Did you know that some Americans are being hit with health insurance rate increases of more than 500 percent? Taking advantage of “the stupidity of the American voter”, the Democrats succeeded in ramming through one of the worst pieces of legislation that has ever come before Congress. The full implementation of Obamacare has been repeatedly delayed, but now we are finally starting to see the true horror of this terrible law. Thanks to Obamacare, millions of American families are losing health plans that they were very happy with, health insurance rates are skyrocketing, millions of workers are having their full-time hours cut back to part-time hours, rural hospitals all over the country are dying, and thousands of doctors are being driven out of the industry thus intensifying the greatest doctor shortage in U.S. history. Obamacare is a slow-motion train wreck of epic proportions, and the full effect of this law is only beginning to be felt. In the end, the economic impact of this law will likely be measured in the trillions of dollars.
One of the primary reasons why Democrats experienced so much pain during the recent elections was because millions of Americans are receiving some very disturbing letters from their health insurance providers. At a time when U.S. incomes are stagnating, health insurance rates are rising to absolutely ridiculous levels.
As the New York Times recently reported, even the Obama administration is admitting that “substantial price increases” are on the way…
The Obama administration on Friday unveiled data showing that many Americans with health insurance bought under the Affordable Care Act could face substantial price increases next year — in some cases as much as 20 percent — unless they switch plans.
The data became available just hours before the health insurance marketplace was to open to buyers seeking insurance for 2015.
An analysis of the data by The New York Times suggests that although consumers will often be able to find new health plans with prices comparable to those they now pay, the situation varies greatly from state to state and even among counties in the same state.
Originally, Barack Obama promised that if we liked our current health plans that we could keep them. Well, it turns out that was not true at all. Instead, the vast majority of us will eventually have to move to new plans if we have not done so already. This is particularly true for those that purchase health insurance individually. The following is an excerpt from an NBC News investigation…
Four sources deeply involved in the Affordable Care Act tell NBC News that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a “cancellation” letter or the equivalent over the next year because their existing policies don’t meet the standards mandated by the new health care law. One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience “sticker shock.”
This is something that actually happened to me. I received a letter in the mail informing me that my new health insurance policy which meets the requirements of Obamacare will cost me nearly twice as much as my old one.
Needless to say, I was not too thrilled about that.
Other Americans are being hit even harder. For instance, one family down in Texas got hammered with a 539 percent rate increase…
Obamacare is named the “Affordable Care Act,” after all, and the President promised the rates would be “as low as a phone bill.” But I just received a confirmed letter from a friend in Texas showing a 539% rate increase on an existing policy that’s been in good standing for years.
As the letter reveals (see below), the cost for this couple’s policy under Humana is increasing from $212.10 per month to $1,356.60 per month. This is for a couple in good health whose combined income is less than $70K — a middle-class family, in other words.
These rate increases are coming at a time when the middle class in the U.S. is already steadily shrinking. A lot of families that are already stretched to the breaking point are making the very painful decision to give up health insurance entirely. At this point, there are millions of families that simply cannot afford it.
But Obama is not about to let those people off the hook. In fact, huge tax penalties are on the way for those that do not participate in the new system…
Penalties for failing to secure a health-insurance plan will rise steeply next year, which could take a big bite out of some families’ pocketbooks.
“The penalty is meant to incentivize people to get coverage,” said senior analyst Laura Adams of InsuranceQuotes.com. “This year, I think a lot of people are going to be in for a shock.”
In 2014, Obamacare’s first year, individuals are facing a penalty of $95 per person, or 1 percent of their income, depending on which is higher. If an American failed to get coverage this year, that penalty will be taken out of their tax refund in early 2015, Adams noted.
While that might be painful to some uninsured Americans who are counting on their tax refunds in early 2015, the penalty for going uninsured next year is even harsher. The financial penalty for skipping out on health coverage will more than triple to $325 per person in 2015, or 2 percent of income, depending on whichever is higher.
Children will be fined at half the adult rate, or $162.50 for those under 18 years old.
No wonder so many people are so angry with the Democrats.
And as Massachusetts Institute of Technology professor Jonathan Gruber has so infamously observed, Obamacare never would have become law if the American people had been told the truth about what it would do to them.
It has been documented that Gruber has visited the White House about a dozen times since 2009, and he has been one of the leading intellectual proponents of Obamacare. A video in which he states that “the stupidity of the American voter” was “really critical” to the passage of Obamacare has gone viral over the past week. I have posted a copy of this video below…
What he is essentially saying is that the Democrats purposely deceived the American people because it was the only way that Obamacare was going to become law.
