While You Were Sleeping: IMF Warns Of "A Second Great Depression"
image: http://prophecynewswatch.com/images/recent/collapsejan192016.jpgBy Michael Snyder/Economic Collapse Blog October 08, 2018
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Why would the IMF use the phrase "a second Great Depression" in a report that they know the entire world will read? To be more precise, the IMF stated that "large challenges loom for the global economy to prevent a second Great Depression".
Are they saying that if we do not change our ways that we are going to be heading into a horrific economic depression? Because if that is what they are trying to communicate, they would be exactly correct.
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At this moment, global debt levels are higher than they have ever been before in all of human history, and in their report the IMF specifically identified "global debt levels" as one of the key problems that could lead to "another financial meltdown"...
The world economy is at risk of another financial meltdown, following the failure of governments and regulators to push through all the reforms needed to protect the system from reckless behaviour, the International Monetary Fund has warned.
With global debt levels well above those at the time of the last crash in 2008, the risk remains that unregulated parts of the financial system could trigger a global panic, the Washington-based lender of last resort said.
And the IMF report also seemed to indicate that global central banks were responsible for the situation in which we now find ourselves.
In the report, an "extended period of ultralow interest rates" was blamed for "the build-up of financial vulnerabilities"...
The IMF Global Financial Stability report read: "The extended period of ultralow interest rates in advanced economies has contributed to the build-up of financial vulnerabilities.
"The large accumulation of public debt and the erosion of fiscal buffers in many economies following the crisis point to the urgency of rebuilding those defences to prepare for the next downturn."
This is extremely unusual language for a globalist institution such as the IMF to be using.
Are they trying to signal that a major global financial crisis is imminent?
Of course they would hardly be the first to sound the alarm. Prominent names throughout the financial world are making all sorts of ominous declarations these days, and more red flags continue to pop up with each passing day.
For example, according to one analysis the global yield curve has gone negative for the first time since the last financial crisis, and this has created "the perfect cocktail" for a "liquidity crunch"...
Major liquidity crunches often occur when yield curves around the world flatten or invert. Currently, the global yield curve is inverted; this is an ominous sign for the global economy and financial markets, especially overvalued stocks markets like the US.
To me, that is one of the most alarming charts that we have seen in a very long time.
Everything in the global financial system revolves around the flow of debt. When money is cheap and flowing freely, economic growth tends to expand. But when a liquidity crunch happens, economic activity can start contracting very rapidly, and it looks like that is the type of scenario that is quickly starting to develop.
In fact, we are already witnessing a substantial liquidity crunch in emerging markets. Lenders are hesitant to lend while economic conditions in those countries are chaotic, and a rapidly rising dollar has made servicing existing dollar-denominated debts increasingly problematic.
As we witnessed in 2008, debt bubbles end when liquidity begins to tighten up. The only way that this current debt bubble can survive is if it continues to expand, and it can only expand for as long as lenders are willing to part with their money easily.
If interest rates continue to go higher, the U.S. economy and the global economy as a whole are going to be hit really hard.
On Thursday, the fact that interest rates "hit new multiyear highs" was blamed for the large decline in the stock market...
Stocks fell sharply on Thursday as interest rates hit new multiyear highs, dampening investor sentiment.
The Dow Jones Industrial Average dropped 201 points as Nike and Home Depot lagged. The 30-stock index dropped 356 points at its lows of the day and posted its worst decline since Aug. 10.
The Dow hit a new all-time high earlier this week, but many believe that it was essentially an illusion.
Because right now there are three times as many stocks at 52-week lows than there are stocks at 52-week highs. Prior to this week, there was only one other day since 1965 when this happened...
There have been two days since 1965 have seen 3x as many NYSE stocks at year-lows than at year-highs while the Dow traded at an all-time high.
The only other time prior to October 3, 2018?
December 28, 1999. The Dow was just days prior to hitting 11,722 on January 10, 2000, which would mark its long-term top. It would bottom at 8,062 on September 21, 2001. A 32% decline. The Nasdaq lost over 60% of its value during that same period, and would decline 78% from its all-time high.
