80 Percent Of Americans Say That They Are Not Better Off Than They Were Four Years Ago

Are you better off today than you were four years ago?  If not, then you are just like most other Americans.  According to a CBS News/New York Times poll that was released a few days ago, 80 percent of Americans say that their financial situation is not “better today” than it was four years ago.  But if you turn on the television and listen to what the “pundits” are saying, you would be tempted to think that we were in the midst of a robust economic recovery.  You would be tempted to think that the U.S. economy is in great shape and that we are heading for a really bright future.  But the fact that the stock market is soaring does not mean much to most Americans.  In fact, most Americans couldn’t care less that the Dow is well above 13,000 and that the NASDAQ is above 3,000.  What most Americans care about is having a job and being able to provide for their families.  If you haven’t paid the mortgage in three months or if you don’t have enough money to take your daughter to go see the doctor it really is not going to matter to you how well the boys and girls over on Wall Street are doing.  Right now most American families are doing worse than they were doing four years ago, and no amount of media hype is going to change that fact.

Yes, the stock market is doing really well for the moment, but the truth is that more than 50 percent of all stocks and bonds are owned by just 1 percent of the U.S. population.

Good for them.  It looks like the trillions of dollars that the Federal Reserve poured into the big Wall Street banks is really paying off nicely for the financial community.

Meanwhile, much of the rest of the country is deeply suffering.

It was recently reported that 1.5 million American families live on less than two dollars a day (before counting government benefits).

That is horrifying.

According to the U.S. Census Bureau, the percentage of Americans living in “extreme poverty” is now sitting at an all-time high.

All across this country poverty is exploding.  Food banks are experiencing more demand than ever before and those offering free healthcare are absolutely swamped.

And every single measure of government dependence has gone way up since Barack Obama entered the White House.

For example, since Barack Obama became president the number of Americans on food stamps has gone up by 45 percent.

Just think about that.

At this point the federal government is helping to feed an all-time record 46.5 million Americans every month.

Oh yeah, times are good.

According to the U.S. Census Bureau, 49 percent of all Americans live in a home that receives direct monetary benefits from the federal government.

That is much higher than it has been historically.

For example, back in 1983 less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.

The big problem is that there are simply not enough jobs for everyone.

Listening to the media, you would be tempted to think that the U.S. economy is now pumping out huge numbers of good jobs.

But that is simply not the case.

Right now there are 5.6 million fewer jobs than there were when the last recession began back in late 2007.

So where are the millions of jobs you promised us Obama?

The federal government is trying to convince us that the unemployment rate is going down, but that is not really true.

The key is to look at the percentage of working age Americans that actually have jobs.  During the last recession that percentage fell dramatically as you can see from the chart below.  After every other recession since World War II the employment to population ratio has always bounced back.  But it has not happened this time.  Instead, the employment to population ratio has remained between 58 and 59 percent since the end of 2009….

We have not had a jobs recovery.  Hopefully we will have one before the next recession hits, but we are running out of time for that.

Tonight there are millions upon millions of hard working Americans that are staring at their television screens and wondering why they can’t find good jobs.  The pretty people on television are telling them that the employment situation is getting much better but they can’t find work no matter how hard they try.  It is a cruel joke on them.

When Barack Obama entered the White House, the number of “long-term unemployed workers” in the United States was approximately 2.6 million.  Today, that number is sitting at 5.6 million.

Thanks for the improvement Obama.

Meanwhile, the average duration of unemployment continues to hover near a record high.  Just look at the chart posted below.  Does this look like a “jobs recovery” to you?….

But of course Obama and those that support him want to make things sound like they are getting better.  They want people to run out and vote for him again in November.

If things are going well for you right now, be thankful, and also remember the millions upon millions of Americans out there that are deeply hurting in this economy.

If you gathered together all of the workers that are “officially” unemployed in the United States at this point into one nation, they would constitute the 68th largest country in the entire world.  It would be a nation larger than Greece or Portugal.

That is a lot of people.

Obama promised us that the Wall Street bailouts would make everything better.  He promised us that if we poured gigantic mountains of money into Wall Street that it would end up helping “Main Street”.

Well, the last time I looked Goldman Sachs was doing just fine.

So where is the help for Main Street?

In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

How much wealthier do they have to get before they start creating more jobs for the rest of us?

Obama (like most of our politicians) is a complete fraud when it comes to the economy.  He is all saddle and no horse.  He talks a good game but he doesn’t have any game.

