When is the next economic crisis?

[I'LLMAKEYAFAMOUS]

As always, whenever we listen to the talking heads on CNBC and the like, we can get completely different opinions on the state of the economy. Also, while we can see the road signs of where we're headed, it's almost impossible to know when these things will transpire. That being said, here are two articles worth reading, and putting in your "Interesting, potentially true, good to be aware of what's going on files. Both indicate China will be at the epicenter of the next crisis.

Kyle Bass: China banks months away from ‘danger territory’

Mark Neuling | CNBC
Kyle Bass
Hayman Capital Management founder Kyle Bass has been ringing the alarm bells about China's banking system and the yuan for months, and now he says the day of reckoning could be just months away.

The premise of Bass' bet goes like this: China's banking system has grown to $34.5 trillion, equal to more than three times the country's GDP. The country is due for a loss cycle as cracks begin to show in its economy.

When that happens, central bankers will have to dip into China's $3.3 trillion of foreign exchange reserves to recapitalize the banks, causing a significant depreciation in the value of the yuan, according to Bass.

On Wednesday, he said China's export-import industry requires China to maintain $2.7 trillion in foreign exchange reserves to continue operating smoothly, citing an International Monetary Fund assessment.

"They'll hit that number in the next five months," he said in an interview on CNBC's "Squawk on the Street." "Those that think they can burn it to zero and they have many years ahead of them, they really only have a few months ahead of them before they get into a real danger territory."

Bass is best known for making a winning bet on the subprime mortgage crisis and later profiting from his call that the Japanese yen would fall in tandem with a projected round of monetary stimulus by the Bank of Japan.

Bass confirmed Wednesday he is devoting much of his fund to his bet the yuan will depreciate. He characterized shorts against the currency, including his, as totaling "billions."
The market will ultimately come to view a 10 percent yuan devaluation as "a pipe dream," he said. "When you look at the size of the imbalance and the size of their economy, it's going to go 30 or 40 percent in the end, and it's going to be the reset for the world."

To be sure, China's controlled devaluation of the yuan this year has sparked growth concerns that roiled equity markets around the world and contributed to the worst January for the Dow and S&P 500 since 2009.

Bass said he has no doubt the People's Bank of China has the ability to recapitalize the nation's financial institutions should they need bailing out. But the problem is that it will have to expand its balance sheet by trillions of dollars to do so, he explained.

Right now, too few people are focused on China's banking system, Bass said, but the narrative will swing that way this year.

Bass ticked off a list of concerns about the Chinese economy, including industrial production at financial crisis lows and the lowest nominal fourth-quarter year-over-year GDP print in 40 years.

"This isn't an aberration. This isn't a speed bump. This is China's excess — let's call it misallocation of capital — coming home to roost," he said. "You can't grow your banking system 1,000 percent in 10 years and not have a loss cycle. And your currency won't stay strong when you go to rectify that balance."

2nd article

Rich Dad’ author says the 2016 market collapse he foresaw in 2002 is coming

Fourteen years ago, the author of a series of popular personal-finance books predicted that 2016 would bring about the worst market crash in history, damaging the financial dreams of millions of baby boomers just as they started to depend on that money to fund retirement.

Broader U.S. stock markets are recovering from the worst 10-day start to a year on record. But Robert Kiyosaki — who made that 2016 forecast in the 2002 book “Rich Dad’s Prophecy” — says the meltdown is under way, and there’s little investors can do but buy gold or silverand hope the Federal Reserve slows the slide.

Kiyosaki is convinced: The pullback he predicted is happening.

“We’re right on schedule,” he said in a recent interview with MarketWatch.
A market destined to collapse

Investors are seven years into a bull market some fear is getting a bit long in the tooth, with the Dow industrials DJIA, +0.38% and the S&P 500 SPX, +0.60% SPX, +0.60% up 0.9% and 0.3%, in 2016. That’s after 2015 saw major U.S. indexes snap multiyear winning streaks amid falling commodity prices, concerns about economic growth, and the Federal Reserve’s December decision to raise interest rates.

