Here is a list of the most worrying signs indicating an imminent escalation of the financial situation in the US and Europe. As, again, nothing has been solved during the 2008 recession the coming economic collapse could be the worst in 100 years.
The economic system that most of the world relied on since the second world war is based on fiat money and never-ending increase of consumption and production. It failed to address and regulate the requirement that in order to keep businesses growing the purchase power of the many (99%) needs to grow - not the few (1%).
For decades, we were not living in a world of free trade but large-scale / accelerating corporatism and artificially enhanced consumerism peppered with planned obsolescence.
The concept of free trade does not work for the people ("the many") anymore when the people are effectively manipulated into their needs (not only via marketing but also by the profit maximizing media and general education).
List of information indicating an imminent economic collapse (not the usual regular recession) in Europe and the US
The following lists is a compilation of some of the most worrying data in my opinion:
- Three months US treasury bills show less confidence in the market than at anytime since 1943 — see chart 1. This also means that the federal bank (FED) will find it very hard to keep the gold price low to temporarily stabilize its fiat currency with the e.g. gold carrying trade — even with the current highly unusual negative gold lease rates. [update dec 2011: more gold lease manipulation]
- The applied economic model has been based on ever-increasing consumption and debt for nearly a century in the US. Growing businesses rely on the increasing purchase power of the many not the few which has not been followed. Inequality in income has been increased for 3 decades in the US and UK — see Gini index
- The number of trades i.e. volume in the share market has been a small fraction compared to the years before 2008 see chart 2.
- US mainstream media are not even pretending anymore to be objective or democratic even in presidential election campaigns. Also last year's freedom smashing legislation and population control bills are also hinting the government is preparing for major civil unrest and a collapse.
- The US does not even try to solve the debt crises seriously (they only cut increases in spending or tiny cuts over many years) but instead focuses on attempts to bring down the European economy first by aligning themselves with China and convince everyone to buy US treasury bills. It seems the US is hoping to use their 900 military bases and military dominance to force oil exporting country to keep trading in dollars.
- When Barack Obama first took office, the official U.S. unemployment rate was 7.6 percent. Today it is 9.1 percent. Chart 6 shows the spiking mean duration of unemployment in the US.
- The number of bets against the S&P 500 for the month of October is absolutely astounding. Somebody is going to make a large amount of money if there is a stock market crash this October.
- Investors are pulling a huge amount of money out of stocks right now. Do they know something that we don't? The following is from a report in the Financial Post.…Investors have pulled more money from U.S. equity funds since the end of April than in the five months after the collapse of Lehman Brothers Holdings Inc., adding to the $2.1 trillion rout in American stocks.
- An increasing number of unemployed Americans have become so desperate that they have started to look for work overseas. For example, the number of Americans that are submitting applications for temporary work visas in Canada has approximately doubled since 2008. Other Americans are even willing to learn foreign languages and travel to the other side of the world if that is what it takes to land a decent job.
- Siemens has pulled more than half a billion euros out of two major French banks and has moved that money to the European Central Bank. Do they know something or are they just getting nervous?
- The Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan and the Swiss National Bank have announced that they are going to make available an "unlimited" amount of money to European commercial banks in October, November and December.
- So far this year, the largest bank in Italy has lost over half of its value and the second largest bank in Italy is down 44 percent.
- After the US, Standard & Poor cuts Italy's credit rating from A+ to A.
- European central banks are now buying more gold than they are selling. This is the first time that has happened in more than 20 years.
- The chief economist at the IMF says that the global economy has entered a "dangerous new phase".
- Israel has dumped 46 percent of its U.S. Treasuries and Russia has dumped 95 percent of its U.S. Treasuries. Do they know something that we don't?
- The middle class in most developed countries has been reduced and indebted too much to squeeze more debt out of it
- Both the European and the US economies are bound to collapse independently or together as both have similar exploding world record debts. According to pioneer investor, Jim Rogers, the US is in deeper trouble though.
Charts indicating an economic collapse in Europe and the US
The below charts underline (and are referenced by) some of the points listed above. Note: a few charts have been added since the first publication.
Videos of experts warning of an economic collapse in the US and Europe
Here is presidential candidate and bestselling author of books about economics and US foreign policy, Ron Paul's warning that an economic collapse in the US and / or Europe is near and high inflation and social unrest and political chaos will take place. Video from July 2011:
BBC speechless as professional trader, Alessio Rastani, talks openly about the unavoidable collapse of the economy and that investment bank Goldman Sachs rules the world — not governments (Sept 26, 2011):
[replaced with new link on Sept 1, 2012, as original video was removed from YouTube]
William Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980, reveals shocking examples of large scale fraud within the financial industry and its regulators. He describes how the financial meltdown is driven by fraud, little of which has been legally persecuted or stopped but keeps on going. From April 2009:
In my opinion the most specific threats of an economic collapse in both the US and Europe are (probably in this order):
- high and accelerating inflation (10–40% a year)
- high and increasing unemployment rates (10–50%)
- savings and other assets in banks may become inaccessible or lost
- temporary shortages of food and water, fuel and electricity
- reduction and losses of benefits, pension and other government payments
- civil unrest
The currently highest risk countries in Europe according to their public debt/GDP ratio based on IMF information from 2010: Greece (130%), Italy (118), Iceland (116%), Belgium (100%), Ireland (94%), France (84%), Portugal (83%).
Here are some ideas how to prepare for an economic collapse:
- secure your assets: buy gold, silver and keep cash accessible in a safe place, spread your money across different banks, countries and currencies
- convert variable interest loans into fixed interest for at least 5 years
- get rid of high and variable interest debt e.g. credit card debt
- buy food and water reserves for at least a few days if not weeks
- keep emergency medicaments and first aid kits
- try to become somewhat self-sufficient (grow food, keep chicken, invest in solar panels & other electricity generators)
- community building (get to know your neighbors, you may need to help each other)
It seems that those who were prepared in 1929 and had some income/job or assets could live pretty well with low prices and many new business opportunities. Let's hope that the world will abandon the fiat money idea finally and use the possibly final collapse to launch a more sustainable system — perhaps participatory economics but hopefully not another flavor of corporatism (left or right — wing).
- 21 signs that something big is about to happen in the financial world
- 30 signs that the US economy is about to go into the toilet
- world facing worst financial crisis in history, Bank of England Governor says (added Oct.7 2011)
- Economic collapse : IMF advisor says we face a Worldwide Banking Meltdown 2–3 Weeks (added Oct 9 2011)
- 5 Collapse-Proof Investments With Tangible Fundamentals (added Oct 9 2011)