New DVDs By Michael Snyder
|
 Today there is a horrific derivatives bubble that threatens to destroy not only the U.S. economy but the entire world financial system as well, but unfortunately the vast majority of people do not understand it. When you say the word “derivatives” to most Americans, they have no idea what you are talking about. In fact, even most members of the U.S. Congress don’t really seem to understand them. But you don’t have to get into all the technicalities to understand the bigger picture. Basically, derivatives are financial instruments whose value depends upon or is derived from the price of something else. A derivative has no underlying value of its own. It is essentially a side bet. Originally, derivatives were mostly used to hedge risk and to offset the possibility of taking losses. But today it has gone way, way beyond that. Today the world financial system has become a gigantic casino where insanely large bets are made on anything and everything that you can possibly imagine.
The derivatives market is almost entirely unregulated and in recent years it has ballooned to such enormous proportions that it is almost hard to believe. Today, the worldwide derivatives market is approximately 20 times the size of the entire global economy.
Because derivatives are so unregulated, nobody knows for certain exactly what the total value of all the derivatives worldwide is, but low estimates put it around 600 trillion dollars and high estimates put it at around 1.5 quadrillion dollars.
Do you know how large one quadrillion is?
Counting at one dollar per second, it would take 32 million years to count to one quadrillion.
If you want to attempt it, you might want to get started right now.
To put that in perspective, the gross domestic product of the United States is only about 14 trillion dollars.
In fact, the total market cap of all major global stock markets is only about 30 trillion dollars.
So when you are talking about 1.5 quadrillion dollars, you are talking about an amount of money that is almost inconceivable.
So what is going to happen when this insanely large derivatives bubble pops?
Well, the truth is that the danger that we face from derivatives is so great that Warren Buffet has called them “financial weapons of mass destruction”.
Unfortunately, he is not exaggerating.
It would be hard to understate the financial devastation that we could potentially be facing.
A number of years back, French President Jacques Chirac referred to derivatives as “financial AIDS”.
The reality is that when this bubble pops there won’t be enough money in the entire world to fix it.
But ignorance is bliss, and most people simply do not understand these complex financial instruments enough to be worried about them.
Unfortunately, just because most of us do not understand the danger does not mean that the danger has been eliminated.
In a recent column, Dr. Jerome Corsi of WorldNetDaily noted that even many institutional investors have gotten sucked into investing in derivatives without even understanding the incredible risk they were facing….
A key problem with derivatives is that in the attempt to reduce costs or prevent losses, institutional investors typically accepted complex risks that carried little-understood liabilities widely disproportionate to any potential savings the derivatives contract may have initially obtained.
The hedge-fund and derivatives markets are so highly complex and technical that even many top economists and investment-banking professionals don’t fully understand them.
Moreover, both the hedge-fund and the derivatives markets are almost totally unregulated, either by the U.S. government or by any other government worldwide.
Most Americans don’t realize it, but derivatives played a major role in the financial crisis of 2007 and 2008.
Do you remember how AIG was constantly in the news for a while there?
Well, they weren’t in financial trouble because they had written a bunch of bad insurance policies.
What had happened is that a subsidiary of AIG had lost more than $18 billion on Credit Default Swaps (derivatives) it had written, and additional losses from derivatives were on the way which could have caused the complete collapse of the insurance giant.
So the U.S. government stepped in and bailed them out – all at U.S. taxpayer expense of course.
But the AIG incident was actually quite small compared to what could be coming. The derivatives market has become so monolithic that even a relatively minor imbalance in the global economy could set off a chain reaction that would have devastating consequences.
In his recent article on derivatives, Webster Tarpley described the central role that derivatives now play in our financial system….
Far from being some arcane or marginal activity, financial derivatives have come to represent the principal business of the financier oligarchy in Wall Street, the City of London, Frankfurt, and other money centers. A concerted effort has been made by politicians and the news media to hide and camouflage the central role played by derivative speculation in the economic disasters of recent years. Journalists and public relations types have done everything possible to avoid even mentioning derivatives, coining phrases like “toxic assets,” “exotic instruments,” and – most notably – “troubled assets,” as in Troubled Assets Relief Program or TARP, aka the monstrous $800 billion bailout of Wall Street speculators which was enacted in October 2008 with the support of Bush, Henry Paulson, John McCain, Sarah Palin, and the Obama Democrats.
But wasn’t the financial reform law that Congress just passed supposed to fix all this?
Well, the truth is that you simply cannot “fix” a 1.5 quadrillion dollar problem, but yes, the financial reform law was supposed to put some new restrictions on derivatives.
And initially, there were some somewhat significant reforms contained in the bill. But after the vast horde of Wall Street lobbyists in Washington got done doing their thing, the derivatives reforms were almost completely and totally neutered.
So the rampant casino gambling continues and everybody on Wall Street is happy.
For now.
One day some event will happen which will cause a sudden shift in world financial markets and trillions of dollars of losses in derivatives will create a tsunami that will bring the entire house of cards down.
All of the money in the world will not be enough to bail out the financial system when that day arrives.
The truth is that we should have never allowed world financial markets to become a giant casino.
But we did.
Soon enough we will all pay the price, and when that disastrous day comes, most Americans will still not understand what is happening.
 As the first of the 80 million Baby Boomers have begun to retire, it has become increasingly apparent that the United States is facing a pension crisis of unprecedented magnitude. State and local government pension plans are woefully underfunded, dozens of large corporate pension plans either have collapsed or are on the verge of collapsing, Social Security is a complete and total financial disaster and about half of all Americans essentially have nothing saved up for retirement. So yes, to say that we are facing a retirement crisis would be a tremendous understatement. There is simply no way that we can keep all of the financial promises that we have made to the Baby Boomer generation. Unfortunately, the crumbling U.S. economy simply cannot support the comfortable retirement of tens of millions of elderly Americans any longer. The truth is that we are all going to have to start fundamentally changing the way that we think about our golden years.
Once upon a time, you could count on getting a big, fat pension if you put 30 years into a job. But now pension plans everywhere are failing. State and local governments are cutting back and are raising retirement ages. A majority of Americans have even lost faith in the Social Security system, which was supposed to be the most secure of them all.
