20 Signs That The Next Great Economic Depression Has Already Started In Europe

20 Signs That The Next Great Economic Depression Has Already Started In EuropeThe next Great Depression is already happening – it just hasn’t reached the United States yet.  Things in Europe just continue to get worse and worse, and yet most people in the United States still don’t get it.  All the time I have people ask me when the “economic collapse” is going to happen.  Well, for ages I have been warning that the next major wave of the ongoing economic collapse would begin in Europe, and that is exactly what is happening.  In fact, both Greece and Spain already have levels of unemployment that are greater than anything the U.S. experienced during the Great Depression of the 1930s.  Pay close attention to what is happening over there, because it is coming here too.  You see, the truth is that Europe is a lot like the United States.  We are both drowning in unprecedented levels of debt, and we both have overleveraged banking systems that resemble a house of cards.  The reason why the U.S. does not look like Europe yet is because we have thrown all caution to the wind.  The Federal Reserve is printing money as if there is no tomorrow and the U.S. government is savagely destroying the future that our children and our grandchildren were supposed to have by stealing more than 100 million dollars from them every single hour of every single day.  We have gone “all in” on kicking the can down the road even though it means destroying the future of America.  But the alternative scares the living daylights out of our politicians.  When nations such as Greece, Spain, Portugal and Italy tried to slow down the rate at which their debts were rising, the results were absolutely devastating.  A full-blown economic depression is raging across southern Europe and it is rapidly spreading into northern Europe.  Eventually it will spread to the rest of the globe as well.

The following are 20 signs that the next Great Depression has already started in Europe…

#1 The unemployment rate in France has surged to 10.6 percent, and the number of jobless claims in that country recently set a new all-time record.

#2 Unemployment in the eurozone as a whole is sitting at an all-time record of 12 percent.

#3 Two years ago, Portugal’s unemployment rate was about 12 percent.  Today, it is about 17 percent.

#4 The unemployment rate in Spain has set a new all-time record of 27 percent.  Even during the Great Depression of the 1930s the United States never had unemployment that high.

#5 The unemployment rate among those under the age of 25 in Spain is an astounding 57.2 percent.

#6 The unemployment rate in Greece has set a new all-time record of 27.2 percent.  Even during the Great Depression of the 1930s the United States never had unemployment that high.

#7 The unemployment rate among those under the age of 25 in Greece is a whopping 59.3 percent.

#8 French car sales in March were 16 percent lower than they were one year earlier.

#9 German car sales in March were 17 percent lower than they were one year earlier.

#10 In the Netherlands, consumer debt is now up to about 250 percent of available income.

#11 Industrial production in Italy has fallen by an astounding 25 percent over the past five years.

#12 The number of Spanish firms filing for bankruptcy is 45 percent higher than it was a year ago.

#13 Since 2007, the value of non-performing loans in Europe has increased by 150 percent.

#14 Bank withdrawals in Cyprus during the month of March were double what they were in February even though the banks were closed for half the month.

#15 Due to an absolutely crippling housing crash, there are approximately 3 million vacant homes in Spain today.

#16 Things have gotten so bad in Spain that entire apartment buildings are being overwhelmed by squatters

A 285-unit apartment complex in Parla, less than half an hour’s drive from Madrid, should be an ideal target for investors seeking cheap property in Spain. Unfortunately, two thirds of the building generates zero revenue because it’s overrun by squatters.

“This is happening all over the country,” said Jose Maria Fraile, the town’s mayor, who estimates only 100 apartments in the block built for the council have rental contracts, and not all of those tenants are paying either. “People lost their jobs, they can’t pay mortgages or rent so they lost their homes and this has produced a tide of squatters.”

#17 As I wrote about the other day, child hunger has become so rampant in Greece that teachers are reporting that hungry children are begging their classmates for food.

#18 The debt to GDP ratio in Italy is now up to 136 percent.

#19 25 percent of all banking assets in the UK are in banks that are leveraged at least 40 to 1.

#20 German banking giant Deutsche Bank has more than 55 trillion euros (which is more than 72 trillion dollars) of exposure to derivatives.  But the GDP of Germany for an entire year is only about 2.7 trillion euros.

Yes, U.S. stocks have been doing great so far this year, but the truth is that the stock market has become completely and totally divorced from economic reality.  When it does catch up with the economic fundamentals, it will probably happen very rapidly like we saw back in 2008.

Our politicians can try to kick the can down the road for as long as they can, but at some point the consequences of our foolish decisions will hunt us down and overtake us.  The following is what Peter Schiff had to say about this coming crisis the other day…

“The crisis is imminent,” Schiff said.  “I don’t think Obama is going to finish his second term without the bottom dropping out. And stock market investors are oblivious to the problems.”

