Business

Why A Greek Exit From The Euro Would Mean The End Of The Eurozone

What was considered unthinkable a few months ago has now become probable.  All over the globe there are headlines proclaiming that a Greek exit from the euro is now a real possibility.  In fact, some of those headlines make it sound like it is practically inevitable.  For example, Der Spiegel ran a front page story the other day with the following startling headline: “Acropolis, Adieu! Why Greece must leave the euro”.  Many are saying that the euro will be stronger without Greece.  They are saying things such as “a chain is only as strong as its weakest link” and they are claiming that financial markets are now far more prepared for a “Grexit” than they would have been two years ago.  But the truth is that it really is naive to think that a Greek exit from the euro can be “managed” and that business will go on as usual afterwards.  If Greece leaves the euro it will set a very dangerous precedent.  The moment Greece exits the euro, investors all over the globe will be asking the following question: “Who is next?”  Portugal, Italy and Spain would all see bond yields soar and they would all likely experience runs on their banks.  It would only be a matter of time before more eurozone members would leave.  In the end, the whole monetary union experiment would crumble.

As I have written about previously, New York Times economist Paul Krugman is wrong about a whole lot of things, but in a blog post the other day he absolutely nailed what is likely to soon unfold in Greece….

1. Greek euro exit, very possibly next month.

2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.

3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.

3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.

4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:

4b. End of the euro.

By itself, Greece cannot crash the eurozone.  But the precedent that Greece is about to set could set forth a chain of events that may very well bring about the end of the eurozone.

If one country is allowed to leave the euro, that means that other countries will be allowed to leave the euro as well.  This is the kind of uncertainty that drives financial markets crazy.

When the euro was initially created, monetary union was intended to be irreversible.  There are no provisions for what happens if a member nation wants to leave the euro.  It simply was not even conceived of at the time.

So we are really moving into uncharted territory.  A recent Bloomberg article attempted to set forth some of the things that might happen if a Greek exit from the euro becomes a reality….

A Greek departure from the euro could trigger a default-inducing surge in bond yields, capital flight that might spread to other indebted states and a resultant series of bank runs. Although Greece accounts for 2 percent of the euro-area’s economic output, its exit would fragment a system of monetary union designed to be irreversible and might cause investors to raise the threat of withdrawal by other states.

In fact, yields on Spanish debt and Italian debt are already rising rapidly thanks to the bad news out of Greece in recent days.

What makes things worse is that a new government has still not formed in Greece.  It looks like new elections may have to be held in June.

Meanwhile, the Greek government is rapidly running out of money.  The following is from a Bank of America report that was released a few days ago….

“If no government is in place before June when the next installment (of loan money) from the European Union and International Monetary Fund is due, we estimate that Greece will run out of money sometime between the end of June and beginning of July, at which point a return to the drachma would seem inevitable”

In the recent Greek elections, parties that opposed the bailout agreements picked up huge gains.  And opinion polls suggest that they will make even larger gains if another round of elections is held.

The Coalition of the Radical Left, also known as Syriza, surprised everyone by coming in second in the recent elections.  Current polling shows that Syriza is likely to come in first if new elections are held.

The leader of Syriza, Alexis Tsipras, is passionately against the bailout agreements.  He says that Greece can reject austerity because the rest of Europe will never kick Greece out of the eurozone.  Tsipras believes that the rest of Europe must bail out Greece because the consequences of allowing Greece to go bankrupt and fall out of the eurozone would be far too high for the rest of Europe.

A spokesman for Syriza, Yiannis Bournos, recently told the Telegraph the following….

“Mr Schaeuble [Germany’s finance minister] is pretending to be the fearless cowboy on the radio, saying the euro is secure [against a Greek exit]. But there’s no way they will kick us out”

So Greece and Germany are playing a game of chicken.

Who will blink first?

Will either of them blink first?

Syriza is trying to convince the Greek people that they can reject austerity and stay in the euro.  Syriza insists that the rest of Europe will provide the money that they need to pay their bills.

And most Greeks do actually want to stay in the euro.  One recent poll found that 78.1 percent of all Greeks want Greece to remain in the eurozone.

But a majority of Greeks also do not want anymore austerity.

Unfortunately, it is not realistic for them to assume that they can have their cake and eat it too.  If Greece does not continue to move toward a balanced budget, they will lose their aid money.

And if Greece loses that aid money, the consequences will be dramatic.

Outgoing deputy prime minister of Greece Theodoros Pangalos recently had the following to say about what would happen if Greece doesn’t get the bailout money that it needs….

