"Obama Set Up The Next President For A Major Recession"... And A Giant Crash Is Coming

Tyler Durden's picture

As SHTFPlan.com's Mac Slavo points out...

The past many months have carried a lot of noise about the coming crash, about a tipping point that may be fast approaching. The economics are simply giving way, and they can’t hold the illusion forever. Now that Donald Trump will be calling the shots, the money powers can usher in collapse if they wish, and have ready their scapegoat. It won’t just be Trump the man or the president, but the people who elected him, who backed Brexit and who gave up on their system. The people who let loose the chaos that now consumes us.

 

Their rage, their anger and their desperation is brewing unrest. The ascent of populism in the political arena has put the establishment in retreat, and revealed, at last, a most dangerous atmosphere, from which collapse can properly precipitate … one in which all regulatory steadiness on the part of the system has been thrown off balance and out of whack by popular revolt. By the time the hammer falls, and the markets fall to the ground, the people rioting in the streets and losing their civility when ATMs stop working and store shelves go empty – these people will become the face of the disaster. The banks have been planning the next rise and fall for sometime; the next phase is all digital, and tightly monitored and controlled.

We Are Being Set Up For Higher Interest Rates, A Major Recession And A Giant Stock Market Crash

via Michael Snyder's Economic Collapse blog,

Since Donald Trump’s victory on election night we have seen the worst bond crash in 15 years.  Global bond investors have seen trillions of dollars of wealth wiped out since November 8th, and analysts are warning of another tough week ahead.  The general consensus in the investing community is that a Trump administration will mean much higher inflation, and as a result investors are already starting to demand higher interest rates.  Unfortunately for all of us, history has shown that higher interest rates always cause an economic slowdown.  And this makes perfect sense, because economic activity naturally slows down when it becomes more expensive to borrow money.  The Obama administration had already set up the next president for a major recession anyway, but now this bond crash threatens to bring it on sooner rather than later.

For those that are not familiar with the bond market, when yields go up bond prices go down.  And when bond prices go down, that is bad news for economic growth.

So we generally don’t want yields to go up.

Unfortunately, yields have been absolutely soaring over the past couple of weeks, and the yield on 10 year Treasury notes has now jumped “one full percentage point since July”

The 10-year Treasury yield jumped to 2.36% in late trading on Friday, the highest since December 2015, up 66 basis point since the election, and up one full percentage point since July!

 

The 10-year yield is at a critical juncture. In terms of reality, the first thing that might happen is a rate increase by the Fed in December, after a year of flip-flopping. A slew of post-election pronouncements by Fed heads – including Yellen’s “relatively soon” – have pushed the odds of a rate hike to 98%.

As I noted the other day, so many things in our financial system are tied to yields on U.S. Treasury notes.  Just look at what is happening to mortgages.  As Wolf Richter has noted, the average rate on 30 year mortgages is shooting into the stratosphere…

The carnage in bonds has consequences. The average interest rate of the a conforming 30-year fixed mortgage as of Friday was quoted at 4.125% for top credit scores. That’s up about 0.5 percentage point from just before the election, according to Mortgage News Daily. It put the month “on a short list of 4 worst months in more than a decade.”

If mortgage rates continue to shoot higher, there will be another housing crash.

Rates on auto loans, credit cards and student loans will also be affected.  Throughout our economic system it will become much more costly to borrow money, and that will inevitably slow the overall economy down.

Why bond investors are so on edge these days is because of statements such as this one from Steve Bannon

In a nascent administration that seems, at best, random in its beliefs, Bannon can seem to be not just a focused voice, but almost a messianic one:

 

“Like [Andrew] Jackson’s populism, we’re going to build an entirely new political movement,” he says. “It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.”

Steve Bannon is going to be one of the most influential voices in the new Trump administration, and he is absolutely determined to get this “trillion dollar infrastructure plan” through Congress.

And that is going to mean a lot more borrowing and a lot more spending for a government that is already on pace to add 2.4 trillion dollars to the national debt this fiscal year.

Sadly, all of this comes at a time when the U.S. economy is already starting to show significant signs of slowing down.  It is being projected that we will see a sixth straight decline in year-over-year earnings for the S&P 500, and industrial production has now contracted for 14 months in a row.

The truth is that the economy has been barely treading water for quite some time now, and it isn’t going to take much to push us over the edge.  The following comes from Lance Roberts

With an economy running at below 2%, consumers already heavily indebted, wage growth weak for the bulk of American’s, there is not a lot of wiggle room for policy mistakes.

 

Combine weak economics with higher interest rates, which negatively impacts consumption, and a stronger dollar, which weighs on exports, and you have a real potential of a recession occurring sooner rather than later.

