Global Collapse Incoming? The Total Breakdown Of Relations With China Could Throw Our Planet Into Utter Turmoil

We just witnessed one of the most monumental events of the entire decade, and yet most Americans still don’t understand what has happened. In recent months, the global economy and stock markets around the world have been buoyed by the hope that the U.S. and China would soon sign a new trade agreement. Unfortunately, there is no way that is going to happen now. On Tuesday, the Senate unanimously passed the “Hong Kong Human Rights and Democracy Act of 2019”, and the House of Representatives passed the same bill by a 417 to 1 vote on Wednesday. Needless to say, the Chinese are beyond angry that Congress has done this. In part one of this article, I showed that China is warning the U.S. to “rein in the horse at the edge of the precipice” and that there will be “revenge” if this bill is allowed to become law. And it looks like this bill will actually become law, because Bloomberg is reporting that President Trump is fully expected to sign it…

President Donald Trump is expected to sign legislation passed by Congress supporting Hong Kong protesters, setting up a confrontation with China that could imperil a long-awaited trade deal between the world’s two largest economies.

Before I go any further, there is something that I want to address. Earlier today, one of my readers emailed me and accused me of siding with China because I am warning about what will happen if trade negotiations fail. Of course that is not true at all. I have been writing about the horrific human rights abuses in China for many years, and they are one of the most tyrannical regimes on the entire planet today. But our two economies have become deeply intertwined over the past two decades, and there are going to be very serious consequences now that we are rapidly becoming bitter enemies. Anyone that doesn’t see this is simply not being rational.

As I have detailed repeatedly in recent months, the global economy has already entered a very serious slowdown. One of the only things that could reverse our economic momentum in the short-term would be a comprehensive trade agreement between the United States and China. But now that our relationship with China has been destroyed, there isn’t going to be a deal.

Some mainstream news sources are reporting that all of this rancor about Hong Kong could delay a trade deal, but that is just more wishful thinking.

Over in China, they are being much more realistic. In fact, the editor of the Global Times, Hu Xijin, just said that the Chinese are “prepared for the worst-case scenario

Few Chinese believe that China and the US can reach a deal soon. Given current poor China policy of the US, people tend to believe the significance of a trade deal, if reached, will be limited. China wants a deal but is prepared for the worst-case scenario, a prolonged trade war.

And he followed that up with another tweet that openly taunted U.S. farmers

So a friendly reminder to American farmers: Don’t rush to buy more land or get bigger tractors. Wait until a China-US trade deal is truly signed and still valid six months after. It’s safer by then.

As the two largest economies on the entire planet decouple from one another, it is going to cause global economic activity as a whole to dramatically slow down. Corporate revenues will fall, credit markets will start to tighten, and fear will increasingly creep into global financial markets.

I have repeatedly warned that conditions are ideal for our first major crisis since 2008, and this conflict with China could be more than enough to push us over the edge.

And already we are getting more bad economic news day after day. For example, we just learned that U.S. rail traffic this month is way down compared to last year

Nowhere is the slowdown in the U.S. economy more obvious than in places like Class 8 Heavy Duty Truck orders and rail traffic. We already wrote about how Class 8 orders continued to fall in October and new data the American Association of Railroads (AAR) now shows that last week’s rail traffic and intermodal container usage both plunged.

The AAR reported total carloads for the week ended Nov. 9 came in at 248,905, down 5.1% compared with the same week in 2018. U.S. weekly intermodal volume was 266,364 containers and trailers, down 6.7% compared to 2018, according to Railway Age.

Unless a miracle happens with China, the economic numbers are going to continue to get worse.

Sadly, a miracle seems exceedingly unlikely now. As I pointed out in part one, the only way that our relationship with China can be fixed is if Congress repeals the bill that it just passed, and there is no way that is going to happen.

And we better hope that our trade war with China doesn’t escalate into a real war at some point.

According to a report that was released earlier this year, we are very ill-prepared to fight any sort of a conventional war with China in the Western Pacific…

The University of Sydney’s United States Studies Centre’s new report Averting Crisis, said: ‘China’s growing arsenal of accurate long-range missiles poses a major threat to almost all American, allied and partner bases, airstrips, ports and military installations in the Western Pacific.

‘As these facilities could be rendered useless by precision strikes in the opening hours of a conflict, the PLA missile threat challenges America’s ability to freely operate its forces from forward locations throughout the region.’

In addition, U.S. military officials are deeply concerned by how rapidly China has been upgrading their strategic nuclear arsenal. For example, they now possess a “submarine-launched missile capable of obliterating San Francisco”

China has tested a new submarine-launched missile capable of obliterating San Francisco, an insider has revealed, in a massive boost to the country’s ‘deterrent’.

The Chinese navy tested its state-of-the-art JL-3 missile in Bohai Bay in the Yellow Sea last month, sources said.

The nuclear-capable missile has a 5,600 mile range, significantly longer than its predecessor the JL-2, which could strike targets 4,350 miles away.

We certainly aren’t at that point yet, but without a doubt the Chinese now consider us to be their primary global enemy.

For the moment, it is just a “cold war” that we are facing, and the Chinese are quite adept at playing global chess. They have lots of ways that they can hurt us, and most Americans don’t realize this.

But in the end nobody is going to “win” this conflict, and the entire planet is going to suffer.

Collectively, the economies of the United States and China account for approximately 40 percent of the GDP of the entire world.

As we cause chaos for one another, everyone else is going to experience tremendous pain as well.

The stage is set for a global nightmare, and at this point it doesn’t appear that there is a way that we will be able to escape it.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.

These New Numbers Are Telling Us That The Global Economic Slowdown Is Far More Advanced Than We Thought

We continue to get more confirmation that the global economy is slowing down substantially. On Monday, it was China’s turn to surprise analysts, and the numbers that they just released are absolutely stunning. When Chinese imports and exports are both expanding, that is a clear sign that the global economy is running on all cylinders, but when both of them are contracting that is an indication that huge trouble is ahead. And the experts were certainly anticipating substantial increases in both categories in December, but instead there were huge declines. There is no possible way to spin these numbers to make them look good…

Data from China showed imports fell 7.6 percent year-on-year in December while analysts had predicted a 5-percent rise. Exports dropped 4.4 percent, confounding expectations for a 3-percent gain.

China now accounts for more total global trade than the United States does, and the fact that the numbers for the global economy’s number one trade hub are falling this dramatically is a major warning sign.

And of course it isn’t just China that is experiencing trouble. In fact, we just witnessed the worst industrial output numbers in Europe “in nearly three years”

Adding to the gloom were weak industrial output numbers from the euro zone, which showed the largest fall in nearly three years.

Softening demand has been felt around the world, with sales of goods ranging from iPhones to automobiles slowing, prompting profit warnings from Apple among others.

If we were headed for a major global recession, these are exactly the types of news stories that we would expect to see.

We also continue to get more indications that the U.S. economy is slowing down significantly. For example, sales of new homes in the U.S. were down 19 percent in November and 18 percent in December

Sales of newly built homes fell 18 percent in December compared with December of 2017, according to data compiled by John Burns Real Estate Consulting, a California-based housing research and analytics firm.

Due to the partial government shutdown, official government figures on home sales for November and December have not been released.

Sales were also down a steep 19 percent annually in November, according to JBRC’s analysts.

Those are horrific numbers, and they are very reminiscent of what we witnessed back in 2008.

And we also just learned that employers are cutting back on hiring new college grads for the first time in eight years

A new report from the National Association of Colleges and Employers (NACE) shows that for the first time in eight years, managers are pulling back the reins on hiring college grads, with a projected 1.3 percent decrease from last year. Additionally, a survey from Monster.com found that of 350 college students polled, 75 percent don’t have a job lined up yet.

I feel really bad for those that are getting ready to graduate from college, because I know what it is like to graduate in the middle of an economic downturn. At the time, many of my friends took whatever jobs they possibly could, and some of them never really got on the right track after that.

But the economic environment that is ahead will be much worse than any of the minor recessions that the U.S. has experienced in the past, and that means things are going to be extremely tough for our college graduates. And the total amount of student loan debt in this country has roughly tripled over the last decade, and so a lot of these young people are going to enter the real world with crippling amounts of debt but without the good jobs that they were promised would be there upon graduation.

As economic conditions have begun to deteriorate, I have had more people begin to ask me about what they can do to get prepared for what is coming. And I always start off by telling them the exact same thing. Today, 78 percent of Americans are living paycheck to paycheck, but when an economic downturn strikes that is precisely what you do not want to be doing.

Some people that I hear from insist that there is no possible way that they can put together an emergency fund because they are already spending everything that they are bringing in.

And yes, it is true that there are some people out there that are so financially stretched that they literally do not have a single penny to spare even though they are being extremely frugal, but the majority of us definitely have areas where we can cut back.

I realize that “cutting back” does not sound fun. But not being able to pay your mortgage when things get really bad will be a whole lot less fun.

Right now people should be focusing on reducing expenses and trying to make some extra money. Use whatever time we have left before things get really bad to put yourself into a better financial position. If you have at least a little bit of money to fall back on, it will make your life much less stressful in the long run.

In addition, anything that you can do to become more independent of the system is a good thing. On a very basic level, learning to grow a garden can end up saving you a ton of money. I was just at the grocery store earlier today, and food is getting really expensive. When the Federal Reserve says that we are in a “low inflation” environment, I always wonder what world they are living on.

When I got up to the register today, I almost felt like they were going to ask me what organ I wanted to donate in order to pay for my groceries. Unfortunately, the price of food right now is actually quite low compared to what it is going to be in the days ahead.

So I guess I shouldn’t complain too much.

I think that I have just been in a foul mood all day ever since I came across Gillette’s new “toxic masculinity” ad. I will have quite a bit to say about that ad later this evening on EndOfTheAmericanDream.com.

Ladies and gentlemen, 2019 is off to quite a rough start, and things are likely to get a whole lot rougher.

As always, let us hope for the best, but let us also get prepared for the worst.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

“The Outlook For The Global Economy Has Deteriorated”: Oil, Copper And Lumber Are All Telling Us The Next Economic Downturn Is Here

Oil, copper and lumber are all telling us the exact same thing, and it isn’t good news for the global economy. When economic activity is booming, demand for commodities such as oil, copper and lumber goes up and that generally causes prices to rise. But when economic activity is slowing down, demand for such commodities falls and that generally causes prices to decline. In recent weeks, we have witnessed a decline in commodity prices unlike anything that we have witnessed in years, and many are concerned that this is a very clear indication that hard times are ahead for the global economy.

Let’s talk about oil first. The price of oil peaked in early October, but since that time it has fallen more than 25 percent, and the IEA is warning of “relatively weak” demand out of Asia and Europe

The International Energy Agency said on Wednesday that while US demand for oil has been “very robust,” demand in Europe and developed Asian countries “continues to be relatively weak.” The IEA also warned of a “slowdown” in demand in developing nations such as India, Brazil and Argentina caused by high oil prices, weak currencies and deteriorating economic activity.

“The outlook for the global economy has deteriorated,” the IEA wrote.

Meanwhile, the price of copper has been declining for quite some time now. The price of copper also fell substantially just before the last recession, and many analysts are pointing out that “Dr. Copper” is now waving a red flag once again

The message of weakening demand on the oil front was reinforced by the falling price of copper. The base metal is often referred to as “Dr. Copper” on its presumed ability to forecast the peaks and troughs of business cycles since it is used in different areas of the economy such as homes, factories and electricity generation. Copper has served as a leading indicator of both recessions and economic booms.

The price of lumber is a “third witness” that indicates that big trouble is looming.

