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This Is The Beginning Of The End For The Euro

The Euro - A Woman Rides The BeastThe long-anticipated collapse of the euro is here. When European Central Bank president Mario Draghi unveiled an open-ended quantitative easing program worth at least 60 billion euros a month on Thursday, stocks soared but the euro plummeted like a rock.  It hit an 11 year low of $1.13, and many analysts believe that it is going much, much lower than this.  The speed at which the euro has been falling in recent months has been absolutely stunning.  Less than a year ago it was hovering near $1.40.  But since that time the crippling economic problems in southern Europe have gone from bad to worse, and no amount of money printing is going to avert the financial nightmare that is slowly unfolding right before our eyes.  Yes, there may be some temporary euphoria for a few days, but it is important to remember that reckless money printing worked for the Weimar Republic for a little while too before it turned into an utter disaster.  Now that the ECB has decided to go this route, it is essentially out of ammunition.  The only thing that it could potentially do beyond this is to print even larger quantities of money.  As the global financial crisis begins to unfold over the next couple of years, the ECB is pretty much going to be powerless to do anything about it.  Over the next couple of months, we can expect the euro to continue to head toward parity with the U.S. dollar, and eventually it is going to go to all-time lows.  Meanwhile, the future of the eurozone itself is very much in doubt.  If it does break up, the elite of Europe will probably try to put it back together in some sort of new configuration, but the damage will already have been done.

Over the next 18 months, the European Central bank will create more than a trillion euros out of thin air and will use that money to buy debt.  The following is how this new QE program for Europe was described by the Telegraph

“The combined monthly purchases of public and private sector securities will amount to €60bn euros,” said Mr Draghi at a press conference following a meeting of the ECB’s governing council.

“They are intended to be carried out until end-September 2016 and will in any case be conducted until we see a sustained adjustment in the path of inflation,” he added, meaning the package will amount to at least €1.1 trillion.

Mr Draghi’s package of asset purchases, including bonds issued by national governments and EU institutions such as the European Commission, is intended to boost the eurozone’s flagging economy and to ward off the spectre of deflation.

When you print more money, you drive down the value of your currency.  And the euro has already been crashing for months as you can see from the chart below…

The Euro Is Collapsing

As I write this, the euro is down to $1.13.  And most analysts seem to agree that it is likely heading even lower.

How low could it ultimately go?

One prominent currency strategist recently told CNBC that he believes that it is actually heading beneath parity with the U.S. dollar…

The euro plunged to an 11-year low on Thursday, after the European Central Bank announced that it would begin a 60-euro monthly asset purchasing program. But it could still have a ways to fall.

Brown Brothers Harriman global head of currency strategy Marc Chandler predicts that the euro, which fell as low as 1.1362 on Thursday after trading near 1.4000 in May, is heading below 1.0. That widely watched level is the point at which it will just take a single U.S. dollar to purchase a euro, a condition known in the currency markets as “parity.”

I totally agree with Chandler.

In fact, I believe that the euro is ultimately going to break the all-time record low against the dollar.

I also believe that the current configuration of the eurozone is eventually going to fall to pieces.  The euro may survive as a currency, but Europe is ultimately going to look a whole lot different than it does right now.

In fact, we could see things start to come apart for the eurozone as soon as Sunday.  If Syriza wins a decisive victory in the upcoming Greek elections, it could create all sorts of chaos

The polls put Alexis Tsipras and Syriza ahead of the ruling New Democracy party of Greek Prime Minister Antonis Samaras.

Tsipras has vowed to convince the ECB and euro zone to write down the value of their Greek debt holdings to allow him to increase public spending and stimulate job growth.

“There is a good chance they could win, and if they begin moving away from fiscal austerity, other members of the EU are going to say: ‘No more lending, no more life support.’ On Monday morning you’ll know,” De Clue said.

But of course Europe is far from alone.  Financial problems are erupting all over the planet, and central banks are getting desperate.

Over the past week, seven major central banks have made moves to fight deflation.  But the more that they cut interest rates and print money, the less effect that it has.  And eventually, the people of the world are going to seriously lose confidence in these central banks as they realize what a sham the system really is.

I think that these recent words from Marc Faber are very wise…

My belief is that the big surprise this year is that investor confidence in central banks collapses. And when that happens — I can’t short central banks, although I’d really like to, and the only way to short them is to go long gold, silver and platinum,” he said. “That’s the only way. That’s something I will do.”

So what do you think?

Do you agree with Marc Faber?

And what do you think is next for the euro?

Do you agree with me that it is going to record lows?

Please feel free to share what you think by posting a comment below…

What In The World Just Happened In Switzerland?

Swiss Francs - Public DomainCentral banks lie.  That is what they do.  Not too long ago, the Swiss National Bank promised that it would defend the euro/Swiss franc currency peg with the “utmost determination”.  But on Thursday, the central bank shocked the financial world by abruptly abandoning it.  More than three years ago, the Swiss National Bank announced that it would not allow the Swiss franc to fall below 1.20 to the euro, and it has spent a mountain of money defending that peg.  But now that it looks like the EU is going to launch a very robust quantitative easing program, the Swiss National Bank has thrown in the towel.  It was simply going to cost way too much to continue to defend the currency floor.  So now there is panic all over Europe.  On Thursday, the Swiss franc rose a staggering 30 percent against the euro, and the Swiss stock market plunged by 10 percent.  And all over the world, investors, hedge funds and central banks either lost or made gigantic piles of money as currency rates shifted at an unprecedented rate.  It is going to take months to really measure the damage that has been done.  Meanwhile, the euro is in greater danger than ever.  The euro has been declining for months, and now the number one buyer of euros (the Swiss National Bank) has been removed from the equation.  As things in Europe continue to get even worse, expect the euro to go to all-time record lows.  In addition, it is important to remember that the Asian financial crisis of the late 1990s began when Thailand abandoned its currency peg.  With this move by Switzerland set off a European financial crisis?

Of course this is hardly the first time that we have seen central banks lie.  In the United States, the Federal Reserve does it all the time.  The funny thing is that most people still seem to trust what central banks have to say.  But at some point they are going to start to lose all credibility.

