As the deadline to raise the debt ceiling draws closer, many are now wondering if Barack Obama will try to go around Congress if a deal is not reached by August 2nd. In particular, a number of voices (including U.S. Treasury Secretary Timothy Geithner) are now touting the 14th Amendment as a way to get around the debt ceiling. There are others that believe that Barack Obama should invoke “national security” in order to avoid a default. If the Republicans and the Democrats do not reach a deal by the end of July, things are going to get really, really interesting and there is no telling what Barack Obama may do.
Section 4 of the 14th Amendment to the U.S. Constitution says the following….
“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
At a breakfast hosted by Politico last month, U.S. Treasury Secretary Timothy Geithner actually pulled out a copy of the Constitution and read this clause out loud.
Geithner (and others) are now attempting to argue that the debt ceiling is actually unconstitutional. They believe that the phrase “shall not be questioned” means that if the U.S. government refuses to make debt payments it would be directly violating the U.S. Constitution.
So what does Barack Obama think of this legal theory?
Reporters have been trying to ask him this question, but right now Obama is not answering.
Certainly Obama would very much prefer to have the Republicans and the Democrats reach a deal far before the debt ceiling deadline arrives.
So what will Obama do if a deal is not reached?
Nobody seems to know.
But this clause of the 14th Amendment brings up some deeper issues as well.
Does this clause make it unconstitutional for all future generations to renounce the national debt?
Does this clause make it illegal for all U.S. citizens to even question the validity of the U.S. national debt?
Most Americans would like to think that when it comes to constitutional questions there should always be some clear answers. But the truth is that for many constitutional questions there are a lot of gray areas.
When there is something in the U.S. Constitution that we do not like, that does not mean that we get to ignore it. We have way too many politicians doing that already.
Personally, I would like to see this phrase in the 14th Amendment changed. I think that this phrase is way too vague and could potentially open up a whole can of worms.
But of much more immediate concern is raising the debt ceiling.
Yesterday, I talked about how horrible our national debt is and I also talked about how dangerous refusing to raise the debt ceiling would be.
A large number of Americans that are deeply concerned about the national debt are also completely opposed to raising the debt ceiling.
But if we default right now, it is going to make our national debt problem much, much worse.
Think of it this way – if you had friends that were drowning in debt, would you tell them to immediately start defaulting on their mortgage, their car loans and their credit cards?
Of course not.
The penalties, fees and interest rate hikes would kill them.
Well, it is the same thing with the federal government. Right now we have a great credit rating and we are able to borrow money at extremely low interest rates.
If that suddenly changed, interest rates on our debt would go up dramatically. Just look at Greece. Greece is paying somewhere around 28 percent interest on 2 year bonds. If that happened to us, it would be a complete and total nightmare.
Even if we adopted a “balanced budget” next fiscal year, we would still need to roll over gigantic amounts of debt.
If interest rates on U.S. government debt started skyrocketing, interest payments on the U.S. national debt would very quickly start eating up the majority of our tax dollars. We would soon have very, very little money to spend on anything else.
Wrecking our credit rating just to make a point about fiscal responsibility is not going to solve anything.
What point would there be to wrecking our financial system when neither political party has a viable plan for something better?
A lot of people (including some readers of this column) are actually rooting for a financial crash so they can watch the world go down in flames.
Yes, an economic collapse is coming, but that doesn’t mean that we should wish for it and try to get it to happen faster.
Look, you are probably going to die someday. That doesn’t mean that you should go out and run your car into the nearest tree.
If we blow out our national credit rating right now, it is going to make it 10 times worse to try to get a handle on our national debt.
Plus, if the world financial system was to crash, it would create a massive amount of economic pain for hundreds of millions of people.
Most Americans cannot even conceive of what the consequences of a complete and total financial collapse would be. It is not something that we should be wishing for. Life as we know it would change dramatically.
Once our economic system crashes, it is not going to be able to be put back together again so easily. Most Americans have no idea how bad things could get.
Yes, we must do something about the national debt. We must stop spending ourselves into oblivion. We must dismantle the current debt-based financial system that we are operating under and we must transition to something new.
But to purposely default by refusing to raise the debt limit would bring a whole lot of future financial pain into the present and would make it almost impossible to transition to a new financial system in an orderly fashion.
The sad thing is that a whole lot of people out there actually believe that the current system can be fixed. Many Republicans believe that if we can just cut spending enough we will be okay. Many Democrats believe that if we can just raise taxes on the wealthy enough we will be okay.
But the truth is that the current system cannot be fixed. It is designed to be a perpetual government debt machine from which there is no escape. We have reached a terminal phase of the debt spiral and we get closer to a collapse every single day.
According to John Williams of Shadow Government Statistics, if the U.S. government used GAAP accounting principles the “real” U.S. government budget deficit each year would be somewhere in the neighborhood of 5 trillion dollars. Williams believes that the U.S. government is essentially bankrupt and that our current system is not anywhere close to sustainable….
Generally, you’ll find that the accounting for unfunded liabilities for Social Security, Medicare and other programs on a net-present-value (NPV) basis indicates total federal debt and obligations of about $75 trillion. That’s 15 times the gross domestic product (GDP). The debt and obligations are increasing at a pace of about $5 trillion a year, which is neither sustainable nor containable. If the U.S. was a corporation on a parallel basis, it would be headed into bankruptcy rather quickly.
Sadly, Williams is right. We are drowning in debt. Something has got to be done.
But refusing to raise the debt limit is not going to help. If we allow our credit rating to be destroyed we could quickly find ourselves paying a trillion dollars or more just in interest on the national debt every single year.
If we want to handle the national debt monster, we need to do it the right way. One thing that we need to do is to admit how bad the situation really is.
The truth is that we are in a lot more than $14.3 trillion in debt.
For example, according to The Financial Armageddon blog, the combined total for all “U.S. government bailouts” and “U.S. government guarantees” related to the financial crisis comes to a grand total of over 20 trillion dollars.
Also, the “unfunded liabilities” of the U.S. government are estimated to be somewhere between $60 trillion and $100 trillion.
If Bill Gates gave every penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
There are no easy solutions to our problems. If we refuse to raise the debt ceiling our interest costs on the national debt may end up doubling or even tripling in short order. That is not going to help us get our fiscal house in order.
Right now the state of the economy is so fragile that one really bad “shock” could cause it to totally fall apart. The U.S. economy is like a patient that is barely hanging on in the operating room. If we don’t show patience and discipline we could end up with a total disaster.
Look, you will probably not find many writers on the entire Internet that harp on the horror of the U.S. national debt more than I do. It is a crisis that is so nightmarish that it is hard to even put into words.
But refusing to raise the debt ceiling is not going to solve anything. In fact, it would only accelerate our demise.
Our economic system is in bad enough shape already. Let’s not do any unnecessary damage to it.
Sadly, that is the truth. We are in a permanent decline. Just “tweaking” a few things is not going to work. Doing what the Democrats are telling us to do is not going to work. Doing what the Republicans are telling us to do is not going to work.
Our financial system is fundamentally flawed from the Federal Reserve on down. If we continue on the path that we are on, a horrific collapse is inevitable.
We need truly dramatic changes if our way of life is going to survive.
Unfortunately, most Democrats and most Republicans believe that they can fix the current system somehow.
The U.S. economy is like a rubber band that is being pulled in several different directions at the same time. Everyone knows that at some point it is going to snap, but nobody is quite sure exactly when it is going to happen. Right now, the state of the economy is not good, and it is going to get a whole lot worse. Sadly, most Americans don’t even understand the economic fundamentals well enough to be able to ask the right questions to our politicians. Today, the United States consumes far more wealth than it produces every single month. That means we are continually getting poorer. U.S. debt is also rising at a far greater rate than U.S. GDP is. On an individual level, if your assets were going down every single month and if you were going into more debt every single single month it would be easy to understand what was happening. However, most Americans can’t really seem to grasp what is taking place on a national level. Our politicians and the mainstream media just keep telling them that everything is going to be okay and they just keep believing it.
These days our leaders are resorting to increasingly desperate measures in order to help revive the economy. On Thursday, Barack Obama decided to release 30 million barrels of oil from the U.S. strategic oil reserve.
