It Is Happening Again: 18 Similarities Between The Last Financial Crisis And Today

If our leaders could have recognized the signs ahead of time, do you think that they could have prevented the financial crisis of 2008?  That is a very timely question, because so many of the warning signs that we saw just before and during the last financial crisis are popping up againMany of the things that are happening right now in the stock market, the bond market, the real estate market and in the overall economic data are eerily similar to what we witnessed back in 2008 and 2009It is almost as if we are being forced to watch some kind of a perverse replay of previous events, only this time our economy and our financial system are much weaker than they were the last time around.  Without a doubt, disaster is coming.
So will we be able to handle a financial crash as bad as we experienced back in 2008? 

2013 San Francisco Mint Silver Eagles As Low As $3.49 Over Spot at SDBullion!

From The Economic Collapse Blog:

What if it is even worse this time?  Considering the fact that we have been through this kind of thing before, you would think that our leaders would be feverishly trying to keep it from happening again and the American people would be rapidly preparing to weather the coming storm.  Sadly, none of that is happening.  It is almost as if they cannot even see the disaster that is staring them right in the face.  But without a doubt, disaster is coming. The following are 18 similarities between the last financial crisis and today…

#1 According to the Bank of America Merrill Lynch equity strategy team, their big institutional clients are selling stock at a rate not seen “since 2008“.

#2 In 2008, stock prices had wildly diverged from where the economic fundamentals said that they should be.  Now it has happened again.

#3 In early 2008, the average price of a gallon of gasoline rose substantially.  It is starting to happen again.  And remember, whenever the average price of a gallon of gasoline in the U.S. has risen above $3.80 during the past three years, a stock market decline has always followed.

#4 New home prices just experienced their largest two month drop since Lehman Brothers collapsed.

#5 During the last financial crisis, the mortgage delinquency rate rose dramatically.  It is starting to happen again.

#6 Prior to the financial crisis of 2008, there was a spike in the number of adjustable rate mortgages.  It is happening again.

#7 Just before the last financial crisis, unemployment claims started skyrocketing.  Well, initial claims for unemployment benefits are rising again.  Once we hit the 400,000 level, we will officially be in the danger zone.

#8 Continuing claims for unemployment benefits just spiked to the highest level since early 2009.

#9 The yield on 10 year Treasuries is now up to 2.60 percent.  We also saw the yield on 10 year U.S. Treasuries rise significantly during the first half of 2008.

#10 According to Zero Hedge, “whenever the annual change in core capex, also known as Non-Defense Capital Goods excluding Aircraft shipments goes negative, the US has traditionally entered a recession”.  Guess what?  It is rapidly heading toward negative territory again.

#11 Average hourly compensation in the United States experienced its largest drop since 2009 during the first quarter of 2013.

#12 In the month of June, spending at restaurants fell by the most that we have seen since February 2008.

#13 Just before the last financial crisis, corporate earnings were very disappointing.  Now it is happening again.

#14 Margin debt spiked just before the dot.com bubble burst, it spiked just before the financial crash of 2008, and now it is spiking again.

#15 During 2008, the price of gold fell substantially.  Now it is happening again.

#16 Global business confidence is now the lowest that it has been since the last recession.

#17 Back in 2008, the U.S. national debt was rapidly rising to unsustainable levels.  We are in much, much worse shape today.

#18 Prior to the last financial crisis, Federal Reserve Chairman Ben Bernanke assured the American people that home prices would not decline and that there would not be a recession.  We all know what happened.  Now he is once again promising that everything is going to be just fine.

Are the American people going to fall for it again?

It doesn’t take a genius to see how vulnerable the global economy is right now.  Much of Europe is already experiencing an economic depression, debt levels in Asia are higher than ever before, and the U.S. economy has been steadily declining for most of the past decade.  If you doubt that the U.S. economy has been declining, please see my previous article entitled “40 Stats That Prove The U.S. Economy Has Already Been Collapsing Over The Past Decade“.

And the truth is that most Americans already know that we are in deep trouble.  Today, 61 percent of all Americans believe that the country is on the wrong track.

It isn’t that so many people are choosing to be pessimistic.  It is just that an increasing number of Americans are waking up to the cold, hard reality that we are facing.

Decades of incredibly foolish decisions have brought us to this point.  We allowed our economic infrastructure to be gutted, we consumed far more wealth than we produced, our politicians kept doing incredibly stupid things but we kept voting the same jokers back into office again and again, and over the past 40 years we have blown up the biggest debt bubble in all of human history.

