Financial Crisis 2016

It’s official – global stocks have entered a bear market. On Wednesday, we learned that the MSCI All-Country World Index has fallen a total of more than 20 percent from the peak of the market. So that means that roughly one-fifth of all the stock market wealth in the entire world has already been wiped out. How much more is it going to take before everyone will finally admit that we have a major financial crisis on our hands? 30 percent? 40 percent? This new round of chaos began last night in Asia. Japanese stocks were down more than 600 points and Hong Kong was down more than 700 points. The nightmare continued to roll on when Europe opened, and European stocks ended up down about 3.2 percent when the markets over there finally closed. In the U.S., it looked like it was going to be a truly historic day for a while there. At one point the Dow had fallen 566 points, but a curious rebound resulted in a loss of only 249 points for the day.

As bad as things are in the U.S. right now, the truth is that we still have a long way to go to catch up with the rest of the planet. Around the world, many major stock indexes are already down more than 30 or 40 percent. Overall, the MSCI All-Country World Index is now down 20 percent, which officially puts us in bear market territory…

The MSCI All-Country World Index, which measures major developed and emerging markets, fell into a bear market Wednesday, with its decline from early last year now totaling more than 20 percent.

A plunge in U.S. stocks, which caused the Dow Jones industrial average to decline by more than 400 points at one point, pushed the global index into bear territory at midmorning during New York trading.

Japan fell into a bear market as well as the Nikkei 225 index dropped 3.7 percent Wednesday, bringing its total pullback to 22 percent from its high in June.

Much of this chaos is being driven by the price of oil. On Wednesday the price of U.S. oil dropped below 28 dollars a barrel for a while, and as I write this article Brent crude is still below 28 dollars a barrel.

As energy prices continue to plummet, this is putting a tremendous amount of pressure on junk bonds. On Wednesday JNK actually dipped beneath 32.00 for a time before rebounding at the end of the day. I expect to see junk bonds continue to crash during the days ahead as investors feverishly race for the exits.

And of course global economic fundamentals continue to deteriorate as well. Global trade is absolutely imploding and shipping rates have fallen to unprecedented levels. If you can believe it, Bloomberg is reporting that it is now actually cheaper to rent a 1,100 foot merchant vessel than it is to rent a Ferrari…

Rates for Capesize-class ships plummeted 92 percent since August to $1,563 a day amid slowing growth in China. That’s less than a third of the daily rate of 3,950 pounds ($5,597) to rent a Ferrari F40, the price of which has also fallen slightly in the past few years, according to Nick Hardwick, founder of supercarexperiences.com. The Baltic Exchange’s rates reflect the cost of hiring the vessel but not fuel costs. Ships burn about 35 metric tons a day, implying a cost of about $4,000 at present prices, data compiled by Bloomberg show.

I could hardly believe that when I first read it.

But this is the kind of thing that we would expect to see happen when the greatest financial bubble in world history bursts.

The 200 trillion dollar global debt pyramid is now collapsing all around us, and the former chief economist of the Bank for International Settlements is warning that we could soon be facing “an avalanche of bankruptcies”…

The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned.

“The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up,” said William White, the Swiss-based chairman of the OECD’s review committee and former chief economist of the Bank for International Settlements (BIS).

Of course it is a little late in the game to be warning us about this now.

At this point there is very little that can be done to stop the collapse that is already happening.

White went on to tell the Telegraph that things are going to become “uncomfortable for a lot of people who think they own assets that are worth something”…

“It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something,” he told The Telegraph on the eve of the World Economic Forum in Davos.

For years, I have been warning that the global financial system is an incredibly shaky house of cards, and now we have finally reached the endgame.

But the mainstream media in the United States is telling everyone not to panic. Instead of a time to sell, the mainstream media is urging people to jump in and take advantage of all of the “great deals” in the stock market right now. I really like what Mike Adams of Natural News had to say about what we are seeing…

The pathetically stupid and dishonest financial media is desperately running stories right now to maintain false faith in the markets, even while their own people are behind the scenes selling like mad. As long as they can keep the public believing in the “faith” of never-ending cheap money, they can bail out their own positions to suckers and fools who think a tiny dip in a massively overvalued, fraudulent market is a “buying opportunity.”

Watch for desperate headlines from propaganda financial outlets (such as MarketWatch.com) like, “10 reasons you shouldn’t sell” or “The upside potential of the market is HUGE!” These are psychological operations to try to persuade people that the collapse they’re seeing in global markets isn’t actually happening.

The financial chaos that has erupted in recent weeks has really caught a lot of people by surprise, but my readers knew that it was coming well in advance.

For months, I have been warning about this exact kind of scenario.

The deflationary financial meltdown that started during the last six months of 2015 is now making headlines all over the planet, and what we have experienced so far is just the tip of the iceberg.

The bears have gotten out of their cages, and global investors are running for cover. Nobody is exactly sure what is going to happen tomorrow, but without a doubt the entire world will be watching.