Financial markets like predictability.  And gigantic amounts of money had been invested based on the repeated promises of the Swiss National Bank to use “unlimited amounts” of money to defend the currency floor.  Needless to say, there are a lot of people in the financial world that feel totally betrayed by the Swiss National Bank today.  The following comes from an analysis of the situation by Bruce Krasting

Thomas Jordan, the head of the SNB has repeated said that the Franc peg would last forever, and that he would be willing to intervene in “Unlimited Amounts” in support of the peg. Jordan has folded on his promise like a cheap suit in the rain. When push came to shove, Jordan failed to deliver.

The Swiss economy will rapidly fall into recession as a result of the SNB move. The Swiss stock market has been blasted, the currency is now nearly 20% higher than it was a day before. Someone will have to fall on the sword, the arrows are pointing at Jordan.

The dust has not settled on this development as of this morning. I will stick my neck out and say that the failure to hold the minimum rate will result in a one time loss for the SNB of close to $100B. That’s a huge amount of money. It comes to 20% of the Swiss GDP!

Most experts are calling this an extremely bad move by the Swiss National Bank.

But in the end, they may have had little choice.

The euro is falling apart, and the Swiss did not want to be married to it any longer.  Unfortunately, when any marriage ends the pain can be enormous.  The following comes from CNBC

How do you know you’re looking at a bad marriage?

Well if one or both of the spouses can’t wait to get out as soon as the smallest crack in the door opens, you have a pretty good clue.

Something like that just happened in Europe as we learned the real reason why so many traders were still invested in the euro: They had nowhere else to go.

As the Swiss National Bank unlocked the doors on its cap on trading euros for Swiss francs, the rush to exit the euro was faster than one of those French bullet trains.

But this move has not been bad for everyone.  In fact, for many of those that live in Switzerland but work in neighboring countries what happened on Thursday was very fortuitous

“I heard the news this morning. I’m so happy!” Vanessa, who refused to give her last name, told AFP outside of one of many mobbed exchange offices in Geneva.

She has reason to be extatic: she is one of some 280,000 people working in Switzerland but living and paying bills in eurozone countries France, Germany or Italy.

These so-called “frontaliers”, or border-crossers, are the biggest winners in Thursday’s Swiss franc surge, seeing their incomes jump 30 percent in the blink of an eye.

In normal times, things like this very rarely happen.

But in times of crisis, things can change very rapidly.  We are moving into a time of great volatility in global financial markets, and great volatility is often a sign that a great crash is coming.

This move by the Swiss National Bank is just the beginning.  Expect more desperate moves on the global economic chessboard in the days ahead.  But in the end, none of those moves is going to prevent what is coming.

And one of these days, another extremely important currency peg is going to end.  Right now, the Chinese have tied their currency very tightly to the U.S. dollar.  This has helped to artificially inflate the value of the dollar.  Unfortunately, as Robert Wenzel has noted, someday the Chinese could suddenly pull the rug out from under our currency, and that would be really bad news for us…

In other words, the SNB is no People’s Bank of China type patsy, where the PBOC has taken on massive amounts of dollar reserves to prop up the dollar.

Will the PBOC learn anything from SNB? If so, this will not be good for the US dollar.

So keep a close eye on what happens in Europe next.

It is going to be a preview of what is eventually coming to America.

On The Verge Of The Next Economic Crisis, 62 Percent Of Americans Are Living Paycheck To Paycheck

Money Emergency Funds - Public DomainNearly two-thirds of all Americans are completely and totally unprepared for the next economic crisis.  As you will read about below, a new survey has found that only 38 percent of Americans have enough money on hand to cover “a $500 repair bill or a $1,000 emergency room visit”.  That essentially means that 62 percent of the people in this country do not have an emergency fund.  Even after the extremely bitter financial lessons that millions of Americans learned during the last recession, most of us are still choosing to live on the edge.  That is utter insanity, and when the next major economic downturn strikes most people are going to find themselves totally unprepared.

The number one thing that you need to do to get ready for the coming economic collapse is to build up an emergency fund.

I know that is not the most “sexy” piece of advice in the world, but it is the truth.  Just think about it.  During the last recession, millions of Americans suddenly lost their jobs.  Because they did not have any cushion to fall back on, millions of them also suddenly could not pay their bills and their mortgages.  Foreclosures skyrocketed and countless families went from living a very comfortable middle class lifestyle to being out on the street in very short order.

And now because the people of this country have been so foolish it is going to happen again.

Because of my website, people are constantly asking me what they should do to prepare for the coming economic collapse.

I think that they expect me to say something like this…

“Sell everything that you possibly can and buy gold and silver, go purchase a llama farm, and dig a bunker where you can bury 10,000 cases of MREs.”

Not that there is anything wrong with those kinds of preparations.

But before you do anything else, you have got to have an emergency fund.  My recommendation is to have an emergency fund that can cover at least six months of expenses in case something happens.

Sadly, a solid majority of Americans do not have any emergency cash at all.  The following comes from the Wall Street Journal

Only 38% of those polled said they could cover a $500 repair bill or a $1,000 emergency room visit with funds from their bank accounts, a new Bankrate report said. Most others would need to take on debt or cut back elsewhere.

“A solid majority of Americans say they have a household budget,” said Bankrate banking analyst Claes Bell. “But too few have the ability to cover expenses outside their budget without going into debt or turning to family and friends for help.”

The survey found that an unexpected bill would cause 26% to reduce spending elsewhere, while 16% would borrow from family or friends and 12% would put the expense on a credit card. The remainder didn’t know what they would do or would make other arrangements.

And of course this is not the only poll that has come up with these kinds of results.  In fact, a Federal Reserve survey from last year produced similar numbers

The findings are strikingly similar to a U.S. Federal Reserve survey of more than 4,000 adults released last year. “Savings are depleted for many households after the recession,” it found. Among those who had savings prior to 2008, 57% said they’d used up some or all of their savings in the Great Recession and its aftermath. What’s more, only 39% of respondents reported having a “rainy day” fund adequate to cover three months of expenses and only 48% of respondents said that they would completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money.

