Red ALERT 🔴 Danger Coming To America And The Financial System In 2019

These Nine Dead Giveaways Are Telltale Signs Of Recession

I’m seeing lifestyles that are out of stock and no longer available, even in China…I’m seeing lifestyles that are out of stock and no longer available, even in China.

Though every recession is unique, all recessions manifest in similar ways in the real economy. By real economy, I mean the on-the-ground economy we observe with our own eyes, as opposed to the abstract statistical model reflected in official declarations of when recessions begin and end.

One characteristic that never makes it into the abstract statistical representation of recession is the light switch phenomenon: business suddenly dries up, as if someone turned a light switch off. This is especially visible in discretionary purchases, which include everything from smart phones to vehicles to eating out.

Other telltale signs of recession include:

Dead giveaway #1: businesses that seemed established and doing well suddenly close. The customers are surprised, the employees are not; they knew sales were eroding while costs were rising, and the financial situation was becoming increasingly precarious.

Dead giveaway #2: new businesses that would have thrived a few years ago close within a few months. Maybe it was the multitude of competitors, or the high rents; but for whatever combination of factors one attributes the demise to, an enterprise that seemed to have all the ingredients for success fails quickly.

Dead giveaway #3: advertising and marketing / promotion no longer move the needle. Campaigns that reliably increased sales no longer work.

Dead giveaway #4: Matriarchs and patriarchs of established enterprises retire. They typically offer rote explanations for their abrupt retirement–to spend time with the family, to enjoy the leisure they never had working 12-hour days, and so on–but the unspoken reason is their decades of experience have finely tuned their recession detectors. They know when it’s about to become impossible to grow revenues and they no longer have the need or energy to buckle down and survive the decline phase of their enterprise’s S-Curve.

Dead giveaway #5: a cliffdive in new business and new customers / clients. If 3 or 4 new customers would sign up every day in the good old days, suddenly nobody’s signing up, regardless of the promotions offered. Then existing customers start drifting away. If you ask why, you get routine answers: family budget cuts, time constraints, etc. Interestingly, these didn’t have any impact in good times, and yet suddenly they’re like a virulent virus: everybody’s got budget cuts and time constraints.

Dead giveaway #6: promotions increasingly give off the pungent scent of desperation. That airline credit card that once offered 25,000 free miles once you spend $1,000 are now offering 50,000 miles on the first use of the card, even if it’s for a cup of coffee at Starbucks. Then the offer edges up to 60,000 miles for customers on the airline’s flights, and so on.

New renters that were previously offered some throwaway promo (once month “free” gym membership, etc.) are suddenly being offered a free month’s rent to sign the lease.

Dead giveaway #7: multiple offers for homes vanish like mist in Death Valley in July. Real estate and home remodels / additions are the most sensitive canaries in the coal mine; they keel over at the first whiff of declining asset valuations and the first hint that greed has flipped polarity to fear.

Dead giveaway #8: the “fun” third vehicles and the inherited sports cars start showing up on CraigsList and “for sale by owner” lots. One of my favorite memories of the 2008-09 meltdown / recession was reporting on all the used Porsches I saw on the local “sell by owner” lot. One of my longtime correspondents said that if he saw me toodling around in a 911, he was canceling his financial support of my work. (Surrender my 1998 Civic for a sports car? Perish the thought–though it was a tempting fantasy….)

Needless to say, I didn’t pick up a heavily discounted recent-vintage Porsche, though the prices were amazingly attractive. (Recall my innate frugality.)

The Only Leverage We Have Is Extreme Frugality (December 27, 2013)

Bonus dead giveaway #9: the IPO of the tech unicorn that was sure to be a roaring success is suddenly cancelled.

You undoubtedly have your own dead giveaways that the cycle has turned from expansion and greed to contraction and fear. I’m seeing plenty of dead giveaways the economy is already in recession–what are you seeing?

