The American People Don’t Need More Handouts – What They Need Are Good Jobs

Without millions more good jobs, the U.S. economy is simply never, ever going to recover.  But at this point, there is every indication that the U.S. economy is going to continue to bleed jobs.  In the past, employment would bounce up and down as the economy went through various cycles.  But today what we are witnessing is something much different.  Over the past 30 or 40 years, literally millions of good jobs have been shipped off to China, India and to dozens of third world nations where half-starving workers are more than happy to slave away for big global corporations for less than a dollar an hour.  In the new “global economy” that we were promised would be so good for us, the expensive American worker is obsolete.  The giant global predator corporations that now dominate our economy do not exist to provide you and your family with a nice home, two cars and college educations for all your children.  No, their goal is to keep costs as low as possible so that their profits will be as high as possible.  For many of these giant global predator corporations, that means that paying workers as close to zero as possible is the best decision for the bottom line. 

The truth is that the American people were never told that “free trade” and a “global economy” would mean that they would soon be lumped into a giant global labor pool and would be forced to compete for jobs with people on the other side of the globe.

No, we were just told that we should enjoy all of the cheap plastic crap made overseas that all of the “big box” retail stores were pushing us to buy.

Well, the party was fun while it lasted.  Americans ran up unprecedented amounts of debt on their credit cards buying all this stuff, while our once great manufacturing cities degenerated into rotted-out war zones.

But isn’t it a good thing to get all these products at such a cheap price?

After all, who wants to pay substantially more for things?

Well, running an economy this way is kind of like tearing off pieces of your house in order to keep your fire going.  Sure the fire will burn brightly for a while, but eventually you will have torn down your entire house.

One way or another, we end up paying dearly for the jobs we have shipped overseas.

You see, the millions of Americans who are now chronically unemployed because of “free trade” have to be supported by the U.S. government.

That means that it is the U.S. taxpayers who end up footing the bill.

You didn’t think that we were going to let all of those unemployed workers starve in the streets, did you?

Without good jobs, an increasing number of Americans are becoming completely dependent on government handouts.

Already, state governments across the United States are going broke trying to pay out unemployment benefits to the hordes of Americans who don’t have a job and can’t find a job.

In addition, for the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.

Also, according to one new study, somewhere around 21 percent of all children in the United States are living below the poverty line in 2010, which is the highest rate in 20 years.

The truth is that more Americans are dependent on direct payments from the federal government than ever before.

But how long can we afford to support the millions upon millions of Americans who have been impoverished by this new “global economy”?

The U.S. government budget deficit was a record $1.4 trillion in 2009.  Now the White House says that we will exceed that figure in 2010 and again in 2011.

So just how long can we afford to run deficits equivalent to 10 percent of GDP?

Anyone with half a brain knows that these kind of debts are not anywhere close to sustainable.

So where is the money going to come from to pay for these exploding government programs?

Well, from you of course.

Recently I dubbed 2011 “the year of the tax increase”.  A whole slew of new taxes is scheduled to go into effect starting next year that will impact every single American taxpayer.

It is almost enough to make you want to stop working and start collecting government handouts instead.

But the American people don’t need even more handouts.

Handouts are only a temporary solution to a long-term problem.

What the American people need are good jobs.

But where in the world are these jobs going to come from?

The reality is that in the new “global economy”, the United States is a very unattractive place to do business.

If you were a global corporation, would you rather open a new facility in the third world where there are very few rules and regulations and where people will work for less than a dollar an hour, or would you rather open a new facility in the United States where there are literally thousands of laws and regulations to comply with and where you are going to have to pay workers at least ten times as much?

It doesn’t take a genius to see where all of this is headed.

For decades, an increasing number of Americans have been forced into lower paying service jobs, but now there aren’t even nearly enough of those to go around. 

But it isn’t just the jobs that have been shipped overseas that are depressing wages and causing unemployment to skyrocket.  The millions of illegal immigrants that have flooded unchecked across the border have depressed wages and fundamentally changed the employment picture in industries such as construction and food service. 

Not only that, but in this environment not even high tech workers are safe.  In fact, there are some corporations in the high tech industry that have been openly abusing worker visas to ship in large numbers of foreign workers to replace more expensive American employees.

What all this means is that it is becoming much more difficult to live a middle class lifestyle in the United States.

