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Epocalypse Soon: The Great Economic Collapse is Happening

HitlerReaper

I use the term “epocalypse” to name the last days of the global economy as we know it — a global economic collapse of biblical proportion. It is economic, epochal, an apocalypse that will change the world and a collapse … all in one word that sounds the right size for what I’m talking about. Call it the “Great Collapse” or the “Epocalypse.” Whatever you call it, it’s about to change the world.

I am referring to an economic crisis so big that the global economy will be forever different after those days. This economic collapse has already begun throughout the world, but I am holding off on using the title “Epocalypse Now” until the US stock market joins the crash. That’s the point at which we’re all in (i.e., at a level where everyone knows it and denial that it is happening falls apart). I anticipate making that call in a matter of days now. Here is where we stand at present:

 

Destruction of Jerusalem as Metaphor for Economic Collapse on an Apocalyptic Scale

Economic collapse is already global

Open your eyes to a wider scope than just the US stock market, and it’s as if a fog lifts all around you to reveal a war-ravaged landscape. It may not be like the landscape described in the New Testament book, The Apocalypse (The Revelation), but it’s moving in that kind of direction. Let me describe what is already unfolding in case you haven’t caught the big picture.

 

  • The energy crash is certain to worsen. The news last week that OPEC is not going to lower output, makes it clear that OPEC is in the energy price war for the duration. Driven by the Saudis, OPEC nations will assure oversupply until they see several major oil companies in the US collapse. To lower output now and raise oil prices would be to have suffered a year of pain for absolutely nothing. OPEC is committed to breaking the US fracking industry, and it’s doing a pretty good job of it. That means energy stocks and oil prices are down for the long term. The price of oil now matches its lowest point in the Great Recession.
  • All commodity prices are collapsing, and the situation is clearly going to worsen and stay bad for a long time. China’s demand for natural resources is not coming back for many years, as its slowdown was intentional, albeit apparently out of control. Because of its slowdown, China became a net seller of materials this year, versus a net buyer. This has become huge bad news for companies all over the world in the natural-resources industry. China is now playing a similar role in all natural resources to that played by OPEC in oil. China has huge overcapacity now in its production of refined materials, but it is cheaper to run some businesses at a loss than to shut them down due to fixed expenses, liabilities, etc. These businesses are underpricing their global competitors, hoping to shut them down so that Chinese businesses can survive in a market of reduced demand. This is crushing major US companies like Alcoa, which has closed down smelters because it cannot compete against the lower price of Chinese aluminum. Copper, to give another example is down 37% from its last high in June of 2014. All of this is a longterm change in the commodities market that is affecting the entire natural-resources industry. The Bloomberg Commodities Index has hit its lowest level in sales of all commodities valued in dollars since 1999. The global overcapacity in steel production alone is estimated at 700,000,000 tons a year. China is exporting deflation all over the world. And major commodity crashes are usually a harbinger for stock market crashes and overall economic crashes.
  • Globally, twenty-seven stock markets are now in correction (a decline of 10% or more) with thirteen of those being bear markets (a decline of 20% or more). Several markets have fallen more than 30%. Trillions of dollars have evaporated around the world. These all-out crashes can be found in Asia, Europe, the Middle East, Africa and South America. They are, in other words, global in extent and include such major economies as the United Kingdom, Germany, China, Canada, Australia and India — not just the usual trouble spots. The last time we saw such widespread stock-market carnage was in 2008 in the first part of the Great Recession. So, it is no overstatement to say we already have a global stock market crash. If you’re in the United States, you might not be feeling the epocalypse yet; but the rest of the world is; and once the US is in, things will become even worse for the rest of the world, which in turn will make things worse for the US.
  • Economic collapse is everywhere; several economies have seen recession this year. Japan, Canada, Australia, Russia, Ukraine, Brazil and Greece are just some of the nations that have officially been in recession during 2015.  Japan, of course, has revised its numbers to claim it is not really in recession. Whatever. If you’re that close that you can’t figure it out, you might as well be considered in. For Japan this makes five recessions in seven years. Global GDP — the sum of all national GDPs — has been falling for a year. The only other time in the past half century that has seen any drop in global GDP was 2008, during which it fell the same amount that it has fallen this year. As recessions are measured by drops in GDP, this means the globe overall is in recession. So, I’m already correct this year in my major prediction that global economic collapse would be a fact this fall. It is a fact.
  • Global economic trade has been collapsing all year. It is down 8.4%, and the rate of decline is getting steeper. The Baltic Dry Index, which monitors shipping costs, has dropped from 809 to 628 in just one month. Container costs go down as demand goes down, and shippers compete more fiercely for fewer customers. The China Containerized Freight Index has hit a record low, falling 31% for the year. German exports were down 18% for the year; US exports, down 10%. Shipping giant Maersk says that shipping indicates the global economy is actually doing worse than most economic projections indicate.
  • Europe is trying to absorb millions of impoverished refugees. Already teetering on recession, Europe averages an unemployment rate of 10%. I have to wonder why European leaders think Europe actually has the financial capacity to absorb millions of jobless refugees. Who is going to support them? Millions of jobless Europeans? The situation has the makings of social calamity, even without the huge cultural divide between the refugees and Europeans and even aside from the risk that such rapid immigration makes it easier for terrorists to slip in among the immigrants. Europe’s leaders are completely unrealistic about Europe’s capacity to absorb the refuge crisis.
  • Islamic terrorism is not going away. Forty-nine nations that are predominantly Islamic want to see the entire globe ruled by Sharia. Many of them are directly funding terrorists. ISIS is expanding its recruitment within nations all over the world, claiming now is the time for Muslims everywhere to rise up in battle within their own nations. Its efforts are sophisticated and inspirational, such as this new song in Mandarin in China (lyric translation). This epic battle creates a high security cost to the economies of all Western nations at a time when they are already weak … and ISIS knows this. Their philosophy is to strike the giant while he is ailing in order to bring him down for good.

