This page has been archived and commenting is disabled.
Two More Harbingers Of Financial Doom That Mirror The Crisis Of 2008
Submitted by Michael Snyder via The Economic Collapse blog,
The stock market continues to flirt with new record highs, but the signs that we could be on the precipice of the next major financial crisis continue to mount. A couple of days ago, I discussed the fact that the U.S. dollar is experiencing a tremendous surge in value just like it did in the months prior to the financial crisis of 2008. And previously, I have detailed how the price of oil has collapsed, prices for industrial commodities are tanking and market behavior is becoming extremely choppy.
All of these are things that we witnessed just before the last market crash as well. It is also important to note that orders for durable goods are declining and the Baltic Dry Index has dropped to the lowest level on record. So does all of this mean that the stock market is guaranteed to crash in 2015? No, of course not. But what we are looking for are probabilities. We are looking for patterns. There are multiple warning signs that have popped up repeatedly just prior to previous financial crashes, and many of those same warning signs are now appearing once again.
One of these warning signs that I have not discussed previously is the wholesale inventories to sales ratio. When economic activity starts to slow down, inventory tends to get backed up. And that is precisely what is happening right now. In fact, as Wolf Richter recently wrote about, the wholesale inventories to sales ratio has now hit a level that we have not seen since the last recession…
In December, the wholesale inventory/sales ratio reached 1.22, after rising consistently since July last year, when it was 1.17. It is now at the highest – and worst – level since September 2009, as the financial crisis was winding down:
Rising sales gives merchants the optimism to stock more. But because sales are rising in that rosy scenario, the inventory/sales ratio, depicting rising inventories and rising sales, would not suddenly jump. But in the current scenario, sales are not keeping up with inventory growth.
Another sign that I find extremely interesting is the behavior of the yield on 10 year U.S. Treasury notes. As Jeff Clark recently explained, we usually see a spike in the 10 year Treasury yield about the time the market is peaking before a crash…
The 10-year Treasury note yield bottomed on January 30 at 1.65%. Today, it’s at 2%. That’s a 35-basis-point spike – a jump of 21% – in less than two weeks.
And it’s the first sign of an impending stock market crash.
And the 30Y was even worse...
As I explained last September, the 10-year Treasury note yield has ALWAYS spiked higher prior to an important top in the stock market.
For example, the 10-year yield was just 4.5% in January 1999. One year later, it was 6.75% – a spike of 50%. The dot-com bubble popped two months later.
In 2007, rates bottomed in March at 4.5%. By July, they had risen to 5.5% – a 22% increase. The stock market peaked in September.
Let’s be clear… not every spike in Treasury rates leads to an important top in the stock market. But there has always been a sharp spike in rates a few months before the top.
Once again, just because something has happened in the past does not mean that it will happen in the future.
But the fact that so many red flags are appearing all at once has got to give any rational person reason for concern.
Yes, the Dow gained more than 100 points on Thursday. But on Thursday we also learned that retail sales dropped again in January. Overall, this has been the worst two month drop in retail sales since 2009…
Following last month’s narrative-crushing drop in retail sales, despite all that low interest rate low gas price stimulus, January was more of the same as hopeful expectations for a modest rebound were denied. Falling 0.8% (against a 0.9% drop in Dec), missing expectations of -0.4%, this is the worst back-to-back drop in retail sales since Oct 2009. Retail sales declined in 6 of the 13 categories.
And economic activity is rapidly slowing down on the other side of the planet as well.
For example, Chinese imports and exports both fell dramatically in January…
Chinese imports collapsed 19.9% YoY in January, missing expectations of a modest 3.2% drop by the most since Lehman. This is the biggest YoY drop since May 2009 and worst January since the peak of the financial crisis. Exports tumbled 3.3% YoY (missing expectations of 5.9% surge) for the worst January since 2009. Combined this led to a $60.03 billion trade surplus in January – the largest ever. But apart from these massive imbalances, everything is awesome in the global economy (oh apart from The Baltic Dry at record lows, Iron Ore near record lows, oil prices crashed, and the other engine of the world economy – USA USA USA – imploding).