Perhaps that is why one of my articles struck such a nerve recently.  An article that I originally wrote for The American Dream blog and adapted by Business Insider has gone mega-viral and has ended up on Yahoo Finance.  The article was entitled “The Middle Class In America Is Radically Shrinking – Here Are The Stats To Prove it” and it has received over 9000 comments on Yahoo.

So why did it provoke such an extraordinary response?

Well, because it hits people where they live.

Today, millions of American families are really struggling.  Record numbers of middle class Americans are receiving foreclosure notices and record numbers of middle class Americans are going bankrupt.

In fact, more Americans than ever find themselves just trying to survive.

According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.

You see, the truth is that most American families are not concerned with saving for retirement or even with planning for next year.  In this economic environment, most American families are worried about how they are going to survive until next month.

So who has been doing well in the new global economy?

The very, very wealthy of course.

According to Harvard Magazine, 66% of the income growth between 2001 and 2007 went to the top 1% of all Americans.

Now, the truth is that there is absolutely nothing wrong with making money, but by any reasonable standard an economic system that produces such skewed results is horribly broken.

So will “redistributing the wealth” solve things?

No, it won’t.

At best, “redistributing the wealth” is only a temporary solution and it always ends up creating a lot of long-term problems.

What the American people really need are millions more good jobs.

But as we have seen, the current imbalances in the new “global economy” make it more likely that the American people will continue to lose millions more good jobs rather than gaining them.

Unless something is done, the standard of living for middle class Americans will continue to be forced down as labor increasingly becomes a global commodity.

So are you just going to accept that, or are you going to start demanding that your representatives change things?

The choice is up to you.

103 U.S. Banks Have Collapsed So Far In 2010 – Do You Know If Your Bank Will Survive?

Have you ever noticed how almost all U.S. bank closings are now announced over the weekend?  It is almost as if someone wants to keep the increasing number of bank closures out of the news cycle as much as possible.  The Obama administration continues to use phrases like “green shoots” and “economic recovery”, but the truth is that the U.S. banking system is in the middle of a meltdown.  On Friday, federal regulators shut down 7 more banks.  That means that the total number of U.S. bank failures has reached 103 for 2010 so far.  Last year (which was a really bad year for bank closings), we did not break 100 until October.  Of course federal officials promise that “the worst is almost over”, but can we really trust anything that they tell us at this point?

When it comes to the health of the U.S. banking system, the statistical trends certainly do not look promising. 

At the end of 2008, there were 252 U.S. banks on the FDIC’s problem list.

At the end of 2009, there were 702 U.S. banks on the FDIC’s problem list.

About halfway through 2010, FDIC Chairman Sheila Bair said that 775 banks (approximately 10% of all U.S. banks) were on the problem list.

Does anyone else notice a trend developing?

It is time for everyone in the financial world to admit that the U.S. banking system is dying.

Do you know if your bank if on the problem list?

You might want to go check.

Not that your money is going to suddenly disappear.

Even if your local bank fails, the FDIC will guarantee your bank account, right?

Yes, it will.

But the FDIC is far from healthy at this point.

The FDIC is backing approximately 8,000 U.S. banks that have a total of about $13 trillion in assets with a deposit insurance fund that is pretty close to empty.

Well, actually “empty” is not quite the right word.

It was recently reported that the FDIC’s deposit insurance fund is sitting at negative 20.7 billion dollars.

And the FDIC estimates that the seven bank failures on Friday will reduce the fund by another $431 million.

Ouch.

The truth is that the FDIC is rapidly turning into a gigantic financial black hole.

The red ink just seems to be endless.

The FDIC now estimates that their funds will experience a $60 billion reduction due to additional bank closings between now and 2014.

And to be honest, that figure is way too optimistic.

So who is going to bail the FDIC out?

The same source that bails everyone out.

The U.S. taxpayers.

But isn’t that bad?

Yes, all of these bailouts are going to cause the U.S. national debt to continue to explode, but what else can we do?

Are we just going to shut down the FDIC?

That wouldn’t go over too well with anyone.

No, the truth is that this is the system that we have built.

All the crap flows downhill and ultimately ends up in the laps of U.S. taxpayers.

The bad news is that it looks like large numbers of banks are going to continue to fail.

