11 Economic Crashes Happening RIGHT NOW
http://www.wealthwire.com/news/economy/4752?r=1
Posted by Wealth Wire - Monday, April 15th, 2013
The stock market is not crashing yet, but there are lots of other market crashes happening in the financial world right now.
Just like we saw back in 2008, it is taking stocks a little bit of
extra time to catch up with economic reality. But almost everywhere
else you look, there are signs that a financial avalanche has begun.
Bitcoins are crashing, gold and silver are plunging, the price of oil
and the overall demand for energy continue to decline, markets all over
Europe are collapsing and consumer confidence in the United States
just had the biggest miss relative to expectations that has ever been
recorded. In many ways, all of this is extremely reminiscent of 2008.
Other than the Bitcoin collapse, almost everything else that is
happening now also happened back then. So does that mean that a
horrible stock market crash is coming as well? Without a doubt, one is
coming at some point. The only question is whether it will be sooner
or later. Meanwhile, there are a whole lot of other economic crashes
that deserve out attention at the moment.
The following are 11 economic crashes that are happening RIGHT NOW...
#1 Bitcoins
As I write this, the price of Bitcoins has fallen more than 70 percent
from where it was on Wednesday. This is one of the reasons why I have
never recommended Bitcoins to anyone. Yes, alternative currencies are a
good thing, but there are a lot of big problems with Bitcoins. Why
would anyone want to invest in a currency that could lose 70 percent of
its purchasing power in just two days? Why would anyone want to invest
in a currency where a single person can arbitrarily decide to suspend
trading in that currency at any time?
An article by Mike Adams of Natural News described some of the things that we have learned about Bitcoins this week...
#1) The bitcoin infrastructure cannot handle a selloff. Once the rush for the exits gains momentum, you will not be able to get out. Only those who sell early will be able to exit the market.
#2) The bitcoin infrastructure is subject to the whims of just one person running MTGox who can arbitrarily decide to shut it down whenever he thinks the market needs a "cooling period." This is nearly equivalent to a financial dictatorship where one person calls the shots.
#3) Every piece of bad news will be "spun" by exchanges like MTGox into good-sounding news. As bitcoin was crashing yesterday by 60% in value in mere hours, MTGox announced it was a "victim of our own success!" So while bitcoin holders watched $1 billion in market valuation evaporate, MTGox called it a success. Gee, then what would you call it when bitcoin loses 99%? A "raging" success?
#2 Gold
The price of gold was down by about 4 percent
on Friday. Gold has now fallen below $1500 an ounce for the first time
since July 2011. Overall, the price of gold has fallen by about 10
percent since the beginning of the year, and it is about 22 percent below the record high set back in September 2011.
Yes, the price of gold is likely being pushed down
by the banksters. And yes, gold is a fantastic investment for the
long-term. But there will be times when the price of gold does fall
dramatically just like we saw back in 2008.
#3 Silver
The price of silver fell by about 5 percent on Friday. If it falls much more it is going to be at a level that presents a historically good buying opportunity.
Just like gold, there will be times when the price of silver swings
dramatically. But the truth is that silver is probably an even better
long-term investment than gold is.
#4 Oil
The price of oil declined by about 3 percent
on Friday. Many will consider this a positive thing, but just remember
what happened back in 2008. Back then, the price of oil dropped like a
rock. If the price of oil gets below $80, that could very well be a
clear signal that a major economic crisis is about to happen.
#5 Consumer Confidence
As I mentioned above, consumer confidence in the U.S. just had its
biggest miss relative to expectations that has ever been recorded. The
following is from an article posted on Zero Hedge on Friday...
Well if this doesn't send the market into all-time record high territory, nothing ever will: seconds ago the UMich Consumer Confidence plummeted from 78.6 to 72.3, on expectations of an unchanged 78.6 print. This was not only a 9 month low in the index, but more importantly the biggest miss to expectations in recorded history!
#6 Retirement Accounts
According to Wells Fargo, the number of Americans taking loans from their 401(k) accounts has risen by 28 percent over the past year...
