Did you know that there are nearly 102 million working age Americans that do not have a job right now? And 20 percent of all families in the United States do not have a single member that is employed. So how in the world can the government claim that the unemployment rate has “dropped” to “6.3 percent”? Well, it all comes down to how you define who is “unemployed”. For example, last month the government moved another 988,000 Americans into the “not in the labor force” category. According to the government, at this moment there are 9.75 million Americans that are “unemployed” and there are 92.02 million Americans that are “not in the labor force” for a grand total of 101.77 million working age Americans that do not have a job. Back in April 2000, only 5.48 million Americans were unemployed and only 69.27 million Americans were “not in the labor force” for a grand total of 74.75 million Americans without a job. That means that the number of working age Americans without a job has risen by 27 million since the year 2000. Any way that you want to slice that, it is bad news.
Well, what about as a percentage of the population?
Has the percentage of working age Americans that have a job been increasing or decreasing?
As you can see from the chart posted below, the percentage of working age Americans with a job has been in a long-term downward trend. As the year 2000 began, we were sitting at 64.6 percent. By the time the great financial crisis of 2008 struck, we were hovering around 63 percent. During the last recession, we fell dramatically to under 59 percent and we have stayed there ever since…
And the numbers behind this chart also show that employment in America did not increase last month.
In March, 58.9 percent of all working age Americans had a job.
In April, 58.9 percent of all working age Americans had a job.
Things are not getting worse (at least for the moment), but things are also definitely not getting better.
The month that Barack Obama entered the White House, we were in the midst of the worst economic downturn since the Great Depression and only 60.6 percent of all working age Americans had a job.
Since only 58.9 percent of all working age Americans have a job now, that means that the employment situation in America is still significantly worse than it was the day Barack Obama took office.
So don’t let anyone fool you with talk of an “employment recovery”. It simply is not happening. The official unemployment rate bears so little relation to economic reality at this point that it has essentially become meaningless.
Look, how in the world can we have an “unemployment rate” of just “6.3 percent” when 20 percent of all American families do n0t have a single member that is working?
Here is how that 20 percent figure was arrived at…
A family, as defined by the BLS, is a group of two or more people who live together and who are related by birth, adoption or marriage. In 2013, there were 80,445,000 families in the United States and in 16,127,000—or 20 percent–no one had a job.
So if one out of every five families is completely unemployed, then why is the official government unemployment rate not up at Great Depression era levels?
Could it be that the government is manipulating the numbers to make them look much better than they actually are?
Why don’t they just go ahead and get it over with? They can just define every American that is not working as “not in the labor force” and then we can have “0.0 percent unemployment”. Then we can all have a giant party and celebrate how wonderful the U.S. economy is.
And don’t be fooled by the “288,000 jobs” that were added to the U.S. economy last month. For workers under the age of 55, the number of jobs actually dropped by a whopping 259,000.
If we were using honest numbers, the official unemployment rate would look a lot scarier. John Williams of shadowstats.com has calculated that the unemployment rate should be about 23 percent. I don’t think that is too far off.
Meanwhile, the quality of the jobs in our economy continues to go down. The House Ways and Means Committee says that seven out of every eight jobs that have been “added” to the economy under Barack Obama have been part-time jobs. But you can’t raise a family or plan a career around a part-time job. To be honest, it is very hard for a single person to even survive on a part-time wage in this economic environment.
As the quality of our jobs goes down, so do our incomes. The median household income has declined for five years in a row, and the middle class is falling apart.
Without middle class incomes, you can’t have a middle class. Considering what we have been watching happen, it should be no surprise that the homeownership rate in the United States has dropped to the lowest level in 19 years or that the number of Americans receiving money from the government each month exceeds the number of full-time workers in the private sector by more than 60 million.
For many more statistics like this, please see my previous article entitled “17 Facts To Show To Anyone That Believes That The U.S. Economy Is Just Fine“.
At a gut level, most Americans understand that things are much worse than they used to be.
The Pew Research Center recently asked people what “class” they consider themselves to be. The results were shocking.
Back in 2008, only 25 percent of all Americans considered themselves to be “lower middle class” or “poor”.
Earlier this year, an astounding 40 percent of all Americans chose one of those designations.
We are in the midst of a long-term economic decline, and no amount of propaganda is going to change that.
But based on the “happy numbers” being trumpeted by the mainstream media, the Federal Reserve is slowly bringing their quantitative easing program to an end.
When quantitative easing is finally totally cut off, we shall see how the financial markets and the U.S. economy perform without artificial life support.
Personally, I don’t think that it is going to be pretty.
Is “discretionary income” rapidly becoming a thing of the past for most American families? Right now, there are a lot of signs that we are on the verge of a nightmarish consumer spending drought. Incomes are down, taxes are up, many large retail chains are deeply struggling because of the lack of customers, and at this point nearly a quarter of all Americans have more credit card debt than money in the bank. Considering the fact that consumer spending is such a large percentage of the U.S. economy, that is very bad news. How will we ever have a sustained economic recovery if consumers don’t have much money to spend? Well, the truth is that we aren’t ever going to have a sustained economic recovery. In fact, this debt-fueled bubble of false hope that we are experiencing right now is as good as things are going to get. Things are going to go downhill from here, and if you think that consumer spending is bad now, just wait until you see what happens over the next several years.
Even though the Dow is surging toward a record high right now, everyone knows that things are not good for the middle class. A recent quote from CPA Howard Dvorkin kind of summarizes our current state of affairs very nicely…
“The fact of the matter is that America is broke — whether it’s mortgages, student loans or credit cards, we are broke. The old rule of thumb is that people should have six months’ of savings,” Dvorkin says.”If you talk to people, most don’t have two pennies.”
These days most Americans are living from paycheck to paycheck, and thanks to rising prices and rising taxes, those paychecks are getting squeezed tighter and tighter. Many families have had to cut back on unnecessary expenses, and some families no longer have any discretionary income at all.
The following are 16 signs that the middle class is rapidly running out of money…
#1 According to one brand new survey, 24 percent of all Americans have more credit card debt than money in the bank.
