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Economic Disaster
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Economic Disaster
Posted with permission and written by Rory Hall of The Daily Coin (CLICK FOR ORIGINAL)
If we look at some of the dots that are beginning to line up, 2016 may not be a very good year for manufacturing, retail or the economy as a whole. The U.S. economy is 70% retail, which is an unsustainable economic base anyway you look at it. If the people that flip burgers next door to the big box store are one-anothers-customers and this is the majority of your economic base, how is that sustainable?
Caterpillar, which has been one of the “measuring sticks” for China’s growth, the mining industry and construction around the world, is in trouble. As the world’s largest manufacturer of heavy construction equipment one can get a sense of what will be happening in the coming months based on the sales of Caterpillar equipment. No sales, no construction and from there you have a massive whole in the economy. The number of other industries that are tied to construction and mining are immense. The situation is so bad Caterpillar announced they were cutting 10,000 jobs through 2018 and 5,000 of those would be in 2016. This does not bode well for global economic growth.
As we have reported for most of 2015 the Baltic Dry Index (BDI) has been bleeding-out all year. In the Spring the BDI was already falling off a cliff and people were crying that it was due to the Longshoreman’s strike in California that began in February 2015. This was simply not the case as the BDI has continued to slide and on two different occasions hit new record lows. The BDI represents the contact price for container ships that haul raw materials to China, India and the other manufacturing centers around the world, including the U.S. As these numbers tumble, this means no one needs this service. From my perspective, if manufacturing centers are not receiving raw materials there must be a slow down in manufacturing. This is one of the first steps in creating an economy. There must be products made in order for stores to have products on the shelves. No products, no business, no economy. You can see a plethora of articles, from a variety of sources, on this topic HERE. It is stunning how this index has tanked and doesn’t appear there will be a recovery anytime soon.
So far, nothing being built, no resources being extracted from the earth to create steel, copper and the other materials to build homes, businesses and other structures. The shipping component of the raw materials has been in free fall for almost a year and the Federal Reserve, the Bureau of Labor Statistics and the other government agencies would have everyone believe all is well and the recovery is going great!! What a freakin’ lie.
Another component that shows 2016 could be in for a very rough ride is the Shanghai Containerized Freight Index (SCFI). Wolf Richter has done a marvelous job of brining this index to light. Mr. Richter has written extensively about this index and has painted a picture that is as bleak as the previous two indicators. The SCFI is, basically, the third leg in the manufacturing cycle. Raw materials have been dug out of the ground (Caterpillar), shipped to the manufacturing centers (BDI) and made into a finished product to sell and the SCFI show us how much of the finished product is making it’s way to market. Needless to say, this too, has dropped like a stone for most of 2015. Once again, there is a plethora of articles from multiple sources on this topic HERE.
This is what Mr. Richter reported in October 2015. You would think that retailers, in the U.S. anyway, would be preparing for the “spending season” that begins in earnest in late November. That is not the case according to these numbers:
The latest weekly reading dropped another 1.7% from the prior week to 752.21, the worst level ever. The CCFI is now 30% below where it had been in February this year and 25% below where it had been 17 years ago at its inception.
The Shanghai Containerized Freight Index (SCFI), also operated by the Shanghai Shipping Exchange, tracks spot rates (not contractual rates) of shipping containers from Shanghai to 15 major destinations around the world. It’s even more volatile than the CCFI. But being based on spot rates, it’s a good indicator where the CCFI is headed.
For last week, the SCFI plunged 5.4% to a new record low of 537.73, down 46% from where it had been at its inception in 2009 when it was set at 1,000 – and down 52% from February:![]()
Not that any of this matters for stocks. What matters are central banks. And they have once again spoken. They’re frazzled by these signs of “unexpected” deterioration. Even China’s official GDP growth rate, at 6.9%, inflated as it may be, is now down to the worst level since the Financial Crisis.
