10 Scenes From The Economic Collapse That Is Sweeping Across The Planet

Earth From SpaceWhen is the economic collapse going to happen?  Just open up your eyes and take a look around the globe.  The next wave of the economic collapse may not have reached Wall Street yet, but it is already deeply affecting billions of lives all over the planet.  Much of Europe has already descended into a deep economic depression, very disturbing economic data is coming out of the second and third largest economies on the globe (China and Japan), and in most of the world economic inequality is growing even though 80 percent of the global population already lives on less than $10 a day.  Just because the Dow has been setting brand new all-time records lately does not mean that everything is okay.  Remember, a bubble is always the biggest right before it bursts.  The next major wave of the economic collapse is already sweeping across Europe and Asia and it is going to devastate the United States as well.  I hope that you are ready.

The following are 10 scenes from the economic collapse that is sweeping across the planet…

#1 27 Percent Unemployment/60 Percent Youth Unemployment In Greece

The economic depression in Europe just continues to get worse with each passing month.  According to the Daily Mail, the unemployment rate in Greece has nearly tripled since 2009…

Greek youth unemployment rose above 60 per cent for the first time in February, reflecting the pain caused by the country’s crippling recession after years of austerity under its international bailout.

Greece’s jobless rate has almost tripled since the country’s debt crisis emerged in 2009 and was more than twice the euro zone’s average unemployment reading of 12.1 percent in March.

While the overall unemployment rate rose to 27 per cent, according to statistics service data released on Thursday, joblessness among those aged between 15 and 24 jumped to 64.2 percent in February from 59.3 percent in January.

#2 Detroit, Michigan Is Insolvent And Is Rapidly Running Out Of Cash

I love to write about Detroit because it is a perfect example of where the rest of the country is headed.  They have just gotten there first.  At this point, Detroit is essentially bankrupt, and the new emergency financial manager is saying that Detroit may totally run out of cash next month

Detroit may run out of cash next month and must cut long-term debt and retiree obligations, according to emergency financial manager Kevyn Orr’s preliminary plan to save Michigan’s largest city from bankruptcy.

Orr’s report says the cost of $9.4 billion in bond, pension and other long-term liabilities is sapping the ability to provide public safety and transportation. He listed cutting debt principal, retiree benefits and jobs among his options.

“No one should underestimate the severity of the financial crisis,” Orr said yesterday in a statement. He called his report “a sobering wake-up call about the dire financial straits the city of Detroit faces.”

#3 Economic Despair In France

France is going down the same path that Greece, Spain, Portugal and Italy have gone.  The following is an excerpt from a recent article in the Economist

HELDER PEREIRA is a young man with no work and few prospects: a 21-year-old who failed to graduate from high school and lost his job on a building site four months ago. With his savings about to run out, he has come to his local employment centre in the Paris suburb of Sevran to sign on for benefits and to get help finding something to do. He’ll get the cash. Work is another matter. Youth unemployment in Sevran is over 40%.

#4 7,000 Abandoned Buildings In Dayton, Ohio

All over the upper Midwest, there are formerly great cities that are dealing with thousands of abandoned buildings.  Dayton, Ohio is one example…

Like many urban cities in recent years, Dayton still finds itself knee-deep in abandoned, dilapidated properties as the result of the foreclosure crisis and economic downturn five years ago.

Boarded up buildings that appear to be on their last legs litter the city as it attempts to recover.

Kevin Powell, the city’s acting manager of housing inspection, says officials plan to use $5.2 million — half from the state’s Moving Ohio Forward program and a matching grant from the city’s general fund — to raze 475 abandoned properties by the end of September.

That will scratch the surface of an estimated 7,000 abandoned property problem that is growing.

#5 Overwhelmed By Squatters In Spain

In Spain, unemployment is rampant and people have become incredibly desperate.  In fact, in some Spanish cities you can now find entire apartment buildings that are being overwhelmed by squatters

A 285-unit apartment complex in Parla, less than half an hour’s drive from Madrid, should be an ideal target for investors seeking cheap property in Spain. Unfortunately, two thirds of the building generates zero revenue because it’s overrun by squatters.

“This is happening all over the country,” said Jose Maria Fraile, the town’s mayor, who estimates only 100 apartments in the block built for the council have rental contracts, and not all of those tenants are paying either. “People lost their jobs, they can’t pay mortgages or rent so they lost their homes and this has produced a tide of squatters.”

#6 The Collapse Of Chinese Power Consumption

Energy consumption tends to closely mirror economic activity.  That is why the recent collapse of Chinese power consumption is so alarming.  The following is from Zero Hedge

According to CLSA’s Chris Wood using NEA data, China’s monthly power consumption (the most accurate proxy for underlying economic strength according to the current premier) growth slowed from 5.5% YoY in Jan-Feb 2013 to 1.9% YoY in March, the slowest growth rate since May 2009 (as discussed in-depth here).

#7 Horrible Economic Data Coming Out Of The Second Largest Economy On The Planet

The economic data that has been coming out of the second largest economy on the globe has been quite alarming recently…

For starters, China’s recent economic data, as massaged as it is to the upside, is downright awful. China’s PMI numbers were the worst in two years. Staffing levels in the Chinese service sector decreased for the first time since January 2009 (remember that year).

China’s LEI also shows no sign of recovery. If anything, it indicates China is heading towards an economic slowdown on par with that of 2008. And if you account for the rampant debt fueling China’s economy you could easily argue that China is posting 0% GDP growth today.

#8 One Out Of Every Five U.S. Households On Food Stamps

Back in the 1970s, about one out of every 50 Americans was on food stamps.  Today, even though we are supposedly in the midst of an “economic recovery”, food stamp enrollment continues to soar to new highs.  The following is from CNS News

The most recent Supplemental Assistance Nutrition Program (SNAP) statistics of the number of households receiving food stamps shows that 23,087,886 households participated in January 2013 – an increase of 889,154 families from January 2012 when the number of households totaled 22,188,732.

The most recent statistics from the United States Census Bureau– from December 2012– puts the number of households in the United States at 115,310,000. If you divide 115,310,000 by 23,087,866, that equals one out of every five households now receiving food stamps.

#9 Child Hunger In America

Those that work for the big banks on Wall Street may have no problems feeding their children, but overall there is a rapidly growing child hunger crisis in America today.  Just check out the following statistics from one of my previous articles

*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.

*In Miami, 45 percent of all children are living in poverty.

*In Cleveland, more than 50 percent of all children are living in poverty.

*According to a recently released report, 60 percent of all children in the city of Detroit are living in poverty.

