Posted: Sat Feb 12, 2011 5:01 pm Post subject: USD/petro dollar Replaced, by new world currency
The US Dollar is in MAJOR Trouble
Feb. 2, 2011 I wrote a piece forecasting the end of the Euro. At that time, I speculated that the Euro would be broken up within the next year.
Then I looked at the US Dollar’s chart.
I've said before that the US Dollar was in BIG trouble, but as of tonight, it's on DEFCON 1 RED ALERT TROUBLE.
As the below chart shows, the greenback needs to rally and rally hard if we’re not going to head into a SERIOUS collapse shortly.
Mexico drops the US Dollar
February 3rd, 2011 Mexico has always considered the US dollar almost a secondary currency to their Peso.
Billions of US dollars spent their way through the Mexican economy in 2009 and 2010.
The Mexican government in September 2010 enacted a new law which basically restricts the use of US Dollars for almost all purchases inside of Mexico.
In early 2010 travelers in Mexico could use US Dollars but under the new law that is no longer an option.
Americans got a shock that US Dollars are no longer accepted.
There has been a rush to sell off US Dollars inside Mexico because the people are sensing a coming financial storm with the
US Dollar and they dont want to be stuck with worthless paper.
IMF calls for USdollar alternative
February 12, 2011 The International Monetary Fund issued a report on a possible replacement
for the USdollar as the world reserve currency. The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system.
The goal is to have a reserve asset for central banks that better reflects the global economy since the dollar is vulnerable
to swings in the domestic economy and changes in U.S. policy.
Gas pump prices highest ever for this time of year
Feb 11, 2011 NEW YORK – U.S. gasoline prices have jumped to the highest levels ever for the middle of February. The national average hit $3.127 per gallon on Friday, about 50 cents above a year ago.
The price is about 6 percent higher than on this date in 2008. The next day, pump prices began a string of 32 gains over 34 days. They rose 39 percent over five months, eventually hitting an all-time high of $4.11 per gallon in July.
Although gas prices are expected to rise, most experts aren't expecting a reprise of 2008, when the price spike forced many drivers to join car pools and trade in gas-guzzling SUVs for fuel-efficient cars.
"It would be a mistake to think we're going to have that all over again," said OPIS chief oil analyst Tom Kloza.
He says oil demand will slide in the U.S. by May, as refineries slow fuel production while they switch to summer blends of gas. World oil consumption also may not rise as much as expected.
And Kloza contends that oil traders are more cautious now, after getting burned when oil plunged to $33 per barrel in early 2009, just six months after hitting $147 per barrel. Even the most bullish traders no longer think they can chase commodity prices higher without risk, he says.
Still, Kloza expects gas to reach $3.50 to $3.75 per gallon this spring because of the usual run-up in prices ahead of the summer driving season. That would mean an increase of 12 to 20 percent from the current level.
Gasoline climbed almost 10 percent since November as oil prices rose because of factors including stronger demand from China, a frigid winter in the U.S. and tension in Egypt, Kloza said.
The price of Brent crude, a key oil contract that also influences U.S. gasoline prices, hit $100 per barrel in January for the first time since 2008.
"It was a perfect storm," said Kloza.
Oil prices retreated Friday after Egypt's President Hosni Mubarak handed over power to the military and left Cairo.
Benchmark West Texas Intermediate crude for March delivery fell $1.15 to settle at $85.58 a barrel on the New York Mercantile Exchange. That's lower than the price on Jan. 25, when the demonstrations in Egypt began.
Investors have been concerned that the anti-government protests over the past 18 days could spread to other parts of the Middle East and disrupt oil supplies. Now that Mubarak has stepped down, the military says it will oversee a democratic transition to a new government.
"The market is getting whipsawed," oil analyst Stephen Schork said. "Everyone is playing the card that stability in Egypt is good for oil" shipments.
In other Nymex trading for March contracts, heating oil fell 1.49 cents to settle at $2.6958 per gallon and gasoline lost less than a penny to settle at $2.4652 per gallon. Natural gas lost 7.6 cents to settle at $3.910 per 1,000 cubic feet.
In London, Brent crude fell 50 cents to settle at $100.94 a barrel on the ICE Futures Exchange.
Hellary Clinton called for ALL 180 ambassadors in the world to come to DC for a closed door meeting.
