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 When you get into too much debt, eventually really bad things start to happen. This is a very painful lesson that southern Europe is learning right now, and it is a lesson that the United States will soon learn as well. It simply is not possible to live way beyond your means forever. You can do it for a while though, and politicians in the U.S. and in Europe keep trying to kick the can down the road and extend the party, but the truth is that debt is a very cruel master and at some point it inevitably catches up with you. And when it catches up with you, the results can be absolutely devastating. Greece, Italy, Spain and Portugal all tried to just slow down the rate at which their government debts were increasing, and look at what happened to their economies. In each case, GDP is shrinking, unemployment is skyrocketing, credit is freezing up and manufacturing is declining. And you know what? None of those countries has even gotten close to a balanced budget yet. They are all still going into even more debt. Just imagine what would happen if they actually tried to only spend the money that they brought in? (Read More....)
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 Why are so many politicians around the world declaring that the debt crisis is "over" when debt to GDP ratios all over the planet continue to skyrocket? The global economy has never seen anything like the sovereign debt bubble that we are experiencing today. The United States, Japan, and nearly every major nation in Europe are absolutely drowning in debt. We have heard a lot about "austerity" over in Europe in recent years, but debt to GDP ratios continue to rise in Greece, Spain, Italy, Ireland and Portugal. In general, most economists consider a debt to GDP ratio of 100% to be a "danger level", and most of the economies of the western world have either already surpassed that level or are rapidly approaching it. Of course the biggest debt offender of all in many ways is the United States. The U.S. debt to GDP ratio has risen from 66.6 percent to 103 percent since 2007, and the U.S. government accumulated more new debt during Barack Obama's first term than it did under the first 42 U.S. presidents combined. This insane sovereign debt bubble will continue to expand until a day of reckoning arrives and the system implodes. Nobody knows exactly when that moment will be reached, but without a doubt it is coming. (Read More....)
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 Are you constantly tired and do you feel incredibly stressed almost all the time? Well, that means that there is a really good chance that you are a typical American worker. Even though our incomes are going down, Americans are spending more time at work than ever before. In fact, U.S. workers spend more time at work than anyone else in the world. But it was not always this way. Back in 1970, the average work week for an American worker was about 35 hours. Today, it is up to 46 hours. But there are other major economies around the globe that are doing just fine without burning their workers out. For example, the average American worker spends 378 more hours working per year than the average German worker does. Sadly, for many Americans work is not even finished once they leave the office. According to one recent survey, the average American worker spends an extra seven hours per week on work tasks such as checking emails and answering phone calls after normal work hours have finished. Other Americans are juggling two or three jobs in a desperate attempt to make ends meet. Americans are busier than ever and work is often pushing the other areas of our lives on to the back burner. What this also means is that "family vacations" are becoming increasingly rare in the United States. In fact, Americans spend less days on vacation than anyone else in the industrialized world. While some would applaud our "work ethic", the truth is that the fact that we are being overworked is having some very serious consequences. In fact, as you will see below, Americans are literally being worked to death. (Read More....)
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 In recent days, New York Times economist Paul Krugman has been doing a whole bunch of interviews in which he has declared that the solution to our economic problems is very easy. Krugman says that all we need to do to get the global economy going again is for the governments of the world to start spending a lot more money. Krugman believes that austerity is only going to cause the economies of the industrialized world to slow down even further and therefore he says that it is the wrong approach. And you know what? Krugman is partly right about all of this. The false prosperity that the United States and Europe have been enjoying has been fueled by unprecedented amounts of debt, and in order to maintain that level of false prosperity we are going to need even larger amounts of debt. But there are several reasons why Krugman is mostly wrong. First of all, we have not seen any real "austerity" yet. Even though there have been some significant spending cuts and tax increases over in Europe, the truth is that nearly every European government is still piling up more debt at a frightening pace. Here in the United States, the federal government continues to spend more than a trillion dollars a year more than it brings in. If the United States were to go to a balanced federal budget, that would be austerity. What we have now is wild spending by the federal government beyond anything that John Maynard Keynes ever dreamed of. Secondly, Krugman focuses all of his attention on making things more comfortable for all of us in the short-term without even mentioning what we might be doing to future generations. Yes, more government debt would give us a short-term economic boost, but it would also make the long-term financial problems that we are passing on to our children even worse. (Read More....)
