Venezuela

Economic Doom Returns: Emerging Market Currencies Collapse To Record Lows As Global Financial Chaos Accelerates

After a little bit of a lull, the international currency crisis is back with a vengeance.  Currencies are collapsing in Argentina, Brazil, India, Turkey and other emerging markets, and central banks are springing into action.  It is being hoped that the financial chaos can be confined to emerging markets so that it will not spread to the United States and Europe.  But of course the global financial system is more interconnected today than ever before, and a massive wave of debt defaults in emerging markets would inevitably have extremely serious consequences all over the planet.  It would be difficult to overstate the potential danger that this new crisis poses for all of us.  Emerging market economies went on an unprecedented debt binge over the past decade, and a high percentage of those debts were denominated in U.S. dollars.  As emerging market currencies collapse, it is going to become nearly impossible to service any debts denominated in U.S. dollars, and that could ultimately mean absolutely enormous losses for international lenders.  Our system tends to do fairly well as long as everybody is paying their debts, but once the dominoes begin to tumble things can get messy really quickly.

Let’s start our roundup today with India.  While India is currently not in as bad shape as some of the other emerging markets, the truth is that they could get there pretty rapidly if they keep going down this path.

On Thursday, concerns about rising oil prices drove the Indian rupee to a brand new all-time record low…

The Indian rupee fell to a record low on Thursday morning, following a declining trend all year — which economists attributed to rising oil prices, broader emerging market concerns, and strong month-end dollar demand.

It slid to 70.8100 against the dollar, after a previous new low just a day before at 70.475. That marked a 10.97 percent decline since the start of the year.

But at least India is doing much better than Argentina.

The Argentine peso collapsed to another all-time record low on Thursday, and at this point it has fallen more than 45 percent against the U.S. dollar so far this year…

The Argentine peso crashed to record lows on the news. It saw steep losses in the previous session and collapsed another 15 percent to hit 39 pesos against the U.S. dollar on Thursday morning.

The peso is down more than 45 percent against the greenback this year, exacerbating pre-existing fears over the country’s weakening economy while inflation is running at 25.4 percent this year.

As Wolf Richter has noted, the Argentine peso was worth one U.S. dollar in 2002.

Today, it is worth 2.4 cents.

That is what a collapse looks like.

In an desperate attempt to stop the bleeding, the Argentine central bank raised interest rates to 60 percent…

On Thursday, the central bank said it was increasing the amount of reserves that banks have to hold, in a bid to tighten fiscal policy and shore up the currency. It hiked rates by 15 percentage points to 60 percent from 45 percent and promised not to lower them at least until December.

Yes, I know that looks like a misprint, but it is not.

Interest rates in Argentina have not been raised to 6 percent.  They have been raised to 60 percent.

Could you imagine what 60 percent interest rates would do to the U.S. economy?

Well, we will get there someday if we don’t change our ways, because we are going down the exact same path that Argentina has gone.

Things continue to get even worse in Turkey as well…

The risks are fast multiplying in Turkey’s beleaguered economy. In a clear sign of deterioration, Turkey’s economic confidence index plunged 9% month-on-month to 83.9 points in August, its lowest since March 2009. The country’s currency, the Lira, resumed its downward spiral. And Moody’s downgraded 20 financial institutions in Turkey.

The financial nightmare in Turkey is the gift that just keeps on giving.  Their entire system is in the process of imploding, and President Erdogan seems to be in a persistent state of panic these days.

Also on Thursday, the Brazilian central bank directly intervened in the market to keep their currency from plunging to another new all-time record low…

The bloodbath in Argentina and Turkey is evident in Brazil also where Bloomberg reports that the central bank just intervened for the first time since June 22.

BCB reportedly intervened at 4.20 “to provide liquidity” adding that intervention intensity and frequency will depend on the market. The BCB also attempted to provide some confidence by reaffirming that monetary policy is not directly linked to recent market shocks.

A global financial crisis has begun, but because it has not really affected the United States too much yet, the mainstream media and most Americans aren’t really paying any attention.

But if the markets start crashing here too, then it will suddenly be all over the news.

Most people are aware that most of the biggest stock market crashes in U.S. history have happened in the fall, and the calendar is about to turn to the month of September.

We have definitely entered a “danger zone”, and more shocks seem to hit the global economy with each passing day.  For example, we just learned that President Trump apparently intends to follow through on his threat to hit the Chinese with another 200 billion dollars in tariffs…

Bloomberg reported Thursday that Trump had told aides that he wants to follow through on a threat to impose tariffs on another $200 billion worth of Chinese goods as early as next week. That would mean more than half of all Chinese imports would be subject to tariffs.

The tariffs could go into effect after the public-comment period ends on September 6.

Of course the Chinese will retaliate, and that will mean more disruption for the global economic system.

Many people believe that the U.S. economy is much stronger than it was in 2008, and that we will be able to easily weather any shocks that come along.

