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Experts Are Warning That A U.S. Stock Market Crash Is Very Likely In The Months Ahead

This article was originally published by Michael Snyder at The Economic Collapse Blog.

Stock prices are not going to stay this high.  Everyone can see that we are in a stock market bubble that does not have any parallel in all of U.S. history, and everyone can see that the end of that bubble is approaching.

The only debate is about how fast and how far the eventual fall will be.  For the first time ever, the ratio of U.S. stock prices to U.S. GDP has reached 200 percent.  In other words, the total value of U.S. stocks is now twice as high as the value of all U.S. economic output for an entire year.  To get an idea of how crazy this is, just check out this chart.  Historically, the ratio of U.S. stock prices to U.S. GDP is normally under 100 percent, and so if all stock prices were cut in half U.S. stocks would still be overvalued.  That is how extreme this bubble has become.

Other key valuation measures also indicate that stock prices have gotten wildly out of balance.  The following example comes from a Motley Fool article entitled “Here’s Why You Should Expect a 20% Stock Market Crash in 2021”

Looking back 150 years, the S&P 500 has averaged a Shiller P/E of 16.78. Admittedly, the Shiller P/E ratio has been a lot higher over the past 25 years. The advent of the internet has broken down information barriers for retail investors, and historically low lending rates for more than a decade have fueled borrowing and lit a fire under growth stocks.

But as of Feb. 3, the Shiller P/E for the S&P 500 was knocking on the door of 35 — more than double the long-term average. To put this figure into some context, there have only been five periods in history where the Shiller P/E ratio topped 30 and stayed there during a bull market run. Two of these events — the Great Depression and dot-com bubble — led to some of the biggest pullbacks ever witnessed in equities. Two other events (not counting the current move) occurred within the past three years, delivering declines of 20% and 34%, respectively, in the S&P 500.

Basically what this is saying is that if stock prices fell by half, the Shiller P/E for the S&P 500 would still be above the long-term average.

So if the market only falls by 20 percent this year as that Motley Fool article is suggesting, we should consider ourselves to be extremely fortunate.

We have never seen anything like this before.  The bubble that we are in now absolutely dwarfs the epic stock market bubbles of 1929 and 2000.  Stock market mania has gripped the entire nation, and all sorts of people have been getting rich, at least on paper.

But many Wall Street veterans that have been watching all of this transpire have become extremely concerned.  The following comes from a Forbes article entitled “Is The Stock Market About To Crash?”

‘Very, very concerning’ echoes of the 90s dot-com bubble are being heard loud and clear by nervous market experts. A 12-year-old bull market; SPAC mania; IPOs that more than double on the first trading day; an army of amateur traders and GameStop mania. It certainly feels like irrational exuberance–and it triggers alarms for those who remember the dot-com bubble of the late 1990s. “The parallels we have today are historically very, very concerning,” notes Jim Stack, president of Whitefish, Montana’s InvesTech Research and Stack Financial Management. “The current froth is the icing on the cake, and when you look through it, you see a lot of other underlying issues.”

In this sort of environment, videos by kids on YouTube showing people how to make a million dollars by day trading stocks get hundreds of thousands of views.

If you have been able to make a lot of money by playing the stock market, good for you.

Just make sure that you get out in time.

Every other stock market bubble in U.S. history has ended badly, and as John Hussman recently noted, this is our generation’s moment of peak financial insanity…

Nothing so animates a speculative herd as a parabolic price advance in an asset detached from any standard of value. I am convinced that future generations will use the present moment to define the concept of a reckless speculative extreme, in the same way our generation uses “1929” and “2000.”

So just how far does Hussman think the market could ultimately fall?

Well, he believes that stock prices would have to drop 65 to 70 percent just to get back to historical norms…

Understand how extreme current valuations have become. In order to simply touch run-of-the-mill historical valuation norms, the S&P 500 would have to lose somewhere in the range of 65-70% over the completion of this cycle.

Stock prices always, always, always get back to their historical averages eventually.

It is just a matter of time.

However, we should hope that a stock market crash can be put off for as long as possible because a truly catastrophic stock market crash would cause far more economic pain than we have experienced so far.

Our system simply would not be able to handle a decline of 50 percent or more in stock prices.  It would essentially mean the end of our financial system as we know it today, and that is something that nobody should want.

