If you enjoy watching financial doom, then you are
quite likely to really enjoy the rest of 2012. Right now, red flags are popping
up all over the place. Corporate insiders are selling off stock like there is
no tomorrow, major economies all over Europe continue to implode, the IMF is
warning that the eurozone could actually break up and there are signs of trouble
at major banks all over the planet. Unfortunately, it looks like the period of
relative stability that global financial markets have been enjoying is about to
come to an end. A whole host of problems that have been festering just below
the surface are starting to manifest, and we are beginning to see the
ingredients for a "perfect storm" start to come together. The greatest global
debt bubble in human history is showing signs that it is getting ready to burst,
and when that happens the consequences are going to be absolutely horrific.
Hopefully we still have at least a little bit more time before the global
financial system implodes, but at this point it doesn't look like anything is
going to be able to stop the chaos that is on the horizon.
The following are 22 red flags that indicate that very serious doom is coming
for global financial markets....
#1 According to
CNN, the level of selling by insiders at corporations listed on the S&P
500 is the highest that it has been in almost a decade. Do those insiders know
something that the rest of us do not?
#2 Home prices in the United States have fallen for six
months in a row and are now down 35
percent from the peak of the housing market. The last time that home prices
in the U.S. were this low was back in
2002.
#3 It is now being projected that the Greek economy will
shrink by
another 5 percent this year.
#4 Despite wave after wave of austerity measures, Greece is
still going to have a budget deficit equivalent to about 7 percent of GDP in 2012.
#5 Interest rates on Italian and Spanish sovereign debt are
rapidly rising. The following is from a recent RTE
article....
Spain's borrowing rate nearly doubled in a short-term debt auction as
investors fretted over the euro zone's determination to deal with its
debts.
And Italy raised nearly €3.5 billion in a short-term bond sale today but
at sharply higher interest rates amid fresh concerns over the euro zone outlook,
the Bank of Italy said.
#6 The government of Spain recently announced that its 2011
budget deficit was much
larger than originally projected and that it probably will not meet its
budget targets for 2012 either.
#7 Amazingly, bad loans now make up 8.15
percent of all loans on the books of Spanish banks. That is the highest
level in 18 years. The total value of all toxic loans in Spain is equivalent to
approximately 13 percent of Spanish GDP.
#8 One key Spanish stock index has already fallen by
more than 19 percent so far this year.
#9 The Spanish government has announced a ban on all cash
transactions larger
than 2,500 euros. Many are interpreting this as a panic move.
#10 It is looking increasingly likely that a major bailout
for Spain will be needed. The following is from a recent Reuters
article....
Economic experts watching Spain don't know how much money will be needed
or precisely when, but some are near certain that Madrid will eventually seek a
multi-billion euro bailout for its banks, and perhaps even for the state
itself.
#11 Analysts at Moody's Analytics are
warning that Italy has now reached financially unsustainable
territory....
"Italy is already out of fiscal space, in our estimate." said Moody's.
"Its debt levels relative to GDP already exceed a manageable level. The
manageable limit for Italian 10-year bond yields is estimated at 4.2pc. As of
Wednesday, Italian 10-year yields were 5.46pc."
#12 It is being projected that the Portuguese economy will
shrink by 5.7 percent during 2012.
#13 There is even trouble in European nations that have been
considered relatively stable up to this point. For example, the Dutch
government collapsed on Monday after
austerity talks broke down.
#14 The head of the IMF, Christine Lagarde, says that there
are "dark
clouds on the horizon" for the global economy.
#15 The top economist for the IMF, Olivier Blanchard, recently
made this statement: "One has the feeling that at any moment, things could
get very bad again."
#16 A recent IMF report admitted that the
current financial crisis could lead to the break up of the eurozone....
Under these circumstances, a break-up of the euro area could not be ruled
out. The financial and real spillovers to other regions, especially emerging
Europe, would likely be very large.
This could cause major political shocks that could aggravate economic
stress to levels well above those after the Lehman
collapse.
#17 George Soros is publicly
declaring that the European Union could soon experience a collapse similar
to what happened to the Soviet Union.
#18 A member of the European Parliament, Nigel Farage,
stated during
one recent interview that it is inevitable that some major banks in Europe
will collapse....
There are going to be some serious banking collapses and the impact of
that on some sovereign states, will be serious. I’m afraid we’ve gotten to a
point where we really can’t stop this now. We’re beginning to reach a stage
where however much false money you create, the problem becomes bigger than the
people trying to solve it. We are very close to that point.
When I talk about the threats and the risk that this thing could wind up
in some kind of rebellion, some sort of awful social cataclysm, they (other
European politicians) are now very worried indeed. They will talk to you in
private, but in public, nobody dares utter a word.
I think the deterioration, in the last two or three weeks, in the
eurozone is very serious indeed. It’s the bond spreads in Italy and Spain. It’s
the fact that youth unemployment is now over 50% in some of these Mediterranean
countries.
It’s riot and disorder on the streets. And yet a month ago I was here and
there was Herman Van Rumpuy telling us, ‘We’ve turned the corner. Everything is
solved. There are no more problems with the eurozone.’ What a pack of jokers
they look like.”
#19 The IMF is projecting that Japan will have a debt to GDP
ratio of 256
percent by next year.
#20 Goldman Sachs is projecting that the S&P 500 will
fall by about 11 percent by the end of 2012.
#21 Over the past six months, hundreds
of prominent bankers have resigned all over the globe. Is there a reason
why so many are suddenly leaving their posts?
#22 The 9 largest U.S. banks have a total of 228.72
trillion dollars of exposure to derivatives.
That is approximately 3 times the size of the entire global economy. It is a
financial bubble so immense in size that it is nearly impossible to fully
comprehend how large it is.
The financial crisis of 2008 was just a warm up act for what is coming. The
too
big to fail banks are larger than ever, the governments of the western world
are in far more debt than they were back then, and the entire global financial
system is more unstable and more vulnerable than ever before.
But this time the epicenter of the financial crisis will be in Europe.
Outside of Europe, most people simply do not understand how truly nightmarish
the European
economic crisis really is.
Spain, Italy and Portugal are all heading for an economic depression and
Greece is already in one.
The European Central Bank was able to kick the can down the road a little bit
by expanding its balance sheet by about a trillion dollars over the last nine
months, but the truth is that the underlying problems in Europe
just continue to get worse and worse.
It truly is like watching a horrible car wreck happen in slow motion.
The good news is that there is still a little time to get yourself into a
better position for the next financial crisis. Don't leave yourself financially
exposed to the next crash.
Sadly, just like back in 2008, most people will never even see this next
crisis coming.
So do you have any other red flags to add to the list above? Please feel
free to post a comment with your thoughts below....
