Is It Time For The Financial World To Panic? 25 Reasons Why The Answer May Be Yes

Tyler Durden's picture

Every now and then it is easy to forget that the one or two "better than expected" data points blasted by flashing headlines do nothing that merely mask what is an otherwise quite deplorable and deteriorating reality. For the disconnect between America and the rest of the world look no further than this chart showing the dramatic divergence between the DJIA, which has just gone positive for the year, and every other major global stock market. Yet for those who require a narrative to go with their numbers, here is The Economic Collapse with the latest of their traditionally comprehensive bulletins, this time summarizing the "25 signs that the financial world is about to hit the big red panic button."

From The Economic Collapse:

The following are 25 signs that the financial world is about to hit the big red panic button....


#1 According to a new study just released by Merrill Lynch, the U.S. economy has an 80% chance of going into another recession.


#2 Will Bank of America be the next Lehman Brothers?  Shares of Bank of America have fallen more than 40% over the past couple of months.  Even though Warren Buffet recently stepped in with 5 billion dollars, the reality is that the problems for Bank of America are far from over.  In fact, one analyst is projecting that Bank of America is going to need to raise 40 or 50 billion dollars in new capital.


#3 European bank stocks have gotten absolutely hammered in recent weeks.


#4 So far, major international banks have announced layoffs of more than 60,000 workers, and more layoff announcements are expected this fall.  A recent article in the New York Times detailed some of the carnage....

A new wave of layoffs is emblematic of this shift as nearly every major bank undertakes a cost-cutting initiative, some with names like Project Compass. UBS has announced 3,500 layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told.


#5 Credit markets are really drying up.  Do you remember what happened in 2008 when that happened?  Many are now warning that we are getting very close to a repeat of that.


#6 The Conference Board has announced that the U.S. Consumer Confidence Index fell from 59.2 in July to 44.5 in August.  That is the lowest reading that we have seen since the last recession ended.


#7 The University of Michigan Consumer Sentiment Index has fallen by almost 20 points over the last three months.  This index is now the lowest it has been in 30 years. 


#8 The Philadelphia Fed's latest survey of regional manufacturing activity was absolutely nightmarish....


The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009 


#9 According to Bloomberg, since World War II almost every time that the year over year change in real GDP has fallen below 2% the U.S. economy has fallen into a recession....


Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.


#10 Economic sentiment is falling in Europe as well.  The following is from a recent Reuters article....

A monthly European Commission survey showed economic sentiment in the 17 countries using the euro, a good indication of future economic activity, fell to 98.3 in August from a revised 103 in July with optimism declining in all sectors.


#11 The yield on 2 year Greek bonds is now an astronomical 42.47%.


#12 As I wrote about recently, the European Central Bank has stepped into the marketplace and is buying up huge amounts of sovereign debt from troubled nations such as Greece, Portugal, Spain and Italy.  As a result, the ECB is also massively overleveraged at this point.


#13 Most of the major banks in Europe are also leveraged to the hilt and have tremendous exposure to European sovereign debt.


#14 Political wrangling in Europe is threatening to unravel the Greek bailout package.  In a recent article, Satyajit Das described what has been going on behind the scenes in the EU....


The sticking point is a demand for collateral for the second bailout package. Finland demanded and got Euro 500 million in cash as security against their Euro 1,400 million share of the second bailout package. Hearing of the ill-advised side deal between Greece and Finland, Austria, the Netherlands and Slovakia also are now demanding collateral, arguing that their banks were less exposed to Greece than their counterparts in Germany and France entitling them to special treatment. At least, one German parliamentarian has also asked the logical question, why Germany is not receiving similar collateral.


#15 German Chancellor Angela Merkel is trying to hold the Greek bailout deal together, but a wave of anti-bailout "hysteria" is sweeping Germany, and now according to Ambrose Evans-Pritchard it looks like Merkel may not have enough votes to approve the latest bailout package....


German media reported that the latest tally of votes in the Bundestag shows that 23 members from Mrs Merkel's own coalition plan to vote against the package, including twelve of the 44 members of Bavaria's Social Christians (CSU). This may force the Chancellor to rely on opposition votes, risking a government collapse.


#16 Polish finance minister Jacek Rostowski is warning that the status quo in Europe will lead to "collapse".  According to Rostowski, if the EU does not choose the path of much deeper economic integration the eurozone simply is not going to survive much longer....


"The choice is: much deeper macroeconomic integration in the eurozone or its collapse. There is no third way."


#17 German voters are against the introduction of "Eurobonds" by about a 5 to 1 margin, so deeper economic integration in Europe does not look real promising at this point.


