10 Reasons Why Ordinary Hard-Working Americans Are About To Really Start Feeling The Squeeze

American families better get ready to tighten their belts again.  There is every indication that we are all going to really start feeling the squeeze in the months ahead.  The price of gas is starting to spike again.  The price of food is moving north.  Health insurance premium increases are being announced coast to coast and a whole slate of tax increases is scheduled to go into effect in 2011.  Meanwhile, household incomes are down substantially all over the nation and the U.S. government is indicating that there will not be an increase in Social Security benefits for the upcoming year once again.  So if the cost of most of the basic things in our monthly budgets is going up and our incomes are going down what does that mean?  It means that average American families are about to be squeezed like nothing we have seen in decades.

The reality is that it is getting really hard to make it out there.  Not only do most households have both parents working, but in many cases both parents are getting second or even third jobs.  Things have gotten so bad that millions of Americans have felt forced to turn to the government for assistance just to survive. 

It can be really disheartening to come to the end of the month and realize that despite your best efforts you have less money than you did at the beginning of the month.  But that is where millions upon millions of American families now find themselves. 

The economic despair in the air is almost palpable.  Already hordes of Americans are truly and honestly hurting and things are only going to get worse.

The following are ten reasons why ordinary hard-working Americans are about to really start feeling the squeeze….   

#1 Gas prices are going up again.  AAA says that the average price of a gallon of regular gasoline in the United States was $2.80 on Sunday.  That is 32.6 cents higher than it was during the same time period in 2009.  As oil and gas prices continue to go up, that is also going to have a significant impact on utility bills for American families this winter.

#2 The price of food is poised to rise substantially.  Bloomberg is reporting that the the cost of meat in the United States is going nowhere but up.  But meat is not the only thing that you will soon be paying much more for at the supermarket.  Wheat, corn, soybeans and almost every other major agricultural commodity is absolutely soaring this fall.  As this continues, it is inevitable that ordinary Americans will see much higher food prices at their local grocery stores.

On a previous article, a reader named Erica left a comment in which see detailed the stunning food inflation that she is seeing where she lives….

Food inflation is real, and it is here. Just yesterday I compared my receipt from a grocery run to prices I have from the same exact store from September 15, 2009. Bacon? Up 52% to $13.69 from $8.99 for 4 lbs. Butter? Up 73% to $9.99 from $5.79 for 4 lbs. Pure vanilla extract up 14% to $6.79 from $5.95. Chopped dried onions up a mere 2% but minced garlic (wet) was up 32%.

#3 It looks like those receiving Social Security are not going to be seeing cost-of-living increases again.  The Associated Press is reporting that the  U.S. government is expected to announce some time this week that the tens of millions of Americans that receive Social Security will go through yet another year without an increase in their monthly benefit payments.  You see, Social Security cost-of-living adjustments are tied to the official government inflation numbers, and according to the U.S. government there is basically very little inflation right now.  Of course we all know that is a lie, but it is what it is.

#4 The cost of health care continues to soar into the stratosphere.  Americans already pay more for health care than anyone else in the world, and yet costs continue to spiral out of control.  The cost of health care increased a staggering 9.6% for all U.S. households from 2007 to 2009.  Now, health insurance companies from coast to coast are announcing that they must raise health insurance premiums substantially due to the new health care law that Barack Obama and the Democrats have pushed through.  So in 2011 it looks like the average American family is going to have to carve out an even bigger chunk of the budget for health care.

#5 American families could desperately use a recovery in the housing industry, but that is simply not going to happen.  Foreclosure-Gate is getting worse by the day, and it threatens to bring the U.S. real estate industry to a complete and total standstill.  If it is ultimately proven that the paperwork for millions of mortgages in the United States is seriously deficient, it could push hordes of mortgage lenders into bankruptcy and render mountains of mortgage-backed securities nearly worthless.  Regardless, it is now going to be much more difficult to get a mortgage, much more difficult to buy a home and much more difficult to sell a home.  We could very well be looking at the next stage of the housing crash.  Ordinary Americans could end up losing trillions more in home equity.   

#6 More Americans than ever find themselves unable to pay their bills, and an increasing number of frustrated creditors are actually resorting to wage garnishment.  Yes, you read the correctly.  Creditors are starting to ruthlessly go after the weekly paychecks of debtors.

The following is an excerpt from a recent New York Times article that discussed the rise of wage garnishment as a weapon against debtors….

After winning, creditors can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, but the pay seizures are rising fast in some areas — up 121 percent in the Phoenix area since 2005, and 55 percent in the Atlanta area since 2004. In Cleveland, garnishments jumped 30 percent between 2008 and 2009 alone.

So if you are getting behind on your debt, you better watch out – your creditors may soon decide to garnish your wages.

#7 Americans now owe more on student loans than they do on credit cards.  As hard as that is to believe, that is actually true.  Americans now owe more than $849 billion on student loans, which is a new all-time record. 

Student loan payments can be absolutely crippling to a household budget.  This is especially true for young Americans that have just gotten out of school.  Sadly, student loan debt is nearly impossible to get rid of.  Once you are committed, it will follow you around for the rest of your life. 