This is THE first time this has happened where every single ambassador around the globe came to DC for a meeting.
It didn't happen prior to WW1, WW2, 9/11, etc. And NO media coverage.
U.S. gasoline prices jump.
The national average hit $3.127 per gallon on Friday, about 50 cents higher than a year ago.
The rise in gas pump prices has so far outpaced the increases seen in 2008. Gas prices began to soar in late February of that year,
eventually hitting an all-time high of $4.11 per gallon in July.
While the dramatic price rise at the pump brings back memories of three years ago, when price spikes forced many drivers to join car pools and
trade in gas-guzzling SUVs for more fuel-efficient cars, "it would be a mistake to think we're going to have that all over again,"
said OPIS chief oil analyst Tom Kloza. (Yeah right)
Gasoline has climbed since November because of a temporary combination of forces that pushed energy prices higher; including stronger oil demand from China,
a frigid winter in the U.S. and tension in Egypt, Kloza said.
The price of Brent crude, a key benchmark that influences U.S. gasoline prices, hit $100 per barrel in January for the first time since 2008.
"It was a perfect storm," said Kloza.
We Can Not Assume The Dollar Will Retain Its Reserve Currency Status
It has begun. Now we wait for something to bridge the petro-dollar. I doubt gold-backed currency happens
given the historical confiscation of Gold during the Great Depression PLUS the fact that it would actual
benefit China since that's where much of the gold is coming from.
China only has oil due to the deal they made with Russia. We may see a renegotiation of that contract given the severe increase in oil prices that are bound to happen.
OPEC can temporarily increase the oil supply, and may certainly intend to do so given that all of the Middle Eastern countries that supply oil may have similar problems to Libya.
So in the long term, we cannot expect OPEC from the Middle East to supply oil with any certainty.
If the US begins gearing up oil production, that takes time, which will only exacerbate the oil supply, giving them further excuses to raise oil prices.
Certainly if the US states begin claiming bankruptcy, and if we have civil unrest, then you can imagine
the rise in commodity prices as the dollar may become GREATLY DEVALUED.
Lindsey Williams said today (May 6, 2011) that his close sources told him the dollar will be dead by the end of 2012 - it will be around that time when the Arabs in the ME(that bought alot of our T-Bills et al) will be double-crossed b/c when the dollar crashes and the Federal Reserve goes bankrupt, the dollar will be dead, and the Arabs in the ME that were holding some of our T-bills et al won't have a dime left of it.(ie-if I understood this correctly, Henry Kissinger made this deal in the ME in the early 70's)
And he said to pay attention to crude oil now - it's around $108 today, but it will zoom in the near future to $200. This is largely why there's a big crisis in the ME, and like LW predicted, it's going from one ME country to another(started in Egypt, now Lybia, and the next one will be...).
How The U.S. Dollar Will Be Replaced
May 17, 2012 edited
The USDollar is being seen worldwide as a Safe Haven. ITS NOT!!
Americans are slaves of debt now, and do not perceive the change.
The dollar represents America, and a collapse of the currency would suggest a failure of the republic.
YES! We ARE a FAILED REPUBLIC!
The USD has been the world reserve currency. Without this exalted status, its value vanishes.
Backed by nothing but massive and unpayable debt, it sits frighteningly idle, like a time bomb, waiting for the moment of ignition.
The horrifying nature of the dollar is that it is only valuable so long as foreign investors believe that we will pay back the considerable debts - which we CAN NOT PAY BACK!.
We see a tidal wave of destructive debt which Americans are blind to.
Most people do not track forex markets, or debt to GDP ratio, or true unemployment, etc.
These expose the globalist ideology.
Most Americans see a responsible government acting in our best interests. We see totalitarianism, dollar devaluation.
We see immediate dangers of economic events this year, including the exit of some countries from the European Union, and
trade agreements between China and other countries which cut out their reliance on the U.S. dollar.
All of these elements are leading to the end of the Greenback as the world reserve currency.
