The Beginning Of The End
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The “Economic Recovery” Continues: Businesses Are Being Destroyed Faster Than They Are Being Created

The Death Of Small Business - Photo by Tina McKimmieWhat would you say about an economy where businesses are shutting down faster than they are opening?  Well, a shocking new study released by the Brookings Institution indicates that this is exactly what is happening in the United States.  We are absolutely killing small businesses and the entrepreneurial spirit in this country, and as you will see below, the number of self-employed Americans has been on a downward trend for a decade even though our population has been steadily growing.  Traditionally, small businesses have been the primary engine of job growth in this nation, so the fact that study after study has found that small business creation is being crippled in the United States is a really bad sign for our economic future.

Personally, I write about our long-term economic decline nearly every day, but even I had no idea that businesses were being destroyed faster than they were being created.  According to the Brookings Institution, this first started happening in 2009

The American economy is less entrepreneurial now than at any point in the last three decades. That’s the conclusion of a new study out from the Brookings Institution, which looks at the rates of new business creation and destruction since 1978.

Not only that, but during the most recent three years of the study — 2009, 2010 and 2011 — businesses were collapsing faster than they were being formed, a first.

And this mirrors an earlier study conducted by economist Tim Kane.  According to his analysis of U.S. Department of Labor data, the following is how the decline in the number of new business jobs per one thousand Americans breaks down by presidential administration

Bush Sr.: 11.3

Clinton: 11.2

Bush Jr.: 10.8

Obama: 7.8

As you can see, this is a problem that has been building for decades and that has accelerated under the Obama administration.

We are strangling small business creation to death, and as a result the number of Americans that are self-employed just keeps going down.  Just check out this chart…

Self-Employed 2014

And keep in mind that throughout this entire time the U.S. population has been growing.  So the numbers in the chart above should be going up steadily as the population grows.  But instead they have just kept going down.

Meanwhile, the “economic recovery” is continuing in the corporate world as well.

On Tuesday, we learned that Office Depot is going to be closing 400 stores.

Why would that happen if the economy was actually getting better?

When this was announced, shares of Office Depot rose about 20 percent.

I can never understand why that happens.  You would think that when a business makes an announcement that essentially says “our business is failing” that it would cause people to dump the stock.

In any event, this comes on the heels of an announcement by Staples back in March that it was going to shut down 225 stores in the United States and Canada.

So where will we buy our pens and paper from now on?

If the economy really was “recovering”, you would think that demand for office supplies would actually be on the rise.

But the only places where the economy is “recovering” is in places such as Washington D.C., New York City and San Francisco.

Those at the top of the pyramid are doing well, but almost everyone else in the country is really suffering right now.

When you kill off small businesses and the entrepreneurial spirit, it tends to increasingly funnel money to the very top of the food chain.  And this is precisely what is happening in America at this point.  In a recent article, Charles Hugh Smith included a chart that shows how average household net worth in the U.S. breaks down by quartile…

Bottom 25%: $4,600
From 25% to 50%: $21,700
From 50% to 75%: $78,900
From 75% to 90%: $242,800
Top 10%: $1,606,600

As you can see, the bottom 50 percent are really not that much above zero at all.  In the old days, it seemed like almost everyone was “middle class” in America, but now that is rapidly changing.

We can see this increasing divide in the real estate market as well.  According to Bloomberg, sales of million dollar homes are booming, but sales of homes at the low end are plunging…

“Million-dollar homes in the U.S. are selling at double their historical average while middle-class property demand stumbles, showing that the housing recovery is mirroring America’s wealth divide.

Purchases costing $1 million or more rose 7.8 percent in March from a year earlier, according to data released last week by the National Association of Realtors. Transactions for $250,000 or less, which represent almost two-thirds of the market, plunged 12 percent in the period”

So this explains why it is almost impossible to find an affordable home in San Francisco, but the overall homeownership rate in the United States has dropped to the lowest level in 19 years.

But even in our wealthy enclaves there are signs of deep economic trouble.  For example, in New York City the number of homeless children has soared to a new all-time high…

They’re just like other kids except they have a secret. They are homeless.  Children are living hidden lives in plain sight. They are part a growing number of low income families who find themselves with no way out but they are working hard to find a solution.

It’s a big issue. And it’s growing. More than 23,000 children sleep in homeless shelters every night, an all-time high, according to the Coalition for the Homeless.

The only “recovery” being experienced in America is the one that is happening on Wall Street, in boardrooms in Silicon Valley and in the halls of power in Washington.

In the rest of the country, retail stores are closing at the fastest pace that we have seen since the collapse of Lehman Brothers, 20 percent of all families do not have a single member that is employed and 49 million Americans are dealing with food insecurity.

There is no way that we are ever going to have a broad-based economic recovery in this nation if we continue to destroy small businesses.  They are the lifeblood of any economy and they are the primary engine of job creation.

Sadly, our politicians seem completely clueless about all of this.  So they will continue to do the same things that they have always been doing and then wonder why the economy never seems to turn around.

Vast Stretches Of Impoverished Appalachia Look Like They Have Been Through A War

West VirginiaIf you want to get an idea of where the rest of America is heading, just take a trip through the western half of West Virginia and the eastern half of Kentucky some time.  Once you leave the main highways, you will rapidly encounter poverty on a level that is absolutely staggering.  Overall, about 15 percent of the entire nation is under the poverty line, but in some areas of eastern Kentucky, more than 40 percent of the population is living in poverty.  Most of the people would work if they could.  Over the past couple of decades, locals have witnessed businesses and industries leave the region at a steady pace.  When another factory or business shuts down, many of the unemployed do not even realize that their jobs have been shipped overseas.  Coal mining still produces jobs that pay a decent wage, but Barack Obama is doing his very best to kill off that entire industry.  After decades of decline, vast stretches of impoverished Appalachia look like they have been through a war.  Those living in the area know that things are not good, but they just try to do the best that they can with what they have.

In previous articles about areas of the country that are economically depressed, I have typically focused on large cities such as Detroit or Camden, New Jersey.  But the economic suffering that is taking place in rural communities in the heartland of America is just as tragic.  We just don’t hear about it as much.

Most of those that live in the heart of Appalachia are really good “salt of the earth” people that just want to work hard and do what is right for their families.  But after decades of increasing poverty, the entire region has been transformed into an economic nightmare that never seems to end.  The following is a description of what life is like in Appalachia today that comes from a recent article by Kevin D. Williamson

Thinking about the future here and its bleak prospects is not much fun at all, so instead of too much black-minded introspection you have the pills and the dope, the morning beers, the endless scratch-off lotto cards, healing meetings up on the hill, the federally funded ritual of trading cases of food-stamp Pepsi for packs of Kentucky’s Best cigarettes and good old hard currency, tall piles of gas-station nachos, the occasional blast of meth, Narcotics Anonymous meetings, petty crime, the draw, the recreational making and surgical unmaking of teenaged mothers, and death: Life expectancies are short — the typical man here dies well over a decade earlier than does a man in Fairfax County, Va. — and they are getting shorter, women’s life expectancy having declined by nearly 1.1 percent from 1987 to 2007.

In these kinds of conditions, people do whatever they have to do just to survive.  With so much poverty around, serving those on food stamps has become an important part of the local economy.  In fact, cases of soda purchased with food stamps have become a form of “alternative currency” in the region.  In his article, Williamson described how this works…

It works like this: Once a month, the debit-card accounts of those receiving what we still call food stamps are credited with a few hundred dollars — about $500 for a family of four, on average — which are immediately converted into a unit of exchange, in this case cases of soda. On the day when accounts are credited, local establishments accepting EBT cards — and all across the Big White Ghetto, “We Accept Food Stamps” is the new E pluribus unum – are swamped with locals using their public benefits to buy cases and cases — reports put the number at 30 to 40 cases for some buyers — of soda. Those cases of soda then either go on to another retailer, who buys them at 50 cents on the dollar, in effect laundering those $500 in monthly benefits into $250 in cash — a considerably worse rate than your typical organized-crime money launderer offers — or else they go into the local black-market economy, where they can be used as currency in such ventures as the dealing of unauthorized prescription painkillers — by “pillbillies,” as they are known at the sympathetic establishments in Florida that do so much business with Kentucky and West Virginia that the relevant interstate bus service is nicknamed the “OxyContin Express.” A woman who is intimately familiar with the local drug economy suggests that the exchange rate between sexual favors and cases of pop — some dealers will accept either — is about 1:1, meaning that the value of a woman in the local prescription-drug economy is about $12.99 at Walmart prices.

