Yet another sign that we remain long in equities at our own peril...
22 Signs That We Are On The Verge Of A Devastating Global Recession
2012 is shaping up to be a very tough year for the global economy. All over the world there are signs that economic activity is significantly slowing down. Many of these signs are detailed later on in this article. But most people don't understand what is happening because they don't put all of the pieces together. If you just look at one or two pieces of data, it may not seem that impressive. But when you examine all of the pieces of evidence that we are on the verge of a devastating global recession all at once, it paints a very frightening picture. Asia is slowing down, Europe is slowing down and there are lots of trouble signs for the U.S. economy. It has gotten to a point where the global debt crisis is almost ready to boil over, and nobody is quite sure what is going to happen next. The last global recession was absolutely nightmarish, and we should all hope that we don't see another one like that any time soon. Unfortunately, things do not look good at this point.
The following are 22 signs that we are on the verge of a devastating global recession....
#1 On Thursday it was announced that U.S. jobless claims had soared to a six-week high.
#2 Hostess Brands, the maker of Twinkies and Wonder Bread, has filed for bankruptcy protection.
#3 Sears recently announced that somewhere between 100 and 120 Sears and Kmart stores will be closing, and Sears stock has fallen nearly 60% in just the past year.
#4 Over the past 12 months, dozens of prominent retailers have closed stores all over America, and one consulting firm is projecting that there will be more than 5,000 more store closings in 2012.
#5 Richard Bove, an analyst at Rochdale Securities, is projecting that the global financial industry will lose approximately 150,000 jobs over the next 12 to 18 months.
#6 Investors are pulling money out of the stock market at a rapid pace right now. In fact, as an article posted on CNBC recently noted, investors pulled more money out of mutual funds than they put into mutual funds for 9 weeks in a row. Are there some people out there that are quietly repositioning their money for tough times ahead?....
Investors yanked money out of U.S. equity mutual funds for a ninth-consecutive week despite a bullish 2012 outlook from Wall Street and a December rally that’s carried over into the New Year.
#7 There are signs that the Chinese economy is seriously slowing down. The following comes from a recent article in the Guardian....
Growth had slowed to an annual rate of 1.5% in the second and third quarters of 2011, below the "stall speed" that historically led to recession.
#8 The Bank of Japan says that the economic recovery in that country "has paused".
#9 Manufacturing activity in the euro zone has fallen for five months in a row.
#10 Germany's economy actually contracted during the 4th quarter of 2011. At this point many economists believe that Germany is already experiencing a recession.
#11 According to a recent article by Bloomberg, it is being projected that the French economy is heading into a recession....
The French economy will shrink this quarter and next, suggesting the nation is in a recession as investment and consumer spending stagnate, national statistics office Insee said.
#12 There are a multitude of statistics that indicate that the UK economy is definitely slowing down.
#13 In the UK, the average price of a gallon of gasoline has risen to an astounding $9.67.
#14 It is being reported that the Spanish economy contracted during the 4th quarter of 2011.
#15 Bad loans in Spain recently hit a 17-year high and the unemployment rate is at a 15-year high.
#16 According to a recent article in the Telegraph, the Italian government is forecasting that there will be a recession for the Italian economy in 2012....
The Italian government predicts GDP will contract 0.4pc next year, but many economists fear the figure is optimistic.
"We can say without mincing words that we have already slipped into recession," said Intesa Sanpaolo analyst Paolo Mameli. "We expect GDP to keep contracting for the next 3-4 quarters."
#17 Italy's youth unemployment rate has hit the highest level ever.
#18 The unemployment rate in Greece for those under the age of 24 is now at 39 percent.
#19 Greece is already experiencing a full-blown economic depression. About a third of the country is now living in poverty and extreme medicine shortages are being reported. Things have gotten so bad that entire families are being ripped apart. According to the Daily Mail, hundreds of Greek children are being abandoned because the economy has gotten so bad that their parents simply cannot afford to take care of them anymore. The note that one mother left with her child was absolutely heartbreaking....
One mother, it said, ran away after handing over her two-year-old daughter Natasha.
Four-year-old Anna was found by a teacher clutching a note that read: 'I will not be coming to pick up Anna today because I cannot afford to look after her. Please take good care of her. Sorry.'
#20 In Greece, large numbers of people are simply giving up on life. Sadly, the number of suicides in Greece has increased by 40 percent in just the past year.
#21 In many European countries, the money supply continues to contract rapidly. The following comes from a recent article in the Telegraph....
Simon Ward from Henderson Global Investors said "narrow" M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.
While real M1 deposits are still holding up in the German bloc, the rate of fall over the last six months (annualised) has been 20.7pc in Greece, 16.3pc in Portugal, 11.8pc in Ireland, and 8.1pc in Spain, and 6.7pc in Italy. The pace of decline in Italy has been accelerating, partly due to capital flight. "This rate of contraction is greater than in early 2008 and implies an even deeper recession, both for Italy and the whole periphery," said Mr Ward.
#22 The major industrialized nations of the world must roll over trillions upon trillions of dollars in debt during 2012. At a time when credit is becoming much tighter, this is going to be quite a challenge. The following list compiled by Bloomberg shows the amount of debt that some large nations must roll over in 2012....
Japan: 3,000 billion
U.S.: 2,783 billion
Italy: 428 billion
France: 367 billion
Germany: 285 billion
Canada: 221 billion
Brazil: 169 billion
U.K.: 165 billion
China: 121 billion
India: 57 billion
Russia: 13 billion
Keep in mind that those numbers do not include any new borrowing. Those are just old debts that must be refinanced.
As I mentioned at the top of this article, things do not look good.
The last thing that we need is another devastating global recession.
As I wrote about yesterday, the U.S. economy is in the midst of a nightmarish long-term decline. The last major global recession helped to significantly accelerate that decline.
So what will happen if this next global recession is worse than the last one?
Sadly, the people that will get hurt the most by another recession will not be the wealthy.
The people that will get hurt the most will be the poor and the middle class.
So what should all of us be doing about this?
We should use the time during this "calm before the storm" to prepare for the hard times that are coming.
As always, let us hope for the best and let us prepare for the worst.
But things certainly do not look promising for the global economy in 2012.
Add a Comment