Unemployment
Did
you know that the total number of unemployed workers in G20 counties is
now up to 93 million and that it is increasing with each passing day?
You see, the truth is that the United States is not the only one dealing
with a systemic unemployment crisis. This is literally happening all
over the planet. So what is causing this crisis? Is there any hope
that it will be turned around? Well, unfortunately there are several
long-term trends that have been developing for decades that have played a
major role in bringing us to this point. First of all, the giant
corporations that now totally dominate the global economy have figured
out that they can make a lot more money by replacing expensive workers
that live in major industrialized nations with workers that live in
nations where it is legal to pay slave labor wages. So it isn't really a
huge mystery why there is such a huge problem with unemployment in the
western world. If you were running a giant corporation, why would you
want to hire workers that will cost you 10 to 20 times as much as other
workers? A worker is a worker, and over the past decade we have seen a
massive movement of jobs to countries where labor is cheaper. In
addition, large corporations are also trying to completely eliminate as
many jobs as they can by using technology. If a corporation can get a
computer or a machine or a robot to do a task more cheaply than a human
worker can do it, then why would that corporation want to continue to
rely on human labor? And of course we have seen an overall weakening of
the economies of the western world in recent years as well. This has
been particularly true in the United States. As these long-term trends intensify, the worldwide unemployment crisis is going to get even worse. (Read More....)[...]
A
fundamental shift is taking place in the U.S. economy. In fact, this
transition is rapidly picking up momentum and is in danger of becoming
an avalanche. The percentage of full-time jobs in our economy is
steadily declining and the percentage of part-time jobs is steadily
increasing. This is not a recent phenomenon, but now there are several
factors which are accelerating this trend. One of them is Obamacare.
The truth is that Obamacare actually gives business owners incentive to
cut hours and turn full-time workers into part-time workers, and according to the Wall Street Journal
and other prominent publications this is already happening all over the
United States. Perhaps this is part of the reasons why the U.S.
economy actually lost 240,000 full-time jobs last month. (Read More....)[...]
As
the number of good jobs continues to decline, the number of Americans
that cannot take care of themselves without government assistance
continues to explode. On Friday, we learned that the U.S. economy added
"195,000 jobs" last month. But when you look deeper at the numbers,
another story emerges. Last month, the U.S. economy actually lost 240,000 full-time jobs. Overall, the U.S. economy has only added 130,000 full-time jobs in 2013, but it takes about 90,000 full-time jobs a month
just to keep up with population growth. So we are losing quite a bit
of ground as far as full-time jobs are concerned. Meanwhile, the U.S.
economy has added more than 500,000 part-time jobs
so far this year. Unfortunately, there are very, very few part-time
and temp jobs that can be considered "breadwinner jobs". Part-time jobs
are great for teenagers, university students and elderly people that
only want to work a limited number of hours, but what most Americans
need are good paying full-time jobs with benefits that will allow them
to take care of their families. Unfortunately, those jobs are
continually becoming a smaller part of our economy. (Read More....)[...]
Trying
to find a job in America today can be an incredibly frustrating
experience. Most of the jobs that are available seem to pay very
little, and there is intense competition for just about any job that is
open. But it wasn't always like this. When I was in high school, I was
immediately hired when I applied for a job at McDonalds because they
were so desperate for workers that they would hire just about anyone
that could flip a burger. But in this economic environment, a single nationwide hiring event conducted by McDonalds resulted in a million job applications,
and only a small percentage of those applicants were actually hired.
Our economy simply does not produce enough jobs for everyone anymore,
and the percentage of "good jobs" continues to decline. That means that
it is getting really hard to find a job that will enable you to support
a family, and a lot of people end up doing jobs that they are massively
overqualified for. But when times are tough, people are going to do
what they have to do in order to survive. (Read More....)Banksters
Broke
nations are bailing out other broke nations with borrowed money. Round
and round we go - where we stop nobody knows. As of April, 41 different countries
had active financial "arrangements" with the IMF. Sometimes they are
called "bailouts" and sometimes they are called other things, but in
every single case they involve loans. And most of the time, these loans
come with very stringent conditions. It is a form of "global
governance" that most people don't even know about. For decades, the
IMF has been able to use money as a way to force developing nations to
do what it wants them to do. But up until fairly recently, this had
mostly only been done with poor nations. But now an increasing number
of wealthy nations are turning to the IMF for help. We have already
seen Greece, Portugal, Ireland and Cyprus receive bailouts which were
partly funded by the IMF, Spain has received a bailout for its banking
sector, and as I noted yesterday, it is being projected that Italy will need a major bailout within six months. How long can this go on before the entire system collapses? (Read More....)[...]
According to a study that was just released by Boston Consulting Group, the wealthiest one percent now own 39 percent of all the wealth in the world. Meanwhile, the bottom 50 percent only own 1 percent of all the wealth in the world combined.
The global financial system has been designed to funnel wealth to the
very top, and the gap between the wealthy and the poor continues to
expand at a frightening pace. The global elite continue to hoard wealth
and heap together enormous mountains of treasure in these troubled days
even though the economic suffering around the planet continues to
grow. So exactly how have the global elite accumulated so much wealth?
Well, one of the primary ways is through the use of debt. As I have
written about previously,
there is about 190 trillion dollars of debt in the world but global GDP
is only about 70 trillion dollars. Our debt-based global financial
system systematically transfers wealth from us and our governments into
the hands of the global elite. And of course the gigantic banks and
corporations that the elite control are constantly gobbling up
everything of value that they can find: natural resources, profitable
small businesses, real estate, politicians, etc. Money, power,
ownership and control are becoming very, very tightly concentrated at
the top of the food chain, and that is a very dangerous thing for
humanity. When too much money and power gets into too few hands, it
almost always results in tyranny. (Read More....)[...]
