Money

Who Is Going To Buy Our Debt If This War Causes China, Russia And The Rest Of The World To Turn On Us?

Can the U.S. really afford to greatly anger the rest of the world when they are the ones that are paying our bills? What is going to happen if China, Russia and many other large nations stop buying our debt and start rapidly dumping U.S. debt that they already own? If the United States is not very careful, it is going to pay a tremendous economic price for taking military action in Syria. At this point, survey after survey has shown that the American people are overwhelmingly against an attack on Syria, people around the globe are overwhelmingly against an attack on Syria, and it looks like the U.S. Congress is even going to reject it. But Barack Obama is not backing down. In fact, ABC News is reporting that plans are now being made for a “significantly larger” strike on Syria than most experts had expected.

If Obama insists on going forward with this, it will be the greatest foreign policy disaster in modern American history.

Right now, both Russia and China are strongly warning Obama not to attack Syria. And Russia is not just warning Obama with words. According to Bloomberg, Russia has sent quite a collection of warships into the region…

Russia is sending three more ships to the eastern Mediterranean to bolster its fleet there as a U.S. Senate panel will consider President Barack Obama’s request for authority to conduct a military strike on Syria.

Russia is sending two destroyers, including the Nastoichivy, the flagship of the Baltic Fleet, and the Moskva missile cruiser to the region, Interfax reported today, citing an unidentified Navy official. That follows last week’s dispatch of a reconnaissance ship to the eastern Mediterranean, four days after the deployment of an anti-submarine ship and a missile cruiser to the area, which were reported by Interfax. Syria hosts Russia’s only military facility outside the former Soviet Union, at the port of Tartus.

China is also letting it be known that they absolutely do not want Obama to hit Syria. On Friday, China issued a warning about what military conflict in the Middle East could do to “the global economy”…

“Military action would have a negative impact on the global economy, especially on the oil price – it will cause a hike in the oil price.”

And according to Debka, China has also deployed “a number of warships” to the region…

Western naval sources reported Friday that a Chinese landing craft, the Jinggangshan, with a 1,000-strong marine battalion had reached the Red Sea en route for the Mediterranean off Syria. According to DEBKAfile, Beijing has already deployed a number of warships opposite Syria in secret. If the latest report is confirmed, this will be the largest Chinese deployment in the Middle East in its naval history.

If the U.S. attacks Syria, Russia and China probably will not take immediate military action against us.

But they could choose to hit us where it really hurts.

According to the U.S. Treasury, foreigners now hold approximately 5.6 trillion dollars of our debt. Over the past couple of decades, the proportion of our debt owned by foreigners has grown tremendously, and today we very heavily depend on nations such as China to buy our debt.

At this point, China owns approximately 1.275 trillion dollars of our debt, and Russia owns approximately 138 billion dollars of our debt.

So what would happen if China, Russia and other foreign buyers of our debt all of a sudden quit purchasing our debt and instead started dumping the debt that they already own back on to the market?

In a word, it would be disastrous.

As I have written about previously, the U.S. government will borrow about 4 trillion dollars this year.

Close to a trillion of that is new borrowing, and about three trillion of that is rolling over existing debt.

If China and other big foreign lenders quit buying our debt and started dumping what they already hold, that would send yields on U.S. Treasuries absolutely soaring.

And we have already seen bond yields rise dramatically in recent weeks. In fact, on Thursday the yield on 10 year U.S. Treasuries briefly broke the 3 percent barrier.

So what is going to happen if the yield on 10 year U.S. Treasuries continues to go up? The following are a few consequences of rising bond yields that I have discussed in previous articles…

-It will cost the federal government more to borrow money.

-It will cost state and local governments more to borrow money.

-As bond yields go up, bond values go down. In the end, rising bond yields could end up costing bond investors trillions of dollars.

-Rising bond yields will cause mortgage rates to skyrocket. In fact, we are already starting to see this happen. This week the average rate on a 30 year mortgage hit 4.57 percent.

-Higher interest rates will mean a slowdown in economic activity at a time when we definitely cannot afford it.

-As economic activity slows down, that will be very bad for stocks. When the next great stock market crash happens (and it is coming), equity investors could end up losing trillions of dollars of wealth.

-Of course the biggest threat of all is the 441 trillion dollar interest rate derivatives time bomb that is sitting out there. Rapidly rising interest rates could potentially bring down several of our “too big to fail” banks in rapid succession and throw us into the greatest financial crisis the nation has ever seen.

Are you starting to get the picture?

And the 3 percent mark is just the beginning. Brent Schutte, a market strategist for BMO Private Bank, told CNBC that he expects the yield on 10 year U.S. Treasuries to eventually go up to 6 or 7 percent…

“4 percent (on 10-year Treasurys) somewhere around the end of the year to early next year would be a good intermediate-term level. And if you look over the longer term, I don’t think that 6 or 7 percent is out of the question.”

If that happens, we will experience a full blown financial meltdown.

Of course it would greatly help if Obama would back down and not attack Syria. As Vladimir Putin noted at the G20 summit, large nations such as India, Brazil, South Africa and Indonesia are all strongly against the U.S. taking military action…

In reply to the question what other country in the world may theoretically be subjected to aggression similar to that Syria is facing, Putin said, “I do not want to think that any other country will be subjected to any external aggression.”

A military action against Syria will have a highly deplorable impact on international security at large, Putin emphasized.

He said he was surprised to see that ever more participants in the summit, including the leader of India, Brazil, the South African Republic, and Indonesia were speaking vehemently against a possible military operation in Syria.

Putin cited the words of the South African President, Jacob Zuma, who said many countries were feeling unprotected against such actions undertaken by stronger countries.

“Given the conditions as they, how would you convince the North Koreans, for example, to give up their nuclear program,” he said. “Just tell them to put everything into storage today and they’ll be pulled to bits tomorrow.”

He underlined the presence of only one method for maintaining stability – “an unconditional observance of international law norms.”

Can we really afford to have most of the international community turn on us and quit buying our debt?

Of course not.

Sadly, as I noted the other day, Obama appears to be locked into doing the bidding of Arab countries such as Saudi Arabia and Qatar.

In fact, as the Washington Post reported the other day, Secretary of State John Kerry has even admitted that they are even willing to pay all of the costs of a U.S. military campaign that would overthrow Assad…

Secretary of State John Kerry said at Wednesday’s hearing that Arab counties have offered to pay for the entirety of unseating President Bashar al-Assad if the United States took the lead militarily.

“With respect to Arab countries offering to bear costs and to assess, the answer is profoundly yes,” Kerry said. “They have. That offer is on the table.”

Asked by Rep. Ileana Ros-Lehtinen (R-Fla.) about how much those countries would contribute, Kerry said they have offered to pay for all of a full invasion.

“In fact, some of them have said that if the United States is prepared to go do the whole thing the way we’ve done it previously in other places, they’ll carry that cost,” Kerry said. “That’s how dedicated they are at this. That’s not in the cards, and nobody’s talking about it, but they’re talking in serious ways about getting this done.”

Why aren’t we hearing more about this in the news?

