25 Signs That The Financial World Is About To Hit The Big Red Panic Button

The Economic Collapse
Wednesday, August 31, 2011

Most of the worst financial panics in history have happened in the fall.  Just recall what happened in 1929, 1987 and 2008.  Well, September 2011 is about to begin and there are all kinds of signs that the financial world is about to hit the big red panic button. 


Wave after wave of bad economic news has come out of the United States recently, and Europe is embroiled in an absolutely unprecedented debt crisis.  At this point there is a very real possibility that the euro may not even survive.  So what is causing all of this?  Well, over the last couple of decades a gigantic debt bubble has fueled a tremendous amount of “fake prosperity” in the western world.  But for a debt bubble to keep going, the total amount of debt has to keep expanding at an ever increasing pace.  Unfortunately for the global economy, sources of credit are starting to dry up.  That is why you hear terms like “credit crisis” and “credit crunch” thrown around so much these days.  Without enough credit to feed the monster, the debt bubble is going to burst.  At this point, virtually the entire global economy runs on credit, so when this debt bubble bursts things could get really, really messy.

Nations and financial institutions would never get into debt trouble if they could always borrow as much money as they wanted at extremely low interest rates.  But what has happened is that lending sources are balking at continuing to lend cheap money to nations and financial institutions that are already up to their eyeballs in debt.

For example, the yield on 2 year Greek bonds is now over 40 percent.  Investors don’t trust the Greek government and they are demanding a huge return in order to lend them more money.

Throughout the financial world right now there is a lot of fear.  Lending conditions have gotten very tight.  Financial institutions are not eager to lend money to each other or to anyone else.  This “credit crunch” is going to slow down the economy.  Just remember what happened back in 2008.  When easy credit stops flowing, the dominoes can start falling very quickly.

  • A d v e r t i s e m e n t

Sadly, this is a cycle that can feed into itself.  When credit is tight, the economy slows down and more businesses fail.  That causes financial institutions to want to tighten up things even more in order to avoid the “bad credit risks”.  Less economic activity means less tax revenue for governments.  Less tax revenue means larger budget deficits and increased borrowing by governments.    But when government debt gets really high that can cause huge economic problems like we are witnessing in Greece right now.  The cycle of tighter credit and a slowing economy can go on and on and on.

I spend a lot of time talking about problems with the U.S. economy, but the truth is that the rest of the world is dealing with massive problems as well right now.  As bad as things are in the U.S., the reality is that Europe looks like it may be “ground zero” for the next great financial crisis.

At this point the EU essentially has three choices.  It can choose much deeper economic integration (which would mean a huge loss of sovereignty), it can choose to keep the status quo going for as long as possible by providing the PIIGS with gigantic bailouts, or it can choose to end of the euro and return to individual national currencies.

Any of those choices would be very messy.  At this point there is not much political will for much deeper economic integration, so the last two alternatives appear increasingly likely.

In any event, global financial markets are paralyzed by fear right now.  Nobody knows what is going to happen next, but many now fear that whatever does come next will not be good.

The following are 25 signs that the financial world is about to hit the big red panic button….

#1 According to a new study just released by Merrill Lynch, the U.S. economy has an 80% chance of going into another recession.

#2 Will Bank of America be the next Lehman Brothers?  Shares of Bank of America have fallen more than 40% over the past couple of months.  Even though Warren Buffet recently stepped in with 5 billion dollars, the reality is that the problems for Bank of America are far from over.  In fact, one analyst is projecting that Bank of America is going to need to raise 40 or 50 billion dollars in new capital.

#3 European bank stocks have gotten absolutely hammered in recent weeks.

#4 So far, major international banks have announced layoffs of more than 60,000 workers, and more layoff announcements are expected this fall.  A recent article in the New York Times detailed some of the carnage….

A new wave of layoffs is emblematic of this shift as nearly every major bank undertakes a cost-cutting initiative, some with names like Project Compass. UBS has announced 3,500 layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told.

#5 Credit markets are really drying up.  Do you remember what happened in 2008 when that happened?  Many are now warning that we are getting very close to a repeat of that.

#6 The Conference Board has announced that the U.S. Consumer Confidence Index fell from 59.2 in July to 44.5 in August.  That is the lowest reading that we have seen since the last recession ended.

#7 The University of Michigan Consumer Sentiment Index has fallen by almost 20 points over the last three months.  This index is now the lowest it has beenin 30 years.

#8 The Philadelphia Fed’s latest survey of regional manufacturing activity was absolutely nightmarish….

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009

#9 According to Bloomberg, since World War II almost every time that the year over year change in real GDP has fallen below 2% the U.S. economy has fallen into a recession….

Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.

#10 Economic sentiment is falling in Europe as well.  The following is from a recent Reuters article….

