The stock market has been on quite a roll in recent weeks, but signs of trouble continue to plague the real economy. Earlier this week, I talked about the “retail apocalypse” that is sweeping America. Major retail chains such as Sears and Macy’s are closing stores and laying off workers, but I didn’t think that Wal-Mart would be feeling the pain as well. Unfortunately, that is precisely what is happening. USA Today is reporting that approximately 1,000 jobs will be cut at Wal-Mart’s corporate headquarters in Bentonville, Arkansas by the end of this month…
Walmart’s plan to lay off of hundreds of employees is the latest ripple in a wave of job cuts and store closures that are roiling the retail industry.
The world’s largest retailer is cutting roughly 1,000 jobs at its corporate headquarters in Bentonville, Ark., later this month, according to a person familiar with the matter who was not authorized to speak about it.
The company is saying that these cuts are necessary because Wal-Mart is always “looking for ways to operate more efficiently and effectively“. But something doesn’t smell right here. You don’t get rid of 1,000 employees at your corporate headquarters if everything is just fine.
I have driven past Wal-Mart’s headquarters in Bentonville a number of times, and it is in a beautiful part of the country. Bentonville and the surrounding areas had been booming, but it looks like times may be changing.
Meanwhile, there are signs of trouble out on the west coast as well. The Los Angeles Times is reporting that there is going to be a new round of engineering job cuts at Boeing…
Boeing Co. has internally announced a new round of employee buyouts for engineers companywide, including in Southern California, and warned that layoff notices will follow later this month to engineers in Washington state, where the company has a large presence.
Management did not cite a target for the number of projected job cuts.
The news comes after company Vice Chairman Ray Conner and the new chief executive of Boeing Commercial Airplanes, or BCA, Kevin McAllister, warned in December of the need to aim for further cuts in 2017.
And according to Boeing spokesperson Doug Alder, similar job cut announcements are coming for other classes of workers as well.
So why is Boeing getting rid of so many employees?
Well, the truth is that Boeing’s business is way down. The following comes from Wolf Richter…
Business has been tough. In 2016, deliveries fell by 14 jets from a year ago, to 748. Net orders dropped 13% from an already rotten level in 2015, to just 668, down 53% from 2014. And the lowest level since 2010!
When the economy is doing well, air traffic tends to rise, and when the economy is doing poorly it tends to go down.
Needless to say, the fact that Boeing is doing so poorly does not bode well for the future.
In addition to Wal-Mart, another major retailer that is letting people go is Petco…
Petco is cutting 180 positions with about 50 at its San Diego headquarters, the pet supply retailer confirmed Wednesday.
The company made the cuts across its workforce and include both existing and open positions.
Petco has about 650 workers at its headquarters in Rancho Bernardo. It employs 27,000 in the U.S.
My wife and I have three cats, and even though Petco tends to be a bit overpriced we have always appreciated the work that they do.
Unfortunately, when the economy gets tough spending on pets tends to be one of the first things to get cut back, and this current trouble at Petco could be a sign that rough sledding is ahead for the entire economy.
Of course your personal perspective on these things is likely to be very heavily influenced by your immediate surroundings. Those that live in wealthy enclaves of major cities such as San Francisco, New York City or Washington D.C. may be wondering how anyone could possibly be talking about economic trouble right now.
But if you live in economically depressed areas of Appalachia or the upper Midwest, it may seem like the last economic recession never even ended.
There have been pockets of economic prosperity in recent years, and this has resulted in some people becoming exceedingly wealthy. Meanwhile, things have just continued to become even tougher for millions of other families as the cost of living always seems to grow faster than their paychecks do.
If you are in the top one percent of all income earners, maybe to you it seems like things have never been better. But most of the country is living paycheck to paycheck and is just struggling to survive from month to month. The following comes from CNN…
The rich are money-making machines. Today, the top mega wealthy — the top 1% — earn an average of $1.3 million a year. It’s more than three times as much as the 1980s, when the rich “only” made $428,000, on average, according to economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman.
Meanwhile, the bottom 50% of the American population earned an average of $16,000 in pre-tax income in 1980. That hasn’t changed in over three decades.
The workers being laid off at the companies discussed above are real people with real hopes and real dreams. Perhaps many of them will be able to land other employment fairly soon, but the truth is that the job market is really tough in many areas of the country right now.
