Do you want to see what a 21st century economic depression looks like? Just look at Greece. Once upon a time, the Greek economy was thriving, the Greek government was borrowing money like there was no tomorrow and Greek citizens were thoroughly enjoying the bubble of false prosperity that all that debt created. Those that warned that Greece was headed for a financial collapse were laughed at and were called “doom and gloomers”. Well, nobody is laughing now. You see, the truth is that debt is a very cruel master. Greeks were able to live way beyond their means for many, many years but eventually a day of reckoning arrived. At this point, the Greek economy has been in a recession for five years in a row, and the economic crisis in that country is rapidly getting even worse. It was just recently announced that the overall rate of unemployment in Greece has soared above 20 percent and the youth unemployment rate has risen to an astounding 48 percent. One out of every five retail stores has been shut down and parents are literally abandoning children in the streets. The frightening thing is that this is just the beginning. Things are going to get a lot worse in Greece. And in case you haven’t been paying attention, these kinds of conditions are coming to the United States as well. We are heading down the exact same road as Greece went down, and the economic pain that this country is eventually going to suffer is going to be beyond anything that most Americans would dare to imagine.
All debt spirals eventually come to an end. For years, Greece borrowed huge amounts of very cheap money, but there came a point when the debt became absolutely strangling and the rest of the world refused to lend the Greek government money at such cheap rates anymore.
Greece would have defaulted long before now if the EU and the IMF had not stepped in to bail them out. But along with those bailouts came strings. The EU and the IMF insisted that the Greek government cut spending and raise taxes.
Well, those spending cuts and tax increases caused the economy to slow down. Tax revenues decreased and deficit reduction targets were missed. So the EU and the IMF insisted on even more spending cuts and tax increases.
Even after all of the spending cuts and all of the tax increases that we have seen, the debt to GDP ratio in Greece is still higher than it was before the crisis began. Today, the Greek national debt is sitting at 142 percent of GDP.
Now the EU and the IMF are demanding even more austerity measures before they will release any more bailout money.
Needless to say, the Greek people are pretty much exasperated by all of this. They created this mess by going into so much debt, but they certainly don’t like the solutions that are being imposed upon them.
Protesters in Greece are absolutely outraged that the EU and the IMF are now demanding a 22 percent reduction in the minimum wage.
Most families in Greece are just barely surviving at this point. Unfortunately, Greece is probably looking at depression conditions for many years to come.
Over the past three years, the size of the Greek economy has shrunk by 16 percent.
In 2012, it is being projected that the Greek economy will shrink by another 5 percent.
Sadly, that projection is probably way too optimistic.
Over the past couple of months, it has been like someone has pulled the rug out from under the Greek economy. Just check out the following numbers from an article in the Telegraph by Ambrose Evans-Pritchard….
Another normal day at the Hellenic Statistical Authority.
We learn that:
Greece’s manufacturing output contracted by 15.5pc in December from a year earlier.
Industrial output fell 11.3pc, compared to minus 7.8pc in November.
Unemployment jumped to 20.9pc in November, up from 18.2pc a month earlier.
I have little further to add. This is what a death spiral looks like.
Can you imagine unemployment going up by 2.7 percent in one month?
This is what a 21st century economic depression looks like.
And needless to say, civil unrest is rampant in Greece.
The following is how a USA Today article described some of the protests that we saw in Greece this week….
Scores of youths, in hoods and gas masks, used sledge hammers to smash up marble paving stones in Athens’ main Syntagma Square before hurling the rubble at riot police.
The country’s two biggest labor unions stopped railway, ferry and public transport schedules, and hospitals worked on skeleton staff while most public services were disrupted. Unions were planning protests in Athens and other cities around midday.
Greek citizens are exasperated by the endless rounds of austerity that are being imposed upon them. They wonder how far all of this is going to go.
How much higher can taxes go in Greece? Greece already has tax rates that are among the highest in Europe….
Greece has the third highest rate of VAT in Europe, second highest gas/petrol tax, third highest tax on social insurance contributions, fifth highest VAT on alcohol, highest property tax and one of the worst corporate tax rates, without the quality of living or competitiveness to match.
How much farther can government pay be cut? Greek civil servants have had their incomes slashed by about 40 percent since 2010.
How would you feel if your pay was reduced by 40 percent?
Large numbers of Greeks are rapidly reaching the end of their ropes. The following is from a recent article in the Independent….
“People are scared and haven’t really realised what’s happening yet,” George Pantsios, an electrician for the country’s public power corporation, said. He has only been receiving half of his €850 monthly wage since August. “But once we all lose our jobs and can’t feed our kids, that’s when it’ll go boom and we’ll turn into Tahrir Square.”
Instead of turning violent, others are simply giving in to despair. According to the Daily Mail, large numbers of Greek children are being abandoned because their parents simply cannot afford to take care of them anymore. The note that one mother left with her little toddler was absolutely heartbreaking….
One mother, it said, ran away after handing over her two-year-old daughter Natasha.
Four-year-old Anna was found by a teacher clutching a note that read: ‘I will not be coming to pick up Anna today because I cannot afford to look after her. Please take good care of her. Sorry.’
Sadly, there are an increasing number of Greeks that are giving up on life entirely. The number of suicides in Greece rose by 40 percent during just one recent 12 month time period.
But we haven’t even seen the worst in Greece yet. The worst is still yet to come.
And the people of Greece are going to get angrier and angrier and angrier.
According to one recent poll, about 90 percent all of Greeks are unhappy with the interim government led by Prime Minister Lucas Papademos.
This week, that government has started to fall apart. Over just the past few days, 6 members of the 48-member government cabinet have resigned. Not only is there real doubt if the new austerity measures will be approved, there is very real doubt if this government will be able to hold together much longer.
Frustration with the EU and the IMF has reached a fever pitch in Greece. Just check out what Reuters is reporting….
In a letter obtained by Reuters on Friday, the Federation of Greek Police accused the officials of “…blackmail, covertly abolishing or eroding democracy and national sovereignty” and said one target of its warrants would be the IMF’s top official for Greece, Poul Thomsen.
So what is going to happen next in Greece?
The truth is that nobody knows.
But whatever kind of “deals” are reached, the reality is that nothing is going to keep Greece from continuing to experience depression-like conditions for quite some time.
Unfortunately, Greece is not an isolated case.
Portugal, Ireland, Italy and Spain are all going down the same path and Europe does not have enough money to bail all of them out.
To get an idea of how much money it would take to bail out the financially troubled nations of Europe, just check out this infographic that was recently posted on ZeroHedge.
A day of reckoning is coming for the United States as well. As CNBC recently noted, the U.S. debt problem is far worse than the European debt problem is.
That is why I have written over and over about the U.S. national debt and about how the U.S. government is spending too much money.
Right now, the U.S. government is still able to borrow gigantic mountains of very cheap money and is spending money as if tomorrow will never come.
Well, just like we saw in Greece, when debt gets out of control a day of great pain eventually arrives.
What we are watching unfold in Greece right now is coming to America.
You better get ready.
