If you thought that 2011 was a bad year for the world economy, just wait until you see what happens in 2012. The U.S. and Europe are both dealing with unprecedented debt problems, the financial markets are flailing about wildly, austerity programs are being implemented all over the globe, prices on basics such as food are soaring and a lot of consumers are flat out scared right now. Many analysts now fear that a “perfect storm” could be brewing and that we could actually be headed for an economic apocalypse in 2012. Hopefully that will not happen. Hopefully our leaders can keep the global economy from completely falling apart. But right now, things don’t look good. After a period of relative stability, things are starting to become unglued once again. The next major financial panic could literally happen at any time. Sadly, if we do see an economic apocalypse in 2012, it won’t be the wealthy that suffer the most. It will be the poor, the unemployed, the homeless and the hungry that feel the most pain.
The following are 20 signs that we could be headed for an economic apocalypse in 2012….
#1 Back in 2008 we saw major rioting around the world due to soaring food prices, and now global food prices are on the rise again. Global food prices in July were 33 percent higher than they were one year ago. Price increases for staples such as maize (up 84 percent), sugar (up 62 percent) and wheat (up 55 percent) are absolutely devastating poverty-stricken communities all over the planet. For example, one expert is warning that 800,000 children living in the Horn of Africa could die during this current famine.
#2 The producer price index in the U.S. has increased at an annual rate of at least 7.0% for the last three months in a row. We are starting to see huge price increases all over the place. For example, Starbucks recently jacked up the price of a bag of coffee by 17 percent. If inflation keeps accelerating like this we could be facing some very serious problems by the time 2012 rolls around.
#3 The U.S. “Misery Index” (unemployment plus inflation) recently hit a 28 year high and many believe that it is going to go much, much higher.
#4 Jared Bernstein, the former chief economist for Vice President Joe Biden, says that the unemployment rate in this country will not go below 8% before the 2012 election. In fact, Bernstein says that “the most optimistic forecast would be for about eight-and-a-half percent.”
#5 Working class jobs in the United States continue to disappear at an alarming rate. Back in 1967, 97 percent of men with a high school degree between the ages of 30 and 50 had jobs. Today, that figure is 76 percent.
#6 There are all kinds of indications that U.S. economic growth is about to slow down even further. For example, pre-orders for Christmas toys from China are way down this year.
#7 One recent survey found that 9 out of 10 U.S. workers do not expect their wages to keep up with the rising cost of basics such as food and gasoline over the next year.
#8 U.S. consumer confidence is now at its lowest level in 30 years.
#9 Today, an all-time record 45.8 million Americans are on food stamps. It is almost inconceivable that the largest economy on earth could have so many people dependent on the government for food.
#10 As the economy crumbles, we are also witnessing the fabric of society beginning to come apart. The recent flash mob crimes that we are starting to see all over America are just one example of this.
#11 Some desperate Americans are already stealing anything that they can get their hands on. For example, according to the American Kennel Club, dog thefts are up 32 percent this year.
#12 Small businesses all over the United States are having a really difficult time getting loans right now. Perhaps if the Federal Reserve was not paying banks not to make loans things would be different.
#13 The U.S. national debt is like a giant boulder that our economy must constantly carry around on its back, and it is growing by billions of dollars every single day. Right now the debt of the federal government is $14,592,242,215,641.90. It has gone up by nearly 4 trillion dollars since Barack Obama took office. S&P has already stripped the U.S. of its AAA credit rating, and more downgrades are certain to come if the U.S. does not get its act together.
#14 Tensions between the United States and China are rising again. A new opinion piece on chinadaily.com is calling for the Chinese government to use its holdings of U.S. debt as a “financial weapon” against the United States if the U.S. follows through with a plan to sell more arms to Taiwan. The U.S. and China are the two biggest economies in the world, so any trouble between them would mean economic trouble for the rest of the globe as well.
#15 Most state and local governments in the U.S. are deep in debt and flat broke. Many of them are slashing jobs at a feverish pace. According to the Center on Budget and Policy Priorities, state and local governments have eliminated more than half a million jobs since August 2008. UBS Investment Research is projecting that state and local governments in the U.S. will cut 450,000 more jobs by the end of 2012. How those jobs will be replaced is anyone’s guess.
#16 The U.S. dollar continues to get weaker and weaker. This is renewing calls for a new global currency to be created to replace the U.S. dollar as the reserve currency of the world.
#17 The European sovereign debt crisis continues to get worse. Countries like Portugal, Italy and Greece are on the verge of an economic apocalypse. All of the financial problems in Europe are even beginning to affect the core European nations. For example, German industrial production declined by 1.1% in June. There are all kinds of signs that the economy of Europe is slowing down and is heading for a recession. French President Nicolas Sarkozy and German Chancellor Angela Merkel are proposing that a new “economic government” for Europe be set up to oversee this debt crisis, but nothing that the Europeans have tried so far has done much to solve things.
#18 The Federal Reserve is so desperate to bring some sort of stability to financial markets that it has stated that it will likely keep interest rates near zero all the way until mid-2013. The Federal Reserve is operating in “panic mode” almost constantly now and they are almost out of ammunition. So what is going to happen when the real trouble starts?
#19 Central banks around the world certainly seem to be preparing for something. According to the World Gold Council, central banks around the globe purchased more gold during the first half of 2011 than they did all of last year.
#20 Often perception very much influences reality. One recent survey found that 48 percent of Americans believe that it is likely that another great Depression will begin within the next 12 months. If people expect that a depression is coming and they quit spending money that actually increases the chance that an economic downturn will occur.
