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10 Charts Which Show We Are Much Worse Off Than Just Before The Last Economic Crisis

10 Charts Economic Crisis If you believe that ignorance is bliss, you might not want to read this article. I am going to dispel the notion that there has been any sort of “economic recovery”, and I am going to show that we are much worse off than we were just prior to the last economic crisis. If you go back to 2007, people were feeling really good about things. Houses were being flipped like crazy, the stock market was booming and unemployment was relatively low. But then the financial crisis of 2008 struck, and for a while it felt like the world was coming to an end. Of course it didn’t come to an end – it was just the first wave of our problems. The waves that come next are going to be the ones that really wipe us out. Unfortunately, because we have experienced a few years of relative stability, many Americans have become convinced that Barack Obama, Janet Yellen and the rest of the folks in Washington D.C. have fixed whatever problems caused the last crisis. Even though all of the numbers are screaming otherwise, there are millions upon millions of people out there that truly believe that everything is going to be okay somehow. We never seem to learn from the past, and when this next economic downturn strikes it is going to do an astonishing amount of damage because we are already in a significantly weakened state from the last one.

For each of the charts that I am about to share with you, I want you to focus on the last shaded gray bar on each chart which represents the last recession. As you will see, our economic problems are significantly worse than they were just before the financial crisis of 2008. That means that we are far less equipped to handle a major economic crisis than we were the last time.

#1 The National Debt

Just prior to the last recession, the U.S. national debt was a bit above 9 trillion dollars. Since that time, it has nearly doubled. So does that make us better off or worse off? The answer, of course, is obvious. And even though Barack Obama promises that “deficits are under control”, more than a trillion dollars was added to the national debt in fiscal year 2014. What we are doing to future generations by burdening them with so much debt is beyond criminal. And so what does Barack Obama want to do now? He wants to ramp up government spending and increase the debt even faster. This is something that I covered in my previous article entitled “Barack Obama Says That What America Really Needs Is Lots More Debt“.

Presentation National Debt

#2 Total Debt

Over the past 40 years, the total amount of debt in the United States has skyrocketed to astronomical heights. We have become a “buy now, pay later” society with devastating consequences. Back in 1975, our total debt level was sitting at about 2.5 trillion dollars. Just prior to the last recession, it was sitting at about 50 trillion dollars, and today we are rapidly closing in on 60 trillion dollars.

Presentation Credit Market Instruments

#3 The Velocity Of Money

When an economy is healthy, money tends to change hands and circulate through the system quite rapidly. So it makes sense that the velocity of money fell dramatically during the last recession. But why has it kept going down since then?

Presentation Velocity Of M2

#4 The Homeownership Rate

Were you aware that the rate of homeownership in the United States has fallen to a 20 year low? Traditionally, owning a home has been a sign that you belong to the middle class. And the last recession was really rough on the middle class, so it makes sense that the rate of homeownership declined during that time frame. But why has it continued to steadily decline ever since?

Presentation Homeownership Rate

#5 The Employment Rate

Barack Obama loves to tell us how the unemployment rate is “going down”. But as I will explain later in this article, this decline is primarily based on accounting tricks. Posted below is a chart of the civilian employment-population ratio. Just prior to the last recession, approximately 63 percent of the working age population of the United States was employed. During the recession, this ratio fell to below 59 percent and it stayed there for several years. Just recently it has peeked back above 59 percent, but we are still very, very far from where we used to be, and now the next economic downturn is rapidly approaching.

Presentation Employment Population Ratio

#6 The Labor Force Participation Rate

So how can Obama get away with saying that the unemployment rate has gone down dramatically? Well, each month the government takes thousands upon thousands of long-term unemployed workers and decides that they have been unemployed for so long that they no longer qualify as “part of the labor force”. As a result, the “labor force participation rate” has fallen substantially since the end of the last recession.

Presentation Labor Force Participation Rate

#7 The Inactivity Rate For Men In Their Prime Working Years

If things are “getting better”, then why are so many men in their prime working years doing nothing at all? Just prior to the last recession, the inactivity rate for men in their prime working years was about 9 percent. Today it is just about 12 percent.

Presentation Inactivity Rate

#8 Real Median Household Income

Not only is a smaller percentage of Americans employed today than compared to just prior to the last recession, the quality of our jobs has gone down as well. This is one of the factors which has resulted in a stunning decline of real median household income.

Presentation Real Median Household Income

I have shared these next numbers before, but they bear repeating. In America today, most Americans do not make enough to support a middle class lifestyle on a single salary paid using a checkstub creator software. The following figures come directly from the Social Security Administration.

-39 percent of American workers make less than $20,000 a year.

-52 percent of American workers make less than $30,000 a year.

-63 percent of American workers make less than $40,000 a year.

-72 percent of American workers make less than $50,000 a year.

We all know people that are working part-time jobs because that is all that they can find in this economy. As the quality of our jobs continues to deteriorate, the numbers above are going to become even more dismal.

#9 Inflation

Even as our incomes have stagnated, the cost of living just continues to rise steadily. For example, the cost of food and beverages has gone up nearly 50 percent just since the year 2000.

