Study Discovers That If The Debt Machine Was Turned Off, The U.S. Would Immediately Plunge Into A Horrifying Depression

A new study has discovered that we are far more dependent on America’s great debt creation machine than most of us would have ever dared to imagine.  Today, debt is involved in most of our major transactions.  In order to purchase a home, most of us go into debt.  The same thing is true when most of us buy a vehicle.  Total credit card debt is well over a trillion dollars, and total student loan debt is now over a trillion and a half dollars.  Corporate debt has more than doubled since the last financial crisis, state and local governments are absolutely drowning in debt and unfunded pension liabilities, and the federal government is more than 22 trillion dollars in debt.  The Federal Reserve and the “too big to fail” banks are at the core of this insidious debt-based system, and it has been systematically destroying the bright future that our children and our grandchildren were supposed to have.  But if we suddenly turned off America’s great debt creation machine at this point, our entire economic system would totally collapse because we have become so dependent on it.  In fact, a study that was just conducted by Bloomberg discovered that “gross domestic product per capita would plunge into negative territory” if the ability to borrow was suddenly removed…

The nation’s health as measured by gross domestic product per capita would plunge into negative territory without its dependence on borrowed money, according to data compiled by Bloomberg.

In fact, the U.S. would fall almost to the bottom of a ranking of 114 economies by GDP per capita. Only Italy, Greece and Japan would fare worse. That’s a seismic shift from America’s comfortable No. 5 spot on a list based on conventional measures.

Our massively inflated debt-fueled standard of living is completely and utterly dependent on the continual creation of more debt.

In essence, this study found that without debt we wouldn’t have much of an economy at all.  In fact, Bloomberg says that U.S. per capita income would collapse from $66,900 a year to “negative $4,857”

To get this somewhat dystopian measure, Bloomberg took each economy’s 2020 GDP as projected by the International Monetary Fund as a starting point. We then adjusted the number by removing the ability to borrow, while adding reserves to create an alternative wealth measure.

U.S. per capita income of $66,900 would be slashed to a negative $4,857 using this measure. That’s a total loss of almost $72,000 for every man, woman and child.

So the only thing keeping us from complete and total economic collapse is the fact that debt is flowing like wine.

But what would happen if some sort of major national crisis erupted someday and all of a sudden everyone was afraid to lend money?

That is something to think about, because such a scenario may be a whole lot closer than many people might think.

As it stands, we appear to be on the precipice of the worst economic downturn since the last financial crisis, and our trade war with China just went to an entirely new level as the month of September began

The biggest reason for last week’s torrid stock market rally was rekindled “optimism” that the escalating trade war between the US and China may be on the verge of another ceasefire following phone conversations, fake as they may have been, between the US and Chinese side. This translated into speculation that a new round of tariffs increases slated for this weekend may not take place or be delayed.

However, that did not happen, and with no trade deal in sight, at 12:00am on Sunday, the Trump administration slapped tariffs on $112 billion in Chinese imports, the latest escalation in a trade war that’s ground the global economy to a halt, sent Germany into a recession, and given the market an alibi to keep rising because, wait for it, “a trade deal is imminent.”

Only, it isn’t, and 1 minute later, at 12:01am EDT, China retaliated with higher tariffs being rolled out in stages on a total of about $75 billion of U.S. goods. The target list strikes at the heart of Trump’s political support – factories and farms across the Midwest and South at a time when the U.S. economy is showing signs of slowing down.

The Chinese knew that these tariffs were about to go into effect, and so they were ready and waiting to retaliate just one minute later.

Of course many U.S. companies will be hit extremely hard by these tariffs that the Trump administration just implemented.  The following comes from CNBC

That means that when an electronics company imports a TV, or a smart speaker, or a drone from China starting September 1, it will have to pay a 15% tax to the U.S. government.

Eventually, this will end up raising prices on gadgets and other products for people in the United States, said Bronwyn Flores, a spokeswoman for the Consumer Tech Association (CTA), a trade group that represents 2,000 different companies in the electronics industry, including brands like Apple and LG and retailers like Walmart and Best Buy.

Basically, people are not going to be able to buy as much stuff during the holiday shopping season, and overall economic activity will be slower than it otherwise would have been.

Meanwhile, President Trump continues to sound hopeful that trade talks with China will bear fruit

President Donald Trump said trade talks with Beijing are still planned for September after a new round of tariffs went into effect on Sunday.

“We are talking to China, the meetings in September, that hasn’t changed,” Trump told reporters Sunday on the White House South Lawn after returning from Camp David.

These sorts of comments helped stabilize the financial markets last week, but if there was any hope that a trade agreement was imminent we would not have seen both sides impose new tariffs on Sunday.

