The Beginning Of The End
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Exactly Like 7 Years Ago? 2014 Is Turning Out To Be Eerily Similar To 2007

Bubble - Photo by Jeff KubinaThe similarities between 2007 and 2014 continue to pile up.  As you are about to see, U.S. home sales fell dramatically throughout 2007 even as the mainstream media, our politicians and Federal Reserve Chairman Ben Bernanke promised us that everything was going to be just fine and that we definitely were not going to experience a recession.  Of course we remember precisely what followed.  It was the worst economic crisis since the days of the Great Depression.  And you know what they say – if we do not learn from history we are doomed to repeat it.  Just like seven years ago, the stock market has soared to all-time high after all-time high.  Just like seven years ago, the authorities are telling us that there is nothing to worry about.  Unfortunately, just like seven years ago, a housing bubble is imploding and another great economic crisis is rapidly approaching.

Posted below is a chart of existing home sales in the United States during 2007.  As you can see, existing home sales declined precipitously throughout the year…

Existing Home Sales 2007

Now look at this chart which shows what has happened to existing home sales in the United States in recent months.  If you compare the two charts, you will see that the numbers are eerily similar…

Existing Home Sales Today

New home sales are also following a similar pattern.  In fact, we just learned that new home sales have collapsed to an 8 month low

Sales of new single-family homes dropped sharply last month as severe winter weather and higher mortgage rates continued to slow the housing recovery.

New home sales fell 14.5% to a seasonally adjusted annual rate of 385,000, down from February’s revised pace of 449,000, the Census Bureau said.

Once again, this is so similar to what we witnessed back in 2007.  The following is a chart that shows how new home sales declined dramatically throughout that year…

New Home Sales 2007

And this chart shows what has happened to new homes sales during the past several months.  Sadly, we have never even gotten close to returning to the level that we were at back in 2007.  But even the modest “recovery” that we have experienced is now quickly unraveling…

New Home Sales Today

If history does repeat, then what we are witnessing right now is a very troubling sign for the months to come.  As you can see from this chart, new home sales usually start going down before a recession begins.

And don’t expect these housing numbers to rebound any time soon.  The demand for mortgages has dropped through the floor.  Just check out the following excerpt from a recent article by Michael Lombardi

One of the key indicators I follow in respect to the state of the housing market is mortgage originations. This data gives me an idea about demand for homes, as rising demand for mortgages means more people are buying homes. And as demand increases, prices should be increasing.

But the opposite is happening…

In the first quarter of 2014, mortgage originations at Citigroup Inc. (NYSE/C) declined 71% from the same period a year ago. The bank issued $5.2 billion in mortgages in the first quarter of 2014, compared to $8.3 billion in the previous quarter and $18.0 billion in the first quarter of 2013. (Source: Citigroup Inc. web site, last accessed April 14, 2014.)

Total mortgage origination volume at JPMorgan Chase & Co. (NYSE/JPM) declined by 68% in the first quarter of 2014 from the same period a year ago. At JPMorgan, in the first quarter of 2014, $17.0 billion worth of mortgages were issued, compared to $52.7 billion in the same period a year ago. (Source: JPMorgan Chase & Co. web site, last accessed April 14, 2014.)

It is almost as if we are watching a replay of 2007 all over again, and yet nobody is talking about this.

Everyone wants to believe that this time will be different.

The human capacity for self-delusion is absolutely amazing.

There are a lot of other similarities between 2007 and today as well.

Just the other day, I noted that retail stores are closing in the United States at the fastest pace that we have seen since the collapse of Lehman Brothers.

Back in 2007, we saw margin debt on Wall Street spike dramatically and help fuel a remarkable run in the stock market.  Just check out the chart in this article.  But that spike in margin debt also made the eventual stock market collapse much worse than it had to be.

And just like 2007, consumer credit is totally out of control.  As I noted in one recent article, during the fourth quarter of 2013 we witnessed the biggest increase in consumer debt in the U.S. that we have seen since 2007.  Total consumer credit in the U.S. has risen by 22 percent over the past three years, and 56 percent of all Americans have “subprime credit” at this point.