The reality is that we are moving into a time when there is not going to be such a thing as “financial security” as we have known it in the past. Things have fundamentally changed, and we are all going to have to struggle to stay above water in the economic nightmare that is coming.
Part of the reason we have such a gigantic economic mess on the way is because we have promised vastly more than we can deliver to future retirees. When you closely examine the numbers, it quickly becomes clear that a financial tsunami is about to hit us that is going to be so devastating that it will change everything that we know about retirement.
The following are 22 statistics about America’s coming pension crisis that will make you lose sleep at night….
Private Pension Plans And Retirement Funds
1 – One recent study found that America’s 100 largest corporate pension plans were underfunded by $217 billion at the end of 2008.
2 – Approximately half of all workers in the United States have less than $2000 saved up for retirement.
3 – According to one recent survey, 36 percent of Americans say that they don’t contribute anything at all to retirement savings.
4 – The Pension Benefit Guaranty Corporation says that the number of pensions at risk inside failing companies more than tripled during the recession.
5 – According to another recent survey, 24% of U.S. workers admit that they have postponed their planned retirement age at least once during the past year.
State And Local Government Pensions
6– Pension consultant Girard Miller recently told California’s Little Hoover Commission that state and local government bodies in the state of California have $325 billion in combined unfunded pension liabilities. When you break that down, it comes to $22,000 for every single working adult in California.
7 – According to a recent report from Stanford University, California’s three biggest pension funds are as much as $500 billion short of meeting future retiree benefit obligations.
8 – In New Jersey, the governor has proposed not making the state’s entire $3 billion contribution to its pension funds because of the state’s $11 billion budget deficit.
9 – It has been reported that the $33.7 billion Illinois Teachers Retirement System is 61% underfunded and is on the verge of total collapse.
10 – The state of Illinois recently raised its retirement age to 67 and capped the salary on which public pensions are figured.
11 – The state of Virginia is requiring employees to pay into the state pension fund for the first time ever.
12 – In New York City, annual pension contributions have increased sixfold in the past decade alone and are now so large that they would be able to finance entire new police and fire departments.
13– Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern’s Kellogg School of Management recently calculated the combined pension liability for all 50 U.S. states. What they found was that the 50 states are collectively facing $5.17 trillion in pension obligations, but they only have $1.94 trillion set aside in state pension funds. That is a difference of 3.2 trillion dollars.
Social Security
14 – According to one recently conducted poll, 6 out of every 10 non-retirees in the United States believe that the Social Security system will not be able to pay them benefits when they stop working.
15 – A very large percentage of the federal budget is made up of entitlement programs such as Social Security and Medicare that cannot be reduced without a change in the law. Approximately 57 percent of Barack Obama’s 3.8 trillion dollar budget for 2011 consists of direct payments to individual Americans or is money that is spent on their behalf.
16 – 35% of Americans over the age of 65 rely almost entirely on Social Security payments alone.
17 – According to the Congressional Budget Office, the Social Security system will pay out more in benefits than it receives in payroll taxes in 2010. That was not supposed to happen until at least 2016. The Social Security deficits are projected to get increasingly worse in the years ahead.
18 – 56 percent of current retirees believe that the U.S. government will eventually cut their Social Security benefits.
19 – In 1950, each retiree’s Social Security benefit was paid for by 16 U.S. workers. In 2010, each retiree’s Social Security benefit is paid for by approximately 3.3 U.S. workers. By 2025, it is projected that there will be approximately two U.S. workers for each retiree.
20 – The shortfall in entitlement programs in the years ahead is mind blowing. The present value of projected scheduled benefits surpasses earmarked revenues for entitlement programs such as Social Security and Medicare by about 46 trillion dollars over the next 75 years.
21 – According to a recent U.S. government report, soaring interest costs on the U.S. national debt plus rapidly escalating spending on entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every single dollar of federal revenue by the year 2019. That is before a single dollar is spent on anything else.
22 – Right now, interest on the U.S. national debt and spending on entitlement programs like Social Security and Medicare is somewhere in the neighborhood of 15 percent of GDP. By 2080, those combined expenditures are projected to eat up approximately 50 percent of GDP.
 Ever since the beginning of this nation, Americans have always been able to take for granted that there would always be plenty of fresh water. But unfortunately that is rapidly changing. Due to pollution, corruption, inefficiency and the never ending greed of the global elite, the United States (and the entire world) is heading for a very serious water shortage. Already, there are some areas of the United States where water is the number one local political issue. In fact, water is becoming so scarce in certain areas that some states are actually battling in court over it. Unfortunately, there is every indication that the worldwide water crisis is about to get a lot worse.
According to a new report released by the Natural Resources Defense Council, more than one-third of all counties in the lower 48 states will likely be facing very serious water shortages by 2050. That is just 40 years away. As water becomes more scarce and as big global corporations lock up available supplies, the price of water is almost certainly going to skyrocket. This will put even more economic pressure on average Americans.
And Americans certainly do use a lot of water. According to CBS News, the average American uses 150 gallons of water per day, while residents of the U.K. only use 40 gallons per day and residents of China use just 22 gallons per day.
In fact, a five minute shower by an American uses more water than a typical person living in poverty in a developing country uses in an entire day.
For hundreds of years, North America has been blessed with an overabundance of fresh water, but those supplies are quickly running dry.
In fact, there are some scientists who are now wondering if we might actually see a return of the “Dust Bowl” days. The Ogallala Aquifer, a massive underground lake that stretches from southern South Dakota to northern Texas, is being drained at a staggering pace, and that means that the Great Plains could soon turn into the Great American Desert.
If the breadbasket of America were to dry up, what would that mean for the future of this nation?
But it is not just the Great Plains that is on the verge of a major water crisis.
The following is an excerpt from an article that I authored recently for another website….
—–
*The number of states facing a water crisis is now far greater than the number of states without one. In fact, a total of 36 states face severe water shortages in the next three years.
*A federal judge recently ruled that Georgia has few legal rights to Lake Lanier – the main water supply for Atlanta. With 2 million more residents expected to move into Atlanta over the next couple of decades, officials there are scrambling to try to figure out how in the world everyone is going to be able to have enough water.
