14 Reasons Why The Economy Is About To Burst

Did you know that a major event just happened in the financial markets that we have not seen since the financial crisis of 2008?  If you rely on the mainstream media for your news, you probably didn’t even hear about it.  Just prior to the last stock market crash, a massive amount of money was pulled out of junk bonds.  Now it is happening again.  In fact, as you will read about below, the market for high yield bonds just experienced “a 6-sigma event”.  But this is not the only indication that the U.S. economy could be on the verge of very hard times.  Retail sales are extremely disappointing, mortgage applications are at a 14 year low and growing geopolitical storms around the world have investors spooked.  For a long time now, we have been enjoying a period of relative economic stability even though our underlying economic fundamentals continue to get even worse.  Unfortunately, there are now a bunch of signs that this period of relative stability is about to end.  The following are 14 reasons why the U.S. economy’s bubble of false prosperity may be about to burst…

#1 The U.S. junk bond market just experienced “a 6-sigma event” earlier this month.  In other words, it is an event that is only supposed to have a chance of 1 in 500 million of happening.  Billions of dollars are being pulled out of junk bonds right now, and that has some analysts wondering if a financial crash is right around the corner.

#2 The last time that we saw a junk bond rout of this magnitude was back during the financial crash of 2008.  In fact, as the Telegraphrecently explained, bonds usually crash before stocks do…

The credit market usually leads the equity market during turning points, as happened when credit markets cracked first in 2008.

Will the same thing happen this time around?

#3 Retail sales have missed expectations for three months in a rowand we just had the worst reading since January.

#4 Things have gotten so bad that even Wal-Mart is really struggling.  Same-store sales at Wal-Mart have declined for five quarters in a row and the outlook for the future is not particularly promising.

#5 The four week moving average for mortgage applications just hit a 14 year low.  It is now even lower than it was during the worst moments of the financial crisis of 2008.

#6 The tech industry is supposed to be booming, but mass layoffs in the tech industry are actually 68 percent ahead of last year’s pace.

#7 According to the Federal Reserve, 40 percent of all households in the United States are currently showing signs of financial stress.

#8 The U.S. homeownership rate has fallen to the lowest level since 1995.

#9 According to one survey, 76 percent of Americans do not have enough money saved to cover six months of expenses.

#10 Rumblings of a stock market correction have become so loud that even the mainstream media is reporting on it.  For example, just check out this CNN headline from earlier this month: “Is a correction near? Wall Street on edge“.

#11 The civil war in Iraq is spiraling out of control, and Barack Obamahas just announced that he is going to send 130 troops to the country in a “humanitarian” capacity.  Iraq is the 7th largest oil producing nation on the entire planet, and if the flow of oil is disrupted that could have serious consequences.

#12 As a result of the conflict in Ukraine, the United States, Canada and the European Union have slapped sanctions on Russia.  In return, Russia has slapped sanctions on them.  Will this slowdown in global tradesignificantly harm the U.S. economy?

#13 The three day cease-fire between Hamas and Israel is about to end, and Hamas officials are saying that they are preparing for a “long battle“.  If a resolution is not found soon, we could potentially see a full-blown regional war erupt in the Middle East.

#14 The number of Ebola deaths continues to grow at an exponential rate, and if the virus starts spreading inside the United States it has the potential to pretty much shut down our entire economy.

Meanwhile, things look even more dire in much of the rest of the globe.

For example, the economic slowdown has gotten so bad in some nations over in Europe that they are actually experiencing deflation

Portugal has crashed into deep deflation and Italy’s inflation rate has fallen to zero as the eurozone flirts with recession, automatically pushing these countries further towards a debt compound spiral.

The slide comes amid signs of a deepening slowdown in the eurozone core, with even Germany flirting with possible recession. Germany’s ZEW index of investor confidence plunged from 27.1 to 8.6 in July, the sharpest fall since June 2012, during the European sovereign debt crisis. “The European Central Bank has to act now,” said Andrew Roberts, credit chief at RBS.

And in Japan, GDP just contracted at a 6.8 percent annual rate during the second quarter…

Japan’s economy suffered its worst contraction since 2011 in the second quarter as consumer spending on big items slumped in the wake of a sales tax rise.

Gross domestic product shrunk by an annualized 6.8% in the three months ended June, Japan’s Cabinet Office said Wednesday. The result was actually better than the 7% contraction expected by economists.

On a quarterly basis, Japan’s GDP dropped by 1.7% as business and housing investment declined. Japan’s economy last suffered a hit of this magnitude after the 2011 tsunami and nuclear disaster.

There is no way that this bubble of false prosperity was going to last forever.  It was never real to begin with.  It was just based on a pyramid of debt and false promises.  In fact, the condition of the global financial system is now far worse than it was just prior to the financial crisis of 2008.