Never in the history of the NFL has there ever been anything like this. Today, Tim Tebow engineered yet another miraculous 4th quarter comeback. Almost everyone has been expecting this unprecedented string of comebacks to come to an end, yet Tebow just keeps pulling off miracle after miracle. It seems like nearly every week now we are talking about another unbelievable Tim Tebow comeback. It is truly a great story, and what is wonderful about Tebow is that he is not out to glorify himself. He is very humble, he always recognizes his teammates and he is a terrific role model for a generation of American youth that is in desperate need of one. Unfortunately, there is not going to be a similar comeback story for the U.S. economy. It is late in the 4th quarter, we have accumulated over 50 trillion dollars of total debt as a nation, and our economic guts are being ripped out at a rate that is almost impossible to believe. The game is essentially over and we are headed for an incredible amount of economic pain as a nation.
We desperately need a “political Tim Tebow” to come along to dismantle our current debt-based economic system. But instead, the corrupt politicians in Washington D.C. just keep patching up our current system and hope that somehow it will recover.
Unfortunately, this is about as good as things are going to get for the U.S. economy. The federal government and the Federal Reserve are already pushing things to the “red line”, and all of that effort has not accomplished much.
We have been experiencing “economic stagnation” for much of the past year, and there is not much more that they can do to improve things under our current system.
Right now, the Federal Reserve has pushed interest rates as low as they can go. They can’t go any lower.
Right now, the federal government is borrowing and spending unprecedented amounts of money. Federal spending cannot go much higher.
Right now, we have already seen tax cut after tax cut and virtually none of them have been paid for. Any additional tax cuts will just send our budget deficits even higher.
Right now, we have already seen unprecedented intervention by the Federal Reserve. They have done just about everything short of dropping huge bags of money over the countryside from helicopters.
The federal government and the Federal Reserve have done just about everything that they can possibly do to “stimulate” the economy, and yet things just keep getting worse.
So what is going to happen when the federal government and the Federal Reserve quit stimulating the economy?
As I wrote about the other day, when evaluating the future of the U.S. economy, it is vitally important to look at the balance sheet numbers and the long-term trends.
When you do that, you suddenly do not feel so good about the upward “blips” that we have seen in the economy lately.
Yes, the “official” unemployment rate recently went down slightly. But as Mac Slavo recently pointed out, even with the recent “improvement” the truth is that the “real” level of unemployment in the United States is still well over 20 percent.
And all of the long-term trends indicate that we heading for a massive amount of trouble.
The number of good jobs continues to decline. Even though our population is rapidly increasing, there are 10 percent fewer middle income jobs in the U.S. today than there were a decade ago.
In recent years, the employment to population ratio has been steadily declining. At the start of the recession it was at 62.7%. Today, it is at 58.5%.
Household incomes continue to go down as well. Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.
So why is this happening? Well, as I wrote about recently, the United States has the worst balance of trade in the entire world by far.
Wealth, jobs and economic infrastructure are pouring out of this country and very few politicians are trying to stop it.
An average of 23 manufacturing facilities were shut down every single day in the United States last year.
That represents a huge amount of lost jobs.
So do you hear any political candidates talking about how they are going to stop this from happening or about how they are going to get all of those lost jobs back?
Overall, the U.S. has lost a total of more than 56,000 manufacturing facilities since 2001.
So how can an economy be great when it is constantly bleeding huge amounts of economic infrastructure?
We have become way too dependent on other nations for the things that we need.
How much trouble would we be in if Saudi Arabia suddenly decided to quit shipping us oil or if China suddenly decided to quit shipping us cheap plastic products to sell in our stores?
Right now, businesses are absolutely racing to get out of the United States. Big corporations are shipping as many jobs as they possibly can out of the country. Our insane economic policies have turned American workers into tremendous liabilities.
One economist from Princeton University is warning that 40 million more U.S. jobs could be sent offshore over the next two decades if nothing is done to stop this.
So why aren’t more politicians screaming and yelling about this?
Without good jobs, Americans are falling out of the middle class in staggering numbers.
Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.
So is that a sign that things are getting better or that things are getting worse?
A higher percentage of Americans is living in extreme poverty than has ever been measured before. Not only that, 2.6 million more Americans fell into poverty last year. That was also a new all-time record.
So are those signs that things are getting better or that things are getting worse?
The American people generally do not understand why these things are happening, but they are clearly getting frustrated.
A recent Gallup poll found that an all-time record 76 percent of all Americans believe that most members of Congress do not deserve to be reelected.
But when election time rolls around, they will probably send most of them back to Washington D.C. anyway.
Our politicians keep kicking the can down the road, but time for doing that is running out. The unprecedented “stimulus” efforts by the federal government will be coming to an end sooner or later.
In a recent article, author Bruce Krasting listed a whole bunch of reasons why the economic can is not going to be able to be kicked down the road much farther. The following are some of the things that he says are scheduled to end by the beginning of 2013….
A) The Bush tax cuts on those making more than $200k will expire.
B) The Bush tax cuts on those making less than $200k will also expire.
C) The Patch on AMT will expire.
D) The 2% payroll tax holiday will expire for all workers on 12/31/12 (I’m sure the current holiday will be rolled for another year)
E) The 99-week extended unemployment benefits die on 12/31. (The emergency benefits will also be extended for 2012)
F) There will have to be a budget that is approved. Alternatively, a series of continuing resolutions is required to avert a government shutdown. We have not had an approved budget in over 900 days.
G) 2013 is the first year that there will be mandatory caps on discretionary spending. These limits will result in a YoY decline in government spending.
H) The Federal Reserve has promised to keep interest rates at zero into 2013. While it is possible that the Fed could continue the madness for even longer, the reality is that interest rates have nowhere to go but up.
I) By January 2013 it will be painfully evident that the country’s key social programs, Social Security and Medicare will be running in the red at a pace that is far higher than anyone considered possible. The need for dramatic changes in these programs will have to come onto the table. The implications of this will be significant.
J) In 2013 the issues of Fannie, Freddie, FHA and the Federal Home Loan Banks must be addressed. The problems at the housing agencies has festered too long.
K) The country will face another debt ceiling extension. The last time cost us our AAA.
Sadly, we will probably not have to wait until 2013 to feel a whole lot of economic pain.
The reality is that a 15 trillion dollar debt and trillion dollar yearly budget deficits are not sustainable. We have created a situation where a horrible crash is inevitable, and there is no way that our current debt-based system can be fixed to keep a nightmarish collapse from happening.
During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office. That is a recipe for national financial suicide.
Meanwhile, despite what you may have heard, the European debt crisis has not been fixed.
Not at all.
The truth is that none of the fundamental problems were fixed by this recent “agreement” as Ambrose Evans-Pritchard recently noted in one of his columns….
There is no shared debt issuance, no fiscal transfers, no move to an EU Treasury, no banking licence for the ESM rescue fund, and no change in the mandate of the European Central Bank.
In short, there is no breakthrough of any kind that will convince Asian investors that this monetary union has viable governance or even a future.
Germany has kept the focus exclusively on fiscal deficits even though everybody must understand by now that this crisis was not caused by fiscal deficits (except in the case of Greece). Spain and Ireland were in surplus, and Italy had a primary surplus.