A new Dollar is underway
Nov 2011 Bob Chapman : ...we broke that story two weeks ago , banks are being told , and I get this right from the people who are at the top of the banking profession not with major banks but with top middle sized sized banks and they go to the FED meetings and they tell me what goes on and they told me that the FED told the Banks to clear safe secure storage because we are getting ready to print a new currency , it's not the Amero it's a dollar probably a different one of what you have already , it's underway , it may not be in the printing stage yet but the plans are there ....because the FED is expecting as is the treasury the the US Dollar is not going to be the reserve currency of the world in about a year and a half may be less .....
In Memory of Robert Chapman
October 16, 1935 - June 4, 2012 Obituary
Robert "Bob" John Chapman, age 76, of Winter Haven, FL (formally of Mexico) died Monday, June 4, 2012 due to pancreatic cancer. He was born October 16, 1935 in Boston, MA the son of John Chapman and Ruth Donley Chapman. Bob was a veteran of the US Army, a writer of a news letter discussing finances and economics and a regular radio commentator discussing politics as well as economics and finances. Most of his working life he served as a stock broker.
Bob is survived by his wife, of 47 years, Judith "Judy" Dabrowski Chapman, son: Robert Michael Chapman, daughter: Jenifer Gillotti and her husband Matt, sisters: Dorothy Trecker and Joan Lotz and 4 grandchildren.
U.S. debt to top 70% of GDP by end of 2012: CBO
5 June 2012 MarketWatch
The U.S. federal debt will exceed 70% of GDP by the end of 2012 - the highest percentage since shortly after World War II - the Congressional Budget Office said Tuesday in a new long-term budget outlook.
The CBO also said that if current laws stay in place, spending on federal health-care programs would grow to nearly 10% of GDP in 2037 from more than 5% now.
Under one scenario considered by the CBO, the debt would reach almost 200% of GDP in 2037.
U.S. posts deficit of $125 billion in May
7 June 2012 The U.S. posted a deficit of $125 billion in May to bring the total federal shortfall to $845 billion through the first eight months of fiscal 2012, according to preliminary data from the Congressional Budget Office.
That's about $80 billion less than the deficit reported at the same time a year earlier.
Spending rose 1% to $306 billion last month, adjusted for changes in the timing of certain payments and the effects of the TARP emergency-relief program in 2011, the CBO said.
The government's tax intake rose 3% to $180 billion in May. The federal fiscal year runs from October to September.
It’s Worth Nuclear War To Save The U.S. Dollar
August 21st, 2012 opinion (not CJ's)
Both parties are driven by the neoconservatives (neocons) who believe that American hegemony over the world is worth nuclear war to accomplish.
In his post, titled, Amerika’s Future is Death, the guy warns readers of fantastic tales circulating American culture,
which are meant to serve as an explanation for the economic and social chaos swirling violently within the U.S.,
including talk of secret Bilderberg meetings, covert plans for a New World Order,
and accusations of a crazy cabal of neocons hellbent on sparking a full-blown WWIII.
The tale continues with an endgame scenario to secure complete U.S. hegemony with an attack upon Iran,
completing a decades-long neocon plan to manhandle the freedom genie back into the bottle.
The only problem is it’s all real, very real. But most Americans are still blind or desensitized to reports of various government agencies procuring
a billion rounds of ammunition; new Army manuals for “Civil Disturbance Operations” (in direct violation of Posse Comitatus);
and acquisitions of ‘sound cannons’, full-body armor and laser equipment design to identify and classify human beings from 164 feet away.
Just as Hitler slowly and insidiously yanked liberties from German citizens for the good of the Third Reich during the 1930s,
the elusive dream of world domination held through a handful of ‘power elites’ entail similar sacrifices of Americans
and the captured U.S. media presstitutes.
647,762,000,000,000 Reasons to Worry: The Derivatives Time Bomb
June 3, 2012 by John Galt
The hits just keep coming and with $647 trillion reasons to worry, aka, the total notional derivatives now outstanding as of Q4 in 2011 per the Bank of International Settlements just released this afternoon and published officially on Monday (click here for the PDF of the full report). The really, really good news is that our Federal Reserve has this completely under control and the trillions of dollars in Credit Default Swaps (CDS) and European Interest Rate Swaps will as always settle without concern. Right?
