Economic collapse approaches
An economic collapse approaches as can be witnessed by numerous signs.
Families are financially stretched
Did you know that more than half of North Americans cannot handle an emergency bill of $400 or more like a car repair, household repair, etc. because they live paycheck to paycheck.
Do you know that 2 out of 3 families keep an average of 3 days of food in their home? This makes them critically dependent on a weak supply chain dependent on credit and just-in-time distribution between growers, shipping, supply warehouses and stores. Our ancestors knew to keep a pantry full for winter.
62% have less than $1,000 in savings and 30% of people report having a zero balance.
All this while we are in a period of expansion!
Yet, there are numerous signs indicating trouble ahead for the world's economies.
P/E ratio and stock index all-time highs
One combination of signs that is telling is the combination of P/E ratio over 25 and a stock market index decline of 10% or more within 40 days of a new all-time high.
The stock market has held a P/E ratio exceeding 25 on a handful of occasions.
1929, 2000, 2004, 2005, 2006, 2007, 2017.
In all past cases, a multiple-month correction has occurred. In some cases, a multiple years declined ensued.
Definition: P/E ratio stands for price per earnings ratio. It is a measure indicating the premium for which a stock is sold. If a company's share price is $28 and each share has $1 in earnings per year then the P/E ratio is 28 [$28/$1]. Normal P/E ratio range 11-14. 2017 P/E currently sits at 28.93.
At time of this writing, the stock market's latest all-time new high is March 01, 2017 at 21,115.
When the stock market declined MORE than 10% within 40 business days of its all-time high, we were in for a significant multiple year decline.
1929-32 [-88%], 2000-02 [-30%, NASDAQ -74%] & 2007-09 [-50%]
When the stock market declined LESS than 10% within 40 business days of its all-time high, any declines were recovered within 12 months and new all-time highs were attained.
2004, 2005 & 2006
In all cases when the P/E exceeded 27.6 and stock index was at all-time new high, the stock market faced a multiple years decline [1929, 2000 & 2007]
In 1929, the high was Sept 3, 1929 and bottom was 45 months later [July 8, 1932].
In 2000, the high was Jan 15, 2000 and bottom was 33 months later [Oct 9, 2002].
In 2007, the high was Oct 9, 2007 and bottom was 18 months later [Mar 9, 2009].
There is concern that any future substantial correction will occur in much less time than in previous corrections due to automated computerization, all-time debt levels, interconnectivity of markets world-wide.
If you are actively in the stock market, do you have an exit strategy?
Paper assets ( bonds, stocks, contracts ) WILL LOSE value.
Bullion [gold, silver] WILL increase in value.
"Since 2010, central banks have been net buyers of gold, driven in part by uncertainty over the future of the international monetary systems and the need to diversify reserves."-World Gold Council
Why have China, Russia, India put together bought more gold per year in past 7 years than is produced yearly and countries like Canada have completely sold off their gold reserves? Fiat currencies based on debt will collapse!
GDP and Recessions
GDP rates of 1.2 or lower are indicators of an approaching recession or in the midst of a recession. Looking at the graph below, the purple line represents 1.2 GDP rate. Whenever 2 consecutive quarters are at or below 1.2, a recession has ensued. It's important to note that when a recession is officially announced, the economy has already been in decline for 6 months.
While the graph is for the USA, other countries are not faring any better. The GDP of many other countries is weak and slowing: Canada 0.9%; Eurozone 0.3%; China 1.8%; Australia -0.5%.
The shaded areas in the graph represent recessions. As we enter 2017, we are entering year 9 since the last recession. Recessions in the USA have occurred between every 2 and 9 years. 2017 is year 9 since last recession. This is currently the 2nd largest growth period only surpassed by 1993-2002.
A bubble occurs when the credit extended exceeds the affordability and asset value by a significant margin.
In 2000, we had a dotcom bubble crash.
The crash that followed saw the NASDAQ market correct by -74.9% and the NYSE by -29.9%.
In 2008, we had a sub-prime credit bubble crash.
The crash that followed this bubble burst saw the NYSE market correct by -50.6%
In 2017, we have a currency bubble, bond bubble, housing bubble, credit bubble, auto loan bubble AND a dangerous derivatives bubble.
Today’s scenario is more toxic than either 2000 and 2008’s “great recession”. Any one bubble that bursts will trigger the others to follow suit and the first consequence is tightening of credit which affects supply chains of bringing goods from growers to stores among other factors. It lowers valuation of assets [houses, cars, stocks] and shrinks available credit causing interest rates to skyrocket making repayment of debt more expensive.
Another harbinger of nearing economic downturn...less commercial credit. The chart below represents credit extended to businesses. We have achieved a peak and a downturn has begun. Compare to 2000 and 2008:
The slope of the downturn of the three peaks is note-worthy. In 2000, it was a gentle 4 year bunny hill slide. In 2007, the downturn was a bit more of a roller coaster slide. This time around, it is starting out as a dropping off of a cliff. Notice too that before each downturn, there is some flattening then one last gasp upwards before turning down...same pattern all three times.
Businesses that pay cash for anything are the exception! Shrinking credit is how banks can kill the economy and currency. Without credit, manufacturers don't build, deliveries don't happen, stores have empty shelves, people get laid off, workers don't get paid, real estate prices drop.
Look for negative effects in the bond market rates and currency devaluation.
Probably most concerning is the derivatives scenario at Deutsche Bank. This German bank has a derivative’s exposure of 72 trillion USD owed to other banks around the globe and it is BROKE! Germany’s GDP is 3.4 trillion per year; compared to 72 trillion DB debt. Deutsche Bank IS many times larger than Lehman Bros and is more broke than Lehman Bros ever was! [Lehman Bros is the American investment bank that was blamed for the 2008 collapse and the resulting $700 billion in bailout money issued by govt.] When Deutsche Bank fails, it will cause shockwaves at many banks in many countries.
Shrinking demand for consumer goods
Demand for consumer goods has been weakening for over 24 months. Singapore, Indonesia, South Korea, Taiwan and China are all experiencing weakening exports. These are the countries that manufacture a lot of the goods sold in retail stores in the Western countries. Less disposable income = less demand which translates into fewer jobs for manufacturing and fewer jobs in retail.
The following charts are additional indicators of worsening economic conditions for american families and the situation is similar in other western countries.
While officials state the economies are growing, these graphs show that the majority of families are worse off.
Spiking student loans, more families on food stamps, federal debt increasing exponentially, central banks printing money, health insurance and taxes increasing, fewer people at full employment and fewer people in the work force, family's have less disposable income and fewer families own their own homes.
All this during a supposed period of expansion. What will happen to these trends when economies of the world worsen and enter a recession? What will happen to individual families?
Take precautions NOW! by buying gold and silver.1
Book of Truth prophecy:
Book of Revelation
Today, in a world that may look battered and bruised because of economic collapse it is easy to believe that things will be okay. Yes, My children, in the past that would be a natural assumption, but not so any more. The plots devised by the core group of organizations, worldwide in every country, joined at the hip of satanic origin, are now ready to spring. Those among you who do not believe in Me, will now, finally understand the prophecies contained in My Father’s Book and the Book of Revelation.2
- January 1st, 2011
These same groups have brought about the collapse of the banking system and will now destroy currencies everywhere. This is so that they can control you.3
- January 1st, 2011
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