*In Texas, farmers and ranchers were absolutely devastated in 2009 as the ongoing drought cost the agricultural sector billions of dollars.
*Every single day Arizona and parts of New Mexico use 300 million gallons more water than they get in renewable supply.
*Lake Mead is the primary supply of water for the city of Las Vegas. But since 1998, Lake Mead’s capacity has plunged by more than 50 percent– down 5.6 trillion gallons. Nobody is quite sure how Las Vegas is going to continue to have enough water.
*The water crisis became so serious in California this past year that Barack Obama actually requested that California Governor Arnold Schwarzenegger call state lawmakers into a special session just to deal with the situation.
*Other states are so concerned about the national water crisis that they are determined to hold on to the supplies that they have. In fact, 8 states surrounding the Great Lakes have signed a pact banning the export of water to outsiders – even to other U.S. states.
—–
The truth is that fresh water is very rapidly becoming one of the most valuable commodities in the world. All over the globe, big global corporations are gobbling up water rights as fast as they can.
Why?
Well, the truth is that the world is on the verge of a water shortage of unprecedented magnitude….
*Worldwide demand for fresh water tripled during the last century, and is now doubling every 21 years.
*According to USAID, one-third of all humans will face severe or chronic water shortages by the year 2025.
*Of the 60 million people added to the world’s cities every year, the vast majority of them live in impoverished slums and shanty-towns with no sanitation facilities whatsoever.
*It is estimated that 75 percent of India’s surface water is now contaminated by human and agricultural waste.
*Not only that, but according to a UN study on sanitation, far more people in India have access to a mobile phone than to a toilet.
*In northern China, the water table is dropping one meter per year due to overpumping.
*But there are few places where the water shortage is as severe as it is in the Middle East. Saudi Arabia had been producing enough wheat to be self-sufficient for most of the past 30 years, but in 2008 authorities there realized that the non-replenishable aquifer they had been pumping for irrigation purposes was nearly depleted. So in response Saudi Arabia made the decision to reduce their wheat harvest by one-eighth every year thereafter. Wheat production in Saudi Arabia is scheduled to cease entirely in 2016.
The truth is that it would be very difficult to understate just how bad the world water crisis is becoming.
The following is a list of mind blowing facts about the world’s water crisis that respected water expert Maude Barlow shares during her presentations….
-Every eight seconds a child dies from drinking dirty water.
-A new desert the size of Rhode Island is created in China because of drought every single year.
-In the developing world, 90% of waste water is discharged completely untreated into local rivers.
-By the year 2050, 1.7 billion people will live in “dire water poverty” and will be forced to relocate.
-Half of the world’s hospital beds are occupied by people who have contracted waterborne diseases.
-The World Health Organization says contaminated water is the cause of 80% of all sickness and disease worldwide.
-In China, 80% of the major rivers are so polluted they don’t support aquatic life at all.
-The women of South Africa collectively walk the equivalent distance to the moon and back 16 times a day for water.
Without fresh water we cannot live, and global supplies are rapidly being depleted.
Meanwhile, the global elite are running around and are gobbling up the rights to as much of the water around the world as they can.
When you put all the facts above together, it all adds up to one very troubling picture.
Right now it is more imperative than ever to make certain that you and your family have a reliable source of clean water for the times that are coming. Clean, fresh water is something that none of us can take for granted any longer.
So what do you think of the coming global water shortage? Feel free to leave a comment with your opinion….
 Thousands of police officers have been laid off all across America since the current economic crisis began. Thousands more are getting ready to be laid off. So could we be on the verge of a new era of chaos and anarchy in America as crime runs wild and there are just far too few police to respond to it all? That is the message that one blood-smeared billboard in Stockton, California is trying to get across. Paid for by the Stockton, California police union, the message of the billboard is chillingly clear: “Welcome to the 2nd most dangerous city in California. Stop laying off cops.” As state, city and local governments across the United States continue to be devastated by the ongoing economic crisis, budget cuts are becoming much deeper and police forces have suddenly become a very popular target.
Officer Steve Leonesio, the president of the Stockton Police Officers Association, has announced that the police union plans to spend approximately $20,000 on at least 20 more billboards.
Why is the union putting up all of these billboards?
Well, it turns out that Stockton has been considering a plan to lay off 53 police officers in an effort to eliminate a $23 million budget deficit.
But law enforcement in Stockton has already been cut to the bone. Recently, the Stockton Police Department dropped this bombshell….
“We absolutely do not have any narcotics officers, narcotics sergeants working any kind of investigative narcotics type cases at this point in time.”
Do you think drug dealers will be flocking to Stockton after they hear that?
But the truth is that so many of these local governments around the nation are just flat broke at this point.
Even major cities are having to admit that they have accumulated such large debts that they cannot even afford to provide the most basic services any longer.
In Oakland, California the battle over police layoffs has made national headlines over the past couple of weeks. Oakland has laid off 80 police officers, and now the police chief says that there are some crimes that his department simply will not be able to respond to.
In fact, Chief Anthony Batts has compiled a list of exactly 44 situations, including grand theft, burglary, car wrecks, identity theft and vandalism, that his officers will not be available to handle any longer.
What in the world?
Once upon a time in America you could get a police officer to come out for just about anything – including for getting a cat down out of a tree.
But those days are long gone.
Today it is very hard to get a police officer to come out for anything short of murder.
The following is a partial list of crimes that police officers in Oakland will no longer be responding to….
- burglary
- theft
- embezzlement
- grand theft
- grand theft: dog
- identity theft
- false information to peace officer
- required to register as sex or arson offender
- dump waste or offensive matter
- discard appliance with lock
- loud music
- possess forged notes
- pass fictitious check
- obtain money by false voucher
- fraudulent use of access cards
- stolen license plate
- embezzlement by an employee (over $ 400)
- extortion
- attempted extortion
- false personification of other
- injure telephone/power line
- interfere with power line
- unauthorized cable tv connection
- vandalism
Not that Oakland wasn’t already a mess, but now how long do you think it will be before total chaos and anarchy reigns on the streets of Oakland?
But Oakland is far from alone.
