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Hopium: How Far Can Irrational Optimism Take The U.S. Economy?

Thought Bubble - Public DomainIf enough people truly believe that things will get better, will that actually cause them to get better?  There is certainly something to be said for being positive and thinking that anything is possible.  And as Americans, optimism seems to come naturally for us.  However, no amount of positive thinking is ever going to turn the sun into a block of wood or turn the moon into a block of cheese.  Any good counselor will tell you that one of the first steps toward recovery is to stop being delusional and to come to grips with how bad things really are.  When we deny reality and engage in irrational wishful thinking, we are engaging in something called “hopium”.  This is a difficult term to define, but the favorite definition of hopium that I have come across so far goes like this: “The irrational belief that, despite all evidence to the contrary, things will turn out for the best.”  In hundreds of articles, I have documented how the U.S. economy is mired in a long-term decline which is about to get a lot worse.  But most Americans see things very differently.  In fact, according to a brand new CNN/ORC poll, 52 percent of Americans describe the U.S. economy as “very” or “somewhat good”, and more than two-thirds of all Americans believe that the U.S. economy will be in “good shape” a year from right now.  But if you asked most of those people why they are so optimistic, they would probably mumble something about “Obama” or about how “we’re Americans and we always bounce back” or some other such gibberish.  Well, it’s wonderful that so many people are feeling good and looking forward to the future, but are those beliefs rational?

We witnessed a perfect example of this “hopium” on Wednesday.  Sales at McDonald’s restaurants have been in decline for quite a while, and the numbers for the first quarter of 2015 were just abysmal

The ubiquitous burger-and-fries chain said US sales, the largest share of global income, fell 2.6 percent from a year ago for comparable outlets.

Sales in the Asia-Pacific and Middle East region dropped 8.3 percent, helping bring overall global sales down 2.3 percent, “reflecting negative guest traffic in all segments,” the company said.

Total revenue sank 11 percent to $5.96 billion in the quarter to March 31, and net income plunged 32.6 percent to $812 million, or 84 cents a share (-31 percent).

So you would think that the stock price would have tanked on Wednesday, right?


Thanks to news that a “turnaround plan” would be announced on May 4th, McDonald’s stock actually skyrocketed

McDonald’s closed up 3.13 percent after spiking more than 4.5 percent in early trade as investors cheered a turnaround plan expected on May 4. However, the fast food chain’s earnings missed on both the top and bottom lines.

This is pure hopium.  Why don’t McDonald’s executives just tell us what the plan is now?  But instead, the mystery of a “secret turnaround plan” gives people just enough hope to keep the stock from tumbling – at least for the moment.

And of course there are all sorts of other stocks that are being massively inflated by hopium right now.

Many years ago, when I was an undergraduate, I was taught that a price to earnings ratio of more than 20 was really, really high.

But these days that is the norm on Wall Street, and at the moment there are quite a few stocks that actually have price to earnings ratios that are greater than 100

There are 10 stocks in the Standard & Poor’s 500, including industrial giant General Electric, video-streamer Netflix and oil and gas explorer Cabot Oil & Gas that are trading for 100 times their diluted earnings the past 12 months excluding extraordinary items, according to a USA TODAY analysis of data from S&P Capital IQ.

And if you can believe it, General Electric has a PE on its training earnings of more than 200

Take General Electric, the industrial giant that’s swiftly selling off banking assets so it can return to its manufacturing roots. GE sports a PE on its trailing earnings of 227, says S&P Capital IQ.

This is completely and totally irrational.  General Electric is a giant mess and is being very badly mismanaged.  But investors continue to pay a massive premium for GE stock because they hope that things will turn around eventually.

Look, hope will get you a lot of things in life, but it won’t put money in your pockets or dinner on the table.

Our politicians and the mainstream media continue to sell us hard on the idea that things are getting better in America, but meanwhile our economic infrastructure continues to decay.  Just check out what is happening in the steel industry

United States Steel Corporation issued layoff notices to 1,404 workers in the latest sign of struggle for the American steel industry. The missives went out in recent days to workers producing pipe and tube products that are used in the oil and gas sector. Job cuts could come as early as June for 17 to 579 employees at a plant in Lone Star, Texas, 166 at a factory in Houston, 255 at a mill in Pine Bluff, Arkansas, and 404 managers across the company’s tubular operations nationwide.

