Economic

11 Predictions Of Economic Disaster In 2015 From Top Experts All Over The Globe

2015 - Public DomainWill 2015 be a year of financial crashes, economic chaos and the start of the next great worldwide depression?  Over the past couple of years, we have all watched as global financial bubbles have gotten larger and larger.  Despite predictions that they could burst at any time, they have just continued to expand.  But just like we witnessed in 2001 and 2008, all financial bubbles come to an end at some point, and when they do implode the pain can be extreme.  Personally, I am entirely convinced that the financial markets are more primed for a financial collapse now than they have been at any other time since the last crisis happened nearly seven years ago.  And I am certainly not alone.  At this point, the warning cries have become a deafening roar as a whole host of prominent voices have stepped forward to sound the alarm.  The following are 11 predictions of economic disaster in 2015 from top experts all over the globe…

#1 Bill Fleckenstein: “They are trying to make the stock market go up and drag the economy along with it. It’s not going to work. There’s going to be a big accident. When people realize that it’s all a charade, the dollar will tank, the stock market will tank, and hopefully bond markets will tank. Gold will rally in that period of time because it’s done what it’s done because people have assumed complete infallibility on the part of the central bankers.”

#2 John Ficenec: “In the US, Professor Robert Shiller’s cyclically adjusted price earnings ratio – or Shiller CAPE – for the S&P 500 is currently at 27.2, some 64pc above the historic average of 16.6. On only three occasions since 1882 has it been higher – in 1929, 2000 and 2007.”

#3 Ambrose Evans-Pritchard, one of the most respected economic journalists on the entire planet: “The eurozone will be in deflation by February, forlornly trying to ignite its damp wood by rubbing stones. Real interest rates will ratchet higher. The debt load will continue to rise at a faster pace than nominal GDP across Club Med. The region will sink deeper into a compound interest trap.”

#4 The Jerome Levy Forecasting Center, which correctly predicted the bursting of the subprime mortgage bubble in 2007: “Clearly the direction of most of the recent global economic news suggests movement toward a 2015 downturn.”

#5 Paul Craig Roberts: “At any time the Western house of cards could collapse. It (the financial system) is a house of cards. There are no economic fundamentals that support stock prices — the Dow Jones. There are no economic fundamentals that support the strong dollar…”

#6 David Tice: “I have the same kind of feel in ’98 and ’99; also ’05 and ’06.  This is going to end badly. I have every confidence in the world.”

#7 Liz Capo McCormick and Susanne Walker: “Get ready for a disastrous year for U.S. government bonds. That’s the message forecasters on Wall Street are sending.”

#8 Phoenix Capital Research: “Just about everything will be hit as well. Most of the ‘recovery’ of the last five years has been fueled by cheap borrowed Dollars. Now that the US Dollar has broken out of a multi-year range, you’re going to see more and more ‘risk assets’ (read: projects or investments fueled by borrowed Dollars) blow up. Oil is just the beginning, not a standalone story.

If things really pick up steam, there’s over $9 TRILLION worth of potential explosions waiting in the wings. Imagine if the entire economies of both Germany and Japan exploded and you’ve got a decent idea of the size of the potential impact on the financial system.”

#9 Rob Kirby: “What this breakdown in the crude oil price is going to spawn another financial crisis.  It will be tied to the junk debt that has been issued to finance the shale oil plays in North America.  It is reported to be in the area of half a trillion dollars worth of junk debt that is held largely on the books of large financial institutions in the western world.  When these bonds start to fail, they will jeopardize the future of these financial institutions.  I do believe that will be the signal for the Fed to come riding to the rescue with QE4.  I also think QE4 is likely going to be accompanied by bank bail-ins because we all know all western world countries have adopted bail-in legislation in their most recent budgets.  The financial elites are engineering the excuse for their next round of money printing . . .  and they will be confiscating money out of savings accounts and pension accounts.  That’s what I think is coming in the very near future.”

#10 John Ing: “The 2008 collapse was just a dress rehearsal compared to what the world is going to face this time around. This time we have governments which are even more highly leveraged than the private sector was.

So this time the collapse will be on a scale that is many magnitudes greater than what the world witnessed in 2008.”

#11 Gerald Celente: “What does the word confidence mean? Break it down. In this case confidence = con men and con game. That’s all it is. So people will lose confidence in the con men because they have already shown their cards. It’s a Ponzi scheme. So the con game is running out and they don’t have any more cards to play.

What are they going to do? They can’t raise interest rates. We saw what happened in the beginning of December when the equity markets started to unravel. So it will be a loss of confidence in the con game and the con game is soon coming to an end. That is when you are going to see panic on Wall Street and around the world.”

If you have been following my website, you know that I have been pointing to 2015 for quite some time now.

For example, in my article entitled “The Seven Year Cycle Of Economic Crashes That Everyone Is Talking About“, I discussed the pattern of financial crashes that we have witnessed every seven years that goes all the way back to the Great Depression.  The last two major stock market crashes began in 2001 and 2008, and now here we are seven years later.

Will the same pattern hold up once again?

In addition, there are many other economic cycles that seem to indicate that we are due for a major economic downturn.  I discussed quite a few of these theories in my article entitled “If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States“.

But just like in 2000 and 2007, there are a whole host of doubters that are fully convinced that the party can continue indefinitely.  Even though our economic fundamentals continue to get worse, our debt levels continue to grow and every objective measurement shows that Wall Street is more reckless and more vulnerable to collapse than ever before, they mock the idea that a financial collapse is imminent.

So let’s see what happens in 2015.

I have a feeling that it is going to be an extremely “interesting” year.

