When you get into too much debt, eventually really bad things start to happen. This is a very painful lesson that southern Europe is learning right now, and it is a lesson that the United States will soon learn as well. It simply is not possible to live way beyond your means forever. You can do it for a while though, and politicians in the U.S. and in Europe keep trying to kick the can down the road and extend the party, but the truth is that debt is a very cruel master and at some point it inevitably catches up with you. And when it catches up with you, the results can be absolutely devastating. Greece, Italy, Spain and Portugal all tried to just slow down the rate at which their government debts were increasing, and look at what happened to their economies. In each case, GDP is shrinking, unemployment is skyrocketing, credit is freezing up and manufacturing is declining. And you know what? None of those countries has even gotten close to a balanced budget yet. They are all still going into even more debt. Just imagine what would happen if they actually tried to only spend the money that they brought in?
I have always said that the next wave of the economic collapse would start in Europe and that is exactly what is happening. So keep watching Europe. What is happening to them will eventually happen to us.
The following are 17 signs that a full-blown economic depression is raging in southern Europe…
#1 The Italian economy is in the midst of a horrifying “credit crunch” that is causing thousands of companies to go bankrupt…
Confindustria, the business federation, said 29pc of Italian firms cannot meet “operational expenses” and are starved of liquidity. A “third phase of the credit crunch” is underway that matches the shocks in 2008-2009 and again in 2011.
In a research report the group said the economy was caught in a “vicious circle” where banks are too frightened to lend, driving more companies over the edge. A thousand are going bankrupt every day.
#2 During the 4th quarter of 2012, the unemployment rate in Greece was 26.4 percent. That was 2.6 percent higher than the third quarter of 2012, and it was 5.7 percent higher than the fourth quarter of 2011.
#3 During the 4th quarter of 2012, the youth unemployment rate in Greece was 57.8 percent.
#4 The unemployment rate in Spain has reached 26 percent.
Data from Italy’s national statistics institute ISTAT showed that the country’s economy shrank by 0.9pc in the fourth quarter of last year and gross domestic product was down a revised 2.8pc year-on-year.
#10 The Greek economy is contracting even faster than the Italian economy is…
Greece also sank further into recession during the fourth quarter of 2012, with figures on Monday showing the economy contracted by 5.7pc year-on-year.
#12 Manufacturing activity is declining just about everywhere in Europe except for Germany…
Research group Markit said its index of activity in UK manufacturing – where 50 is the cut off between growth and decline – sank from 50.5 in January to 47.9 in February. It left Britain on the brink of a third recession in five years after the economy shrank by 0.3 per cent in the final quarter of 2012.
Chris Williamson, chief economist at Markit, said: ‘This represents a major setback to hopes that the UK economy can return to growth in the first quarter and avoid a triple-dip recession.’
The eurozone manufacturing index also read 47.9. Germany scored 50.3 but Spain hit 46.8, Italy 45.8 and France 43.9.
#13 The percentage of bad loans in Italian banks has risen to 12.2 percent. Back in 2007, that number was sitting at just 4.5 percent.
#14 Bank deposits experienced significant declines all over Europe during the month of January.
#15 Private bond default rates are soaring all over southern Europe…
S&P said the default rate for Italian non-investment grade bonds jumped to 9.5pc last year from 5.7pc in 2012 as local banks shut off funding. It was even worse in Spain, doubling to 14.3pc.
The default rate in France rocketed from 0.8pc to 8.7pc, the latest in a blizzard of bad news from the country as the delayed effects of tax rises, fiscal tightening, and the strong euro do their worst.
#16 Lars Feld, a key economic adviser to German Chancellor Angela Merkel, recently said the following…
“The sustainability of Italian public finances is in jeopardy. The euro crisis will therefore return shortly with a vengeance.”
#17 Things have gotten so bad in Greece that the Greek government plans to sell off 28 state-owned buildings – including the main police headquarters in Athens.
One of the few politicians in Europe that actually understands what is happening in Europe is Nigel Farage. A video of one of his recent rants is posted below. Farage believes that “the Eurozone has been a complete economic disaster” and that the worst is yet to come…
Most people believe that the eurozone has been “saved”, but that is not even close to the truth.
In fact, it becomes more likely that we will see the eurozone break up with each passing day.
So who would leave first?
Well, recently there have been rumblings among some German politicians that Greece should be the first to leave. The following is from a recent Reuters article…
Greece remains the biggest risk for the euro zone despite a calming of its economic and political crisis and may still have to leave the common currency, a senior conservative ally of German Chancellor Angela Merkel said.
But there is also a chance that Germany could eventually be the first nation that decides to leave the euro. In fact, a new political party is forming in Germany that is committed to getting Germany out of the euro. The following is a brief excerpt from a recent article by Ambrose Evans-Pritchard…
A new party led by economists, jurists, and Christian Democrat rebels will kick off this week, calling for the break-up of monetary union before it can do any more damage.
“An end to this euro,” is the first line on the webpage of Alternative für Deutschland (AfD). “The introduction of the euro has proved to be a fatal mistake, that threatens the welfare of us all. The old parties are used up. They stubbornly refuse to admit their mistakes.”