We have been living so far above our means for so long that most of us actually think that our current economic situation is “normal”.

But no, there is nothing normal about what we are experiencing.  We are entering the terminal phase of a colossal debt spiral, and when it flames out the economic devastation is going to be absolutely spectacular.

When the next major wave of the economic collapse comes and unemployment soars well up into the double digits, millions of businesses close and millions of American families lose their homes, I hope that those that are assuring all of us that there will not be an economic collapse will come back and apologize.

There are tens of millions of people out there right now that are not making any preparations at all because they have been promised that everything is going to be okay.  When the next financial crash happens, most of them will be absolutely blindsided by it and many of them will totally give in to despair.

Don’t let that happen to you.

2013 Silver Maples As Low As $2.29 Over Spot at SDBullion!

Comments

  1. Although the Americans are gullible and malleable, seemingly more so than most of the world, they also are the most reactionary once riled up and awakened. That is what is occurring in spades right now! It’s the sleeping giant slowly rolling out of bed. When he starts stomping around, do not be under foot!

  2. I’m interested to get everyone’s opinion on how the next crash will shake out as I can see it going a number of ways. 
    1. Stock market crashes.  Money floods out of equities and into bonds, real estate, and/or commodities. 
    2. Bond market explodes (likely due to foreign governments dumping Treasuries).  Money moves into equities, real estate and/or commodities. 
    3. SHTF in all markets.  Money disappears (as most of it is digital), cost of basic necessities sky rockets while everything else including PMs collapses.  I may catch some flack for this but you can’t eat PMs, they won’t provide warmth or shelter, and the vast majority of people have no experience with metals so the potential for fraud is far to high for people to risk it.  Who knows, they may spike as a store of value for Governments and the Elites but with the great unwashed there won’t be much use for them.

    In both 1 and 2, commodities (PMs in particular) are the only asset class with significant upside as everything else has experienced significant gains already.

    I see the federal bond market as less risky than stocks (muni bonds are screwed) because there is nothing to stop the Fed from stepping in and purchasing 100% of all bonds issued and directly monetizing the debt.  The only way this market collapses is if Foreign Exchange Reserves of Treasuries are dumped on the market in such quantities that the Fed cannot absorb the supply or the Fed decides to abandon QE. At this time, there isn’t a viable alternative to the dollar as a reserve currency, so I don’t see either happening in the short term.  

    Personally, I see the Fed ramping up QE to prevent the bond bubble from blowing up.  Investment banks are going to pull out of equities and real estate as there is limited upside and begin heavier speculation in commodities (driving up food and energy prices).  

    But who knows, if the Fed ramps up QE we may just see further inflation of all asset classes with the DOW hitting 50,000 similar to the Nikkei in 1990. 

    • All is true, I recommend drinking heavily!

    • Consider that in a true SHTF situation, practically all of the rules will either be scrapped or changed.  We cannot guess how things will work in that environment because none of us have ever been in it.  Perhaps this depends upon how one defines a SHTF scenario?  In my perception, a SHTF scenario is one in which the dollar itself collapses in value, taking all paper assets with it.  At that point, silver and gold become money again because there is no viable alternative to them.  (See Zimbabwe, modern history for details) No one will trust un-backed paper currency of any kind, so only currencies that are backed by commodities will be seen as having real value.  In 2008, only cash remained static while everything else collapsed in price.  Cash was king because the US dollar did not collapse.  Because of that, it was not a SHTF scenario, IMO.  It was bad, no doubt, but it was still manageable and it WAS managed.  Whether that was managed well or poorly is a topic for debate.  
       
      The SHTF scenario that many of us envision is one wherein the bond market collapses, the dollar collapses, the stock market collapses even though the strongest blue chip companies do not, and only barter exists as a way to get the things that we need.  Gold and silver are barter currencies, so they have been and continue to be real money that everyone will accept.  Without money, we would all be reduced to trading this for that and it is MUCH more convenient to carry around a small bag of gold and silver coins than it is to carry around a cow, a chord of wood, or a ton of wheat.  Also, bartering where labor is concerned quickly becomes very tricky.  How does one value the labor of a laborer vs. that of an auto mechanic or a physician?  Realistically, all would be priced via the free market.  A laborer might be happy to work all day for a silver dime, if it supports him.  The auto mechanic might want a silver quarter because he is more highly skilled than a laborer, and the physician, being the most skilled and needed of all, might want a silver half-dollar for his or her services.  Using silver coins for these payments is much easier than swapping this kind of labor for that kind of labor.
       
