With this one I have to include the comments from readers at
The Trading Report so you can get an idea about our economy worldwide; as well as enjoy fresh ideas and insight about the the realities of the collapsing market globally as some are predicting to happen this year. This is what some people say about the whole situation:- “Japanese economy was sideswiped in the early 90’s by artificially low interest rates and excessive money supply which led to bubbling asset prices; when alot you who think the economy is going to be all roses’s the one with the gold and silver will flourish; Maybe you are not aware of the nature of debt, but at some point it must either be paid back, defaulted on, or inflated away: since paying it back is not an option, we will be stuck with #2 or # 3, neither of which will end well.” Enjoy the article……and let us hear from you too, you can comment in the end
By Michael Snyder (The Economic Collapse Blog | Original Link) February 5, 2014
Did you see what just happened in Japan? The stock market of the 3rd largest economy on the planet is imploding. On Tuesday, the Nikkei fell by more than 610 points. If that sounds like a lot, that is because it is. The largest one day stock market decline in U.S. history is only777 points. So far, the Dow is only down about 1000 points during this “correction”, but the Nikkei is down more than 2,300 points. The Nikkei has dropped more than 14 percent since the peak of the market, and many analysts believe that this is only just the beginning. Those that have been waiting for a full-blown stock market collapse may be about to get their wish. Japan is absolutely drowning in debt, their central bank is printing money like crazy and the Japanese population is aging rapidly. As far as economic fundamentals go, there is very little good news as far as Japan is concerned. So will an Asian financial collapse precede the next great financial crisis in the United States? That is what some have been predicting, and it starting to look increasingly likely.
What happened to the Nikkei early on Tuesday was absolutely breathtaking. The following is how Bloomberg described the carnage…
At the end of January 2013, Japanese stocks trailed only Portugal for the biggest rally among developed markets. Now the Nikkei 225 Stock Average is leading declines, slumping 8.5 percent last month and today capping a 14 percent drop from its Dec. 30 peak.
Losses snowballed in Tokyo during a global retreat that has erased $2.9 trillion from equity values worldwide this year amid signs of slower growth in China and stimulus cuts by the U.S. Federal Reserve.
As Bloomberg noted, much of the blame for the financial problems that we are seeing all over the planet right now is being placed on the Federal Reserve.
The Fed created this bubble by pumping trillions of fresh dollars into the global financial system, and now they are bursting this bubble by starting to cut off the flow of easy money.
This is something that I warned would happen when the Fed decided to taper, and now RBS is warning of a “market bloodbath” unless the Federal Reserve immediately stops tapering.
Most Americans simply do not realize that our financial markets no longer resemble a free market system. Instead, they are highly manipulated and distorted by the central banks, and the trillions of dollars of “hot money” that the Fed has poured into the global financial system has infected virtually every financial market on Earth…
On Wall Street they call it “hot money”—that seemingly endless flow of cash that goes to the most profitable country du jour—but in the real economy it’s gone cold.
That hot money has come mostly in the form of a low-yielding U.S. dollar, which investors have borrowed en masse to fund investments in other higher-yielding currencies across the globe. The so-called carry trade has helped fuel an investment bonanza across the world that has boosted risk assetsthanks primarily to the U.S. Federal Reserve’s easy-money policy.
But with the Fed tiptoeing away from what initially was an $85 billion-a-month infusion of liquidity, investors are beginning to prepare themselves for a world of rising rates in which the endless cash flow to emerging market economies begins to ebb, then cease.
We never fixed any of the fundamental problems that caused the last financial crisis. Instead, the Fed seemed to think that the solution to any problem was just to create more money.
It was an incredibly stupid approach, and now our fundamental problems are worse than ever as Marc Faber recently noted…
“Total credit as a percent of the global economy is now 30 percent higher than it was at the start of the economic crisis in 2007, we have had rapidly escalating household debt especially in emerging economies and resource economies like Canada and Australia and we have come to a point where household debt has become burdensome on the system—that is, where an economic slowdown follows.”
So what comes next?
Well, unless the Fed or other central banks intervene, we are probably going to have even more carnage.
At least that is what Dennis Gartman, the editor and publisher of “The Gartman Letter”, told CNBC on Tuesday…
“I just think you’re going to have a very severe, very substantive and really quite ugly correction that will probably make a lot of people wail and gnash their teeth before it’s done.”
Other analysts share his pessimism. According to Doug Short, the vice president of research at Advisor Perspectives, the U.S. stock market “still looks 67% overvalued“.
