Recession 2010?

If you watch any mainstream news program these days, it is almost a certainty that someone will mention the word “recession” before a half hour passes.  In fact, it seems like almost everyone is either predicting that we are going into a recession, or they are warning of the need to avoid a recession or they are proclaiming that we are still in a recession.  So will the U.S. economy once again be in recession in 2010?  When you consider all the signs that are pointing that way, the evidence is compelling.  The truth is that there is bad economic news wherever you turn.  There is bad news in the housing industry.  There is bad news in the financial markets.  There is bad news in the banking system.  There is bad news coming out of Europe.  There are even signs that the bubble in China may be about to burst.  Plus, the economic impact of the Gulf of Mexico oil spill could end up being the straw (or the gigantic concrete slab) that really breaks the camel’s back.  So there are certainly a lot of pieces of news that “gloom and doom” economists can hang their hats on these days.  There is a very dark mood in world financial markets right now, and it seems like almost everyone is waiting for the other shoe to drop.  But does all of this really mean that we are looking at the start of another recession before the end of 2010?   

The truth is that nobody really knows.  Things certainly look very ominous out there.  The dark clouds are gathering and the economic winds are starting to blow in a bad direction.  The following are 24 pieces of evidence that do seem to indicate that very difficult economic times are imminent….

-U.S. Treasury yields have dropped to stunning new lows.  So why are they so low?  Well, it is because so many investors are anticipating that we are headed into a deflationary period.  In fact, many economists are warning that the fact that Treasury yields are so low is one of the clearest signs that economic trouble is ahead.

-The Conference Board’s Consumer Confidence Index declined sharply to 52.9 in June.  Most economists had expected that the figure for June would be somewhere around 62.  If consumers aren’t confident they won’t be spending money.  If American consumers don’t start spending money soon a lot of American retailers are going to go belly up.

-The M3 money supply plunged at a 9.6 percent annual rate during the first quarter of 2010.  If the M3 keeps declining at that kind of a rate it is going to put extreme deflationary pressure on the U.S. economy.

-Many economists are now warning that the “China investment bubble” is about to burst.  In fact, Kenneth Rogoff, Harvard University professor and former chief economist of the International Monetary Fund, claims that China’s property market is beginning a “collapse” that will send a shockwave across the globe.  One prominent economist that specializes in China is even forecasting that property prices in major Chinese cities are likely to soon experience a drop of up to 30 percent.

-Nouriel Roubini is warning that Europe’s economy could stop growing as soon as this year.  Back in 2007 and 2008, the U.S. was the epicenter of the financial crisis, but many analysts believe that it will be Europe this time around.

-Vacancies and lease rates at U.S. shopping centers continued to get worse during the second quarter of 2010.  If things don’t pick up soon will we see half empty shopping malls by the time Christmas rolls around?

-CBS News is reporting that the oil spill in the Gulf of Mexico is hurting businesses “from coast to coast”.  The longer this oil spill goes on the bigger of an impact it is going to have.  The cost to the American economy from this disaster could ultimately be in the trillions.

-Some analysts are warning that if BP goes under as a result of the Gulf of Mexico oil spill that it could cause the total collapse of the worldwide derivatives market and unleash a liquidity crisis unlike anything the world financial system has ever seen.

-The state of Illinois has stopped paying most of its bills and yet the flood of red ink continues to get even worse.  Illinois now ranks eighth in the world in possible bond-holder default.  That is even worse than California.

-Speaking of California, the Schwarzenegger administration has won an appellate court ruling saying it has the authority to impose the federal minimum wage of $7.25 an hour on more than 200,000 state workers as California wrestles with its latest budget crisis.

-Things are so bad at the state level in the U.S. that economist Mark Zandi is projecting that up to 400,000 workers could lose their jobs in the next year as states, counties and cities struggle with lower tax revenues and significantly reduced federal funding.

-Two Federal Reserve officials recently said that U.S. unemployment is likely to stay high for a long time.  Normally Fed officials are some of the biggest cheerleaders for the economy.  If they are not optimistic about the employment situation that is a very bad sign.

-Analysts are warning that the “death cross” is coming.  The Standard & Poor’s 500 50-day moving average is about to cross beneath the 200-day moving average, and many economists say that this is a very strong indication that a new recession is about to begin.

-One prominent trader says that the Dow Jones Industrial Average is repeating a pattern that appeared just before financial markets collapsed during the Great Depression.

-Ambrose Evans-Pritchard, one of the most respected financial columnists in the world, really raised eyebrows recently when he declared that this “really is starting to feel like 1932”.

-In the month of May, sales of new homes in the United States dropped to the lowest level on record.

-The National Association of Realtors recently announced that its seasonally adjusted index of sales agreements for previously occupied homes dropped 30 percent in May.

-It is being reported that sales of foreclosed homes in Florida made up nearly 40 percent of all home purchases in the state during the first part of 2010.

-Politicians across Europe have pledged to dramatically cut their national budgets, and many economists are warning that such a dramatic pullback in public sector spending could cause a very significant slowdown of the European economy.

