Europe

27 Major Global Stocks Markets That Have Already Crashed By Double Digit Percentages In 2015

Earth Globe - Public DomainAnyone that tries to tell you that a global financial crisis is not happening is not being honest with you.  Right now, there are 27 major global stock markets that have declined by double digit percentages from their peaks earlier this year.  And this is truly a global phenomenon – we have seen stock market crashes in Asia, Europe, South America, Africa and the Middle East.  But because U.S. stocks are only down less than a thousand points from the peak earlier this year, most Americans seem to think that everything is just fine.

The truth, of course, is that everything is not fine.  We are witnessing a pattern similar to what we saw back in 2008.  Back then, Chinese stocks and other major stock markets started crashing first, and then U.S. stocks followed later.

And it appears that we may have entered the next leg down for markets in the western world this week.  The Dow was down another 252 points on Thursday, and all of the major stock indexes in the U.S. are now negative for the year except for the NASDAQ.  Unless there is a major turnaround in the coming weeks, the six year winning streak for U.S. stocks is likely over.

But when you step back and look at what has been happening globally, a much more ominous picture emerges.  I spent much of the afternoon looking at stock market charts for the largest economies all over the globe.  What I discovered was financial carnage that was much worse than I anticipated.

It turns out that there are 27 major global stock markets that have fallen by more than 10 percent from peaks that were set earlier this year.  If you want to verify this information for yourself, just go to Trading Economics.  As you can see, many of these stock market declines have been quite impressive…

1. China: down more than 30 percent

2. Saudi Arabia: down 26 percent

3. Germany: down about 13 percent

4. United Kingdom: down close to 12 percent

5. Spain: down 15 percent

6. Brazil: down more than 22 percent (13,000 points overall)

7. Kuwait: down 14 percent

8. Turkey: down 16 percent

9. India: down close to 12 percent

10. Chile: down 11 percent

11. Columbia: down about 30 percent

12. Peru: down more than 40 percent

13. Bulgaria: down more than 20 percent

14. Greece: down more than 30 percent

15. Poland: down about 19 percent

16. Malaysia: down 10 percent

17. Egypt: down 32 percent

18. Indonesia: down 18 percent

19. Canada: down 12 percent

20. Ukraine: down 45 percent

21. Morocco: down 13 percent

22. Ghana: down 17 percent

23. Kenya: down 27 percent

24. Australia: down 13 percent

25. Nigeria: down more than 30 percent

26. Taiwan: down 15 percent

27. Thailand: down 20 percent

We have not seen numbers like these since 2008, and trillions of dollars of stock market wealth has been wiped out globally.  So the “nothing is happening” crowd is simply dead wrong.  Stocks are already crashing all over the planet.  Just because the big U.S. stock market crash has not happened quite yet does not mean that a major global financial crisis is not happening.

But do you know what is crashing here in this country?

Junk bonds.

At this point, yields on the riskiest junk bonds have risen to levels that we have not seen since the last financial crisis.  As I have discussed repeatedly, yields on junk bonds spiked dramatically just before the stock market crash of 2008, and now it is happening again…

Yield On CCC Bonds - Chart from Federal Reserve

This is precisely the kind of behavior that we would expect to see if a major U.S. stock market crash was imminent.  Personally, I watch the junk bond market very, very closely because it is such a key leading indicator.  And according to Jeffrey Snider, it appears that “something” is starting to cause junk bonds to sell off at an alarming pace…

There isn’t much as far as confirmation, but it increasingly appears as if “something” just hit the triple hooks (CCC) in the junk bond bubble. At least as far as one view of it, Bank of America ML’s CCC implied yield, there was a huge selloff that brought the yield to a new cycle high (low in price) above even the 2011 crisis peak.

But just like in 2008, a lot of people will not heed the warnings because they don’t have the patience to watch long-term trends play out.

We live in a society where we expect constant instant gratification.  We have instant coffee, video on demand and 48 hour news cycles.  If something does not happen immediately, most of us quickly lose patience.

On my other website, I include a lot more stories about things that are trending in the news.  For example, earlier today I wrote about the horrible shootings in San Bernardino, California and I explained why I believe that Islamic terror is now more of a threat to the American people than ever before.

But on this website I like to take a broader view of things.  For months, I have been warning that conditions were perfect for another major global financial crisis, and since that time events have been unfolding in textbook fashion.

And as you can see from the numbers above, we have already entered a new global financial crisis.  If you tried to tell someone in China, Brazil or Saudi Arabia that a financial crisis was not happening, they would just laugh at you.  We need to start learning that the world doesn’t revolve around the United States.

Of course the U.S. is heading for tremendous difficulties as well.  This is something that I covered yesterday.  All of the fundamental economic numbers are absolutely screaming “recession”, and yet most of the “experts” are still forecasting good things for the coming year.

Those that do not learn from history are doomed to repeat it.  None of the problems that caused the crisis the last time around have been fixed, and most of our “leaders” seem blind to what is happening at this moment even though the exact same patterns that played out in 2008 are playing out once again right in front of our eyes.

If you have been waiting for the next global financial crisis, you can stop, because it is already here.

As we move toward the end of 2015, let us hope for the best, but let us also get prepared for the worst.

