The mainstream media is full of happy economic news these days. The S&P 500 has shot up 16 percent since the beginning of July. Ford Motor Company just reported a profit that jumped nearly 70 percent in the third quarter. It was Ford’s best third quarter performance ever and it was the 6th quarterly profit in a row for the company. Other major firms have announced earnings that have far exceeded expectations in recent weeks. Hooray! The pundits are proclaiming that the economic collapse is over and that the U.S. economy has won. It is almost enough to make one tear into a stirring rendition of “Happy Days Are Here Again”. But perhaps we should take a moment and get a hold of ourselves first. After all, the underlying economic fundamentals have not changed. The same long-term trends that were ripping the U.S. financial system apart a month or two ago are still continuing to do so. Millions upon millions of American families are still deeply suffering. So exactly what in the world is going on here? Well, this is what is known as a “sucker’s rally”. Those on the inside know better than to throw money at this market. In fact, corporate insiders are now selling off stock so fast you would think it is going out of style. Meanwhile, hordes of innocent rubes are jumping back into the stock market thinking that it is the perfect time to get in.
The truth is that these “good times” are only temporary. Don’t get used to them. The following are 30 reasons why people should be getting really, really nervous about the state of the U.S. economy….
#1 Corporate insiders are selling off stock at a blinding pace and are looking for the exits. Alan Newman, the editor of the Crosscurrents newsletter, examined a number of the top performing stocks in the market including Google, Apple and Target and found that the ratio of corporate insider stock sold to corporate insider stock purchased over the last six months for those companies was 3,177 to 1. At the group of firms that Newman looked at, corporate insiders had purchased 38,000 shares of stock over the last six months and yet had sold off over 120 million shares.
#2 Analysts at both Bank of America and Goldman Sachs both believe that the U.S. Federal Reserve is going to initiate a new round of quantitative easing in November. It does not take a genius to figure out that this is very likely to push up inflation and have very serious consequences for the U.S. dollar.
#3 Economists at Goldman Sachs are projecting that the Fed will have to purchase at least $4 trillion in assets during this next round of quantitative easing to get the U.S. economy moving in a positive direction once again.
#4 In the United States today, there are 5,057 janitors with Ph.D.’s, other doctorates, or professional degrees.
#5 Investors have very little faith in the U.S. dollar (and in paper currencies in general) at this point. Precious metals are soaring to obscene heights. The price of gold has increased more than 20 percent in 2010. The price of silver has skyrocketed about 40 percent this year. These are not signs that indicate that the U.S. financial system is stable.
#6 Robin Griffiths, a technical strategist at Cazenove Capital, told CNBC on Monday that the U.S. dollar is in danger of becoming “toxic waste”.
#8 U.S. lending institutions repossessed an all-time record total of 102,134 homes in the month of September. That was the first time that home repossessions in the U.S. had ever exceeded the 100,000 mark during a single month.
#9 According to a Standard & Poor’s/Case-Shiller home price report that was released on Tuesday, single family home prices in the United States declined for a second straight month in August.
#11 During the months of August and September, the state of Nevada had an unemployment rate of 14.4 percent, which was the highest in the history of the state. Not that the rest of the country is doing any better. The state of California has become a complete and total economic disaster zone, and the city of Detroit, Michigan is literally dying.
#12 The “official” unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months.
#13 The number of people unemployed in the state of California is approximately equivalent to the populations of Nevada, New Hampshire and Vermont combined.
#14 According to the president of the Federal Reserve Bank of New York, there are approximately 3 million more vacant housing units than usual in the United States.
#15 China has reduced the export quota on rare earth elements for the second half of 2010 by 72%, thus strengthening their position in the world economy even more. Rare earth elements are absolutely crucial to the manufacture of a vast array of high technology products, and now even more of them will have to be made in China.
#16 In 1985, the U.S. trade deficit with China was 6 million dollarsfor the entire year. In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.
#17 Wheat, corn and other staples are absolutely soaring in price on world markets. These higher food prices are going to hit U.S. consumers hard.
#18 In 2007, 3 U.S. banks failed. In 2008, 25 U.S. banks failed. In 2009, 140 U.S. banks failed. Last Friday, it was announced that 139 U.S. banks have failed so far this year and it is not even the end of October yet.
#20 Back in 1980, the United States imported approximately 37 percent of the oil that we use. Now we import nearly 60 percent of the oil that we use.
#21 According to an analysis by the Congressional Joint Committee on Taxation, the health care reform legislation that Congress didn’t read but passed into law anyway will generate $409.2 billion in additional taxes on the American people by the year 2019.
#22 Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009. That was the second yearly decline in a row.
#23 One out of every six Americans is now enrolled in a government anti-poverty program, and yet the number of Americans signing up for food stamps and other social programs just continues to set new all-time records month after month after month.
#24 The number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.
#26 According to a recent poll conducted by CNBC, 92 percent of Americans believe that the performance of the U.S. economy is either “fair” or “poor”.
#27 After analyzing Congressional Budget Office data, Boston University economics professor Laurence J. Kotlikoff came to the conclusion that the U.S. government is now facing a “fiscal gap” of $202 trillion dollars.
#28 A trillion $10 bills, if they were taped end to end, would wrap around the earth more than 380 times. That amount of money would still not be enough to pay off the U.S. national debt.
#30 At our current pace, the Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.
The U.S. economy is in the midst of a long-term decline. There are always going to be moments when it seems like things are getting a bit better, but then reality will kick in and the depressing slide will continue.
If you really want to understand what is happening to the U.S. economy, do not become fixated on the short-term numbers. Instead, always keep an eye on the long-term trends.
The U.S. economy is dying. We are getting whipped by the rest of the world and we are drowning in a sea of debt. A little rally in the stock market is not going to do a thing to fix our very deep fundamental economic problems.
Most Americans still do not understand just how bad the economic horror we are facing really is. Today, millions of Americans are living as paupers in the land that their foreathers built even as America’s infrastructure is literally being sold out from under their feet by corrupt politicians. The “official” unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months, and today it takes the average unemployed American about 35 weeks to find a job. However, the “official” unemployment rate is misleading, because it does not include workers that have quit looking for work or that have had their hours cut back to part-time. According to 60 Minutes, when you add those “discouraged workers” and “underemployed workers” into the equation the actual rate is about 17 percent, and in the state of California the actual rate is about 22 percent. Meanwhile, foreign nations are using sovereign wealth funds to buy up staggering amounts of U.S. infrastructure. America is quite literally for sale in 2010. All across the United States, highways, ports, toll roads and even parking meters are being gobbled up by foreign powers. We have shipped massive amounts of wealth and jobs to other nations, and now those very same countries are turning around and buying huge amounts of U.S. infrastructure with the gigantic piles of dollars that they have accumulated.
Widespread long-term chronic unemployment was something that America was never supposed to see again. Our leaders promised us that the U.S. financial system was so strong that we would never have another “Great Depression” in our lifetimes. But then the financial crisis of 2008 happened. Unprecedented numbers of Americans started losing their jobs and the U.S. Congress did something that it had never done before. Congress decided to extend unemployment benefits all the way out to 99 weeks.
Doing that has cost U.S. taxpayers approximately $100 billion dollars to this point, but we were promised that it was a “temporary” fix and that it would give displaced U.S. workers a chance to find new jobs.
Surely any industrious American worker could get another job within 99 weeks, right?
Wrong.