#10 The Tremendous Suffering Of Hundreds Of Millions Of Desperately Poor People That We Never Hear About

There are billions of people around the globe that are deeply suffering but that do not have a voice.  We usually never hear about the desperate poverty that these people are living in, but that doesn’t mean that they don’t exist.  The following statistics that Stephen Lendman recently compiled should shock and alarm you…

At least 80% live on less than $10 a day. Over three billion people live on less than $2.50 a day. More than 80% live in countries where income disparity is increasing.

The poorest 40% of world population has 5% of global income. The bottom fifth has $1.5%. The top 20% has 75%.

According to UNICEF, 22,000 impoverished children die daily. They “die quietly in some of the poorest villages on earth, far removed from the scrutiny and the conscience of the world. Being meek and weak in life makes these dying multitudes even more invisible in death.”

An estimated 28% of children in developing countries are underweight, malnourished and/or stunted.

How can so many people be living like that in a world with such wealth?

Sadly, things are going to get much worse.  The economic and financial systems of the world are rapidly breaking down, and in a few years these are going to look like “the good old days”.

And a growing number of people are starting to realize the direction that things are headed.  For example, according to a survey that has just been released, 48 percent of all Americans believe that the best days of America are now behind us.

So what do you think?

Are our best days behind us, or are they still ahead of us?

Please feel free to post a comment with your thoughts below…

The Price Of Copper And 11 Other Recession Indicators That Are Flashing Red

Red LightThere are a dozen significant economic indicators that are warning that the U.S. economy is heading into a recession.  The Dow may have soared past the 15,000 mark, but the economic fundamentals are telling an entirely different story.  If historical patterns hold up, the economy is heading for a very rocky stretch.  For example, the price of copper is called “Dr. Copper” by many economists because it so accurately forecasts the future direction of the U.S. economy.  And so far this year the price of copper is way down.  But that is not the only indicator that is worrying economists.  Home renovation spending has fallen dramatically, retail spending is crashing in a way not seen since the last recession, manufacturing activity and consumer confidence are both declining, and troubling economic data continues to come pouring out of Asia and Europe.  So why do U.S. stocks continue to skyrocket?  Will U.S. financial markets be able to continue to be divorced from reality?  Unfortunately, as we have seen so many times in the past, when stocks do catch up with reality they tend to do so very rapidly.  So you better put on your seatbelts because a crash is coming at some point.

But most average Americans are not that concerned with the performance of the stock market.  They just want to be able to go to work, pay the bills and provide for their families.  During the last recession, millions of Americans lost their jobs and millions of Americans lost their homes.  If we have another major recession, that will happen again.  Sadly, it appears that another major recession is quickly approaching.

The following are 12 recession indicators that are flashing red…

#1 The price of copper has traditionally been one of the very best indicators of the future performance of the U.S. economy.  The fact that it is down nearly 20 percent so far this year has many analysts extremely concerned

Copper’s downward trend foreshadows a stock market collapse, according to Societe Generale’s famously bearish strategist Albert Edwards, who said equity markets will riot “Japan-style.”

“Copper is acting exactly as it did when I wrote about the impotence of liquidity in the face of the (then imminent) 2007 recession. Once again it is giving us an early warning that liquidity will not save risk assets: time to get out of equities,” Edwards wrote in his latest research note, on Thursday.

#2 Home renovation spending has fallen back to depressingly-low 2010 levels.

#3 As Zero Hedge recently pointed out, U.S. retail spending is repeating a pattern that we have not seen since the last recession…

Retail sales of clothing is growing at the slowest pace since 2010; but while major store sales are about to drop negative YoY for the first time in over 3 years, the utter collapse in general merchandise sales is worse that at the peak of the last recession at -5%. It seems tough to see how a nation with an economy built on 70% consumption is not in a recessionary environment. And while this alone is a dismal signal for the discretionary upside of the US economy/consumer; as Gluskin Sheff’s David Rosenberg points out real personal income net of transfer receipts plunged at a stunning 5.8% annual rate in Q1. The other seven times we have seen such a collapse, the economy was either in recession of just coming out of one.

#4 Manufacturing activity all over the country is showing signs of slowing down.  In fact, Chicago PMI has dipped below 50 (indicating contraction) for the first time since the last recession.

#5 In April, consumer confidence unexpectedly fell to a nine-month low

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment declined to 72.3 in April from 78.6 a month earlier. This month’s reading was lower than all 69 estimates in a Bloomberg survey that called for no change from the March number.

#6 NYSE margin debt peaked right before the recession that began in 2002, it peaked right before the financial crisis of 2008, and it is peaking again.

#7 The S&P 500 usually mirrors the performance of Chinese stocks very closely.  That is why it is so alarming that Chinese stocks peaked months ago.  Will the S&P 500 soon follow?

#8 The economic data coming out of the Chinese economy lately has been mostly terrible

For starters, China’s recent economic data, as massaged as it is to the upside, is downright awful. China’s PMI numbers were the worst in two years. Staffing levels in the Chinese service sector decreased for the first time since January 2009 (remember that year).

China’s LEI also shows no sign of recovery. If anything, it indicates China is heading towards an economic slowdown on par with that of 2008. And if you account for the rampant debt fueling China’s economy you could easily argue that China is posting 0% GDP growth today.

#9 Things just continue to get even worse over in Europe.  Unemployment in both Greece and Spain is now about 27 percent, and the unemployment rate in the eurozone as a whole has just set a brand new all-time record high.

#10 Crude inventories have soared to a record high as demand for energy continues to decline.  As I have written about previously, this is a clear sign that economic activity is slowing down.

#11 Casino spending is usually a strong indicator of the overall health of the U.S. economy.  That is why it is so noteworthy that casino spending is now back to levels that we have not seen since the last recession.

#12 The impact of the sequester cuts is starting to kick in.  According to the Congressional Budget Office, the sequester cuts will cost the U.S. economy about 750,000 jobs this year.

Do you have any other recession indicators that you would add to this list?