For many more reasons why Europe is headed for big trouble, please read this article: “22 Reasons Why We Could See An Economic Collapse In Europe In 2012“.
When Europe goes down, it is going to have a devastating impact on the United States.
Meanwhile, the economies of China and Japan are also steamrolling toward recession.
There is simply way too much debt in the world, and a great day of reckoning is coming.
Combined, the industrialized nations of the world borrowed more than 10 trillion dollars this year, and that number is expected to soar even higher next year.
Jim Cramer of CNBC stated recently that the global economy is at “DEFCON 3, two stages from a financial collapse so huge it’s hard to get your mind around.”
Most Americans don’t understand this yet. But hopefully we can get more of them educated while there is still time.
The global financial system is a big shell game. It is a gigantic mountain of debt, leverage and risk.
You would have thought that we would have learned some key lessons from the financial crisis of 2008, but we didn’t.
Back in 2002, the top 10 U.S. banks controlled 55 percent of all U.S. banking assets. Right now, the top 10 U.S. banks control 77 percent of all U.S. banking assets.
Today, the “too big to fail” banks are larger than ever. The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.
So instead of doing something about the “too big to fail” banks, they are now more “too big to fail” than ever.
As big banks and big corporations have come to dominate our economy more than ever before, wealth and power have also become much more concentrated….
*The wealthiest 1 percent of all Americans now own more than a third of all the wealth in the United States.
*The poorest 50 percent of all Americans collectively own just 2.5% of all the wealth in the United States.
*The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30 percent of all Americans combined.
*Overall, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.
It would be wonderful if we could send a “Tim Tebow of politics” to Washington D.C., but instead the Democrats and the Republicans look like they just plan to give us more of the same.
Are the Republicans really going to nominate someone who co-sponsored 418 bills with Nancy Pelosi? The truth is that the latest “anti-Romney candidate” is almost a clone of Mitt Romney.
Newt Gingrich is essentially an older, ruder version of Barack Obama. If you are counting on him to “save America” then you are going to be incredibly disappointed.
Sadly, we just do not have nearly enough men like Tim Tebow in America today. The following comes from a recent profile of Tebow that recently appeared in the Wall Street Journal….
While at Florida, Mr. Tebow became well known for spending his summers helping the poor and needy in the Philippines. He also spoke in prisons and appeared to accept every opportunity to volunteer. He encouraged his teammates and classmates to follow his lead.
You can see video of Tim Tebow speaking to a group of prisoners at the Lake City Correctional Facility while he was still attending the University of Florida right here.
Unfortunately, there is no “Tim Tebow comeback” on the horizon for the U.S. economy at this point.
But when the U.S. economy does get worse, we can take a cue from Tim Tebow and be very generous with those in need. There are going to be a lot of people that will be really hurting, and those of us that have been blessed should do what we can to help them out.
A lot of people say that my site is all about “doom and gloom”, but telling the truth to the American people is never a bad thing.
We do not do ourselves any favors by sticking our heads in the sand and pretending that everything is going to be okay.
There is going to be no miracle comeback for the U.S. economy.
A horrific economic collapse is coming.
You better get ready.
If you know someone that believes that the U.S. economy is in great shape, just show that person the following statistics. But please don’t show these statistics to anyone that is feeling depressed or that has just lost a job – it might push such a person over the edge. The sad truth is that the U.S. economy is in the midst of a long-term decline and it is coming apart at the seams. Right now the Obama administration and the Federal Reserve are attempting to “paper over” our economic problems with massive amounts of government debt and paper currency, but in the end it is not going to work. When you analyze the numbers objectively, it leads to the inescapable conclusion that we are headed for another Great Depression. That is a very depressing thought, but there is no denying that decades of debt and incredibly bad decisions are starting to catch up with us. The economic pain that is coming is going to be absolutely mind blowing.
It would be nice if our politicians and our business leaders suddenly started making incredibly wise decisions so that we could bring the U.S. economy in for a “soft landing”, but the chance of that happening is so small that it is not even worth mentioning.
It is time for all of us to face up to the truth. In this day and age it is really easy to get caught up in the trap of feeling depressed, but once we understand exactly how bad our problems are it can be empowering because then we can start focusing on solutions.
The following are 27 depressing statistics about the U.S. economy that are almost too crazy to believe….
#1 The Obama administration projects that the federal budget deficit will be approximately $1,600,000,000,000 this year. Right now the Republicans and the Democrats are fighting tooth and nail over budget cuts. The Republicans are proposing to cut the budget deficit by 3.8%. The Democrats only want to cut it by 2.1%.
#2 The U.S. economy actually grew more between 1930 and 1940 than it did during the decade that recently ended.
#3 Over the last decade, the number of Americans without health insurance has risen from about 38 million to about 52 million.
#4 Agricultural commodities are absolutely soaring. The price of corn has more than doubled over the last 12 months. Considering the fact that corn is in literally thousands of our food products, that is a very frightening statistic.
#5 Between 1999 and 2009, real median household income in the United States declined by 5.0%.
#6 It is being estimated that total U.S. government debt will grow by 42 percent by the year 2015.
#7 According to the Pentagon, the cost of the first week of attacks on Libya was 600 million dollars.
#8 The average American now spends approximately 23 percent of his or her income on food and gas.
#9 According to the U.S. Energy Department, the average U.S. household will spend approximately $700 more on gasoline in 2011 than it did during 2010.
#10 It is being projected that for the first time ever, the OPEC nations are going to bring in over a trillion dollars from exporting oil this year. Their biggest customer is the United States.
#11 According to the Economic Policy Institute, almost 25 percent of U.S. households now have zero net worth or negative net worth. Back in 2007, that number was just 18.6 percent.
#12 China produced 19.8 percent of all the goods consumed in the world last year. The United States only produced 19.4 percent.
#13 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.
#14 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.
#15 U.S. home values have fallen an astounding 6.3 trillion dollars since the peak of the real estate market in 2005.
#16 According to RealtyTrac, one out of every 45 U.S. households was hit with a foreclosure filing in 2010.
#17 The number of homes that were actually repossessed reached the 1 million mark for the first time ever during 2010.
#18 New home sales in the United States set a brand new all-time record low in the month of February.
#19 Now home sales in the United States are now down 80% from the peak in July 2005.
#20 The financial condition of American families continues to deteriorate rapidly. In 2010, one out of every eight American families had at least one family member that was unemployed. That number was the highest it has been since the U.S. Labor Department began keeping track of that statistic back in 1994.
#21 There are now more than 6 million Americans that the government says have given up looking for work completely.
#22 According to the U.S. Bureau of Labor Statistics, the average length of unemployment in the U.S. is now an all-time record 39 weeks.
#23 Americans now owe more than $900 billion on student loans, which is also an all-time record high.
#24 Average household debt in the United States has now reached a level of 136% of average household income.
#25 According to the Federal Reserve, between 2007 and 2009 median household net worth in the United States fell by 23 percent.
#26 The Federal Reserve also says that median household debt in the United States has risen to $75,600.
#27 According to a recent article posted on the website of the American Institute of Economic Research, the purchasing power of a U.S. dollar declined from $1.00 in 1913 to 4.6 cents in 2009. Sadly, the Federal Reserve is working very hard to get rid of the little bit of purchasing power that the U.S. dollar has left.
