It is that magical time of the year for retailers. The period between mid-October and late December can often make the difference between success or failure in the retail industry, and this year will be no exception. As you will see below, it is being projected that Americans will spend a massive amount of money this holiday season. In fact, what Americans plan to spend on Christmas this year is greater than the yearly GDP of the entire nation of Sweden. So isn’t this good economic news? Shouldn’t we be happy that Americans are opening up their wallets so eagerly? Well, it depends how you look at it. Even though our spending is increasing, our incomes are not. As I discussed the other day, 50 percent of American workers make less than 28,031 dollars a year and incomes have been stagnant for years. That means that any increases in spending must be funded by more debt, and that is not good news at all.
In 2014, approximately 70 percent of all Americans will participate in Halloween. It seems like with each passing year this dark holiday become even more popular, and before it is all said and done it is being projected that Americans will spend a whopping 7.4 billion dollars this time around…
Kicking off the end of year spending season is Halloween. Just how much do Americans spend on trick-or-treating and other Halloween festivities? The National Retail Federation (NRF) forecasts total Halloween spending—including candy, costumes, and decorations—to come in at $7.4 billion this year.
That 7.4 billion dollars includes 2 billion dollars for Halloween candy and 350 million dollars for pet Halloween costumes.
Yes, you read that correctly. We are collectively going to spend 350 million dollars on Halloween costumes for our cats and dogs.
Overall, spending on Halloween has risen by more than 55 percent since 2005. It just seems like Americans can’t get enough of this particular holiday.
But of course what Americans spend on Halloween is not even worth comparing to what Americans spend on Christmas.
According to the National Retail Federation, more than 90 percent of Americans celebrate either Christmas, Kwanza or Hanukkah.
And Christmas in particular has become virtually synonymous with materialism. This year, the National Retail Federation is projecting that Americans will spend more than 600 billion dollars just on Christmas.
That represents a huge chunk of our GDP as a nation.
Most of that money will be spent on Christmas gifts. According to a Gallup survey that was just released, the average U.S. adult plans to spend 781 dollars on Christmas gifts this year, which is significantly up from last year…
Americans’ initial estimates of the total amount they will spend on Christmas gifts this year point to an above-average holiday season for the nation’s retailers. While Gallup’s October spending forecast is a warm-up to its key measure in November, it finds Americans expecting to spend $781, on average, up from $704 last November.
Of course holiday spending does not end there. There are trees to put up, packages to send out and decorations to buy. The following numbers are from a Forbes article about what an average American typically spends during a Christmas season…
Christmas Tree: $41.50
Cards And Postage: $32.43
Floral Arrangements: $22.61
Food And Candy: $95.04
So where is all of this money coming from?
That is a key question.
If our incomes were going up, all of this spending might be good news. But as the following chart from the Federal Reserve demonstrates, that is not the case…
Our incomes are stagnant at best. But Americans always like to party as if it were the best of times. So they will pull out their credit cards and spend what they feel they need to spend in order to feel happy once again this year.
But deep down most people realize that this debt-fueled party cannot last forever.
Deep down most people realize that we have some incredibly serious long-term problems that need to be fixed.
Sadly, no matter which political party occupies the White House, and no matter which political party controls Congress, our long-term problems only seem to get even worse.
As our problems have multiplied, over time Americans have become angrier and angrier.
And right now is election season, and so that is very bad news for Democrats…
Nearly 7 in 10 Americans are angry at the direction the country is headed and 53% of Americans disapprove of President Barack Obama’s job performance, two troubling signs for Democrats one week before the midterm elections, a new CNN/ORC International Poll shows.
Democrats are battling to try and save the Senate majority, while hoping to prevent more losses in the House, which the GOP controls by a 234 to 201 margin.
In the Senate, Republicans need a net gain of six seats, and several state polls in the past month of contested races show that Democrats are in danger of losing control of the majority, and thus Congress.
If the Republicans do take control of both houses of Congress, will that fundamentally change the direction of the country?
I wish that I could believe that, but at this point most Republicans are virtually indistinguishable from most Democrats.
In other words, it is very hard to tell them apart.
As a nation, we are steamrolling toward a date with oblivion, but everyone is trying to put such a happy face on things.
Well, enjoy this time of relative stability while you can, because it is going to end way too soon.
Did you know that the U.S. state that produces the most vegetables is going through the worst drought it has ever experienced and that the size of the total U.S. cattle herd is now the smallest that it has been since 1951? Just the other day, a CBS News article boldly declared that “food prices soar as incomes stand still“, but the truth is that this is only just the beginning. If the drought that has been devastating farmers and ranchers out west continues, we are going to see prices for meat, fruits and vegetables soar into the stratosphere. Already, the federal government has declared portions of 11 states to be “disaster areas”, and California farmers are going to leave half a million acres sitting idle this year because of the extremely dry conditions. Sadly, experts are telling us that things are probably going to get worse before they get better (if they ever do). As you will read about below, one expert recently told National Geographic that throughout history it has been quite common for that region of North America to experience severe droughts that last for decades. In fact, one drought actually lasted for about 200 years. So there is the possibility that the drought that has begun in the state of California may not end during your entire lifetime.
This drought has gotten so bad that it is starting to get national attention. Barack Obama visited the Fresno region on Friday, and he declared that “this is going to be a very challenging situation this year, and frankly, the trend lines are such where it’s going to be a challenging situation for some time to come.”
