The week that was… and a new forecast by Celente

On Friday during V’s weekly program we got to discuss a little bit about the week that was, and the parallels that are quickly emerging that make right now eerily similar to the middle period between the all-time high of October 2007, and the following months that would lead to the stock market crash, credit crisis, and death of several financial institutions exactly one year later.  But unlike what happened following that fateful period just seven years ago, central banks around the world appear impotent to have any effect to change what is coming, and have spent their ammunition simply trying to keep an insolvent market system operational to the detriment of the rest of the general economy.
Seven straight days of decline in the Dow with the major index now down 1000 points from its all-time high.

Similar to what took place in the stock market a few months after it reached a new all-time high in October of 2007, the market is running the same parallel track after reaching a much greater all-time high in May of this year.  And since that time when the Dow touched 18,350 just three months ago, it has now dropped over 1000 points, and doesn’t appear to be slowing down in decline anytime soon.

Dow Chart
Dow Chart

Graphic courtesy of Zerohedge

Meanwhile, in this same period home ownership has declined to levels not seen since 1977, and workers no longer counted in the unemployment roles and no longer in the labor market are at 93.8 million, which is a number that also has not been seen in nearly four decades.

China stock market down over 35% in the last four weeks.

When the 2008 October crash took place, it started in Asia and migrated through Europe before reaching U.S. markets.  And over the past 30 days we have seen the PBOC have to infuse several hundred billion Yuan into their ‘bubble’ equity markets just to keep a complete panic from spreading pver into the civilian population.  In addition to this, China has dumped over $560 billion of its dollar reserves which indicate that a continued decline in their economy will be addressed with a combination of stimulus from China’s central bank, and through the conversion of treasuries that the Fed must mop up through its offshore BLICS coalition.

Chinese stock market declines
Chinese stock market declines

France enters in with the PIIGS (Now PFIIGS)

‘The debt levels which the country has are as unsustainable as Britain’s, yet its policies are more irresponsible and its remedies more restricted. Although it is considered a core country in the eurozone, France’s economic profile now bears more resemblance to Greece’s [than] Germany’s.

‘Public debt in France is at 86.1pc of GDP (146pc if ECB liabilities and bank guarantees are included). The projected budget deficit this year is 4.5pc, with France having exempted itself from the EU’s instruction to bring deficits down to 3pct by the end of the year.

‘These numbers are not unusual in the context of eurozone economies in general. What distinguishes France is the lack of political will to address them and, as a consequence, a projected debt to GDP ratio which would place it firmly amongst the PIIGS grouping…’ – The Telegraph via The Daily Reckoning

Gerald Celente goes all in and forecasts market crash or collapse before the end of the year

Leading Trends Forecaster Gerald Celente is well known for keeping up to date information on all kinds of economic trends, but only rarely does he put his reputation on the line and put a timeline to his forecasts for coming events.  However, when he does he has been correct going all the way back to the 1987 stock market crash, the collapse of the Dot Com bubble, and more recently, the collapse of the markets in 2008.  And on Aug. 8, Celente added a new prediction that he believes will manifest before the end of 2015.

Eric King: Let’s start off with the stock market because you want to make an announcement on King World News with a prediction.

Gerald Celente: Rarely do I ever put a date on market crashes. I did it in 1987… I forecast the 1987 stock market crash which was in the Wall Street Journal. The Panic of 08 and as everyone knows we took out the domain name in 2007. The Dot Com bust we did in October of 1999, and said it would fail in the second quarter of 2000. All of those are documented on our website,Trendsresearch.com on the forecast page.

Yet I got it wrong when I believed following the Panic of 08 we’d have the big collapse in 2010. I had no idea they would invest a thing called Quantitative Easing. I had no idea they would keep zero percent interest rates as a matter of policy that still exists today.