They propose German withdrawl from EMU and return to the D-Mark, or a breakaway currency with the Dutch, Austrians, Finns, and like-minded nations. The French are not among them. The borders run along the ancient line of cleavage dividing Latins from Germanic tribes.
However this all plays out, the reality is that things are about to get much more interesting in Europe.
No debt bubble lasts forever. The Europeans are finding that out right now, and the U.S. won’t be too far behind.
But for the moment, most Americans assume that everything is going to be okay because the Dow keeps setting new all-time record highs.
Well, enjoy this little bubble of debt-fueled false prosperity while you can, because it won’t last for long.
A massive wake up call is coming, and it will be exceedingly painful for those that are not ready for it.
The economic implosion of Europe is accelerating. Even while the mainstream media continues to proclaim that the financial crisis in Europe has been “averted”, the economic statistics that are coming out of Europe just continue to get worse. Manufacturing activity in Europe has been contracting month after month, the unemployment rate in the eurozone has hit yet another brand new record high, and the official unemployment rates in both Greece and Spain are now much higher than the peak unemployment rate in the United States during the Great Depression of the 1930s. The economic situation in Europe is far worse than it was a year ago, and it is going to continue to get worse as austerity continues to take a huge toll on the economies of the eurozone. It would be hard to understate how bad things have gotten – particularly in southern Europe. The truth is that most of southern Europe is experiencing a full-blown economic depression right now. Sadly, most Americans are paying very little attention to what is going on across the Atlantic. But they should be watching, because this is what happens when nations accumulate too much debt. The United States has the biggest debt burden of all, and eventually what is happening over in Spain, France, Italy, Portugal and Greece is going to happen over here as well.
The following are 20 facts about the collapse of Europe that everyone should know…
#110 Months: Manufacturing activity in both France and Germany has contracted for 10 months in a row.
#211.8 Percent: The unemployment rate in the eurozone has now risen to 11.8 percent – a brand new all-time high.
#317 Months: In November, Italy experienced the sharpest decline in retail sales that it had experienced in 17 months.
#420 Months: Manufacturing activity in Spain has contracted for 20 months in a row.
#520 Percent: It is estimated that bad loans now make up approximately 20 percent of all domestic loans in the Greek banking system at this point.
#622 Percent: A whopping 22 percent of the entire population of Ireland lives in jobless households.
#726 Percent: The unemployment rate in Greece is now 26 percent. A year ago it was only 18.9 percent.
#826.6 Percent: The unemployment rate in Spain has risen to an astounding 26.6 percent.
#927.0 Percent: The unemployment rate for workers under the age of 25 in Cyprus. Back in 2008, this number was well below 10 percent.
#1028 Percent: Sales of French-made vehicles in November were down 28 percent compared to a year earlier.
#1136 Percent: Today, the poverty rate in Greece is 36 percent. Back in 2009 it was only about 20 percent.
#1237.1 Percent: The unemployment rate for workers under the age of 25 in Italy – a brand new all-time high.
#1344 Percent: An astounding 44 percent of the entire population of Bulgaria is facing “severe material deprivation”.
#1456.5 Percent: The unemployment rate for workers under the age of 25 in Spain – a brand new all-time high.
#1557.6 Percent: The unemployment rate for workers under the age of 25 in Greece – a brand new all-time high.
#1660 Percent: Citigroup is projecting that there is a 60 percent probability that Greece will leave the eurozone within the next 12 to 18 months.
#1770 Percent: It has been reported that some homes in Spain are being sold at a 70% discount from where they were at during the peak of the housing bubble back in 2006. At this point there are approximately 2 million unsold homes in Spain.
#18200 Percent: The debt to GDP ratio in Greece is rapidly approaching 200 percent.
#191997: According to the Committee of French Automobile Producers, 2012 was the worst year for the French automobile industry since 1997.
#202 Million: Back in 2005, the French auto industry produced about 3.5 million vehicles. In 2012, that number dropped to about 2 million vehicles.
One thing that these shocking numbers cannot convey is the tremendous amount of pain that many average Europeans are living through on a daily basis at this point. To get a peek into what life is like in Greece these days, check out this short excerpt from a recent Bloomberg article…
Anastasia Karagaitanaki, 57, is a former model and cafe owner in Thessaloniki, Greece. After losing her business to the financial crisis, she now sleeps on a daybed next to the refrigerator in her mother’s kitchen and depends on charity for food and insulin for her diabetes.
“I feel like my life has slipped through my hands,” said Karagaitanaki, whose brother also shares the one-bedroom apartment. “I feel like I’m dead.”
For thousands of Greeks like Karagaitanaki, the fabric of middle-class life is unraveling. Teachers, salaries slashed by a third, are stealing electricity. Families in once-stable neighborhoods are afraid to leave their homes because of rising street crime.
All over Europe, people that have lost all hope are actually setting themselves on fire in a desperate attempt to draw attention. Millions of formerly middle class Europeans have lost everything and are becoming increasingly desperate. Suicide and crime are skyrocketing all over southern Europe and massive street riots are erupting on a regular basis.
Unfortunately, this is just the beginning. Things are going to get even worse for Europe.
Meanwhile, those of us living in the United States smugly look down our noses at Europe because we are still living in a false bubble of debt-fueled prosperity.
