Coming

As The Perfect Storm Approaches, Most Americans Are Partying Instead Of Preparing

I can’t think of a time when Americans were more apathetic about getting prepared, and yet this is exactly the time when the urgency to get prepared should be at the highest.  Earlier today, my wife Meranda and I were discussing the fact that every single element of “the perfect storm” is coming together just as we had anticipated.  One by one, the pieces are all falling into place, and I share the most recent things that my research has uncovered with all of you on a daily basis.  Unfortunately, most Americans are absolutely convinced that there is no reason to get prepared for hard times because everything is going to be just great.  In America today, most people either believe that the future is going to be totally wonderful or that the future will be totally wonderful once we get rid of Trump.  Because so many of us have adopted one of these false narratives, most Americans are partying instead of preparing, and that is going to mean big trouble when things really start going haywire.

Are you familiar with “the rule of three”?  I just looked it up on Google, and this is how it is defined…

“You can survive for 3 Minutes without air (oxygen) or in icy water. You can survive for 3 Hours without shelter in a harsh environment (unless in icy water) You can survive for 3 Days without water (if sheltered from a harsh environment) You can survive for 3 Weeks without food (if you have water and shelter)”

Of course these numbers are not exact.  For example, many have gone without food for more than 3 weeks without serious problems.  But in general, this is a pretty good guideline for survival.

Sadly, if a major emergency were to hit this country tonight, most Americans would be completely unprepared when it comes to even the most basic essentials.  In fact, one survey found that only 39 percent of Americans have any sort of an “emergency kit” whatsoever…

When it comes to being prepared for an emergency, 39% say they have an emergency kit, while another 39% have a non-perishable food stock. A little less than one-third (28%) of people have stockpiles of water, and one in four people (25%) have an evacuation plan.

Of those who have an emergency kit, the most common items to have in the kit are: a first-aid kit (86%), flashlights or other light sources (83%), food (65%), water (63%), and blankets (62%).

Those are depressingly low numbers.

So what are all of those people going to do when things hit the fan and the government is not there to rescue them?

Needless to say, a lot of people will really freak out when they can’t get what they need.

But as long as things are relatively “normal”, this astounding lack of preparation will not be a problem.  And right now, Americans are acting as if things will be “normal” for the foreseeable future.  In fact, most of us are partying like it’s 1999 all over again.  According to CNBC, U.S. consumer debt just surpassed the four trillion dollar mark for the first time ever…

As of this month, outstanding consumer debt exceeded $4 trillion for the first time, according to the Federal Reserve.

Relatively strong holiday spending, particularly in November, and increasing credit card debt added more than $41 billion in outstanding balances at the end of 2018, according to LendingTree, a loan comparison website, which analyzed the data from the Fed.

We are spending money as if there is no tomorrow, and that would be fine if tomorrow never arrived.

Of course we really shouldn’t be spending money so wildly anyway, because many of us are already completely drowning in debt.  For example, auto loan delinquencies are already far higher than they were during the peak of the last recession.  The following comes from NBC News…

At least 7 million Americans were in serious delinquency on their car loan — 90 or more days behind — at the end of 2018, according to data released Tuesday by the Federal Reserve Bank of New York.

That’s 1 million more than at the end of 2010, after the recession.

And student loan delinquencies also just shot up to the highest level ever.  We have never seen anything like this before in modern American history, and yet the party continues to roll on.

For now.

Unfortunately, all parties eventually come to an end, and the end of this one is going to be particularly painful.

When disaster strikes, most Americans are going to be out of resources very, very rapidly.  One survey found that 78 percent of all American workers are living paycheck to paycheck.  That number is a little higher than other figures that I have seen, but everyone agrees that a solid majority of the country is barely scraping by each month.

When things get really bad, I honestly don’t know how most people are going to make it.

A number of years ago, a survey asked Americans how long they thought they would survive if the electrical grid went down for an extended period of time.

Nearly 75 percent said that they would be dead before the two month mark.

Hopefully you are more resourceful than that.  But without a doubt all of us are going to stand a better chance of surviving what is ahead if we make some basic preparations.  In particular, I would encourage everyone to stock up on some emergency food and make sure that you have a Berkey water filter.  It’s isn’t rocket science, but if you choose to do nothing because you have blind faith in the system, then you and your entire family could find yourselves in a world of hurt when things start getting really crazy out there.

