Debt Crisis

Major Currencies All Over The World Are In “Complete Meltdown” As The $63 Trillion EM Debt Bubble Implodes

The wait for the next global financial crisis is over.  Major currencies all over the planet are in a “death spiral”, many global stock markets are crashing, and economic activity is beginning to decline at a stunning rate in quite a few nations.  Over the past 16 years, the emerging market debt bubble has grown from 9 trillion dollars to 63 trillion dollars.  Yes, you read that correctly.  Now that emerging market debt bubble is imploding, and as a result emerging market currencies all over the globe are in “complete meltdown”.  In fact, at least 20 different currencies have fallen by double-digit percentages against the U.S. dollar so far in 2018, and nobody is quite sure what is going to happen next.

You may be tempted to think that this must be a good thing for the United States since the value of the U.S. dollar has been rising, but it is not.

During the “boom years”, trillions of dollars were borrowed by emerging market economies, and a high percentage of those loans were denominated in U.S. dollars.  Now that their currencies are crashing, it is going to take much more local currency to service those U.S.-denominated debts, and a whole lot of them are going to start going bad.

That means that many financial institutions here in the United States and over in Europe are going to end up holding enormous piles of bad debt, and the losses could potentially be astronomical.

The dominoes are starting to fall, and even the mainstream media is admitting that what we are facing is really bad.  For example, the following comes from a CNBC article entitled “The emerging market crisis is back. And this time it’s serious”…

The crisis has engulfed countries across the globe — from economies in South America, to Turkey, South Africa and some of the bigger economies in Asia, such as India and China. A number of these countries are seeing their currency fall to record levels, high inflation and unemployment, and in some cases, escalating tensions with the United States.

When I say that the world has been on the greatest debt binge in human history since the last financial crisis, I am not exaggerating one bit.

The emerging market debt bubble is now three times larger than it was in 2007, and it is seven times larger than it was in 2002.  Here is more from CNBC…

Emerging markets are also heavily plagued by debt and a stronger dollar makes it tougher for them to pay this debt. The latest data from the Institute of International Finance shows that debt in emerging markets including China increased from $9 trillion in 2002 to $21 trillion in 2007 and finally to $63 trillion in 2017.

Of course this bubble was going to burst.

Anyone with half a brain should have been able to see that.

Now we have a full-blown crisis on our hands, and nobody seems to have any idea how to solve it.

As Charles Hugh Smith has observed, emerging market currencies all over the globe “are in complete meltdown”…

As the chart below illustrates, a great many currencies around the world are in complete meltdown. This is not normal. Nations that over-borrow, over-spend and print too much of their currency to generate an illusion of solvency eventually experience a currency crisis as investors and traders lose faith in the currency as a store of value, i.e. the faith that it will have the same (or more) purchasing power in a month that it has today.

This is the chart that Charles Hugh Smith referenced in that quote…

I am not sure that I even have the words to describe financial carnage of that magnitude.

Since the financial markets are not crashing here in the United States yet, most Americans do not really seem to be concerned about this crisis at this point.  But that is a mistake.  This meltdown has started with the weaker nations, but ultimately what we are witnessing is an “unraveling” of the entire global financial system…

The fact that so many currencies are melting down at the same time is telling us the global financial system is unraveling, and unraveling fast. This is a symptom of a fatal disease. Currencies reflect all sorts of financial information; they’re akin to taking an economy’s pulse: trade balances, debt levels, interest rates, central bank policies, fiscal policies, and so on.

The global financial system is inter-connected, but this is not a viable excuse for the meltdown. The general explanation floating around is that currency weakness is like the flu: one currency gets it, and then it spreads to other weak currencies.

This diagnosis is misleading. What’s actually happening is the unprecedented global bubble of debt and assets of the past decade is popping, and it’s laying waste to the most indebted, over-leveraged and mismanaged nations first, either via stock market declines or meltdowns in currencies.

Earlier today, we learned that the South African economy has officially plunged into a new recession.  This crisis is spreading very quickly, and the United States won’t be immune from what is happening.  This is a point that Charles Hugh Smith made very well as he wrapped up his most recent article…

The illusion that the U.S. is immune to the unraveling of debt and asset valuations won’t last. When the defaults start piling up, so will the losses, and when asset bubbles pop, incomes and spending decline. Although few seem to notice, almost half the profits of the S&P 500 corporations are earned overseas.