The American People Are Utterly Clueless About What Is Going To Happen As We Enter 2015

Wrong Way - Public DomainThe American people are feeling really good right about now.  For example, Gallup’s economic confidence index has hit the highest level that we have seen since the last recession.  In addition, nearly half of all Americans believe that 2015 will be a better year than 2014 was, and only about 10 percent believe that it will be a worse year.  And a lot of people are generally feeling quite good about the people that have been leading our nation.  According to Gallup, once again this year Hillary Clinton is the most admired woman in America and Barack Obama is the most admired man in America.  I don’t know what that says about our nation, but it can’t be good.  Unfortunately, when things seem to be going well common sense tends to go out the window.  A couple days ago, the Guardian ran an article entitled “Goodbye to one of the best years in history“, and a whole lot of people out there are feeling really optimistic these days.  But should they be?

Sadly, what we are experiencing right now is so similar to what we witnessed in 2007 and early 2008.  The stock market had been on a great run, people were flipping houses like crazy and most people were convinced that the party would never end.

But then it did end – very painfully.

The signs of trouble were there, but most people chose to ignore them.

Sadly, the exact same thing is happening again.

On Monday, the price of oil hit a brand new five year low.  As I write this, U.S. oil is sitting at a price of $53.76 a barrel, which is nearly a 50 percent decline from the peak earlier this year.

There is only one other time in history when the price of oil has declined by more than 50 dollars a barrel in such a short time frame.  That was back in the middle of 2008, shortly before the worst stock market crash since the Great Depression.

Unless the price of oil starts really bouncing back, the U.S. economy is going to be hit really hard.

Since 2009, oil industry employment has risen by 50 percent.  And jobs in the oil industry pay quite well.  One figure that I saw put the average weekly wage at about 1700 dollars.

But now we aren’t going to be gaining those types of jobs.  Instead, we are going to rapidly start losing them.

Already, the oil rig count has dropped for three weeks in a row and is now at an 8 month low.  And as the oil industry suffers, all of the industries that it supports are also going to start feeling the pain.  In fact, Business Insider is reporting that Texas business executives are “freaked out” about what is happening…

Business executives in Texas are worried about the drop in oil prices.

On Monday, the Dallas Fed’s latest manufacturing survey showed that activity in Texas was slowing down.

The latest composite index came in at 4.1, widely missing expectations and down big from November’s reading. Expectations were for the index to come in at 9, down from 10.5 last month.

So while most Americans are feeling really good about the coming year, many of those with an inside view are becoming quite alarmed.  One Texas business executive went so far as to say that the stunning decline in oil prices was “going to make things ugly … quickly.“

Meanwhile, the 9 trillion dollar U.S. dollar carry trade is starting to unwind.

The following is an excerpt from a recent Zero Hedge article…

Oil’s collapse is predicated by one major event: the explosion of the US Dollar carry trade. Worldwide, there is over $9 TRILLION in borrowed US Dollars that has been ploughed into risk assets.

Energy projects, particularly Oil Shale in the US, are one of the prime spots for this. But it is not the only one. Economies that are closely aligned with commodities (all of which are priced in US Dollars) are getting demolished too.

Just about everything will be hit as well. Most of the “recovery” of the last five years has been fueled by cheap borrowed Dollars. Now that the US Dollar has broken out of a multi-year range, you’re going to see more and more “risk assets” (read: projects or investments fueled by borrowed Dollars) blow up. Oil is just the beginning, not a  standalone story.

If things really pick up steam, there’s over $9 TRILLION worth of potential explosions waiting in the wings. Imagine if the entire economies of both Germany and Japan exploded and you’ve got a decent idea of the size of the potential impact on the financial system.

And that’s assuming NO increased leverage from derivative usage.

Ouch.

And yes, as that last excerpt mentioned, derivatives could soon become a massive problem.  The big banks are holding trillions in commodity derivatives that could blow up if the price of oil does not rebound.  Overall, there are five U.S. banks that each have more than 40 trillion dollars of exposure to derivatives of all types, and the total global derivatives bubble is at least 700 trillion dollars at this point.

At the same time, many are becoming concerned that the unprecedented bond bubble that we are witnessing could soon implode and trillions of dollars of “wealth” could disappear into thin air.

In fact, Bloomberg says that we should “get ready for a disastrous year” for bonds…

Get ready for a disastrous year for U.S. government bonds. That’s the message forecasters on Wall Street are sending.

With Federal Reserve Chair Janet Yellen poised to raise interest rates in 2015 for the first time in almost a decade, prognosticators are convinced Treasury yields have nowhere to go except up. Their calls for higher yields next year are the most aggressive since 2009, when U.S. debt securities suffered record losses, according to data compiled by Bloomberg.

That certainly does not sound very optimistic, does it?

Anyone with even a minimal amount of intelligence should be able to see the massive financial bubbles that the central banks of the world have created, and anyone with even a minimal amount of intelligence should be able to see that we are heading for a massive financial implosion which will be extraordinarily painful.

Unfortunately, as I wrote about yesterday, the American people have become “zombiefied“.  Instead of thinking for themselves, they let “the matrix” do their thinking for them.  And right now “the matrix” is telling them that everything is going to be just fine in 2015.

If you do not think that there is a propaganda machine that tells us what to think, I want you to watch the video posted below very carefully.  This video makes it so obvious that even a small child can understand it…

 

A Cyber War With North Korea And An Economic War With Russia

North KoreaIn addition to all of our wars in the Middle East and the war that has erupted on the streets of America, we are now engaged in a cyber war with North Korea and an economic war with Russia.  Without a doubt, the United States has the capability to do a tremendous amount of damage to both of them.  But what about the damage that they could potentially do to us?  We have a society that is absolutely teeming with soft targets.  Our Internet infrastructure is extremely vulnerable, our debt-based economic system is already teetering on the edge of disaster, and government officials freely admit that security at key facilities such as power plants is sorely lacking.  And these kinds of bitter conflicts have a way of escalating.  The North Koreans and the Russians are both very proud, and neither one is going to back down any time soon.  If a foreign power wanted to really make us hurt, it wouldn’t take much imagination at all.  There are thousands of ways to do it.  So Americans should not just smugly assume that we are untouchable.  In a war, it is often those that are overconfident that get hurt the worst.

