This Is Exactly How Markets Behave Right Before They Crash - By Michael Snyder -
http://theeconomiccollapseblog.com/archives/exactly-markets-behave-right-crash When the stock market starts to behave like a roller coaster, that is a sign that a major move to the downside is right around the corner. As I have stated repeatedly, when the market is very calm it tends to go up. But when the waters start getting really choppy, that is a clear indication that stocks are about to plummet. In early 2015, volatility has returned to Wall Street in a big way. At one point on Tuesday, the Dow was up more than 300 points. But then the bottom dropped out. From the peak on Tuesday, the Dow plunged nearly 700 points in less than 30 hours before recovering more than 100 points at the end of the day. The Dow has now experienced the longest losing streak that we have seen in 3 months, but that is not that big of a deal. Of much greater concern is the huge price swings that we have been seeing. Remember, the three largest single day stock market increases in history were right in the middle of the financial crisis of 2008. So if stocks go up 400 points tomorrow that is NOT a good sign. What we really need is a string of days when stocks move less than 100 points in either direction. If stocks keep making dramatic moves up and dramatic moves down, history tells us that it is only a matter of time before they collapse. Any student of stock market history knows that what we are witnessing right now is exactly how markets behave right before they crash.
Examine the chart below very carefully. It is a chart of the CBOE Volatility Index from 2006 to 2008. As you can see, volatility was very low as stocks soared during 2006. Then things started to get a bit choppy in 2007, and investors should have recognized this as a warning sign. Finally, you can see that the VIX absolutely skyrocketed during the financial crisis of 2008...
VIX 2006 to 2008
Looking back, it seems so obvious.
So why aren't more people alarmed this time around?
As CNN is reporting, the VIX is up almost 20 percent so far in 2015...
Volatility has returned with a vengeance this January. The Dow has been moving up or down by at least 100 points nearly every day this year.
CNNMoney's Fear & Greed Index is showing signs of Extreme Fear again. And a volatility gauge known as the VIX, which is one of the components in our index, is up nearly 20% so far this year.
Meanwhile, there are lots of other signs of trouble on the horizon as well.
For example, the price of copper got absolutely hammered on Wednesday. As I write this, it has fallen more than 5 percent and it has not been this low in more than five years.
In financial circles, it is referred to as "Dr. Copper" because it is such a valuable indicator regarding where the global economy is heading next.
For example, in 2008 the price of copper was close to $4.00 before plummeting to below $1.50 by the end of that year as the global financial system fell apart.
Now the price of copper is plunging again, and many analysts are becoming extremely concerned...
One growing global worry is the steep decline in copper, which is used in many products and is often viewed as good gauge on how China is doing. The price of copper hit its lowest price since 2009 on Wednesday at $2.46. Copper is down nearly 7% this week alone.
Meanwhile, the recession (some call it a depression) in Europe continues to get even worse, and the euro continues to plunge.
On Wednesday, the euro declined to the lowest level that we have seen in nine years, and Goldman Sachs is now saying that the euro and the U.S. dollar could be at parity by the end of next year.
That is amazing considering the fact that it took $1.60 to get one euro back in July 2008.
Personally, I am fully convinced that Goldman Sachs is right on this one. I believe that the euro is going to all-time lows that we have never seen before, and this is going to create massive problems for the eurozone.
With all of these signs of trouble out there, the smart money is rapidly pulling their money out of stocks and putting it into government bonds. This usually happens when a crisis is looming. It is called a "flight to safety", and it pushes government bond yields down.
On Wednesday, the yield on 10 year U.S. Treasuries fell beneath the important 1.8 percent barrier. We will probably see it go even lower in the months ahead.
As the rest of the world economy crumbles, the remainder of the globe is looking to America to be the rock in the storm. For example, the following quote that I found today comes from a British news source...
'The global economy is running on a single engine... the American one,' the World Bank's chief economist, Kaushik Basu, said. 'This does not make for a rosy outlook for the world.'
Well, they may not want to rely on us too much, because there are plenty of signs that our economy is slowing down too. For example, we learned today that December retail sales were down 0.9% from a year ago, and this is being called "an unmitigated disaster". Americans were supposed to be taking the money that they were saving on gasoline and spending it, but that apparently is not happening.
Back on October 29th, I wrote an article entitled "From This Day Forward, We Will Watch How The Stock Market Performs Without The Fed's Monetary Heroin". In that article, I warned that the end of quantitative easing could have dire consequences for the financial system as bubbles created by the Fed began to burst.
And that is precisely what is happening. In fact, many analysts are now pinpointing the end of QE as the exact moment when our current troubles began. For instance, check out this excerpt from a CNBC article that was published on Wednesday...
