17
Reasons To Be EXTREMELY Concerned About The Second
Half Of 2012
http://theeconomiccollapseblog.com
http://17reasonssecondhalfworse.htm
What is the second half of 2012 going to
bring? Are things going to get even worse than they are right now?
Unfortunately, that appears more likely with each passing day. I will
admit that I am extremely concerned about the second half of 2012.
Historically, a financial crisis is much more likely to begin in the fall than
during any other season of the year. Just think about it. The stock
market crash of 1929 happened in the fall. "Black Monday"
happened on October 19th, 1987. The financial crisis of 2008 started in
the fall. There just seems to be something about the fall that brings out
the worst in the financial markets. But of course there is not a stock
market crash every year. So are there specific reasons why we should be
extremely concerned about what is coming this year? Yes, there are.
The ingredients for a "perfect storm" are slowly coming together, and
in the months ahead we could very well see the next wave of the economic
collapse strike. Sadly, we have never even come close to recovering from
the last recession, and this next crisis might end up being even more painful
than the last one.
The
following are 17 reasons to be extremely concerned about the second half of
2012....
#1 Historical Trends
A
recent IMF research paper by Luc Laeven and Fabián
So
what will this September bring?
#2 JP Morgan
Do
you remember back in May when JP Morgan announced that it would be taking a 2 billion dollar trading loss on some
derivatives trades gone bad? Well, the New York Times is now reporting
that the real figure could reach 9 billion dollars, but nobody
really knows for sure. At some point is JP Morgan going to need a
bailout? If so, what is that going to do to the
#3 Derivatives
Last
week, Moody's downgraded the credit ratings of 15 major global banks.
As a result, a number of them have been required to post billions of dollars in additional collateral
against derivatives exposures....
Citigroup’s
two-notch long-term rating downgrade from A3 to Baa2 could have led to US$500m
in additional liquidity and funding demands due to derivative triggers and
exchange margin requirements, according to the bank’s 10Q regulatory filing at
the end of the first quarter.
Morgan
Stanley – which Moody’s downgraded from A2 to Baa1 – said a two-notch downgrade
from both Moody’s and Standard and Poor’s could spur an additional US$6.8bn of
collateral requirements in its latest 10Q. The bank did not break down its
potential collateral calls under a scenario where only Moody’s downgraded the
bank below the Single A threshold.
Royal
Bank of
The
worldwide derivatives market is starting to show some
cracks, and at some point this is going to become a major disaster.
Remember,
the 9 largest
#4 LEAP/E2020 Warning
LEAP/E2020
has issued a red alert for the global financial
system for this fall. They are warning that the "second half of
2012" will represent a "major inflection point" for the global
economic system....
The
shock of the autumn 2008 will seem like a small summer storm compared to what
will affect planet in several months.
In
fact LEAP/E2020 has never seen the chronological convergence of such a series
of explosive and so fundamental factors (economy, finances, geopolitical…)
since 2006, the start of its work on the global systemic crisis. Logically, in
our modest attempt to regularly publish a “crisis weather forecast”, we must
therefore give our readers a “Red Alert” because the upcoming events which are
readying themselves to shake the world system next September/ October belong to
this category.
#5 Increasing Pessimism
One
recent survey of corporate executives found that only 20 percent of them expect the global
economy to improve over the next 12 months and 48 percent of them expect the global
economy to get worse over the next 12 months.
#6
The
Spanish financial system is basically a total nightmare at this point.
Moody's recently downgraded Spanish debt to one level above junk status, and
earlier this week Moody's downgraded the credit ratings of 28 major Spanish banks.
According
to CNBC,
The
yield paid on a 3-month bill was 2.362 percent, up from just 0.846 percent a
month ago. For six-month paper, it leapt to 3.237 percent from 1.737 percent in
May.
Needless
to say, this is very, very bad news.
#7
The
situation in
The
euro zone’s third-biggest economy is seen as the next domino at risk of
toppling after the European Union’s June 9 deal to lend
A
recent Fortune article detailed some of
the economic fundamentals that have so many economists deeply concerned about
the Italian economy right now....
The
main glaring risk threats that could propel Italy down the path to become
Europe's next domino is the size of country's outstanding debt (at €1.9
trillion or 120% of GDP); the mountain of debt it has to roll over in the next
12 months (nearly €400 billion); and the market's cracking credibility around
Prime Minister Mario Monti's ability to reduce the
country's fiscal footprint and spur growth.
