From the dawn of history, elites have always attempted to enslave humanity. Yes, there have certainly been times when those in power have slaughtered vast numbers of people, but normally those in power find it much more beneficial to profit from the labor of those that they are able to subjugate. If you are forced to build a pyramid, or pay a third of your crops in tribute, or hand over nearly half of your paycheck in taxes, that enriches those in power at your expense. You become a “human resource” that is being exploited to serve the interests of others. Today, some forms of slavery have been outlawed, but one of the most insidious forms is more pervasive than ever. It is called debt, and virtually every major decision of our lives involves more of it. For example, at the very beginning of our adult lives we are pushed to go to college, and Americans have piled up more than 1.2 trillion dollars of student loan debt at this point. When we buy homes, most Americans get mortgages that they can barely afford, and when we buy vehicles most Americans now stretch their loans out over five or six years. When we get married, that often means even more debt. And of course no society on Earth has ever piled up more credit card debt than we have. Almost all of us are in bondage to debt at this point, and as we slowly pay off that debt over the years we will greatly enrich the elitists that tricked us into going into so much debt in the first place. At the apex of this debt enslavement system is the Federal Reserve. As you will see below, it is an institution that is designed to produce as much debt as possible.
There are many people out there that believe that the Federal Reserve is an “agency” of the federal government. But that is not true at all. The Federal Reserve is an unelected, unaccountable central banking cartel, and it has argued in federal court that it is “not an agency” of the federal government and therefore not subject to the Freedom of Information Act. The 12 regional Federal Reserve banks are organized “much like private corporations“, and they actually issue shares of stock to the “member banks” that own them. 100 percent of the shareholders of the Federal Reserve are private banks. The U.S. government owns zero shares.
Many people also assume that the federal government “issues money”, but that is not true at all either. Under our current system, what the federal government actually does is borrow money that the Federal Reserve creates out of thin air. The big banks, the ultra-wealthy and other countries purchase the debt that is created, and we end up as debt servants to them. For a detailed explanation of how this works, please see my previous article entitled “Where Does Money Come From? The Giant Federal Reserve Scam That Most Americans Do Not Understand“. When it is all said and done, the elite end up holding the debt instruments and we end up being collectively responsible for the endlessly growing mountain of debt. Our politicians always promise to get the debt under control, but there is never enough money to both fund the government and pay the interest on the constantly expanding debt. So it always becomes necessary to borrow even more money. When it was created back in 1913, the Federal Reserve system was designed to create a perpetual government debt spiral from which it would never be possible to escape, and that is precisely what has happened.
Just look at the chart that I have posted below. Forty years ago, the U.S. national debt was less than half a trillion dollars. Today, it has exploded up to nearly 18 trillion dollars…
But the national debt is only part of the story. The big banks which control the Federal Reserve also seek to individually dominate our lives with debt. We have become a “buy now, pay later” society and the results have been absolutely catastrophic. 40 years ago, the total amount of debt in our system was just a shade over 2 trillion dollars. Today it is over 57 trillion dollars…
The big banks do not loan you money because they want to help you achieve “the American Dream”. The elitists loan you money because it will make them wealthier. For example, if you only make the minimum payment on a credit card each month, you will end up paying back several times as much money as you originally borrowed. It is a very insidious form of debt enslavement that most Americans simply do not understand.
Meanwhile, the Federal Reserve is also systematically destroying the wealth that you already have. If you try to buck the system and actually save money, the purchasing power of that money is continually being eroded by the Federal Reserve’s inflationary policies. The following chart comes directly from the Federal Reserve and it shows how the value of the U.S. dollar has plummeted over the past 40 years…
Overall, the U.S. dollar has lost approximately 98 percent of its value since the Fed was first established in 1913.
Most people seem to assume that if we could just send the “right politicians” to Washington D.C. that we could get our economy back on the right track.
What those people do not understand is that our system is fundamentally broken. We are trapped in a perpetual debt spiral that is destined to end in a horrifying collapse. Just “tweaking” a few things here or there and adjusting tax rates a bit is not going to fix anything. The vast majority of the “economic solutions” that our politicians talk about are basically equivalent to rearranging the deck chairs on the Titanic.
And of course the elite don’t want the rest of us to truly understand what is going on. Just think about it. Even though the Federal Reserve is one of the most important institutions in our society, and even though it is at the very heart of our economic system, our kids are taught next to nothing about the Fed in school. The vast majority of them have absolutely no idea where money comes from.
Isn’t that pathetic?
But the elite know that if we did understand what they were doing to us that most of us would start to get very upset. Henry Ford, the founder of Ford Motor Company, once said the following…
“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.”
Please share this article with as many people as you can. The truth sets people free, so let us do what we can to wake our fellow Americans up to this insidious debt enslavement system which dominates our society.
Every year on July 4th we celebrate our “independence”, but is America really free? How could we possibly be free when “Big Brother” is constantly intruding in our lives in hundreds of different ways? And I am not just talking about NSA snooping. Sadly, the truth is that the United States is beginning to fully embrace a “police state” culture. We have learned that the government monitors and keeps a record of all of our cell phone calls, emails, Internet searches, credit card transactions, and every piece of mail that we send. But most Americans don’t seem to care. We are “encouraged” to report the “suspicious activity” of our neighbors to the authorities, we are told that having security thugs touch the private areas of our women and children at our airports is necessary “for our security”, and 80,000 SWAT team raids are conducted each year in the United States. But the American people don’t seem to care. America was once a great country, but now it is being turned into a giant prison, and only a small minority of the citizens are raising their voices in objection.
When I was a child, I was taught that totalitarian societies such as North Korea, the Soviet Union and Nazi Germany were the bad guys.
So why in the world would we want to become more like them?
Do we actually believe that these ridiculous security measures are keeping us safer?
At this point, we have already given up so much privacy that we barely have any left.
For example, up until recently I actually believed that our mail was private. But now we have learned that the government is monitoring every piece of mail that the American people send. And according to the New York Times, the government has flagged the mail of thousands of problem citizens for special attention…
Leslie James Pickering noticed something odd in his mail last September: a handwritten card, apparently delivered by mistake, with instructions for postal workers to pay special attention to the letters and packages sent to his home.
“Show all mail to supv” — supervisor — “for copying prior to going out on the street,” read the card. It included Mr. Pickering’s name, address and the type of mail that needed to be monitored. The word “confidential” was highlighted in green.
But even if you are not on the list of those that get special attention, your mail is still photographed. In fact, 160 billion photographs of our mail were sent to the government last year…
Mr. Pickering was targeted by a longtime surveillance system called mail covers, a forerunner of a vastly more expansive effort, the Mail Isolation Control and Tracking program, in which Postal Service computers photograph the exterior of every piece of paper mail that is processed in the United States — about 160 billion pieces last year. It is not known how long the government saves the images.