Yes, the stock market soared immediately following Trump’s election, but it wasn’t because economic conditions actually improved.

If you look at history, a stock market crash almost always follows a major bond crash.  So if bond prices keep declining rapidly that is going to be a very ominous sign for stock traders.

And history has also shown us that no bull market can survive a major recession.  If the economy suffers a major downturn early in the Trump administration, it is inevitable that stock prices will follow.

The waning days of the Obama administration have set us up perfectly for higher interest rates, a major recession and a giant stock market crash.

Of course any problems that occur after January 20th, 2017 will be blamed on Trump, but the truth is that Obama will be far more responsible for what happens than Trump will be.

Right now so many people have been lulled into a sense of complacency because Donald Trump won the election.

That is an enormous mistake.

A shaking has already begun in the financial world, and this shaking could easily become an avalanche.

Now is not a time to party.  Rather, it is time to batten down the hatches and to prepare for very rough seas ahead.

All of the things that so many experts warned were coming may have been delayed slightly, but without a doubt they are still on the way.

So get prepared while you still can, because time is running out.

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css1971's picture

Doesn't make sense. They all thought that Hillary was going to be next.

 

Unless they planned a away out. Negative interest rates etc.

Haus-Targaryen's picture

" The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks."

There it is ladies and gents. 

How can Bannon get his negative rates to make this possible if Yellen is about to raise them?  

AVmaster's picture

Michael is a great writer and all, but he's a fuckin sensationalist.

Hey michael,

The bond market is crashing because those guys have confidence in a trump presidency, so they are taking the money and sticking it into stocks...

 

>_>

Chris Dakota's picture
Chris Dakota (not verified) AVmaster Nov 22, 2016 6:04 AM

How is this Obama or Trumps fault?

A. 1913 and us borrowing our own money from Jewish bankers.

B. Manufacturing base gone.

C. Living on wars and bubbles.

We can never recover and crash it must, its all been smoke and mirrors to enrich the Jewish bankers for 100 yrs.

they won't have anywhere to hide very soon.

Look who Trump has worming in his administration...also his son in law.

Michael Ledeen who wrote a book with General Flynn a few months ago.

http://milfuegos.blogspot.com/2016/11/neocon-invasion-of-team-trump-full...

 

FreezeThese's picture
FreezeThese (not verified) Chris Dakota Nov 22, 2016 6:06 AM

Fiction peddling, the fact is every Republican president since the 20th century has faced a recession in their first term, some more than one. But you guys knew that when you voted Trump.

Markets at all time highs ... this will be the GOP and Trump's fault, don't make excuses for him to fear monger and pitch your dying agenda

Chris Dakota's picture
Chris Dakota (not verified) FreezeThese Nov 22, 2016 6:09 AM

This has nothing to do with poliltical parties.

Pinto Currency's picture

Japanese yields rising since Jul
Italian yields rising since Aug
German yields rising since Aug
US yields rising since June

LIBOR rising since Dec 2014.

It's not about Trump.

PT's picture

PT noticed a disturbance in the farce back around 2000.  Things should have flattened out back then but they didn't.  2004 is the year PT noticed that bat-shit crazy was the norm.  The Economy should have crashed before then but it didn't.  Economy been on life support since 2008.  It will crash whenever they want it to crash.  Unless they lose control.

TeamDepends's picture

You are such an idiot. Do you also believe unemployment is 5%? What Trump did, and many such as yourself missed it, is expose the fact that Ds and Rs are THE SAME TEAM. The Bushes voted for Clinton. Both Ds and Rs hated Trump. Were it not for massive, unprecedented, biblical money printing by the money-changers starting in 2008 the western world would have collapsed. Remember back then you progressives were quick to blame it on W? But now it's going to be the "GOP and Trump's fault". You people are so predictable, you will ALWAYS be hypocrites.

Scuba Steve's picture

... and Idiots with capital I (see what I did there).

new game's picture

like walking into dog shit. but i read trumps plan and started to think i was in china and hearing a empty citi dream. lol. central planning with a central bank to back.

folksy folks: the current system is fucked until the 1913 fed reserve act monopoly is gone stompted and burried.

real/false power eminats from this ponzi fiat scheme. trump no different by being held to this system. just spending differently whilst we are held hostage to the ramnifications of the fed.

each 1/4 pt interest cost 50 billion. PER YEAR

up 1/2 =100 billion.

to where? a cabel or group of privat bank owner that we citizen can't even put a face to. THINK ABOUT THAT MOFO...

silverer's picture

You forgot to protest when you should have?

