Crisis
by
Chris Martenson
As we’ve been warning for quite a while (too long for my taste): the world’s grand experiment with debt has come to an end. And it’s now unraveling.
Just in the two weeks since the start of 2016, the US equity markets are down almost 10%. Their worst start to the year in history. Many other markets across the world are suffering worse.
If you watched stock prices today, you likely had flashbacks to the financial crisis of 2008. At one point the Dow was down over 500 points, the S&P cracked below key support at 1,900, and the price of oil dropped below $30/barrel. Scared investors are wondering: What the heck is happening? Many are also fearfully asking: Are we re-entering another crisis?
The Deflation Monster Has Arrived
by Chris MartensonAs we’ve been warning for quite a while (too long for my taste): the world’s grand experiment with debt has come to an end. And it’s now unraveling.
Just in the two weeks since the start of 2016, the US equity markets are down almost 10%. Their worst start to the year in history. Many other markets across the world are suffering worse.
If you watched stock prices today, you likely had flashbacks to the financial crisis of 2008. At one point the Dow was down over 500 points, the S&P cracked below key support at 1,900, and the price of oil dropped below $30/barrel. Scared investors are wondering: What the heck is happening? Many are also fearfully asking: Are we re-entering another crisis?
by
Chris Martenson
Executive Summary
- There are too many signs of deflation to deny it's winning the day
- Why China's weakening will accelerate the global economy's decent
- Why this next crisis will be worse than 2008
- What will it look like if things really get out of control (how bad could things get?)
- The best investments to be making now, before the rout
If you have not yet read The Deflation Monster Has Arrived, available free to all readers, please click here to read it first.
Too Many Warning Signs To Talk About
The deflationary monster is here and there are almost too many warning signs to list, let alone fully describe.
So I’ll just list and link them…you can follow up on the details if you want, it’s the ‘general vibe’ I want to get across.
Here are the signs of a weak economy that we are dealing with:
- Oil in the $20’s (!!)
- Copper under $2
- Baltic Dry Shipping Index at the lowest ever at 383 and down ~50% in the past year.
- Wal-Mart closing 269 stores, 154 in the US.
- Business inventories to sales at new cycle highs
- U.S. freight volume falls for first time in almost three years
- US retail sales fall 0.1% in December
- Empire State index weakens to recession lows.
- South African rand hits new all-time lows in 2016
- Brazil’s Real Falls Sharply Against Dollar
- Brazil Unemployment Rate Rises to 9%
- Canadian Dollar Hits 13 Year Low Against US Dollar
- U.S. Energy Junk Bond Spreads At Record Width
- Nigeria’s Currency Plummets On Open Market
- Mexico’s Peso Hits New All-Time Low
- Chinese Stocks Enter Bear Market (again)
- European Stocks Enter Bear Market
The pattern here is one of rapidly slowing economic activity and mounting pain starting “from the outside in” as emerging markets and the poor people within the core countries bear the brunt at first. Things always get rolling to the downside starting with the weakest, peripheral elements first.
Copper and oil are providing very clear signs that economic activity is not just slow, but in rapid retreat. Wal-Mart tells us that its shoppers are having trouble. The fresh all-time lows in a variety of currencies, plus massive weakness in others, is telling us that the virtuous portion of the liquidity cycle that the Fed, et al., unleashed on the world has entered the vicious part of the cycle.
The pain will spread to the center with increasing speed. The main question is if the authorities can stop that before the momentum becomes too great to halt? And what will happen if they cannot?
The answer to that is…
Why This Next Crisis Will Be Worse Than 2008
PREVIEW by Chris MartensonExecutive Summary
- There are too many signs of deflation to deny it's winning the day
- Why China's weakening will accelerate the global economy's decent
- Why this next crisis will be worse than 2008
- What will it look like if things really get out of control (how bad could things get?)
- The best investments to be making now, before the rout
If you have not yet read The Deflation Monster Has Arrived, available free to all readers, please click here to read it first.
Too Many Warning Signs To Talk About
The deflationary monster is here and there are almost too many warning signs to list, let alone fully describe.
So I’ll just list and link them…you can follow up on the details if you want, it’s the ‘general vibe’ I want to get across.
Here are the signs of a weak economy that we are dealing with:
- Oil in the $20’s (!!)
- Copper under $2
- Baltic Dry Shipping Index at the lowest ever at 383 and down ~50% in the past year.
