Today global wealth is more highly concentrated in the hands of the elite than it ever has been at any other point in modern history. Once upon a time, the vast majority of the people in the world knew how to grow their own food, raise their own animals and take care of themselves. There weren’t many that were fabulously wealthy, but there was a quiet dignity in having land you could call your own or in having a skill that you could turn into a business. Sadly, over the past several decades an increasingly growing percentage of agricultural land has been gobbled up by big corporations and by corrupt governments. Hundreds of millions of people have been pushed off their land and into highly concentrated urban areas. Meanwhile, it has become increasingly difficult to start a business of your own as monolithic global corporations have come to dominate nearly every sector of the world economy. So more people than ever around the world are forced to work for “the system” just to make a living. At the same time, those at the very top of the food chain (the elite) have spent decades rigging the system to ensure that increasing amounts of wealth will continue to flow into their pockets. So now in 2010 we have a global system where a few elitists at the top are insanely wealthy while about half the people living on earth are wretchedly poor.
There are very few nations around the world that have not been almost entirely plundered by the global elite. When the elite speak of “investing” in poor countries, what they really mean is taking control of the land, water, oil and other natural resources. In dozens of nations around the world today, big global corporations are stripping fabulous amounts of wealth out of the ground even as the vast majority of the citizens of those nations continue to live in abject poverty. Meanwhile, the top politicians in those nations are given huge bribes to go along with the plundering.
So what we have in 2010 is a world that is dominated by a very small handful of ultra-wealthy elitists that own an almost unbelievable amount of real assets, a larger group of “middle managers” that run the system for the global elite (and are rewarded very handsomely for doing so), hundreds of millions of people who actually do the work required by the system, and several billion “useless eaters” that the global elite don’t really need and that they don’t really have much use for.
The system was not ever designed to lift up the poor. Nor was it ever designed to promote “free enterprise” and “competition”. Rather, the elite intend to funnel all wealth to themselves and to have the rest of us enslaved either to debt or to poverty.
The following are 20 statistics that prove that the wealth of the world is increasingly being funneled into the hands of the global elite, leaving most of the rest of the world wretchedly poor and miserable….
#1 According to the UN Conference on Trade and Development, the number of “least developed countries” has doubled over the past 40 years.
#2 “Least developed countries” spent 9 billion dollars on food imports in 2002. By 2008, that number had risen to 23 billion dollars.
#3 Average income per person in the poorest countries on the continent of Africa has fallen by one-fourth over the past twenty years.
#4 Bill Gates has a net worth of somewhere in the neighborhood of 50 billion dollars. That means that there are approximately 140 different nations that have a yearly GDP which is smaller than the amount of money Bill Gates has.
#5 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.
#6 Approximately 1 billion people throughout the world go to bed hungry each night.
#7 The wealthiest 2 percent own more than half of all global household assets.
#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 Every 3.6 seconds someone starves to death and three-quarters of them are children under the age of 5.
#10 According to Gallup, 33 percent of the people on the globe say that they do not have enough money for food.
#11 As you read this, there are 2.6 billion people around the world that lack basic sanitation.
#12 According to the most recent “Global Wealth Report” by Credit Suisse, the wealthiest 0.5% control over 35% of the wealth of the world.
#14 CNN founder Ted Turner is the largest private landowner in the United States. Today, Turner owns approximately two million acres. That is an amount greater than the land masses of the states of Delaware and Rhode Island combined. Turner also advocates restricting U.S. couples to 2 or fewer children to control population growth.
#15 There are 400 million children in the world today that have no access to safe water.
#16 Approximately 28 percent of all children in developing countries are considered to be underweight or have had their growth stunted as a result of malnutrition.
#17 It is estimated that the United States owns approximately 25 percent of the total wealth of the world.
#18 It is estimated that the entire continent of Africa owns approximately 1 percent of the total wealth of the world.
#19 In 2008, approximately 9 million children died before they reached their fifth birthdays. Approximately a third of all of these deaths was due either directly or indirectly to lack of food.
#20 The most famous banking family in the world, the Rothschilds, has accumulated mountains of wealth while much of the rest of the world has been trapped in poverty. The following is what Wikipedia has to say about Rothschild family wealth….
It has been argued that during the 19th century, the family possessed by far the largest private fortune in the world, and by far the largest fortune in modern history.
Nobody seems to know exactly how much the Rothschilds are worth today. They dominate the banking establishments of England, France, Germany, Austria, Switzerland and many other nations. It was estimated that they were worth billions back in the mid-1800s. What the total wealth of the family is today is surely an amount that is almost unimaginable, but nobody knows for sure.
Meanwhile, billions of people around the globe are wondering where their next meal is going to come from.
At this point, many readers will want to start arguing about how horrible capitalism is and about how wonderful socialism and communism are.
But capitalism is not the problem and as we have seen countless times over the past several decades, government ownership of business is not the solution to anything.
What we have in the world today is not capitalism. Rather, it more closely resembles “feudalism” than anything else. The elite are “monopoly men” who use their unbelievable wealth and power to dominate the rest of us. In fact, it was John D. Rockefeller who once said that “competition is sin”.
It would be great if we lived in a world where those living in poverty were encouraged to start owning land, to create businesses and to build better lives for themselves.
But instead, things are going the other way. Wealth is becoming more concentrated in the hands of the elite, and the middle class is starting to be wiped out even in prosperous nations such as the United States.
It turns out that the global elite have decided that they don’t really need so many expensive American “worker bees” after all and they have been moving thousands of factories and millions of jobs overseas. Meanwhile the American people are so distracted watching Dancing with the Stars, Lady Gaga and their favorite sports teams that they don’t even realize what is going on.
There is no guarantee that America will be prosperous forever. Today, a record number of Americans are already living in poverty. Today, a record number of Americans are on food stamps. The median household income went down last year and it went down the year before that too.
So wake up. America is being integrated into a world economic system that is dominated and controlled by the insanely wealthy elite. They don’t care that you have to pay the mortgage or that you intend to send your kids to college. Mostly what they care about is making as much money for themselves as they can.
Greed is running rampant around the globe, and the world is becoming a very cold place. Unfortunately, unless something really dramatic happens, the rich are just going to continue to get richer and the poor are just going to continue to get poorer.