Finding a good job that will allow you to pay the bills and support your family is not easy. You may find that out the hard way if you end up losing your current job during the economic troubles that will come in 2017.
Earlier today, I came across an excellent article by Gail Tverberg that detailed a whole bunch of reasons why a significant economic downturn appears to be imminent in 2017. If you would like to read it, you can find it here. She points to many of the same things that I have been pointing to for a very long time.
Even though economic conditions were fairly stable throughout 2016, our long-term problems just continued to get even worse. So the truth is that we are more primed for a major crisis today than we have been at any point since the last recession.
My hope is that things will not be nearly as bad in 2017 as Gail Tverberg and others are projecting that they could be, but the warning signs are definitely there, and it isn’t going to take much to push the U.S. economy off the rails.
The election of Donald Trump has sent shockwaves through the U.S. economy and the U.S. financial system. Since November 8th, the Dow has hit a brand new all-time record high, the U.S. dollar has strengthened greatly, and bank stocks are way up. But not all of the economic news is good news. Unlike stocks, bonds have reacted very negatively to Trump’s election victory. The past week has been an absolute bloodbath for bond traders, and as you will see below this is going to have dramatic implications for all U.S. consumers moving forward.
Over just a two day period, more than a trillion dollars was wiped out as bond yields spiked all over the globe. As CNN has noted, this type of “violent reaction” in the bond market has only happened three other times within the past ten years…
The rate on 10-year Treasury notes has surged to 2.3%, from 1.77% before the election. Last week’s spike in Treasury rates was so big, that it had only happened three times before in the last decade.
BlackRock’s Russ Koesterich called it a “violent reaction.”
The move stands to have broad repercussions for all Americans. Not only will the U.S. government have to pay more to borrow money, but mortgage rates and car loan costs should also rise. That’s because Treasuries are used as the benchmark for many other forms of credit.
As interest rates rise, virtually everyone in our society is going to feel the pain.
Those that need an auto loan in order to purchase a vehicle are going to find that loan payments are significantly higher than they were before.
Credit card rates will also go up, and those just getting out of school will discover that their student loan payments are even more suffocating.
But the biggest impact will be felt in the housing market. The average rate on a 30-year fixed mortgage just hit the psychologically-important 4 percent barrier, and that could mean big trouble for the housing market in 2017…
The average contract rate on the popular 30-year fixed mortgage hit 4 percent, according to Mortgage News Daily, a level most didn’t expect to see until the middle of next year. Rates have now moved nearly a half a percentage point higher since Donald Trump was elected president.
“The situation on the ground is panicked. Damage control,” said Matthew Graham, chief operating officer of Mortgage News Daily. “People were trying to lock loans quickly last week and are now facing a tough choice to lock today or hope for a bounce. Many hoped for a bounce last week heading into the long weekend and we obviously didn’t get it.”
Rising interest rates was one of the key factors that precipitated the financial crisis of 2008, and many fear that it could happen again.
And without a doubt, this rise in rates is going to affect the affordability of homes that are already on the market…
“If you’re going to buy a house and your mortgage payment went up by $200 or $300, you may buy a smaller house. There’s impact on interest rate sensitive sectors, like autos and housing, and also corporate bonds themselves, where financial engineering has helped juice up the equity market,” said George Goncalves, head of rate strategy at Nomura.
In addition, rising rates will make it more difficult for those with adjustable rate mortgages to keep their homes. Foreclosure activity was already up 27 percent during the month of October, and many are projecting that we could see another giant spike in foreclosures during the months ahead that is similar to what we saw during the last financial crisis.
Many Trump supporters don’t really care what the rest of the world thinks of our new president, but this is an area where what the rest of the world thinks really, really matters.
The truth is that the rest of the planet is not all too fond of Trump, and if that makes them a lot less eager to lend us money that is a major problem.
The only way that we can maintain our massively inflated debt-fueled standard of living is to continue to borrow gigantic mountains of money from the rest of the world at ultra-low interest rates.
If the rest of the world starts demanding higher rates of return now that Trump is president, we are going to experience economic pain on a scale that most Americans don’t believe is possible.
One of our big lenders has been China, and right now they are deeply concerned about what a Trump presidency might mean. Trump has talked very tough about trade with China, and the Chinese are gearing up for a major trade war. The following comes from CNBC…
During his election campaign this year, Trump spoke of a 45 percent import tariff on all Chinese goods while failing to outline how it would work. Should any such policy come into effect, China will take a “tit-for-tat approach”, according to an opinion piece in the Global Times, a newspaper backed by the Communist party.