However, I’m ready to forecast now that between now and the end of the this year… the end of 2015, we are going to have panic on Wall Street. And there is going to be panic of the streets (more than Wall Street). The bottom has fallen out and they’re only keeping ponzi alive with this monetary methadone that’s no longer able to fix his habit. – King World News interview, Aug. 8

Surrounding all of these events like a glove is the deflation that is occurring in the energy and commodities sector.  No longer can central banks create any type of inflation through their Quantitative Easing and money printing as there are few assets left that they can buy or monetize.  And with the amount of money needed to create just $1 of growth ranging as high as $4 of newly printed fiat, the days of central bank influence in the economy has long since reached the point of diminishing returns.  Which makes any proposed rate hikes a death knell to the entire economy since all that would happen would be a crash in the markets, defaults in the debt markets, and an decrease in liquidity that is already happening despite hundreds of billions of dollars still being created in the U.S., Europe, China, and Japan.

Economic indicators everywhere show we have already fallen off the precipice and are headed straight down into the next great crash.  The only question that remains is just how much velocity is that mountain of bubbles moving at, and is the time remaining until it reaches the bottom just two months away, or as some are forecasting right now, no more than four?

29 comments

  1. PFIIGS, should change to FenPIIGS, for england is really not that great either, even though it does not use the Euro. Or read it as you like.

  2. V. Around 4 years ago I listened to you on the hagmann’s show talking about debtors prison and the end of the dollar. This shook me to pray about eliminating our (me and wife) 25,000 bad credit debt and fixing my credit score of 562. I made 9$ an hour but made lots of prayers. Today (4 years later) God has made way for us to pay off all our bad debt and we are now in prayer for buying Karatebars and moving to Panama. Hearing this is discouraging right now because I am not able to achieve the overtime we have been praying for. Today at the same company I went from 9$ to Gods blessing of 16$ dollars an hour, but I am the only income. My wife is a homemaker to home school our kids instead of sending them to the public school prisons. We will still keep on praying and putting all of our efforts to achieve these goals. I pray God gives grace and mercy for 6 more months so we may achieve the financial stability to get out of America. God has used you and the Rogue money family to open my eyes to reality and I want to thank all of you for it. Lots of love.

    1. We are here to help as we can, but your trust in God and in His Hand providing your needs and solutions… and seeing them manifest in your life as your comment shows is the best thanks I and others here could get in a good report.

    2. I’m curious. Is it possible to purchase the Plan B Panama Information on lawyers and real estate, etc without going to the conference.

  3. Ken, I am curious about you’re closing remark about a bottom in two or four months time. I guess you’re talking an intermediate bottom?

    1. I certainly dont know when the system or TPTB will see the plug pulled, but Im hedging the window most analysts smarter than me are forecasting. ie… Sep/Oct, or now with Celente, by the end of the year (4 months).

      1. Gotcha. I do think when this thing cuts loose, this bubble will be unwinding for years. World demographics seem to shouting a reversal in conspicuous consumption.

  4. Not a good idea to throw in predictions with dates. By his own admission he did not foresee the use of QE and zero interest rates.
    Dr Jim Willie said about the fraud lasting for as long as what next war is the US planning to have on a country.

  5. Ken. Great Article! I really enjoy your work.Its always better to be early to a party than late. Some use charts to predict things. Some guess.
    Some just don’t know. But for me I gauge things by what I call the “Biblical Pride Cycle”. You see it over and over again in Biblical History. When a people become rebellious and devilish in their behavior, the lord pulls his protective hand away from that nation and destruction soon follows. With same sex marriage being rammed through the Supreme Court, and Planned Parenthood selling off body parts of aborted fetuses, we have officially struck the 12:00 hour of the Pride Cycle and our destruction is almost assured. The only thing that could possibly stop it is a nation that would willing to turn from its evil practices. From where I’m sitting that’s certainly not going to happen anytime soon.

    I know people would rather discuss economic theory, but the truth is where we’re headed your best option is to get right with the lord. I’m always amazed how easy people can be compelled to believe religious principles when the plane their riding in is headed straight for the ground. That’s exactly where we’re headed financially. Straight for the ground. The bankers have already jumped out with their golden parachutes, while the rest of us argue over who gets to fly the plane.

