New Vehicle Sales “Collapse” And Pending Home Sales “Plunge” As America’s Economic Slowdown Accelerates

In late 2018, the bad economic news just keeps rolling in.  At a time when consumer confidence is absolutely soaring, the underlying economic numbers are clearly telling us that enormous problems are right around the corner.  Of course this is usually what happens just before a major economic downturn.  Most people in the general population feel like the party can go on for quite a while longer, but meanwhile the warning signs just keep becoming more and more obvious.  I have been hearing from people that truly believe that the economy is “strong”, but if the U.S. economy really was in good shape would new vehicle sales be “collapsing”?

According to the latest estimates released by Edmunds, new vehicle sales for September are expected to collapse both on a monthly basis and year-over-year basis. The company predicted that 1,392,434 new cars and trucks will be sold in the U.S. in September, which makes for a estimated seasonally adjusted annual rate (SAAR) of 17 million. This will be a 5.4% decrease from last month and an 8.3% drop from September of last year.

Those are absolutely terrible numbers.

And this news comes after all of the major automakers had already revised earnings guidance lower.  The following comes from Zero Hedge

The drop in sales capped another rough month for the auto industry during which Detroit’s carmakers all revised their earnings guidance lower and Ford embarked on a five-year restructuring plan. Earlier this week, we reported that Ford’s CEO claimed that President Trump’s auto tariffs had cost the company $1 billion in profits.

Sadly, this may just be the very beginning of the auto industry’s troubles.

It is now being projected that if this trade war with China continues, U.S. automakers could see total sales fall “by 2 million vehicles per year”

Retaliation by China to tariffs already in place have made some American auto exports uncompetitive, and could collapse US auto sales by 2 million vehicles per year, resulting in the loss of up to 715,000 American jobs and a devastating hit of as much as $62 billion to the US GDP.

As per NBC News, the Center for Automotive Research (CAR) warns that the auto industry could receive a devastating blow if Section 232 declares foreign-made cars and car parts a threat to national security.

Kristin Dziczek, a vice president and senior economist at CAR, said if Section 232 is enacted, it could trigger a “downward cycle” in the auto industry – not seen since the last great recession.

And needless to say, the thousands of companies that do business with those large automakers would also lose sales and jobs.

Once these downturns get rolling, the domino effect can be absolutely devastating.

On Thursday, we also learned that pending home sales “plunged in August”

Pending home sales plunged in August, dropping 1.8% MoM (almost four times worse than expected) to its lowest since Oct 2014 (and fell 2.5% YoY) – the fourth month of annual declines in a row…

If the U.S. economy truly is “strong”, then why have we seen four monthly declines in a row?

And it isn’t just one part of the nation that is experiencing a downturn.  According to Bloomberg, all four major regions of the country showed a decline…

As Bloomberg notes, the decline, which was broad-based across all four regions, shows that higher mortgage rates, rising prices and a shortage of affordable homes continue to squeeze buyers. Existing-home sales in August matched the lowest in more than two years, while revisions to new-home sales showed a slower market than thought, according to previously released figures.

Homes are not selling like they once were.  There is a reason why one out of every four home sellers in America slashed their prices in August.  Demand is way down, and that strongly indicates that an economic slowdown is here.

When it looks like the economy is headed for a major downturn, a lot of people go out and stock up on gold, and it turns out that is precisely what global central banks have been doing

Central banks have emerged as some of the biggest buyers of gold this year, buying a total of 264 metric tons this year to reach the highest level in six years, according to analysts at Macquarie.

Of course the Federal Reserve and other central banks are trying to assure us that everything is going to be okay, but meanwhile their actions are telling us a different story.

Much of the world is already in the midst of a crippling economic crisis, and every indicator seems to be pointing to the fact that the U.S. is headed down the same path.

Even without any extenuating circumstances, the truth is that we are way overdue for a recession.  But when you throw in political chaos, exploding debt levels, an emerging market currency crisis and a trade war between the two largest economies on the entire planet, you definitely have a recipe for a perfect storm.

If you do not believe that this trade war is a big deal, you should consider the words of former Reagan administration official David Stockman

Folks, it’s not a “skirmish”. On the scale of trade warfare we are now at DEFCON 2.

At this very moment, the US is taxing $250 billion of Chinese imports or nearly half the total flow; and China is taxing $110 billion of its imports from the US or 85% of the flow.

And it’s soon going full monte. The Donald has repeatedly threatened to tariff the remaining $267 billion of Chinese imports if Beijing retaliates against his $200 billion, but, self-evidently, they already have.