Unfortunately, that is not true at all.

The truth is that all of our long-term problems are much worse than they were in 2008, and the stage is definitely set for an economic disaster of unprecedented proportions.

This article originally appeared on The Economic Collapse Blog.  About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

That Escalated Quickly: The Emerging Market Currency Crisis Of 2018 Threatens To Destabilize The Entire Global Financial System

We haven’t seen emerging market currencies crash like this in over a decade, and analysts are warning that if this continues we could witness a devastating global debt crisis.  Over the past decade, there has been an insatiable appetite for cheap loans in emerging market economies, and a very substantial percentage of those loans were denominated in U.S. dollars.  When emerging market currencies crash relative to the U.S. dollar, lending dries up and servicing the existing loans becomes extremely oppressive, and that is precisely what we are witnessing right now.  This week, most of the top headlines in the financial media have been about the crisis in Turkey.  The Turkish lira fell another 8 percent against the U.S. dollar on Monday, and it is now down about 35 percent over the past week.  Overall, the lira has fallen 82 percent against the U.S. dollar in 2018, and this is putting an enormous amount of stress on the Turkish financial system…

“It is about credit, since Turkey has been a huge borrower in global capital markets over the past number of years when the world’s central banks were encouraging investors to stretch for yield,” David Rosenberg, chief economist and strategist at Gluskin Sheff, said in his daily market note. “Over half of the borrowing is denominated in foreign currencies, so when the lira sinks, debt-servicing costs and default risks rise inexorably.”

Turkey’s economy, just like all of the other major economies around the world, is utterly dependent on the flow of credit, and now lending is becoming greatly restricted.

Meanwhile, any existing loans that were made during the lending spree of the past decade that are denominated in foreign currencies are going to be causing major problems.  The following comes from CNBC…

The lending spree has created two potential problems, according to Capital Economics. One is that Turkish banks looked to foreign wholesale markets as a way to fund the credit boom, instead of relying on more steady domestic deposits.

Now, the expense of servicing those loans has jumped with the lira’s decline, and they will be much more difficult for banks to roll over. The second risk is the possible sharp rise in nonperforming loans, including those made in foreign currencies, mostly to businesses.

Many of my American readers may be wondering why they should be concerned about what is going on in Turkey.

Well, the fear is that “what happens in Turkey won’t stay in Turkey”, and it isn’t just Turkey that we are talking about.  Similar scenarios are playing out in emerging markets all over the planet, and one of the most dramatic examples is Argentina.

The Argentine peso has lost 8 percent against the U.S. dollar over the last three trading days, and overall it is down about 33 percent over the past four months.

In a desperate attempt to restore confidence in the currency, the central bank raised the core interest rate 5 entire percentage points on Monday to an eye-popping 45 percent…

Argentina took emergency steps to stabilize its currency in the wake of an emerging-market rout caused by Turkey’s crisis, jacking up its already highest-in-the-world interest rate by 5 percentage points and announcing it will sell $500 million to support the peso.

Policy makers set the rate for seven-day notes at a record 45 percent and pledged to keep it at that level at least until October. The central bank also said it plans to phase out 1 trillion pesos ($33.2 billion) of short-term notes by December in an effort to limit the currency volatility that often popped up when the securities were rolled over. And the bank also changed a system for dollar auctions to make them harder for traders to anticipate.

And this wasn’t the first time that the central bank has made such a dramatic move.

In fact, this was the fourth enormous rate hike that we have seen since April 27th.

The IMF has promised to intervene in Argentina with a 50 billion dollar bailout, but that may not be nearly enough.

Meanwhile, let’s not forget the complete and utter disaster that Venezuela has become.  According to the IMF, the inflation rate in that country is projected to hit one million percent this year…

A top U.N. official is warning that Venezuela is on the verge of turning into an “absolute disaster of unprecedented proportions.” And now, what was once Latin America’s richest nation is about to ravaged by hyperinflation.

Life for most people in Venezuela is already terrible, so it might be hard to believe that it is about to get even worse, but it is.

One million percent. That’s the inflation rate the International Monetary Fund predicts Venezuela will hit this year.

Yes, it is true that Venezuela has been a basket case for some time, but things are getting a lot worse.  People are starving, the entire economy is disintegrating, and chaos reigns in the streets.

And we must remember that Venezuela was once one of the wealthiest nations on the entire globe.

Will similar scenes soon be playing out in other emerging markets as this new debt crisis deepens?

In addition to Turkey and Argentina, currencies are also crashing in South Africa, Colombia, India, Mexico, Brazil, Chile and a very long list of other prominent nations.

If order is not restored to the currency markets, we are going to see an international debt crisis of unprecedented size and scope.

So keep a close eye on the foreign exchange markets over the next few days.  If emerging market currencies keep crashing, events are going to begin to escalate very, very rapidly.

Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

Venezuela Defaults On A Debt Payment – Is This The First Domino To Fall?

