The Beginning Of The End
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This Is What An Economic Depression Looks Like In The 21st Century

Do you want to see what a 21st century economic depression looks like?  Just look at Greece.  Once upon a time, the Greek economy was thriving, the Greek government was borrowing money like there was no tomorrow and Greek citizens were thoroughly enjoying the bubble of false prosperity that all that debt created.  Those that warned that Greece was headed for a financial collapse were laughed at and were called "doom and gloomers".  Well, nobody is laughing now.  You see, the truth is that debt is a very cruel master.  Greeks were able to live way beyond their means for many, many years but eventually a day of reckoning arrived.  At this point, the Greek economy has been in a recession for five years in a row, and the economic crisis in that country is rapidly getting even worse.  It was just recently announced that the overall rate of unemployment in Greece has soared above 20 percent and the youth unemployment rate has risen to an astounding 48 percent.  One out of every five retail stores has been shut down and parents are literally abandoning children in the streets.  The frightening thing is that this is just the beginning.  Things are going to get a lot worse in Greece.  And in case you haven't been paying attention, these kinds of conditions are coming to the United States as well.  We are heading down the exact same road as Greece went down, and the economic pain that this country is eventually going to suffer is going to be beyond anything that most Americans would dare to imagine.

All debt spirals eventually come to an end.  For years, Greece borrowed huge amounts of very cheap money, but there came a point when the debt became absolutely strangling and the rest of the world refused to lend the Greek government money at such cheap rates anymore.

Greece would have defaulted long before now if the EU and the IMF had not stepped in to bail them out.  But along with those bailouts came strings.  The EU and the IMF insisted that the Greek government cut spending and raise taxes.

Well, those spending cuts and tax increases caused the economy to slow down.  Tax revenues decreased and deficit reduction targets were missed.  So the EU and the IMF insisted on even more spending cuts and tax increases.

Even after all of the spending cuts and all of the tax increases that we have seen, the debt to GDP ratio in Greece is still higher than it was before the crisis began.  Today, the Greek national debt is sitting at 142 percent of GDP.

Now the EU and the IMF are demanding even more austerity measures before they will release any more bailout money.

Needless to say, the Greek people are pretty much exasperated by all of this.  They created this mess by going into so much debt, but they certainly don't like the solutions that are being imposed upon them.

Protesters in Greece are absolutely outraged that the EU and the IMF are now demanding a 22 percent reduction in the minimum wage.

Most families in Greece are just barely surviving at this point.  Unfortunately, Greece is probably looking at depression conditions for many years to come.

Over the past three years, the size of the Greek economy has shrunk by 16 percent.

In 2012, it is being projected that the Greek economy will shrink by another 5 percent.

Sadly, that projection is probably way too optimistic.

Over the past couple of months, it has been like someone has pulled the rug out from under the Greek economy.  Just check out the following numbers from an article in the Telegraph by Ambrose Evans-Pritchard....

Another normal day at the Hellenic Statistical Authority.

We learn that:

Greece's manufacturing output contracted by 15.5pc in December from a year earlier.

Industrial output fell 11.3pc, compared to minus 7.8pc in November.

Unemployment jumped to 20.9pc in November, up from 18.2pc a month earlier.

I have little further to add. This is what a death spiral looks like.

Can you imagine unemployment going up by 2.7 percent in one month?

This is what a 21st century economic depression looks like.

And needless to say, civil unrest is rampant in Greece.

The following is how a USA Today article described some of the protests that we saw in Greece this week....

Scores of youths, in hoods and gas masks, used sledge hammers to smash up marble paving stones in Athens' main Syntagma Square before hurling the rubble at riot police.

The country's two biggest labor unions stopped railway, ferry and public transport schedules, and hospitals worked on skeleton staff while most public services were disrupted. Unions were planning protests in Athens and other cities around midday.

Greek citizens are exasperated by the endless rounds of austerity that are being imposed upon them.  They wonder how far all of this is going to go.

How much higher can taxes go in Greece?  Greece already has tax rates that are among the highest in Europe....

Greece has the third highest rate of VAT in Europe, second highest gas/petrol tax, third highest tax on social insurance contributions, fifth highest VAT on alcohol, highest property tax and one of the worst corporate tax rates, without the quality of living or competitiveness to match.

How much farther can government pay be cut?  Greek civil servants have had their incomes slashed by about 40 percent since 2010.

How would you feel if your pay was reduced by 40 percent?