Through an analysis of participants enrolled in Wells Fargo-administered defined contribution plans, the bank announced today that in the fourth quarter of 2012, there was a 28 percent increase in the number of people taking loans out from their 401(k) and that the average new loan balances increased to $7,126 from those taken out in the fourth quarter of 2011 - a 7% increase from $6,662.
Of the participants who took out loans, the greatest percentage were to people in their 50s (34.2%), followed by those in their 60s (28.9%) and then by those in their 40s (27.3%). The increase among participants in their 50s was nearly double the increase among those under 30. This is based on an analysis of a subset of 1.9 million eligible participants in retirement plans that Wells Fargo administers.
“The increased loan activity particularly among older participants is concerning because those are the years when workers can start to make ‘catch-up’ contributions and really need to focus on preparing for retirement,” said Laurie Nordquist, director of Wells Fargo Retirement.
#7 Casino Spending
Casino spending is declining again. Many people (including myself)
would consider this to be a good thing, but casino spending is also one
of the most reliable indicators about the overall health of the
economy. Remember, casino spending crashed during the last financial
crisis as well. That is why it is so alarming that casino spending is
now back to levels that we have not seen since the last recession.
#8 Employment In Greece
Over in Europe, things just continue to get worse. According to
numbers that were just released, the unemployment rate in Greece has
soared to 27.2 percent,
which was up from 25.7 percent the previous month. That means that
the unemployment rate in Greece rose by 1.5 percent in just a single
month. That is not just a crash - that is an avalanche of unemployment.
#9 European Financial Stocks
European financial stocks have been hit particularly hard lately. And
for good reason actually - most of the major banks in Europe are
essentially insolvent at this point. This week, European financial
stocks fell to seven month lows, and this is probably only just the beginning.
#10 Spanish Bankruptcies
According to Reuters, the number of Spanish companies going bankrupt has risen by 45 percent over the past year...
A record number of Spanish companies went bust in the first quarter of 2013 as companies remained under intense pressure from tight credit conditions and meager demand, a study showed on Monday.
The 2,564 firms filing for insolvency proceedings in first three months of the year was a 10 percent rise from the previous quarter and a 45 percent increase on the same period in 2012, the survey by credit rating agency Axesor said.
#11 Demand For Energy
Just like we saw back in 2008, the overall demand for energy in the
United States is falling rapidly. There are some shocking charts that
prove this that were recently posted on Zero Hedge that you can find right here.
Yes, it is good for people to use a bit less energy, but it is also a
clear indication that economic activity is really starting to slow
down.
But despite everything that you have just read, the Dow and the S&P 500 have been setting new record highs.
And if you listen to the mainstream media, you would think that this stock market bubble can continue indefinitely.
Fortunately, there are a few voices of reason out there. For example, just check out what Marc Faber recently told CNBC...
In the near-term, the U.S. stock market is overbought and adding that any more near-term gains portend big trouble for the market, "The Gloom, Boom & Doom Report" publisher Marc Faber told CNBC on Monday.
"If we continue to move up, the probability of a crash becomes higher," Faber predicted in a "Squawk Box" interview, saying it could happen "sometime in the second half of this year."
As I have written about previously,
a bubble is always the biggest right before it bursts. I hope that we
still have at least a little bit more time before it happens, but I
wouldn't count on it.
The economic fundamentals
tell us that the stock market should be plunging, not rising. At some
point the boys over on Wall Street will get the message and the market
will catch up to reality very, very rapidly.
But for the moment, the American people are feeling really good. According to CNN, Americans are now more optimistic than they have been in six years...
As the stock market continues to show record highs, the number of Americans who say things are going well in the country has reached 50% for the first time in more than six years, according to a new national survey.
So what do you think will happen for the rest of the year?
Do you think that the good times will continue to roll, or do you believe that the bubble is about to burst?
Please feel free to share your opinion by posting a comment below...
*Post courtesy of the Economic Collapse Blog.
The Bitcoin Crash Continues — Now Down 77% From Two Days Ago
Bitcoin has fallen to $60 this morning.
