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.
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.
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?