Today, there are at least 1.5 milion “99ers” – those Americans that have completely exhausted all 99 weeks of unemployment benefits and that still do not have jobs.
Sadly, as bad as that number sounds, it is likely to keep growing. Today, over one-third of all unemployed Americans have already been unemployed for at least one year. If this trend continues, we are going to end up with millions of “99ers”.
60 Minutes recently did a report on some of these “99ers”. Many of them are very highly educated and very highly qualified. If you have not seen this 60 Minutes report yet, you have got to take few minutes to sit down and watch it. This video is so shocking that many of you will have your jaws on the floor by the time you finish watching it….
So is there much reason for these “99ers” to be optimistic?
No, not really.
In fact, there are some indications that unemployment in America is actually getting worse. Gallup’s measure of unemployment, which is not adjusted for “seasonal factors”, exhibited a sharp increase in the month of September. According to Gallup, unemployment has increased from 8.9% in July to 9.3% in August and to 10.1% in September.
In addition, the seasonally-adjusted “Alternate Unemployment Rate” compiled by Shadow Government Statistics also indicates that unemployment in the U.S. is going up once again. The Alternate Unemployment Rate calculated by SGS reflects estimated “long-term discouraged workers”, which the U.S. government stopped keeping track of back in 1994….
But it is not just the massive number of Americans that are completely unemployed that we need to be concerned about. The truth is that more Americans than at any other time in recent history are working part-time jobs because that is all they can find. The number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.
Meanwhile, sovereign wealth funds from nations such as Saudi Arabia, China, Kuwait, Libya, Singapore and the United Arab Emirates are buying up highways, ports, toll roads and even parking meters from coast to coast.
So exactly what is a sovereign wealth fund?
Well, just think of it as a huge mountain of state-owned money that roams about the countryside looking for assets to gobble up.
In a recent piece for Rolling Stone, Matt Taibbi described some of the U.S. infrastructure assets that these sovereign wealth funds are buying up….
A toll highway in Indiana. The Chicago Skyway. A stretch of highway in Florida. Parking meters in Nashville, Pittsburgh, Los Angeles, and other cities. A port in Virginia. And a whole bevy of Californian public infrastructure projects, all either already leased or set to be leased for fifty or seventy-five years or more in exchange for one-off lump sum payments of a few billion bucks at best, usually just to help patch a hole or two in a single budget year.
It turns out that U.S. politicians have figured out that they can help solve their budget problems by selling off or leasing out pieces of infrastructure. Foreign nations with money to burn have been glad to come in and start buying a lot of this infrastructure up. Today, it is estimated that the rest of the world currently owns several trillion dollars more of America than America owns of the rest of the world. Later on in his article, Taibbi noted that the trend toward selling off pieces of infrastructure only seems to be accelerating….
At this writing Nashville and Pittsburgh are speeding ahead with their own parking meter deals, as is L.A. New York has considered it, and the city of Miami just announced its own plans for a leasing deal. There are now highways, airports, parking garages, toll roads — almost everything you can think of that isn’t nailed down and some things that are — for sale, to bidders unknown, around the world.
Sadly, both the number and the value of major acquisitions made by sovereign wealth funds approximately doubled during the first half of 2010.
Instead of being the “land of the free”, we are rapidly becoming the “land that has been leased out to foreign nations”.
So where in the world did these sovereign wealth funds get all this money?
Well, they got it from us of course.
Every single month, the United States buys massive amounts of oil from the Middle East and massive amounts of cheap plastic crap from China. The rest of the world buys a bunch of stuff from us too, but not nearly as much as we buy from the rest of the world.
So every single month tens of billions of dollars that used to belong to the American people ends up in the hands of foreigners. Now some of that money is returning to this country and is being used to buy up our infrastructure.
Many of these highways and toll roads that are being sold off had already been completely paid for. Can you imagine the frustration of the taxpayers in many of these areas when they realize that a road that they have already completely paid for with their tax dollars has been sold out from underneath them?
Another place that all these U.S. dollars held by foreigners is going is into U.S. Treasuries. In fact, the federal government very much encourages this. After all, we have to finance our exploding debt somehow.
In essence, first we made some folks in the Middle East and in Asia incredibly wealthy, and now we are asking them to please lend that money back to us so that we can continue living far beyond our means.
The borrower is the servant of the lender, and we are rapidly becoming enslaved to the rest of the world.
This is national economic suicide, but our politicians have become so addicted to debt that there doesn’t seem to be much hope that things can be turned around any time soon.
Back in the 1960s and 1970s, there was a seemingly endless parade of pop songs about how great life was in California, and millions of young Americans dreamed of moving to the land of sandy beaches and golden sunshine. But now all of that has changed. Today, millions of Californians are dreaming about leaving the state for good. The truth is that California is broke. The economy of the state is in shambles. The official unemployment rate has been sitting above 12 percent for an extended period of time, and poverty is everywhere. For many Californians today, there are very few reasons to stay in the state but a whole lot of reasons to leave: falling housing prices, rising crime, budget cuts, rampant illegal immigration, horrific traffic, some of the most brutal tax rates in the nation, increasing gang violence and the ever present threat of wildfires, mudslides and natural disasters. The truth is that it is easy to understand why there are now more Americans moving out of California each year than there are Americans moving into the state. California has become a complete and total disaster zone in more ways than one, and an increasing number of Californians are deciding that enough is enough and they are getting out for good.
Sadly, the state of California is facing such a wide array of social, economic, and political problems that it is hard to even document them all. It is really one huge gigantic mess at this point.
Just consider the following facts about what life is like in the state of California today….
#1 Unemployment in the state of California was 12.4% in September – one of the highest rates in the nation.
#2 The number of people unemployed in the state of California is approximately equivalent to the populations of Nevada, New Hampshire and Vermont combined.
#3 Not even state government jobs are safe in California these days. Last month, government agencies in California slashed a total of 37,300 jobs.
#4 California has the third highest state income tax in the nation: a 9.55% tax bracket at $47,055 and a 10.55% bracket at $1,000,000.
#5 California has the highest state sales tax rate in the nation by far at 8.25%. Indiana has the next highest at 7%.
#6 Residents of California pay the highest gasoline taxes (over 67 cents per gallon) in the United States.
#7 Even with all of the taxes, the budget deficit for the California state government for the current year is approximately 19 billion dollars.
#920 percent of the residents of Los Angeles County are now receiving public aid.
#10 Budget cuts are making life very difficult in many California cities. For example, Oakland, California Police Chief Anthony Batts says that due to severe budget cuts there are a number of crimes that his department will simply not be able to respond to any longer. The crimes that the Oakland police will no longer be responding to include grand theft, burglary, car wrecks, identity theft and vandalism.
Things have gotten so bad in Stockton, California that the police union put up a billboard with the following message: “Welcome to the 2nd most dangerous city in California. Stop laying off cops.”
#12 California’s poverty rate soared to 15.3 percent in 2009, which was the highest in 11 years.
#13 California’s overstretched health care system is also on the verge of collapse. Dozens of California hospitals and emergency rooms have shut down over the last decade because they could not afford to stay open after being endlessly swamped by illegal immigrants and poor Californians who were simply not able to pay for the services they were receiving. As a result, the remainder of the health care system in the state of California is now beyond overloaded. This had led to brutally long waits, diverted ambulances and even unnecessary patient deaths.
#14 California home builders began construction on 1,811 homes during the month of August, which was down 77% from August 2006.