A monthly European Commission survey showed economic sentiment in the 17 countries using the euro, a good indication of future economic activity, fell to 98.3 in August from a revised 103 in July with optimism declining in all sectors.

#11 The yield on 2 year Greek bonds is now an astronomical 42.47%.

#12 As I wrote about recently, the European Central Bank has stepped into the marketplace and is buying up huge amounts of sovereign debt from troubled nations such as Greece, Portugal, Spain and Italy.  As a result, the ECB is alsomassively overleveraged at this point.

#13 Most of the major banks in Europe are also leveraged to the hilt and have tremendous exposure to European sovereign debt.

#14 Political wrangling in Europe is threatening to unravel the Greek bailout package.  In a recent article, Satyajit Das described what has been going on behind the scenes in the EU….

The sticking point is a demand for collateral for the second bailout package. Finland demanded and got Euro 500 million in cash as security against their Euro 1,400 million share of the second bailout package. Hearing of the ill-advised side deal between Greece and Finland, Austria, the Netherlands and Slovakia also are now demanding collateral, arguing that their banks were less exposed to Greece than their counterparts in Germany and France entitling them to special treatment. At least, one German parliamentarian has also asked the logical question, why Germany is not receiving similar collateral.

#15 German Chancellor Angela Merkel is trying to hold the Greek bailout deal together, but a wave of anti-bailout “hysteria” is sweeping Germany, and nowaccording to Ambrose Evans-Pritchard it looks like Merkel may not have enough votes to approve the latest bailout package….

German media reported that the latest tally of votes in the Bundestag shows that 23 members from Mrs Merkel’s own coalition plan to vote against the package, including twelve of the 44 members of Bavaria’s Social Christians (CSU). This may force the Chancellor to rely on opposition votes, risking a government collapse.

#16 Polish finance minister Jacek Rostowski is warning that the status quo in Europe will lead to “collapse“.  According to Rostowski, if the EU does not choose the path of much deeper economic integration the eurozone simply is not going to survive much longer….

“The choice is: much deeper macroeconomic integration in the eurozone or its collapse. There is no third way.”

#17 German voters are against the introduction of “Eurobonds” by about a 5 to 1 margin, so deeper economic integration in Europe does not look real promising at this point.

#18 If something goes wrong with the Greek bailout, Greece is financially doomed.  Just consider the following excerpt from a recent article by Puru Saxena….

In Greece, government debt now represents almost 160% of GDP and the average yield on Greek debt is around 15%. Thus, if Greece’s debt is rolled over without restructuring, its interest costs alone will amount to approximately 24% of GDP. In other words, if debt pardoning does not occur, nearly a quarter of Greece’s economic output will be gobbled up by interest repayments!

#19 The global banking system has a total of 2 trillion dollars of exposure to Greek, Irish, Portuguese, Spanish and Italian debt.  Considering how much the global banking system is leveraged, this amount of exposure could end up wiping out a lot of major financial institutions.

#20 The head of the IMF, Christine Largarde, recently warned that European banks are in need of “urgent recapitalization“.

#21 Once the European crisis unravels, things could move very rapidly downhill.  In a recent article, John Mauldin put it this way….

It is only a matter of time until Europe has a true crisis, which will happen faster – BANG! – than any of us can now imagine. Think Lehman on steroids. The U.S. gave Europe our subprime woes. Europe gets to repay the favor with an even more severe banking crisis that, given that the U.S. is at best at stall speed, will tip us into a long and serious recession. Stay tuned.

#22 The U.S. housing market is still a complete and total mess.  According to a recently released report, U.S. home prices fell 5.9% in the second quarter compared to a year earlier.  That was the biggest decline that we have seen since 2009.  But even with lower prices very few people are buying.  According to the National Association of Realtors, sales of previously owned homesdropped 3.5 percent during July.  That was the third decline in the last four months.  Sales of previously owned homes are even lagging behind last year’s pathetic pace.

#23 According to John Lohman, the decline in U.S. economic data over the past three months has been absolutely unprecedented.

#24 Morgan Stanley now says that the U.S. and Europe are “hovering dangerously close to a recession” and that there is a good chance we could enter one at some point in the next 6 to 12 months.

#25 Minneapolis Fed President Narayana Kocherlakota says that he is so alarmed about the state of the economy that he may drop his opposition to more monetary easing.  Could more quantitative easing by the Federal Reserve soon be on the way?

Things have not looked this bad for global financial markets since 2008.  Unless someone rides in on a white horse with trillions of dollars (or euros) of easy credit, it looks like we are headed for a massive credit crunch.

What we witnessed back in 2008 was absolutely horrifying.  Very few people want to see a repeat of that.  But as things in the U.S. and Europe continue to unravel, it appears increasingly likely that the next wave of the financial crisis could hit us sooner rather than later.