The Federal Reserve Is Systematically Destroying Social Security And The Retirement Plans Of Millions Of Americans
Last week the mainstream media hailed QE3 as the "quick fix" that the U.S. economy desperately needs, but the truth is that the policies that the Federal Reserve is pursuing are going to be absolutely devastating for our senior citizens. By keeping interest rates at exceptionally low levels, the Federal Reserve is absolutely crushing savers and is systematically destroying Social Security. Meanwhile, the inflation that QE3 will cause is going to be absolutely crippling for the millions upon millions of retired Americans that are on a fixed income. Sadly, most elderly Americans have no idea what the Federal Reserve is doing to their financial futures. Most Americans that are approaching retirement age have not adequately saved for retirement, and the Social Security system that they are depending on is going to completely and totally collapse in the coming years.
Abortion has killed off the workers who were to support SS
Dow drops 100 after Fed official's warning
Sep 25, 2012 NEW YORK A quiet day on Wall Street turned into the worst sell-off in three months after a Federal Reserve official said he doubted the bank's effort to boost economic growth would work.
Charles Plosser, president of the Fed's Philadelphia branch, told an audience Tuesday that the Fed's effort to support the economy would likely fall short of its goals.
The speech probably startled some investors who had faith in the Fed's latest plan, said Jack Ablin, chief investment officer Harris Private Bank. The plan includes buying $40 billion in mortgage bonds each month until the economy improves.
"So many investors have bought into the illusion," he said. "And it was like Plosser pulled up the curtain on the Wizard of Oz."
The Standard & Poor's 500 index lost 15.30 points, its fourth straight decline, to close at 1,441.59. The 1.05 percent drop was the worst for the S&P since June 25.
Quantitative Easing Did Not Work For The Weimar Republic Either
Sep 27, 2012 Did printing vast quantities of money work for the Weimar Republic? Nope. And it won't work for us either. If printing money was the secret to economic success, we could just print up a trillion dollars for every American and be done with it. The truth is that making everyone in America a trillionaire would not mean that we would all suddenly be wealthy. There would be the same amount of "real wealth" in our economy as before. But what it would do is render our currency meaningless and totally destroy faith in our financial system. Sadly, we have not learned the lessons that history has tried to teach us. Back in April 1919, it took 12 German marks to get 1 U.S. dollar. By December 1923, it took approximately 4 trillion German marks to get 1 U.S. dollar. So was the Weimar Republic better off after all of the "quantitative easing" that they did or worse off? Of course they were worse off. They destroyed their currency and wrecked all confidence in their financial system. There was an old joke that if you left a wheelbarrow full of money sitting around in the Weimar Republic that thieves would take the wheelbarrow and they would leave the money behind. Will things eventually get that bad in the United States someday?
Of course we are not going to see hyperinflation in the U.S. this week or this month.
But don't think that it will never happen.
The people of Germany never thought that it would happen to them, but it did.
The following is an excerpt from a Wikipedia article about the Weimar Republic. Take note of the similarities between what the Weimar Republic experienced and what we are going through today....
The cause of the immense acceleration of prices that occurred during the German hyperinflation of 1922–23 seemed unclear and unpredictable to those who lived through it, but in retrospect was relatively simple. The Treaty of Versailles imposed a huge debt on Germany that could be paid only in gold or foreign currency. With its gold depleted, the German government attempted to buy foreign currency with German currency, but this caused the German Mark to fall rapidly in value, which greatly increased the number of Marks needed to buy more foreign currency. This caused German prices of goods to rise rapidly which increase the cost of operating the German government which could not be financed by raising taxes. The resulting budget deficit increased rapidly and was financed by the central bank creating more money. When the German people realized that their money was rapidly losing value, they tried to spend it quickly. This increase in monetary velocity caused still more rapid increase in prices which created a vicious cycle. This placed the government and banks between two unacceptable alternatives: if they stopped the inflation this would cause immediate bankruptcies, unemployment, strikes, hunger, violence, collapse of civil order, insurrection, and revolution. If they continued the inflation they would default on their foreign debt. The attempts to avoid both unemployment and insolvency ultimately failed when Germany had both.
When the Weimar Republic first started rapidly printing money everything seemed fine at first. Economic activity was buzzing and unemployment was very low.
But as the following chart shows, when hyperinflation kicks in, it can happen very quickly. By late 1922, the effects of all of the money printing were really starting to hit the German economy....
Once you start printing money it is really, really hard to stop.
By late 1922, inflation was officially out of control. An article in The Economist described what happened next....