Meanwhile, the financial condition of most American families is far worse than it was just prior to the last major economic crisis.  As a recent MarketWatch article detailed, the average family currently has far less wealth than it did back then…

But while the jobs market is improving and the Affordable Care Act has given an estimated 15 million people access to medical care, the Great Recession does appear to have taken its toll on Americans’ finances; in fact, they’re 40% poorer today than they were in 2007. The net worth of American families — that is, the difference between the values of their assets, including homes and investments, and liabilities — fell to $81,400 in 2013, down slightly from $82,300 in 2010, but a long way off the $135,700 in 2007, according to a report released last month by the nonprofit think tank Pew Research Center in Washington, D.C.

So we have a lot less wealth, and almost two-thirds of us have no emergency cushion to fall back on whatsoever.

What could go wrong?

In addition, there is lots of evidence that much of the country has not bothered to make any preparations at all for even a basic emergency that would last for just a few days.  For example, the following are results from a survey conducted by the Adelphi Center for Health Innovation that I featured in a previous article

  • 44 percent don’t have first-aid kits
  • 48 percent lack emergency supplies
  • 53 percent do not have a minimum three-day supply of nonperishable food and water at home
  • 55 percent believe local authorities will come to their rescue if disaster strikes
  • 52 percent have not designated a family meeting place if they are separated during an emergency
  • 42 percent do not know the phone numbers of all of their immediate family members
  • 21 percent don’t know if their workplace has an emergency preparedness plan
  • 37 percent do not have a list of the drugs they are taking
  • 52 percent do not have copies of health insurance documents

What are all of those people going to do if there is an extended crisis or disaster in this nation?

That is a very good question.

Meanwhile, the signs that we are on the verge of the next major economic crisis just continue to grow.  Yesterday, I shared 10 things that happened just prior to the financial crisis of 2008 that are happening again right now.

Today, we learned that a major oil driller down in Texas has just declared bankruptcy, and many more energy companies are expected to follow suit in the coming months.  The following is from the Wall Street Journal

[S]igns of strain are building in the oil patch, where revenue growth hasn’t kept pace with borrowing. On Sunday, a private company that drills in Texas, WBH Energy LP, and its partners, filed for bankruptcy protection, saying a lender refused to advance more money and citing debt of between $10 million and $50 million. Neither the Austin-based company nor its lawyers responded to requests for comment.

Energy analysts warn defaults could be coming. “The group is not positioned for this downturn,” said Daniel Katzenberg, an analyst at Robert W. Baird & Co. “There are too many ugly balance sheets.”

And we also learned today that teen retailer Wet Seal is going to be closing two-thirds of its stores.

Dozens more retailers are expected to make similar announcements over the coming months.

We are moving into the most chaotic time for the U.S. economy that any of us have ever seen, and most Americans are totally oblivious to what is happening and are totally unprepared.

So what is our country going to look like when tens of millions of unprepared people are blindsided by a crisis that they never saw coming?

The Retail Apocalypse Accelerates: Collapsing Holiday Sales Are A Signal That A Recession Is Coming

Retail Apocalypse - Photo by Justin CozartRetail sales during the four day Thanksgiving weekend were down a whopping 11 percent from last year.  This is a “make or break” time of the year for many retailers, and if things don’t turn around during the coming weeks we could see a tsunami of store closings in January and February.  As you read this article, there is already more than a billion square feet of retail space sitting empty in the United States.  Many have described the ongoing collapse of the retail industry as an “apocalypse”, and this apocalypse appears to be accelerating.  Yes, the shift to online retailers is a significant factor, but as you will see below even online retailers struggled over the holiday weekend.  The sad truth of the matter is that U.S. consumers are tapped out and are drowning in debt at this point, so they simply do not have as much money to spend as they once did.

According to the National Retail Federation, 5.2 percent fewer Americans shopped online or at retail stores over the past weekend.  Those that did shop spent an average of 6.4 percent less money than consumers did last year.

So if less people shopped, and they spent less money on average, that means that total retail sales must have been way down.

And indeed they were.  As the New York Times has reported, total retail sales were down an astounding 11 percent…

Sales, both in stores and online, from Thanksgiving through the weekend were estimated to have dropped 11 percent, to $50.9 billion, from $57.4 billion last year, according to preliminary survey results released Sunday by the National Retail Federation. Sales fell despite many stores’ opening earlier than ever on Thanksgiving Day.

And though many retailers offered the same aggressive discounts online as they did in their stores, the web failed to attract more shoppers or spending over the four-day holiday weekend than it did last year, the group said. The average person who shopped over the weekend spent $159.55 at online retailers, down 10.2 percent from last year.

No wonder there was less violence on Black Friday this year.

Traffic at retailers was way down.

Of course some analysts are trying to put a positive spin on all of this.  For example, the CEO of the National Retail Federation says that this could actually be a sign that the economy is improving

As the WSJ reports, NRF’s CEO Matt Shay attributed the drop to a combination of factors, including the fact that retailers moved promotions earlier this year in attempt to get people out sooner and avoid what happened last year when people didn’t finish their shopping because of bad weather.

Also did we mention the NRF is perpetually cheery and always desperate to put a metric ton of lipstick on a pig? Well, hold on to your hats folks:

He also attributed the declines to better online offerings and an improving economy where “people don’t feel the same psychological need to rush out and get the great deal that weekend, particularly if they expected to be more deals,” he said.

And of course the sprint vs marathon comparisons, such as this one: “The holiday season and the weekend are a marathon not a sprint,” NRF Chief Executive Officer Matthew Shay said on a conference call. Odd how that metaphor is never used when the (seasonally-adjusted) sprint beats the marathoners.

So there you have it: a 11% collapse in retail spending has just been spun as super bullish for the US economy, whereby US consumers aren’t spending because the economy is simply too strong, and the only reason they don’t spend is because they will spend much more later. Or something.

The retail industry is absolutely brutal at this point.  It is flooded with very large competitors that are chasing fewer and fewer disposable dollars.

