Did We Just Witness The Last Great Black Friday Celebration Of American Materialism?

Black Friday - Photo by Powhusku

Americans are going to spend more than 600 billion dollars this Christmas season, and on Friday we got to see our fellow citizens fight each other like rabid animals over foreign-made flat screen televisions and Barbie dolls. As disgusting as this behavior is to many of us, there may soon come a time when we will all fondly remember these days. Most Americans are completely unaware of what is currently happening in the financial world, but right now there are deeply troubling signs that we could be on the verge of another major global financial collapse. If the next great economic downturn does strike in 2015, that could mean that we may have just witnessed the last great Black Friday celebration of American materialism. As you read this, stock prices are approximately double the value that they should be, margin debt is hovering near all-time record highs, and the “too big to fail” banks are being far more reckless than they were just prior to the last major stock market implosion. So many of the exact same patterns that we witnessed back in 2007 and 2008 are repeating right now, and as you will see below, this includes a horrifying crash in the price of oil. Anyone with half a brain should be able to see the slow-motion financial train wreck that is unfolding right before our eyes.

Every year, it has been my tradition to write an article about the mini-riots that erupt in retail stores all around the country on Black Friday. This year things were a bit calmer because so many stores opened up on Thanksgiving itself, but there was still plenty of chaos. For example, in the video posted below you can see women viciously fighting one another over discounted lingerie and underwear…

But instead of launching into another diatribe about how we are committing national economic suicide by buying hundreds of billions of dollars of foreign-made goods with money that we do not have, I want to focus on what is coming next.

You see, I believe that in the not too distant future many of us will be wishing for the days when the debt-fueled U.S. economy was healthy enough for people to be wrestling with one another on the floor over good deals in our retail establishments.

The next great financial crash (which many have been anticipating for years) is rapidly approaching. So many of the same things that happened last time are happening again. As I noted above, this includes a crash in the price of oil.

In the months prior to the last stock market collapse, the price of oil began plummeting dramatically in the summer of 2008. This was an “early warning signal” that something was deeply amiss in the financial world…

Oil Price 2007 - 2008

Many people assume that a lower price for oil is good for the economy, but the exact opposite is actually true. The oil industry has become absolutely critical to the U.S. and Canadian economies. And in recent years, the “shale oil boom” has been one of the only bright spots for the United States. If the shale oil industry starts to fail because of lower prices, a lot of the boom areas all over the nation are going to go bust really quickly and a lot of the financial institutions that were backing these projects are going to feel an immense amount of pain.

Unfortunately for us, the “shale oil revolution” simply does not work at 80 dollars a barrel.

And it certainly does not work at 70 dollars a barrel.

As I write this, U.S. crude is sitting at about 66 dollars a barrel due to OPEC’s recent decision to not cut output.

That is the lowest price for U.S. crude since September 2009.

So just like we saw during the summer of 2008, crude oil prices are collapsing once again. The chart below comes from the Federal Reserve, but it is a few days out of date. Now that the price of crude is down to about 66 dollars, you have to imagine the price actually going below the bottom of this chart…

Oil Price 2013 - 2014

Needless to say, this price collapse is having a huge impact on the stock prices of oil companies. The following information about what happened in the markets on Friday comes from Business Insider

Here were some of the biggest losers on Friday:

  • BP (BP), down 5%
  • Royal Dutch Shell (RDS.A), down 6%
  • Total (TOT), down 5%
  • Statoil (STO), down 14%
  • Exxon Mobil (XOM), down 5%
  • ConocoPhillips (COP), down 9%
  • Marathon Oil (MRO), down 13%
  • Occidental Petroleum (OXY), down 7%
  • Anadarko Petroleum (APC), down 14%
  • Linn Energy (LINE), down 13%
  • Whiting Petroleum (WLL), down 28%
  • Oasis Petroleum (OAS), down 32%
  • Kodiak Oil & Gas (KOG), down 28%

And this list goes on.

But this could just be the beginning of the oil price declines.

The most powerful oil official in Russia believes that the price of oil could fall below $60 next year…

Russia’s most powerful oil official Igor Sechin said in an interview with an Austrian newspaper that oil prices could fall below $60 by mid-way through next year.

Sechin, chief executive of Rosneft, Russia’s largest oil producer, also said U.S. oil production would fall after 2025 and that an oil market council should be created to monitor prices, the same day the OPEC cartel met in Vienna and left its output targets unchanged.

“We expect that a fall in the price to $60 and below is possible, but only during the first half, or rather by the end of the first half (of next year),” Sechin told the Die Presse newspaper.

And one oil industry analyst just told CNBC that he believes that the price of oil could ultimately plunge as low as $35 a barrel…

“When you look at the second half of 2015, that’s when you see oil beginning to dwarf demand by about a million, a million and a half barrels a day,” he said. “Thirty-five dollars is a possibility if they don’t get an agreement next spring because that’s when the oil really starts to build and you can have a billion barrels of oil with really no place to put it.”

