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26 Incredible Facts About The Economy That Every American Should Know For The Trump-Clinton Debate

donald-trump-hillary-clinton-debate-photo-by-vectoropenstockAre you ready for the most anticipated presidential debate in decades?  It is being projected that Monday’s debate between Donald Trump and Hillary Clinton could potentially break the all-time record of 80 million viewers that watched Ronald Reagan and Jimmy Carter debate back in 1980.  Many Americans probably hope to see some personal fireworks between the two nominees, but the two candidates have both expressed a desire to focus on substantive issues.  There will likely be quite a few questions about the economy, and without a doubt this is an area where Trump and Clinton have some very sharp differences.  The mainstream media would have us believe that the U.S. economy is in pretty good shape, and if that was true that would seem to favor Clinton.  But is it actually true?  The following are 26 incredible facts about the economy that every American should know for the Trump-Clinton debate…

#1 When Barack Obama entered the White House, the U.S. government was 10.6 trillion dollars in debt.  Today, the U.S. government is 19.5 trillion dollars in debt, and Obama still has several months to go until the end of his second term.  That means that an average of more than 1.1 trillion dollars a year will be added to the national debt during his presidency.  We are stealing a tremendous amount of consumption from the future to make the economy look much, much better than it otherwise would be, and we are systematically destroying the future in the process.

#2 As Obama prepares to leave office, the rate at which we are adding to the national debt is actually increasing.  During the fiscal year that is just ending, the U.S. government has added another 1.36 trillion dollars to the national debt.

#3 It isn’t just the federal government that is on a massive debt binge.  Total U.S. corporate debt has nearly doubled since the end of 2007.

#4 Default rates on U.S. corporate debt are the highest that they have been since the last financial crisis.

#5 Corporate profits have fallen for five quarters in a row, and it is being projected that it will be six in a row once the final numbers for the third quarter come in.

#6 During the month of August, commercial bankruptcy filings were up 29 percent compared to the same period a year ago.

#7 The rate of new business formation in the United States dropped dramatically during the last recession and has hovered at that new lower level ever since.

#8 The Wall Street Journal says that this is the weakest “economic recovery” since 1949.

#9 Barack Obama is on track to be the only president in all of U.S. history to never have a single year when the U.S. economy grew by at least 3 percent.

#10 In August, the Cass Freight Index dipped to the lowest level that we have seen for that month since 2010.  What this means is that the total amount of stuff being shipped around the country by air, by rail and by truck is really dropping, and this is a clear sign that real economic activity is slowing down in a major way.

#11 Capital expenditure growth has turned negative, and history has shown that this is almost always followed by a new recession.

#12 The percentage of Americans with a full-time job has been sitting at about 48 percent since 2010.  You have to go back to 1983 to find a time when full-time employment in this country was so low.

#13 The labor force participation rate peaked back in 1997 and has been steadily falling ever since.

#14 The “inactivity rate” for men in their prime working years is actually higher today than it was during the last recession.

#15 The United States has lost more than five million manufacturing jobs since the year 2000 even though our population has become much larger over that time frame.

#16 If you can believe it, the total number of government employees now outnumbers the total number of manufacturing employees in the United States by almost 10 million.

#17 One study found that median incomes have fallen in more than 80 percent of the major metropolitan areas in this country since the year 2000.

#18 According to the Social Security Administration, 51 percent of all American workers make less than $30,000 a year.

#19 The rate of homeownership in the U.S. has fallen every single year while Barack Obama has been in the White House.

#20 Approximately one out of every five young adults are currently living with their parents.

#21 The auto loan debt bubble recently surpassed the one trillion dollar mark for the first time ever.

#22 Auto loan delinquencies are at the highest level that we have seen since the last recession.

#23 In 1971, 61 percent of all Americans were considered to be “middle class”, but now middle class Americans have actually become a minority in this nation.

#24 One recent survey discovered that 62 percent of all Americans have less than $1,000 in savings.

#25 According to the Federal Reserve, 47 percent of all Americans could not even pay an unexpected $400 emergency room bill without borrowing the money from somewhere or selling something.

#26 The number of New Yorkers sleeping in homeless shelters just set a brand new record high, and the number of families permanently living in homeless shelters is up a whopping 60 percent over the past five years.

Despite all of the facts that you just read, the truth is that there is one particular group of people that have been doing quite well during the Obama years.  I really like how Charles Hugh Smith made this point in one of his recent articles

The top 5% of households that dominate government, Corporate America, finance, the Deep State and the media have been doing extraordinarily well during the past eight years of stock market bubble (oops, I mean boom) and “recovery,” and so they report that the economy is doing splendidly because they’ve done splendidly.

By recklessly creating money out of thin air and pumping it into the financial markets, the Federal Reserve has greatly enriched the elite, but they have also dramatically increased the gap between the very wealthy and the rest of us.  Since he has been in the White House during this time, Barack Obama has gotten the credit for this temporary stock market bubble, and most of the elite love Obama anyway.

But in the process the stage has been set for the greatest economic and financial implosion in U.S. history, and the pain that is coming is going to affect every man, woman and child in this country.

During the debate, Trump and Clinton will talk a lot about tinkering with tax rates and regulations, but those measures are essentially going to be meaningless when compared to the massive economic tsunami that is coming.  The next president is going to inherit the biggest economic problems that this nation has ever faced, and it is going to take a miracle of Biblical proportions to turn the U.S. economy in the right direction.

The One Trillion Dollar Consumer Auto Loan Bubble Is Beginning To Burst

Soap Bubble - Public DomainDo you remember the subprime mortgage meltdown from the last financial crisis?  Well, this time around we are facing a subprime auto loan meltdown.  In recent years, auto lenders have become more and more aggressive, and they have been increasingly willing to lend money to people that should not be borrowing money to buy a new vehicle under any circumstances.  Just like with subprime mortgages, this strategy seemed to pay off at first, but now economic reality is beginning to be felt in a major way.  Delinquency rates are up by double digit percentages, and major auto lenders are bracing for hundreds of millions of dollars of losses.  We are a nation that is absolutely drowning in debt, and we are most definitely going to reap what we have sown.