Fortunately, despite the relentless propaganda coming from the mainstream media, a lot of members of Congress are choosing to take a stand against this war. For example, U.S. Representative Tom Marino recently shared the following about why he is voting against military action in Syria…

Secretary Hagel could not tell lawmakers who the U.S. could trust among the Syrian opposition, stating “that’s not my business to trust.” Like many Americans, I believe it is our duty as decision makers to be informed and confident when making choices – especially in those choices that could result in sending U.S. troops or money abroad. It is no wonder Secretary Hagel isn’t in the business to trust when more players are added daily to the growing list of ‘Syrian opposition’—many of them jihadist, terrorists, known Al Qaeda affiliates, members of the Muslim Brotherhood and enemies of the U.S. and our allies. To simplify, the Secretary of Defense was unable to tell us, after nearly three years of the Syrian Civil War, who the good guys are or if there are any at all.

And Marino is very right. There are no “good guys” in Syria. The “rebels” are murderous jihadist psychotics that would be even worse than Assad if they took power.

For much more on what the mainstream media is not telling you about the war in Syria, check out a stunning video report from investigative reporter Ben Swann that you can find right here.

The picture above comes from the official Facebook page of one of the “rebel groups” in Syria.

I am sure that you do not need me to point out that the White House is burning in the background of the picture.

These are the people that Obama wants to help?

According to NBC News, the rebels are also displaying images of the black flag of al-Qaeda on Facebook too…

The image is one of eight photos posted on the official Facebook page of the “Al-Aqsa Islamic Brigades,” a small armed Sunni rebel faction fighting with the Free Syrian Army, the main umbrella military organization of the opposition forces. Two other photos posted on the group’s page feature the widely recognized black flag of the al Qaeda in Iraq terrorist group, which operates freely in Syria.

Let’s assume for a moment that Obama is successful in Syria and that Assad is overthrown.

That would hand Syria over to al-Qaeda.

Once in power, the “rebels” would slaughter or force the conversion of millions of Christians, Jews and non-Sunni Muslims that have been living peacefully in Syria for centuries.

To those that would support this war, I would ask you this question…

Is that what you want?

Do you want the blood of millions of Christians, Jews and non-Sunni Muslims on your hands?

If you are a Christian that is supporting Obama on this, I would ask you to consider an excerpt from a letter from Christian nuns in Azeir, Syria that I have posted below…

We look at the people around us, our day workers who are all here as if suspended, stunned: “They’ve decided to attack us.” Today we went to Tartous…we felt the anger, the helplessness, the inability to formulate a sense to all this: the people trying their best to work and to live normally. You see the farmers watering their land, parents buying notebooks for the schools that are about to begin, unknowing children asking for a toy or an ice cream…you see the poor, so many of them, trying to scrape together a few coins. The streets are full of the “inner” refugees of Syria, who have come from all over to the only area left that is still relatively liveable…. You see the beauty of these hills, the smile on people’s faces, the good-natured gaze of a boy who is about to join the army and gives us the two or three peanuts he has in his pocket as a token of “togetherness”…. And then you remember that they have decided to bomb us tomorrow. … Just like that. Because “it’s time to do something,” as it is worded in the statements of the important men, who will be sipping their tea tomorrow as they watch TV to see how effective their humanitarian intervention will be….

You can read the rest of that letter right here.

Also consider the following shocking video of Senator John McCain being confronted by a very emotional woman that says that her 18-year-old cousin in Syria was just killed by rebels loyal to al-Qaeda…

Any American that supports this war is aiding al-Qaeda.

Any American that supports this war is choosing to ally themselves with radical jihadist Christian killers that want to conquer the entire Middle East in the name of Sunni Islam.

If Congress votes to approve this war, then we should do what one site has suggested and send those that vote yes to Syria.

They don’t even have to fight. We’ll just drop them off in the middle of the “rebel forces” and entrust them into the gentle hands of the al-Nusra Front.

But of course they would never go. The ones that will be endangered will be the precious sons and daughters of other Americans.

This is not a war that has a good outcome for America. Conservative voices and liberal voices all over the country are joining together to speak out against this war.

Hopefully Barack Obama will listen and cooler heads will prevail. If not, things could spin wildly out of control very rapidly.

If You Could Make More Money By Going On Welfare Instead Of Working, Would You Do It?

If you could stay home and relax all day and actually make more money than you do at your current job, would you do it? That sounds crazy, but this is actually a very real dilemma for millions upon millions of Americans. According to a shocking new study that was just released by the Cato Institute, people on welfare are actually better off than minimum wage workers in 35 U.S. states. And in 13 states, those on welfare actually do better than those making $15 an hour. So why bother? It is very difficult to find a job in this economy, especially a good one. As I mentioned yesterday, seven out of every eight jobs that have been “created” since Barack Obama has been president have been part-time jobs. Why slave away flipping burgers, stocking shelves for some retail giant or working for some temp agency when you could just sit home and make more money collecting government checks? Yes, there is definitely a minority of Americans that hate the idea of becoming dependent on the government and would never want to take advantage of the system like that, but that minority seems to be shrinking. At this point, about half the country gets money from the government each month anyway, so why not collect “your share”? If someone is offering to give you something for free, it is only human nature to be at least a little bit tempted. And right now the federal government is making it extremely tempting to give up on work entirely and become a permanent welfare check collector.

Before people start getting really upset, let me once again reiterate that most of the people that are receiving financial assistance from the government actually need it. Not everyone is abusing the system, and not everyone is using their food stamps to buy lobster.

Poverty in the United States has absolutely exploded in recent years, and our economy simply does not produce enough jobs for everyone anymore. We certainly do not want those without jobs to go hungry or to be sleeping in the streets.

But what we have today is a situation where there is a huge incentive in many states to actually give up on work entirely and become a dependent of the state instead.

According to the Cato Institute, someone in the state of New York that goes on welfare can bring home more in money and benefits than an entry-level school teacher makes in an entire year…

The federal government funds 126 separate programs targeted towards low-income people, 72 of which provide either cash or in-kind benefits to individuals. (The rest fund community-wide programs for low-income neighborhoods, with no direct benefits to individuals.) State and local governments operate more welfare programs. Of course, no individual or family gets benefits from all 72 programs, but many do get aid from a number of them at any point in time.

Today, the Cato institute is releasing a new study looking at the state-by-state value of welfare for a mother with two children. In the Empire State, a family receiving Temporary Assistance for Needy Families, Medicaid, food stamps, WIC, public housing, utility assistance and free commodities (like milk and cheese) would have a package of benefits worth $38,004, the seventh-highest in the nation.

While that might not sound overly generous, remember that welfare benefits aren’t taxed, while wages are. So someone in New York would have to earn more than $21 per hour to be better off than they would be on welfare. That’s more than the average statewide entry-level salary for a teacher.

If you are going to live off of welfare, the key is to pick the right state. Not all states offer the same level of benefits.

In some states, you have to make far more than the minimum wage before it pays not to be on welfare. In fact, there are 12 different states where you actually have to make more than $15 an hour before you start doing better than welfare recipients…

Nationwide, our study found that the wage-equivalent value of benefits for a mother and two children ranged from a high of $60,590 in Hawaii to a low of $11,150 in Idaho. In 33 states and the District of Columbia, welfare pays more than an $8-an-hour job. In 12 states and DC, the welfare package is more generous than a $15-an-hour job.

