Global stocks are falling precipitously once again, and banking stocks are leading the way. If this reminds you of 2008, it should, because that is precisely what we witnessed back then. Banking stocks collapsed as fear gripped the marketplace, and ultimately many large global banks had to be bailed out either directly or indirectly by their national governments as they failed one after another. The health of the banking system is absolutely paramount, because the flow of money is our economic lifeblood. When the flow of money tightens up during a credit crunch, the consequences can be rapid and dramatic just like we witnessed in 2008.
So let’s keep a very close eye on banking stocks. Global systemically important bank stocks surged in the aftermath of Trump’s victory in 2016, but now they are absolutely plunging. They are now down a whopping 27 percent from the peak, and that puts them solidly in bear market territory.
U.S. banking stocks are not officially in bear market territory yet, but they are getting close. At this point, they are now down 17 percent from the peak…
Monday early afternoon, the US KBW Bank index, which tracks large US banks and serves as a benchmark for the banking sector, is down 2.5% at the moment. It has dropped 17% from its post-Financial Crisis high on January 29.
Of course European banking stocks are doing much worse. Right now they are down 27 percent from the peak and 23 percent from a year ago. The following comes from Wolf Richter…
But unlike their American brethren, the European banks have remained stuck in the miserable Financial Crisis mire – a financial crisis that in Europe was followed by the Euro Debt Crisis. The Stoxx 600 bank index, which covers major European banks, including our hero Deutsche Bank, has plunged 27% since February 29, 2018, and is down 23% from a year ago
I wish that we didn’t have a global economic system that was so dependent on the “too big to fail” banks, but we do.
If they aren’t healthy, nobody is going to be healthy for long, and it is starting to look and feel a whole lot like 2008.
But unlike 2008, we also have a global trade war to contend with. The CEO of one yacht company recently told USA Today that tariffs have had a “catastrophic” effect on his company…
Tariffs imposed on goods by the European Union, and the Chinese and American governments on boats, cribs, bourbon, and more have put Wisconsin businesses between a rock and a hard place. The tariffs imposed are already damaging a bloated bubble economy and the hardships are just beginning.
“It’s been catastrophic,” said Rob Parmentier, who is the president and CEO of Marquis-Larson Boat Group, which builds Carver yachts in Pulaski, Wisconsin. According to USA Today, the first “hand grenade,” as Parmentier described it, tossed during the trade wars at him specifically, was a 25 percent tariff the European Union placed this year on boats built in the United States, along with scores of other products including Harley-Davidson motorcycles.
I have previously warned my readers that the damage caused by this trade war would get progressively worse the longer that it lasts.
Many companies have been trying to ride it out, but eventually the money runs out and layoffs start happening…
“We’ve had a lot of order cancellations. Canada and Europe have essentially stopped buying boats,” Parmentier said according to USA Today. “We’ve been absorbing some of the additional costs … hoping the tariffs will go away. But we can only do that for so long,” he said. The next step is layoffs.
Anyone who thought that this trade war would not have very serious consequences was just fooling themselves. According to one source, tariffs paid by U.S. businesses are up 45 percent compared to a year ago…
“For the most recent months available, August 2018, the amount of tariffs paid increased by $1.4 billion — or 45% — as compared to tariffs paid in August 2017. Tariff costs in Michigan tripled to $178 million and more than doubled in multiple states — to $424 million in Texas, $193 million in Illinois, $50 million in Alabama, $29 million in Oklahoma, $23 million in Louisana, and $7.3 million in West Virginia.
These costs strain businesses of all sizes but are particularly painful for small business, manufacturers, and consumers who bear the burden of tariff increases in the form of higher prices,” via the data compiled by The Trade Partnership and released by Tariffs Hurt the Heartland.
And it doesn’t look like this trade war is going to end any time soon. In fact, one key Chinese official recently made it very clear that China is not afraid of a long trade war…
On Monday in Beijing, Zhang Qingli, a leading member of a Chinese committee tasked with forging alliances with other nations, told a small group of U.S. business leaders, lobbyists and public relations executives that China refuses to be intimidated by an ongoing trade war with the Trump administration.