#18 If something goes wrong with the Greek bailout, Greece is financially doomed.  Just consider the following excerpt from a recent article by Puru Saxena....


In Greece, government debt now represents almost 160% of GDP and the average yield on Greek debt is around 15%. Thus, if Greece’s debt is rolled over without restructuring, its interest costs alone will amount to approximately 24% of GDP. In other words, if debt pardoning does not occur, nearly a quarter of Greece’s economic output will be gobbled up by interest repayments!


#19 The global banking system has a total of 2 trillion dollars of exposure to Greek, Irish, Portuguese, Spanish and Italian debt.  Considering how much the global banking system is leveraged, this amount of exposure could end up wiping out a lot of major financial institutions.


#20 The head of the IMF, Christine Largarde, recently warned that European banks are in need of "urgent recapitalization".


#21 Once the European crisis unravels, things could move very rapidly downhill.  In a recent article, John Mauldin put it this way....


It is only a matter of time until Europe has a true crisis, which will happen faster – BANG! – than any of us can now imagine. Think Lehman on steroids. The U.S. gave Europe our subprime woes. Europe gets to repay the favor with an even more severe banking crisis that, given that the U.S. is at best at stall speed, will tip us into a long and serious recession. Stay tuned.


#22 The U.S. housing market is still a complete and total mess.  According to a recently released report, U.S. home prices fell 5.9% in the second quarter compared to a year earlier.  That was the biggest decline that we have seen since 2009.  But even with lower prices very few people are buying.  According to the National Association of Realtors, sales of previously owned homes dropped 3.5 percent during July.  That was the third decline in the last four months.  Sales of previously owned homes are even lagging behind last year's pathetic pace.


#23 According to John Lohman, the decline in U.S. economic data over the past three months has been absolutely unprecedented.


#24 Morgan Stanley now says that the U.S. and Europe are "hovering dangerously close to a recession" and that there is a good chance we could enter one at some point in the next 6 to 12 months.


#25 Minneapolis Fed President Narayana Kocherlakota says that he is so alarmed about the state of the economy that he may drop his opposition to more monetary easing.  Could more quantitative easing by the Federal Reserve soon be on the way?

And the conclusion which is, as usual, spot on:

Things have not looked this bad for global financial markets since 2008.  Unless someone rides in on a white horse with trillions of dollars (or euros) of easy credit, it looks like we are headed for a massive credit crunch.


What we witnessed back in 2008 was absolutely horrifying.  Very few people want to see a repeat of that.  But as things in the U.S. and Europe continue to unravel, it appears increasingly likely that the next wave of the financial crisis could hit us sooner rather than later.


None of the fundamental problems that caused the crisis of 2008 have been fixed.  The world financial system is still one gigantic mountain of debt, leverage and risk.


Authorities around the globe will certainly do all they can to keep things stable, but in the end it is inevitable that the house of cards is going to come crashing down.


Let us hope for the best, but let us also prepare for the worst.

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Fletch F. Fletch's picture

All is well.  Remain calm.

BaBaBouy's picture


Anyone Got Change For A Quarter ???

Fukushima Sam's picture


Just kidding, go ahead and hit it.  Let's get this over with!

max2205's picture

It's the buy the dip Bernake Miracle. Don't judge the economy by what the Dow does anymore. It's the last bastion of confidence and heir Ben won't let it blow.

andyupnorth's picture

It'll be a slow slide for the next decade to DOW=3k and gold=6k

Ruffcut's picture

I can't agree with "get over this".

With this total disrespect for law, order and justice, the cabal is taking down as slow as they can hope from the designed fail or a failed design.

A financial collapse will create chaos.

I have been in this trading and blogging shit for over 5 years. THe slow depression can continue, but forcing the issue will escalate into madness. Fuck it is madness already.

Fuck it, at this pace I can squeak out a couple more good years, then call it a day.


Henry Chinaski's picture

A "terrorist attack" will "take down the internet" and there will be a "great reset" and no one will be able to figure out why. A new dark age. Wait for instructions.

Gotterdammerung's picture

As more and more people realize the inevitable storm that is about to fall upon us,..the negative energy is palatable.  when you are out and about,… don't you find yourself thinking that this just can't go on much longer, and you find yourself attempting to absorb the simple little things that you once took for granted because soon, sooner than many others realize,……it will never be the same in our life time again.

Please,… less vulgaries make for more enjoyable reading even as our way of life begins to crumble!


spankfish's picture

Any relation to Die Götzen-Dämmerung?  Was mich nicht umbringt, macht mich stärker.

Snidley Whipsnae's picture

Gotta love this CYA comment in the summation... "Authorities around the globe will certainly do all they can to keep things stable..."