-Banks in the U.K. are being instructed to hoard cash in preparation for the next financial crisis.

-One recent poll found that 76 percent of Americans believe that the U.S. economy is actually still in a recession.

-The average duration of unemployment in the United States has risen to an all-time high.  Millions of unemployed Americans are fighting off deep despair and depression as they find it nearly impossible to find a decent job.

-Small and mid-size banks across the United States are failing at a rapidly accelerating pace.  The truth is that the entire U.S. banking system is teetering on the brink of disaster.

-At this point just about everyone can see the writing on the wall.  Literally dozens of top economists and world leaders are declaring that we are likely to enter the second leg of a “double-dip recession” at some point over the next twelve months.

So yes, things are really, really bad.

Those who want to forecast a coming recession don’t have to look too far for data that will back them up. 

But wait.

There is actually one prominent economist who says that it is virtually impossible that the United States will experience a recession in the next six months.

Goldman Sachs economist Andrew Tilton says that there is “no way in hell” that the U.S. economy is going into a recession.  To be more precise, Tilton says that there is a 1.6% chance that the U.S. economy will be in a recession six months from now.

So according to Tilton, there is a 98.4% chance (and he has computer models that supposedly back him up) that the U.S. economy will be growing when we reach the end of the year.

So what is actually going to happen?

Who knows.

The truth is that so many of these economists are so caught up in what is happening in the short-term that they are missing the bigger picture.

The bigger picture is that the U.S. economy is more over-leveraged than it ever has been before, and we are caught in a debt spiral that is basically impossible to unwind.

So in the final analysis it really doesn’t matter if we are “officially” in a recession by the end of 2010 or not.  The truth is that the United States is headed for a devastating long-term economic collapse and there isn’t much that anyone can do to change that reality at this point.

Shipping Our Economy, Our Jobs And Our Prosperity To China

As the U.S. economy continues to implode, large American corporations are investing billions upon billions of dollars in China.  But all of this investment comes at a price.  Over the past several decades, hundreds of factories and manufacturing facilities that would have been constructed in the United States, along with millions of decent paying jobs, have ended up going to China instead where labor is so much cheaper.  In the process, China has become a massive economic powerhouse, while once thriving manufacturing cities in the United States such as Detroit are now rusted-out corpses.  In fact, China’s economy has grown so rapidly that it is being projected that in 2010 China will replace Japan as the world’s second-largest economy.  Not only that, but China has already overtaken Germany and is now the biggest exporter of goods in the entire world.  But none of this growth in communist China would have been possible without all of the globalism and free trade that U.S. politicians from both parties have been pushing on us for the last 40 years.  When they were selling us on the benefits of “free trade” they didn’t tell us that we would end up shipping our economy, our jobs and our prosperity over to China. 

American consumers never seemed to be able to put two and two together.  As we were busy running out and filling up our shopping carts with cheap plastic crap made in China, we didn’t seem to realize that a “global economy” meant that we would be competing for jobs and wages with workers on the other side of the world.

So now the U.S. economy, with its high wages and repressive government regulations, is suffering while China’s economy is thriving.

So just how much money are U.S. corporations pouring into China?

Well, according to the U.S.-China Business Council, U.S. corporations combined for $3.6 billion in direct foreign investment in China in 2009.  That was substantially up from $2.9 billion in 2008.

As U.S. companies pour increasingly large amounts of money into China, the economies of the U.S. and China are becoming inextricably linked.

In fact, some of the biggest “American” success stories are now manufactured in China.

For example, have you purchased an Apple iPhone?  Well, if you have, there is a really good chance that it was made in China.  Of course what Apple doesn’t tell you is that ten workers at the facility in China where the iPhone is manufactured have committed suicide in the past year by jumping off buildings at the factory.  Perhaps they were depressed over their low pay – the workers at the factory work very long hours but make less than 300 hundred dollars a month.

How would you like to work for 300 dollars a month?

But things could be even worse.

Reuters recently described the ordeal of one Chinese worker who spends at least eight hours a day standing on an assembly line putting together locks for Honda cars….

“Each year is the same. It makes me sick in the stomach. There’s no freshness to things anymore,” he said of his job which pays around 30 yuan (US$5) per day.

How in the world can American workers be expected to compete with someone who makes 5 dollars a day?

But some Chinese workers toil in even more difficult conditions.  According to the Toronto Star, employees at the Pingdingshan Cotton Textile Company work grueling two day shifts and yet only make 65 cents an hour.

These low wages have enabled big global corporations to make huge profits, and they have helped provide lots of low price products for American consumers, but in the process they are cannibalizing U.S. jobs, factories and businesses.

In fact, it is getting quite hard to find things that are made in the United States anymore.  Even many of the “organic foods” that you are buying at organic food stores are now actually made in China.

As tens of millions of American workers sit at home collecting unemployment checks, U.S. companies are busy making plans to invest billions more in China.