Yes, that will drive down oil prices for a few days, but what is going to happen someday if we actually need to use that strategic oil reserve?
But in many ways you can’t blame Obama for trying. He desperately wants to get reelected and he knows that his campaign will be highly dependent on the state of the economy. Look for Obama to pull out all the stops as we get closer to the fall of 2012.
Sadly, the truth is that it almost does not matter what the Democrats or the Republicans do at this point. The long-term trends are so powerful now that it would take a miracle to reverse them. We are facing an “economic tsunami” that is just going to keep on destroying middle class America.
If you went to a store today, and there were two somewhat similar products sitting on the shelf and one cost ten times more than the other one, which one would you buy?
Well, that is the situation facing American workers today. They have been pushed into one giant globalized labor pool, but big corporations are allowed to pay workers on the other side of the globe slave labor wages. It costs ten times more (at least) to hire a blue collar American worker than it does to hire a blue collar worker in most areas of Asia.
As a result of the globalization of labor, we have seen a mass exodus of jobs out of the United States, and wages for many of the jobs that remain have been significantly depressed.
There simply are not nearly enough jobs for all Americans at this point.
Recent college grads are finding this out. A new study that was conducted by Rutgers University discovered that over 30 percent of all those that graduated from college between 2006 and 2010 were not able to get a job within six months of graduation.
But unemployment is only part of the story. There are millions upon millions of Americans that are “underemployed” today.
There are hordes of highly educated, hard working Americans that are working temporary or part-time jobs at close to minimum wage because that is all they can get.
With good jobs being so scarce, American families are finding it more difficult than ever to make ends meet.
One recent survey found that 9 out of 10 U.S. workers do not expect their wages to keep up with the rising cost of basics such as food and gasoline over the next year.
I talked about the rising cost of food in my recent article entitled “Why Are Food Prices Rising So Fast?” Today, one out of every seven Americans is already on food stamps, and if the cost of living keeps rising this quickly we are going to see millions more of our fellow citizens clamoring for government assistance.
The decline of the American consumer is having other effects as well.
For example, pre-orders for Christmas toys from China are way down.
It looks like this holiday season is not going to be as “merry” as usual.
It would be nice if we could say that the economy is improving, but that simply is not the case.
American households are in a far different place than they were prior to the recent recession.
For example, did you know that home values in the United States have plummeted $6.6 trillion since the peak back in 2007?
U.S. homeowners have taken the brunt of that decline. According to the Federal Reserve, average home equity has fallen from 61 percent in 2001 to 38 percent in the first quarter of 2011.
That is a colossal shift.
If U.S. homeowners only own 38 percent of their homes, then who owns the rest?
The banks do.
Doesn’t that just make you feel all warm and fuzzy inside?
Health care is another area where American families are getting squeezed.
“There’s a lot of emotion in this market at the moment, and the conversations among traders are nearly all leaning toward the bear side”
As the financial system spins out of control, the Federal Reserve is increasing the number of workers that it is “embedding” at the big Wall Street banks.
I guess the Fed wants to keep a closer eye on things as they come crashing down.
Sadly, so much of this would be much easier to fix if our nation was not drowning in debt.
Since Barack Obama was elected, the national debt has increased by nearly 4 trillion dollars. If you and I went out today and started repaying that 4 trillion dollars at a rate of one dollar per second, it would take over 120,000 years to do it.
Most Americans have a hard time comprehending these kinds of numbers. Janet Tavakoli tried to put our debt situation into perspective in her latest column….
David Walker, the former U.S. comptroller general, says it’s even worse than that. When he takes into account future obligations for Medicare, Social Security, Federal debt, Military retirement, Civil servant retirement, and more, we owe $546,663 per household. That doesn’t even include your local debt — it may not be as bad as if you lived in Illinois, but it’s substantial nonetheless — and personal debt including mortgages and consumer debt that average more than $120,000 per household.
But you don’t have to toss wild numbers around to get an idea of how much trouble we are in.
As I have written about recently, there is increasing evidence all around us that the collapse of society is accelerating. We are seeing disturbing reports of civil unrest pop up all over the U.S. at an alarming rate.
According to a CBS affiliate in Chicago, earlier this week approximately 50 young people conducted a shocking mob robbery of a drug store located on the Magnificent Mile in Chicago….
Some 50 young people barged into a Walgreens at Michigan and Chicago on the Magnificent Mile on Tuesday afternoon. They took bottled drinks and sandwiches off the shelves, then ran off, CBS 2′s Suzanne Le Mignot reports.
When large groups of young people get together and agree to commit crimes that should be a huge red flag for all of us.
We are a nation that is deeply, deeply divided. Hatred is growing and the love of most Americans is growing cold.
As I have written about previously on “The American Dream“, the American people are actually encouraged to hate one another these days….
The truth is that the “establishment” is constantly trying to divide us and get us fighting with one another. They pit the Republicans against the Democrats (even as though control both sides). They pit one race against another. They pit one gender against another. We are told that the rich are against the poor, the north is against the south, urban is against rural and that there are even “generational battles” going on. Frustration and hate are rapidly growing in the United States today, and a lot of that frustration and hate is unfortunately aimed at the targets that the mainstream media has programmed all of us to hate. Meanwhile, those at the top of the pyramid who are controlling the whole game love it when we are divided because we can never become united and challenge their control.
We need to come together as a nation. If we don’t, we are going to face an unprecedented nightmare when the economy collapses.
So what do you think about the state of the economy? Please feel free to leave a comment with your opinion below….
Is the U.S. economy improving? That is what Federal Reserve Chairman Ben Bernanke would have us believe. Bernanke declared today that the “recovery appears to be proceeding at a moderate pace” and that everything is going pretty much as planned. Sadly, the mainstream media and most of the American people still seem to have faith in the economic pronouncements of Helicopter Ben. They seem to have forgotten all of the Bernanke quotes from before the financial crisis. Bernanke pledged that there would not be a housing crash and that there would not be a recession. It is amazing that anyone still believes that Bernanke has any credibility left.
Of course “economic recovery” is one of Barack Obama’s favorite new terms. He loves to talk about all of the signs that the economy is improving. To Obama, all of the recent bad economic news is no big deal. He says that what we are experiencing right now are simply “bumps on the road to recovery“.
Well, whether you want to call them “bumps” or “potholes” or “massive gaping wounds that are gushing blood all over the place”, the truth is that the U.S. economy is not improving at all. In fact, it is rapidly getting worse.
Let’s take a look at just a few areas of the economy….
Federal Government Finances
As I wrote about yesterday, the national debt is completely and totally out of control. Since Barack Obama took office, the U.S. national debt has increased by nearly 4 trillion dollars.
Keep in mind that from George Washington to Ronald Reagan, the U.S. government accumulated only 1 trillion dollars in debt.
Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.
Now the Democrats and the Republicans are busy negotiating over some modest reductions in spending.
But unprecedented federal spending is one of the only things propping the economy up right now.
If the U.S. economy is performing so poorly after being flooded with “stimulus money” from the federal government, what is going to happen once the federal government cuts back?
For the moment, let’s just focus on the state of Illinois.
Did you know that things have gotten so bad in Illinois at this point that the Illinois state government is letting bills go unpaid for long periods of time on a regular basis?
It’s true.
Right now they have billions in unpaid bills and they are facing a financial future that is so bleak that it is almost indescribable.
In one recent article, author Stephen Lendman described the horrific financial crisis that Illinois is facing right now….
With spending exceeding revenues, and obligations not postponed, unpaid bills are growing “at a frightening rate. For instance, IGPA’s Fiscal Futures Model indicates (they) could reach $40 billion by July 1, 2013, with an associated delay in paying those bills of more than five years.”
Besides its $13 billion deficit and $6 billion in unpaid bills, its pension fund is about $130 billion in the red – a red flag that state workers may lose out altogether, wiping out their promised retirement savings.
But it isn’t just the state government that is having problems. According to Cook County Treasurer Maria Pappas, the average household in Chicago would owe a whopping $63,525 if all local government debt was divided up equally among all of the households.
The truth is that even if the finances of the federal government could somehow be fixed, there would still be dozens and dozens of very significant “government debt problems” all across America.
With so many state and local governments drowning in debt, jobs are being slashed at an alarming rate. UBS Investment Research is projecting that state and local governments in the U.S. will combine to slash a whopping 450,000 jobs by the end of next year.