In order to thrive, retailers need financially healthy consumers.  But over time, U.S. consumers have been getting deeper and deeper into debt.  The chart posted below shows that consumer credit in the United States has doubled since the year 2000…

Consumer Credit 2014

Meanwhile, the long-term trend for real median household income since the year 2000 has been down…

Real Median Household Income 2014

In order for Americans to spend money, they have to make money first.

Unfortunately, the quality of our jobs continues to plummet.

As I have written about previously, 50 percent of all American workers currently make less than $28,031 a year at their jobs.  And here are some more numbers from a report that the Social Security Administration recently released…

-39 percent of American workers made less than $20,000 last year

-52 percent of American workers made less than $30,000 last year

-63 percent of American workers made less than $40,000 last year

-72 percent of American workers made less than $50,000 last year

So in order for a typical American family to bring in $50,000 a year or more both parents usually have to work.

Sometimes they both have to work more than one job.

And with the cost of living constantly rising, family budgets are being squeezed more than ever.  That is why families have less money to spend at retail stores these days.  For even more on the current financial condition of American families, please see my previous article entitled “Are You Better Off This Thanksgiving Than You Were Last Thanksgiving?

It is time for retailers in America to face the fact that economic conditions have fundamentally changed.  U.S. consumers simply are not in as good shape as they used to be.

In addition, online retailers are going to continue to steal sales from traditional retail locations.  This means that more stores are going to close and more retail space is going to be abandoned.

As I mentioned above, more than a billion square feet of retail space is aleady sitting vacant in the United States.  And retail consultant Howard Davidowitz is projecting that up to half of all shopping malls in the U.S. may shut down within the next couple of decades

Within 15 to 20 years, retail consultant Howard Davidowitz expects as many as half of America’s shopping malls to fail. He predicts that only upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive.

In the years ahead, it is going to become normal to see boarded up strip malls and abandoned shopping centers all over the country.

The golden age of retail is over, and now most retailers will have to work incredibly hard to survive the apocalypse that is unfolding right before our eyes.

10 Examples Of The Social Decay That Is Eating Away At America Like Cancer

Social Decay - Public DomainIt isn’t just our economy that is crumbling.  Something is happening to America that no amount of money will be able to fix.  Everywhere around us we can see evidence of the social decay that is systematically eating away at the foundations of our society.  It can be found on the streets of our inner cities, in dark basements in extremely rural communities, in the most prestigious boardrooms on Wall Street, and definitely in the halls of power in Washington.   Bringing in an entirely different crop of politicians or printing gigantic mountains of money is not going to solve this problem, because it exists in the hearts of millions of ordinary men and women.  The truth is that we really need to take a good, long look at ourselves in the mirror, because we need to take a 180 degree turn as a nation.  What we are doing now is clearly not working, and the longer that we take to address this problem the worse it is going to get.  The following are 10 examples of the social decay that is eating away at America like cancer.  Individually, they could be dismissed as isolated incidents.  But I could have easily listed 100 examples or 1000 examples.  Every single day, we are inundated with reports like these.  The symptoms of the decay of our society are all around us.  We just have to be willing to look at them…

#1 It seems like many of the most horrific crimes these days are happening in middle America.  For example, a woman was recently hit over the head, raped and set on fire in a park in Wichita Kansas

Wichita police say a woman was sexually assaulted, hit on the head, and set on fire Monday night in Fairmount Park.

According to police, the woman was on the ground, almost in a crawl, barely moving, and naked.

The woman was helped by a neighbor – Johnnye Marshall woke up her boyfriend Deon McPherson when she heard somebody scream for help.

“What if that was my daughter?  I’d want somebody to go in and get her,” McPherson told The Wichita Eagle.  “Where there wasn’t blood, there was a burn.”

The flames from the fire were about 2 to 4 feet high.  McPherson stayed with the woman until firefighters arrived.

#2 I have repeatedly written about how the United States is the most obese of all the major industrialized nations.  Well, now we are using our extreme obesity to try to hide things that we have stolen

A 350-pound Wal-mart shopper was arrested yesterday after he was found sitting atop five stolen rib eye steaks in the seat of a motorized scooter that he was riding around the South Carolina store.

Rodney Fowler, 43, was spotted Tuesday afternoon placing the steaks in his scooter by a Walmart loss prevention officer, according to a police report.

“Suspect sat on the steaks and exited the store passing all points of sale, without attempting to pay for said merchandise,” cops noted.

The 5’ 5” Fowler was then confronted by the Walmart worker and escorted back into the store, where he was later arrested by police for shoplifting. “Due to his size, the suspect was cuffed using two pairs of cuffs,” investigators noted.

#3 What would you do if a police officer pulled you over for a traffic stop and exposed his private parts to you when he came up to your vehicle?  Well, this actually has been happening in New Jersey

A Newton police officer was arrested Monday on accusations that he unzipped his pants and exposed himself to young male drivers during “numerous” traffic stops.

Jason R. Miller, 37, of Hampton Township, a patrolman since 2001, turned himself in at the Sussex County Prosecutor’s Office and has been indefinitely suspended without pay pending the outcome of the criminal case, according to a statement issued by Sussex County Prosecutor Francis Koch and Newton Police Chief Michael Richards.

Miller was charged with two counts of official misconduct, one count of a pattern of official misconduct and one count of lewdness, the statement said.

Miller would expose his genitals to motorists “to satisfy his prurient interests” and then let them leave without issuing traffic summonses, according to a police complaint.

#4 If someone was planning to “accidentally” kill his wealthy wife, you would think that he would be smart enough not to put an “X” on the map where he planned to do it.  But that is apparently precisely what one man in Colorado foolishly did…

A suburban Denver man charged with pushing his wife to her death off a cliff in Colorado’s Rocky Mountain National Park could not explain to investigators why he had a park map with an “X” drawn at the spot where she fell.

Newly unsealed court documents say Harold Henthorn denied using the map during the deadly September 29, 2012, hike.

But he told friends that he scouted out the park’s steep and craggy terrain at least six times, trying to find the perfect place to take Toni to celebrate their 12th year of marriage.

