Radical leftists have been catapulted to power in Greece, and that means that the European financial crisis has just entered a dangerous new phase. Syriza, which is actually an acronym for “Coalition of the Radical Left” in Greek, has 36 percent of the total vote with approximately 80 percent of the polling stations reporting. The current governing party, New Democracy, only has 28 percent of the vote. Syriza leader Alexis Tsipras is promising to roll back a whole host of austerity measures that were imposed on Greece by the EU, and his primary campaign slogan was “hope is on the way”. Hmmm – that sounds a bit familiar. Clearly, the Greek population is fed up with the EU after years of austerity and depression-like conditions. At this point, the unemployment rate in Greece is sitting at 25.8 percent, and the Greek economy is approximately 25 percent smaller than it was just six years ago. The people of Greece are desperate for things to get better, and so they have turned to the radical leftists. Unfortunately, things may be about to get a whole lot worse.
Once they formally have control of the government, Syriza plans to call for a European debt conference during which they plan to demand that the repayment terms of their debts be renegotiated. But the rest of Europe appears to be highly resistant to any renegotiation – especially Germany.
Syriza says that it does not plan to unilaterally pull Greece out of the eurozone, and that it also intends for Greece to continue to use the euro.
But what happens if Germany will not budge?
Syriza’s entire campaign was based on promises to end austerity. If international creditors refuse to negotiate and continue to insist that Greece abide by the austerity measures that were previously put in place, what will Syriza do?
Will Syriza back down and lose all future credibility with Greek voters?
Since 2010, the Greek people have endured a seemingly endless parade of wage reductions, pension cuts, tax increases and government budget cutbacks.
The Greek people just want things to go back to the way that they used to be, and they are counting on Syriza to deliver.
Unfortunately for Syriza, delivering on those promises is not going to be easy. They may be faced with a choice of either submitting to the demands of their international creditors or choosing to leave the eurozone altogether.
And if Greece does leave the eurozone, the consequences for all of Europe could be catastrophic…
Syriza risks overplaying its hand, said International Capital Strategies’ Rediker. “Given that the ECB controls the liquidity of the Greek banking system, and also serves as its regulator through the SSM (Single Supervisory Mechanism), going toe-to-toe with the ECB is one battle that could end very badly for the Greek government.”
If the ECB were to stop funding the liquidity of the Greek banks, the banks could collapse—an event that could lead to Greece abandoning the euro and printing its own money once more.
Milios didn’t believe it would come to that, saying, “No one wants a collapse of banks in the euro zone. This is going to be Lehman squared or to the tenth. No one wants to jeopardize the future of the euro zone.”
Hopefully cooler heads will prevail, because one bad move could set off a meltdown of the entire European financial system.
Even before the Greek election, the euro was already falling like a rock and economic conditions all over Europe were already getting worse.
So why would the Greeks risk pushing Europe to the brink of utter disaster?
Well, it is because economic conditions in Greece have been absolutely hellish for years and they are sick and tired of it.
For example, the BBC is reporting that many married women have become so desperate to find work in Greece that they are literally begging to work in brothels…
Some who have children and are struggling to support them have turned to sex work, to put food on the table.
Further north, in Larissa, Soula Alevridou, who owns a legal brothel, says the number of married women coming to her looking for work has doubled in the last five years.
“They plead and plead but as a legal brothel we cannot employ married women,” she says. “It’s illegal. So eventually they end up as prostitutes on the streets.”
When people get this desperate, they do desperate things – like voting radical leftists into power.
But Greece might just be the beginning. Surveys show that the popularity of the EU is plummeting all over Europe. Just check out the following excerpt from a recent Telegraph article…
Europe is being swept by a wave of popular disenchantment and revolt against mainstream political parties and the European Union.
In 2007, a majority of Europeans – 52 per cent – trusted the EU. That level of trust has now fallen to a third.
Once, Britain’s Euroscepticism was the exception, and was seen as the biggest threat to the future of the EU.
Now, other countries pose a far bigger danger thanks to the political discontents unleashed by the euro.