Last month, lumber dropped more than 10 percent, and that was the biggest monthly drop that we have seen in more than 7 years

In October, prices for softwood lumber in the U.S. dropped 10.3% – the largest decline since May 2011, according to the Producer Price Index (PPI) release by the Bureau of Labor Statistics. The producer price index for softwood lumber has fallen 21.2% since setting the cycle and all-time high in June.

If oil, copper and lumber are all telling us the same thing simultaneously, don’t you think that we should be listening?

At this point, even Bloomberg is admitting that the global economy is heading toward “a generalized slowdown”…

These developments suggest the synchronized growth that the global economy has enjoyed in recent years is likely to be replaced by a generalized slowdown. Just take a look at the data out of Japan and Germany this week, which showed the world’s third- and fourth-largest economies contracted in the third quarter.

How many signs is it going to take before people start understanding what is happening?

Wells Fargo just notified about 1,000 employees that they will be laid off. Job losses are starting to mount, and it is likely that we will start to see these sorts of news stories on an almost daily basis now.

And as the shaking on Wall Street accelerates, we are going to see more financial firms get into trouble. In fact, we just witnessed the total collapse of OptionSellers.com. The following comes from a notice that they sent to investors informing them that they lost all their money and that the firm is being liquidated…

I am writing to give you an update on the situation here with your account.

We have spent the week unwinding our short natural gas call position as expediently as possible.

Today which was to be the final day of liquidation, the market flared as prices appear to have been caught in a “short squeeze.”

The speed at which it took place is truly beyond anything I have seen in my career. It overran our risk control systems and left us at the mercy of the market.

In short, it was a rogue wave and it overwhelmed us.

Unfortunately, this has resulted in a catastrophic loss.

Our clearing firm, FC Stone now requires us to liquidate all positions. We hoped to have this done today. If not, it will be completed tomorrow.

Your account could potentially be facing a debit balance as of tomorrow. OptionSellers.com will be processing fee credits over the course of the coming days to help alleviate debit balances. What these will be will be determined after all positions are cleared.

This has in effect, crippled the firm. At this point, our brokers at FC Stone have been assisting us in liquidation.

Our offices will remain open and we will all still be here to answer your questions and process account closings. We will do everything in our power to ease what discomfort we can.

I am truly sorry this has happened.

I will be updating you again via memo in 24 hours.

Regards,

OptionSellers.com

Those investors are among the first to be completely wiped out, but they certainly won’t be the last.

The ironic thing is that Americans are less concerned about another crisis than they have been at any point since 2008 at a time when they should be more focused on getting prepared than ever.

You know that it is really late in the game when even Jim Cramer of CNBC is saying that the U.S. economy is really slowing down. A few of my readers wrote me after that article because they didn’t like the fact that I had quoted Jim Cramer. But I don’t think that they really got my point. I was not endorsing Jim Cramer as some sort of financial guru. Rather, I was pointing out that even mainstream media celebrities that were previously cheerleaders for the economy are now recognizing the reality of what we are facing.

Global economic activity is slowing down, and things are shifting very rapidly now. The weather is already getting very cold, the mood of the nation is very dark, and it would only take a very small push to send us completely tumbling over the edge.

About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

Oil Prices Have Been Rising And $4 A Gallon Gasoline Would Put Enormous Stress On The U.S. Economy

Thanks to increasing demand and upcoming U.S. sanctions against Iran, oil prices have been rising and some analysts are forecasting that they will surge even higher in the months ahead. Unfortunately, that would be very bad news for the U.S. economy at a time when concerns about a major economic downturn have already been percolating. In recent years, extremely low gasoline prices have been one of the factors that have contributed to a period of relative economic stability in the United States. Because our country is so spread out, we import such a high percentage of our goods, and we are so dependent on foreign oil, our economy is particularly vulnerable to gasoline price shocks. Anyone that lived in the U.S. during the early 1970s can attest to that. If the average price of gasoline rises to $4 a gallon by the end of 2018 that will be really bad news, and if the average price of gasoline were to hit $5 a gallon that would be catastrophic for the economy.

Very early on Tuesday, the price of U.S. oil surged past $70 a barrel in anticipation of the approaching hurricane along the Gulf Coast. The following comes from Fox Business

U.S. oil prices rose on Tuesday, breaking past $70 per barrel, after two Gulf of Mexico oil platforms were evacuated in preparation for a hurricane.

U.S. West Texas Intermediate (WTI) crude futures were at $70.05 per barrel at 0353 GMT, up 25 cents, or 0.4 percent from their last settlement.

If we stay at about $70 a gallon, that isn’t going to be much of a problem.

But some analysts are now speaking of “an impending supply crunch”, and that is a very troubling sign. For example, just check out what Stephen Brennock is saying

“Exports from OPEC’s third-biggest producer are falling faster than expected and worse is to come ahead of a looming second wave of U.S. sanctions,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates. “Fears of an impending supply crunch are gaining traction.”

So how high could prices ultimately go?

Well, energy expert John Kilduff is now projecting that we could see the price of gasoline at $4 a gallon by winter

Energy expert John Kilduff counts Iran sanctions as the top reason West Texas Intermediate (WTI) could climb as much as 30 percent by winter, and that could spell $4 a gallon unleaded gasoline at the pumps.

“The global market is tight and it’s getting tighter, and the big strangle around the market right now is what’s in the process of happening with Iran and the Iran sanctions,” the Again Capital founding partner said on CNBC’s “Futures Now.”

About two months from now, U.S. sanctions will formally be imposed on Iran, and that is going to significantly restrict the supply of oil available in the marketplace.

So refiners that had relied on Iranian oil are “scrambling” to find new suppliers, and this could ultimately drive oil prices much higher

Iran’s oil exports are plummeting, as refiners scramble to find alternatives ahead of a re imposition of U.S. sanctions in early November. That in turn has helped drain a glut of unsold oil.

“To the extent we’re seeing the Iran barrels lost to the market, you’re looking at a WTI price and Brent in the $85 to $95 range, potentially,” Kilduff said.

Other sources are also predicting that oil prices will rise.

Barclays is warning that “prices could reach $80 and higher in the short term”, and BNP Paribas is now anticipating that Brent crude will average $79 a barrel in 2019.

In addition to the upcoming Iranian sanctions, rising global demand for oil is also a major factor that is pushing up prices.

For example, many Americans don’t even realize that China has surpassed us and has now become the biggest crude oil importer on the entire planet

China became the world’s largest crude oil importer in 2017, surpassing the US and importing 8.4 million barrels per day.

The US only imported 7.9 million barrels per day in 2017, according to the US Energy Information Administration.

So what is the bottom line for U.S. consumers?

The bottom line is that gasoline prices are likely to jump substantially, and that is going to affect prices for almost everything else that you buy.

Excluding tech products, virtually everything else that Americans purchase has to be transported, and so the price of gasoline must be factored into the cost.

So if gasoline prices shoot up quite a bit, that means that almost everything is going to cost more.

And this would be happening at a time when inflation is already on the rise

According to data from the Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers, less food and energy, hit 2.4% in July 2018. That’s its highest reading since September 2008.

Of course 2.4 percent doesn’t really sound that scary, and that is how the government likes it.

But if the rate of inflation was still calculated the way it was back in 1990, the current inflation rate would be above 6 percent.

And if the rate of inflation was still calculated the way it was back in 1980, the current inflation rate would be above 10 percent.

Inflation is a hidden tax on all of us, and it is one of the big reasons why the middle class is being eroded so rapidly.

Please do not underestimate the impact of the price of oil. It shot above $100 a barrel in 2008, and it was one of the factors that precipitated the financial crisis later that year.

Now we are rapidly approaching another crisis point, and there are so many wildcards that could potentially cause major problems.

One of those wildcards that I haven’t even talked about in this article would be a major war in the Middle East. One of these days it will happen, and the price of oil will instantly soar to well above $100 a barrel.

We live at a time of rising global instability, and we should all learn to start expecting the unexpected.

This article originally appeared on The Economic Collapse Blog. About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.

Russia Joins Global Trade War – Imposes Tariffs On U.S. Energy, Mining Imports

(Zero Hedge) Whether this is a coordinated response is unclear – and certainly on a much smaller scale – but Bloomberg reports that Russian Prime Minister Dmitry Medvedev signed a decree this morning imposing higher tariffs on U.S. products in retaliation for U.S. duties on metals imports, according to Economy Ministry statement.

Reuters reports that Russia’s additional duties will apply to imports of fiber optics, equipment for road construction, oil and gas industry, metal processing and mining, according to an economy ministry statement.

Russia will impose duties on goods which have Russian-made substitutes, Economy Minister Maxim Oreshkin is quoted as saying in the statement.

Are You Kidding Me? Chinese Exports Plunge 25.4 Percent Compared To Last Year

Exports Declining - Public Domain

We just got more evidence that global trade is absolutely imploding. Chinese exports dropped 25.4 percent during the month of February compared to a year ago, and Chinese imports fell 13.8 percent compared to a year ago. For Chinese exports, that was the worst decline that we have seen since 2009, and Chinese imports have now fallen for 16 months in a row on a year over year basis. The last time we saw numbers like this, we were in the depths of the worst economic downturn since the Great Depression of the 1930s. China accounts for more global trade than any other nation (including the United States), and so this is a major red flag. Anyone that is saying that the global economy is in “good shape” is clearly not paying attention.

If someone would have told me a year ago that Chinese exports would be 25 percent lower next February, I would not have believed it. This is not just a slowdown – this is a historic implosion. The following comes from Zero Hedge

Things are not getting better in China as Exports crashed 25.4% YoY (the 3rd largest drop in history), almost double the 14.5% expectation and Imports tumbled 13.8%, the 16th month of YoY decline – the longest ever. Altogether this sent the trade surplus down to $32.6bn (missing expectations of $51bn) to 11-month lows.

Chinese Exports - Zero Hedge

So much for that whole “devalue yourself to export growth” idea…

I don’t know how anyone can possibly dismiss the importance of these numbers. As you can see, this is not just a one month aberration. Chinese trade numbers have been declining for months, and that decline appears to be accelerating.

Another very interesting piece of news that has come out in recent days regards the massive layoffs that are coming at state industries in China. According to Reuters, five to six million Chinese workers are going to be losing their jobs during this transition…

China aims to lay off 5-6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two reliable sources said, Beijing’s boldest retrenchment program in almost two decades.

China’s leadership, obsessed with maintaining stability and making sure redundancies do not lead to unrest, will spend nearly 150 billion yuan ($23 billion) to cover layoffs in just the coal and steel sectors in the next 2-3 years.

 

For years, the Chinese economic miracle has been fueling global economic growth, but now things are changing dramatically.

Another factor that we should discuss is the fact that the relationship between the United States and China is going downhill very rapidly. This is something that I wrote about yesterday. China has seized control of several very important islands in the South China Sea, and in response the Obama administration has been sailing military vessels past the islands in a threatening manner. Most recently, Obama decided to have an aircraft carrier task force cruise past the islands, and this provoked a very angry response from the Chinese

The four-ship U.S. strike group that patrolled the disputed South China Sea was followed by Chinese warships, a show of force that prompted a hard-line response from China doubling down on its claim to nearly all of the resource-rich sea.

China’s foreign minister said his country’s sovereignty claims are supported by history and made a veiled reference to the 5-day patrol by the Stennis Carrier Strike Group, as well as recent passes by China’s man-made islands by destroyers Lassen and Curtis Wilbur in recent months.

