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.

The Red Horse Is “At The Edge Of The Precipice” As China Threatens The U.S. With “Revenge” For Siding With The Hong Kong Protesters

A new “cold war” has officially begun, and it could potentially throw the entire world into a state of chaos. As you will see below, China is warning the U.S. to “rein in the horse at the edge of the precipice” as the conflict between our two nations threatens to spiral out of control. This week, the Senate and the House of Representatives both passed the “Hong Kong Human Rights and Democracy Act of 2019”, and this new law is essentially a public declaration that the U.S. government fully supports the protesters in Hong Kong. For the past five months, violent protests have been rocking the streets of Hong Kong, and this week we witnessed the worst violence yet. Hong Kong police conducted an extended siege of protesters that were holed up at a university campus, and the horrific human rights violations have shocked the whole planet. Since the beginning of the siege, hundreds of protesters have been injured and more than 1,000 of them have been arrested. It is a major crisis, and our representatives in Congress felt compelled to do something.

But to the Chinese, this move by Congress is being viewed as a direct intervention in their internal affairs. The protesters in Hong Kong want independence from China, and that is a very noble goal, but the communist Chinese government will never, ever allow that to happen. For Chinese leaders, the status of Hong Kong is something that must never be questioned, and so when the U.S. Congress publicly sided with the protesters it felt like an insult to their national honor. In essence, over in China this new law is being viewed as a direct assault on Chinese sovereignty, and it has created a tremendous uproar.

But here in the United States, most Americans don’t even know that the “Hong Kong Human Rights and Democracy Act of 2019” was unanimously passed by the Senate on Tuesday and then passed by a vote of 417 to 1 in the House of Representatives on Wednesday.

In fact, the mainstream media is so obsessed with covering the impeachment proceedings that they have devoted very little coverage to what Congress just did.

But the truth is that this is one of the biggest news stories of the entire decade.

And the fact that Republicans and Democrats were united on this issue is a very big deal. The following is what Nancy Pelosi had to say after the bill was passed by the House…

“The Congress is sending an unmistakable message to the world that the United States stands in solidarity with freedom-loving people of Hong Kong and that we fully support their fight for freedom,” Speaker Nancy Pelosi said on the House floor. “This has been a very unifying issue for us.”

Reuters is reporting that President Trump is expected to sign the bill, and even if for some reason he didn’t there are more than enough votes to override any veto.

What this means is that the next election is not going to change anything. Siding with the Hong Kong protesters will still be official U.S. policy no matter who wins in 2020.

Needless to say, the Chinese are extremely angry about this new law, and the official newspaper of the ruling communist party is warning that the U.S. needs to “rein in the horse at the edge of the precipice” and that China will soon “take resolute revenge”

On Thursday, the ruling Chinese Communist Party’s main newspaper, the People’s Daily, urged the United States to “rein in the horse at the edge of the precipice” and stop interfering in Hong Kong matters and China’s internal affairs.

“If the U.S. side obstinately clings to its course, the Chinese side will inevitably adopt forceful measures to take resolute revenge, and all consequences will be borne by the United States,” it said in a front-page editorial.

And Chinese Foreign Ministry spokesperson Geng Shuang is warning that the U.S. should brace for “strong countermeasures”

China “condemns and firmly opposes” the legislation that Trump plans to sign, according to a statement from Foreign Ministry spokesperson Geng Shuang after Tuesday’s Senate vote.

“The U.S. should immediately stop interfering in Hong Kong affairs and China’s other internal affairs, or the negative consequences will boomerang on itself,” the statement said. “China will have to take strong countermeasures to defend our national sovereignty, security and development interests if the U.S. insists on making the wrong decisions.”

We aren’t just talking about a trade war anymore. The Chinese now view us as enemy number one, and they are going to play hardball.

I wish that I could get everyone to understand how serious this is. Most Americans couldn’t care less about what happens over in China, but the Chinese have been steaming about U.S. interference in their affairs for months.

