22 Red Flags That Indicate That Very Serious Doom Is Coming For Global Financial Markets

"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...."

at http://theeconomiccollapseblog.com/archives/22-red-flags-that-indicate-that-very-serious-doom-is-coming-for-global-financial-markets

Latest Posts: I Am Not Alone! Here are Quotes From 17 Others on Coming Global Financial Collapse John Hathaway: Financial Repression to Continue Even Under the Most Optimistic Scenarios Save 1+ Hours! Read Campbell's Synopsis of, and Comments on, the IMF's 2012 World Economic Outlook Wednesday, April 25th, 2012 | Posted by Editor I Am Not Alone! Here are Quotes From 17 Others on Coming Global Financial Collapse

"Here is a list from Economic Collapse that shows how the stage is becoming crowded with others holding similar outlooks:

#1. Credit Suisse’s Fixed Income Research unit: “We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen…to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.”

#2. Willem Buiter, chief economist at Citigroup: “Time is running out fast. I think we have maybe a few months — it could be weeks, it could be days — before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it.”

#3. Jim Reid of Deutsche Bank: “If you don’t think Merkel’s tone will change then our investment advice is to dig a hole in the ground and hide.”

#4. David Rosenberg, a senior economist at Gluskin Sheff in Toronto: “Lenders are finding it difficult to finance their day-to-day operations with short-term funding. This is a lot like 2008 but with more twists.”

#5. Christian Stracke, the head of credit research for Pimco: “This is just a repeat of what we saw in 2008, when everyone wanted to see toxic assets off the banks’ balance sheets”

#6. Paul Krugman of the New York Times: “At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France.”

#7. Paul Hickey of Bespoke Investment Group: “More and more, we are hearing anecdotal comments from individual and professionals that this is the most difficult environment they have ever experienced as the market is like a fish flopping around after being taken out of the water.”

at http://www.munknee.com/2012/04/i-am-not-alone-here-are-quotes-from-17-others-on-coming-global-financial-collapse/

We Are Witnessing The Largest Financial Bubble In History

"The biggest bubble in human history is in sovereign debt, the obligations of governments around the world. The classic signs of a bubble are present. Despite the fact that virtually all governments are insolvent (the Reality), there exists an almost universal belief that sovereign debt is safe (the Perception). There is a massive gap between reality and perception.

What we hear is that gold, silver and oil are in bubble mania. Nothing could be further from the truth. The perception is so far below the reality that we effectively have a negative bubble. Buyers of these three assets are speculating fools according to the mainstream media. The only thing that is foolish is not holding onto positions and not adding as nominal prices periodically come down.

The bubble is in paper assets, particularly sovereign debt. Historic lows in interest rates mean that prices are at historic highs as rates and prices move inversely. Take into account the solvency factor, and the conclusion is inescapable that such paper assets are in the biggest bubble in history. Sadly, the vast majority of people will not understand this until it is too late and their savings have been destroyed.

The current pricing for gold, silver and energy assets is a gift to those with the ability to look at the facts as presented and take a longer-term view.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/19_We_Are_Witnessing_The_Largest_Financial_Bubble_In_History.html

Percent Job Losses: Great Recession and Great Depression

"The causes of the Great Recession were similar to the Great Depression - as opposed to most post war recessions that were caused by Fed tightening to slow inflation - and I'm frequently asked if we could compare the percent job losses during the two periods. Unfortunately there is very little data for the Great Depression.

Back in February I posted a graph based on some rough annual data.

On Friday, Treasury released a slide deck titled Financial Crisis Response In Charts. One of the charts shows the percentage jobs lost in the current recession compared to the Great Depression.

Click on graph for larger image.

This graph compares the job losses from the start of the employment recession, in percentage terms for the Great Depression, the 2007 recession, and the average for several recent recession following financial crisis.

Although the 2007 recession is much worse than any other post-war recession, the employment impact was much less than during the Depression. Note the second dip during the Depression - that was in 1937 and the result of austerity measures."




at http://www.calculatedriskblog.com/2012/04/percent-job-losses-great-recession-and.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29

Europe on brink of another financial crisis, Darling warns

"Europe is in the eye of an economic cyclone, with a fresh storm about to hit vulnerable countries, the former chancellor Alistair Darling has warned.