Basel III: How The Bank For International Settlements Is Going To Help Bring Down The Global Economy
A
new set of regulations that most people have never even heard of that
was developed by an immensely powerful central banking organization that
most people do not even know exists is going to have a dramatic effect
on the global financial system over the next several years. The new set
of regulations is known as "Basel III", and it was developed by the
Bank for International Settlements. The Bank for International
Settlements has been called "the central bank for central banks", and it
is headquartered in Basel, Switzerland. 58 major central banks
(including the Federal Reserve) belong to the Bank for International
Settlements, and the decisions made in Basel often have more of an
impact on the direction of the global economy than anything the
president of the United States or the U.S. Congress are doing. All you
have to do is to look back at the last financial crisis to see an
example of this. Basel II and Basel 2.5 played a major role in
precipitating the subprime mortgage meltdown. Now a new set of
regulations known as "Basel III" are being rolled out. The
implementation of these new regulations is beginning this year, and they
will be completely phased in by 2019. These new regulations
dramatically increase capital requirements and significantly restrict
the use of leverage. Those certainly sound like good goals, the problem
is that the entire global financial system is based on credit at this
point, and these new regulations are going to substantially reduce the
flow of credit. The only way that the giant debt bubble that we are all
living in can continue to persist is if it continues to expand. By
restricting the flow of credit, these new regulations threaten to burst
the debt bubble and bring down the entire global economy. (Read More....)[...]
Recently
uncovered documents prove that the Obama administration has been
working with the Mexican government to increase the number of illegal
immigrants on food stamps, and when more illegal immigrants go on food
stamps JP Morgan makes more money. As you will read about below, JP
Morgan has made at least 560 million dollars processing
Electronic Benefits Transfer cards. Each month, JP Morgan makes
between $.31 and $2.30 for every single person on food stamps (and that
does not even include things like ATM fees, etc). So JP Morgan has a
vested interest in seeing poverty grow and the number of people on food
stamps increase. Meanwhile, the Obama administration has been
aggressively seeking to expand participation in the food stamp program.
Under Obama, the number of people on food stamps has grown from 32
million to more than 47 million. And even though poverty in America is absolutely exploding,
that apparently is not good enough for the Obama administration. It
has now come out that the U.S. Department of Agriculture has provided
the Mexican government with literature that actively encourages illegal
immigrants to enroll in food stamps. One flyer contains the following
statement in Spanish: "You need not divulge information regarding your immigration status in seeking this benefit for your children."
The bold and the underlining are in the original document in case you
were wondering. Overall, federal spending on food stamps increased from
18 billion dollars in 2000 to 85 billion dollars in 2012, and at this
point one out of every five U.S. households
in now enrolled in the food stamp program. When people illegally or
fraudulently enroll in the food stamp program, it makes it harder for
those that desperately need the help to be able to get it. (Read More....)[...]
Economic Despair
The pension nightmare that is at the heart of the horrific financial crisis in Detroit is just the tip of the iceberg of the coming retirement crisis that will shake America to the core. Right now, more than 10,000 Baby Boomers
are hitting the age of 65 every single day, and this will continue to
happen every single day until the year 2030. As a society, we have made
trillions of dollars of financial promises to these Baby Boomers, and
there is no way that we are going to be able to keep those promises.
The money simply is not there. Yes, I suppose that we could eventually
see a "super devaluation" of the U.S. dollar and keep our promises to
the Baby Boomers using currency that is not worth much more than
Monopoly money, but as it stands right now we simply do not have the
resources to do what we said that we were going to do. The number of
senior citizens in the United States is projected to more than double by
the middle of the century, and it would have been nearly impossible to
support them all even if we weren't in the midst of a long-term economic decline.
Tens of millions of Americans that are eagerly looking forward to
retirement are going to be in for a very rude awakening in the years
ahead. There is going to be a lot of heartache and a lot of broken
promises. (Read More....)[...]
It
is so sad to watch one of America's greatest cities die a horrible
death. Once upon a time, the city of Detroit was a teeming metropolis
of 1.8 million people and it had the highest per capita income in the
United States. Now it is a rotting, decaying hellhole of about 700,000
people that the rest of the world makes jokes about. On Thursday, we
learned that the decision had been made for the city of Detroit to
formally file for Chapter 9 bankruptcy. It was going to be the largest
municipal bankruptcy in the history of the United States by far, but on
Friday it was stopped at least temporarily by an Ingham County judge.
She ruled that Detroit's bankruptcy filing violates the Michigan Constitution
because it would result in reduced pension payments for retired
workers. She also stated that Detroit's bankruptcy filing was "also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy",
and she ordered that a copy of her judgment be sent to Barack Obama.
How "honoring the president" has anything to do with the bankruptcy of
Detroit is a bit of a mystery, but what that judge has done is ensured
that there will be months of legal wrangling ahead over Detroit's money
woes. It will be very interesting to see how all of this plays out.
But one thing is for sure - the city of Detroit is flat broke. One of
the greatest cities in the history of the world is just a shell of its
former self. The following are 25 facts about the fall of Detroit that
will leave you shaking your head... (Read More....)[...]
Can
you support a family on $2,000 a month? Recently, McDonald's and Visa
teamed up to launch a website that is intended to help employees of
McDonald's manage their money. The aspect of the website that is
getting a tremendous amount of national attention is the "McDonald's
Budget" which is a sample monthly budget which is designed to help
workers plan their spending. You can see a copy of it for yourself right here.
