Critical Observer

RAISING THE INTEREST RATE MAY TRIGGER GLOBAL DEBT CRISIS

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Debt ratios have reached extreme levels across all major regions of the global economy, leaving the financial system acutely vulnerable to monetary tightening by the US Federal Reserve, the world’s top financial watchdog has warned.<br />
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<span style="background-color: #cccccc; font-family: Trebuchet MS, sans-serif;"><u>My Comment:</u> <i> </i><span style="font-style: italic; font-weight: normal;">I would say it's a safe bet that the FED will </span><i>NOT</i><span style="font-style: italic; font-weight: normal;"> be raising interest rates in the very near future. The FED just wants to make it look like they are ABLE to raise them, and that the market is healthy enough to do so. But in reality, it's just for show. There is no way that raising the interest rates now is realistic. As many reliable economists have pointed out, it can't be done right now without collapsing the market.</span></span></h3>
The Bank for International Settlements said the wild market ructions of recent weeks and capital outflows from China are warning signs that the massive build-up in credit is coming back to haunt, compounded by worries that policymakers may be struggling to control events.<br />
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“We are not seeing isolated tremors, but the release of pressure that has gradually accumulated over the years along major fault lines,” said Claudio Borio, the bank’s chief economist.<br />
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The Swiss-based BIS said total debt ratios are now significantly higher than they were at the peak of the last credit cycle in 2007, just before the onset of global financial crisis.<br />
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<a href="http://www.telegraph.co.uk/finance/economics/11858952/BIS-fears-emerging-market-maelstrom-as-Fed-tightens.html" target="_blank">Read The Full Article ></a>

RAISING THE INTEREST RATE MAY TRIGGER GLOBAL DEBT CRISIS

Debt ratios have reached extreme levels across all major regions of the global economy, leaving the financial system acutely vulnerable to...

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Global Market Meltdown Has Begun - Don't Be Mistaken

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There is so much confusion out there.  On the days when the Dow goes down by several hundred points, lots of people pat me on the back and tell me that I “nailed” my call for the second half of this year.  But on the days when the Dow goes up by several hundred points, I get lots of people contacting me and telling me that they are confused because they thought the stock market was supposed to go down.  Well, the truth is that if there is going to be a full-blown market meltdown, we would expect for there to be wildly dramatic swings in the market both up and down.  A perfect example of this is what we experienced during the financial crisis of 2008.  9 of the 20 largest single day declines in stock market history happened that year, but 9 of the 20 largest single day increases in stock market history also happened that year.  If we are moving into another great financial crisis, there should be massive ups and massive downs, and that is precisely what we are witnessing right now.<br />
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On Tuesday, the Dow surged several hundred points.  There was much celebrating in the mainstream media over this, but what they failed to realize was that this was another big red flag.  And we saw this volatility carry over into Wednesday.  The Dow was up 171 points early in the day before ending down 239 points.<br />
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By themselves, those two days don’t mean a whole lot.  The key is to look at them in context.  And in context, we have already witnessed the most dramatic stock market crash since the last financial crisis.<br />
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There will be more days when the stock market absolutely plummets and there will be more days when it absolutely soars.  No stock market crash in U.S. history has ever gone in just one direction continually.  There are always giant waves of momentum that cause panic selling and panic buying.<br />
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There is one thing that could change that.  A major “black swan event” such as a historic natural disaster, an unprecedented terror attack, or the outbreak of war could potentially be enough to chase all of the buyers out of the marketplace.  And considering the times that we are moving into, those things should not be ruled out.<br />
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But minus some type of event like that, we should expect lots of wild swings in both directions.<br />
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Over the past couple of years, I have repeatedly attempted to explain the general principle that markets tend to go up when they are calm and they tend to go down when they are volatile.<br />
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If you want the bull market to return, you should be rooting for lots of really, really boring days on Wall Street.<br />
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When things are boring, investors make money.<br />
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Days that are “exciting” are really bad for Wall Street.  Investors like a world that is predictable, and when conditions start changing rapidly they get very, very nervous.<br />
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In the months ahead, trillions of dollars are going to be lost in stock markets all over the planet.  Feel bad for the retirees and the hard working families that are going to get wiped out by this, but don’t feel bad for the banksters.  They have been laughing it up while most of the country has been suffering during our ongoing economic decline.  If you don’t believe me, just check out this YouTube clip.<br />
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A lot of people are going to be paralyzed during this time, because they won’t know what to do.  They didn’t heed the warnings up until now, and they thought that they would be able to safely get out of the market when things started getting crazy.  The big ups and big downs in the markets will confuse them, and the mainstream media will be telling them that everything is just fine.<br />
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If you have been waiting for the market to send you “warning signals”, then you can stop waiting because it is happening right in front of your eyes.<br />
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Now is not a time for fear.  Personally, I seek to live my live in a constant state of peace without any fear even though I write about some very hard realities almost every day.<br />
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This is part of the reason why I so adamantly encourage people to prepare for what is ahead.  Knowledge and preparation can help eliminate fear.<br />
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If you already know what is coming and you are already prepared for it, you won’t be freaking out like the rest of the general population will be when things start really going crazy.<br />
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I want to share something with you that Brandon Smith wrote recently…<br />
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Panic betrays and fear kills. The preparedness culture is built upon the ideal that one must defeat fear in order to live. How a person goes about removing uncertainty from the mind is really up to the individual. For me, combat training and mixed martial arts is a great tool. If you get used to people trying to hurt you in a ring, it’s not quite as surprising or terrifying when it happens in the real world. If you can handle physical and mental trauma in a slightly more controlled environment, then fear is less likely to take hold of you during a surprise disaster.<br />
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Six months may be enough time to enter a state of mental preparedness, it may not be, but more than anything else, this is what you should be focusing on. All other survival actions depend on it. Your ability to function personally, your ability to work with others, your ability to act when necessary, all rely on your removal of fear. Take the precious time you have now and ensure you are ready to handle whatever the future throws at you.<br />
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Life in America in the years ahead is going to look dramatically different from what life in America looks like right now.

Global Market Meltdown Has Begun - Don't Be Mistaken

There is so much confusion out there. On the days when the Dow goes down by several hundred points, lots of people pat me on the back an...