But eventually we will feel the sting of austerity as well. The recent fiscal cliff deal was an indication of that. Taxes are going up and government spending is at least going to slow down. It won’t be too long before the effects of that are felt in the economy.
And of course the reality of the situation is that the U.S. economy really did not perform very well at all during 2012 when you take a look at the numbers. The cold, hard truth is that the U.S. economy has been declining for a very long time, and there are a whole bunch of reasons to expect that our decline will accelerate even further in 2013.
So if you are an American, don’t laugh at what is happening over in Europe at the moment. We are headed down the exact same path that they have gone, and we are going to experience the same kind of suffering that they are going through right now.
Use these last few “bubble months” to prepare for what is ahead. At some point this “hope bubble” will disappear and then the time for preparation will be over.
What is the biggest economic problem that the United States is facing? Very simply, our biggest problem is that we have way too much debt. Over the past 30 years, household debt, corporate debt and government debt have all grown much faster than our GDP has. But no nation on earth has ever been able to expand debt much faster than national output indefinitely. All debt bubbles eventually burst. Right now, we are living in the greatest debt bubble in the history of the world. All of this debt has fueled a “false prosperity” which has enabled many Americans to live like kings and queens. But no nation (or household) can pile on more debt forever. At some point the weight of the debt becomes just too great. It is amazing that the United States has been able to pile up as much debt as it has. Over the years, many authors have predicted that U.S. government finances would collapse long before the U.S. national debt ever got to this level. So the mountain of debt that we have accumulated is quite an “achievement” if you want to look at it that way. But the clock is ticking on this debt bubble and when it collapses we will say “bye bye” to our vastly inflated standard of living and we will discover that we have destroyed the economy for all future generations of Americans.
Sometimes a picture is worth a thousand words. When most Americans think of the “debt problem” in this country, they think of the debt of the federal government.
But that is not the only debt bubble that we are facing.
Thirty years ago, household debt in the United States was approaching the 2 trillion dollar mark. Today, it is sitting at about 13 trillion dollars….
We have been trained to pay for everything with debt.
We pay for our homes with debt, and mortgage debt as a percentage of GDP has more than tripled since 1955.
We pay for our cars with debt, and at this point about 70 percent of all auto purchases in the United States involve an auto loan.
We pay for higher education with debt, and the total amount of student loan debt in America recently surpassed the one trillion dollar mark.
Wherever we go we pay with plastic.
If you want a heated cat bed and a cute little cat sweater for your little kitty just put it on your Visa or Mastercard.
Amazingly, consumer debt in America has risen by a whopping 1700% since 1971, and if you can believe it, 46% of all Americans carry a credit card balance from month to month.
We are absolutely addicted to debt and we do not know how to stop.
State And Local Government Debt
Our state and local governments are also addicted to debt.
30 years ago, state and local government debt was approaching the 400 million dollar mark. Today, state and local government debt is hovering around the 3 trillion dollar mark….
In the United States today, we don’t just have one “government debt problem” – the truth is that we have hundreds of them. All over the country, state and local governments are facing bankruptcy because of too much debt.
For example, according to Fox News the city of Stockton, California is right on the verge of declaring bankruptcy. In fact, an announcement could come as early as this week….
Stockton, Calif., is set to declare bankruptcy as early as this week, according to local officials, a move that would make it one of the largest U.S. cities ever to file for reorganization.
On Monday, a state-required mediation with creditors to find a fiscal solution is scheduled to expire. Stockton’s City Council is then slated to meet Tuesday to decide whether to adopt a budget for operating in bankruptcy, a move widely considered the last step before the city formally submits a Chapter 9 petition to federal bankruptcy court.
Federal Government Debt
Of course the biggest offender of all is the federal government. 30 years ago, Ronald Reagan was running around proclaiming what a nightmare it was that the U.S. national debt was reaching the one trillion dollar mark.
Well, now we are about to blast through the 16 trillion dollar mark with no end in sight….
Running up debt at a much faster rate than our GDP is rising is a recipe for national financial suicide. Our politicians continue to steal about 150 million dollars an hour from future generations and everybody just acts like this is perfectly normal.
We are going down the same path that Greece, Portugal, Italy, Ireland and Spain have gone.
In fact, we already have more government debt per capita than all of those nations do.
Since Barack Obama entered the White House, we have accumulated more than five trillion dollars of additional debt.
We are on the road to national financial oblivion, and most Americans don’t seem to care.
Debt From Sea To Shining Sea
Now let’s add up all the debt in the country. When you total up all household debt, business debt and government debt, it comes to more than 300% of our GDP….
In fact, if current trends continue we will hit 400% of GDP before too long.
As you can see from the chart, there was a little “hiccup” during the last recession, but now the debt bubble is growing again.
So how high can it go before the entire system collapses?
Total credit market debt owed is roughly 10 times larger than it was about 30 years ago.
How in the world did we accumulate 10 times more debt in just 30 years?
If we do that again in the next 30 years, our total debt will be more than 500 trillion dollars in the 2040s.
Unfortunately, that is the way that debt spirals work. They either have to keep expanding or they collapse.
So will the U.S. debt spiral continue to expand?
