Are we on the verge of another major economic downturn? In recent weeks, most of the focus has been on our politicians in Washington, but there are lots of other reasons to be deeply alarmed about the economy as well. Economic confidence is down, retail sales figures are disappointing, job cuts are up, and American consumers are deeply struggling. Even if our politicians do everything right, there would still be a significant chance that we could be heading into tough economic times in the coming months. Our economy has been in decline for a very long time, and that decline appears to be accelerating. There aren’t enough jobs, the quality of our jobs continues to decline, our economic infrastructure is being systematically gutted, and poverty has been absolutely exploding. Things have gotten so bad that former President Jimmy Carter says that the middle class of today resembles those that were living in poverty when he was in the White House. But this process has been happening so gradually that most Americans don’t even realize what has happened. Our economy is being fundamentally transformed, and the pace of our decline is picking up speed. The following are 22 reasons to be concerned about the U.S. economy as we head into the holiday season…
#1 According to Gallup, we have just seen the largest drop in U.S. economic confidence since 2008.
#2 Retailers all over America are reporting disappointing sales figures, and many analysts are very concerned about what the holiday season will bring. The following is an excerpt from a recent Zero Hedge article…
Chico’s FAS [CHS] Earnings Call 8/28/13:
“Traffic was our issue in quarter two. In a highly promotional and challenging environment, comparable sales result was a negative 2.6 percent on top of a positive 5.6 percent last year and a positive 12.8 percent in 2011.”
William-Sonoma [WSM] Earnings Call 8/28/13:
“The retail environment, it seems to indicate there’s still a lot of uncertainty out there, that the promotional environment has not gone away and that the retail environment in general continues to be choppy, especially with the recent earnings releases and this global unrest, and we just don’t want to get ahead of ourselves.”
Zale Corp [ZLC] Earnings Call 8/28/13:
“Overall, we continue to take a conservative view of market conditions in both the U.S. and in Canada. That being said, we do expect to continue to achieve positive top line growth. We expect store closures will impact our overall revenue growth for the year by about 250 basis points. It represents net closures of approximately 50 to 55 retail locations.”
DSW Inc. [DSW] Earnings Call 8/27/13:
“We did have a traffic decline in Q2, sort of similar to what just about every other retailer in America has reported.”
Guess? [GES] Earnings Call 8/28/13:
“The Korean business continued to be strong as revenue grew in the high single digits in local currency during the quarter. This was offset with the weakness from China, where we are seeing clear evidence of a pullback in consumer spending behavior because of the slowdown in the economy.”
Aeropostale [ARO] Earnings Call 8/22/13:
“Our business trends in the second quarter did not change materially from earlier in the year, which was disappointing given the level of change we registered with the brand. This performance in the third quarter outlook is being influenced by a challenging retail environment, with weak traffic trends and high levels of promotional activity.”
#3 Domestic vehicle sales just experienced their largest “miss” relative to expectations since January 2009.
#20 Former President Jimmy Carter says that the middle class in America has declined so dramatically that the middle class of today resembles those that were living in poverty when he was in the White House.
#21 According to a Gallup poll that was recently released, 20.0% of all Americans did not have enough money to buy food that they or their families needed at some point over the past year. That is just under the record of 20.4% that was set back in November 2008.
#22 Right now, one out of every five households in the United States is on food stamps. There are going to be a lot of struggling families out there this winter, so please be generous with organizations that help the poor. A lot of people are really going to need their help during the cold months ahead.
Everything is going to be just great. Haven’t you heard? The stock market is at an all-time high, Federal Reserve Chairman Ben Bernanke says that inflation is incredibly low, and the official unemployment rate has been steadily declining since early in Barack Obama’s first term. Of course I am being facetious, but this is the kind of talk about the economy that you will hear if you tune in to the mainstream media. They would have us believe that those running things know exactly what they are doing and that very bright days are ahead for America. And it would be wonderful if that was actually true. Unfortunately, as I made exceedingly clear yesterday, the U.S. economy has already been in continual decline for the past decade. Any honest person that looks at those numbers has to admit that our economy is not even close to where it used to be. But could it be possible that we are making a comeback? Could it be possible that Obama and Bernanke really do know what they are doing and that their decisions have put us on the path to prosperity? Could it be possible that everything is going to be just fine?
