22 Signs That We Are On The Verge Of A Devastating Global Recession

2012 is shaping up to be a very tough year for the global economy.  All over the world there are signs that economic activity is significantly slowing down.  Many of these signs are detailed later on in this article.  But most people don’t understand what is happening because they don’t put all of the pieces together.  If you just look at one or two pieces of data, it may not seem that impressive.  But when you examine all of the pieces of evidence that we are on the verge of a devastating global recession all at once, it paints a very frightening picture.  Asia is slowing down, Europe is slowing down and there are lots of trouble signs for the U.S. economy.  It has gotten to a point where the global debt crisis is almost ready to boil over, and nobody is quite sure what is going to happen next.  The last global recession was absolutely nightmarish, and we should all hope that we don’t see another one like that any time soon.  Unfortunately, things do not look good at this point.

The following are 22 signs that we are on the verge of a devastating global recession….

#1 On Thursday it was announced that U.S. jobless claims had soared to a six-week high.

#2 Hostess Brands, the maker of Twinkies and Wonder Bread, has filed for bankruptcy protection.

#3 Sears recently announced that somewhere between 100 and 120 Sears and Kmart stores will be closing, and Sears stock has fallen nearly 60% in just the past year.

#4 Over the past 12 months, dozens of prominent retailers have closed stores all over America, and one consulting firm is projecting that there will be more than 5,000 more store closings in 2012.

#5 Richard Bove, an analyst at Rochdale Securities, is projecting that the global financial industry will lose approximately 150,000 jobs over the next 12 to 18 months.

#6 Investors are pulling money out of the stock market at a rapid pace right now.  In fact, as an article posted on CNBC recently noted, investors pulled more money out of mutual funds than they put into mutual funds for 9 weeks in a row.  Are there some people out there that are quietly repositioning their money for tough times ahead?….

Investors yanked money out of U.S. equity mutual funds for a ninth-consecutive week despite a bullish 2012 outlook from Wall Street and a December rally that’s carried over into the New Year.

#7 There are signs that the Chinese economy is seriously slowing down.  The following comes from a recent article in the Guardian….

Growth had slowed to an annual rate of 1.5% in the second and third quarters of 2011, below the “stall speed” that historically led to recession.

#8 The Bank of Japan says that the economic recovery in that country “has paused“.

#9 Manufacturing activity in the euro zone has fallen for five months in a row.

#10 Germany’s economy actually contracted during the 4th quarter of 2011.  At this point many economists believe that Germany is already experiencing a recession.

#11 According to a recent article by Bloomberg, it is being projected that the French economy is heading into a recession….

The French economy will shrink this quarter and next, suggesting the nation is in a recession as investment and consumer spending stagnate, national statistics office Insee said.

#12 There are a multitude of statistics that indicate that the UK economy is definitely slowing down.

#13 The credit ratings of Italy, Spain, Portugal, France and Austria all just got downgraded.

#14 It is being reported that the Spanish economy contracted during the 4th quarter of 2011.

#15 Bad loans in Spain recently hit a 17-year high and the unemployment rate is at a 15-year high.

#16 According to a recent article in the Telegraph, the Italian government is forecasting that there will be a recession for the Italian economy in 2012….

The Italian government predicts GDP will contract 0.4pc next year, but many economists fear the figure is optimistic.

“We can say without mincing words that we have already slipped into recession,” said Intesa Sanpaolo analyst Paolo Mameli. “We expect GDP to keep contracting for the next 3-4 quarters.”

#17 Italy’s youth unemployment rate has hit the highest level ever.

#18 The unemployment rate in Greece for those under the age of 24 is now at 39 percent.

#19 Greece is already experiencing a full-blown economic depression.  About a third of the country is now living in poverty and extreme medicine shortages are being reported.  Things have gotten so bad that entire families are being ripped apart.  According to the Daily Mail, hundreds of Greek children are being abandoned because the economy has gotten so bad that their parents simply cannot afford to take care of them anymore.  The note that one mother left with her child was absolutely heartbreaking….

One mother, it said, ran away after handing over her two-year-old daughter Natasha.

Four-year-old Anna was found by a teacher clutching a note that read: ‘I will not be coming to pick up Anna today because I cannot afford to look after her. Please take good care of her. Sorry.’

#20 In Greece, large numbers of people are simply giving up on life.  Sadly, the number of suicides in Greece has increased by 40 percent in just the past year.

#21 In many European countries, the money supply continues to contract rapidly.  The following comes from a recent article in the Telegraph….

Simon Ward from Henderson Global Investors said “narrow” M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.

While real M1 deposits are still holding up in the German bloc, the rate of fall over the last six months (annualised) has been 20.7pc in Greece, 16.3pc in Portugal, 11.8pc in Ireland, and 8.1pc in Spain, and 6.7pc in Italy. The pace of decline in Italy has been accelerating, partly due to capital flight. “This rate of contraction is greater than in early 2008 and implies an even deeper recession, both for Italy and the whole periphery,” said Mr Ward.

#22 The major industrialized nations of the world must roll over trillions upon trillions of dollars in debt during 2012.  At a time when credit is becoming much tighter, this is going to be quite a challenge.  The following list compiled by Bloomberg shows the amount of debt that some large nations must roll over in 2012….

Japan: 3,000 billion
U.S.: 2,783 billion
Italy: 428 billion
France: 367 billion
Germany: 285 billion
Canada: 221 billion
Brazil: 169 billion
U.K.: 165 billion
China: 121 billion
India: 57 billion
Russia: 13 billion

Keep in mind that those numbers do not include any new borrowing.  Those are just old debts that must be refinanced.

As I mentioned at the top of this article, things do not look good.

The last thing that we need is another devastating global recession.

As I wrote about yesterday, the U.S. economy is in the midst of a nightmarish long-term decline.  The last major global recession helped to significantly accelerate that decline.