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WALL STREET PANICS OVER GLOBAL RECESSION FEARS

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Wall Street plunged Tuesday after investors feared weak data from China, the world’s second-largest economy, would lead to a global recession.<br />
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China’s manufacturing sector suffered its quickest deterioration in over six years, leading to a three-year market low and other sectors of the Chinese economy also slowed down significantly.<br />
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In response, all three major U.S. stock indices, the Dow Jones, the S&P 500 and NASDAQ, were down two percent in early trading.<br />
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“While a measure of calm has returned to these markets recently and they have seen relief rallies, many of the underlying negative fundamentals are still in place,” said Nariman Behravesh, chief economist for IHS. “As a result, the downside risks for most commodity prices, exchange rates, and stock markets are likely to persist for some time, while growth in many parts of the world, especially in emerging markets, is likely to deteriorate further.”<br />
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Investors panicked once China’s official manufacturing Purchasing Managers’ Index (PMI) dropped to 49.7.<br />
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“The PMI was below 50, which is a psychologically important level and puts into real focus the fact that China is contracting,” said Joe Rundle, a senior sales trader at ETX Capital. “With the weak data coming out, we’re going to see the negative sentiment from the last few weeks continuing.”<br />
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This pessimistic outlook may become self-fulfilling.<br />
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In fact, Canada has already fell into a recession after its economy retreated 0.5% in the second quarter and 0.8% in the first.<br />
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“Canada’s manufacturing sector continues to face growth headwinds from heightened global economic uncertainty and sharp falls in energy sector capex plans,” said Cheryl Paradowski, president and chief executive officer of SCMA.<br />
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Collapsing oil prices have also hurt Canada, which is the world’s fifth-largest oil producer.<br />
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The decaying conditions in Canada and China could trigger a global recession.<br />
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by KIT DANIELS | INFOWARS.COM

WALL STREET PANICS OVER GLOBAL RECESSION FEARS

Wall Street plunged Tuesday after investors feared weak data from China, the world’s second-largest economy, would lead to a global reces...

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MARKET COLLAPSE: CENTRAL BANKS CAN’T STOP IT

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Like children clinging to their parents, stock market traders turned to their central banks last week as they sought protection from the frightening economic figures coming out of China. Surely, they asked, the central banks would ward off the approaching bogeymen, as they had so many times since the 2008 crash.<br />
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The US Federal Reserve came up with the goods. William Dudley, president of the bank’s New York branch, hinted that the interest rate rise many had expected next month was likely to be delayed.<br />
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A signal that borrowing costs would remain at rock bottom was all it took. After Black Monday and Wobbly Tuesday, the markets recovered to regain almost all their recent losses.<br />
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It was just as if they had said to themselves: who cares if China’s economy is slowing; the “Greenspan put”, which so famously propped up US stock markets during the 1990s and early 2000s with one interest rate cut after another, is still in operation.<br />
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The meeting of the world’s most important central bankers in Jackson Hole, Wyoming, this weekend only confirmed the need for Britain, Japan, the eurozone and the US to keep monetary policy loose.<br />
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Yet the palliative offered by the Fed is akin to a parent soothing fears with another round of ice-creams despite expanding waistlines and warnings from the dentist and the doctor.<br />
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According to some City analysts, the stock markets are pumped with so much cheap credit that a crash is just around the corner. And they worry that when that crash comes, the central banks are all out of moves to prevent the aftershocks from causing a broader collapse.<br />
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Since 2008 the Fed has pumped around $4.5 trillion into the financial system. The Bank of England stopped at £375bn. The Bank of Japan is still adding to its post-crash stimulus with around $700bn a year and the Frankfurt-based European Central Bank will have matched its cousin in Tokyo by the end of the year.<br />
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In each case, the central bank has adopted quantitative easing, which involves buying government debt to drive up its price. A higher price lowers the returns and encourages investors to go elsewhere in search of gains. It has meant a big shift in the portfolios of fund managers in favour of shares. Apart from a few blips due to the Greek crisis, stock markets have boomed. This summer, the FTSE 100 soared past 2008 levels to top its 1999 peak.<br />
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But China, which has borrowed heavily to keep its economy moving, is running out of steam. Beijing has said it does not want to encourage another borrowing boom. But to prevent a crash, it is doing just that. In the last two weeks it has cut interest rates and loosened borrowing limits. It has even invested directly in the market, buying the shares of smaller companies.<br />
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So we face the shocking prospect of central bankers, in thrall to stock market gyrations, making the world a more unstable place with promises of yet more cheap credit.<br />
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There are a few alternative courses of action that Bank of England governor Mark Carney could still propose. He could tell politicians that the only sustainable way to get their economies moving is with hard cash from taxed wealth and incomes. If that is too unpalatable, governments should borrow directly to fund public infrastructure and productivity improvements.<br />
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And if the government is too embarrassed to admit to voters that it needs to borrow money, then the least central banks can do is sign deals with high street banks to lend, rather than hoping they will take QE funds and do something useful with them. Because the evidence is already there for all to see that investors would prefer to pump the money into the stock market and property, both of them inherently unstable and prone to violent crashes.<br />
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Google feels the EU heat<br />
‘We have owned the internet,” Barack Obama crowed in a video interview this February. “Our companies have created it, expanded it, perfected it.” But from tax to privacy and now a string of antitrust investigations, one of those companies, Google, is under attack on multiple fronts in Europe.<br />
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The US president argued that what has been presented as high-minded intervention by regulators is in fact a commercially driven bid to protect old-world technology companies from the Silicon Valley invaders.<br />
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Europe’s most powerful regulator, the Brussels competition policy chief Margrethe Vestager, has taken aim at Google Shopping, its price-comparison service. In April, she launched a legal process that could result in a big fine. On Thursday, the search giant filed a 150-page rebuttal.<br />
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First of all, Google says it has not choked off traffic to rival shopping price sites – the traffic it sends to these kinds of sites has increased by 227% over a decade (its own data shows). Sounds like a big number. Until you look at the growth in Google’s own traffic over that period. The number of searches worldwide now stands at somewhere near 1.2 trillion a year – an increase of 750% in a decade.<br />
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Google also wants its shopping service considered as part of a much larger group that includes actual retailers, like Amazon, and marketplaces, like eBay, where people also go to compare prices. Perhaps, but these are very different businesses. The capital needed to launch an online retailer, let alone one with a global presence and a one-day delivery guarantee, is much larger than the funding required for a price-comparison startup.<br />
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Google’s strongest point is that forcing a company to offer its services to rivals is a drastic measure normally reserved for monopoly utilities. Google is very useful, but it is not water or electricity. Google Shopping is a very niche service.<br />
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The argument about fair price comparison is a sideshow given the much bigger worries about privacy, security and tax that currently dog the digital world. But a victory for regulators here could lead to more assaults – on Google’s flight-comparison service and maps. Vestager has also launched an investigation into Android, the group’s market-leading phone software. Obama may be called on to cheer the home team again before this fight is over.<br />
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Two sides to the national living wage?<br />
George Osborne has already claimed credit for Sainsbury’s increasing the base pay of its shop floor staff by 4%. “Britain deserves a pay rise so great Sainsbury’s staff will be paid at least national living wage early with biggest increases in 10 years,” he tweeted last week.<br />
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It is a indeed a credit to the chancellor that he has put pay on the agenda for Britain’s supermarkets, the country’s largest private employers, by announcing a national living wage in the budget last month. However, Sainsbury’s announcement is just one side of the coin: the other side is how it will finance the pay increase.<br />
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The Office for Budget Responsibility has estimated that the chancellor’s national living wage will lead to 60,000 job losses as companies fund the higher minimum pay by cutting jobs. Moody’s, the credit rating agency, has warned retailers could close stores, increase prices and employ more under-25s – who do not qualify for the national living wage. Perks for staff, such as in-store discounts, could also be at risk.<br />
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Sainsbury’s did not downgrade its profit forecasts at the same time as announcing the pay increase, so it must have found the money from somewhere – time will tell where.<br />
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From: The Guardian