For decades, most Americans have enjoyed an extremely high standard of living. In fact, most of us have been “enjoying the high life” and “living the dream” for so long that we have assumed that it is just always going to be that way. But now a rapidly growing percentage of Americans is getting the chance to experience some very serious economic pain. Today, over 40 million Americans are on food stamps and over 20 million U.S. children are living in poverty. Tens of millions of Americans are unemployed, and personal bankruptcies and foreclosures continue to set all-time records. For many people, all of this economic turmoil was completely unexpected. Millions of people now can’t sleep at night because they are constantly stressed about finances. More couples than ever are being torn about by arguments over money. Unprecedented numbers of Americans have experienced a sinking feeling in the pit of their stomachs upon the realization that they are going to lose the homes that they have been raising their families in. Money may not buy happiness, but as tens of millions of Americans are finding out, the lack of it can bring a whole lot of pain.
Now, the truth is that there have always been a small percentage of Americans that have struggled to get by, but today we are seeing more Americans who are “down on their luck” than at any other time in recent memory. According to one shocking new survey, 28% of all U.S. households have at least one member that is looking for a full-time job.
It seems like almost everyone has a family member or a close friend who is looking for a job. The truth is that there are not enough jobs for everyone, and there certainly are not nearly enough good jobs.
A recent Pew Research survey found that 55 percent of the U.S. labor force has experienced either unemployment, a pay decrease, a reduction in hours or an involuntary move to part-time work since the recession began.
That is incredible.
That means that over half of all American workers have been unemployed or have been forced to take a reduction in pay since the recession started.
Things are getting really tough out there.
Millions of Americans are wondering why their husbands or wives suddenly can’t find jobs.
In fact, the average duration of unemployment in the United States has risen to an all-time high. The declining economy has created a new class of chronically unemployed Americans who would love to work but can’t seem to find anyone to hire them.
Millions of Americans have been forced to turn to part-time work. In fact, one recent survey found that approximately 8.6 million American workers are working part time because they can’t get full-time jobs.
In this economic environment, there is significant competition for even the lowest paying jobs.
You never know – this holiday season the friendly gentleman greeting you down at the local Wal-Mart may actually have several advanced degrees but just cannot find anyone else who will hire him.
As the economic situation continues to deteriorate, record numbers of Americans are going bankrupt and are losing their homes. In fact, banks repossessed a record number of U.S. homes during the second quarter of 2010.
So it is really no wonder why so many Americans are feeling so negative about the economy.
According to one new survey, U.S. consumer sentiment weakened in early July to its lowest in 11 months. In addition, one recent poll found that 76 percent of Americans believe that the U.S. economy is still in a recession.
But sometimes what gets lost in all the numbers are the individual stories of the very real pain that so many Americans are going through. Today, I thought that I would share just a few of the stories of economic pain that my readers have been sharing with me.
A reader of my column on The American Dream blog named Kate recently graduated from college but now finds that she can’t even get a retail job….
I just graduated college in May… Moved to a new state and am now living with my boyfriend who should not and cannot continue to have to pay everything because i just plain can’t get a job.
I’m over qualified for retail survivor jobs… so I lie on my application. But then retail stores just plain don’t hire full time. So even if I could get a job as a cashier someplace… I’d only work enough hours to maybe pay for my car payment/ car insurance/ gas…. and my half of rent/electric and such is out of the question… not to mention charged to the limit credit cards from being unemployed and student loans that will hit in just a matter of months.
Any other jobs either don’t exist or they just ALL want 5 years professional experience…. which is impossible for someone who just graduated and has been working part time retail jobs since high school.
AND internships are unpaid or only for college students so thats out of the question….
But the fact of the matter is that jobs don’t care about education in the least bit if you don’t have the real professional work experience to back it up.
A reader of this column named David ended up taking a very low paying job overseas because he simply couldn’t find anything here in the United States….
I have been looking for a job since June 2009. I am a prior Army officer who knows four foreign languages and has lived around the world. I have sent out over 100 resumes over the past year. Finally, I got a job offer to teach English in Russia for $720 per month. Yes, $720 per month. Luckily my housing is paid for. So, I took my tax return and left for Russia to teach English. The American economy is broken and it will get worse. We are in the early stages of a total meltdown in America. Yes, if you are an American, you better prepare yourself for the worst is still to come.
But even those who do have jobs are facing some very difficult circumstances as one of my readers named Ana recently described….
I am a cop’s wife. My husband currently works for a Sheriff’s office who is extremely understaffed and the county wastes money like there is no tomorrow. They threaten the Sheriff with more layoffs if they don’t write more tickets on the highway. My husband has often had to patrol the entire county by himself for a full 12 hour shift. It is a bad situation for everyone.
The truth is that there are millions of stories like the ones above. Economic pain is everywhere, and the American people are becoming increasingly frustrated. Most Americans don’t understand why the economy is suddenly in the toilet – all most of them know is that things are broken and they desperately want someone to fix things.
A lot of this frustration is coming out as anger towards the government. People are waking up and are starting to realize that the American ruling class has been doing an incredibly bad job of running things. The American people are hungry for a real change. In fact, a new Rasmussen Reports national telephone survey found that just 23% of voters nationwide believe that the U.S. government has the consent of the governed.
But will we start to see some real changes in the years ahead?
Unfortunately, that is quite doubtful. The reality is that the American ruling class has a stranglehold on both political parties, and they are not going to release their grip easily.
Meanwhile, our leaders continue to perpetuate the same failed policies that got us into this mess in the first place. But unless some fundamental changes are made soon, the economic pain that Americans are experiencing is going to continue to get even worse.
So do you have a story of economic pain to share? Feel free to share your thoughts in the comments section below….
The economic frustration of the American people is reaching a fever pitch. Millions of Americans can’t seem to get a good job no matter what they do. Millions of others are working as hard as they can but find that they keep coming up short at the end of the month. Record numbers of Americans are still going bankrupt. Record numbers of Americans are still losing their homes. Meanwhile, the U.S. economy is a dead horse at this point. It just doesn’t have any more to give. At this point the U.S. economy is like an aging rock star that requires larger and larger doses of drugs each night just to be able to perform. The U.S. economy is addicted to “drugs” such as debt and government stimulus, and years ago those things really supercharged the U.S. economic system, but at this point they aren’t provoking much of a response at all. In fact, the things that once “stimulated” the economy are now slowly killing it. But the vast majority of the American people do not understand this. All they know is that the economy is broken and they want someone to “fix” it.
For most Americans, all we have ever known is tremendous prosperity. All our lives we have been taught that America is the richest and most prosperous nation on the planet, and that while there will always be times of “recession”, things will always bounce back and be better than ever before.
But this time things aren’t bouncing back.
And Americans are starting to become extremely frustrated.
A couple of quotes that appeared in a recent article in The New York Daily News really embodied the growing frustration that so many are feeling at this point….
“My husband and I are fortunate to be able to move in with my 81-year-old mother-in-law. But how sad is that? I apply for jobs and nothing happens,” writes Gayle Hanson. “Who wants to hire a 59-year-old woman? My answer is nobody. [I] have years of experience, excellent references. And nothing to show for it.”
