Today's grim economic and investment news is just the first rumbling of an emerging MONEY PANIC: A financial blitzkrieg that will lay waste to the US economy ... smash the S&P 500 to below 600 ... crush the Dow to below 5,000 ... and absolutely OBLITERATE the Nasdaq to below 800. This report will show you what you must do immediately to preserve your wealth...
WARNING: The ghosts of all the financial and economic crises you've ever experienced have returned to haunt us again!
Investors have been through a lot in recent years: the Tech Wreck of 2000 ... the Debt Disaster of 1998 ... and the Asian Crisis of 1997.
And, not long ago, investors were hit with the Energy Crisis of the 1970s ... the Real Estate Bust of 1974 ... the Bond Market Collapse of 1979-80 ... and the Banking/S&L Debacle of the 1980s.
Each one of these crises destroyed untold thousands of jobs. Each one gutted investor portfolios. And each one vaporized the prosperity, the financial security, and the retirement dreams of millions.
Now, with the US economy on the ropes and the stock market already in dire straits, these crises are once again rearing their ugly heads. Not just one or two of them - but ALL seven of these economic nightmares are rapidly converging upon the US economy.
In the next few months, they will simultaneously slam into Wall Street, triggering the bloodiest economic collapse and stock market crash since 1929.
I'm talking about the most severe economic upheaval of your lifetime -- a financial apocalypse that will slaughter hundreds of the world's oldest and wealthiest banks ... smash hundreds more international corporations and thousands of smaller companies to smithereens ... level the economies of Japan, Korea, Southeast Asia, Latin America, the European Common Market countries, and yes, even the United States ...
... and trigger the most cataclysmic destruction of personal wealth in our lifetimes -- driving the DOW to below 5000 ... the S&P 500 to below 600 ... and absolutely creaming the Nasdaq to below 800.
Major Companies Will Disappear In The Coming
And if that wasn't terrifying enough, the Fed tells us this debt is STILL growing almost THREE TIMES FASTER than the Gross Domestic Product (GDP) -- the combined value of all goods and services produced by the entire US economy!
In fact, 157 big-name public companies now have more debt than assets. You'd expect these big, household name companies to be debt free and rolling in dough. But in reality, they have a net value of NEGATIVE $12.8 BILLION!
Think of it: These companies have a combined market capitalization of $50.4 trillion. That means US investors have shelled out more than $50 trillion for companies that are in effect, WORTHLESS!
Needless to say, investments in those companies are likely to be completely wiped out - reduced to ashes - when this great debt bubble bursts.
It gets worse: I've also identified another 668 big companies that are bleeding so much red ink that they will have a hard time surviving another year - and I am NOT talking about small, obscure companies here:
Think only big companies borrowed more than they could repay? Think again! Just about every type of business you can name -- from the smallest "mom and pop" shops to the largest multi-nationals -- are now so buried in debt there's little hope they'll ever dig themselves out.
No wonder corporate credit ratings are plummeting. No wonder there have been as many as 3 corporate credit downgrades for every 1 upgrade for 10 quarters in a row. And no wonder a fourth of all junk bonds are trading at "distressed levels."
This Debt Disaster Has Put Some of America's Biggest Banks At EXTREME RISK Of Failure!
It doesn't take a Nobel-Prize-Winning economist to figure out that unpayable debts at major corporations and thousands of smaller businesses is potentially devastating news for banks. Already ...
I'm not talking peanuts: Sunbeam recently defaulted on loans totaling $1.7 billion. Xerox owes $750 million that is likely to go into default as well.
And get this: For the first time in 10 years, banking industry profits dropped last year. Profits dropped $417 million at Bank One Arizona ... fell $778 million at first USA Bank ... and a plummeted a staggering $2.8 BILLION at First Union!
Case in point: J.P. Morgan Chase & Co. loaned steel maker LTV Corp $600 million over the past few years. But times have been tough for the company, and so LTV filed for bankruptcy - and asked the bank to loan it ANOTHER $225 MILLION!
