The parallels between the false prosperity of 2007 and the false prosperity of 2014 are rather striking. If we go back and look at the numbers in the fall of 2007, we find that the Dow set an all-time high in October, margin debt on Wall Street had spiked to record levels, the unemployment rate was below 5 percent and Americans were getting ready to spend a record amount of money that Christmas season. But then the very next year the worst economic crisis since the Great Depression shook the entire planet and everyone wondered why most people never saw it coming. Well, now a similar pattern is unfolding right before our eyes. The Dow and the S&P 500 both hit record highs on Monday, margin debt on Wall Street is hovering near record levels, the unemployment rate has ticked down a little bit and Americans are getting ready to spend more than 600 billion dollars this Christmas season. The truth is that the economy seems pretty stable for the moment, and most people cannot even imagine that an economic collapse is coming. So why are so many really smart people forecasting economic disaster in the near future?
For example, just consider what the Jerome Levy Forecasting Center is saying. This is an organization with a tremendous economic forecasting record that goes all the way back to the Great Depression. In fact, it predicted ahead of time the financial trouble and the recession that would happen in 2008. Well, now this company is forecasting that there is a 65 percent chance that there will be a global recession by the end of next year…
In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash.
Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession — the slump began two months later.
The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year.
Could they be wrong?
It’s certainly possible.
But I wouldn’t bet against them.
John Hussman is another expert that is warning of financial disaster on the horizon. He believes that we are experiencing a massive stock market bubble right now and that stocks are approximately double the value that they should be…
If you look at corporate profits and especially corporate profit margins, they’re one of the most cyclical and mean-reverting series in economics. Right now, we have corporate profits that are close to about 11% of GDP, but if you look at that series you will find that corporate profits as a share of GDP have always dropped back to about 5.5% or below in every single economic cycle including recent decades, including not only the financial crisis but 2002 and every other economic cycle we have been in.
Right now stocks as a multiple of last year’s expected earnings may look only modestly over valued or modestly richly valued. Really if you look at the measures of valuation that are most correlated to the returns that stocks deliver over time say over seven years or over the next 10 years the S&P 500 in our estimation is about double the level of valuation that would give investors a normal rate of return.
Could you imagine the chaos that would ensue if stocks really did drop by 50 percent?
Well, Hussman says that this is precisely what must happen in order for stock prices to return to historical norms…
Right now, like I say, we are looking at stocks that have been pressed to long-term expected returns that are really dismal. But more important than that, in every market cycle that we’ve seen with the mild exception of 2002, we’ve seen stocks price revert back to normal rates of return. In order to get to that point from here, we would have to have equities drop by about half.
If that does happen, it will make the crisis of 2008 look like a Sunday picnic.
Meanwhile, other very prominent thinkers are also warning that an economic nightmare is rapidly approaching.
Economic cycle theorist Martin Armstrong foresees major economic problems in 2015 which will ultimately lead to “civil unrest” in 2016…
It looks more and more like a serious political uprising will erupt by 2016 once the economy turns down. That is the magic ingredient. Turn the economy down and you get civil unrest and revolution.
And of course there are a whole lot of other economic cycle theorists that are forecasting that we are about to experience a massive economic downturn as well. For much more on this, please see this article and this article.
What is truly frightening is that we have never even come close to recovering from the last economic crisis. One poll that was taken just prior to the recent election found that only 28 percent of Americans said that their families were doing better financially. In addition, here are some more survey numbers about how Americans are feeling about the economy…
According to voter exit polls conducted by CNN, 78% said they are worried about the economy, with 69% saying that, in their view, economic conditions are not good. 65% responded that the country is on the wrong track vs. only 31% who believed that it is headed in the right direction.
Even though we are repeating so many of the same patterns that we experienced back in 2007, we are doing so with a fundamentally weaker economy. The last crisis did a tremendous amount of permanent damage to us. For an extensive look at this, please see my previous article entitled “12 Charts That Show The Permanent Damage That Has Been Done To The U.S. Economy“.
And there are lots of signs that much of the planet is already entering another major economic slowdown. In a recent article, Brandon Smith summarized some of these. He says that we are currently witnessing “the last gasp of the global economy“…
Global exports, and thus consumer demand, are plunging. Germany, the only pillar left to prop up the failing European Union, has experienced a severe decline in exports not seen since 2009.
China, the largest exporter and importer in the world, and Chinese companies, have been caught in a number of instances using fraudulent invoices to artificially inflate their own export numbers, in some cases reporting 50% more exported goods than had actually existed.
China’s manufacturing has also declined for the past five months, exposing the nature of its inflated export stats and indicating a global slowdown.
The Baltic Dry Index, a measure of global shipping rates for raw goods, and thus a measure of demand for shipping, continues to drag along near historic lows.
The U.S. consumer (the only economic asset the U.S. has besides the dollar’s world reserve status), has seen declines in spending as well as wages.
In the meantime, long term jobless Americans continue to fall off welfare rolls by the millions, making unemployment numbers look good, but the overall future picture look terrible as participation rates dissolve into the ether of government statistics.
How is such poverty being hidden? Foodstamps. Plain and simple. Nearly 50 million Americans now subsist on food stamp programs today, and this number shows no signs of dropping. In states like Illinois, two people sign up for food assistance for every citizen that happens to find a job.
From time to time, I get accused of “spreading fear” and of being obsessed with “doom and gloom”.
But that is not the case at all.
I actually want our economy to stay stable for as long as possible. Many Americans don’t realize this, but even the poorest of us live in luxury compared to much of the rest of the world. It would be wonderful if we could all live out our lives in peace and quiet and safety.
Unfortunately, it is simply not going to happen.
And it does not take an expert to see what is coming.
Anyone with half a brain should be able to see the economic disaster that is approaching.
There is hope in understanding what is happening and there is hope in getting prepared. Millions of Americans that are willingly blind to our problems are going to have their lives absolutely destroyed when they get blindsided by the coming crisis. So please use this brief period of relative stability to get prepared and to warn others.