That leaves the “end user”, the retail market. What’s happening there? According to latest Bureau of Labor Statistics report the U.S. piled on 211,000 new jobs!! WoooHoooo we’re saved!!! Well, if you take a look at the reality of what these numbers actually represent you find some startling revelations. Like, over 300,000 part time jobs. You find a labor participation rate continuing to drop. Labor participation is the number of people of working age – 16-54 age group – and that number has fallen throughout 2015. It is now somewhere around the mid 1970’s level of participation. Has the population of the U.S. increased since the mid 1970’s? Well, why aren’t these people working? Why do they not have a job? How can an economy experience a “recovery” in 2015 when it continually loses it’s workforce?
What about retail sales? Is anyone selling products that aren’t being manufactured or shipped? Apparently not.
According to Dave Kranzler, Investment Research Dynamics, the biggest sales day of the year, Black Friday, fell by 10% year over year:
Total sales in the US on Black Friday fell 10% to $10.4bn this year, down from $11.6bn in 2014, according to research firm ShopperTrak. – The Guardian
Store-based sales dropped $1.2 billion, while online sales increased $150 million. The media is going to highlight the increase in online sales. But remember, online sales represent only 6% of total retail sales. The plunge in brick-and-mortar sales was nearly 10x greater in total dollars than was the increase in cyber sales.
Mr. Kranzler is not alone his analysis. ZeroHedge also discussed the year over year decline:
We can hear the mainstream media now – “Great News Everyone!! The American consumer is back” – online sales on Black Friday rose 10% to $1.7 billion which ComScore says shows “strong spending.” The only problem is – which we suspect will be oddly missing from the mainstream narrative, as ShopperTrak reports total sales on Black Friday crashed 10% to $10.4 billion. While blame has been placed on early opening on Thanksgiving, that is false too since spending on that day also plunged 10%. So, the sales news is unequivocally bad – which is hardly surprising given the collapse in consumer confidence.
So to clarify… (via The Guardian)
Total sales in the US on Black Friday fell 10% to $10.4bn this year, down from $11.6bn in 2014, according to research firm ShopperTrak.
The decline in sales on the traditional busiest shopping day of the year has been blamed on shops opening the day before. But this year, sales on Thanksgiving also dropped, and by the same percentage, to $1.8bn.
So, for those with difficulty with reading and math…
If you add all this together it can mean only one thing: the Federal Reserve knows exactly how to steer an economy and have done a helluva job since the 2008 financial crisis began! Quantative Easing (QE) and Zero Interest Rate Policy (ZIRP) have worked like a charm! The “recovery” is in full swing; with full employment, according the Bureau of Labor Statistics a mere 5.0% are unemployed. The Dow Jones Industrial Average is in great shape and the people are spending, spending, spending!! What a joyous time.
Now, slave, get back to work, if you have a job, and make sure you save some energy for your other part time employment as you will be going to those jobs later today. Full employment as defined by the Federal Reserve is two or more part time jobs for everyone. Generating enough income to pay taxes, insurance and maybe a mortgage/rent.
Please email with any questions about this article or precious metals HERE
Economic Disaster
Posted with permission and written by Rory Hall of The Daily Coin (CLICK FOR ORIGINAL)
Rory Hall, Editor-in-Chief of The Daily Coin, has written over 700 articles and produced more than 200 videos about the precious metals market, economic and monetary policies as well as geopolitical events since 1987. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver and Silver Doctors, SGTReport, just to name a few. Rory has contributed daily to SGTReport since 2012. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Gerald Celente and Peter Schiff, to name but a few. Visit The Daily Coin website and The Daily Coin YouTube channels to enjoy original and some of the best economic, precious metals, geopolitical and preparedness news from around the world.
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Good morning, worker drones.
Caterpillar has not been a valid measure of growth in China for years. They lost almost all their market share to Japanese, Korean, and Chinese heavy equipment companies.
These companies are doing well and working every day around the clock in China:
Komatsu, Hyundai, Hitachi, Daewoo/Doosan, Sany, , Zoomlion, Longking, XCMG, LiuGong, Sumitomo, Volvo, Shantui, Chery, Putzmeister, and Schwing. The last two are German companies that make concrete pumps. China bought one or both.