In light of so much bad economic data, it boggles my mind that stocks have been doing so well.
But this is typical bubble behavior. Financial bubbles tend to be very irrational and they tend to go on a lot longer than most people think they will. When they do finally burst, the consequences are often quite horrifying.
It may not seem like it to most people, but we are right on track for a major financial catastrophe. It is playing out right in front of our eyes in textbook fashion. But it is going to take a little while to unfold.
Unfortunately, most people these days do not have the patience to watch long-term trends develop. Instead, we have been trained by the mainstream media to have the attention spans of toddlers. We bounce from one 48-hour news cycle to the next, eagerly looking forward to the next “scandal” that is going to break.
And when the next financial crash does strike, the mainstream media is going to talk about what a “surprise” it is. But for those that are watching the long-term trends, it is not going to be a surprise at all. We will have seen it coming a mile away.
»
- 29074 reads
- Printer-friendly version
- Send to friend
- advertisements -
“I refuse to "look up." Optimism nauseates me. It is perverse. Since man's fall, his proper position in the universe has been one of misery.”
? John Kennedy Toole, A Confederacy of Dunces
Like everything in the world, it has to play itself out. All of the cheap money flooding through the system by the Fed has to filter out. Then we will get a crash.
Promise?!!!
What ever became of those multiple Hindenberg Omens? It's all Bullshit!!!
The Hindeberg Omens give you notice that flying this high often ends in a precipitous fall when everything bursts into flames.
The doomsday hamburgers are not just warning, but mean things are already starting to play out.
But most of the hotdogs that think theirs is the lucky exception are going to tell you that nobody saw it coming.
And the CNBC chimp typing script for the midday report types, "Is this a good time for individual investors to get back into the market?" And the big box broker dude respondent exclaims, "You bet'cha Tia Maria Triple Chin - times a wasting - and they need to buy in `fore it gets to late!" And the Schwab / IB retail web apis are still waiting for a farking log in.
Now that load of mountain snaps, for sure, had Tia Maria swallowing three times before she could take a breath!
And despite the little glob of extra-judical unconstitutional self tugs and dry humping by the paranoids we employ in our very own KGB 2.0 (American Style!), and every farking thing else, the bleats from the Wal Mart half size aisle continue unabated.
Anybody else feeling an urge to convert their pension/savings portfolio to something a tad more substantial than US paper and other tokens of asset class equities and (mis)representations?
Anybody thinking, "Cuba"?
By this time all this is done, and the bubbles have all popped, and we are looking around at the smoking ruins of industry, most ZH will be experts at describing and predicting bubble-behaviour - then one day they will die of old age, just in time for their children to start the cycle again.
Michael Snyder barking 'ECONOMIC DOOM'? [with charts & shit ~ TO PROVE IT]?
GET RIGHT OUT OF TOWN!
Those are signs but none of that is what actually caused the crash.
The crash was precipitated by forcing banks to use mark-to-market once CDOs started to appear that were majority subprime and yet rated AAA. The temporary drying up of the CDO market was inevitable and caused the crash. Well, actually if Obama's Treasury secretary had not let Lehman fail, we still may not have had more than a correction. Credit default swaps magnified the crash. Of course, it was other factors (Keynsianism) that turned the crash into a depression.
My question is thus what could precipitate the crash today? For example, where is there mark-to-market in a big market that could suddenly and temporarily dry up while credit default swaps on that market would all come due?
They learned their lesson but more importantly got the results they wanted. I questioned why they would make the banks to mark their assets to market value when they really hadn't done so accurately for years,,,,knowing that this would also force the credit market to completely lock up. A deliberate clearing?? More centralization of power? Make absolutely sure another Republican would not be elected president?? A deliberate destructive punch to a completely setup and corrupt market?