You see, right now the American people are simply not doing a very good job of paying their bills.

During the first quarter of 2010, the total number of loans at U.S. banks that were at least three months past due increased for the 16th consecutive quarter.

Just think about that for a moment.

Would you consider 16 in a row to be a trend?

In an economic system built on credit, it is absolutely imperative that most people pay their debts or the whole thing will come crashing down very quickly.

And right now it is undeniable that things are unraveling at a staggering pace.

So who is benefiting from all this?

Well, there is one segment of the banking industry that is actually performing quite nicely in the midst of all of this chaos.

Many of the largest banks in the U.S. have been reporting very large profits as they gobble up larger and larger shares of the U.S. banking market.

In a previous article entitled “Are We About To Witness The Greatest Banking Consolidation In U.S. History?”, we noted the rapidly growing power of America’s megabanks….

Back in 2000, the “Big Four” U.S. banks – Citigroup, JPMorgan Chase, Bank of America and Wells Fargo – held approximately 22 percent of all deposits in FDIC-insured institutions.  As of June 30th of last year that figure was up to 39 percent.

The Founding Fathers of this country warned us of the danger of big banks getting too much power, but we have not listened to their warnings.

Now we have monolithic global banks that are so immense in size that we seem almost powerless to control them.

In fact, the six biggest banks in the United States (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets equivalent to 60 percent of America’s gross national product.

The truth is that these sharks aren’t shedding any tears when your local banks die off.

Why?

Because they know that many of the customers from the banks that have died will soon come their way.

The reality is that all of the legislation and regulations implemented during the past 30 or 40 years have rigged the game massively in favor of the big global banks.

So dozens upon dozens of smaller banks are going to continue to die and the megabanks are going to continue to eat up increasingly larger portions of market share.

So if you still have money in a small local bank, enjoy it while you can.

From now on, the small bank in America is an endangered species.

2011: The Year Of The Tax Increase

Unless the U.S. Congress acts, there is going to be a massive wave of tax increases in 2011.  In fact, some are already calling 2011 the year of the tax increase.  A whole host of tax cuts that Congress established between 2001 and 2003 are set to expire in January unless Congress chooses to renew them.  But with Democrats firmly in control of both houses that appears to be extremely unlikely.  These tax increases are going to affect every single American (at least those who actually pay taxes).  But this will be just the first wave of tax increases.  Another huge slate of tax increases passed in the health care reform law is scheduled to go into effect by 2019.  So Americans that are already infuriated by our tax system are only going to become more frustrated in the years ahead.  The reality is that the U.S. government will soon be digging much deeper into our wallets.

The following are some of the tax increases that are scheduled to go into effect in 2011….

1 – The lowest bracket for the personal income tax is going to increase from 10 percent to 15 percent.

2 – The next lowest bracket for the personal income tax is going to increase from 25 percent to 28 percent.

3 – The 28 percent tax bracket is going to increase to 31 percent.

4 – The 33 percent tax bracket is going to increase to 36 percent.

5 – The 35 percent tax bracket is going to increase to 39.6 percent.

6 – In 2011, the death tax is scheduled to return.  So instead of paying zero percent, estates of $1 million or more are going to be taxed at a rate of 55 percent.

7 – The capital gains tax is going to increase from 15 percent to 20 percent.

8 – The tax on dividends is going to increase from 15 percent to 39.6 percent.

9 – The “marriage penalty” is also scheduled to be reinstated in 2011.

It is being estimated that the total cost of these tax increases to U.S. taxpayers will be $2.6 trillion through the year 2020.

Ouch!

But wait, there are even more tax increases coming.

The “health care reform law” contains over a dozen new taxes that will be implemented in stages over the next decade.  When you add all of these taxes to the taxes that were mentioned earlier, the result is going to be absolutely devastating.  According to an analysis by the Congressional Joint Committee on Taxation the health care reform law will generate $409.2 billion in additional taxes by the year 2019.

Double ouch!

So is it any wonder why the public has such a low opinion of the U.S. Congress?

Every single major poll done on the topic shows that approval ratings for Congress are at record lows.

For example, Gallup’s 2010 Confidence in Institutions poll found Congress ranking dead last out of the 16 institutions rated this year.