Prices roared up. So did unemployment, modest as 1923 began. As October ended, 19% of metal-workers were officially out of work, and half of those left were on short time. Feeble attempts had been made to stabilise prices. Some German states had issued their own would-be stable currency: Baden's was secured on the revenue of state forests, Hanover's convertible into a given quantity of rye. The central authorities issued what became known as “gold loan” notes, payable in 1935. Then, on November 15th, came the Rentenmark, worth 1,000 billion paper marks, or just under 24 American cents, like the gold mark of 1914.
Hyperinflation hurts the poor, the elderly and those on fixed incomes the worst. The following is an excerpt from a work by Adam Fergusson....
The rentier classes who depended on savings or pensions, and anyone on a fixed income, were soon in penury, their possessions sold. Barter often took over from purchase. By law rents could not be raised, which allowed employers to pay low wages and impoverished landlords in a country where renting was the norm. The professional classes -- lawyers, doctors, scientists, professors -- found little demand for their services. In due course, the trade unions, no longer able to strike for higher wages (often uncertain what to ask for, so fast became the mark's fall from day to day), went to the wall, too.
Workers regularly got wage increases during this time, but they never seemed to keep up with the horrible inflation that was raging all around them. So they steadily became poorer even though the amount of money they were bringing home was steadily increasing.
People started to lose all faith in the currency and in the financial system. This had an absolutely devastating effect on the German population. American author Pearl Buck was living in Germany at the time and the following is what she wrote about what she saw....
The cities were still there, the houses not yet bombed and in ruins, but the victims were millions of people. They had lost their fortunes, their savings; they were dazed and inflation-shocked and did not understand how it had happened to them and who the foe was who had defeated them. Yet they had lost their self-assurance, their feeling that they themselves could be the masters of their own lives if only they worked hard enough; and lost, too, were the old values of morals, of ethics, of decency."
Of course not everyone in Germany was opposed to the rampant inflation that was happening. There were some business people that became very wealthy during this time. The hyperinflation rendered their past debts meaningless, and by investing paper money (that would soon be worthless) into assets that would greatly appreciate thanks to inflation, many of them made out like bandits.
The key was to take your paper money and spend it on something that would hold value (or even increase in value) as rapidly as possible.
The introduction of the Rentenmark brought an end to hyperinflation, but the damage to the stability of the German economy had been done. The German economy went through several wild swings which ultimately resulted in the rise of the ****s. The following description of this time period is from an article by Alex Kurtagic....
The post-hyperinflationary credit crunch was, not surprisingly followed by a credit boom: starved of money and basic necessities for so long (do not forget the hyperinflation had come directly after defeat in The Great War), many funded lavish lifestyles through borrowing during the second half of the 1920s. We know how that ended, of course: in The Great Depression, which eventually saw the end of the Weimar Republic and the beginning of the National Socialist era.
By the end of the decade unemployment really started to take hold in Germany as the following statistics reveal....
September 1928 - 650,000 unemployed
September 1929 - 1,320,000 unemployed
September 1930 - 3,000,000 unemployed
September 1931 - 4,350,000 unemployed
September 1932 - 5,102,000 unemployed
January 1933 - 6,100,000 unemployed
By the end of 1932, over 30 percent of all German workers were unemployed. This created an environment where people were hungry for "change".
On January 30th, 1933 Hitler was sworn in as chancellor, and the rest is history.
So where will all of this money printing take America?
As I wrote about in a previous article, the amount of excess reserves that banks have stashed with the Federal Reserve has risen from about 9 billion dollars on September 10th, 2008 to about 1.5 trillion dollars today....
What is going to happen to inflation when all of those excess reserves start flowing out into the regular economy?
It won't be pretty.
Just consider the ominous words that Philadelphia Fed President Charles Plosser used earlier this week....
"Inflation is going to occur when excess reserves of this huge balance sheet begin to flow outside into the real economy. I can't tell you when that's going to happen."
"When that does begin if we don't engage in a fairly aggressive and effective policy of preventing that from happening, there's no question in my mind that that will lead to lots of inflation."
Oh great. And so what is Bernanke doing?
He is printing up lots more money.
But isn't this supposed to help the economy?
I wouldn't count on it.
According to USA Today, the following is what Plosser says about the effect that QE3 is likely to have on our economy....