Widespread Terrorism Is Just Part Of The Perfect Storm That Is Now Descending On The Western World

Perfect Storm - Public DomainWords cannot adequately describe the utter horror that was unleashed on the streets of Paris, France on Friday.  CNN is calling it “the worst violence witnessed in France since World War II“, and even though it happened a couple of days ago now, many of us are still having a really tough time processing what took place.  Somehow, a small group of less than 10 radical Islamists was able to unleash a coordinated wave of attacks that killed at least 129 people and injured at least 350.  All of this comes less than a year after the Charlie Hebdo massacre in Paris, and many in the western world are now starting to understand that something has fundamentally changed.  Even though France has a highly advanced anti-terrorism infrastructure, and even though it also has some of the strictest anti-gun laws in Europe, none of that did anything to prevent these attacks.  Despite all of our advanced technology, the openness of our society makes us highly vulnerable to Islamic terror.  And as more waves of refugees from the Middle East are absorbed by both Europe and the United States, it is inevitable that there will be more attacks like this.

According to Google, the definition of a “soft target” is “a person or thing that is relatively unprotected or vulnerable, especially to military or terrorist attack.”  And as we just saw in France, the western world is literally teeming with soft targets.  I am talking about sporting events, concert halls, schools, churches, shopping malls, power stations, water treatment facilities, mass transit, etc.

For those that wish to create terror, the opportunities are endless.

In the western world, we generally rely on certain deterrents in order to maintain order.  Most sane people do not want to be shot, and most sane people do not want to go to prison.

But what do you do when there are large numbers of crazy people that are actually looking forward to being martyrs?

We don’t really have a defense for the kind of attack that we just witnessed in France.  What can you really do when you are dealing with large numbers of homicidal maniacs that are not afraid to die and that can strike anywhere at any time?  Unless you can identify the terrorists or their plans ahead of time, it becomes a guessing game.

And the level of evil demonstrated by these terrorists is truly astounding.  At the Bataclan Theater, two of the terrorists fired their AK-47s indiscriminately into the crowd for a full 10 minutes…

At the Bataclan Theater, at least 75 people attending a concert by a U.S. rock band were killed and many more injured, according to authorities. Eyewitnesses spoke of two young men armed with AK47 assault rifles firing repetitively and dispassionately into the crowded venue, targeting helpless victims cowering on the floor.

Julien Pearce, a radio reporter who was inside the concert hall, told CNN he saw two terrorists at the back of the venue, “firing randomly to the crowd. People yelled, screamed, everybody lying on the floor. And it lasted for ten minutes, ten minutes, ten horrific minutes, where everybody was on the floor covering their heads.”

But these latest attacks are just part of a wider trend of chaos and terror that has descended upon western Europe.  For much, much more on this, please check out this video.

Sadly, what Europe is currently experiencing is coming here too.

When I first start dealing with someone new, I watch to see if that individual will actually follow through on what he or she has promised.  Sometimes this happens, but sometimes it does not.

In the case of ISIS, I would have to say that they are indeed following through on what they said they would do.  Tonight, much of Europe is completely gripped by fear and terror, and the head of ISIS has promised a “direct confrontation” with the United States as well…

Abu Bakr al-Baghdadi, the leader of the Islamic State of Iraq and Syria (ISIS), issued a rare audio message back on January 21 in which he flatly stated his group’s intention to march on Baghdad and move into “direct confrontation” with the United States.

“Our last message is to the Americans. Soon we will be in direct confrontation, and the sons of Islam have prepared for such a day,” Baghdadi said. “So watch, for we are with you, watching.”

As WND has pointed out, there have been dozens of Islamic terror attacks on U.S. soil since 2001, but most of them have been relatively small.

Unfortunately, I believe that we are moving into a new era.  Instead of just being satisfied with killing dozens or hundreds of people, these terrorists will start getting a hold of weapons that can kill thousands.  Eventually we will see terror attacks inside this country that will make 9/11 look like a Sunday picnic.  And Barack Obama is certainly not helping things by “resettling” thousands upon thousands of Syrian refugees in communities all over America.

Of course increasing terror is just a part of the overall picture.  Many have described what is coming to the United States and Europe as a “perfect storm”, and I would agree with that assessment.

Even without Islamic terror, we live at a time of rising civil unrest.  The deep divisions in our country have been demonstrated by what happened in Ferguson, in Baltimore and more recently at the University of Missouri.  Americans are angrier and more frustrated than ever before, and the mainstream media is constantly playing up the divisions between various groups.  And thanks to Barack Obama’s refusal to protect our borders, there are now 1.4 million members of criminal gangs living in our cities.  Violent crime is already on the rise in our urban areas, and it is going to get even worse as we plunge into recession.  For instance, the city of Baltimore recently recorded its 300th homicide of the year after only seeing 211 for all of 2014.  Our major cities have never been more primed for civil unrest, and I believe that we are going to see widespread rioting, looting and chaos in the years ahead as the economy totally falls to pieces.

In addition to increased Islamic terror and civil unrest, I also believe we are moving into a time of great governmental shaking, increased tensions between global superpowers, unprecedented natural disasters, and the greatest financial unraveling the world has ever seen.

All of these trends will feed into one another to create the “perfect storm” that I mentioned earlier.  What this is going to mean is a dramatic change in our standard of living, our liberties and freedoms will continue to be stripped away, and our world is going to be transformed at a pace that very few of us ever imagined was possible.

If you have the feeling that everything has changed after what just happened in France, you are right.

But this is just the beginning.

What is coming in the weeks and months ahead is going to be even worse, and it is going to shock the entire planet.