Sadly, what we are experiencing right now is a “mini-hope bubble” that has been produced by an unprecedented debt binge by the federal government and by unprecedented money printing by the Federal Reserve. Once this “sugar high” wears off, it will be glaringly apparent that by “kicking the can down the road” Bernanke and Obama have made our long-term problems even worse.
Unfortunately, most Americans don’t understand these things.
Most Americans just let their televisions do their thinking for them, and right now their televisions are telling them that everything is going to be fine.
Everything is fine, but the Chairman of the Joint Chiefs of Staff just told Congress that Obama is considering using the U.S. military to intervene in the conflict in Syria.
Unfortunately, the cold, hard reality of the matter is that everything is not fine.
As a nation, we consume far more wealth that we produce.
As a nation, we buy far more stuff from the rest of the world than they buy from us.
As a nation, our debt is growing at a much faster pace than our economy is.
As a nation, our share of global GDP has been dropping like a rock over the past decade.
Our economic infrastructure is being systematically gutted, Wall Street has been transformed into a gigantic casino and poverty in the United States continues to explode even in the midst of this so-called “economic recovery”.
How in the world can the mainstream media get away with telling the American people that everything is just fine?
The economic fundamentals are absolutely screaming that massive trouble is on the horizon. Hopefully people are getting ready, because a whole lot of pain is on the way for this country.
The United States is a deeply unhappy place. We are a nation that is absolutely consumed by fear, stress, anger and depression. It isn’t just our economy that is falling apart – the very fabric of society is starting to come apart at the seams and it is because of what is happening to us on the inside. The facts and statistics that I am going to share with you in this article are quite startling. They are clear evidence that America is a nation that is an advanced state of decline. We are overwhelmed by fear, stress and anxiety, and much of the time the ways that we choose to deal with those emotions lead to some very self-destructive behaviors. Americans have experienced a standard of living far beyond the wildest dreams of most societies throughout human history, and yet we are an absolutely miserable people. Why is this? Why is America #1 in so many negative categories? Why are we constantly looking for ways to escape the pain of our own lives? Why are our families falling apart? There is vast material wealth all around us. So why can’t we be happy?
Just look around you. Are most of the people around you teeming with happiness and joy? Sadly, the truth is that most Americans are terribly stressed out. Yeah, many of them may be able to manage to come up with a smile when they greet you, but most of the time they are consumed by internal struggles that are eating away at them like cancer.
So why is this happening? Is modern life structured in a way that is fundamentally unhealthy?
Below I have posted a short excerpt from a message that one of Charles Hugh Smith’s readers named Kenneth Daigle recently sent to him. I think that it does a good job of describing the incredible stress that many people contend with on a daily basis…
Think about how our culture is now structured for the average adult: STRESS, everywhere you look–commuting in horrible traffic, as you want to scream in frustration–money stress, to pay rent/house note, tuition, utilities, gas, insurances, vacations, cable bill, rising food costs, and on and on and on–stress from family problems, divorce, delinquency, drugs, crime, infidelity, keeping up with the Jones, etc.
People have too high an expectation of what they should have out of life, and get overly stressed over it all. How does all of this manifest itself? A prescription drug culture (Zoloft, Xanax, etc.) that tricks people into thinking a pill will knock back the stress, when these drugs, in my opinion, only make things worse.
I am hearing more and more that people just want to drop out from it all, as they are reaching a breaking point, and have decided less income and dependency on entitlements will reduce their stress, and is not so humiliating, so giving up working becomes more acceptable, to KEEP ONE’S SANITY.
I know I am correct, from the feedback I hear every day, and the financial media does not see this like I hear it every day. People don’t want to admit that they are too weak to deal with stress, so the financial pundits are not aware of this critical factor because they don’t talk to Joe Sixpack.
Most Americans live lives of “quiet desperation” that are punctuated by moments of great crisis. We spend our prime years working for others (making them rich) in order to pay off debts that we have foolishly accumulated (thus making the banks even wealthier). When most Americans reach the end of their lives, they look back and wonder what they actually accomplished.
James Altucher published an incredible article the other day entitled “Why Do People Hate Their Jobs?” It did a great job of describing what life is like for the modern worker in America. The following are a few of the reasons that he says people tend to hate their jobs…
-Jobs are modern-day slavery. We are paid just enough to live and not more. You are punished if you ask for more.
-We are often verbally abused on the job and we take it because we think it’s normal that people would yell at us.