As Wall Street has recovered, the rest of the country has actually been in decline.  Median household income in the United States is down 7.8 percent since December 2007 after adjusting for inflation.  Millions of American families are reaching the breaking point and millions of other families have already reached it.

Incomes have been declining but the cost of living has not.

For example, health insurance costs have risen by 23 percent since Barack Obama became president.

Has your paycheck increased by 23 percent?

The average price of a gallon of gasoline in the United States has increased by more than 90 percent since Barack Obama became president.

Has your paycheck increased by 90 percent?

Millions of American families have lost their homes while Obama has been president and millions more will soon lose their homes.  At this point there are more than 6 million mortgages in the United States that are overdue.

It is a horrible, horrible feeling to know that you can’t pay your mortgage and that you will soon lose your home and your family will be put out on the street.

None of us would ever want to end up in that situation.

And the housing market sure has not shown any signs of recovery under Barack Obama.

In January, U.S. home prices were the lowest that they have been in more than a decade.

Weren’t home prices and home sales supposed to be turning around by now?

Under Barack Obama, new home sales in the United States set a brand new all-time record low in 2009, they set a brand new all-time record low again in 2010, and they set a brand new all-time record low once again during 2011.

That trend is not going in the right direction.

Of course Barack Obama is not solely responsible for the performance of the U.S. economy.  Congress should share part of the blame as well, and the Federal Reserve is more responsible for our economic performance than anyone else is.

But one area where Barack Obama has had a huge impact is in the area of government spending.

While Barack Obama has been president, the U.S. national debt has risen from 10.6 trillion to 15.5 trillion.

Thanks Obama.

During the first three years of the Obama administration, the U.S. government has accumulated more debt than it did between 1776 and 1995.

So is Obama planning a change of course?

Of course not.

At this point, our national debt is increasing by about 150 million dollars every single hour.

So should we be thanking Obama for stealing 150 million dollars from our children and our grandchildren every hour?

Should we be thanking Obama for ruining our future?

I think not.

But you know what?

According to the CBS News/New York Times poll mentioned above, about half of America would actually vote for Obama if the next presidential election was held today.

That alone is a clear sign that this country is in a massive amount of trouble.

The truth is that the leaders we elect are an accurate reflection of who we are as a country.

And when you look at the collection of misfits in Washington D.C. right now, that does not say a lot about the character of this nation.

So where does America go from here?

That is up to you America.

20 Economic Statistics To Use To Wake Sheeple Up From Their Entertainment-Induced Comas

The Dow has closed above 13,000 for the first time since 2008, and the mainstream media is declaring that a strong economic recovery is underway.  Barack Obama is telling anyone who will listen that his economic policies are a huge success, and U.S. consumers are piling up astounding amounts of new debt.  Unfortunately, this euphoria about the economy will be short-lived.  None of the long-term problems that are destroying the U.S. economy have been solved.  In fact, there are dozens of statistics that can be quoted that prove that the U.S. economy is in far worse shape than it was when the recession supposedly ended.  If dramatic changes are not made very rapidly, our nation is going to smash directly into an economic brick wall.  Sadly, most Americans are so addicted to entertainment that they have no idea what is about to happen.  Most of them are “sheeple” that are content to trust that the “experts” know exactly how to fix our problems as they continue to enjoy their entertainment-induced comas.  After all, it is much easier to turn on “American Idol” or “Dancing With The Stars” than it is to think about debt ratios and monetary policy.  But that doesn’t mean that we should not try to wake the sheeple up.  It just means that it will not be easy.

If you went to the doctor tomorrow and he told you to take some little blue pills without telling you anything else, would you take them?

Of course not.

You would want to know what the little blue pills are for.

But if your doctor told you that you have a deadly incurable disease that is about to kill you, and that the little blue pills are the only cure, then you would definitely be interested in taking them.

Well, it is the same way with the American people.  Until they understand just how sick the economy is, they will not be interested in fighting for a solution.

We need to show all the sheeple out there that the U.S. economy has terminal cancer and is headed for death.

We need to show them that the future of our children and our grandchildren is literally being destroyed.

Way too many Americans are sitting around waiting for the government to save them.

It isn’t going to happen.

It is up to those of us that are awake to wake up those that are asleep.

And there are many out there that think that they are awake that are only partially awake.