According to Pacific Epoch, a China-focused research firm based in Shanghai, Pepsi “has committed $1 billion over the next four years to build 14 new beverage production plants, in a move that will almost double its production capacity in the country.”

Couldn’t we use a few of those beverage production plants in the United States?

But who wants to pay U.S. workers 12 dollars an hour when they can pay Chinese workers 2 dollars an hour?

But Pepsi is far from alone.  Forbes recently detailed the massive investments that some of the major car companies are making in China….

General Motors and Volkswagen have invested billions in China, starting more than a decade ago. Ford is rushing to catch up by adding production capacity and expanding its dealer network in China. Ford and its joint-venture partner, Chang’an Ford Mazda Automobile, plan to start producing next-generation Ford Focus models at a new, $490 million plant in Chongqing in 2012.

Meanwhile, once thriving American manufacturing cities such as Detroit and Flint, Michigan are so dilapidated and run down that they literally look like war zones.

But it is not just U.S. companies that are investing in China.  According to China’s Ministry of Commerce, overall direct foreign investment in China rose 14 percent to approximately $39 billion in the first five months of 2010.  Nearly half of that money was spent on building or expanding factories.

The implications of all this are staggering.

First of all, nobody can deny any longer that China has become a superpower.  China now has one of the largest economies in the world, their military has been dramatically upgraded and modernized and they have developed a network of economic and diplomatic contacts around the globe that would have been unthinkable 20 or 30 years ago.

Meanwhile, the United States has an economy that is imploding, a reputation that has been deeply tarnished and a debt that is the largest in the history of the world. 

In fact, China owns about a trillion dollars of U.S. government debt.

Yes, the United States is falling and China is rising.

So now that China’s economy and manufacturing base has been built up so dramatically, what happens when someday the communist Chinese government decides that it doesn’t want to be such great friends with the United States anymore?

If relations between the two nations really go south someday, could U.S. corporations suddenly lose the billions upon billions that they have poured into China? 

Also, many Chinese military strategists believe that it is inevitable that there will be a war between the United States and China someday.  So could China end up using all of the technology and manufacturing capacity that they have gained at our expense against us someday?    

The truth is that all of the money and technology that we have poured into China could end up being one of the greatest national security blunders of all time. 

China is not a democracy.  The Communist Party runs China, and most of their leaders still believe in the ultimate worldwide triumph of communism.

So in the end the United States may look back and realize how incredibly stupid it was to build up communist China at the expense of our own economy.

But this is the world our leaders have built for us.  A world where globalism and “free trade” force us to compete for jobs against sweatshop laborers around the globe.

The reality is that this “new world” is not very good at all for the American middle class.  The economic realities of the 21st century are very cruel for Americans who are seeking to live a middle class lifestyle. 

Gradually, everyone in the world is being pushed into two economic groups.  The massive global corporations that dominate everyone and everything, and the worldwide mass of expendable labor that serves those global corporations.

It is this kind of “neo-feudalism” that we must avoid at all costs.  If the American people would just wake up this trend towards increasing globalism could be reversed.

But will they wake up?

No Jobs

Everyone knows that the United States is bleeding jobs.  According to one new study, the private sector in the United States has lost 10.5 million jobs since 2007.  The U.S. economy lost 125,000 more jobs during the month of June.  Approximately a million frustrated American workers have simply dropped out of the employment market altogether over the past two months.  But the question not enough people are asking is why so many jobs are being lost.  Yes, the large global corporations have been sending millions of jobs overseas where labor is far, far cheaper.  And yes, the U.S. government has accumulated so much debt that it is absolutely suffocating the U.S. economy.  But there is another very important factor that has been largely overlooked.  Traditionally, about 75 percent of all new jobs are created by small businesses.  But today, hundreds of thousands of small businesses are being strangled out of existence by all of the oppressive taxes, fees, rules, regulations, paperwork and demands that government keeps imposing on them.  In such a repressive environment, it is getting close to impossible for small businesses to thrive, and if our small businesses can’t succeed, then we simply are not going to see a lot of jobs being created.   

You see, the truth is that over the past several decades the game has become dramatically stacked in favor of large businesses.  Big corporations have the money to lobby Congress and other governmental institutions, they get almost all the tax breaks and they are the only ones who get bailouts.  They even “help” write legislation on the federal level. 

Many times large corporations will even lobby for more regulations for their own industry because they know that they can handle all of the rules and paperwork far easier than their smaller competitors can.  After all, a large corporation with an accounting department can easily handle filling out a few thousand more forms, but for a small business with only a handful of employees that kind of paperwork is a major logistical nightmare.

When it comes to hiring new employees, the federal government has made the process so complicated and so expensive for small businesses that it is hardly worth it anymore.  Things have gotten so bad that more small businesses than ever are only hiring part-time workers or independent contractors. 

So what we actually have now is a situation where small businesses have lots of incentives not to hire more workers, and if they really do need some extra help the rules make it much more profitable to do whatever you can to keep from bringing people on as full-time employees.    