Last week, Barack Obama blamed North Korea for the nightmarish hack attack on Sony Pictures Entertainment and he promised that the U.S. would respond.

Well, it looks like that response began on Monday.  According to Bloomberg, North Korea’s connection to the Internet was totally cut off…

North Korea’s limited access to the Internet has been cut off, according to a network-monitoring company, days after the U.S. government accused the country of hacking into Sony Corp. (6758)’s files.

North Korea, which has four official networks connecting the country to the Internet — all of which route through China — began experiencing intermittent problems yesterday and today went completely dark, according to Doug Madory, director of Internet analysis at Dyn Research in Hanover, New Hampshire.

Needless to say, that got the attention of the North Koreans.

On their end, the North Koreans are still denying that they had anything to do with the attack on Sony.  And we may never know the actual truth.  In reality, Russia could have carried out such an attack.  Or it could have been the Chinese.  Or it could have even been a false flag cyberattack conducted by a three letter U.S. agency.  We just don’t know.

But what we do know is that North Korea is now vowing to take action against “the White House, the Pentagon and the whole U.S. mainland“…

“The DPRK has already launched the toughest counteraction. Nothing is more serious miscalculation than guessing that just a single movie production company is the target of this counteraction. Our target is all the citadels of the U.S. imperialists who earned the bitterest grudge of all Koreans,” a report on state-run KCNA read.

“Our toughest counteraction will be boldly taken against the White House, the Pentagon and the whole U.S. mainland, the cesspool of terrorism,” the report said, adding that “fighters for justice” including the “Guardians of Peace” — a group that claimed responsibility for the Sony attack — “are sharpening bayonets not only in the U.S. mainland but in all other parts of the world.”

So can North Korea back up those bold words?

We shall see.

But without a doubt our Internet infrastructure is very vulnerable.  As I have written about previously, our big banks are under Internet attack every single minute of every single day.  And in recent months we have seen a whole host of retailers and major corporations get hacked.

This is an emerging threat that should not be underestimated.  As a society, we have become extremely dependent on the Internet, and these attacks are constantly becoming more powerful and more sophisticated.

I think that Steve Quayle put it very well during one recent interview…

“Cyberwarfare is increasing dramatically as we speak. There are serious concerns about the ability of the United States’ banking system to whether extremely sophisticated cyberattacks. The Sony breach is just one example of how a detrimental cyberattack can bring one of the world’s most prominent entertainment giants to its knees.”

And we do know that the North Koreans take hacking very seriously.

In fact, it has been reported that North Korea has a small army of hackers that are continually harassing the western world known as “Unit 121″…

Just like in a Bond movie, an army of teenage geniuses tap away at keyboards in fortified complex tucked away from prying eyes in a rogue state, bent on bringing cyber-carnage to their Western enemies on the orders of their leader who is bent on revenge.

But this isn’t the plot line from a film. This is North Korea in 2014. And the cyber-warriors inside have diverted from their usual work of disrupting governments and big business to turn their collective fury on Sony.

The building, the Kim Il-Sung Military Academy, is one of four North Korean universities known to train children, hand-picked for their intelligence from all around the country, and turn them into recruits for an elite group of hackers simply known as Unit 121 or Bureau 121.

Meanwhile, the struggle between the United States and Russia over Ukraine has escalated into a full-blown economic war.

At first, both sides started slapping each other with relatively minor economic sanctions.

But then things started escalating.  I think that things really began to get serious for the U.S. when Russia started to make moves against the petrodollar.  This is not something that has been reported on much at all by the mainstream media in the United States, but it is a very big deal.  If you want to become enemy #1 in the eyes of the U.S. government, just start attacking the petrodollar.  So when Russia began cutting the U.S. dollar out of oil and natural gas transactions, that definitely got the attention of some folks in Washington.  You can read much more about what Russia has been doing in this regard in this article, this article and this article.

Of course Washington was not just going to sit back and let this happen.  The Obama administration has retaliated by going after two of the most important pillars of the Russian economy – oil and the ruble.  And without a doubt, a tremendous amount of damage has already been done.

At this point, Russia is facing a full-blown currency crisis, major banks are starting to fail and economists are forecasting a deep recession for next year…

The central bank bailed out its first victim of the collapsing currency, authorities announced a tax on grain exports to protect domestic stocks and a Reuters poll of 11 economists predicted that Russia’s gross domestic product would fall 3.6 percent next year.

Russia has been hit by what Economy Minister Alexei Ulyukayev recently called a “perfect storm” of plummeting oil prices, sanctions related to its military action in Ukraine, and a flight of investors’ capital — made worse by a lack of structural reforms that means the economy is overwhelmingly dependent on oil revenues.

But don’t count out the Russians just yet.

They are a very crafty people, and they are not afraid to fight dirty.

And it is important to keep in mind that the Russian Bear never forgives and it never forgets.  Most Americans don’t realize this, but right now anti-American sentiment in Russia is actually higher than it was at the end of the Cold War era.  Many Russians believe that this is a new Cold War, and that the United States is the greatest force for evil on the entire planet.

So while many Americans view this current conflict as a temporary foreign policy tussle about Ukraine, many Russians view this as a long-term struggle that is absolutely critical to the future of humanity.  If you doubt this, you should check out some of the things that their leading thinkers have been saying.

This conflict between the United States and Russia is not going to end any time soon.  And someday down the road, it could evolve into something more than just an economic war.  But before that happens, the Russians have a whole host of other ways that they can damage us.

Yes, the United States can hurt Russia.

But Russia can also hurt us.

In the end, this conflict is not going to be good for anyone.