Is Glencore The Next Lehman? The World’s Largest Commodities Trading Company Is Toast

Toast - Public DomainAre we about to witness the most important global financial event since the collapse of Lehman Brothers in 2008?  Glencore has been known as the largest commodities trading company on the entire planet, and at one time it was ranked as the 10th biggest company in the world.  It is linked to billions of dollars of derivatives trades globally, and if the firm were to implode it would be a financial disaster unlike anything that we have seen in Europe since the end of World War II.  Unfortunately, all signs are pointing to an inescapable death spiral for Glencore at this point.  The stock price was down nearly 30 percent on Monday, and overall Glencore stock has plunged nearly 80 percent since May.  There are certainly other candidates for “the next Lehman” (Petrobras and Deutsche Bank being two perfect examples), but Glencore has definitely surged to the front of the pack.  Right now many analysts are openly wondering if the firm will even be able to survive to the end of next month.

If you are not familiar with Glencore, the following is a pretty good summary of the commodity trading giant from Wikipedia…

Glencore plc is an Anglo–Swiss multinational commodity trading and mining company headquartered in Baar, Switzerland, with its registered office in Saint Helier, Jersey. The company was created through a merger of Glencore with Xstrata on 2 May 2013. As of 2014, it ranked tenth in the Fortune Global 500 list of the world’s largest companies. It is the world’s third-largest family business.

As Glencore International, the company was already one of the world’s leading integrated producers and marketers of commodities. It was the largest company in Switzerland and the world’s largest commodities trading company, with a 2010 global market share of 60 percent in the internationally tradeable zinc market, 50 percent in the internationally tradeable copper market, 9 percent in the internationally tradeable grain market and 3 percent in the internationally tradeable oil market.

For months, I have been warning about the consequences of the crash that we have been witnessing in commodity prices.  We saw a similar thing happen in 2008 just before the financial crisis that erupted in the fall of that year.  If commodity prices kept going down (which they did), it was only a matter of time before firms like Glencore started imploding.

At this point, Glencore owes almost twice as much money as the entire firm is worth…

Now there is every chance the merged operation could implode. If it does, it will be the resources sector’s very own Lehman Brothers moment.

With debt approaching $US30 billion and a market value of just $US16 billion, shareholders and those holding the debt are desperately looking for an exit.

The cost of Glencore’s credit default swaps – a financial instrument that insures against a default – soared overnight.

Actually, “soared” is a horrible understatement.

The cost of insuring Glencore’s debt is absolutely screaming into the stratosphere.  This is precisely what we would expect to see right before a “Lehman Brothers moment”.  Here are some of the specific details from the Wall Street Journal…

Investors had to pay on Monday more than $790,000 a year to insure $10 million of Glencore debt against default for five years using credit default swaps, according to Markit, more than 40% higher than Friday. At the beginning of the year, the same insurance cost $154,000.

When Glencore goes down, they will take a whole lot of others with them.  That is because Glencore is tied to trillions of dollars worth of derivatives trades all over the planet.  According to Zero Hedge, we are looking at “the start of a self-fulfilling prophecy which leads to the Companys’s IG downgrade and the collapse of trillions in derivative notionals as what may be the trading desk of the biggest commodity counterparty quietly goes out of business.”

For years I have been ranting about the danger of derivatives.  In article after article I warned that they would play a starring role in the next financial crisis.

Now the reality of what I was warning about is staring us right in the face.

The “nothing is happening” crowd is completely and utterly clueless.  There are these people running around telling everyone that the stock market decline is “over” and that we aren’t about to experience another great financial crisis.

I don’t understand how these people can be so ignorant.  Global giants such as Glencore, Petrobras and Deutsche Bank are imploding right in front of our eyes.  As I write this, stocks in Hong Kong are down 744 points and stocks in Japan are down 677 points.  The stock markets of the 10 largest economies on the entire planet are all crashing, but the mockers are going to continue to mock.  They will continue to tell you that “nothing is happening” even in the face of undeniable evidence to the contrary.

And the sad thing is that many of these mockers are given air time on the big mainstream news networks.  They will tell you that stocks are “oversold” and that you should “buy the dip” because stocks are going to be going back to record highs really soon.

I wish that was true.  Unfortunately, the reality of the matter is that we are finally witnessing the bursting of the last great global financial bubble.  I really like how Bill Holter put it recently…

In my opinion we are already well within the jaws of a meltdown/shutdown as liquidity is evaporating. There are a dozen developed countries with their stock markets already in bear markets (down 20% or more). All crashes come from oversold levels just as bank runs come on fast and are a surprise at the time. What is coming should be NO SURPRISE to anyone as we are looking at the end of not only an empire but of a flawed system which has endured for far too many years! This was a solvency problem in 2008 and “liquidity” was the incorrect tool used then. Now it is a bigger solvency problem with an illiquidity kicker attached …while the Fed has already used every tool imaginable and every last ounce of credibility. The loss of confidence in the issuer of the world’s reserve currency would be bad enough in an unlevered world, the loss of confidence in today’s “debt world” will be a DISASTER!

To wrap this up, do not let anything that may happen from here surprise you. The conditions are ripe for global currency crises and a shutdown of credit. The conditions are also ripe for hot war to explode in multiple venues. A meltdown or shutdown of markets will serve as a FINAL FLUSH of what remains left of the U.S. middle class.

We are steamrolling toward a global economic collapse that will be permanent and irreversible.

For months, I have been warning that we were witnessing a textbook example of what the lead up to a major financial crisis looks like, and now it is happening.  All of this was completely and totally predictable for those that were willing to look at the signs.

Unfortunately, there are way too many people out there that think that they know it all and that have a tremendous amount of blind faith in the system.

Now the system is failing, and that blind faith is about to be shattered.