The U.S. Federal Reserve is getting ready to conduct another gigantic bailout of the big banks, but this time virtually nobody in the mainstream media will use the term “bailout” and the American people are going to get a lot less upset about it. You see, one lesson that was learned during the last round of bank bailouts was that the American people really, really do not like it when the U.S. Congress votes to give money to the big banks. So this time, the financial “powers that be” have figured out a way around that. Instead of going through the massive headache of dealing with the U.S. Congress, the Federal Reserve is simply going to print money and give it directly to the banks. To be more precise, the Federal Reserve is going to use a procedure known as “quantitative easing” to print money out of thin air in order to purchase large quantities of “troubled assets” (such as mortgage-backed securities) from the biggest U.S. banks at well above market price. Some are already openly wondering if this next round of quantitative easing is going to be the biggest bank robbery in history. Most Americans won’t understand these “backdoor bailouts” well enough to get upset about them, but that doesn’t mean that they won’t be just as bad (or even worse) than the last round of bailouts. In the end, all of the inflation that this new round of quantitative easing is going to cause is going to be a “hidden tax” on all of us.
These new backdoor bailouts are going to work something like this….
1) The big U.S. banks have massive quantities of junk mortgage-backed securities that are worth little to nothing that they desperately want to get rid of.
2) They convince the Federal Reserve (which the big banks are part-owners of) to buy up these “toxic assets” at way above market price.
3) The Federal Reserve creates massive amounts of money out of thin air to buy up all of these troubled assets. The public is told that all of this “quantitative easing” is necessary to stimulate the U.S. economy.
4) The big banks are re-capitalized and have gotten massive amounts of bad mortgage securities off their hands, the Federal Reserve has found a way to pump hundreds of billions (if not trillions) of dollars into the economy, and most of the American people are none the wiser.
During a recent appearance on MSNBC, Matt Taibbi of Rolling Stone did a great job of explaining how this all works….
But this isn’t the only way that the Federal Reserve forks over massive amounts of cash to the big U.S. banks. In a previous article, I described how the U.S. Federal Reserve lends huge quantities of nearly interest-free money to big U.S. banks which they turn around and invest in U.S. Treasuries which bring in a return of three percent or so. In essence, it is a legalized way for the big U.S. banks to make mountains and mountains of free money.
The truth is that the Federal Reserve does whatever it can to ensure that the big U.S. banks stay fat and happy.
So what about the small banks? What happens to them?
Well, the vast majority of the small banks are considered “not big enough for bailouts” and they are allowed to die like dogs.
Don’t let anyone ever fool you into thinking that the U.S. banking system has a level playing field.
For weeks, Federal Reserve officials have been coming out and have been dropping hints about how important it is for them to take “action” and implement another round of quantitative easing in order to help stimulate the U.S. economy.
In fact, during his speech on Friday, you could almost hear Ben Bernanke salivating at the thought of printing more money.
But nobody ever really asks who is going to be the first to get their hands on all this money that the Fed is going to pump into the economy.
The answer, of course, is obvious.
It is going to be the big banks – the same banks that are part-owners of the Federal Reserve and that have tremendous influence over Fed policies.
But even though this is all more than a little shady, is it such a bad thing for the rest of us if the Federal Reserve bails out the big banks and brings some much needed stability back to the U.S. financial system?
After all, if “Foreclosure-Gate” could potentially cause a nightmarish financial meltdown, isn’t it better for the Federal Reserve to step in and soak up large amounts of these toxic assets?
Those are legitimate questions.
Certainly the Federal Reserve has the power to step in and smooth over all sorts of short-term problems by papering them with money, but in the end printing more money will just make our long-term problems even worse.
Whenever a new dollar is introduced into the system, every other dollar in existence loses a little bit of value.
When trillions of new dollars get introduced into the system, it has the potential to create an inflationary nightmare.
Already, a number of top Fed officials are publicly saying that inflation is “too low” and that we need to purposely generate more inflation in order to “stimulate” the U.S. economy.
Yes, that is just as insane as it sounds, but that is what they are actually proposing.
Apparently many top Federal Reserve officials honestly believe that they can pump trillions into the economy, jack up inflation significantly, and little harm will be done.
But even before “QE2″ has begun, we are already starting to see all kinds of little bubbles beginning to develop in the financial system. For example, commodity prices are skyrocketing right now, and that will soon be affecting the price we pay for food at the supermarket.
We are already on the road to serious inflation and the Federal Reserve has not even fired up the money hoses yet. So what is going to happen after they pump trillions more into the economy?
Printing more money and giving it to the banks is not going to solve our economic problems. It is just going to make them worse.
But unfortunately, American voters get no say about any of this. Our national monetary policy is in the hands of an unelected central bank that does pretty much whatever it wants.
An economic nightmare is coming, and you had better get ready.
This October, millions of Americans are going to watch horror movies and read horror stories because they enjoy being frightened. Well, if you really want to be scared, you should just check out the real horror story unfolding right before our eyes – the U.S. economic meltdown. It seems like more bad news for the U.S. economy comes out almost every single day now. Unfortunately, things are about to get a whole lot worse. The mainstream media has been treating “Foreclosuregate” as if it is a minor nuisance, but the truth is that the lid is about to be publicly lifted on years and years of massive fraud in the U.S. mortgage industry, and this thing has the potential to cause economic chaos that is absolutely unprecedented. Over the past several days, expert after expert has been coming forward and warning that this crisis could completely and totally paralyze the mortgage industry in the United States. If that happens, it will be essentially like pulling the plug on the U.S. economic recovery.
Not that there was going to be a recovery anyway. The truth is that economic statistic after economic statistic has been pointing to incredible trouble for the U.S. economy.
For example, the U.S. government just announced that the U.S. trade deficit went up again in August. According to the U.S. Census Bureau, the U.S. trade deficit was $46.3 billion during August, which was up significantly from $42.6 billion in July.
So how much coverage did this get in the mainstream media?
Well, just about none.
We have gotten so used to horrific trade deficits that it isn’t even news anymore.
But these trade deficits are absolutely killing our economy.
How long do you think that the U.S. economy can keep shelling out 40 or 50 billion more dollars than we take in every single month?
If you look at the countries around the world that have become very wealthy, almost all of them have gotten that way by trading with the United States.
Meanwhile, many of our once great manufacturing cities are turning into open sewers.
Every single politician in the United States should be talking about the trade deficit.
But hardly any of them are.
Is it because Americans have all become so dumbed-down that we don’t understand these things anymore, or is it because we are so distracted by the various forms of entertainment that we are addicted to that we just don’t care?
But the trade deficit is not the only economic statistic that is getting worse.
According to the Department of Labor, for the week ending October 9th the advance figure for seasonally adjusted initial jobless claims was 462,000, which represented an increase of 13,000 from the previous week.
We have an unemployment epidemic going on in this country, but what did the mainstream media do in response to this news?
They yawned. Instead, many of the “financial experts” were busy talking about how wonderful it is that the Stock Market is going up, up, up.
Well, as one reader recently reminded me, if you want to evaluate an economy by how much the stock market is going up, then the economy of Zimbabwe has had an absolutely wonderful decade!
The truth is that the stock market is not a good barometer for what is actually going on.
What is really happening is that the U.S. economic system is literally coming apart at the seams.
