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Most of the worst financial panics in history have happened in the fall. Just recall what

happened in 1929, 1987 and 2008. Well, September 2011 is about to begin and there are all

kinds of signs that the financial world is about to hit the big red panic button. Wave after

wave of bad economic news has come out of the United States recently, and Europe is

embroiled in an absolutely unprecedented debt crisis. At this point there is a very real

possibility that the euro may not even survive. So what is causing all of this? Well, over thelast couple of decades a gigantic debt bubble has fueled a tremendous amount of "fake

prosperity" in the western world. But for a debt bubble to keep going, the total amount of

debt has to keep expanding at an ever increasing pace. Unfortunately for the global

economy, sources of credit are starting to dry up. That is why you hear terms like "credit

crisis" and "credit crunch" thrown around so much these days. Without enough credit to feed

the monster, the debt bubble is going to burst. At this point, virtually the entire global

economy runs on credit, so when this debt bubble bursts things could get really, really messy.

Nations and financial institutions would never get into debt trouble if they could always

borrow as much money as they wanted at extremely low interest rates. But what has

happened is that lending sources are balking at continuing to lend cheap money to nations

and financial institutions that are already up to their eyeballs in debt.For example, the yield on 2 year Greek bonds is now over 40 percent. Investors don't trust

the Greek government and they are demanding a huge return in order to lend them more

money.

Throughout the financial world right now there is a lot of fear. Lending conditions have

gotten very tight. Financial institutions are not eager to lend money to each other or to

anyone else. This "credit crunch" is going to slow down the economy. Just remember what

happened back in 2008. When easy credit stops flowing, the dominoes can start falling very

quickly.

Sadly, this is a cycle that can feed into itself. When credit is tight, the economy slows down

and more businesses fail. That causes financial institutions to want to tighten up things evenmore in order to avoid the "bad credit risks". Less economic activity means less tax revenue

for governments. Less tax revenue means larger budget deficits and increased borrowing by

governments. But when government debt gets really high that can cause huge economic

problems like we are witnessing in Greece right now. The cycle of tighter credit and a

slowing economy can go on and on and on.

I spend a lot of time talking about problemswith the U.S. economy, but the truth is that the

rest of the world is dealing with massive problems as well right now. As bad as things are in

the U.S., the reality is that Europe looks like it may be "ground zero" for the next great

financial crisis.

At this point the EU essentially has three choices. It can choose much deeper economic

integration (which would mean a huge loss of sovereignty), it can choose to keep the statusquo going for as long as possible by providing the PIIGS with gigantic bailouts, or it can

choose to end of the euro and return to individual national currencies.

Any of those choices would be very messy. At this point there is not much political will for

much deeper economic integration, so the last two alternatives appear increasingly likely.

In any event, global financial markets are paralyzed by fear right now. Nobody knows what

is going to happen next, but many now fear that whatever does come next will not be good.

The following are 25 signs that the financial world is about to hit the big red panic button....

http://theeconomiccollapseblog.com/archives/wake-up-america-10-very-obvious-reasons-why-the-devastating-u-s-jobs-famine-is-going-to-suck-the-hope-right-out-of-americahttp://theeconomiccollapseblog.com/archives/wake-up-america-10-very-obvious-reasons-why-the-devastating-u-s-jobs-famine-is-going-to-suck-the-hope-right-out-of-americahttp://theeconomiccollapseblog.com/archives/wake-up-america-10-very-obvious-reasons-why-the-devastating-u-s-jobs-famine-is-going-to-suck-the-hope-right-out-of-americahttp://theeconomiccollapseblog.com/archives/wake-up-america-10-very-obvious-reasons-why-the-devastating-u-s-jobs-famine-is-going-to-suck-the-hope-right-out-of-america

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#1 According to a new study just released by Merrill Lynch, the U.S. economy has an80%

chanceof going into another recession.

#2 Will Bank of America be the next Lehman Brothers? Shares of Bank of America have

fallenmore than 40%over the past couple of months. Even though Warren Buffet recently

stepped in with 5 billion dollars, the reality is that the problems for Bank of America are far

from over. In fact, one analyst is projecting that Bank of America is going to need toraise40 or 50 billion dollarsin new capital.

#3 European bank stocks have gottenabsolutely hammeredin recent weeks.

#4So far, major international banks have announced layoffs ofmore than 60,000 workers,

and more layoff announcements are expected this fall. A recent articlein the New York

Timesdetailed some of the carnage....