The size of this market is larger than you may imagine.  Earlier this year, the auto loan bubble surpassed the one trillion dollar mark for the first time ever

Americans are borrowing more than ever for new and used vehicles, and 30- and 60-day delinquency rates rose in the second quarter, according to the automotive arm of one of the nation’s largest credit bureaus.

The total balance of all outstanding auto loans reached $1.027 trillion between April 1 and June 30, the second consecutive quarter that it surpassed the $1-trillion mark, reports Experian Automotive.

The average size of an auto loan is also at a record high.  At $29,880, it is now just a shade under $30,000.

In order to try to help people afford the payments, auto lenders are now stretching loans out for six or even seven years.  At this point it is almost like getting a mortgage.

But even with those stretched out loans, the average monthly auto loan payment is now up to a record 499 dollars.

That is the average loan size.  To me, this is absolutely infuriating, because only a very small percentage of wealthy Americans are able to afford a $499 monthly payment on a single vehicle.

Many middle class American families are only bringing in three or four thousand dollars a month (before taxes).  How in the world do they think that they can afford a five hundred dollar monthly auto loan payment on just one vehicle?

Just like with subprime mortgages, people are being taken advantage of severely, and the end result is going to be catastrophic for the U.S. financial system.

Already, auto loan delinquencies are rising to very frightening levels.  In July, 60 day subprime loan delinquencies were up 13 percent on a month-over-month basis and were up 17 percent compared to the same month last year.

Prime delinquencies were up 12 percent on a month-over-month basis and were up 21 percent compared to the same month last year.

We have a huge crisis on our hands, and major auto lenders are setting aside massive amounts of cash in order to try to cover these losses.  The following comes from USA Today

In a quarterly filing with the Securities and Exchange Commission, Ford reported in the first half of this year it allowed $449 million for credit losses, a 34% increase from the first half of 2015.

General Motors reported in a similar filing that it set aside $864 million for credit losses in that same period of 2016, up 14% from a year earlier.

Meanwhile, other big corporations are also alarmed about the economic health of average U.S. consumers.  Just check out what Dollar General CEO Todd Vasos had to say about this just the other day

I know that when we look at globally the overall U.S. population, it seems like things are getting better. But when you really start breaking it down and you look at that core consumer that we serve on the lower economic scale that’s out there, that demographic, things have not gotten any better for her, and arguably, they’re worse. And they’re worse, because rents are accelerating, healthcare is accelerating on her at a very, very rapid clip.

The stock market may seem to be saying that everything is fine (for the moment), but the hard economic numbers are telling a completely different story.  What we are experiencing right now looks so similar to 2008, and this includes big institutions just dropping dead seemingly out of the blue.  On Tuesday, we learned that ITT Technical Institute is immediately shutting down and permanently closing all locations.  This is from a Los Angeles Times report

The company that operates the for-profit chain, one of the country’s largest, announced that it was permanently closing all its campuses nationwide. It blamed the shutdown on the recent move by the U.S. Education Department to ban ITT from enrolling new students who use federal financial aid.

“Two quarters ago there were rumors about the school having problems, but they told us that anyone who was already a student would be allowed to finish,” said Wiggins, who works as the assistant manager for a family-run auto parts business and went to ITT to open new opportunities.

“Am I angry?” he said. “I’m like angry times 10 million.”

As a result of this shutdown, 35,000 students are suddenly left out in the cold and approximately 8,000 employees have lost their jobs.

This is what happens during a major economic downturn.  Large institutions that may have been struggling under the surface for quite a while suddenly give up and drop a bomb on those that were depending on them.  In the months ahead, there will be a lot more examples of this.

Already, some of the biggest corporate names in America have been laying off thousands of workers in 2016.  Mass layoffs are usually an early warning sign that big trouble is ahead, so keep a close eye on those companies.

The pace of the economic decline has been a bit slower than many (including myself) originally anticipated, but without a doubt it has continued.

And it is undeniable that the stage is set for a crisis that will absolutely dwarf 2008.  Our national debt has nearly doubled since the beginning of the last crisis, corporate debt has doubled, student loan debt has crossed the trillion dollar mark, auto loan debt has crossed the trillion dollar mark, and total household debt has crossed the 12 trillion dollar mark.

We are living in the greatest debt bubble in world history, and there are signs that this giant bubble is now starting to burst.  And when it does, the pain is going to be greater than most people would dare to imagine.

Dozens Shot Over Memorial Day Weekend As The Collapse Of Chicago Accelerates

Gang Violence - Public DomainChaos and violence threaten to spiral out of control in America’s third largest city, and nobody seems to have any idea how to solve the problem.  After decades of control by the radical left, many parts of the “Windy City” have become rotting, decaying, gang-infested hellholes.  Just like Detroit, the city of Chicago is rapidly becoming a joke to the rest of the world, but a horribly corrupt political culture likely stands in the way of any type of major reform any time soon.  And just like much of the rest of the nation, a spirit of violence and civil unrest is rising in Chicago.  So far this year, the number of shootings in Chicago is up 50 percent compared to the same time period last year, and that was before we even got to Memorial Day weekend.  As of Sunday morning, at least 40 people had already been shot, and authorities were bracing for even more violence as the holiday weekend stretched on…

A string of nearly two dozen shootings on the West Side has pushed the number of people shot during the Memorial Day weekend to at least 40, with two more days to go.

As of early Sunday morning, the toll stood at four dead and 36 wounded across the city, including a 15-year-girl shot to death as she rode in a Jeep on Lake Shore Drive near Fullerton Avenue, police said.

The cries to fix what is wrong with Chicago are becoming increasingly desperate, but at this point the city is drowning in debt and is pretty much flat broke.