So what will happen if this next global recession is worse than the last one?

Sadly, the people that will get hurt the most by another recession will not be the wealthy.

The people that will get hurt the most will be the poor and the middle class.

So what should all of us be doing about this?

We should use the time during this “calm before the storm” to prepare for the hard times that are coming.

As always, let us hope for the best and let us prepare for the worst.

But things certainly do not look promising for the global economy in 2012.

If A Global Recession Is Not Looming, Then Why Are Bailouts Flying Around As If The End Of The World Is Coming?

I have learned that watching what people do is much more important than listening to what they say.  Back in 2008, financial authorities in the United States insisted that everything was gone to be okay.  But we all know now that was a lie.  Well, right now financial authorities in the U.S. and Europe are once again trying to assure us that everything is under control and that we are not headed for a global recession.  Unfortunately, their actions are telling a very different story.  All over the world, bailouts are flying around as if the end of the world is coming.  Governments and central banks are stepping in with gigantic mountains of money to prop up bond yields, major banks and even stock markets.  What we have seen over the past few months has been absolutely unprecedented.  So why are such desperate measures being taken if everything is going to be just fine?  Unfortunately, debt problems are never solved with more debt, so these bailouts really aren’t solving anything.  We are still headed for a massive amount of financial pain.  It would just be nice if the authorities would quit lying to us and would actually admit how bad things really are.

Today it was announced that the European Central Bank has agreed to make $638 billion in 3 year loans to 523 different banks.  Never before (not even during the last financial crisis) has the ECB loaned so much cheap money to European banks at one time.

This move by the ECB made headlines all over the globe.  CNBC is calling them “ultra-long and ultra-cheap loans“.

European authorities are hoping that European banks will use this money to make loans to businesses and to buy up the debt of troubled European governments.

But as we have seen in the United States, bailout money does not always get spent the way that the authorities intend for it to be spent.

The truth is that the banks could end up just sitting on the money.  That is what happened with a lot of bailout money in the United States during the last financial crisis.

European authorities hope, however, that European banks will take this super cheap money and lend it to European governments at much higher interest rates.

Unfortunately, global financial markets were not terribly impressed with this move by the ECB.  European bond yields actually rose and the euro just kept on falling.

Every few days another major “solution” to the European debt crisis is put out there, but so far nothing has worked.

For example, the European Central Bank has already spent over 274 billion dollars directly buying up European government bonds, and yet bond yields continue to hover in very dangerous territory.

But without ECB intervention, we probably would have already seen a major financial collapse in Europe.

The financial system of Europe is a total mess right now, and everyone is becoming incredibly dependent on the ECB.  The following comes from a recent Reuters article….

One of the key factors certain to have boosted demand is that banks are now more reliant than ever on central bank funds. The ECB said on Monday, in its semi-annual Financial Stability Review, that this dependency could be difficult to cure.

French banks have almost quadrupled their intake of ECB money since June to 150 billion euros, while banks in Italy and Spain are each taking more than 100 billion euros.

At this point, the ECB has the weight of the entire world on its shoulders.  One false move and we could see a huge wave of bank failures and we could be plunged into a major global recession.

But even with all of this unprecedented assistance, we have already seen some big time European banks fail.

Back in Obtober, Dexia was the first major European bank to be bailed out, and the cost of that bailout is going to exceed 100 billion dollars.

The funny thing is that Dexia actually passed the banking stress test that was conducted earlier this year with flying colors.

So what does that say about all of the other major European banks that did not do so well on the stress test?

In addition, it was recently announced that Germany’s second largest bank is going to need a bailout.

The following comes from a Sky News report….

Germany’s second largest bank, Commerzbank, is reportedly in discussions with the German government about a bailout after regulators said it needed to raise more money to cope with a potential default on its loans to governments.

“Intense talks” have been going on for several days, according to sources who spoke to the news agency Reuters.

Even with unprecedented intervention by the ECB, the truth is that the European banking system is rapidly failing.

In Greece, a full-blown run on the banks is happening.  According to a recent Der Spiegel article, funds are being pulled out of Greek banks at a pace that is astounding….

He means that the outflow of funds from Greek bank accounts has been accelerating rapidly. At the start of 2010, savings and time deposits held by private households in Greece totalled €237.7 billion — by the end of 2011, they had fallen by €49 billion. Since then, the decline has been gaining momentum. Savings fell by a further €5.4 billion in September and by an estimated €8.5 billion in October — the biggest monthly outflow of funds since the start of the debt crisis in late 2009.

In all, approximately 20 percent of all deposits in Greek banks have been withdrawn since the start of 2011.

Other European nations are implementing draconian measures in an attempt to protect their banks.  For example, in Italy all cash transactions over 1000 euros have been permanently banned.  People will either have to use checks, debit cards or credit cards for large transactions.  This will “encourage” people to keep more money in the banks, and this will also make it much easier for the Italian government to track transactions and to collect taxes.

But it is not just in the EU where we find unusual steps being taken.

In the UK, the Bank of England is acting like the end of the world is about to happen.  The following comes from a recent article on the This Is Money website….

The deputy governor of the Bank of England today warned the situation surrounding the single currency was ‘worrying’ and that the Bank was making preparations to support British banks, should the eurozone collapse.

A temporary loan facility has been introduced as a precaution, for use in the event of contagion from the eurozone crisis endangering UK institutions, Charlie Bean said in an interview on BBC Radio 4’s World at One.

An article posted on Business Insider a while back says that Switzerland is also preparing for “a euro collapse”….

The Swiss government is preparing for a collapse of the euro, according to Swiss Finance Minister Eveline Widmer-Schlumpf.

She told parliament that a work group was studying the imposition of capital controls and negative interest rates to protect Switzerland from the capital flight that a euro collapse would engender

Frightening stuff.