The sheriff’s department in Ashtabula County, Ohio has been slashed from 112 to 49 deputies, and there is now just one vehicle remaining to patrol all 720 square miles of the county.
So what are the citizens of that county supposed to do to protect themselves?
Well, when asked about what they should do, Judge Alfred Mackey gave this stunning piece of advice….
“Arm themselves.”
So is that what we are left with?
Is American society degenerating into a “Road Warrior-style” wasteland where we are all left to fend for ourselves?
It gets really frightening when you start considering just how many police are actually being laid off across the United States….
*Acting State Police director Jonathon Monken has announced that the Illinois State Police will lay off more than 460 troopers and close five regional headquarters by this fall.
*Atlantic City Mayor Lorenzo Langford has proposed a plan to lay off 40 police officers.
*The police department in Vallejo, California will temporarily suspend its K-9 and SWAT programs at the end of the month in a move to delay officer layoffs.
*Last year, 18 special police units in Toledo, Ohio – including the gang task force and the mounted patrol – were eliminated or downsized in an effort to replace the 130 patrol officers who were laid off because of a $20.7 million budget deficit.
*Of 315 municipalities the New Jersey State Policemen’s union canvassed, more than half indicated that they were planning to lay off police officers.
*Four police officers in one town in New Jersey were greeted at work this past Monday morning with notices informing them that they will be laid off on August 31st.
*Police in Phoenix, Arizona have been told that more than 400 officers could be impacted by layoffs if “the worst case scenario” plays out.
*Police and firefighters in Flint, Michigan decided that layoffs were preferable to taking a 15 percent pay and benefits cut.
*The city of Maywood, California laid off all 68 of its employees July 1st and is now “contracting out” police services.
*In Colorado Springs, dozens of police positions are going unfilled and the police helicopters were put up for sale on the Internet.
The sad thing is that as local police forces across America are being stripped down or dismantled, many communities are opening their arms wide to increased federal law enforcement “assistance”.
In recent years, we have seen a large number of examples where the U.S. military is being used for domestic law enforcement, which is supposed to be against the law. In addition, federal government agencies are increasingly taking over the financing, training and even command of local police.
But is this “federalization” of local law enforcement a good thing?
Of course not.
Unfortunately we live at a time when almost everything is being centralized under federal government control. Of course this is completely contrary to everything that our founders intended, but most of our “officials” don’t seem too concerned about actually following the Constitution these days.
So what are you seeing in your own local community? Is the police force being slashed where you live? Is crime on the rise? Feel free to leave a comment with your opinion….
 If you watch any mainstream news program these days, it is almost a certainty that someone will mention the word “recession” before a half hour passes. In fact, it seems like almost everyone is either predicting that we are going into a recession, or they are warning of the need to avoid a recession or they are proclaiming that we are still in a recession. So will the U.S. economy once again be in recession in 2010? When you consider all the signs that are pointing that way, the evidence is compelling. The truth is that there is bad economic news wherever you turn. There is bad news in the housing industry. There is bad news in the financial markets. There is bad news in the banking system. There is bad news coming out of Europe. There are even signs that the bubble in China may be about to burst. Plus, the economic impact of the Gulf of Mexico oil spill could end up being the straw (or the gigantic concrete slab) that really breaks the camel’s back. So there are certainly a lot of pieces of news that “gloom and doom” economists can hang their hats on these days. There is a very dark mood in world financial markets right now, and it seems like almost everyone is waiting for the other shoe to drop. But does all of this really mean that we are looking at the start of another recession before the end of 2010?
The truth is that nobody really knows. Things certainly look very ominous out there. The dark clouds are gathering and the economic winds are starting to blow in a bad direction. The following are 24 pieces of evidence that do seem to indicate that very difficult economic times are imminent….
-U.S. Treasury yields have dropped to stunning new lows. So why are they so low? Well, it is because so many investors are anticipating that we are headed into a deflationary period. In fact, many economists are warning that the fact that Treasury yields are so low is one of the clearest signs that economic trouble is ahead.
-The Conference Board’s Consumer Confidence Index declined sharply to 52.9 in June. Most economists had expected that the figure for June would be somewhere around 62. If consumers aren’t confident they won’t be spending money. If American consumers don’t start spending money soon a lot of American retailers are going to go belly up.
-The M3 money supply plunged at a 9.6 percent annual rate during the first quarter of 2010. If the M3 keeps declining at that kind of a rate it is going to put extreme deflationary pressure on the U.S. economy.
-Many economists are now warning that the “China investment bubble” is about to burst. In fact, Kenneth Rogoff, Harvard University professor and former chief economist of the International Monetary Fund, claims that China’s property market is beginning a “collapse” that will send a shockwave across the globe. One prominent economist that specializes in China is even forecasting that property prices in major Chinese cities are likely to soon experience a drop of up to 30 percent.
-Nouriel Roubini is warning that Europe’s economy could stop growing as soon as this year. Back in 2007 and 2008, the U.S. was the epicenter of the financial crisis, but many analysts believe that it will be Europe this time around.
-Vacancies and lease rates at U.S. shopping centers continued to get worse during the second quarter of 2010. If things don’t pick up soon will we see half empty shopping malls by the time Christmas rolls around?
-CBS News is reporting that the oil spill in the Gulf of Mexico is hurting businesses “from coast to coast”. The longer this oil spill goes on the bigger of an impact it is going to have. The cost to the American economy from this disaster could ultimately be in the trillions.
-Some analysts are warning that if BP goes under as a result of the Gulf of Mexico oil spill that it could cause the total collapse of the worldwide derivatives market and unleash a liquidity crisis unlike anything the world financial system has ever seen.
-The state of Illinois has stopped paying most of its bills and yet the flood of red ink continues to get even worse. Illinois now ranks eighth in the world in possible bond-holder default. That is even worse than California.
-Speaking of California, the Schwarzenegger administration has won an appellate court ruling saying it has the authority to impose the federal minimum wage of $7.25 an hour on more than 200,000 state workers as California wrestles with its latest budget crisis.
-Things are so bad at the state level in the U.S. that economist Mark Zandi is projecting that up to 400,000 workers could lose their jobs in the next year as states, counties and cities struggle with lower tax revenues and significantly reduced federal funding.