And this is a man that has become very wealthy advising government on healthcare matters. According to an article in the Washington Post, he has made millions of dollars from “consulting” in recent years…
Not all of the contracts could be found on public Web sites, but here is a sampling. In some cases, Gruber worked with other consultants, so the fees were shared. These figures also might not represent the final payout, and of course these are gross figures, before expenses. But it’s safe to say that about $400,000 appears to be the standard rate for gaining access to the Gruber Microsimulation Model.
Gruber has also earned more than $2 million over the last seven years for an ongoing contract with HHS to assess choices made by the elderly in Medicare’s prescription-drug plan.
If you are Gruber, life is quite good.
But for most of the rest of America, the economic pain continues.
For example, one recent study found that almost half of all Floridians cannot even afford “to pay for basic necessities”…
Nearly half of Florida households do not earn enough to pay for basic necessities, according to a report released Tuesday by the United Way that seeks to cast a light on the large group of state residents who struggle financially but do not meet the official criteria for being in poverty.
While 15 percent of Florida households are below the poverty level, another 30 percent are financially insecure — a figure that also applies to Sarasota and Manatee counties — based on a new measurement developed by the United Way.
If all those people cannot even afford the basics, how are they going to pay for Obamacare?
This law is going to financially cripple millions of American families. It truly is a death panel for the U.S. economy. And because Barack Obama can veto anything that the Republicans in Congress do, we are stuck with it for at least another two years (and probably longer).
So what about you?
Have your health insurance premiums gone up yet?
Please feel free to add to the discussion by posting a comment below…
Most people that discuss the “economic collapse” focus on what is coming in the future. And without a doubt, we are on the verge of some incredibly hard times. But what often gets neglected is the immense permanent damage that has been done to the U.S. economy by the long-term economic collapse that we are already experiencing. In this article I am going to share with you 12 economic charts that show that we are in much, much worse shape than we were five or ten years ago. The long-term problems that are eating away at the foundations of our economy like cancer have not been fixed. In fact, many of them continue to get even worse year after year. But because unprecedented levels of government debt and reckless money printing by the Federal Reserve have bought us a very short window of relative stability, most Americans don’t seem too concerned about our long-term problems. They seem to have faith that our “leaders” will be able to find a way to muddle through whatever challenges are ahead. Hopefully this article will be a wake up call. The last major wave of the economic collapse did a colossal amount of damage to our economic foundations, and now the next major wave of the economic collapse is rapidly approaching.
The mainstream media is constantly telling us about the “employment recovery” that is happening in the United States, but the truth is that it is just an illusion. As the chart below demonstrates, just prior to the last recession about 63 percent of all working age Americans had a job. During the last wave of the economic collapse, that number dropped to below 59 percent and stayed there for a very long time. In the past few months we have finally seen the employment-population ratio tick back up to 59 percent, but we are still far, far below where we used to be. To call the tiny little bump at the end of this chart a “recovery” is really an insult to our intelligence…
#2 The Labor Force Participation Rate
The percentage of Americans that are either employed or currently looking for a job started to fall during the last recession and it has not stopped falling since then. The labor force participation rate has now fallen to a 36 year low, and this is a sign of a very, very sick economy…
#3 The Inactivity Rate For Men In Their Prime Years
Some blame the decline in the labor force participation rate on the aging of our population. But it isn’t just elderly people that are dropping out of the labor force. In fact, the inactivity rate for men in their prime working years (25 to 54) continues to rise and is now at the highest level that has ever been recorded…
#4 Manufacturing Employees
Once upon a time in America, anyone that was reliable and willing to work hard could easily find a manufacturing job somewhere. But we have stood by and allowed millions upon millions of good paying manufacturing jobs to be shipped out of the country, and now many of our formerly great manufacturing cities have been transformed into ghost towns. Over the past few years, there has been a slight “recovery”, but we are still well below where we were at just previous to the last recession…
#5 Our Current Account Balance
As a nation, we buy far more from the rest of the world than they buy from us. In other words, we perpetually consume far more wealth than we produce. This is a recipe for national economic suicide. Our current account balance soared to obscene levels just prior to the last recession, and now we have almost gotten back to those levels…
#6 Existing Home Sales
Our economy has never fully recovered from the housing crash of 2007-2008. As you can see from the chart below, the number of existing home sales is still far below the level that we hit back in 2006. At this point we are just getting back to the level we were at in 2000, but our population today is far larger than it was back then…
#7 New Home Sales
Things are even more dramatic when you look at new home sales. This is an industry that have been absolutely emasculated. The number of new home sales in the United States is just a little more than half of what it was back in 2000, and it isn’t even worth comparing to what we experienced during the peak of 2006.