The U.S. economy has found a way to muddle through for the past couple of years, and we should all hope that the economy can find a way to navigate through these current problems.

But the storm clouds are growing more ominous with each passing day, and at some point time will run out.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

The Last Days Warrior Summit is the premier online event of 2018 for Christians, Conservatives and Patriots.  It is a premium-members only international event that will empower and equip you with the knowledge and tools that you need as global events begin to escalate dramatically.  The speaker list includes Michael Snyder, Mike Adams, Dave Daubenmire, Ray Gano, Dr. Daniel Daves, Gary Kah, Justus Knight, Doug Krieger, Lyn Leahz, Laura Maxwell and many more. Full summit access will begin on October 25th, and if you would like to register for this unprecedented event you can do so right here.

15 Facts About The Imploding U.S. Economy That The Mainstream Media Doesn’t Want You To See

U.S. Economy - Public DomainYou 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!

5. U.S. factory orders have been dropping for 18 months in a row.

6. The Cass Shipping Index has been falling on a year over year basis for 14 consecutive months.

7. U.S. coal production has dropped to the lowest level in 35 years.

8. Goldman Sachs has its own internal tracker of the U.S. economy, and it has fallen to the lowest level since the last recession.

9. JPMorgan’s “recession indicators” have risen to the highest level that we have seen since the last recession.

10. Federal tax receipts and state tax receipts usually both start to fall as we enter a new recession, and that is precisely what is taking place right now.

11. The Federal Reserve’s Labor Market Conditions Index has been falling for five months in a row.

12. The employment numbers that the government released for last month were the worst that we have seen in six years.

13. According to Challenger, Gray & Christmas, layoff announcements at major firms are running 24 percent higher this year than they were at this time last year.

14. Online job postings on the business networking site LinkedIn have been declining steadily since February after 73 months in a row of growth.

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?

Temporary Help Services

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.

And Wal-Mart has announced that it is going to be eliminating “back-office accounting jobs” at approximately 500 locations

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.

And you want to know who else realizes this?

Foreign investors do.

Last month, foreign investors dumped U.S. debt at the fastest pace ever recorded

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.

There is no debate any longer – the next economic crisis is already here.  This is so abundantly obvious at this point that even George Soros has been feverishly dumping stocks and buying gold.

We can argue about whether the U.S. economy started turning down in late 2015, early 2015 or late 2014, and it is good to have those debates.

But at the end of the day, what is far more important is what is ahead.  Fortunately, our downturn has been fairly gradual so far, and let us hope that it stays that way for as long as possible.

In much of the rest of the world, things are already in full-blown panic mode.  For instance, Venezuela was once the wealthiest nation in South America, but now people are literally hunting cats and dogs for food.

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.*

The Next Employment Crisis Is Here: Job Cuts At U.S. Companies Jump 35 Percent In April

Layoffs - Public DomainShould we be alarmed that the number of job cuts announced by large U.S. companies was 35 percent higher in April than it was in March?  This is definitely a case where the trend is not our friend.  According to Challenger, Gray & Christmas, U.S. firms announced 65,141 job cuts during April, which represented a massive 35 percent increase over the previous month.  And so far this year overall, job cut announcements are running 24 percent higher than for the exact same period in 2015.  Meanwhile, on Thursday we learned that initial claims for unemployment benefits shot up dramatically last week.  In fact, the jump of 17,000 was the largest increase that we have seen in over a year.  Of course the U.S. economy has been slowing down for quite a while now, and many have been wondering when we would begin to see that slowdown reflected in the employment numbers.  Well, that day has now arrived.

At this point, U.S. firms are laying off people at a rate that we have not seen since the last financial crisis.  Here is what Zero Hedge had to say about these latest numbers…

While one can debate the veracity of the BLS’ seasonally adjusted data, one thing is certain: when a company announces it will layoff thousands, it will. So for all those who suggest that all is well with the US jobs picture based on initial claims reports, here is the latest report from Challenger according to which the pace of downsizing increased in April jumped by 35% to 65,141 during the month of April, from the 48,207 layoff announcements in March.

Looking further back, in the first four months of 2016, employers have announced a total of 250,061 planned job cuts, up 24% from the 201,796 job cuts tracked during the same period a year ago. This represents the highest January-April total since 2009, when the opening four months of the year saw 695,100 job cuts in the aftermath of the biggest financial crisis in modern history.

So what is causing this?

Why are firms laying off so many people all of a sudden?