#2 J.C. Penney was once an unstoppable retail powerhouse, but now J.C. Penney has just posted its lowest annual retail sales in more than 20 years…
J.C. Penney Co. (JCP) slid the most in more than three decades after the department-store chain lost $4.3 billion in sales in the first year of Chief Executive Officer Ron Johnson’s turnaround plan.
The shares fell 18 percent to $17.40 at 11:28 a.m. in New York after earlier declining 22 percent, the biggest intraday drop since at least 1980, according to data compiled by Bloomberg. J.C. Penney yesterday said its net loss in the quarter ended Feb. 2 widened to $552 million from $87 million a year earlier. The Plano, Texas-based retailer’s annual revenue slid 25 percent to $13 billion, the lowest since at least 1987.
How much worse can things get? At this point the decline has become so steep for J.C. Penney that Jim Cramer of CNBC is declaring that they are in “a true tailspin“.
#3 In the United States today, a new car has become out of reach for most middle class Americans according to the 2013 Car Affordability Study…
Looking to buy a new car, truck or crossover? You may find it more difficult to stretch the household budget than you expected, according to a new study that finds median-income families in only one major U.S. city actually can afford the typical new vehicle.
The typical new vehicle is now more expensive than ever, averaging $30,500 in 2012, according to TrueCar.com data, and heading up again as makers curb the incentives that helped make their products more affordable during the recession when they were desperate for sales. According to the 2013 Car Affordability Study by Interest.com, only in Washington could the typical household swing the payments, the median income there running $86,680 a year.
#4 The founder of Subway Restaurants, Fred Deluca, says that the recent tax increases are having a noticeable impact on his business…
“The payroll tax is affecting sales. It’s causing sales declines,” he said, estimating a decline of about 2 percentage points off sales at his restaurants. “There are a lot of pressures on consumers,” Deluca said, adding “I think this is on the permanent side, but I think business will adjust to it.”
#5 Many other large restaurant chains are also struggling in this tough economic environment…
Darden Restaurants, which owns the casual dining chains Oliver Garden, LongHorn Steakhouse and Red Lobster, said blended same-store sales at its three eateries would be 4.5 percent lower during its fiscal third quarter.
Clarence Otis, Darden’s chairman and chief executive, said that “while results midway through the third quarter were encouraging, there were difficult macro-economic headwinds during the last month of the quarter.”
“Two of the most prominent were increased payroll taxes and rising gasoline prices, which together put meaningful pressure on the discretionary purchasing power of our guests,” he added.
#6 The CFO of Family Dollar recently admitted to CNBC that this is a “challenging time” because of reduced consumer spending…
At Family Dollar where the average customer makes less than $40,000 a year, the combination of a two-percent hike in the payroll tax, rising gas prices and delayed tax refunds has created a “challenging time and an uncertain time for the consumer right now,” said Mary Winston, the company’s chief financial officer.
“In our case, anything that takes money out of our customer’s wallet gives them less money to spend in our stores,” she told CNBC. “So I think all of those things create nervousness for the consumer, and I think there are sometimes political dynamics going on that they might not even fully understand the details, but they know it’s not good.”
#7 Even Wal-Mart is really struggling right now. According to a recent Bloomberg article, Wal-Mart is struggling “to restock store shelves as U.S. sales slump“…
Evelin Cruz, a department manager at the Wal-Mart Supercenter in Pico Rivera, California, said Simon’s comments from the officers’ meeting were “dead on.”
“There are gaps where merchandise is missing,” Cruz said in a telephone interview. “We are not talking about a couple of empty shelves. This is throughout the store in every store. Some places look like they’re going out of business.”
This all comes on the heels of an internal Wal-Mart memo that was leaked to the press earlier this month that described February sales as a “total disaster”.
#8 Electronics retailer Best Buy continues to struggle mightily. Best Buy just announced that it will be eliminating 400 jobs at its headquarters in Richfield, Minnesota.
#9 It is being projected that many of the largest retail chains in America, including Best Buy, will close down hundreds of stores during 2013. The following is a list of projected store closings for 2013 that I included in a previous article…
Forecast store closings: 200 to 250
Sears Holding Corp.
Forecast store closings: Kmart 175 to 225, Sears 100 to 125
Forecast store closings: 300 to 350
Forecast store closings: 125 to 150
Barnes & Noble
Forecast store closings: 190 to 240, per company comments
Forecast store closings: 500 to 600
Forecast store closings: 150 to 175
Forecast store closings: 450 to 550
#10 Another sign that consumer spending is slowing down is the fact that less stuff is being moved around in our economy. As I have mentioned previously, freight shipment volumes have hit their lowest level in two years, and freight expenditures have gone negative for the first time since the last recession.
#11 Many young adults have no discretionary income to spend because they are absolutely drowning in student loan debt. According to the New York Federal Reserve, student loan debt nearly tripled between 2004 and 2012.
#12 The student loan delinquency rate in the United States is now at an all-time high. It is only a matter of time before the student loan debt bubble bursts.
#13 Due to a lack of jobs and high levels of debt, poverty among young adults in America is absolutely exploding. Today, U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.
#14 According to one recent survey, 62 percent of all middle class Americans say that they have had to reduce household spending over the past year.
#15 Median household income in the United States has fallen for four consecutive years. Overall, it has declined by more than $4000 during that time span.
#16 According to the U.S. Census Bureau, the middle class is currently taking home a smaller share of the overall income pie than has ever been recorded before.
Are you starting to get the picture?
Retailers are desperate for sales, but you can’t squeeze blood out of a rock.
For much more on how the middle class is absolutely drowning in debt, please see this article: “Money Is A Form Of Social Control And Most Americans Are Debt Slaves“.
But if you listen to the mainstream media, they would have you believe that happy days are here again.
Right now, everyone seems to be quite giddy about the fact that the Dow is marching toward an all-time high. And I actually do believe that the Dow will blow right past it. In fact, it is even possible that we could see the Dow hit 15,000 before everything starts falling apart.