There Are Indications That A Major Financial Event In Germany Could Be Imminent

Germany Euro Map - Public Domain
Is something about to happen in Germany that will shake the entire world?  According to disturbing new intel that I have received, a major financial event in Germany could be imminent.  Now when I say imminent, I do not mean to suggest that it will happen tomorrow.  But I do believe that we have entered a season of time when another “Lehman Brothers moment” may occur.  Most observers tend to regard Germany as the strong hub that is holding the rest of Europe together economically, but the truth is that serious trouble is brewing under the surface.  As I write this, the German DAX stock index is down close to 20 percent from the all-time high that was set back in April, and there are lots of signs of turmoil at Germany’s largest bank.  There are very few banks in the world that are more prestigious or more influential than Deutsche Bank, and it has been making headlines for all of the wrong reasons recently.

Just like we saw with Lehman Brothers, banks that are “too big to fail” don’t suddenly collapse overnight.  The truth is that there are always warning signs in advance if you look closely enough.

In early 2014, shares of Deutsche Bank were trading above 50 dollars a share.  Since that time, they have fallen by more than 40 percent, and they are now trading below 29 dollars a share.

It is common knowledge that the corporate culture at Deutsche Bank is deeply corrupt, and the bank has been exceedingly reckless in recent years.

If you are exceedingly reckless and you win all the time, that is okay.  Unfortunately for Deutsche Bank, they have increasingly been on the losing end of things.

Prior to the “sudden collapse” of Lehman Brothers on September 15th, 2008, there had been media reports of mass layoffs at the firm.  To give you just a couple of examples, CNBC reported on this on March 10th, 2008 and the New York Times reported on this on August 28th, 2008.

When big banks start getting into serious trouble, this is what they do.  They start getting rid of staff.  That is why the massive job cuts that Deutsche Bank just announced are so troubling…

Deutsche Bank aims to cut roughly 23,000 jobs, or about one quarter of total staff, through layoffs mainly in technology activities and by spinning off its PostBank division, financial sources said on Monday.

That would bring the group’s workforce down to around 75,000 full-time positions under a reorganization being finalised by new Chief Executive John Cryan, who took control of Germany’s biggest bank in July with the promise to cut costs.

Cryan presented preliminary details of the plan to members of the supervisory board at the weekend. A spokesman for the bank declined comment.

Deutsche Bank has also been facing mounting legal troubles.  The following is a brief excerpt from a recent Zero Hedge article…

The bank, which has paid out more than $9 billion over the past three years alone to settle legacy litigation, has become something of a poster child for corrupt corporate culture.

In April, Deutsche settled rate rigging charges with the DoJ for $2.5 billion (or about $25,474 per employee) and subsequently paid $55 million to the SEC (an agency that’s been run by former Deutsche Bank employees and their close associates for years) in connection with allegations it deliberately mismarked its crisis-era LSS book to the tune of at least $5 billion.

But it was out of the frying pan and into the fire so to speak, because early last month, the DoJ announced it would seek to extract a fresh round of MBS-related settlements from banks that knowingly packaged and sold shoddy CDOs in the lead up to the crisis. JP Morgan, Bank of America, and Citi settled MBS probes when the DoJ was operating under the incomparable (and we mean that in a derisive way) Eric Holder but now, emboldened by her pyrrhic victory over Wall Street’s FX manipulators, new Attorney General Loretta Lynch is set to go after Barclays PLC, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC, Royal Bank of Scotland Group PLC,UBS AG and Wells Fargo & Co.

Of course the legal troubles are just the tip of the iceberg of what has been going on over at Deutsche Bank over the past couple of years.  The following is a pretty good timeline of some of the major events that have hit Deutsche Bank since the beginning of last year.  It comes from a NotQuant article that was published back in June entitled “Is Deutsche Bank the next Lehman?“…

  • In April of 2014,  Deutsche Bank was forced to raise an additional 1.5 Billion of Tier 1 capital to support its capital structure.  Why?
  • 1 month later in May of 2014, the scramble for liquidity continued as DB announced the selling of 8 billion euros worth of stock – at up to a 30% discount.   Why again?  It was a move which raised eyebrows across the financial media.  The calm outward image of Deutsche Bank did not seem to reflect their rushed efforts to raise liquidity.  Something was decidedly rotten behind the curtain.
  • Fast forwarding to March of this year:   Deutsche Bank fails the banking industry’s “stress tests” and is given a stern warning to shore up it’s capital structure.
  • In April,  Deutsche Bank confirms its agreement to a joint settlement with the US and UK regarding the manipulation of LIBOR.   The bank is saddled with a massive $2.1 billion payment to the DOJ.  (Still, a small fraction of their winnings from the crime). 
  • In May,  one of Deutsche Bank’s CEOs, Anshu Jain is given an enormous amount of new authority by the board of directors.  We guess that this is a “crisis move”.  In times of crisis the power of the executive is often increased.
  • June 5:  Greece misses its payment to the IMF.   The risk of default across all of its debt is now considered acute.   This has massive implications for Deutsche Bank.
  • June 6/7:  (A Saturday/Sunday, and immediately following Greece’s missed payment to the IMF) Deutsche Bank’s two CEO’s announce their surprise departure from the company.  (Just one month after Jain is given his new expanded powers).   Anshu Jain will step down first at the end of June.  Jürgen Fitschen will step down next May.
  • June 9: S&P lowers the rating of Deutsche Bank to BBB+  Just three notches above “junk”.  (Incidentally,  BBB+ is even lower than Lehman’s downgrade – which preceded its collapse by just 3 months)

Are you starting to get the picture?  These are not signs of a healthy bank.

What makes things even worse is how recklessly Deutsche Bank has been behaving.  At one point, it was estimated that Deutsche Bank had a staggering 75 trillion dollars worth of exposure to derivatives.  Keep in mind that German GDP for an entire year is only about 4 trillion dollars.  So when Deutsche Bank finally collapses, there won’t be enough money in Europe (or anywhere else for that matter) to clean up the mess.  This is a perfect example of why I am constantly hammering on the danger of these “weapons of financial mass destruction”.