My readers are very well aware of the pain that the energy industry is experiencing at the moment, but surprisingly it was not the energy industry that announced the most job cuts in April…

Computer firms announced 16,923 job cuts during the month; the highest total among all industries. That total includes 12,000 from chipmaker Intel, which is shifting away from the traditional desktop and laptop market and toward the mobile market. To date, computer firms have announced 33,925 job cuts, up 262 percent from a year ago, when job cuts in the sector totaled just 9,368 through the first four months of the year.

Yes, the U.S. energy industry has lost well over 100,000 good paying jobs since the beginning of last year, but the downturn is so much broader than that.  All over America corporate earnings are down, and when earnings fall it is inevitable that layoffs will follow.

As I have written about previously, earnings for companies listed on the S&P 500 have fallen a total of 18.5 percent from their peak in late 2014, and it was being projected that corporate earnings overall would be down 8.5 percent for the first quarter of 2016 compared to the same period a year ago.

And in the chart that I have posted below, you can see that corporate profits after tax have been falling precipitously since peaking in mid-2015…

corporate profits

As this new economic downturn intensifies, the layoffs will accelerate.

In plain English, that means that a whole lot more people will be losing their jobs.

Unfortunately, a very large percentage of Americans didn’t learn anything from the last crisis and are living on the financial edge.  In fact, the Federal Reserve says that 47 percent of all Americans cannot even pay an unexpected $400 emergency room bill without borrowing the money or selling something.

So just like back in 2008, we are going to see huge numbers of people unable to pay their bills when they lose their jobs.  Foreclosures are going to skyrocket, and lots and lots of families are going to be put out into the street.

This is why I have been preaching the importance of having an emergency fund for years.  It is absolutely imperative to have an emergency fund that can cover your bills for at least six months in the event that there is a job loss or some other sort of major disaster strikes.

If you have not done this already, you are probably already too late.

The cold, hard reality of the matter is that it would take most families quite a while to save up a six month emergency fund if they are starting from zero.

So if you are in this position and you lose your job, you may have to move in with family or friends when your money runs out.

I don’t mean to be cold, but this is the situation that we are facing.  The next employment crisis is already here, and it is going to get much, much worse.  No matter who becomes “the next president”, job cuts are going to accelerate and good jobs are going to become exceedingly difficult to find.

I am certainly not advocating that anyone give up.  If you still have a good job for the moment, tighten your belt and use this time to feverishly prepare the very best that you can.

Sadly, tens of millions of Americans believed that this bubble of false prosperity would keep on rolling, and so they wasted immense amounts of precious time and resources.  Now the day of reckoning is here, and vast numbers of our fellow citizens are going to discover the horror of being unprepared.

The U.S. Economy Officially Joins The Global Economic Slowdown – 1st Quarter GDP Comes In At 0.5%

Slow Down - Public DomainEven the government is admitting that the U.S. economy is slowing down.  On Thursday, we learned that U.S. GDP grew at just a 0.5 percent annual rate during the first quarter of 2016.  This was lower than analysts were anticipating, and it marks the third time in a row that the GDP number has declined compared to the previous quarter.  In other words, GDP growth has been declining for close to a year now, and this lines up perfectly with what I have been saying about how the second half of last year was a turning point that plunged us into the early chapters of a brand new economic crisis.  And as you will see below, the official GDP number is highly manipulated, and the way that it is calculated has been changed numerous times over the years.  So the bad number that is being reported by the government is actually the best case scenario.

Of course many of the “experts” being quoted by the mainstream media are saying that this is just a temporary blip and that good times for the U.S. economy are right around the corner.  For instance, check out this quote from Reuters

“The economy essentially stalled in the first quarter, but that doesn’t mean it is faltering,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Some of the restraints to growth are dissipating. Growth is likely to accelerate going forward.”

We have been told this same story for years, but the “acceleration” has never materialized.  In fact, Barack Obama is poised to become the only president in U.S. history to never have a single year when the economy grew by more than 3 percent during his presidency.

That is a statistic that is hard to believe, but it is true.

In addition, Louis Woodhill has pointed out that the average rate of U.S. economic growth during the Obama years will be the fourth worst in recorded history…

Assuming 2.67% RGDP growth for 2016, Obama will leave office having produced an average of 1.55% growth. This would place his presidency fourth from the bottom of the list of 39*, above only those of Herbert Hoover (-5.65%), Andrew Johnson (-0.70%) and Theodore Roosevelt (1.41%)

So does anyone out there still believe that there has been an “Obama recovery”?

