Is There Going To Be A Stock Market Crash In The Fall?

Is the stock market going to crash by the end of this year?  Are we on the verge of major financial chaos on a global scale? Well, this is the time of the year when investors start getting nervous.  We all remember what happened during the fall of 1929, the fall of 1987 and the fall of 2008.  However, it is important to keep in mind that we do not see a stock market crash in the fall of every year.  Some years the stock market cruises through the months of September, October, November and December without any problems whatsoever.  But this year conditions certainly seem to be right for a “perfect storm” to develop.  Technical indicators are screaming that a stock market decline is imminent and sources in the financial industry all over the world are warning that a massive crisis is on the way.  What you are about to read should alarm you.  But it is not a guarantee that anything will or will not happen.  When Ben Bernanke gives his speech at the Jackson Hole summit on Friday he could announce to the rest of the world that the Federal Reserve has decided to launch QE3 and that the Fed will be printing up trillions of new dollars.  If that happened global financial markets would leap for joy.  So it is always a dangerous thing when anyone out there tries to tell you that they can “guarantee” what is about to happen in the financial world.  There are just so many moving parts.  But if we do not see major intervention by the governments of the world or by global central banks a major financial crisis could rapidly develop this fall.  The conditions are certainly right for a stock market collapse, and we could easily see a repeat of what happened back in 2008.

The truth is that the second half of 2012 looks a little bit more like the second half of 2008 with each passing day.

Just check out what Bob Janjuah of Nomura Securities has been saying….

Based on the reasons set out earlier and also covered in my two prior notes, over the August to November period I am looking for the S&P500 to trade off down from around 1400 to 1100/1000 – in other words, I expect over the next four months to see global equity markets fall by 20% to 25% from current levels and to trade at or below the lows of 2011! US equity markets, along with parts of the EM spectrum, will I think underperform eurozone equity markets, where already very little hope resides.

Others are issuing similar warnings.  For example, the following is what a couple of Bank of America analysts said in a report the other day….

Our strategists see an unusually high number of macro catalysts over the next 3-6 months that could take markets lower. We expect economic growth to disappoint in the second half of the year in anticipation of the fiscal cliff. This would exacerbate any slowdown from the deepening recession in Europe and decelerating growth in emerging markets. There is also the ongoing tension in the Middle East, the potential for a US credit downgrade and accelerating downward analyst estimate revisions. To top it off, September is seasonally the weakest month of the year for stock price returns.

There has been an unusual amount of chatter in the financial world about the September to December time frame.

That could mean something or it could mean nothing.

But is is very interesting to watch what some top financial insiders are doing with their stocks right now.

Dennis Gartman, the publisher of the Gartman Leter, has dumped all of his stocks at this point.

As I have written about previously, George Soros has dumped all of his stock in banking giants JP Morgan, Citigroup and Goldman Sachs.

Are they just being paranoid?

Or do they know something that we do not?

If you are looking for the next “Lehman Brothers moment” in the United States, you might want to watch Morgan Stanley.  Morgan Stanley was heavily involved in the Facebook IPO disaster, earlier this year their credit rating was downgraded, and now there are persistent rumors that Morgan Stanley is in big trouble and that it will be allowed to fail.  You can check out some of these rumors for yourself here, here and here.

But of course as I have said all along the center of the coming crisis is going to be in Europe, and many analysts agree with me.  For example, the following is what the chairman of Casey Research, Doug Casey, had to say during a recent interview….

Europe is a full cycle ahead of the U.S. Its governments and its banks are both bankrupt. It’s a couple of drunks standing on the street corner holding each other up at this point. Europe is in much worse shape than the U.S. It’s highly regulated, highly taxed and much more socially unstable.

Europe is going to be the epicenter of the coming storm. Japan is waiting in the wings, as is China. This is going to be a worldwide phenomenon. Of course, the U.S. will be in it, too. We’re going to see this all over the world.

Much of southern Europe is already experiencing depression-like conditions.  Unemployment in both Greece and Spain is well above 20 percent and both economies are steadily shrinking.

Money is flowing out of Spanish banks at an unprecedented rate right now.  Just take a look at these charts.  The only thing that is going to keep the Spanish banking system from totally collapsing is outside intervention.

But the truth is that all of Europe is in big trouble.  Even German companies are slashing job right now. For example, check out what Siemens is up to….

German engineering conglomerate Siemens (SIEGn.DE) is in early internal talks to cut thousands of jobs in response to a weakening economy, particularly in Europe, a German newspaper reported.

Decisions could be made in October or November, according to daily Boersen-Zeitung, which did not specify its sources.

A Siemens spokesman declined to comment.

