Did anyone really think that Italy would be able to get through this thing without needing a bailout? Just when you thought that things in Europe could get back to normal for a little while, here comes Italy. On Friday, there was a bit of a “mini-panic” as investors started dumping Italian financial assets. European officials are concerned that the sovereign debt crisis that has ravaged Greece, Ireland and Portugal will now put the Italian economy through the wringer. European Council President Herman Van Rompuy has called an emergency meeting for Monday morning. He is denying that the meeting is about Italy, but everyone knows that Italy is going to be discussed. European Central Bank President Jean-Claude Trichet and European Commission President Jose Manuel Barroso along with a host of other top officials will also be at this meeting. If it does turn out that Italy needs a bailout, it is going to change the entire game in Europe.
What is going on in Italy right now is potentially far more serious than what has been going on in Greece. Italy is the fourth largest economy in the European Union. If Italy requires a bailout, the rest of Europe might not be able to handle it.
This latest crisis was precipitated by a substantial sell-off of Italian financial assets on Friday. An article posted by Bloomberg described the pounding that the two largest Italian banks took….
UniCredit SpA (UCG) and Intesa Sanpaolo SpA (ISP), Italy’s biggest banks, fell to the lowest in more than two years in Milan yesterday as contagion from Europe’s debt crisis threatened to spread to the region’s third-largest economy.
UniCredit plunged 7.9 percent, the biggest decline since March 30, 2009, while Intesa dropped 4.6 percent. Both hit lows not seen since the period when markets were emerging from the crisis spawned by the collapse of Lehman Brothers Holdings Inc.
Unfortunately, this is just the continuation of a trend that has been going on for a while.
When you look at them as a group, the stocks of the five largest Italian banks have lost 27% since the beginning of 2011.
That is not a good sign.
Also, investors are starting to dump Italian government debt. Reuters says that the yield on 10 year Italian bonds is approaching the danger zone….
The spread of the Italian 10-year government bond yield over benchmark German Bunds hit euro lifetime highs around 2.45 percentage points on Friday, raising the Italian yield to 5.28 percent, close to the 5.5-5.7 percent area which some bankers think could start putting heavy pressure on Italy’s finances.
The Italian national debt is now up to about 120 percent of GDP. The Italian government would be able to manage it if interest rates were very, very low. But unfortunately they are rising fast and if they get too much higher they are going to become suffocating.
As I have written about previously, government debt becomes very painful once you take low interest rates out of the equation. For example, if Greece could borrow all of the money that it wanted to borrow at zero percent interest, it would not have a debt problem. But now the yield on 2 year Greek bonds is over 30 percent, and there is not a government on the face of the earth that can afford to pay interest that high for long.
Unfortunately for Italy, this could just be the beginning of rising interest rates. Just recently, Moody’s warned that it may be forced to downgrade Italy’s Aa2 debt rating at some point within the next couple of months.
If things continue to unravel in Italy, all of the credit agencies may downgrade Italy sooner rather than later.
The frightening thing about Italy is that a financial crisis has a way of exposing corruption, and there are very few countries that can match the kind of corruption that goes on in Italy.
As a child, I had the chance to live in Italy. I love Italy. The people are friendly, the weather is great, the architecture is amazing and the food is spectacular. I will always have great affection for Italy and I will always cheer for the Italian national team when the World Cup rolls around.
However, I also know that corruption is deeply ingrained into Italian culture. It is simply a way of life.
Just check out the prime minister of Italy. Silvio Berlusconi is the consummate Italian politician. He is greatly loved by many, but it would take days to detail all of the scandals that he has been linked to.
At this point, Berlusconi has become a parody of himself. Each new sex scandal or financial scandal just adds to his legend. Italy is one of the only nations in Europe where such a corrupt politician could have stayed in office for so long.
Not that the U.S. government is much better. Our government becomes more corrupt with each passing year.
But the point is that if a financial collapse happens in Italy and people start “turning over rocks” it could turn up all sorts of icky stuff.
So what is Europe going to do if Italy needs a bailout?
Well, they are probably going to have to fire up the printing presses because it would probably take a whole lot more euros than they have right now.
The truth is that the EU has now entered a permanent financial crisis. You have a whole bunch of nations that have accumulated unsustainable debts and that cannot print their own currencies. The financial system of the EU as it is currently constructed simply does not work.
Some believe that the sovereign debt crisis will eventually cause the breakup of the EU. Others believe that this crisis will cause it to be reformed and become much more integrated.
In any event, what just about everyone can agree on is that the financial problems of Europe are not going away any time soon. For now, EU officials are keeping all of the balls in the air, but if at some point the juggling act falters, the rest of the world better look out.
A financial crash in Europe would be felt in every nation on earth and it would be absolutely devastating. Let’s hope that we still have some more time before it happens.
Is the United States “number one”? Many Americans take deep pride in their nation and the truth is that the U.S. has a lot going for it. The United States has the largest economy in the world. The United States also has the most powerful military on the entire planet. The United States has produced most of the greatest movies that the world has ever seen. But the United States is also number one in a lot of categories that are not go great. If we ever want to turn this country around, we need to be very honest with ourselves. We need to take a long, hard look in the mirror and realize that it is not a good thing that we are number one in divorce, drug addiction, debt, obesity, car thefts, murders and total crimes. We have become a slothful, greedy, decadent nation that is exhibiting signs of advanced decay. Until we understand just how bad our problems really are, we won’t be able to come up with the solutions that we need.
A lot of people that write articles like this have a deep hatred for America. But that is not the case with me. I love the United States. I love the American people. America is like an aging, bloated rock star that has become addicted to a dozen different drugs. America is a shadow of its former self and it desperately needs to wake up before it plunges into oblivion.
If you do not believe that America is in bad shape, just read the list below. The following are 20 not so good categories that the United States leads the world in….
#15 More pornography is created in the United States than anywhere else on the entire globe. 89 percent is made in the U.S.A. and only 11 percent is made in the rest of the world.
#16 The United States has the largest trade deficit in the world every single year. Between December 2000 and December 2010, the United States ran a total trade deficit of 6.1 trillion dollars with the rest of the world, and the U.S. has had a negative trade balance every single year since 1976.
#17 The United States spends 7 times more on the military than any other nation on the planet does. In fact, U.S. military spending is greater than the military spending of China, Russia, Japan, India, and the rest of NATO combined.
#20 The U.S. has accumulated the biggest national debt that the world has ever seen and it is rapidly getting worse. Right now, U.S. government debt is expanding at a rate of $40,000 per second.