According to NBC News, businesses across the region are shutting down, large numbers of workers are leaving to search for other work, and things are already so bad that it “calls to mind the Dust Bowl of the 1930s“…
In the state’s Central Valley — where nearly 40 percent of all jobs are tied to agriculture production and related processing — the pain has already trickled down. Businesses across a wide swath of the region have shuttered, casting countless workers adrift in a downturn that calls to mind the Dust Bowl of the 1930s.
If you will recall, there have been warnings that Dust Bowl conditions were going to return to the western half of the country for quite some time.
Now the mainstream media is finally starting to catch up.
And of course these extremely dry conditions are going to severely affect food prices. The following are 15 reasons why your food bill is going to start soaring…
#1 2013 was the driest year on record for the state of California, and 2014 has been exceptionally dry so far as well.
#2 According to the U.S. Drought Monitor, 91.6 percent of the entire state of California is experiencing “severe to exceptional drought” even as you read this article.
#3 According to CNBC, it is being projected that California farmers are going to let half a million acres of farmland sit idle this year because of the crippling drought.
#4 Celeste Cantu, the general manager for the Santa Ana Watershed Project Authority, says that this drought could have a “cataclysmic” impact on food prices…
Given that California is one of the largest agricultural regions in the world, the effects of any drought, never mind one that could last for centuries, are huge. About 80 percent of California’s freshwater supply is used for agriculture. The cost of fruits and vegetables could soar, says Cantu. “There will be cataclysmic impacts.”
#5 Mike Wade, the executive director of the California Farm Water Coalition, recently explained which crops he believes will be hit the hardest…
Hardest hit would be such annual row crops as tomatoes, broccoli, lettuce, cantaloupes, garlic, peppers and corn. Wade said consumers can also expect higher prices and reduced selection at grocery stores, particularly for products such as almonds, raisins, walnuts and olives.
#6 As I discussed in a previous article, the rest of the nation is extremely dependent on the fruits and vegetables grown in California. Just consider the following statistics regarding what percentage of our produce is grown in the state…
–99 percent of the artichokes
–44 percent of asparagus
–two-thirds of carrots
–half of bell peppers
–89 percent of cauliflower
–94 percent of broccoli
–95 percent of celery
–90 percent of the leaf lettuce
–83 percent of Romaine lettuce
–83 percent of fresh spinach
–a third of the fresh tomatoes
–86 percent of lemons
–90 percent of avocados
–84 percent of peaches
–88 percent of fresh strawberries
–97 percent of fresh plums
#7 Of course it isn’t just agriculture which will be affected by this drought. Just consider this chilling statement by Tim Quinn, the executive director of the Association of California Water Agencies…
“There are places in California that if we don’t do something about it, tens of thousands of people could turn on their water faucets and nothing would come out.”
#8 The Sierra Nevada snowpack is only about 15 percent of what it normally is. As the New York Times recently explained, this is going to be absolutely devastating for Californians when the warmer months arrive…
Experts offer dire warnings. The current drought has already eclipsed previous water crises, like the one in 1977, which a meteorologist friend, translating into language we understand as historians, likened to the “Great Depression” of droughts. Most Californians depend on the Sierra Nevada for their water supply, but the snowpack there was just 15 percent of normal in early February.
#9 The underground aquifers that so many California farmers depend upon are being drained at a staggering rate…
Pumping from aquifers is so intense that the ground in parts of the valley is sinking about a foot a year. Once aquifers compress, they can never fill with water again. It’s no surprise Tom Willey wakes every morning with a lump in his throat. When we ask which farmers will survive the summer, he responds quite simply: those who dig the deepest and pump the hardest.
#10 According to an expert interviewed by National Geographic, the current drought in the state of California could potentially last for 200 years or more as some mega-droughts in the region have done in the past…
California is experiencing its worst drought since record-keeping began in the mid 19th century, and scientists say this may be just the beginning. B. Lynn Ingram, a paleoclimatologist at the University of California at Berkeley, thinks that California needs to brace itself for a megadrought—one that could last for 200 years or more.
#11 Much of the western U.S. has been exceedingly dry for an extended period of time, and this is hurting huge numbers of farmers and ranchers all the way from Texas to the west coast…
The western United States has been in a drought that has been building for more than a decade, according to climatologist Bill Patzert of NASA’s Jet Propulsion Laboratory.
“Ranchers in the West are selling off their livestock,” Patzert said. “Farmers all over the Southwest, from Texas to Oregon, are fallowing in their fields because of a lack of water. For farmers and ranchers, this is a painful drought.”
#12 The size of the U.S. cattle herd has been shrinking for seven years in a row, and it is now the smallest that it has been since 1951. But our population has more than doubled since then.
#13 Extremely unusual weather patterns are playing havoc with crops all over the planet right now. The following is an excerpt from a recent article by Lizzie Bennett…
Peru, Venezuela, and Bolivia have experienced rainfall heavy enough to flood fields and rot crops where they stand. Volcanic eruptions in Ecuador are also creating problems due to cattle ingesting ash with their feed leading to a slow and painful death.
Parts of Australia have been in drought for years affecting cattle and agricultural production.
Rice production in China has been affected by record low temperatures.
Large parts of the UK are underwater, and much of that water is sea water which is poisoning the soil. So wet is the UK that groundwater is so high it is actually coming out of the ground and adding to the water from rivers and the sea. With the official assessment being that groundwater flooding will continue until MAY, and that’s if it doesn’t rain again between now and then. The River Thames is 65 feet higher than normal in some areas, flooding town after town as it heads to the sea.
#14 As food prices rise, our incomes are staying about the same. The following is from a CBS News article entitled “Food prices soar as incomes stand still“…
While the government says prices are up 6.4 percent since 2011, chicken is up 18.4 percent, ground beef is up 16.8 percent and bacon has skyrocketed up 22.8 percent, making it a holiday when it’s on sale.