Of course not all welfare recipients take advantage of all of the programs that they are eligible for. But if you do know how to work the system, you can live very comfortably at the expense of the government in many states.

So what is the solution?

Well, it would be great if we had enough jobs for everyone, but that is definitely not the case. In fact, the U.S. economy is probably going to continue to lose good jobs in the years ahead if current trends continue.

Unfortunately, that also means that poverty and dependence on the government are likely going to continue to grow, especially when the next major wave of the economic collapse strikes.

If you want to get an idea of where we are headed, just look at Detroit. Once upon a time, Detroit actually had the highest per capita income in the entire country. But now it is a rotting, festering, bankrupt hellhole where tens of thousands of stray dogs freely roam the streets…

As many as 50,000 stray dogs roam the streets and vacant homes of bankrupt Detroit, replacing residents, menacing humans who remain and overwhelming the city’s ability to find them homes or peaceful deaths.

One Humane Society official that recently visited the city to help deal with the dog crisis described what she witnessed as “almost post-apocalyptic“…

The number of strays signals a humanitarian crisis, said Amanda Arrington of the Humane Society of the United States, based in Washington. She heads a program that donated $50,000 each to organizations in Detroit and nine other U.S cities to get pets vaccinated, fed, spayed and neutered.

Arrington said when she visited Detroit in October, “It was almost post-apocalyptic, where there are no businesses, nothing except people in houses and dogs running around.”

“The suffering of animals goes hand in hand with the suffering of people.”

But don’t laugh at Detroit.

The rest of the country is going down the exact same path.

Just recently, Charles Nenner told Newsmax TV that another recession is rapidly approaching that that it is “going to be bad”…

Technical analyst Charles Nenner didn’t mince words when asked about the United States facing another recession.

“It’s going to be bad,” Nenner told Newsmax TV in an exclusive interview.

And it looks like the folks in Washington are getting very concerned about all of the economic warnings signs that we have been seeing as well.

Just this week, Barack Obama “held a special, closed door meeting with the heads of the U.S. government’s financial, monetary and oversight agencies. It included members of the Federal Reserve, the FDIC, the CFTC, the SEC, and the Federal Housing Finance Agency.”

So why did Obama gather all of the top financial officials for a secret closed door meeting?

John Embry told King World News that he thinks it is because the administration is deeply alarmed about what is happening in the financial markets…

I firmly believe the reason the President has called this meeting today is because if interest rates in the U.S. continue to rise, it could really unleash something disastrous. We are talking here about the possibility of a meltdown. It’s interesting that the President would call in that many big hitters, the head of every significant financial agency in the United States, as well as the Fed and the Comptroller of the Currency, etc — this is a very large meeting today.

I’ve always believed that the global financial crisis of 2008 was just the opener. We have now bought the better part of 5 years now through unlimited money creation. But as we head into this next massive, and what I believe will be a larger round of destabilization, I want KWN readers around the world to understand that the central planners don’t have the same weapons to fight this global financial crisis. This is why I believe they are desperately attempting right now, today in this meeting, to stave off this crisis.

And the truth is that our “leaders” in Washington have good reason to be concerned. If interest rates keep going up rapidly we are going to be in for a world of hurt.

Sadly, most Americans seem to have already forgotten how painful 2008 was, and that was only a preview of coming attractions.

The worst economic crisis in the history of the United States is on the horizon, and most people are going to be absolutely blindsided by it.

I hope that you are getting prepared while you still can.

40 Percent Of U.S. Workers Make Less Than What A Full-Time Minimum Wage Worker Made In 1968

Are American workers paid enough? That is a topic that is endlessly debated all across this great land of ours. Unfortunately, what pretty much everyone can agree on is that American workers are not making as much as they used to after you account for inflation. Back in 1968, the minimum wage in the United States was $1.60 an hour. That sounds very small, but after you account for inflation a very different picture emerges. Using the inflation calculator that the Bureau of Labor Statistics provides, $1.60 in 1968 is equivalent to $10.74 today. And of course the official government inflation numbers have been heavily manipulated to make inflation look much lower than it actually is, so the number for today should actually be substantially higher than $10.74, but for purposes of this article we will use $10.74. If you were to work a full-time job at $10.74 an hour for a full year (with two weeks off for vacation), you would make about $21,480 for the year. That isn’t a lot of money, but according to the Social Security Administration, 40.28% of all workers make less than $20,000 a year in America today. So that means that more than 40 percent of all U.S. workers actually make less than what a full-time minimum wage worker made back in 1968. That is how far we have fallen.

The other day I wrote an article which discussed the transition that we are witnessing in our economy right now. Good paying full-time jobs are disappearing, and they are being replaced by low paying part-time jobs. So far this year, 76.7 percent of the jobs that have been “created” in the U.S. economy have been part-time jobs.

That would be depressing enough, but what makes it worse is that wages for many of these low paying jobs have actually been declining over the past decade even as the cost of living keeps going up. The following is from a recent USA Today article…

In the years between 2002 and 2012, real median wages dropped by at least 5% in five of the top 10 low-wage jobs, including food preparers and housekeepers.

So where have the good jobs gone?

Well, there are three long-term trends that are absolutely crushing American workers right now.

First of all, thanks to our very foolish politicians American workers have been merged into a global labor pool where they must directly compete for jobs with workers on the other side of the planet that live in countries where it is legal to pay slave labor wages. This has resulted in millions upon millions of good jobs leaving this country. Big corporations can pad their profits by taking a job from an American worker making $15 an hour with benefits and giving it to a worker on the other side of the globe that is willing to work for less than a dollar an hour with no benefits. Our politicians could do something about this, but they refuse to do so. Most of them are absolutely married to the idea of a one world economic system that will unite the globe. Unfortunately, the U.S. economy is going to continue to lose tens of thousands of businesses and millions upon millions of jobs to this one world economic system.

Secondly, big corporations are replacing as many expensive workers with machines, computers and robots as they possibly can. As technology continues to advance at a blistering pace, the need for workers (especially low-skilled workers) will continue to decrease. Unfortunately, the jobs that are being lost to technology are not coming back any time soon.

Thirdly, the overall U.S. economy has been steadily declining for more than a decade. If you doubt this, just read this article. As our economy continues to get weaker, the lack of jobs is going to become a bigger and bigger problem.

And as our economy systematically loses good jobs, more Americans are forced to become dependent on the government.

Back in 1979, there was about one American on food stamps for every manufacturing job. Today, there are about four Americans on food stamps for every manufacturing job.

When I first found that statistic I was absolutely stunned. How in the world can anyone out there deny that the U.S. economy is collapsing?

But as I mentioned above, it isn’t just that the number of jobs is not what it should be. The quality of our jobs is declining as well. For example, one study found that between 1969 and 2009 the wages earned by American men between the ages of 30 and 50 declined by 27 percent after you account for inflation.

That is a pretty stunning decline. And it has only accelerated in recent years. Median household income (adjusted for inflation) has fallen by 7.8 percent since the year 2000, and the ratio of wages and salaries to GDP in the United States is near an all-time record low.