None of the fundamental problems that caused the crisis of 2008 have been fixed.  The world financial system is still one gigantic mountain of debt, leverage and risk.

Authorities around the globe will certainly do all they can to keep things stable, but in the end it is inevitable that the house of cards is going to come crashing down.

Let us hope for the best, but let us also prepare for the worst.

 






 
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25 Responses to “25 Signs That The Financial World Is About To Hit The Big Red Panic Button”

  1. Humanity is stuck in a failure mode. It was of little consequence before advances in travel and communication made the world smaller. Earth, now saturated with our lunacies, can no longer endure business as usual.

    The failure mode is our trust in government and religion. It is the shock of our lives to discover that we brought on the NWO ourselves! Tyrants grow in the fields of our own dishonesties. They mirror us…karmic payback in kind!

    Presently, the outlook for our survival is bleak. In a worst case scenario, world infrastructures will break down, and there will be no money, no trucks to haul the garbage, no safe water, no sewage systems, little or no food, no safety from roving, raping gangs, and little land that is not radioactive and toxic. A savage world few of us are prepared for!

    In a best case scenario, the tyrants may delay–but not abate–their encroachment. Our only hope is to change ourselves in ways we never expected, and in ways many fear, and in ways violently opposed by religion and government.

    The future is not set in concrete. Bringing about a better future asks that we explore the nature of reality. We manifest it. Anything can be, subject only to the Rules of Change. Change is:

    Creative,
    Unpredictable,
    Incremental,
    Inevitable,
    Perpetual,
    Irresistible, and
    Irreversible.

    Change protects us from ‘Absolute Truth’.

    The status quo is a changing illusion. Scriptures and courts of law fade into oblivion, over aeons, before societies attain the consciousness of our extraterrestrial friends. They are in direct contact with the God of Reality…….far more thrilling, loving, and adventurous than Earth’s anthropomorphic gods of truth. It is our far-off destiny to discover this also.

    In our dreams, we visit fascinating worlds, and at some point, desire to return to where we started. But we cannot. The journey through infinity is strictly one way. There’s no returning to the way things were. The languor of our melancholy is inexpressible.

    We will not return to our failure mode of governmental and religious control of our lives without destroying homo sapiens. Like it or not, government has to go! Like it or not, religion has to go! If throw bible verses at this, you only reveal your arrogant disdain of a history written in blood and your spiritually sick obsession with crushing our God-given independence and freedom of thought.

    The transition will take us through the Rules of Change. Not overnight. Sadly, we realize that centuries of going down the wrong road have lead us to a dead end, and now, it will take many, many years to go back.

    But then where shall we go? The answer is strange, curious, but simple. We must live in reality and not in truth.

    Living in reality is fitting ourselves to the attributes of reality: Uncertainty, Change, and Imperfection. Freedom comes from uncertainty, creativity comes from change, and love comes from imperfection. Living in truth is delusory, for the attributes of truth…….certainty, permanence, and perfection……are incompatible with reality. Let no government tell you what to do! Let no religion tell you what to believe! Think and act for yourself!

    The result is that we evolve our own personal truths, revising as we go, based on the feedback of testing those truths as solutions to life’s challenges. We toss out failed truths, and keep and improve successful truths. This brings the highest ethics, because the instinct to survive impels us to enhance our situations.

    On the other hand, if we get our truth as Absolute Truth from government and religion, it fails us. Truth cannot be generalized. Each of us is unique. Thus, values based on externally imposed moralities eventually are seen as arbitrary and benefiting their authors but not the rest of us. When phony values don’t work, people may give them lip service but go on to do things in immature and irresponsible ways. Pedophile priests, e.g.

    Infinity is a one way journey, we cannot go back! Our great civilization will arrive slowly and painfully, but we can hasten our progress once we begin living in reality, not in truth. This brings the highest ethics, in which we shall wisely govern ourselves, rather than being unwisely governed by others.

    As we learn to live in reality, not truth, and accept that our true selves exist forever, we learn to live in love, not fear. This brings us ever closer to God.

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    I’m posting my blog video here because I need to reach out to the real people who are effected by the Global Economic Crisis. Please pass this video on.

  3. All I can do is laugh at this rediculous nonsense of what we call a government. What we need t is take our rights serioulsy, go get our guns and execute these people that have COMMITED TREASON against our country.. But don’t wory that will never happen as everyone is a pussy in this country. THEY KILL OUR CITIZENS AND CLEARLY VIOLATE OUR RIGHTS.. What more needs to happen??? I believe the time for armed insurection has come an past.