“The South China Sea has been subject to colonial invasion and illegal occupation and now some people are trying to stir up waves, while some others are showing off forces,” Wang Yi said, according to an Associated Press report, a day after the Stennis CSG departed the South China Sea. “However, like the tide that comes and goes, none of these attempts will have any impact. History will prove who is merely the guest and who is the real host.”

Most Americans are not even paying attention to this dispute, but in China there is talk of war. The Chinese are absolutely not going to back down, and it does not look like Obama is going to either. Needless to say, a souring of the relationship between the largest economy on the planet and the second largest economy on the planet would not be a good thing for the global economy.

And of course China is far from the only country that is having economic problems. Yesterday, I discussed how Italy’s banking system is on the verge of completely collapse. A few days before that I discussed the economic depression that has gripped much of South America. A new global economic crisis has already begun, and just because the United States is feeling less pain than the rest of the world so far does not mean that everything is going to be okay.

There are huge red flags in Europe, Asia and South America right now. In addition, our neighbor to the north (Canada) is experiencing a very significant slowdown. The irrational optimists can continue to believe that the U.S. economy will somehow escape relatively unscathed if they would like, but that is not going to be what happens.

Just like virtually everyone else on the planet, we are heading into hard times too, and this is going to become a dominant theme in the presidential campaign as we move forward into the months ahead.

(Originally published on The Economic Collapse Blog)

Chinese Exports Plunge 11.2 Percent As Economic Activity Continues To Collapse All Over The Planet

Cargo Ship - Public Domain

If the global economy is in fine shape, then why does all of the hard data tell us that global trade is absolutely collapsing? The Baltic Dry Index has fallen below 300 for the first time ever, and export numbers are way down for almost every major exporting nation on the entire planet. As you will see below, this includes China. The Chinese account for more global trade than anyone else, and so the fact that their imports and their exports are both collapsing precipitously is a huge red flag. When less stuff is being bought and sold and shipped around the world, that tells us that the “real economy” is contracting. Tremendous efforts are being made to try to prop up financial markets all over the globe right now, but in the end those efforts are going to prove to be rather futile. The global economy is clearly plunging into recession, and at this point it is becoming exceedingly difficult for even the most optimistic economic analysts to deny this reality.

When the trade numbers for China for the month of January were released, they were an extreme disappointment. The following comes from CNBC

China‘s exports fell 11.2 percent on-year in January, while imports declined 18.8 percent, clocking far bigger slides than expected by analysts.

Analysts polled by Reuters had expected a 1.9 percent drop in January exports, and a 0.8 percent drop in imports, after China’s exports fell 1.4 percent in December from a year earlier and imports slid 7.6 percent .

We never see numbers like this outside of a recession.

Never.

Chinese imports have now fallen for 15 months in a row, and the second largest economy on the entire planet appears to be in the process of imploding. As I mentioned above, China has become the most important hub for global trade. Nobody accounts for more total trade than they do, and so these new numbers can only be described as catastrophic.

Other numbers are telling the same story. Global trade has fallen so dramatically that it is now cheaper to rent a 1,100 foot merchant vessel that than it is to rent a Ferrari…

Rates for Capesize-class ships plummeted 92 percent since August to $1,563 a day amid slowing growth in China. That’s less than a third of the daily rate of 3,950 pounds ($5,597) to rent a Ferrari F40, the price of which has also fallen slightly in the past few years, according to Nick Hardwick, founder of supercarexperiences.com. The Baltic Exchange’s rates reflect the cost of hiring the vessel but not fuel costs. Ships burn about 35 metric tons a day, implying a cost of about $4,000 at present prices, data compiled by Bloomberg show.

Can you believe that?

This is just another sign of how crazy things have become.

Another indication of the slowdown in China is what is happening to the Hong Kong housing market. Just check out these numbers

Two weeks ago, in our latest report on the Hong Kong housing market, we observed that according to the local Centaline Property Agency total Hong Kong property transactions in January were on track to register the worst month since 1991, when it started compiling monthly figures. In other words, the biggest drop in recorded history.

Centaline estimated that only 3,000 transactions will have registered with developers slowing down new launches, while only 394 units were sold in the first 27 days of January, 80.3 per cent lower than the 2,127 deals lodged in December. Meanwhile, sales of used homes fell by a fifth to 1,276 deals in January.

We could talk about many more examples like this all over the world.

Most people like to watch the ups and downs of the financial markets, but it is the hard economic numbers that tell us the real story.

We are in the midst of a stunning global economic downturn, and the global financial system is starting to take notice. Global stocks have fallen into bear market territory, the price of oil has fallen by three-fourths over the past 18 months, junk bonds have been crashing hard just like they did in 2008, and at one point last week close to 17 trillion dollars of global stock market wealth had been wiped out since mid-2015.

In a desperate attempt to revive economic activity, many global central banks have started to implement negative interest rates. Unfortunately, these negative interest rates are having some very nasty unintended consequences

One of the unintended consequences of global central banks’ race to the bottom (which seemingly has no bottom) is that negative interest rates act as a tax on the banking system.

By penalising commercial lenders for parking their reserves at the central bank, it erodes the profit margin they make on charging already low interest rates while raising the cost of capital.

So far, “banks seem unable or unwilling to pass negative deposit rates to their retail customers, leaving them with few options to offset costs”, note analysts at JP Morgan.

The truth is that we have really reached the limit of what monetary policy can do.

Since March 2008, interest rates have been cut 637 times around the world and central banks have purchased 12.3 trillion dollars worth of assets.

Despite all of that unprecedented intervention, we are now plunging into a brand new global crisis.

The central bankers are just making things up as they go along, and they are flailing all over the place as they desperately try to find a way to fix things. I like how Jim Rogers put it during a recent interview with CNN

Famed investor Jim Rogers is warning that financial Armageddon is just around the corner, and it’s being fueled by moronic central bankers.

We’re all going to pay a horrible price for the incompetence of these central bankers,” he said Monday in a TV interview with CNNMoney’s Nina dos Santos. “We got a bunch of academics and bureaucrats who don’t have a clue what they’re doing.”

We have reached the terminal phase of the greatest financial bubble in history, and now the endgame is upon us.

Yes, governments and central banks will keep trying to “fix things”, but it is becoming exceedingly clear that they are rapidly losing control.

And there are other factors, such as the potential start of World War 3 in the Middle East, that could turn this new crisis into a complete and utter nightmare in no time at all.

So let us pray for the best, but let us also get prepared for the worst…

Financial Crisis 2016: High Yield Debt Tells Us That Just About EVERYTHING Is About To Collapse

Money Tornado - Public Domain

Did you know that there are more than 1.8 trillion dollars worth of junk bonds outstanding in the United States alone? With interest rates at record lows all over the world in recent years, investors that were starving for a decent return poured hundreds of billions of dollars into high yield debt (also known as junk bonds). This created a giant bubble, but at first everything seemed to be going fine. Defaults were very low and most investors were seeing a nice return. But then the price of oil started crashing and the global economy began to slow down significantly. Energy company debt makes up somewhere between 15 and 20 percent of the junk bond market, and the credit rating downgrades for that sector are coming fast and furious. But it isn’t just the energy industry that is seeing a massive wave of defaults, debt restructurings and bankruptcy filings. Just like with subprime mortgages in 2008, investors are starting to wake up and realize that the paper that they are holding is not worth a whole lot. So now investors are rushing for the exits and we are starting to see panic on a level that we have not witnessed since the last financial crisis.

Just look at what has been happening in recent days. Investors took nearly 500 million dollars out of the largest junk bond ETF (iShares HYG) last week alone. The following chart shows that HYG has now fallen to the lowest level that it has been since the last financial crisis

HYG February 2016

During the last financial crisis, junk bonds starting crashing well before stocks did. In fact, many consider junk bonds to be a sort of “early warning system” for stocks. For many analysts, when you see high yield debt collapse that is a huge warning sign that you need to get out of stocks as soon as possible.

And this makes perfect sense. When financial trouble erupts, it is going to hit more vulnerable companies first usually.

Blue chip companies are typically not in the high yield debt market. Normally, high yield debt is only for companies that have more risk associated with them. And it is risky companies that typically start to crumble the quickest.

Another high yield ETF that I watch very closely is JNK. As you can see, the chart for JNK looks nearly identical to the chart for HYG…

JNK - February 2016

What these charts are telling us is that a new financial crisis began during the second half of last year and that it is now accelerating.

At this point, yields have reached levels that we have not seen since the collapse of Lehman Brothers. The following bit of analysis comes from Wolf Richter

The average yield of CCC or lower-rated junk bonds hit the 20% mark a week ago. The last time yields had jumped to that level was on September 20, 2008, in the panic after the Lehman bankruptcy, as we pointed out. Today, that average yield is nearly 22%!

Today even the average yield spread between those bonds and US Treasuries has breached the 20% mark. Last time this happened was on October 6, 2008, during the post-Lehman panic:

Junk Bond Spreads - Wolf Richter

At this cost of capital, companies can no longer borrow. Since they’re cash-flow negative, they’ll run out of liquidity sooner or later. When that happens, defaults jump, which blows out spreads even further, which is what happened during the Financial Crisis. The market seizes. Financial chaos ensues.

After junk bonds crashed in 2008, virtually every other kind of investment followed suit.

Just about the only thing that didn’t crash were precious metals. Gold and silver soared, and that is what you would expect to happen during a major financial crisis.

Another thing that I am watching closely is margin debt.

During past financial bubbles, we have seen lots of people borrow lots and lots of money to buy stocks.

If that sounds like a really bad idea, that is because it is a really bad idea.

Whenever margin debt peaks and then starts to decline precipitously, that is a signal that a stock market crash could be imminent. The following chart comes from James Stack

Margin Debt - James Stack

After looking at that chart, I can’t understand how anyone couldn’t see the pattern.

We keep making the same mistakes, but we never seem to learn from history. In fact, the mainstream media keeps telling us that this new financial crisis “isn’t 2008” over and over again. Even though the exact same patterns are happening once again, they still believe that this time will somehow be different.

And to a certain extent that is actually true. This current crisis is not going to be the same as the last one. Eventually, it is going to prove to be even worse than the last one once everything is all said and done.

So what should we all be doing? In a recent article entitled “70 Tips That Will Help You Survive What Is Going To Happen To America“, I gave my readers some basic pieces of advice on how to get prepared for what is coming. But not all of them will apply immediately. For example, my wife and I don’t believe that we will need our emergency food next month. But down the road we are absolutely convinced that we will need it.

For the moment, one of the key things is to build up an emergency fund. In my opinion, everyone should have an emergency fund that can cover at least six months of bills and expenses. And now is not the time to go into debt. Instead of buying lots of shiny new toys, now is a time to spend money on practical things that will be needed during the hard times that are coming.

Unfortunately, most people believe what they want to believe, and most people do not want to believe that hard times are coming. They have an extraordinary amount of faith in the system, and they are convinced that this time will be different somehow.

So I wish them the best, but as for me and my family, we are getting prepared.

What about you?

Are you getting prepared?

Please feel free to share your thoughts with the rest of us by posting a comment below…

22 Signs That The Global Economic Turmoil We Have Seen So Far In 2016 Is Just The Beginning

Skyline Globe Clock Gears - Public Domain

As bad as the month of January was for the global economy, the truth is that the rest of 2016 promises to be much worse. Layoffs are increasing at a pace that we haven’t seen since the last recession, major retailers are shutting down hundreds of locations, corporate profit margins are plunging, global trade is slowing down dramatically, and several major European banks are in the process of completely imploding. I am about to share some numbers with you that are truly eye-popping. Each one by itself would be reason for concern, but when you put all of the pieces together it creates a picture that is hard to deny. The global economy is in crisis, and this is going to have very serious implications for the financial markets moving forward. U.S. stocks just had their worst January in seven years, and if I am right much worse is still yet to come this year. The following are 22 signs that the global economic turmoil that we have seen so far in 2016 is just the beginning…

1. The number of job cuts in the United States skyrocketed 218 percent during the month of January according to Challenger, Gray & Christmas.