We also need to add another layer to our analysis.  By now, everyone should realize that the official GDP number is highly manipulated, and the way that GDP is calculated has been changed many, many times over the years.

For example, here is Peter Schiff commenting on changes that were made in 2013

The latest example of this was revealed earlier this week when the Bureau of Economic Analysis (BEA) announced new methods of calculating Gross Domestic Product (GDP) that will immediately make the economy “bigger’ than it used to be. The changes focus heavily on how money spent on research and development (R&D) and the production of “intangible” assets like movies, music, and television programs will be accounted for. Declaring such expenditures to be “investments” will immediately increase U.S. GDP by about three percent. Such an upgrade would immediately increase the theoretic size of the U.S economy and may well lead to the perception of faster growth. In reality these smoke and mirror alterations are no different from changes made to the inflation and unemployment yardsticks that for years have convinced Americans that the economy is better than it actually is.

And the following originally comes from a Bloomberg article which discussed changes that were made in 2015

The way some parts of U.S. gross domestic product are calculated are about to change in the wake of the debate over persistently depressed first-quarter growth.

In a blog post published Friday, the Bureau of Economic Analysis listed a series of alterations it will make in seasonally adjusting data used to calculate economic growth. The changes will be implemented with the release of the initial second-quarter GDP estimate on July 30, the BEA said.

One of the changes that was made last year was intended to artificially boost GDP growth numbers for the first quarter of each year.

So without that artificial boost, what would the real number for the first quarter of 2016 look like?

John Williams of shadowstats.com tracks what the official government numbers would be if honest numbers were actually being used, and according to him U.S. GDP growth has been continuously negative since 2005.

But we certainly can’t have the press report those sorts of things.  If that were the case, then everyone would be talking about the “economic depression” that never seems to end.

Unfortunately, the truth is that we are in the midst of a long-term economic decline, and we can see evidence of this all around us.  For example, on Thursday we also learned that the rate of homeownership in the United States has fallen once again, and it is now hovering just 0.1 percent above the lowest level ever recorded in American history…

After gains in the second half of 2015, the homeownership rate fell to just 63.6 percent, seasonally adjusted, in the first quarter of this year, according to the U.S. Census Bureau. Homeownership hit a high of 69.4 percent in 2004, during one of the biggest housing booms in history. That was also when mortgage lending was arguably at its loosest level in history. The homeownership rate is now just one-tenth of 1 basis point higher than its all-time low in the second quarter of 2015.

For many more numbers that show that the U.S. economy has continued to decline, please see the following articles that I authored earlier this month…

#1 “Economy In Decline: Apple Reports Massive Revenue Decline As iPhone Sales Plummet Dramatically

#2 “In 1 Out Of Every 5 American Families, Nobody Has A Job

#3 “Stories Of Despair From The Forgotten People That The U.S. Economy Has Left Behind

#4 “47 Percent Of Americans Cannot Even Come Up With $400 To Cover An Emergency Room Visit

#5 “Corporations Are Defaulting On Their Debts Like It’s 2008 All Over Again

Now that U.S. GDP growth has been steadily dropping for three quarters in a row, hopefully people will wake up and begin to realize what is happening.

We are entering very hard times, so now is not the time to go out and buy fancy new toys or to go into lots of debt.

Rather, this is a time to tighten our belts, batten down the hatches and prepare for rough seas ahead.

Sadly, most people continue to have blind faith that our politicians and the central bankers will be able to perform some kind of miracle to save us from what is coming.

*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.*

Economic Collapse Is Erupting All Over The Planet As Global Leaders Begin To Panic

Earth Ready To Explode - Public DomainMainstream news outlets are already starting to use the phrase “economic collapse” to describe what is going on in some areas of our world right now.  For many Americans this may seem a bit strange, but the truth is that the worldwide economic slowdown that began during the second half of last year is starting to get a lot worse.  In this article, we are going to examine evidence of this from South America, Europe, Asia and North America.  Once we are done, it should be obvious that there is absolutely no reason to be optimistic about the direction of the global economy right now.  The warnings of so many prominent experts are now becoming a reality, and what we have witnessed so far are just the early chapters of a crushing economic crisis that will affect every man, woman and child in the entire world.

Let’s start with Brazil.  It has the 7th largest economy on the entire planet, and it is already enduring its worst recession in 25 years.  In fact, at the end of last year Goldman Sachs said that what was going on down there was actually a “depression“.

But now the crisis in Brazil has escalated significantly.