Presentation Food Inflation

#10 Government Dependence

As the middle class shrinks and the number of Americans that cannot independently take care of themselves soars, dependence on the government is reaching unprecedented heights. For instance, the federal government is now spending about twice as much on food stamps as it was just prior to the last recession. How in the world can anyone dare to call this an “economic recovery”?

Presentation Government Spending On Food Stamps

So you tell me – are things “getting better” or are they getting worse?

To me, it is crystal clear that we are in much worse condition than we were just prior to the last economic crisis.

And now things are setting up in textbook fashion for the next great economic crisis. Unfortunately, most Americans are totally clueless about what is going on and the vast majority are completely and totally unprepared for what is coming.

Or could it be possible that I am wrong? Whether you agree or disagree with me, please feel free to add to the discussion by posting a comment below.

The post 10 Charts Which Show We Are Much Worse Off Than Just Before The Last Economic Crisis appeared first on The Economic Collapse.

Soloing, & Celebrity Cult

We are living in the Internet age, and the plutocratic age. Plutocracy wants celebritism to rule the minds. When people feel, think, and live through celebrities, they are ready to do so through plutocrats.

Plutocrats hence push everywhere for the celebration of the unique act, because unicity is what they extoll.

And no act is more unique, and useful, to plutocrats than those which say life is not important.

My Friend John Bachar Free Soloing, Showing Off. Fell To His Death, Free Soloing

Three Neurons, Free Will

Modern Slaves Are Predictable, Free Worms Are Not:

Enough of these sad songs about how plutocracy, stupidity, cowardice and greed rule! Worms are smart, and willful! Yes, even worms have Free Will. Too bad for those who thought god controlled everything. Too bad for those who thought animals were machines. Too bad for those controlled by a decerebrating media: they are predictable, whereas worms are not.

That worms have free will is what a study led by Cori Bargmann shows. She is, among other titles, Torsten N. Wiesel Professor, head of the Lulu and Anthony Wang Laboratory of Neural Circuits and Behavior at Rockefeller University (Americans love complicated titles, they aspire to aristocracy; Wiesel a neurologist, got the Nobel, and was president of Rockefeller).

Brainy Blonde Cori Bargmann “Think Like A Worm”

California Is Turning Back Into A Desert And There Are No Contingency Plans

Once upon a time, much of the state of California was a barren desert. And now, thanks to the worst drought in modern American history, much of the state is turning back into one. Scientists tell us that the 20th century was the wettest century that the state of California had seen in 1000 years. But now weather patterns are reverting back to historical norms, and California is rapidly running out of water. It is being reported that the state only has approximately a one year supply of water left in the reservoirs, and when the water is all gone there are no contingency plans. Back in early 2014, California Governor Jerry Brown declared a drought emergency for the entire state, but since that time water usage has only dropped by 9 percent. That is not nearly enough. The state of California has been losing more than 12 million acre-feet of total water a year since 2011, and we are quickly heading toward an extremely painful water crisis unlike anything that any of us have ever seen before.

But don’t take my word for it. According to the Los Angeles Times, Jay Famiglietti “is the senior water scientist at the NASA Jet Propulsion Laboratory/Caltech and a professor of Earth system science at UC Irvine”. What he has to say about the horrific drought in California is extremely sobering.

As our “wet” season draws to a close, it is clear that the paltry rain and snowfall have done almost nothing to alleviate epic drought conditions. January was the driest in California since record-keeping began in 1895. Groundwater and snowpack levels are at all-time lows. We’re not just up a creek without a paddle in California, we’re losing the creek too.

Data from NASA satellites show that the total amount of water stored in the Sacramento and San Joaquin river basins – that is, all of the snow, river and reservoir water, water in soils and groundwater combined – was 34 million acre-feet below normal in 2014. That loss is nearly 1.5 times the capacity of Lake Mead, America’s largest reservoir.

Statewide, we’ve been dropping more than 12 million acre-feet of total water yearly since 2011. Roughly two-thirds of these losses are attributable to groundwater pumping for agricultural irrigation in the Central Valley. Farmers have little choice but to pump more groundwater during droughts, especially when their surface water allocations have been slashed 80% to 100%. But these pumping rates are excessive and unsustainable. Wells are running dry. In some areas of the Central Valley, the land is sinking by one foot or more per year.

Are you starting to understand why so many experts are so alarmed?

For much more from Famiglietti, check out this 60 Minutes interview.

According to the U.S. Drought Monitor, essentially the entire state is suffering drought conditions right now. And as you can see from the map below, most of the state is currently experiencing either the highest or the second-highest classification of drought.

 

Nearly 40 million people live in the state of California at the moment.

What are they all going to do when the water is gone?

In some rural areas, reservoirs are already nearly bone dry. And in other areas, the water quality has gone way down. For example, in one Southern California neighborhood black water is now coming out of the taps.

Residents of a Southern California neighborhood are concerned about the fact that the water flowing out of the taps in their homes is the color black. That’s right; the water coming out of their faucets is indeed black – not gray, not cloudy – but black. Inky, opaque black water that the water company says is okay to drink.

Those who live in Gardena, California, are understandably skeptical when asked to consume water that strongly resembles crude oil or something emitted by a squid. The water reportedly also has an “odor of rotten eggs or sewer smell,” according to one resident.

