The next time you visit a hospital, it is your wallet that may end up hurting the most. All over the United States, it has become common practice for hospitals to wildly inflate medical bills. For example, it has been reported that some hospitals are charging up to 30 dollars for a single aspirin pill. And as you will see below, some victims report being billed tens of thousands of dollars for a non-surgical hospital visit that lasts only a few hours. When something is seriously wrong with us, most of us never stop to ask our health professionals how much it will cost to actually treat us. In that moment, we are desperate and we just want someone to help us. Many doctors and hospitals take full advantage of this by billing their “customers” as much as they feel they can possible get away with. It is a legal scam that is bilking ordinary Americans out of billions of dollars every single year.
Over the weekend, the New York Times reported on one case that is a perfect example of the outrageous medical billing that I am talking about…
Before his three-hour neck surgery for herniated disks in December, Peter Drier, 37, signed a pile of consent forms. A bank technology manager who had researched his insurance coverage, Mr. Drier was prepared when the bills started arriving: $56,000 from Lenox Hill Hospital in Manhattan, $4,300 from the anesthesiologist and even $133,000 from his orthopedist, who he knew would accept a fraction of that fee.
He was blindsided, though, by a bill of about $117,000 from an “assistant surgeon,” a Queens-based neurosurgeon whom Mr. Drier did not recall meeting.
“I thought I understood the risks,” Mr. Drier, who lives in New York City, said later. “But this was just so wrong — I had no choice and no negotiating power.”
The practice known as “drive-by doctoring” has gotten completely and totally out of control.
All over America, doctors are popping into surgeries or are stopping by to talk to another doctor’s patients for a few minutes and are charging thousands of dollars for this “assistance”.
It is a morally reprehensible scam that needs to be stopped.
Another thing that needs to be stopped is the practice that many hospitals have of billing patients for emergency medications at a rate that is thousands of times over cost.
For example, just check out what happened when 52-year-old Marcie Edmonds went in to a hospital in Arizona to get treated for a scorpion sting…
With the help of a friend, she called Poison Control and was advised to go to the nearest hospital that had scorpion antivenom, Chandler Regional Medical Center. At the hospital, an emergency room doctor told her about the antivenom, called Anascorp, that could quickly relieve her symptoms. Edmonds said the physician never talked with her about the cost of the drug or treatment alternatives.
Her symptoms subsided after she received two doses of the drug Anascorp through an IV, and she was discharged from the hospital in about three hours.
Weeks later, she received a bill for $83,046 from Chandler Regional Medical Center. The hospital, owned by Dignity Health, charged her $39,652 per dose of Anascorp.
Did that hospital actually need to charge that much?
Of course not.
Hospitals down in Mexico only charge $100 per dose of Anascorp.
And anyone that has ever been in for major surgery knows how outrageous some of these hospital bills can be.
For instance, consider the experience of an NBC News reporter that chose to have neck surgery for degenerative disc disease….
Once I got my itemized bill, the grand total was a little over $66,013.40! That was for a one night stay and a four level vertebrae fusion surgery. The charges included $22 for one sleeping pill, $427 for one dissecting tool, and $32,000 for four titanium plates and ten screws.
I brought it to Todd Hill, a fee based patient advocate who helps people decipher their medical bills. “The screws in your procedure were billed at $605 a piece for a total of $6050 dollars. We’ve seen those in our past research for $25 or $30,” he said. “In this case, the markup is tremendous,” he added.
One of the primary reasons why so many Americans die completely broke is because medical bills can run up to astronomical heights if you happen to have a terminal illness.
For example, a while back Time Magazine reported on one cancer patient in California that had run up nearly a million dollars in hospital bills before he died…
By the time Steven D. died at his home in Northern California the following November, he had lived for an additional 11 months. And Alice had collected bills totaling $902,452. The family’s first bill — for $348,000 — which arrived when Steven got home from the Seton Medical Center in Daly City, Calif., was full of all the usual chargemaster profit grabs: $18 each for 88 diabetes-test strips that Amazon sells in boxes of 50 for $27.85; $24 each for 19 niacin pills that are sold in drugstores for about a nickel apiece. There were also four boxes of sterile gauze pads for $77 each. None of that was considered part of what was provided in return for Seton’s facility charge for the intensive-care unit for two days at $13,225 a day, 12 days in the critical unit at $7,315 a day and one day in a standard room (all of which totaled $120,116 over 15 days). There was also $20,886 for CT scans and $24,251 for lab work.
The sad truth is that the U.S. health care system has become a giant money making scam, and all of us are the victims.
Those that work in this industry should be greatly ashamed for what they are doing to us.
Just consider the following numbers…
-It has been estimated that hospitals in the United States overcharge their patients by about 10 billion dollars every single year.
-Medical bills are the number one reason why Americans file for bankruptcy. One study found that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt.
-According to a report published in The American Journal of Medicine, medical bills cause more than 60 percent of the personal bankruptcies in the United States.
-Health insurance is not nearly as much protection as you might think. According to a report published in the American Journal of Medicine, of all bankruptcies caused by medical debt approximately 75 percent of the time the people actually did have health insurance.
-Hospitals are not shy about sending debt collection agencies after people with unpaid medical bills. In fact, collection agencies seek to collect unpaid medical bills from approximately 30 million Americans every year.
-Back in 1980, less than 10 percent of U.S. GDP went to health care. Today, about 18 percent of U.S. GDP goes toward health care.
-If the U.S. health care system was a nation, it would be the 6th largest economy on the entire planet.
Does anyone out there have any doubt that the system is completely broken?
Please share this article with as many people as you can. Hospitals all over America are brazenly ripping us off, and we need to stand up and say that enough is enough.