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I know that I have used a lot of technical jargon in this article, but the bottom line is this...
Big trouble is coming.
At this point, even Dennis Gartman is saying that "one cannot but think that a global bear market of some very real consequence is developing."
Sentiment on Wall Street has shifted at a rate that is absolutely breathtaking. The mindless optimism of recent years has been replaced with an ominous feeling that a major downturn is imminent.
And because markets tend to go down a lot faster than they go up, a lot of people could end up being wiped out financially before they even realize what just hit them.
The Dollar's Amazing High-Flying Act - Todd Strandberg - https://www.raptureready.com/category/nearing-midnight/
The European Union has said the US dollar needs to be replaced as the global trading currency. The Russian government has said a switch to a new monetary trading system is needed. China has been working with several nations to supplant the greenback with one based on its currency. As hard as these nations try to replace the dollar, it still remains the central mechanism unit of global trade.
The dollar is by no means a perfect currency. The government that controls the quality of dollars spends money like there is no tomorrow. On Sep 30, fiscal-year 2018 came to an end, and during that 12-month period, the debt load of the federal government increased by $1,271,158,167,127; feds borrowed $8,172 per every American with a Job. This has been the largest spike in red ink since the dark days of the 2008 Subprime Crisis.
It is amazing that we have such a huge shortfall during a time of positive GDP growth. During a recession, tax revenues decline because millions of people lose their jobs and because companies lose money or go bankrupt as their sales collapse. Also during a recession, government expenditures surge because of an increase in support payments such as unemployment compensation and food stamps. The next time we have a recession, the deficit will likely be between $2 to $3 trillion.
The ability of the US government to produce massive deficits without any impact on the dollar has calmed concern over deficit spending. I was shocked when I learned that Trump had quietly signed last week a spending bill that allowed the government to continue the red ink. In the past, there would be a great amount of debate over the raising of any major debt ceiling.
Some people would argue that deficits never matter, because the U.S. has a monopoly creation of dollars, and it isn't at risk of being forced to default on its debt. So as long as inflation remains low, there's room to buy all the iPhones we want from China.
The only reason why the dollar has value is because of trust. By having a trade deficit of $500 billion each year, we have put $10 trillion in the hands of our trading partners. US banks have made another $10 trillion in loans that are based on the greenback.
The world is so flooded with dollars, no other currency can achieve the same level of liquidity. Sea shells are very abundant, and they would make a great currency in term of liquidity. In order for a currency to have value, it needs to be in limited supply. The reason why we don't use Monopoly money alongside the dollar is because Parker Brothers would run their printing presses 24/7 if people actually applied value to their currency.
I think it is an absolute miracle that the US dollar has not already collapsed. It is a basic law of economics that if you print too much debt, your national currency goes down in value. There are several nations that are currently suffering massive devaluation of their currency. The Argentine peso has been in sharp decline. That nation's central bank rate has hiked interest rates to 60% to prop up the currency.
Argentina's currency problems are the result of a $3.7 billion shortfall in its budget. The U.S. has a deficit 343 times greater, and our currency has been in an uptrend for several months.
If I had any doubt that the hand of God was guiding the path of the American dollar, Trump's announcement of a five-way trade war with China, Europe, Mexico, and Canada made things clear. Nothing less than divine monetary intervention was required to keep a meltdown from occurring. We have a $375 billion trade deficit with China, and Trump said it is a "privilege" to trade with America. Clearly, either God has a sense of humor or Trump understands the dollar's connection to prophecy.
The Bible doesn't clearly state that the Antichrist will come to power from a global financial crisis. Because the Beast of Revelation will very quickly gain total control over the global economic system, it is logical to assume that some type of calamity would aid his sudden rise to power. Our ability to see a monetary storm coming from this side of the rapture provides further evidence that the world is headed toward an end-time crash.
"He shall have power over the treasures of gold and silver, and over all the precious things of Egypt; also the Libyans and Ethiopians shall follow at his heels" (Daniel 11:43).
"Through his cunning he shall cause deceit to prosper under his rule; and he shall exalt himself in his heart. He shall destroy many in their prosperity" (Daniel 8:25a).