Most Americans are finding that their bills just keep going up but their paychecks are not. This is causing the middle class to wither away, and most families are just trying to survive from month to month at this point. In fact, according to one recent survey 76 percent of all Americans are living paycheck to paycheck.

So where do we go from here?

To some people the answer is simple. They say that we should substantially raise the minimum wage. And yes, that would definitely make life a bit better for lots of low paid workers out there, but it would also have some very negative side effects. A substantially higher minimum wage would mean higher prices at retail stores and restaurants, and it would also greatly increase the incentive that corporations have to replace American workers with foreign workers or with technology. We already have rampant unemployment in this country, and right now there are more than 100 million working age Americans that do not have a job. We certainly don’t want to make that worse.

So raising the minimum wage would not solve our problems. It would just redistribute our problems.

What we really need to do is to return to the principles that once made this country great. In early America, we protected our markets with high tariffs. Access to the U.S. market was a privilege. Foreign domination was kept out, and our economy thrived.

It is definitely not “conservative” and it should not be “liberal” to stand by and watch millions upon millions of our good jobs get shipped over to communist China. We need more “economic patriots” in America today, but unfortunately they appear to be a minority at this point.

And once upon a time the U.S. economy was actually a free market system where rules, regulations and red tape were kept to a minimum. Our nation blossomed under such a system. Sadly, today we have become a nation that literally has millions of laws, rules and regulations. The control freaks seem to run everything. In fact, the Obama administration recently forced one small-time magician out in Missouri to submit a 32 page disaster plan for the little rabbit that he uses in his magic shows for kids. That is a very humorous example, but it is a perfect illustration of how absurd our system has become.

Another thing we could do to turn this around would be to get rid of the IRS and the income tax. Did you know that the greatest period of economic growth in U.S. history was during a time when there was absolutely no income tax? If you doubt this, just read this article.

And of course probably the most important thing that we could do for our economy would be to get rid of the Federal Reserve. The Fed is a massive Ponzi scheme and it has played a primary role in creating almost every single financial bubble in the post-World War II era. Right now we are living in the greatest bond bubble in the history of the planet, and when that Fed-created bubble bursts the pain is going to be absolutely excruciating. In addition, the value of our currency has declined by over 96 percent and the size of the U.S. national debt has gotten more than 5000 times larger since the Fed was created. The Federal Reserve is at the very heart of our economic problems, and we desperately need to shut it down.

Unfortunately, our politicians are not even willing to consider these solutions, and most Americans are way too busy watching Toddlers & Tiaras, Honey Boo Boo and other mindless television programs to be bothered with the real problems that our country is facing.

So needless to say, the great economic storm that is coming is not going to be averted. Most of the country is still asleep, and most people are going to get absolutely blindsided by the economic nightmare that is rapidly approaching.

25 Facts About The Fall Of Detroit That Will Leave You Shaking Your Head

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.

The Federal Reserve Is Paying Banks NOT To Lend 1.8 Trillion Dollars To The American People

Did you know that U.S. banks have more than 1.8 trillion dollars parked at the Federal Reserve and that the Fed is actually paying them not to lend that money to us? We were always told that the goal of quantitative easing was to “help the economy”, but the truth is that the vast majority of the money that the Fed has created through quantitative easing has not even gotten into the system. Instead, most of it is sitting at the Fed slowly earning interest for the bankers. Back in October 2008, just as the last financial crisis was starting, Federal Reserve Chairman Ben Bernanke announced that the Federal Reserve would start paying interest on the reserves that banks keep at the Fed. This caused an absolute explosion in the size of these reserves. Back in 2008, U.S. banks had less than 2 billion dollars of excess reserves parked at the Fed. Today, they have more than 1.8 trillion. In less than five years, the pile of excess reserves has gotten nearly 1,000 times larger. This is utter insanity, and it will have very serious consequences down the road.

Posted below is a chart that shows the explosive growth of these excess reserves in recent years…

This explains why all of the crazy money printing that the Fed has been doing has not caused tremendous inflation yet. Most of the money has not even gotten into the economy. The Fed has been paying banks not to lend it out.

But now that big pile of money is sitting out there, and at some point it is going to come pouring in to the U.S. economy. When that happens, we could very well see an absolutely massive tsunami of inflation.

Posted below is a chart that shows the growth of the M2 money supply over the past several decades. It has been fairly steady, but imagine what would happen if you took the hockey stick from the chart above and suddenly added it to the top of this one…

The longer that the Federal Reserve continues to engage in quantitative easing and continues to pay banks not to lend that money out to the rest of us, the larger that inflationary time bomb is going to become.

In a recent article for the Huffington Post, Professor Robert Auerbach of the University of Texas explained the nightmarish situation that we are facing…

One reason that the excess reserves grew to an extraordinary level is that in October 2008, one month after the financial crisis when Lehman Brothers went bankrupt, the Bernanke Fed began paying interest on bank reserves. Although it has been 1/4 of 1 percent interest, this risk free rate was not low compared to the Fed’s policy of keeping short-term market rates near zero. The interest banks received was and is an incentive to hold the excess reserves rather than lend to consumers and businesses in the risky environment of the major recession and the slow recovery.

The Bernanke Fed is now facing a $1.863 trillion time bomb, they helped to create, of excess reserves in the private banking system. If rates of interest on income earning assets (including bank loans to consumers and businesses) rise, the Fed will have to pay the banks more interest to hold their excess reserves.

If interest rates move up dramatically (and they are already starting to rise significantly), banks will have an incentive to take that money out of the Fed and start lending it out. Professor Auerbach suggests that this could cause an “avalanche” of money pouring into the economy…

Eighty five billion a month will seem tiny compared to the avalanche of the $1.863 trillion excess reserves exploding rapidly into the economy. That would devalue the currency, cause more rapid inflation and worry investors about a coming collapse.

So the Fed has kind of painted itself into a corner. If the Fed keeps printing money, they continue to grossly distort our financial system even more and the excess reserves time bomb just keeps getting bigger and bigger.

But even the suggestion that the Fed would begin to start “tapering” quantitative easing caused the financial markets to throw an epic temper tantrum in recent weeks. Interest rates immediately began to skyrocket and Fed officials did their best to try to settle everyone down.

So where do we go from here?

Unfortunately, as Jim Rogers recently explained, this massive experiment in financial manipulation is ultimately going to end in disaster…

I’m afraid that in the end, we’re all going to suffer perhaps, worse than we ever have, with inflation, currency turmoil, and higher interest rates.

The Fed and other global central banks have created the largest bond bubble in the history of the planet. If the Fed ends quantitative easing, the bond market is going to try to revert to normal.

That would be disastrous for the global financial system. The following is what Jim Willie told Greg Hunter of USAWatchdog.com…

Everything is dependent on Fed support. They know if they take it away, they’re going to create a black hole. The Treasury bond is the greatest asset bubble in history. It’s at least twice as large as the housing and mortgage bubble, maybe three or four times as large.

But even if the central banks keep printing money, they may not be able to maintain control over the bond market. In fact, there are already signs that they are starting to lose control. The following is what billionaire Eric Sprott told King World News the other day…

It’s total orchestration. And it’s orchestration because they might have lost control of the bond market. I find it such a juxtaposition that central banks on a daily basis buy more bonds today than they ever purchased, and interest rates are going up, which is almost perverted. I mean how can that happen?