How would you feel if you went to the store to buy something, and someone rushed ahead of you and purchased it first and then sold it to you at a higher price? Well, in the financial world this happens millions upon millions of times. In fact, this practice has become so popular that it has spawned an entire industry known as “high frequency trading”. At this point, high frequency trading makes up about half of all trading volume on Wall Street, and it is costing the rest of us billions of dollars a year. And the funny thing is that this is all perfectly legal. High frequency trading firms are exploiting a glitch in the system, and by allowing this to go on, the authorities have essentially given them a license to steal from the rest of us. Sadly, this is just another example that shows that the odds are never in our favor. The “little guy” never seems to be able to win, and those at the top of the food chain like it that way.
Making money in the stock market is supposed to be about making wise investment decisions. It isn’t supposed to be about finding a glitch in a video game and exploiting it. But that is essentially what these high frequency traders have done. They have spent an extraordinary amount of time and energy figuring out ways to make pennies (or sometimes just fractions of a penny) on the trades that the rest of us make.
Fortunately, this practice was exposed in front of the entire world by 60 Minutes the other night. Steve Kroft interviewed a former trader named Michael Lewis that just released a new book entitled “Flash Boys” that is all about the evils of high frequency trading. The following is an excerpt from that interview…
Steve Kroft: And this is all being done by computers?
Michael Lewis: All being done by computers. It’s too fast to be done by humans. Humans have been completely removed from the marketplace.
“Fast” is the operative word. Machines with secret programs are now trading stocks in tiny fractions of a second, way too fast to be seen or recorded on a stock ticker or computer screen. Faster than the market itself. High-frequency traders, big Wall Street firms and stock exchanges have spent billions to gain an advantage of a millisecond for themselves and their customers, just to get a peek at stock market prices and orders a flash before everyone else, along with the opportunity to act on it.
Michael Lewis: The insiders are able to move faster than you. They’re able to see your order and play it against other orders in ways that you don’t understand. They’re able to front run your order.
Steve Kroft: What do you mean front run?
Michael Lewis: Means they’re able to identify your desire to, to buy shares in Microsoft and buy ’em in front of you and sell ’em back to you at a higher price. It all happens in infinitesimally small periods of time. There’s speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds. But it”s enough for them to identify what you’re gonna do and do it before you do it at your expense.
Steve Kroft: So it drives the price up.
Michael Lewis: So it drives the price up, and in turn you pay a higher price.
You can watch the entire interview right here. Unlike most mainstream media news reports, this one is actually worth your time. I have watched the entire thing, and I highly recommend it.
Of course there have been many that have been screaming about high frequency trading for many years. Zero Hedge is just one example. This practice has gone on year after year and the federal government has looked the other way.
These high frequency trading firms do not add anything to society. As Barry Ritholtz noted recently, one of these firms has an average holding period for stocks of just 11 seconds, and at one point it stated that it had “not had a losing day of trading in four years“…
The only surprising thing about Lewis’s assertion was that anyone could be even remotely surprised by it.
The math on trading is simple: It is a zero-sum game. One trader’s gain is another trader’s loss. Only in the case of HFT, the losers are the investors — by way of their pension funds, retirement accounts and institutional funds. The HFT’s take — the “skim” — comes out of these large institution’s trade executions.
The technology behind HFT may be complex, but the math is that simple. Once the Securities and Exchange Commission allowed stock exchanges to share with traders all of the unexecuted incoming orders, it was hard not to make money by skimming a few cents or fractions of a cent from each trade. Several years ago, the founder of Tradebot, one of the biggest high-frequency firms, had said that the firm had “not had a losing day of trading in four years.” The firm’s average holding period for stocks is 11 seconds.
How in the world does that kind of behavior add any value to society?
They are just skimming money that should be going to others. Billions of dollars is essentially being stolen from pension funds and retirement accounts, and it is time that people started getting outraged about this.
Unfortunately, even if this practice is outlawed, the truth is that the odds will still never be in our favor.
There are millions of Americans that dream of getting ahead, but they never seem to be able to get there. They work incredibly hard, but the more they earn, the more the government taxes them. If somehow you do manage to scrape together a little bit of money to invest in the financial markets, any profits that you make will be endlessly eroded by fees, commissions and even more taxes.
And it is important to remember that in the financial world, the “little guy” is regarded as easy prey by the hungry wolves that are all too eager to find a way to transfer your money into their own pockets. If you don’t know what you are doing, it is all too easy to get absolutely slaughtered.
On Wall Street, there are winners and there are losers.
Most of the time, “the little guys” end up losing.
But at least they could try to have a system that at least has the appearance of fairness. As long as high frequency trading exists, that will never be the case.
Karen Hudes is a graduate of Yale Law School and she worked in the legal department of the World Bank for more than 20 years. In fact, when she was fired for blowing the whistle on corruption inside the World Bank, she held the position of Senior Counsel. She was in a unique position to see exactly how the global elite rule the world, and the information that she is now revealing to the public is absolutely stunning. According to Hudes, the elite use a very tight core of financial institutions and mega-corporations to dominate the planet. The goal is control. They want all of us enslaved to debt, they want all of our governments enslaved to debt, and they want all of our politicians addicted to the huge financial contributions that they funnel into their campaigns. Since the elite also own all of the big media companies, the mainstream media never lets us in on the secret that there is something fundamentally wrong with the way that our system works.
Remember, this is not some “conspiracy theorist” that is saying these things. This is a Yale-educated attorney that worked inside the World Bank for more than two decades. The following summary of her credentials comes directly from her website…
Karen Hudes studied law at Yale Law School and economics at the University of Amsterdam. She worked in the US Export Import Bank of the US from 1980-1985 and in the Legal Department of the World Bank from 1986-2007. She established the Non Governmental Organization Committee of the International Law Section of the American Bar Association and the Committee on Multilateralism and the Accountability of International Organizations of the American Branch of the International Law Association.