For myself, all I have seen is a constant drive to discredit capitalism, or at least what THEY call capitalism, even while claiming they are trying to save capitalism. But we know there is ZERO initiative to protect free markets (like you could if you wanted to). Rather we see a constant pressure to regulate, to control, to create a new "kinder, gentler capitalism/socialism hybrid. This socialism infection is killing anything that would resemble a free market.
It feels a bit like the Twilight Zone as so many, in one breath talk about how free markets are now a thing of the past and everything is totally rigged (which is indeed obvious), but then in the next breath talk about how market forces will eventually win out. There are no actual market forces at play in a fake market. These are not the "markets" that they used to be. The societies in which they exist are not what they used to be. It's all for show now!
If things do "collapse" as opposed to a long slow decline, it will not be due to "market forces", and the cause will not be evident in any charts.
I think when people say that market forces will win out, they don't mean that we will have a free-market. I think they mean that nature, reality, etc. will win out, and I would agree that even that is not a sure thing.
Are you saying that the fiat system will crater?
Reality and fiat are polar opposites. Thus far, reality and nature have given way to the fiat confidence games.
All money is fiat. Why do people throw that around as an epithet?
The highest form of money is law. Even gold money was stamped which made it fiat.
So, the question is and should always be, "What kind of fiat?" Is it lawful, is it controlled in its volume? Does it cycle into beneficial channels? What is the nature of the unit?
People have been hypnotized by Austrian drivel and others who do not understand money to have a knee jerk reaction when they hear the word fiat.
Metal money by weight was a diabolical system that enslaved millions, especially in the Levant period.
We don't teach this stuff in econ 101, as it is hidden from view on purpose. One can read up on ancient Sumer, or Babylon and find out more on how they took out the garbage, than on how their money system operated. Money power agents have always been secretive, because their cult societies soon find out the level of control that can be exercised, and how much wealth they can take as a form of rents on the population.
That money is a pricing and distribution scheme, makes it the most important action of a sovereign. That it is hidden in history to such a large extent tells us that conspiracy in this area has been with us a long time.
The sheeple are ignorant on purpose, as the conspiracy to keep them ignorant is funded by the usury mechanism.
Money is a product.
You had me until 'sheeple': a word only ever used by d-bags that assume they're the smartest guy in the room. Please excise this from your lexicon. Try & step outside the room you're in and realize: most folks aren't stupid. They're just busy trying to not to drown in it all.
CapnJackDaniel
We all have born ignorant. We become stupid by our environment.
Ignorant: Lack of knowledge or information.
Stupid: Lacking intelligence or common sense. Incapable of critical thinking. Embrace opinions and believes as facts.
Let me give you some examples of stupidity
In Australia universities showed that up to 25% believe the biblical mythology of creation rather than the factually supported of evolution.
21% of future medical practitioners of Monash University, Melbourne, were committed to the biblical account of the creation of woman from Adam’s rib.
The head of one of the U.S. House Energy Committee, John Shimkus, explained that global warming can't be a problem because God promised Noah that there wouldn't be another flood.
By the way, your criticism of the word ‘sheeple’ has merit. Making sure you know that.
Evolution is NOT factual, even your first sentence says "we become stupid because of our environment" that is ADAPTATION. There is no evidence for evolution. It is a theory. There is environmental adaptation, but a Galapagos finch is still a bird. It is not a monkey and there is no fossil evidence of any link species of any kind. I am far from relgious, however there is more evidence of mythological creation than there is is of evolution. If you have any evidence of evolution of any kind, please feel free to proivide. Evolution is just another bullshit theory that has been shoved down everyones throat since elementary school, and I repeat, I am far from religious.
It should fail, and it may, but that is not a sure thing. Also, the US dollar is likely to fail by design so that the IMF can replace it with their SDR as the new global currency.
I'm going long tulip bulbs...
"...but then in the next breath talk about how market forces will eventually win out. There are no actual market forces at play in a fake market"
Actually, there are. 1+1 ALWAYs = 2.
The Swiss pegged the franc to manipulate the market. The market prevailed and the peg broke. Wage and price controls never work, as the market always prevails.