The belief that U.S. markets are somehow disconnected from global markets and immune to the repricing of risk, debt, assets and currencies is magical thinking.

I am entirely convinced that we have reached a major turning point.

For several years it has seemed like things have been getting “better”, but it was largely an illusion.  Our ridiculously high standard of living was financed by the greatest debt binge in the history of the world, and it was inevitable that a day of reckoning would arrive.

Now that day of reckoning is knocking on the door, and our society is completely and utterly unprepared for what is going to happen next.

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.

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.

The 5 Previous Times This Stock Market Indicator Has Reached This Level Stock Prices Have Fallen By At Least 50 Percent

Have you ever heard of the “Sound Advice Risk Indicator”?  Every single time in our history when it has gone above 2.0 the stock market has crashed, and now it has just surged above that threshold for the very first time since the late 1990s.  That doesn’t mean that a stock market crash is imminent, but it is definitely yet another indication that this stock market bubble is living on borrowed time.  But for the moment, there is still quite a bit of optimism on Wall Street.  The Dow set another brand new all-time record high earlier this week, and on Wednesday we learned that this bull market is now officially the longest in our history…

For context, a bull market is defined as a 20% rally on a closing basis that’s at no point derailed by a subsequent 20% decline. March 9, 2009, has long been the agreed-upon starting point for such calculations because that was the absolute bottom for the prior bear market, which ended that day.

The S&P 500 has surged a whopping 323% over the period, with its roughly 19% annualized return slightly lagging behind the historical bull market average of 22%.

Of course the U.S. economy has not been performing nearly as well.  Even if you accept the highly manipulated numbers that the federal government puts out, we haven’t had a year when GDP grew by at least 3 percent since the middle of the Bush administration.

It simply is not possible for stock prices to continue to soar about 20 percent a year when the U.S. economy is growing less than 3 percent a year.  At some point a major adjustment is coming, and it is going to be exceedingly painful.

Author Gray Cardiff has been touting his “Sound Advice Risk Indicator” for many years.  He believes that the relationship between the S&P 500 and the median price of a new house in the United States is very important, and this is the very first time since the late 1990s that this indicator has entered the danger zone…

The “Sound Advice Risk Indicator” is a different story. This indicator, the brainchild of Gray Cardiff, editor of the Sound Advice newsletter, is derived from the ratio of the S&P 500 to the median price of a new U.S. house. For the first time since the late 1990s, and for only the sixth time since 1895, this indicator has risen above the 2.0 level that represents a major sell signal for equities.

So should we be concerned?

In previous instances when this level has been breached, a crash hasn’t always happened right away, but in every instance the market eventually fell “by 50 % or more”…

To be sure, Cardiff is quick to emphasize, his risk indicator is not a short-term market timing tool. In the wake of past occasions when it rose above 2.0, for example, equities stayed high or even continued rising “for many months, sometimes even a couple of years.” However, he continues, “in all cases, a major decline or crash followed, pulling down stock prices by 50% or more.”

Because Wall Street is so highly leveraged today, a 50 percent decline in stock prices would be totally catastrophic.  Banks would go down one after another, and we would be facing a financial crisis that would make 2008 look like a Sunday picnic.

And the truth is that much of the world is already in crisis mode.  The mainstream media is telling us that Italy is teetering on the brink of “financial disaster”, and China appears to be entering a serious economic downturn as the trade war begins to take a substantial toll on their economy.

Meanwhile, emerging market currencies continue to plummet, and this week it has been Brazil’s turn to capture the headlines.  The Brazilian real is absolutely crashing, and many analysts are pointing to their internal problems as the cause…

According to analysts the devaluation of the Brazilian real is not due to the current foreign turbulence but to internal uncertainties and the upcoming October presidential elections.

“The (Brazilian) real was not devalued sixteen percent because of Turkey or other external reasons, it was because the rate of R$3.00 to R$3.30 (per US$1) was absolutely incompatible with the status quo of the Brazilian economy and the expressiveness of the country’s fiscal debt,” said Sidnei Moura Nehme, executive director at NGO.