Or will we soon see a collapse?
Sadly, this exact same thing is happening all over the world. The government debt to GDP ratio in Japan (the third largest economy in the world) blew past the 200% mark quite a while ago, and almost every country in the EU is absolutely drowning in debt.
The world has never faced anything quite like this. There is way, way too much debt in the world, but the only way we can continue to enjoy this level of prosperity under the current system is to pile up a lot more debt.
The western world is like a debt addict in a deep state of denial. Some debt addicts end up with dozens of credit card accounts. They will keep opening more accounts as long as someone will let them. Most debt addicts actually believe that they will be able to get out of the hole at some point, but most never do.
Most Americans still believe that we are experiencing “temporary” economic problems that will eventually go away. Most Americans still believe that even greater prosperity is still ahead.
Sadly, what the mainstream media and the two major political parties are telling them is a bunch of lies.
We have enjoyed the greatest prosperity that we will ever see in the United States, and when the debt bubble bursts there is going to be an immense amount of pain.
That is a very painful truth, but it is better to come to grips with it now than be blindsided by it later.
How is the U.S. economy doing in 2012? Unfortunately, it is not doing nearly as well as the mainstream media would have you believe. Yes, things have stabilized for the moment but this bubble of false hope will not last for long. The long-term trends that are ripping our economy and our financial system to shreds continue unabated. When you step back and look at the broader picture, it is hard to deny that we are in really bad shape and that things are rapidly getting worse. Later on in this article you will find a list of interesting facts that show the true state of the U.S. economy. Hopefully many of you will find this list to be a useful tool that you can share with your family and friends. Each day the foundations of our economy crumble a little bit more, and we need to wake up as many Americans as we can to what is really going on while there is still time. We have accumulated way too much debt, we consume far more wealth than we produce, millions of our jobs are being shipped overseas, our big cities are decaying, family budgets are being squeezed more than ever, poverty is rampant and we have raised several generations of Americans that expect the government to fix all of their problems. The U.S. economy is at a crossroads, and the decisions that the American people make in 2012 are going to be incredibly important.
The statistics listed below are presented without much commentary. They pretty much speak for themselves.
After reading this list, it will be hard for anyone to argue that we are on the right track.
The following are 55 interesting facts about the U.S. economy in 2012….
#1 As you read this, there are more than 6 million mortgages in the United States that are overdue.
#11 According to Reuters, approximately 23.7 million American workers are either unemployed or underemployed right now.
#12 There are about 88 million working age Americans that are not employed and that are not looking for employment. That is an all-time record high.
#13 According to CareerBuilder, only 23 percent of American companies plan to hire more employees in 2012.
#14 Back in the year 2000, about 20 percent of all jobs in America were manufacturing jobs. Today, about 5 percent of all jobs in America are manufacturing jobs.
#15 The United States has lost an average of approximately 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001.
#16 Amazingly, more than 56,000 manufacturing facilities in the United States have been shut down since 2001.
#17 According to author Paul Osterman, about 20 percent of all U.S. adults are currently working jobs that pay poverty-level wages.
#18 During the Obama administration, worker health insurance costs have risen by 23 percent.
#19 An all-time record 49.9 million Americans do not have any health insurance at all at this point, and the percentage of Americans covered by employer-based health plans has fallen for 11 years in a row.
#20 According to the New York Times, approximately 100 million Americans are either living in poverty or in “the fretful zone just above it”.
#21 In the United States today, corporate profits are at an all-time high. The percentage of Americans that are living in “extreme poverty” is also at an all-time high according to the U.S. Census Bureau.
#23 The poorest 50 percent of all Americans now collectively own just 2.5% of all the wealth in the United States.
#24 The number of children living in poverty in the state of California has increased by 30 percent since 2007.
#25 According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.
#26 Since Barack Obama entered the White House, the number of Americans on food stamps has increased from 32 million to 46 million.
#27 As the economy has slowed down, so has the number of marriages. According to a Pew Research Center analysis, only 51 percent of all Americans that are at least 18 years old are currently married. Back in 1960, 72 percent of all U.S. adults were married.
#28 In 1984, the median net worth of households led by someone 65 or older was 10 times larger than the median net worth of households led by someone 35 or younger. Today, the median net worth of households led by someone 65 or older is 47 times larger than the median net worth of households led by someone 35 or younger.
#29 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.
#31 According to the Student Loan Debt Clock, total student loan debt in the United States will surpass the 1 trillion dollar mark at some point in 2012. If you went out right now and starting spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
#34 The average interest rate on a credit card that is carrying a balance is now up to 13.10 percent.
#35 Of the U.S. households that do have credit card debt, the average amount of credit card debt is an astounding $15,799.
#36 Overall, Americans are carrying a grand total of $798 billion in credit card debt. If you were alive when Jesus was born and you spent a million dollars every single day since then, you still would not have spent $798 billion by now.
#37 It may be hard to believe, but the truth is that consumer debt in America has increased by a whopping 1700% since 1971.
#38 At this point, about 70 percent of all auto purchases in the United States involve an auto loan.
#39 In the United States today, 45 percent of all auto loans are made to subprime borrowers.
#52 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.
#53 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.