Can the U.S. economy thrive in such an environment?

Of course not.

Small businesses are slowly being strangled out of existence.

Unless something changes quickly, small businesses are going to continue looking for ways to shed employees rather than hire them.

The U.S. government has become like the 500 pound fat guy who jumps on a horse and then gets angry when it won’t move.

Passing even more ridiculous regulations and raising taxes even higher is not going to fix business in America.

The burdens we have placed on our small businesses have gotten worse under every single presidential administration of the past several decades.  Now our great economic machine has become so overburdened and so tired that it is simply refusing to move.

And this is not a short-term problem either.  Yes, we have lost a ton of jobs since the beginning of the “Great Recession”, but our problems go back a lot farther than that.  The reality is that the U.S. population has grown by about 25 million people since they year 2000, and we needed to create millions upon millions of new jobs to support that increased population.  Instead, we have lost a total of 3 million jobs since 2000.

Needless to say, that is not a good trend.

There are simply not enough jobs for everyone.

Today, there are more than 5 unemployed Americans for every single job opening.

It is becoming harder and harder to find a job, and the number of Americans who are chronically unemployed is absolutely exploding.

In America today, the average time needed to find a job has risen to a record 35.2 weeks.

There are millions of Americans out there tonight who feel like punching the walls or drinking themselves under the table out of frustration because they can’t find a job.

And many of those who are “chronically unemployed” are about to experience even more pain.

So far, the U.S. Senate has refused to extend long-term unemployment benefits for about 1.3 million Americans.  Without this assistance, these Americans and their families will be forced to survive on food stamps and whatever else they can scrape together.

The tent cities that are popping up all over the United States are about to get a lot more crowded.

So is there much hope that this is going to turn around any time soon?

Unfortunately, no.

Big corporations are not going to pay U.S. workers ten times more money than what they are paying employees in Malaysia, China or the Philippines just because they feel sorry for them.

Small businesses are not going to hire a lot more workers as long as things stay the way that they are.  In fact, many small businesses are going to continue to look for ways to cut employees.

The public sector is the one place that had been hiring more workers, but due to growing concern about exploding budget deficits, there isn’t going to be a lot of additional hiring in the public sector either.

The truth is that there is not a lot of reason for optimism right now.  The U.S. economy is being battered by a host of economic problems, and with each passing week even more economists warn that we are likely headed for the second half of a double-dip recession.

So if you still have a job, be thankful.  If you don’t have a job, you are probably going to have to get really creative. 

Times are tough and they are going to get even tougher.  But it is in the midst of challenging times that we find out who we really are.

The Death Cross: Another Sign That We Are On The Verge Of A Recession?

The Standard & Poor’s 500 50-day moving average stands poised to cross beneath the 200-day moving average.  To those in the financial industry, this is known as a “death cross”, and it is a very powerful indicator that we could be entering a bearish period.  So is this yet another sign that we are on the verge of a recession?  Well, anyone who has spent much time trying to interpret financial charts will tell you how inexact that science can be.  Financial markets can be wildly unpredictable, and there is always a tremendous amount of manipulation going on behind the scenes.  However, when you add this impending death cross with all of the other signs that we could be entering a recession, there certainly seems to be reason for alarm.  The truth is that financial markets across the globe are full of fear and panic right now.  In fact, as noted in another article, the dominant force in world financial markets in 2010 is fear.  When fear rules, markets become very volatile and they can fall very quickly.  Anyone who has spent much time trying to squeeze profits out of world financial markets knows that they tend to fall much faster than they ever rise.  So are we now approaching one of those times of panic when financial markets across the world fall at breathtaking speed?

Well, the truth is that nobody knows.  Anyone who says that they can predict these things with 100 percent certainty is either a liar or they are unbelievably rich.

But certainly the mood in the financial markets is grim.  If a death cross does happen on the S&P it is going to make things even more tense.

For those not familiar with investing terminology, Investopedia defines a “death cross” this way….

A crossover resulting from a security’s long-term moving average breaking above its short-term moving average or support level.

In this case, the death cross would be happening on the S&P 500, which is a weighted index of the prices of 500 large-cap common stocks actively traded in the United States.  The S&P 500 is one of the most commonly used benchmarks for the overall U.S. stock market.

So how soon could we see a death cross on the S&P 500?

Well, some analysts believe that it could happen almost at any time….

“Because the market has moved down so violently, it’s brought about the likelihood of the Death Cross occurring much more rapidly,” Abigail Doolittle, the founder of Peak Theories Research, was recently quoted by CNBC as saying.  “It now appears it could be only a day or two off if downward momentum continues.”

But hopefully most of you that are reading this are not even in the stock market at this point anyway.

The truth is that the “rally” that we have witnessed in the financial markets has been nothing more than a “sucker’s rally”.

The fundamentals of the marketplace have not changed.

The U.S. housing market continues to teeter on the brink of disaster.

The sovereign debt crisis is worse now than it ever has been.

In fact, just about every economic indicator you could name is pointing to difficult times ahead.