Large numbers of Greeks are rapidly reaching the end of their ropes.  The following is from a recent article in the Independent....

"People are scared and haven't really realised what's happening yet," George Pantsios, an electrician for the country's public power corporation, said. He has only been receiving half of his €850 monthly wage since August. "But once we all lose our jobs and can't feed our kids, that's when it'll go boom and we'll turn into Tahrir Square."

Instead of turning violent, others are simply giving in to despair.  According to the Daily Mail, large numbers of Greek children are being abandoned because their parents simply cannot afford to take care of them anymore.  The note that one mother left with her little toddler was absolutely heartbreaking....

One mother, it said, ran away after handing over her two-year-old daughter Natasha.

Four-year-old Anna was found by a teacher clutching a note that read: 'I will not be coming to pick up Anna today because I cannot afford to look after her. Please take good care of her. Sorry.'

Sadly, there are an increasing number of Greeks that are giving up on life entirely.  The number of suicides in Greece rose by 40 percent during just one recent 12 month time period.

But we haven't even seen the worst in Greece yet.  The worst is still yet to come.

And the people of Greece are going to get angrier and angrier and angrier.

According to one recent poll, about 90 percent all of Greeks are unhappy with the interim government led by Prime Minister Lucas Papademos.

This week, that government has started to fall apart.  Over just the past few days, 6 members of the 48-member government cabinet have resigned.  Not only is there real doubt if the new austerity measures will be approved, there is very real doubt if this government will be able to hold together much longer.

Frustration with the EU and the IMF has reached a fever pitch in Greece.  Just check out what Reuters is reporting....

In a letter obtained by Reuters on Friday, the Federation of Greek Police accused the officials of "...blackmail, covertly abolishing or eroding democracy and national sovereignty" and said one target of its warrants would be the IMF's top official for Greece, Poul Thomsen.

So what is going to happen next in Greece?

The truth is that nobody knows.

But whatever kind of "deals" are reached, the reality is that nothing is going to keep Greece from continuing to experience depression-like conditions for quite some time.

Unfortunately, Greece is not an isolated case.

Portugal, Ireland, Italy and Spain are all going down the same path and Europe does not have enough money to bail all of them out.

To get an idea of how much money it would take to bail out the financially troubled nations of Europe, just check out this infographic that was recently posted on ZeroHedge.

A day of reckoning is coming for the United States as well.  As CNBC recently noted, the U.S. debt problem is far worse than the European debt problem is.

That is why I have written over and over about the U.S. national debt and about how the U.S. government is spending too much money.

Right now, the U.S. government is still able to borrow gigantic mountains of very cheap money and is spending money as if tomorrow will never come.

Well, just like we saw in Greece, when debt gets out of control a day of great pain eventually arrives.

What we are watching unfold in Greece right now is coming to America.

You better get ready.

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  • Ralphieboy

    I live and work in Athens off and on a few months annually, residing in a working class suburb in a tiny apartment. The “riots” occur only in a few square block area in central Athens, Syntagma Square. The vast majority of people do not participate–they are too busy simply trying to survive. And Greeks are survivors with strong family and religious values. My employee there makes excellent income, and with this, he is able to support his very extended family.
    Bug there has long been heavy corruption in the government. Central banks provide hefty funds to politicians who have lavished the population with benefits so as to maintain and increase power. I root the present problem back to the central banks. They knew what they were doing, and they continue to do same to us in the USA via the
    ral Reserve

  • Proftel

    There will be a “reset” logo.

    Probably War, unfortunately.

    :-/

  • Sceptic

    Sandy CPA. Why do you believe that cutting spending will not lower economic growth? As far as gdp is calculated every dollar of government spending increases gdp output.

    Your statment that we cannot increase taxes but we have to decrease spending is an oxymoron. As a CPA you should know this. This is simple math…

    • 007

      Government spending is terribly inefficient and the money from government spending must be borrowed. This borrowed money takes money that would be available to be invested in the private sector. Even the CBO admits that government spending does not facilitate private sector growth. You are correct that our beurocrats and all of the job killing anti business government spending is added to our GDP calculation to pad the statistic. How insane! All of these beuracrats and their worthless, unproductive and often counter productive services and spending are counted as OVER 24% of our national GDP. How can you not get that this is what is drowning our economy.

  • Otown Right Guy

    This is what happens when you embrace godless communism/socialism and its welfare state like the Greek people did.