Together, the two programs show that postal mail is subject to the same kind of scrutiny that the National Security Agency has given to telephone calls and e-mail.
The tyrants of the past never dreamed of having some of the technologies that we have today. Virtually everything that we do is watched, monitored, tracked or recorded in some way.
And as technology continues to advance, there will be very little that the authorities will not be capable of.
Some of the technologies that are coming out these days are absolutely frightening. For example, over in Europe one company is now running talking ads that seem like they are coming from inside our own heads…
Passengers leaning their head against the window will “hear” adverts “coming from inside the user’s head”, urging them to download the Sky Go app.
The proposal involves using bone conduction technology, which is used in hearing aids, headphones and Google’s Glass headset, to pass sound to the inner ear via vibrations through the skull.
A video for the Talking Window campaign released by Sky Deutschland and ad agency BBDO Germany states: “Tired commuters often rest their heads against windows. Suddenly a voice inside their head is talking to them. No one else can hear this message.”
How would you respond if a “voice inside your head” suddenly started talking to you?
In other instances, “Big Brother” can intrude in our lives in more old-fashioned ways.
For example, just check out the rules for July 4th that were posted at the entrance to one park in Lakewood, Ohio. This photo comes from a recent article by Paul Joseph Watson…
Why would anyone want to go spend the 4th of July at that park?
But this is what America is turning into. We are turning into a society that is absolutely obsessed with security and control, and this is manifesting in hundreds upon hundreds of different ways. If you doubt this, just check out the following articles…
Fortunately, the recent revelations about the NSA have spurred some Americans into action. For example, a new non-partisan organization known as “Restore The Fourth” is calling on the U.S. government to restore our Fourth Amendment rights. The following is from a press release that the organization recently issued…
Restore the Fourth is a grassroots, non-partisan, non-violent movement that seeks to organize and assemble nationwide protests on July 4th, 2013. Protesters in over 100 cities across America will gather to demand that the government of the United States of America adhere to its constitutionally dictated limits and respect the Fourth Amendment. http://www.RestoretheFourth.net provides a detailed list of protest locations.
Restore the Fourth maintains that justification of the Fourth Amendment beyond the original text need not be given; the legitimacy of which is self-evident. “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” The Fourth Amendment of the Bill of Rights clearly protects all citizens’ assets, both digital and physical, against searches and seizures without warrant; they aim to assert those rights. They insist that the proper channels of government work to ensure that all policy complies with the supreme laws of the United States of America in their entirety.
Restore the Fourth requests that American citizens’ right to privacy is respected and stands with the Electronic Frontier Foundation and StopWatching.us on their open letter to Congress. As informed members of the American electorate, they endorse and echo the letter’s demands.
1. Enact reform this Congress to Section 215 of the USA PATRIOT Act, the state secrets privilege, and the FISA Amendments Act to make clear that blanket surveillance of the Internet activity and phone records of any person residing in the U.S. is prohibited by law and that violations can be reviewed in adversarial proceedings before a public court;
2. Create a special committee to investigate, report, and reveal to the public the extent of this domestic spying. This committee should create specific recommendations for legal and regulatory reform to end unconstitutional surveillance;
3. Hold accountable those public officials who are found to be responsible for this unconstitutional surveillance.
The July 4th demonstrations seek to demand an end to the unconstitutional surveillance methods employed by the U.S. government and to ensure that all future government surveillance is constitutional, limited, and clearly defined.
Restore the Fourth aims to ensure that the will of the people is reflected in the government of the United States of America. This movement intends to bring an end to twelve years of Fourth Amendment abuses, and demonstrate the need for a return to the Constitution. All Americans should stand with them in this cause to protect the Fourth Amendment of the United States Constitution.
I would encourage you to speak out about these issues however you can. For some people, that may mean participating in a street protest. For others, it may mean making a great YouTube video. Others spread the word on radio shows or by speaking with their friends. Personally, I have written about these issues extensively on my websites and in my new book. We all have ways that we can object to the fact that America is being systematically transformed into a giant prison.
So what do you think?
Do you believe that America is really free?
Please feel free to share your opinion by posting a comment below…
Were you under the impression that your credit card transactions are private? If so, I am sorry to burst your bubble. As you will see below, there are actually multiple government agencies that are gathering and storing records of your credit card transactions. And in turn, those government agencies share that information with other government agencies that want it. So if you are making a purchase that you don’t want anyone to know about, don’t use a credit card. This is one of the reasons why the government hates cash so much. It is just so hard to track. In this day and age, the federal government seems to be absolutely obsessed with gathering as much information about all of us as it possibly can. But there is one big problem. What they are doing directly violates the U.S. Constitution. For those that are not familiar with it, the following is what the Fourth Amendment actually says: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” Unfortunately, the Fourth Amendment is essentially dead at this point. The federal government is investigating all of us and gathering information on all of us all day, every day without end.
Many Americans have never even heard of the Consumer Financial Protection Bureau, but Judicial Watch has discovered that they are spending millions of dollars to collect and analyze our financial transactions…
Judicial Watch announced today that it has obtained records from the Consumer Financial Protection Bureau (CFPB) revealing that the agency has spent millions of dollars for the warrantless collection and analysis of Americans’ financial transactions. The documents also reveal that CFPB contractors may be required to share the information with “additional government entities.”
Judicial Watch was able to obtain some absolutely shocking documents thanks to a Freedom of Information Act request that it filed in April. The following is a summary of some of the things those documents show…
Overlapping contracts with multiple credit reporting agencies and accounting firms to gather, store, and share credit card data as shown in the task list of a contract with Argus Information & Advisory Services LLC worth $2.9 million
A provision stipulating that “The contractor recognizes that, in performing this requirement, the Contractor may obtain access to non-public, confidential information, Personally Identifiable Information (PII), or proprietary information.”
A stipulation that “The Contractor may be required to share credit card data collected from the Banks with additional government entities as directed by the Contracting Officer’s Representative (COR).”
How do you feel about the fact that the government has contracts with “multiple credit reporting agencies and accounting firms to gather, store, and share credit card data”?
How do you feel about the fact that your credit card data and other “non-public, confidential information” may be shared with “additional government entities”?
Judicial Watch President Tom Fitton put it very well when he said that this “warrantless collection of the private financial information of millions of Americans is mind-blowing. Is there anything that this administration thinks it can’t do?”
But of course the Consumer Financial Protection Bureau is not the only one keeping records of your credit card transactions.
We have also recently learned that the NSA is doing it too. The following is from a recent Time Magazine article…
Networks are most likely giving the government “metadata.” That is, the credit card issuers could provide the NSA details such as an account or card number, where and when a purchase was made, and for how much. Even though the exact items purchased aren’t revealed, Brian Krebs, who blogs at KrebsOnSecurity.com, says “merchant category codes” in such data give clues about what was bought.
