The big problem is that there is simply way, way, way too much debt in the United States and Europe.  It has been a lot of fun spending all of this borrowed money, but now we get to pay the price.

The following are 19 reasons why it is time to start freaking out about the global economy….

#1 The yield on 10 year Italian bonds has now risen to more than 6 percent.

#2 The yield on 10 year Spanish bonds has now risen to more than 7 percent.  This is considered to be an unsustainable level.

#3 Citigroup Chief Economist Willem Buiter says that both Italy and Spain are going to need major bailouts.

#4 The Spanish banking crisis continues to get worse.  The following is from a CNN article that was posted on Monday….

But the depth of the nation’s crisis has raised doubts about whether €100 billion will be enough to recapitalize the banks. For example, the Bank of Spain, the nation’s central bank, released data Monday showing that “doubtful” loans — those that are more than 3 months overdue — rose to €152.7 billion in April, equal to 8.7% of all the loans held by the nation’s banks.

#5 Unemployment in Spain is sitting at a record high of over 24 percent with no hope in sight.

#6 Unemployment in the eurozone as a whole has hit a brand new all-time record high.

#7 The socialists won an outright majority in the recent parliamentary elections in France.  That means that France and Germany are now headed in completely different directions.  The close cooperation that we have seen between France and Germany in recent years is now over.

#8 New French President Francois Hollande has promised to implement a top tax rate of 75 percent on those making over 1 million euros a year.

#9 German Chancellor Angela Merkel has declared that Germany will not budge at all on the terms of the Greek bailout.

#10 Analysts at Citigroup Global Markets are projecting that the odds of Greece leaving the euro over the next 12 to 18 months are still between 50 and 75 percent.

#11 Money is being transferred from banks in southern Europe to banks in northern Europe at an astounding pace….

Financial advisers and private bankers whose clients have accounts too large to be covered by a Europe-wide guarantee on deposits up to 100,000 euros ($125,000), are reporting a “bank run by wire transfer” that has picked up during May.

Much of this money has headed north to banks in London, Frankfurt and Geneva, financial advisers say.

“It’s been an ongoing process but it certainly picked up pace a couple of weeks ago We believe there is a continuous 2-3 year bank run by wire transfer,” said Lorne Baring, managing director at B Capital, a Geneva-based pan European wealth management firm.

#12 As I wrote about recently, about 500 million euros a day has been pulled out of Greek banks so far this month.

#13 The Bank for International Settlements is warning that global lending is contracting at the fastest rate that we have seen since the end of the last financial crisis.

#14 Lloyd’s of London has publicly admitted that it is making preparations for a collapse of the eurozone.

#15 Government debt levels all over the industrialized world have exploded in recent years.  The following is from a recent article by Stephen Lendman….

Five years ago, OECD countries sovereign debt/GDP ratios were 70%. Today it’s 106% and rising.

Anything over 100% is considered to be an extremely dangerous level.

#16 The economic problems in Europe are already taking a toll on the U.S. economy.  At this point U.S. exports to Europe are way down.

#17 One recent poll found that 75 percent of Americans are either “very or somewhat worried” that the U.S. economy is heading for another recession.

#18 Under Barack Obama, the United States has been indulging in a debt binge unlike anything ever seen in U.S. history.  The following is from a recent Forbes article….

After just one year of the Obama spending binge, federal spending had already rocketed to 25.2% of GDP, the highest in American history except for World War II.  That compares to 20.8% in 2008, and an average of 19.6% during Bush’s two terms.  The average during President Clinton’s two terms was 19.8%, and during the 60-plus years from World War II until 2008 — 19.7%.  Obama’s own fiscal 2013 budget released in February projects the average during the entire 4 years of the Obama Administration to come in at 24.4% in just a few months.  That budget shows federal spending increasing from $2.983 trillion in 2008 to an all time record $3.796 trillion in 2012, an increase of 27.3%.

Moreover, before Obama there had never been a deficit anywhere near $1 trillion.  The highest previously was $458 billion, or less than half a trillion, in 2008. The federal deficit for the last budget adopted by a Republican controlled Congress was $161 billion for fiscal year 2007.  But the budget deficits for Obama’s four years were reported in Obama’s own 2013 budget as $1.413 trillion for 2009, $1.293 trillion for 2010, $1.3 trillion for 2011, and $1.327 trillion for 2012, four years in a row of deficits of $1.3 trillion or more, the highest in world history.