But at some point, the financial markets will catch up with economic reality. It is just a matter of time.
In the meanwhile, those that are wise are taking advantage of these times of plenty to prepare for the great economic drought that is coming.
Don’t be caught living paycheck to paycheck and totally unprepared when the next wave of the economic collapse strikes. Anyone that believes that this debt-fueled bubble of false hope can last indefinitely is just being delusional.
The federal income tax is a bad joke and it needs to be abolished. All over the nation, hard working American families are being absolutely crushed by oppressive levels of taxation, and our politicians are constantly coming up with new ways to extract money from all of us every single year. Meanwhile, many ultra-wealthy Americans and many of the most profitable corporations in the country pay little to nothing in taxes. In fact, as you will see below, there are dozens of very prominent corporations that make billions of dollars in profits and yet don’t pay a dime in taxes. Tax avoidance has become a multi-billion dollar industry in the United States. Those that have the resources to “play the game” use shell companies, offshore tax havens and the thousands of loopholes in our tax code to minimize their tax burdens as much as possible. Meanwhile, the rest of us get absolutely hammered. This is fundamentally unfair. The federal income tax system is irreversibly broken at this point, and it is time to abolish it. If you think that the federal income tax system can be “fixed”, then you probably have never studied it. Our tax code is nearly 4 million words long and it is absolutely riddled with thousands of loopholes that favor big corporations and the ultra-wealthy. We should come up with a better, fairer way to fund the government. The United States once prospered greatly without a federal income tax, and it could do so again.
Many people simply do not believe that it is possible for corporations inside the United States to make billions of dollars in profits each year and not pay a dime in income taxes.
Well, according to a report put out by Public Campaign, that is exactly what is happening. Posted below are numbers that come directly from their report. 30 large corporations are listed, and 29 of them had a tax burden for 2008 through 2010 that was less than zero even though they all made enormous profits. And all 30 of them spent more on lobbying than they did on taxes.
The numbers that you are about to see are for 2008, 2009 and 2010 combined. For “taxes paid”, please note that for 29 of the corporations a negative number is given. That means that the net tax liability for 2008 through 2010 was actually less than zero.
After seeing these numbers, is there anyone out there that is still willing to claim that our tax system is “fair”?…
U.S. Profits: $10,460,000,000
Taxes Paid: ‐$4,737,000,000
U.S. Profits: $4,855,000,000
Taxes Paid: ‐$1,027,000,000
U.S. Profits: $32,518,000,000
Taxes Paid: ‐$951,000,000
U.S. Profits: $49,370,000,000
Taxes Paid: ‐$681,000,000
American Electric Power
U.S. Profits: $5,899,000,000
Taxes Paid: ‐$545,000,000
U.S. Profits: $882,000,000
Taxes Paid: ‐$508,000,000
U.S. Profits: $1,666,000,000
Taxes Paid: ‐$305,000,000
U.S. Profits: $1,931,000,000
Taxes Paid: ‐$284,000,000
U.S. Profits: $1,385,000,000
Taxes Paid: ‐$227,000,000
U.S. Profits: $5,475,000,000
Taxes Paid: ‐$216,000,000
U.S. Profits: $9,735,000,000
Taxes Paid: ‐$178,000,000
U.S. Profits: $6,403,000,000
Taxes Paid: ‐$139,000,000
U.S. Profits: $4,263,000,000
Taxes Paid: ‐$127,000,000
U.S. Profits: $365,000,000
Taxes Paid: ‐$112,000,000
Integrys Energy Group
U.S. Profits: $818,000,000
Taxes Paid: ‐$92,000,000
U.S. Profits: $1,725,000,000
Taxes Paid: ‐$85,000,000
U.S. Profits: $2,124,000,000
Taxes Paid: ‐$72,000,000
U.S. Profits: $926,000,000
Taxes Paid: ‐$66,000,000
U.S. Profits: $415,000,000
Taxes Paid: ‐$48,000,000
U.S. Profits: $627,000,000
Taxes Paid: ‐$46,000,000
U.S. Profits: $4,105,000,000
Taxes Paid: ‐$41,000,000
U.S. Profits: $4,903,000,000
Taxes Paid: ‐$34,000,000
U.S. Profits: $1,292,000,000
Taxes Paid: ‐$29,000,000
U.S. Profits: $286,000,000
Taxes Paid: ‐$26,000,000
U.S. Profits: $896,000,000
Taxes Paid: ‐$18,000,000
U.S. Profits: $2,551,000,000
Taxes Paid: ‐$17,000,000
U.S. Profits: $571,000,000
Taxes Paid: ‐$15,000,000
U.S. Profits: $1,020,000,000
Taxes Paid: ‐$9,000,000
U.S. Profits: $1,977,000,000
Taxes Paid: ‐$4,000,000
U.S. Profits: $4,247,000,000
Taxes Paid: $37,000,000 (a rate of less than 1%)
U.S. Profits: $163,691,000,000
Taxes Paid: ‐$10,602,000,000
Just look at that combined total again.
Those 30 companies had combined profits of more than 163 billion dollars during those three years, and yet the combined net tax liability of those companies was negative 10.6 billion dollars.
I wish I could make my taxes look like that.
Another company that is making headlines because of their taxes these days is Facebook.
It turns out that Facebook made more than a billion dollars in 2012 but did not pay a single dime in federal or state income taxes. The following is from a report that was just released by Citizens for Tax Justice…
Earlier this month, the Facebook Inc. released its first “10-K” annual financial report since going public last year. Hidden in the report’s footnotes is an amazing admission: despite $1.1 billion in U.S. profits in 2012, Facebook did not pay even a dime in federal and state income taxes.
Instead, Facebook says it will receive net tax refunds totaling $429 million.
According to Businessweek, Facebook has an additional 2 billion dollars in tax credits that it will be able to use in future years…
Facebook says that it anticipates reducing its tax liability in the future by an additional $2.17 billion by using further net operating loss carry-forwards that it has banked.