I would encourage everyone to read the rest of Williamson’s excellent article.  You can find the entire article right here.

In Appalachia, the abuse of alcohol, meth and other legal and illegal drugs is significantly higher than in the U.S. population as a whole.  In a desperate attempt to deal with the pain of their lives, many people living in the region are looking for anything that will allow them to “escape” for a little while.  The following is an excerpt from an excellent article by Chris Hedges which describes what life is like in the little town of Gary, West Virginia at this point…

Joe and I are sitting in the Tug River Health Clinic in Gary with a registered nurse who does not want her name used. The clinic handles federal and state black lung applications. It runs a program for those addicted to prescription pills. It also handles what in the local vernacular is known as “the crazy check” — payments obtained for mental illness from Medicaid or SSI — a vital source of income for those whose five years of welfare payments have run out. Doctors willing to diagnose a patient as mentally ill are important to economic survival.

“They come in and want to be diagnosed as soon as they can for the crazy check,” the nurse says. “They will insist to us they are crazy. They will tell us, ‘I know I’m not right.’ People here are very resigned. They will avoid working by being diagnosed as crazy.”

The reliance on government checks, and a vast array of painkillers and opiates, has turned towns like Gary into modern opium dens. The painkillers OxyContin, fentanyl — 80 times stronger than morphine — Lortab, as well as a wide variety of anti-anxiety medications such as Xanax, are widely abused. Many top off their daily cocktail of painkillers at night with sleeping pills and muscle relaxants. And for fun, addicts, especially the young, hold “pharm parties,” in which they combine their pills in a bowl, scoop out handfuls of medication, swallow them, and wait to feel the result.

Of course this kind of thing is not just happening in the heart of Appalachia.  All over the country there are rural communities that are economically depressed.  In fact, according to the Wall Street Journal, economic activity in about half of the counties in the entire nation is still below pre-recession levels…

About half of the nation’s 3,069 county economies are still short of their prerecession economic output, reflecting the uneven economic recovery, according to a new report from the National Association of Counties.

So what are our “leaders” doing to fix this?

Well, they plan to ship millions more of our good jobs overseas.

Unfortunately, I am not kidding.

Republicans in the House of Representatives are introducing “fast track” trade promotion authority legislation that will pave the way for rapid approval of the secret trade treaty that Barack Obama has been negotiating.  The following is how I described this insidious treaty in a previous article

Did you know that the Obama administration is negotiating a super secret “trade agreement” that is so sensitive that he isn’t even allowing members of Congress to see it?  The Trans-Pacific Partnership is being called the “NAFTA of the Pacific” and “NAFTA on steroids”, but the truth is that it is so much more than just a trade agreement.  This treaty has 29 chapters, but only 5 of them have to do with trade.  Most Americans don’t realize this, but this treaty will fundamentally change our laws regarding Internet freedom, health care, the trading of derivatives, copyright issues, food safety, environmental standards, civil liberties and so much more.  It will also merge the United States far more deeply into the emerging one world economic system.

Once again, our politicians are betraying the American people and millions of jobs will be lost as a result.

Not that the economy needs another reason to go downhill.  The truth is that our economic foundations have already been rotting away for quite some time.

But now the ongoing economic collapse seems to be picking up steam again.  For example, the Baltic Dry Index (a very important indicator of global economic activity) is collapsing at a rate not seen since the great financial crash of 2008

Despite ‘blaming’ the drop in the cost of dry bulk shipping on Colombian coal restrictions, it seems increasingly clear that the 40% collapse in the Baltic Dry Index since the start of the year is more than just that. While this is the worst start to a year in over 30 years, the scale of this meltdown is only matched by the total devastation that occurred in Q3 2008. Of course, the mainstream media will continue to ignore this dour index until it decides to rise once again, but for now, 9 days in a row of plunging prices is yet another canary in the global trade coalmine and suggests what inventory stacking that occurred in Q3/4 2013 is anything but sustained.

Soon economic conditions will get even worse for Appalachia and for the rest of the country.  The consequences of decades of very foolish decisions are rapidly catching up with us, and millions upon millions of Americans are going to experience immense economic pain during the years to come.

So what are things like in your area of the country right now?  Please feel free to share your thoughts by posting a comment below…

West Virginia

Camden, New Jersey: One Of Hundreds Of U.S. Cities That Are Turning Into Rotting, Decaying Hellholes

Camden, New Jersey - Photo by Blake BolingerAll over America, formerly prosperous communities are being transformed into crime-infested wastelands of poverty and despair.  Of course the most famous example of this is Detroit.  At one time, Detroit was the greatest manufacturing city that the world had ever seen and it had the highest per capita income in the entire country.  But now it has become a rotting, decaying hellhole that the rest of the planet laughs at.  And of course Detroit is far from alone.  There are hundreds of other U.S. cities that are suffering a similar fate.  In this article, the focus is going to be on Camden, New Jersey, but the truth is that there are lots of other “Detroits” and “Camdens” all over the nation.  Jobs and businesses are leaving our cities at a staggering rate, and what is being left behind is poverty, crime and extreme desperation.

Earlier this month, Rolling Stone published an article that took a hard look at the nightmare conditions that exist in Camden.  A city that once made Campbell’s soup and some of this nation’s most famous warships is now a national disgrace.  The following are six of the best quotes out of that article…

-“In September, its last supermarket closed, and the city has been declared a “food desert” by the USDA. The place is literally dying, its population having plummeted from above 120,000 in the Fifties to less than 80,000 today.”

-“Their home is a city with thousands of abandoned houses but no money to demolish them, leaving whole blocks full of Ninth Ward-style wreckage to gather waste and rats.”

-“With legal business mostly gone, illegal business took hold. Those hundreds of industries have been replaced by about 175 open-air drug markets, through which some quarter of a billion dollars in dope moves every year.”

-“On January 18th, 2011, the city laid off 168 of its 368 police officers, kicking off a dramatic, years-long, cops-versus-locals, house-to-house battle over a few square miles of North American territory that should have been national news, but has not been, likely because it took place in an isolated black and Hispanic ghost town.”

-“After the 2011 layoffs, police went into almost total retreat. Drug dealers cheerfully gave interviews to local reporters while slinging in broad daylight.”

-“The carnage left Camden’s crime rate on par with places like Haiti after its 2010 earthquake, and with other infamous Third World hot spots, as police officials later noticed to their dismay when they studied U.N. statistics.”

You can read the rest of the article right here.  But as bad as things have become in Camden, this should not be a surprise to most of you.  The reality is that this kind of rot and decay is happening in communities all over the United States.

Over in Detroit, crime has gotten so bad that even the police are telling people to “enter Detroit at your own risk“.  When you call the police in Detroit it takes them an average of 58 minutes to respond, and more than 90 percent of the crimes committed in the city end up as unsolved mysteries.

At this point, 60 percent of all children in Detroit are living in poverty, and there are approximately 78,000 abandoned homes in the city.

For much more on all this, check out the statistics in this article, and you can find some great photos of the “ruins of Detroit” right here.

So why is all of this happening?

Well, there are lots of factors involved of course, but the biggest one is the lack of good jobs in these cities.

At one time, Detroit had the largest and most prosperous middle class in the entire nation.  But now those days are long gone.