-The government gets up to 50% of your paycheck and then 10-20% of that goes to kill people on other parts of the planet, including our own children.
-From 7am to 7pm you are either A) going to work, B) at work, or C) coming back from work. Hence, the times when you can be most creative are garbage-compacted into your cubicle.
-When you are paranoid at a job, you are probably correct. THEY are, in fact, talking about you and backstabbing you right now.
-You realize that all the dollars you spent on degrees to get you a job that will make you happy were completely wasted. You were scammed but you can’t let the next generation know how stupid you were so now you become part of perpetuating the scam.
-Your spouse is tired of hearing about your job after six months. And you couldn’t care less about hers. Ten years later you wake up next to a total stranger. 40 years later you die next to one.
-When you were a kid you liked to draw, and read, and run, and laugh, and play, and imagine a magical world. You’re never going to do any of that again.
-Over time everyone is getting fired and being replaced by younger, cheaper, more temporary, more robotic, versions of you. You see this but are afraid to do anything about it.
And of course when we get home from work there is even more stress. In America today, we are witnessing a breakdown of the family unlike anything we have ever seen before. The United States leads the world in divorce and in single person households. We are having an increasingly difficult time relating to one another, and many of us drown our sorrows in our addictions. We are addicted to pills, to alcohol, to food, to entertainment, to sex, to gambling, to shopping and to anything else that will make us feel good and forget about our problems for a while.
The following is a collection of facts and statistics that prove that America is being absolutely consumed by fear, stress, anger and depression…
-Tens of millions of Americans use alcohol and drugs to numb the pain that they are experiencing. In the United States today, there are about 28 million Americans with a drinking problem and about 22 million Americans use illegal drugs.
-More people have been diagnosed with mental disorders in America than anywhere else on earth.
-There are also tens of millions of Americans that try to deal with anxiety and stress by eating. Of all the major industrialized nations, America is the most obese. Mexico is #2.
-Many people try to escape from the pain of reality by getting lost in entertainment. Incredibly, the United States is tied with the UK for the highest average number of hours spent watching television each week.
-The United States has the highest divorce rate in the world by a good margin.
Fear is one of the primary things that motivates the American people, and that is a very powerful weapon that can be used against us.
As I wrote about yesterday, those that commit acts of terror want to get attention and they want to create fear.
And that is exactly what the Boston Marathon bombing accomplished. It captured the attention of the nation for days on end, and it absolutely paralyzed the entire Boston area with fear.
When we allow ourselves to be terrorized, we actually encourage more terror attacks. When we give terrorists what they want, it just encourages more psychos to commit acts of terror. If you don’t believe me, just check out the following links that I found posted on The Drudge Report on Monday…
The appropriate response to a terror attack is to refuse to be terrorized. Yes, we should also work to expose and punish the individuals, organizations and governments that are behind terror. But we should also not let terror change how we live our lives, and we should definitely not allow terror to be used as an excuse to rip our liberties and freedoms away.
Sadly, as Ron Paul has detailed, some of our politicians are already calling for “tighter security” in the aftermath of the Boston Marathon bombing…
Sadly, I expect this week’s tragic attacks in Boston to be used to justify new restrictions on liberty. Within 48 hours of the attack in Boston, at least one Congressman was calling for increased use of surveillance cameras to expand the government’s ability to monitor our actions, while another Senator called for a federal law mandating background checks before Americans can buy “explosive powder.”
I would not be surprised if the Transportation Security Administration uses this tragedy to claim new authority to “screen” Americans before they can attend sporting or other public events. The Boston attack may also be used as another justification for creating a National ID Card tied to a federal database with “biometric” information. The only thing that will stop them is if the American people rediscover the wisdom of Benjamin Franklin that you cannot achieve security by allowing government to take their liberties.
But no matter how much liberty and freedom we give up, we will never be 100% safe. Bad people are always going to do bad things, and unfortunately we are probably going to see some pretty nightmarish things in the years ahead as the world becomes even more unstable.
If we allow the bad guys to get us so frightened that we throw out the U.S. Constitution and abandon our liberties and our freedoms, then we are the ones who lose.
