U.S and China Stock Market Plunges Will Completely Obliterate the Global Economy

(Before It's News)

By: Voice of Reason

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In the first video, Glenn Beck had on his Radio Show James Rickards author of “The Death of Money: The Coming Collapse of the International Monetary System” for the book go to: http://www.bit.ly/DeathofMoneyBook 

“The next financial collapse will resemble nothing in history. . . . Deciding upon the best course to follow will require comprehending a minefield of risks, while poised at a crossroads, pondering the death of the dollar.”

The international monetary system has collapsed three times in the past hundred years, in 1914, 1939, and 1971. Each collapse was followed by a period of tumult: war, civil unrest, or significant damage to the stability of the global economy. Now James Rickards, the acclaimed author of Currency Wars, shows why another collapse is rapidly approaching—and why this time, nothing less than the institution of money itself is at risk.

The American dollar has been the global reserve currency since the end of the Second World War. If the dollar fails, the entire international monetary system will fail with it. No other currency has the deep, liquid pools of assets needed to do the job.

Optimists have always said, in essence, that there’s nothing to worry about—that confidence in the dollar will never truly be shaken, no matter how high our national debt or how dysfunctional our government. But in the last few years, the risks have become too big to ignore. While Washington is gridlocked and unable to make progress on our long-term problems, our biggest economic competitors—China, Russia, and the oil producing nations of the Middle East—are doing everything possible to end U.S. monetary hegemony. The potential results: Financial warfare. Deflation. Hyperinflation. Market collapse. Chaos.

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Rickards offers a bracing analysis of these and other threats to the dollar. The fundamental problem is that money and wealth have become more and more detached. Money is transitory and ephemeral, and it may soon be worthless if central bankers and politicians continue on their current path. But true wealth is permanent and tangible, and it has real value worldwide.

The author shows how everyday citizens who save and invest have become guinea pigs in the central bankers’ laboratory. The world’s major financial players—national governments, big banks, multilateral institutions—will always muddle through by patching together new rules of the game. The real victims of the next crisis will be small investors who assumed that what worked for decades will keep working.

Fortunately, it’s not too late to prepare for the coming death of money. Rickards explains the power of converting unreliable money into real wealth: gold, land, fine art, and other long-term stores of value. As he writes: “The coming collapse of the dollar and the international monetary system is entirely foreseeable. . . . Only nations and individuals who make provision today will survive the maelstrom to come.”

Opednews.com reports:

Sovereign debt and its corollary, the federal debt ceiling, are arguably mirages. These operate in a macro context where valuation of wealth and debt are essentially illusions, or at the very least, manageable artifices.

What is not at all manageable, however, is internal debt and wealth inequality. Why? Because in the internal workings of our economy __ and those of most of the developed countries of the world __ ownership and control of wealth are reinforced by rigid and unforgiving legal authority. As is becoming increasingly evident, the laws of this country now serve a very wealthy elite __ a tiny slice of our 318,000,000 people __ at the expense of everyone else.

This is not the 1%.

We’re talking about the .1% and the .01% __ about 30,000 people __ the rich and powerful who actually run the country.

These are the folks you and I never see, because we can’t get within fifty miles of them.

These are the people who operate in a bubble of incomprehension, so detached from the realities of our “ordinary” lives, the basics of survival are about as apparent to them as the emotional life of a Cambodian weaver ant is to you and I.

These are the folks who will repossess your car, foreclose on your home, garnish your pay when you fall behind on your student loan, make it impossible to get an apartment or job for the horrible crime of falling behind on your credit card bills.

They own. We owe.

Home mortgage debt: $8.17 trillion.

Credit card debt: $3.34 trillion.

College loans: $1.2 trillion.

Auto loans: $955 billion.

Home equity loans: $550 billion.

Total household debt: $13.6 trillion!

The astonishing thing about all of this is that in the wealthiest nation in the world, none of this debt slavery is necessary. There is enough wealth to go around. We could all have the security and basic right to a minimum guaranteed income, a shared sense of community and country which would materialize from sharing our enormous resources and riches.

The ultra-rich could still live in splendor. After all, beyond a certain point, accumulation of money has no impact on the individual life style of a human being, no matter how absurdly rapacious that person is. More money just becomes a pathological numbers game.

How many Bentleys, private jets, wading pools full of caviar, diamond cuff links the size of grapefruits can you own?

I’ve referenced this in a prior blog. But it’s worth reviewing.

To spend the Koch brothers incomprehensible fortune at $10,000 per day, it would take almost 28,000 years __ it would be 29,394 C.E. when you finished your shopping spree.

Spending one million dollars a day, it would take 214 years to go through the monumental wealth of Gates.

The fortune of the Walton family __ owners of Wal-Mart __ totals more that the bottom 42% of Americans. One family has more money than 134,000,000 people.

This is insane.

This is the system we have in place.

This is what the laws of this country have cemented into our national landscape.

Wealth inequality on this level is inhumane and grotesque.