Did you know that 15 trillion dollars of global stock market wealth has been wiped out since last June? The worldwide financial crisis that began in the middle of last year is starting to spin wildly out of control. On Friday, the Dow plunged another 390 points, and it is now down a total of 1,437 points since the beginning of this calendar year. Never before in U.S. history have stocks ever started a year this badly. The same thing can be said in Europe, where stocks have now officially entered bear market territory. As I discussed yesterday, the economic slowdown and financial unraveling that we are witnessing are truly global in scope. Banks are failing all over the continent, and I expect major European banks to start making some huge headlines not too long from now. And of course let us not forget about China. On Friday the Shanghai Composite declined another 3.6 percent, and overall it is now down more than 20 percent from its December high. Much of this chaos has been driven by the continuing crash of the price of oil. As I write this article, it has dipped below 30 dollars a barrel, and many of the big banks are projecting that it still has much farther to fall.

The other night, Barack Obama got up in front of the American people and proclaimed that anyone that was saying that the economy was not recovering was peddling fiction. Well, if the U.S. economy is doing so great, then why in the world has Wal-Mart decided to shut down 269 stores?…

Walmart (WMT) will close 269 stores around the world in a strategic move to focus more on its supercenters and e-commerce business, the company said Friday.

The closures include 154 U.S. locations, encompassing Walmart’s entire fleet of 102 ‘Express’ format stores, its smallest stores that have been in pilot testing since 2011. Some supercenters, Sam’s Club locations and Neighborhood Markets will also close, plus 115 stores in Latin American markets. The closures were decided based on financial performance and how well the locations fit with Walmart’s broader strategy, says Greg Hitt, a company spokesman.

We have grown accustomed to other major retailers shutting down stores, but this is Wal-Mart.

Wal-Mart doesn’t retreat. For decades, Wal-Mart has been on a relentless march forward. They have been an unstoppable juggernaut that has expanded extremely aggressively and that has ruthlessly crushed the competition.

I was absolutely stunned when I saw that they were going to close down 269 stores. If you want to know if your local store is in danger, you can view the full list right here.

Overall, 10,000 Wal-Mart employees will be affected. I could understand closing down a few underperforming stores, but if the U.S. economy truly is in great shape then it wouldn’t make any sense at all to shut down hundreds of stores.

What in the name of Sam Walton is going on out there?

The truth, of course, is that the U.S. economy is in great danger. We have now entered the next great crisis, but most communities around the country never even recovered from the last one. In fact, the Wall Street Journal is reporting that a whopping 93 percent of all counties in the United States “have failed to fully recover” from the last recession…

More than six years after the economic expansion began, 93% of counties in the U.S. have failed to fully recover from the blow they suffered during the recession.

Nationwide, 214 counties, or 7% of 3,069, had recovered last year to prerecession levels on four indicators: total employment, the unemployment rate, size of the economy and home values, a study from the National Association of Counties released Tuesday found.

The next few weeks are going to be very interesting to watch. The economic fundamentals continue to deteriorate, and the financial markets are finally starting to catch up with economic reality.

As the collapse on Wall Street accelerates, we are going to increasingly see panic selling and forced liquidations. In the past, it was mostly humans that had their hands on the controls during market crashes, but today the machines are making more of the decisions than ever before. The following comes from CNBC…

The new market age is decidedly different: Rather than that seething cacophony, aggressive corrections like the current ones are directed by a faceless metronome of computer-generated orders, triggering irresistible momentum and trillions in losses.

Amid it all, market veterans are left to ponder when the script will flip and market direction will turn not by newfound optimism among traders in the pits, but rather by algorithms that generate “buy” rather than “sell” signals.

“It feels like sell program after sell program,” said Michael Cohn, chief market strategist at Atlantis Asset Management, a boutique firm in New York. “It seems to happen first thing in the morning, and then however the market transpires during the day is how they close it. If it looks like it’s coming back, they’ll take it at the end. If if looks like it’s heading lower, they’ll slam it at the end of the day.”

Earlier today, an article authored by Michael Pento entitled “A recession worse than 2008 is coming” was posted on CNBC. Here is a short excerpt…

But a recession has occurred in the U.S. about every five years, on average, since the end of WWII; and it has been seven years since the last one — we are overdue.

Most importantly, the average market drop during the peak to trough of the last 6 recessions has been 37 percent. That would take the S&P 500 down to 1,300; if this next recession were to be just of the average variety.

But this one will be worse.

If stocks do drop a total of 37 percent, that would just bring them back to levels that would be considered “normal” or “average” by historical standards. There is certainly the possibility that they could fall much farther than that.

And of course the markets are so incredibly fragile at this point that any sort of a “trigger event” could cause a collapse of epic proportions.

All it is going to take is a major disaster or emergency of some sort.

Do you have a feeling that something really bad is about to happen? This is something that I have been hearing from people that I respect, and I would like to know if it is a phenomenon that is more widespread. If you have been feeling something like this, please feel free to share it with us by posting a comment below…

Global Stocks Enter Bear Market: One-Fifth Of All Worldwide Stock Market Wealth Is Already Gone

Welcome To The New Normal: The Dow Crashes Another 390 Points And Wal-Mart Closes 269 Stores