So are you convinced that we are in trouble yet?
The truth is that America has changed. Most of us don’t even say hello to our neighbors anymore.
In fact, we have become so self-involved that many of us don’t even notice when someone around us dies.
Just consider the following two examples.
*USA Today recently reported on the body of a dead woman that was not found for approximately a year even though a whole bunch of people walked right past the car where she died….
Bank contractors, inspectors and even the new owner of a foreclosed home walked past the silver Chevy Nova in the garage numerous times before discovering the former homeowner — dead on the front seat.
*In an even more shocking case, the CBS affiliate in Boston recently reported that a dead woman was lying on the bottom of a public pool for two days while large numbers of people swam right over her. How in the world could something like this possibly happen?….
It’s a mystery as murky as the water at Veteran’s Memorial swimming pool in Fall River public pool: how did swimmers, lifeguards, or inspectors not notice a woman’s body at the bottom of the pool for a few days?
Marie Joseph, 36, was last seen at the pool on Sunday. The pool was open to the public Monday and Tuesday with six lifeguards on duty, and no one noticed the body under 12 feet of water.
Most Americans have become so self-involved that they barely even notice anyone other than their family and close friends.
The love of most Americans is growing cold and when the collapse of the U.S. economy happens it is just going to make things worse. Instead of working as a community, most Americans will only be concerned with making sure that their own needs are taken care of.
The United States was once the most blessed nation on the face of the earth, but now we are literally falling to pieces.
Does anyone have any ideas about why this could be happening?
The U.S. health care system has become one gigantic money making scam, and you are about to see the statistics that prove it. Today, the United States spends more on health care per person than any other country in the world by far. The health insurance companies and the big pharmaceutical corporations are raking in gigantic mountains of cash and yet the quality of the health care that we receive in return is rather quite poor. People living in Puerto Rico have a greater life expectancy than we do. Residents of Cuba have a lower infant mortality rate than we do. We are the most medicated population on the planet and yet we are also one of the sickest. If the U.S. health care system was a country, it would have the 6th largest economy on the globe and yet rates of cancer, heart disease and diabetes continue to increase. The U.S. health care statistics that you are about to read below are absolutely stunning. For as much money as we shell out for health care, we should have the greatest system in the entire world. But we don’t. Something has gone horribly wrong.
As you read this, there are hordes of health bureaucrats and greedy corporate fatcats that are becoming incredibly wealthy while the rest of us go broke trying to pay for our health care. In the United States today, health care bills cause more bankruptcies than anything else does. Millions of Americans are afraid to go to the hospital because they know that even a short visit would be a huge financial burden.
Sadly, our politicians in Washington D.C. continue to make the problem worse. Obamacare was one of the worst pieces of legislation that anyone has ever come up with in the history of the United States. You could put a thousand monkeys in a room with a thousand typewriters for a thousand years and they wouldn’t come up with anything as bad as Obamacare. Rather than doing something to address the abuses of the health insurance companies and the pharmaceutical corporations, Obamacare actually gives them more power. In fact, huge portions of Obamacare are virtually identical to a bill that was written by the health insurance trade association in 2009. Under Obamacare our health care costs will go up even faster and the quality of our health care will continue to go down. So please don’t try to tell me that Obamacare is the solution to anything.
The health care system in the United States is so broken that it probably cannot be repaired. The entire thing needs to be dismantled and completely reinvented.
If you doubt this, just check out the stats that I have compiled below.
As I put together this list of statistics, Business Insider proved to be a very valuable resource. In addition, I relied heavily on the following articles which I previously authored….
#2 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%.
#3 The United States spent 2.47 trillion dollars on health care in 2009. It is being projected that the U.S. will spend 4.5 trillion dollars on health care in 2019.
#4 One study found that approximately 41 percent of working age Americans either have medical bill problems or are currently paying off medical debt.
#5 According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States. Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance.
#6 Over the past decade, health insurance premiums have risen three times faster than wages have in the United States.
#7 The chairman of Aetna, the third largest health insurance company in the United States, brought in a staggering $68.7 million during 2010. Ron Williams exercised stock options that were worth approximately $50.3 million and he raked in an additional $18.4 million in wages and other forms of compensation. The funny thing is that he left the company and didn’t even work the whole year.
#8 The top executives at the five largest for-profit health insurance companies in the United States combined to receive nearly $200 million in total compensation for 2009.
#9 Even as the rest of the country struggled with a deep recession, U.S. health insurance companies increased their profits by 56 percent during 2009 alone.
#10 According to a report by Health Care for America Now, America’s five biggest for-profit health insurance companies ended 2009 with a combined profit of $12.2 billion.
#11 In the United States, health insurance administration expenses account for 8 percent of all health care costs. In Finland, that figure is just 2 percent.
#12 Health insurance rate increases are getting out of control. According to the Los Angeles Times, Blue Shield of California announced plans earlier this year to raise rates an average of 30% to 35%, and some individual policy holders were slated to see their health insurance premiums rise by up to 59 percent.
#13 According to an article on the Mother Jones website, health insurance premiums for small employers in the U.S. increased 180% between 1999 and 2009.
#14 Since 2003, health insurance companies have shelled out more than $42 million in state-level campaign contributions.
#17 Prescription drugs cost about 50% more in the United States than they do in other countries.
#18Nearly half of all Americans now use prescription drugs on a regular basis according to a CDC report that was recently released. According to the report, approximately one-third of all Americans use two or more pharmaceutical drugs, and more than ten percent of all Americans use five or more drugs on a regular basis.
#20 The Food and Drug Administration reported 1,742 prescription drug recalls in 2009, which was a gigantic increase from 426 drug recalls in 2008.
#21 Children in the United States are three times more likely to be prescribed antidepressants than children in Europe are.
#22 The percentage of women taking antidepressants in America is higher than in any other country in the world.
#23 Lawyers are certainly doing their part to contribute to soaring health care costs. According to one recent study, the medical liability system in the United States added approximately $55.6 billion to the cost of health care in 2008.
#24 According to one doctor interviewed by Fox News, “a gunshot wound to the head, chest or abdomen” will cost $13,000 at his hospital the moment the victim comes in the door, and then there will be significant additional charges depending on how bad the wound is.
#25 Why are c-sections on the rise? It is because a vaginal delivery costs approximately $5,992, while a c-section costs approximately $8,558.
#26 According to the CIA World Factbook, the United States had a higher infant mortality rate than 45 other nations in 2009.