#54 Right now, the U.S. national debt is increasing by about 150 million dollars every single hour.
#55 Spending by the federal government accounted for about 2 percent of GDP back in 1800. It accounted for 23.8 percent in 2011, and according to former U.S. Comptroller General David M. Walker, it will account for 36.8 percent of GDP by 2040.
Bad news, eh?
But it isn’t just our economy that is decaying.
We are witnessing a tremendous amount of social decay as well. As I wrote about the other day, America is rapidly decomposing right in front of our eyes.
When the water level of a river drops far enough, it will reveal rocks that have been hidden from view for a very long time. Well, a similar thing is happening in America right now. For decades, our debt-fueled prosperity has masked a lot of the social decay that has been going on.
But now that our prosperity is evaporating, a lot of frightening stuff is being revealed.
Unfortunately, another major financial crisis is rapidly approaching and economic conditions in the United States are going to get a lot worse.
So what is our country going to look like when that happens?
We have all been lied to. For decades, the leaders of both major political parties have promised us that they can fix our current system and that they can get our national debt under control. As the 2012 election approaches, they are making all kinds of wild promises once again. Well you know what? It is all a giant sham. The United States has gotten into so much debt that there will be no coming back from this. The current system is irretrievably broken. 30 years ago the U.S. debt was a horrific crisis that was completely and totally out of control. If we would have dealt with it back then maybe we could have done something about it. But now it is 15 times larger, and we are adding more than a trillion dollars to the debt every single year. The facts that you are about to read below should set America on fire with anger. Please share them with as many people as you can. What we are doing to our children and our grandchildren is absolutely nightmarish. Words like “abuse”, “financial rape”, “theft” and “crime” do not even begin to describe what we are doing to future generations. We were the wealthiest nation on earth, but it wasn’t good enough just to squander all of our own money. We had to squander the money of our children and our grandchildren as well. America has been so selfish and so self-centered that it is hard to argue that we don’t deserve what is about to happen to this country. We have stolen the future of America, and yet we strut around as if we are the smartest generation that ever walked the face of the earth.
All of this prosperity that we see all around us is just an illusion. It is a false prosperity that has been purchased by the biggest mountain of debt in the history of the world.
Did you know that if you added up all forms of debt in the United States and divided it up equally that every single family in the country would owe more than $683,000?
We are a nation that is absolutely addicted to debt, and the U.S. debt crisis threatens to destroy everything that our forefathers built.
Yes, everything may seem fine for the moment, but what do you think would happen if the federal government suddenly adopted a balanced budget?
1.3 trillion dollars a year would be sucked right out of the economy and we would be looking at an “economic readjustment” that would be mind blowing.
Enjoy this false prosperity while you can, because it is not going to last.
Debt is a very cruel master, and our day of reckoning is almost here.
The following are 34 shocking facts about U.S. debt that should set America on fire with anger….
#4 According to Wikipedia, the monetary base “consists of coins, paper money (both as bank vault cash and as currency circulating in the public), and commercial banks’ reserves with the central bank.” Currently the U.S. monetary base is sitting somewhere around 2.7 trillion dollars. So if you went out and gathered all of that money up it would only make a small dent in our national debt. But afterwards there would be no currency for anyone to use.
#9 According to the GAO, the U.S. government is facing 34 trillion dollars in unfunded liabilities for social insurance programs such as Social Security and Medicare. These are obligations that we have already committed ourselves to but that we do not have any money for.
#10 Others estimate that the unfunded liabilities of the U.S. government now total over 117 trillion dollars.
#11 According to the GAO, the ratio of debt held by the public to GDP is projected to reach 287 percent of GDP by 2086.
#18 When you add up all spending by the federal government, state governments and local governments, it comes to 46.6% of GDP.
#19 Our nation is more addicted to government checks than ever before. In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for 18.4% of all income.
#21 A staggering 48.5% of all Americans live in a household that receives some form of government benefits. Back in 1983, that number was below 30 percent.
#22 Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid.
#23 In 1950, each retiree’s Social Security benefit was paid for by 16 U.S. workers. According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 full-time private sector workers for each person that is receiving Social Security benefits in the United States.
#24 The U.S. government now says that the Medicare trust fund will run out five years faster than they were projecting just last year.
#25 Right now, spending by the federal government accounts for about 24 percent of GDP. Back in 2001, it accounted for just 18 percent.
#26 If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion each and every year.
#27 If you were alive when Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now. But this year alone the U.S. government is going to add more than a trillion dollars to the national debt.
#28 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
#29 A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times. That amount of money would still not be enough to pay off the U.S. national debt.
#30 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 470,000 years to pay off the national debt.
#31 If Bill Gates gave every penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
#32 According to Professor Laurence J. Kotlikoff, the U.S. is facing a “fiscal gap” of over 200 trillion dollars in the future. The following is a brief excerpt from a recent article that he did for CNN….
The government’s total indebtedness — its fiscal gap — now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations — including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt — and all projected future taxes.
#33 If you add up all forms of debt in the United States (government, business and consumer), it comes to more than 56 trillion dollars. That is more than $683,000 per family. Unfortunately, the average amount of savings per family in the U.S. is only about $4,735.