Today, Hudes is trying very hard to expose the corrupt financial system that the global elite are using to control the wealth of the world. During an interview with the New American, she discussed how we are willingly allowing this group of elitists to totally dominate the resources of the planet…
A former insider at the World Bank, ex-Senior Counsel Karen Hudes, says the global financial system is dominated by a small group of corrupt, power-hungry figures centered around the privately owned U.S. Federal Reserve. The network has seized control of the media to cover up its crimes, too, she explained. In an interview with The New American, Hudes said that when she tried to blow the whistle on multiple problems at the World Bank, she was fired for her efforts. Now, along with a network of fellow whistleblowers, Hudes is determined to expose and end the corruption. And she is confident of success.
Citing an explosive 2011 Swiss study published in the PLOS ONE journal on the “network of global corporate control,” Hudes pointed out that a small group of entities — mostly financial institutions and especially central banks — exert a massive amount of influence over the international economy from behind the scenes. “What is really going on is that the world’s resources are being dominated by this group,” she explained, adding that the “corrupt power grabbers” have managed to dominate the media as well. “They’re being allowed to do it.”
Previously, I have written about the Swiss study that Hudes mentioned. It was conducted by a team of researchers at the Swiss Federal Institute of Technology in Zurich, Switzerland. They studied the relationships between 37 million companies and investors worldwide, and what they discovered is that there is a “super-entity” of just 147 very tightly knit mega-corporations that controls 40 percent of the entire global economy…
When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.
But the global elite don’t just control these mega-corporations. According to Hudes, they also dominate the unelected, unaccountable organizations that control the finances of virtually every nation on the face of the planet. The World Bank, the IMF and central banks such as the Federal Reserve literally control the creation and the flow of money worldwide.
At the apex of this system is the Bank for International Settlements. It is the central bank of central banks, and posted below is a video where you can watch Hudes tell Greg Hunter of USAWatchdog.com the following…
“We don’t have to wait for anybody to fire the Fed or Bank for International Settlements . . . some states have already started to recognize silver and gold, the precious metals, as currency”
Most people have never even heard of the Bank for International Settlements, but it is an extremely important organization. In a previous article, I described how this “central bank of the world” is literally immune to the laws of all national governments…
An immensely powerful international organization that most people have never even heard of secretly controls the money supply of the entire globe. It is called the Bank for International Settlements, and it is the central bank of central banks. It is located in Basel, Switzerland, but it also has branches in Hong Kong and Mexico City. It is essentially an unelected, unaccountable central bank of the world that has complete immunity from taxation and from national laws. Even Wikipedia admits that “it is not accountable to any single national government.” The Bank for International Settlements was used to launder money for the Nazis during World War II, but these days the main purpose of the BIS is to guide and direct the centrally-planned global financial system. Today, 58 global central banks belong to the BIS, and it has far more power over how the U.S. economy (or any other economy for that matter) will perform over the course of the next year than any politician does. Every two months, the central bankers of the world gather in Basel for another “Global Economy Meeting”. During those meetings, decisions are made which affect every man, woman and child on the planet, and yet none of us have any say in what goes on. The Bank for International Settlements is an organization that was founded by the global elite and it operates for the benefit of the global elite, and it is intended to be one of the key cornerstones of the emerging one world economic system.
This system did not come into being by accident. In fact, the global elite have been developing this system for a very long time. In a previous article entitled “Who Runs The World? Solid Proof That A Core Group Of Wealthy Elitists Is Pulling The Strings“, I included a quote from Georgetown University history professor Carroll Quigley from a book that he authored all the way back in 1966 in which he discussed the big plans that the elite had for the Bank for International Settlements…
[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.
And that is exactly what we have today.
We have a system of “neo-feudalism” in which all of us and our national governments are enslaved to debt. This system is governed by the central banks and by the Bank for International Settlements, and it systematically transfers the wealth of the world out of our hands and into the hands of the global elite.
But most people have no idea that any of this is happening because the global elite also control what we see, hear and think about. Today, there are just six giant media corporations that control more than 90 percent of the news and entertainment that you watch on your television in the United States.
This is the insidious system that Karen Hudes is seeking to expose. For much more, you can listen to Joyce Riley of the Power Hour interview her for an entire hour right here.
So what do you think about what Hudes is saying? Please feel free to share your thoughts by posting a comment below…
Did you know that the big banks have a way to legally steal your house from you even if you don’t owe a single penny on your mortgage? Big banks and hedge funds are buying billions of dollars worth of tax liens from local governments all over the nation, and they are ruthlessly foreclosing on homeowners when they can’t pay the absolutely ridiculous penalties and legal fees that are tacked on to the original tax bill. As you will see below, one 76-year-old man lost his $197,000 home that he fully owned over a $134 tax bill. A 95-year-old woman lost her $300,000 home over a $44.79 tax bill. This is a very, very dirty way to make money, and the predatory financial institutions that are involved in this business definitely do not want to talk about it.
Of course much of the blame should also be shouldered by the local governments that are coldly selling these tax liens to these ruthless predators. If local governments want to collect their tax bills, they should do it themselves. They should not be auctioning off their tax liens to cold-hearted financial institutions that are very eager to commit a legal version of highway robbery.
A few days ago, the Washington Post reported on the tragic story of a 76-year-old former Marine named Bennie Coleman. Coleman had originally purchased his home with cash, but that didn’t stop tax lien predators from stealing his home over an unpaid $134 property tax bill…
On the day Bennie Coleman lost his house, the day armed U.S. marshals came to his door and ordered him off the property, he slumped in a folding chair across the street and watched the vestiges of his 76 years hauled to the curb.