#15 As I have written about previously, median household income has fallen for five years in a row. So average Americans are going to have to make their food budgets stretch more than they ever have before as this drought drags on.
If the drought does continue to get worse, small agricultural towns all over California are going to die off.
For instance, consider what is already happening to the little town of Mendota…
The farms in and around Mendota are dying of thirst. The signs are everywhere. Orchards with trees lying on their sides, as if shot. Former farm fields given over to tumbleweeds. Land and cattle for sale, cheap.
Large numbers of agricultural workers continue to hang on, hoping that somehow there will be enough work for them. But as Evelyn Nieves recently observed, panic is starting to set in…
Off-season, by mid-February, idled workers are clearly anxious. Farmworkers and everyone else who waits out the winter for work (truckers, diesel providers, packing suppliers and the like) are nearing the end of the savings they squirrel away during the season. The season starts again in March, April at the latest, but no one knows who will get work when the season begins, or how much.
People are scared, panicked even.
I did not write this article so that you would panic.
Yes, incredibly hard times are coming. If you will recall, the 1930s were also a time when the United States experienced extraordinarily dry weather conditions and a tremendous amount of financial turmoil. We could very well be entering a similar time period.
Worrying about this drought is not going to change anything. Instead of worrying, we should all be doing what we can to store some things up while food is still relatively cheap. Our grandparents and our great-grandparents that lived during the days of the Great Depression knew the wisdom of having a well-stocked food pantry, and it would be wise to follow their examples.
Please share this article with as many people as you can. The United States has never faced anything like this during most of our lifetimes. We need to shake people out of their “normalcy bias” and get them to understand that big changes are coming.
The death of the middle class in America has become so painfully obvious that now even the New York Times is doing stories about it. Millions of middle class jobs have disappeared, incomes are steadily decreasing, the rate of homeownership has declined for eight years in a row and U.S. consumers have accumulated record-setting levels of debt. Being independent is at the heart of what it means to be “middle class”, and unfortunately the percentage of Americans that are able to take care of themselves without government assistance continues to decline. In fact, the percentage of Americans that are receiving government assistance is now at an all-time record high. This is not a good thing. Sadly, the number of people on food stamps has increased by nearly 50 percent while Barack Obama has been in the White House, and at this point nearly half the entire country gets money from the government each month. Anyone that tries to tell you that the middle class is going to be “okay” simply has no idea what they are talking about. The following are 28 signs that the middle class is heading toward extinction…
#1 You don’t have to ask major U.S. corporations if the middle class is dying. This fact is showing up plain as day in their sales numbers. The following is from a recent New York Times article entitled “The Middle Class Is Steadily Eroding. Just Ask the Business World“…
In Manhattan, the upscale clothing retailer Barneys will replace the bankrupt discounter Loehmann’s, whose Chelsea store closes in a few weeks. Across the country, Olive Garden and Red Lobster restaurants are struggling, while fine-dining chains like Capital Grille are thriving. And at General Electric, the increase in demand for high-end dishwashers and refrigerators dwarfs sales growth of mass-market models.
As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.
#2 Some of the largest retailers in the United States that once thrived by serving the middle class are now steadily dying. Sears and J.C. Penney are both on the verge of bankruptcy, and now we have learned that Radio Shack may be shutting down another 500 stores this year.
#3 Real disposable income in the United States just experienced the largest year over year drop that we have seen since 1974.
#4 Median household income in the United States has fallen for five years in a row.
#5 The rate of homeownership in the United States has fallen for eight years in a row.
#6 In 2008, 53 percent of all Americans considered themselves to be “middle class”. In 2014, only 44 percent of all Americans consider themselves to be “middle class”.
#7 In 2008, 25 percent of all Americans in the 18 to 29-year-old age bracket considered themselves to be “lower class”. In 2014, an astounding 49 percent of them do.
#8 Incredibly, 56 percent of all Americans now have “subprime credit”.
#9 Total consumer credit has risen by a whopping 22 percent over the past three years.
#10 The average credit card debt in the United States is $15,279.
#11 The average student loan debt in the United States is $32,250.
#12 The average mortgage debt in the United States is $149,925.
#13 Overall, U.S. consumers are $11,360,000,000,000 in debt.
#14 The U.S. national debt is currently sitting at $17,263,040,455,036.20, and it is being reported that is has grown by $6.666 trillion during the Obama years so far. Most of the burden of servicing that debt is going to fall on the middle class (if the middle class is able to survive that long).
#15 According to the Congressional Budget Office, interest payments on the national debt will nearly quadruple over the next ten years.
#16 Back in 1999, 64.1 percent of all Americans were covered by employment-based health insurance. Today, only 54.9 percent of all Americans are covered by employment-based health insurance.
#17 More Americans than ever find themselves forced to turn to the government for help with health care. At this point, 82.4 million Americans live in a home where at least one person is enrolled in the Medicaid program.
#18 There are 46.5 million Americans that are living in poverty, and the poverty rate in America has been at 15 percent or above for 3 consecutive years. That is the first time that has happened since 1965.
#19 While Barack Obama has been in the White House, the number of Americans on food stamps has gone from 32 million to 47 million.
#20 While Barack Obama has been in the White House, the percentage of working age Americans that are actually working has declined from 60.6 percent to 58.6 percent.
#21 While Barack Obama has been in the White House, the average duration of unemployment in the United States has risen from 19.8 weeks to 37.1 weeks.
#22 Middle-wage jobs accounted for 60 percent of the jobs lost during the last recession, but they have accounted for only 22 percent of the jobs created since then.