In fact, the Chinese government was accusing the U.S. of being behind the Hong Kong protests all the way back in July

“As you all know, they are somehow the work of the US,” Foreign Ministry spokeswoman Hua Chunying said at a press conference in Beijing.

Hua added that China would “never allow any foreign forces” to interfere in the semi-autonomous city, and warned that “those who play (with) fire will only get themselves burned.”

Of course the U.S. denies being behind the protests, but now that the U.S. Congress is publicly supporting the protesters it really doesn’t matter.

To the Chinese, it certainly looks like the U.S. is trying to encourage civil unrest in Hong Kong, and for them that crosses a red line that should have never been crossed.

The only way that our relations with China could be repaired now would be if Congress voted to repeal this new law, and that simply is not going to happen.

So that means that this new “cold war” is here to stay, and we better hope that it doesn’t turn into a “hot war”.

The Chinese do not forgive, and they do not forget. As this new “cold war” escalates, they are going to try to make us hurt every way that they can, and most Americans have absolutely no idea what that could possibly mean.

I will publish the second part of this article on The Most Important News later tonight, and in that article I will discuss some of the economic implications of this move that Congress just made.

Yes, supporting the protesters in Hong Kong is certainly a noble thing to do. But by publicly insulting China’s national honor and directly assaulting China’s sovereignty over Hong Kong, Congress has set in motion a chain of events that nobody is going to be able to control.

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.

Global Stocks Enter Bear Market: One-Fifth Of All Worldwide Stock Market Wealth Is Already Gone

Stock Market Bear Bull - Public Domain

It’s official – global stocks have entered a bear market. On Wednesday, we learned that the MSCI All-Country World Index has fallen a total of more than 20 percent from the peak of the market. So that means that roughly one-fifth of all the stock market wealth in the entire world has already been wiped out. How much more is it going to take before everyone will finally admit that we have a major financial crisis on our hands? 30 percent? 40 percent? This new round of chaos began last night in Asia. Japanese stocks were down more than 600 points and Hong Kong was down more than 700 points. The nightmare continued to roll on when Europe opened, and European stocks ended up down about 3.2 percent when the markets over there finally closed. In the U.S., it looked like it was going to be a truly historic day for a while there. At one point the Dow had fallen 566 points, but a curious rebound resulted in a loss of only 249 points for the day.

As bad as things are in the U.S. right now, the truth is that we still have a long way to go to catch up with the rest of the planet. Around the world, many major stock indexes are already down more than 30 or 40 percent. Overall, the MSCI All-Country World Index is now down 20 percent, which officially puts us in bear market territory

The MSCI All-Country World Index, which measures major developed and emerging markets, fell into a bear market Wednesday, with its decline from early last year now totaling more than 20 percent.

A plunge in U.S. stocks, which caused the Dow Jones industrial average to decline by more than 400 points at one point, pushed the global index into bear territory at midmorning during New York trading.

Japan fell into a bear market as well as the Nikkei 225 index dropped 3.7 percent Wednesday, bringing its total pullback to 22 percent from its high in June.

Much of this chaos is being driven by the price of oil. On Wednesday the price of U.S. oil dropped below 28 dollars a barrel for a while, and as I write this article Brent crude is still below 28 dollars a barrel.

As energy prices continue to plummet, this is putting a tremendous amount of pressure on junk bonds. On Wednesday JNK actually dipped beneath 32.00 for a time before rebounding at the end of the day. I expect to see junk bonds continue to crash during the days ahead as investors feverishly race for the exits.

And of course global economic fundamentals continue to deteriorate as well. Global trade is absolutely imploding and shipping rates have fallen to unprecedented levels. If you can believe it, Bloomberg is reporting that it is now actually cheaper to rent a 1,100 foot merchant vessel 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.

I could hardly believe that when I first read it.

But this is the kind of thing that we would expect to see happen when the greatest financial bubble in world history bursts.

