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    Negative Interest Rates Destroying World Economy: “Doom-and-Gloom Outlook for Banks in Europe”

    Mac Slavo
    February 8th, 2016
    SHTFplan.com
    Comments (55)
    Read by 9,314 people

    global-reset---shadow-banking

    Trying to simply hold onto the standard that you’ve got has become a new normal for financial challenges.

    Equity erodes away when interest rates go negative… then everything starts to sour.

    China’s economy and stock market are effectively in the toilet, or poised to further collapse the next time anything big happens in Europe or the United States, and perhaps any part of the world.

    The U.S. stock market has become jumpy and prone to collapse as well, and all major markets are now global, and trip up anytime the string tied around their ankle is yanked from across the ocean. And collapsing oil prices are adding huge pressures to everything.

    Now Europe banks are at the brink. Will it be enough to set off the major crisis everyone has been warning about?

    Via MarketWatch:

    Europe’s bank index has posted its longest weekly string of losses since 2008 […] the Stoxx Europe 600 Banks Index has logged six straight weeks of declines.

    Lackluster profits and negative interest rates, have prompted investors to dump shares in the sector that was touted as one of the best investment ideas just a few months ago.

    […]

    The negative interest rates set by the ECB means that banks effectively have to pay to have cash on their balance sheets, while at the same time getting squeezed on their net interest margins. Debt levels are already really high on the continent, which means further loan growth is expected to be low, he said.

    Negative interest rates, a result of the overkill of quantitative easing at the Federal Reserve, is plenty enough rope for all involved to hang themselves. The desperate and poor will fall as a result of borrowing too much on easy credit, and the richer and better off will fall as a result of declining returns and falling standards for income.

    Banks and businesses are now seeing no return at all for investment in some cases, and a devastating decline in income security for pensioners and savers. Zero interest rates have caused severe damage.

    Things are severely distorted.

    “The current environment for European banks is very, very bad. Over a full business cycle, I think it’s very questionable whether banks on average are able to cover their cost of equity. And as a result that makes it an unattractive investment for long-term investors,” warned Peter Garnry, head of equity strategy at Saxo Bank.

    The doom-and-gloom outlook for banks comes as the stock market has had an ominous start to the year.

    […]

    “And its worrisome, because banks are much more important for the credit mechanism in the economy here in Europe than it is in the U.S. […] therefore [the current weakness] is a little bit scary,” he said.

    When the credit crunch is fully on, it is likely to trigger a debt bomb with low income developing countries and broke, bankrupt mismanaged first world cities and states (like Illinois). It will also be much more difficult for households to gain credit, due to the pressures at higher levels.

    According to Market Watch, one of the precursors to this new disaster has been “aggressive easing from the European Central Bank,” in order words, more quantitative easing, Federal Reserve style.

    Just as bank regulators have recognized in the United States, this monetary policy has distorted EVERYTHING it has touched.

    Every sector, every market. The stocks are in a bubble; asset prices inflated; job growth and wages stagnant; investors with nothing to show; and a grinding halt across the entire machine itself.

    The Federal Reserve went way too far with its free flowing easy money, trickling slowly down from the top where most all of it went. Now everything is tangled and messy.

    “Normally,” Market Watch claims, “banks benefit from measures such as quantitative easing, but it’s just not doing the trick in Europe.”

    What a joke.

    Now everyone will be taken for a ride… and things are sure to be a bumpy ride.

    Read more:

    Global Economy “Trapped in Death Spiral” According to Wall Street Bank

    “Fed Risks Triggering Panic and Turmoil”: World Bank Warns Against Raising Rates

    Central Bank of Central Banks Says “The World is Unable to Fight Next Global Crash”

    Click here to subscribe: Join over one million monthly readers and receive breaking news, strategies, ideas and commentary.
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    Author: Mac Slavo
    Views: Read by 9,314 people
    Date: February 8th, 2016
    Website: www.SHTFplan.com

    Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely reproduced in full or in part in digital form with full attribution to the author and a link to www.shtfplan.com. Please contact us for permission to reproduce this content in other media formats.

