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Bankrupt, Decaying And Nearly Dead: 24 Facts About The City Of Detroit That Will Shock You

Bankrupt, Decaying And Nearly Dead: 24 Facts About The City Of Detroit That Will Shock You - Photo by Angelique DuLongIf you want to know what the future of America is going to be like, just look at the city of Detroit.  Once upon a time it was a symbol of everything that America was doing right, but today it has been transformed into a rotting, decaying, post-apocalyptic hellhole.  Detroit was once the fourth-largest city in the United States, and in 1960 Detroit had the highest per-capita income in the entire nation.  It was the greatest manufacturing city the world had ever seen, and the rest of the globe looked at Detroit with a sense of awe and wonder.  But now the city of Detroit has become a bad joke to the rest of the world.  Unemployment is rampant, 60 percent of the children are living in poverty and the city government is on the verge of bankruptcy.  They say that Detroit is just a matter of “weeks or months” away from running out of cash, and when Detroit does declare bankruptcy it will be the largest municipal bankruptcy in the history of the United States.  But don’t look down on Detroit, because the truth is that Detroit is really a metaphor for what is happening to America as a whole.  In the United States today, our manufacturing infrastructure has been gutted, poverty is absolutely exploding and we are rapidly approaching national bankruptcy.  Detroit may have gotten there first, but the rest of the country will follow soon enough.

Back during the boom years, Detroit was known for making great cars.  Today, it is known for scenes of desolation and decay.  It is full of vandalized homes, abandoned schools and empty factories.  The following description of what Detroit looks like at this point is from an article by Barry Yeoman

It’s hard to describe the city’s physical landscape without producing what Detroiters call “ruin porn.” Brick houses with bays and turrets sit windowless or boarded up. Whole blocks, even clusters of blocks, have been bulldozed. Retail strips have been reduced to a dollar store here, a storefront church there, and a whole lot of plywood in between. Not a single chain supermarket remains.

So what caused the downfall of one of the greatest cities on earth?

Well, here is a hint…

Between December 2000 and December 2010, 48 percent of the manufacturing jobs in Michigan were lost.

When you are a manufacturing area, and you lose half of your manufacturing jobs over the course of a single decade, of course things are going to get really, really bad.

So just how bad have things gotten in Detroit?

The following are 24 facts about the city of Detroit that will shock you…

#1 Detroit was once the fourth-largest city in the United States, and it was once home to close to 2 million people.  But over the last several decades people have been fleeing in droves.  According to the 2010 census, only 713,000 people now live in Detroit, and city officials admit that the population has probably slipped under 700,000 at this point.

#2 The population of Detroit has declined by about 25 percent over the past decade.  The last time the population of Detroit was this low was all the way back in 1910.

#3 Today, Detroit is only the 18th-largest city in America.  It is now smaller than Austin, Texas and Charlotte, North Carolina.

#4 Back in 1960, the city of Detroit had the highest per-capita income in the United States.

#5 Today, the unemployment rate in Detroit is more than 18 percent, which is more than twice as high as the nation as a whole.

#6 According to a report that was just recently released, approximately 60 percent of all children in Detroit live in poverty.

#7 Approximately one-third of Detroit’s 140 square miles are either vacant or derelict.

#8 The city government of Detroit has closed dozens of schools and has decided to cut off public services to the “heavily blighted areas“.

#9 According to one estimate, there are 33,500 empty houses and 91,000 vacant residential lots in the city of Detroit today.

#10 The median price of a home in Detroit is just $9,000, and there are some areas of Detroit where you can still buy a house for $100.

#11 There are more than 85,000 streetlights in Detroit, but thieves have stripped so much copper wiring out of the lights that more than half of them are not working.

#12 Mayor Bing has announced a plan to reduce the number of streetlights in the city of Detroit to just 46,000.

#13 According to one very shocking report, 47 percent of all people living in the city of Detroit are functionally illiterate at this point..

#14 The murder rate in Detroit is 11 times higher than it is in New York City.

#15 There were 377 homicides in Detroit in 2011.  In 2012, that number rose to 411.

#16 Justifiable homicide in Detroit rose by an astounding 79 percent during 2011.

#17 In one recent year, the rate of self-defense killings in the city of Detroit was 2200% above the national average.

#18 Ten years ago, there were approximately 5,000 police officers in the city of Detroit.  Today, there are only about 2,500 and another 100 are scheduled to be eliminated from the force soon.

#19 Due to budget cutbacks, most police stations in Detroit are now closed to the public for 16 hours a day.

#20 Crime has gotten so bad in Detroit that even the police are are telling people to “enter Detroit at your own risk“.

#21 At one point, 100 bus drivers in Detroit refused to drive their routes because they were afraid of being attacked out on the streets in broad daylight.  The head of the bus drivers union, Henry Gaffney, said that the drivers were literally “scared for their lives“….

“Our drivers are scared, they’re scared for their lives. This has been an ongoing situation about security. I think yesterday kind of just topped it off, when one of my drivers was beat up by some teenagers down in the middle of Rosa Parks and it took the police almost 30 minutes to get there, in downtown Detroit,” said Gaffney.

#22 There have been reports that gangs of young men with AK-47s have been terrorizing gas stations all over Detroit.

#23 Detroit was once known for making some of the greatest cars in the world.  Now, it is known around the world as a dumping ground for the dead

From the street, the two decomposing bodies were nearly invisible, concealed in an overgrown lot alongside worn-out car tires and a moldy sofa. The teenagers had been shot, stripped to their underwear and left on a deserted block.

They were just the latest victims of foul play whose remains went undiscovered for days after being hidden deep inside Detroit’s vast urban wilderness — a crumbling wasteland rarely visited by outsiders and infrequently patrolled by police.

#24 Detroit’s public schools are an absolute nightmare.  The following is from one of my readers that actually attended one of the “best” public schools in Detroit…

The school was a new seven story building just a couple of years old. The bathrooms would often lack toilet paper & soap beyond the second floor (the main floor), the bathroom sinks would often not work. The water fountains on north side of the building on from the third floor & up did not work. The elevators would constantly break down. I even got stuck on the elevator before. I almost tripped down a half a flight of stairs because the elastic seal (it was the metal bar at the front of a treader of I don’t know the name of it.) the stairs was not properly installed.

Students would often have sex on the stairs & throughout the school. Parents actually called the school many times & reported kids having sex on the stairs because all of them had glass windows 270 degrees.

Even over in Europe they write stories about the dramatic decline of Detroit.  For example, the following is how one British reporter described his visit to Detroit

Much of Detroit is horribly dangerous for its own residents, who in many cases only stay because they have nowhere else to go. Property crime is double the American average, violent crime triple. The isolated, peeling homes, the flooded roads, the clunky, rusted old cars and the neglected front yards amid trees and groin-high grassland make you think you are in rural Alabama, not in one of the greatest industrial cities that ever existed.