So why doesn’t the state government of California just fix many of these problems? Well, the truth is that it simply cannot. The state government is flat broke. Earlier this year, Bob Herbert of the New York Times described California’s massive budget problems this way….
California has cut billions of dollars from its education system, including its renowned network of public colleges and universities. Many thousands of teachers have been let go. Budget officials travel the state with a glazed look in their eyes, having tried everything they can think of to balance the state budget. And still the deficits persist.
So is there any hope that all this can be turned around?
Is there any hope that the economy of California will recover?
Or will California continue to experience a rapid decline?
Please feel free to leave a comment with your opinion….
The American people are experiencing financial death by a thousand cuts and most of them don’t even realize it. The U.S. government, state governments, local governments and the financial elite are draining us financially in dozens upon dozens of different ways, and yet we have become so programmed to accept it that it just seems normal to us. 2011 is rapidly approaching, and a whole slate of federal taxes is scheduled to go up, state taxes are being increased from coast to coast, local governments are finding new and creative ways to stick it to us and the financial elite are becoming more predatory than ever. Meanwhile, the incomes of many average Americans are actually going down. According to the Census Bureau’s annual survey of income and poverty in the United States, of the 52 largest metro areas in the nation, only the city of San Antonio did not see a decline in median household income during 2009. Tens of millions of Americans are flat broke and they are getting pissed off. According to a new poll conducted by CNBC, 92 percent of Americans believe that the U.S. economy is either “fair” or “poor”. The American people desperately want someone to fix the economy, but instead our “leaders” are trying to come up with new and creative ways to drain even more money out of us.
In no particular order, the following are 75 ways that the U.S. government, state governments, local governments and the financial elite will be sucking even more of the life blood out of the American people in 2011….
#1 State governments across the U.S. are raising fees and taxes in so many different ways it is staggering. A reader named Richard recently sent me an email in which he described the shock that he experienced when he recently received his license plate renewal notice in the mail….
I just got a license plate renewal notice from the Oregon Department of Motor Vehicles. When I opened the envelope and saw the amount of the renewal, I was shocked. The amount seemed much higher than usual.
I have a computerized record of all my financial transactions over the last many years. I looked up previous DMV license plate renewals and I saw that my vehicle license plate fees were up 187% in only 8 years! In other words, they were almost triple what they were 8 years ago!
#2 The cost of health care also continues to escalate out of control. Americans already pay more for health care than anyone else in the world, and yet costs continue to explode. Health insurance companies from coast to coast are already announcing that they must raise health insurance premiums substantially due to the new health care law that Barack Obama and the Democrats have pushed through. For example, I am in perfect health and I have never had a single claim on my health insurance policy and yet I received notice earlier this year that my monthly health insurance premiums were going to be increasing by about 50 percent.
Unfortunately, I am far from alone. Crazy rate hikes are being reported from coast to coast. According to The Wall Street Journal, the following are just some of the health insurance companies that have announced rate hikes that are at least partially attributed to the new health care law….
*Aetna says that the extra benefits that the new health care reform law is forcing it to cover are behind rate increases for new individual plans of 5.4% to 7.4% in California and 5.5% to 6.8% in Nevada.
*Regence BlueCross BlueShield of Oregon claims that the cost of providing additional benefits under the new health care law will account for 3.4% of a 17.1% premium rise for small employers.
*Celtic Insurance claims that half of a whopping 18% health insurance premium increase it is seeking comes from complying with mandates in the new health care law.
But do the financial elite in the health care industry really need more of our money? According to a report by Health Care for America Now, America’s five biggest for-profit health insurance companies ended 2009 with a combined profit of $12.2 billion.
#4 From coast to coast, the big Wall Street banks are buying up thousands upon thousands of tax liens and are making a killing by socking distressed homeowners with predatory interest, outrageous penalties and almost unbelievable legal fees. The article which I published yesterday, “The Big Wall Street Banks Have Found A New Way To Strangle The American People: Predatory Property Tax Collection” elicited a very strong reaction from many readers. In particular, Walter Burien, who has done some great work exposing financial fraud at the government level, left a message explaining how this kind of predatory property tax collection is being done by design….
Per the article “Predatory Property Tax Collection” here is the why government did this. The feds put it through last year at the recommendation of a few private associations that represented many local governments and it was the government that pushed forward to require the banks and mortgage companies to do the tax collection tied directly into the mortgage. (Quicker money for the local governments) Read the new mortgage documentation and the banks have been required to collect property taxation up front for the local government.
Government in most venues had to wait four (4) years to move forward with foreclosure for delinquent property taxes. Well now that they have assigned the banks to do the collection, the banks usually move on foreclosure in six months which gets a new head in the door to pay the same levied property taxes quicker.
But the biggest drain on all of our incomes is excessive taxation by the government. If the U.S. Congress does not act, and there is little reason to believe that they will, the following tax increases will go into effect in 2011….
#5 The lowest bracket for the personal income tax is going to increase from 10 percent to 15 percent.
#6 The next lowest bracket for the personal income tax is going to increase from 25 percent to 28 percent.
#7 The 28 percent tax bracket is going to increase to 31 percent.
#8 The 33 percent tax bracket is going to increase to 36 percent.
#9 The 35 percent tax bracket is going to increase to 39.6 percent.
#10 In 2011, the death tax is scheduled to return. So instead of paying zero percent, estates of $1 million or more are going to be taxed at a rate of 55 percent.
#11 The capital gains tax is going to increase from 15 percent to 20 percent.
#12 The tax on dividends is going to increase from 15 percent to 39.6 percent.
#13 The “marriage penalty” is also scheduled to be reinstated in 2011. Members of Congress keep promising to do something about this, but so far nothing has happened.
#14 Many American businesses are going to get hit with a very significant tax increase in 2011. Small businesses had been able to “expense”, rather than slowly depreciate, equipment purchases of up to $250,000 a year. Now that will be slashed down to $25,000. Larger businesses had been able to expense half of their purchases of equipment. Now all of it will have to be depreciated.
#15 They keep talking about it, but so far Congress has not passed a “fix” for the Alternative Minimum Tax. If a fix is not passed, one out of every six U.S. taxpayers is going to be hit by the Alternative Minimum Tax. The taxpayers most likely to be affected are married couples, very large families, home owners and taxpayers in states that have high state and local taxes. The average tax increase that these taxpayers will be facing is going to be approximately $3,900 and most of them have no idea that it is coming. If nothing changes, 27.2 million American households will pay AMT in 2010.
The following are a whole bunch of other taxes that Americans must pay each and every year and which seem to continually go up….