#19 Barack Obama almost seems more focused on his golf game than on the problems the global economy is having.  He just finished up playing his 100th round of golf since he became president.

If you are looking for some kind of a global financial miracle you can stop watching.

If European leaders had a master plan to save Europe they would have shown it by now.

If Barack Obama had a master plan to fix things he would have implemented it by now.

If the Federal Reserve had a master plan to fix things we would have seen it by now.

The entire house of cards is starting to come down and things are going to get really messy.

A lot of people both in the United States and in Europe are going to lose their jobs and their homes over the next few years.

It is likely that the next recession will be even more painful than the last one was.

Now is not the time to panic.  If you acknowledge what is coming and prepare accordingly then you will likely be in good shape.

But if you stick your head in the sand and pretend that everything is going to be okay then the next few years will likely be incredibly painful for you.

The post Oh Crud! 19 Reasons Why It Is Time To Start Freaking Out About The Global Economy appeared first on The Economic Collapse.

Even though all the warning signs were there, very few people actually expected to see the kind of financial crisis that we saw back in 2008.

But it happened.

Now very few people actually expect another “Lehman Brothers moment” to happen in Europe although the warning signs are all around us.

Sadly, most people never want to believe the truth until it is too late.

The following are 25 signs that the smart money has completely written off southern Europe….

#1 Lloyd’s of London is publicly admitting that it is rapidly making preparations for a collapse of the eurozone.

#2 According to the New York Times, top global law firms are advising their clients to withdraw all cash and all other liquid assets from Greece….

So their advice is blunt: Remove cash and other liquid assets from Greece and prepare to take a short-term hit on any other investments.

“My personal view is that it is irrational for anyone, whether a corporation or an individual, to be leaving money in Greek financial institutions, so long as there is a credible prospect of a euro zone exit,” said Ian M. Clark, a partner in London for White & Case, a global law firm that has a team of 10 lawyers focusing on the issue.

#3 According to CNBC, large numbers of wealthy Europeans have been moving their money from banks in southern Europe to banks in northern Europe….

Financial advisers and private bankers whose clients have accounts too large to be covered by a Europe-wide guarantee on deposits up to 100,000 euros ($125,000), are reporting a “bank run by wire transfer” that has picked up during May.

Much of this money has headed north to banks in London, Frankfurt and Geneva, financial advisers say.

“It’s been an ongoing process but it certainly picked up pace a couple of weeks ago We believe there is a continuous 2-3 year bank run by wire transfer,” said Lorne Baring, managing director at B Capital, a Geneva-based pan European wealth management firm.

#4 The President of the Federal Reserve Bank of Philadelphia, Charles Plosser, says that the Federal Reserve is advising money market funds to reduce their exposure to Europe….

The Fed and regulators have tried to stress to money market funds, for example, to reduce their exposure to European financial institutions.

#5 The yield on 10-year Spanish bonds is rapidly moving toward the very important 7 percent level.

#6 Many multinational corporations that operate in Greece are now pulling their funds out of the country on a nightly basis.

#7 Juergen Fitschen, the co-CEO of Deutsche Bank, has publicly proclaimed that Greece is a “failed state“.

#8 The head of the Swiss central bank has admitted that Switzerland is developing an “action plan” for how it will handle the collapse of the eurozone.

#9 The European Commission has urged all member states to develop contingency plans for a Greek exit from the euro….

Last week, the European Commission said that it has asked member states to make plans to deal with a potential Greek exit, ahead of a second round of Greek elections on 17 June.

#10 PIMCO CEO Mohamed El-Erian says that a Greek exit from the euro “is probably inevitable“.

#11 Spanish stocks continue to drop like a rock.

#12 The percentage of bad loans on the books of Spanish banks has reached an 18 year high.

#13 Late on Friday, the Spanish government announced that banking giant Bankia is going to need a 19 billion euro bailout.

#14 Standard & Poor’s downgraded the credit ratings of five more Spanish banks to junk status on Friday.

#15 Moody’s downgraded the credit ratings of 16 Spanish banks back on May 17th.

#16 According to the Telegraph, “struggling European banks could be seized and controlled by Brussels as part of secret plans being drawn up”.

#17 The head of equity strategy at Societe Generale, Claudia Panseri, is warning that European stocks could fall by as much as 50 percent if Greece leaves the euro.

#18 Economist Marc Faber is warning that there is now a “100% chance” that there will be another global recession.

#19 There seems to be an increasing attempt to pin the problems that Greece is now experiencing on the behavior of Greek citizens.  The following are some of the shocking things that the head of the IMF, Christine Lagarde, said in a recent interview….

“Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.”

Even more than she thinks about all those now struggling to survive without jobs or public services? “I think of them equally. And I think they should also help themselves collectively.” How? “By all paying their tax. Yeah.”

It sounds as if she’s essentially saying to the Greeks and others in Europe, you’ve had a nice time and now it’s payback time.

“That’s right.” She nods calmly. “Yeah.”

And what about their children, who can’t conceivably be held responsible? “Well, hey, parents are responsible, right? So parents have to pay their tax.”

#20 According to the Telegraph, an unidentified member of Angela Merkel’s cabinet has stated that Germany simply will not “pour money into a bottomless pit”.

#21 This week the Bank of England is holding a “secret summit” of global central bankers to address the European financial crisis….

The summit will be dominated by central bankers including the host, Sir Mervyn King, Governor of the Bank of England. Mario Draghi, president of the European Central Bank, and Zhou Xiaochuan, governor of the People’s Bank of China, have been invited.

#22 According to Zero Hedge, a major German newspaper is reporting that a Greek exit from the eurozone is a “done deal”….

“The Greece-exit is a done deal: According to the German economic news from financial circles EU and the ECB have abandoned the motherland of democracy as a euro member. The reason is, interestingly, not in the upcoming elections – these are basically become irrelevant. The EU has finally realized that the Greeks have not met any agreements and will not continue not to meet them. A banker: “We helped with the Toika. The help of the troika was tied to conditions. Greece has fulfilled none of the conditions, and has been for months now.”

#23 According to CNBC, preparations are quietly being made to print up and distribute new drachmas should the need arise….

British banknote printer De La Rue is drawing up plans to print new drachma notes in the event of a Greek euro exit, according to an industry source with knowledge of the matter.

The world’s biggest security firm G4S expects to be involved in distributing notes around the country.

#24 Citibank’s chief economist Willem Buiter is warning that any new currency issued by the Greek government could “immediately fall by 60 percent“.

#25 Reuters is reporting that a planning memo exists that suggests that Greece could receive as much as 50 billion euros to “ease its path” out of the eurozone.

If Greece does leave the eurozone, the cost to the rest of Europe is going to be astronomical.  The following is from a recent article by John Mauldin….

The debate among very knowledgeable individuals and institutions as to the future of Europe is intense. There are those who argue that the cost of breaking up the eurozone, even allowing Greece to leave, is so high that it will not be permitted to happen. Estimates abound of a cost of €1 trillion to European banks, governments, and businesses, just for the exit of Greece. And that does not include the cost of contagion as the markets wonder who is next. Keeping Spanish and Italian interest-rate costs at levels that can be sustained will cost even more trillions, as not just government debt but the entire banking system is at stake. Not to mention the pension and insurance funds. If the cost of Greece leaving is €1 trillion, then who can guess the cost of Spain or Italy?

As I have written about previously, a Greek exit from the euro would cause the “bank jogs” that are already happening in Spain and Italy to accelerate.

The problem in Europe is not just government debt.  The truth is that the entire European financial system is in danger of melting down.

Unfortunately, there are no more grand solutions on the horizon and so things are going to continue to get worse for Europe.

As I have talked about so many times, the next wave of the economic collapse is going to start in Europe, but it is going to deeply affect the entire globe.

During the next major economic downturn, the official unemployment rate in the United States will rise well up into the double digits.

Once that happens, perhaps many more Americans will finally figure out that they should have been paying much more attention to what was taking place in Europe.

The post 25 Signs That The Smart Money Has Completely Written Off Southern Europe appeared first on The Economic Collapse.

The following are 22 signs that we are on the verge of a devastating global recession….

#1 On Thursday it was announced that U.S. jobless claims had soared to a six-week high.

#2 Hostess Brands, the maker of Twinkies and Wonder Bread, has filed for bankruptcy protection.

#3 Sears recently announced that somewhere between 100 and 120 Sears and Kmart stores will be closing, and Sears stock has fallen nearly 60% in just the past year.

#4 Over the past 12 months, dozens of prominent retailers have closed stores all over America, and one consulting firm is projecting that there will be more than 5,000 more store closings in 2012.

#5 Richard Bove, an analyst at Rochdale Securities, is projecting that the global financial industry will lose approximately 150,000 jobs over the next 12 to 18 months.