On the other side of the world, the government of China is also taking action.  In fact, China is actually injecting money into the stock market in order to prop up stock prices.

The following comes from an article in the China Post….

In a movement considered “long overdue” by some analysts, the injection of government money into the tanking stock market to prop up stock prices has been given the green light, government officials announced yesterday.

Vice Premier Chen, the topmost government official charged with the country’s financial stability, however, insisted the fundamentals of the economy and the stock market are sound, expressing his hope for continued optimism among the people.

Of course the Federal Reserve is not going to stand on the sideline while all of this is going on.  In a recent article, I described how the Federal Reserve is helping to bail out European banks….

The Federal Reserve, the European Central Bank, the Bank of England, the Bank of Canada, the Bank of Japan and the Swiss National Bank have announced a coordinated plan to provide liquidity support to the global financial system.  According to the plan, the Federal Reserve is going to substantially reduce the interest rate that it charges the European Central Bank to borrow dollars.  In turn, that will enable the ECB to lend dollars to European banks at a much cheaper rate.  The hope is that this will alleviate the credit crunch which has gripped the European financial system by the throat.  So where is the Federal Reserve going to get all of these dollars that it will be loaning out at very low interest rates?  You guessed it – the Fed is just going to create them out of thin air.  Our currency is being debased so that Europe can be helped out.

If the global financial system was in good shape, all of these bailouts would not be happening.

These desperate measures are a clear sign that something is up.

The financial authorities of the world are doing their best to keep the system together, but in the end they are not going to be able to prevent the collapse that is coming.

The world is heading for incredibly hard economic times.

So is the end of the world coming?

No.

But to many in the financial world it may feel like it.  The coming global recession is not going to be fun.

We have now reached a point where it has become “normal” for governments and central banks to throw money at one financial crisis after another.

At one time, bailouts were so unusual that they provoked a great deal of outrage.

Today, bailouts have become standard operating procedure.

The bailouts will continue to get larger and larger, and authorities all over the globe will do their very best to keep the house of cards from coming crashing down.

Unfortunately, they will not be successful.

Bernanke Says That Any Criticism Of The Federal Reserve Is Based On “Misconceptions”

Federal Reserve Chairman Ben Bernanke is taking his show on the road in at attempt to help Americans feel better about the Federal Reserve.  During a visit to the Fort Bliss headquarters of the Army’s 1st Armored Division this week, Bernanke held a town hall meeting during which he took questions from some of the soldiers.  Bernanke tried to sound as compassionate as possible as he assured the soldiers that the Federal Reserve is looking out for the American people and is doing everything that it can to help create jobs.  At one point, Bernanke even made the following statement: “For a lot of people, I know, it doesn’t feel like the recession ever ended.”  That probably helped a lot of people feel better.  A few probably even had a good cry.  But what Bernanke did not explain to the troops is that the Federal Reserve is very much responsible for the fact that unemployment is rampant, for the fact that the U.S. dollar is rapidly being devalued and for the fact that we have accumulated the largest national debt in the history of the world.

Ben Bernanke keeps insisting that the Federal Reserve has two main jobs (fighting inflation and keeping unemployment low) and that it is working incredibly hard to accomplish that dual mandate.  During his visit with the soldiers he told them that the Fed is very determined to create more jobs for the American people….

“We at the Federal Reserve have been focusing intently on supporting job creation.”

Well, if we are to judge the Federal Reserve by how well it has accomplished its “dual mandate”, then the Federal Reserve has been an abysmal failure.

Since the Federal Reserve was created, the U.S. dollar has lost well over 95 percent of its value to inflation.

Is that something Bernanke should be proud of?

Of course not.

Okay, so the Fed has failed when it comes to keeping inflation under control.

What about jobs?

Well, the first decade of this century was the worst decade for job creation that the United States has seen since the Great Depression.

The sad truth is that a total of zero jobs were created last decade.  The following is a quote from a recent article in Washington Monthly….

“If any single number captures the state of the American economy over the last decade, it is zero. That was the net gain in jobs between 1999 and 2009—nada, nil, zip. By painful contrast, from the 1940s through the 1990s, recessions came and went, but no decade ended without at least a 20 percent increase in the number of jobs.”

So what kind of a grade should we give the Federal Reserve for the job that it has done?

How about a big fat F?

The Federal Reserve has been a failure of epic proportions.  It greatly contributed to the Great Depression (even Bernanke admits this), it created the conditions for the financial bubbles that greatly contributed to the financial crisis of 2008, and it has brought us to the verge of yet another gigantic financial crisis.

But Ben Bernanke believes that all of us that are criticizing the Fed are just ignorant.  He thinks that we just don’t understand the Fed properly.  During a recent question and answer session, Bernanke stated the following….

“I think that the concerns about the Fed are based on misconceptions”

Oh, if only the rest of us understood how the Fed works and how they really care about the American people.  Then everything would be okay.

Not.

During that same session, Bernanke insisted that the Federal Reserve only has the purest motives….

“Our motives are strictly to do what is in the best interest of the broad public and I believe that our efforts to stabilize the financial system, which were ultimately proved successful, were very much in the interest of the broad public”

According to Bernanke, those that work at the Fed are unselfish guardians of our monetary system who are fighting for truth, justice and the American way of life.

Okay, perhaps I am exaggerating just a bit, but you get the point.

Bernanke is trying very hard to convince all of us that the Federal Reserve is just misunderstood and that we should just trust what the “experts” are doing.

So what will the plan be if the financial crisis in Europe blows up?

Well, during his visit to Fort Bliss one of the soldiers actually asked him about that.  The following is his answer….

“Although the Fed would obviously do all that we could to maintain stability and to keep monetary policy as easy as necessary to try to minimize the damage, I don’t think we would be able to escape the consequences of a blow-up in Europe”

Oh, he would keep monetary policy “as easy as necessary”.