We are living in the greatest debt bubble in the history of the world, and at some point that bubble is going to burst in a very messy way.

It is vital that people understand that our system is not even close to sustainable.

Knowing exactly when it will collapse is not nearly as important as understanding that a collapse is absolutely inevitable.

I think what former World Bank economist Richard Duncan had to say recently is very helpful….

“The explosion in credit drove economic growth in the U.S. and around the world, and now that’s the only thing that’s keeping us from collapsing in a debt/deflation spiral,” he said. “[What] I think everybody needs to understand is that the kind of economy that we have now, it’s not capitalism. It has very little in common with capitalism. Capitalism was an economic system in which the government played very little role …. Under capitalism, gold was money and the government had nothing to do with it. Now the central bank creates the money and manipulates its value.”

And he is very right.

We aren’t seeing a failure of capitalism.

What we are witnessing is the failure of debt-based central banking.

And if you think that the global elite are not aware of what is happening then you have not been paying attention.

This summer the global elite have been preparing very hard.  Either they are getting very paranoid or they know things that we do not.

If you want to catch up on what the global elite have been up to recently, check out these three articles that I have published previously….

-“Are The Government And The Big Banks Quietly Preparing For An Imminent Financial Collapse?

-“Startling Evidence That Central Banks And Wall Street Insiders Are Rapidly Preparing For Something BIG

-“Jacob Rothschild, John Paulson And George Soros Are All Betting That Financial Disaster Is Coming

If you are waiting for the nightly news to tell you what to do, then you have not learned anything.

Did anyone in the mainstream media warn you about what was about to happen back in 2008?

Of course not.

The “authorities” insisted that everything was going to be just fine and many average Americans were absolutely wiped out.

So don’t expect someone to come along and nicely inform you that your retirement savings are about to be absolutely devastated.

In this day and age it is absolutely critical for people to learn to think for themselves.

Barack Obama is not going to save you.

Mitt Romney is not going to save you.

The U.S. Congress is not going to save you.  They are too busy living the high life at taxpayer expense.

The system is not looking out for you.  Nobody is really going to care if your financial planning gets turned upside down.  This is a cold, cruel world and you need to understand how the game is played.  The financial insiders are looking out for themselves and most of them usually are able to avoid financial disaster.

Average folks like you and I are normally not so fortunate.

There are lots of warning signs that indicate that this fall could be a very turbulent time for global financial markets.

Ignore them at your own peril.

95 Percent Of The Jobs Lost During The Recession Were Middle Class Jobs

Who is the biggest loser in the ongoing decline of the U.S. economy?  Is it the wealthy?  No, the stock market has been soaring lately and their incomes are actually going up.  Is it the poor?  Well, the poor are definitely hurting very badly, but when you don’t have much to begin with you don’t have much to lose.  Unfortunately, it is the middle class that has lost the most during this economic downturn.  According to Bloomberg, 95 percent of the jobs lost during the recession were middle class jobs.  That is an absolutely astounding figure.  Yes, some executives lost their jobs during the last recession as did some minimum-wage workers.  But overwhelmingly the jobs that were lost were middle income jobs.  Sadly, the limited number of jobs that have been added since the end of the last recession have mostly been low income jobs.  A higher percentage of Americans are working low income jobs than ever before, and the cost of living continues to rise at a very brisk pace.  This is causing an erosion of the middle class unlike anything we have ever seen in American history.

When I was growing up I was taught that the fact that we had the largest middle class in the history of the world was evidence that our economic system was working incredibly well.

So what does the fact that the middle class is shrinking at a very rapid pace at this point say about how well our economy is working?

Middle Class Incomes Are Going Down

During the last recession, millions of Americans lost their jobs and the percentage of working age Americans that have jobs has not bounced back in the years since the recession ended.

But most middle class Americans still have jobs.  The big problem for many middle class families is the fact that their incomes are not going up.  In fact, after you account for inflation, middle class incomes are actually way down during the Obama years as a recent Bloomberg article explained….

As a candidate in 2008, Obama blamed the reversals largely on the policies of Bush and other Republicans. He cited census figures showing that median income for working-age households — those headed by someone younger than 65 — had dropped more than $2,000 after inflation during the first seven years of Bush’s time in office.

Yet real median household income in March was down $4,300 since Obama took office in January 2009 and down $2,900 since the June 2009 start of the economic recovery, according to an analysis of census data by Sentier Research, an economic- consulting firm in Annapolis, Maryland.

So is this the “hope and change” that Obama was talking about?

But let’s not just blame Obama and Bush.  The truth is that the trend toward lower paying jobs has been going on for a very long time.

Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

So where will it end?

Will 50 percent or 60 percent of all Americans soon be working low income jobs?

At this point, approximately one out of every four jobs in America pays $10 an hour or less.

Could your family survive on $10 an hour?

The Rising Cost Of Living

As middle class incomes go down, the cost of almost everything that middle class families buy continues to go up.

The Federal Reserve claims that it has kept inflation “low” for decades, but that is a giant lie.

When you take a look at the long-term picture, it is amazing how much prices have changed.

Back in 1950, the average price of a new car was $1,510.

Today, the average price of a new car is $30,748.

In 1967, yearly tuition at Yale was $1,950.

Today it is $38,300.

And inflation continues to take a great toll on the paychecks of middle class families.

For example, electricity bills in the U.S. have risen faster than the overall rate of inflation for five years in a row.

Also, the price of gas has risen by more than 100 percent since Barack Obama entered the White House and the average U.S. household spent a staggering $4,155 on gasoline during 2011.

The Destruction Of Middle Class Wealth

What is the number one financial asset for most middle class families?

Most middle class families don’t have a lot of stocks, bonds or other financial assets.

Instead, normally the family home is the number one financial asset for most middle class families, and in recent years the value of that asset has been absolutely decimated.

When you take inflation into account, housing prices have fallen all the way back to 1998 levels.  The following is from a recent Smart Money article….

The latest S&P / Case-Shiller numbers, reported last week, show that prices in 20 major markets declined 3.5% over the year through February. They’re now back to 2002 levels. If we subtract for inflation, they’re back to 1998 levels.

Overall, home prices in the U.S. have declined for six months in a row and are now down a total of 35 percent from the peak of the housing bubble.

Unfortunately, things don’t look like they are going to turn around any time soon.  Yale economics professor Robert Shiller recently said the following about U.S. home prices….

“I worry that we might not see a really major turnaround in our lifetimes”

But falling home prices are not the only problem we are witnessing.  We are also seeing millions of middle class families lose their homes.

According to the U.S. Census, homeownership in America is now at the lowest level it has been in 15 years.

According to Gallup, the current level of homeownership in the United States is the lowest that Gallup has ever measured.

Owning your own home is an indication that you are part of the middle class, and so the fact that the number of Americans that own a home is falling rapidly is not a good sign for the health of the middle class at all.

The Future Is Not Bright

Those that are graduating from college right now are supposed to be the future of the middle class in America.

But for most of those college graduates, the future is not so bright.  Last year, a staggering 53 percent of all U.S. college graduates under the age of 25 were either unemployed or underemployed.

Millions of young college graduates have been forced to take jobs that do not even require a college degree.  Just check out the following stats from a recent CNBC article….

In the last year, they were more likely to be employed as waiters, waitresses, bartenders and food-service helpers than as engineers, physicists, chemists and mathematicians combined (100,000 versus 90,000). There were more working in office-related jobs such as receptionist or payroll clerk than in all computer professional jobs (163,000 versus 100,000).

Aren’t those numbers crazy?

The truth is that a college education is no longer a ticket to the middle class.

What Happens To Americans That Fall Out Of The Middle Class?

As the middle class shrinks, the ranks of the “low income” and “the poor” are absolutely swelling.

Today, approximately 48 percent of all Americans are either considered to be “low income” or are living in poverty.

That is almost half the country.

Each year, millions more fall out of the middle class.  In 2010, 2.6 million more Americans fell into poverty.  That was the biggest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

As the middle class shrinks, the number of Americans dependent on the government for survival rises.  Right now, government dependence is at an all-time high and things are only going to get worse from here.

In November 2008 (when Barack Obama won the election), 30.8 million Americans were on food stamps.  Today, more than 46 million Americans are on food stamps.

Will we eventually see 50 million or 60 million Americans on food stamps?

The U.S. economy desperately needs more middle class jobs.

Unfortunately, the Republicans failed to generate them under George W. Bush and the Democrats failed to generate them under Barack Obama.

Instead, both parties continue to promote the politics of division and they both continue to push for more of the same policies that got us into this mess in the first place.

Nothing is being done to solve our problems and so the middle class in America is going to be even smaller by this time next year.

If you still have a spot in the middle class, hold on to it as tightly as you can.  It is not as secure as you might think.