 

The ISIS Apocalypse: The History, Strategy, and Doomsday Vision of the Islamic State

 

Economic collapse developing in the US

 

  • Junk bond interest is skyrocketing as the high-yield bond market begins to collapse. The US collapse into the Great Recession was led by junk bonds. Obviously, as junk bonds become riskier, the amount offered in interest to attract financiers rises. So, skyrocketing interest equates to a perception of skyrocketing risk. Junk bond interest this year has taken on that distinct “hockey stick” shape, reaching its highest level in five years. That rise is across the board, not just in industries where it would be expected, such as financing in the energy industry. Those who already hold high-yield bonds are seeing their first annual loss since 2008 as they seek to dump bonds that have a growing risk of default. Risky bonds usually average about one-and-a-half times the yield of safer bonds. They now average four times the yield in order to find buyers. This the start of a bond market sell-off. UBS, the largest bank in Switzerland, reported recently that over a trillion dollars of junk bond issuers are having troubles refinancing. This adds up to a likelihood of large defaults in corporate junk bonds like the defaults that created the Great Recession. Junk-bond crashes also have a longstanding reputation of foreshadowing stock-market crashes. The potential Fed rate hike is exacerbating the rise in interest. The US economy now stands at the brink of the second crash of the Great Recession — the Epocalypse.
  • The US Dept. of Agriculture has forecast that farm incomes will decline 38% this year. Not dire for everyone, but it calls to mind years of the Great Depression when farmers struggled against drought during a time of economic collapse, and it does add more downward pressure on some parts of the economy, including major corporations like John Deere. Poor farmers don’t buy expensive farm equipment if they can avoid it. They also don’t buy cars and trucks and a lot of other things. It all adds to the impact that the oil crash is having on the midwest.
  • Major retailers are in decline. Target, Macy’s, Dick’s Sporting Goods, Walmart, Best Buy, Nordstrom, Kohl’s, Tiffany are all experiencing trouble. Sales are dropping so that inventories are backing up. The Wall Street Journal just published a story titled “Retailers Ring Alarm Bells for the Holiday Season,” which describes the decline as “shockingly bad.” This is not due entirely to customers switching from brick-and-mortar stores to online purchases. Bank of America reports that credit-card purchases, which happen equally in both physical stores and online stores, took their first holiday-season decline (year-on-year) since the official years of the Great Recession. Part of the decline, they say, but not all of it, was due to the drop in fuel prices, also purchased with credit cards; but part of it is due to retail.
  • Auto loans and student loans are a leaning tower of debt. Auto sales have peaked only as a result of a huge extension of looser, loser credit where loan terms are now up to seven years long, and interest is low or non-existent as are down payments. The last time we saw such desperate financing measures in the auto industry was just before the Great Recession, and we all know what happened to the auto industry then. We also know what happened to the housing industry when it peaked because of this kind of looser credit. We’ve learned nothing and have repeated the problem … on steroids. So, another crash is coming.
  • The US manufacturing sector is already in recession. When the index run by the Institute for Supply Management (the ISM index) falls below a reading of 50, it means US manufacturing is in contraction. Last month, it finally caved in to a level of  48.59. This is not a fluke. The index has been in steady decline since this past June. 65% of the times when the ISM index has gone below 50, the US economy has gone into recession. The 35% of the times when it did NOT go into recession were times that had nowhere near the downward economic pressures that the present time already has. The direction the ISM index moves has been a nearly perfect predictor of the direction US gross domestic product moves, and GDP is the measure by which economists determine if an economy is in expansion (growth) or contraction (recession). The last time the ISM index hit this level was during the pit of the Great Recession in 2009.