#29 In fact, one trained medical billing advocate says that over 90 percent of all the medical bills that she has audited contain “gross overcharges“.
#30 It is not uncommon for insurance companies to get hospitals to knock their bills down by up to 95 percent, but if you are uninsured or you don’t know how the system works then you are out of luck.
#31 Over the last decade, the number of Americans without health insurance has risen from about 38 million to about 52 million.
#32 People living in the United States are three times more likely to have diabetes than people living in the United Kingdom.
#41 According to a PricewaterhouseCoopers report, “inefficient claims processing” costs the U.S. health care system 210 billion dollars every single year.
#42 Today, approximately 40% of all U.S. doctors are age 55 or older.
#43 According to the American Association of Medical Colleges, we were already going to be facing a shortage of more than 150,000 doctors over the next 15 years even before Obamacare was passed.
#44 An IBD/TIPP poll taken back in August 2009 found that 4 out of every 9 American doctors said that they “would consider leaving their practice or taking an early retirement” if Congress passed Obamacare.
#45According to a survey published in the New England Journal of Medicine, approximately one-third of all practicing physicians in the United States indicated that they may leave the medical profession because of the new health care law.
#46 According to a Merritt Hawkins survey of 2,379 doctors that was conducted in August 2010, 40 percent of all U.S. doctors plan to “retire, seek a nonclinical job in health care, or seek a job or business unrelated to health care” at some point over the next three years.
If this is supposed to be an “economic recovery” it sure is pathetic. In fact, as you will read below, the numbers tell us that this is the worst economic recovery that the American economy has ever seen. If what we had experienced was a “normal” recession and a “normal” recovery, then jobs, economic growth and home values would have come roaring back by now. But they haven’t. The Federal Reserve injected unprecedented amounts of new money into the system and the federal government went into unprecedented amounts of new debt, but all of that effort has not accomplished much. It did buy us a little bit of time and a period of relative economic stability, but now there are all kinds of signs that we are about to go into another recession (or something even worse). So is it really honest for Ben Bernanke and Barack Obama to be using the term “economic recovery” to describe what is happening?
The truth is that what is really taking place is that the long-term economic decline of the United States is beginning to accelerate.
But most Americans simply don’t understand what is going on.
The mainstream media teaches us to blame our politicians for the economy. One recent survey found that 44 percent of the American people believe that the U.S. economy is “worse than when Obama was inaugurated”.
Yes, Barack Obama is a horrible president. But the economic downfall of this nation is not all his fault. George W. Bush was a horrible president too. So was Bill Clinton. Congress has been corrupt and incompetent for decades.
Of course the institution that is most responsible for our economic problems is the Federal Reserve. Thankfully, more Americans than ever are starting to realize this.
But if you listen to Ben Bernanke and Barack Obama, you would think that a great “economic recovery” has begun. They would have us believe that they know exactly what our problems are and that they know exactly how to get us out of this mess.
Unfortunately, what we have experienced is not much of an “economic recovery” at all. According to the Wall Street Journal, this is the worst “recovery” from a recession that the U.S. economy has ever seen….
On economic growth, real GDP has risen 0.8% over the 13 quarters since the recession began, compared to an average increase of 9.9% in past recoveries. From the beginning of the recession to April 2011, real personal income has grown just .9% compared to 9.4% for the same period in previous post 1960 recessions.
So what is really going on?
Sadly, what we are experiencing right now is a brief period of stability in the middle of a downward spiral toward economic oblivion.
The CEO of Pimco, Mohamed El-Erian, says that it should now be obvious to everyone that all of the efforts of the U.S. government and the Federal Reserve to stimulate the economy simply have not been enough to solve the structural economic challenges that we are facing….
“It’s clear that the stimulus-induced recovery hasn’t overcome the structural challenges to large-scale job creation.”
The U.S. economy is not producing enough jobs. Today, there are 25 million Americans that are either unemployed or underemployed.
But the inability to create jobs is not a new phenomenon for the U.S. economy. The truth is that between 2000 and 2007, the U.S. economy had its poorest stretch of job creation since the Great Depression.
However, since 2007 the employment situation in this country has gotten a lot worse. Take a minute and watch the stunning video posted below. It shows how rampant unemployment swept across this country between 2007 and 2011….
Our politicians promised us that globalization would be great for the U.S. economy.
Well, it was great for the big corporations to be able to pay slave labor wages to workers on the other side of the globe, but things have not worked out so well for workers in this country.
Millions of our jobs have been lost. Millions more jobs are being lost. Yet our politicians do nothing to stop the bleeding.
Things have gotten so bad that even the top of the food chain is shipping jobs overseas.
If even jobs at Goldman Sachs are being sent out of the country, are any of our jobs safe?
Many Americans would love to start a business instead of having to work for someone else, but the economic environment has become incredibly toxic for small businesses in the United States.
The rate of new business creation in the United States has been declining steadily since the 1980s. Our politicians are literally choking the entrepreneurial spirit to death in this country.
Today, more Americans than ever are dependent on the government. In fact, it has gotten to the point where the U.S. economy itself is highly dependent on the government.
So what is going to happen when the government is not handing out so many goodies?
The era of rampant spending in Washington D.C. seems to be coming to an end, at least for now. The U.S. national debt has become so outrageous that many members of Congress are finally determined to start making some cuts.
While it is true that cutting government spending is long overdue, most Americans don’t realize that cutting government spending will also mean that “the economic sugar high” that we have been experiencing will start to wear off.
If we try to live within our means, that is going to cause a lot of economic pain, and the American people are not too good about making sacrifices these days.
Look, whoever is elected in 2012 is going to be in for a rough ride. Some very difficult economic times are ahead, and whoever is elected in 2012 is going to get blamed. By 2016, the president is probably going to be the most hated person in America.
But the truth is that these economic problems have been building for decades.
We didn’t get here by accident, and our economic problems are not going to be solved overnight.
In fact, many financial analysts are warning that they are about to get a lot worse.
For example, David Rosenberg of Gluskin Sheff says that there is a 99 percent chance that the U.S. will fall into another recession by the end of 2012.
As the economy continues to crumble, U.S. cities will become increasingly hostile places in which to live.
According to a recent Rasmussen Reports national telephone survey, 41 percent of Americans say that crime has increased where they live over the past year and only 6 percent of Americans say that crime has decreased where they live over the past year.
But just wait until the economy really collapses – that is when all hell will break loose.
In a recent article entitled “Is The Economy Improving?“, I quoted statistic after statistic that showed that the U.S. economy is actually continuing to decline.
