Critical Observer

NOBEL LAUREATE: US STOCK MARKET TO COLLAPSE

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<span style="font-family: inherit;"><span class="source" style="line-height: 24px;">(Mark Lennihan/AP) </span><span class="caption" style="line-height: 24px;">Robert Shiller.</span></span></div>
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<span style="font-family: inherit;">Robert Shiller is worried about the stock market. And the Nobel laureate's concern can be summed up in this chart, which shows a steady decline in the valuation of the stock market from both institutional and individual buyers.</span></div>
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<span style="font-family: inherit;"><img alt="Screen Shot 2015 09 13 at 8.25.35 PM" class="editorial" data-mce-source="Yale" data-preembed="image" height="434" src="http://l1.yimg.com/bt/api/res/1.2/fkkQSVN.jkOLHYW5_.DjKw--/YXBwaWQ9eW5ld3NfbGVnbztxPTg1O3c9NjUw/http://globalfinance.zenfs.com/en_us/Finance/US_AFTP_SILICONALLEY_H_LIVE/This_is_the_chart_that-f9c7f21d8ee2fa6cb4953c89e753afe1" style="background-repeat: no-repeat; border: 0px; display: inline; height: auto; margin: 0px; max-width: 100%; min-height: 1px; opacity: 1 !important; vertical-align: bottom; visibility: visible !important; width: auto !important;" width="650" /></span></figure></div>
<span style="font-family: inherit;"><span class="source" style="background-color: white; line-height: 24px;">(Yale)  </span><span style="background-color: white; line-height: 24px;">This chart shows Shiller's stock market confidence index, which he compiles by asking investors whether they think the stock market is overvalued, fairly valued, or undervalued.</span></span><br />
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<span style="font-family: inherit;">In an interview with the Financial Times, Shiller explains that what worries him about this chart is that the drop in investor confidence corresponds with an increase in the valuation and overall index level of the market.</span></div>
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<span style="font-family: inherit;">Said another way, investors keep buying stocks even though they don't really think stocks are, on balance, a good deal. It is, then, something closer to fear than optimism that is fueling the rally in stocks.</span></div>
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<span style="font-family: inherit;">This is a similar pattern to what happened for years ahead of the popping of the tech bubble, which Shiller nailed when his book "Irrational Exuberance" was first published right at the bubble's peak in 2000.</span></div>
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<span style="font-family: inherit;"><span style="background-color: white; line-height: 24px;">Now, the idea that Shiller thinks 1) the stock market is currently in a bubble and 2) that this bubble is being inflated in part by — or in spite of — our fears is not a new theme for him. About a year ago,</span><a data-rapid_p="12" href="http://www.businessinsider.com/robert-shiller-on-the-stock-market-2014-9" style="background-color: white; color: #324fe1; line-height: 24px; text-decoration: none;" target="_blank">Shiller said</a><span style="background-color: white; line-height: 24px;"> our anxieties were driving the stock market to new record highs.</span></span><br />
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<span style="font-family: inherit;">And in <a data-rapid_p="13" href="http://www.businessinsider.com/afp-fear-behind-current-stock-market-highs-nobel-laureate-2015-3" style="color: #324fe1; text-decoration: none;" target="_blank">multiple</a> <a data-rapid_p="14" href="http://www.businessinsider.com/robert-shiller-stock-market-bubble-2015-5" style="color: #324fe1; text-decoration: none;" target="_blank">interviews</a> this year Shiller has said there is a "<a data-rapid_p="15" href="http://www.businessinsider.com/robert-shiller-stock-market-bubble-2015-5" style="color: #324fe1; text-decoration: none;" target="_blank">bubble element"</a> to what we're seeing in the stock market while reiterating his call that this stock market rally is a "<a data-rapid_p="16" href="http://www.businessinsider.com/afp-fear-behind-current-stock-market-highs-nobel-laureate-2015-3" style="color: #324fe1; text-decoration: none;" target="_blank">new normal boom</a>" that is more or less devoid of optimism about the future.</span></div>
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<span style="font-family: inherit;">Beyond the confidence index, Shiller is perhaps best known for his CAPE, or cyclically adjusted price-to-earnings ratio, which measures inflation-adjusted earnings over a 10-year rolling period.</span></div>
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<span style="font-family: inherit;">The idea behind this measure is to give investors a longer-term view on whether stock prices are cheap, fairly valued, or expensive relative to history. Shiller added in his comments to the FT that he found this measure "substantially predicts" stock returns over the next decade.</span></div>
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<span style="font-family: inherit;">And right now, the Shiller CAPE ratio makes stocks look pretty expensive, meaning returns will probably be pretty crappy going forward. So at least we have that to look forward to.</span></div>
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<span class="source" style="background-color: white; line-height: 24px;">By Myles Udland of Business Insider</span>

NOBEL LAUREATE: US STOCK MARKET TO COLLAPSE

(Mark Lennihan/AP) Robert Shiller. Robert Shiller is worried about the stock market. And the Nobel laureate's concern can be sum...

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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...