Mr Darling, who accurately predicted in 2008 that Britain was on the brink of the worst economic downturn for 60 years, said European Union leaders should not be lulled into thinking that the worst of the eurozone crisis is over.
In a lecture to students at Queen Mary, University of London last week, the Labour MP said the situation in Spain, where the centre-right government is imposing severe budget cuts and a general strike wreaked havoc on Thursday, should trigger alarm bells across the EU.
The French President, Nicolas Sarkozy, claimed last month that following agreement on a fresh EU bailout of Greece, the eurozone was out of the woods. And David Cameron and George Osborne have insisted that Britain's strategy to push on with austerity measures has helped stabilise European economies. By contrast, Angela Merkel, the German Chancellor, has warned that Europe remains in a "fragile situation" and that the crisis is far from over.
Mr Darling told the university's New Labour in Government class: "Part of the problem with Europe is that a lot of them took the view that that this crisis is now behind us, therefore this is a time to visit austerity, whereas the countries who are going to be most hit by austerity [like Spain] are not out of the crisis at all."

at http://www.independent.co.uk/news/uk/politics/europe-on-brink-of-another-financial-crisis-darling-warns-7606256.html

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Marc Faber : The Financial system will be an MF Global where you dont get your money back from the Banks

"Well, I think that every person should own some precious metals as a reserve and as an insurance policy against a complete meltdown in the financial system. And, as you know, we had MF Global. What did the clients get, less than what they had in the company and I think eventually the financial system will be an MF Global where you don’t get your money back from the banks and the investment banks and from the mutual funds and so forth and so on. And, so I think everybody has to think to himself, how do I protect myself against such a black sworn event. Now you have a, say, a life insurance policy and you have a health insurance policy, if you have a health insurance policy and a life insurance policy, you’re not exactly hoping to die and have an accident. But if it happens you have it, and so I would suggest that people own some precious metals..."

at  http://marcfaberchannel.blogspot.com/2012/03/marc-faber-mf-global-and-banks.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28Marc+Faber+Blog%29

The FED Is Creating New Bubbles

New asset bubbles are being fueled by the FED's cheap money policy. It postpones problems in the short-term, but it is sowing the seeds for a bigger crisis.

Financial Repression Has Come Back to Stay

"As they have before in the aftermath of financial crises or wars, governments and central banks are increasingly resorting to a form of “taxation” that helps liquidate the huge overhang of public and private debt and eases the burden of servicing that debt.
Such policies, known as financial repression, usually involve a strong connection between the government, the central bank, and the financial sector. In the United States, as in Europe, at present, this means consistent negative real interest rates (yielding less than the rate of inflation) that are equivalent to a tax on bondholders and, more generally, savers...
 

Public and Private Debt Overhang

Elevated levels of public debt in the United States and elsewhere will probably be the most enduring legacy of the post-2007 financial crises. For the advanced economies, public debts had not approached these levels since the end of World War II.
Figure 1, which traces the evolution of average gross public debt for the 22 advanced economies from 1900 to 2011 demonstrates the magnitude of the policy challenges now facing many (if not most) of these countries. However, these numbers significantly understate the magnitude of the debt surge in recent years by excluding record private borrowing—particularly by banks—which remains a major possible contingent liability of governments.

Figure 1 Gross central government debt as a percent of GDP:
22 advanced economies, 1900–2011 (unweighted averages)

Throughout history, debt-to-GDP ratios have been reduced in five ways: economic growth, substantive fiscal adjustment or austerity plans, explicit default or restructuring of private and/or public debt, a surprise burst in inflation, and a steady dose of financial repression that is accompanied by an equally steady dose of inflation. It is critical to note that the last two option— inflation and financial repression—are only viable for domestic-currency debts (the euro area is a special hybrid case)..."

at  http://www.piie.com/publications/opeds/oped.cfm?ResearchID=2065 

Global Financial Crisis Could Lead to World War III

"Throughout history, major wars have often been triggered by financial crises. So the question is: Will today’s great financial crisis — the worst since the 1930s Depression — lead to World War III? And if so, when?
This is a very important topic for all of us, for a variety of reasons. And naturally, there’s no way I can do it justice in a singe column. Or even in a 400-page book.
But the least I can do is share my research on the subject with you, and more importantly, give you an idea as to whether or not the current financial crisis could lead to a major war, and if so, when."

at http://www.marketoracle.co.uk/Article20287.html

Euro Up but Spain Under Pressure

"For the fifth day, the euro is recording higher highs and higher lows. It has advanced by roughly 3.25% since last Monday’s lows. While we recognize an improved news stream, the main circumstances of the European debt crisis have not gone away. Spain’s challenges are overshadowing Portugal and Greece.
Last week Spain offered bonds for the first time since the Fitch downgrade. The bonds were well received, but at the price of a roughly 50% increase in yields. Spain will be issuing 10- and 20-year bonds on Thursday. The timing could be problematic given two developments today. First, the chairman of BBVA said in a speech today that most Spanish companies and banks have been closed out of the international credit markets. Second, the ECB reported today that Spanish banks borrowed a record 85.6 bln euros from it in May. The second point would lend even more credence to the first point."

at  http://www.creditwritedowns.com/2010/06/euro-up-but-spain-under-pressure.html#ixzz0qrCQALgn

