proposed $1 trillion net tax increase consists of the following:
Income Tax Increase – $350 Billion: Clinton hasproposed a $350 billion income tax hike in the form of a 28 percent cap on itemized deductions.
Business Tax Increase — $275 Billion: Clinton has called for a tax hike of at least $275 billion through undefined business tax reform, as described in a Clinton campaigndocument.
“Fairness” Tax Increase —$400 Billion: According to her published plan, Clinton has called for a tax increase of “between $400 and $500 billion” by “restoring basic fairness to our tax code.” These proposals include a “fair share surcharge,” the taxing of carried interest capital gains as ordinary income, and a hike in the Death Tax.
Taxes tend to be a pet peeve of mine, so looking at that list of proposed taxes definitely makes me cringe.
If Donald Trump wants to hit the Democrats really hard on the economy, all he has to do is point out the fact that Barack Obama is going to be the only president in American history to never see 3 percent economic growth for an entire year, and he had two entire terms in which to try to turn things in a positive direction.
Sadly, things are very likely going to be worse for the economy no matter who wins the election. Under Obama, our national debt, our trade deficit, and most of our other long-term economic problems have gotten much, much worse, and so the table is set for a major economic disaster during the next presidential administration.
And if what I have to share about the future of America in my new book is correct, we are definitely moving into a “perfect storm” that will not just be economic in nature. The things that are coming are going to shake this nation to the very core, and I believe that we will soon face the consequences for decades of exceedingly foolish decisions.
So in the end, we may look back and long for the days of 1.2 percent economic growth, because what is on the horizon is going to make that look like a Sunday picnic.
When less stuff is being bought, sold and shipped around the country with each passing month, how in the world can the U.S. economy be in “good shape”? Unlike official government statistics which are often based largely on projections, assumptions and numbers seemingly made up out of thin air, the Cass Freight index is based on real transactions conducted by real shipping companies. And what the Cass Freight Index is telling us about the state of the U.S. economy in 2016 lines up perfectly with all of the other statistics that are clearly indicating that we have now shifted into recession mode.
Since 1995, the Cass Freight Index™ has been a trusted measure of North American freight volumes and expenditures. Our monthly Cass Freight Index Report provides valuable insight into freight trends as they relate to other economic and supply chain indicators and the overall economy.
Data within the Index includes all domestic freight modes and is derived from $25 billion in freight transactions processed by Cass annually on behalf of its client base of hundreds of large shippers. These companies represent a broad sampling of industries including consumer packaged goods, food, automotive, chemical, OEM, retail and heavy equipment. Annual freight volume per organization ranges from $1 million to over $1 billion. The diversity of shippers and aggregate volume provide a statistically valid representation of North American shipping activity.
When they say “all domestic freight modes”, that includes air, rail, truck, etc. As you are about to see, the total amount of stuff that is being bought, sold and shipped around the country by all these various methods has now been declining for 15 months in a row.
If it was just one or two months you could say that it was just an anomaly, but how in the world can anyone explain away 15 consecutive months?
Not only that, but the brand new number that just came out for May 2016 is the lowest number that we have seen for the month of May in 6 years.
Of course the number for April was the lowest number that we have seen for that month in 6 years too, and the number for March was also the lowest number that we have seen for that month in 6 years.
The Index is not seasonally or otherwise adjusted, so it shows strong seasonal patterns. In the chart below, the red line with black markers is for 2016. The colorful spaghetti above that line represents the years 2011 through 2015. The only month this year that was not the worst month since 2010 was February; only February 2011 was worse. That’s how bad it has gotten in the Freight sector:
“Truck tonnage continues to slide for both linehaul and spot markets,” according to the report. And railroads are also singing the blues.
To me, these numbers are absolutely staggering. How anyone can look at them and then attempt to claim that the U.S. economy is heading for good times is a mystery to me.
And this is especially true considering all of the other news that is pouring in. Just today, we learned that new home sales have fallen by the most in 8 months. If you are trying to sell your home, hopefully you will get that done very quickly, because this latest property bubble is starting to burst in a major way.