For those that want to read even more about the horrifying downfall of Detroit, there are some amazing charts that graphically show the decline of Detroit right here.

So what is the solution?

How can we fix Detroit?

Well, why don’t we just build a monorail!  Of course that sounds ridiculous, but the federal government has actually committed $25 million to construct “a streetcar line” that nobody really wants and that very few people would probably actually use.  Perhaps they could be excused for wasting so much money on a bad idea if there had not already been 24 failed attempts to develop a successful public transit system in Detroit over the past four decades.

Well, why don’t we just build a bunch of theme parks instead?  After all, tourists would just flock to Detroit, right?

It has been suggested that Detroit would be ideal for an “automotive theme park”, and there is actually one group of investors that wants to turn some of the worst areas of Detroit into a “zombie theme park”.

What will they think of next?

Actually, a much better idea would have been to not allow millions of our good paying manufacturing jobs to be shipped to the other side of the world, but it is too late for that at this point.

But once again, please do not look down on the city of Detroit.  Instead, let the city of Detroit serve as a warning for the rest of us.

The truth is that the entire U.S. economy is in an advanced state of decline…

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

-An astounding 53 percent of all American workers make less than $30,000 a year.

-Amazingly, there are hundreds of thousands of Americans with either Master’s degrees or Ph.D.s that are enrolled in the food stamp program at this point.

We are a nation that consumes far more wealth than we produce, we are a nation that is constantly bleeding jobs, businesses and wealth, and we are a nation that is going deeper into debt with each passing day.

Yes, Detroit may have gone over the edge into economic oblivion first, but the rest of the nation is steamrolling down the exact same path that Detroit has gone.

Is it too late for us to change direction?

Please feel free to share your thoughts on that question by leaving a comment below…

Detroit - Photo by Albert duce

10 Signs That America Is Decomposing Right In Front Of Our Eyes

The decay of society is so much harder to quantify than economic decline is.  The government keeps lots of statistics on things like unemployment and inflation, but it really does not keep track of how sick and twisted people are becoming.  Most of us recognize that the character of the American people has changed dramatically over the decades, but unlike the national debt, you can’t easily point to a chart or a graph to show exactly how bad things are getting.  In this article, my approach will be to point you to various “signs” of social decay.  Signs tell us where we are at now and where we are headed.  Some of the signs that I will use will be statistics while others will simply consist of anecdotal evidence.  Yes, anecdotal evidence is not perfect, but when you put enough of it together it starts to paint a pretty clear picture of what is going on out there.  America is becoming a truly frightening place.  Our cities our decaying, thieves are becoming bolder, you never know who you can trust and everyone seems depressed.  America is decomposing right in front of our eyes, and it is time that we all admitted it.

In the old days, if you met a stranger out on the streets you knew that you could almost certainly trust that person.  But these days if you let your child wander one aisle over while you are shopping at Wal-Mart there is a chance that someone will try to abduct her.

Something has changed.

In our major cities, if you walk up to someone at random there is a decent chance that person will be a pervert or a sicko, and most Americans know that this is true at a gut level.  Almost everyone is very leery of “strangers” these days.  It has gotten to the point where we are all afraid of one another.

Just try this some time….

In a major U.S. city, walk right up to people on the street, look them in the eyes and try to introduce yourself.

What will happen when you do that?

In many instances, people will literally run away from you.

We are scared to death to interact with people that we do not know, and the reality is that those fears are way too often justified.

The character of the American people is decaying at a rapid pace, and the evidence of this is all around us.

The following are 10 signs that America is decomposing right in front of our eyes….

#1 As the economy crumbles, in many U.S. cities desperate people are increasingly resorting to violent acts in an attempt to survive.  So far this year, violent crime in Washington D.C. has risen by 40 percent.  Robberies at gunpoint have more than doubled compared to the same time period last year.

And as I wrote about recently, justifiable homicide in Detroit rose by a staggering 79 percent during 2011, and the rate of self-defense killings in Detroit is now 2200% above the national average.

#2 But it is not just in the cities where you will find crazies.  A recent Daily Mail article described a very disturbing incident which took place recently in North Dakota.  Two crack-fueled perverts abducted and murdered a 43-year-old math teacher named Sherry Arnold….

Spell and Waters had left Colorado days before the crime claiming they wanted work in eastern Montana and western North Dakota’s oil fields.

After smoking crack cocaine over the entire trip, Waters allegedly told Spell the drug ‘brought the devil out in him’ and began talking about kidnapping and killing a female, AP reports.

After they spotted Arnold, Spell claims that Waters told him to ‘grab the lady’ and pull her into their Ford Explorer as she jogged by.

After they got Arnold into the car, they choked her to death and then buried her body in a shallow grave in North Dakota.

Why would anyone do something like that?

#3 Unfortunately, sickos will even be found working for the government.  Just as so many of us feared, TSA workers are actually purposely selecting attractive women to go through the body scanners so that they can admire their naked bodies.  The following are actual quotations from official TSA complaints….

-“I feel I was targeted by the TSA employee to go through the see-you-naked machine because I am a semi-attractive female.”

-“The screener appeared to enjoy the process of picking someone rather than doing true random screening. I felt this was inappropriate. A woman behind me was also “randomly selected.”

-“TSA staff ‘trolling’ the lines looking for people to pull out was unprofessional.”

-“I know he went to that room to see my naked body through the machine with the other guy.”

-“When I looked around, I saw that there were only women that were “told” to go through this machine. There were no men.”

One woman was recently forced to go through the body scanner three times because the TSA workers wanted to get a really good look at her “cute figure“.

Isn’t about time that we admitted that the TSA is a massive failure?

#4 The American people seem more depressed than ever.  So are we the most depressed nation in the entire world?  The U.S. has the highest percentage of women taking antidepressants of any country in the world, and kids in the U.S. are three times more likely to be prescribed antidepressants than kids in Europe are.

#5 The gang problem in the United States has never been worse.  According to the FBI, the number of gang members in the United States has risen by 40 percent since 2009 and there are now a total of 1.4 million gang members living inside this country.

#6 Millions of other young people are not able to find jobs once they finish school and end up financially dependent on their parents.  Today, record numbers of young adults are living at home.  Many of these young people end up very disillusioned and very frustrated.  Right now, more than 30 percent of all Americans in the 18 to 34 age bracket are currently living at home with their parents.  That is not good news for the future of this country.

#7 All over America, criminals are becoming bolder and more desperate.  The following is a report about one serial home invader from the Washington Post….

A housekeeper was tied up and sexually assaulted and a mother and teenage son were tied up during a home invasion in Bethesda early Wednesday morning that Montgomery County police say involves the same suspect as in a home invasion Tuesday in Wheaton.