2. The Baltic Dry Index just hit yet another brand new all-time record low. As I write this article, it is sitting at 303.

3. U.S. factory orders have now dropped for 14 months in a row.

4. In the U.S., the Restaurant Performance Index just fell to the lowest level that we have seen since 2008.

5. In January, orders for class 8 trucks (the big trucks that you see shipping stuff around the country on our highways) declined a whopping 48 percent from a year ago.

6. Rail traffic is also slowing down substantially. In Colorado, there are hundreds of train engines that are just sitting on the tracks with nothing to do.

7. Corporate profit margins peaked during the third quarter of 2014 and have been declining steadily since then. This usually happens when we are heading into a recession.

8. A series of extremely disappointing corporate quarterly reports is sending stock after stock plummeting. Here is a summary from Zero Hedge of a few examples that we have just witnessed…

  • SHARES OF LIONS GATE ENTERTAINMENT FALL 5 PCT IN EXTENDED TRADE AFTER QUARTERLY RESULTS – RTRS
  • TABLEAU SOFTWARE SHARES TUMBLE 40 PCT IN AFTER HOURS TRADING – RTRS
  • YRC WORLDWIDE SHARES DOWN 16.4 PCT AFTER THE BALL FOLLOWING RESULTS – RTRS
  • SPLUNK INC SHARES DOWN 7.6 PCT IN AFTER HOURS TRADING – RTRS
  • LINKEDIN SHARES EXTEND DECLINE, DOWN 24 PCT AFTER RESULTS, GUIDANCE – RTRS
  • HANESBRANDS SHARES FURTHER ADD TO LOSSES IN EXTENDED TRADE, LAST DOWN 14.9 PCT – RTRS
  • OUTERWALL SHARES FALL 11 PCT IN EXTENDED TRADING AFTER QUARTERLY RESULTS – RTRS
  • GENWORTH SHARES DOWN 16.5 PCT AFTER THE BELL FOLLOWING RESULTS, RESTRUCTURING PLAN

9. Junk bonds continue to crash on Wall Street. On Monday, JNK was down to 32.60 and HYG was down to 77.99.

10. On Thursday, a major British news source publicly named five large European banks that are considered to be in very serious danger…

Deutsche Bank, Credit Suisse, Santander, Barclays and RBS are among the stocks that are falling sharply sending shockwaves through the financial world, according to former hedge fund manager and ex Goldman Sachs employee Raoul Pal.

11. Deutsche Bank is the biggest bank in Germany and it has more exposure to derivatives than any other bank in the world. Unfortunately, Deutsche Bank credit default swaps are now telling us that there is deep turmoil at the bank and that a complete implosion may be imminent.

12. Last week, we learned that Deutsche Bank had lost a staggering 6.8 billion euros in 2015. If you will recall, I warned about massive problems at Deutsche Bank all the way back in September. The most important bank in Germany is exceedingly troubled, and it could end up being for the EU what Lehman Brothers was for the United States.

13. Credit Suisse just announced that it will be eliminating 4,000 jobs.

14. Royal Dutch Shell has announced that it is going to be eliminating 10,000 jobs.

15. Caterpillar has announced that it will be closing 5 plants and getting rid of 670 workers.

16. Yahoo has announced that it is going to be getting rid of 15 percent of its total workforce.

17. Johnson & Johnson has announced that it is slashing its workforce by 3,000 jobs.

18. Sprint just laid off 8 percent of its workforce and GoPro is letting go 7 percent of its workers.

19. All over America, retail stores are shutting down at a staggering pace. The following list comes from one of my previous articles

-Wal-Mart is closing 269 stores, including 154 inside the United States.

-K-Mart is closing down more than two dozen stores over the next several months.

-J.C. Penney will be permanently shutting down 47 more stores after closing a total of 40 stores in 2015.

-Macy’s has decided that it needs to shutter 36 stores and lay off approximately 2,500 employees.

-The Gap is in the process of closing 175 stores in North America.

-Aeropostale is in the process of closing 84 stores all across America.

-Finish Line has announced that 150 stores will be shutting down over the next few years.

-Sears has shut down about 600 stores over the past year or so, but sales at the stores that remain open continue to fall precipitously.

20. According to the New York Times, the Chinese economy is facing a mountain of bad loans that “could exceed $5 trillion“.

21. Japan has implemented a negative interest rate program in a desperate attempt to try to get banks to make more loans.

22. The global economy desperately needs the price of oil to go back up, but Morgan Stanley says that we will not see $80 oil again until 2018.

It is not difficult to see where the numbers are trending.

Last week, I told my wife that I thought that Marco Rubio was going to do better than expected in Iowa.

How did I come to that conclusion?

It was simply based on how his poll numbers were trending.

And when you look at where global economic numbers are trending, they tell us that 2016 is going to be a year that is going to get progressively worse as it goes along.

So many of the exact same things that we saw happen in 2008 are happening again right now, and you would have to be blind not to see it.

Hopefully I am wrong about what is coming in our immediate future, because millions upon millions of Americans are not prepared for what is ahead, and most of them are going to get absolutely blindsided by the coming crisis.

(Originally published on The Economic Collapse Blog)

Lowest Ever: The Baltic Dry Index Plunges To 394 As Global Trade Grinds To A Standstill

Container Ship - Public Domain

For the first time ever, the Baltic Dry Index has fallen under 400. As I write this article, it is sitting at 394. To be honest, I never even imagined that it could go this low. Back in early August, the Baltic Dry Index was sitting at 1,222, and since then it has been on a steady decline. Of course the Baltic Dry Index crashed hard just before the great stock market crash of 2008 too, but at this point it is already lower than it was during that entire crisis. This is just more evidence that global trade is grinding to a halt and that 2016 is going to be a “cataclysmic year” for the global economy.

If you are not familiar with the Baltic Dry Index, here is a helpful definition from Wikipedia

The Baltic Dry Index (BDI) is an economic indicator issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides “an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a timecharter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.”

The BDI is one of the key indicators that experts look at when they are trying to determine where the global economy is heading. And right now, it is telling us that we are heading into a major worldwide economic downturn.

Some people try to dismiss the recent drop in the Baltic Dry Index by claiming that shipping rates are down because there is simply too much capacity out there these days. And I don’t dispute that. Without a doubt, too many vessels were built during the “boom years”, and now shipbuilders are paying the price. For example, Chinese shipyards reported a 59 percent decline in orders during the first 11 months of 2015…

Total orders at Chinese shipyards tumbled 59 percent in the first 11 months of 2015, according to data released Dec. 15 by the China Association of the National Shipbuilding Industry. Builders have sought government support as excess vessel capacity drives down shipping rates and prompts customers to cancel contracts. Zhoushan Wuzhou Ship Repairing & Building Co. last month became the first state-owned shipbuilder to go bankrupt in a decade.

But that doesn’t explain everything. The truth is that exports are way down all over the world. China, the United States, South Korea and many other major exporting nations have all been reporting extremely dismal export numbers. Global trade is contracting quite rapidly, and I don’t see how anyone could possibly dispute that.

The global economy is a mess, but many people are not paying any attention to the economic fundamentals because they are too busy looking at the stock market.

The stock market does not tell us how the economy is doing. If the stock market is up today that does not mean that the economy is doing well, and if the stock market is down tomorrow that does not mean that it is doing poorly.

Yes, the health of the financial markets can greatly affect the overall economy. We saw this back in 2008. When there is a tremendous amount of panic, that can cause a credit crunch and make it very difficult for money to flow through our system. The end result is a rapid slowdown of economic activity, and it is something that we will be experiencing again very soon.

But don’t let the day to day fluctuations of the stock market fool you. Just because the Dow was up 227 points today does not mean that the crisis is over. It is important to remember that stocks are not going to go down every single day. On Thursday, the Dow didn’t even regain two-thirds of what it lost on Wednesday. Even in bear markets there are up days, and some of the biggest up days in stock market history were right in the middle of the crash of 2008.

It is critical that we take a long-term view of things and not let our vision be clouded by every tick up and down in the financial markets. Initial jobless claims just hit their highest level in about six months, and companies like Macy’s and GoPro are laying off thousands of workers. Things are already bad, and they are rapidly getting worse.

And let us not forget the great amount of financial carnage that has already happened so far this year. According to CNBC, approximately 3.2 trillion dollars of stock market wealth was wiped out globally during the first 13 days of 2016…

Almost $3.2 trillion has been wiped off the value of stocks around the world since the start of 2016, according to calculations by a top market analyst.

It has also been the worst-ever start to a year for U.S. equities, said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, as both the S&P 500 and the blue-chip Dow Jones industrial average have posted their steepest losses for the first eight days trading of a year.

Over the past six months, there have now been two 10 percent “corrections” for U.S. stocks. The only other times we have seen multiple corrections like this were in 1929, 2000 and 2008. If those years seem familiar to you, that is because they should. In all three years, we witnessed historic stock market crashes.

The stunning collapse of the Baltic Dry Index is just more evidence that we have entered a global deflationary crisis. Goods aren’t moving, unemployment is rising all over the planet, and commodity prices have fallen to levels that we have not seen in over a decade.

Around the globe, there have been dramatic stock market crashes to begin the year, and we should expect to see much more market turmoil during the weeks and months to come.

If the markets have calmed down a bit for the moment, we should be very thankful for that, because we could all use some additional time to prepare for what is coming.

The debt-fueled standard of living that so many of us are enjoying today is just an illusion. And many of us won’t even understand what we have been taking for granted until it is taken away from us.

A great shaking is coming to the global economy, and the pain is going to be unimaginable. So let us enjoy every single day of relative “normalcy” while we still can, because there aren’t too many of them left.

(Originally published on The Economic Collapse Blog)

Global Trade Is Collapsing As The Worldwide Economic Recession Deepens

Dominoes Falling - Public Domain

When the global economy is doing well, the amount of stuff that is imported and exported around the world goes up, and when the global economy is in recession, the amount of stuff that is imported and exported around the world goes down. It is just basic economics. Governments around the world have become very adept at manipulating other measures of economic activity such as GDP, but the trade numbers are more difficult to fudge. Today, China accounts for more global trade than anyone else on the entire planet, and we have just learned that Chinese exports and Chinese imports are both collapsing right now. But this is just part of a larger trend. As I discussed the other day, British banking giant HSBC has reported that total global trade is down 8.4 percent so far in 2015, and global GDP expressed in U.S. dollars is down 3.4 percent. The only other times global trade has plummeted this much has been during other global recessions, and it appears that this new downturn is only just beginning.

For many years, China has been leading the revolution in global trade. But now we are witnessing something that is almost unprecedented. Chinese exports are falling, and Chinese imports are absolutely imploding

Growth of exports from China has been dropping relentlessly, for years. Now this “growth” has actually turned negative. In September, exports were down 3.7% from a year earlier, the “inevitable fallout from China’s unsustainable and poorly executed credit splurge,” as Thomson Reuters’ Alpha Now puts it. Most of these exports are manufactured goods that are shipped by container to the rest of the world.

And imports into China – a mix of bulk and containerized freight – have been plunging: down 20.4% in September from a year earlier, after at a 13.8% drop in August.