At the same time, trouble signs continue to emerge here in the United States.

On Wednesday, we learned that Lowe’s is planning to shut down 99 Orchard Supply Hardware stores…

The company said Wednesday that the 99 Orchard Supply Hardware stores that Lowe’s owns in California, Oregon and Florida, as well as a distribution center, will be shut down by the end of the fiscal year.

Orchard Supply Hardware has 4,300 employees. Ellison said in the earnings release that the chain’s workers will be given “priority status” if they apply for other jobs at Lowe’s and will also receive job placement assistance and severance.

If the U.S. economy really was in good shape, why would they be doing that?

Ultimately, most people out there realize on some level that our current economic situation is not sustainable.  Stock prices have become completely detached from reality, and we are enjoying a ridiculously high standard of living that has been fueled by the greatest debt binge that the world has ever seen.

We can steal from the future for an extended period of time, but eventually it will catch up with us.

When the stock market finally crashes, the mainstream media will treat it like a big surprise, but the truth is that it shouldn’t catch anybody off guard.  Key stock valuation ratios always return to their long-term averages eventually, and in this case stock prices are going to have to fall at least 40 or 50 percent before they begin to make sense again.

But as I noted earlier, our system is so fragile that we won’t be able to handle that kind of an adjustment.

Our system almost completely collapsed in 2008, but what we are facing is going to be much worse than that.  Most of the wealth of the country will be wiped out in the process, and it will be an exceptionally painful time for the American people.

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.

5 Signs That Global Financial Markets Are Entering A Bear Market, And 11 Ways That You Can Get Prepared For The Chaos That Is Coming…

We haven’t seen carnage like this in the global financial marketplace in quite some time.  On Wednesday, U.S. stocks were down some, but things were much, much worse around the rest of the world.  Global banking stocks are plunging, emerging market stocks are cratering, and emerging market currencies continue their stunning decline.  This represents a dramatic change from the relative stability that we have seen throughout most of 2018.  It is almost as if someone flipped a switch once the month of August began, and the shakiness of global financial markets has many investors wondering what trouble fall will bring.  What we are witnessing right now is not a full-blown panic yet, but it definitely has the potential to turn into one.

The term “bear market” is being thrown around a lot lately, but a lot of people don’t understand what a “bear market” actually is.

A bear market is generally considered to be when we see a decline of 20 percent or more from the 52-week high, and after the carnage of this past week a lot of those thresholds are now being crossed.

It would probably be too early to call this a “global stock market crash”, but we are well on the way to getting there.  The following are 5 signs that global financial markets are entering a bear market…

#1 Global stocks have now fallen beneath all key moving averages.  Those key moving averages are important psychological thresholds for investors, and if we have a few more days like Wednesday we could see global financial markets go into full panic mode.

#2 European banking stocks have now officially entered a bear market, and all major European stock indexes are now red for the year.

#3 Global banking stocks are down a whopping 23 percent from the peak established earlier this year, and that means that they have officially entered a bear market.

#4 Emerging market stocks have fallen 20 percent from the peak, and that means that they are also now in a bear market.

#5 When demand for industrial metals falls, that indicates that an economic slowdown is coming.  On Wednesday, prices for industrial metals fell to their lowest level in almost a year, and “Dr. Copper officially entered a bear market.

If the financial carnage continues (and that is a big “if”), this could be the beginning of another financial crisis like we experienced in 2008, and that would almost certainly mean a crippling global recession.

And of course once the next global recession begins, it is likely to be more painful than we have ever seen before in modern history, because the global debt bubble is far larger than it has ever been before.

We live at a time of great global instability, and there are so many ominous warnings about our future.  A lot of people reach out to me for advice on how to get prepared for what is coming, and I hope to share quite a few tips in future articles.

Today, I would like to share with you 11 tips that my good friend Ray Gano shared with his readers in his most recent article…

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1 – Get Out of Debt: The old saying, “the borrower is the servant of the lender”, is so incredibly true.  The key to insulating yourself from an economic meltdown is to become as independent as possible, and as long as you are in debt, you simply are not independent.  You don’t want a horde of creditors chasing after you when things really start to get bad out there.