And of course when it comes to abusing the tax system, the big Wall Street banks are some of the worst offenders. The following is an excerpt from a report put out by the office of U.S. Senator Bernie Sanders…
Here are just a few examples of how the corporations and Wall Street banks these CEOs work for have significantly harmed our economy and the federal budget:
1. Bank of America CEO Brian Moynihan
Number of Offshore Tax Havens in 2010? 371.
In 2010, Bank of America operated 371 subsidiaries incorporated in offshore tax havens. 204 of these subsidiaries are incorporated in the Cayman Islands, which has a corporate tax rate of 0%.
Amount of federal income taxes Bank of America would have owed if offshore tax havens were eliminated? $2.5 billion.
Bank of America has stashed $18.5 billion in offshore tax havens to avoid paying U.S. income taxes. Bank of America would owe an estimated $2.5 billion in federal income taxes if its use of offshore tax avoidance was eliminated.
Amount of federal income taxes paid in 2010? Zero. $1.9 billion tax refund.
Bank of America received a $1.9 billion tax refund from the IRS in 2010, even though it made $4.4 billion in profits.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? Over $1.3 trillion.
During the financial crisis, Bank of America received a total of more than $1.3 trillion in virtually zero interest loans from the Federal Reserve and a $45 billion bailout from the Treasury Department.
2. JP Morgan Chase CEO James Dimon
Number of Offshore Tax Havens in 2010? 83.
In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens.
Amount of federal income taxes JP Morgan Chase would have owed if offshore tax havens were eliminated? $4.9 billion
JP Morgan Chase has stashed $21.8 billion in offshore tax haven countries to avoid payng income taxes. If this practice was outlawed, it would have paid $4.9 billion in federal income taxes.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? $416 billion
During the financial crisis, JP Morgan Chase received a total of more than $391 billion in virtually zero interest loans from the Federal Reserve and a $25 billion bailout from the Treasury Department, while Jamie DImon served as a director of the New York Federal Reserve.
3. Goldman Sachs CEO Lloyd Blankfein
Amount of federal income taxes paid in 2008? Zero. $278 million tax refund.
In 2008, Goldman Sachs received a $278 million refund from the IRS, even though it earned a profit of $2.3 billion that year.
Number of offshore tax havens in 2010? 39.
In 2010, Goldman Sachs operated 39 subsidiaries in offshore tax haven countries.
Amount of federal income taxes Goldman Sachs would have owed if offshore tax havens were eliminated? $3.32 billion.
Goldman Sachs has stashed $20.63 billion in offshore tax haven countries to avoid paying income taxes. If this practice was outlawed, it would have paid $3.32 billion in federal income taxes.
Taxpayer Bailout from the Federal Reserve and the Treasury Department? $824 billion.
During the financial crisis, Goldman Sachs received a total of $814 billion in virtually zero interest loans from the Federal Reserve and a $10 billion bailout from the Treasury Department.
Are you starting to get the picture?
The big banks and the big corporations make billions, but they pay nothing or next to nothing.
The rest of us bust our rear ends to try to get ahead, and we get gouged by dozens of different taxes.
Over time, the percentage of the overall tax burden shouldered by corporations has gotten smaller and smaller.
Back in 1950, corporate taxes accounted for about 30 percent of all federal revenue. In 2012, corporate taxes accounted for less than 7 percent of all federal revenue.
These days, large corporations have become absolute masters at avoiding taxes. In fact, there are many international tax havens that are doing a booming business in setting up sham headquarters for U.S. corporations. For example, the city of Zug, Switzerland only has a population of 26,000 people but it is the headquarters for 30,000 companies.
But corporations are not the only ones doing this kind of thing.
The ultra-wealthy have also mastered the art of legally not paying taxes.
As I mentioned in a previous article, it has been reported that the global elite have up to 32 TRILLION dollars stashed in offshore banks around the globe.
With that amount of money, you could pay off the entire U.S. national debt and still have enough money left over to buy every product and service produced in the United States during an entire year.
It is time to admit that our tax system is broken.
Congress has had decades to fix it, and yet the abuses just keep getting worse.
What we are doing is not working.
We need to abolish the income tax.
If you are still not convinced that the federal income tax is an abomination and that we need to abolish it, here are some more shocking facts about our tax system from one of my previous articles about taxes…
1 – The U.S. tax code is now 3.8 million words long. If you took all of William Shakespeare’s works and collected them together, the entire collection would only be about 900,000 words long.
2 – According to the National Taxpayers Union, U.S. taxpayers spend more than 7.6 billion hours complying with federal tax requirements. Imagine what our society would look like if all that time was spent on more economically profitable activities.
3 – 75 years ago, the instructions for Form 1040 were two pages long. Today, they are 189 pages long.
4 – There have been 4,428 changes to the tax code over the last decade. It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.
5 – According to the National Taxpayers Union, the IRS currently has 1,999 different publications, forms, and instruction sheets that you can download from the IRS website.
6 – Our tax system has become so complicated that it is almost impossible to file your taxes correctly. For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household. All 46 of them came up with a different result.
7 – In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household. All five of them came up with a different result.
8 – The IRS spends $2.45 for every $100 that it collects in taxes.
9 – According to The Tax Foundation, the average American has to work until April 17th just to pay federal, state, and local taxes. Back in 1900, “Tax Freedom Day” came on January 22nd.
10 – When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.
11 – Residents of New Jersey pay $1.64 in taxes for every $1.00 of federal spending that they get back.
12 – The United States is the only nation on the planet that tries to tax citizens on what they earn in foreign countries.
13 – According to Forbes, the 400 highest earning Americans pay an average federal income tax rate of just 18 percent.
14 – Warren Buffett had an effective tax rate of just 17.4 percent for 2010.
15 – The top 20 percent of all income earners in the United States pay approximately 86 percent of all federal income taxes.
16 – Sadly, as Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.
Please share this article with as many people as you can. We have now entered a time of the year when tens of millions of Americans will be filling out their tax returns, and the pain of going through that process will make people even more receptive than normal to the truth about how broken our system is.
So what do you think?