So would the U.S. government step in and start bailing out state and local governments?
Not likely.
U.S. Representative Paul Ryan has said the following about the prospect of bailing out the states….
“If we bail out one state, then all of the debt of all of the states are almost explicitly on the books of the federal government.”
So for now, state and local governments are on their own.
Commercial Real Estate
Commercial real estate continues to decline all across America.
Moody’s/REAL All Property Type Aggregate Index fell 3.7% in April and is now the lowest it has been in over 10 years.
Overall, commercial real estate is down by over 40 percent since the peak back in 2007.
Residential Real Estate
The United States is dealing with a housing crash that never seems to end.
According to the National Association of Realtors, existing home sales in the United States fell another 3.8% in May.
During this housing crash home values have declined more than they did during the Great Depression and there does not appear to be any hope in sight.
New home sales are in even worse shape. During the first three months of this year, less new homes were sold in the U.S. than in any three month period ever recorded.
Unemployment
As 2009 began, the official U.S. unemployment rate was 7.6 percent. Today it is 9.1 percent.
The American people keep waiting for a “jobs recovery”, but it has not shown up.
Sadly, all of this is part of a long-term trend.
Over the past decade, U.S. multinational corporations have been laying off millions of workers in the U.S. and hiring millions of workers overseas to take their place.
The labor of American workers is rapidly losing value in a globalized economy. Big corporations have a tough time justifying paying ten times more to a worker in the United States when they are allowed to hire people for slave labor wages overseas.
The share of the national income taken in by U.S. workers continues to decline. Just consider what Mortimer Zuckerman had to say in a recent article for usnews.com….
Labor’s share of national income has fallen to the lowest level in modern history, down to 57.5 percent in the first quarter as compared to 59.8 percent when the so-called recovery began. This reflects not only the 7 million fewer workers but the fact that wages for part-time workers now average $19,000—less than half the median income.
In the United States today, there are not nearly enough jobs for everyone. The number of “middle class jobs” has fallen by about 10 percent over the last decade.
Only 66.8% of American men had a job last year. That was the lowest level that has ever been recorded in all of U.S. history.
We are seeing the rise of a whole class of people that are chronically unemployed. At the beginning of 2009, the number of “long-term unemployed” in the United States was approximately 2.6 million. Today, that number is up to 6.2 million.
So in light of these employment statistics, can anyone really say that the economy is improving?
Economic Anxiety
The economy is the number one issue on the minds of the American people. There is an extraordinary about of economic pain out there today, and Americans are becoming impatient.
According to CNBC, the Money Anxiety Index is at its highest level in 30 years….
The latest indicator to ring up trouble is the Money Anxiety Index, which uses traditional economic metrics as well as other factors to gauge the level of consumers’ worry regarding their personal financial conditions.
According to the May figures, the MAI is not only at its highest level in 30 years at 91.9 but also two months away from indicating another dip into recession. In the past, five straight months of increases in the index often signaled recession.
Most recent polls show that the American people are rapidly becoming more pessimistic about the direction the U.S. economy is headed.
By making inflation appear lower, it would be easier for Congress to deny cost of living increases to those on Social Security and other social programs.
How sad is that?
Economic Suffering
As American families find it increasingly difficult to pay the mortgage and put food on the table, many of them find themselves forced to put off other expenses. According to one recent survey, 26 percent of Americans have put off doctor visits because of the economy.
Other Americans can’t make it at all without government assistance. As 2007 began, there were only 26 million Americans on food stamps. Today, there are more than 44 million Americans on food stamps, which is an all-time record.
It is not good to have so many Americans on food stamps, but it is probably better than the alternative.
If there were tens of millions of Americans that could not feed themselves we would probably already have economic riots in the streets.
Solutions?
So do our politicians have any solutions?
Of course not. Everything that they have tried has failed.
Several top Democrats in Washington D.C. are now calling for a new economic stimulus package. When in doubt, our politicians usually revert to spending more money.
Sadly, this is about the best that our economy is going to get.
What we are experiencing right now is “the recovery”. As we move forward things are going to get progressively worse.
A lot of people don’t like to hear that we are in the middle of a long-term economic decline, but that is the truth.
The era of tremendous economic prosperity for America is coming to an end.
It really is hard to find the words to describe the true horror of the national debt. The U.S. government has been on the greatest debt binge in all of human history, and a day of reckoning is coming that is going to be so painful that it is going to shock America to the core. We have lived so far above our means for so long that none of us really has any concept of what “normal” is like anymore. The United States has enjoyed the greatest party in the history of the world, but now this decades-old party is ending and the bills are coming due. It was Dick Cheney who famously said that “deficits don’t matter”. Well, try telling that to the nation of Greece right about now. The horror that Greece is just beginning to experience is a preview of what is going to happen to us as well. Only when it happens to us it is going to be so much worse, because when we go down we are going to bring the entire global financial system down with us.
What we have done to future generations is beyond sickening. Previous generations entrusted to us the greatest economic machine in the history of the world and we destroyed it. Now we are leaving to our children and our grandchildren an economic future that has been totally wiped out and a national debt of more than 14 trillion dollars that we expect them to repay.
In Washington D.C. these days, there is a lot of talk about the debt ceiling. But whatever the politicians do, it is not going to solve our debt problems. If the debt ceiling does not get raised, we move the financial pain into the present. World financial markets would crash and that would be followed by a devastating economic nightmare.
If we do raise the debt ceiling, that will “kick the can down the road” a little bit farther. However, world financial markets will still crash eventually and our eventual economic nightmare will be even worse.
Well, can’t we just “inflate our way” out of debt?
No, unfortunately things are just not that easy. If we try to inflate our way out of debt, interest rates will likely rise just as quickly as inflation does, and that would be absolutely catastrophic.
Before interest rates even reached 20% we would hit a point where it would take every single dollar taken in by the federal government just to pay the interest on the national debt.
Meanwhile, rapidly rising inflation would devastate the value of all of your bank accounts and every other single financial asset that you own.
So no, inflating our way out of debt is not going to work.
At the moment, the U.S. federal government is able to borrow gigantic quantities of money at super low interest rates.
When that changes, all hell is going to be unleashed.
The following are 41 statistics about the national debt that are almost too crazy to believe….
2 – 30 years ago, the U.S. national debt was approximately 14 times smaller.
3 – It took from the presidency of George Washington to the presidency of Ronald Reagan for the U.S. government to accumulate one trillion dollars of debt.
4 – Since then, we have added more than 13 trillion dollars of additional debt.
5 – The United States government is responsible for more than a third of all the government debt in the entire world.
6 – If you divide up the national debt equally among all U.S. households, each one owes over $125,000.
7 – Mandatory federal spending is going to surpass total federal revenue for the first time ever in this fiscal year. That was not supposed to happen until 50 years from now.
8 – Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.
11 – The U.S. national debt is currently rising by well over 4 billion dollars every single day.
12 – The U.S. government is borrowing over 2 million more dollars every single minute.
13 – The U.S. government borrows an average of about 168 million dollars every single hour.
14 – The combined debt of the major GSEs (Fannie Mae, Freddie Mac and Sallie Mae) has increased from 3.2 trillion in 2008 to 6.4 trillion in 2011. Thanks to George W. Bush, Barack Obama and the U.S. Congress, U.S. taxpayers are guaranteeing that debt. This is debt that is not even included in the $14.3 trillion national debt figure.
15 – Some experts estimate that the unfunded liabilities of the U.S. government for programs such as Social Security and Medicare are in the neighborhood of 60 trillion dollars. Other experts claim that the total for federal government unfunded liabilities could be well over $100 trillion. But what almost everyone agrees on is that it is going to be virtually impossible to even come close to meeting all of those obligations.
16 – The U.S. government currently has to borrow approximately 41 cents of every single dollar that it spends.
17 – The total compensation that the federal government workforce earned last year came to a grand total of approximately 447 billion dollars.
18 – The level of government waste in this country is absolutely mind blowing. For example, the Department of Health and Human Services has just announced a brand new $500 million program that will, among other things, seek to solve the problem of 5-year-old children that “can’t sit still” in a kindergarten classroom.