  • Dow Theory is waving a bright-red flag. Shipping companies, railroads and trucking companies are all in serious decline, as is Cummins, the maker of diesel engines, as is the sale of new trucks, new rail cars and new ships … because products and resources are not moving nearly as fast as they were. Sales are down. Stocks are down. The Port of Los Angeles reports a 15% decline in container shipping volume this year. Both imports and exports are down. Orders of large trucks are down 44% year-on-year. Railcar orders plunged 83% year-over-year in the third quarter, the largest decline in almost thirty years! Year-to-date, the Dow Jones Transportation Average has gone from a value of 9,200 to 7,800, a 15% drop.  The Dow Jones Industrial Average, on the other hand, has lost less than half a percent for the year. According to Dow Theory, a healthy stock market with a good future sees both the Industrial Average and the Transportation Average going up together. When they diverge (especially this dramatically) trouble is afoot. The theory is based on the idea that, when manufacturers are doing well, they produce more, AND they ship more. Transportation stocks are seen as the leading indicator. If shipping is slowing, demand is slowing, and so manufacturing will have to slow down, too, as inventories start to pile up. Exactly what we’ve been seeing all year. Since transportation stocks have dropped 15% overall, Dow Theory suggests that manufacturing has a similar or even greater decline waiting for it, as manufacturing slows to match plunging demand and rid itself of existing overstock.
  • Hedge funds are tanking. Money managers who made big names for themselves are failing. They have been failing all year. Some have been failing for a few years now, and their problems are only getting worse. Why is it that the nation’s top stock pickers can no longer pick winning stocks to save their souls? Could it be that the stock market no longer works as a market for buying and selling interest in corporations but is purely a casino so that traditional fund managers no longer know how the game operates? Do you even wonder? When those with reputations of great economic success fail spectacularly and in fairly large numbers, can economic collapse be far behind?
  • The US stock market now rides on only ten stocks. Right now the US stock market is the best looking horse at the glue factory, so a whopping ten of its stocks are still fetching enough bids to keep the entire US stock average above water. Most of the US stock market is already in recession. When support in the market narrows down to only a handful of stocks that are going up in value enough to keep the market’s average up, that leaning out is nearly always the dying breath of a bull market. It means investors are finding very few stocks they have confidence in and are crowding into those few remaining shares like rats running to the highest point of a sinking ship. But the rats that are really running are the insiders, such as CEOs. Insider selling of stocks in November reached its fourth-highest level in the history of the New York Stock Exchange. The rich are running and are propping up their share values while they run by using corporate credit to have the corporations they run buy back shares.
  • Corporate sales have been down every quarter of 2015, and stock buybacks have been the market’s main support to share prices. Stock values have not risen due to sales but due to companies using cheap interest loans (as a result of the Federal Reserve’s policies) to buy back their own shares, creating their own demand in the stock market. The last time we saw such an incestuous frenzy of buybacks as we have in 2015 was in 2007. We all know what happened right after that. With no reason for sales to go up and with interest rates likely going up, buybacks will end, so stock prices will fall. Any companies that have to refinance their debt will have to do so at higher interest at a time of declining sales, exacerbating their decline.
  • The Fed will raise interest rates in December. The gauges for jobs that the Federal Reserve pays the closest attention to when deciding on interest targets came in so strong last month that the Federal Reserve would be hard-pressed to find another reason to keep interest down. While Permabear Peter Schiff has predicted repeatedly that the Fed will not raise rates and will go straight into a fourth round of quantitative easing, I have strongly disagreed throughout the year, maintaining that the Fed is blind and, so, it will raise rates because it looks at a very limited array of gauges and will not see the economic demise that is happening all around it any better this time than it did when Ben Bernanke declared in 2008 that the Fed saw no hint of a recession in sight, even as it turned out he was already standing knee-deep in the middle of one!
  • China’s yuan is now a global reserve currency. That threatens the supremacy of the US dollar as a reserve currency. China, once the United States’ major financier of national debt has divested from US treasuries. So, has Russia, once the second-largest financier of US debt. Longterm, this indicates higher interest rates on US debt as major buyers have already moved away and more may move away now that China’s yuan represents an option for storing sovereign treasure. With the national debt now four times higher than the mountain of debt that existed before the Great Recession, this could be calamitous.