#6 Investors are pulling money out of the stock market at a rapid pace right now.  In fact, as an article posted on CNBC recently noted, investors pulled more money out of mutual funds than they put into mutual funds for 9 weeks in a row.  Are there some people out there that are quietly repositioning their money for tough times ahead?….

Investors yanked money out of U.S. equity mutual funds for a ninth-consecutive week despite a bullish 2012 outlook from Wall Street and a December rally that’s carried over into the New Year.

#7 There are signs that the Chinese economy is seriously slowing down.  The following comes from a recent article in the Guardian….

Growth had slowed to an annual rate of 1.5% in the second and third quarters of 2011, below the “stall speed” that historically led to recession.

#8 The Bank of Japan says that the economic recovery in that country “has paused“.

#9 Manufacturing activity in the euro zone has fallen for five months in a row.

#10 Germany’s economy actually contracted during the 4th quarter of 2011.  At this point many economists believe that Germany is already experiencing a recession.

#11 According to a recent article by Bloomberg, it is being projected that the French economy is heading into a recession….

The French economy will shrink this quarter and next, suggesting the nation is in a recession as investment and consumer spending stagnate, national statistics office Insee said.

#12 There are a multitude of statistics that indicate that the UK economy is definitely slowing down.

#13 The credit ratings of Italy, Spain, Portugal, France and Austria all just got downgraded.

#14 It is being reported that the Spanish economy contracted during the 4th quarter of 2011.

#15 Bad loans in Spain recently hit a 17-year high and the unemployment rate is at a 15-year high.

#16 According to a recent article in the Telegraph, the Italian government is forecasting that there will be a recession for the Italian economy in 2012….

#17 Italy’s youth unemployment rate has hit the highest level ever.

#18 The unemployment rate in Greece for those under the age of 24 is now at 39 percent.

#19 Greece is already experiencing a full-blown economic depression.  About a third of the country is now living in poverty and extreme medicine shortages are being reported.  Things have gotten so bad that entire families are being ripped apart.  According to the Daily Mail, hundreds of Greek children are being abandoned because the economy has gotten so bad that their parents simply cannot afford to take care of them anymore.  The note that one mother left with her child was absolutely heartbreaking….

One mother, it said, ran away after handing over her two-year-old daughter Natasha.

Four-year-old Anna was found by a teacher clutching a note that read: ‘I will not be coming to pick up Anna today because I cannot afford to look after her. Please take good care of her. Sorry.’

#20 In Greece, large numbers of people are simply giving up on life.  Sadly, the number of suicides in Greece has increased by 40 percent in just the past year.

#21 In many European countries, the money supply continues to contract rapidly.  The following comes from a recent article in the Telegraph….

Simon Ward from Henderson Global Investors said “narrow” M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.

While real M1 deposits are still holding up in the German bloc, the rate of fall over the last six months (annualised) has been 20.7pc in Greece, 16.3pc in Portugal, 11.8pc in Ireland, and 8.1pc in Spain, and 6.7pc in Italy. The pace of decline in Italy has been accelerating, partly due to capital flight. “This rate of contraction is greater than in early 2008 and implies an even deeper recession, both for Italy and the whole periphery,” said Mr Ward.

#22 The major industrialized nations of the world must roll over trillions upon trillions of dollars in debt during 2012.  At a time when credit is becoming much tighter, this is going to be quite a challenge.  The following list compiled by Bloomberg shows the amount of debt that some large nations must roll over in 2012….

Japan: 3,000 billion
U.S.: 2,783 billion
Italy: 428 billion
France: 367 billion
Germany: 285 billion
Canada: 221 billion
Brazil: 169 billion
U.K.: 165 billion
China: 121 billion
India: 57 billion
Russia: 13 billion

Keep in mind that those numbers do not include any new borrowing.  Those are just old debts that must be refinanced.

As I mentioned at the top of this article, things do not look good.

The last thing that we need is another devastating global recession.

As I wrote about yesterday, the U.S. economy is in the midst of a nightmarish long-term decline.  The last major global recession helped to significantly accelerate that decline.

So what will happen if this next global recession is worse than the last one?

Sadly, the people that will get hurt the most by another recession will not be the wealthy.

The people that will get hurt the most will be the poor and the middle class.

So what should all of us be doing about this?

We should use the time during this “calm before the storm” to prepare for the hard times that are coming.

As always, let us hope for the best and let us prepare for the worst.

But things certainly do not look promising for the global economy in 2012.

The post 22 Signs That We Are On The Verge Of A Devastating Global Recession appeared first on The Economic Collapse.