And what is happening to Detroit is precisely what is happening to America as a whole.  Our good jobs are disappearing and the middle class is being systematically destroyed.

In order to have a middle class, you have got to have middle class jobs.

There is no way around that.

And right now, hordes of young people are graduating from college and discovering that the middle class jobs that they were promised simply are not there.

CNN recently profiled a 37-year-old college graduate named Bobby Bingham.  Because he cannot find a good job, he is forced to work four low paying jobs…

Bobby Bingham works four jobs in Kansas City, Missouri, yet he has very little to show for it.

Bingham is 37 years old and has a college degree, but like many Americans, is stuck working many hours in low wage, part-time jobs.

Each week, he works a total of about 60 hours in his jobs as a massage therapist, a waiter at a Mexican restaurant, a delivery man for sandwich chain Jimmy John’s and a receptionist at his massage school.

Bingham makes approximately $400 a week, which works out to about $20,000 a year.  He has come to the conclusion that he may never be able to make enough to support a family…

“I’ve come to the point in my life where I wonder if I can ever support a family,” he said. “I have no idea how that’s ever going to logically happen.”

That deeply saddened my heart when I read that.  Here is a young man that wants to get married, have a family and do all the right things, but the economy is so bad that he fears that this may never be possible for him.

As I have written about previously, the economic downturn that we are experiencing right now has hit men particularly hard.  The number of men in their prime working years that do not make enough money to support a family is rising with each passing year, and this is causing massive problems in this country.

And when our politicians proclaim that all we need is “more education”, I feel like vomiting.  The U.S. population as a whole has more “education” today than it ever has had before.

If you think that “more education” is the answer, then check out the following excerpt from a recent interview with a law school graduate that is making about $40,000 a year and that has about $200,000 in law school debt…

Yes, it’s extremely hard to get by. I can’t afford rent or a car and can barely afford food. Anything extra like enjoying myself with friends, going to a movie, traveling, etc. — that’s all out the window for the foreseeable future and possibly for the rest of my life thanks to law school. I live with my parents. I don’t have a car. I don’t go out to socialize. I don’t date. I don’t buy new clothes. I don’t buy electronics. I don’t buy much of anything. I spend my free time working other jobs to put more money toward my debt. I do contract work for other lawyers, but the pay is very low and payment is sporadic.

Why did this happen to him?  Well, the truth is that there are way, way too many law school graduates.  There are not nearly enough good jobs for all of them.  In fact, this particular law school graduate deeply regrets ever going to law school and considers it “an extraordinary waste of money”…

I consider law school a waste of my life and an extraordinary waste of money. I feel like I was duped and tricked. At the end of the day, it’s my own fault for being a sucker and I learned an extremely hard lesson. Because I went to law school, I don’t see myself having a family, earning a comfortable wage, or having an enjoyable lifestyle.

But at least he has a job.  There are millions of college graduates that do not.  And there are hundreds of thousands of other college graduates that are currently working as waiters and waitresses.  Large numbers are also working temp jobs or standing behind registers in retail stores.

Over the past decade, tens of thousands of businesses and millions of good jobs have left this country.  The quality of the jobs that remain continues to decline at a frightening pace, and most of the new jobs that are being “created” these days are part-time jobs.

But you won’t hear the mainstream media or our most prominent politicians talk about these things much.  You won’t hear them talk about the fact that median household income in the United States has fallen for five years in a row or about the fact that the rate of homeownership in the United States has fallen for eight years in a row.

The middle class is dying.

Wake up America.

And even as millions of our jobs have been shipped to the other side of the planet, some of the most prominent “American companies” have been bought up by foreigners.  The following list comes from a recent Economy In Crisis article

—–

Here are some of America’s most famous brands currently held in foreign hands:

  • Budweiser, now owned by Anheuser-Busch InBev N.V., which is based in Leuven, Belgium
  • Alka-Seltzer, now owned by German company Bayer Schering Pharma AG
  • Ben & Jerrys, now owned by British-Dutch Unilever
  • AMC theaters, now owned by the Chinese
  • 7-Eleven, now owned by the Japanese company, Seven & I Holdings
  • Woman’s Day Magazine, now owned by the French company,  Hachette Filipacchi Médias, S.A
  • Purina, now owned by the Swiss company, Nestle
  • Gerber, now owned by the Swiss pharmaceutical giant, Novartis
  • Firestone, now owned by the Japanese Bridgestone Corporation
  • Citgo, now owned by the government of Venezuela
  • French’s Mustard, now owned by Reckitt Benckiser, a British conglomerate
  • Frigidaire, now owned by Sweden’s AB Electrolux
  • The Plaza Hotel in New York City, now owned by Israeli billionaire Yitzhak Tshuva’s El-Ad Group
  • Trader Joes, now owned by German billionaires Karl and Theo Albrecht
  • Dial soap, now owned by Henkel KGaA, based in Dusseldorf, Germany
  • Sunglass Hut, now owned by Italian eyewear seller Luxottica Group

—–

Are you starting to get the picture?

Our economic infrastructure is being absolutely gutted and more than 46 million Americans are now living in poverty.

And if you are waiting for the jokers in Washington D.C. to fix things, you are going to be waiting for a very, very long time.

Over the past several years, both the Democrats and the Republicans have proven again and again that they are basically completely and totally useless.  In fact, just about everything that they try to do actually makes our problems even worse.

In just a few days, Barack Obama leaves for a 17 day holiday vacation in Hawaii.  Many have criticized him and the members of Congress for taking so much time off, but perhaps that is the best thing that they can do at this point.  As long as they are away from Washington D.C., at least they won’t be making things even worse for all the rest of us.

The Biggest Ponzi Scheme In The History Of The World

America Is BrokeDid you know that you are involved in the most massive Ponzi scheme that has ever existed?  To illustrate my point, allow me to tell you a little story.  Once upon a time, there was a man named Sam.  When he was younger, he had been a very principled young man that had worked incredibly hard and that had built a large number of tremendously successful businesses.  He became fabulously wealthy and he accumulated far more gold than anyone else on the planet.  But when he started to get a little older he forgot the values of his youth.  He started making really bad decisions and some of his relatives started to take advantage of him.  One particularly devious relative was a nephew named Fred.  One day Fred approached his uncle Sam with a scheme that his friends the bankers had come up with.  What happened next would change the course of Sam’s life forever.

Even though Sam was the wealthiest man in the world by far, Fred convinced Sam that he could have an even higher standard of living by going into a little bit of debt.  In exchange for IOUs issued by his uncle Sam, Fred would give him paper notes that he printed off on his printing press.  Since the paper notes would be backed by the gold that Sam was holding, everyone would consider them to be valuable.  Sam could take those paper notes and spend them on whatever his heart desired.  Uncle Sam started to do this, and he started to become addicted to all of the nice things that those paper notes would buy him.

Fred took the IOUs that he received from his uncle and he auctioned them off to the bankers.  But there was a problem.  The IOUs issued by Uncle Sam had to be paid back with interest.  When the time came to pay back the IOUs, Uncle Sam could not afford to pay back the debts, pay the interest on those debts, and buy all of the nice things that he wanted.  So Uncle Sam issued even more IOUs than before so that he could get enough notes to pay off his debts.  As time rolled on, this pattern just kept on repeating.  Uncle Sam repeatedly paid off his old debts by taking out even larger new debts.

Meanwhile, since the notes that Uncle Sam was using were backed by gold, everyone else in the world decided to start using them to trade with one another.  This was greatly beneficial to Uncle Sam, because the rest of the world was glad to send him oil, home electronics, plastic trinkets and anything else that Uncle Sam wanted in exchange for his gold-backed notes.

Eventually, however, the rest of the world started to suspect that the number of gold-backed notes that Uncle Sam was issuing far exceeded the amount of gold that Uncle Sam actually had.  So the rest of the world started to trade in their notes for gold.