“I am soon to be 57 and considered too old, too expensive, etc. I can’t get an employer to hire me at any salary,” writes Mike Stiller. “I am BOILING MAD.”
But Gayle Hanson and Mike Stiller are far from alone.
Millions upon millions of Americans are “boiling mad” about the economy at this point.
The truth is that the United States has lost 10.5 million jobs since 2007. Many of those jobs have been shipped off to countries like China and India where labor is much cheaper and they are never coming back.
There just are not enough jobs for everyone in America at this point. The number of “chronically unemployed” has been rising at a frightening pace. In fact, the average duration of unemployment in the United States has risen to an all-time high.
If you have never been unemployed and unable to find a job, then you just don’t know how soul crushing it can be. This is especially true when you have a family to support.
Right now, there are 9.2 million Americans that are unemployed but are not even receiving an unemployment insurance check. It is easy to tell those unemployed workers that they should “get a job”, but as the chart below shows, the gap between the number of unemployed workers and the number of job openings has increased dramatically over the last couple of years….
But in this economy, even many of those who do have jobs are still struggling mightily. According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck. That was up significantly from 49 percent in 2008 and 43 percent in 2007.
And Americans are still losing their homes in record numbers. Banks repossessed an average of 4,000 south Florida properties a month in the first half of 2010, which was up 83 percent from the first half of 2009.
Meanwhile, demand for homes is dropping through the floor. The Mortgage Bankers Association announced on Wednesday that demand for loans to purchase U.S. homes sunk to a 13 year low last week, and refinancing demand also plummeted despite near record-low mortgage rates.
So considering all of these statistics, is it any wonder why so many Americans are so pessimistic?
According to a recent poll conducted by Bloomberg, 71% of Americans say that it still feels like the economy is in a recession.
But the truth is that we haven’t seen anything yet.
Things are going to get much worse.
Already, Federal Reserve policymakers are discussing what steps they might take to stimulate economic activity “if the outlook were to worsen appreciably”.
So can more economic stimulus help?
To a limited extent.
The Federal Reserve and the U.S. government will likely try to inject more debt and more “economic stimulus” into the system to try to shock the economy back to life.
But the more debt the U.S. government takes on the worse our long-term problems are going to get.
The reality is that the U.S. economic system is broken, and there is simply not any “quick fix” that is available that is going to get things back to normal.
So on an individual level, what should we all do?
Well, we all need to start becoming a lot less dependent on the system.
We should all consider how we can start our own businesses, grow our own food and trade within our own communities.
If the entire system is starting to break down, it is those who are the least dependent on the system that will have the best chance to prosper during the times ahead.
So what do you think? Do you agree? Do you disagree? Feel free to leave a comment with your thoughts below….
With each passing news cycle, it seems like the economic headlines just keep getting worse. And unfortunately, the highly integrated global economy that we have constructed means that what happens on one side of the world is going to very likely have a big impact on the other side of the world. A meltdown in New York or Los Angeles is going to affect London, Paris, Rome, Berlin, Moscow, Beijing and Tokyo. That is just the way the world works now. Back in 2007 and 2008, the financial crisis that began in the United States devastated economies across the globe. So are there any economic problems brewing out there right now that could send another wave of panic across the globe?
Well, yes, actually there are a whole bunch of them. In fact, if certain things break the wrong way it could create a gigantic mess in the financial world. Let’s take a few moments to examine a few of the questions that economists are asking right now….
Will The Eurozone Break Up And Devastate The Global Economy?
One of the most respected financial journalists in the world, Ambrose Evans-Pritchard, is warning that cases currently making their way through the German court system could actually result in the breakup of Europe’s monetary union. The cases involve the massive EU bailouts that have been agreed to recently. It is being argued that these bailouts actually violate EU treaty law, and therefore they also violate Germany’s supreme and sovereign Basic Law.
So what would happen if the German courts rule against these bailouts?
Well, it could be catastrophic. Ambrose Evans-Pritchard put it this way in his recent column….
“Should they succeed, of course, the eurozone risks disintegration within days, and perhaps hours.”
And he is not the only one sounding the alarm. In fact, one major Dutch bank is warning that a full-fledged disintegration of the eurozone would trigger the worst economic crisis in modern history and would unleash a deflationary shockwave that would envelop the entire globe including the United States.
That doesn’t sound promising, does it?
So is it going to happen?
No, probably not.
It would be a great, great victory for national sovereignty if it did happen, but there are just way too many powerful interests that are way too invested in seeing the eurozone succeed. In addition, the legal, economic and political obstacles that would have to be overcome to fully break apart the eurozone are absolutely mind-numbing when you start thinking about them all.
Instead, what we are likely to see are calls for even more European integration. Already, many politicians are claiming that the current crisis has been caused because Europe is simply not integrated enough.
So, no, the eurozone is not likely to break up, but that doesn’t mean that we are not going to see massive economic problems in Europe over the coming years.
Will The U.S. Congress Extend Long-Term Unemployment Benefits?
The U.S. Congress continues to debate whether or not they are going to extend long-term unemployment benefits for an estimated 2.1 million unemployed Americans that have stopped getting unemployment checks.
So will they end up getting it done?
But there are a growing number of lawmakers that are extremely alarmed about how incredibly fast the U.S. debt is growing.
It is a shame that many of them were not concerned about it 12 or 13 trillion dollars ago.
Not that we shouldn’t help the millions of American workers that have been out of work for a long time and can’t get jobs.
A lot of people are really, really suffering out there right now.
So where did all the jobs go?
Well, as we detailed in a previous article, our politicians and our big American corporations have been busy shipping them off to China and to a whole host of third world nations over the past couple of decades.
The millions upon millions of jobs that have been lost are gone permanently and are not coming back.
So we are likely to continue to have a growing underclass of chronically unemployed blue collar workers that don’t have jobs and can’t get jobs because there are not nearly enough of them for everyone.
So, yes, Congress is likely to extend the unemployment benefits soon, but what those millions of Americans really need are good jobs.
Will The World Trade Imbalance Continue To Get Worse?
It was recently announced that China’s trade surplus climbed 140 percent in June compared to a year earlier.
At least globalism is working well for somebody.
The truth is that someday people will look back and think that U.S. leadership must have been insane when they allowed the greatest economic machine to ever be assembled to systematically be dismantled and shipped off to China, India and dozens of other third world countries around the globe.
The other side of this tragedy is the tremendous exploitation of third world populations which we are allowing big global corporations to get away with.
In one of his recent articles, Stephen Lendman told the tragic story of sweatshop worker Naran Dhula Bhil….
In February 2009, he was hospitalized at Dharmaj, in Gujarat state, coughing, very weak, struggling to walk, and unable to lift anything heavier than five pounds. Since mid-2008, he lost almost half his body weight, dropping from 132 to 70 pounds of skin and bones. On April 14, he died of silicosis, the result of greed, indifference, and consumer ignorance about buying “gemstones of death.”
Bhil was 11 when he began working as a grinder, shaper, and polisher, making gemstones into hearts, pendants, rings, beads, and various type ornaments.