There is already a tremendous amount of economic pain on the streets of America, but unfortunately it looks like things may get even worse in 2012.
The once great economic machine that was handed down to us by our forefathers is falling to pieces all around us and we are in debt up to our eyeballs. The consequences of our bad economic decisions are hurting some of the most vulnerable members of our society the most.
As the following video shows, large numbers of formerly middle class Americans are now living in their cars or sleeping in the streets….
It is a crying shame what is happening out there on the streets of America today.
Please say a prayer for all of those that are sleeping in cars or tents or under bridges tonight.
Tonight millions of American families will shovel huge piles of food into their mouths without even realizing that starvation is rapidly spreading in Africa. Right now Somalia, Ethiopia and Kenya are experiencing the worst drought conditions that they have seen in 60 years. Tens of thousands of African families have abandoned their homes as they desperately search for food and water. Hundreds of thousands of farm animals have died because of the drought. Considering the fact that approximately two-thirds of the people living in the region “make their living by raising goats, sheep, cattle and camels“, the word “catastrophic” just is not sufficient to describe what is happening. Every single day, thousands more head to Dadaab, the biggest refugee camp in the world. Dadaab was originally designed to hold 90,000 people, but now over 360,000 precious people are camped there. In addition, approximately 30,000 desperately hungry people are standing outside the fences waiting to be admitted. It is projected that by the end of the year there will be over a half million people living in Dadaab. Sadly, this is just the beginning. According to the United Nations, there are already 10 million people in the region that are facing severe food shortages, and many fear that if the drought continues we could actually see mass starvation in Africa in 2012.
Hopefully the world will be very generous as they hear about what is happening in the Horn of Africa. But the truth is that food is getting tight all over the globe. Last summer an unprecedented heat wave caused Russia to put restrictions on the export of wheat. Some of the key agricultural areas of China, Pakistan, Brazil and Australia have experienced unprecedented flooding over the past 12 months. Natural disasters have hit U.S. crops hard in many states as well. Crop diseases such as UG99 wheat rust continue to spread. The world continues to lose topsoil at an alarming rate. Things simply do not look promising.
Meanwhile, the price of oil has absolutely soared over the past year. The methods that we use to produce and transport our food take a lot of oil. If the price of oil continues to climb that is going to make it very hard to feed the entire planet.
Most Americans have no idea how desperate things are becoming in many areas of the globe already. Just check out what a recent article in The Guardian had to say about the situation at Dadaab….
Every day 1,000 Somalis stream across the Kenyan border to Dadaab, which is full to bursting with 367,000 people and already constitutes the largest refugee settlement in the world. They arrive malnourished and dehydrated but – after a walk lasting weeks – grateful that they have made it to a point where they will get food and water.
Sometimes words alone are not enough to convey an accurate picture of what is really going on. Take a couple of moments to watch the video posted below. Imagine if you and your family had to go to a camp like this….
Sadly, the suffering is not limited to one refugee camp. There are millions of Africans that are now in danger of starvation.
A recent article in The Telegraph described how bad things are getting in parts of Somalia, Ethiopia, Kenya, Djibouti and Uganda….
“Two consecutive poor rainy seasons have resulted in one of the driest years since 1950/51 in many pastoral zones,” Elisabeth Byrs, spokeswoman of the UN Office for the Co-ordination of Humanitarian Affairs, said. “There is no likelihood of improvement [in the situation] until 2012,” she added.
A lot of these people don’t have any money. If aid was not rolling in from elsewhere they would be dropping dead all over the place.
Food prices are rising so quickly in these areas that it is becoming difficult for anyone to be able to afford to buy food.
“For example, yellow maize prices in the Ethiopian Jiiga grain market had risen by 117 per cent from May 2010 to May 2011, while white maize at the Mandera market in Kenya had risen by nearly 60 per cent.”
In some areas of the Horn of Africa we are starting to see food riots. For example, the following is a very brief excerpt from a recent Reuters report….
Kenyan police fired tear gas to disperse people protesting in the capital on Thursday against high food and fuel prices and a shortage of maize which has enraged many in east Africa’s biggest economy.
When people cannot even feed themselves they have nothing left to lose.
Today, there are approximately two billion people that spend more than half of their income on food.
So what are they supposed to do when the price of food doubles?
Are they supposed to spend every penny they have just on food?
Most Americans have no idea what it is like to have to scratch and claw just to survive each day.
There are hundreds of millions of people around the globe that are engaged in a desperate struggle to survive.
Meanwhile, the speculators and the big Wall Street banks feel no guilt at all when they drive up the price of food in order to make a few extra bucks.
Look, the truth is that what we are seeing in Africa right now is just the beginning.
When the global economy crashes, things are going to get a lot worse.
Right now a significant percentage of the global population can barely afford to buy enough food to eat. Most people do not realize this, but when the global financial system totally collapses there is a very real possibility that we could see mass starvation.
The following are 12 signs that the world is running out of food….
#2 Over the past year, the global price of food has risen by 37 percent.
#3 Just about every major agricultural commodity has been skyrocketing in price. Check out what a recent Bloomberg article had to say about what has been happening to many key agricultural commodities over the past year….
Corn futures advanced 77 percent in the past 12 months in Chicago trading, a global benchmark, rice gained 39 percent and sugar jumped 64 percent. There will be shortages in corn, wheat, soybeans, coffee and cocoa this year or next, according to Utrecht, Netherlands-based Rabobank Groep. Prices also rose after droughts and floods from Australia to Canada ruined crops last year. European farmers are now contending with their driest growing season in more than three decades.