Are you starting to get the picture?  It is only 7 years later, and the same things that happened just prior to the last great financial crisis are happening again.  Only this time we are in much worse shape to handle an economic meltdown.  The following is a brief excerpt from my recent article entitled “We Are In FAR Worse Shape Than We Were Just Prior To The Last Great Financial Crisis“…

None of the problems that caused the last financial crisis have been fixed.  In fact, they have all gotten worse.  The total amount of debt in the world has grown by more than 40 percent since 2007, the too big to fail banks have gotten 37 percent larger, and the colossal derivatives bubble has spiraled so far out of control that the only thing left to do is to watch the spectacular crash landing that is inevitably coming.

You can read the rest of that article right here.

For a long time, I have been convinced that this two year time period is going to represent a major “turning point” for America.

Right now, 2014 is turning out to be eerily similar to 2007.

Will 2015 turn out to be a repeat of 2008?

Please feel free to share what you think by posting a comment below…

20 Early Warning Signs That We Are Approaching A Global Economic Meltdown

Earth From SpaceHave you been paying attention to what has been happening in Argentina, Venezuela, Brazil, Ukraine, Turkey and China?  If you are like most Americans, you have not been.  Most Americans don’t seem to really care too much about what is happening in the rest of the world, but they should.  In major cities all over the globe right now, there is looting, violence, shortages of basic supplies, and runs on the banks.  We are not at a “global crisis” stage yet, but things are getting worse with each passing day.  For a while, I have felt that 2014 would turn out to be a major “turning point” for the global economy, and so far that is exactly what it is turning out to be.  The following are 20 early warning signs that we are rapidly approaching a global economic meltdown…

#1 The looting, violence and economic chaos that is happening in Argentina right now is a perfect example of what can happen when you print too much money

For Dominga Kanaza, it wasn’t just the soaring inflation or the weeklong blackouts or even the looting that frayed her nerves.

It was all of them combined.

At one point last month, the 37-year-old shop owner refused to open the metal shutters protecting her corner grocery in downtown Buenos Aires more than a few inches — just enough to sell soda to passersby on a sweltering summer day.

#2 The value of the Argentine Peso is absolutely collapsing.

#3 Widespread shortages, looting and accelerating inflation are also causing huge problems in Venezuela

Economic mismanagement in Venezuela has reached such a level that it risks inciting a violent popular reaction. Venezuela is experiencing declining export revenues, accelerating inflation and widespread shortages of basic consumer goods. At the same time, the Maduro administration has foreclosed peaceful options for Venezuelans to bring about a change in its current policies.

President Maduro, who came to power in a highly-contested election last April, has reacted to the economic crisis with interventionist and increasingly authoritarian measures. His recent orders to slash prices of goods sold in private businesses resulted in episodes of looting, which suggests a latent potential for violence. He has put the armed forces on the street to enforce his economic decrees, exposing them to popular discontent.

#4 In a stunning decision, the Venezuelan government has just announced that it has devalued the Bolivar by more than 40 percent.

#5 Brazilian stocks declined sharply on Thursday.  There is a tremendous amount of concern that the economic meltdown that is happening in Argentina is going to spill over into Brazil.

#6 Ukraine is rapidly coming apart at the seams

A tense ceasefire was announced in Kiev on the fifth day of violence, with radical protesters and riot police holding their position. Opposition leaders are negotiating with the government, but doubts remain that they will be able to stop the rioters.

#7 It appears that a bank run has begun in China

As China’s CNR reports, depositors in some of Yancheng City’s largest farmers’ co-operative mutual fund societies (“banks”) have been unable to withdraw “hundreds of millions” in deposits in the last few weeks. “Everyone wants to borrow and no one wants to save,” warned one ‘salesperson’, “and loan repayments are difficult to recover.” There is “no money” and the doors are locked.

#8 Art Cashin of UBS is warning that credit markets in China “may be broken“.  For much more on this, please see my recent article entitled “The $23 Trillion Credit Bubble In China Is Starting To Collapse – Global Financial Crisis Next?

#9 News that China’s manufacturing sector is contracting shook up financial markets on Thursday…

Wall Street was rattled by a key reading on China’s manufacturing which dropped below the key 50 level in January, according to HSBC. A reading below 50 on the HSBC flash manufacturing PMI suggests economic contraction.

#10 Japanese stocks experienced their biggest drop in 7 months on Thursday.

#11 The value of the Turkish Lira is absolutely collapsing.

#12 The unemployment rate in France has risen for 9 quarters in a row and recently soared to a new 16 year high.

#13 In Italy, the unemployment rate has soared to a brand new all-time record high of 12.7 percent.

#14 The unemployment rate in Spain is sitting at an all-time record high of 26.7 percent.