Once this false bubble of hope runs out, all of our lives are going to dramatically change.
How do you fix a superpower with exploding levels of debt, that has a rapidly aging population, that consumes far more wealth than it produces, and that has scores of zombie banks that could collapse at any moment. You might think that I am talking about the United States, but I am actually talking about Europe. You see, the truth is that the European Union has a larger population than the United States does, it has a larger economy than the United States does, and it has a much larger banking system than the United States does. Most of the time I write about the horrible economic problems that the U.S. is facing, but without a doubt economic conditions in Europe are even worse at the moment. In fact, there are many (including the Washington Post) that are calling what is happening in Europe a full-blown “depression”. Sadly, this is probably only just the beginning. In the months to come things in Europe are likely to get much worse.
First of all, let’s take a look at unemployment. If the U.S. was using honest numbers, the official unemployment rate would probably be somewhere close to 10 percent. But in many nations in Europe, the official unemployment rate is already above the ten percent mark…
The official unemployment rate for the eurozone as a whole is currently 11.5 percent. The lack of good jobs is causing the middle class to shrink all over Europe, and more people than ever are becoming dependent on government assistance. European nations are well known for their generous welfare programs, but all of this spending is causing debt to GDP ratios to absolutely explode…
At the same time, the value of the euro has been steadily declining over the last six months. This is significantly reducing the purchasing power that European families have…
Many believe that the euro will ultimately go much lower than this. Nations such as Greece and Spain are already experiencing deflation, and the inflation rates in Germany and France are both currently below one percent. If the European Central Bank starts injecting lots of fresh euros into the system to combat this perceived problem, that will lift the level of inflation but it will also further erode the value of the euro.
In the long run, it would not be a surprise to see the U.S. dollar at parity with the euro.
When it happens, remember where you heard it.
The Europeans are scared to death of a deflationary depression, but that is precisely where the long-term economic trends are taking them right now. The following is from a recent Forbes article…
Market consensus believes that the eurozone is edging toward that moment when the scourge of deflation actually becomes a crippling reality. Eurozone data is constantly reminding investors that the region’s economy is barely limping along, as companies slash selling prices in a vain attempt to improve sales in the face of a weakening economy and evaporating new orders. Corporate deflationary reactions like this only hurt a company’s bottom line by squeezing profit margins even further. The obvious knock-on effect will limit resources for hiring and investing, which in turn only dampens any chances of an economic rebound, again putting the region into a bigger hole.
In a desperate attempt to avoid widespread deflation in Europe, the ECB will inevitably take action at some point.
It may not happen immediately, but when it does it will be yet another salvo in the emerging global currency war.
Speaking of currencies, it is being reported that Russia is actually considering legislation that will ban the circulation of the U.S. dollar in that nation. The following is from an article that was posted on Infowars…
Russia may ban the circulation of the United States dollar.
The State Duma has already been submitted a relevant bill banning and terminating the circulation of USD in Russia, APA’s Moscow correspondent reports.
If the bill is approved, Russian citizens will have to close their dollar accounts in Russian banks within a year and exchange their dollars in cash to Russian ruble or other countries’ currencies.
Otherwise their accounts will be frozen and cash dollars levied by police, customs, tax, border, and migration services confiscated.
That is not good news for the U.S. dollar at all.
Expect wild shifts in the foreign exchange markets in the months and years to come. Turbulent times are ahead for the dollar, the euro and the yen.
Getting back to Europe, let us hope that things stabilize over there – at least for a while.
But that might not happen. In fact, things could take a turn for the worse at any moment.
Most people don’t realize this, but European banks are even shakier than U.S. banks, and that is saying a lot.
For example, the largest bank in the strongest economy in Europe is Deutsche Bank. At this point, Deutsche Bank has approximately 75 trillion dollars worth of exposure to derivatives. That amount of money is about 20 times the size of German GDP, and it is more exposure than any U.S. bank has.
And Deutsche Bank is far from alone. All over Europe there are zombie banks that are essentially insolvent. Many of them are being propped up by their governments. Those governments know that if those banks failed that it would make their economic problems even worse.
Just like in the United States, most economic activity in Europe is fueled by debt. So those banks are needed to provide mortgages, loans and credit cards to average citizens and businesses. Unfortunately, bad debt levels and business failures continue to shoot up all over Europe.
The system is breaking down, and nobody is quite sure what is going to happen next.
So keep an eye on Europe. In particular, keep an eye on Italy. I have a feeling that big economic news is about to start coming out of Italy, and it won’t be good.
In 2014, we have been experiencing “the calm before the storm”.
But 2015 is right around the corner, and it promises to be extremely “interesting”.
Large numbers of people believe that an economic crash is coming next year based on a seven year cycle of economic crashes that goes all the way back to the Great Depression. What I am about to share with you is very controversial. Some of you will love it, and some of you will think that it is utter rubbish. I will just present this information and let you decide for yourself what you want to think about it. In my previous article entitled “If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States“, I discussed many of the economic cycle theories that all seem to agree that we are on the verge of a major economic downturn in this country. But there is an economic cycle that I did not mention in that article that a lot of people are talking about right now. And if this cycle holds up once again in 2015, it will be really bad news for the U.S. economy.
Looking back, the most recent financial crisis that we experienced was back in 2008. Lehman Brothers collapsed, the stock market crashed and we were plunged into the worst recession that we have experienced as a nation since the Great Depression. You can see what happened to the Dow Jones Industrial Average on the chart that I have posted below…
Prior to that, the last time that the stock market experienced a major decline of that nature was during the bursting of the dotcom bubble seven years earlier. 2001 was a year of recession for the U.S. economy and of big trouble for stocks.
And oh year, a little event known as “9/11″ happened that year.
Seven years before that, in 1994, investors experienced the worst bond market of their lifetimes.