 

That’s the large picture. When you see large blocks of it all at once like that, you get more of a sense of the scale of economic collapse that is coming. Note that none of the enormous pressures above appear likely to reverse anytime soon.

 

The Great Economic Collapse symbolized in four fallen horses in battle

The Four Fallen Horsemen of the Epocalypse

My conclusions about global economic collapse in 2015

 

Major hedge funds collapsing, only ten stocks carrying the whole stock market, junk bonds failing rapidly, commodities crashing spectacularly and for the long term. Are these not the four horsemen of an economic apocalypse? Is that the company you really want to ride with. If not, get out!

The US stock market is teetering on collapse just as the Fed is ready to raise interest — the perfect timing I have predicted all along for Fed foolishness  — the one thing the Fed excels at. The perfect storm. As a reader of this blog, you have the advantage of knowing what the Fed will do, when it will do it, and how oblivious the Fed will be to understanding that it is crashing its own false economy. You can’t do anything to stop the Fed’s childish ignorance. You can only watch it unfold from as safe a seat as you can find. So, find it quickly because the US is about to go over the cliff with the rest of the world.

Clearly, 2015 is a year when things fall apart as a result of the end of quantitative easing at the end of 2014. The year has unfolded just as I predicted it would. I’ve bet my blog that we will go into global economic collapse (already a fact), and that the US stock market and overall US economy will go over the cliff with the rest of the world this fall (fourth quarter), so I have a lot at stake in the next few weeks.

If you’ve been around this site for awhile, you know I said last year that the big stock market plunge in September-October of 2014 marked the end of the bull market. I said, you’d see that play out throughout 2015, and you have. Hindsight now verifies that the US stock market has bounced hectically sideways along an obvious ceiling ever since. The slope of the bull is long gone.

Why should it have been obvious that 2015 would go this way? Anyone understanding economic fundamentals should be able to see that the “recovery” is a mirage created by TRILLIONS of dollars of free money — a mirage that would, therefore, fall apart when the free money stopped that was sustaining it because nothing has been done to establish an economy built on anything other than endless mountains debt as its foundation, which was the cause of the initial economic collapse that we called “The Great Recession.”

Almost-free money continues under the Fed’s zero-interest program. So, when the Fed raises interest next week — a nearly certain likelihood — the remainder of support to the bubblistic, mirage economy falls away. The false recovery vanishes once the wizard’s magic ends. I have said for years now that the illusory recovery is completely unsustainable because our only solution to the Great Recession has been to prop up the old dying regime as long as we could to milk it for all its worth.

When the government reacted to the Great Recession many years ago, I used the metaphor of a snow plow, which is supposed to angle its blade to push the snow off to the side, not push it straight ahead. I pointed out that, if you push the snow straight ahead, it piles up until the snow plow is no longer able to push it. That, I have said all along is all we are doing — just pushing our mountains of debt higher and higher ahead of ourselves as our sole answer. (“Kicking the can down the road,” as congress often said (and did).) 2015 is the year the snow plows lost traction. That’s all you’ve heard all year is the screech of spinning tires. The end of 2015 is the time the epocalypse begins — a great economic collapse that will ultimately lead to global economic transformation because a global crisis will seem to demand global solutions.

What is truly needed is freedom from the addiction to and bondage of debt along with justice brought against colossal greed, instead of bailouts. That is one global answer that would work — a biblical “Year of Jubilee,” in which all debts are dissolved everywhere in the world — a global reboot that ends the tyranny of the 1%.

That would be a move for justice against the stockpilers of greed. You’d lose much of your retirement fund, but you’d also lose your mortgage and all other debts; and you’re likely to lose much of your retirement fund in the days ahead anyway, unless you move your money to cash, and even that has some peril. A “Year of Jubilee” would reset the whole playing field on a level plane.

It won’t happen.

Instead, we’ll see global answers that keep the majority of the world indebted to the minority and that consolidate the power of those already in power. You’ll see a loss of human freedoms in the face of anarchy and terrorism. Today’s people will readily give up their freedom in exchange for a sense of security. Gone are the days when brave souls gave up their own lives to assure human freedoms for others. Here are the days in which people will give up their own freedoms in order to assure their own lives.

That, however, is writing for another time. It is too soon right now to say such things, as people have not seen the epocaplyse that will change the world. They don’t believe in it; therefore, it seems too dismal by present measures to imagine such surrender of freedom is possible, much less likely. Nevertheless, that is the trend I see, but the first measure of the accuracy of that insight will be whether the epocaplyse comes this year, as I have maintained all year long it will. If I’m wrong, I’ll go away, as the world does not need dismal people, but one is not dismal if he is simply right. In that case, he cannot help that the truth is bleak. Better to see it for what is than to be blindsided by it.