In 2002, Kiyosaki wrote that the stock market would crash in 2016 as the first wave of baby boomers began to hit 70 1/2 in 2016 and started taking required-by-law distributions from traditional individual retirement accounts.

He still believes that: “Demography is destiny,” he said in the interview.
Courtesy Rich Dad Co.
Robert Kiyosaki.

According to U.S. Census Bureau data, more than 76 million individuals were born between 1946 and 1964; researchers at the Population Reference Bureau determined in 2014 that 65 million of them were still living. After immigrants are added in, according to that 2014 report, the number of living U.S. baby boomers was back above 76 million.

A market meltdown could imperil those boomers’ retirement plans, taking a badly timed bite out of hard-earned balances in their retirement accounts. And while the sheer number of aging boomers could contribute to stock-market selling pressure, Kiyosaki said, the larger issue today is that it’s hard for investors to figure out where to put money.

“Interest income or cash flow on savings is virtually nonexistent, and capital-gains plays in the stock market are thwarted because stock prices are at record highs,” he said.

Whatever burden millions of boomers might put on the market, he said, the situation is being made worse by events overseas, where one big country is wielding the monkey wrench.

“China has been in a bubble for 20-something years,” said Kiyosaki. “It has propped up the U.S. economy falsely. When [China] stops importing, the world crashes with them.”
Down the China rabbit hole

First to go, Kiyosaki said, will be commodity producers like Australia, Canada and African countries, which will drag down the rest of the world’s economies.

The collapse in oil prices has been particularly tough for economies such as Australia’s. The S&P/ASX 200 XJO, -0.21% down 14% over a 12-month period, suffered its first annual decline in four years last year. The Shanghai Composite SHCOMP, +0.43% meanwhile, has cratered, sliding nearly 15% in three months after earning the title of Asia’s best-performing stock market in 2015 with a gain above 9%.

Market watchers are largely divided about the outlook for China, though every piece of negative data raises new questions about the country’s ability to drive global economic growth. Recent data showed Chinese exports down 25.4% from a year earlier; economists had forecast a drop of 15%. It was the eighth consecutive decline in exports.


Kiyosaki is hardly alone in his bearish view: The “high” probability of a “sharp economic slowdown“ in China was cited in mid-March as a top global risk by the Economist Intelligence Unit. Its concerns included a buildup of bad debt in the country, a weak currency and worries that the government may not be able to shore up its economy.

And ballooning government debt was a key reason Moody’s Investors Service cut its outlook on China’s credit rating in March, also citing money fleeing the country.

Kiyosaki, who has written or co-written more than two dozen books — including New York Times best seller “Rich Dad Poor Dad” — has built a fortune mostly on real estate and authorship, rather than the stock market. (His licensing company, Rich Global LLC, has filed for bankruptcy and is being sued by a seminar promoter in connection with that filing. A spokesman said Kiyosaki “has the money to withstand an adverse ruling” and expects the case to be settled this year.)

Forbes estimated Kiyosaki’s worth at $80 million in 2012, a figure he declined to address.

But from the outside looking in, he said, investors are ignoring danger signs. The next crash, he said, could have a harsher effect on the economy than the market crashes that have occurred so far in the 21st century.

Those crashes included the market rout that ended the dot-com boom in 2000, which erased $5 trillion in market value between March 2000 and October 2002, and the financial crisis of 2007-08, which inspired both a market collapse and a real estate bust. Better Markets, a nonprofit pro-financial-reform watchdog, has estimated that the final price tag for the 2007-08 crash will exceed $20 trillion in lost gross domestic product.




Kiyosaki said two key factors have emerged since he wrote “Rich Dad’s Prophecy”: the likelihood of a bust in China and the “insanity” of quantitative easing, the Federal Reserve’s controversial multibillion-dollar bond-buying program, which ended in 2014 amid criticism that it had increased demand for risky investments even as supporters said it sustained economic growth.