Sadly, most people do not understand these things.  Most people just assume that our leaders have fixed whatever caused the problems last time.  And when the next crisis arrives, they will be totally blindsided by it.

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About the Author: The Economic Collapse Blog

  • jumpstart

    Dillie seems to be dilling Goering, and they both are in Marxist heaven. Marx had three goals, Dethrone God, Destroy Capitalism and rewrite history. Keep dilling and goering while rome burns.

  • JohnDille

    GIVEN THE NATURE OF WE HUMAN BEINGS, racial prejudices and blatant discrimination are quite normal. We are ALL descended from people who have murdered and massacred people just because they looked different, acted different, had different religions, followed different political leaders, came from a different economic or social class… OR WHATEVER! Each of us MUST suppress these DEEP hatreds and prejudices, and that is often very hard to do…BECAUSE FOR MANY HUNDREDS OF THOUSANDS OF YEARS, OUR VERY OWN DIRECT ANSCESTORS PRACTICED OUT AND OUT GENOICIDE… AND WE HAVE INHERITED THEIR GENES AND THEIR DEEP SEATED CULTURAL LEANINGS!!! No doubt about it… there are an awful lot of Black folks and Brown folks who really and truly should be taken out and shot… it would make the world a much better place… BUT THERE ARE AN AWFUL LOT OF WHITE FOLKS WHO SHOULD BE TAKEN OUT AND SHOT, ALSO! The BEST that we can all do is to try to get along and selectively cull out the worst people among us… imprison them, execute them, push them off into ghettoes or whatever… NO MATTER WHAT COLOR OR ETHNICITY THEY MAY BE! When we all can unite behind THAT strategy, then we shall have some degree of true racial and ethnic equality… not until! We NEED to have a culture that encourages Black folks to work hand in hand with White folks to get rid of the worst Black folks,,, and the worst White folks! MY DEEPEST WORRY IS FOR THE FUTURE…. WHEN WE SHALL RUN SHORT OF CRITICAL RESOURCES, AND BE IMPOVERISHED BY OVER POPULATION AND BY SHORTAGES OF ESSENTIAL RESOURCES…. THAT WILL MAKE NATURAL NORMAL RACIAL PRESSURES FAR FAR FAR GREATER THAN THEY ARE TODAY… and the grim truth is that MILLIONS of Americans in the future will be rounded up and murdered… in cold blood… simply for being the wrong color or ethnicity or religion or political persuasion. THAT DAY DRAWS EVER NEARER… AND THE RISE OF THE FAR RIGHT IN THIS NATION IS A CLEAR SIGN THAT SUCH A DAY IS CLOSE AT HAND!!! It only took the Nazis about 10 to 15 years to rise from NOTHING to being in total control of Germany and some of its neighbors. THE RISE OF THE FAR RIGHT HERE IN AMERICA TELLS ME THAT THAT PROCESS OF THE EVOLUTION OF A RIGHT WING DICTATORSHIP… AND THE HORRORS IT IS LIKELY TO BRING… MAY WELL HAVE ALREADY BEGUN!!! ON THE OTHER HAND, HOWEVER… THERE IS REALLY NOTHING NEW WITH HAVING THE FAR RIGHT BEING SO POWERFUL IN THIS NATION…. THEY ARE THE SELF CENTERED CRIMINALS WHO STARTED THE CIVIL WAR, AFTER ALL! I am an old man, and I HOPE that I will not live to see that kind of thing happen in my lifetime…. but it will be a race against time… will I kick the bucket BEFORE that kind of nightmare begins…or after? I SEE THIS AS INEVITABLE… NOT A MATTER OF IF… BUT OF WHEN…. BECAUSE IT IS INHERENT IN THE MINDS OF ALL TRUE BELIEVING RIGHT WINGERS, THAT THOSE OTHER PEOPLE… ESPECIALLY BLACK FOLKS… ARE LESS THAN HUMAN, AND THAT IT IS THEREFORE ONLY A MATTER OF HOW BEST TO GET RID OF THEM… NOT AN ISSUE OF WHETHER OR NOT IT IS RIGHT TO GET RID OF THEM!!! Scary thought to serious thinkers like myself!!!