Movers carted out his easy chair, his clothes, his television. Next came the things that were closest to his heart: his Marine Corps medals and photographs of his dead wife, Martha. The duplex in Northeast Washington that Coleman bought with cash two decades earlier was emptied and shuttered. By sundown, he had nowhere to go.
All because he didn’t pay a $134 property tax bill.
So why couldn’t he pay such a small bill?
Well, as the Post explained, these big banks and hedge funds keep tacking on interest, penalties and legal fees until the tax bills are many times the size that they originally were. When the distressed homeowners can’t come up with thousands of dollars to pay off the debts, the big banks and the hedge funds move in for the kill…
For decades, the District placed liens on properties when homeowners failed to pay their bills, then sold those liens at public auctions to mom-and-pop investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid.
But under the watch of local leaders, the program has morphed into a predatory system of debt collection for well-financed, out-of-town companies that turned $500 delinquencies into $5,000 debts — then foreclosed on homes when families couldn’t pay, a Washington Post investigation found.
In particular, hedge funds have discovered that this is a great way to make huge piles of money. The following is a short excerpt from a CNN article that was published back in May…
With buyers identified only by numbers or unrelated names, the fragmented, unregulated industry is opaque. Even the market’s size is debated — $15 billion a year, according to Howard Liggett, the chief executive of Distressed Real Estate Consulting Services, or $5 billion a year, according to the National Tax Lien Association, a trade group. While returns are a closely kept secret, investors typically make between 2.5% and 10% a year, or in the low teens for larger buys.
“The hedge funds are chasing yield in this business” says Albert Friedman, a principal at Alterna Capital, an alternative investment firm in Boca Raton that buys tax liens.
Insiders estimate hedge funds now control 40% of the tax-lien market, from under 5% five years ago, with regional banks, obscure partnerships sporting names like God’s ATM LLC, and mom-and-pop investors making up the rest.
And a number of “too big to fail” banks are involved in this business as well.
In a previous article, I described exactly how this works…
1) The big Wall Street banks set up or invest in shell companies that will disguise who they really are.
2) These shell companies run around and buy up all of the tax liens that they can get their hands on.
3) Predatory levels of interest (in some states as high as 18 percent), fees and penalties rapidly pile up on these unpaid tax liens. The affected homeowners quickly end up owing much, much more than what the original tax bills were for.
4) If the collecting firm has to hire a lawyer, then that gets charged to the homeowner as well. The bloated legal fees for some of these lawyers can end up being the biggest expense of all.
5) If the tax liens do not get paid, the collecting firms move in to foreclose as quickly as legally possible.
According to the Huffington Post, Wall Street banks such as Bank of America and JPMorgan Chase have been gobbling up several hundred thousand tax liens from local governments. It appears that “distressed housing markets” are being particularly targeted.
Many of these tax liens are sold in online auctions, so it is unclear if many local government officials even realize who the big money behind many of these shell companies is.
These big financial institutions may consider this to be “good business”, but the truth is that they are absolutely shattering lives in the process. This is particularly true when it comes to older people that do not fully understand what is happening to them. Just consider the following examples from a recent Washington Post article…
A 48-year-old math teacher paid his taxes in 2007, but the tax office took his $1,400 payment and applied it to the wrong house, crediting an entirely different taxpayer.
A 58-year-old bank employee almost lost her house in 2010 because the tax office mistakenly sent bills and notices to a wooded lot across from a strip shopping center in Virginia — 12 times.
A 69-year-old hat designer was given the wrong payoff amount and ended up in court to save her property, owned by her family since 1943.
Those homeowners found out about the mistakes in time to fight. Ninety-five-year-old Daisy Dolsey, living in a nursing home and struggling with Alzheimer’s, wasn’t so lucky: She lost her $300,000 house over a $44.79 tax debt even after she paid her taxes.
Doesn’t that just sicken you?
And then the big banks and the hedge funds have the gall to wonder why people dislike them so much.
In this day and age, large financial institutions have become more cold-hearted than ever before.
Always make sure that your property taxes are fully paid, and always keep a paper record of all financial transactions involving your home.
If you do slip up and make a mistake at some point, there is a very good chance that a ruthless financial institution will try to swoop in and steal your home right out from under your nose.
It is so sad to watch one of America’s greatest cities die a horrible death. Once upon a time, the city of Detroit was a teeming metropolis of 1.8 million people and it had the highest per capita income in the United States. Now it is a rotting, decaying hellhole of about 700,000 people that the rest of the world makes jokes about. On Thursday, we learned that the decision had been made for the city of Detroit to formally file for Chapter 9 bankruptcy. It was going to be the largest municipal bankruptcy in the history of the United States by far, but on Friday it was stopped at least temporarily by an Ingham County judge. She ruled that Detroit’s bankruptcy filing violates the Michigan Constitution because it would result in reduced pension payments for retired workers. She also stated that Detroit’s bankruptcy filing was “also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy“, and she ordered that a copy of her judgment be sent to Barack Obama. How “honoring the president” has anything to do with the bankruptcy of Detroit is a bit of a mystery, but what that judge has done is ensured that there will be months of legal wrangling ahead over Detroit’s money woes. It will be very interesting to see how all of this plays out. But one thing is for sure – the city of Detroit is flat broke. One of the greatest cities in the history of the world is just a shell of its former self. The following are 25 facts about the fall of Detroit that will leave you shaking your head…
1) At this point, the city of Detroit owes money to more than 100,000 creditors.
2) Detroit is facing $20 billion in debt and unfunded liabilities. That breaks down to more than $25,000 per resident.
3) Back in 1960, the city of Detroit actually had the highest per-capita income in the entire nation.
4) In 1950, there were about 296,000 manufacturing jobs in Detroit. Today, there are less than 27,000.