There Is Hope In Understanding That A Great Economic Collapse Is Coming

Hope Despair - Public DomainIf you were about to take a final exam, would you have more hope or more fear if you didn’t understand any of the questions and you had not prepared for the test at all?  I think that virtually all of us have had dreams where we show up for an exam that we have not studied for.  Those dreams can be pretty terrifying.  And of course if you were ever in such a situation in real life, you probably did very, very poorly on that test.  The reason I have brought up this hypothetical is to make a point.  My point is that there is hope in understanding what is ahead of us, and there is hope in getting prepared.  Since I started The Economic Collapse Blog back in 2009, there have always been a few people that have accused me of spreading fear.  That frustrates me, because what I am actually doing is the exact opposite of that.  When a hurricane is approaching, is it “spreading fear” to tell people to board up their windows?  Of course not.  In fact, you just might save someone’s life.  Or if you were walking down the street one day and you saw someone that wasn’t looking and was about to step out into the road in front of a bus, what would the rational thing to do be?  Anyone that has any sense of compassion would yell out and warn that other person to stay back.  Yes, that other individual may be startled for a moment, but in the end you will be thanked warmly for saving that person from major injury or worse.  Well, as a nation we are about to be slammed by the hardest times that any of us have ever experienced.  If we care about those around us, we should be sounding the alarm.

Since 2009, I have published 1,211 articles on the coming economic collapse on my website.  Some people assume that I must be filled with worry, bitterness and fear because I am constantly dealing with such deeply disturbing issues.

But that is not the case at all.

There is nothing that I lose sleep over, and I don’t spend my time worrying about anything.  Yes, my analysis of the global financial system has completely convinced me that an absolutely horrific economic collapse is in our future.  But understanding what is happening helps me to calmly make plans for the years ahead, and working hard to prepare for what is coming gives me hope that my family and I will be able to weather the storm.

I do not believe in living my life in a state of fear, and I do not want anything that I write to ever cause fear in my readers.  The ancient Hebrew greeting “Shalom” is roughly translated as “peace” or “completeness”, and that is what we are constantly pursuing in my household.  My wife and I know that incredibly challenging times are coming, but we also know who we are, what our purpose is, and where we are headed.  We also believe that the greatest chapters of our lives are ahead even in the midst of all the chaos that is coming.

When times are the darkest, that is when light is needed the most.  Just think about it.  When you look back over history, what heroes do you admire the most?  If you truly think about it, almost all of those heroes arose during times of great adversity and conflict.

The years ahead can be a time of great adventure for you, or they can seem like hell on Earth.  It all depends on how you respond to your circumstances.

Do you want to know who is going to respond to the years ahead with fear, panic and depression?

The millions of people that have absolutely no idea what is coming and have made absolutely no preparations are going to be absolutely blindsided by the coming economic collapse.  Just like the 1930s, we are going to see people jumping out of windows and jumping in front of trains.  Others will sink into a state of despair so deep that nobody will ever be able to shake them out of it.

It doesn’t have to be that way.

Over the past five years I have spent thousands of hours studying the coming economic collapse.  In my articles you can find tens of thousands of facts and statistics that prove that the U.S. economy is hurtling toward oblivion.

It is not always the most pleasant thing to write about, but it is the truth.  And that is what matters.  If you believe that I am wrong, prove it to me.  I work very hard to put out the most accurate information that I possibly can.  So if you can prove that I am wrong, I will change my mind.

But of course that is not going to happen.  As I have stated previously, anyone with half a brain should be able to see that we are living in the greatest debt bubble in human history.  Anyone with half a brain should be able to see that the “too big to fail” banks are being extraordinarily reckless (derivatives, etc.).  Anyone with half a brain should be able to see that our formerly great manufacturing cities are being transformed into crime-infested hellholes.  Anyone with half a brain should be able to see that the middle class is dying.  Anyone with half a brain should be able to see that the exact same patterns that led up to the great financial crisis of 2008 are happening again.  Anyone with half a brain should be able to see that we simply cannot consume far more wealth than we produce as a nation indefinitely.  Anyone with half a brain should be able to see that the incredibly foolish decisions that our politicians have been making for decades have placed us on a road to utter disaster.

So it doesn’t take anyone special to do what I am doing.  I am just a “watchman on the wall” sounding the alarm the best that I can.  And there are lots of others that are doing the same thing.  We are deeply concerned about where this nation is heading, and we have been pleading with our leaders to do something about it for a long time but they have not listened to us.

Since our leaders just continue doing “business as usual”, there is not going to be a solution to our problems on the national level.

So that is why I am encouraging people to get prepared for the hard times that are coming on a family level and a community level.

Unfortunately, it seems like some people always have an excuse for not getting prepared.  In fact, a few have even gone so far as to accuse me of being “anti-faith” for suggesting that people actually get off their couches and do something to help their families deal with the nightmare on the horizon.  They seem to have the attitude that we should all just sit back and wait for God to do everything for us.

So I am not quite sure why those people get up in the morning and go to work, since they should just “trust God” to deposit paychecks into their banks.  And I am not quite sure why they ever fill up the tanks of their vehicles with gasoline, because they should be able to “trust God” to put more gas there when they need it.

I covered all of this in much more detail in my previous article entitled “Is It ‘Anti-Faith’ To Prepare For The Coming Economic Collapse?”

For now, let me just state that what those people are suggesting is the exact opposite of what the Bible teaches.  Trusting God is not about sitting back and doing nothing.  In the Scriptures, we are told that faith is about stepping out and taking action on what God has revealed to us.  That includes working hard, being wise and providing for our families.  For example, just check out Proverbs 6:6-11…

Go to the ant, you sluggard! Consider her ways and be wise. Which, having no guide, overseer, or ruler, provides her bread in the summer, and gathers her food in the harvest.

