Tag Archives: economic collapse

Many media sources now warning us of imminent economic disaster

Are we on the verge of another great financial crisis, a devastating recession and a horrific implosion of the global debt bubble?

The coming crisis is apparently so close now that many in the media are starting to see it, and of course economic disaster is already a reality for much of the rest of the planet.  For years, the mainstream media told us that things would get better, and in a lot of ways we did see some improvement.  But now the tone of the mainstream media has become quite ominous, and that is definitely not a positive sign.

#1 Forbes: “Disaster Is Inevitable When America’s Stock Market Bubble Bursts”

As shown in this report, the U.S. stock market is currently trading at extremely precarious levels and it won’t take much to topple the whole house of cards. Once again, the Federal Reserve, which was responsible for creating the disastrous Dot-com bubble and housing bubble, has inflated yet another extremely dangerous bubble in its attempt to force the economy to grow after the Great Recession. History has proven time and time again that market meddling by central banks leads to massive market distortions and eventual crises. As a society, we have not learned the lessons that we were supposed to learn from 1999 and 2008, therefore we are doomed to repeat them.

The purpose of this report is to warn society of the path that we are on and the risks that we are facing.

#2 CNBC: “Tech stock sell-off could be just beginning if trade war with China worsens”

Congressional scrutiny of social media companies and fears of new regulation pummeled their stocks, but other tech names could also soon be vulnerable to a new round of selling pressure if President Donald Trump goes through with new tariffs on Chinese goods.

#3 Bloomberg: “Emerging-market rout is longest since 2008 as confidence cracks”

For stocks, it’s 222 days. For currencies, 155 days. For local government bonds, 240 days.

This year’s rout in emerging markets has lasted so long that it’s taken even the most ardent bears by surprise. Not one of the seven biggest selloffs since the financial crisis — including the so-called taper tantrum — inflicted such pain for so long on the developing world.

#4 CNN: “Emerging Markets Look Sick. Will They Infect Wall Street?”

Chinese stocks are is in a bear market. Turkey’s currency has collapsed. South Africa has stumbled into a recession. Not even an IMF bailout has stemmed the bleeding in Argentina.

The storm rocking emerging markets has its origins in Washington. Vulnerable currencies plunged as the US Federal Reserve steadily raised interest rates. And President Donald Trump’s trade crackdown added gasoline to the fire.

The trouble could spread, infecting other emerging markets or even Wall Street.

#5 The Motley Fool: “6 signs the next recession might be closer than we realize”

To be perfectly clear, trying to predict when recessions will occur is pure guesswork. Top market analysts have called for pullbacks in the market, unsuccessfully, in pretty much every year since the Great Recession ended. But the economic cycle doesn’t lie: recessions are inevitable. And in my estimation, we’re probably closer to the next recession than you realize.

How can I be so certain? Well, I can’t. Remember, I just noted there’s virtually no certainty when it comes to predicting when recessions will occur. There are, however, six warning signs that suggest a recession could be, in relative terms, around the corner.

#6 Forbes: “U.S. Household Wealth Is Experiencing An Unsustainable Bubble”

Since the dark days of the Great Recession in 2009, America has experienced one of the most powerful household wealth booms in its history. Household wealth has ballooned by approximately $46 trillion or 83% to an all-time high of $100.8 trillion. While most people welcome and applaud a wealth boom like this, my research shows that it is actually another dangerous bubble that is similar to the U.S. housing bubble of the mid-2000s. In this piece, I will explain why America’s wealth boom is artificial and heading for a devastating bust.

#7 Savannah Now: “Global debt soars, along with fears of crisis ahead”

“We were supposed to correct a debt bubble,” said David Rosenberg, chief economist at Gluskin Sheff, a wealth-management firm. “What we did instead was create more debt.”

#8 CNBC: “The emerging market crisis is back. And this time it’s serious”

But markets are feeling a sense of deja vu. Blame it on a stronger dollar, escalating tensions since President Donald Trump came to power, worries over a full-fledged trade war with China or rising interest rates in the U.S., this time around the crisis seems to have entered a new phase.

The damage is far more widespread. 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.

 

We have not seen such ominous declarations from the mainstream media since the last global financial crisis in 2008.

The media purport to know what is coming, and they also think it is approaching very rapidly.  This chapter in American history is not going to end well. On some level, all of us understand this. Storm clouds have been building on the horizon for quite some time and the warning signs are all around us. America has a date with destiny, and it is going to be exceedingly painful.

 

[From an article published by The Economic Collapse Blog]

 

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

 

 

 

 

 

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When 43% of Americans can’t afford food and rent, we can safely say the economic collapse is not coming, it’s here

You probably remember all those reports about how lots of Americans can’t afford a $1000 surprise expense like a medical bill or a car repair? Well, forget additional expenses. It turns out that nearly half of the families in America are struggling to pay for food and rent. And that means that the economic collapse isn’t just “coming.” It’s HERE.

United Way has done a study on a group of Americans they call ALICE: Asset Limited, Income Constrained, Employed. The study found that this group does not make the money needed “to survive in the modern economy.”