And now we are moving into the month that is traditionally the worst for Wall Street.  The following comes from Fox Business

Investors may breathe a sigh of relief that August, typically a volatile month for stocks, is over, but history shows that September could be even worse for Wall Street.

Since 1950, September has been the worst month for the S&P 500 Index, which has dropped, on average, 0.5% during the month, a phenomenon referred to as the September effect. According to Dow Jones market data, the average decline of the Dow Jones Industrial Average in September is 1%, while the Nasdaq Composite generally sees an average fall of 0.5%.

We shall see what this September brings.  Certainly things are really shaky on Wall Street right now, and any piece of really bad news is likely to set off another wave of panic.

Without a doubt, the market is more primed for a crash than it has been at any point since 2008, and it definitely will not take much to make this a “September to remember”…

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Preparing For A Financial Apocalypse: Insiders Are Selling “$600 Million Of Stock Per Day In August”

In the U.S., corporate insiders have been selling stocks at an average rate of 600 million dollars per day during the month of August.  This kind of wild selling indicates that there is a tremendous amount of fear among corporate insiders right now, and such selling would only make sense if a stock market crash is imminent.  And without a doubt, we have already seen volatility return to Wall Street in a major way as our trade war with China has dramatically escalated.  Many Americans are hoping that things will start to calm down and that our trade conflict with China can be resolved calmly, because if things take a bad turn many analysts are warning that we could soon be facing the worst financial crisis since 2008.  Here is one example

Remember the brutal sell-off last year when stocks suffered their worst December since the Great Depression? Something worse than that could happen in days, a Nomura analyst said.

Macro and quant strategist Masanari Takada turned heads earlier this month with his bold call for a “Lehman-like” plunge. He’s sticking with this prediction as market sentiment shows no signs of improving, leading him to believe a monster sell-off could arrive this week.

With chilling forecasts like that being thrown around on a regular basis these days, it is understandable that corporate insiders would be tempted to get out of the market, and right now they are racing for the exits at a pace that is absolutely breathtaking.  The following comes from CNN

Corporate insiders have sold an average of $600 million of stock per day in August, according to TrimTabs Investment Research, which tracks stock market liquidity.

August is on track to be the fifth month of the year in which insider selling tops $10 billion. The only other times that has happened was 2006 and 2007, the period before the last bear market in stocks, TrimTabs said.

In other words, the last time we saw corporate insiders dump stocks like this was just before the last financial crisis.

Clearly, many among the elite are preparing for the worst.  They can see financial disaster looming on the horizon, and they are getting out of the market while the getting is still good.

On the other hand, there are multitudes of Americans out there that are completely convinced that President Trump will be able to successfully navigate us through any storms that may be ahead.

When Barack Obama was in the White House, national interest in prepping soared to all-time highs, but since Trump entered the White House things have completely reversed.  The following comes from Business Insider

But since President Trump took office in 2016, prepping has taken a dive nationwide. There are fewer prepper conventions held across the US, and several prepper business owners who spoke with Business Insider (as well as Mills), say the prepping community is not as active as it was three years ago. It’s an indication of how Trump relieves many of the worst fears of his voters, including conservative preppers.

“It definitely seems to be cycling with the White House,” prepper and inventor Mikhail Merkurieff, who builds and sells prepping and camping tools including stoves, cooking utensils, and portable shelters, told Business Insider.

With a Republican in the White House, many conservatives simply do not see any reason to prep anymore, and so things are completely different than they were about four or five years ago.  Many former preppers seem to believe that having Trump in the Oval Office means that “we don’t have to worry about anything”

Rick Austin, who organizes a popular “Prepper Camp” in the hills of North Carolina every year, which is attended by roughly 1,400 worst-case-scenario preparers hoping to beef up their skills, also noted a downturn.

“Businesses are down because people have kind of gone, ‘Oh, you know, Trump’s in office, we don’t have to worry about anything,'” he said while milking his goats from an “undisclosed location” in the Appalachian Mountains.

So we are witnessing something extremely strange right now.

Corporate insiders and the Wall Street elite are feverishly preparing as if a “perfect storm” was about to strike, but meanwhile millions upon millions of hardcore conservatives feel completely relaxed because they feel like Trump has everything under control.

And President Trump did cause quite a turnaround in the financial markets on Monday when he told the press that China had called and had requested a return to the negotiating table…

“China called last night our top trade people and said. ‘Let’s get back to the table,’ so we will be getting back to the table and I think they want to do something. They have been hurt very badly but they understand this is the right thing to do and I have great respect for it. This is a very positive development for the world,” Trump said.

Subsequently, however, the Chinese denied that such a call had taken place

In Beijing, Foreign Ministry spokesman Geng Shuang said he was not aware that a phone call between the two sides had taken place. And Hu Xijin, editor-in-chief of Chinese state-run newspaper the Global Times, denied that negotiators had held the phone calls Trump described.