20 – The cost for the first week of airstrikes on Libya was 600 million dollars. Keep in mind that the leader of the opposition in Libya has admitted that his forces contain large numbers of the same “al-Qaeda fighters” that were shooting at American troops in Iraq. So we are going broke and we are helping al-Qaeda take power in Libya at the same time.
21 – Just one day of the war in Afghanistan costs more money than it took to build the entire Pentagon.
22 – In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for 18.4% of all income.
23 – 59 percent of all Americans now receive money from the federal government in one form or another.
24 – Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid.
25 – Back in 1950, each retiree’s Social Security benefit was paid for by approximately 16 workers. Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers. By 2025 it is projected that there will be approximately two workers for each retiree.
27 – Back in the 1950s, corporate taxes accounted for about 30 percent of all federal revenue. In 2009, corporate taxes accounted for just 6.6 percent.
29 – If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion each and every year.
30 – According to a shocking U.S. government report, interest on the national debt and mandatory spending on entitlement programs will absorb approximately 92 cents of every dollar of federal revenue by the year 2019.
34 – It is now being projected that by the year 2021, interest payments on the national debt will amount to $1.1 trillion dollars a year.
35 – If interest rates move up even slightly, the interest on the national debt is going to be a whole lot worse. A recent article in the Huffington Post laid this out really well….
According to a recent note from the sage of Dallas based Hayman Capital, highly respected Kyle Bass, a move back to 5% (2006 levels) in short term interest rates will increase annual U.S. interest expense by almost $700 billion annually. This is against current U.S. government tax revenues of $2.228 trillion (CBO FY 2011 forecast).
37 – A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times. That amount of money would still not be enough to pay off the U.S. national debt.
38 – If Bill Gates gave every penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
39 – If you were alive when Jesus was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now. But this year alone the U.S. government is going to add more than a trillion dollars to the national debt.
40 – If you went out today and started spending one dollar every single second, it would take you over 31,000 years to spend one trillion dollars.
41 – If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.
You might be depressed after reading all of those statistics about the national debt, but there is some good news.
If you would like to help address this problem, the federal government is actually taking online donations that will go towards paying off the national debt.
Try not to laugh.
The national debt is a problem that should have been handled 20 or 30 years ago.
But it wasn’t.
So now what we have to look forward to is a very bleak future. Even if we totally scrapped our current monetary system and repudiated the debt, the transition would be “rocky” at best and we would not enjoy anything close to the standard of living that we are enjoying today.
Unfortunately, the vast majority of our politicians in Washington D.C. would never even dream of abandoning the current system. Most of them still totally believe in it.
But this current system is headed for an inevitable collapse. There is no way of getting around it.
Even most of our top politicians are now admitting that our current state of affairs is “unsustainable”. They just don’t have the guts to do anything about it.
The rest of the world needs to sit up and take notice of what is going on in Greece right now. This is what can happen when you allow government debt to spiral out of control. Once it becomes clear that you can’t pay your debts, a financial collapse can happen very suddenly and you start losing your sovereignty to those that you must turn to for financial help. So is the financial collapse of Greece the “canary in the coal mine” for the global economy? EU finance ministers have given the Greek government two weeks from Monday to approve another round of brutal austerity measures. If the austerity measures are not approved, Greece will not receive the next bailout installment of 12 billion euros. If that happens, the whole globe better buckle up because it is going to get crazy.
July 3rd is the deadline. Basically the EU has put a gun to the head of the Greek government. Without this bailout money, Greece will default and economic hell will break loose all across the country.
It is important to keep in mind that this is just the first Greek bailout that we are talking about. Last year, the EU and the IMF agreed to provide the Greek government with a 110 billion euro bailout. The current 12 billion euro installment is part of that package.
Sadly, it has become apparent that the first bailout is not going to be nearly enough for Greece. A second bailout, which will be the same size or even larger, is already being discussed. This is going to put the Greek people even more under the heel of the money powers in Europe.
Keep in mind that all of these “bailouts” are just more loans. There is no way that the Greeks are ever going to be able to repay all of this money.
But this is what happens when a nation lets debt get out of control. For years and years it can seem like all of that debt does not have any consequences, but then the day of reckoning comes and it is a complete and total nightmare.
In order to get the next installment of 12 billion euros, European finance ministers are insisting that the Greek Parliament approves a package of austerity measures that will be worth approximately 28 billion euros.
At this point, it is uncertain whether those austerity measures will pass.
However, the pressure on the Greek government to get them pushed through is immense.
These austerity measures include tax increases, budget cuts and a “large-scale privatization program”.
This is often what happens to third world nations that cannot pay their debts. Organizations such as the IMF or the World Bank will come in and insist that they tax their people more, cut back on their spending and sell some of their public assets to big corporations.
As we can see from the wild protests that have been taking place in Greece, a significant percentage of the Greek population is not happy with all of these austerity measures.
Unfortunately, the EU and the IMF are able to put a lot more pressure on the Greek government than the Greek people are.
Greek Prime Minister George Papandreou recently gave the following warning to the Greek people about what could happen if this debt crisis ends badly….
The consequences of a violent bankruptcy or exit from the euro would be immediately catastrophic for households, the banks, and the country’s credibility.
Not only would a Greek default be a total disaster for Greece, it would potentially be a total disaster for the entire global financial system.
Sung Won Sohn, an economics professor at California State University, recently made the following statement about the seriousness of the debt crisis in Europe….
“The European debt crisis has the potential to have as big an impact as the subprime mortgage crisis did in the United States”
So will these bailouts solve the problem?
No, giving Greece more loans is only going to kick the can down the road for a little while longer.
The truth is that Greece is bankrupt. Unless huge amounts of Greek debt are forgiven, Greece is going to default sooner or later.
When confidence in the finances of a nation is lost, borrowing costs can go up very quickly. Today, the yield on two year Greek bonds is up to 28.6%.
Anyone that has ever been late on paying their credit cards knows how painful an interest rate like that can be.
So why doesn’t Greece just slash government spending to the bone and get their financial house in order?
Well, it is not that easy. Harsh austerity measures have already been implemented. As a result, unemployment is rampant and there is rioting in the streets.
A year of wage and pension cuts, benefit losses and tax increases has taken its toll: almost a quarter of the population now live below the poverty line, unemployment is at a record 16% and, as the economy contracts for a third year, economists estimate that about 100,000 businesses have closed.
As the economy crumbles, Greece has descended into an almost permanent state of civil unrest.
The fact that the EU and the IMF want even more austerity measures has sparked some wild rioting In Greece in recent days. You can see video of the stunning violence going on in Greece right here.
Not all protesters are being violent. Some of them are showing their displeasure in non-violent ways. For example, workers for Greece’s state-owned electric utility are staging 48 hours of rolling strikes that are designed to create blackouts over large areas.
The frightening thing is that Greece is not alone. Ireland has already received a bailout and they are probably going to need another one at some point.
The employment situation in Spain is absolutely nightmarish. Spain will probably be able to squeak by without a bailout if the global economy stays stable, but if the dominoes start to fall Spain could be in a massive amount of trouble very quickly.
Not that many people are talking about Italy, but the truth is that Italy has a huge debt problem. On Friday, Moody’s warned that it may downgrade Italy’s Aa2 debt rating at some point within the next 90 days.
Belgium and France also have very substantial debt problems. They probably would not be the first dominoes to fall, but if the “contagion” starts to spread they could certainly have massive problems.
The truth is that Europe’s entire financial system is extremely vulnerable right now. Big banks all over Europe (and especially in Germany) are leveraged to the hilt. All it would take to topple many of them is a stiff breeze.
When Lehman Brothers collapsed, it was leveraged 31 to 1.
German banks are also holding a massive amount of Greek debt.
That is why there is so much fear that the crisis in Greece could spread across the rest of Europe and start toppling dominoes.
The sovereign debt crisis in Europe did not happen overnight and it is going to be with us for a long, long time even if the global economy remains relatively stable.
At the moment, the best that officials in Europe can seem to come up with is to put off the pain for another day. Pimco’s Mohamed El-Erian told CNBC the following on Monday….
“This problem is not going to go away. It’s going to weigh on markets here and we’re going to see the same set of headlines over and over again. We simply cannot continue to kick the can down the road, because we’re coming to the end of the road in Greece.”