Yet another piece of really bad economic news that just came out is that the number of home repossessions by banks set a new all-time record during the month of September. The record total of 102,134 bank repossessions was the first time ever that bank repossessions climbed over the 100,000 mark for a single month.
The good news is that bank repossessions are about to come to a screeching halt.
The bad news is that it is because the U.S. mortgage industry is about to become completely and totally paralyzed by this foreclosure fraud crisis.
The following are three basic points to remember about this foreclosure mess….
A) Massive Fraud Was Committed At Every Stage By The Mortgage Industry
The truth is that there was fraud going on in every segment of the mortgage industry over the past decade. Predatory lending institutions were aggressively signing consumers up for mortgages that they knew they could never repay. Many consumers were also committing fraud because a lot of them also knew that they could never possibly repay the mortgages. These bad mortgages were fraudulently bundled up and securitized, and these securitized financial instruments were fraudulently marketed as solid investments. Those who certified that these junk securities were “AAA rated” also committed fraud. Then these securities were traded at lightning speed all over the globe and a ton of mortgage paperwork became “lost” or “missing”.
Finally, when it came time to foreclose on these bad mortgages, a whole lot more fraud was committed. Thousands upon thousands of foreclosure documents were “robo-signed”, but the truth is that investigators are starting to discover a lot of things about these mortgages that are a lot worse than that.
B) Nobody Really Knows Who Owns Or Who Has The Right To Foreclose On Millions Upon Millions Of Mortgages
The legal rights to millions of U.S. mortgages has been scrambled so badly that it might actually be impossible to fully sort this mess out. In particular, MERS (Mortgage Electronic Registration Systems) has created a paperwork nightmare that may never be able to be completely remediated.
On a previous article, a reader named William left a comment that did a great job of describing the very serious problem that we are now facing because of MERS….
MERS – potentially the most serious problem because it affects who really owns the loans. Securitization mandates that loans be transferred into REMIC trusts within a strict timeframe. Late transfers are not allowed. In spite of the supposed “ease” of transfer through MERS, it now appears that perhaps 60% of US loans were never properly transferred. Absent remedial legislation, it is impossible to do so now. And the former owners may be out of business or bankrupt. So how do we get these loans to the trust beneficiaries who were supposed to own them? This is no simple paperwork correction. The train has left the station, with no more to follow.
C) Unprecedented Chaos Is Going To Erupt As Faith In The Mortgage System Completely Dies
So what is going to happen as a result of all of this fraud and confusion in the mortgage industry? Well, basically everybody is going to sue everybody. It is going to be absolute mayhem.
Real estate attorneys can rejoice: everyone will get sued, in every court in the land. Banks will get sued, title insurance companies will get sued, realtors will get sued, foreclosure mills will get sued, MERS will get sued, and so on. The attorneys general of the states will all sue the banks and mortgage mills, claiming billions in damages.
Meanwhile, virtually nobody will want to buy any house that has been foreclosed on in the past ten years or so until this mess is sorted out (which could take years and years).
Meanwhile, title insurance companies are going to avoid foreclosures like the plague.
Meanwhile, all of the investors that have been propping up the housing market by buying foreclosures are going to be fleeing the market in droves.
Meanwhile, the financial world is going to be trying to figure out which U.S. lending institutions are still solvent. The value of most mortgage-based assets is now totally up in the air.
Meanwhile, millions more homeowners across the United States will be emboldened to quit making payments on their mortgages as they realize that those holding their mortgages may not have the legal right to foreclose on them.
And that is where the true horror of this entire situation may lie. What is going to happen if millions upon millions of Americans holding underwater mortgages look at this situation and decide that they really don’t have to be afraid of the threat of foreclosure any longer?
If a massive wave of homeowners suddenly decides to simply quit paying their mortgages, it would basically wipe out nearly the entire mortgage industry.
That would likely mean more government bailouts, more government control, much higher mortgage rates and eventually a serious crash in housing prices.
This crisis is incredibly complicated and it has a ton of moving parts, so it is extremely difficult to describe accurately. But the reality is that this mess has the potential to hurt the U.S. real estate market much more than “subprime mortgages” ever did.
Hopefully this crisis will not be “the straw that broke the camel’s back” for the U.S. economy, but with each passing day this thing looks even more horrifying.
One way or another, real estate law in the United State is going to be changed forever as a result of this crisis. It is going to be extremely interesting to see how all of this plays out.
The foreclosure fraud crisis seems to escalate with each passing now. It is being reported that all 50 U.S. states have launched a joint investigation into alleged fraud in the mortgage industry. This is a huge story that is not going to go away any time soon. The truth is that it would be hard to understate the amount of fraud that has gone on in the U.S. mortgage industry, and we are watching events unfold that could potentially rip the U.S. economy to shreds. Many are now referring to this crisis as “Foreclosure-Gate“, and already it is shaping up to be the worst thing that has ever happened to the U.S. mortgage industry. At this point, it seems inevitable that some financial institutions will go under as a result of this mess. In fact, by the end of this thing we might see a whole bunch of lending institutions crash and burn. This crisis is very hard to describe because it is just so darn complicated, but it is worth it to try to dig into this thing and understand what is going on because it has the potential to absolutely decimate the entire U.S. mortgage industry.
The truth is that there was fraud going on in every segment of the mortgage industry over the past decade. Predatory lending institutions were aggressively signing consumers up for mortgages that they knew they could never repay. Many consumers were also committing fraud because a lot of them also knew that they could never possibly repay the mortgages. These bad mortgages were fraudulently bundled up and securitized, and these securitized financial instruments were fraudulently marketed as solid investments. Those who certified that these junk securities were “AAA rated” also committed fraud. Then these securities were traded at lightning speed all over the globe and a ton of mortgage paperwork became “lost” or “missing”.
Then, when it came time to foreclose on these bad mortgages, a whole bunch more fraud started being committed. The reality is that the “robo-signing” scandal is just the tip of the iceberg. The following are six things that you should know about how deep this foreclosure fraud crisis really goes….
#1 According to the Associated Press, financial institutions were hiring just about whoever they could find, including hair stylists and Wal-Mart employees, as “foreclosure experts” to help them rush through the massive backlog of foreclosures that were rapidly piling up.
In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn’t define the word “affidavit.” Others didn’t know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers’ accusations about document fraud.
#2 There is soon going to be a colossal legal scramble to figure out who actually owns millions of U.S. mortgages.
In his recent article entitled “Invasion Of The Robot Home Snatchers“, Robert Scheer described the complete and total mess that the U.S. mortgage industry has created….
How do you foreclose on a home when you can’t figure out who owns it because the original mortgage is part of a derivatives package that has been sliced and diced so many ways that its legal ownership is often unrecognizable? You cannot get much help from those who signed off on the process because they turn out to be robot signers acting on automatic pilot. Fully 65 million homes in question are tied to a computerized program, the national Mortgage Electronic Registration Systems (MERS), that is often identified in foreclosure proceedings as the owner of record.