The epocalypse has already begun in most of the world. Look for it to materialize in the US next week as the Fed raises interest. In fact, look for it to materialize even if the Fed does NOT raise interest. The Fed is now damned if it does and damned if it doesn’t. Their magic has ended. Because the entire market is now anticipating the Fed will raise interest, based on the Fed’s own telegraphed messages, the Fed will send shock waves through the market if it does not follow through. If the Fed cannot raise interest even when all of its job gauges are where it said it wants them, that would say to many people that the Fed doesn’t believe in its own recovery either.

I am certain, however, that the Fed does believe in its false recovery, and am confident it will end its stimulus with the worst possible timing. That’s why I’ve predicted unflinchingly that the US stock market will crash this fall. The global economic collapse that I also predicted for this year, is clearly already happening; but for US citizens, it will take a stock-market crash to convince them that the end is here.

While JP Morgan and Citi were finally smart enough last week to put the likelihood of a US recession at 65% (after years of talking about “recovery” as if it were happening), they were also safe enough in hedging their prediction to give that a three-year time frame for happening. You can find much better precision and courage here. I’m stating a higher likelihood with a window now of one week. I’m not hedging my bets. Of course, it will take months to play out; but you’ll see the dramatic shift begin before fall has ended.

2015 was a year of moving sideways after the bull market ended. 2016 will be a long year of decline with many plunges along with some brief phantom rallies.

You’ve got little time left to secure your financial positions. After this week, things will change rapidly enough that you may not be able to get ahead of the wall of water that will be coming your way. Get as safely out of the way now as you can and watch it unfold from a position that is out of the way.

This is likely to be my final warning. After this, I’ll be writing about how it happened. For more reading on how the epocalypse is unfolding, click here.

 

 

Further reading on global economic collapse:

  • Jaric Fontaine

    Been hearing the same thing since 2000. Anyone remember Y2K? We may have a recession but that’s part of the business cycle, every six years or so.

    • Not from me you haven’t, and I never got on the Y2K bandwagon. While I think something bad could have happened there, I said at the time that businesses had spent so much money correcting the problem, taking it seriously, that Y2K would like be a bug that wouldn’t bite. Unlike the permabears who always say the market is going to crash, there are years on this blog where I said all year the market would not crash and there are two times when I said it would go down … and it did. Also, unlike the permabears, I give clear time frames that aren’t so ridiculously large that pure chance makes them likely to happen. And if I’m wrong, I’ll go away.

      You might also note that within the timeframe you reference, those who said the market would go down in 2000 were right, and those who said it would go down in 2008 were certainly right. Of course, the permabears say it will go down every year until they are right; but there are also people who saw those crashes coming for very good reasons and were right for good reason. That’s no harder to predict than is a rising market, but people prefer blind optimism.

      You need to use discernment on which ones you listen to and which ones you don’t. The ones who say it’s going down may be right for all the right reasons, and may be right pretty consistently. The permaBULLS, on the other hand, are worse than the permaBEARS. They also endlessly say it is going UP, even when it goes down. The odds are far more in their favor since, as you point out, the market only crashes about one year in six (or seven). So, they’ve got an easier game.

      • Jaric Fontaine

        Fair enough. Thank you for your response.

        • Thanks for coming by the site and giving the article some thought.

  • jakartaman

    Great Summary and conclusion.
    I did not know you existed – go you from the Economic collapse site.
    I will definitely be checking in – Thanks for your insight.

    • Glad you have found me and have decided to keep tracking the economic collapse here.

  • Cluez Jones

    Powerful piece. Looks like I just found a new blog to keep me informed.

    • Cool. Glad to be found. The next few weeks could get interesting now that we’re flying without a safety net and get to feel what the weather is really like.

      • Cluez Jones

        Totally agree. Things are going to start getting real interesting. .25% isn’t much, but with all of the leverage out there who knows what happens.

  • Dan Skidds

    Dave, new to your blog…great job. Think I was directed thru Maloney website or ZeroHedge. But great detail and accuracy. Thanks–you are now on my dashboard. Do have a reference question from your site: what do you consider Cow here? (cash, gold, silver, investment, something else–or secret?)

    • Cool. Thanks for letting me know.

      I have to smile at the “cow” question; it’s a good one. The reference to buying the cow was an inside joke. That member on the site had written to me about putting her land to use and maybe getting a cow and planting some crops in case things really go bad. So, I was saying, “Yeah, now may be a good time to buy the cow and plant a big garden in the spring.”