100% of bubbles burst. A bubble is a fake market. A bubble never prevails.
A market force may be suppressed, but it is still at play, as it will eventually enforce itself.
There are MANY things that could start the process, Grexit, causing other dominoes to fall, WWIII, or most likely something that nobody could see coming, the latter being the most probable!
Mark to market ? Many of these toxics are marked to bankster models. In reality, marked to myths. That's why they have to furiously add kool aids.
Erosion of trust in the big banks shall reach that break point when the whole sandpile collapses. Enjoy the spectacle.
Hank Paulson, Treasury Secretary under Bush, was at the wheel when Lehman was allowed to tank.
He left the decision to Geithner, but I'm sure he wanted the same decision too.
Hey, these are special times! We get to see just how far the system can be punked before mother nature returns home and finds the mess the kids have created. Sit back and enjoy the spectacle of just how long these bastards can play God .....and we have a ringside seat !
Sorry to all the people who will be run over .....who could have known?
The only ones that ever see it coming are those commonly referred to as NUTS.
For people constantly selling their shit there is no reason to do anything but sell their shit. To give warning is to suggest future, but we all know they is only the now.
Doomed! We are DOOMED!
Yeah, no shit.
Maybe not doomed, but for damned sure damned.
If ZH was an Elizabethan era blog, the common mantra regarding the charts would be:
“What, will the line stretch out to th' crack of doom?”
Macbeth Act 4, scene 1, 112–117
Here's another harbinger, and I'm quite sure that there was an analogue when the Roman empire was collapsing.
On the front page of The Observer (U.K.) website, there is a photo of the well-known Irish politician Gerry Adams, with a link below to the story. This is the story:
"Gerry Adams recounts trampolining naked with his dog"
Oddly, below the article was a picture that looked like a wedding featuring sheep.
http://www.independent.co.uk/incoming/article10045223.ece/alternates/w1024/world-in-pic-1.jpg
The handwriting is on the wall for all to (choose) to see it! Those that see through the statistical lies are preparing, the ostriches, not so much!
The dialectic of communism, where the political elite were super oligarch’s vs financial capitalism where oligarchs own money power and control – is rapidly coming to a close.
All economies are land+Machine+labor. Money allows division of labor, meaning that a laborer can focus on their job and hence becomes more efficient at their given profession.
Since labor is important to production, it should be educated and have clean water, good housing, and health. These kinds of costs are not drags, but instead improve economic outputs. The original American ideal, which built the country, was to improve labor to then improve productivity.
When labor uses machines, economic outputs jump dramatically. In effect the earth is providing inputs in both raw materials and energy to multiply labor and its goods production.
Today, with the advent of high technology, robot production and high speed communication - means that less and less labor is needed to make goods. Robot GPS guided tractors and robot fruit pickers are in our future. With financial capitalism, capital will tend to own the means of production, and hence labor will become disenfranchised. There is revolution if increment of association cannot be distributed.
Money is also a pricing and distribution scheme, and with an improper money system, we will cycle in and out of “force” political systems, such as Feudalism or Communism. Finance capitalism is Feudal in nature, as serfs owe usury to their masters. The masters own (private) Credit means.
Increment of association is ingenuity of inventors and entrepreneurs of the past who gave us gifts. People like Nikolai Tesla with polyphase motors and electricity who gave mankind great productivity capacity. Finance capitalism will take those increments for itself by using keyboard credit that has leverage. Finance capitalism will then claim that its ownership of land and resources is above labor. Yet labor has to produce with its life energy, to then make goods/services as prices, to then get existing money out of the supply. There is no equivalence between creating the medium of exchange, to using life energy to earn it.
We will need to transition to a wealth money system, like sovereign money. Sovereign money already exists in proportion to goods and services production – it is not credit money. We then will need to inject this wealth money into the base of the population. Injecting into households, gives them first seigniorage.