So if Europe starts having major problems will the U.S. step in and help?
Yes, if the crisis in Europe gets worse, the Federal Reserve will probably step in just like they did back in 2008.
But the U.S. is rapidly approaching a day of reckoning like the one that Greece is going through. The U.S. government has piled up the biggest mountain of debt in the history of the world and faith in the U.S. dollar is dying.
The economic crisis in the United States gets worse with each passing year. Yes, the Federal Reserve can print up stacks of money and send it over to Europe, but that isn’t going to solve anything in the long run. The truth is that the U.S. is not even going to be able to keep itself from drowning.
The world financial system is far more vulnerable today than it was back in 2008. The next wave of the financial collapse is going to hit at some point, and when it does it is going to probably be even more painful than the last wave.
Our world is becoming an incredibly unstable place.
Barack Obama has issued a brand new executive order that establishes a White House Rural Council. This Rural Council has been given the task of developing “public-private partnerships” that will seek to bring the “economic prosperity” of our big cities to rural America. In other words, the U.S. government and the big corporations are going to team up to dominate the economies of our small towns and rural communities just like they dominate the economies of all of our big cities. So should those that live in rural America be excited about this? After all, the U.S. government and the big corporations have done such a great job of bringing “economic prosperity” to places like Detroit, Michigan and Camden, New Jersey. Won’t it be great to have the federal government come in and tell rural communities how they should be doing things?
The chair of the White House Rural Council will be Agriculture Secretary Tom Vilsack. Vilsack is a former governor of Iowa and a Democrat. Swing states like Iowa will be key in 2012, and so perhaps Obama is trying to show that he really cares for middle America.
But it is really hard to forget the remarks that Obama made about rural Americans during the 2008 campaign.
In particular, the following quote about the “bitterness” of those living in rural America got a lot of attention at the time….
“And it’s not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”
Look, the vast majority of the people who live in rural America do not want to hear that they need to let go of their guns or their religion.
And most of them certainly do not want the federal government to come in and tell them how to run their local economies.
Though rural communities face numerous challenges, they also present enormous economic potential. The Federal Government has an important role to play in order to expand access to the capital necessary for economic growth, promote innovation, improve access to health care and education, and expand outdoor recreational activities on public lands.
To many Americans, all of this will sound really great. The federal government is going to come in and help the “backwoods folk” catch up with the rest of us. What could be wrong with that?
Well, the truth is that whenever the federal government gets its fingers into something it tends to really mess it up. Many of the biggest problems our country is facing today can be traced directly back to Washington D.C.
Many small towns and rural communities are doing just fine without the interference of the federal government. In fact, large numbers of Americans have purposely moved out to rural areas because they don’t want the interference of the federal government in their lives.
But according to this new executive order, the Obama administration plans to stick its itchy little fingers into just about every aspect of rural life. One of the stated goals of the White House Rural Council is to do the following….
coordinate and increase the effectiveness of Federal engagement with rural stakeholders, including agricultural organizations, small businesses, education and training institutions, health-care providers, telecommunications services providers, research and land grant institutions, law enforcement, State, local, and tribal governments, and nongovernmental organizations regarding the needs of rural America
This is yet another example of how we are rapidly becoming a centrally-planned economy.
Today, there are way too many Americans that expect the federal government to solve all their problems and take care of them from birth to death.
But that is not what our founding fathers intended, and our federal government has become so corrupt and so incompetent that it could not do those things even if we wanted it to.
Before the federal government “fixes” the problems of rural America, perhaps it should focus on “fixing” many of the other problems it has created first….
*Growing numbers of military veterans cannot find jobs once they leave the U.S. military. In fiscal 2008, the Pentagon spent $450 million on unemployment benefits for military vets. In fiscal 2010, the Pentagon spent almost twice as much – $882 million. According to the U.S. Bureau of Labor Statistics, the unemployment rate for military veterans between the ages of 18 and 24 is more than 30%.
*The housing collapse that the Federal Reserve and the U.S. government caused is a nightmare that never seems to end. According to the New York Times, at the current pace it will take 62 years for the banks to repossess all of the homes that are in severe default or foreclosure in the state of New York.
*The recent commodity price increases caused by the Federal Reserve have resulted in much higher prices at the gas pump and at the grocery store. These higher prices are hitting the poor and the lower middle class much harder than they are hitting the wealthy.
*The federal government has piled up the biggest debt in the history of the world and the U.S. dollar is dying. Standard & Poor’s has altered its outlook on U.S. government debt from “stable” to “negative” and is warning that the U.S. could soon lose its prized AAA rating. Russian presidential economic adviser Arkady Dvorkovich says that his nation is going to keep dumping U.S. government debt. China has been dumping U.S. government debt. The entire U.S. financial system is on the verge of financial collapse and the federal government seems to be powerless to make any meaningful changes.
But instead of fixing the glaring problems that are staring them directly in the face, the control freaks and the bureaucrats in Washington D.C. seem obsessed with figuring out more ways to interfere in our lives.
Over the past couple of months, bad economic news has been pouring in almost constantly. Our economy appears to be in danger of breaking apart. We are in the midst of a horrific economic crisis and nobody is sure what is going to happen next.
So please excuse the good folks of rural America if they are not in the mood to put up with federal government interference in their communities.
The federal government has failed so dramatically so many times before that it is really hard to have any faith that the federal government can do much of anything right at this point.
Do you believe that the U.S. economy is steamrolling toward a depression? If so, you are not alone. According to a recent CNN poll, 48 percent of Americans believe that “another Great Depression” is likely within the next 12 months. Americans have been waiting for almost three years for a “recovery” to materialize, but instead there are all kinds of signs that the economy is about to get worse yet again. Inflation is rising but wages are not. There are millions of Americans that would do just about anything to get a decent job. The “misery index” is the highest it has been in almost 30 years. All of the recent polls show that the American people are more pessimistic about the economy than at any other time in recent memory. World financial markets are incredibly unstable right now and many analysts are expecting a repeat of 2008 (or worse). Meanwhile, our state and local governments are drowning in debt, the federal government is drowning in debt and governments all over Europe are drowning in debt. No, it is not crazy for 48 percent of Americans to believe that we are about to go into another Great Depression.
Just think about that statistic for a moment. Nearly half of the country expects the economy to fall to pieces at some point over the next year.
So do I agree with them?
Yes, I certainly believe that an economic collapse is coming. But that doesn’t mean that it will necessarily happen within the next year. The United States is in the midst of a long-term economic decline, and the next big financial crisis could potentially happen in 2011 or 2012.
But it might not.
There are so many variables and it is so hard to predict with certainty the exact timing of how things will play out.
However, it is true that incredibly painful economic times are coming. Our long-term economic future looks unbelievably bleak.
So anyone that believes that we are headed for another depression is certainly not crazy. The following are 19 reasons why it is perfectly rational to be pessimistic about the U.S. economy right now….
#1 Today, 25 million Americans are either unemployed or underemployed. 6 million of those have been out of work for at least 6 months. The average duration of unemployment in the U.S. is now close to 40 weeks.
#2 The unofficial misery index, which is calculated by combining unemployment and inflation, is now at a 28 year high.
#3 Sadly, if unemployment and inflation were calculated the same way that they were back in the 1970s, the misery index would actually be much, much higher. According to John Williams of Shadow Government Statistics, the current “real” rate of inflation is approximately 11.2% instead of the 3.6% figure that the U.S. government wants us to believe.
#4 Greece is on the verge of complete and total financial collapse. The yield on two year Greek bonds is up to 28 percent. The European Central Bank and the German government have been fighting over what to do to solve the Greek crisis. The truth is that without a bailout the Greek government will default. If Greece defaults, it would be a huge nightmare for world financial markets.
#5 Neil MacKinnon, an analyst at VTB Capital, is warning that a Greek implosion could set off a 2008-style financial crisis….
“The risk of a ‘Lehman moment’ for the eurozone is increasing”
#6 Spain is also potentially a major problem. The Spanish economy is more than twice the size of the Greek, Irish and Portuguese economies combined. Over the past 12 months, the yield on 10 year Spanish bonds has been rising steadily, and many believe that Spain could be the tipping point that pushes the sovereign debt crisis in Europe over the edge.
