The warning signs are all around us. All we have to do is open up our eyes and look at them. Almost every single day there are more prominent voices in the financial world telling us that a massive economic crisis is coming and that we need to prepare for the worst. On Wednesday, it was the World Bank itself that issued a very chilling warning. In an absolutely startling report, the World Bank revised GDP growth estimates for 2012 downward very sharply, warned that Europe could be on the verge of a devastating financial crisis, and declared that the rest of the world better “prepare for the worst.” You would expect to hear this kind of thing on The Economic Collapse Blog, but this is not the kind of language that you would normally expect to hear from the stuffed suits at the World Bank. Obviously things have gotten bad enough that nobody is even really trying to deny it anymore. Andrew Burns, the lead author of the report, said that if the sovereign debt crisis gets even worse we could be looking at an economic crisis that could be even worse than the last one: “An escalation of the crisis would spare no-one. Developed- and developing-country growth rates could fall by as much or more than in 2008/09.” Burns also stated that the “importance of contingency planning cannot be stressed enough.” In other words, Burns is saying that it is time to prepare for the worst. So are you ready?
UrbanMan's comments: If you are reading this then you are probably one of the few who don't need to be told about the importance of preparing for the collapse....you already are preparing to the extent you can. Or are you?
But of course it isn’t just the World Bank that is warning about these things. The chorus of voices that is warning about the next great financial crisis just seems to grow by the day.
Some of these voices were profiled in a Bloomberg article the other day entitled “Apocalypse How? Dire ’12 Forecasts“.
click here to review this Bloomberg article.
The most critical of these voices is Michael Panzner of Financial Armageddon, who said: “The fundamental outlook is even worse now than it was a few weeks ago, given (the lack of positive) developments in Europe and growing evidence that the economies of major countries around the world are deteriorating fast.”
When this crisis is over, all sorts of people are going to be running around claiming that they predicted it. But it does not take a genius to see what is coming. All you have to do is open up your eyes and look at the flashing red warning signs.
So what should we all be looking for next?
March 20th is a key date to keep your eye on. That is the day when Greece will either makes its 14.5 billion euro bond payment or it will default. Greece does not have a prayer of making that payment without help. If Greece can convince the EU and the IMF to release the next scheduled bailout payment and if Greece can reach a satisfactory deal with private bondholders, then the coming Greek default might be “orderly”. But if something goes wrong, the coming Greek default might be quite “disorderly”.
At this point, almost everyone in the financial world is anticipating a Greek default of one form or another. Edward Parker, the managing director for Fitch’s sovereign and supranational group in Europe, the Middle East and Africa, recently declared that a Greek default is inevitable. In Greece, 20 percent of all retail stores have already shut down. The unemployment rate for those under the age of 24 is now at 39 percent. Large numbers of Greeks are trying to get themselves and their money out of the country while they still can.
Greece is not the only declining economy in Europe by a long shot. Italy has a much larger economy, and if Italy totally collapses it will be an absolute nightmare for the entire globe. Right now, the Bank of Italy is forecasting a significant recession for the Italian economy in 2012.
Only this time the U.S. is in a much weaker position. The U.S. debt problem has gotten much worse since the last crisis.
During 2008, our national debt crossed the 10 trillion dollar mark. Less than 4 years later, we have crossed the 15 trillion dollar mark. So what are we going to do the next time large numbers of banks fail and unemployment skyrockets? Where are we going to get the money to bail out all of those banks and to take care of all of those newly unemployed people?
Some people say that socialism is the answer, but the truth is that we are already a socialist welfare state. If you can believe it, nearly half of all Americans live in a household that receives some form of financial benefits from the U.S. government.
During the next great crisis, the number of people that are dependent on the government will go even higher. If you don’t want to end up dependent on the government, you should heed the warning signs and you should use this time to prepare for the hard times that are coming. When even the World Bank tells us to hope for the best but to prepare for the worst, you know that it is late in the game.
UrbanMan's comments: Newt Gingrich took some shots from Liberals when he referred to Predient Obama as the Food Stamp President,......but this is essentially true if you consider people on food stamps has risen by 25% in the past couple of years. What's going to happen when the U.S. Government checks bounce for 150 million people in the U.S?
