South America

The South American Financial Crisis Of 2015

July 29, 2015July 29, 2015 by Michael

Most nations in South America are either already experiencing an economic recession or are right on the verge of one. In general, South American economies are very heavily dependent on exports, and right now they are being absolutely shredded by the twin blades of a commodity price collapse and a skyrocketing U.S. dollar. During the boom times in South America, governments and businesses loaded up on tremendous amounts of debt. Since much of that debt was denominated in U.S. dollars, South American borrowers are now finding that it takes much more of their own local currencies to service and pay back those debts. At the same time, there is much less demand for commodities being produced by South American nations in the international marketplace. As a result, South America is heading into a full-blown financial crisis which will cause years of pain for the entire continent.

If you know your financial history, then you know that we have seen this exact same scenario play out before in various parts of the world. The following comes from a recent CNN article…

The dollar’s gains should make history nerds shake in their boots. Its rally in the early 1980s helped trigger Latin America’s debt crisis. Fifteen years later, the greenback surged quickly again, causing Southeast Asian economies, such as Thailand, to collapse after a run on the banks ensued.

In particular, what is going on right now is so similar to what took place back in the early 1980s. At that time, Latin American governments were swimming in debt, the U.S. dollar was surging and commodity prices were falling. The conditions were perfect for a debt crisis in Latin America, and that is precisely what happened…

When the world economy went into recession in the 1970s and 80s, and oil prices skyrocketed, it created a breaking point for most countries in the region. Developing countries also found themselves in a desperate liquidity crunch. Petroleum exporting countries – flush with cash after the oil price increases of 1973-74 – invested their money with international banks, which ‘recycled’ a major portion of the capital as loans to Latin American governments. The sharp increase in oil prices caused many countries to search out more loans to cover the high prices, and even oil producing countries wanted to use the opportunity to develop further. These oil producers believed that the high prices would remain and would allow them to pay off their additional debt.

As interest rates increased in the United States of America and in Europe in 1979, debt payments also increased, making it harder for borrowing countries to pay back their debts. Deterioration in the exchange rate with the US dollar meant that Latin American governments ended up owing tremendous quantities of their national currencies, as well as losing purchasing power. The contraction of world trade in 1981 caused the prices of primary resources (Latin America’s largest export) to fall.

Sadly, the same mistakes have been repeated once again. In recent years South American nations have loaded up on vast amounts of debt, and now that commodity prices are tanking and the U.S. dollar is surging, all of that debt is creating tremendous headaches.

For instance, just consider what is happening in Brazil…

Brazil’s real plummeted to a 12-year low of 3.34 to the dollar, reflecting the country’s heavy reliance on exports of iron ore and other raw materials to China.

The devaluation tightens the noose on Brazilian companies saddled with $188bn in dollar debt taken out during the glory days of the commodity boom. The oil group Petrobras alone raised $52bn on the US bond markets.

Today, Brazil has the 7th largest economy on the entire planet.

So a major financial crisis in Brazil would be extremely significant.

And that is precisely what is starting to happen. It is being projected that Brazilian government debt will soon be reduced to junk status, Brazilian stocks have already entered “correction territory“, and economic forecasters say that the Brazilian economy is heading into its worst recession in at least 25 years…

Brazil needs to brace itself for some very tough times. Brazilian banks are currently forecasting another economic contraction for the South American country in 2016, marking the first time that Brazil’s economy has shrunk in two consecutive years since the Great Depression.

Last Friday, economist Nelson Teixeira of Switzerland-based financial services holding company Credit Suisse released a revision of his already dour forecast for the Brazilian GDP, moving this year’s numbers from -1.8 percent to -2.4 percent.

The IMF is also projecting that 2015 will be a year of recession for the second largest economy in South America (Argentina) and the third largest economy in South America (Venezuela).

And actually Venezuela is in the deepest trouble of all. According to a recent Bloomberg article, it appears to be inevitable that there will be a debt default by the Venezuelan government in the very near future…

Harvard University Professor Ricardo Hausmann last year questioned Venezuela’s decision to keep paying bondholders as the country sank deeper into crisis and suggested it stop honoring the debt.

Now, he’s saying Venezuela will have no choice but to default next year.