“A batch of Boeing orders will be replaced by Airbus. U.S. auto and iPhone sales in China will suffer a setback, and U.S. soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the U.S.,” the Global Times article read.
Most Trump supporters assume that since Trump has been a very successful businessman that he will be able to strengthen the U.S. economy.
But it isn’t that simple.
The only reason we are able to live the way that we live today is because we have been able to borrow trillions upon trillions of dollars at irrationally low interest rates.
The moment the rest of the world decides that they are not going to loan us money at irrationally low interest rates any longer the game is over, and it won’t really matter who is in the White House at that point.
So watch interest rates very carefully. If they keep going up, it is inevitable that a major economic slowdown will follow no matter what economic policies the new Trump administration implements.
Did you know that our planet will be hit by more than 100,000 earthquakes of magnitude 3.0 or greater this year alone? Earlier today, I came across a report that contained this amazing fact, but it was so incredible that I felt that I had to go and verify it myself. So I went to the official USGS website, and I found out that this is actually true. Overall, there are about half a million earthquakes around the globe each year, but it is only when a quake is of about magnitude 3.0 or greater that humans actually feel them. As the very large earthquakes in Italy and Myanmar within the last 24 hours have demonstrated, the shaking of our planet is getting worse, and this is something that I have written about over and over again. So why is this happening? Why does the crust of our planet seemingly become more and more unstable with each passing year?
We need to start addressing those questions, because there aren’t too many things that can do more damage to a community than a major earthquake. Very early Wednesday morning, a magnitude 6.2 earthquake struck central Italy. It is being reported that it sounded “like a bomb” went off, and it looks like this is going to end up being the worst natural disaster to hit Italy in many years.
This earthquake rattled buildings in Rome, it could be felt in Naples to the south, and it is even being claimed that it could be felt all the way up in Bologna in the north.
The epicenter of the quake was a charming little Italian town known as Amatrice. According to Mayor Sergio Pirozzi, “the town is no more” at this point. You can see some amazing photographs of the destruction for yourself right here. Homes, churches and businesses collapsed in heaps of rubble, and at this moment rescuers are engaged in a frantic race against time to pull survivors from the wreckage…
Rescue teams using bulldozers, and aided by townspeople with their bare hands, were still poring through the piles of rock, metal and wood late Wednesday looking for possible survivors. Police near the town of Ascoli said they could hear cries for help from under the rubble but lacked the heavy equipment to move the rocks, according the RAI radio.
“We need chain saws, shears to cut iron bars, and jacks to remove beams: everything, we need everything,” civil protection worker Andrea Gentili told the Associated Press.
So far, the death toll stands at 159 people, but that number is going to go way up as more bodies are discovered. The following was reported by Reuters…
One hotel that collapsed in the small town of Amatrice probably had about 70 guests, and only seven bodies had so far been recovered, said the mayor of the town that was one of the worst hit by the quake.
But as destructive as the Italian quake was, it wasn’t even the largest earthquake on the globe on Wednesday. A huge magnitude 6.8 earthquake struck Myanmar, but because that earthquake was much deeper it didn’t do the same level of damage as the quake in Italy did…
A powerful earthquake shook Myanmar on Wednesday, killing at least three people and damaging nearly a hundred ancient Buddhist pagodas in the former capital of Bagan, a major tourist site, officials said.
The U.S. Geological Survey said the magnitude 6.8 quake was centered about 25 kilometers (15 miles) west of Chauk, a town south of Bagan. It was located fairly far below the Earth’s surface at a depth of about 84 kilometers (52 miles), it said.
Sadly, most Americans couldn’t care less about what goes on in places like Italy or Myanmar. I know that may sound terrible, but it is true.
However, Americans should care, because this global rise in earthquake activity is affecting us as well. In fact, the USGS now says that human activity may at least be partially to blame for the “dramatic increase in seismicity” that we have been witnessing in the United States in recent years…
On Monday, for the first time, the U.S. Geological Survey has released an analysis of the magnitude of “human-induced” earthquakes. That such a thing as human-induced earthquakes can exist is scary enough, but the “dramatic increase in seismicity” in places such as Oklahoma has forced the USGS to consider the threat more broadly.