#8 Even as expenses rise, incomes are down from coast to coast.  Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009.  There are very few areas that have not been affected.  In fact, of the 52 largest metro areas in the United States, only the city of San Antonio did not see a decline in median household income during 2009.

#9 If all of this was not bad enough, now there are rumblings that the U.S. Federal Reserve is actually thinking that we need more inflation.  A number of top Federal Reserve officials have come out recently and have publicly supported the notion that the Fed needs to purposely create more inflation in order to stimulate the economy.  Of course what they don’t tell the American people is that inflation is a hidden tax on every single dollar in our wallets and in our bank accounts.  More inflation would be really bad news for ordinary Americans, because they are already having a tough time getting their dollars to stretch far enough. 

#10 Apparently the U.S. government (and many state and local governments) think that this is a great time to stick it to the American people by hitting them with a slew of new taxes.  There are so many tax increases scheduled to go into effect in 2011 that it is hard to keep track of them all.  In fact, there are many (myself included) that are calling 2011 “the year of the tax increase“.  But the Americans that are going to get it the worst of all are those that are going to get hit with the Alternative Minimum Tax.  One out of every six American households is going to be hit with a tax increase averaging $3,900 (thanks to the AMT) and most of them don’t even know that it is coming.

So did you think that 2010 was bad?

Well, you haven’t seen anything yet.

2010 was a Sunday picnic compared to what is coming.

Get ready to get squeezed.

Get ready for higher food prices, higher gas prices, higher health insurance premiums and higher taxes.

Get ready to try to do a lot more with a lot less.

Inflation is already here, but it is going to get a whole lot worse.  Meanwhile, the U.S. government (along with state and local governments) is going to continue to have a voracious appetite for more revenue. 

Average Americans are going to be squeezed until they have nothing left to give.  Then they are going to be squeezed just a little bit more.  

Are you ready?

Foreclosure-Gate

If you work in the mortgage industry or for a title insurer, you might not want to make any plans for the next six months.  Foreclosure-Gate is about to explode.  It is being alleged that many prominent mortgage lenders have been using materially flawed paperwork to evict homeowners.  Apparently officials at quite a few of these firms have been signing thousands upon thousands of foreclosure documents without even looking at them.  In addition, it is being alleged that much of the documentation for these mortgages that are being foreclosed upon is either “improper” or is actually “missing”.  As lawyers start to smell blood in the water, lawsuits challenging these foreclosures have already started springing up from coast to coast.  In fact, some are already calling Foreclosure-Gate the biggest fraud in the history of the capital markets.  JPMorgan Chase, Ally Bank’s GMAC Mortgage and PNC Financial have all suspended foreclosures in the 23 U.S. states where foreclosures must be approved by a judge.  Bank of America has actually suspended foreclosures in all 50 states.  Now, law enforcement authorities from coast to coast are calling for investigations into this controversy and it could be years before this thing gets unraveled.

This thing just seems to escalate with each passing day.  It is being reported that the attorneys general of up to 40 U.S. states will be working together on a joint investigation into this foreclosure crisis.  Lawmakers in both houses of the U.S. Congress, including Nancy Pelosi and Christopher Dodd, have called for an investigation to begin on the national level.  U.S. Attorney General Eric Holder said last week that he is looking into the issue.  Things are certainly getting very serious out there.  Never before has there ever been such a national focus on foreclosure paperwork.

But apparently there are good reasons for such scrutiny….

*One GMAC Mortgage official admitted during a December 2009 deposition that his team of 13 people signed approximately 10,000 foreclosure documents a month without reading them.

*One Bank of America employee confessed during a Massachusetts bankruptcy case that she signed up to 8,000 foreclosure documents a month and typically did not look them over “because of the volume”.

But the “robo-signing” aspect of Foreclosure-Gate is just the tip of the iceberg.  Apparently there is a whole lot more going on than just a bunch of bad signatures. 

Peter J. Henning, a professor at Wayne State University Law School in Detroit, was recently quoted by MSNBC as saying the following about Foreclosure-Gate….

“You’ve got so many potential avenues of liability. You don’t even know the parameters of this yet.”

The sad truth is that potentially millions of foreclosures across the United States could potentially be invalid because the securitization process has muddied the chain of ownership.  In fact, an increasing number of judges from coast to coast have been ruling that the “owners” of the mortgage have no right to foreclose on a property because they lack clear title.

At the core of this title controversy is MERS – Mortgage Electronic Registration Systems.  MERS is based in Reston, Virginia and it was created by the mortgage industry to enable that big financial firms to securitize and swap mortgages at high speed.  MERS allowed these big financial firms to largely avoid the hassle of filling out more forms and submitting new filing fees every time that a mortgage was traded.

But now MERS is facing some very serious legal challenges.  A recent article in Businessweek described the situation this way….

A lawsuit filed on September 28th in federal court in Louisville on behalf of all Kentucky homeowners claims that MERS was part of a conspiracy to create false promissory notes, affidavits, and mortgage assignments to be used in mortgage foreclosures. Similar class actions have been filed on behalf of homeowners in Florida and New York. Karmela Lejarde, a MERS spokeswoman, declined to comment on any pending litigation.

The reality is that as millions of U.S. mortgages have been bunched together and traded around the globe at lightning speed, it has become increasingly unclear who actually has title to them and who actually has the right to foreclose on these properties.