Just Wednesday morning, it topped $266 before a dramatic plunge sent it to $120.
Then, Thursday, the world’s largest Bitcoin exchange halted trading for 12 hours in an attempt to “cool down” the market.
When trading reopened last night, Bitcoin instantly plunged another 35% to $78.
Now, at $60, Bitcoin has lost 77% of its value from Wednesday’s high.
Mt. Gox has been dealing with trading lag issues in recent weeks as popularity of the virtual currency has soared.
Some of these trading lags have been caused by "distributed denial of service" attacks, wherein hackers use large groups of computers to flood a website with bogus connections, preventing legitimate users from connecting and causing the site to crash.
One analyst says hackers are doing this to force Bitcoin prices down so they can scoop them up on the cheap.
The lag that sent Bitcoin traders into a selling panic on Wednesday, according to Mt. Gox, was not the result of a DDoS attack, but was instead due to the rapid influx of new users in recent days.
http://www.businessinsider.com/bitcoin-loses-77-of-value-from-high-2013-4
Read more: http://www.businessinsider.com/bitcoin-loses-77-of-value-from-high-2013-4#ixzz2QhCqzkvP
Bitcoins: What are they, and how do they work?
http://www.guardian.co.uk/technology/2011/jun/22/bitcoins-how-do-they-work
Bitcoin is one of the first attempts to create a real-world currency with no governments, no central banks, and no rules
Bitcoin ... can it become a real-world currency? Photograph: Matt Cardy/Getty
It started, and ended, with a click. With one touch of a mouse, a
hacker managed to transfer 25,000 credits of online currency – then
worth almost $500,000 dollars – to his own account. The transfer is
visible on a public register; the original owner has publicised his
plight online, but to no avail – the money is gone.
This hack, which happened in June 2011, was the first major online heist for Bitcoins, one of the world's newest currencies, and the subsequent panic left many casual users reeling.
Days later, it was dwarfed by hack number two: an attack on the currency's biggest online exchange, involving more than 400,000 Bitcoins – worth almost $9m (£5.5m). The attempt to sell off the coins was a sale so huge it plunged the value of each coin from more than $17 to $0.01.
The exchange, MtGox, was promptly taken offline, and is planning to reverse the transactions. No-one knows what the currency will be worth – if anything – when it reopens.
Such is the strange world of the online frontier. Bitcoin isn't the currency of an online game or Facebook fad – it's one of the first attempts to create a real-world currency with no governments, no central banks, and no rules. More than 6,500,000 Bitcoins are in circulation, in an online economy, which was worth over $180m shortly before June's hack.
No bank or government issues new Bitcoins. Instead, they are "mined" in batches of 50 as a result of intensive calculations carried out on PCs across the world. Anyone wanting to mine the coins installs mining software, which carries out intensive calculations on a certain unit of "work".
Whichever computer around the world solves the problem receives 50 Bitcoins. Six months ago, this reward was worth less than $1. At the start of June 2011, it was worth $1,000. The work generally needs powerful computers to pay off: some developers involved with the project estimate a typical laptop could work for two years without ever generating any coins.
Given the rocketing value of the coins – and the increasing difficulty of mining them – it's no surprise people have started going to extraordinary lengths to generate them.
Users on mining forums discuss cooling their computers in dry ice to allow the processors to run faster, customising specialist chips, or borrowing networked computing power to generate more coins. One even reported the upturn in his electricity use was so significant his house was raided by police, who were concerned that he might be farming cannabis.
Members of the hacking collectives LulzSec and Anonymous, behind many of the high-profile hacks of recent weeks, may have found a more innovative solution: using other people's computers.
The groups' famed distributed denial-of-service attacks rely on botnets – networks of computers to which hackers have gained access, usually without the owners' knowledge – to provide the weight of numbers to take down high profile targets.
Several purported members of Anonymous, plus intermediaries linked to Anon and to Lulzsec, have confirmed some individuals connected to the organisations have used their botnets to "mine" Bitcoins.