2 – Find New Sources of Income: With the birth of The IRA, there simply is no such thing as job security anymore.  If you are dependent on a job (“just over broke”) for 100% of your income, you are in a very bad position.  There are thousands of different ways to make extra money.  What you don’t want to do is to have all of your eggs in one basket.  One day when the economy melts down and you are out of a job are you going to be destitute or are you going to be okay?

IF you need some ideas on what you can do, contact me and I can help.

3 – Reduce Your Expenses: Many Americans have left the rat race and have found ways to live on half or even on a quarter of what they were making previously.  It is possible – if you are willing to reduce your expenses.  In the future times are going to be tougher, so learn to start living with less today.

4 – Learn To Grow Your Own / Supplement Your Food: Today the vast majority of Americans are completely dependent on being able to run down to the supermarket or to the local Wal-Mart to buy food.  But what happens when the U.S. dollar declines dramatically in value and it costs ten bucks to buy a loaf of bread?  If you learn to grow your own food (even if is just a small garden) you will be insulating yourself against rising food prices. Another thing is to learn to hunt and fish. There is “low cost” food out there for the taking, you just need to assert yourself. (Low Cost = you still need to pay for hunting and fishing licenses.)

5 – Make Sure You Have A Reliable Water Supply: Water shortages are popping up all over the globe.  Water is quickly becoming one of the “hottest” commodities out there.  Even in the United States, water shortages have been making headline news recently.  As we move into the future, it will be imperative for you and your family to have a reliable source of water.  Some Americans have learned to collect rainwater and many others are using advanced technology such as atmospheric water generators to provide water for their families.  But whatever you do, make sure that you are not caught without a decent source of water in the years ahead.

6 – Buy Land: This is a tough one, because prices are high depending on where you are looking. If you are able to buy land when prices are low, that is going to insulate you a great deal from the rising housing costs that will occur when the U.S dollar does totally go into the tank.

7 – Buy Precious Metals: this is a no brainer, but it still amazes me how many people are not doing this. Right now silver is sitting at $14.41. That is a very affordable price and a price that everyone can afford.  We must start “paying ourselves first” and start pulling in these sort of assets.

The best place that I recommend is Renaissance Precious Metals. It is who I purchase from.

8 – Get Partially Off The Grid: An increasing number of Americans are going “off the grid”.  Essentially what that means is that they are attempting to operate independently of the utility companies.  In particular, going “off the grid” will enable you to insulate yourself from the rapidly rising energy prices that we are going to see in the future.  If you are able to produce energy for your own home, you won’t be freaking out like your neighbors are when electricity prices triple someday.

9 – Store Non-Perishable Supplies: Non-perishable supplies are one investment that is sure to go up in value.  Not that you would resell them.  You store up non-perishable supplies because you are going to need them someday.  So why not stock up on the things that you are going to need now before they double or triple in price in the future?  Your money is not ever going to stretch any farther than it does right now.

EXAMPLE – Toilet Paper

10 – Develop Stronger Relationships: Americans have become very insular creatures.  We act like we don’t need anyone or anything.  But the truth is that as the we see a socio-economic melt down we are going to need each other.  It is those that are developing strong relationships with family and friends right now that will be able to depend on them when times get hard.

11 – Get Educated And Stay Flexible: When times are stable, it is not that important to be informed because things pretty much stay the same.  However, when things are rapidly changing it is imperative to get educated and to stay informed so that you will know what to do.  The times ahead are going to require us all to be very flexible, and it is those who are willing to adapt that will do the best when things get tough.

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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.

10 Numbers That Prove That America’s Current Financial Condition Is A Horror Show

America’s long-term “balance sheet numbers” just continue to get progressively worse.  Unfortunately, since the stock market has been soaring and the GDP numbers look okay, most Americans assume that the U.S. economy is doing just fine.  But the stock market was soaring and the GDP numbers looked okay just prior to the great financial crisis of 2008 as well, and we saw how that turned out.  The truth is that GDP is not the best measure for the health of the economy.  Judging the U.S. economy by GDP is basically like measuring the financial health of an individual by how much money he or she spends, and I will attempt to illustrate that in this article.

