Is the United States economy headed for another Great Depression? Well, according to Barack Obama, that is no longer possible. According to Obama, the United States has avoided an economic collapse and is headed for another wonderful era of growth and prosperity. But is Obama right? Do the economic signs indicate that the U.S. is headed towards recovery or towards even more difficult times? As you shall see below, there is no way in the world that Barack Obama should have ever said that "a second depression is no longer a possibility". In fact, as the U.S. financial system continues to crumble, it is likely that those words will be exploited by his political adversaries again and again. If you are a politician and you are going to issue a guarantee, you had better be able to deliver the goods. In this case, Obama is making a promise that defies all of the economic data.
Video of Obama making his declaration that "a second depression is no longer a possibility" is posted below....
So why is Obama wrong? Well, if you want a full examination of why the United States is headed for an economic collapse, please read the rest of this blog. In this article we just wanted to highlight a few of the reasons why the U.S. is headed for a complete financial meltdown....
#1) The U.S. housing market is continuing to come apart like a 20 dollar suit. The U.S. government just announced that in January sales of new homes plunged to the lowest level on record. This is not a sign that the U.S. economy is recovering.
#2) In fact, a lot more houses may be on the market soon. The number of U.S. mortgages more than 90 days overdue has climbed to 5.1 percent. An increasing number of Americans find themselves simply unable to keep up with their mortgages. This is another indication that things are getting worse instead of better.
#3) Over 24% of all homes with mortgages in the United States were underwater as of the end of 2009. So in other words, nearly one out of every four U.S. homeowners with a mortgage owe more on their homes than the homes are worth. That is a giant mess, and it is going to be very painful to untangle it.
#4) If all of that wasn't bad enough, a massive "second wave" of adjustable rate mortgages is scheduled to reset beginning in 2010. The "first wave" of mortgage resets from 2006 - 2008 absolutely crippled the U.S. housing market, and this second wave threatens to make things far worse.
#5) Confidence among U.S. consumers fell dramatically in February to the lowest level in 10 months. Consumers that are not confident in the economy tend to hold on to their money. If consumers don't spend their money then the economy is not going to grow.
#6) Many analysts are predicting that the next "shoe to fall" in the ongoing financial crisis will be commercial real estate. U.S. commercial property values are down approximately 40 percent since 2007 and currently 18 percent of all office space in the United States is sitting vacant.
#7) In fact, the commercial real estate sector is just now entering the danger zone. It is projected that the largest commercial real estate loan losses will be experienced in 2011 and the years following. Some analysts are estimating that losses from commercial real estate at U.S. banks alone could range as high as 200 to 300 billion dollars. To get an idea of how rapidly commercial real estate loans are turning sour, just check out the chart below....
#8) All of these bad loans are causing banks to dramatically slow down real estate lending. During the middle of the decade, the number of commercial real estate loans exploded, but now the bubble has burst, and as the chart below reveals, commercial real estate lending has dropped through the floor....
#9) All of these real estate problems are decimating America's small and mid-size banks. The FDIC has announced that the number of banks on its "problem" list climbed to 702 at the end of 2009. This is compared to only 552 banks that were on the problem list at the end of September and only 252 banks that were on the problem list at the end of 2008. As you can see from these figures, the banking crisis in the U.S. is escalating rapidly.
#10) The U.S. national debt is now over 12 trillion dollars and it is rising at a rate of about 3.8 billion dollars per day. In fact, some analysts are projecting that the United States will borrow more money in 2010 than the rest of the governments of the world combined.
#11) The financial mess in the U.S. is scaring off other nations from buying U.S. government debt. In fact, the Federal Reserve now has to "buy" most U.S. government debt because others are extremely hesitant to purchase the massive amount of bad paper the U.S. is trying to sell. In addition, other countries are now using the massive amounts of U.S. government debt that they already hold as leverage. A major U.K. newspaper is warning that evidence is mounting that recent Chinese sales of U.S. Treasury bonds are intended as a warning to the United States government rather than simply being part of a routine portfolio shift.
#12) But the U.S. is not the only economy that is suffering during this economic downturn. The entire world economy has been impacted. The World Trade Organization has announced that world trade fell by 12% last year as the world economic crisis caused the biggest drop in world trade since 1945.
#13) The United States should not expect the rest of the world to pick up the economic slack either. The crisis in Greece has made headlines all over the globe recently, and Harvard University Professor Kenneth Rogoff is warning that we could soon see a huge wave of sovereign defaults.
#14) The reality is that things are so bad in some parts of Europe that it could take years and years to recover. In fact, the chief economist of the International Monetary Fund is warning that financial "belt-tightening" in Europe will be "extremely painful" and could take up to 20 years. The truth is that if Europe is suffering economically, it will be very difficult for the U.S. to recover at the same time.
#15) In addition, some of the most prominent investors in the world know what is coming and are issuing their own warnings. For example, Charlie Munger, Warren Buffett's long-time business partner, has warned in a new article for Slate.com that "it’s basically over" for the U.S. economy. Marc Faber is warning that things are going to get so bad that it is time for investors to buy farmland and gold.