The American people are starting to lose patience. In fact, people all over the country are starting to get more than a little crazy. For example, there is a now a national “epidemic” of people robbing pharmacies in order to get a hold of painkillers.
Pharmacists all over the country are being robbed at gunpoint. Some prescription painkillers will reportedly sell for as much as 80 dollars a pill on the street. As a recent article in the Washington Post noted, things are getting really dangerous out there for pharmacists….
“It’s an epidemic,” said Michael Fox, a pharmacist on New York’s Staten Island who has been stuck up twice in the last year. “These people are depraved. They’ll kill you.”
Armed robberies at pharmacies rose 81 percent between 2006 and 2010, from 380 to 686, the U.S. Drug Enforcement Administration says. The number of pills stolen went from 706,000 to 1.3 million. Thieves are overwhelmingly taking oxycodone painkillers like OxyContin or Roxicodone, or hydrocodone-based painkillers like Vicodin and Norco. Both narcotics are highly addictive.
Is the U.S. economy improving? That is what Federal Reserve Chairman Ben Bernanke would have us believe. Bernanke declared today that the “recovery appears to be proceeding at a moderate pace” and that everything is going pretty much as planned. Sadly, the mainstream media and most of the American people still seem to have faith in the economic pronouncements of Helicopter Ben. They seem to have forgotten all of the Bernanke quotes from before the financial crisis. Bernanke pledged that there would not be a housing crash and that there would not be a recession. It is amazing that anyone still believes that Bernanke has any credibility left.
Of course “economic recovery” is one of Barack Obama’s favorite new terms. He loves to talk about all of the signs that the economy is improving. To Obama, all of the recent bad economic news is no big deal. He says that what we are experiencing right now are simply “bumps on the road to recovery“.
Well, whether you want to call them “bumps” or “potholes” or “massive gaping wounds that are gushing blood all over the place”, the truth is that the U.S. economy is not improving at all. In fact, it is rapidly getting worse.
Let’s take a look at just a few areas of the economy….
Federal Government Finances
As I wrote about yesterday, the national debt is completely and totally out of control. Since Barack Obama took office, the U.S. national debt has increased by nearly 4 trillion dollars.
Keep in mind that from George Washington to Ronald Reagan, the U.S. government accumulated only 1 trillion dollars in debt.
Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.
Now the Democrats and the Republicans are busy negotiating over some modest reductions in spending.
But unprecedented federal spending is one of the only things propping the economy up right now.
If the U.S. economy is performing so poorly after being flooded with “stimulus money” from the federal government, what is going to happen once the federal government cuts back?
For the moment, let’s just focus on the state of Illinois.
Did you know that things have gotten so bad in Illinois at this point that the Illinois state government is letting bills go unpaid for long periods of time on a regular basis?
It’s true.
Right now they have billions in unpaid bills and they are facing a financial future that is so bleak that it is almost indescribable.
In one recent article, author Stephen Lendman described the horrific financial crisis that Illinois is facing right now….
With spending exceeding revenues, and obligations not postponed, unpaid bills are growing “at a frightening rate. For instance, IGPA’s Fiscal Futures Model indicates (they) could reach $40 billion by July 1, 2013, with an associated delay in paying those bills of more than five years.”
Besides its $13 billion deficit and $6 billion in unpaid bills, its pension fund is about $130 billion in the red – a red flag that state workers may lose out altogether, wiping out their promised retirement savings.
But it isn’t just the state government that is having problems. According to Cook County Treasurer Maria Pappas, the average household in Chicago would owe a whopping $63,525 if all local government debt was divided up equally among all of the households.
The truth is that even if the finances of the federal government could somehow be fixed, there would still be dozens and dozens of very significant “government debt problems” all across America.
With so many state and local governments drowning in debt, jobs are being slashed at an alarming rate. UBS Investment Research is projecting that state and local governments in the U.S. will combine to slash a whopping 450,000 jobs by the end of next year.
So would the U.S. government step in and start bailing out state and local governments?
Not likely.
U.S. Representative Paul Ryan has said the following about the prospect of bailing out the states….
“If we bail out one state, then all of the debt of all of the states are almost explicitly on the books of the federal government.”
So for now, state and local governments are on their own.
Commercial Real Estate
Commercial real estate continues to decline all across America.
Moody’s/REAL All Property Type Aggregate Index fell 3.7% in April and is now the lowest it has been in over 10 years.
Overall, commercial real estate is down by over 40 percent since the peak back in 2007.
Residential Real Estate
The United States is dealing with a housing crash that never seems to end.
According to the National Association of Realtors, existing home sales in the United States fell another 3.8% in May.
During this housing crash home values have declined more than they did during the Great Depression and there does not appear to be any hope in sight.
New home sales are in even worse shape. During the first three months of this year, less new homes were sold in the U.S. than in any three month period ever recorded.
Unemployment
As 2009 began, the official U.S. unemployment rate was 7.6 percent. Today it is 9.1 percent.
The American people keep waiting for a “jobs recovery”, but it has not shown up.
Sadly, all of this is part of a long-term trend.
Over the past decade, U.S. multinational corporations have been laying off millions of workers in the U.S. and hiring millions of workers overseas to take their place.
The labor of American workers is rapidly losing value in a globalized economy. Big corporations have a tough time justifying paying ten times more to a worker in the United States when they are allowed to hire people for slave labor wages overseas.
The share of the national income taken in by U.S. workers continues to decline. Just consider what Mortimer Zuckerman had to say in a recent article for usnews.com….
Labor’s share of national income has fallen to the lowest level in modern history, down to 57.5 percent in the first quarter as compared to 59.8 percent when the so-called recovery began. This reflects not only the 7 million fewer workers but the fact that wages for part-time workers now average $19,000—less than half the median income.
In the United States today, there are not nearly enough jobs for everyone. The number of “middle class jobs” has fallen by about 10 percent over the last decade.
Only 66.8% of American men had a job last year. That was the lowest level that has ever been recorded in all of U.S. history.
We are seeing the rise of a whole class of people that are chronically unemployed. At the beginning of 2009, the number of “long-term unemployed” in the United States was approximately 2.6 million. Today, that number is up to 6.2 million.
So in light of these employment statistics, can anyone really say that the economy is improving?
Economic Anxiety
The economy is the number one issue on the minds of the American people. There is an extraordinary about of economic pain out there today, and Americans are becoming impatient.
According to CNBC, the Money Anxiety Index is at its highest level in 30 years….