A new wave of layoffs is emblematic of this shift as nearly every major bank undertakes a

cost-cutting initiative, some with names like Project Compass. UBS has announced 3,500

layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of

America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro,

Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State

Street and Wells Fargo have in recent months all announced plans to cut jobstens ofthousands all told.

#5 Credit marketsare really drying up. Do you remember what happened in 2008 when that

happened? Many are now warning that we are getting very close to a repeat of that.

#6 The Conference Board has announced that the U.S. Consumer Confidence Index fell from

59.2 in Julyto 44.5 in August. That is the lowest reading that we have seen since the last

recession ended.

#7 The University of Michigan Consumer Sentiment Index has fallenby almost 20

pointsover the last three months. This index is now the lowest it has beenin 30 years.

#8The Philadelphia Fed's latest survey of regional manufacturing activitywas absolutely

nightmarish....The surveys broadest measure of manufacturing conditions, the diffusion index of current

activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The

index is now at its lowest level since March 2009

#9According to Bloomberg, since World War II almost every time that the year over year

change in real GDP has fallen below 2% the U.S. economy has fallen into a recession....

Since 1948, every time the four-quarter change has fallen below 2 percent, the economyhas entered a recession. Its hard to argue against an indicator with such a long history of

accuracy.

#10 Economic sentiment is falling in Europe as well. The following is froma recent Reuters

article....A monthly European Commission survey showed economic sentiment in the 17 countries

using the euro, a good indication of future economic activity, fell to 98.3 in August from a

revised 103 in July with optimism declining in all sectors.

#11 The yield on 2 year Greek bonds is now an astronomical42.47%.