The 200 trillion dollar global debt pyramid is now collapsing all around us, and the former chief economist of the Bank for International Settlements is warning that we could soon be facing “an avalanche of bankruptcies”

The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned.

The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up,” said William White, the Swiss-based chairman of the OECD’s review committee and former chief economist of the Bank for International Settlements (BIS).

Of course it is a little late in the game to be warning us about this now.

At this point there is very little that can be done to stop the collapse that is already happening.

White went on to tell the Telegraph that things are going to become “uncomfortable for a lot of people who think they own assets that are worth something”…

It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something,” he told The Telegraph on the eve of the World Economic Forum in Davos.

For years, I have been warning that the global financial system is an incredibly shaky house of cards, and now we have finally reached the endgame.

But the mainstream media in the United States is telling everyone not to panic. Instead of a time to sell, the mainstream media is urging people to jump in and take advantage of all of the “great deals” in the stock market right now. I really like what Mike Adams of Natural News had to say about what we are seeing…

The pathetically stupid and dishonest financial media is desperately running stories right now to maintain false faith in the markets, even while their own people are behind the scenes selling like mad. As long as they can keep the public believing in the “faith” of never-ending cheap money, they can bail out their own positions to suckers and fools who think a tiny dip in a massively overvalued, fraudulent market is a “buying opportunity.”

Watch for desperate headlines from propaganda financial outlets (such as MarketWatch.com) like, “10 reasons you shouldn’t sell” or “The upside potential of the market is HUGE!” These are psychological operations to try to persuade people that the collapse they’re seeing in global markets isn’t actually happening.

The financial chaos that has erupted in recent weeks has really caught a lot of people by surprise, but my readers knew that it was coming well in advance.

For months, I have been warning about this exact kind of scenario.

The deflationary financial meltdown that started during the last six months of 2015 is now making headlines all over the planet, and what we have experienced so far is just the tip of the iceberg.

The bears have gotten out of their cages, and global investors are running for cover. Nobody is exactly sure what is going to happen tomorrow, but without a doubt the entire world will be watching.

(Originally published on The Economic Collapse Blog)

7 Percent Crash Causes Emergency Shutdown Of Stock Markets In China For The 2nd Time In 4 Days

Panic Button

Did you see what just happened in China? For the second time in four days, a massive stock market crash has caused an emergency shutdown of the markets in China. On both Monday and Thursday, trading was suspended for 15 minutes when the CSI 300 fell 5 percent, and on both days the total decline very rapidly escalated to 7 percent once trading was reopened. Once a 7 percent drop happens, trading is automatically suspended for the rest of the day. I guess that is one way to keep the stock market from crashing – you just don’t let anyone trade. And of course the panic in China is causing other markets to go haywire as well. As I write this, the Nikkei is down 324 points and Hong Kong is down 572 points.

The amazing thing is that trading was only open in China for about 15 total minutes tonight. Here is how CNBC described what just happened…

China’s stocks were suspended from all trade on Thursday after the CSI300 tumbled more than 7 percent in early trade, triggering the market’s circuit breaker for a second time this week.

That drop-kicked stock markets across Asia, which were already wallowing after a weaker open amid concerns over China’s economic slowdown and its depreciating currency as well as falling oil prices.

On the mainland, the Shanghai Composite tumbled 7.32 percent by at the time of the halt, while the Shenzhen Composite plummeted 8.34 percent. The CSI300, the benchmark index against which China’s new circuit breakers are set, plunged 7.21 percent. If that index rises or falls 5 percent, the market halts all trade for 15 minutes. If it moves 7 percent, trading will be suspended for the rest of the day. In total Thursday, China shares only traded around 15 minutes.

How will European and U.S. markets respond to the chaos in Asia when they open?

That is a very good question. I think that everybody will be watching.

Already, the Dow Jones Industrial Average is down about 500 points for the year. The financial crisis that began in the second half of 2015 is now accelerating as we enter 2016, and nobody is quite sure what is going to happen next.