If Deutsche Bank were to totally collapse, it would be a financial disaster far worse than Lehman Brothers.  It would literally take down the entire European financial system and cause global financial panic on a scale that none of us have ever seen before.

On a personal note, I apologize for not posting anything last week.  I traveled to two very important conferences and was living out of a suitcase for about eight days.

There has been a bit of a lull in the action over the past couple of weeks, but I expect that to end very shortly.  I believe that the rest of 2015 is going to be incredibly chaotic, and we are going to see some things happen that most people could not even conceive of right now.

In the days that are directly ahead, I encourage people to keep a close eye on both Germany and Japan.

Big things are about to happen, and millions are about to be totally shaken out of their complacency.

11 Red Flag Events That Just Happened As We Enter The Pivotal Month Of August 2015

Red Flags - Public DomainAre you ready for what is coming in August?  All over America, economic, political and social tensions are building, and the next 30 days could turn out to be pivotal.  In July, we saw things start to turn.  As you will read about below, a major six year trendline for the S&P 500 was finally broken this month, Chinese stocks crashed, commodities crashed, and debt problems started erupting all over the planet.  I fully expect that this next month (August) will be a month of transition as we enter an extremely chaotic time in the fall and winter.  Things are unfolding in textbook fashion for another major global financial crisis in the months ahead, and yet most people refuse to see what is happening.  In their blind optimism, they want to believe that things will somehow be different this time.  Well, the coming months will definitely reveal who was right and who was wrong.  The following are 11 red flag events that just happened as we enter the pivotal month of August 2015…

#1 Puerto Rico is going to default on a 58 million dollar debt payment that is due on Saturday.  Even though this has serious implications for the U.S. financial system, Barack Obama has said that there will be no bailout for “America’s Greece”.

#2 As James Bailey has pointed out, the most important trendline for the S&P 500 has finally been broken after holding up for six years.  This is a critical technical signal that will likely motivate a significant number of investors to sell off their holdings in the weeks ahead.

#3 The IMF is indicating that it will not take part in the new Greek debt deal.  As a result, the whole thing may completely fall apart…

Leaked minutes of the fund’s latest board meeting, which took place on Wednesday, showed staff “cannot reach agreement at this stage” on whether to take part in the new €86bn (£60bn) bailout for Greece. The document said there were doubts over the capacity of the Athens Government to implement economic reforms, as well as the over the sustainability of the country’s sovereign debt pile, which is now projected to hit 200 percent of GDP.

The German Chancellor, Angela Merkel, only sanctioned a new Greek deal earlier this month on the condition that the IMF takes part.

#4 Italy is going down the exact same path as Greece, but Italy is going to be a much larger problem for Europe because it has a far, far larger economy.  This week, we learned that youth unemployment in Italy has reached a 38-year high of 44 percent, and Italy’s debt to GDP ratio has now hit 135 percent.

#5 The Canadian economy has officially entered a new recession.  This is something that was not supposed to happen.

#6 The price of oil plummeted close to 20 percent during the month of July.  It was the worst month for the price of oil that we have seen since October 2008, which just happened to be during the height of the last financial crisis.

#7 Commodities just had their worst month in almost four years.  As I have written about previously, we witnessed a collapse in commodity prices just before the stock market crash of 2008 too.

#8 Thanks to Barack Obama, the U.S. coal industry is imploding, and some of the largest coal producers in the entire country have just announced that they are declaring bankruptcy…

On Thursday, Bloomberg reported that the biggest American producer of coking coal, Alpha Natural Resources, could file for bankruptcy as soon as Monday.

Competitor Walter Energy filed for bankruptcy earlier this month, and several others have done the same this year.

#9 For the month of July, the Shanghai Composite Index was down 13.4 percent.  Despite unprecedented government intervention to prop up the market, it was the worst month for Chinese stocks since October 2009.

#10 A major red flag that a recession in the United States is fast approaching is the fact that Exxon Mobile just announced their worst earnings for a single quarter since 2009.  Compared to the same time period one year ago, Exxon Mobile’s earnings were down 51 percent.

#11 Chevron is another oil giant that has seen earnings plunge.  In the second quarter of this year, Chevron’s earnings were down an eye-popping 90 percent from a year ago.

And in this list I didn’t even mention the economic chaos that is happening down in South America.  For full coverage of that, please see my previous article entitled “The South American Financial Crisis Of 2015“.

To a certain extent, I can understand why most Americans are not alarmed about the months ahead.  The relative stability of the past several years has lulled most of us into a false sense of security, and the mainstream media is assuring everyone that everything is going to be just fine and that brighter days are ahead.  At this point, many believe that it is patently absurd to suggest that we could see an economic collapse in 2015.  But of course even though the signs were glaringly apparent, very few of us anticipated the financial crisis of 2008 either.

A few weeks ago, I authored a piece entitled “The Last Days Of ‘Normal Life’ In America“, and I stand by every single word of that article.  I truly believe that the era of debt-fueled prosperity that we have been enjoying for so long is coming to an end, and our standard of living will never again get back to this level.

Just yesterday, I had the chance to go over and stock up on some emergency supplies at a dollar store.  It always astounds me what you can still buy for a dollar.  The combined cost of raw materials, manufacturing, packaging, shipping and retailing most of these items shouldn’t be less than a dollar, but thanks to having the reserve currency of the world we are still able to go to these big box stores and fill up our carts with lots and lots of extremely inexpensive merchandise.