JRobby's picture

Bush handed him a sub sandwich made of turds, OBAMA DID NOTHING and hands the sandwich to Trump

Oldwood's picture

Oh, trust me. Obama did PLENTY. He added 10 Trillion to our debt, and used that money to empower progressive institutions and grow the entitlement society, which will burn the planet to the ground to sustain those entitlements.

cageysea's picture

Asinine comment from someone who clearly doesn't understand the consequences of Keynesian economics, nor business cycles.

deimosaffair's picture

next time you throw a party, invite me.

 

i'll make sure to trash the place up and down, leave you to cleanup. hey, your house, your fault, right?   ;)

Xena fobe's picture

So run up the credit card bills and live it up.  Noone ever has to pay for it, right freeze?  I think freeze is a troll that goes around to various sites praising Obamanomics. 

TeamDepends's picture

Kill the Fed Donald you MUST do it! These unelected bankers care only about themselves. We need sound money such as what they had in Germany before said bankers destroyed them. You know they are evil by the fact they don't like competition.

Chris Dakota's picture
Chris Dakota (not verified) TeamDepends Nov 22, 2016 6:21 AM

He better clear out these Neocons like yesterday.

I know he doesn't have much to work with but he better figure it out.

Wait till the end and put Ron Paul Sect of Treasury.

Put Rand as Sect of State.

Ron paved the way for Trump starting in 2007, thats a fact.

BennyBoy's picture

 

If the money is not borrowed, the money will never exist.

If all debts were paid off, there would be NO money.

Welcome to the debt based money system!

Diatom's picture

Guess what?

Debt is a concept that doesn´t exists in Nature... And Nature is a dictatorship that

is always right...

And other thing: Those who believe in infinite growth in a finite planet, are: or stupid or economists...

thestarl's picture

Wage stagnation in the DM's plus debt saturation where's this recovery coming from?

Miggy's picture

Exactly right, +1. Not only that, the pie is not stagnant, it will get bigger with economic affluence which means the tax base will get bigger so their projections are way off.

Everybody knows lower corporate taxes creates jobs and growth, good grief. Especially for small business, which by far employees the most people in America.

JamesBond's picture

Google Translation:  SELL

 

 

Peterk_kk's picture

What is it about financial articles on Zerohedge.  So called experts are doom and gloom soothsayers who have been shown to be in error over and over again. I have not read one article that has a balanced perspective.  Throw this article in the bin with the others.  

This my friends is the start of a bull cycle with the Dow Jones heading to 23,000 before the first pullback. 

Chris Dakota's picture
Chris Dakota (not verified) Haus-Targaryen Nov 22, 2016 5:48 AM

How can Bannon get his negative rates

Nationalize the FED.

TheReplacement's picture

Horrible idea.  That would legitimize the Fed.  It would be better end up abandoning the Fed system using a constitutional argument, repudiate the debt that the USA owes the Fed as odious, and expose just who owns the Fed.  The Fed could continue to exist, even if abandoned and unmanned.  Let all the debt holders collect from the real owners.

The US gets a fresh start.

Popcorn companies shoot to the moon as everyone tunes in to watch countries like China hunt down and flay the people who have been running this global ponzi scheme for a century.

WOAR's picture

It's physically impossible.

Well, at least, we can say that. I don't think the founding fathers expected us to go 20 trillion in debt, and they probably thought such a thing was physically impossible as well.

So, let the rates rise. People will pull out their bonds until those assets get frozen, and then all hell breaks loose.

Sounds like we're in for some more interesting times.

NoPension's picture

We are simply living in and through the hockey stick portion of the graph representing the exponential function.

I'm 54, and have been hearing warning shots for the last 30 years. Social Security this, National Debt that. Pension Funds, uh oh.

Looking back....it was 2010/2016/2020.... years that seemed so far off into the future. It must be a " human" thing. I feel like 1998. When I stop, and contemplate we are going into 2017.... it's like " what the fuck!" , where did the last 20 years go??!! I lived through them. And, all things being equal, it's not been bad....especially relative to the rest of the world. Can we do better? Maybe...sure...I don't know. Things change.

I like a/c, microwaves, high def Tv, grocery stores with 15 kinds of mustard.
But I will guarantee this....something is going to happen.

Franktastic's picture

End the Fucking FED, problem solved.

zanza's picture

been a crash coming for 5 years according to ZeroHedge, record SPY/DJI yesterday lol.  Hope no one listened.  Gold and Silver in dumpster.

Haus-Targaryen's picture

ZH et. al. are completely correct.  

"Market" fundamentals have not changed. 

If you've made a ton of money, good for you.  Know when to pull money off the table and invest it in things not paper.  I imagine many people who think similarly to you will be the first ones screaming for a bailout the next time this goes south. 

Captain Chlamydia's picture

Stock water -check 

Stock food -check 

Bug out bag -check 

 

I'm practicing sleeping with one eye open. 

HedgeJunkie's picture

Water-Check.