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 If you enjoy watching financial doom, then you are quite likely to really enjoy the rest of 2012. Right now, red flags are popping up all over the place. Corporate insiders are selling off stock like there is no tomorrow, major economies all over Europe continue to implode, the IMF is warning that the eurozone could actually break up and there are signs of trouble at major banks all over the planet. Unfortunately, it looks like the period of relative stability that global financial markets have been enjoying is about to come to an end. A whole host of problems that have been festering just below the surface are starting to manifest, and we are beginning to see the ingredients for a "perfect storm" start to come together. The greatest global debt bubble in human history is showing signs that it is getting ready to burst, and when that happens the consequences are going to be absolutely horrific. Hopefully we still have at least a little bit more time before the global financial system implodes, but at this point it doesn't look like anything is going to be able to stop the chaos that is on the horizon. (Read More....)
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 The economic crisis in Europe continues to get worse and eventually it is going to unravel into a complete economic nightmare. All over Europe, national governments have piled up debts that are completely unsustainable. But whenever they start significantly cutting government spending it results in an economic slowdown. So politicians in Europe are really caught between a rock and a hard place. They can't keep racking up these unsustainable debts, but if they continue to cut government spending it is going to push their economies into deep recession and their populations will riot. Greece is a perfect example of this. Greece has been going down the austerity road for several years now and they are experiencing a full-blown economic depression, riots have become a way of life in that country and their national budget is still not anywhere close to balanced. Americans should pay close attention to what is going on in Europe, because this is what it looks like when a debt party ends. Most of the nations in the eurozone have just started implementing austerity, and yet unemployment in the eurozone is already the highest it has been since the euro was introduced. It has risen for 10 months in a row and is now up to 10.8 percent. Sadly, it is going to go even higher. As economies across Europe slide into recession, that is going to put even more pressure on the European financial system. Most Americans do not realize this, but the European banking system is absolutely enormous. It is nearly four times the size that the U.S. banking system is. When the European banking system crashes (and it will) it is going to reverberate around the globe. The epicenter of the next great financial crisis is going to be in Europe, and it is getting closer with each passing day. (Read More....)
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 For a long time, most analysts have believed that if someone was going to leave the euro, it would be a weak nation such as Greece or Portugal. But the truth is that financially troubled nations such as Greece and Portugal don't want to leave the euro. The leaders of those nations understand that if they leave the euro their economies will totally collapse and nobody will be there to bail them out. And at this point there really is not a formal mechanism which would enable other members of the eurozone to kick financially troubled nations such as Greece or Portugal out of the euro. But there is one possibility that is becoming increasingly likely that could actually cause the break up of the euro. Germany could leave the euro. Yes, it might actually happen. Germany is faced with a very difficult problem right now. It is looking at a future where it will be essentially forced to bail out most of the rest of the nations in the eurozone for many years to come, and those bailouts will be extremely expensive. Meanwhile, the mood in much of the rest of Europe is becoming decidedly anti-German. In Greece, Angela Merkel and the German government are being openly portrayed as Nazis. Financially troubled nations such as Greece want German bailout money, but they are getting sick and tired of the requirements that Germany is imposing upon them in order to get that money. Increasingly, other nations in Europe are simply ignoring what Germany is asking them to do or are openly defying Germany. In the end, Germany will need to decide whether it is worth it to continue to pour billions upon billions of euros into countries that don't appreciate it and that are not doing what Germany has asked them to do. (Read More....)
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