The U.S. Economy: Soul Crushing Total System Failure

No matter how often the pretty people on television tell us that the U.S. economy is getting better, it isn’t going to change the soul crushing agony that millions of American families are going through right now.  The stock market may have gotten back to where it was in 2008, but the job market sure hasn’t.  As I wrote about a few days ago, the percentage of working age Americans that are actually employed has stayed very flat since late 2009, and the average duration of unemployment is hovering near an all-time high.  Sadly, this is not just a temporary downturn.  The U.S. economy has been slowly declining for several decades and is nearing total system failure.  Right now, many poverty statistics are higher than they have ever been since the Great Depression.  Many measurements of government dependence are the highest that we have ever seen in all of U.S. history.  The emerging one world economic system (otherwise known as “free trade”) has cost the U.S. economy tens of thousands of businesses, millions of jobs and hundreds of billions of dollars of our national wealth.  The federal government is going into unprecedented amounts of debt in order to try to maintain our current standard of living, but there is no way that they will be able to sustain this kind of borrowing for too much longer.  So enjoy this bubble of false prosperity while you can, because things will soon get significantly worse.

As the U.S. economy experiences total system failure, it will be imperative for all of us not to wait around waiting for someone to rescue us.

And I am not just talking about the government.

Today, millions upon millions of Americans are waiting around hoping that someone out there will hire them.

Well, the truth is that our politicians have made it so complicated and so expensive to hire someone that many small businesses try to avoid hiring as much as possible.

Businesses generally only want to hire people if they can make a profit by doing so.  When our politicians keep piling on the taxes and the regulations and the paperwork, that creates a tremendous incentive not to hire workers.

Michael Fleischer, the President of Bogen Communications, once wrote an op-ed in the Wall Street Journal entitled “Why I’m Not Hiring”.  The following is how Paul Hollrah of Family Security Matters summarized the nightmarish taxes that are imposed on his company when Fleischer hires a new worker….

According to Fleischer, Sally grosses $59,000 a year, which shrinks to less than $44,000 after taxes and other payroll deductions. The $15,311 deducted from Sally’s gross pay is comprised of New Jersey state income tax: $1,893; Social Security taxes: $3,661; state unemployment insurance: $126; disability insurance: $149; Medicare insurance: $856; federal withholding tax: $6,250; and her share of medical and dental insurance: $2,376. Roughly 25.9 percent of Sally’s income is siphoned off by Washington and Trenton before she receives her paychecks.

But then there are the additional costs of employing Sally. In addition to her gross salary, her employer must pay the lion’s share of her healthcare insurance premiums: $9,561; life and other insurance premiums: $153; federal unemployment insurance: $56; disability insurance: $149; worker’s comp insurance: $300; New Jersey state unemployment insurance: $505; Medicare insurance: $856; and the employer’s share of Social Security taxes: $3,661.

Over and above her gross salary, Bogen Communications must pay an additional $15,241 in benefits and state and federal taxes, bringing the total cost of employing Sally to approximately $74,241 per year. Sally gets to keep $43,689, or just 58.8% of that total.

Are you starting to understand why so many businesses are hesitant to hire new workers?

The big corporations can handle all of the paperwork and regulations that come with hiring a new worker fairly well, but for small businesses hiring a new worker can be a massive undertaking. That new worker is going to have to almost be a miracle worker in order to justify all of the hassle and expense.

But the federal government just keeps piling more burdens on to the backs of employers.  That is one reason why there is such an uproar over Obamacare.  It is going to make hiring workers even less attractive.

These days, most small businesses are trying to get by with as few workers as possible, and many big businesses are trying to ship as many jobs as they can overseas.

Sadly, even if you do find a good job it can disappear at any moment.

The following is from a comment that a reader named Jeff recently left on one of my articles….

It’s sad what’s happening here in this country. So many lucky ones defend it. In America it’s not exactly about hard work anymore, it’s about who you know always. The ability to keep people stupid as well as in debt was established here well by corporations also. You cannot start a solid hiring business like you could years ago.

I know many of folks who don’t break a sweat and earn more money than I ever will in a week. The system is getting crazy only creating two extremes. I fought for this country right after 9/11 as a young naive person. Using my grandfather’s old stories to see the dream that this country was always suppose to have.

The company I still unfortunately work for (cause other places are worse), 4 years ago they froze our salaries. No raises yet, this is when the company was bought by an investment group for 500 million.

Now we are getting sold to Japan for 1 billion. A 500 million dollar profit. Sorry if I may be ignorant in this way of business. But it seems the only one who benefited from this is that group of investors. 400+ well skilled jobs lost, no raises or rewards, a whole lot more work and contract obligations to meet, and less contact with management when problems surface.

I just think the United States of America is becoming the world’s poker table.

I want out of this country so bad. I don’t even know what happen to people here. The younger generation scares me how dumb they are and everyone seems so easily bought with eyecandy.

Can you imagine that?