I want to share with you an excerpt from a recent article entitled “Brazil: Economic collapse worse than feared“.  I know, that title sounds like it comes directly from The Economic Collapse Blog, but I didn’t write it.

It actually comes from CNN

Amid political chaos, Brazil’s economic collapse is worse than its government once believed.

In the midst of rising calls to impeach President Dilma Rousseff, Brazil’s central bank announced Thursday that it now expects the country’s economy to shrink 3.5% this year.

That’s worse than the central bank’s previous estimate for a 1.9% contraction. The darker forecast matches what the International Monetary Fund projected for Brazil — Latin America’s largest country — and what many independent economists have suspected.

It is one thing for Michael Snyder to tell you that Brazil is in the midst of “economic collapse”, but it is another thing entirely for CNN to say it.

And of course I have been warning about the crisis down in Brazil for quite some time now.  For much more on this, please see my previous article entitled “The Economic Collapse Of South America Is Well Underway“.

Meanwhile, things are actually much worse in Venezuela than they are in Brazil.  Food and basic supplies are in short supply, the inflation rate has hit 720 percent, and crime is completely out of control.

The following is from an article in the Independent entitled “Venezuela is on the brink of complete economic collapse“…

The only question now is whether Venezuela’s government or economy will completely collapse first.

The key word there is “completely.” Both are well into their death throes. Indeed, Venezuela’s ruling party just lost congressional elections that gave the opposition a veto-proof majority, and it’s hard to see that getting any better for them any time soon — or ever.

Incumbents, after all, don’t tend to do too well when, according to the International Monetary Fund, their economy shrinks 10 percent one year, an additional 6 percent the next, and inflation explodes to 720 percent. It’s no wonder, then, that markets expect Venezuela to default on its debt in the very near future. The country is basically bankrupt.

Once again we see a very respected mainstream publication using the phrase “economic collapse” to describe what is happening in South America.

You can find some stunning video of the “economic Armageddon” that is taking place in Venezuela right here.  I would encourage you to watch that video, because what is happening down there will eventually be happening here.

Meanwhile, over in Europe the collapse of the Italian banking system has entered a disturbing new chapter.  Italy’s finance minister has called a meeting in Rome for Monday that will be focusing on a “last resort” bailout plan for the troubled banks…

Finance minister Pier Carlo Padoan has called a meeting in Rome on Monday with executives from Italy’s largest financial institutions to agree final details of a “last resort” bailout plan.

Yet on the eve of that gathering, concerns remain as to whether the plan will be sufficient to ringfence the weakest of Italy’s large banks, Monte dei Paschi di Siena, from contagion, according to people involved in the talks.

Italian bank shares have lost almost half their value so far this year amid investor worries over a €360bn pile of non-performing loans — equivalent to about a fifth of GDP. Lenders’ profitability has been hit by a crippling three-year recession.

As Italy descends into financial chaos, the rest of the continent better be paying attention.

Do you remember how hard it was for the rest of Europe to rescue Greece?

Well, Greece has the 44th largest economy on the planet.

Italy has the 8th.

It would be hard to overstate the seriousness of what is going on over in Europe, and it is not just Italy we are talking about.  All over the continent major banks are in deep trouble, and the chairman of France’s second largest  retail bank recently told reporters that “I am much more worried than I was in 2009“.

And there is very good reason for concern.  On Sunday, we learned that a major “bail-in” had just been announced for one of Austria’s most prominent banks.  The following comes from Zero Hedge

And then today, following a decision by the Austrian Banking Regulator, the Finanzmarktaufsicht or Financial Market Authority, Austria officially became the first European country to use a new law under the framework imposed by Bank the European Recovery and Resolution Directive to share losses of a failed bank with senior creditors as it slashed the value of debt owed by Heta Asset Resolution AG.

The highlights from the announcement:

Today, the Austrian Financial Market Authority (FMA) in its function as the resolution authority pursuant to the Bank Recovery and Resolution Act (BaSAG – Bundesgesetz über die Sanierung und Abwicklung von Banken) has issued the key features for the further steps for the resolution of HETA ASSET RESOLUTION AG. The most significant measures are:

  • a 100% bail-in for all subordinated liabilities,
  • a 53.98% bail-in, resulting in a 46.02% quota, for all eligible preferential liabilities,
  • the cancellation of all interest payments from 01.03.2015, when HETA was placed into resolution pursuant to BaSAG,
  • as well as a harmonisation of the maturities of all eligible liabilities to 31.12.2023.

