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Warning Signs of an Economic Collapse

The National Debt Clock is shown Monday, Feb. 1, 2010 in New York. President Barack Obama sent Congress a $3.83 trillion budget on Monday that would pour more money into the fight against high unemployment, boost taxes on the wealthy and freeze spending for a wide swath of government programs. The deficit for this year would surge to a record-breaking $1.56 trillion. The Debt Clock is a privately funded estimate of the national debt. (AP Photo/Mark Lennihan)

Obama has previouly stated the he has pulled the economy back from the brink. This is far from truth and quite the opposite. Obama’s economic policies are instead pushing us off the economic cliff. The 13 trillion dollar National Debt is just one of a number of unprecedented warning signs pointing toward an economic collapse. The National Debt is very important, but not the most important on it’s own. There are several other factors that you need to be aware of as well, and here are a few.

First a list from The Economic Collapse Blog: “The U.S. Economic Collapse Top 20 Countdown” June 2010

Gallup’s measure of underemployment hit 20.0% on March 15th.  That was up from 19.7% two weeks earlier and 19.5% at the start of the year.

According to RealtyTrac, foreclosure filings were reported on 367,056 properties in the month of March.  This was an increase of almost 19 percent from February, and it was the highest monthly total since RealtyTrac began issuing its report back in January 2005.

According to the Bureau of Labor Statistics, in March the national rate of unemployment in the United States was 9.7%, but for Americans younger than 25 it was well above 18 percent.

The FDIC’s list of problem banks recently hit a 17-year high.

During the first quarter of 2010, the total number of loans that are at least three months past due in the United States increased for the 16th consecutive quarter.

The U.S. Congress recently approved an increase in the debt cap of the U.S. government to over 14 trillion dollars

The FDIC is backing 8,000 banks that have a total of $13 trillion in assets with a deposit insurance fund that is basically flat broke.  In fact, the FDIC’s deposit insurance fund now has negative 20.7 billion dollars in it, which actually represents a slight improvement from the end of 2009.

The U.S. national debt soared from the $12 trillion mark to the $13 trillion mark in a frighteningly short period of time.

It is being reported that a massive network of big banks and financial institutions have been involved in blatant bid-rigging fraud that cost taxpayers across the U.S. billions of dollars.  The U.S. Justice Department is charging that financial advisers to municipalities colluded with Bank of America, Citigroup, JPMorgan Chase, Lehman Brothers, Wachovia and 11 other banks in a conspiracy to rig bids on municipal financial instruments.

The Mortgage Bankers Association recently announced that more than 10 percent of all U.S. homeowners with a mortgage had missed at least one payment during the January-March time period.  That was a record high and up from 9.1 percent a year ago.

The official U.S. unemployment number is 9.9%, although the truth is that many economists consider the true unemployment rate to be much, much higher than that.

The biggest banks in the U.S. cut their collective small business lending balance by another $1 billion in November.  That drop was the seventh monthly decline in a row.

The six biggest banks in the United States now possess assets equivalent to 60 percent of America’s gross national product.

The total number of banks that have been shut down this year in the United States to a total of 78.

According to a study published by Texas A&M University Press, the four biggest industries in the Gulf of Mexico region are oil, tourism, fishing and shipping.  Together, those four industries account for approximately $234 billion in economic activity each year.  Now those four industries have been absolutely decimated by the Gulf of Mexico oil spill and will probably not fully recover for years, if not decades.

Decent three bedroom homes in the city of Detroit can be bought for $10,000, but no one wants to buy them.

A massive “second wave” of adjustable rate mortgages is scheduled to reset over the next two to three years.  If this second wave is anything like the first wave, the U.S. housing market is about to be absolutely crushed.

The bottom 40 percent of all income earners in the United States now collectively own less than 1 percent of the nation’s wealth.

Here is another  list compilation posted on July 20, 2010 by TheTruthWins.com titled “40 Bizarre statistics that reveal the horrifying truth about the US Economy”

A recent Pew Research survey found that 55 percent of the U.S. labor force has experienced either unemployment, a pay decrease, a reduction in hours or an involuntary move to part-time work since the recession began.

There are 9.2 million Americans that are unemployed but that are not receiving an unemployment insurance check.

In America today, the average time needed to find a job has risen to a record 35.2 weeks.

According to one analysis, the United States has lost 10.5 million jobs since 2007.

China’s trade surplus (much of it with the United States) climbed 140 percent in June compared to a year earlier.

Banks repossessed 269,962 U.S. homes during the second quarter of 2010, which was a new all-time record.

Banks repossessed an average of 4,000 South Florida properties a month in the first half of 2010, up 83 percent from the first half of 2009.

The Mortgage Bankers Association recently announced that demand for loans to purchase U.S. homes has sunk to a 13-year low.

Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.

According to a new poll, six of 10 non-retirees believe that Social Security won’t be able to pay them benefits when they stop working.

Retail sales in the U.S. fell in June for a second month in a row.

Vacancies and lease rates at U.S. shopping centers continued to get worse during the second quarter of 2010.