Hausmann’s comments come as a deepening collapse in oil prices and a shortage of dollars stoke concern Venezuela is fast running out of money to stay current on debt. The country’s bonds plunged last year after Hausmann, who served as Venezuelan planning minister after Hugo Chavez’s failed 1992 coup, raised the specter of default, saying he found “no moral grounds” for the government to pay debt at a time when Venezuelans were facing shortages of everything from basic medicine to toilet paper.

The inflation rate in Venezuela today is an astounding 68.5 percent, and the country is plunging into full-blown economic collapse. The following comes from Zero Hedge…

As we recently warned, the hyperinflationary collapse in Venezuela is reaching its terminal phase. With inflation soaring at least 65%, murder rates the 2nd highest in the world, and chronic food (and toilet paper shortages), the following disturbing clip shows what is rapidly becoming major social unrest in the Maduro’s socialist paradise… and perhaps more importantly, Venezuela shows us what the end game for every fiat money system looks like (and perhaps Janet and her colleagues should remember that).

Here is the video that was mentioned in the excerpt above. As you watch this, please keep in mind that the United States is on the exact same path that Venezuela has gone down…

Economic chaos is beginning to erupt all over the planet, and the depression that we are entering into will truly be global in scope.

For the moment, many in the United States still believe that what is going on in the rest of the world will not affect us. But the truth is that we are also right on the verge of a major financial crisis, and it is going to be even worse than what we experienced back in 2008.

So what do you think about what is going on down in South America?

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

There Will Be Pestilences: Why Are So Many Deadly Diseases Breaking Out All Over The Globe Right Now?

October 6, 2014October 6, 2014 by Michael

Ebola, Marburg, Enterovirus and Chikungunya – these diseases were not even on the radar of most people coming into 2014, but now each one of them is making headline news. So why is this happening? Why are so many deadly diseases breaking out all over the world right now? Is there some kind of a connection, or is the fact that so many horrible diseases are arising all at once just a giant coincidence? And this could be just the beginning. For example, there are now more than a million cases of Chikungunya in Central and South America, and authorities are projecting that there will be millions more in 2015. The number of Ebola cases continues to grow at an exponential rate, and now an even deadlier virus (Marburg) has broken out in Uganda. We have gone decades without experiencing a major worldwide pandemic, and many people believed that it could never happen in our day and time. But now we could potentially see several absolutely devastating diseases all racing across the planet at the same time.

On Monday, we got news that the first confirmed case of Ebola transmission in Europe has happened. A nurse in Spain that had treated a couple of returning Ebola patients has contracted the disease herself…

A nurse’s assistant in Spain is the first person known to have contracted Ebola outside of Africa in the current outbreak.

Spanish Health Minister Ana Mato announced Monday that a test confirmed the assistant has the virus.

The woman helped treat a Spanish missionary and a Spanish priest, both of whom had contracted Ebola in West Africa. Both died after returning to Spain.

Health officials said she developed symptoms on September 30. She was not hospitalized until this week. Her only symptom was a fever.

How many people did she spread the virus to before it was correctly diagnosed?

Meanwhile, Ebola continues to rage out of control in West Africa. It is being reported that Sierra Leone just added 121 new Ebola deaths to the overall death toll in a single day. If Ebola continues to spread at an exponential rate, it is inevitable that more people will leave West Africa with the virus and take it to other parts of the globe.

In fact, it was being reported on Monday that researchers have concluded that there is “a 50 percent chance” that Ebola could reach the UK by October 24th…

Experts have analysed the pattern of the spread of the disease, along with airline traffic data, to make the startling prediction Ebola could reach Britain by October 24.

They claim there is a 50 percent chance the virus could hit Britain by that date and a 75 percent chance the it could be imported to France, as the deadliest outbreak in history spreads across the world.

Currently, there is no cure for the disease, which has claimed more than 3,400 lives since March and has a 90 percent fatality rate.

I have written extensively about Ebola, but it is certainly not the only virus making headlines right now.

Down in Uganda, a man has just died from a confirmed case of the Marburg Virus…

A man has died in Uganda’s capital after an outbreak of Marburg, a highly infectious haemorrhagic fever similar to Ebola, authorities said on Sunday, adding that a total of 80 people who came into contact with him had been put under quarantine.

Marburg starts with a severe headache followed by haemorrhaging and leads to death in 80% or more of cases in about nine days. It is from the same family of viruses as Ebola, which has killed thousands in West Africa in recent months.