Meanwhile, more organizations are stepping forward to help homeowners fight foreclosures. National People’s Action, PICO National Network, Industrial Areas Foundation, Alliance of Californians for Community Empowerment and the Northwest Federation of Community Organizations have all partnered with the SEIU to launch the “Where’s The Note” campaign which is going to encourage homeowners to demand to see the note before submitting to a foreclosure. Campaigns such as this are going to make foreclosures much more costly for banks.
#3 Legal battles over foreclosure documents could soon spawn thousands upon thousands of lawsuits across the United States.
Adam Levitin, a Georgetown University Law professor who specializes in mortgage finance and financial regulatory issues was recently quoted in an article on CNBC as saying the following about the situation we are currently in….
The mortgage is still owed, but there’s going to be a problem figuring out who actually holds the mortgage, and they would be the ones bringing the foreclosure. You have a trust that has been getting payments from borrowers for years that it has no right to receive. So you might see borrowers suing the trusts saying give me my money back, you’re stealing my money. You’re going to then have trusts that don’t have any assets that have been issuing securities that say they’re backed by a whole bunch of assets, and you’re going to have investors suing the trustees for failing to inspect the collateral files, which the trustees say they’re going to do, and you’re going to have trustees suing the securitization sponsors for violating their representations and warrantees about what they were transferring.
#4 The problems with foreclosure paperwork may be more widespread than anyone would have dared to imagine.
Attorney Richard Kessler recently conducted a study in which he found “serious errors” in approximately 75 percent of the court filings related to home repossessions that he examined. Now he says that the foreclosure crisis could haunt the U.S. mortgage industry for the next ten years….
“Defective documentation has created millions of blighted titles that will plague the nation for the next decade.”
#5 If some banks discover that they are missing the paperwork for large numbers of mortgages (as is currently being alleged), those banks could be forced to significantly revalue those assets (as in “close to zero”) on their balance sheets.
The most damaging thing that could happen to banks would be the discovery that they simply cannot prove they hold a mortgage on a house. In that case, the loan would probably have to be written down to near zero. Even for current loans, the regulatory reserve requirements would double as the loan would no longer be a functional mortgage but an ordinary consumer loan. Depending on the size of the “no docs” portion of the loan portfolio, this might be a minor blip or require a bank to raise new capital to fill the hole in the balance sheet.
#6 Renowned investor Jim Sinclair is actually warning that the collapse of securitized mortgage debt could be the “final shot” that will wipe out many financial institutions across the United States.
I am asking for your attention again because of the depth of the fraud and now the size of the securitized mortgage debt OTC derivative pile of garbage that is in the trillions. This entire mountain of weapons of mass financial and social destruction is now in question. I have been telling you this for more than 2 years since the manufacturers and distributors of this crap were called by the NY Fed due to the loss of control over the paperwork.
I had dinner with my former partner, then lead director of and CEO of Bear Stearns. I could not contain myself so I asked him why he did so much business in OTC derivatives which were certain to bankrupt them. The answer I got was it was more than 50% of their profit. The right answer should have been it was more than 80% of their earnings.
Securitized mortgage debt is going to be the final shot that kills all kinds of financial entities in the Western world. The biggest holder of this putrid junk is pension funds.
Meanwhile, the stock market continues to go up, up, up as if everything is right in the world and as if a juicy new bull market is now upon us.
Well, let’s all join hands and sing happy songs around the campfire.
Perhaps if we all close our eyes and wish real hard all of this foreclosure fraud will just go away.
The U.S. economy is being slowly but surely destroyed and many Americans have no idea that it is happening. That is at least partially due to the fact that most financial news is entirely focused on the short-term. Whenever a key economic statistic goes up the financial markets surge and analysts rejoice. Whenever a key economic statistic goes down the financial markets decline and analysts speak of the potential for a “double-dip” recession. You could literally get whiplash as you watch the financial ping pong ball bounce back and forth between good news and bad news. But focusing on short-term statistics is not the correct way to analyze the U.S. economy. It is the long-term trends that reveal the truth. The reality is that there are certain underlying foundational problems that are destroying the U.S. economy a little bit more every single day.
11 of those foundational problems are discussed below. They are undeniable and they are constantly getting worse. If they are not corrected (and there is no indication that they will be) they will destroy not only our economy but also our entire way of life. The sad truth is that it would be hard to understate just how desperate the situation is for the U.S. economy.
Long-Term Trend #1: The Deindustrialization Of America
The United States is being deindustrialized at a pace that is almost impossible to believe. But now that millions upon millions of people have lost their jobs, more Americans than ever are starting to wake up and believe it.
A recent NBC News/Wall Street Journal poll found that 69 percent of Americans now believe that free trade agreements have cost America jobs. Ten years ago the majority of Americans had great faith in the new “global economy” that we were all being merged into, but now the tide has turned.
So why have Americans lost faith in “free trade”?
Well, it turns out that the current system is neither “free trade” nor “fair trade”. Many other nations impose extremely high tariffs on U.S. goods and put up ridiculous barriers to American products and yet the United States has generally let everyone else openly manipulate currency rates and flood our shores with whatever cheap products they want.
The results have been disastrous. Jobs and factories have been leaving the United States at a blinding pace.
The United States has lost approximately 42,400 factories since 2001. An economy without a manufacturing base does not have a bright long-term future. Yet our politicians have allowed our manufacturing base to be systematically dismantled.
As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time that less than 12 million Americans were employed in manufacturing was in 1941.
How is the United States supposed to have a bright economic future if it consumes everything in sight and yet makes very little?
Something needs to be done.
In 1959, manufacturing represented 28 percent of all U.S. economic output. In 2008, it represented only 11.5 percent and it continues to fall.
Needless to say, millions of blue collar workers now find themselves unable to find jobs. Today, 28% of all U.S. households have at least one person that is looking for a full-time job and there is no sign that things are going to improve much any time soon.
Long-Term Trend #2: The Exploding U.S. Trade Deficit
Each month, tens of billions more dollars go out of the United States than come into it. In other words, every single month the United States gets poorer.
Recently, the U.S. trade deficit has been coming in at around 40 to 50 billion dollars a month. About half of that is with communist China.
As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.
There is a reason why China has been able to loan the U.S. government nearly a trillion dollars. They have literally been bleeding us dry.
The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.
Does that sound like “fair trade” to you?
According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.
Half a million jobs in just one year?
And that doesn’t even take into account the trade deficit that we have with all the other nations around the world.
We have literally built China into a superpower.
One prominent economist is now projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.
But it isn’t just China that is a problem.