According to the current resolution plan for HETA, the wind-down process should be concluded by 2020, although the repayment of all claims as well as the legally binding conclusion of all currently outstanding legal disputes will realistically only be concluded by the end of 2023. Only at that point will it be possible to finally distribute the assets and to liquidate the company.

The dominoes are starting to fall in Europe, and I would expect even bigger announcements in the weeks and months to come.

Over in Asia, economic chaos is beginning to prevail as well.

In China, the stock market is already down more than 40 percent from the peak, Chinese exports were down 25.4 percent on a year over year basis in February, and Chinese economic numbers overall have not been this poor since the depths of the last global recession.

At the same time, the Japanese economy is really struggling right now.  As I wrote about the other day, Japanese GDP has shrunk for two out of the last three quarters, we just saw Japanese industrial production experience the biggest one month decline that we have witnessed since the tsunami of 2011, and business sentiment has fallen to a three year low.  The Nikkei has dropped by about 5,000 points from where it was last summer, and some analysts believe that Japanese markets “are being destroyed” due to massive intervention by the Bank of Japan.

Here in the United States, we haven’t been hit quite as hard as the rest of the world just yet, but there are lots of very disturbing warning signs all around us.

At the end of last week, we learned that it is being projected that U.S. GDP will have grown by just 0.1 or 0.2 percent during the first quarter of 2016.  And on Monday corporate earnings reporting season begins, and it is expected to be a very, very bad one.  The following comes from Business Insider

We are about to get confirmation that earnings growth for America’s biggest companies was negative in the first quarter, compared to the same period a year ago.

When aluminum giant Alcoa releases its results on Monday, it will mark the unofficial start of the heaviest reporting season for S&P 500 companies.

The final scoreboard is expected to show a 9.1% earnings drop for the quarter, according to FactSet senior earnings analyst John Butters.

If these projections turn out to be accurate, it will be the fourth quarter in a row of earnings declines.  This is something that we never see outside of a recession.

And for a whole bunch more numbers which indicate that the U.S. economy is in very serious trouble, please see my previous article entitled “19 Facts That Prove Things In America Are Worse Than They Were Six Months Ago“.

Of course I am just another voice in the crowd when it comes to predicting that the U.S. economy is headed for rough times.  For example, just check out what Societe Generale economist Albert Edwards is saying

A tidal wave is coming to the US economy, according to Albert Edwards, and when it crashes it’s going to throw the economy into recession.

…the profit recession facing American corporations is going to lead to a collapse in corporate credit.

“Despite risk assets enjoying a few weeks in the sun our fail-safe recession indicator has stopped flashing amber and turned to red”

He continued:

Whole economy profits never normally fall this deeply without a recession unfolding. And with the US corporate sector up to its eyes in debt, the one asset class to be avoided — even more so than the ridiculously overvalued equity market — is US corporate debt. The economy will surely be swept away by a tidal wave of corporate default.

As you can see, it isn’t just one nation or one region of the world that we need to be concerned about.

Economic chaos is erupting literally all over the planet, and global leaders are starting to panic.

Unfortunately, they have had seven years to try to fix things since the last global recession, and they didn’t get the job done.  Anyone that believes that by some miracle they will be able to pull us out of the fire this time and that everything will somehow be okay is simply engaged in wishful thinking.

*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.*

Welcome To The New Normal: The Dow Crashes Another 390 Points And Wal-Mart Closes 269 Stores

Welcome to the new normalDid you know that 15 trillion dollars of global stock market wealth has been wiped out since last June?  The worldwide financial crisis that began in the middle of last year is starting to spin wildly out of control.  On Friday, the Dow plunged another 390 points, and it is now down a total of 1,437 points since the beginning of this calendar year.  Never before in U.S. history have stocks ever started a year this badly.  The same thing can be said in Europe, where stocks have now officially entered bear market territory.  As I discussed yesterday, the economic slowdown and financial unraveling that we are witnessing are truly global in scope.  Banks are failing all over the continent, and I expect major European banks to start making some huge headlines not too long from now.  And of course let us not forget about China.  On Friday the Shanghai Composite declined another 3.6 percent, and overall it is now down more than 20 percent from its December high.  Much of this chaos has been driven by the continuing crash of the price of oil.  As I write this article, it has dipped below 30 dollars a barrel, and many of the big banks are projecting that it still has much farther to fall.