And by that time Uncle Sam definitely did not have enough gold to back up his notes.  Realizing that the scheme was starting to collapse, one day Uncle Sam announced that his notes would no longer be backed by gold.  But he insisted that the rest of the world should continue using his notes because he was the wealthiest man on the planet and everyone should just trust him.

And the rest of the world did continue to trust him, although it wasn’t the same as before.

As Uncle Sam got greedier and greedier, he started to issue IOUs and spend notes at a rate that nobody ever dreamed possible.  The great businesses that Uncle Sam had built when he was younger were starting to decline, and Uncle Sam started buying far more stuff from the rest of the world than they bought from him.  The rest of the world was still glad to take Uncle Sam’s notes because they used them to trade with one another, but they started accumulating far more notes than they actually needed.

Not sure exactly what to do with mountains of these notes, the rest of the world started to loan them back to Uncle Sam.  It eventually got to the point where Uncle Sam owed the rest of the world trillions of these notes.  Even though the notes were losing value at a rate of close to 10 percent a year, Uncle Sam somehow convinced the rest of the world to loan him notes at an average rate of interest of less than 3 percent a year.

One day Uncle Sam woke up and realized that the amount of debt that he owed was now more than 5000 times larger than it was when Fred had first approached him with this ill-fated scheme.  Uncle Sam now owed more than 16 trillion notes to his creditors, and Uncle Sam had already made future financial commitments of 202 trillion notes that he would never be able to pay.  Meanwhile, the notes that Fred had been printing up for Uncle Sam were now worth less than 5 percent of their original value.  Uncle Sam was becoming concerned because some of his other relatives were warning that this whole scheme was about to collapse.

Sadly, Uncle Sam did not listen to them.  Uncle Sam knew that if he admitted how fraudulent the financial scheme was, the rest of the world would quit sending him all of the things that he needed in exchange for his notes and they would quit lending his notes back to him at super low interest rates.

And if the rest of the world lost confidence in his notes and quit using them, Uncle Sam knew that his standard of living would go way, way down.  That was something that Uncle Sam could not bear to have happen.

When a financial crisis almost caused the scheme to crash in 2008, a desperate Uncle Sam went to Fred and asked for help.  In response, Fred started printing up far more notes than ever before and started directly buying up large amounts of IOUs from Uncle Sam with the notes that he was creating out of thin air.  Fred hoped that the rest of the world would not notice what he was doing.

It seemed to work for a little while, but then an even worse financial crisis came along.  Once again, Uncle Sam started issuing massive amounts of new IOUs and Fred started printing up giant mountains of new notes to try to fix things, but their desperate attempts to keep the system going were to no avail.  The rest of the world started to realize that they had been sucked into a massive Ponzi scheme, and they lost confidence in the notes that Uncle Sam was using.  Suddenly nobody wanted to lend notes to Uncle Sam at super low interest rates anymore, and people started asking for far more notes in exchange for the things that Uncle Sam wanted.

Uncle Sam’s standard of living dropped dramatically.  Since he could no longer flood the world with his notes, Uncle Sam could not continue to consume far, far more wealth than he produced.  Uncle Sam sunk into a deep depression as he watched the scheme fall apart all around him.

Uncle Sam had once been the wealthiest man on the entire planet, but now he was a broke, tired old man that was absolutely drowning in debt.  Unfortunately, once he was down on his luck the rest of the world did not have any compassion for him.  In fact, much of the rest of the world celebrated the downfall of Uncle Sam.

All of this could have been avoided if Uncle Sam had never agreed to Fred’s crazy scheme.  And once Uncle Sam made the decision to stop backing his notes with gold, it was only a matter of time before the scheme was going to collapse.

Does this little story sound crazy to you?  It shouldn’t.  The truth is that you are involved in such a scheme right now.  In case you haven’t figured it out, “Uncle Sam” is the United States, the “notes” are U.S. dollars, and “Fred” is the Federal Reserve.

Please share this story with as many people as you can.  Our country is headed for complete and total financial disaster, and we need to get people educated about this while there is still time.

This Is What It Feels Like To Have Your Life Savings Confiscated By The Global Elite

This Is What It Feels Like To Have Your Life Savings Confiscated By The Global Elite - Photo by Hannibal PoenaruWhat would you do if you woke up one day and discovered that the banksters had “legally” stolen about 80 percent of your life savings?  Most people seem to assume that most of the depositors that are getting ripped off in Cyprus are “Russian oligarchs” or “wealthy European tycoons”, but the truth is that they are only just part of the story.  As you will see below, there are small businesses and aging retirees that have been absolutely devastated by the wealth confiscation that has taken place in Cyprus.  Many businesses can no longer meet their payrolls or pay their bills because their funds have been frozen, and many retirees have seen retirement plans that they have been working toward for decades absolutely destroyed in a matter of days.  Sometimes it can be hard to identify with events that are happening on the other side of the globe, but I want you to try to put yourself into their shoes for a few minutes.  How would you feel if something like this happened to you?

For example, just consider the case of one 65-year-old retiree that has had his life savings totally wiped out by the “wealth tax” in Cyprus.  His very sad story was recently featured by the Sydney Morning Herald

”Very bad, very, very bad,” says 65-year-old John Demetriou, rubbing tears from his lined face with thick fingers. ”I lost all my money.”

John now lives in the picturesque fishing village of Liopetri on Cyprus’ south coast. But for 35 years he lived at Bondi Junction and worked days, nights and weekends in Sydney markets selling jewellery and imitation jewellery.

He had left Cyprus in the early 1970s at the height of its war with Turkey, taking his wife and young children to safety in Australia. He built a life from nothing and, gradually, a substantial nest egg. He retired to Cyprus in 2007 with about $1 million, his life savings.

He planned to spend it on his grandchildren – some of whom live in Cyprus – putting them through university and setting them up. There would be medical bills; he has a heart condition. The interest was paying for a comfortable retirement, and trips back to Australia. He also toyed with the idea of buying a boat.

He wanted to leave any big purchases a few years, to be sure this was where he would spend his retirement. There was no hurry. But now it is all gone.

”If I made the decision to stay, I was going to build a house,” John says. ”Unfortunately I didn’t make the decision yet.

”I went to sleep Friday as a rich man. I woke up a poor man.”

You can read the rest of the article right here.

How would you feel if you suddenly lost almost everything that you have been working for your entire life?

And many small and mid-size businesses have been ruined by the bank account confiscation that has taken place in Cyprus.

The following is a bank account statement that was originally posted on a Bitcoin forum that has gone absolutely viral all over the Internet.  One medium size IT business has lost a staggering amount of money because of the “bail-in” that is happening in Cyprus…

Cyprus Bank Account Confiscation

The following is what the poster of this screenshot had to say about what this is going to do to his business…

Over 700k of expropriated money will be used to repay country’s debt. Probably we will get back about 20% of this amount in 6-7 years.

I’m not Russian oligarch, but just European medium size IT business. Thousands of other companies around Cyprus have the same situation.

The business is definitely ruined, all Cypriot workers to be fired.
We are moving to small Caribbean country where authorities have more respect to people’s assets. Also we are thinking about using Bitcoin to pay wages and for payments between our partners.

Special thanks to:

– Jeroen Dijsselbloem
– Angela Merkel
– Manuel Barroso
– the rest of officials of “European Comission”

With each passing day, things just continue to get worse for those with deposits of over 100,000 euros in Cyprus.  A few hours ago, a Reuters story entitled “Big depositors in Cyprus to lose far more than feared” declared that the initial estimates of the losses by big depositors in Cyprus were much too low.

And of course the truth is that those that have had their deposits frozen will be very fortunate to ever see any of that money ever again.

But just a few weeks ago, the Central Bank of Cyprus was swearing that nothing like this could ever possibly happen.  Just check out the following memo from the Central Bank of Cyprus dated “11 February 2013″ that was recently posted on Zero Hedge

Central Bank of Cyprus Memo

Sadly, the truth is that the politicians will lie to you all the way up until the very day that they confiscate your money.