#15 This year, the Baltic Dry Index experienced the largest two week post-holiday decline that we have ever seen.

#16 Chipmaker Intel recently announced that it plans to eliminate 5,000 jobs over the coming year.

#17 CNBC is reporting that U.S. retailers just experienced “the worst holiday season since 2008“.

#18 A recent CNBC article stated that U.S. consumers should expect a “tsunami” of store closings in the retail industry…

Get ready for the next era in retail—one that will be characterized by far fewer shops and smaller stores.

On Tuesday, Sears said that it will shutter its flagship store in downtown Chicago in April. It’s the latest of about 300 store closures in the U.S. that Sears has made since 2010. The news follows announcements earlier this month of multiple store closings from major department stores J.C. Penney and Macy’s.

Further signs of cuts in the industry came Wednesday, when Target said that it will eliminate 475 jobs worldwide, including some at its Minnesota headquarters, and not fill 700 empty positions.

#19 The U.S. Congress is facing another deadline to raise the debt ceiling in February.

#20 The Dow fell by more than 170 points on Thursday.  It is becoming increasingly likely that “the peak of the market” is now in the rear view mirror.

And I have not even mentioned the extreme drought that has caused the U.S. cattle herd to drop to a 61 year low or the nuclear radiation from Fukushima that is washing up on the west coast.

In light of everything above, is there anyone out there that still wants to claim that “everything is going to be okay” for the global economy?

Sadly, most Americans are not even aware of most of these things.

All over the country today, the number one news headline is about Justin Bieber.  The mainstream media is absolutely obsessed with celebrity scandals, and so is a very large percentage of the U.S. population.

A great economic storm is rapidly approaching, and most people don’t even seem to notice the storm clouds that are gathering on the horizon.

In the end, perhaps we will get what we deserve as a nation.

Anarchy Along The Jersey Shore And On Long Island In The Aftermath Of Hurricane Sandy

Hurricane Sandy is another reminder of just how incredibly fragile the thin veneer of civilization that we all take for granted on a daily basis really is.  Many of the hardest hit areas along the Jersey shore and the coast of Long Island have descended into a state of anarchy.  More than 7 million people live on Long Island, and millions more live along the Jersey shore and right now they are getting a taste of what life would be like during a total economic meltdown.  At the moment, there are still approximately 4.7 million homes and businesses that do not have power.  Officials say that some of those homes and businesses may not have their power restored until the weekend of November 10th and 11th.  Meanwhile, it is getting very cold at night.  This weekend the low temperatures on Long Island are supposed to dip into the upper thirties.  There have been reports of people diving into dumpsters behind supermarkets in a desperate search for food, and there have been other reports of roaming gangs of criminals posing as officials from FEMA or Con Edison and then robbing families at gunpoint once they have gained entrance into their homes.  If people will behave like this during a temporary emergency that lasts only a few days, what would they do during a total economic collapse?  That is a frightening thing to think about.

Most gas stations along the Jersey shore and on Long Island are either totally out of gasoline or they don’t have any power to operate the gas pumps.  It is estimated that more than half of all gas stations in New York City are closed at the moment, and officials say that more than 80 percent of all gas stations in New Jersey are not able to sell gas right now.  So needless to say, the lines at the gas stations that remain open are horrific.

It is being reported that some people are waiting in line for hours for gasoline in some areas and that state troopers have actually been deployed at every gas station along the New Jersey Turnpike and the Garden State Parkway.

The following is how one New Jersey mayor described the situation

“Gas lines are stretching for a couple of miles,” said Anthony Ammiano, mayor of Freehold, N.J., who recalled the oil crisis of the 1970s. “It’s like the Jimmy Carter years. It’s a flashback of bad memories.”

There have even been reports of people literally fighting each other over gasoline…

“It’s so crazy. Cars are pulling up and people are fighting each other. There is no gas around here,” said Mena Aziz, who manages a Gulf Express station in Bay Ridge, Brooklyn. “It’s been so busy.”

According to Breitbart, there have been continuous reports of “fistfights and people bringing guns to gas stations” on Twitter.  The following are a couple of examples…

Just awful! RT @metrogypsy: Someone just pulled a knife at Greenpoint #gas station as line stretches with hours long wait #gettingrealFAST

— Camila Xavier (@camilaxavier) November 1, 2012

You know things are bad when you ask the gas station attendent “when do you think you’re going to get more gas?” and he just laughs at you.