    55 Comments...

    Vote: Click here to vote for SHTF Plan as a Top Prepper Web Site
    1. got out then says:

      I thought last year was shaky. This years is far far worse. And there are WAY to many people who are completely ignorant. I try to wake up one person a day. We went on our weekly shopping trip this weekend trying to keep to a budget. Fresh vegetables are getting high, our money isn’t going very far. Also the shelves were low on stock. I know its the beginning of the month but even dog food stock was really low, we bought the last bag they had.

      • Jacknife says:

        NOW HEAR THIS: To all you silver stackers out there….GOOD JOB!!!

      • maddog says:

        Low inventory is due to the BDI at an all time low, rail tonnage at all time lows and 48% cut is truck shipping. I have hundreds of hours in JIT production. Toyoda training. What you are experiencing will continue to get much worse. In JIT there are NO banks (stock piles).Inventory is replaced with no reserves in case of delays. In theory it points out problem areas immediately and reduces inventory expense. However when nothing is shipped for reasons not related to production inventories could drop to zero with no resolutions. I suggest stocking up on everything.

        • Captain Crunch says:

          Damn good post maddog

          Watch the sheer panic in someone’s eyes when they have the realization that the empty shelves in Kroger or IGA or Alberstons (or whatever shíthøle grocer chain people shop at ) isn’t just a temporary glitch and there won’t be food on that shelf ever again.

          Pandemonium.

          Cannabalism in 15 days or so.

          The only question you need to ask is did I stack high enough?

          • lorungee says:

            What’ll ya, where’ll ya spend your stack on if there’s no stock in the stores ?

            • Philosopher says:

              Land. I already have cash for food. Stuffed it all under my mattress.

            • Jacknife says:

              Did you grow up in a cacoon? You’ll still be able to operate, just not the way we do now.

            • MARCUS says:

              Lorungee: You wont. Stacking implies you have plenty of beans, bullets, and bandaids.

              Why do people seem have such a hard time understanding PM’s are long-term savings and not “spending money” or replacement currency..???

              • durangokidd says:

                From Business Insider:

                “I think we’d all argue that some of this volume isn’t terribly healthy,” he said. “It is not the classic beginning of the year reinvesting cycle,” he added.

                “It is choppier, it is gappy, it is highly insured volume, and the question is how long are we going to see that for?” – Ted Pick, Head of Trading for Morgan Stanley.

                I told this community last Aug/Sept that I thought markets would be “CHOPPY” for the next two years. That was six months ago.

                You are welcome. :-)

        • john stiner says:

          Just in Time delivery is a great business model. You work at 100% capasity and work output and saves lots of money.

          gone are the days you would ask the store clerk, “can you check in the back to see if there are more?”

          There is no “more” because it costs money.

          Hence the problem. When ever there is a hick-up in the system then there is a product disruption. A three day delay in transport and the grocery stores would be empty.

      • Foxglove666 says:

        I almost feel sorry for the gubmint check, double dipping keyboard commandos here that are giving the commie system hell yet sucking on the gubmint tit in an apartment in backwater east coast towns. Some brag about what they’ll do when they get their BOL yet will never be able to afford one. Even if they could afford one, no one will put up with their nonsense nor bad attitude. Yep, this year things are going to get interesting for the gubmint titsuckers.

        • Archivist says:

          My freezers are full. My pantry is full. My storage buildings are full. I bought even more seeds today. My wife and I paid into Social Security, so we’re going to get all we can out of it before it goes under.

          Don’t feel sorry for me. You need to feel sorry for yourself. I’m in my location with armed friends, neighbors, and relatives all around me. You are probably broke, busted, and up the proverbial creek without a paddle or a life jacket.

          So there.

        • got out then says:

          The gubmint titsuckers are already lost. When that SNAP card cant buy the usual amount of GMO processed food that it once bought, and that local food bank is short, the game is over. We got out of the city 3 years ago. Moved rural off grid its a great retreat location. We are STILL working on improvements. We had 2 years of crop failures Frost, Deer and rabbits hoping this is the year we get it working.

          • Foxglove666 says:

            Got out, congratulations for getting out ahead of time. It really is great that you have had time to work out some of the kinks before it really counts. Good on ya! It’s always a work in progress….. :-)

        • Yoko Ono says:

          I’m a full collector of a state government pension and live off your back in some way. Thanks, sucker!!!!