ALICE is your child care worker, your parent on Social Security, the cashier at your supermarket, the gas attendant, the salesperson at your big box store, your waitress, a home health aide, an office clerk. ALICE cannot always pay the bills, has little or nothing in savings, and is forced to make tough choices such as deciding between quality child care or paying the rent. One unexpected car repair or medical bill can push these financially strapped families over the edge.

ALICE is a hardworking member of the community who is employed yet does not earn enough to afford the basic necessities of life.

ALICE earns above the federal poverty level but does not earn enough to afford a bare-bones household budget of housing, child care, food, transportation, and healthcare. (source)

Between families living below the poverty line due to unemployment or disability and ALICEs, the study discovered that 43% of Americans were struggling to cover basic necessities like rent and food.

Where are families struggling the most?

Some states have more families living at ALICE levels than others. The 3 states with the most families barely surviving paycheck to paycheck are California, New Mexico, and Hawaii. Each of these states saw 49% of families struggling. North Dakota had the lowest ALICE percentage with 32%. You can check how your state fares right here. Despite the lowest unemployment rate since 2000, families all over the country are barely getting by.

The media page of the ALICE website is jammed with headlines that are all too familiar for many Americans:

  • Report: Michigan makes little progress in lifting working poor to financial stability
  • After a decade of tax cuts — Ohioans in financial hardship
  • Louisiana families work hard, but still can’t cover necessities
  • 44 percent of Florida households, mostly working poor, struggling to meet basic needs
  • Third of New Jersey households can’t afford basic necessities
  • 42 percent of Wisconsin households struggle to pay bills

And on and on and on…

The economic collapse of America is here.

While many families are still doing okay, the specter of poverty looms over many of us. Many of us know that we’re one personal financial catastrophe away from disaster. I wrote recently about my own family’s struggle with a large medical bill.

Obviously, I’m not telling you about our financial saga to make myself look bad. I’m telling you because I want you to know that no matter how much you try to do everything right, financial problems can happen to anyone, at any time. Whether you have $100 in the bank or $100,000 in the bank, something can happen that wipes out your emergency fund just like it did mine.

This doesn’t mean that you failed financially – it means that circumstances can affect you, just like they do everyone else, no matter how careful you are.

Before my daughter’s illness, I was doing everything “right.”

  • I had enough money in my emergency fund to carry me through 3 lean months
  • I had numerous credit cards with zero balances
  • My only debt was my car
  • My kids are going to school without student loans
  • I opted out of health insurance because it was more financially practical to pay cash (and I still agree with that decision)

Everything was great.

Until it wasn’t. (source)

This is a story that probably rings true to more and more familiar to a growing number of families every week.

While my income hasn’t dropped – it’s grown – I am still struggling to pay off those bills and recover. I’ve taken on a significant amount of extra work to get things back under control, and still, I worry it won’t be enough.

Sound familiar?

If it does, it’s because – and of this, I am quite certain – the long- heralded economic collapse of America is upon us. When hard-working families who should be “middle class” can barely afford to eat and keep a roof over their heads, things are only going to decline further.

Look at other examples of economic collapse

This is just the beginning of a looming collapse in America.

Remember back when Greece began to collapse? It was the same thing – no one could afford the basics and things went downhill pretty quickly from there. It really hit the papers when a strict austerity program was instituted and culminated when a “bank holiday” shut down the financial system for an entire week.

There are similar stories in the UK (where the taxpayers can still fund a 45 million dollar wedding but poor families can’t afford to eat every day), Argentina, and Cyprus.

Jose wrote for us about the warning signs that the collapse of Venezuela was approaching and they’re eerily familiar. Food rationing began, the cost of medical care became prohibitive, the health insurance system began to fail, and people began to make difficult choices about rent versus food.

Nearly half of the American population is also now making that decision each month.

What’s the answer?

While the United Way hopes to boost the minimum wage, I don’t feel that is the answer because it will drive businesses to let employees go when they can’t afford to pay them. We have seen this happen in fast food establishments in which humans are on their way to being replaced by self-service kiosks and burger-flipping robots.

I believe the only answer is to begin to produce more than we consume. Currently, Americans are like a horde of locusts, working at jobs that produce nothing, but consuming rabidly the imports that feed us, clothe us, and entertain us. We’re looking at economic tariffs on imports that may increase their price up to 40% and our own exports will be subject to tariffs in return.

If you find yourself in a tough spot, these tips from The Cheapskate’s Guide to the Galaxy may help.

  1. Audit your situation. See where all your money is going, see how much debt you’re in, and see what the most immediate ramifications will be.
  2. Take care of the most important things first. In most situations, keeping your home paid for (rent or mortgage), paying utilities, and making your auto and insurance payments should come first. Take care of the things that will have the most immediate ramifications first.
  3. You may have to make some late payments on less vital things. If so, communicate with those to whom you owe money and try to make arrangements. This may affect your credit, but by communicating with them, you can keep damage to a minimum.
  4. Cut your expenses. When you audit your situation, you may find some places that you can slash your regular expenses. Don’t hesitate to reduce services that are unnecessary or to whittle down your monthly obligations. (More ideas here)
  5. Put a little money back into your emergency fund as soon as possible. This may sound counterintuitive but having a bit of money for minor emergencies means that you won’t need to rely on credit cards for these things, putting you even further in the hole.
  6. Pay off your debts. Use the snowball method to attack your debts. Start paying these off AFTER you pay for the things I recommended in step 2.
  7. Use the things you have on hand. Delay a trip to the store for as long as possible by planning a menu using the food in your pantry and freezer. (Think about the stockpile challenge we did and use those strategies. Get some ideas for meals from your stockpile in this article) Use the shampoo, soap, and personal hygiene products that you have already instead of buying new products.
  8. Raise extra money. This may come from selling things you don’t need, taking on some extra work, or by creating a product or service to sell. However you do this, use the extra revenue wisely to get out of debt and to rebuild your emergency fund. There are more ideas for making money quickly in this issue.