As the economy gets even worse, home invasions will become even more common.  You might want to learn how to defend yourself.

#8 These days thieves will steal literally anything.  Each night in cities all over the nation more street lights are going out as thieves strip the copper wiring right out of them. In the San Francisco area, one very ambitious group of thieves actually swiped a copper bell that weighs 2.7 tons.

#9 One of the clearest signs that America is decomposing is the stunning decline of major cities such as Detroit.  In response to my recent article about the death of Detroit, a reader identified as Bill posted the following….

Seeing what is happening to Detroit makes me want to cry AND scream.

I’m a native Detroiter myself – born in Harper Hospital on the east side & was one of those 2 million plus counted in the 1950 Census. I left Detroit in the early 70s for work reasons and had not gone back there since 1984.

When I drove through there on my way to Port Huron last September I “made a lap” around the city – got off I-75 downtown, made a loop around the downtown area (the 2 new stadiums look nice as does the RenCen) then went out Michigan Avenue to 12th and up through the 1967 Riot area to Grand River and out to the northwestern part of town where I grew up and went to school.

What a depressing trip. All my old haunts are gone, boarded up or burnt to the ground. The car dealer where I bought my first car (the old “Redford Rambler” on Grand River just west of Evergreen) is nothing but a slab. All the car dealers along the Grand River strip from Evergreen to McNicoles (6 Mile Rd.) are gone, the 16th Precinct Police Station at GR & Mc Nicholes is abandoned and the high school where my cousin graduated is all boarded up (Redford High School, across Grand River from the old police station). My old house on Lasher just north of Grand River is there but the stores in the area are all gone. One would think space aliens had come and taken all the life out of the area.

On that same article, another reader identified as “Disappointed” shared his thoughts on the decline of that once great city….

I worked in Detroit for a few years a while back. I was fascinated by the crumbling ruins, drove around to see a lot of them after work (a couple of times I drove through neighborhoods that I can tell you now I would not go near, even in the daytime). It was sad and fascinating at the same time. I would not even THINK of doing that now, it would be highly dangerous. I would not even work in Detroit now.

#10 But it isn’t just Detroit that is falling apart.  This kind of thing is happening all over the country.  A reader identified as Golden Child recently left the following comment on my website….

Much of America is like Detroit. America is rotting from California to West Virginia to Baltimore. It’s the same song across the United States. High unemployment, falling rent and or house prices, massive police lay-offs, giant spikes in crime accompanied by a rising cost of living and fewer job opportunities. Vallejo and Oakland, California are very much like Detroit. Vallejo ranked as the ninth most miserable city in America according to Forbes. Oakland and Vallejo have laid off nearly half of their police forces. You can get an apartment in Vallejo or Oakland for $200-600 a month although the median monthly rent in California is well over a thousand dollars with Bay Area rent being generally higher. There is a reason why rent is so comparably dirt cheap in those cities. San Francisco-Oakland-Vallejo collectively make up the car-theft capital of the United States. Northern CA cities like Oakland, Richmond and Stockton are regulars on the top ten most dangerous cities in America list. Baltimore, MD is also very much like Detroit with its thousands of abandoned rowhomes, high concentration of Black poverty, drugs and violence. Camden, NJ, East St. Louis, Gary Indiana are all no different from the D. Even large sections of wealthy world class cities like DC, NYC and San Francisco are impoverished quasi-third world hellholes. Southeast DC has the highest unemployment rate of anywhere in America despite the fact that DC is the richest city and metro in America. NYC has the widest income inequality gap of any metro area. Massive swaths of NYC are dangerous towering project buildings packed with working poor minorities. SF is home to some of the most sub-standard public housing in America in neighborhoods like Hunter’s Point, Sunnydale and Potrero Hill. America has been rotting from the core since at least the 70′s.

Sadly, this is just the beginning.

As the economic decline of this nation accelerates, people are going to become much more desperate.

And desperate people do desperate things.

So where do all of you think America is headed?  Please feel free to post a comment with your opinion below….

***EPILOGUE***

I wanted to post a couple of new comments from the readers.  These are more firsthand examples of what life is like on the streets of America today….

—Comment By “Bean”—

This evening I had to pick my daughter up from work,a fast food restaurant in the heart of downtown Fort Wayne, Indiana. My daughter came out later than expected so I had to sit in the car for about forty minutes waiting. While waiting a man walked up to my car and reached for the door handle, thankfully I had the doors locked, he started tapping on the window, I drove off went around the block and parked again to wait for my daughter. A little while later an elderly man with a cane, who appeared to be homeless, shuffled along the sidewalk, he saw me sitting in the car and he came up and tapped on the window, fortunately at that moment my daughter came out of work so I pulled up and picked her up and we got out of town. It was creepy, this was downtown Fort Wayne, Indiana, a city with a population of around 300,000, I was shocked! I do not want my daughter coming out of work at night into this kind of environment, I will be contacting the owner of the business to let them know that it is not a safe environment for young people to have to walk to their cars after dark.

—Comment By Madsr—

My wife and I were discussing this exact thing. A young girl in our quiet Arkansas town met a local guy off the internet she ended up dead on his family farm in a 55 gal drum…..Who does this? We live in a town of 4000 where we all know each other, a man walked into a little shop 3 weeks ago and raped the woman behind the counter. My wife and I consider where we live very safe compared to most of America. Yet we never go anywhere that we are not both carrying a pistol. That is what is so different between todays depression and the great depression. Most people would not hurt or kill you for food or goods. They were more apt to suffer quietly or sneak and get a chicken. It is just the opposite today they are being told everyday they are owed food and goods. The only reason they don’t have them is because the rich have it all, so you should take it from them. I guess that makes most of us that have worked 60 hours a week for the last 25 or 30 years the rich evil people. This is not going to get better regardless of the President both sides have supported the moral decay. God help us!

*****

Why Are Record Numbers Of Young Adults Jobless And Living At Home With Mom And Dad?

In the United States today, unemployment among those age 18 to age 34 is at epidemic levels and the number of young adults that are now living at home with Mom and Dad is at an all-time high.  So why are so many of our young adults jobless?  Why are record numbers of them unable or unwilling to move out on their own?  Well, there are quite a few factors at work.  Number one, our education system has completely and totally failed them.  As I have written about previously, our education system is a joke and most high school graduates these days are simply not prepared to function at even a very basic level in our society.  In addition, college education in the United States has become a giant money making scam that leaves scores of college graduates absolutely drowning in debt.  Many young adults end up moving back in with Mom and Dad because they are drowning in so much debt that there are no other options.  Thirdly, the number of good jobs continues to decline and this is hitting younger Americans the hardest.  Millions of young people enter the workforce excited about the future only to find that there are hordes of applicants for the very limited number of decent jobs that are actually available.  So all of this is creating an environment where more young adults are financially dependent on their parents that ever before in modern American history.