Unfortunately, this massively inflated standard of living is going to come crashing to a halt.  This next financial crisis is going to destroy the system that is currently producing such comfortable lifestyles for the vast majority of us, and that will be an extremely painful experience.

So enjoy this summer for as long as it lasts.  Even though August threatens to be pivotal, it is going to be nothing compared to what will follow.

Fall and winter are coming.

Prepare while there is still time to do so.

Now Is The Time – Fear Rises As Financial Markets All Over The Planet Start To Crash

Fear - Public DomainCan you feel the panic in the air?  CNN Money’s Fear & Greed Index measures the amount of fear in the financial world on a scale from 0 to 100.  The closer it is to zero, the higher the level of fear.  Last Monday, the index was sitting at a reading of 36.  As I write this article, it has fallen to 7.  The financial turmoil which began last week is threatening to turn into an avalanche. On Sunday night, we witnessed the second largest one day stock market collapse in China ever, and this pushed stocks all over the planet into the red.  Meanwhile, the twin blades of an emerging market currency crisis and a commodity price crash are chewing up economies that are dependent on the export of natural resources all over the globe.  For a long time, I have been warning about what would happen in the second half of 2015, and now it is here.  The following is a summary of the financial carnage that we have seen over the past 24 hours…

-On Sunday night, the Shanghai Composite Index plunged 8.5 percent.  It was the largest one day stock market crash in China since 2007, and it was the second largest in history.  The Chinese government is promising to directly intervene in order to prevent Chinese stocks from going down even more.

-Over 1,500 stocks in China fell by their 10 percent daily maximum.  This list includes giants such as China Unicom, Bank of Communications and PetroChina.

-Ever since peaking in June, the Shanghai Composite Index has dropped by a total of 28 percent.

-Even Chinese stocks that are listed on U.S. stock exchanges are being absolutely hammered.  The following comes from USA Today…

The 144 China-based stocks with primary listings on major U.S. exchanges have erased nearly $40 billion in paper wealth since the Shanghai Composite index peaked on June 12. It’s an enormous destruction of wealth that in effects wipes out the market value of a company the size of cruise ship operator Carnival.

-The Chinese stock market crash pushed European stocks significantly lower on Monday…

The pan-European FTSEurofirst 300 provisionally closed 2.1 percent lower, while the Germany’s DAX and France’s CAC closed respectively 2.4 percent and 2.5 percent lower.

The U.K.’s benchmark FTSE outperformed its euro zone peers, but still closed unofficially down 1.0 percent.

-Overall, European stocks have been falling steadily since the beginning of last week.  To get an idea of how much damage has been done already, just check out this chart.

-As I mentioned above, an emerging market currency crisis is causing havoc for economies all over the planet.  The following comes from an article that was published by the Telegraph…

The currencies of Brazil, Mexico, South Africa and Turkey have all crashed to multi-year lows as investors flee emerging markets and commodity prices crumble.

The drastic moves came as fears of imminent monetary tightening by the US Federal Reserve combined with shockingly weak figures from China, which stoked fears that the country may be sliding into a deeper downturn and sent tremors through East Asia, Latin America and Africa.

-The government of Puerto Rico has announced that it does not have enough cash to make a scheduled debt payment of 169 million dollars on August 1st.  The Obama administration says that there are no plans in the works to bail out Puerto Rico.

-On Monday, the Dow was down another 127 points.  It was the fifth day in a row that the Dow and the S&P 500 have both declined.

-Overall, the Dow is now down more than 650 points since July 20th.

-480 stocks on the New York Stock Exchange have hit new 52-week lows.  Many analysts consider this to be a very, very ominous sign.

-I have repeatedly written about the danger of the commodity collapse that we are currently witnessing, and the Bloomberg Commodity Index fell another 1.22 percent on Monday to a fresh low of 92.1493.

-On Monday, the price of U.S. oil hit a 52-week low of $46.92.

-So far, the price of U.S. oil has fallen about 20 percent this month.

-Back in June 2014, the price of a barrel of West Texas Intermediate crude was above 107 dollars.  Since then, the price of U.S. oil has fallen an astounding 56 percent.

-Thanks in large part to the collapse in energy prices, junk bonds are cratering.  This is something that happened just before the financial crisis of 2008, and now it is happening again.  The following comes from Wolf Street…

Among the bonds: Cliffs Natural Resources down 27.6%, SandBridge down 30%, Murray Energy down 21.2%, and Linn Energy down 22.3%, according to Bloomberg.

For example, Linn Energy 6.25% notes due in 2019 were trading at 78 cents on the dollar at the beginning of July and at 58 on Friday, according to LCD. There was bloodshed beyond energy, such as AK Steel’s 7.625% notes due in 2021. They were trading at 62 cents on the dollar, down 22% from the beginning of July.

“The performance is a disappointment to investors who purchased about $40 billion of junk-rated bonds from energy companies this year, thinking that the worst of the slump was over,” Bloomberg noted.

This is exactly what we would expect to see during the early stages of a financial crisis.

Of course global financial markets may bounce back somewhat tomorrow.  If you will remember, some of the largest one day gains in stock market history happened right in the middle of the stock market collapse of 2008.  So don’t get fooled by what happens on any one particular day.

With so much fear in the air, literally anything could happen in the weeks and months ahead of us.  One month ago, I issued a red alert for the last six months of this year.  I warned that a major financial crisis was imminent and that people needed to start protecting themselves immediately.

As I write this article on Monday evening, financial markets are already opening up over in Asia.  Japanese stocks are already down 251 points even though the market has only been open for about an hour over there.