#8 The Monetary Base
In a desperate attempt to get the economy going again, the Federal Reserve has been wildly printing money. It has been so reckless that it is hard to put it into words. When I look at this chart, the phrase “Weimar Republic” comes to mind…
#9 Food Inflation
Thankfully, much of the money that the Federal Reserve has been injecting into the system has not made it into the real economy. But enough of it has gotten into the system to force food prices significantly higher. For example, my wife went to the store today and paid just a shade under 10 bucks for just four pieces of chicken. And as you can see from the chart below, food prices have been steadily going up in America for a very long time…
#10 The Velocity Of Money
One of the reasons why we have not seen even more inflation is because the velocity of money is extraordinarily low. In general, when an economy is healthy money tends to flow through the system rapidly. People are buying and selling and money changes hands frequently. But when an economy is sick, money tends to stagnate. And that is exactly what is happening in the United States right now. In fact, at this point the velocity of the M2 money stock has dropped to the lowest level ever recorded…
#11 The National Debt
As our economic fundamentals have deteriorated, our politicians have attempted to prop up our standard of living by borrowing from the future. The U.S. national debt is on pace to approximately double during the Obama years, and it increased by more than a trillion dollars in fiscal year 2014 alone. Despite assurances that “the deficit is under control”, the federal government borrows about a trillion dollars a year to fund new spending in addition to borrowing about 7 trillion dollars to pay off old debt that is coming due. What we are doing to future generations of Americans is absolutely criminal, and it is just a matter of time before this Ponzi scheme totally collapses…
#12 Total Debt
Of course it is not just the federal government that is gorging on debt. When you add up all forms of debt in our society (government, business, consumer, etc.) it comes to a grand total of more than 57 trillion dollars. This total has more than doubled since the year 2000…
If you know anyone that believes that we are in good economic shape, just show them these charts.
The numbers do not lie. Our economy is sick and it is getting sicker by the day.
And of course the next major financial crisis could strike at any time. U.S. stocks just experienced their worst week in three years, and if cases of Ebola start popping up around the country the fear that would cause could collapse our economy all by itself.
The debt-fueled prosperity that we are enjoying today is not real. We are living on the fumes of our past, and every single day our long-term problems get even worse.
Anyone with half a brain should be able to see what is coming.
Sadly, most Americans will continue to deny the truth until it is far too late.
The U.S. economy has had six full years to bounce back since the financial collapse of 2008, and it simply has not happened. Median household income has declined substantially since then, total household wealth for middle class families is way down, the percentage of the population that is employed is still about where it was at the end of the last recession, and the number of Americans that are dependent on the government has absolutely exploded. Even those that claim that the economy is “recovering” admit that we are not even close to where we used to be economically. Many hope that someday we will eventually get back to that level, but the truth is that this is about as good as things are ever going to get for the middle class. And we should enjoy this period of relative stability while we still can, because when the next great financial crisis strikes things are going to fall apart very rapidly.
The U.S. Census Bureau has just released some brand new numbers, and they are quite sobering. For example, after accounting for inflation median household income in the United States has declined a total of 8 percent from where it was back in 2007.
That means that middle class families have significantly less purchasing power than they did just prior to the last major financial crisis.
And one research firm is projecting that it is going to take until 2019 for median household income to return to the level that we witnessed in 2007…
For everybody wondering why the economic recovery feels like a recession, here’s the answer: We’re still at least five years away from regaining everything lost during the 2007-2009 downturn.
Forecasting firm IHS Global Insight predicts that real median household income — perhaps the best proxy for middle-class living standards — won’t reach the prior peak from 2007 until 2019. Since the numbers are adjusted for inflation, that means the typical family will wait 12 years until their purchasing power is as strong as it was before the recession. That would be the longest period of stagnation, by far, since the Great Depression of the 1930s.
Of course that projection assumes that the economy will continue to “recover”, which is a very questionable assumption at best.
Meanwhile, total household wealth has been declining for middle class families as well.
According to the New York Times, the “typical American household” is now worth 36 percent less than it was worth a decade ago.
That is a pretty substantial drop. But you never hear our politicians (especially the Democrats) bring up numbers like that because they want us to feel good about things.
So why is all of this happening?
The biggest reason why the middle class is struggling so much is the lack of good jobs.
As the chart posted below demonstrates, the percentage of the working age population that is actually employed is still way, way below where it was prior to the last recession…
The “employment recovery” (the tiny little bump at the end of the chart) has been so miniscule that it is hardly even worth mentioning.
At the moment, we still have 1.4 million fewer full-time jobs than we did in 2008 even though more than 100,000 people are added to the U.S. population each month.