Since the start of the recession, the percentage of young adults in America that are employed has dropped like a rock.  In 2007, the employment rate for Americans between the ages of 18 and 24 was 62.4 percent.  Today, it is down to 54.3 percent.

Yes, there are certainly many out there that are lazy, but the truth is that most of them would like to work if they could.  It is just that it is much harder to find a job these days.

And it isn’t just young people that think that the job market has gotten tougher.  According to one recent survey, 82 percent of all Americans believe that it is harder for young adults to find jobs today than it was for their parents to find jobs.

But if they cannot get jobs, then young adults cannot financially support themselves.  So more of them than ever are heading back home to live with Mom and Dad.

In the year 2000, 8.3 percent of all American women between the ages of 25 and 34 were living at home with their parents.  Today, that figure is up to 9.7 percent.

In the year 2000, 12.9 percent of all American men between the ages of 25 and 34 were living at home with their parents.  Today, that figure is up to an astounding 18.6 percent.

Take a moment and let those statistics sink in.

Nearly one out of every five American men from age 25 to age 34 are living at home with Mommy and Daddy.

When you look at Americans age 18 to age 24, it is even worse.  Among Americans age 18 to age 24, 50 percent of all women and 59 percent of all men still live with their parents.

Those are very frightening numbers.

Part of this has to do with a fundamental cultural shift.  An increasing number of parents these days expect that they will have to take care of their own children beyond the age of 22.  The following is from a recent article by Pew Research….

When asked in a 1993 survey what age children should be financially independent from their parents, 80% of parents said children have to be self-reliant by age 22. In the current survey, only 67% of parents say children have to be financially independent by age 22—a drop of 13 percentage points.

But what accounts for the tremendous gender disparity that we see in the figures above?

Well, one major factor is that young women are now far more likely to pursue a college education than young men are.  According to an article in the New York Times, women now account for approximately 57 percent of all enrollments at U.S. colleges and universities.

The less education you have, the more likely you are to be unemployed in America today.  So that is certainly a significant factor.

But many that have gone on to college are also moving back home.  When you are a young adult with no job and no prospects and you are swamped with tens of thousands of dollars of student loan debt, it can be incredibly difficult to be financially independent.

After adjusting for inflation, U.S. college students are now borrowing about twice as much money as they did a decade ago.  Many students that go on to graduate school end up with more than $100,000 in total student loan debt.

Sadly, those degrees often do not pay off.  In fact, in America today one-third of all college graduates end up taking jobs that don’t even require college degrees.

So what does all of this mean?

It means that there are millions upon millions of angry, disillusioned and frustrated young adults out there today.  A recent USA Today article told the story of 32-year-old Dennis Hansen….

After a year without work, Hansen, 32, was hired to monitor Lake Michigan and Lake Superior water for the state and federal governments over two summers. He also had short stints as a census worker and as an extra post office hand during one holiday crush.

It hasn’t been enough: Hansen says he has a $13,000 credit card debt and that’s just for basics — his $600 monthly mortgage, heat and food.

“It’s definitely a roller coaster,” Hansen says, with the ups coming when he’s done well in a job interview and the downs when there’s a rejection: “That’s when I’m frustrated, angry and wondering why I went to college for 10 years.”

If the economy was humming along on all cylinders, it would be easy to blame our young adults for being too lazy.

But these days most young adults have to scramble like crazy just to get a really low paying job.  Large numbers of very talented young adults are waiting tables, flipping burgers or stocking shelves at Wal-Mart.

And this reality is reflected in the overall economic statistics.  Since the year 2000, incomes for U.S. households led by someone between the ages of 25 and 34 have fallen by about 12 percent after you adjust for inflation.

The “wealth gap” between younger Americans and older Americans is also growing and recently hit a new all-time high.  U.S. households led by someone 65 years of age or older are now 47 times wealthier than U.S. households led by someone 35 years of age or younger.

But this is not good for our society.  When there is civil unrest, it is not those 65 and older that take to the streets.

We desperately need our economy to get healthy again so that our young adults can get good jobs, get married, set up households, raise families and be productive members of society.

Instead, the percentage of young adults that have jobs is near an all-time low, the percentage of young adults living with their parents is at an all-time high, the proportion of adults in the United States that are married is at an all-time low and we have hordes of angry, frustrated young adults with plenty of time on their hands.

You don’t have to be a genius to see trouble on the horizon.

What is going to happen when the next major financial crisis comes and the economy gets significantly worse than it is now?

In the end, we are going to reap what we have sown.  We have fundamentally failed our young adults, and those failures are going to produce some very bitter fruit.

Stagflation 2011: Why It Is Here And Why It Is Going To Be Very Painful

Are you ready for an economy that has high inflation and high unemployment at the same time? Well, welcome to “Stagflation 2011″.  Stagflation exists when inflation and unemployment are both at high levels at the same time.  Of course we all know about the high unemployment situation already.  Gallup’s daily tracking poll says that the U.S. unemployment rate has been hovering around 10 percent all year so far.  But now thanks to rapidly rising food prices and the exploding price of oil, rampant inflation is being added to the equation.  Normally inflation is a sign of increased economic activity, but when the basic commodities that we depend on to run our economy (such as oil) go up in price it actually causes a slowdown in economy activity.  When the price of oil goes up high enough, it fundamentally changes the behavior of individuals and businesses.  Suddenly certain types of economic activities that were feasible when oil was very cheap are not profitable any longer.  When the price of oil rises to a new level and it stays there, essentially what is happening is that more “blood” is being drained out of our economy.  Our economy will continue to function when there are higher oil prices, it will just be a lot more sluggish.

In some way, shape or form the price of oil factors into the production of most of our goods and services and it also factors into the transportation of most of our goods and services.  A significant rise in the price of oil changes the economic equation for almost every business in the United States.

Today, the price of WTI crude soared past 100 dollars a barrel before closing at $98.10.  The price of Brent crude increased 5.3 percent to $111.25.  The protests in Libya are certainly causing a lot of the price activity that we have seen over the past few days, but the truth is that oil has been going up for a number of months.  Right now we are only seeing an acceleration of the long-term trend.

Things are likely to get far worse if the “day of rage” planned for Saudi Arabia next month turns into a full-blown revolution.  Up to this point, the revolutions that have been sweeping the Middle East have been organized largely on Facebook, and now there are calls all over Facebook for the “Saudi revolution” to start on March 20th.

That date is less than 4 weeks away.  If Saudi Arabia plunges into chaos, the price of oil is going to go through the roof.