And to harden yourself against the collapse that will only get worse, make these changes to help your family survive.

What can you store?” is not the right question to ask.

“What can you make?” – that’s the right question.

Your focus has to be on long-term sustainability, frugality, and self-reliance.  Don’t get me wrong – a stockpile is sensible and an essential course of action. It should definitely be part of your preparedness plan.  However, you need to also be ready for the time when the supplies in your well-stocked pantry are no longer available.  You need to be able to meet as many of your own needs as possible or you’ll end up being one of those people wearing dirty clothes because you can’t find laundry soap or going hungry because you can’t find any food at the stores – or can’t afford it if you can find it. You need to be ready for the end of a consumer-driven lifestyle, because quite frankly, there may soon come a day when there are no consumer goods to be had.

Here are some ways to work on your self-reliance:

It’s only by reducing your need for the things sold in stores that you can exempt yourself from the chaos and desperation that will erupt when everyone realizes that an economic collapse is truly here.

 

[From an article by Daisy Luther, written for THE ORGANIC PREPPER]

 

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

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Indisputable confirmation that a new recession has already begun

Temporary Help Services

A  new economic downturn has already begun.  Last Friday, the government released the worst jobs report in six years, and it has a lot of people really freaked out.  But when you really start digging into those numbers, you quickly find that things are even worse than most analysts are suggesting.  In particular, the number of temporary jobs in the United States has started to decline significantly after peaking last December.  Why this is so important is because the number of temporary jobs started to decline precipitously right before the last two recessions as well.

When economic conditions start to change, temporary workers are often affected before anyone else is.  Temporary workers are easier to hire than other types of workers, and they are also easier to fire.

In this chart above you can see that the number of temporary workers peaked and started to decline rapidly before we even got to the recession of 2001.  And you will notice that the number of temporary workers also peaked and started to decline rapidly before we even got to the recession of 2008.  This shows why the temporary workforce is considered to be a “leading indicator” for the U.S. economy as a whole.  When the number of temporary workers peaks and then starts to fall steadily, it’s a major red flag.  And that is why it is so alarming that the number of temporary workers peaked in December 2015 and has fallen quite a bit since then.

Temporary Help Services

In May, the U.S. economy lost another 21,000 temporary jobs, and overall we have lost almost 64,000 since December.

If a new economic downturn had already started, this is precisely what we would expect to see.  The following is some commentary from Wolf Richter

Staffing agencies are cutting back because companies no longer need that many workers. Total business sales in the US have been declining since mid-2014. Productivity has been crummy and getting worse. Earnings are down for the fourth quarter in a row. Companies see that demand for their products is faltering, so the expense-cutting has started. The first to go are the hapless temporary workers.

Another indicator which is pointing to big trouble for American workers is the Fed Labor Market Conditions Index.  Just check out this chart from Zero Hedge, which shows that this index has now been falling on a month over month basis for five months in a row.  Not since the last recession have we seen that happen…

Fed Labor Market Conditions MoM

Of course I have been warning about this new economic downturn since the middle of last year.  U.S. factory orders have now been falling for 18 months in a row, job cut announcements at major companies are running 24 percent higher up to this point in 2016 than they were during the same time period in 2015, and just recently Microsoft said that they were going to be cutting 1,850 jobs as the market for smartphones continues to slow down.

The exact same patterns that we witnessed just prior to the last major economic crisis are playing out once again right in front of our eyes.

Perhaps you have blind faith in Barack Obama, the Federal Reserve and our other “leaders”, and perhaps you are convinced that everything will turn out okay somehow, but there are others doing what they can to get prepared in advance.

It may surprise you to learn that George Soros is one of them.

According to recent media reports, George Soros has been selling off investments like crazy and has poured tremendous amounts of money into gold and gold stocks

Maybe the best argument in favor of gold is that American legendary investor and billionaire George Soros has recently sold 37% of his stock and bought a lot more gold and gold stocks.

George Soros, who once called gold ‘the ultimate bubble,’ has resumed buying the precious metal after a three-year hiatus. On Monday, the billionaire investor disclosed that in the first quarter he bought 1.05 million shares in SPDR Gold Trust, the world’s biggest gold exchanged-traded fund, valued at about $123.5 million,” Fortune and Reuters reported Tuesday.

George Soros didn’t make his fortune by being a dummy.  Obviously he can see that something big is coming, and so he is making the moves that he feels are appropriate.

