One month ago I wrote the article “Economic Warning” and today I am updating it a whole lot. Why? Because I feel there are a number of points that show we are in pretty rough shape economically. That being the case, I want to impress upon you the increased urgency in being prepared for emergencies, disasters and grid-down. All three of those things will happen, some sooner than others.
Read the original Economic Warning article for the background for this article < click here to read article >
Let’s get right to it:
#1 – The big one of course is Greece. Greece has gone into default and is technically bankrupt at this point. It cannot pay its debts. It cannot pay its pensions. It cannot pay the government’s operating expenses. And the worst part is…the Greeks don’t give a damn about it. Actually, last Sunday they voted to stay in debt, to get more loans, and not to pay their financial obligations. And they made it clear that they thought the EU was being mean and harsh.
We need to admit something and then move on to what this really means. The Greek economy and their debt doesn’t directly impact the USA in any noticeable way at all. Not a single bit.
However, the concept of what is happening with them is the bigger picture. Remember, Greece is a socialist democracy, similar to what Obama advocates for here in the US till they can implement full socialism. So the Greeks are representative of all of Europe, they are all social democracies. Social democracies are the “lite” version of Socialism/Communism/Marxism. The problem with Greece is fairly isolated and of little consequence to us, unless another country in the EU follows Greece’s path. If that occurs, we will see a significant problem develop in the US as a result.
#2 – The US stock market is also a red flag. In the last 60 days the market is down 3.5%. In the last 30 days the market has dropped 1.5%. In the last 50 days the market has dropped 4.5%. When you graph that all out you have a steep decline in the graph. The important part is the steep decline started May19th reversing a significant upswing in the market for the previous several years. Bottom line – the market is showing a consistent downward trend that is accelerating. The most disconcerting aspect of the market right now is the wild volatility swings of hundreds of points it is making some days but not every day.
Today (7/7) the market swung from a huge drop to a minor gain, a total of 325 point swing in slightly over four hours. That was nearly a 2% swing in the value of the market in a fraction of a day. That volatility is one of the red flags for me. If it can swing that much in one day, it can drop that much or more on any given day.
#3 – The Chinese stock market is a red flag as well (no pun intended). Yes, the Chinese stock market is an issue here by itself and an even bigger red flag when combined with another event I will touch on in a minute. The stats are this; from mid-March of this year to the end of April the Chinese stock market gain 20% in value. Impressive! However, since June 8th, one month ago when I gave the original Economic Warning, their stock market tumbled 8.5%. But here is a key element to watch, in less than two weeks the Chinese stock market dropped 9% of its value. That is significant!
So how does the Chinese stock market run up 20% in about 45 days, then drop like a rock in the last 45 days? And the chart shows that the drop is not just continuing but accelerating. And that drop is matching the drop in the US stock market. The Chinese government, according to the Wall Street Journal is pumping billions of dollars into their stock market weekly to keep it afloat. What happens when that money stops flowing into the market? And that is exactly what the US government is doing via Quantitative Easing with the Fed. And I ask the same question, what happens when the government quits pumping in all that money and keeping interest rates artificially low?
#4 – On July 6th Pakistan and India do something very unusual. But before I go into that let me remind you that Russia and China have been allies before. However, they really don’t like each other and have fought wars in years past. OK, what does that have to do with Pakistan and India? Both Pakistan and India have joined the Shanghai Cooperation Organization. And who started that organization? China…with Russia along with a couple of the old Soviet “stan” countries.
So what is the big deal? Ah, Pakistan and India are sworn enemies and they hate each other. But yet, they join with Russia and China in a security pact similar to NATO. Don’t you think that is just a bit weird?
Now add into the mix that both Pakistan and India are nuclear armed. And isn’t India a big trading partner with the US? Yes, #13 to be exact…to the tune of $63billion per year. And who do we off-shore a lot of out computer support and computer programming to? India. And who just hacked the federal government computer system? China…now a security pact partner of India.
#5 – Combine the horrible financial conditions that exist in China, and have existed in Russia for more than a couple years now and what do you get? Add into that mix our very rough and unstable economy, and volatile markets here in the US, now what? Every time that world powers have been in these conditions war has erupted. Will that happen this time? I have no idea. But, I wouldn’t bet against a historical track record.
#6 – I mentioned the “rough and unstable economy” here in the US. You do understand that all the economic numbers support that claim, yes? Take just the unemployment numbers alone. Let’s take it one number at a time:
- The number of jobs lost since Obama took office = 7.5 million.
- Additionally, the number of people that have given up looking for work = 3+ million since Obama took office.
- There are fewer people working now than in 2000. But, there are 30 million more people in the country since then.
- There are ZERO new net full-time jobs since Obama took office.
- May ’15 had an increase of 54,000 jobs. But, the number of full-time workers fell by 142,000 that same month. April ’15 dropped 290,000+ full-time workers from the payrolls.
- Last month over 360,000 unemployed people moved into the “long-term unemployed” category. That category of unemployed people is now well over 6 million people. That statistic is important because the long-term unemployed at far more difficult to get employed. So their chances of finding a job drops dramatically.
- The actual “real” unemployment number in the US now stands at 16%. That is worse than during the Great Depression.
- The number of weeks that an unemployed person is actually unemployed is up over 7% just this year alone. That is a huge number.
- The labor force participation rate dropped by another half-million people in June. That means there are 500,000 less people even trying to work or even looking for a job. The current labor force participation rate is the worst its been in 50 years!
That should paint the picture of the US economy right now and how horrifically bad it is. The drop in the stock market, along with its volatility, validates the employment situation. It also verifies the terrible condition of the economy.
So you have the three big boys on the block all in horrible economic condition; China, Russia and the US. What does your gut tell you is going to happen?
Now, what do you do about it?
The same things I’ve been preaching all along. But, at this present time I would make sure I have a stack of cash on hand. The amount is up to you, but I would ensure that I have enough to carry me at least a month of reduced expenses. Maybe, 50 – 75% of your normal household expenses would be sufficient as a starting point.
If you have some extra cash laying around after that, and you have food storage, etc., then I would consider some precious metals. Make sure you read my article on precious metals “Silver & Gold…really?” < click here to read >
Also, and I am going to stick my neck out just a bit, make sure you have your guns & ammo all take care of. You must be able to take care of your family; hopefully the other members of your group as well.
I am starting to feel just a little “hinky” about what I am seeing. No, I have not pushed the panic button…and I won’t. But I feel we are closer to have serious and significant problems in this country than we have had in 50 – 75 years, maybe more. And I will continue to monitor the situation. Believe me, when I think it is SHTF time, or about to be, I will broadcast it long and loud.
Folks, we are in some interesting times to e sure. Right now we have a maniac for a president, we have troubles with China, Russia, Iran and most of the Islamic world. Who else could jump in there against us? Oh, yeah, I forgot…Pakistan and India already did. Weird eh? We must keep our eyes open, we must do those things that will help our families be better prepared for disasters, emergencies and grid-down. Please.
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