“China didn’t change its position. China won’t cave to U.S. pressure,” said Hu, who is widely seen as a mouthpiece for Beijing’s messaging.

We shall see where things go from here.

It would certainly be a step in the right direction if the two sides start talking again, and the Chinese have definitely expressed a desire to avoid any further escalations

In response, Chinese Vice Premier Liu He told a state-controlled newspaper on Monday that “China is willing to resolve its trade dispute with the United States through calm negotiations and resolutely opposes the escalation of the conflict,” Reuters first reported, citing a transcript of his remarks provided by the Chinese government. Liu is China’s top trade negotiator.

Speaking at a technology conference in China, Liu added: “We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world.”

But with a presidential election looming about a year away, the Chinese are simply not going to accept any deal that is appreciably different from what they expect that they could get from Joe Biden or Elizabeth Warren.

And it is also very unlikely that President Trump will cave in and give the Chinese what they want.  So ultimately we will see episodes of hope on Wall Street on the days when it looks like the two sides may start talking again, but there won’t be a deal any time soon.

Many people believe that we are living during one of the most critical moments in U.S. history, and we haven’t seen this sort of fear in the financial markets in a long time.

At this moment, corporate insiders are dumping stocks as if “the everything bubble” was about to burst in a major way.  And if those corporate insiders are correct, millions upon millions of other Americans will be completely and utterly unprepared for what is about to happen.

About the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

Legendary Investor Jim Rogers Warns That The Worst Stock Market Crash In Your Lifetime Is Coming ‘This Year Or Next’

If Jim Rogers is right, the worst stock market crash that any of us has ever seen is right around the corner.  For the past 15 years, Rogers has been a frequent guest analyst on CNBC, Fox News and elsewhere, and he is immensely respected for the depth of knowledge and experience that he brings to the table.  So the fact that he is warning that we are about to see the worst stock market crash in any of our lifetimes is making a lot of waves in the financial community.  And of course Rogers is far from alone.  Previously, I have written about several other prominent experts that are warning that a new financial crisis is imminent, and I have also discussed how a number of big investors are quietly positioning themselves to make an enormous amount of money when the markets crash.  Could it be possible that all of these incredibly sharp minds could be wrong?  Yes, but I wouldn’t bet on it.

I was actually quite stunned when I first learned what Jim Rogers had told Henry Blodget of Business Insider during a recent interview.  Rogers has built up a tremendous amount of credibility, but now he is putting that credibility on the line by warning that a great stock market crash will happen by the end of next year.  Here is the key portion of the interview

Blodget: Well, yeah, TV ratings do seem to go up during crashes, but then they completely disappear when everyone is obliterated, so no one is hoping for that. So when is this going to happen?

Rogers: Later this year or next.

Blodget: Later this year or next?

Rogers: Yeah, yeah, yeah. Write it down.

There is no backing out of a statement like that.

If Rogers is wrong, he will never hear the end of it.

Subsequently, Blodget and Rogers also discussed how severe the coming crisis would be…

Blodget: And how big a crash could we be looking at?

Rogers: It’s going to be the worst in your lifetime.

Blodget: I’ve had some pretty big ones in my lifetime.

Rogers: It’s going to be the biggest in my lifetime, and I’m older than you. No, it’s going to be serious stuff.

So that means that Rogers is convinced that the coming crisis is going to be even worse than what we went through in 2008.

Of course this is something that I have been warning about for quite a while, but for Jim Rogers to make a statement like this is a really, really big deal.

Later in the interview, Rogers shared more details about what he believes the coming crisis will look like…

You’re going to see governments fail. You’re going to see countries fail, this time around. Iceland failed last time. Other countries fail. You’re going to see more of that.

You’re going to see parties disappear. You’re going to see institutions that have been around for a long time — Lehman Brothers had been around over 150 years. Gone. Not even a memory for most people. You’re going to see a lot more of that next around, whether it’s museums or hospitals or universities or financial firms.

That definitely sounds like an “economic collapse” to me.  Of course the truth is that the U.S. economy is already in the midst of a slow-motion economic collapse that stretches back for decades, but this coming crisis that Rogers is talking about is going to great accelerate matters.

Let us hope that it is put off for as long as possible, but at some point we are simply going to run out of time.

And when markets do start falling, they can move very, very rapidly.  Just look at what happened on Friday.  Technology sector stocks were down 2.7 percent, and the FAANG stocks were some of the biggest movers

Facebook fell $5.11, or 3.3%, to $149.60.

Apple fell $6.01, or 3.9%, to $148.90.

Amazon fell $31.96, or 3.2%, to $978.31 now demoted from the elect group for 4-digit stocks back to the large group of 3-digit stocks.