Care to guess what the bank did? I'll tell you: It gave LTV the financing deal - despite the fact that the company was going under!
Talk about throwing good money after bad!
In San Francisco's South of Market district - formerly home to many tech startups - available sublease space has skyrocketed 275% in the last six months and rents in commercial buildings have already fallen by 40%.
Even more ominous: one study projects that 80% of the remaining dot-com companies in the Bay area will collapse in the next year. Result: Another 4 million square feet of office space will become vacant.
This problem is massive: US banks are on the hook for a total of $639 billion in commercial real estate loans. THAT'S 35% MORE THAN THE COMBINED CAPITAL OF ALL US BANKS PUT TOGETHER!
Five years ago, banks typically loaned up to 80% of a property's market value. Not any more! Convinced that the great economic expansion of 1991-2000 would never end, bankers literally threw money at anyone who asked for it. They didn't stop at lending 80% ... or even 90% ... or even 100% . They sometimes loaned up to 110% of a property's value -- that's right -- ONE HUNDRED AND TEN PERCENT.
In fact, these ultra-high-risk real estate loans - called "High Loan to Value" loans or "HLTV" - have QUADRUPLED in just the last two years.
This is one gigantic house of cards -- and its collapse has already begun! With hundreds of thousands of homeowners being laid off ... with thousands of corporations unable to make their loan payments ... with thousands more simply going out of business, and with untold thousands of office buildings empty, defaults on these loans are already skyrocketing and could soon reach epidemic proportions.
But derivatives are dangerous because any major unexpected market swing can strike the players like an atomic bomb. The fall-out: Huge losses plus dozens of banks falling like dominoes.
How big is this problem?
Well, back in October of 1998, when currencies from Japan to Russia and Europe were crashing, derivatives cost Union Bank $240 million. Chase Manhattan lost $160 million. Deutsche Bank lost $770 million. And Credit Lyonnais lost a whopping $2 billion.
And that was without a worldwide economic recession!
You'd think governments would have stepped in since then - and forced banks to limit their exposure to these highly leveraged derivatives. Well, think again.
In 1998, US banks held about $27 trillion in derivatives contracts. Today the US General Accounting Office (GAO) tells us US banks are now exposed to more than $37.3 TRILLION in derivatives!
That's more than four times America's entire gross domestic product ... more than 530 times the banking industry's TOTAL PROFITS ... nearly $141,000 for every man, woman, and child in the country.
Even if you consider just the credit risk associated with derivatives (not their full face value), the exposure is huge. For every $1.00 of capital (after the Fed's adjustments for other risk factors), Bank One has $1.04 in credit risk related to derivatives.
J.P. Morgan's is eight times greater. That means if just 12.5% -- a mere one in eight -- of its bets on derivatives go bad, J.P. Morgan is broke. Bankrupt. Kaput!
And if you think heavy derivatives risk is limited just to these huge money center banks, please think again: Right now, 389 commercial banks in the US trade in financial derivatives!
Any major global economic hiccup could easily trigger TRILLIONS of dollars in derivatives losses at US banks - and sink the entire system.
In fact, the US General Accounting Office even has a name for the kind of risk derivatives pose. It's called "System Risk" -- the risk of GLOBAL FINANCIAL MELTDOWN.
The GREAT Debt Debacle of 2001-2002
When that happens, you're going to see millions of Americans temporarily penniless while the feds try to pick up the pieces. You're going to see global confidence in the US economy and in the dollar tattered and torn. And, you're going to see blood flow hip-deep on Wall Street.
Wall Street's $6 Trillion Crash ALONE Is Enough
The greatest stock market orgy of all time recently turned into the greatest stock crash since 1929. But the hangover is not yet over - and it's going to be a living hell.
The first shot in this financial massacre was fired last year - on March 25 - and it inflicted a gaping head wound on the US economy.
I'm talking about the stock market crash that robbed US investors of nearly $6 TRILLION - an amount equal to about HALF this nation's total GDP!