You can believe our “leaders” when they swear that nothing like this will ever happen in the United States, in Canada or in other European nations if you want.

But I don’t believe them.

In fact, as an outstanding article by Ellen Brown recently detailed, the concept of a “bail-in” for “systemically important financial institutions” has been in the works for a long time…

Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.

If you do not believe that what just happened in Cyprus could happen in the United States, you need to read the rest of her article.  The following is an extended excerpt from that article

*****

Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.”  The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.

The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.”  It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state:

An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution.

No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks.  The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only  mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden.

*****

You can find the rest of her excellent article right here.  I would encourage everyone to especially pay attention to what she has to say about derivatives.

Sadly, what is happening in Cyprus right now is just the continuation of a trend.  In recent years, governments all over the world have turned to the confiscation of private wealth in order to solve their financial problems.  The following examples are from a recent article posted on Deviant Investor

October 2008 – Argentina’s leftist government, facing a gigantic revenue shortfall, proposes to nationalize all private pensions so as to meet national debt payments and avoid its second default in the decade.

November 2010 – Headline – Hungary Gives Its Citizens an Ultimatum: Move Your Private Pension Fund Assets to the State or Permanently Lose Your Pension – This is an effective nationalization of all pensions.

November 2010 – Ireland elects to appropriate ten billion euros from its National Pension Reserve Fund to help fund an eighty-five billion euro rescue package for its besieged banks. Ireland also moves to consider a regulatory move that compels some private Irish pension funds to hold more Irish government debt, thereby providing the state with a captive investor base but hugely raising the risk for savers.

December 2010 – France agrees to transfer twenty billion euros worth of assets belonging to its Fonds de Reserve pour les Retraites (FRR), the funded portion of its retirement system, to help pay off recurring social benefits costs. No pensioners are consulted.

April 2012 – Argentina announces that its Economy Ministry has taken an emergency loan from the national pension fund in the amount of $4.3 billion. No pensioners were consulted.

June 2012 – Treasury Secretary Timothy Geithner unilaterally appropriates $45 billion from US federal pension funds to help tide over US deficits for the remainder of fiscal year 2011.

January 2013 – Treasury Secretary Geithner again announces that the government has begun borrowing from the federal employees pension fund to keep operating without passing the approaching “fiscal cliff” debt limit. The move effectively creates $156 billion in borrowing authority from federal pension funds.

March 2013 – Open Bank Resolution finance minister, Bill English, is proposing a Cyprus style solution for potential New Zealand bank failures. The reserve bank is in the final stages of establishing a rescue scheme which will put all bank depositors on the hook for bailing out their banks. Depositors will overnight have their savings shaved by the amount needed to keep distressed banks afloat.

Can you see the pattern?

As I wrote about the other day, no bank account, no pension fund, no retirement account and no stock portfolio will be able to be considered 100% safe ever again.

And once the global derivatives casino melts down, there are going to be a lot of major banks that are going to need to be “bailed in”.

When that day arrives, they are going to try to come after your money.

So don’t leave your entire life savings sitting in a single bank – especially not one of the banks that has a tremendous amount of exposure to derivatives.

Hopefully we can get more people to wake up and realize what is happening.  We are moving into a time of great financial instability, and what worked in the past is not going to work in the future.

Be smart and get prepared while you still can.

Time is running out.

Does China Plan To Establish “China Cities” And “Special Economic Zones” All Over America?

Does China Plan To Establish Chinese Cities And Special Economic Zones All Over America?What in the world is China up to?  Over the past several years, the Chinese government and large Chinese corporations (which are often at least partially owned by the government) have been systematically buying up businesses, homes, farmland, real estate, infrastructure and natural resources all over America.  In some cases, China appears to be attempting to purchase entire communities in one fell swoop.  So why is this happening?  Is this some form of “economic colonization” that is taking place?  Some have speculated that China may be intending to establish “special economic zones” inside the United States modeled after the very successful Chinese city of Shenzhen.  Back in the 1970s, Shenzhen was just a very small fishing village, but now it is a sprawling metropolis of over 14 million people.  Initially, these “special economic zones” were only established within China, but now the Chinese government has been buying huge tracts of land in foreign countries such as Nigeria and establishing special economic zones in those nations.  So could such a thing actually happen in America?  Well, according to Dr. Jerome Corsi, a plan being pushed by the Chinese Central Bank would set up “development zones” in the United States that would allow China to “establish Chinese-owned businesses and bring in its citizens to the U.S. to work.”  Under the plan, some of the $1.17 trillion that the U.S. owes China would be converted from debt to “equity”.  As a result, “China would own U.S. businesses, U.S. infrastructure and U.S. high-value land, all with a U.S. government guarantee against loss.”  Does all of this sound far-fetched?  Well, it isn’t.  In fact, the economic colonization of America is already far more advanced than most Americans would dare to imagine.

So how in the world did we get to this point?  A few decades ago, the United States was the unchallenged economic powerhouse of the world and China was essentially a third world country.

So what happened?

Well, we entered into a whole bunch of extremely unfavorable “free trade” agreements, and countries such as China began to aggressively use “free trade” as an economic weapon against us.

Over the past decade, we have lost tens of thousands of businesses and millions of jobs to China.  When the final numbers for 2012 come out, our trade deficit with China for the year will be well over 300 billion dollars, and that will be the largest trade deficit that one country has had with another country in the history of the world.

Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars.  That 2.3 trillion dollars could have gone to U.S. businesses and U.S. workers, and in turn taxes would have been paid on all of that money.  But instead, all of that money went to China.

Rather than just sitting on all of that money, China has been lending much of it back to us – at interest.  We now owe China more than a trillion dollars, and our politicians are constantly pleading with China to lend more money to us so that we can finance our exploding debt.

Today, the U.S. government pays China approximately 100 million dollars a day in interest on the debt that we owe them.  Those that say that the U.S. debt “does not matter” are being incredibly foolish.

So thanks to our massive trade deficit and our exploding national debt, China is systematically getting wealthier and the United States is systematically getting poorer.

And now China is starting to use a lot of that wealth to aggressively expand their power and influence around the globe.

But isn’t it more than a bit far-fetched to suggest that China may be planning to establish Chinese cities and special economic zones in America?

Not really.

Just look at what has already happened up in Canada.  It is well-known that the Chinese population of Vancouver, Canada has absolutely exploded in recent years.  In fact, the Vancouver suburb of Richmond is now approximately half Chinese.  The following is an excerpt from a BBC article

Richmond is North America’s most Asian city – 50% of residents here identify themselves as Chinese. But it’s not just here that the Chinese community in British Columbia (BC) – some 407,000 strong – has left its mark. All across Vancouver, Chinese-Canadians have helped shape the local landscape.

A similar thing is happening in many communities along the west coast of the United States.  In fact, Chinese citizens purchased one out of every ten homes that were sold in the state of California in 2011.

But in other areas of the United States, the Chinese are approaching things much more systematically.

For example, as I have written about previously, a Chinese group identified as “Sino-Michigan Properties LLC” has purchased 200 acres of land near the town of Milan, Michigan.  Their stated goal is to build a “China City” that has artificial lakes, a Chinese cultural center and hundreds of housing units for Chinese citizens.

In other instances, large chunks of real estate in major U.S. cities that are down on their luck are being snapped up by Chinese investors.  Just check out what a Fortune article from a while back says has been happening over in Toledo, Ohio…

In March 2011, Chinese investors paid $2.15 million cash for a restaurant complex on the Maumee River in Toledo, Ohio. Soon they put down another $3.8 million on 69 acres of newly decontaminated land in the city’s Marina District, promising to invest $200 million in a new residential-commercial development. That September, another Chinese firm spent $3 million for an aging hotel across a nearby bridge with a view of the minor league ballpark.