There is no vaccine or specific treatment for the Marburg virus, which is transmitted through bodily fluids such as saliva and blood or by handling infected wild animals such as monkeys.

The Marburg Virus is an absolutely horrible disease, and many consider it to be even more deadly than Ebola. But the fact that it kills victims so quickly may keep it from spreading as widely as Ebola.

We shall see.

Meanwhile, a disease that sounds very similar to Ebola and Marburg has popped up in Venezuela and doctors down there do not know what it is…

“We do not know what it is,” admitted Duglas León Natera, president of the Venezuelan Medical Federation.

In its initial stages, the disease presents symptoms of fever and spots on the skin, and then produces large blisters and internal and external bleeding, according to data provided week stop by the College of Physicians of the state of Aragua, where the first cases were reported.

Then, very quickly, patients suffer from respiratory failure, liver failure and kidney failure. Venezuelan doctors have not been able to determine what the disease is, much less how to fight it.

Why aren’t we hearing more about this in the mainstream news?

Here in the United States, enterovirus D-68 has sickened hundreds of children all over the country. So far cases have been confirmed in 43 different states, several children have been paralyzed by it, and one New Jersey boy has died…

Parents in New Jersey are concerned after a state medical examiner determined a virus causing severe respiratory illness across the country is responsible for the death of a 4-year-old boy.

Hamilton Township health officer Jeff Plunkett said the Mercer County medical examiner’s office found the death of Eli Waller was the result of enterovirus D-68. Waller, the youngest of a set of triplets, died in his sleep at home on Sept. 25.

The virus has sickened more than 500 people in 43 states and Washington, D.C.— almost all of them children. Waller is the first death in New Jersey directly linked to the virus.

The CDC seems to have no idea how to contain the spread of enterovirus D-68.

So why should we be confident that they will be able to contain the spread of Ebola?

Last but not least, the Chikungunya virus is at pandemic levels all over Central and South America.

We aren’t hearing that much about this disease in the U.S., but at this point more than a million people have already been infected…

An excruciating mosquito-borne illness that arrived less than a year ago in the Americas is raging across the region, leaping from the Caribbean to the Central and South American mainland, and infecting more than 1 million people. Some cases already have emerged in the United States.

The good news is that very few people actually die from this disease.

The bad news is that almost everyone that gets it feels like they are dying.

In a previous article, I wrote about the intense suffering that victims go through. According to Slate, the name of this virus originally “comes from a Makonde word meaning ‘that which bends up,’ referring to the contortions sufferers put themselves through due to intense joint pain.”

Right now, the number of cases of Chikungunya is absolutely exploding. Just check out the following excerpt from a recent Fox News report…

In El Salvador, health officials report nearly 30,000 suspected cases, up from 2,300 at the beginning of August, and hospitals are filled with people with the telltale signs of the illness, including joint pain so severe it can be hard to walk.

“The pain is unbelievable,” said Catalino Castillo, a 39-year-old seeking treatment at a San Salvador hospital. “It’s been 10 days and it won’t let up.”

Venezuelan officials reported at least 1,700 cases as of Friday, and the number is expected to rise. Neighboring Colombia has around 4,800 cases but the health ministry projects there will be nearly 700,000 by early 2015.

So why is this happening?

Why are so many absolutely horrible diseases emerging all at once?

Please share what you think by posting a comment below…

18 Signs That The Global Economic Crisis Is Accelerating As We Enter The Last Half Of 2014

June 30, 2014 by Michael

A lot of people that I talk to these days want to know “when things are going to start happening”. Well, there are certainly some perilous times on the horizon, but all you have to do is open up your eyes and look to see the global economic crisis unfolding. As you will see below, even central bankers are issuing frightening warnings about “dangerous new asset bubbles” and even the World Bank is declaring that “now is the time to prepare” for the next crisis. Most Americans tend to only care about what is happening in the United States, but the truth is that serious economic trouble is erupting in South America, all across Europe and in Asian powerhouses such as China and Japan. And the endless conflicts in the Middle East could erupt into a major regional war at just about any time. We live in a world that is becoming increasingly unstable, and people need to understand that the period of relative stability that we are enjoying right now is extremely vulnerable and will not last long. The following are 18 signs that the global economic crisis is accelerating as we enter the last half of 2014…

#1 The Bank for International Settlements has issued a new report which warns that “dangerous new asset bubbles” are forming which could potentially lead to another major financial crisis. Do the central bankers know something that we don’t, or are they just trying to place the blame on someone else for the giant mess that they have created?