I invite you to share your thoughts by posting a comment below…

A Recession Is Coming - Photo by Angie from Sawara, Chiba-ken, Japan

Corporatism: A System Of Control Designed By The Monopoly Men Of The Global Elite

Corporatism: A System Of Control Designed By The Monopoly Men Of The Global EliteThe Dow is at a record high and so are corporate profits – so why does it feel like most of the country is deeply suffering right now?  Real household income is the lowest that it has been in a decade, poverty is absolutely soaring, 47 million Americans are on food stamps and the middle class is being systematically destroyed.  How can big corporations be doing so well while most American families are having such a hard time?  Isn’t their wealth supposed to “trickle down” to the rest of us?  Unfortunately, that is not how the real world works.  Today, most big corporations are trying to minimize the number of “expensive” American workers on their payrolls as much as they can.  If the big corporation that is employing you can figure out a way to replace you with a worker in China or with a robot, it will probably do it.  Corporations are in existence to maximize wealth for their shareholders, and most of the time the largest corporations are dominated by the monopoly men of the global elite.  Over the decades, the politicians that have their campaigns funded by these monopoly men have rigged the game so that the big corporations are able to easily dominate everything.  But this was never what those that founded this country intended.  America was supposed to be a place where the power of collectivist institutions would be greatly limited, and individuals and small businesses would be free to compete in a capitalist system that would reward anyone that had a good idea and that was willing to work hard.  But today, our economy is completely and totally dominated by a massively bloated federal government and by absolutely gigantic predator corporations that are greatly favored by our massively bloated federal government.  Our founders tried to warn us about the dangers of allowing government, banks and corporations to accumulate too much power, but we didn’t listen.  Now they dominate everything, and the rest of us are fighting for table scraps.

In early America, most states had strict laws governing the size and scope of corporations.  Individuals and small businesses thrived in such an environment, and the United States experienced a period of explosive economic growth.  We showed the rest of the world that capitalism really works, and we eventually built the largest middle class that the world had ever seen.

But now we have replaced capitalism with something that I like to call “corporatism”.  In many ways, it shares a lot of characteristics with communism, and that is why nations such as communist China have embraced it so readily.  Under “corporatism”, monolithic predator corporations run around sucking up as much wealth and economic power as they possibly can.  Most individuals and small businesses cannot compete and end up getting absorbed by the corporations.  These mammoth collectivist institutions are in private hands rather than in government hands (as would be the case under a pure form of communism), but the results are pretty much the same either way.  A tiny elite at the top gets almost all of the economic rewards.

There are some out there that would suggest that the answer to our problems is to move more in the direction of “socialism”, but to be honest that wouldn’t be the solution to anything.  It would just change how the table scraps that the rest of us are getting are distributed.

If we truly wanted a return to prosperity, we need to dramatically shift the rules of the game so that they are tilted back in favor of individuals and small businesses.  A much more pure form of capitalism would mean more wealth, less poverty and a more equitable distribution of the economic rewards in this country.

But it will never happen.  Most of our politicians are married to the big corporations and the wealthy elitists that fund their campaigns.  And most Americans are so uneducated that they believe that what we actually have today is “capitalism” and that the only alternative is to go “to the left” toward socialism.

Very few people out there are suggesting that we need to greatly reduce the power of the federal government and greatly reduce the power of the big corporations, but that is exactly what we need to do.  We need to give individuals and small businesses room to breathe once again.

With each passing year, things get even worse.  In fact, the founder of Subway Restaurants recently said that the environment for small businesses is so toxic in America today that he never would have been able to start Subway if he had to do it today.

For much more on how small business is being strangled to death in the United States, please see my previous article entitled “We Are Witnessing The Death Of Small Business In America“.

What I want to do now is to discuss some of the results that “corporatism” is producing in America.

First of all, we continue to see incomes go down even though we live in an inflationary economy.

As Time Magazine recently reported, personal incomes took a huge nosedive during the month of January…

Data released by the Commerce Department last week showed that personal income fell 3.6% in January, the biggest decline in 20 years. The drop was even bigger when taxes and inflation are taken into account. Real personal disposable income fell by 4%, the biggest monthly drop in half a century.

But this is part of a longer term trend.  Median household income in the U.S. has declined for four consecutive years, and it is now significantly lower than it was all the way back in 2001

Real median US household income — that’s “real,” as in “adjusted for inflation” — was $50,054 in 2011, the most recent data available from the US Census Bureau. That’s 8% lower than the 2007 peak of $54,489.

Meanwhile, big corporations are absolutely raking in the cash.  The following is from a recent New York Times article

“So far in this recovery, corporations have captured an unusually high share of the income gains,” said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. “The U.S. corporate sector is in a lot better health than the overall economy. And until we get a full recovery in the labor market, this will persist.”

The result has been a golden age for corporate profits, especially among multinational giants that are also benefiting from faster growth in emerging economies like China and India.

Today, corporate profits as a percentage of U.S. GDP are at an all-time high, but wages as a percentage of U.S. GDP are near an all-time low.

Just check out the following chart.  Corporate profits have absolutely exploded over the past decade…

Corporate Profits After Tax

Meanwhile, wages as a percentage of GDP continue to fall rapidly…

Wages And Salaries As A Percentage Of GDP

Most of the jobs being created in America today are “low wage” jobs.  Tens of millions of Americans are working as hard as they can only to find that they can barely put food on the table and provide a roof over the heads of their children.  The ranks of the “working poor” are exploding and the middle class continues to shrink.

Many of you that are reading this article are members of the working poor.  You know what it is like to stare up at your ceiling at night wondering how you are going to pay the bills next month.

Today, most Americans are living very close to the edge financially.  A recent article by NBC News staff writer Allison Linn shared some of their stories.  The following is one example…

Crystal Dupont knows what it’s like to try to live on the federal minimum wage.

Dupont has no health insurance, so she hasn’t seen a doctor in two years. She’s behind on her car payments and has taken out pawn shop and payday loans to cover other monthly expenses. She eats beans and oatmeal when her food budget gets low.

When she got her tax refund recently, she used the money to get ahead on her light bill.

“I try to live within my means, but sometimes you just can’t,” said Dupont, 25. The Houston resident works 30 to 40 hours a week taking customer service calls, earning between $7.25 and $8 an hour. That came to about $15,000 last year.

It’s a wage she’s lived on for a while now, but just barely.

Sadly, the number of Americans that are “just barely” surviving continues to grow.

But if corporate profits are soaring to unprecedented heights, then who is getting all of those rewards?

The monopoly men of the global elite are.

Just check out the following video which does a great job of illustrating how corporatism has systematically funneled all of the economic rewards in our system to the very top…

Once again, I want to make it very clear that I am not advocating socialism as the answer in any way, shape or form.  Socialism takes away the incentive to create wealth and it almost always results in almost all of the economic rewards going to a very tiny elite anyway.

As I said earlier, what we need is a return to a much more pure form of capitalism, but this is so foreign to the way that most people think that most people will not be able to grasp this.

It certainly would be possible to greatly reduce the power of the federal government and greatly reduce the power of the big corporations at the same time, but this is so “outside the box” for most people that they cannot even conceive of doing such a thing.

We need to create an environment where individuals and small businesses can thrive once again.  But instead, most of us are content to continue “playing the game” and getting enslaved in even more debt.

For example, according to CNBC, auto loans just continue to get larger and continue to get stretched out for longer periods of time…

American car buyers, attracted by new models and cheap financing, are taking out bigger auto loans and stretching out the terms of those loans to a new record length.