Since the implementation of NAFTA in 1994, 300,000 U.S. farms have gone out of business.
Globalism has forced U.S. workers to directly compete with the cheapest labor in the world for jobs. That is not good for American workers and it is not good for America.
Long-Term Trend #3: The Shrinking Middle Class
As jobs continue to flee the United States and as wages continue to be depressed, America’s middle class is shrinking at an alarming rate.
According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck. That was up substantially from 49 percent in 2008 and 43 percent in 2007.
Unfortunately, a growing number of Americans have found it impossible to make it from month to month without direct financial assistance from the federal government.
41 million Americans are now on food stamps. One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government. Economic pain is everywhere.
Tens of millions of Americans now live in poverty. The U.S. Census Bureau says that 43.6 million Americans are now living in poverty and according to them that is the highest number of poor Americans that they have ever recorded in 51 years of record-keeping.
Long-Term Trend #4: The Growing Size Of The U.S. Government
No matter whether it is a Republican or a Democrat in the White House, the size of the U.S. government has continued to grow by leaps and bounds in recent years.
This is a tremendous drain on the U.S. economy. The government produces very little value for the economy and yet costs a colossal amount to maintain.
In addition, multiplying government regulations have caused the United States to be a very difficult environment to operate a business in.
The Federal Register is the main source of regulations for U.S. government agencies. In 1936, the number of pages in the Federal Register was about 2,600. Today, the Federal Register is over 80,000 pages long.
Long-Term Trend #5: The Constantly Growing U.S. National Debt
The United States has accumulated the biggest mountain of debt in the history of the world and every single month it gets worse.
Do we really want to pass on a 20 trillion dollar debt to our children and grandchildren?
But the truth is that the situation is actually a lot worse than that.
If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion each and every year.
Needless to say, that is not anywhere close to sustainable. We are literally destroying our economic future with all of this debt.
Long-Term Trend #6: The Ongoing Devaluation Of The U.S. Dollar
The Federal Reserve constantly destroys the value of the U.S. dollar. Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power.
An item that cost $20.00 in 1970 would cost you $112.35 today. An item that cost $20.00 in 1913 would cost you $440.33 today.
Inflation is like a hidden tax. The value of the dollars you are holding right now will decline a little bit more each and every month.
And now that the Federal Reserve is threatening to unleash another round of quantitative easing, it appears that the value of our dollars will soon be declining even more rapidly.
Long-Term Trend #7: The Derivatives Bubble
The one thing that the “Wall Street reform bill” should have done was that it should have done something about the horrific abuses in the derivatives markets. Instead, the Wall Street reform bill did next to nothing about derivatives and instead imposed hundreds of other useless regulations on Wall Street.
Most Americans don’t even know what derivatives are. Basically, they are side bets. They have no underlying value of their own. But today derivatives have taken center stage on Wall Street. Our financial markets have become a gigantic casino.
The total value of all derivatives worldwide is estimated to be somewhere between 600 trillion and 1.5 quadrillion dollars. And thanks to the U.S. Congress, the derivatives bubble is still growing.
It would be hard to understate the danger that the derivatives bubble represents. The danger from derivatives is so great that Warren Buffet once called them “financial weapons of mass destruction”.
When the derivatives bubble finally pops, there will not be enough money in the entire world to fix it.
Long-Term Trend #8: The Health Care Industry
The United States health care system is completely and totally broken. It has become a gigantic money making machine for health insurance companies, pharmaceutical corporations and greedy lawyers.
Americans pay more for health care than anyone else in the world and yet they get shockingly little in return.
Health care expenses are the number one reason why people file for personal bankrupty in the United States. Surprisingly, most of those who get bankrupted by health care expenses actually have health insurance.
The health insurance system in the United States is a complete and total mess. Health insurance premiums are busting the budgets of tens of millions of American families and yet they are getting ready to go up yet once again.
But do health insurance companies actually need more money? Even as the rest of the U.S. economy deeply struggles, America’s health insurance companies increased their profits by 56 percent in 2009.
At least someone is doing well in this economy.
The truth is that the U.S. health care system needs to be totally and completely reinvented. The system we had before did not work. Barack Obama’s new health care system will be far worse. Meanwhile, the health care industry is literally choking the life out of the U.S. economy.
Long-Term Trend #9: Financial Power Is Becoming Concentrated In Fewer And Fewer Hands
Once upon a time, the United States had a very diverse financial system. But today financial power is becoming concentrated in fewer and fewer hands with each passing year.
More U.S. banks fail every single week. In fact, the number of bank failures is on pace to far surpass the total of 140 U.S. banks that failed last year.
There are now nearly 900 banks (well over 10 percent of all U.S. banks) on the FDIC list of problem banks.
Meanwhile, the “too big to fail” banks continue to pick up market share. The “big four” U.S. banks (Citigroup, JPMorgan Chase, Bank of America and Wells Fargo) had approximately 22 percent of all deposits in FDIC-insured institutions back in 2000. As of June 30th of last year that figure was up to 39 percent.
Putting an increasing amount of financial power into the hands of just a few elite banks is a recipe for disaster any way you want to cut it.
Long-Term Trend #10: Rampant Corruption On Wall Street
Our financial system has become an absolute cesspool of corruption. In the past I have written extensively about all of the corruption that Goldman Sachs has been involved in, but they are far from alone.
In fact, it seems like new stories of financial corruption emerge almost daily now.
For example, just recently Bank of America, JPMorgan Chase and GMAC Mortgage have all suspended foreclosures in many U.S. states due to serious concerns about foreclosure procedures.
But there is a lot of corruption that is a lot worse than that. The rampant manipulation of the gold and silver markets was completely blown open by an industry insider earlier this year, but the U.S. government had to be publicly shamed before they would even agree to look into it.
The truth is that corruption on Wall Street has become so common that it is almost impossible to keep up with it all. It seems like no matter what stone you turn over on Wall Street these days you find yet more corruption.
But if the core of our financial system is so incredibly corrupt, how long will it be before it collapses in on itself?
Long-Term Trend #11: The Growing Retirement Crisis That Threatens To Bankrupt America
The Baby Boomers may end up bankrupting America after all. A retirement tsunami is coming that threatens to drown our nation in a sea of red ink.
The truth is that Americans have not been preparing for retirement on their own. One shocking new study indicates that Americans are $6.6 trillion short of what they need to retire comfortably.
In fact, approximately half of all workers in the United States have less than $2000 saved up for retirement.
So what about corporate pension plans?
Are they in good shape?
No.
One recent study found that America’s 100 largest corporate pension plans were underfunded by $217 billion as of the end of 2008.
But sadly, the pension plans run by U.S. state governments are in even worse shape.
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 of 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 means that collectively, the 50 U.S. state governments are 3.2 trillion dollars short of what they need to meet their pension obligations.