This budget is laughably unrealistic, but it is also deeply tragic,
because there are tens of millions of American workers that are actually
trying to raise families on this kind of an income. (Read More....)[...]
Federal Reserve
Federal
Reserve Chairman Ben Bernanke said this week that inflation in the
United States needs to be higher. Yes, he actually came right out and
said that. It almost seems as if Bernanke is trying to purposely hurt
the middle class. On Wednesday, Bernanke told the press that "both sides of our mandate are saying we need to be more accommodative".
Of course he was referring to the Fed's dual mandate to keep
unemployment and inflation low, but Bernanke has a very unique
interpretation of that mandate. According to Bernanke, inflation in the
U.S. is now "too low".
The official inflation rate is currently sitting at about 1 percent,
and Bernanke insists that such a low rate of inflation is not good for the economy.
He would prefer that the rate of inflation be up around 2 percent, and
he is hoping that more "monetary accommodation" will help push inflation
up and the unemployment rate down. (Read More....)[...]
Did you know that U.S. banks have more than 1.8 trillion dollars parked at the Federal Reserve and that the Fed is actually paying them
not to lend that money to us? We were always told that the goal of
quantitative easing was to "help the economy", but the truth is that the
vast majority of the money that the Fed has created through
quantitative easing has not even gotten into the system. Instead, most
of it is sitting at the Fed slowly earning interest for the bankers.
Back in October 2008, just as the last financial crisis was starting,
Federal Reserve Chairman Ben Bernanke announced that the Federal Reserve
would start paying interest on the reserves that banks keep at the
Fed. This caused an absolute explosion in the size of these reserves.
Back in 2008, U.S. banks had less than 2 billion dollars
of excess reserves parked at the Fed. Today, they have more than 1.8
trillion. In less than five years, the pile of excess reserves has
gotten nearly 1,000 times larger. This is utter insanity, and it will have very serious consequences down the road. (Read More....)[...]
What
does it look like when a 30 year bull market ends abruptly? What
happens when bond yields start doing things that they haven't done in 50 years?
If your answer to those questions involves the word "slaughter", you
are probably on the right track. Right now, bonds are being absolutely
slaughtered, and this is only just the beginning. Over the last several
years, reckless bond buying by the Federal Reserve has forced yields
down to absolutely ridiculous levels. For example, it simply is not
rational to lend the U.S. government money at less than 3 percent when
the real rate of inflation is somewhere up around 8 to 10 percent.
But when he originally announced the quantitative easing program,
Federal Reserve Chairman Ben Bernanke said that he intended to force
interest rates to go down, and lots of bond investors made a lot of
money riding the bubble that Bernanke created. But now that Bernanke
has indicated that the bond buying will be coming to an end, investors
are going into panic mode and the bond bubble is starting to burst. One
hedge fund executive told CNBC
that the "feeling you are getting out there is that people are selling
first and asking questions later". And the yield on 10 year U.S.
Treasuries just keeps going up. Today it closed at 2.59 percent,
and many believe that it is going to go much higher unless the Fed
intervenes. If the Fed does not intervene and allows the bubble that it
has created to burst, we are going to see unprecedented carnage. (Read More....)[...]
Did
you know that you are involved in the most massive Ponzi scheme that
has ever existed? To illustrate my point, allow me to tell you a little
story. Once upon a time, there was a man named Sam. When he was
younger, he had been a very principled young man that had worked
incredibly hard and that had built a large number of tremendously
successful businesses. He became fabulously wealthy and he accumulated
far more gold than anyone else on the planet. But when he started to
get a little older he forgot the values of his youth. He started making
really bad decisions and some of his relatives started to take
advantage of him. One particularly devious relative was a nephew named
Fred. One day Fred approached his uncle Sam with a scheme that his
friends the bankers had come up with. What happened next would change
the course of Sam's life forever. (Read More....)Housing Crash
Did
you actually think that mortgage rates were going to stay at all-time
lows forever? Federal Reserve Chairman Ben Bernanke was able to grossly
distort the market for a while by buying up massive amounts of
government bonds and mortgage-backed securities, but there was no way in
the world that the market was going to stay that distorted forever. It
simply does not make sense to give American families 30 year mortgages
at a fixed interest rate of less than four percent when the real rate of
inflation is somewhere around eight to ten percent and the mortgage
delinquency rate in the United States is 9.72 percent.
If we actually did have "free markets" and they were behaving
rationally, mortgage rates would be far, far higher. Well, now that the
Fed has indicated that they are going to be starting to "taper" QE at
some point, bond yields have skyrocketed
and this is rapidly pushing up mortgage rates. According to Freddie
Mac, we just witnessed the largest weekly increase in mortgage rates in
26 years. Sadly, this is only just the beginning. Unless the Federal
Reserve intervenes, mortgage rates are going to continue to try to
revert to normal. (Read More....)[...]
Federal
Reserve Chairman Ben Bernanke has done it. He has succeeded in
creating a new housing bubble. By driving mortgage rates down to the
lowest level in 100 years and recklessly printing money with wild
abandon, Bernanke has been able to get housing prices to rebound a bit.
