We may be facing the worst financial bubble yet. But let’s put this into some context.
The U.S. economy never recovered from the crisis that began in 2007. It hasn’t even recovered from the dot-com bubble in 2000. And depending on how you look at things, it was more or less stagnant since 1990. What am I talking about? The real statistics from shadowstats.com:
Forget the numbers governments have been giving to pacify the population and hide the fact that living standards have been falling for years. 46 million Americans are now on food stamps, and this financial bubble won’t make things any better.
This shouldn’t surprise anyone. The bubble-growth of the 2000’s has been entirely phony. And the phonier the growth, and the greater the government’s spending at home and abroad, the less there is for the productive sectors of the economy to work with. What’s that – taking on staggering amounts of debt doesn’t resolve economic troubles? Who would have thought!
So what’s the next financial bubble?
Now here’s the meat of the problem – the housing bubble was just a minor blip compared to this giant. The next financial bubble is the derivatives bubble. Look at this table from zerohedge.com
As you can see, the top 10 banks are over-leveraged. Their liabilities exceed their assets by anywhere from 1:1.5, to a whopping 1:426 for Goldman Sachs. But the point is that all of the banks whose liabilities exceed their assets, are insolvent. They cannot meet their debt obligations.
Remember how Lehman brothers collapsed when it had a leverage of 1:31 (possibly higher with proper accounting)? Remember how a moment ago we found out the ratio of assets to liabilities of Goldman Sachs was 1:426? Yeah, I’m sure everything will be just fine. No financial bubble to see here, move along now…
Now make sure you’ve seen that the units are in $ Millions. Meaning the total here at the bottom is 230 TRILLION DOLLARS.
So when I advocate disaster preparedness, understand that the disaster is already here. The crash might not have materialized yet – but the financial bubble has already been blown up, and everything is in place for an economic collapse that will make the Great Depression look like a walk in the park.
This isn’t the only possible disaster worth preparing for; I do a short overview over here. But it’s definitely right at the top as far as probability goes.
I don’t know if at this point it’s even possible to diffuse this nightmarish financial bubble – but what I do know is that nobody has any plans to do so. The banks and politicians will ride this gambling roller coaster right until it crashes into the ground and blows the entire economy up with it.
So don’t let yourself get caught off guard – if you haven’t already, start preparing now. If you have questions, feel free to ask at the forum.