“We will be in wild bankruptcy, out-of-control bankruptcy. The state will not be able to pay salaries and pensions. This is not recognised by the citizens. We have got until June before we run out of money.”

If Greece gets cut off and runs out of money, it will almost certainly be forced to go back to using the drachma.  If that happens there will likely be a “bank holiday”, the borders will be secured to limit capital flight and new currency will be rapidly printed up.  It would be a giant mess.

In fact, there are rumblings that the European financial system is already making preparations for all this.  For example, a recent Reuters article had the following shock headline: “Banks prepare for the return of the drachma”

But a new drachma would almost certainly crash in value almost immediately as a recent article in the Telegraph described….

Most economists think that a new, free-floating drachma would immediately crash by up to 50 percent against the euro and other currencies, effectively halving the value of everyone’s savings and spelling catastrophe for those on fixed incomes, like pensioners.

A Greek economy that is already experiencing a depression would get even worse.  The Greek economy has contracted by 8.5 percent over the past 12 months and the unemployment rate in Greece is up to 21.8 percent.  It is hard to imagine what Greece is going to look like if things continue to fall apart.

But the consequences for the rest of Europe (and for the rest of the globe) would be dramatic as well.  A Greek exit from the euro could be the next “Lehman Brothers moment” and could plunge the entire global financial system into another major crisis.

Unfortunately, at this point it is hard to imagine a scenario in which the eventual break up of the euro can be avoided.

Germany would have to become willing to bail out the rest of the eurozone indefinitely, and that simply is not going to happen.

So there is a lot of pessimism in the financial world right now.  Nobody is quite sure what is going to happen next and the number of short positions is steadily rising as a recent CNN article detailed….

After staying quiet at the start of the year, the bears have come roaring back with a vengeance.

Short interest — a bet on stocks turning lower — topped 13 billion shares on the New York Stock Exchange at the end of last month. That’s up 4% from March and marks the highest level of the year.

If the eurozone is going to survive, Greece must stay a part of it.

Instead of removing the weakest link from the chain, the reality is that a Greek exit from the euro would end up shattering the chain.

Confidence is a funny thing.  It can take decades to build but it can be lost in a single moment.

If Greece leaves the euro, investor confidence in the eurozone will be permanently damaged.  And when investors get spooked they don’t behave rationally.

A common currency in Europe is not dead by any means, but this current manifestation is now operating on borrowed time.

As the eurozone crumbles, it is likely that Germany will simply pull the plug at some point and decide to start over.

So what do you think?

Do you think that I am right or do you think that I am wrong?

Please feel free to post a comment with your thoughts below….

If You Live In California Things Just Got A Whole Lot Worse

Why does the state of California seem to be so incredibly hopeless?  These days California can’t seem to do anything right, and if you live in California things just got a whole lot worse.  Governor Brown has announced that the state budget deficit for this year is going to be much larger than projected, that more government services are going to be cut and that voters are going to vote on another round of tax increases in November.  Meanwhile, unemployment is sitting at 11 percent and extended federal unemployment benefits for workers in the state are ending.  Because California is one of the worst places in the nation to conduct business, there has been a steady flow of companies leaving the state.  Those companies have taken a whole lot of good jobs with them.  Due to the lack of jobs and a steady stream of impoverished immigrants coming in from Mexico and other countries, poverty in the state has exploded and crime is rapidly increasing.  California may be the land of “endless sunshine”, but for the California economy there are only dark clouds on the horizon.  The state is coming apart at the seams and there is not much hope that things are going to turn around any time soon.

These days, California is very similar to Greece in many ways.

Just like Greece, California has had round after round of “austerity” and yet still cannot seem to balance the budget.

Even after all of the cuts that have been implemented in recent years, the California budget deficit is still going to be far larger than originally projected this year.  The following is from the Los Angeles Times….

Gov. Jerry Brown announced on Saturday that the state’s deficit has ballooned to $16 billion, a huge increase over his $9.2-billion estimate in January.

The bigger deficit is a significant setback for California, which has struggled to turn the page on a devastating budget crisis. Brown, who announced the deficit on YouTube, is expected to outline his full budget proposal on Monday in Sacramento.

“This means we will have to go much further, and make cuts far greater, than I asked for at the beginning of the year,” Brown said in the video.

During his remarks on YouTube, Governor Brown stated that California is “still recovering from the worst recession since the 1930s” and he stressed that hard choices are ahead.

But the California state government has already cut back in so many places.  For example, back in the late 1970s the state of California was number one in per-pupil spending on education, but now California has fallen to 48th place.