http://www.cnbc.com/id/44278624http://www.cnbc.com/id/44278624http://www.cnbc.com/id/44278624http://www.cnbc.com/id/44278624http://www.businessinsider.com/bank-of-americas-stock-collapse-2011-8http://www.businessinsider.com/bank-of-americas-stock-collapse-2011-8http://www.businessinsider.com/bank-of-americas-stock-collapse-2011-8http://www.businessinsider.com/bank-of-america-may-need-to-raise-40-50-billion-of-capital-analyst-2011-8http://www.businessinsider.com/bank-of-america-may-need-to-raise-40-50-billion-of-capital-analyst-2011-8http://www.businessinsider.com/bank-of-america-may-need-to-raise-40-50-billion-of-capital-analyst-2011-8http://www.smh.com.au/business/world-business/european-bank-job-bloodbath-hits-67000-20110824-1j93f.htmlhttp://www.smh.com.au/business/world-business/european-bank-job-bloodbath-hits-67000-20110824-1j93f.htmlhttp://www.smh.com.au/business/world-business/european-bank-job-bloodbath-hits-67000-20110824-1j93f.htmlhttp://www.telegraph.co.uk/finance/8724643/Bank-job-cuts-top-60000-after-ABN-Amro-axes-thousands.htmlhttp://www.telegraph.co.uk/finance/8724643/Bank-job-cuts-top-60000-after-ABN-Amro-axes-thousands.htmlhttp://www.telegraph.co.uk/finance/8724643/Bank-job-cuts-top-60000-after-ABN-Amro-axes-thousands.htmlhttp://www.nytimes.com/2011/08/29/business/top-banks-confront-leaner-future-by-cutting-jobs.htmlhttp://www.nytimes.com/2011/08/29/business/top-banks-confront-leaner-future-by-cutting-jobs.htmlhttp://www.nytimes.com/2011/08/29/business/top-banks-confront-leaner-future-by-cutting-jobs.htmlhttp://www.nytimes.com/2011/08/29/business/top-banks-confront-leaner-future-by-cutting-jobs.htmlhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://money.cnn.com/2011/08/30/news/economy/consumer_confidence/index.htm?iid=HP_LNhttp://money.cnn.com/2011/08/30/news/economy/consumer_confidence/index.htm?iid=HP_LNhttp://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8http://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8http://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8http://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8http://www.dailymail.co.uk/news/article-2025372/US-consumer-confidence-hits-30-YEAR-low-Americans-tire-high-unemployment.htmlhttp://www.dailymail.co.uk/news/article-2025372/US-consumer-confidence-hits-30-YEAR-low-Americans-tire-high-unemployment.htmlhttp://www.dailymail.co.uk/news/article-2025372/US-consumer-confidence-hits-30-YEAR-low-Americans-tire-high-unemployment.htmlhttp://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2011/bos0811.cfmhttp://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2011/bos0811.cfmhttp://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2011/bos0811.cfmhttp://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2011/bos0811.cfmhttp://www.dailykos.com/story/2011/08/30/1011752/-Double-dip-recession-is-upon-ushttp://www.dailykos.com/story/2011/08/30/1011752/-Double-dip-recession-is-upon-ushttp://www.dailykos.com/story/2011/08/30/1011752/-Double-dip-recession-is-upon-ushttp://www.reuters.com/article/2011/08/30/us-eurozone-climate-idUSTRE77T1M420110830?feedType=RSS&feedName=businessNews&rpc=23&sp=truehttp://www.reuters.com/article/2011/08/30/us-eurozone-climate-idUSTRE77T1M420110830?feedType=RSS&feedName=businessNews&rpc=23&sp=truehttp://www.reuters.com/article/2011/08/30/us-eurozone-climate-idUSTRE77T1M420110830?feedType=RSS&feedName=businessNews&rpc=23&sp=truehttp://www.reuters.com/article/2011/08/30/us-eurozone-climate-idUSTRE77T1M420110830?feedType=RSS&feedName=businessNews&rpc=23&sp=truehttp://www.bloomberg.com/apps/quote?ticker=GGGB2YR:IND&n=yhttp://www.bloomberg.com/apps/quote?ticker=GGGB2YR:IND&n=yhttp://www.bloomberg.com/apps/quote?ticker=GGGB2YR:IND&n=yhttp://www.bloomberg.com/apps/quote?ticker=GGGB2YR:IND&n=yhttp://www.reuters.com/article/2011/08/30/us-eurozone-climate-idUSTRE77T1M420110830?feedType=RSS&feedName=businessNews&rpc=23&sp=truehttp://www.reuters.com/article/2011/08/30/us-eurozone-climate-idUSTRE77T1M420110830?feedType=RSS&feedName=businessNews&rpc=23&sp=truehttp://www.dailykos.com/story/2011/08/30/1011752/-Double-dip-recession-is-upon-ushttp://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2011/bos0811.cfmhttp://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2011/bos0811.cfmhttp://www.dailymail.co.uk/news/article-2025372/US-consumer-confidence-hits-30-YEAR-low-Americans-tire-high-unemployment.htmlhttp://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8http://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8http://money.cnn.com/2011/08/30/news/economy/consumer_confidence/index.htm?iid=HP_LNhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://www.nytimes.com/2011/08/29/business/top-banks-confront-leaner-future-by-cutting-jobs.htmlhttp://www.nytimes.com/2011/08/29/business/top-banks-confront-leaner-future-by-cutting-jobs.htmlhttp://www.telegraph.co.uk/finance/8724643/Bank-job-cuts-top-60000-after-ABN-Amro-axes-thousands.htmlhttp://www.smh.com.au/business/world-business/european-bank-job-bloodbath-hits-67000-20110824-1j93f.htmlhttp://www.businessinsider.com/bank-of-america-may-need-to-raise-40-50-billion-of-capital-analyst-2011-8http://www.businessinsider.com/bank-of-americas-stock-collapse-2011-8http://www.cnbc.com/id/44278624http://www.cnbc.com/id/44278624

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#12As I wrote about recently, the European Central Bank has stepped into the marketplace

and is buying up huge amounts of sovereign debt from troubled nations such as Greece,

Portugal, Spain and Italy. As a result, the ECB is alsomassively overleveragedat this point.

#13Most of the major banks in Europeare also leveraged to the hiltand have tremendous

exposure to European sovereign debt.

#14 Political wrangling in Europe is threatening to unravel the Greek bailout package. In arecent article,Satyajit Dasdescribed what has been going on behind the scenes in the EU....

The sticking point is a demand for collateral for the second bailout package. Finland

demanded and got Euro 500 million in cash as security against their Euro 1,400 million

share of the second bailout package. Hearing of the ill-advised side deal between Greece

and Finland, Austria, the Netherlands and Slovakia also are now demanding collateral,

arguing that their banks were less exposed to Greece than their counterparts in Germany

and France entitling them to special treatment. At least, one German parliamentarian has

also asked the logical question, why Germany is not receiving similar collateral.

#15German Chancellor Angela Merkel is trying to hold the Greek bailout deal together, but

a wave of anti-bailout "hysteria" is sweeping Germany, and nowaccording to AmbroseEvans-Pritchardit looks like Merkel may not have enough votes to approve the latest bailout

package....