Did you know that Venezuela just went into default?  This should be an absolutely enormous story, but the mainstream media is being very quiet about it.  Wall Street and other major financial centers around the globe could potentially be facing hundreds of millions of dollars in losses, and the ripple effects could be felt for years to come.  Sovereign nations are not supposed to ever default on debt payments, and so this is a very rare occurrence indeed.  I have been writing about Venezuela for years, and now the crisis that has been raging in that nation threatens to escalate to an entirely new level.

Things are already so bad in Venezuela that people have been eating dogs, cats and zoo animals, but now that Venezuela has officially defaulted, there will be no more loans from the rest of the world and the desperation will grow even deeper…

Venezuela, a nation spiraling into a humanitarian crisis, has missed a debt payment. It could soon face grim consequences.

The South American country defaulted on its debt, according to a statement issued Monday night by S&P Global Ratings. The agency said the 30-day grace period had expired for a payment that was due in October.

A debt default risks setting off a dangerous series of events that could exacerbate Venezuela’s food and medical shortages.

So what might that “dangerous series of events” look like?

Well, Venezuela already has another 420 million dollars of debt payments that are overdue.  Investors around the world are facing absolutely catastrophic losses, and the legal wrangling over this crisis could take many years to resolve.  The following comes from Forbes…

S&P says that it expects Venezuela to default on other bond payments. This comes as absolutely no surprise. A further $420m of bond payments are already overdue: unless Venezuela finds some dollars in a hurry, these will also go into default very soon.

S&P also warns that Venezuela could embark on a coercive debt restructuring that would in effect be default. Indeed, it has already announced its intention to do so, though as yet it has produced no plan. But we can imagine what such a debt restructuring might look like: in 2012, Greece imposed a coercive debt restructuring on private sector investors, and Argentina has restructured its dollar-denominated debt twice this century, the second time to sort out the dog’s breakfast Argentina made of the first restructuring. Investors could take substantial losses, and there would no doubt be lawsuits lasting for years. The biggest winners from distressed debt restructurings are always lawyers.

When you add this to all of the other bad news that has been coming out lately, it is easy to understand why things are starting to shift in the financial markets.

In fact, CNBC says that there is “a different tone to the markets in the last week or so”…

Another day, another down open. There’s a different tone to the markets in the last week or so.

It started last Tuesday, when an initial rally faded into a hard sell-off mid-morning. The next five trading sessions generally opened down.

Peter Tchir of Academy Securities, checked off a short list of concerns. There is progress on tax reform “but the reality is it’s not going to be as great as everyone hoped,” he said. There are questions about what the flatter yield curve means. And the recent arrests of high-ranking Saudis in an anti-corruption initiative created uncertainty in the last week and a half.

I keep writing about all of the experts that are warning of an imminent market crash, and yet most investors do not appear to be listening.

In fact, one survey found that the number of fund managers that “are taking higher-than-normal risk” is at an all-time high…

According to Bank of America Merrill Lynch’s latest monthly fund-manager survey, which includes 206 panelists who manage $610 billion, investors are opting for the latter.

The firm finds that a record number of survey responders are taking higher-than-normal risk. That comes at a time when US stock market valuations are sitting close to their highest in history, creating a precarious situation in which investors are feeling emboldened at a time when they should be exhibiting caution.

This reminds me so much of what we have witnessed just prior to other market crashes.

During the euphoria of the original dotcom bubble, we were being told that Internet stocks would never go down because this was the beginning of an entirely new revolution.

And then investors lost trillions upon trillions of dollars when the market finally crashed.

Just prior to the financial crisis of 2008, we were being assured that there was nothing unusual going on with housing prices.

And then the market crashed and we were suddenly facing the worst financial crisis since the Great Depression.

Every bubble eventually bursts, and this one will burst too.  Those that do not learn from history are doomed to repeat it, and it is likely that more money will be lost during this coming crisis than during any other crisis in our entire history.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Venezuela Has Officially Abandoned The Petrodollar – Does This Make War With Venezuela More Likely?

Venezuela is the 11th largest oil producing country in the entire world, and it has just announced that it is going to stop using the petrodollar.  Most Americans don’t even know what the petrodollar is, but for those of you that do understand what I am talking about, this should send a chill up your spine.  The petrodollar is one of the key pillars of the global financial system, and it allows us to live a far higher standard of living than we actually deserve.  The dominance of the petrodollar has been very jealously guarded by our government in the past, and that is why many are now concerned that this move by Venezuela could potentially lead us to war.

I don’t know why this isn’t headline news all over the country, but it should be.  One of the few major media outlets that is reporting on this is the Wall Street Journal…

The government of this oil-rich but struggling country, looking for ways to circumvent U.S. sanctions, is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy have told The Wall Street Journal.

Before we go any further, we should discuss what we mean by the “petrodollar” for those that are not familiar with the concept.  The following comes from an excellent article by Christopher Doran…

In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran.