5) Between December 2000 and December 2010, 48 percent of the manufacturing jobs in the state of Michigan were lost.
6) There are lots of houses available for sale in Detroit right now for $500 or less.
7) At this point, there are approximately 78,000 abandoned homes in the city.
8) About one-third of Detroit’s 140 square miles is either vacant or derelict.
9) An astounding 47 percent of the residents of the city of Detroit are functionally illiterate.
10) Less than half of the residents of Detroit over the age of 16 are working at this point.
11) If you can believe it, 60 percent of all children in the city of Detroit are living in poverty.
12) Detroit was once the fourth-largest city in the United States, but over the past 60 years the population of Detroit has fallen by 63 percent.
13) The city of Detroit is now very heavily dependent on the tax revenue it pulls in from the casinos in the city. Right now, Detroit is bringing in about 11 million dollars a month in tax revenue from the casinos.
14) There are 70 “Superfund” hazardous waste sites in Detroit.
15) 40 percent of the street lights do not work.
16) Only about a third of the ambulances are running.
17) Some ambulances in the city of Detroit have been used for so long that they have more than 250,000 miles on them.
18) Two-thirds of the parks in the city of Detroit have been permanently closed down since 2008.
19) The size of the police force in Detroit has been cut by about 40 percent over the past decade.
20) When you call the police in Detroit, it takes them an average of 58 minutes to respond.
21) Due to budget cutbacks, most police stations in Detroit are now closed to the public for 16 hours a day.
22) The violent crime rate in Detroit is five times higher than the national average.
23) The murder rate in Detroit is 11 times higher than it is in New York City.
24) Today, police solve less than 10 percent of the crimes that are committed in Detroit.
25) Crime has gotten so bad in Detroit that even the police are telling people to “enter Detroit at your own risk“.
It is easy to point fingers and mock Detroit, but the truth is that the rest of America is going down the exact same path that Detroit has gone down.
Detroit just got there first.
All over this country, there are hundreds of state and local governments that are also on the verge of financial ruin…
“Everyone will say, ‘Oh well, it’s Detroit. I thought it was already in bankruptcy,’ ” said Michigan State University economist Eric Scorsone. “But Detroit is not unique. It’s the same in Chicago and New York and San Diego and San Jose. It’s a lot of major cities in this country. They may not be as extreme as Detroit, but a lot of them face the same problems.”
A while back, Meredith Whitney was highly criticized for predicting that there would be a huge wave of municipal defaults in this country. When it didn’t happen, the critics let her have it mercilessly.
But Meredith Whitney was not wrong.
She was just early.
Detroit is only just the beginning. When the next major financial crisis strikes, we are going to see a wave of municipal bankruptcies unlike anything we have ever seen before.
And of course the biggest debt problem of all in this country is the U.S. government. We are going to pay a great price for piling up nearly 17 trillion dollars of debt and over 200 trillion dollars of unfunded liabilities.
All over the nation, our economic infrastructure is being gutted, debt levels are exploding and poverty is spreading. We are consuming far more wealth than we are producing, and our share of global GDP has been declining dramatically.
We have been living way above our means for so long that we think it is “normal”, but an extremely painful “adjustment” is coming and most Americans are not going to know how to handle it.
So don’t laugh at Detroit. The economic pain that Detroit is experiencing will be coming to your area of the country soon enough.
Did you know that the total number of unemployed workers in G20 counties is now up to 93 million and that it is increasing with each passing day? You see, the truth is that the United States is not the only one dealing with a systemic unemployment crisis. This is literally happening all over the planet. So what is causing this crisis? Is there any hope that it will be turned around? Well, unfortunately there are several long-term trends that have been developing for decades that have played a major role in bringing us to this point. First of all, the giant corporations that now totally dominate the global economy have figured out that they can make a lot more money by replacing expensive workers that live in major industrialized nations with workers that live in nations where it is legal to pay slave labor wages. So it isn’t really a huge mystery why there is such a huge problem with unemployment in the western world. If you were running a giant corporation, why would you want to hire workers that will cost you 10 to 20 times as much as other workers? A worker is a worker, and over the past decade we have seen a massive movement of jobs to countries where labor is cheaper. In addition, large corporations are also trying to completely eliminate as many jobs as they can by using technology. If a corporation can get a computer or a machine or a robot to do a task more cheaply than a human worker can do it, then why would that corporation want to continue to rely on human labor? And of course we have seen an overall weakening of the economies of the western world in recent years as well. This has been particularly true in the United States. As these long-term trends intensify, the worldwide unemployment crisis is going to get even worse.
In fact, the director general of the International Labor Organization is fully convinced that unemployment is going to continue to rise in G20 nations. Just check out what he told CNBC on Friday…
Unemployment will likely soar further in the group of 20 major economic powers without immediate action, Guy Ryder, the director general of the International Labor Organization told CNBC on Friday, comparing the jobs crisis to the 2008-2009 financial crisis and warning it needs to be tackled urgently.
“We have gone backwards. It is quite alarming to see…that unemployment has not gone down, in fact it’s gone up,” Ryder told CNBC at the G20 finance ministers’ meeting in Moscow.
He said 93 million people were currently unemployed in the G20.
And when those living in G20 nations lose their jobs, they tend to stay out of work for a very long time. In fact, 30 percent of unemployed workers in G20 countries have been out of work for one year or longer.
Major industrialized nations all over the planet are no longer able to produce enough jobs for their people. In many “wealthy nations” the unemployment rate has already risen well up into double digits. Just consider the following numbers…
-The unemployment rate is above 25 percent in South Africa.
-The unemployment rate in France recently hit a 15 year high.
-The unemployment rate in Italy is up to 12.2 percent, which is the highest in 35 years.
