The Economic Collapse

What will our financial system look like once the 20 trillion dollar commercial real estate industry implodes?  You might want to start thinking about that, because the truth is that the industry is in a tremendous amount of trouble.   Occupancy rates are extremely low and getting lower, rising interest rates have created all sorts of havoc, and now many of the small and mid-size banks that the industry depends upon for financing are in serious jeopardy.  In essence, the commercial real estate industry is facing a “perfect storm” of nightmares, and this crisis is only going to escalate in the months ahead. (Read More...)

A trillion dollars is a lot of money.  If you stacked a billion dollar bills on top of one another, the pile would be 67.9 miles high, but if you stacked a trillion dollar bills on top of one another the pile would be 67,866 miles high.  And if you lined up a trillion dollar bills end to end, the line of dollar bills would be a staggering 96,906,656 miles long.  That is longer than the distance from the Earth to the Sun.  A trillion dollars is such a vast amount of money that it is truly difficult to comprehend, but as you will see below, that much money has already been pulled out of “vulnerable” U.S. banks over the past year.  Hordes of small and mid-size banks are now in trouble, and that is really bad news because those institutions issue most of the mortgages, auto loans and credit cards that our economy runs on.  The other day, I asked my readers to “imagine what our country will look like if the banking system implodes and the economy plunges into a depression”, because if our banks continue to collapse that is precisely where we are headed. (Read More...)

When there is fear in the air, banks start getting really tight with their money, and right now there is lots of fear in the air.  A major credit contraction would be a nightmare scenario for the economy, and as you will see below, there is evidence that this is already starting to happen.  Hopefully our leaders can find a way to calm things down, because we all remember what happened during the last financial crisis.  Banks decided to substantially tighten their lending standards and that really deepened the economic downturn.  So our leaders should be doing what they can to support the stability of the system, but in so many cases they end up doing just the opposite. (Read More...)

They actually did it.  The Federal Reserve just raised interest rates by another 25 basis points right in the middle of a major banking crisis.  I honestly do not understand what Fed officials are thinking.  They had already blown a 620 billion dollar black hole in the balance sheets of U.S. banks by raising rates so aggressively, and that resulted in the second and third largest bank failures in U.S. history earlier this month.  Apparently they are not yet satisfied with the carnage that they have caused, and so they have decided to make things even worse.  What we are witnessing is either extreme incompetence of epic proportions, or they are trying to crash the economy on purpose.  I am sitting here trying to think of a third alternative, but so far I am coming up blank. (Read More...)

We could not survive without the giant ball of fire that our planet revolves around, and so the stability of our sun is of the utmost importance.  Unfortunately, it has started to behave very erratically lately.  Scientists are telling us that they think everything is just fine, but the truth is that they don’t really know.  We are witnessing activity that is truly unusual, and I believe that should deeply alarm all of us.  In fact, I am entirely convinced that the behavior of the sun will become a really big story in the years ahead. (Read More...)

Fear is in the air.  In recent days we have seen a level of panic that we have not witnessed since 2008, and in such an environment people just want to make sure that their money is safe.  But there are very few places in our financial system that are truly “safe” at this point.  The cryptocurrency industry has already experienced an absolutely disastrous crash, collapsing bond prices have blown a 620 billion dollar black hole in bank balance sheets, residential real estate prices have started to plummet, and now the largest commercial real estate crisis in the entire history of the United States is looming.  The good news is that stock prices are holding steady for now, but that can only last for so long.  Just like we witnessed in 2008, a major banking crisis will inevitably hit the stock market really hard. (Read More...)

They are desperately trying to plug one leak in the system after another, but what happens if the entire system suddenly comes crashing down all around them?  Back on January 4th, I specifically warned that our problems would “greatly accelerate over the next 12 months”, and that is precisely what has happened.  We are now in the midst of the most severe banking crisis since 2008, and it could soon get a whole lot worse.  We have already witnessed the second and third largest bank failures in the entire history of our nation, and now it is being reported that 186 more banks “are at risk of failure”… (Read More...)

What in the world was she thinking?  When a bailout was hastily arranged for uninsured depositors at Silicon Valley Bank and Signature Bank, the implication was that the same thing would be done for uninsured depositors at any other banks that failed.  But now U.S. Treasury Secretary Janet Yellen is telling us that is not actually what will happen.  She just admitted that depositors at a failed bank will only be protected if officials determine that a “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences”.  So that means that depositors at big banks are likely to be protected and that depositors at small banks are much less likely to be protected.  In other words, Janet Yellen just poured lighter fluid on every small bank in America. (Read More...)