Unfortunately, Governor Brown does not believe that budget cuts alone will solve the problem.

So you know what that means.

Tax increases!

The tax increases that California voters will be voting on in November were outlined in a recent Bloomberg article….

Brown this week submitted more than 1.5 million signatures to place the tax measure on the ballot. It would temporarily raise the state sales tax, already the highest in the U.S., to 7.5 percent from 7.25 percent. It would also boost rates on income starting at $250,000. The 10.3 percent levy on those making $1 million or more would rise to 13.3 percent, the most of any state.

Get ready to fire up the moving vans.

The rest of the California economy may be falling apart, but moving companies will continue to do very well.

As I have written about previously, California has already experienced a net loss of approximately four million residents to other states over the past 20 years.

If the top rate on those making a million dollars or more a year hits 13.3 percent you will see a lot more wealthy people leave.

And thousands of businesses have left California in recent years as well.  Sadly, one survey found that CEOs ranked California as the worst place in the United States to do business for seven years in a row.

You would think that the state legislature would get the message.

Unfortunately they have not.

California absolutely suffocates businesses with rules and regulations and it gets worse with each passing year.

So lots of good jobs continue to leave the state.

As mentioned earlier, the official rate of unemployment in California is sitting at 11 percent.  That is almost 3 points higher than for the nation as a whole.

Of course the “official” numbers greatly understate the true scope of the unemployment problem, but for more on that you can check out this article.

However you want to look at it, the reality is that California has a massive unemployment problem.

Sadly, a whole bunch of unemployed workers in California are about to lose their unemployment benefits.

On Saturday, more than 200,000 unemployed Americans were dumped off the unemployment rolls.  Close to half of them live in California.

Instead of 99 weeks, unemployed workers in California will now only be able to collect unemployment benefits for a maximum of 79 weeks.

It is estimated that a total of 93,000 people in California have suddenly lost their benefits as a result of this change.

Unfortunately, the truth is that the employment picture in California is not really getting any better.  It is still incredibly difficult to find a decent job.

Unless you are “connected”, it can be a horribly frustrating experience trying to find a new job in this economic environment.

But if you are truly desperate, there are some folks out there who are always hiring.

These days, “national security” is quite a growth industry.  For example, if you are currently unemployed you can always apply to work as an Internment/Resettlement Specialist for the national guard.

While the economy is going to pot, you can get paid to lock up other Americans that are protesting about the state of our country.

Doesn’t that sound fun?

But seriously, if you live in California right now you probably don’t need anyone else to tell you how bad things are.

You probably already know that the number of children living in poverty in the state of California has increased by 30 percent since 2007.

California is rapidly changing, and not for the better.

But it is not just the economy that is falling apart in California.  The truth is that there are a whole host of good reasons to move away from California.  The traffic is nightmarish, crime is on the rise, the gangs are bigger and more active than ever before, millions of illegal immigrants have poured into the state, and the control freak politicians become more insane with each passing year.

Plus there is the constant threat that your home will be destroyed by a mudslide, a wildfire or an earthquake.

One of these days the “big one” will hit California.

You do not want to be there when that happens.

But if you decide that you do want to move from California, what is the best state to move to?

That is a very good question.

The truth is that economic conditions are horrible in most of the country and are rapidly getting a whole lot worse.

According to one poll, 30 percent of all Americans described the condition of the economy as “good” back in February but only 20 percent do now.

When we enter the next major economic downturn, unemployment is going to go higher everywhere in the nation.

There will be small pockets where jobs are still plentiful (where the oil industry is strong for example) but almost everywhere else will be really hurting.

So what do all of you think?

For people looking to move away from California, where should they go?

Please feel free to post a comment with your thoughts below….

11 Reasons Why America Would Be A Better Place Without Goldman Sachs

Would America be a better place without Goldman Sachs?  Of course it would.  The “vampire squid” of Wall Street does not care about the future of America.  Sadly, Goldman Sachs apparently does not even care much about their own clients.  What Goldman Sachs is all about is making as much money as humanly possible.  In the end, there is nothing wrong with making money, but there are constructive ways to make money and there are destructive ways to make money.  Unfortunately, Goldman Sachs seems to find the destructive path almost irresistible.  Greg Smith, the head of the U.S. equity derivatives business for Goldman Sachs in Europe, the Middle East and Africa made headlines all over the world on Wednesday when he resigned publicly from Goldman Sachs in a scorching editorial in the New York Times.  Smith said that he could “honestly say that the environment now is as toxic and destructive as I have ever seen it”.  Considering what we know has gone on at Goldman over the past decade, that is very frightening to hear.  So could this be the beginning of the end for Goldman Sachs?  And if it is, will America be a better place when Goldman is gone?