#34 The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was created back in 1913.
But do our leaders care about statistics such as these?
In fact, Barack Obama says that we need to raise the debt limit by another 1.2 trillion dollars.
The absurdity of raising the debt limit when we are already in so much debt is beautifully illustrated by the video posted below….
I just thought that video was so well done.
The “huge cuts” that Congress has agreed to are absolutely meaningless when compared to how rapidly our debt is exploding.
Calling those cuts “pocket change” would be an insult to pocket change.
But it is not just U.S. debt that is the problem. The European debt crisis threatens to completely unravel in 2012 and Japan actually has the highest debt to GDP ratio in the entire industrialized world.
In 2012, a total of 7,600,000,000,000 dollars of debt must be rolled over by the G-7 nations, Brazil, Russia, India and China.
That doesn’t even count new borrowing. That number just represents old debts that are coming due that must be refinanced.
Anyone out there that insists that this debt bubble can be fixed under our current system is lying.
A massive amount of financial pain is coming.
It is time for Americans to wake up from their television-induced comas.
It is time for Americans to get very angry.
Your future has been destroyed and the future of your children and grandchildren has been destroyed.
Well, it is time to raise the debt ceiling again. Right now we are about to hit the current limit of $15.194 trillion and the Obama administration is going to ask that it be raised by another 1.2 trillion dollars. Unfortunately, Congress has already promised not to stand in the way, and so soon the debt limit will be raised to a staggering $16.394 trillion. Considering how much debt we have already placed on the backs of future generations, what is another 1.2 trillion dollars? After all, if we are going to sell our children and our grandchildren into debt slavery, we might as well go all the way, right? Such is the thinking in “the Obama Nation”. During “the Obama Nation”, the federal government has already accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office. Of course the Bush administration was nearly as bad at piling up government debt. Between Bush and Obama (with a big helping hand from the Federal Reserve), they have done a pretty good job of wiping out the financial future of the United States. If there are future generations of Americans, they will look back and curse those that did this to them. It is absolutely immoral to steal trillions of dollars from future generations. Unfortunately, there are very, very few members of Congress that are even objecting to this madness.
Today, more debt just seems to be the answer to everything. The truth is that debt is not just a government problem. We are a nation that is addicted to debt.
As of October, total consumer credit in the United States had increased for 12 of the past 13 months. We simply have not learned the lessons of the past and we are making the same mistakes all over again.
We are living in the greatest debt bubble in the history of the world, and this false prosperity that we are enjoying is simply not sustainable.
But even in the midst of this false prosperity we are seeing a huge number of store closings.
For example, it was just announced that Sears has decided to close between 100 and 120 Sears and Kmart stores.
Once upon a time, Sears was the dominant force in the retail industry, but those days are long gone. Sears stock has declined more than 45 percent so far this year, and many are wondering how long the company is going to be able to survive.
And there have been other high profile store closings announced during this holiday season as well. A while back it was announced that all Syms stores and all Filene’s Basement stores will be closing.
Will we all eventually be relegated to shopping only at Wal-Mart?
In the middle of this “economic recovery” that Obama keeps talking about a staggering number of retail stores are closing up shop. The following is a list of store closings in 2011 that I recently found. The first number represents the total number of stores being closed for each chain….
117 Anchor Blue
117 Foot Locker
71 A.J. Wright
60 Rite Aid
52 Destination Maternity
50 Abercrombie & Fitch
50 Hot Topic
45 Big Lots
45 Family Dollar
43 Select Comfort
43 Sonic Drive-In
32 Great Atlantic and Pacific Tea Company, Inc. (SuperFresh, Pathmark Super Market)
Sadly, it looks like things are going to get even worse next year. One consulting firm is projecting that there will be more than 5,000 store closings in 2012.
The United States is piling up unprecedented amounts of new debt at a time when our economy is dying and our ability to produce wealth is diminishing.
All over America right now, poverty is absolutely exploding. Millions of people that never dreamed that they would have to reach out for help now find that they have no other options. The following comes from a recent article in the Fiscal Times….
For years, the food pantry in Crystal Lake, Ill., a bedroom community 50 miles west of Chicago, has catered to the suburban areas’ poor, homeless and unemployed. But Cate Williams, the head of the pantry, has noticed a striking change in the makeup of the needy in the past year or two. Some families that once pulled down six-figure incomes and drove flashy cars are now turning to the pantry for help. A few of them donated food and money to the pantry before their luck soured, according to Williams.
“People will shyly say to me, ‘You know, I used to give money and food to you guys. Now I need your help,’” Williams told The Fiscal Times last week. “Most of the folks we see now are people who never took a handout before. They were comfortable, able to feed themselves, to keep gas in the car, and keep a nice roof over their head.”
But not everyone will ask for help nicely. As the economic numbers continue to get worse, desperate Americans will lash out in wild and unpredictable ways.
The following is from a local NBC station down in Texas. In the days to come, this type of report will become quite common….
A 19-year-old Houston-area man says he was beaten and a friend was slashed in the face as a group of men robbed him of his new pair of expensive Air Jordan shoes.
We will also see more mass protests and more mass riots as the months and years roll along. This country is going to become increasingly unstable.