The following is how Reuters recalls the carnage…
The 1994 bond market massacre is remembered with horror by those who lived through it. Yields on 30-year Treasuries jumped some 200 basis points in the first nine months of the year, hammering investors and financial firms, not to mention thrusting Mexico into crisis and bankrupting Orange County.
Going back another seven years brings us to 1987.
Anyone that lived through that era remembers “Black Monday” and the horrible stock market crash very well.
The next major economic crash prior to 1987 was in the early 1980s.
In 1980, the S&L crisis was blooming and everyone was talking about the “stagflation” that we were experiencing under Jimmy Carter. The Federal Reserve raised interest rates dramatically to combat inflation, and this helped precipitate the very deep recession that we experienced early in Ronald Reagan’s first term.
You can read much more about the “early 1980s recession” right here.
Seven years prior to 1980 brings us to 1973. To many young Americans, that year does not have any significance, but older Americans remember the Arab oil embargo and the super long lines at the gas pumps really well.
In addition, a recession began in 1973 which ended up stretching all the way until 1975.
And those that have studied these things say that the pattern keeps going back all the way to the Great Depression. Many correctly point out that the stock market crash which began the Great Depression was in 1929, but actually the worst year for the stock market during the Great Depression was in 1931. And 1931 fits perfectly into the cycle.
So we have this pattern of economic crashes occurring approximately every seven years.
But there is an additional element to this cycle which makes it even more extraordinary.
As Jonathan Cahn has pointed out, this seven year cycle also lines up with the seven year “Shemitah cycle” that we find in the Bible.
For those not familiar with it, during the Shemitah year the people of Israel were commanded to let their land rest for a full year. It was also supposed to be a time of releasing of debts.
But for the most part the people of Israel did not observe the Shemitah year, and in the Bible that is mentioned as one of the reasons why they were exiled to Babylon for seventy years.
The Shemitah year always begins in the fall, and the upcoming Shemitah year is going to start about a month from now.
Will we see things happen during this Shemitah year that are similar to things that we have seen in past Shemitah years?
For example, on September 17th, 2001 we witnessed the greatest one day stock market crash in U.S. history up until that time. It happened on the 29th of Elul on the Jewish calendar, which is the day right before Rosh Hashanah.
That record stood for seven years until the massive stock market crash of September 29, 2008. That date also corresponded with the 29th of Elul on the Jewish Calendar – the day right before Rosh Hashanah.
Will the pattern hold up in 2015?
Well, the 29th of Elul falls on a Sunday in 2015, so the stock market will be closed. But it is very interesting to note that there will be a solar eclipse on that day.
And as Jonathan Cahn recently told WND, similar solar eclipses in the past have preceded major financial disasters…
In 1931, a solar eclipse took place on Sept. 12 – the end of a “Shemitah” year. Eight days later, England abandoned the gold standard, setting off market crashes and bank failures around the world. It also ushered in the greatest monthlong stock market percentage crash in Wall Street history.
In 1987, a solar eclipse took place Sept. 23 – again the end of a “Shemitah” year. Less than 30 days later came “Black Monday” the greatest percentage crash in Wall Street history.
Is Cahn predicting doom and gloom on Sept. 13, 2015? He’s careful to avoid a prediction, saying, “In the past, this ushered in the worst collapses in Wall Street history. What will it bring this time? Again, as before, the phenomenon does not have to manifest at the next convergence. But, at the same time, and again, it is wise to take note.”
So what should we make of all of this?
I am sure that some of you will dismiss this as pure coincidence and speculation.
Others will find it utterly fascinating.
But one thing is for sure – people are going to be talking about this seven year cycle all over the Internet.
When they ask you what you think, what are you going to say?
The similarities between 2007 and 2014 continue to pile up. As you are about to see, U.S. home sales fell dramatically throughout 2007 even as the mainstream media, our politicians and Federal Reserve Chairman Ben Bernanke promised us that everything was going to be just fine and that we definitely were not going to experience a recession. Of course we remember precisely what followed. It was the worst economic crisis since the days of the Great Depression. And you know what they say – if we do not learn from history we are doomed to repeat it. Just like seven years ago, the stock market has soared to all-time high after all-time high. Just like seven years ago, the authorities are telling us that there is nothing to worry about. Unfortunately, just like seven years ago, a housing bubble is imploding and another great economic crisis is rapidly approaching.
Posted below is a chart of existing home sales in the United States during 2007. As you can see, existing home sales declined precipitously throughout the year…
Now look at this chart which shows what has happened to existing home sales in the United States in recent months. If you compare the two charts, you will see that the numbers are eerily similar…
New home sales are also following a similar pattern. In fact, we just learned that new home sales have collapsed to an 8 month low…
Sales of new single-family homes dropped sharply last month as severe winter weather and higher mortgage rates continued to slow the housing recovery.
New home sales fell 14.5% to a seasonally adjusted annual rate of 385,000, down from February’s revised pace of 449,000, the Census Bureau said.
Once again, this is so similar to what we witnessed back in 2007. The following is a chart that shows how new home sales declined dramatically throughout that year…
And this chart shows what has happened to new homes sales during the past several months. Sadly, we have never even gotten close to returning to the level that we were at back in 2007. But even the modest “recovery” that we have experienced is now quickly unraveling…
If history does repeat, then what we are witnessing right now is a very troubling sign for the months to come. As you can see from this chart, new home sales usually start going down before a recession begins.
And don’t expect these housing numbers to rebound any time soon. The demand for mortgages has dropped through the floor. Just check out the following excerpt from a recent article by Michael Lombardi…
One of the key indicators I follow in respect to the state of the housing market is mortgage originations. This data gives me an idea about demand for homes, as rising demand for mortgages means more people are buying homes. And as demand increases, prices should be increasing.
But the opposite is happening…
In the first quarter of 2014, mortgage originations at Citigroup Inc. (NYSE/C) declined 71% from the same period a year ago. The bank issued $5.2 billion in mortgages in the first quarter of 2014, compared to $8.3 billion in the previous quarter and $18.0 billion in the first quarter of 2013. (Source: Citigroup Inc. web site, last accessed April 14, 2014.)