The latest indicator to ring up trouble is the Money Anxiety Index, which uses traditional economic metrics as well as other factors to gauge the level of consumers’ worry regarding their personal financial conditions.
According to the May figures, the MAI is not only at its highest level in 30 years at 91.9 but also two months away from indicating another dip into recession. In the past, five straight months of increases in the index often signaled recession.
Most recent polls show that the American people are rapidly becoming more pessimistic about the direction the U.S. economy is headed.
By making inflation appear lower, it would be easier for Congress to deny cost of living increases to those on Social Security and other social programs.
How sad is that?
Economic Suffering
As American families find it increasingly difficult to pay the mortgage and put food on the table, many of them find themselves forced to put off other expenses. According to one recent survey, 26 percent of Americans have put off doctor visits because of the economy.
Other Americans can’t make it at all without government assistance. As 2007 began, there were only 26 million Americans on food stamps. Today, there are more than 44 million Americans on food stamps, which is an all-time record.
It is not good to have so many Americans on food stamps, but it is probably better than the alternative.
If there were tens of millions of Americans that could not feed themselves we would probably already have economic riots in the streets.
Solutions?
So do our politicians have any solutions?
Of course not. Everything that they have tried has failed.
Several top Democrats in Washington D.C. are now calling for a new economic stimulus package. When in doubt, our politicians usually revert to spending more money.
Sadly, this is about the best that our economy is going to get.
What we are experiencing right now is “the recovery”. As we move forward things are going to get progressively worse.
A lot of people don’t like to hear that we are in the middle of a long-term economic decline, but that is the truth.
The era of tremendous economic prosperity for America is coming to an end.
Barack Obama has issued a brand new executive order that establishes a White House Rural Council. This Rural Council has been given the task of developing “public-private partnerships” that will seek to bring the “economic prosperity” of our big cities to rural America. In other words, the U.S. government and the big corporations are going to team up to dominate the economies of our small towns and rural communities just like they dominate the economies of all of our big cities. So should those that live in rural America be excited about this? After all, the U.S. government and the big corporations have done such a great job of bringing “economic prosperity” to places like Detroit, Michigan and Camden, New Jersey. Won’t it be great to have the federal government come in and tell rural communities how they should be doing things?
The chair of the White House Rural Council will be Agriculture Secretary Tom Vilsack. Vilsack is a former governor of Iowa and a Democrat. Swing states like Iowa will be key in 2012, and so perhaps Obama is trying to show that he really cares for middle America.
But it is really hard to forget the remarks that Obama made about rural Americans during the 2008 campaign.
In particular, the following quote about the “bitterness” of those living in rural America got a lot of attention at the time….
“And it’s not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”
Look, the vast majority of the people who live in rural America do not want to hear that they need to let go of their guns or their religion.
And most of them certainly do not want the federal government to come in and tell them how to run their local economies.
Though rural communities face numerous challenges, they also present enormous economic potential. The Federal Government has an important role to play in order to expand access to the capital necessary for economic growth, promote innovation, improve access to health care and education, and expand outdoor recreational activities on public lands.
To many Americans, all of this will sound really great. The federal government is going to come in and help the “backwoods folk” catch up with the rest of us. What could be wrong with that?
Well, the truth is that whenever the federal government gets its fingers into something it tends to really mess it up. Many of the biggest problems our country is facing today can be traced directly back to Washington D.C.
Many small towns and rural communities are doing just fine without the interference of the federal government. In fact, large numbers of Americans have purposely moved out to rural areas because they don’t want the interference of the federal government in their lives.
But according to this new executive order, the Obama administration plans to stick its itchy little fingers into just about every aspect of rural life. One of the stated goals of the White House Rural Council is to do the following….
coordinate and increase the effectiveness of Federal engagement with rural stakeholders, including agricultural organizations, small businesses, education and training institutions, health-care providers, telecommunications services providers, research and land grant institutions, law enforcement, State, local, and tribal governments, and nongovernmental organizations regarding the needs of rural America
This is yet another example of how we are rapidly becoming a centrally-planned economy.
Today, there are way too many Americans that expect the federal government to solve all their problems and take care of them from birth to death.
But that is not what our founding fathers intended, and our federal government has become so corrupt and so incompetent that it could not do those things even if we wanted it to.
Before the federal government “fixes” the problems of rural America, perhaps it should focus on “fixing” many of the other problems it has created first….
*Growing numbers of military veterans cannot find jobs once they leave the U.S. military. In fiscal 2008, the Pentagon spent $450 million on unemployment benefits for military vets. In fiscal 2010, the Pentagon spent almost twice as much – $882 million. According to the U.S. Bureau of Labor Statistics, the unemployment rate for military veterans between the ages of 18 and 24 is more than 30%.
*The housing collapse that the Federal Reserve and the U.S. government caused is a nightmare that never seems to end. According to the New York Times, at the current pace it will take 62 years for the banks to repossess all of the homes that are in severe default or foreclosure in the state of New York.
*The recent commodity price increases caused by the Federal Reserve have resulted in much higher prices at the gas pump and at the grocery store. These higher prices are hitting the poor and the lower middle class much harder than they are hitting the wealthy.
*The federal government has piled up the biggest debt in the history of the world and the U.S. dollar is dying. Standard & Poor’s has altered its outlook on U.S. government debt from “stable” to “negative” and is warning that the U.S. could soon lose its prized AAA rating. Russian presidential economic adviser Arkady Dvorkovich says that his nation is going to keep dumping U.S. government debt. China has been dumping U.S. government debt. The entire U.S. financial system is on the verge of financial collapse and the federal government seems to be powerless to make any meaningful changes.
But instead of fixing the glaring problems that are staring them directly in the face, the control freaks and the bureaucrats in Washington D.C. seem obsessed with figuring out more ways to interfere in our lives.
Over the past couple of months, bad economic news has been pouring in almost constantly. Our economy appears to be in danger of breaking apart. We are in the midst of a horrific economic crisis and nobody is sure what is going to happen next.
So please excuse the good folks of rural America if they are not in the mood to put up with federal government interference in their communities.
The federal government has failed so dramatically so many times before that it is really hard to have any faith that the federal government can do much of anything right at this point.