Perhaps you don’t care about what happens to California.

Perhaps you believe that they are just getting what they deserve.

And you might be right about that.

But the truth is that this is a crisis for all of us, because an enormous amount of our fresh produce is grown in the state.

As I discussed in a previous article, the rest of the nation is very heavily dependent on the fruits and vegetables grown in California. The following numbers represent California’s contribution to our overall production.

99 percent of the artichokes

44 percent of asparagus

two-thirds of carrots

half of bell peppers

89 percent of cauliflower

94 percent of broccoli

95 percent of celery

90 percent of the leaf lettuce

83 percent of Romaine lettuce

83 percent of fresh spinach

a third of the fresh tomatoes

86 percent of lemons

90 percent of avocados

84 percent of peaches

88 percent of fresh strawberries

97 percent of fresh plums

Without the agricultural production of the state of California, we are in a massive amount of trouble.

And of course there are other areas all over the globe that are going through similar things. For instance, taps in Rio de Janeiro and Sao Paolo are running dry as Brazil experiences the worst drought that it has seen in 80 years.

The world simply does not have enough fresh water left at this point, and that is why water is being called “the new oil”. The following comes from CBS News.

It’s been said that the wars of the 21st century may well be fought over water. The Earth’s population has more than doubled over the last 50 years and the demand for fresh water – to drink and to grow food – has surged along with it. But sources of water like rainfall, rivers, streams, reservoirs, certainly haven’t doubled. So where is all that extra water coming from? More and more, it’s being pumped out of the ground.

Water experts say groundwater is like a savings account – something you draw on in times of need. But savings accounts need to be replenished, and there is new evidence that so much water is being taken out, much of the world is in danger of a groundwater overdraft.

And if scientists are right, what we are experiencing right now may just be the very beginning of our problems. In fact, one team of researchers has concluded that the Southwestern United States is headed for a “megadrought” that could last for decades.

Scientists had already found that the Southwestern United States were at great risk of experiencing a significant megadrought (in this case meaning drought conditions that last for over 35 years) before the end of the 21st century. But a new study published in Science Advances added some grim context to those predictions.

Columbia University climate scientists Jason Smerdon and Benjamin Cook, and Cornell University’s Toby Ault were co-authors on the study. They took data from tree rings and other environmental records of climate from the Southwest and compared them to the projections of 17 different climate models that look at precipitation and soil moisture. When they made the comparison between past and future, they found that all the models agreed: the next big megadrought is coming, and it will be way worse than anything we’ve seen in over 1,000 years–including droughts that have been credited with wiping out civilizations.

Needless to say, along with any water crisis comes a food crisis.

Virtually everything that we eat requires a tremendous amount of water to grow. And at this point, the world is already eating more food than it produces most years.

So what is going to happen to us as this water crisis gets even worse?

Feel free to share what you think by posting a comment below.

The post California Is Turning Back Into A Desert And There Are No Contingency Plans appeared first on The Economic Collapse.

Plutocracy: I Lie, Therefore I Am

Submission To High Finance From Propaganda To Corruption, USA To EU:

IN EUROPE, OR ELSEWHERE. WHAT IS IT TO BE PROGRESSIVE, OR ON THE LEFT?

The debate about what is progress has been going since before Marx was a toddler. Actually, one can go back to Voltaire, and even all the way back to philosopher Abelard fighting Saint Bernard (Twelfth Century).

Abelard believed in debate (“Sic et Non”). Whereas Saint Bernard was all about having explained the world, all by himself. Bernard said: ”I believe though I do not comprehend, and I hold by faith what I cannot grasp with the mind.”

Nowadays, many emulate Bernard, holding by faith that what they call the “free market” is the way to whatever they believe we are going to. In the “Free Market”, which neither free, not a market, banksters are free to enslave Peoples with interest.

God Here, Dog There

A big difference between the USA and Western Europe, is that the USA is obsessed by god. Just like Europe used to be, at least, officially speaking. (According to Rabelais, it was all a lie; peasants did not believe in the official obsession with god. That’s why his books on Gargantua and company ignored Christianism.)

A researcher applied Bayesian analysis to what we know of the writings on Jesus, and various alleged witnesses at the time. The probability that Jesus was a real person was found to be as low as .08%. Oops.

Emotional Thinking Is Superior Thinking

Elliptic Geometry In Action: Greeks, 240 BCE, Understood The Difference Between Latitude & Geodesic (Great Circle)

By claiming emotional thinking is superior, I do not mean that “logical” thinking ought to be rejected. I am just saying what I am saying, and no more. Not, just the opposite, “logical” thinking ought to be embraced. However, there are many “logical” types of thought possible.

Emotional and logical thinking can be physiologically distinguished in the brain (the latter is mostly about axons; the former about the rest).

Any “logical” thinking is literally, a chain made of points. (And there are no points in nature, said a Quantum Angel who passed by; let’s ignore her, for now!)

Guess What Happened The Last Two Times The S&P 500 Was Up More Than 200% In Six Years?

