Michael Snyder


The Economic Collapse Blog Has Issued A RED ALERT For The Last Six Months Of 2015


Red Alert ButtonI have never done anything like this before.  Ever since I started The Economic Collapse Blog in late 2009, I have never issued any kind of “red alert” for any specific period of time.  As an attorney, I was trained to be level-headed and to only come to conclusions that were warranted by the evidence.  So this is not something that I am doing lightly.  Based on information that I have received, things that I have been told, and thousands of hours of research that have gone into the publication of more than 1,300 articles about our ongoing economic collapse, I have come to the conclusion that a major financial collapse is imminent.  Therefore, I am issuing a RED ALERT for the last six months of 2015.

To clarify, when I say “imminent” I do not mean that it will happen within the next 48 hours.  And I am not saying that our problems will be “over” once we get to the end of 2015.  In fact, I believe that the truth is that our problems will only be just beginning as we enter 2016.

What I am attempting to communicate is that we are right at the door of a major turning point.  About this time of the year back in 2008, my wife and I went to visit her parents.  As we sat in their living room, I explained to them that we were on the verge of a major financial crisis, and of course the events that happened a few months later showed that I was right on the money.

This time around, I wish that I could visit the living rooms of all of my readers and explain to them why we are on the verge of another major financial crisis.  Unfortunately, that is not possible, but hopefully this article will suffice.  Please share it with your friends, your family and anyone else that you want to warn about what is coming.

Let’s start with a little discussion about the U.S. economy.  Most of the time, when I use the term “economic collapse” what most people are actually thinking of is a “financial collapse”.  And we will talk about the imminent “financial collapse” later on in this article.  But just because stocks have recently been hitting all-time record highs does not mean that the overall economy has been doing well.  This is a theme that I have hammered on over and over again.  It is my contention that we are in the midst of a long-term economic collapse that has been happening for many years, that is happening as you read this article, and that will greatly accelerate over the coming months.

Let me give you just one quick example.  When an economy is healthy, money tends to circulate fairly rapidly.  I buy something from you, then you take that money and buy something from someone else, etc.  In a stable and growing economy, people generally feel good about things and they are not afraid to spend.  But during hard times, the exact opposite happens.  That is why the velocity of money almost always slows down during a recession.  As you can see from the chart below, the velocity of money has indeed gone down during every recession since 1960.  Once a recession is over, the velocity of money is supposed to go back up.  But a funny thing happened after the last recession ended.  The velocity of money continued to go down, and it has now hit an all-time record low…

Velocity Of Money M2

This is the kind of chart that you would expect from a very sick economy.  And without a doubt, our economy is sick.  Even the official government numbers paint a picture of an economy that is deeply troubled.  Corporate profits have declined for two quarters in a row, U.S. exports plunged by 7.6 percent during the first quarter of 2015, U.S. GDP contracted by 0.7 percent during the first quarter, and factory orders have declined year over year for six months in a row.

If the stock market was connected to reality, it would be going down.  But instead, it has just kept going up.  As I discussed yesterday, this is a classic case of an irrational financial bubble.  If I was writing an economic textbook and I wanted to include an example of what a run up to a major financial crash looks like, it would be hard to come up with anything more ideal than what we have watched unfold over the last six months.  Just about every pattern that has popped up prior to previous stock markets crashes is happening again, and this is something that I have written about so much that many of my readers are sick of it.

And without a doubt, our financial markets are primed for a crash.

Only two times before has the S&P 500 been up by more than 200 percent over a six year time frame.

The first was in 1929, and the stock market subsequently crashed.

The second was in 2000, right before the dotcom bubble burst.

And by just about any measure that you can possibly imagine, stocks are massively overvalued right now.

For instance, just check out the chart posted below.  It comes from Doug Short, and it shows that the ratio of corporate equity prices to GDP has only been higher one time since 1950.  That was in 2000 just before the dotcom bubble burst…

The Buffett Indicator from Doug Short

Let’s take a look at another chart.  This one comes from Phoenix Capital Research, and it shows that the CAPE ratio (cyclically adjusted price-to-earnings ratio) has rarely been higher.  In fact, the only times that it has been higher we have seen stock market crashes immediately afterwards…

CAPE - Phoenix Capital Research

Yale economics professor Robert Shiller is also deeply concerned about the CAPE ratio

I think that compared with history, US stocks are overvalued. One way to assess this is by looking at the CAPE (cyclically adjusted P/E) ratio that I created with John Campbell, now at Harvard, 25 years ago. The ratio is defined as the real stock price (using the S&P Composite Stock Price Index deflated by the CPI) divided by the ten-year average of real earnings per share. We have found this ratio to be a good predictor of subsequent stock market returns, especially over the long run. The CAPE ratio has recently been around 27, which is quite high by US historical standards. The only other times it has been that high or higher were in 1929, 2000, and 2007—all moments before market crashes.