#4 According to the World Bank, 44 million more people around the globe have been pushed into extreme poverty since last June because of rising food prices.
#5 Sadly, rising food prices is not a new trend. According to the UN Food and Agriculture Organization, the global price of food has gone up by 240% since 2004.
#6 To a large extent, this global food crisis has been brought on by the greed of the wealthy. A study by the World Institute for Development Economics Research discovered that the bottom half of the world population owns approximately 1 percent of all global wealth.
#7 The average income per person in the poorest countries on the continent of Africa has fallen by one-fourth over the past twenty years.
#8 It is estimated that over 80 percent of the world’s population lives in countries where the income gap between the rich and the poor is widening.
#9 Approximately 1 billion people throughout the world go to bed hungry every single night.
#10 Every 3.6 seconds someone starves to death and three-quarters of them are children under the age of 5.
#11 It is estimated that the entire continent of Africa only owns approximately 1 percent of the total wealth of the world.
#12 According to the most recent “Global Wealth Report” by Credit Suisse, the wealthiest 0.5% of the global population controls over 35% of all the wealth on the planet.
Those of us that live in wealthy countries have it really good.
We get to shovel huge amounts of food into our faces whenever we want.
But eventually things are going to change for us as well.
Global food supplies are getting really tight. If something does not change we are going to have some real problems.
“We’ve got to do something or we’re going to have no food at any price at times in the next few years.”
We all saw what happened during the aftermath of Hurricane Katrina and during the aftermath of the tsunami in Japan. When a major crisis occurs, food can disappear from store shelves overnight.
Global stockpiles of corn, the most-consumed grain, are forecast to drop to 47 days of use, the fewest since 1974, data from the U.S. Department of Agriculture show. Inventories are declining as demand continues to outstrip production that’s forecast to rise to a fifth consecutive year of record.
Most Americans simply do not understand how close we potentially are to a major global food crisis.
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.
Are you familiar with Robert Kiyosaki? He is best known for the “Rich Dad, Poor Dad” series of books. Over 26 million books authored by Kiyosaki have been sold and he is recognized as a financial expert by millions of people across the globe. Well, guess what? Even Robert Kiyosaki is warning that an economic collapse is coming. In fact, Kiyosaki and his team of financial experts are encouraging Americans to stock up on food, guns and precious metals. This is yet another sign of just how close we are to the total collapse of the U.S. Economy. Kiyosaki, who once co-authored a book with Donald Trump entitled “Why We Want You To Be Rich” is now a full-fledged prepper. As even more prominent Americans start warning that an “economic collapse” is coming do you think that the American people will finally wake up and start paying attention?
The statements that Robert Kiyosaki makes in the video posted below are absolutely jaw-dropping. Once upon a time he was all about teaching people how they could get rich, but now he is talking about storing food, buying guns, investing in precious metals and preparing for the coming crash.
The following are 11 of the best Kiyosaki “sound bites” from the video below….
#1 “when the economy crashes as we predict”
#2 “the crowds come rushing in to buy gold and silver”
#3 “we could either go into a depression or we go to hyperinflation”
#4 “or we could also go to war”
#5 “buy a gun”
#6 “I’m preparing”
#7 “I’m prepared for the worst”
#8 “so come to my house and I’m armed and dangerous and I’ll welcome you”
#9 “we have food, we have water, we have guns, gold and silver, and cash”
#10 “the credit card system shuts down, the world shuts down”
#11 “the supermarkets have less than 3 days supply”
If you have not seen this video yet, it is definitely worth the 8 minutes that it takes to watch it. Robert Kiyosaki seems to be extremely alarmed about the future of the U.S. economy….
It certainly seems as though the entire financial culture in America is changing.
Once upon a time everyone wanted to know how to get rich.
Now everyone wants to know how to survive the collapse that is coming.
As I have written about previously, even people like Tony Robbins and Donald Trump are warning that an economic collapse is coming.
Economic pessimism is seemingly everywhere and almost every recent survey indicates that the American people are losing faith in the U.S. economy.
For example, in a recent article I noted that 48 percent of Americans believe that it is likely that another great Depression will begin within the next 12 months.
According to Gallup, the percentage of Americans that lack confidence in U.S. banks is now at an all-time high of 36%. Back in 2007, just 14% of Americans lacked confidence in U.S. banks.
In order for society to function correctly, people need to be able to trust each other and they need to be able to trust the major institutions that hold society together.
Once confidence in our major societal institutions is gone, it is going to be incredibly difficult to get it back.
Sadly, the reality is that many of our major financial institutions have been untrustworthy for a very long time. It is just that the American people are only just now starting to wake up to that fact.
For example, the Federal Reserve has been at the heart of our economic problems for decades but most Americans have not realized it.
But now that is starting to change. According to one recent poll, only 30% of Americans currently view Federal Reserve Chairman Ben Bernanke favorably.
The American people are becoming increasingly dissatisfied with an economic system where the vast majority of the rewards flow to Wall Street, the big banks, the biggest corporations and the ultra-wealthy.
According to the Washington Post, the top 0.1% of all income earners in the United States took home 2.6% of the nation’s earnings in 1975. By 2008, the top 0.1% were taking home 10.4% of the nation’s earnings.
The Washington Post also says that after adjusting for inflation, the average income of the top 0.1% of all Americans jumped by 385 percent between 1970 and 2008 while the average income for the bottom 90 percent of all Americans actually fell by one percent.
The sad truth is that income inequality in the United States has become a major problem. A very small sliver of the population is reaping almost all of the rewards and the middle class is being ripped to shreds. Conservatives, liberals, Democrats, Republicans and libertarians should all be alarmed by this.