Title insurers have backed the titles of millions of these foreclosed properties and now potentially find themselves in a heap of trouble.  Some of the biggest title insurers have already begun circling the wagons in an attempt at damage control.  For example, one of the biggest title insurance companies in the United States, Old Republic National Title Insurance, has already declared that it will no longer write new policies for homes that have been foreclosed on by JPMorgan Chase and GMAC Mortgage.

So what happens if nearly all title insurers start avoiding foreclosed properties? 

Won’t that make it much more difficult for the banks to sell the massive backlog of foreclosed properties that they have accumulated?

In addition, Americans that have purchased foreclosed homes may now be facing some serious problems themselves.  Millions of Americans may now “own” homes that they do not have clear title for.  When it comes times to sell those homes, many Americans may find themselves unable to do so. 

Needless to say, this is a complete and total mess.

Already, U.S. banks have a record number of foreclosed properties that they need to clear out, and now all of this scrutiny on foreclosure paperwork and all of these lawsuits are going to grind the process of getting these homes sold off to a standstill.

In fact, the true legacy of Foreclosure-Gate may be the massive amount of bank failures that it causes.

It would be difficult to understate how much of a nightmare Foreclosure-Gate is going to be for U.S. mortgage lenders.  Having to go back through the paperwork of millions of old mortgages is going to be a complete and total disaster.  If banks end up being unable to foreclose on a large number of bad mortgages, it could potentially be enough to put many banks out of commission for good.  Not only that, but the legal fees that many of these banks will accumulate defending lawsuits related to Foreclosure-Gate will be astronomical.

The U.S. mortgage industry was already on the verge of death, and Foreclosure-Gate may just be the straw that broke the camel’s back.

The reality is that U.S. banks are drowning in foreclosures and this current crisis is just going to make things a lot worse.  Back in 2005, there were approximately 100,000 home repossessions in the United States.  In 2009, there were approximately 1 million home repossessions in the U.S. and RealtyTrac is now projecting that there will be an all-time record of 1.2 million home repossessions in the United States this year.

For the U.S. mortgage industry, Foreclosure-Gate must feel like someone has dropped a bomb on them after they have already been beaten up and doused with gasoline.

Attorney Richard Kessler, who recently conducted a study that found serious errors in approximately three-fourths of court filings related to home repossessions, says that Foreclosure-Gate could haunt the U.S. mortgage industry for the next ten years….

“Defective documentation has created millions of blighted titles that will plague the nation for the next decade.”

While it may be easy to beat up U.S. mortgage lenders and say that they deserve all this, let us not forget that this is going to impact a whole lot of other people too.

It is going to become much harder to get a mortgage.  It is going to become much harder to buy a home.  It is going to become much harder to sell a home.  The U.S. housing industry is likely to suffer a significant downturn due to all of this.  There is even a good chance that the entire U.S. economy could be dragged down for an extended period of time.

So no, Foreclosure-Gate is not good news for anyone. 

Well, except maybe for lawyers. 

But for virtually everyone else this is really bad news.  Any hope that the U.S. housing industry would experience a quick recovery is completely and totally gone.

More Bad News: 10 Things You Should Know About The Latest Economic Numbers

On Friday, headlines across the United States declared that “unemployment remains unchanged at 9.6%”.  Many analysts rejoiced and heralded this announcement as a sign that we have hit bottom and that things will be turning around soon.  But is that the truth?  A closer look at the unemployment numbers reveals some disturbing facts.  For example, according to the Bureau of Labor Statistics, a broader measure of unemployment that includes workers that have stopped looking for work rose sharply to 17.1%.  But that is not the only troubling sign from this past week.  Agricultural commodities continue to skyrocket, which means that food price increases are on the way.  The foreclosure “robo-signing” crisis continues to escalate, and that threatens to throw the entire mortgage industry into a state of absolute turmoil.  Meanwhile, the U.S. national debt continues to grow and wealth continues to leave the United States at a dizzying rate

So is there reason for optimism?

No, not really.

Even if the unemployment numbers had improved slightly, the longer-term trends for unemployment are extremely troubling as you will see from the statistics and the chart below.

At the same time when so many Americans are out of work or can barely get by on what they are currently making, there is every indication that prices are about to go up.  Wheat, corn and soybeans all jumped in price on Friday, and it is inevitable that at some point these price increases will be passed on to consumers.  And if that wasn’t bad enough, now some Federal Reserve officials are actually talking about purposely generating more inflation in order to “stimulate” the U.S. economy.  

Meanwhile, this “robo-signing” foreclosure crisis threatens to escalate totally out of control.  Will we soon see thousands of court cases popping up from coast to coast challenging the legitimacy of foreclosure paperwork?  Will title insurers start totally backing off from foreclosed properties?  Banks were already completely overwhelmed trying to process the massive backlog of foreclosures.  Is this going to make the situation a whole lot worse?

The truth is that more bad news for the U.S. economy comes out almost daily now.  The following are 10 things that you need to know about the latest econ0mic numbers…. 

1 – Gallup’s measure of unemployment, which is not adjusted for “seasonal factors”, showed a sharp increase in September.  According to Gallup, unemployment has increased from 8.9% in July to 9.3% in August and to 10.1% in September.