-Two Federal Reserve officials recently said that U.S. unemployment is likely to stay high for a long time. Normally Fed officials are some of the biggest cheerleaders for the economy. If they are not optimistic about the employment situation that is a very bad sign.
-Analysts are warning that the “death cross” is coming. The Standard & Poor’s 500 50-day moving average is about to cross beneath the 200-day moving average, and many economists say that this is a very strong indication that a new recession is about to begin.
-One prominent trader says that the Dow Jones Industrial Average is repeating a pattern that appeared just before financial markets collapsed during the Great Depression.
-Ambrose Evans-Pritchard, one of the most respected financial columnists in the world, really raised eyebrows recently when he declared that this “really is starting to feel like 1932″.
-In the month of May, sales of new homes in the United States dropped to the lowest level on record.
-The National Association of Realtors recently announced that its seasonally adjusted index of sales agreements for previously occupied homes dropped 30 percent in May.
-Small and mid-size banks across the United States are failing at a rapidly accelerating pace. The truth is that the entire U.S. banking system is teetering on the brink of disaster.
-At this point just about everyone can see the writing on the wall. Literally dozens of top economists and world leaders are declaring that we are likely to enter the second leg of a “double-dip recession” at some point over the next twelve months.
So yes, things are really, really bad.
Those who want to forecast a coming recession don’t have to look too far for data that will back them up.
But wait.
There is actually one prominent economist who says that it is virtually impossible that the United States will experience a recession in the next six months.
Goldman Sachs economist Andrew Tilton says that there is “no way in hell” that the U.S. economy is going into a recession. To be more precise, Tilton says that there is a 1.6% chance that the U.S. economy will be in a recession six months from now.
So according to Tilton, there is a 98.4% chance (and he has computer models that supposedly back him up) that the U.S. economy will be growing when we reach the end of the year.
So what is actually going to happen?
Who knows.
The truth is that so many of these economists are so caught up in what is happening in the short-term that they are missing the bigger picture.
The bigger picture is that the U.S. economy is more over-leveraged than it ever has been before, and we are caught in a debt spiral that is basically impossible to unwind.
So in the final analysis it really doesn’t matter if we are “officially” in a recession by the end of 2010 or not. The truth is that the United States is headed for a devastating long-term economic collapse and there isn’t much that anyone can do to change that reality at this point.
 The Standard & Poor’s 500 50-day moving average stands poised to cross beneath the 200-day moving average. To those in the financial industry, this is known as a “death cross”, and it is a very powerful indicator that we could be entering a bearish period. So is this yet another sign that we are on the verge of a recession? Well, anyone who has spent much time trying to interpret financial charts will tell you how inexact that science can be. Financial markets can be wildly unpredictable, and there is always a tremendous amount of manipulation going on behind the scenes. However, when you add this impending death cross with all of the other signs that we could be entering a recession, there certainly seems to be reason for alarm. The truth is that financial markets across the globe are full of fear and panic right now. In fact, as noted in another article, the dominant force in world financial markets in 2010 is fear. When fear rules, markets become very volatile and they can fall very quickly. Anyone who has spent much time trying to squeeze profits out of world financial markets knows that they tend to fall much faster than they ever rise. So are we now approaching one of those times of panic when financial markets across the world fall at breathtaking speed?
Well, the truth is that nobody knows. Anyone who says that they can predict these things with 100 percent certainty is either a liar or they are unbelievably rich.
But certainly the mood in the financial markets is grim. If a death cross does happen on the S&P it is going to make things even more tense.
For those not familiar with investing terminology, Investopedia defines a “death cross” this way….
A crossover resulting from a security’s long-term moving average breaking above its short-term moving average or support level.
In this case, the death cross would be happening on the S&P 500, which is a weighted index of the prices of 500 large-cap common stocks actively traded in the United States. The S&P 500 is one of the most commonly used benchmarks for the overall U.S. stock market.
So how soon could we see a death cross on the S&P 500?
Well, some analysts believe that it could happen almost at any time….
“Because the market has moved down so violently, it’s brought about the likelihood of the Death Cross occurring much more rapidly,” Abigail Doolittle, the founder of Peak Theories Research, was recently quoted by CNBC as saying. “It now appears it could be only a day or two off if downward momentum continues.”
But hopefully most of you that are reading this are not even in the stock market at this point anyway.
The truth is that the “rally” that we have witnessed in the financial markets has been nothing more than a “sucker’s rally”.
The fundamentals of the marketplace have not changed.
The U.S. housing market continues to teeter on the brink of disaster.
The sovereign debt crisis is worse now than it ever has been.
In fact, just about every economic indicator you could name is pointing to difficult times ahead.
So there was really no fundamental reason why we should have even seen such a rally.
But even with the recent rally, the stock market still has not been producing good returns.
So often you hear people giving advice that goes something like this….
“If you are going to get into the stock market just keep your money in there and ride out the hard times because in the long run things always go up”.
But do they?
The truth is that some people have done well, but overall inflation-adjusted returns from stocks over the past ten years have been pretty close to zero.
So if the stock market is a game that you want to play, you had better really know what you are doing (or hire someone else who does), because it can be a very cruel game for amateurs.
What does seem certain is that with so much tension in world financial markets right now, we are likely to continue to see an extreme amount of volatility in the marketplace. In such an environment, even the slightest piece of good news or bad news can set off incredibly wild swings.
It is a very exciting time for those of us who follow the financial news, but for those seeking to actually squeeze some profits out of the marketplace, times such as these are not easy.
 Our world is changing at a pace that is so staggering these days that it can be really hard to fully grasp the significance of what we are witnessing. Hopefully the collection of random facts below will help you to “connect the dots” just a little bit. On one level, the facts below may not seem related. However, what they all do have in common is that they show just how much the United States has fundamentally changed. Do you ever just sit back and wonder what in the world has happened to America? The truth is that the America that so many of us once loved so much has been shattered into a thousand pieces. The “land of the free and the home of the brave” has been transformed into a socialized Big Brother nanny state that is oozing with corruption and has accumulated the biggest mountain of debt in the history of the world. The greatest economic machine that the world has ever seen is falling apart before our very eyes, and even when our politicians actually try to do something right (which is quite rare) the end result is still a bunch of garbage. For those who still love this land (and there are a lot of us) it is heartbreaking to watch America slowly die.
