The Crash Continues...
Click here for Part I. Also as a side note, I've decided to allow comments on this. In Part I i stated that i was closing comments, as my intention was simply to put this out as simply a warning, but I changed my mind. Feel free to discuss, but I've disabled anonymous posting.
Now where were we?
Ah yes...we had just looked at two previous financial crashes in the USA, making the argument that a third is on our doorstep which has so far displayed similar patterns to the previous two. Lets fast forward to today, again eight years since the last crash (keep in mind that the distance between the 2000 and 2008 crash was also 8 years and the fact that the U.S. tends to have a recession every 6 to 8 years). What is the current situation, and how far along are we in the four step pattern I outlined in Part I? Well firstly as I’ve stated, the problem begins when the Federal Reserve starts to raise interest rates while simultaneously lying about it to the general public. The link and video that i posted at the beginning of Part I should now start to make some sense as to why i put them there. Lets take a look at them again. The federal reserve has now decided to raise interest rates for the first time since the last bubble they sought to pop back in 2006 - 2008 (Step 1). They do this, while lying to peoples face about any potential dangers, seen in the video below (Step 2):
(Note: Janet Yellen, the woman in the video, is currently the new head of the Federal Reserve, and in the video she quite clearly claims that there is no bubble in the equity market, which is another term for the stock market)
As per tradition, Janet Yellen, the new head of the Federal Reserve goes on TV and lies to people, saying that the stock market is not overvalued and the U.S. economy is not overhyped. She says this all while former associates who formerly worked at the Federal Reserve are saying that a bubble in the stock/equity markets obviously exists. Again, i link to the recent interview of a former member of the Fed, Richard Fisher (which i posted at the beginning of Part I) stating quite plainly that not only does a bubble exist, it is also set to burst:
This time, the bubble is in corporate debt. Corporations borrowed too much money while interest rates were kept low by the Federal Reserve (ironically, the federal reserve creates the problem, then rushes in as the saviour to “fix” it every time), and now that they are over-encumbered with debt, they are fracturing at the seams.
So steps one and two are already here. What is the step three external shock to the system this time? This time, it’s China. What’s going on in China?
The CSI 300, an index of the country’s biggest stocks, fell by 7%, the worst-ever start to a year for Chinese markets. Small-cap stocks fared even worse, many falling by the daily maximum of 10%. Monday was the first day of operation for new “circuit breakers”—automatic 15-minute pauses in trading whenever the CSI 300 swings up or down by 5%. These are intended to restore calm when the markets are in a frenzy. No such luck: less than ten minutes after trading resumed following the first such pause, the index fell by another two percentage points. That triggered another circuit breaker, prompting a suspension in trading for the remainder of the day.
Since the middle of last year, the Chinese markets have been tanking. China is the second largest economy in the world, so when it falters, we all falter due to the interconnectedness brought about by globalization. The Chinese stock market lost 3.2 Trillion U.S. dollars last year alone. To put that in perspective, the GDP of the whole United Kingdom is only 2.6 Trillion U.S. dollars.
Here’s more information on the crash since the middle of last year:
Some thought that the beginning of this year would be better, and that the crash in China would not affect the U.S. economy. They were wrong. it has been a bloodbath:
China is taking down the world, starting with the U.S.. A whole one trillion dollars has already been lost from the U.S. economy since December of 2015.
Imagine how much damage there will be by the end of the year if the U.S. has already lost $1 trillion in a single month. Now, for those of you sitting comfortably in the UK, Canada, Germany or elsewhere who thinks that this is America’s and China’s problem, I’d think again. Because America is the largest economy in the world, all major world markets follow the U.S. market. Where America goes, so goes the rest of the world. Take a look at this chart of the S&P500, which to remind you is used as a representation of the U.S. economy as a whole:
Notice the pattern and how it seems to have already topped out and begun rolling over (the black area i've circled) into a negative trajectory for 2016. That's the effect China's current catastrophy has already had on the U.S. economy since the beginning of the year, and we aren't even through January yet. Now take a look at the FTSE 100, which is the UK equivalent to the S&P500 in America, except the FTSE looks at the top 100 companies for the UK, which is used to gauge the general health of the UK stock market and economy as a whole. Do you see a familiar pattern?
Yep, they are following the U.S. markets down the rabbit hole too, and they've been following the pattern of the U.S. markets since the year 2000.
What about the Germans? Surely with their powerful industrial capacity, they aren’t following the U.S. to its grave right? Well lets take a look at the DAX, which is the German equivalent to the S&P500
Hmm, okay...guess the germans are out. How about Canada? Surely my fellow Canadians are holding out right? Our economy is said to be one of the soundest in the world, as our banks had managed to stay strong in 2008 unlike those in the USA. Well, lets take a look at the TSX, which is our equivalent to the S&P500.