At this point, the future of the eurozone is in serious jeopardy.
I have a feeling that major changes in Europe are on the way which are going to shock the planet.
Meanwhile, the rest of the globe continues to slide toward another major financial crisis as well.
So many of the things that preceded the last financial crisis are happening once again. This includes a massive crash in the price of oil. Most people have absolutely no idea how critical the price of oil is to global financial markets. I like how Gerald Celente put it during an interview the other day…
I began getting recognition as a trend forecaster in 1987. The Wall Street Journal covered my forecast. I said, ‘1987 would be the year it all collapses.’ I said, ‘There will be a stock market crash.’ One of the fundamentals I was looking at were the crashing oil prices in 1986.
Well, we see crashing oil prices today and the banks are much more concentrated and levered up in the oil patch than they were in 1987. From Goldman Sachs to Morgan Stanley banks have been involved in major debt financing, derivatives and energy transactions. But much of this debt has not been sold to investors and now we are going to start seeing some big defaults.
By itself, the Greek election would be a significant crisis.
But combined with all of the other economic and geopolitical problems that are erupting all over the planet, it looks like the conditions for a “perfect storm” are rapidly coming together.
Unfortunately, the overall global economy is in far worse shape today than it was just prior to the last major financial crisis.
This time around, the consequences might just be far more dramatic than most people would ever dare to imagine.
If you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer. As I write this, the price of U.S. oil is sitting at $45.76 a barrel. It has fallen by more than 60 dollars a barrel since June. There is only one other time in history when we have seen anything like this happen before. That was in 2008, just prior to the worst financial crisis since the Great Depression. But following the financial crisis of 2008, the price of oil rebounded fairly rapidly. As you will see below, there are very strong reasons to believe that it will not happen this time. And the longer the price of oil stays this low, the worse our problems are going to get. At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before. So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead. Because if not, the price of oil is going to absolutely rip the global economy to shreds.
What amazes me is that there are still many economic “experts” in the mainstream media that are proclaiming that the collapse in the price of oil is going to be a good thing for the U.S. economy.
The only precedent that we can compare the current crash to is the oil price collapse of 2008. You can see both crashes on the chart below…
If rapidly falling oil prices are good economic news, that collapse should have pushed the U.S. economy into overdrive.
But that didn’t happen, did it? Instead, we plunged into the deepest recession that we have seen since the Great Depression.
And unless there is a miracle rebound in the price of oil now, we are going to experience something similar this time.
Already, we are seeing oil rigs shut down at a staggering pace. The following is from Bloomberg…
U.S. oil drillers laid down the most rigs in the fourth quarter since 2009. And things are about to get much worse.
The rig count fell by 93 in the three months through Dec. 26, and lost another 17 last week, Baker Hughes Inc. data show. About 200 more will be idled over the next quarter as U.S. oil explorers make good on their promises to curb spending, according to Moody’s Corp.
But that was just the beginning of the carnage. 61 more oil rigs shut down last week alone, and hundreds more are being projected to shut down in the months ahead.
For those that cannot connect the dots, that is going to translate into the loss of large numbers of good paying jobs. Just check out what is happening in Texas…
A few days ago, Helmerich & Payne, announced that it would idle 50 more drilling rigs in February, after having already idled 11 rigs. Each rig accounts for about 100 jobs. This will cut its shale drilling activities by 20%. The other two large drillers, Nabors Industries and Patterson-UTI Energy are on a similar program. All three combined are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ,” said Oilpro Managing Director Joseph Triepke.
Unfortunately, this crisis will not just be localized to states such as Texas. There are tens of thousands of small and mid-size firms that will be affected. The following is from a recent CNBC report…
More than 20,000 small and midsize firms drive the “hydrocarbon revolution” in the U.S. that has helped the oil and gas industry thrive in recent years, and they produce more than 75 percent of the nation’s oil and gas output, according to the Manhattan Institute for Policy Research’s February 2014 Power & Growth Initiative Report. The Manhattan Institute is a conservative think tank in New York City.