This comes at a time when there are already a whole host of signs that the global economy is slowing down. Three of the ten largest economies on the planet have already slipped into recession, and the economic nightmare over in Europe just continues to get even worse. In fact, we just learned that the unemployment rate in Italy has shot above 13 percent for the first time ever recorded.

In addition, it is important to remember that the “real economy” in the United States is in far worse shape than it was just prior to the last financial crash. Just consider these numbers…

-In the United States today, the number of payday lending locations is greater than the number of McDonald’s and the number of Starbucks.

-One recent survey found that about 22 percent of all Americans have had to turn to a church food panty for assistance.

-This year, almost one out of every five households in the United States celebrated Thanksgiving on food stamps.

-The rate of government dependence in America is at an all-time high and approximately 60 percent of U.S. households get more in transfer payments from the government than they pay in taxes.

-According to a report that was just released by the National Center on Family Homelessness, the number of homeless children in the U.S. has soared to a new all-time record high of 2.5 million.

If things are this bad now, what are they going to look like after the next great financial crash?

And without a doubt, the next crash is coming. Hopefully we have at least a couple more months of relative stability, but many experts are now urgently warning that time is quickly running out.

By this time next year, Black Friday may look a whole lot different than it does today.

(Originally posted on The Economic Collapse Blog)

1 thought on “Did We Just Witness The Last Great Black Friday Celebration Of American Materialism?”

  1. As I sit here, the Keynesian Economic Disaster continues to play a part in all of our lives.
    The Chinese are experiencing the same thing.
    So are the Japanese.
    This economy does not just effect Americans, it effects everyone equally all over the planet.
    I see the Chinese and Japanese stock markets are going to crash taking the banks with them.
    Will it lead to a war no one can win? I think so. Because when the SHTF both the retailer and the customer will get the bill for all of this over spending.
    The Rand Report from Iron Mountain says that leaders will call attention away from their mismanagement by declaring a war that involves everyone nationally. Personally, I think they are full of it. First you have to have a draft administration that includes all those illegal immigrants coming into the country to reside here permanently.
    This time-old tactic to stay in office has been used a lot over the last 65 years.
    The only thing missing is a draft to take out all the young men (18-30) that would rebel against this mismanagement.
    So who wins? The quiet silent majority of Americans have very little to lose. They are all ready unemployed, living on welfare, in whatever those welfare checks allows them to live from check to check. Only it isn’t checks, it is direct deposit through a local credit union or bank.
    Then you have the current adjustable beyond the law Obamacare with all of its ugly implications through the IRS.
    So normally people would expect some small amount of money between March and April if they file as early as February.
    But I am betting that those income tax refunds will be confiscated this year to pay for Obamacare needs.
    The real winner here is the irresponsible people who spend every dime they have in this current mass hysteria of bargain city.
    Why? they simply do not have anything left to lose.
    The people that are conservative, save money in a bank, and do not spend beyond their means will have it all confiscated in the coming debacle.
    Two years ago, my secondary insurance from where I worked had a 600 dollar deductable. It is insurance against catastrophic illness. Nothing more than that, with the exception of a co-pay on the doctor’s visits.
    Today we are looking at a $6,000 deductable with that same insurance.
    The real mistake is passing this piece of garbage legislation in the first place. The only real winner in this battle of numbers is the insurance company. They are pros. The congress are amateurs in comparison.
    The average working household out there has to absorb huge sums of money out of their discretionary income.
    So where is the money coming from to spend on Christmas? It is all massive debt waiting for the crash of 2015.
    The Republicans will blame their opposite numbers. But everyone knows that the real blame will come down to who is actually in control of the Congress and the Executive Branch in the next six months to a year.
    I suggest they will do away with the laws of bankruptcy in the coming year to prevent people from having an out.
    The real adjustment here is going to be in China, India, and other economies dependent on government assistance to survive.
    Because when the SHTF, every bank in the world will come up a loser. When those dollars out there represent toilet paper the entire world will come down. Not just the United States or Canada, everything will have to start over again.
    And under that new set of rules, it will have to be an equal playing field.
    That means all those jobs in other countries are going to the dogs as well. The chief factor is going to be transporting goods. It is no longer possible to make a profit at that time from a distance of approximately 6-7,000 miles away from the factory.
    The goods will have to be produced in the country of importation.
    I think at that point in time you will see a return to the laws of the 30s concerning any goods coming into the country and any goods going out of the country. That essentially means at least a triple digit raise in the prices of every material good coming from abroad.
    I remember a small item when this happened before 20 years ago or more. Bubble Bath! It was produced in Mexico. It went from $2.50 a bottle to over $5 a bottle from one day to the next.
    It will be worse this time because the exchange rate is completely out of control.
    MY prediction is that the only safe place for money will be in commodities. Especially anything we cannot do with out. Like Food, Clothing, Housing ourselves, and transportation.

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