One very famous author once wrote that “people are destroyed for lack of knowledge”, and that is exactly what is happening in America today.  Most Americans simply don’t understand what is happening economically, politically, socially, morally or financially in this nation.

Please help me wake the sheeple up.

The following are 20 economic statistics to use to wake sheeple up from their entertainment-induced comas….

#1 The United States has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.

#2 The European Commission has formally declared that Europe has now entered another recession.  German banks are leveraged 32 to 1 and the European financial system is rapidly approaching a nightmare.  Lehman Brothers was only leveraged 30 to 1 when it finally collapsed.

#3 There are clear signs that economic activity is also significantly slowing down in the United States.  For example, new orders for goods manufactured in the United States experienced the biggest drop in three years in January.

#4 U.S. consumers are busy racking up staggering amounts of debt once again.  Total consumer debt rose at an annual rate of 9.3 percent in December.  It is now sitting at a grand total of 2.498 trillion dollars.

#5 The U.S. Postal Service has announced plans to eliminate 35,000 more jobs.

#6 There are more unemployed Americans than there are people living in the entire nation of Greece.

#7 The percentage of American men that have jobs is near an all-time record low.

#8 Right now, there are 88 million working age Americans that do not have jobs and that the government says are not looking for jobs.

#9 The average duration of unemployment in the United States is nearly three times as long as it was back in the year 2000.

#10 In January 2009, there were 2.6 million “long-term unemployed workers” according to the federal government.  Today, there are 5.6 million.

#11 The average price of a gallon of gasoline in the United States has risen by 14 cents in just the past week, and the average price of a gallon of gasoline in the state of California is now an astounding $4.29.  Sadly, the price of gas is expected to continue rising over the next few months.

#12 The U.S. housing market continues to struggle deeply.  Home prices in the 4th quarter of 2011 were four percent lower than they were during the 4th quarter of 2010.  Overall, U.S. home prices are 34 percent lower than they were back at the peak of the housing bubble.

#13 Large numbers of Americans are putting off basic health procedures due to the declining economy.  Just consider the following example from a recent Huffington Post article….

Americans between the ages of 50 to 64 got 500,000 fewer colonoscopies, or screenings aimed at detecting colon cancer, during the recession, compared to the two years before, according to a recent study from researchers at the University of North Carolina’s medical school.

#14 The number of Americans on food stamps has increased by almost 50 percent since Barack Obama first took office.

#15 Right now, 48 percent of all Americans are considered to be either “low income” or “living in poverty”.

#16 The U.S. government is stealing about 150 million dollars from our children and our grandchildren every single hour of every single day.

#17 If Bill Gates gave all of his money to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.

#18 Since the Federal Reserve was created, the U.S. dollar has declined in value by more than 95 percent and the U.S. national debt has gotten more than 5000 times larger.

#19 Approximately 25 million American adults are living with their parents.  Most of them are doing it for economic reasons.

#20 According to a new Politico poll, only 30 percent of all Americans believe that the next generation will be “better off economically” than the previous generation.

For many more current statistics about the U.S. economy, check out the interesting facts which I documented in this previous article.

Thankfully, there are others out there such as trends researcher Gerald Celente that are tirelessly working to sound the alarm.  Celente is convinced that the U.S. financial system is rapidly heading for a disaster.  Just consider the following quotes from Celente in a recent USA Today article….

“2012 is when many of the long-simmering socioeconomic and political trends that we have been forecasting and tracking will climax,” Celente noted in his Top 12 Trends 2012 newsletter. In an interview he added: “When money stops flowing to the man on the street, blood starts flowing in the street.”

Even some politicians on the state level are deeply concerned about the possibility of a massive financial meltdown.

For example, a bill has been introduced in Wyoming that would set up “a state-run government continuity task force” which would develop plans for how Wyoming would deal with potential disasters such as a “complete meltdown of the federal government”, an economic collapse or a major disruption in food and energy supplies….

State Rep. David Miller, R-Riverton, has seen the national debt rise above $15 trillion and protest movements grow around the country. Wealthy Americans are fleeing the country, he says, and confidence in the dollar has taken a hit around the world.

If America’s economic and social problems continue to escalate and spiral out of control, Miller said, Wyoming needs to be ready. So, he’s introduced legislation to create a state-run government continuity task force, which would study and prepare Wyoming for potential catastrophes, from disruptions in food and energy supplies to a complete meltdown of the federal government.

It would even look at the feasibility of quickly providing an alternative currency in Wyoming should the U.S. dollar collapse entirely.