Total mortgage origination volume at JPMorgan Chase & Co. (NYSE/JPM) declined by 68% in the first quarter of 2014 from the same period a year ago. At JPMorgan, in the first quarter of 2014, $17.0 billion worth of mortgages were issued, compared to $52.7 billion in the same period a year ago. (Source: JPMorgan Chase & Co. web site, last accessed April 14, 2014.)
It is almost as if we are watching a replay of 2007 all over again, and yet nobody is talking about this.
Everyone wants to believe that this time will be different.
The human capacity for self-delusion is absolutely amazing.
There are a lot of other similarities between 2007 and today as well.
Just the other day, I noted that retail stores are closing in the United States at the fastest pace that we have seen since the collapse of Lehman Brothers.
Back in 2007, we saw margin debt on Wall Street spike dramatically and help fuel a remarkable run in the stock market. Just check out the chart in this article. But that spike in margin debt also made the eventual stock market collapse much worse than it had to be.
And just like 2007, consumer credit is totally out of control. As I noted in one recent article, during the fourth quarter of 2013 we witnessed the biggest increase in consumer debt in the U.S. that we have seen since 2007. Total consumer credit in the U.S. has risen by 22 percent over the past three years, and 56 percent of all Americans have “subprime credit” at this point.
Are you starting to get the picture? It is only 7 years later, and the same things that happened just prior to the last great financial crisis are happening again. Only this time we are in much worse shape to handle an economic meltdown. The following is a brief excerpt from my recent article entitled “We Are In FAR Worse Shape Than We Were Just Prior To The Last Great Financial Crisis“…
None of the problems that caused the last financial crisis have been fixed. In fact, they have all gotten worse. The total amount of debt in the world has grown by more than 40 percent since 2007, the too big to fail banks have gotten 37 percent larger, and the colossal derivatives bubble has spiraled so far out of control that the only thing left to do is to watch the spectacular crash landing that is inevitably coming.
You can read the rest of that article right here.
For a long time, I have been convinced that this two year time period is going to represent a major “turning point” for America.
Right now, 2014 is turning out to be eerily similar to 2007.
Will 2015 turn out to be a repeat of 2008?
Please feel free to share what you think by posting a comment below…
If the economy is really “getting better”, then why have millions upon millions of formerly middle class Americans been pushed to the point of utter despair? The stories that you are about to read are absolutely heartbreaking. I don’t know how anyone can read them without getting chills. In America today, if you lose a good job, there is a good chance that you will get back on your feet before too long. But there is also a good chance that you won’t be able to find a decent job and will plunge into the abyss of depression and desperation that so many millions of other Americans have fallen into. As I wrote about earlier this month, the U.S. economy is definitely not getting any better. For example, if you assume that the percentage of Americans that want to work is about at the long term average, then the official unemployment rate in the United States would be above 11 percent. And compared to six years ago, 1,154,000 fewer Americans are working today even though our population has gotten significantly larger since then. Behind all of these numbers are real flesh and blood people, and you are about to hear from some of them. The following are 10 stories from the cold, hard streets of America that will break your heart…
#1 A 34-year-old man named Rocco…
“While my wife goes to work, I’ve been staying at home to conserve fuel. I’ve been losing weight from eating less, so my family has more on their plates. It feels like the government and big business expect more and more while trying to give back as little as possible. Soon my internet connection will be shut off and since most companies don’t offer paper applications, how will I find work then? Walking around for miles a day, asking for an application that may or may not be available?”
#2 Homeless people wasting away in “Obamavilles” on the outskirts of Baltimore, Maryland…
A sheet of plastic laid over a clothesline. A mini-fortress of milk crates stacked under a tree. A thin mattress on a flimsy crate lying in a dark tunnel.
On the edge of Baltimore’s woodlands, dozens of the city’s transients live in makeshift homes which they consider safer than homeless shelters.
You can see some incredible photos of how these homeless people are living right here.
#3 A 50-year-old woman in Pennsylvania named Karen…
“My husband only makes 10 dollars an hour and drives 30 miles round trip, so it’s taking all we have just to keep the Jeep filled with gas. We stopped going to church and all to save gas. We are homebodies now, afraid to use what gas we have. We save two kids from getting put in foster care just to be hit like this. It’s just a constant trap they try to keep you from receiving any help! I’m so disgusted when my 12-year-old asks me why we don’t have snacks anymore, or why are we eating so much rice, etc.”
#4 The following is an excerpt from a comment that was recently left by one of my readers…
“I live right at ground zero. South West Virginia and let me tell you things are bad and getting worse by the day. We don’t do drugs but have family members hooked on meth and or pills or both. Many of these pills are prescribed by local doctors either Suboxone to get you off the opiates, a total joke by the way and tons of Xanax why would anyone need 120 Xanax a month how can you even be expected to function. These pills get traded for cash sex and other items, same goes for the SNAP cards. We have family members going to jail repeatedly for the same crimes making meth, selling pills and stealing anything that’s not nailed down. People who are 30 years old look like they are 55 years old. The jobs here are awful walmat, gas stations, fast food etc. Most of our whole county is on the government dole.”
#5 A 55-year-old man from California named Randy Carpadus…
“I was working as a firefighter for the state of California and was laid off in April 2012, right at the beginning of fire season. At my age, I’m not going to be picked up by another fire department. They want younger guys.
I’ve applied for everything from truck driver, to sales, to nonprofit work. I’ve sent out almost 400 resumes, and I’ve gotten nothing. I’ve done whatever I could to make ends meet.
Through some connections, I got a temp job as a truck driver in Napa Valley — a 3-hour commute from where I live. I lived in my car and worked during grape harvest.”