If the NSA is collecting data at the processor level, “at that point the transaction gets cleared and posts to an account, so, yes, you can track it down to a person,” Aufsesser says.
The NSA conceivably could — and probably would — be able get the names of individual account holders from banks issuing credit cards. ”I don’t see how you would anonymize it,” says Al Pascual, senior analyst for security, risk and fraud for Javelin Strategy & Research.
We are rapidly becoming a “Big Brother society” where the government tracks virtually every move that we make.
And don’t think that you can escape this by not using credit cards or by staying off of the Internet. The truth is that we are being tracked in hundreds of different ways.
For example, have you heard of automated license plate readers?
They are being installed on police vehicles all over the nation, and the amount of information that they are gathering on all of us is frightening.
A computer security consultant named Michael Katz-Lacabe asked the city of San Leandro, California for a record of every time that these license plate readers had scanned his vehicle, and what he discovered absolutely stunned him…
The paperback-size device, installed on the outside of police cars, can log thousands of license plates in an eight-hour patrol shift. Katz-Lacabe said it had photographed his two cars on 112 occasions, including one image from 2009 that shows him and his daughters stepping out of his Toyota Prius in their driveway.
That photograph, Katz-Lacabe said, made him “frightened and concerned about the magnitude of police surveillance and data collection.” The single patrol car in San Leandro equipped with a plate reader had logged his car once a week on average, photographing his license plate and documenting the time and location.
At a rapid pace, and mostly hidden from the public, police agencies throughout California have been collecting millions of records on drivers and feeding them to intelligence fusion centers operated by local, state and federal law enforcement.
Most Americans do not even know that these devices exist, but they have been “collecting millions of records” and feeding them into law enforcement databases all over the nation.
In San Diego alone, more than 36 million license plate scans have been fed into a regional database just since 2010…
In San Diego, 13 federal and local law enforcement agencies have compiled more than 36 million license-plate scans in a regional database since 2010 with the help of federal homeland security grants. The San Diego Association of Governments maintains the database. Like the Northern California database, the San Diego system retains the data for between one and two years.
“License-plate data is clearly identifiable to specific individuals,” said Lee Tien, a senior staff attorney at the Electronic Frontier Foundation. “This is like having your barcode tracked.”
Is this the kind of society that we want to become?
Do we really want the police to be taking millions of photographs of us?
Do we really want all of our financial transactions to be fed directly into federal databases?
As I wrote about recently, it has been documented that literally thousands of companies have been handing over customer data to the NSA.
Is this the kind of legacy that we want to leave for our children and our grandchildren?
Fortunately, it appears that at least some Americans are waking up to all of this.
According to a brand new Rasmussen survey, 56 percent of likely voters in the United States now believe that the federal government is a threat to individual rights…
A new Rasmussen Reports national telephone survey finds that 56% of Likely U.S. Voters now consider the federal government a threat to individual rights rather than a protector of those rights. That’s up 10 points from 46% in December.
While 54% of liberal voters consider the feds to be a protector of individual rights, 78% of conservatives and 49% of moderates see the government as a threat.
Overall, only 30% believe the feds today are a protector of individual rights. Fourteen percent (14%) are undecided. (To see survey question wording, click here.)
If the American people do not stand up and demand change, the people that are constantly violating our privacy are going to continue to do so.
Sadly, the vast majority of the politicians in both major political parties seem to think that there is nothing wrong with the status quo. So I wouldn’t expect any major changes in the short-term. But hopefully government surveillance will start to become such a major issue with the American people that the politicians will be forced to start addressing it.
What is going to happen when the greatest economic bubble in the history of the world pops? The mainstream media never talks about that. They are much too busy covering the latest dogfights in Washington and what Justin Bieber has been up to. And most Americans seem to think that if the Dow keeps setting new all-time highs that everything must be okay. Sadly, that is not the case at all. Right now, the U.S. economy is exhibiting all of the classic symptoms of a bubble economy. You can see this when you step back and take a longer-term view of things. Over the past decade, we have added more than 10 trillion dollars to the national debt. But most Americans have shown very little concern as the balance on our national credit card has soared from 6 trillion dollars to nearly 17 trillion dollars. Meanwhile, Wall Street has been transformed into the biggest casino on the planet, and much of the new money that the Federal Reserve has been recklessly printing up has gone into stocks. But the Dow does not keep setting new records because the underlying economic fundamentals are good. Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of 1929. Margin debt is absolutely soaring, and every time that happens a crash rapidly follows. But this time when a crash happens it could very well be unlike anything that we have ever seen before. The top 25 U.S. banks have more than 212 trillion dollars of exposure to derivatives combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up. After all, U.S. GDP for an entire year is only a bit more than 15 trillion dollars.
But most Americans are only focused on the short-term because the mainstream media is only focused on the short-term. Things are good this week and things were good last week, so there is nothing to worry about, right?
Unfortunately, economic reality is not going to change even if all of us try to ignore it. Those that are willing to take an honest look at what is coming down the road are very troubled. For example, Bill Gross of PIMCO says that his firm sees “bubbles everywhere”…
We see bubbles everywhere, and that is not to be dramatic and not to suggest they will pop immediately. I just suggested in the bond market with a bubble in treasuries and bubble in narrow credit spreads and high-yield prices, that perhaps there is a significant distortion there. Having said that, it suggests that as long as the FED and Bank of Japan and other Central Banks keep writing checks and do not withdraw, then the bubble can be supported as in blowing bubbles. They are blowing bubbles. When that stops there will be repercussions.
And unfortunately, it is not just the United States that has a bubble economy. In fact, the gigantic financial bubble over in Japan may burst before our own financial bubble does. The following is from a recent article by Graham Summers…
First and foremost, Japan is the second largest bond market in the world. If Japan’s sovereign bonds continue to fall, pushing rates higher, then there has been a tectonic shift in the global financial system. Remember the impact that Greece had on asset prices? Greece’s bond market is less than 3% of Japan’s in size.
For multiple decades, Japanese bonds have been considered “risk free.” As a result of this, investors have been willing to lend money to Japan at extremely low rates. This has allowed Japan’s economy, the second largest in the world, to putter along marginally.
So if Japanese bonds begin to implode, this means that:
1) The second largest bond market in the world is entering a bear market (along with commensurate liquidations and redemptions by institutional investors around the globe).
2) The second largest economy in the world will collapse (along with the impact on global exports).
Both of these are truly epic problems for the financial system.
-$190,000,000,000,000 – The approximate size of the total amount of debt in the entire world. It has nearly doubled in size over the past decade.
-$212,525,587,000,000 – According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States. But those banks only have total assets of about 8.9 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.
-$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives generally fall within this range. At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.