Meanwhile, the national debt continues to explode. Right now, U.S. government debt is expanding at a rate of $40,000 per second.
Every single minute we steal another 2 million dollars away from our children and our grandchildren.
But if we stop this theft it would throw the U.S. economy into a horrible economic crisis that would be far worse than what we are experiencing right now.
That is why the vast majority of our politicians do not have the guts to do it.
We truly are caught between a rock and a hard place.
But people like Robert Kiyosaki can see what is coming, and they are getting prepared.
Are you prepared?
Many of our young people have come up with their own versions of an “economic stimulus plan”. In past articles I have documented many of the signs that society is collapsing, including the disturbing rise of the “mob robbery” phenomenon.
Well, just the other day there was another very shocking mob robbery in the city of Philadelphia.
The U.S. economy is like a rubber band that is being pulled in several different directions at the same time. Everyone knows that at some point it is going to snap, but nobody is quite sure exactly when it is going to happen. Right now, the state of the economy is not good, and it is going to get a whole lot worse. Sadly, most Americans don’t even understand the economic fundamentals well enough to be able to ask the right questions to our politicians. Today, the United States consumes far more wealth than it produces every single month. That means we are continually getting poorer. U.S. debt is also rising at a far greater rate than U.S. GDP is. On an individual level, if your assets were going down every single month and if you were going into more debt every single single month it would be easy to understand what was happening. However, most Americans can’t really seem to grasp what is taking place on a national level. Our politicians and the mainstream media just keep telling them that everything is going to be okay and they just keep believing it.
These days our leaders are resorting to increasingly desperate measures in order to help revive the economy. On Thursday, Barack Obama decided to release 30 million barrels of oil from the U.S. strategic oil reserve.
Yes, that will drive down oil prices for a few days, but what is going to happen someday if we actually need to use that strategic oil reserve?
But in many ways you can’t blame Obama for trying. He desperately wants to get reelected and he knows that his campaign will be highly dependent on the state of the economy. Look for Obama to pull out all the stops as we get closer to the fall of 2012.
Sadly, the truth is that it almost does not matter what the Democrats or the Republicans do at this point. The long-term trends are so powerful now that it would take a miracle to reverse them. We are facing an “economic tsunami” that is just going to keep on destroying middle class America.
If you went to a store today, and there were two somewhat similar products sitting on the shelf and one cost ten times more than the other one, which one would you buy?
Well, that is the situation facing American workers today. They have been pushed into one giant globalized labor pool, but big corporations are allowed to pay workers on the other side of the globe slave labor wages. It costs ten times more (at least) to hire a blue collar American worker than it does to hire a blue collar worker in most areas of Asia.
As a result of the globalization of labor, we have seen a mass exodus of jobs out of the United States, and wages for many of the jobs that remain have been significantly depressed.
There simply are not nearly enough jobs for all Americans at this point.
Recent college grads are finding this out. A new study that was conducted by Rutgers University discovered that over 30 percent of all those that graduated from college between 2006 and 2010 were not able to get a job within six months of graduation.
But unemployment is only part of the story. There are millions upon millions of Americans that are “underemployed” today.
There are hordes of highly educated, hard working Americans that are working temporary or part-time jobs at close to minimum wage because that is all they can get.
With good jobs being so scarce, American families are finding it more difficult than ever to make ends meet.
One recent survey found that 9 out of 10 U.S. workers do not expect their wages to keep up with the rising cost of basics such as food and gasoline over the next year.
I talked about the rising cost of food in my recent article entitled “Why Are Food Prices Rising So Fast?” Today, one out of every seven Americans is already on food stamps, and if the cost of living keeps rising this quickly we are going to see millions more of our fellow citizens clamoring for government assistance.
The decline of the American consumer is having other effects as well.
For example, pre-orders for Christmas toys from China are way down.
It looks like this holiday season is not going to be as “merry” as usual.
It would be nice if we could say that the economy is improving, but that simply is not the case.
American households are in a far different place than they were prior to the recent recession.
For example, did you know that home values in the United States have plummeted $6.6 trillion since the peak back in 2007?
U.S. homeowners have taken the brunt of that decline. According to the Federal Reserve, average home equity has fallen from 61 percent in 2001 to 38 percent in the first quarter of 2011.
That is a colossal shift.
If U.S. homeowners only own 38 percent of their homes, then who owns the rest?
The banks do.
Doesn’t that just make you feel all warm and fuzzy inside?
Health care is another area where American families are getting squeezed.
“There’s a lot of emotion in this market at the moment, and the conversations among traders are nearly all leaning toward the bear side”
As the financial system spins out of control, the Federal Reserve is increasing the number of workers that it is “embedding” at the big Wall Street banks.
I guess the Fed wants to keep a closer eye on things as they come crashing down.
Sadly, so much of this would be much easier to fix if our nation was not drowning in debt.
Since Barack Obama was elected, the national debt has increased by nearly 4 trillion dollars. If you and I went out today and started repaying that 4 trillion dollars at a rate of one dollar per second, it would take over 120,000 years to do it.
Most Americans have a hard time comprehending these kinds of numbers. Janet Tavakoli tried to put our debt situation into perspective in her latest column….
David Walker, the former U.S. comptroller general, says it’s even worse than that. When he takes into account future obligations for Medicare, Social Security, Federal debt, Military retirement, Civil servant retirement, and more, we owe $546,663 per household. That doesn’t even include your local debt — it may not be as bad as if you lived in Illinois, but it’s substantial nonetheless — and personal debt including mortgages and consumer debt that average more than $120,000 per household.