Netflix plunged $7.85, or 4.7%, to $158.20.

Alphabet – the G in FAANG – fell $33.58, or 3.4%, to $952.23, moving further away from everyone’s dream of closing at $1,000.

If we are indeed moving toward a new crisis, one of the things that we will want to watch for is an inverting of the yield curve.

We saw this happen in 2000 and in 2006, and on both occasions it foreshadowed that a huge stock market crash was coming in the not too distant future.

Unfortunately, CNBC says that a new inversion of the yield curve could happen “by the end of this year”…

The bounce in Treasury yields witnessed after the election of Donald Trump is now decaying in the D.C. swamp. If the Federal Reserve continues to ignore this slow growth and deflationary signal from the bond market and continues along its current rate hiking path, the yield curve will invert by the end of this year and an equity market plunge and a recession is sure to follow.

An inverted yield curve, which has correctly predicted the last seven recessions going back to the late 1960’s, occurs when short-term interest rates yield more than longer-term rates. Why is an inverted yield curve so crucial in determining the direction of markets and the economy? Because when bank assets (longer-duration loans) generate less income than bank liabilities (short-term deposits), the incentive to make new loans dries up along with the money supply. And when asset bubbles are starved of that monetary fuel they burst. The severity of the recession depends on the intensity of the asset bubbles in existence prior to the inversion.

Another key indicator is the growth of commercial and industrial loans. According to Zero Hedge, this indicator has correctly foreshadowed every single recession since 1960…

While many “conventional” indicators of US economic vibrancy and strength have lost their informational and predictive value over the past decade (GDP fluctuates erratically especially in Q1, employment is the lowest this century yet real wage growth is non-existent, inflation remains under the Fed’s target despite its $4.5 trillion balance sheet and so on), one indicator has remained a stubbornly fail-safe marker of economic contraction: since the 1960, every time Commercial & Industrial loan balances have declined (or simply stopped growing), whether due to tighter loan supply or declining demand, a recession was already either in progress or would start soon.

So considering the fact that this indicator has been so accurate, it is extremely alarming that we could see our “first negative loan growth” since the last financial crisis “in roughly 4 to 6 weeks”

After growing at a 7% Y/Y pace at the start of the year, which declined to 3% at the end of March and 2.6% at the end of April, the latest bank loan update from the Fed showed that the annual rate of increase in C&A loans is now down to just 1.6%, – the lowest since 2011 – after slowing to 2.3% and 1.8% in the previous two weeks.

Should the current rate of loan growth deceleration persist – and there is nothing to suggest otherwise – the US will post its first negative loan growth, or rather loan contraction since the financial crisis, in roughly 4 to 6 weeks.

And when you throw in all of the other signs that the U.S. economy is slowing down, a very clear picture begins to emerge.

It has been said that those that do not learn from history are doomed to repeat it.  As a society, we certainly didn’t learn much from the horrible financial disaster of 2008, and now so many of the exact same patterns are repeating once again.

An unprecedented financial crisis is most definitely heading our way, and the only thing left to be answered is how soon it will get here.

During Every Market Crash There Are Big Ups, Big Downs And Giant Waves Of Momentum

Tsunami Tidal Wave - Public DomainThis is exactly the type of market behavior that we would expect to see during the early stages of a major financial crisis.  In every major market downturn throughout history there were big ups, big downs and giant waves of momentum, and this time around will not be any different.  As I have explained repeatedly, markets tend to go up when things are calm, and they tend to go down when things get really choppy.  During a market meltdown, we fully expect to see days when the stock market absolutely soars.  Waves of panic selling are often followed by waves of panic buying.  As you will see below, six of the ten best single day gains for the Dow Jones Industrial Average happened during the financial crisis of 2008 and 2009.  So don’t be fooled for a moment by a very positive day for stocks like we are seeing on Tuesday.  It is all part of the dance.

At one point on Tuesday, the Dow was up over 400 points, and many of the talking heads on television were proclaiming that the stock market had “recovered”.  This is something that I predicted would happen yesterday

And if stocks go up tomorrow (which they probably should), all of those same “experts” will be proclaiming that the “correction” is over and that everything is now fine.

No, everything is not “fine” now.  The extreme volatility that we are witnessing just tells us that more trouble is coming.  Early on Tuesday the market was “burning up energy” as short-term investors sought to “buy the dip”.  But now that wave of panic buying is subsiding and the Dow is only up 240 points as I write this.

Overall, the Dow is still down more than 2,200 points from the peak of the market.  Even though I specifically warned that a market crash was coming, I didn’t expect the Dow to be down this far in late August.  Even after the “rally” we witnessed today, we are still way ahead of schedule.

The truth is that what we have seen so far is just the warm up act.