So there was really no fundamental reason why we should have even seen such a rally.

But even with the recent rally, the stock market still has not been producing good returns.

So often you hear people giving advice that goes something like this….

“If you are going to get into the stock market just keep your money in there and ride out the hard times because in the long run things always go up”.

But do they?

The truth is that some people have done well, but overall inflation-adjusted returns from stocks over the past ten years have been pretty close to zero.

So if the stock market is a game that you want to play, you had better really know what you are doing (or hire someone else who does), because it can be a very cruel game for amateurs.

What does seem certain is that with so much tension in world financial markets right now, we are likely to continue to see an extreme amount of volatility in the marketplace.  In such an environment, even the slightest piece of good news or bad news can set off incredibly wild swings.

It is a very exciting time for those of us who follow the financial news, but for those seeking to actually squeeze some  profits out of the marketplace, times such as these are not easy.

50 Random Facts That Make You Wonder What In The World Has Happened To America

Our world is changing at a pace that is so staggering these days that it can be really hard to fully grasp the significance of what we are witnessing.  Hopefully the collection of random facts below will help you to “connect the dots” just a little bit.  On one level, the facts below may not seem related.  However, what they all do have in common is that they show just how much the United States has fundamentally changed.  Do you ever just sit back and wonder what in the world has happened to America?  The truth is that the America that so many of us once loved so much has been shattered into a thousand pieces.  The “land of the free and the home of the brave” has been transformed into a socialized Big Brother nanny state that is oozing with corruption and has accumulated the biggest mountain of debt in the history of the world.  The greatest economic machine that the world has ever seen is falling apart before our very eyes, and even when our politicians actually try to do something right (which is quite rare) the end result is still a bunch of garbage.  For those who still love this land (and there are a lot of us) it is heartbreaking to watch America slowly die.

The following are 50 random facts that show just how dramatically America has changed….

#50) A new report released by the United Nations is publicly calling for the establishment of a world currency and none of the major news networks are even covering it.

#49) The state of California is so broke that Arnold Schwarzenegger has ordered California State Controller John Chiang to reduce state worker pay for July to the federal minimum allowed by law — $7.25 an hour for most state workers.

#48) A police officer in Oklahoma recently tasered an 86-year-old disabled grandma in her bed and stepped on her oxygen hose until she couldn’t breathe because they considered her to be a “threat”.

#47) In early 2009, U.S. net national savings as a percentage of GDP went negative for the first time since 1952, and it has continued its downward trend since then.

#46) Corexit 9500 is so incredibly toxic that the UK’s Marine Management Organization has completely banned it, so if there was a major oil spill in the North Sea, BP would not be able to use it.  And yet BP has dumped over a million gallons of dispersants such as Corexit 9500 into the Gulf of Mexico.

#45) For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.

#44) It has come out that one employee used a Federal Emergency Management Agency credit card to buy $4,318 in “Happy Birthday” gift cards.  Two other FEMA officials charged the cost of 360 golf umbrellas ($9,000) to the taxpayers.

#43) Researchers at the State University of New York at Buffalo received $389,000 from the U.S. government to pay 100 residents of Buffalo $45 each to record how much malt liquor they drink and how much pot they smoke each day.

#42) The average duration of unemployment in the United States has risen to an all-time high.

#41) The bottom 40 percent of all income earners in the United States now collectively own less than 1 percent of the nation’s wealth.

#40) In the U.S., the average federal worker now earns about twice as much as the average worker in the private sector.

#39) Back in 1950 each retiree’s Social Security benefit was paid for by 16 workers.  Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers.  By 2025 it is projected that there will be approximately two workers for each retiree.

#38) According to a U.S. Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015.

#37) The federal government actually has the gall to ask for online donations that will supposedly go towards paying off the national debt.

#36) The Cactus Bug Project at the University Of Florida was allocated $325,394 in economic stimulus funds to study the mating decisions of cactus bugs.

#35) A dinner cruise company in Chicago got nearly $1 million in economic stimulus funds to combat terrorism.

#34) It is being reported that a 6-year-old girl from Ohio is on the “no fly” list maintained by U.S. Homeland Security.

#33) During the first quarter of 2010, the total number of loans that are at least three months past due in the United States increased for the 16th consecutive quarter.

#32) According to a new report, Americans spend twice as much as residents of other developed countries on healthcare, but get lower quality and far less efficiency.

#31) Some experts are warning that the cost of bailing out Fannie Mae and Freddie Mac could reach as high as $1 trillion.

#30) The FDA has announced that the offspring of cloned animals could be in our food supply right now and that there is nothing that they can do about it.

#29) In May, sales of new homes in the United States dropped to the lowest level ever recorded.

#28) In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1.  Since the year 2000, that ratio has ranged between 300 to 500 to one.

#27) Federal border officials recently said that Mexican drug cartels have not only set up shop on American soil, they are actually maintaining lookout bases in strategic locations in the hills of southern Arizona.