Do you think that it is fair for the ultra-wealthy and hugely profitable corporations to get away with paying zero taxes while you get hammered?
Do you believe that it is time to abolish the income tax?
Please feel free to post a comment with your thoughts below…
Why does it seem like wherever there is human suffering, some giant bank is making money off of it? According to a new report from the World Development Movement, Goldman Sachs made about 400 million dollars betting on food prices last year. Overall, 2012 was quite a banner year for Goldman Sachs. As I reported in a previous article, revenues for Goldman increased by about 30 percent in 2012 and the price of Goldman stock has risen by more than 40 percent over the past 12 months. It is estimated that the average banker at Goldman brought in a pay and bonus package of approximately $396,500 for 2012. So without a doubt, Goldman Sachs is swimming in money right now. But what is the price for all of this “success”? Many claim that the rampant speculation on food prices by the big banks has dramatically increased the global price of food and has caused the suffering of hundreds of millions of poor families around the planet to become much worse. At this point, global food prices are more than twice as high as they were back in 2003. Approximately 2 billion people on the planet spend at least half of their incomes on food, and close to a billion people regularly do not have enough food to eat. Is it moral for Goldman Sachs and other big banks such as Barclays and Morgan Stanley to make hundreds of millions of dollars betting on the price of food if that is going to drive up global food prices and make it harder for poor families all over the world to feed themselves?
This is another reason why the derivatives bubble is so bad for the world economy. Goldman Sachs and other big banks are treating the global food supply as if it was some kind of a casino game. This kind of reckless activity was greatly condemned by the World Development Movement report…
“Goldman Sachs is the global leader in a trade that is driving food prices up while nearly a billion people are hungry. The bank lobbied for the financial deregulation that made it possible to pour billions into the commodity derivative markets, created the necessary financial instruments, and is now raking in the profits. Speculation is fuelling volatility and food price spikes, hurting people who struggle to afford food across the world.”
So shouldn’t there be a law against this kind of a thing?
Well, in the United States there actually is, but the law has been blocked by the big Wall Street banks and their very highly paid lawyers. The following is another excerpt from the report…
“The US has passed legislation to limit speculation, but the controls have not been implemented due to a legal challenge from Wall Street spearheaded by the International Swaps and Derivatives Association, of which Goldman Sachs is a leading member. Similar legislation is on the table at the EU, but the UK government has so far opposed effective controls. Goldman Sachs has lobbied against controls in both the US and the EU.”
Posted below is a chart that shows what this kind of activity has done to commodity prices over the past couple of decades. You will notice that commodity prices were fairly stable in the 1990s, but since the year 2000 they have been extremely volatile…
The reason for all of this volatility was explained in an excellent article by Frederick Kaufman…
The money tells the story. Since the bursting of the tech bubble in 2000, there has been a 50-fold increase in dollars invested in commodity index funds. To put the phenomenon in real terms: In 2003, the commodities futures market still totaled a sleepy $13 billion. But when the global financial crisis sent investors running scared in early 2008, and as dollars, pounds, and euros evaded investor confidence, commodities — including food — seemed like the last, best place for hedge, pension, and sovereign wealth funds to park their cash. “You had people who had no clue what commodities were all about suddenly buying commodities,” an analyst from the United States Department of Agriculture told me. In the first 55 days of 2008, speculators poured $55 billion into commodity markets, and by July, $318 billion was roiling the markets. Food inflation has remained steady since.
The money flowed, and the bankers were ready with a sparkling new casino of food derivatives. Spearheaded by oil and gas prices (the dominant commodities of the index funds) the new investment products ignited the markets of all the other indexed commodities, which led to a problem familiar to those versed in the history of tulips, dot-coms, and cheap real estate: a food bubble. Hard red spring wheat, which usually trades in the $4 to $6 dollar range per 60-pound bushel, broke all previous records as the futures contract climbed into the teens and kept on going until it topped $25. And so, from 2005 to 2008, the worldwide price of food rose 80 percent –and has kept rising.
Are you angry yet?
You should be.
Poor families all over the planet are suffering so that Wall Street bankers can make bigger profits.
Many big financial institutions just seem to love to make money on the backs of the poor. I have previously reported on how JP Morgan makes billions of dollars issuing food stamp cards in the United States. When the number of Americans on food stamps goes up, so does the amount of money that JP Morgan makes. You can read much more about all of this right here: “Making Money On Poverty: JP Morgan Makes Bigger Profits When The Number Of Americans On Food Stamps Goes Up“.
Sadly, the global food supply is getting tighter with each passing day, and things are looking rather ominous for the years ahead.
According to the United Nations, global food reserves have reached their lowest level in nearly 40 years. Global food reserves have not been this low since 1974, but the population of the world has greatly increased since then. If 2013 is another year of drought and bad harvests, things could spiral out of control rather quickly…
World grain reserves are so dangerously low that severe weather in the United States or other food-exporting countries could trigger a major hunger crisis next year, the United Nations has warned.
Failing harvests in the US, Ukraine and other countries this year have eroded reserves to their lowest level since 1974. The US, which has experienced record heatwaves and droughts in 2012, now holds in reserve a historically low 6.5% of the maize that it expects to consume in the next year, says the UN.
“We’ve not been producing as much as we are consuming. That is why stocks are being run down. Supplies are now very tight across the world and reserves are at a very low level, leaving no room for unexpected events next year,” said Abdolreza Abbassian, a senior economist with the UN Food and Agriculture Organisation (FAO).
The world has barely been able to feed itself for some time now. In fact, we have consumed more food than we have produced for 6 of the last 11 years…
Evan Fraser, author of Empires of Food and a geography lecturer at Guelph University in Ontario, Canada, says: “For six of the last 11 years the world has consumed more food than it has grown. We do not have any buffer and are running down reserves. Our stocks are very low and if we have a dry winter and a poor rice harvest we could see a major food crisis across the board.”
“Even if things do not boil over this year, by next summer we’ll have used up this buffer and consumers in the poorer parts of the world will once again be exposed to the effects of anything that hurts production.”