We have entered a time when what is happening to global stock markets will once again be headline news.  We are right on the precipice of another great financial crisis, only this one is going to ultimately end up being much worse than the last one.

Now is the time.

Please get prepared while you still can.

The President Of France Wants Eurozone Members To Transfer Their Sovereignty To A United States Of Europe

EU Poster Tower Of BabelThe President of France has come up with a very creative way of solving the European debt crisis.  On Sunday, a piece authored by French President Francois Hollande suggested that the ultimate solution to the problems currently plaguing Europe would be for every member of the eurozone to transfer all of their sovereignty to a newly created federal government.  In other words, it would essentially be a “United States of Europe”.  This federal government would have a prime minister, a parliament, a federal budget and a federal treasury.  Presumably, the current national governments in Europe would continue to function much like state governments in the U.S. do.  In the end, there may be some benefits to such a union – particularly for the weaker members of the eurozone.  But at what cost would those benefits come?

When I first learned that French President Francois Hollande had proposed that the members of the eurozone should create their own version of a federal government, I was quite stunned.  But I shouldn’t have been surprised.  For the global elite, the answer to just about any problem is more centralization.  The following comes from a Bloomberg article that was posted on Sunday…

French President Francois Hollande said that the 19 countries using the euro need their own government complete with a budget and parliament to cooperate better and overcome the Greek crisis.

“Circumstances are leading us to accelerate,” Hollande said in an opinion piece published by the Journal du Dimanche on Sunday. “What threatens us is not too much Europe, but a lack of it.”

So precisely what would “more Europe” look like?

Hollande envisions a central government that has both a parliament and a federal budget…

“I have proposed taking up Jacques Delors’ idea about euro government, with the addition of a specific budget and a parliament to ensure democratic control,” Hollande said.

His remarks touched on what analysts have seen as a major flaw in the euro.

Under the 1992 Treaty of Maastricht, countries which share a common currency must obey rules on borrowing and deficit spending.

But the Greek crisis saw one of the 19 eurozone members notch up successive worsening deficits and amass a mountain of debt. The problems were only addressed by bailouts from the European institutions and the International Monetary Fund (IMF).

Critics say the problem stems from a lack of centralised control over national fiscal policies, which today are jealously guarded areas of sovereignty.

In addition, this eurozone government would have its own prime minister.  In essence, he would be the European version of the president of the United States.  The following comes from the Independent…

There would be a eurozone government with its own prime minister, the officials said. This government would have its own budget – separate from the EU budget – to aid and invest in more fragile countries, It would try to harmonise corporation and pay-roll taxes to ensure fair competition in the eurozone.

Of course Hollande is not the only one calling for more centralization.  Last month, European Central Bank President Mario Draghi, European Commission President Jean-Claude Juncker and Eurogroup President Jeroen Dijsselbloem proposed a plan that would create a shared European treasury…

Draghi called for the creation of a shared treasury within 10 years in a joint proposal with politicians including European Commission President Jean-Claude Juncker and Eurogroup President Jeroen Dijsselbloem last month.

I don’t anticipate that we will see any of these things implemented immediately.

However, what is important is the fact that this is where the European elite plan to take Europe.  And when the next great European financial crisis erupts, these proposals will be offered as the “solutions” necessary to end the crisis.

During times of emergency, the elite are often able to push things through that they would never be able to accomplish under normal circumstances.  At the moment, it would be extremely difficult to get everyone to agree to a full-blown “United States of Europe”.  But if things were to start spinning wildly out of control and people were suddenly desperately clamoring for solutions, the environment would be quite different.

What that time arrives, the key will be to get Germany and France to agree on what a “United States of Europe” should look like.  If Germany and France can agree, it is inevitable that most of the other members of the eurozone would ultimately fall in line.

One potential hurdle for the creation of this new government would be the euro.  The current treaty agreements concerning the euro are quite complicated and quite restrictive.  If Germany and France decided that they did want to create a “United States of Europe”, they might have to create an entirely new currency in order to accomplish that.

I know that sounds kind of crazy right now, but at one time the concept of “the euro” sounded really crazy too.

For the moment, the debt crisis in Europe just continues to get even worse.  Greece, Portugal, Ireland, Italy, Spain, Belgium and France are all drowning in debt.  Whether or not we see a “Grexit” in the short-term, I fully expect that European bond yields will continue to rise and European stocks will take quite a tumble in the months ahead.

I believe that we are right on the verge of a very significant European financial crisis.  In particular, keep on eye on the big banks.  Just like in the United States, the “too big to fail” banks in Europe are massively overleveraged and are tremendously exposed to derivatives.

In fact, the bank with the most exposure to derivatives on the entire planet is Deutsche Bank.  It has been reported that Deutsche Bank has a whopping 75 trillion dollars worth of exposure to derivatives, their co-CEOs were recently forced to resign, and there are all sorts of rumblings about troubles going on behind the scenes at the bank.

What do you think would happen if the biggest and most important bank in Germany suddenly became the next Lehman Brothers?

That is something to think about.

Meanwhile, the euro continues to fall.  For a long time, I have been repeating my prediction that the euro would fall to parity with the U.S. dollar.

One year ago, the EUR/USD was sitting at 1.35.

Today, it has come all the way down to 1.08.

There will be more ups and downs, but we are almost there.

A time of great chaos is coming to Europe, and the eurozone will be deeply shaken.

But whether or not there is a break up of the eurozone in the short-term, in the long-term the goal of the European elite is even more integration and even more centralization.

So even though there will be significant bumps in the road, I fully expect to see the “United States of Europe” that French President Francois Hollande has proposed.

Do you agree?