#6 In this tough economic environment, debt collectors are becoming even more aggressive. Just check out the kind of harassment that one woman named Jennifer Posey has been put through…
“This is Jimmy Lee calling from CheckCare. Just letting you know we’re in full force,” he said. The man had a thick Southern accent that stretched the word “you” into a two-syllable accusation. “We’re going to have warrants out for your arrest in Columbus, Ga.,” the man threatened. “We know you have an apartment on the canal in Clearwater.”
It was when he mentioned her home in Florida that Posey began to feel anxious. “We’re hurting you,” he continued. “We’re hurting your family, your son’s family, your cousin’s family. Whatever we can do to get you to pay.”
Forty minutes later, her phone rang again. “What about that 12-, 13-year-old child you’re trying to raise?” the voice sneered.
#7 A 50-year-old woman from New York named Sharon Ritchie…
“I am constantly told I am ‘overqualified.’ I’ve also been told to dumb down my resume, but I can’t just erase 30 years of experience.
You can only stand the word ‘no’ so many times. There are times that I cry at night wondering what happened, and at times I have thought about suicide.
But, I keep on going, hoping the cycle will break.”
#8 In response to my recent article about Appalachia, a reader named Rob shared the following…
“I am from rural south central KY (Brodhead, Rockcastle County) and I can tell you that most of the things described above are exactly how it is here. There are so many people on drugs it’s crazy. First it was the meth, which was more of a problem back in 2002-2007, then the pain pills really started becoming a huge problem, OxyContin and perc 30’s (roxicet) obtained from Florida and Georgia doctors. The pain pills are something that you can’t just walk away from after doing them for a while; they cause people to steal from family, sell everything they own, and/or prostitute themselves in order to avoid opiate withdrawal.”
#9 A 30-year-old man from California named Alejandro…
“I need to provide for my son who is diagnosed with autism and my baby girl. I’ve sold a bunch of my belongings to try and put food on the table, to buy clothes for my kids, to pay rent and utilities and to put gas in my vehicle to go job hunting. Not having money for necessities takes a toll on my mind. Depression has kicked in. It really takes a toll on one’s self-esteem and confidence to move forward.I’ve applied to countless amounts of jobs, only to not even get a call back. I’ve gone from construction site to construction site, only to be told they are not hiring. Finally, I got at least a positive call back from a company telling me they will call me to work in a couple of weeks. I am crossing my fingers and praying. There are millions of people in my situation or even worse.”
#10 An excerpt from a heartbreaking letter that an unemployed woman named Paula Bray sent to Barack Obama…
Dear Mr. President,
I write to you today because I have nowhere else to turn. I lost my full time job in September 2012. I have only been able to find part-time employment — 16 hours each week at $12 per hour — but I don’t work that every week. For the month of December, my net pay was $365. My husband and I now live in an RV at a campground because of my job loss. Our monthly rent is $455 and that doesn’t include utilities. We were given this 27-ft. 1983 RV when I lost my job.
This is America today. We have no running water; we use a hose to fill jugs. We have no shower but the campground does. We have a toilet but it only works when the sewer line doesn’t freeze — if it freezes, we use the campground’s restrooms. At night, in my bed, when it’s cold out, my blanket can freeze to the wall of the RV. We don’t have a stove or an oven, just a microwave, so regular-food cooking is out. Recently we found a small toaster oven on sale so we can bake a little now because eating only microwaved food just wasn’t working for us. We don’t have a refrigerator, just an icebox (a block of ice cost about $1.89). It keeps things relatively cold. If it’s freezing outside, we just put things on the picnic table.
Sadly, this is just the beginning.
The economic despair that we are witnessing right now is just a taste of the horrible economic nightmare that is going to unfold in the United States during the coming years.
And already there are signs that things are starting to take another turn for the worse. In recent months, we have seen a whole host of retail chains announce store closings. In fact, one of my readers wrote to me the other day and told me about a home appliance chain known as “American TV” that is going out of business in the Midwest. When these stores shut down, close to another 1000 Americans will soon be out of work…
“While this is a sad moment it is also a proud moment. It’s a moment to be proud of our efforts and to be proud of what we have delivered to the community”, said Doug Reuhl, President and CEO of American since 1988. “Words cannot adequately express how grateful we are to our millions of loyal customers, and to the incredible, dedicated family of employees that we have been blessed with over our 60 years of business”. Advanced notice of the business closing has been given to the 989 employees affected in eleven locations. Employees will be compensated, with benefits, through the notification period, and the majority will continue employment through the closing process.
But if you listen to the mainstream media, you would think that happy days are here again for America. Just check out some of the bizarre headlines that I have collected in recent weeks…
CNBC: “Stop whining! The US economy is in good shape”
USA Today: “Economists: U.S. will see better growth in ’14”
Newsday: “Why the economy isn’t doomed”
Most Americans will buy into this propaganda and will never see the next major economic crisis coming until it is too late to do anything about it.
So what do you think about all of this?
Do you have a personal story to share?
Please feel free to add to the discussion by leaving a comment below…
Bankers committing suicide by jumping from the rooftops of their own banks is something that we think of when we think of the Great Depression. Well, it just happened in London, England. A vice president at JPMorgan’s European headquarters in London plunged to his death after jumping from the top of the 33rd floor. He fell more than 500 feet, and it is being reported by an eyewitness that “there was quite a lot of blood“. This comes on the heels of news that a former Deutsche Bank executive was found hanged in his home in London on Sunday. So why is this happening? Yes, the markets have gone down a little bit recently but they certainly have not crashed yet. Could there be more to these deaths than meets the eye? You never know. And as I will discuss below, there have been a lot of other really strange things happening around the world lately as well.
But before we get to any of that, let’s take a closer look at some of these banker deaths. The JPMorgan executive that jumped to his death on Tuesday was named Gabriel Magee. He was 39 years old, and his suicide has the city of London in shock…
A bank executive who died after jumping 500ft from the top of JP Morgan’s European headquarters in London this morning has been named as Gabriel Magee.
The American senior manager, 39, fell from the 33-story skyscraper and was found on the ninth floor roof, which surrounds the Canary Wharf skyscraper.