They’ve lost control of the market in my mind, and that’s why they are so desperately trying to get us all to forget the word ‘taper.’ In fact, we probably won’t even hear the word ‘taper’ anymore because it has such a sickening reaction to people in the bond market, and perhaps even people in the stock market. They will probably do away with the word. But the system is totally out of control. And then we’ve got this quadrillion dollars of derivatives. It just blows blows my mind to think about what could really be going on behind the scenes.

Sprott made a really good point about derivatives.

The quadrillion dollar derivatives bubble could bring down the global financial system at any time.

And remember, interest rate derivatives make up the biggest chunk of that. Today, there are 441 trillion dollars of interest rate derivatives sitting out there. If interest rates begin skyrocketing at some point, that is going to create some absolutely massive losses in the system. We could potentially be talking about an event that would make the failure of Lehman Brothers look like a Sunday picnic.

We are moving into a time of great financial instability. People are going to be absolutely shocked by what happens.

Our financial system is a house of cards built on a foundation of risk, leverage and debt. When it all comes tumbling down, it should not be a surprise to any of us.

20 Completely Ridiculous College Courses Being Offered At U.S. Universities

Would you like to know what America’s young people are actually learning while they are away at college? It isn’t pretty. Yes, there are some very highly technical fields where students are being taught some very important skills, but for the most part U.S. college students are learning very little that they will actually use out in the real world when they graduate. Some of the college courses listed below are funny, others are truly bizarre, others are just plain outrageous, but all of them are a waste of money. If we are going to continue to have a system where we insist that our young people invest several years of their lives and tens of thousands of dollars getting a “college education”, they might as well be learning some useful skills in the process. This is especially true considering how much student loan debt many of our young people are piling up. Sadly, the truth is that right now college education in the United States is a total joke. I know – I spent eight years in the system. Most college courses are so easy that they could be passed by the family dog, and many of these courses “study” some of the most absurd things imaginable.

Listed below are 20 completely ridiculous college courses being offered at U.S. universities. The description following each course title either comes directly from the official course description or from a news story about the course…

1. “What If Harry Potter Is Real?” (Appalachian State University) – This course will engage students with questions about the very nature of history. Who decides what history is? Who decides how it is used or mis-used? How does this use or misuse affect us? How can the historical imagination inform literature and fantasy? How can fantasy reshape how we look at history? The Harry Potter novels and films are fertile ground for exploring all of these deeper questions. By looking at the actual geography of the novels, real and imagined historical events portrayed in the novels, the reactions of scholars in all the social sciences to the novels, and the world-wide frenzy inspired by them, students will examine issues of race, class, gender, time, place, the uses of space and movement, the role of multiculturalism in history as well as how to read a novel and how to read scholarly essays to get the most out of them.

2. “God, Sex, Chocolate: Desire and the Spiritual Path” (UC San Diego) – Who shapes our desire? Who suffers for it? Do we control our desire or does desire control us? When we yield to desire, do we become more fully ourselves or must we deny it to find an authentic identity beneath? How have religious & philosophical approaches dealt with the problem of desire?

3. “GaGa for Gaga: Sex, Gender, and Identity” (The University Of Virginia) – In Graduate Arts & Sciences student Christa Romanosky’s ongoing ENWR 1510 class, “GaGa for Gaga: Sex, Gender, and Identity,” students analyze how the musician pushes social boundaries with her work. For this introductory course to argumentative essay writing, Romanosky chose the Lady Gaga theme to establish an engaging framework for critical analysis.

4. “Lady Gaga and the Sociology of Fame” (The University Of South Carolina) – Lady Gaga may not have much class but now there is a class on her. The University of South Carolina is offering a class called Lady Gaga and the Sociology of Fame. Mathieu Deflem, the professor teaching the course describes it as aiming to “unravel some of the sociologically relevant dimensions of the fame of Lady Gaga with respect to her music, videos, fashion, and other artistic endeavours.”

5. “Philosophy And Star Trek” (Georgetown) – Star Trek is very philosophical. What better way, then, to learn philosophy, than to watch Star Trek, read philosophy, and hash it all out in class? That’s the plan. This course is basically an introduction to certain topics in metaphysics and epistemology philosophy, centered around major philosophical questions that come up again and again in Star Trek. In conjunction with watching Star Trek, we will read excerpts from the writings of great philosophers, extract key concepts and arguments and then analyze those arguments.

6. “Invented Languages: Klingon and Beyond” (The University Of Texas) – Why would anyone want to learn Klingon?

7. “The Science Of Superheroes” (UC Irvine) – Have you ever wondered if Superman could really bend steel bars? Would a “gamma ray” accident turn you into the Hulk? What is a “spidey-sense”? And just who did think of all these superheroes and their powers? In this seminar, we discuss the science (or lack of science) behind many of the most famous superheroes. Even more amazing, we will discuss what kind of superheroes might be imagined using our current scientific understanding.

8. “Learning From YouTube” (Pitzer College) – About 35 students meet in a classroom but work mostly online, where they view YouTube content and post their comments. Class lessons also are posted and students are encouraged to post videos. One class member, for instance, posted a 1:36-minute video of himself juggling.

9. “Arguing with Judge Judy” (UC Berkeley) – TV “Judge” shows have become extremely popular in the last 3-5 years. A fascinating aspect of these shows from a rhetorical point of view is the number of arguments made by the litigants that are utterly illogical, or perversions of standard logic, and yet are used over and over again. For example, when asked “Did you hit the plaintiff?” respondents often say, “If I woulda hit him, he’d be dead!” This reply avoids answering “yes” or “no” by presenting a perverted form of the logical strategy called “a fortiori” argument [“from the stronger”] in Latin. The seminar will be concerned with identifying such apparently popular logical fallacies on “Judge Judy” and “The People’s Court” and discussing why such strategies are so widespread. It is NOT a course about law or “legal reasoning.” Students who are interested in logic, argument, TV, and American popular culture will probably be interested in this course. I emphasize that it is NOT about the application of law or the operations of the court system in general.

10. “Elvis As Anthology” (The University Of Iowa) – The class, “Elvis as Anthology,” focuses on Presley’s relationship to African American history, social change, and aesthetics. It focuses not just on Elvis, but on other artists who inspired him and whom he inspired.

11. “The Feminist Critique Of Christianity” (The University Of Pennsylvania) – An overview of the past decades of feminist scholarship about Christian and post-Christian historians and theologians who offer a feminist perspective on traditional Christian theology and practice. This course is a critical overview of this material, presented with a summary of Christian biblical studies, history and theology, and with a special interest in constructive attempts at creating a spiritual tradition with women’s experience at the center.

12. “Zombies In Popular Media” (Columbia College) – This course explores the history, significance, and representation of the zombie as a figure in horror and fantasy texts. Instruction follows an intense schedule, using critical theory and source media (literature, comics, and films) to spur discussion and exploration of the figure’s many incarnations. Daily assignments focus on reflection and commentary, while final projects foster thoughtful connections between student disciplines and the figure of the zombie.