It also turns out that his first wife died in a “freak accident” too.

Some coincidence, eh?

#5 It is one thing to kill someone.  It is another thing to hack the dead body up with a saw and cook it.  I don’t know what in the world has happened to the state of Florida, but a lot of really weird stuff has been going on down there lately…

Angela Stoldt told officials she took a hacksaw to her neighbor’s body last year and tried to cook away evidence of James Sheaffer.

One leg went in the oven. Other parts went into pots.

Stoldt’s house in Deltona smelled of burning flesh, but she assured her daughter it was just a rat broiling in the oven, according to details made public last week after a grand jury charged her with first-degree murder.

“Thursday is when I was cooking him,” Stoldt told investigators. “Friday is when I was dumping him.”

The 42-year-old Deltona woman is accused of killing Sheaffer, 36, a limousine driver, in April 2013.

#6 In recent years, it seems like there has been a constant stream of news stories about twisted men locking up women in their basements and forcing them to be sex slaves.  The latest example comes from Cincinnati

A man pleaded guilty Friday to locking multiple women in his Cincinnati home and forcing them into prostitution.

Christopher Hisle, 45, was arrested on April 8, 2014, in Louisville, Kentucky after authorities said he drove a young woman from Cincinnati to Louisville to engage in prostitution at a nearby Red Roof Inn.

An FBI investigation later revealed Hisle was involved in forcing and compelling the women to engage in commercial sex for at least two years. He held the women at his Avondale home at 908 Lexington Ave., documents state .

It is unknown how many women Hisle held at one time and what their ages were. Authorities said at least 12 women are victims of his human trafficking operation.

#7 Why would a grown woman want to have sex with a 10-year-old boy?  You would have to be incredibly sick to try to do such a thing, but that is reportedly what one 25-year-old babysitter in Connecticut is charged with doing.  In fact, she is accused of doing this multiple times

A babysitter has been accused of repeatedly having sex with her friend’s 10-year-old son while she was looking after him and his other siblings.

Marybeth Rataic is facing 10 felony charges after allegedly having sex three times with the boy at his home in Meriden, Connecticut.

Police say that in one instance, the 25-year-old from Willimantic, had sex with the boy while his siblings slept in the room after creeping into the child’s room, which he shared with his brothers.

She is also accused of having sex with the 10-year-old while his mother was giving birth in hospital.

#8  A minor scuffle between two girls at a California high school erupted into a melee when a 400 pound police officer slammed his fist into the face of one of the girls.   Other students began to swarm the officer, and at that point things got wildly out of control

A lunchtime fight at a Central California high school Wednesday ended with police swarming onto campus, closing the school and putting six students under arrest, authorities said.

However, Ernest Righetti High School students say the initial fight was relatively minor, and that it was a Sheriff’s deputy striking one of the girls involved in the brawl that sparked the mass violence on campus.

That shocking moment was filmed by a bystander and has since been posted online by the Santa Maria Times.

The video shows the officer trying to break up a fight between two girls, only to hit one of the young women and drag her away. Students watching the altercation appear outraged by the act, and start to swarm the officer.

#9 When I was growing up, it seemed like almost everyone watched the Cosby Show on Thursday night.  Bill Cosby was “America’s Dad”, and he was universally respected.  Well, it turns out that now he is being accused of rape by 15 different women.  How is it possible that such horrific crimes could be covered up for so long, and what does that say about our society?  The following comes from Time Magazine

In Cosby’s story we find accusations of women being silenced for decades by threats, lawyers, fear and a generally defensive public, who until now were uninterested in being awakened from sweet dreams of their TV father.

The NPR audio interview released last week showcases Cosby’s clearly pre-determined response to the softest, almost nervous questions about the rape allegations: deafening silence.

This should not be viewed as the mature response of a well respected, integrity filled man (and in the case of his wife, a beloved, regal woman) attempting to maintain dignity and stay above the fray. It should be seen as what it is: A power move by a someone so arrogant that he thinks he shouldn’t even be asked about the fact that 15 women are accusing him of a horrific crime.

#10 As I have written about previously, the violence that we have seen in Ferguson, Missouri this year is a perfect example of how the streets of America can descend into chaos.  And now the upcoming grand jury decision threatens to rekindle that violence.

Instead of sober deliberation about this case and sincere attempts at peaceful reconciliation, both sides are preparing for mass civil unrest.  If the grand jury reaches “the wrong decision” we could see even more rioting, looting, violence and police brutality than we saw the first time around.

And this time, it may not be limited to Ferguson.  As the Daily Sheeple has pointed out, protest organizers have put up a Tumblr page for something called “The Ferguson National Response Network“.  According to that page,  “planned responses” are being organized in 82 cities throughout the United States.  In addition, protest organizers have released a list of 19 “Proposed Rules of Engagement” for confrontations with law enforcement authorities.  Needless to say, all of this sounds quite ominous.  The following are the 82 cities where “planned responses” are currently being organized…

Albany, NY
Albuquerque, NM
Atlanta, GA
Austin, TX
Baltimore, MD
Bangor, ME
Beavercreek, OH
Blacksburg, VA
Boston, MA
Buffalo, NY
Carbondale, IL
Chapel Hill, NC
Chattanooga, TN
Chicago, IL
Cleveland, OH
Columbia, MO
Columbus, OH
Dallas, TX
Denver, CO
Des Moines, IA
Detroit, MI
Durham, NC
Ferguson, MO
Gainesville, FL
Grand Rapids, MI
Greensboro, NC
Greenville, NC
Grinnell, IA
Houston, TX
Indianapolis, IN
Iowa City, IA
Jackson, MI
Kansas City, MO
Kennesaw, GA
Lawrence, KS
Lexington, KY
Longview, TX
Los Angeles, CA
Louisville, KY
Meadville, PA
Memphis, TN
Milwaukee, WI
Minneapolis, MN
Mobile, AL
Monpelier, VT
Monroeville, OH
Nashville, TN
New London, CT
New Orleans, LA
Newark, NJ
Northampton, MA
NYC, NY
Oak Ridge, TN
Oakland, CA
Olympia, WA
Oshkosh, WI
Phoenix, AZ
Philadelphia, PA
Pittsburgh, PA
Portland, OR
Providence, RI
Raleigh, NC
Rochester, NY
Rocky Mount, NC
San Diego, CA
Santa Barbara, CA
Seattle, WA
South Hadley, MA
Spring Valley, NY
Springfield, MA
St. Paul, MN
St. Petersburg, FL
Stroudsberg, PA
Tallahassee, FL
Tampa, FL
Toledo, OH
Toronto, Canada
Tucson, AZ
Washington, D.C.
West Hartford, CT
West Palm Beach, FL
Williamsburg, VA
Worcester, MA

Police in Ferguson are warning citizens that they better buy guns because they “will not be able to protect you or your family“.  And
CNN is reporting that gun sales in Ferguson are indeed surging.