This week it was announced that Chinese GDP growth had fallen to the lowest level since the last recession, and that makes sense. Global economic activity is really slowing down, and this is deeply affecting China.

So what about the United States?

Well, based on the amount of stuff that is being shipped around in our country it appears that our economy is really slowing down too. The following comes from Wolf Richter, and I shared some of it in a previous article, but I think that it bears repeating…

September is in the early phase of the make-or-break holiday shipping season. Shipments usually increase from August to September. They did this year too. The number of shipments in September inched up 1.7% from August, according to the Cass Freight Index.

But the index was down 1.5% from an already lousy September last year, when shipments had fallen from the prior month, instead of rising. And so, in terms of the number of shipments, it was the worst September since 2010.

It has been crummy all year: With the exception of January and February, the shipping volume has been lower year-over-year every month!

The index is broad. It tracks data from shippers, no matter what carrier they choose, whether truck, rail, or air, and includes carriers like FedEx and UPS.

What major retailers such as Wal-Mart are reporting also confirms that we are in a major economic slowdown. Wal-Mart recently announced that its earnings would fall by as much as 12 percent during the next fiscal year, and that caused Wal-Mart stock to drop by the most in 27 years.

And of course this is going to have a huge ripple effect. There are thousands of other companies that do business with Wal-Mart, and Reuters is reporting that they are starting to get squeezed…

Suppliers of everything from groceries to sports equipment are already being squeezed for price cuts and cost sharing by Wal-Mart Stores. Now they are bracing for the pressure to ratchet up even more after a shock earnings warning from the retailer last week.

The discount store behemoth has always had a reputation for demanding lower prices from vendors but Reuters has learned from interviews with suppliers and consultants, as well as reviewing some contracts, that even by its standards Wal-Mart has been turning up the heat on them this year.

“The ground is shaking here,” said Cameron Smith, head of Cameron Smith & Associates, a major recruiting firm for suppliers located close to Wal-Mart’s headquarters in Bentonville, Arkansas. “Suppliers are going to have to help Wal-Mart get back on track.”

Similar things are going on at some of the other biggest companies in America as well.

For instance, things have gotten so bad for McDonald’s that one franchise owner recently stated that the restaurant chain is “facing its final days”

“McDonald’s announced in April that it would be closing 700 ‘underperforming’ locations, but because of the company’s sheer size — it has 14,300 locations in the United States alone — this was not necessarily a reduction in the size of the company, especially because it continues to open locations around the world. It still has more than double the locations of Burger King, its closest competitor.”

However, for the franchisees, the picture looks much worse than simply 700 stores closing down.

“We are in the throes of a deep depression, and nothing is changing,” a franchise owner wrote in response to a financial survey by Nomura Group. “Probably 30% of operators are insolvent.” One owner went as far as to speculate that McDonald’s is literally “facing its final days.”

Why would things be so bad at Wal-Mart and McDonald’s if the economy was “recovering”?

Come on now – let’s use some common sense here.

All of the numbers are screaming at us that we have entered a major economic downturn and that it is accelerating.

CNBC is reporting that the number of job openings in the U.S. is falling and that the number of layoffs is rising

Job openings fell 5.3 percent in August, while a 2.6 percent rise in layoffs and discharges offset a 0.3 percent gain in hires. Finally, the amount of quits — or what Convergex calls its “take this job and shove it” indicator because it shows the percentage of workers who left positions voluntarily — fell to 56.6 percent from 57.1 percent, indicating less confidence in mobility.

And as I discussed the other day, Challenger Gray is reporting that we are seeing layoffs at major firms at a level that we have not witnessed since 2009.

We already have 102.6 million working age Americans that do not have a job right now. As this emerging worldwide recession deepens, a lot more Americans are going to lose their jobs. That is going to cause the poverty and suffering in this country to spike even more, if you can imagine that.

Just consider what authorities discovered on the streets of Philadelphia just this week

Support is flooding in for a homeless Philadelphia family whose two-year-old son was found wandering alone in a park in the middle of the night.

Angelique Roland, 27, and Michael Jones, 24, were sleeping with their children behind cardboard boxes underneath the Fairmount Park Welcome Center in Love Park when the toddler slipped away.

The boy was found just before midnight and handed over to a nearby Southeastern Pennsylvania Transportation Authority police officer, who took him to the Children’s Hospital of Philadelphia.

He was wearing a green, long sleeve shirt, black running pants and had a diaper on, but did not have shoes or socks.

Could you imagine sleeping on the streets and not even being able to provide your two-year-old child with shoes and socks?

These numbers that I write about every day are not a game. They affect all of us on a very personal level.

Just like in 2008 and 2009, millions of Americans that are living a very comfortable middle class lifestyle today will soon lose their jobs and will end up out in the streets.

In fact, there will be people that will read this article that this will happen to.

So no, none of us should be excited that the global economy is collapsing. There is already so much pain all around us, and what is to come is beyond what most of us would even dare to imagine.

(Originally published on The Economic Collapse Blog)

Moving Toward A One World Government, A One World Economy And A One World Religion

Global Hands - Public Domain

The global elite have never been closer to their goal of a united world. Thanks to a series of interlocking treaties and international agreements, the governance of this planet is increasingly becoming globalized and centralized, but most people don’t seem alarmed by this at all. In the past 30 days, we have seen some of the biggest steps toward a one world government, a one world economy and a one world religion that we have ever witnessed, but these events have sparked very little public discussion or debate. So please share this article with as many people as you can. We need to wake people up about this before it is too late.

From September 25th to September 27th, the United Nations launched a “new universal agenda” for humanity. Those are not my words, they actually come directly out of the core document for this new agenda. The Pope traveled to New York City to give the address that kicked off this conference, thus giving his considerable endorsement to this new plan. Virtually every nation on the entire planet willingly signed up for the 17 goals that are included in this plan, but this stunning turn of events made very few international headlines.

The United Nations is promising that if we all work together that we can turn our planet into some kind of “utopia”, but the truth is that all of this talk about “unity” masks a very insidious agenda. The following comes from a recent piece by Paul McGuire, the author of a groundbreaking new book entitled “The Babylon Code”

The UN is not asking permission, but issuing a command that the entire planet will commit to 17 sustainable development goals and 169 sustainable development targets designed to radically transform our world by 2030. The UN 2030 plan promoted by the Pope will advance Agenda 21 on steroids. Through a controlled media the mass populations will be told that this is all about saving the environment and “ending poverty.” But that is not the true agenda of Agenda 21. The true agenda of Agenda 21 is to establish a global government, global economic system, and global religion. When UN Secretary General Ban Ki-Moon spoke of “a dream of a world of peace and dignity for all” this is no different than when the Communists promised the people a “workers paradise.”

For the general population, “the 2030 Agenda” has been rebranded as “the global goals”. On September 26th, some of the biggest names in the music world (including Beyonce) promoted these new “global goals” at the “Global Citizen Festival” that was held in Central Park. And you can watch a YouTube video where some of the most famous names on the entire planet urge all of us to get behind these new “global goals” right here.

None of this is by accident. We are being trained to think of ourselves as “global citizens” that belong to a “global community”. Decades ago, most Americans would have been up in arms over something like this. But now most people just seem to accept these changes passively. Very powerful secret societies and international organizations have been moving us in this direction for a very long time, and most Americans simply have no idea what is happening. Here is more from Paul McGuire

The United Nations is a de facto global government and does not rule by the “consent of the governed.” The United Nations is a global government to which American politicians of both parties have surrendered our Constitutional rights. If you look at the Republican Presidential debates you see the vast majority of those running are “bought men and women.” They are there to do the bidding of their true masters, the international banking families and their interlocking secret societies. If a candidate has a different set of beliefs than the “Orwellian group think” which constitutes domestic and foreign policy, he is allowed to go only so far.

Who are these powerful elite groups and the secret societies that run them? As we extensively document in our new book, The Babylon Code, co-authored by this author and Troy Anderson, a Pulitzer Prize-nominated investigative journalist, there exists a very real network of semi-secretive and secret groups. Groups like The Council on Foreign Relations, The Trilateral Commission, Royal Institute of International Affairs, United Nations, Club of Rome, The Bilderberg Group, and others control presidents, prime ministers, media networks, politicians, CEO’s, and entire nations. You will almost never hear any substantive analysis by the media, which is controlled by these groups nor of attempts at holding them accountable by governments around the world.

Another way that our planet is being “united” is through the use of international trade agreements.

The ultimate goal is for the entire world to become a “single market” with uniform laws, rules and regulations. But as we merge our economy with the rest of the globe, the United States has been losing tens of thousands of businesses and millions of jobs as the monolithic corporations that now dominate our economy shift production to areas where labor is much cheaper. This is absolutely destroying the middle class, but very few people seem to care.

Negotiations for one of the biggest international trade treaties that the world has ever seen recently concluded. The Trans-Pacific Partnership, also known as “Obamatrade”, would represent a giant step toward a truly unified global economy. The following is an excerpt from one of my previous articles

We have just witnessed one of the most significant steps toward a one world economic system that we have ever seen. Negotiations for the Trans-Pacific Partnership have been completed, and if approved it will create the largest trading bloc on the planet. But this is not just a trade agreement. In this treaty, Barack Obama has thrown in all sorts of things that he never would have been able to get through Congress otherwise. And once this treaty is approved, it will be exceedingly difficult to ever make changes to it. So essentially what is happening is that the Obama agenda is being permanently locked in for 40 percent of the global economy.

The United States, Canada, Japan, Mexico, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam all intend to sign on to this insidious plan. Collectively, these nations have a total population of about 800 million people and a combined GDP of approximately 28 trillion dollars.

And do you want to know who pushed really hard to give Obama fast track negotiating authority so that these negotiations could be brought to a successful conclusion?

It was the traitorous Republican leadership in Congress. They did everything that they could to pave the way for Obamatrade.

We are also seeing some stunning moves in the direction of a one world religion.

In recent years, you may have noticed that it has become very trendy to say that all religions are just different paths to the same God. In fact, many prominent religious leaders are now openly proclaiming that the two biggest faiths on the entire planet, Christianity and Islam, worship the exact same deity.

For example, just consider what the Pope is saying publicly on this matter. The following is an extended excerpt from one of my recent articles on End of the American Dream

*****

What Pope Francis had to say at St. Patrick’s Cathedral in Manhattan has received very little coverage by the mainstream media, but it was exceedingly significant. The following is how he began his address

I would like to express two sentiments for my Muslim brothers and sisters: Firstly, my greetings as they celebrate the feast of sacrifice. I would have wished my greeting to be warmer. My sentiments of closeness, my sentiments of closeness in the face of tragedy. The tragedy that they suffered in Mecca.

In this moment, I give assurances of my prayers. I unite myself with you all. A prayer to almighty god, all merciful.

He did not choose those words by accident. In Islam, Allah is known as “the all-merciful one”. If you doubt this, just do a Google search.

And this is not the first time Pope Francis has used such language. For instance, the following comes from remarks that he made during his very first ecumenical meeting as Pope…

I then greet and cordially thank you all, dear friends belonging to other religious traditions; first of all the Muslims, who worship the one God, living and merciful, and call upon Him in prayer, and all of you. I really appreciate your presence: in it I see a tangible sign of the will to grow in mutual esteem and cooperation for the common good of humanity.

The Catholic Church is aware of the importance of promoting friendship and respect between men and women of different religious traditions – I wish to repeat this: promoting friendship and respect between men and women of different religious traditions – it also attests the valuable work that the Pontifical Council for interreligious dialogue performs.

Pope Francis clearly believes that Christians and Muslims worship the exact same God. And so that helps to explain why he authorized “Islamic prayers and readings from the Quran” at the Vatican for the first time ever back in 2014.

