The Next Financial Crisis Has Already Arrived In Europe, And People Are Starting To Freak Out - Michael Snyder THE ECONOMIC COLLAPSE BLOG

The Next Financial Crisis Has Already Arrived In Europe, And People Are Starting To Freak Out

Posted: 12 Jun 2017  Michael Snyder  THE ECONOMIC COLLAPSE BLOG

Did you know that the sixth largest bank in Spain failed in spectacular fashion just a few days ago?  Many are comparing the sudden implosion of Banco Popular to the collapse of Lehman Brothers in 2008, and EU regulators hastily arranged a sale of the failed bank to Santander in order to avoid a full scale financial panic. 

Sadly, most Americans have no idea that a new financial crisis is starting to play out over in Europe, because most Americans only care about what is going on in America.  But we should be paying attention, because the EU is the second largest economy on the entire planet, and the euro is the second most used currency on the entire planet.  The U.S. financial system is already teetering on the brink of disaster, and this new financial crisis in Europe could turn out to be enough to push us over the edge.

If EU regulators had not arranged a “forced sale” of Banco Popular to Santander, we would probably be witnessing panic on a scale that we haven’t seen since 2008 in Europe right about now.  The following comes from the Telegraph…

Spanish banking giant Santander has stepped in to the rescue ailing rival Banco Popular by taking over the failing lender for €1 in a watershed deal masterminded by EU regulators to avoid a damaging collapse.
Santander will tap its shareholders for €7bn in a rights issue to raise the capital needed to shore-up Popular’s finances in a dramatic private sector rescue of Spain’s sixth-largest lender.
It will inflict losses of approximately €3.3bn on bond investors and shareholders but crucially will avoid a taxpayer bailout.

But now that a “too big to fail” bank like Banco Popular has failed, investors are immediately trying to figure out which major Spanish banks may be the next to collapse.  According to Wolf Richter, many have identified Liberbank as an institution that is highly vulnerable…

After its most tumultuous week since the bailout days of 2012, Spain’s banking system is gripped by a climate of fear, uncertainty and distrust. Rather than allaying investor nerves, the shotgun bail-in and sale of Banco Popular to Santander on Tuesday has merely intensified them. For the first time since the Global Financial Crisis, shareholders and subordinate bondholders of a failing Spanish bank were not bailed out by taxpayers; they took risks in order to make a buck, and they bore the consequences. That’s how it should be. But bank investors don’t like not getting bailed out.
Now they’re worrying it could happen again. As Popular’s final days showed, once confidence and trust in a bank vanishes, it’s almost impossible to restore them. The fear has now spread to Spain’s eighth largest lender, Liberbank, a mini-Bankia that was spawned in 2011 from the forced marriage of three failed cajas (savings banks), Cajastur, Caja de Extremadura and Caja Cantabria.

On Thursday, shares of Liberbank dropped by an astounding 20 percent, and that was followed up by another 19 percent decline on Friday.

Spanish authorities responded by banning short sales of Liberbank shares, and that caused a short-term rebound in the stock price.

But we haven’t seen this kind of chaos in European financial markets in a very long time.
Meanwhile, Nick Giambruno is sounding the alarm about a much bigger bubble.  At this moment, more than a trillion dollars worth of Italian government bonds have negative yields…

Over $1 trillion worth of Italian bonds actually have negative yields.
It’s a bizarre and perverse situation.
Lending money to the bankrupt Italian government carries huge risks. So the yields on Italian government bonds should be near record highs, not record lows.
Negative yields could not exist in a free market. They’re only possible in the current “Alice in Wonderland” economy created by central bankers.
You see, the European Central Bank (ECB) has been printing money to buy Italian government bonds hand over fist. Since 2008, the ECB and Italian banks have bought over 88% of Italian government debt, according to a recent study.

The moment that the ECB stops wildly buying Italian bonds, the party will be over and the Italian financial system will crash.  Unfortunately for Italy, the Germans are pressuring the ECB to quit printing so much money, and the Germans usually get their way in these things.
But if the Germans get their way this time, we could be facing a complete and utter nightmare very quickly.  Here is more from Nick Giambruno…

Once the ECB—the only large buyer—steps away, Italian government bonds will crash and rates will soar.
Soon it will be impossible for the Italian government to finance itself.
Italian banks—which are already insolvent—will be decimated. They hold an estimated €235 billion worth of Italian government bonds. So the coming bond crash will pummel their balance sheets.
It’s shaping up to be a lovely train wreck.