If you are waiting for some type of big announcement from the government that a recession has started, you are likely going to be waiting for quite a while. (The government never wants to release that dreaded “announcement” until the facts are obvious to everyone who still has a pulse.  Back in mid-2008 Federal Reserve Chairman Ben Bernanke insisted that the U.S. economy was not heading into a recession even though we found out later that we were already in one at the moment Bernanke made that now infamous statement.)

You can be like Ben Bernanke in 2008 and stick your head in the sand and pretend that nothing is happening, or you can honestly assess the situation at hand and adjust your strategies accordingly like George Soros is doing.

Of course I am not a fan of George Soros at all.  The shady things that he has done to promote the radical left around the globe are well documented.  But they don’t call people like him “the smart money” for no reason.

Down in Venezuela, the economic collapse has already gotten so bad that people are hunting dogs and cats for food.  For most of the rest of the world, things are not nearly that bad, and they won’t be that bad for a while yet.  But without a doubt, the global economy is moving in a very negative direction, and the pace of change is accelerating.

 

[from an article by Michael Snyder in The Economic Collapse Blog]

 

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

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Federal Reserve makes another huge mistake…

US economic bubble

As stocks continue to crash, you can blame the Federal Reserve, because the Fed is more responsible for creating the current financial bubble we’re living in than anyone else.

When the Federal Reserve pushed interest rates all the way to the floor and injected lots of hot money into the financial markets during their quantitative easing programs, this pushed stock prices to wildly artificial levels.  The only way it would have been possible to keep stock prices at those wildly artificial levels would have been to keep interest rates ultra-low and to keep recklessly creating lots of new money.  But now the Federal Reserve has ended quantitative easing and has embarked on a program of very slowly raising interest rates.  This is going to have very severe consequences for the markets, but Janet Yellen doesn’t seem to care.

There is a reason why the financial world hangs on every single word issued by the Fed: The massively inflated stock prices we see today were a creation of the Fed and are completely dependent on the Fed for their continued existence.

Right now, stock prices are still 30 to 40 percent above what the economic fundamentals say they should be based on historical averages.  And if we are now plunging into a very deep recession as I contend, stock prices should probably fall by a total of more than 50 percent from where they are now.

The only way stock prices could have ever gotten this disconnected from economic reality is with the help of the Federal Reserve.  And since the U.S. dollar is the primary reserve currency of the entire planet, the actions of the Fed over the past few years have created stock market bubbles all over the globe.

But the only way to keep the party going is to keep the hot money flowing.  Unfortunately for investors, Janet Yellen and her friends at the Fed have chosen to go the other direction.  Not only has quantitative easing ended, but the Fed has also decided to slowly raise interest rates.  The Fed left rates unchanged on Wednesday, but we were told that we are probably still on schedule for another rate hike in March.

So how did the markets respond to the Fed?

Well, after attempting to go green for much of the day, the Dow started plunging very rapidly and ended up down 222 points.

The markets understand the reality of what they are now facing.  They know stock prices are artificially high and that if the Fed keeps tightening that it is inevitable that they will fall back to earth.

In a true free market system, stock prices would be far, far lower than they are right now.  Everyone knows this – including Jim Cramer.  Just check out what he told CNBC viewers earlier today…

Jim Cramer was tempted to resurface his “they know nothing” rant after hearing the Fed speak on Wednesday. He was hoping that a few boxes on his market bottom checklist might be checked off, but it seems that the bear market has not yet run its course.

The Fed’s wishy-washy statement on interest rates today left stocks sinking back into oblivion after a nice rally yesterday,” the “Mad Money” host said.

Without artificial help from the Fed, stocks will most definitely continue to sink into oblivion.

That is because these current stock prices are not based on anything real.

And so as this new financial crisis continues to unfold, the magnitude of the crash is going to be much worse than it otherwise would have been.

It has often been said that the higher you go the farther you have to fall.  Because the Federal Reserve has pumped up stock prices to ridiculously high levels, that just means that the pain on the way down is going to be that much worse.

It is also important to remember that stocks tend to fall much more rapidly than they rise.  And when we see a giant crash in the financial markets, that creates a tremendous amount of fear and panic.  The last time there was great fear and panic for an extended period of time was during the crisis of 2008 and 2009, and this created a tremendous credit crunch.

During a credit crunch, financial institutions because very hesitant to lend to one another or to anyone else.  And since our economy is extremely dependent on the flow of credit, economic activity slows down dramatically.

As this current financial crisis escalates, you are going to notice certain things begin to happen.  If you own a business or you work at a business, you may start to notice that fewer people are coming in, and those people that do come in are going have less money to spend.

As economic activity slows, employers will be forced to lay off workers, and many businesses will shut down completely.  And since 63 percent of all Americans are living paycheck to paycheck, many will suddenly find themselves unable to meet their monthly expenses.  Foreclosures will skyrocket, and large numbers of people will go from living a comfortable middle class lifestyle to being essentially out on the street very, very rapidly.

At this point, many experts believe that the economic outlook for the coming months is quite grim.  For example, just consider what Marc Faber is saying

It won’t come as a surprise to market watchers that “Dr. Doom” Marc Faber isn’t getting any more cheerful.

But the noted bear at least found a sense of humor on Wednesday into which he could channel his bleakness.

The publisher of the “Gloom, Boom & Doom Report” told attendees at the annual “Inside ETFs” conference that the medium-term economic outlook has become “so depressing” that he may as well fill a newly installed pool with beer instead of water.