MARKET COLLAPSE: CENTRAL BANKS CAN’T STOP IT

Like children clinging to their parents, stock market traders turned to their central banks last week as they sought protection from the ...

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LIES YOU WILL HEAR AS THE ECONOMIC COLLAPSE PROGRESSES

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<span style="line-height: 1.1;">It is undeniable; the final collapse triggers are upon us, triggers alternative economists have been warning about since the initial implosion of 2008</span></h5>
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In the years since the derivatives disaster, there has been no end to the absurd and ludicrous propaganda coming out of mainstream financial outlets and as the situation in markets becomes worse, the propaganda will only increase.</div>
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This might seem counter-intuitive to many. You would think that the more obvious the economic collapse becomes, the more alternative analysts will be vindicated and the more awake and aware the average person will be. Not necessarily…</div>
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In fact, the mainstream spin machine is going into high speed the more negative data is exposed and absorbed into the markets. If you know your history, then you know that this is a common tactic by the establishment elite to string the public along with false hopes so that they do not prepare or take alternative measures while the system crumbles around their ears. At the onset of the Great Depression the same strategies were used. Consider if you’ve heard similar quotes to these in the mainstream news over the past couple months:</div>
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John Maynard Keynes in 1927: “We will not have any more crashes in our time.”</div>
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H.H. Simmons, president of the New York Stock Exchange, Jan. 12, 1928: “I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”</div>
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Irving Fisher, leading U.S. economist, The New York Times, Sept. 5, 1929: “There may be a recession in stock prices, but not anything in the nature of a crash.” And on 17, 1929: “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”</div>
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W. McNeel, market analyst, as quoted in the New York Herald Tribune, Oct. 30, 1929: “This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”</div>
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Harvard Economic Society, Nov. 10, 1929: “… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.”</div>
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Here is the issue – as I have ALWAYS said, economic collapse is not a singular event, it is a process. The global economy has been in the process of collapse since 2008 and it never left that path. Those who were ignorant took government statistics at face value and the manipulated bull market as legitimate and refused to acknowledge the fundamentals. Now, with markets recently suffering one of the greatest freefalls since the 2008/2009 crash, they are witnessing the folly of their assumptions, but that does not mean they will accept them or apologize for them outright. If there is one lesson I have learned well during my time in the Liberty Movement, it is to never underestimate the power of normalcy bias.</div>
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There were plenty of “up days” in the markets during the Great Depression, and this kept the false dream of a quick recovery alive for a large percentage of the American population for many years. Expect numerous “stunning stock reversals” as the collapse of our era progresses, but always remember that it is the overall TREND that matters far more than any one positive or negative trading day (unless you open down 1000 points as we did on Monday), and even more important than the trends are the economic fundamentals.</div>
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The establishment has made every effort to hide the fundamentals from the public through far reaching misrepresentations of economic stats. However, the days of effective disinformation in terms of the financial system are coming to an end. As investors and the general public begin to absorb the reality that the global economy is indeed witnessing a vast crisis scenario and acknowledges real numbers over fraudulent numbers, the only recourse of central bankers and the governments they control is to convince the public that the crisis they are witnessing is not really a crisis. That is to say, the establishment will attempt to marginalize the collapse signals they can no longer hide as if such signals are of “minimal” importance.</div>
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Just as occurred during the onset of the Great Depression, the lies will be legion the closer we come to zero hour. Here are some of the lies you will likely hear as the collapse accelerates…</div>
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The Crisis Was Caused By Chinese Contagion</div>
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The hypocrisy inherent in this lie is truly astounding, to say the least, considering it is now being uttered by the same mainstream dirtbags who only months ago were claiming that China’s financial turmoil and stock market upset were inconsequential and would have “little to no effect” on Western markets.</div>
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I specifically recall these hilarious quotes from Barbara Rockefeller in July:</div>
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“Something else that doesn’t matter much is the Chinese equity meltdown—again. China may be big and powerful, but it lacks a retail base and fund managers experienced in price variations, never mind a true rout…”</div>
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“Doom-and-gloom types have been saying for a long time that we will get a stock market rout when the Fed finally does move to raise rates. But as we wrote last week, history doesn’t bear out the thesis, not that you can really count on history when the sample size is one or two data points…”</div>
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Yes, that is a bit embarrassing. One or two data points? There have been many central bank interventions in history. When has ANY central bank or any government ever used stimulus to manipulate markets through fiat infusion and zero interest fueled stock buybacks or given government the ability to monetize its own debt, and actually been successful in the endeavor? When has addicting markets to stimulus like a heroin dealer ever led to “recovery”? When has this kind of behavior ever NOT created massive fiscal bubbles, a steady degradation of the host society, or outright calamity?</div>
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Suddenly, according to the MSM, China’s economy does affect us. Not only that, but China is to blame for all the ills of the globally interdependent economic structure. And, the mere mention that the Fed might delay the end of near zero interest rates in September by a Federal Reserve stooge recently sent markets up 600 points after a week-long bloodbath; meaning, the potential for any interest rate increase no mater how small also has wider implications for markets.</div>
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The truth is, the crash in global stocks which will undoubtedly continue over the next several months despite any delays on ZIRP by the Fed is a product of universal decay in fiscal infrastructure. Nearly every single nation on this planet, every sovereign economy, has allowed central and international banks to poison every aspect of their respective systems with debt and manipulation. This is not a “contagion” problem, it is a systemic problem to every economy across the world.</div>