      But “time to buy the cow” really makes a good metaphor for the times we will be facing. I mean, the cow is an investment you can always resell later if you don’t need her. In the meantime, she pays dividends. In essence, we may face such times where the intrinsic value of land and what you can do with it will be a good safeguard to have; but tilling the field and putting in row crops or raising your own beef and producing your own milk and eggs won’t work for most people.

      Still, there is a concept there that is important for everyone — look at resources/investments that have practical uses in the worst of times; position yourself for some self-sufficiency and to have something to share or trade with others. I think the upcoming economic collapse has the potential to be as life-changing as the Great Depression. I don’t counsel people to worry about it or go to extremes, but be practical, and think multi-use.

      With each investment right now, ask “Is this my cow?” Is this my practical, multi-use, essential-in-bad-times investment? Is this something I or other people will need as one of the essentials of life (food, clothing, shelter), and is it subject to a lot of deflation (like many houses) or likely to go up in value (if food prices rise in bad times), and does it pay dividends/rent/something along the way (milk), does it have intrinsic value as a salvage value (meat). The more of those essentials your investment covers, the better hedged it is by nature for bad times.

      I’m glad you raised the question, as it might be a helpful way to consider all investment choices right now.

      –David

  • Alleged Comment

    Don’t they say this every year since the DOW was at only 7000??

    • Some do, BUT NOT THIS ONE. There have been years in the writing of this blog where things looked bad and I said that the economy definitely would NOT crash that year. The Permabears sound the same alarm every year, and when they are finally right, they make a big lot of noise about how they predicted it. They are the proverbial broken clock, bragging because they tell the time right twice a day. They also don’t ever bet their blog on what they predict. So, it costs them nothing if they’re wrong. If I’m wrong, I WANT to go away. Why would the world need more fear mongering and tales of travail and woe if they’re not true. If the tales of woe ARE true, well then, many people still won’t want them, but they SHOULD. That’s why we’re stuck in this economic nightmare — people don’t want to see what really needs to be done and just want to believe in an easy recovery where all the heavy lifting is taken care of for them by the Fed. What’s really being taken care of is their pockets are getting fleeced. If I’m wrong, I’ll post an article here saying so, and then I’ll go away.

  • US_Libertarian

    Maybe the Fed can print another 10 or 100 trillion dollars. Keynesian economics [never] works… Apparently secret agreements for economic reset and currency devaluation may already be in the works…. It might be time to take possession of your savings before the false flag or whatever the trigger event will be [cyber attack, nuke, EMP, etc..]

    http://www.thecommonsenseshow.com/2015/12/14/key-bankers-told-bank-holiday-is-near-read-this-before-taking-money-out-of-the-bank/

  • Eddie

    Hi Dave,
    Your article was posted on the Burning Platform. I have bookmarked your site and will check it each day. Great work.

    • Thank you very much, Eddie. I only write, as a rule, about once or twice a week, but I appreciate your interest in coming back. Since you’re interested in more articles, I’ll add your email address to a list of sites I keep that are interested. One of your readers has already taken the time to look up my email address here and write back to me just to let me know how much he appreciated finding the article on your site. So, thank you.

      –David

      • Eddie

        HI Dave,

        I have a set of sites I open each morning to read about the financial world. So as not to take credit, The Burning Platform is not my site, but one I follow along with a large number of folks. You will get very good exposure with your articles posted there.

  • tjb323

    Hi Dave, I saw that this article made it on Michael Snyder’s Blog! That is great, congrats! God Bless!

  • merrileerj

    I wanted to order some more catfood to stock up before there’s nothing, if I order tomorrow do you think I will get it before all hell breaks loose?

    • Did I let the cat out of the bag with this article? Well, you’ll just have to wait until later this week to find out. Don’t expect all hell to break lose in a day, though. There’s a lot of hell to get through the door. Things are more likely to go down in big chunks with breaks in between, as they did in 2008 and 2009. Your bigger worry is going to be getting UPS to deliver your cat food this week. With the holiday rush and all, you’ll be lucky if it gets here by Christmas

      • merrileerj

        Har har!! :)) Oh yeah, Christmas. Oh well, I’m not out, just want it to get here. I ordered this morn, thanks.

        • Let me know if there’s anything else I can help with 😉

  • Just a thought, Dave.

    Acquaintances ask me, If I’m so sure of a crash or a sell-off, why not sell short?

    If I knew how, I would. (Hey, I may want to buy more than one cow, and maybe a barn, so I’ll need the dough!)

    How would you do it?

    • The first problem with selling short is you have to have a broker who will take the bet, so to speak. You have to have a relationship with someone in the stock industry who will extend you the credit in the form of stock shares you don’t pay for, based on your promise to pay for them in the future at the future price. They have to know that when that future date comes you’ll pay up, even if it sends you backward. So, not everyone CAN sell short .