Consumer credit in the United States has contracted during 15 of the past 16 months.

During the first quarter of 2010, the total number of loans that are at least three months past due in the United States increased for the 16th consecutive quarter.

Things are now so bad in California that in the region around the state capital, Sacramento, there is now one closed business for every six that are still open.

The state of Illinois now ranks eighth in the world in possible bond-holder default.  The state of California is ninth.

More than 25 percent of Americans now have a credit score below 599, which means that they are a very bad credit risk.

According to a U.S. Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015.

Most of the circumstances in these lists have only gotten worse since being posted.

Bank failures this year have hit 109 via FDIC‘s Failed Bank List

According to EconomicPolicyJournal.com in May 2010  32 States were so bankrupt that they had “Borrowed from the Federal Government to make unemployment payments”

MSNBC reports that “The average rate for 30-year fixed loans fell this week to 4.42 percent”

The Congresional Budget Office (CBO) released a very bleak Report on “The Budget and Economic Outlook.” The report is hiding some facts and our editor and fellow blogger Rich Mitchell takes it apart here.

Today’s Department of Labor Report on unemployment benefits showed the number filing for initial claims jumped 12,000  to 500,000.

A Department of Treasury Report shows that in May China got rid of $33 billion worth of US Treasuries. As well as the Oil Exporters & Japan dropping $8.8 billion. This brings China’s total amount of US Treasuries to it’s lowest level since June 2009.

We also have to take note of the actions of George Soros, the Communist billionaire that is known as The man whomade a billion dollars by ” breaking the Bank of England” and has strong ties to Obama.

George Soros dropped almost 50%  of his American holdings and Gold is his primary investment. From Gateway Pundi (August 18th, 2010)t:

Far Left billionaire, democratic donor and Obama supporter, George Soros is bailing out of the US stock market. The value of billionaire investor George Soros’s hedge fund dropped by 42% to $5.1 billion at the end of the second quarter.
Economic Policy Journal reported, via Free Republic:

Billionaire trader and political manipulator,George Soros, is clearly not optimistic. The latest SEC filings are out on the Soros hedge fund, Soros Fund Management.

Between the end of March and the end of June, Soros lowered his stock investments from $8.8 billion to $5.1 billion in the fund, Soros Fund Management.

He sold most of his positions (over 95%) in Wal-Mart, J.P. Morgan Chase and Pfizer.

His biggest position at the end of June was in the gold ETF which accounted for 13% of his equity portfolio at $638 million.

This means that George Soros does not have confidence in the US stock market and instead is buying gold to hedge inflation. In my opinion he is preparing for the economic collapse of the US economy, but not all currency and the gold holdings can be used to buy any surviving currency, or a new global currency.

A bigger warning sign that the market is near collapse is the “Hindenburg Omen” which has preceded previous stock market crashes and been recently observed. The Hindenburg Omen is a collection of statistics, that if observed twice within 32 days have always predicted disaster within the Stock Market.

Heres a video explaining the Hindenburg Omen posted in October of 2007

More on the Hindenburg Omen From MoneyNews.com:

Named after the zeppelin disaster that took place over Lakehurst, N.J., in 1937, the pattern is a “rare but potent” sell signal, said Jay Shartsis, director of option trading at R.F. Lafferty & Co.

For this to be activated, it requires at least 2.2 percent of the market to reach new 52-week highs and 52-week lows on the New York Stock Exchange on the same day, which happened Thursday, suggesting a lack of conviction among investors.

However, it also needs to happen in a rising market, based on certain indicators, including a 10-week moving average of the NYSE Composite, which has to be rising.

Shartsis said the indicator “speaks for itself,” noting that when confirmed by a second occurrence within 36 days, “every crash (since 1985) was preceded by such a signal.”

Other strategists said they hadn’t heard of the indicator, which has been discussed on financial blogs during Friday’s trading.

And from Zero Hedge:

Today we got our first Hindenburg Omen confirmation. The number of new highs was 136, and new lows was at 69 (per the traditional WSJ source). Granted this particular criteria set was a little weak as the 69 is precisely on the borderline for confirmation (the 2.2%), and the new highs number was not more than double the new lows (although it was close). Less gating were the McClellan oscillator which was negative at -83.6, and the 10 week MVA, which rose, which were the two remaining conditions. The first omen was spotted on August 12 – a week later the H.O has been confirmed. The more confirmations, the scarier it gets from a technical perspective, not to mention the conversion into a self-fulfilling prophecy (like every other technical indicator).

Even though, on June 3rd 2009, Ben Bernanke stated to Congress that the Federal Reserve had no plans to monetize the debt, the Federal Reserve has begun to do just that. The Monetization of the debt is the scariest factor pointing to economic collapse and I cannot stress enough how terrible the outcome of this can be.  Even left-wing Huffington Post was taken aback by this move from the Federal Reserve in this post “Federal Reserve Begins Massive Monetization of US Government Debt” (Emphasis mine)

In a step that will be one of the markers on the road to economic and financial catastrophe, the Federal Open Market Committee (otherwise known as the FOMC) of the Federal Reserve, made a bombshell policy decision on August 10, 2010, one fraught with dangerous long-term consequences for the American and global economy.