Of course there are a whole host of reasons why the American people are upset with Congress, but one of the big ones is the fact that we are literally being taxed to death.

However, it is not just federal income taxes that are killing us.

In a previous article entitled “Taxed Enough Already!”, we listed just a few of the taxes that Americans have to pay each year….

Accounts Receivable Tax

Building Permit Tax

Capital Gains Tax

CDL license Tax

Cigarette Tax

Corporate Income Tax

Court Fines (indirect taxes)

Dog License Tax

Federal Income Tax

Federal Unemployment Tax (FUTA)

Fishing License Tax

Food License Tax

Fuel permit tax

Gasoline Tax

Gift Tax

Hunting License Tax

Inheritance Tax

Inventory tax IRS Interest Charges (tax on top of tax)

IRS Penalties (tax on top of tax)

Liquor Tax

Local Income Tax

Luxury Taxes

Marriage License Tax

Medicare Tax

Payroll Taxes

Property Tax

Real Estate Tax

Recreational Vehicle Tax

Road Toll Booth Taxes

Road Usage Taxes (Truckers)

Sales Taxes

School Tax

Septic Permit Tax

Service Charge Taxes

Social Security Tax

State Income Tax

State Unemployment Tax (SUTA)

Telephone federal excise tax

Telephone federal universal service fee tax

Telephone federal, state and local surcharge taxes

Telephone minimum usage surcharge tax

Telephone recurring and non-recurring charges tax

Telephone state and local tax

Telephone usage charge tax

Toll Bridge Taxes

Toll Tunnel Taxes

Traffic Fines (indirect taxation)

Trailer registration tax

Utility Taxes

Vehicle License Registration Tax

Vehicle Sales Tax

Watercraft registration Tax

Well Permit Tax

Workers Compensation Tax

Are you dizzy yet?

The reality is that the American people are being drained in dozens and dozens of different ways.

But what did you expect?

Did you think that our politicians would pile up the biggest debt in the history of the world and never ask you to pay for it?

Did you think that we could run deficits equivalent to about 10 percent of GDP without ever seeing tax increases?

The truth is that the U.S. government needs a whole lot more money than even these new tax increases will bring in.

After all, it is being projected that the U.S. government will be spending $2 trillion on the interest on the national debt alone by the year 2020.

To put that in perspective, the entire budget for the U.S. government is less than $4 trillion for 2010.

Are you starting to get the picture?

In the years ahead the IRS is going to be digging deeper and deeper into our pockets and a gigantic chunk of that money is going to go directly into the pockets of those who own our debt.

But very few Americans wanted to listen when this problem was actually somewhat fixable 20 or 30 years ago.

So now we are all going to pay the price – literally.

GunMagWarehouse.com

One Economic Chart That You Should Permanently Burn Into Your Memory

Today most Americans are completely obsessed with the silliest of things.  They wonder how Lindsay Lohan is going to fare in jail and they agonize over who LeBron James is going to play basketball for.  But when it comes to the things that really matter, most Americans are completely clueless.  For example, while most Americans would agree that we are experiencing difficult economic times right now, most of them would also argue that our economic system is in fundamentally good shape and that things will get back to “normal” at some point.  Those of us who are trying to warn America of the impending economic nightmare are dismissed as “doom and gloomers” and “conspiracy theorists”.  But of course, as with so many things, the passage of time will tell who was right and who was wrong.  Below there is a chart that I want all of you to burn into your memory.  It is a chart of total U.S. debt as a percentage of GDP from 1870 until 2009.  This chart clearly and succinctly communicates the horror of the debt bubble that we are currently dealing with.  When this debt bubble pops, it is going to make the Great Depression look like a Sunday picnic.

As you can see from the chart below, the total of all debt (government, business and consumer) is now somewhere in the neighborhood of 360 percent of GDP.  Never before has the United States faced a debt bubble of this magnitude…. 

Most of us were not alive during the Great Depression, but those who were remember how incredibly painful it was for America to deleverage and bring the economic system back into some type of balance.

So if our current debt bubble is far worse, what kind of economic horror is ahead for us?

But the truth is that we are facing some circumstances that even the folks back during the Great Depression did not have to deal with….

1 – Back in the 1930s, tens of millions of Americans lived on farms or knew how to grow their own food.  Today the vast majority of Americans are totally dependent on the system for even their most basic needs.