  • Kaspar_Goering

    I lived in Los Angeles during the riots of 1992 that were due to the acquittal of the policemen involved with the Rodney King beating. The circumstances of what Ferguson is going through are different, yet the same in origin. A group can be suppressed for only so long until the pressure becomes released.

    youtube*com/watch?v=JuMlHdxiIZ8

  • JohnDille

    Ever learned of the Great Uprising in American history? What is ironic is that the same town that started it in 1870 is experiencing riots not unlike those of a hundred years ago. It may be that Ferguson Missouri is the future of America. YOU ARE ALMOST SURELY REFERING TO THE GREAT RAILROAD STRIKE OF 1877 THAT SPREAD ALL OVER THE UNITED STATES. ESPECIALLY TO MAJOR CITIES. As for the reference to Ferguson Missouri… THAT is not so clear… Strikers from East St Lois, ILLINJOIS went across the Mississippi River to support strikers in the St Lois area during the uprising, and they very likely moved into or through what is now Ferguson… but back then, it is highly likely that Ferguson itself either did not exist, or was just a small village a dozen or more miles from the strikers activities! AS FOR WHAT IS HAPPENING IN FERGUSON… IF YOU PAY MUCH ATTENTION TO WHAT IS HAPPENING ALL OVER THE USA, THAT STORY IS NJOT REALLY UNUSUAL… Black kids getting killed by police or other White folks is almost common. Sometimes the circumstances are so outrageous that the story goes national… but mostly these incidents make the news only in that area or the Black community that was directly affected. THE ONLY WAY THAT THE INCIDENT IN FERGUSON WILL HAVE ANY REAL LONG TERM NATIONAL IMPACT IS IF THE GENERAL PUBLIC FINALLY WAKES UP TO THE ENDLESS TRAGEDIES THAT ARE THE NORM IN BLACK AMERICA… and given White ignorance of what things are REALLY like in the Black communities of this nation, that is highly unlikely!!! just look at the HATRED of President Obama, and the rapid growth of the far right due to this Presidency, and it should make clear that DEEP racial prejudice and outright hatred is still pretty much the norm in America… and is especially virulent in the Republicans and more Conservative parts of America!

  • Kaspar_Goering

    Here, here! I agree wholeheartedly with you assessment of the actual perpetrators of this quandary that we share. My suggestion of a Global “New Deal” was more of a tongue-in-cheek jab at those propagandized people who insist on supporting the so-called Conservatives while they are going over the cliff that those same Conservatives built for you.

    I belong to no organized political party – I AM a Democrat!

    Your Global perspective describes the conditions that are in America politics as well. As long as the People remain divided the REAL POWER cannot assert it self against the monied powers that be. What America needs is a new Labor Revolution. Ever learned of the Great Uprising in American history? What is ironic is that the same town that started it in 1870 is experiencing riots not unlike those of a hundred years ago.

    It may be that Ferguson Missouri is the future of America.

  • Kaspar_Goering

    Are you suggesting that war with the Nazis is what helped America out of the Great Depression? If that were the case then America should be booming due to the TWO WARS that we just participated in. Actually, according to you, we should be doing 2 times as well with having two wars.

    It was the ‘New Deal” policies of FDR that allowed American industry to survive long enough to be the “arsenal of Democracy” that it was during WW2. Without FDR and the “New Deal” we would be all speaking German.

  • Noel Falconer

    It was Hitler and WW2.

  • JohnDille

    I WOULD BE STRONGLY IN FAVOR OF THAT!!! However… Franklin Roosevelt had tens of millions of angry worried, terrified citizens… and a super majority in Both Houses of Congress, and Democratic control of the large majority of states, to back his New Deal! NOW, DEMOCRATS CANNOT EVEN PASS A MINIMUM WAGE BILL UNLESS THEY DO LIKE THEY DID BACK IN 2009… AND GIVE REPUBLICANS A BUNCH OF IMPORTANT CONCESSIONS!!! And THAT is just here in the USA… If anyone tried to impose a New Deal set of programs on the world at large, the VAST majority of nations would just laugh at the whole effort… BECAUSE THE RICH PEOPLE WHO CONTROL MOST OF THOSE NATIONS WOULD KNOW THAT THEY CONTROL THOSE NATIONS, AND THERE WOULD BE NO WAY THAT THEY WOULD GIVE AWAY MUCH OF ANYTHING TO ORDINARY WORKING PEOPLE… or to any political groups who stand up on behalf of working peoples!!! SILENTLY, QUIETLY, WITHOUT MOST PEOPLE EVEN REALIZING IT, REPUBLICANS AND REPUBLICAN TYPES ALL OVER THE WORLD HAVE ALLIED THEMSELVES AGSINST ORDINARY PEOPLE, AND IN SUPPORT OF GLOBAL CORPORATE FASCISM!!!

  • Kaspar_Goering

    You make a good argument for the enactment of a Global “New Deal.”