The good news is that I do not expect a stock market crash within the next 30 days unless some sort of major “trigger event” comes along.

Stocks may go down, but for the moment I expect at least a short-term period of relative stability.

But that short-term period of relative stability will not last very long at all, and I fully expect 2021 as a whole to be a very, very painful year.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  By purchasing the books you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse BlogEnd Of The American Dream, and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial, or health decisions.  I encourage you to follow me on social media on FacebookTwitter, and Parler, and anyway that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

The post Experts Are Warning That A U.S. Stock Market Crash Is Very Likely In The Months Ahead first appeared on SHTF Plan – When It Hits The Fan, Don’t Say We Didn’t Warn You.

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The Economy Continues To Unravel Despite All Stimulus Measures

This article was originally published by Brandon Smith at Alt-Market. 

Since the pandemic lockdowns were first implemented in the US I have been more concerned with the government and central bank response than the virus itself. As I have noted in past articles, the pandemic restrictions and subsequent economic and social crisis events they help to create will cause far more deaths than Covid-19 ever will. Not only that, but the actions of the Federal Reserve continue to con the American public into believing that there is some kind of “plan” to stop the crash that THEY engineered.

The only agenda of the Fed is to increase the pain in the long term; they have no intention of actually preventing any disaster.

This is evidenced in comments by voting members of the Fed, including Neel Kashkari who recently argued for the enforcement of hard lockdowns for at least six weeks in the US, all because the US savings rate was going up. Meaning, because Americans are saving more in order to protect themselves from economic fallout, Kashkari thinks we should be punished with an economic shutdown that would force us to spend whatever we have been able to save.

Do you see how that works?

Fed members and government officials demand hard lockdowns, depleting public savings, and destroying small businesses. Then, the public has to beg the Fed and the government for more and more stimulus measures so that they can survive. The people and the system become dependent on a single point of support – fiat money creation and welfare. Yet, the evidence suggests that this strategy is failing to do much of anything except stall the inevitable for a very short time.

If the goal was really to reduce the pain of the pandemic as much as possible, then the strategy should be to keep the economy as open as possible and let the virus run its course.  By initiating lockdowns, all we are doing is extending the economic damage over the span of years instead of months.  We can deal with the comparatively minimal deaths associated with the virus; we cannot handle the disaster that is about to befall the financial system.

The small business sector appears to be the most fragile element of the economy right now. The PPP loans that were supposed to shore up small businesses failed miserably, with data showing only 13% to 19% of applicants getting a loan of any kind. Over 64% of small businesses that received a loan are also worried about being approved for loan forgiveness. In other words, of the few small business owners that got a PPP loan more than half do not have the ability to pay the loan back if they end up not qualifying for an exemption.

This problem does not seem to be affecting the corporate sector, however. International companies are enjoying incredible cash infusions from the Fed through overnight loans as well as Fed stimulus propping up stock markets (at least for now). Tech companies in particular are enjoying a rush of investment as the assumption in the day trading world is that the central bank will not allow these companies to fail.

Maybe they are right, but stock markets today DO NOT reflect the health of our system in any way. Stock tickers are a placebo, a Pavlovian trigger for the public, a tool to make people believe that the situation is improving merely because share values are going up. This is not the case.

Small businesses in the US account for around 50% of all employment and job creation. They are a vital part of the economy. Yet, government and central bank measures seem to have left them out in the cold to die.

To be sure, the $600 weekly unemployment enhancement created through the CARES Act passed in March did boost consumer spending, primarily on durable goods such as computers, TVs, cellphones, etc. Spending on services declined though, which is where the majority of small businesses make their money. And, considering the fact that most durable goods are manufactured overseas, this means that the majority of stimulus dollars that went to consumers did not go into the US economy, but foreign exporters like China.

Now, the unemployment enhancement has ended and its return is in question. It will be interesting to see if the boost to purchases of goods will continue without that extra $600 weekly stimulus. Consumer spending rose in July by 1.9%, but this was already a weak print compared to the increases during the previous two months.

Unemployment numbers have declined due to soft reopenings in numerous states, and at the very least some part-time jobs appear to be returning, but nowhere near the level needed to erase the millions of jobs lost since February after the initial lockdowns began. If you count U-6 measurements and unemployed people who have been removed from the rolls for being jobless for too long, the REAL unemployment rate is closer to 30% of working-age Americans. This is essentially Great Depression levels of joblessness.