Read Article »

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

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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 />
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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 />
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“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 />
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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 />
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“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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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 />
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“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 />
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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 />
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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 />
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Schiff, however, was adamant that the US hasn’t had “a real recovery.”<br />
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“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 />
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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 />
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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 />
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“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 />
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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 />
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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 />
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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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NYSE invokes Rule 48 again to smooth market open

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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 />
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The New York Stock Exchange invoked Rule 48 for the second day in a row, Dow Jones reported.<br />
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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 />
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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 />
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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 />
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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 />
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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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<div style="background-color: white; box-sizing: border-box; color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px; margin-bottom: 10px;">
<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>
<div style="background-color: white; box-sizing: border-box; color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px; margin-bottom: 10px;">
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>
<div style="background-color: white; box-sizing: border-box; margin-bottom: 10px;">
<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>
<div style="background-color: white; box-sizing: border-box; margin-bottom: 10px;">
<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 ...

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GLOBAL ECONOMY IS OFFICIALLY MELTING DOWN

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<span style="box-sizing: border-box;">Years of bailouts and monetary expansion have created one of the most inflated and artificial economic booms in history, and now it appears that this global economic bubble is deflating. M</span><span style="line-height: 18.2000007629395px;">arkets across the board are melting down as we speak, and the financial crash that supposedly “fringe” analysts have been predicting since 2008, is finally upon us. Take a look at what’s going down right now.</span></div>
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<li style="box-sizing: border-box;">The Dow has fallen <a href="http://theeconomiccollapseblog.com/archives/we-have-already-witnessed-the-first-1300-points-of-the-stock-market-crash-of-2015" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">1300 points</a> from its peak. On Friday alone, it fell by 530 points, making it the<a href="http://theeconomiccollapseblog.com/archives/this-2-day-stock-market-crash-was-larger-than-any-1-day-stock-market-crash-in-u-s-history" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">9th worst stock market crash</a> in US history.</li>
<li style="box-sizing: border-box;">The Shanghai composite fell by <a href="http://money.cnn.com/2015/08/21/investing/china-stocks-shanghai-composite/" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">more than 11%</a> this week. All told, China’s stock market has lost a third of its value since its previous peak, and the only thing holding it up is their government’s intervention. It lost 4% of its value on Friday after it was revealed that their manufacturing activity had reached a <a href="http://money.cnn.com/2015/08/20/news/economy/china-factories-growth-pmi/index.html?iid=EL" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">77 month low</a>.</li>
<li style="box-sizing: border-box;"><a href="http://www.bloomberg.com/news/articles/2015-08-21/world-s-richest-people-lose-182-billion-as-market-rout-deepens" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">400 of the world’s richest people</a> lost a total of $182 billion this week, amounting to 6.3% of their collective wealth. When the people who benefit the most from inflated markets are getting hurt, you know that the bubble is bursting.</li>
<li style="box-sizing: border-box;">The dollar’s rally may be finally nearing its end. Its value has fallen slightly, but consistently <a href="http://www.marketwatch.com/story/dollar-tumbles-after-downbeat-china-manufacturing-data-2015-08-21" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">for the past 2 weeks</a>.</li>
<li style="box-sizing: border-box;">Commodities have fallen to a <a href="http://www.bloomberg.com/news/articles/2015-08-21/these-charts-show-how-hard-china-has-hit-global-markets" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">13 year low</a>. The price of copper has reached a 6 year low while oil has suffered its longest <a href="http://www.marketwatch.com/story/oil-prices-under-pressure-in-asia-after-weak-chinese-manufacturing-data-2015-08-21" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">decline since 1986.</a></li>
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That last one is very telling. You can always tell when the global economy is in bad shape based on the value of various commodities. It’s one of the strongest indicators for an economy, since it reveals how many real, tangible goods are being produced. Curiously, many of these commodities have been falling in value throughout the supposed recovery that we’ve been in since 2009. <span style="line-height: 18.2000007629395px;">The only commodity that is doing well right now is gold, which has reached a six week high, and just had its best week</span><span style="line-height: 18.2000007629395px;"> </span><a href="http://www.marketwatch.com/story/gold-climbs-to-six-and-a-half-week-high-2015-08-21" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; line-height: 18.2000007629395px; outline: none; text-decoration: none;" target="_blank">since last January</a><span style="line-height: 18.2000007629395px;">. Given the safe haven status that gold holds, it’s clear now that confidence in the US dollar and the global economy, is slowly slipping.</span></div>
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With all of this information at hand, it would be hard to deny that we may be finally witnessing the same kind of crash that we endured in 2008. Anyone who thought that we’ve been in a genuine recovery for the past 6 years, was foolish. But anyone who thinks that global markets will simply bounce back from what has occurred over the past few weeks, is downright crazy.</div>
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<i style="box-sizing: border-box; font-family: Neuton, sans-serif; line-height: 25.7142868041992px;">by</i><span style="font-family: Neuton, sans-serif; line-height: 25.7142868041992px;"> </span><span style="box-sizing: border-box; font-family: Neuton, sans-serif; line-height: 25.7142868041992px; text-transform: uppercase;"><span style="box-sizing: border-box;">JOSHUA KRAUSE</span> | <a href="http://www.thedailysheeple.com/the-global-economy-is-officially-melting-down_082015" style="background: transparent; border: none; box-sizing: border-box; color: black; outline: none; text-decoration: none;" target="_blank">THE DAILY SHEEPLE</a> </span><span style="font-family: Neuton, sans-serif; line-height: 25.7142868041992px;">| </span><span style="box-sizing: border-box; font-family: Neuton, sans-serif; line-height: 25.7142868041992px; text-transform: uppercase;">AUGUST 23, 2015</span></div>
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GLOBAL ECONOMY IS OFFICIALLY MELTING DOWN

Years of bailouts and monetary expansion have created one of the most inflated and artificial economic booms in history, and now it app...

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