“We’re broke, Schiff added.  “We owe trillions. Look at our budget deficit; look at the debt to GDP ratio, the unfunded liabilities. If we were in the Eurozone, they would kick us out.”

Schiff points out that the market gains experienced recently, with the Dow first topping 14,000 on its way to setting record highs, are giving investors a false sense of security.

“It’s not that the stock market is gaining value… it’s that our money is losing value. And so if you have a debased currency… a devalued currency, the price of everything goes up. Stocks are no exception,” he said.

“The Fed knows that the U.S. economy is not recovering,” he noted. “It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode.”

So please don’t think that we are any different from Europe.

If the United States government started only spending the money that it brings in, we would descend into an economic depression tomorrow.

The only way that we can continue to live out the economic fantasy that we see all around us is by financially abusing our children and our grandchildren.

The U.S. economy has become a miserable junkie that is completely and totally addicted to reckless money printing and gigantic mountains of debt.

If we stop printing money and going into unprecedented amounts of debt we are finished.

If we continue printing money and going into unprecedented amounts of debt we are finished.

Either way, this is all going to end very, very badly.

European Central Bank, Frankfurt - by jpatokal

The Federal Reserve Sends Thank You Letters To Congress For Allowing Them To Destroy Our Economy In Secret

The Federal Reserve continues to pump up this “bubble economy” by recklessly printing money and by setting interest rates artificially low, and the U.S. Congress continues to stand aside and allow them to systematically destroy our economy.  The U.S. Congress could choose to end this madness at any time, but the truth is that Congress won’t even pass a law that would allow the American people to see what is going on over at the Federal Reserve.  Congress has voted down every single bill that would authorize a comprehensive audit of the Federal Reserve.  So the folks over at the Fed will continue to be able to destroy our future in secret.  In fact, back in July Federal Reserve Chairman Ben Bernanke actually sent five thank you letters to members of Congress that gave speeches on the floor of the U.S. House of Representatives encouraging their fellow lawmakers to vote against the bill to audit the Fed.  Since the U.S. Congress continues to refuse to do anything to hold the Federal Reserve accountable, the Fed will continue to print unprecedented amounts of money, it will continue to set interest rates insanely low and it will continue to pump up the greatest debt bubble in the history of the world.  Unfortunately, all debt bubbles eventually burst, and when this one does it is going to be a financial nightmare unlike anything we have ever seen before.

It was Politico that first broke the story about the thank you letters that Federal Reserve Chairman Ben Bernanke sent to five members of Congress back in July.  Bernanke acknowledged in the letters that there was never any worry that the “Audit the Fed” bill would actually get through Congress and be signed into law, but he was still extremely grateful that a number of members of Congress got up and publicly denounced the bill….

In July, the Fed chairman sent letters of gratitude to five Democratic members of Congress after they delivered speeches on the House floor urging fellow lawmakers to reject the “Audit the Fed” bill authored by retiring Texas Republican Ron Paul, the central bank’s chief antagonist.

Their efforts failed to defeat the bill, but they were not in vain, at least in Bernanke’s eyes.

“While the outcome of the vote was not in doubt, your willingness to stand up for the independence of the Federal Reserve is greatly appreciated,” Bernanke wrote in the letters, which were obtained by POLITICO through a Freedom of Information Act request.

So who did Bernanke send those letters to?

According to Politico, the thank you letters were delivered to U.S. Representatives Barney Frank, Elijah Cummings, Melvin Watt, Carolyn Maloney and Steny Hoyer.

By refusing to take action against the Federal Reserve, the U.S. Congress is silently endorsing their incredibly foolish policies.

Sadly, most Americans don’t even realize that the Federal Reserve has more control over our economy than anyone else does.  Most Americans that are actually concerned about politics are busy arguing over whether Obama or Romney will be better for the economy when it is actually the Fed that controls the levers of economic power.

Just think about it.

The Federal Reserve played a major role in creating the housing bubble which severely damaged our financial system a few years ago.

As the chart below shows, after 9/11 the Federal Reserve dropped interest rates to historically low levels.  This allowed potential home buyers to get into much larger mortgages, and the big banks (which the Fed supposedly “regulates”) started making home loans to almost anyone with a pulse.

When interest rates started to go back up to normal levels in 2005, many home owners discovered that their adjustable rate mortgages started to become much more painful.  By 2007, we started to see a massive wave of mortgage defaults.  In 2008, the financial system crashed.

In response to the financial crisis of 2008, the Federal Reserve dropped interest rates to record low levels.  The effective federal funds rate is essentially at zero at this point, and the Fed has promised to keep interest rates at ultra-low levels all of the way into 2015.