13. “Far Side Entomology” (Oregon State) – For the last 20 years, a scientist at Oregon State University has used Gary Larson’s cartoons as a teaching tool. The result has been a generation of students learning — and laughing — about insects.

14. “Interrogating Gender: Centuries of Dramatic Cross-Dressing” (Swarthmore) – Do clothes make the man? Or the woman? Do men make better women? Or women better men? Is gender a costume we put on and take off? Are we really all always in drag? Does gender-bending lead to transcendence or chaos? These questions and their ramifications for liminalities of race, nationality and sexuality will be our focus in a course that examines dramatic works from The Bacchae to M. Butterfly.

15. “Oh, Look, a Chicken!” Embracing Distraction as a Way of Knowing (Belmont University) – Students must write papers using their personal research on the five senses. Entsminger reads aloud illustrated books The Simple People and Toby’s Toe to teach lessons about what to value by being alive. Students listen to music while doodling in class. Another project requires students to put themselves in situations where they will be distracted and write a reflection tracking how they got back to their original intent.

16. “The Textual Appeal of Tupac Shakur” (University of Washington) – The UW is not the first college with a class dedicated to Shakur — classes on the rapper have been offered at the University of California Berkeley and Harvard — but it is the first to relate Shakur’s work to literature.

17. “Cyberporn And Society” (State University of New York at Buffalo) – With classwork like this, who needs to play? Undergraduates taking Cyberporn and Society at the State University of New York at Buffalo survey Internet porn sites.

18. “Sport For The Spectator” (The Ohio State University) – Develop an appreciation of sport as a spectacle, social event, recreational pursuit, business, and entertainment. Develop the ability to identify issues that affect the sport and spectator behavior.

19. “Getting Dressed” (Princeton) – Jenna Weissman Joselit looks over the roomful of freshmen in front of her and asks them to perform a warm-up exercise: Chart the major moments of your lives through clothes. “If you pop open your closet, can you recall your lives?” she posits on the first day of the freshman seminar “Getting Dressed.”

20. “How To Watch Television” (Montclair) – This course, open to both broadcasting majors and non-majors, is about analyzing television in the ways and to the extent to which it needs to be understood by its audience. The aim is for students to critically evaluate the role and impact of television in their lives as well as in the life of the culture. The means to achieve this aim is an approach that combines media theory and criticism with media education.

Are you starting to understand why our college graduates can’t function effectively when they graduate and go out into the real world?

All of this would be completely hilarious if not for the fact that we have millions of young people going into enormous amounts of debt to pay to go to these colleges.

In America today, college education has become a giant money making scam. We have a system that absolutely throws money at our young people, but we never warn them about the consequences of all of these loans. The following is an excerpt from an email that one reader sent me recently about the student loan industry…

For example, one woman told me that her and her husband sat down and thought of every possible expense they could when they were applying for parent/student loan for their daughter. When the approval came back, they were approved for 7k more than they asked for…how about ****! Of course at 7%, why not! Funny thing is they kept the 7k, because she’s in wealth management and said she could “easily” get more than 7% in the stock market……awesome! I have another example of a younger friend of mine who graduated law school from Vanderbilt with 210k in student loans. I asked if tuition was that much there. She said kind of, but they kept offering more than the actual tuition, so she took it and used it for a better lifestyle. Now 20% of her income goes to pay those loans, and it’s still not enough to touch one dollar of the principal…so all she is doing is paying interest, and building on principal…like a revers amortizing mortgage. To make it worse, she was able to save 25k, so she is going to buy a house somehow. Having explained to her that the best investment in the world is to pay off a high interest loan, she said I’m tired of waiting to have a life.

In a recent article entitled “The Student Loan Delinquency Rate In The United States Has Hit A Brand New Record High” I detailed how nightmarish our student loan debt bubble is becoming. According to the Federal Reserve, the total amount of student loan debt has risen by 275 percent since 2003, and it just continues to soar.

A college education can be a wonderful thing, but right now we have got a system that is deeply, deeply broken.

So what do you think about our system of higher education?

Please feel free to express your opinion by posting a comment below…

18 Signs That Massive Economic Problems Are Erupting All Over The Planet

This is no time to be complacent. Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine. In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control. One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.

But for the moment, there are a lot of skeptics out there.

For the moment, there are a lot of people that are declaring that the problems of the past have been fixed and that we are heading for incredibly bright economic times ahead.

Unfortunately, those people appear to be purposely ignoring the economic horror that is breaking out all over the globe.

The following are 18 signs that massive economic problems are erupting all over the planet…

#1 The eurozone is now in the midst of its longest recession ever. Economic activity in the eurozone has declined for six quarters in a row.

#2 Italy’s economy has now been contracting for seven quarters in a row.

#3 Industrial production in Italy has fallen for 15 months in a row. It has now fallen to its lowest level in about 25 years.

#4 The number of people that are considered to be “seriously deprived” in Italy has doubled over the past two years.

#5 Consumer confidence in France has just hit a new all-time low.

#6 The number of unemployed workers seeking a job in France has hit a brand new all-time record high. Many unemployed workers in France are utterly frustrated at this point…

“I’ve sent CVs everywhere, I come to the unemployment agency every day, for 3 or 4 hours to look for work as a truck driver and there’s never anything,” said 42-year old Djamel Sami, who has been unemployed for a year, leaving a job agency in Paris.

#7 Unemployment in the eurozone as a whole has just hit a brand new all-time record high of 12.2 percent.

#8 Youth unemployment continues to soar to unprecedented heights in Europe. The following is from an article that was recently posted on the website of the Guardian that detailed how bad things are getting in some of the worst countries…

In Greece, 62.5% of young people are out of work, in Spain it’s 56.4%, then Portugal with 42.5%, and then Italy with 40.5%.

#9 Youth unemployment is being partially blamed for the worst rioting that Sweden has seen in many years. The following is how the Daily Mail described the riots…

Sweden is reeling after a third night of rioting in largely run-down immigrant areas of the capital Stockholm.

In the last 48 hours violence has spread to at least ten suburbs with mobs of youths torching hundreds of cars and clashing with police.

It is Sweden’s worst disorder in years and has shocked the country and provoked a debate on how Sweden is coping with youth unemployment and an influx of immigrants.

#10 An astounding 10 percent of all banking deposits were pulled out of banks in Cyprus during the month of April alone.

#11 Economic growth in India is the slowest that it has been in an entire decade.

#12 Suddenly Australia is experiencing some tremendous economic challenges. The following quotes are from a recent Zero Hedge article…

-“We’re seeing a much sharper contraction in the Australian economy than we’d anticipated four or five months ago”. Coffey MD, John Douglas. The engineering group has seen its shares, which traded above $4 in 2007, hit 10c last week.

-“By 10am, the Fitness First gym in the city is packed full of brokers who’ve had a gutful of sitting at their desk doing nothing – salary cuts are starting and next it will be jobs” Perth broker

-“Oh mate, the funding market is dead. You are now seeing a few deeply discounted rights issues for those that are reaching desperate levels ….. liquidity has completely disappeared” Perth broker

#13 The financial system in Japan is beginning to spin wildly out of control. The Japanese stock market has now declined about 15 percent from the peak, and many believe that the yen will continue to get weaker and that interest rates in Japan will start to rise significantly.