-The unemployment rate in the eurozone as a whole is up to an all-time high of 12.2 percent.
-The unemployment rate in Poland is 13.2 percent.
-The unemployment rate in Ireland is now 13.6 percent.
-The unemployment rate in Portugal has rocketed up to 17.7 percent.
-The unemployment rate in Greece is currently sitting at 26.9 percent and it is being projected that it will soon hit 30 percent.
-The unemployment rate in Spain is even worse than in Greece. The unemployment rate in Spain is a staggering 27.2 percent.
Sadly, it looks like things are not going to be getting better any time soon. In fact, global business confidence is now the lowest that it has been since the last recession.
So what about the United States?
Well, it is true that our official numbers do not look quite as bad as much of the rest of the world. But the official unemployment rate in the U.S. has been at 7.5 percent or higher for 54 months in a row. That is the longest stretch in U.S. history.
But at least it is not in double digits yet.
Things could be worse.
However, that does not mean that we are doing well either.
The mainstream media is attempting to convince us that everything is just fine because the unemployment rate has been “going down”, but when you take a deeper look at the numbers that is not exactly an accurate assessment of our situation.
As the New York Times recently pointed out, the decline in the unemployment rate can almost entirely be accounted for by a decline in the labor participation rate…
Let’s take a step back. Lots of people lost jobs during the Great Recession. In the aftermath, the great surprise has been how few are looking for new jobs. Labor force participation, the share of adults working or trying to find work, has stagnated at about 63.5 percent, almost three percentage points below the pre-recession level.
The unemployment rate has dropped almost entirely because of this decline in labor force participation. In other words, it has not fallen because people are finding jobs. It has fallen because fewer people are looking for jobs.
To get a more accurate picture of what is really happening with employment in America, you need to look at the employment-population ratio. It is a measurement of the percentage of the working age population that is actually working. As you can see, the percentage of working age Americans that actually have a job has been declining since the year 2000…
As you can see, there has been no employment recovery.
When the mainstream media tells you that the employment numbers for June were “great”, that is not being honest. The truth is that the unemployment rate rose in 28 U.S. states and it only declined in 11 states during June, and as I mentioned yesterday, the U.S. economy actually lost 240,000 full-time jobs last month.
So no, things are not getting better, and the unemployment problems in the United States and in Europe are likely going to continue to get worse in the years ahead.
That is very bad news for most of us, because the only thing that most of us have to offer in the marketplace is our labor. If the value that is placed on our labor is continually declining, then that puts us in a very difficult position.
It is almost as if we have all been drafted to play a very twisted game of musical chairs. Each time the music stops, more chairs (jobs) are being pulled out of the game.
You might be doing okay for the moment, but what is going to happen when the music suddenly stops one day and your chair gets pulled out of the game?
That is something that you might want to start thinking about.
****IMPORTANT UPDATE**** Apparently the big Internet companies are not as “innocent” in all of this as they originally led us to believe. So this additional information changes some of the conclusions that I reached in my original article. It appears that some of the biggest Internet companies have been cooperating with the government in this data collection effort at least to a certain extent. The following is from an article in the New York Times that describes how the U.S. government has been getting user data from major Internet companies…
The companies that negotiated with the government include Google, which owns YouTube; Microsoft, which owns Hotmail and Skype; Yahoo; Facebook; AOL; Apple; and Paltalk, according to one of the people briefed on the discussions. The companies were legally required to share the data under the Foreign Intelligence Surveillance Act. People briefed on the discussions spoke on the condition of anonymity because they are prohibited by law from discussing the content of FISA requests or even acknowledging their existence.
In at least two cases, at Google and Facebook, one of the plans discussed was to build separate, secure portals, like a digital version of the secure physical rooms that have long existed for classified information, in some instances on company servers. Through these online rooms, the government would request data, companies would deposit it and the government would retrieve it, people briefed on the discussions said.
****END OF UPDATE****
The U.S. government has been hacking in to the servers of Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube and Apple and has been taking their user data without their knowledge or consent. According to the Washington Post, the information being stolen includes “audio and video chats, photographs, e-mails, documents, and connection logs”. This program is known as PRISM, and it was first revealed by the Washington Post on Thursday. Since the story broke, Director of National Intelligence James Clapper has admitted that PRISM exists and so has Barack Obama. The Washington Post initially claimed that all of the Internet companies were willingly handing over their user data to the government. Now we are learning that is NOT true. In fact, all of the Internet companies named in the Washington Post story have denied knowing about PRISM or ever giving the federal government permission to directly access their servers. So this means that the U.S. government has been stealing massive amounts of user data from the largest Internet companies in the world without their permission. Of course this is highly illegal and it directly violates the Fourth Amendment to the U.S. Constitution, but you can bet that the Obama administration is going to do everything that it can to get the courts to “make it legal”. Hopefully the revelation of this program will be enough to get the American people to realize that we are rapidly being transformed into a Big Brother police state that is descending into tyranny.
Barack Obama has described the systematic gathering of cell phone records and the Internet spying that the federal government has been doing as “modest encroachments” that we should all just accept as part of the price of living in a modern world, but if we allow the government to get away with this, where will it end?
Even if we had a total “Big Brother” society where the government watched everything that we did 24 hours a day, bad people would still do bad things. There would still be terror attacks and great tragedies. No matter how much the government intrudes into our lives, it can never guarantee us 100% safety.
Those that founded the United States understood this. They did not want this country to be turned into a police state. That is why they guaranteed us some very important protections in the Bill of Rights. If the government wants to do a search, there are some very important procedures that must be followed first.
Unfortunately, the Obama administration appears to believe that the Constitution does not apply to user data on the Internet. The NSA is apparently hacking into Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube and Apple and taking whatever they want without ever getting permission from those companies.