So the options for doing anything about this growing crisis are quite limited.

But that isn’t stopping prominent city leaders from speaking out.  According to the New York Times, Rev. Corey Brooks believes that “we could be looking at a blood bath” this summer if nothing changes…

“If something doesn’t change, if we don’t get jobs for these kids, if we don’t change the economic situation, I’m worried that we could be looking at a blood bath,” said the Rev. Corey Brooks, a pastor on the city’s South Side, a mostly African-American area where some of the shootings have been concentrated. “If something doesn’t happen, I fear that we’re potentially looking at one of the worst summers we’ve ever had.”

As of Friday morning, homicides in Chicago were up 52 percent in 2016, compared with the same period a year ago, and shootings had increased by 50 percent, though the pace of violence had slowed in recent weeks, the police said.

I believe that Rev. Brooks is correct, but he isn’t identifying the core of the problem.

Thanks in large part to unchecked illegal immigration, gang membership has been surging in Chicago.  Back in 2012, the Chicago Crime Commission estimated that there were 150,000 gang members living in the city, but of course by now that number is likely far higher.

No city in the United States has a higher population of gang members than Chicago does, and hundreds of factions are constantly battling for turf.  The police in Chicago insist that they have the situation under control, but everyone can see that they do not.

And how could they?  There are only 13,318 law enforcement officers of all types in the city of Chicago.  They are outnumbered by the gangs by much more than a 10 to 1 margin.  There is no way in the world that they are ever going to be able to stop the gang violence.  All they can do is hope to contain it.

Sadly, they are fighting a losing battle, because with each passing month thousands more gang members cross our southern border illegally and head directly for our major cities where they are warmly received by their gang brothers.

Perhaps this helps to explain why 3,000 millionaires left the city of Chicago last year.

Do you want to know somewhere else that has been controlled by the radical left for decades and that is now seeing chaos and violence spin out of control?

In Venezuela, we get to see what it looks like when an entire country starts to shut down.  The following comes from the New York Times

The courts? Closed most days. The bureau to start a business? Same thing. The public defender’s office? That’s been converted into a food bank for government employees.

Step by step, Venezuela has been shutting down.

This country has long been accustomed to painful shortages, even of basic foods. But Venezuela keeps drifting further into uncharted territory.

At this point, more than 80 percent of all basic consumer products are in short supply, and some people have become so desperate that they are actually hunting cats and dogs for food.  My wife and I had a lot more to say about the rapidly deteriorating situation down in Venezuela during a recent episode of our new television show.  It is so important to watch what is going on down there right now, because eventually the same things will be happening here in America too.

When society breaks down, people become very desperate, and crime spirals out of control.  The mafia and the gangs are having a field day at the moment, and the police are so overwhelmed that they can’t do much to stop them.

And if you need medical treatment down in Venezuela right now, you might as well forget it

The Luis Razetti Hospital in the portal city of Barcelona looks like a war zone.

Patients can be seen balancing themselves on half-broken beds with days-old blood on their bodies.

They’re the lucky ones; most are curled up on the floor, blood streaming, limbs blackening.

Children lie among dirty cardboard boxes in the hallways without food, water or medication.

Without electricity or functioning machines, medics have had to create their own solutions. Two men who had surgery on their legs have their limbs elevated by makeshift slings made out of water bottles.

Most Americans would scoff at the suggestion that we could ever see scenes like that in the United States, but just a few years ago most Venezuelans would have probably said the exact same thing.

For so long, watchmen all over America have been endlessly warning people to get prepared.

But at some point, time runs out.

In fact, down in Venezuela time has already run out.  Store shelves all over the country are empty, there are chronic shortages of basic supplies, some people are hunting dogs and cats for food, and there has been an almost total breakdown of public services.

I wish that I could say that these kinds of conditions are only going to be limited to Venezuela.  But I cannot say that.  Great suffering is going to eventually spread all over the world, and that is going to include our own nation.

I hope that you are using this short period of relative stability wisely, because it will be gone way too soon.

Business Debt Delinquencies Are Now Higher Than When Lehman Brothers Collapsed In 2008

Insolvent - Public DomainYou are about to see more very clear evidence that a new economic crisis has already begun.  During economic recoveries, business debt delinquencies generally fall, and during times of economic recession business debt delinquencies generally rise.  In fact, you will see below that business debt delinquencies shot up dramatically just prior to the last two recessions, and the exact same thing is happening again right now.  In 2008, business debt delinquencies increased at a very frightening pace just before Lehman Brothers collapsed, and this was a very clear sign that big trouble was ahead.  Unfortunately for us, in 2016 business debt delinquencies have already shot up above the level they were sitting at just before the collapse of Lehman Brothers, and every time debt delinquencies have ever gotten this high the U.S. economy has always fallen into recession.

In article after article, I have shown that key indicators for the U.S. economy started falling in either late 2014 or at some point during 2015.  Well, business debt delinquencies are another example of this phenomenon.  According to Wolf Richter, business debt delinquencies have shot up an astounding 137 percent since the fourth quarter of 2014…

Delinquencies of commercial and industrial loans at all banks, after hitting a low point in Q4 2014 of $11.7 billion, have begun to balloon (they’re delinquent when they’re 30 days or more past due). Initially, this was due to the oil & gas fiasco, but increasingly it’s due to trouble in many other sectors, including retail.

Between Q4 2014 and Q1 2016, delinquencies spiked 137% to $27.8 billion.

And we never see this kind of rise unless the U.S. economy is heading into a recession.  Here is more from Wolf Richter

Note how, in this chart by the Board of Governors of the Fed, delinquencies of C&I loans start rising before recessions (shaded areas). I added the red marks to point out where we stand in relationship to the Lehman moment:

Delinquencies-commercial-industrial-loans-2016-q1

Business loan delinquencies are a leading indicator of big economic trouble.