The financial meltdown that happened back in 2008 should have been a wake up call for the nations of the world. They should have corrected the mistakes that happened so that nothing like that would ever happen again. Unfortunately, nothing was fixed. Instead, our politicians and the central bankers became obsessed with reinflating the system. They piled up even more debt, recklessly printed tons of money and kicked the can down the road for a few years. In the process, they made our long-term problems even worse. The following is a recent quote from John Williams of shadowstats.com…
The economic and systemic solvency crises of the last eight years continue. There never was an actual recovery following the economic downturn that began in 2006 and collapsed into 2008 and 2009. What followed was a protracted period of business stagnation that began to turn down anew in second- and third-quarter 2012. The official recovery seen in GDP has been a statistical illusion generated by the use of understated inflation in calculating key economic series (see Public Comment on Inflation). Nonetheless, given the nature of official reporting, the renewed downturn likely will gain recognition as the second-dip in a double- or multiple-dip recession.
What continues to unfold in the systemic and economic crises is just an ongoing part of the 2008 turmoil. All the extraordinary actions and interventions bought a little time, but they did not resolve the various crises. That the crises continue can be seen in deteriorating economic activity and in the panicked actions by the Federal Reserve, where it proactively is monetizing U.S. Treasury debt at a pace suggestive of a Treasury that is unable to borrow otherwise.
And there are already lots of signs that the next economic downturn is rapidly approaching.
Would revenues at Wal-Mart be falling if the economy was getting better?
U.S. jobless claims hit a six week high last week. We aren’t in the danger zone yet, but once they hit 400,000 that will be a major red flag.
And even though we are still in the “good times” relatively speaking, the federal government is already talking about tightening welfare programs. In fact, there are proposals in Congress right now to make significant cuts to the food stamp program.
If food stamps and other welfare programs get cut, that is going to make a lot of people very, very angry. And that anger and frustration will get even worse when the next economic downturn strikes and millions of people start losing their jobs and their homes.
What we are witnessing right now is the calm before the storm. Let us hope that it lasts for as long as possible so that we can have more time to prepare.
Unfortunately, this bubble of false hope will not last forever. At some point it will end, and then the pain will begin.
European officials are openly admitting that the two largest banks in Cyprus are “insolvent“, and it is now being reported that Cyprus Popular Bank only has “enough liquidity to cover the next few hours“. Of course all banks in Cyprus are officially closed until Tuesday at the earliest, but there have been long lines at ATMs all over Cyprus as people scramble to get whatever money they can out of the banks. Unfortunately, some ATMs appear to be “malfunctioning” and others appear to have already run out of cash. You can see some photos of huge lines at one ATM in Cyprus right here. Some businesses are now even refusing to take credit card payments. This is creating an atmosphere of panic on the streets of Cyprus. Meanwhile, the EU is holding a gun to the head of the Cyprus financial system. Either Cyprus meets EU demands by Monday, or liquidity for the banks will be totally cut off and Cyprus will be forced out of the euro. It is being reported that European officials believe that the “economy is going to tank in Cyprus no matter what“, and that it would be okay to let the financial system of Cyprus crash and burn if politicians in Cyprus are not willing to do what they have been ordered to do. Apparently European officials are very confident that the situation in Cyprus can be contained and that it will not spread to other European nations.
Unfortunately, European officials are losing sight of the bigger picture. If the largest banks in Cyprus are allowed to fail, it will be another “Lehman Brothers moment“. The faith that people have in banks all over Europe will be called into question, and everyone will be wondering what major European banks will be allowed to fail next.
Meanwhile, European officials have already completely shattered confidence in deposit insurance at this point. Everyone now knows that when there is a major bank failure that depositors will be expected to share in the pain. Expect to see “bank jogs” all over southern Europe over the coming weeks.
The banks in Cyprus had been scheduled to reopen on Tuesday, but very few people expect that to actually happen at this point. In fact, Bloomberg is reporting that EU officials are actually thinking about shutting down the two biggest banks in Cyprus and freezing their assets…
Finance ministers for the 17 euro countries are considering a plan to shutter the two biggest banks in Cyprus and freeze the assets of uninsured depositors, said the four officials, who asked not to be named because the talks are ongoing. The ministers are holding a teleconference tonight.
Cyprus Popular Bank Pcl (CPB) and the Bank of Cyprus Plc would be split to create a so-called bad bank, one of the officials said. Insured deposits — below the European Union ceiling of 100,000 euros ($129,000) — would go into a so-called good bank and not sustain any losses, while uninsured deposits would go into the bad bank and be frozen until assets could be sold, said the four officials.
Losses to unsecured creditors, including uninsured depositors, could reach 40 percent under the plan, which has support from the International Monetary Fund and the European Central Bank. The proposal, a version of which was rejected last week, is considered a better option than taxing insured deposits or allowing Cypriot banks to collapse in a disorderly fashion if they lose access to ECB aid, the officials said.
Such a scenario would be an utter disaster.
How would you feel if you woke up someday and 40 percent of your life savings was suddenly gone?
According to Greek newspaper Kathimerini, European officials are also openly discussing the possibility of a Cyprus exit from the eurozone if a suitable bailout agreement is not worked out…
The possibility of Cyprus exiting the eurozone was discussed during teleconference involving technocrats from the Euro Working Group on Wednesday, Kathimerini understands.
A reliable source told Kathimerini that the technical implications of a euro exit, as well as the adoption of capital controls were debated by the Euro Working Group officials during the teleconference.
As I mentioned above, European officials seemed resigned to the fact that there will be an economic collapse in Cyprus “no matter what”, and so letting Cyprus leave the euro would not make that much of a difference. Either way, the banks are going to have to be “reorganized” and capital controls will be imposed…
In detailed notes of the call seen by Reuters, the group’s chair Austria’s Thomas Wieser said: “The economy is going to tank in Cyprus no matter what. Restrictions on capital will probably be imposed.”
Never before have we seen European officials impose such a harsh ultimatum with such a short deadline. It is almost as if they want to boot Cyprus out of the euro. The following comes from a recent CNBC report…
In stark twin warnings on Thursday, the European Central Bank said it would cut off liquidity to Cypriot banks and a senior EU official made clear to Reuters that the bloc was ready to see the bankrupt island banished from the euro in the belief it could then contain damage to the wider European economy.
And European officials are even publicly talking about the possibility that Cyprus will soon need to start using “their own currency”…
In Brussels, a senior European Union official told Reuters that an ECB withdrawal would mean Cyprus’s biggest banks being wound up, wiping out the large deposits it has sought to protect, and probably forcing the country to abandon the euro.
“If the financial sector collapses, then they simply have to face a very significant devaluation and faced with that situation, they would have no other way but to start having their own currency,” the EU official said.
This is absolutely shocking. Everyone always thought that Greece would be the first to leave the euro, but now it looks like it might be Cyprus.