Isn’t that lovely – I bet that will be great for the value of the U.S. dollar.

Bernanke also told the soldiers that he believes that happy days are ahead for the U.S. economy….

“I do believe we will return to a healthier growth rate. I don’t see any reason why we couldn’t”

So we should just trust Bernanke, right?

He has never been wrong before, right?

Well, let’s check the record….

In 2005, Bernanke said that we shouldn’t worry because housing prices had never declined on a nationwide basis before and he said that he believed that the U.S. would continue to experience close to “full employment”….

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

In 2005, Bernanke also said that he believed that derivatives were perfectly safe and posed no danger to financial markets….

“With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

In 2006, Bernanke said that housing prices would probably keep rising….

“Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”

In 2007, Bernanke insisted that there was not a problem with subprime mortgages….

“At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

In 2008, Bernanke said that a recession was not coming….

“The Federal Reserve is not currently forecasting a recession.”

A few months before Fannie Mae and Freddie Mac collapsed, Bernanke insisted that they were totally secure….

“The GSEs are adequately capitalized. They are in no danger of failing.”

For many more examples that demonstrate the absolutely nightmarish track record of Federal Reserve Chairman Ben Bernanke, please see the following articles….

*”Say What? 30 Ben Bernanke Quotes That Are So Stupid That You Won’t Know Whether To Laugh Or Cry

*”Is Ben Bernanke A Liar, A Lunatic Or Is He Just Completely And Totally Incompetent?

But after being wrong over and over and over, Barack Obama still nominated Ben Bernanke for another term as Chairman of the Fed.

It is hard to put how stupid that was into words.

Look, if someone wrecked your car again and again would you keep handing that person your keys?

It just doesn’t make any sense.

Bernanke made another statement during his visit with the troops this week that was really bizarre….

“The Federal Reserve is not perfect … but at this point, if you look around the world, you see no alternative”

He has got to be kidding, right?

Of course there are no other alternatives for us to look at!  Only a handful of nations on earth do not have a central bank at this point.  Iran, North Korea and a handful of others don’t have a central bank dominated by the international banking community but basically everyone else does.

Just because nearly every nation on earth has a central bank does not mean that there are not alternatives to the Federal Reserve system.  I detailed a plan the other day that would transition us away from the Federal Reserve system.

It most certainly can be done.

But right now, most of our politicians are standing up for a system that allows private central bankers to spend trillions of dollars bailing out their friends while the rest of us suffer.

The other day, an article by U.S. Senator Bernie Sanders appeared in the Huffington Post that detailed what was learned during a very limited audit of transactions conducted by the Federal Reserve during the recent financial crisis.

According to Senator Sanders, the Federal Reserve made 16 trillion dollars in secret loans to big corporations, Wall Street banks, foreign nations and wealthy individuals during the financial crisis….

“…we learned that the Federal Reserve provided a jaw-dropping $16 trillion in total financial assistance to every major financial institution in the country as well as a number of corporations, wealthy individuals and central banks throughout the world.”

Senator Sanders also says that the audit revealed that many of those running the Fed are from the same institutions that the Fed has been bailing out….

“The GAO also revealed that many of the people who serve as directors of the 12 Federal Reserve Banks come from the exact same financial institutions that the Fed is in charge of regulating. Further, the GAO found that at least 18 current and former Fed board members were affiliated with banks and companies that received emergency loans from the Federal Reserve during the financial crisis.”

Wait – isn’t there a huge conflict of interest problem there?

Of course there is.

But neither major political party is making a stink about it.

Sadly, Senator Sanders says that the audit found that there was “instance after instance” where individuals used their positions at the Fed to benefit their own firms….

“The GAO has detailed instance after instance of top executives of corporations and financial institutions using their influence as Federal Reserve directors to financially benefit their firms, and, in at least one instance, themselves.”

Wow – you would think that this scandal would have been reported on the front page of every major newspaper from coast to coast.

But that didn’t happen.

In fact, both major political parties continue to insist that there is nothing wrong with the Federal Reserve and that the Fed is doing a wonderful job.

It really is sickening.

Look, we need to educate the American people about the Federal Reserve and we need to make control over our currency a major issue in the 2012 campaign.

The American people should demand that the issuing of all United States currency be immediately returned to Congress as the U.S. Constitution requires.

The American people should demand that no more debt-based Federal Reserve Notes be issued and that from now on only debt-free United States money be issued.

The Federal Reserve has a track record of nearly 100 years of failure.

It is time for it to be shut down.

The choice, America, is up to you.

Depressed As A Nation? 80 Percent Of Americans Believe That We Are In A Recession Right Now

According to a brand new Gallup poll, 80 percent of Americans believe that we are in a recession right now.  Of course the government insists that the recession ended quite some time ago, but apparently the message is not sinking in.  Not only that, most Americans also do not believe that things are going to get better any time soon.  According to the Gallup poll, 61 percent of Americans believe that the economy will be the same as it is right now or will be even worse one year from now.  Two years ago, only 35 percent of Americans felt that way.  Talk about pessimism!  So are we depressed as a nation?  Have too many people been reading the Economic Collapse Blog?  How do we account for such strange numbers?

Certainly there are some areas of the country that are still doing quite well.  If you live in an area that is closely tied to the federal government (Washington D.C.), the big Wall Street banks (New York) or corporate America (Silicon Valley, etc.), then you can go out on the weekends and find packed restaurants and mall parking lots that are overflowing.

But most of the rest of the country is really hurting.

Tonight, there are millions upon millions of Americans that won’t sleep well at all because they are trying to figure out how to get back on their feet.  It can be really tough to keep going when you have been searching for work for years and still nobody will hire you.  If you have a family, it is easy to feel like a failure when you have to look your spouse and your children in the eyes day after day knowing that they are depending on you.