Today, I also came across a stunning IMF report that was just released that criticized the U.S. for our shrinking middle class and our rising levels of poverty…
A rising share of the U.S. labor force is shifting into retirement, basic infrastructure is crumbling, productivity gains are scanty, and labor markets and businesses appear less adept at reallocating human and physical capital. These growing headwinds are overlaid by pernicious secular trends in income: labor’s share of income is around 5 percent lower today than it was 15 years ago, the middle class has shrunk to its smallest size in the last 30 years, the income and wealth distribution are increasingly polarized, and poverty has risen.
If you follow my work on a regular basis, you already know that everything that the IMF said in that paragraph is true.
A little bit later in the report, the IMF shared some absolutely startling facts about the growth of poverty in this country…
There is an urgent need to tackle poverty. In the latest data, 1 in 7 Americans is living in poverty, including 1 in 5 children and 1 in 3 female-headed households. Around 40 percent of those in poverty are working.
This distressing growth in our poverty numbers has taken place during Barack Obama’s so-called “economic recovery”.
So how bad are things ultimately going to get for America’s poor now that a new economic crisis has begun?
Before I wrap up this article, I have to mention the early returns from the Brexit vote. All day on Thursday, global news sources were reporting that the latest polls had “Remain” comfortably in the lead, and global financial markets soared on that news.
But now that the actual votes are being reported, it looks like it is going to be much, much closer than anticipated. In fact, as I write this article “Leave” is ahead by a 54.16 percent to 45.84 percent margin. Only a relatively small fraction of the votes have been counted so far, but global financial markets are already being spooked by these results.
If “Leave” does actually win, that is going to have enormous implications for the markets and for the future of Europe. So let’s keep a close eye on what is happening. If “Leave” does prove to be victorious, that will be one of the biggest things to hit Europe in decades, and I am sure that I will be posting an article about it tomorrow.
We live at a time when global events are beginning to accelerate, and there is much uncertainty in the air. If you do not have a solid foundation on which to stand, the events of the coming months will likely shake you greatly. I encourage everyone to start focusing on the things that really matter, because a lot of the other things that we obsess over will soon become quite insignificant.
UPDATE: It is official – the United Kingdom has voted to leave the European Union. They are to be greatly congratulated for declaring their independence, but without a doubt this vote is going to cause some very serious short-term economic and financial pain. Already we have witnessed the greatest one day crash in the history of the British pound, and stock markets all over the world are crashing. For much more, please see our latest video update…
You are about to see undeniable evidence that the U.S. economy has been slowing down for quite some time. And it is vital that we focus on the facts, because all over the Internet you are going to find lots and lots of people that have opinions about what is going on with the economy. And of course the mainstream media is always trying to spin things to make Barack Obama and Hillary Clinton look good, because those that work in the mainstream media are far more liberal than the American population as a whole. It is true that I also have my own opinions, but as an attorney I learned that opinions are not any good unless you have facts to back them up. So please allow me a few moments to share with you evidence that clearly demonstrates that we have already entered a major economic slowdown. The following are 15 facts about the imploding U.S. economy that the mainstream media doesn’t want you to see…
1. Industrial production has now declined for nine months in a row. We have never seen this happen outside of a recession in all of U.S. history.
2. U.S. commercial bankruptcies have risen on a year over year basis for seven months in a row and are now up 51 percent since September.
3. The delinquency rate on commercial and industrial loans has been rising since January 2015.
4. Total business sales in the United States have been steadily dropping since the middle of 2014. No, I did not say 2015. Total business sales have been in decline for nearly two years now, and we just found out that they dropped again…
Total business sales in the US did in April what they’ve been doing since July 2014: they dropped: -2.9% from a year ago, to $1.28 trillion (not adjusted for seasonal differences and price changes), the Censuses Bureau reported on Tuesday. That’s where sales had been in April 2013!
15. The number of temporary workers in the United States peaked and started falling precipitously before the recession of 2001 even started. The exact same thing happened just prior to the beginning of the 2008 recession. So would it surprise you to learn that the number of temporary workers in the United States peaked in December and has fallen dramatically since then?
Earlier today, we learned that two of our biggest corporations will be laying off even more workers. Bank of America, which is holding more of our money than any other bank in the country, has announced that it is going to be cutting about 8,000 more workers…
Bank of America is expected to reduce staffing in its consumer banking division by as many as 8,000 more jobs.