“By including human-induced events, our assessment of earthquake hazards has significantly increased in parts of the U.S.,” said Mark Petersen, chief of the USGS National Seismic Hazard Mapping Project, in a statement. “This research also shows that much more of the nation faces a significant chance of having damaging earthquakes over the next year, whether natural or human-induced.”
And I wanted to note that there was a magnitude 3.9 earthquake in Colorado on Tuesday. We have started to see sizable earthquakes in many portions of the country where they are not expected, and this is going to continue to get worse as the shaking of our planet intensifies.
There is one more thing that I wanted to share with you all today. I don’t know if this is related to anything, but a blood red moon was photographed directly behind the new World Trade Center tower last night. To some people this is just a meaningless coincidence, but there are others that consider it to be a very ominous sign.
This summer, things have been relatively calm and peaceful in America. Donald Trump and Hillary Clinton have dominated the headlines, but other than the election there really hasn’t been a major crisis that has grabbed the attention of the nation.
But of course all of that could change in a moment. Despite all of our advanced technology, the truth is that we are still virtually defenseless against a major natural disaster.
Scientists tell us that it is inevitable that a great New Madrid earthquake will shake the center of the country. They also tell us that it is inevitable that there will be a major earthquake in southern California, that volcanoes on the west coast will erupt again, and that the Yellowstone supervolcano could wipe out much of the country in a single day.
As global seismic activity continues to rise, it is just a matter of time before a string of historic disasters hits this nation.
Unfortunately, I am convinced that this could happen a lot sooner than most people would dare to imagine.
Corporate revenues in the United States have been falling for quite some time, but now some of the biggest companies in the entire nation are reporting extremely disappointing results. On Tuesday, Apple shocked the financial world by reporting that revenue for the first quarter had fallen 7.4 billion dollars compared to the same quarter last year. That is an astounding plunge, and it represents the very first year-over-year quarterly sales decline that Apple has experienced since 2003. Analysts were anticipating some sort of drop, but nothing like this. And of course last week we learned that Google and Microsoft also missed revenue and earnings projections for the first quarter of 2016. The economic crisis that began during the second half of 2015 is really starting to take hold, and even our largest tech companies are now feeling the pain.
This wasn’t supposed to happen to Apple. No matter what else has been going on with the U.S. economy, Apple has always been unshakeable. Even during the last recession we never saw a year-over-year decline like this…
Apple today announced financial results for the second fiscal quarter (first calendar quarter) of 2016. For the quarter, Apple posted revenue of $50.6 billion and net quarterly profit of $10.5 billion, or $1.90 per diluted share, compared to revenue of $58 billion and net quarterly profit of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter. As expected, the year-over-year decline in quarterly revenue was the first for Apple since 2003.
I think that this announcement by Apple is waking a lot of people up. The global economic slowdown is real, and we can see this in iPhone sales. During the first quarter, Apple sold 16 percent fewer iPhones than it did during the same quarter in 2015. This is the very first year-over-year quarterly sales decline for the iPhone ever. Here are some of the specific sales figures from the Apple announcement…
Apple sold 51.1 million iPhones during the quarter, down from 61.2 million a year earlier, while Mac sales were 4.03 million units, down from from 4.56 million units in the year-ago quarter. iPad sales were also down once again, falling to 10.25 million from 12.6 million.
Once these numbers hit the wires, shares of Apple immediately began to plummet during after-hours trading. In fact, USA Today is reporting that Apple has already lost 43 billion dollars in market value since the annoucement…
Shares of Apple are getting hit roughly 8% in after-hours trading, tumbling to $96.67. They closed in regular trading at $104.35, or down 0.7%, putting them down 0.9% for the year. The downward move in after-hours trading means the company shed $43 billion in market value based on after-hours trading.
Meanwhile, shares of Twitter are crashing in after-hours trading after the social media giant also announced very disappointing results. The stock has now dripped below 16 dollars a share, and the company continues to lose tremendous amounts of money…
For all its other travails, Twitter is unprofitable. It narrowed its loss but still recorded a loss of $79.7 million, or 12 cents a share, compared with a loss of $162.4 million, or 25 cents a share, in the year-ago quarter.
Of course it isn’t just the tech giants that are troubled these days.
On Tuesday we learned that same-store sales for Chipotle declined by a whopping 29.7 percent during the first quarter, and appliance manufacturer Whirlpool has seen sales fall all over the planet…
Whirlpool, the world’s biggest appliance manufacturer, has become the poster child for the deep challenges facing multinational companies these days.