      The second problem with it is that it’s still just using the stock market as a gambling casino. If I invest in stocks, I want to do it because I believe the company is a money maker for the long term so that I own an actual thriving business, not bet on a company going down in value and hope that it times out with what I expect will happen. In other words, I want to be doing more than betting on market gyrations. The first kind of stock purchase is true investing, Warren Buffet style. You’re buying a stock in order to own part of a good company.

      For those with money to risk, shorting the market right now might make them a fortune. Many of the biggest fortunes have been made exactly that way; but I don’t have enough money I can afford to lose to throw some on that kind of risk. (Even in a falling market you could wind up picking a stock that hits it rich for unforeseen reasons, and then you’d lose a fortune, even when the market falls.)

      I feel more comfortable with waiting until after prices are down and then buying really good companies that are well-positioned for the future and just sitting on them as an owner of a good company.

      –David

      • Thanks, Dave.

        After the crash of 2008, I waited until the market was in the 600s before buying. A little birdie told me to wait til then, and it paid off very nicely. I bought decent companies that had been beaten up and were way below their true value. I saw an annual profit of 60% for the next two years. Something to live on when I needed it — which I did. I’m going to try to do the same during the next trough if I can scrape together enough dough — or sell a cow or two. :o)

        Thanks for all the great writing you do here!

  • Today, the news that’s all over the Gambling Channels today is that junk-bond fund Third Avenue Management has just put a halt to sales, blocking its investors from getting their money back anytime soon: http://www.nytimes.com/2015/12/11/business/dealbook/high-yield-fund-blocks-investor-withdrawals.html?src=me

    “Experts” like Carl Icahn spout that this is only a single fund (once $2.5B, now down to $788M) and has nowhere near capacity to wreak the devastation of 2008. It’s not mortgages, he says, it’s not banks. He doesn’t see the connection. Incredible!

    • I think you’re right that it is significant. Sure it’s not nearly as big as when Bear Sterns went down or Lehman Brothers, which were parts of our financial central nervous system, BUT there are so many junk-bond funds and hedge funds now that that are having liquidity problems that I think this is a sign of things to come. Basically, “it’s starting to happen.” First a pebble here, then a boulder and then the whole mountainside is starting to move. Icahn’s comment is sort of like saying, “This tiny leak in the dike isn’t significant. I can plug that with my finger!” Sure, but what does it say about the waterlogged condition of the dike as a whole?

      • Thanks for the reply, Dave.

        Based on your blog entry above, I’m going on the assumption that the crash is happening within days:

        “That’s why I’ve predicted unflinchingly that the US stock market will crash this fall.”

        and: “I’m stating a higher likelihood with a window now of one week.
        I’m not hedging my bets. Of course, it will take months to play out; but
        you’ll see the dramatic shift begin before fall has ended.”

        In other words, by December 21 (or whatever the official end of autumn is this year), the stock market will crash. That’s within 9 days of today. Correct?

        If so, I’m buying that cow (unable to sign on as Xavier Yount :/), and plowing my lower 1/2 acre — wish it were 40. Though as you say, bigger is not always better!

        Stay warm and happy holidays. Cheers!

        • Aye, Eye. I’m convinced that the only thing holding the economy together is the Fed’s continuance of free money. Even then, things are clearly falling apart. It’s happening everywhere you look, and yet many who are less delving can’t see it. Things are so ready to fall apart for many of the reasons i thought they would be by this time, that they will fall apart even if the Fed continues its free money.

          I just read an article by David Stockton last night. He has for years refrained from giving any dates; but now says like me that December 16 is D-day. Already, yesterday, we saw a large drop in the market in anticipation of what is coming. That, of course, doesn’t PROVE anything, but I believe it telegraphs which way the market is ready to go.

          The only thing I’m not sure of is how quickly economic collapse will unfold in the US and how quickly that will spread more global carnage. I am sure it will go down in chunks, not all at once, just as it did in 2008 and 2009 where out of the blue Bear Stearns imploded. No one saw it coming, and then a couple of months later Lehmen Brothers crashed, and few there were who saw that coming. And then more … and then more as the pace quickened.

          I think we’ll see the market heave upon the first news, even as it is quaking now. Maybe things will stabilize for a moment of calm, and then the first big chuck will fall. The pause between initial turmoil and the first major institution to fall may be days, or it could be a month; but looking back the turning point will be clear: December 16, 2015.

          Right now what we see is the first trickle of rocks starting down the hill as a few bond funds fail even as we know that many bond funds and hedge funds are lined up to fail behind them. The wise guys, like Icahn, who have their own investments to protect by the things they say will say, “Oh that is nothing.” They said the same kinds of things and Bear Stearns collapsed in a day and Lehman Brothers stumbled and fell.

