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…
#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.
Bonus Alarm #12: The US Services economy is weakening in its usual lagged way to manufacturing. This is a problem as the narrative has been that Services will save the economy even as manufacturing collapses.
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…
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, and the more people that we can warn in advance the better.
The director of the CME Metals Group announced her resignation to effective December 11. No further explanation was provided – Reuters link. I’m not one to infer some type of conspiracy theory in connection with this, but it seems rather abrupt. It’s akin to Bernanke leaving the Fed much sooner than anyone expected. The rats are leaving the ship before it sinks.
Another indication of the chaos erupting behind the “curtain” is the melt-down going on the junk bond market. Alhambra Partners wrote a piece in which it asserted that the stunning spike higher in triple-CCC rated junk bonds is indicative of something blowing up in the junk bond market – LINK. But it’s not speculation, it’s a fact. And it’s not “something,” it’s the entire distressed credit asset class.
The asset class itself, like every other financial asset, is horrendously mis-priced thanks to the massive Central Bank intervention. But unavoidable leaks are springing and they are going to turn into torrential floods.
This dynamic is going to spread to other asset classes within the credit market, like subprime mortgage pass-thru trusts, collateralized debt obligations, etc. This how it began to unfold in 2008. This is why Wall Street banks are now net short corporate bonds. The problem is that this time around the amount of debt of all varieties is a few multiples greater than it was in 2008. And connected to all of this is a preponderance of OTC derivatives. Derivatives that I believe are already melting down behind “the curtain.”
At some point the “collapse dyamic” is going to hit the entire stock market. It already has in several sub-sectors and individual stocks below the surface. We see this in the “cliff-dives” that occur when companies report “unexpectedly” disappointing earnings results. Stocks which were held up with the broad indices thanks to the Fed’s monetary lasiviousness get quickly repriced to downside.
The hallmark of an empire in collapse is the imposition of Governmental totalitarianism and reckless attempted military imperialism.
History tells us this is what occurs when a powerful economic/political system is in the final stages of collapse.
[This commentary on recent events, as seen on The Blaze, is really really good, highly germane and worth reading once or twice]
Yes, God Can Fix This
I don’t know the numbers, but I do not believe we are a very prayerful culture as a whole, despite the fact that a wide majority of us profess a belief in God. Maybe if all who believed in God acted and prayed as if they did, things wouldn’t be quite so bad in this country.
I don’t expect to convince atheists of the power of prayer. First, they have to accept that God is real and present, and that’s not a discussion I’m going to try to shoehorn into this post. But for those of us who already believe, we should not place limits on what prayer can achieve. Psalms tells us that when the righteous cry for help, the Lord hears them. Christ teaches that if we ask, it will be given (Luke 11:9). It might not be given in the way we anticipated or on a timeline that we prefer, but nonetheless God hears and answers all prayer.
I doubt there are many words mentioned more frequently in the Bible than “pray.” It’s one of the most basic and fundamental lessons God communicates to us through Scripture: Pray. Pray. Pray.
Prayerful people are blessed in more ways than one. Aside from receiving an answer to their specific prayer (and not every prayer should be a request — we should also pray in thanksgiving, in joy, in frustration, in anger, in sadness, in whatever state and for whatever purpose), the prayerful person grows in faith and obedience and humility. A person who prays sincerely every day, throughout the day, as not just a habit but a lifestyle, is a person who is not likely to struggle as much with arrogance or pride as the rest of us. When we pray, we humble ourselves before the Lord and remember our place in the universe: as the Shepherd’s sheep, the Master’s servants.
Prayer works. I believe it works. And if we were a prayerful people, we would be a better people, and if we were a better people, we’d be a better nation. Yes, I even believe mass shootings could be prevented if we prayed for God’s protection every day. That doesn’t mean every attack will automatically be thwarted. It doesn’t mean every shooting will be halted. It doesn’t mean every bad thing will be avoided. It certainly doesn’t mean that those who are killed in attacks failed to pray enough. For all I know, the victims of yesterday’s shooting were extraordinarily prayerful people. And even if they weren’t, that doesn’t mean God set out to punish them for their lack of prayers.
All I mean is that, according to God’s will, prayer can protect us. God can fix this. In fact, God already “fixed it” when He sent His Son to die for our sins and bring salvation to the world. He provided the ultimate solution, which is available to all who seek it. And when He comes again, He will “wipe away every tear,” and there will be no more death or pain (Revelation 21:4), and everything will be fixed for good.
In the meantime, before Christ returns with the final “fix,” it is not silly or useless to pray that God address our problems, large or small, and shield ourselves and our families from the terrible atrocities in the world. It doesn’t mean He will fix each thing just exactly as we imagine, or that we will be shielded and protected from every atrocity or misfortune just exactly as we requested — prayer is not a magic wand and God is not a genie conjured from a lamp — but our prayers are meaningful and fruitful still. Just because they did not bear the sort of fruit we anticipated in our finite, mortal imaginations, doesn’t mean they bore no fruit at all.
It’s important to remember that God provided the solution, which is Christ, but it is up to us to choose Him and walk the path He forged for us. Acts of evil and violence occur when people reject Him — reject the solution — and stray from the path. God has granted us the power to choose, but He does not create these evils or force anyone to perform them. He has given the fix, but many have turned it down, and as long as that happens, terrible things will also happen.