And a lot of the workers that have lost jobs since the start of the last recession have never been able to find a new one.
According to a brand new survey conducted by Rutgers University, more than 20 percent of all workers that have been laid off in the past five years still have not found a new job.
Meanwhile, the control freak bureaucrats that run this country continue to kill off small businesses.
In recent years we have seen large numbers of small businesses fail, and at this point the rate of small business ownership in the United States is at an all-time low.
As a result of everything that you have just read, the middle class is shrinking and dependence on the government is soaring.
Today, there are 49 million Americans that are dealing with food insecurity, and Americans received more than 2 trillion dollars in benefits from the federal government last year alone.
For many more statistics just like this, please see my previous article entitled “30 stats to show to anyone that does not believe the middle class is being destroyed“.
Without a doubt, things are not that good for the middle class in America these days.
Unfortunately, the next great wave of financial trouble is rapidly approaching, and once it strikes things are going to get substantially worse for the middle class.
Yes, the stock market set record high after record high this summer. But what we have observed is classic bubble behavior. So many of the exact same patterns that occurred just prior to previous stock market crashes are happening once again.
And it is interesting to note that September 22nd has marked important market peaks at various times throughout history…
For traders, September 22 is one of those days with a notorious history. UBS’s Art Cashin notes that September 22 marked various market highs in 1873, 1929, 1980, and even as recent as 2008.
Could the coming months be the beginning of the next major stock market decline?
Small-cap stocks are already starting to show signs of real weakness. In fact, the Russell 2000 just hit a “death cross” for the first time in more than 2 years…
The Russell 2000 has been diverging from the broader market over the last several weeks, and now technicians point out it has flashed a bearish signal. For the first time in more than two years, the small-cap index has hit a so-called death cross.
A death cross occurs when a nearer-term 50-day moving average falls below a longer-term, 200-day moving average. Technicians argue that a death cross can be a bearish sign.
None of us knows what the market is going to do tomorrow, but a lot of the “smart money” is getting out of the market right now while the getting is good.
So where is the “smart money” putting their assets?
In a previous article, I discussed how sales of gold bars to wealthy clients is way up so far this year.
And CNBC has just reported that the ultra-wealthy “are holding mountains of cash” right now…
Billionaires are holding mountains of cash, offering the latest sign that the ultra-wealthy are nervous about putting more money into today’s markets.
According to the new Billionaire Census from Wealth-X and UBS, the world’s billionaires are holding an average of $600 million in cash each—greater than the gross domestic product of Dominica.
Why are they doing this?
Are they concerned about the potential of a market crash?
And if we do see another market crash like we witnessed back in 2008, what is that going to mean for the rest of us?
2008 certainly did not destroy our economy.
But it did cause an immense amount of damage that we have never recovered from.
Now the next wave is approaching, and most people don’t even see it coming.
Large numbers of people believe that an economic crash is coming next year based on a seven year cycle of economic crashes that goes all the way back to the Great Depression. What I am about to share with you is very controversial. Some of you will love it, and some of you will think that it is utter rubbish. I will just present this information and let you decide for yourself what you want to think about it. In my previous article entitled “If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States“, I discussed many of the economic cycle theories that all seem to agree that we are on the verge of a major economic downturn in this country. But there is an economic cycle that I did not mention in that article that a lot of people are talking about right now. And if this cycle holds up once again in 2015, it will be really bad news for the U.S. economy.
Looking back, the most recent financial crisis that we experienced was back in 2008. Lehman Brothers collapsed, the stock market crashed and we were plunged into the worst recession that we have experienced as a nation since the Great Depression. You can see what happened to the Dow Jones Industrial Average on the chart that I have posted below…
Prior to that, the last time that the stock market experienced a major decline of that nature was during the bursting of the dotcom bubble seven years earlier. 2001 was a year of recession for the U.S. economy and of big trouble for stocks.
And oh year, a little event known as “9/11″ happened that year.
Seven years before that, in 1994, investors experienced the worst bond market of their lifetimes.
The following is how Reuters recalls the carnage…
The 1994 bond market massacre is remembered with horror by those who lived through it. Yields on 30-year Treasuries jumped some 200 basis points in the first nine months of the year, hammering investors and financial firms, not to mention thrusting Mexico into crisis and bankrupting Orange County.
Going back another seven years brings us to 1987.
Anyone that lived through that era remembers “Black Monday” and the horrible stock market crash very well.
The next major economic crash prior to 1987 was in the early 1980s.