#26) The U.S. government has declared some parts of Arizona off limits to U.S. citizens because of the threat of violence from Mexican drug smugglers.

#25) According to the credit card repayment calculator, if you owe $6000 on a credit card with a 20 percent interest rate and only pay the minimum payment each time, it will take you 54 years to pay off that credit card.  During those 54 years you will pay $26,168 in interest rate charges in addition to the $6000 in principal that you are required to pay back.

#24) According to prepared testimony by Goldman Sachs Chief Operating Officer Gary Cohn, Goldman Sachs shorted roughly $615 million of the collateralized debt obligations and residential mortgage-backed securities the firm underwrote since late 2006.

#23) The six biggest banks in the United States now possess assets equivalent to 60 percent of America’s gross national product.

#22) Four of the biggest U.S. banks (Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup) had a “perfect quarter” with zero days of trading losses during the first quarter of 2010.

#21) 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.

#20) BP has hired private security contractors to keep the American people away from oil cleanup sites and nobody seems to care.

#19) Barack Obama is calling for a “civilian expeditionary force” to be sent to Afghanistan and Iraq to help overburdened military troops build infrastructure.

#18) On June 18th, two Christians decided that they would peacefully pass out copies of the gospel of John on a public sidewalk outside a public Arab festival in Dearborn, Michigan and within 3 minutes 8 policemen surrounded them and placed them under arrest.

#17) It is being reported that sales of foreclosed homes in Florida made up nearly 40 percent of all home purchases in the first part of this year.

#16) During a recent interview with Larry King, former first lady Laura Bush revealed to the world that she is actually in favor of legalized gay marriage and a woman’s “right” to abortion.

#15) Scientists at Columbia University are warning that the dose of radiation from the new full body security scanners going into airports all over the United States could be up to 20 times higher than originally estimated.

#14) 43 percent of Americans have less than $10,000 saved for retirement.

#13) The FDIC’s deposit insurance fund now has negative 20.7 billion dollars in it, which represents a slight improvement from the end of 2009.

#12) The judge that BP is pushing for to hear an estimated 200 lawsuits on the Gulf of Mexico oil disaster gets tens of thousands of dollars a year in oil royalties and is paid travel expenses to industry conferences.

#11) In recent years the U.S. government has spent $2.6 million tax dollars to study the drinking habits of Chinese prostitutes and $400,000 tax dollars to pay researchers to cruise six bars in Buenos Aires, Argentina to find out why gay men engage in risky sexual behavior when drunk.

#10) U.S. officials say that more than three billion dollars in cash (much of it aid money paid for by U.S. taxpayers) has been stolen by corrupt officials in Afghanistan and flown out of Kabul International Airport in recent years.

#9) According to a report by the U.S. Department of Transportation’s Bureau of Transportation Statistics, the baggage check fees collected by U.S. airlines shot up 33% in the first quarter of 2010 to $769 million.

#8) Three California high school students are fighting for their right to show their American patriotism – even on a Mexican holiday – after they were forced to remove their American flag T-shirts on Cinco de Mayo.

#7) Right now, interest on the U.S. national debt and spending on entitlement programs like Social Security and Medicare are somewhere in the neighborhood of 10 to 15 percent of GDP.  By 2080, they are projected to eat up approximately 50 percent of GDP.

#6) The total of all government, corporate and consumer debt in the United States is now about 360 percent of GDP.

#5) A 6-year-old girl was recently handcuffed and sent to a mental facility after throwing temper tantrums at her elementary school.

#4) In Florida, students have been arrested by police for things as simple as bringing a plastic butter knife to school, throwing an eraser, and drawing a picture of a gun.

#3) School officials in one town in Massachusetts are refusing to allow students to recite the Pledge of Allegiance.

#2) According to one new study, approximately 21 percent of children in the United States are living below the poverty line in 2010.

#1) Since 1973, more than 50 million babies have been murdered in abortion facilities across the United States.

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Mortgage Horror Stories: The U.S. Housing Industry Will Never Recover If Qualified People Can’t Get A Home Loan

Back about five or six years ago, when the housing bubble was still rising, just about anyone could get a mortgage.  Lending institutions were handing out ridiculously bloated home loans to almost anyone who breathed.  It didn’t matter if you had a rotten credit history, it didn’t matter if you didn’t have a job and in some cases it didn’t even matter if you had any income at all.  It was basically an orgy of mortgage lending.  But now the pendulum has swung 180 degrees in the other direction.  Severely burned by the subprime mortgage crash, mortgage lending institutions have been seriously tightening their lending standards.  As a result, in 2010 it is extremely difficult to get a home loan or a mortgage modification.  In their determination not to get burned again, mortgage lenders have completely overreacted and now a lot of highly qualified people can’t get a home loan.

This point was beautifully illustrated recently by one of our readers named John….