The other night, Barack Obama got up in front of the American people and proclaimed that anyone that was saying that the economy was not recovering was peddling fiction.  Well, if the U.S. economy is doing so great, then why in the world has Wal-Mart decided to shut down 269 stores?…

Walmart (WMT) will close 269 stores around the world in a strategic move to focus more on its supercenters and e-commerce business, the company said Friday.

The closures include 154 U.S. locations, encompassing Walmart’s entire fleet of 102 ‘Express’ format stores, its smallest stores that have been in pilot testing since 2011. Some supercenters, Sam’s Club locations and Neighborhood Markets will also close, plus 115 stores in Latin American markets. The closures were decided based on financial performance and how well the locations fit with Walmart’s broader strategy, says Greg Hitt, a company spokesman.

We have grown accustomed to other major retailers shutting down stores, but this is Wal-Mart.

Wal-Mart doesn’t retreat.  For decades, Wal-Mart has been on a relentless march forward.  They have been an unstoppable juggernaut that has expanded extremely aggressively and that has ruthlessly crushed the competition.

I was absolutely stunned when I saw that they were going to close down 269 stores.  If you want to know if your local store is in danger, you can view the full list right here.

Overall, 10,000 Wal-Mart employees will be affected.  I could understand closing down a few underperforming stores, but if the U.S. economy truly is in great shape then it wouldn’t make any sense at all to shut down hundreds of stores.

What in the name of Sam Walton is going on out there?

The truth, of course, is that the U.S. economy is in great danger.  We have now entered the next great crisis, but most communities around the country never even recovered from the last one.  In fact, the Wall Street Journal is reporting that a whopping 93 percent of all counties in the United States “have failed to fully recover” from the last recession…

More than six years after the economic expansion began, 93% of counties in the U.S. have failed to fully recover from the blow they suffered during the recession.

Nationwide, 214 counties, or 7% of 3,069, had recovered last year to prerecession levels on four indicators: total employment, the unemployment rate, size of the economy and home values, a study from the National Association of Counties released Tuesday found.

The next few weeks are going to be very interesting to watch.  The economic fundamentals continue to deteriorate, and the financial markets are finally starting to catch up with economic reality.

As the collapse on Wall Street accelerates, we are going to increasingly see panic selling and forced liquidations.  In the past, it was mostly humans that had their hands on the controls during market crashes, but today the machines are making more of the decisions than ever before.  The following comes from CNBC

The new market age is decidedly different: Rather than that seething cacophony, aggressive corrections like the current ones are directed by a faceless metronome of computer-generated orders, triggering irresistible momentum and trillions in losses.

Amid it all, market veterans are left to ponder when the script will flip and market direction will turn not by newfound optimism among traders in the pits, but rather by algorithms that generate “buy” rather than “sell” signals.

It feels like sell program after sell program,” said Michael Cohn, chief market strategist at Atlantis Asset Management, a boutique firm in New York. “It seems to happen first thing in the morning, and then however the market transpires during the day is how they close it. If it looks like it’s coming back, they’ll take it at the end. If if looks like it’s heading lower, they’ll slam it at the end of the day.”

Earlier today, an article authored by Michael Pento entitled “A recession worse than 2008 is coming” was posted on CNBC.  Here is a short excerpt…

But a recession has occurred in the U.S. about every five years, on average, since the end of WWII; and it has been seven years since the last one — we are overdue.

Most importantly, the average market drop during the peak to trough of the last 6 recessions has been 37 percent. That would take the S&P 500 down to 1,300; if this next recession were to be just of the average variety.

But this one will be worse.

If stocks do drop a total of 37 percent, that would just bring them back to levels that would be considered “normal” or “average” by historical standards.  There is certainly the possibility that they could fall much farther than that.

And of course the markets are so incredibly fragile at this point that any sort of a “trigger event” could cause a collapse of epic proportions.

All it is going to take is a major disaster or emergency of some sort.

Do you have a feeling that something really bad is about to happen?  This is something that I have been hearing from people that I respect, and I would like to know if it is a phenomenon that is more widespread.  If you have been feeling something like this, please feel free to share it with us by posting a comment below…

The U.S. Dollar Has Already Caused A Global Recession And Now The Fed Is Going To Make It Worse

Dollar Hands - Public DomainThe 7th largest economy on the entire planet, Brazil, has been gripped by a horrifying recession, as has much of the rest of South America.  But it isn’t just South America that is experiencing a very serious economic downturn.  We have just learned that Japan (the third largest economy in the world) has lapsed into recession.  So has Canada.  So has Russia.  The dominoes are starting to fall, and it looks like the global economic crisis that has already started is going to accelerate as we head into the end of the year.  At this point, global trade is already down about 8.4 percent for the year, and last week the Baltic Dry Shipping Index plummeted to a brand new all-time record low.  Unfortunately for all of us, the Federal Reserve is about to do something that will make this global economic slowdown even worse.