However, there is still a chance that Cyprus may find a way to comply with EU demands. Politicians in Cyprus are frantically searching for a way to raise the needed cash without raiding private bank accounts. The following is what CNN is saying about the latest efforts…
Leaders of Cyprus’ political parties agreed Thursday to create an “investment solidarity fund,” which would issue bonds backed by state and church assets.
The plan was due to be discussed by the Cypriot government and parliament on Thursday evening, but few details were available and it was not clear how much the fund would be worth.
According to Reuters, other proposals have been under consideration as well…
The government said a “Plan B” was in the works.
Officials said it could include: an option to nationalize pension funds of semi-government corporations, which hold between 2 billion and 3 billion euros; issuing an emergency bond linked to future natural gas revenues; and possibly reviving the levy on bank deposits, though at a lower level than originally planned and maybe excluding savers with less than 100,000 euros.
At this point it is unclear whether any of those proposals will turn out to be acceptable to European officials.
In fact, the tone of European officials has noticeably changed from previous bailout efforts. They now seem much more willing to play hardball. For example, just check out what German Finance Minister Wolfgang Schaeuble is saying about the situation in Cyprus…
German finance minister Wolfgang Schaeuble told the ZDF public broadcaster on Tuesday night (19 March) he “took note with regret” of the Cypriot parliament’s rejection of the bailout deal, but insisted that the terms will stay the same.
Asked if the eurozone was willing to let Cyprus go bust, he answered: “Well, we are much more stable in the eurozone – we took measures to protect ourselves from the risks of contagion … but I don’t want to have any of this.”
He added: “It is a serious situation, but this cannot lead to a decision that makes absolutely no sense, to rescue a business model that has failed. Cyprus has a banking sector that is totally oversized and this made Cyprus insolvent. And nobody outside Cyprus is to blame for it.”
Schaeuble knows that the EU is holding all of the cards and that Cyprus is doomed without their help…
“The Cypriot state cannot fund itself on the markets. Its two largest banks are insolvent and are being kept afloat with emergency funding from the ECB, but only on the condition that there will be a long-term rescue programme. If this condition is no longer met, Cyprus will no longer be solvent and this is something Cypriot decision makers must know”
But the truth is that the EU can’t really afford to allow major banks to fail or for a single member to leave the eurozone. If either of those things happen, the confidence game that has been holding the European financial system together will begin to rapidly evaporate.
If the EU thinks that they can abandon Cyprus without the crisis spreading to the rest of southern Europe they are just being delusional.
At least there are a few politicians in Europe that understand what is happening. Nigel Farage, a very outspoken member of the European Parliament, is telling people to get their money out of banks in southern Europe as quickly as they can. He is warning that a great collapse of the European financial system is coming and that people need to get prepared for it…
So what do you think?
Do you believe that we are on the verge of a major financial collapse in Europe?
Please feel free to post a comment with your thoughts below…
Is “discretionary income” rapidly becoming a thing of the past for most American families? Right now, there are a lot of signs that we are on the verge of a nightmarish consumer spending drought. Incomes are down, taxes are up, many large retail chains are deeply struggling because of the lack of customers, and at this point nearly a quarter of all Americans have more credit card debt than money in the bank. Considering the fact that consumer spending is such a large percentage of the U.S. economy, that is very bad news. How will we ever have a sustained economic recovery if consumers don’t have much money to spend? Well, the truth is that we aren’t ever going to have a sustained economic recovery. In fact, this debt-fueled bubble of false hope that we are experiencing right now is as good as things are going to get. Things are going to go downhill from here, and if you think that consumer spending is bad now, just wait until you see what happens over the next several years.
Even though the Dow is surging toward a record high right now, everyone knows that things are not good for the middle class. A recent quote from CPA Howard Dvorkin kind of summarizes our current state of affairs very nicely…
“The fact of the matter is that America is broke — whether it’s mortgages, student loans or credit cards, we are broke. The old rule of thumb is that people should have six months’ of savings,” Dvorkin says.”If you talk to people, most don’t have two pennies.”
These days most Americans are living from paycheck to paycheck, and thanks to rising prices and rising taxes, those paychecks are getting squeezed tighter and tighter. Many families have had to cut back on unnecessary expenses, and some families no longer have any discretionary income at all.
The following are 16 signs that the middle class is rapidly running out of money…
#1 According to one brand new survey, 24 percent of all Americans have more credit card debt than money in the bank.
#2 J.C. Penney was once an unstoppable retail powerhouse, but now J.C. Penney has just posted its lowest annual retail sales in more than 20 years…
J.C. Penney Co. (JCP) slid the most in more than three decades after the department-store chain lost $4.3 billion in sales in the first year of Chief Executive Officer Ron Johnson’s turnaround plan.
The shares fell 18 percent to $17.40 at 11:28 a.m. in New York after earlier declining 22 percent, the biggest intraday drop since at least 1980, according to data compiled by Bloomberg. J.C. Penney yesterday said its net loss in the quarter ended Feb. 2 widened to $552 million from $87 million a year earlier. The Plano, Texas-based retailer’s annual revenue slid 25 percent to $13 billion, the lowest since at least 1987.
How much worse can things get? At this point the decline has become so steep for J.C. Penney that Jim Cramer of CNBC is declaring that they are in “a true tailspin“.
Looking to buy a new car, truck or crossover? You may find it more difficult to stretch the household budget than you expected, according to a new study that finds median-income families in only one major U.S. city actually can afford the typical new vehicle.
The typical new vehicle is now more expensive than ever, averaging $30,500 in 2012, according to TrueCar.com data, and heading up again as makers curb the incentives that helped make their products more affordable during the recession when they were desperate for sales. According to the 2013 Car Affordability Study by Interest.com, only in Washington could the typical household swing the payments, the median income there running $86,680 a year.
#4 The founder of Subway Restaurants, Fred Deluca, says that the recent tax increases are having a noticeable impact on his business…
“The payroll tax is affecting sales. It’s causing sales declines,” he said, estimating a decline of about 2 percentage points off sales at his restaurants. “There are a lot of pressures on consumers,” Deluca said, adding “I think this is on the permanent side, but I think business will adjust to it.”
Darden Restaurants, which owns the casual dining chains Oliver Garden, LongHorn Steakhouse and Red Lobster, said blended same-store sales at its three eateries would be 4.5 percent lower during its fiscal third quarter.
Clarence Otis, Darden’s chairman and chief executive, said that “while results midway through the third quarter were encouraging, there were difficult macro-economic headwinds during the last month of the quarter.”
“Two of the most prominent were increased payroll taxes and rising gasoline prices, which together put meaningful pressure on the discretionary purchasing power of our guests,” he added.