But for many Americans, the “meltdown” has already happened on a personal level.

Many are going to extreme lengths in an attempt to survive in this economy.

For example, one ex-police officer in Ohio got so desperate that he decided that it would be better to get arrested for bank robbery and be thrown in prison than to be homeless and living in the streets….

Former Columbus police officer Edward Pascucci had been jobless for more than a year and was facing homelessness last summer when he decided to rob a local bank. Making off with stacks of cash, however, never was his intention.

Pascucci told a federal judge on Thursday he’d run out of options, was facing “severe health problems” and opted to avail himself of the services offered by the federal penal system rather than live on the street.

Can you imagine that?

Can you imagine getting arrested just so that you could get free health care and wouldn’t have to sleep in the streets?

Meanwhile, the Obamas are living the high life and seem to have developed a “let them eat cake” mentality.  The following is from a recent article in The Daily Mail….

The Obama family just finished a luxury ski vacation in Aspen, Colorado. This comes on the heels of a Hawaiian Christmas vacation for the family that lasted a few weeks. The 2011 Hawaiian vacation cost the American taxpayers $4 million and a big increase from the 2010 bill sent to the American people for $2.5 million, according to the Huffington Post.

Over the past three summers, the Obama’s have vacationed in the exclusive Blue Heron Farm in Chilmark, Martha’s Vineyard in Massachusetts. President Obama has a reputation for hitting every golf course on this island vacation spot for the rich and famous.

There is nothing wrong with a President taking a modest vacation, but there is a problem when the political leader of America is taking frequent swanky vacations when average Americans are experiencing economic pain.

Shouldn’t the Obamas be setting an example for the rest of us during these hard economic times?

Unfortunately, Barack Obama seems to believe that the worst of our economic troubles is now behind us.

If only that were true.

During this short-lived bubble of false hope, we should all be working hard to prepare for what is ahead.

A menacing storm is on the horizon and it will be here way too soon.

Let us wake up as many of the sheeple as we can while there is still time.

 

I Can’t Take It Anymore! When Will The Government Quit Putting Out Fraudulent Employment Statistics?

On Friday, the entire financial world celebrated when it was announced that the unemployment rate in the United States had fallen to 8.3 percent. That is the lowest it has been since February 2009, and it came as an unexpected surprise for financial markets that are hungry for some good news.  According to the Bureau of Labor Statistics, nonfarm payrolls jumped by 243,000 during the month of January.  You can read the full employment report right here.  Based on this news, pundits all over the world were declaring that the U.S. economy is back.  Stocks continued to rise on Friday and the Dow is hovering near a 4 year high.  So does this mean that our economic problems are over?  Of course not.  A closer look at the numbers reveals just how fraudulent these employment statistics really are.  Between December 2011 and January 2012, the number of Americans “not in the labor force” increased by a whopping 1.2 million.  That was the largest increase ever in that category for a single month.  That is how the federal government is getting the unemployment rate to go down.  The government is simply pretending that huge numbers of unemployed Americans don’t want to be part of the labor force anymore.  As you will see below, the employment situation in America is not improving.  Yet everyone in the mainstream media is dancing around as if the economic crisis has been cancelled.  I can’t take it anymore!  It is beyond ridiculous that so many intelligent people continue to buy in to such fraudulent numbers.

The truth is that the labor force participation rate declined dramatically in January.  For those unfamiliar with this statistic, the labor force participation rate is the percentage of working age Americans that are either employed or that are unemployed and considered to be looking for a job.

As you can see from the chart posted below, the labor force participation rate rose steadily between 1970 and 2000.  That happened because large numbers of women were entering the labor force for the first time.

The labor force participation rate peaked at a little more then 67 percent in the late 90s.  Between 2000 and the start of the recent recession, it declined slightly to about 66 percent.

Since then, it has been dropping like a rock.  The chart below does not even include the latest data.  In January, the labor force participation rate was only 63.7 percent.  That is the lowest that is has been since May 1983.  So keep that in mind as you view the chart.

In reality, the percentage of men and women in the United States that would like to have jobs is almost certainly about the same as it was back in 2007 or 2008.  There has been no major social change that would cause large numbers of men or women to want to give up their careers.  So there is something very, very fishy with this chart….

The federal government has been pretending that millions of unemployed Americans have decided that they simply do not want jobs anymore.

This does not make sense at all.