You would think that at some point clients of Goldman would become so sick and tired of the stories of corruption coming out of the firm that they would simply walk away.

Unfortunately, corruption is so endemic on Wall Street that Goldman Sachs really does not seem out of place.  The truth is that a lot of the things that are said about Goldman could also be said about JPMorgan Chase, Bank of America, Citigroup and Morgan Stanley.

But in recent years Goldman Sachs has truly become a national symbol of what is wrong with our financial system.  As the American people become fed up with institutions such as Goldman, hopefully we will start to see some of them disappear.

The following are 11 reasons why America would be a better place without Goldman Sachs….

#1 Even after all of the negative publicity we have seen in recent years, Goldman Sachs appears to not have learned any lessons.  The following is how Greg Smith described the three ways to get ahead at Goldman Sachs….

“What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.”

#2 Goldman Sachs is one of the too big to fail banks and those banks just keeping getting bigger than ever.  Back in 2002, the top 10 U.S. banks controlled 55 percent of all U.S. banking assets.  Today, the top 10 U.S. banks control 77 percent of all U.S. banking assets.  So if we couldn’t afford to let them fail back in 2008 because they were so big, why did we allow them to become even larger?

#3 The Federal Reserve shows great favoritism to big Wall Street banks such as Goldman Sachs.  For example, between December 1, 2007 and July 21, 2010 the Federal Reserve made 814 billion dollars in secret loans to Goldman Sachs.

#4 Goldman Sachs is at the heart of the derivatives bubble that threatens to throw the entire global financial system into chaos.  At this point, Goldman Sachs has over 53 trillion dollars of exposure to derivatives.

According to the New York Times, the big Wall Street banks completely control derivatives trading.  In fact, the New York Times says that representatives from JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup hold a secretive meeting each month to coordinate their domination over the derivatives market….

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

#5 Goldman Sachs was at the very heart of the financial crisis of 2008 which plunged the entire global economy into a very deep recession.  In the years leading up to the financial crisis of 2008, Goldman Sachs was putting together mortgage-backed securities that they knew were garbage and they marketed them to investors as AAA-rated investments.  On top of that, Goldman then often made huge bets against those exact same securities which turned out to be extremely profitable when those securities crashed and burned.

The following is how the New York Times described what was going on at the time….

“Goldman was not the only firm that peddled these complex securities — known as synthetic collateralized debt obligations, or C.D.O.’s — and then made financial bets against them, called selling short in Wall Street parlance. Others that created similar securities and then bet they would fail, according to Wall Street traders, include Deutsche Bank and Morgan Stanley, as well as smaller firms like Tricadia Inc.”

Sylvain Raynes, an expert in structured finance at R & R Consulting in New York, said at the time that he was absolutely shocked by what Goldman was doing….

“The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen”

#6 Goldman Sachs played a huge role in getting Greece, Italy and several other European nations into so much debt.  The following is an excerpt from an article by Andrew Gavin Marshall….

In the same way that homeowners take out a second mortgage to pay off their credit card debt, Goldman Sachs and JP Morgan Chase and other U.S. banks helped push government debt far into the future through the derivatives market. This was done in Greece, Italy, and likely several other euro-zone countries as well. In several dozen deals in Europe, “banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books.” Because the deals are not listed as loans, they are not listed as debt (liabilities), and so the true debt of Greece and other euro-zone countries was and likely to a large degree remains hidden. Greece effectively mortgaged its airports and highways to the major banks in order to get cash up-front and keep the loans off the books, classifying them as transactions.

#7 Goldman Sachs is working very hard to help state and local governments sell off our highways, water treatment plants, libraries, parking meters, airports and power plants to the highest bidder.  Much of the time foreigners are the highest bidders for these precious infrastructure assets.

The following is how Dylan Ratigan described what is going on….

On Wall Street, setting up and running “Infrastructure Funds” is big business, with over $140 billion run by such banks as Goldman Sachs, Morgan Stanley, and Australian infrastructure specialist Macquarie. Goldman’s 2010 SEC filing should give you some sense of the scope of the campaign. Goldman says it will be involved with “ownership and operation of public services, such as airports, toll roads and shipping ports, as well as power generation facilities, physical commodities and other commodities infrastructure components, both within and outside the United States.” While the bank sees increased opportunity in “distressed assets” (ie. Cities and states gone broke because of the financial crisis), the bank also recognizes “reputational concerns with the manner in which these assets are being operated or held.”