A sustained decline in prices could lead to layoffs at these firms, say experts. “The energy industry has been one of the job-growth areas leading us out of the recession,” said Chad Mabry, a Houston-based analyst in the energy and natural resources research department of boutique investment bank MLV & Co. in New York City. “In 2015, that changes in this price environment,” he said. “We’re probably going to see some job losses on a fairy significant scale if this keeps up.”
If the price of oil makes a major comeback, the carnage will ultimately not be that bad.
But if it stays at this level or keeps going down for an extended period of time, it is inevitable that a whole bunch of those firms will go bankrupt and their debt will go bad.
That would mean a junk bond crash unlike anything that Wall Street has ever experienced.
And as I have written about previously, a stock market crash almost always follows a junk bond crash.
These are things that happened during the last financial crisis and that are repeating again right in front of our eyes.
Another thing that happened in 2008 that is happening again is a crash in industrial commodity prices.
At this point, industrial commodity prices have hit a 12 year low. I am talking about industrial commodities such as copper, iron ore, steel and aluminum. This is a huge sign that global economic activity is slowing down and that big trouble is on the way.
So what is driving this? The following excerpt from a recent Zero Hedge article gives us a clue…
Globally there are over $9 trillion worth of borrowed US Dollars in the financial system. When you borrow in US Dollars, you are effectively SHORTING the US Dollar.
Which means that when the US Dollar rallies, your returns implode regardless of where you invested the borrowed money (another currency, stocks, oil, infrastructure projects, derivatives).
Take a look at commodities. Globally, there are over $22 TRILLION worth of derivatives trades involving commodities. ALL of these were at risk of blowing up if the US Dollar rallied.
Unfortunately, starting in mid-2014, it did in a big way.
This move in the US Dollar imploded those derivatives trades. If you want an explanation for why commodities are crashing (aside from the fact the global economy is slowing) this is it.
Once again, much of this could be avoided if the price of oil starts going back up substantially.
Unfortunately, that does not appear likely. In fact, many of the big banks are projecting that it could go even lower…
Goldman Sachs, CitiGroup, Societe General and Commerzbank are among the latest investment banks to reduce crude oil price estimates, and without production cuts, there appears to be more room for lower prices.
“We’re going to keep on going lower,” says industry analyst Brian Milne of energy manager Schneider Electric. “Even with fresher new lows, there’s still more downside.”
OPEC could stabilize global oil prices with a single announcement, but so far OPEC has refused to do this. Many believe that the OPEC countries actually want the price of oil to fall for competitive reasons…
Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG.
The oil producing countries in the Middle East seem to be settling in for the long haul. In fact, one prominent Saudi prince made headlines all over the world this week when he said that “I’m sure we’re never going to see $100 anymore.”
Never is a very strong word.
Could there be such a massive worldwide oil glut going on right now that the price of oil will never get that high again?
Well, without a doubt there is a huge amount of unsold oil floating around out there at the moment.
It has gotten so bad that some big trading companies are actually hiring supertankers to store large quantities of unsold crude oil at sea…
Some of the world’s largest oil traders have this week hired supertankers to store crude at sea, marking a milestone in the build-up of the global glut.
Trading firms including Vitol, Trafiguraand energy major Shell have all booked crude tankers for up to 12 months, freight brokers and shipping sources told Reuters.
They said the flurry of long-term bookings was unusual and suggested traders could use the vessels to store excess crude at sea until prices rebound, repeating a popular 2009 trading gambit when prices last crashed.
The fundamentals for the price of oil are so much worse than they were back in 2008.
We could potentially be looking at sub-$50 oil for an extended period of time.
If that is indeed the case, there will be catastrophic damage to the global economy and to the global financial system.
So hold on to your hats, because it looks like we are going to be in for quite a bumpy ride in 2015.
