The Phaserl


The Next Big Crash Of The U.S. Economy Is Coming, Here’s Why

by Steve St. Angelo, SRSRocco Report:

Investors better be prepared as the next crash of the U.S. economy is coming. This is not based on hype or speculation, rather due to the disintegration of the underlying fundamentals. Matter-a-fact, the fundamentals are so completely AWFUL, that the next market crash will make 2008 look quite tame indeed.

To get the skinny on the lousy fundamental data, let’s first look at the Auto Industry. The next series of charts come from the article, More Warnings–Unsustainable Auto Sales & Stock PE Ratios:

Ever since the supposed economic turnaround, the amount of outstanding auto loans has increased dramatically from less that $700 billion in 2010 to over $1 trillion in the fourth quarter of 2015. According to Wolf Richter, quoted in the article:

“Deep-subprime borrowers are high-risk. Typically they have credit scores below 550. To make it worth everyone’s while, they get stuffed into loans often with interest rates above 20%. To make payments even remotely possible at these rates, terms are often stretched to 84 months. Borrowers are typically upside down in their vehicle: the negative equity of their trade-in, along with title, taxes, and license fees, and a hefty dealer profit are rolled into the loan. When the lender repossesses the vehicle, losses add up in a hurry.

When I was younger, the longest automobile loan an individual could get was 48 months. However, you were considered to be a REAL LOSER if you had to finance an automobile that long. Now, 84 months is becoming the norm….LOL.

This is just one factor that shows just how weak the economy has become if Americans have to finance a car for seven years.

Here is another chart from the article linked above. It shows just how inflated the S&P 500 index has become:


According to Michael Lebowitz of 720 Global Research (quoted in the article):

Since October 1, 2011, the S&P 500 has risen 82% on the heels of a 0.75% decline in earnings. The price to earnings ratio over that time period has risen 83%, with price gains contributing 99% to the increase. Prices have risen substantially, while earnings have actually fallen. The chart below highlights the growing gap between earnings and the S&P 500.”

As we can see from the chart, the S &P 500  and earnings have been surviving on HOT AIR, especially since the latter part of 2014.  When QE (money printing) and zero interest rates no longer provided enough bounce in the markets, the Fed, Central Banks and the Plunge Protection Team stepped in a BIG WAY to keep the markets from crashing.

So, not only do we have a highly over-leveraged automobile financed industry, the broader stock market valuations are in bubble territory.  Unfortunately, this is only part of the story.  If we look at the disintegrating U.S. Energy Industry, the situation is even more dire.

The Coming Collapse Of The U.S. Energy Industry

Today I did an interview with Money Metals Exchange.  I will be putting out the interview when it’s published.  However, I discussed this energy subject matter during the interview.  When I first started the interview, I said the precious metals community was guilty of propagating hype and short-term surging price moves that never came true.  Thus, we have frustrated a lot of precious metals investors because the COLLAPSE of the Dollar, DEFAULT of the COMEX or much HIGHER gold and silver prices have not yet occurred.

So, am I guilty myself by putting out a new a headline that reads, “The Coming Collapse of the U.S. Energy Industry?”  No…. here’s why.

The situation in the U.S. Energy Industry is so AWFUL, I wouldn’t be surprised to see half of the industry go bankrupt over the next few years.  Of course, the U.S. Government could step in and either bail out or nationalize the energy industry, but this would stop the impending collapse.

Let’s take a look at this next chart.  The U.S. Energy Industry has added so much debt that it took nearly half of all its operating profits to just pay the interest on its debt in 2015:


While this was bad, it was even worse in the first quarter of 2016.  According to the article, Why Oil & Gas Companies Are Barely Scraping By, the U.S. Energy Sector paid 86% of its total profits just to service the interest on its debt.  Can you imagine that?

This chart from the article shows the huge change of interest payments on debt of the percentage of operating income in the U.S. Energy Sector:


Since 2000, the U.S. Energy Sector was paying (on average) between 10-15% of its operating income to service its debt.  However, that changed significantly in 2014 as the price of oil plunged.  The reason this percentage jumped over 20% in 1998 was due to the price of oil falling below $15 compared to $22 in 1996.