"Stuff happens when QE ends," said Peter Boockvar, chief market analyst at The Lindsey Group. "It's no coincidence that the market started going into a higher volatility mode, it's no coincidence that the decline in commodity prices accelerated, it's no coincidence that the yield curve started flattening when QE ended."
Indeed, the increase in volatility and its effect on prices across the capital market spectrum was closely tied to the Fed ending the third round of QE in October.
We are moving into a time of great danger for Wall Street and for the global economy as a whole.
If we continue to see a tremendous amount of volatility, history tells us that it is only a matter of time before the markets implode.
Hopefully you will be ready when that happens.
Last Days Financial Wonders - Todd Strandberg - http://www.raptureready.com/rap16.html
One of the complications of having a Supernatural Being (the God of the Bible), guiding and directing world affairs-is that occasionally-events go down a path that defies logic. Right now, we are seeing this type of divergence take place in the financial markets. It is so significant, I would call it miraculous.
What we are experiencing certainly fits the definition of a miracle: An event in the physical world that surpasses all known human or natural powers and is ascribed to a supernatural cause such as an event considered as a work of God.
The Hand of God is the only explanation for how the interlocked global economic system has for seven years now avoided a financial debacle. There has never been a time where the markets have become so ripe for calamity, and yet somehow-they hold together. We currently have a host of economic perils that have no comparison in history. Here are four that stand out:
1. Japan: The Most Hopelessly Indebted Nation on Earth
One of the best ways to measure the debt of a nation is by its obligations divided by that country's annual economic output or GDP. According to the stats compiled by the IMF, at more than 250%, Japan has the highest debt-load of all developed nations.
The word "hopeless" can be attached to this debt based on how rapidly it is growing. But what truly makes Japan's economic affairs unmanageable is the fact its population is in decline. After peaking at 128 million a few years back, Japan's population is now falling, and is on a path to decline by about one million people per year.
In just 25 years, the Japanese government estimates there will be just 100 million citizens in the nation. Since Japan is now one of the oldest countries on earth, the swelling ranks of retirees over age 65 is already putting enormous pressure on the nation's debt burden.
2. America: The Largest Debt Load by Value of Any Time
At just over $18 trillion, the U.S. has the largest debt load of any nation in history. Actually, our national debt is just part of the problem. Years of negative balance of trade has resulted in foreign nations now holding over $10 trillion of our hard currency. The feds will co-sign any loan. During the Financial Crisis of 2008, the Federal Reserve made secret loans of $16 trillion to bail out American and foreign banks. Uncle Sam has also given its guarantee to $1 trillion in student loans, $6 trillion in mortgage debt, and the $5 trillion bank money markets.
With obligations between $30 and $50 trillion, it is amazing that the U.S. dollar has retained its value. No other nation in history has been able to create so much of its national currency without suffering a collapse. Eventually, investors are going to reach a point where they lose faith in the dollar. Because the debt numbers are so massively large, instant panic is the outcome that I'm expecting to see.
3. The Lowest Interest Rates Ever Recorded
In a normal economy, low interest rates would be considered a good thing. In the world in which we currently find ourselves, low interest rates have come to represent a ticking time bomb. If rates were to rise just modestly, bond markets around the world would go into meltdown mode.
We have records for interest rates that go back over 400 years, and they've never been this low. It is also the worst time for rates being so low. The ones in Spain are currently around two percent, and the county is a basket case. Spain's debt is growing at eight percent per year, it has 25 percent unemployment, and its economy is smaller than it was seven years ago. If a nation can't service its debts at two percent, there is zero hope for it if rates were to explode.
The truly scary part is how little the rates would have to rise, to trigger a crisis in Japan. The 10 year bond in that nation is at 0.33 percent. If the interest rate was to rise above one percent, Japan's treasury would have to print twice the nation's annual budget just to keep the government funded.
4. The Greatest Leverage Bets (Derivatives) of All Time
The cherry bomb on the top of this pile of financial gunpowder is the derivatives market. You would think that just after experiencing a crisis triggered by derivatives, that Wall Street and Washington would long restrict their usage. In recent months, all caution has been thrown to the wind as these types of leverage bets have reached staggering new highs. Just a few weeks ago, the big banks made the government responsible for $300 trillion in derivatives.
With responsibility having been passed off to the feds, the bankers are free to be even more reckless with their derivative gambling. Since human nature is so predictable here, I have little doubt that these derivative bets will once again result in disaster.
Some people would argue that central bankers working behind the scenes are the ones keeping the financial bandwagon on the road. I find it hard to believe that mere mortals could manage a problem that has become so vastly complex.
This miraculous juggling act will have to end at some point. It's a matter of basic math. You can't have a nation's debt rapidly growing forever-while its economy remains stagnant.