Did you know that 65 percent of all children in the United States live in a home that receives aid from the federal government? We live at a time when child poverty in America is exploding. Yes, the U.S. economy is experiencing a temporary bubble of false stability for the moment, but even during this period of false stability the gap between the wealthy and the poor continues to rapidly expand and the middle class is being systematically destroyed. And sadly, this is having a disproportionate impact on children. This is happening for a couple of reasons. First of all, poorer households tend to have more children than wealthier households. Secondly, most people tend to have children when they are in their young adult years, and right now young adults are being absolutely hammered by this economy. As a result, things just continue to get even worse for children living in this country. Here are 14 facts that show that the number of children in America living in poverty this Christmas is at an all-time record high…
#1 The National Center for Children in Poverty says that 45 percent of all U.S. children belong to low income families.
#2 According to a Census Bureau report that was released just this week, 65 percent of all children in America are living in a home that receives some form of aid from the federal government…
“Almost two-thirds (65 percent) of children,” said the Census Bureau, “lived in households that participated in at least one or more of the following government aid programs: Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Medicaid, and the National School Lunch Program.”
#3 According to a report recently released by UNICEF, almost one-third of all children in this country “live in households with an income below 60 percent of the national median income”.
#4 When it comes to child poverty, the United States ranks 36th out of the 41 “wealthy nations” that UNICEF looked at.
#5 An astounding 45 percent of all African-American children in America live in areas of “concentrated poverty”.
#6 40.9 percent of all children in the United States that are living with only one parent are living in poverty.
#7 These days, a lot of single mothers are really, really struggling to survive. A decade ago, the number of women in America that had jobs outnumbered the number of women in America on food stamps by more than a 2 to 1 margin. But now the number of women in America on food stamps actually exceeds the total number of women that have jobs.
#8 It is hard to believe, but right now 49 million Americans are dealing with food insecurity.
#9 According to a report that was released last month by the National Center on Family Homelessness, the number of homeless children in the United States has reached a new all-time high of 2.5 million.
#10 There are more than half a million homeless children in the state of California alone.
#11 One recent survey found that about 22 percent of all Americans have had to turn to a church food panty for assistance.
#12 This year, almost one out of every five households in the United States will go through the holiday season on food stamps.
#13 One of the primary reasons why kids are suffering so much is because their parents are simply not making enough money. This is especially true for parents of young children. For example, check out the following numbers from the Atlantic…
Since the Great Recession struck in 2007, the median wage for people between the ages of 25 and 34, adjusted for inflation, has fallen in every major industry except for health care.
These numbers come from an analysis of the Census Current Population Survey by Konrad Mugglestone, an economist with Young Invincibles.
In retail, wholesale, leisure, and hospitality—which together employ more than one quarter of this age group—real wages have fallen more than 10 percent since 2007. To be clear, this doesn’t mean that most of this cohort are seeing their pay slashed, year after year. Instead it suggests that wage growth is failing to keep up with inflation, and that, as twentysomethings pass into their thirties, they are earning less than their older peers did before the recession.
#14 Overall, the quality of the jobs in America continues to decline. At this point, most Americans do not bring home enough income to support a middle class lifestyle for their families. Below I have shared an excerpt from an article that I published a while back…
The following are some statistics about wages in the U.S. from a Social Security Administration report that was 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.
In addition to all of these numbers, there is also a lot of anecdotal evidence that families with children are really struggling right now.
For example, McDonald’s has traditionally been a place where poor and middle class families have taken their children for a cheap meal. But the restaurant chain just released the worst sales numbers that we have seen in more than a decade.
And the really bad news is that this is just the beginning of the economic pain for families with children. The U.S. economy is in a bubble period right now, and the authorities have been trying with all of their might to keep the bubble inflated.
Just imagine a bodybuilder that is pressing with all of his might to do one more rep on the bench press. That is essentially where we are at. In a recent piece, Brian Pretti summarized some of the extraordinary measures that global central banks have taken to keep the economic bubble inflated…
Since early 2009, central banks globally have printed more than $13 trillion. In addition, governments across the planet have increased their borrowings at historic proportions (the US just crossed $18T – another new high!), all in an effort to stimulate economies and avoid deflationary pressures. Total US Federal debt has more than doubled in five years, an increase of $9.5 trillion and counting.
Despite all of these efforts, the best that we have achieved is economic stagnation.