#14 Global cash flow is declining at a rate not seen since the last recession. This indicates that we could be headed for a global credit crunch.

#15 Real wages continue to decline in the United States. Even though we are being told that the U.S. is experiencing an “economy recovery”, real weekly earnings have declined from $297.79 in 2010 to $295.49 in 2011 to $294.83 in 2012. (The preceding calculation is based on 1982-1984 dollars)

#16 Wall Street is buzzing about the fact that “the Hindenburg Omen” appeared at the end of last week. So exactly what is “the Hindenburg Omen”? The following are the criteria that are used to determine whether it has appeared or not…

1. The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.

2. The smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.

3. That the NYSE 10 Week moving average is rising.

4. That the McClellan Oscillator ( a market breadth indicator used to evaluate the rate of money entering or leaving the market and interpretively indicate overbought or oversold conditions of the market)is negative on that same day.

5. That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs).

When the Hindenburg Omen makes an appearance, it supposedly means that the U.S. stock market is likely to experience a serious decline within the next 40 days.

#17 As I wrote about the other day, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years. That means that lots of “smart money” has been getting out of the market and lots of “dumb money” has been pouring in.

#18 Margin debt on the New York Stock Exchange has set a new all-time high. The following is from a recent Market Oracle article…

Margin debt—that’s the amount of money borrowed to purchase stocks—on the New York Stock Exchange (NYSE) reached its all-time high in April. Margin debt on the NYSE registered at $384.3 billion as the key stock indices hit new record-highs. (Source: New York Stock Exchange web site, last accessed May 29, 2013.) The highest margin debt ever reached prior to this was in July of 2007, when it stood just above $381.0 billion. At that time, just like today, the key stock indices were near their peaks and “buy now before it’s too late” was the prominent theme of the day

Whenever margin debt spikes like this, a stock market crash almost always follows. If you doubt this, just check out the chart in this article.

Wall Street has had a good couple of years, but it has been a “false prosperity” that has been pumped up by reckless money printing by the Federal Reserve. Just like all of the other stock market bubbles that we have seen in recent years, this one is going to burst too. And as Marc Faber recently pointed out, this bubble has been particularly beneficial to the wealthy…

The Fed has been flooding the system with money. The problem is the money doesn’t flow into the system evenly. It doesn’t increase economic activity and asset prices in concert. Instead, it creates dangerous excesses in countries and asset classes. Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market – things like stocks, bonds, art, wine, jewelry, and luxury real estate.

Money-printing boosts the economy of the people closest to the money flow. But it doesn’t help the worker in Detroit, or the vast majority of the middle class. It leads to a widening wealth gap. The majority loses, and the minority wins.

The fact that the U.S. stock market has set new all-time record high after new all-time record high in recent months means very little. At this point, the stock market has become completely divorced from economic reality. When this current bubble bursts, the adjustment is going to be very painful. Wall Street will likely whine and complain and ask for more bailouts, but they may find that authorities are not nearly as sympathetic this time.

Much of the rest of the world is already experiencing the next major wave of the economic collapse. Reckless money printing by the Fed and reckless borrowing and spending by the federal government may have delayed the inevitable in the United States for a little while, but those measures have also made our long-term problems even worse.

There was one piece of advice that Ben Bernanke included in his commencement speech to students at Princeton recently that I thought was particularly ironic…

“Don’t be afraid to let the drama play out.”

Will he take his own advice when the next great financial crisis strikes the United States?

That seems very unlikely.

Unfortunately, things are not going to be so easy to fix this next time.

What happened back in 2008 was just a preview.

What is coming next is going to absolutely shock the world.

Top 1% Own 39% Of All Global Wealth: Hoarding Soars As We Hurtle Toward Economic Oblivion

According to a study that was just released by Boston Consulting Group, the wealthiest one percent now own 39 percent of all the wealth in the world. Meanwhile, the bottom 50 percent only own 1 percent of all the wealth in the world combined. The global financial system has been designed to funnel wealth to the very top, and the gap between the wealthy and the poor continues to expand at a frightening pace. The global elite continue to hoard wealth and heap together enormous mountains of treasure in these troubled days even though the economic suffering around the planet continues to grow. So exactly how have the global elite accumulated so much wealth? Well, one of the primary ways is through the use of debt. As I have written about previously, there is about 190 trillion dollars of debt in the world but global GDP is only about 70 trillion dollars. Our debt-based global financial system systematically transfers wealth from us and our governments into the hands of the global elite. And of course the gigantic banks and corporations that the elite control are constantly gobbling up everything of value that they can find: natural resources, profitable small businesses, real estate, politicians, etc. Money, power, ownership and control are becoming very, very tightly concentrated at the top of the food chain, and that is a very dangerous thing for humanity. When too much money and power gets into too few hands, it almost always results in tyranny.

What will eventually happen when the global elite have ALL the wealth?

Will the rest of us work as serfs in a system that they have iron-fisted control over?

And what if they decide that they don’t really need billions of people working for them? Will they decide to implement population control measures in order to reduce the number of “useless eaters”? It is already happening in China and other highly centralized societies.

When all of the economic rewards of a society go to a very small handful of people, it tends to be very destabilizing. We have seen this again and again throughout history.

When people have everything taken away from them and they have nothing left to lose, they tend to become very desperate. And right now we are rapidly hurtling toward a time of great global instability. Anger and frustration are growing all over the globe, and the rate at which the gap between the wealthy and the poor is widening seems to be accelerating. Just check out these numbers…

-The wealthiest 1 percent of the global population now owns 39 percent of all the wealth on the planet.

-According to a report that was released last summer, the global elite have up to 32 TRILLION dollars stashed in offshore banks around the planet.

-According to a study conducted by Credit Suisse, the bottom two-thirds of the global population owns just 3.3% of all the wealth.

-A study by the World Institute for Development Economics Research discovered that the bottom half of the world population owns approximately 1 percent of all global wealth.

-It is estimated that the entire continent of Africa only owns approximately 1 percent of the total wealth of the world.

-Approximately 1 billion people throughout the world go to bed hungry each night.

-If you can believe it, more than 3 billion people currently live on less than 2 dollar a day.

In the world that we live in, money equals power. And the more money that the top one percent accumulate, the more power they will accumulate as well.

So exactly who are the top one percent? I discussed this at length in my previous article entitled “Who Runs The World? Solid Proof That A Core Group Of Wealthy Elitists Is Pulling The Strings“. The global elite are absolutely obsessed with power and control and they have been working to implement their agenda for a very long time. In the end, they hope to unite the entire planet under a monolithic global system that they control. They are actually quite open about this – it is just that most people do not want to believe it.

The gap between the wealthy and the poor is rapidly growing in the United States as well. Sadly, this means that the middle class is steadily disappearing as the ranks of those that are living in poverty continues to increase.

But of course not everyone is doing badly in the U.S. right now. In fact, those that own stocks have had lots of reasons to celebrate in recent months.

So who owns stocks?

Well, the wealthy do of course. In fact, approximately 60 percent of all individually held stocks are owned by the top 5 percent of all Americans.