If you have never been through it, then you should not mock those that are depressed because they cannot find work.  Losing a good job and not being able to find another one can be an absolutely soul-crushing experience.

So why do 80 percent of Americans believe that we are in a recession right now?

Well, it is because that is what it feels like for most people.

For example, a reader identified as Carol recently shared the following with us….

My unemployment ends the end of December, yes, I will be one of the 99′ers, one that did not sit at home and eat potato chips, drink soda and watch TV. I have no health insurance, I support myself and cannot afford it. I was diagnosed with rheumatoid arthritis last fall. Not to mention, degenerative disc disease, and osteoporosis. But I have continued to pursue work and regain employment, despite my health. I have no other choice but to fight and PRAY!

It amazes me at the stupidity of the general population, who still have their heads in the sand. The majority have no idea what is actually going on in our country on the political or economic side.

What would you do if you found out you were sick, you had no job, no health insurance and you were rapidly running out of money?

Please pray for those that are out of work.  You never know when it will be you that needs some assistance.

For those that still believe that the economy is doing “great”, let’s review some of the cold, hard facts….

*46.2 million Americans were living in poverty in 2010.

*The number of Americans living in poverty increased by 2.6 million last year.  That was the largest increase since the U.S. government began keeping statistics on this back in 1959.

*14 million Americans are officially unemployed.

*6 million Americans have been unemployed for at least half a year.

*8.8 million Americans are working part-time because they cannot find full-time jobs.

*Only 63.5 percent of all men in the United States had a job during the month of July.

*Zero jobs were created in the United States during the month of August.

*Median household income has fallen for three years in a row.

*49.9 million Americans do not have any health insurance at all.

*The percentage of Americans covered by employer-based health plans has fallen for 11 years in a row.

*More than 45 million Americans (a new all-time record) are on food stamps.

If you are still doing really well, be thankful for that.  Don’t use the fact that you are on top of the hill as an opportunity to look down on others.

Unfortunately, as I talked about in a recent article, the U.S. economy continues to get even worse.

It certainly does not help that we continue to see millions of jobs shipped overseas.  Neither the Democrats nor the Republicans are proposing anything that will stop the bleeding.

A lot of very skilled Americans are being put out of work by all of this offshoring.  For example, a reader identified as GlennA recently shared the following with us….

Yes, lurking in the shadows, that’s been me. A professional man with a master’s degree in a technical who has not worked at a full-time job with benefits since mid 2009. Spent my last 2 years with the company offshoring to India all my team’s work. I hear through the grapevine that quality there has gone completely off a cliff, but profits are OK.

Have had only sporadic benefitless contract work ever since, and am now down to my last few bucks.

All of the horrible natural disasters that we have experienced this year are not helping things either.  As I have written about previously, in many ways this has been the worst year for natural disasters in modern U.S. history.

In a recent article for Newsday, Jennifer Wheary described the impact these horrible natural disasters have had on many areas of the country that were already facing tough economic times….

But after decades of disappearing jobs, declining wages and increasing expenses, this is no longer the case. As a result, people across New York, New Jersey, Pennsylvania, Massachusetts, Vermont, Maryland, the Carolinas, Texas and elsewhere lack the savings needed to weather these unexpected economic shocks. Well before the spate of recent bad weather, or the recent recession, millions of middle- and working-class families were already under water.

Right now, even the vast majority of American families that still do have jobs are barely scraping by.  At this point, “financial security” is just a far off dream for most Americans.

So what are our leaders doing about this?

Well, as I have written about previously, the Obama jobs plan is a complete joke.  It is really quite sad if that was his best shot.  His plan would spend a lot of money, but just like the last “stimulus plan”, it would not create many jobs at all.

The Federal Reserve has decided that it better jump into action again.  The Federal Reserve has just announced that it is going to sell $400 billion of its short-term U.S. Treasuries and will use that money to buy $400 billion of long-term U.S. Treasuries.  The Fed is hoping that this will lower interest rates on mortgages and home loans and will help to spur the economy.

So will this fix our economic problems?  No, it will have even less of an impact than QE2 did.  But the Fed wants to at least appear as if it is trying to do something.

The Federal Reserve has also pledged an “unlimited” amount of dollars to help bail out big European banks in October, November and December.

It is quite frustrating that virtually nobody in the mainstream media seems upset that the Federal Reserve is going to be showering European banks with cheap loans.  Apparently they must all think that this is a wonderful idea, or perhaps they are just too preoccupied with talking about “The X Factor”.

In any event, it does look like the global financial system may need some propping up very soon.  Yesterday, I shared 21 signs that the financial world is on the verge of a nervous breakdown.

Well, here are a couple more….

Right now, corporate insiders are selling 7 dollars of stock for every 1 dollar of stock that they are buying.

That is a very troubling sign.

Another troubling sign is that Moody’s has just downgraded the credit ratings of Citigroup, Wells Fargo, and Bank of America.

The last time we saw so much financial chaos was back in 2008.

We all remember what happened back then.

At this point, things are still so bad that 80 percent of Americans believe that we are still in a recession.

So what are things going to look like if there is another major financial crash in the coming months?

Will we soon see millions more Americans going dumpster diving as they hunt for something to eat?

Will we see even more tent cities start popping up all over the nation?

Will we see even more elderly people freeze in their own homes because they can’t afford to heat them?

Already, more than one out of every five children in the United States is living in poverty.

How much worse can things get?

Unfortunately, they can get a lot worse.

If you think that Americans are depressed now, just wait and see what happens after the next financial crisis.

This country is going to become unglued in a major way.

Buckle up and hold on tight because it is going to be a bumpy ride.