Can you imagine your boss walking in one day and declaring that the business has just been sold to foreigners and that you are about to lose your job?

In America today, it can be absolutely soul crushing to lose a job.  It isn’t as if you are going to run out and get another fantastic job in a week or two.

When you are unemployed, people look at your differently.  It gets to the point where you don’t even want to interact with other people because you know that your unemployment is probably going to be the number one topic of conversation.

When you are out of work for six months or more, it is easy to feel like a failure – especially when so many other people are looking at you as if you are a failure too.

But in most cases, individual Americans are not to blame for not being able to find work.

Rather it is the entire system that is failing all of us.

The U.S. economy is bleeding good jobs and the middle class in America has become a bizarre game of musical chairs.  When the music stops each round you might lose your spot.  You just never know.

Looking for work in the United States in this economic environment can be a demoralizing endeavor.  For example, a recent Esquire article described what one unemployed man named Scott Annechino found when he attended a job fair in San Francisco….

A glass elevator carries him to the third floor, where the front-desk girl, who knows it’s her job to be cheerful, told him the job fair is supposed to be.

A pasty kid, maybe thirty, in a too-big shirt and a cheap tie, greets him and tells him the companies are set up in rooms along the hall and that he should definitely visit all of them. Annechino, forty-four years old, wearing his best suit and shined black shoes, walks to the first exhibitor: Devcon, a home-security company. The door is closed, no one inside. Annechino looks around for an explanation. “Oh, I just got an e-mail from my contact there saying they wouldn’t be able to make it today,” the pasty kid says, fingering his BlackBerry.

A couple of other potential employers who were supposed to be here didn’t make it, either — Konica Minolta, Santa Clara University. “Yeah …” the kid says. Annechino moves to the next room. State Farm. They’re looking for people who can put up fifty grand to start their own insurance agency. The Art Institute is next, mostly looking for people who might want to go to art school. New York Life. The U. S. Army, where men wearing fatigues and combat boots offer brochures.

That’s it.

If you want to check out the rest of the sad unemployment stories in that article, you can find them right here.

But even if you do have a job, that doesn’t mean that everything is just fine.  Average American families are finding that the prices of the basic things that they need are rising much faster than their paychecks are.

According to one recent study, more than half of all Americans feel as though they are really struggling to afford just the basics at this point….

“Every retailer wants to think ‘Everything I sell is worth it! Shoppers will love it’, but the hard reality is 52% Americans feel they barely have enough to afford the basics,” said Candace Corlett, president of WSL/Strategic Retail.

Just buying food and gas is a major financial ordeal for many families these days.  On average, a gallon of gasoline in the United States now costs $3.83.  Many Americans burn up a huge chunk of their paychecks just going back and forth to work in their cars.

So what is the solution?

Well, according to the Obama administration the answer is even more government dependence.  The federal government is now actually running ads encouraging even more people to go on food stamps….

Can you believe that?

Apparently having 46.5 million Americans on food stamps is not enough.  The federal government is spending our tax money on advertisements that try to convince even more Americans that they need to be on food stamps.

What the American people really need are good jobs, but those keep getting shipped out of the country.

Meanwhile, people are becoming increasingly desperate.

For example one Colorado man was recently caught stealing parts from toilets in public restrooms….

Donald Allen Citron, 48, faces 18 charges, including burglary and theft. He’s accused of stealing toilet parts from several locations, including Southwest Plaza Mall, University of Denver, and Craig Hospital.

Most of the crimes happened in just a few minutes, but police Citron is a plumber and all he needed was a wrench and a screw driver to steal pipes and the plumbing in toilets. The items he’s accused of stealing are valued at around $6,400.

They are calling him “the crapper scrapper”.

Other Americans are not willing to stoop to crime and instead suffer quietly and anonymously.

A reader named Katie recently left the following heartbreaking comment on one of my articles….

I’m almost homeless. Through no fault of my own I’d like to point out. I don’t drink, smoke, or do drugs. I don’t even eat fast food unless I have too.

Four years ago I had a house, car, family, stuff, an IRA, and really everything that people in this country aspire to. I had a great job that I enjoyed so did my boyfriend. Even our relationship was great.

We didn’t get hit by the economy right away. We were in Katrina damaged parts of the country and there was still a lot of construction going on and the economic boom that comes with it.

Then I got laid off. Doesn’t seem to matter that I go to interview after interview. I use indeed, monster, craigslist, and newspapers to search for jobs even outside my area.

Now my boyfriend has passed away suddenly, and his family got everything. I personally have only a living father left, who hasn’t the room but I’m camping in his yard. All my friends say they don’t have the room either. Which makes me wonder just how much of friends they are. Considering if the situation was reversed I have in the past and would open my home to anyone that needed help.