A rapidly rising price for oil is really bad news for the U.S. economy, because it is going to mean lots of inflation.  Unfortunately, this also comes at a time when the economy is also feeling the inflationary effects of more quantitative easing by the Federal Reserve.

So if rising oil prices are going to cause more inflation and if rising oil prices are also going to cause our economy to become even more sluggish, what does all of that add up to?

It adds up to stagflation.

Wikipedia defines stagflation in the following manner….

In economics, stagflation is the situation when both the inflation rate and the unemployment rate are persistently high.

This is going to rapidly become the “new normal” for America.  High oil prices are going to cause the cost of just about everything to go up, and high oil prices are also going to cause the economy to slow down thus making the unemployment numbers even worse.

It is going to be just like the 1970s all over again.

Only worse.

Economists differ as to how much rising oil prices affect U.S. GDP, but almost all of them agree that rising oil prices do cause a decline in U.S. GDP at least to some extent.

If American families have to spend $10 or $20 more each time they visit a gas station, that means that they are going to have less discretionary income.  They won’t be able to spend as much at the stores.

Not only that, but since the price of oil affects the price of almost everything else, Americans will find that their dollars have reduced purchasing power.

An oil crisis would force American families to stretch their already overburdened budgets even farther.

So where is the price of gasoline going from here?  Well, the average price of gasoline in the United States is rapidly sneaking up on the $3.20 a gallon mark.  Almost everyone believes that it is going to be going significantly higher.

Tom Kloza, the chief analyst for the Oil Price Information Service, was recently quoted in USA Today as saying that he believes that the average price for gasoline in the United States will reach somewhere between $3.50 and $3.75 a gallon by April.

As I wrote about yesterday, there are other analysts that believe that we are going to see $4.00 gasoline in the United States by the end of the year, and there are some that believe that we could see $5.00 gasoline if revolution sweeps Saudi Arabia.

If gasoline becomes that expensive and it stays there for a while, it is going to seriously start affecting the behavior of American businesses and American consumers.

Just remember what happened back in 2008.  Andrew Busch of BMO Capital Markets recently told CNBC the following….

“Remember when oil was last at $140 (a barrel), Americans reacted and cut the amount of miles they drove.”

Can you imagine what it would do to the economy if millions of Americans start sitting in their homes instead of doing their normal amounts of driving and flying?

In addition, one of the biggest problems with a higher price for oil is that it would cause our trade deficit to explode.  According to the U.S. government, more than half of the oil that we use is imported.  So every month we send the rest of the world billions and billions of our dollars and they send us massive amounts of oil.  We rapidly consume all of the oil they send us and we continually need more.  So we keep sending larger and larger amounts of money overseas and they keep sending us larger amounts of oil.  In the process, our national wealth is being drained at an astounding rate.  It is one of the greatest transfers of wealth the world has ever seen.

When the price of oil rises substantially, the transfer of wealth accelerates.  This is a very bad thing for the U.S. economy.  For example, when oil prices were above $100 a barrel back in 2008 our trade deficit for the year was almost 700 billion dollars.

It would be great if the Middle East would settle down and oil prices would start declining because that would really help out the U.S. economy.  Unfortunately, it does not look like that is going to happen.  Instead, it appears that we are steamrolling directly towards stagflation.  Anyone that lived through the stagflation of the 1970s knows that it is not a lot of fun.

The cold, hard reality of the matter is that without cheap oil our lifestyles are going to change.  Our economy was not set up to run on expensive oil.  If oil moves well above $100 a barrel and it stays there it is going to bring about significant societal changes.

For the rest of 2011, the price of oil will be the number one economic indicator to watch.  If it gets too high it is going to be an absolute disaster for the U.S. economy.

Tent Cities, Homelessness And Soul-Crushing Despair: The Legacy Of Decades Of Government Debt And Mismanagement Of The Economy

For decades, our politicians have been deeply addicted to government debt, they have stood idly by as millions of our jobs have been shipped overseas and they have passed countless business-crushing regulations and they never thought that it would catch up with us.  Well, it has.  America has been living in the biggest debt bubble in the history of the world, and now that bubble is starting to pop.  There has never been such an extended period of unemployment in the United States since the Great Depression, and millions of Americans are losing their homes.  Homelessness is skyrocketing, tent cities are popping up everywhere and countless numbers of American families are experiencing the soul-crushing despair that comes from desperately trying to hang on for month after month after month.

Now, because of the horrific hole that our politicians have dug for us, we are faced with some heartbreaking choices.  For example, right now the U.S. Congress is deciding whether or not to extend long-term unemployment benefits for the nation’s jobless.

Extending those benefits through the end of February would add another $12.5 billion to the U.S. national debt.  But not doing it would cut off the only lifeline that many Americans have just in time for the holidays.

The extension of jobless benefits that was passed last summer expires on December 1st.  If these long-term benefits are not renewed, approximately 2 million unemployed Americans will lose their checks.

But what can the U.S. Congress do?  Just keep going into endless amounts of debt?  As I have written about previously, the United States is never going to see another balanced budget ever again under the current system.  The U.S. government is flat out broke.  Somehow our politicians desperately need to find a way for the federal budget to stop hemorrhaging red ink.

There is no more “extra money” to spend.  The U.S. government has piled up the biggest mountain of debt in the history of the world and we are headed for a complete and total economic disaster because of it.

But what are we going to do?  Are we going to let millions of Americans starve in the streets?

It’s not just the rapidly rising number of homeless Americans that is the problem.  Millions of Americans are not going to be able to heat their homes this winter.  Millions of others are going to have to choose between buying medicine and buying food because they will not be able to afford both.

How would you like to be at a point where you could not go to the doctor because you knew that you could not pay the deductible?

How would you like to be at a point where you had to decide whether to buy diabetes medicine or to buy macaroni and cheese to feed your family?

More than 42 million Americans are now on food stamps, and that number keeps going up month after month after month.

Just think about that.

42 million Americans would not be able to eat if the U.S. government did not give them handouts.

The safety net is getting awfully crowded.

If you really want to see some soul-crushing desperation, go check out the flood tunnels under the city of Las Vegas.  But do not do this alone – it is very dangerous down there.  Today, there are hordes of “tunnel people” who call those dark tunnels home.  Nobody knows for sure how many people are down there (some people say that it is well into the thousands), but everyone agrees that the number is rapidly growing.

But in many major U.S. cities there are no flood tunnels to go to.  Instead, in many areas of the United States huge tent cities have sprouted.  The following is a video news report from the BBC about the tent cities that are popping up all over America….

But it is not just “drug addicts” and the “mentally ill” that are going to these tent cities.  One anonymous unemployed woman identified only as “Kaynonymous” is a highly educated professional who figures that she will end up in a tent city soon….