If the Federal Reserve had left interest rates at more reasonable levels and had never done any quantitative easing, we would have been forced to address our fundamental economic problems more honestly and stock prices would be far, far lower today.

But now that the Fed has created this giant artificial financial bubble, the coming crash is going to be much worse than it otherwise would have been.  And the tremendous amount of panic that this crash will cause will paralyze much of the economy and will ultimately lead to a far deeper economic downturn than we witnessed last time around.

Once the Fed started wildly injecting money into the system, they had no other choice but to keep on doing it.

 

[by Michael Snyder, writing for The Economic Collapse Blog]

 

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

 

 

 

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Americans seem to agree on at least one thing: They REALLY dislike the US government!

If there is one thing that Americans can agree on these days, it is the fact that most of us don’t like the government.

 

CBS News has just released an article entitled “Americans hate the U.S. government more than ever“, and an average of recent surveys calculated by Real Clear Politics found that 63 percent of all Americans believe the country is heading in the wrong direction and only 28 percent of all Americans believe that the country is heading in the right direction.  In just a few days the first real ballots of the 2016 election will be cast in Iowa, and up to this point the big story of this cycle has been the rise of “outsider” candidates that many of the pundits had assumed would never have a legitimate chance.  Donald Trump, Ted Cruz and Bernie Sanders have all been beneficiaries of the overwhelming disgust that the American people feel regarding what has been going on in Washington.

And it isn’t just Barack Obama or members of Congress that Americans are disgusted with.  According to the CBS News article that I referenced above, our satisfaction with various federal agencies has fallen to an eight year low…

A handful of industries are those “love to hate” types of businesses, such as cable-television companies and Internet service providers.

The federal government has joined the ranks of the bottom-of-the-barrel industries, according to a new survey from the American Customer Satisfaction Index. Americans’ satisfaction level in dealing with federal agencies –everything from Treasury to Homeland Security — has fallen for a third consecutive year, reaching an eight-year low.

So if we are all so fed up with the way that things are running, it should be easy to fix right?

Unfortunately, things are not so simple.

In America today, we are more divided as a nation than ever.  If you ask 100 different people how we should fix this country, you are going to get 100 very different answers.  We no longer have a single shared set of values or principles that unites us, and therefore it is going to be nearly impossible for us to come together on specific solutions.

You would think that the principles enshrined in the U.S. Constitution should be able to unite us, but sadly those days are long gone.  In fact, the word “constitutionalist” has become almost synonymous with “terrorist” in our nation.  If you go around calling yourself a “constitutionalist” in America today, there is a good chance that you will be dismissed as a radical right-wing wacko who probably needs to be locked up.

The increasing division in our nation can be seen very clearly during this election season.  On the left, an admitted socialist is generating the most enthusiasm of any of the candidates.  Among many Democrats today, Hillary Clinton is simply “not liberal enough” and no longer represents their values.

On the other end of the spectrum, a lot of Republican voters are gravitating toward either Donald Trump or Ted Cruz.  Both of those candidates represent a complete break from how establishment Republicans have been doing things in recent years.

Now don’t get me wrong – I am certainly not suggesting that we need to meet in the middle.  My point is that there is absolutely no national consensus about what we should do.  On the far left, they want to take us into full-blown socialism.  Those that support Donald Trump or Ted Cruz want to take us in a more conservative direction.  But even among Republicans there are vast disagreements about how to fix this country.  Establishment Republicans greatly dislike both Trump and Cruz, and they are quite determined to do whatever it takes to keep either of them from getting the nomination.  The elite have grown very accustomed to anointing the nominee from each party every four years, and so the popularity of Trump and Cruz is making them quite uneasy this time around.  The following comes from the New York Times

The members of the party establishment are growing impatient as they watch Mr. Trump and Mr. Cruz dominate the field heading into the Iowa caucuses next Monday and the New Hampshire primary about a week later.

The party elders had hoped that one of their preferred candidates, such as Senator Marco Rubio of Florida, would be rising above the others by now and becoming a contender to rally around.

The global elite gathered in Davos, Switzerland are also greatly displeased with Trump.  Just check out some of the words that they are using to describe him

Unbelievable“, “embarrassing” even “dangerous” are some of the words the financial elite gathered at the World Economic Forum conference in the Swiss resort of Davos have been using to describe U.S. Republican presidential frontrunner Donald Trump.

Although some said they still expected his campaign to founder before his party picks its nominee for the November election many said it was no longer unthinkable that he could be the Republican candidate.

The truth is that the Republican Party represents somewhere less than half the population in the United States, and today it is at war with itself.  Supporters of Trump have a significantly different vision of the future than supporters of Cruz, and the establishment wing wants nothing to do with either candidate.

A lot of people seem to assume that since Trump is leading in the polls that he will almost certainly get the nomination.

That is not exactly a safe bet.

It is my contention that the establishment will pull out every trick in the book to keep either him or Cruz from getting the nomination.  And in order to lock up the nomination before the Republican convention, a candidate will need to have secured slightly more than 60 percent of all of the delegates during the caucuses and the primaries.