— Prede (@predederva) November 1, 2012

Unfortunately, authorities are projecting that the gas shortage may last for another week at least.

How angry and frustrated will people get by that time?

There are vast stretches of the Jersey Shore and the coast of Long Island that will never be the same again.  The following is an excerpt from a comment that a reader of mine from Long Island left on one of my recent articles

I live in Massapequa NY …..No power to 95%. almost every home south of Merrick Road ( 1.5 miles from open water ) has been flooded. No electricity, no supermarkets in immediate area, no gas (approx 80% of gas stations closed on Long Island).

This was not just another storm.  It was a life-altering event for millions of people.

Unfortunately, just as we have seen after every other major storm in recent years, looters are taking advantage of the chaos caused by Hurricane Sandy.

According to the New York Post, a number of arrests for looting have already been made on Long Island…

In the Rockaways, lowlifes were sneaking into clothing stores and cleaning out pizzerias. Two men and a woman were arrested for robbing a BP gas station on Beach Channel Drive, three men and one woman were cuffed for pillaging a Radio Shack on Beach 88th Street, and two people were arrested for raiding a clothing store near Beach 86th Street, cops said. Stores were emptied along a two-block stretch of Mermaid Avenue in Coney Island. Seven people were busted.

Over on Coney Island, looting appeared to be out of control during the immediate aftermath of the storm…

Thieves broke in to the badly damaged Mega Aid Pharmacy on Mermaid Avenue and reportedly stole more than 10,000 pharmaceutical items, including prescription drugs.

“The water went away and these people started walking down the streets and just robbed stores,” a pharmacy worker told HuffPo’s Andy Campbell.

Manager Stan Gutkin said the major heist essentially “breaks the business.”

Looters reportedly also targeted banks, other shops, and other pharmacies.

And residents are noticing.

“People are turning on each other — they’re attacking each other,” Ocean Towers resident Dena Wells told Campbell.

Amazingly, a number of not-so-smart looters have actually been displaying their looted goods on Twitter.  Just check out the shocking photos in this article.

But most people living in the areas that were most affected by Hurricane Sandy are decent people that just want some assistance.  One resident of Hoboken, New Jersey became so frustrated that he inflated an air mattress and used it to float down to city hall in an attempt to get some answers…

Nearly 20,000 people have been trapped at home in the New Jersey city of Hoboken, just across the Hudson River from New York City, amid accusations that officials were slow to deliver food and water.

One man blew up an air mattress and floated to City Hall, demanding to know why supplies had not reached residents – at least a quarter of homes there are flooded and 90% do not have power.

Just like we saw after Hurricane Katrina, the response by the federal government and by big aid agencies such as the Red Cross has been very slow.  In fact, Staten Island Borough President James Molinaro has gone so far as to call the Red Cross an “absolute disgrace” and is urging people that live in his area to quit giving money to them…

“You know, I went to a shelter Monday night after the storm. People were coming in with no socks, with no shoes. They were in desperate need. Their housing was destroyed. They were crying. Where was the Red Cross? Isn’t that their function? They collect millions of dollars. Whenever there’s a drive in Staten Island, we give openly and honestly. Where are they? Where are they? I was at the South Shore yesterday, people were buried in their homes. There the dogs are trying to find bodies. The people there, the neighbors who had no electricity, were making soup. Making soup. It’s very emotional because the lack of a response. The lack of a response. They’re supposed to be here….They should be on the front lines fighting, and helping the people.”

If this is how angry and frustrated that people become over a temporary disaster, how angry and frustrated would they get if there was a total economic meltdown that was permanent?

Sadly, the truth is that what we are seeing during the aftermath of Hurricane Sandy is just a very small preview of what is coming on a national level.

Our economy is a complete and total mess right now, and things are going to get a whole lot worse.

When unemployment starts skyrocketing again and large segments of the population realize that there is no hope for a turnaround, many of them are going to totally give in to despair and become very desperate.

And as we are seeing along the Jersey Shore and on Long Island right now, desperate people do desperate things.

That is why I am constantly pounding on the need to prepare for what is ahead.  There are signs of social decay all around us, and most Americans are not equipped to deal with the pressures that come with a major emergency.  When things totally fall apart, you don’t want your family to be totally unprepared and surrounded by millions of angry and desperate people.

Hopefully Hurricane Sandy will serve as a wake up call for millions of American families.  Time is definitely running out, and we all need to get prepared while we still can.

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