Credible reports suggest some individuals connected to Anonymous have botnets with more than 100,000 active computers. A network of this size, even mining Bitcoins inefficiently, has the potential to generate 400 to 500 coins a day – worth in excess of $7,500 before the crash.
Coders in the Bitcoins community are divided by the involvement of the hacking collectives in their community. While some deny any botnet mining occurs, others concede it's a factor, and admit a slump in processing power data in April signified a botnet being turned off. One, who preferred not to be named, acknowledged it was "neat that those guys decided they could get a better return from participating in Bitcoins than by attacking it".
The attractions of Bitcoins to such communities are manifold. It's an online-only experiment with no government or corporate involvement. It's accepted as currency on hundreds of sites worldwide, including one claiming to sell illegal drugs and several selling pornography.
It is also, despite having a public register of all transactions, capable of being totally anonymous. Users taking other precautions will find the only occasion at which they might link their Bitcoins wallet to their real identity is when transferring their coins into real cash at privately owned exchanges.
Given these can base themselves anywhere in the world, and often reject regulation, law enforcement agencies have a problem – if the Bitcoins experiment survives, criminals and money-launderers may soon have a near-untraceable channel through which to funnel their proceeds.
Perhaps as troubling to some agencies is WikiLeaks' recent decision to embrace the new currency, giving its donors the prospect of anonymity as secure as the site claims its whistleblowers enjoy.
Such prospects trouble those driving the development of the currency far less; instead, the majority see the benefits of an unfettered currency as outweighing the costs.
"The freedom to easily, instantly, and at very low cost pay anybody in the world is the fundamental idea," says Gavin Andresen, described as Bitcoin technical lead. "The internet gives us the ability to communicate with anybody in the world easily, instantly, and at very low cost; I think it should be as easy to pay somebody across the world as it is to send them an email."
Another, Nils Schneider, puts it more succinctly: "Bitcoin is an experiment to make a 'raw' digital currency. Such a currency does not need supervision."
Schneider also lacked sympathy for the victim of the 25,000 Bitcoin theft which first brought security jitters to the fledgling community. Bitcoin wallets at present are stored with no encryption whatsoever by default, and transfers of stolen material are irreversible unless half of all Bitcoin users agree to it.
This hack, which happened in June 2011, was the first major online heist for Bitcoins, one of the world's newest currencies, and the subsequent panic left many casual users reeling.
Days later, it was dwarfed by hack number two: an attack on the currency's biggest online exchange, involving more than 400,000 Bitcoins – worth almost $9m (£5.5m). The attempt to sell off the coins was a sale so huge it plunged the value of each coin from more than $17 to $0.01.
The exchange, MtGox, was promptly taken offline, and is planning to reverse the transactions. No-one knows what the currency will be worth – if anything – when it reopens.
Such is the strange world of the online frontier. Bitcoin isn't the currency of an online game or Facebook fad – it's one of the first attempts to create a real-world currency with no governments, no central banks, and no rules. More than 6,500,000 Bitcoins are in circulation, in an online economy, which was worth over $180m shortly before June's hack.
No bank or government issues new Bitcoins. Instead, they are "mined" in batches of 50 as a result of intensive calculations carried out on PCs across the world. Anyone wanting to mine the coins installs mining software, which carries out intensive calculations on a certain unit of "work".
Whichever computer around the world solves the problem receives 50 Bitcoins. Six months ago, this reward was worth less than $1. At the start of June 2011, it was worth $1,000. The work generally needs powerful computers to pay off: some developers involved with the project estimate a typical laptop could work for two years without ever generating any coins.
Given the rocketing value of the coins – and the increasing difficulty of mining them – it's no surprise people have started going to extraordinary lengths to generate them.
Users on mining forums discuss cooling their computers in dry ice to allow the processors to run faster, customising specialist chips, or borrowing networked computing power to generate more coins. One even reported the upturn in his electricity use was so significant his house was raided by police, who were concerned that he might be farming cannabis.