The main event will unfold during the months of September through December, and right now most people could not even conceive of the things that we are going to see in 2016.

But all along, there are going to be days when stocks fly higher.  As I mentioned above, many of the “best days” in stock market history occurred right in the middle of the financial crisis of 2008 and 2009.  This is a point that Jim Quinn has made very eloquently…

Six of the ten largest point gains in the history of the stock market occurred between September 2008 and March 2009. That’s right. During one of the greatest market collapses in history, the market soared by 5% to 11% in one day, six times. Here are the data points:

2008-10-13: +936.42

2008-10-28: +889.35

2008-11-13: +552.59

2009-03-23: +497.48

2008-11-21: +494.13

2008-09-30: +485.21

Do you think these factoids will be shared with the public today on the stock bubble networks? Not a chance.

And all of the technical indicators are still screaming that U.S. stocks have a long, long way to fall.  For example, just check out this chart.  The long-term analysis has not changed one bit.

Often, it is the short-term news that drives markets on any particular day.  Tuesday began with another massive stock selloff in Asia

The Shanghai Composite, China’s main stock exchange, fell 7.6% on Tuesday – after losing 8.5% on what state media have called China’s “Black Monday”.

It was the worst fall since 2007 and caused sharp drops in markets in the US and Europe

Tokyo’s Nikkei index had a volatile day, closing 4% lower.

In another desperate attempt to stop the bleeding, the Chinese decided to cut interest rates

The People’s Bank of China has lowered its interest rate for the fifth time since November. The one-year lending has been reduced by 25 basis points to 4.6 percent; the one-year deposit rate has been cut by 25 basis points to 1.75 percent. The change comes into force on Wednesday.

This reduction in interest rates was cheered by investors all over the planet, and as a result there was a wave of panic buying in Europe and in the United States.

But none of the short-term activity changes the fact that global financial markets are absolutely primed for a giant crash.  I like how Bill Fleckenstein put it during a recent interview with King World News

I have no idea how this is going to play out, other than I know we are headed considerably lower. The fact that so few seem to understand what the actual problem is makes me even more confident about that point. It would seem that everyone is using the easy answer and blaming China, but that was just the catalyst. The market has been trading in a heavy sideways fashion for some time, expectations are way higher than can be met, the technical action has now deteriorated, and bad news actually matters at the same time that speculation has run rampant. As I have stated many times (and also noted the reasons why), you couldn’t create a more crash-prone environment if you specifically set out to do so.

What we can’t account for are “black swan events” which could greatly accelerate this financial crisis.

A war in the Middle East, a major natural disaster or a terror attack involving weapons of mass destruction are all examples of the kinds of things that could turn this market crash into full-blown market implosion.

As we move into the critical month of September 2015, I think that it is safe to say that we should all be ready to expect the unexpected.  Our world is becoming increasingly unstable, and I am extremely concerned about the period of time that we are heading into.

The nice, comfortable period of relative stability that we have been experiencing for the past few years has come to an end.  I hope that you have enjoyed the good times while you still had them.

Now we are moving into a time of tremendous chaos and rapidly shifting conditions, and it is imperative that we all work very hard to get prepared for it while we still can.

Gerald Celente Is Predicting That A Stock Market Crash Will Happen By The End Of 2015

New York Stock Exchange - Public DomainGerald Celente of the Trends Research Institute has just gone on the record with a prediction that there will be a stock market crash by the end of this calendar year.  If you are not familiar with Gerald Celente, he is one of the most highly respected trends forecasters in the entire world.  He has been featured on CNN, The Oprah Winfrey Show, The Today Show, Good Morning America, CBS Morning News, NBC Nightly News and Coast to Coast AM.  Personally, I have a lot of respect for him.  While it is true that not every single one of his forecasts about the future came to pass over the years, he does have a very solid track record that goes back for decades.  He correctly predicted the 1987 stock market crash, the bursting of the dotcom bubble and the financial panic of 2008.  Just a couple of days ago, he told Eric King the following: “I’m now predicting that we are going to see a global stock market crash before the end of the year.”  Celente says that it won’t just be U.S. stocks either.  He believes that crashes are also coming to “the DAX, the FTSE, the CAC, Shanghai, and the Nikkei”.  It other words, it is going to be a truly global financial crisis and he says that there is “going to be panic on the streets from Wall Street to Shanghai and from the UK down to Brazil”.

When you go out on a limb like this, you are putting your credibility on the line.  This is something that Celente has only done a few times in the past, and normally he has been spot on

Rarely do I ever put a date on market crashes. I did it in 1987 when I forecast the 1987 stock market crash — that was in the Wall Street Journal. I also forecast the ‘Panic of 2008,’ and the ‘dot-com bust’ in October of 1999, when I said it (the dot-com mania) would fail in the second quarter of 2000…

Of course Celente is far from alone.  Many others have also been warning that a new financial crisis is imminent.