2 – A vast horde of Baby Boomers is expecting to retire, and the “Social Security trust fund” has nothing but 2.5 trillion dollars of government IOUs in it.  According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019.  This is a financial tsunami the likes of which Americans back in the 1930s could never have even dreamed of.

3 – American workers never had to compete for jobs with workers on the other side of the world back in the 1930s.  But today, millions upon millions of our jobs have been “outsourced” to China, India and a vast array of third world nations where desperate workers are more than happy to slave away for big global corporations for less than a dollar an hour.  How in the world are American workers supposed to compete with that?

4 – Back in the 1930s, there was nothing like the gigantic derivatives bubble that hangs over us today.  The total value of all derivatives worldwide is estimated to be somewhere between 600 trillion and 1.5 quadrillion dollars.  The danger that we face from derivatives is so great that Warren Buffet has called them “financial weapons of mass destruction”.  When this bubble pops there won’t be enough money in the entire world to fix it.

5 – During the Great Depression, the United States economy was relatively self-contained.  But today we truly do live in a global economy.  Unfortunately that means that a severe economic crisis in one part of the world is going to affect us as well.  Right now, the United States is far from alone in dealing with a massive debt crisis.  Greece, Spain, Italy, Hungary, Portugal and a number of other European nations are in real danger of actually defaulting on their debts.  Japan (the third biggest economy in the world) is on the verge of complete and total economic collapse.  So what happens to the U.S. economy when the dominoes start to fall? 

The truth is that by almost any measure, we are in worse economic condition than we were right before the beginning of the Great Depression.  We have been living way beyond our means and the debts we have been piling up are clearly not anywhere close to sustainable. 

Did you think that we could just continue to run deficits equal to 10 percent of GDP forever?

Of course not.

The U.S. economy is being driven off a cliff, but America’s “ruling class” has insisted all along that they know better than we do

But the truth is that in the final analysis it is not us that they care about.

What they do actually care about is getting more money and more power for themselves and for other members of the ruling class.  Today, 10,000 people make 30% of the total income in the United States each year.

That leaves 70% of the pie for the remaining 99.99% of us to divide up.

The reality is that however you want to slice it, the U.S. economic system is broken.  However, considering the fact that America’s ruling class has a stranglehold on both major political parties, we are not likely to see any fundamental changes any time soon.

That is very unfortunate, because time is running out on the U.S. economy.

U.S. National Debt 2010

So just how big is the U.S. national debt in 2010?  Well, according to the U.S. Treasury Department, on June 1st the U.S. National Debt was $13,050,826,460,886.97.  For those not used to seeing such big numbers, that is over 13 trillion dollars.  To give you an idea of just how much a trillion dollars is, if you had started spending one million dollars every single day when Christ was born, you still would not have spent one trillion dollars by now.  And yet somehow the U.S. government has accumulated a debt of over 13 trillion dollars.  This is a debt that we have callously placed on the backs of future generations of Americans.  Somehow we have the gall to expect our progeny to pay off the biggest mountain of debt in the history of the world.  What we have done to future generations is beyond sickening.

But hey, if you are feeling especially generous today, the federal government is actually taking online donations that will go towards paying off the national debt.

Yes, it is true.

Please try to resist the urge to laugh.

This request comes from the same government that spent $2.6 million tax dollars to study the drinking habits of Chinese prostitutes and $400,000 tax dollars to pay researchers to cruise six bars in Buenos Aires, Argentina to find out why gay men engage in risky sexual behavior when drunk.

Perhaps they should not hold their breath while waiting for our donations to show up.

Or perhaps they should get their own house in order before expecting donations.

But the truth is that they continue to recklessly spend our money as if they have not learned anything.

This year, it is projected that the U.S. government will issue nearly as much new debt as the rest of the governments of the world combined.

Yes, getting into debt is another thing that we Americans dominate the rest of the world in.

It is estimated that the U.S. government will have a budget deficit of approximately 1.6 trillion dollars in 2010.

Now remember, when Ronald Reagan took office, the U.S. national debt was only about 1 trillion dollars.

So, from the founding of the United States until Reagan took office we accumulated a total of about 1 trillion dollars in debt.

In just the last 30 years we have accumulated 12 trillion dollars more.