Yes, the years ahead are going to be tough. The economic collapse is going to accelerate greatly, there will be tremendous natural disasters, there will be war in the Middle East and there will be other problems that we cannot even conceive of right now. At the same time, the American people will continue to become even angrier and even more frustrated. According to a recent Pew Research survey, the percentage of Americans with a favorable view of the federal government is now at an all-time low. As the economy crumbles, there will likely be great civil unrest as people demand solutions. Unfortunately, our problems took decades to develop and they will not be solved overnight even if we did have good people in office.
So why am I saying all of this?
And why am I constantly warning about the coming economic collapse?
Is it because I want to create fear?
No, just the opposite of that.
I am a watchman on the wall.
In ancient times, a watchman would warn the people when the enemy was approaching.
When you receive the warning, there are a few different ways that you can respond to it…
#1 You can become consumed with fear and run away from the enemy. Unfortunately, cowards never get the victory in the end.
#2 You can dismiss the warning and pretend that the enemy is not approaching. But then when the enemy comes you will be completely unprepared.
#3 You can do everything possible to get prepared to face the enemy that is coming with strength and courage.
And that is how I would encourage all of you to approach the coming economic collapse and the other great problems that we will soon be experiencing as a nation.
Do not be afraid.
Instead, be strong and courageous and prepare well for the storms that are coming.
The mainstream media covered the inauguration of Barack Obama with breathless anticipation on Monday, but should we really be celebrating another four years of Obama? The truth is that the first four years of Obama were an absolute train wreck for the U.S. economy. Over the past four years, the percentage of working age Americans with a job has fallen, median household income has declined by more than $4000, poverty in the U.S. has absolutely exploded and our national debt has ballooned to ridiculous proportions. Of course all of the blame for the nightmarish performance of the economy should not go to Obama alone. Certainly much of what we are experiencing today is the direct result of decades of very foolish decisions by Congress and previous presidential administrations. And of course the Federal Reserve has more influence over the economy than anyone else does. But Barack Obama steadfastly refuses to criticize anything that the Federal Reserve has done and he even nominated Ben Bernanke for another term as Fed Chairman despite his horrific track record of failure, so at a minimum Barack Obama must be considered to be complicit in the Fed’s very foolish policies. Despite what the Obama administration tells us, the U.S. economy has been in decline for a very long time, and that decline has accelerated in many ways over the past four years. Just consider the statistics that I have compiled below. The following are 37 statistics which show how four years of Obama have wrecked the U.S. economy…
2. At the beginning of the Obama era, 32 million Americans were on food stamps. Today, more than 47 million Americans are on food stamps.
3. According to one calculation, the number of Americans on food stamps now exceeds the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”
4. The number of Americans receiving money directly from the federal government each month has grown from 94 million in the year 2000 to more than 128 million today.
11. Median household income in America has fallen for four consecutive years. Overall, it has declined by over $4000 during that time span.
12. The economy is not producing nearly enough jobs for the hordes of young people now entering the workforce. Approximately 53 percent of all U.S. college graduates under the age of 25 were either unemployed or underemployed in 2011.
13. According to a report from the National Employment Law Project, 58 percent of the jobs that have been created since the end of the recession have been low paying jobs.
14. Back in 2007, about 28 percent of all working families were considered to be among “the working poor”. Today, that number is up to 32 percent even though our politicians tell us that the economy is supposedly recovering.
15. According to the Center for Economic and Policy Research, only 24.6 percent of all of the jobs in the United States are “good jobs” at this point.
16. According to the U.S. Census Bureau, the middle class is taking home a smaller share of the overall income pie than has ever been recorded before.
17. According to the Economic Policy Institute, the United States is losing half a million jobs to China every single year.
18. The United States has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.
19. According to the World Bank, U.S. GDP accounted for 31.8 percent of all global economic activity in 2001. That number declined steadily over the course of the next decade and was only at 21.6 percent in 2011.
20. The United States actually has plenty of oil and we should not have to import oil from the Middle East. We need to drill for more oil, but Obama has been very hesitant to do that. Under Bill Clinton, the number of drilling permits approved rose by 58 percent. Under George W. Bush, the number of drilling permits approved rose by 116 percent. Under Barack Obama, the number of drilling permits approved actually decreased by 36 percent.
21. When Barack Obama took office, the average price of a gallon of gasoline was $1.84. Today, the average price of a gallon of gasoline is $3.26.
30. The total amount of money that the federal government gives directly to the American people has grown by 32 percent since Barack Obama became president.
31. The Obama administration has been spending money on some of the most insane things imaginable. For example, in 2011 the Obama administration spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.