“China never wants a trade war with anybody, not to mention the U.S., who has been a long term strategic partner, but we also do not fear such a war,” Zhang said through a translator, according to a meeting attendee who declined to be named.
We are entering a time when the economy was likely to slow down anyway, but if stocks continue to crash and global banking woes escalate, that is going to spread fear and panic like wildfire.
And when there is fear and panic in the air, lending tends to really tighten up, and a major credit crunch is just about the last thing that we need right now.
It’s been a really bad October for global markets so far, and more trouble is brewing. Hold on to your hats, because it looks like it is going to be a bumpy ride ahead.
About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.
How America will collapse
A soft landing for America 40 years from now? Don’t bet on it. The demise of the United States as the global superpower could come far more quickly than anyone imagines. If Washington is dreaming of 2040 or 2050 as the end of the American Century, a more realistic assessment of domestic and global trends suggests that in 2018, it could all be over except for the shouting.
Despite the aura of omnipotence most empires project, a look at their history should remind us that they are fragile organisms. So delicate is their ecology of power that, when things start to go truly bad, empires regularly unravel with unholy speed: just a year for Portugal, two years for the Soviet Union, eight years for France, 11 years for the Ottomans, 17 years for Great Britain, and, in all likelihood, 22 years for the United States, counting from the crucial year 2003.
Future historians are likely to identify the Bush administration’s rash invasion of Iraq as the start of America’s downfall. The bloodshed that marked the end of so many past empires, with cities burning and civilians slaughtered, this twenty-first century imperial collapse has come relatively quietly through the invisible tendrils of economic collapse and cyberwarfare.
As a half-dozen European nations have discovered, imperial decline tends to have a remarkably demoralizing impact on a society, regularly bringing at least a generation of economic privation. As the economy cools, political temperatures rise, often sparking serious domestic unrest.
Available economic, educational, and military data indicate that, when it comes to U.S. global power, negative trends will aggregate rapidly by 2020 and are likely to reach a critical mass no later than 2030. The American Century, proclaimed so triumphantly at the start of World War II, will be tattered and fading by 2025, its eighth decade, and could be history by 2030.
Significantly, in 2008, the U.S. National Intelligence Council admitted for the first time that America’s global power was indeed on a declining trajectory. In one of its periodic futuristic reports, Global Trends 2025, the Council cited “the transfer of global wealth and economic power now under way, roughly from West to East” and “without precedent in modern history,” as the primary factor in the decline of the “United States’ relative strength — even in the military realm.” Like many in Washington, however, the Council’s analysts anticipated a very long, very soft landing for American global preeminence, and harbored the hope that somehow the U.S. would long “retain unique military capabilities… to project military power globally” for decades to come.
2017, according to current plans, the Pentagon will throw a military Hail Mary pass for a dying empire. It will launch a lethal triple canopy of advanced aerospace robotics that represents Washington’s last best hope of retaining global power despite its waning economic influence.
However, China’s global network of communications satellites, backed by the world’s most powerful supercomputers, are also fully operational, providing Beijing with an independent platform for the weaponization of space and a powerful communications system for missile- or cyber-strikes into every quadrant of the globe.
“We are destined to fulfill [historian Paul] Kennedy’s prophecy that we are going to be a great nation that has failed because we lost control of our economy and overextended.”
Ordinary Americans, watching their jobs head overseas, have a more realistic view than President Trump. An opinion poll found that 85 percent of Americans believe the country is now “in a state of decline.” Already, Australia and Turkey, traditional U.S. military allies, are using their American-manufactured weapons for joint air and naval maneuvers with China. Already, America’s closest economic partners are backing away from Washington’s opposition to China’s rigged currency rates.
Viewed historically, the question is not whether the United States will lose its unchallenged global power, but just how precipitous and wrenching the decline will be.