#16 Accounts Receivable Taxes
#17 Building Permit Taxes
#18 Capital Gains Taxes
#19 CDL license Taxes
#20 Cigarette Taxes
#21 Corporate Income Taxes
#22 Court Fines (indirect taxes)
#23 Dog License Taxes
#24 Federal Income Taxes
#25 Federal Unemployment Taxes (FUTA)
#26 Fishing License Taxes
#27 Food License Taxes
#28 Fuel permit taxes
#29 Gasoline Taxes
#30 Gift Taxes
#31 Hunting License Taxes
#32 Inheritance Taxes
#33 Inventory tax IRS Interest Charges (tax on top of tax)
#34 IRS Penalties (tax on top of tax)
#35 Liquor Taxes
#36 Local Income Taxes
#37 Luxury Taxes
#38 Marriage License Taxes
#39 Medicare Taxes
#40 Payroll Taxes
#41 Property Taxes
#42 Real Estate Taxes
#43 Recreational Vehicle Taxes
#44 Road Toll Booth Taxes
#45 Road Usage Taxes (Truckers)
#46 Sales Taxes
#47 Self-Employment Taxes
#48 School Taxes
#49 Septic Permit Taxes
#50 Service Charge Taxes
#51 Social Security Taxes
#52 State Income Taxes
#53 State Unemployment Taxes (SUTA)
#54 Telephone federal excise taxes
#55 Telephone federal universal service fee taxes
#56 Telephone federal, state and local surcharge taxes
#57 Telephone minimum usage surcharge taxes
#58 Telephone recurring and non-recurring charges taxes
#59 Telephone state and local taxes
#60 Telephone usage charge taxes
#61 Toll Bridge Taxes
#62 Toll Tunnel Taxes
#63 Traffic Fines (indirect taxation)
#64 Trailer registration taxes
#65 Utility Taxes
#66 Vehicle License Registration Taxes
#67 Vehicle Sales Taxes
#68 Watercraft registration Taxes
#69 Well Permit Taxes
#70 Workers Compensation Taxes
#71 The Internet is increasingly being viewed as a potential major revenue source. Many U.S. states are working harder than ever to collect taxes that they feel they are owed from online transactions on the Internet.
#72 Student loan debt is more of a financial drain on Americans than ever before. Americans now owe more on student loans than they do on credit cards. As hard as that is to believe, that is actually true. Americans now owe more than $849 billion on student loans, which is a new all-time record.
#73 More Americans than ever find themselves unable to pay their bills, and an increasing number of frustrated creditors are actually resorting to wage garnishment. Yes, you read the correctly. Creditors are starting to ruthlessly go after the weekly paychecks of debtors.
After winning, creditors can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, but the pay seizures are rising fast in some areas — up 121 percent in the Phoenix area since 2005, and 55 percent in the Atlanta area since 2004. In Cleveland, garnishments jumped 30 percent between 2008 and 2009 alone.
So if you are getting behind on your debt, you better watch out – your creditors may soon decide to garnish your wages.
#74 Many state and local governments throughout the United States are now viewing their police forces primarily as revenue raising organizations. For example, earlier this year a federally funded ticketing blitz in the state of Virginia resulted in a total of 6996 traffic tickets being handed out in a single weekend. Sure the roads are a little safer, but it also brought in a ton of money for the government.
The truth is that the police even realize what is going on. Just consider the following quote from from Police Chief Michael Reaves of Utica, Michigan….
“When I first started in this job 30 years ago, police work was never about revenue enhancement, but if you’re a chief now, you have to look at whether your department produces revenues.”
#75 If all of this wasn’t bad enough, now there is an increasing amount of talk in international circles about the need for global taxes. The IMF and the World Health Organization are both proposing new global taxes that would be imposed on all of us. Not only that, but representatives from 60 different nations recently met at the UN to discuss a tax on global financial transactions that would be used to battle poverty and “climate change”.
If all of these methods of draining us financially were combined into one, the American people would be screaming bloody murder. But because all of them are so small, and they go up so gradually, most Americans don’t seem to notice.
It is like the story of the frog in the kettle. If you tried to drop a frog into a pot of boiling water, it would hop out immediately.
But if you put a frog into a kettle of warm water and turn up the heat very gradually, it will just sit there until it boils to death.
Well, we are that frog. Every single year, they drain us a little more rapidly. Tens of millions of us are flat broke and yet they keep coming back for more.
Never before in American history has money been drained out of us in so many different ways. They are literally bleeding us dry, and eventually there will simply be nothing left to drain.
Most Americans still seem to be convinced that “free trade” is “fair trade” and that to be against current U.S. trade policies and globalization means that you are anti-business, anti-free enterprise and anti-American. In the mainstream media, any unfair trade practices that are brought up are treated as minor nuisances that will be ironed out as we march towards the glorious globalized economy of the future. But the truth is that the kind of world trade that is going on today is neither “free” nor is it “fair”. Major exporting countries around the globe are openly manipulating their currencies, they are heavily subsidizing their major industries and they are erecting huge tariffs against many U.S. goods in order to protect their own domestic companies. Meanwhile, U.S. consumers enjoy mountains of cheap goods, but thousands of factories, hundreds of thousands of jobs and hundreds of billions of dollars of national wealth leave our country for good every year. So how in the world is that good for us? It is kind of like ripping apart your house to get more firewood just to keep the fire going. Eventually you aren’t going to have a house anymore.
The other day, my article entitled “The Number One U.S. Export To China: Waste Paper And Scrap Metal” really struck a chord with many advocates of current U.S. trade practices. For example, one reader identified only as “Someone” left a comment that was typical of many that were posted on the article….
“The author of this article has shown no knowledge of economics.”
Well, it doesn’t take a genius to look at the numbers and figure out that something is wrong. In 1985, the U.S. trade deficit with China was 6 million dollarsfor the entire year. In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.
Can anyone else spot a disturbing trend there?
Years ago, I was also one of those who believed that because I was “pro-business” that also meant that I had to defend “free trade” and trade agreements such as NAFTA and the WTO.
After all, I didn’t want to be labeled “anti-business” or “anti-American” did I?
But the truth is that merging our economy with socialist and communist economies that allow their workers to be paid slave labor wages is not “pro-business” and it certainly is not “pro-American”. Allowing entire U.S. industries to be destroyed because of the unfair predatory trade practices of socialist and communist economies is not “pro-business” and it certainly is not “pro-American”.
If you want to have “free trade”, then by definition you must have a level playing field. For example, trade with Canada (although not perfect) is mostly a very, very good thing. Trade with China is not.
Many readers have suggested that all we have to do is get rid of the horrific regulations and taxes that are holding U.S. businesses back and our trade situation will be fixed.
And yes, the U.S. government has piled so many rules, so many taxes and so much paperwork on U.S. businesses that it is becoming very, very difficult to operate a profitable business inside the United States. There has never been a more oppressive environment for business in the United States than we have today.
But would fixing that solve all our trade problems? Would fixing that bring back all of our factories and jobs?
No, but of course it would help to an extent.
However, the reality is that unless we address the fundamental problems with global trade we are in a heap of trouble.
Unfortunately, not all of my readers agree. One reader named Puzzled was quite blunt is his analysis of my recent article on trade: “I’d recommend a class on basic economics.” Well, it turns out that I did take a number of courses in economics at one of the finest universities in the United States, but our education system has become so dumbed-down that I didn’t learn much.
So let’s hear from someone who is considered to be an expert in economics.
“The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil… Right now, the rest of the world owns $3 trillion more of us than we own of them.”
Advocates of current U.S. trade policies usually respond by saying something like this….
“The global economy is here to stay so you better get used to it. There is no going back. It is a good thing for factories and jobs to be going to China because they can produce things cheaper than we can. We benefit because we get to enjoy large amounts of cheap products. Yes, American workers are going to have a significantly reduced standard of living, but this is necessary as we merge all the countries of the world into a globalized economy which will be better for everyone in the end. After all, it is better for goods and services to cross borders than it is for armies to cross borders. U.S. citizens are just going to have to learn to live within their means. If the United States cannot provide jobs for all of their people in this new global economy, then maybe they need to start implementing some population control measures. Quit blaming China because they aren’t doing anything wrong. Everyone knows that free trade is always the best alternative. Are you an idiot? Go take a class in basic economics you moron.”