The nation’s largest retail bank by deposits has already reduced the staffing in its consumer division from more than 100,000 in 2009 to about 68,400 as of the end of the first quarter of 2016, said Thong Nguyen, Bank of America’s president of retail banking and co-head of consumer banking at the Morgan Stanley Financials Conference Tuesday.
Walmart is going to cut some back-office accounting jobs at about 500 stores in a bid to become more efficient.
The job cuts will occur mostly at stores mostly in the West and involve accounting and invoicing workers, says spokesman Kory Lundberg. Instead, bookkeeping functions will be switched to Walmart’s home office in Bentonville, Ark. Cash at the stores will be counted by machine.
Day after day we are hearing about more layoffs like this. So why would this be happening if the U.S. economy truly was in “recovery mode”?
Even with how manipulated the GDP numbers are these days, Barack Obama is on course to be the only president in all of U.S. history to never have a single year when the economy grew by at least 3 percent. The truth is that our economy has been stuck in the mud ever since the end of the last recession, and now a major new downturn has clearly already begun.
Foreign investors sold a record amount of U.S. Treasury bonds and notes for the month of April, according to U.S. Treasury Department data on Wednesday, as investors priced in a few more rate increases by the Federal Reserve this year.
Foreigners sold $74.6 billion in U.S. Treasury debt in the month, after purchases of $23.6 billion in March. April’s outflow was the largest since the U.S. Treasury Department started recording Treasury debt transactions in January 1978.
Absent a major “black swan event” of some sort, we won’t see that happening in the United States for at least a while yet, but without a doubt we are steamrolling toward a major economic depression.
Unfortunately for all of us, there isn’t anything that any of our politicians are going to be able to do to stop it.
*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*
Why is George Soros selling stocks, buying gold and making “a series of big, bearish investments”? If things stay relatively stable like they are right now, these moves will likely cost George Soros a tremendous amount of money. But if a major financial crisis is imminent, he stands to make obscene returns. So does George Soros know something that the rest of us do not? Could it be possible that he has spent too much time reading websites such as The Economic Collapse Blog? What are we to make of all of this?
The recent trading moves that Soros has made are so big and so bearish that they have even gotten the attention of the Wall Street Journal…
Worried about the outlook for the global economy and concerned that large market shifts may be at hand, the billionaire hedge-fund founder and philanthropist recently directed a series of big, bearish investments, according to people close to the matter.
Soros Fund Management LLC, which manages $30 billion for Mr. Soros and his family, sold stocks and bought gold and shares of gold miners, anticipating weakness in various markets. Investors often view gold as a haven during times of turmoil.
Hmmm – it sounds suspiciously like George Soros and Michael Snyder are on the exact same page as far as what is about to happen to the global economy.
You know that it is very late in the game when that starts happening…
One thing that George Soros is particularly concerned about that I haven’t been talking a lot about yet is the upcoming Brexit vote. If the United Kingdom leaves the EU (and hopefully they will), the short-term consequences for the European economy could potentially be absolutely catastrophic…
Mr. Soros also argues that there remains a good chance the European Union will collapse under the weight of the migration crisis, continuing challenges in Greece and a potential exit by the United Kingdom from the EU.
“If Britain leaves, it could unleash a general exodus, and the disintegration of the European Union will become practically unavoidable,” he said.
The Brexit vote will be held two weeks from today on June 23rd, and we shall be watching to see what happens.
But Soros is not just concerned about a potential Brexit. The economic slowdown in China also has him very worried, and so he has directed his firm to make extremely bearish wagers.
According to the Wall Street Journal, the last time Soros made these kinds of bearish moves was back in 2007, and it resulted in more than a billion dollars of gains for his company.
After 73 consecutive months of year-over-year growth, online jobs postings have been in decline since February. May was by far the worst month since January 2009, down 285k from April and down 552k from a year ago.
That may seem counterintuitive in an industry that has been rapidly shedding workers, with more than 350,000 people laid off in the oil and gas industry worldwide.
Texas is one place feeling the pain. Around 99,000 direct and indirect jobs in the Lone Star state have been eliminated since prices collapsed two years ago, or about one third of the entire industry. In April alone there were about 6,300 people in oil and gas and supporting services that were handed pink slips. Employment in Texas’ oil sector is close to levels not seen since the aftermath of the financial crisis in 2009. “We’re still losing big chunks of jobs with each passing month,” Karr Ingham, an Amarillo-based economist, told The Houston Chronicle.