How long will you sleep, O sluggard? When will you arise out of your sleep? Yet a little sleep, a little slumber, a little folding of the hands to sleep— so will your poverty come upon you like a stalker, and your need as an armed man.

In the end, each one of us needs to make the decisions that we feel are best for our own families.

So that is why it is so incredibly important not to let someone else do your thinking for you.

In America today, the average person watches 153 hours of television a month.  In addition to that, we also spend countless hours watching movies, playing video games, listening to music, reading books and surfing the Internet.

What most Americans don’t realize is that there are just six giant corporations that control almost all of that content, and that makes them immensely powerful.

These giant media corporations are constantly manipulating our attitudes, opinions and beliefs.  And at this point most Americans seem quite content to remain “plugged into the matrix” and to allow corrupt corporate executives somewhere to do their thinking for them.

I urge you to break free from that system.

Do your own research and do your own thinking.

Don’t take what I say or what anyone else says as truth without critically examining it yourself.  This can be difficult at first, because in this nation our young people are no longer trained to think critically.  Instead, we are trained to just blindly accept whatever information the system feeds us.

George Orwell once said that “during times of universal deceit, telling the truth becomes a revolutionary act“.

That perfectly describes the era that we are currently living in.

The truth does not bring fear and despair.

Rather, the truth brings hope and it sets people free.

Share the truth with as many people as you can, because we live in a world that desperately needs it.

A Full-Blown Economic Crisis Has Erupted In Russia

Vladimir PutinThe 8th largest economy on the entire planet is in a state of turmoil right now.  The shocking collapse of the price of oil has hit a lot of countries really hard, but very few nations are as dependent on energy production as Russia is.  Sales of oil and natural gas account for approximately two-thirds of all Russian exports and approximately 50 percent of all government revenue. So it should be no surprise that the fact that the price of oil has declined by almost 50 percent since June is absolutely catastrophic for the Russian economy.  And when you throw in international sanctions, wild money printing by the Central Bank of Russia and unprecedented capital flight, you get the ingredients for an almost perfect storm.  But those of us living in the western world should not be too smug about what is happening in Russia, because the nightmare that is unfolding over there is just a preview of the economic chaos that will soon envelop the whole world.

So far this year, the Russian ruble has fallen nearly 50 percent against the U.S. dollar.  That is a monumental shift.  And as the collapse of the ruble has accelerated in recent days, we are seeing scenes in Russia that are reminiscent of the Weimar Republic.  For example, just consider the following excerpt from an article that just appeared in the New York Times…

Scenes that Russians hoped had receded into the past reappeared on the streets: Currency exchange signs blinked ever-changing digits, and Russians rushed to appliance stores to buy washing machines or televisions to unload rubles.

“We are seeing an economic crisis,” Natalia V. Akindinova, a professor at the Higher School of Economics, said in a telephone interview. “We are seeing a sharp devaluation of the ruble at a time when the central bank doesn’t have the reserves to influence the market, as it did in the past crises.”

In a desperate attempt to stop the bleeding, the Central Bank of Russia made an astounding move.  Last night it raised its key interest rate from 10.5 percent all the way up to 17 percent.

It was hoped that this desperate move would keep the ruble from plummeting any further.

And it did work for a few minutes, but then the collapse of the ruble resumed.  This is how Zero Hedge described the carnage…

For those wondering if the CBR’s intervention in the Russian FX market with its shocking emergency rate hike to 17% overnight calmed things, the answer is yes… for about two minutes. The USDRUB indeed tumbled nearly 10% to 59 and then promptly blew right back out, the Ruble crashing in panic selling and seemingly without any CBR market interventions, and at last check was freefalling through 72 74, and sending the Russian stock market plummeting by over 15%.

So why is this happening now?

Well, the biggest reason for the freefall of the ruble is the fact that the Central Bank of Russia just printed up about 625 billion rubles and gave it to their friends at Rosneft.

Rosneft is an absolutely massive oil company that is controlled by the Russian government.  For months, Rosneft has been asking for a bailout (sound familiar?) to refinance loans that can no longer be rolled over with western banks because of economic sanctions.

And on Friday they got one.

In an attempt to quietly slip this massive injection of new money past everyone, Rosneft issued 625 billion rubles worth of new bonds just before the weekend and the Central Bank of Russia gobbled most of those new bonds up with freshly created money.  Unfortunately for Rosneft and the Central Bank of Russia, the rest of the world took notice…

With the oil giant in a bind, the central bank ruled that it would accept Rosneft bonds held by commercial banks as collateral for loans.

Rosneft issued 625 billion rubles, about $10.9 billion at the exchange rate at the time, in new bonds on Friday. The identities of the buyers were not publicly disclosed, but analysts say that large state banks bought the issue.

When these banks deposit the bonds with the central bank in exchange for loans, Rosneft will have been financed, in effect, with an emission of rubles from the central bank.

So that is what led to the panic selling that we witnessed on Monday.

Meanwhile, money is being pulled out of Russia at an absolutely staggering pace.  As confidence in the ruble and in the Russian financial system disappears, wealthy people are feverishly trying to protect their wealth by moving it somewhere else.  The following is an excerpt from an editorial that Mohamed A. El-Erian recently penned for Business Insider…

Rather than bring in buyers at these substantially cheaper levels, Russian currency weakness is inducing more selling, including by a growing number of worried bank depositors who, instead of holding their savings in ruble, are opting for safer dollars. The larger the extent of this “currency substitution,” the bigger the scope for capital flight out of Russia. This puts even greater pressure on the currency, aggravating the output contraction, imported inflation, and the general sense economic and financial instability.

It has been estimated that total capital outflows for 2015 will reach an astounding $128 billion.

And this could just be the beginning of the economic troubles for Russia.