*****

What is happening is undeniable.

We are steamrolling toward a one world government, a one world economy and a one world religion.

Of course we will not get there overnight. It is going to take some time, and there are going to be quite a few bumps along the way. In fact, I believe that our planet will experience an extreme amount of chaos before we actually get there.

But every major crisis will be used as an excuse to advance this agenda. Virtually every solution that the elite offer us will involve more globalization and more centralization. We will be told that all of our problems will be solved if humanity will just come together in unity.

For some, the goal of a “united planet” where we are all working together to eradicate things like poverty, war and disease makes all the sense in the world.

For others, a one world government, a one world economy and a one world religion would simply mean setting the stage for “one world tyranny”.

So what do you think? Please feel free to share your thoughts by posting a comment below…

(Originally published on The Economic Collapse Blog)

Is The Global Economy Getting Ready To Implode?

World On Fire - Public Domain

Did you know that the number of publicly traded companies declaring bankruptcy has reached a five year high? And did you know that Chinese exports are absolutely collapsing and that Chinese economic growth in 2014 was the weakest in over 20 years? Even though things may seem to be okay on the surface for the global economy at the moment, that does not mean that big trouble is not percolating just under the surface. On Wednesday, investors cheered as stocks soared to new highs, but almost all of the economic news coming in from around the planet has been bad. The credit rating on Greek debt has been slashed again, global economic trade is really slowing down, and many of the exact same financial patterns that we saw just before the crash of 2008 are repeating once again. All of this reminds me of the months leading up to the implosion of Lehman Brothers. Most people were feeling really good about things, but huge trouble was brewing just underneath the surface. Finally, one day we learned that Lehman Brothers had “suddenly” collapsed, and then all hell broke loose.

If the economy is actually “getting better” like we are being told by the establishment media, then why are so many big companies declaring bankruptcy? According to CNBC, the number of publicly traded companies declaring bankruptcy has hit a five year high…

The number of bankruptcies among publicly traded U.S. companies has climbed to the highest first-quarter level for five years, according to a Reuters analysis of data from research firm bankruptcompanynews.com.

Plunging prices of crude oil and other commodities is one of the major reasons for the increased filings, and bankruptcy experts said a more aggressive stance by lenders may also be hurting some companies.

It is interesting to note that the price of oil is being named as one of the primary reasons why this is happening.

In an article entitled “Anyone That Believes That Collapsing Oil Prices Are Good For The Economy Is Crazy“, I warned about this. If the price of oil does not bounce back in a huge way, we are going to see a lot more companies go bankrupt, a lot more people are going to lose their jobs, and a lot more corporate debt is going to go bad.

And of course this oil crash has not just hurt the United States. All over the world, economic activity is being curtailed because of what has happened to the price of oil…

In the heady days of the commodity boom, oil-rich nations accumulated billions of dollars in reserves they invested in U.S. debt and other securities. They also occasionally bought trophy assets, such as Manhattan skyscrapers, luxury homes in London or Paris Saint-Germain Football Club.

Now that oil prices have dropped by half to $50 a barrel, Saudi Arabia and other commodity-rich nations are fast drawing down those “petrodollar” reserves. Some nations, such as Angola, are burning through their savings at a record pace, removing a source of liquidity from global markets.

If oil and other commodity prices remain depressed, the trend will cut demand for everything from European government debt to U.S. real estate as producing nations seek to fill holes in their domestic budgets.

But it isn’t just oil. We appear to be moving into a time when things are slowing down all over the place.

In a recent article, Zero Hedge summarized some of the bad economic news that has come in just this week…

Mortgage Apps tumble, Empire Fed slumps, and now Industrial Production plunges… Against expectations of a 0.3% drop MoM, US Factory Output was twice as bad at -0.6% – the worst since August 2012 (and lamost worst since June 2009). This is the 4th miss in a row.

If we are indeed heading into another economic downturn, that is really bad news, because at the moment we are in far worse shape than we were just prior to the last recession.

To help illustrate this, I want to share with you a couple of charts.

This first chart comes from the Federal Reserve Bank of St. Louis, and it shows that after you adjust for inflation, median income for the middle class is the lowest that it has been in decades

Median Income St. Louis Fed

This next chart shows that median net worth for the middle class is also the lowest that it has been in decades after you adjust for inflation…

Median Net Worth St. Louis Fed

The middle class is being systematically destroyed. For much more on this, please see this recent article that I published. And now we are on the verge of another major economic slowdown. That is not what the middle class needs at all.

We are also getting some very disturbing economic news out of China.

In 2014, economic growth in China was the weakest in more than 20 years, and Chinese export numbers are absolutely collapsing

China’s monthly trade data shows exports fell in March from a year ago by 14.6% in yuan terms, compared to expectations for a rise of more than 8%.

Imports meanwhile fell 12.3% in yuan terms compared to forecasts for a fall of more than 11%.

This is a clear sign that global economic activity is slowing down in a big way.

In addition, Chinese home prices are now falling at a faster pace then U.S. home prices fell during the subprime mortgage meltdown

It appeared as though things went from bad to worse nearly overnight; China’s National Bureau of Statistics said that contrary to hopes that there would be a modest rebound, the average new home price in China fell at the fastest pace on record in February, from the previous year.

Reuters reported that average new home prices in China’s 70 major cities fell 5.7 percent, year to year, in February – marking the sixth consecutive drop after January’s decline of 5.1 percent.

Things continue to get worse in Europe as well.

This week we learned that the credit rating for Greek government debt has been slashed once again

Standard & Poor’s has just cut Greece’s credit rating to “CCC+” from “B-” with a negative outlook.

S&P said it expected Greece’s debt to be “unsustainable.” It cited the potential for dissolving liquidity in the government, banks and economy.

And according to the Financial Times, we could actually be on the verge of witnessing a Greek debt default…

Greece is preparing to take the dramatic step of declaring a debt default unless it can reach a deal with its international creditors by the end of April, according to people briefed on the radical leftist government’s thinking.

The government, which is rapidly running out of funds to pay public sector salaries and state pensions, has decided to withhold €2.5bn of payments due to the International Monetary Fund in May and June if no agreement is struck, they said.

So I hope that those that are euphoric about the performance of their stock portfolios are taking their profits while they still can.

Huge trouble is percolating just under the surface of the global economy, and it won’t be too long before the financial markets start feeling the pain.

(Originally published on The Economic Collapse Blog)

Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds

Boom Goes The Dynamite - Public Domain

If you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer. As I write this, the price of U.S. oil is sitting at $45.76 a barrel. It has fallen by more than 60 dollars a barrel since June. There is only one other time in history when we have seen anything like this happen before. That was in 2008, just prior to the worst financial crisis since the Great Depression. But following the financial crisis of 2008, the price of oil rebounded fairly rapidly. As you will see below, there are very strong reasons to believe that it will not happen this time. And the longer the price of oil stays this low, the worse our problems are going to get. At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before. So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead. Because if not, the price of oil is going to absolutely rip the global economy to shreds.

What amazes me is that there are still many economic “experts” in the mainstream media that are proclaiming that the collapse in the price of oil is going to be a good thing for the U.S. economy.

The only precedent that we can compare the current crash to is the oil price collapse of 2008. You can see both crashes on the chart below…

Price Of Oil Since 2006

If rapidly falling oil prices are good economic news, that collapse should have pushed the U.S. economy into overdrive.

But that didn’t happen, did it? Instead, we plunged into the deepest recession that we have seen since the Great Depression.

And unless there is a miracle rebound in the price of oil now, we are going to experience something similar this time.

Already, we are seeing oil rigs shut down at a staggering pace. The following is from Bloomberg

U.S. oil drillers laid down the most rigs in the fourth quarter since 2009. And things are about to get much worse.

The rig count fell by 93 in the three months through Dec. 26, and lost another 17 last week, Baker Hughes Inc. data show. About 200 more will be idled over the next quarter as U.S. oil explorers make good on their promises to curb spending, according to Moody’s Corp.

But that was just the beginning of the carnage. 61 more oil rigs shut down last week alone, and hundreds more are being projected to shut down in the months ahead.

For those that cannot connect the dots, that is going to translate into the loss of large numbers of good paying jobs. Just check out what is happening in Texas

A few days ago, Helmerich & Payne, announced that it would idle 50 more drilling rigs in February, after having already idled 11 rigs. Each rig accounts for about 100 jobs. This will cut its shale drilling activities by 20%. The other two large drillers, Nabors Industries and Patterson-UTI Energy are on a similar program. All three combined are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ,” said Oilpro Managing Director Joseph Triepke.

Unfortunately, this crisis will not just be localized to states such as Texas. There are tens of thousands of small and mid-size firms that will be affected. The following is from a recent CNBC report

More than 20,000 small and midsize firms drive the “hydrocarbon revolution” in the U.S. that has helped the oil and gas industry thrive in recent years, and they produce more than 75 percent of the nation’s oil and gas output, according to the Manhattan Institute for Policy Research’s February 2014 Power & Growth Initiative Report. The Manhattan Institute is a conservative think tank in New York City.

A sustained decline in prices could lead to layoffs at these firms, say experts. “The energy industry has been one of the job-growth areas leading us out of the recession,” said Chad Mabry, a Houston-based analyst in the energy and natural resources research department of boutique investment bank MLV & Co. in New York City. “In 2015, that changes in this price environment,” he said. “We’re probably going to see some job losses on a fairy significant scale if this keeps up.”

If the price of oil makes a major comeback, the carnage will ultimately not be that bad.

But if it stays at this level or keeps going down for an extended period of time, it is inevitable that a whole bunch of those firms will go bankrupt and their debt will go bad.

That would mean a junk bond crash unlike anything that Wall Street has ever experienced.

And as I have written about previously, a stock market crash almost always follows a junk bond crash.

These are things that happened during the last financial crisis and that are repeating again right in front of our eyes.

Another thing that happened in 2008 that is happening again is a crash in industrial commodity prices.

At this point, industrial commodity prices have hit a 12 year low. I am talking about industrial commodities such as copper, iron ore, steel and aluminum. This is a huge sign that global economic activity is slowing down and that big trouble is on the way.

So what is driving this? The following excerpt from a recent Zero Hedge article gives us a clue…

Globally there are over $9 trillion worth of borrowed US Dollars in the financial system. When you borrow in US Dollars, you are effectively SHORTING the US Dollar.

Which means that when the US Dollar rallies, your returns implode regardless of where you invested the borrowed money (another currency, stocks, oil, infrastructure projects, derivatives).

Take a look at commodities. Globally, there are over $22 TRILLION worth of derivatives trades involving commodities. ALL of these were at risk of blowing up if the US Dollar rallied.

Unfortunately, starting in mid-2014, it did in a big way.

This move in the US Dollar imploded those derivatives trades. If you want an explanation for why commodities are crashing (aside from the fact the global economy is slowing) this is it.

Once again, much of this could be avoided if the price of oil starts going back up substantially.

Unfortunately, that does not appear likely. In fact, many of the big banks are projecting that it could go even lower

Goldman Sachs, CitiGroup, Societe General and Commerzbank are among the latest investment banks to reduce crude oil price estimates, and without production cuts, there appears to be more room for lower prices.

“We’re going to keep on going lower,” says industry analyst Brian Milne of energy manager Schneider Electric. “Even with fresher new lows, there’s still more downside.”

OPEC could stabilize global oil prices with a single announcement, but so far OPEC has refused to do this. Many believe that the OPEC countries actually want the price of oil to fall for competitive reasons…

Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG.