The following is a sampling of actual comments that have been recently posted in response to my articles on globalism by advocates of current U.S. trade policies.
A reader named Frodo apparently thinks that I am “anti-freedom”….
You are totally wrong about free trade. “free trade” is part of “freedom” like the freedom of consumers to buy stuff they want made somewhere else.
A reader named John seems convinced that that United States has never lost even a single job to China….
No American has ever lost a job to China: what happens is due to USA govt industrial policy (get big or get out), new jobs are placed in new factories where there will be better stability in the future – China. Those “lost jobs” are not coming back because like buggy whips, we don’t use them anymore.
A reader named Dave believes that “free trade” is precisely what we need to revitalize manufacturing in America again….
Free trade is EXACTLY what’s needed if we ever hope to get manufacturing back in North America.
In the face of such overwhelming logic how can I continue to maintain that the current state of global trade is deeply flawed and deeply broken?
Well, I have a challenge for advocates of current U.S. trade policies.
I challenge you to answer the following 10 questions about our globalized economy. Please answer these questions and tell me why I am wrong….
#1 How can trade be considered “fair” when other major exporting nations openly manipulate their currencies, provide massive subsidies for their national industries and erect massive tariffs against many U.S. goods while we allow them to wipe out many of our domestic industries by flooding our shores with endless amounts of cheap products?
#2 How is it possible that it is good for American workers to be merged into a global labor pool where they must compete for jobs with workers on the other side of the globe that make less than ten percent of what an average American worker makes?
#3 As millions of manufacturing jobs continue to flow to where “labor is cheaper”, can you please explain how in the world we are going to provide nearly enough jobs for blue collar American workers?
#4 If there are not nearly enough jobs for everyone, then millions upon millions of Americans will not be able to take care of themselves. We simply are not going to let them starve to death in the streets. Already, over 41 million Americans are on food stamps. One way or another we are going to pay to take care of American workers. Either we are going to give them jobs or we are going to give them welfare. Are you willing to have your taxes raised substantially to pay for all of the welfare cases that “free trade” is creating?
#5 As U.S. workers are merged into the new global labor pool, can you please explain how wages will not be forced down and the standard of living for average, hard-working Americans will not diminish substantially?
#6 How can any conservative ever justify trading with a nation (China) that has a “one-child policy” and that has mobile abortion vans driving around the country to enforce this mandate?
#7 How can any liberal ever justify trading with a nation (China) that is rapidly becoming an environmental wasteland and where millions of people work in horrific conditions for what is essentially slave labor pay?
#8 The House National Security Oversight Subcommittee recently heard stunning testimony from a number of experts that told them that the rapid decline of manufacturing in the United States has resulted in America losing its edge in numerous industries that are absolutely vital to national security. How is it possible that putting our national security in such peril is a “good thing”?
#9 The United States spends 40 to 50 billion more on goods and services from the rest of the world each month than they spend on goods and services from us. That means that the United States is becoming 40 to 50 billion dollars poorer each and every month. How is that good for the U.S. economy?
#10 Over the past few decades, the communist Chinese have been able to accumulate approximately $2.5 trillion in foreign currency reserves, and the U.S. government now owes them close to 900 billion dollars. We constantly have to send top government officials over there to beg them to continue to lend us money. This would have never happened without the insane trade policies of the last several decades. So how in the world can advocates of current U.S. trade policies ever justify this?
Historians tell us that by the very end of the Roman Empire, goods were pouring into Rome from all over the known world, but about the only thing being sent out of Rome was human waste and garbage. America has not yet reached that point, but we are certainly well on our way. In 2010, the number one U.S. export to China is “scrap and trash”. Yes, you read the correctly. The number one thing that China buys from us is our garbage. According to author Clyde Prestowitz, China’s number one export to the U.S. is computer equipment (nearly $50 billion) while our number one export to them is waste paper and scrap metal (approximately $8 billion). When it comes to world trade, China is literally wiping the floor with the United States. In August, the U.S. trade deficit with China set a new one month record of $28 billion dollars. Our insane trade policies are making China (along with several of our other “trade partners”) incredibly wealthy, and the U.S. government ends up begging China to lend that money back to us to fund the exploding U.S. national debt. That just isn’t stupidity – that is insanity.
The truth is that our “twin deficits” are literally bankrupting this nation. We are completely and totally destroying the economic future of our children and grandchildren.
But hey, the Vikings beat the Cowboys, Dancing With The Stars is heating up and we all have a bunch of DVDs to get caught up on so why worry ourselves, right?
Unfortunately, the reality is that we can’t afford to be “comfortably numb” any longer if we hope to have any kind of a future.
It is time to wake up people.
Sadly, a significant percentage of young Americans these days can’t even tell you what a “trade deficit” is.
If you don’t believe this, just try a little experiment some time. Just go up to a few young Americans on the street and ask them to define “trade deficit” for you.
But fortunately, the vast majority of the readers of this column are quite informed. Unfortunately, I still don’t believe that most of you really understand how incredibly dangerous the trade deficit is.
So just how dangerous is the trade deficit? Well, world famous investor Warren Buffett once put it this way….
“The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil… Right now, the rest of the world owns $3 trillion more of us than we own of them.”
Between 2000 and 2009, America’s trade deficit with China skyrocketed nearly 300 percent. Wealth, factories and jobs are leaving the United States at an astounding pace. The danger that this represents to our economy is so vast that it is hard to even describe.
If you ever find yourself in a debate with proponents of “free trade”, you can almost always get them to eventually admit that “free trade” will raise the standard of living for workers in countries like China while significantly lowering the standard of living for U.S. workers, but that this must be done for the good of the emerging “global economy”.
Of course U.S politicians never really mention this nasty little fact when they give speeches about how wonderful our trade policies are. They never really get around to mentioning that “free trade” is one of the key foundations of “globalism” and that we are being merged into a one world economy.
Today, American workers do not just compete with other American workers. Instead, U.S. workers now find themselves in direct competition for jobs with workers in China that makes less than a tenth of what an American worker would make. In China, a garment worker makes approximately 86 cents an hour. Apple iPhones are manufactured in China by workers making about 293 dollars a month (and that was after a big raise).
So exactly how long do you think you and your family would be able to survive on 293 dollars a month?
But unfortunately, millions more Americans will lose their jobs and millions more Americans will be forced to take a cut in pay in order to compete in the new global economy.
According to a disturbing new study by the Economic Policy Institute, if the trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.
The sad truth is that it is NOT a good time to be a blue collar worker in America. If your job does not get offshored or outsourced, then it is likely to be made obsolete by computers and automation.
The need for manual labor is rapidly declining in today’s world. For example, there is a Japanese firm called Fanuc, Ltd. that actually has industrial robots manufacturing other industrial robots in a “lights out” factory.
How bizarre is that?
But things wouldn’t be quite as bad for U.S. workers if China was not cheating so badly. The truth is that they just do not play the game fairly.
For instance, it is estimated that the Chinese government is keeping China’s currency valued about 40 percent lower than it should be. This is essentially a de facto subsidy to China’s exporters.
There has been a little bit of rumbling in the Obama administration about this in recent weeks, but it is quite unlikely that they will push China too far on this issue. After all, the Obama administration desperately needs China to keep loaning us massive quantities of money so that we can keep funding our runaway debt.