At this point it is so obvious that we have entered a new economic downturn that I don’t know how anyone can possibly deny it any longer.
Unfortunately, the reality of what is happening has not sunk in with the general population yet.
American taxpayers are quick to criticize the federal government for its ever-increasing national debt, but a new study released Wednesday found taxpayers are also saddled with debt, and are likely to end 2016 with a record high $1 trillion in outstanding balances.
Wallethub, a site that recommends credit cards based on consumers’ needs, said that will be the highest amount of credit card debt on record, surpassing even the years during and before the Great Recession. The site said the record high was in 2008, when people owed $984.2 billion on their credit cards.
Will we ever learn?
This has got to be one of the worst possible times to be going into credit card debt.
Sadly, the “dumb money” will continue to act dumb and the “smart money” (such as George Soros) will continue to quietly position themselves to take advantage of the crisis that is already starting to unfold.
We can’t change what is happening to the economy, but we do have control over the choices that we make.
So I urge you to please make your choices wisely.
*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*
You are about to see a chart that is undeniable evidence that we have already entered a major economic slowdown. In the “real economy”, stuff is bought and sold and shipped around the country by trucks, railroads and planes. When more stuff is being bought and sold and shipped around the country, the “real economy” is growing, and when less stuff is being bought and sold and shipped around the country, the “real economy” is shrinking. I know that might sound really basic, but I want everyone to be on the same page as we proceed in this article. Just because stock prices are artificially high right now does not mean that the U.S. economy is in good shape. In fact, there was a stock rally at this exact time of the year in 2008 even though the underlying economic fundamentals were rapidly deteriorating. We all remember what happened later that year, so we should not exactly be rejoicing that precisely the same pattern that we witnessed in 2008 is happening again right in front of our eyes.
During the month of April, the Cass Transportation Index was down 4.9 percent on a year over year basis. What this means is that a lot less stuff was bought and sold and shipped around the country in April 2016 when compared to April 2015. The following comes from Wolf Richter…
Freight shipments by truck and rail in the US fell 4.9% in April from the beaten-down levels of April 2015, according to the Cass Transportation Index, released on Friday. It was the worst April since 2010, which followed the worst March since 2010. In fact, shipment volume over the four months this year was the worst since 2010.
This is no longer statistical “noise” that can easily be brushed off.
Of course this was not just a one month fluke. The reality is that we have now seen the Cass Shipping Index decline on a year over year basis for 14 consecutive months. Here is more commentary and a chart from Wolf Richter…
The Cass Freight Index is not seasonally adjusted. Hence the strong seasonal patterns in the chart. Note the beaten-down first four months of 2016 (red line):
This is undeniable evidence that the “real economy” has been slowing down for more than a year. In 2007-2008 we saw a similar thing happen, but the Federal Reserve and most of the “experts” boldly assured us that there was not going to be a recession.
Of course then we immediately proceeded to plunge into the worst economic downturn since the Great Depression of the 1930s.
Traditionally, railroad activity has been a key indicator of where the U.S. economy is heading next. Just a few days ago, I wrote about how U.S. rail traffic was down more than 11 percent from a year ago during the month of April, and I included a photo that showed 292 Union Pacific engines sitting in the middle of the Arizona desert doing absolutely nothing.
Well, just yesterday one of my readers sent me a photograph of a news article from North Dakota about how a similar thing is happening up there. Hundreds of rail workers are being laid off, and engines are just sitting idle on the tracks because there is literally nothing for them to do…
Intuitively, does it seem like this should be happening in a “healthy” economy?
Of course not.
The reason why this is happening is because businesses have been selling less stuff. Total business sales have now been declining for almost two years, and they are now close to 15 percent lower than they were in late 2014.
Because sales are way down, unsold inventories are really starting to pile up. The inventory to sales ratio is now close to the level it was at during the worst moments of the last recession, and many analysts expect it to continue to keep going up.
Why can’t people understand what is happening? So far this year, job cut announcements are up 24 percent and the number of commercial bankruptcies is shooting through the roof. Signs that we are in the early chapters of a new economic downturn are all around us, and yet denial is everywhere.