But you don’t have to toss wild numbers around to get an idea of how much trouble we are in.
As I have written about recently, there is increasing evidence all around us that the collapse of society is accelerating. We are seeing disturbing reports of civil unrest pop up all over the U.S. at an alarming rate.
According to a CBS affiliate in Chicago, earlier this week approximately 50 young people conducted a shocking mob robbery of a drug store located on the Magnificent Mile in Chicago….
Some 50 young people barged into a Walgreens at Michigan and Chicago on the Magnificent Mile on Tuesday afternoon. They took bottled drinks and sandwiches off the shelves, then ran off, CBS 2′s Suzanne Le Mignot reports.
When large groups of young people get together and agree to commit crimes that should be a huge red flag for all of us.
We are a nation that is deeply, deeply divided. Hatred is growing and the love of most Americans is growing cold.
As I have written about previously on “The American Dream“, the American people are actually encouraged to hate one another these days….
The truth is that the “establishment” is constantly trying to divide us and get us fighting with one another. They pit the Republicans against the Democrats (even as though control both sides). They pit one race against another. They pit one gender against another. We are told that the rich are against the poor, the north is against the south, urban is against rural and that there are even “generational battles” going on. Frustration and hate are rapidly growing in the United States today, and a lot of that frustration and hate is unfortunately aimed at the targets that the mainstream media has programmed all of us to hate. Meanwhile, those at the top of the pyramid who are controlling the whole game love it when we are divided because we can never become united and challenge their control.
We need to come together as a nation. If we don’t, we are going to face an unprecedented nightmare when the economy collapses.
So what do you think about the state of the economy? Please feel free to leave a comment with your opinion below….
If you do much grocery shopping, you have probably noticed that the cost of food has been rising at a very brisk pace over the past year. So why are food prices rising so fast? According to Federal Reserve Chairman Ben Bernanke, inflation is still very low and the economy is improving. So what is going on here? When I go to the grocery store these days, there are very few things that I will buy unless they are on sale. In fact, I have noticed that many of the new “sale prices” are the old regular prices. Other items have had their packages reduced in size in order to hide the price increases. But with millions of American families just barely scraping by as it is, what is going to happen if food prices keep rising this rapidly?
The food prices are especially painful if you are trying to eat healthy. Most of the low price stuff in the grocery stores is garbage. Eating the “typical American diet” is a highway to cancer, heart disease and diabetes.
But if you try to stick to food that is “healthy” or “organic” you can blow through hundreds of dollars in a heartbeat. In fact, the reality is that tens of millions of American families have now essentially been priced out of a healthy diet.
Soon there will be millions more American families that will not even be able to afford an unhealthy diet.
Some recent statistics compiled by the Bureau of Labor Statistics are absolutely staggering. According to a recent CNBC article, over the past year many of the most popular foods in America have absolutely soared in price….
Coffee, for instance, is up 40 percent. Celery is 28 percent higher while butter prices rose 26.4 percent. Rounding out the top five are bacon, at 23.5 percent, and cabbage, at 23.3 percent.
Unfortunately, it looks like the trend of rising food prices is accelerating. Just look at what the CNBC article says happened in the month of April alone….
Just in April—the most recent month for which data is available—grapes went up nearly 30 percent, cabbage jumped about 17 percent and orange juice surged more than 5 percent.
Meat is becoming more expensive as well. Since March 2009, livestock prices have risen by 138%.
So when Ben Bernanke tells us that inflation is very low, that really is a lie. On the stuff that people spend money on every day (like food and gas), prices have gone up dramatically.
Sadly, this is not just a phenomenon that is happening in the United States. The truth is that the entire planet is rapidly approaching a horrific global food crisis.
Over the past year, the global price of food has risen by 37 percent and this has pushed approximately 44 million more people around the world into poverty.
When food prices rise in the U.S. it may be painful for millions of American families, but around the world a rise in food prices can mean the difference between surviving and not surviving.
That is why it has been so alarming that the global price of wheat has approximately doubled over the past year.
But it is not just wheat that has been soaring. Check out what a recent Bloomberg article had to say about what has been happening to many key agricultural commodities over the past year….
Corn futures advanced 77 percent in the past 12 months in Chicago trading, a global benchmark, rice gained 39 percent and sugar jumped 64 percent. There will be shortages in corn, wheat, soybeans, coffee and cocoa this year or next, according to Utrecht, Netherlands-based Rabobank Groep. Prices also rose after droughts and floods from Australia to Canada ruined crops last year. European farmers are now contending with their driest growing season in more than three decades.
Even before this recent spike in food prices the world was struggling to get enough food to everybody. It has been estimated that somewhere in the world someone starves to death every 3.6 seconds, and 75 percent of those are children under the age of five.
So what is going to happen if food prices keep on rising at the current pace?
That is a very good question.
We really are starting to move into unprecedented territory. Nobody is quite sure what is going to happen next.
So why is all of this happening?
Well, a lot of people are blaming the Federal Reserve. All of the “quantitative easing” that the Fed has done has flooded the financial markets with money. All of that money had to go somewhere. Much of it has pumped up the prices of hard assets such as oil, gold and agricultural commodities.
But it is not just the Fed that is to blame. The truth is that central banks all over the world have been recklessly printing money.
When the amount of money in an economy goes up, the purchasing value of all existing money goes down. In the United States, that means that your dollars will not go as far as they did before.