      Something that needs to be addressed here is that when addressing these questions, we must avoid the influence of “normalcy bias” or the tendency to see things in a certain way because that is the way in which we have always seen them.  A SHTF scenario will be radically different from anything that any of us has ever experienced, so our way of describing it and dealing with it will of necessity have to be just as radical.
       
      Finally, we need to understand that gold and silver have been money for more than 4,000 years.  During all that time, there were plenty of horrific SHTF times, yet the perception of human beings that they were valuable persisted in spite of all the chaos of those times.  That will be just as true during the next SHTF scenario as it has been throughout all the others.  In this regard, it will be no different this time.  This is not to say that gold and silver are all anyone needs to survive and prosper in hard times.  Having food, water, meds, tools, fuel, and weapons with which to defend ourselves and our stored goods will also be needed.  At some point after the SHTF, people will get up from their hunkered down positions, move around a bit, and begin to trade with each other.  That will be the time when gold and silver can be used to get what we need and do not have.  They will also allow us to more easily sell that which we have in excess.  Times like these will be incredibly difficult but they will be FAR more difficult for those who have not planned for such times and do not have some food, water, and silver put aside.  The bottom line can be put this way:  Is it better to be prepared for hard times or not?  Once we have answered that basic question we can get on with doing what seems best.
       

  3. Maybe there will be no crash or crisis in the coming years, when everyone is calling for a crash, it never happens.
    Could we have a -25% correction the stock market?  Sure, it doesn’t mean everything in the economy is going to crash.
    Could we have bond yields move a little higher? Again, it’s not the end of the world.
    My bet is that we get the same we have been experiencing since 2009, CB’s control all markets today, that is not likely to change anytime soon.
    Japan has been in the same boat for over 20 years, policy makers can drag this mess on for a long time, even decades.
     

    • Zman, There will be a correction alright, the whole freakin’ world is on the very edge of totally turning upside down.

  4. The single biggest contributing factor to disaster is TRUST AND CONFIDENCE. Most Americans STILL believe the government  can and will handle any situation. This blind trust is a result of ignorance. Most people have zero grip on reality. This fact can be evidenced by consumer debt. The line between want and needs use to be blured, now it`s invisable.

  5. Because of the fundamental structure of the banknote scheme, these crisis events must mathematically recur at quickening intervals. The exponential ‘Positive Loop Feedback’ that’s invisibly metastasizing through systemic design … guarantees it. By all appearances, I estimate this approaching calamity as the finale’. Call me a goofball, but this is an aspect of ‘preping’ that rolls through my mind …

    All currencies are private property of their issuing banks. They lend them for general use as ‘Trade Facilitation Instruments’ for a fee called Interest. As with the loan of any private property, if the deal falls into a condition of Non-Performance and default then, wherever their property is found, in anyone’s possession, the banks are of right to recover their property. This is the premise behind ‘bail-in’.

    When a loan is non-performing and in arrears, the bank has a free choice to ‘bridge’ the borrower, in the mutual hope that conditions change and the loan can be brought back ‘on track’. This is the ‘reasoning’ behind ‘QE”.

    If after a period of ‘bridging’ it becomes obvious that the default can’t be resolved, the bank would naturally want to foreclose (bail-in) to recover their property.

    Thinking more on the subject of Titles, as I see it, the banks have loaned banknotes (and their digital proxies) NOT HOUSES, CARS, STOVES and so forth. It seems a perfectly Lawful and Equitable defense against their efforts to recover those banknotes therefore, that one has a right to limit the banks’ to precisely those notes alone, given that the factual intrinsic value of them is so vastly disparate from the real things they always seek to commandeer in lieu of their stinking notes.

    I think I’ll write that up into some model litigation. If the State wants to perform ‘collectior’ for the banks, I want to put up the best fight I can devise without ‘going out in a blaze of glory’.

  6. I don’t know if it is a coincidence or not, but two engineering companies I have dealt with in the past have just gone out of business in the last month. One I contracted to a number of years ago; a good firm, they treated me well. The other one a sub-contractor who did some install work for a site I was recently on. Both were well established companies.

    Business failures seem to be on the up again, but little is reported in the mainstream. There still seems to be real deflationary pressure in engineering and retail. It appears to me that there is an inflationary-deflationary battle going on in different parts of the economy, I’m talking about the UK here.

    Anyone noticed anything similar in the States?

Speak Your Mind