If I went out right now and got a whole bunch of new credit cards and started spending money like there was no tomorrow, would that mean that my financial condition had improved?

No, in fact it would mean that my long-term financial condition just got a whole lot worse.

GDP is a measurement of how much economic activity is happening in our society, and it is basically an indication of how much money is changing hands.

But just because more money is changing hands does not mean that things are going well.  What really matters is what is happening to assets and liabilities.  In other words, is wealth being built or is more debt just being accumulated?

Sadly, there are only a handful of bright spots in our economy.  A couple of very large tech companies such as Apple are accumulating wealth, but just about everywhere else you look debt is growing at an unprecedented pace.  Household debt has never been higher, corporate debt has doubled since the last financial crisis, state and local government debt is at record highs, and the U.S. national debt is wildly out of control.

If I went out tomorrow and spent $20,000 with a bunch of new credit cards, I could claim that my “personal GDP” was soaring because I was spending a lot more money then before.  But my boasting would be pointless because in reality I would just be putting my family in an extremely precarious financial position.

Economic growth that is produced by continually increasing amounts of debt is not a positive thing.  I wish that more people understood this very basic concept.  The following are 10 numbers that prove that America’s current financial condition is a horror show…

#1 U.S. consumer credit just hit another all-time record high.  In the second quarter of 2008, total consumer credit reached a grand total of 2.63 trillion dollars, and now ten years later that number has soared to 3.87 trillion dollars.  That is an increase of 48 percent in just one decade.

#2 Student loan debt has surpassed 1.5 trillion dollars for the first time ever.  Over the last 8 years, the total amount of student loan debt has shot up 79 percent in the United States.

#3 According to the Federal Reserve, the credit card default rate in the U.S. has risen for 7 quarters in a row.

#4 One recent survey found that 42 percent of American consumers paid their credit card bill late “at least once in the last year”, and 24 percent of Americans consumers paid their credit card bills late “more than once in the last year”.

#5 Real wage growth in the United States just declined by the most that we have seen in 6 years.

#6 According to one recent study, the “rate of people 65 and older filing for bankruptcy is three times what it was in 1991”.

#7 We are in the midst of the greatest “retail apocalypse” in American history.  At this point, 57 major retailers have announced store closings so far in 2018.

#8 The size of the official U.S. budget deficit is up 21 percent under President Trump.

#9 It is being projected that interest on the national debt will surpass half a trillion dollars for the first time ever this year.

#10 Goldman Sachs is projecting that the yearly U.S. budget deficit will surpass 2 trillion dollars by 2028.

And I haven’t even talked about unfunded liabilities.  Those are essentially future commitments that we have made that we don’t have the money for at the moment.

According to Professor Larry Kotlikoff, our unfunded liabilities are well in excess of 200 trillion dollars right now.

If individuals, corporations, state and local governments and the federal government all stopped going into more debt, we would plunge into the greatest economic depression in U.S. history immediately.

The system is deeply, deeply broken, and the only way that we can keep this debt bubble going is go keep accumulating even more debt.

Anyone out there that believes that the U.S. economy has been “fixed” is completely deceived.  NOTHING has been fixed.  Instead, our long-term financial imbalances are getting worse at an escalating pace.

Unfortunately, the attitude of the general public is so similar to what it was just prior to the great financial crisis of 2008.  Most people seem to assume that just because we have not experienced great consequences for our very foolish decisions up to this point that no great consequences are coming.

And many also assume that since control of the White House has switched parties that somehow things must magically be better as well.

Of course the truth is that the only way that our long-term problems are ever going to be fixed is if we start addressing the issues that caused those long-term problems in the first place, and that simply is not happening.

As I have traveled extensively over the course of the past year, I discovered that most Americans do not want to make fundamental changes to the system, because they are under the illusion that the current system is working just fine.  So it will probably take another major crisis before most people are ready to consider fundamental changes, and when it finally arrives we will need to be ready to educate the public.

The system that we have today is not fundamentally sound at all.  We desperately need to return to the values and principles that this nation was founded upon, but until things start getting really, really bad it is highly unlikely that the American people will be ready to embrace those changes.

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.