“I’m a 99er too. 53, female, single and once on track with an IT career. No one in their right mind would consider me for an IT position after being gone from the field for over 2 years. I have officially been a 99er since May 2010. In Aug. 2010 all of my savings and retirement funds were finally depleted–not only can I no longer make my mortgage payment, I can no longer afford utilities either. I’m just not sure that the 99ers ever had a voice outside of union organizers and even with them it was too little too late. Guess I’ll be seeing ya’ll in the soup kitchens and tent cities. I do still have my tent…”

So we should just extend the long-term unemployment benefits, right?  Well, according to a recent poll commissioned by the National Employment Law Project, 73 percent of Americans want Congress to continue paying out extended unemployment benefits.

But it is not just that simple.

America is broke.

The entire financial system is dying.

The U.S. government desperately needs to stop spending so much money.

But how can we turn our backs on people who are desperately hurting?

There are millions of Americans that have just about reached the end of their ropes.  For example, one 43-year-old woman named Jacqueline recently expressed some of the extreme frustration that she is experiencing on her blog….

I am one of the 6 million poor, unemployed middle-aged Americans struggling without any safety net or income other than food stamps. I have resorted to salvaging scrap metal just to survive while keeping up an increasingly hopeless job search. On May 4th, 2010 just three weeks before my 43rd birthday ago I got slapped with a diagnosis of very early stage glaucoma when I had a six year long overdue optical exam for badly needed new glasses. Without treatment — including ophthalmologist’s glaucoma monitoring exams — I will end up blind and permanently disabled. It’s not a matter of “if”, it’s a matter of when.

As a society, we will be judged by how we treat those who are the most vulnerable.  It can seem easy to bash those who have lost everything, but someday you might end up in that position.  In the following video, police in St. Petersburg, Florida are seen using box cutters to slice up the tents that the homeless were sleeping in….

Hopefully you were deeply disturbed by that video.

We have gotten ourselves into a giant mess, and things are only going to get worse.

Unfortunately, some extremely painful decisions are going to have to be made.

The truth is that we are so deeply in debt that the U.S. government just cannot be spending any extra money right now.

However, we also cannot turn our backs on millions of American families that are going to lose their homes and go hungry if we do not help them.

So what do we do?

What hurting Americans need most of all are not handouts – what they really need are good jobs.

But good jobs are being shipped overseas at a breathtaking pace.  The United States has lost approximately 42,400 factories since 2001.  The greatest economic machine in the history of the world is literally having its guts ripped out, and most of you kept voting in jokers who supported all of this deindustrialization.

For decades, our politicians kept telling us how wonderful globalization would be for America.  We didn’t listen when Ross Perot warned us about “the great sucking sound” that these “free trade” agreements would bring about.

Well, look how all of that turned out.  In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year.  In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.

In case you can’t figure it out, that means that 28 billion dollars of our national wealth was transferred to China in just one month.

This is happening month after month after month.

And yet Barack Obama continues to get up and tell us how wonderful globalism is.  During his recent trip to India, Barack Obama made the following statement….

“This will keep America on its toes. America is going to have to compete. There is going to be a tug-of-war within the US between those who see globalization as a threat and those who accept we live in a open integrated world, which has challenges and opportunities.”

Yes, globalization is a threat.  We should have never merged our economy with the economy of China where workers make less than a tenth of what an American worker makes.

Jobs are flooding out of the U.S. and they are flooding into places like India and China where labor is far, far cheaper.

But without good jobs, how in the world are average Americans going to pay the bills?

The answer is that an increasing number of them are not.  1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.

Incomes are going down.  According to the U.S. Census Bureau, median household income in the United States fell from $51,726 in 2008 to $50,221 in 2009.

Things are getting worse instead of getting better.

And things are going to continue to get worse because the U.S. government goes into more debt every single month, most state and local governments go into more debt every single month, and thanks to America’s exploding trade deficit, tens of billions of our national wealth gets transferred out of the United States every single month.

The U.S. economy is dying.  There are going to be even more tent cities and even more hungry Americans.  The scale of the economic nightmare that we are facing in the years ahead is going to be unimaginable.

So if you get to enjoy a warm dinner and you get to sleep in a warm bed tonight, please consider yourself to be very fortunate.  Someday soon you also may find those things cruelly stripped away from you.

Why Is Indiana Putting Armed Security Guards Into 36 Unemployment Offices Across The State?

Did you ever think that things in America would get so bad that we would need to put armed guards into our unemployment offices?  Well, that is exactly what is happening in Indiana.  Armed security guards will now be posted at all 36 full-service unemployment offices in the state of Indiana.  So why is this happening now?  Well, Indiana Department of Workforce Development spokesman Marc Lotter says that the agency is bringing in the extra security in anticipation of an upcoming deadline when thousands upon thousands of Indiana residents could have their unemployment benefits cut off.  But it is not just the state of Indiana that could have a problem.  In fact, one recent study found that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season unless Congress authorizes another emergency extension of benefits by the end of November.  At this point, however, that is looking less and less likely.

So perhaps all the states will have to start putting armed security guards in their unemployment offices.  The truth is that frustration among unemployed Americans is growing by the day.

Could we soon see economic riots similar to what we have seen in Greece and France?

Let’s hope not.

The following is a video news report about the armed guards that are going into Indiana unemployment offices….

So could things really get out of hand when thousands of unemployed workers in Indiana find out that they aren’t going to get checks any longer?

Indiana Department of Workforce Development spokesman Marc Lotter makes it sound like that is very much on his mind….

“Given the upcoming expiration of the federal extensions and the increased stress on some of the unemployed, we thought added security would provide an extra level of protection for our employees and clients.”

So who is paying for all of this extra security?

The Feds of course.

The additional cost of the new security will be approximately $1 million, and it will be paid for with U.S. government funds designated for the administration of the unemployment system according to Lotter.

This is not a good trend.  As you go through your daily life, just start taking note of the places that now have armed security that did not have armed security five or ten years ago.

Unfortunately, as the U.S. economy goes downhill even further, the amount of security that people feel is “necessary” is likely to go up even more.

So is America going to become an armed camp where the people and institutions with money are protected by armed guards from the hordes of frustrated unemployed workers that can’t feed themselves or their families?

Americans are certainly not in a good mood about the economy.  According to a recent poll conducted by CNBC, 92 percent of Americans believe that the performance of the U.S. economy is either “fair” or “poor”.

The lack of jobs is the main thing that the American people are so mad about.  In fact, it is hard for even highly educated people to find work in 2010.  In America today, 317,000 waiters and waitresses have college degrees. 

People are really hurting and they are getting to the end of their ropes.  Over 41 million Americans are now on food stamps, and one out of every six Americans is enrolled in at least one federal anti-poverty program.  It is getting hard to believe that this is even America anymore.  For many more statistics that reveal the economic horror we are now facing as a nation, please see my previous article entitled “30 Reasons Why People Should Be Getting Really Nervous About The State Of The U.S. Economy“.