2 – The seasonally-adjusted Alternate Unemployment Rate compiled by Shadow Government Statistics shows that the real unemployment rate in the United States is worse than it has been ever since the economic downturn began.  The Alternate Unemployment Rate calculated by SGS reflects estimated “long-term discouraged workers”, which the U.S. government stopped keeping track of back in 1994….

3 – The number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.

4 – 15.8% of Americans between the ages of 18 and 29 were unemployed during the month of September.

5 – Agricultural commodities continued to move higher on Friday.  Wheat, corn and soybeans all saw their prices soar.  Unfortunately for American consumers, this is part of a broader trend of rising agricultural commodity prices.  As this continues, it is inevitable that we will all be seeing much higher food prices at our local grocery stores. 

6 – It is being reported that PNC Financial Services Group has suspended the sale of foreclosed homes for the next thirty days.  This is the fourth major lender to take dramatic action recently.  Will nearly all U.S. mortgage lenders eventually be caught up in this crisis before it is over?

7 – Bank of America announced on Friday that it is now going to suspend sales of foreclosed homes in all 50 U.S. states as it continues to evaluate internal foreclosure procedures.  This “foreclosure crisis” threatens to decimate the entire U.S. real estate industry.  What has happened is that millions of U.S. mortgages were sold and resold around the globe at lightning speed and the chain of ownership for many of these mortgages become muddied.  In addition, it is starting to emerge that many of these lenders used fraudulent loan documents during foreclosure proceedings and company officials often used “robo-signers” to sign important foreclosure documents.  So now mortgage lenders, title insurers and those buying or selling foreclosed homes will be facing years of gridlock and chaos as foreclosure-related lawsuits multiply exponentially.  All of this is going to have a dramatic effect on the U.S. real estate market.  In fact, it is being reported that U.S. home sales are already starting to be affected by this crisis. 

8 – The U.S. National debt just keep growing.  If you took the national debt and divided it up among all Americans, each American (including children) would owe approximately $42,000.  So, for an average family of four, their share of the national debt would be $168,000.

9 – Interest payments on the U.S. national debt increased 13% in the fiscal year that ended September 30th.  If interest payments continue to increase that rapidly each year they will bankrupt the U.S. government very quickly. 

10 – It appears that some weird games are being played with the national debt numbers.  Back on September 29th, the U.S. national debt was 13.466 trillion dollars.  On September 30th, the U.S. national debt soared to 13.561 trillion dollars.  Then on October 1st, the beginning of the new fiscal year for the federal government, the U.S. national debt jumped up to 13.610 trillion dollars.  So how in the world does the U.S. national debt jump by a whopping 144 billion dollars in just two days?  Somebody has some explaining to do for this kind of accounting.

The United States was once the wealthiest nation by far on the entire planet.

But now we are in such a rapid decline that it is hard for most Americans to even comprehend it.

We are like that one couple that almost every neighborhood seems to have that has two shiny new cars in their driveway, that dresses in designer clothes and that seems to have plenty of money to take vacations and yet is in debt up to their eyeballs.

The truth is that the United States keeps getting poorer every single month.  The term “trade deficit” is not very sexy, but it is critically important to understand if you want to comprehend what is happening to the U.S. economy.  Every month tens of billions of dollars more wealth goes out of the United States than comes into it.  We are continually getting poorer.

To cover up our declining national wealth, we have gone into staggering amounts of debt.  We have maintained our lavish standard of living by piling up staggering amounts of debt on the national, corporate and consumer levels. 

The sad reality is that the U.S. government is not the wealthiest government in the world any longer.  Rather, it is the government that is the most in debt.  The U.S. national debt is the biggest debt that the world has ever seen, and it grows larger every single day.

We can’t keep up this charade forever.  At some point it is going to stop.

When this house of cards does come tumbling down, do you think that the American people are going to be pleased to learn that our leaders have squandered our once great wealth and have destroyed the greatest economic machine that the world has ever known?

27 Signs That The Standard Of Living For America’s Middle Class Is Dropping Like A Rock

If you still have a job and you can put food on the table and you still have a warm house to come home to, then you should consider yourself to be very fortunate.  The truth is that every single month hundreds of thousands more Americans fall out of the middle class and into poverty.  The statistics that you are about to read are incredibly sobering.  Household incomes are down from coast to coast.  Enrollment in government anti-poverty programs sets new records month after month after month.  Home ownership is down, personal bankruptcies are way up and there are not nearly enough jobs to go around.  Meanwhile, the price of basics such as food and health care continue to skyrocket.  Don’t be fooled by a rising stock market or by record bonuses on Wall Street.  The U.S. economy is not getting better.  After World War II, the great American economic machine built the largest and most vigorous middle class in the history of the world, but now America’s middle class is disintegrating at a blinding pace.

Most of those who write about the plight of the American middle class believe that things can be turned around and that the middle class will eventually be stronger than it ever has been.  But unfortunately, that is just not the case.  As a society, we have lived far, far beyond our means for decades.  Now the bills are coming due and none of our leaders seem to know what to do.