#6 The CFO of Family Dollar recently admitted to CNBC that this is a “challenging time” because of reduced consumer spending…
At Family Dollar where the average customer makes less than $40,000 a year, the combination of a two-percent hike in the payroll tax, rising gas prices and delayed tax refunds has created a “challenging time and an uncertain time for the consumer right now,” said Mary Winston, the company’s chief financial officer.
“In our case, anything that takes money out of our customer’s wallet gives them less money to spend in our stores,” she told CNBC. “So I think all of those things create nervousness for the consumer, and I think there are sometimes political dynamics going on that they might not even fully understand the details, but they know it’s not good.”
Evelin Cruz, a department manager at the Wal-Mart Supercenter in Pico Rivera, California, said Simon’s comments from the officers’ meeting were “dead on.”
“There are gaps where merchandise is missing,” Cruz said in a telephone interview. “We are not talking about a couple of empty shelves. This is throughout the store in every store. Some places look like they’re going out of business.”
This all comes on the heels of an internal Wal-Mart memo that was leaked to the press earlier this month that described February sales as a “total disaster”.
#8 Electronics retailer Best Buy continues to struggle mightily. Best Buy just announced that it will be eliminating 400 jobs at its headquarters in Richfield, Minnesota.
#9 It is being projected that many of the largest retail chains in America, including Best Buy, will close down hundreds of stores during 2013. The following is a list of projected store closings for 2013 that I included in a previous article…
Forecast store closings: 200 to 250
Sears Holding Corp.
Forecast store closings: Kmart 175 to 225, Sears 100 to 125
Forecast store closings: 300 to 350
Forecast store closings: 125 to 150
Barnes & Noble
Forecast store closings: 190 to 240, per company comments
Forecast store closings: 500 to 600
Forecast store closings: 150 to 175
Forecast store closings: 450 to 550
#10 Another sign that consumer spending is slowing down is the fact that less stuff is being moved around in our economy. As I have mentioned previously, freight shipment volumes have hit their lowest level in two years, and freight expenditures have gone negative for the first time since the last recession.
#11 Many young adults have no discretionary income to spend because they are absolutely drowning in student loan debt. According to the New York Federal Reserve, student loan debt nearly tripled between 2004 and 2012.
#12 The student loan delinquency rate in the United States is now at an all-time high. It is only a matter of time before the student loan debt bubble bursts.
#13 Due to a lack of jobs and high levels of debt, poverty among young adults in America is absolutely exploding. Today, U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.
#14 According to one recent survey, 62 percent of all middle class Americans say that they have had to reduce household spending over the past year.
#15 Median household income in the United States has fallen for four consecutive years. Overall, it has declined by more than $4000 during that time span.
#16 According to the U.S. Census Bureau, the middle class is currently taking home a smaller share of the overall income pie than has ever been recorded before.
Are you starting to get the picture?
Retailers are desperate for sales, but you can’t squeeze blood out of a rock.
But if you listen to the mainstream media, they would have you believe that happy days are here again.
Right now, everyone seems to be quite giddy about the fact that the Dow is marching toward an all-time high. And I actually do believe that the Dow will blow right past it. In fact, it is even possible that we could see the Dow hit 15,000 before everything starts falling apart.
But at some point, the financial markets will catch up with economic reality. It is just a matter of time.
In the meanwhile, those that are wise are taking advantage of these times of plenty to prepare for the great economic drought that is coming.
Don’t be caught living paycheck to paycheck and totally unprepared when the next wave of the economic collapse strikes. Anyone that believes that this debt-fueled bubble of false hope can last indefinitely is just being delusional.
How can anyone not see that the U.S. economy is collapsing all around us? It just astounds me when people try to tell me that “everything is just fine” and that “things are getting better” in America. Are there people out there that are really that blind? If you want to see the economic collapse, just open up your eyes and look around you. By almost every economic and financial measure, the U.S. economy has been steadily declining for many years. But most Americans are so tied into “the matrix” that they can only understand the cheerful propaganda that is endlessly being spoon-fed to them by the mainstream media. As I have said so many times, the economic collapse is not a single event. The economic collapse has been happening, it is is happening right now, and it will continue to happen. Yes, there will be times when our decline will be punctuated by moments of great crisis, but that will be the exception rather than the rule. A lot of people that write about “the economic collapse” hype it up as if it will be some huge “event” that will happen very rapidly and then once it is all over we will rebuild. Unfortunately, that is not how the real world works. We are living in the greatest debt bubble in the history of the world, and once it completely bursts there will be no going back to how things were before. Right now, we are living in a “credit card economy”. As long as we can keep borrowing more money, most people think that things are just fine. But anyone that has lived on credit cards knows that eventually there comes a point when the game is over, and we are rapidly approaching that point as a nation.
Have you ever been there? Have you ever desperately hoped that you could just get one more credit card or one more loan so that you could keep things going?
At first, living on credit can be a lot of fun. You can live a much higher standard of living than you otherwise would be able to.
But inevitably a day of reckoning comes.
If the federal government and the American people were forced at this moment to live within their means, the U.S. economy would immediately plunge into a depression.
That is a 100% rock solid guarantee.
But our politicians and the mainstream media continue to perpetuate the fiction that we can live in this credit card economic fantasy land indefinitely.
And most Americans could not care less about the future. As long as “things are good” today, they don’t really think much about what the future will hold.
As a result of our very foolish short-term thinking, we have now run up a national debt of 16.4 trillion dollars. It is the largest debt in the history of the world, and it has gotten more than 23 times larger since Jimmy Carter first entered the White House.
The chart that you see below is a recipe for national financial suicide…
Of course things have accelerated over the past four years. Since Barack Obama entered the White House, the U.S. government has run a budget deficit of well over a trillion dollars every single year, and we have stolen more than 100 million dollars from our children and our grandchildren every single hour of every single day.
It is the biggest theft of all time. What we are doing to our children and our grandchildren is beyond criminal.
And now our debt is at a level that most economists would consider terminal. When Barack Obama first entered the White House, the U.S. debt to GDP ratio was under 70 percent. Today, it is up to 103 percent.
Our politicians are stealing from the future in order to make the present look better. During Obama’s first term, the federal government accumulated more debt than it did under the first 42 U.S presidents combined.
That is utter insanity!
If you started paying off just the new debt that the U.S. has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.
So what is the solution?
Get ready to laugh.
The most prominent economic journalist in the entire country, Paul Krugman of the New York Times, recently suggested the following in an article that he wrote entitled “Kick That Can“…
Realistically, we’re not going to resolve our long-run fiscal issues any time soon, which is O.K. — not ideal, but nothing terrible will happen if we don’t fix everything this year. Meanwhile, we face the imminent threat of severe economic damage from short-term spending cuts.
So we should avoid that damage by kicking the can down the road. It’s the responsible thing to do.