    Ken I agree. We don’t have more than a few months. Whatever is going to happen will happen before the G20 meeting in November, that much I am sure of.

  6. You know there’s a small chance that the U.S. has one small advantage over China in what’s coming. We haven’t had a ‘New Deal’ style spending program since Roosevelt, though Kennedy’s ‘New Frontier’ has been likened to a version of it. China has been doing intense infrastructure development for a while, a lot of ‘new’ cities, factories, etc. and is somewhat ‘overbuilt’, but the U.S. is ripe for a big makeover.
    The coming crash will make the Republican drive towards austerity moot, as it will come on it’s own with massive deflation, and defaults at several levels. Eventually new thinking will emerge, and the one thing that hasn’t been done here for a long time, internal infrastructure development, is an available option. So what if the world doesn’t want our dollars at that point? Globalism will be about dead anyway, as well as conspicuous consumption. Look at the Baltic Dry Index, or King Copper, or oil, nation states can no longer hope for reciprocal stimulation through trade. The global demand is just not there. So nations will just have to go internal for a while, clean up the mal-investment, and become more self sufficient in many areas as there won’t be any other options. I’m reminded of how Nazi Germany mobilized and found substitute materials and technology for things they were forbidden to buy due to sanctions put in after WWI. We certainly don’t want their political philosophy, but in a world were international trade is ‘frozen’, we will have to self-stimulate to recover, and there is a justification for it based on our depleted condition.

    This came to mind as I just read the new 10 dollar bill is rumoured will be issued with Eleanor Roosevelt on it. Why would the elites remind us of the Roosevelts just now? Maybe it’s a hint of things to come.

  7. Now I’m as mystified as anyone else as to what Donald Trump represents, but if you did want to do a ‘New Deal’ program in the U.S., the Republican party would have to be taken down considerably, as they would oppose such a program strenuously. Whether ‘The Trump’ is controlled opposition, or a genuine organic development, the hatchet job he is doing on the Republican party would be an essential prerequisite for this to happen.

    1. We tried it… $900 billion by the Democrats for ‘shovel ready jobs’.
      But like all good politicians the money went into their coffers, or that of their cronies, and nothing got fixed or built.

      1. Well, I’m talking about ’emergency conditions’ not the conditions we have now or recently. Market crashes of the magnitude that lie before us shake societies to their very foundations. The American people have not been disarmed, and if you watch some old film clips of strikes that took place at that time (1930’s), well, they brought out the national guard in many instances.
        I think a return to those conditions is on the docket. It’s a world only our grandparents and great grandparents knew. if the elites don’t do something is this direction, there won’t be a future for anyone, including them. I would dismiss comparisons of the recent past with what’s coming. Two entirely different worlds.

  8. Martin Armstrongs ECM predicted 40+ years ago the 2015.75 turn point or as he has nick named it the “Big Bang” or “Sovereign Debt Crisis”. Long before Gerald Celente ever said a word. I only bring this up to give credit where credit is due. No one has ever been more acurate then his computer model has been. I would love to see his model talked about more closely by the RM team 😉 as you can see I am a huge fan of his work.

    1. MIKEF,40 years ago, the markets were “normal” (not manipulated). Armstrong using his computer model (ECM?) can accurately predict the “future”..However, since his release from incarceration some years back, the world’s markets have changed tremendously from normal to being grossly manipulated. So if we accept his prediction generated 40 years ago, it may be accurate.

    2. MIKEF, I follow Armstrong also. He does very good work. I also have developed a model of my own, but mine is based on ‘power law’ mathematics. There’s a book by Manfred Schroeder called Fractals, Chaos, and Power Laws, written for Physicists rather than Traders. Market crashes are considered ‘brown noise’, but you can do some empirical work on historical examples. Usually, market manias move upward in 3 or 5 separate moves, and the path down is usually proportional to the number ‘phi’ taken to the power of (magnitude of whole prior up move)/(magnitude of the first part of the up move). As that ratio climbs, the corrections get very severe.
      The characteristics of the current market can produce as much as a 75% correction with the S&P down to below 600 or so, but it would take a while, several years. I think Martin Armstrong points at 2020-2021 for a low, and that makes perfect sense to me.