In 1980, the S&L crisis was blooming and everyone was talking about the “stagflation” that we were experiencing under Jimmy Carter. The Federal Reserve raised interest rates dramatically to combat inflation, and this helped precipitate the very deep recession that we experienced early in Ronald Reagan’s first term.
You can read much more about the “early 1980s recession” right here.
Seven years prior to 1980 brings us to 1973. To many young Americans, that year does not have any significance, but older Americans remember the Arab oil embargo and the super long lines at the gas pumps really well.
In addition, a recession began in 1973 which ended up stretching all the way until 1975.
And those that have studied these things say that the pattern keeps going back all the way to the Great Depression. Many correctly point out that the stock market crash which began the Great Depression was in 1929, but actually the worst year for the stock market during the Great Depression was in 1931. And 1931 fits perfectly into the cycle.
So we have this pattern of economic crashes occurring approximately every seven years.
But there is an additional element to this cycle which makes it even more extraordinary.
As Jonathan Cahn has pointed out, this seven year cycle also lines up with the seven year “Shemitah cycle” that we find in the Bible.
For those not familiar with it, during the Shemitah year the people of Israel were commanded to let their land rest for a full year. It was also supposed to be a time of releasing of debts.
But for the most part the people of Israel did not observe the Shemitah year, and in the Bible that is mentioned as one of the reasons why they were exiled to Babylon for seventy years.
The Shemitah year always begins in the fall, and the upcoming Shemitah year is going to start about a month from now.
Will we see things happen during this Shemitah year that are similar to things that we have seen in past Shemitah years?
For example, on September 17th, 2001 we witnessed the greatest one day stock market crash in U.S. history up until that time. It happened on the 29th of Elul on the Jewish calendar, which is the day right before Rosh Hashanah.
That record stood for seven years until the massive stock market crash of September 29, 2008. That date also corresponded with the 29th of Elul on the Jewish Calendar – the day right before Rosh Hashanah.
Will the pattern hold up in 2015?
Well, the 29th of Elul falls on a Sunday in 2015, so the stock market will be closed. But it is very interesting to note that there will be a solar eclipse on that day.
And as Jonathan Cahn recently told WND, similar solar eclipses in the past have preceded major financial disasters…
In 1931, a solar eclipse took place on Sept. 12 – the end of a “Shemitah” year. Eight days later, England abandoned the gold standard, setting off market crashes and bank failures around the world. It also ushered in the greatest monthlong stock market percentage crash in Wall Street history.
In 1987, a solar eclipse took place Sept. 23 – again the end of a “Shemitah” year. Less than 30 days later came “Black Monday” the greatest percentage crash in Wall Street history.
Is Cahn predicting doom and gloom on Sept. 13, 2015? He’s careful to avoid a prediction, saying, “In the past, this ushered in the worst collapses in Wall Street history. What will it bring this time? Again, as before, the phenomenon does not have to manifest at the next convergence. But, at the same time, and again, it is wise to take note.”
So what should we make of all of this?
I am sure that some of you will dismiss this as pure coincidence and speculation.
Others will find it utterly fascinating.
But one thing is for sure – people are going to be talking about this seven year cycle all over the Internet.
When they ask you what you think, what are you going to say?
Did you know that a major event just happened in the financial markets that we have not seen since the financial crisis of 2008? If you rely on the mainstream media for your news, you probably didn’t even hear about it. Just prior to the last stock market crash, a massive amount of money was pulled out of junk bonds. Now it is happening again. In fact, as you will read about below, the market for high yield bonds just experienced “a 6-sigma event”. But this is not the only indication that the U.S. economy could be on the verge of very hard times. Retail sales are extremely disappointing, mortgage applications are at a 14 year low and growing geopolitical storms around the world have investors spooked. For a long time now, we have been enjoying a period of relative economic stability even though our underlying economic fundamentals continue to get even worse. Unfortunately, there are now a bunch of signs that this period of relative stability is about to end. The following are 14 reasons why the U.S. economy’s bubble of false prosperity may be about to burst…
#1 The U.S. junk bond market just experienced “a 6-sigma event” earlier this month. In other words, it is an event that is only supposed to have a chance of 1 in 500 million of happening. Billions of dollars are being pulled out of junk bonds right now, and that has some analysts wondering if a financial crash is right around the corner.
#2 The last time that we saw a junk bond rout of this magnitude was back during the financial crash of 2008. In fact, as the Telegraph recently explained, bonds usually crash before stocks do…
The credit market usually leads the equity market during turning points, as happened when credit markets cracked first in 2008.
Will the same thing happen this time around?
#3 Retail sales have missed expectations for three months in a row and we just had the worst reading since January.
