19 Reasons To Be Deeply Concerned About The Global Economy

Tyler Durden's picture

Submitted by Michael Snyder of The Economic Collapse blog,

Is the global economic downturn going to accelerate as we roll into the second half of this year?  There is turmoil in the Middle East, we are seeing things happen in the bond markets that we have not seen happen in more than 30 years, and much of Europe has already plunged into a full-blown economic depression.  Sadly, most Americans will never understand what is happening until financial disaster strikes them personally.  As long as they can go to work during the day and eat frozen pizza and watch reality television at night, most of them will consider everything to be just fine. 

Unfortunately, the truth is that everything is not fine.  The world is becoming increasingly unstable, we are living in the terminal phase of the greatest debt bubble in the history of the planet and the global financial system is even more vulnerable than it was back in 2008.  Unfortunately, most people seem to only have a 48 hour attention span at best these days.  They don't have the patience to watch long-term trends develop.  And the coming economic collapse is not going to happen all at once.  Rather, it is like watching a very, very slow-motion train wreck happen. 

The coming economic nightmare is going to unfold over a number of years.  Yes, there will be moments of great panic, but mostly it will be a steady decline into economic oblivion.  And there are a lot of indications that the second half of this year is not going to be as good as the first half was.  

The following are 19 reasons to be deeply concerned about the global economy as we head into the second half of 2013...

#1 The velocity of money in the United States has plunged to an all-time low.  It is extremely difficult to have an "economic recovery" if banks are not lending money and people are not spending it...

Velocity Of Money

#2 The fall of the Egyptian government threatens to bring even more instability to the Middle East.  In response to the events in Egypt, the price of oil rose to more than 101 dollars a barrel on Wednesday.

#3 Every time the average price of a gallon of gasoline in the United States has risen over $3.80 in the past three years, a stock market decline has always followed.

#4 As the world becomes increasingly unstable, massive citizen protest movements have been rising all over the globe...

The protests have many different origins. In Brazil people rose up against bus fares, in Turkey against a building project. Indonesians have rejected higher fuel prices, Bulgarians the government’s cronyism.

 

In the euro zone they march against austerity, and the Arab spring has become a perma-protest against pretty much everything. Each angry demonstration is angry in its own way.

#5 The European sovereign debt crisis is flaring up once again.  This time it is Portugal's turn to take center stage...

From Greece to Cyprus, Slovenia to Spain and Italy, and now most pressingly Portugal, where the finance and foreign ministers resigned in the space of two days, a host of problems is stirring after 10 months of relative calm imposed by the European Central Bank.

 

Portuguese Prime Minister Pedro Passos Coelho told the nation in an address late on Tuesday that he did not accept the foreign minister's resignation and would try to go on governing.

 

If his government does end up collapsing, as is now more likely, it will raise immediate questions about Lisbon's ability to meet the terms of the 78-billion-euro bailout it agreed with the EU and International Monetary Fund in 2011.

#6 It is being projected that Italy will need a major EU bailout within six months.

#7 Bond investors are starting to panic.  In fact, even prominent firms such as Pimco are seeing investors pull massive amounts of money out right now...

In June, investors pulled $9.6bn from Bill Gross’s flagship fund at Pimco, the largest single month of outflows at the fund since Morningstar records began in 1993, the investment research firm said.

The outflows came after investors pulled $1.3bn from the fund in May, which marked the first outflows since December 2011.

Overall, a whopping 80 billion dollars was pulled out of bond funds during June.

#8 Central banks are selling off staggering amounts of U.S. Treasury bonds right now.

#9 U.S. mortgage bonds just suffered their largest quarterly decline in nearly 20 years.

#10 We continue to buy far more from the rest of the world than they buy from us.  The U.S. trade deficit for the month of May was 45.0 billion dollars.

#11 The severe drought that the western half of the United States is suffering never seems to end.  What will it do to food prices if ranchers and farmers out west have to go through another summer like they did last year?

#12 European car sales have fallen to a 20 year low.

#13 Unemployment in the eurozone is at an all-time high.

#14 Could the paper gold Ponzi scheme be on the verge of crumbling?  There are reports that there is now a 100 day delay for gold owners to take physical delivery of their gold from some warehouses owned by the London Metal Exchange...

We’re told that bullion-buyers in London must now wait more than 100 days to take delivery of the bullion for which they have already paid.

 

The comedic drones at Bloomberg, and officials of the London Metal Exchange itself would have us believe this is due to “warehouse queues.” While precious metals bulls undoubtedly appreciate the imagery implied of a 100-day line-up of armored cars waiting to load their bullion – in the middle of this “bear market” – the implication is fallacious.

 

In an era of just-in-time inventories; the notion that there can be a 100-day backlog to load bullion into armored cars with the metal already sitting in the warehouse is ludicrous. Clearly what the LME is really reporting here is a greater-than-three-month delay to refine the gold (or silver) being purchased here – and then ship it to their warehouse.