But apparently Barack Obama knows better.
Apparently Barack Obama can guarantee that it is impossible for the United States to go into another depression.
Do you believe him?
Let’s not forget that the FDIC is over $20.9 billion in the hole.
The current system should implode. Better to start from scratch then rebuild a faulty system. Yes the end of this capitalistic system is coming to an end….and Obama knows it…is anticipating it and will carry it through as instructed by his masters. Yes masters!!!!
Ever wonder why nothing has been done to help the middle class for the last 30 years?
Two heads ONE SNAKE!!!!!
they did it in the the thirties….they do it again…since the time of the pharaohs and the invention of papyrus.
I can not help but say that we could enter another Great Depression, possibly even a global economic collapse. I pray that it does not happen, but it seems like we are in for a ruff road of hoe. I would advise everyone to start making some kind of plans in case something was to occur.
it is startling to see so many guns and ammo being bought up at record paces. Malitia groupd are on the rise and there is a growing sentiment that the economy is going to get much worse and it possibly will get worse.
In my home town of Louisville, KY I have seen entire neighborhoods filled with vacant homes and buildinds. Ply wood covering the doors and windows with the dwellings address painted on the surface.
Anyone who can make such a statement, even if things did look better than it currently does, is destine for failure. Unfortunately I have a feeling were all in for a good dose of humility.
This is a helpful post for an overview of current challenges and problems.
But, the over the top pessimism seems as unwarranted as the Dow’s implied optimism. The truth as always is in the middle.
Current conditions are grim but not as bad as 1933, by a long shot.
We survived that and emerged stronger–that can happen again.
The key is to impose discipline on our leaders in a coherent fashion.
A long steady decline in American living standards is far more likely than a total economic collapse.
But none of this is written in stone. We just need to replicate the basic policies of 1945 thru 1995, when we enjoyed five decades of unsurpassed growth and stability. Sound financial regulation and human capital development can save us again.
The biggest issue is the method of measuring the economy. The GDP only looks at spending. Debt is not a negative figure. The more spending the better. If you borrow to do the spending, it can actually make the GDP figures better.
Some states have relized this and are now changing their method of measuring their economies.
‘Main Street’ economic conditions misread by GDP
http://www.physorg.com/news185733405.html
It is time for the citizens to stand up and get the governments to actually measure the well being of the country with real figures.
Also, don’t forget that the present governments around the world are helping keep the rich, rich. They have changed the rules enough to give the rich more tax breaks.
Trickle down tax breaks have not helped those on the bottom of the stack. It is time for bottom up tax breaks.
He is engaged in wishful thinking like a true tyrant. His idea of a solution is for the government to take over as in fascism/socialism. He has a profound aversion to individual enterprise and freedom and he demonstrates an ignorance of how a marketplace operates without government intervention. For a supposed Constitutional scholar one wonders where he finds constitutional authorization for all his interventionist plans? Appears to be more of a Hamiltonian statist/monarchist than a Jeffersonian individualistically oriented advocate of a limited government.
http://www.campaignforliberty.com 228,377 and growing to restore the Constitutional republic by replacing politicians who fail to keep their oath to preserve the Constitution with those who have read it, understand it and will keep the oath.
Read Atlas Shrugged and Capitalism: The Unknown Ideal
http://www.atlassociety.com
http://www.mises.org
http://www.fff.org
Join with us and pass the torch.
Read Ron Paul’s The Revolution: A Manifesto and End The Fed
Obama is a con artist criminal, one of “them” the American people have allowed themselves to be deceived. Ever been conned by a slick car salesman when you wanted that slightly used yet expensive car at a 21% interest rate? Obama isn’t even a natural born citizen. He’s not a real American and is for wall street. 27 trillion were given to bankers by we the tax payers. Our country has crumbled from within, the foreigners are here – 30 million illegal immigrants have been allowed to enter America and the middle class is paying for them with our taxes. They are given special privileges and not prosecuted for DUI’s, etc. Our gov’t has been taken over by the New World Order Banking cartel and that’s why this has happened. The politicians already saw the writing on the wall and like Judas, have betrayed the American people many of whom are brainwashed and asleep at the wheel due to television programming.
Come on armchair warriors or is it Chicken Littles of the world !!
Sounds like everyone has conceded to bury your heads and wait for impact. Possibly… offer some tangible solutions rather than simply finding problems?
Your answer? Less government? Sure. While you are at it, why not add to the mix less unbalanced (lazy) journalism?
Apparently, the two pillars of our country… capitalism and freedom of speech have apparently been using steroids and we’ve lost our male parts in the process.
Obama is talking the markets up. He knows the game is over for the US Economy, and he is trying to overt disaster by talking positive. It’s all about the perception of confidence. Can you imagine what would happen to the DOW Jones, S&P 500, FTSE etc if he came out with the truth and said: “Sorry people I’m afraid it’s all over! We are indeed ‘doomed’ in an economic sense as Marc Faber has correctly prophecised”. The World Economy is dead in the water and it’s only a matter of time before the crash. I’m just biding my time to sell the markets short once the bulls finally run out of steam.