#7 State and local governments all over the United States are cutting their budgets and are implementing brutal austerity measures. For example, one small town in Alabama has actually decided that they are simply going to stop paying pension benefits to their retirees. In other areas, teachers and police officers are being fired in massive numbers. UBS Investment Research is projecting that state and local governments in the U.S. will combine to slash a whopping 450,000 jobs by the end of next year.
#8 The middle class in the United States is being systematically ripped to shreds. The poorest 50% of all Americans collectively own just 2.5% of all the wealth in the United States at this point.
#9 It is never a good sign when even the big Wall Street banks start laying off workers. CNBC is reporting that Goldman Sachs, Morgan Stanley and many other big firms on Wall Street are planning some large staff reductions in the months ahead. That is a very bad sign for the economy.
#10 Things have gotten so bad that some mainstream media outlets are actually encouraging Americans to go out and start racking up credit card debt once again. For example, one recent USA Today article was actually entitled “More credit card debt might be good for the economy“. Of course the big banks are ready to suck the lifeblood out of anyone that does slip up on making their credit card payments. One major bank has announced that a single late payment could result in a penalty rate as high as 29.99%.
#11 According to the Bureau of Labor Statistics, the share of national income being taken home by American workers is at a post-war low and is rapidly declining.
#12Reuters is reporting that many of Wall Street’s biggest banks plan to cut their use of U.S. Treasuries starting in August. China has already been dumping short-term U.S. debt. But if most of the big players abandon the market, who is going to buy up the massive amounts of debt that the U.S. government needs to issue?
“At some point, the pain of high unemployment may lead to some new thinking in Washington – but until that time, welcome to the second Great Depression”
#14 The U.S. banking system could plunge into disaster at any moment. The FDIC is backing up 7 trillion dollars in deposits with an insurance fund that barely has anything in it.
#15 It seems like almost everyone is talking about the next financial collapse. Renowned investor Jim Rogers recently said the following….
“I would expect to see some serious problems in the foreseeable future….By 2011, 2012, 2013, 2013, I don’t know when, we’re going to have an economic slowdown again.”
There is definitely going to be another financial crisis around the corner,” says hedge fund legend Mark Mobius, “because we haven’t solved any of the things that caused the previous crisis.”
#17 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period. It is clearly unsustainable for our debt to be growing so much faster than our economy is.
“Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything,” Yastrow said. “We’re on the verge of a great, great depression. The [Federal Reserve] knows it.”
#19 The American people are extremely pessimistic about the economy right now. According to one recent poll, 56 percent of Americans have lost sleep due to the economy and about three-quarters of Americans believe that the nation is on the wrong track.
The nation is in a very sour mood right now, and this is causing even many in the mainstream media to ask some very hard questions.
For example, Jack Cafferty recently asked the following question to viewers on CNN….
“What are the chances the U.S. economy could eventually trigger violence in our country?”
You can view the video of Cafferty asking this question right here or you can just watch it below….
Sadly, we are already starting to see violence erupt all over North America.
In previous articles I have discussed the insanity that has been going on in major U.S. cities such as Chicago.
Now even the mainstream media is being forced to report on the surge in violence.
A recent USA Today article described some of the most recent mob robberies that have been happening in Chicago….
A Chicago Tribune report tells of a 68-year-old man from Washington State who was set upon while he was smoking a cigar on a bench when youths surrounded him, attacked him and reportedly stole a phone and iPad. The report says a 42-year-old Japanese tourist also was beaten and robbed on a bicycle path by the lakefront. The paper says seven were arrested, but that the group participating in the felonies was estimated at 15 to 20 people strong. One 20something suburbanite told Chicago’s WGN TV that he was hit so hard in the head with a baseball that it knocked his motorcycle helmet off. he managed to fight his way out of trouble and hail police, he said.
When people don’t have hope, they get desperate.
There are millions of other Americans that are suffering through this economy quietly.
There are so many people out there that have worked hard and have followed all the rules and yet now find themselves struggling just to survive.
For example, a reader named Carolyn recently left a comment in which she shared her story with my readers….
My husband lost his long-term job in 2009 due to budget cuts. Don’t worry, I said. I’m still working, and we have a year of our salary in savings. You’re smart, you’re educated, you’re a hard worker. You’ll find a job soon.
Two months later, my long-term job was sent to India.
I still wasn’t worried. I’m smart, I’m educated, and I’m a smart worker.
A year and a half later, I haven’t found new career yet. I’m 50. No one is going to hire me. I am working – at a Home Depot. At a 79% pay cut from my prior position. But it doesn’t pay for anything. My husband found a new position in his field – at a 62% pay cut from his prior position.
We lived off unemployment and our savings, until both ran out. We put our house and investment property on the market the day after I lost my job.
We haven’t had one offer.
We just had our Chapter 7 bankruptcy discharged. Our foreclosure is still pending. No word yet when that will be done.
To add insult to injury, we owe Federal income taxes on the penalties we used to make withdrawals from our 401(k)’s to live off. My husband took a job in another state, and we were SHOCKED to learn that we owed NEW YORK STATE taxes on the income he earned in Mississippi – to New York state! Apparently there is some loophole that if you are a property owner in New York, but earn income in another state, you have to pay New York state income taxes on out of state earned income.
We’ve been told once our foreclosure is finalized, we may owe taxes on that as well.
What happened to our country?
It is so sad to see what is happening to America.
Things are so hard out there for so many millions of American families right now.
But the truth is that things are much better at the moment than they will be in a few years.
So what is America going to look like when there is no doubt that the economy has collapsed and people have no hope at all?
If you want to feel better about America, just spend some time in some of the really great small towns and rural communities that are scattered across this country. Over the past several days, that is exactly what I had the privilege to do. I have often written about how the “America” that so many of us love is fading away, but in many small towns throughout the United States that “America” is still very much alive. The truth is that there are millions of Americans that still place a tremendous amount of value on God, family and country. My wife and I are accustomed to big city ways, and so we were amazed at how friendly and how open the people that we encountered during our travels were. A lot of times the elitists that run this country look down their noses at those that live in rural communities and small towns, but the reality is that those are some of the greatest people this country has.
Did you know that there are still some Americans in 2011 that do not lock their homes or their cars?
It’s true – my wife and I met some of these people during our travels. They do not fear crime because very, very little crime ever happens where they live.
Of course if someone does try to rob them, let’s just say that the thieves would be in for some very unpleasant surprises.
My wife and I have also found that people in small towns are so much friendlier. Everywhere we went people were saying hello and were eager to get into conversations. We ended up talking with one hotel clerk for 15 to 20 minutes and he shared with us much of his life story. He was a real “salt of the earth” type of guy and it was interesting to hear his unique perspective on life. Every summer he makes jam and sells it in the hotel lobby and he encouraged us to stop by the next time we are in town to get some.
But he was not the only one that was extremely friendly. People were eager to talk to us and were genuinely interested in what we were doing wherever we went.
Also, people sure seemed to smile a whole lot more in these small towns. They just seemed happier.
This is so much different from what I have been used to. Most of my life I have lived either in or near big cities.
When I worked as a lawyer in Washington D.C., I took the metro to work every morning. Often the passengers were crammed into the metro cars like cattle, but most of the time there was absolutely no conversation among the passengers. Usually it was just dead silence all the way into D.C.
In fact, if you did try to strike up a conversation with someone it usually created an awkward moment.
The truth is that in most big cities there is an unwritten rule that you really aren’t even supposed to make eye contact with people. If someone tries to interact with you, it is usually because they want something from you.
So is living in a city with several million people really better than living in a town with only a few thousand people?
During our trip, my wife and I stopped in a little community store where they actually had cats for adoption scattered throughout the store. We also ventured into a pizza parlor that could have been straight out of the 1970s or 1980s. The floor of the pizzeria was a classic red and white checkerboard pattern and there was an old jukebox sitting in the corner. It was great.
Today most of our big box stores are so “corporate” and so “sterile” that something gets lost. When we eliminate the “human element” from everything the world becomes a colder place.
There are still places in America where people will take you at your word.
There are still places in America where people will invite you to stay with them even though they just met you.
There are still places in America where the air is clean, the people are authentically friendly and where the corporations don’t own all the businesses.
The other night my wife and I ordered some food at a “real” family restaurant and it was so much different from what we were used to.