Treasury yields are behaving as if they are signaling a recession, but strategists say this time it’s more likely a sign of something else.
The market has been buzzing about the flattening yield curve, or the fact that yields on longer duration Treasurys are getting closer to yields on shorter duration securities.
In the case of 10-year notes and two-year notes, that spread was the flattest Friday than it has been on a closing basis since late 2007. The yield curve had turned negative in 2006 and stayed there for months in 2007 before turning higher ahead of the Great Recession. The spread was at 95 at Friday’s curve but widened Monday to more than 96.
Treasury yields are very, very clearly telling us that a new recession is here, but because the “experts” don’t want to believe it they are telling us that the signal is “broken”.
For many Americans, all that seems to matter is that the stock market has recovered from the horrible crashes last August and earlier this year. But in the end, I am convinced that those crashes will simply be regarded as “foreshocks” of a much greater crash in our not too distant future.
But if you don’t want to believe me, perhaps you will listen to Goldman Sachs. They just came out with six reasons why stocks are about to tumble.
Or perhaps you will believe Bank of America. They just came out with nine reasons why a big stock market decline is on the horizon.
To me, one of the big developments has been the fact that stock buybacks are really starting to dry up. In fact, announced stock buybacks have declined 38 percent so far this year…
After snapping up trillions of dollars of their own stock in a five-year shopping binge that dwarfed every other buyer, U.S. companies from Apple Inc. to IBM Corp. just put on the brakes. Announced repurchases dropped 38 percent to $244 billion in the last four months, the biggest decline since 2009, data compiled by Birinyi Associates and Bloomberg show. “If the only meaningful source of demand in the market is companies buying their own shares back, then what happens if that goes away?” asked Brad McMillan, CIO of Commonwealth “We should be concerned.”
Stock buybacks have been one of the key factors keeping stock prices at artificially inflated levels even though underlying economic conditions have been deteriorating. Now that stock buybacks are drying up, it is going to be difficult for stocks to stay disconnected from economic reality.
A lot of people have been asking me recently when the next crisis is going to arrive.
I always tell them that it is already here.
Just like in early 2008, economic conditions are rapidly deteriorating, but the stock market has not gotten the memo quite yet.
And just like in 2008, when the financial markets do finally start catching up with reality it will likely happen very quickly.
So don’t take your eyes off of the deteriorating economic fundamentals, because it is inevitable that the financial markets will follow eventually.
The full-blown economic collapse that is happening in Venezuela right now is a preview of what Americans will be experiencing in the not too distant future. Just a few years ago, most Venezuelans could never have imagined that food shortages would become so severe that people would literally hunt dogs and cats for food. But as you will see below, this is now taking place. Sadly, this is what the endgame of socialism looks like. When an all-powerful government is elevated far above all other institutions in society and radical leftists are given the keys to the kingdom, this is the result. Food shortages, looting and rampant violent crime have all become part of daily life in Venezuela, and we all need to watch as this unfolds very carefully, because similar scenarios will soon be playing out all over the planet.
The funny thing is that Venezuela actually has more “wealth” than most countries in the world. According to the CIA, Venezuela actually has more proven oil reserves than anyone else on the globe – including Saudi Arabia.
So how did such a wealthy nation find itself plunged into full-blown economic collapse so rapidly, and could a similar thing happen to us?
The president of Venezuela has declared a 60 day state of emergency in a desperate attempt to restore order, but most people don’t anticipate that it will do much good. Social order continues to unravel as the economy systematically implodes. The Venezuelan economy shrunk by 5.7 percent last year, and it is being projected that it will contract by another 8 percent in 2016. Meanwhile, inflation is raging wildly out of control. According to the IMF, the official inflation rate in Venezuela will be somewhere around 720 percent this year and 2,200 percent next year.
If people are able to get their hands on some money, they immediately rush out to the stores to use it before the prices go up again. This has created devastating shortages of food, basic supplies and medicine.
Electricity is also in short supply, and a two day workweek has been imposed on many government employees in a desperate attempt to save power. Violent crime is seemingly everywhere, and most law-abiding Venezuelans lock themselves in their homes at night as a result.