We are unlikely to see much benefit to growth or to employment from further asset purchases."
But we will get more inflation, so our monthly budgets will not go as far as they did before.
The other day I was going to the supermarket, and my wife told me that she wanted some croissants. When I got to the bakery section I discovered that it was $4.49 for just four croissants.
If it had just been for me, I would have never gotten them. I am the kind of shopper that doesn't even want to look at something unless there is a sale tag on it.
But I did get the croissants for my wife.
Unfortunately, thanks to Federal Reserve Chairman Ben Bernanke soon none of us may be able to afford to buy croissants.
I still remember the days when I could fill up my entire shopping cart for 20 bucks.
And it was not that long ago - I am talking about the late 90s.
But paying more for food is not the greatest danger we are facing. Bernanke is destroying the credibility of our currency and he is destroying faith in our financial system.
Bernanke may believe that he is preventing the next great collapse from happening, but the truth is that what he is doing is going to make the eventual collapse far worse.
Better get your wheelbarrows ready.
Calif. creates state-run private retirement plan[/size]
Sept 28, 2012 SACRAMENTO - California Gov. Jerry Brown signed legislation Friday that will create the nation's first state-run retirement savings program for private-sector workers, over the objection of critics who said it creates a new liability for taxpayers.
The bill will establish the California Secure Choice Retirement Savings Program for more than 6 million lower-income, private-sector workers whose employers do not offer retirement plans.
The program directs employers to withhold 3 percent of their workers' pay unless the employee opts out of the savings program every two years. It would be administered by a seven-member board chaired by the state treasurer.
State Sen. Kevin De Leon, D-Los Angeles, introduced the bill earlier this year in response to what he called the "looming retirement tsunami" as millions of lower-wage workers face financial hardship in their retirement years. He said the program will act as a supplement to Social Security by offering private-sector workers a portable savings plan with a guaranteed return.
The Last Housing Crash Is Not Even Over But Bernanke Is Already Setting The Stage For The Next One
Federal Reserve Chairman Ben Bernanke is determined to push mortgage rates to record low levels and he is encouraging the banks that the Fed regulates to make home loans more freely. Wait a second - isn't that exactly what caused the last housing bubble? After 9/11, the Federal Reserve slashed interest rates and this caused mortgage rates to steadily fall. Financial institutions were urged to help "expand home ownership" in America, and many of them started making home loans to people who never, ever should have gotten home loans. When mortgage rates started to go back up, millions of families with adjustable rate mortgages discovered that they could not make their monthly payments. Mortgage delinquencies absolutely soared and large numbers of mortgage-backed securities suddenly turned into garbage. So what is the Fed doing about it? The Fed recently announced another round of quantitative easing in which it will buy 40 billion dollars worth of these mortgage-backed securities a month. Essentially the Fed is clearing the bad financial paper out of the system and is creating the conditions for another housing bubble. But will we really fix our problems by going back and doing the same things that got us into trouble in the first place?
The following chart shows how interest rates on 30 year conventional mortgages have declined over the past 30 years. After 9/11, mortgage rates were pushed to ridiculously low levels and that helped create the mess that we are currently in.
So what did the Fed decide to do to fix things? They decided to push mortgage rates even lower....
Warnings That A Massive Stock Market Crash Is Imminent
October 4, 2012
In the financial world, the month of October is synonymous with stock market crashes. So will a massive stock market crash happen this year? You never know. The truth is that our financial system is even more vulnerable than it was back in 2008, and financial experts such as Doug Short, Peter Schiff, Robert Wiedemer and Harry Dent are all warning that the next crash is rapidly approaching. We are living in the greatest debt bubble in the history of the world and Wall Street has been transformed into a giant **** that is based on a massive web of debt, risk and leverage. When that web breaks we are going to see a stock market crash that is going to make 2008 look like a Sunday picnic. Yes, the Federal Reserve has tried to prevent any problems from erupting in the financial markets by initiating another round of quantitative easing, but 40 billion dollars a month will not be nearly enough to stop the massive collapse that is coming. This will be explained in detail toward the end of the article. Hopefully we will get through October (and the rest of this year) without seeing a stock market collapse, but without a doubt one is coming at some point. Those on the wrong end of the coming crash are going to be absolutely wiped out.