But it is not just monetary policy that is affecting food prices. In 2010 and 2011 we have seen an unprecedented wave of natural disasters and crazy weather. This has caused problems with crops all over the globe.
In addition, U.S. economic policies are also playing a role. At this point, almost a third of all corn grown in the United States is used for fuel. This is putting a lot of stress on the price of corn.
Also, there are some long-term trends that are not in our favor. For example, the systematic depletion of the Ogallala Aquifer could eventually turn “America’s Breadbasket” back into the “Dust Bowl”. If you have not heard of this problem I would encourage you to do some research on it.
Things are going to get a lot worse, but already America is having a really hard time feeding itself. According to Feeding America’s 2010 hunger study, more than 37 million Americans are now being served by food pantries and soup kitchens.
So is that number unusual?
Yes, it sure is.
The number of Americans that are going to food pantries and soup kitchens has increased by 46% since 2006.
That is not a good trend.
Another stat that I talk a lot about in this column is the number of Americans on food stamps.
Right now, there are 44 million Americans on food stamps. Nearly half of them are children.
How did we ever get to the point as a nation where more than 20 million children end up on food stamps?
It is estimated that one out of every four American children is currently on food stamps, and it is being projected that approximately 50 percent of all U.S. children will be on food stamps at some point in their lives before they reach the age of 18.
So what is going to happen if the economy gets even worse?
What is going to happen if there really is a major food crisis in this country someday?
Food prices have been going up for decades and they are going to continue to go up. But the frightening thing is how fast they are increasing now.
As the U.S. middle class continues to be destroyed, the number of Americans that can’t afford to buy enough food is going to continue to rise. Food prices are rising much faster than wages are, and that is not likely to change any time soon.
Food is rapidly becoming one of the most important global economic issues of this decade. The farther one looks down the road, the bleaker things look for the global food situation.
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.
Do you believe that the U.S. economy is steamrolling toward a depression? If so, you are not alone. According to a recent CNN poll, 48 percent of Americans believe that “another Great Depression” is likely within the next 12 months. Americans have been waiting for almost three years for a “recovery” to materialize, but instead there are all kinds of signs that the economy is about to get worse yet again. Inflation is rising but wages are not. There are millions of Americans that would do just about anything to get a decent job. The “misery index” is the highest it has been in almost 30 years. All of the recent polls show that the American people are more pessimistic about the economy than at any other time in recent memory. World financial markets are incredibly unstable right now and many analysts are expecting a repeat of 2008 (or worse). Meanwhile, our state and local governments are drowning in debt, the federal government is drowning in debt and governments all over Europe are drowning in debt. No, it is not crazy for 48 percent of Americans to believe that we are about to go into another Great Depression.
Just think about that statistic for a moment. Nearly half of the country expects the economy to fall to pieces at some point over the next year.
So do I agree with them?
Yes, I certainly believe that an economic collapse is coming. But that doesn’t mean that it will necessarily happen within the next year. The United States is in the midst of a long-term economic decline, and the next big financial crisis could potentially happen in 2011 or 2012.
But it might not.
There are so many variables and it is so hard to predict with certainty the exact timing of how things will play out.
However, it is true that incredibly painful economic times are coming. Our long-term economic future looks unbelievably bleak.
So anyone that believes that we are headed for another depression is certainly not crazy. The following are 19 reasons why it is perfectly rational to be pessimistic about the U.S. economy right now….
#1 Today, 25 million Americans are either unemployed or underemployed. 6 million of those have been out of work for at least 6 months. The average duration of unemployment in the U.S. is now close to 40 weeks.
#2 The unofficial misery index, which is calculated by combining unemployment and inflation, is now at a 28 year high.
#3 Sadly, if unemployment and inflation were calculated the same way that they were back in the 1970s, the misery index would actually be much, much higher. According to John Williams of Shadow Government Statistics, the current “real” rate of inflation is approximately 11.2% instead of the 3.6% figure that the U.S. government wants us to believe.
#4 Greece is on the verge of complete and total financial collapse. The yield on two year Greek bonds is up to 28 percent. The European Central Bank and the German government have been fighting over what to do to solve the Greek crisis. The truth is that without a bailout the Greek government will default. If Greece defaults, it would be a huge nightmare for world financial markets.
#5 Neil MacKinnon, an analyst at VTB Capital, is warning that a Greek implosion could set off a 2008-style financial crisis….
“The risk of a ‘Lehman moment’ for the eurozone is increasing”
#6 Spain is also potentially a major problem. The Spanish economy is more than twice the size of the Greek, Irish and Portuguese economies combined. Over the past 12 months, the yield on 10 year Spanish bonds has been rising steadily, and many believe that Spain could be the tipping point that pushes the sovereign debt crisis in Europe over the edge.
#7 State and local governments all over the United States are cutting their budgets and are implementing brutal austerity measures. For example, one small town in Alabama has actually decided that they are simply going to stop paying pension benefits to their retirees. In other areas, teachers and police officers are being fired in massive numbers. 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.
#8 The middle class in the United States is being systematically ripped to shreds. The poorest 50% of all Americans collectively own just 2.5% of all the wealth in the United States at this point.
#9 It is never a good sign when even the big Wall Street banks start laying off workers. CNBC is reporting that Goldman Sachs, Morgan Stanley and many other big firms on Wall Street are planning some large staff reductions in the months ahead. That is a very bad sign for the economy.
#10 Things have gotten so bad that some mainstream media outlets are actually encouraging Americans to go out and start racking up credit card debt once again. For example, one recent USA Today article was actually entitled “More credit card debt might be good for the economy“. Of course the big banks are ready to suck the lifeblood out of anyone that does slip up on making their credit card payments. One major bank has announced that a single late payment could result in a penalty rate as high as 29.99%.