– Latin American sales plunged 22%.
– Revenue fell 8% in Europe, Middle East and Africa.
– Asia sales dipped 2%.
When is it finally going to sink in for most people? The global economy is slowing down significantly, and the next global economic crisis is already here.
Of course the oil companies are feeling more pain than anyone else. According to CNN, the crash in the price of oil has cost the 40 largest publicly-traded U.S. oil producers 67 billion dollars…
American oil companies are drowning in a sea of red ink.
The crash in crude oil prices caused a stunning $67 billion in combined losses by 40 publicly-traded U.S. oil producers last year, according Energy Information Administration research. And the bleeding is expected to continue at least early this year for many.
The losses surpassed $1 billion each from struggling oil companies like EOG Resources (EOG), Devon Energy (DVN) and Linn Energy (LINE) as well as SandRidge Energy (SD), the shale oil driller that recently admitted it’s exploring a bankruptcy filing.
That is an astounding amount of money.
These days we throw around terms like “millions” and “billions” so much that they almost lose their meaning.
But this is real money that we are talking about here.
In recent days, Barack Obama has been running around boasting that he saved the world economy from another Great Depression. But that isn’t true at all. Instead, our “leaders” have simply set the stage for a larger and more painful crisis. I like the way that Doug Casey recently put it…
You’ve got to remember that all of these governments and central banks all around the world have driven interest rates not just to zero, but to negative levels in some cases… and they are simultaneously printing up trillions of currency units. And even while they are desperately doing that the economy is falling apart in lots of different ways.
…They’ve created a super-bubble in bonds, a bubble in stocks, and meanwhile commodities have collapsed and are below production costs in many cases.
…The economy is going to be very, very bad… It’s the next stage of what I call the Greater Depression.
Whether you want to call it a “Great Depression”, a “Greater Depression” or “The Greatest Depression”, the truth is that we are heading into a period of time that will be unlike anything any of us have ever experienced before.
The greatest debt bubble in the history of the planet is starting to implode, and this time the central bankers and the politicians are not going to be able to put the pieces back together again.
But just like in 2008, the vast majority of the population will not recognize the warning signs until it is way too late.
*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 7th largest economy on the entire planet is completely imploding. I have written previously about the economic depression that is plaguing Brazil, but since my last article it has gotten much, much worse. During 2015, Brazil’s economy shrank by 3.8 percent, but for the most recent quarter the decline was 5.89 percent on a year over year basis. Unemployment is rising rapidly, the inflation rate is up over 10 percent, and Brazilian currency has lost 24 percent of its value compared to the U.S. dollar over the past 12 months.
At this point, Brazil is already experiencing its longest economic downturn since the Great Depression of the 1930s, and things are getting worse for ordinary Brazilians every single day. The following comes from CNN…
But with Brazil plunging into its worst recession in over two decades — hopes for a brighter future are fading. The Brazilian economy shrank 3.8% in 2015, according to government data published Thursday. That’s the biggest annual drop since 1990 and the country is in its longest recession since the 1930s.
“I have never seen anything like this,” said Alves, 24, as he stood on his balcony overlooking Rocinha, a massive lower middle class neighborhood or favela in Rio de Janeiro where he grew up. “My parents would tell me about hard times, but today it is really tough. Prices are going up every day.”
So how did this happen?
Well, there are a couple of factors that are really hurting South American economies.
Number one, during the “boom years” governments and businesses in South America absolutely gorged on debt. Unfortunately, many of those loans were denominated in U.S. dollars, and now that the U.S. dollar has appreciated greatly against local South American currencies it is taking far more of those local currencies to service and pay back those debts.
Number two, collapsing prices for oil and other commodities have been absolutely brutal for South American economies. They rely very heavily on exporting commodities to the rest of the world, and so at the same time their debt problems are exploding they are getting a lot less money for the oil and industrial commodities that they are trying to sell to North America, Asia and Europe.
I want you to pay close attention to the following chart and analysis from Zero Hedge. As you can see, the economic problems in Brazil appear to be greatly accelerating…
“The Brazilian economic downturn took a real turn for the worse in February,” according to Markit’s Composite PMI, which collapsed to record lows at 39.0. Despite a slightly less bad than expected GDP print this morning (still down a record 5.89% YoY), hope was quickly extinguished as PMIs showed economic activity continuing to contract at a record pace, job losses accelerating, and manufacturing’s collapse accelerating. As Market sums up, “With the global economy also showing signs of slowing, which will impact on external demand, it looks as if the downturn is set to continue to run its course in the coming months.”