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China’s crash matters not because it is causing all other economies to crash. It matters because China is the largest importer/exporter in the world and it is a litmus test for the financial health of every other country. If China is failing, it means we are not consuming, and if we are not consuming, then we must be broke. China’s crash portends our own far worse economic conditions. THAT is why western markets have been crumbling along with China’s despite the assumptions of the mainstream.</div>
<div>
<br /></div>
<div>
China’s Rate Cuts Will Stop The Crash</div>
<div>
<br /></div>
<div>
No they won’t. China has cut rates five times since last November and this has done nothing to stem the tide of their market collapse. I’m not sure why anyone would think that a new rate cut would accomplish anything besides perhaps a brief respite from the continuing avalanche.</div>
<div>
<br /></div>
<div>
It’s Not A Crash, It’s Just The End Of A “Market Cycle”</div>
<div>
<br /></div>
<div>
This is the most ignorant non-explanation I think I have ever heard. There is no such thing as a “market cycle” when your markets are supported partially or fully by fiat manipulation. Our market is in no way a free market, thus, it cannot behave like a free market, and thus, it is a stunted market with no identifiable cycles.</div>
<div>
<br /></div>
<div>
Swings in markets of up to 5%-6% to the downside or upside (sometimes both in a single day) are not part of a normal cycle. They are a sign of cancerous volatility that comes from an economy on the brink of disaster.</div>
<div>
<br /></div>
<div>
The last few years have been seemingly endless market bliss in which any idiot day trader could not go wrong as long as he “bought the dip” while Fed monetary intervention stayed the course. This is also not normal, even in the so-called “new normal”. Yes, the current equities turmoil is an inevitable result of manipulated markets, false statistics, and misplaced hopes, but it is indeed a tangible crash in the making. It is in no way an example of a predictable and non-threatening “market cycle”, and the fact that mainstream talking heads and the people who parrot them had absolutely no clue it was coming is only further evidence of this.</div>
<div>
<br /></div>
<div>
The Fed Will Never Raise Rates</div>
<div>
<br /></div>
<div>
Don’t count on it. Public statements by globalist entities like the IMF on China, for example, have argued that their current crisis is merely part of the “new normal”; a future in which stagnant growth and reduced living standards is the way things are supposed to be. I expect the Fed will use the same exact argument to support the end of zero interest rates in the U.S., claiming that the decline of American wealth and living standards is a natural part of the new economic world order we are entering.</div>
<div>
<br /></div>
<div>
That’s right, mark my words, one day soon the Fed, the IMF, the BIS and others will attempt to convince the American people that the erosion of the economy and the loss of world reserve status is actually a “good thing”. They will claim that a strong dollar is the cause of all our economic pain and that a loss in value is necessary. In the meantime they will, of course, downplay the tragedies that will result as the shift toward dollar devaluation smashes down on the heads of the populace.</div>
<div>
<br /></div>
<div>
A rate hike may not occur in September. In fact, as I predicted in my last article, the Fed is already hinting at a delay in order to boost markets, or at least slow down the current carnage to a more manageable level. But, they WILL raise rates in the near term, likely before the end of this year after a few high tension meetings in which the financial world will sit anxiously waiting for the word on high. Why would they raise rates? Some people just don’t seem to grasp the fact that the job of the Federal Reserve is to destroy the American economic system, not protect it. Once you understand this dynamic then everything the central bank does makes perfect sense.</div>
<div>
<br /></div>
<div>
A rate increase will occur exactly because that is what is needed to further destabilize U.S. market psychology to make way for the “great economic reset” that the IMF and Christine Lagarde are so fond of promoting. Beyond this, many people seem to be forgetting that ZIRP is still operating, yet, volatility is trending negative anyway. Remember when everyone was ready to put on their ‘Dow 20,000′ hat, certain in the omnipotence of central bank stimulus and QE infinity? Yeah…clearly that was a pipe dream.</div>
<div>
<br /></div>
<div>
ZIRP has run it’s course. It is no longer feeding the markets as it once did and the fundamentals are too obvious to deny.</div>
<div>
<br /></div>
<div>
The globalists at the Bank for International Settlements in spring openly deemed the existence of low interest rate policies a potential trigger for crisis. Their statements correlate with the BIS tendency to “predict” terrible market events they helped to create while at the same time misrepresenting the reasons behind them.</div>
<div>
<br /></div>
<div>
The point is, ZIRP has done the job it was meant to do. There is no longer any reason for the Fed to leave it in place.</div>
<div>
<br /></div>
<div>
Get Ready For QE4</div>
<div>
<br /></div>
<div>
Again, don’t count on it. Or at the very least, don’t expect renewed QE to have any lasting effect on the market if it is initiated.</div>
<div>
<br /></div>
<div>
There is truly no point to the launch of a fourth QE program, but do expect that the Fed will plant the possibility in the media every once in a while to mislead investors. First, the Fed knows that it would be an open admission that the last three QE’s were an utter failure, and while their job is to dismantle the U.S. economy, I don’t think they are looking to take immediate blame for the whole mess. QE4 would be as much a disaster as the ECB’s last stimulus program was in Europe, not to mention the past several stimulus actions by the PBOC in China. I’ll say it one more time – fiat stimulus has a shelf life, and that shelf life is over for the entire globe. The days of artificially supported markets are nearly done and they are never coming back again.</div>
<div>
<br /></div>
<div>
I see little advantage for the Fed to bring QE4 into the picture. If the goal is to derail the dollar, that action is already well underway as the IMF carefully sets the stage for the Yuan to enter the SDR global currency basket next year, threatening the dollar’s world reserve status. China also continues to dump hundreds of billions in U.S. treasuries inevitably leading to a rush to a dump of treasuries by other nations. The dollar is a dead currency walking, and the Fed won’t even have to print Weimar Germany-style in order to kill it.</div>
<div>
<br /></div>
<div>
It’s Not As Bad As It Seems</div>
<div>
<br /></div>
<div>
Yes, it is exactly as bad as it seems if not worse. When the Dow can open 1000 points down on a Monday and China can lose all of its gains for 2015 in the span of a few weeks despite institutionalized stimulus measures lasting years, then something is very wrong. This is not a “hiccup”. This is not a correction which has already hit bottom. This is only the beginning of the end.</div>
<div>
<br /></div>
<div>
Stocks are not a predictive indicator. They do not follow positive or negative fundamentals. Stocks do not crash before or during the development of an ailing economy. Stocks crash after the economy has already gone comatose. Stocks crash when the system is no longer salvageable. Since 2008, nothing in the global financial structure has been salvaged and now the central banking edifice is either unable or unwilling (I believe both) to supply the tools to allow us even to pretend that it can be salvaged. We’re going to feel the hurt now, all while the establishment tells us the whole thing is in our heads.</div>
</div>

LIES YOU WILL HEAR AS THE ECONOMIC COLLAPSE PROGRESSES

It is undeniable; the final collapse triggers are upon us, triggers alternative economists have been warning about since the initial impl...