36. As I wrote about yesterday, when you break it down the amount of new debt accumulated by the U.S. government during Obama’s first term comes to approximately $50,521 for every single household in the United States. Are you ready to contribute your share?
37. If you started paying off just the new debt that the U.S. has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.
But despite all of these numbers, the mainstream media and the left just continue to shower Barack Obama with worship and praise. Newsweek recently heralded Obama’s second term as “The Second Coming“, and at Obama’s pre-inauguration church service Reverand Ronald Braxton openly compared Obama to Moses…
At Metropolitan African Methodist Episcopal Church, Braxton reportedly crafted his speech around Obama’s personal political slogan: “Forward!”
Obama, said Braxton, was just like Moses facing the Red Sea: “forward is the only option … The people couldn’t turn around. The only thing that they could do was to go forward.” Obama, said Braxton, would have to overcome all obstacles – like opposition from Republicans, presumably, or the bounds of the Constitution. Braxton continued, “Mr. President, stand on the rock,” citing to Moses standing on Mount Horeb as his people camped outside the land of Israel.
But it wasn’t enough to compare Obama with the founder of Judaism and the prophet of the Bible. Braxton added that Obama’s opponents were like the Biblical enemies of Moses, and that Obama would have to enter the battle because “sometimes enemies insist on doing it the hard way.”
So what do you think the next four years of Obama will bring?
Please feel free to post a comment with your thoughts below…
The middle class has quite a gift welcoming them as the calendar flips over to 2013. Their payroll taxes are going to go up, their income taxes are going to go up, and approximately 28 million households are going to be hit with a huge, unexpected AMT tax bill on their 2012 earnings. So happy New Year middle class! You are about to be ripped to shreds. In addition to the tax increases that I just mentioned, approximately two million unemployed Americans will instantly lose their extended unemployment benefits when 2013 begins, and new Obamacare tax hikes which will cost American taxpayers about a trillion dollars over the next decade will start to go into effect. If Congress is not able to come to some sort of a deal, all middle class families in America will be sending thousands more dollars to Uncle Sam next year than they were previously. And considering the fact that the middle class is already steadily shrinking and that the U.S. economy is already in an advanced state of decline, that is not good news. You would think that both major political parties would want to do something to keep the middle class from being hit with this kind of tax sledgehammer. Unfortunately, at this point it appears that our “leaders” in Washington D.C. are incapable of getting anything done. So get ready for much smaller paychecks and much larger tax bills. What is coming is not going to be pleasant.
So what happened?
Weren’t the tax increases only supposed to be for the wealthy?
Well, that is what the politicians always promise, but it is always the middle class that ends up getting hit the hardest.
In this day and age, the big corporations and the ultra-wealthy are absolute masters at avoiding taxes.
For example, Facebook paid approximately $4.64 million in taxes on their entire foreign profits of $1.344 billion for 2011.
Keep in mind that U.S. GDP for 2011 was only slightly above 15 trillion dollars.
So the global elite have an amount of money parked in offshore banks that is substantially larger than the total value of all goods and services produced in the United States each year.
According to one estimate, a third of all the wealth in the entire world is stationed in offshore banks. Our politicians are playing checkers and the global elite are playing chess when it comes to taxes. Our current system of taxation is irreversibly broken and should be entirely thrown out and replaced with something else.
And of course under our current system those that are poor don’t pay much in taxes because they are just trying to survive.
So who always ends up getting the painful end of the hammer?
The middle class does, and that really stinks.
Let us hope and pray that our politicians can come together and do something for the middle class. In particular, we should all be screaming and yelling at our politicians about the Alternative Minimum Tax. It was originally designed as a method to “tax the rich”, but unless Congress does something the middle class is about to be ripped to shreds by it. The following is from a recent CNBC article about the AMT…
In a cruel epilogue to 2012, roughly 28 million families would owe the IRS $86 billion more than they anticipated for this year should the country plunge off the cliff, according to the nonpartisan Tax Policy Center.
Those families would face the “Alternative Minimum Tax,” which was introduced in 1969 to supposedly guarantee that wealthy Americans could not elude the taxman. But the AMT not only flopped, it was never indexed to inflation. So with each passing year, it seeps away from high society and into the wallets of Target and Wal-Mart shoppers. That sets up a disaster for April 15.