If something happens to him I really don’t know what I’m going to do. I need to get on my feet and I know that jobs are hard to come by. I’m sick of the people who have jobs saying ‘get a job you lazy bum’. I’m hardly lazy and I’m trying desperately to be employed; not being homeless would be rather awesome in my opinion. I’m not picky, regardless of my degree I’ll pick up trash or clean toilets. McDonald’s, Taco Bell and the other fast food places don’t even bother with a call back. And when I call to inquire about my application it’s always the same, ‘we will call you when we make a decision’. Such a cop-out.

So no. In my (granted meaningless opinion) the economy is not getting better. To even suggest that when unemployment is so high or the rate of food stamps. Is utter ludicrous at best. I notice that those talking heads on the cable news and radio never seem to mention that the homeless shelters have a higher occupancy level than ever before. Nor would they mention the fact that we have those shelters in abundance now across the country in comparison to the Great Depression.

I’m getting real tired of hearing how great the economy is doing. When obviously it’s not. All you have to do is open your eyes and see. Business are not coming back yet and foreclosed homes sit empty everywhere. The unemployment rate only counts the people who are getting unemployment benefits. So the people who fall off the unemployment benefits don’t get counted. Because the must have gotten a job, right? Hardly. In fact the homeless in this country are almost never counted correctly. It’s too hard to count them all, or at least that’s the excuse.

I know it’s meaningless, especially to those who see homeless and immediately have a bias, but that’s my opinion on the current state of our economy. You can count me in the 80%. Only a fool would see this as a recovery.

Please say a prayer for Katie and the millions of other Americans just like her.  It can be absolutely soul crushing to lose everything that you ever worked for and not see any light at the end of the tunnel.

Unfortunately, the U.S. economy is not going to be improving in the long run.  What we are experiencing right now is about as good as it is going to get.  The truth is that it is pretty much downhill from here.

It is fairly simple to figure out what is happening to us as a nation.

You can’t keep buying far more than you sell.

You can’t keep spending far more than you bring in.

You can’t keep running up debt in larger and larger amounts indefinitely.

The U.S. economy is running on borrowed money and on borrowed time.

At some point, both are going to run out.

Are you ready for that?

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.

Not So Fast On That Whole Economic Recovery Thing

Not so fast.  Those that are publicly declaring that an economic recovery has arrived are ignoring a whole host of numbers that indicate that the U.S. economy is in absolutely horrendous shape.  The truth is that the health of an economy should not be measured by how well the stock market is doing.  Rather, the truth health of an economy should be evaluated by looking at numbers for things like jobs, housing, poverty and debt.  Some of the latest economic statistics indicate that unemployment is getting a little bit worse, that the housing market continues to deteriorate, that poverty in America continues to soar and that our debt problem is worse than ever.  If we were truly experiencing the kind of economic recovery that the United States has experienced after every other post-World War II recession we would see a sharp improvement across the board in most of our economic statistics.  But that simply is not happening.  Sadly, this is about as much of an “economic recovery” as we are going to get because soon the economy will be getting much worse.  So enjoy this period of relative stability while you can.

The Obama administration would have us believe that unemployment in the United States has declined, but the truth is that the percentage of working age Americans that are employed has stayed very, very flat for more than two years and now there are some measures of unemployment that are actually getting worse.

For example, according to Gallup the unemployment rate in the United States has risen from 8.5% in December to 8.6% in January to 9.1% in February.  The Obama administration would have us believe that it is actually going the other direction.

Initial unemployment claims are rising again.  For the week ending March 3rd, they increased by 8,000 over the previous week to 362,000.  This is not the kind of good news that people were hoping for.

What the U.S. economy could really use are millions of good jobs.  But those are being shipped out of the country at a staggering pace.

Right now there are millions of Americans in their prime working years that are sitting at home wondering what to do with their lives.  The average duration of unemployment in the United States continues to hover near a record high, and if we were truly experiencing an economic recovery it should have been falling by now.

But a lot of Americans have bought into the propaganda about an economic recovery and they are out running up huge amounts of debt once again.  In January, consumer credit increased by much more than expected.  The following is from a recent Reuters report….

Nonrevolving credit, which includes auto loans as well as student loans made by the government, rose $20.723 billion during the month. That was the biggest increase in dollar terms since November 2001, when credit was surging in the wake of the September 11 attacks in New York and Washington.

Don’t fall into the trap of debt slavery.  During the last recession millions of Americans lost their homes and most of what they owned because they got overextended.

Don’t do it.