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China Sells U.S. Treasuries, US Debt is Unsustainable.

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China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter. Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.<br />
<br />
The People’s Bank of China has been offloading dollars and buying yuan to support the exchange rate, a policy that’s contributed to a $315 billion drop in its foreign-exchange reserves over the last 12 months. The $3.65 trillion stockpile will fall by some $40 billion a month in the remainder of 2015 because of the intervention, according to the median estimate in a Bloomberg survey.<br />
<br />
China selling Treasuries is “not a surprise, but possibly something which people haven’t fully priced in,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP. “It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind.”<br />
<br />
<br />
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<br />
Gross’s Tweet<br />
The PBOC and the U.S. Embassy in Beijing didn’t immediately respond to requests for comment. Bill Gross, who manages the $1.47 billion Janus Global Unconstrained Bond Fund, tweeted Wednesday “China selling long Treasuries ????”.<br />
<br />
Two-year Treasuries erased an earlier advance, with their yield little changed at 0.67 percent as of 11 a.m. in London. It fell as much as two basis points. The 10-year yield declined three basis points to 2.15 percent, near to its average for the past month.<br />
<br />
Chinese sales of U.S. government debt may have kept yields from falling this month as a selloff in global stocks prompted investors to favor the safest assets.<br />
<br />
“By selling Treasuries to defend the renminbi, they’re preventing Treasury yields from going lower despite the fact that we’ve seen a sharp drop in the stock market,” David Woo, head of global rates and currencies research at Bank of America Corp., said on Bloomberg Television on Wednesday. “China has a direct impact on global markets through U.S. rates.”<br />
<br />
China Holdings<br />
The latest available Treasury data and estimates by strategists suggest that China controls $1.48 trillion of U.S. government debt, according to data compiled by Bloomberg. That includes about $200 billion held through Belgium, which Nomura Holdings Inc. says is home to Chinese custodial accounts.<br />
<br />
The PBOC has sold at least $106 billion of reserve assets in the last two weeks, including Treasuries, according to an estimate from Societe Generale SA. The figure was based on the bank’s calculation of how much liquidity will be added to China’s financial system through Tuesday’s reduction of interest rates and lenders’ reserve-requirement ratios. The assumption is that the central bank aims to replenish the funds it drained when it bought yuan to stabilize the currency.<br />
<br />
The yuan rose 0.08 percent to 6.4053 per dollar on Thursday in Shanghai, trimming this month’s decline to 3.1 percent. Daily fluctuations have averaged less than 0.1 percent in the past two weeks as the PBOC intervened to bring stability following the Aug. 11 devaluation. The nation’s Treasury holdings will stop falling once the intervention stops and the currency is freely floating, said Steve Wang, chief China economist at Reorient Financial Markets Ltd. in Hong Kong.<br />
<br />
“Strategically, it probably has been China’s intention to find the right time to lighten up its excessive accumulation of U.S. Treasuries,” he said.<br />
<br />
by Blooomberg News

China Sells U.S. Treasuries, US Debt is Unsustainable.

China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation tw...

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Is The Federal Reserve Bank to blame for market crisis or is China?

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<br />
As stock markets continue their slide into negative territory, economists debate whether the problems lie in monetary mismanagement by the US Federal Reserve or with China’s domestic concerns “exporting pain” to others via its yuan devaluation.<br />
<br />
Speaking to RT, economist Peter Schiff of Euro Pacific Capital Inc. said that there is a lot of “scapegoating” surrounding China and the yuan’s devaluation when it comes to the recent downward fortunes of global stock markets, but that the Federal Reserve is the more responsible culprit when it comes to any instability in the American economy.<br />
<br />
“This is not about China. This problem is made in America. It’s all about the Fed. The Fed inflated this bubble and now they’re threatening to prick it. Everybody expects the Fed to actually raise interest rates,” Schiff said, after US stocks rallied early Tuesday before crashing in the final hour of trading.<br />
<br />
He went on to say that he believes the possibility of the Fed raising rates is “a bluff,” and that doing so would trigger another financial crisis.<br />
<br />
“If the Fed takes away the zero percent interest rates, this market is going to implode and we’re right back at recession… that is what is hurting markets around the world,” Schiff said. “It’s the fear of higher interest rates. That’s propping up the dollar, that’s depressing emerging markets, that’s depressing commodity markets.”<br />
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<br />
Critics of Schiff’s view claim the Fed isn’t to blame and that, in fact, the US government has not done enough to help boost the economy.<br />
<br />
“The problem is that this has been a very weak recovery for the United States,” Mark Weisbrot from the Center for Economic and Policy Research told RT. “Our GDP is about 8.5 percent bigger than it was at the peak before the Great Recession,” he said, adding that this statistic represents very little growth.<br />
<br />
By comparison, he said, China has grown by 80 percent and Europe has just recently caught up to its pre-recession peak. Specifically, Weisbrot singled out the European economy as the “much worse problem,” citing much higher unemployment rates there than in the US.<br />
<br />
He said the Fed “has done its part” by keeping interest rates low and that America needs more infrastructure investment and stimulus to create another three or four million jobs.<br />
<br />
Schiff, however, was adamant that the US hasn’t had “a real recovery.”<br />
<br />
“The reason that the average American is worse off today than when the recovery began is because the Fed hasn’t allowed a recovery,” he said, adding that measures such as zero percent interest rates are “interfering” with a true recovery. Instead, less government, higher rates and a “real recession” are needed before recovery can occur, Schiff said.<br />
<br />
This argument was challenged by Weisbrot, who said that allowing the recession to worsen wouldn’t have helped because the kinds of policies Schiff advocated for had been implemented in Europe and did not lead to better economic growth.<br />
<br />
Regarding China’s role in the market turmoil, economist Max Wolff of Manhattan Venture Partners told RT that the yuan’s devaluation is a move that suggests China is still more interested in looking inward than focusing on the global economy.<br />
<br />
“When the Chinese go for the devaluation, what they’re saying is, ‘We’re more concerned with our domestic employment and GDP picture, and we’re willing to make a good effort to export our pain to other people,’” he said. “What that means is that a leading global economy isn’t taking a leadership role; it’s really internally focused and it’s willing to export some pain in order to stabilize internally.”<br />
<br />
This could suggest the situation in China may be worse than initially thought, he added. Beijing’s move has led other nations to follow suit and devalue their currencies in order to stay competitive, Wolff said, warning that any further devaluation could risk a continuing chain reaction.<br />
<br />
At the same time, he noted that there are “real pockets of weakness” in the US economy, particularly since the bottom 75 to 80 percent of households still haven’t recovered from the 2008 crisis. “They’re not as strong as we’d like them to be going into a tough global moment,” Wolff said.<br />
<br />
From: RT News