For a day’s work, he produced 100 – 150 for 15.5 cents an hour, $1.08 daily, or less than a penny for each stone produced, each giving off silica dust that killed him. By age 20, he knew it, stayed on the job, borrowed money to buy gemstones, and became “bonded,” meaning he couldn’t quit until out of debt, what few grinders ever do.
Bihl said his shop employed 35. Only four or five are left, the others sick or dead. “So many have died,” he said, and when he expired “he did not have a single penny to his name,” as true for most others.
Could you imagine if that was your life story?
What big global corporations are getting away with is absolutely mind blowing.
The global economic system is broken and the only ones who seem to really be benefiting from it are the giant corporations and the ultra-rich.
Is this going to change any time soon?
No, unfortunately, it will not.
Will Americans Continue to Be Obsessed With Money?
According to a new poll of Americans between the ages of 44 and 75, 61% said that running out money was their biggest fear. The remaining 39% thought death was scarier.
Running out of money scarier than death?
Yes, it is very important to provide for ourselves and for our families, especially as we head towards economic collapse, but the obsession that the American people have with money and wealth is completely and totally out of control.
At the end of your life, do you want your life to be defined by the pile of stuff that you have accumulated or by what you were able to do with your life?
The truth is that we don’t even actually “own” most of what we think that we own.
There is so much more to life than getting stuff and having stuff, but the mainstream media will continue to push Americans to love the “consumer culture” which has come to dominate our way of life.
So, yes, Americans will continue to be obsessed with wealth, money and with who LeBron James is playing basketball for.
But you can make a different choice. You can choose to live your life for what really matters.
Is The U.S. Economy Going To Turn Around As We Approach The Christmas Season And The End Of The Year?
Many analysts are hoping that as the holidays approach the American people will get back to their old ways of spending massive amounts of money and that this will help jumpstart the U.S. economy.
So is there reason for optimism?
Vacancies and lease rates at U.S. shopping centers continued to get even worse during the second quarter of 2010. In fact, in some of the most depressed areas of the United States, many malls and shopping centers could end up looking like ghost towns by the time Christmas rolls around.
So what are some of the areas in the U.S. that are the worst economic disaster zones?
Well, everyone knows about Detroit. Once regarded as one of the crown jewels of American industry, Detroit is now a rusted-out war zone that is a shell of its former self.
South of there, the state of Illinois has now become a complete and total disaster zone. The government of Illinois has stopped paying even its most essential bills and it now ranks eighth in the world in possible bond-holder default. Universities and government agencies are experiencing absolute chaos as they try to figure out how they are going to continue to function without any money.
Of course then there is California, where the Schwarzenegger administration has won an appellate court ruling saying it has the authority to impose the federal minimum wage of $7.25 an hour on more than 200,000 state workers as California wrestles with its latest budget crisis. Things are now so bad in California that in the region around the state capital, Sacramento, there is now one closed business for every six that are still open.
Next door to California, in Nevada, things may be even worse. Official unemployment in Nevada is hovering around 14 percent (unofficially it is much higher of course) and it is estimated that a whopping 65 percent of all homes in the state of Nevada are underwater. There is perhaps no state in the U.S. that has been hurt more seriously by the housing crash than Nevada.
Unfortunately, things look like they are going to get even tighter for state and local governments in the year ahead. Economist Mark Zandi is warning that up to 400,000 state and local government workers could lose their jobs in the next year as states, counties and cities grapple with lower revenue and less federal funding.
On top of all this, there is the threat that the Gulf of Mexico oil spill could push the teetering U.S. economy completely over the edge.
Many cities along the Gulf of Mexico coast were already economic disaster zones even before this oil spill.
But now we are talking about an economic nightmare of unprecedented proportions.
The seafood, tourism and real estate industries along the Gulf coast have been decimated and people are leaving in droves. It could be years, or even decades, before things get back to some kind of “normal” in the area.
Some are even warning that this oil spill could cause the collapse of BP, and if that happens it could bring about absolute chaos on world financial markets.
Well, it turns out that BP is a major source of global liquidity and is a major player in the worldwide derivatives market.
If someday the worldwide derivatives market crashes, there won’t be enough money in the entire world to fix that problem.
But that is a topic for another day….
It is incredibly hard to put into words the absolute horror that is happening in the Gulf of Mexico right now. The millions of gallons of oil that have gushed into the Gulf of Mexico and BP’s efforts to fight the massive leak are turning the Gulf into a lifeless toxic stew of oil and chemicals. The damage caused to wildlife in the Gulf by this spill will be incalculable. Entire species are at risk of being wiped out. Scientists are telling us that the primary dispersant being used by BP ruptures red blood cells and causes fish to bleed. This is by far the greatest environmental disaster in U.S. history, and there is no end in sight. It is a worse environmental and economic disaster than all of the hurricanes of the past ten years combined. The great wetlands and beaches along the Gulf of Mexico will never be the same in our lifetimes. The seafood and tourism industries in the Gulf are being completely destroyed. The thousands of jobs and businesses being wiped out by this disaster could potentially throw the entire Gulf coast region into a depression. The damage already caused by this oil spill is beyond measure and yet the government tells us that up to 19,000 barrels (798,000 gallons) of oil a day continue to flow into the Gulf of Mexico.
Federal officials have expanded the “no fishing” area in the Gulf of Mexico to 75,920 square miles. That is 31 percent of all federal waters in the Gulf. As the oil continues to spread out there may soon be nowhere to fish.
And the oil is starting to come ashore in more places. Red-brown oil was found on Alabama’s Dauphin Island on Tuesday. As Gulf coast residents slowly watch this oil destroy everything around them they are starting to realize that this is it.
Life along the Gulf of Mexico will simply never be the same again.
The following are 30 shocking quotes about the Gulf of Mexico oil spill that reveal the soul-crushing horror this disaster is causing….
#1) Councilman Jay LaFont of Grand Isle, Louisiana:
“As long as you have something to look forward to, a little glimmer of hope, you can move on. But this just drained everything out of us.”
#2) Billy Nungesser, president of Plaquemines Parish:
“They said the black oil wouldn’t come ashore. Well, it is ashore. It’s here to stay and it’s going to keep coming.”
#3) Prosanta Chakrabarty, a Louisiana State University fish biologist:
“Every fish and invertebrate contacting the oil is probably dying. I have no doubt about that.”
#4) Marine toxicologist Dr. Susan Shaw, director of the Marine Environmental Research Institute on BP’s use of chemical dispersants:
“They’ve been used at such a high volume that it’s unprecedented. The worst of these – Corexit 9527 – is the one they’ve been using most. That ruptures red blood cells and causes fish to bleed. With 800,000 gallons of this, we can only imagine the death that will be caused.”
#5) Dr. Larry McKinney, director of the Harte Research Institute for Gulf of Mexico Studies in Texas:
“Bluefin tuna spawn just south of the oil spill and they spawn only in the Gulf. If they were to go through the area at a critical time, that’s one instance where a plume could destroy a whole species.”
#6) Carol Browner, Barack Obama’s adviser on energy and climate:
“This is probably the biggest environmental disaster we have ever faced in this country. It is certainly the biggest oil spill and we are responding with the biggest environmental response.”