Most sobering of all is what Richard Russell is saying. In his 60 years of writing about financial issues, he has never been “so filled with foreboding regarding what lies ahead”…
I’d be lying if I said that I wasn’t worried about the way things are going. Frankly, I’m truly scared for myself, my family and the nation. I have the sinking feeling that the stock market is on the edge of a crash. If that happens, investor sentiment will turn quickly bearish. And the bear market will start feeding on itself. Ironically, the recent action occurred in the face of almost insane bullishness on the part of the crowd and on the part of investors.
Obviously smart heads and institutional money managers know that the US is semi dead in the water. And all the talk about an improving economy is just wishes and hopes. Bernanke’s dream of a flourishing new economy, improving without the need of the Fed’s help, is an idle dream.
I’ve been writing about the stock market for over 60 years and I can’t remember a time when I was so filled with foreboding regarding what lies ahead. The primary trend of the market, like the tide of the ocean, is irresistible, and waits for no man. What scares me the most in this current situation is that I see no clear island of safety.
You can read the rest of his very disturbing remarks right here.
U.S. stocks may not totally crash this week, this month or even this year, but without a doubt a day of reckoning is coming. As a society, our total consumer, business and government debt is now equivalent to approximately 345 percent of GDP.
The only way that the game can continue is to keep pumping up the debt bubble even more.
Once the debt bubble stops expanding, it will start collapsing very rapidly.
Those that foolishly still have lots of money in the stock market better hope that the Federal Reserve decides to intervene in a major way very soon.
Because if they don’t, there is a very good chance that we could indeed have a “market bloodbath” on our hands.
Join the discussion…at the trading report
george • 20 hours ago
Maybe we could get the taxpayers to give us a 100 million to go on a one week trip and not worry about increasing the debt, or for that matter anything else and we could all take “selfies” of ourselves.
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JohnDille • 20 hours ago
YADA YADA YADA!!! I guess Michael Snyder has never heard of Abenomics, the Japanese version of infinite Quantitative Easing! Right wingers wishing to bash Japan’s effort to get its stagnant economy moving apparently are not aware that it has been stagnant for more than 20 years… so it is about time they try SOMETHING!!! That is especially true because Japan can no longer afford stagnation… it can risk serious economic problems by following Abenomics… or they can risk even more serious economic problems by doing nothing!!! In other words, Japan is in the same situation the United States was a few years ago… when they decided to step in and do the bail out thing and the quantitative Easing thing… as risky as those strategies were… OR THEY COULD HAVE DONE LIKE RIGHT WINGERS WANTED THEM TO DO… and let the whole US economic system collapse!!! Japanese economy was sideswiped in the early 90’s by artificially low interest rates and excessive money supply which led to bubbling asset prices They seem to forget that out there in the REAL world, the solution to the debt problem is inherently simple, though controversial… SINCE ALL THAT DEBT IS JUST PAPER, IF PUSH REALLY COMES TO SHOVE, JUST PUT A MATCH TO THE MOST EXPENSIVE FORMS OF ALL THAT PAPER!!! Let the rich right wingers scream in protest… WE STOLE ALL OF THAT MONEY FAIR AND SQUARE… but driving down interest rates almost to zero is saving the US government and the people of the United States TRILLIONS OF DOLLARS A YEAR IN INTEREST COSTS… SAVINGS THAT WILL BE COMPOUNDED FOR YEARS TO COME IF WE CONTINUE TO FOLLOW THAT STRATEGY!!! In the mean time, let the right wingers howl… THE WIND BLOWS LOUDEST THROUGH AN EMPTY BARN… as my old man used to say!!!
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Paul Dragotto JohnDille • 19 hours ago
why are you blaming the right. it’s the whole damn system. if you have any money in a 401K , or any retirement , get it into gold and silver. when alot you who think the economy is going to be all roses’s the one with the gold and silver will flourish. i’m not a republican nor a deomocrap, i’m an patriot. i stand by the constituiton and the i buy guns and gold.i see inflation every week go up in food price’s and dry goods. when the storm troopers come to take you to a FEMA camp . i’ll be safe with my food,guns, and metals. good luck chuck.
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Joe Cabot JohnDille • 17 hours ago −
Uh, sleepy, maybe you were dozing off, but the stimulus in the USA began during the Bush administration. Called TARP, too big to fail, and corporate bailouts, the lefties were in full howl over the excesses and evil of it all. Now that Barry is in office it suddenly becomes sound economic policy. By the way, the Japanese economy was sideswiped in the early 90’s by artificially low interest rates and excessive money supply which led to bubbling asset prices, which is exactly where we are at today. Maybe you are not aware of the nature of debt, but at some point it must either be paid back, defaulted on, or inflated away: since paying it back is not an option, we will be stuck with #2 or # 3, neither of which will end well. That lesson was taught during the first week of basic economics – you must have been in the barn with your dad that week.
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