Opinion: China’s banks could be the next big problem

Meanwhile, China has been throwing money at its banks to keep lending going, and debt quality at financial institutions is a constant theme among worried onlookers. Kiyosaki said he is in the camp that fears Chinese banks will be at the forefront of the next crash.
Waiting for the Fed’s fire hose

Kiyosaki told MarketWatch that the combination of demographics and global economic weakness makes the next crash inevitable — but the Fed could stave it off with another round of quantitative easing, which might stimulate the economy.

The Fed turned more dovish at its March meeting, with the central bank penciling in fewer interest-rate hikes this year than were previously part of its implied framework. The Fed signaled those hikes would happen more slowly than had been anticipated earlier, owing to a weak global economic environment and a volatile stock market.

“The big question [whether] we do ‘QE4,’” said Kiyosaki. “If we do, the stock market will come roaring back, but it’s not rocket science. If we stop printing money, it crashes; if we print money, it goes up. But, eventually, it’s all going to come down.”
Reuters
Shanghai’s Pudong financial district as seen this month.

For baby boomers beginning to withdraw funds from the stock market, he said, another round of quantitative easing, or QE, might be a particularly welcome occurrence.

If Janet Yellen “even hints” about such fresh stimulus, Kiyosaki said, he’d be ready to go back into he stock market himself, if only for a short time. Money left in the bank in an ultra-low-rate environment — a big topic as central banks in Japan and the European Union have bitten the negative-rate bullet — returns nothing for savers, he noted.

And for the Fed another round of quantitative easing “could be the last time they pull this stunt,” in Kiyosaki’s view. “The markets might rally, then crash.”

Opinion: Don’t rule out the possibility of Fed quantitative easing (part four)

Because preparing for that coming storm is vital, Kiyosaki often invokes investors to “build a financial ark.”

He thinks investors should own some gold or silver, based on the view that central banks will just have to print money to get out of the next crisis and precious metals are often deployed as a perceived hedge against inflation. Some investors, meanwhile, might look for investments geared toward income, such as rent payments or dividends, rather than appreciation.

“If you know what you’re doing and are investing for cash flow, baby boomers — or any investors — may see some gains,” he said. “But for those whose wealth is tied up in the [equity] markets, it’s more like gambling than investing.”

[Original_Intent]

We're in the middle of it. It started in 2008, everything to convince us otherwise has all been smoke and mirrors.

The Fed managed to wring one last gasping bull market out of this cycle, and it has been aa pretty pathetic bull market. But it made a lot of money for the Wall Street crowd, not much of anyone else, though.

The CPI is a pack of lies, the vast majority of Americans are worse off financially than they were 20 years ago.

Things are unraveling. Someone posted that it was all going to hit the fan within six months - I hope their right. Not because i want disaster, but because the longer we play pretend and finance our wants today on the backs of our children and grandchildren, the worse it will be when reality strikes. I am sure we will see austerity the likes of which we can't even imagine now, and civil unrest that is going to make Venezuela today seem like a safe haven.

I don;t know if the six months time frame is right, but I know it's coming and it's going to be a reality that most Americans can''t fathom.

[kirtland r.m.]

We're in the middle of it. It started in 2008, everything to convince us otherwise has all been smoke and mirrors.

The Fed managed to wring one last gasping bull market out of this cycle, and it has been aa pretty pathetic bull market. But it made a lot of money for the Wall Street crowd, not much of anyone else, though.

The CPI is a pack of lies, the vast majority of Americans are worse off financially than they were 20 years ago.

Things are unraveling. Someone posted that it was all going to hit the fan within six months - I hope their right. Not because i want disaster, but because the longer we play pretend and finance our wants today on the backs of our children and grandchildren, the worse it will be when reality strikes. I am sure we will see austerity the likes of which we can't even imagine now, and civil unrest that is going to make Venezuela today seem like a safe haven.

I don;t know if the six months time frame is right, but I know it's coming and it's going to be a reality that most Americans can''t fathom.

This post is so spot on that Original_Intent is going to look like a genius shortly. It was me who said sometime in the next six months we will see the collapse. If you aren't prepared, get prepared. I may get called a fear monger again, but that's not going to happen much longer. Thanks guys for the great thread so far.