The truth is that unemployment is not really declining at all.  The percentage of Americans that are working is not increasing.  The civilian employment-population ratio dropped like a rock during 2008 and 2009 and it has held very steady since that time.

In January, the civilian employment-population ratio once again held steady at 58.5 percent.  This is about where it has been for most of the last two years….

Does that chart look like an “economic recovery” to you?

Of course not.

If the percentage of people that are employed is about the same as it was two years ago, does that represent an improvement?

Of course not.

If the employment situation in America was getting better, the civilian employment-population ratio would be bouncing back.

We should be thankful that our economy is not free falling like it was during 2008 and 2009, but we also need to understand why things have stabilized.

The federal government is spending money like there is no tomorrow.  During 2011, the Obama administration stole an average of about 150 million dollars an hour from our children and our grandchildren and pumped it into the economy.  Even though the Obama administration spent that money on a lot of frivolous things, it still got into the pockets of average Americans who in turn went out and spent it on food, gas, clothes and other things.

Without all of this reckless government spending, we would not be able to continue to live way above our means and our economic problems would be a lot worse.

But even with the federal government borrowing and spending unprecedented amount of money, and even with interest rates at record lows, our economy is still deeply struggling.  Just consider the following facts….

-New home sales in the United States hit a brand new all-time record low during 2011.

-The average duration of unemployment in America is close to an all-time record high.

-The percentage of Americans living in “extreme poverty” is at an all-time high.

-The number of Americans on food stamps recently hit a new all-time high.

-According to the Census Bureau, an all-time record 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government.  Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.

So let’s not get too excited about the economy.

Yes, things have somewhat stabilized.  The percentage of Americans that have jobs is about the same as it was two years ago.  Considering how rapidly jobs are being shipped out of the United States, that is a good thing.

Enjoy this false bubble of hope while you can.  Things are about to get a lot worse.

Do you remember how rapidly things fell apart after the financial crisis of 2008?

Well, another major financial crisis is on the way.  This time it is going to be centered in Europe initially, but it is going to spread all around the globe just like the last one did.

As the charts above show, we have never even come close to recovering from the last recession, and another one is on the way.

So how bad are things going to get after the next wave of the financial crisis hits us?

That is something that we should all be thinking about.

Look Out Below – The Nightmarish Decline Of The Euro Has Begun

The euro is a dying currency.  On Thursday, the EUR/USD fell below 1.28 for the first time since September 2010.  In fact, as I write this the EUR/USD is sitting at 1.2791.  Back in July, the EUR/USD was over 1.45.  But this is just the beginning.  The euro is going to go a lot lower.  At this point, there are several major European nations that are on the verge of default, the European financial system is overflowing with debt and toxic assets, and most major European banks are leveraged about as badly as Lehman Brothers was when it collapsed.  Most Americans simply do not grasp the gravity of what is happening.  Just because the Dow is sitting above 12000 and a few U.S. economic numbers have improved slightly does not mean that everything is going to be okay.  As I wrote about recently, the EU has a bigger economy than we do and they have a bigger banking system than we do.  U.S. banks are massively exposed to European sovereign debt and European banking debt.  When the financial system of Europe collapses and the euro falls apart it is going to rock the entire planet.  So you better look out below – the euro is coming down and it is coming down hard.  After the euro implodes, nothing is every going to be the same again.

So how far are we going to see the euro decline?

Julian Jessop of Capital Economics expects the euro to fall much further….

The relative strength of the recent economic data from the US is supporting the dollar more generally, and we expect this divergence to persist as the euro-zone slides into a deep and prolonged recession. Above all, doubts about the very survival of the euro itself are likely to remain a drag on the currency. We therefore continue to expect the euro to fall to around $1.10 by the end of the year.

Others are even more pessimistic.

As I have written about previously, the head of global bond portfolio management at PIMCO believes that the euro is going to go even lower than that….

“Parity with the dollar next year is not out of the question”

Can you imagine that?

1 dollar = 1 euro?

Don’t think that it can’t happen.

But the decline of the euro is just part of the story.  The truth is that Europe is on the verge of a financial collapse that could end up dwarfing the financial crisis of 2008.

Sadly, most Americans have no idea what has been going on in Europe the past few days….

-The stock of the biggest bank in Italy, UniCredit, is absolutely collapsing.  Shares of UniCredit fell 14 percent on Wednesday and 17 percent on Thursday.

-Shares of another major Italian bank, Intesa Sanpaolo, fell 7.3 percent on Thursday.