And all of this is happening in the context of a global economy that appears to be headed for a major downturn.

For example, the last time that global credit growth showed down this rapidly was during the last financial crisis…

From peak to trough the deceleration in global credit growth is now approaching that during the global financial crisis (-6% of global GDP), even if the dispersion of the decline is much narrower. Currently 55% of the countries in our sample have experienced a -0.3 standard deviation deterioration in their credit impulse (median over 12 months) compared to 77% of countries in Dec ’09 when the median decline was -1.4 stdev.”

Of course the last time global credit growth decelerated this dramatically, global central banks intervened on a scale that was unlike anything that we had ever seen before.
But this time around it is happening at a time when global central banks are very low on ammo…

More importantly, back in 2009, not only China, but the Fed and other central banks unleashed the biggest injection of credit, i.e. liquidity, the world has ever seen resulting in the biggest asset bubble the world has ever seen. And, this time around, the Fed is set to hike for the third time in the past year, even as the ECB and BOJ are forced to soon taper as they run out of eligible bonds to monetize. All this comes at a time when US loan growth is weeks away from turning negative.
As such, what “kickstarts” the next spike in the credit impulse is unclear. What is clear is that if the traditional 3-6 month lag between credit inflection points, i.e. impulse, and economic growth is maintained, the global economy is set for a dramatic collapse some time in the second half.

There are so many experts that are warning about big economic trouble in our immediate future.  I would like to say that all of the experts that are freaking out are wrong, but I can’t do that.

I have not seen an atmosphere like this since 2008 and 2009, and everything points to an acceleration of the crisis as we enter the second half of this year.

    

Major Economic Warning Sign: The Euro Is Heading For Parity With The U.S. Dollar - Michael Snyder THE ECONOMIC COLLAPSE BLOG

Major Economic Warning Sign: The Euro Is Heading For Parity With The U.S. Dollar

Posted: 15 Dec 2016  Michael Snyder  THE ECONOMIC COLLAPSE BLOG

The collapse of the euro is accelerating, and it looks like we could be staring a major European financial crisis right in the face early in 2017.  On Thursday, the EUR/USD fell all the way to $1.0366 at one point before rebounding slightly.  That represents the lowest that the euro has been relative to the U.S. dollar since January 2003.  Ever since 2011, I have been relentlessly warning that the euro is heading for parity with the U.S. dollar. 

When the EUR/USD was trading at about $1.40 that must have seemed like crazy talk, but I never wavered.  I just kept warning people that the euro was going to weaken greatly relative to the U.S. dollar.  Here is one example from March 2015: “How many times have I said it?  The euro is heading to all-time lows.  It is going to go to parity with the U.S. dollar, and then it is eventually going to go below parity.” 

After Thursday, we are almost there, and once we do hit parity that is going to be a sign that all sorts of chaos is about to erupt in Europe.

For years, so many people that write about our coming economic problems have been proclaiming that the death of the U.S. dollar is imminent.

But I have always taken a different approach.  I have always maintained that the collapse of the euro comes first, and that the death of the U.S. dollar happens some time later. So many people have wanted to get rid of all of their dollars in anticipation of the coming crisis, but that is a huge mistake.

First of all, without exception everyone needs an emergency fund that can cover at least six months of expenses in case there is a job loss, a health emergency or all hell breaks loose for some reason.

Secondly, cash is going to be king during the initial stages of the coming crisis.  Later on the U.S. dollar will rapidly lose value, but at first it will pay to have significant amounts of cash available to you.

Most people out there seem to think that a strong dollar is great news and that it is a sign of good things to come under Donald Trump.

But the truth is that an overly strong U.S. dollar is actually very bad news for the global economy.

For the U.S., a strong dollar hurts our imports and tends to drag down our GDP.

For the rest of the world, a strong dollar makes it more expensive to borrow money.  The economic boom in the developing world following the last financial crisis was fueled by mountains of cheap dollars that were borrowed at ultra-low interest rates.  But now the U.S. dollar is surging and interest rates are spiking, and that is starting to cause major problems.