          Nuclear scientists said the same kinds of things when Fukushima went into meltdown. They all lined up to tell us how meltdown was impossible because of how overbuilt these reactors were, failing to recognize that a couple of 9-point earthquakes and a complete deluge by icy sea-water might go beyond their breaking points. As they proclaimed meltdown would never happen, I told those around me that it was probably already happening, and the experts didn’t know it. Why? Well, there was those two massive quakes, a thousand lesser quakes and all that icy water hitting glowingly hot metal … PLUS the fact that experts are always overconfident of their engineering.

          So, the experts will be telling us “this is nothing,” just as Ben Bernanke said their was no recession in site in 2008 even though his feet were already standing in one. While they say nothing is going to happen, it has already started to happen. Look at all the above. As you say, it is incredible that they can argue nothing is going to happen when it clearly already is.

          –David

          • Not sure what the first article was saying about Icahn because elsewhere I have come across the following:

            “A day after a prominent Wall Street firm shocked investors by freezing withdrawals from a credit mutual fund, things only got nastier in the junk-bond market.

            “Prices on the high-risk securities sank to levels not seen in six years and, to add to the growing sense of alarm, billionaire investor Carl Icahn said the selloff is only starting.

            “’The meltdown in High Yield is just beginning,’ Icahn, who’s been betting against the high-yield market, wrote on his verified Twitter account Friday… Icahn’s comments come as junk-bond investors, already stung by the worst losses since 2008, are the most nervous they’ve been in three years….

            “‘The timing could not be worse,’ said Peter Tchir, head of macro strategy with Brean Capital LLC in New York. “Everyone is already nervous about liquidity, oil, the Fed hike — and you get this extreme event on top of it all. There is a lot of confusion. It’s put people on edge.'”

            It just goes to show, as I’ve been saying, how quickly the pieces can fall when there is so much pressure on them. The entire marketplace can be surprised when the first piece goes and then the second; but it shouldn’t be. People should have noticed how rickety the whole affair was all along and realized that you cannot build prosperity out of mountains of debt. That truth should have been self-evident.

            How quickly things are changing as the market readies itself for the hit the Fed is about to give. It will be a very small hit — a mere quarter of a percent increase in interest — probably even just an eighth of a precent — but it will trigger an enormous economic collapse due to all the pressures pushing down on the economic system around the globe already.

            • Thanks, Dave, for the call. So, I’m buying a crash helmet (and a cow) tomorrow in anticipation of the sky falling on Thursday. As they say, hang on to your hat!

              Best,
              DE

  • tjb323

    Hi Dave, Great article, as usual. Thank you for all your work. Things are not looking good. I read this article the other day you may have seen. Writen by Brandon Smith. http://www.shtfplan.com/headline-news/the-global-economic-reset-has-begun-controlled-demolition-of-the-american-structure-as-we-know-it_12092015…. I have always liked what Brandon has to say. Looking forward to your next article. Take care and have a Blessed Merry Christmas!

    • Thank you. I found this comment in the article particularly interesting: “Due to the forced interdependency of globalism, crisis in one country could cause a domino effect of crisis in other countries; therefore, all countries and their economic behavior must be managed by a central authority to prevent blundering governments or “rogue central banks” from upsetting the balance.”

      That is exactly what I think will become the great concern (or IS becoming the great concern) — that one economy can trip up another; therefore, we should have a global economy. Unfortunately, that kind of grand thinking is seriously flawed. What those who believe that are glossing over is … What happens if the one big economy fails? Then you have no other economies to help pull you up (as we had with China for awhile). Then you don’t need to worry about domino effects because the whole Titanic thing is going down all at once.

      Interesting that people who talk so much about the “strength of diversity” cannot see that this applies to having diverse economies as well.

      –David

      • Dan Skidds

        Thanks Dave, great explanation. I have been studying this mess since 08. It all seems so wrong when being told it was right. I found looking back to see forward–helps. I have also found that there is 1 thing that can not be taken away from me in any event—financial, seizure, etc. My knowledge and training! Thanks and I will keep in touch.

        • Exactly. That is what “buy the cow means to me.” Look back to basics for the answers. What did people do and need in the Great Depression to survive. What knowledge for survival can be found there. I’m glad to have had Depression-era parents from whom I learned every nail can be used twice. Hopefully, it won’t get that bad as I don’t like spending time straightening nails and don’t consider it profitable use of my time at present; BUT I’m glad I understand that perspective well enough to be adaptable IF I NEED TO BE.