Best Six Year Performance

Question Ball - Public Domain Just a few days ago, the bull market for the S&P 500 turned six years old. This six year period of time has been great for investors, but what comes next? On March 9th, 2009 the S&P 500 hit a low of 676.53. Since that day, it has risen more than 200 percent. As you will see below, there are only two other times within the last 100 years when the S&P 500 performed this well over a six year time frame. In both instances, the end result was utter disaster. And as you take in this information, I want you to keep in mind what I said in my previous article entitled “7 Signs That A Stock Market Peak Is Happening Right Now“. What we are witnessing at this moment is classic “peaking behavior”, and there is a long way to go down from here. So if historical patterns hold up, those with lots of money in the stock market could soon be in for a whole lot of trouble.

According to Societe Generale analyst Andrew Lapthorne, there was an S&P 500 bull market run of more than 200 percent over a six year time period that ended in 1929.

We all know what happened that year.

And there was another S&P 500 bull market run of more than 200 percent over a six year time period that ended in 1999. In the end, all of those gains were wiped out when the dotcom bubble burst.

And now we are near the end of another great bull market for the S&P 500. The following is an excerpt from a recent Business Insider article.

“Such a strong six year run up in US equities has only been seen twice since 1900, i.e., back in 1929 and 1999, neither of which ended well,” Lapthorne wrote.

It’s anyone’s guess what happens next. But Lapthorne and his colleagues have slanted bearish.
So how will this current bull market end?

Needless to say, a lot of people are not very optimistic about that right now.

And there was another very interesting bull market that ended in 1987.

On Aug. 12, the S&P 500 dipped to 102.42, setting the stage for the third-biggest bull market in stocks since 1929. Inflation and unemployment fell. In 1984, President Reagan would cruise to reelection with an ad telling voters “It’s morning again in America.” By 1987, the stock market had tripled. Shareholders who were able to see beyond the gloom of the early 1980s reaped a huge return.

Of course a lot of those huge stock market returns were eliminated in a single day. On October 19th, 1987 the Dow declined by more than 22 percent during a single trading session. That day is still known as “Black Monday” up to this present time.

Markets tend to go down a lot faster than they go up. So if your stock portfolio has gone up substantially over the past few years, good for you. But keep in mind that all of your gains can be wiped out very rapidly. Millions of people experienced this during the last financial crisis, and millions more will experience this during the next one.

And as I keep reminding people, so many of the exact same patterns that we witnessed just prior to the last great stock market collapse are happening once again.

For example, just yesterday I explained that there has been only one other time over the past decade when we have seen the U.S. dollar surge in value in such a short period of time.

That was in 2008, just prior to the last financial crisis.

Another example is what has happened to the price of oil. Since the middle of last year, the price of oil has fallen by more than 50 dollars a barrel.

In all of history, that has happened only one other time.

That was in 2008, just prior to the last financial crisis.

I could go on and on. I could talk about margin debt, price/earnings ratios, industrial commodities, etc.

But you know what? Despite all of the warning signs there are still people out there that are eagerly pouring money into the stock market.

Back in 2005 and 2006, I knew people that were hurrying to buy homes before they got “priced out of the market”. So they did everything that they could to scrape together down payments and they took on mortgages that were larger than they could really afford.

And in the end they got burned.

Today, people are doing similar things. For instance, my friend Bob recently sent me an article that I could hardly believe. It turns out that an “expert” on CNBC is encouraging people “to take out a 7 year loan with a rapidly amortizing asset as collateral in order to buy stocks.”

Yikes!

Let me be clear. The really, really, really dumb money is jumping into the stock market right now. Those that are pouring money into stocks today are really going to get hit hard when the crash comes.

And it isn’t just me saying this.

Just consider the words of billionaire hedge fund manager Crispin Odey.

Mr Odey is best known for his big macroeconomic calls, including foreseeing the 2008 global credit crisis; piling into insurers in the wake of September 2001 attacks; and picking the recent oil price rout. He famously paid himself £28 million in 2008 after shorting credit crisis casualties, including British lender Bradford & Bingley. Mr Odey’s fund returned 54.8 per cent that year.

“The market’s reaction to all of this is leave it to the professionals, leave it to those great guys, the central bankers, because they saved the day in 2009,” he said. “These guys are kind of relying on central banks pulling a rabbit out of a hat.”

The risk is that this time, monetary policy may be ineffective: “We need the crisis to reformulate policy. Central banks are not all singing and all dancing, they cannot basically avoid the natural consequences of what we are doing.”

An inadequate supply-side response to the plunge in commodity prices as the resources industry declines to reduce production was in effect stimulating supply into falling demand.

“The trouble is today the players, whether they are the miners or the oil companies or the Saudis or anybody else, they are not doing the right things. This is the first time in my career where economics 101 doesn’t work at all.”

But it was also true that the world has not had a major recession for 25 years and thanks to frequent interventions, “there is a sensation we don’t have a business cycle”. Stocks are enjoying a six-year bull market but he also hinted at liquidity issues bubbling under the surface.

I just think that you and I have got grandstand seats here [to an imminent market shock] and my point is having found myself in the second quarter of last year selling a lot of equities and starting to go short, I found out just how illiquid it all was. You never actually see it until people try and get out of these things.”

It was unclear to Mr Odey what central banks could do to prevent a crash.