To me, this couldn’t be any clearer.

Just like the U.S. government and just like U.S. consumers, U.S. businesses are absolutely drowning in debt.

In fact, a report that was just released found that debt at U.S. companies has been growing at a pace that is 50 times faster than the rate that cash has been growing.

Just imagine what it would mean for your family if your debt was growing 50 times faster than your bank account.  Needless to say, this is an extremely troubling development

Well, American companies may just have a mountain’s worth of problems, according to a new report from Andrew Chang and David Tesher of S&P Global Ratings.

“At the same time, the imbalance between cash and debt outstanding we reported on last year has gotten even worse: Debt outstanding increased 50x that of cash in 2015,” wrote Chang and Tesher.

“Total debt rose by roughly $850 billion to $6.6 trillion last year, dwarfing the 1% cash growth ($17 billion).”

And the really bad news is that banks all across the country are starting to tighten credit to businesses.

In other words, they are beginning to become much more reluctant to loan money to businesses because debts are going bad at such an alarming rate.

When the flow of credit to the business community starts to slow down, it is inevitable that the overall economy slows down as well.  It is just basic economics.  So the deterioration of the U.S. economy that we have witnessed so far is just the beginning of a process that is going to take quite a while to play out.

And let us not forget that most of the rest of the world is already is much worse shape than we are.  Most global financial markets are officially in bear market territory right now, and some nations are already experiencing full-blown economic depression.

Now that the early chapters of the “next crisis” are here, most American families find themselves ill-equipped to deal with another major downturn.  In fact, USA Today is reporting that approximately two-thirds of the country is currently living paycheck to paycheck…

Two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency, according to an exclusive poll, a signal that despite years after the Great Recession, Americans’ finances remain precarious as ever.

These difficulties span all incomes, according to the poll conducted by The Associated Press-NORC Center for Public Affairs Research. Three-quarters of people in households making less than $50,000 a year and two-thirds of those making between $50,000 and $100,000 would have difficulty coming up with $1,000 to cover an unexpected bill.

What are these people going to do when they lose their jobs or their businesses go under?

If you have any doubt that the U.S. economy is already in recession mode, just look at this chart over and over.

For months, I have been warning that the same patterns that immediately preceded previous recessions were happening once again, and this rise in debt delinquencies is another striking example of this phenomenon.

This stuff isn’t complicated.  Anyone that is willing to be honest with themselves should be able to see it.  As a society, we have been making very, very bad decisions for a very, very long period of time, and what we are watching unfold right now are the inevitable consequences of those decisions.

*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*

The 90,000 Square Foot, 100 Million Dollar Home That Is A Metaphor For America

Versailles House - Public DomainJust like “America’s time-share king”, America just keeps on making the same mistakes over and over again.  Prior to the financial collapse of 2008, time-share mogul David Siegel and his wife Jackie began construction on their “dream home” near Disney World in Orlando, Florida.  This dream home would be approximately 90,000 square feet in size, would be worth $100 million when completed, and would be named “Versailles” after the French palace that inspired it.  In fact, you may remember David and Jackie from an excellent 2012 documentary entitled “The Queen of Versailles”.  That film documented how the Siegels almost lost everything after the financial collapse of 2008 devastated the U.S. economy because they were overleveraged and drowning in debt.  But since that time, David’s time-share company has bounced back, and the Siegels now plan to finally finish construction on their dream home and make it bigger and better than ever before.  But before you pass judgment on the Siegels, it is important to keep in mind that we are behaving exactly the same way as a nation.  Instead of addressing our fundamental problems after the last financial crisis, we have just continued to make the exact same mistakes that we made before.  And ultimately, things are going to end very, very badly for us.

As Americans, we like to think that we are somehow entitled to the biggest and best of everything.  We have been trained to believe that we are the wealthiest and most prosperous nation on the entire planet and that it will always be that way.  This generation was handed the keys to the greatest economic machine in world history, but instead of treating it with great care, we have wrecked it.  Our economic infrastructure is being systematically dismantled, Wall Street has been transformed into the biggest casino in the history of the planet, we have piled up a mountain of debt unlike anything the world has ever seen, and the reckless Federal Reserve is turning our currency into Monopoly money.  All of our decisions have been designed to make things better for ourselves in the short-term without any consideration about what we were doing to the future of this country.

That is why “Versailles” is such a perfect metaphor for America.  The Siegels always had to have the biggest and the best of everything, and they almost lost it all when the financial markets crashed

David Siegel (“They call me the time-share king”) and his wife, Jackie Siegel — titular star of the 2012 documentary “The Queen of Versailles” — began building their dream home near Disney World about a decade ago. Soon it became evident that the sheer size of the mansion was almost unprecedented in America; it’s thought that only Biltmore House and Oheka Castle are bigger and still standing, and both of those are now run as tourist attractions, not true single-family homes.

But when the bottom fell out of the financial markets in 2008, their fortunes were upended too. By the time the documentary ended, their dream home had gone into default and they’d put it on the market. The listing asked for $100 million finished — “based on the royal palace of Louix XIV of the 17th century or to the buyer’s specifications — or $75 million “as is with all exterior finishings in crates in the 20-car garage on site.”

But just like the U.S. economy, the Siegels have seemingly recovered, at least for the moment.

Thanks to a rebound in the time-share business, the Siegels plan to finally complete their dream home and make it bigger and better than ever

The unfinished home sits on 10 acres of lakefront property and when completed will feature 11 kitchens, 30 bathrooms, 20-car garage, two-lane bowling alley, indoor rollerskating rink, three indoor pools, two outdoor pools, video arcade, ballroom, two-story movie theater modeled off the Paris Opera House, fitness center with 10,000-square-foot spa, yoga studios, 20,000-bottle wine cellar and an exotic fish aquarium.

Two tennis courts, a baseball diamond and formal garden will be included on the grounds.