#23 It is hard to believe, but an astounding 53 percent of all American workers make less than $30,000 a year in wages.
#24 Approximately one out of every four part-time workers in America is living below the poverty line.
#25 According to the most recent numbers from the U.S. Census Bureau, an all-time record 49.2 percent of all Americans are receiving benefits from at least one government program each month.
#26 The U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.
#27 Only 35 percent of all Americans say that they are better off financially than they were a year ago.
#28 Only 19 percent of all Americans believe that the job market is better than it was a year ago.
As if the middle class didn’t have enough to deal with, now here comes Obamacare.
As I have written about previously, Obamacare is going to mean higher taxes and much higher health insurance premiums for middle class Americans.
Not only that, but millions of hard working Americans are going to end up losing their jobs or having their hours cut back thanks to Obamacare. For example, a fry cook named Darnell Summers recently told Barack Obama directly that he and his fellow workers “were broken down to part time to avoid paying health insurance“…
And the Congressional Budget Office now says that Obamacare could result in the loss of 2.3 million full-time jobs by 2021.
Several million people will reduce their hours on the job or leave the workforce entirely because of incentives built into President Barack Obama’s health care overhaul, the Congressional Budget Office said Tuesday.
That would mean job losses equal to 2.3 million full-time jobs by 2021, in large part because people would opt to keep their income low to stay eligible for federal health care subsidies or Medicaid, the agency said. It had estimated previously that the law would lead to 800,000 fewer jobs by that year.
But even if we got rid of Obamacare tomorrow that would not solve the problems of the middle class.
The middle class has been shrinking for a very long time, and something dramatic desperately needs to be done.
The numbers that I shared above simply cannot convey the level of suffering that is going on out there on the streets of America today. That is why I also like to share personal stories when I can. Below, I have posted an excerpt from an open letter to Barack Obama that a woman with a Master’s degree and 30 years of work experience recently submitted to the Huffington Post. What this formerly middle class lady is having to endure because of this horrible economy is absolutely tragic…
Dear Mr. President,
I write to you today because I have nowhere else to turn. I lost my full time job in September 2012. I have only been able to find part-time employment — 16 hours each week at $12 per hour — but I don’t work that every week. For the month of December, my net pay was $365. My husband and I now live in an RV at a campground because of my job loss. Our monthly rent is $455 and that doesn’t include utilities. We were given this 27-ft. 1983 RV when I lost my job.
This is America today. We have no running water; we use a hose to fill jugs. We have no shower but the campground does. We have a toilet but it only works when the sewer line doesn’t freeze — if it freezes, we use the campground’s restrooms. At night, in my bed, when it’s cold out, my blanket can freeze to the wall of the RV. We don’t have a stove or an oven, just a microwave, so regular-food cooking is out. Recently we found a small toaster oven on sale so we can bake a little now because eating only microwaved food just wasn’t working for us. We don’t have a refrigerator, just an icebox (a block of ice cost about $1.89). It keeps things relatively cold. If it’s freezing outside, we just put things on the picnic table.
You can read the rest of her incredibly heartbreaking letter right here.
This is not the America that I remember.
What in the world is happening to us?
Why are young people in America so frustrated these days? You are about to find out. Most young adults started out having faith in the system. They worked hard, they got good grades, they stayed out of trouble and many of them went on to college. But when their educations where over, they discovered that the good jobs that they had been promised were not waiting for them at the end of the rainbow. Even in the midst of this so-called “economic recovery”, the full-time employment rate for Americans under the age of 30 continues to fall. And incomes for that age group continue to fall as well. At the same time, young adults are dealing with record levels of student loan debt. As a result, more young Americans than ever are putting off getting married and having families, and more of them than ever are moving back in with their parents.
It can be absolutely soul crushing when you discover that the “bright future” that the system had been promising you for so many years turns out to be a lie. A lot of young people ultimately give up on the system and many of them end up just kind of drifting aimlessly through life. The following is an example from a recent Wall Street Journal article…
James Roy, 26, has spent the past six years paying off $14,000 in student loans for two years of college by skating from job to job. Now working as a supervisor for a coffee shop in the Chicago suburb of St. Charles, Ill., Mr. Roy describes his outlook as “kind of grim.”
“It seems to me that if you went to college and took on student debt, there used to be greater assurance that you could pay it off with a good job,” said the Colorado native, who majored in English before dropping out. “But now, for people living in this economy and in our age group, it’s a rough deal.”
Young adults as a group have been experiencing a tremendous amount of economic pain in recent years. The following are 30 statistics about Americans under the age of 30 that will blow your mind…
#1 The labor force participation rate for men in the 18 to 24 year old age bracket is at an all-time low.
#2 The ratio of what men in the 18 to 29 year old age bracket are earning compared to the general population is at an all-time low.
#3 Only about a third of all adults in their early 20s are working a full-time job.
#4 For the entire 18 to 29 year old age bracket, the full-time employment rate continues to fall. In June 2012, 47 percent of that entire age group had a full-time job. One year later, in June 2013, only 43.6 percent of that entire age group had a full-time job.
#5 Back in the year 2000, 80 percent of men in their late 20s had a full-time job. Today, only 65 percent do.
#6 In 2007, the unemployment rate for the 20 to 29 year old age bracket was about 6.5 percent. Today, the unemployment rate for that same age group is about 13 percent.
#7 American families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.
#8 During 2012, young adults under the age of 30 accounted for 23 percent of the workforce, but they accounted for a whopping 36 percent of the unemployed.
#9 During 2011, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.