Meanwhile, the U.S. economy is being rapidly assimilated into the emerging one world economy.  Middle class American workers now find themselves in direct competition for jobs with the cheapest labor on the other side of the globe.  Of course many multinational corporations have taken advantage of this by moving factories and jobs to countries like China where blue collar workers make about a dollar an hour.  This has helped raise the standard of living for workers in those nations by a nominal amount, but it has been absolutely devastating for the standard of living of America’s middle class.

So what does all of this mean?

It means that the U.S. economy is headed for collapse and middle class Americans are in for some really, really hard times.

The following are  27 signs that the standard of living for America’s middle class is dropping like a rock….

#1 Household spending for the middle fifth of all U.S. income earners was down 3.5% in 2009.  That was the steepest one year decline since records began being kept back in 1984.

#2 Median household income in the United States fell from $51,726 in 2008 to $50,221 in 2009.

#3 According to one new report, in 2009 residents of New York state experienced their first full-year decline in income in more than 70 years.

#4 Of the 52 largest metro areas in the United States, only the city of San Antonio did not see a decline in median household income in 2009.

#5 Home ownership in the United States declined for the third year in a row in 2009.

#6 In 2009, approximately 4 million Americans fell out of the middle class and now live below the federal poverty line.

#7 The number of Americans enrolled in the food stamp program has set a new all-time record for 20 consecutive months

#8 In July (the last month for which data is available), 41.8 million Americans were on food stamps.

#9 The number of Americans in the food stamp program skyrocketed more than 55 percent between December 2007 and July 2010.

#10 In 2009, more than 48 million Americans were enrolled in the Medicaid program.

#11 One out of every six Americans is now enrolled in at least one anti-poverty program run by the U.S. government.

#12 According to one recent study, approximately 21 percent of all children in the United States are living below the poverty line in 2010.

#13 According to the Cato Institute, anti-poverty spending by the U.S. government has increased 89 percent over the past decade.

#14 The cost of health care increased a staggering 9.6% for all U.S. households from 2007 to 2009.

#15 It turns out that only the top 5 percent of all U.S. households have earned enough additional income to match the rise in housing costs since 1975.

#16 35 percent of all U.S. households now live on $35,000 or less.

#17 New York state Comptroller Thomas DiNapoli says that Wall Street bonuses for 2009 were up 17 percent when compared with 2008.

#18 According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck.  That was up substantially from 49 percent in 2008 and 43 percent in 2007.

#19 Today, 28% of all American households have at least one member that is searching for a full-time job.

#20 Nearly 10 million Americans now receive unemployment insurance, which is almost four times as many that were receiving it back in 2007.

#21 A recent Pew Research survey found that 55 percent of the U.S. labor force has experienced either unemployment, a pay decrease, a reduction in hours or an involuntary move to part-time work since the recession began.

#22 In 2009, 43.6 million Americans were living in poverty.  Sadly, the number of Americans living in poverty has increased for three consecutive years, and the 43.6 million poor Americans in 2009 was the highest number that the U.S. Census Bureau has ever recorded in 51 years of record-keeping.

#23 A staggering 25 percent of all American adults now have a credit score below 599.

#24 It is estimated that nearly a third of all Americans cannot qualify for a mortgage because of low credit scores.

#25 For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all American households put together.

#26 Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a stunning 32 percent increase over 2008.

#27 According to a new report by the U.S. Census Bureau, the bottom fifth of all U.S. income earners brought in just 3.4 percent of all income in 2009 while the top fifth brought in a whopping 49.4 percent of all income.

So is there any hope that things will turn around soon?

No, not really.

At this point, even some of the top economic authorities in the nation are admitting that we are headed for very difficult times.

Goldman Sachs recently announced that the U.S. economy is likely to be either “fairly bad” or “very bad” over the next 6 to 9 months.

Not only that, but Federal Reserve Chairman Ben Bernanke now says that the U.S. economy is in a situation that is dire and “unsustainable”.

Not that Goldman Sachs or Fed Chairman Ben Bernanke should be trusted when it comes to the economy.

When it comes to the problems we are facing, the truth can be found in the long-term trends.  If you have not done so already, please read “11 Long-Term Trends That Are Absolutely Destroying The U.S. Economy“.  It will open your eyes to the true horrors that our economy is now facing.

But statistics alone do not tell the real story.

Sometimes what gets lost in the endless economic statistics is the very real pain of the millions of Americans who are trying to live through this.  The following story from the Unemployed Friends website is from a woman named Leetah who is desperately hoping to be able to get through this upcoming winter….

The place I live in right now has no jobs and no places to live. My fiance, Lloyd, and I have been looking for anything but he lost his job from McDonald’s and the factories (the only jobs to make a living off of) consider him an insurance liability. I can’t get hired to a factory because of I was fired from our major factory for attendance (I had to miss 3 days of work because I was sick). So we are moving to the Edmond/OKC region where we are hoping to find a job and a place with running water and heating. We’ve spent the last few years without heat and running water and so having a place with water and heat would be heaven.

Winter is coming up fast and I am so afraid. Last winter we almost died from the cold and now the thought of cold makes my throat close up and my heart pound. But it isn’t just ourselves we are looking out for, we have our dog too. Our wonderful APBT Maggie who is 2-years-old and has been with us since she was 5-months-old. She’s our baby girl and we can’t lose her. We almost lost her to the cold too and it scared me so much. We are going to be living in our car soon with our dog.