For instance, just check out what David Stockman recently told CNBC

David Stockman has long warned that the stock market is on the verge of a massive collapse, and the recent price action has him even more convinced than ever that the bottom is about to fall out.

I think it’s pretty obvious that the top is in,” the Reagan administration’s OMB director said Thursday on CNBC’s “Futures Now.” The S&P 500 has traded in a historically narrow range for the better part of 2015, having moved just 1 percent higher year to date. “It’s just waiting for the knee-jerk bulls, robo traders and dip buyers to finally capitulate.”

Stockman, whose past claims have yet to come to fruition, still believes that the excessive monetary policy from central banks around the world has created a “debt supernova,” and all the signs point to “the end of the central bank enabled bubble,” which could cause a worldwide recession.

Just a few days ago, I authored an article entitled “8 Financial Experts That Are Warning That A Great Financial Crisis Is Imminent” which showed that a whole bunch of other financial experts are sounding the alarm about an implosion of the financial markets.

And before any of these warnings came out, I issued my “red alert” for the last six months of 2015 back on June 25th.

There is a growing consensus that something really, really bad is about to happen in the very near future.

You know that we are really late in the game when the mainstream media starts sounding exactly like The Economic Collapse Blog.

On July 22nd, I authored a piece entitled “Commodities Collapsed Just Before The Last Stock Market Crash – So Guess What Is Happening Right Now?

Now compare that headline to this recent one from Bloomberg: “Commodities Are Crashing Like It’s 2008 All Over Again“.

The mainstream media is starting to get it.  The exact same patterns that we witnessed just prior to the last financial crisis are playing out once again right before our very eyes.  Here is an excerpt from that Bloomberg article

Attention commodities investors: Welcome back to 2008!

The meltdown has pushed as many commodities into bear markets as there were in the month after the collapse of Lehman Brothers Holdings Inc., which spurred the worst financial crisis seven years ago since the Great Depression.

Eighteen of the 22 components in the Bloomberg Commodity Index have dropped at least 20 percent from recent closing highs, meeting the common definition of a bear market. That’s the same number as at the end of October 2008, when deepening financial turmoil sent global markets into a swoon.

This is the kind of stuff that I have been hammering on for weeks.

Another sign that we saw back in 2008 that is repeating once again is a substantial slowdown in global trade.  Over the weekend, we got some more bad news on this front from China.  The following comes from Zero Hedge

Overnight we got another acute reminder of just who is lying hunched over, comatose in the driver’s seat of global commerce: the country whose July exports just crashed by 8.3% Y/Y (and down 3.6% from the month before) far greater than the consensus estimate of only a 1.5% drop, and the biggest drop in four months following the modest June rebound by 2.8%: China.

China Exports YoY - Zero Hedge

It wasn’t just exports, imports tumbled as well by 8.1%, fractionally worse than the -8.0% consensus, and down from the -6.1% in June as China’s commodity tolling operations are suddenly mothballed.

The crisis that so many have been waiting for is here.

As the coming weeks and months play out, there will be good days and there will be bad days.  Remember, some of the biggest one day gains in U.S. stock market history happened right in the middle of the financial crisis of 2008.  So don’t get fooled by what happens on any one particular day.

Also, please do not think that this crisis will be “over” by the end of 2015.  What we are moving into is just the start of the crisis.  Things will continue to unravel as we move into 2016 and beyond.  The recession that we experienced back in 2008 and 2009 will seem like a Sunday picnic compared to what is coming by the time that everything is all said and done.

So that is why I work so hard to encourage people to get prepared.

What we are facing is not going to last for weeks or for months.

The coming crisis is going to last for years, and it is going to be painful beyond what most people would dare to imagine.

Commodities Collapsed Just Before The Last Stock Market Crash – So Guess What Is Happening Right Now?

Grid Stock Exchange Economy Finance - Public DomainIf we were going to see a stock market crash in the United States in the fall of 2015 (to use a hypothetical example), we would expect to see commodity prices begin to crash a few months ahead of time.  This is precisely what happened just before the great financial crisis of 2008, and we are watching the exact same thing happen again right now.  On Wednesday, commodities got absolutely pummeled, and at this point the Bloomberg Commodity Index is down a whopping 26 percent over the past twelve months.  When global economic activity slows down, demand for raw materials sinks and prices drop.  So important global commodities such as copper, iron ore, aluminum, zinc, nickel, lead, tin and lumber are all considered to be key “leading indicators” that can tell us a lot about where things are heading next.  And what they are telling us right now is that we are rapidly approaching a global economic meltdown.