Since last June, the company has informed 7,800 employees of potential job cuts, a tally from Pittsburgh Business Times indicated. U.S. Steel spokeswoman Sarah Cassella said the ongoing layoffs are the result of “challenging market conditions and global influences in the market including a high level of imports, reduced prices for oil and natural gas and reduced steel prices.”

A little over a month ago, I published an article entitled “10 Charts Which Show We Are Much Worse Off Than Just Before The Last Economic Crisis” in which I demonstrated that we are in far worse economic shape than we were just prior to the last recession, and now another great economic crisis is at our door.

Unfortunately, most Americans have no idea what is going on out there.  Most of them get their news from the giant propaganda matrix that very tightly controls the flow of ideas and information in this country.  This is something that I explain on my new DVD.  Six colossal corporations control over 90 percent of the news, information and entertainment that Americans consume, and that gives them an awesome amount of power.

And right now that propaganda matrix is assuring the American people that everything is going to be just fine.

Well, they better be right.  Because if not, they are going to have millions of people extremely angry with them when things really start falling to pieces.

It Is About To Get Ugly: Oil Is Crashing And So Is Greece

Hindenburg Disaster - Public DomainThe price of oil collapsed by more than 8 percent on Wednesday, and a decision by the European Central Bank has Greece at the precipice of a complete and total financial meltdown.  What a difference 24 hours can make.  On Tuesday, things really seemed like they were actually starting to get better.  The price of oil had rallied by more than 20 percent since last Thursday, things in Europe seemed like they were settling down, and there appeared to be a good deal of optimism about how global financial markets would perform this month.  But now fear is back in a big way.  Of course nobody should get too caught up in how the markets behave on any single day.  The key is to take a longer term point of view.  And the fact that the markets have been on such a roller coaster ride over the past few months is a really, really bad sign.  When things are calm, markets tend to steadily go up.  But when the waters start really getting choppy, that is usually a sign that a big move down in on the horizon.  So the huge ups and the huge downs that we have witnessed in recent days are likely an indicator that rough seas are ahead.

A stunning decision that the European Central Bank has just made has set the stage for a major showdown in Europe.  The ECB has decided that it will no longer accept Greek government bonds as collateral from Greek banks.  This gives the European Union a tremendous amount of leverage in negotiations with the new Greek government.  But in the short-term, this could mean some significant pain for the Greek financial system.  The following is how a CNBC article described what just happened…

“The European Central Bank is telling the Greek banking system that it will no longer accept Greek bonds as collateral for any repurchase agreement the Greek banks want to conduct,” said Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.

“This is because the ECB only accepts investment grade paper and up until today gave Greece a waiver to this clause. That waiver has now been taken away and Greek banks now have to go to the Greek Central Bank and tap their Emergency Liquidity Assistance facility for funding,” he said.

And it certainly didn’t take long for global financial markets to respond to this news

The Greek stock market closed hours ago, but the exchange-traded fund that tracks Greek stocks, GREK, crashed during the final minutes of trading in the US markets.

The euro is also getting walloped, falling 1.3% against the US dollar.

The EUR/USD, which had recovered to almost 1.15, fell to nearly 1.13 on news of the action taken by the ECB.

But this is just the beginning.

In coming months, I fully expect the euro to head toward parity with the U.S. dollar.

And if the new Greek government will not submit to the demands of the EU, and Greece ultimately ends up leaving the common currency, it could potentially mean the end of the eurozone in the configuration that we see it today.

Meanwhile, the oil crash has taken a dangerous new turn.

Over the past week, we have seen the price of oil go from $43.58 to $54.24 to less than 48 dollars before rebounding just a bit at the end of the day on Wednesday.

This kind of erratic behavior is the exact opposite of what a healthy market would look like.

What we really need is a slow, steady climb which would take the price of oil back to at least the $80 level.  In the current range in which it has been fluctuating, the price of oil is going to be absolutely catastrophic for the global economy, and the longer it stays in this current range the more damage that it is going to do.

But of course the problems that we are facing are not just limited to the oil price crash and the crisis in Greece.  The truth is that there are birth pangs of the next great financial collapse all over the place.  We just have to be honest with ourselves and realize what all of these signs are telling us.