I am hoping to be able to keep our food stamps in the new city so we can still eat. I have already applied for ten+ jobs and nothing yet but I am keeping my hopes up. Hopefully it will get easier to find a job once we get there. Then we just have to save up and then we can afford an apartment. Now finding an apartment with my awesome dog is another story.

Please say a prayer for those who are out of work and on the verge of being forced out on the street.

You never know, you might be next.

Home Sales Drop 27 Percent In July And Things Are Only Going To Get Worse For The U.S. Housing Industry

On Tuesday the National Association of Realtors announced that existing home sales in the United States dropped a whopping 27.2% in the month of July.  The consensus among analysts was that we would see a drop of around 13 percent, so when the 27 percent figure was announced it sent a shock through world financial markets.  To say that the real estate industry is alarmed by these numbers would be a tremendous understatement. What we are seeing unfold is essentially “Armageddon” for those involved in the housing and real estate industries.  The real estate market is grinding to a standstill and a shockingly low number of people are actually in the market to buy a home right now.  In the months ahead home sales may pick up a little bit, but only if housing prices start to fall.  Why?  Because right now there are tons of houses on the market and there are very few qualified buyers available to purchase them and potential buyers are starting to realize this.  Buyers are beginning to understand that they have all the leverage now and they are waiting for prices to fall.

Anyone who has taken Economics 101 in college knows that when supply is high and demand is low prices will fall, and that is exactly the situation we have in the U.S. housing market right now.

At the moment, most home sellers in the United States are very hesitant to lower the prices on their homes too much.  Many have no intention of selling their homes below what they originally paid for them, and many others truly believe that the housing market will eventually rebound.

But the truth is that housing prices are simply not going to rebound to 2006 levels.  If anything, they are going to continue to fall.

The following are the three basic points that every American needs to understand about the U.S. housing market right now….    

1) There Is A Gigantic Mountain Of Unsold Homes On The Market

There are a staggering number of unsold homes on the market right now.  As you can see from the chart from the Calculated Risk blog below, there is now over a year’s worth of unsold homes flooding the marketplace….

So who is going to buy all of those unsold homes with so few qualified purchasers in the marketplace?

That is a very good question.

Unfortunately, all the signs indicate that the glut of unsold homes is going to get even worse.

As of this March, U.S. banks had an inventory of 1.1 million foreclosed homes, which was a new all-time record and which was up 20 percent from one year ago.

And the tsunami of foreclosures and repossessions just keeps growing….

*One out of every seven mortgages were either delinquent or in foreclosure during the first quarter of 2010.

*According to RealtyTrac, a total of 1.65 million U.S. properties received foreclosure filings during the first half of 2010.

*U.S. Banks repossessed 269,962 U.S. homes during the second quarter of 2010, which was a new all-time record.

The supply of unsold homes is already incredibly massive and it is growing at a staggering rate. 

With such a flood of homes on the market, why in the world would anyone in their right mind pay a premium price for a home in 2010?

2) There Are Not Nearly Enough Qualified Buyers Seeking To Buy Homes

The banks and lending institutions that survived the subprime mortgage crisis of 2007 and 2008 learned some very valuable lessons.  The days when even the family dog could get approved for a home loan are long gone.  Now the pendulum has swung to the other end of the spectrum.  Fearful of making more bad loans, banks and lending institutions have really, really tightened up lending standards.  So a lot fewer people are getting approved for home loans these days.

That makes a lot of business sense for banks and lending institutions, but it also means that there are a lot fewer qualified buyers out there looking for homes.

Not only that, but millions of Americans who could potentially buy homes are waiting for the market to go down even further.

When you add that all together, you get the kind of home sales numbers discussed at the beginning of the article.

The Mortgage Bankers Association recently announced that demand for loans to purchase U.S. homes has sunk to a 13-year low.  Unless the number of Americans getting approved for home loans starts increasing, you simply are not going to see housing numbers recover much.

And the truth is that Americans are not even doing much browsing for homes right now.  Even Internet searches for homes are way down.  Internet searches on real estate websites are down about 20 percent compared to this same time period in 2009.

So with a massive flood of houses on the market and with very few qualified buyers to purchase them, how in the world are housing prices supposed to go up?

3) The Housing Industry Will Never Fully Recover Without A Jobs Recovery First

In order to get qualified for home loans, Americans have to have good jobs first.  But in this economy that is a huge problem.

Robert Dye, a senior economist with PNC Financial Services Group, recently told USA Today what he believes the bottom line problem of this housing crisis is…. 

“Jobs, jobs, jobs”

Today, 14 million Americans are unemployed and millions more are underemployed.  Unfortunately, there are not nearly enough good jobs for all of them.

Today it takes the average unemployed American over 8 months to find a job.  The number of Americans receiving long-term unemployment benefits has risen a staggering 60 percent in the past year alone.

Things have gotten so bad that according to one recent survey 28% of all U.S. households have at least one person that is searching for a full-time job.

To get an understanding of how horrific the unemployment situation has become in the United States, take 38 seconds to watch the incredible video posted below….

The truth is that without jobs, Americans simply cannot buy homes.