          • Foxglove666 says:

            What do Orkin and Yoko Ono have in common? They both make a living off dead Beatles…… :-)

          • got out then says:

            Sucker???
            How the hell do you figure that? Do I have a choice of not paying taxes on money I earn? Can I just not pay taxes? from my understanding the government takes my money by force. Enjoy your government paid pension you put your time in and you earned it. I do hope you put it to really good use while you can. Oh by the way the last time I checked that pension check is written by a bankrupt nation.

          • Foxglove666 says:

            Pensions are a whole other animal, you earned that. I’m talking about freeloader assmonkeys that collect dummy checks and have no intention of being viable members of society. They simply take what they can get, then the hypocrites rant about the FSA on here.

      • MARCUS says:

        “The Nikkei has now managed to lose more than 10% since BOJ announced its negative rate policy and authorities are clearly becoming concerned that their move has backfired.”

        830est, via http://www.nasdaq.com/article/market-drivers-a-full-collapse-usdjpy-breaks-11500-cm576909

    2. Braveheart1776 says:

      “Now everyone will be taken for a ride…and things are sure to be a bumpy ride.” Hell, the road is so full of potholes it needs to be closed!

    3. PO'd Patriot says:

      Stand by for the bank bail-ins. Italy and Spain will be first then it’ll eventually get around to the rest of us. Your better off keeping cash under a floorboard. Ain’t gonna make any money on it with it parked in the bank.

    4. incognito says:

      Got phyz bitches?

    5. Captain Crunch says:

      The nork EMP superweapon can be tracked live at www . N2YO . com

      Sorry for the spaces , damn moderation.

      Be prepared at all times for the lights to go out permanently

    6. Frank Thoughts says:

      The low or no interest rate environment is to train us for the introduction of sharia banking. It is haram to charge interest in Islam. The ‘crisis’ is being used to bring in an Islamic economy, complete with millions of Muslims.

      On the plus side, you will be able to have as many wives as you want, marry and f#ck underage kids and rape at will when you have a ‘sexual emergency’. Islam will be fun if you are a straight man or a closet case.

      • The low or no interest rates intent was to stimulate the economy by enticing more borrowing and drive money from savings into Wall Street via stocks.

        The whole Islamic thing is a rouse to justify the destruction of oil economies so that they have no alternative to accepting the US dollar as payment for oil. Chaos is the friend of TPTB and the US Military is their enforcer.

    7. TnAndy says:

      Article at Zerohedge says the FED only has about 200 billion in physical cash. There are 2.5 trillion in checking/savings accounts…..meaning if rates go negative, you’ll have a 1 in 10 chance of pulling your deposits out in cash…..assuming they even let us withdraw, or the bank doors are open (remember Greece ? )

      Sounds like the first ones to panic will have some cash, and the rest are SOL.

    8. rellik says:

      Negative interest rates are not new. We all know it as “inflation”. Inflation that the Feds try to engineer through monetary policy. They think inflation is good, I’m on a fixed income and I’d prefer deflation. The downfall of the world is this idea of paying off debt in future inflated dollars, gold, or silver. The house of cards will fall. When we get back to where the price of a gallon of fuel, a pound of food, a loan for whatever has some relationship to the cost of the item at the point of sale, that is when we will be able to start real growth again.

      • TnAndy says:

        While I agree we have had effective negative returns on money kept in a bank for quite a few years once you subtract taxes paid and inflation from the interest rate paid….we’ve never had “in your face” negative where you put 10,000 bucks in the bank, and come back to find 9,990.

    9. Slobesky O'gorki says:

      Negative interest rates are a kind of bank bail-in by default. Just remember that the term ‘Systemically Important’ is an euphemism for ‘Too big to fail’.

    10. 2isone says:

      Woke up to this dream this morning. Take it for what it’s worth. I don’t generally dream about my preps.

      There were several people involved in this. We were all changing residences according to our means. I was involved in trying to get my food moved without tipping the movers off to how much and what I had. I found a good place and felt satisfied with it. But I felt insecure about my opsec because of having help to move quickly. In the dream, it was an urgent move. Like we all knew something was going to happen imminently. In “real” life my husband and I would move stuff like that ourselves in a separate vehicle.

      Then, I was asked to go with someone looking at apartments to help them decide what was best and most secure. In the dream, I remember going to one complex and not being impressed with the security. But then, the manager walked us into this space that was carpeted on the walls with all kinds of outlets and very secure double doors. He said that space was available to his tenants. I reflected on that room as I stirred my coffee this morning thinking it reminded me of one of those “arcade” spaces that was so much part of the scene in the late ’90s. The games had been cleared out… the manager was marketing to people who needed storage- wink, wink.