Check out this video of a massive brawl that erupted inside Mall of America the other day. Soon scenes such as this will become so common that they will not even be newsworthy anymore.
In response, many Americans will get sick and tired of waiting for the police to protect them and will take matters into their own hands.
In fact, we are already starting to see this. For example, just the other day a store clerk down in North Carolina knocked a would-be robber out cold and then forced him to clean up his own blood after he woke up.
There are millions of Americans out there that are not going to put up with a whole lot of nonsense. When desperate criminals try to rob from their homes or businesses it might not end well for the criminals.
Of course it would be much nicer if the federal government would do some things to actually fix the economy and avoid some the problems that are looming on the horizon.
Ah, but that would interrupt their vacations. Right now, the U.S. House of Representatives is on vacation until mid-January.
If you can believe it, Congress does not work for most of the year. Normally they are scheduled to be in session for about a third of all the days on the calendar.
And Obama is certainly taking it easy. He is enjoying yet another vacation. As I wrote about yesterday, it has been estimated that the Obama Hawaiian vacation this year will cost somewhere in the neighborhood of 4 million dollars.
Yes, it is tough being the head of the Obama Nation.
Sadly, a lot of Americans still have faith in these jokers.
According to a Gallup poll that was just released, Barack Obama is the most admired man in America by far and Hillary Clinton is the most admired woman in America by far. If you can believe it, Barack Obama has held the top spot for men for four years in a row, and Hillary Clinton has held the top spot for women for ten years in a row.
When are we going to learn?
Someone once said that insanity is doing the same thing over and over again and expecting different results.
Well, the American people keep sending corrupt politicians such as Bush and Obama to the White House and they keep expecting things to get better.
It just isn’t going to happen.
If we stay on the current path that we are on, there will be a lot more store closings, the economy will continue to crumble and government debt will continue to skyrocket.
Minor changes are not going to cut it. We need massive changes on a fundamental level.
Unfortunately, neither political party is offering massive changes. The Republicans and the Democrats just keep offering the same tired solutions and they keep promising that they can “fix things” if we will just send more of them to Washington.
Hopefully the American people will wake up and see through these lies because time is running out.
Are we on the verge of a massive financial collapse in Europe? Rumors of an imminent default by Greece are flying around all over the place and Greek government officials are openly admitting that they are running out of money. Without more bailout funds it is absolutely certain that Greece will soon default on their debts. But German officials are threatening to hold up more bailout payments until the Greeks “do what they agreed to do”. The attitude in Germany is that the Greeks must now pay the price for going into so much debt. Officials in the Greek government are becoming frustrated because the more austerity measures they implement, the more their economy shrinks. As the economy shrinks, so do tax payments and the budget deficit gets even larger. Meanwhile, hordes of very angry Greek citizens are violently protesting in the streets. If Germany allows Greece to default, that is going to start financial dominoes tumbling around the globe and it is going to be a signal to the financial markets that there is a very real possibility that Portugal, Italy and Spain will be allowed to default as well. Needless to say, all hell would break loose at that point.
So why is Greece so important?
Well, there are two reasons why Greece is so important.
Number one, major banks all over Europe are heavily invested in Greek debt. Since many of those banks are also very highly leveraged, if they are forced to take huge losses on Greek debt it could wipe many of them out.
Secondly, if Greece defaults, it tells the markets that Portugal, Italy and Spain would likely not be rescued either. It would suddenly become much, much more expensive for those countries to borrow money, which would make their already huge debt problems far worse.
If Italy or Spain were to go down, it would wipe out major banks all over the globe.
Financial turmoil in Europe is no longer a problem of small, peripheral economies like Greece. What’s under way right now is a full-scale market run on the much larger economies of Spain and Italy. At this point countries in crisis account for about a third of the euro area’s G.D.P., so the common European currency itself is under existential threat.
Most Americans don’t spend a lot of time thinking about the financial condition of Europe.
But they should.
Right now, the U.S. economy is really struggling to stay out of another recession. If Europe has a financial meltdown, there is no way that the United States is going to be able to avoid another huge economic downturn.
If you think that things are bad now, just wait. After the next major financial crisis what we are going through right now is going to look like a Sunday picnic.
The following are 20 signs of imminent financial collapse in Europe….
#1 The yield on 2 year Greek bonds is now over 60 percent. The yield on 1 year Greek bonds is now over 110 percent. Basically, world financial markets now fully expect that Greece will default.
#2 European bank stocks are getting absolutely killed once again today. We have seen this happen time after time in the last few weeks. What we are now witnessing is a clear trend. Just like back in 2008, major banking stocks are leading the way down the financial toilet.
#3 The German government is now making preparations to bail out major German banks when Greece defaults. Reportedly, the German government is telling banks and financial institutions to be prepared for a 50 percent “haircut” on Greek debt obligations.
#4 With thousands upon thousands of angry citizens protesting in the streets, the Greek government seems hesitant to fully implement the austerity measures that are being required of them. But if Greece does not do what they are being told to do, Germany may withhold further aid. German Finance Minister Wolfgang Schaeuble says that Greece is now “on a knife’s edge“.