-Shares of three major French banks all fell by at least 5 percent on Thursday.

-Even shares of German banks are falling like a rock.  Shares of Commerzbank fell 4.5 percent on Thursday and shares of Deutsche Bank fell 5.6 percent on Thursday.

-The yield on 5 years Italian bonds is back over 6 percent and the yield on 10 year Italian bonds is back over 7 percent.  Analysts all over Europe insist that that the Italian debt situation is not sustainable if rates stay this high.

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

This is mind blowing news.

But what is the top headline on USA Today right now?

Employers Impose Bans On Smokers

These are some of the other top headlines on USA Today right now….

“Automakers Rush To Offer Apps In Your Car”

“Bargain Season At Taco Bell, Pizza Hut, Wendy’s”

“Does Your Dog Understand You? Study Says Maybe”

Is that what passes as news in this country?

A financial meltdown of historic proportions is happening in Europe and you cannot even find anything about it on the front page of USA Today.

Amazing.

All of us need to snap out of our television-induced comas and start waking up.

Things are about to get really bad for the global financial system.

At this point so much confidence has been lost in the euro that even the Council on Foreign Relations is admitting that the euro is a failure….

The euro should now be recognized as an experiment that failed. This failure, which has come after just over a dozen years since the euro was introduced, in 1999, was not an accident or the result of bureaucratic mismanagement but rather the inevitable consequence of imposing a single currency on a very heterogeneous group of countries. The adverse economic consequences of the euro include the sovereign debt crises in several European countries, the fragile condition of major European banks, high levels of unemployment across the eurozone, and the large trade deficits that now plague most eurozone countries.

If even the CFR is throwing in the towel, that should tell you something about what is about to happen to the euro.

There is a very real possibility that we could see the euro break up at some point during the next couple of years.

It now seems that a report produced a while back by Credit Suisse’s Fixed Income Research unit was right on target….

“We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.”

The European debt crisis just continues to get worse and worse.  None of the solutions that European leaders have tried have worked.  We are rapidly approaching the meltdown phase of this crisis.

As I have written about previously, it doesn’t take a genius to figure out what is happening in Europe.  The equation is simple….

Brutal austerity + toxic levels of government debt + rising bond yields + a lack of confidence in the financial system + banks that are massively overleveraged + a massive credit crunch = A financial implosion of historic proportions

Unfortunately, what is happening right now in Europe is eventually going to happen in the United States as well.

As I wrote about yesterday, U.S. debt is a ticking time bomb that is going to devastate the entire global economy at some point.  Nobody knows when the implosion will happen, but everyone knows that it is inevitable.

When Europe falls apart financially, that is going to make our own financial system much less stable.  What is happening in Europe could turn our “limited recovery” into a “major recession” almost overnight.

So keep your eye on the euro.

If the euro keeps going down, that is going to be really bad news for the global economy.

Unfortunately, the truth is that the decline of the euro is just getting started.

Hold on to your hats.

***UPDATE***

The euro continues to drop like a rock.  Right now it is at 1.2721.

Michael

LOL – This Stock Market Rally Is For Suckers

Hey, have you heard?  The stock market is absolutely soaring right now.  The Dow was up 330 points on Monday, and overall the Dow has risen by more than 10 percent since October 3rd.  So should we all be throwing our money into the stock market in order to take advantage of this tremendous rally?  Well, if you actually believe that the sovereign debt crisis has passed and that we are no longer on the verge of a massive worldwide financial crisis then I have a bridge that I would like to sell you.  The stock market may be soaring, but absolutely nothing has been solved.  The truth is that this stock market rally is for suckers.  The primary reason why stocks rose today was because German Chancellor Angela Merkel and French President Nicolas Sarkozy promised that they would reveal a “comprehensive response” to the European debt crisis by the end of this month.  When pressed for specifics, Sarkozy stated that “now is not the moment to go into the details.”  So do global financial markets really have a legitimate reason to be giddy about the super secret plan cooked up by Angela Merkel and Nicolas Sarkozy, or are Merkel and Sarkozy just blowing a bunch of smoke?

Merkel and Sarkozy have made bold promises in the past, but nothing ever got fixed.

So why should we believe them this time?

If they have real solutions, why don’t they just reveal them now?

Why keep us in suspense?

By making these vague promises, Merkel and Sarkozy certainly did give a boost to global financial markets, but they also seriously raised expectations.