U.S. global power will reach its end in 2018.
Today, three main threats exist to America’s dominant position in the global economy: loss of economic clout thanks to a shrinking share of world trade, the decline of American technological innovation, and the end of the dollar’s privileged status as the global reserve currency.
By 2008, the United States had already fallen to number three in global merchandise exports, with just 11 percent of them compared to 12 percent for China and 16 percent for the European Union. This trend has not reversed itself.
Similarly, American leadership in technological innovation is on the wane. In 2008, the U.S. was still number two behind Japan in worldwide patent applications with 232,000, but China was closing fast at 195,000, thanks to a blistering 400 percent increase since 2000. A harbinger of further decline: in 2009 the U.S. hit rock bottom in ranking among the 40 nations surveyed by the Information Technology & Innovation Foundation when it came to “change” in “global innovation-based competitiveness” during the previous decade. Adding substance to these statistics, China’s Defense Ministry unveiled the world’s fastest supercomputer, the Tianhe-1A, so powerful, said one U.S. expert, that it “blows away the existing No. 1 machine” in America.
Add to this clear evidence that the U.S. education system, that source of future scientists and innovators, has been falling behind its competitors. After leading the world for decades in 25- to 34-year-olds with university degrees, the country sank to 12th place in 2010. The World Economic Forum ranked the United States at a mediocre 52nd among 139 nations in the quality of its university math and science instruction in 2010. Nearly half of all graduate students in the sciences in the U.S. are now foreigners, most of whom will be heading home, not staying here as once would have happened. By 2025, in other words, the United States is likely to face a critical shortage of talented scientists.
Such negative trends are encouraging increasingly sharp criticism of the dollar’s role as the world’s reserve currency. “Other countries are no longer willing to buy into the idea that the U.S. knows best on economic policy,” observed Kenneth S. Rogoff, a former chief economist at the International Monetary Fund. In mid-2009, with the world’s central banks holding an astronomical $4 trillion in U.S. Treasury notes, Russia has insisted that it is time to end “the artificially maintained unipolar system” based on “one formerly strong reserve currency.”
Simultaneously, China’s central bank governor suggested that the future might lie with a global reserve currency “disconnected from individual nations” (that is, the U.S. dollar). Take these as signposts of a world to come, and of a possible attempt, as economist Michael Hudson has argued, “to hasten the bankruptcy of the U.S. financial-military world order.”
Faced with a fading superpower incapable of paying the bills, China, India, Iran, Russia, and other powers, great and regional, provocatively challenge U.S. dominion over the oceans, space, and cyberspace. Meanwhile, amid soaring prices, ever-rising unemployment, and a continuing decline in real wages, domestic divisions widen into violent clashes and divisive debates, often over remarkably irrelevant issues. Riding a political tide of disillusionment and despair, a far-right patriot captures the presidency with thundering rhetoric, demanding respect for American authority and threatening military retaliation or economic reprisal. The world pays next to no attention as the American Century ends in silence.
One casualty of America’s waning economic power has been its lock on global oil supplies. Speeding by America’s gas-guzzling economy in the passing lane, China became the world’s number one energy consumer, a position the U.S. had held for over a century. Energy specialist Michael Klare has argued that this change means China will “set the pace in shaping our global future.”
By 2018, Iran and Russia will control almost half of the world’s natural gas supply, which will potentially give them enormous leverage over energy-starved Europe. Add petroleum reserves to the mix and, as the National Intelligence Council has warned, two countries, Russia and Iran, could “emerge as energy kingpins.”
China has poured countless billions into building a massive trans-Asia pipeline and funding Iran’s exploitation of the worlds largest percent natural gas field at South Pars in the Persian Gulf.
The American economy is paralyzed. With long-fraying alliances at an end and fiscal pressures mounting, U.S. military forces are seen as the only hope and so the populist president will launch world war three or watch a total collapse on Wall Street.