And it isn’t just in the western world where people are sounding the alarm.  All over the world, highly educated professionals are warning that a great storm is on the horizon.  The other day, I had an economist in Germany write to me with his concerns.  And in China, the head of the Dagong Rating Agency is declaring that we are going to have to face “a new world financial crisis in the next few years”

The world economy may slip into a new global financial crisis in the next few years, China’s Dagong Rating Agency Head Guan Jianzhong said in an interview with TASS news agency on Wednesday.

“I believe we’ll have to face a new world financial crisis in the next few years. It is difficult to give the exact time but all the signs are present, such as the growing volume of debts and the unsteady development of the economies of the US, the EU, China and some other developing countries,” he said, adding the situation is even worse than ahead of 2008.

For a long time, I have been pointing at the year 2015.  But this year is not going to be the end of anything.  Rather, it is just going to be the beginning of the end.

During the past few years, we have experienced a temporary bubble of false stability fueled by reckless money printing and an unprecedented accumulation of debt.  But instead of fixing anything, those measures have just made the eventual crash even worse.

Now a day of reckoning is fast approaching.

Life as we know it is about to change dramatically, and most people are completely and totally unprepared for it.

Economists: The U.S. Economy Shrank In Q1, But Better Days Are Just Around The Corner

Smiley Face - Photo by FlyingtigersiteDuring the first three months of this year, the U.S. economy contracted at a 1 percent annual rate.  Despite this, mainstream economists flooded the mainstream media with assurances that much better days are just around the corner on Thursday.  In fact, many of them boldly predicted that U.S. GDP would grow at a 3 or 4 percent annual rate in the second quarter.  None of them seem the least bit concerned that another major recession is rapidly approaching.  Instead, they just blamed the bad number for the first quarter on a “severe winter“, and the financial markets responded to the GDP news quite cheerfully.  In fact, the S&P 500 soared to another brand new record high.  No matter how bad the numbers get, almost everyone in the financial world seems quite optimistic.  But is there actually good reason to have such optimism?

As Zero Hedge has pointed out, if it wasn’t for dramatically increased healthcare spending due to the implementation of Obamacare, U.S. GDP would have actually dropped at a 2 percent annual rate during the first quarter of 2014.

That would have been an absolutely disastrous number.

But within a very short time of the revised U.S. GDP number being released, the mainstream media was inundated with positive stories about the news.

For example, CNN published a story entitled “U.S. economy shrinks, but it’s not a big deal” and CNBC released a survey of nine prominent economists that showed that their consensus forecast for the second quarter of 2014 is GDP growth at a 3.74 percent annual rate.

It just seems like almost everyone wants to forget about what happened during the first quarter and wants to look ahead to a great number for quarter two.

Joseph Lavorgna, the chief U.S. economist at Deutsche Bank, is boldly forecasting a 4 percent growth rate for the second quarter.  So is Jim O’Sullivan.  In fact, it is hard to find any “expert” in the mainstream media that does not expect rip-roaring economic growth this quarter.

For example, just check out these quotes…

Stuart Hoffman, the chief economist for PNC Bank: “The first quarter was disappointing, but rather than view that as an omen of a recession or the first of a down leg in the economy, I see the seeds of a big bounce back in spring.”

Paul Ashworth of Capital Economics: “For those worried about a recession, it’s worth remembering that employment increased by nearly 300,000 in April.”

The Bank of Tokyo’s Chris Rupkey: “2Q growth seen at nearly 4%… Weak 1Q is stone cold dead as an indicator of where the economy is headed.”

Jan Hatzius of Goldman Sachs: “Because of weaker inventory investment in Q1, we increased our Q2 GDP tracking estimate by two-tenths to 3.9%.”

Dun & Bradstreet Credibility Corp. CEO Jeffrey Stibel: “Using an alternative model for projecting job growth, we see an entirely different scenario, one in which the U.S. unemployment rate will fall below 5 percent by no later than the middle of next year.”

Hopefully they are right.

Hopefully we are not heading into another recession.

But as I discussed in an article earlier this week, evidence continues to mount that another recession has already begun for much of the country.