I’m seeing lifestyles that are out of stock and no longer available, even in China:

Living Paycheck To Paycheck: The New Crisis And Normal For The American Middle Class

According to recent studies, the vast majority of the American middle class is only one missed paycheck away from poverty. About 78% of workers in the United States are living paycheck to paycheck, and the statistics don’t improve from there.

Only 39% of Americans actually have saved enough money to cover a $1000 emergency. Nearly 3 in 4 workers say they are in debt and of those, more than half think they always will be, according to statistics posted by Forbes. Any rise in interest rates or the cost of food could leave some Americans with the tough choice of eating or paying the car payment to get to work.

A similar 2016 GOBankingRates survey found that 69 percent of Americans had less than $1,000 in total savings and 34 percent had no savings at all.  That means many Americans would have to put an emergency expense on a credit card or borrow money another way just to cover the cost of a $1000 expense.

Making matters worse, the 2017 Report on the Economic Wellbeing of US Households stated that, when asked how they would cover an emergency expense of $400, only 59% of Americans said they could easily cover the expense using entirely cash, savings, or a credit card paid off at the next statement. But “four in ten adults would either borrow, sell something or not be able to pay” if faced with a $400 emergency expense.

The government shutdown recently highlighted the fact that a large number of Americans are wholly unprepared for any kind of economic downturn, let alone another recession.

According to the newest op-ed article by Market Watch, the government shutdown is perfectly proving that Americans are not prepared for a financial disaster of any kind, let alone an economic recession. Many have long assumed that the government (which as we all know is almost $22 trillion in debt) will be using their money (stolen funds aka, taxation) to bail out those who get themselves into trouble. But the shutdown is proving just how little the government actually does and just how financially illiterate many Americans have allowed themselves to become.

It’s been ten years since the Great Recession left many Americans jobless with no money, and it appears most have learned nothing. The government shutdown serves as a painful warning and preview for what will happen once unemployment rises from 50-year lows.  Americans are far too dependent on others, including the government, for their survival.-SHTFPlan

Forbes reported that even without an unexpected expense, according to the Fed’s report, one in five (22%) can’t cover all their current month’s bills, and one in four skipped a medical treatment in the past year due to an inability to pay. Some of those use credit cards in between paychecks to scrape by and many know that they will be unable to pay back the money they have already borrowed. 

I think a lot of Americans are so willing to use their credit cards because they’re so far in debt, they know they’re broke, and they might as well go out with a bang. A lot of people have no intention of paying back the money that they’re using whether it’s Visa or Mastercard. 

The good times won’t last forever.  All economies eventually fall into a recession, and this one will be no different.  Those who are prepared will turn a major catastrophe into an inconvenience, while those who are not prepared could face mounting difficulties. The U.S. Faces A Catastrophic Food Supply Crisis In America As Farmers Struggle

American farmers are battling several issues when it comes to producing our food.  Regulated low prices, tariffs, and the inability to export have all cut into the salaries of farmers.  They are officially in crisis mode, just like the United States’ food supply.

“The farm economy’s in pretty tough shape,” said John Newton, chief economist at the American Farm Bureau Federation.

“When you look out on the horizon of things to come, you start to see some cracks.”

Average farm income has fallen to near 15-year lows under president Donald Trump’s policies, and in some areas of the country, farm bankruptcies are soaring.  And with slightly higher interest rates, many don’t see borrowing more money as an option.  “A lot of farmers are going to give the president the benefit of the doubt, and have to date. But the longer the trade war goes on, the more that dynamic changes,” said Brian Kuehl, executive director of Farmers for Free Trade, according to Politico.

With no end to the disastrous trade war in sight, many farmers have traveled to Washington to share their plights with the president himself hoping that he’ll end the trade war that’s exacerbating an already precarious food crisis.  Farmers make up a fairly large chunk of president Trump’s base, and an unwillingness to put food production in the United States first could be detrimental for Trump reelection chances in 2020. It could also be the beginning of a catastrophic food shortage.