New analysis from Experian Automotive shows the average new car loan in the fourth quarter of last year was $26,691 and stretched out over an average of 65 months. The length of the average loan is one month longer than the previous record set in the third quarter of last year.

What will they think of next?

Will we eventually have auto loans that get paid off over 10 years?

By the way, that is another way that the monopoly men of the global elite get all of our money.  They enslave us to debt, and we spend year after year of our lives slaving away to make them even wealthier.

They are very smart.  There is a reason why they have 32 TRILLION dollars stashed away in offshore tax havens.  They know how to play the game, and they are very happy that most of the rest of us are asleep.

Fortunately, it appears that an increasing number of Americans are waking up.

For example, I wanted to share with you all an excerpt from a comment that one of my readers left on one of my recent articles

In the past year, I’ve been slowly but surely waking up to the nonsense happening around me. There’s so many things I need to simply get off my chest, so excuse the length of this post. Recently in the past two years, I’ve gotten married and have been medically discharged from the Marines after being injured in Afghanistan. Being 23 years old and married, my goal is secure a secure a future for my family, but with the way things are going, I’m not exactly sure how much of a future we’re going to have in 50 years. I can’t explain it, but I’ve felt this need to change my attitude and motivations lately.

I started by turning off the garbage music, television and other mindless entertainment that seems to plague my generation. It was easier than it looked – I don’t miss most of it really. The next order of business was to educate myself on world news, so that’s what I did. Every day, like clockwork, I check all major mainstream news feeds (NBC, Fox, Abc, CNN, Reuters, BBC, etc.) as well as not-so-mainstream news sites – yours being one of them. It’s incredible how fast our world changes and the manner in which it changes. The local 10 o’clock doesn’t show anything but local news, sports, weather, lottery #’s and whatever else they decide to throw in. It’s a night and day difference once you start to actually research and see what’s happening all over the world. Look at the number of comments about a news story on the economy and then look at a celebrity story on the “news”….People are so blind, it truly amazes me. My friends, family and classmates at college seem to be under a spell of some sort. They’re distracted – and it’s contagious. Nobody I know gives a damn about global affairs/economics. They’re more interested in the newest iPhone, cars, shows, movies, and just about anything else you can think of. I’m not saying there’s anything wrong with these things, but my friends/family/peers are CONSUMED by these distractions. When the election was taking place in 2012, every Tom, Dick and Harry on Facebook had an opinion and rant. After the circus ended however, everyone simply went back to posting about parties, kittens, Farmville etc. It’s a huge joke. For me, it’s little terrifying and exciting to see history unfolding in front of our eyes. This country of ours is going through big changes now that will most certainly affect our future, so I strive to adapt and prepare myself and my family. I’m looking at buying my first home this summer. Right now I live in an apartment right outside Philly and spend more money on rent than most pay for a mortgage. I need a house with a little land to raise chickens, grow fruits/vegetables, store canned food – and to be as independent from the system as I can. For my job, I wanted a skill/trade that people would always need, so I picked the funeral business. On the side, I work in construction and have been learning everything there is to know about building with my own two hands. I feel as though these old forgotten skills are going to be handy in a short while.

Hopefully we can get a lot more people to wake up and start breaking out of “the matrix” of control that is all around us.

Right now, the system is designed to continually funnel more money and more power to the very top of the pyramid.  The global elite are becoming more dominant with each passing day.  Unless something dramatic happens, at some point the American people will become so powerless that they won’t be able to do anything about it even if they wanted to.

The idea of a very tiny elite completely dominating all the rest of us goes against everything that America is supposed to stand for.  In the end, it will result in absolute tyranny if it is not stopped.

Who Runs The World - Solid Proof That A Core Group Of Wealthy Elitists Are Pulling The Strings

The Dow Hits An All-Time High! Translation: A Bubble Is Always Biggest Right Before It Bursts

The Dow Hits An All-Time High! Translation: A Bubble Is Always Biggest Right Before It Bursts - Photo by KazekiReckless money printing by Federal Reserve Chairman Ben Bernanke has pumped up the Dow to a brand new all-time high.  So what comes next?  Will the Dow go even higher?  Hopefully it will.  In fact, it would be great if the Dow was able to hit 15,000 before it finally came crashing down.  That would give all of us some more time to prepare for the nightmarish economic crisis that is rapidly approaching.  As you will see below, the U.S. economy is in far, far worse shape than it was the last time the Dow reached a record high back in 2007.  In addition, all of the long-term trends that are ripping our economy to shreds just continue to get even worse and our debt just continues to explode.  Unfortunately, the Dow has become completely divorced from economic reality in recent years because of Fed manipulation.  All of this funny money that the Federal Reserve has been cranking out has made the wealthy even wealthier, but this bubble will not last for too much longer.  What goes up must come down.  And remember, a bubble is always biggest right before it bursts.

Fortunately, it looks like an increasing number of people out there are starting to recognize that the primary reason why stocks have been going up is because of the Fed.  Just check out this excerpt from a recent article by the USA Today editorial board

The Federal Reserve’s purchases have driven interest rates to near zero. This has stimulated the economy but not without cost. Savers, particularly older ones trying to live on income from their investments, are starved for safe options. They’ve been forced into stocks, which is one reason the market has been acting as if it’s on steroids. Further, with borrowing costs low, Congress and the White House have less incentive to rein in the national debt. Rock-bottom interest rates have also distorted markets.

The best indication that the Fed’s bond-buying purchases are pushing stocks up artificially is that investors run for cover whenever there is a hint that the Fed might change course, as happened recently. On Monday, billionaire superinvestor Berkshire Hathaway CEO Warren Buffett told CNBC that markets are on a “hair trigger” waiting for signs of change from the Fed. The market is “hooked on the drug” of easy money, Dallas Fed President Richard Fisher told Reuters.

Fisher’s comparison of Fed policies to a drug is apt. Markets might not like the idea of the drug being withdrawn now, when the Fed holds a portfolio of $3 trillion. But the withdrawal symptoms will be a lot worse once the portfolio grows to $4 trillion, or more.

Those sentiments were echoed by Gordon Charlop, a trader at Rosenblatt Securities, during a recent appearance on CNBC…

“The Wizard of the Fed, Ben [Bernanke], has done a great job propping up the market, but the question is how does the wizard move the pin from the balloon without blowing the whole thing up?” said Charlop. “This is getting out of balance and he’s got to figure out a way to justify the levels that we’ve gotten to and draw back on some of the stimulus.”

Of course, in the end, the bursting of this bubble is going to be very messy.

The Fed has dramatically distorted the market in an attempt to make things look good, but now the financial markets are completely and totally addicted to easy money.  Is there any chance that the Fed will be able to take away that easy money without causing disaster?