You know, the truth is that it is really, really hard to even spend one trillion dollars.

If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

Hopefully that gives you an idea just how fast the U.S. government is getting us into debt.

And now we are officially in the danger zone.

According to Dr. Jerome Corsi,  the U.S. national debt is now equal to 90 percent of gross domestic product.

Most economists consider a level of 100 percent debt to GDP to be an absolute nightmare scenario.

But things look even worse when you total up all forms of debt in the United States.

The total of all government, corporate and consumer debt in the United States is now equal to 360 percent of GDP.

That is far greater than at any point during the Great Depression.

Yes, we are in a LOT of trouble.

So can we just raise taxes on everybody just a little bit and get rid of this budget deficit?

Well, unfortunately no.

According to the Tax Foundation’s Microsimulation Model, to erase the U.S. budget deficit for 2010, the U.S. Congress would have to multiply the tax rate for every American by 2.4.

That would mean that the 10 percent tax rate would become 24 percent, the 15 percent tax rate would become 36 percent, and the 35 percent tax rate would have to be 85 percent.

Would you like to pay 85 percent of your income in taxes?

And that would not reduce the national debt one penny – all that would do is eliminate the U.S. budget deficit for this year.

The truth is that it is simply not possible to pay off the national debt.  Most economists realize this and speak of more realistic goals such as getting our debt growth down to a level that is “sustainable”.

But the reality is that we are way beyond being able to get this debt under control.  If the U.S. government cut spending enough to make a real difference it would crush the economy and tax revenue would take a sharp nosedive.  If the U.S. government borrows even more money and increases government spending even more it will help the economy in the short-term, but it will make our long-term problems even worse.

No, the truth is that we have created an economic nightmare from which there simply is no escape under the current system.  The national debt will never be repaid and the never ending spiral of debt and paper money that we have created is doomed to failure.

So what will happen someday when the current economic system does collapse?

That will be for the American people to decide.  Hopefully they will learn from our mistakes and will return to our constitutional roots and devise a financial system based on solid economic principles.

How to Survive the End of the World as We Know It

How Is The U.S. Economy Supposed To Succeed When Our Politicians And The Big Banks Are Making Billions Of Dollars Betting Against It?

Most people around the globe think of America as a great “capitalist” economic machine, but the truth is that the U.S. financial system is essentially one massive betting parlor at this point.  In fact, there has been a whole lot of easy money made in this betting parlor over the past several years by our politicians and by the big financial players down on Wall Street.  So how did they make all of this money?  They did it by betting against America.  By betting that the U.S. economy would do badly, a lot of very powerful people have gotten insanely wealthy.  Literally billions of dollars have been made over the past five years simply by betting that the U.S. housing market would go into the toilet.  But is all of this “short selling” and are all of these “side bets” actually good for the American economy?  How is the U.S. economy supposed to succeed when the big banks and so many of our politicians are actively making bets against it?

Just take a moment and check out some of the folks that have been betting against America….

*A Wall Street Journal analysis of congressional disclosures shows that 13 members of the U.S. Congress or their wives were engaged in substantial short selling during the financial crisis of 2008.

*An individual by the name of Jeff Greene made hundreds of millions of dollars during the real estate collapse by making huge bets against the residential housing market.  Now he wants to use some of that money to run for the U.S. Senate in Florida.

*Goldman Sachs openly and brazenly bet against its own clients as the housing market began to implode back in 2007 and 2008, and they made a TON of money by doing so.

*John Paulson (with the assistance of Goldman Sachs) has quickly become one of the richest men in the United States by betting against America.  Shorting the subprime mortgage market enabled his firm, Paulson & Co., to make 15 billion dollars in 2007.  John Paulson alone made approximately 4 billion dollars that year.

*Legendary investor Warren Buffett said on Saturday that he’s bearish about the ability of all currencies to hold their value over time because of massive deficits being run up by governments in the wake of the global financial crisis.

*The Federal Reserve holds credit-default swaps on the debt of Florida schools, and on debt owed by the states of Nevada and California.  So the Federal Reserve would profit if one of those states defaulted on its debt.

*JPMorgan Chase, Bank of America, and Citigroup are offering “municipal credit default swaps” that enable investors to make big money if U.S. states and cities end up defaulting on their debts.