You can bet that there are some very, very angry executives at those companies right now that are trying to figure out how to respond to these revelations.
All of these companies have vehemently denied that they were involved. At this point, there is no reason to doubt their very strong denials.
For example, the following is what
Dear Google users—
You may be aware of press reports alleging that Internet companies have joined a secret U.S. government program called PRISM to give the National Security Agency direct access to our servers. As Google’s CEO and Chief Legal Officer, we wanted you to have the facts.
First, we have not joined any program that would give the U.S. government—or any other government—direct access to our servers. Indeed, the U.S. government does not have direct access or a “back door” to the information stored in our data centers. We had not heard of a program called PRISM until yesterday.
Second, we provide user data to governments only in accordance with the law. Our legal team reviews each and every request, and frequently pushes back when requests are overly broad or don’t follow the correct process. Press reports that suggest that Google is providing open-ended access to our users’ data are false, period. Until this week’s reports, we had never heard of the broad type of order that Verizon received—an order that appears to have required them to hand over millions of users’ call records. We were very surprised to learn that such broad orders exist. Any suggestion that Google is disclosing information about our users’ Internet activity on such a scale is completely false.
Finally, this episode confirms what we have long believed—there needs to be a more transparent approach. Google has worked hard, within the confines of the current laws, to be open about the data requests we receive. We post this information on our Transparency Report whenever possible. We were the first company to do this. And, of course, we understand that the U.S. and other governments need to take action to protect their citizens’ safety—including sometimes by using surveillance. But the level of secrecy around the current legal procedures undermines the freedoms we all cherish.
Facebook CEO Mark Zuckerberg has issued a similar denial. He insists that Facebook never even heard of PRISM until Thursday…
I want to respond personally to the outrageous press reports about PRISM:
Facebook is not and has never been part of any program to give the US or any other government direct access to our servers. We have never received a blanket request or court order from any government agency asking for information or metadata in bulk, like the one Verizon reportedly received. And if we did, we would fight it aggressively. We hadn’t even heard of PRISM before yesterday.
When governments ask Facebook for data, we review each request carefully to make sure they always follow the correct processes and all applicable laws, and then only provide the information if is required by law. We will continue fighting aggressively to keep your information safe and secure.
We strongly encourage all governments to be much more transparent about all programs aimed at keeping the public safe. It’s the only way to protect everyone’s civil liberties and create the safe and free society we all want over the long term.
So how has the U.S. government been getting this user data if they do not have the cooperation of these large Internet companies?
They have been stealing it.
Is this the kind of society that we want to have? Do we really want the government to be free to hack into the servers of Internet companies and take user data any time that it wants?
And guess what?
According to the Wall Street Journal, the NSA has also been gathering massive amounts of credit card data as well…
The National Security Agency’s monitoring of Americans includes customer records from the three major phone networks as well as emails and Web searches, and the agency also has cataloged credit-card transactions, said people familiar with the agency’s activities.
So if you ever bought something embarrassing with a credit card, there is a very good chance that the NSA knows about it.
If you don’t like where all of this is headed, then now is the time to stand up and say something about it.
Sadly, the truth is that most of our politicians see absolutely nothing wrong with our current system. The following is what Barack Obama said in response to the recent revelations about the NSA…
“You can’t have 100 percent security and also then have 100 percent privacy and zero inconvenience. We’re going to have to make some choices as a society,” he said. “I think that on balance, we have established a policy and a procedure that the American people should feel comfortable with.”
Do you feel comfortable with the fact that the NSA is hacking into major Internet companies and stealing their user data?
I know that I definitely am not.
I think that the journalist that originally broke the story about how the government is systematically gathering our phone records summed up what many of us are feeling right now pretty well…
“There is a massive apparatus within the United States government that with complete secrecy has been building this enormous structure that has only one goal, and that is to destroy privacy and anonymity, not just in the United States but around the world,” charged Glenn Greenwald, a reporter for the British newspaper “The Guardian,” speaking on CNN. “That is not hyperbole. That is their objective.”
What do you think?
Is all of this government spying good for America or bad for America?
Please feel free to share your opinion by posting a comment below…
When financial markets in the United States crash, so does the U.S. economy. Just remember what happened back in 2008. The financial markets crashed, the credit markets froze up, and suddenly the economy went into cardiac arrest. Well, there are very few things that could cause the financial markets to crash harder or farther than a derivatives panic. Sadly, most Americans don’t even understand what derivatives are. Unlike stocks and bonds, a derivative is not an investment in anything real. Rather, a derivative is a legal bet on the future value or performance of something else. Just like you can go to Las Vegas and bet on who will win the football games this weekend, bankers on Wall Street make trillions of dollars of bets about how interest rates will perform in the future and about what credit instruments are likely to default. Wall Street has been transformed into a gigantic casino where people are betting on just about anything that you can imagine. This works fine as long as there are not any wild swings in the economy and risk is managed with strict discipline, but as we have seen, there have been times when derivatives have caused massive problems in recent years. For example, do you know why the largest insurance company in the world, AIG, crashed back in 2008 and required a government bailout? It was because of derivatives. Bad derivatives trades also caused the failure of MF Global, and the 6 billion dollar loss that JPMorgan Chase recently suffered because of derivatives made headlines all over the globe. But all of those incidents were just warm up acts for the coming derivatives panic that will destroy global financial markets. The largest casino in the history of the world is going to go “bust” and the economic fallout from the financial crash that will happen as a result will be absolutely horrific.
There is a reason why Warren Buffett once referred to derivatives as “financial weapons of mass destruction”. Nobody really knows the total value of all the derivatives that are floating around out there, but estimates place the notional value of the global derivatives market anywhere from 600 trillion dollars all the way up to 1.5 quadrillion dollars.