#11 According to the Bureau of Labor Statistics, the share of national income being taken home by American workers is at a post-war low and is rapidly declining.
#12Reuters is reporting that many of Wall Street’s biggest banks plan to cut their use of U.S. Treasuries starting in August. China has already been dumping short-term U.S. debt. But if most of the big players abandon the market, who is going to buy up the massive amounts of debt that the U.S. government needs to issue?
“At some point, the pain of high unemployment may lead to some new thinking in Washington – but until that time, welcome to the second Great Depression”
#14 The U.S. banking system could plunge into disaster at any moment. The FDIC is backing up 7 trillion dollars in deposits with an insurance fund that barely has anything in it.
#15 It seems like almost everyone is talking about the next financial collapse. Renowned investor Jim Rogers recently said the following….
“I would expect to see some serious problems in the foreseeable future….By 2011, 2012, 2013, 2013, I don’t know when, we’re going to have an economic slowdown again.”
There is definitely going to be another financial crisis around the corner,” says hedge fund legend Mark Mobius, “because we haven’t solved any of the things that caused the previous crisis.”
#17 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. It is clearly unsustainable for our debt to be growing so much faster than our economy is.
“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.”
#19 The American people are extremely pessimistic about the economy right now. According to one recent poll, 56 percent of Americans have lost sleep due to the economy and about three-quarters of Americans believe that the nation is on the wrong track.
The nation is in a very sour mood right now, and this is causing even many in the mainstream media to ask some very hard questions.
For example, Jack Cafferty recently asked the following question to viewers on CNN….
“What are the chances the U.S. economy could eventually trigger violence in our country?”
You can view the video of Cafferty asking this question right here or you can just watch it below….
Sadly, we are already starting to see violence erupt all over North America.
In previous articles I have discussed the insanity that has been going on in major U.S. cities such as Chicago.
Now even the mainstream media is being forced to report on the surge in violence.
A recent USA Today article described some of the most recent mob robberies that have been happening in Chicago….
A Chicago Tribune report tells of a 68-year-old man from Washington State who was set upon while he was smoking a cigar on a bench when youths surrounded him, attacked him and reportedly stole a phone and iPad. The report says a 42-year-old Japanese tourist also was beaten and robbed on a bicycle path by the lakefront. The paper says seven were arrested, but that the group participating in the felonies was estimated at 15 to 20 people strong. One 20something suburbanite told Chicago’s WGN TV that he was hit so hard in the head with a baseball that it knocked his motorcycle helmet off. he managed to fight his way out of trouble and hail police, he said.
When people don’t have hope, they get desperate.
There are millions of other Americans that are suffering through this economy quietly.
There are so many people out there that have worked hard and have followed all the rules and yet now find themselves struggling just to survive.
For example, a reader named Carolyn recently left a comment in which she shared her story with my readers….
My husband lost his long-term job in 2009 due to budget cuts. Don’t worry, I said. I’m still working, and we have a year of our salary in savings. You’re smart, you’re educated, you’re a hard worker. You’ll find a job soon.
Two months later, my long-term job was sent to India.
I still wasn’t worried. I’m smart, I’m educated, and I’m a smart worker.
A year and a half later, I haven’t found new career yet. I’m 50. No one is going to hire me. I am working – at a Home Depot. At a 79% pay cut from my prior position. But it doesn’t pay for anything. My husband found a new position in his field – at a 62% pay cut from his prior position.
We lived off unemployment and our savings, until both ran out. We put our house and investment property on the market the day after I lost my job.
We haven’t had one offer.
We just had our Chapter 7 bankruptcy discharged. Our foreclosure is still pending. No word yet when that will be done.
To add insult to injury, we owe Federal income taxes on the penalties we used to make withdrawals from our 401(k)’s to live off. My husband took a job in another state, and we were SHOCKED to learn that we owed NEW YORK STATE taxes on the income he earned in Mississippi – to New York state! Apparently there is some loophole that if you are a property owner in New York, but earn income in another state, you have to pay New York state income taxes on out of state earned income.
We’ve been told once our foreclosure is finalized, we may owe taxes on that as well.
What happened to our country?
It is so sad to see what is happening to America.
Things are so hard out there for so many millions of American families right now.
But the truth is that things are much better at the moment than they will be in a few years.
So what is America going to look like when there is no doubt that the economy has collapsed and people have no hope at all?
Well, it’s official. U.S. stock prices have fallen for six weeks in a row. So will next week make it seven? The last time stocks declined for seven weeks in a row was back in May 2001 when the “dot-com” bubble was bursting. At this point, the Dow has declined by approximately 5 percent since the beginning of June. Things don’t look good. So exactly what is going on here? Well, it is undeniable that the recent mini-bubble in stocks has been too good to be true. The S&P 500 had surged nearly 30 percent since last September. Much of this has been fueled by the Federal Reserve’s latest round of quantitative easing, but now that is coming to an end in a few weeks and investors are a bit spooked. Meanwhile, wars and revolutions are sweeping the Middle East, Japan is dealing with the damage caused by the tsunami and by Fukushima, Europe is trying to figure out how to bail out Greece again and the U.S. debt crisis is continually getting worse. In addition, wave after wave of bad economic news is certainly not helping the mood on Wall Street. In many ways, a “perfect storm” is developing and many are now extremely concerned about what the rest of 2011 is going to bring for Wall Street.