If you sit back and objectively analyze the facts, it quickly becomes undeniable that China is beating the living crap out of us economically. In fact, one prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.
This all could have been turned around a decade or two ago, but now China has us by the throat. At any time, China could decide to start selling off massive quantities of U.S. Treasuries. At any time, China could decide to cut off our supply of rare earth elements (of which they have a virtual monopoly).
China is now even the number one supplier of components that are critical to the operation of U.S. defense systems. How smart were we to allow that to happen?
It is a direct threat to national security for China to have so much leverage over us. But you rarely hear anyone talking about this.
The truth is that trade with China is not a left/right issue. As I have written about previously, it is impossible for any self-respecting conservative to justify our trade policies with China and it is impossible for any self-respecting liberal to justify our trade policies with China.
Yet very few current members of the U.S. Congress ever discuss the possibility of sweeping changes to our trade policies.
So we will continue to lose thousands of factories, we will continue to lose millions of jobs and we will continue to see the biggest transfer of wealth in the history of the world accelerate.
So do any of you think that I am wrong about this? Please feel free to leave a comment with your opinion below….
When Federal Reserve Chairman Ben Bernanke gives a speech about the U.S. economy, it gets a whole lot more attention than when Barack Obama gives a speech about the U.S. economy. Why is this true? Well, it is because Bernanke has a whole lot more control over the U.S. economy than Obama does. It is the Federal Reserve that controls monetary policy and interest rates. It is the Federal Reserve that can create money out of thin air. It is the Federal Reserve which is going to have the most influence over whether there will be inflation or deflation. So when Bernanke gives a speech, world financial markets listen. On Friday, news of the Bernanke speech sent gold and silver soaring towards new highs and send the U.S. dollar tumbling once again. This new Bernanke speech was yet another very strong indication that Helicopter Ben is getting ready to fire up the printing presses in an attempt to get the U.S. economy moving.
So is it a good thing for an unelected, virtually unaccountable private central bank called the Federal Reserve to have more power over the U.S. economy than the president of the United States?
Of course not.
But that is the way our system works.
So what did Bernanke say during his speech in Boston that was so earth shattering?
Well, you can read a full transcript of what Bernanke said right here. The following are a few key excerpts from Bernanke’s remarks….
*”Although output growth should be somewhat stronger in 2011 than it has been recently, growth next year seems unlikely to be much above its longer-term trend. If so, then net job creation may not exceed by much the increase in the size of the labor force, implying that the unemployment rate will decline only slowly. That prospect is of central concern to economic policymakers, because high rates of unemployment–especially longer-term unemployment–impose a very heavy burden on the unemployed and their families. More broadly, prolonged high unemployment would pose a risk to consumer spending and hence to the sustainability of the recovery.”
Clearly, Bernanke feels as though unemployment is way, way too high and that lowering unemployment is now the number one policy priority of the Federal Reserve.
So how will this be accomplished? After all, interest rates are already kissing the floor and that hasn’t brought the U.S. economy back to life.
Well, as most financial analysts are anticipating, the Fed could launch a substantial new round of quantitative easing.
But wouldn’t that cause a rise in the inflation rate?
Well according to Bernanke’s speech, the U.S. economy is supposed to have a certain amount of inflation….
*”Similarly, the mandate-consistent inflation rate–the inflation rate that best promotes our dual objectives in the long run–is not necessarily zero; indeed, Committee participants have generally judged that a modestly positive inflation rate over the longer run is most consistent with the dual mandate.”
Do you understand what Bernanke is saying there?
He is actually saying that the goal of the Federal Reserve is not to have a zero inflation rate. Rather, he says that we should expect to always have at least some inflation and that this is normal.
In fact, in his speech Bernanke said that inflation in the United States is currently too low….
*”…inflation is running at rates that are too low relative to the levels that the Committee judges to be most consistent with the Federal Reserve’s dual mandate in the longer run.”
Inflation is too low?
Is he joking?
No, sadly he is not.
Instead, he seems ready to break out the money hoses and start showering dollars from every street corner….
*”Given the Committee’s objectives, there would appear–all else being equal–to be a case for further action.”
“Further action” being code words for the “quantitative easing” that we have all been anticipating.
The funny thing is that in the nearly 4,000 word Bernanke speech there was not a single word about the value of the U.S. dollar.
This month the U.S. dollar has been plummeting like a rock, but apparently it is not an important consideration for Bernanke.
In essence, Bernanke’s message is that the focus is on trying to “fix” the U.S. economy and if it is necessary to jack up the rate of inflation and to radically devalue the U.S. dollar then that is what we are going to do.
Bernanke also did not mention the foreclosure fraud crisis which threatens to throw the entire U.S. mortgage industry into a state of absolute turmoil.
But the rest of the financial world is definitely starting to take notice of this crisis.
All of this uncertainty is already starting to take a huge toll on U.S. bank stocks. Several of the largest U.S. banks have seen their stock prices significantly decline in recent days.
The truth is that this could be the biggest challenge for big U.S. banks since the 2007 financial collapse. Just consider the following very troubling signs….
*JPMorgan announced on Wednesday that it has boosted its reserves by a billion dollars in order to cover faulty mortgages that it was obligated to repurchase from Fannie Mae, Freddie Mac and private insurers. In all, JPMorgan has set aside approximately 3 billion dollars for potential mortgage repurchases.
*But a few billion dollars may not be nearly enough for many of these big banks. According to an estimate by Branch Hill Capital, Bank of America could be forced to repurchase up to $74 billion in mortgages.
*The losses from this crisis could be absolutely staggering. Analyst Dick Bove is projecting that U.S. banks could lose a combined 80 billion dollars as a result of this foreclosure fraud crisis.
The truth is that it would be hard to understate just how much of a financial mess this foreclosure fraud crisis could possibly become. A recent article by Nomi Prins did a great job of discussing some of the potential implications of this crisis….
If foreclosed homes couldn’t be sold because of fraudulent paperwork or had to wait for more detailed inspections, you can imagine how difficult selling assets stuffed with faulty loans might be. If it’s tough to find a title for a foreclosed home, think how tough it is to back the related loan out of a pyramid of securities sitting on top of it.
See, the loan that might be analyzed in a foreclosure situation could be part of a chain connecting the underlying home to 20 or 50 different securitized assets, all depending on it for either the interest payments the loan was supposed to provide, or the value of the foreclosure property if those payments stopped (in Wall Street speak, the “recovery value”). If a foreclosed property isn’t selling, it’s not recovering any money back to any asset waiting for it. Think what that can do to the value of toxic assets living at the Fed and the Treasury Department.
This foreclosure fraud crisis is extremely complicated, but the reality is that this could be the thing that breaks the back of the U.S. financial system. For much more on the specifics of this crisis, please check out the following articles that I have previously posted….
The truth is that the U.S. economy is headed for extreme danger and what Bernanke wants to do is douse it with gasoline and light it on fire.
Once the Federal Reserve starts down the road of trying to “stimulate inflation” in order to get the U.S. economy going, it is going to be really hard to turn back around again.
But the truth is that this is what the U.S. Federal Reserve has always done. They have always destroyed the value of the U.S. dollar. The U.S. dollar has lost over 95 percent of its value since the Federal Reserve was created in 1913, and now Bernanke says that we need to actually accelerate the pace of the destruction of the dollar in order to “help” the economy.