German media reported that the latest tally of votes in the Bundestag shows that 23 members

from Mrs Merkel's own coalition plan to vote against the package, including twelve of the 44

members of Bavaria's Social Christians (CSU). This may force the Chancellor to rely on

opposition votes, risking a government collapse.

#16 Polish finance minister Jacek Rostowski is warning that the status quo in Europe will

lead to "collapse". According to Rostowski, if the EU does not choose the path of much

deeper economic integration the eurozone simply is not going to survive much longer....

"The choice is: much deeper macroeconomic integration in the eurozone or its collapse.

There is no third way."

#17 German voters are against the introduction of "Eurobonds"by about a 5 to 1 margin, so

deeper economic integration in Europe does not look real promising at this point.

#18If something goes wrong with the Greek bailout, Greece is financially doomed. Just

consider the following excerpt froma recent article by Puru Saxena....

In Greece, government debt now represents almost 160% of GDP and the average yield on

Greek debt is around 15%. Thus, if Greeces debt is rolled over without restructuring, its

interest costs alone will amount to approximately 24% of GDP. In other words, if debt

pardoning does not occur, nearly a quarter of Greeces economic output will be gobbled up

by interest repayments!

#19The global banking system has a total of2 trillion dollarsof exposure to Greek, Irish,

Portuguese, Spanish and Italian debt. Considering how much the global banking system is

leveraged, this amount of exposure could end up wiping out a lot of major financial

institutions.

#20 The head of the IMF, Christine Largarde, recently warned that European banks are in

need of "urgent recapitalization".

http://theeconomiccollapseblog.com/archives/3-2-1-global-debt-meltdownhttp://theeconomiccollapseblog.com/archives/3-2-1-global-debt-meltdownhttp://theeconomiccollapseblog.com/archives/3-2-1-global-debt-meltdownhttp://www.telegraph.co.uk/finance/economics/8560503/European-Central-Bank-risks-being-wiped-out-by-bail-outs.htmlhttp://www.telegraph.co.uk/finance/economics/8560503/European-Central-Bank-risks-being-wiped-out-by-bail-outs.htmlhttp://www.telegraph.co.uk/finance/economics/8560503/European-Central-Bank-risks-being-wiped-out-by-bail-outs.htmlhttp://finance.fortune.cnn.com/2011/06/20/europes-sickly-banks/?iid=HP_LNhttp://finance.fortune.cnn.com/2011/06/20/europes-sickly-banks/?iid=HP_LNhttp://finance.fortune.cnn.com/2011/06/20/europes-sickly-banks/?iid=HP_LNhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://www.telegraph.co.uk/finance/financialcrisis/8728628/Euro-bail-out-in-doubt-as-hysteria-sweeps-Germany.htmlhttp://www.telegraph.co.uk/finance/financialcrisis/8728628/Euro-bail-out-in-doubt-as-hysteria-sweeps-Germany.htmlhttp://www.telegraph.co.uk/finance/financialcrisis/8728628/Euro-bail-out-in-doubt-as-hysteria-sweeps-Germany.htmlhttp://www.telegraph.co.uk/finance/financialcrisis/8728628/Euro-bail-out-in-doubt-as-hysteria-sweeps-Germany.htmlhttp://euobserver.com/19/113440http://euobserver.com/19/113440http://euobserver.com/19/113440http://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8http://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8http://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8http://www.321gold.com/editorials/saxena/saxena082211.htmlhttp://www.321gold.com/editorials/saxena/saxena082211.htmlhttp://www.321gold.com/editorials/saxena/saxena082211.htmlhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://www.cnbc.com/id/44303970http://www.cnbc.com/id/44303970http://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://www.321gold.com/editorials/saxena/saxena082211.htmlhttp://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8http://euobserver.com/19/113440http://www.telegraph.co.uk/finance/financialcrisis/8728628/Euro-bail-out-in-doubt-as-hysteria-sweeps-Germany.htmlhttp://www.telegraph.co.uk/finance/financialcrisis/8728628/Euro-bail-out-in-doubt-as-hysteria-sweeps-Germany.htmlhttp://www.silverbearcafe.com/private/08.11/crunch.htmlhttp://finance.fortune.cnn.com/2011/06/20/europes-sickly-banks/?iid=HP_LNhttp://www.telegraph.co.uk/finance/economics/8560503/European-Central-Bank-risks-being-wiped-out-by-bail-outs.htmlhttp://theeconomiccollapseblog.com/archives/3-2-1-global-debt-meltdown

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