But the biggest mess of all may be the U.S. Social Security system.
The sad reality is that anyone that has studied it closely knows that it is nothing more than a Ponzi scheme, and the scam has just about run its course.
But things get really hairy when you start looking down the road.
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.
Ouch.
It is time to face facts people.
We are in deep, deep, deep trouble.
An increasing number of Americans are starting to realize this. They may not always know the specifics of what is going wrong, but more people than ever realize that something is broken. According to one recent survey, 63 percent of Americans believe that the United States is on the wrong track.
And we are very much on the wrong track. We have squandered the great wealth that our parents and grandparents left us and we are wrecking the greatest economic machine that the world has ever seen.
If we do not get our act together, someday people will look back and will curse this generation for how incredibly stupid we were.
Millions of Americans are waking up to the fact that the Federal Reserve is bad, but very few of them can coherently explain why this is true. For decades, an unelected, privately-owned central bank has controlled America’s currency, run our economy and has driven the U.S. government to the brink of bankruptcy. It operates in great secrecy, it has never been subjected to a comprehensive audit and yet the actions it takes have an impact on every single American. It is an institution designed to drain wealth from the U.S. government (and ultimately from the American people) and transfer it to the ultra-wealthy. Have you ever wondered why a sovereign nation such as the United States has to borrow United States dollars from anyone? Have you ever wondered why a sovereign nation such as the United States does not even issue its own currency? Have you ever wondered why we allow a group of unelected private bankers to run our economy?
Those are some very important questions. Hopefully what you are about to read will open the eyes of many. The truth is that our financial system is centrally-controlled and centrally-managed by a group of banking oligarchs who have constructed an ever-expanding debt spiral which has been efficiently designed to slowly transfer all wealth into their hands.
The following are 11 reasons why the Federal Reserve is not good for the United States….
1 – The Federal Reserve was created as a way to enslave the U.S. government with debt. The truth is that the U.S. government only goes into debt if it chooses to. Theoretically, one day that U.S. government could simply decide to print as many U.S. dollars as it wants and pay off all government debts. But under the current system that is not allowed. You see, today the U.S. government does not issue any money. The Federal Reserve issues all money. That is why they are called “Federal Reserve notes”.
Under the current regime, whenever the U.S. government wants more currency to be created it has to go into more debt.
If you will pull a dollar bill out and take a look at it, you will notice that it says “Federal Reserve Note” at the top.
It belongs to the Federal Reserve.
The U.S. government cannot simply go out and create new money whenever it wants under our current system.
Instead, it must get it from the Federal Reserve.
So, when the U.S. government needs to borrow more money (which happens a lot these days) it goes over to the Federal Reserve and asks them for some more green pieces of paper called Federal Reserve Notes.
The Federal Reserve swaps these green pieces of paper for pink pieces of paper called U.S. Treasury bonds. The Federal Reserve either sells these U.S. Treasury bonds or they keep the bonds for themselves (which happens a lot these days).
So that is how the U.S. government gets more green pieces of paper called “U.S. dollars” to put into circulation. But by doing so, they get themselves into even more debt which they will owe even more interest on.
So every time the U.S. government does this, the national debt gets even bigger and the interest on that debt gets even bigger.
Now, apologists for the Federal Reserve system are quick to point out that the Federal Reserve does not make much of a profit. Once a “statutory dividend” of 6% is paid to member banks and a capital account surplus is “maintained”, the rest of the profits of the Federal Reserve go back to the U.S. Treasury.
Problem solved, right?
Wrong.
The point is not how much of a profit the Federal Reserve makes or does not make.
The point is that the Federal Reserve is a tool for creating U.S. government debt which slowly drains our national wealth and which ends up greatly enriching the global elite.
As of July 1st, the U.S. government had spent $355 billion so far in 2010 on interest payments to the holders of the national debt.
Have you ever wondered who gets all that money?
The truth is that the wealthiest individuals around the globe have been getting very rich for a very long time off of government debt.
2 – The Federal Reserve creates money out of thin air. In a previous article, I noted how this fact comes out in congressional hearings and yet the American people just don’t seem to get too upset about it….
During a recent Joint Economic Committee hearing on Capital Hill, U.S. Representative Ron Paul directly confronted Federal Reserve Chairman Ben Bernanke about this 1.3 trillion dollars. As Ron Paul described how this 1.3 trillion was just created out of thin air, all Bernanke could do was nod his head. Why? Because it was the truth.
3– The huge predator megabanks that now dominate the U.S. banking system use the Federal Reserve as a tool to make money. One of the ways they do this is called the U.S. Treasury carry trade. What happens is that the Federal Reserve lends huge amounts of money to the megabanks for next to nothing, and then these megabanks use all that cash to buy U.S. government debt. This little “trick” helped enable four of the biggest U.S. banks (Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup) to have a “perfect quarter” with zero days of trading losses during the first quarter of 2010. Wouldn’t you like to have a perfect batting average?
4 – The Federal Reserve devalues our currency. Since the Federal Reserve was created in 1913, the U.S. dollar has lost 96 percent of its purchasing power. The truth is that just a two percent inflation rate will wipe out half of your purchasing power within a single generation. In the chart below, you can clearly see that the beginning of the rapid rise of inflation in the United States coincided with the creation of the Federal Reserve….
5 – The Federal Reserve manipulates the U.S. economy by setting national interest rates. By keeping rates high or low, the Federal Reserve has the power to create economic growth or to destroy it. They have the power to inflate massive bubbles and to pop them. Most Americans give way too much credit and blame to presidents like Bush or Obama for how the economy is doing. The truth is that they really don’t have that much control over the economy compared to the Federal Reserve.
6 – The Federal Reserve also controls the national money supply. They can pump trillions into the economy or pull trillions out without being accountable to anyone. This can have disastrous consequences. For example, after the U.S. stock market crash of 1929, the Federal Reserve continued to contract the money supply. Many analysts believe that this was one of the key things that precipitated the Great Depression.
7– The Federal Reserve is not part of the U.S. government. The truth is that the Federal Reserve is about as “federal” as Federal Express is. In defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve objected by declaring that it was “not an agency” of the U.S. government and therefore it was not subject to the Freedom of Information Act. It is kind of funny how Fed officials are always talking about how important their “independence” is, but whenever anyone starts criticizing them for being private they start stressing their ties with the government.
8 – The Federal Reserve has become far, far too powerful. The reality is that those running the Federal Reserve are not elected and yet have an enormous amount of control. In fact, Ron Paul recently told MSNBC that he believes that the Federal Reserve is more powerful than Congress…..
“The regulations should be on the Federal Reserve. We should have transparency of the Federal Reserve. They can create trillions of dollars to bail out their friends, and we don’t even have any transparency of this. They’re more powerful than the Congress.”