In the end, this whole thing is going to fall apart. In the end, all of the juggling and fancy financial moves by the Fed are going to fail.
The U.S. financial system is a pyramid of fraud built on a mountain of debt. By definition it is unsustainable. At some point it is going to dramatically collapse. The only real question left to answer is when it will happen.
Does anyone really want to hear that America is in decline? For decades, most of us have been raised to believe that the United States is “number one” and that anyone who doubts that fact is a “gloom and doomer” that should just pack up and move to “Russia” or “Iraq” or some other country where things are not nearly as good. But does it do us or future generations any good to ignore the very serious signs of trouble that are erupting all around us? The truth is that it is about time to wake up and admit how much trouble we are actually in. The U.S. government is absolutely drowning in debt. The entire society is absolutely drowning in debt. We are being slaughtered in the arena of world trade, and every single month tens of billions of dollars (along with large numbers of factories and jobs) leave our shores for good. Our infrastructure is failing, our kids are less educated and our incomes are going down. We have serious, serious problems. At one time, the U.S. economy was so dominant that it was not even worth talking about who was in second place. That is no longer the case in 2010. Our forefathers handed us the greatest economic machine in history and we have allowed it to fall apart right in front of our eyes. A national economic crisis of historic proportions is getting worse with each passing month, and yet most of our leaders seem to be asleep at the switch.
So is American in decline? Well, read the statistics below and decide for yourself. The reality is that when you start connecting the dots it gets really hard to deny what is going on.
Urgent action must be taken if things are going to be turned around. It is time to get our heads out of the sand. It is not guaranteed that the United States will always be the greatest economy in the world or that we will even continue to be prosperous.
For many Americans, it will be incredibly difficult to admit that our nation has become a debt addict and an economic punching bag for the rest of the world.
But if we are never willing to admit what the problems are, how are we ever going to come up with the solutions?
What you are about to read below is going to absolutely shock many of you. But hopefully it will shock you enough to get you to take action. We desperately need to change course as a nation.
The following are 24 statistics about the United States economy that are almost too embarrassing to admit….
#1 Ten years ago, the United States was ranked number one in average wealth per adult. In 2010, the United States has fallen to seventh.
#2 The United States once had the highest proportion of young adults with post-secondary degrees in the world. Today, the U.S. has fallen to 12th.
#4 In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th.
#5 The economy of India is projected to become larger than the U.S. economy by the year 2050.
#6 One prominent economist now says that the Chinese economy will be three times larger than the U.S. economy by the year 2040.
#7 According to a new study conducted by Thomson Reuters, China could become the global leader in patent filings by next year.
#8 The United States has lost approximately 42,400 factories since 2001.
#9 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.
#10 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.
#11 In 1959, manufacturing represented 28 percent of all U.S. economic output. In 2008, it represented only 11.5 percent.
#12 The television manufacturing industry began in the United States. So how many televisions are manufactured in the United States today? According to Princeton University economist Alan S. Blinder, the grand total is zero.
#13 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time that less than 12 million Americans were employed in manufacturing was in 1941.
#14 Back in 1980, the United States imported approximately 37 percent of the oil that we use. Now we import nearly 60 percent of the oil that we use.
#15 The U.S. trade deficit is running about 40 or 50 billion dollars a month in 2010. That means that by the end of the year approximately half a trillion dollars (or more) will have left the United States for good.
#17 Today, the United States spends approximately $3.90 on Chinese goods for every $1 that China spends on goods from the United States.
#18 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.
#20 Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009. That was the second yearly decline in a row.
#21 The United States has the third worst poverty rate among the advanced nations tracked by the Organization for Economic Cooperation and Development.
#22 Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power.
#24 The Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.
Please share these statistics with as many family members and friends as you can. It is time to get real. It is time to admit that we have some really big problems.
America is in decline and the situation is getting worse by the day. If we are not willing to admit how bad things really are, then we are never even going to have a chance to find the solutions that we need.
American families better get ready to tighten their belts again. There is every indication that we are all going to really start feeling the squeeze in the months ahead. The price of gas is starting to spike again. The price of food is moving north. Health insurance premium increases are being announced coast to coast and a whole slate of tax increases is scheduled to go into effect in 2011. Meanwhile, household incomes are down substantially all over the nation and the U.S. government is indicating that there will not be an increase in Social Security benefits for the upcoming year once again. So if the cost of most of the basic things in our monthly budgets is going up and our incomes are going down what does that mean? It means that average American families are about to be squeezed like nothing we have seen in decades.
The reality is that it is getting really hard to make it out there. Not only do most households have both parents working, but in many cases both parents are getting second or even third jobs. Things have gotten so bad that millions of Americans have felt forced to turn to the government for assistance just to survive.
It can be really disheartening to come to the end of the month and realize that despite your best efforts you have less money than you did at the beginning of the month. But that is where millions upon millions of American families now find themselves.
The economic despair in the air is almost palpable. Already hordes of Americans are truly and honestly hurting and things are only going to get worse.
The following are ten reasons why ordinary hard-working Americans are about to really start feeling the squeeze….
#1 Gas prices are going up again. AAA says that the average price of a gallon of regular gasoline in the United States was $2.80 on Sunday. That is 32.6 cents higher than it was during the same time period in 2009. As oil and gas prices continue to go up, that is also going to have a significant impact on utility bills for American families this winter.
#2 The price of food is poised to rise substantially. Bloomberg is reporting that the the cost of meat in the United States is going nowhere but up. But meat is not the only thing that you will soon be paying much more for at the supermarket. Wheat, corn, soybeans and almost every other major agricultural commodity is absolutely soaring this fall. As this continues, it is inevitable that ordinary Americans will see much higher food prices at their local grocery stores.
On a previous article, a reader named Erica left a comment in which see detailed the stunning food inflation that she is seeing where she lives….
Food inflation is real, and it is here. Just yesterday I compared my receipt from a grocery run to prices I have from the same exact store from September 15, 2009. Bacon? Up 52% to $13.69 from $8.99 for 4 lbs. Butter? Up 73% to $9.99 from $5.79 for 4 lbs. Pure vanilla extract up 14% to $6.79 from $5.95. Chopped dried onions up a mere 2% but minced garlic (wet) was up 32%.
#3 It looks like those receiving Social Security are not going to be seeing cost-of-living increases again. The Associated Press is reporting that the U.S. government is expected to announce some time this week that the tens of millions of Americans that receive Social Security will go through yet another year without an increase in their monthly benefit payments. You see, Social Security cost-of-living adjustments are tied to the official government inflation numbers, and according to the U.S. government there is basically very little inflation right now. Of course we all know that is a lie, but it is what it is.
#4 The cost of health care continues to soar into the stratosphere. Americans already pay more for health care than anyone else in the world, and yet costs continue to spiral out of control. The cost of health care increased a staggering 9.6% for all U.S. households from 2007 to 2009. Now, health insurance companies from coast to coast are announcing that they must raise health insurance premiums substantially due to the new health care law that Barack Obama and the Democrats have pushed through. So in 2011 it looks like the average American family is going to have to carve out an even bigger chunk of the budget for health care.