#8 At the same time that Goldman Sachs is causing all sorts of trouble for everyone else, their employees are making crazy amounts of money.  During 2010, employees of Goldman Sachs brought in more than 15 billion dollars in total compensation.

#9 Goldman Sachs has way too much influence over the federal government.  There is a reason why it is commonly referred to as “Government Sachs”.  No matter who is the White House, people that used to work for Goldman and other big Wall Street banks always seem to be crawling around.

Last year, Michael Brenner wrote the following about the composition of the Obama administration….

Wall Street’s takeover of the Obama administration is now complete. The mega-banks and their corporate allies control every economic policy position of consequence. Mr. Obama has moved rapidly since the November debacle to install business people where it counts most. Mr.William Daley from JP Morgan Chase as White House Chief of Staff. Mr. Gene Sperling from the Goldman Sachs payroll to be director of the National Economic Council. Eileen Rominger from Goldman Sachs named director of the SEC’s Investment Management division. Even the National Security Advisor, Thomas Donilon, was executive vice president for law and policy at the disgraced Fannie Mae after serving as a corporate lobbyist with O’Melveny & Roberts. The keystone of the business friendly team was put in place on Friday. General Electric Chairman and CEO Jeffrey Immelt will serve as chair of the president’s Council on Jobs and Competitiveness.

#10 Employees from Goldman Sachs pour way too much money into our national elections.  In 2008, donations from individuals and organizations affiliated with Goldman Sachs donated more than a million dollars to Barack Obama.  This time around they are pouring huge amounts of cash into Mitt Romney’s campaign.

#11 Goldman Sachs is still a “vampire squid” as Matt Taibbi once so famously proclaimed in Rolling Stone….

“The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who’s Who of Goldman Sachs graduates.”

Once again, there is nothing wrong with making money.

And there is certainly nothing wrong with working in the financial system.

But there is a right way to do things and there is a wrong way to do things.

Goldman Sachs is doing things very much the wrong way, and America would be a better place without them.

Making Money On Poverty: JP Morgan Makes Bigger Profits When The Number Of Americans On Food Stamps Goes Up

How would you feel if someone told you that one of the largest banks on Wall Street makes more money whenever the number of Americans on food stamps goes up?  Unfortunately, this is something that is actually true.  In the United States today, one out of every seven Americans is on food stamps.  In fact, the number of Americans on food stamps has increased by a whopping 14 million since Barack Obama entered the White House.  All of this makes JP Morgan very happy, because JP Morgan has been making money by the boatload on food stamps.  Right now, JP Morgan Chase issues food stamp debit cards in 26 U.S. states and the District of Columbia.  The division of JP Morgan Chase that issues these debit cards made an eye-popping 5.47 billion dollars in net revenue during 2010.  JP Morgan is paid per customer, so when the number of Americans on food stamps goes up, they make more money.  But doesn’t this give JP Morgan an incentive to try to keep the number of Americans on food stamps as high as possible?  Of course it does.  JP Morgan is interested in making money as rapidly as possible. If JP Morgan can get more Americans enrolled in the food stamp program and keep them enrolled in it for as long as possible, that is good for business.

And the Obama administration is certainly doing what it can to help out.  Even though a whopping 46 million Americans are now on food stamps, the Obama administration plans to give out large amounts of money to organizations that are able figure out ways to get even more people enrolled in the program….

Despite the historic rise in food stamp use, however, the Obama Administration believes not enough people are receiving food stamps who should be and is offering $75,000 grants to groups who devise “effective strategies” to “increase program participation” among those who have yet to sign up.

In fact, U.S. Agriculture Secretary Tom Vilsack says that if we can get even more Americans enrolled in the food stamp program, that will be a great way to “stimulate the economy“.

Of course JP Morgan just loves all of this.  The more people they have in the system the better.

Christopher Paton, the managing director of JP Morgan’s “Treasury Solutions” business, made the following statement about the “food stamp business” that his firm is engaged in during an interview with Bloomberg Television….

“This business is a very important business to JPMorgan. It’s an important business in terms of its size and scale…Right now, volumes have gone through the roof in the past couple of years. The good news, from JPMorgan’s perspective, is the infrastructure that we built has been able to cope with that increase in volume.”

You can see more of the interview with Paton in the video posted below….

As the interview above noted, more than 40 percent of all food stamp recipients in the United States actually have a job.