Is The Federal Reserve Bank to blame for market crisis or is China?

As stock markets continue their slide into negative territory, economists debate whether the problems lie in monetary mismanagement by th...

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China's Stock Market Slips Once Again After Interest Rate Cut

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HONG KONG/SHANGHAI, Aug 26 (Reuters) - China's turbulent stock markets slipped again on Wednesday, as a double-barrelled blast of central bank stimulus failed to convince investors of Beijing's ability to jolt the world's second biggest economy out of its slowdown.<br />
<br />
After watching share prices tumble around 25 percent in a little more than a week, the People's Bank of China re-entered the fray late on Tuesday, cutting interest rates and further loosening bank lending restrictions.<br />
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The response from China's two main stock indexes - never reliable barometers of the domestic economy - was typically erratic, lurching between gains and losses of more than 3 percent before ending the day modestly lower.<br />
<br />
European markets had risen sharply immediately after the People's Bank of China's move on Tuesday, but U.S. indexes turned negative after an initial leap, setting the tone for a lackluster session in Asia on Wednesday.<br />
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"The whole market sentiment is still risk-off, which is why markets have taken the latest move from Beijing in their stride and believe more is needed to restore investor sentiment," said Grace Tam, global markets strategist at JP Morgan Asset Management in Hong Kong.<br />
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The CSI300 index of the biggest listed companies in Shanghai and Shenzhen closed down 0.6 percent, while the Shanghai Composite Index fell 1.3 percent.<br />
<br />
Investors' caution was understandable, said Lim Say Boon, Chief Investment Officer at DBS Bank, as the policy moves would have little impact on consumption in a nation of savers, or investment in a country where government, not the "animal spirits of the private sector," takes the lead.<br />
<br />
"What the market is waiting for (is) the 'big bazooka' of government spending," he wrote in a note.<br />
<br />
There was also concern that the PBOC was simply playing catch-up. ANZ Bank noted that, even after four interest rate cuts since November, the negative producer price index (PPI) was keeping real borrowing costs elevated.<br />
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"With the PPI at minus 5.4 percent y/y in July, the real interest rate costs could be well above 10 percent," it said.<br />
<br />
"We believe that the traditional monetary policy easing, such as cutting RRR (reserve requirement ratio) and lowering the interest rate, is not sufficient to mitigate the risks associated with China's highly leveraged economy," it added.<br />
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<b>SURPRISE DEVALUATION</b><br />
Concerns about China's economy intensified after factory activity shrank at its fastest pace in almost 6-1/2 years and the central bank unexpectedly devalued its yuan currency earlier this month.<br />
<br />
There is, however, little evidence that the stock market mayhem has hit consumer spending so far. Confidence among Chinese consumers rose for the third consecutive month in August, according to a Westpac MNI survey, as household finances continued to improve.<br />
<br />
OCBC Bank noted that cuts in the RRR were needed to ease the liquidity pressures created by capital outflows that had been exacerbated by the yuan devaluation. It said it expected at least another 100 basis point cut this year.<br />
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Japanese automaker Suzuki Motor Corp highlighted the problem manufacturers in China face, with its sales faltering as the economy slows. It said on Wednesday it needed to adjust its production capacity in the country, which was roughly twice what it could sell.<br />
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"Currently, there is still downward pressure on China's economic growth," the central bank acknowledged on Tuesday.<br />
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Investors are also concerned that China is growing at a much slower pace than the official 7 percent target for 2015.<br />
<br />
Despite that, a majority of economists predict a continued deceleration - rather than a crash - for China's economy, and most dismiss comparisons with the 2008 global financial crisis or the 1997/98 crisis in Asia.<br />
<br />
"The upshot is that there is no sign in the recent data of a deepening economic crisis," wrote analysts at Capital Economics. "With policy support gathering force, a rebound in growth still looks the most likely outturn for the next couple of quarters."

China's Stock Market Slips Once Again After Interest Rate Cut

HONG KONG/SHANGHAI, Aug 26 (Reuters) - China's turbulent stock markets slipped again on Wednesday, as a double-barrelled blast of cen...

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NYSE invokes Rule 48 again to smooth market open

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<br />
U.S. stock index futures pointed to a sharply higher open on Tuesday, recovering from the plunge seen in global stocks on Monday as mayhem in Chinese markets and interest rate fears dominated markets.<br />
<br />
The New York Stock Exchange invoked Rule 48 for the second day in a row, Dow Jones reported.<br />
<br />
The exchange used the rule before Monday's open after futures for several major averages hit limit down. The last time the rule was used was during the financial crisis.<br />
<br />
What is Rule 48? The goal of Rule 48 is to ensure orderly trading amid financial market turbulence. It's only used in the event that extremely high market volatility is likely to have a floor-wide impact on the ability of designated market makers (DMMs) to disseminate price indications before the bell.<br />
<br />
Unlike a circuit breaker that stops stock trading, Rule 48 speeds up the opening by suspending the requirement that stock prices be announced at the market open. Those prices have to be approved by stock market floor managers before trading actually begins. Without that approval, stock trading can begin sooner.<br />
<br />
Dow futures briefly rose more than 600 points in premarket trading, implying a more than 450-point bounce at the open and shrugging off deeper selling in China's mainland stock market.<br />
<br />
From: CNBC News

NYSE invokes Rule 48 again to smooth market open

U.S. stock index futures pointed to a sharply higher open on Tuesday, recovering from the plunge seen in global stocks on Monday as mayhe...