- Wal-Mart closing 269 stores, 154 in the US.
- Business inventories to sales at new cycle highs
- U.S. freight volume falls for first time in almost three years
- US retail sales fall 0.1% in December
- Empire State index weakens to recession lows.
- South African rand hits new all-time lows in 2016
- Brazil’s Real Falls Sharply Against Dollar
- Brazil Unemployment Rate Rises to 9%
- Canadian Dollar Hits 13 Year Low Against US Dollar
- U.S. Energy Junk Bond Spreads At Record Width
- Nigeria’s Currency Plummets On Open Market
- Mexico’s Peso Hits New All-Time Low
- Chinese Stocks Enter Bear Market (again)
- European Stocks Enter Bear Market
The pattern here is one of rapidly slowing economic activity and mounting pain starting “from the outside in” as emerging markets and the poor people within the core countries bear the brunt at first. Things always get rolling to the downside starting with the weakest, peripheral elements first.
Copper and oil are providing very clear signs that economic activity is not just slow, but in rapid retreat. Wal-Mart tells us that its shoppers are having trouble. The fresh all-time lows in a variety of currencies, plus massive weakness in others, is telling us that the virtuous portion of the liquidity cycle that the Fed, et al., unleashed on the world has entered the vicious part of the cycle.
The pain will spread to the center with increasing speed. The main question is if the authorities can stop that before the momentum becomes too great to halt? And what will happen if they cannot?
The answer to that is…
by
Chris Martenson
Executive Summary
- Which countries are next in line to "go Greek"?
- Which major countries will be hit by deflation next? Which will instead see massive inflation?
- How individuals should start preparing
- Why huge massive losses and wealth transfer are inevitable for many
If you have not yet read Part 1: Greece Exposes The Global Economy's Achilles Heel, available free to all readers, please click here to read it first.
At a high level, the suite of predicaments we face are as obvious as they are serious.
Perhaps the largest predicament we face is that infinite economic growth on a finite planet is an impossibility and yet that's exactly what our monetary and banking systems require.
Not merely because the bankers and politicians want it, which they do, but because that's how the system itself is designed. When you loan money into existence, you get an exponential increase of that money over time. Actually you get an exponential increase in debt too, only at a faster pace which translates into larger quantities.
For as long as debts are growing at an exponential pace, everything is fine with the world, the economy hums along, politicians get re-elected and the big banks churn out profits year after year.
However, when the debt growth stops, financial panic sets in, the banking system threatens collapse, and the fiscal and monetary authorities pull out all the stops in their efforts to prevent these various ills from getting any worse.
What the political and banking folks are desperately seeking to prevent is nothing less than a Great Unraveling.
Their task is impossible.
The Great Unraveling will be a set of related economic and financial crises that end up taking inflated expectations and reducing them to match reality. Perhaps this process will take years, or maybe it will take decades, or maybe it will take months. Nobody knows. But the longer that…
The Approaching Great Unraveling – Are You Prepared?
PREVIEW by Chris MartensonExecutive Summary
- Which countries are next in line to "go Greek"?
- Which major countries will be hit by deflation next? Which will instead see massive inflation?
- How individuals should start preparing
- Why huge massive losses and wealth transfer are inevitable for many
If you have not yet read Part 1: Greece Exposes The Global Economy's Achilles Heel, available free to all readers, please click here to read it first.
At a high level, the suite of predicaments we face are as obvious as they are serious.
Perhaps the largest predicament we face is that infinite economic growth on a finite planet is an impossibility and yet that's exactly what our monetary and banking systems require.
Not merely because the bankers and politicians want it, which they do, but because that's how the system itself is designed. When you loan money into existence, you get an exponential increase of that money over time. Actually you get an exponential increase in debt too, only at a faster pace which translates into larger quantities.
For as long as debts are growing at an exponential pace, everything is fine with the world, the economy hums along, politicians get re-elected and the big banks churn out profits year after year.
However, when the debt growth stops, financial panic sets in, the banking system threatens collapse, and the fiscal and monetary authorities pull out all the stops in their efforts to prevent these various ills from getting any worse.
What the political and banking folks are desperately seeking to prevent is nothing less than a Great Unraveling.
Their task is impossible.
The Great Unraveling will be a set of related economic and financial crises that end up taking inflated expectations and reducing them to match reality. Perhaps this process will take years, or maybe it will take decades, or maybe it will take months. Nobody knows. But the longer that…
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