…According to one of the most reliable indicators that we have, we are closer to another recession than we have been at any point since the last financial crisis and, when you combine this with all of the other indicators that are screaming that a new crisis is on the horizon, a very troubling picture emerges. Hopefully this will turn out to be a false alarm, but it is looking more and more like big economic trouble is coming in 2018.
The original article, written by Michael Snyder, is presented here by munKNEE.com – “ The internet’s most unique site for financial articles! (Here’s why)” – in an edited ([ ]) and revised (…) format to provide a fast & easy read. Visit our Facebook page for all the latest – and best – financial articles!
…The professionals on Wall Street take the yield curve very, very seriously, and the fact that it has gotten so flat has many of them extremely concerned. If the yield curve continues to get even flatter, it will spark widespread selling on Wall Street and, if it actually inverts, that will set off total panic.
…When the financial markets finally do crash, it won’t exactly be a surprise. In fact, we are way, way overdue for financial disaster.
- Since the last financial crisis, we have been on the greatest debt binge in human history.
- U.S. government debt has gone from $10 trillion to $20 trillion,
- corporate debt has doubled,
- and U.S. consumer debt has now risen to nearly $13 trillion.
Debt brings consumption from the future into the present, increasing short-term economic activity at the expense of long-term financial health, but we simply cannot continue to grow debt much, much faster than the overall economy is growing…The only reason why we have even gotten this far is because unprecedented intervention by the Federal Reserve and other global central banks has pushed interest rates way below the real rate of inflation, and that has bought us extra time.
Indeed, if the average rate of interest on U.S. government debt were to return to the long-term average, we would be paying more than a trillion dollars a year in interest on the national debt and the game would be over but now the Federal Reserve and other global central banks are reversing course in unison, and global financial markets are already starting to decline. Of course more debt and more central bank manipulation would just make the eventual financial disaster even worse, but that is what we are faced with at this point.
The only way we can keep putting off the next financial crisis is if we continue our unprecedented debt binge and if global central banks continue to artificially prop up the financial markets.
Most people simply don’t understand the gravity of the situation. Nothing was ever fixed after the last financial crisis. Instead, we went on the greatest debt binge that humanity has ever seen, and central banks started creating trillions of dollars out of thin air and recklessly injected that hot money into the financial system so now we are in the terminal phase of the largest financial bubble in human history, and there is no easy way out. We basically have two choices.
- We can have a horrific financial crisis now,
- or we can have one a little bit later.
Usually the choice is “later” – and that is why our leaders have been piling on the debt and global central banks have been recklessly creating money. It is inevitable, however, that our bad choices will catch up with us eventually, and when that happens the pain that we are going to experience is going to be absolutely off the charts.
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The U.S. stock market has entered into the last stage, which I call the Super-Charged Tulip Mania. Not only are stock prices inflated well above anything we have ever seen before, but valuations are also reaching heights that are totally unsustainable. This next market crash will not resemble anything similar to what took place during the 2008-2009 U.S. banking and housing market collapse. When the markets cracked in 2008, EVERYTHING went down together. Instead this time around, as the markets tank the precious metals will surge to new highs.
Right now most people seem to have been lulled into a false sense of security, and they truly believe that everything is going to be okay but every time before when the market has looked like this, a crash has always followed, and this time will be no exception.
Mark my words here: This third and final bubble (fourth if you count 1987) is now the biggest and most obvious bubble in this boom since 1983. It is as overvalued as at the top of 1929 and the fact that no one wants to hear about it is an ominous sign that it may well be peaking!
Treasury Secretary, ex-Goldman Sachs banker Steven Mnuchin, has threatened Congress with [a] stock crash if Congress doesn’t pass a tax reform Bill. His reason is that the stock market surge since the election was based on the hopes of a big tax cut. This reminds me of 2008.
If the markets crash in 2018 then, like previous crashes, they will prove to be a buying opportunity but, until the masses embrace this bull market, however, the most likely outcome is a correction and not crash.
John Hussman believes the markets are so overvalued now that we can expect a 60% decline from here…[and in his original article he] presents a total of seven charts to make a compelling case.
All we have been hearing since 2011 is how the stock market is going to crash but these charts illustrate that the retail market is not in crash mode just yet and it is still nowhere near the overbought levels of 2007.
There’s no real reason to suspect from a fundamental standpoint that the bull market in the stock market has ended. Indeed, the balance of the data suggests we aren’t likely to see a recession in the U.S. until late 2018 at the earliest. Let me explain further.
As it stands, everything is in place for a serious stock market correction; the question is when. With markets in record territory and momentum strong, the next crash may not be around the corner but, with valuations getting further and further out of whack, stocks will have further to fall when a crash comes.
There has been nothing that has been normal about this economic recovery, and I don’t think there’s going to be anything that’s normal on how this all ends. For now, enjoy the melt-up, because this too will come to an end.
I do realise that bearers of bad news are unpopular figures. If they are right, nobody will thank them and many people will blame them. If they are wrong they will be ridiculed but, as most readers know, I am not here to be a prophet of doom and gloom. No, my purpose is just to tell things as I see them and to warn people about the massive risks that the world is now facing.
My reading of the economic and financial tea leaves is that the economy continues to grow at a sub-par pace (about 2%), just as it has for the past 8 years. I don’t see evidence of a coming boom, or of an imminent bust… just more of the same. Dull. Here are a baker’s dozen charts, with the latest updates, to flesh out the story:
Watch what emerges in the coming months and ask yourself if the DAY OF FINANCIAL JUDGMENT is here! I am.
This article discusses how we arrived here; what’s next; what this means for the stock market; and China as the key to the problem.
I honestly believe that those who read this article in full will understand the horrible predicament we are facing better than 99% of the population!
As the next crisis erupts, the mainstream media is going to respond with shock and horror but the only real surprise is that this ridiculous bubble lasted for as long as it did. The truth is that a market decline is way overdue.