Home » Uncategorized » “Epocalypse” Now Proves to be Right Term for the Inevitable Economic Collapse We are Now Headed into
            

“Epocalypse” Now Proves to be Right Term for the Inevitable Economic Collapse We are Now Headed into

Did anyone say housing bubble collapse?

In the fall of 2015, I coined the term Epocalypse to describe and define the scale of economic collapse that we are headed into. I couldn’t think of a better term because it conveys connotations of “epoch” and “epic” with audible overtones of “collapse” while being a contraction for “economic collapse.” The storm that is now developing will be all of those things.

When I first used the term epocalypse, I quickly found other publications picking up on it and quoting my article as a reference to where they got the term, including Forbes Ukraine edition, which, after referencing my article, spun off their own cyrillic version of the word. The word started to take off globally because stock markets started to crash just as I said they would as soon as the Federal Reserve implemented its first interest-rate increase. The whole economy looked like it could slide into an abyss and people were grasping for a word big enough for the event they feared … but then … just as suddenly .. everything seemed to stabilize, and the word just as quickly lost popularity.

 

“Carmageddon” and “Retail Apocalypse” confirm “Epocalypse” as the right name for this event

 

I still think “Epocalypse” is the right word to describe the full event, which is now unfolding again … a bit behind schedule but every bit as big as I (and many others) have said it will be. It is happening again because it is inevitable; it’s baked into the recovery. You now see a number of publications using terms like “carmadeddon” and “retail apocalypse,” which I’ve also used in recent articles to describe parts of the economic collapse that is developing in real time around us. (See “Carmageddon Crashes into ‘the Recovery’ Right on Schedule — EXACTLY as Predicted Here” and “Retail Apocalypse Engulfs US Economy.”)

It’s the cascade of shutdowns that occur after the anchor stores close up shop that is the next wave that will be more devastating than the anchor stores themselves. The shuttering of anchor stores diminishes traffic creating collateral damage to surrounding businesses. Already restaurants have experienced their longest decline since the Great Recession, losing ground in year-on-year sales for sixteen consecutive months, falling another 1-3% in June. As anchor stores close and restaurants collapse, malls will become self-contained ghost towns.

Publications are using the term carmageddon because the distress in the auto industry is likely to become as bad as it did during the financial crisis when the United States’ major automakers faced possible bankruptcy if the Federal Reserve did not bail them out or buy them out. They are also using that term because the decline in the industry this time looks like it is going to be long-term. Customers have reached peak auto debt. People in aggregate aren’t going for the enticements to take on new debt to buy new overly expensive cars. They’re stretching their ownership out longer. Millennials are also less inclined to have cars as are aging baby boomers. At the same time, the Fed is not as likely to bail anyone out this time because they are in a mode of wanting to reduce their balance sheet, not add to it. So, people are seeing this as a major shift that the auto industry will have to wrestle with for years.

Publications are frequently using the term retail apocalypse now (even mainstream publications), in part because the change in retail is not just huge; it is PERMANENT. While retail sales overall are down because of the failing economy, retail sales are finished forever for a lot of brick-and-mortar retailers. (Yes, sales are up for Amazon; but they are still down overall because the increase to Amazon and other online sources doesn’t match the loss at brick-and-mortar stores.) They’re also using the term retail apocalypse because they are starting to recognize that the knock-on effect of so many brick-and-mortar stores closing is going to be massive with job losses far exceeding anything the highly automated Amazon will add in jobs. The collapse of anchor stores is going to put out other businesses around those stores and result in a lot of loan defaults in commercial real estate, too.

When you see numerous publications picking up terms like carmageddon and retail apocalypse just to name and define two parts of the economic crisis that is developing, then you know it takes an exceptionally big word like Epocalypse to define and describe the overall collapse we are now entering. I didn’t coin either carmageddon or retail apocalypse that I know of. I started seeing other publications use them at the same time I published articles using them. (Wolf Richter may have come out with carmageddon first, but I’m not sure.) When terms hit everywhere at once that says to me they are “pregnant ideas” by which I mean ideas so obvious and appropriate to the moment that they reproduce themselves everywhere at once — just start popping up. When new terms like that take off on their own like wildfire, that means a sudden awareness is coming upon people everywhere.

 

Why epocalypse now?

 

I do know I coined the term epocalypse for this particular use. (Just to be accurate: I researched the word before putting it into play and saw that it already had slight use to refer to an ecological apocalypse years ago but didn’t catch on for that use and was used in the form “E-Pocalypse!” as the name of an album by the band Kids In Glass Houses (technically an EP); but no one had ever used it to refer to an economic apocalypse, other than maybe as the title to a book, but I haven’t read the book in order to know how the author was using the word, and the book does not appear to have had any popularity, being now 13,000,000 in ranking on Amazon.)