If we had made different choices as a nation, we could have had a very different future.

Sadly, our self-destructive behavior continues to get even worse, and a day of reckoning for America is fast approaching.

Get Prepared NowAbout 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.

Not Prepared: 17 Signs That Most Americans Will Be Wiped Out By The Coming Economic Collapse

Tornado Damage - Photo by JOE M500The vast majority of Americans are going to be absolutely blindsided by what is coming.  They don’t understand how our financial system works, they don’t understand how vulnerable it is, and most of them blindly trust that our leaders know exactly what they are doing and that they will be able to fix our problems.  As a result, most Americans are simply not prepared for the massive storm that is heading our way.  Most American families are living paycheck to paycheck, most of them are not storing up emergency food and supplies, and only a very small percentage of them are buying gold and silver for investment purposes.   They seem to have forgotten what happened back in 2008.  When the financial markets crashed, millions of Americans lost their jobs.  Because most of them were living on the financial edge, millions of them also lost their homes.  Unfortunately, most Americans seem convinced that it will not happen again.  Right now we seem to be living in a “hope bubble” and people have become very complacent.  For a while there, being a “prepper” was very trendy, but now concern about a coming economic crisis seems to have subsided.  What a tragic mistake.  As I pointed out yesterday, our entire financial system is a giant Ponzi scheme, and there are already signs that our financial markets are about to implode once again.  Those that have not made any preparations for what is coming are going to regret it bitterly.  The following are 17 signs that most Americans will be wiped out by the coming economic collapse…

#1 According to a survey that was just released, 76 percent of all Americans are living paycheck to paycheck.  But most Americans are acting as if their jobs will always be there.  But the truth is that mass layoffs can occur at any time.  In fact, it just happened at one of the largest law firms in New York City.

#2 27 percent of all Americans do not have even a single penny saved up.

#3 46 percent of all Americans have $800 or less saved up.

#4 Less than one out of every four Americans has enough money stored away to cover six months of expenses.

#5 Wages continue to fall even as the cost of living continues to go up.  Today, the average income for the bottom 90 percent of all income earners in America is just $31,244.  An increasing percentage of American families are just trying to find a way to survive from month to month.

#6 62 percent of all middle class Americans say that they have had to reduce household spending over the past year.

#7 Small business is becoming an endangered species in America.  In fact, only about 7 percent of all non-farm workers in the United States are self-employed at this point.  That means that the vast majority of Americans are depending on someone else to provide them with an income.  But what is going to happen as those jobs disappear?

#8 In 1989, the debt to income ratio of the average American family was about 58 percent.  Today it is up to 154 percent.

#9 Today, a higher percentage of Americans are dependent on the government than ever before.  In fact, according to the U.S. Census Bureau 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government.  So what is going to happen when the government handout gravy train comes to an end?

#10 Back in the 1970s, about one out of every 50 Americans was on food stamps.  Today, about one out of every 6.5 Americans is on food stamps.

#11 It is estimated that less than 10 percent of the U.S. population owns any gold or silver for investment purposes.

#12 It has been estimated that there are approximately 3 million “preppers” in the United States.  But that means that almost everyone else is not prepping.

#13 44 percent of all Americans do not have first-aid kits in their homes.

#14 48 percent of all Americans do not have any emergency supplies stored up.

#15 53 percent of all Americans do not have a 3 day supply of nonperishable food and water in their homes.

#16 One survey asked Americans how long they thought they would survive if the electrical grid went down for an extended period of time.  Incredibly, 21 percent said that they would survive for less than a week, an additional 28 percent said that they would survive for less than two weeks, and nearly 75 percent said that they would be dead before the two month mark.

#17 According to a survey conducted by the Adelphi University Center for Health Innovation, 55 percent of Americans believe that the government will come to their rescue when disaster strikes.

Just because you are living a comfortable middle class lifestyle today does not mean that it will always be that way.

If you doubt this, take a look at what is going on in Greece.  Many formerly middle class parents in Greece have become so impoverished that they are actually dumping their children at orphanages so that they won’t starve…

Scores of children have been put in orphanages and care homes for economic reasons; one charity said 80 of the 100 children in its residential centres were there because their families can no longer provide for them.