Throughout 2015, the U.S. dollar has been getting stronger.  That sounds like good news, but the truth is that it is not.  When the last financial crisis ended, emerging markets went on a debt binge unlike anything we have ever seen before.  But much of that debt was denominated in U.S. dollars, and now this is creating a massive problem.  As the U.S. dollar has risen, the prices that many of these emerging markets are getting for the commodities that they export have been declining.  Meanwhile, it is taking much more of their own local currencies to pay back and service all of the debts that they have accumulated.  Similar conditions contributed to the Latin American debt crisis of the 1980s, the Asian currency crisis of the 1990s and the global financial crisis of 2008 and 2009.

Many Americans may be wondering when “the next economic crisis” will arrive, but nobody in Brazil is asking that question.  Thanks to the rising U.S. dollar, Brazil has already plunged into a very deep recession

As Brazilian president Dilma Rousseff combats a slumping economy and corruption accusations, the country’s inflation surged above 10 percent while unemployment jumped to 7.9 percent, according to the latest official data. The dour state of affairs has Barclays forecasting a 4 percent economic contraction this year, followed by 3.3 percent shrinkage next year, the investment bank said in a research note last week.

The political and economic turmoil has recently driven the real, Brazil’s currency, to multiyear lows, a factor helping to stoke price pressures.

And as I mentioned above, Brazil is far from alone.  This is something that is happening all over the planet, and the process appears to be accelerating.  One of the places where this often first shows up is in the trade numbers.  The following comes from an article that was just posted by Zero Hedge

This market is looking like a disaster and the rates are a reflection of that,” warns one of the world’s largest shipbrokers, but while The Baltic Dry Freight Index gets all the headlines – having collapsed to all-time record lows this week – it is the spefics below that headline that are truly terrifying. At a time of typical seasonal strength for freight and thus global trade around the world, Reuters reports that spot rates for transporting containers from Asia to Northern Europe have crashed a stunning 70% in the last 3 weeks alone. This almost unprecedented divergence from seasonality has only occurred at this scale once before… 2008! “It is looking scary for the market and it doesn’t look like there is going to be any life in the market in the near term.”

Many “experts” seem mystified by all of this, but the explanation is very simple.

For years, global economic growth was fueled by cheap U.S. dollars.  But since the end of QE, the U.S. dollar has been surging, and according to Bloomberg it just hit a 12 year high…

The dollar traded near a seven-month high against the euro before the release of minutes of the Federal Reserve’s October meeting, when policy makers signaled the potential for an interest-rate increase this year.

A trade-weighted gauge of the greenback is at the highest in 12 years as Fed Chair Janet Yellen and other policy makers have made numerous pronouncements in the past month that it may be appropriate to boost rates from near zero at its Dec. 15-16 gathering. The probability the central bank will act next month has risen to 66 percent from 50 percent odds at the end of October.

But even though the wonks at the Federal Reserve supposedly know the damage that a strong dollar is already doing to the global economy, they seem poised to make things even worse by raising interest rates in December

Most Federal Reserve policymakers agreed last month that the economy “could well” be strong enough in December to withstand the Fed’s first Interest rate hike in nearly a decade, according to minutes of its meeting Oct. 27-28.

The officials said global troubles had eased and a delay could increase market uncertainty and undermine confidence in the economy.

The meeting summary provides the clearest evidence yet that a majority of Fed policymakers are leaning toward raising the central bank’s benchmark rate next month, assuming the economy continues to progress.

Considering the tremendous amount of damage that has already been done to the global economy, this is one of the stupidest things that they could possibly do.

But it looks like they are going to do it anyway.

It has been said that those that refuse to learn from history are doomed to repeat it.

And right now so many of the exact same patterns that we saw just before the great financial crisis of 2008 are playing out once again right in front of our eyes.

A lot of people out there seem to assume that once we got past the September/October time frame that we were officially out of “the danger zone”.

But that is not true at all.

The truth is that we have already entered a new global economic downturn that is rapidly accelerating, and the financial shaking that we witnessed in August was just a foreshock of what is coming next.

Let us hope that common sense prevails and the Fed chooses not to raise interest rates at their next meeting.

Because if they do, it will just make the global crisis that is now emerging much, much worse.