Further,
fear around Italy's creditworthiness, which has recently been expressed by near
cycle highs in sovereign CDS spreads and government yields on the 10-year bond,
follow some rather glaring negative fundamentals over recent quarters and
years: declining GDP over the last three consecutive quarters; a rising
unemployment rate (especially among its youth); deterioration in labor market
competitiveness; and increased competition for export goods to its key trading
partners.
#8
I
have written extensively about the financial
nightmare that is unfolding in
#9
The
tiny island nation of Cyprus has become the fifth member of the eurozone to formally request a bailout. This is yet
another sign that the eurozone is rapidly falling
apart.
#10
German
Chancellor Angela Merkel continues to promote an austerity path for
Merkel,
speaking to a conference in Berlin today as Spain announced it would formally
seek aid for its banks, dismissed “euro bonds, euro bills and European deposit
insurance with joint liability and much more” as “economically wrong and
counterproductive,” saying that they ran against the German constitution.
“It’s
not a bold prediction to say that in
In
fact, Merkel says that there will be no eurobonds
"as long as I live".
This means that there will be no "quick fix" for the problems that
are unfolding in
#11 Bank Runs
Every
single day, hundreds of billions of dollars is being pulled out of banks in
southern
In a previous article I included an extremely alarming
quote from a CNBC article about the unfolding banking crisis in
Financial
advisers and private bankers whose clients have accounts too large to be
covered by a Europe-wide guarantee on deposits up to 100,000 euros ($125,000), are reporting a "bank run by wire
transfer" that has picked up during May.
Much
of this money has headed north to banks in
"It's
been an ongoing process but it certainly picked up pace a couple of weeks ago
We believe there is a continuous 2-3 year bank run by wire transfer," said
Lorne Baring, managing director at B Capital, a Geneva-based pan European
wealth management firm.
How
long can these bank runs continue before banking systems start to
collapse?
#12 Preparations For
The Collapse Of The Eurozone
As I
have written about previously, the smart money has already written off southern
Visa
Chief
Commercial Officer Steve Perry said Tuesday that management at the U.K.-based
credit-card company meets weekly to explore various possible outcomes,
including a total collapse of the euro zone.
#13 Global Lending Is Slowing Down
All
over the globe the flow of credit is beginning to freeze up. In fact, the
Bank for International Settlements says that worldwide lending is contracting
at the fastest pace since the financial
crisis of 2008.
#14 Sophisticated Cyber Attacks On Banks
It is
being reported that "very sophisticated" hackers have successfully
raided dozens of banks in
Sixty
million euro has been stolen from bank accounts in a massive cyber bank raid
after fraudsters raided dozens of financial institutions around the world.
According
to a joint report by software security firm McAfee and Guardian Analytics, more
than 60 firms have suffered from what it has called an "insider level of
understanding".
What
happens someday if we wake up and all
the money in the banks is gone?
#15
All
over the
Stockton,
California, said it will file for bankruptcy after talks with bondholders and
labor unions failed, making the agricultural center the biggest U.S. city to
seek court protection from creditors.
“The
city is fiscally insolvent and must seek Chapter 9 bankruptcy protection,”
#16 The Obamacare Decision
The U.S. economy is already a complete and total mess, and
now the Obamacare
decision is going to throw a huge wet blanket on it. All over
#17 The
It is
being reported that Barack Obama is putting together an army of "thousands of lawyers" to
deal with any disputes that arise over voting procedures or results. It
certainly looks like this upcoming election is going to be extremely close, and
there is the potential that we could end up facing another Bush v. Gore
scenario where the fate of the presidency is determined in court. This
campaign season is likely to be exceptionally nasty,
and I fear what may happen if there is not a decisive winner on election
day. The possibility of significant civil unrest is certainly there.
We
definitely live in "interesting" times.
Personally,
I am deeply concerned about the September, October, November time frame.
The
other day, Joe Biden delivered a speech in which he made the following statement....
"It's A
Depression For Millions And Millions Of Americans"
And
what Biden said was right for once. Millions of Americans are out of work
right now and millions of Americans have fallen out of
the middle class in recent years. If you have lost everything, it
does feel like you are living through a depression.
When
people lose everything, they tend to get desperate. And desperate people
do desperate things - especially when they are angry.
A
whole host of recent opinion polls have shown that anger and frustration in the
Let
us hope for the best, but let us also prepare for the worst.