This is an exciting “growth area” for JP Morgan.  As the middle class continues to decline, the number of “the working poor” in America is exploding.

Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.  This trend is perfect for JP Morgan because it means that the number of low income workers that are eligible for food stamps is going to keep increasing.

And what makes all of this even sadder is that JP Morgan has outsourced many of the customer service jobs for its food stamp program to India.

Yes, you read that correctly.

When Americans that can’t find a decent job need help with their food stamps there is a good chance that they will be talking to a customer service representative sitting in India.

Isn’t that crazy?

When ABC News confronted JP Morgan about this, JP Morgan would not tell ABC which states have customer service calls sent to India and which states have them handled inside the United States….

JP Morgan is the only one today still operating public-assistance call centers overseas. The company refused to say which states had calls routed to India and which ones had calls stay domestically. That decision, the company said, was often left up to the individual states.

But JP Morgan doesn’t just handle food stamps.  JP Morgan also issues child support debit cards in 15 states and unemployment insurance debit cards in 7 states.

Of course JP Morgan is not the only big bank involved in this kind of business.  Several others are also making money in massive quantities on the backs of the poor.

The following example comes from a Huffington Post article….

Shawana Busby does not seem like the sort of customer who would be at the center of a major bank’s business plan. Out of work for much of the last three years, she depends upon a $264-a-week unemployment check from the state of South Carolina. But the state has contracted with Bank of America to administer its unemployment benefits, and Busby has frequently found herself incurring bank fees to get her money.

To withdraw her benefits, Busby, 33, uses a Bank of America prepaid debit card on which the state deposits her funds. She could visit a Bank of America ATM free of charge. But this small community in the state’s rural center, her hometown, does not have a Bank of America branch. Neither do the surrounding towns where she drops off her kids at school and attends church.

She could drive north to Columbia, the state capital, and use a Bank of America ATM there. But that entails a 50 mile drive, cutting into her gas budget. So Busby visits the ATMs in her area and begrudgingly accepts the fees, which reach as high as five dollars per transaction. She estimates that she has paid at least $350 in fees to tap her unemployment benefits.

There is something about all of this that just seems very, very wrong.

When we have good jobs, the big banks hit us with outrageous bank fees and they try to get us enslaved to credit card debt.

When we are down on our luck and become dependent on the government, the big banks still find ways of making money at our expense.

Why do the banksters always seem to win and we always seem to lose?

If You Are A Blue Collar Worker In America You Are An Endangered Species

Have you ever heard of the dodo bird?  Once upon a time, dodo birds lived on the island of Mauritius in the Indian Ocean.  But if you go there today you won’t find any because they are extinct.  Well, if you are a blue collar worker in America today it looks like you are headed for a similar fate.  Blue collar workers are truly becoming an “endangered species” in the United States.  In the old days, the balance of power between business owners and labor was more even because they both needed each other.  But today that has all changed.  Thanks to robotics, automation and computers there is simply not as much of a need for physical laborers anymore and nothing is going to reverse that trend.  Big employers will continue to look for ways to replace men with machines, and there is nothing wrong with that.  But there is another major trend that is also destroying blue collar jobs in America that we should do something about.  Right now, it is perfectly legal for big corporations to shut down manufacturing facilities in the United States and send the jobs over to nations on the other side of the globe where it is legal to pay slave labor wages and where there are barely any regulations.  As you will see later on this article, this has been the biggest reason for the shocking blue collar job losses in America over the past decade.  The big corporations don’t care that you need to pay the mortgage and put food on the table for your families.  All they care about it the bottom line, and if dramatic changes are not made soon, the number of blue collar jobs leaving the United States will continue to increase.

Once upon a time, almost everyone who wanted a job in America could get one.  If you go back a few decades, you will find that about 95 percent of all men between the ages of 25 and 54 had a job.  Today that figure is struggling to stay above 80 percent.

If you are a blue collar worker in America, you are simply not valued.  Your bosses are constantly trying to think of ways to replace you or send your job overseas.

According to Reuters, 23.7 million American workers are either unemployed or underemployed right now.  The more “blue collar” you are, the more likely you are to be unemployed.  The following chart that shows the unemployment rate during 2010 broken down by level of education comes from the Bureau of Labor Statistics….

If you are an unskilled worker in America today, you simply are not needed.  Yes, once upon a time nearly anyone could go out and get a factory job, but those days are over.  Neither major political party seems the least bit interested in trying to keep manufacturing jobs in America.