Now many in the financial world are expecting something truly significant from Merkel and Sarkozy.  For example, CNN has quoted economist Scott Brown as saying the following about the announcement by Merkel and Sarkozy….

“The Europe debt crisis cloud has been hanging over the market for a year-and-a-half now,” said Scott Brown, chief economist at Raymond James. “The risks and worries have been intensifying over the last couple of weeks, but after this weekend, the market is expecting something big and concrete that will put the crisis behind us.”

So can Merkel and Sarkozy deliver something big?

Of course not.

Merkel has already gotten all of the bailout money that she is going to get out of the Germans.  The political will for more bailouts is totally gone in Germany, and many of Germany’s top leaders have expressed this in no uncertain terms.

For example, German Finance Minister Wolfgang Schaeuble is publicly admitting that Germany will not be able to contribute any more money to the European bailout fund.

Also, the leader of Bavaria’s Social Christians, Horst Seehofer, said after the recent vote on the Greek bailout package that his party would go “this far, and no further“.

Recent opinion polls in Germany make it abundantly clear that the German people are overwhelmingly opposed to more bailouts.  Squeezing more money out of Germany simply is not going to happen, and that means that squeezing more money out of the rest of Europe is simply not going to happen.

In a recent editorial, Ambrose Evans-Pritchard described the current political situation in Europe in this manner….

Repeat after me:

THERE WILL BE NO FISCAL UNION.

THERE WILL BE NO EUROBONDS.

THERE WILL BE NO DEBT POOL.

THERE WILL BE NO EU TREASURY.

THERE WILL BE NO FISCAL TRANSFERS IN PERPETUITY.

THERE WILL BE A STABILITY UNION – OR NO MONETARY UNION.

Get used to it. This is the political reality of Europe, since nothing of importance can be done without Germany. All else is wishful thinking, clutching at straws, and evasion. If this means the euro will shed some members or blow apart – as it almost certainly does – then the rest of the world must prepare for the day.

So exactly what “big” solution do Merkel and Sarkozy have up their sleeves that does not involve more money?

Can they really produce the goods or are they just blowing smoke?

Perhaps global financial markets should be focusing on what we can see rather than on what we cannot see.

For example, the first major bank bailout in Europe has now happened.  Dexia is being bailed out, and it is going to cost more than 100 billion dollars.

The funny thing is that Dexia actually passed the banking stress test that was conducted a few months ago.

What does that say about all of the major European banks that did not pass the stress test?

Also, perhaps global financial markets should focus on all of the credit ratings that are being downgraded all over Europe.

Lately, we have seen a cascade of credit rating downgrades.

For example, Moody’s slashed Italy’s credit rating by three levels last Tuesday, and the other day S&P slashed the credit ratings of seven different major Italian banks.

The problems in Europe continue to grow worse, and yet the stock market is soaring.

It doesn’t make a lot of sense, does it?

If Greece defaults, it is going to be a major disaster.

If Italy or Spain defaults, it is going to be financial armageddon.

The world truly is on the verge of a massive financial crisis.  If you don’t want to believe me, perhaps you might believe some of the top financial officials in the world….

*Bank of England Governor Sir Mervyn King: “This is the most serious financial crisis we’ve seen at least since the 1930s, if not ever”

*U.S. Treasury Secretary Timothy F. Geithner recently stated that if something is not done quickly, Europe faces “cascading default, bank runs and catastrophic risk.”

*IMF advisor Robert Shapiro: “If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected.”

For many more shocking quotes about how bad things have gotten in Europe, just check out this article.

Merkel and Sarkozy are holding really weak cards but they have chosen to raise the stakes anyway.

Their bluff may calm financial markets for a month or two, but in the end they will not be able to stop what is coming.

A great financial collapse is coming to Europe.

Try to get out of the way of the coming avalanche while you still can.

The Federal Reserve Saves The Stock Market?

The Federal Reserve has saved the stock market!  Well, at least for a day.  That was one heck of a “dead cat bounce” that we saw on Tuesday.  Normally, after the kind of dramatic decline that we saw on Monday there is some sort of a rebound, but on Tuesday the market did not begin to soar until the Federal Reserve pledged to leave interest rates near zero until mid-2013.  Once the Fed made their announcement, the market went haywire.  At one point the Dow was down more than 200 points, but by the end of the day it was up 430 points.  It was a desperate move for the Federal Reserve to pledge not to raise interest rates for the next two years, and it has stabilized financial markets for the moment.  But what is the Fed going to do to save the stock market when it starts crashing next week or next month?  The underlying financial fundamentals continue to get worse and worse.  Europe is a mess, Japan is a mess and the United States is a mess.  The Federal Reserve can try to keep all of the balls in the air for as long as possible, but at some point the juggling act is going to end and the house of cards is going to come crashing down.