So is there any hope that we will see a robust jobs recovery any time soon?

Well, as I have written about previously, unfortunately there is every indication that the employment market is going to get even worse.

So the bottom line is that the housing market is going to continue to suffer.

There is going to continue to be a massive glut of unsold homes on the market.

There are going to continue to be very few qualified buyers in the marketplace.

Large numbers of Americans are going to continue to be unemployed.

Yes, that is a lot of bad news, but you aren’t reading this column to get the same kind of mindless optimism that you get from the mainstream media news.

Even Tony Robbins Is Warning That An Economic Collapse Is Coming

It seems like almost everyone is warning of a coming economic collapse these days.  Do you remember Tony Robbins?  He is probably the world’s best known “motivational speaker” and his infomercials dominated late night television during the 80s and 90s.  He was always urging all of us to “unleash the power within” and to take charge of our lives.  Well guess what?  Now Tony Robbins is warning that an economic collapse is coming. In fact, he has issued a special video warning about what he believes is about to happen. Considering the incredible connections that he has at the highest levels of the financial world, it makes a lot of sense to consider what he is trying to warn us about. Robbins says that a “major retracement” is coming to financial markets and that the coming collapse is going to be a “painful process” as we go through it.  Those familiar with Tony Robbins know that he always goes out of his way to stress the positive, so if even he is openly warning the public about a coming economic nightmare than you know that things are starting to get really, really bad out there.

The video that Tony Robbins published where he gives his economic warning is posted in two parts below.  This is unlike any Tony Robbins video that you have ever seen before and it is absolutely jaw dropping….  

Part 1:

Part 2:

So is Tony Robbins right about what is coming?

Yup.

An economic collapse is coming.

You need to get prepared.

For those not familiar with my previous articles, let’s review just some of the reasons why America is headed towards an economic nightmare of unprecedented proportions….

The National Debt – The U.S. government has accumulated a national debt that is rapidly approaching the 14 trillion dollar mark.  According to Democrat Erskine Bowles, one of the heads of Barack Obama’s national debt commission, if we continue on the path we are on the U.S. government will be spending $2 trillion just for interest on the national debt by 2020.

State And Local Debt – Many of America’s state and local governments may be in even worse financial shape than the federal government is.  In fact, some state and local governments are in such a financial mess that they have starting cutting off even the most essential services.

Consumer Debt – The total amount of consumer debt that Americans have accumulated now stands at approximately 11.7 trillion dollars

The Trade Deficit – The U.S. trade deficit has exploded to nightmarish proportions over the past two decades.  Every single month tens of billions more dollars flows out of the country than flows into it.  The rest of the world is literally bleeding us dry in slow motion.

No Jobs – Today it takes the average unemployed American over 8 months to find a job.  The number of Americans receiving long-term unemployment benefits has risen over 60 percent in just the past year.

The Credit Crunch – The U.S. is experiencing a credit crunch unlike anything it has seen since the Great Depression.  Lending has really, really dried up, but without loans our economic system cannot function properly.

The Housing Crisis – Even with mortgage rates at historic lows, a shockingly low number of Americans are buying houses.  There has been a total collapse in home sales since the home buyer tax credit expired.  At the same time, mortgage defaults, foreclosures and home repossessions by banks continue to set new all-time records. 

Rising Bankruptcies – Nationwide, bankruptcy filings rose 20 percent in the 12-month period ending June 30th.

Rising Poverty – One out of every eight Americans and one out of every four American children are now on food stamps.  Approximately 50 million Americans couldn’t even afford to buy enough food to stay healthy at some point last year.

The Coming Pension Crisis – America is facing a pension crisis that is so nightmarish that it is almost impossible to adequately describe it.  State and local government pension plans are woefully underfunded, dozens of large corporate pension plans either have collapsed or are on the verge of collapsing, Social Security is a complete and total financial disaster and about half of all Americans essentially have nothing saved up for retirement.

The Derivatives Bubble – Our financial system has become a gigantic gambling parlor and we have allowed a horrific derivatives bubble to develop that could destroy the entire world economy if it ever bursts.  Nobody knows exactly how big the derivatives bubble is, but low estimates place it at around 600 trillion dollars and high estimates put it at around 1.5 quadrillion dollars.  Once that bubble pops there simply will not be enough money in the entire world to fix it.

The Federal ReserveThe Federal Reserve has devalued the U.S. dollar by over 95 percent since 1913 and it has been used to create the biggest mountain of government debt in the history of the world.  There are many economists who would argue that the Federal Reserve is at the very core of our economic problems.

As we get even closer to the economic abyss that we are racing towards, even more big names such as Tony Robbins will come forward with warnings.

The truth is that these problems did not develop overnight, and they are not going to be solved overnight either. 

Perhaps our economic future is best summed up by this one statement that economist Paul Krugman recently made….

“America is now on the unlit, unpaved road to nowhere.”

It would be great if I could write about America’s bright economic future and the unlimited prosperity that is ahead for all of us, but that would be a lie.

We are headed for an economic collapse.

It is going to be painful.

It is time to get prepared.