Back in the year 2000, more than 20 percent of all jobs in America were manufacturing jobs.  Today, about 5 percent of all jobs in America are manufacturing jobs.

To have that huge of a shift in a little over a decade is absolutely mind blowing.

Many Americans had been hoping that Barack Obama would stand up for the working man like he promised to do.  But just like so many of Obama’s other promises, that one was totally worthless as well.

The Obama administration has been pushing hard for even more “free trade” deals that will allow big corporations to ship even more of our jobs out of the country.  The Obama administration simply does not value blue collar jobs at all.  In fact, U.S. Trade Representative Ron Kirk is running around telling the press that there are lots of things that “we don’t want to make in America” anymore.

If you are a blue collar worker, Barack Obama does not care about you.

He never cared about you.

In fact, the vast majority of the politicians in both major political parties do not care about you.

What they do care about is winning elections and taking care of the big donors that keep helping them win elections.

Many of those donors are systematically shipping huge numbers of our jobs overseas.

In addition, now that labor has become a “global commodity”, wages for the jobs that remain in America are being steadily driven lower.

A recent White House reported entitled “Investing in America: Building an Economy That Lasts” actually bragged that our trade policies have driven wages in America down.  The following chart is from that report….

We were told that the “one world economy” would be great for America, but the truth is that it has only been great for the giant corporations.  For the average working man, it has been a disaster.

But we should have all seen this coming.  It didn’t take a genius to figure out what was going to happen once you put American workers into the same labor pool as slave laborers on the other side of the world.  After all, what greedy corporate executive really wants to pay U.S. workers ten to twenty times as much compensation just because it is the “right” thing to do?

Today, formerly great cities all over America are being transformed into hellholes while shiny, new industrial cities are popping up all over China.

For example, a couple of decades ago the Chinese city of Shenzhen was a sleepy little fishing town.

In 2012, it is a teeming metropolis of over 13 million people.

Foxconn (the builder of iPhones, iPads and many other products that we buy) runs a factory in Shenzhen that employs over 400,000 people.  Most of those people work for about a dollar an hour.

A recent article posted on Business Insider described the incredibly long hours and the nightmarish working conditions that those workers must endure.  The following is a brief excerpt from that article….

A Chinese working “hour” is 60 minutes–unlike an American “hour,” which generally includes breaks for Facebook, the bathroom, a phone call, and some conversation. The official work day in China is 8 hours long, but the standard shift is 12 hours. Generally, these shifts extend to 14-16 hours, especially when there’s a hot new gadget to build.

At Foxconn, they don’t really care about the health and safety of the workers.  Workers are expected to do the same repetitive tasks as rapidly as they can for as long as they can.  When their bodies break down, they are fired….

Some workers can no longer work because their hands have been destroyed by doing the same thing hundreds of thousands of times over many years (mega-carpal-tunnel). This could have been avoided if the workers had merely shifted jobs. Once the workers’ hands no longer work, obviously, they’re canned.

But the Obama administration insists that allowing big corporations to ship our jobs over to countries with working conditions like that is “good for the economy”.

Well, it might be good for the profits of the largest corporations, but it is a total nightmare for the rest of us.  Just consider the following stats….

*The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

*Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

*According to U.S. Representative Betty Sutton, America has lost an average of 15 manufacturing facilities a day over the last 10 years.  During 2010 it got even worse.  Last year, an average of 23 manufacturing facilities a day shut down in the United States.

*In all, more than 56,000 manufacturing facilities in the United States have shut down since 2001.

*According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.

*According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades.

Are you starting to get the picture?

If you are a blue collar worker that cannot find a job, it is not because you have failed as a human being.

Rather, the truth is that you cannot find a job because of the failed trade policies of the federal government.

We are experiencing the bitter fruit of a “one world economy”.  Globalization was never intended to make the lives of American workers better, and now many are finally waking up and realizing this.

Hopefully, as Americans wake up on these issues they will fight to turn this nation in a more positive direction.

Unfortunately, way too many Americans are giving up hope completely.  The following comes from a recent article in the Guardian….

The year 2011 will be remembered as the time when many ever-optimistic Americans began to give up hope. President John F Kennedy once said that a rising tide lifts all boats. But now, in the receding tide, Americans are beginning to see not only that those with taller masts had been lifted far higher, but also that many of the smaller boats had been dashed to pieces in their wake.

As I have written about so many times, we are watching the middle class in America be systematically destroyed.

The economy is not getting better.  There may be moments when the economy seems like it is improving, but the reality is that we are mired in a nightmarish long-term decline.  If you are not yet convinced of this, please see this article and this article.