GDP was a disaster (but better than expected)
And of course Brazil is not the only South American economy that is a basket case right now. In fact, things in Venezuela are far worse. In 2015, the Venezuelan economy shrunk by 10 percent, and the official rate of inflation was a staggering 181 percent.
Could you imagine living in an economy with a 181 percent inflation rate?
As prices have escalated out of control, citizens have attempted to hoard basic supplies in advance, and this has resulted in food shortages that are absolutely frightening…
Cardboard signs on the door warning of “No bread” have become increasingly common at Venezuelan bakeries.
Venezuela gets 96 percent of its foreign currency from oil exports, and as crude prices have plunged, so have the country’s imports — among them wheat.
The leftist government of President Nicolas Maduro has tightly controlled access to hard currency, and this has affected imports ranging from medicine to toilet paper. Now it is seriously affecting imports of wheat, which Venezuela does not grow.
Add to this the soaring inflation rate — 181 percent in 2015, the world’s highest — and you see why customers are mainly interested in buying basic food items such as bread.
Here in the United States, there are still people who doubt that an economic crisis is happening.
But in Venezuela and Brazil there is no debate.
Unfortunately, what is happening in Venezuela and Brazil is also slowly starting to happen to most of the rest of the planet as well. It is just that they are a little farther down the road. Economic and financial bubbles are bursting all over the world, and I like how author Vikram Mansharamani described this phenomenon during a recent interview with CNBC…
Deflationary tides are lapping the shores of countries across the world and financial bubbles are set to burst everywhere, Vikram Mansharamani, a lecturer at Yale University, told CNBC on Thursday.
“I think it all started with the China investment bubble that has burst and that brought with it commodities and that pushed deflation around the world and those ripples are landing on the shore of countries literally everywhere,” the high-profile author and academic said at the Global Financial Markets Forum in Abu Dhabi.
And of course the evidence of what Mansharamani was talking about is all around us.
Just this week we found out that Chinese state industries plan to lay off five to six million workers, U.S. factory orders have now fallen for 15 months in a row, and the corporate default rate in the United States has now risen above where it was at when Lehman Brothers collapsed.
There are some people that would like to point to the fact that stocks have bounced back a bit over the past couple of weeks as evidence that the crisis is over.
If they want to believe that, they should go ahead and believe that.
Unfortunately, the truth is that the hard economic numbers that are coming in from all over the world tell us very clearly that global economic activity is slowing down significantly.
A new global recession has already begun, and the pain that is already being felt all over the planet is just the beginning of what is coming.
All over the United States, cities of refuge are being created. Now when I say “cities”, I don’t mean vast areas of land that can hold hundreds of thousands or millions of people. Rather, I am talking about much smaller places of refuge that can accommodate dozens or hundreds of people. In a few cases, I know of places of refuge that will be able to take in thousands of people, but that is about as big as they get. There are individuals all across America that have specifically felt called to build communities where large numbers of people will be able to gather when society totally collapses. So why is this happening? Why do so many people feel such an urgency to create cities of refuge that would presumably never be used if we don’t ever see full-blown societal breakdown?
In the headline, I claimed that hundreds of these “cities of refuge” are being created, but the truth is that it could easily be thousands. I have personally talked to countless numbers of people that are like my wife and I and are planning to be able to take in members of their own extended families when things get really crazy. But there are others that are taking things to an entirely different level.
I was recently contacted by a man in New York state that plans to convert a hotel and surrounding facilities into a place of refuge that could potentially accommodate hundreds of people for an extended period of time. I know of a ranch in southern Idaho where the staff has been feverishly preparing to take in thousands of people when society starts completely falling apart. And I have corresponded with so many others both inside the United States and outside the country that are creating these types of communities.
It has been estimated that there are three million preppers in America today. But those that are creating these places of refuge are not just “prepping” for themselves. Instead, they feel called to prepare a place of safety where others will be able to gather when times get really crazy.