#10 At this point about half of all recent college graduates are working jobs that do not even require a college degree.
#11 The number of Americans in the 16 to 29 year old age bracket with a job declined by 18 percent between 2000 and 2010.
#12 According to one survey, 82 percent of all Americans believe that it is harder for young adults to find jobs today than it was for their parents to find jobs.
#13 Incomes for U.S. households led by someone between the ages of 25 and 34 have fallen by about 12 percent after you adjust for inflation since the year 2000.
#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 In 2011, SAT scores for young men were the worst that they had been in 40 years.
#16 Incredibly, approximately two-thirds of all college students graduate with student loans.
#17 According to the Federal Reserve, the total amount of student loan debt has risen by 275 percent since 2003.
#18 In America today, 40 percent of all households that are led by someone under the age of 35 are paying off student loan debt. Back in 1989, that figure was below 20 percent.
#19 The total amount of student loan debt in the United States now exceeds the total amount of credit card debt in the United States.
#20 According to the U.S. Department of Education, 11 percent of all student loans are at least 90 days delinquent.
#21 The student loan default rate in the United States has nearly doubled since 2005.
#22 One survey found that 70% of all college graduates wish that they had spent more time preparing for the “real world” while they were still in college.
#23 In the United States today, there are more than 100,000 janitors that have college degrees.
#24 In the United States today, 317,000 waiters and waitresses have college degrees.
#25 Today, an all-time low 44.2 percent of all Americans between the ages of 25 and 34 are married.
#26 According to the Pew Research Center, 57 percent of all Americans in the 18 to 24 year old age bracket lived with their parents during 2012.
#27 One poll discovered that 29 percent of all Americans in the 25 to 34 year old age bracket are still living with their parents.
#28 Young men are nearly twice as likely to live with their parents as young women the same age are.
#29 Overall, approximately 25 million American adults are living with their parents according to Time Magazine.
#30 Young Americans are becoming increasingly frustrated that previous generations have saddled them with a nearly 17 trillion dollar national debt that they are expected to make payments on for the rest of their lives.
And this trend is not just limited to the United States. As I have written about frequently, unemployment rates for young adults throughout Europe have been soaring to unprecedented heights. For example, the unemployment rate for those under the age of 25 in Italy has now reached 40.1 percent.
Simon Black of the Sovereign Man blog discussed this global trend in a recent article on his website…
Youth unemployment rates in these countries are upwards of 40% to nearly 70%. The most recent figures published by the Italian government show yet another record high in youth unemployment.
An entire generation is now coming of age without being able to leave the nest or have any prospect of earning a decent wage in their home country.
This underscores an important point that I’ve been writing about for a long time: young people in particular get the sharp end of the stick.
They’re the last to be hired, the first to be fired, the first to be sent off to fight and die in foreign lands, and the first to have their benefits cut.
And if they’re ever lucky enough to find meaningful employment, they can count on working their entire lives to pay down the debts of previous generations through higher and higher taxes.
But when it comes time to collect… finally… those benefits won’t be there for them.
Meanwhile, the overall economy continues to get even weaker.
In the United States, Gallup’s daily economic confidence index is now the lowest that it has been in more than a year.
For young people that are in high school or college right now, the future does not look bright. In fact, this is probably as good as the U.S. economy is going to get. It is probably only going to be downhill from here.
The system is failing, and young people are going to become even angrier and even more frustrated.
So what will that mean for our future?
Please feel free to share what you think by posting a comment below…
If the economy is getting better, then why do incomes keep falling? According to a shocking new report that was just released by the U.S. Census Bureau, median household income (adjusted for inflation) has declined for five years in a row. This has happened even though the federal government has been borrowing and spending money at an unprecedented rate and the Federal Reserve has been on the most reckless money printing spree in U.S. history. Despite all of the “emergency measures” that have been taken to “stimulate the economy”, things just continue to get worse for average American families. Americans are working harder than ever, but their paychecks are not reflecting that. Meanwhile, the cost of everything just keeps going up. The Federal Reserve insists that inflation is “low”, but anyone that goes grocery shopping or that stops at a gas station knows that is a lie. In fact, if inflation was calculated the exact same way that it was calculated back in 1980, the inflation rate would be somewhere between 8 and 10 percent right now. Paychecks are being stretched more than ever before, and that is probably the reason why about three-fourths of the entire country is living paycheck to paycheck at this point.
According to the Census report, the high point for median household income in the United States was back in 1999 ($56,080). It almost got back to that level in 2007 ($55,627), but ever since then there has been a steady decline. The following figures come directly from the report, and as you can see, median household income has fallen every single year for the past five years…
How far does that number have to go down before we admit that we have a major problem on our hands?
The new Census report also revealed that 46.5 million Americans are living in poverty. As CNSNews.com noted, this is far higher than when Barack Obama first entered the White House…
During the four years that marked President Barack Obama’s first term in office, the real median income of American households dropped by $2,627 and the number of people on poverty increased by approximately 6,667,000, according to data released today by the Census Bureau.
So why does Obama continue to insist that things are getting better?
Right now, one out of every five households in the United States is on food stamps.
One out of every five.
How bad does it have to get before we acknowledge that what we are doing economically is not working.
Will half of us eventually end up on food stamps?
In addition, the new Census report also says that 48 million Americans are currently without any kind of health insurance whatsoever.
The biggest culprit for this is the stunning decline of employment-based health insurance. Back in 1999, 64.1 percent of all Americans were covered by employment-based health insurance. Today, only 54.9 percent are covered by employment-based health insurance.
And of course as I noted yesterday, even more companies are going to be dumping health insurance plans because of Obamacare.