If you want to feel better about America, just spend some time in some of the really great small towns and rural communities that are scattered across this country. Over the past several days, that is exactly what I had the privilege to do. I have often written about how the “America” that so many of us love is fading away, but in many small towns throughout the United States that “America” is still very much alive. The truth is that there are millions of Americans that still place a tremendous amount of value on God, family and country. My wife and I are accustomed to big city ways, and so we were amazed at how friendly and how open the people that we encountered during our travels were. A lot of times the elitists that run this country look down their noses at those that live in rural communities and small towns, but the reality is that those are some of the greatest people this country has.
Did you know that there are still some Americans in 2011 that do not lock their homes or their cars?
It’s true – my wife and I met some of these people during our travels. They do not fear crime because very, very little crime ever happens where they live.
Of course if someone does try to rob them, let’s just say that the thieves would be in for some very unpleasant surprises.
My wife and I have also found that people in small towns are so much friendlier. Everywhere we went people were saying hello and were eager to get into conversations. We ended up talking with one hotel clerk for 15 to 20 minutes and he shared with us much of his life story. He was a real “salt of the earth” type of guy and it was interesting to hear his unique perspective on life. Every summer he makes jam and sells it in the hotel lobby and he encouraged us to stop by the next time we are in town to get some.
But he was not the only one that was extremely friendly. People were eager to talk to us and were genuinely interested in what we were doing wherever we went.
Also, people sure seemed to smile a whole lot more in these small towns. They just seemed happier.
This is so much different from what I have been used to. Most of my life I have lived either in or near big cities.
When I worked as a lawyer in Washington D.C., I took the metro to work every morning. Often the passengers were crammed into the metro cars like cattle, but most of the time there was absolutely no conversation among the passengers. Usually it was just dead silence all the way into D.C.
In fact, if you did try to strike up a conversation with someone it usually created an awkward moment.
The truth is that in most big cities there is an unwritten rule that you really aren’t even supposed to make eye contact with people. If someone tries to interact with you, it is usually because they want something from you.
So is living in a city with several million people really better than living in a town with only a few thousand people?
During our trip, my wife and I stopped in a little community store where they actually had cats for adoption scattered throughout the store. We also ventured into a pizza parlor that could have been straight out of the 1970s or 1980s. The floor of the pizzeria was a classic red and white checkerboard pattern and there was an old jukebox sitting in the corner. It was great.
Today most of our big box stores are so “corporate” and so “sterile” that something gets lost. When we eliminate the “human element” from everything the world becomes a colder place.
There are still places in America where people will take you at your word.
There are still places in America where people will invite you to stay with them even though they just met you.
There are still places in America where the air is clean, the people are authentically friendly and where the corporations don’t own all the businesses.
The other night my wife and I ordered some food at a “real” family restaurant and it was so much different from what we were used to.
Yes, the decor was a bit dated and the environment was not as “clinical” as you will find in most corporate-owned restaurants, but we had a great time.
I ordered some chicken, and when they brought it out it was not anything like the little bony pieces of chicken that they give you most places. I had probably the thickest chicken breast that I have ever seen. There was as much meat on that one chicken breast as there would be on five or six “tv dinner” chicken breasts.
So is small town life preferable?
Well, it is undeniable that living near a big city is much more convenient and most of the good jobs are in or near the big cities.
But as the economy collapses and as society becomes increasingly unstable, do you really want to find yourself in the middle of one of our urban areas?
This is a theme I have been talking about a lot recently. The following are just a few of the articles that I have put out about the breakdown of society in recent weeks….
It would be nice if things would calm down for a while, but that is just not happening.
In fact, what have we seen just this week?
A horrifying riot in Vancouver.
Aren’t Canadians supposed to be calmer than us?
You can see video of the shocking riots in Vancouver right here, or you can just view the video below….
Yes, there is nothing new about sports riots.
However, what is new is the level of the violence.
15 vehicles, including two police cruisers, were set on fire. Windows were smashed and stores were openly looted in front of television cameras. Police were pelted with rocks and debris. A huge section of the city of Vancouver turned into a war zone.
And for what?
A hockey game?
So what is going to happen someday when those people have real problems?
Part of preparing for hard times is evaluating where you live.
Do you really want to live smack dab in the middle of a major urban area if we do see major rioting in this country someday?
What happened in Vancouver this week was absolutely mindless.
But thankfully, while all of this was going on my wife and I were also reminded that there are still large numbers of really wonderful people out there too.
Small town America is alive and well. Yes, huge numbers of families are really struggling in this economic environment, but that does not mean that they have given up. They still believe in America and they still believe in each other.
Yes, an economic collapse is coming. But that doesn’t mean that all Americans are going to respond to it the same way. If you don’t have a lot of faith in the community where you currently live, you might want to take a closer look at some of the truly great small towns scattered throughout this country.
So many economists and financial pundits seem absolutely shocked that the U.S. economy is slowing down again. It is as if this latest wave of bad economic data has caught them completely by surprise. Now, in the mainstream media we are seeing all kinds of headlines declaring that the U.S. economy is headed for disaster. But anyone with half a brain could have seen this coming. This year alone, we have seen the worst tsunami in Japanese history, the worst U.S. tornado season in recent memory and the worst Mississippi River flooding in decades. In addition, chaos in the Middle East has pushed the price of oil up to very high levels. Of course all of those things were going to have an effect on the economy. In addition, all of the long-term trends that have been destroying the U.S. economy for decades have not been taken a breather. In fact, the truth is that all of our long-term economic problems have been accelerating. So yes, the sky is falling, it is time to panic and the U.S. economy really has fallen and it really can’t get up. It is just that everyone in the mainstream media seems to have believed that Ben Bernanke and Barack Obama would just sprinkle a bunch of fairy dust on the economy and everything would just magically get better. Well, in the real world things simply do not work that way.
Despite an unprecedented debt binge by the federal government and nightmarish money printing by the Federal Reserve, the economic downturn continues to drag on. Andrew Barber, a strategist at Waverly Advisors in Corning, New York recently told CNN the following….
“People are starting to see that this sort of malaise is not just going to go away no matter what you do.”
And “malaise” is a really good word for what we have been experiencing. For those that remember the late 1970s, what we are going through today is similar in a lot of ways.
In particular, we are starting to see some real signs of instability in the financial markets.
When Moody’s downgraded Greek debt again on Wednesday all the way down to Caa1, I was only moderately alarmed. The truth is that everyone knows Greece is a basket case so a debt downgrade wasn’t really all that surprising.
When Moody’s announced that it plans to review the U.S. government’s AAA debt rating “if there is no progress on increasing the statutory debt limit in coming weeks” that got the attention of a lot of people around the world, but it was not totally unexpected. Moody’s is telling Congress that they better raise the debt ceiling or else. A lot more pressure will be applied to Congress before this is over.