If the price of oil stays this low or goes even lower, the Russian economy will shrink.  The only question is how much it will contract…

The Bank of Russia said Monday that the country could sink into a deep recession next year if oil prices remain at $60 a barrel. GDP could contract by as much as 4.7% in 2015, and then by a further 1.1% in 2016 unless oil prices pick up.

Sadly, it isn’t just oil producing nations such as Russia that are going to be devastated by the coming crisis.

Eventually, the entire globe is going to feel the pain.

Last week was the worst week for global financial markets in three years, and so many of the exact same patterns that we witnessed just prior to the great financial crisis of 2008 are happening once again.  We have been living in a false bubble of relative stability for the past couple of years, but now time is running out.  The next great financial crisis is rapidly approaching, and 2015 promises to be the most “interesting” year that we have seen in ages.

If Everything Is Just Fine, Why Are So Many Really Smart People Forecasting Economic Disaster?

Apocalyptic Disaster - Public DomainThe parallels between the false prosperity of 2007 and the false prosperity of 2014 are rather striking.  If we go back and look at the numbers in the fall of 2007, we find that the Dow set an all-time high in October, margin debt on Wall Street had spiked to record levels, the unemployment rate was below 5 percent and Americans were getting ready to spend a record amount of money that Christmas season.  But then the very next year the worst economic crisis since the Great Depression shook the entire planet and everyone wondered why most people never saw it coming.  Well, now a similar pattern is unfolding right before our eyes.  The Dow and the S&P 500 both hit record highs on Monday, margin debt on Wall Street is hovering near record levels, the unemployment rate has ticked down a little bit and Americans are getting ready to spend more than 600 billion dollars this Christmas season.  The truth is that the economy seems pretty stable for the moment, and most people cannot even imagine that an economic collapse is coming.  So why are so many really smart people forecasting economic disaster in the near future?

For example, just consider what the Jerome Levy Forecasting Center is saying.  This is an organization with a tremendous economic forecasting record that goes all the way back to the Great Depression.  In fact, it predicted ahead of time the financial trouble and the recession that would happen in 2008.  Well, now this company is forecasting that there is a 65 percent chance that there will be a global recession by the end of next year…

In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash.

Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession — the slump began two months later.

The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year.

Could they be wrong?

It’s certainly possible.

But I wouldn’t bet against them.

John Hussman is another expert that is warning of financial disaster on the horizon.  He believes that we are experiencing a massive stock market bubble right now and that stocks are approximately double the value that they should be…

If you look at corporate profits and especially corporate profit margins, they’re one of the most cyclical and mean-reverting series in economics. Right now, we have corporate profits that are close to about 11% of GDP, but if you look at that series you will find that corporate profits as a share of GDP have always dropped back to about 5.5% or below in every single economic cycle including recent decades, including not only the financial crisis but 2002 and every other economic cycle we have been in.

Right now stocks as a multiple of last year’s expected earnings may look only modestly over valued or modestly richly valued. Really if you look at the measures of valuation that are most correlated to the returns that stocks deliver over time say over seven years or over the next 10 years the S&P 500 in our estimation is about double the level of valuation that would give investors a normal rate of return.

Could you imagine the chaos that would ensue if stocks really did drop by 50 percent?

Well, Hussman says that this is precisely what must happen in order for stock prices to return to historical norms…

Right now, like I say, we are looking at stocks that have been pressed to long-term expected returns that are really dismal. But more important than that, in every market cycle that we’ve seen with the mild exception of 2002, we’ve seen stocks price revert back to normal rates of return. In order to get to that point from here, we would have to have equities drop by about half.

If that does happen, it will make the crisis of 2008 look like a Sunday picnic.

Meanwhile, other very prominent thinkers are also warning that an economic nightmare is rapidly approaching.

Economic cycle theorist Martin Armstrong foresees major economic problems in 2015 which will ultimately lead to “civil unrest”  in 2016…

It looks more and more like a serious political uprising will erupt by 2016 once the economy turns down. That is the magic ingredient. Turn the economy down and you get civil unrest and revolution.

And of course there are a whole lot of other economic cycle theorists that are forecasting that we are about to experience a massive economic downturn as well.  For much more on this, please see this article and this article.

What is truly frightening is that we have never even come close to recovering from the last economic crisis.  One poll that was taken just prior to the recent election found that only 28 percent of Americans said that their families were doing better financially.  In addition, here are some more survey numbers about how Americans are feeling about the economy…

According to voter exit polls conducted by CNN, 78% said they are worried about the economy, with 69% saying that, in their view, economic conditions are not good. 65% responded that the country is on the wrong track vs. only 31% who believed that it is headed in the right direction.

Even though we are repeating so many of the same patterns that we experienced back in 2007, we are doing so with a fundamentally weaker economy.  The last crisis did a tremendous amount of permanent damage to us.  For an extensive look at this, please see my previous article entitled “12 Charts That Show The Permanent Damage That Has Been Done To The U.S. Economy“.

And there are lots of signs that much of the planet is already entering another major economic slowdown.  In a recent article, Brandon Smith summarized some of these.  He says that we are currently witnessing “the last gasp of the global economy“…

Global exports, and thus consumer demand, are plunging. Germany, the only pillar left to prop up the failing European Union, has experienced a severe decline in exports not seen since 2009.

China, the largest exporter and importer in the world, and Chinese companies, have been caught in a number of instances using fraudulent invoices to artificially inflate their own export numbers, in some cases reporting 50% more exported goods than had actually existed.

China’s manufacturing has also declined for the past five months, exposing the nature of its inflated export stats and indicating a global slowdown.

The Baltic Dry Index, a measure of global shipping rates for raw goods, and thus a measure of demand for shipping, continues to drag along near historic lows.

The U.S. consumer (the only economic asset the U.S. has besides the dollar’s world reserve status), has seen declines in spending as well as wages.

In the meantime, long term jobless Americans continue to fall off welfare rolls by the millions, making unemployment numbers look good, but the overall future picture look terrible as participation rates dissolve into the ether of government statistics.