In fact, in some of the more prosperous areas of the country you would
be tempted to think that it is 2005 all over again. If you can believe
it, in some areas of the country builders are actually holding lotteries
to see who will get the chance to buy their homes. Wow - that sounds
great, right? Unfortunately, this "housing recovery" is not based on
solid economic fundamentals. As you will see below, this is a recovery
that is being led by investors. They are paying cash for cheap
properties that they believe will appreciate rapidly in the coming
years. Meanwhile, the homeownership rate in the United States continues
to decline. It is now the lowest that it has been since 1995. There are a couple of reasons for this. Number one, there has not been a jobs recovery in the United States. The percentage of working age Americans with a job has not rebounded at all and is still about the exact same place where it was at the end of the last recession. Secondly, crippling levels of student loan debt
continue to drive down the percentage of young people that are buying
homes. So no, this is not a real housing recovery. It is an
investor-led recovery that is mostly limited to the more prosperous
areas of the country. For example, the median sale price of a home in
Washington D.C. just hit a new all-time record high. But this bubble will not last, and when this new housing bubble does burst, will it end as badly as the last one did? (Read More....)[...]
New
home sales in the United States are on pace to set a brand new all-time
record low in 2011. This will be the third year in a row that new home
sales have set a new record low. Sadly, this is yet another sign that
the U.S. economy continues to grow weaker. Back in 2005, more than four
times as many new homes were being sold as are being sold today. The
home building industry is one of the central pillars of the U.S.
economy, and the fact that we are going to set another new record low
for home sales in 2011 is a really bad sign for those hoping for an
economic recovery. Unlike most of those that work in the financial
industry, those that build new homes produce something of lasting value
for American families. In addition, millions of Americans have
traditionally made a solid living by building and selling new homes.
But today the market for new homes has totally dried up and large
numbers of those jobs are disappearing. Some of the reasons for this
include high unemployment, a glut of foreclosures on the market and the
tightening of lending standards on home loans. In order for the U.S. to
have anything resembling a healthy economy again, we are going to need a
revival in the sale of new homes. (Read More....)[...]
Right
now, interest rates are near historic lows. The U.S. government is
able to borrow gigantic mountains of money for next to nothing. U.S.
consumers are still able to get home loans, car loans and student loans
at ridiculously low interest rates. When this low interest rate
environment changes (and it will), it is going to absolutely devastate
the U.S. economy. Without low interest rates, the U.S. financial system
dies. When it comes to borrowing money, it is the rate of interest
that causes the pain. If you could borrow as much money as you wanted
at a zero rate of interest for the rest of your life you would never,
ever have a debt problem. But when there is a cost to borrowing money
that changes things. The higher the rate of interest goes, the more
painful debt becomes. (Read More....)[...]
Unless
you have been asleep or hiding under a rock for the past five years,
you already know that we are experiencing the worst real estate crisis
that the U.S. has ever seen. Home prices in the United States have
fallen 33 percent from the peak of the housing bubble, which is more
than they fell during the Great Depression. Those that decided to buy a
house in 2005 or 2006 are really hurting right now. Just think about
it. Could you imagine paying off a $400,000 mortgage on a home that is
now only worth $250,000? Millions of Americans are now living through
that kind of financial hell. Sadly, most analysts expect U.S. home
prices to go down even further. Despite the "best efforts" of those
running our economy, unemployment is still rampant. The number of
middle class jobs continues to decline
year after year, but it takes at least a middle class income to buy a
decent home. In addition, financial institutions have really tightened
up lending standards and have made it much more difficult to get home
loans. Back during the wild days of the housing bubble, the family cat
could get a zero-down mortgage, but today the pendulum has swung very
far in the other direction and now it is really, really tough to get a
home loan. Meanwhile, the number of foreclosures and distressed
properties continues to soar. So with a ton of homes on the market and
not a lot of buyers the power is firmly in the hands of those looking to
buy a house. (Read More....)[...]
If
you make your living by building or selling new homes in the United
States, you might want to consider taking up a different career for a
while. New homes sales in the United States hit yet another new
all-time record low in the month of February, and there are a whole lot
of reasons why new home sales are going to stay extremely low for an
extended period of time. The massive wave of foreclosures that we have
seen has produced a giant glut of unsold homes in the marketplace,
mortgage lenders are making it really hard to get approved for home
loans, unemployment is still rampant and the global economy looks like
it may soon plunge into another major recession. None of those things
is good news for the new home construction industry. The truth is that
we were supposed to have seen new home sales already bounce back by
now. If you look at the historical numbers, new home sales in the U.S. always
increased significantly after the end of every recession since World
War 2. But that did not happen this time. Instead, new home sales have
just continued to decline. This is absolutely unprecedented, and
economists are puzzled. So what is going to happen if the U.S. economy
suffers another major downturn? (Read More....)[...]
Today
there are two very different Americas. In one America, the stock
market is soaring, huge bonuses are taken for granted, the good times
are rolling and people are spending money as if they will be able to
"live the dream" for the rest of their lives. In the other America, the
one where most of the rest of us live, unemployment is rampant, a
million families were kicked out of their homes last year and hordes of
American families are drowning in debt. The gap between the rich and
the poor is bigger today than it ever has been before. In fact, this
article is not so much about "rich vs poor" as it is about "the rich vs
the rest of us". Barack Obama and Ben Bernanke keep touting an
"economic recovery", but the truth is that the only ones that seem to be
benefiting from this recovery are those at the very top of the economic
food chain. (Read More....)
If
you know someone that actually believes that the U.S. economy is in
good shape, just show them the statistics in this article. When you
step back and look at the long-term trends, it is undeniable what is
happening to us. We are in the midst of a horrifying economic decline
that is the result of decades of very bad decisions. 30 years ago, the
U.S. national debt was about one trillion dollars. Today, it is almost
17 trillion dollars. 40 years ago, the total amount of debt in the
United States was about 2 trillion dollars. Today, it is more than 56
trillion dollars. At the same time that we have been running up all of
this debt, our economic infrastructure and our ability to produce wealth
has been absolutely gutted. Since 2001, the United States has lost
more than 56,000 manufacturing facilities and millions of good jobs have
been shipped overseas. Our share of global GDP declined from 31.8
percent in 2001 to 21.6 percent in 2011. The percentage of Americans
that are self-employed is at a record low, and the percentage of
Americans that are dependent on the government is at a record high. The
U.S. economy is a complete and total mess, and it is time that we faced
the truth. (Read More....)[...]