It is one thing to make a legitimate profit on an investment.  It is another thing entirely for the biggest financial institutions in the United States and our politicians to be making massive amounts of money off of the economic collapse of America.

You see, those making huge bets against the U.S. economy also have an incentive to do what they can to make those bets profitable.  So for those who have the power to do so, does there come a point where they give the U.S. economy a little “push” in the wrong direction so that their bets will pay off?

The reality is that we have created a financial environment where fear rules.  For example, very few people want to back U.S. home loans anymore.  So now the U.S. government has to do it.  According to Inside Mortgage Finance, U.S. government-related entities backed 96.5% of all U.S. home loans during the first quarter of 2010.  This was up from 90% in 2009.

We should really rethink a financial system where a few people make a ton of money off of the fact that everyone else is doing badly.  Sure a few people are laughing all the way to the bank, but America as a whole is hurting.

Just consider the following charts.  U.S. national income has never experienced such a radically negative change in modern times….

All of these economic problems have caused the revenue of the U.S. government to dramatically decline at the same time expenditures are rocketing into the stratosphere….

As the U.S. economy continues to tank, the U.S. national debt is going to keep spinning wildly out of control.  Back in 1980, the U.S. national debt was approximately 1 trillion dollars.  Today it is accelerating rapidly as it pushes past 12 trillion dollars and towards 13 trillion dollars….

The truth is that the massive deficits being run up not only by the U.S. government, but by governments all over the world, are something that is clearly not sustainable.  In fact, Warren Buffett recently made an interesting remark about how painful it is going to be when the debt party ends….

“How the world weans itself off huge deficit financing is going to be difficult to watch.”

In fact, there are some nations that are in bigger trouble with debt than even the United States is.  Japan’s gross public debt has reached 201% of GDP, and the only way that the government of Japan can avoid bankruptcy at this point is by borrowing ever-increasing amounts of money.

But the truth is that this game cannot be played forever.

There has never been a time when so many nations around the world have piled up so much debt so quickly.

When the sovereign debt bubble pops, things are going to get really messy and the dominoes will start falling really quickly.

But when that happens one thing is for certain – there will be a lot of people ready to make a lot of money by betting on the financial failures of others.

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Why You Should Be VERY CONCERNED About The Financial Crisis In Greece

Up to this point, it seems as though most Americans have not really been too concerned about the financial meltdown that is taking place in Greece.  But they should be.  The truth is that the debt crisis we see playing out in Greece may soon repeat itself in some of the largest nations in the world such as Japan, the U.K. and even the United States.  Once upon a time, this kind of thing only happened in third world nations, but now virtually every nation on earth has a debt problem.  As the saying goes, the borrower is the servant of the lender, and so when a country like Greece gets in way, way too deep financially, it ends up having to give up a portion of its sovereignty to those controlling the purse strings.  In the case of Greece, those controlling the purse strings are the IMF and the EU.  But it just isn’t Greece that is in trouble.  Dozens of nations are in serious financial trouble and are at the mercy of those who can bail them out.  The truth is that global financial institutions like the IMF, the World Bank, the European Central Bank and the Federal Reserve are increasingly gaining power all over the globe as governments around the world continue to accumulate frightening amounts of debt.

This has been quite a week for Greece and for the other nations in Europe teetering on the edge of financial disaster.  Standard & Poor’s reduced Greek debt to “junk” status, and Spain and Portugal’s debts were also downgraded substantially.  These unprecedented steps by Standard & Poor’s have many concerned that this financial “contagion” could start spreading across all of Europe.

We’ll take a look at the “austerity measures” being forced on Greece in a moment, but first it is important to note that financial panic is already spreading to other nations in the region.

In Portugal, the government has announced that additional “austerity measures”, beyond those in the current three year plan, are expected to be implemented.  Perhaps they wouldn’t need to take such drastic steps if they hadn’t spent all of those millions constructing those shiny new soccer stadiums a few years ago.  But in any event, many analysts are now forecasting that Portugal will be the next domino to fall.

Officials in Spain are expected to announce this week that unemployment has hit 20%.  But of course any nation that implements a hardcore “cap and trade” law like the one in Spain should expect unemployment to soar into the stratosphere.  So they are just reaping what they have sown, but the fallout could end up being very painful.  Spain’s economy is approximately five times larger than Greece’s so if Spain ends up defaulting it will create a financial nightmare for all of Europe.