You mean that we might actually do damage to the debt-fueled economic fantasy world that we are living in if we stopped stealing so much money from future generations?
Oh the humanity!
It is horrifying to think that all that one of the “top economic minds” in America can come up with is to “kick the can” down the road some more.
Unfortunately, neither Paul Krugman nor most of the American people understand that our financial system is actually designed to create government debt.
The bankers that helped create the Federal Reserve intended to permanently enslave the U.S. government to a perpetually expanding spiral of debt, and their plans worked.
At this point, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.
So why don’t the American people understand what the Federal Reserve system is doing to us?
It is because most of them are still plugged into the matrix. A Zero Hedge article that I came across today put it beautifully…
US society in a nutshell: Chris Dorner has been around for a week and has 222 million results on Google; the Federal Reserve has been around for one hundred years and has 187 million results.
If nothing is done about our exploding debt, it is only a matter of time before we reach financial oblivion.
According to Boston University economist Laurence Kotlikoff, the U.S. government is facing a “present value difference between projected future spending and revenue” of 222 trillion dollars in the years ahead.
So how in the world are we going to come up with an extra 222 trillion dollars?
But it is not just the U.S. government that is drowning in debt.
Just check out this chart which shows the astounding growth of state and local government debt in recent years…
All over the United States there are state and local governments that are on the verge of bankruptcy. Just check out what is going on in Detroit. The only way that most of our state and local governments can keep going at this point is to also “kick the can” down the road some more.
And of course most of the rest of us are drowning in debt as well.
The good news is that U.S. GDP is now more than 12 times larger than it was 40 years ago.
The bad news is that the total amount of debt in our financial system is now more than 30 times larger than it was 40 years ago…
At the same time that we are going into so much debt, our ability to produce wealth continues to decline.
According to the World Bank, U.S. GDP accounted for 31.8 percent of all global economic activity in 2001. That number dropped to 21.6 percent in 2011. That is not just a decline – that is a nightmarish freefall. Just check out the chart in this article.
We are becoming less competitive as a nation with each passing year. In fact, the U.S. has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.
Most Americans don’t understand this, but the United States buys far more from the rest of the world than they buy from us each year. In 2012, we had a trade deficit of more than 500 billion dollars with the rest of the world.
That means that more than 500 billion dollars that could have gone to U.S. workers and U.S. businesses went out of the country instead.
So how does our country survive if hundreds of billions of dollars more is flowing out of the country than is flowing into it?
Well, to make up the shortfall we go to the countries that we sent our money to and we beg them to lend it back to us. If that doesn’t work, we just print and borrow even more money.
Back in 1985, our trade deficit with China was approximately 6 million dollars (million with a little “m”) for the entire year.
In 2012, our trade deficit with China was 315 billion dollars. That was the largest trade deficit that one nation has had with another nation in the history of the world.
In particular, our trade with China is extremely unbalanced. Today, U.S. consumers spend approximately 4 dollars on goods and services from China for every one dollar that Chinese consumers spend on goods and services from the United States.
But isn’t getting cheap stuff from China good?
No, because it costs us good paying jobs.
According to the Economic Policy Institute, the United States is losing half a million jobs to China every single year.
Overall, more than 56,000 manufacturing facilities in the United States have been shut down since 2001. During 2010, manufacturing facilities in the United States were shutting down at a rate of 23 per day. How can anyone say that “things are getting better” when our economic infrastructure is being absolutely gutted?
The truth is that there are never going to be enough jobs in America ever again, because millions of our jobs are being sent overseas and millions of our jobs are being lost to technology.
You won’t hear this on the news, but the percentage of the civilian labor force in the United States that is employed has been steadily declining every single year since 2006.
Younger workers have been hit particularly hard. In 2007, the unemployment rate for the 20 to 29 age bracket was about 6.5 percent. Today, the unemployment rate for that same age group is about 13 percent.
If you are under the age of 30 and you aren’t living with your parents, there is a really good chance that you are living in poverty. If you can believe it, U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.
Our economy has been steadily bleeding huge numbers of middle class jobs, and many of those jobs have been replaced by low paying jobs in recent years.
According to one study, 60 percent of the jobs lost during the last recession were mid-wage jobs, but 58 percent of the jobs created since then have been low wage jobs.
And at this point, an astounding 53 percent of all American workers make less than $30,000 a year.
But for most families this economic decline has been a total nightmare. Median household income in America has fallen for four consecutive years. Overall, it has declined by over $4000 during that time span.
Sometimes people forget how good things were about a decade ago. About three times as many new homes were sold in the United States in 2005 as were sold in 2012.
But we like to live in denial.
In fact, a lot of families are trying to keep up their standards of living by going into tremendous amounts of debt.
Back in 1983, the bottom 95 percent of all income earners in the United States had 62 cents of debt for every dollar that they earned. By 2007, that figure had soared to $1.48.
Fake it until you make it, right?
But how much debt can our system possibly handle?
Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.
According to the U.S. Census Bureau, 49 percent of all Americans live in a home that receives direct monetary benefits from the federal government. Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.
So is it a good sign or a bad sign that the percentage of Americans that are financially dependent on the federal government is at an all-time high?
And in future years the number of Americans that are receiving benefits from the federal government is projected to absolutely skyrocket.
Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid, and things are about to get a whole lot worse. It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
If you take a look at Medicare, things are very more sobering.
As I wrote recently, it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.
At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for every single household in the United States.
Are you ready to contribute your share?
Social Security is a complete and total nightmare as well.
Right now, there are approximately 56 million Americans collecting Social Security benefits.
By 2035, that number is projected to soar to an astounding 91 million.
Oh, but don’t worry because “things are getting better”, right?
I honestly do not know how anyone can look at the numbers above and come to the conclusion that the economy is in good shape.
We have accumulated the largest mountain of debt in the history of the world, our economic infrastructure is being gutted, we are bleeding good jobs, government dependence is at an all-time high and we are getting poorer as a nation with each passing day.
But other than that, everything is rainbows and lollipops, right?
If you want to see the economic collapse, just open up your eyes.
And if dramatic changes are not made quickly, things are going to get much, much worse from here.
Please share this article with as many people as possible. Time is quickly running out and there are a whole lot of people out there that we need to wake up while we still can.
Every single year, millions of young adults head off to colleges and universities all over America full of hopes and dreams. But what most of those fresh-faced youngsters do not realize is that by taking on student loan debt they are signing up for a life of debt slavery. Student loan debt has become a trillion dollar bubble which has shattered the financial lives of tens of millions of young college graduates. When you are just starting out and you are not making a lot of money, having to make payments on tens of thousands of dollars of student loan debt can be absolutely crippling. The total amount of student loan debt in the United States has now surpassed the total amount of credit card debt, and student loan debt is much harder to get rid of. Many young people view college as a “five year party“, but when the party is over millions of those young people basically end up as modern day serfs as they struggle to pay off all of the debt that they have accumulated during their party years. Bankruptcy laws have been changed to make it incredibly difficult to get rid of student loan debt, so once you have it you are basically faced with two choices: either you are going to pay it or you are going to die with it.