  • JohnDille

    WHAT DO YOU CALL A FAILED CAPITALIST SYSTEM??? You call it Communism!!! BOTH WORK ALMOST EXACTLY THE SAME… except that in Capitalism, the people who inherited or successfully stole their wealth are the parasites at the top of the system… while in Communism, the people who inherited their wealth, or who successfully stole their wealth, are the parasites at the top of the system!!! THE ONLY DIFFERENCE IS WHO THE PARENTS WERE, AND HOW THE TOP DOG PARASITES GOT SO WEALTHY AND POWERFUL! In Capitalism, the top dogs got wealthy by SUPPORTING their favorite politicians so they will pass laws that make their various forms of theft legal, while in Communism, the top dogs literally put guns to the head of the politicians, and force them to pass laws that make their thefts legal!!! IN BOTH SYSTEMS, THE PEOPLE WHO DO ALL THE ACTUAL WORK MOSTLY LIVE IN OR NEAR POVERTY… unless they are willing to sell out there fellow workers by going along with whatever scams the parasites at the top are running. COMMUNISTS HAVE THEIR USEFUL IDIOTS… CAPITALISTS HAVE THEIR REPUBLICAN IDIOTS!!!

  • JohnDille

    JOE CABOT JUST CANNOT ADMIT THAT HIS BEING A LIFE LONG REPUBLICAN HAS BEEN A BLUNDER…. SO HE KEEPS INSISTING… AND INSISTING… AND INSISTING… THAT DEMOCRATS AND REPUBLICANS ARE THE SAME BUNCH OF LOSERS… THAT THEY ARE ESSENTIALLY DIFFERENT IN NAME ONLY!!! Joe is probably trans sexual… he thinks men and women are just alike, too… just because we are ALL human beings!!! Or ALMOST ALL human beings… there are a lot of Republicans out there that may well not qualify for membership in our species!!! MAYBE even a few Democrats, too, IF old Joe is right about Republicans and Democrats having at least a few similarities!!!

  • Joe Cabot

    I bet that it feels good to get that democrats are different than republicans mythology off your chest. Kudos to you for admitting the error of your previous ways!

  • Kaspar_Goering

    This report seems to confirm what Marx predicted in his Magum Opus Das Kapital. What many here refuse to acknowledge is the fact that Capitalism has failed many times before. The biggest failure of American style capitalism happened after the stock market crash of 1929. It was the “New Deal” of FDR that actually saved American style Capitalism from its self.

    We may need a “global” New Deal to save capitalism.

  • JohnDille

    38 CONSECUTIVE POSTS FAILING TO RECOGNIZE THAT THE TWO PARTIES ARE NOTHING ALIKE… AND FAILING TO TELL US WHAT THIRD PARTY FANTASIES THA OLD JOE CABOT BELIEVES IN!!! At least old Joe is consistent… and how’s that old saying go… consistency is the hob goblin of small minds… or narrow minds… or something like that!!! SEEMS TO BE TRUE, at least in Joe’s case!!!

  • Joe Cabot

    Two consecutive posts admitting that democrats and republicans are interchangeable! The comrade is coming in from the dark! Oh, and third party fantasies? How about no-party fantasies. Political parties are destructive entities full of lying politicians and supported by rubes who cannot think for themselves.

  • JohnDille

    YOU CAN’T TELL BLATANT SARCASM WHN YOU SEE IT??? Obama HAS gone along with Republican policies… BECAUSE REPUBLICANS REFUSE TO ALLOW HIM TO DO ANYTHING ELSE… or if he manages to do something else… Republicans whine and complain and accuse him of being a dictator… or an evil Black man… or whatever!!! JUST BECAUSE YOU WANT TO HIDE BEHIND YOUR THIRD PARTY FANTASIES… whatever those third party fantasies are… you never tell us… you just sit up on your high horse and bad mouth all us inferior old party loyalists… DOES NOT MEAN THAT DEMOCRATS AND REPUBLICANS ARE EVEN REMOTELY THE SAME… except to the extent that they HAVE to be the same… for obvious reasons… there is only one way to do an awful lot of things!

  • Joe Cabot

    Comrade, it was a given that you would actually get caught up in your own babbling. You have been tossing tantrums for months, blaming everything on republicans and ranting about democrats having this completely different agenda. And, finally you see the error of your ways and admit that Barry O’Bomber and the dems are nothing but the other half of the Big Governement Party, carrying out the same policies regardless of the party platform, aka party lies. Congratulations on seeing the light!

  • JohnDille

    Or rename the article ” 14 reasons why Marxism doesn’t work ” . I bet I can find a high school sophomore with a better grasp of economics than this administration . YEAH… OBAMA HA REALLY BLOWN IT BY JUST GOING ALONG WITH WHAT THE BUSH ADMINISTRATION STARTED, AND WITH WHAT REPUBLICANS HAVE LEGISLATED INTO LAW OVER THE PAST 30 ODD YEARS OR SO!!!

  • chilichild

    Or rename the article ” 14 reasons why Marxism doesn’t work ” . I bet I can find a high school sophomore with a better grasp of economics than this administration .

  • g13man

    ROFL @

    For example, the economic slowdown has gotten so bad in some nations over in Europe that they are actually experiencing deflation

    I mean how dare prics drop so our money can buy more products ..