The Federal Reserve Bank of Minneapolis warned back in November of rising Chapter 12 bankruptcies used by family farmers to restructure massive amounts of debt. The Fed said that the strain of low commodity prices “is starting to show up not just in bottom-line profitability, but in simple viability.” The increase in bankruptcies was driven by woes in Wisconsin’s dairy sector, which shrunk by about 1,200 operations, or 13 percent, from 2016 to October 2018.

“You’ve had farms that have gone out of business, that have gone bankrupt because of this trade war,” said Kuehl of Farmers for Free Trade.

“There’s a lot of farmers going through tough conversations right now with their lenders.”

And so far, the government’s solution to the problem they created is to give more welfare to farmers, placing the burden on the backs of taxpayers.

As the government continues to pass the burden onto others while destroying the food industry, things could very well reach apocalyptic levels.  Nothing will see this country spiral into complete disarray like a lack of food. Alarmingly, scientists have already said that the global food supply system is broken.

To put it simply, government interference in the agriculture industry is responsible for the food crisis we all are about to face.

This Is Your Final Warning Before Things Get Ugly: The Next Stock Market Leg Down Is Here

The next leg down is officially here, and the market is fully aware of this. The evidence is clear in the charts – a crash is coming…The next leg down is officially here.

The big picture story for the markets is that the US/China trade deal is no longer important. Even if the two nations did agree on a perfect deal that resolves the structural issues between their economies (highly improbable), the fact is that the global credit cycle has turned and we are entering a contraction/ crisis.

Europe is now officially weakening with most major economies (Germany, France, Italy and Spain) approaching, if not already in, recessions.

The market is fully aware of this. The German DAX has ended its bull market from the 2009 low. This latest rally is a pathetic dead cat bounce in the context of a larger bear market.

The situation is even worse in China. There we have the beginning of complete systemic collapse as the largest pile of garbage debt/ financial fraud finally blows up. China spends $25 in debt for every $1 in GDP growth. And its economy is growing, at best, by 2% per year.

The market similarly knows this which is why China has broken in 20+ year bull market trendline.  The Chinese stock market has been in a series of successive bubbles followed by spectacular crashes for the last two decades. This time around, the Crash will be something truly astonishing to behold.

This leaves the US, where despite all the fanfare, the economy is almost certainly contracting if not already in a full-blown recession.

Maxing out your credit card is very different from getting a raise. What’s happened in the US in the last two years is the country maxing out its credit card on a personal, state, and national level.

Here again the market knows this, which is why we’ve broken the bull market trendline from the 2009 lows. The ultimate downside for this collapse is at best 2,000, and more likely than not we’ll go to the high 1,000s (think 1,750-1,800).

A Crash is coming…

On that note we just published a 21-page investment report titled Stock Market Crash Survival Guide.

In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.

Today is the last day this report will be available to the public. We extended the deadline based on yesterday’s sucker rally, but this it IT… no more extensions.

The Most Depressing Stat Of The Month: US National Debt About To Pass The $22 Trillion Mark

The larger our debt grows, the more interest we have to pay, and the less we have to spend on other things like roads and bridges…The U.S. national debt is wildly out of control, and nobody in Washington seems to care.  According to the U.S. Treasury, the federal government is currently $21,933,491,166,604.77 in debt.  In just a few days, that figure will cross the 22 trillion dollar mark.  Over the last 10 years, we have added more than 11 trillion dollars to the national debt, and that means that it has been growing at a pace of more than a trillion dollars a year.  To call this a major national crisis would be a massive understatement, and yet there is absolutely no urgency in Washington address this absolutely critical issue.  We are literally destroying the financial future of this nation, but most Americans don’t seem to understand the gravity of the situation that we are facing.