There are now rumors that even Italy and Ireland are in a massive amount of trouble financially.

So will the EU and the IMF end up having to bail all of them out?

Well, for now Greece is first in line.

European officials said on Friday that the Greek government, facing a rapidly deteriorating financial situation, is close to completing negotiations for assistance from the International Monetary Fund.

So Greece is going to get the money that it needs – but it comes with strings.

Greece must surrender some of its fiscal sovereignty and adopt a three year program of severe spending cuts and higher taxes.

In fact, one major Greek newspaper says that wage and job cuts for public workers will also be ordered alongside the spending cuts and tax increases to get through what they are calling “three hard years”.

You see, the truth is that Greece is a highly socialized nation.  In a population of just over 11 million people, Greece employs more than a million in the public sector.

Just think about that for a moment.

That is huge.

They get paid extremely well, and Greek civil servants also enjoy very generous pension benefits and early retirement.

Needless to say a lot of these Greek civil servants are not happy at all about the changes the IMF is forcing upon them, and they have called a general strike for May 5th.

For his part, the Greek Prime Minister, George Papandreou, is trying to convince the Greek people that these new spending cuts and tax increases are necessary to keep his nation afloat.  According to The Associated Press, Mr. Papandreou recently told the Greek Parliament the following….

“The measures we must take, which are economic measures, are necessary for the protection of our country — for our survival, for our future, so we can stand firmly on our feet.”

There are even fears that this sovereign debt crisis could spell the end for the Euro.  Back on Wednesday, the leaders of the 16 countries currently using the Euro called an emergency meeting to attempt to avert a Euro meltdown triggered by Greece’s financial collapse.

Of course the Euro is not actually going to collapse, but the fact that they all felt the need to get together and talk about this situation is quite telling.

In fact, the language used by some of the top financial authorities in the world when speaking about the Greek debt crisis is quite alarming….

Angel Gurría, head of the Organization for Economic Cooperation and Development:

“This is like Ebola. It’s threatening the stability of the financial system.”

Colin Ellis, economist at Daiwa Capital Markets:

“The time for horse-trading, prevarication and posturing is over. Arguably, the very future of the euro area is now teetering on a knife edge.”

Dominique Strauss-Kahn, head of the International Monetary Fund:

“If we don’t fix it in Greece, it may have a lot of consequences on the EU.”

But for the people of Greece, getting help with their debt means giving up their ability to determine their own affairs.  They have gotten into so much debt that now they are forced to do whatever the IMF and the EU tell them to do.  Of course there are many in Greece who are extremely upset by this as evidenced by the recent riots there….

But this is what happens when a nation allows itself to get into way too much debt.  In fact, this has been done by design in third world nations for decades.  In his extraordinary book, Confessions of an Economic Hitman, John Perkins explained how it was his job to go around the world and get third world governments to accept multibillion-dollar loans that he knew they would never be able to repay.  Of course when the time came and they could not repay the loans, the big global institutions would go in and confiscate natural resources and impose “conditions” and implement “austerity measures” similar to the ones they are currently imposing on Greece.

The alarming thing today is that it just isn’t third world nations where this game is being played anymore.  Now that they have perfected the blueprint, they are trying it out on nations like Greece.

The reality is that this is all part of the push towards globalization.  In fact, Jean-Claude Trichet, the president of the European Central Bank, emphasized the need for global coordination in financial matters during his April 26th address at the Council on Foreign Relations.

“Global coordination” sounds nice, but just like “global governance” and “global cooperation”, it is just another way of saying that we need to transfer more power and more authority to globalist institutions.

You see, whatever problem that pops up (in this instance it is the Greek debt crisis), the solution always seems to be to transfer more power to global institutions.

In fact, as a “solution” to the global financial crisis, the IMF is proposing two new taxes on financial institutions worldwide: a “financial stability contribution” which levies a small charge on financial institution balance sheets, and a “financial activities tax”, which would tax “excess profits” and bonuses.

As the nations of the world continue to get deeper in debt, and as more power and more money is transferred to unelected global institutions, the people of the world may find their lives increasingly being run by heartless bureaucrats on the other side of the globe.

For anyone who loves freedom, that is a very sobering thought.