The following is an excerpt from one of my previous articles in which I discussed the difficult delegate math that the Republican candidates are facing this time around…

It is going to be much more difficult for Donald Trump to win the Republican nomination than most people think.  In order to win the nomination, a candidate must secure at least 1,237 of the 2,472 delegates that are up for grabs.  But not all of them will be won during the state-by-state series of caucuses and primaries that will take place during the first half of 2016.  Of the total of 2,472 Republican delegates, 437 of them are unpledged delegates – and 168 of those are members of the Republican National Committee.  And unless you have been hiding under a rock somewhere, you already know that the Republican National Committee is not a fan of Donald Trump.  In order to win the Republican nomination without any of the unpledged delegates, Trump would need to win 60.78 percent of the delegates that are up for grabs during the caucuses and primaries.  And considering that his poll support is hovering around 30 percent right now, that is a very tall order.

In the past, it was easier for a front-runner to pile up delegates in “winner take all” states, but for this election cycle the Republicans have changed quite a few things.  In 2016, all states that hold caucuses or primaries before March 15th must award their delegates proportionally.  So when Trump wins any of those early states, he won’t receive all of the delegates.  Instead, he will just get a portion of them based on the percentage of the vote that he received.

In 2016, more delegates will be allocated on a proportional basis by the Republicans than ever before, and with such a crowded field that makes it quite likely that no candidate will have secured enough delegates for the nomination by the time the Republican convention rolls around.

If no candidate has more than 60 percent of the delegates by the end of the process, then it is quite likely that we will see the first true “brokered convention” in decades.

If we do see a “brokered convention”, that would almost surely result in an establishment candidate coming away with the nomination.  That list of names would include Bush, Rubio, Christie and Kasich.

And if by some incredible miracle either Trump or Cruz does get the nomination, the elite will move heaven and earth to make sure that Hillary Clinton ends up in the White House.

For decades, it has seemed like nothing ever really changes no matter which political party is in power, and that is exactly how the elite like it.  Our two major political parties are really just two sides of the same coin, and they are both leading this nation right down the drain.

 

[by Michael Snyder, writing for The Economic Collapse Blog]

 

NORM ‘n’ AL Note:  If it seems like the good ol’ USA is foundering like a ship in a storm, that’s because the USA very definitely IS foundering. Just like the Titanic, which although proclaimed unsinkable, hit an iceberg and took thousands of its passengers to a cold and watery grave, the USA, once the brightest light among countries anywhere on the planet, is very close to taking many millions of its own citizens to their graves. The demise of the Titanic was preventable by those at the helm. The demise of the USA is also preventable, but those at the helm are too busy re-arranging deck chairs while the ship they are supposed to be steering is heading straight for the rocks.

Americans used to have respect for life, liberty, and the pursuit of happiness. Now we have no respect for life: We murder little human beings with hardly a thought, and since Roe v. Wade became law, we have murdered nearly 60 million of them. We obviously have no respect for liberty, because we continue to do our best to enslave those in coming generations who have not a prayer of being able to repay the monstrous level of debt we continue to heap upon them. As for happiness, just ask yourself this very simple question: Am I happy? Do I like the fact that the US government is more restrictive than ever before? Does it make me happy to see our economy prevent millions of us from getting a job? Does it make me happy to see our Oval Office Occupant favor Muslims over Christians? Am I happy with a government that is now so big and clumsy and oppressive that it simply cannot get out of its own way and protect its citizens, which is its most basic obligation? If you want to experience first-hand just how big and clumsy and inept the US government really is, just get sick and try to get good, effective, first-rate health care. You stand a better chance of getting well in 36 other countries, because the US is now ranked 37th in quality of healthcare. (That ranking comes from the World Health Organization, WHO, which has been ranking the world’s quality of healthcare for decades. WHO knows what good healthcare is.)

Are you not yet sick and tired of politicians who seek office for their OWN benefit, and not that of the USA? You SHOULD be fighting mad by now, unless it makes you happy to live like a doormat. Do you think God is going to look with favor on a country that continues to kill its unborn by the millions? That has removed prayer from its schools in an all-out effort to remove God from its children? That has spared no expense to remove all references to the Creator from the everyday lives of its citizens? That has absolutely no respect for the truth of the Bible? Think again. You are now living in a country which is showing you very clearly what ONE NATION UNDER NO GOD looks like, feels like, and will be like, next week and next year.

 

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

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Financial Armageddon Approaching: U.S. Banks Have 247 Trillion Dollars Of Exposure To Derivatives

Financial crisis approaching...

Did you know that there are 5 “too big to fail” banks in the United States that each have exposure to derivatives contracts that is in excess of 30 trillion dollars?

Overall, the biggest U.S. banks collectively have more than 247 trillion dollars of exposure to derivatives contracts.  That is an amount of money that is more than 13 times the size of the U.S. national debt, and it is a ticking time bomb that could set off financial Armageddon at any moment.  Globally, the notional value of all outstanding derivatives contracts is a staggering 552.9 trillion dollars according to the Bank for International Settlements.  The bankers assure us that these financial instruments are far less risky than they sound, and that they have spread the risk around enough so that there is no way they could bring the entire system down.  But that is the thing about risk – you can try to spread it around as many ways as you can, but you can never eliminate it.  And when this derivatives bubble finally implodes, there won’t be enough money on the entire planet to fix it.