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22 comments to The Next Big Crash Of The U.S. Economy Is Coming, Here’s Why

  • rich

    It’s becoming more apparent on a daily basis that the Federal Reserve is attempting to exert complete control over the markets. The Federal Reserve operates from its NY Fed trading base in conjunction with the U.S. Treasury’s Exchange Stabilization Fund, which operates in the same building as the NY Fed. So much for the notion that the Fed operates independently of the Government.

    But it’s not just the markets. It’s becoming more apparent to more people that same cadre of insider elitists who are rigging the stock market also do their best to rig the political process. This is exemplified by the fact that the SEC announced yesterday that it is investigating the accounting methods of Alibaba. This is eyebrow-raising because it’s quite obvious that Alibaba’s chief competitor,, has been engaging in fraudulent accounting practices for over two decades.

    Oh, I forgot to mention that Amazon CEO Jeff Bezos owns the Washington Post. This is the perfect political hand grenade with which to threaten the DC politicians and political appointees if they were to start probing around Bezos and his enormous business Ponzi schemes.

    or as Yra Harris points out……”This supports the case that monetary policy has broken all global markets turning everything into a relative value trade in which the value base is established by central bank fiat.”

    bend the knee?

    • Fraser

      The manipulation is indeed incredible, but what is truly mind-boggling is what it seeks to support. The $60 trillion of debt (current + unfunded), the $1-2 quadrllion in dervivatives PLUS the ongoing cost of all the foreign military bases, NATO, the wars, NGOs, spying etc! My god, the US taxpayer (x100) could not pay for it all. Why Russia and China don’t pull the plug is beyond me. A simple Comex default would implode the USD, preventing the use of The Fed’s printing press to fund it. Collapse, game over, the end of the USA’s hegemony.

      • KRELL427

        I tend to agree with Rob Kirby that it will end when China stops getting its gold,and as Jim Willie has stated that the US is like the movie Weekend at Bernie’s and it is being kept alive while China is unloading US treasuries and acquiring all the gold. Time will tell.

        • Fraser

          Agree with you Krell (and the other two). Question is how to play it? It appears that the probability distribution of markets is no longer log-normal (random walk) but can be described as binary, meaning that they are either 1 (alive) or 0 (dead). And if markets die, does the winner get paid out, or is everyone dead? As a mathematician and options trader, this plays with my head. Probably best to stick with phyz and food.

          • KRELL427

            I’m sticking to the rule if you can’t hold it you don’t own it, I have heard all the info I need to hear on the DTCC flood which did not complete the job so they had a fire shortly after.In other words I feel all paper and computer digits could be vaporized at any time. Take advantage of the cheap silver price while we can.

            • Fraser

              Cash will remain useful and for a long time you won’t want to spend your silver. Current minted coins are also good, not only because swapping $10,000 of digital for coins drives your bank manager insane. In a deflation they will buy more stuff than before and in an inflation the metal content will greatly exceed face value. Plus, there is every chance that copper and nickel (and other things) will keep the same pricing relationship to gold and silver. Plus, no robber would ever tackle a tonne of nickels. AND you can swap them back for digital at any time.

              • Eric

                Fraser, in general I would rather have a roll of copper quarters than a $10 bill. But copper isn’t in supply deficit like Silver and Gold are. As an industrial metal it is very dependent on China. While Copper has been considered money throughout history, most of the population has copper coins at home. Nobody has Silver or Gold. It’s the monetary demand that is draining inventories. Also, in my experience…weights and measures can weigh you down in one place. Some is good. But too much feels like an anchor tied around your leg. Better to go with Silver on that route. Gold for less weight.

                Still, driving a bank manager insane is always fun.

                • Fraser

                  Agree totally. Just saying keep some cash on hand until gold and silver take their rightful place in the monetary system and that coin (cash) is better than either digital or paper.

                • Eric

                  Wish I had some but just floating on credit with lots of debt for another month. Got plenty of shiney if the SHTF.

  • Millicent

    Crash, Collapse, or whatever else you want to call it… These guys are all false prophets trying to sell you something.

    Like the old “Honeymooners” line where Ralph would threaten to punch out Alice… “Bang, Zoom, to the moon!”, maybe Alice but not PM”s.