Worst of all __ and the subject of a whole other blog __ the economic infrastructure which locks in this kind of excessive capital aggregation is destroying our planet, and may lead to human extinction. I can’t improve on Naomi Klein’s lucid exposition of this, so I won’t try.

Just taking the narrow view of the social consequences, and the destructive impact wealth inequality has had on our democracy, we need to ask ourselves . . .

Is this sustainable?

One great thing about a rhetorical question is that the answer is so obvious, you don’t have to answer it.

But we certainly need to do something about it . . . before it’s too late.

Other than a handful of legislators __ Bernie Sanders and Elizabeth Warren certainly are talking about it __ and our president who gives lip service to this critical issue, there is no one in public life who is serious about addressing this threat to our existence as a nation.

No one!

Just about everyone in elected office __ to a man, to a woman __ needs to go.

Stuffing them all in a massive launch vehicle for a mission to Mars might be too drastic. But getting them out of office and replacing them with elected officials who represent the needs and values of every American __ not just the privileged elite __ is not.

Just do it.

In the second video, Alex Jones discussed The New York Stock Exchange, which was temporarily shutdown due to an alleged technical issue. The suspension of trading, however, has no doubt fueled concerns whether other factors also influenced the decision to pull the plug.

While all eyes are on Greece, The really worrying financial crisis is happening in China. The global economy is so dependent on China that if the country were to completely implode, a world-wide recession would likely result. Check it out!

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China’s Stock-Market Crash Is Just Beginning

Howard Gold Writes:

Since the Shanghai Composite index dropped from a 52-week high around 5,178 on June 12, it’s been downhill all the way.

In just three weeks, stocks listed on mainland China’s most prominent exchange tumbled 30% from their seven-year highs. The even more speculative ChiNext Index has lost 42% of its value over 21 days.

Investors and traders who piled into Chinese shares over the past year, causing Shanghai to rise 150% and other markets to catapult even more dramatically, faced margin calls on their highly leveraged positions and started selling with both hands and both feet.

It was the biggest rout in this volatile market since 1992, and it prompted the Chinese government to take strong measures.

Last week, the Bank of China cut short-term interest rates for the fourth time this year. Regulators relaxed margin requirements and cracked down on short sellers, while state-run media tried to calm jittery investors with happy talk. That did little to stanch the hemorrhage.

Over this past weekend, government authorities and “private” Chinese brokerages and companies announced even more dramatic moves to prop up stocks:

Brokerages and mutual-fund companies said they would buy billions of dollars’ worth of Shanghai shares.

A state-owned investment firm said it would buy China-based ETFs.

Twenty-eight companies said they would put planned initial public offerings on hold, as IPOs had been the focus of the most intense speculation.

Regulators also increased the kinds of assets that can be used as collateral to buy stocks, to include — are you ready for this? — people’s homes. I’m not making this up.

The goal: Show retail investors that the all-powerful Chinese government had their backs and that the “Beijing Put” was alive and well.

Except it wasn’t. Shanghai opened up a strong 8.5% on Monday, despite Greece’s resounding “no” vote in Sunday’s referendum. But shares slipped throughout the trading day and closed up only 2.5%. On Tuesday, Shanghai slipped 1.3%, and on Wednesday plunged 5.9%.

That was a clear sign that the government had taken its best shot and failed. Which means that the most likely direction for Shanghai, Shenzhen and other mainland exchanges is down, down, down.

Morgan Stanley, which made a good “sell” call on China weeks ago, now expects Shanghai to fall as low as 3,250 by mid-2016. Citigroup analysts told clients the selloff has a “long way to go.”

I agree, but I think it could go much, much lower.

THE UNDERLYING PROBLEM IS THAT THE INVESTING CULTURE IS IMMATURE!

As I’ve written many times, China, Brazil, Russia and other emerging markets are suffering through secular bear markets that will last years. Since Chinese stocks represent more than 20% of some emerging-markets ETFs, the pain will likely continue well into this decade.

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IS CHINA’S MARKET-RESCUE PLAN WORKING?

Secular bear markets feature sudden, violent rallies and mini–bull markets that fool people into thinking they’re the genuine article. In real bull markets, indexes repeatedly top their previous highs; in bear markets, they never do.

So it was an ominous sign when Shanghai hit 5,000 and then reversed sharply. The previous all-time high was over 6,000 in October 2007. We thus have an eight-year down trend.

Back in 2007, China was booming as the government rolled out massive new infrastructure ahead of the 2008 Olympic Games, which by any measure were a huge success.

But after the financial crisis, the Great Recession and a domestic real-estate bust, China is struggling to hit the government’s 7% economic-growth target. When the property market crashed, desperate Chinese authorities encouraged novice investors to channel their speculative energies into the stock market.

Now that’s reversing quickly, as massive margin calls swamp the government’s efforts to stop the rout.

The underlying problem is that while the Chinese economy has made great strides and become a global powerhouse, China’s investing culture remains backward and immature.

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