We desperately need a good growing season next summer, and all eyes are on the United States. The U.S. exports more food than anyone else does, and last summer the United States experienced the worst drought that it had seen in about 50 years. That drought left deep scars all over the country. The following is from a recent Rolling Stone article…
In 2012, more than 9 million acres went up in flames in this country. Only dredging and some eleventh-hour rain kept the mighty Mississippi River from being shut down to navigation due to low water levels; continuing drought conditions make “long-term stabilization” of river levels unlikely in the near future. Several of the Great Lakes are soon expected to hit their lowest levels in history. In Nebraska last summer, a 100-mile stretch of the Platte River simply dried up. Drought led the USDA to declare federal disaster areas in 2,245 counties in 39 states last year, and the federal government will likely have to pay tens of billions for crop insurance and lost crops. As ranchers became increasingly desperate to feed their livestock, “hay rustling” and other agricultural crimes rose.
Ranchers were hit particularly hard. Because they couldn’t feed their herds, many ranchers slaughtered a tremendous number of animals. As a result, the U.S. cattle herd is now sitting at a 60 year low.
What do you think that is going to do to meat prices over the next few years?
Meanwhile, the drought continues. According to the U.S. Drought Monitor, this is one of the worst winter droughts the U.S. has ever seen. At this point, more than 60 percent of the entire nation is currently experiencing drought.
If things don’t turn around dramatically, 2013 could be an absolutely nightmarish year for crops in the United States. If 2013 does turn out to be another bad year, food prices would soar both in the U.S. and on the global level. The following is from a recent CNBC article…
The severe drought that swept through much of the U.S. last year is continuing into 2013, threatening to cripple economic growth while forcing consumers to pay higher food prices.
“The drought will have a significant impact on prices, especially beef, pork and chicken,” said Ernie Gross, an economic professor at Creighton University and who studies farming issues.
So let us hope for the best, but let us also prepare for the worst.
It looks like higher food prices are on the way, and millions of poor families all over the planet will be hard-pressed to feed their families.
Meanwhile, Goldman Sachs will be laughing all the way to the bank.
The mainstream media continues to insist that the economy is “getting better”, but the poverty numbers for children and young people just continue to explode. For example, did you know that the poverty rate for families with a head of household under the age of 30 is a whopping 37 percent? Children and young people sure didn’t cause our recent economic downturn, but they sure are getting hit the hardest by it. According to the U.S. Department of Education, for the first time ever more than a million U.S. public school students are homeless. That seems like an impossible number, but it is actually true. How in the world could the “wealthiest nation on earth” get to the point where more than a million children can’t count on a warm bed to sleep in at night? Sadly, a huge number of American children can’t count on a warm dinner either. About a fourth of them are enrolled in the food stamp program. What do you do if you are a parent in that kind of situation? How do you explain to your kids that you can’t afford a nice home like everybody else has or that you can’t afford to go to the grocery store and buy them some dinner?
Young people are experiencing very rough times right now as well. If you are under the age of 30, it is really, really difficult to get a job in America today. The competition for the few decent jobs that seem to be available is absolutely crazy. Unemployment among young people is at a level that we have not seen since World War II, and this is causing major problems.
Even if you do have a college degree, there is no guarantee that you will be able to get any type of a job. In fact, more than half of all college graduates under the age of 25 were either unemployed or underemployed last year. There are millions of very talented college graduates that are waiting tables, making sandwiches or stocking shelves down at the local branch of a global retail conglomerate. Meanwhile, they are saddled with record breaking amounts of student loan debt.
This is easily the worst economic environment that we have seen for young people since the Great Depression of the 1930s. The number of good jobs continues to decline. Many young people are faced with the choice of taking a bad job or having no job at all.
If you are under 30 in America today, you better hope that you come from a wealthy family or that you have some really good connections, because otherwise the future looks pretty bleak for you.
The following are 20 signs that the U.S. poverty explosion is hitting children and young people the hardest…
1. If you can believe it, a higher percentage of children is living in poverty in America today than was the case back in 1975.
2. More than one out of every five children in the United States is currently living in poverty.
3. According to U.S. Census data, 57 percent of all American children live in a home that is either considered to be “poor” or “low income”.
4. Median household income for families with children dropped by a whopping $6,300 between 2001 and 2011.
5. For the first time ever, more than a million public school students in the United States are homeless. That number has risen by 57 percent since the 2006-2007 school year.
6. It is being projected that half of all American children will be on food stamps at least once before they turn 18 years of age.
7. One university study estimates that child poverty costs the U.S. economy 500 billion dollars each year.
8. The 18 to 24 age group has a higher unemployment rate than any other age group in the United States.
9. Young adult employment is now at the lowest level that we have seen since World War II.
10. In 2007, the unemployment rate for the 20 to 29 age bracket was about 6.5 percent. Today, the unemployment rate for that same age group is about 13 percent.
11. Families that have a head of household under the age of 30 have a poverty rate of 37 percent.
12. Family homelessness in the Washington D.C. region (one of the wealthiest regions in the entire country) has risen 23 percent since the last recession began.
13. Since the year 2000, incomes for U.S. households led by someone between the ages of 25 and 34 have fallen by about 12 percent after you account for inflation.
14. In 1984, the median net worth of households led by someone 65 or older was 10 times larger than the median net worth of households led by someone 35 or younger. Today, the median net worth of households led by someone 65 or older is 47 times larger than the median net worth of households led by someone 35 or younger.
15. During 2011, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.
16. Many young people are finding that they cannot afford to get married these days. Sadly, an all-time low 44.2 percent of all Americans between the ages of 25 and 34 are married right now.
17. Right now, approximately 53 percent of all Americans in the 18 to 24 age group are living at home.
18. The number of Americans in the 25 to 34 age group that live with their parents has grown by 25 percent since 2007.
19. One survey discovered that 85 percent of all college seniors plan on moving back in with their parents after graduation.
20. Overall, approximately 25 million American adults are living with their parents in the United States right now according to Time Magazine.