Economic Collapse and the Digitization Of All Trade By Brandon Smith Alt-Market
People need to understand the threat is at their doorstep. It’s not a few years off or a decade away; it’s here now. We are right in the middle of collapse.
The appearance of prosperity means nothing if the fundamentals do not support the optimism. That is to say, a bullish stock market, a high dollar index and a low unemployment percentage mean nothing if such stats are generated by false methods and fiat.
I relate these points because the future I am about to suggest here might sound outlandish to some, because it is so contrary to the “official” accounting of our current financial world.
The stock market, the greatest false indicator of all time, is on the verge of implosion; and the banking elites are positioning themselves to avoid blame for this implosion while the rest of us are being sold on the most elaborate recovery con-game ever conceived.
The globalists have stretched the whole of the world thin. They have removed almost every pillar of support from the edifice around us, and like a giant game of Jenga, are waiting for the final piece to be removed, causing the teetering structure to crumble. Once this calamity occurs, they will call it a random act of fate, or a mathematical inevitability of an overly complex system. They will say that they are not to blame. That we were in the midst of “recovery”. That they could not have seen it coming.
Their solution will be predictable.
In our highly interdependent system in the West in which more than 80 percent of the population has been domesticated and is psychologically incapable of self-reliance, it is very likely that a disruption of normal supply chains and services would result in considerable poverty and death. Such a threat would invariably lead frightened and unprepared people to demand increased government controls so that they can return to the level of comfort they have grown accustomed to.
The elites will argue that the banks and bankers are not necessarily to blame. Rather, they will accuse the “system” of being too complex and chaotic, leaving itself open to greed, stupidity and overall unconscious sabotage. The fact that the crisis was engineered from the very beginning will never be mentioned.
The more independent elements within any system, the more chance there is for unpredictable events that lead to supposed disaster. Ostensibly, the solution would be to streamline all systems and remove the free-radicals. That is to say, complete centralization is the answer. What a surprise.
What this means on a micro-level is the activation of bail-ins; that is to say, the legalized confiscation of bank accounts, pension funds, stock holdings, etc. as a method for prolonging a collapse event. We have seen this already to some extent in Europe, and it will happen in the U.S..
While the initial scenario we face in America will be one of stagflation, many necessities and the means to produce those necessities will skyrocket in cost. There may not be inflation in every sector of the economy because imploding demand could offset some of the effects of falling currency value, but there will be extreme inflation in the areas that hurt common people most.
Digitization Of All Trade
Despite all the failings and control mechanisms involved in fiat money, there are still worse systems to be had. Last month more than 100 executives from the world’s largest financial institutions met privately at the Times Square office of Nasdaq Inc. to discuss the future of money; more specifically a software apparatus called “Blockchain.” The goal is to implement Blockchain as a medium to fully digitize monetary transactions around the world and in a way that is traceable and foolproof. In other words, the goal is put an end to all transactions involving physical cash.
The establishment of a cashless society would mark the end of all privacy in trade. Even supposedly anti-centralization digital currencies like Bitcoin are hindered by the blockchain feature, which requires the tracking of ALL transactions in order for the currency to function. While methods for anonymity could be argued, the fact of the matter is, digital currency by its very nature is a destroyer of the truly private trade offered by cash and barter. When all trade is tracked, and all savings digitized, whoever owns the keys to the core of the blockchain will have the power to wreak havoc on the life of any participant at will.
To be sure, the “blockchain” that the elites have in mind will never allow for anonymous transactions, because digital currency is not about anonymity or “convenience,” it is about control.
Corrupt government is the tool by which globalists can extort goods and labor from a population as well as exert force to subdue rebellion. It is highly unlikely that the global reset will result in a collapse of government. On the contrary, it is usually during economic collapse that governments grow in power to the point of totalitarianism. There will always be a new currency mechanism or financial structure to replace the old, and the globalists will always have a way to pay off armies and useful idiots to do their bidding. No one should be counting on the idea that the elites face collapse as we face collapse. This is naive. The elites created the collapse; they plan to be ready to use it to their advantage.