And now it is becoming clear that the overwhelming deflationary forces around the globe are starting to win the battle. The central banks have used up their ammunition and they still have not turned things around. In fact, as Ambrose Evans-Pritchard so eloquently put it recently, what we see all around us is “evidence of a 1930s-style depression, albeit one that is still contained”…
What is clear is that the world has become addicted to central bank stimulus. Bank of America said 56pc of global GDP is currently supported by zero interest rates, and so are 83pc of the free-floating equities on global bourses. Half of all government bonds in the world yield less that 1pc. Roughly 1.4bn people are experiencing negative rates in one form or another.
These are astonishing figures, evidence of a 1930s-style depression, albeit one that is still contained. Nobody knows what will happen as the Fed tries to break out of the stimulus trap, including Fed officials themselves.
But will it still be contained once the next major financial crash strikes?
As I discussed yesterday, there has never been a time when conditions have been more ideal for a financial crisis since the last one happened in 2008.
So as bad as things are for the children of America right now, they are only going to get worse.
In the years ahead may we all have great compassion for these victims of our incredibly foolish economic mistakes.
It isn’t just the price of oil that is collapsing. The last time commodity prices were this low was during the immediate aftermath of the last financial crisis. The Bloomberg Commodity Index fell to 110.4571 on Monday – the lowest that it has been since April 2009. Just like junk bonds, industrial commodities are a very reliable leading indicator. In other words, prices for industrial commodities usually start to move in a particular direction before the overall economy does. We witnessed this in the summer of 2008 when a crash in commodity prices preceded the financial crisis in the fall by a couple of months. And right now, we are witnessing what may be another major collapse in commodity prices. In recent weeks, the price of copper has declined substantially. So has the price of iron ore. So has the price of nickel. So has the price of aluminum. You get the idea. So this isn’t just about oil. This is a broad-based commodity decline, and if it continues it is really bad news for the U.S. economy.
Of course most Americans would much rather read news stories about Kim Kardashian, but what is happening to the prices of these industrial metals at the moment is actually far more important to their daily lives. For example, when the price of iron ore goes down that is a strong indication that economic activity is slowing down. And that is why it is so troubling that the price of iron ore has almost sunk to a five year low. The following comes from an Australian news source…
The price of iron ore has held below $US70 a tonne in overnight trade, leaving its five-year low within reach.
At the end of the latest offshore session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US69.40 a tonne, down 0.4 per cent from its previous close of $US69.70 a tonne and only 2 per cent above the five-year low of $US68 reached a fortnight ago.
This week’s dip back under $US70 a tonne has followed revised forecasts from JPMorgan that suggest the commodity will average just $US67 a tonne next year, about $US20 below the investment bank’s previous expectation.
Copper is probably an even better economic indicator than iron ore is. Economists commonly refer to it as “Dr. Copper”, and there is a really good reason for that. Looking back over history, the price of copper often makes a significant move in one direction or the other before the economy does. And now that the price of copper just hit the lowest level that we have seen since the last financial crash, alarm bells are going off. The following comes from an article by CNBC contributor Ron Insana…
Copper prices are now below $3 a pound and there’s an expression that “the economy is topped with a copper roof.” More simply put, copper tends to top out in price, before it becomes obvious that, in this case, the global economy is about to weaken.
So is the global economy heading for rough waters?
Could 2015 be a very rough year economically?
According to Insana, the signs are all around us…
We already have evidence that the commodity crash has ominous portents for the rest of the world:
* Japan’s recession is deeper than previously thought.
* China’s demand for basic materials, amid a glut of uneconomic construction projects, appears to be plummeting.
* Russia’s ruble has collapsed and the country is on the brink, if not already in, a recession.
* India’s economic recovery is beginning to look shaky.
* Europe’s growth rate and inflation rate, for the next two years, were just revised downward by the European Central Bank, suggesting that Europe’s economic crisis is far from over. In fact, at least one former European leader with whom I recently spoke, believes the crisis in Europe may just be in its early stages.