But we don’t warn kids about this before they go to school. We just endlessly preach to them that they need a college degree in order to get a “good job”, and that after they graduate they will easily be able to pay off their student loans with the “good job” that they will certainly be able to find.
Sadly, tens of millions of young Americans have left college in recent years only to find out that they were lied to all along.
As I have written about previously, college has become a giant money making scam and the victims of the scam are our young people.
Back in 1952, a full year of tuition at Harvard was only $600.
At every turn our young people are being ripped off.
For example, the cost of college textbooks has tripled over the past decade.
Has it suddenly become a lot more expensive to print books?
Of course not.
The truth is that an entire industry saw an opportunity to gouge students and they went for it.
The amount of money being spent on higher education in this country is absolutely outrageous. One father down in Texas says that he will end up spending about 1.5 million dollars on college expenses for his five daughters before it is all said and done.
Unfortunately, most young adults in America don’t have wealthy fathers so they have to take out large student loans to pay for their educations.
Average student loan debt at graduation is estimated to be about $28,720 right now.
That is a crazy figure and it has absolutely soared in recent years. In fact, student loan debt in America has grown by 511 percent since 1999.
And student loan debt will follow you wherever you go.
If you do not pay your loans when you graduate, you could end up having your wages, your tax refunds and even your Social Security benefits garnished.
In addition, your account could be turned over to the debt collectors and they can be absolutely brutal.
The student loan debt bubble is the best thing to happen to debt collectors in ages. The following is what one professional who works in the industry said in a recent article that he wrote for a debt collection industry publication….
As I wandered around the crowd of NYU students at their rally protesting student debt at the end of February, I couldn’t believe the accumulated wealth they represented – for our industry.
It was lip-smacking.
At my right, to graphically display how she was debt-burdened, was a girl wearing a t-shirt emblazoned with the fine sum of $90,000, another with $65,000, a third with $20,000 and over there a really attractive $120,000 was printed on another shirt. Guys were shouldering their share, with t-shirts of $20,000, $15,000, $27,000, $33,000 and $75,000.
There is no way that our young people can afford to take on those kinds of debt loads, and that is one reason why student loan delinquency rates continue to surge.
In fact, the student loan default rate in the United States has nearly doubled since 2005.
At this point there are about 5.9 million Americans that are at least 12 months behind on their student loan payments.
So could the bursting of the student loan bubble do tremendous damage to our financial system?
Don’t worry – Federal Reserve Chairman Ben Bernanke is promising that the student loan debt bubble won’t cause a crisis.
And you can trust him, right?
For those living with the burden of unpaid student loan debt, life can be really tough. Some try to avoid the debt collectors, but it is easier said than done. The following is from a recent article in the New York Times….
Hiding from the government is not easy.
“I keep changing my phone number,” said Amanda Cordeiro, 29, from Clermont, Fla., who dropped out of college in 2010 and has fielded as many as seven calls a day from debt collectors trying to recover her $55,000 in overdue loans. “In a year, this is probably my fourth phone number.”
Unlike private lenders, the federal government has extraordinary tools for collection that it has extended to the collection firms. Ms. Cordeiro has already had two tax refunds seized, and other debtors have had their paychecks or Social Security payments garnisheed.
The biggest problem, of course, is that there are not nearly enough jobs for the hordes of college graduates that our system produces each year.
During 2011, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.
So without a good job, how are those young people supposed to service their student loans?
Sadly, those days are long gone. Today, millions upon millions of college graduates have taken jobs that do not even require a college education. The following is from a recent CNBC article….
In the last year, they were more likely to be employed as waiters, waitresses, bartenders and food-service helpers than as engineers, physicists, chemists and mathematicians combined (100,000 versus 90,000). There were more working in office-related jobs such as receptionist or payroll clerk than in all computer professional jobs (163,000 versus 100,000). More also were employed as cashiers, retail clerks and customer representatives than engineers (125,000 versus 80,000).
You probably know young people who have experienced the “wake up call” that comes as a result of entering the “real world” in this horrible economic environment.
It is not easy out there.
And this can be extremely disappointing for parents as well. How would you feel if your daughter got very high grades all of the way through college and ended up working as a waitress because she couldn’t find anything else?
Even those that pursue advanced degrees are having an extremely challenging time finding work in this economy.
For example, a Business Insider article from a while back profiled a law school graduate named Erin that is actually on food stamps….
She remains on food stamps so her social life suffers. She can’t afford a car, so she has to rely on the bus to get around Austin, Texas, where she lives. And currently unable to pay back her growing pile of law school debt, Gilmer says she wonders if she will ever be able to pay it back.
“That has been really hard for me,” she says. “I have absolutely no credit anymore. I haven’t been able to pay loans. It’s scary, and it’s a hard thing to think you’re a lawyer but you’re impoverished. People don’t understand that most lawyers actually aren’t making the big money.”
And the really sad thing is that the quality of the education that our young people are receiving is very poor. I spent eight years attending U.S. universities, and most parents would be absolutely shocked at how little our college students are actually learning.
Going to college really has become a ticket to party for four or five or six years with a little bit of “education” thrown in.
But our society has put a very high value on those little pieces of paper called “diplomas” so we all continue to play along with the charade.
Some college students are finding other “creative” ways to pay for their educations other than going into tremendous amounts of debt. For example, an increasing number of young women are seeking out “sugar daddies” who will “sponsor” their educations. The following is from a Huffington Post article about this disturbing trend….
On a Sunday morning in late May, Taylor left her Harlem apartment and boarded a train for Greenwich, Conn. She planned on spending the day with a man she had met online, but not in person.
Taylor, a 22-year-old student at Hunter College, had confided in her roommate about the trip and they agreed to swap text messages during the day to make sure she was safe.
Once in Greenwich, a man who appeared significantly older than his advertised age of 42 greeted Taylor at the train station and then drove her to the largest house she had ever seen. He changed into his swimming trunks, she put on a skimpy bathing suit, and then, by the side of his pool, she rubbed sunscreen into the folds of his sagging back — bracing herself to endure an afternoon of sex with someone she suspected was actually about 30 years her senior.
Of course that young woman will probably deeply regret doing that later on in her life.
Once graduation comes, millions upon millions of our young people are discovering that it is really hard to be financially independent if you are drowning in student loan debt and you can’t find a good job.
So what are they doing?
They are moving back in with Mom and Dad.
One poll discovered that 29 percent of all Americans in the 25 to 34 year old age bracket are still living with their parents.
So what do you think about all of this? Please feel free to post a comment with your thoughts below….