By Michael Snyder, on
June 30th, 2014
A lot of people that I talk
to these days want to know "when things are going to start
happening". Well, there are certainly some perilous times on the
horizon, but all you have to do is open up your eyes and look to see the global
economic crisis unfolding. As you will see below, even central bankers
are issuing frightening warnings about "dangerous new asset bubbles"
and even the World Bank is declaring that "now is the time to
prepare" for the next crisis. Most Americans tend to only care about
what is happening in the United States, but the truth is that serious economic
trouble is erupting in South America, all across Europe and in Asian
powerhouses such as China and Japan. And the endless conflicts in the
Middle East could erupt into a major regional war at just about any time.
We live in a world that is becoming increasingly unstable, and people need to
understand that the period of relative stability that we are enjoying right now
is extremely vulnerable and will not last long. The following are 18
signs that the global economic crisis is accelerating as we enter the last half
of 2014...
#1 The Bank for
International Settlements has issued a new reportwhich warns that "dangerous new asset bubbles" are forming which
could potentially lead to another major financial crisis. Do the central
bankers know something that we don't, or are they just trying to place the
blame on someone else for the giant mess that they have created?
#2 Argentina has
missed a $539 million debt payment and is on the verge
of its second major debt default in 13 years.
#3 Bulgaria is
desperately trying to calm down a massive run on the banks that threatens of
spiral out of control.
#4 Last month,
household loans in the eurozone declined at the fastest rate ever recorded. Why are European
banks holding on to their money so tightly right now?
#5 The number of
unemployed jobseekers in France has just soared to another brand new record high.
#6 Economies all over
Europe are either showing no growth or are shrinking. Just check out what
a recent Forbes article had to say about the
matter...
Italy’s economy shrank by
0.1% in the first three months of 2014, matching the average of the three
previous quarters. After expanding 0.6% in Q2 2013, France recorded zero
growth. Portugal shrank 0.7%, following positive numbers in the preceding nine
months. While figures weren’t available for Greece and Ireland in Q1, neither
country is showing progress. Greek GDP dropped 2.5% in the final three months
of last year, and Ireland limped ahead at 0.2%.
#7 A few days ago it
was reported that consumer prices in Japan are rising at the fastest pace in 32 years.
#8 Household
expenditures in Japan are down 8 percent compared to one year
ago.
#9 U.S. companies are
drowning in massive amounts of debt, but the corporate debt bubble in China is
so bad that the amount of corporate debt in China has actually now surpassed the amount of
corporate debt in the United States.
#10 One Chinese
auditor is warning that up to 80 billion dollars worth of loans in
China are backed by falsified gold transactions. What will that do to the
price of gold and the stability of Chinese financial markets as that mess
unwinds?
#11 The unemployment
rate in Greece is currently sitting at 26.7 percent and the youth unemployment rate is 56.8 percent.
#12 67.5 percent of the people that are unemployed in
Greece have been unemployed for over a year.
#13 The unemployment
rate in the eurozone as a whole is 11.8
percent - just a little bit shy of the all-time
record of 12.0 percent.
#14 The European
Central Bank is so desperate to get money moving through the system that it has
actually introduced negative
interest rates.
#15 The IMF is
projecting that there is a 25
percent chance that the eurozone will slip into deflation by
the end of next year.
#16 The World Bank is
warning that "now is the time to prepare" for the next crisis.
#17 The economic
conflict between the United States and Russia continues to deepen. This
has caused Russia to make a series of movesaway from the U.S. dollar and toward other
major currencies. This will have serious ramifications for the global
financial system as time rolls along.
#18 Of course the U.S.
economy is struggling right now as well. It shrank at a 2.9 percent annual rate during the first
quarter of 2014, which was much worse than anyone had anticipated.
But if U.S. economic
numbers look a bit better for the second quarter, that doesn't mean that we are
out of the woods.
As I have stressed so many
times, the long-term trends and the long-term balance sheet numbers are far,
far more important than the short-term economic numbers.
For example, if you went to
the mall today and spent a thousand dollars on candy and video games, your
short-term "economic activity" would spike dramatically. But
your long-term financial health would take a significant turn for the worse.
Well, when we are talking
about the health of the U.S. economy or the entire global financial system we
need to keep the same kinds of considerations in mind.
As for the United States,
whether the level of our debt-fueled short-term economic activity goes up a
little bit or down a little bit is not what is truly important.
Rather, the fact that we
are nearly 60 trillion dollars in debt as a society is what
really matters.
The same thing applies for
the globe as a whole. Right now, the citizens of the planet are more than 223 trillion dollars in debt, and "too big to
fail" banks around the world have at least 700 trillion dollars of exposure to
derivatives.
So it doesn't really matter
too much whether the short-term economic numbers go up a little bit or down a
little bit right now. The whole system is an inherently flawed Ponzi
scheme that will inevitably collapse under its own weight.
Let us hope that this
period of relative stability lasts for a while longer. It is a good thing
to have time to prepare. But you would have to be absolutely insane to
think that the biggest debt bubble in the history of the world is never going
to burst.
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