Toledo is being promoted to Chinese investors as a “5-star logistics region“.  From Toledo it is very easy to get to Chicago, Detroit, Cleveland, Pittsburgh, Columbus and Indianapolis…

With a population of 287,000, Toledo is only the fourth largest city in Ohio, but it lies at the junction of two important highways — I-75 and I-80/90. “My vision is to make Toledo a true international city,” Toledo’s Mayor Mike Bell told the Toledo Blade.

But some of these deals appear to be about far more than just making “investments”.  According to the Idaho Statesman, a Chinese company known as Sinomach (which is actually controlled by the Chinese government) was actually interested in developing a 50 square mile self-sustaining “technology zone” south of the Boise airport…

A Chinese national company is interested in developing a 10,000- to 30,000-acre technology zone for industry, retail centers and homes south of the Boise Airport.

Officials of the China National Machinery Industry Corp. have broached the idea — based on a concept popular in China today — to city and state leaders.

The article suggested that this “technology zone” would be modeled after similar projects that already exist in China, and that Chinese officials were conducting similar negotiations with other U.S. states as well…

Sinomach is not looking only at Idaho.

The company sent delegations to Ohio, Michigan and Pennsylvania this year to talk about setting up research and development bases and industrial parks. It has an interest in electric transmission projects and alternative energy as well.

The technology zone proposal follows a model of science, technology and industrial parks in China — often fully contained cities with all services included.

Thankfully the deal in Idaho appears to be stalled for now, but could we soon see China establish special economic zones in other communities all around America?

The Chinese certainly do seem to be laying the groundwork for something.  They have been voraciously gobbling up important infrastructure all over the country.  The following comes from a recent American Free Press article

In addition to already owning vital ports in Long Beach, Calif. and Boston, Mass., the China Ocean Shipping Company is eyeing major ports on the East Coast and Gulf of Mexico. China also owns access to ports at the entry and exit points of the Panama Canal.

And due to fiscal woes plaguing many American cities and states, U.S. legislators have been actively seeking out Chinese investors. In one of the worst cases, Baton Rouge, La., Mayor Kip Holden offered the Chinese government ownership and operating rights to a new toll way system if the Chinese would provide the funding to build it.

Does it make sense for the Chinese to own some of our most important ports?

Isn’t there a national security risk?

Sadly, there isn’t much of anything that our politicians won’t sell these days as long as someone is willing to flash a lot of cash.

The Chinese have also been busy buying up important real estate on the east coast as a recent Forbes article explained….

According to a recent report in the New York Times, investors from China are “snapping up luxury apartments” and are planning to spend hundreds of millions of dollars on commercial and residential projects like Atlantic Yards in Brooklyn. Chinese companies also have signed major leases at the Empire State Building and at 1 World Trade Center, the report said.

But it is not only just land and infrastructure that the Chinese have been buying up.

They have also been purchasing rights to vital oil and natural gas deposits all over the United States.

There have been two Chinese companies that have been primarily involved in this effort.

The first is the China National Offshore Oil Corporation (CNOOC).  According to Wikipedia, CNOOC is 100 percent owned by the Chinese government…

CNOOC Group is a state-owned oil company, fully owned by the Government of the People’s Republic of China, and the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) performs the rights and obligations of shareholder on behalf of the government.

The second is Sinopec Corporation.  Sinopec Group is the largest shareholder (approx. 75% ownership) in Sinopec Corporation.  And as the Sinopec website tells us, Sinopec Group is fully owned by the Chinese government…

Sinopec Group, the largest shareholder of Sinopec Corp., is a super-large petroleum and petrochemical group incorporated by the State in 1998 based on the former China Petrochemical Corporation. Funded by the State, it is a State authorized investment arm and State-owned controlling company.

So whenever you see CNOOC or Sinopec, you can replace those names with the Chinese government.  The Chinese government essentially runs both of those companies.

And as you can see from the following list compiled by the Wall Street Journal, those two companies have been extremely aggressive in buying up rights to oil and natural gas all over the nation…

Colorado: Cnooc gained a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming in a $1.27 billion pact with Chesapeake Energy Corp.

Louisiana: Sinopec has a one-third interest in 265,000 acres in the Tuscaloosa Marine Shale after a broader $2.5-billion deal with Devon Energy.

Michigan: Sinopec gained a one-third interest in 350,000 acres in a larger $2.5 billion deal with Devon Energy.

Ohio: Sinopec acquired a one-third stake in Devon Energy’s 235,000 Utica Shale acres in a larger $2.5 billion deal.

Oklahoma: Sinopec has a one-third interest in 215,000 acres in a broader $2.5 billion deal with Devon Energy.

Texas: Cnooc acquired a one-third interest in Chesapeake Energy’s 600,000 acres in the Eagle Ford Shale in a $2.16-billion deal.

Wyoming: Cnooc has a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming after a $1.27 billion pact with Chesapeake Energy. Sinopec gained a one-third interest in Devon Energy’s 320,000 acres as part of a larger $2.5 billion deal.

Gulf of Mexico: Cnooc Ltd. separately acquired minority stakes in some of Statoil ASA’s leases as well as six of Nexen Inc.’s deep-water wells.

So why is the U.S. government allowing this?

That is a very good question.

For a nation that purports to be pursuing “energy independence”, we sure do have a funny way of going about things.

Unfortunately, the sad truth is that China is absolutely mopping the floor with the United States on the global economic stage.  China is rising and America is in an advanced state of decline.  Global economic power has shifted dramatically and most Americans still don’t understand what has happened.

The following are 44 more signs of how dominant the economy of China has become…

1. A Chinese firm recently made a $2.6 billion offer to buy movie theater chain AMC.

2. A different Chinese firm made a $1.8 billion offer to buy aircraft maker Hawker Beechcraft.

3. In December it was announced that a Chinese group would be purchasing AIG’s plane leasing unit for $4.23 billion.

4. It was recently announced that the Federal Reserve will now allow Chinese banks to buy up American banks.

5. A $190 million bridge project up in Alaska was awarded to a Chinese firm.

6. A $400 million contract to renovate the Alexander Hamilton bridge in New York was awarded to a Chinese firm.

7. A $7.2 billion contract to construct a new bridge between San Francisco and Oakland was awarded to a Chinese firm.

8. The uniforms for the U.S. Olympic team were made in China.

9. 85 percent of all artificial Christmas trees are made in China.

10. The new World Trade Center tower is going to include glass that has been imported from China.

11. The new Martin Luther King memorial on the National Mall was made in China.

12. In 2001, American consumers spent 102 billion dollars on products made in China.  In 2011, American consumers spent 399 billion dollars on products made in China.

13. The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

14. According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.

15. The Chinese economy has grown 7 times faster than the U.S. economy has over the past decade.

16. The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

17. The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

18. Overall, the United States has lost a total of more than 56,000 manufacturing facilities since 2001.

19. According to the Economic Policy Institute, America is losing half a million jobs to China every single year.

20. Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

21. In 2010, China produced more than twice as many automobiles as the United States did.

22. Since the auto industry bailout, approximately 70 percent of all GM vehicles have been built outside the United States.

23. After being bailed out by U.S. taxpayers, General Motors is currently involved in 11 joint ventures with companies owned by the Chinese government.  The price for entering into many of these “joint ventures” was a transfer of “state of the art technology” from General Motors to the communist Chinese.

24. Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.

25. The United States has lost more than a quarter of all of its high-tech manufacturing jobs over the past ten years.

26. China’s number one export to the U.S. is computer equipment.

27. The number one U.S. export to China is “scrap and trash”.

28. The U.S. trade deficit with China is now more than 28 times larger than it was back in 1990.

29. Back in 1985, the U.S. trade deficit with China was just 6 million dollars for the entire year.  For the month of November 2012 alone, the U.S. trade deficit with China was 28.9 billion dollars.