US GDP has continued to decline by 32% according to the Bureau of Economic Analysis (despite statistical rigging by the Fed and government agencies), and while it’s possible that stimulus slowed the effects of GDP loss, there is no indication what the trillions of dollars created by the Fed have actually bought other than a few months of time and a massive bubble in the stock market.

The economy cannot survive extreme lockdown conditions for any length of time, let alone almost two more months. And, if you want to know what it means when elites in government and central banking call for a “hard lockdowns”, just look at Level 4 restrictions in places like Australia and New Zealand, where only one person can leave home at any given time, can only travel 3 miles from home and only for food and supplies, and anyone caught not wearing a mask is subject to arrest or a $10,000 fine.

This mother in Melbourne, Australia was arrested because of a Facebook post calling for protests over the lockdown restrictions.  She later had to take the post down and offered an apology, saying she did not know it was illegal to post such statements on social media:

Yeah, this kind of Orwellian response will do wonders for any economic recovery, and this is what Kashkari is calling for in the US.  It’s almost as if the Fed and certain politicians WANT a financial collapse in America…

The REAL solution is to stop the lockdown restrictions altogether. If the goal is truly to protect as many American lives as possible for the “greater good”, then the pandemic response must stop. Luckily, it seems that more and more people are beginning to see through the facade and are rejecting the restrictions. Even in Europe and Australia, there have been some signs of protest and rebellion. The problem is that, at least in terms of the economy, it may be too late.

We have to consider the fact that once a large portion of the business sector (like small businesses) takes a massive hit like the one they have suffered over the past several months, many such businesses and jobs will simply not come back. There are many reasons for this, but primarily it’s a matter of debt. The average small business owner carries almost $200,000 in debt for 3-5 years before he reaches profitability or breaks even. This is assuming that there are no major economic catastrophes in that time.

With the pandemic, the riots, the restrictions, etc., businesses will have to take on much more debt with little guarantee of recovery in the next few years let alone the next few months.  Chapter 11 business bankruptcies in the US rose over 26% in the first half of 2020 alone.

Even if lockdown restrictions were completely eradicated tomorrow, a large number of businesses would go bankrupt anyway.  The “Retail Apocalypse” has been growing over the past decade, LONG before the coronavirus was on issue.  Thousands of businesses shut down last year and tens of thousands more are slated to close this year.   The virus and lockdowns simply accelerated the existing decline.

This is why large banks are cutting off loans to business owners and consumers right now; they know exactly where all this is headed.

Banks act as middlemen for the PPP loans financed by the Fed, yet those loans are not getting to most businesses. Banks have also cut credit card lending in the past few months, and general lending has crashed. All of this despite low interest rates for banks receiving stimulus injections from the Fed. Where is all of the money going? They are keeping it for themselves, buying up hard assets as well as propping up the stock market. As noted above, the elites have NO INTENTION of saving the economy, only themselves.

If the stimulus is not getting to the main-street economy then the only purpose it serves is to give the public a false sense of comfort.  The people who gain the most from the ongoing pandemic chaos are establishment elites that want severe restrictions on personal liberty.  Not to mention, the virus and lockdowns offer a convenient scapegoat for the financial crisis that was already brewing due to central bank mismanagement of stimulus, inflation, and interest rates. The bottom line is, the banks do not want the crisis to end.  Why would they?  The longer the panic continues, the more they benefit.

The post The Economy Continues To Unravel Despite All Stimulus Measures first appeared on SHTF Plan – When It Hits The Fan, Don't Say We Didn't Warn You.

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Fear Of The Coronavirus Has Absolutely Destroyed America’s Future

Very few people are talking about it, and even fewer are bothering to object, but by borrowing and spending so much money our politicians are essentially feeding America’s financial future into a wood chipper.  It took from the founding of our country all the way to 1981 before the U.S. national debt reached one trillion dollars.  Incredibly, we just added more than a trillion dollars to our national debt in less than a month.  On April 5th, we were 23.9 trillion dollars in debt, and by May 4th we were 25 trillion dollars in debt.  Fear of the coronavirus has caused nearly all of our politicians to suddenly become socialists, and we are being told that trillions more in spending may be coming.  This is complete and utter lunacy, and we are leaving future generations of Americans with a mountain of debt that would absolutely crush them.  But of course our society may not even last too much longer at the rate we are going.  For years I have been loudly warning that our absurd national debt is an existential threat to America’s future, but at this point both major political parties have completely abandoned any sense of fiscal responsibility.  Now our national debt is rapidly speeding toward the 26 trillion dollar mark, and the House of Representatives just passed a bill that would borrow and spend an additional 3 trillion dollars that we do not currently have…