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Surviving the Economic Meltdown

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Just remember what happened back in 2008.  That crisis took most people totally by surprise. Millions of Americans lost their jobs, and because most of them were living paycheck to paycheck, all of a sudden most of them couldn’t pay the rent or the mortgage either.  Large numbers of families that were once living a comfortable middle class lifestyle suddenly found themselves destitute.  Well, this coming crisis is going to be even worse by the time it is all said and done, and it is not just going to be economic in nature.  Over the past two trading days, the Dow has gone down more than a thousand points.  The shaking that so many have warned about has begun.  As this shaking plays out, you and your family will need cash, food, supplies and a whole bunch of other things.  If you do not already have everything prepared, then you need to kick your prepping into overdrive because we are on a very compressed time frame now.<br />
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But don’t just take my word for it.  A top adviser to former British Prime Minister Gordon Brown named Damian McBride is saying the same thing…<br />
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A former adviser to Gordon Brown has urged people to stock up on canned goods and bottled water as stock markets around the world slide.<br />
And he didn’t just speak in generalities.  According to an article in one of the most important newspapers in the UK, McBride is urging his fellow citizens to do some very specific things…<br />
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“Advice on the looming crash, No.1: get hard cash in a safe place now; don’t assume banks & cashpoints will be open, or bank cards will work,” he tweeted.<br />
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“Crash advice No.2: do you have enough bottled water, tinned goods & other essentials at home to live a month indoors? If not, get shopping.<br />
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“Crash advice No.3: agree a rally point with your loved ones in case transport and communication gets cut off; somewhere you can all head to.”<br />
All of that is great advice.<br />
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But I wonder why he is so concerned about people being able to live a month indoors.  Does he know something that the rest of us do not?<br />
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Others are issuing similar ominous warnings.  The following is an excerpt from a recent article by Chuck Baldwin that seemed to be written with an unusual sense of urgency…<br />
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I suggest you have a supply of food and water to last at least three months. Many survival experts insist that a six-month supply is the minimum. Personally, I can live a long time on tuna fish or peanut butter. You can purchase MREs from a variety of sources, as well as camp-style packaged food from many sporting goods stores. Of course, bottled water is available everywhere during normal times. Stock up! Distilled water will store longer than spring water. Plus, I suggest you have some water purification tablets or a Katadyn water filter on hand. And, if you are able, prepare to grow your own food. In cold weather climates such as we have here in Montana, people quickly learn how to construct and utilize greenhouses in which to grow food. Canning food is another very helpful hedge against deprivation. If your parents and grandparents lived through the Great Depression as mine did, this was standard operating procedure.<br />
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Get a generator. Keep a supply of fuel on hand. Stay stocked up on batteries, candles, portable lights, first aid supplies, and toiletries–especially toilet paper and toothpaste. I also suggest you never run out of lighters or matches. You never know when you’ll need to build a fire. If you live in a cold weather climate, you probably already have some sort of wood stove or fireplace.<br />
You can read the rest of that outstanding article right here.<br />
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Similar sentiments were expressed in a recent piece by prepper extraordinaire Daisy Luther…<br />
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Take your money out of the bank ASAP. If you still keep your money in the bank, go there and remove as much as you can while leaving in enough to pay your bills. Although it wasn’t a market collapse in Greece recently, the banks did close and limit ATM withdrawals. People went for quite some time without being able to access their money, but were able to have a sense of normalcy by transferring money online to pay bills or using their debit cards to make purchases. Get your cash out.You don’t want to be at the mercy of the banks.<br />
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Stock up on supplies. Make sure you are prepped. If you’re behind on your preparedness efforts and need to do this quickly, you can orderbuckets of emergency food just to have some on hand. (Learn how to build an emergency food supply using freeze dried food HERE) Hit the grocery store or wholesale club and stock up there, too, on your way home.<br />
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Load up on fuel. Fill up your gas tank and fill your extra cans also. Quite often, fuel prices skyrocket in the wake of a market crash.<br />
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Be prepared for the potential of civil unrest. If the banks put a limit on withdrawals (or close like they did in Greece) you can look for some panic to occur. If the stores dramatically increase prices or close..more panic. Be armed and be prepared to stay safely at home. (Although this article was written during the Ferguson race riots, civil unrest follows a similar pattern regardless of the cause.)<br />
Be prepared for the possibility of being unable to pay your bills. If things really go downhill, the middle class and those who are the working poor will be the most strongly affected, as they have been in Greeceduring that country’s ongoing financial crisis. This article talks about surviving if you are unable to pay all of your bills.<br />
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Every family is facing a different set of circumstances, so “prepping” is not going to look the same for everyone.  What may make sense for you may not make sense for me.  But the truth is that we all need to get prepared for what is coming, because time is running out.<br />
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As I have discussed repeatedly, I have more of a sense of urgency about the last six months of 2015 than I have ever had about any other other specific period of time.  That is why the book that I recently co-authored with survivalist expert Barbara Fix is entitled “Get Prepared NOW“.  The word “NOW” is in larger print than everything else on the front cover because I really wanted to emphasize the urgency of what we are facing.<br />
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If you think that you can wait until next year to start getting prepared, you are going to be too late.<br />
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This stock market crash is just the beginning.  Next month we are witnessing a convergence of events that is pretty much unprecedented.  The relative stability of the past few years has lulled millions of Americans into a state of complacency.<br />
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And even our politicians are displaying a stunning level of complacency.  For example, even though our nation is rapidly going down the toilet, Barack Obama has played more than 1,100 hours of golf while he has been in the White House.<br />
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It is time for all of us to awaken from our slumber, because life in America is about to dramatically change.<br />
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Do you have some specific tips to share with those that are trying to get prepared for what is coming?  Please feel free to join the discussion by posting a comment below…

Surviving the Economic Meltdown

Just remember what happened back in 2008. That crisis took most people totally by surprise. Millions of Americans lost their jobs, and b...