I think there was a kind of pregnancy to the idea of calling this economic collapse an “epocalyse,” too, because it started to spin off when the stock market started crashing last January; but then central banks started buying stocks directly to prop up the US market during the election year, which we now know for a fact,. That averted an immediate crash, which caused people to move away from their sudden adoption of the loaded term epocalypse — since maybe things were not going to turn all that bad after all. So, I backed off from using it some myself  because I think things need to start looking that bad again to everyone for the word to find its cachet all over again.

Frankly, I’d secretly (now not so secretly) like to be the one who coined the term by which the entire world eventually starts to name the greatest economic collapse the world has ever seen — since warning of this economic collapse is my whole reason for writing this blog — so, I’m holding back a little until the word’s time has clearly come. I may have been premature in launching it; but, until last year, central banks had never purchased stocks directly in order to prop up entire markets. So, they managed to hold back the tide in a completely unexpected and novel way during an election year.

Central banks had purchased stock in things like failing banks to save them; but, as of last year, they started buying the most successful stocks out there, apparently to lead the market upward since no central banks need to ever make a profit and are not even supposed to be about making profits (though, of course, they are, despite their remonstrations). This was a whole new kind of intervention that came along with emergency meetings of the Federal Reserve (topic of the meetings never disclosed) and emergency meetings between the Fed chair and the president and VP last spring, all giving you a pretty big clue as to how bad the market collapse was really going to be last year.

So, that turned out be epocalypse not quite now.

That was then; this is now. We are seeing bits and pieces start to emerge that reveal how bad this economic collapse will become. (The “bits and pieces” are huge in themselves.) The collapse is showing up first in cars and retail closures, but housing also looks like it is getting ready to swing. There are signs that a top is in for the US stock market, with the Trump Rally now blown off and limping almost sideways.

Student loans, as noted in my last article, have also just begun their great collapse. The student loan problem that has been slowly building until just last month, has suddenly become something that actually is making it harder for Trump to come up with an economic stimulus plan that balances the budget because the goal post is moving away from him so quickly, due largely to the rapid rise in student loan defaults and (to a lesser degree) mortgage defaults. The annual deficit took a huge hike in June just because of government losses on the loans. This is why I said half a year ago that any stimulus plans from Trump will come too late to matter because political inertia to those changes would slow their start down to where the goals would begin to move away faster than the solutions can take effect.

 

Oso landslide as a symbol of the sudden and massive collapse of the Epocalypse.

Oso Landslide, Washington

The scale of the Epocalypse

Now that student loans, mortgages, retail stores and auto sales are all sliding at a speed that is causing serious troubles and notable concern, you can see what I have meant about how a collapse this big is a landslide that has many parts. And when each part is this big, think of the size of the whole movement.

This is an entire mountainside that you can see is cracking up and ready to slide. It may go in chunks, or it may go all at once. It’s looking more and more like many pieces are starting to move at the same time, which will be horrendous; but this is also, as I’ve said a number of times in the past, something with huge inertia. So, the initial movement is going to be slow, and certainly not ALL chunks will give way at once.

At first, movement was almost unnoticeable, but the cracks were obvious throughout the economy for anyone to see if they had their eyes open. And that is what this site has always been about — pointing out all the cracks and how they form a massive expanse of land that is getting ready to move and about monitoring the movement of those cracks to try to discern when it will all give way.

The when part is the harder part to predict, but most people don’t even see the easy part — the evident flaws throughout the economy. Even when you point the numerous cracks out to them, they deny the significance because they live in economic denial. They don’t want to see what is coming, and it is too big for them to believe. Now, however, it is noticeable to many, and its size is becoming apparent just in how people are naming its pieces.. Soon many of the parts will be slowly sliding downhill, and that is when you will see genuine panic set in with people starting to run (on the banks and in the markets).

That’s how big I’ve been saying this will be, and that is how big it is starting to show itself to be just in the scale of its parts now that you have student loans and home loans hitting the government deficit in a major way and auto sales and retail closures hitting the economy. We have only just begun to feel those movements, but many publications are now noticing them and giving them pretty grand names. That’s why I’ve marked summer as the point where the Epocalypse … again … starts to become widely recognizable and starts to break through denial.

  • QEternity

    The “bubble” is now in passive investment funds. When the market starts to head down, as it will invariably, the bot traders will dry up, and all that “liquidity” will be nothing but a Wile E. Coyote “cliff moment” for the retail investors. Once the selling starts there will be no one buying for a long way down.

    • Same conclusion I’ve come to in my most recent article:

      http://thegreatrecession.info/blog/machine-mania-marketplace/

      A price vacuum will form because so many traderbots have been buying the same stocks, so the traderbots will all be selling the same stocks, and regular investors, knowing the trader bots are selling off will be afraid to buy the stocks, so stocks could have a long way too all to find willing buyers, especially when the stock leaders are priced around 180x earnings, instead of a more traditional 15-18, where 18 was thought a tad high.