What do you think the future holds for Europe?

Please feel free to join the discussion by posting a comment below…

The Bankruptcy Of The Planet Accelerates – 24 Nations Are Currently Facing A Debt Crisis

Dominoes - Public DomainThere has been so much attention on Greece in recent weeks, but the truth is that Greece represents only a very tiny fraction of an unprecedented global debt bomb which threatens to explode at any moment.  As you are about to see, there are 24 nations that are currently facing a full-blown debt crisis, and there are 14 more that are rapidly heading toward one.  Right now, the debt to GDP ratio for the entire planet is up to an all-time record high of 286 percent, and globally there is approximately 200 TRILLION dollars of debt on the books.  That breaks down to about $28,000 of debt for every man, woman and child on the entire planet.  And since close to half of the population of the world lives on less than 10 dollars a day, there is no way that all of this debt can ever be repaid.  The only “solution” under our current system is to kick the can down the road for as long as we can until this colossal debt pyramid finally collapses in upon itself.

As we are seeing in Greece, you can eventually accumulate so much debt that there is literally no way out.  The other European nations are attempting to find a way to give Greece a third bailout, but that is like paying one credit card with another credit card because virtually everyone in Europe is absolutely drowning in debt.

Even if some “permanent solution” could be crafted for Greece, that would only solve a very small fraction of the overall problem that we are facing.  The nations of the world have never been in this much debt before, and it gets worse with each passing day.

According to a new report from the Jubilee Debt Campaign, there are currently 24 countries in the world that are facing a full-blown debt crisis…

■ Armenia

■ Belize

■ Costa Rica

■ Croatia

■ Cyprus

■ Dominican Republic

■ El Salvador

■ The Gambia

■ Greece

■ Grenada

■ Ireland

■ Jamaica

■ Lebanon

■ Macedonia

■ Marshall Islands

■ Montenegro

■ Portugal

■ Spain

■ Sri Lanka

■ St Vincent and the Grenadines

■ Tunisia

■ Ukraine

■ Sudan

■ Zimbabwe

And there are another 14 nations that are right on the verge of one…

■ Bhutan

■ Cape Verde

■ Dominica

■ Ethiopia

■ Ghana

■ Laos

■ Mauritania

■ Mongolia

■ Mozambique

■ Samoa

■ Sao Tome e Principe

■ Senegal

■ Tanzania

■ Uganda

So what should be done about this?

Should we have the “wealthy” countries bail all of them out?

Well, the truth is that the “wealthy” countries are some of the biggest debt offenders of all.  Just consider the United States.  Our national debt has more than doubled since 2007, and at this point it has gotten so large that it is mathematically impossible to pay it off.

Europe is in similar shape.  Members of the eurozone are trying to cobble together a “bailout package” for Greece, but the truth is that most of them will soon need bailouts too…

All of those countries will come knocking asking for help at some point. The fact is that their Debt to GDP levels have soared since the EU nearly collapsed in 2012.

Spain’s Debt to GDP has risen from 69% to 98%. Italy’s Debt to GDP has risen from 116% to 132%. France’s has risen from 85% to 95%.

In addition to Spain, Italy and France, let us not forget Belgium (106 percent debt to GDP), Ireland (109 debt to GDP) and Portugal (130 debt to GDP).

Once all of these dominoes start falling, the consequences for our massively overleveraged global financial system will be absolutely catastrophic…

Spain has over $1.0 trillion in debt outstanding… and Italy has €2.6 trillion. These bonds are backstopping tens of trillions of Euros’ worth of derivatives trades. A haircut or debt forgiveness for them would trigger systemic failure in Europe.

EU banks as a whole are leveraged at 26-to-1. At these leverage levels, even a 4% drop in asset prices wipes out ALL of your capital. And any haircut of Greek, Spanish, Italian and French debt would be a lot more than 4%.

Things in Asia look quite ominous as well.

According to Bloomberg, debt levels in China have risen to levels never recorded before…

While China’s economic expansion beat analysts’ forecasts in the second quarter, the country’s debt levels increased at an even faster pace.

Outstanding loans for companies and households stood at a record 207 percent of gross domestic product at the end of June, up from 125 percent in 2008, data compiled by Bloomberg show.

And remember, that doesn’t even include government debt.  When you throw all forms of debt into the mix, the overall debt to GDP number for China is rapidly approaching 300 percent.

In Japan, things are even worse.  The government debt to GDP ratio in Japan is now up to an astounding 230 percent.  That number has gotten so high that it is hard to believe that it could possibly be true.  At some point an implosion is coming in Japan which is going to shock the world.

Of course the same thing could be said about the entire planet.  Yes, national governments and central banks have been attempting to kick the can down the road for as long as possible, but everyone knows that this is not going to end well.

And when things do really start falling apart, it will be unlike anything that we have ever seen before.  Just consider what Egon von Greyerz recently told King World News…

Eric, there are now more problem areas in the world, rather than stable situations. No major nation in the West can repay its debts. The same is true for Japan and most of the emerging markets. Europe is a failed experiment for socialism and deficit spending. China is a massive bubble, in terms of its stock markets, property markets and shadow banking system. Japan is also a basket case and the U.S. is the most indebted country in the world and has lived above its means for over 50 years.

So we will see twin $200 trillion debt and $1.5 quadrillion derivatives implosions. That will lead to the most historic wealth destruction ever in global stock, with bond and property markets declining at least 75 – 95 percent. World trade will also contract dramatically and we will see massive hardship across the globe.

So what do you think is coming, and how bad will things ultimately get once this global debt crisis finally spins totally out of control?

Please feel free to add to the discussion by posting a comment below…

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