It now takes much more local currency to pay back those dollar-denominated loans that were made in emerging markets during the boom times.  If the U.S. dollar continues to rise we are going to see a staggering number of defaults, and a credit crunch in many areas of the globe seems inevitable at this point.

Of course the big thing to keep an eye on over the coming weeks is the rapidly unfolding crisis in Italy.  The Italians have the 8th largest economy on the entire planet, and we are in the process of watching their entire banking system completely implode.

In fact, their third largest bank is in imminent danger of collapse, and according to Reuters this could trigger “a wider banking and political crisis in Italy”…

Italy’s government is ready to pump 15 billion euros into Monte dei Paschi di Siena (BMPS.MI) and other ailing banks, sources said, as the country’s third-largest lender pushes ahead with a private rescue plan that is widely expected to fail.
The world’s oldest bank has until Dec. 31 to raise 5 billion euros ($5.2 billion) in equity or face being wound down by the European Central Bank, potentially triggering a wider banking and political crisis in Italy.
If needed, the government will pump 15 billion euros into the Siena-based lender and several other smaller banks to prevent that, two sources close to the matter said on Thursday.

This is so much more serious than the ongoing economic depression in Greece.

Greece is just the 44th largest economy on the planet, and we saw how much trouble Europe had trying to bail them out.

So what is the rest of Europe going to do when financial collapse hits Italy?

Here in the United States very few people are interested in hearing about a “global financial crisis” right at this moment, because in the aftermath of the election most people are feeling really good about where things are heading.  Just consider the following three facts that I pulled out of a Bloomberg article…

#1 “The National Association of Homebuilders’ index of sentiment soared to an 11-year high in December, despite the sizable rise in bond yields since the election.”

#2 “The University of Michigan’s December index of consumer confidence also continued its upward post-election trend, rising to 98. A sub-index that tracks respondents’ opinion of the government’s economic policies spiked to levels not seen since 2009.”

#3 “The National Federation of Independent Businesses’ index of optimism among small businesses posted its sharpest surge since 2009 in November to reach 98.4. An expected improvement in business conditions among small business owners surveyed after Nov. 8 was the largest contributor to the improvement in the headline print.”

Hopefully happy days will stick around for a while.

But it won’t last forever.

As I have warned so many times, the coming crisis is going to hit Europe first, and the United States will join the party not too long after.

And a key marker that we have been watching for is almost here.  The euro is going to hit parity with the U.S. dollar just like I have been warning, and once that takes place expect events to start accelerating significantly.

4 Harbingers Of Stock Market Doom That Foreshadowed The 2008 Crash Are Flashing Red Again - Michael Snyder THE ECONOMIC COLLAPSE blog

4 Harbingers Of Stock Market Doom That Foreshadowed The 2008 Crash Are Flashing Red Again

Posted: 11 Nov 2015 04:27 PM PST  Michael Snyder  THE ECONOMIC COLLAPSE blog

So many of the exact same patterns that we witnessed just before the stock market crash of 2008 are playing out once again right before our eyes.  Most of the time, a stock market crash doesn’t just come out of nowhere.  Normally there are specific leading indicators that we can look for that will tell us if major trouble is on the horizon. 

One of these leading indicators is the junk bond market.  Right now, a closely watched high yield bond ETF known as JNK is sitting at 35.77.  If it falls below 35, that will be a major red flag, and it will be the first time that it has done so since 2009.  As you can see from this chart, JNK started crashing in June and July of 2008 – well before equities started crashing later that year.  A crash in junk bonds almost always precedes a major crash in stocks, and so this is something that I am watching carefully.

And there is a reason why junk bonds are crashing.  In 2015 we have seen the most corporate bond downgrades since the last financial crisis, and corporate debt defaults are absolutely skyrocketing.  The following comes from a recent piece by Porter Stansberry…

So far this year, nearly 300 U.S. corporations have seen their bonds downgraded. That’s the most downgrades per year since the financial crisis of 2008-2009. The year isn’t over yet. Neither are the downgrades. More worrisome, the 12-month default rate on high-yield corporate debt has doubled this year. This suggests we are well into the next major debt-default cycle.