[Silver]

Just a handful of silver, and a drop or two of gold, that's all I'm asking you to do, just like Robert Kiyosaki.

The articles are great, but most people who read them won't do anything. Just like they won't store food even though President Monson plainly told them to.

[I'LLMAKEYAFAMOUS]

We're in the middle of it. It started in 2008, everything to convince us otherwise has all been smoke and mirrors.

The Fed managed to wring one last gasping bull market out of this cycle, and it has been aa pretty pathetic bull market. But it made a lot of money for the Wall Street crowd, not much of anyone else, though.

The CPI is a pack of lies, the vast majority of Americans are worse off financially than they were 20 years ago.

Things are unraveling. Someone posted that it was all going to hit the fan within six months - I hope their right. Not because i want disaster, but because the longer we play pretend and finance our wants today on the backs of our children and grandchildren, the worse it will be when reality strikes. I am sure we will see austerity the likes of which we can't even imagine now, and civil unrest that is going to make Venezuela today seem like a safe haven.

I don;t know if the six months time frame is right, but I know it's coming and it's going to be a reality that most Americans can''t fathom.

This post is so spot on that Original_Intent is going to look like a genius shortly. It was me who said sometime in the next six months we will see the collapse. If you aren't prepared, get prepared.

There are a lot of indicators pointing to this year. I agree with you that the sooner it happens the better. I would rather have it happen during my adult years rather than my children's or grandchildren's.
What caught my attention was Kyle Bass' statement that "it'll be the reset for the world."
The world HAS to have a reset. I've always thought it would come in the form of war, and it still may. Though I think it's more likely to come as a combination or economic crisis and war.

[AlbertaBronco]

Every indicator suggests that the collapse should have happened already but when governments interfere with the free market it becomes artificially propped up. The colaspe will happen when governments finally let go because they can't sustain the bailouts.

[friendsofthe]

All of the experts I’ve been hearing are saying the same thing, we are at the end of the road, the global economy is tanking as we speak. So I’m thinking that before the end of the year we will see economic collapse and chaos in the streets.

I see it as the fulfillment of Joseph Smith prophecy regarding the demise of our currency and the resulting civil war. After all, people are waking up at an accelerated rate, they have had their fill of the globalists in both establishment parties as evidenced by the Trump phenomenon we see unfolding.

I expect that the gads will have to spring the trap by this fall or see all their hard work start to unravel under a Trump presidency. Don’t think they are going to let that happen, so get ready for the plunge into globalism and the commencement of the 42 months just before the elections….

5 And there was given unto him a mouth speaking great things and blasphemies; and power was given unto him to continue forty and two months. (Who do you suppose the "him" is here?)
6 And he opened his mouth in blasphemy against God, to blaspheme his name, and his tabernacle, and them that dwell in heaven.
7 And it was given unto him to make war with the saints, and to overcome them: and power was given him over all kindreds, and tongues, and nations. Rev. 13

I’ve been saying this for a long time and the way things are going I think I’m going to be able to say “I told you so” by the end of the year….. Keep the faith, God’s side wins in the end!!!

[Sunain]

Every day now we are seeing things about the financial system being in chaos. Here's another big decision that may or may not evolve into something significant.

Banks Must Defend Libor Lawsuits After Judges Warn of Impact
May 23, 2016 — 11:18 AM EDT Updated on May 23, 2016 — 4:22 PM EDT

Sixteen of the world’s largest banks including JPMorgan Chase & Co. and Citigroup Inc. must face antitrust lawsuits accusing them of hurting investors who bought securities tied to Libor by rigging an interest-rate benchmark, a ruling that an appeals court warned could devastate them.

The appellate judges reversed a lower-court ruling on one issue -- whether the investors had adequately claimed in their complaints to have been harmed -- while sending the cases back for the judge to consider another issue: whether the plaintiffs are the proper parties to sue, in part because their claims, if successful, provide for triple damages that could overwhelm the banks.