One key to watch is what happens with the S&P 500.

2000 is kind of like a giant line in the sand on the S&P 500. On Wednesday we saw the market hover around that psychologically-important number, and there is a whole lot of resistance right there. If we break solidly through 2000 and start plunging toward 1900, that is going to break things wide open.

The primary reason for the stock market crash in China on Thursday was another stunning devaluation of the yuan. This explanation from Zero Hedge is very helpful…

Following the collapse of offshore Yuan to 5 year lows and decompression to record spreads to onshore Yuan, The PBOC has stepped in and dramatically devalued the Yuan fix by 0.5% to 6.5646. This is the biggest devaluation since the August collapse. Offshore Yuan has erased what modest bounce gains it achieved intraday and is heading significantly lower once again. Dow futures are down 100 points on the news.

PBOC fixes Yuan at its weakest since March 2011… with the biggest devaluation since August

Yuan Devaluation

A massive devaluation of the yuan was also one of the primary reasons for the market turmoil that we saw back in August. The Chinese are playing games with their currency, and this is causing havoc in the global marketplace.

Meanwhile, we have received some other very troubling news about the global economy over the past few days…

-The price of oil continues to collapse. As I write this, the price of U.S. oil is down to $33.26 a barrel. Those that follow my writing regularly already know that this is a really bad sign for the global economy.

-The Baltic Dry Index just hit another brand new all-time record low. Global trade is absolutely imploding, and this is having a devastating impact on China and other major exporting nations.

-U.S. manufacturing is contracting at the fastest pace that we have seen since the last recession. This is precisely what we would expect to see during the early stages of a new crisis.

-U.S. manufacturing imports are also contracting at the fastest pace that we have seen since the last recession. It appears that “the almighty U.S. consumer” is not going to save the global economy after all.

In 2015, trillions of dollars of stock market wealth was wiped out globally. Now this new global financial crisis is picking up speed, and many of the “experts” seem absolutely stunned by what is happening.

But most of my readers are not surprised. That is because I have been breaking down the signs that have been warning us of this new crisis in excruciating detail for months. The financial carnage that we have witnessed around the globe this week is simply a logical progression of what has already been happening.

To be honest, though, even I have been stunned by what has happened in China this week. I can’t say that I expected an emergency shutdown of the Chinese markets two times within the first four trading days of the year.

Panic and fear are beginning to grip the global marketplace, and once that starts to happen events become very difficult to predict.

Let us hope that things settle down soon, but I wouldn’t count on it.

As I have said before, 2016 is the year when everything changes, and we are going to see things take place over the next 12 months that are going to shock the world.

(Originally published on The Economic Collapse Blog)

Stock Markets All Over The Globe Are Crashing

Dominoes - Public Domain

The first trading day of 2016 was full of chaos and panic.  It started in Asia where the Nikkei was down 582 points, Hong Kong was down 587 points, and Chinese markets experienced an emergency shutdown after the CSI 300 tumbled 7 percent.  When European markets opened, the nightmare continued.  The DAX was down 459 points, and European stocks overall had their worst start to a year ever.  In the U.S., it looked like we were on course for a truly historic day as well.  The Dow Jones Industrial Average was down 467 points at one stage, but some very mysterious late day buying activity helped trim the loss to just 276 points at the close of the market.  The sudden market turmoil caught many by surprise, but it shouldn’t have.  The truth is that a whole host of leading indicators have been telling us that this is exactly what should be happening.  The global financial crisis that began in 2015 is now accelerating, and my regular readers already know precisely what is coming next.