So how much money are we talking about?
According to that same article, many families are about to be socked by tax bills that will be absolutely huge…
On the whole, 98 percent of those with incomes between $200,000 to $500,000 would pay an additional $11,000 in AMT this year, according to the center’s estimates. About 88 percent of those with incomes of $100,000 to $200,000 would need to fork over another $3100, and even the majority of Americans with earnings between $75,000 and $100,000 would have an AMT liability.
Most of the tax increases that will be coming as a result of the fiscal cliff will be for 2013 earnings, but the AMT tax hike will apply to 2012 earnings. So if you end up falling under the AMT, you better get ready to write a very large check to Uncle Sam in just a couple of months.
And the AMT is only just one of the very painful tax increases that American families will be facing. If no deal is reached in Congress, every single middle class American taxpayer will be dealing with significantly higher taxes.
During a recent interview on CNBC, Ron Paul explained that “they pretend they are fighting up there, but they really aren’t. They are arguing over power, spin, who looks good, who looks bad; all trying to preserve the system where they can spend what they want, take care of their friends and print money when they need it.”
Most in the mainstream media are making it sound like some kind of a “battle royal” is going on in Washington, but as Lou Dobbs recently pointed out, the U.S. national debt is going to end up in just about the same place no matter what happens.
According to Dobbs, if we “do nothing” the U.S. national debt will be approximately 25.8 trillion dollars in 2022.
If “Obama wins”, the U.S. national debt will be approximately 25.4 trillion dollars in 2022.
If “Boehner wins”, the U.S. national debt will be approximately 25.2 trillion dollars in 2022.
You can watch the entire analysis by Lou Dobbs right here…
So they are putting all of us through all of this torture even though nothing will really change in the long run no matter who wins?
Barack Obama has just issued a new executive order that ends the pay freeze for federal workers that had been in place.
So now all federal employees will be getting a nice hefty pay raise.
For example, Vice President Joe Biden brought in $225,521 this year.
Next year, he will make $231,900.
Not that our politicians really need the money. Most members of Congress are millionaires anyway. But if they can get us to pay for it, they might as well go for it, eh?
There are now close to half a million federal employees that bring home at least $100,000 a year. Plus, it is important to keep in mind that the benefits that federal employees get are absolutely outstanding, and it is close to impossible to actually fire a federal worker.
Life is good if you are working for Uncle Sam.
Meanwhile, our politicians seem determined to keep draining more blood out of the middle class. Even if a “deal” is reached, we will still be hit by some categories of tax increases. Let’s just hope and pray that we don’t get hit by all of the tax increases that are scheduled to go into effect. That would be a financial disaster for millions of families.
So happy New Year middle class. Your taxes are about to go through the roof and our politicians are too busy fighting with each other to do anything about it.
Historically, small businesses have been the primary engine of new job creation in the United States. If the economy was getting healthy, we would expect to see the number of jobs at new businesses rise. Instead, we are witnessing just the opposite. We are told that the economy is supposed to be “recovering”, but the number of “startup jobs” at new businesses has fallen for five years in a row. According to an analysis of U.S. Department of Labor data performed by economist Tim Kane, there were almost 12 startup jobs per 1000 Americans back in the year 2006. By 2011, that figure had fallen to less than 8 startup jobs per 1000 Americans. According to Kane, the number of jobs in the United States at businesses that are less than one year old has fallen from 4.1 million in 1994 to 2.5 million in 2010. Overall, the number of “new entrepreneurs and business owners” has fallen by more than 50 percent as a percentage of the population since 1977. The United States was once known as “the land of opportunity”, but now that is fundamentally changing. At this point we truly do have a “crisis of entrepreneurship” in this country, and that is a huge reason why America is in decline. We are witnessing the slow death of the small business in America, and that is incredibly bad news for all of us.