We then need to pump with land taxes and sales tax. The pump will drain purchasing power with taxes to then be re-injected, using wealth money (not credit) so that labor has access to its inheritance; gifts of the earth and gifts of its ancestors. Land tax prevents land from being bid up artificially in value. Finance Capital did not earn their money; they are not rightful inheritors of the earth.
About ½ of the population can quit working, primarily women, who would then be eyes on the streets, keep civilization moral and crime down; women also create and watch out for the next generation. The economy de-monetizes at least 50% and becomes more gifting, which is in alignment with our evolutionary history. Social friction is reduced and civilization reaches higher, rather than lower as in today.
Zionists are opposed to sovereign wealth money and national will. Therefore, the Jewish question/problem will also need to be solved in the next 100 years.
Your flaw is that you depend on the government to redistribute the wealth. Think what you may about technology and disenfranchised workers but the elephant in the room is a growing, unaccountable, all consuming government that already demands economic justice tribute payments.
If people refuse to invest in themselves, to strive for their own independence, then no government will ever produce anything but slave mentalities, at best, well cared for sheep. And this is exactly what TPTB are building, propagating and driving us towards, and your solution is their solution.
It is the people that are the problem and as long as we focus on those seeking to take advantage of our ignorance, our sloth, our undying desire for something for nothing, rather than to resolve to change our behavior, we will continue to fail.
+1
What is Wrong with the People.
“If I had been downright honest with myself… I would have seen very plainly… who was to be the absolute dictator” — Moby Dick
Oldwood
The elephants in the room are demographics and energy. Demographics is growing in an exponential line, while oil and food production are in a linear line, and declining.
Ever growing demographics and debt play a bigger and larger role destroying than the government.
Our time bomb rests within the unprepared population and their mysticism (ignorance) as solutions.
The trigger will be not enough energy and the end of growth.
The delivery systems of our demise will come through the language by the (religion, political, and economic) demagogues.
And the hiding place of all of these nonsense’s that block us of seeing the inevitable? The immeasurable coils of our DNA.
Escrava,
This is undoubtably true. Mentioning these things just seems to get the sheeple mad. They want to be led around by the nose and not deal with some harsh realities.
Earth+Labor+Machine = all economics. The machine gets its energy from Earth, and that is a finite source.
Humans cannot continue to double and triple in numbers as there are consequences to the carry capacity of earth.
Once again, it is the money system that demands growth for its existence. We alway hear this, "My money made money. Hogwash. Money doesn't make money, it is people who use their energy to create wealth.
Money can cycle through many transactions thus performing its function over and over at low cost. The type of money that can do this is most emphatically NOT private bank credit. Private bank credit returns to the ledger for destruction. Then it needs to be re-created, at a high cost, to then be available in money supply.
Political, religous and economic demagogues whisper lies into our ears. It is diabolical hypnosis in action.
Great points as always MEOF.
And let's not forget the role of Mother Culture as a whisperer in our ears...
https://aadivaahan.wordpress.com/2010/06/14/70/
+1
Hammer meet Head !
"The Greatest Story NEVER Told" Look it up, it's available on youtube (unless it's blocked in your country)
If it's blocked, try the official website (www.tgsnt.tv) or there's a few torrents out there.
Standard Quality
https://thepiratebay.se/torrent/9730831/_Adolf_Hitler__The_Greatest_Stor...
High-definition Quality
https://thepiratebay.se/torrent/11182630/Adolf_Hitler__The_Greatest_Stor...
The increase in inventory I buy. Or rather I don't buy. Anyhow increasing inventories seems to be a valid point. The stock market not so much because markets are computer generated graphs from central bank software applications that employ FRAUD against the populations of the world. You have to talk with the software developers and insiders if you wish to conjecture about stock market directions.
BTFD until you see those mushroom clouds bitchez.
About the market collapse, they'll get it right some day, maybe this summer.
In the mean time markets look ready to break out into a final parabolic rally to entice and trap every last investor now out of the market. After that just like it happened to NASDAQ on April Y2K, the correction/ bear market will begin IMO.
Remember the 7 year Fed induced crash cycle.
molon labe
I smell gas.