This means that every country in the world that imports oil—which is the vast majority of the world’s nations—has to have immense quantities of dollars in reserve.

As will be explained below, the fact that virtually everyone around the world has to use our currency to buy oil is a massive advantage for us.  Venezuela knows this, and so in response to new sanctions being imposed upon them, they are hitting us where it hurts…

Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.”

If more nations start to follow suit, it would be absolutely disastrous for the United States.

In other articles, I have detailed why the petrodollar is so incredibly important to our economy and our financial system.  The following is an extended excerpt from one of those previous articles…

So why is the petrodollar so important?

Well, it creates a tremendous amount of demand for the U.S. dollar all over the globe.  Since everyone has needed it to trade with one another, that has created an endless global appetite for the currency.  That has kept the value of the dollar artificially high, and it has enabled us to import trillions of dollars of super cheap products from other countries.  If other nations stopped using the dollar to trade with one another, the value of the dollar would plummet dramatically and we would have to pay much, much more for the trinkets that we buy at the dollar store and Wal-Mart.

In addition, since the U.S. dollar is essentially the de facto global currency, this has also increased demand for our debt.  Major exporting nations such as China and Saudi Arabia end up with giant piles of our dollars.  Instead of just letting them sit there and do nothing, those nations often reinvest their dollars into securities that can rapidly be changed back into dollars if needed.  One of the most popular ways to do this has been to invest those dollars in U.S. Treasuries.  This has driven down interest rates on U.S. debt over the years and has enabled the U.S. government to borrow trillions upon trillions of dollars for next to nothing.

But if the rest of the world starts moving away from the U.S. dollar, all of this could change.

History has shown that when the status of the petrodollar is threatened, the U.S. is swift to take action.

And it is very interesting to note that President Trump will be meeting with Latin American leaders next week, and the main topic for discussion will be “the Venezuela crisis”…

U.S. President Donald Trump has invited three Latin American leaders to dine with him next week in New York as he seeks to address the Venezuela crisis and build bridges with the region after an acrimonious start with neighbor Mexico.

The political and economic turmoil in Venezuela, source of 10 percent of the oil consumed by the United States, will almost certainly top the agenda when he receives the center-right presidents of Peru, Colombia and Brazil at Trump Tower on Monday evening, diplomats said.

Could this latest move by Venezuela be enough to potentially spark a military conflict?

The guys over at Zero Hedge seem to think so…

Having threatened China today with exclusion from SWIFT, we suspect Washington is rapidly running out of any great ally to sustain the petrodollar-driven hegemony (and implicitly its war machine). Cue the calls for a Venezuelan invasion in 3…2..1…!

It would be absolutely no surprise at all if John McCain and Lindsey Graham start appearing on the major news networks calling for war with Venezuela, but hopefully President Trump will not listen to such nonsense.

No matter how important the petrodollar is, there is absolutely no reason to go to war to protect it.

And if war talk does begin, the American people need to make their voices heard very, very loudly.  We have been in useless wars before, and we certainly do not need another one.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Global Collapse: Children Are Literally Starving To Death In Venezuela And Yemen

Venezuela and Yemen were both once very prosperous nations, but now parents are literally watching their children starve to death as the economies of both nations continue to utterly collapse.  Just like so many here in the United States, most of those living in Venezuela and Yemen would have called you completely crazy if you would have warned them that this was going to happen five years ago.  In particular, Venezuela has more proven oil reserves than almost anyone else on the planet, and so to most of their citizens it was unimaginable that things could ever get this bad.  But it has happened, and the collapse that has already begun in parts of South America, Africa and the Middle East will soon spread elsewhere.

When I said that children are literally starving to death in Venezuela, I was not exaggerating one bit.  The following comes from the Wall Street Journal…

Jean Pierre Planchart, a year old, has the drawn face of an old man and a cry that is little more than a whimper. His ribs show through his skin. He weighs just 11 pounds.

His mother, Maria Planchart, tried to feed him what she could find combing through the trash—scraps of chicken or potato. She finally took him to a hospital in Caracas, where she prays a rice-milk concoction keeps her son alive.

“I watched him sleep and sleep, getting weaker, all the time losing weight,” said Ms. Planchart, 34 years old. “I never thought I’d see Venezuela like this.”

What would you do if that was your child?

At one time Venezuela had the brightest outlook out of all the economies in South America, but now their economy has contracted by a total of 27 percent since 2013, imports of food have fallen 70 percent, and the IMF says that the inflation rate will hit a staggering 720 percent this year.

Tonight, in major cities all across Venezuela you will find thousands of people rummaging through garbage looking for food.  It has been reported that some citizens have even resorted to eating cats, dogs and pigeons because they are so desperate for something to eat.

According to one survey, among those that said that they lost weight last year, the average amount lost was a staggering 19 pounds.  In the United States that would be a good thing, but in a country like Venezuela that is an absolutely catastrophic number.

