Global Economy’s Recovery Is A Sheep In Wolf’s Clothing, Financial Markets And Prices Will Have To Adjust, Perhaps Sharply — The Feared “Crash.”

Economic Collapse Ahead

An inevitable economic collapse has been warned about since this website began over four years ago. This forecast never pretended to be able to predict its timing.

Over its existence, the website has dealt with many topics non-economic. Let me remind readers of the three key economic points that have been consistent since its beginning:

• There is no recovery nor can there be a recovery without a massive economic reset, a collapse.
• Government interventions over the last several decades have put us into this position.
• Government is now trapped and, like a wounded animal, will do anything to survive including harming the economy and those dependent on it.

The bias that we all carry is that assuming people who agree with us are smart. That is an indirect form of reinforcement and self-aggrandizement that can be very dangerous. It is a version, albeit a distant one, of Mark Twain’s warning that it is what you know that ain’t true that is most damaging. At the risk of committing this very dangerous error, I recommend an article by Captain Hook whose thinking is perilously close to mine. Here are some excerpts which coincide precisely or are perilously close to what I have expressed:

• We are getting close to the day of reckoning this fiat currency economy suicide mission the Fed(s) has engineered for us. So you better get ready, because they will not ring a bell at the top of the stock market to warn the party is over ?

…

http://www.economicnoise.com/2013/12/12/inching-toward-economic-collapse/

Global recovery is a sheep in wolf’s clothing 

Investors assume that the global financial crisis over. But while financial markets are buoyant, the real economy remains moribund, writes Satyajit Das.

Commentary: Officials promote government of the debt, by the debt, and for the debt

SYDNEY (MarketWatch) — Many global stock markets are making new highs almost daily. Even the Nasdaq has risen to levels not seen since the 2000 tech bubble, as technology stocks are back in fashion with everybody looking for the new Google, Facebook or Twitter.

Such is the bubble environment that a reader of the Financial Times commented that even an alien invasion would result in stock prices rising. Equity analysts would argue that companies could look forward to the prospect of gaining new non-human customers.

Investors assume that the global financial crisis is now ancient history and normality has returned. But while financial markets are buoyant, the real economy remains moribund, stuck in a “secular stagnation” of low, volatile growth, high and rising debt, slow investment, overcapacity, high unemployment, low income growth and negative realinterest rates.

Yet despite talk of recoveries and reforms, little has actually changed.

The global financial crisis (GFC) was the result of high debt levels, global imbalances, excessive financialization of economies and an entitlement society, based around borrowing-driven consumption and unfunded social entitlement programs in developed countries. These root causes remain substantially unaddressed.

Since 2007, total debt levels in most economies have increased. Higher public borrowings have offset debt reductions by businesses and households. If unfunded entitlement obligations for pensions, health care and aged care are included, the level of indebtedness increases dramatically.

Most importantly, as a result of attempts to boost economic activity following the 2008/ 2009 downturn, emerging markets, such as China, have increased debt levels substantially from those prevailing before the crisis.

…

There is a growing gap between financial markets and real economic activity, between the 1% who continue to gain in the current environment and the 99% whose economic fortunes have declined, and between the promises of policy makers and the economic reality. This gap will have to close.

The gap can close with a significant increase in economic activity. Alternatively, financial markets and prices will have to adjust, perhaps sharply — the feared “crash.”

http://www.marketwatch.com/story/global-economys-recovery-is-a-sheep-in-wolfs-clothing-2013-12-12?dist=lcountdown

The Bloodletting Continues In The Stock Market

Stocks are having a rough go of it in North American trading today.

 

The S&P 500 is down 0.5%, trading near 1773, while the Dow Jones Industrial Average is down 0.8%, trading near 15,710. Both are at their lows of the day.

Barring an afternoon comeback, this will be the third day in a row that stocks close in the red, and the eighth down day in the last ten sessions.