A lot of readers may be tempted to quit reading right now, because “derivatives” is a term that sounds quite complicated.  And yes, the details of these arrangements can be immensely complicated, but the concept is quite simple.  Here is a good definition of “derivatives” that comes from Investopedia

A derivative is a security with a price that is dependent upon or derived from one or more underlying assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.

I like to refer to the derivatives marketplace as a form of “legalized gambling”.  Those that are engaged in derivatives trading are simply betting that something either will or will not happen in the future.  Derivatives played a critical role in the financial crisis of 2008, and I am fully convinced that they will take on a starring role in this new financial crisis.

And I am certainly not the only one who is concerned about the potentially destructive nature of these financial instruments.  In a letter that he once wrote to shareholders of Berkshire Hathaway, Warren Buffett referred to derivatives as “financial weapons of mass destruction”…

The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.

Since the last financial crisis, the big banks in this country have become even more reckless.  And that is a huge problem, because our economy is even more dependent on them than we were the last time around.  At this point, the four largest banks in the U.S. are approximately 40 percent larger than they were back in 2008.  The five largest banks account for approximately 42 percent of all loans in this country, and the six largest banks account for approximately 67 percent of all assets in our financial system.

So the problem of “too big to fail” is now bigger than ever.

If those banks go under, we are all in for a world of hurt.

Yesterday, I wrote about how the Federal Reserve has implemented new rules that would limit the ability of the Fed to loan money to these big banks during the next crisis.  So if the survival of these big banks is threatened by a derivatives crisis, the money to bail them out would probably have to come from somewhere else.

In such a scenario, could we see European-style “bail-ins” in this country?

Ellen Brown, one of the most fierce critics of our current financial system and the author of Web of Debt, seems to think so…

Dodd-Frank states in its preamble that it will “protect the American taxpayer by ending bailouts.” But it does this under Title II by imposing the losses of insolvent financial companies on their common and preferred stockholders, debtholders, and other unsecured creditors. That includes depositors, the largest class of unsecured creditor of any bank.

Title II is aimed at “ensuring that payout to claimants is at least as much as the claimants would have received under bankruptcy liquidation.” But here’s the catch: under both the Dodd Frank Act and the 2005 Bankruptcy Act, derivative claims have super-priority over all other claimssecured and unsecured, insured and uninsured.

The over-the-counter (OTC) derivative market (the largest market for derivatives) is made up of banks and other highly sophisticated players such as hedge funds. OTC derivatives are the bets of these financial players against each other. Derivative claims are considered “secured” because collateral is posted by the parties.

For some inexplicable reason, the hard-earned money you deposit in the bank is not considered “security” or “collateral.” It is just a loan to the bank, and you must stand in line along with the other creditors in hopes of getting it back.

As I mentioned yesterday, the FDIC guarantees the safety of deposits in member banks up to a certain amount.  But as Brown has pointed out, the FDIC only has somewhere around 70 billion dollars sitting around to cover bank failures.

If hundreds of billions or even trillions of dollars are ultimately needed to bail out the banking system, where is that money going to come from?

It would be difficult to overstate the threat that derivatives pose to our “too big to fail” banks.  The following numbers come directly from the OCC’s most recent quarterly report (see Table 2), and they reveal a recklessness that is on a level that is difficult to put into words…

Citigroup

Total Assets: $1,808,356,000,000 (more than 1.8 trillion dollars)

Total Exposure To Derivatives: $53,042,993,000,000 (more than 53 trillion dollars)

JPMorgan Chase

Total Assets: $2,417,121,000,000 (about 2.4 trillion dollars)

Total Exposure To Derivatives: $51,352,846,000,000 (more than 51 trillion dollars)

Goldman Sachs

Total Assets: $880,607,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $51,148,095,000,000 (more than 51 trillion dollars)

Bank Of America

Total Assets: $2,154,342,000,000 (a little bit more than 2.1 trillion dollars)

Total Exposure To Derivatives: $45,243,755,000,000 (more than 45 trillion dollars)

Morgan Stanley

Total Assets: $834,113,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $31,054,323,000,000 (more than 31 trillion dollars)

Wells Fargo

Total Assets: $1,751,265,000,000 (more than 1.7 trillion dollars)

Total Exposure To Derivatives: $6,074,262,000,000 (more than 6 trillion dollars)

As the “real economy” crumbles, major hedge funds continue to drop like flies, and we head into a new recession, there seems to be very little alarm among the general population about what is happening.

The mainstream media is assuring us that everything is under control, and they are running front page headlines such as this one during the holiday season: “Kylie Jenner shows off her red-hot new tattoo“.

But underneath the surface, trouble is brewing.

A new financial crisis has already begun, and it is going to intensify as we head into 2016.

And as this new crisis unfolds, one word that you are going to want to listen for is “derivatives”, because they are going to play a major role in the “financial Armageddon” that is rapidly approaching.