Unfortunately, the problems that small businesses are experiencing right now have been building up for decades. The economic environment for small businesses in America has become incredibly toxic. Sadly, we can see this in the numbers. According to Kane, the following is how the decline in the number of startup jobs per 1000 Americans breaks down by presidential administration…
Bush Sr.: 11.3
Bush Jr.: 10.8
Obviously, we are headed very much in the wrong direction. Kane speculates about why this may be happening in his paper…
There is anecdotal evidence that the U.S. policy environment has become inadvertently hostile to entrepreneurial employment. At the federal level, high taxes and higher uncertainty about taxes are undoubtedly inhibiting entrepreneurship, but to what degree is unknown. The dominant factor may be new regulations on labor. The passage of the Affordable Care Act is creating a sweeping alteration of the regulatory environment that directly changes how employers engage their workforces, and it will be some time until those changes are understood by employers or scholars. Separately, there has been a federal crackdown since 2009 by the Internal Revenue Service on U.S. employers that hire U.S. workers as independent contractors rather than employees, raising the question of mandatory benefits. New firms tend to use part-time and contract staffing rather than full-time employees during the startup stage. According to Labor Department data, the typical American today only takes home 70 percent of compensation as pay, while the rest is absorbed by the spiraling cost of benefits (e.g., health insurance). The dilemma for U.S. policy is that an American entrepreneur has zero tax or regulatory burden when hiring a consultant/contractor who resides abroad. But that same employer is subject to paperwork, taxation, and possible IRS harassment if employing U.S.-based contractors. Finally, there has been a steady barrier erected to entrepreneurs at the local policy level. Brink Lindsey points out in his book Human Capitalism that the rise of occupational licensing is destroying startup opportunities for poor and middle class Americans.
Kane raises some very good points in his analysis. Without a doubt, small businesses in the United States are being taxed into oblivion. If you doubt this, just read this article.
And the regulatory environment for small businesses is more suffocating than it has ever been before. Unfortunately, our politicians never seem to learn that lesson. During his first term, Obama piled on mountains of new regulations, and now that he has won a second term he is preparing to unleash another massive wave of new regulations.
But many times the worst offenders are politicians on the state and local level. There are some areas of the country (such as California) that have created absolutely nightmarish conditions for small businesses. California had the worst “small business failure rate” in the country in 2010. It was 69 percent higher than the national average. And in 2011, the state of California ranked 50th out of all 50 states in new business creation.
Yet the politicians in California just continue to pile on even more regulations and even more taxes.
Sadly, this kind of thing is happening from coast to coast and it is killing off hordes of small businesses. Just consider the following statistics…
-As a share of the population, the percentage of Americans that are self-employed fell by more than 20 percent between 1991 and 2010.
-As a share of the population, the percentage of “new entrepreneurs and business owners” dropped by a staggering 53 percent between 1977 and 2010.
-The average pay for self-employed Americans declined by $3,721 between 2006 and 2010.
So what needs to be done?
Well, first of all, the tax burden and the regulatory burden on small businesses both need to be greatly reduced.
Secondly, the balance of power in our nation needs to be dramatically shifted. Conservatives run around talking about the need to reduce the power of government and liberals run around talking about the need to reduce the power of corporations, and actually both of them are right.
Our founding fathers wanted to empower individual citizens and small businesses. They never intended for us to have a system where big government and big corporations dominate everything and crush the “little guy” at every opportunity.
Even as we witness the death of the small business in America, corporations are absolutely thriving. The following chart shows how corporate profits after tax have exploded to new record highs in recent years…
So has this been good for workers? No, it has not translated into more jobs and higher wages. In fact, wages and salaries as a percentage of GDP are now at an all-time low…
That is why it is imperative that we change “the rules of the game” so that the balance of power is shifted back in the direction of individual citizens and small businesses. We desperately need to turn back to the principles that this nation was founded upon.
If nothing is done, these trends are going to get even worse. Barack Obama certainly has no plans to reduce the size and the power of the government. Since he was elected, an average of 101 new federal employees have been added to the government payroll every single day…
In the 1,420 days since he took the oath of office, the federal government has daily hired on average 101 new employees. Every day. Seven days a week. All 202 weeks. That makes 143,000 more federal workers than when Obama talked forever on that cold day in January of 2009.
And if nothing is done, the monolithic predator corporations that dominate our economy will just get even larger and even more powerful. Meanwhile, hundreds of thousands more small businesses will close up shop all over the country.
Unfortunately, most Americans seem totally apathetic about these issues. They seem content to wear “meggings“, watch “Honey Boo Boo” on television and let our government and corporate overlords run everything. Most of them have even been brainwashed into believing that this is the American way of doing things.
So where do we go from here?
Well, this nation will probably continue to keep doing the same things that it has been doing, and it will continue to get the same results.
The death of small business in America is happening right in front of our eyes, and everybody can see it happening, but very few people are doing anything to stop it.