You are correct that market share for Cat has declined in Asia and in the States for Excavators and probably most everything else. But I think the last four competitors are front organizations as Shantui, Chery, Putzmeister, and Schwing are not in heavy equipment but rather are all working in the thriving Asian market for other types of "services". The one ending in "-meister" is the boss or pimp, as you may.
Let's share our Christmas cheer this year by sending your Congress critter a lump of coal.
Standard Disclaimer: Or a lump of dog shit.
I'm not sure I'm going to take any investment advice from someone who calls me slave and orders me to get back to work.
It makes me wonder what sort of dirt is under his fingernails, and my guess is that it's the same dirt as under Paul Ryan's or Hillary Clinton's or Warren Buffet's.
ur looking in the wrong place. Obama got a hole in one. Awesome! Yes, Yes, it's true he was still in the locker room, but with a few seasonal adjustments things are still looking up. Balls to the wall!!
I hope people, everywhere, remember who did this to them and I hope they have what it takes to do something about it.
Hey, I'm okay. Only change in my life style is I no longer go anywhere, or do anything.
But, I got my Frito Bandito Fuck My Wallet healthcare plan, so that is good, right ? Right ?
Food is more expensive, but hey, people eat too much anyway. Gas is cheaper, but I can't afford to go anywhere, so that doesn't herlp me much.
Pet food has become way more expensive, so now I only buy dog food.
What about the cat ?
Well, I jerk off the dog to feed the cat, so, I just buy dog food.
Life is good in Korporate Death Kamp Amerika.
I knawed off a limb
it could be worse, we had to eat the dog. The cat saw us and ran off; we haven't seen her in a while.
Economic disaster, yeah. Here's me now, after going all-in on PMs.
http://thayrone.com/WD%20cover.jpg
What a crock of hype crap, all designed and motivated to fan fear and sucker people into wasting their precious limited money on doom & gloom newsletters and books and inert money-losing shiny lead !
If there is an "economic disaster" that these wizards of doom porn keep predicting is always coming but never arriving, then you better understand that it will be IMPOSSIBLE to access ANY valuable asset that is not under your own physical control - especially if it is gold and it is outside the country.
I don't know, but losing interest on my accounts for seven years with a real inflationrate over 5% with soaring government taxes and fees of all sorts, sounds like a current disaster to me. Used to buy a new car every few years- my current car is 12 years old. I used to go out for drinks with my friends every week until the bills started to go over $80 for 2. I calculated the lost income from 0% interest once but I don't want to remember. Made a few bucks in the stock runup and bailed to cash in late 2014. I don't expect to see that again for a while.
You set a high bar for a disaster. Maybe the recent $1.8T Government spending Omnibus Bill will crack your criteria.
Yes, the central banks screwed everyone who works for a living or who needs to earn income from savings,
BUT
those who succumbed to the relentless grossly over-hyped and never delivered prophesies of collapse and crash from the PM carnival-barkers and exchanged their precious limited money for PMs - especially gold - HAVE LOST EVEN MORE money!
STOP WITH ALL THE APOCALYPSE HYPE ALREADY !!!!
I really do hope that you are as smart as what you think you are and that you have a crystal ball so that you can get out before the doors close. Or maybe you are independently wealthy and it does not matter to you. But, if that was so you would not be posting on ZH.
Dude. Seriously. Go fuck your bankster hat.
Gold was worth $35.00 an ounce in 1964. Still worth over a grand an ounce today.
I'll take a piece of that investment rock solid safe haven from paper currency action.
Silver works real good that way too - safe haven, not quarterly dividend paper unicorn fart promises.
My paper dollar or the silver dollar it represented in 1964 bought 4 gallons of gas.
Today, my paper dollar, which is backed by nothing, buys a half gallon of gas.
My silver dollar, at spot metal price only buys 7 gallons of gas.
So, take a fucking long hike off a short pier already.
You TOTALLY suck at trolling for your fiat lords and masters. .