* Brazil and other emerging market nations are struggling with a variety of issues, from recessions at home, to the rising value of the dollar, which is complicating how emerging markets conduct economic policies at home, given how closely their currencies are tied to the greenback.
In addition, the Baltic Dry Index is now at the lowest point that we have seen at this time of the year since 2008…
Simply put, with collapsing commodity prices (iron ore for instance) and massive fleets of credit-driven mal-investment-based vessels, it should surprise no one that the shipping index just plunged back below 1000, now at its lowest for this time of year since 2008. Furthermore, the seasonal bounce always seen in Q3 was among the weakest ever.
What does all of this mean?
It is commonly said that those that do not learn from history are doomed to repeat it.
So many of the exact same patterns that we witnessed leading up to the financial crash of 2008 are happening again.
Unfortunately, very few people saw the last crash coming, and this next crash will take most Americans by surprise as well.
I have written more than 1,200 articles about the economy on my website since 2009, and right now our financial system is more primed for a crash than at any other time since I started The Economic Collapse Blog.
Hopefully we have at least a couple more months of relative stability, but without a doubt 2015 is shaping up to be the most “interesting” year that we have seen in the financial world in a very long time.
All of the signs are there. But most people choose to believe that everything is going to be okay somehow. When the next crash comes, those people are going to be absolutely blindsided by it.
When you see storm clouds on the horizon, the logical thing to do is to prepare. And the number one thing that most people should be working on is an emergency fund. So don’t be frittering your money away on frivolous things. In the early stages of this next crisis, you are going to need money to pay the mortgage, to put food on the table and to take care of your family.
Just remember what happened back in 2008. A lot of middle class families were living on the financial edge every month, and because they didn’t have any cushion to fall back on, millions of those families ended up losing their homes when their jobs disappeared.
You need to have an emergency fund that can cover at least six months of expenses. You don’t want a job loss or a major emergency to put you into a situation where your family could be put out into the street.
And for those that still have lots of money invested in the stock market – I really hope that you know what you are doing.
The market giveth, and the market taketh away.
And when the market taketh away, the consequences can often be exceedingly cruel.
Did you know that some Americans are being hit with health insurance rate increases of more than 500 percent? Taking advantage of “the stupidity of the American voter”, the Democrats succeeded in ramming through one of the worst pieces of legislation that has ever come before Congress. The full implementation of Obamacare has been repeatedly delayed, but now we are finally starting to see the true horror of this terrible law. Thanks to Obamacare, millions of American families are losing health plans that they were very happy with, health insurance rates are skyrocketing, millions of workers are having their full-time hours cut back to part-time hours, rural hospitals all over the country are dying, and thousands of doctors are being driven out of the industry thus intensifying the greatest doctor shortage in U.S. history. Obamacare is a slow-motion train wreck of epic proportions, and the full effect of this law is only beginning to be felt. In the end, the economic impact of this law will likely be measured in the trillions of dollars.
One of the primary reasons why Democrats experienced so much pain during the recent elections was because millions of Americans are receiving some very disturbing letters from their health insurance providers. At a time when U.S. incomes are stagnating, health insurance rates are rising to absolutely ridiculous levels.
As the New York Times recently reported, even the Obama administration is admitting that “substantial price increases” are on the way…
The Obama administration on Friday unveiled data showing that many Americans with health insurance bought under the Affordable Care Act could face substantial price increases next year — in some cases as much as 20 percent — unless they switch plans.
The data became available just hours before the health insurance marketplace was to open to buyers seeking insurance for 2015.
An analysis of the data by The New York Times suggests that although consumers will often be able to find new health plans with prices comparable to those they now pay, the situation varies greatly from state to state and even among counties in the same state.
Originally, Barack Obama promised that if we liked our current health plans that we could keep them. Well, it turns out that was not true at all. Instead, the vast majority of us will eventually have to move to new plans if we have not done so already. This is particularly true for those that purchase health insurance individually. The following is an excerpt from an NBC News investigation…
Four sources deeply involved in the Affordable Care Act tell NBC News that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a “cancellation” letter or the equivalent over the next year because their existing policies don’t meet the standards mandated by the new health care law. One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience “sticker shock.”