Manipulating the yuan debate dangerous game

"Some members of the U.S. congress are playing a dangerous game by manipulating the Chinese yuan debate for domestic political gains.
These congressmen, prompted by a need to appease American workers frustrated by the loss of millions of jobs in the global financial crisis, and to woo constituencies in elections to be held later this year, are resorting to their old trick of blaming everything on China.
They claim China's foreign exchange policy is costing America jobs and threaten to impose tough trade sanctions against Chinese imports.
But they choose to ignore the fact that an appreciating yuan cannot rebalance Sino-U.S. trade or help create jobs for American workers. Both trade imbalance and high unemployment are deep-rooted economic problems that can only be addressed when the United States implements some painful yet necessary structural reforms.
These congressmen claim they are the white knights defending the interest of the American people, but in fact, they are nothing more than a bunch of baby-kissing politicians trying to swing voters by manipulating the yuan debate.
They only served to divert the public attention from the much more serious domestic economic problems, which are caused in part by their incompetence.
It is really dangerous that these irresponsible remarks, played up by some sensational U.S. media outlets, will inevitably mislead the American public, and poison the atmosphere of Sino-U.S. economic cooperation.
The fact is that China now serves as the third-largest export market for American goods and it will probably become the biggest one sooner than expected. A growing Chinese economy has brought substantial benefits to American workers.
When they are manipulating the yuan debate,these American politicians may make some short-term political gains, but they put the long-term Sino-U.S. bilateral relations in jeopardy."

at http://news.xinhuanet.com/english2010/indepth/2010-06/13/c_13348628.htm

Banks With State Debt Ignore Not-If-But-When Default

"European banking shares indicate a Greek debt default may be just a matter of time.
Investors have already pushed down financial stocks enough to imply the “erosion” in book value that may result from losses tied to a sovereign debt restructuring, said Dirk Hoffmann-Becking, an analyst at Sanford C. Bernstein in London. A Bloomberg index of European financial firms dropped as much as 22 percent since April 15 to the lowest level since July.
A $1 trillion aid package from the European Union and International Monetary Fund may delay a Greek default and give Spain, Italy and possibly Portugal time to get their finances in shape, averting a wider contagion, analysts said. Greece’s debt burden is likely to prove unsustainable, said Thomas Mayer, Deutsche Bank AG’s London-based chief economist.
“Deficit reduction alone doesn’t solve the debt issue,” Mayer said in a telephone interview. He estimates Greece’s debt will rise to 150 percent of gross domestic product following the country’s austerity program, from 120 percent. “Hardly anyone I know believes they can carry it out and still not restructure. This is basically the expectation across all asset classes.”
Writedowns stemming from a Greek default would total almost $200 billion, estimates Jon Peace, an analyst at Nomura Holdings Inc. in London. Banks globally could lose as much as $900 billion in a worst-case scenario where Greece, Ireland, Italy, Portugal and Spain all have to restructure their debt, Nomura estimates.
‘Prisoner’s Dilemma’
Banks holding sovereign debt are faced with a “prisoner’s dilemma,” said Hoffmann-Becking, referring to a mathematical theory that seeks to explain the behavior of two parties that can choose to either cooperate or pursue their own interests.
“From an individual bank’s perspective, it would be great to get rid of the sovereign debt,” Hoffmann-Becking said by telephone. “However, if everybody did it you’d have a rapid collapse of the government bond market and then you’d have the default. And in the default, the fact that you have no sovereign debt actually doesn’t help you at all.”

at http://www.bloomberg.com/apps/news?pid=20601010&sid=aVTX9yKZzdJ4

PONZI Finance Recipe for Economic Catastrophe, Gold Not a Bubble

"The “When hope turns to Fear” moment (See 2010 Outlook “When hope turns to Fear” in Tedbits archives) is unfolding as we speak, as the tides of insolvency sweep over the social welfare states and financial systems of the developed world. It is the next leg down in the global financial crisis and what will come to be known as the greatest depression ever is commencing -- we are fascinated and astonished at what the main stream media is reporting and failing to report.

No amount of PONZI finance or money printing will rescue the Western world from its immorality masquerading as morality..."

at  http://www.marketoracle.co.uk/Article20214.html

Soros Says "Crisis Far From Over, We Have Just Entered Act 2"

"Billionaire investor George Soros said “we have just entered Act II” of the crisis as Europe’s fiscal woes worsen.


“The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.”
Concern that Europe’s sovereign-debt crisis may spread sent the euro to a four-year low against the dollar on June 7 and has wiped out more than $4 trillion from global stock markets this year. Europe’s debt-ridden nations have to raise almost 2 trillion euros ($2.4 trillion) within the next three years to refinance maturing bonds and fund deficits, according to Bank of America Corp.
“When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide,” Soros said.
 
at http://www.zerohedge.com/article/soros-says-crisis-far-over-we-have-just-entered-act-2?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29