If the global economy was actually healthy and expanding, the demand for commodities would be increasing and that would tend to drive prices up.  But instead, prices continue to go down.

The Bloomberg Commodity Index just hit a brand new 13-year low.  That means that global commodity prices are already lower than they were during the worst moments of the last financial crisis

The commodities rout that’s pushed prices to a 13-year low pulled some of the biggest mining and energy companies below levels seen during the financial crisis.

The FTSE 350 Mining Index plunged as much as 4.9 percent to the lowest since 2009 on Wednesday, with BHP Billiton Ltd. and Anglo American Plc leading declines. Gold and copper are near the lowest in at least five years, while crude oil retreated to $50 a barrel.

This commodity bear market is like a train wreck in slow motion,” said Andy Pfaff, the chief investment officer for commodities at MitonOptimal in Cape Town. “It has a lot of momentum and doesn’t come to a sudden stop.”

Commodity prices have not been this low since April 2002.  According to Bloomberg, some of the commodities being hit the hardest include soybean oil, copper, zinc and gasoline.  And this commodity crash is already having a dramatic impact on some of the biggest commodity-producing nations on the globe.  Just consider what Gerald Celente recently told Eric King

We now see that the Australian dollar is at a six-year low against the U.S. dollar. What are Australia’s biggest exports? How about iron-ore and other metals.

If we look at Canada, their currency is also now at a six-year low vs the U.S. dollar. Well, Canada is a big oil exporter, particularly some tar sands oil, which is expensive to produce.

We also now have the Brazilian real at a 10-year low vs the U.S. dollar. Why? Because it’s a natural resource rich country and they don’t have a strong market to sell their natural resources to.

Meanwhile, the Indian rupee is at a 17-year low vs the U.S. dollar. This is because manufacturing is slowing down and there is less development. If the Americans aren’t buying, the Indians, the Chinese, the Vietnamese — they’re not making things.

All of this is so, so similar to what we experienced in the run up to the financial crisis of 2008.  Just a couple of days ago, I talked about how the U.S. dollar got really strong just prior to the last stock market crash.  The same patterns keep playing out over and over, and yet most in the mainstream media refuse to see what is happening.

Something else that happened just a few months before the last stock market crash was a collapse of the junk bond market.

Guess what?

That is starting to happen again too.  Just check out this chart.

I know that I must sound like a broken record.  But I think that it is extremely important to document these things.  When the next financial collapse takes place, virtually everyone in the mainstream media will be talking about what a “surprise” it is.

But for those that have been paying attention, it won’t be much of a “surprise” at all.

When the stock market does crash, how far might it fall?

During a recent appearance on CNBC, Marc Faber suggested that it could decline by up to 40 percent

The U.S. stock market could “easily” drop 20 percent to 40 percent, closely followed contrarian Marc Faber said Wednesday—citing a host of factors including the growing list of companies trading below their 200-day moving average.

In recent days, “there were [also] more declining than advancing stocks, and the list of 12-month new lows was very high on Friday,” the publisher of The Gloom, Boom & Doom Report told CNBC’s “Squawk Box.”

“It shows you a lot of stocks are already declining.”

Others, including myself, believe that what we are going to experience is going to be even worse than that.

We live in such a fast-paced world, and most of us don’t have the patience to wait for long-term trends to play out.

If the stock market is not crashing today, to most people that means that everything must be fine.

But once it has crashed, everyone is going to be complaining that they weren’t warned in advance about what was coming and everyone will be complaining that nobody ever fixed the things that caused the exact same problems the last time around.

Personally, I am trying very hard to make sure that nobody can accuse me of not sounding the alarm about the storm that is on the horizon.

The world has never been in more debt, our “too big to fail” banks have never been more reckless, and global financial markets have never been more primed for a collapse.

Amazingly, there are still a lot of “experts” out there that insist that everything is going to be okay somehow.

Of course many of those exact same “experts” were telling us the same thing just before the stock market crashed in 2008 too.

A great financial shaking has already begun around the world, and it will hit U.S. financial markets very soon.

I hope that you are getting ready while you still can.

Investors Start To Panic As A Global Bond Market Crash Begins

Panic Keyboard - Public DomainIs the financial collapse that so many are expecting in the second half of 2015 already starting?  Many have believed that we would see bonds crash before the stock market crashes, and that is precisely what is happening right now.  Since mid-April, the yield on 10 year German bonds has shot up from 0.05 percent to 0.89 percent.  But much of that jump has come this week.  Just a couple of days ago, the yield on 10 year German bonds was sitting at just 0.54 percent.  And it isn’t just Germany – bond yields are going crazy all over Europe.  So far, it is being estimated that global investors have lost more than half a trillion dollars, and there is much more room for these bonds to fall.  In the end, the overall losses could be well into the trillions even before the stock market collapses.