Due to the wide reach of my articles, I have had a lot of people involved in these communities reach out to me over time. Some have graciously let my wife and I know that there is a place for us if needed during a major emergency, and others have wanted for us to become personally involved in what they are doing. I wish that I could get involved in all of them, but there is a limit to what any one of us can do. But I always encourage people to keep pressing forward with their preparations, because without a doubt they will be needed someday.
In addition to what is happening inside the United States, there are others that have already left this country and are creating places of refuge abroad. There are people that are doing this in South America, Canada, Australia, New Zealand and the Middle East.
And of course every “place of refuge” looks different. As I mentioned above, some plan on transforming existing hotels or ranches into places of refuge. Others plan to use open land to host large numbers of RVs or to construct vast tent cities.
But there are five big things that all places of refuge need to be thinking about…
1. Food – It is going to take vast quantitites of food to even feed dozens of people. When you are talking about hundreds or thousands of people, the amount of food required for a place of refuge will be off the charts.
2. Water – None of us can live without water, and it has been estimated that the average American uses 80 to 100 gallons of water every single day. Of course we would all use a lot less during an emergency situation, but if your “place of refuge” does not have easy access to water that could become a major problem very rapidly.
3. Shelter – It is nice to think that you are going to take in a lot of people, but where are all of them going to sleep? Most people don’t think of mattresses or cots as “survival items”, but the truth is that they are going to be greatly in demand when things get crazy.
4. Power – If the electricity goes off and stays off for an extended period of time, what are you going to do? How will people stay warm, how will you cook food, and how will your community function without any artificial light whatsoever? Having an alternative source of power for your place of refuge is very important.
5. Security – If there was a full-blown collapse of society, any place that still has ample resources is automatically going to become a target. So it is great if you have everything that your community will need, but if you have no way to protect it you can end up losing it all very quickly.
For even more tips on preparing for what is ahead, please see my recent article entitled “70 Tips That Will Help You Survive What Is Going To Happen To America“.
There are a lot of preppers out there that are only preparing for themselves and their immediate families, and anyone else that comes looking for assistance when things get really hard will end up looking down the barrel of a shotgun.
But there are so many others that feel called by God to prepare a place for large numbers of people to gather during the coming storm. They are doing this by faith, because such places have never been needed before in modern American history. Perhaps if you go all the way back to the Great Depression of the 1930s you could find large groups of people that needed somewhere to go, but since that time we have generally been regarded as the wealthiest and most prosperous nation on the entire planet.
Unfortunately, things are rapidly changing in this country. Our economy is in the process of crumbling, there is evidence of social decay all around us, natural disasters are increasing in frequency and intensity, and World War 3 could erupt in the Middle East at any time.
If I am right, the time when these cities of refuge will be needed is not that far away. Unfortunately, the vast majority of Americans are not preparing for what is ahead, and so most of them will be absolutely devastated by the great trials that are directly ahead of us.
There is so much chaos going on that I don’t even know where to start. For a very long time I have been warning my readers that a major banking collapse was coming to Europe, and now it is finally unfolding. Let’s start with Deutsche Bank. The stock of the most important bank in the “strongest economy in Europe” plunged another 8 percent on Monday, and it is now hovering just above the all-time record low that was set during the last financial crisis. Overall, the stock price is now down a staggering 36 percent since 2016 began, and Deutsche Bank credit default swaps are going parabolic. Of course my readers were alerted to major problems at Deutsche Bank all the way back in September, and now the endgame is playing out. In addition to Deutsche Bank, the list of other “too big to fail” banks in Europe that appear to be in very serious trouble includes Commerzbank, Credit Suisse, HSBC and BNP Paribas. Just about every major bank in Italy could fall on that list as well, and Greek bank stocks lost close to a quarter of their value on Monday alone. Financial Armageddon has come to Europe, and the entire planet is going to feel the pain.
The collapse of the banks in Europe is dragging down stock prices all over the continent. At this point, more than one-fifth of all stock market wealth in Europe has already been wiped out since the middle of last year. That means that we only have four-fifths left. The following comes from USA Today…
The MSCI Europe index is now down 20.5% from its highest point over the past 12 months, says S&P Global Market Intelligence, placing it in the 20% decline that unofficially defines a bear market.
Europe’s stock implosion makes the U.S.’ sell-off look like child’s play. The U.S.-centric Standard & Poor’s 500 Monday fell another 1.4% – but it’s only down 13% from its high. Some individual European markets are getting hit even harder. The Milan MIB 30, Madrid Ibex 35 and MSCI United Kingdom indexes are off 29%, 23% and 20% from their 52-week highs, respectively as investors fear the worse could be headed for the Old World.