All in all, what we have been witnessing over the past decade and a half is the systematic evisceration of the middle class.
After accounting for inflation, right now 40 percent of all U.S. workers are making less than what a full-time minimum wage worker made back in 1968.
Over the years, our incomes have certainly gone up, but inflation has increased even faster.
Back when I was growing up, $50,000 a year sounded like a whole lot of money. I thought that anyone should be able to live a very comfortable lifestyle on that amount of money.
Unfortunately, $50,000 a year doesn’t go nearly as far as it once did.
If you take the current median household income ($51,017) and divide it up by 12 months, it comes to just a little bit more than $4000 a month.
And as I noted last year, it is not easy for the average American family to do everything that it needs to do on $4000 a month…
So can an average family of four people make it on just $4000 a month?
Well, first of all you have got to take out taxes. After accounting for all forms of taxation you will be lucky if you have $3000 remaining.
With that $3000, you have to pay for all of the following…
*At Least One Vehicle
*Home Or Rental Insurance
*Student Loan Debt Payments
*Credit Card Payments
*Entertainment (although it is hard to imagine any money will be left for that)
Have I left anything out?
The truth is that $3000 does not go as far as it used to.
No wonder American families are feeling so stretched financially these days.
The new Census report also noted that the gap between the wealthiest Americans and the rest of us continues to grow. There is certainly nothing wrong with making money, but if the economy was working properly all Americans should be able to have the opportunity to better themselves.
According to CNBC, the 400 wealthiest Americans now have more money than the poorest 50 percent of all Americans combined.
So why is this happening? Well, certainly there are a lot of reasons, but in recent years quantitative easing has definitely played a role. As I noted in my recent article about the Federal Reserve, quantitative easing has been incredibly good for those with stocks and other forms of financial investments. All of that liquidity has juiced the financial markets, and the extremely wealthy have been loving it.
Meanwhile, things just continue to get even tougher for most of the rest of the American people, and the frightening thing is that the next major wave of the economic collapse has not even hit us yet.
How bad will things be for average American families once that happens?
And there are certainly lots of troubling signs as we get ready to head into the fall season…
-Total mortgage activity has dropped to the lowest level that we have seen since October 2008.
-One of the largest furniture manufacturers in America was just forced into bankruptcy.
-According to the Wall Street Journal, the 2013 holiday shopping season is already being projected to be the worst that we have seen since 2009.
Hopefully the slow and steady economic decline that we have been experiencing will not accelerate into a full-blown avalanche any time soon.
But I would definitely get prepared just in case.
What is America going to look like when the middle class is dead? Once upon a time, the United States has the largest and most vibrant middle class in the history of the world. When I was growing up, it seemed like almost everyone was “middle class” and it was very rare to hear of someone that was out of work. Of course life wasn’t perfect, but most families owned a home, most families had more than one vehicle, and most families could afford nice vacations and save for retirement at the same time. Sadly, things have dramatically changed in America since that time. There just aren’t as many “middle class jobs” as there used to be. In fact, just six years ago there were about six million more full-time jobs in our economy than there are right now. Those jobs are being replaced by part-time jobs and temp jobs. The number one employer in America today is Wal-Mart and the number two employer in America today is a temp agency (Kelly Services). But you can’t support a family on those kinds of jobs. We live at a time when incomes are going down but the cost of living just keeps going up. As a result, the middle class in America is being absolutely shredded and the ranks of the poor are steadily growing. The following are 44 facts about the death of the middle class that every American should know…
1. According to one recent survey, “four out of five U.S. adults struggle with joblessness, near poverty or reliance on welfare for at least parts of their lives”.
2. The growth rate of real disposable personal income is the lowest that it has been in decades.
3. Median household income (adjusted for inflation) has fallen by 7.8 percent since the year 2000.
4. According to the U.S. Census Bureau, the middle class is taking home a smaller share of the overall income pie than has ever been recorded before.
5. The home ownership rate in the United States is the lowest that it has been in 18 years.
6. It is more expensive to rent a home in America than ever before. In fact, median asking rent for vacant rental units just hit a brand new all-time record high.
7. According to one recent survey, 76 percent of all Americans are living paycheck to paycheck.
8. The U.S. economy actually lost 240,000 full-time jobs last month, and the number of full-time workers in the United States is now about 6 million below the old record that was set back in 2007.
9. The largest employer in the United States right now is Wal-Mart. The second largest employer in the United States right now is a temp agency (Kelly Services).
10. One out of every ten jobs in the United States is now filled through a temp agency.
11. According to the Social Security Administration, 40 percent of all workers in the United States make less than $20,000 a year.
12. The ratio of wages and salaries to GDP is near an all-time record low.
13. The U.S. economy continues to trade good paying jobs for low paying jobs. 60 percent of the jobs lost during the last recession were mid-wage jobs, but 58 percent of the jobs created since then have been low wage jobs.
14. Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs.
15. At this point, one out of every four American workers has a job that pays $10 an hour or less.
16. According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 declined by 27 percent after you account for inflation.
17. In the year 2000, about 17 million Americans were employed in manufacturing. Today, only about 12 million Americans are employed in manufacturing.
18. The United States has lost more than 56,000 manufacturing facilities since 2001.
19. The average number of hours worked per employed person per year has fallen by about 100 since the year 2000.
20. Back in the year 2000, more than 64 percent of all working age Americans had a job. Today, only 58.7 percent of all working age Americans have a job.
21. When you total up all working age Americans that do not have a job, it comes to more than 100 million.
22. The average duration of unemployment in the United States is nearly three times as long as it was back in the year 2000.