Another thing that I am watching closely is the price of oil.

A massive crash in the price of oil preceded the stock market crash of 2008, and over the past year we have seen another dramatic crash in the price of oil.

Many had been expecting the price of oil to bounce back, but instead we are seeing new downward momentum.  In fact, according to Business Insider the price of U.S. oil briefly dipped below $43 a barrel on Wednesday…

Crude oil was down nearly 3% in morning trade on Wednesday.
West Texas Intermediate crude oil futures in New York dropped to as low as $42.97 per barrel. Futures touched a $42-handle in the last week of October, but last traded near those levels for a considerable period in August.

Another thing that I am watching is the ongoing crash of other industrial commodities.  This is something that also preceded the stock market crash of 2008, and it is a clear sign that global economic activity is really slowing down.

Prices for industrial commodities such as aluminum, tin, iron ore and coal are all crashing.  But the commodity that has me most alarmed personally is copper.

Economists commonly refer to it as “Dr. Copper”, and there is a very good reason for that.  Looking back over history, the price of copper often makes a significant move in one direction or the other before the overall economy does.  And the price of copper almost always starts declining before stocks do.

As I write this, the price of copper has fallen to $2.21, and it is already lower than at any point since the last financial crisis.  To get a better perspective regarding what I am talking about, just check out this chart.  This is one signal that is absolutely screaming that a major financial crisis is imminent.

One more harbinger of financial doom on the horizon is the surging U.S. dollar.  The U.S. dollar surged just before the financial crisis of 2008, and now it is happening again.

Most Americans don’t understand this, but the truth is that a rising U.S. dollar puts an incredible amount of stress on emerging markets all around the globe.  Since the last financial crisis, many of these emerging markets have been on a massive debt binge, and much of that debt was denominated in U.S. dollars.  Now that the dollar has increased in value, emerging market borrowers are finding that it takes much more of their own local currencies to service and pay back those debts.  Defaults are rapidly rising, and emerging market economies all over the world (such as Brazil) have already plunged into recession.

If the Fed does follow through with an interest rate hike in December, that is going to make things even worse.  The U.S. dollar will surge even more, and emerging markets will be in even more trouble.

At the same time that the dollar is getting stronger, the euro is getting weaker.  An article that was posted by CNBC on Wednesday went so far as to state that “it is now looking like the euro reaching parity with the greenback is all but guaranteed”…

The prospect of the Fed hiking interest rates in December has pushed the dollar higher, and it is now looking like the euro reaching parity with the greenback is all but guaranteed.
Strategists, however, disagree on how quickly that will happen and how much more the dollar can appreciate in the near term. That depends, they say, on the Fed, and how fast it will raise interest rates in a world where other central banks are moving in the opposite direction toward easier policy.
Goldman Sachs analysts this week reiterated that they expect euro parity with the dollar by year-end though other strategists expect the decline in the common currency against the dollar to take longer.

Let’s see, who has been warning that this would happen for more than a year?  Here are just a few examples…

July 19th: “For a long time, I have been repeating my prediction that the euro would fall to parity with the U.S. dollar.”

June 28th: “As I have warned repeatedly, the euro is heading for parity with the U.S. dollar, and at some point it will drop below parity.”

May 25th: “As I have warned so many times before, the euro is headed for parity with the U.S. dollar, and then it is going to go below parity.”

In August 2014, just a little bit over a year ago, the EUR/USD was sitting above 1.30.  At that time very few people out there would have ever imagined we would be talking about parity just a little more than a year later.

This is just the beginning of a time of great financial volatility.  The things that we are going to witness in the months and years to come are going to be absolutely unprecedented.  A massive global debt super-cycle is coming to an end, and the pain that this is going to mean for the global economy is almost too great to put into words.

Prophecy - JOHN PAUL JACKSON - USA, Euro Dollar fall, Iran, Russia, Ukraine, Poland, Israel, weather catastrophes worldwide

John Paul Jackson - prophetic message that will let you know

we must intercede in prayer.

Published on Mar 5, 2014 on YouTube. 

Originally his message was given on Jan. 22, 2012.

This is just a 15 minute clip of the full 1.5 hr video. The entire video can be seen at:

Watch full message here: https://www.youtube.com/watch?v=U4_Bq...

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