The couple admitted that some of their plans for the house – such as children’s playrooms – will have to be modified now that their kids are older.

However, they are determined to see the project through.

‘I’m not at the ending to my story yet, but so far, it’s a happy ending, and I’m really looking forward to starting the next chapter of my life and moving into my palace, finishing it and throwing lots of parties – anxious for the world to see it,’ Mrs Siegel said.

It is easy to point fingers at the Siegels, but the truth is that they are just behaving like we have been behaving as an entire nation.

When our financial bubbles burst the last time, our leaders did not really do anything to address our fundamental economic problems.  Instead, they were bound and determined to reinflate those bubbles and make them even larger than before.

Now we stand at the precipice of the greatest financial crisis in our history, and we only have ourselves to blame.

Just consider what has happened to our national debt.  Just prior to the last recession, it was sitting at about 9 trillion dollars.  Today, it has just crossed the 18 trillion dollar mark…

Total Public Debt

You may not think that you are to blame for this, but most of the people that will read this article voted for politicians that fully supported all of this borrowing and spending.  And yes, that includes most Democrats and most Republicans.

We have stolen trillions of dollars from future generations of Americans in a desperate attempt to prop up our failing standard of living in the present.  What we have done is a horrific crime, and if we lived in a just society a whole lot of people would be going to prison over this.

A similar pattern emerges when we look at the spending habits of ordinary Americans.  This next chart shows one measure of consumer credit in America.  During the last recession, we actually had a brief period of deleveraging (which was good), but now we are back on the exact same trajectory as before…

Consumer Credit 2015

Even though we had a higher standard of living than all previous generations of Americans, that was never good enough for us.  We always had to have more, and we have borrowed and spent ourselves into oblivion.

We have also shown absolutely no respect for our currency.  Having the primary reserve currency of the world has been an incredible advantage for the U.S. economy, but we are squandering that privilege.  Like I said at the top of the article, the Federal Reserve has been treating the U.S. dollar like Monopoly money in recent years in an attempt to prop up the financial system.  Just look at what “quantitative easing” has done to the Fed balance sheet since the last recession…

Fed Balance Sheet

Most of the new money that the Fed has created has been funneled into the financial markets.  This has created some financial bubbles which are absolutely insane.  For example, just look at how the NASDAQ has performed since the last financial crisis…

NASDAQ

These Fed-created bubbles are inevitably going to implode, because they have no relation to economic reality whatsoever.  And when they implode, millions of Americans are going to be financially wiped out.

Just like David and Jackie Siegel, we simply can’t help ourselves.  We just keep on making the same old mistakes.

And in the end, we will all pay a great, great price for our utter foolishness.

The Retail Apocalypse Accelerates: Collapsing Holiday Sales Are A Signal That A Recession Is Coming

Retail Apocalypse - Photo by Justin CozartRetail sales during the four day Thanksgiving weekend were down a whopping 11 percent from last year.  This is a “make or break” time of the year for many retailers, and if things don’t turn around during the coming weeks we could see a tsunami of store closings in January and February.  As you read this article, there is already more than a billion square feet of retail space sitting empty in the United States.  Many have described the ongoing collapse of the retail industry as an “apocalypse”, and this apocalypse appears to be accelerating.  Yes, the shift to online retailers is a significant factor, but as you will see below even online retailers struggled over the holiday weekend.  The sad truth of the matter is that U.S. consumers are tapped out and are drowning in debt at this point, so they simply do not have as much money to spend as they once did.

According to the National Retail Federation, 5.2 percent fewer Americans shopped online or at retail stores over the past weekend.  Those that did shop spent an average of 6.4 percent less money than consumers did last year.

So if less people shopped, and they spent less money on average, that means that total retail sales must have been way down.

And indeed they were.  As the New York Times has reported, total retail sales were down an astounding 11 percent…

Sales, both in stores and online, from Thanksgiving through the weekend were estimated to have dropped 11 percent, to $50.9 billion, from $57.4 billion last year, according to preliminary survey results released Sunday by the National Retail Federation. Sales fell despite many stores’ opening earlier than ever on Thanksgiving Day.

And though many retailers offered the same aggressive discounts online as they did in their stores, the web failed to attract more shoppers or spending over the four-day holiday weekend than it did last year, the group said. The average person who shopped over the weekend spent $159.55 at online retailers, down 10.2 percent from last year.

No wonder there was less violence on Black Friday this year.

Traffic at retailers was way down.

Of course some analysts are trying to put a positive spin on all of this.  For example, the CEO of the National Retail Federation says that this could actually be a sign that the economy is improving

As the WSJ reports, NRF’s CEO Matt Shay attributed the drop to a combination of factors, including the fact that retailers moved promotions earlier this year in attempt to get people out sooner and avoid what happened last year when people didn’t finish their shopping because of bad weather.

Also did we mention the NRF is perpetually cheery and always desperate to put a metric ton of lipstick on a pig? Well, hold on to your hats folks:

He also attributed the declines to better online offerings and an improving economy where “people don’t feel the same psychological need to rush out and get the great deal that weekend, particularly if they expected to be more deals,” he said.

And of course the sprint vs marathon comparisons, such as this one: “The holiday season and the weekend are a marathon not a sprint,” NRF Chief Executive Officer Matthew Shay said on a conference call. Odd how that metaphor is never used when the (seasonally-adjusted) sprint beats the marathoners.

So there you have it: a 11% collapse in retail spending has just been spun as super bullish for the US economy, whereby US consumers aren’t spending because the economy is simply too strong, and the only reason they don’t spend is because they will spend much more later. Or something.

The retail industry is absolutely brutal at this point.  It is flooded with very large competitors that are chasing fewer and fewer disposable dollars.

In order to thrive, retailers need financially healthy consumers.  But over time, U.S. consumers have been getting deeper and deeper into debt.  The chart posted below shows that consumer credit in the United States has doubled since the year 2000…

Consumer Credit 2014

Meanwhile, the long-term trend for real median household income since the year 2000 has been down…

Real Median Household Income 2014

In order for Americans to spend money, they have to make money first.