With the debt loads totally unmanageable, the key thing to focus on is why has this situation gone on so long. We have already set a record for the longest period in American history without a recession. As time drags on, I can only come to the conclusion that God has some special plan in the works.
One explanation that comes to mind is the Rapture. The sudden removal of millions of Christians would create its own devastating economic impact. Adding to the fuel that already exists would create a conflagration that would provide the perfect setting for the Antichrist to take charge. Since this bubble will eventually pop, our goal should be to warn others to be ready.
"Therefore, knowing the fear of the Lord, we persuade men" (2 Corinthians 5:11).
"Behold, I come quickly: blessed is he that keepeth the sayings of the prophecy of this book" (Revelation 22:7).
Nordic countries point the way to cashless societies - By Rebecka Roos and Alister Doyle - http://news.yahoo.com/nordic-countries-point-way-cashless-societies-143338597--sector.html
Nordic countries are leading a shift by rich nations towards cashless societies, providing a test case for whether the lower cost and convenience of using cards and smartphones for payments outweigh the risks of fraud and some people being left behind.
Helped by wide use of computers even among the elderly, broad trust in the state and big business and only small black economies, people in Sweden and neighboring countries are fast embracing cards, the Internet and apps for financial transactions, and forsaking notes and coins.
"We are headed more and more for a cashless society," said Jan Digranes, a director at Finance Norway, which represents banks and other financial institutions.
Sweden, home of music streaming firm Spotify and the Candy Crush mobile phone game, ranks top in the European Union for card payments, with 230 transactions per inhabitant in 2012, just above Denmark and Finland and well ahead of Britain on 167, Germany 39 and Italy 28, according to the European Central Bank.
Non-EU members Norway and Iceland are also among top users of cards worldwide, their central banks say.
For banks and businesses, the big benefit is lower costs.
A report by the Norwegian central bank last month said the total cost of each cash transaction -- including handling notes and coins in banks -- was estimated at 7.1 crowns ($0.92) against only 4.1 crowns per card transaction.
For consumers, abandoning cash is often about convenience, though some are worried the poor, elderly and disabled can lack access to technology and credit, or just prefer notes and coins.
Swedes often make the smallest purchases, such as for chewing gum, with a credit card and can use the Swedish banks' jointly-developed smartphone app Swish to repay a small debt to a friend. Another app allow drinkers to buy beers in a bar without queuing.
In the Stockholm subway, it is impossible to buy a ticket with cash, while some unemployed people selling street magazines now also accept electronic payments.
Mike Shabwan, selling flowers on a Stockholm square, said sales had risen by 10 percent since he started use the Swedish service iZettle in his smartphone to accept card payments.
"And it is also cheaper and easier for me because the money comes directly into the bank," he said.
MOBILEPAY
In Denmark, "MobilePay" -- an app launched by Danske Bank to allow payments via a smartphone -- was judged by public radio as the best new word of the year for 2014. It now has 1.8 million users in a nation of 5.6 million people.
But Jarl Dahlfors, chief executive of cash handling firm Loomis, says the cashless trend may have gone too far for "unbanked people" such as many elderly.
And "do we really want everything we buy to be registered?" he asked, touching on the loss of privacy involved in switching from cash purchases to card and online payments.
Then there are the risks of electronic fraud.
According to Swedish Justice Ministry data, electronic fraud has doubled in the country in the past decade to about 140,000 cases in 2013. The boom is partly because a successful Internet-based computer scam can quickly generate thousands of cases.
To limit risks with MobilePay, Danske Bank advises clients to keep their phones locked when not in use and guard them as they would a credit card or cash.
In Norway, Mastercard is experimenting with a fingerprint identification system developed by Norway's Zwipe, embedded into credit cards, hoping to make them more secure.
Anna Eriksson, spokeswoman of the Swedish Association of Senior Citizens, said elderly people need guarantees that cash can be used freely everywhere.
"Maybe we need incentives for older people to get an iPad to learn what's positive about paying bills through a computer," she said.
Still, there are silver linings, even in the rise of electronic fraud. Bank robberies -- which can involve violence -- fell in Sweden to a record low of five in 2012 from 16 the year before.
The Swedish central bank is far from phasing out cash; it will launch new notes and coins this year.
But it predicts the amount of cash in Sweden will fall by between 20 and 50 percent by 2020 compared with 2012.
And as the first generation of Internet users grows older, it seems likely that attachments to notes and coins will fade.
"It is an ongoing evolution," said Peter Fredell, CEO of Swedish Seamless, which developed the payment app Seqr that handles around 3 billion transactions in stores, restaurants and e-trade annually.
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