"Requiring the banks to pay treble damages to every plaintiff who ended up on the wrong side of an independent Libor‐denominated derivative swap would, if appellants’ allegations were proved at trial, not only bankrupt 16 of the world’s most important financial institutions, but also vastly extend the potential scope of antitrust liability in myriad markets where derivative instruments have proliferated," the U.S. Court of Appeals in New York said in the ruling.

Bank of America Corp., HSBC Holdings Plc, Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Royal Bank of Canada and Royal Bank of Scotland Group Plc are also among the banks sued in Manhattan.

http://www.bloomberg.com/news/articles/ ... st-lawsuit" onclick="window.open(this.href);return false;

[KurtTheMormon]

Very soon.

[nzgirl]

We're in the middle of it. It started in 2008, everything to convince us otherwise has all been smoke and mirrors.

The Fed managed to wring one last gasping bull market out of this cycle, and it has been aa pretty pathetic bull market. But it made a lot of money for the Wall Street crowd, not much of anyone else, though.

The CPI is a pack of lies, the vast majority of Americans are worse off financially than they were 20 years ago.

Things are unraveling. Someone posted that it was all going to hit the fan within six months - I hope their right. Not because i want disaster, but because the longer we play pretend and finance our wants today on the backs of our children and grandchildren, the worse it will be when reality strikes. I am sure we will see austerity the likes of which we can't even imagine now, and civil unrest that is going to make Venezuela today seem like a safe haven.

I don;t know if the six months time frame is right, but I know it's coming and it's going to be a reality that most Americans can''t fathom.

Spot on, I think we sometimes forget that the economy has not been 100% right since the 08 GFC. All that is happening is governments trying to delay the inevitable complete collapse, there is only so far the rubber band will stretch before it snaps.
I also believe Venezuela is a foreshadow of what is to come on a global scale, hope we're all ready.

[I'LLMAKEYAFAMOUS]

Semi-interesting interview.

https://soundcloud.com/user-201995189/t ... his-summer" onclick="window.open(this.href);return false;

[BTH&T]

As I read many of the posts here, the thought keeps coming to mind....."the bigger they are, the harder they fall".
I too believe that the time is short and the "games" that have been played are going to make the it a very hard fall!

[Durzan]

We got a short time left as well, if the impressions that I am getting are true. The Lord told me much. Some of what he told me, I thought would happen a long way off, but he recently told me that the time of these personal events were drawing close. Logically, I concluded that these personal events would occur in days of tribulation, because otherwise, the conditions the Lord spelled out for me would be extraordinarily contrived.

[I'LLMAKEYAFAMOUS]

More evidence of the banks' interests put ahead of the people's.

The Federal Reserve's $4.3 trillion ticking time bomb
Yahoo Finance
Jared Blikre Fri, May 27 5:17 AM PDT
The Federal Reserve has a big problem if it wants to raise rates again. It will have to pay U.S. and foreign banks enormous sums of money instead of U.S. taxpayers.

Not only would the Fed likely draw the ire of Congress, but it could also become a target of the next U.S. president—be it Clinton or Trump. That’s because the gangbuster profits of $90 billion (plus) per year that the Fed remits to the Treasury could easily dwindle to zero. According to several leading economists, it’s also possible that the Fed will become technically insolvent (though it always has the power to print its way out of such a disastrous state).


Quantitative easing was a Faustian bargain

The putative savior of the financial crisis, quantitative easing, was a Faustian bargain. The Fed got to inject trillions of dollars into the financial sector while simultaneously “sterilizing” the very same money. It did this by incentivizing banks to deposit their digital cash at the Fed, paying above-market interest rates.

Currently, the Fed pays 0.50% annually to banks to keep that money out of the economy. It might not seem like much, but the comparable rate paid by the U.S. Treasury for T-bills is 0.28%. In other words, the Fed pays banks nearly twice as much as the Treasury does.

But the Fed refuses to acknowledge this. Each year, the Fed Chair is required by law to testify twice in front of Congress. Both Ben Bernanke and Janet Yellen have used the word, “comparable,” to assert disingenuously that the Fed is paying an amount of interest similar to what banks could earn in the marketplace. It’s possible to “compare” apples to oranges, but it doesn’t mean they’re similar.