      That’s it. Is anyone else dreaming dreams like this?

      • tishie says:

        2isone,
        Yes! A couple of weeks ago I had a dream that I was @ my BOL. My BOL is more like a vacation house but best I could do. As I arrived someone was in my garage. Everything was gone and just cardboard strewn around. Two people were doing the rummaging. It was Obama and his wife Michelle. They said nothing to me but I screamed at them saying; You have already taken everything there is to take, there is Nothing More Left!
        When I awoke I felt so angry and deceived. They will hunt us down and help themselves to whatever is around.

    11. bb in GA says:

      @TnAndy

      The Fed Reserve says:

      ht tp:// http://www.federalreserve.gov/faqs/currency_12773.htm

      “How much U.S. currency is in circulation?

      There was approximately $1.39 trillion in circulation as of September 30, 2015, of which $1.34 trillion was in Federal Reserve notes.”

      Now, in circulation would logically mean worldwide since places other than the US have standardized on the US dollar. Currency circulating in, say, West Africa will not be available for me to withdraw.

      So unless we are being lied to (again) somewhere between Zerohedge’s $200 B number and $1.3 T ($1300 B)is the right number.

      <bb

    12. Plan twice, prep once says:

      Everything is obviously flat, retail is cutting inventory to the bone. Sales are flat and company after company are reporting dismal sales.

      Oil prices dropping to rock bottom are good for us and the economy, except we just went through a major expansion exploiting fracking. A lot of money was borrowed to drill holes in the ground based financially on a price of oil three times what it was last week. There’s not enough profit coming in from the holes we drilled to pay the debt used to drill them. Bonds, drillers, equipment suppliers, oil workers. The whole industry is in collapse. The bond failures are killing banks all over the world that bought into these great investments. This oil bubble is just like the housing bubble that nearly brought down the world economy in 2008. It took years to unwind the housing debt from 2008.

      2008 broke the global banking paradigm. Banks no longer make money the way they used to, banks are now dependent on cheap money flying off the printing presses. Banks don’t even want the deposits of American savers. The savings of most Americans have been destroyed anyway, so there’s no going back to the old ways for banks, that foundation is in ruins. The current banking model is based on cheap money printing. This new banking model is unsustainable. Trillions in bad bonds from the oil sector combined with associated real estate collapses mixed with crumbling retail and a crashing stock markets means the banks are toast. And then those failures spread to more corporate, retail, real estate, bond failures.

      We are in a financial death spiral, check out the next FOMC meeting on Mar 16 when Janet Yellin speaking for the FED will be heard to say “Miss Charlotte, ah don’t know nuttin bout burthin no babies”!

    13. bb in GA says:

      December 23, 1995

      “Butterfly McQueen, the actress best remembered for her portrayal of Prissy in “Gone With the Wind,” the vexing slave girl who confounded Scarlett O’Hara with the tearful pronouncement, “I don’t know nothin’ ’bout birthin’ babies, Miss Scarlett,” died yesterday. She was 84 years old.”

      <bb

    14. bb in GA says:

      @TnAndy

      The Fed Reserve says:

      “How much U.S. currency is in circulation?

      There was approximately $1.39 trillion in circulation as of September 30, 2015, of which $1.34 trillion was in Federal Reserve notes.”

      Now, in circulation would logically mean worldwide since places other than the US have standardized on the US dollar. Currency circulating in, say, West Africa will not be available for me to withdraw.

      So unless we are being lied to (again) somewhere between Zerohedge’s $200 B number and $1.3 T ($1300 B)is the right number.

      I apologize if this shows twice – version 1 is in moderation jail

      <bb

    15. Brace For Impact says:

      Put Jesus first folks and stand for what is right, just and true. Lord knows I’ve tried to warn everyone that would listen and soon they will understand.

    16. john stiner says:

      According to Market Watch, one of the precursors to this new disaster has been “aggressive easing from the European Central Bank,” in order words, more quantitative easing, Federal Reserve style.

      Quantitative easing has been happening for the last eight years, so how can this be a sudden precursor to collapse?

     
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