Bad News

The bad news about the economy just keeps rolling in.  If this is an economic recovery, what in the world is the next “recession” going to look like?  Today there was another huge truckload of bad economic news.  The stock market had another 400 point “correction”, applications for unemployment benefits are up again, inflation is higher than expected, home sales have dropped again and Europe is coming apart at the seams.  The financial markets have been in such a state of chaos recently that days like today don’t even seem “unusual” anymore.  But we should all be alarmed at what is happening.  We haven’t seen anything quite like this since the darkest days of 2008 and 2009.  If more bad news keeps pouring in, we may soon have a very real panic on our hands.

I would have thought that my article yesterday, “20 Signs That The World Could Be Headed For An Economic Apocalypse In 2012“, would have contained enough bad economic news to last for a while.  But today there was another huge bumper crop of depressing numbers.

Are you ready for the carnage?

*The Dow fell 419 points today.  That was a 3.7% drop.  The S&P 500 shot down 4.5% and the Nasdaq plummeted by a whopping 5.2%.

*European bank stocks got absolutely hammered.

*The number of Americans applying for unemployment benefits jumped back above 400,000 last week.

*The recent inflation numbers have really taken analysts by surprise.  The consumer price index rose at a 6.0% annual rate during the month of July. As I mentioned yesterday, the producer price index in the U.S. has increased at an annual rate of at least 7.0% for the last three months in a row.

So now we have high unemployment and high inflation.  Oh goody!  All of this stagflation is almost enough to make one nostalgic for the 1970s.

*The housing market is getting even worse.  According to the National Association of Realtors, sales of previously owned homes dropped 3.5 percent during July.  That was the third decline in the last four months.  Sales of previously owned homes are even lagging behind last year’s pathetic pace. Mortgage rates are now the lowest they have been since the 1950s, but there are very few interested buyers in the marketplace.

*The Philadelphia Fed’s latest survey of regional manufacturing activity was absolutely nightmarish….

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009

*Morgan Stanley now says that the U.S. and Europe are “hovering dangerously close to a recession” and that there is a good chance we could enter one at some point in the next 6 to 12 months.

All of this bad news is sending the price of gold through the roof.  The price of gold soared to a brand new all-time high of $1,829.70 an ounce on Thursday morning.  So far, the price of gold is up almost 30 percent in 2011.

Meanwhile, millions of average American families are deeply suffering and are desperately hoping that things won’t get even worse.  Everywhere you turn, there is a tremendous amount of stress in the air.

According to the New York Times, 25 million Americans “could not find full-time jobs last month”.

As the economy crumbles, good paying full-time jobs are becoming increasingly scarce.  People are hurting and they are looking for leadership.

Well, Barack Obama is running around the country promising that he will unveil some “solutions” very shortly.

So what are those solutions going to include?  Well, the plans are still in the development stage, but the Obama administration is reportedly considering the following….

-The creation of a new government agency that will be dedicated to job creation.  This will entail more government spending and more government paper pushers, but it will probably not do much to create good paying full-time jobs.

-Pushing even more free trade agreements through Congress.  That way even more of our good jobs can be shipped to countries on the other side of the globe where paying slave wages to workers is still legal.

-A “reverse boot camp” that will train military veterans for civilian jobs.  That sounds like a good idea, but we already have millions and millions of highly trained Americans that can’t get jobs.

-An extension of the payroll tax cut for at least another year.  That will put more money into the pockets of U.S. workers, but it will also mean less revenue for the federal government.  The existing payroll tax cut has not exactly resulted in a “jobs boom”, but removing that tax cut is certainly not going to help the economy either.

-An extension of long-term unemployment benefits.  Yes, that will help the unemployed survive and will give them some money to spend into the economy, but it will not create many jobs for them.  Plus it will put the government into even more debt.

-The creation of an infrastructure bank.  Like most of the proposals above, this will entail even more government spending.  I know that a “shovel-ready” joke is called for about now, but I can’t think of one at the moment.

The ironic thing is that Barack Obama is riding around on his multistate “jobs tour” in a $1.2 million bus that was made in Canada.

You just can’t make this stuff up.

Things have gotten so bad out there that even Wal-Mart is suffering now.  Sales at Wal-Mart stores that have been open for at least a year have fallen for nine quarters in a row.

Not that anyone should have much sympathy for Wal-Mart, but it is a sign of just how bad things are getting out there.

So is there much hope for the future?  Well, considering the fact that only 32 percent of 15-year-olds in the United States are proficient in math, things don’t look good.

Our education system is a joke, tens of thousands of factories have already closed, more are closing every day, millions of jobs have been shipped overseas and most of our politicians are either incompetent or corrupt (or both).

So you would think that with all of our problems, authorities would be focused on the big issues.

But no, time after time they just keep picking on average Americans.

For example, a woman that lives in the Salem, Oregon area that is fighting terminal bone cancer tried to raise some money for her medical bills by holding a few garage sales on the weekends.

Well, the authorities in Salem got wind of this and now they are shutting her down.

This is absolutely unbelievable.  A video news report about this incident is posted below….

Massive fraud and corruption at the big banks caused a worldwide financial crisis in 2008 and yet not a single Wall Street executive has gone to prison because of it.

Yet a cancer-stricken lady tries to hold a few yard sales to pay her bills and authorities come down on her like a ton of bricks.

Does that seem fair to you?

Our world is getting crazier every day.  The bad news is going to keep pouring in.  Global financial markets are being held together with chicken wire and duct tape.  At some point the pyramid of corruption and con games is going to come crashing down.

If you still have faith in the system, you are not very wise.  We are heading for an economic collapse that will be absolutely unprecedented, and you need to be getting prepared.

The Stock Market Crash Of 2011?

