By itself, the 530 point plunge on Friday was the ninth worst stock market crash in all of U.S. history.  The following list of the top eight comes from Wikipedia…

#1 2008-09-29 −777.68

#2 2008-10-15 −733.08

#3 2001-09-17 −684.81

#4 2008-12-01 −679.95

#5 2008-10-09 −678.91

#6 2011-08-08 −634.76

#7 2000-04-14 −617.77

#8 1997-10-27 −554.26

Another very interesting thing to note is that the largest stock market crash in U.S. history took place on the very last day of the Shemitah year of 2008, and now we are less than a month away from the end of this current Shemitah year.

It is funny how these strange “coincidences” keep happening.

The financial carnage that we witnessed on Friday was truly global in scope.  On a percentage basis, Chinese stocks crashed even more than U.S. stocks did.  Japanese stocks also crashed, so did stock markets all over Europe, and emerging market currencies all over the planet got absolutely destroyed.

The following is how Zero Hedge summarized what went down…

• China’s worst week since July – closes at 5 month lows
• Global Stocks’ worst week since May 2012
• US Stocks’ worst week in 4 years
• VIX’s biggest weekly rise ever
• Crude’s longest losing streak in 29 years
• Gold’s best week since January
• 5Y TSY Yield’s biggest absolute drop in 2 years

Even though I specifically warned that this would happen, and have been explaining why it would happen on my website in excruciating detail for months, the truth is that I didn’t expect stocks to start crashing this quickly or this ferociously.

Normally, August is a fairly slow month in the financial world.  As I have discussed previously, most of the really noteworthy stock market crashes throughout history have taken place during the months of September and October.  So I thought that things wouldn’t start getting really crazy for another few weeks at least.

Financial markets tend to fall much faster than they go up, and I believe that we are moving into a time of extraordinary volatility.  There will be huge down days, and there will also be huge up days.  In fact, the three largest single day rallies in Dow history happened right in the middle of the financial crisis of 2008.  So don’t let what happens on any one particular day fool you.

An absolutely gigantic global financial bubble is beginning to burst, and stocks could potentially fall a very, very long way.  For instance, just consider what MarketWatch columnist Brett Arends has just written…

I don’t mean to be alarmist or to induce panic, but someone needs to tell the public that there is a plausible scenario in which the U.S. stock market now collapses by another 70% until the Dow Jones Industrial Average falls to about 5,000.

It is important to keep in mind that Arends is not a “bear” at all.  He is a very level-headed analyst that tries to objectively look at all sides of things.

I sincerely hope that global financial markets will stabilize for at least a couple of weeks.  But there is absolutely no guarantee that will happen.

So many of the things that I have been warning about on this website and on End of the American Dream are starting to unfold right in front of our eyes.  If I am right, this is just the beginning.  I believe that we are moving into a time of unprecedented chaos, and our nation is about to be shaken to the core.

Hopefully you have been preparing for the storm that is coming for quite a while and you will not be surprised by what is about to happen.

Unfortunately, the same cannot be said for the vast majority of Americans.  Most of them are totally unprepared for what is coming, and they are going to be completely blindsided by the events that will unfold in the months ahead.

The relative calm of the past few years has lulled millions into a false sense of complacency.

If you are one of those that have dozed off, I have a word of warning for you…

Wake up and get ready.

It’s starting.

The post This 2 Day Stock Market Crash Was Larger Than Any 1 Day Stock Market Crash In U.S. History appeared first on The Economic Collapse.

The funny thing is that the fact that investors are so highly leveraged is being seen as a positive thing by many in the financial world.  Some believe that a high level of margin debt is a sign that “investor confidence” is high and that the rally will continue.  The following is from a recent article in the Wall Street Journal…

The rising level of debt is seen as a measure of investor confidence, as investors are more willing to take out debt against investments when shares are rising and they have more value in their portfolios to borrow against. The latest rise has been fueled by low interest rates and a 15% year-to-date stock-market rally.

Others, however, consider the spike in margin debt to be a very ominous sign.  Margin debt has now risen to about 2.4 percent of GDP, and as the New York Times recently pointed out, whenever we have gotten this high before a market crash has always followed…

The first time in recent decades that total margin debt exceeded 2.25 percent of G.D.P. came at the end of 1999, amid the technology stock bubble. Margin debt fell after that bubble burst, but began to rise again during the housing boom — when anecdotal evidence said some investors were using their investments to secure loans that went for down payments on homes. That boom in margin loans also ended badly.

Posted below is a chart of the performance of the S&P 500 over the last several decades.  After looking at this chart, compare it to the margin debt charts that the New York Times recently published that you can find right here.  There is a very strong correlation between these charts.  You can find some more charts that directly compare the level of margin debt and the performance of the S&P 500 right here.  Every time margin debt has soared to a dramatic new high in the past, a stock market crash and a recession have always followed.  Will we escape a similar fate this time?

What makes all of this even more alarming is the fact that a number of things that we have not seen happen in the U.S. economy since 2009 are starting to happen again.  For much more on this, please see my previous article entitled “12 Clear Signals That The U.S. Economy Is About To Really Slow Down“.

At some point the stock market will catch up with the economy.  When that happens, it will probably happen very rapidly and a lot of people will lose a lot of money.

And there are certainly a lot of prominent voices out there that are warning about what is coming.  For example, the following is what renowned investor Alan M. Newman had to say about the current state of the market earlier this year…

“If anything has changed yet in 2013, we certainly do not see it. Despite the early post-fiscal cliff rally, this is the same beast we rode to the 2007 highs for the Dow Industrials. The U.S. stock market is over leveraged, overpriced and has been commandeered by mechanical forces to such an extent that all holding periods are now affected by more risk than at any time in history.”

Unfortunately, most Americans never get to hear such voices.  Instead, most Americans rely on the mainstream media to do much of their thinking for them.  And right now the mainstream media is insisting that we are not in a stock market bubble…

Forbes: “Why Stocks Are On Solid Footing And This Is No Bubble”

ABC News: “AP Survey: Economists See No Stock Market Bubble”

Businessweek: “Prognostications: It’s Not a Stock Bubble”

Yahoo: “This Is NOT a Stock Bubble! Says Ben Stein”

MarketWatch: “Is a stock bubble coming? No, say economists”

So what do you think?

Do you believe that we are in a stock market bubble that is about to burst, or do you believe that everything is going to be just fine?

Please feel free to express your opinion by posting a comment below…

The post Whenever Margin Debt Goes Over 2.25% Of GDP The Stock Market Always Crashes appeared first on The Economic Collapse.