Authorities around the world are busy as cats kicking sand in pursuit of saving TBTF banksters...  fixed that.


espirit's picture

Never before was SkyNet self-aware, that pretty much cancels fundamentals and reality.

Bots have that effect.

Justaman's picture

Aren't these all transitory? 

rosiescenario's picture

Yes, they truly are.......on a long enough time line.....

spandrall's picture

Silvio: Hey everybody, don't worry! Lots of austerity, everywhere!

Silvio (later that night): Austerity, what? I was joking, sarcasm bitchez. Wow look at that hot 15 year old.

DK Delta's picture

Great interview of Lew Rockwell and what QE3 Fed intervention really means for the rest of us landless proletariat. Says banks aren't lending out their reserves because doing so would cause hyperinflation -

IQ 145's picture

Why didn't I think of that? That must be it. They're saving us from ouselves by keeping all the money so we can't do anything foolish with it.

StychoKiller's picture

What an Idjut I've been!  I've been thinking it was cause those qualified to receive a loan don't want one and those that want one are unqualified.  Back to room 101 with me!

johngaltfla's picture

<---INSERT Kevin Bacon getting WHACKED here.


CrashisOptimistic's picture

Brent's not calm.  The spread is now headed towards $27.

That's right.  $27.  It was about 0 in January of this year.  

And it was about 0 for all months of history prior to January.

But still they think that finance matters for an engine that is having its fuel flow choked off.

Buckaroo Banzai's picture

The time has come for "The Four G's": God, Gold, Guns, Grub.

Or, if you will, "The Four B's": Beans, Bibles, Bullets, Bullion

Pladizow's picture

You can keep God and the bible, I'll take the rest.

Id fight Gandhi's picture

There's no atheists in the foxhole.

DaveyJones's picture

what do you call people who don't believe athiests exist other than ironic?  

Raymond Reason's picture

My first wife and i divorced over religious differences....she was an atheist, i was an agnostic.  Woody Allen.

Christophe2's picture

I guess the vast differences between atheism ('there is no god') and agnosticism ('there is god, only not the one from the Books') escape you?  Woody Allen is a zionist puke who married his own (adopted) daughter, a mental masturbator who excels at rationalizing and valorizing vacuous, decadent lifestyles.  Bleh.


In any case, getting back to the topic at hand: rather than just bear witness to the slow progression of our economic and social destruction, why not fight back?

=> if we don't fight back, the NWO's stated goal of 92% world population reduction and 'agenda 21' for 'sustainable development' will become a reality.

Raymond Reason's picture

No sense of humor, eh?  By the way, your definition of agnostism is wrong.


topcallingtroll's picture

There have been quite a few athiests/agnostics in foxholes but most of us dont go around talking about it.

Tunga's picture

No need for talk troll; the shitstains on your pants say it all.


cranky-old-geezer's picture



Oh that was real "christian" like.

The hottest parts of gehennah are reserved for you miserable disgusting "christian" frauds.

slavador's picture

Cranky-Geezer are you exceptional or is it common for atheists to fantasize about torturing rivals? If so, perhaps the folks running Abu-Graib were self actualized atheists? 

MSimon's picture

Uh. Christians have a history of more than fantasizing.


slavador's picture


I do not have a history of "doing more than fantasizing about torture". There are 1.5 billion living Christians that will make similar claims. Our group is the biggest in the world with the longest and most colorful history. Cherrypicking the ugliest available datapoints from a group that is a huge percent of the population makes you as dishonest as a bankster. 

slewie the pi-rat's picture

"living Christians" don't necessarily believe they are more honest than others, imo.  only, perhaps, that they can be more "honest" than others in facing their own "dishonesty" b/c of the norm they are up against in the guy who walked outa the freaking boat they were all in

if you can't walk outa the boat, stf up, you self-righteous hypocrite!

PaperBugsBurn's picture



You with your nagging wife, underwater mortgage were in a foxhole? Yeah right!

MsCreant's picture

Communion? The bread is the body of Christ. The wine the blood.

delacroix's picture

I come in my fathers name, and I am in him, and he is in me.

Jasper M's picture

What does gay incest have to do with international finance?

FEDbuster's picture

If you had bought beans, bullets and bullion over the past ten years, you have done pretty good with your "investment".  Food is still relatively cheap, now is the time to stock up.  By the time your local Walmart is burning, it's too late to prepare (then all you can do is pray, or not).  Hedge your future by preping now.  As Barry said last week, "prepare for the worst, and hope for the best" (no teleprompter needed for that line).

delacroix's picture

is he trying to prove, you can polish a turd?  no offense TF