But it is not just unemployment that is the problem.  In recent years, millions upon millions of Americans have been forced to take reduced hours or a cut in pay due to the economy.  Millions of others have had to take jobs that barely enable them to survive.  In fact, the number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.

So why aren’t there even close to enough jobs for everyone?  Well, there are a number of contributing factors, including the fact that we have been “offshoring” and “outsourcing” millions of our jobs and now it is really starting to catch up with us.  I have discussed this so many times now that I am starting to sound like a broken record.

But instead of fixing the fundamental problems with our economy, the Federal Reserve wants to print yet another gigantic pile of paper money and throw it at the problem.  It is called “quantitative easing“, and it may help smooth things over for a few months, but it is also going to make our long-term problems even worse.

Unfortunately, the Federal Reserve does not really seem concerned about protecting the value of the U.S. dollar at this point.  Not that they ever did, but it would be nice to see Fed officials paying at least some lip service to the dangers of inflation.

Instead, various Fed officials have been publicly making statements about the need for more quantitative easing for weeks.  Right now they seem desperate to put the American people back to work – even if it ends up crashing the value of the dollar.   

But now even the IMF seems supportive of a dollar devaluation.  On Thursday, the IMF actually said that the U.S. dollar is “overvalued” and that adjustments need to be made.

We’ll see what the Fed decides to do next week.  Most analysts believe that they will announce a quantitative easing program of some sort or another.

But what have we come to as a nation when those who control our economy believe that the best solution to our economic problems is to print another big pile of paper money and chuck it into the system?

We’ve got an absolutely gigantic economic mess on our hands, and none of our “leaders” seem to have any idea about how to fix it.

Meanwhile, millions of unemployed Americans are just going to become more and more frustrated – especially when it gets to the point when they aren’t receiving unemployment checks anymore.

Millions Of Unemployed Americans Now Live As Paupers Even As Foreign Nations Use Sovereign Wealth Funds To Buy Up Huge Chunks Of American Infrastructure

Most Americans still do not understand just how bad the economic horror we are facing really is.  Today, millions of Americans are living as paupers in the land that their foreathers built even as America’s infrastructure is literally being sold out from under their feet by corrupt politicians.  The “official” unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months, and today it takes the average unemployed American about 35 weeks to find a job.  However, the “official” unemployment rate is misleading, because it does not include workers that have quit looking for work or that have had their hours cut back to part-time.  According to 60 Minutes, when you add those “discouraged workers” and “underemployed workers” into the equation the actual rate is about 17 percent, and in the state of California the actual rate is about 22 percent.  Meanwhile, foreign nations are using sovereign wealth funds to buy up staggering amounts of U.S. infrastructure.  America is quite literally for sale in 2010.  All across the United States, highways, ports, toll roads and even parking meters are being gobbled up by foreign powers.  We have shipped massive amounts of wealth and jobs to other nations, and now those very same countries are turning around and buying huge amounts of U.S. infrastructure with the gigantic piles of dollars that they have accumulated.    

Widespread long-term chronic unemployment was something that America was never supposed to see again.  Our leaders promised us that the U.S. financial system was so strong that we would never have another “Great Depression” in our lifetimes.  But then the financial crisis of 2008 happened.  Unprecedented numbers of Americans started losing their jobs and the U.S. Congress did something that it had never done before.  Congress decided to extend unemployment benefits all the way out to 99 weeks.

Doing that has cost U.S. taxpayers approximately $100 billion dollars to this point, but we were promised that it was a “temporary” fix and that it would give displaced U.S. workers a chance to find new jobs. 

Surely any industrious American worker could get another job within 99 weeks, right?

Wrong.

Today, there are at least 1.5 milion “99ers” – those Americans that have completely exhausted all 99 weeks of unemployment benefits and that still do not have jobs. 

Sadly, as bad as that number sounds, it is likely to keep growing.  Today, over one-third of all unemployed Americans have already been unemployed for at least one year.  If this trend continues, we are going to end up with millions of “99ers”.

60 Minutes recently did a report on some of these “99ers”.  Many of them are very highly educated and very highly qualified.  If you have not seen this 60 Minutes report yet, you have got to take few minutes to sit down and watch it.  This video is so shocking that many of you will have your jaws on the floor by the time you finish watching it….  

http://www.youtube.com/watch?feature=player_embedded&v=CwpdGyIY2fQ

So is there much reason for these “99ers” to be optimistic?

No, not really.

In fact, there are some indications that unemployment in America is actually getting worse.  Gallup’s measure of unemployment, which is not adjusted for “seasonal factors”, exhibited a sharp increase in the month of September.  According to Gallup, unemployment has increased from 8.9% in July to 9.3% in August and to 10.1% in September.

In addition, the seasonally-adjusted “Alternate Unemployment Rate” compiled by Shadow Government Statistics also indicates that unemployment in the U.S. is going up once again.  The Alternate Unemployment Rate calculated by SGS reflects estimated “long-term discouraged workers”, which the U.S. government stopped keeping track of back in 1994….

But it is not just the massive number of Americans that are completely unemployed that we need to be concerned about.  The truth is that more Americans than at any other time in recent history are working part-time jobs because that is all they can find.  The number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.

Meanwhile, sovereign wealth funds from nations such as Saudi Arabia, China, Kuwait, Libya, Singapore and the United Arab Emirates are buying up highways, ports, toll roads and even parking meters from coast to coast.

So exactly what is a sovereign wealth fund?

Well, just think of it as a huge mountain of state-owned money that roams about the countryside looking for assets to gobble up.

In a recent piece for Rolling Stone, Matt Taibbi described some of the U.S. infrastructure assets that these sovereign wealth funds are buying up….

A toll highway in Indiana. The Chicago Skyway. A stretch of highway in Florida. Parking meters in Nashville, Pittsburgh, Los Angeles, and other cities. A port in Virginia. And a whole bevy of Californian public infrastructure projects, all either already leased or set to be leased for fifty or seventy-five years or more in exchange for one-off lump sum payments of a few billion bucks at best, usually just to help patch a hole or two in a single budget year.

It turns out that U.S. politicians have figured out that they can help solve their budget problems by selling off or leasing out pieces of infrastructure.  Foreign nations with money to burn have been glad to come in and start buying a lot of this infrastructure up.  Today, it is estimated that the rest of the world currently owns several trillion dollars more of America than America owns of the rest of the world.  Later on in his article, Taibbi noted that the trend toward selling off pieces of infrastructure only seems to be accelerating….

At this writing Nashville and Pittsburgh are speeding ahead with their own parking meter deals, as is L.A. New York has considered it, and the city of Miami just announced its own plans for a leasing deal. There are now highways, airports, parking garages, toll roads — almost everything you can think of that isn’t nailed down and some things that are — for sale, to bidders unknown, around the world.