In sheer dollar terms, unadjusted for inflation, this has been the largest loss of wealth in the history of humanity, dwarfing the "great" stock market crash of 1929 by a factor of 23 to 1!
And that crash lit the fuse on the worst depression this nation has ever suffered.
You can bet your bottom dollar that the devastating losses we've seen recently guarantee economic catastrophe and another vicious slaughter of US stocks and equity funds in 2001!
Could President Bush's tax cut save the economy
FIRST: It's back-loaded -- timed for the majority of the cuts to kick in five years, seven years, up to 10 years down the road. Only a tiny percentage of the $1.7 trillion tax relief they promised will go into the economy in the next 12-18 months.
SECOND: This crash has taken nearly $6 trillion out of investor's pockets. Even if the entire $1.7 trillion could be handed back to taxpayers THIS YEAR, it would only be a tiny, pathetic drop in the ocean compared to what investors have lost in stocks - nowhere near enough to invigorate the economy.
THIRD: Even though the tax cut is pitifully inadequate to stimulate the economy, Democrats and even some moderate Republicans are doing everything in their power to whittle it down still further. They know it won't do anything to revive the economy NOW ... and they also fear that declining tax revenues combined with tax rate cuts will doom the government to $100 billion deficits ... crashing bond prices ... and rising interest rates for the foreseeable future.
Even Greenspan's interest rate cuts are too little, too late.This crash destroyed at least HALF of all of the American people's life savings. It scrambled the retirement nest eggs of more than 45.69 million baby boomers who will be retiring in the next five years.
Most important, it is reversing the great "wealth effect" that drove this economy for the past eight years, instantly transforming millions of big spenders into stingy Scrooges.
Don't think for a minute that interest rate cuts could possibly undo that kind of damage. Consumers are neither willing nor able to begin spending like they did in the stock market's heyday -- no matter how low interest rates go!
Look. The Fed lowered interest rates eight times before and during the Great Depression. Did that stop the Depression? Of course not!
Before and during the recession of 1973-75, the Fed lowered interest rates six times. That didn't stop the economy from plunging either.
Ditto in 1945, 1953, 1970, and 1990.
Fact is, there's nothing anyone can do to keep this staggering stock market debacle from smashing the US economy- NOT President Bush, NOT Alan Greenspan, and NOT even the entire US Congress.
And there are more crises to come!The Great Debt Debacle and the Wall Street crash are only the first of several major crises that will bludgeon the US economy in 2001. More are on the way ...
Today's fledgling economic slowdown, skyrocketing debt, soaring oil, gasoline, natural gas and electricity prices ... sporadic and even chronic shortages ... and crashing government bond prices will be huge hurdles for the US economy to overcome in the next 18-24 months.
Long-Term Bonds Are Destined to CrashMassive losses in tax revenues due to the stock market crash … huge new spending programs … and President Bush's $1.7 TRILLION tax cut add up to more than just a return to deficits:
You're looking at skyrocketing deficits ... crashing government bond prices ... a falling dollar ... and rising interest rates - as far as the eye can see!
To make up for massive losses from the slowing economy and the stock market crash, the US Treasury will be forced to dump tons of notes, bills, and bonds onto the market in 2002 and beyond - just to keep the government running.
Without fail, every time this has happened throughout history, bond prices have been hammered into the ground. The dollar has collapsed. And interest rates have skyrocketed - no matter what the Fed Chief did to avert the disaster.
You've seen it before - under Jimmy Carter, when the economy tanked, inflation hit 18% and the Prime Rate jumped to 21%. And, it will happen again.
The Coming REAL ESTATE
The more expensive the real estate, the bigger the bubble. And now the bubble is starting to rapidly deflate ... As usual, the first market to feel the impact is high-end rentals, because that's where consumers have the most discretion.
Manhattan's high-flying rents are already falling back toward earth. For the first time in seven years, landlords are slashing rents and some are even offering to pay broker fees.
In San Francisco, which is close to "dot-com ground-zero," prices have been falling for six months - with high-end apartments suddenly getting cheaper by hundreds of dollars a month.