I was just turned down for a home loan. My credit score is 799, my wife’s 804. We had $40,000.00 to put down, which was almost 30%. BUT! Our bank turned down our application! Why? They required us to have 6 months “operating expenses” in the bank after all closing costs were covered. They came up with an arbitrary number on their own, based on our bills and such. We had that amount and more on top of our closing monies. Then why were we denied the loan? Several thousand dollars were from “cash” and the bank required that “cash” be in the bank for at least 60 days or they wouldn’t consider it fluid funding. Needless to say we didn’t make the closing date and are hiring an attorney to avoid being sued (by the seller).

A reader named distressedinbham on another website had an even more frustrating experience trying to get a home loan modification….

I am self-employed, have been all my life and have owned a home for 30 years. When I started my Loan Modification process in August of 09 I WAS NOT behind on any payments. I sent full documentation, over 150 pages, with the things they needed to verify my income. I am now 2 payments behind and I am getting nowhere. They keep flipping me between Loss Mitigation and Imminent Default, back and fourth month end month out. I made a habit of calling every week, then every two weeks just to be sure all was moving forward. From the middle of November I was told my file was with the underwriter and it would only be 30-60 days. I began automatically updating my income verification, verification that I still resided at the property and an updated 4506-T every month. In the middle of April a rep finally told me I was not in the loan modification process. In fact, that I had been denied on March 2. Keep in mind, I’m talking to these people every 2 weeks. She did a financial interview and sent me a new packet so that I could start all over, resubmitting all the documentation yet again. She told me she was my Account Manager. I completed the packet, called with a question (2 weeks later – over a week to receive the packet and another few days to complete it and gather all my documents again) and learned that my “Account Manager” was on maternity leave and I now didn’t have an account manager. Also, I was told that I had received the incorrect packet…it was the old version rather than the updated version. She asked me to fax four or five pieces of information in the hopes it would, quote, “jump start my file back into the process” and said she we send me another packet. That was mid April. Here we sit, 2-1/2 months later, I have still not received anything in writing about my rejection. And, though I’ve now had people tell me on three separate occasions that I would receive a new packet, it has yet to show up on my door step. I asked several times why my application was denied and the answer I finally got last week was that it was because I was DELIQUENT in my payments. Call me crazy but I thought that was the whole point??!! I almost hired a third party but am so hesitant to take that step. Every time I get on the phone with them it takes an hour out of my day and I am usually so upset I find it difficult to work, so I just don’t call. I’m going to sit back and regroup and decide what I need to do next.

The truth is that scenes such as these are being repeated over and over again across the United States right now.

Scott Stern, the CEO of Lenders One, says that a lot has changed since 2007….

“Lending standards have tightened dramatically between 2007 and 2009.”

In an attempt to avoid the mistakes of the housing bubble, the mortgage industry has now created a situation where standards are so tight that the entire industry is freezing up.

In May, sales of new homes in the United States dropped to the lowest level ever recorded.  To be more exact, new home sales dropped 32.7 percent to a seasonally adjusted annual rate of 300,000. 

Keep in mind that a “normal” level for new homes sales is an annual rate of about 800,000. 

New homes have never sold this slowly ever since the U.S. Commerce Department began tracking this data back in 1963.

Now, a lot of the drop in new home sales has to do with other factors, but certainly the fact that people are having such a hard time getting approved for loans is playing a role.

If large numbers of qualified people are getting turned down for mortgages that is going to suck a lot of money out of the marketplace.

And without enough qualified buyers, the U.S. housing industry is simply not going to recover.

But it isn’t just a lack of qualified buyers that is the problem.

The truth is that the U.S. real estate market is a complete and total disaster right now and there is every indication that things are going to get even worse.

So what does all of this mean?

It means that it is going to remain very difficult to sell homes.

It means that prices are going to continue to come down.

It means that real estate agents will continue to suffer and there will continue to be high unemployment in the construction industry.

In fact, every industry that is highly dependent on the U.S. housing market is likely to continue to feel a lot of pain for a long time to come.

So do you have a mortgage horror story to share?  If so, please feel free to leave it in a comment below…..

25 Signs That Almost Everyone Is Expecting An Economic Collapse In 2010

At times like these, it is hardly going out on a limb to say that we are headed for hard economic times.  In fact, it seems like almost everyone in the financial world is either declaring that a recession is coming or is busy preparing for one.  The truth is that bad economic signs are everywhere.  Consumer confidence is plummeting, big banks are hoarding cash, top financial experts are issuing recession warnings and it seems like almost everyone is trying to accumulate as much gold as possible.  Now that the G20 nations have all pledged to dramatically cut government spending in an effort to get debt under control, worries about a double-dip recession have reached a fever pitch.  So will we see the full-fledged economic collapse that so many analysts are warning of before the end of 2010?  Of course it is possible, but it seems much more likely that  we will just see the beginning of another recession that could certainly deepen into a depression as we head into 2011 and 2012.  There are so many variables and so many moving parts that it is always difficult to predict exactly how things will play out.  What does seem virtually certain, however, is that we are heading into a time of extreme economic stress.

The following are 25 signs that almost everyone in the financial world is expecting an economic downturn during the second half of 2010….