Meanwhile, thousands of children are starving to death in Yemen as well…

Eyes half open and sunken deep into their sockets, little Jamila Ali Abdu already looked half dead for most of her 12-day stay at the Hodeidah clinic.

Too weak to resist the march of disease and hunger in her war-battered country, the child’s tiny frame was swathed in a bright green shroud and lowered by sobbing relatives into a dusty grave on Tuesday.

The primary cause of the crisis in Yemen is a nightmarish civil war that is not going to end any time soon.

And most Americans don’t realize this, but the U.S. military has contributed to the civil war by conducting airstrikes.  It is essentially a proxy war between Saudi Arabia and Iran, and both sides are absolutely determined to win.

So the suffering in Yemen is only going to intensify, and already a child under the age of five is dying every five minutes…

The United Nations warns that a child under five in Yemen dies around every 10 minutes from preventable causes such as starvation, disease, poor sanitation or lack of medical care.

UN chief Antonio Guterres warned last week of “the starving and the crippling of an entire generation.”

Nearly 17 million of Yemen’s 28 million people are deemed “food insecure” by aid groups – and around SEVEN MILLION do not know where they will get their next meal.

Even though you may not believe it right now, what is happening in Venezuela and Yemen is going to happen in the United States someday as well.

So instead of using this time of relative stability for the U.S. economy to party, I would be using it to prepare.

This Region Of The World Is Being Hit By The Worst Economic Collapse It Has Ever Experienced

South America On The Globe - Public DomainThe ninth largest economy in the entire world is currently experiencing “its longest and deepest recession in recorded history”, and in a country right next door people are being encouraged to label their trash so that the thousands upon thousands of desperately hungry people that are digging through trash bins on the streets can find discarded food more easily.  Of course the two nations that I am talking about are Brazil and Venezuela.  The Brazilian economy was once the seventh largest on the globe, but after shrinking for eight consecutive quarters it has now fallen to ninth place.  And in Venezuela the economic collapse has gotten so bad that more than 70 percent of the population lost weight last year due to a severe lack of food.  Most of us living in the northern hemisphere don’t think that anything like this could happen to us any time soon, but the truth is that trouble signs are already starting to erupt all around us.  It is just a matter of time before the things currently happening in Brazil and Venezuela start happening here, but unfortunately most people are not heeding the warnings.

Just a few years ago, the Brazilian economy was absolutely roaring and it was being hailed as a model for the rest of the world to follow.  But now Brazil’s GDP has been imploding for two years in a row, and this downturn is being described as “the worst recession in recorded history” for that South American nation…

Latin America’s largest economy Brazil has contracted by 3.6 percent in 2016, shrinking for the second year in a row; statistics agency IBGE said on Tuesday. It confirmed the country is facing its longest and deepest recession in recorded history.

Data shows gross domestic product (GDP) fell for the eighth straight quarter in the three months to December, down 0.9 percent from the previous quarter. The figure was worse than the 0.5 percent decline economists had forecast and left the country’s overall GDP down 3.6 percent for the full year following a 3.8 percent drop in 2015.

“In real terms, GDP is now nine percent below its pre-recession peak,” Neil Shearing, chief emerging markets economist at Capital Economics, told the Financial Times.

“This is comfortably the worst recession in recorded history,” he added.

It had been hoped that things in Brazil would be getting better by now, but instead they just keep getting worse.

The number of bankruptcy filings has soared to an all-time record high, and the official unemployment rate has more than doubled since the end of 2013.  The following comes from Wolf Richter…

In a stunning deterioration, the unemployment rate in Brazil spiked to 12.6% in the rolling three-month period through January, a record in the new data series going back to 2012, according to Brazil’s statistical agency IBGE. Up from 11.8% in the three-month period through October. Up from an already terribly high 9.5% a year ago. And more than double the 6.2% in December 2013.

Meanwhile, hordes of hungry people are rummaging through garbage cans in Venezuela in order to find something to fill their aching stomachs.

Things have gotten so bad that one of President Maduro’s chief opponents has urged citizens to label which trash bags have food in them so that people that are searching through the garbage can find food scraps more easily…

Controversial Priest and opponent to President Nicolás Maduro’s administration Father Jose Palmar posted on social media this week about labeling discarded waste so those looking through it for food can do so more easily and “with dignity.”

Palmar called on Venezuelans to celebrate Lent by identifying bags where food has been discarded for those with no where else to turn. That way, they don’t have to dig through non-edible items to find it.

And previously I have written about how people are so hungry in Venezuela that some of them are actually slaughtering and eating cats, dogs, pigeons and zoo animals.

I keep telling people that this is coming to America, but a lot of people out there don’t want to believe me.

But it is most certainly coming.