The following are 50 random facts that show just how dramatically America has changed….
#50) A new report released by the United Nations is publicly calling for the establishment of a world currency and none of the major news networks are even covering it.
#49) The state of California is so broke that Arnold Schwarzenegger has ordered California State Controller John Chiang to reduce state worker pay for July to the federal minimum allowed by law — $7.25 an hour for most state workers.
#48) A police officer in Oklahoma recently tasered an 86-year-old disabled grandma in her bed and stepped on her oxygen hose until she couldn’t breathe because they considered her to be a “threat”.
#47) In early 2009, U.S. net national savings as a percentage of GDP went negative for the first time since 1952, and it has continued its downward trend since then.
#46) Corexit 9500 is so incredibly toxic that the UK’s Marine Management Organization has completely banned it, so if there was a major oil spill in the North Sea, BP would not be able to use it. And yet BP has dumped over a million gallons of dispersants such as Corexit 9500 into the Gulf of Mexico.
#45) For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
#44) It has come out that one employee used a Federal Emergency Management Agency credit card to buy $4,318 in “Happy Birthday” gift cards. Two other FEMA officials charged the cost of 360 golf umbrellas ($9,000) to the taxpayers.
#43) Researchers at the State University of New York at Buffalo received $389,000 from the U.S. government to pay 100 residents of Buffalo $45 each to record how much malt liquor they drink and how much pot they smoke each day.
#42) The average duration of unemployment in the United States has risen to an all-time high.
#41) The bottom 40 percent of all income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
#40) In the U.S., the average federal worker now earns about twice as much as the average worker in the private sector.
#39) Back in 1950 each retiree’s Social Security benefit was paid for by 16 workers. Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers. By 2025 it is projected that there will be approximately two workers for each retiree.
#38) According to a U.S. Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015.
#37) The federal government actually has the gall to ask for online donations that will supposedly go towards paying off the national debt.
#36) The Cactus Bug Project at the University Of Florida was allocated $325,394 in economic stimulus funds to study the mating decisions of cactus bugs.
#35) A dinner cruise company in Chicago got nearly $1 million in economic stimulus funds to combat terrorism.
#34) It is being reported that a 6-year-old girl from Ohio is on the “no fly” list maintained by U.S. Homeland Security.
#33) During the first quarter of 2010, the total number of loans that are at least three months past due in the United States increased for the 16th consecutive quarter.
#32) According to a new report, Americans spend twice as much as residents of other developed countries on healthcare, but get lower quality and far less efficiency.
#31) Some experts are warning that the cost of bailing out Fannie Mae and Freddie Mac could reach as high as $1 trillion.
#30) The FDA has announced that the offspring of cloned animals could be in our food supply right now and that there is nothing that they can do about it.
#29) In May, sales of new homes in the United States dropped to the lowest level ever recorded.
#28) In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has ranged between 300 to 500 to one.
#27) Federal border officials recently said that Mexican drug cartels have not only set up shop on American soil, they are actually maintaining lookout bases in strategic locations in the hills of southern Arizona.
#26) The U.S. government has declared some parts of Arizona off limits to U.S. citizens because of the threat of violence from Mexican drug smugglers.
#25) According to the credit card repayment calculator, if you owe $6000 on a credit card with a 20 percent interest rate and only pay the minimum payment each time, it will take you 54 years to pay off that credit card. During those 54 years you will pay $26,168 in interest rate charges in addition to the $6000 in principal that you are required to pay back.
#24) According to prepared testimony by Goldman Sachs Chief Operating Officer Gary Cohn, Goldman Sachs shorted roughly $615 million of the collateralized debt obligations and residential mortgage-backed securities the firm underwrote since late 2006.
#23) The six biggest banks in the United States now possess assets equivalent to 60 percent of America’s gross national product.
#22) Four of the biggest U.S. banks (Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup) had a “perfect quarter” with zero days of trading losses during the first quarter of 2010.
#21) 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.
#20) BP has hired private security contractors to keep the American people away from oil cleanup sites and nobody seems to care.
#19) Barack Obama is calling for a “civilian expeditionary force” to be sent to Afghanistan and Iraq to help overburdened military troops build infrastructure.
#18) On June 18th, two Christians decided that they would peacefully pass out copies of the gospel of John on a public sidewalk outside a public Arab festival in Dearborn, Michigan and within 3 minutes 8 policemen surrounded them and placed them under arrest.
#17) It is being reported that sales of foreclosed homes in Florida made up nearly 40 percent of all home purchases in the first part of this year.
#16) During a recent interview with Larry King, former first lady Laura Bush revealed to the world that she is actually in favor of legalized gay marriage and a woman’s “right” to abortion.
#15) Scientists at Columbia University are warning that the dose of radiation from the new full body security scanners going into airports all over the United States could be up to 20 times higher than originally estimated.
#14) 43 percent of Americans have less than $10,000 saved for retirement.
#13) The FDIC’s deposit insurance fund now has negative 20.7 billion dollars in it, which represents a slight improvement from the end of 2009.
#12) The judge that BP is pushing for to hear an estimated 200 lawsuits on the Gulf of Mexico oil disaster gets tens of thousands of dollars a year in oil royalties and is paid travel expenses to industry conferences.
#11) In recent years the U.S. government has spent $2.6 million tax dollars to study the drinking habits of Chinese prostitutes and $400,000 tax dollars to pay researchers to cruise six bars in Buenos Aires, Argentina to find out why gay men engage in risky sexual behavior when drunk.
#10) U.S. officials say that more than three billion dollars in cash (much of it aid money paid for by U.S. taxpayers) has been stolen by corrupt officials in Afghanistan and flown out of Kabul International Airport in recent years.
#9) According to a report by the U.S. Department of Transportation’s Bureau of Transportation Statistics, the baggage check fees collected by U.S. airlines shot up 33% in the first quarter of 2010 to $769 million.
