The Crisis is underway…
Economic Warning Signs
There are so many economic indicators signaling that a crash could be headed our way that I couldn’t possibly begin to cover them in one article. Here are 3 of the major ones.
Interest Rates – The Federal Reserve has been printing money and using it to buy $85 billion dollars worth of government bonds per month. Doing this has artificially kept interest rates low, delaying the complete collapse of our economy. However, many signs indicate that the Federal Reserve is simply inflating the bubble before it bursts. Even mainstream media admits the bubble may already be starting to burst. Regardless of when it happens, a rapid increase in interest rates will likely result. Such an increase would be catastrophic for the economy.
Debt – We have a global debt crisis on our hands the likes of which has never been seen before. We all have seen what happened in Greece, but what happens when bigger countries like the United States can’t pay their debt back? Many experts agree that defaulting on U.S. national debt would be disastrous. The dollar could lose its reserve currency status and rapidly devalue, causing an inflationary collapse.
The scariest part about the debt crisis to me is that there really is no solution to it. Raising taxes and implementing drastic spending cuts would only begin to scratch the surface of our debt problems.
Unemployment – Unemployment numbers have been heavily “massaged” to make it seem like our economy is recovering. As you probably know, those who stop receiving government benefits are no longer considered unemployed even if they still don’t have a job. The truth is that the official unemployment rate is wrong. Furthermore, four out of five U.S. adults struggle with joblessness, are near poverty, or rely on welfare for at least parts of their lives.
Students just graduating college are expected to know more and take a lower pay to compete for entry level jobs. All the while student loan debt is being racked up faster than ever. This Huffington Post article from 2012 explains that only half of recent college grads have a full time job. Does that sounds like a recipe for a booming future economy?
Telling Government Activity
The government has been out of control for a long time. Recently though, the actions they have taken are becoming increasingly blatant. Many would argue that they are preparing for something big to go down in the U.S. Check out what some of our government agencies have been up to below.
NSA – The NSA has been caught spying on Americans. They have been collecting phone records, emails, internet searches, and just about every other type of digital communications that exist. Large companies like Microsoft and Google have played a part in this by handing over our data. The part that really bothers me is that I have yet to meet someone in person who actually approves of this. But this behavior goes on, clearly against the will of the American public.
If it couldn’t get any more outrageous, the guy who let us know about it, Edward Snowden, is being called a terrorist and a spy. Really?!!! In my opinion the government definition of a terrorist has become quite blurry. It’s starting to look like anyone that sticks their neck out for freedom gets their head chopped off….
DOUG CASEY: “WE’RE STILL IN THE MIDST OF THE BIGGEST BUBBLE IN WORLD HISTORY”
“We’re still in the midst of the biggest bubble in world history. It’s bigger than the tech stock market bubble around the turn of the century. It’s bigger than the real estate bubble…[it’s] the bond bubble. With interest rates ranging from zero to a few percent—this is the biggest bubble in history and when it collapses, it’s going to be catastrophic because the bond market is so huge.”
If One Crash is a Failure, then 3 in one Week is an Attack
On Friday August 16, 2013, Google crashed for a period of time and so did 40% of all web traffic as the graph below demonstrates:
While outages among large technology companies might seem to be the norm recently, in reality redundancy and mirrored systems are supposed to prevent this. Fast forward to Monday, August 19th and voila, another major web site, this time the mega-web retailer Amazon.com goes down for 30 minutes in Canada and the United States:
This brings the party to today’s news:
They Actually Expect Us To Have Faith In These Financial Markets After This Week?
What in the world is happening to our financial markets? Trading on the Nasdaq was halted on Thursday for more than 3 hours, and the only formal explanation that we got was that it was a “technical issue”. On Tuesday, Goldman Sachs made thousands of “erroneous trades” that are now being canceled. If those trades had not been canceled, it could have cost Goldman “hundreds of millions of dollars” according to the Wall Street Journal. How nice for them that they get a “do over”. When Knight Capital made a similar “trading error”, they were not so fortunate. Our financial system has become completely and totally dependent on computers, and that means that it is extremely vulnerable. After what we have witnessed this week, how can they actually expect us to have faith in these financial markets? And what happens if these “technical issues” get even worse?
This Chart Of Surging Interest Rates Is Everything
2.91% and rising
This little-watched development could be much bigger than the end of QE
News this week that the Fed could cease its $85 billion-per-month buying of bonds and other instruments as early as September.
This would obviously mean a lot less money being pumped into the economic system. Which has concerned some observers.
But it pales in comparison with potential deflation looming in the European banking system. Due to new rules that are shaking up that sector.
Global regulators recently released a new slate of “Basel III” rules for banks. One of the key points is a “leverage ratio.” Which dictates that banks must hold certain levels of cash relative to their holdings of assets like loans and derivatives.
Many banks don’t currently meet these standards. Meaning they will have to raise money through equity financings (which are now starting to happen). Or cut assets.
Here’s where the numbers start to get eye-catching…
Why Asian Markets Are Collapsing In 3 Simple Charts
THE CONFIDENTIAL MEMO AT THE HEART OF THE GLOBAL FINANCIAL CRISIS
07 09 13 LONGWave Earnings Shock