The Congressional Budget Office projects that the national debt and interest on that debt will both explode at an exponential rate in future years if we stay on the path that we are currently on.  According to the CBO, the federal government spent 371 billion dollars on net interest during the most recent fiscal year…

In fiscal 2018, the government spent $371 billion on net interest, while the Defense Department budget was $599 billion. Social Security benefits cost $977 billion, Medicare $585 billion and Medicaid $389 billion, according to the CBO estimates.

But the CBO said interest outlays’ rate of growth in fiscal 2018 was faster than that for the three mandatory federal programs: Social Security (up $43 billion, or 5 percent); Medicaid (up $14 billion, or 4 percent); and Medicare (up $16 billion, or 3 percent). In comparison, net interest on the public debt increased by $62 billion, or 20 percent.

The 371 billion dollars that we spent on interest could have been spent on roads, schools, airports, strengthening our military or helping the homeless.

Instead, it was poured down a black hole.

As interest rates rise, it is being projected that we will soon be spending more on interest on the national debt than we do on national defense.  And not too long after that, interest on the national debt will cost us more than the entire Social Security program each year.

The bigger our debt gets, the more interest we have to pay, and the CBO is projecting that we will add another 12 trillion dollars to the debt during the 2020s…

Washington has been drowning in red ink for years and it’s only going to get a lot worse over the next decade, a fresh government estimate shows.

The U.S. is likely to add $12 trillion in public debt from 2020 to 2029 through a combination of higher government spending and slower economic growth, according to the Congressional Budget Office.

Of course CBO estimates are almost always way too optimistic, and so reality will probably be a lot worse than that.

But if government debt is so bad, why do we just keep on accumulating more of it?

Well, the truth is that government debt always makes the short-term look better.  When the government borrows money and spends it into the economy, it increases GDP.  In essence, we are sacrificing our long-term prosperity in order for some short-term gain.

If we went back and removed the 11 trillion dollars that the federal government borrowed and spent over the last decade, we would be in the worst economic depression in American history right now.  But by stealing from the future, the federal government has been able to stabilize things.

Unfortunately, the future always arrives eventually, and our future is looking extremely bleak at the moment.

If we want to turn things around, we should not be afraid to learn from what other countries have done.  Switzerland and Sweden have both found a lot of success in managing their budgets by adopting very strict fiscal frameworks…

What magic formula keeps the Swiss and Swedish fiscal houses in order?

In both cases, they adopted a comprehensive fiscal framework anchored by sensible fiscal targets and enforced by spending and tax limits. It allows them to live with prevailing economic cycles by pegging federal spending and debt to GDP — spending more when the economy is down, and less when growth is strong — and establishing a process for living within those goals.

But that would require discipline, and that is something that is severely lacking in our nation’s capital right now.

In fact, on the left it has become very trendy to say that the U.S. can never face a debt crisis because we can always “print more money”.  Here is one example…

All lending to the U.S. government is done in dollars, and the Treasury controls the supply of that currency. It is literally impossible for America to face a pure debt crisis because it can always print enough money to pay its bills.

Again, that creates its own problems. Doing so would risk significant inflation which would almost certainly harm the country’s credit rating, making future borrowing more expensive. However, America structurally can’t reach a point where it doesn’t have the money to pay its debts; only a point where it prioritizes different concerns.

There is so much wrong with those two paragraphs that I don’t even know where to begin.

First of all, the U.S. Treasury does not control the supply of our currency.  The Federal Reserve does, and under normal circumstances more “Federal Reserve notes” do not come into existence unless a corresponding amount of U.S. debt is also issued.

In other words, the process of creating more money also creates more debt.  Most Americans simply do not understand that the Federal Reserve system was designed to be a perpetual debt machine, and it is the primary reason why we are now nearly 22 trillion dollars in debt.  During my run for Congress, abolishing the Federal Reserve was one of the key issues that I ran on, and we need to continue to educate the American people about these issues.

Because the truth is that the national debt is an existential threat to the future of this nation, and we are systematically destroying the very bright future that our children and our grandchildren were supposed to have.