#7) Richard Charter of the Defenders of Wildlife:
“It is so big and expanding so fast that it’s pretty much beyond human response that can be effective. … You’re looking at a long-term poisoning of the area. Ultimately, this will have a multidecade impact.”
#8) Reverand Mike Tran:
“This is going to destroy the Mississippi and the Gulf Coast as we know it.”
#10) Dean Blanchard, owner of a seafood business:
“I hold Obama responsible for not making BP stand up and look at the people in the face and fix it.”
#11) Louisiana Governor Bobby Jindal:
“The day that we’ve been fearing is upon us.”
#12) Billy Nungesser, president of Plaquemines Parish, about BP CEO Tony Hayward:
“We ought to take him offshore and dunk him 10 feet underwater and pull him up and ask him ‘What’s that all over your face?”
#13) Former Clinton adviser James Carville:
“The country feels like it’s entitled to abuse this state and forget about us, and we are sick of it.”
#14) An anonymous Louisiana resident:
“A hurricane is like closing your bank account for a few days, but this here has the capacity to destroy our bank accounts.”
#15) U.S. Representative Edward Markey:
“I have no confidence whatsoever in BP . I think that they do not know what they are doing.”
#16) Gulf coast resident Marie Michel:
“Immediately, it’s no more fishing, no more crabbing, no more swimming, no more walking on the beach.”
#17) Brenda Prosser of Mobile, Alabama:
“I just started crying. I couldn’t quit crying. I’m shaking now. To know that our beach may be black or brown, or that we can’t get in the water, it’s so sad.”
#18) Qin Chen, an associate professor of civil and environmental engineering at Louisiana State University in Baton Rouge on the possibility that a hurricane could push massive amounts of oil ashore along the Gulf:
“A hurricane in the Gulf of Mexico this year would be devastating.”
#19) Retired Army General Russel Honore on the effect this spill is having on residents of the Gulf coast:
“I’m sure, every time they hear a negative word, their skin crawls, ’cause they need these jobs. … This is what’s going to put their kids in school, and what pays the rent.”
#20) A group calling itself “Seize BP”:
“The greatest environmental disaster with no end in sight! Eleven workers dead. Millions of gallons of oil gushing for months (and possibly years) to come. Jobs vanishing. Creatures dying. A pristine environment destroyed for generations. A mega-corporation that has lied and continues to lie, and a government that refuses to protect the people.”
#21) Louisiania Governor Bobby Jindal
“There has been failure, particularly with the effort to protect our coast and our marsh. And that was the biggest topic of discussion in a very frank meeting we had with the president.”
#22) BP’s chief operating officer, Doug Suttles:
“This scares everybody — the fact that we can’t make this well stop flowing, the fact that we haven’t succeeded so far.”
#23) Doug Rader, chief ocean scientist for the Environmental Defense Fund:
“You simply cannot make more (reefs), unless you have a few thousand years to wait.”
#24) Public Service Commissioner Benjamin Stevens:
“You get hit by a hurricane and you can rebuild. But when that stuff washes up on the white sands of Pensacola Beach, you can’t just go and get more white sand.”
#25) Wilma Subra, a chemist who has served as a consultant to the Environmental Protection Agency:
“Every time the wind blows from the south-east to the shore, people are being made sick.”
#26) Hotel Owner Dodie Vegas:
“It’s just going to kill us. It’s going to destroy us.”
#27) Louisiana resident Sean Lanier:
“Until they stop this leak, it’s just like getting stabbed and the knife’s still in you, and they’re moving it around.”
#28) White House energy adviser Carol Browner:
“We’ll see dead bodies soon. Sharks, dolphins, sea turtles, whales: the impact on predators will be seen in a short time because the food web will be impacted from the bottom up.”
#30) Plaquemines Parish President Billy Nungesser:
“We will die a slow death over the next two years as this oil creeps ashore.”
Do you know if your bank will be there next month? For a growing number of Americans, that is becoming a very real question. The Wall Street Journal is reporting that 775 banks (approximately ten percent of all U.S. banks) are now on the Federal Deposit Insurance Corporation’s list of “problem” banks. This year we have already seen more than six dozen banks fail, and the frightening thing is that we are seeing a rapid acceleration in bank failures even though we are supposedly in a “recovery” right now. So what happens if the economy takes a bad turn and hundreds of these banks that are barely surviving start failing?
Right now an increasing number of Americans are not paying their loans, and this is shredding the balance sheets of small and medium size banks all over the United States. In fact, during the first quarter of 2010, the total number of loans that are at least three months past due increased for the 16th consecutive quarter.
16 consecutive quarters?
Once is a coincidence.
Twice is a trend.
Sixteen times in a row is a total nightmare.
Is there anyone out there that is still convinced that the economy is getting better?
If so, perhaps this will convince you otherwise….
There were 252 banks on the FDIC’s “problem list” at the end of 2008.
There were 702 banks on the FDIC’s “problem list” at the end of 2009.
Now there are 775 banks of the FDIC’s “problem list”.
Are you starting to see a trend?
Federal regulators have already closed 73 banks in 2010, more than double the number shut down at this time last year.
The truth is that the U.S. banking system is coming apart like a 20 dollar suit.
So is the FDIC worried?
No, they insist that they have plenty of money to cover all of the banks that are going to fail.
After all, the FDIC’s deposit insurance fund now has negative 20.7 billion dollars in it, which represents a slight improvement from the end of 2009.
Yes, you read that correctly.
Negative 20.7 billion dollars.
That should be enough to cover the hundreds of banks that are in the process of failing, right?
Well, if not, the FDIC can just run out and ask the U.S. government for a big, juicy bailout.
After all, can’t the U.S. government borrow an endless amount of money with absolutely no consequences?
Debt always catches up with you sooner or later.
In fact, the IMF is warning that that the gross public debt of the United States will hit 97 percent of GDP in 2011 and 110 percent of GDP in 2015.
Meanwhile, the U.S. financial system continues to shrink even after the unprecedented amount of “stimulus money” that the U.S. government has been shoveling into the economy.
The M3 money supply is now contracting at a frightening pace.
In fact, the current rate of monetary contraction now matches the average rate of monetary contraction the U.S. experienced between 1929 and 1933.
But don’t worry.
We aren’t going into a Depression.
Everything is going to be just fine.
Just look deep into Obama’s eyes and keep repeating the word “change” to yourself over and over.
According to a report in The Telegraph, the M3 money supply declined from $14.2 trillion to $13.9 trillion in the first quarter of 2010.
That represents an annual rate of contraction of 9.6 percent.
In case you were wondering, that is a lot.
Not only that, but the assets of institutional money market funds declined at a 37 percent annual rate.
That was the sharpest drop ever.
Yes, it is time for the alarm bells to start going off.
The Telegraph recently quoted Professor Tim Congdon from International Monetary Research as saying the following about the deep problems that the U.S. is facing….
“The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly.”
If banks continue to cut their lending, the M3 is going to continue to shrink.
But as noted above, Americans are increasingly getting behind on their loans, so why should banks loan money to a bunch of deadbeats?