Sadly, both the number and the value of major acquisitions made by sovereign wealth funds approximately doubled during the first half of 2010.

Instead of being the “land of the free”, we are rapidly becoming the “land that has been leased out to foreign nations”.

So where in the world did these sovereign wealth funds get all this money?

Well, they got it from us of course.

Every single month, the United States buys massive amounts of oil from the Middle East and massive amounts of cheap plastic crap from China.  The rest of the world buys a bunch of stuff from us too, but not nearly as much as we buy from the rest of the world.

So every single month tens of billions of dollars that used to belong to the American people ends up in the hands of foreigners.  Now some of that money is returning to this country and is being used to buy up our infrastructure.

Many of these highways and toll roads that are being sold off had already been completely paid for.  Can you imagine the frustration of the taxpayers in many of these areas when they realize that a road that they have already completely paid for with their tax dollars has been sold out from underneath them?

Another place that all these U.S. dollars held by foreigners is going is into U.S. Treasuries.  In fact, the federal government very much encourages this.  After all, we have to finance our exploding debt somehow. 

In essence, first we made some folks in the Middle East and in Asia incredibly wealthy, and now we are asking them to please lend that money back to us so that we can continue living far beyond our means.

Today, the national debt of the United States is rapidly approaching 14 trillion dollars.  An increasing percentage of this debt is owned by foreigners.

The borrower is the servant of the lender, and we are rapidly becoming enslaved to the rest of the world.

This is national economic suicide, but our politicians have become so addicted to debt that there doesn’t seem to be much hope that things can be turned around any time soon.

Where Are The Jobs?

Most Americans don’t really care about the economic minutiae that many of us who study the U.S. economy love to pour over.  When it comes to the economy, the typical American citizen just wants to be able to get a good job, make a decent living and put bread on the table for the family.  For generations, this arrangement has worked out quite well.  The U.S. economy has provided large numbers of middle class jobs and the American people have worked hard and have helped this nation prosper like no other.  But now people are starting to notice that something has shifted.  Millions of people are looking around and are realizing that the jobs that are supposed to be there are not there anymore.  The American people are still working hard (and in many cases harder than ever) but all of that hard work is producing fewer and fewer rewards.  Often politicians will placate voters by telling them that they are working harder and harder for less and less.  That tends to ring true with voters because that is a very accurate description of what so many of them are actually experiencing, but what the politicians don’t tell us is that they are the ones to blame for the situation that we are in.  As millions of jobs become obsolete because of technology and millions of other jobs are shipped overseas, our politicians tell us over and over that we can “compete” with anyone and that if we will just go out and get some more education we can make it happen.  But those of us who are extremely over-educated know what a fraud that line is.  The truth is that there are not nearly enough jobs for all of us no matter how “educated” we are.  This is creating a lot of anger and frustration, and now even the IMF is warning that we could see “an explosion of social unrest” if high unemployment persists.

But what can be done?  You can’t force large corporations to hire people.  The reality is that there are a couple of huge factors that have brought us to this point.  First of all, advanced technology means that big corporations need fewer people to do the same amount of work now.  Secondly, the globalization of our economy means that U.S. workers have now been merged into a global labor pool where they are in direct competition with workers who are more than happy to make less than a dollar an hour on the other side of the world.

This all means that the labor of American workers is less valuable to global corporations than it ever has been before.  Advanced technology and computers have enabled corporations to operate leaner and meaner.  If they do need some old-fashioned muscle for certain tasks they can always run out and set up a facility in some third world nation where they can pay people close to slave labor wages and where they don’t have to worry much about taxes, regulations, unions, health benefits or pension plans.  

What did you think was going to happen when the United States entered into all of these “free trade” agreements with nations around the world that did not have minimum wage laws?

U.S. corporations are not in existence to provide the American people with jobs.  They are in existence to make money.  If they can make more money by shipping jobs overseas, then that is exactly what they are going to do.

According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies skyrocketed 30 percent to 10.1 million. During that same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.

Are you starting to see the picture?

Global corporations based in the U.S. have been creating lots of jobs – just not in the United States.

In fact, things only seem to be accelerating.

In 2008 alone, U.S. employment at American multinational corporations fell by 445,500.

In the old days, you could give tax breaks to U.S. firms and that would spur them to do more business and to hire more workers.  But today, if U.S. multinationals decide they wish to expand they will just go hire more third world workers and pocket the rest of the profits for themselves.

The reality is that we are facing a very disturbing long-term trend in the United States.  Today, over half of all unemployed workers in the United States have been out of work for over six months.  In fact, the duration of unemployment in the United States has spiked up to the highest level it has been at since World War II.

This has created a growing subclass of people in the United States who feel that the system has failed them.  The anger and the frustration in the country is rising every day.  You can almost feel it.

In fact, the IMF is warning that we are at risk of “an explosion of social unrest” due to this unemployment crisis.

The head of the IMF, Dominique Strauss-Kahn, recently made the following statement at an Oslo jobs summit with the International Labour Federation….

“The labour market is in dire straits. The Great Recession has left behind a waste land of unemployment.”

So exactly what is going to turn that around?

Are millions of jobs going to suddenly hop up and return home from overseas?

Is the U.S. government going to suddenly eliminate a whole raft of taxes and regulations and are U.S. workers going to suddenly become much cheaper?

Is the U.S. trade deficit crisis suddenly going to reverse and turn into huge trade surpluses for the United States?

Of course none of those things is going to happen.

America is going to continue to bleed jobs, wages inside the United States are going to continue to be forced down and the standard of living for most Americans is going to continue to deteriorate.

Plus, if the American people don’t have good jobs, they can’t buy homes.  In fact, a growing number of Americans are finding out that they can’t even afford the homes they are in right now.  CNBC is reporting that the nation’s banks repossessed a record number of homes in August.

But for many Americans, a foreclosure is just the beginning of their problems.  People are falling out of the middle class at an alarming rate.  Approximately 45 million Americans were living in poverty during 2009.  That is an absolutely astounding figure.

The American people are getting mad and faith in the economy is plummeting.  According to Gallup, confidence in the economy is way down compared to to the same period last year.

So what is going to happen when (not if) things get even worse?

Well, some investors are already anticipating rough times ahead and are flocking to commodities.  The price of gold soared to a record intra-day high of $1,276.50 an ounce on Tuesday, and the price of gold and other commodities will probably continue to climb as economies around the world continue to destabilize.

These are very, very difficult times that we are moving into.  There are not going to be nearly enough jobs for everyone.  People you know are going to be unemployed.  People you know are going to lose their homes.  People you know might even end up living on the streets.

Just hope that you don’t end up being one of them.

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