Unfortunately, the quality of our jobs continues to plummet.

As I have written about previously, 50 percent of all American workers currently make less than $28,031 a year at their jobs.  And here are some more numbers from a report that the Social Security Administration recently released…

-39 percent of American workers made less than $20,000 last year

-52 percent of American workers made less than $30,000 last year

-63 percent of American workers made less than $40,000 last year

-72 percent of American workers made less than $50,000 last year

So in order for a typical American family to bring in $50,000 a year or more both parents usually have to work.

Sometimes they both have to work more than one job.

And with the cost of living constantly rising, family budgets are being squeezed more than ever.  That is why families have less money to spend at retail stores these days.  For even more on the current financial condition of American families, please see my previous article entitled “Are You Better Off This Thanksgiving Than You Were Last Thanksgiving?

It is time for retailers in America to face the fact that economic conditions have fundamentally changed.  U.S. consumers simply are not in as good shape as they used to be.

In addition, online retailers are going to continue to steal sales from traditional retail locations.  This means that more stores are going to close and more retail space is going to be abandoned.

As I mentioned above, more than a billion square feet of retail space is aleady sitting vacant in the United States.  And retail consultant Howard Davidowitz is projecting that up to half of all shopping malls in the U.S. may shut down within the next couple of decades

Within 15 to 20 years, retail consultant Howard Davidowitz expects as many as half of America’s shopping malls to fail. He predicts that only upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive.

In the years ahead, it is going to become normal to see boarded up strip malls and abandoned shopping centers all over the country.

The golden age of retail is over, and now most retailers will have to work incredibly hard to survive the apocalypse that is unfolding right before our eyes.

21 Ways To End The Phrase ‘Americans Are So Broke…’

Coins - Public DomainDid you know that 77 million Americans have unpaid debts that are “in collections” and that Congress is actually thinking about letting post offices offer payday loans?  We live in a country where almost everyone is drowning in debt and where most people are either flat broke or very close to flat broke.  Years ago, “your Mama is so broke” jokes were all the rage, and at the rate we are going they could make a big comeback.  Some of my favorites were “your Mama is so broke she went to McDonald’s and put a milkshake on layaway” and “your Mama is so broke your family ate cereal with a fork to save milk”.  Unfortunately, the facts that I am about to share with you are not funny at all.  In fact, they are quite sobering.  Yes, things are going fairly well for the elitists that live in the good areas of New York City, Washington D.C. and San Francisco right now, but most of the country is deeply struggling as our economic fundamentals continue to crumble.  Please share these numbers with as many people as you can, because we need people to understand that there has not been an “economic recovery” for most of America.  In fact, in many ways things just continue to get even worse.  The following are 21 ways to end the phrase “Americans are so broke”…

1. Americans are so broke that about a third of them have debt collectors on their heels.  One recent study discovered that more than one out of every three adults in the United States has an unpaid debt that is “in collections“.  That is a total of 77 million people.  In other words, the debt collection business in America is absolutely booming.

2. Americans are so broke that Congress is now actually considering allowing post offices to provide payday loans and check cashing services.

3. Americans are so broke that they are keeping their vehicles longer than ever.  The average age of vehicles on America’s roads recently set a new all-time high of 11.4 years.

4. Americans are so broke that car dealers are having to go to extreme lengths to get new customers.  Last year, one out of every four auto loans in the United States was made to someone with subprime credit.

5. Americans are so broke that 52 percent of them cannot even afford the homes that they are living in right now.

6. Americans are so broke that they are falling farther behind on their student loans than ever.  The total amount of student loan debt in the U.S. has now reached a whopping 1.2 trillion dollars, and approximately seven million Americans are in default on their student loans at this point.

7. Young Americans are so broke that half of all college graduates are still relying on their parents financially when they are two years out of school.

8. Young Americans are so broke that only 36 percent of American adults under the age of 35 currently own a home.  That is the lowest level that has ever been recorded.

9. Americans are so broke that many of them can’t even afford to shop at Wal-Mart and dollar stores anymore

Discount stores are slowly dying.

Yesterday, Dollar Tree announced it would buy Family Dollar, a chain that is in the process of closing hundreds of stores and firing workers.

Other discount stores have been struggling as well, writes Heidi Moore at The Guardian. Fashion discounter Loehmann’s filed for bankruptcy, while Wal-Mart’s sales have declined for the past five quarters.

“There’s just not enough money deployed by American families to keep all the discount chains in business,” Moore writes.

10. Americans are so broke that they are running up record levels of debt.  Overall, U.S. households are 11.68 trillion dollars in debt right now.

11. Americans are so broke that the wealth of the “typical American household” has fallen by 36 percent over the past decade.

12. Americans are so broke that one out of every four part-time workers in America is living below the poverty line.

13. Americans are so broke that more than 37 million Americans are now being served by food pantries and soup kitchens.

14. Americans are so broke that there are 49 million Americans that are dealing with food insecurity.

15. Americans are so broke that the number of people on food stamps has increased by about 14 million while Obama has been in the White House.  Ten years ago, the number of women in the U.S. that had jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin.  But now the number of women in the U.S. on food stamps actually exceeds the number of women that have jobs.

16. Americans are so broke that the U.S. government has had to spend an astounding 3.7 trillion dollars on welfare programs over the past five years.

17. Americans are so broke that more than 20 percent of all children in the U.S. are living in poverty.

18. Americans are so broke that we have a record number of kids sleeping in the streets.  In fact, we have more than a million public school children that are homeless at this point.

19. Americans are so broke that 76 percent of all Americans are living paycheck to paycheck.

20. Americans are so broke that 26 percent of Americans have absolutely no emergency savings whatsoever.

21. Americans are so broke that approximately two-thirds of all Americans do not have enough money saved up to cover six months of expenses if an emergency arose.