23. The percentage of Americans that are self-employed has steadily declined over the past decade and is now at an all-time low.
24. Right now there are 20.2 million Americans that spend more than half of their incomes on housing. That represents a 46 percent increase from 2001.
25. In 1989, the debt to income ratio of the average American family was about 58 percent. Today it is up to 154 percent.
26. Total U.S. household debt grew from just 1.4 trillion dollars in 1980 to a whopping 13.7 trillion dollars in 2007. This played a huge role in the financial crisis of 2008, and the problem still has not been solved.
27. The total amount of student loan debt in the United States recently surpassed the one trillion dollar mark.
28. Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.
29. Back in the year 2000, the mortgage delinquency rate was about 2 percent. Today, it is nearly 10 percent.
30. Consumer debt in the United States has risen by a whopping 1700% since 1971, and 46% of all Americans carry a credit card balance from month to month.
31. In 1999, 64.1 percent of all Americans were covered by employment-based health insurance. Today, only 55.1 percent are covered by employment-based health insurance.
32. One study discovered that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt, and according to a report published in The American Journal of Medicine medical bills are a major factor in more than 60 percent of all personal bankruptcies in the United States.
33. Each year, the average American must work 107 days just to make enough money to pay local, state and federal taxes.
34. Today, approximately 46.2 million Americans are living in poverty.
35. The number of Americans living in poverty has increased by more than 15 million since the year 2000.
36. Families that have a head of household under the age of 30 have a poverty rate of 37 percent.
37. At this point, approximately 25 million American adults are living with their parents.
38. In the year 2000, there were only 17 million Americans on food stamps. Today, there are more than 47 million Americans on food stamps.
39. Back in the 1970s, about one out of every 50 Americans was on food stamps. Today, about one out of every 6.5 Americans is on food stamps.
40. Right now, the number of Americans on food stamps exceeds the entire population of the nation of Spain.
41. 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.”
42. At this point, more than a million public school students in the United States are homeless. This is the first time that has ever happened in our history. That number has risen by 57 percent since the 2006-2007 school year.
43. 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”.
44. In the year 2000, the ratio of social welfare benefits to salaries and wages was approximately 21 percent. Today, the ratio of social welfare benefits to salaries and wages is approximately 35 percent.
And not only is the middle class being systematically destroyed right now, we are also destroying the bright economic future that our children and our grandchildren were supposed to have by accumulating gigantic mountains of debt in their names. The following is from a recent article by Bill Bonner…
Today, the U.S. lumbers into the future with total debt equal to about 350% of GDP. In Britain and Japan, the total is over 500%. Debt, remember, is the homage that the future pays to the past. It has to be carried, serviced… and paid. It has to be reckoned with… one way or another.
And the cost of carrying debt is going up! Over the last few weeks, interest rates have moved up by about 15% — an astounding increase for the sluggish debt market. How long will it be before long-term borrowing rates are back to “normal”?
At 5% interest, a debt that measures 3.5 times your revenue will cost about one-sixth of your income. Before taxes. After tax, you will have to work about one day a week to keep up with it (to say nothing of paying it off!).
That’s a heavy burden. It is especially disagreeable when someone else ran up the debt. Then you are a debt slave. That is the situation of young people today. They must face their parents’ debt. Even serfs in the Dark Ages had it better. They had to work only one day out of 10 for their lords and masters.
We were handed the keys to the greatest economic machine in the history of the planet and we wrecked it.
As young people realize that their futures have been destroyed, many of them are going to totally lose hope and give in to despair.
And desperate people do desperate things. As our economy continues to crumble, we are going to see crime greatly increase as people do what they feel they need to do in order to survive. In fact, we are already starting to see this happen. Just this week, CNBC reported on the raging epidemic of copper theft that we are seeing all over the nation right now…
Copper is such a hot commodity that thieves are going after the metal anywhere they can find it: an electrical power station in Wichita, Kan., or half a dozen middle-class homes in Morris Township, N.J. Even on a Utah highway construction site, crooks managed to abscond with six miles of copper wire.
Those are just a handful of recent targets across the U.S. in the $1 billion business of copper theft.
“There’s no question the theft has gotten much, much worse,” said Mike Adelizzi, president of the American Supply Association, a nonprofit group representing distributors and suppliers in the plumbing, heating, cooling and industrial pipe industries.
The United States once had the greatest middle class in the history of the world, but now it it dying.
This is causing a tremendous amount of anger and frustration to build in this nation, and when the next major wave of the economic collapse strikes, a lot of that anger and frustration will likely be unleashed.
The American people don’t understand that these problems have taken decades to develop. They just want someone to fix things. They just want things to go back to the way that they used to be.
Unfortunately, the great economic storm that is coming is not going to be averted.
Get ready while you still can. Time is running out.
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.
If the economy is improving, then why are many of the largest retail chains in America closing hundreds of stores? When I was growing up, Sears, J.C. Penney, Best Buy and RadioShack were all considered to be unstoppable retail powerhouses. But now it is being projected that all of them will close hundreds of stores before the end of 2013. Even Wal-Mart is running into problems. A recent internal Wal-Mart memo that was leaked to Bloomberg described February sales as a “total disaster”. So why is this happening? Why are major retail chains all over America collapsing? Is the “retail apocalypse” upon us? Well, the truth is that this is just another sign that the U.S. economy is falling apart right in front of our eyes. Incomes are declining, taxes are going up, government dependence is at an all-time high, and according to the Bureau of Labor Statistics the percentage of the U.S. labor force that is employed has been steadily falling since 2006. The top 10% of all income earners in the U.S. are still doing very well, but most U.S. consumers are either flat broke or are drowning in debt. The large disposable incomes that the big retail chains have depended upon in the past simply are not there anymore. So retail chains all over the United States are now closing up unprofitable stores. This is especially true in low income areas.