How far does the stock market have to go down before we officially call it a crash?  The Dow is now down more than 2,000 points in just the last 14 trading days.  So can we now call this “The Stock Market Crash of 2011”?  Today the Dow was down 519 points.  Yesterday, an announcement by the Federal Reserve indicating that the Fed would keep interest rates near zero until mid-2013 helped the Dow surge more than 400 points, but all of those gains were wiped out today.  It turns out that the Federal Reserve was only able to stabilize the financial markets for a single day.  Fears about the European sovereign debt crisis and the crumbling U.S. economy continue to dominate the marketplace.  With each passing day, things are looking more and more like 2008 all over again.  So what is going to happen if “The Stock Market Crash of 2011” pushes the U.S. economy into “The Recession of 2012”?

Just like in 2008, bank stocks are being hit the hardest.  That was true once again today.  Bank of America was down more than 10 percent, Citigroup was down more than 10 percent, Morgan Stanley was down more than 9 percent and JPMorgan Chase was down more than 5 percent.

Bank of America stock is down almost 50 percent so far this year.  Overall, the S&P financial sector is down more than 23 percent in 2011 so far.

How soon will it be before we start hearing of the need for more bailouts?  After all, the “too big to fail” banks are even bigger now than they were in 2008.

All of this panic is causing the price of gold to reach unprecedented heights.  Today, gold was over $1800 at one point.  If the current panic continues for an extended period of time, there is no telling how high the price of gold may go.

In the United States, much of the focus has been on the fact that the U.S. government has lost its AAA credit rating, but the truth is that the European sovereign debt crisis is probably the biggest cause of the instability in world financial markets right now.

The European Central Bank has decided to start purchasing Italian and Spanish debt, and there have been rumors that French debt could be hit with a downgrade.  Europe is a total financial basket case right now and unless dramatic action is taken things are going to get progressively worse.

Of course the U.S. is also certainly contributing greatly to this crisis.  The federal government is on track to have a budget deficit that is over a trillion dollars for the third year in a row.  The U.S national debt is a horrific nightmare, but our politicians keep putting off budget cuts.

The debt ceiling deal that was just reached basically does next to nothing to cut the budget before the next election.  Unless the “Super Congress” does something dramatic, the only “budget cuts” we will see before the 2012 election will be 25 billion dollars in “savings” from spending increases that will be cancelled.

The modest spending cuts scheduled to go into effect beginning in 2013 will probably never materialize.  Whenever the time comes to actually significantly cut the budget, our politicians always want to put it off for another time.

But in the end, debt is always going to have its day.  Our politicians can try to kick the can down the road all they want, but eventually a day of reckoning is going to come.

In fact, if the U.S. and Europe had not piled up so much debt, we would not be facing all of the problems we are dealing with now.

Things could have been so much different.

But here we are.

The truth is that this debt crisis is just beginning.  There is no magic potion that is going to make all of this debt suddenly disappear.

Most Americans have no idea how much financial pain is coming.  We have been living way beyond our means for decades, and now we are going to start paying for it.

Now that long-term U.S. government debt has been downgraded, huge numbers of other securities are also going to be affected.  In fact, according to a recent Bloomberg article, S&P has already been very busy slashing the ratings on hordes of municipal bonds….

Standard & Poor’s lowered the AAA ratings of thousands of municipal bonds tied to the federal government, including housing securities and debt backed by leases, following its Aug. 5 downgrade of the U.S.

That is the thing about financial markets – once the dominoes start to fall, the ripple effects can be felt for a long, long time.

So if this stock market crash gets even worse, will the Federal Reserve respond with even stronger measures?

They have already basically promised to keep interest rates near zero for the next two years.  So what else can the Fed do?

Well, many now believe that there is a very good chance that we could see another round of quantitative easing.

Not that more quantitative easing is going to help much of anything.  Rather than helping the economy, the last round of quantitative easing just pushed commodity prices through the roof.  But the Fed is unlikely to just sit there and do nothing while financial markets struggle.

But it is not just the financial markets that are having a difficult time right now.  Bad news is coming in from all over the economy.  The possibility that we could soon slip into another major recession is growing by the day.

Unfortunately, our economy is so weak already that a new recession would probably hurt even more than the last recession did.

Mark Zandi, the chief economist at Moody’s Analytics, says that if we have another recession it “won’t feel like a new recession. It would likely feel like a depression.

But the American people are in no mood for more economic pain.  Every recent poll shows that Americans are already fed up.

For example, a brand new Reuters/Ipsos poll found that 73 percent of the American people believe that the country is “on the wrong track”.

So let’s certainly hope that the current stock market crash does not set off another major global recession.  We certainly do not need things to get significantly worse than they are right now.

But whether it hits now or later, the truth is that a whole lot of economic pain is on the way.  The U.S. and Europe have been making really, really bad decisions for decades, and we are not going to be able to escape the consequences of those decisions.

The global financial system is one huge mountain of leverage, risk and debt.  A collapse is inevitable.

When you build a house of cards on a foundation of sand, you should not be surprised when it comes crashing down.

The next wave of the economic collapse is coming, and those that are wise will get prepared.

 

 

Economic Recovery?

If this is supposed to be an “economic recovery” it sure is pathetic.  In fact, as you will read below, the numbers tell us that this is the worst economic recovery that the American economy has ever seen.  If what we had experienced was a “normal” recession and a “normal” recovery, then jobs, economic growth and home values would have come roaring back by now.  But they haven’t.  The Federal Reserve injected unprecedented amounts of new money into the system and the federal government went into unprecedented amounts of new debt, but all of that effort has not accomplished much.  It did buy us a little bit of time and a period of relative economic stability, but now there are all kinds of signs that we are about to go into another recession (or something even worse).  So is it really honest for Ben Bernanke and Barack Obama to be using the term “economic recovery” to describe what is happening?

The truth is that what is really taking place is that the long-term economic decline of the United States is beginning to accelerate.

But most Americans simply don’t understand what is going on.

The mainstream media teaches us to blame our politicians for the economy.  One recent survey found that 44 percent of the American people believe that the U.S. economy is “worse than when Obama was inaugurated”.