 

In other words, the “bullion” which traders believe they are purchasing today is in fact merely ore which hasn’t even been dug out of the ground yet.

#15 The number of mortgage applications in the United States is falling at the fastest rate in more than 3 years.

#16 Real disposable income in the United States is falling at the fastest rate in more than 4 years.

#17 The percentage of companies issuing negative earnings guidance for this quarter is at a level that we have never seen before.

#18 Is the dark side of derivatives trading about to be exposed?  EU officials claim that 13 major international banks have been colluding to control the trading of derivatives...

The European Commission says many of the world's largest investment banks appear to have colluded to block attempts by exchanges to trade and offer more transparent prices for financial products known as credit derivatives.

 

The commission, the executive arm of the European Union, said Monday it has informed 13 banks — including Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley — as well as the industry association for derivatives itself, the International Swaps and Derivatives Association, ISDA, of the preliminary conclusions of an investigation that began in March.

#19 There are 441 trillion dollars of interest rate derivatives sitting out there and interest rates have risen rapidly over the past few weeks.  What is going to happen to those derivatives if interest rates keep going higher?

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Flakmeister's picture

Peak oil and the end of the growth paradigm is the only thing we really need to concern ourselves with...

CH1's picture

That matters, of course, but I still say the biggest problem is Peak Obedience.

kliguy38's picture

just DONT buy gold or miners stocks....that's ALL you're supposed to know.....sell them to me

BKbroiler's picture

For once I'd like the "Economic Collapse Blog" to report some good news.  just to confuse everyone.

CPL's picture

http://i.imgur.com/fHWQy.png

 

Stock holders of winzip are ecstatic.

Chupacabra-322's picture

20. The system is Criminal, run by Criminals for Criminals.

francis_sawyer's picture

careful who you call 'criminal'... kito might send you off to a Neil Diamond concert for sensitivity training...

James_Cole's picture

To me, most of these "19 reasons to be deeply concered" actually look like good things.

The economy isn't like gravity - as if we're to be worried that suddenly the foundations of nature are being unmoored - economy is a system invented and run by humans. If you think it's working well, then you should be concerned.

If you think it needs some changes, most of this is welcome news.

Shocker's picture

20) Unemployment issue. Everyone knows this, but a weak job market affects everything.

http://www.dailyjobcuts.com

/

TeamDepends's picture

21)  The Zimmerman Trial.  There is no issue anywhere in the world as important as this battle for the hearts and minds....

nope-1004's picture

10yr broke out today, finished the day above 2.72.  That's very significant, yet no one is talking about it.

 

CrimsonAvenger's picture

Seriously - what the hell caused the jump? That's huge.

GetZeeGold's picture

 

 

 

 

When do we hit peak stupidity?

 

Can we please undo the total transformation now?

 

They promised Nirvana...and gave us hell.

ONLY 47% OF ADULTS HAVE FULL-TIME JOB...

 

Richard Chesler's picture

#1 and only: a corrupt scumbag puppet of a criminal banking cartel is elected TWICE as leader of the free world.

ARE YOU FUCKING KIDDING ME?

All Risk No Reward's picture

An inflection point is coming for the economy as a whole...

The banksters are spiking interest rates (central banks selling record American debt) as the organic economy collapses (thrid chart down):

http://market-ticker.org/akcs-www?singlepost=3216019

The organic economy is contracting at $500 billion a quarter in spite of $2.5 trillion in Fed and government deficits.

It looks ot me like the banksters are setting the stage where they claim they can't lend more money and then the economy is collapsing in a black hole of credit destruction.

BLOTTO's picture

We have been hoodwinked, plain and simple...our life, our parents life and our childrens life.

.

It did not have to be this way. This is way above and beyond greed.

.

Something massive is being kept away and hidden from the masses...

...the truth.

.

Someone(s) knows something significant.

.

Now what do we do? Go vote eh? lol

Incubus's picture

Truth is that you and I have no freedom.

 

We're born into a slave class, and we'll die here. We have the freedom of irrelevency. As long as it doesn't matter, we've got a choice.

 

We're born to be used.

BoNeSxxx's picture

We register our marriages through licenses and our children through certificates of birth...

Anything you have to register, you don't really own.

CPL's picture

And the quickest way to remedy the situation is not help, turn your back and walk away.  Giving another power is as easy as taking it away.  Don't need a gun for that.

 

Just will.  And the willingness to find people that wish to stay out of the troubles and work together.  Kind of like asking everyone on earth to jump at once.  But I'm sure once nobody thought they would be offering their unconditional feality to a 'king' or a 'queen' either.  But there it is.  Just walk away, sit back and find something else to do while waiting.

SnobGobbler's picture

down vote for slander against the semetic tom-jones. neil takes lots of pussy francis, you should know better.

Surly Bear's picture

It's not a problem until it's a problem. Sorry, I just don't give a shit.

Stuck on Zero's picture

If you didn't give a shit you wouldn't be reading this you'd be watching Oprah and drinking a tall cool one.