    But at least they weren’t pretending to be a Christian nation while dropping bombs on others who were not bothering them. We have worshipped at the altar of the dollar, while we waved the flag as our government committed acts of mass murder and mayhem around the world. America’s “reward” could be a lot worse.

    • Peter

      There is no such thing as a god.

      • tak

        cant think of anything to say to you peter,but one day every knee will bow before GOD and every tongue will confess he is LORD please ask Jesus into your heart today ,bow today and go to heaven or bow to him after the rapture and go to hell,this is not my opinon but the word of GOD

        • metalbuoy

          ******** people like peter… we just elected obama to a second term, and i lost interest in trying to save em…. every man for himself, the racists are about to grab control on us like never before seen since the nazis did it.

  • Arius

    We are watching the death march of the West.

  • Pingback: This Is What An Economic Depression Looks Like In The 21st Century | Sovereign Independent

  • jim

    The math is simple. Bush came into office with 5.6 trillion surplus, left with 10 trillion deficit. 15.6 trillion Bush spent. Almost 2 trillion a year increase. Lets get repubs back in there so they can spend twice as much as Obama… Wake up people, Republicrats are all the same they just heard their sheople different and brainwash the easy ones.

    • 007

      Wrong. Obama with democratic control in both houses increased the deficit more than every President combined through Bush’s first term. The democrats are the ones resisting any cuts in government spending. You can have your own opinion but not your own facts.

      • 007

        Here is Obama’s version of cutting spending.

        Obama.. I am on a crash diet. I have only gained 10 pounds last month, and iI weigh just 350 pounds now. Isn’t that great!

        Citizen… You gained 10 pounds that doesn’t sound very good.

        Obama…Oh yea, this is great. You see, I was previously planning to gain 20 pounds so I have cut spending in half. This is big, big progress.

  • Gary2

    Conservatism Thrives on Low Intelligence and Poor Information. Reading many of the replies on this site this is so true. It is hard to believe people can think the way conservatives do. Its akin to believing the world is flat. How could anyone think that way?

    Friends I am passing this along so the conservatives can reassess their world view-you too Michael.

    The Canadian study published last month in the journal Psychological Science, which revealed that people with conservative beliefs are likely to be of low intelligence.

    Links:http://www.alternet.org/story/154082/conservatism_thrives_on_low_intelligence_and_poor_information?akid=8246.146440.OZbL_H&rd=1&t=8

    • http://lnx-bsp.net/ Tel

      And what does Socialism thrive on? High intelligence? I guess that’s why Chairman Mao murdered everyone who wore glasses.

      • Gary2

        And what does Socialism thrive on? High intelligence?

        YES-you got something correct for a change!!!

        MAO was communist big difference but like I said conservatives do not understand complex things like the difference between socialism and communism. This is why they use the terms interchangeably.

        You pretty much made my point for me.

    • Rodster

      You have it backwards Gary2 your intelligence speaks pretty loud for what liberalism and socialism can do for humans.

    • Rodster

      When the Greek Socialist Gov’t which is fiscally bankrupt, and i’m looking at you Gary2 who embraces socialism. They are paying benefits to pedophiles, sadomasochists and exhibitionist who are considered disabled.

      That shows the low intelligence level of socialist and liberals. No Conservative would embrace that. Conservatives have higher standards.

      • Lacy

        Gary2 is one of the slackers who think they will get something for nothing.

    • 007

      Typical liberal insulting comment. You will never hear Gary ever try to defend his socialist positions. He will never explain how taxing the rich could ever balance the budget and cure our ailing economy. Instead he simply slanders those who he disagrees with. Of course, the reason he does not try to refute conservative positions is because he can not make a serious argument.

      Gary, I would think you would be much happier in Greece with all those geniuses that created that socialist utopia. Greece…the finished work of socialist policies.

    • Gadabout

      This is not helpful. Undoubitably many conservatives are racists but the majority are not. How is living within your means considered to be an unintelligent idea? Fact is, communism/socialism/marxism has NEVER been successful anywhere.

    • Syrin

      You just can’t help being a moron can you GARY ?

      Liberals genetically predisposed to ignore reality, base decisions on raw emotion:

      http://www.americanthinker.com/blog/2010/11/genetics_and_politics.html

      Liberals on the wrong side of history and predisposed to tyranny:

      http://www.americanthinker.com/2012/01/on_the_intellectual_inferiority_of_liberalism.html

      Liberals are racist: http://www.americanthinker.com/blog/2011/05/the_racism_racists.html

      Hey GARY, I literally have over two dozen more links for this subject. keep trying bigot.