  9. Bill Holter, Greg Marino and numerous others are all more or less saying more or less the same thing. Greg Marino called the top of the equities market pretty accurately. Bill Holter wasn’t as specific on timing as Gerald Celente, but a theme is developing out there. All the professionals think things look bad. Now sometimes markets are known to climb a wall of fear, but this does look different. If I were simply a contrarian I would buy, but this is really structural not just psychological, and guess who created the monster?? The system looks like it is being held together with spit at this point.
    Greece negotiations on debt relief are far from over and Finland is saying it won’t work. Italy has 44% unemployment among its youth.

    On top of these you have the politicians trying to figure out ways to spend more money on climate change, student debt, etc. It does look like a recipe for disaster.

    I remember when Bernanke raised interest rates about 17 times in a row without taking a breather and waiting for results of his rate hikes. This really looked like a deliberate attempt to crash the economy. In my experience the Fed always waited to see what the economic effects of hiking were before doing another one. He was supposedly an expert on the Depression ( what how to start one?). At that time I was no longer working in the market, but I remember thinking that he was deliberately creating a disaster because it was a fact that there was a lot of bad debt in the mortgage markets and it was not a secret to anyone.

    Deja vu, we have Janet Yellen talking about raising rates in the Fall towards the end of another Presidential term. Hard to know whether she is bluffing or not, but if she does it looks disastrous and if she doesn’t things are not looking very good either. It looks like we are at the point in the economy where either way, there are just so many risks built in and there has been so much recklessness again, that something has to give. I was never an analyst, but I intuitively, it doesn’t look good. Whether we get a big crash or just a steady move downward, it’s going to be a very ugly period

    Couple all the charts, like the ones Ken provided above, which speak volumes and numerous others found any given day on ZeroHedge, and the fact that this is a planned take down and you realize that the central planners have been deliberately and maliciously manipulating the economy all along. Couple this with the fact that is major initiative on a global level to deal with “climate change” which is also manipulated by all the geo-engineering, I can’t help but think that we are seeing the beginning of a roll-out of a new world economic order. Christine LaGarde has used the expressions numerous times “rebalancing” “economic reset” etc. When Christine talks, I think we’ve all learned to listen carefully because she broadcasts what’s going to happen.

    US, which used to hold world reserve currency status has been given a leader who is clearly not interested in preserving the sovereignty or the constitution of the US, but systematically dismantling it. This should be obvious to any thinking person.

    The other very clear strategy being used besides fluoride in the water and aluminum in the air, legal marijuana in a few states and rampant drug use the likes we haven’t seen since the 60s, is the divide and conquer strategy. There are religious wars, race wars, class wars, political wars, all kinds of wars going on all over the planet. Massive shifts of populations through immigration designed to destroy national boundaries. Global police state where no one has privacy anymore whether they are suspected criminals or not. Forced vaccinations, Amy Schumer crying for gun control ( seriously, she is not even a good comedian.. what makes her think she’s a politician)

    All we need is a few big terror attacks in Western nations, which are supposedly in the planning and fear and panic will really take hold.

    If we don’t have a collapse by this Fall sometime before 2016 is over it has to happen. Things are hanging by a thread and just waiting until the powers that be want them to snap.

    1. All real bad indeed. There’s a storm of brown stuff coming right at us. The elites always work by problem, reaction, solution. So they take us down, scare us to death, then offer the solution, which we grasp at. Why I was intrigued by the 10 dollar bill with Eleanor Roosevelt on it being rumoured to be released. A reminder of the New Deal and rebuilding, which we sorely need. But we have to go through the fire first…and well, Roosevelt was no Constitutionalist for sure. But history seems to rhyme, if not repeat…

      1. I’m surprised the bill being released isn’t Margret Sanger. Probably the release of the videos on Planned Parenthood selling baby parts, it would be hard to pull off. I’m sure if the powers that be could get away with it they would put her face on our money, and then we would really know how worthless it is.