A lot of people focus on the month of October because of the history of stock market crashes in this month. This history was detailed in a recent USA Today article....
When it comes to wealth suddenly disappearing, October can be diabolically frightful. The stock market crash of 1929 that led to the Great Depression occurred in October. So did the 22.6% plunge suffered by the Dow Jones industrial average in 1987 on "Black Monday."
The scariest 19-day span during the 2008 financial crisis also went down in October, when the Dow plunged 2,675 points after investors fearing a financial collapse went on a panic-driven stock-selling spree that resulted in five of the 10 biggest daily point drops in the iconic Dow's 123-year history.
So what will we see this year? Only time will tell.
If a stock market crash does not happen this month or by the end of this year, that does not mean that the experts that are predicting a stock market crash are wrong.
It just means that they were early.
As I have said so many times, there are thousands upon thousands of moving parts in the global financial system. So that makes it nearly impossible to predict the timing of events with perfect precision. Financial conditions are constantly shifting and changing.
But without a doubt another major financial collapse similar to what happened back in 2008 (or even worse) is on the way. Let's take a look at some of the financial experts that are predicting really bad things for our financial markets in the months ahead....
According to Doug Short, the vice president of research at Advisor Perspectives, the stock market is somewhere between 33% and 51% overvalued at this point. In a recent article he offered the following evidence to support his position....
● The Crestmont Research P/E Ratio (more)
● The cyclical P/E ratio using the trailing 10-year earnings as the divisor (more)
● The Q Ratio, which is the total price of the market divided by its replacement cost (more)
● The relationship of the S&P Composite price to a regression trendline
Peter Schiff, the CEO of Euro Pacific Capital, has been one of the leading voices in the financial community warning people about the crisis that is coming.
During a recent interview with Fox Business, Schiff stated that the massive financial collapse that we witnessed back in 2008 "wasn't the real crash" and he boldly declared that the "real crash is coming".
So is Schiff right? We shall see.
Economist Robert Wiedemer warned people what was coming before the crash of 2008, and now he is warning that what is coming next is going to be even worse....
"The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation . . . starting in 2012."
Financial author Harry Dent believes that the stock market could fall by as much as 60 percent in the coming months. He is convinced that stocks are hugely overvalued right now....
"We have the greatest debt bubble in history. We will see a worldwide downturn. And when you are in this type of recessionary environment stocks should be trading at five to seven times earnings."
So are these guys right? We shall see.
But I do find it interesting that some of the biggest names in the financial world are currently making moves as if they also believe that a massive financial crisis is coming.
For example, as I have written about previously, George Soros has dumped all of his holdings in banking giants JP Morgan, Citigroup and Goldman Sachs.
Infamous billionaire hedge fund manager John Paulson, the man who made somewhere around 20 billion dollars betting against the U.S. housing market during the last financial crisis, is making massive bets against the euro right now.
So where are these financial titans putting their money?
According to the Telegraph, both of these men are pouring enormous amounts of money into gold....
There was also news last week in an SEC filing that both George Soros and John Paulson had increased their investment in SPDR Gold Trust, the world’s largest publicly traded physical gold exchange traded fund (ETF).
Mr Soros upped his stake in the ETF to 884,400 shares from 319,550 and Mr Paulson bought 4.53m shares, bringing his stake to 21.3m.
At the current price of about $156 a share, these are new investments of about $88m of Mr Soros’ cash and more than $700m from Mr Paulson’s funds. These are significant positions.
So why would they do this? Why would they pour millions upon millions of dollars into gold?
Well, it would make perfect sense to put so much money into gold if a massive financial crisis was coming.
So is the next financial crisis imminent? We will see.
Most "financial analysts" that appear in the mainstream media would laugh at the notion that a stock market crash is imminent.
Most of them would insist that everything is going to be perfectly fine for the foreseeable future.
In fact, most of them are convinced that quantitative easing is going to cause stocks to go even higher.
After all, isn't quantitative easing supposed to be good for stocks?
Didn't I write an article just last month that detailed how quantitative easing drives up stock prices? Yes I did.
So how can I be writing now about the possibility of a stock market crash?
Aren't I contradicting myself? Not at all. Let me explain.