But the CAPE ratio is not the only metric I watch. In my book Irrational Exuberance (3rd Ed., Princeton 2015) I discuss several metrics that help judge what’s going on in the market. These include my stock market confidence indices. One of the indicators in that series is based on a single question that I have asked individual and institutional investors over the years along the lines of, “Do you think the stock market is overvalued, undervalued, or about right?” Lately, what I call “valuation confidence” captured by this question has been on a downward trend, and for individual investors recently reached its lowest point since the stock market peak in 2000.

Other valuation indicators produce similar results.  This next chart is another one from Doug Short, and it shows the average of four of his favorite valuation indicators.  As you can see, there is only one other time when stocks have been more overvalued than they are today according to the average of his four favorite indicators, and that was just before the stock market crashed when the dotcom bubble burst…

Four Valuation Indicators - Doug Short

Another one of the things that indicates that a financial bubble is happening is the level of margin debt.  Whenever margin debt has gone over 2.25% of GDP a stock market crash has always followed, and today it is far above that level.  As you can see from the chart below, there have been three major peaks in margin debt in modern U.S. history.  One was just before the dotcom bubble burst, one was just before the financial crisis of 2008, and the third is happening right now…

Margin Debt - Doug Short

Something else that we would expect to see prior to a major financial crisis is a decoupling of high yield debt and stocks.  This is something that happened just prior to the stock market crash of 2008, and it is happening again right now.  The following chart comes from Zero Hedge, and it demonstrates this brilliantly…

S&P 500 HY Credit

Are you starting to get the picture?

And as I discussed yesterday, the smart money is beginning to pull their money out of stocks while they still can.  According to USA Today, mutual fund investors have pulled more money out of stocks than they have put into stocks for 16 weeks in a row

In a sign of stock market nervousness on Main Street, mutual fund investors have yanked more money out of U.S. stock funds than they put in for 16 straight weeks.

The last time domestic stock funds had positive net cash inflows was in the week ending Feb. 25, according to data from the Investment Company Institute, a mutual fund trade group.

In the week ended June 17, the most recent data available, mutual funds that invest in U.S. stocks suffered net outflows of $3.45 billion, according to the ICI.

Since late February, U.S. stock funds have suffered estimated outflows of nearly $55 billion. Those net withdrawals come despite the fact the benchmark Standard & Poor’s 500 hit a fresh record high of 2130.82 on May 21 and the Dow Jones industrial average notched a fresh record on May 19.

But it isn’t just stocks that are going to crash during the next financial crisis.  Bonds are going to crash as well, but what I am concerned about most of all are derivatives.

Derivatives are going to play a starring role in the next major financial crisis.  I cannot emphasize this enough.  In fact, if you want to listen for just one word on the news that will let you know that things have started to really unravel, just listen for the word “derivatives”.  This form of legalized gambling is going to crush “too big to fail” banks all over the planet during the next major financial downturn.  The “too big to fail” banks in the U.S. alone have 278 trillion dollars of total exposure to derivatives, but they only have 9.8 trillion dollars in total assets.  To say that they are being “reckless” is a massive understatement.

For much more on the coming derivatives crisis, please see my previous article entitled “Warren Buffett: Derivatives Are Still Weapons Of Mass Destruction And ‘Are Likely To Cause Big Trouble’“.

Of course I am not the only one that is sounding the alarm about what is coming.  Just consider what some very prominent individuals have been saying recently…

Ron Paul has just released a new video in which he warned all of us to “prepare for a bear market in bonds“.

Carl Icahn says that financial markets are “extremely overheated—especially high-yield bonds“.

Max Keiser recently told Alex Jones that a great financial collapse is coming.

Martin Armstrong says that his Economic Confidence Model predicts that the “Big Bang” is coming in “2015.75“.

Jeff Berwick of the Dollar Vigilante says that “we’re getting very, very close to the next crisis collapse” and he has specifically pointed to the month of September.

James Howard Kunstler has predicted that stocks are going to “crater in Q3 as faith in paper and pixels erodes“.