Bankrupt America: Bankruptcy Soars As The Country Grapples With An Unprecedented Debt Problem

America, you officially have a debt problem, and I am not just talking about the national debt.  Consumer bankruptcies are surging, corporate debt has doubled since the last financial crisis, state and local government debt loads have never been higher, and the federal government has been adding more than a trillion dollars a year to the federal debt ever since Barack Obama entered the White House.  We have been on the greatest debt binge in human history, and it has enabled us to enjoy our ridiculously high standard of living for far longer than we deserved.  Many of us have been sounding the alarm about our debt problem for a very long time, but now even the mainstream news is freaking out about it.  I have a feeling that they just want something else to hammer President Trump over the head with, but they are actually speaking the truth when they say that we are facing an unprecedented debt crisis.

For example, the New York Times just published a piece that discussed the fact that the bankruptcy rate among retirees is about three times higher than it was in 1991…

For a rapidly growing share of older Americans, traditional ideas about life in retirement are being upended by a dismal reality: bankruptcy.

The signs of potential trouble — vanishing pensions, soaring medical expenses, inadequate savings — have been building for years. Now, new research sheds light on the scope of the problem: The rate of people 65 and older filing for bankruptcy is three times what it was in 1991, the study found, and the same group accounts for a far greater share of all filers.

Overall, Baby Boomers are doing a whole lot better financially than the generations coming after them, and so this is very troubling news.

And here is another very troubling fact from that same article…

Not only are more older people seeking relief through bankruptcy, but they also represent a widening slice of all filers: 12.2 percent of filers are now 65 or older, up from 2.1 percent in 1991.

The jump is so pronounced, the study says, that the aging of the baby boom generation cannot explain it.

Of course it isn’t just Baby Boomers that are drowning in debt.

Collectively, U.S. households are 13.15 trillion dollars in debt, which is the highest level in American history.

All over the nation, companies are also going bankrupt at a staggering pace.  This week we learned that the biggest mattress retailer in the entire country “Is considering a potential bankruptcy filing”…

Mattress Firm Inc, the largest U.S. mattress retailer, is considering a potential bankruptcy filing as it seeks ways to get out of costly store leases and shut some of its 3,000 locations that are losing money, people familiar with the matter said.

Mattress Firm’s deliberations offer the latest example of a U.S. brick-and-mortar retailer struggling financially amid competition from e-commerce firms such as Amazon.com Inc (AMZN.O).

We have seen retailer after retailer go down, and it is being projected that this will be the worst year for retail store closings ever.

But it isn’t just retailers that are hurting.  Yesterday, I came across an article about a television manufacturer in South Carolina that just had to lay off “94 percent of their workforce”…

A TV manufacturer based in South Carolina have blamed Trump’s trade tariffs for laying off 94 percent of their workforce.

Element Electronics now has just eight employees in their company after letting 126 members of staff go.

They said the tariffs imposed on goods from China mean they can no longer buy essential components for their TVs.

During this next economic downturn, I believe that we are going to see the biggest wave of corporate bankruptcies that this country has ever seen.

State and local governments don’t go bankrupt, but they are drowning in debt as well.  State and local government debt has ballooned to the highest levels on record in recent years, and one of the big reasons for this is because we are facing a coming pension crisis that threatens to absolutely overwhelm us…

Many cities and states can no longer afford the unsustainable retirement promises made to millions of public workers over many years. By one estimate they are short $5 trillion, an amount that is roughly equal to the output of the world’s third-largest economy.

Certain pension funds face the prospect of insolvency unless governments increase taxes, divert funds or persuade workers to relinquish money they are owed. It is increasingly likely that retirees, as well as new workers, will be forced to take deeper benefit cuts.

Meanwhile, the federal government continues to engage in incredibly reckless financial behavior.  When Barack Obama was elected, we were 10 trillion dollars in debt, and now we are 21 trillion dollars in debt.

What that means is that we have been adding more than a trillion dollars to the national debt per year since 2008, and we continue to steal more than 100 million dollars every single hour of every single day from future generations of Americans.