Ten percent of Greek children are said to be at risk of hunger. Teachers talk of cancelling PE lessons because children are underfed and of seeing pupils pick through bins for food.

If the U.S. economy crashes and you lose your job, how will you and your family survive?

Will you and your family end up homeless and totally dependent on the government for your survival?

Get prepared while there is still time.  If you do not know how to get prepared, my article entitled “25 Things That You Should Do To Get Prepared For The Coming Economic Collapse” has some basic tips, and there are dozens of excellent websites out there that teach people advanced prepping techniques for free.

So there is no excuse.  You can trust that Ben Bernanke and Barack Obama have everything under control, but as for me and my family we are going to prepare for the giant economic storm that is coming.

I hope that you will be getting prepared too.

Prepping?

The Coming Derivatives Panic That Will Destroy Global Financial Markets

When financial markets in the United States crash, so does the U.S. economy.  Just remember what happened back in 2008.  The financial markets crashed, the credit markets froze up, and suddenly the economy went into cardiac arrest.  Well, there are very few things that could cause the financial markets to crash harder or farther than a derivatives panic.  Sadly, most Americans don’t even understand what derivatives are.  Unlike stocks and bonds, a derivative is not an investment in anything real.  Rather, a derivative is a legal bet on the future value or performance of something else.  Just like you can go to Las Vegas and bet on who will win the football games this weekend, bankers on Wall Street make trillions of dollars of bets about how interest rates will perform in the future and about what credit instruments are likely to default.  Wall Street has been transformed into a gigantic casino where people are betting on just about anything that you can imagine.  This works fine as long as there are not any wild swings in the economy and risk is managed with strict discipline, but as we have seen, there have been times when derivatives have caused massive problems in recent years.  For example, do you know why the largest insurance company in the world, AIG, crashed back in 2008 and required a government bailout?  It was because of derivatives.  Bad derivatives trades also caused the failure of MF Global, and the 6 billion dollar loss that JPMorgan Chase recently suffered because of derivatives made headlines all over the globe.  But all of those incidents were just warm up acts for the coming derivatives panic that will destroy global financial markets.  The largest casino in the history of the world is going to go “bust” and the economic fallout from the financial crash that will happen as a result will be absolutely horrific.

There is a reason why Warren Buffett once referred to derivatives as “financial weapons of mass destruction”.  Nobody really knows the total value of all the derivatives that are floating around out there, but estimates place the notional value of the global derivatives market anywhere from 600 trillion dollars all the way up to 1.5 quadrillion dollars.

Keep in mind that global GDP is somewhere around 70 trillion dollars for an entire year.  So we are talking about an amount of money that is absolutely mind blowing.

So who is buying and selling all of these derivatives?

Well, would it surprise you to learn that it is mostly the biggest banks?

According to the federal government, four very large U.S. banks “represent 93% of the total banking industry notional amounts and 81% of industry net current credit exposure.”

These four banks have an overwhelming share of the derivatives market in the United States.  You might not be very fond of “the too big to fail banks“, but keep in mind that if a derivatives crisis were to cause them to crash and burn it would almost certainly cause the entire U.S. economy to crash and burn.  Just remember what we saw back in 2008.  What is coming is going to be even worse.

It would have been really nice if we had not allowed these banks to get so large and if we had not allowed them to make trillions of dollars of reckless bets.  But we stood aside and let it happen.  Now these banks are so important to our economic system that their destruction would also destroy the U.S. economy.  It is kind of like when cancer becomes so advanced that killing the cancer would also kill the patient.  That is essentially the situation that we are facing with these banks.

It would be hard to overstate the recklessness of these banks.  The numbers that you are about to see are absolutely jaw-dropping.  According to the Comptroller of the Currency, four of the largest U.S. banks are walking a tightrope of risk, leverage and debt when it comes to derivatives.  Just check out how exposed they are…

JPMorgan Chase

Total Assets: $1,812,837,000,000 (just over 1.8 trillion dollars)

Total Exposure To Derivatives: $69,238,349,000,000 (more than 69 trillion dollars)

Citibank

Total Assets: $1,347,841,000,000 (a bit more than 1.3 trillion dollars)

Total Exposure To Derivatives: $52,150,970,000,000 (more than 52 trillion dollars)

Bank Of America

Total Assets: $1,445,093,000,000 (a bit more than 1.4 trillion dollars)

Total Exposure To Derivatives: $44,405,372,000,000 (more than 44 trillion dollars)

Goldman Sachs

Total Assets: $114,693,000,000 (a bit more than 114 billion dollars – yes, you read that correctly)

Total Exposure To Derivatives: $41,580,395,000,000 (more than 41 trillion dollars)

That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 362 times greater than their total assets.