Thanks to chronically empty store shelves and severe food shortages, people in Venezuela are losing weight at an astounding pace.  In the United States it would be a good thing if much of the population lost this much weight, but in Venezuela it definitely is not…

Three quarters of the country’s population lost an average of over 18 pounds over food shortages in 2016, according to a survey by Venezuelan universities and nonprofit groups. Last year, over 80 percent of foodstuffs disappeared from shelves and many had to get by with one meal a day, Foreign Policy reported.

Venezuela was once South America’s most powerful petrostate. But decades of government mismanagement sent the country into decline. Maduro’s predecessor Hugo Chavez choked the economy with heavy-handed regulations, price controls, and a campaign to nationalize major industries that chased out foreign investments.

Further north, very alarming signs are starting to pop up in Mexico.

It probably won’t happen next week or next month, but there are indications of emerging “liquidity problems” which could precipitate a major debt crisis at some point…

In Mexico foreign investors hold around $100 billion of the country’s local-currency government debt, the most for any emerging market economy. That’s almost 20 times what it was 20 years ago. They also hold billions of euros worth of corporate bonds, which are also showing signs of strain, prompting some Mexican business leaders to call for “new programs” to be implemented before the situation causes “a large-scale crisis” among Mexican companies.

The most ominous sign yet came last week when Bloomberg reported sources saying that the Bank of Mexico (or Banxico, as it is referred to) had sought a swap line from the Federal Reserve in case of “liquidity problems,” which immediately triggered furious denials from Banxico. “I can say clearly and unequivocally that we are not in the process of asking for any credit line from any authority,” said the central bank’s governor, Agustin Carstens, who has postponed by six months his departure from the bank, initially scheduled for May.

One of the biggest problems for nations such as Brazil, Venezuela and Mexico is the strength of the U.S. dollar.  During the good times they went into tremendous amounts of debt, and much of that debt was denominated in U.S. dollars.  So when the U.S. dollar becomes stronger, it takes more of their own local currencies to pay that debt back.

And if the Federal Reserve raises interest rates at their next meeting, that will strengthen the U.S. dollar even more and put even more pressure on emerging market economies.

Unfortunately, it appears that this is precisely what the Fed is going to do…

Even one small interest rate increase by the Fedcould have a sweeping impact on U.S. and world economies, Komal Sri-Kumar told CNBC on Monday.

“I think they are going to hike” on March 15, Sri-Kumar said on “Squawk Box,” echoing a theory shared by many analysts. “But that is going to prompt capital outflows from the euro zone, especially with the political risk. It is going to increase the capital outflow from China, and the U.S. economy will feel the impact.”

The global economy is more interconnected than ever before, and pain that starts in one region can rapidly spread to others.

The biggest debt bubble that the world has ever seen is starting to burst, and over the coming years we are going to see financial pain on a scale that would be unimaginable to most of us at this moment.

But even now there are those that would suggest that this colossal debt bubble can continue growing much faster than global GDP indefinitely, and this sort of exceedingly reckless optimism is leading many astray.

The Economic Collapse In Venezuela Is So Bad That People Are Slaughtering And Eating Zoo Animals

Black Stallion - Public DomainIf you were hungry enough, would you kill and eat zoo animals?  To most of us such a notion sounds absolutely insane, but this is actually happening in Venezuela right now.  This is a country where people are standing in lines for up to 12 hours hoping that there will be food to buy that day, and where rioting and looting have become commonplace.  So even though the U.S. economy is in dreadful shape at this moment, we should be thankful for what we have, because at least we are not experiencing a full-blown economic collapse yet like Venezuela currently is.

Black stallions can be some of the most beautiful horses on the entire planet, but things are so desperate down in Venezuela this summer that everything looks like food to some people at this point.  What happened at the Caricuao Zoo on Sunday is so horrible that I actually debated whether or not to share it with you.  Desperate people do desperate things, and when people get hungry enough they will do things such as this…

Venezuela’s worsening food shortages had tragic consequences for a rare show horse last weekend, when a group of intruders broke into the zoo, pulled the black stallion from its cage, then slaughtered it for meat.

Prosecutors say the crime occurred in the small hours of Sunday morning at Caracas’ Caricuao Zoo, when “several people” sneaked into the state-run park under the cover of darkness and busted into the stallion’s pen. The horse, the only one of its kind in the zoo, was then led to a more secluded area and butchered on the spot. Only its head and ribs were left behind in a gruesome pile for zookeepers to find after sunrise.

Unfortunately, this precious animal was not even the first victim at that particular zoo.

A few weeks ago, pigs and sheep were the targets…

Sadly, this horse wasn’t the first zoo animal to suffer the effects of Venezuela’s crippling food shortages. Some Vietnamese pigs and sheep were reportedly stolen from the same zoo earlier this month.

Dozens of other zoo animals are slowing starving to death because there is no food available to give to them.  In fact, it is being reported that at least 50 animals have died from lack of food at one zoo alone…

At least 50 animals have died in the last six months at the Caricuao zoo in Caracas, Venezuela, due to widespread food shortages that are affecting both man and beast in the socialist nation.