Yes, Barack Obama is a horrible president.  But the economic downfall of this nation is not all his fault.  George W. Bush was a horrible president too.  So was Bill Clinton.  Congress has been corrupt and incompetent for decades.

Of course the institution that is most responsible for our economic problems is the Federal Reserve.  Thankfully, more Americans than ever are starting to realize this.

But if you listen to Ben Bernanke and Barack Obama, you would think that a great “economic recovery” has begun.  They would have us believe that they know exactly what our problems are and that they know exactly how to get us out of this mess.

Unfortunately, what we have experienced is not much of an “economic recovery” at all.  According to the Wall Street Journal, this is the worst “recovery” from a recession that the U.S. economy has ever seen….

On economic growth, real GDP has risen 0.8% over the 13 quarters since the recession began, compared to an average increase of 9.9% in past recoveries. From the beginning of the recession to April 2011, real personal income has grown just .9% compared to 9.4% for the same period in previous post 1960 recessions.

So what is really going on?

Sadly, what we are experiencing right now is a brief period of stability in the middle of a downward spiral toward economic oblivion.

The CEO of Pimco, Mohamed El-Erian, says that it should now be obvious to everyone that all of the efforts of the U.S. government and the Federal Reserve to stimulate the economy simply have not been enough to solve the structural economic challenges that we are facing….

“It’s clear that the stimulus-induced recovery hasn’t overcome the structural challenges to large-scale job creation.”

The U.S. economy is not producing enough jobs.  Today, there are 25 million Americans that are either unemployed or underemployed.

But the inability to create jobs is not a new phenomenon for the U.S. economy.  The truth is that between 2000 and 2007, the U.S. economy had its poorest stretch of job creation since the Great Depression.

However, since 2007 the employment situation in this country has gotten a lot worse.  Take a minute and watch the stunning video posted below.  It shows how rampant unemployment swept across this country between 2007 and 2011….

Our politicians promised us that globalization would be great for the U.S. economy.

Well, it was great for the big corporations to be able to pay slave labor wages to workers on the other side of the globe, but things have not worked out so well for workers in this country.

Millions of our jobs have been lost.  Millions more jobs are being lost.  Yet our politicians do nothing to stop the bleeding.

Things have gotten so bad that even the top of the food chain is shipping jobs overseas.

Just consider this recent headline which appeared in Business Insider: “Goldman Sachs Is Firing Employees In The US So It Can Hire 1,000 In Singapore

If even jobs at Goldman Sachs are being sent out of the country, are any of our jobs safe?

Many Americans would love to start a business instead of having to work for someone else, but the economic environment has become incredibly toxic for small businesses in the United States.

The rate of new business creation in the United States has been declining steadily since the 1980s.  Our politicians are literally choking the entrepreneurial spirit to death in this country.

Today, more Americans than ever are dependent on the government.  In fact, it has gotten to the point where the U.S. economy itself is highly dependent on the government.

So what is going to happen when the government is not handing out so many goodies?

The era of rampant spending in Washington D.C. seems to be coming to an end, at least for now.  The U.S. national debt has become so outrageous that many members of Congress are finally determined to start making some cuts.

While it is true that cutting government spending is long overdue, most Americans don’t realize that cutting government spending will also mean that “the economic sugar high” that we have been experiencing will start to wear off.

If we try to live within our means, that is going to cause a lot of economic pain, and the American people are not too good about making sacrifices these days.

Look, whoever is elected in 2012 is going to be in for a rough ride.  Some very difficult economic times are ahead, and whoever is elected in 2012 is going to get blamed.  By 2016, the president is probably going to be the most hated person in America.

But the truth is that these economic problems have been building for decades.

We didn’t get here by accident, and our economic problems are not going to be solved overnight.

In fact, many financial analysts are warning that they are about to get a lot worse.

For example, David Rosenberg of Gluskin Sheff says that there is a 99 percent chance that the U.S. will fall into another recession by the end of 2012.

As the economy continues to crumble, U.S. cities will become increasingly hostile places in which to live.

According to a recent Rasmussen Reports national telephone survey, 41 percent of Americans say that crime has increased where they live over the past year and only 6 percent of Americans say that crime has decreased where they live over the past year.

But just wait until the economy really collapses – that is when all hell will break loose.

In a recent article entitled “Is The Economy Improving?“, I quoted statistic after statistic that showed that the U.S. economy is actually continuing to decline.

The American people are starting to lose patience.  In fact, people all over the country are starting to get more than a little crazy.  For example, there is a now a national “epidemic” of people robbing pharmacies in order to get a hold of painkillers.

Pharmacists all over the country are being robbed at gunpoint.  Some prescription painkillers will reportedly sell for as much as 80 dollars a pill on the street.  As a recent article in the Washington Post noted, things are getting really dangerous out there for pharmacists….

“It’s an epidemic,” said Michael Fox, a pharmacist on New York’s Staten Island who has been stuck up twice in the last year. “These people are depraved. They’ll kill you.”

Armed robberies at pharmacies rose 81 percent between 2006 and 2010, from 380 to 686, the U.S. Drug Enforcement Administration says. The number of pills stolen went from 706,000 to 1.3 million. Thieves are overwhelmingly taking oxycodone painkillers like OxyContin or Roxicodone, or hydrocodone-based painkillers like Vicodin and Norco. Both narcotics are highly addictive.

But this is what our country is turning into.

We are a nation of addicts.

Our national addiction to debt and our national addiction to greed have brought us to the brink of economic disaster.

If you are waiting for an “economic recovery”, you should stop waiting.

This is about as good as things are going to get.

From here on out, things are just going to keep going downhill.

Most Americans are going to be absolutely blindsided by the economic collapse that is coming.

But that doesn’t have to be you.

You still have some time to get prepared.

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