Eventually, they will also have to limit or outlaw barter and alternative currencies in order for the digitized economy to work.
This is the age old strategy of Centralization; to remove all choices within a system, by force or manipulation, until the masses think they have nothing left but the choices the elites give them. It is the bread and butter of elitist institutions like Rand Corporation, and is at the core of the push for globalization.
With almost every major economy on the globe on the verge of collapse and most now desperately inflating, taxing, or outright stealing in order to hide their situation, with multiple tinderbox environments being facilitated in the Pacific with China, North Korea, and Japan, and in the Middle East and Africa with Egypt, Syria, Iran, Pakistan, Yemen, Mali, etc., there is no doubt that we are living in a linchpin-rich era. It is inevitable that one or more of these explosive tension points will erupt and cause a chain reaction around the planet. The linchpin and the chain reaction will become the focus of our epoch, rather than the men who made them possible in the first place.
Each major global hot-spot today can easily be linked back to the designs of international corporate and banking interests and the puppet governments they use as messengers.
Governments of America, Russia and China are actually complicit in the formation of a global currency and global government controlled by the IMF.
China in particular has loudly pronounced a need for a global currency system to replace the dollar, and they have suggested that this system be controlled by the IMF:
The world economic crisis shows the “inherent vulnerabilities and systemic risks in the existing international monetary system,” Gov. Zhou Xiaochuan said in an essay released Monday by the bank. He recommended creating a currency made up of a basket of global currencies and controlled by the International Monetary Fund and said it would help “to achieve the objective of safeguarding global economic and financial stability.”
China is NOT anti-establishment or anti-new world order, nor is Russia. American opposition to the NWO is a lie. Period. In fact, the BRICS have argued only for greater inclusion in the IMF system and have no intention of developing a legitimate alternative to “Western” globalization. If you do not understand that the BRICS are part of the NWO, not opposed to it, then you do not understand a thing.
When there is lots of unemployment and lots of unused industrial capacity, central banks keep interest rates low to encourage businesses to borrow and invest. But in the growth stage of an economy, that excess capacity gets used up.
One bank will be allowed to go under and its depositors allowed to be wiped out, then there will be a run on every bank. The entire banking system will be ruined in a couple of hours, with utter chaos, pandemonium, and violence being the rule rather than the exception.
The Federal Reserve bank and its manipulation of the currency supply will directly cause the depression.
Suddenly you reach a point where there is too much money chasing limited resources. According to economic theory, that is when inflation happens.
One group caused another group to lose their property’s value. In most places, this activity by another name is called “destruction of property” or “theft.” However, currency devaluation is such an esoteric and ingenious form of theft or destruction that it goes unnoticed and unexamined by the majority of the population.
Whenever central authorities inflate the currency supply it causes the value or purchasing power of the currency to decline. This value is basically lost or “stolen” from the people.
Many Americans will starve to death. And the American government won’t do anything to help. Buildings, like the economy will be in collapse. Nationwide shortages of food at runaway inflation prices will become the norm.
With an economy in freefall, and food prices skyrocketing, many Americans will eat less and less every day. Children will suffer the most, and severe malnutrition will rise at an alarming rate.
With triple-digit inflation driving up prices, few will be able to afford to pay for even the most basic goods. We will find that U.S. interest rates simply cannot go up enough to stop inflation.
The final stage of this intergenerational theft will be the debasement of our currency. Government will cheat us of our just rewards. Our finances will collapse. The economy will stall. The safety net will unravel. And the most vulnerable will suffer.
It will become simply impossible to finance Social Security and Medicare at current real levels. There is, sorry to say, no legal entitlement to social-insurance transfers, so the government would violate no law by backing out of its promises. That’s how the safety net unravels. There’s no way to continue to pay for it, so it stops being paid for, and so it goes away.
Hyperinflation will largely destroy the economy’s capacity to produce real goods.
Crash that will send Dow down 17,000 points