#4 Things have gotten so bad that even Wal-Mart is really struggling. Same-store sales at Wal-Mart have declined for five quarters in a row and the outlook for the future is not particularly promising.
#5 The four week moving average for mortgage applications just hit a 14 year low. It is now even lower than it was during the worst moments of the financial crisis of 2008.
#6 The tech industry is supposed to be booming, but mass layoffs in the tech industry are actually 68 percent ahead of last year’s pace.
#7 According to the Federal Reserve, 40 percent of all households in the United States are currently showing signs of financial stress.
#8 The U.S. homeownership rate has fallen to the lowest level since 1995.
#9 According to one survey, 76 percent of Americans do not have enough money saved to cover six months of expenses.
#10 Rumblings of a stock market correction have become so loud that even the mainstream media is reporting on it. For example, just check out this CNN headline from earlier this month: “Is a correction near? Wall Street on edge“.
#11 The civil war in Iraq is spiraling out of control, and Barack Obama has just announced that he is going to send 130 troops to the country in a “humanitarian” capacity. Iraq is the 7th largest oil producing nation on the entire planet, and if the flow of oil is disrupted that could have serious consequences.
#12 As a result of the conflict in Ukraine, the United States, Canada and the European Union have slapped sanctions on Russia. In return, Russia has slapped sanctions on them. Will this slowdown in global trade significantly harm the U.S. economy?
#13 The three day cease-fire between Hamas and Israel is about to end, and Hamas officials are saying that they are preparing for a “long battle“. If a resolution is not found soon, we could potentially see a full-blown regional war erupt in the Middle East.
#14 The number of Ebola deaths continues to grow at an exponential rate, and if the virus starts spreading inside the United States it has the potential to pretty much shut down our entire economy.
Meanwhile, things look even more dire in much of the rest of the globe.
For example, the economic slowdown has gotten so bad in some nations over in Europe that they are actually experiencing deflation…
Portugal has crashed into deep deflation and Italy’s inflation rate has fallen to zero as the eurozone flirts with recession, automatically pushing these countries further towards a debt compound spiral.
The slide comes amid signs of a deepening slowdown in the eurozone core, with even Germany flirting with possible recession. Germany’s ZEW index of investor confidence plunged from 27.1 to 8.6 in July, the sharpest fall since June 2012, during the European sovereign debt crisis. “The European Central Bank has to act now,” said Andrew Roberts, credit chief at RBS.
And in Japan, GDP just contracted at a 6.8 percent annual rate during the second quarter…
Japan’s economy suffered its worst contraction since 2011 in the second quarter as consumer spending on big items slumped in the wake of a sales tax rise.
Gross domestic product shrunk by an annualized 6.8% in the three months ended June, Japan’s Cabinet Office said Wednesday. The result was actually better than the 7% contraction expected by economists.
On a quarterly basis, Japan’s GDP dropped by 1.7% as business and housing investment declined. Japan’s economy last suffered a hit of this magnitude after the 2011 tsunami and nuclear disaster.
There is no way that this bubble of false prosperity was going to last forever. It was never real to begin with. It was just based on a pyramid of debt and false promises. In fact, the condition of the global financial system is now far worse than it was just prior to the financial crisis of 2008.
Sadly, most people do not understand these things. Most people just assume that our leaders have fixed whatever caused the problems last time. And when the next crisis arrives, they will be totally blindsided by it.
How in the world does the government expect us to trust the economic numbers that they give us anymore? For a long time, many have suspected that they were being manipulated, and as you will see below we now have stone cold proof that this is indeed the case. But first, let’s talk about the revised GDP number for the first quarter of 2014 that was just released. Initially, they told us that the U.S. economy only shrank by 0.1 percent in Q1. Then that was revised down to a 1.0 percent contraction, and now we are being informed that the economy actually contracted by a whopping 2.9 percent during the first quarter. So what are we actually supposed to believe? Sometimes I almost get the feeling that government bureaucrats are just throwing darts at a dartboard in order to get these numbers. Of course that is not actually true, but how do we know that we can actually trust the numbers that they give to us?
Over at shadowstats.com, John Williams publishes alternative economic statistics that he believes are much more realistic than the government numbers. According to his figures, the U.S. economy has actually been continually contracting since 2005. That would mean that we have been in a recession for the last nine years.
Could it be possible that he is right and the bureaucrats in Washington D.C. are wrong?
Before you answer that question, read the rest of this article.
It just might change your thinking a bit.
Another number that many have accused of being highly manipulated is the inflation rate.
But we don’t have to sit around and wonder if that figure is being manipulated. The truth is that even those that work inside the Federal Reserve admit that it is being manipulated.