But didn’t artificially low interest rates cause many of our problems in the first place?  The central planners over at the Fed are convinced that this is the right course for our economy, but can we really live in a zero interest rate bubble indefinitely?  Won’t this eventually cause even greater problems?….

The Fed is also destroying our economy by recklessly printing money.

Once upon a time, the U.S. monetary base rose at a very steady pace.  But since the financial crisis of 2008, Ben Bernanke has been flooding the financial system with money and this has caused an unprecedented explosion in our money supply.

It isn’t too hard to see from this chart what the foolish “quantitative easing” policies of the Federal Reserve have done to our monetary base….

Fortunately a lot of the money from previous rounds of quantitative easing is being stashed by the big banks as “excess reserves” with the Federal Reserve, but when that money starts flowing into the “real economy” (and it will at some point), we are going to have a major problem on our hands.

But more than tripling our monetary base was not enough for Bernanke.  He recently announced yet another round of quantitative easing which he says will last indefinitely.

Basically, Bernanke is taking a sledgehammer to the U.S. dollar.  Our currency is being systematically destroyed, and the U.S. Congress is standing by and doing nothing.

For a lot more on why QE3 is going to be so incredibly destructive for our economy, please see the following five articles….

-“QE3: Helicopter Ben Bernanke Unleashes An All-Out Attack On The U.S. Dollar

-“How QE3 Will Make The Wealthy Even Wealthier While Causing Living Standards To Fall For The Rest Of Us

-“The Federal Reserve Is Systematically Destroying Social Security And The Retirement Plans Of Millions Of Americans

-“QE4? The Big Wall Street Banks Are Already Complaining That QE3 Is Not Enough

-“Quantitative Easing Did Not Work For The Weimar Republic Either

The Federal Reserve seems to think that printing more money is always the solution to whatever economic problems we are having.

But of course the Fed has been debasing our currency from the very beginning.  The entire Federal Reserve system is designed to create inflation.

From the time that the Federal Reserve was created back in 1913, the purchasing power of a U.S. dollar has declined from $1.00 to only about 4 pennies today.

And now Bernanke seems bound and determined to wipe out those last 4 pennies.

The Federal Reserve system was also designed to create a never ending spiral of government debt.

Sadly, most Americans simply have no idea where money comes from.  Most Americans have no idea that money that the Federal Reserve zaps into existence out of thin air is loaned to the U.S. government at interest.  Most Americans have no idea that the primary reason why we are 16 trillion dollars in debt is because this is what the system was designed to do to us.

Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was originally created in 1913.  This did not happen by accident….

Not that our politicians should be off the hook for this.  They have been spending money as if there is no tomorrow.  Most of them have shown no concern at all about the legacy of debt that they are passing on to future generations of Americans.

If our politicians had been more responsible, the national debt would still be there, but it would be at a much more manageable level.

If we ever want to totally get rid of our national debt, the Federal Reserve must be abolished.

There is no other way.

And government debt is not the only bubble that the Federal Reserve has pumped up.

The following is a chart that shows the growth of all forms of debt (government, business, consumer, etc.) in the United States.  The total amount of debt in the United States has grown from less than $2 trillion to more than $55 trillion over the past 40 years….

How in the world could we have been so foolish?

How in the world did we allow the total amount of debt in our country to get more than 27 times larger over the past 40 years?

As you can see, there was a slight “hiccup” in the bubble as a result of the financial crisis of 2008, but now it has started growing again.

At this point our entire financial system is based on debt, and if the debt bubble does not continue to expand the entire thing will collapse.

But no financial bubble grows forever.  History has proven that to us over and over.

At some point this bubble is going to burst.

When it does, we will either experience a deflationary collapse or a hyperinflationary collapse depending on how “the powers that be” respond to what is happening.

History has shown us that financial collapse is often accompanied by social upheaval.   Many times it even leads to war.

So what will happen to America when our economic collapse happens?

That is a very good question.

How would you answer it?

6 Charts Which Prove That Central Banks All Over The Globe Are Recklessly Printing Money

If the U.S. dollar is being devalued so rapidly, then why does it sometimes increase in value against other global currencies?  Well, it is because everybody is recklessly printing money now.  The 6 charts which you are about to see below prove this.  The truth is that it is not just the U.S. Federal Reserve which has been printing money like there is no tomorrow.  Out of control money printing has also been happening in the UK, in the EU, in Japan, in China and in India.  There are times when one particular global currency will fall faster than the others, but the reality is that they are all being rapidly devalued.  Unfortunately, this is a recipe for a global economic nightmare.