Hopefully this grand jury decision will come and go and peace will prevail in Ferguson and elsewhere.

But without a doubt, the thin veneer of civilization that we all take for granted on a daily basis is disappearing.

The foundations of our society are steadily rotting and decaying, and our underlying problems are getting worse with each passing day.

How long will our nation be able to remain stable if this continues?

National Economic Suicide: The U.S. Trade Deficit With China Just Hit A New Record High

Economics - Public DomainDid you know that we buy nearly five times as much stuff from the Chinese as they buy from us?  According to government numbers that were just released, we imported 44.9 billion dollars worth of stuff from China in September but we only exported 9.3 billion dollars worth of stuff to them.  And this is not happening because our economy is so much larger than China’s.  In fact, the IMF says that China now has the largest economy on the entire planet on a purchasing power basis.  No, the truth is that this is happening because our economy is broken.  Every month, we consume far more wealth than we produce.  Because the outflow of money is far greater than the inflow, we have to go to major exporting nations and beg them to lend our dollars back to us so that we can pay our bills.  Meanwhile, the quality of the jobs in this country continues to go down and our formerly great manufacturing cities are rotting and decaying.  We are committing national economic suicide, and most Americans don’t seem to care.

Barack Obama is constantly hyping a “manufacturing resurgence” in America, but the numbers don’t lie.  In September, our manufactured goods trade deficit with the rest of the world soared to a new all-time record high of 69.16 billion dollars.  For the year, we are nearly 12 percent ahead of last year’s record pace.

When we buy far more things than we sell, we get poorer as a nation.

How do you think that we ever got into a position of owing China more than a trillion dollars?

We just kept buying far more from them than they bought from us, and their money just kept piling up.  Now it has gotten to the point where our politicians literally beg them to lend our money back to us.  They are the head and we are the tail.

And we did this to ourselves.

Once upon a time, the United States was the greatest manufacturing powerhouse that the world had ever seen.  But now China manufactures more stuff than us and China also accounts for more total global trade (imports plus exports) than us.

This should never have happened.  Several decades ago, the Chinese economy was a complete joke.  But decades of incredibly foolish decisions by our politicians have resulted in the loss of tens of thousands of manufacturing facilities, millions of good paying jobs and the destruction of vast stretches of our economic infrastructure.

During the same time frame, gleaming new manufacturing facilities have gone up all over China.

China is literally wiping the floor with us on the global economic stage and most Americans don’t even understand what is happening.  Here is more on the trade deficit numbers that were just released from the RealityChek Blog

>The China goods deficit of $35.56 billion blew past the old mark of $30.86 billion, set in July, by 15.23 percent. The new deficit also represented a 17.77 percent increase over the August level of $30.20 billion.

>U.S. goods exports to the still strongly growing Chinese economy fell on month in September from $9.63 billion to $9.33 billion (3.12 percent). U.S. merchandise imports from China jumped by 12.70 percent over August levels, from $39.83 billion to $44.89 billion – itself an all-time high.

>The U.S. goods deficit with China this year is now so far running 5.62 percent ahead of 2014’s record pace.

>The longstanding U.S. manufacturing trade shortfall shot up from $59.10 billion in August to $69.16 billion in September. This 17.02 percent jump resulted in a beat of the old record of $67.33 billion, also set in July, by 2.72 percent.

And it isn’t just cheap plastic trinkets that China is selling to us.

In fact, their number one export to us is computer equipment.

Meanwhile, one of our main exports to them is “scrap and trash”.

For much more on how China is absolutely dominating us, please see my previous article entitled “Not Just The Largest Economy – Here Are 26 Other Ways China Has Surpassed America“.

Sadly, there are a couple of factors that will probably make our trade deficit with the rest of the world even worse in the months ahead.

Number one, the currency war that I wrote about earlier this week will probably push the U.S. dollar even higher against the yen and the euro.

You might think that a rising dollar sounds good, but the truth is that it will make our exports less competitive in the global marketplace.

Nations such as Japan devalue their currencies so that they can sell more stuff to us.  But that hurts our own domestic industries.  And when our own domestic industries suffer, that means less jobs for American workers.

Secondly, the collapse in the price of oil could have very serious implications for the shale oil industry.

In recent years, the shale oil revolution has caused local economic booms in states such as Texas and North Dakota.  But shale oil tends to be quite expensive to extract.  As I write this, the price of U.S. oil has fallen to about 77 dollars a barrel.  If it stays at that level or keeps going down, shale oil production in the United States will slow down dramatically.

In other words, a lot of these shale oil “boom towns” could go “bust” very rapidly.

If that happens, the amount of oil that we import will rise substantially and that will add to our overall trade deficit.

But of course the biggest factor fueling our trade deficit is that the vast majority of Americans simply do not care that we are committing national economic suicide.

When we buy products made in America, we support American businesses and American workers.

When we buy products made overseas, we hurt American businesses, we kill American jobs and we make ourselves poorer as a nation.

Of course there is nothing wrong with buying a foreign-made product once in a while.  But this holiday season, most people will fill their shopping carts to the brim with foreign-made goods without even thinking twice about it.

The next time that you go into a huge retail establishment such as Wal-Mart, start picking up products and look to see where they were made.