#8) Three California high school students are fighting for their right to show their American patriotism – even on a Mexican holiday – after they were forced to remove their American flag T-shirts on Cinco de Mayo.
#7) Right now, interest on the U.S. national debt and spending on entitlement programs like Social Security and Medicare are somewhere in the neighborhood of 10 to 15 percent of GDP. By 2080, they are projected to eat up approximately 50 percent of GDP.
#6) The total of all government, corporate and consumer debt in the United States is now about 360 percent of GDP.
#5) A 6-year-old girl was recently handcuffed and sent to a mental facility after throwing temper tantrums at her elementary school.
#4) In Florida, students have been arrested by police for things as simple as bringing a plastic butter knife to school, throwing an eraser, and drawing a picture of a gun.
#3) School officials in one town in Massachusetts are refusing to allow students to recite the Pledge of Allegiance.
#2) According to one new study, approximately 21 percent of children in the United States are living below the poverty line in 2010.
#1) Since 1973, more than 50 million babies have been murdered in abortion facilities across the United States.
 At times like these, it is hardly going out on a limb to say that we are headed for hard economic times. In fact, it seems like almost everyone in the financial world is either declaring that a recession is coming or is busy preparing for one. The truth is that bad economic signs are everywhere. Consumer confidence is plummeting, big banks are hoarding cash, top financial experts are issuing recession warnings and it seems like almost everyone is trying to accumulate as much gold as possible. Now that the G20 nations have all pledged to dramatically cut government spending in an effort to get debt under control, worries about a double-dip recession have reached a fever pitch. So will we see the full-fledged economic collapse that so many analysts are warning of before the end of 2010? Of course it is possible, but it seems much more likely that we will just see the beginning of another recession that could certainly deepen into a depression as we head into 2011 and 2012. There are so many variables and so many moving parts that it is always difficult to predict exactly how things will play out. What does seem virtually certain, however, is that we are heading into a time of extreme economic stress.
The following are 25 signs that almost everyone in the financial world is expecting an economic downturn during the second half of 2010….
#1) The Conference Board’s Consumer Confidence Index declined sharply to 52.9 in June. Most economists had expected that the figure for June would be somewhere around 62. To get an idea of how bad this is, the index was at 100 back during the baseline year of 1985.
#2) Major banks are being instructed to hoard cash in preparation for the next financial crisis.
#3) French bank Societe Generale is forecasting that gold could reach $1,430 an ounce in the third quarter of this year due to fears of a double-dip recession.
#4) Paul Krugman of the New York Times declared in a recent column that we are about to enter “the third depression”.
#5) According to one recent poll, about eight out of every 10 Americans expect the Gulf of Mexico oil spill to damage the U.S. economy and drive up the cost of gas and food.
#6) Mark Zandi, chief economist of Moody’s Analytics, is not optimistic about the chances of avoiding another recession….
“There’s an uncomfortably high probability that we slip back into recession.”
#7) The U.S. Department of Agriculture is forecasting that the number of Americans on food stamps will increase to 43 million in 2011.
#8) George Soros claims that a European recession in the coming months is “almost inevitable”.
#9) Kevin Giddis, the Managing Director of Fixed Income at Morgan Keegan says that a lot of people are making some really large financial bets that a recession is on the way….
“There is big money making big bets that at a minimum we we’ll have a recession if not a depression that could last for years.”
#10) The Center on Budget and Policy Priorities recently said that U.S. states in fiscal 2011 could be facing the worst budget situation that they have experienced since the economic downturn began in 2007.
#11) Federal Reserve Chairman Ben Bernanke is publicly saying that the U.S. unemployment rate is quite likely to remain “high for a while”.
#12) The National League of Cities is warning that large numbers of cities across the U.S. will be facing horrible economic conditions over the next couple of years….
“City budget shortfalls will become more severe over the next two years as tax collections catch up with economic conditions. These will inevitably result in new rounds of layoffs, service cuts, and canceled projects and contracts.”
#13) According to the Wall Street Journal, debates have already begun inside the Federal Reserve about what to do in the event of a “double-dip” recession.
#14) In May, sales of new homes in the United States dropped to the lowest level ever recorded. The truth is that the American people know economic hard times are coming and so they aren’t running out and buying expensive new homes that they can’t afford.
#15) Mike Whitney says that without more “stimulus” from the federal government a recession by the end of 2010 is extremely likely….
“Without another boost of stimulus, the economy will lapse back into recession sometime by the end of 2010.”
#16) One recent poll found that 76 percent of Americans believe that the U.S. economy is still in a recession.
#17) Richard Russell, the famous author of the Dow Theory Letters, is not mincing words about what he believes is headed our way….
“Do your friends a favor. Tell them to “batten down the hatches” because there’s a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don’t need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won’t recognize the country. They’ll retort, “How the dickens does Russell know — who told him?” Tell them the stock market told him.”
#18) The Bank of International Settlements said in its annual report that major banks on both sides of the Atlantic Ocean continue to remain “highly leveraged and still appear to be on life support”.
#19) Mish Shedlock recently raised eyebrows by openly proclaiming that “an economic depression is here”.
#20) Bob Chapman of the International Forecaster is very pessimistic about the state of the world economy as we head into the second half of 2010….
“There is still no question in our minds that Greece was a setup to lead to a deflationary collapse later and the Greek people refused to listen. As a result it is now apparent that Greece is even worse off than the elitists imagined. We do not see European bailouts going any further. The result is the US and UK will follow. Financial Europe is history. You should all keep in mind that this is child’s play. Wait until England and the US go down, perhaps before the end of the year.”
#21) An article on Bloomberg’s website says that 46 U.S. states are facing a “Greek style” financial crisis.
#22) Charles Cooper at Oriel Securities says that worries about the global economy right now are actually very good for the price of gold….
“Debt on government balance sheets and worries that the world could be heading towards a double-dip recession are driving the gold price higher.”
#23) Richard Suttmeier recently wrote an article for Forbes magazine in which he predicted that we are headed for another dramatic decline in housing prices….
Home prices will decline again with risk of another 50% down to get house prices back to levels of 1999 / 2000.
#24) University of Maryland professor Peter Morici is warning that the decision by European governments to slash their budgets makes the prospect of another recession much more likely….
