Warning signs

While the people sleep, an economic earthquake is rumbling underneath. The day that they begin to feel the quake draws near. There are many flashing warning signs that the economy is about blow.

Through the coming months and year three crashes potentials crises are looming. Any one of them or any combination of two or more could send the economy into a tailspin to rival or exceed the 2008 crisis — one, the U.S. stock market; and two, student loan bubble; and three, a looming pensions crisis.

The stock market is poised to begin a sickening slide. The great Fed-inspired rally is over in spite of all manipulation.

Noted Wall Street market analyst John Hussman claims, as reported by GoldCore.com, the U.S. stock market is “the most dangerous and overvalued stock market on record – worse than 2007, worse than 2000, even worse than 1929.”

More from GoldCore:

Hussman begins his latest research note by quoting the late, great Sir John Templeton:

“Bull markets are born on pessimism, grow on scepticism, mature on optimism, and die on euphoria.”

He then warns

“A week ago, bullish sentiment among investment advisers soared to the highest level in 30 years (Investor’s Intelligence), joined last week by a 16-year high in consumer confidence. When one recognises that the prior peak in bullish sentiment corresponds to the 1987 market extreme, and the prior peak in consumer confidence corresponds to the 2000 bubble, Sir Templeton’s words take on both relevance and urgency.”

Hussman advises investors become more defensive, because the market could be about to enter a brutal bear market as seen throughout history.

Student loan debt totals $1.3 trillion spread out among 33 million borrowers. The average class of 2016 graduate owes $37,172 in student loan debt and that’s up 6 percent from last year.

Data analyzed by the Wall Street Journal  showed that at more than 1,000 colleges and trade schools, at least half the students had defaulted or failed to pay down at least $1 of their debt within seven years. This analysis turned out to be far worse than the Department of Education claimed before it released revised data and admitted it had overstated student loan repayment rates because of “technical programming error.”

There are tens of trillions of unfunded pension liabilities held by municipalities and states across the country. This could leave millions of retired Americans without a source of income beyond the Social Security Ponzi scheme.

Look at some of the numbers:

  • South Carolina’s government pension covers about 550,000 people and is $24.1 billion in the red.
  • The Michigan Public School Employees Retirement System pension fund is underfunded by $26.7 billion; has paid out more benefits than it has actual assets in 41 of the last 42 years, and more than a third of the state’s school payroll expenses go to retirees.
  • Pew Charitable Trusts research estimates a $1.5 trillion pension funding gap for the states alone, with Kentucky, New Jersey, Illinois, Pennsylvania and California going backwards at a rapid rate. Using a wider range of fiscal health measures, the Mercatus Center has the five worst states as Kentucky, Illinois, New Jersey, Massachusetts and Connecticut.
  • In California, the difference between what all California government agencies have set aside for pensions and what they will eventually owe has reached $241 billion.
  • Last year the Central State pension fund in Kansas became the first fund to take advantage of a 2014 law allowing pension funds to cut benefits as 400,000 Americans who depend on their monthly pension income to pay for such things as their mortgage, groceries and medical expenses saw an average of $1,400 per month sliced of their monthly benefits.

Other crisis indicators include a rise in 30-day and 60-day delinquency rates on the $1 trillion auto loan industry. And bond guru Bill Gross told GoldCore that investors need to keep an watchful eye on the U.S. 10-year bond yield as a breach of 2.6 percent will mean that “a secular bear bond market has begun.”

There are some $500 trillion in derivatives, but the world’s gross national product is only $75 trillion.

This week the Fed raised interest rates by a quarter point.

According to John Williams of Shadowstats.com, annual real M3 growth just plunged to a new signal for a major economic downturn. The surge in headline inflation has been due to energy price distortions, not an overheating economy, as Janet Yellen signaled at the Fed press conference.

All of these signal danger.

At or near the top of a bull market is when the crowd enters. This is when everybody is talking about how great the market is and how much money they are making. They pay no attention to stock values or market history. They just buy, buy, buy.

But market psychology changes slowly over several months or years. This means that the crowd or the public buys at or very near the top, but most don’t get out until they have lost most of their capital.

There are three phases to bear markets and bull markets.

In the first phase of the bear market phase the excitement cools as stocks lose. This is the most deceptive phase because few people are aware that the bear market has started. The public never knows when the bear market starts until they have lost most of their capital.

The second phase of the bear market gives way to crisis selling and rising volume on the down side. In this stage two, the public begins to wake up and some sell out, already at big losses. As interest rates continue to rise, mania quiets down. Building slows and the banks tighten their lending rules. This is happening now, although we are still in phase one of the bear market.

Phase three eventually arrives and then the public wakes up to the nightmare of horrible losses. What they had been led to believe were investments have become a great deception. In this phase three, the public is fully aware of what has happened to their money. Black pessimism sets in. They dump their stocks for whatever they can get vowing never to buy stocks again. You can count on this happening at some point in the next several months. It could be in the early part of next year.

Markets are created to cause huge losses by the people. The purpose of the New York Stock Market is to distribute stocks to the public.

Not everyone loses. Think of Warren Buffett who has made wealth from stock investing. But most people do lose their money.

The primary reason is that they fail to understand the trend of markets; it’s as simple as this is. When markets change trends every few years, people don’t change.

What to do? Gold is in a long-term bull market.

Buy gold bullion and gold coins, and hold it in your possession. But not numismatics. Buy stock in gold mining companies.

Store food and water and guns and ammo for an economic crisis or for a natural event. Heed the warning signs.

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