And even though the Republicans have been in control in Washington, very few of our leaders seem to want to alter the trajectory that we are on.  But if something is not done, absolute disaster is a certainty.  At this point, it is being projected that our debt will reach 30 trillion dollars by 2028 if we stay on this current path.  It would be difficult to overstate the grave danger that we are facing, but nothing is being done to turn things around.  Here are some more projections from the Congressional Budget Office…

In 2022, the Highway Trust Fund will run out of full funding. In 2026, the Medicare Hospital Insurance Trust Fund follows. In 2032, the Social Security trust fund surpluses run dry, and all beneficiaries regardless of age or income level will face a 21 percent across-the-board benefit cut. Before 2030, we could have trillion-dollar annual interest payments. Interest rates have been low until now, but that is changing. As rates go up, we have to pay more on new debt and on all accumulated debt.

The amount we pay in interest on the debt is set to triple over the next ten years. But if interest rates rise just 1 point higher than expected, the government will owe an extra $1.9 trillion over 10 years.

On top of everything else, everyone else around the world has been on a massive debt binge as well.

Total global debt is well above 200 trillion dollars, and it has nearly quadrupled over the past 17 years.

Are you starting to understand why they call this a “debt bubble”?

Unfortunately, all debt bubbles must burst eventually, and the one that we are in right now is definitely on borrowed time.

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.

The Debt Crisis Of 2017: Once Their Vacation Ends, Congress Will Have 4 Days To Avoid A Government Shutdown On April 29

April 2017 could turn out to be one of the most important months in U.S. history that we have seen in a very long time.  On April 6th, Donald Trump attacked Syria on the 100th anniversary of the day that the U.S. officially entered World War I, and now at the end of this month we could be facing an unprecedented political crisis in Washington.  On Friday, members of Congress left town for their two week “Easter vacation”, and they won’t resume work until April 25th.  What this means is that Congress will have precisely four days when they get back to pass a bill to fund government operations or there will be a government shutdown starting on April 29th.

Up to this point, there has been very little urgency by either party to move a spending bill forward.  It is almost as if everyone is already resigned to the fact that a government shutdown will happen.  The Democrats will greatly benefit from a government shutdown because they can just blame the entire mess on the Republicans.  But for the GOP, this is essentially the equivalent of political malpractice.

To me, there is simply no way that Congress is going to be able to agree on a bill that funds the entire government in just four days.  And it turns out that this upcoming deadline comes exactly on the 100th day of Trump’s presidency…

The U.S. government is poised to shut down on Day 100 of Donald Trump’s presidency, unless Congress can pass a new spending bill or a continuing resolution before the current one expires on April 28.

Since Congress is currently on a two-week recess, there will be a sense of urgency to get a new bill passed once they reconvene on April 25. Leaders in both chambers would have four days to craft a new proposal that each side can agree on and get it on the president’s desk for Trump to sign.

If the Republicans control the White House, the Senate and the House of Representatives, why will it be so difficult to get an agreement on a spending bill?

Well, first of all, look at how difficult it was for the Republicans to agree on a bill to repeal and replace Obamacare.  At this point, it doesn’t look like that is going to happen at all.

More importantly, any bill to fund the government is going to require 60 votes in the Senate.  The “nuclear option” that the Republicans just used to push the Gorsuch Supreme Court nomination through is not available in this case under current Senate rules because a spending bill of this nature would not qualify.

So the Democrats have leverage, and they plan to use it to the maximum.  Senate Minority Leader Chuck Schumer is already promising to block any spending bill that includes funds for a border wall or that defunds Planned Parenthood…

The threat from Senate Minority Leader Chuck Schumer and other Democratic leaders sets up a climactic first showdown with the president, particularly with their inclusion of Trump’s signature border wall proposal.

“If Republicans insist on inserting poison pill riders such as defunding Planned Parenthood, building a border wall, or starting a deportation force, they will be shutting down the government and delivering a severe blow to our economy,” Schumer said in a statement.

Up until now, Trump hasn’t needed Democratic votes to stock his cabinet or advance the repeal of Obamacare, but a spending bill keeping the government open is subject to a 60-vote threshold in the Senate.

Do you understand what this means?

President Trump is going to be under an immense amount of pressure to end the government shutdown once it begins, but to do so will mean that he has to give up his goal of getting a border wall.

Do you think that Trump will just throw in the towel and forget about his beloved border wall after giving countless speeches promising one?