Right now U.S. banks are increasingly tightening their lending standards, and this is making it much tougher to get a loan.
In fact, in 2009 the biggest U.S. banks posted their sharpest decline in lending since 1942.
But there is only one problem.
The U.S. economy is completely and totally dependent on credit.
Without easy credit, the entire U.S. economic machine is going to slowly grind to a halt.
So what do you do?
The reality is that we have one gigantic financial mess on our hands, and in many ways it is starting to look like the 1930s all over again.
But perhaps someone out there has a way to get us out of this nightmare. Please feel free to leave a comment with your thoughts, opinions or solutions….
Could the world economy be headed for a depression in 2011? As inconceivable as that may seem to a lot of people, the truth is that top economists and governmental authorities all over the globe say that the economic warning signs are there and that we need to start paying attention to them. The two primary ingredients for a depression are debt and fear, and the reality is that we have both of them in abundance in the financial world today. In response to the global financial meltdown of 2007 and 2008, governments around the world spent unprecedented amounts of money and got into a ton of debt. All of that spending did help bail out the global banking system, but now that an increasing number of governments around the world are in need of bailouts themselves, what is going to happen? We have already seen the fear that is generated when one small little nation like Greece even hints at defaulting. When it becomes apparent that quite a few governments around the globe cannot handle their debt burdens, what kind of shockwave is that going to send through financial markets?
The truth is that we are facing the greatest sovereign debt crisis in modern history. There is no way out of this financial mess that does not include a significant amount of economic pain.
When you add mountains of debt to paralyzing fear to strict austerity measures, what do you get?
What you get is deflationary pressure and financial markets that seize up.
Some of the top financial authorities in the world are warning us that unless something substantial is done, that is exactly what we are going to be seeing as 2010 turns into 2011.
Of course some governments around the world could try to put these economic problems off for a while by printing and borrowing even more money, but we all know by now that only makes the long-term problems even worse.
For now, however, it seems as though most governments are opting for the austerity measures that the IMF seems determined to cram down the throats of everyone.
So what will austerity measures mean for the global economy?
Think “stimulus” in reverse.
Yes, things are going to get messy.
It looks like there is going to be a great deal of economic fear and a great deal of economic pain in 2011 and the years beyond that.
So are we headed for “the depression of 2011”?
Well, let’s hear what some of the top financial experts in the world have to say….
#1) Economist Nouriel Roubini:
“We are still in the middle of this crisis and there is more trouble ahead of us, even if there is a recovery. During the great depression the economy contracted between 1929 and 1933, there was the beginning of a recovery, but then a second recession from 1937 to 1939. If you don’t address the issues, you risk having a double-dip recession and one which is at least as severe as the first one.”
#2) Bank of England Governor Mervyn King:
“Dealing with a banking crisis was difficult enough, but at least there were public-sector balance sheets on to which the problems could be moved. Once you move into sovereign debt, there is no answer; there’s no backstop.”
#3) German Chancellor Angela Merkel:
“The current crisis facing the euro is the biggest test Europe has faced for decades, even since the Treaty of Rome was signed in 1957.”
#4) Paul Donovan, the Senior Economist at UBS:
“Now people are questioning if the euro will even exist in three years.”
#5) Michael Pento, Chief Economist at Delta Global Advisors:
“The crisis in Greece is going to spread to Spain and it’s going to be very difficult to deal with. They are bailing out debt with more debt and it isn’t sustainable. It’s a wonderful scenario for gold.”
“LEAP/E2020 believes that the global systemic crisis will experience a new tipping point from Spring 2010. Indeed, at that time, the public finances of the major Western countries are going to become unmanageable, as it will simultaneously become clear that new support measures for the economy are needed because of the failure of the various stimuli in 2009, and that the size of budget deficits preclude any significant new expenditures.”
#7) Telegraph Columnist Edmund Conway:
“Whatever yardstick you care to choose – share-price moves, the rates at which banks lend to each other, measures of volatility – we are now in a similar position to 2008.”
#8) Peter Morici, an Economics Professor at the University of Maryland:
“The next financial tsunami is emerging and will ripple to America.”
#9) Bob Chapman of the International Forecaster:
“The green shoots of recovery have now turned into poison ivy. The abyss has again been filled with more debt and more fiat currency. In the process the Fed and now the ECB have lost all credibility.”
#10) Telegraph Columnist Ambrose Evans-Pritchard:
“The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.”
#11) Professor Tim Congdon from International Monetary Research:
“The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly.”
#12) Reuters Columnist Iliana Jonas:
“The default rate for commercial mortgages held by banks in the first quarter hit its highest level since at least 1992 and is expected to surpass that by year-end and peak in 2011, according to a study by Real Capital Analytics.”
#13) Paul Krugman, a Nobel Prize-winning Economist:
“Anyone expecting a robust rebound in the housing market … will be sorely disappointed.”
#15) Fox News:
“As the national debt clock ticked past the ignominious $13 trillion mark overnight, Congress pressed to pass a host of supplemental spending bills.”
“The U.S. government’s Aaa bond rating will come under pressure in the future unless additional measures are taken to reduce projected record budget deficits, according to Moody’s Investors Service Inc.”
#17) Peter Schiff:
“When creditors ultimately decide to curtail loans to America, U.S. interest rates will finally spike, and we will be confronted with even more difficult choices than those now facing Greece. Given the short maturity of our national debt, a jump in short-term rates would either result in default or massive austerity. If we choose neither, and opt to print money instead, the run-a-way inflation that will ensue will produce an even greater austerity than the one our leaders lacked the courage to impose. Those who believe rates will never rise as long as the Fed remains accommodative, or that inflation will not flare up as long as unemployment remains high, are just as foolish as those who assured us that the mortgage market was sound because national real estate prices could never fall.”
#18) The National League of Cities:
“City budget shortfalls will become more severe over the next two years as tax collections catch up with economic conditions. These will inevitably result in new rounds of layoffs, service cuts, and canceled projects and contracts.”
#19) Dan Domenech, Executive Director of the American Association of School Administrators:
“Faced with continued budgetary constraints, school leaders across the nation are forced to consider an unprecedented level of layoffs that would negatively impact economic recovery and deal a devastating blow to public education.”
#20) Mike Whitney:
“Without another boost of stimulus, the economy will lapse back into recession sometime by the end of 2010.”
#21) Kevin Giddis, Managing Director of Fixed Income at Morgan Keegan:
“There is big money making big bets that at a minimum we we’ll have a recession if not a depression that could last for years.”
#22) John P. Hussman, Ph.D.:
“In my estimation, there is still close to an 80% probability (Bayes’ Rule) that a second market plunge and economic downturn will unfold during the coming year. This is not certainty, but the evidence that we’ve observed in the equity market, labor market, and credit markets to-date is simply much more consistent with the recent advance being a component of a more drawn-out and painful deleveraging cycle.”
#23) Richard Russell, the Famous Author of the Dow Theory Letters:
“Do your friends a favor. Tell them to “batten down the hatches” because there’s a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don’t need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won’t recognize the country. They’ll retort, “How the dickens does Russell know — who told him?” Tell them the stock market told him.”