Lindsey Williams recently sent out an email alert in which he warned that his elite friend has told him that “they have a World Wide Financial Collapse scheduled between September and the end of December 2015“.

Gerald Celente has warned about “the Great Panic of 2015“.

Bill Fleckenstein has said that 2015 could be the year of the “big accident“.

Ray Gano has stated that we will see a financial collapse “probably starting in the third quarter of 2015″.

Legendary investor Jim Rogers recently said that he believes that “we will see some kind of major, major problems in the world financial markets” within the next year or two.

Alex Jones recently released a video in which he explained that he recently received “two different calls” from “extremely prominent wealthy people” warning him about what is coming by the end of this year and asking him why he isn’t leaving the United States “before October”.

Bible prophecy expert Joel C. Rosenberg has posted an ominous message on his personal blog in which he warned that “something is coming” and that “we must be ready”…

I feel a tremendous sense of urgency about this column.

The United States is hurtling towards severe trouble, and the events of the past few months — and what may be coming over the next few months — grieves me a great deal.

Something is coming. I don’t know what. But we all must be ready in every possible way.

When I read what Rosenberg wrote, it struck me that it was precisely how I have been feeling too.

In my entire life, I have never had such an ominous feeling about any period of time as I have about the last six months of 2015.  Like Rosenberg, I feel a “tremendous sense of urgency”, and I feel a great need to warn as many people as I can.

And it isn’t just a financial collapse that I am concerned about.  In a previous article, I detailed seven key events that we are going to witness before the end of this September…

Late June/Early July – It is expected that this is when the U.S. Supreme Court will reveal their gay marriage decision.  Most believe that the court will rule that gay marriage is a constitutional right in all 50 states.  There are some that believe that this will be a major turning point for our nation.

July 15th to September 15th – A “realistic military training exercise” known as “Jade Helm” will be conducted by the U.S. Army.  More than 1,000 members of the U.S. military will take part in this exercise.  The list of states slated to be involved in these drills includes Texas, Colorado, New Mexico, Arizona, Nevada, Utah, California, Mississippi and Florida.

July 28th – On May 28th, Reuters reported that countries in the European Union were being given a two month deadline to enact “bail-in” legislation.  Any nation that does not have “bail-in” legislation in place by that time will face legal action from the European Commission.  So why is the European Union in such a rush to get this done?  Are the top dogs in the EU anticipating that another great financial crisis is about to erupt?

September 13th – This is Elul 29 on the Biblical calendar – the last day of the Shemitah year.  Many are concerned about this date because we have seen giant stock market crashes on the last day of the previous two Shemitah cycles.

On September 17th, 2001 (which was Elul 29 on the Biblical calendar), we witnessed the greatest one day stock market crash in U.S. history up until that time.  The Dow plummeted 684 points, and it was a record that held for exactly seven years until the end of the next Shemitah cycle.

On September 29th, 2008 (which was also Elul 29 on the Biblical calendar), the Dow fell by an astounding 777 points, which still today remains the greatest one day stock market crash of all time.

Now we are approaching the end of another Shemitah year.  So will the stock market crash on September 13th, 2015?  Well, no, because that day is a Sunday.  So I guarantee that the stock market will not crash on that particular day.  But as Jonathan Cahn has pointed out in his book on the Shemitah, sometimes stock market crashes happen just before the end of the Shemitah year and sometimes they happen within just a few weeks after the end of the Shemitah.  So we are not just looking at one particular date.

September 15th – The 70th session of the UN General Assembly begins on this date.  It is being reported that France plans to introduce a resolution which would give formal UN Security Council recognition to a Palestinian state.  Up until now, the United States has always been the one blocking such a resolution, but Barack Obama is indicating that things may be much different this time around.

September 25th to September 27th – The United Nations is going to launch a brand new sustainable development agenda for the entire planet.  Some have called this “Agenda 21 on steroids”.  But this new agenda is not just about the environment.  It also includes provisions regarding economics, agriculture, education and gender equality.  On September 25th, the Pope will travel to New York to give a major speech kicking off the UN conference where this new agenda will be unveiled.

September 28th – This is the date for the last of the four blood moons that fall on Biblical festival dates during 2014 and 2015.  This blood moon falls on the very first day of the Feast of Tabernacles, it will be a “supermoon”, and it will actually be visible in the city of Jerusalem.  There are many that dismiss the blood moon phenomenon, but we have seen similar patterns before.  For example, a similar pattern of eclipses happened just before and just after the destruction of the Jewish temple by the Romans in 70 AD.

