Something major is occuring in the markets today.
The US economy peaked in 2007. However, throughout much of 2008, the stock market continued to rally despite the economic collapse as well as the financial system imploding.
Throughout this period the credit markets jammed up and implied something VERY BAD was in the system. However, stock investors continued to pile into stocks because, well, frankly stocks always are the last to “get it.”
And when stocks finally did get it… it was quite a thing.
This same environment is occurring today. Only this time the collapse is sovereign in nature: entire countries are going bust.
We have been getting MAJOR warning signs of a collapse for months now. No less than the Bank of England, the IMF, and legendary asset management firm Franklin Templeton have warned that we are facing an epic, hellish crisis.
We got the first taste of this in August when the S&P 500 literally wiped out a year’s worth of gains in two weeks The only thing that brought us back from the brink at that time was the belief that the EU mess might be solvable and a coordinated intervention from the world Central Banks.
We then had a spirited rally as the Fed and central banks went “all in” to force the stock market above its 200-DMA.
This final “hurrah” has failed and the financial system is literally imploding. The EU will be broken up in the next month or so and it is highly likely Germany will back out of the Euro altogether.
Moreover, the world central banks are now totally out of ammunition. They’ve spent Trillions of Dollars in bailouts, abandoned accounting standards, and even moved TRILLIONs in garbage debt onto the public’s balance sheet.
None of this has worked. The credit markets are jammed up just like in 2008. Italy, the third largest bond market in the world, is on the verge of default. No one wants to fund the EFSF. China is entering a hard landing and economic collapse. The US is in a clear depression.
And on and on.
This is the single most dangerous market environment of our lifetimes. We are entering a period of massive wealth destruction. We will see bank holidays and civil unrest. We will see sovereign defaults. We will see temporary shortages in various goods and services.
So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.