If things are this bad now, during the so-called “economic recovery”, how bad will things get during the next major economic downturn?

Unfortunately, most Americans have been lulled into a false sense of security.  The financial crisis of 2008 seems like ancient history to most of them now, and most people appear to believe that our leaders have “fixed” whatever was wrong the last time.

Of course that is not the case at all.  In fact, our long-term problems have just continued to grow since then.

The truth is that what we are experiencing right now is about as good as things are going to get for the U.S. economy.  When the next crisis arrives, all of the numbers in the list above are going to rapidly get a lot worse.

So enjoy the rest of this “bubble” while you still can.  It certainly will not last for too much longer.

22 Facts About The Coming Demographic Tsunami That Could Destroy Our Economy All By Itself

TsunamiToday, more than 10,000 Baby Boomers will retire.  This is going to happen day after day, month after month, year after year until 2030.  It is the greatest demographic tsunami in the history of the United States, and we are woefully unprepared for it.  We have made financial promises to the Baby Boomers worth tens of trillions of dollars that we simply are not going to be able to keep.  Even if we didn’t have all of the other massive economic problems that we are currently dealing with, this retirement crisis would be enough to destroy our economy all by itself.  During the first half of this century, the number of senior citizens in the United States is being projected to more than double.  As a nation, we are already drowning in debt.  So where in the world are we going to get the money to take care of all of these elderly people?

The Baby Boomer generation is so massive that it has fundamentally changed America with each stage that it has gone through.  When the Baby Boomers were young, sales of diapers and toys absolutely skyrocketed.  When they became young adults, they pioneered social changes that permanently altered our society.  Much of the time, these changes were for the worse.

According to the New York Post, overall household spending peaks when we reach the age of 46.  And guess what year the peak of the Baby Boom generation reached that age?…

People tend, for instance, to buy houses at about the same age — age 31 or so. Around age 53 is when people tend to buy their luxury cars — after the kids have finished college, before old age sets in. Demographics can even tell us when your household spending on potato chips is likely to peak — when the head of it is about 42.

Ultimately the size of the US economy is simply the total of what we’re all spending. Overall household spending hits a high when we’re about 46. So the peak of the Baby Boom (1961) plus 46 suggests that a high point in the US economy should be about 2007, with a long, slow decline to follow for years to come.

And according to that same article, the Congressional Budget Office is also projecting that an aging population will lead to diminished economic growth in the years ahead…

Lost in the discussion of this week’s Congressional Budget Office report (which said 2.5 million fewer Americans would be working because of Obamacare) was its prediction that aging will be a major drag on growth: “Beyond 2017,” said the report, “CBO expects that economic growth will diminish to a pace that is well below the average seen over the past several decades [due in large part to] slower growth in the labor force because of the aging of the population.”

So we have a problem.  Our population is rapidly aging, and an immense amount of economic resources is going to be required to care for them all.

Unfortunately, this is happening at a time when our economy is steadily declining.

The following are some of the hard numbers about the demographic tsunami which is now beginning to overtake us…

1. Right now, there are somewhere around 40 million senior citizens in the United States.  By 2050 that number is projected to skyrocket to 89 million.

2. According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

3. One poll discovered that 26 percent of all Americans in the 46 to 64-year-old age bracket have no personal savings whatsoever.

4. According to a survey conducted by the Employee Benefit Research Institute, “60 percent of American workers said the total value of their savings and investments is less than $25,000″.

5. 67 percent of all American workers believe that they “are a little or a lot behind schedule on saving for retirement”.

6. A study conducted by Boston College’s Center for Retirement Research found that American workers are $6.6 trillion short of what they need to retire comfortably.

7. Back in 1991, half of all American workers planned to retire before they reached the age of 65.  Today, that number has declined to 23 percent.

8. According to one recent survey, 70 percent of all American workers expect to continue working once they are “retired”.

9. A poll conducted by CESI Debt Solutions found that 56 percent of American retirees still had outstanding debts when they retired.

10. A study by a law professor at the University of Michigan found that Americans that are 55 years of age or older now account for 20 percent of all bankruptcies in the United States.  Back in 2001, they only accounted for 12 percent of all bankruptcies.

11. Today, only 10 percent of private companies in the U.S. provide guaranteed lifelong pensions for their employees.

12. According to Northwestern University Professor John Rauh, the total amount of unfunded pension and healthcare obligations for retirees that state and local governments across the United States have accumulated is 4.4 trillion dollars.

13. Right now, the American people spend approximately 2.8 trillion dollars on health care, and it is being projected that due to our aging population health care spending will rise to an astounding 4.5 trillion dollars in 2019.

14. Incredibly, the United States spends more on health care than China, Japan, Germany, France, the U.K., Italy, Canada, Brazil, Spain and Australia combined.

15. If the U.S. health care system was a country, it would be the 6th largest economy on the entire planet.

16. When Medicare was first established, we were told that it would cost about $12 billion a year by the time 1990 rolled around.  Instead, the federal government ended up spending $110 billion on the program in 1990, and the federal government spent approximately $600 billion on the program in 2013.

17. It is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

18. At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for every single household in the United States.

19. In 1945, there were 42 workers for every retiree receiving Social Security benefits.  Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.

20. Right now, there are approximately 63 million Americans collecting Social Security benefits.  By 2035, that number is projected to soar to an astounding 91 million.

21. Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

22. The U.S. government is facing a total of 222 trillion dollars in unfunded liabilities during the years ahead.  Social Security and Medicare make up the bulk of that.

So where are we going to get the money?

That is a very good question.

The generations following the Baby Boomers are going to have to try to figure out a way to navigate this crisis.  The bright future that they were supposed to have has been destroyed by our foolishness and our reckless accumulation of debt.