What
in the world is China up to? Over the past several years, the Chinese
government and large Chinese corporations (which are often at least
partially owned by the government) have been systematically buying up
businesses, homes, farmland, real estate, infrastructure and natural
resources all over America. In some cases, China appears to be
attempting to purchase entire communities in one fell swoop. So why is
this happening? Is this some form of "economic colonization" that is
taking place? Some have speculated that China may be intending to
establish "special economic zones" inside the United States modeled
after the very successful Chinese city of Shenzhen.
Back in the 1970s, Shenzhen was just a very small fishing village, but
now it is a sprawling metropolis of over 14 million people. Initially,
these "special economic zones" were only established within China, but now the Chinese government has been buying huge tracts of land in foreign countries such as Nigeria
and establishing special economic zones in those nations. So could
such a thing actually happen in America? Well, according to Dr. Jerome Corsi,
a plan being pushed by the Chinese Central Bank would set up
"development zones" in the United States that would allow China to
"establish Chinese-owned businesses and bring in its citizens to the
U.S. to work." Under the plan, some of the $1.17 trillion
that the U.S. owes China would be converted from debt to "equity". As a
result, "China would own U.S. businesses, U.S. infrastructure and U.S.
high-value land, all with a U.S. government guarantee against loss."
Does all of this sound far-fetched? Well, it isn't. In fact, the
economic colonization of America is already far more advanced than most
Americans would dare to imagine. (Read More....)[...]
This
is the time of the year when Americans run out to their favorite retail
stores and fill up their shopping carts with lots of cheap plastic crap
made by workers in foreign countries where it is legal to pay slave
labor wages. By doing this, the American people are actively
participating in the destruction of the U.S. economy. You see, buying
products that are made in America is not just a matter of national
pride. It is a matter of national survival. If we do not support
American workers, they are going to continue to see their jobs shipped
out of the country. If we do not support American businesses, they are
going to continue to die off at a staggering rate. Last year, the
United States had a trade deficit with the rest of the world of 558
billion dollars. More than half a trillion dollars that could have gone
into the pockets of U.S. workers and U.S. businesses went overseas
instead. If that money had stayed in the country, taxes would have been
paid on that mountain of cash and our local, state and federal
government debt problems would not be as severe. As a result of our
massive trade imbalance, we have lost tens of thousands of businesses,
millions of jobs and trillions of dollars of national wealth. Both
major political parties have sold us out on these issues, and we are
getting poorer as a nation with each passing day. We desperately need a
resurgence of economic patriotism in the United States before it is too
late. (Read More....)[...]
Either
way this election turns out, American jobs are going to continue to get
slaughtered by the millions. During this campaign, Mitt Romney and
Barack Obama have both attempted to portray each other as the "outsourcer in chief".
Unfortunately, they are both right. Barack Obama and Mitt Romney have
both participated in the outsourcing of American jobs, and both are
openly admitting to the American people that they favor the emerging one
world economic system which will continue to destroy millions of
American jobs. In fact, they argue with each other about which of them
will be more aggressive in pursuing more "free trade" agreements over
the next four years. Unfortunately, the "free trade" agreements that
the U.S. government enters into are never "fair trade" agreements. As a
result, over the past decade we have lost tens of thousands of
businesses, millions of jobs and trillions of dollars of national
wealth. This year alone, we will buy about half a trillion dollars more
stuff from the rest of the world than they will buy from us. This
trade deficit will be about 7 times larger than the trade deficit of any
other nation on earth. Our economy will continue to bleed jobs at a
horrifying pace, but Obama and Romney insist that the answer to our
problems is even more "free trade". What makes all of this even more
dreadful is that most Americans continue to fall for this nonsense. (Read More....)[...]
The
mainstream media in the United States is almost totally ignoring one of
the most important trends in global economics. This trend is going to
cause the value of the U.S. dollar to fall dramatically and it is going
to cause the cost of living in the United States to go way up. Right
now, the U.S. dollar is the primary reserve currency of the world. Even
though that status has been chipped away at in recent years, U.S.
dollars still make up more than 60 percent
of all foreign currency reserves in the world. Most international
trade (including the buying and selling of oil) is conducted in U.S.
dollars, and this gives the United States a tremendous economic
advantage. Since so much trade is done in dollars, there is a constant
demand for more dollars all over the globe from countries that need them
for trading purposes. So the Federal Reserve is able to flood our
financial system with dollars without it causing a tremendous amount of
inflation because the rest of the world ends up soaking up a lot of
those dollars. But now that is changing. China and Russia have been
spearheading a movement to shift away from using the U.S. dollar in
international trade. At the moment, the shift is happening gradually,
but at some point a tipping point will come (for example if Saudi Arabia
were to declare that it will no longer take U.S. dollars for oil) and
the entire global financial system is going to change. When that
tipping point comes the global demand for U.S. dollars is going to
absolutely plummet and nightmarish inflation will come to the United
States. If such a scenario sounds far out to you, then you have not
been paying attention. In fact, China and Russia have been working very
hard to move us toward exactly such a scenario. (Read More....)Government Debt
Anyone
that thinks that the U.S. economy can keep going along like this is
absolutely crazy. We are in the terminal phase of an unprecedented debt
spiral which has allowed us to live far, far beyond our means for the
last several decades. Unfortunately, all debt spirals eventually end,
and they usually do so in a very disorderly manner. The chart that you
are about to see is one of my favorite economic charts. It compares the
growth of U.S. GDP to the growth of total debt in the United States.