  • Chris P

    Great reply!! I agree with you on all accounts. It is big and will have many hands in it to keep it afloat so there will be many twists and turns. Thanks for your bolg and time.

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  • Chris P

    Just consider the extreme example of Venezuela’s IBC General Index, which went from 40,000 to 120,000 points, while the economy contracted by 21% in real terms (officially, that is. If one were to apply private sector estimates of inflation, it would look a lot worse)

    • Interesting. As I’ve mentioned to others before, knowing how something this massive blows apart is beyond reach, as it is so much bigger and has so many more part ready to go than anything we’ve ever seen before. So, maybe that’s how it goes — economy blows apart, but rigged stock market goes up anyway and then eventually crumbles to dust because it doesn’t have a leg to stand on. (I’ve written before that I don’t think stocks or housing are likely to lead the downhill charge on this one, but I’m not sure how quickly they’ll fall apart now that other things like store closures, declining auto sales, mortgage defaults and student loan defaults are all starting to raise their heads high. Maybe stocks will be seen as the last place of refuge, instead of bonds … in this upside down, top-heavy bond world.

      • steven Fortin

        My feeling is who cares what the index is if the currency is worthless. Many keep calling what’s coming a recession. No recession in history has ever had the massive problems that exist today. Not even the great depression. The population and the attitude of the population today, especially in cities, will lead to chaos like we have never seen. As soon as subsidies dry up how will much of the population respond? There seems to be very little restraint in people today.

        • I, too, don’t really care what stocks do, as I’m out of stocks. Stocks used to be strongly indicative of how the economy overall was going so that a stock crash was almost synonymous with an economic crash, but that is far from the case anymore because the Fed has been front-running the market for years now, so the market is almost entirely Fed dependent. It’s really only a reflection of what the Fed does. If the Fed tightens, as it says it will, the market will collapse; but they may see it collapsing and immediately reverse course. For those willing to bet on what the Fed will do, they might be able to make some big money; but I don’t feel comfortable at all betting on what the Fed will do. I know it wants to tighten and that it cannot tighten without killing the economy and the stock market together. But will it tighten anyway. History says it will. The Fed’s pattern of tightening just as their recovery is stalling is a pretty strong pattern. I think their tightening is less predictable than their loosening because they seem to believe they can tighten, and I am certain they cannot. Whereas, they can always loosen. Inflation is a concern, but not of the money stays invested in stocks and bonds where those are the only assets that become inflated … well, not, that is, until they decide to unwind.

  • V_ANGERY

    Car loan growth looks like it will peak around November. Imagine if the crisis hit Americaland just before Christmas. Trump would look really bad, especially now that he’s put his name on the economy.

    This was edited in paint and initially I just wanted it to go all the way to 0 to get an accurate visual, then I stretched it out to see when the trend would possibly hit 0 which would signify the end of the growth and the begining of a strong, drawn-out deflationary pressure on car-loans.

    I think that it would be of great interest to the Keynesians at the Fed if they could cause a recession this year prior to christmas and before the 2018 midterms. Trump sort of signifies free-market capitalism to the left and they’d love to pin the blame on a lack of government control. But that’s possibly thinking too conspiratorially. https://uploads.disquscdn.com/images/a27d7e18d8687833a7586b50e8f80ed12ea184587630bbcbf941ec60fb948b4c.png

    • As others have pointed out, that is the problem with taking credit for the last euphoric burst of glory in the stock market: when it all goes down, you have to take the blame, too.

      If you want more grist for the conspiratorial side, one writer I read this past week suggested that Janet Yellen will keep all the stops wide open until the end of her term, February, 2018, so that she doesn’t have to deal with any of the mess. That could make her, I think, the first Fed chair to have never had a recession during her/his watch … should she be so lucky.

      I, however, don’t think she has that much time even with all the stops out, as the start of 2018 is the long end of my timeframe as to when so many things will be going so poorly that keeping up appearances won’t be possible.

      August through October tend to be the stock market’s most problematic shock months with early summer often being a slump. It’s started to get interesting already.

  • Don_in_Odessa

    Ever hear the term “don’t fight the Fed?” Janet sweety says we ain’t gonna have another collapse in our lifetimes. Whats’a matta’ Dave ol’ boy? Don’t trust the Fed? LOL!

    • I know it. I fought them last year and lost … kinda. What I thought would happen happened (the stock market plunging right after the Fed started raising rates), but what I didn’t think would happen also happened, which was when central banks started buying huge amounts of stocks in companies that were thriving without their help.