“Europeans cutting their budgets now could thrust the global economy into a double-dip recession.”
#25) John P. Hussman, fund manager of Hussman Strategic Total Return and Hussman Strategic Growth, has issued a full-fledged recession warning: “Based on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn.”
So in light of all this, what should we all do?
We should all start preparing for difficult times.
Now is a great time to get out of debt, to reduce expenses, to develop additional streams of income and to start storing up food and supplies for when things really fall apart.
After all, you don’t start preparing once the storm has already arrived. You start preparing the moment that you see the first signs of trouble on the horizon.
There is no excuse for not getting yourself prepared. The signs that we are headed towards an economic nightmare are all around us.
Do what you have to do for yourself and for your family.
 As violent protests erupted outside, the leaders of the world’s largest economies plotted the future course of the global economy at this weekend’s G20 summit. So what was decided? Well, according to various reports in the mainstream media, it was the “deficit hawks” who got their way. Apparently the consensus of the G20 meetings was that a round of tough budget cuts is the medicine that the world economy needs. In fact, the G20 leaders all pledged to cut their respective budget deficits in half by 2013. Canadian Prime Minister Stephen Harper, one of the key advocates of budget cuts, said that the G20 nations need to walk a “tightrope” between stimulating their economies and debt reduction. But as the largest economies around the globe transition from reckless government spending to budget reductions and austerity measures, what is that really going to mean for the world economy?
Well, the truth is that as good as “budget cuts” sound, they can have some very nasty short-term side effects.
You see, there is no getting around the fact that whenever governments spend more money it is good for economic growth. The problem is that a large number of governments around the globe have been consistently spending way beyond their means for decades and now they find themselves up to their eyeballs in debt.
The exploding sovereign debt levels around the globe are not sustainable by any definition, and so it was undeniable that something had to be done.
In fact, European Commission President José Manuel Barroso put it quite succinctly during the G20 meetings in Toronto when he told the press the following….
“There is no more room for deficit spending.”
The reality is that nations such as Greece, Spain, Portugal and Italy are already on the verge of default. Japan has accumulated so much debt that it makes headlines almost constantly in the newspapers over there. The exploding U.K. debt was one of the key factors that enabled the Conservatives to take power in the most recent election.
But nobody has more debt than the United States. As of June 1st, the U.S. National Debt was $13,050,826,460,886.97. The U.S. government has accumulated the most colossal mountain of debt the world has ever seen and it is exploding at a rate that is breathtaking.
So, yes, the largest economies of the world have a major problem with government debt.
But are budget cuts and austerity measures the correct solution?
It depends who you ask.
The reality is that the U.S., the U.K. and many of the other most powerful economies in the world now find themselves between a rock and a hard place.
If they continue recklessly going into debt their economies will continue to be stimulated (at least to some degree), but interest expenses will continue to spiral upwards and borrowing costs will go through the roof as credit ratings fall. In the end, nation after nation would end up defaulting and the world financial system would crash hard.
However, if the G20 nations actually do implement the hard budget cuts that are necessary to get their debts under control, it will suck a ton of money out of the system and could send the already vulnerable global economy into a devastating deflationary depression.
The truth is that neither option is a good option.
Either path is going to contain a good amount of economic pain.
So what do you do when there is no good solution?
Stephen Lewis of Monument Securities recently argued that the path of “fiscal stimulus” has been totally played out and so there is no good reason to continue to go down that path….
“Growth could be negative again as soon as the fourth quarter. There is no easy way out since fiscal stimulus has already been pushed as far as it can credibly go without endangering US credit-worthiness.”
However, Chris Whalen, a former Federal Reserve official and now head of Institutional Risk Analytics says that unless the printing presses are quickly cranked up again we are definitely headed for deflation….
“The party is over from fiscal support. These hard-money men are fighting the last war: they don’t recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again.”
So what is the right answer?
For now, G20 leaders have decided that budget cuts and austerity measures are the right answer.
Not that Barack Obama and U.S. Federal Reserve chairman Ben Bernanke didn’t fight behind the scenes for additional “stimulus” for the world economy.
You see, when it comes to “Helicopter Ben”, his first instinct is to always pump more money into the economy. In fact, according to one major U.K. newspaper, U.S. Federal Reserve chairman Ben Bernanke has been fighting an intense behind the scenes war for control of U.S. monetary policy. Bernanke is reportedly frightened that the U.S. could be headed for a deflationary spiral and has been pushing the idea of a fresh injection of money into the U.S. economy.
But for now Bernanke has lost. Barack Obama has joined the other leaders of the G20 in promising to cut their budget deficits by 50 percent by 2013.
Not that we are actually going to see that happen.
We all know how reliable Barack Obama’s promises are. He was busy breaking his 2008 campaign promises before he was even sworn in.
And the day will come when Barack Obama needs to turn the economy around in order to win some votes, and when that day arrives the temptation to “stimulate” the economy with some more government spending will prove irresistible.
But for the moment, Obama is lining up with the other G20 leaders and is swearing that he is going to get spending under control.
That should settle world financial markets down for the moment, but the reality is that as all of the major economies around the world suddenly see a dramatic reduction in government spending, a substantial economic slowdown will be inevitable.
When the world economy slows down, unemployment will spike, the global real estate mess will get even worse and “austerity riots” could even break out in many areas of the globe.
So at some point, the pendulum will once again swing back towards “stimulus” and world leaders will indulge their debt addictions once again. But that will only make the long-term global economic problems even worse.
The truth is that the entire world economic system is broken. It is built on a fraudulent pyramid of debt, derivatives, central banking and paper money that is doomed to fail. But world leaders will continue to keep it alive for as long as they can.
Right now their big solution is to get all of the major industrialized nations to agree to huge budget cuts. These budget cuts, if they are actually implemented, are very likely to lead to a severe economic slowdown and potentially even a deflationary depression.
But continuing on the path that the G20 leaders were on would have resulted in a wave of sovereign defaults and hyperinflationary meltdowns.
So the G20 leaders have decided to change course and they are hoping that they can navigate the economic minefield ahead and bring our economies through all of this okay.
But in the end they are going to fail.
|
|