Currently, the Fed is paying banks about $12 billion per year in interest. If the Fed raises rates two times (by 0.25% each time) and the level of reserves stays the same, that number doubles to $24 billion. If we are to believe San Francisco Fed President John Williams, who targets an eventual 3.0% for short-term rates, then that's $72 billion per year to the banks. This is a huge expenses for the Fed. Subtract from that the $90 billion (plus) per year in operating profits, and the amount of money the Fed pays to the Treasury gets pretty small.

The Fed is poised to take huge capital losses

But it gets worse. The Fed is taking capital losses on its $4.3 trillion bond portfolio, and those losses will eventually accelerate. When the bonds that the Fed holds mature, it realizes losses because it paid above-market prices for most of them to begin with.

The Fed is currently keeping its balance sheet the same size, purchasing new bonds when old ones mature. Should it decide to sell bonds, it would realize huge losses over a short space of time and would likely go into debt with the U.S. Treasury. According to Hall and Reis, it would take the Fed 6 to 10 years to work off the debt and get back in the green.

Bottom line: No matter how you slice it, the Fed payments to Uncle Sam will not only drop off a cliff someday, they could also go negative. That means, the taxpayers would be indirectly on the hook for Federal Reserve operating losses.

The crisis comes when Congress realizes the Fed is paying the government nothing (or next to nothing) while shelling out billions to the banks. Several members of Congress have already been critical of Fed payments to banks, but they’ve largely missed the mark. When the next budget crisis arises without the Fed paying it’s perceived “fair share,” all it would take is a few impassioned speeches to stir the masses and make monetary policy a de facto political animal.

The worst possible outcome would be for a fickle and indecisive Congress to assert its authority over monetary policy. Unfortunately, by waiting seven years to raise rates—and into an economy growing at best modestly—the Fed has backed itself into a corner. The Fed has clearly chosen the banks over the best interests of the taxpayers, and this will eventually come back to bite Chair Yellen.

[shadow]

Very soon.

The order of urgency relative to time from furthest to nearest is as follows-
Soon- decades to centuries
Very soon- years to decades
Imminent- months to years

[Silver]

https://srsroccoreport.com/the-next-big ... heres-why/" onclick="window.open(this.href);return false;

More at the link above including some great graphics.

The Next Big Crash Of The U.S. Economy Is Coming, Here’s Why
by SRSrocco on May 26, 2016

Investors better be prepared as the next crash of the U.S. economy is coming. This is not based on hype or speculation, rather due to the disintegration of the underlying fundamentals. Matter-a-fact, the fundamentals are so completely AWFUL, that the next market crash will make 2008 look quite tame indeed.

To get the skinny on the lousy fundamental data, let’s first look at the Auto Industry. The next series of charts come from the article, More Warnings–Unsustainable Auto Sales & Stock PE Ratios:

Auto-Loans-Owned-Securitized-Chart

Ever since the supposed economic turnaround, the amount of outstanding auto loans has increased dramatically from less that $700 billion in 2010 to over $1 trillion in the fourth quarter of 2015. According to Wolf Richter, quoted in the article:

“Deep-subprime borrowers are high-risk. Typically they have credit scores below 550. To make it worth everyone’s while, they get stuffed into loans often with interest rates above 20%. To make payments even remotely possible at these rates, terms are often stretched to 84 months. Borrowers are typically upside down in their vehicle: the negative equity of their trade-in, along with title, taxes, and license fees, and a hefty dealer profit are rolled into the loan. When the lender repossesses the vehicle, losses add up in a hurry.

When I was younger, the longest automobile loan an individual could get was 48 months. However, you were considered to be a REAL LOSER if you had to finance an automobile that long. Now, 84 months is becoming the norm….LOL.

This is just one factor that shows just how weak the economy has become if Americans have to finance a car for seven years.

Here is another chart from the article linked above. It shows just how inflated the S&P 500 index has become:

Growth-of-SP500-Earings-Chart

According to Michael Lebowitz of 720 Global Research (quoted in the article):

Since October 1, 2011, the S&P 500 has risen 82% on the heels of a 0.75% decline in earnings. The price to earnings ratio over that time period has risen 83%, with price gains contributing 99% to the increase. Prices have risen substantially, while earnings have actually fallen. The chart below highlights the growing gap between earnings and the S&P 500.”