#1) The Conference Board’s Consumer Confidence Index declined sharply to 52.9 in June.  Most economists had expected that the figure for June would be somewhere around 62.  To get an idea of how bad this is, the index was at 100 back during the baseline year of 1985.

#2) Major banks are being instructed to hoard cash in preparation for the next financial crisis.

#3) French bank Societe Generale is forecasting that gold could reach $1,430 an ounce in the third quarter of this year due to fears of a double-dip recession.

#4) Paul Krugman of the New York Times declared in a recent column that we are about to enter “the third depression”.

#5) According to one recent poll, about eight out of every 10 Americans expect the Gulf of Mexico oil spill to damage the U.S. economy and drive up the cost of gas and food.

#6) Mark Zandi, chief economist of Moody’s Analytics, is not optimistic about the chances of avoiding another recession….

“There’s an uncomfortably high probability that we slip back into recession.”

#7) The U.S. Department of Agriculture is forecasting that the number of Americans on food stamps will increase to 43 million in 2011.

#8) George Soros claims that a European recession in the coming months is “almost inevitable”.

#9) Kevin Giddis, the Managing Director of Fixed Income at Morgan Keegan says that a lot of people are making some really large financial bets that a recession is on the way….

“There is big money making big bets that at a minimum we we’ll have a recession if not a depression that could last for years.”

#10) The Center on Budget and Policy Priorities recently said that U.S. states in fiscal 2011 could be facing the worst budget situation that they have experienced since the economic downturn began in 2007.

#11) Federal Reserve Chairman Ben Bernanke is publicly saying that the U.S. unemployment rate is quite likely to remain “high for a while”.

#12) The National League of Cities is warning that large numbers of cities across the U.S. will be facing horrible economic conditions over the next couple of years….

“City budget shortfalls will become more severe over the next two years as tax collections catch up with economic conditions.  These will inevitably result in new rounds of layoffs, service cuts, and canceled projects and contracts.”

#13) According to the Wall Street Journal, debates have already begun inside the Federal Reserve about what to do in the event of a “double-dip” recession.

#14) In May, sales of new homes in the United States dropped to the lowest level ever recorded.  The truth is that the American people know economic hard times are coming and so they aren’t running out and buying expensive new homes that they can’t afford.

#15) Mike Whitney says that without more “stimulus” from the federal government a recession by the end of 2010 is extremely likely….

“Without another boost of stimulus, the economy will lapse back into recession sometime by the end of 2010.”

#16) One recent poll found that 76 percent of Americans believe that the U.S. economy is still in a recession.

#17) Richard Russell, the famous author of the Dow Theory Letters, is not mincing words about what he believes is headed our way….

“Do your friends a favor. Tell them to “batten down the hatches” because there’s a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don’t need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won’t recognize the country. They’ll retort, “How the dickens does Russell know — who told him?” Tell them the stock market told him.”

#18) The Bank of International Settlements said in its annual report that major banks on both sides of the Atlantic Ocean continue to remain “highly leveraged and still appear to be on life support”.

#19) Mish Shedlock recently raised eyebrows by openly proclaiming that “an economic depression is here”.

#20) Bob Chapman of the International Forecaster is very pessimistic about the state of the world economy as we head into the second half of 2010….

“There is still no question in our minds that Greece was a setup to lead to a deflationary collapse later and the Greek people refused to listen. As a result it is now apparent that Greece is even worse off than the elitists imagined. We do not see European bailouts going any further. The result is the US and UK will follow. Financial Europe is history. You should all keep in mind that this is child’s play. Wait until England and the US go down, perhaps before the end of the year.”

#21) An article on Bloomberg’s website says that 46 U.S. states are facing a “Greek style” financial crisis.

#22) Charles Cooper at Oriel Securities says that worries about the global economy right now are actually very good for the price of gold….

“Debt on government balance sheets and worries that the world could be heading towards a double-dip recession are driving the gold price higher.”

#23) Richard Suttmeier recently wrote an article for Forbes magazine in which he predicted that we are headed for another dramatic decline in housing prices….

Home prices will decline again with risk of another 50% down to get house prices back to levels of 1999 / 2000.

#24) University of Maryland professor Peter Morici is warning that the decision by European governments to slash their budgets makes the prospect of another recession much more likely….

“Europeans cutting their budgets now could thrust the global economy into a double-dip recession.”

#25) John P. Hussman, fund manager of Hussman Strategic Total Return and Hussman Strategic Growth, has issued a full-fledged recession warning: “Based on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn.”

So in light of all this, what should we all do?

We should all start preparing for difficult times.

Now is a great time to get out of debt, to reduce expenses, to develop additional streams of income and to start storing up food and supplies for when things really fall apart.

After all, you don’t start preparing once the storm has already arrived.  You start preparing the moment that you see the first signs of trouble on the horizon.

There is no excuse for not getting yourself prepared.  The signs that we are headed towards an economic nightmare are all around us.

Do what you have to do for yourself and for your family.

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