It is a game of chicken between Trump and the Democrats, and I don’t think that either side will give in easily.

Of even greater importance is the debate over the funding of Planned Parenthood.

There are members of the Freedom Caucus that will absolutely not vote for any spending bill that includes funding for Planned Parenthood.  But without the Freedom Caucus, there aren’t enough Republican votes to get a spending bill through the House of Representatives.

Alternatively, Senate Minority Leader Chuck Schumer is vowing that his party will block any funding bill that attempts to defund Planned Parenthood in the Senate.

If Planned Parenthood is not defunded now, it never will be defunded.  This is one of the most pivotal moments in recent U.S. political history, and the outcome is going to have extraordinary consequences for our nation.

For those that are optimistic that there will not be a government shutdown, do you actually expect me to believe that this battle over the funding of Planned Parenthood will somehow get resolved in just four days?

Give me a break.

And of course there are dozens of other major issues that have to be resolved as well.  For example, Senator McCain is promising note to vote for any bill unless it includes an enormous increase in military spending, while many Senate Democrats would be very much against such a move.

I don’t see any way that a government shutdown is going to be avoided at this point, and the longer it goes on the more financial markets are going to get rattled.

Meanwhile, we continue to get even more signs that a substantial slowdown has begun for the U.S. economy.  Last week, we learned that only 98,000 jobs were added in March, and that was only about half of what most analysts were expecting.

And since it takes approximately 150,000 jobs a month just to keep up with population growth, that means that we are losing ground.

At the same time, the Atlanta Fed’s GDPNow forecasting model is now projecting that U.S. GDP growth for the first quarter of 2017 will be just 0.6 percent on an annualized basis.

That is absolutely pathetic, and as I have said before, I wouldn’t be surprised at all if we actually end up with a negative number for the first quarter.

If we do indeed get a negative number for the first quarter and that is followed by another negative number for the second quarter, that will mean that a new recession has already started right now but we just haven’t gotten official confirmation yet.

And lots of other things are already happening which have not happened since the last recession.  For instance, this is the first time since the last financial crisis when there has been no growth for commercial and industrial lending for at least six months.

In addition, commercial bankruptcies spiked during the last recession, and now it is happening again…

Commercial bankruptcy filings, from corporations to sole proprietorships, spiked 28% in March from February, the largest month-to-month move in the data series of the American Bankruptcy Institute going back to 2012.

Of course consumer bankruptcies are rising at an alarming rate as well.  The following comes from Wolf Richter…

In December, bankruptcy filings rose 4.5% from a year earlier. In January they rose 5.4%. It was the first time consumer bankruptcies rose back-to-back since 2010. I called it “a red flag that’ll be highlighted only afterwards as a turning point.”

In March, consumer bankruptcy filings rose 4% year-over-year, to 77,900, the highest since March 2015, when 79,000 filings occurred, according to the American Bankruptcy Institute data.  The turning point has now been confirmed.

If you would like, I could keep talking about the bad economic news for a couple thousand more words.  U.S. credit card debt has just surpassed the one trillion dollar mark, a major crisis has arrived for the U.S. auto industry, thousands of retail stores are closing all over America, our pension funds are underfunded by trillions of dollars, and the U.S. national debt is now sitting at a grand total that is just shy of 20 trillion dollars.  The only reason that we have not crossed that 20 trillion dollar mark yet is because the debt ceiling deadline has already passed, and that is another thing that Congress needs to address very quickly if they want to avoid a major crisis.

Needless to say, the last thing that we need at this point is another war or two on top of everything else.

Unfortunately, a U.S. aircraft carrier strike group headed by the USS Carl Vinson is heading toward North Korea right at this moment, and Russia and Iran are promising to “respond with force” to any new U.S. attacks on Syria.  I will be writing quite a bit more about all of this on End Of The American Dream later today.

Those that were hoping for some sort of “reprieve” under Donald Trump can forget all about that now.  The pace of global events is really starting to accelerate, and the U.S. is already in a more precarious position than it was at any point in 2016.

The clouds have been building for a very long time, and now the storm is almost upon us.  I hope that you have been getting prepared, because a day of reckoning for the United States of America is closing in very rapidly.

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