The first two rounds of quantitative easing did indeed drive up stock prices. The same thing will happen under QE3, unless the effects of QE3 are overwhelmed by a major crisis.
For example, if we were to see a total collapse of the derivatives market it would render QE3 totally meaningless.
Estimates of the notional value of the worldwide derivatives market range from 600 trillion dollars all the way up to 1.5 quadrillion dollars. Nobody knows for sure how large the market for derivatives is, but everyone agrees that it is absolutely massive.
When we are talking about amounts that large, the $40 billion being pumped into the financial system each month by the Federal Reserve during QE3 would essentially be the equivalent of spitting into Niagara Falls. It would make no difference at all.
Most Americans do not understand what "derivatives" are, so they kind of tune out when people start talking about them.
But they are very important to understand.
Essentially, derivatives are "side bets". When you buy a derivative, you are not investing in anything. You are just gambling that something will or will not happen.
I explained this more completely in a previous article entitled "The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System"....
A derivative has no underlying value of its own. A derivative is essentially a side bet. Usually these side bets are highly leveraged.
At this point, making side bets has totally gotten out of control in the financial world. Side bets are being made on just about anything you can possibly imagine, and the major Wall Street banks are making a ton of money from it. This system is almost entirely unregulated and it is totally dominated by the big international banks.
Over the past couple of decades, the derivatives market has multiplied in size. Everything is going to be fine as long as the system stays in balance. But once it gets out of balance we could witness a string of financial crashes that no government on earth will be able to fix.
Five very large U.S. banks (including Goldman Sachs, JP Morgan and Bank of America) have combined exposure to derivatives in excess of 250 trillion dollars.
Keep in mind that U.S. GDP for 2011 was only about 15 trillion dollars.
So we are talking about an amount of money that is almost inconceivable.
That is why I cannot talk about derivatives enough. In fact, I apologize to my readers for not writing about them more.
If you want to understand the coming financial collapse, one of the keys is to understand derivatives. Our entire financial system has been transformed into a giant ****, and at some point all of this gambling is going to cause a horrible crash.
Do you remember the billions of dollars that JP Morgan announced that they lost a while back? Well, that was caused by derivatives trades gone bad. In fact, they are still not totally out of those trades and they are going to end up losing a whole lot more money than they originally anticipated.
Sadly, that was just the tip of the iceberg. Much, much worse is coming. When you hear of a major "derivatives crisis" in the news, you better run for cover because it is likely that the entire house of cards is about to start falling.
And don't get too caught up in the exact timing of predictions.
If a stock market crash does not happen this month, don't think that the storm has passed.
A major financial crisis is coming. It might not happen this week, this month or even this year, but without a doubt it is approaching.
And when it arrives it is going to be immensely painful and it is going to change all of our lives.
I hope you are ready for that.
* U.S. cannot ease debt burden by "surprise" inflation - Bullard
* Says investors signal they think Fed may allow inflation above 2 pct
* Inflation would impose costs on savers, higher interest rates in future
Will The Chinese Renminbi Replace The U.S. Dollar As The Primary Reserve Currency Of The World?
October 7, 2012 Most Americans have no idea what a tremendous advantage the United States possesses by having the primary reserve currency of the world, and most Americans also have no idea how close the U.S. dollar is to losing that status. For the past 40 years, the vast majority of all global trade (including the buying and selling of oil) has been done in U.S. dollars.
That is still the case today, but things are starting to shift. All over the globe, international agreements are being made to move away from the U.S. dollar and to use other currencies in global trade. The second largest economy in the world, China, has been particularly aggressive in seeking to change the existing financial order. As you will see below, China has been running all over the planet making agreements with other nations to start conducting an increasing amount of trade in currencies other than the U.S. dollar. And of course the Chinese are heavily promoting their own currency - the renminbi.
So why is this happening? Well, for one thing, the truth is that the United States is not the only superpower in the world anymore. The Chinese economy is actually projected to become larger than the U.S. economy by 2016, and by some measurements the Chinese economy is already larger. So Chinese leaders have been very open about the fact that they believe that it just doesn't make sense that the vast majority of all global trade should continue to be conducted in U.S. dollars, especially considering the reckless money printing that the Federal Reserve has been doing. At a time when the status of the U.S. dollar is already slipping, QE3 is deeply undermining confidence in U.S. currency.
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