I think that you will be shocked at how few of them are actually made inside the United States.

When are Americans going to get sick and tired of making China wealthier at our expense?

We are willing participants in the destruction of the U.S. economy, and yet only a small minority of people seem to care.

What is it going to take for people to finally wake up?

12 Charts That Show The Permanent Damage That Has Been Done To The U.S. Economy

12 - Public DomainMost people that discuss the “economic collapse” focus on what is coming in the future.  And without a doubt, we are on the verge of some incredibly hard times.  But what often gets neglected is the immense permanent damage that has been done to the U.S. economy by the long-term economic collapse that we are already experiencing.  In this article I am going to share with you 12 economic charts that show that we are in much, much worse shape than we were five or ten years ago.  The long-term problems that are eating away at the foundations of our economy like cancer have not been fixed.  In fact, many of them continue to get even worse year after year.  But because unprecedented levels of government debt and reckless money printing by the Federal Reserve have bought us a very short window of relative stability, most Americans don’t seem too concerned about our long-term problems.  They seem to have faith that our “leaders” will be able to find a way to muddle through whatever challenges are ahead.  Hopefully this article will be a wake up call.  The last major wave of the economic collapse did a colossal amount of damage to our economic foundations, and now the next major wave of the economic collapse is rapidly approaching.

#1 Employment

The mainstream media is constantly telling us about the “employment recovery” that is happening in the United States, but the truth is that it is just an illusion.  As the chart below demonstrates, just prior to the last recession about 63 percent of all working age Americans had a job.  During the last wave of the economic collapse, that number dropped to below 59 percent and stayed there for a very long time.  In the past few months we have finally seen the employment-population ratio tick back up to 59 percent, but we are still far, far below where we used to be.  To call the tiny little bump at the end of this chart a “recovery” is really an insult to our intelligence…

Employment Population Ratio 2014

#2 The Labor Force Participation Rate

The percentage of Americans that are either employed or currently looking for a job started to fall during the last recession and it has not stopped falling since then.  The labor force participation rate has now fallen to a 36 year low, and this is a sign of a very, very sick economy…

Labor Force Participation Rate 2014

#3 The Inactivity Rate For Men In Their Prime Years

Some blame the decline in the labor force participation rate on the aging of our population.  But it isn’t just elderly people that are dropping out of the labor force.  In fact, the inactivity rate for men in their prime working years (25 to 54) continues to rise and is now at the highest level that has ever been recorded…

Inactivity Rate Men 2014

#4 Manufacturing Employees

Once upon a time in America, anyone that was reliable and willing to work hard could easily find a manufacturing job somewhere.  But we have stood by and allowed millions upon millions of good paying manufacturing jobs to be shipped out of the country, and now many of our formerly great manufacturing cities have been transformed into ghost towns.  Over the past few years, there has been a slight “recovery”, but we are still well below where we were at just previous to the last recession…

Manufacturing Employees 2014

#5 Our Current Account Balance

As a nation, we buy far more from the rest of the world than they buy from us.  In other words, we perpetually consume far more wealth than we produce.  This is a recipe for national economic suicide.  Our current account balance soared to obscene levels just prior to the last recession, and now we have almost gotten back to those levels…

Current Account Balance 2014

#6 Existing Home Sales

Our economy has never fully recovered from the housing crash of 2007-2008.  As you can see from the chart below, the number of existing home sales is still far below the level that we hit back in 2006.  At this point we are just getting back to the level we were at in 2000, but our population today is far larger than it was back then…

Existing Home Sales 2014

#7 New Home Sales

Things are even more dramatic when you look at new home sales.  This is an industry that have been absolutely emasculated.  The number of new home sales in the United States is just a little more than half of what it was back in 2000, and it isn’t even worth comparing to what we experienced during the peak of 2006.

New Home Sales 2014

#8 The Monetary Base

In a desperate attempt to get the economy going again, the Federal Reserve has been wildly printing money.  It has been so reckless that it is hard to put it into words.  When I look at this chart, the phrase “Weimar Republic” comes to mind…

Monetary Base 2014

#9 Food Inflation

Thankfully, much of the money that the Federal Reserve has been injecting into the system has not made it into the real economy.  But enough of it has gotten into the system to force food prices significantly higher.  For example, my wife went to the store today and paid just a shade under 10 bucks for just four pieces of chicken.  And as you can see from the chart below, food prices have been steadily going up in America for a very long time…

Food Inflation 2014

#10 The Velocity Of Money

One of the reasons why we have not seen even more inflation is because the velocity of money is extraordinarily low.  In general, when an economy is healthy money tends to flow through the system rapidly.  People are buying and selling and money changes hands frequently.  But when an economy is sick, money tends to stagnate.  And that is exactly what is happening in the United States right now.  In fact, at this point the velocity of the M2 money stock has dropped to the lowest level ever recorded…

Velocity Of Money 2014

#11 The National Debt

As our economic fundamentals have deteriorated, our politicians have attempted to prop up our standard of living by borrowing from the future.  The U.S. national debt is on pace to approximately double during the Obama years, and it increased by more than a trillion dollars in fiscal year 2014 alone.  Despite assurances that “the deficit is under control”, the federal government borrows about a trillion dollars a year to fund new spending in addition to borrowing about 7 trillion dollars to pay off old debt that is coming due.  What we are doing to future generations of Americans is absolutely criminal, and it is just a matter of time before this Ponzi scheme totally collapses…

National Debt 2014

#12 Total Debt

Of course it is not just the federal government that is gorging on debt.  When you add up all forms of debt in our society (government, business, consumer, etc.) it comes to a grand total of more than 57 trillion dollars.  This total has more than doubled since the year 2000…

Total Debt 2014

If you know anyone that believes that we are in good economic shape, just show them these charts.

The numbers do not lie.  Our economy is sick and it is getting sicker by the day.

And of course the next major financial crisis could strike at any time.  U.S. stocks just experienced their worst week in three years, and if cases of Ebola start popping up around the country the fear that would cause could collapse our economy all by itself.