#2 Argentina has missed a $539 million debt payment and is on the verge of its second major debt default in 13 years.

#3 Bulgaria is desperately trying to calm down a massive run on the banks that threatens of spiral out of control.

#4 Last month, household loans in the eurozone declined at the fastest rate ever recorded. Why are European banks holding on to their money so tightly right now?

#5 The number of unemployed jobseekers in France has just soared to another brand new record high.

#6 Economies all over Europe are either showing no growth or are shrinking. Just check out what a recent Forbes article had to say about the matter…

Italy’s economy shrank by 0.1% in the first three months of 2014, matching the average of the three previous quarters. After expanding 0.6% in Q2 2013, France recorded zero growth. Portugal shrank 0.7%, following positive numbers in the preceding nine months. While figures weren’t available for Greece and Ireland in Q1, neither country is showing progress. Greek GDP dropped 2.5% in the final three months of last year, and Ireland limped ahead at 0.2%.

#7 A few days ago it was reported that consumer prices in Japan are rising at the fastest pace in 32 years.

#8 Household expenditures in Japan are down 8 percent compared to one year ago.

#9 U.S. companies are drowning in massive amounts of debt, but the corporate debt bubble in China is so bad that the amount of corporate debt in China has actually now surpassed the amount of corporate debt in the United States.

#10 One Chinese auditor is warning that up to 80 billion dollars worth of loans in China are backed by falsified gold transactions. What will that do to the price of gold and the stability of Chinese financial markets as that mess unwinds?

#11 The unemployment rate in Greece is currently sitting at 26.7 percent and the youth unemployment rate is 56.8 percent.

#12 67.5 percent of the people that are unemployed in Greece have been unemployed for over a year.

#13 The unemployment rate in the eurozone as a whole is 11.8 percent – just a little bit shy of the all-time record of 12.0 percent.

#14 The European Central Bank is so desperate to get money moving through the system that it has actually introduced negative interest rates.

#15 The IMF is projecting that there is a 25 percent chance that the eurozone will slip into deflation by the end of next year.

#16 The World Bank is warning that “now is the time to prepare” for the next crisis.

#17 The economic conflict between the United States and Russia continues to deepen. This has caused Russia to make a series of moves away from the U.S. dollar and toward other major currencies. This will have serious ramifications for the global financial system as time rolls along.

#18 Of course the U.S. economy is struggling right now as well. It shrank at a 2.9 percent annual rate during the first quarter of 2014, which was much worse than anyone had anticipated.

But if U.S. economic numbers look a bit better for the second quarter, that doesn’t mean that we are out of the woods.

As I have stressed so many times, the long-term trends and the long-term balance sheet numbers are far, far more important than the short-term economic numbers.

For example, if you went to the mall today and spent a thousand dollars on candy and video games, your short-term “economic activity” would spike dramatically. But your long-term financial health would take a significant turn for the worse.

Well, when we are talking about the health of the U.S. economy or the entire global financial system we need to keep the same kinds of considerations in mind.

As for the United States, whether the level of our debt-fueled short-term economic activity goes up a little bit or down a little bit is not what is truly important.

Rather, the fact that we are nearly 60 trillion dollars in debt as a society is what really matters.

The same thing applies for the globe as a whole. Right now, the citizens of the planet are more than 223 trillion dollars in debt, and “too big to fail” banks around the world have at least 700 trillion dollars of exposure to derivatives.

So it doesn’t really matter too much whether the short-term economic numbers go up a little bit or down a little bit right now. The whole system is an inherently flawed Ponzi scheme that will inevitably collapse under its own weight.

Let us hope that this period of relative stability lasts for a while longer. It is a good thing to have time to prepare. But you would have to be absolutely insane to think that the biggest debt bubble in the history of the world is never going to burst.

20 Signs That The Global Economic Crisis Is Starting To Catch Fire

February 13, 2014February 13, 2014 by Michael

If you have been waiting for the “global economic crisis” to begin, just open up your eyes and look around. I know that most Americans tend to ignore what happens in the rest of the world because they consider it to be “irrelevant” to their daily lives, but the truth is that the massive economic problems that are currently sweeping across Europe, Asia and South America are going to be affecting all of us here in the U.S. very soon. Sadly, most of the big news organizations in this country seem to be more concerned about the fate of Justin Bieber’s wax statue in Times Square than about the horrible financial nightmare that is gripping emerging markets all over the planet. After a brief period of relative calm, we are beginning to see signs of global financial instability that are unlike anything that we have witnessed since the financial crisis of 2008. As you will see below, the problems are not just isolated to a few countries. This is truly a global phenomenon.