But do they actually deserve a “bright future”?  Perhaps they deserve to spend their years slaving away to support previous generations during their golden years.  Young people today tend to be extremely greedy, self-centered and lacking in compassion.  They start blogs with titles such as “Selfies With Homeless People“.  Here is one example from that blog…

Selfies With Homeless People

Of course not all young people are like that.  Some are shining examples of what young Americans should be.

Unfortunately, those that are on the right path are a relatively small minority.

In the end, it is our choices that define us, and ultimately America may get exactly what it deserves.

The Stock Market In Japan Is COLLAPSING

Stock Market Collapse In JapanDid you see what just happened in Japan?  The stock market of the 3rd largest economy on the planet is imploding.  On Tuesday, the Nikkei fell by more than 610 points.  If that sounds like a lot, that is because it is.  The largest one day stock market decline in U.S. history is only 777 points.  So far, the Dow is only down about 1000 points during this “correction”, but the Nikkei is down more than 2,300 points.  The Nikkei has dropped more than 14 percent since the peak of the market, and many analysts believe that this is only just the beginning.  Those that have been waiting for a full-blown stock market collapse may be about to get their wish.  Japan is absolutely drowning in debt, their central bank is printing money like crazy and the Japanese population is aging rapidly.  As far as economic fundamentals go, there is very little good news as far as Japan is concerned.  So will an Asian financial collapse precede the next great financial crisis in the United States?  That is what some have been predicting, and it starting to look increasingly likely.

What happened to the Nikkei early on Tuesday was absolutely breathtaking.  The following is how Bloomberg described the carnage…

At the end of January 2013, Japanese stocks trailed only Portugal for the biggest rally among developed markets. Now the Nikkei 225 Stock Average is leading declines, slumping 8.5 percent last month and today capping a 14 percent drop from its Dec. 30 peak.

Losses snowballed in Tokyo during a global retreat that has erased $2.9 trillion from equity values worldwide this year amid signs of slower growth in China and stimulus cuts by the U.S. Federal Reserve.

As Bloomberg noted, much of the blame for the financial problems that we are seeing all over the planet right now is being placed on the Federal Reserve.

The Fed created this bubble by pumping trillions of fresh dollars into the global financial system, and now they are bursting this bubble by starting to cut off the flow of easy money.

This is something that I warned would happen when the Fed decided to taper, and now RBS is warning of a “market bloodbath” unless the Federal Reserve immediately stops tapering.

Most Americans simply do not realize that our financial markets no longer resemble a free market system.  Instead, they are highly manipulated and distorted by the central banks, and the trillions of dollars of “hot money” that the Fed has poured into the global financial system has infected virtually every financial market on Earth

On Wall Street they call it “hot money”—that seemingly endless flow of cash that goes to the most profitable country du jour—but in the real economy it’s gone cold.

That hot money has come mostly in the form of a low-yielding U.S. dollar, which investors have borrowed en masse to fund investments in other higher-yielding currencies across the globe. The so-called carry trade has helped fuel an investment bonanza across the world that has boosted risk assets thanks primarily to the U.S. Federal Reserve‘s easy-money policy.

But with the Fed tiptoeing away from what initially was an $85 billion-a-month infusion of liquidity, investors are beginning to prepare themselves for a world of rising rates in which the endless cash flow to emerging market economies begins to ebb, then cease.

We never fixed any of the fundamental problems that caused the last financial crisis.  Instead, the Fed seemed to think that the solution to any problem was just to create more money.

It was an incredibly stupid approach, and now our fundamental problems are worse than ever as Marc Faber recently noted

“Total credit as a percent of the global economy is now 30 percent higher than it was at the start of the economic crisis in 2007, we have had rapidly escalating household debt especially in emerging economies and resource economies like Canada and Australia and we have come to a point where household debt has become burdensome on the system—that is, where an economic slowdown follows.”

So what comes next?

Well, unless the Fed or other central banks intervene, we are probably going to have even more carnage.

At least that is what Dennis Gartman, the editor and publisher of “The Gartman Letter”, told CNBC on Tuesday

“I just think you’re going to have a very severe, very substantive and really quite ugly correction that will probably make a lot of people wail and gnash their teeth before it’s done.”

Other analysts share his pessimism.  According to Doug Short, the vice president of research at Advisor Perspectives, the U.S. stock market “still looks 67% overvalued“.

Most sobering of all is what Richard Russell is saying.  In his 60 years of writing about financial issues, he has never been “so filled with foreboding regarding what lies ahead”

I’d be lying if I said that I wasn’t worried about the way things are going.  Frankly, I’m truly scared for myself, my family and the nation.  I have the sinking feeling that the stock market is on the edge of a crash.  If that happens, investor sentiment will turn quickly bearish.  And the bear market will start feeding on itself.  Ironically, the recent action occurred in the face of almost insane bullishness on the part of the crowd and on the part of investors.

Obviously smart heads and institutional money managers know that the US is semi dead in the water.  And all the talk about an improving economy is just wishes and hopes.  Bernanke’s dream of a flourishing new economy, improving without the need of the Fed’s help, is an idle dream.

I’ve been writing about the stock market for over 60 years and I can’t remember a time when I was so filled with foreboding regarding what lies ahead.  The primary trend of the market, like the tide of the ocean, is irresistible, and waits for no man.  What scares me the most in this current situation is that I see no clear island of safety.

You can read the rest of his very disturbing remarks right here.

U.S. stocks may not totally crash this week, this month or even this year, but without a doubt a day of reckoning is coming.  As a society, our total consumer, business and government debt is now equivalent to approximately 345 percent of GDP.

The only way that the game can continue is to keep pumping up the debt bubble even more.

Once the debt bubble stops expanding, it will start collapsing very rapidly.

Those that foolishly still have lots of money in the stock market better hope that the Federal Reserve decides to intervene in a major way very soon.

Because if they don’t, there is a very good chance that we could indeed have a “market bloodbath” on our hands.

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