This is something that actually happened to me. I received a letter in the mail informing me that my new health insurance policy which meets the requirements of Obamacare will cost me nearly twice as much as my old one.
Needless to say, I was not too thrilled about that.
Other Americans are being hit even harder. For instance, one family down in Texas got hammered with a 539 percent rate increase…
Obamacare is named the “Affordable Care Act,” after all, and the President promised the rates would be “as low as a phone bill.” But I just received a confirmed letter from a friend in Texas showing a 539% rate increase on an existing policy that’s been in good standing for years.
As the letter reveals (see below), the cost for this couple’s policy under Humana is increasing from $212.10 per month to $1,356.60 per month. This is for a couple in good health whose combined income is less than $70K — a middle-class family, in other words.
These rate increases are coming at a time when the middle class in the U.S. is already steadily shrinking. A lot of families that are already stretched to the breaking point are making the very painful decision to give up health insurance entirely. At this point, there are millions of families that simply cannot afford it.
But Obama is not about to let those people off the hook. In fact, huge tax penalties are on the way for those that do not participate in the new system…
Penalties for failing to secure a health-insurance plan will rise steeply next year, which could take a big bite out of some families’ pocketbooks.
“The penalty is meant to incentivize people to get coverage,” said senior analyst Laura Adams of InsuranceQuotes.com. “This year, I think a lot of people are going to be in for a shock.”
In 2014, Obamacare’s first year, individuals are facing a penalty of $95 per person, or 1 percent of their income, depending on which is higher. If an American failed to get coverage this year, that penalty will be taken out of their tax refund in early 2015, Adams noted.
While that might be painful to some uninsured Americans who are counting on their tax refunds in early 2015, the penalty for going uninsured next year is even harsher. The financial penalty for skipping out on health coverage will more than triple to $325 per person in 2015, or 2 percent of income, depending on whichever is higher.
Children will be fined at half the adult rate, or $162.50 for those under 18 years old.
No wonder so many people are so angry with the Democrats.
And as Massachusetts Institute of Technology professor Jonathan Gruber has so infamously observed, Obamacare never would have become law if the American people had been told the truth about what it would do to them.
It has been documented that Gruber has visited the White House about a dozen times since 2009, and he has been one of the leading intellectual proponents of Obamacare. A video in which he states that “the stupidity of the American voter” was “really critical” to the passage of Obamacare has gone viral over the past week. I have posted a copy of this video below…
What he is essentially saying is that the Democrats purposely deceived the American people because it was the only way that Obamacare was going to become law.
And this is a man that has become very wealthy advising government on healthcare matters. According to an article in the Washington Post, he has made millions of dollars from “consulting” in recent years…
Not all of the contracts could be found on public Web sites, but here is a sampling. In some cases, Gruber worked with other consultants, so the fees were shared. These figures also might not represent the final payout, and of course these are gross figures, before expenses. But it’s safe to say that about $400,000 appears to be the standard rate for gaining access to the Gruber Microsimulation Model.
Gruber has also earned more than $2 million over the last seven years for an ongoing contract with HHS to assess choices made by the elderly in Medicare’s prescription-drug plan.
If you are Gruber, life is quite good.
But for most of the rest of America, the economic pain continues.
For example, one recent study found that almost half of all Floridians cannot even afford “to pay for basic necessities”…
Nearly half of Florida households do not earn enough to pay for basic necessities, according to a report released Tuesday by the United Way that seeks to cast a light on the large group of state residents who struggle financially but do not meet the official criteria for being in poverty.
While 15 percent of Florida households are below the poverty level, another 30 percent are financially insecure — a figure that also applies to Sarasota and Manatee counties — based on a new measurement developed by the United Way.
If all those people cannot even afford the basics, how are they going to pay for Obamacare?
This law is going to financially cripple millions of American families. It truly is a death panel for the U.S. economy. And because Barack Obama can veto anything that the Republicans in Congress do, we are stuck with it for at least another two years (and probably longer).
So what about you?
Have your health insurance premiums gone up yet?
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