And there was another number that was released today that seems to confirm this.  According to CNBC, there was a 6 percent drop in exports in the first quarter of 2014 when compared to the first quarter of 2013…

The U.S. economic reversal was led by a 6 percent drop in exports year over year, until recently hailed as a key driver of the U.S. recovery, and which had risen 9.5 percent in the last three months of 2013.

The slackening of trade has spread to the developing world, where emerging economies are seeing less demand from the U.S., Europe and China for raw materials and other exports.

We saw a similar decline happen in mid-2008 as the U.S. economy plunged into recession.

And Bloomberg’s Consumer Comfort index has fallen to the lowest level that we have seen in six months.  U.S. consumers are increasingly tapped out, and the ongoing “retail apocalypse” is evidence of that fact.

A declining middle class simply cannot support the massive retail infrastructure that America has developed.  As the middle class has fallen to pieces, it was just a matter of time before big trouble started erupting for the retail industry.  This is something that David Stockman recently wrote about…

It does not take much analysis to see that these bell ringers do not represent sustainable prosperity unfolding across the land. For example, around 1990 real median income was $56k per household and now, 25 years later, its just $51k—-meaning that main street living standards have plunged by about 9% during the last quarter century. But what has not dropped is the opportunity for Americans to drop shopping: square footage per capita during the same period more than doubled, rising from 19 square feet per capita at the earlier date to 47 at present.

This complete contradiction—declining real living standards and soaring investment in retail space—did not occur due to some embedded irrational impulse in America to speculate in real estate, or because capitalism has an inherent tendency to go off the deep-end. The fact that in equally “prosperous” Germany today there is only 12 square feet of retail space per capita is an obvious tip-off, and this is not a teutonic aberration. America’s prize-winning number of 47 square feet of retail space per capita is 3-8X higher than anywhere else in the developed world!

Without middle class jobs, you can’t have a middle class.  That is why our employment crisis is at the very heart of our economic problems.  Even using the government’s highly manipulated unemployment figures, there are still quite a few cities out there that have official unemployment rates in the double digits

The unemployment rate in Yuma, Ariz., is 23.8%. In El Centro, Calif., it is 21.6%. El Centro sits in an area of California in which unemployment in many metro areas is double the national average. In Merced the figure is 14.3%, in Yuba City the figure is 14.5%, in Hanford it is 13.1% and in Visalia it is 13.4%. In several metros close to these, the figure is above 10%. Most of them are inland from San Francisco and the area just south of it, which also happens to be among the nation’s most drought-plagued regions. This means jobs recovery is highly unlikely.

But of course the truth is that if the government actually used honest numbers, the unemployment rate for the entire nation would be in double digits.

And as I like to remind people, according to the government’s own numbers approximately 20 percent of the families in the entire nation do not have a single member that is employed.

So how is it possible that the “unemployment rate” is just a little above 6 percent?

It is a giant sham.

But that is what they want.

They want us feeling good and thinking that everything is going to be okay.

Unfortunately, they used the same approach back in 2007 and 2008, and we all remember how that turned out.

16 Things About 2013 That Are Really Going To Stink

16 Things About 2013 That Are Really Going To Stink - Photo by Linh_rOmThe beginning of the year has traditionally been a time of optimism when we all look forward to the exciting things that are going to happen over the next 12 months.  Unfortunately, there are a whole bunch of things about 2013 that we already know are going to stink.  Taxes are going to go up, good paying jobs will continue to leave the country, small businesses will continue to be destroyed, the number of Americans living in poverty will continue to soar, our infrastructure will continue to decay, global food supplies will likely continue to dwindle and the U.S. national debt will continue to explode.  Our politicians continue to pursue the same policies that got us into this mess, and yet they continue to expect things to magically turn around.  But that is not the way that things work in the real world.  Bad decisions lead to bad outcomes.  Instead of realizing that what we are doing is not working, our “leaders” continue to give us more of the same.  As a result, there are going to be a lot of things about 2013 that will not be great.  Sticking our heads in the sand and pretending that everything will be “okay” somehow is not going to help anyone.  We’ve got to make people understand exactly what is happening and why it is happening if we ever hope to see real changes.

The following are 16 things about 2013 that are really going to stink…

#1 Taxes Are Going To Go Up

Even if a fiscal cliff deal is reached, some taxes will still go up next year.  And if no deal is reached, there will be a whole bunch of different tax increases in 2013.