#5 American families could desperately use a recovery in the housing industry, but that is simply not going to happen. Foreclosure-Gate is getting worse by the day, and it threatens to bring the U.S. real estate industry to a complete and total standstill. If it is ultimately proven that the paperwork for millions of mortgages in the United States is seriously deficient, it could push hordes of mortgage lenders into bankruptcy and render mountains of mortgage-backed securities nearly worthless. Regardless, it is now going to be much more difficult to get a mortgage, much more difficult to buy a home and much more difficult to sell a home. We could very well be looking at the next stage of the housing crash. Ordinary Americans could end up losing trillions more in home equity.
#6 More Americans than ever find themselves unable to pay their bills, and an increasing number of frustrated creditors are actually resorting to wage garnishment. Yes, you read the correctly. Creditors are starting to ruthlessly go after the weekly paychecks of debtors.
After winning, creditors can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, but the pay seizures are rising fast in some areas — up 121 percent in the Phoenix area since 2005, and 55 percent in the Atlanta area since 2004. In Cleveland, garnishments jumped 30 percent between 2008 and 2009 alone.
So if you are getting behind on your debt, you better watch out – your creditors may soon decide to garnish your wages.
#7 Americans now owe more on student loans than they do on credit cards. As hard as that is to believe, that is actually true. Americans now owe more than $849 billion on student loans, which is a new all-time record.
Student loan payments can be absolutely crippling to a household budget. This is especially true for young Americans that have just gotten out of school. Sadly, student loan debt is nearly impossible to get rid of. Once you are committed, it will follow you around for the rest of your life.
#8 Even as expenses rise, incomes are down from coast to coast. Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009. There are very few areas that have not been affected. In fact, of the 52 largest metro areas in the United States, only the city of San Antonio did not see a decline in median household income during 2009.
#9 If all of this was not bad enough, now there are rumblings that the U.S. Federal Reserve is actually thinking that we need more inflation. A number of top Federal Reserve officials have come out recently and have publicly supported the notion that the Fed needs to purposely create more inflation in order to stimulate the economy. Of course what they don’t tell the American people is that inflation is a hidden tax on every single dollar in our wallets and in our bank accounts. More inflation would be really bad news for ordinary Americans, because they are already having a tough time getting their dollars to stretch far enough.
#10 Apparently the U.S. government (and many state and local governments) think that this is a great time to stick it to the American people by hitting them with a slew of new taxes. There are so many tax increases scheduled to go into effect in 2011 that it is hard to keep track of them all. In fact, there are many (myself included) that are calling 2011 “the year of the tax increase“. But the Americans that are going to get it the worst of all are those that are going to get hit with the Alternative Minimum Tax. One out of every six American households is going to be hit with a tax increase averaging $3,900 (thanks to the AMT) and most of them don’t even know that it is coming.
So did you think that 2010 was bad?
Well, you haven’t seen anything yet.
2010 was a Sunday picnic compared to what is coming.
Get ready to get squeezed.
Get ready for higher food prices, higher gas prices, higher health insurance premiums and higher taxes.
Get ready to try to do a lot more with a lot less.
Inflation is already here, but it is going to get a whole lot worse. Meanwhile, the U.S. government (along with state and local governments) is going to continue to have a voracious appetite for more revenue.
Average Americans are going to be squeezed until they have nothing left to give. Then they are going to be squeezed just a little bit more.
The mainstream media is full of happy economic news these days. The S&P 500 has shot up 16 percent since the beginning of July. Ford Motor Company just reported a profit that jumped nearly 70 percent in the third quarter. It was Ford’s best third quarter performance ever and it was the 6th quarterly profit in a row for the company. Other major firms have announced earnings that have far exceeded expectations in recent weeks. Hooray! The pundits are proclaiming that the economic collapse is over and that the U.S. economy has won. It is almost enough to make one tear into a stirring rendition of “Happy Days Are Here Again”. But perhaps we should take a moment and get a hold of ourselves first. After all, the underlying economic fundamentals have not changed. The same long-term trends that were ripping the U.S. financial system apart a month or two ago are still continuing to do so. Millions upon millions of American families are still deeply suffering. So exactly what in the world is going on here? Well, this is what is known as a “sucker’s rally”. Those on the inside know better than to throw money at this market. In fact, corporate insiders are now selling off stock so fast you would think it is going out of style. Meanwhile, hordes of innocent rubes are jumping back into the stock market thinking that it is the perfect time to get in. 
California Is Broke – 19 Reasons Why It May Be Time For Everyone To Leave The State Of California For Good
Sadly, the state of California is facing such a wide array of social, economic, and political problems that it is hard to even document them all. It is really one huge gigantic mess at this point.
Just consider the following facts about what life is like in the state of California today….
#1 Unemployment in the state of California was 12.4% in September – one of the highest rates in the nation.
#2 The number of people unemployed in the state of California is approximately equivalent to the populations of Nevada, New Hampshire and Vermont combined.
#3 Not even state government jobs are safe in California these days. Last month, government agencies in California slashed a total of 37,300 jobs.
#4 California has the third highest state income tax in the nation: a 9.55% tax bracket at $47,055 and a 10.55% bracket at $1,000,000.
#5 California has the highest state sales tax rate in the nation by far at 8.25%. Indiana has the next highest at 7%.
#6 Residents of California pay the highest gasoline taxes (over 67 cents per gallon) in the United States.
#7 Even with all of the taxes, the budget deficit for the California state government for the current year is approximately 19 billion dollars.
#8 According to an article in the Wall Street Journal, California’s unfunded pension liability is estimated to be somewhere between $120 billion and $500 billion.
#9 20 percent of the residents of Los Angeles County are now receiving public aid.
#10 Budget cuts are making life very difficult in many California cities. For example, Oakland, California Police Chief Anthony Batts says that due to severe budget cuts there are a number of crimes that his department will simply not be able to respond to any longer. The crimes that the Oakland police will no longer be responding to include grand theft, burglary, car wrecks, identity theft and vandalism.
Things have gotten so bad in Stockton, California that the police union put up a billboard with the following message: “Welcome to the 2nd most dangerous city in California. Stop laying off cops.”
#11 According to one survey, approximately 1 in 4 Californians under the age of 65 had absolutely no health insurance last year.
#12 California’s poverty rate soared to 15.3 percent in 2009, which was the highest in 11 years.
#13 California’s overstretched health care system is also on the verge of collapse. Dozens of California hospitals and emergency rooms have shut down over the last decade because they could not afford to stay open after being endlessly swamped by illegal immigrants and poor Californians who were simply not able to pay for the services they were receiving. As a result, the remainder of the health care system in the state of California is now beyond overloaded. This had led to brutally long waits, diverted ambulances and even unnecessary patient deaths.
#14 California home builders began construction on 1,811 homes during the month of August, which was down 77% from August 2006.
#15 Earlier this year, it was reported that in the area around Sacramento, California there was one closed business for every six that were still open.
#16 The “lawsuit climate” in California is ranked number 46 out of all 50 states.
#17 Residents of California pay some of the highest electricity prices in the entire nation.
#18 Over 20 percent of California homeowners are now underwater on their mortgages.
#19 Large tent cities have been springing up all over the state of California. Just check out the following shocking video news report….
http://www.youtube.com/watch?v=cRLupIRhrmg
So why doesn’t the state government of California just fix many of these problems? Well, the truth is that it simply cannot. The state government is flat broke. Earlier this year, Bob Herbert of the New York Times described California’s massive budget problems this way….
So is there any hope that all this can be turned around?
Is there any hope that the economy of California will recover?
Or will California continue to experience a rapid decline?
Please feel free to leave a comment with your opinion….