Do you all remember what set off the financial panic in 2008?
Do the names “Bear Stearns” and “Lehman Brothers” ring a bell?
Well, right now there are some frightening indications that we may see more trouble at some “too big to fail” institutions.
But will there be any willingness to do more bailouts this time?
Right now the financial markets are closely mirroring their performance just prior to the financial collapse of 2008. One great example of this is these charts which were recently posted by the Financial Armageddon blog. It looks like bank stocks may once again be leading the way down.
Hopefully the financial system can hold together and we won’t have a repeat of 2008 right now, because if it happens it is going to be really messy.
But even without a “financial collapse” we already have all of the economic problems that we can handle.
Robert Brusca, the chief economist at FAO Economics, is being quoted by CNN as saying the following….
“We’ve had a poor economic recovery to begin with, and now it appears to be segueing into an end.”
At this point, U.S. consumer confidence is already lower than it was back in September 2008 when Lehman Brothers collapsed. U.S. consumers are holding on to their money more tightly these days and that is not a good sign for an economy that is so highly dependent on consumer spending.
The latest manufacturing numbers have also been very distressing. Measures of manufacturing activity all over the world are indicating that we have now entered an economic slowdown. This is also similar to what we saw a few years ago.
We should all feel really bad for anyone that is entering the workforce right now. We are in the midst of graduation season, and the only thing that our new graduates have to look forward to is an economic crisis that never seems to end.
I feel sad for yet another year of graduates entering a horrible job market. I recently read, and I think it was in the mainstream media, that only half the 2010 college grads have found jobs of any kind, only half of those have found jobs requiring a college education, and that 85 percent of all grads moved right back in with their parents. The job growth rate is so low that we keep employing fewer and fewer people as a percentage of our adult population. Why isn’t that still a recession?
What a future our college graduates have to look forward to, eh? Moving back in with your parents, a crappy job (if you can find one) and a pile of student loan debt that will crush you financially for decades.
We are always told that “more education” is the answer, but even many of our most highly educated young people can’t find jobs. In fact, it turns out that a third of last year’s law school graduates aren’t even practicing law….
The law school class of 2010 is making news for all the wrong reasons. The budding legal minds who managed to find employment last year have set a new record–only 68.4 percent of them are in jobs that require them to pass the bar exam, the lowest share since the Association for Legal Professionals began collecting data.
Now it looks like the economy is going to starting heading downhill once again.
What is that going to do to the job market?
Last year, only 45.4% of Americans had jobs. That was the lowest figure since 1983.
In some states it was even worse than that. In states like California, Arizona and Mississippi only about 37 percent of people had a job last year.
The economic news just seems to get worse and worse and worse. The American people have been relatively calm over the past several years as they have waited for the promised “economic recovery”, but what do you think is going to happen if we have another major economic downturn and unemployment spikes back up by several more percentage points?
And what in the world can our “leaders” really do to “help” the economy if we do have a repeat of 2008?
We are already running trillion dollar deficits.
The Federal Reserve is already printing money like it is going out of style.
So what would their next moves be?
Most Americans have no idea how fragile our financial system and our economy really are.
Let us hope and pray that things can hold together for as long as possible, because when the next wave of the economic collapse happens it is going to be really, really messy.
As the U.S. economy starts to slow down once again, global financial markets are beginning to tremble. Over the past couple of weeks, all kinds of bad economic news has been pouring in. The ADP jobs report was a “disaster”, the housing numbers are dismal, manufacturing has slowed way down and consumer confidence is dropping like a rock. The Democrats and the Republicans are bickering over the debt ceiling and this is causing a lot of uncertainty as well. All of this bad news is starting to spook investors. On Wednesday, the Dow was down 279 points and the NASDAQ was down 65 points. It was the worst day of the year for the Dow, and many are wondering what is going to happen next if we see even more bad economic data. QE2 is slated to end at the end of the month, and already the bond markets seem to be anticipating QE3. If the U.S. economy enters another significant downturn during the second half of 2011, it seems quite likely that the Federal Reserve would attempt to do something to stimulate the economy and that would probably mean more money printing.
This article is essentially the second part to an article I wrote yesterday about how we are seeing warnings about the next financial collapse all over the place right now. Panic is building and a lot of investors are trying to figure out where to put their money. Suddenly everyone seems a whole lot less optimistic than they were a couple of months ago.
Michael Sheldon, the chief market strategist at RDM Financial, believes that all of the bad economic news we are seeing right now is clear evidence that we are entering an “economic slump”….
“Initially, we just had bad news from the weekly jobless claims data, but now we’re starting to see a broad-based economic slump.”
So what are some of the numbers that have investors so concerned?
Mike Riddell, a fund manager at M&G Investments in London, recently explained to CNBC why he is so alarmed right now….
“US house prices have fallen by more than 5 percent year on year, pending home sales have collapsed and existing home sales disappointed, the trend of improving jobless claims has arrested, first quarter GDP wasn’t revised upwards by the 0.4 percent forecast, durables goods orders shrank, manufacturing surveys from Philadelphia Fed, Richmond Fed and Chicago Fed were all very disappointing.”
The bad economic news just keeps rolling in. It is almost as if someone has slammed on the economic brakes.
The following are a few more examples of the bad economic numbers that have come out over the past couple of days….
*According to the latest ADP Employment Services report, private employers in the United States only added 38,000 jobs last month. That number had been expected to be somewhere around 175,000. This jobs report is being called a “disaster“.
*Manufacturing activity in May was much lower than most economists were projecting. The following is how CNBC described the newest numbers from ISM….
The Institute for Supply Management (ISM) said its index of national factory activity fell to 53.5 in May from 60.4 the month before. The reading missed economists’ expectations for 57.7.
*Moody’s downgraded Greek debt again on Wednesday, and stated that they believe that there is a 50/50 chance that Greece will default. This time Moody’s downgraded Greek debt by three levels all the way down to Caa1, and that caused the euro to fall like a rock.
To get an idea of just how imbalanced the European financial system has become at this point, just check out this article.
*As I mentioned yesterday, the consumer confidence index fell from 66 in April to 60.8 in May.
So what is causing all of this?
Well, the truth is that the “sugar high” that the U.S. economy has been enjoying is coming to an end.
QE2 is almost over and the vast majority of the federal “stimulus money” has been spent. Now the federal government is talking about getting spending under control and we are seeing austerity programs being implemented on the state and local level from coast to coast.