Last week, House Democrats unveiled their latest pandemic-relief package. The bill combines aid for families, a bailout for struggling cities and states, and additional funds for testing, tracing, and hospitals. The price tag is about $3 trillion—and it comes just weeks after the president signed an economic-relief package worth about $2 trillion.

Since we are destroying the nation anyway, why don’t we make the grand total a nice round 10 trillion dollars like the progressives at the Atlantic are suggesting?

After all, we added close to 10 trillion dollars to the national debt during the Obama years and hardly anyone seemed to mind.

Of course Trump is trying to outdo Obama.  We have already added more than 5 trillion dollars to the national debt while he has been in office, and it looks like more “coronavirus relief bills” could be on the way.

Yes, borrowing and spending money that we do not have gives us an economic boost in the present.

But it is also money that we are stealing from future generations, and we are systematically destroying the bright future that they were supposed to have.

Since Barack Obama’s first day in the White House, we have been stealing an average of more than 100 million dollars from our children and our grandchildren every single hour of every single day.

And under Trump, that pace has actually increased.

I know that figure is difficult to believe, but run the numbers yourself and you will see that I am correct.

What we are doing to future generations is beyond criminal, and it should make every American deeply angry.

But instead, many Americans are convinced that we aren’t spending enough.

In fact, Mark Cuban believes that the government should be issuing $1,000 checks to each household every two weeks

The federal government has already sent a one-time check of up to $1,200 to millions of American families, but according to Mark Cuban, the stimulus is not enough to offset the economic pain of the coronavirus pandemic.

The billionaire entrepreneur proposed the government issue $1,000 checks to every American household every two weeks for the next two months, with the caveat that the money must be spent within 10 days of receipt or it expires. It would cost about $500 billion, Cuban estimated.

Everybody knows that you should never go full Weimar Republic, but since we are essentially doing that already, why not make it $10,000 for every household every two weeks?

After all, $1,000 doesn’t go as far as it once did.  These days, you can blow $1,000 in a single trip to the grocery store.

Of course I am being facetious.  We are literally watching our leaders destroy everything that all previous generations of Americans fought so hard to build, and it is absolutely infuriating.

At this point even the ultra-liberal Washington Post is admitting that “the national debt is out of control”, but of course the Post also keeps on promoting ultra-liberal spending policies.

We are like a morbidly obese guy that can’t even fit in his own bathtub anymore because he is so addicted to food.  Our addiction is debt, and no matter how loud the warnings get we are just going to keep going back for more.

Ultimately, the only way that the U.S. is going to be able to service this exploding debt is to wildly devalue the currency.  This is the road that the Weimar Republic, Venezuela and so many others have gone down, and it always ends in utter disaster.

Only this time the biggest economy on the entire planet is doing it, and the currency that we are devaluing is the reserve currency of the world.

Sadly, there is no turning back now.  Both political parties are completely committed to this course, and the mainstream media is fully behind them.  In fact, CNN insists that “now is not the time to cut back on the borrowing”.

So when will be the time to cut back on borrowing?

If we need to add trillions to the national debt to deal with a relatively minor crisis like this coronavirus pandemic, what in the world are we going to do when really bad stuff starts happening?

Last November, I was absolutely horrified when our national debt hit the 23 trillion dollar mark.  But by the time this November rolls around, we might be at the 27 or 28 trillion dollar mark.

Unfortunately, we throw the word “trillion” around so much these days that most Americans don’t even realize how much money a trillion dollars actually is.

If you would have been spending a million dollars every single day since Jesus was born, you still would not have spent a trillion dollars by now.

We are talking about an amount of money that is absolutely unimaginable, and we just added that much money to the national debt in less than a month.

Thanks to our free spending politicians and everyone that is supporting them, there is now no future for this country.

We are literally committing national suicide in front of the whole world, but we are so utterly consumed by our addiction that we don’t even realize that we should be deeply ashamed of ourselves.

About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse BlogEnd Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with all many people as we possibly can.

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