If it is that obvious we're at a top....we're not at a top. This is investing 101.
Did you know that every year ending in 5 since 1905 was an up year? Did you know the average return those years was 35%? The reason: 3rd year in a presidential term is the least volatile.
Strap in for a parabolic move UP.
Did you know virtually every crash happened in a Shemitah year? Did you know we are in a Shemitah year? '87, 2000, 2007, 1929
BTW - I don't believe your statement. Up 35 % - bullshit.
1905: no 1915: yes 1925: no (Warren G Harding died 8/2/23) 1935: yes 1945: no for both FDR and Truman 1955:yes 1965: no 1975: no (Ford assumed office 8/9/74) 1985: no 1995: yes 2005: no 2015: yes If the US market goes up 35% this year, it will be as a result of an avalanche of refugee capital and not on account of any real domestic boom. But this would contradict your point about least volatile time. you could certainly be right about both your general point and the specific opportujity this year, but I'm out and staying out permanently.
short everything now
Are the increasing inventories waiting to be off loaded at the west coast docks?
Went to WalMart a little bit ago to pick up something for my mother. The place was fully stocked except for some candles that were pulled to the front so that the shelves would look full. Didn't check the ammo case. Most of what I saw being checked out was groceries.
Consider those ships waiting to dock at the west coast ports as merely free floating warehouses for WalMart's excess inventory.
M.H. Very interesting linking and going from pointA to B. Thanks Milestones
More crash, less talk.....
Talk is cheap. Crashes are not.
Financials mean nothing. When all the central gobmints
work together to create a zirp environment than people will
seek returns in the stock market. Add in TPPT, bans on
short selling, huge hedge funds that collude to squeeze
anybody stupid enough to short a stock, and MSM providing
the "goldilocks" economy narrative then human nature takes
over and the dumb money arrives. Eventually there will
be geopolitical events that bring the market down.
Governments are parasitized by money powers. Why is this a difficult concept?
Washington Consensus government consists of Extraction industry (oil and minerals), the Farm Lobby, Wall Street Corporations, military industrial security complex, and finally private Finance. Private finance in turn is heavily controlled by Zionism; while AIPAC and the Israel lobby use money power to pervert political control.
Of these five "constituents" private finance exerts the most control. Senators and others can be easily bribed, especially since the 17'th ammendment. Those that make usury money with keyboard entries, have a ready supply of bribe money available, to then pervert the law to their benefit.
That this action is at work is undeniable. Gov't bad. Gov't bad. But nobody stops to analyze why it is malfunctioning? In order to fix root problem, the problems first need to be diagnosed.
The money power is the root problem. No other reform matters until the money problem is fixed.
A parasitized centralized "Washington Consensus" government does not follow the will of the people. It follows its five constituents.
Seen this way, Obama is the most effective president ever, as he gave and is giving his constituents everything they want.
lol
sorry guys....QE10 until infinity!
How can this mathematical stupidity continue?
Everywhere I go, I still see massive discount sales.
Even bigger discounts then during Xmas and Boxing Day.
Someone wants to liquidate the junk before it becomes worthless.
It's the new game called "Who can liquidate and make out like a bandit the fastest"
Many seem to be missing the point. It's not the fact not one person can time a top, that's not what really is important here. It's the fact that this will be the top before the most devastating crash in our country's history. That's the point so many are making here. Those idiots who like coming in for a visit and criticizing others for talking about the coming crash, you'll get it soon enough and I bet its severity will surprise us all!
Here is a leveraged loan chart that also predicts a crash.
http://michaelekelley.com/2014/12/20/leveraged-loans-predict-crash/
Here is how to prepare for the worst.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Thanks
The rise in the 10 YR Treasury yield will surprise everyone by its tenacity once started. Prices of stocks and bonds will fall together which is indicative of deflationary pressures. Few people alive today have witnessed deflation. Most believe they know what it is like... they don't.
http://www.globaldeflationnews.com/10-year-u-s-treasury-index-yieldellio...