QE2 is slated to conclude at the end of June, and many investors are deeply disappointed that it does not appear that we are not going to see QE3 right away. Many fear that the end of quantitative easing will pop the current mini-bubble in stocks and commodities. At the moment, financial markets are more jittery than they have been in a long time.
“There’s a lot of emotion in this market at the moment, and the conversations among traders are nearly all leaning toward the bear side”
So what are some of the signs that this downturn on Wall Street may turn into a full-blown crash?
Well, according to the Wall Street Journal, junk bonds are being sold off at an alarming rate right now. Does the following quote from the Journal remind anyone of 2008 at least a little bit?….
A steep decline in prices of bonds backed by subprime mortgages has spread through the riskiest segments of the credit markets, ending rallies in high-yield corporate bonds and commercial real-estate debt.
Also, many of the big Wall Street banks are already laying off workers. In a previous article I wrote about the potential for Wall Street to go into “panic mode“, I noted that Goldman Sachs, Bank of America, JPMorgan Chase and Morgan Stanley are all laying people off or are considering staff cuts.
The truth is that the big banks on Wall Street are not nearly as stable as most people think that they are. Moody’s recently warned that it may downgrade the debt ratings of Bank of America, Citigroup and Wells Fargo.
Another major story on Wall Street right now is oil. OPEC recently announced that oil production levels will not be raised, even though the price of oil has been hovering around $100 a barrel.
World oil supplies are very tight right now. In fact, the globe actually consumed 5 million barrels per day more oil than it produced during 2010. This was possible because the difference was apparently made up by drawing down reserves.
But if oil supplies are this tight already, what is going to happen if a major war (as opposed to all of the minor wars that are already happening) erupts in the Middle East?
The world is sitting on the edge of a financial disaster.
It is important to keep in mind that Europe is also in far worse financial condition than it was just prior to the financial collapse of 2008.
It is being reported that German finance minister Wolfgang Schaeuble is convinced that a “full-blown” financial meltdown by Greece is a very real possibility. The cost of insuring Greek debt has soared to a brand new record high, and officials all over Europe are in panic mode.
But financial problems are not just happening in Greece. The largest bank in France has just cut in half the amount of cash that customers can withdraw from ATMs each week.
Most Americans don’t spend much time thinking about the financial condition of Europe, but the truth is that what happens in Europe is going to play a major role in the months and years ahead.
Of course most Americans already know that the U.S. government is a financial mess.
As the “debt ceiling deadline” of August 2nd draws closer, the U.S. government has been raiding retirement funds in order to stay under the debt limit.
Many investors are quite nervous about what may happen if the U.S. government actually does start defaulting on debt on August 2nd.
Others claim that the U.S. government is already in default.
The only Chinese agency that gives credit ratings on sovereign debt says that the U.S. government “has already been defaulting” and the Chinese government has been repeatedly warning that the U.S. needs to get its finances in order.
In any event, this debt ceiling drama will get resolved one way or another.
The bigger question is this….
How is the U.S. government going to respond when the next financial crash happens?
Back in 2008, the Federal Reserve and the U.S. government took unprecedented steps to prop up Wall Street.
But can they really do that again if we see another major crash in 2011 or 2012?
Many believe that things will be totally different this time around. Just check out what Jim Rogers recently told CNBC….
“The debts that are in this country are skyrocketing,” he said. “In the last three years the government has spent staggering amounts of money and the Federal Reserve is taking on staggering amounts of debt.
“When the problems arise next time…what are they going to do? They can’t quadruple the debt again. They cannot print that much more money. It’s gonna be worse the next time around.”
Jim Rogers is right about that.
The next time we see a collapse on the scale of 2008 it is going to be a much bigger mess.
Global financial markets are extremely vulnerable right now and there are a whole host of potential “tipping points” which could push them over the edge.
The Federal Reserve and the U.S. government more or less used up all of their ammunition on the 2008 crisis.
If we see another collapse in 2011 or 2012 there is not going to be much of a safety net available.
The entire world financial system is simply swamped with way too much debt. The world has never seen anything even remotely close to the gigantic mountains of debt that have been accumulated around the world today.
The current global financial system is not sustainable. More crashes are inevitable. A lot of people are going to get steamrolled.
If you thought that 2011 was a bad year for the world economy, just wait until you see what happens in 2012. The U.S. and Europe are both dealing with unprecedented debt problems, the financial markets are flailing about wildly, austerity programs are being implemented all over the globe, prices on basics such as food are soaring and a lot of consumers are flat out scared right now. Many analysts now fear that a “perfect storm” could be brewing and that we could actually be headed for an economic apocalypse in 2012. Hopefully that will not happen. Hopefully our leaders can keep the global economy from completely falling apart. But right now, things don’t look good. After a period of relative stability, things are starting to become unglued once again. The next major financial panic could literally happen at any time. Sadly, if we do see an economic apocalypse in 2012, it won’t be the wealthy that suffer the most. It will be the poor, the unemployed, the homeless and the hungry that feel the most pain.
Economic Recovery?
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….
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….
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.
Just consider this recent headline which appeared in Business Insider: “Goldman Sachs Is Firing Employees In The US So It Can Hire 1,000 In Singapore”
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….
But this is what our country is turning into.
We are a nation of addicts.
Our national addiction to debt and our national addiction to greed have brought us to the brink of economic disaster.
If you are waiting for an “economic recovery”, you should stop waiting.
This is about as good as things are going to get.
From here on out, things are just going to keep going downhill.
Most Americans are going to be absolutely blindsided by the economic collapse that is coming.
But that doesn’t have to be you.
You still have some time to get prepared.