9– The Federal Reserve is dominated by Wall Street and the New York banks. The New York representative is the only permanent member of the Federal Open Market Committee, while other regional banks rotate in 2 and 3 year intervals. The former head of the New York Fed, Timothy Geithner, is now U.S. Treasury Secretary. The truth is that the Federal Reserve Bank of New York has always been the most important of the regional Fed banks by far, and in turn the Federal Reserve Bank of New York has always been dominated by Wall Street and the major New York banks.
10– Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements for banks. Fractional reserve banking has always been a way that the bankers have conned the public, but now Bernanke wants to get rid of the pretense of “reserves” altogether.
The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.
11 – The Federal Reserve is not accountable to anyone. The Federal Reserve has never undergone a true comprehensive audit since it was created back in 1913. Ron Paul’s proposal to audit the Federal Reserve, which had previously been co-sponsored by 320 members of the U.S. House of Representatives, ultimately failed by a vote of 229-198.
But shouldn’t the American people be able to see what is going on inside the Federal Reserve?
Shouldn’t we have some way to keep them accountable?
After all, they have an incredible amount of power over us, shouldn’t we have at least a little bit of power over them?
Unfortunately, the truth is that they desperately do not want light to be shined on the elaborate “shell game” that they are running.
Have you ever wondered if it was just a coincidence that the personal income tax was implemented just about the same time that the Federal Reserve was created?
Why does the U.S. government have to tax us?
Why can’t the U.S. government just print up all the money that it needs?
Well, the way that our Congress spends money that would probably create horrific hyperinflation, but that is the subject for another article.
The point is that the U.S. government should not have to get U.S. dollars from someone else.
If you take a few minutes to stop and think about it, an America where there is no Federal Reserve, no personal income tax and no IRS is not that hard to imagine.
If the U.S. government functioned just fine without all of them at one time, then why couldn’t the U.S. government function just fine without all of them now?
The system we have now clearly is not working. The Federal Reserve was supposed to guarantee that our financial system would be perfectly stable, but in reality our financial system has become much more unstable.
It is time for different thinking. It is time for the U.S. government to take back control of our currency and of our economy. It is time to start electing some people with common sense to represent us in Washington.
So what do you think of the Federal Reserve? Feel free to leave a comment with your opinion….
Have you ever noticed how almost all U.S. bank closings are now announced over the weekend? It is almost as if someone wants to keep the increasing number of bank closures out of the news cycle as much as possible. The Obama administration continues to use phrases like “green shoots” and “economic recovery”, but the truth is that the U.S. banking system is in the middle of a meltdown. On Friday, federal regulators shut down 7 more banks. That means that the total number of U.S. bank failures has reached 103 for 2010 so far. Last year (which was a really bad year for bank closings), we did not break 100 until October. Of course federal officials promise that “the worst is almost over”, but can we really trust anything that they tell us at this point?
When it comes to the health of the U.S. banking system, the statistical trends certainly do not look promising.
At the end of 2008, there were 252 U.S. banks on the FDIC’s problem list.
At the end of 2009, there were 702 U.S. banks on the FDIC’s problem list.
About halfway through 2010, FDIC Chairman Sheila Bair said that 775 banks (approximately 10% of all U.S. banks) were on the problem list.
Does anyone else notice a trend developing?
It is time for everyone in the financial world to admit that the U.S. banking system is dying.
Do you know if your bank if on the problem list?
You might want to go check.
Not that your money is going to suddenly disappear.
Even if your local bank fails, the FDIC will guarantee your bank account, right?
In an economic system built on credit, it is absolutely imperative that most people pay their debts or the whole thing will come crashing down very quickly.
And right now it is undeniable that things are unraveling at a staggering pace.
So who is benefiting from all this?
Well, there is one segment of the banking industry that is actually performing quite nicely in the midst of all of this chaos.
Many of the largest banks in the U.S. have been reporting very large profits as they gobble up larger and larger shares of the U.S. banking market.
Back in 2000, the “Big Four” U.S. banks – Citigroup, JPMorgan Chase, Bank of America and Wells Fargo – held approximately 22 percent of all deposits in FDIC-insured institutions. As of June 30th of last year that figure was up to 39 percent.
The Founding Fathers of this country warned us of the danger of big banks getting too much power, but we have not listened to their warnings.
Now we have monolithic global banks that are so immense in size that we seem almost powerless to control them.
The truth is that these sharks aren’t shedding any tears when your local banks die off.
Why?
Because they know that many of the customers from the banks that have died will soon come their way.
The reality is that all of the legislation and regulations implemented during the past 30 or 40 years have rigged the game massively in favor of the big global banks.
So dozens upon dozens of smaller banks are going to continue to die and the megabanks are going to continue to eat up increasingly larger portions of market share.
So if you still have money in a small local bank, enjoy it while you can.
From now on, the small bank in America is an endangered species.
Do you know if your bank will be there next month? For a growing number of Americans, that is becoming a very real question. The Wall Street Journal is reporting that 775 banks (approximately ten percent of all U.S. banks) are now on the Federal Deposit Insurance Corporation’s list of “problem” banks. This year we have already seen more than six dozen banks fail, and the frightening thing is that we are seeing a rapid acceleration in bank failures even though we are supposedly in a “recovery” right now. So what happens if the economy takes a bad turn and hundreds of these banks that are barely surviving start failing?
Right now an increasing number of Americans are not paying their loans, and this is shredding the balance sheets of small and medium size banks all over the United States. In fact, during the first quarter of 2010, the total number of loans that are at least three months past due increased for the 16th consecutive quarter.
16 consecutive quarters?
Once is a coincidence.
Twice is a trend.
Sixteen times in a row is a total nightmare.
Is there anyone out there that is still convinced that the economy is getting better?
If so, perhaps this will convince you otherwise….
There were 252 banks on the FDIC’s “problem list” at the end of 2008.
There were 702 banks on the FDIC’s “problem list” at the end of 2009.
Now there are 775 banks of the FDIC’s “problem list”.
Are you starting to see a trend?
Federal regulators have already closed 73 banks in 2010, more than double the number shut down at this time last year.
The truth is that the U.S. banking system is coming apart like a 20 dollar suit.
So is the FDIC worried?
No, they insist that they have plenty of money to cover all of the banks that are going to fail.
Meanwhile, the U.S. financial system continues to shrink even after the unprecedented amount of “stimulus money” that the U.S. government has been shoveling into the economy.
The M3 money supply is now contracting at a frightening pace.
In fact, the current rate of monetary contraction now matches the average rate of monetary contraction the U.S. experienced between 1929 and 1933.
But don’t worry.
We aren’t going into a Depression.
Everything is going to be just fine.
Just look deep into Obama’s eyes and keep repeating the word “change” to yourself over and over.
Yes, it is time for the alarm bells to start going off.