But without massive intervention by the Federal Reserve and by the U.S. government will the U.S. economy be able to stand?
Douglas Borthwick, a managing director with Faros Trading in Stamford, Connecticut is not optimistic….
“The sugar high that has buoyed the U.S. economy over the past six months is wearing out, and there is little in economic growth or foundation to show for it.”
The truth is that the Fed and the U.S. government went all-out in an attempt to keep the economy from falling into a total depression. The U.S. government has been running budget deficits well in excess of a trillion dollars and the Fed has been printing money like mad. If these measures are removed, the economic crisis we are experiencing might just get a whole lot worse.
How much worse?
Well, just check out what Peter Yastrow, a market strategist for Yastrow Origer, recently told CNBC….
“Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything,” Yastrow said. “We’re on the verge of a great, great depression. The [Federal Reserve] knows it.”
Ben Bernanke and Barack Obama keep talking about the “economic recovery” but most Americans know better.
According to one new poll, 66% of Americans believe that we are still in a recession.
Perhaps this is a sign that the American people are starting to wake up to the new economic realities that we are facing.
The U.S. economy is being ripped apart and shredded. Thanks to our short-sighted trade policies, the Chinese economy has roared to life while the U.S. economy continues to ship jobs and factories overseas.
But instead of facing up to our economic problems and coming up with some solutions, our nation has been on a horrific debt binge over the last couple of decades in a desperate attempt to maintain our standard of living.
One of the reasons why I pound on the economic news day after day is so that more people will really understand what is going on and will start to wake up.
Look, even Barack Obama says that the present state of affairs is “unsustainable” and that changes have to be made.
But if the U.S. government decided that it was going to go to a balanced budget tomorrow, that would suck approximately a trillion and a half dollars out of the economy.
What do you think would happen if that came to pass?
Of course by going into even more debt we are destroying the economic future of our children and our grandchildren.
We have piled up the biggest mountain of debt in the history of the world and we expect future generations to pay it off.
It is absolutely disgusting what we have done and it is thievery on the highest level.
Everyone knows that we are living in the greatest debt bubble in the history of the world and that at some point it is going to pop.
Perhaps the best we can hope for at this point is for a little bit more time before economic disaster strikes.
Unfortunately, all of the latest economic news seems to be pointing toward another economic slowdown.
Is the United States “number one”? Many Americans take deep pride in their nation and the truth is that the U.S. has a lot going for it. The United States has the largest economy in the world. The United States also has the most powerful military on the entire planet. The United States has produced most of the greatest movies that the world has ever seen. But the United States is also number one in a lot of categories that are not go great. If we ever want to turn this country around, we need to be very honest with ourselves. We need to take a long, hard look in the mirror and realize that it is not a good thing that we are number one in divorce, drug addiction, debt, obesity, car thefts, murders and total crimes. We have become a slothful, greedy, decadent nation that is exhibiting signs of advanced decay. Until we understand just how bad our problems really are, we won’t be able to come up with the solutions that we need.
Uh Oh – Italy Is Coming Apart Like A 20 Dollar Suit
What is going on in Italy right now is potentially far more serious than what has been going on in Greece. Italy is the fourth largest economy in the European Union. If Italy requires a bailout, the rest of Europe might not be able to handle it.
An anonymous European Central Bank source told one German newspaper the following on Sunday….
The source also added that the current bailout fund “was never designed for that“.
Italy has already implemented austerity measures.
This was not supposed to happen.
But it is happening.
This latest crisis was precipitated by a substantial sell-off of Italian financial assets on Friday. An article posted by Bloomberg described the pounding that the two largest Italian banks took….
Unfortunately, this is just the continuation of a trend that has been going on for a while.
When you look at them as a group, the stocks of the five largest Italian banks have lost 27% since the beginning of 2011.
That is not a good sign.
Also, investors are starting to dump Italian government debt. Reuters says that the yield on 10 year Italian bonds is approaching the danger zone….
The Italian national debt is now up to about 120 percent of GDP. The Italian government would be able to manage it if interest rates were very, very low. But unfortunately they are rising fast and if they get too much higher they are going to become suffocating.
As I have written about previously, government debt becomes very painful once you take low interest rates out of the equation. For example, if Greece could borrow all of the money that it wanted to borrow at zero percent interest, it would not have a debt problem. But now the yield on 2 year Greek bonds is over 30 percent, and there is not a government on the face of the earth that can afford to pay interest that high for long.
Unfortunately for Italy, this could just be the beginning of rising interest rates. Just recently, Moody’s warned that it may be forced to downgrade Italy’s Aa2 debt rating at some point within the next couple of months.
If things continue to unravel in Italy, all of the credit agencies may downgrade Italy sooner rather than later.
The frightening thing about Italy is that a financial crisis has a way of exposing corruption, and there are very few countries that can match the kind of corruption that goes on in Italy.
As a child, I had the chance to live in Italy. I love Italy. The people are friendly, the weather is great, the architecture is amazing and the food is spectacular. I will always have great affection for Italy and I will always cheer for the Italian national team when the World Cup rolls around.
However, I also know that corruption is deeply ingrained into Italian culture. It is simply a way of life.
Just check out the prime minister of Italy. Silvio Berlusconi is the consummate Italian politician. He is greatly loved by many, but it would take days to detail all of the scandals that he has been linked to.
At this point, Berlusconi has become a parody of himself. Each new sex scandal or financial scandal just adds to his legend. Italy is one of the only nations in Europe where such a corrupt politician could have stayed in office for so long.
Not that the U.S. government is much better. Our government becomes more corrupt with each passing year.
But the point is that if a financial collapse happens in Italy and people start “turning over rocks” it could turn up all sorts of icky stuff.
So what is Europe going to do if Italy needs a bailout?
Well, they are probably going to have to fire up the printing presses because it would probably take a whole lot more euros than they have right now.
The truth is that the EU has now entered a permanent financial crisis. You have a whole bunch of nations that have accumulated unsustainable debts and that cannot print their own currencies. The financial system of the EU as it is currently constructed simply does not work.
Some believe that the sovereign debt crisis will eventually cause the breakup of the EU. Others believe that this crisis will cause it to be reformed and become much more integrated.
In any event, what just about everyone can agree on is that the financial problems of Europe are not going away any time soon. For now, EU officials are keeping all of the balls in the air, but if at some point the juggling act falters, the rest of the world better look out.
A financial crash in Europe would be felt in every nation on earth and it would be absolutely devastating. Let’s hope that we still have some more time before it happens.