The oil producing countries in the Middle East seem to be settling in for the long haul. In fact, one prominent Saudi prince made headlines all over the world this week when he said that “I’m sure we’re never going to see $100 anymore.”

Never is a very strong word.

Could there be such a massive worldwide oil glut going on right now that the price of oil will never get that high again?

Well, without a doubt there is a huge amount of unsold oil floating around out there at the moment.

It has gotten so bad that some big trading companies are actually hiring supertankers to store large quantities of unsold crude oil at sea…

Some of the world’s largest oil traders have this week hired supertankers to store crude at sea, marking a milestone in the build-up of the global glut.

Trading firms including Vitol, Trafiguraand energy major Shell have all booked crude tankers for up to 12 months, freight brokers and shipping sources told Reuters.

They said the flurry of long-term bookings was unusual and suggested traders could use the vessels to store excess crude at sea until prices rebound, repeating a popular 2009 trading gambit when prices last crashed.

The fundamentals for the price of oil are so much worse than they were back in 2008.

We could potentially be looking at sub-$50 oil for an extended period of time.

If that is indeed the case, there will be catastrophic damage to the global economy and to the global financial system.

So hold on to your hats, because it looks like we are going to be in for quite a bumpy ride in 2015.

(Originally published on The Economic Collapse Blog)

Game Over Japan: Real Wages Crash Most In 21st Century, Savings Rate Turns Negative

The End Button - Public Domain

When about a month ago it was revealed that Japan’s shadow economic advisor is none other than Paul Krugman [12], we said it was only a matter of time before the Japanese economy implodes. Terminally. We didn’t have long to wait and last night the barrage of Japanese economic data pretty much assured Japan’s transition into failed Keynesian state status.

In fact, after last night’s abysmal Japanese eco data, we doubt even the most lobotomized Keynesian voodoo priests have anything favorable left to say about Abenomics: not only did core inflation miss expectations and is now clearly in slowdown mode despite Japan openly monetizing all gross Treasury issuance, not only did industrial production decline 0.6% missing expectations of an increase and record its first decline in 3 months with durable goods shipments crashing, not only did consumer spending plunge for the 8th straight month dropping 2.5% in November (with real spending on housing in 20% freefall), but – the punchline – both nominal and real wages imploded, when total cash wages and overtime pay declined for the first time in 9 months and 20 months, respectively.

(Read the rest of the story here…)

Russia Drops Dollar: Direct Trade Between China & Russia Has Increased 2400 Percent and Set to Explode

Chinese Yuan - Public Domain
As Russia struggles  to survive economically , China has swooped in and announced that on Monday they will start trading more comprehensively with Russia in Chinese yuan, cutting out the dollar completely.

From Bloomberg: “China will allow trading in forwards and swaps between the yuan and three more currencies in a bid to reduce foreign-exchange risks amid increased volatility in emerging markets.

The China Foreign Exchange Trade System will begin such contracts with… Russia’s ruble…from Dec. 29… That will extend the yuan’s swaps trading to 11 currencies on the interbank foreign-exchange market. The new contracts come amid Malaysia and Russia are China’s eighth and ninth biggest trading partners.”


Currency Transactions without Dollars between Russia and China increased 2400% in the 4 months between July and October 2014

Russian President Vladimir Putin has been trying to strengthen ties with China and avoid using the dollar since the US instituted economic sanctions on his country several months ago.

Efforts by China to increase the international use of the yuan, 
as the world’s second-largest economy promotes 
it as an alternative to the U.S. dollar for 
global trade and finance. 

putin and chinese prime minister

As WSJ reports, “In an interview with the Russian news agency Tass, Mr. Putin said that oil giant Rosneft is working with a major Chinese corporation to receive renminbi as a payment for a significant flow of oil.

“We’re moving away from the diktat of the market that denominates all the commercial oil flows in U.S. dollars,” Mr. Putin said. Russian companies are increasingly shifting to direct renminbi-ruble trading to settle their imports and exports with Asia.

Turnover in direct transactions in the two currencies soared to $1.2 billion over the course of October, from $307 million in September and as low as $52 million in July, according to data available on the website of the China Foreign Exchange Trading System, the trading division of China’s central bank.

“Volumes are picking up as both countries aren’t against using their own currencies instead of the dollar for mutual transactions. I expect the turnover to grow,” said Evgeny Gavrilenkov, a currency strategist at Sberbank .

The Moscow Exchange reported a record daily turnover of 1.5 billion yuan ($245 million) against the ruble on October 16.

Ruble-yuan trading was launched by the Moscow Exchange in 2010 but failed to gain significant interest from Russian companies until October, just after the U.S. and Europe widened their sanctions against the country.

To further strengthen cooperation, the exchange signed an agreement with the Bank of China in October and is currently negotiating with Chinese authorities the launch of new services to investors on the Chinese and Russian markets.

Sanctions on Russia will undoubtedly encourage ties with other countries, particularly China,” said Andy Seaman, fund manager at Stratton Street Capital LLP which manages a renminbi bond fund.

He added,


“The Chinese currency is already likely to be the third most actively traded currency in the world by the end of 2015
and greater trade links between Russia and China
can only accelerate the internationalization
of the renminbi.”

Zerohedhge reports, “So while the US continues to parade with “destroying” the Russian economy, even if it means crushing the shale industry, aka the only bright spot, high-paying job-creating industry in the US economy over the past 5 years, Russia and China continue to be nudged by the west ever closer monetarily and strategically, until one day, as we have long predicted,

China and Russia will announce a joint currency, one backed by both China’s “surprising” gold reserves and Russia’s commodity hoard. 

Then things will get interesting.”
Article authored by Carol Serpa. You can find the original story right here.

Russia heading for crash as ruble plummets

Russian Ruble - Public Domain

Russia’s economy is crashing and its currency appears to be in free fall.

The ruble plunged by about 12% Monday, meaning it’s lost nearly 50% against the dollar this year. Early Tuesday in Russia, the central bank hiked its key interest rate for a sixth time this year to 17% from 10.5%.

A double-whammy of collapsing oil prices and Western sanctions is driving up inflation. Cash is flooding out of the country and the risk that some Russian companies may default is increasing.

Russia’s central bank has not only been raising interest rates, but has spent nearly $90 billion trying to defend the ruble and prevent prices spiraling out of control.

(Read the rest of the story here…)

Global Business Confidence Collapses To Post-Lehman Lows

Collapse - Public Domain

Markit’s survey of over 6000 firms showed optimism falling sharply in October, dropping to the lowest seen since the survey began five years ago. Hiring and investment plans were also at or near post-crisis lows, while price expectations deteriorated further. More worrying, perhaps, is the US is not decoupled whatsoever, with future expectations of US business activity at the lowest since the financial crisis.

(Read the rest of the story here…)

3 Of The 10 Largest Economies In The World Have Already Fallen Into Recession – Is The U.S. Next?

Global Recession

Are you waiting for the next major wave of the global economic collapse to strike? Well, you might want to start paying attention again. Three of the ten largest economies on the planet have already fallen into recession, and there are very serious warning signs coming from several other global economic powerhouses. Things are already so bad that British Prime Minister David Cameron is comparing the current state of affairs to the horrific financial crisis of 2008. In an article for the Guardian that was published on Monday, he delivered the following sobering warning: “Six years on from the financial crash that brought the world to its knees, red warning lights are once again flashing on the dashboard of the global economy.” For the leader of the nation with the 6th largest economy in the world to make such a statement is more than a little bit concerning.

So why is Cameron freaking out?

Well, just consider what is going on in Japan. The economy of Japan is the 3rd largest on the entire planet, and it is a total basket case at this point. Many believe that the Japanese will be on the leading edge of the next great global economic crisis, and that is why it is so alarming that Japan has just dipped into recession again for the fourth time in six years

Japan’s economy unexpectedly fell into recession in the third quarter, a painful slump that called into question efforts by Prime Minister Shinzo Abe to pull the country out of nearly two decades of deflation.

The second consecutive quarterly decline in gross domestic product could upend Japan’s political landscape. Mr. Abe is considering dissolving Parliament and calling fresh elections, people close to him say, and Monday’s economic report is seen as critical to his decision, which is widely expected to come this week.

Of course Japan is far from alone.

Brazil has the 7th largest economy on the globe, and it has already been in recession for quite a few months.

And the problems that the national oil company is currently experiencing certainly are not helping matters

In the past five days, 23 powerful Brazilians have been arrested, with even more warrants still outstanding.

The country’s stock market has become a whipsaw, and its currency, the real, has hit a nine-year low.

All of this is due to a far-reaching corruption scandal at one massive company, Petrobras.

In the last month the company’s stock has fallen by 35%.

The 9th largest economy in the world, Italy, has also fallen into recession

Italian GDP dropped another 0.1% in the third quarter, as expected.

That’s following a 0.2% drop in Q2 and another 0.1% decline in Q1, capping nine months of recession for Europe’s third-largest economy.

Like Japan, there is no easy way out for Italy. A rapidly aging population coupled with a debt to GDP ratio of more than 132 percent is a toxic combination. Italy needs to find a way to be productive once again, and that does not happen overnight.

Meanwhile, much of the rest of Europe is currently mired in depression-like conditions. The official unemployment numbers in some of the larger nations on the continent are absolutely eye-popping. The following list of unemployment figures comes from one of my previous articles

France: 10.2%

Poland: 11.5%

Italy: 12.6%

Portugal: 13.1%

Spain: 23.6%

Greece: 26.4%

Are you starting to get the picture?

The world is facing some real economic problems.

Another traditionally strong economic power that is suddenly dealing with adversity is Israel.

In fact, the economy of Israel is shrinking for the first time since 2009

Israel’s economy contracted for the first time in more than five years in the third quarter, as growth was hit by the effects of a war with Islamist militants in Gaza.

Gross domestic product fell 0.4 percent in the July-September period, the Central Bureau of Statistics said on Sunday. It was the first quarterly decline since a 0.2 percent drop in the first three months of 2009, at the outset of the global financial crisis.

And needless to say, U.S. economic sanctions have hit Russia pretty hard.

The rouble has been plummeting like a rock, and the Russian government is preparing for a “catastrophic” decline in oil prices…

President Vladimir Putin said Russia’s economy, battered by sanctions and a collapsing currency, faces a potential “catastrophic” slump in oil prices.

Such a scenario is “entirely possible, and we admit it,” Putin told the state-run Tass news service before attending this weekend’s Group of 20 summit in Brisbane, Australia, according to a transcript e-mailed by the Kremlin today. Russia’s reserves, at more than $400 billion, would allow the country to weather such a turn of events, he said.

Crude prices have fallen by almost a third this year, undercutting the economy in Russia, the world’s largest energy exporter.

It is being reported that Russian President Vladimir Putin has been hoarding gold in anticipation of a full-blown global economic war.

I think that will end up being a very wise decision on his part.

Despite all of this global chaos, things are still pretty stable in the United States for the moment. The stock market keeps setting new all-time highs and much of the country is preparing for an orgy of Christmas shopping.

Unfortunately, the number of children that won’t even have a roof to sleep under this holiday season just continues to grow.

A stunning report that was just released by the National Center on Family Homelessness says that the number of homeless children in America has soared to an astounding 2.5 million.

That means that approximately one out of every 30 children in the United States is homeless.

Let that number sink in for a moment as you read more about this new report from the Washington Post

The number of homeless children in the United States has surged in recent years to an all-time high, amounting to one child in every 30, according to a comprehensive state-by-state report that blames the nation’s high poverty rate, the lack of affordable housing and the effects of pervasive domestic violence.