As we can see from the chart, the S &P 500 and earnings have been surviving on HOT AIR, especially since the latter part of 2014. When QE (money printing) and zero interest rates no longer provided enough bounce in the markets, the Fed, Central Banks and the Plunge Protection Team stepped in a BIG WAY to keep the markets from crashing.

So, not only do we have a highly over-leveraged automobile financed industry, the broader stock market valuations are in bubble territory. Unfortunately, this is only part of the story. If we look at the disintegrating U.S. Energy Industry, the situation is even more dire.

The Coming Collapse Of The U.S. Energy Industry

Today I did an interview with Money Metals Exchange. I will be putting out the interview when it’s published. However, I discussed this energy subject matter during the interview. When I first started the interview, I said the precious metals community was guilty of propagating hype and short-term surging price moves that never came true. Thus, we have frustrated a lot of precious metals investors because the COLLAPSE of the Dollar, DEFAULT of the COMEX or much HIGHER gold and silver prices have not yet occurred.

So, am I guilty myself by putting out a new a headline that reads, “The Coming Collapse of the U.S. Energy Industry?” No…. here’s why.

The situation in the U.S. Energy Industry is so AWFUL, I wouldn’t be surprised to see half of the industry go bankrupt over the next few years. Of course, the U.S. Government could step in and either bail out or nationalize the energy industry, but this wouldn’t stop the impending collapse.

Let’s take a look at this next chart. The U.S. Energy Industry has added so much debt that it took nearly half of all its operating profits to just pay the interest on its debt in 2015:

U.S.-Energy-Sector-Interest-Payments-On-Debt-%

While this was bad, it was even worse in the first quarter of 2016. According to the article, Why Oil & Gas Companies Are Barely Scraping By, the U.S. Energy Sector paid 86% of its total profits just to service the interest on its debt. Can you imagine that?

This chart from the article shows the huge change of interest payments on debt of the percentage of operating income in the U.S. Energy Sector:

U.S.-Energy-Sector-Interest-On-Debt-YahooFinance-Chart

Since 2000, the U.S. Energy Sector was paying (on average) between 10-15% of its operating income to service its debt. However, that changed significantly in 2014 as the price of oil plunged. The reason this percentage jumped over 20% in 1998 was due to the price of oil falling below $15 compared to $22 in 1996.

So, why is the U.S. Energy Sector interest on the debt so much worse now with the price of oil more than double the 1998 price?? Again, the average annual price of oil in 1998 was $15 compared to $33 in Q1 2016. Why did the U.S. Oil and Gas Industry have to pay 86% of its operating income to service its debt during the first quarter of 2016 on the back of a $33 oil compared to 25% on $15 oil in 1998?

BECAUSE…. The U.S. Oil & Gas Industry has gone into massive debt to bring on very expensive energy supplies.

Here is one more chart from the energy article linked above:

U.S.-Energy-Sector-Debt-Maturity

This chart shows the U.S. Energy Sector maturing debt outstanding for each year. According to the article:

While $5.1 billion of U.S. energy debt matures this year, $25.1 billion will mature in 2017. The number risies to $52.5 billion in 2020.

“There’s not a lot of this debt that comes due in 2016. But in 2017—that’s when the rubber will really hit the road. Now a lot of these companies are already looking to bankruptcy because people know that the bond position is untenable,” said Dicker.

As the article states, the outstanding U.S. energy debt that matures in 2017 ($25.1 billions) is five times what matures this year ($5.1 billion). How can the U.S. Energy Industry pay back this debt when it can barely pay the interest on its debt currently?

And… to make matters even worse, U.S. oil production is falling rapidly:

U.S.-Field-Oil-Production-Weekly

U.S. domestic oil production peaked at 9.6 million barrels per day (mbd) in June 2015 and is currently at 8.7 mbd. This is nearly a 10% decline in U.S. oil production in less than a year. Some may think this huge decline is due to lower oil prices. That may be partly true, however U.S. oil production was going to decline even with higher oil prices.