      I thought that would only happen in places like China, where centralized planning (rigging) of markets has been the name of the game since Mau Tse-Tung. When the news came out recently that central banks were now hoarding US stocks, no one even raised an eyebrow. Oh well, so what? Our market is as rigged as China’s? No big deal. Want the market to go up, get your buddies in Switzerland to print another half a trillion francs and buy more FAANG stocks.

      The rest of the economy, however, the Fed has less control over than it thinks. Thus, it is breaking apart all over the place. Best-case scenario? We wind up with a busted economy with a vibrant stock market! An oddly skewed picture, but maybe. Oddly skewed is what you get with eternal central bank manipulation. My best guess is still that it ultimately cannot stand the skew and blows apart.

      • Don_in_Odessa

        Look out below. The stock market is about to handout free money. If so the banksters may feel a little better about letting lose a bit of the Fed’s generosity finally. Just may be that the roaring twenties will be back before the Red Fox can utter “it’s the big one ‘lizabeth.”

        Could be my blow off top is upon us.

        • What causes this, Don? Is this based on your charting or more direct central bank purchases … or …?

          • Don_in_Odessa

            I’m strictly a technical trader. My expectations are based solely on that. I am wrong more than I am right. My error is more often than not, in timing rather than direction. However, I am more convinced now than I have been in the past that we are now at the point of exponentially increasing irrational exuberance in the markets. Causes of market direction, either up or down, can be something as stupid as the proverbial “fat finger.” But more often, as simple as the human conditions of fear and greed. Both are undeniably measurable by the technicals.

            As for the economy for which I am in full agreement with you; There is historical precedent for the financial markets to pull the economy along with it. Could be the market’s undoing if it fails at it. We have a debt based economy. If the PTB want to kick the can down the road for another cycle the only way to do it is for banks to start releasing some of their ill gotten gains into the general economy. Something they have not done so far during this period of so called “recovery.” Doesn’t look like the Democraps and Repukelicans are going to be able to agree on anything, let alone kick start the economy with more of it’s own debt.

            • Good points, Don. My position on what the stock market will do is going through some adjustment. While I still think a major crash will happen sometime between now and the start of next year, I’ve also learned recently about the new levels to which central banks are willing to go to keep their foot down on the throttle. Now that I know the idea that central banks would use their infinite resources of money to buy stocks directly — not just for saving banks that are too big to fail — but for rigging the market to run in one direction only — that idea is no longer just my own conspiracy theory I’m speculating on, as it was last year.

              IF central banks are willing to keep intervening in that manner to keep pumping the US market up, then there could easily be another climb of irrational exuberance beyond anything we’ve ever seen because central banks are now doing something never done in US stocks in history (that I am aware of) and are fully acting as central planners, as they did in China. Since there is no limit to how much money they can create and pump into the market so long as banks do not release their ill-gotten gains into the economy — or, at least, don’t release enough of those gains to cause inflation to rise too high. They could let a little through to keep the masses less restless and, thus, tolerate, as Yellen already suggested a little higher than usual inflation.

              If they all worked in precision like that, I have no idea how long they could keep pumping the market up; but I still tend to think it is cannot be done for much longer because that kind of pumping now that the economy of the entire world is visibly starting to break up in major pieces around them is going to make them all look no different than the Bank of China. They’re going to get themselves whipped up into a tornado will do a lot of lifting but only because it rapidly has to do a lot more lifting to keep up with all the damage it is creating. So, the question for stocks is how does it look when the whole world looks as overtly rigged as the Chinese market. Does the market keep spinning in a vortex upward, or does it fly apart because it is one thing for one nation to maintain that in a world that still has some sane investing but another for all central banks to maintain it simultaneously in a world that is falling apart?

              My thought remains that the effort quickly becomes unsustainable because it becomes so complicated as all central banks either buy their own nation’s stocks directly or all agree to buy each other’s directly but wind up in competition on those policies for who saves what because their own governments to varying degrees resist allowing direct CB purchases of stocks. Citizen blowback and blowback from traditional investors also becomes hard to contain. The level of interventions will become as insane as China’s market did a couple of years ago — only all over the world.

              I think they actually want to unwind and still haven’t realized they cannot. So, the Fed will unwind, as they’ve said they will, and havoc will begin as it quickly becomes obvious to everyone that they cannot. As they start to unload assets, bond rates will have to rise in order to offload their junk, and that will draw money out of stocks, so stocks will fall. The only way I can see they could avert that would be if all central banks have agreed they will unwind one at a time and that all the banks that aren’t unwinding at that moment will prop up markets in the one country that is unwinding. Problem with that kind of plan is that it only shifts the difficulty of unwinding onto other banks because they end up with more assets to unwind later. It just kicks the can down the road by shifting the burden to others, so it’s hard to believe they’d be dumb enough to agree to that. Thus, I don’t see who they can go very far down this road.