How is such poverty being hidden? Foodstamps. Plain and simple. Nearly 50 million Americans now subsist on food stamp programs today, and this number shows no signs of dropping. In states like Illinois, two people sign up for food assistance for every citizen that happens to find a job.

From time to time, I get accused of “spreading fear” and of being obsessed with “doom and gloom”.

But that is not the case at all.

I actually want our economy to stay stable for as long as possible.  Many Americans don’t realize this, but even the poorest of us live in luxury compared to much of the rest of the world.  It would be wonderful if we could all live out our lives in peace and quiet and safety.

Unfortunately, it is simply not going to happen.

And it does not take an expert to see what is coming.

Anyone with half a brain should be able to see the economic disaster that is approaching.

There is hope in understanding what is happening and there is hope in getting prepared.  Millions of Americans that are willingly blind to our problems are going to have their lives absolutely destroyed when they get blindsided by the coming crisis.  So please use this brief period of relative stability to get prepared and to warn others.

Once this false bubble of hope runs out, all of our lives are going to dramatically change.

National Economic Suicide: The U.S. Trade Deficit With China Just Hit A New Record High

Economics - Public DomainDid you know that we buy nearly five times as much stuff from the Chinese as they buy from us?  According to government numbers that were just released, we imported 44.9 billion dollars worth of stuff from China in September but we only exported 9.3 billion dollars worth of stuff to them.  And this is not happening because our economy is so much larger than China’s.  In fact, the IMF says that China now has the largest economy on the entire planet on a purchasing power basis.  No, the truth is that this is happening because our economy is broken.  Every month, we consume far more wealth than we produce.  Because the outflow of money is far greater than the inflow, we have to go to major exporting nations and beg them to lend our dollars back to us so that we can pay our bills.  Meanwhile, the quality of the jobs in this country continues to go down and our formerly great manufacturing cities are rotting and decaying.  We are committing national economic suicide, and most Americans don’t seem to care.

Barack Obama is constantly hyping a “manufacturing resurgence” in America, but the numbers don’t lie.  In September, our manufactured goods trade deficit with the rest of the world soared to a new all-time record high of 69.16 billion dollars.  For the year, we are nearly 12 percent ahead of last year’s record pace.

When we buy far more things than we sell, we get poorer as a nation.

How do you think that we ever got into a position of owing China more than a trillion dollars?

We just kept buying far more from them than they bought from us, and their money just kept piling up.  Now it has gotten to the point where our politicians literally beg them to lend our money back to us.  They are the head and we are the tail.

And we did this to ourselves.

Once upon a time, the United States was the greatest manufacturing powerhouse that the world had ever seen.  But now China manufactures more stuff than us and China also accounts for more total global trade (imports plus exports) than us.

This should never have happened.  Several decades ago, the Chinese economy was a complete joke.  But decades of incredibly foolish decisions by our politicians have resulted in the loss of tens of thousands of manufacturing facilities, millions of good paying jobs and the destruction of vast stretches of our economic infrastructure.

During the same time frame, gleaming new manufacturing facilities have gone up all over China.

China is literally wiping the floor with us on the global economic stage and most Americans don’t even understand what is happening.  Here is more on the trade deficit numbers that were just released from the RealityChek Blog…

>The China goods deficit of $35.56 billion blew past the old mark of $30.86 billion, set in July, by 15.23 percent. The new deficit also represented a 17.77 percent increase over the August level of $30.20 billion.

>U.S. goods exports to the still strongly growing Chinese economy fell on month in September from $9.63 billion to $9.33 billion (3.12 percent). U.S. merchandise imports from China jumped by 12.70 percent over August levels, from $39.83 billion to $44.89 billion – itself an all-time high.

>The U.S. goods deficit with China this year is now so far running 5.62 percent ahead of 2014’s record pace.

>The longstanding U.S. manufacturing trade shortfall shot up from $59.10 billion in August to $69.16 billion in September. This 17.02 percent jump resulted in a beat of the old record of $67.33 billion, also set in July, by 2.72 percent.

And it isn’t just cheap plastic trinkets that China is selling to us.

In fact, their number one export to us is computer equipment.

Meanwhile, one of our main exports to them is “scrap and trash”.

For much more on how China is absolutely dominating us, please see my previous article entitled “Not Just The Largest Economy – Here Are 26 Other Ways China Has Surpassed America“.

Sadly, there are a couple of factors that will probably make our trade deficit with the rest of the world even worse in the months ahead.

Number one, the currency war that I wrote about earlier this week will probably push the U.S. dollar even higher against the yen and the euro.

You might think that a rising dollar sounds good, but the truth is that it will make our exports less competitive in the global marketplace.

Nations such as Japan devalue their currencies so that they can sell more stuff to us.  But that hurts our own domestic industries.  And when our own domestic industries suffer, that means less jobs for American workers.

Secondly, the collapse in the price of oil could have very serious implications for the shale oil industry.

In recent years, the shale oil revolution has caused local economic booms in states such as Texas and North Dakota.  But shale oil tends to be quite expensive to extract.  As I write this, the price of U.S. oil has fallen to about 77 dollars a barrel.  If it stays at that level or keeps going down, shale oil production in the United States will slow down dramatically.

In other words, a lot of these shale oil “boom towns” could go “bust” very rapidly.

If that happens, the amount of oil that we import will rise substantially and that will add to our overall trade deficit.

But of course the biggest factor fueling our trade deficit is that the vast majority of Americans simply do not care that we are committing national economic suicide.

When we buy products made in America, we support American businesses and American workers.

When we buy products made overseas, we hurt American businesses, we kill American jobs and we make ourselves poorer as a nation.

Of course there is nothing wrong with buying a foreign-made product once in a while.  But this holiday season, most people will fill their shopping carts to the brim with foreign-made goods without even thinking twice about it.