 

Clever Name's picture

+1 for getting me to drink a tall cool one.

max2205's picture

This is bullish to all the algo traders out there

LongBallsShortBrains's picture

Okra with beer?

Hell, get a pizza with that beer.

GMadScientist's picture

"You get a tall cool one...and you get a tall cool one...and you get a tall cool one..."

check under your seat

TuPhat's picture

I think you do.  I always heard the bear does shit in the woods.

TheMerryPrankster's picture

Say, do you know if the pope is catholic by any chance?

CheapBastard's picture

BK, the good news is 10-year bonds soared to ov er 2.7% and more people are quitting their jobs---"sure signs of row-bust grote"...MSM spinmeisters said today.

Bay of Pigs's picture

Pretty amazing watching big dealers like APMEX and Tulving getting cleaned out right now.

No physical demand? Yeah, that's it. 

Snoopy the Economist's picture

You know people write this quite often but then I go check the sites and see it wrong - as I did again with your comment. Why do you write this when it is incorrect?

pointer's picture

he's probably underwater and bought silver at 40.  Me, I bought it in between 8 &15 per oz, back when Zero Hedge didn't have as many trolls posting comments on the boards.

The amount of mindless drivel that people post here nowadays is pathetic.

Motorboat's picture

Maybe it's because people  here were allowed to speak the truth before, even point out that most of the criminals are Jewish, and almost all the biggest ones for sure?

Now that the brains have left or been silenced, what's left?

Clever Name's picture

While phyzz demand may be very high right now all over the world, 'getting cleaned out' to me would imply some kind of shortage. Not "Orders ship in 2-3 days".

tmosley's picture

Tulving, the largest dealer in the country, is experiencing delays of 7-8 weeks, or more in many cases.

That is about equal to what happened after the 2008 crash, and it isn't over yet.  We haven't even bottomed yet, and already there are these kinds of delays.

And Tulving is hedged.  They don't pull invenory because the price goes down.  If they did, they would be a local coin shop, not the largest bullion dealer in the US.

Max Cynical's picture

It took Tulving 5 weeks to ship a friend 1 monster box of Eagles...ordered in may, delivered in June.

Hongcha's picture

They say they're out, but they're not - they're just not going to sell at this level.  Au and Ag are going through the mother of shakeouts right now, as prophesied.

tmosley's picture

But that's wrong, you fucking retard.

(Large online sellers HEDGE, and as thus are immune to spot price fluctuation, making money off the spread).

Herd Redirection Committee's picture

And this is NOT good for Tulving's reputation.  No reason to do this, unless you knew a reset was imminent, any way.  No, buyers outnumber sellers, so its difficult to get your hands on physical.  Its as simple as that.

And on the paper markets, its now reversed.  You can't find many buyers of paper gold (thank God, people are waking up).

autofixer's picture

Peak obedience does not appear to be a problem.

mofreedom's picture

i'm only deeply concerned someone's gonna call me a racist for my love of the English language and my love for my children against the stasi and put me in prison.

justamousesquared's picture

The stasi are on their way. 

It's coming slowly but surely. One step at a time. William "Goebbels" Hague has our number here in the UK and Theresa May the dumb Ho has the hand on the gas chamber door for us all. 

sgt_doom's picture

Bravo, CH1, bravo!

"Sadly, most Americans will never understand what is happening until financial disaster strikes them personally."

Sadly, most Ameritards will never understand anything until it strikes them personally, which is why they are rightfully referred to as Oblivions! ! ! !

It is also referred to as the process of infantilization, something which sadly has been indoctrinated into them since birth, whether by the consumer mentality spewed forth at them 24 hours a day via cable, the movies, adverts, or Sesame Street (originally financed by David Rockefeller stooge, Peter G. Peterson, and created/produced by his wifey).

As far as derivatives (the last numbered item), that has been rigged from the getgo, and contrary to whorescum, Gillian Tett and that awful JPMC apologia of hers (Fools Gold), credit derivatives weren't invented within JPMorgan Chase, (although that insurance scam, credit default swaps were, thanx to Blythe Masters and company), but came into being from a consultant to the Resolution Trust Corporation to bail out the banksters during the S&L meltdown!

Those financial exchanges are ALL owned by the banks/oil companies, so some of those remarks on this blog and the USA Today article were highly specious in nature!

HardAssets's picture

sgt doom:  "Sadly, most Ameritards will never understand anything until it strikes them personally, which is why they are rightfully referred to as Oblivions! ! ! !

It is also referred to as the process of infantilization, something which sadly has been indoctrinated into them since birth, whether by the consumer mentality spewed forth at them 24 hours a day via cable, the movies, adverts, or Sesame Street"

So true. Many American 'men' are mental children. There are family members who I can't get to discuss these issues and what it might mean for all of us. But they get all excited when winning a local basketball tournament or playing golf. WTF is wrong with with them ? - - - The dumbing down of people in this society is no accident.