He was a vice president in the corporate and investment bank technology department having joined in 2004, moving to Britain from the United States in 2007.
What would cause a man in his prime working years who is making huge amounts of money to do something like that?
The death on Sunday of former Deutsche Bank executive Bill Broeksmit is also a mystery. According to the Daily Mail, police consider his death to be “non-suspicious”, which means that they believe that it was a suicide and not a murder…
A former Deutsche Bank executive has been found dead at a house in London, it emerged today.
The body of William ‘Bill’ Broeksmit, 58, was discovered at his home in South Kensington on Sunday shortly after midday by police, who had been called to reports of a man found hanging at a house.
Mr Broeksmit – who retired last February – was a former senior manager with close ties to co-chief executive Anshu Jain. Metropolitan Police officers said his death was declared as non-suspicious.
On top of that, Business Insider is reporting that a communications director at another bank in London was found dead last week…
Last week, a U.K.-based communications director at Swiss Re AG died last week. The cause of death has not been made public.
Perhaps it is just a coincidence that these deaths have all come so close to one another. After all, people die all the time.
And London is rather dreary this time of the year. It is easy for people to get depressed if they are not accustomed to endless gloomy weather.
If the stock market was already crashing, it would be easy to blame the suicides on that. The world certainly remembers what happened during the crash of 1929…
Historically, bankers have been stereotyped as the most likely to commit suicide. This has a lot to do with the famous 1929 stock market crash, which resulted in 1,616 banks failing and more than 20,000 businesses going bankrupt. The number of bankers committing suicide directly after the crash is thought to have been only around 20, with another 100 people connected to the financial industry dying at their own hand within the year.
But the market isn’t crashing just yet. We definitely appear to be at a “turning point“, but things are still at least somewhat stable.
So why are bankers killing themselves?
That is a good question.
As I mentioned above, there have also been quite a few other strange things that have happened lately that seem to be “out of place”.
For example, Matt Drudge of the Drudge Report posted the following cryptic message on Twitter the other day…
“Have an exit plan…”
What in the world does he mean by that?
Maybe that is just a case of Drudge being Drudge.
Then again, maybe not.
And on Tuesday we learned that a prominent Russian Bank has banned all cash withdrawals until next week…
Bloomberg reports that ‘My Bank’ – one of Russia’s top 200 lenders by assets – has introduced a complete ban on cash withdrawals until next week. While the Ruble has been losing ground rapidly recently, we suspect few have been expecting bank runs in Russia.
Yes, we have heard some reports of people having difficulty getting money out of their banks around the world lately, but this news out of Russia really surprised me.
Yet another story that seemed rather odd was a report in the Wall Street Journal earlier this week that stated that Germany’s central bank is advocating “a one-time wealth tax” for European nations that need a bailout…
Germany’s central bank Monday proposed a one-time wealth tax as an option for euro-zone countries facing bankruptcy, reviving a idea that has circled for years in Europe but has so far gained little traction.
Why would they be suggesting such a thing if “economic recovery” was just around the corner?
According to that same article, the IMF has recommended a similar thing…
The International Monetary Fund in October also floated the idea of a one-time “capital levy,” amid a sharp deterioration of public finances in many countries. A 10% tax would bring the debt levels of a sample of 15 euro-zone member countries back to pre-crisis levels of 2007, the IMF said.
So what does all of this mean?
I am not exactly sure, but I have got a bad feeling about this – especially considering the financial chaos that we are witnessing in emerging markets all over the globe right now.
So what do you think? Please feel free to share your thoughts by posting a comment below…
At a time when Wall Street is absolutely swimming in wealth, New York City is experiencing an epidemic of homelessness. According to the New York Times, the last time there was this many homeless children in New York City was during the days of the Great Depression. And the number of homeless children in the United States overall recently set a new all-time record. As I mentioned yesterday, there are now 1.2 million public school kids in America that are homeless, and that number has gone up by about 72 percent since the start of the last recession. As Americans, we like to think of ourselves as “the wealthiest nation on the planet”, and yet the number of young kids that don’t even have a roof over their heads at night just keeps skyrocketing. There truly are “two Americas” today, and unfortunately most Americans that live in “good America” don’t seem to really care too much about the extreme suffering that is going on in “bad America”. In the end, what kind of price will we all pay for neglecting the most vulnerable members of our society?
If you live in “good America”, I very much encourage you to read an excellent piece about homelessness in New York City that was just published in the New York Times. What some young kids have to go through on a nightly basis should break all of our hearts…
She wakes to the sound of breathing. The smaller children lie tangled beside her, their chests rising and falling under winter coats and wool blankets. A few feet away, their mother and father sleep near the mop bucket they use as a toilet. Two other children share a mattress by the rotting wall where the mice live, opposite the baby, whose crib is warmed by a hair dryer perched on a milk crate.
Could you imagine having your own family live like that? The name of the little girl in the story is Dasani, and every night her family sleeps in a city-run homeless shelter that sounds like it is straight out of a horror movie…
Her family lives in the Auburn Family Residence, a decrepit city-run shelter for the homeless. It is a place where mold creeps up walls and roaches swarm, where feces and vomit plug communal toilets, where sexual predators have roamed and small children stand guard for their single mothers outside filthy showers.
It is no place for children. Yet Dasani is among 280 children at the shelter. Beyond its walls, she belongs to a vast and invisible tribe of more than 22,000 homeless children in New York, the highest number since the Great Depression, in the most unequal metropolis in America.
You can read the rest of that excellent article right here. Sadly, there are countless other children just like Dasani that live like this day after day, month after month, year after year.
Shouldn’t we be able to do better than this as a society? After all, the stock market has been hovering near record highs lately, and Wall Street is absolutely drenched with wealth for the moment.
With so much wealth floating around, why are New York City subways being “overrun with homeless” right now?
Something has gone horribly wrong.