5 Trillion MORE Dollars To Fix Fannie Mae And Freddie Mac???

Fannie Mae and Freddie Mac have become gigantic financial black holes that the U.S. government endlessly pours massive quantities of money into.  Unfortunately, if the U.S. government did allow Fannie Mae and Freddie Mac to totally implode, both the mortgage industry and the housing industry in the United States would completely collapse.  So essentially the U.S. government finds itself between a rock and a hard place.  Prior to the financial crisis of the last few years, Fannie Mae and Freddie Mac were profit-seeking private corporations that also had a government-chartered mission of expanding home ownership in America.  But now that they have been officially taken over by the U.S. government, they have become gigantic bottomless money pits.  It is hard to even describe just how much of a mess Fannie and Freddie are in.  However, the unprecedented intervention by Fannie Mae and Freddie Mac in the mortgage market over the past couple of years has been about the only thing that has kept it from plunging into absolute chaos.  So what does the future hold for Fannie Mae and for Freddie Mac?  Well, according to one estimate, it could take another 5 trillion dollars to “fix” Fannie Mae And Freddie Mac.

Yes, you read the correctly.  According to an article in the Christian Science Monitor, Fannie Mae and Freddie Mac are facing $5 trillion dollars in liabilities that the federal government is going to have to deal with one way or another….

An exit strategy could involve adding Fannie and Freddie’s roughly $5 trillion in obligations, in effect, to a federal balance sheet that already includes $13.3 trillion in federal government debts. The GSE obligations would be a different animal, because those liabilities would need to be covered by taxpayers only if things went bad in the housing market.

It is hard to even put into words how much money that is.  If you were alive when Jesus was born, and you spent one million dollars every single day since then, you still would not have spent one trillion dollars by now.

But Fannie Mae and Freddie Mac are not a one trillion dollar problem.

They are a five trillion dollar problem.

And if the housing market gets even worse (which it will), that figure could rise substantially.

Of course the U.S. government should have never gotten into the mortgage business in the first place, but these days the U.S. government is intervening in virtually every industry.

And don’t expect U.S. government support for the mortgage industry to stop any time soon.  In fact, U.S. Treasury Secretary Timothy Geithner says that the U.S. government plans to continue to play a prominent role in back-stopping mortgages in order to keep the U.S. economy stabilized.

But if the only thing keeping the U.S. housing industry from plunging into the abyss is unprecedented intervention by the U.S. government, what does that say about the overall health of the U.S. economy?

Mortgage defaults and foreclosures continue to set new all-time records even with all of this government intervention.  In fact, major U.S. banks wrote off about $8 billion on mortgages during the first 3 months of 2010, and if this pace continues it will even exceed 2009’s staggering full-year total of $31 billion.

Not only that, but construction of new homes in the U.S. and applications to build new homes in the U.S. both declined to their lowest levels in more than a year during July.

And things are rapidly getting even worse for Fannie Mae and Freddie Mac.  Mortgages held by Fannie and Freddie are going delinquent at a very alarming pace as the Christian Science Monitor recently explained….

As of March 31 this year, 6.3 percent of mortgages held by Fannie and Freddie are either seriously delinquent or in foreclosure. Although that’s down slightly from the figure three months earlier, it represents a big one-year rise (from 3.9 percent in early 2009).

An increase in delinquencies of over 50 percent in just one year?

That is not a promising trend.

If the U.S. housing market takes another big dive in the next few years, and things certainly look very ominous at the moment, what in the world is that going to do to Fannie Mae and Freddie Mac?

So what is the solution?

Well, on Tuesday the Obama administration invited prominent banking executives to offer their thoughts on the mortgage market.

So what was the consensus?

It was something along the lines of this: “Please, oh please, oh please continue propping up the 11 trillion dollar mortgage market.”

So much for capitalism, eh?

When even the banksters are begging for massive ongoing government intervention you know that the game has changed.

Adam Smith must be rolling over in his grave.

But this is where we are at.

We are on the verge of a horrific economic collapse, and it is only enormous intervention by the U.S. government that is holding things together.

Fannie Mae, Freddie Mac, the Federal Housing Administration and the Veterans Administration backed approximately 90 percent of all home loans made during the first half of 2010.

So where would we be without the government?

Of course we could let the whole thing collapse and allow housing prices to eventually settle at a level where people could actually afford them, but what fun would that be?

No, for now the U.S. government will continue to endlessly spend billions of dollars to prop up a system that is artificially inflated and that is destined to collapse one way or another.

The truth is that the American middle class is slowly being wiped out and they just can’t afford to pay $300,000, $400,000 or $500,000 for their houses anymore.

Without good jobs, the American people are not going to be able to afford hefty mortgages.  Unfortunately, millions upon millions of middle class jobs are being offshored and outsourced every single year and they are not coming back.

There simply will never be a recovery in the housing market without jobs.  But in the new global economy, American workers have been put in direct competition with the cheapest labor in the world.  It doesn’t take a genius to figure out that jobs are going to be taken away from American workers and given to people who are willing to work for less than ten percent as much.

So, no, the housing market is never going to fully recover.  Things got dramatically out of balance over the past couple of decades, and the housing market is going to try to restore that balance regardless of what the U.S. government does. 

The U.S. government can continue to throw billions (or even trillions) of dollars at the problem, but in the end the underlying economic fundamentals are simply not going to be denied.

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