  • fonestar

    Maybe fonestar would feel bad for the sheep and what will happen to them here in the collapse? You know, maybe if they weren’t so goddamn arrogant, ignorant, materialistic, selfish, dumb, judgmental, gullible, boastful, deceitful, artificial, conformist, complacent, decadent, selfish, etc, etc, etc….

    • Eric

      Maybe if you didn’t try so hard to get them to invest in a ponzi scheme like bitcoin you would be able to contain your emotions better.

      Why should I buy bitcoin at $473/bitcoin when I can buy litecoin for $3.52???

      There is much more value and upside in litecoin.

      • fonestar

        No, there is no more “upside” in Litecoin, Primecoin, etc because they bring nothing new and no “wow”factor to the table. Most of them are just clones and knock-offs of Bitcoin. But you are going to pretend you understand something about this (which you obviously don’t) anyway.

        So just to be clear everyone… “Only gold is money. Not Bitcoin. So because Bitcoin is not money, do not buy Bitcoin. Because Windex is not money, do not buy Windex. Eric said so. And if you hit a bird with your car, do not vacation in New Zealand.”

        Great logic…

        • Eric

          Yes that is true. I did say that Gold is money (which it is) and bitcoin is not money (because its not a store of value). Pretty obvious for those that can get past their ego. Gold has way more “wow” factor than bitcoin. It’s shiny and malleable, doesn’t tarnish, easy to find if you know how to look, and only grows at the same rate as the population so it makes it scarce and the perfect money. Plus, it’s portable, fungible, divisible, a unit of account, a wonderful store of value, and has a long history of being used as a medium of exchange. The truest form of wealth.

          I don’t know why you don’t want litecoin. You can get 134.375 litecoins for as much just one bitcoin. I wonder how much Windex I can purchase with 130 litecoins. I could use some Windex but probably not that much.

          Why would you want to hit a bird with your car?

        • Eric

          I don’t think “wow factor” is one of the characteristics of money. I’ve never heard of that historically being a characteristic. But I suppose the dutch tulip mania of 1637 had a wow factor for a few weeks before they went to zero.

  • GoldTooth999

    St. Angelo sounds like Pastor Lindsey Williams’ long lost son. Both preach doom and gloom and offer faery tale solutions. When is gold going to reach $1,300 and firmly stay there, St. Angelo? St. Angelo has been missing the mark for years.

    Buy some Exxon and gold and ignore this middle-aged moron who failed in life. He missed the roaring 80s and the dot-com mania of the 90s.

  • GoldTooth999

    Thanks for the feedback.

    Exxon’s credit rating is much better than the majority of major mining companies and major oil companies. Exxon has the cash cushion, proven oil reserves and executive expertise to profit from the next market crash and subsequently, the energy independence movement.

    Whether oil is abiotic or not, the credit downgrade and divestment from the Rottenfellers seem politically motivated. Exxon has been standing tall and Glencore has been stumbling.

    For investors on a tight budget considering only one choice, Exxon or gold? Gold is the obvious choice.

    • Eric

      I owned Exxon shares for a while. It’s not going away anytime soon. But its stock price does trade with the oil price and the US markets which are overvalued and in a bubble at these levels. Plus it doesn’t move much and not much yield. The only thing not in a bubble is commodities, productive farmland, milk. Yeah milk is definitely not in a bubble. And I don’t see oil being the energy of the future. Prefer Uranium. It’s so beaten down. Still no reason to trust any of it. If you don’t hold it, you don’t own it. Gold and Silver and mining shares. Otherwise productive land or income producing assets.

  • GoldTooth999

    Prices for commodities seem depressed. However, the upside potential is enormous. But after how many months or years will that happen? Gold and silver deserve the most investments. And storeable food is obvious in case of emergencies.

    Modern economics treat gold as a commodity, not as money. That is a huge error. The world financial system is at a critical point. Gold will reclaim its spot at the very center. Central planners will finally agree on something.

    Exxon is a blue chip and its long term performance shows it. How is Exxon doing compared to Chesapeake? Crash and burn happens all the time in the Wall Street casino. For the conservative investor in fear of a worldwide market shutdown, gold and silver are the only choices. After the new financial system launches, other investments will deserve a look.

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