As Robert Wenzel recently pointed out, Mike Bryan, a vice president and senior economist in the Atlanta Fed’s research department, has been very open about the fact that the way inflation is calculated has been changed almost every month at times…
The Economist retells a conversation with Stephen Roach, who in the 1970s worked for the Federal Reserve under Chairman Arthur Burns. Roach remembers that when oil prices surged around 1973, Burns asked Federal Reserve Board economists to strip those prices out of the CPI “to get a less distorted measure. When food prices then rose sharply, they stripped those out too—followed by used cars, children’s toys, jewellery, housing and so on, until around half of the CPI basket was excluded because it was supposedly ‘distorted'” by forces outside the control of the central bank. The story goes on to say that, at least in part because of these actions, the Fed failed to spot the breadth of the inflationary threat of the 1970s.
I have a similar story. I remember a morning in 1991 at a meeting of the Federal Reserve Bank of Cleveland’s board of directors. I was welcomed to the lectern with, “Now it’s time to see what Mike is going to throw out of the CPI this month.” It was an uncomfortable moment for me that had a lasting influence. It was my motivation for constructing the Cleveland Fed’s median CPI.
I am a reasonably skilled reader of a monthly CPI release. And since I approached each monthly report with a pretty clear idea of what the actual rate of inflation was, it was always pretty easy for me to look across the items in the CPI market basket and identify any offending—or “distorted”—price change. Stripping these items from the price statistic revealed the truth—and confirmed that I was right all along about the actual rate of inflation.
Right now, the Federal Reserve tells us that the inflation rate is sitting at about 2 percent.
But according to John Williams, if the inflation rate was calculated the same way that it was in 1990 it would be nearly 6 percent.
And if the inflation rate was calculated the same way that it was in 1980 it would be nearly 10 percent.
So which number are we supposed to believe?
The one that makes us feel the best?
And without a doubt, “2 percent inflation” sounds a whole lot better than “10 percent inflation” does.
But anyone that does any grocery shopping knows that we are definitely not in a low inflation environment. For much more on this, please see my previous article entitled “Inflation? Only If You Look At Food, Water, Gas, Electricity And Everything Else“.
Of course the unemployment rate is being manipulated as well. Just consider the following excerpt from a recent New York Post article…
In case you are just joining this ongoing drama, the Labor Department pays Census to conduct the monthly Household Survey that produces the national unemployment rate, which despite numerous failings is — inexplicably — still very important to the Federal Reserve and others.
One of the problems with the report is that Census field representatives — the folks who knock on doors to conduct the surveys — and their supervisors have, according to my sources, been shortcutting the interview process.
Rather than collect fresh data each month as they are supposed to do, Census workers have been filling in the blanks with past months’ data. This helps them meet the strict quota of successful interviews set by Labor.
That’s just one of the ways the surveys are falsified.
The Federal Reserve would have us believe that the unemployment rate in the U.S. has fallen from a peak of 10.0 percent during the recession all the way down to 6.3 percent now.
But according to shadowstats.com, the broadest measure of unemployment is well over 20 percent and has kept rising since the end of the last recession.
And according to the Federal Reserve’s own numbers, the percentage of working age Americans with a job has barely increased over the past four years…
The chart above looks like a long-term employment decline to me.
But that is not the story that the government bureaucrats are selling to us.
So where does the truth lie?
What numbers are we actually supposed to believe?
Please feel free to share your thoughts by posting a comment below…
During the first three months of this year, the U.S. economy contracted at a 1 percent annual rate. Despite this, mainstream economists flooded the mainstream media with assurances that much better days are just around the corner on Thursday. In fact, many of them boldly predicted that U.S. GDP would grow at a 3 or 4 percent annual rate in the second quarter. None of them seem the least bit concerned that another major recession is rapidly approaching. Instead, they just blamed the bad number for the first quarter on a “severe winter“, and the financial markets responded to the GDP news quite cheerfully. In fact, the S&P 500 soared to another brand new record high. No matter how bad the numbers get, almost everyone in the financial world seems quite optimistic. But is there actually good reason to have such optimism?
As Zero Hedge has pointed out, if it wasn’t for dramatically increased healthcare spending due to the implementation of Obamacare, U.S. GDP would have actually dropped at a 2 percent annual rate during the first quarter of 2014.
That would have been an absolutely disastrous number.
But within a very short time of the revised U.S. GDP number being released, the mainstream media was inundated with positive stories about the news.
For example, CNN published a story entitled “U.S. economy shrinks, but it’s not a big deal” and CNBC released a survey of nine prominent economists that showed that their consensus forecast for the second quarter of 2014 is GDP growth at a 3.74 percent annual rate.