Much of the crime is being perpetrated by the mafia and the gangs, but sometimes it is just normal people looking for food. Desperate people do desperate things, and according to the Guardian there have been “107 episodes of looting or attempted looting in the first quarter of 2016″…
Crowds of people in Venezuela have stolen flour, chicken and even underwear this week as looting increases across the country in the wake of shortages of many basic products. Many people have adopted the habit of getting up in the dead of night to spend hours in long lines in front of supermarkets. But as more end up empty-handed and black market prices soar, plundering is rising in Venezuela, an Opec nation that was already one of the world’s most violent countries.
There is no official data, but the Venezuelan Observatory for Social Conflict, a rights group, have reported 107 episodes of looting or attempted looting in the first quarter of 2016. Videos of crowds breaking into shops, swarming on to trucks or fighting over products frequently make the rounds on social media, though footage is often hard to confirm.
Other Venezuelans have resorted to digging in dumpsters and trash cans for food. This many seem detestable to many Americans, but when you are desperately hungry you may be surprised at what you are willing to do.
Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Venezuela are filled with people killing animals for food.
Through Twitter, Muchacho reported that in Venezuela, it is a “painful reality” that people “hunt cats, dogs and pigeons” to ease their hunger.
You may be tempted to dismiss these people as “barbarians”, but someday Americans will be doing the exact same thing.
There has been a breakdown of basic social services in Venezuela as well. Acute shortages of drugs and medical supplies are having absolutely tragic results. When I read the following from the New York Times, this crisis in Venezuela become much more real to me…
By morning, three newborns were already dead.
The day had begun with the usual hazards: chronic shortages of antibiotics, intravenous solutions, even food. Then a blackout swept over the city, shutting down the respirators in the maternity ward.
Doctors kept ailing infants alive by pumping air into their lungs by hand for hours. By nightfall, four more newborns had died.
So once again I ask – how did such a thing happen to such a wealthy nation?
The real culprit is chavismo, the ruling philosophy named for Chavez and carried forward by Maduro, and its truly breathtaking propensity for mismanagement (the government plowed state money arbitrarily into foolish investments); institutional destruction (as Chavez and then Maduro became more authoritarian and crippled the country’s democratic institutions); nonsense policy-making (like price and currency controls); and plain thievery (as corruption has proliferated among unaccountable officials and their friends and families).
Are not the same things happening here?
The U.S. government is mismanaging our money too. During Barack Obama’s eight years in the White House, the U.S. national debt has risen by more than eight trillion dollars. We waste money in some of the most bizarre ways imaginable, and at this point our national debt is nearly the double the size it was just prior to the last major financial crisis.
Institutional destruction is also a legacy of the Obama regime. With each passing day, our society resembles the Republic that our founders originally intended less and less, and it resembles socialist dictatorships more and more. We may as well not even have a Constitution anymore, because at this point nobody really follows it.
The third thing that Business Insider mentioned, “nonsense policy-making”, is a perfect description of what has been going on in Washington D.C. these days. Perhaps that is why Congress only has a 12.8 percent approval rating right now.
Lastly, thievery and corruption are also out of control in our nation too. The elite and special interest groups spend massive amounts of money to get their favorites into office, and in turn those politicians shower their good friends with money and favors. It is a very sick relationship, but that is how our system now works.
We are sitting on the largest mountain of debt in the history of the planet, and our debt-fueled prosperity is completely dependent on the rest of the world lending us gigantic amounts of money at ridiculously low interest rates and continuing to use our increasingly shaky currency which we are debasing at a staggering pace.
We consume far more than we produce, and unlike Venezuela we aren’t sitting on hundreds of billions of barrels of oil. The amount of “real wealth” that we actually have does not justify our current standard of living. The only way that we are able to live the way that we do is by stealing consumption from the future. One study has found that our debt level is the highest that it has been since the Great Depression of the 1930s, and yet we continue to race down this road to economic oblivion without even thinking twice about it.
What you sow is what you will reap.
And just like Venezuela, America will ultimately reap a very bitter harvest.