The financial turmoil of the last 24 hours is making headlines all over the globe.  It began last night in China.  Very bad manufacturing data and another troubling devaluation of the yuan sent Chinese stocks tumbling to a degree that we have not seen since last August.  In fact, the carnage would have probably been far, far worse if not for a new “circuit breaker” that China recently implemented.  Once the CSI 300 was down 7 percent, trading was completely shut down for the rest of the day.  The following comes from USA Today

Under a new market “circuit breaker” rule in China established last year, which is designed to slow down markets and halt panic in the event of moves of 5% or more, the CSI 300, a large-company stock index in mainland China was halted for 15 minutes in mid-afternoon trading after diving more than 5%. But when shares headed lower once again just minutes after the initial trading halt, and losses for the day swelled to more than 7%, the new circuit breaker rules kicked in, prompting a shutdown of mainland China’s stock market for the day, according to Bloomberg.

After the first 15 minute halt, panic set in as Chinese traders rushed to get out of their trades before the 7 percent circuit breaker kicked in.  This resulted in an absolutely chaotic seven minutes as investors made a mad dash for the exits…

The sell orders piled up fast on Monday at Shenwan Hongyuan Group, China’s fifth-biggest brokerage by market value.

China’s CSI 300 Index had just tumbled 5 percent, triggering a 15-minute trading halt, and stock investors were scrambling to exit before getting locked in by a full-day suspension set to take effect at 7 percent. When the first halt was lifted, the market reaction was swift: it took just seven minutes for losses to reach the limit as volumes surged to their highs of the day.

“Investors rushed to the door during the level-one stage of the circuit breaker as they fretted the market would go down further,” said William Wong, the head of sales trading at Shenwan Hongyuan in Hong Kong.

The financial carnage continued once the European markets opened.  Markets were red all across the continent, and things were particularly bad in Germany.  The DAX was down 459 points, and it is rapidly approaching the psychologically-important 10,000 barrier.  Overall, it was the worst start to a year that the European markets have ever experienced.

When U.S. markets opened, unexpectedly bad U.S. manufacturing data seemed to add fuel to the fire.  Monday morning we learned that our manufacturing sector is contracting at a pace that we haven’t seen since the last recession

America’s manufacturing sector shrank for the second straight month in December. The industry’s key index — ISM — hit 48.2% in December, the lowest mark since June 2009. Anything below 50% is a contraction and a month ago it hit 48.6%.

The index has fallen for six straight months.

The trend is certainly heading in a direction that would ring alarm bells,” says Sam Bullard, senior economist at Wells Fargo.

This is yet another sign that tells us that the U.S. economy has already entered the next recession.

And what happens to the markets during a recession?

They go down.

In addition to the bad data that we got from the U.S. and China, there was another number that was also extremely troubling.

South Korean exports have traditionally been considered a key leading indicator for the entire global economy, and on Monday we learned that they were down a whopping 13.8 percent in December from a year earlier…

One of the more reliable indicators of the global economy continues to confirm fears of a worldwide slowdown.

South Korean exports — also referred to as the world’s economic canary in the coal mine — fell 13.8% in December from a year earlier.

This was a deterioration from the 4.8% decline in November, and it was much worse than the 11.7% decline expected by economists.

The “nothing is happening” crowd may not be willing to admit it yet, but the truth is that a major global economic slowdown is already happening.

And what happened to global markets today is perfectly consistent with the longer term patterns that have been emerging over the past six months or so.

In the weeks and months to come, things are going to get even worse.  There will always be days when the markets are up, but don’t let those days fool you into thinking that the crisis is over.  In the western world we are so accustomed to 48 hour news cycles, and many of us seem to be incapable of focusing on trends that develop over longer periods of time.

If I was going to put together a scenario for a global financial crisis for a textbook, what we have seen over the past six months or so would be perfect.  Things are playing out exactly how they should be, and that means big trouble for the rest of 2016.

But that doesn’t mean that we have to live in fear.  In fact, I just wrote an entire article entitled “2016: A Year For Living With No Fear“.  It is when times are at their worst that our character is put to the test.  Some will respond to what happens in 2016 with courage and strength, and others will respond with fear and panic.

As things start falling apart all around us this year, how will you respond?

(Originally published on The Economic Collapse Blog)

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