Yes, the decor was a bit dated and the environment was not as “clinical” as you will find in most corporate-owned restaurants, but we had a great time.
I ordered some chicken, and when they brought it out it was not anything like the little bony pieces of chicken that they give you most places. I had probably the thickest chicken breast that I have ever seen. There was as much meat on that one chicken breast as there would be on five or six “tv dinner” chicken breasts.
So is small town life preferable?
Well, it is undeniable that living near a big city is much more convenient and most of the good jobs are in or near the big cities.
But as the economy collapses and as society becomes increasingly unstable, do you really want to find yourself in the middle of one of our urban areas?
This is a theme I have been talking about a lot recently. The following are just a few of the articles that I have put out about the breakdown of society in recent weeks….
It would be nice if things would calm down for a while, but that is just not happening.
In fact, what have we seen just this week?
A horrifying riot in Vancouver.
Aren’t Canadians supposed to be calmer than us?
You can see video of the shocking riots in Vancouver right here, or you can just view the video below….
Yes, there is nothing new about sports riots.
However, what is new is the level of the violence.
15 vehicles, including two police cruisers, were set on fire. Windows were smashed and stores were openly looted in front of television cameras. Police were pelted with rocks and debris. A huge section of the city of Vancouver turned into a war zone.
And for what?
A hockey game?
So what is going to happen someday when those people have real problems?
Part of preparing for hard times is evaluating where you live.
Do you really want to live smack dab in the middle of a major urban area if we do see major rioting in this country someday?
What happened in Vancouver this week was absolutely mindless.
But thankfully, while all of this was going on my wife and I were also reminded that there are still large numbers of really wonderful people out there too.
Small town America is alive and well. Yes, huge numbers of families are really struggling in this economic environment, but that does not mean that they have given up. They still believe in America and they still believe in each other.
Yes, an economic collapse is coming. But that doesn’t mean that all Americans are going to respond to it the same way. If you don’t have a lot of faith in the community where you currently live, you might want to take a closer look at some of the truly great small towns scattered throughout this country.
What we are now witnessing is the slow motion unraveling of America. Our economy is dying, the American people have lost faith in the government and in almost all of our other major institutions, and our society is collapsing. Most Americans don’t understand why all of this is happening, but most of them do realize that something has fundamentally changed. Earlier this year, McDonald’s held a “National Hiring Day” and a million Americans showed up to apply for jobs. Only 62,000 of them were hired. That means only 6.2% of the applicants got jobs. So what are we supposed to tell the 93.8% that didn’t get hired? Are they supposed to have any hope for the future when they can’t even get a minimum wage job at McDonald’s? When I was a teenager, I went over to McDonald’s one day, filled out an application and was instantly hired. My, how things have changed. Now we have millions upon millions of young people that are staring directly into a very bleak future. The level of frustration in this country is rising to frightening levels and large numbers of people are already showing that they will stoop to anything in order to survive.
In a recent article entitled “18 Signs The Collapse Of Society Is Accelerating” I focused primarily on the chaos that has been erupting in many of our urban areas. But the truth is that, as you will see below, there are signs that society is collapsing coming out of very rural areas as well. This phenomenon cannot just be pinned down to one area of the country or to one group of people. From coast to coast people are already starting to lose it and the economic collapse has only just begun.
The cold, hard reality of the matter is that what we are experiencing right now is rip-roaring prosperity compared to what is coming down the road.
So if people will behave this wildly now, what is our society going to look like someday when there are millions of Americans that have not had anything to eat for several days?
That is something to think about.
History has shown us that when people are really, really hungry they will do just about anything.
But right now we are not even close to that point and yet people all across America are going crazy.
The following are 12 more signs that society is collapsing….
#1In my previous article, I detailed how the “mob robbery” phenomenon in Chicago is spinning wildly out of control. Well, just this morning, the brother of Billy Corgan (the front man for the Smashing Pumpkins) was mugged and had his iPod stolen by a mob of teens while he was riding a Red Line train in Chicago.
Things have gotten so bad that now even The Wall Street Journal is taking notice of the rash of “mob robberies” that have been happening in Chicago. The following is how a new article in the Journal described one of the recent attacks….
In another incident last Saturday evening, Krzysztof Wilkowski, after shopping on Michigan Avenue, was sitting on his scooter a couple of blocks away checking his phone for a restaurant when he got whacked in the face with a baseball.
At first, he said, he thought it was a prank, but then he looked up and saw 15 to 20 young men approaching. “My first reaction was, ‘I’m about to get robbed, what do I do?’ ” Mr. Wilkowski recalled in an interview.
The 34-year-old insurance company employee from a Chicago suburb grabbed the keys from his ignition and held tight to his phone. A few of the attackers dragged him off his scooter and pulled him onto Chicago Avenue where they punched him, hit him with his helmet and tried to grab his phone.
#2 Sadly, “mob robberies” are not just happening in Chicago. The following is a video of a mob robbery that took place in Stockton, California….
This next video is an Associated Press video report about how police have become extremely concerned about the “flash mobs” that have been plaguing Philadelphia lately…..
This is a very, very disturbing trend. Once these videos go up on YouTube, other groups of young people “copycat” them all over the country.
The next 10 signs are from some of my readers. In response to my previous article that discussed how society is collapsing, a number of people left comments that described what is happening in their particular areas. Sometimes so many dozens of comments get left that some real gems get overlooked. The following is a sampling of what my readers have been sharing about how society is collapsing where they live….
#3 Golden Child (Third Richest County In America):
About a month ago I was robbed in broad daylight walking to the store on a picture perfect 75 degree sunny day at 1 PM by two high school dropout teenagers on the path in my nice suburban town which is located in third richest county in America! A few months before that I was beaten unconscious by random drunk young people on the path near my home that I woke up in the hospital getting stitches in my face. This will be one dangerous summer for places all across America.
#4 Chris (Fargo, North Dakota):
I live in Fargo,ND and we have been having a rash of crime lately. In the past 6 months we have had multiple gas station robberies, bank robberies, and the latest, a shooting at one of our three movie theaters.
#5 Sue (Ogden, Utah):
I am a teacher in Ogden, Utah and this last winter I had a second grade student tell me that if I didn’t tell him how old I was that he was going to “shoot me in the back of my head.” He was suspended from school because that is a threat of violence, but nothing changed. His parents are active gang members.
#6 Heather (Columbus, Ohio):
I live close enough to Columbus, OH to follow the news there. (Thankfully far enough away not to be regularly affected by it.) Every day there is a new report of a violent crime. I believe we are up to 70 or so murders on the year. 10 years ago this wasn’t the case. I could (and did) walk into the worst part of the city and be safe as long as I was vigilant. I wouldn’t try that for the world now. I used to be a bank teller there and there’d be maybe 1 robbery a month throughout the city. It’s at least one a week now, probably more than that. And it’s no longer the downtown banks that are getting robbed–it’s the suburban ones.
#7 The Baroness (Atlanta):
I live in Atlanta Georgia. Everyday there are signs. Today’s headlines are: Babysitter kills toddler, 2 shot outside teen party, Brick thrown from I-75 overpass and several more.
#8 Gas Panic (Unknown):
The first, a 21 year old pizza delivery girl who was held with a knife to her throat while making a delivery. They took all the money she had on her and even took the time to search her car! The second was a 30 year old woman who told me she was walking down the street and was solicited by a pimp telling her she could “make good money”. After she told him to get lost, he stabbed her in the back of the arm. She needed over twenty stitches and showed me the wound.
#9 NS (Fairbanks, Alaska):
Even in Fairbanks, Alaska, there has been similar “mob robbing” going on. Yes, it is spreading everywhere.
#10 Katherine (Unknown):
I’ve also seen a huge increase in theft, vandalism, sexual assault, and violence just in the past couple of years. This is in a city that used to make the list in top places to live in the U.S. year after year.
#11 Doktryn (Richmond, California):
I live in Richmond California aka the city with the 2nd highest murder rate next to New Orleans, aka the city where the probability of you being killed is 5x higher. It is getting very serious out here, and luckily I don’t live in the rough part, however I go to the rough part to try to witness and preach. People are walking zombies. At any point their lives can be taken but the fact is, this is all they know. It is completely hopeless and when you wrote about “American Hellholes” I live in one. Richmond, CA is a post-industrial warzone. I work in the manufacturing industry, and I got here not long ago, but if you just drive through the city, the boarded up homes and abandoned warehouses tell the tale of how a deindustrialized city quickly turns to a battlefield.