According to CBS News, these tax increases would be very painful for the middle class…

If lawmakers fail to work out any sort of deal, there will be severe long-term consequences for the economy: According to the Tax Policy Center, going off the “cliff” would affect 88 percent of U.S. taxpayers, with their taxes rising by an average of $3,500 a year; taxes would jump $2,400 on average for families with incomes of $50,000 to $75,000. Because consumers would get less of their paychecks to spend, businesses and jobs would suffer.

#2 The Middle Class Is About To Be Scorched By The Alternative Minimum Tax

Of more immediate concern for the middle class is the Alternative Minimum Tax.  Many Americans have never heard of the AMT, but it is truly one of the worst things about our tax code.

If Congress does not act, and right now it does not look promising, millions of middle class households will see a massive increase in their tax bills for 2012.

According to one analysis, households that are forced to pay the AMT will end up paying an extra $3,700 in taxes…

Unless Congress acts by the end of the year, more than 26 million households will for the first time face the AMT, which threatens to tack $3,700, on average, onto taxpayers’ bills for the current tax year. Because those people have never paid the AMT, they have no idea they are in its crosshairs — put there by a broader stalemate over tax policy that has kept Congress from limiting the AMT’s reach.

Do you have an extra $3,700 sitting around to send to Uncle Sam?

If not, you had better contact your representatives in Congress and scream like crazy about passing a fix for the AMT.  They have always gotten it done before, but this year there is so much animosity between the Republicans and the Democrats that nothing may end up getting done.

#3 The Economy Will Continue To Get Worse

Despite all of the talk in the mainstream media and from our politicians that our economy is getting better, the truth is that the U.S. economy continued to decline in 2012.  If you doubt this, just read the 75 statistics in this article.

And there are a whole host of signs that the economy is starting to slow down even more as we enter 2013.  For example, consumer confidence in the United States has experienced its largest two-month drop in over a year, and retail sales during the holiday season turned out to be quite disappointing.

#4 Good Paying Jobs Will Continue To Be Shipped Out Of The United States

Thanks to decades of “free trade agreements”, workers in the United States must directly compete for jobs with hundreds of millions of workers on the other side of the globe that live in countries where it is legal to pay slave labor wages.

We continue to see millions of jobs being shipped out of the country and our politicians stand by and do nothing.

Most Americans have no idea how this emerging one world economic system works.  The beautiful product that you buy at the big retail store may have been made by someone working in some of the most horrific conditions imaginable.

A 42-year-old woman named Julie Keith recently found this letter inside a box of Halloween decorations that had been made in China…

“If you occasionally buy this product, please kindly resend this letter to the World Human Right Organization. Thousands people here who are under the persecution of the Chinese Communist Party Government will thank and remember you forever.

People who work here have to work 15 hours a day without Saturday, Sunday break and any holidays. Otherwise, they will suffer torturement, beat and rude remark. Nearly no payment (10 yuan/1 month).

People who work here, suffer punishment 1-3 years averagely, but without Court Sentence (unlaw punishment). Many of them are Falun Gong practitioners, who are totally innocent people only because they have different believe to CCPG. They often suffer more punishment than others.”

But both political parties continue to tell us how wonderful it is that we are trading with communist China.  They see no problem with the fact that good paying jobs that used to be performed in America are now being performed by slave laborers on the other side of the planet.  And most Americans continue to support this system by filling their shopping carts with lots of stuff that has “made in China” stamped on it.

#5 Small Businesses Will Continue To Be Destroyed

At the same time, small businesses all over America are being strangled to death by taxes and regulations.  Just consider the following numbers from a previous article

We are told that the economy is supposed to be “recovering”, but the number of “startup jobs” at new businesses has fallen for five years in a row.  According to an analysis of U.S. Department of Labor data performed by economist Tim Kane, there were almost 12 startup jobs per 1000 Americans back in the year 2006.  By 2011, that figure had fallen to less than 8 startup jobs per 1000 Americans.

How is our economy ever going to thrive if we keep killing off our small businesses?

#6 Hunger And Poverty Will Continue To Explode To Unprecedented Levels

As the U.S. economy bleeds jobs and loses small businesses, the number of Americans living in poverty continues to explode.