Food-Check

Silver-Check

Gold-In Progress

Bug Out Bag...replaced by pump shotgun, AR, .45, M-1 and a shitload of ammo for each.

When I leave it will be because the water ran out.  And I know where water is in this desert.

I'll sit here for a couple of months while the citified rambos learn that they aren't as tough and prepared as they thought.

The further out into the desert I go I expect to collect a lot of free, useful, items.

Pumpkin's picture

Bug out?  I have never understood this.  Let's leave all my shit, only take a little of my shit, to  go defend a place that ain't my home. 

Urban Redneck's picture

No it doesn't make sense.  Those who profit by the status quo are going to orchestrate a crash that will empower and embolden a populist who has been raging against them and their corruption.  Maintaining the status quo is their best defense against Trump & Bannon.  

HermanVanCuckold's picture

You raise a good point and I imagine power could swing either way in the event of a collapse, which is why you can't do anything with an article like this. Get out of debt, own some gold/silver, have some cash on hand and be ready just in case. Fake Markets can stay hoaxed longer than I can bet against them....

NoPension's picture

How would like to be a high rolling K street operator, right about now?

Surely, they're panties must be in a wad.

chubbar's picture

No one is going to blame Trump for this economic disaster that's been in the making for decades. This idea that interest rates can go down forever and it's just the policies of the new president that caused the bond crash is assine. Even fucking NIRP has a limit. Imagine being charged 50% negative interest rates (say 20 years from now). What is the reality of any administration surviving the blowback from people forced into digital dollars and having them confiscated at that rate or even 5%? This shit show ends WAY before that could ever become a reality. I don't think that Trump would even consider a ban on cash, one more reason I don't think he makes it to inauguration, I hope I'm wrong.

j0nx's picture

Yes but will house prices in the NO VA area start to come back down to reality or not? I'd like to see $100k lopped off the value of every SFH in the area as a good start.

Xena fobe's picture

Housing has been subject to monopoly like conditions.  Need to force divestiture from the parasites turning us into slaves.  House prices at 10x annual income? Tax the hell out of parasitic house hoarding corps.

lil dirtball's picture

>Doesn't make sense.

That's because you suffer under the illusion that what you learned in .gov school is somehow real. It isn't.

You live in a theme park. Once you understand that - everything else starts to make sense.

Donald Trump may as well be Donald Duck.

John Prewett's picture

Obama is a pro-Islamist minion of the Satanic pope-led Globalist network.  

Do you [whoever] really think the election of Trump surprised the Globalist network ?

Do you [whoever] really think the RUTHLESS Globalist network will be thwarted by Nationalist Trump ?

Are you [whoever] really THAT naive - ignorant ?

 

Though, naturally I have some scenarios in mind [and they are shocking],

I don't know exactly when or how the Globalist will bring Trump down.

 

But it is CERTAIN the Globalist will bring Trump down along with the Nationalist movement.

And they have planned this from way back.  End of "sovereign" America fast approaching.

 

Diatom's picture

"...and there´s a global awakening."

Zbigniew Brzezinski

I guess that the Internet has some play in that...

Nationalism is here to stay...

It´s one of Nature core fundamentals...

 

EuroPox's picture

"Sadly, all of this comes at a time when the U.S. economy is already starting to show significant signs of slowing down"

Well, duuuhhh, it things were great there would be no need to do it.

Grandad Grumps's picture

... and blamed on populism, even though it is 100% clear that in a fiat money system EVERYTHING economic is created and controlled by those who control the money supply. Trump and populism will have nothing to do with what is coming... except that they can cut it short by taking power away from the banks.

Depressions are scientifically created... and through them wealth is stolen and people are controlled.

But, we believed this was coming a long time ago ... because the controllers continue to do the same thing over and over ... and they lack nothing if they do not lack creativity and spontaneity.

bada boom's picture

Really, you think a community organizer, a 3 year senator came up with this plan himself?  Please, Obama was selected to do this. 

What about CONgress and their role in this?  Voted for bailout and super stimulus packages one after the other.

Trump was also selected to do a job.

AViewFromDublin's picture

All of this will be by design of course - they will do everything they can to make Trump's tenure as difficult as possible. Trump however. is a highly intelligent and astute businessman. He will have factored all of this in and will be two or three chess moves ahead of his opponents.

A man who has had the entire appartus of the state against him and still win the election is a force to be reckoned with. Fuck him over at your peril!

NoPension's picture

They didn't design shit. The best of the best of these assholes, at best, manipulate the system to enrich themselves...and maintain power.

But none of these masters of the universe planned for Trump.

None of them. They are just like us....with better acces to the trough.

We give way to much credit to a small group of idiots to manipulate our lives. IMO.