        1. I half think that scandal is real deep too. How much ‘research’ can you really do with fetal organs? Maybe some, but I’d bet there’s a market for some of that for ritualistic weird stuff. Hate to say that.

  10. Ken,
    Now we have the devaluation of the Yuan in the mix. Waiting for team RM to comment on how they see this factoring into the grand chess match of these financial wars. It’s interesting that they did it after being rejected for inclusion in the SDRs.

    Making their exports cheaper, would appear to be an effort to lift their economy, but that’s the simple answer. Wonder what else is behind this? If China is looking for world reserve currency status it seems like this would be counter productive, no?

      1. Isn’t it pretty much following Jim Willie’s predictions? I think Dr. Willie is basing much of his work on the late Dr. Robert Triffin, from whence we get the Triffin’s paradox (or dilemma). This predicts absolutely that any sovereign nation whose currency becomes a world reserve currency, will over some period of time become not only dominant, but that currency will be the bane of the country that hosts it.
        The necessary outcome of this principle is that all currencies end up devaluing against the world reserve currency, regardless of their intrinsic merit. It also postulates a final collapse of all the fiat currencies, that’s the end game, the Reserve Currency being the last one to go.

        Extraordinary explanation here:

        http://www.resilience.org/stories/2013-01-07/commentary-why-peak-oil-threatens-the-international-monetary-system

        Not sure if Jim Willy’s commentary makes full sense, unless this concept is understood. When the Economist magazine produced an infamous cover in 1988 predicting the rise of a Gold based currency in 2018, amidst a melange of burning fiat currencies of various denominations, this was most certainly a product of this principle.

        In the link above, the author makes it clear he’s talking about peak CHEAP oil, which is a reasonable concept. One shouldn’t let agnosticism about Peak oil, deter them from this article. It is excellent.

  11. Ken,Good call, but do you really think this is a small move? Where is this heading? Looks like economic war on a bigger scale.

    At the same time you have John Kerry saying if the nuke deal doesn’t go through the USD will lose world reserve status. Oh, really, that’s the reason??? I thought it was because we are indebted up to our eyeballs.

    It sounds like there are all kinds of effects from this move that may not be easy to calculate . IMF says this will not effect their admission into IMF SDRs.

    Russia is starting war games with Iran and US is still trying to get rid of Assad, along with the Saudis, etc.

    This is really a 3D chess match, but it doesn’t look like things are going very well.

    Good broadcast:

    http://usawatchdog.com/china-just-turned-the-currency-war-nuclear-andy-hoffman/

    1. Joyann, your absolutely right about this having effects that will be hard to calculate. There’s talk of a 50% (or more) dollar devaluation. You can picture IMF people sitting around a big oak table ‘deciding’ what the dollar would be worth based on some formula. Reality is, it will find whatever level it will, regardless of their intentions. In a deflationary crash, central banks lose control, that’s why they always inflate, no matter what. They’re terrified of deflation.
      I think there’s some non-zero chance the dollar won’t be accepted at all. I think there’s another set of probabilities that demand is already at Great Depression levels, and after the ‘reset’, world demand drops to essentially zero. Baltic dry index is almost there now.

      Ken, I liked your piece, I just take issue with the idea of a ‘brief’ correction.

    2. If China made huge moves the entire system would have a Lehman moment… Ive been watching what is occurring in the EU-Yuan carry trade and where Thailand, India, and Russia all now have to adjust because even though the BRICS are in synch on a number of things, China will always ‘beggar thy neighbor’ if the economy even hints at bringing about civil unrest.
      And the Dow has just performed a Death Cross… and hasnt had a true one since 2011. Imagine all this if China did a Major move instead of small devaluations?

      http://tothedeathmedia.com/dow-hits-first-true-death-cross-since-2011/

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