Here are some numbers to show to people who still don’t understand how desperate the situation is…

-Families that have a head of household under the age of 30 have a poverty rate of 37 percent.

-According to U.S. Census data, 57 percent of all American children live in a home that is either considered to be “poor” or “low income”.

-For the first time ever, more than a million public school students in the United States are homeless.  That number has risen by 57 percent since the 2006-2007 school year.

#7 The Number Of Americans On Food Stamps Will Continue To Increase

If the economy is recovering, then why does the number of Americans on food stamps continue to soar?

As I wrote about yesterday, about 17 million Americans were on food stamps back in the year 2000.

Today, more than 47 million Americans are on food stamps.

Does anyone want to explain to me how that is a sign that things are getting better?

Back in the 1970s, about one out of every 50 Americans was on food stamps.  Today, about one out of every 6.5 Americans is on food stamps.

How much worse do things have to get before people realize that what we are doing is not working?

#8 Millions Of Americans Are About To Lose Their Unemployment Benefits

During this economic crisis, an unprecedented number of American families have been relying on unemployment benefits in order to stay afloat.

Well, if no agreement is reached in Washington D.C., millions of Americans will shortly lose those benefits

Three million Americans may become unwitting casualties of the political war in Washington over the fiscal cliff.

Since 2008, the federal government has funded extensions of the unemployment insurance offered by states, more than tripling the amount of aid available to the unemployed in some areas. But the program is expensive, with the Congressional Budget Office estimating it would cost $30 billion to extend it through 2013. President Barack Obama wants to extend the benefits for another year, but Congress has already pared back the program, and Republicans insist it represents the kind of largesse Washington can no longer afford.

#9 Our Infrastructure Will Continue To Rot And Decay

The United States once had the most beautiful infrastructure in the entire world.  Our highways, bridges, airports, railroads, sewer systems and electrical grids were the envy of the entire planet.

Well, now we don’t even have enough money to repair what we already have, so our infrastructure will continue to rot and decay in 2013…

Highways and bridges will need $2.5 trillion in upgrades if they are to survive for another 50 years — a must-do to keep commerce thriving. And that figure doesn’t even take into account the airports, railroads, subways, sewage-treatment plants, waterworks, levees, electric grids, pipelines, and all of those other expensive systems that people ignore until they break down.

#10 Many Of Our Major Cities Will Continue To Be Transformed Into Festering Hellholes

A lot of our major cities are also rapidly degenerating.  Detroit is one of my favorite examples, but the same kinds of things could be said about dozens of other major cities all over the country.  The following is a brief excerpt from one of my recent articles

If you can believe it, more than 50 percent of all children in Detroit are living in poverty, and close to 50 percent of all adults living in the city are functionally illiterate.  The high school graduation rate in Detroit is down to about 25 percent, and the city has become a breeding ground for gangs and violence.  The number of murders in Detroit is already higher than last year, and recently groups of young men toting AK-47s have been running around robbing gas stations.  How much worse can things possibly get for Detroit?

#11 State And Local Governments Will Find Ways To Squeeze Even More Money Out Of Us

In case you haven’t noticed, state and local governments all over the country are bleeding cash and are desperate for money.  In 2013 you can expect them to continue to find more ways to squeeze even more money out of all of us.  Here is one example…

Over the course of 2013, the District government will add 134 traffic cameras to its network, more than doubling the size of a system that generated $85 million in revenues for the city in its last fiscal year.

Police spokeswoman Gwendolyn Crump told The Washington Examiner that the city will intensify its camera-based efforts to cite motorists for speeding and stoplight violations while also adding cameras to detect other moving violations.

#12 Drug Cartels Will Continue To Easily Cross Our Borders And Terrorize Our Citizens

The federal government continues to refuse to protect our borders, and that means that drug runners and gang members will continue to pour into the United States.

Down in the Southwest, many ranchers are being absolutely terrorized by these criminals.  The following is from a recent NBC News article

Just before nightfall, 73-year-old rancher Jim Chilton hikes quickly up and down the hills on his rugged cattle-grazing land south of Tucson, escorting two U.S. Border Patrol agents.