Read more: http://www.businessinsider.com/stock-market-bloodletting-continues-2013-12#ixzz2nINUyFHB

U.S. long-term unemployed about to lose extended benefits

More than a quarter of 4.1 million long-term unemployed people — 718,000 fewer than in November 2012 — will lose their extended unemployment benefits Dec. 28 with 3.6 million more set to see their benefits end at the close of 2014 unless Congress a…

http://www.upi.com/Top_News/US/2013/12/08/The-Issue-US-long-term-unemployed-about-to-lose-extended-benefits/UPI-22581386495000/

Moody’s Puts Puerto Rico on Downgrade to Junk Review Citing Very High Debt, Pension Obligations, Chronic Deficits; Exodus Underway

Read more at http://globaleconomicanalysis.blogspot.com/2013/12/moodys-puts-puerto-rico-on-downgrade-to.html#sMFJI37g6yu3farR.99

MARKETS START TO TANK FOR THE SECOND DAY… 10Y RATES ALL RISE!!! Gold And Silver Slammed! Initial Claims Spike Most Since Sandy To Worst In 9 Months!!!

http://investmentwatchblog.com/markets-start-to-tank-for-the-second-day-10y-rates-all-rise-gold-and-silver-slammed/

HARRY DENT: America Is Headed Off The ‘Demographic Cliff’ And Another Crisis Is Near

As Boomers retire, it’s not an unfamiliar argument. Dent writes that an aging U.S. will cause deflation that will weaken the economy from 2014-2019.

Here are some of his main points:

• Young people cause inflation because they “cost everything and produce nothing.” But young people eventually “begin to pay off when they enter the workforce and become productive new workers (supply) and higher-spending consumers (demand).”
• Unfortunately, the U.S. reached its demographic “peak spending” from 2003-2007 and is headed for the “demographic cliff.” Germany, England, Switzerland are all headed there too. Then China will be the first emerging market to fall off the cliff, albeit in a few decades. The world is getting older.
• The U.S. stock market will crash. “Our best long-term and intermediate cycles suggest another slowdown and stock crash accelerating between very early 2014 and early 2015, and possibly lasting well into 2015 or even 2016. The worst economic trends due to demographics will hit between 2014 and 2019. The U.S. economy is likely to suffer a minor or major crash by early 2015 and another between late 2017 and late 2019 or early 2020 at the latest.”
• “The everyday consumer never came out of the last recession.” The rich are the ones feeling great and spending money, as asset prices (not wages) are aided by monetary stimulus.
• The U.S. and Europe are headed in the same direction as Japan, a country still in a “coma economy precisely because it never let its debt bubble deleverage,” Dent argues. “The only way we will not follow in Japan’s footsteps is if the Federal Reserve stops printing new money.”
• “The reality is stark, when dyers start to outweigh buyers, the market changes.” It all comes down to an aging population, Dent writes. “Fewer spenders, borrowers, and investors will be around to participate in the next boom.”
• The U.S. has a crazy amount of debt and “economists and politicians have acted like we can just wave a magic wand of endless monetary injections and bailouts and get over what they see as a short-term crisis.” But the problem, Dent says, is long-term and structural — demographics.
• Businesses can “dominate the years to come” by focusing on cash and cash flow, being “lean and mean,” deferring major capital expenditures, selling nonstrategic real estate, and firing weak employees now.
• The big four challenges in the years ahead will be 1) private and public debt 2) health care and retirement entitlements 3) authoritarian governance around the globe and 4) environmental pollution that threatens the global economy.

“You need to prepare for that crisis, which will occur between 2014 and 2023, with the worst likely starting in 2014 and continuing off and on into late 2019,” Dent concludes. “You can contribute to the solution by conserving your financial assets and reinvesting them after the crisis.” Cheery stuff.
Read more: http://www.businessinsider.com/harry-dent-demographic-cliff-2013-12#ixzz2nIwqGdzX