The warning signs are clear.

Soon the time for warning will be over and the crisis will be here.

I hope that you are getting ready.

The post Guess What Happened The Last Two Times The S&P 500 Was Up More Than 200% In Six Years? appeared first on The Economic Collapse.

What Is It To Think Correctly?

Cartesian Thinking Gets Gobbled Down By Vicious Dinosaur

Some say that correct thinking has to do with avoiding “logical fallacies”. That is, of course, silly. Imagine a pilot in a plane. Suppose she avoids all logical fallacies. Where does the plane go? Nowhere. Thinking correctly is more than avoiding logical “fallacies”.

One needs more than logic, to proceed: one needs e-motion, or motivation (both express the fact that they are whatever gets people to get into action; the semantics recognizes that logic without emotion goes nowhere).

There is another, related, fallacy in thinking that correct thinking is all about avoiding “logical fallacies”.

The Last, Great Run For The U.S. Dollar, The Death Of The Euro And 74 Trillion In Currency Derivatives At Risk

Are we on the verge of an unprecedented global currency crisis? On Tuesday, the euro briefly fell below $1.07 for the first time in almost a dozen years. And the U.S. dollar continues to surge against almost every other major global currency. The U.S. dollar index has now risen an astounding 23 percent in just the last eight months. That is the fastest pace that the U.S. dollar has risen since 1981. You might be tempted to think that a stronger U.S. dollar is good news, but it isn’t. A strong U.S. dollar hurts U.S. exports, thus harming our economy. In addition, a weak U.S. dollar has fueled tremendous expansion in emerging markets around the planet over the past decade or so. When the dollar becomes a lot stronger, it becomes much more difficult for those countries to borrow more money and repay old debts. In other words, the emerging market “boom” is about to become a bust. Not only that, it is important to keep in mind that global financial institutions bet a tremendous amount of money on currency movements. According to the Bank for International Settlements, 74 trillion dollars in derivatives are tied to the value of the U.S. dollar, the value of the euro and the value of other global currencies. When currency rates start flying around all over the place, you can rest assured that someone out there is losing an enormous amount of money. If this derivatives bubble ends up imploding, there won’t be enough money in the entire world to bail everyone out.

Do you remember what happened the last time the U.S. dollar went on a great run like this?

As you can see from the chart below, it was in mid-2008, and what followed was the worst financial crisis since the Great Depression.

Dollar Index 2015

A rapidly rising U.S. dollar is extremely deflationary for the overall global economy.

This is a huge red flag, and yet hardly anyone is talking about it.

Meanwhile, the euro continues to spiral into oblivion.

Euro U.S. Dollar

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.

This is going to cause massive headaches in the financial world.

The Europeans are attempting to cure their economic problems by creating tremendous amounts of new money. It is the European version of quantitative easing, but it is having some very nasty side effects.

The markets are starting to realize that if the value of the U.S. dollar continues to surge, it is ultimately going to be very bad for stocks. In fact, the strength of the U.S. dollar is being cited as the primary reason for the Dow’s 332 point decline on Tuesday.

The Dow Jones industrial average fell more than 300 points to below the index’s 50-day moving average, wiping out gains for the year. The S&P 500 also closed in the red for the year and breached its 50-day moving average, which is an indicator of the market trend. Only the Nasdaq held onto gains of 2.61 percent for the year.

There’s “concern that energy and the strength in the dollar will somehow be negative for the equities,” said Art Hogan, chief market strategist at Wunderlich Securities. He noted that the speed of the dollar’s surge was the greatest market driver, amid mixed economic data and concerns about the Federal Reserve raising interest rates.

And as I noted above, when the U.S. dollar rises the things that we export to other nations become more expensive and that hurts our businesses.

This is so basic that even the White House understands it.

Despite reassurance from The Fed that a strengthening dollar is positive for US jobs, The White House has now issued a statement that a “strengthening USD is a headwind for US growth.”

But even more important, a surging U.S. dollar makes it more difficult for emerging markets all over the world to borrow new money and to repay old debts. This is especially true for nations that heavily rely on exporting commodities.

It becomes especially ugly for emerging market economies that produce commodities. Many emerging market countries rely on their natural resources for growth and haven’t yet developed more advanced industries. As the products of their principal industries decline in value, foreign investors remove available credit while their currency is declining against the U.S. dollar. They don’t just find it difficult to pay their debt – it is impossible.

It has been estimated that emerging markets have borrowed more than 3 trillion dollars since the last financial crisis.

But now the process that created the emerging markets “boom” is starting to go into reverse.

The global economy is fueled by cheap dollars. So if the U.S. dollar continues to rise, that is not going to be good news for anyone.

And of course the biggest potential threat of all is the 74 trillion dollar currency derivatives bubble which could end up bursting at any time.

The sophisticated computer algorithms that financial institutions use to trade currency derivatives are ultimately based on human assumptions. When currencies move very little and the waters are calm in global financial markets, those algorithms tend to work really, really well.

But when the unexpected happens, some of the largest financial firms in the world can implode seemingly overnight.

Just remember what happened to Lehman Brothers back in 2008. Unexpected events can cripple financial giants in just a matter of hours.