Which means, the U.S. Energy Sector will be in even more trouble as oil production declines further as the amount of debt that matures continues to increase over the next several years. This is extremely bad news for the U.S. economy as it will have to import more foreign oil to make up for declining domestic production.

Of course, this means the market will have to react by offering 96 and 108 month payment plans to keep the automobile financing bubble from popping. Furthermore, I would imagine the Plunge Protection Team will work overtime just to keep the markets from imploding.

[KurtTheMormon]

Very soon.

The order of urgency relative to time from furthest to nearest is as follows-
Soon- decades to centuries
Very soon- years to decades
Imminent- months to years

Imminent.

[David13]

I will go with Shadow.
Imminent.
Months to years.
dc

In terms of preparedness, all I can do is try. It continues to be a struggle for me.

[BeNotDeceived]

Very soon.

The order of urgency relative to time from furthest to nearest is as follows-
Soon- decades to centuries
Very soon- years to decades
Imminent- months to years

Imminent.

Few to me means 4 or 5, but could include three.

Several resembles the word seven so is indicative of 7 or more.

2024 currently looms 7 years in the future, which is still several years or imminent or very soon = I'm so confused.

[I'LLMAKEYAFAMOUS]

The two prognosticators quoted in the OP have been proven wrong. I still believe the day of reckoning is coming, but no one has a clue as to when.

[Matchmaker]

If I had to make a guess, I would say that Trump will be the President during 7 years of prosperity for America and Israel (the temple gets built) and then we'll see 7 years of war, famine, pestilence, disease, civil unrest, natural disasters, return of the tribes, and building of the New Jerusalem, followed by the Second Coming.

Of course, it could all collapse into chaos tomorrow. Nobody knows!

[AI2.0]

We're in the middle of it. It started in 2008, everything to convince us otherwise has all been smoke and mirrors.

The Fed managed to wring one last gasping bull market out of this cycle, and it has been aa pretty pathetic bull market. But it made a lot of money for the Wall Street crowd, not much of anyone else, though.

The CPI is a pack of lies, the vast majority of Americans are worse off financially than they were 20 years ago.

Things are unraveling. Someone posted that it was all going to hit the fan within six months - I hope their right. Not because i want disaster, but because the longer we play pretend and finance our wants today on the backs of our children and grandchildren, the worse it will be when reality strikes. I am sure we will see austerity the likes of which we can't even imagine now, and civil unrest that is going to make Venezuela today seem like a safe haven.

I don;t know if the six months time frame is right, but I know it's coming and it's going to be a reality that most Americans can''t fathom.

This post is so spot on that Original_Intent is going to look like a genius shortly. It was me who said sometime in the next six months we will see the collapse. If you aren't prepared, get prepared. I may get called a fear monger again, but that's not going to happen much longer. Thanks guys for the great thread so far.

The six months time frame was wrong....again.

So what's the plan? Keep throwing things out till eventually one turns out to be right? Do any here think they deserve credit for predicting one particular event when there is a consistent record of fails? :-w

I don't know about others, but for me, it's the predictions that are annoying, not the information--which can be interesting and informative, but so far, none of the soothsayers on this forum are any good at actually predicting events; why they'd want to continue to prove it, I don't know.

[DesertWonderer]

Very soon.

Are you thinking 6 months, 1 year 2 yrs?

[AI2.0]

Very soon.

Are you thinking 6 months, 1 year 2 yrs?

Considering he said 'very soon' over 8 months ago, I don't think he'll choose 6 months. /:)

[rewcox]

If I had to make a guess, I would say that Trump will be the President during 7 years of prosperity for America and Israel (the temple gets built) and then we'll see 7 years of war, famine, pestilence, disease, civil unrest, natural disasters, return of the tribes, and building of the New Jerusalem, followed by the Second Coming.

Of course, it could all collapse into chaos tomorrow. Nobody knows!

Keep you eyes on Twitter, you'll be one of the first to know.