After reading all of those statistics, do you still doubt that America is in decline? If so, you can find some more shocking statistics right here.
The truth is that it should be painfully evident to anyone with a brain that our economy is not working correctly anymore. We have lots of talented people, but there are not nearly enough jobs and a lot of those very talented people end up sleeping out in the streets.
A recent New York Times article told the story of a young man named Duane Taylor. Sadly, there are way too many young people out there today that are experiencing the same kind of things that he is…
Duane Taylor was studying the humanities in community college and living in his own place when he lost his job in a round of layoffs. Then he found, and lost, a second job. And a third.
Now, with what he calls “lowered standards” and a tenuous new position at a Jack in the Box restaurant, Mr. Taylor, 24, does not make enough to rent an apartment or share one. He sleeps on a mat in a homeless shelter, except when his sister lets him crash on her couch.
“At any time I could lose my job, my security,” said Mr. Taylor, explaining how he was always the last hired and the first fired. “I’d like to be able to support myself. That’s my only goal.”
There are millions upon millions of young people in America today that feel totally lost because they cannot find their places in the world.
They are angry, frustrated, depressed, desperate and disillusioned. They felt like they did everything that the system told them to do, and now they feel like the system is failing them.
An unemployed 2010 graduate of the University of Florida named Lance Fuller expresses similar sentiments on his blog entitled “Voices Of A Lost Generation“…
They are the countless young men and women eager for an opportunity but have found few, if any. They have desirable skills, are highly educated, and are more than willing to work.
Sadly, crippled by college debt and graduated into a struggling economy, they stand little chance to find gainful employment in their chosen fields and take temporary jobs they are overqualified for. They lie waiting for the dream job they went to school for — but it probably doesn’t exist.
My name is Lance and sadly, I share in this story. Like my twentysomething peers, I am one of the thousands of faces of America’s Generation U — Unfortunate, Unlucky, and Unemployed.
I am fortunate that I have never been without money to buy food and have never had to spend a night on the street. But tonight millions upon millions of Americans under the age of 30 will be faced with those kinds of circumstances.
Please say a prayer for them. They didn’t cause the economic mess that we are in, but they are certainly paying the price for the mistakes that were made.
Does anyone out there have a similar story to the ones that were shared in this article? If so, please feel free to share it below. Perhaps your story will encourage someone else out there who is going through a really hard time right now.
Do you think that is an alarmist headline? Well, I am not the one saying this. Law enforcement authorities all over the country are telling citizens that they can no longer deal with all the crime and that people need to lock their doors and prepare to defend their families. Just recently, the city attorney of San Bernardino, California told citizens to “lock their doors and load their guns” because there is not enough money to pay for adequate police protection any longer. The murder rate in San Bernardino is up 50 percent this year, but the city is dealing with bankruptcy and has been forced to lay off 80 police officers. But San Bernardino is not the only city dealing with this kind of a thing. In Oakland, burglaries are up 43 percent so far this year, and to say that there is a “crime wave” going on in Oakland would be a massive understatement. If you can believe it, in Oakland “more than 11,000 homes, cars or businesses have been broken into so far this year – translating to about 33 burglaries a day.” Sadly, there simply are not enough police to keep up with it all. Due to budget cuts, it is being projected that by February the size of the police force in Oakland will be about 25 percent smaller than it was back in 2008. But what is happening in Detroit is perhaps even more frightening. Today there are about 1,000 fewer police officers in Detroit than there was a decade ago. But crime just continues to rise. So now even the police are telling people to “enter Detroit at your own risk“. With very little police protection, an increasing number of citizens are taking matters into their own hands. As I noted in a previous article, justifiable homicide in the city of Detroit increased by 79 percent in 2011, and the rate of self-defense killings in Detroit is approximately 2200 percent above the national average. But don’t laugh at what is happening in cities like San Bernardino, Oakland and Detroit. What is happening in those cities will be coming to your community soon enough.
From coast to coast, criminals are becoming increasingly bold and increasingly desperate. My sister lives near a large city in the middle part of the country, and a house across the street from the one her family just moved into was recently vandalized. The criminals took all of the exposed copper pipe and copper wire that could be accessed easily.
Other criminals have become very focused on gold because it has soared in value and it is easy to resell. For example, there have been more than 250 gold chain robberies in Stockton, California just since the month of April. According to the CBS News affiliate in Sacramento, criminals are just ripping these chains right off of the necks of unsuspecting citizens, and many of the victims that have tried to resist have ended up getting hurt. Normally the criminals sell off the jewelry within 24 hours, so solving these crimes is a real challenge…
Most victims of the robberies are female (65 percent), and 44 percent of victims are age 50 or older, the data showed. The most common time of day for the crimes were between 12 and 5 p.m., though this only accounts for about a third of the crime.
Parino said robbers took even police by surprise initially.
“When [criminals] do these crimes, they normally get rid of the items within 24 hours,” he said.
That’s why police are now checking up on secondhand stores and pawn shops on a weekly basis.
Many dismiss reports such as these as “anomalies”, but how many “anomalies” do we need before we finally admit that we have a widespread problem in our society?
Personally, there are many major U.S. cities that I would not want to be living right in the middle of right now.
Just take a look at Chicago. It has become one of the deadliest major cities on the entire globe. In recent years we have seen massive cuts to the police budget coupled with a dramatic increase in gang activity in Chicago.
The murder rate in Chicago is way up this year and the police force is massively outnumbered.
As I have written about previously, there are only about 200 police officers assigned to Chicago’s Gang Enforcement Unit. It is their job to handle the estimated 100,000 gang members living in the city.
How would you like to be outnumbered 100,000 to 200?
When things really hit the fan, Chicago is going to be a complete and utter nightmare.
And sometimes we get a peek into how people will behave when things break down. Just look at what happened during the aftermath of Hurricane Sandy.
If you can believe it, some criminals actually took advantage of the Thanksgiving holiday to loot homes in the Breezy Point neighborhood of Queens. That was the neighborhood where approximately 100 homes burned down. The suffering of the residents of that neighborhood made headlines all over the nation. But that has not stopped criminals from moving in and taking advantage of their vulnerability…
Cops told the victims burglaries are on the rise in Breezy Point.