Today, there are five U.S. banks that each have more than 40 trillion dollars of total exposure to derivatives of all types. Those five banks are JPMorgan Chase, Bank of America, Goldman Sachs, Citibank and Morgan Stanley.

By transforming Wall Street into a gigantic casino, those banks have been able to make enormous amounts of money.

But they are constantly performing a high wire act. One of these days, their reckless gambling is going to come back to haunt them, and the entire global financial system is going to be severely harmed as a result.

As I have said so many times before, derivatives are going to be at the heart of the next great global financial crisis.

And thanks to the wild movement of global currencies in recent months, there are now more than 74 trillion dollars in currency derivatives at risk.

Anyone that cannot see trouble on the horizon at this point is being willingly blind.

The post The Last, Great Run For The U.S. Dollar, The Death Of The Euro And 74 Trillion In Currency Derivatives At Risk appeared first on The Economic Collapse.

7 Signs That A Stock Market Peak Is Happening Right Now

Stock Market Crash - Public Domain Is this the end of the last great run for the U.S. stock market? Are we witnessing classic “peaking behavior” that is similar to what occurred just before other major stock market crashes? Throughout 2014 and for the early stages of 2015, stocks have been on quite a tear. Even though the overall U.S. economy continues to be deeply troubled, we have seen the Dow, the S&P 500 and the Nasdaq set record after record. But no bull market lasts forever – particularly one that has no relation to economic reality whatsoever. This false bubble of financial prosperity has been enjoyable, and even I wish that it could last much longer. But there comes a time when we all must face reality, and the cold, hard facts are telling us that this party is about to end. The following are 7 signs that a stock market peak is happening right now.

#1 Just before a stock market crash, price/earnings ratios tend to spike, and that is precisely what we are witnessing. The following commentary and chart come from Lance Roberts.

The chart below shows Dr. Robert Shiller’s cyclically adjusted P/E ratio. The problem is that current valuations only appear cheap when compared to the peak in 2000. In order to put valuations into perspective, I have capped P/E’s at 30x trailing earnings. The dashed orange line measures 23x earnings which has been the level where secular bull markets have previously ended. I have noted the peak valuations in periods that have exceeded that 30x earnings.

markets are cheap - StreetTalkLive

At 27.85x current earning the markets are currently at valuation levels where previous bull markets have ended rather than continued. Furthermore, the markets have exceeded the pre-financial crisis peak of 27.65x earnings. If earnings continue to deteriorate, market valuations could rise rapidly even if prices remain stagnant.

#2 The average bull market lasts for approximately 3.8 years. The current bull market has already lasted for six years.

#3 The median total gain during a bull market is 101.5 percent. For this bull market, it has been 213 percent.

#4 Usually before a stock market crash we see a divergence between the relative strength index and the stock market itself. This happened prior to the bursting of the dotcom bubble, it happened prior to the crash of 2008, and it is happening again right now.

The first technical warning sign that we should heed is marked by a significant divergence between the relative strength index (RSI) and the market itself. This is noted by a declining pattern of lower highs in the RSI as stocks continue to make higher highs, a sign that the market is “topping out”. In the late ‘90s this divergence persisted for many years as the tech bubble reached epic valuation levels. In 2007 this divergence lasted over a much shorter period (6 months) before the market finally peaked and succumbed to massive selling. With last month’s strong rally to new records, we now have a confirmed divergence between the long-term relative strength index and the market’s price action.

#5 In the past, peaks in margin debt have been very closely associated with stock market peaks. The following chart comes from Doug Short, and I included it in a previous article.

Margin Debt

#6 As I have discussed previously, we usually witness a spike in 10 year Treasury yields just about the time that the stock market is peaking right before a crash.

Well, according to Business Insider, we just saw the largest 5 week rate rally in two decades.

Lots of guys and gals went home this past weekend thinking about the implications of the recent rise in the 10-year Treasury bond’s yield.

Chris Kimble notes it was the biggest 5-week rate rally in twenty years!

#7 A lot of momentum indicators seem to be telling us that we are rapidly approaching a turning point for stocks. For example, James Stack, the editor of InvesTech Research, says that the Coppock Guide is warning us of “an impending bear market on the not-too-distant horizon”.

A momentum indicator dubbed the Coppock Guide, which serves as “a barometer of the market’s emotional state,” has also peaked, Stack says. The indicator, which, “tracks the ebb and flow of equity markets from one psychological extreme to another,” is also flashing a warning flag.

The Coppock Guide’s chart pattern is flashing a “double top,”  which suggests that “psychological excesses are present” and that “secondary momentum has peaked” in this bull market, according to Stack.

“All of this is just another reason for concern about an impending bear market on the not-too-distant horizon,” Stack writes.

So if we are to see a stock market crash soon, when will it happen?

Well, the truth is that nobody knows for certain.

It could happen this week, or it could be six months from now.

In fact, a whole lot of people are starting to point to the second half of 2015 as a danger zone. For example, just consider the words of David Morgan.