Yes, U.S. GDP has certainly grown at a decent pace over the years, but
our total debt has absolutely exploded. 40 years ago, the total amount
of debt in our system (government debt + corporate debt + consumer debt,
etc.) was about 2 trillion dollars. Today it has grown to more than 56 trillion dollars.
Our debt has grown at a much, much faster rate than our economy has,
and there is no way in the world that we will be able to continue to do
that for long. (Read More....)[...]
When
you add maturing debt to the new debt that the federal government is
accumulating, the total is quite eye catching. You see, the truth is
that the U.S. government must not only borrow enough money to fund
government spending for this year, it must also "roll over" existing
debt that has reached maturity. Of course the government never actually
pays any of that debt off. Instead, it essentially takes out new debts
to cover the old ones. So the U.S. government is actually borrowing
far more money each year than most Americans realize. For fiscal year
2013, the U.S. budget deficit will be about $845 billion, but on top of that the government will also have to borrow about 3 trillion dollars
to pay off old debt that is maturing. Overall, the U.S. government
will borrow close to 4 trillion dollars this year, and that number will
likely be even higher next year. That is not going to cause a crisis as
long as interest rates stay super low, but if interest rates begin to rise substantially, the game will change dramatically. (Read More....)[...]
Why
did the U.S. government spend 2.6 million dollars to train Chinese
prostitutes to drink responsibly? Why did the U.S. government spend
$175,587 "to determine if cocaine makes Japanese quail engage in
sexually risky behavior"? Why did the U.S. government spend nearly a
million dollars on a new soccer field for detainees being held at
Guantanamo Bay? This week when I saw that the IRS was about to pay out
70 million dollars in bonuses to their employees and that the U.S.
government was going to be leaving 7 billion dollars worth of military
equipment behind in Afghanistan, it caused me to reflect on all of the
other crazy ways that the government has been wasting our money in
recent years. So I decided to go back through my previous articles and
put together a list. I call it "The Waste List". Even though our
politicians insist that there is very little that can still be cut out
of the budget, the truth is that the federal budget is absolutely
drowning in pork. The following are 66 crazy ways that the U.S.
government is wasting your hard-earned money... (Read More....)[...]
Eventually the money runs out. Much of America was shocked when the city of Detroit defaulted on a $39.7 million debt payment and announced that it was suspending payments on $2.5 billion of unsecured debt, but those who visit my site
on a regular basis were probably not too surprised. Anyone with half a
brain and a calculator could see this coming from a mile away. But
people kept foolishly lending money to the city of Detroit, and now many
of them are going to get hit really hard. Detroit Emergency Manager
Kevyn Orr has submitted a proposal that would pay unsecured creditors
about 10 cents
on the dollar. Similar haircuts would be made to underfunded pension
and health benefits for retirees. Orr is hoping that the creditors and
the unions that he will be negotiating with will accept this package,
but he concedes that there is still a "50-50 chance"
that the city of Detroit will be forced to formally file for
bankruptcy. But what Detroit is facing is not really that unique. In
fact, Detroit is a perfect example of what the future of America is
going to look like. We live in a nation that is rotting, decaying,
drowning in debt and racing toward insolvency. Already there are dozens
of other cities across the nation that are poverty-ridden,
crime-infested hellholes just like Detroit is,
and hundreds of other communities are rapidly heading in that
direction. So don't look down on Detroit. They just got there before
the rest of us. (Read More....)[...]
Europe
Have
you ever seen a disaster movie that is so bad that it is actually
good? Well, that is exactly what Syfy's new television movie entitled
"Sharknado" is. In the movie, wild weather patterns actually cause
man-eating sharks to come flying out of the sky. It sounds absolutely
ridiculous, and it is. You can view the trailer for the movie right here.
Unfortunately, we are witnessing something just as ridiculous in the
real world right now. In the United States, the mainstream media is
breathlessly proclaiming that the U.S. economy is in great shape because
job growth is "accelerating" (even though we actually lost 240,000 full-time jobs last month)
and because the U.S. stock market set new all-time highs this week.
The mainstream media seems to be absolutely oblivious to all of the
financial storm clouds that are gathering on the horizon. The
conditions for a "perfect storm" are rapidly developing, and by the time
this is all over we may be wishing that flying sharks were all that we
had to deal with. The following are 10 reasons why the global economy
is about to experience its own version of "Sharknado"... (Read More....)[...]
When
you get into too much debt, really bad things start to happen. Sadly,
that is exactly what is happening to Italy right now. Harsh austerity
measures are causing the Italian economy to slow down even more than it
was previously. And yet even with all of the austerity measures, the
Italian government just continues to rack up even more debt. This is
the exact same path that we watched Greece go down. Austerity causes
government revenues to drop which causes deficit reduction targets to be
missed which causes even more austerity measures to become necessary.
But if Italy collapses economically, it is going to be a far bigger deal
than what happened in Greece. Italy is the ninth largest economy on
the entire planet. Actually, Italy used to be number eight, but now
Russia has passed it. If Italy continues to stumble, India and Canada
will soon pass it as well. It really is a tragedy to watch what is
happening in Italy, because it really is a wonderful place. When I was a
child, my father was in the navy, and I got the opportunity to live
there for a while. It is a land of great weather, great food and great
soccer. The people are friendly and the culture is absolutely
fascinating. But now the nation is falling apart. The following are 11
signs that Italy is descending into a full-blown economic depression...