During the last recession, Americans lost 16 trillion dollars of wealth. Since then, about 45 percent of that wealth has been “recovered”, but the vast majority of that “recovery” has been due to rising stock prices. The following comes from a recent Washington Post article…

From the peak of the boom to the bottom of the bust, households watched a total of $16 trillion in wealth disappear amid sinking stock prices and the rubble of the real estate market. Since then, Americans have only been able to recapture 45 percent of that amount on average, after adjusting for inflation and population growth, according to the report from the St. Louis Fed released Thursday.

In addition, the report showed most of the improvement was due to gains in the stock market, which primarily benefit wealthy families. That means the recovery for other households has been even weaker.

“A conclusion that the financial damage of the crisis and recession largely has been repaired is not justified,” the report stated.

Once upon a time, the United States had the largest and most thriving middle class in the history of the world. That was a great thing. But now the middle class is being destroyed and government dependence has surged to an all-time high.

The following are some of the incredible statistics that show how wide the gap between the wealthy and the poor in America is becoming…

-The wealthiest 1 percent of all Americans now own more than a third of all the wealth in the United States.

-In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

-According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million Americans combined.

-The six heirs of Wal-Mart founder Sam Walton have as much wealth as the bottom one-third of all Americans combined.

-On average, households in the top 7 percent have 24 times as much wealth as households in the bottom 93 percent.

-Between 2009 and 2011, the wealth of the bottom 93 percent of all Americans declined by 4 percent, while the wealth of the top 7 percent of all Americans increased by 28 percent.

-The poorest 50 percent of all Americans collectively own just 2.5% of all the wealth in the United States.

-The top 0.01% of all Americans make an average of $27,342,212. The bottom 90% make an average of $31,244.

For much more on how poverty is rising and the middle class is being destroyed, please see my recent article entitled “22 Facts That Prove That The Bottom 90 Percent Of America Is Systematically Getting Poorer“.

Obviously we have a huge problem here.

With each passing day, poverty is rising and more people are becoming dependent on the government.

So what is the solution to this mess?

Please feel free to voice your opinion by posting a comment below…

Why Is The Smart Money Suddenly Getting Out Of Stocks And Real Estate?

If wonderful times are ahead for U.S. financial markets, then why is so much of the smart money heading for the exits? Does it make sense for insiders to be getting out of stocks and real estate if prices are just going to continue to go up? The Dow is up about 17 percent so far this year, and it just keeps setting new record high after new record high. U.S. home prices have risen about 11 percent from a year ago, and some analysts are projecting that we are on the verge of a brand new housing boom. Why would the smart money want to leave the party when it is just getting started? Well, of course the truth is that the “smart money” is regarded as being smart because they usually make better decisions than other people do. And right now the smart money is screaming that it is time to get out of the markets. For example, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years. The smart money is busy selling even as the dumb money is busy buying. So precisely what does the smart money expect to happen? Are they anticipating a market “correction” or something bigger than that?

Those are very good questions. Unfortunately, the smart money rarely divulges their secrets, so we can only watch what they do. And right now a lot of insiders are making some very interesting moves.

For example, George Soros has been dumping almost all of his financial stocks. The following is from a recent article by Becket Adams…

Everyone’s favorite billionaire investor is back in the spotlight, and this time he has a few people wondering what he’s up to.

George Soros has dumped his position with several major banks including JPMorgan Chase, Capitol One, SunTrust, and Morgan Stanley. He has reduced his exposure to Citigroup and decreased his stake in AIG by two-thirds.

In fact, Soros’ financial stock holdings are down by roughly 80 percent, a massive drop from his position just three months ago, according to SNL Financial.

So exactly what is going on?

Why is Soros doing this?

Well, there is certainly a lot to criticize when it comes to Soros, but you can’t really blame him if he is just taking his profits and running. Financial stocks have been on a tremendous run and that run is going to end at some point. Smart investors lock in their profits while they still can.

And without a doubt, stocks have become completely divorced from economic reality in recent months. For example, there is usually a very close relationship between corporate earnings and stock prices. But as CNBC recently reported, that relationship has totally broken down lately…

That trend disrupted a formerly symbiotic relationship between earnings and stock prices and is indicating that the bluechip average is in for a substantial pullback, according to Tom Kee, who runs the StockTradersDaily investor web site.

“They’ve been moving in tandem since 2009, until recently. Earnings per share for the Dow Jones industrial average have flatlined and the price has taken off,” Kee said. “There is something happening here that defines a bubble.”

At some point there will be a correction. If the relationship between earnings and stock prices was where it should be, the Dow would be around 13,500 right now. That would be a fall of nearly 2,000 points from where it is at the moment.

And we appear to be entering a time when revenues at many corporate giants are actually declining. As I noted in a previous article, corporate revenues are falling at Wal-Mart, Proctor and Gamble, Starbucks, AT&T, Safeway, American Express and IBM.

Of course a stock market “correction” can turn into a crash very easily. Financial markets in Japan are already crashing, and many fear that the escalating problems in the third largest economy on the planet will soon spill over into Europe and North America.

And things in Europe just continue to get steadily worse. In fact, the New York Times is reporting that the European Central Bank is warning that the risk of a “renewed banking crisis” in Europe is rising…

The European Central Bank warned on Wednesday that the euro zone’s slumping economy and a surge in problem loans were raising the risk of a renewed banking crisis, even as overall stress in the region’s financial markets had receded.

In a sober assessment of the state of the zone’s financial system, the E.C.B. said that a prolonged recession had made it harder for many borrowers to repay their loans, burdening banks that had still not finished repairing the damage caused by the 2008 financial crisis.

And there are many financial analysts out there that are warning that their cyclical indicators have peaked and that we are on the verge of a fresh global downturn…

“We see building evidence of a cyclical downturn,” said Fredrik Nerbrand, HSBC’s global asset guru. “We find it highly troubling that the eurozone is still marred in a recession at the same time as our cyclical indicators appear to have peaked.”

In the United States, a lot of the smart money has also decided that it is time to bail out of the housing market before this latest housing bubble bursts. The following is one example of this phenomenon that was discussed in a recent Businessweek article…

Hedge fund manager Bruce Rose was among the first investors to coax institutional money into the mom and pop business of single-family home rentals, raising $450 million last year from Oaktree Capital Group LLC.

Now, with house prices climbing at the fastest pace in seven years and investors swamping the rental market, Rose says it no longer makes sense to be a buyer.

“We just don’t see the returns there that are adequate to incentivize us to continue to invest,” Rose, 55, chief executive officer of Carrington Holding Co. LLC, said in an interview at his Aliso Viejo, California office. “There’s a lot of — bluntly — stupid money that jumped into the trade without any infrastructure, without any real capabilities and a kind of build-it-as-you-go mentality that we think is somewhat irresponsible.”

So what does all of this mean?

Is there a reason why the smart money is suddenly getting out of stocks and real estate?

It could just be that the insiders are simply responding to market dynamics and that many of them are just seeking to lock in their profits.

Or it could be something much more than that.

What do you think?

Why are so many insiders heading for the exits right now?

Feel free to post a comment with your thoughts below…