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It Is About To Get Ugly: Oil Is Crashing And So Is Greece
Michael
Snyder
4
February, 2015
The
price of oil collapsed by more than 8 percent on Wednesday, and a
decision by the European Central Bank has Greece at the precipice of
a complete and total financial meltdown. What a difference 24
hours can make. On Tuesday, things really seemed like they were
actually starting to get better. The price of oil had rallied
by more than 20 percent since last Thursday, things in Europe seemed
like they were settling down, and there appeared to be a good deal of
optimism about how global financial markets would perform this
month. But now fear is back in a big way. Of course
nobody should get too caught up in how the markets behave on any
single day. The key is to take a longer term point of view.
And the fact that the markets have been on such a roller coaster ride
over the past few months is
a really, really bad sign.
When things are calm, markets tend to steadily go up. But when
the waters start really getting choppy, that is usually a sign that a
big move down in on the horizon. So the huge ups and the huge
downs that we have witnessed in recent days are likely an indicator
that rough seas are head.
A
stunning decision that the European Central Bank has just made has
set the stage for a major showdown in Europe. The ECB has
decided that it will no longer accept Greek government bonds as
collateral from Greek banks. This gives the European Union a
tremendous amount of leverage in negotiations with the new Greek
government. But in the short-term, this could mean some
significant pain for the Greek financial system. The following
is how a
CNBC article described
what just happened…
“The European Central Bank is telling the Greek banking system that it will no longer accept Greek bonds as collateral for any repurchase agreement the Greek banks want to conduct,” said Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
“This is because the ECB only accepts investment grade paper and up until today gave Greece a waiver to this clause. That waiver has now been taken away and Greek banks now have to go to the Greek Central Bank and tap their Emergency Liquidity Assistance facility for funding,” he said.
The Greek stock market closed hours ago, but the exchange-traded fund that tracks Greek stocks, GREK, crashed during the final minutes of trading in the US markets.
The euro is also getting walloped, falling 1.3% against the US dollar.
The
EUR/USD, which had recovered to almost 1.15, fell to nearly 1.13 on
news of the action taken by the ECB.
But
this is just the beginning.
And
if the new Greek government will not submit to the demands of the EU,
and Greece ultimately ends up leaving the common currency, it could
potentially mean the
end of the eurozone in
the configuration that we see it today.
Meanwhile,
the oil crash has taken a dangerous new turn.
Over
the past week, we have seen the price of oil go from
$43.58 to $54.24 to less than 48 dollars before
rebounding just a bit at the end of the day on Wednesday.
This
kind of erratic behavior is the exact opposite of what a healthy
market would look like.
What
we really need is a slow, steady climb which would take the price of
oil back to at least the $80 level. In the current range in
which it has been fluctuating, the price of oil is going to be
absolutely catastrophic for the global economy, and the longer it
stays in this current range the
more damage that it is going to do.
But
of course the problems that we are facing are not just limited to the
oil price crash and the crisis in Greece. The truth is that
there are birth pangs of the next great financial collapse all
over the place.
We just have to be honest with ourselves and realize what all of
these signs are telling us.
And
it isn’t just in the western world where people are sounding the
alarm. All over the world, highly educated professionals are
warning that a great storm is on the horizon. The other day, I
had an economist in Germany write to me with his concerns. And
in China, the head of the Dagong Rating Agency is declaring that we
are going to have to face “a
new world financial crisis in the next few years”…
The world economy may slip into a new global financial crisis in the next few years, China’s Dagong Rating Agency Head Guan Jianzhong said in an interview with TASS news agency on Wednesday.
“I believe we’ll have to face a new world financial crisis in the next few years. It is difficult to give the exact time but all the signs are present, such as the growing volume of debts and the unsteady development of the economies of the US, the EU, China and some other developing countries,” he said, adding the situation is even worse than ahead of 2008.
For
a long time, I have been pointing at the year 2015.
But this year is not going to be the end of anything. Rather,
it is just going to be the beginning of the end.
During
the past few years, we have experienced a temporary bubble of false
stability fueled by reckless money printing and an unprecedented
accumulation of debt.
But instead of fixing anything, those measures have just made the
eventual crash even worse.
Now
a day of reckoning is fast approaching.
Life
as we know it is about to change dramatically, and most people are
completely and totally unprepared for it.
Only 44 Percent Of U.S. Adults Are Employed For 30 Or More Hours Per Week
Jim
Clifton, the Chairman and CEO of Gallup, says that the percentage of
Americans that are employed full-time has been hovering near record
lows since the end of the last recession. But most Americans
don’t realize this because the official unemployment numbers are
extremely misleading. In fact, Clifton says that the official
5.6 percent unemployment rate is a “big lie”. Gallup
regularly tracks the percentage of U.S. adults that are employed for
30 or more hours per week, and it is currently at 44.2 percent.
It has been hovering between 42 percent and 45 percent since the end
of 2009. This is extremely low. As I discussed the
other day,
there are 8.69
million Americans that
are considered to be “officially unemployed” at this point.
But there are another 92.90
million Americans that
are considered to be “not in the labor force”. Millions
upon millions of those Americans would work if they could.
Overall, there are 101 million U.S. adults that do not have a job
right now. But you won’t hear that number being discussed by
the mainstream media, because it would make Barack Obama look really
bad.
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