The U.S. housing market continues to deeply struggle as well.  If we were really in an economic recovery housing would be bouncing back.  But that is not happening.  Just consider the following facts….

*The number of new homes sold in the United States continues to hover near a record low.

*U.S. home prices in the 4th quarter of 2011 were four percent lower than they were during the 4th quarter of 2010.

*According to CoreLogic, 22.8 percent of all homes with a mortgage in the United States were in negative equity as of the end of the 4th quarter of 2011.  That was an increase from 22.1 percent in the third quarter.

Why are things still getting worse for the U.S housing market?

That is a really good question.

We should have seen some improvement by now.

But it isn’t happening.

Also, poverty in America continues to explode.

For example, the number of Americans on food stamps has increased to 46.5 million – a brand new all-time record.

If we really were in an economic recovery, wouldn’t that number be going down?

We should be thankful that the U.S. economy is not declining as rapidly as it was during 2008 and 2009.  But what we are experiencing right now is not an economic recovery.  It is simply just a bubble of false hope.

The big problem is that our nation is covered in an ocean of constantly expanding debt.

U.S. consumers are drowning in debt, U.S. businesses have pushed debt levels to the red line, and the U.S. financial system is massively overleveraged.

Of course government debt is our biggest debt problem of all.

All over the nation, state and local governments are on the verge of financial ruin.

If we were in the middle of an economic recovery, so many states would not be in crisis mode.  A recent article in the Los Angeles Times declared that “California could run out of cash in March“.  As the economy continues to crumble we are going to hear a lot more of this kind of thing.

A lot of local governments around the nation are on the verge of total financial collapse.  Stockton, California has announced that they will be defaulting on some debt payments, and Suffolk County in New York recently declared a fiscal emergency after discovering that it would rack up more than 500 million dollars of debt between 2011 and 2013.

Keep your eyes open for more news items like this in the months ahead.

Of course the biggest problem of all is the U.S. national debt and it continues to rapidly get worse.

According to the Congressional Budget Office, the U.S. government had a budget deficit of 229 billion dollars in the month of February.  That is the worst one month budget deficit in the history of the United States.

The Congressional Budget Office also says that the U.S. government is now borrowing 42 cents of every single dollar that it spends.

Ouch.

The U.S. national debt has gotten more than 59 times larger since 1950.

The U.S. national debt is now more than 22 times larger than it was when Jimmy Carter became president.

Are there any words in the English language that are strong enough to describe how foolish we have been?

Of course we won’t be able to accumulate so much debt indefinitely.  At some point the trillion dollar deficits will stop and our false prosperity will disappear.

If you want to get an idea of what happens then, just take a look at Greece.

But Barack Obama and most members of the U.S. Congress don’t really care about what they are doing to our future.

What they care about is winning the next election so that they can continue living their fabulous lives.

Barack Obama is supposed to be taking care of the American people, but instead he has been very busy taking care of the people who helped him get elected.  Politics in America is all about money.  Just check out the following very short excerpt from a recent article in the Washington Post….

More than half of Obama’s 47 biggest fundraisers, those who collected at least $500,000 for his campaign, have been given administration jobs. Nine more have been appointed to presidential boards and committees.

At least 24 Obama bundlers were given posts as foreign ambassadors, including in Finland, Australia, Portugal and Luxembourg. Among them is Don Beyer, a former Virginia lieutenant governor who serves as ambassador to Switzerland and Liechtenstein.

Washington D.C. is deeply corrupt and if you are waiting for our politicians to fix our problems you are going to be deeply disappointed.

The federal government is not going to save you.

Our politicians are not going to save you.

You better figure out how you are going to take care of yourself and your family in the years ahead because this is about as good as things are going to get.

This “economic recovery” is about to end and more pain is about to begin.

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.

Nervous Breakdown? 21 Signs That Something Big Is About To Happen In The Financial World

Will global financial markets reach a breaking point during the month of October?  Right now there are all kinds of signs that the financial world is about to experience a nervous breakdown.  Massive amounts of investor money is being pulled out of the stock market and mammoth bets are being made against the S&P 500 in October.  The European debt crisis continues to grow even worse and weird financial moves are being made all over the globe.  Does all of this unusual activity indicate that something big is about to happen?  Let’s hope not.  But historically, the biggest stock market crashes have tended to happen in the fall.  So are we on the verge of a “Black October”?

The following are 21 signs that something big is about to happen in the financial world and that global financial markets are on the verge of a nervous breakdown….