Members of the hacking collectives LulzSec and Anonymous, behind many of the high-profile hacks of recent weeks, may have found a more innovative solution: using other people's computers.
The groups' famed distributed denial-of-service attacks rely on botnets – networks of computers to which hackers have gained access, usually without the owners' knowledge – to provide the weight of numbers to take down high profile targets.
Several purported members of Anonymous, plus intermediaries linked to Anon and to Lulzsec, have confirmed some individuals connected to the organisations have used their botnets to "mine" Bitcoins.
Credible reports suggest some individuals connected to Anonymous have botnets with more than 100,000 active computers. A network of this size, even mining Bitcoins inefficiently, has the potential to generate 400 to 500 coins a day – worth in excess of $7,500 before the crash.
Coders in the Bitcoins community are divided by the involvement of the hacking collectives in their community. While some deny any botnet mining occurs, others concede it's a factor, and admit a slump in processing power data in April signified a botnet being turned off. One, who preferred not to be named, acknowledged it was "neat that those guys decided they could get a better return from participating in Bitcoins than by attacking it".
The attractions of Bitcoins to such communities are manifold. It's an online-only experiment with no government or corporate involvement. It's accepted as currency on hundreds of sites worldwide, including one claiming to sell illegal drugs and several selling pornography.
It is also, despite having a public register of all transactions, capable of being totally anonymous. Users taking other precautions will find the only occasion at which they might link their Bitcoins wallet to their real identity is when transferring their coins into real cash at privately owned exchanges.
Given these can base themselves anywhere in the world, and often reject regulation, law enforcement agencies have a problem – if the Bitcoins experiment survives, criminals and money-launderers may soon have a near-untraceable channel through which to funnel their proceeds.
Perhaps as troubling to some agencies is WikiLeaks' recent decision to embrace the new currency, giving its donors the prospect of anonymity as secure as the site claims its whistleblowers enjoy.
Such prospects trouble those driving the development of the currency far less; instead, the majority see the benefits of an unfettered currency as outweighing the costs.
"The freedom to easily, instantly, and at very low cost pay anybody in the world is the fundamental idea," says Gavin Andresen, described as Bitcoin technical lead. "The internet gives us the ability to communicate with anybody in the world easily, instantly, and at very low cost; I think it should be as easy to pay somebody across the world as it is to send them an email."
Another, Nils Schneider, puts it more succinctly: "Bitcoin is an experiment to make a 'raw' digital currency. Such a currency does not need supervision."
Schneider also lacked sympathy for the victim of the 25,000 Bitcoin theft which first brought security jitters to the fledgling community. Bitcoin wallets at present are stored with no encryption whatsoever by default, and transfers of stolen material are irreversible unless half of all Bitcoin users agree to it.
The change in price when the Bitcoins hit the market after the hack. Source: MtGox
Asked – before the MtGox hack – about the situation, Schneider said:
"We're working on adding encryption to the wallet so it can't be stolen
that easily again. But other than that, Bitcoin is like cash. You have
to secure it yourself and shouldn't keep too many Bitcoins on an easily
hackable computer."
He added that should the currency take off, he hoped banks would emerge to aid people in securing their wallets.
Perhaps the simplest explanation for what brought thousands of users – many non-technical – to an unprotected currency is the sheer increase in value it attained in recent months. On 1 January 2011, Bitcoins were worth 30 cents each. By 9 June 2011, they were worth $29.55.
The total volume of US dollar to Bitcoins traded on MtGox was $146,000 in January. In the first two weeks of June alone, this was 143 times bigger, at $21m worth of trades.
Bitcoins have been generating value from nothing, and breaking the economic rules of virtually every currency. By design, Bitcoins at present have an inflation rate estimated by one developer at 7,200% (this will automatically drop to 0% over the next 30 years).
Such hyperinflation usually causes the exchange rate of a currency to plummet – as happened to Germany in the early 1930s, or Zimbabwe over the past decade. Bitcoins' value instead increased almost a hundredfold in six months.