There were 14 home break-ins from Nov. 12 to Nov. 18, compared with none a year before.
And in the 28 days before that, there were 48 burglaries. Only four break-ins were reported in that time period the year before.
In the days after Sandy, some of the hardest-hit areas were plagued with store looting, home burglaries, street muggings and other crimes.
There are some very sick people out there. These days you simply do not know who you can trust. The person you meet on the street may be perfectly fine or they may be a total sicko. It is so hard to tell. But without a doubt there are a lot of sickos out there. Just check out what authorities in Pennsylvania found recently…
Animal welfare workers say 11 puppies were found dead and skinned near an eastern Pennsylvania park.
Sadly, authorities in that area had come across another similar incident recently…
The discovery is second disturbing incident in the county in less than a week. About 20 miles away in Lynn Township police say a dog was discovered skinned and cooked.
Who would do such things?
What in the world is happening to this country?
Things are changing, and this is just the tip of the iceberg. As conditions shift, we are all going to have to carefully evaluate what is necessary to protect our families. Don’t ignore all of the warning signs. Sticking our heads in the sand and pretending that everything is going to be okay is not going to help anything.
So what do all of you think about all of this? Please feel free to post a comment with your opinion below…
All over America there are millions of people that will be missing meals and going hungry this holiday season. Even as much of the country indulges in the yearly ritual of unbridled consumerism that we refer to as “the holiday season”, more families in the United States than ever before will be dealing with not having enough food to eat. Food stamp use is at an all-time high. Demand at food banks is at an all-time high. They keep telling us that we are in an “economic recovery” and yet the middle class continues to shrink and the number of Americans living in poverty just continues to grow. We are witnessing unprecedented hunger in America, and this especially seems tragic during the holidays. Much of the country is partying as if the good times will never stop, but families that are living from one meal to the next are facing a completely different reality. How do you tell your children that there isn’t going to be any food to eat for dinner? How do you explain to them that other families have plenty to eat but you don’t? Sadly, many food banks are overstretched at this point. All over the nation, food pantries have actually had to turn people away because of the overwhelming demand. And more Americans used food stamps to buy their Thanksgiving dinners this year than ever before. This is a problem that is not going away any time soon, and when the next major economic downturn strikes the problem of hunger in America is going to get even worse.
For many Americans, hunger has become a way of life. Families that don’t have enough money are often faced with some absolutely heartbreaking choices. Just check out what one Maine official that works with the Emergency Food Assistance Program recently had to say…
“One in six people in Maine don’t know where their next meal is coming from, or skip a meal so their kids can eat, or have to choose between paying for prescriptions and food, or fuel for your car and food,” Hall said. “What’s amazing is that food is always the first thing to go from your budget. It’s staggering, the choices people have to make.”
Food banks all over the country try their best to do what they can, especially during the holidays, but it is often not enough. In fact, some food banks ran out of turkeys well in advance of Thanksgiving this year…
Three days in advance of Thanksgiving, the Pear Street Cupboard and Café in Framingham, Massachusetts, is out of turkeys. According to organizers, “requests for help are up 400 percent over last year.”
But it isn’t just during the holidays that food banks are having problems keeping up with demand. The truth is that many food banks find themselves out of food and having to turn away hungry families all throughout the year. The following is from a recent Reuters article…
Overall, food pantries and soup kitchens reported a 5 percent spike in demand in 2012, according to the survey. More than half of providers said they were forced to turn away clients, reduce portion sizes, or limit their hours.
In Staten Island, all of the agencies that respond to hunger reported not having enough food to meet demand, while in the Bronx that was true for 80 percent of agencies. In Queens and Brooklyn, more than 60 percent of agencies did not have enough food to meet the needs of the populations they serve.
If you are able, please support your local food bank. The needs are great and they are only going to get greater.
The following are 20 facts about hunger in America that will blow your mind…
#1 According to one calculation, the number of Americans on food stamps now exceeds the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”
#2 In October 2008, 30.8 million Americans were on food stamps. By August 2012 that number had risen to 47.1 million Americans.
#3 Right now, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.
#4 It is projected that half of all American children will be on food stamps at least once before they turn 18 years of age.
#5 According to new numbers that were just released by the U.S. Census Bureau, the number of Americans living in poverty increased to a new all-time record high of 49.7 million last year.
#6 The number of Americans living in poverty has increased by about 6 million over the past four years.
#7 Today, about one out of every four workers in the United States brings home wages that are at or below the federal poverty level.
#8 According to the U.S. Census Bureau, the poverty rate for children living in the United States is about 22 percent.
#9 Overall, approximately 57 percent of all children in the United States are living in homes that are either considered to be either “low income” or impoverished.
#10 In the United States today, close to 100 million Americans are considered to be either “poor” or “near poor”.
#11 One university study estimates that child poverty costs the U.S. economy 500 billion dollars each year.
#12 Households that are led by a single mother have a 31.6 percent poverty rate.
#13 In 2010, 42 percent of all single mothers in the United States were on food stamps.
#14 According to the National Center for Children in Poverty, 36.4 percent of all children in Philadelphia are living in poverty, 40.1 percent of all children in Atlanta are living in poverty, 52.6 percent of all children in Cleveland are living in poverty and 53.6 percent of all children in Detroit are living in poverty.
#15 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.
#16 Family homelessness in the Washington D.C. region (one of the wealthiest regions in the entire country) has risen 23 percent since the last recession began.
#17 There are 314 counties in the United States where at least 30 percent of the children are facing food insecurity.
#18 More than 20 million U.S. children rely on school meal programs to keep from going hungry.
#19 Right now, more than 100 million Americans are enrolled in at least one welfare program run by the federal government. And that does not even count Social Security or Medicare.
#20 According to the Natural Resources Defense Council, approximately 40 percent of all food in America “is routinely thrown away by consumers at home, discarded or unserved at restaurants or left unharvested on farms.”