Next to feel the pain will be the market price of high-end single-family homes. Just listen to what some industry insiders are saying:
REITs will get clobbered. Construction stocks will plunge.
REITs and REIT funds: A REIT is like a mutual fund, only it deals in real estate, not equities. Real Estate Investment Trusts purchase and manage income property and/or mortgage loans. Now, they're going to get slammed, with those concentrated in California and other high-tech areas especially hard hit.
Construction companies: Construction companies are exceptionally vulnerable to the downturn in real estate for obvious reasons. Overcapacity and dwindling demand for new office space and shopping malls means less projects to build, and therefore, declining earnings. Companies like Devcon International, and Abrams Industries will see their shares get hit.
Bank stocks: Losses from large syndicated loans by US banks tripled in 2000 to more than $5 billion. And we've already seen bad-loan fallout poison the earnings of Bank of America and First Union. A real estate recession will make previous problems look like a walk in the park for these stocks.
I'm not the only one issuing warnings. A recent study by Salomon Smith Barney forecast that loan defaults will total about $33 billion this year, with most of that bad debt showing up on the books in the first half. I think they're understating the potential damage. But even if they're right, the impact on the financial institutions holding these debts will be dramatic.
FDIC Chairman Donna Tanoue says that 9% of banks are "very vulnerable" to a real estate downturn. Another 16% are "somewhat vulnerable." More bad news from the FDIC:
The Coming ENERGY
But precious few people - including the President - have any idea how deadly this crisis is shaping up to be.
Last time around - in 1973 and '74 - an oil shortage drove the Dow down by nearly in half and flattened the economy for nearly two years.
This time around, it's not just oil. The US is running chronically short on the lifeblood of our high-tech civilization: Electricity.
Oil prices have already tripled from their 1998 lows. Electricity prices have already soared by 200% ... 300% -- up to 800% from Florida to California. Natural gas prices have more than DOUBLED from $2.00 in January 2000 to $4.22 today.
Together this triple crisis will cripple the US economy in ways we couldn't even imagine during the last energy crisis. Ultimately, they are helping to smash US industry ... kill the digital revolution ... even plunge some of our cities into darkness. Here's what just about nobody else is telling you about America's energy disaster ...
For the first time in a quarter-century,
But in the 1990s, memories of the great oil crisis began to fade. And so did America's resolve to become self-sufficient.
Now, the America's energy picture is in far worse shape than at any time in its history ...
And second: Those same environmental regulations have made it nearly impossible to build new refineries in the US. Not a single US refinery has been built in the past quarter-century!
And to make matters worse, you can't just throw up a new refinery overnight. It will take years to build new refining capacity in the US.
Put simply, it will be next to impossible to increase the supply of electricity in this country for many years to come!
As Bad As The Impending Oil Shock Is,
This is a national problem -- and it's a headache of massive proportions:
Why is this crisis occurring now? Blame it on the computer and Internet explosions. US demand for electrical power is 62% greater than it was in 1980 -- and as much as HALF of this country's electricity is now being used by computers and Internet equipment!
But America's utilities have completely failed to anticipate this booming demand. And in many cases have been actually prevented from building new power plants by draconian EPA regulations.
As a result, electricity prices are rising in more than California, New York, Florida, Montana, Minnesota, Wisconsin, Illinois, Louisiana and many other states ... consumers are already reporting a dramatic increase in brown-outs nation-wide ... and major black-outs have already hammered cities from New York to Oregon.
And now, Allied Business Intelligence -- a top technology research firm -- is publicly predicting that major, chronic nation-wide power shortages will plague US homes and industry for many months and years to come.
Today, more than 99 percent of all investors - even managers of massive hundred-billion-dollar mutual funds -- are completely oblivious to these locked-in trends, and the investments that will soar are selling cheap.
Get Your Money to Safety NOW!This is just the beginning. A financial hurricane is getting ready to rip through your investments. Your number one priority must continue to be the protection of your principal. Just a few months of losses in these markets can take years, sometimes decades, to recover.
Here's what to do NOW:
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