30. China now consumes more energy than the United States does.

31. China is now the leading manufacturer of goods in the entire world.

32. China uses more cement than the rest of the world combined.

33. China is now the number one producer of wind and solar power on the entire globe.

34. Today, China produces nearly twice as much beer as the United States does.

35. Right now, China is producing more than three times as much coal as the United States does.

36. China now produces 11 times as much steel as the United States does.

37. China produces more than 90 percent of the global supply of rare earth elements.

38. China is now the number one supplier of components that are critical to the operation of U.S. defense systems.

39. A recent investigation by the U.S. Senate Committee on Armed Services found more than one million counterfeit Chinese parts in the Department of Defense supply chain.

40. 15 years ago, China was 14th in the world in published scientific research articles.  But now, China is expected to pass the United States and become number one very shortly.

41. China now awards more doctoral degrees in engineering each year than the United States does.

42. According to one study, the Chinese economy already has roughly the same amount of purchasing power as the U.S. economy does.

43. According to the IMF, China will pass the United States and will become the largest economy in the world in 2016.

44. Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.

Without the “globalization” of the world economy, none of this would have ever happened.  But instead of admitting our mistakes and fixing them, our politicians continue to press for even more “free trade” and even more integration with communist nations such as China.

In fact, according to Dr. Jerome Corsi, the U.S. government has already set up 257 “foreign trade zones” all over America.  These “foreign trade zones” are apparently given “special U.S. customs treatment” and are used to promote “free trade”…

Corsi noted that the U.S. government has created 257 foreign trade zones, or FTZs, throughout the United States, designed to extend special U.S. customs treatment to U.S. plants engaged in international-trade-related activities.

The FTZs tend to be located near airports, with easy access into the continental NAFTA and WTO multi-modal transportation systems being created to move free-trade goods cheaply, quickly and efficiently throughout the continent of North America.

“There is nothing in the U.S. government’s description of FTZs that would prevent a foreign government, like China, from operating a shell U.S. company that is in reality owned and financed by the Chinese government and operated through a Chinese government-owned corporation,” Corsi wrote.

Sadly, we are probably going to see a whole lot more of this in the years ahead.

According to Corsi, a professor of economics at Tsighua University in Beijing named Yu Qiao has suggested the following plan as a way to transform the debt that the United States owes China into something more “tangible”…

  1. China would negotiate with the U.S. government to create a “crisis relief facility,” or CRF. The CRF “would be used alongside U.S. federal efforts to stabilize the banking system and to invest in capital-intensive infrastructure projects such as high-speed railroad from Boston to Washington, D.C.
  2. China would pool a portion of its holdings of Treasury bonds under the CFR umbrella to convert sovereign debt into equity. Any CFR funds that were designated for investment in U.S. corporations would still be owned and managed by U.S. equity holders, with the Asians holding minority equity shares “that would, like preferred stock, be convertible.”
  3. The U.S. government would act as a guarantor, “providing a sovereign guarantee scheme to assure the investment principal of the CRF against possible default of targeted companies or projects”.
  4. The Federal Reserve would set up a special account to supply the liquidity the CRF would require to swap sovereign debt into industrial investment in the United States.

Apparently the Bank of China really likes this plan and would like to see something like this implemented.

In the years ahead, perhaps many of you will end up working in a “special economic zone” for a Chinese company on a project that is being financially guaranteed by the U.S. government.

If that sounds like a form of slavery to you, the truth is that you are probably not too far off the mark.

The borrower is the servant of the lender, and we should have never allowed ourselves to get into so much debt.

Now we will pay the price.

To get an idea of how much the world has changed in recent years, just check out this incredible photo which contrasts the decline of Detroit over the years with the amazing rise of Shanghai, China.

Things did not have to turn out this way.  Unfortunately, we made decades of incredibly foolish decisions and we wrecked the greatest economic machine that the world has ever seen.

Now the future for America looks really bleak.

Or could it be that I am being too pessimistic?  Please feel free to post a comment with your thoughts below…

The United States - A Colony Of China? - Photo by DrRandomFactor

We Are Witnessing The Death Of Small Business In America

Historically, small businesses have been the primary engine of new job creation in the United States.  If the economy was getting healthy, we would expect to see the number of jobs at new businesses rise.  Instead, we are witnessing just the opposite.  We are told that the economy is supposed to be “recovering”, but the number of “startup jobs” at new businesses has fallen for five years in a row.  According to an analysis of U.S. Department of Labor data performed by economist Tim Kane, there were almost 12 startup jobs per 1000 Americans back in the year 2006.  By 2011, that figure had fallen to less than 8 startup jobs per 1000 Americans.  According to Kane, the number of jobs in the United States at businesses that are less than one year old has fallen from 4.1 million in 1994 to 2.5 million in 2010.  Overall, the number of “new entrepreneurs and business owners” has fallen by more than 50 percent as a percentage of the population since 1977.  The United States was once known as “the land of opportunity”, but now that is fundamentally changing.  At this point we truly do have a “crisis of entrepreneurship” in this country, and that is a huge reason why America is in decline.  We are witnessing the slow death of the small business in America, and that is incredibly bad news for all of us.

Unfortunately, the problems that small businesses are experiencing right now have been building up for decades.  The economic environment for small businesses in America has become incredibly toxic.  Sadly, we can see this in the numbers.  According to Kane, the following is how the decline in the number of startup jobs per 1000 Americans breaks down by presidential administration

Bush Sr.: 11.3

Clinton: 11.2

Bush Jr.: 10.8

Obama: 7.8

Obviously, we are headed very much in the wrong direction.  Kane speculates about why this may be happening in his paper

There is anecdotal evidence that the U.S. policy environment has become inadvertently hostile to entrepreneurial employment. At the federal level, high taxes and higher uncertainty about taxes are undoubtedly inhibiting entrepreneurship, but to what degree is unknown. The dominant factor may be new regulations on labor.  The passage of the Affordable Care Act is creating a sweeping alteration of the regulatory environment that directly changes how employers engage their workforces, and it will be some time until those changes are understood by employers or scholars. Separately, there has been a federal crackdown since 2009 by the Internal Revenue Service on U.S. employers that hire U.S. workers as independent contractors rather than employees, raising the question of mandatory benefits. New firms tend to use part-time and contract staffing rather than full-time employees during the startup stage. According to Labor Department data, the typical American today only takes home 70 percent of compensation as pay, while the rest is absorbed by the spiraling cost of benefits (e.g., health insurance). The dilemma for U.S. policy is that an American entrepreneur has zero tax or regulatory burden when hiring a consultant/contractor who resides abroad. But that same employer is subject to paperwork, taxation, and possible IRS harassment if employing U.S.-based contractors. Finally, there has been a steady barrier erected to entrepreneurs at the local policy level. Brink Lindsey points out in his book Human Capitalism that the rise of occupational licensing is destroying startup opportunities for poor and middle class Americans.

Kane raises some very good points in his analysis.  Without a doubt, small businesses in the United States are being taxed into oblivion.  If you doubt this, just read this article.

And the regulatory environment for small businesses is more suffocating than it has ever been before.  Unfortunately, our politicians never seem to learn that lesson.  During his first term, Obama piled on mountains of new regulations, and now that he has won a second term he is preparing to unleash another massive wave of new regulations.

But many times the worst offenders are politicians on the state and local level.  There are some areas of the country (such as California) that have created absolutely nightmarish conditions for small businesses.  California had the worst “small business failure rate” in the country in 2010.  It was 69 percent higher than the national average.  And in 2011, the state of California ranked 50th out of all 50 states in new business creation.

Yet the politicians in California just continue to pile on even more regulations and even more taxes.

Sadly, this kind of thing is happening from coast to coast and it is killing off hordes of small businesses.  Just consider the following statistics…

-According to the U.S. Census Bureau, the U.S. economy lost more than 220,000 small businesses during the last recession.