Bernanke and Yellen have stolen a little over $120K in interest from me over the past 7 years. They can go get fucked. I don't spend a dime that isn't necessary.
Excellent post.
ditto
The central bankers (global, not just FED) did a superb $%#@^&%$ job on ALL savers, including me, including large real financial damage, and they will do a lot more.
But that does not constitute the systemic economic collapse that the PM carnival-barkers keep sirening, like "FIRE!" in a crowded theater, just to compel people who have NO money to waste to sink it in money-losing PMs out of artificially created hysteria and panic over immanent devastating collapse.
I'm not sure if they really believe it either, some probably do and feel it is their duty to sound the alarm. Others strictly want to sell PMs to you no matter what the price, if you ask them it's always the best time to buy. Just like asking a realtor.
When you invest, you buy what is cheap, its not stocks, nor bonds, nor real estate at this time. PMs are a good value buy right now(IMO), I would keep it down to 15-20% of your wad, though. And keep in mind, when (if) the SHTF, the .gov will be quite able to pass any legislation they wish to confiscate, compel you to surrender, or tax the shite out of your PMs when you sell. Been done before, being done now in India, will be done in the future. It's an old game, it always goes to strong hands and it always will.
My personal advice is to limit your debt as much as possible, have 6 mos. of cash reserves that will pay all your bills. I would follow the Mormons' example of having a years worth of food (or at least 6 months) so you can wait out an emergency at home instead of being out in the street rioting for the last can of pinto beans at Safeway. Some form of personal defense seems prudent, a 12ga. pump shotgun is legal nearly everywhere and is quite a formidable weapon in the context of home defense. Pepper spray would disperse a band of miscreants less intent on harming you.
Gasoline is a problem to store, propane is much easier, put on your thinking cap and plan how to get things done in an ongoing emergency.
I'm no a doomer, but after seeing the aftermath of Andrew, Katrina and Sandy, I would not want to be depending on the govt to fill my needs.
An economic disaster is the same, it could bring temporary chaos, shortages, confusion. They may need to crash the dollar and roll out a new currency given the hole they have dug themselves. I would not be surprised to see them walk away from THEIR debts.
All quite commonsense preparations that don't make you a nut or "prepper" in my book. Gold is not the single answer for every possible disaster scenario, it may be somewhat useful in many though.
Very rational and reasonable, I would buy you a beer and enjoy a live talk.
I have done most of what you described, no debts, self-sufficient farm, year+ supply of food, my own well, nat gas/propane power & cooking, solar & biogas electric power, complete supply of tools, weapons & ammo, etc.
But I called bull-shit on all the gold-peddlers' prophesies of immanent collapse of USD, US debt, US economy, etc and bought treasuries, which have been giving me interest income to pay living expenses AND *HUGE* capital gains instead of *HUGE* losses in gold.
Anyone who is preaching that you should ALWAYS be buying something regardless of the conditions, price and direction is a sleazy deceitful self-serving exploitative parasite, because there is NOTHING in the universe that is ALWAYS a BUY, BUY, BUY!
THAT - is why God gave you a brain, and the ability to think rationally.
Buy The Mother Fucking Dips, Bitchez.
It is a Zero Hedge life philosophy.
A cold hard fact - reality in our brave new world.
As for your paper, it has no value. Your gains are false, unless you cash in, and move the gains to hard physical assets.
Time line for both gold and silver is not by the yearly quarter - the time line for metals has always been decades.
Your bold type missive is something most adults learned back in grade school.
Look at a chart of M2 velocity of money over the past eight years. Disaster has been here for some time.
48.8% of young adults cannot leave the nest - no new home buyers, while former home buyers just rent.
World trade collapsing (see baltic dry index), currencies crashing everyone one looks, High-yield bond market meltdown, war and unrest breaking out in every corner of the globe....yeah, everything is awesome all right. Turn off the TV.
Definition of "disaster" from http://dictionary.reference.com/browse/disaster
"a calamitous event, especially one occurring suddenly and causing great loss of life, damage, or hardship, as a flood, airplane crash, or business failure.