“Momentum is one indicator and the money supply. Also, when I made my forecast, there is a big seasonality, and part of it is strict analytical detail and part of it is being in this market for 40 years. I got a pretty good idea of what is going on out there and the feedback I get…. I’m in Europe, I’m in Asia, I’m in South America, I’m in Mexico, I’m in Canada; and so, I get a global feel, if you will, for what people are really thinking and really dealing with. It’s like a barometer reading, and I feel there are more and more tensions all the time and less and less solutions. It’s a fundamental take on how fed up people are on a global basis. Based on that, it seems to me as I said in the January issue of the Morgan Report, September is going to be the point where people have had it.”

Time will tell if Morgan was right.

But without a doubt, lots of economic warning signs are starting to pop up.

One that is particularly troubling is the decline in new orders for consumer goods. This is something that Charles Hugh-Smith pointed out in one of his recent articles.

The financial news is astonishingly rosy: record trade surpluses in China, positive surprises in Europe, the best run of new jobs added to the U.S. economy since the go-go 1990s, and the gift that keeps on giving to consumers everywhere, low oil prices.

So if everything is so fantastic, why are new orders cratering? New orders are a snapshot of future demand, as opposed to current retail sales or orders that have been delivered.

Posted below is a chart that he included with his recent article. As you can see, the only time things have been worse in recent decades was during the depths of the last financial crisis.

Charles Hugh-Smith New Orders

To me, it very much appears that time is running out for this bubble of false prosperity that we have been living in.

But what do you think? Please feel free to contribute to the discussion by posting a comment below.

The post 7 Signs That A Stock Market Peak Is Happening Right Now appeared first on The Economic Collapse.

Nearly At ‘Full Employment’? 10 Reasons Why The Unemployment Numbers Are A Massive Lie

What - Public Domain On Friday, we learned that the official “unemployment rate” has fallen to 5.5 percent. Since an unemployment rate of 5 percent is considered to be “full employment” by many economists, many in the mainstream media took this as a sign that the U.S. economy has almost fully “recovered” since the last recession. In fact, according to the Wall Street Journal, some Federal Reserve officials believe that “the U.S. economy is already at full employment“. But how can this possibly be? It certainly does not square with reality. Personally, I know people that have been struggling with unemployment for years and that still cannot find a decent job. And I get emails from readers all the time that are heartbroken because they are suffering through extended periods of unemployment. So what in the world is going on? How can the government be telling us that we are nearly at “full employment” when so many people can’t find work? Could it be possible that the government numbers are misleading?

It is my contention that the official “unemployment rate” has become so politicized and so manipulated that it is essentially meaningless at this point. The following are 10 reasons why.

#1 Since February 2008, the size of the U.S. population has grown by 16.8 million people, but the number of full-time jobs has actually decreased by 140,000.

#2 The percentage of working age Americans that have a job right now is still about the same as it was during the depths of the last recession. Posted below is a chart that shows how the employment-population ratio has changed since the beginning of the decade. Does this look like a full-blown “employment recovery” to you?.

Employment Population Ratio 2015

#3 The primary reason for the decline in the official “unemployment rate” is the fact that the government now considers millions upon millions of long-term unemployed workers to “no longer be in the labor force”. Just check out the following numbers.

The number of Americans participating in the labor force has been on a decline for the past few years. Nearly 33 percent of the Americans above age 16 are not part of the workforce, the highest number since 1978. The Bureau of Labor Statistics (BLS) report issued recently has found 92,898,000 Americans above age 16 not a part of the labor force of the country as on February 2015.

When President Obama took over the office in January 2009, nearly 80,529,000 Americans were not a part of the labor force. The number has increase by nearly 12 million over the last few years.

#4 Over the past couple of years, the labor force participation rate in this country has been hovering near mutli-decade lows.

The labor force participation rate hovered between 62.9 percent and 62.7 percent in the eleven months from April 2014 through February, and has been 62.9 percent or lower in 13 of the 17 months since October 2013.

Prior to that, the last time the rate was below 63 percent was 37 years ago, in March 1978 when it was 62.8 percent, the same rate it was in February.

#5 When you add the number of “officially unemployed” Americans (8.7 million) to the number of Americans “not in the labor force” (92.9 million), you get a grand total of 101.6 million working age Americans that do not have a job right now. Does that sound like “full employment” to you?

#6 The quality of our jobs continues to decline. Right now, only 44 percent of U.S. adults are employed for 30 or more hours each week.

#7 Millions upon millions of Americans have been forced to take part-time jobs because that is all they can find, and wages for American workers are at depressingly low levels. The following numbers come directly from the Social Security Administration.

-39 percent of American workers make less than $20,000 a year.

-52 percent of American workers make less than $30,000 a year.

-63 percent of American workers make less than $40,000 a year.

-72 percent of American workers make less than $50,000 a year.

#8 The average duration of unemployment for an unemployed worker is still about twice as long as it was just prior to the last recession.

#9 Most Americans feel as though the Obama administration has done little to nothing to help the middle class. Just consider the following poll numbers.

According to a new poll by the Pew Research Center, Americans see government policies under the Obama administration as having mostly benefited wealthy people, large corporations and financial institutions.

Seventy-two percent of respondents said government policies have done little or nothing to help the middle class, and 65 percent said they have done nothing to help the poor. Sixty-eight percent said the policies have done nothing to help small businesses.