This move may calm nerves for a day or two, but there is still a tremendous amount of fear out there at the moment.  Many investors are pouring money into “safe havens” right now.  Huge amounts of cash are being poured into U.S. Treasuries and the price of gold is absolutely soaring.  The price of gold is up about $220 in just the last 30 days alone.

So how high could the price of gold go in the coming months?  Well, analysts at JP Morgan are forecasting that the price of gold could hit $2,500 by the end of this year.

Yes, that is how wild things are becoming.  The Federal Reserve is painting itself into a corner.  Never before has the Fed pledged to leave interest rates near zero for the next two years.  The following is an excerpt from the statement that the Fed released earlier today….

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent.  The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.  The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings.  The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

Needless to say, the rest of the world is not pleased by this nonsense from the Fed.  Yes, the Fed has stabilized financial markets for the moment, but a lot of ill will is being created with the rest of the globe.  The following is what Bruce Krasting had to say about how the rest of the world is going to react to this latest Fed move….

Brazil, Argentina, Korea, Indonesia are going to scream bloody murder over perpetual ZIRP. Russia is likely to get downright ugly with their rhetoric. I wouldn’t be surprised if they took this opportunity to vote with their feet and just abandon the dollar as a reserve holding. China will also make noise. They will make more calls for a new international currency to replace the dollar. The Central bankers in Japan and Switzerland are puking in the trashcan over this. Bernanke is exporting US deflation to them. Shame on the Fed for pursuing Beggar my neighbor policies. They deserve all the global criticism they are about to get.

The Federal Reserve is using up all of the ammunition it has available and the game has barely even begun.

Things are going to get a lot worse.  The U.S national debt continues to pile up at lightning speed.  The debt ceiling deal essentially does nothing to fix our debt problems.  Thousands of businesses and millions of jobs continue to leave the United States.  As a nation, we are constantly becoming poorer and we are constantly getting into more debt.

Meanwhile, Europe is on the verge of a financial meltdown and Japan has a “zombie economy” at this point.

Many fear that we could be on the verge of another major global recession.  The following is how a recent Der Spiegel article described the current global financial situation….

Many economists have been pointing out that last week’s panic resembled the fear that swept financial markets after the collapse of US investment bank Lehman Brothers in September 2008.

Then as now, banks stopped lending each money. Then as now, banks’ cash deposits at the central bank doubled within days. The European Central Bank reacted by assuring banks of unlimited liquidity in the coming months. It was an emergency measure that led to short-term relief but sparked anxious questions among bankers and stock market players. How long can the central bank keep up its market-soothing liquidity operations before it finally loses its credibility, the most important asset of a central bank? Is the financial crisis about to escalate?

In the old days, the U.S. and Europe could just borrow gigantic stacks of cash in order to solve any problems.  But now things are dramatically changing.

China’s official news agency recently stated that the U.S. needs to understand that things are different now….

“The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone”

Not that the U.S. government and the Federal Reserve are going to suddenly give up their old habits.  The U.S. government is addicted to debt and the Fed is addicted to printing money.  When push comes to shove, they are going to resort to their favorite tricks.

But at some point the rest of the world is not going to play along anymore.  When that moment arrives, it is going to be very interesting to see what happens.

Meanwhile, the U.S. economy continues to slowly unravel, and people in this country are getting very angry.  Millions of Americans families are barely scraping by right now.  Most Americans just want someone to “fix” things, but unfortunately there are no easy “fixes” to our financial problems.

As our economic problems grow even worse, frustration inside the United States is going to continue to escalate.  A brand new Rasmussen survey found that only 17 percent of Americans now believe that the U.S. government has the consent of the governed.

That was a brand new all-time low.

Faith in the major institutions of our society is already dangerously low and the economy is not even that bad yet.

As horrible as things are now, the truth is that this is rip-roaring prosperity compared to what is coming.

In the months and years ahead, America is going to be greatly tested.  As the recent London riots have shown, things can spiral out of control very quickly.

When the economy completely collapses will America be able to handle it?

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