Keep in mind that global GDP is somewhere around 70 trillion dollars for an entire year. So we are talking about an amount of money that is absolutely mind blowing.
So who is buying and selling all of these derivatives?
Well, would it surprise you to learn that it is mostly the biggest banks?
According to the federal government, four very large U.S. banks “represent 93% of the total banking industry notional amounts and 81% of industry net current credit exposure.”
These four banks have an overwhelming share of the derivatives market in the United States. You might not be very fond of “the too big to fail banks“, but keep in mind that if a derivatives crisis were to cause them to crash and burn it would almost certainly cause the entire U.S. economy to crash and burn. Just remember what we saw back in 2008. What is coming is going to be even worse.
It would have been really nice if we had not allowed these banks to get so large and if we had not allowed them to make trillions of dollars of reckless bets. But we stood aside and let it happen. Now these banks are so important to our economic system that their destruction would also destroy the U.S. economy. It is kind of like when cancer becomes so advanced that killing the cancer would also kill the patient. That is essentially the situation that we are facing with these banks.
It would be hard to overstate the recklessness of these banks. The numbers that you are about to see are absolutely jaw-dropping. According to the Comptroller of the Currency, four of the largest U.S. banks are walking a tightrope of risk, leverage and debt when it comes to derivatives. Just check out how exposed they are…
Total Assets: $1,812,837,000,000 (just over 1.8 trillion dollars)
Total Exposure To Derivatives: $69,238,349,000,000 (more than 69 trillion dollars)
Total Assets: $1,347,841,000,000 (a bit more than 1.3 trillion dollars)
Total Exposure To Derivatives: $52,150,970,000,000 (more than 52 trillion dollars)
Bank Of America
Total Assets: $1,445,093,000,000 (a bit more than 1.4 trillion dollars)
Total Exposure To Derivatives: $44,405,372,000,000 (more than 44 trillion dollars)
Total Assets: $114,693,000,000 (a bit more than 114 billion dollars – yes, you read that correctly)
Total Exposure To Derivatives: $41,580,395,000,000 (more than 41 trillion dollars)
That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 362 times greater than their total assets.
To get a better idea of the massive amounts of money that we are talking about, just check out this excellent infographic.
How in the world could we let this happen?
And what is our financial system going to look like when this pyramid of risk comes falling down?
Our politicians put in a few new rules for derivatives, but as usual they only made things even worse.
According to Nasdaq.com, beginning next year new regulations will require derivatives traders to put up trillions of dollars to satisfy new margin requirements.
Swaps that will be allowed to remain outside clearinghouses when new rules take effect in 2013 will require traders to post $1.7 trillion to $10.2 trillion in margin, according to a report by an industry group.
The analysis from the International Swaps and Derivatives Association, using data sent in anonymously by banks, says the trillions of dollars in cash or securities will be needed in the form of so-called “initial margin.” Margin is the collateral that traders need to put up to back their positions, and initial margin is money backing trades on day one, as opposed to variation margin posted over the life of a trade as it fluctuates in value.
So where in the world will all of this money come from?
Total U.S. GDP was just a shade over 15 trillion dollars last year.
Could these rules cause a sudden mass exodus that would destabilize the marketplace?
Let’s hope not.
But things are definitely changing. According to Reuters, some of the big banks are actually urging their clients to avoid new U.S. rules by funneling trades through the overseas divisions of their banks…
Wall Street banks are looking to help offshore clients sidestep new U.S. rules designed to safeguard the world’s $640 trillion over-the-counter derivatives market, taking advantage of an exemption that risks undermining U.S. regulators’ efforts.
U.S. banks such as Morgan Stanley (MS.N) and Goldman Sachs (GS.N) have been explaining to their foreign customers that they can for now avoid the new rules, due to take effect next month, by routing trades via the banks’ overseas units, according to industry sources and presentation materials obtained by Reuters.
Unfortunately, no matter how banks respond to the new rules, it isn’t going to prevent the coming derivatives panic. At some point the music is going to stop and some big financial players are going to be completely and totally exposed.
When that happens, it might not be just the big banks that lose money. Just take a look at what happened with MF Global.
MF Global has confessed that it “diverted money” from customer accounts that were supposed to be segregated. A lot of customers may never get back any of the money that they invested with those crooks. The following comes from a Huffington Post article about the MF Global debacle, and it might just be a preview of what other investors will go through in the future when a derivatives crash destroys the firms that they had their money parked with…
Last week when customers asked for excess cash from their accounts, MF Global stalled. According to a commodity fund manager I spoke with, MF Global’s first stall tactic was to claim it lost wire transfer instructions. Then instead of sending an overnight check, it sent the money snail mail, including checks for hundreds of thousands of dollars. The checks bounced. After the checks bounced, the amounts were still debited from customer accounts and no one at MF Global could or would reverse the check entries. The manager has had to intervene to get MF Global to correct this.
How would you respond if your investment account suddenly went to “zero” because the firm you were investing with “diverted” customer funds for company use and now you have no way of recovering your money?
Keep an eye on the large Wall Street banks. In a previous article, I quoted a New York Times article entitled “A Secretive Banking Elite Rules Trading in Derivatives” which described how these banks dominate the trading of derivatives…
On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.
The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.
According to the article, the following large banks are represented at these meetings: JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup.
When the casino finally goes “bust”, you will know who to blame.
Without a doubt, a derivatives panic is coming.
It will cause the financial markets to crash.
Several of the “too big to fail” banks will likely crash and burn and require bailouts.
As a result of all this, credit markets will become paralyzed by fear and freeze up.
Once again, we will see the U.S. economy go into cardiac arrest, only this time it will not be so easy to fix.
Do you agree with this analysis, or do you find it overly pessimistic? Please feel free to post a comment with your thoughts below…