#1 We are seeing an amazing number of bets against the S&P 500 right now.  According to CNN, the number of bets against the S&P 500 rose to the highest level in a year last month.  But that was nothing compared to what we are seeing for October.  The number of bets against the S&P 500 for the month of October is absolutely astounding.  Somebody is going to make a monstrous amount of money if there is a stock market crash next month.

#2 Investors are pulling a huge amount of money out of stocks right now.  Do they know something that we don’t?  The following is from a report in the Financial Post….

Investors have pulled more money from U.S. equity funds since the end of April than in the five months after the collapse of Lehman Brothers Holdings Inc., adding to the $2.1 trillion rout in American stocks.

About $75 billion was withdrawn from funds that focus on shares during the past four months, according to data compiled by Bloomberg from the Investment Company Institute, a Washington-based trade group, and EPFR Global, a research firm in Cambridge, Massachusetts. Outflows totaled $72.8 billion from October 2008 through February 2009, following Lehman’s bankruptcy, the data show.

#3 Siemens has pulled more than half a billion euros out of two major French banks and has moved that money to the European Central Bank.  Do they know something or are they just getting nervous?

#4 On Monday, Standard & Poor’s cut Italy’s credit rating from A+ to A.

#5 The European Central Bank is purchasing even more Italian and Spanish bonds in an attempt to cool down the burgeoning financial crisis in Europe.

#6 The Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan and the Swiss National Bank have announced that they are going to make available an “unlimited” amount of money to European commercial banks in October, November and December.

#7 So far this year, the largest bank in Italy has lost over half of its value and the second largest bank in Italy is down 44 percent.

#8 Angela Merkel’s coalition is getting embarrassed in local elections in Germany.  A recent poll found that an astounding 82 percent of all Germans believe that her government is doing a bad job of handling the crisis in Greece.  Right now, public opinion in Germany is very negative toward the bailouts, and that is really bad news for Greece.

#9 Greece is experiencing a full-blown economic collapse at this point.  Just consider the following statistics from a recent editorial in the Guardian….

Consider first the scale of the crisis. After contracting in 2009 and 2010, GDP fell by a further 7.3% in the second quarter of 2011. Unemployment is approaching 900,000 and is projected to exceed 1.2 million, in a population of 11 million. These are figures reminiscent of the Great Depression of the 1930s.

#10 In 2009, Greece had a debt to GDP ratio of about 115%.  Today, Greece has a debt to GDP ratio of about 160%.  All of the austerity that has been imposed upon them has done nothing to solve their long-term problems.

#11 The yield on 1 year Greek bonds is now over 129 percent.  A year ago the yield on those bonds was under 10 percent.

#12 Greek Deputy Finance Minister Filippos Sachinidis says that Greece only has enough cash to continue operating until next month.

#13 Italy now has a debt to GDP ratio of about 120% and their economy is far, far larger than the economy of Greece.

#14 The yield on 2 year Portuguese bonds is now over 17 percent.  A year ago the yield on those bonds was about 4 percent.

#15 China seems to be concerned about the stability of European banks.  The following is from a recent Reuters report….

A big market-making state bank in China’s onshore foreign exchange market has stopped foreign exchange forwards and swaps trading with several European banks due to the unfolding debt crisis in Europe, two sources told Reuters on Tuesday.

#16 European central banks are now buying more gold than they are selling.  This is the first time that has happened in more than 20 years.

#17 The chief economist at the IMF says that the global economy has entered a “dangerous new phase“.

#18 Israel has dumped 46 percent of its U.S. Treasuries and Russia has dumped 95 percent of its U.S. Treasuries.  Do they know something that we don’t?

#19 World financial markets are expecting that the Federal Reserve will announce a new bond-buying plan this week that will be designed to push long-term interest rates lower.

#20 If some wealthy investors believe that the Obama tax plan has a chance of getting through Congress, they may start dumping stocks before the end of this year in order to avoid getting taxed at a much higher rate in 2012.

#21 According to a study that was recently released by Merrill Lynch, the U.S. economy has an 80% chance of going into another recession.

When financial markets get really jumpy like this, all it takes is one really big spark to set the dominoes in motion.

Hopefully nothing really big will happen in October.

Hopefully global financial markets will not experience a nervous breakdown.

But right now things look a little bit more like 2008 every single day.

None of the problems that caused the financial crisis of 2008 have been fixed, and the world financial system is more vulnerable today than it ever has been since the end of World War II.

As I wrote about yesterday, the U.S. economy has never really recovered from the last financial crisis.

If we see another major financial crash in the coming months, the consequences would be absolutely devastating.

We have been softened up and we are ready for the knockout blow.

Let’s just hope that the financial world can keep it together.

We don’t need more economic pain right about now.

Do NOT follow this link or you will be banned from the site!