It just seems like almost everyone wants to forget about what happened during the first quarter and wants to look ahead to a great number for quarter two.
Joseph Lavorgna, the chief U.S. economist at Deutsche Bank, is boldly forecasting a 4 percent growth rate for the second quarter. So is Jim O’Sullivan. In fact, it is hard to find any “expert” in the mainstream media that does not expect rip-roaring economic growth this quarter.
For example, just check out these quotes…
-Stuart Hoffman, the chief economist for PNC Bank: “The first quarter was disappointing, but rather than view that as an omen of a recession or the first of a down leg in the economy, I see the seeds of a big bounce back in spring.”
-Paul Ashworth of Capital Economics: “For those worried about a recession, it’s worth remembering that employment increased by nearly 300,000 in April.”
-The Bank of Tokyo’s Chris Rupkey: “2Q growth seen at nearly 4%… Weak 1Q is stone cold dead as an indicator of where the economy is headed.”
-Jan Hatzius of Goldman Sachs: “Because of weaker inventory investment in Q1, we increased our Q2 GDP tracking estimate by two-tenths to 3.9%.”
-Dun & Bradstreet Credibility Corp. CEO Jeffrey Stibel: “Using an alternative model for projecting job growth, we see an entirely different scenario, one in which the U.S. unemployment rate will fall below 5 percent by no later than the middle of next year.”
Hopefully they are right.
Hopefully we are not heading into another recession.
But as I discussed in an article earlier this week, evidence continues to mount that another recession has already begun for much of the country.
And there was another number that was released today that seems to confirm this. According to CNBC, there was a 6 percent drop in exports in the first quarter of 2014 when compared to the first quarter of 2013…
The U.S. economic reversal was led by a 6 percent drop in exports year over year, until recently hailed as a key driver of the U.S. recovery, and which had risen 9.5 percent in the last three months of 2013.
The slackening of trade has spread to the developing world, where emerging economies are seeing less demand from the U.S., Europe and China for raw materials and other exports.
We saw a similar decline happen in mid-2008 as the U.S. economy plunged into recession.
And Bloomberg’s Consumer Comfort index has fallen to the lowest level that we have seen in six months. U.S. consumers are increasingly tapped out, and the ongoing “retail apocalypse” is evidence of that fact.
A declining middle class simply cannot support the massive retail infrastructure that America has developed. As the middle class has fallen to pieces, it was just a matter of time before big trouble started erupting for the retail industry. This is something that David Stockman recently wrote about…
It does not take much analysis to see that these bell ringers do not represent sustainable prosperity unfolding across the land. For example, around 1990 real median income was $56k per household and now, 25 years later, its just $51k—-meaning that main street living standards have plunged by about 9% during the last quarter century. But what has not dropped is the opportunity for Americans to drop shopping: square footage per capita during the same period more than doubled, rising from 19 square feet per capita at the earlier date to 47 at present.
This complete contradiction—declining real living standards and soaring investment in retail space—did not occur due to some embedded irrational impulse in America to speculate in real estate, or because capitalism has an inherent tendency to go off the deep-end. The fact that in equally “prosperous” Germany today there is only 12 square feet of retail space per capita is an obvious tip-off, and this is not a teutonic aberration. America’s prize-winning number of 47 square feet of retail space per capita is 3-8X higher than anywhere else in the developed world!
Without middle class jobs, you can’t have a middle class. That is why our employment crisis is at the very heart of our economic problems. Even using the government’s highly manipulated unemployment figures, there are still quite a few cities out there that have official unemployment rates in the double digits…
The unemployment rate in Yuma, Ariz., is 23.8%. In El Centro, Calif., it is 21.6%. El Centro sits in an area of California in which unemployment in many metro areas is double the national average. In Merced the figure is 14.3%, in Yuba City the figure is 14.5%, in Hanford it is 13.1% and in Visalia it is 13.4%. In several metros close to these, the figure is above 10%. Most of them are inland from San Francisco and the area just south of it, which also happens to be among the nation’s most drought-plagued regions. This means jobs recovery is highly unlikely.
But of course the truth is that if the government actually used honest numbers, the unemployment rate for the entire nation would be in double digits.
And as I like to remind people, according to the government’s own numbers approximately 20 percent of the families in the entire nation do not have a single member that is employed.
So how is it possible that the “unemployment rate” is just a little above 6 percent?
It is a giant sham.
But that is what they want.
They want us feeling good and thinking that everything is going to be okay.
Unfortunately, they used the same approach back in 2007 and 2008, and we all remember how that turned out.