 

[by Michael Snyder, writing for The Economic Collapse Blog]

 

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

 

 

 

 

 

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Alarm bells going off as 11 critical indicators scream that the global economic crisis is getting deeper

Economic activity is slowing down all over the planet, and a whole host of signs are indicating that we are essentially exactly where we were just prior to the great stock market crash of 2008.  Yesterday, I explained that the economies of Japan, Brazil, Canada and Russia are all in recession.  Today, I am mainly going to focus on the United States.  We are seeing so many things happen right now that we have not seen since 2008 and 2009.  In so many ways, it is almost as if we are watching an eerie replay of what happened the last time around, and yet most of the “experts” still appear to be oblivious to what is going on.  If you were to make up a checklist of all of the things that you would expect to see just before a major stock market crash, virtually all of them are happening right now.  The following are 11 critical indicators that are absolutely screaming that the global economic crisis is getting deeper…

Alarms are flashing all over the globe...

#1 On Tuesday, the price of oil closed below 40 dollars a barrel.  Back in 2008, the price of oil crashed below 40 dollars a barrel just before the stock market collapsed, and now it has happened again.

#2 The price of copper has plunged all the way down to $2.04.  The last time it was this low was just before the stock market crash of 2008.

#3 The Business Roundtable’s forecast for business investment in 2016 has dropped to the lowest level that we have seen since the last recession.

#4 Corporate debt defaults have risen to the highest level that we have seen since the last recession.  This is a huge problem because corporate debt in the U.S. has approximately doubled since just before the last financial crisis.

#5 The Bloomberg U.S. economic surprise index is more negative right now than it was at any point during the last recession.

#6 Credit card data that was just released shows that holiday sales have gone negative for the first time since the last recession.

#7 As I mentioned yesterday, U.S. manufacturing is contracting at the fastest pace that we have seen since the last recession.

#8 The velocity of money in the United States has dropped to the lowest level ever recorded.  Not even during the depths of the last recession was it ever this low.

#9 In 2008, commodity prices crashed just before the stock market did, and late last month the Bloomberg Commodity Index hit a 16 year low.

#10 In the past, stocks have tended to crash about 12-18 months after a peak in corporate profit margins.  At this point, we are 15 months after the most recent peak.

#11 If you look back at 2008, you will see that junk bonds crashed horribly.  Why this is important is because junk bonds started crashing before stocks did, and right now they have dropped to the lowest point that they have been since the last financial crisis.

If just one or two of these indicators were flashing red, that would be bad enough.

The fact that all of them seem to be saying the exact same thing tells us that big trouble is ahead.

And I am not the only one saying this.  Just today, a Reuters article discussed the fact that Citigroup analysts are projecting that there is a 65 percent chance that the U.S. economy will plunge into recession in 2016…

The outlook for the global economy next year is darkening, with a U.S. recession and China becoming the first major emerging market to slash interest rates to zero both potential scenarios, according to Citi.

As the U.S. economy enters its seventh year of expansion following the 2008-09 crisis, the probability of recession will reach 65 percent, Citi’s rates strategists wrote in their 2016 outlook published late on Tuesday. A rapid flattening of the bond yield curve towards inversion would be an key warning sign.

Personally, I am convinced that we are already in a recession.  There is a lag in the official numbers, so often we don’t know that we are officially in one until it is well underway.  For example, we now know that a recession started in early 2008, but in the summer of 2008 Ben Bernanke and our top politicians were still insisting that there was not going to be a recession.  They were denying what was actually happening right in front of their eyes, and the same thing is happening now.

And of course if the government was actually using honest numbers, we would all be talking about the recession that never seems to end.  According to John Williams of shadowstats.com, honest numbers would show that the U.S. economy has continually been in recession since 2005.

But just like in 2008, the “experts” at the Federal Reserve are assuring all of us that everything is going to be just fine.  In fact, Janet Yellen is convinced that things are so rosy that she seems quite confident that the Fed will raise interest rates in December

Federal Reserve Chair Janet Yellen signaled Wednesday that the Fed is all but certain to raise interest rates this month for the first time in nearly a decade, saying that gains in the economy and labor market have met the central bank’s goals.

Her comments at the Economic Club of Washington amount to the strongest indication the Fed has provided so far that it will take action at a December 15-16 meeting.

This is the exact same kind of mistake that the Federal Reserve made back in the late 1930s.  They thought that the U.S. economy was finally recovering, and so interest rates were raised.  That turned out to be a tragic mistake.

But this time around, any mistake that the Fed makes will have global consequences.  The rising U.S. dollar is already crippling emerging markets all around the globe, and an interest rate hike will just push the U.S. dollar even higher.  For much more on this, please see my previous article entitled “The U.S. Dollar Has Already Caused A Global Recession And Now The Fed Is Going To Make It Worse“.

Many people are waiting for “the big crash”, but the truth is that almost everything has crashed already.

Oil has crashed.

Commodities have crashed.

Gold and silver have crashed.

Junk bonds have crashed.

Chinese stocks have crashed.

Dozens of other stock markets around the world have already crashed.

But the “big event” that many are waiting for is the crash of U.S. stocks.  And just like in 2008, it is inevitable that a U.S. stock crash will follow all of the other crashes that I just mentioned.

The exact same patterns that we experienced back then are playing out once again right in front of our eyes.

 

[by Michael Snyder, writing for THE ECONOMIC COLLAPSE BLOG]

 

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As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis
normal@usa1usa.com
612.239.0970

 

 

 

 

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