(Read More....)[...]
Is
the global economic downturn going to accelerate as we roll into the
second half of this year? There is turmoil in the Middle East, we are
seeing things happen in the bond markets that we have not seen happen in
more than 30 years, and much of Europe has already plunged into a
full-blown economic depression. Sadly, most Americans will never
understand what is happening until financial disaster strikes them
personally. As long as they can go to work during the day and eat
frozen pizza and watch reality television at night, most of them will
consider everything to be just fine. Unfortunately, the truth is that everything is not fine.
The world is becoming increasingly unstable, we are living in the
terminal phase of the greatest debt bubble in the history of the planet
and the global financial system is even more vulnerable than it was back
in 2008. Unfortunately, most people seem to only have a 48 hour
attention span at best these days. They don't have the patience to
watch long-term trends develop. And the coming economic collapse is not
going to happen all at once. Rather, it is like watching a very, very
slow-motion train wreck happen. The coming economic nightmare is going
to unfold over a number of years. Yes, there will be moments of great
panic, but mostly it will be a steady decline into economic oblivion.
And there are a lot of indications that the second half of this year is
not going to be as good as the first half was. The following are 19
reasons to be deeply concerned about the global economy as we head into
the second half of 2013... (Read More....)[...]
Did
you actually believe that they were not going to use the precedent that
they set in Cyprus? On Thursday, EU finance ministers agreed to a
shocking new plan that will make every bank account in Europe vulnerable
to Cyprus-style bail-ins. In other words, the wealth confiscation that
we just witnessed in Cyprus will now be used as a template for future
bank failures all over Europe. That means that if you have a bank
account in Europe, you could wake up some morning and every penny in
that account over 100,000 euros could be gone. That is exactly what
happened in Cyprus, and now EU officials plan to do the same thing all
over Europe. For quite a while EU officials insisted that Cyprus was a
"special case", but now we see that was a lie. International outrage
over what happened in Cyprus has died down, and now they are pushing
forward with what they probably had planned all along. But why have
they chosen this specific moment to implement such a plan? Are they
anticipating that we will see a wave of bank failures soon? Do they
know something that they aren't telling us? (Read More....)[...]
This
is no time to be complacent. Massive economic problems are erupting
all over the globe, but most people seem to believe that everything is
going to be just fine. In fact, a whole bunch of recent polls and
surveys show that the American people are starting to feel much better
about how the U.S. economy is performing. Unfortunately, the false
prosperity that we are currently enjoying is not going to last much
longer. Just look at what is happening in Europe. The eurozone is now
in the midst of the longest recession that it has ever experienced.
Just look at what is happening over in Asia. Economic growth in India
is the lowest that it has been in a decade and the Japanese financial
system is beginning to spin wildly out of control. One of the only
places on the entire planet where serious economic problems have not
already erupted is in the United States, and that is only because we
have "kicked the can down the road" by recklessly printing money and by
borrowing money at an unprecedented rate. Unfortunately, the "sugar
high" produced by those foolish measures is starting to wear off. We
are going to experience a massive amount of economic pain along with the
rest of the world - it is just a matter of time. (Read More....)[...]
The
next Great Depression is already happening - it just hasn't reached the
United States yet. Things in Europe just continue to get worse and
worse, and yet most people in the United States still don't get it. All
the time I have people ask me when the "economic collapse" is going to
happen. Well, for ages I have been warning that the next major wave of
the ongoing economic collapse would begin in Europe, and that is exactly
what is happening. In fact, both Greece and Spain already have levels
of unemployment that are greater than anything the U.S. experienced
during the Great Depression of the 1930s. Pay close attention to what
is happening over there, because it is coming here too. You see, the
truth is that Europe is a lot like the United States. We are both
drowning in unprecedented levels of debt, and we both have overleveraged
banking systems that resemble a house of cards. The reason why the
U.S. does not look like Europe yet is because we have thrown all caution
to the wind. The Federal Reserve is printing money as if there is no
tomorrow and the U.S. government is savagely destroying the future that
our children and our grandchildren were supposed to have by stealing
more than 100 million dollars from them every single hour of every
single day. We have gone "all in" on kicking the can down the road even
though it means destroying the future of America. But the alternative
scares the living daylights out of our politicians. When nations such
as Greece, Spain, Portugal and Italy tried to slow down the rate at
which their debts were rising, the results were absolutely devastating.
A full-blown economic depression is raging across southern Europe and
it is rapidly spreading into northern Europe. Eventually it will spread
to the rest of the globe as well. (Read More....)[...]
What
would you do if you woke up one day and discovered that the banksters
had "legally" stolen about 80 percent of your life savings? Most people
seem to assume that most of the depositors that are getting ripped off
in Cyprus are "Russian oligarchs" or "wealthy European tycoons", but the
truth is that they are only just part of the story. As you will see
below, there are small businesses and aging retirees that have been
absolutely devastated by the wealth confiscation that has taken place in Cyprus.
Many businesses can no longer meet their payrolls or pay their bills
because their funds have been frozen, and many retirees have seen
retirement plans that they have been working toward for decades
absolutely destroyed in a matter of days. Sometimes it can be hard to
identify with events that are happening on the other side of the globe,
but I want you to try to put yourself into their shoes for a few
minutes. How would you feel if something like this happened to you? (Read More....)[...]
Financial Markets
Do
you want to know the primary reason why rapidly rising interest rates
could take down the entire global financial system? Most people might
think that it would be because the U.S. government would have to pay
much more interest on the national debt. And yes, if the average rate
of interest on U.S. government debt rose to just 6 percent (and it has
actually been much higher in the past), the federal government would be
paying out about a trillion dollars a year just in interest on the
national debt. But that isn't it. Nor does the primary reason have to
do with the fact that rapidly rising interest rates would impose massive
losses on bond investors. At this point, it is being projected that if
U.S. bond yields rise by an average of 3 percentage points, it will
cause investors to lose a trillion dollars.