In addition to everything above, quite a number of economic cycle theories that were developed by secular economists all point to big trouble for America between the years of 2015 and 2020.  For more on this, please see my previous article entitled “If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States“.

Earlier today, I publicly announced that I was issuing a RED ALERT for the last six months of 2015 on the Alex Jones radio show.  You can watch video of that interview right here.  In this article (which is about three times as long as one of my normal articles) I have only shared a small fraction of the information that has led me to issue this red alert.  But if you want to know more, and you are not afraid to really go down the rabbit hole, I would encourage you to check out a full two hour presentation that I did down in Dallas, Texas on the nightmarish years that are coming.

The period of relative stability that we have been enjoying is ending.  What comes next is going to lead us into the worst period of time in modern American history.  I wish that I was wrong about this.

But the goal is not to scare you.  My wife and I live our lives with absolutely no fear, and that is my desire for all of my readers.  There is hope in understanding what is happening and there is hope in getting prepared.  Personally, my wife and I believe that the greatest chapters of our lives are ahead of us, and I hope that you have a similar outlook.

We need a generation of people that are willing to rise up and do great things even in the midst of all the chaos and darkness that is coming.  It is when times are the darkest that the greatest heroes are needed.

So what will you choose to do when the next crisis comes?

Will you cower in fear, or will you rise up to meet the challenge?

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LIGHTER SIDE

 

Political Cartoons by Tom Stiglich

Political Cartoons by Pat Cross

Political Cartoons by Gary Varvel

ALERT ALERT

TEA PARTY -> Lois Lerner Case Explodes:
IRS Docs Link McCain’s Office To Tea Party Attacks

Since announcing his brain cancer was terminal, Arizon Sen. John McCain has continued to make headlines, but not due to his medical status. Instead, it has been one controversy after another revolving around him, and now one more had been added to the list.

This one is based in his dislike not for Ted Cruz or Rand Paul, but of the tea party.

McCain has never really endeared himself to conservatives, and he made his feeling public about the tea party movement at a breakfast hosted by the Christian Science Monitor in 2015, according to a Yahoo report.

“I think also — I probably shouldn’t say this — but some of (the tea party) appeals to the bad angels of our nature rather than the better angels of our nature,” McCain said.

This attitude ties into the latest scandal swirling around McCain.

One of a number of scandals that plagued President Barack Obama and his administration involved the IRS targeting tea party groups after 2010. It seemed that their tax-exempt status requests were denied or delayed due to intense political partisanship in the agency.

In May 2013, The Washington Post reported that the IRS’s exempt-organizations division director Lois Lerner “let slip” the week prior “that low-level IRS staffers had focused extra scrutiny on conservative groups with words such as ‘tea party’ or ‘patriot’ in their names.”

In addition, “internal reviews have shown that Lerner knew about the targeting in 2011 — but neither Congress nor the public knew until (2013).” Despite this, Lerner was never prosecuted and was allowed to retire with her taxpayer-funded pension intact.

This did not change, even after House Ways and Means Committee Chairman Kevin Brady, a Texas Republican, and Tax Policy Subcommittee Chairman Peter Roskam, an Illinois Republican, wrote a letter to Attorney General Jeff Sessions. In it, they begged him to reopen a probe into the matter, according to Jay Sekulow, chief council for the American Center for Law and Justice, writing in a commentary for Fox News.

When President Donald Trump was sworn into office, some held out hope that the perceived injustices from Obama’s tenure would somehow be made right. However, in September 2017, Trump’s administration had already preemptively declined to pursue criminal charges against Lerner “based on the available evidence,” according to Fox News.

But more has since been uncovered about the scandal. Government watchdog group Judicial Watch has obtained and released “internal IRS documents, including material revealing that Sen. John McCain’s former staff director and chief counsel on the Senate Homeland Security Permanent Subcommittee, Henry Kerner, urged top IRS officials, including then-director of exempt organizations Lois Lerner, to “audit so many that it becomes financially ruinous.”

Judicial Watch �dd0e

JW President @TomFitton: Much of what you know about the IRS scandal is thanks to JW... Our new docs show the scandal is bipartisan in nature. A McCain staffer suggested Lois Lerner audit all of the 501(c)(4) groups in a way that'd be financially ruinous.