#12 IWillSurvive (Rural America):
In my area we have been able to sleep well enough and always known our neighbors – up until a few months ago I did not lock my cars or my home most of the time – there was no need. That has changed, neighbors are now siphoning gas out of cars from desperation, and stealing scrap lumber, metal, livestock, produce and anything else they can get their hands on to sell or eat. Over the last year or so the police departments of some areas have started taking these seriously and actually investigated and caught a few. They are sometimes groups of people working together to amass resources to sell. We now keep a vigilant eye on our little flock of chickens and we have a colony of rabbits as well. We no longer “free range” them on our property at all – the risk of theft is too high if others know we have them. We keep any resources away from the road on the back side of our property – we also keep two German Shepherd Dogs for guarding our property. Living in the country is NOT what it used to be.
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Sadly, this is just the beginning.
This is just the tip of the iceberg.
As the economy collapses, the chaos is going to get a lot worse.
I wish that wasn’t true, but this is the world we live in now.
The recent article I did about the “economic hell” that American families are going through right now got a huge response, but honestly what we are experiencing right now is not even worth comparing to how nightmarish things are going to be when our economic system fully collapses.
We have been on the biggest debt binge that the world has ever seen. Our debt-fueled prosperity has enabled us to enjoy an unprecedented standard of living. But the largest debt bubble in the history of the world is going to pop, and when it does the party is going to be over.
As the deadline to raise the debt ceiling draws closer, many are now wondering if Barack Obama will try to go around Congress if a deal is not reached by August 2nd. In particular, a number of voices (including U.S. Treasury Secretary Timothy Geithner) are now touting the 14th Amendment as a way to get around the debt ceiling. There are others that believe that Barack Obama should invoke “national security” in order to avoid a default. If the Republicans and the Democrats do not reach a deal by the end of July, things are going to get really, really interesting and there is no telling what Barack Obama may do.
Is The Economy Improving?
Of course “economic recovery” is one of Barack Obama’s favorite new terms. He loves to talk about all of the signs that the economy is improving. To Obama, all of the recent bad economic news is no big deal. He says that what we are experiencing right now are simply “bumps on the road to recovery“.
Well, whether you want to call them “bumps” or “potholes” or “massive gaping wounds that are gushing blood all over the place”, the truth is that the U.S. economy is not improving at all. In fact, it is rapidly getting worse.
Let’s take a look at just a few areas of the economy….
Federal Government Finances
As I wrote about yesterday, the national debt is completely and totally out of control. Since Barack Obama took office, the U.S. national debt has increased by nearly 4 trillion dollars.
Keep in mind that from George Washington to Ronald Reagan, the U.S. government accumulated only 1 trillion dollars in debt.
Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.
Now the Democrats and the Republicans are busy negotiating over some modest reductions in spending.
But unprecedented federal spending is one of the only things propping the economy up right now.
If the U.S. economy is performing so poorly after being flooded with “stimulus money” from the federal government, what is going to happen once the federal government cuts back?
State And Local Government Finances
All over the United States, there are large numbers of state and local governments that are on the verge of bankruptcy.
For the moment, let’s just focus on the state of Illinois.
Did you know that things have gotten so bad in Illinois at this point that the Illinois state government is letting bills go unpaid for long periods of time on a regular basis?
It’s true.
Right now they have billions in unpaid bills and they are facing a financial future that is so bleak that it is almost indescribable.
In one recent article, author Stephen Lendman described the horrific financial crisis that Illinois is facing right now….
But it isn’t just the state government that is having problems. According to Cook County Treasurer Maria Pappas, the average household in Chicago would owe a whopping $63,525 if all local government debt was divided up equally among all of the households.
The truth is that even if the finances of the federal government could somehow be fixed, there would still be dozens and dozens of very significant “government debt problems” all across America.
With so many state and local governments drowning in debt, jobs are being slashed at an alarming rate. UBS Investment Research is projecting that state and local governments in the U.S. will combine to slash a whopping 450,000 jobs by the end of next year.
So would the U.S. government step in and start bailing out state and local governments?
Not likely.
U.S. Representative Paul Ryan has said the following about the prospect of bailing out the states….
So for now, state and local governments are on their own.
Commercial Real Estate
Commercial real estate continues to decline all across America.
Moody’s/REAL All Property Type Aggregate Index fell 3.7% in April and is now the lowest it has been in over 10 years.
Overall, commercial real estate is down by over 40 percent since the peak back in 2007.
Residential Real Estate
The United States is dealing with a housing crash that never seems to end.
According to the National Association of Realtors, existing home sales in the United States fell another 3.8% in May.
During this housing crash home values have declined more than they did during the Great Depression and there does not appear to be any hope in sight.
New home sales are in even worse shape. During the first three months of this year, less new homes were sold in the U.S. than in any three month period ever recorded.
Unemployment
As 2009 began, the official U.S. unemployment rate was 7.6 percent. Today it is 9.1 percent.
The American people keep waiting for a “jobs recovery”, but it has not shown up.
Sadly, all of this is part of a long-term trend.
Over the past decade, U.S. multinational corporations have been laying off millions of workers in the U.S. and hiring millions of workers overseas to take their place.
The labor of American workers is rapidly losing value in a globalized economy. Big corporations have a tough time justifying paying ten times more to a worker in the United States when they are allowed to hire people for slave labor wages overseas.
The share of the national income taken in by U.S. workers continues to decline. Just consider what Mortimer Zuckerman had to say in a recent article for usnews.com….
In the United States today, there are not nearly enough jobs for everyone. The number of “middle class jobs” has fallen by about 10 percent over the last decade.
Only 66.8% of American men had a job last year. That was the lowest level that has ever been recorded in all of U.S. history.
We are seeing the rise of a whole class of people that are chronically unemployed. At the beginning of 2009, the number of “long-term unemployed” in the United States was approximately 2.6 million. Today, that number is up to 6.2 million.
So in light of these employment statistics, can anyone really say that the economy is improving?
Economic Anxiety
The economy is the number one issue on the minds of the American people. There is an extraordinary about of economic pain out there today, and Americans are becoming impatient.
According to CNBC, the Money Anxiety Index is at its highest level in 30 years….
Most recent polls show that the American people are rapidly becoming more pessimistic about the direction the U.S. economy is headed.
According to a recent CNN poll, 48 percent of Americans believe that “another Great Depression” is likely within the next 12 months.
When you really stop and think about that number, it is really frightening.
Inflation
Ben Bernanke may not admit it, but the truth is that the price of just about everything is soaring.
For example, when Barack Obama took office, the average price of a gallon of gasoline in the United States was $1.83. Today it is about $3.74.
So what are our politicians doing about it?
Not much.
They just want to pretend that it isn’t happening.
In fact, members of Congress are actually tinkering with the idea of changing the way that inflation is calculated once again.
By making inflation appear lower, it would be easier for Congress to deny cost of living increases to those on Social Security and other social programs.
How sad is that?
Economic Suffering
As American families find it increasingly difficult to pay the mortgage and put food on the table, many of them find themselves forced to put off other expenses. According to one recent survey, 26 percent of Americans have put off doctor visits because of the economy.
Other Americans can’t make it at all without government assistance. As 2007 began, there were only 26 million Americans on food stamps. Today, there are more than 44 million Americans on food stamps, which is an all-time record.
It is not good to have so many Americans on food stamps, but it is probably better than the alternative.
If there were tens of millions of Americans that could not feed themselves we would probably already have economic riots in the streets.
Solutions?
So do our politicians have any solutions?
Of course not. Everything that they have tried has failed.
Several top Democrats in Washington D.C. are now calling for a new economic stimulus package. When in doubt, our politicians usually revert to spending more money.
Sadly, this is about the best that our economy is going to get.
What we are experiencing right now is “the recovery”. As we move forward things are going to get progressively worse.
A lot of people don’t like to hear that we are in the middle of a long-term economic decline, but that is the truth.
The era of tremendous economic prosperity for America is coming to an end.
An economic nightmare is coming.
You better get ready.