Even those most centrally involved in Bitcoins agree that prior to the MtGox hack Bitcoin was in a bubble – and that a loss of trust could be fatal: "The growth rate is certainly not sustainable. I don't know if the current value with respect to established currencies is sustainable or not; certainly if people lost trust in the Bitcoin system its value would crash," says Andresen.
"Bitcoin is an experiment that has never been tried before. People should think of it as an internet startup – it might be wildly successful, or it might fail. In any case, I do not expect that the road ahead will be smooth: even if Bitcoin is ultimately successful, I expect more price bubbles, scams, software bugs, failures of Bitcoin-related businesses and other problems that I can't even imagine right now."
Given Bitcoin's travails, the more idealistic developers are keen to point out the wider benefits an open currency could have, if it became established. Controversially – within the community at least – some also acknowledge legal oversight may be necessary for these to be realised.
"People in the third world are at the mercy of corrupt governments and banks," says Amir Taaki, co-founder of Bitcoin Consultancy. "Bitcoin can drastically reduce overheads and fight corruption. At present, it's possible to pay up to 23% commission on an international funds transfer. That's not capitalism, that's a corruption of capitalism."
Just days after the massive hack of MtGox brought the fledgling currency to its knees, its idealists awaited its reopening to see if a currency without rules, government, or corporate control could withstand its first crash to survive long enough to deliver any of its potential benefits.
The wealthiest Bitcoin users have more pressing concerns. It's only when the exchange reopens that they'll learn if their electronic wallets are worth millions of dollars, or less than the $10 USB stick on which they're stored. It's a tense wait.
He added that should the currency take off, he hoped banks would emerge to aid people in securing their wallets.
Perhaps the simplest explanation for what brought thousands of users – many non-technical – to an unprotected currency is the sheer increase in value it attained in recent months. On 1 January 2011, Bitcoins were worth 30 cents each. By 9 June 2011, they were worth $29.55.
The total volume of US dollar to Bitcoins traded on MtGox was $146,000 in January. In the first two weeks of June alone, this was 143 times bigger, at $21m worth of trades.
Bitcoins have been generating value from nothing, and breaking the economic rules of virtually every currency. By design, Bitcoins at present have an inflation rate estimated by one developer at 7,200% (this will automatically drop to 0% over the next 30 years).
Such hyperinflation usually causes the exchange rate of a currency to plummet – as happened to Germany in the early 1930s, or Zimbabwe over the past decade. Bitcoins' value instead increased almost a hundredfold in six months.
Even those most centrally involved in Bitcoins agree that prior to the MtGox hack Bitcoin was in a bubble – and that a loss of trust could be fatal: "The growth rate is certainly not sustainable. I don't know if the current value with respect to established currencies is sustainable or not; certainly if people lost trust in the Bitcoin system its value would crash," says Andresen.
"Bitcoin is an experiment that has never been tried before. People should think of it as an internet startup – it might be wildly successful, or it might fail. In any case, I do not expect that the road ahead will be smooth: even if Bitcoin is ultimately successful, I expect more price bubbles, scams, software bugs, failures of Bitcoin-related businesses and other problems that I can't even imagine right now."
Given Bitcoin's travails, the more idealistic developers are keen to point out the wider benefits an open currency could have, if it became established. Controversially – within the community at least – some also acknowledge legal oversight may be necessary for these to be realised.
"People in the third world are at the mercy of corrupt governments and banks," says Amir Taaki, co-founder of Bitcoin Consultancy. "Bitcoin can drastically reduce overheads and fight corruption. At present, it's possible to pay up to 23% commission on an international funds transfer. That's not capitalism, that's a corruption of capitalism."
Just days after the massive hack of MtGox brought the fledgling currency to its knees, its idealists awaited its reopening to see if a currency without rules, government, or corporate control could withstand its first crash to survive long enough to deliver any of its potential benefits.
The wealthiest Bitcoin users have more pressing concerns. It's only when the exchange reopens that they'll learn if their electronic wallets are worth millions of dollars, or less than the $10 USB stick on which they're stored. It's a tense wait.
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