Market Meltdown: New Warnings That Correction Is Unstoppable
Read more at http://prophecynewswatch.com/article.cfm?recent_news_id=2633#mgJmejuLuEuqUQ7v.99
Read more at http://prophecynewswatch.com/article.cfm?recent_news_id=2633#mgJmejuLuEuqUQ7v.99
Is Ron Paul about to be proven right once again? For a very long time, Ron Paul has been one of my political heroes. His willingness to stand up for true constitutional values and to keep saying "no" to the Washington establishment over and over again won the hearts of millions of American voters, and I wish that there had been enough of us to send him to the White House either in 2008 or in 2012.
To this day, I still wish that we could make his classic work entitled "End The Fed" required reading in every high school classroom in America. He was one of the few members of Congress that actually understood economics, and it is very sad that he has now retired from politics. With the enormous mess that Washington D.C. has become, we sure could use a lot more statesmen like him right now.
But even though he has retired from politics, Ron Paul is still speaking out about the most important issues of the day. And what he recently told CNBC is extremely ominous.
The following comes from a CNBC article entitled "Ron Paul: US is barreling towards a stock market drop of 50% or more, and there's no way to prevent it"...
According to the former Republican Congressman from Texas, the recent jump in Treasury bond yields suggest the U.S. is barreling towards a potential recession and market meltdown at a faster and faster pace.
And, he sees no way to prevent it.
Of course lots of such predictions are flying around these days.
In fact, at this point even the IMF is warning of a "second Great Depression".
So when it actually takes place it won't be much of a surprise. However, I do believe that many will be surprised by the ferocity of the coming crash. According to Ron Paul, stock prices could end up falling by up to 50 percent...
Paul is a vocal Libertarian known for an ardent grassroots fanbase that propelled him to multiple presidential runs, as well as his grim warnings about the economy. Yet he has been warning investors for years that an epic drop of 50 percent or more will eventually hit the stock market. He predicted the February correction, but not in size and scope.
Actually, stock prices need to fall by at least 50 percent in order for stock valuations to get close to their long-term averages.
In the end, if stocks only fall by 50 percent we will be extremely fortunate. Stock valuations always, always, always return to their long-term averages eventually, and usually they fall below those averages during a period of adjustment.
And the mood on Wall Street has definitely changed. The euphoria that we once witnessed is now gone, and instead it has been replaced by a gnawing sense that a really big downturn is coming. In his most recent piece, John Hussman compared it to the fading out of a pop song...
In recent days, the combination of extreme valuations and unfavorable market internals has been joined by acute dispersion in daily trading data that often occurs within a few days of pre-collapse peaks in the market. My opinion is that the music has already quietly faded out like the end of a pop song, in a wholly uneventful way, and that even a surprise push to further highs would be marginal.
And he concluded his most recent piece with this very chilling statement...
For now, and until market conditions shift, there's an open trap door under the equity market, and it's a very long way down.
If stock prices continue to fall, this could be the beginning of a race for the exits.
But if stock prices rebound a bit, it means that we could have some more time.
And keep an eye on junk bonds. They crashed really hard just before the financial crisis of 2008, and they are starting to slip here in October 2018.
A full-blown junk bond panic would definitely be a very clear sign that a major market crash is imminent.
But whether a massive crisis erupts right now or not, the truth is that there is no way that we are going to avoid the consequences of our actions.
At this moment we are in the terminal phase of the biggest debt bubble in human history. In fact, total indebtedness in the United States has increased by more than 2 trillion dollars over the past 12 months...
In total, indebtedness of consumers, corporations, and all governments has grown by $2.04 trillion over the past four quarters. And they're going to be paying higher interest rates on this ballooning debt. In other words, debt service costs are going to rise substantially.
All of this debt has fueled a short-term bubble of relative "prosperity", but meanwhile all of our long-term problems just continue to get worse.
There is no possible way that our debt bubble can continue to grow much faster than the overall economy indefinitely. In fact, we have already been defying the laws of economics for way too long.
Eventually all debt bubbles burst, and when this one bursts we are going to experience economic pain on a scale that America has never seen before.
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