The next time that you go into a huge retail establishment such as Wal-Mart, start picking up products and look to see where they were made.

I think that you will be shocked at how few of them are actually made inside the United States.

When are Americans going to get sick and tired of making China wealthier at our expense?

We are willing participants in the destruction of the U.S. economy, and yet only a small minority of people seem to care.

What is it going to take for people to finally wake up?

Small Business Ownership In America Is At An All-Time Low

Small Business - Public DomainAccording to the Federal Reserve, the percentage of American families that own a small business is at the lowest level that has ever been recorded.  In a report that was just released entitled “Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances“, the Federal Reserve revealed that small business ownership in America “fell substantially” between 2010 and 2013.  Even in the midst of this so-called “economic recovery”, small business ownership in America has now fallen to an all-time low.  If the economy truly was healthy, this would not be happening.  And it isn’t as if Americans are flooding the labor market either.  As I detailed yesterday, the labor force participation rate in this country is at a 36 year low.  That would not be happening if the economy was actually healthy either.  The truth is that the middle class in America is dying, and this new report from the Federal Reserve is more evidence of this very harsh reality.

In order to build wealth, middle class Americans either need to have their own businesses or they need good jobs.  Sadly, the percentage of Americans that own a business continues to decline steadily.  In the report that I mentioned above, the Federal Reserve says that the proportion of U.S. families that have an ownership interest in a small business fell from 13.3 percent in 2010 to a brand new all-time low of 11.7 percent in 2013.

This is one of the factors that is increasing the gap between the extremely wealthy and the rest of us in this country.  And of course another of the major factors is the steady decline in good paying jobs.

The U.S. Competitiveness Project at Harvard Business School is chaired by professors Michael E. Porter and Jan W. Rivkin.  It just released a new report entitled “An Economy Doing Half Its Job”, and it addressed the fact that the middle class is deeply struggling even though many large U.S. corporations have been thriving.  The following is an excerpt from an article in the Boston Globe about this report…

In a statement, Porter added: “Shortsighted executives may be satisfied with an American economy where firms operating here are winning without lifting US living standards. But leaders with longer perspectives understand that companies can’t thrive for long while their workers and their communities struggle.”

Unfortunately, this is not likely to change any time soon.  In fact, that same report discovered that Harvard Business School alumni foresee “falling pay and fewer openings for full-time jobs” for American workers in the years ahead…

U.S. workers face a dim future, with stagnant or falling pay and fewer openings for full-time jobs.

That’s the picture that emerges from a survey of Harvard Business School alumni.

More than 40 percent of the respondents foresee lower pay and benefits for workers. Roughly half favor outsourcing work over hiring staffers. A growing share prefer part-time employees. Nearly half would rather invest in new technology than hire or retain workers.

The Obama administration continues to tell us that the unemployment rate is “going down” and that the economy is recovering, but that does not match the reality of what most Americans are experiencing on a day to day basis.

As David Stockman recently so aptly put it, outside of health and education the U.S. economy has not produced a single job since mid-2000 even though our population has grown greatly since that time…

In a few deft seconds, a “no jobs” nobody who apparently doesn’t actually have one himself,  essentially explained the contents of the chart below to his silenced CNBC hosts. Over the course of 170 “jobs Fridays” since mid-2000, the latter have apparently never noticed the single most stunning fact embedded in the monthly BLS report. Namely, that outside of health and education there has not been one net new job created in the American economy since July 2000! Yes, not a single new job—as in none, nein, nichts, nada, zip!

In addition, most of the new jobs that are being “added to the economy” each month are part-time jobs.  Right now, we still have 1.4 million fewer full-time jobs than we did in 2008 even though more than 100,000 people are added to the population each month.

What this means is that the middle class is shrinking.

We are witnessing an increasing concentration of wealth among the ultra-wealthy, and most of the rest of us are getting poorer.  As a recent CNN article detailed, the Federal Reserve has also discovered that the gap between the rich and the poor in America is larger than the Fed has ever recorded before…

In its Study of Consumer Finances, released every three years, the Fed found that the wealthiest 3% of American households controlled 54.4% of the nation’s wealth in 2013, a slight increase from its last survey in 2010. It’s also substantially higher from the 44.8% they held in 1989, showing how quickly the income divide has been growing over the past decade or so.

At the same time, the share of wealth held by the bottom 90% fell to 24.7% in 2013. That’s compared to 33.2% in 1989.

How close does the share of wealth for the bottom 90 percent have to go before we admit that we have a major problem on our hands?

Is there anyone out there that would be okay with it hitting zero percent?

One of the big reasons why the wealthy have been doing so well is because the stock market has been soaring.  The money printing policies of the Federal Reserve have sent stock prices to unprecedented heights.  This has overwhelmingly benefited the extremely wealthy…

According to recent data from the Federal Reserve, America has the lowest level of stock ownership in 18 years. Yet stock ownership for the wealthy is at a new high—and that has accounted for most of their good fortune compared to the rest of America.

In fact, the Fed says that the wealthiest top 10 percent of all Americans now own 81 percent of all stocks…

Stock ownership is even more concentrated when it comes to share of total stock holdings. In 2010, the latest period available, the top 10 percent of Americans by net worth held 81 percent of all directly held or indirectly held stocks, according to Edward N. Wolff, an economics professor at New York University who specializes in inequality and Federal Reserve data.

Wolff said that share—which has not been released yet for 2013—has probably gone even higher than 81 percent since 2010.

Since the last financial crisis, the Federal Reserve has been very good to the elite.

But most of the rest of us have had a really hard time.

Until more Americans start getting good jobs and building small businesses, things are not going to turn around for the middle class.

But the policies being pursued by our politicians continue to kill good jobs and continue to kill small businesses, so I wouldn’t expect significant changes any time soon.

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