These declines are being primarily driven by the banks. According to MarketWatch, European banking stocks have fallen for six weeks in a row, and this is the longest streak that we have seen since the heart of the last financial crisis…
The region’s banking gauge, the Stoxx Europe 600 Banks Index FX7, -5.59% has logged six straight weeks of declines, its longest weekly losing stretch since 2008, when banks booked 10 weeks of losses, beginning in May, according to FactSet data.
“The current environment for European banks is very, very bad. Over a full business cycle, I think it’s very questionable whether banks on average are able to cover their cost of equity. And as a result that makes it an unattractive investment for long-term investors,” warned Peter Garnry, head of equity strategy at Saxo Bank.
Overall, Europe’s banking stocks are down 23 percent year to date and 39 percent since the peak of the market in the middle of last year.
The financial crisis that began during the second half of 2015 is picking up speed over in Europe, and it isn’t just Deutsche Bank that could implode at any moment. Credit Suisse is the most important bank in Switzerland, and they announced a fourth quarter loss of 5.8 billion dollars. The stock price has fallen 34 percent year to date, and many are now raising questions about the continued viability of the bank.
Similar scenes are being repeated all over the continent. On Monday we learned that Russia had just shut down two more major banks, and the collapse of Greek banks has pushed Greek stock prices to a 25 year low…
Greek stocks tumbled on Monday to close nearly eight percent lower, with bank shares losing almost a quarter of their market value amid concerns over the future of government reforms.
The general index on the Athens stock exchange closed down 7.9 percent at 464.23 points — a 25-year-low — while banks suffered a 24.3-percent average drop.
This is what a financial crisis looks like.
Fortunately things are not this bad here in the U.S. quite yet, but we are on the exact same path that they are.
One of the big things that is fueling the banking crisis in Europe is the fact that the too big to fail banks over there have more than 100 billion dollars of exposure to energy sector loans. This makes European banks even more sensitive to the price of oil than U.S. banks. The following comes from CNBC…
The four U.S. banks with the highest dollar amount of exposure to energy loans have a capital position 60 percent greater than European banks Deutsche Bank, UBS, Credit Suisse and HSBC, according to CLSA research using a measure called tangible common equity to tangible assets ratio. Or, as Mayo put it, “U.S. banks have more quality capital.”
Analysts at JPMorgan saw the energy loan crisis coming for Europe, and highlighted in early January where investors might get hit.
“[Standard Chartered] and [Deutsche Bank] would be the most sensitive banks to higher default rates in oil and gas,” the analysts wrote in their January report.
There is Deutsche Bank again.
It is funny how they keep coming up.
In the U.S., the collapse of the price of oil is pushing energy company after energy company into bankruptcy. This has happened 42 times in North America since the beginning of last year so far, and rumors that Chesapeake Energy is heading that direction caused their stock price to plummet a staggering 33 percent on Monday…
Energy stocks continue to tank, with Transocean (RIG) dropping 7% and Baker Hughes (BHI) down nearly 5%. But those losses pale in comparison with Chesapeake Energy (CHK), the energy giant that plummeted as much as 51% amid bankruptcy fears. Chesapeake denied it’s currently planning to file for bankruptcy, but its stock still closed down 33% on the day.
And let’s not forget about the ongoing bursting of the tech bubble that I wrote about yesterday.
On Monday the carnage continued, and this pushed the Nasdaq down to its lowest level in almost 18 months…
Technology shares with lofty valuations, including those of midcap data analytics company Tableau Software Inc and Internet giant Facebook Inc, extended their losses on Monday following a gutting selloff in the previous session.
Shares of cloud services companies such as Splunk Inc and Salesforce.com Inc had also declined sharply on Friday. They fell again on Monday, dragging down the Nasdaq Composite index 2.4 percent to its lowest in nearly 1-1/2 years.
Those that read my articles regularly know that I have been warning this would happen.
All over the world we are witnessing a financial implosion. As I write this article, the Japanese market has only been open less than an hour and it is already down 747 points.
The next great financial crisis is already here, and right now we are only in the early chapters.
Ultimately what we are facing is going to be far worse than the financial crisis of 2008/2009, and as a result of this great shaking the entire world is going to fundamentally change.