Since the start of the year, Canada has been down and trending downwards, Germany is down and trending downwards, the UK is down and trending downwards, and pretty much all the major economies in the world are down and trending downwards (if i had more space, i'd show you the charts here), following the same three hill (boom then bust) pattern of the S&P500 in the USA, as they did in 2008 and 2000. When the U.S. crashed in 2000, everyone felt it. When the U.S. crashed in 2008, everyone felt it to an even greater degree. What do you think will happen this third time around? Because of globalization and the interconnectedness of the world economy and trade, we're all essentially in this together.
What is coming is known as a deflationary crash, and this crash is poised to be one of the worst in recorded history, which i don’t have enough space to fully detail as to why here. Thankfully though, there is a great video which explains why this is setting up to be one of the most severe market crashes in recent history. In short, its because a lot of cycles are converging downwards right now, all at the same time. These cycles include the baby boomers retiring, the wealth distribution cycle, the stock market cycle, and other cycles that are beginning a downward momentum
Best/most relevant part starts at 18:40 but i encourage watching of the whole video as it explains everything quite eloquently:
My personal opinion is that given how severe this next chapter in world stability/order is going to look, movements like 3rd wave feminism and BLM are going to have a hard time surviving in my view. Economics trumps everything. The amount of social upheaval this may cause is worrisome, because feminism won't be the only casualty of this. In any case, there are several ways in which you can prepare (and even profit) for what’s coming. Here is a quick rundown:
- Accumulate savings in U.S. dollars. i don't care if you live in Canada, Austrailia or the Eurozone and the exchange rate between your currency and the U.S. dollar is the worst it has ever been. If you think the exchange rate is bad now, wait until your currency falls another 25% against the U.S. dollar. You'll be wishing you had those dollars then.
- Get out of/avoid debt. If you were thinking of taking an auto loan to get a new car, don't. If you were thinking of getting a mortgage to move into your first home/condo, don't. If you have credit card debt, prioritize paying it off before going on that vacation you've been planning for years. Don't sulk, just do it.
- Consider building up a small stockpile of canned food. No need to go full on Doomsday Prepper with this, but there's no harm in having a little stored in the cupboards.
- If and only if you've accomplished #1, #2 and #3, consider buying gold. No, not jewelry. I'm talking investment grade gold bars/coins. i have no time/space to explain why here, but I'll refer you to a previous myTake i wrote where i explain the necessity of it. Search my profile for a myTake i wrote some time ago title "The Age of Men is Over - Part III", and scroll to the bottom half of it for an explanation of gold's key role today.
- If you are savvy with investing and have a brokerage account already, you can attempt to do what I'm doing right now, which is taking some money and buying ETF's on the New York Stock Exchange...in particular, ETF's which go up in value when the markets go down.
Much of what I write is written with this crash scenario in mind, because its something i and others have seen coming for several years now. Some of my previous takes are no exception. The reason why this will be my last myTake for a while is that I'll be very busy working alongside other investors that i collaborate with in order to properly navigate whats coming, and come out the other end winning. A few months ago, I wrote a MyTake titled “Why I believe Republicans like Donald Trump have zero chance of becoming the next president of the USA in 2016” I made an argument based on the recent history of U.S. elections, why someone like Donald Trump had a very uphill battle to fight if he actually wanted to win the general election (i wasn't talking about the republican primary). I had one caveat in it though which i intentionally left there in the event that signs started to show this economic crash began to rear its ugly head. My caveat was that barring a cataclysmic event, Donald Trump would probably loose. This looming crash however is the kind of cataclysmic event that caused Republicans to get curb stomped by Obama in 2008. The economic crash that Bush presided over, which we now know was in part created by the Federal Reserve raising interest rates, cost Republicans that election, and could cost Democrats the 2016 election if it happens on Obamas watch. Donald Trump knows this, which is why in 2015 (unbeknownst to most) he began screaming from the hilltops about how he felt Janet Yellen was intentionally not raising interest rates in order to help the democrats.
Obviously he was wrong, but this take should help elucidate the story behind that debacle between Trump and Yellen last year.
The last video i will leave is one by a prominent guy in the manosphere called Sandman. I make it a point of mine to listen to whats going on in both feminist and male circles, as i believe in the philosophy of listening to all but following none. One day, i was listening to a video he made about his experiences in eastern Europe during its economic collapse, and it succinctly outlines why guys really should stop hyperventilating at the mere mention of feminism, or how seemingly difficult they feel it is to date in today's environment. If you're prepared for what's coming, all other things will come to you. There would be less guys complaining on here if they knew the full extent of what was coming and how to take advantage of it in a way that benefits them. This is why I don't participate much in these gender war issues, as my radar detects bigger fish. My great eye is fixed on Gondor, not the shire. Now note...I am not a MGTOW, MRA and definitely not a feminist, but when i pick up on information that peaks my curiosity from one camp or the other, I take note of it..and you should too:
Need I say more?