He wants to show them the disturbing discovery he made earlier in the day: a drug-smugglers’ camp on his private property.  Stacked together under a stand of trees are blankets, jackets, food, water, binoculars and bales of marijuana from Mexico wrapped in burlap. The smugglers, themselves, are nowhere in sight and are believed to have fled the area, which is about 10 miles north of the Mexican border.

Chilton has had his house burglarized a couple of times and his family regularly encounters groups of armed drug smugglers coming across from Mexico…

Their cattle fences are frequently cut and paths heading north from Mexico cross their property.  Beckham says a smuggler even fired shots at him while he walked his land with a U.S. Border Patrol agent.  Several illegal border crossers have also approached his house at night–one even reaching his hand into their bathroom window.

“Several years ago, one of my children was taking a shower and had a gentleman reach into the shower while he was in there, and he came out screaming, absolutely refusing to take a shower for the next couple months.”

But even if you don’t live along the border, all of this still affects you.  According to government figures, Mexican drug cartels are actively operating in more than 1,200 U.S. cities right now.  They are probably hard at work in the community where you live.

So what is the Obama administration doing to fix the problem?

Not much.

In fact, the Obama administration is actually encouraging people to come to the U.S. and become dependent on the system.  If you can believe it, there is actually a website run by the Department of Homeland Security that teaches immigrants how to apply for welfare benefits once they get into the United States.

#13 Social Decay Will Continue To Accelerate

All over America we are seeing signs of social breakdown.  Here is yet another example

A woman sleeping on a street bench outside a drug store was doused with an accelerant and set on fire early Thursday morning in Van Nuys.

Witnesses told police that a man poured liquid — possibly a beverage containing alcohol — on the sleeping woman at about 1 a.m. outside a Walgreens store near Van Nuys Boulevard and Sherman Way. He lit a match and ran from the location, witnesses told police.

Who would just run up and set a woman on fire?

Sadly, this is not an isolated incident.  For many more examples like this, please see this article: “20 Shocking Examples Of How Sadistic And Cruel People Have Become“.

We need to admit that we have a major problem on our hands.  Violent crime in the United States increased by 18 percent in 2011, and another huge increase is expected when the numbers for 2012 come out.

America is changing, and not for the better.

#14 Global Food Supplies Will Continue To Dwindle

Did you know that for six of the last eleven years the world has consumed more food than it has produced?

As a result, global food reserves have reached their lowest level in almost 40 years.

So what is going to happen if the world continues to eat more food than it makes?

Let us hope that there is not another major drought in 2013.  If there is, we could be looking at a very serious food crunch.

#15 Wall Street Will Continue To Resemble A Giant Casino

Our financial system seems to have not learned any lessons from the financial crash of 2008.

Instead of admitting their mistakes, they just continue to engage in even more reckless behavior.

Today, there are four major U.S. banks that each have more than 40 trillion dollars of exposure to derivatives.

At some point that house of cards is going to collapse and we will be facing a derivatives crisis of unprecedented magnitude.

Will it be in 2013?

#16 The U.S. National Debt Will Cross The 17 Trillion Dollar Mark

In 2013, our national debt will blow past the 17 trillion dollar mark and start heading toward 18 trillion dollars.

How stupid can we possibly be?

During the first four years of the Obama administration, the U.S. national debt has grown by about as much as it did from the time that George Washington took office to the time that George W. Bush took office.

It really takes something to match more than 200 years of debt accumulation in less than four years.

But our politicians don’t seem to care about all of this debt.  They will continue to steal more than 100 million dollars from our children and our grandchildren every single hour of every single day.  That is beyond criminal, and yet the American people don’t seem to care.

What in the world has happened to this country?

Of course not everything about 2013 will be bad.  Personally, I am looking forward to an exciting year.  I have a new book that will be coming out, and my family is blessed and healthy.  I would like to wish all of you a very blessed 2013.  Things may be falling apart all around us, but that doesn’t mean that we can’t have a great year even in the midst of all the chaos.

Happy 2013

DVDs By Michael

Economic Collapse DVD
Shocking Forecast
High Blood Pressure?

Economic Collapse Investing
Thrive Banner
The End Of All Disease
The Day Of The Lord Is At Hand
Panama Relocation Tours
The 1 Must Own Gold Stock
The Babylon Code
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