When you step back and take a look at the bigger picture, the rapid decline of some of our largest retail chains really is stunning.
It is happening already in some areas, but soon half empty malls and boarded up storefronts will litter the landscapes of cities all over America.
Just check out some of these store closing numbers for 2013. These numbers are from a recent Yahoo Finance 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
The RadioShack in a nearby town just closed up where I live. This is all happening so fast that it is hard to believe.
But the truth is that those store closings are not the entire story. When you dig deeper you find a lot more retailers that are in trouble.
For example, Blockbuster recently announced that this year they will be closing about 300 stores and eliminating about 3,000 jobs.
Toy manufacturer Hasbro recently announced that they will be reducing the size of their workforce by about 10 percent.
Even Wal-Mart is going through a tough stretch right now. According to documents that were leaked to Bloomberg, Wal-Mart is having an absolutely disastrous February…
Wal-Mart Stores Inc. had the worst sales start to a month in seven years as payroll-tax increases hit shoppers already battling a slow economy, according to internal e-mails obtained by Bloomberg News.
“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal- Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.”
So what in the world is going on here?
The mainstream media continues to proclaim that we are experiencing a robust “economic recovery”, but at the same time there are a whole host of indications that things are continually getting worse.
Even global cell phone sales actually declined slightly in 2012. That was the first time that has happened since the last recession.
Perhaps it is time that we faced the truth. The middle class is shrinking, incomes are declining and there are not nearly as many jobs as there used to be.
Mort Zuckerman pointed this out in a recent article in the Wall Street Journal…
The U.S. labor market, which peaked in November 2007 when there were 139,143,000 jobs, now encompasses only 132,705,000 workers, a drop of 6.4 million jobs from the peak. The only work that has increased is part-time, and that is because it allows employers to reduce costs through a diminished benefit package or none at all.
So how can the mainstream media be talking about how “good” things are if we still have 6.4 million fewer jobs than we had back in November 2007?
And sadly, things may soon be getting a lot worse. If Congress does not do anything about the “sequester”, millions of federal workers may shortly be facing some very painful furloughs according to CNN…
Federal workers could start facing furloughs as early as April, according to federal agencies trying to prepare for the worst.
Unless Congress steps in, some $85 billion in massive spending reductions will hit the federal government, doling out furloughs to much of the nation’s 2.1 million federal workforce, experts say.
If you still live in an area of the country where the stores and the restaurants are booming, you should be very thankful because that is not the reality for most of the country.
I often write about the stunning economic decline of major cities such as Detroit, but there are huge sections of rural America that are in even worse shape than Detroit in many ways.
For example, many Indian reservations all over America have been shamefully neglected by the federal government and have become hotbeds for crime, drugs and poverty.
Business Insider recently profiled the Wind River Indian reservation in western Wyoming. The following is a brief excerpt from that outstanding article…
The Wind River Indian Reservation is not an easy place to get to, but I had to see it for myself.
Thirty-five-hundred square miles of prairie and mountains in western Wyoming, the reservation is home to bitter ancestral enemies: the Eastern Shoshone and Northern Arapaho tribes.
Even among reservations, it’s renowned for brutal crime, widespread drug use, and legal dumping of toxic waste.
You can see some amazing photos of the Wind River Indian reservation right here.
It is hard to believe that there are places like that in America, but the truth is that conditions like that are spreading to more U.S. communities with each passing day.
We are a nation that is in an advanced state of decline. But as long as the financial markets are okay, our leaders don’t seem too concerned about the suffering that everyone else is going through.
In fact, former Federal Reserve Chairman Alan Greenspan essentially admitted as much during a recent interview with CNBC. The following is how a Zero Hedge article summarized that interview…
Starting at around 1:50, Greenspan states the odds of sequester occurring are very high – in fact, the playdough-faced ex-Chair-head notes, “I find it very difficult to find a scenario in which [the sequester] doesn’t happen” But when asked how this will affect the economy, Awkward Alan is unusually clearly spoken – “the issue is how does it affect the stock market.”
While not so many of our leaders have taken the path to direct truthiness, Greenspan somewhat shocks a Botox’d and babbling Bartiromo when he admits “the stock market is the key player in the game of economic growth.”
Bartiromo shifts uncomfortably in her seat, strokes her imaginary beard and stares blankly as Greenspan explains that while the sequester will have a real effect on the real economy, “if the stock market can hold up through this, then the effect will be rather minor.”
Do you see?
As long as the stock market is moving higher they think that everything is just fine and dandy.
And the Obama administration?
They continue to pursue the same policies that got us into this mess.
Their idea of “economic reform” is to threaten to sue businesses that do not hire ex-convicts.
And of course now that Obama has been re-elected he is putting a tremendous amount of effort into “stimulating the economy”.
For example, he spent this weekend golfing in Florida, and the Obamas recently spent about 20 million taxpayer dollars vacationing in Hawaii.
Meanwhile, the U.S. economy is getting worse with each passing day.
If you doubt that economic conditions are getting worse, please read this article: “Show This To Anyone That Believes That ‘Things Are Getting Better’ In America“.
When you look at the cold, hard numbers, it is undeniable what is happening to America.
And our leaders are not doing anything to fix our problems. In fact, most of the time they are just making things worse.
So buckle up and get prepared. We are in for very bumpy ride, and this is only just the beginning.
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.