    • Syrin

      Let’s not forget liberals don’t give to charity: http://www.freerepublic.com/focus/f-news/2254161/posts

      So at least you react out of emotion, don’t adapyt to reality or history, have a predisposition to tyranny (ALL despots come from the left, it’s called HISTORY GARY), don’t give to charity AND have racist policies.

      WELL DONE !!!

    • Syrin

      By the way, that artivle has already been discredited by the selectuion bias of the authors, GARY!

      Tell me GARY, how smart is the prison pop’l which is 95+% liberal? How about all the welfare dependents, GARY ?!?!?

      See, THAT HUGE voting chunk of YOUR base is NEVER INCLUDED IN THESE STUDIES !!!!!!!!!!!!!!!!!!

      MORON@!

  • Peter

    What stops Greece from printing physical Euro’s? Just print billions and billions to get back at Germany.

    Every country has the right to print its own currency. For Greece, that’s the Euro. Let the Greek people spent those Euro’s either in Greece or somewhere else in Europe.

    • 007

      No they can’t print Euros per their deal with the EU. That is their problem. They could start printing their own other currency. However, if they did they would still have to pay back their loans in euros. This has the potential to become like Weimar Germany after WW1.

    • tak

      2nd dumb post from you, only the country with the worlds reserve currency can print money,if greese whats to but oil they need to buy it with dollars they can not buy it with euros, so only US can print money

  • Cinderella Man

    Michael the American Dream website is being censored as of 2 pm MST. I have tried to access the site from my mobile and instead of showing your posts it reads sorry you cant find what your looking for. Very strange.

    • Michael

      It is up for me and I just posted a new article on it.

      If you continue to have problems with it please let me know.

      Michael

  • mondobeyondo

    Confucius say, “As ‘plastics’ was career choice in 1967 movie ‘The Graduate’, word today shall be ‘Mandarin’. No, not Mandarin oranges. Mandarin Chinese!”

  • Gary2

    Importantly, it shows that prejudice tends not to arise directly from low intelligence but from the conservative ideologies to which people of low intelligence are drawn. Conservative ideology is the “critical pathway” from low intelligence to racism.

    I told you that conservatives are mostly all racist! Study proves it!

    • Rodster

      Stop trolling, you can’t possibly be as stupid as you sound. Geez I hope not or the human race is in deep..deep trouble.

    • mondobeyondo

      The only race that really matters is the 100 meter dash. Hee!

  • Ralphieboy

    So Gary2, does this mean you are a propenent of eugenics, a concept heartily embraced by thr progressive community in the early 20th century?
    Studies are only as accurate as the selective data put into them. As to IQ, i consider those who lack basic reason and logic skills to be of low intelligence, hence I seriously doubt your capability to think critically. You might oick up Eric Hoffeer’s True Belieever, which clearly illustrateshow socialists rely on low intelligence ofcertain groups to enhace, their causes. Most of my friends are highly successful professionals in their respective fields, and all are extremely well read and intelligent. None are liberal, kool aid socialists like yourself.

    If you in fact had the capability for critical, independent thought, you would be fully aware of the fact that no centrally planned economy has ever lasted for long, and always has an ugly end. My guess is that you have never done any in-depth study of economics, and likely have little grasp of history. You obviously lack these fundamental tools, preferring to rely on the tired old mantras of your socialist heros. No worries. History is littered with failures like you. Too bad the rest of us low IQ duncees have to pay for yourr crimes in humanity.

  • http://helpfixamericafirst.blogspot.com American

    Many Americans are confused about how U.S. corporations can be raking in record profits yet not paying any income taxes. The way most of them do it is through the “pass-through.”

    http://en.wikipedia.org/wiki/S_corporation

    Despite record high corporate profits, about two-thirds of U.S. companies don’t pay a dime in income taxes to the federal government and the percentage of U.S. companies doing this is increasing.

    The ones that still do pay income taxes employ an army of accountants to take advantage of loopholes and to shield profits in complex tax shelters to reduce them as much as possible but let’s look at the ones that don’t pay any income taxes (often despite record profits).

    These companies are called pass-throughs, and rather than taking advantage of tax loopholes by hiring a brigade of accounts, they instead are structured to shuttle company profits along to investors (e.g. other names for “investors” are “shareholders” and “owners”).