The debt-fueled prosperity that we are enjoying today is not real.  We are living on the fumes of our past, and every single day our long-term problems get even worse.

Anyone with half a brain should be able to see what is coming.

Sadly, most Americans will continue to deny the truth until it is far too late.

The Dow And S&P 500 Soar To Irrational Heights – Meanwhile The Ultra-Wealthy Rush To Buy Gold Bars

Gold Bars - Public DomainDid you know that the number of gold bars being purchased by ultra-wealthy individuals has increased by 243 percent so far this year?  If stocks are just going to keep soaring, why are they doing this?  On Thursday, the Dow Jones industrial average and the S&P 500 both closed at record highs once again.  It is a party that never seems to end, and there are a lot of really happy people on Wall Street these days.  But those that are discerning realize that we witnessed the exact same kind of bubble behavior during the dotcom boom and during the run up to the last financial crash in 2007.  The irrational exuberance that we are witnessing right now cannot go on forever.  And the bigger that this bubble gets, the more painful that it is going to be when it finally bursts.  Those that get out at the peaks of the market are the ones that usually end up making lots of money.  Those that ride stocks all the way up and all the way down are the ones that usually end up getting totally wiped out.

To get an idea of how irrational the markets have become, all one has to do is to look at Twitter.

Would you value “a horribly mismanaged company” that is less than 10 years old and that has never made a yearly profit at 31 billion dollars?

Well, that is precisely how much the financial markets say that Twitter is worth at this moment.

Even though Twitter will probably never be much more popular than it is right now, it continues to bleed money profusely.  On a GAAP (generally accepted accounting principles) basis, Twitter lost an astounding 145 million dollars during the second quarter of 2014…

Twitter’s GAAP net loss totaled $145 million, up from $42 million a year ago. On a GAAP basis, Twitter lost $0.24 per share. Investors, however, were not expecting Twitter to be profitable by GAAP measurements, so the loss isn’t too much of a drag.

Why would anyone want to invest in such a money pit?

Here are some more disturbing financial numbers about Twitter from David Stockman

Currently, Twitter (TWTR) is valued at $31 billion.That’s 18X revenue, but the catch is that the revenue in question is it’s lifetime bookings over the 18 quarters since Q1 2010.

When it comes to profits, the numbers are not nearly so promising!  For the LTM period ending in June, TWTR booked $974 million of revenue and $1.7 billion of operating expense. That why “NM” shows up in its LTM ratio of enterprise value to EBITDA. It turns out that its EBITDA was -$704 million. In fact, its R&D expense alone was 83% of revenues.

Of course the truth is that Twitter should be able to make money.

And it probably would be making money if it was being managed better.

The following is what Silicon Valley venture capitalist Peter Thiel said about Twitter on CNBC the other day…

“It’s a horribly mismanaged company — probably a lot of pot-smoking going on there.”

But because Twitter is a “hot tech stock” investors are literally throwing money at it.

And there are many other tech companies that have similar stories.  Off the top of my head, Snapchat, LinkedIn, Yelp and Pinterest come to mind.

Fueled by the quantitative easing policies of the Federal Reserve, U.S. stocks have enjoyed an unprecedented joy ride.

However, as David Stockman recently told Yahoo Finance, the subsequent crash is likely to be enormously painful…

“I think what the Fed is doing is so unprecedented, what is happening in the markets is so unnatural,” he said. “This is dangerous, combustible stuff, and I don’t know when the explosion occurs – when the collapse suddenly is upon us – but when it happens, people will be happy that they got out of the way if they did.”

The behavior that we are observing in the stock market simply does not reflect what is happening in the economy overall whatsoever.

In many ways, U.S. economic fundamentals just continue to get even worse.  Small business ownership in the United States is at an all-time low, the labor force participation rate is the lowest that it has been in 36 years, and the U.S. national debt has grown by more than a trillion dollars over the past 12 months.

But on Wall Street right now, there is very little fear that the party is going to end any time soon.

The following is how Seth Klarman recently described the market complacency that he is seeing at the moment…

To put it a bit differently, writer and investor John Mauldin is right when he says that there is “a bubble in complacency.” Fear has effectively been banished. The members of the Fed know it. Stock traders who chase the market to new highs almost daily know it. Implied volatilities (and realized volatilities) are historically low (the VIX Index recently hit a seven-year low), and falling. The Bank for International Settlements recently cautioned that financial markets are euphoric and in the grip of an aggressive search for yield. The S&P has gone over 1,000 days without a 10% decline, according to Birinyi Associates. Dutch and French 10-year government bond yields are at 500 and 250 year lows, respectively; Spain, 225 years. Spanish debt yields were recently inside of U.S. levels.

But as Klarman also observed, just because “investors have been seduced into feeling good” does not mean that this current bubble is any different from what we witnessed back in 2007…

It’s not hard to reach the conclusion that so many investors feel good not because things are good but because investors have been seduced into feeling good—otherwise known as “the wealth effect.” We really are far along in re-creating the markets of 2007, which felt great but were deeply unstable when shocks started to pile up. Even Janet Yellen sees “pockets of increasing risk-taking” in the markets, yet she has made clear that she won’t raise rates to fight incipient bubbles. For all of our sakes, we really wish she would.

Meanwhile, the ultra-wealthy are making moves to protect themselves from the inevitable chaos that is coming.

For example, the Telegraph recently reported that sales of gold bars to wealthy customers are up 243 percent so far in 2014…

The super-rich are looking to protect their wealth through buying record numbers of “Italian job” style gold bars, according to bullion experts.

The number of 12.5kg gold bars being bought by wealthy customers has increased 243 percent so far this year, when compared to the same period last year, said Rob Halliday-Stein founder of BullionByPost.

“These gold bars are usually stored in the vaults of central banks and are the same ones you see in the film ‘The Italian Job’,” added David Cousins, bullion executive from London based ATS Bullion.

Do they know something that we don’t?

The ultra-wealthy are able to stay ultra-wealthy for a reason.

They are usually a step or two ahead of most of the rest of us.

And any rational person should be able to see that this financial bubble is going to end very, very badly.

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