Right now you can almost smell the panic as it rises in global financial markets.  Investors all over the world are racing to get out of paper and to get into hard assets.  Just about anything that is “real” and “tangible” is hot right now.  Gold hit a record high last year and it is on the rise again.  In fact, it just hit a new five-week high.  Demand for silver is becoming absolutely ridiculous right now.  Oil is marching up towards $100 a barrel again.  Agricultural commodities have exploded in price over the past year.  Many investors are even gobbling up art and other collectibles.

Paper money is no longer considered to be safe.  All over the globe investors are watching all of the reckless money printing that has been going on and they are becoming alarmed.  An increasing number of investors and financial institutions are putting their wealth into hard assets that are real and tangible in an effort to preserve their wealth.

The other day, a reader of this column named James sent me some charts that he had put together.  I thought they were so good that I asked him if I could include them in an article.  These charts show how central banks all over the globe have been recklessly printing money.  Over the last 30 years virtually the entire world has developed a great love affair with fiat currency….

So is everyone printing money?

The U.S. is printing lots of money…..

Source, The St. Louis Fed

The Bank of England is printing lots of money…..

Source: The BoE

The EU is printing lots of money….

Source: The ECB

Japan is printing lots of money…..

Source: The BoJ

China is printing lots of money…..

Source: The People’s Bank of China

India is printing lots of money…..

Source: Reserve Bank of India

Of course anyone with half a brain can see where all of this is ultimately headed.  In the end, inflation is going to spiral out of control and we are going to witness financial implosion on a global scale.

So why don’t these nations just adopt sound money?

Well, it turns out that if you are a member of the IMF, you are specifically prohibited from having gold-backed currency.

Yes, you read that correctly.

In fact, U.S. Representative Ron Paul once sent an open letter to the U.S. Treasury and the Federal Reserve asking about this and he received no response.  The following is the content of that letter….

Dear Sirs:

I am writing regarding Article 4, Section 2b of the International Monetary Fund (IMF)’s Articles of Agreement. As you may be aware, this language prohibits countries who are members of the IMF from linking their currency to gold. Thus, the IMF is forbidding countries suffering from an erratic monetary policy from adopting the most effective means of stabilizing their currency. This policy could delay a country’s recovery from an economic crisis and retard economic growth, thus furthering economic and political instability.

I would greatly appreciate an explanation from both the Treasury and the Federal Reserve of the reasons the United States has continued to acquiesce in this misguided policy. Please contact Mr. Norman Singleton, my legislative director, if you require any further information regarding this request. Thank you for your cooperation in this matter.

Ron Paul
U.S. House of Representatives

Sadly, the truth is that the global elite don’t want nations to start adopting gold-backed currencies.  They want countries to use fiat currencies that they can openly manipulate for their own benefit.

At this point, every nation on earth (to the best of my knowledge) uses a fiat currency.  All of the major global currencies are being continually devalued.  In fact, there are times when counties will purposely devalue their currencies even more rapidly in order to gain a competitive advantage in world trade.

This is why so many investors now have such an aversion to paper currency.  It starts losing value the moment you take possession of it.

In some areas of the world, “gold fever” is absolutely exploding.  For example, China imported five times as much gold in 2010 as it did in 2009.  On the Shanghai Gold Exchange, trading volume soared 43 percent during the first 10 months of 2010.

Gold, silver and other precious metals are now seen as a great hedge against inflation worldwide.  Investors all over the globe are demonstrating a strong preference for “real money” over “paper money”.

So what does all of this mean?

It means that some tremendous imbalances are being built up in the global financial system.  The central banks of the world must continue to inflate these bubbles with constantly increasing amounts of paper money and debt in order to keep the game going.  If at some point the reckless money printing comes to a screeching halt it is going to unleash hell on global financial markets.

But if all of this reckless money printing continues we are eventually going to see horrific inflation all over the planet.  In fact, we are already seeing significant inflation happening in many areas of the globe.  Almost every single day a new headline about inflation in China seems to pop up in the financial news.  Rising food prices are sparking unrest in the Middle East and elsewhere.  Even U.S. consumers are starting to see some uncomfortable price increases at the gas pump and in the supermarket.

So it is not just Federal Reserve Chairman Ben Bernanke that is off his rocker.  The whole world is going crazy with money printing.

Hopefully this whole thing is not going to end as badly as many of us fear that it will.  But right now the central banks of the world are pumping unprecedented amounts of cash into the global financial system, and those in the global financial system are funneling a very large percentage of that cash into hard assets.  Unless something changes, that is going to mean that prices for basic necessities such as food and gas are going to continue to rise.

This is quite a fine mess that we are in.

Does anyone see a way out?