The Telegraph recently quoted Professor Tim Congdon from International Monetary Research as saying the following about the deep problems that the U.S. is facing….
“The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly.”
If banks continue to cut their lending, the M3 is going to continue to shrink.
But as noted above, Americans are increasingly getting behind on their loans, so why should banks loan money to a bunch of deadbeats?
Right now U.S. banks are increasingly tightening their lending standards, and this is making it much tougher to get a loan.
In fact, in 2009 the biggest U.S. banks posted their sharpest decline in lending since 1942.
But there is only one problem.
The U.S. economy is completely and totally dependent on credit.
Without easy credit, the entire U.S. economic machine is going to slowly grind to a halt.
So what do you do?
The reality is that we have one gigantic financial mess on our hands, and in many ways it is starting to look like the 1930s all over again.
But perhaps someone out there has a way to get us out of this nightmare. Please feel free to leave a comment with your thoughts, opinions or solutions….
As the number of bank failures in the United States continues to accelerate, many analysts are warning that we could soon see unprecedented changes in the U.S. banking industry. In fact, there are some economists that are warning that we could be about to witness the greatest banking consolidation in U.S. history. As dozens of small and medium size banks have failed, the megabanks have systematically been gobbling up larger and larger slices of market share. In fact, if current trends continue, it doesn’t take much imagination to foresee a future where the entire U.S. banking industry has been consolidated down to between 5 and 10 “superbanks”. So would that be so bad? Well, yes it would. It would represent a massive shift in financial power away from the American people to big, global corporate banks. But if you happen to be a fan of big, global corporate banks perhaps you will really love what is about to happen to the U.S. banking industry.
On Friday, federal regulators seized Pinehurst Bank, which brought the total number of U.S. banks closed this year to 73. At this point in 2009, only 36 banks had failed.
That means that the number of bank failures has doubled compared to the same time period a year ago.
Is that a good trend?
Well, it is a good trend if you are one of the megabanks that is gobbling up the remnants of these banks that were “small enough to fail”.
And the sad thing is that we are likely to see dozens and dozens more small and medium size banks fail in the coming months.
The FDIC recently announced that the number of banks on its “problem list” climbed to 702 at the end of 2009. That is extremely alarming considering the fact that only 552 banks were on the problem list at the end of September 2009 and only 252 banks that were on the problem list at the end of 2008.
In fact, the FDIC is expecting so many banks to fail that they are opening up new offices just to handle all the expected failures. The FDIC has opened a massive 100,000 square foot satellite office near Chicago that will house up to 500 temporary staffers and contractors to manage receiverships and liquidate assets from what they are expecting will be a gigantic wave of failed Midwest banks. Not only that, but the FDIC has also opened similar offices in Irvine, California and Jacksonville, Florida.
But can the FDIC realistically handle all of these bank failures?
No.
The FDIC is backing 8,000 banks that have a total of $13 trillion in assets with a deposit insurance fund that is basically flat broke.
So if the FDIC completely runs out of money, where will all the necessary funds come from?
From U.S. taxpayers of course.
It seems that we are the ultimate bailout machine.
Meanwhile, the biggest U.S. banks are hoarding cash in preparation for hard times. In fact, the biggest banks in the United States cut their collective small business lending balance by another 1 billion dollars in November 2009. That drop was the seventh monthly decline in a row.
The truth is that in 2009, the biggest U.S. banks posted their sharpest decline in lending since 1942.
So what were they doing with their money?
Well, thanks to the Federal Reserve, the megabanks were using the U.S. Treasury carry trade to make huge gobs of cash. In fact, the little game that they are playing with U.S. Treasuries is working so well that 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.
The truth is that the game is rigged to benefit the largest financial institutions, and they are slowly but surely gobbling up the entire U.S. banking market.
Back in 2000, the “Big Four” U.S. banks – Citigroup, JPMorgan Chase, Bank of America and Wells Fargo – held approximately 22 percent of all deposits in FDIC-insured institutions. As of June 30th of last year that figure was up to 39 percent.
The Founding Fathers of this country warned us of the danger of big banks getting too much power, but we have not listened to their warnings.
Now we have monolithic global banks that are so immense in size that we seem almost powerless to control them.
It should interest you to know that my Intel source inside the Fed says absolutely no later than November the banking system should implode. Presently 75% of banks have problems and that the top 5 banks will take over all the others in a general nationalization. There is tremendous fear and uneasiness in the banking world.
Now, let us hope that Bob Chapman’s source is wrong. Certainly the U.S. banking system is in a state of complete and total chaos, but hopefully we can make it into 2011 without a complete implosion of the banking industry.
However, Bob Chapman has been in the industry for decades and he would not have put out a warning like this without good reason. Let us just pray that what this source is warning of does not actually come to pass.
But Bob Chapman is not the only one warning of difficult times ahead.
CNBC recently quoted Brian Kelly, the founder of Kanundrum Capital, as saying that the chances of a global depression breaking out have increased dramatically in recent days….
“Two weeks ago I would give the global depression scenario a one percent chance, but the chances have increased to 10 percent today.”
In fact, world famous economist Nouriel Roubini is absolutely convinced that there is a good deal of economic trouble ahead of us….
“We are still in the middle of this crisis and there is more trouble ahead of us, even if there is a recovery. During the great depression the economy contracted between 1929 and 1933, there was the beginning of a recovery, but then a second recession from 1937 to 1939. If you don’t address the issues, you risk having a double-dip recession and one which is at least as severe as the first one.”
So will the end of 2010 be a very difficult time for the U.S. economy?
Only time will tell.
But what does seem certain is that small and medium size banks will continue to fail in large numbers, and the big dominant banks will continue to gobble up market share.
We are witnessing a dramatic consolidation of the U.S. banking industry, and the only question seems to be how fast it is all going to play out.
Today global wealth is more highly concentrated in the hands of the elite than it ever has been at any other point in modern history. Once upon a time, the vast majority of the people in the world knew how to grow their own food, raise their own animals and take care of themselves. There weren’t many that were fabulously wealthy, but there was a quiet dignity in having land you could call your own or in having a skill that you could turn into a business. Sadly, over the past several decades an increasingly growing percentage of agricultural land has been gobbled up by big corporations and by corrupt governments. Hundreds of millions of people have been pushed off their land and into highly concentrated urban areas. Meanwhile, it has become increasingly difficult to start a business of your own as monolithic global corporations have come to dominate nearly every sector of the world economy. So more people than ever around the world are forced to work for “the system” just to make a living. At the same time, those at the very top of the food chain (the elite) have spent decades rigging the system to ensure that increasing amounts of wealth will continue to flow into their pockets. So now in 2010 we have a global system where a few elitists at the top are insanely wealthy while about half the people living on earth are wretchedly poor.