There are only a few ways that this current scenario can play out.  The following is what Stanley Druckenmiller recently told CNBC

I don’t know when it’s going to end, but my guess is, it’s going to end very badly; and it’s going to end very badly because, again, when you get the biggest price in the world, interest rates, being manipulated you get a misallocation of resources and this is going to end in one of two ways – with a malinvestment bust which we got in ’07-’08 (we didn’t get inflation). We got a malinvestment bust because of the bubble that was created in housing. Or it could end with just monetizing the debt and off we go in inflation. So that’s a very binary outcome – they’re both bad.”

What the Fed has done to the money supply in recent years has been absolutely unprecedented.  Just check out how our money supply has skyrocketed since the last financial crisis…

M1 Money Supply

So what happens when the amount of money in an economy rises rapidly?

Well, if I remember Econ 101 correctly, that would mean that prices should go up.

And that is exactly what has happened.  And since most of the money that the Fed has created has gone into the financial system first, it should not be a surprise that we have seen a bubble in financial assets.

In a previous article that I wrote last September, I warned that QE3 would cause stocks to go up…

So what have the previous rounds of quantitative easing accomplished?  Well, they have driven up the prices of financial assets.  Those that own stocks have done very well the past couple of years.  So who owns stocks?  The wealthy do.  In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.  Those that have invested in commodities have also done very nicely in recent years.  We have seen gold, silver, oil and agricultural commodities all do very well.  But that also means that average Americans are paying more for basic necessities such as food and gasoline.  So the first two rounds of quantitative easing made the wealthy even wealthier while causing living standards to fall for all the rest of us.  Is there any reason to believe that QE3 will be any different?

Of course not.

So will stocks continue to go up indefinitely?

No way.

As I have also written about previously, the money printing that the Fed is doing right now is not nearly enough to stop the mammoth derivatives crisis that is coming.

A derivatives crisis was one of the primary reasons for the financial crash of 2008, but most Americans still have no idea what derivatives are.

They can be very complex, but I think that it is easiest just to think of them as side bets.

When someone buys a derivative, they are not buying anything real.  They are simply betting that something will or will not happen.

For example, if you bet $100 that the Chicago Cubs will win the World Series this year, would you be “investing” in anything real?

Of course not.

Well, it is the same with most derivatives.

Today, Wall Street has become the biggest casino in the entire world and trillions of dollars of very reckless bets have been made.

In fact, most Americans would be absolutely shocked to learn how exposed to derivatives some of our largest financial institutions are.  The following is an excerpt from one of my previous articles entitled “The Coming Derivatives Panic That Will Destroy Global Financial Markets“…

It would be hard to overstate the recklessness of these banks.  The numbers that you are about to see are absolutely jaw-dropping.  According to the Comptroller of the Currency, four of the largest U.S. banks are walking a tightrope of risk, leverage and debt when it comes to derivatives.  Just check out how exposed they are…

JPMorgan Chase

Total Assets: $1,812,837,000,000 (just over 1.8 trillion dollars)

Total Exposure To Derivatives: $69,238,349,000,000 (more than 69 trillion dollars)

Citibank

Total Assets: $1,347,841,000,000 (a bit more than 1.3 trillion dollars)

Total Exposure To Derivatives: $52,150,970,000,000 (more than 52 trillion dollars)

Bank Of America

Total Assets: $1,445,093,000,000 (a bit more than 1.4 trillion dollars)

Total Exposure To Derivatives: $44,405,372,000,000 (more than 44 trillion dollars)

Goldman Sachs

Total Assets: $114,693,000,000 (a bit more than 114 billion dollars – yes, you read that correctly)

Total Exposure To Derivatives: $41,580,395,000,000 (more than 41 trillion dollars)

That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 362 times greater than their total assets.

When the derivatives crash happens, there won’t be enough money in the entire world to fix it.

So enjoy this little stock market bubble while you can.

It will end soon enough.

And of course stocks should not be this high in the first place.  The underlying economic fundamentals do not justify these kinds of stock prices whatsoever.

A recent CNN article noted that the last time the Dow hit a record high that unemployment in the U.S. was much lower…

Consider this. When the Dow hit its now old record high back in October 2007, the economy was still in good shape — although it was just a few months away from the beginning of the Great Recession.

The unemployment rate in October 2007 was 4.7%. In January of this year, the unemployment rate was 7.9%.

And that same article also pointed out that GDP growth and housing prices were also much stronger back in 2007…

Gross domestic product grew 3% in the third quarter of 2007. Revised figures from the government last week showed that GDP in the fourth quarter of 2012 rose a scant 0.1%. But I guess that’s good news considering the first estimate showed a 0.1% decline.

And despite all the hoopla about the steady recovery in the housing market over the past year, real estate is still in a bear market. The most recent level of the S&P Case-Shiller 20-City Home Price Index, one of the most widely watched gauges of the health of housing, is still 24% below where it was in October 2007.

We have never even come close to recovering from the last economic crisis.  Most Americans seem to have forgotten how good things were back then, but a recent Zero Hedge article included some more points of comparison between October 2007 and today…

  • Dow Jones Industrial Average: Then 14164.5; Now 14164.5
  • Regular Gas Price: Then $2.75; Now $3.73
  • GDP Growth: Then +2.5%; Now +1.6%
  • Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
  • Americans On Food Stamps: Then 26.9 million; Now 47.69 million
  • Size of Fed’s Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
  • US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
  • US Deficit (LTM): Then $97 billion; Now $975.6 billion
  • Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
  • US Household Debt: Then $13.5 trillion; Now 12.87 trillion
  • Labor Force Particpation Rate: Then 65.8%; Now 63.6%
  • Consumer Confidence: Then 99.5; Now 69.6

And of course anyone that reads my site regularly knows that the U.S. economy has been in a state of persistent decline over the past several years.

Just consider the following data points…

-The percentage of the civilian labor force in the United States that is actually employed has been steadily declining every single year since 2006.

-In 2007, the unemployment rate for the 20 to 29 age bracket was about 6.5 percent.  Today, the unemployment rate for that same age group is about 13 percent.

-According to one study, 60 percent of the jobs lost during the last recession were mid-wage jobs, but 58 percent of the jobs created since then have been low wage jobs.

-Median household income in America has fallen for four consecutive years.  Overall, it has declined by more than $4000 during that time span.

-At this point, an astounding 53 percent of all American workers make less than $30,000 a year.

That is the other side of the Fed’s insidious money printing.  Incomes in the United States are going down, but the cost of living is skyrocketing.  This is squeezing millions of Americans out of the middle class

When Debbie Bruister buys a gallon of milk at her local Kroger supermarket, she pays $3.69, up 70 cents from what she paid last year.