    Pass-through companies use a special structure to pass along profits to investors who then are supposed to pay income taxes. Despite taxes for the wealthy being at historically low rates currently, they funnel the money into hedge funds (which Congress says don’t have to declare their values if they are family-owned) and other tax sheltered vehicles.

    Pass-throughs are legal and have been encouraged by Congress and state governments which broadened their scope recently.

    The Wall Street Journal reports that 69 percent of U.S. corporations were organized as nontaxable businesses in 2008, up from 24 percent in 1986, and that the percentage is actually higher when including partnerships and sole proprietors. In total, about 75% of U.S. businesses pay zero income taxes today and that number is rising thanks to the pass-through.

    Large companies are often structured as pass-throughs, with an estimated 60 percent of U.S. businesses with profits of $1 million comprising this category, the largest such percentage in any developed country.

    http://bottomline.msnbc.msn.com/_news/2012/01/10/10094176-companies-that-pay-no-federal-income-tax-on-the-rise

    The profits “pass through” the corporations right into the wealthy’s hedge funds where they pay a less percentage than the middle-class.

    If that wasn’t bad enough, our politicians bestow money grants to them that comes directly out of the pockets of U.S. taxpayers. They also allow our government to process American businesses applications to insource foreign workers to displace American workers and to offshore and outsource American jobs, capital investment, and innovation enmasse to foreign countries and workers. For example, in 2010 the U.S. government processed 422,228 employer applications requesting 851,556 foreign workers in 2010 so American corporations can give foreign workers American jobs right here on U.S. soil.

    http://www.foreignlaborcert.doleta.gov/pdf/oflc_2010_annual_report_master.pdf

    Much of the “job growth” claimed is going directly to these insourced foreign workers and immigrants both legal and illegal. The Center for Immigration Studies (CIS) was able to show that in Texas, for example, between 2001 and 2007 81% of all new job growth went to immigrant workers (both legal and illegal) instead of American natural born citizens.

    http://cis.org/immigrants-filled-most-new-jobs-in-Texas

    Our government also enables a broken U.S. immigration system that fostered the establishment of Spanish-speaking immigrant networks all over the SouthWest that block American citizens from working in the U.S. as those jobs go directly to the friends and family of the immigrants bypassing American workers. A UCLA study showed that a weak economy in the state of California was the result of more than two million Spanish-speaking immigrant workers who were receiving their pay off the books without paying taxes. These immigrant networks only hire other immigrants.

    http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/09/28/BUG92EURPQ1.DTL&type=business

    Yet our politicans make what remains of the American worker pay the lion’s share of the country’s bills (the individual income tax has been the largest single source of federal revenue since 1950) afterwards while allowing U.S. businesses to bypass the American worker and offshore/outsource/insource American jobs, capital investment, and innovation to foreign countries and workers.

    Then the politicians look the American people in the eye and tell them we have to reduce taxes on corporations and the wealthy so the country can pay its bills.

  • Doc Strange

    If you are prepping for a post-disaster life, you must have adequate supplies of antibiotics and other prescription meds. It’s hard to get these from most doctors, but there is a solution. Go to survivinghealthy.com and they can help. No controlled substances, but antibiotics and most prescription meds in quantity. I am a satisfied customer and have no connection to them.

  • Kenuck

    Just default..across the board..ALL debt forgiven.Then print some money..give us all a jumpstart..one more “boom”, we promise not to piss it all away this time.

  • Jim

    Sorry folks, seems you all have one big problem. Politics. Your so bloody blinded due to these political conflicts, that you all over look the high unemployment, the increasing infaltion and the declining value of the greenback. Every dollar the Federal Reserve prints is reducing the worth of existing greenbacks. Your trying to pay interest with borrowed money, like so many have tried with home credit. One card used to pay a different card, but the dept just gets bigger. Beware, depression is getting ever closer and the Banks are laughing at you all. Guess your all too young to remember how Germany did what the Fed. is doing. Soon it’ll be $1000US for a loaf of bread, if you can find one to buy. I don’t care what your politics are, your bankrupt and sinking.

  • Imm

    This planet will be dark forever….

  • JackTheRipper

    yes something can still be done but will it No because the government is only worried about seeing how long they can put this off instead of solving it…..It’s going to happen people this is something that can not be avoided……I advise all you people living in disbelief, doubt, and fear to wake up and fight for your very survival.

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