I know that for most average Americans, talk about “bond yields” is rather boring.  But it is important to understand these things, because we could very well be looking at the beginning of the next great financial crisis.  The following is an excerpt from an article by Wolf Richter in which he details the unprecedented carnage that we have witnessed over the past few days…

On Tuesday, ahead of the ECB’s policy announcement today, German Bunds sagged, and the 10-year yield soared from 0.54% to 0.72%, drawing a squiggly diagonal line across the chart. In just one day, yield increased by one-third!

Makes you wonder to which well-connected hedge funds the ECB had once again leaked its policy statement and the all-important speech by ECB President Mario Draghi that the rest of us got see today.

And today, the German 10-year yield jump to 0.89%, the highest since October last year. From the low in mid-April of 0.05% to today’s 0.89% in just seven weeks! Bond prices, in turn, have plunged!  This is the definition of a “rout.”

Other euro sovereign bonds have gone through a similar rout, with the Spanish 10-year yield soaring from 1.05% in March to 2.07% today, and the Italian 10-year yields jumping from a low in March of 1.03% to 2.17% now.

What this means is that the central banks are losing control.

In particular, the European Central Bank has been trying very hard to force yields down, and now the exact opposite is happening.

This is very bad news for a global financial system that is absolutely teeming with red ink.  Since the last financial crisis, our planet has been on the greatest debt binge of all time.  If we are moving into a time of higher interest rates, that is going to cause enormous problems.  Unfortunately, CNBC says that is precisely where things are headed…

The wild breakout in German yields is rocking global debt markets, and giving investors an early glimpse of the uneasy future for bonds in a world of higher interest rates.

The shakeout also carries a message for corporate bond investors, who have snapped up a record level of new issuance this year, and are now seeing negative total returns in the secondary market for the first time this year.

So why is this happening?

Why are bond yields going crazy?

According to the Wall Street Journal, financial regulators in Europe are blaming the ECB’s quantitative easing program…

A recent surge in government bond market volatility can be blamed on the quantitative easing program of the European Central Bank, according to one of Europe’s top financial regulators.

EIOPA, the body responsible for regulating insurers and pension funds in the European Union, has warned that the ECB’s decision to buy billions of euros’ worth of sovereign bonds, to kick-start the region’s economy, has caused markets to become choppier.

And actually this is what should be happening.  When central banks start creating money out of thin air and pumping it into the markets, investors should rationally demand a higher return on their money.  This didn’t really happen when the Federal Reserve tried quantitative easing, so the Europeans thought that they might as well try to get away with it too.  Unfortunately for them, investors are starting to catch up with the scam.

So what happens next?

Well, European bond yields are probably going to keep heading higher over the coming weeks and months.  This will especially be true if the Greek crisis continues to escalate.  And unfortunately for Europe, that appears to be exactly what is happening

Greece will not make a June 5 repayment to the International Monetary Fund if there is no prospect of an aid-for-reforms deal with its international creditors soon, the spokesman for the ruling Syriza party’s lawmakers said on Wednesday.

The payment of 300 million euros ($335 million) is the first of four this month totaling 1.6 billion euros from a country that depends on foreign aid to stay afloat.

Greece owes a total of about 320 billion euros, of which about 65 percent to euro zone governments and the IMF, and about 8.7 percent to the European Central Bank.

On Tuesday, Greece’s creditors drafted the broad outlines of an agreement to put to the leftist government in Athens in a bid to conclude four months of negotiations and release aid before the country runs out of money.

“If there is no prospect of a deal by Friday or Monday, I don’t know by when exactly, we will not pay,” Nikos Filis told Mega TV.

In fact, there are reports that both the ECB and the Greek government are talking about Greece going to a “parallel domestic currency”

Biagio Bossone and Marco Cattaneo write that according to several recent media reports, both the Greek government and the ECB are taking into consideration the possibility (for Greece) to issue a parallel domestic currency to pay for government expenditures, including civil servant salaries, pensions, etc. This could happen in the coming weeks as Greece faces a severe shortage of euros. A new domestic currency would help make payments to public employees and pensioners while freeing up the euros needed to pay out creditors.

If Greece defaults and starts using another currency, the value of the euro is going to absolutely plummet and bond yields all over the continent are going to start heading into the stratosphere.

That is why it is so important to keep an eye on what is going on in Greece.

But no matter what happens in Greece, it appears that we are moving into a time when there will be higher interest rates around the world.  And since 505 trillion dollars in derivatives are directly tied to interest rate levels, that could lead to a financial unraveling unlike anything that we have ever seen before in the history of our planet.

As I have warned about so many times before, 2008 was just the warm up act.

The main event is still coming, and it is going to be extraordinarily painful.

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