To get a better idea of the massive amounts of money that we are talking about, just check out this excellent infographic.

How in the world could we let this happen?

And what is our financial system going to look like when this pyramid of risk comes falling down?

Our politicians put in a few new rules for derivatives, but as usual they only made things even worse.

According to Nasdaq.com, beginning next year new regulations will require derivatives traders to put up trillions of dollars to satisfy new margin requirements.

Swaps that will be allowed to remain outside clearinghouses when new rules take effect in 2013 will require traders to post $1.7 trillion to $10.2 trillion in margin, according to a report by an industry group.

The analysis from the International Swaps and Derivatives Association, using data sent in anonymously by banks, says the trillions of dollars in cash or securities will be needed in the form of so-called “initial margin.” Margin is the collateral that traders need to put up to back their positions, and initial margin is money backing trades on day one, as opposed to variation margin posted over the life of a trade as it fluctuates in value.

So where in the world will all of this money come from?

Total U.S. GDP was just a shade over 15 trillion dollars last year.

Could these rules cause a sudden mass exodus that would destabilize the marketplace?

Let’s hope not.

But things are definitely changing.  According to Reuters, some of the big banks are actually urging their clients to avoid new U.S. rules by funneling trades through the overseas divisions of their banks…

Wall Street banks are looking to help offshore clients sidestep new U.S. rules designed to safeguard the world’s $640 trillion over-the-counter derivatives market, taking advantage of an exemption that risks undermining U.S. regulators’ efforts.

U.S. banks such as Morgan Stanley (MS.N) and Goldman Sachs (GS.N) have been explaining to their foreign customers that they can for now avoid the new rules, due to take effect next month, by routing trades via the banks’ overseas units, according to industry sources and presentation materials obtained by Reuters.

Unfortunately, no matter how banks respond to the new rules, it isn’t going to prevent the coming derivatives panic.  At some point the music is going to stop and some big financial players are going to be completely and totally exposed.

When that happens, it might not be just the big banks that lose money.  Just take a look at what happened with MF Global.

MF Global has confessed that it “diverted money” from customer accounts that were supposed to be segregated.  A lot of customers may never get back any of the money that they invested with those crooks.  The following comes from a Huffington Post article about the MF Global debacle, and it might just be a preview of what other investors will go through in the future when a derivatives crash destroys the firms that they had their money parked with…

Last week when customers asked for excess cash from their accounts, MF Global stalled. According to a commodity fund manager I spoke with, MF Global’s first stall tactic was to claim it lost wire transfer instructions. Then instead of sending an overnight check, it sent the money snail mail, including checks for hundreds of thousands of dollars. The checks bounced. After the checks bounced, the amounts were still debited from customer accounts and no one at MF Global could or would reverse the check entries. The manager has had to intervene to get MF Global to correct this.

How would you respond if your investment account suddenly went to “zero” because the firm you were investing with “diverted” customer funds for company use and now you have no way of recovering your money?

Keep an eye on the large Wall Street banks.  In a previous article, I quoted a New York Times article entitled “A Secretive Banking Elite Rules Trading in Derivatives” which described how these banks dominate the trading of derivatives…

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

According to the article, the following large banks are represented at these meetings: JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup.

When the casino finally goes “bust”, you will know who to blame.

Without a doubt, a derivatives panic is coming.

It will cause the financial markets to crash.

Several of the “too big to fail” banks will likely crash and burn and require bailouts.

As a result of all this, credit markets will become paralyzed by fear and freeze up.

Once again, we will see the U.S. economy go into cardiac arrest, only this time it will not be so easy to fix.

Do you agree with this analysis, or do you find it overly pessimistic?  Please feel free to post a comment with your thoughts below…