Meeting notes from April 30, 2013, involving Kerner, Lerner, “and other high-ranking IRS officials” were obtained by JW. With the meeting taking place only 10 days before the IRS scandal exploded into the public view, they are particularly incriminating against Kerner and Lerner:

“Henry Kerner asked how to get to the abuse of organizations claiming section 501 (c)(4) but designed to be primarily political. Lois Lerner said the system works, but not in real time.”

“Henry Kerner noted that these organizations don’t disclose donors. Lois Lerner said that if they don’t meet the requirements, we can come in and revoke, but it doesn’t happen timely.”

“Nan Marks said if the concern is that organizations engaging in this activity don’t disclose donors, then the system doesn’t work. Henry Kerner said that maybe the solution is to audit so many that it is financially ruinous. Nikole noted that we have budget constraints.”

“Elise Bean suggested using the list of organizations that made independent expenditures. Lois Lerner said that it is her job to oversee it all, not just political campaign activity.”

Thus far, there is no evidence that McCain knew about or directed Kerner to take such action. It is plausible that Kerner, knowing of McCain’s dislike of the tea party, opted to be a proactive and loyal staffer by urging the IRS to take action against the groups.

But McCain’s personality does little to keep him far removed from the scandal and tongues are wagging with speculation as to his involvement. Regardless, McCain’s frosty relationship with President Donald Trump has not made the Arizona senator many fans among Trump supporters.

New suspicions about him betraying the tea party won’t help matters at all.

OMG

Chelsea Handler Says Fox Doesn’t Work With
Black People, Obviously Doesn’t Watch Network

Humor is supposed to be based on truth. After all, the reason we laugh at a joke or scenario is because it triggers a feeling of recognition about reality, especially if it’s presented in an unexpected way.

It doesn’t look like “comedian” Chelsea Handler has a very firm grasp on truth or reality, however.

After a production error during a Fox News broadcast was called out by users on Twitter, the raunchy and sex-obsessed Handler tried to bash the network … but ended up showing off her ignorance instead.

“Fox News honored Aretha Franklin by using a graphic that contained a photo of Patti LaBelle,” the comedian and television host posted on Twitter Thursday evening.

That part was true enough: Fox admitted that they made a mistake on a background slide during a tribute to the late soul singer, and accidentally showed a faded photo of LaBelle. The main image still showed Franklin, who passed away on Thursday in Detroit.

Broadcast television is complex, which you would think Handler understands after being involved in TV for many years. Honest mistakes happen on every network. But no: In Handler’s alternate reality, the only explanation for the mistake was racism.

“It’s probably hard for anyone who works at Fox News to tell black people apart because they’ve never worked with any,” she declared.

Chelsea Handler  @chelseahandler

Fox News honored Aretha Franklin by using a graphic that contained a photo of Patti LaBelle. It’s probably hard for anyone who works at Fox News to tell black people apart because they’ve never worked with any.

Was she trying to be bitter or funny? It was hard to tell, but either way, that statement shows just how isolated the Hollywood left is from reality.

If she really believes that Fox has “never worked with any” black people, maybe she should try an experiment: Actually watch the channel for a minute.

She would probably tune in to the face of Harris Faulkner, the enthusiastic and Emmy-winning host of “Outnumbered,” which airs every single weekday.

Or, maybe she could get a clue from Deneen Borelli, another well-known face of Fox News for nearly a decade. How about the venerable Juan Williams, co-host of “The Five” and a “Fox News Sunday” regular for over 20 years?

Nah. They apparently don’t count, because Handler would rather live in an alternate reality of ignorance than admit she was the one making racial assumptions.

We’re not finished! Moving on to frequent guest contributors to Fox News, how about Candace Owens? Brandon Tatum? Ben Carson? Larry Elder? All of these smart individuals are familiar faces at Fox, and all are — look closely! — African American.

That’s saying nothing of the behind-the-scenes staff at Fox, a good number of whom are of course black. In fact, it’s completely possible the photo mix-up was accidentally made by a black employee. Handler openly assumed the race of the staff members who made the error, while knowing nothing.

Once again, the left has tipped their hand and revealed just how elitist and out of touch they are.

Handler has likely never turned on Fox News in her life, yet she thinks she’s an expert on it. She eagerly diminishes and waves away the contributions of black Americans to one of the most popular news stations in the nation, while lecturing others about race.

This type of attitude implies that only “liberal approved” black voices count. If they don’t parrot a 43-year-old white comedian’s politics, they’re invisible to her.

That arrogant view, and not an honest editing mistake, is perhaps the real outrage here … and it’s exactly why so many black voters are walking away from the left.

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