In a policy being dubbed QE2, the Federal Reserve’s FOMC conceded that the so-called U.S. economic recovery has “slowed,” and required more stimulus from the Fed. However, with federal funds interest rates now effectively at zero, the only aspect of monetary policy left is money printing. Thus, the Federal Reserve, in effect, will use its printing press to buy long-term U.S. government debt.

Of course, that is not how the FOMC is positioning this major escalation in quantitative easing by the Federal Reserve. In the dry, obtuse language that the obscurantists of the Federal Reserve love to engage in, the committee’s official statement said:

“To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The Committee will continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.”

In its first bout of heavy quantitative easing, in the wake of the implosion of the major Wall Street investment banks in the fall of 2008, Ben Bernanke, utilizing his printing press, purchased $1.25 trillion in mortgage-backed securities, and an additional $200 billion in debts owed by so-called government-sponsored enterprises, primarily Freddie Mac and Fannie Mae.

This massive explosion in the Fed’s balance sheet has thus far failed to stimulate economic activity and retard a persistent deflationary recession. All that Bernanke has accomplished has been to create a new asset bubble, this time on Wall Street, with equities exploding in price far beyond their post-crisis lows.

Beyond the Dow Jones index, however, the impact of Bernanke’s balance sheet expansion has been impotent in the face of economic realities, particularly a collapsing labor market and the contraction in consumer demand. The erosion in the M3 money supply, a statistic the Federal Reserve no longer publicly discloses, attests to the failure of its policies.

Now that the Federal Reserve admits, though in its typically obscure linguistic constructs, that a double-dip recession is becoming increasingly likely, Bernanke is going to enter a buying binge of long-term U.S. Treasuries. The hope is that this will stabilize financial markets, and somehow force liquidity into the economy. That, at least is the hope. Given Ben Bernanke’s track record, I would not bank on hope in the infallible judgement of the Federal Reserve and its FOMC.

What is likely to result from the QE2 phase of the Federal Reserve’s disastrous policymaking? In time, sovereign wealth funds will recognize Bernanke’s maneuver for what it is: monetization of the U.S. national debt. When that happens, Treasury auctions will begin to fail, and yields will advance.

This will all put added pressure on the Fed to print even more dollars, and monetize an increasing proportion of the federal government’s debt. This will unquestionably inject liquidity into the U.S. economy. But this Federal Reserve monetary injection will be as beneficial as money printing was in Weimar Germany in the early 1920s, or Zimbabwe more recently.

In deciding on a process that will lead to an ever-growing proportion of the U.S. national debt and yearly budget deficits being monetized by its printing press, the Federal Reserve, under the leadership of itschairman, Ben Bernanke, has taken a fateful step towards irredeemable economic and financial ruin, ultimately convulsing America with a savage, hyperinflationary depression. And, as history teaches us, severe economic depressions bring along other unanticipated consequences, often leading to political and social turmoil and even global war.

The Huffington Post is telling you that this move will destroy our economy in eventual Hyper-Inflation. Again, this is left-wing Obama loving Huffington Post. Monetizing the debt can dire circumstances in the best of times and is outright apocalyptic in the worst. Add all these factors together and our economy is on the road to ruin. We have a president who has no intention of ever stopping or slowing down the spending in accordance with the Cloward-Piven Strategy. The Stock Market is predicted to fold around October by the Hindenburg Omen. Foreign Nations instead of buying our Debt are beginning to sell it off. When they no longer buy our debt, our Credit Rating will be downgraded and the Federal Government will default. The Fed will continue printing money anyway and we will see hyper-inflation like the Weimar Republic and Zimbabwe. Hope for the best but prepare for the worst is the only recommendation I can give.

See Today’s other Conservative Daily News articles for more perspective on the economy:

Welcome to the New Deal. Same as.. The New Deal by Michelle Ray (@GaltsGirl)

Why You Should Care About the CBO Report – Really This Time by Rich Mitchell (@CDNNow)

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  1. [...] via Warning Signs of an Economic Collapse – – Conservative Daily News. [...]

  2. Elizabeth Imbasciati says:

    John, your killing me here. As usual well researched and presented in a well laid out and logical manner. The video is amazing. Where are my golden years” going to? Really really appreciate the work you do

  3. Elizabeth Imbasciati says:

    John, your killing me. Scary stuff. As usual well researched and presented in a logical well thought out format with facts and figures. The video was awesome as well. Guess I can bend over and kiss my goldern years goodby? ROTFLMFAO

  4. [...] This post was mentioned on Twitter by John Smith, John Wilkenson, JOHN SMITH, Patriot!, JOHN SMITH and others. JOHN SMITH said: http://bit.ly/bm1JPR Warning Signs of an Economic Collapse @Dr_Rose @michellemalkin @ADSmithNRA @DougE @gretawire @Conservativeind @AP [...]