Marlene Sifontes, a union leader for employees of state parks agency Inparques which oversees zoos, told Reuters that the zoo lost Vietnamese pigs, tapirs, rabbits and birds after the animals went weeks without eating. Others animals at the zoo are in danger of severe malnutrition. Lions and tigers, which should be on a carnivorous diet, are being fed mango and pumpkin just to get something in their empty stomachs, while an elephant is being fed tropical fruit instead of its usual diet of hay, the union leader said. According to one report, the big cats are being fed slaughtered thoroughbred racehorses from a nearby race track.

If what you have just read hurts your heart, let us not forget that it is not just the animals that are suffering.  There are millions of precious people down there that are living on the very edge of starvation as you read this article.

Earlier this year, one mayor came forward and admitted to the world that some people are so hungry that they are actually hunting “cats, dogs and pigeons” for food…

Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Venezuela are filled with people killing animals for food.

Through Twitter, Muchacho reported that in Venezuela, it is a “painful reality” that people “hunt cats, dogs and pigeons” to ease their hunger. People are also reportedly gathering vegetables from the ground and trash to eat as well.

The crisis in Venezuela is worsening everyday due in part to shortages reaching 70 percent […] six Venezuelan military officials were arrested for stealing goats to ease their hunger, as there was no food at the Fort Manaure military base.

With each passing week, the situation in Venezuela keeps on getting worse.

And even though the United States has made many of the exact same mistakes that Venezuela has made, most of us just assume that what is happening down there could never happen up here.

After all, we have “the greatest economy in the world” and we are “the wealthiest nation on the entire planet”, right?

Well, actually our economic infrastructure has been systematically gutted by free trade deals and we consume far more wealth than we produce.  We have artificially pumped up our standard of living by adding more than 1.1 trillion dollars a year to the national debt since Barack Obama has been in the White House, and one recent poll discovered that 62 percent of all Americans have less than $1,000 saved up.

But don’t worry.  Instead of turning out like Venezuela, the mainstream media insists that the best days for America are right around the corner.

In fact, just today I came across a Business Insider article that insisted that soon our biggest economic problem will be that we won’t be able to find enough workers.

And Barbra Streisand is so thrilled that Hillary Clinton is going to be our next president that she launched into a rousing rendition of “Happy Days Are Here Again” as she kicked off her farewell tour in Los Angeles.  The following account comes from the Drudge Report…

So long sad times
Go along bad times
We are rid of you at last
Howdy gay times
Cloudy gray times
You are now a thing of the past
Happy days are here again
The skies above are clear again
So let’s sing a song of cheer again…

Streisand suddenly interrupted the lyric, realizing a Democrat was currently in the White House!

“By the way, I love Obama.”

Altogether shout it now
There’s no one
Who can doubt it now
So let’s tell the world about it now
Happy days are here again

So what is the truth?

Are we going to end up just like Venezuela, or are happy days here once more?

Unfortunately, I have a feeling that we are not going to have to wait too long to find out…

Watch Venezuela, Because Food Shortages, Looting And Economic Collapse Are Coming To America Too

Venezuela Economic CollapseThe full-blown economic collapse that is happening in Venezuela right now is a preview of what Americans will be experiencing in the not too distant future.  Just a few years ago, most Venezuelans could never have imagined that food shortages would become so severe that people would literally hunt dogs and cats for food.  But as you will see below, this is now taking place.  Sadly, this is what the endgame of socialism looks like.  When an all-powerful government is elevated far above all other institutions in society and radical leftists are given the keys to the kingdom, this is the result.  Food shortages, looting and rampant violent crime have all become part of daily life in Venezuela, and we all need to watch as this unfolds very carefully, because similar scenarios will soon be playing out all over the planet.

The funny thing is that Venezuela actually has more “wealth” than most countries in the world.  According to the CIA, Venezuela actually has more proven oil reserves than anyone else on the globe – including Saudi Arabia.

So how did such a wealthy nation find itself plunged into full-blown economic collapse so rapidly, and could a similar thing happen to us?

The president of Venezuela has declared a 60 day state of emergency in a desperate attempt to restore order, but most people don’t anticipate that it will do much good.  Social order continues to unravel as the economy systematically implodes.  The Venezuelan economy shrunk by 5.7 percent last year, and it is being projected that it will contract by another 8 percent in 2016.  Meanwhile, inflation is raging wildly out of control.  According to the IMF, the official inflation rate in Venezuela will be somewhere around 720 percent this year and 2,200 percent next year.

If people are able to get their hands on some money, they immediately rush out to the stores to use it before the prices go up again.  This has created devastating shortages of food, basic supplies and medicine.

Electricity is also in short supply, and a two day workweek has been imposed on many government employees in a desperate attempt to save power.  Violent crime is seemingly everywhere, and most law-abiding Venezuelans lock themselves in their homes at night as a result.