Getting to the store costs more, too. Gas in Corinth, Miss., her hometown, costs $3.51 a gallon now, compared to less than three bucks in 2012. That really hurts, considering her husband’s 112-mile daily round-trip commute to his job as a pharmacist.

Perhaps you can identify with this.  Perhaps your paychecks are about the same as they used to be back in 2007 but the cost of living has gone up dramatically since then.

I wish I could tell you that things were going to get better, but unfortunately there are all kinds of indications that things are about to get even worse for the U.S. economy.  If you doubt this, just read this article and this article.

Yes, the Dow is at an all-time high.  But do you want to know what else has hit an all-time high up in New York?

Homelessness.

The following is from a recent report in the New York Times

An average of more than 50,000 people slept each night in New York City’s homeless shelters for the first time in January, a record that underscores an unsettling national trend: a rising number of families without permanent housing.

And apparently families and children have been hit particularly hard over the past year…

More than 21,000 children—an unprecedented 1% of the city’s youth—slept each night in a city shelter in January, an increase of 22% in the past year, the report said, while homeless families now spend more than a year in a shelter, on average, for the first time since 1987. In January, an average of 11,984 homeless families slept in shelters each night, a rise of 18% from a year earlier.

Of course New York is far from alone.  There has been a surge in homelessness all over the United States.  In fact, at this point more than a million public school students in the United States are homeless.  This is the first time that has ever happened in U.S. history.

But the Dow just hit a record high so we should all be wildly happy, right?

Hopefully we can get more Americans to understand that the “prosperity” that we are enjoying right now is just an illusion.  It isn’t real.  It is a bubble created by reckless money printing by the Fed and reckless borrowing by the U.S. government.  If you can believe it, the U.S. government borrowed another 253 billion dollars during the month of February alone.

The Fed and the U.S. government will continue to engage in this kind of reckless behavior until the bubble eventually bursts.

So what should all the rest of us do?

We should be feverishly preparing for the hard times that are coming.  As Daisy Luther recently wrote about, one of the most important things to do is to create an emergency fund.  Instead of going out and blowing your money on the latest toys and gadgets, set some money aside so that you will have something to live on if the economy crashes and you suddenly lose your income.

Just remember what happened back in 2008.  Millions of Americans suddenly lost their jobs, and because many of them had no financial reserves, a lot of Americans suddenly could not pay their mortgages and they lost their homes.

So put some money away in a place where it will be safe – and that does not mean the stock market.

Jim Cramer of CNBC and a lot of the other talking heads on the financial news channels are trying to encourage ordinary Americans to jump into “the bull market” right now and make some money, and many people will take their advice.

But the truth is that a bubble is always biggest right before it bursts.

This bubble is awfully big right now, and I don’t know how much larger it can possibly get.

Stock Market Bubble

Federal Reserve Money Printing Is The Real Reason Why The Stock Market Is Soaring

Federal Reserve Money Printing Is The Real Reason Why The Stock Market Is SoaringYou can thank the reckless money printing that the Federal Reserve has been doing for the incredible bull market that we have seen in recent months.  When the Federal Reserve does more “quantitative easing”, it is the financial markets that benefit the most.  The Dow and the S&P 500 have both hit levels not seen since 2007 this month, and many analysts are projecting that 2013 will be a banner year for stocks.  But is a rising stock market really a sign that the overall economy is rapidly improving as many are suggesting?  Of course not.  Just because the Federal Reserve has inflated another false stock market bubble with a bunch of funny money does not mean that the U.S. economy is in great shape.  In fact, the truth is that things just keep getting worse for average Americans.  The percentage of working age Americans with a job has fallen from 60.6% to 58.6% while Barack Obama has been president, 40 percent of all American workers are making $20,000 a year or less, median household income has declined for four years in a row, and poverty in the United States is absolutely exploding.  So quantitative easing has definitely not made things better for the middle class.  But all of the money printing that the Fed has been doing has worked out wonderfully for Wall Street.  Profits are soaring at Goldman Sachs and luxury estates in the Hamptons are selling briskly.  Unfortunately, this is how things work in America these days.  Our “leaders” seem far more concerned with the welfare of Wall Street than they do about the welfare of the American people.  When things get rocky, their first priority always seems to be to do whatever it takes to pump up the financial markets.

When QE3 was announced, it was heralded as the grand solution to all of our economic problems.  But the truth is that those running things knew exactly what it would do.  Quantitative easing always pumps up the financial markets, and that overwhelmingly benefits those that are wealthy.  In fact, a while back a CNBC article discussed a very interesting study from the Bank of England which showed a clear correlation between quantitative easing and rising stock prices…

It said that the Bank of England’s policies of quantitative easing – similar to the Fed’s – had benefited mainly the wealthy.

Specifically, it said that its QE program had boosted the value of stocks and bonds by 26 percent, or about $970 billion. It said that about 40 percent of those gains went to the richest 5 percent of British households.

Many said the BOE’s easing added to social anger and unrest. Dhaval Joshi, of BCA Research wrote that  “QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it.”

So should we be surprised that stocks are now the highest that they have been in more than 5 years?

Of course not.

And who benefits from this?

The wealthy do.  In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.

Unfortunately, all of this reckless money printing has a very negative impact on all the rest of us.  When the Fed floods the financial system with money, that causes inflation.  That means that the cost of living has gone up even though your paycheck may not have.

If you go to the supermarket frequently, you know exactly what I am talking about.  The new “sale prices” are what the old “regular prices” used to be.  They keep shrinking many of the package sizes in order to try to hide the inflation, but I don’t think many people are fooled.  Our food dollars are not stretching nearly as far as they used to, and we can blame the Federal Reserve for that.

For much more on rising prices in America, please see this article: “Somebody Should Start The ‘Stuff Costs Too Much’ Party“.

Sadly, this is what the Federal Reserve does.  The system was designed to create inflation.  Before the Federal Reserve came into existence, the United States never had an ongoing problem with inflation.  But since the Fed was created, the United States has endured constant inflation.  In fact, we have come to accept it as “normal”.  Just check out the amazing chart in the video posted below

The chart in that video kind of reminds me of a chart that I shared in a previous article

Hyperinflation Weimar Republic

Not that I expect the United States to enter a period of hyperinflation in the near future.

Actually, despite all of the reckless money printing that the Fed has been doing, I expect that at some point we are going to see another wave of panic hit the financial markets like we saw back in 2008.  The false stock market bubble will burst, major banks will fail and the financial system will implode.  It could unfold something like this…

1 – A derivatives panic hits the “too big to fail” banks.

2 – Financial markets all over the globe crash.

3 – The credit markets freeze up.