Definition of "disaster" from http://www.merriam-webster.com/dictionary/disaster
"a sudden calamitous event bringing great damage, loss, or destruction"
Progressive decline in economic activity and opportunity, quality of life,etc and recessions do NOT qualify as "disasters, they are just continuous decline, decay, and rot.
USA and Europe are on trajectory of long-term decline in almost every aspect, economy, culture, politics & government, etc, but no evidence that a sudden abrupt collapse is immanent.
Life in Europe and USA, especially for those trying to start their careers and those trying to end their careers and start their retirements, sucks and will get worse every year, ending in dismal mediocrity and impoverishment, unless the people revolt.
Turn off the bong.
Well, I guess that defines everything that started to go down in the summer of 2007, bottomed out in 2009, and still reverberates throughout the United States to this very day.
Maybe not for you, but I think the start of the recession, and it's long term implications for a lot of the middle class in the USA certainly qualify as a fucking disaster.
Just because the time line doesn't qualify in your dictionary or personal life as a disaster doesn't take the wreckage out of the lives of those who were hit hardest, and still live with the results.
Good point.
I subscribe to one, Casey Report. They advocate PMs outside US too. What I wonder is, what if global war breaks out? Wouldn't foreign jurisdiction simply seize anyone's PM?
i am amazed that some people think they are going to get a better deal in a global meltdown in someplace like Argentina for instance. well the rich are different than you and I
I'm amazed, too.
It's hard for me to know what to think/believe when I read Casey report. I like him, what he says makes sense...
...but, I can't help but wonder if what he says to do will work for _me_ if I try to pull it off. I don't have much money at all.
May I recommend a truce/quiet time next week in advance of Christmas? I think almost everyone reading zerohedge knows the abyss is just over the horizon, but we may also have young family members and spouses that need our cheer.
I'd prefer to see articles from Sprott that address risk and contingencies regarding your trust holdings under various emergency scenarios, especially given the new leftist Canadian government.
Parents should inculcate their 'little bastards' in the art of getting nothing but a lump of coal for Christmas IMHO. Moreover, cheerfulness is for those that get by on delusion to propel them through their years of servitude, and slavery, to the Synagogue of Satan, and the tribe. Bottom line is that Christmas is a Capitalist endeavour designed to foster mid winter sales for retail industry that would not see sales otherwise. Like the BIG turkey in the window of the butcher in the movie Scrooge, few can afford the damn thing so it's just window dressing for the poor, and disenfranchised that cannot afford it without the false benevolence of a God damned lying motherfucking NeoCapitalist that screws them, and their 'little bastards' out of their share of the profits.
Up yours, Jesus Christ, God, and the Holy Trinity, you motherfuckers are shorting my dollar.
Prepare to die.
Personally, I am fatigued from 8 years of what has seemed like constant impending financial disaster.
If you asked me 5 years ago if this shit show could possibly go on for another 5 years I would have said "not a chance".
If you asked me today if they could keep the game going for another 5 years, my answer would be "quite possibly".
My wish for next year would be for this whole ruddy commedy of errors to be pulled back from the edge of the abyss a little, but alas, I see little chance of that.
So Merry Christmas and next year is surely going to be one we tell stories about when we're old.
stay thirsty my friend
God, I hope things keep going for another 5 years.
By then I actually have a snowball's chance in Hell of being more or less fully prepped.
yeah i remember the prequel to the story of Jesus and the money changers, he said I'll be back after my birthday. i always have some quiet time around then
If you really believe that the current government in Canada is leftist then you don't know Canadian politics.
Trudeau is to the left what Hillary Clinton is to Occupy Wall Street: Lots of big talk, lots of superficial tokens thrown out to the masses, even more back-room deals favoring insiders.
I know! much of the time Conservatives are more brain dead than Liberals...look at some of the wars they have created or continued-and they virtually allowed 911 to happen, (begged for it?) then went to war with Iraq-which had nothing to do with 911
The Liberal Chretien government was in power on 9/11.