  4. SHOW THIS TO ALL YOUR TEA PARTY FRIENDS WHO ARE CAUGHT UP IN THE R vs D trap!

    Click on link below to see a 14 minute video by an Arkansas Tea Party leader who does a FANTASTIC job at showing that this election is really about The Constitution vs the NWO! She tells the REAL threat to our country….the cancer of globalism through Agenda 21, Project 60, etc. She ties it all together so well and in such a short time, and helps people wake up to the REAL battle!

    I am so glad to find this, b/c most of the tea party people I know are totally focused on beating Obama, and “anyone will do” except for him! They are ignorant of the internationalist anti-sovereignty activities going on silently and daily in the US.

    • what link

  5. Could someone at infowars put together an article and explain the depth of what the current policy of the Federal Reserve is and also where to go about getting all the information.
    For instance is the Federal Reserve retracting money supply or is the money supply maxed out and thats why the Fed is talking about printing money. I’m not following what the current policy of the Federal Reserve is.
    Are they printing more money or are they retracting the money supply? What am I missing?

  6. I have noticed in many areas, police are not patrolling at all aka St Louis, they are inviting racial strive, Every-one I Know have sold thier houses at a loss and have split for the country.

  7. Did you know that there is a huge organization who’s actually getting rich by destroying the economy?

    Learn what Osama, Obama, Biden, Bin Laden, the FBI’s Most Wanted Terrorists, and Sarah Palin had to do with the last presidential election and the military’s overthrow of our government. Search PalinsDirtyLittleSecret.blogspot and learn what the media isn’t reporting.

  8. Wish someone WOULD hit the “button”!! They wont though.. they will move to plan B thanks to internet sights like this one. Oh and all the people who haven’t had jobs now for over 2 yrs and probably never will again. HIT THE BUTTON YOU AZZHOLES!!!!!!!

  9. How many more signs do you need to know the game is lost? It’s time to hunker in and watch the train wreck from a distance. If you’re not prepared, at least get some food to get you through! If you’re in a city, you won’t have an easy time. placeofrefuge2012.

    • But if one goes somewhere to hunker in and wait it out; what is that?

      Is going into hiding and hoping others will ‘fix’ it and make it better? What if it doesnt get fixed whiler yer hunkered in? Then what? Are you then just passing time away until yer discovered and removed from your place of hiding?

      I believe living in the country in small towns or being inside homes out in the country offers an open target that is free from colateral damage. In cities, that is where alot of important grids are located inside of. Guerilla warfare is always the toughest.

  10. I think the New World Order wins guys… at least for now, until the true Jesus Christ comes back.

  11. Fiat currencies, credit default swaps, derivatives, Treasury notes, the network of stock markets and investments opportunities, etc, etc, etc…..all seem to be heading into a transitional phase.

    There are still peoples in this World that live their lives outside of these entanglements such as investing, playing the markets, hedging, going short, etc, etc. People that live in the steppes of Tajikistan that live much the way generations before them had lived. Peoples in the rain forest of Brazil that live every day in such a way that is far far removed from the pots of gold of this age.
    There are many examples of peoples living in such a way that if one was to decribe to them the carnival of events of stocks, investments, the entire cycle of ‘security’ based on such primitive means, they would not want to be a part of that global establishment system.

    No matter how one slices it, it is still an Earthly systemic construct of primitive modes of the eat or be eaten levels of human existence and thought. Even a so-called New World Order consists of the thought, the management, the actions of the old, primitive roots of predator – prey, plunder here / plunder there. Its the same old book with the same old game plan; no matter what cover is on the book or no matter what illustrations are placed within it. The ending is the same.

  12. there is no way in hell that the elites can control the masses when the bubble burst so they HAVE to take us to a massive global war!

    • The best way to deal with this financial crisis is to destroy the monetary system and give everybody whatever they need. Otherwise, the man “Limitless” was inspired by will do it for the world. Watch and see what happens.

  13. Get ready for Roctober.

    • LOL. (nervous laugh)

  14. I’m going to believe Gerald Celente rather than Morgan Stanley and say that were in a depression. Oh they have hysteria in Germany, just look at how many expensive cars are getting torched! Get your gold and silver!

    • And the other to G’s: guns and getaway plans..

  15. Well it was bound to happen sonner or later still not sure why they arent planning to just forgive all debt everywhere and start over again with a common currency. I know this seems one worldish but If you think about it 1 currency over the entire world and there will be no need for speculators or derivitives or any of the other bullshit that got us into this mess in the first place.

    • ‘still not sure why” thats because you are brain dead. they don’t want to start over. get a clue. this is exactly where they want to be. please use your head for once. you always say the same old shiit. you are a troll.

  16. …and when it does, will the masses stop to check their notes and attend to the real agenda which is to reclaim the massive stolen wealth that dominates all life among those living in the so-called ‘civilized’ world?

  17. I’ll see your Pffft, Sir Porky, and raise you a Feh!

    • zzZZZzzz …

  18. Pffft …

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