4 – Economic activity in the United States starts to grind to a halt.

5 – Unemployment rises above 20 percent and mortgage defaults soar to unprecedented levels.

6 – Tax revenues fall dramatically and austerity measures are implemented by the federal government, state governments and local governments.

7 – The rest of the globe rapidly loses confidence in the U.S. financial system and begins to dump U.S. debt and U.S. dollars.

I write about derivatives a lot, because they are one of the greatest threats that the global financial system is facing.  In fact, right now a derivatives scandal is threatening to take down the oldest bank in the world

Banca Monte dei Paschi di Siena, the world’s oldest bank, was making loans when Michelangelo and Leonardo da Vinci were young men and before Columbus sailed to the New World. The bank survived the Italian War, which saw Siena’s surrender to Spain in 1555, the Napoleonic campaign, the Second World War and assorted bouts of plague and poverty.

But MPS may not survive the twin threats of a gruesomely expensive takeover gone bad and a derivatives scandal that may result in legal action against the bank’s former executives. After five centuries of independence, MPS may have to be nationalized as its losses soar and its value sinks.

So when you hear the word “derivatives” in the news, pay close attention.  The bankers have turned our financial system into a giant casino, and at some point the entire house of cards is going to come crashing down.

In response to the coming financial crisis, I believe that our “leaders” will eventually resort to money printing unlike anything we have ever seen before in a desperate attempt to resuscitate the system.  When that happens, I believe that we will see the kind of rampant inflation that so many people have been warning about.

So what do you think about all of this?

Do you believe that Federal Reserve money printing is the real reason why the stock market is soaring?

Please feel free to post a comment with your thoughts below…

How Much Money Will They Print?

The Worst Economic Numbers In More Than A Year

With everything else that is going on in the world, a lot of people have failed to notice that we are seeing some of the worst economic numbers that we have seen in more than a year.  For example, it was announced on Thursday that initial claims for unemployment benefits have hit their highest level in a year and a half.  Hopefully this is just a temporary blip in the data, because initial unemployment claims tend to have a very strong correlation with the overall performance of the economy.  We also continue to see poverty statistics rise.  According to government statistics released earlier this month, the number of Americans living in poverty and the number of Americans on food stamps are both at all-time record highs.  Meanwhile, the Dow and the S&P 500 are both down more than 5 percent since the election and the U.S. government rolled up 22 billion dollars more debt in October 2012 than it did in October 2011.  The unfortunate truth is that things are not getting better.  The U.S. economy continues to become weaker and more unstable, and there are a whole lot of reasons to be very pessimistic about our economic situation as we move into the winter months.

Let’s take a closer look at some of the troubling economic numbers that have been released in recent days…

Initial Claims For Unemployment Benefits

The optimism that many analysts had about jobs is rapidly dissipating.  Over the past few weeks there has been a huge wave of companies announcing layoffs.  Just check out this article and this article.

But now we are actually seeing a significant rise in the number of American workers applying for unemployment benefits.  Initial claims for unemployment benefits soared to 439,000 for the week ending November 10th.  This is the highest level that we have seen in more than a year.  The last time initial claims were this high was April 2011.  It is interesting to note that the largest numbers of new unemployment claims came from the swing states of Ohio and Pennsylvania.

Record Food Stamp Numbers

In dozens of articles I have carefully documented the steady rise of poverty in America and the steady decline of the middle class.

Even though our politicians insist that we are in the middle of an “economic recovery”, the number of Americans dependent on the government for their very survival just continues to keep going up.

A few days ago, the latest food stamp numbers were released.  It turns out that the number of Americans on food stamps increased by 420,947 from July to August.  That was the largest one month increase that we have seen in a year.  At this point, an all-time record 47.1 million Americans are enrolled in the food stamp program.  What would that look like if all of those people had to actually stand outside in bread lines like in the old days?

Stunning Stock Market Declines

A few days ago, I wrote about how many wealthy Americans are dumping stocks and other financial assets in anticipation of the looming “fiscal cliff”.

Well, if things get much worse we may soon have a “market crash” on our hands.

The Dow and the S&P 500 are both down by more than 5 percent since the election and many are wondering if things are about to get a whole lot worse.

Shares of Apple are down by 25 percent since late September.  Some analysts are actually using the term “panic selling” to describe what is happening to the stock.

Slowing Economic Activity

All over America there are indications that economic activity is starting to slow down.  Is Superstorm Sandy responsible for this, or are there other factors at work?

According to the Federal Reserve Bank of New York, economic activity appears to be contracting in areas that were hit particularly hard by Superstorm Sandy…

The Federal Reserve Bank of New York’s general economic index was minus 5.2 this month after minus 6.2 in October. Readings of less than zero signal contraction in New York, northern New Jersey and southern Connecticut.

Things appear to be slowing down in the mid-Atlantic region as well.  According to CNBC, manufacturing activity in the mid-Atlantic region has contracted much faster than analysts were projecting…

The Philadelphia Federal Reserve Bank said its business activity index slumped to -10.7 from 5.7 the month before. The fall was much steeper than economists’ expectations for slippage to a reading of 2.0, according to a Reuters poll.

Any reading above zero indicates expansion in the region’s manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey, and Delaware.

New Poverty Numbers

More American families are falling out of the middle class every single day.

New numbers that were just released by the U.S. Census Bureau show that the number of Americans living in poverty rose to a new all-time record of 49.7 million last year.

Once upon a time, people would have laughed at you if you suggested that someday 50 million Americans would be living in poverty.

But here we are.

Soaring Government Debt

Anyone that follows my columns on a regular basis knows that government debt is one of my major pet peeves.

Well, despite all of the “budget deals” that have been made between the Republicans and the Democrats, the amount of debt that we are accumulating just continues to balloon in size.

The federal budget deficit for October 2012 was 120 billion dollars.  That was a huge increase over the October 2011 federal budget deficit of 98 billion dollars.

How long can we possibly continue to do this?

Things In Europe Are Getting Worse Too

In case you had not noticed, the economic situation in Europe continues to unravel as well.  The eurozone is officially in a recession once again, and unemployment in the eurozone is at an all-time record high.  Violent protests and rioting happen on an almost daily basis over in Europe now.  The largest economy on the planet continues to implode right in front of our eyes, and this is another factor that will continue to drag down the U.S. economy.

So is there anyone out there that actually still believes that things are “getting better”?

The brief period of economic stability that we have been experiencing is rapidly coming to an end.  The “recovery” turned out to be extremely disappointing, and now the next major downturn is almost here.