Europe is not just heading into another recession. The truth is that Europe is heading into a full-blown depression. The economy of the EU is actually larger than the U.S. economy, and we are watching it melt down right in front of our eyes. Things just continue to get worse in Europe, and yet somehow the authorities over in Europe just keep insisting that everything is going to be “just fine”. Well, everything is not “just fine” over in Europe right now. Unemployment in the eurozone has just hit another brand new record high. In some nations in Europe, the unemployment rate is already significantly higher than anything the United States experienced during the Great Depression of the 1930s. Europe is a continent that is collapsing under the weight of its own debt, and this is just the beginning. A lot more pain is on the way. Officials over in Europe are trying to hold the European financial system together with duct tape and prayers, but it could literally fall apart at any moment. Europe has a much larger banking system than the United States does, so when a financial collapse happens in Europe, it is going to be very significant for the entire globe. Sadly, most Americans do not even pay attention to much of anything that is happening in Europe. They tend to think that the United States is the center of the universe and that as long as we are fine that everything will be okay. Well, all of those people who are not paying attention need to wake up. First of all, the U.S. economy is most definitely in decline. Secondly, the European economy is imploding right in front of our eyes and Europe is going to end up dragging the entire globe down with it.
The following are 11 facts that show that Europe is heading into an economic depression…
2. Unemployment in the eurozone has hit a brand new all-time record high of 11.7 percent.
3. The unemployment rate in Portugal is now up to 16.3 percent. A year ago it was just 13.7 percent.
4. The unemployment rate in Greece is now up to 25.4 percent. A year ago it was just 18.4 percent.
5. The unemployment rate in Spain has hit a brand new all-time record high of 26.2 percent. How much higher can it possibly go? This is already higher than the unemployment rate in the United States ever reached during the Great Depression of the 1930s.
7. Earlier this month, Moody’s stripped France of its AAA credit rating, and wealthy individuals are leaving France in droves as the socialists implement plans to raise taxes to very high levels on the rich.
8. Industrial production is collapsing all over Europe. Just check out these numbers…
You don’t have to be an economic genius to understand that the perpetual uncertainty over the Eurozone’s future has led to a widespread freeze on industrial investment and development. Industrial production is collapsing at an accelerating rate, falling 7% year-on-year in Spain and Greece, 4.8% in Italy, and 2.1% in France.
9. There are even trouble signs in the “stable” economies in Europe. In Germany, factory orders in September were down 3.3 percent from the month before, and retail sales in October declined 2.8 percent from the previous month.
10. The debt of the Greek government is now projected to hit 189 percent of GDP by the end of this year.
11. The Greek economy has shrunk by more than 7 percent this year, and it is being projected that the Greek economy will contract by another 4.5 percent in 2013.
But sometimes you can’t really get a feel for how bad things really are over there just from the raw economic numbers.
Many people that are living through these depression-like conditions are totally giving in to despair. Just check out the following example from an RT article from earlier this year…
A 61-year-old Greek pensioner has hung himself from a tree in a public park after succumbing to the pressure of crushing debt. A note in his pocket indicates he is merely the latest in a rash of economic crisis-induced suicides.
The pensioner’s lifeless body was found dangling by an attendant in a public park not far from his home in the suburb of Nikaia, Athens. The attendant also found a suicide note in the man’s pocket, The Athens news reports.
The man, identifying himself as Alexandros, said he was a man of few vices who “worked all day.” However, he blamed himself from committing one “horrendous crime”: becoming a professional at the age of 40 and plunging himself into debt. He referred to himself as a 61-year-old idiot who had to pay, hoping his grandchildren would not be born in Greece, as the country’s prospects were so bleak.
Please take note of what is happening in places like Greece and Spain right now, because similar conditions will soon be coming to the United States.
This is one reason why I try so hard to encourage people to prepare for what is coming. There is hope in understanding what is coming and there is hope in getting prepared.
You don’t want to end up getting blindsided by the coming crisis and end up sitting on a park bench trying to figure out if life is still worth living or not.
Life is most definitely worth living. Yes, a storm is coming and the world is going to become incredibly unstable in more ways than one. But if you understand what is coming and you work hard to prepare, then you and your family will have a chance to thrive even in the midst of the storm.
Please learn from what is happening over in Europe. The economic horror show that is unfolding over there is going to come to America too, and time is running out.