Meanwhile, 45 percent said the policies have done a “great deal” to help large banks and financial institutions, 38 percent say they have helped large corporations, and 36 percent say they have helped the wealthy.

#10 If the unemployment rate was calculated honestly, we would all be talking about the horrific “unemployment crisis” that we were currently enduring. According to John Williams of shadowstats.com, the real unemployment rate in the United States right now is above 23 percent.

Our politicians and the mainstream media are attempting to convince us that everything is just fine.

But what they are telling us simply does not match the cold, hard reality on the streets.

And since the talking heads on television are proclaiming that we are nearly at “full employment”, that just makes millions upon millions of Americans that can’t seem to find work no matter how hard they try feel even worse than they already do.

If jobs are “easy to get”, then those that are chronically unemployment must have “something wrong” with them. That is the message that we are being given. If the mainstream media says that unemployment has gone way down, then anyone that is still unemployed must be really “lazy”, right?

When you are unemployed for an extended period of time, it can really suck the life right out of you. It can be really tempting to believe that you are viewed as a failure by your family and friends. And for the government to lie to us like this just makes things even harder.

If you are unemployed and can’t find a job right now, I want you to understand that you are caught in the midst of a long-term downward economic spiral which is going to get a lot worse.

When the government tells you that we are in a “recovery”, they are lying to you.

And when the government tells you that things are about to get a lot better, they are lying to you.

Everyone has times in their lives when they get knocked down.

The key is to always get back up and to never, ever stop fighting.

Yes, we are facing some really hard economic times. But that does not mean that your life is over. Never give up, and never give in to fear. Just do what you can with what you have today, and tomorrow get up and fight with everything that you have got.

The truth is that the best chapters of your life could be just around the corner.

Just don’t sit back and wait for the government to save you. If you are waiting for the government to save you, then you are going to be deeply disappointed.

The post Nearly At ‘Full Employment’? 10 Reasons Why The Unemployment Numbers Are A Massive Lie appeared first on The Economic Collapse.

Sometimes All You Need Is War

HMS Queen Mary Exploding @ Jutland Battle. Traumatizing Churchill?

“All You Need Is Love” is worse than hypocrisy. It is the wrong strategy, especially in the worst cases:

War is not fashionable among moral exhibitionists. However, as the Romans noticed more than 2,000 years ago, those who really love peace, prepare for war (Si Vis Pacem, Para Bellum).

After the dictatorship of Kaiser Wilhelm II suddenly attacked the world on August 1, 1914, Earl Grey the British Foreign Minister, went to the Commons, and made an excellent speech about joining the war to defend civilization. Bertrand Russell, the philosopher, understood none of it (because like Keynes, or the Kaiser, Russell was on the plutocratic side).

War can be a horrible thing. Even for warriors.

Sometimes, The Ends Justify The Means

Nazis Hid Such Pictures, Islamists Gloat About Them

Putin’s Reich, like Hitler’s Reich, can be thoroughly surrealistic.

Russia captured an Ukrainian army pilot, a well-known woman who served against in the Middle East. That an Ukrainian combat helicopter pilot ended in a cage in Russia is even stranger: did Ukraine invade Russia? No. Did Russia invade Ukraine? How else does Putin capture famous Ukrainian pilot (and then accuse her of “murder”).

Meanwhile, all over the Middle East, The Islamists bulldoze the past, as it proves that their so-called Prophet was just an analphabet raider who came thousands of years after the invention of civilization and secular law, in exactly the same place. The advantage, is that they show Islamist ideology for what it is. Here is how Islam conquered the Middle East (please refer to the picture.)

Quantum Metaphysics Unavoidable

Down In Hell, Electrons Collide, Convection Goes Up

Quantum everything is unavoidable, because the world is Quantum.

When a non-Quantum explanation is advanced it has to be simple enough to be clearly non-Quantum. Yet, much that was thought to be very simple, turns out to be Quantum!

QUANTUM EFFECTS SHIELD LIFE ON EARTH:

Here is an example: the magnetic shield protecting which protects life originates, everybody agrees with something more or less molten iron at more or less the temperature of the surface of the Sun, does below our feet. However, researchers at the Universities of Washington Rutgers, Carnegie just revealed that some “Quantum correlations between electrons” were crucial. It helps generate twice the thermal convection that theory neglecting electron to electron scattering had found (the theory from 1930 had neglected the effect).

Who Needs Spanking? France, or Europe?

Truth: France Less Corrupt That Sweden

There is, in the Anglosphere, a systematic bias against the French Republic. The latest: an English organization “APPROACH” got France condemned by the “Council of Europe for the tortures allegedly inflicted in France on French children by sadistic French parents.

France, presently at war in several countries, just scoffed: the mood in France at this point is that there was not enough discipline, and too much laxity. No other country in the world is as obsessed by its own children as France. (France spends the most of all countries in the world on care and education of her children, until the age of 12, very clearly.)

Then I read a long article in Nature on the connection between corruption and the lack of innovation (the more corrupt a country is, the less innovative). That was also an Anglosphere based article. What struck me was that the article considered France half corrupt, so to speak. Half-way between the most corrupt European countries, and the less corrupt (Sweden). That was in contradiction with official European statistics.