I think that a recent editorial by David Simon, the creator of the Wire, summarized things pretty well. We are not “one America” anymore, and most of the people that live in “good America” don’t really care much about those living in “bad America”…
America is a country that is now utterly divided when it comes to its society, its economy, its politics. There are definitely two Americas. I live in one, on one block in Baltimore that is part of the viable America, the America that is connected to its own economy, where there is a plausible future for the people born into it. About 20 blocks away is another America entirely. It’s astonishing how little we have to do with each other, and yet we are living in such proximity.
There’s no barbed wire around West Baltimore or around East Baltimore, around Pimlico, the areas in my city that have been utterly divorced from the American experience that I know. But there might as well be.
Once upon a time, things were different in America. Nobody resented businessmen for building strong businesses and making lots of money. And successful businessmen such as Henry Ford hired large numbers of American workers and paid them very well. He felt that his workers should make enough money to buy the cars that they were building. In those days, businessmen were loyal to their workers and workers were loyal to those that employed them.
Unfortunately, those days are long gone. Today, in business schools all over America students are taught that the sole purpose of a corporation is to make as much money as possible for the stockholders. Not that there is anything wrong with making money. But at this point we have elevated greed above all other economic goals. Taking care of one another isn’t even a consideration anymore.
In the old days, big businesses actually needed our labor. But that is now no longer the case. Today, corporations are shipping millions of our jobs overseas and they are replacing as many of us with technology as they possibly can. The value of the labor of the working man is declining with each passing day.
As a result, the fortunes of big business and American workers are increasingly diverging. For example, the disconnect between employment levels and stock prices has never been greater in this country. If you doubt this, just check out this chart.
And instead of fixing things, Barack Obama is negotiating a secret treaty which will result in millions more American jobs being shipped overseas. The following is a brief excerpt about this secret treaty from an Australian news source…
The government has refused the Senate access to the secret text of the trade deal it is negotiating in Singapore, saying it will only be made public after it has been signed.
As the final round of ministerial talks on the Trans-Pacific Partnership resumed on Sunday, Nobel prize-winning economist Joseph Stiglitz wrote to each of the 12 participating nations warning that the deal and the secrecy surrounding it presented ”grave risks”.
So why aren’t we hearing much about this secret treaty from U.S. news sources?
If this is going to affect millions of American jobs, shouldn’t the mainstream media be making a big deal out of this?
And even if we weren’t losing millions of jobs to the other side of the planet, we would still be losing millions of jobs to advancements in technology. In fact, a CNBC article that was posted earlier this week seems to look forward to the day when nobody will have to worry about the low pay that fast food workers get anymore because they will all be replaced by droids…
Maybe so, but as fast food workers protest low wages and the president of the United States equates hard work with the right to decent pay, the rise of technology once again proves to be no stunt, or laughing matter. McDonald’s, where food production is already about as mechanized as food science allows, stopped updating the famous number “served” figure at its restaurants back in 1994—just short of 100 billion—but how long will it be before trillions are served their burgers and fries by a drone, after being cooked by a droid? Those machines work for cheap, and the best thing is, they have no concept of hard work, or dignity, or the foresight to consider whether or not the “cool” things they can do ultimately contribute, or detract, from a strong, consumer-dependent economy.
So what is the solution to all of this?
Where will the millions of desperately needed jobs for “bad America” come from?
Well, it appears that good ideas are in short supply these days. In fact, some of the ideas being promoted by our “leaders” are absolutely insane. For example, one prominent entrepreneur recently suggested that the solution to our employment crisis is for Congress to pass an immigration bill which would bring in 30 million more low-skilled workers over the next ten years…
Middle class Americans face a tough future because robots and machinery are eliminating their jobs, according to Steve Case, an entrepreneur who earned roughly $1 billion by creating the first successful internet firm, America Online.
But Congress could help the situation by passing an immigration bill that would import some foreign entrepreneurs and almost 30 million low-skilled workers over the next decade, Case told an audience of D.C. lobbyists and lawyers gathered on Tuesday by the business-backed Bipartisan Policy Center.
Exactly how would this improve the employment situation in this country?
I still cannot figure that one out.
But there are people out there that actually believe this stuff.
Meanwhile, many parts of Europe are suffering through similar things.
The unemployment rate in the eurozone recently hit a new all-time high, and the number of people living in poverty in Europe just continues to grow…
Over 124 million people in the European Union – or almost a quarter of its entire population – live under the threat of poverty or social exclusion, a report by EU’s statistical office has revealed.
Last year, 124.5 million people, or 24.8 percent of Europe’s population were at risk of poverty or social exclusion, compared to 24.3 percent in 2011 and 23.7 percent in 2008, the Eurostat said in a document published earlier in the week.
So what is going to fix this?
Where are the good jobs for workers in North America and Europe going to come from in the years ahead?
If you have a potential solution, please feel free to share it below…
The too big to fail banks have a larger share of the U.S. banking industry than they have ever had before. So if having banks that were too big to fail was a “problem” back in 2008, what is it today? As you will read about below, the total number of banks in the United States has fallen to a brand new all-time record low and that means that the health of the too big to fail banks is now more critical to our economy than ever. In 1985, there were more than 18,000 banks in the United States. Today, there are only 6,891 left, and that number continues to drop every single year. That means that more than 10,000 U.S. banks have gone out of existence since 1985. Meanwhile, the too big to fail banks just keep on getting even bigger. In fact, the six largest banks in the United States (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) have collectively gotten 37 percent larger over the past five years. If even one of those banks collapses, it would be absolutely crippling to the U.S. economy. If several of them were to collapse at the same time, it could potentially plunge us into an economic depression unlike anything that this nation has ever seen before.
Incredibly, there were actually more banks in existence back during the days of the Great Depression than there is today. According to the Wall Street Journal, the federal government has been keeping track of the number of banks since 1934 and this year is the very first time that the number has fallen below 7,000…
The number of federally insured institutions nationwide shrank to 6,891 in the third quarter after this summer falling below 7,000 for the first time since federal regulators began keeping track in 1934, according to the Federal Deposit Insurance Corp.