Read Article »

ANALYST: “WE ARE NOW IN A FULL ON MARKET CRASH”

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Financial analyst Clive P. Maund asserts that we are now witnessing a “full on market crash” and that the Dow could see drops of up to a thousand points on a daily basis.<br />
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The Dow Jones lost 6% last week, tumbling more than 1,000 points, the worst fall since 2008, but according to technical analyst Maund, that is only the beginning. With fringe investors only just realizing the delusion of establishment financial media claims that the collapse was just a temporary “correction,” the rush to the exit will now become a stampede.<br />
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“When a market tips into a crash on a Friday, what typically happens is that the thousands or even millions of investors who believed the mainstream media and didn’t see it coming spend the weekend “stewing” over their investments – and many of them decide to bail out come Monday,” writes Maund.<br />
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“Thus we may see a massive down day tomorrow, possibly the worst of the crash phase, and it would not be that surprising to see the Dow Jones Industrials drop by 800 – 1000 points in one day, perhaps even more. Remember that the Dow Jones Industrials “only” dropped 3% on Friday, which is no big deal by the standards of past crashes,” he adds.<br />
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Maund predicts several days of high volume selling, noting that the market is currently in “full blown panic mode,” before a more measured decline confirms the emergence of a bear market downtrend. A self-perpetuating “Mexican wave” of losses will continue to spread globally for a few days, writes Maund.<br />
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Meanwhile, this morning’s continued collapse in Asia has sent the “fear index,” which monitors volatility in S & P stocks, exploding to its highest level since 2011.<br />
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Business Insider’s Henry Blodget says that stocks need to “drop of 40%-50% from the recent high” merely to “get back to historically average levels of valuation and performance.”<br />
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Even as investors resort to panic selling, some sectors of the establishment financial media are still clinging on to the delusion that we’re in a bull market.<br />
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CNBC is encouraging people to pour more money into the stock market, claiming that the collapse is merely a “dull year,” while Bloomberg is calling it a mere “correction”.<br />
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When this kind of blind faith begins to take hold, you know the bottom is about to drop out.<br />
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By <b>Paul Joseph Watson of InfoWars.com</b>

ANALYST: “WE ARE NOW IN A FULL ON MARKET CRASH”

Financial analyst Clive P. Maund asserts that we are now witnessing a “full on market crash” and that the Dow could see drops of up to a ...

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MARKET CRASH: FREIGHT RATES FROM ASIA TO EUROPE CRASH 60% IN THREE WEEKS

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<strong style="box-sizing: border-box;">Three weeks ago, when <a href="http://www.zerohedge.com/news/2015-08-02/something-just-snapped-container-freight-rates-asia-europe-crash-23-one-week" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">we last looked </a>at the collapse in trade along what may be the most trafficked route involving China, i.e., from Asia to Northern Europe, we noted that while that particular shipping freight rate Europe had crashed some 23% on just one week, there was some good news: at least the Baltic Dry index was still inexplicably rising, and at last check it was hovering just above 1,100.</strong></div>
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That is no longer the case, and just as with everything else in recent months, the Baltic Dry dead cat bounce is now over, with the BDIY topping out just above 1200 on August 4, and now back in triple digit territory, rapidly sliding back to the reality of recent record lows which a few months ago we suggested hinted that much more is wrong with global trade, and the global economy, than artificially manipulated stock markets would admit.</div>
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<a data-slb-active="1" href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/2015-08-23_9-02-48%20BDIY.jpg" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank"><img alt="" class="img-responsive" height="270" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/2015-08-23_9-02-48%20BDIY_0.jpg" style="border: none; box-sizing: border-box; display: block; height: auto; max-width: 100%; outline: none; vertical-align: middle;" width="501" /></a></div>
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More importantly, a major source of confusion appears to have been resolved. Recall that as <a href="http://www.zerohedge.com/news/2015-08-02/something-just-snapped-container-freight-rates-asia-europe-crash-23-one-week" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">we noted on August 3</a>, “many were wondering how it was possible that with accelerating deterioration across all Chinese asset classes, not to mention the bursting of various asset bubbles, could global shippers demand increasingly higher freight rates, an indication of either a tight transportation market or a jump in commodity demand, neither of which seemed credible. We may have the answer.”</div>
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<span style="color: #333333; font-family: Georgia, Times New Roman, Times, serif;"><span style="font-size: 13px; line-height: 18.2000007629395px;">We did. To wit: “Should the dead cat bounce in shipping rates indeed be over, and if the accelerate slide continues at the current pace, not only will shippers mothball key transit lanes, but the biggest concern for global economy, the unprecedented slowdown in world trade volumes, which we flagged a week ago, will be not only confirmed but is likely to unleash yet another global recession.“</span></span></div>
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<span style="color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px;">As expected, on Friday, we got confirmation that the BDIY has indeed become a lagging indicator to actual demand, when Reuters reported in its latest weekly update using data from the Shanghai Containerized Freight Index, that key shipping freight rates for transporting containers from ports in Asia to Northern Europe fell by 26.7 percent to $469 per 20-foot container (TEU) in the week ended on Friday.</span></div>
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<span style="color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px;">The collapse in rates is nothing short of a bloodbath: “it was the third consecutive week of falling freight rates on the world’s busiest route and rates are now nearly 60 percent lower than three weeks ago.</span></div>
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<span style="color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px;">Freight rates on the world’s busiest shipping route have tanked this year due to overcapacity in available vessels and sluggish demand in goods to be transported. Rates generally deemed profitable for shipping companies on the route are at about $800-$1,000 per TEU.</span></div>
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<span style="color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px;">Other Europe-focused freight rates did even worse, with container freight rates from Asia to ports in the Mediterranean plunging 32.1%, while those to the US West and East coast slid by 7.9% and 9.9%, respectively.</span></div>
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<span style="color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px;">This should not come as a surprise: it was back in March when we first reported that “Global Trade Volume Tumbles Most Since 2011; Biggest Value Plunge Since Lehman.”</span></div>
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<a data-slb-active="1" href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/03/global%20trade%20USD.jpg" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; margin-left: 1em; margin-right: 1em; outline-offset: -2px; outline: -webkit-focus-ring-color auto 5px;" target="_blank"><img alt="" class="img-responsive" height="322" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/03/global%20trade%20USD_0.jpg" style="border: none; box-sizing: border-box; display: block; height: auto; max-width: 100%; outline: none; vertical-align: middle;" width="509" /></a></div>
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<span style="line-height: 18.2000007629395px;">It took the no longer discounting “market” about 6 months to figure this out. As for the culprit, no question who is at fault.</span></div>

MARKET CRASH: FREIGHT RATES FROM ASIA TO EUROPE CRASH 60% IN THREE WEEKS

Three weeks ago, when we last looked at the collapse in trade along what may be the most trafficked route involving China, i.e., from ...

Read Article »