#5 Germany is increasingly taking a hard line with Greece, and the Greeks are feeling very pushed around by the Germans at this point. Ambrose Evans-Pritchard made this point very eloquently in a recent article for the Telegraph….
Germany’s EU commissioner Günther Oettinger said Europe should send blue helmets to take control of Greek tax collection and liquidate state assets. They had better be well armed. The headlines in the Greek press have been “Unconditional Capitulation”, and “Terrorization of Greeks”, and even “Fourth Reich”.
#6 Everyone knows that Greece simply cannot last much longer without continued bailouts. John Mauldin explained why this is so in a recent article….
It is elementary school arithmetic. The Greek debt-to-GDP is currently at 140%. It will be close to 180% by year’s end (assuming someone gives them the money). The deficit is north of 15%. They simply cannot afford to make the interest payments. True market (not Eurozone-subsidized) interest rates on Greek short-term debt are close to 100%, as I read the press. Their long-term debt simply cannot be refinanced without Eurozone bailouts.
#7 The austerity measures that have already been implemented are causing the Greek economy to shrink rapidly. Greek Finance Minister Evangelos Venizelos has announced that the Greek government is now projecting that the economy will shrink by 5.3% in 2011.
#8 Greek Deputy Finance Minister Filippos Sachinidis says that Greece only has enough cash to continue operating until next month.
#9 Major banks in the U.S., in Japan and in Europe have a tremendous amount of exposure to Greek debt. If they are forced to take major losses on Greek debt, quite a few major banks that are very highly leveraged could suddenly be in danger of being wiped out.
#10 If Greece goes down, Portugal could very well be next. Ambrose Evans-Pritchard of the Telegraph explains it this way….
Yet to push Greece over the edge risks instant contagion to Portugal, which has higher levels of total debt, and an equally bad current account deficit near 9pc of GDP, and is just as unable to comply with Germany’s austerity dictates in the long run. From there the chain-reaction into EMU’s soft-core would be fast and furious.
#11 The yield on 2 year Portuguese bonds is now over 15 percent. A year ago the yield on those bonds was about 4 percent.
#13 Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.
#14 Major banks in the “healthy” areas of Europe could soon see their credit ratings downgraded. For example, there are persistent rumors that Moody’s is about to downgrade the credit ratings of several major French banks.
#15 Most major European banks are leveraged to the hilt and are massively exposed to sovereign debt. Before it fell in 2008, Lehman Brothers was leveraged 31 to 1. Today, major German banks are leveraged 32 to 1, and those banks are currently holding a massive amount of European sovereign debt.
#16 The ECB is not going to be able to buy up debt from troubled eurozone members indefinitely. The European Central Bank is already holding somewhere in the neighborhood of 444 billion euros of debt from the governments of Greece, Italy, Portugal, Ireland and Spain. On Friday, Jurgen Stark of Germany resigned from the European Central Bank in protest over these reckless bond purchases.
“Should the ECB see its assets fall by just 4.23pc in value . . . its entire capital base would be wiped out.”
#18 The recent decision issued by the German Constitutional Court seems to have ruled out the establishment of any “permanent” bailout mechanism for the eurozone. Just consider the following language from the decision….
“No permanent treaty mechanisms shall be established that leads to liability for the decisions of other states, especially if they entail incalculable consequences”
#19 Economist Nouriel Roubini is warning that without “massive stimulus” by the governments of the western world we are going to see a major financial collapse and we will find ourselves plunging into a depression….
“In the short term, we need to do massive stimulus; otherwise, there’s going to be another Great Depression”
#20 German Economy Minister Philipp Roesler is warning that “an orderly default” for Greece is not “off the table“….
”To stabilize the euro, we must not take anything off the table in the short run. That includes, as a worst-case scenario, an orderly default for Greece if the necessary instruments for it are available.”
Right now, Greece is caught in a death spiral. The more austerity measures they implement, the more their economy slows down. The more their economy slows down, the more their tax revenues go down. The more their tax revenues go down, the worse their debt problems become.
Greece could end up leaving the euro, but that would make their economic problems far, far worse and it would be very damaging to the rest of the eurozone as well.
Quite a few politicians in Europe are touting a “United States of Europe” as the ultimate solution to these problems, but right now the citizens of the eurozone are overwhelming against deeper economic integration.
Plus, giving the EU even more power would mean an even greater loss of national sovereignty for the people of Europe.
That would not be a good thing.
So what we are stuck with right now is the status quo. But the current state of affairs cannot last much longer. Germany is getting sick and tired of giving out bailouts and nations such as Greece are getting sick and tired of the austerity measures that are being forced upon them.
At some point, something is going to snap. When that happens, world financial markets are going to respond with a mixture of panic and fear. Credit markets will freeze up because nobody will be able to tell who is stable and who is about to collapse. Dominoes will start to fall and quite a few major financial institutions will be wiped out. Governments around the world will have to figure out who they want to bail out and who they don’t want to bail out.
It will be a giant mess.
For decades, the governments of the western world have been warned that they were getting into way too much debt.
For decades, the major banks and the big financial institutions were warned that they were becoming way too leveraged and were taking far too many risks.
Well, nobody listened.
So now we get to watch a global financial nightmare play out in slow motion.
Grab some popcorn and get ready. It is going to be quite a show.