Over the past few years, the Federal Reserve and other global central banks have inflated an unprecedented financial bubble with their reckless money printing. Much of this “hot money” poured into emerging markets all over the world. But now that the Federal Reserve has begun “tapering” quantitative easing, investors are taking this as a sign that the party is ending. Money is being pulled out of emerging markets all over the globe at a staggering pace and this is creating a tremendous amount of financial instability. In addition, the economic problems that have been steadily growing over the past few years in established economies throughout Europe and Asia just continue to escalate. The following are 20 signs that the global economic crisis is starting to catch fire…

#1 The unemployment rate in Greece has hit a brand new record high of 28 percent.

#2 The youth unemployment rate in Greece has hit a brand new record high of 64.1 percent.

#3 The percentage of bad loans in Italy is at an all-time record high.

#4 Italian industrial output declined again in December, and the Italian government is on the verge of collapse.

#5 The number of jobseekers in France has risen for 30 of the last 32 months, and at this point it has climbed to a new all-time record high.

#6 The total number of business failures in France in 2013 was even higher than in any year during the last financial crisis.

#7 It is being projected that housing prices in Spain will fall another 10 to 15 percent as their economic depression deepens.

#8 The economic and political turmoil in Turkey is spinning out of control. The government has resorted to blasting protesters with pepper spray and water cannons in a desperate attempt to restore order.

#9 It is being estimated that the inflation rate in Argentina is now over 40 percent, and the peso is absolutely collapsing.

#10 Gangs of armed bandits are roaming the streets in Venezuela as the economic chaos in that troubled nation continues to escalate.

#11 China appears to be very serious about deleveraging. The deflationary effects of this are going to be felt all over the planet. The following is an excerpt from Ambrose Evans-Pritchard’s recent article entitled “World asleep as China tightens deflationary vice“…

China’s Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons.

The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China’s $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.

This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications.

#12 There was a significant debt default by a coal company in China last Friday…

A high-yield investment product backed by a loan to a debt-ridden coal company failed to repay investors when it matured last Friday, state media reported on Wednesday, in the latest sign of financial stress in China’s shadow bank sector.

#13 Japan’s Nikkei stock index has already fallen by 14 percent so far in 2014. That is a massive decline in just a month and a half.

#14 Ukraine continues to fall apart financially…

The worsening political and economic circumstances in Ukraine has prompted the Fitch Ratings agency to downgrade Ukrainian debt from B to a pre–default level CCC. This is lower than Greece, and Fitch warns of future financial instability.

#15 The unemployment rate in Australia has risen to the highest level in more than 10 years.

#16 The central bank of India is in a panic over the way that Federal Reserve tapering is effecting their financial system.

#17 The effects of Federal Reserve tapering are also being felt in Thailand…

In the wake of the US Federal Reserve tapering, emerging economies with deteriorating macroeconomic figures or visible political instability are being punished by skittish markets. Thailand is drifting towards both these tendencies.

#18 One of Ghana’s most prominent economists says that the economy of Ghana will crash by June if something dramatic is not done.

#19 Yet another banker has mysteriously died during the prime years of his life. That makes five “suspicious banker deaths” in just the past two weeks alone.

#20 The behavior of the U.S. stock market continues to parallel the behavior of the U.S. stock market in 1929.

Yes, things don’t look good right now, but it is important to keep in mind that this is just the beginning.

This is just the leading edge of the next great financial storm.

The next two years (2014 and 2015) are going to represent a major “turning point” for the global economy. By the end of 2015, things are going to look far different than they do today.

None of the problems that caused the last financial crisis have been fixed. Global debt levels have grown by 30 percent since the last financial crisis, and the too big to fail banks in the United States are 37 percent larger than they were back then and their behavior has become even more reckless than before.

As a result, we are going to get to go through another “2008-style crisis”, but I believe that this next wave is going to be even worse than the previous one.

So hold on tight and get ready. We are going to be in for quite a bumpy ride.

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