We have seen this story before, and it never ends well. From mid-March until early May 2008, a vigorous stock market rally convinced many investors that the market turmoil of late 2007 and early 2008 was over and that happy days were ahead for the U.S. economy. But of course we all know what happened. It turned out that the market downturns of late 2007 and early 2008 were just “foreshocks” of a much greater crash in late 2008. The market surge in the spring of 2008 was just a mirage, and it masked rapidly declining economic fundamentals. Well, the exact same thing is happening right now. The Dow rose another 222 points on Tuesday, but meanwhile virtually every number that we are getting is just screaming that the overall U.S. economy is steadily falling apart. So don’t be fooled by a rising stock market. Just like in the spring of 2008, all of the signs are pointing to an avalanche of bad economic news in the months ahead. The following are 11 signs that the U.S. economy is rapidly deteriorating…
#1 Total business sales have been declining for nearly two years, and they are now about 15 percent lower than they were in late 2014.
#2 The inventory to sales ratio is now back to near where it was during the depths of the last recession. This means that there is lots and lots of unsold stuff just sitting around out there, and that is a sign of a very unhealthy economy.
#4 Profits for companies listed on the S&P 500 were down 7.1 percent during the first quarter of 2016 when compared to the same time period a year ago.
#5 In April, commercial bankruptcies were up 32 percent on a year over year basis, and Chapter 11 filings were up 67 percent on a year over year basis. This is exactly the kind of spike that we witnessed during the initial stages of the last major financial crisis as well.
#7 The U.S. economy has lost an astounding 191,000 mining jobs since September 2014. For areas of the country that are heavily dependent on mining, this has been absolutely devastating.
#8 According to Challenger, Gray & Christmas, U.S. firms announced 35 percent more job cuts during April than they did in March. This indicates that our employment problems are accelerating.
#9 So far this year, job cut announcements are running 24 percent above the exact same period in 2015.
#10 U.S. GDP grew at just a 0.5 percent annual rate during the first quarter of 2016. This was the third time in a row that the GDP number has declined compared to the previous quarter, and let us not forget that the formula for calculating GDP was changed last year specifically to make the first quarter of each year look better. Without that “adjustment”, it is quite possible that we would have had a negative number for the first quarter.
But you never hear Obama talk about that statistic, do you?
And the mainstream media loves to point the blame at just about anyone else. In fact, the Washington Post just came out with an article that is claiming that the big problem with the economy is the fact that U.S. consumers are saving too much money…
The surge in saving is the real drag on the economy. It has many causes. “People got a cruel lesson about [the dangers] of debt,” says economist Matthew Shapiro of the University of Michigan. Households also save more to replace the losses suffered on homes and stocks. But much saving is precautionary: Having once assumed that a financial crisis of the 2008-2009 variety could never happen, people now save to protect themselves against the unknown. Research by economist Mark Zandi of Moody’s Analytics finds higher saving at all income levels.
So even though half the country is flat broke, I guess we are all supposed to do our patriotic duty by going out and running up huge balances on our credit cards.
What a joke.
Of course the U.S. economy is actually doing significantly better at the moment than almost everywhere else on the planet. Many areas of South America have already plunged into an economic depression, major banks all over Europe are in the process of completely melting down, Japanese GDP has gone negative again despite all of their emergency measures, and Chinese stocks are down more than 40 percent since the peak of the market.
This is a global economic slowdown, and just like in 2008 it is only a matter of time before the financial markets catch up with reality. I really like how Andrew Lapthorne put it recently…
On the more bearish slant is Andrew Lapthorne, head of quantitative strategy at Societe Generale. To him this profit downturn is a sign that stocks are far too overvalued and the economy is weaker than you think.
“MSCI World EPS is now declining at the fastest pace since 2009, losing 4% in the last couple of months alone (this despite stronger oil prices),” wrote Lapthorne in a note. For the S&P 500 specifically, the year on year drop in profit drop was the most since third quarter of 2009.
“Global earnings are now 14% off the peak set in August 2014 and back to where they stood five years ago. Equity prices on the other hand are 25% higher. Gravity beckons!”
I couldn’t have said it better myself.
Look, this is not a game.
So far in 2016, three members of my own extended family have lost their jobs. Businesses are going under at a pace that we haven’t seen since 2008, and this means that more mass layoffs are on the way.
We can certainly be happy that U.S. stocks are doing okay for the moment. May it stay that way for as long as possible. But anyone that believes that this state of affairs can last indefinitely is just being delusional.
Gravity beckons, and the crash that is to come is going to be a great sight to behold.