21 Signs That The Global Economic Crisis Is About To Go To A Whole New Level

The global debt crisis has reached a dangerous new phase.  Unfortunately, most Americans are not taking notice of it yet because most of the action is taking place overseas, and because U.S. financial markets are riding high.  But just because the global economic crisis is unfolding at the pace of a “slow-motion train wreck” right now does not mean that it isn’t incredibly dangerous.  As I have written about previously, the economic collapse is not going to be a single event.  Yes, there will be days when the Dow drops by more than 500 points.  Yes, there will be days when the reporters on CNBC appear to be hyperventilating.  But mostly there will be days of quiet despair as the global economic system slides even further toward oblivion.  And right now things are clearly getting worse.  Things in Greece are much worse than they were six months ago.  Things in Spain are much worse than they were six months ago.  The same thing could be said for Italy, France, Japan, Argentina and a whole bunch of other nations.  The entire global economy is slowing down, and we are entering a time period that is going to be incredibly painful for everyone.  At the moment, the U.S. is still experiencing a “sugar high” from unprecedented fiscal and monetary stimulus, but when that “sugar high” wears off the hangover will be excruciating.  Reckless borrowing, spending and money printing has bought us a brief period of “economic stability”, but our foolish financial decisions will also make our eventual collapse far worse than it might have been.  So don’t think for a second that the U.S. will somehow escape the coming global economic crisis.  The truth is that before this is all over we will be seen as one of the primary causes of the crisis.

The following are 21 signs that the global economic crisis is about to go to a whole new level….

#1 Bank of Israel Governor Stanley Fischer says that the global economy is “awfully close” to recession.

#2 It was announced last week that the unemployment rate in Greece has reached an all-time high of 25.1 percent.  Unemployment among those 24 years old or younger is now more than 54 percent.  Back in April 2010, the unemployment rate in Greece was only sitting at 11.8 percent.

#3 The IMF is warning that Greek debt may have to be “restructured” yet again.

#4 Swedish Finance Minister Anders Borg says that it is “probable” that Greece will leave the euro, and that it might happen within the next six months.

#5 An angry crowd of approximately 40,000 angry Greeks recently descended on Athens to protest a visit by German Chancellor Angela Merkel…

From high-school students to pensioners, tens of thousands of Greek demonstrators swarmed into Athens yesterday to show the visiting German Chancellor, Angela Merkel, their indignation at their country’s continued austerity measures.

Flouting the government’s ban on protests, an estimated 40,000 people – many carrying posters depicting Ms Merkel as a Nazi – descended on Syntagma Square near the parliament building. Masked youths pelted riot police with rocks as the officers responded with tear gas.

The authorities had deployed 7,000 police, water cannon and a helicopter. Snipers were placed on rooftops to ensure the German leader’s safety.

#6 The debt crisis is Argentina is becoming increasingly troublesome.

#7 The government debt to GDP ratio in Italy is expected to hit 126 percent this year.  In Greece, it is expected to hit 198 percent.  In Japan, it is expected to hit a whopping 237 percent.

#8 Standard & Poor’s has slashed the credit rating on Spanish government debt to BBB-, which is just one level above junk status.

#9 Back in the year 2000, the ratio of total debt to GDP in Spain was 192 percent.  By 2011, it had reached 363 percent.

#10 Record amounts of money are being pulled out of Spanish banks, and many large Spanish banks are rapidly heading toward insolvency.

#11 Manufacturing activity in Spain has contracted for 17 months in a row.

#12 It is being projected that home prices in Spain will fall by another 15 percent by the end of 2013.

#13 The unemployment rate in France is now above 10 percent, and it has risen for 16 months in a row.

#14 There are signs that Switzerland may be preparing for “major civil unrest” throughout Europe.

#15 The former top economist at the European Central Bank says that the ECB has fallen into a state of “panic” as it desperately tries to solve the European debt crisis.

#16 According to a recent IMF report, European banks may need to sell off 4.5 trillion dollars in assets over the next 14 months in order to meet strict new capital requirements.

#17 In August, U.S. exports dropped to the lowest level that we have seen since last February.

#18 Economics Professor Barry Eichengreen is very concerned about what is coming next for stocks in the United States…

“I’m worried that stock markets in the United States in particular have gotten ahead of economic growth”

#19 During the week ending October 3rd, investors pulled more than 10 billion dollars out of U.S. mutual funds.  Overall, a total of more than 100 billion dollars has been pulled out of U.S. mutual funds so far this year.

#20 As I wrote about the other day, the IMF is warning that there is an “alarmingly high” risk of a deeper global economic slowdown.

#21 When shipping companies start laying off workers, that is one of the best signs that economic activity is slowing down.  That is why it was so troubling when it was announced that FedEx is planning to get rid of “several thousand” workers over the coming months.  According to AFP, “its business is being hit by the global economic slowdown”.

For even more signs that the global economy is rapidly crumbling, please see my previous article entitled “The Largest Economy In The World Is Imploding Right In Front Of Our Eyes“.

So is anyone doing well right now?

Yes, it turns out that QE3 is padding the profits of the big banks in the United States and making the wealthy even wealthier just like I warned that it would.

According to the Washington Post, QE3 is helping the big banks much more than it is helping consumers.  Is this what the Fed intended all along?…

JPMorgan Chase and Wells Fargo, the nation’s largest mortgage lenders, said Friday they won’t make home loans much cheaper for consumers, even as they reported booming profits from that business.

Those bottom lines have been padded by federal initiatives to stimulate the economy. The Federal Reserve is spending $40 billion a month to reduce mortgage rates to encourage Americans to buy homes. Instead, its policies may be generating more benefits for banks than borrowers.

So exactly how much has QE3 helped out the big banks?  Just check out these numbers…

Revenue from mortgages was up 57 percent in the third quarter compared with the same period last year at JPMorgan and more than 50 percent up at Wells Fargo.

But should we expect anything else from the Federal Reserve?

The American people are trusting the Fed to protect our economy, and yet they cannot even protect their own shipments of money.  In fact, the Fed recently lost a large shipment of new $100 bills.

Or perhaps could letting people steal money from their own trucks be another way that the Fed is trying to “stimulate the economy”?

Stranger things have happened.

In any event, the truth is that the U.S. economy and the U.S. financial system are unsustainable from any angle that you want to look at things.

We are drowning in government debt, we are drowning in consumer debt, Wall Street has been transformed into a high risk casino where our largest financial institutions are putting it all on the line on a daily basis, we are consuming far more than we are producing, there are more than 100 million Americans on welfare and we are stealing more than 100 million dollars an hour from future generations to pay for it all.

Anyone that believes that we are in “good shape” does not know the first thing about economics.

Sadly, the U.S. is not alone.  Nations all over the globe are experiencing similar problems.

The global economic crisis is just beginning and it is going to get much, much worse.

I hope that you ready.

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