-As a share of the population, the percentage of Americans that are self-employed fell by more than 20 percent between 1991 and 2010.

-As a share of the population, the percentage of “new entrepreneurs and business owners” dropped by a staggering 53 percent between 1977 and 2010.

-The average pay for self-employed Americans declined by $3,721 between 2006 and 2010.

So what needs to be done?

Well, first of all, the tax burden and the regulatory burden on small businesses both need to be greatly reduced.

Secondly, the balance of power in our nation needs to be dramatically shifted.  Conservatives run around talking about the need to reduce the power of government and liberals run around talking about the need to reduce the power of corporations, and actually both of them are right.

Our founding fathers intended to establish a Republic where power would never be concentrated in the hands of just a few.  That is why they tried to strictly limit the power of the federal government in the U.S. Constitution, and that is why they greatly restricted the size and scope of corporations in early America.  For much more on this, please see this article: “Corporatism Is Not Capitalism: 7 Things About The Monolithic Predator Corporations That Dominate Our Economy That Every American Should Know“.

Our founding fathers wanted to empower individual citizens and small businesses.  They never intended for us to have a system where big government and big corporations dominate everything and crush the “little guy” at every opportunity.

Even as we witness the death of the small business in America, corporations are absolutely thriving.  The following chart shows how corporate profits after tax have exploded to new record highs in recent years…

So has this been good for workers?  No, it has not translated into more jobs and higher wages.  In fact, wages and salaries as a percentage of GDP are now at an all-time low…

That is why it is imperative that we change “the rules of the game” so that the balance of power is shifted back in the direction of individual citizens and small businesses.  We desperately need to turn back to the principles that this nation was founded upon.

If nothing is done, these trends are going to get even worse.  Barack Obama certainly has no plans to reduce the size and the power of the government.  Since he was elected, an average of 101 new federal employees have been added to the government payroll every single day…

In the 1,420 days since he took the oath of office, the federal government has daily hired on average 101 new employees. Every day. Seven days a week. All 202 weeks. That makes 143,000 more federal workers than when Obama talked forever on that cold day in January of 2009.

And if nothing is done, the monolithic predator corporations that dominate our economy will just get even larger and even more powerful.  Meanwhile, hundreds of thousands more small businesses will close up shop all over the country.

Unfortunately, most Americans seem totally apathetic about these issues.  They seem content to wear “meggings“, watch “Honey Boo Boo” on television and let our government and corporate overlords run everything.  Most of them have even been brainwashed into believing that this is the American way of doing things.

So where do we go from here?

Well, this nation will probably continue to keep doing the same things that it has been doing, and it will continue to get the same results.

The death of small business in America is happening right in front of our eyes, and everybody can see it happening, but very few people are doing anything to stop it.

Lock Your Doors And Prepare To Defend Your Family

Do you think that is an alarmist headline?  Well, I am not the one saying this.  Law enforcement authorities all over the country are telling citizens that they can no longer deal with all the crime and that people need to lock their doors and prepare to defend their families.  Just recently, the city attorney of San Bernardino, California told citizens to “lock their doors and load their guns” because there is not enough money to pay for adequate police protection any longer.  The murder rate in San Bernardino is up 50 percent this year, but the city is dealing with bankruptcy and has been forced to lay off 80 police officers.  But San Bernardino is not the only city dealing with this kind of a thing.  In Oakland, burglaries are up 43 percent so far this year, and to say that there is a “crime wave” going on in Oakland would be a massive understatement.  If you can believe it, in Oakland “more than 11,000 homes, cars or businesses have been broken into so far this year – translating to about 33 burglaries a day.”  Sadly, there simply are not enough police to keep up with it all.  Due to budget cuts, it is being projected that by February the size of the police force in Oakland will be about 25 percent smaller than it was back in 2008.  But what is happening in Detroit is perhaps even more frightening.  Today there are about 1,000 fewer police officers in Detroit than there was a decade ago.  But crime just continues to rise.  So now even the police are telling people to “enter Detroit at your own risk“.  With very little police protection, an increasing number of citizens are taking matters into their own hands.  As I noted in a previous article, justifiable homicide in the city of Detroit increased by 79 percent in 2011, and the rate of self-defense killings in Detroit is approximately 2200 percent above the national average.  But don’t laugh at what is happening in cities like San Bernardino, Oakland and Detroit.  What is happening in those cities will be coming to your community soon enough.

From coast to coast, criminals are becoming increasingly bold and increasingly desperate.  My sister lives near a large city in the middle part of the country, and a house across the street from the one her family just moved into was recently vandalized.  The criminals took all of the exposed copper pipe and copper wire that could be accessed easily.

Other criminals have become very focused on gold because it has soared in value and it is easy to resell.  For example, there have been more than 250 gold chain robberies in Stockton, California just since the month of April.  According to the CBS News affiliate in Sacramento, criminals are just ripping these chains right off of the necks of unsuspecting citizens, and many of the victims that have tried to resist have ended up getting hurt.  Normally the criminals sell off the jewelry within 24 hours, so solving these crimes is a real challenge…

Most victims of the robberies are female (65 percent), and 44 percent of victims are age 50 or older, the data showed. The most common time of day for the crimes were between 12 and 5 p.m., though this only accounts for about a third of the crime.

Parino said robbers took even police by surprise initially.

“When [criminals] do these crimes, they normally get rid of the items within 24 hours,” he said.

That’s why police are now checking up on secondhand stores and pawn shops on a weekly basis.

Many dismiss reports such as these as “anomalies”, but how many “anomalies” do we need before we finally admit that we have a widespread problem in our society?

Personally, there are many major U.S. cities that I would not want to be living right in the middle of right now.

Just take a look at Chicago.  It has become one of the deadliest major cities on the entire globe.  In recent years we have seen massive cuts to the police budget coupled with a dramatic increase in gang activity in Chicago.

The murder rate in Chicago is way up this year and the police force is massively outnumbered.

As I have written about previously, there are only about 200 police officers assigned to Chicago’s Gang Enforcement Unit.  It is their job to handle the estimated 100,000 gang members living in the city.

How would you like to be outnumbered 100,000 to 200?

When things really hit the fan, Chicago is going to be a complete and utter nightmare.

And sometimes we get a peek into how people will behave when things break down.  Just look at what happened during the aftermath of Hurricane Sandy.

If you can believe it, some criminals actually took advantage of the Thanksgiving holiday to loot homes in the Breezy Point neighborhood of Queens.  That was the neighborhood where approximately 100 homes burned down.  The suffering of the residents of that neighborhood made headlines all over the nation.  But that has not stopped criminals from moving in and taking advantage of their vulnerability…

Cops told the victims burglaries are on the rise in Breezy Point.

There were 14 home break-ins from Nov. 12 to Nov. 18, compared with none a year before.

And in the 28 days before that, there were 48 burglaries. Only four break-ins were reported in that time period the year before.

In the days after Sandy, some of the hardest-hit areas were plagued with store looting, home burglaries, street muggings and other crimes.

There are some very sick people out there.  These days you simply do not know who you can trust.  The person you meet on the street may be perfectly fine or they may be a total sicko.  It is so hard to tell.  But without a doubt there are a lot of sickos out there.  Just check out what authorities in Pennsylvania found recently

Animal welfare workers say 11 puppies were found dead and skinned near an eastern Pennsylvania park.

Sadly, authorities in that area had come across another similar incident recently…

The discovery is second disturbing incident in the county in less than a week. About 20 miles away in Lynn Township police say a dog was discovered skinned and cooked.

Who would do such things?

What in the world is happening to this country?

Things are changing, and this is just the tip of the iceberg.  As conditions shift, we are all going to have to carefully evaluate what is necessary to protect our families.  Don’t ignore all of the warning signs.  Sticking our heads in the sand and pretending that everything is going to be okay is not going to help anything.

So what do all of you think about all of this?  Please feel free to post a comment with your opinion below…

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