And the number of active bank branches all across America is falling too. In fact, according to the FDIC the total number of bank branches in the United States fell by 3.2 percent between the end of 2009 and June 30th of this year.
Unfortunately, the closing of bank branches appears to be accelerating. The number of bank branches in the U.S. declined by 390 during the third quarter of 2013 alone, and it is being projected that the number of bank branches in the U.S. could fall by as much as 40 percent over the next decade.
Can you guess where most of the bank branches are being closed?
If you guessed “poor neighborhoods” you would be correct.
According to Bloomberg, an astounding 93 percent of all bank branch closings since late 2008 have been in neighborhoods where incomes are below the national median household income…
Banks have shut 1,826 branches since late 2008, and 93 percent of closings were in postal codes where the household income is below the national median, according to census and federal banking data compiled by Bloomberg.
It turns out that opening up checking accounts and running ATM machines for poor people just isn’t that profitable. The executives at these big banks are very open about the fact that they “love affluent customers“, and there is never a shortage of bank branches in wealthy neighborhoods. But in many poor neighborhoods it is a very different story…
About 10 million U.S. households lack bank accounts, according to a study released in September by the Federal Deposit Insurance Corp. An additional 24 million are “underbanked,” using check-cashing services and other storefront businesses for financial transactions. The Bronx in New York City is the nation’s second most underbanked large county—behind Hidalgo County in Texas—with 48 percent of households either not having an account or relying on alternative financial providers, according to a report by the Corporation for Enterprise Development, an advocacy organization for lower-income Americans.
And if you are waiting for a whole bunch of new banks to start up to serve these poor neighborhoods, you can just forget about it. Because of a whole host of new rules and regulations that have been put on the backs of small banks over the past several years, it has become nearly impossible to start up a new bank in the United States. In fact, only one new bank has been started in the United States in the last three years.
So the number of banks is going to continue to decline. 1,400 smaller banks have quietly disappeared from the U.S. banking industry over the past five years alone. We are witnessing a consolidation of the banking industry in America that is absolutely unprecedented.
Just consider the following statistics. These numbers come from a recent CNN article…
-The assets of the six largest banks in the United States have grown by 37 percent over the past five years.
-The U.S. banking system has 14.4 trillion dollars in total assets. The six largest banks now account for 67 percent of those assets and all of the other banks account for only 33 percent of those assets.
-Approximately 1,400 smaller banks have disappeared over the past five years.
-JPMorgan Chase is roughly the size of the entire British economy.
-The four largest banks have more than a million employees combined.
-The five largest banks account for 42 percent of all loans in the United States.
-Bank of America accounts for about a third of all business loans all by itself.
-Wells Fargo accounts for about one quarter of all mortgage loans all by itself.
-About 12 percent of all cash in the United States is held in the vaults of JPMorgan Chase.
As you can see, without those banks we do not have a financial system.
Our entire economy is based on debt, and if those banks were to disappear the flow of credit would dry up almost completely. Without those banks, we would rapidly enter an economic depression unlike anything that the United States has seen before.
It is kind of like a patient that has such an advanced case of cancer that if you try to kill the cancer you will inevitably also kill the patient. That is essentially what our relationship with these big banks is like at this point.
Unfortunately, since the last financial crisis the too big to fail banks have become even more reckless. Right now, four of the too big to fail banks each have total exposure to derivatives that is well in excess of 40 TRILLION dollars.
Keep in mind that U.S. GDP for the entire year of 2012 was just 15.7 trillion dollars and the U.S. national debt is just 17 trillion dollars.
So when you are talking about four banks that each have more than 40 trillion dollars of exposure to derivatives you are talking about an amount of money that is almost incomprehensible.
Posted below are the figures for the four banks that I am talking about. I have written about this in the past, but in this article I have included the very latest updated numbers from the U.S. government. I think that you will agree that these numbers are absolutely staggering…
Total Assets: $1,947,794,000,000 (nearly 1.95 trillion dollars)
Total Exposure To Derivatives: $71,289,673,000,000 (more than 71 trillion dollars)
Total Assets: $1,319,359,000,000 (a bit more than 1.3 trillion dollars)
Total Exposure To Derivatives: $60,398,289,000,000 (more than 60 trillion dollars)
Bank Of America
Total Assets: $1,429,737,000,000 (a bit more than 1.4 trillion dollars)
Total Exposure To Derivatives: $42,670,269,000,000 (more than 42 trillion dollars)
Total Assets: $113,064,000,000 (just a shade over 113 billion dollars – yes, you read that correctly)
Total Exposure To Derivatives: $43,135,021,000,000 (more than 43 trillion dollars)
Please don’t just gloss over those huge numbers.
Let them sink in for a moment.
Goldman Sachs has total assets worth approximately 113 billion dollars (billion with a little “b”), but they have more than 43 TRILLON dollars of total exposure to derivatives.
That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 381 times greater than their total assets.
Most Americans do not understand that Wall Street has been transformed into the largest casino in the history of the world. The big banks are being incredibly reckless with our money, and if they fail it will bring down the entire economy.
The biggest chunk of these derivatives contracts that Wall Street banks are gambling on is made up of interest rate derivatives. According to the Bank for International Settlements, the global financial system has a total of 441 TRILLION dollars worth of exposure to interest rate derivatives.
When that Ponzi scheme finally comes crumbling down, there won’t be enough money on the entire planet to fix it.
We had our warning back in 2008.
The too big to fail banks were in the headlines every single day and our politicians promised to fix the problem.
But instead of fixing it, the too big to fail banks are now 37 percent larger and our economy is more dependent on them than ever before.
And in their endless greed for even larger paychecks, they have become insanely reckless with all of our money.
Mark my words – there is going to be a derivatives crisis.
When it happens, we are going to see some of these too big to fail banks actually fail.
At that point, there will be absolutely no hope for the U.S. economy.
We willingly allowed the too big to fail banks to become the core of our economic system, and now we are all going to pay the price.