Much of the crime is being perpetrated by the mafia and the gangs, but sometimes it is just normal people looking for food.  Desperate people do desperate things, and according to the Guardian there have been “107 episodes of looting or attempted looting in the first quarter of 2016″…

Crowds of people in Venezuela have stolen flour, chicken and even underwear this week as looting increases across the country in the wake of shortages of many basic products. Many people have adopted the habit of getting up in the dead of night to spend hours in long lines in front of supermarkets. But as more end up empty-handed and black market prices soar, plundering is rising in Venezuela, an Opec nation that was already one of the world’s most violent countries.

There is no official data, but the Venezuelan Observatory for Social Conflict, a rights group, have reported 107 episodes of looting or attempted looting in the first quarter of 2016. Videos of crowds breaking into shops, swarming on to trucks or fighting over products frequently make the rounds on social media, though footage is often hard to confirm.

One example of this looting took place on May 11th.  Thousands of hungry people stormed Maracay Wholesale Market in central Venezuela, and the police seemed powerless to stop them…

“They took milk, pasta, flour, oil, and milk powder. There were 5,000 people,”one witness told Venezuela outlet El Estímulo.

People from across the entire state came to the supermarket because there were rumors that some products not found anywhere else would be sold there.

“There were 250 people for each National Guard officer… lots of people and few soldiers. At least one officer was beat up because he tried to stop the crowd,” another source told El Estímulo.

You can see some rough footage of this incident right here…

It is important to remember that this was not an isolated incident.  As people have become hungrier and hungrier, there have been reports of looting at “pharmacies, shopping malls, supermarkets, and food delivery trucks“.  During some of these episodes there have actually been people chanting “we are hungry”.

Other Venezuelans have resorted to digging in dumpsters and trash cans for food.  This many seem detestable to many Americans, but when you are desperately hungry you may be surprised at what you are willing to do.

And as I mentioned above, some Venezuelans and now actually hunting dogs and cats for food…

Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Venezuela are filled with people killing animals for food.

Through Twitter, Muchacho reported that in Venezuela, it is a “painful reality” that people “hunt cats, dogs and pigeons” to ease their hunger.

You may be tempted to dismiss these people as “barbarians”, but someday Americans will be doing the exact same thing.

There has been a breakdown of basic social services in Venezuela as well.  Acute shortages of drugs and medical supplies are having absolutely tragic results.  When I read the following from the New York Times, this crisis in Venezuela become much more real to me…

By morning, three newborns were already dead.

The day had begun with the usual hazards: chronic shortages of antibiotics, intravenous solutions, even food. Then a blackout swept over the city, shutting down the respirators in the maternity ward.

Doctors kept ailing infants alive by pumping air into their lungs by hand for hours. By nightfall, four more newborns had died.

So once again I ask – how did such a thing happen to such a wealthy nation?

Here is Business Insider’s explanation…

The real culprit is chavismo, the ruling philosophy named for Chavez and carried forward by Maduro, and its truly breathtaking propensity for mismanagement (the government plowed state money arbitrarily into foolish investments); institutional destruction (as Chavez and then Maduro became more authoritarian and crippled the country’s democratic institutions); nonsense policy-making (like price and currency controls); and plain thievery (as corruption has proliferated among unaccountable officials and their friends and families).

Are not the same things happening here?

The U.S. government is mismanaging our money too.  During Barack Obama’s eight years in the White House, the U.S. national debt has risen by more than eight trillion dollars.  We waste money in some of the most bizarre ways imaginable, and at this point our national debt is nearly the double the size it was just prior to the last major financial crisis.

Institutional destruction is also a legacy of the Obama regime.  With each passing day, our society resembles the Republic that our founders originally intended less and less, and it resembles socialist dictatorships more and more.  We may as well not even have a Constitution anymore, because at this point nobody really follows it.

The third thing that Business Insider mentioned, “nonsense policy-making”, is a perfect description of what has been going on in Washington D.C. these days.  Perhaps that is why Congress only has a 12.8 percent approval rating right now.

Lastly, thievery and corruption are also out of control in our nation too.  The elite and special interest groups spend massive amounts of money to get their favorites into office, and in turn those politicians shower their good friends with money and favors.  It is a very sick relationship, but that is how our system now works.

We are sitting on the largest mountain of debt in the history of the planet, and our debt-fueled prosperity is completely dependent on the rest of the world lending us gigantic amounts of money at ridiculously low interest rates and continuing to use our increasingly shaky currency which we are debasing at a staggering pace.

We consume far more than we produce, and unlike Venezuela we aren’t sitting on hundreds of billions of barrels of oil.  The amount of “real wealth” that we actually have does not justify our current standard of living.  The only way that we are able to live the way that we do is by stealing consumption from the future.  One study has found that our debt level is the highest that it has been since the Great Depression of the 1930s, and yet we continue to race down this road to economic oblivion without even thinking twice about it.

What you sow is what you will reap.

And just like Venezuela, America will ultimately reap a very bitter harvest.

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