Yes, that is a 1 with 12 zeroes after it ($1,000,000,000,000). But
that is not the number one danger posed by rapidly rising interest rates
either. Rather, the number one reason why rapidly rising interest
rates could cause the entire global financial system to crash is because
there are more than 441 TRILLION dollars worth of interest rate
derivatives sitting out there. This number comes directly from the Bank for International Settlements
- the central bank of central banks. In other words, more than
$441,000,000,000,000 has been bet on the movement of interest rates.
Normally these bets do not cause a major problem because rates tend to
move very slowly and the system stays balanced. But now rates are
starting to skyrocket, and the sophisticated financial models used by
derivatives traders do not account for this kind of movement. (Read More....)[...]
If
yields on U.S. Treasury bonds keep rising, things are going to get very
messy. As I write this, the yield on 10 year U.S. Treasures has risen
to 2.51 percent. If that keeps going up, it is going to be like a mile
wide lawnmower blade devastating everything in its path. Ben Bernanke's
super low interest rate policies have systematically pushed investors
into stocks and real estate over the past several years because there
were few other places where they could get decent returns. As this
trade unwinds (and it will likely not be in an orderly fashion), we are
going to see unprecedented carnage. Stocks, ETFs, home prices and
municipal bonds will all be devastated. And of course that will only be
the beginning. What we are ultimately looking at is a sell off very
similar to 2008, only this time we will have to deal with rising
interest rates at the same time. The conditions for a "perfect storm"
are rapidly developing, and if something is not done we could eventually
have a credit crunch unlike anything that we have ever seen before in
modern times. (Read More....)[...]
Can
you smell that? It is the smell of panic in the air. As I have noted
before, when financial markets catch up to economic reality they tend to
do so very rapidly. Normally we don't see virtually all asset classes
get slammed at the same time, but the bucket of cold water that Federal
Reserve Chairman Ben Bernanke threw on global financial markets on
Wednesday has set off an epic temper tantrum.
On Thursday, U.S. stocks, European stocks, Asian stocks, gold, silver
and government bonds all over the planet all got absolutely shredded.
This is not normal market activity. Unfortunately, there is nothing
"normal" about our financial markets anymore. Over the past several
years they have been grossly twisted and distorted by the Federal
Reserve and by the other major central banks around the globe. Did the
central bankers really believe that there wouldn't be a great price to
pay for messing with the markets? The behavior that we have been
watching this week is the kind of behavior that one would expect at the
beginning of a financial panic. Dick Bove, the vice president of equity
research at Rafferty Capital Markets, told CNBC
that what we are witnessing right now "is not normal. It is not normal
for all markets to move in the same direction at the same point in time
due to the same development." The overriding emotion in the financial
world right now is fear. And fear can cause investors to do some crazy
things. So will global financial markets continue to drop, or will
things stabilize for now? That is a very good question. But even if
there is a respite for a while, it will only be temporary. More carnage
is coming at some point. (Read More....)[...]
U.S.
financial markets are exhibiting the classic behavior patterns of an
addict. Just a hint that the Fed may start slowing down the flow of the
"juice" was all that it took to cause the financial markets to throw an
epic temper tantrum on Wednesday. In fact, one CNN article stated that
the markets "freaked out"
when Federal Reserve Chairman Ben Bernanke suggested that the Fed would
eventually start tapering the bond buying program if the economy
improves. And please note that Bernanke did not announce that the money
printing would actually slow down any time soon. He just said that it
may be "appropriate to moderate the pace of purchases later this year"
if the economy is looking good. For now, the Fed is going to continue
wildly printing money and injecting it into the financial markets. So
nothing has actually changed yet. But just the suggestion that this
round of quantitative easing would eventually end if the economy
improves was enough to severely rattle Wall Street on Wednesday. U.S.
financial markets have become completely and totally addicted to easy
money, and nobody is quite sure what is going to happen when the Fed
takes the "smack" away. When that day comes, will the largest bond bubble in the history of the world burst? Will interest rates rise dramatically? Will it throw the U.S. economy into another deep recession? (Read More....)[...]
Federal
Reserve Chairman Ben Bernanke is on the way out the door, but the
consequences of the bond bubble that he has helped to create will stay
with us for a very, very long time. During Bernanke's tenure, interest
rates on U.S. Treasuries have fallen to record lows. This has enabled
the U.S. government to pile up an extraordinary amount of debt. During
his tenure we have also seen mortgage rates fall to record lows. All of
this has helped to spur economic activity in the short-term, but what
happens when interest rates start going back to normal? If the average
rate of interest on U.S. government debt rises to just 6 percent, the
U.S. government will suddenly be paying out a trillion dollars a year
just in interest on the national debt. And remember, there have been
times in the past when the average rate of interest on U.S. government
debt has been much higher than that. In addition, when the U.S.
government starts having to pay more to borrow money so will everyone
else. What will that do to home sales and car sales? And of course we
all remember what happened to adjustable rate mortgages when interest
rates started to rise just prior to the last recession. We have gotten
ourselves into a position where the U.S. economy simply cannot afford
for interest rates to go up. We have become addicted to the cheap money
made available by a grossly distorted financial system, and we have Ben
Bernanke to thank for that. The Federal Reserve is at the very heart of the economic problems that we are facing in America, and this time is certainly no exception. (Read More....)[...]
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