If you enjoy watching financial doom, then you are quite likely to
really enjoy the rest of 2012. Right now, red flags are popping up all
over the place. Corporate insiders are selling off stock like there is
no tomorrow, major economies all over Europe continue to implode, the
IMF is warning that the eurozone could actually break up and there are
signs of trouble at major banks all over the planet. Unfortunately, it
looks like the period of relative stability that global financial
markets have been enjoying is about to come to an end.
A whole host of problems that have been festering just below the
surface are starting to manifest, and we are beginning to see the
ingredients for a "perfect storm" start to come together. The greatest
global debt bubble in human history is showing signs that it is getting
ready to burst, and when that happens the consequences are going to be
absolutely horrific. Hopefully we still have at least a little bit more
time before the global financial system implodes, but at this point it
doesn't look like anything is going to be able to stop the chaos that is
on the horizon.
The following are 22 red flags that indicate that very serious doom is coming for global financial markets....
#1 According to CNN, the level of selling by insiders at
corporations listed on the S&P 500 is the highest that it has been
in almost a decade. Do those insiders know something that the rest of
us do not?
#2 Home prices in the United States have fallen for six months in a
row and are now down 35 percent from the peak of the housing market.
The last time that home prices in the U.S. were this low was back in
2002.
#3 It is now being projected that the Greek economy will shrink by another 5 percent this year.
#4 Despite wave after wave of austerity measures, Greece is still
going to have a budget deficit equivalent to about 7 percent of GDP in
2012.
#5 Interest rates on Italian and Spanish sovereign debt are
rapidly rising. The following is from a recent RTE article....
Spain's borrowing rate nearly doubled in a short-term debt auction
as investors fretted over the euro zone's determination to deal with
its debts.
And Italy raised nearly €3.5 billion in a short-term bond sale
today but at sharply higher interest rates amid fresh concerns over the
euro zone outlook, the Bank of Italy said.
#6 The government of Spain recently announced that its 2011 budget
deficit was much larger than originally projected and that it probably
will not meet its budget targets for 2012 either.
#7 Amazingly, bad loans now make up 8.15 percent of all loans on
the books of Spanish banks. That is the highest level in 18 years. The
total value of all toxic loans in Spain is equivalent to approximately
13 percent of Spanish GDP.
#8 One key Spanish stock index has already fallen by more than 19 percent so far this year.
#9 The Spanish government has announced a ban on all cash
transactions larger than 2,500 euros. Many are interpreting this as a
panic move.
#10 It is looking increasingly likely that a major bailout for
Spain will be needed. The following is from a recent Reuters
article....
Economic experts watching Spain don't know how much money will be
needed or precisely when, but some are near certain that Madrid will
eventually seek a multi-billion euro bailout for its banks, and perhaps
even for the state itself.
#11 Analysts at Moody's Analytics are warning that Italy has now reached financially unsustainable territory....
"Italy is already out of fiscal space, in our estimate." said
Moody's. "Its debt levels relative to GDP already exceed a manageable
level. The manageable limit for Italian 10-year bond yields is estimated
at 4.2pc. As of Wednesday, Italian 10-year yields were 5.46pc."
#12 It is being projected that the Portuguese economy will shrink by 5.7 percent during 2012.
#13 There is even trouble in European nations that have been
considered relatively stable up to this point. For example, the Dutch
government collapsed on Monday after austerity talks broke down.
#14 The head of the IMF, Christine Lagarde, says that there are "dark clouds on the horizon" for the global economy.
#15 The top economist for the IMF, Olivier Blanchard, recently
made this statement: "One has the feeling that at any moment, things
could get very bad again."
#16 A recent IMF report admitted that the current financial crisis could lead to the break up of the eurozone....
Under these circumstances, a break-up of the euro area could not
be ruled out. The financial and real spillovers to other regions,
especially emerging Europe, would likely be very large.
This could cause major political shocks that could aggravate
economic stress to levels well above those after the Lehman collapse.
#17 George Soros is publicly declaring that the European Union
could soon experience a collapse similar to what happened to the Soviet
Union.
#18 A member of the European Parliament, Nigel Farage, stated
during one recent interview that it is inevitable that some major banks
in Europe will collapse....
There are going to be some serious banking collapses and the
impact of that on some sovereign states, will be serious. I’m afraid
we’ve gotten to a point where we really can’t stop this now. We’re
beginning to reach a stage where however much false money you create,
the problem becomes bigger than the people trying to solve it. We are
very close to that point.
When I talk about the threats and the risk that this thing could
wind up in some kind of rebellion, some sort of awful social cataclysm,
they (other European politicians) are now very worried indeed. They will
talk to you in private, but in public, nobody dares utter a word.
I think the deterioration, in the last two or three weeks, in the
eurozone is very serious indeed. It’s the bond spreads in Italy and
Spain. It’s the fact that youth unemployment is now over 50% in some of
these Mediterranean countries.
It’s riot and disorder on the streets. And yet a month ago I was
here and there was Herman Van Rumpuy telling us, ‘We’ve turned the
corner. Everything is solved. There are no more problems with the
eurozone.’ What a pack of jokers they look like.”
#19 The IMF is projecting that Japan will have a debt to GDP ratio of 256 percent by next year.
#20 Goldman Sachs is projecting that the S&P 500 will fall by about 11 percent by the end of 2012.
#21 Over the past six months, hundreds of prominent bankers have
resigned all over the globe. Is there a reason why so many are suddenly
leaving their posts?
#22 The 9 largest U.S. banks have a total of 228.72 trillion
dollars of exposure to derivatives. That is approximately 3 times the
size of the entire global economy. It is a financial bubble so immense
in size that it is nearly impossible to fully comprehend how large it
is.
The financial crisis of 2008 was just a warm up act for what is
coming. The too big to fail banks are larger than ever, the governments
of the western world are in far more debt than they were back then, and
the entire global financial system is more unstable and more vulnerable
than ever before.
But this time the epicenter of the financial crisis will be in Europe.
Outside of Europe, most people simply do not understand how truly nightmarish the European economic crisis really is.
Spain, Italy and Portugal are all heading for an economic depression and Greece is already in one.
The European Central Bank was able to kick the can down the road a
little bit by expanding its balance sheet by about a trillion dollars
over the last nine months, but the truth is that the underlying problems
in Europe just continue to get worse and worse.
It truly is like watching a horrible car wreck happen in slow motion.
The good news is that there is still a little time to get yourself
into a better position for the next financial crisis. Don't leave
yourself financially exposed to the next crash.
Sadly, just like back in 2008, most people will never even see this next crisis coming.
No comments:
Post a Comment
Don't Troll, if you can't add anything helpful, don't post.