Titled “America’s Youngest Outcasts,” the report being issued Monday by the National Center on Family Homelessness calculates that nearly 2.5 million American children were homeless at some point in 2013. The number is based on the Education Department’s latest count of 1.3 million homeless children in public schools, supplemented by estimates of homeless preschool children not counted by the agency.

The problem is particularly severe in California, which has about one-eighth of the U.S. population but accounts for more than one-fifth of the homeless children, totaling nearly 527,000.

This is why I get so fired up about the destruction of the middle class. A healthy economy would mean more wealth for most people. But instead, most Americans just continue to see a decline in the standard of living.

And remember, the next major wave of the economic collapse has not even hit us yet. When it does, the suffering of the poor and the middle class is going to get much worse.

Unfortunately, there are already signs that the U.S. economy is starting to slow down too. In fact, the latest manufacturing numbers were not good at all

The Federal Reserve’s new industrial production data for October show that, on a monthly basis, real U.S. manufacturing output has fallen on net since July, marking its worst three-month production stretch since March-June, 2011. Largely responsible is the automotive sector’s sudden transformation from a manufacturing growth leader into a serious growth laggard, with combined real vehicles and parts production enduring its worst three-month stretch since late 2008 to early 2009.

A lot of very smart people are forecasting economic disaster for next year.

Hopefully they are all wrong, but I have a feeling that they are going to be right.

(Originally posted on The Economic Collapse Blog)

Israel economy shrinks for first time in more than 5 years

Israel Flag

Israel’s economy contracted for the first time in more than five years in the third quarter, as growth was hit by the effects of a war with Islamist militants in Gaza.

Gross domestic product fell 0.4 percent in the July-September period, the Central Bureau of Statistics said on Sunday. It was the first quarterly decline since a 0.2 percent drop in the first three months of 2009, at the outset of the global financial crisis.

Growth for all of 2014 is projected at 2.2 percent, with Israel’s 50-day war in July and August having shaved off about half a percentage point.

(Read the rest of the story here…)

David Cameron warns of looming second global crash

David Cameron - Photo by Valsts kanceleja

David Cameron has issued a stark message that “red warning lights are flashing on the dashboard of the global economy” in the same way as when the financial crash brought the world to its knees six years ago.

Writing in the Guardian at the close of the G20 summit in Brisbane, Cameron says there is now “a dangerous backdrop of instability and uncertainty” that presents a real risk to the UK recovery, adding that the eurozone slowdown is already having an impact on British exports and manufacturing.

His warning comes days after the Bank of England governor, Mark Carney, claimed a spectre of stagnation was haunting Europe. The International Monetary Fund managing director, Christine Lagarde, expressed fears in Brisbane that a diet of high debt, low growth and unemployment may yet become “the new normal in Europe”.

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5 reasons to worry about the world economy

Earth From Space

There’s little reason for cheer in Europe. While Germany narrowly avoided a recession in the third quarter, the latest numbers show the $13 trillion eurozone economy is stuck in first gear.

High unemployment, high debt and a lack of investment continue to hold the region back. And then there’s the risk of deflation, or at least a prolonged period of very low inflation. That will keep consumers and companies cautious and could condemn the region to years of stagnation.

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Specter of deflation looms over Fed’s return to normal

Federal Reserve

After months of focus on slack in U.S. labor markets, the Federal Reserve faces a new challenge: the possibility that weak inflation may be so firmly entrenched it upends the return to normal monetary policy.

The soft global inflation backdrop, from sliding oil prices to stagnant wages in advanced economies, has triggered debate over whether the Fed and its peers merely need to wait for a slow-motion business cycle to improve, or face a shift in the underlying nature of inflation after the global recession.

That uncertainty has become the Fed’s chief concern in recent weeks, likely to shape upcoming policy statements and delay even further the moment when interest rates, pinned near zero for nearly six years, will start rising again.

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The World’s 2nd-Biggest Retailer Is Getting Hammered As Profits Collapse 90 Percent

Tesco - Public Domain

Tesco’s results are out Thursday for the first half of the year, and a breakdown of the results shows just how badly the company is being hammered. Shares are down by 6.39% well into London’s trading day Thursday, adding to the last month’s brutal sell-off.

According to UK Channel 4’s Paul Mason, CEO Dave Lewis has been ordered by financial regulators not to explain the massive £250 million ($400 million) profit error that was revealed last month. That suggests that investors could be kept in the dark for months yet, just making the firm’s situation worse.

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If you have $3,650, you’re among the wealthiest half of people in the world

Cash - Public Domain

Global wealth grew by 8.3pc – its fastest rate ever – over the last year, reaching a worldwide total of $263 trillion, according to Credit Suisse’s Global Wealth Report for 2014. From average worth to millionaire growth, here are the other numbers you need to know.

• Over the past 12 months, the world got $20.1 trillion richer, growing at record pace to $263 trillion. That’s the first time household wealth has surpassed the $250 trillion mark.

• In 2013, global wealth increased by $21.9 trillion – the largest annual growth since 2000. That’s more than the total loss from the financial crisis in 2007 to 2008, which knocked $21.5 trillion off global wealth.

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Recovery? 60% Of Greeks Live At Or Below Poverty Levels

Greece Riots - Photo by Master of Puppets

While Greek government yields (and political leaders) proclaim the troubled peripheral European nation is ‘recovering’, the risk of major political upheaval in Greece has not gone away ahead of next year’s presidential vote next year. As Reuters notes, under growing pressure from anti-bailout leftists, Greek Prime Minister Antonis Samaras desperately needs a new narrative to get the backing of lawmakers and rally Greeks fed up with four years of austerity. We wish him luck as Keep Talking Greece notes, it is high time that the real data of the economic situation of the Greek society come to the surface and so it did this week. A report from Greece’s State Budget Office found that three in every five Greeks, or some 6.3 million people, were living in poverty or under the threat of poverty in 2013 due to material deprivation and unemployment.

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Get your money out of Britain: Global banks warn investors ‘Yes’ vote would be ‘cataclysmic’ for UK economy

Map Of Scotland - Photo by Rcsprinter123

International investors have been warned to pull their cash out of Britain to protect themselves against the ‘cataclysmic’ impact of Scottish independence.

Japan’s biggest bank, Nomura, warned sterling could plunge by 15 per cent in the event of a ‘Yes’ vote – amid warnings over a ‘run on UK assets’ threatening savings and pensions of ordinary families.

It came as it emerged David Cameron has pleaded with business chiefs to publicly warn against Scottish independence.

The Prime Minister asked company bosses at a Downing Street drinks event last night to ‘highlight the dangers of a Scottish exit in any way we can’.

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The Dire Straits of the Ukranian Economy

Despair - Public Domain

For the last few months, even before the turmoil began, Ukraine has been in an inflationary cycle. Both retail and asset prices were spiraling higher.

Now they’ve entered a stagflationary period. The currency has gone into freefall. Unemployment is rising. The economy is contracting (6% by phony government estimates). And inflation is a whopping 19%… and rising.

These people are getting abused. And the worst is yet to come.

The banking system is borderline insolvent. The head of the local Citigroup branch here said that the non-performing loan ratio in Ukraine is as high as 40%.

And potentially up to 4% of all bank assets are now locked down in Crimea, which may or may not even be part of Ukraine any longer.

If the banking system collapses (and many here suspect it will), this place will become unglued. Asset prices will collapse, yet retail prices will surge even higher.

I can already see it on the street; so many businesses have closed. Hopeless unemployed youths are now roaming the city or joining the war effort.

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China Says That It Is Up To The United States To Stimulate The Global Economy

China vs. America - Photo by Wangdora92

China’s finance minister said Wednesday that the country is not planning any new stimulus measures and it is up to the United States to drive the global economy.

Lou Jiwei said that leaders are satisfied with the country’s economic performance so far this year and that in the first five months China had created up to 6 million jobs, 60 percent of this year’s target.

Analysts say the ruling party appears willing to accept economic growth below its 7.5 percent target this year so long as the rate of creation of new jobs stays high enough to avoid political tensions.

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18 Signs That The Global Economic Crisis Is Accelerating As We Enter The Last Half Of 2014

Accelerating - Public Domain

A lot of people that I talk to these days want to know “when things are going to start happening”.  Well, there are certainly some perilous times on the horizon, but all you have to do is open up your eyes and look to see the global economic crisis unfolding.  As you will see below, even central bankers are issuing frightening warnings about “dangerous new asset bubbles” and even the World Bank is declaring that “now is the time to prepare” for the next crisis.  Most Americans tend to only care about what is happening in the United States, but the truth is that serious economic trouble is erupting in South America, all across Europe and in Asian powerhouses such as China and Japan.  And the endless conflicts in the Middle East could erupt into a major regional war at just about any time.  We live in a world that is becoming increasingly unstable, and people need to understand that the period of relative stability that we are enjoying right now is extremely vulnerable and will not last long.  The following are 18 signs that the global economic crisis is accelerating as we enter the last half of 2014…

#1 The Bank for International Settlements has issued a new report which warns that “dangerous new asset bubbles” are forming which could potentially lead to another major financial crisis.  Do the central bankers know something that we don’t, or are they just trying to place the blame on someone else for the giant mess that they have created?

#2 Argentina has missed a $539 million debt payment and is on the verge of its second major debt default in 13 years.

#3 Bulgaria is desperately trying to calm down a massive run on the banks that threatens of spiral out of control.

#4 Last month, household loans in the eurozone declined at the fastest rate ever recorded.  Why are European banks holding on to their money so tightly right now?

#5 The number of unemployed jobseekers in France has just soared to another brand new record high.

#6 Economies all over Europe are either showing no growth or are shrinking.  Just check out what a recent Forbes article had to say about the matter…

Italy’s economy shrank by 0.1% in the first three months of 2014, matching the average of the three previous quarters. After expanding 0.6% in Q2 2013, France recorded zero growth. Portugal shrank 0.7%, following positive numbers in the preceding nine months. While figures weren’t available for Greece and Ireland in Q1, neither country is showing progress. Greek GDP dropped 2.5% in the final three months of last year, and Ireland limped ahead at 0.2%.

#7 A few days ago it was reported that consumer prices in Japan are rising at the fastest pace in 32 years.

#8 Household expenditures in Japan are down 8 percent compared to one year ago.

#9 U.S. companies are drowning in massive amounts of debt, but the corporate debt bubble in China is so bad that the amount of corporate debt in China has actually now surpassed the amount of corporate debt in the United States.

#10 One Chinese auditor is warning that up to 80 billion dollars worth of loans in China are backed by falsified gold transactions.  What will that do to the price of gold and the stability of Chinese financial markets as that mess unwinds?

#11 The unemployment rate in Greece is currently sitting at 26.7 percent and the youth unemployment rate is 56.8 percent.

#12 67.5 percent of the people that are unemployed in Greece have been unemployed for over a year.

#13 The unemployment rate in the eurozone as a whole is 11.8 percent – just a little bit shy of the all-time record of 12.0 percent.

#14 The European Central Bank is so desperate to get money moving through the system that it has actually introduced negative interest rates.

#15 The IMF is projecting that there is a 25 percent chance that the eurozone will slip into deflation by the end of next year.

#16 The World Bank is warning that “now is the time to prepare” for the next crisis.

#17 The economic conflict between the United States and Russia continues to deepen.  This has caused Russia to make a series of moves away from the U.S. dollar and toward other major currencies.  This will have serious ramifications for the global financial system as time rolls along.

#18 Of course the U.S. economy is struggling right now as well.  It shrank at a 2.9 percent annual rate during the first quarter of 2014, which was much worse than anyone had anticipated.

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