Even those running our economy are saying that things are not going to be getting much better any time soon.

For example, the President of the Federal Reserve Bank of Chicago, Charles Evans, recently admitted that the employment picture is not going to be much brighter than it is now by the end of 2012.  He recently said that “at the end of the year, we’re not going to be very different from 8.5 percent unemployment.”

And remember – history has shown us that most pronouncements by Federal Reserve officials are usually far too optimistic.

If you are a blue collar worker in America, there is simply not too much to be optimistic about right now.

You might want to think about how you and your family are going to survive without any work.

The millions of jobs that have been sent overseas are not coming back.  Even if you still have a decent job, now is the time to be developing a side business or developing other alternative streams of income.

What you don’t want to do is to just sit there and hope that somehow things will “magically” turn around if we just vote in the “right” politician.

If you want to get a really good idea of what is really going on with the U.S. economy right now, just go tour some of the formerly great industrial cities in the “Rust Belt”.

In Cuyahoga County, Ohio one out of every five houses is sitting vacant.  It is not that those homes are not needed – it is just that there are not nearly enough people with good jobs available to buy up all of the foreclosures.

So thousands of perfectly good houses are being torn down.  The following comes from a recent CBS News report by Scott Pelley….

Across America, recession-fueled foreclosures and plummeting home values have left countless properties abandoned and vulnerable to looting. As Scott Pelley reports, the problem has gotten so bad in Cleveland, Ohio, that county officials have demolished more than 1,000 homes this year – and plan to demolish 20,000 more – rather than let the blight spread and render nearby homes worthless.

Can you imagine that?

20,000 homes being demolished in one county alone?

Of course Detroit is in even worse shape than Cleveland.  If you can believe it, the median price of a home in Detroit is now just $6000.

For much more on all of this, please read my recent article entitled “Formerly Great Cities All Over America Are Turning Into Open, Festering Sores“.

It would be great if I could tell you that hope is just around the corner, but it is not.  The plight of the blue collar worker in America is going to get worse and worse.

But just because blue collar workers in America are an endangered species does not mean that you have to be a victim.

We should all seek to become less dependent on the system.

If you are completely and totally dependent on having a “job” (just over broke), then you have put yourself in a very vulnerable position.

That job could disappear at any moment.

Over the next few years, the number of good jobs is going to continue to decrease.  Things are going to be really tough.  But those that have prepared and that have tried to become more independent are going to be in much better shape than those that have not.

GE CEO Jeffrey Immelt, The Head Of Obama’s Jobs Council, Is Moving Jobs And Economic Infrastructure To China At A Blistering Pace

Jeffrey Immelt, the head of Barack Obama’s highly touted “Jobs Council”, is moving even more GE infrastructure to China.  GE makes more medical-imaging machines than anyone else in the world, and now GE has announced that it “is moving the headquarters of its 115-year-old X-ray business to Beijing“.  Apparently, this is all part of a “plan to invest about $2 billion across China” over the next few years.  But moving core pieces of its business overseas is nothing new for GE.  Under Immelt, GE has shipped tens of thousands of good jobs out of the United States.  Perhaps GE should change its slogan to “Imagination At Work (In China)”.  If the very people that have been entrusted with solving the unemployment crisis are shipping jobs out of the country, what hope is there that things are going to turn around any time soon?

Earlier this month, Immelt made the following statement to a jobs summit at the U.S. Chamber of Commerce….

“There’s no excuse today for lack of leadership. The truth is we all need to be part of the solution.”

Apparently Immelt’s idea of being part of the solution is to ship as many jobs overseas as he possibly can.

A recent article on the Huffington Post documented how GE has been sending tens of thousands of good jobs out of the country….

As the administration struggles to prod businesses to create jobs at home, GE has been busy sending them abroad. Since Immelt took over in 2001, GE has shed 34,000 jobs in the U.S., according to its most recent annual filing with the Securities and Exchange Commission. But it’s added 25,000 jobs overseas.

At the end of 2009, GE employed 36,000 more people abroad than it did in the U.S. In 2000, it was nearly the opposite.

GE is supposed to be creating the “jobs of tomorrow”, but it seems that most of the “jobs of tomorrow” will not be located inside the United States.

The last GE factory in the U.S. that made light bulbs closed last September.  The transition to the new CFL light bulbs was supposed to create a whole bunch of those “green jobs” that Barack Obama keeps talking about, but as an article in the Washington Post noted, that simply is not happening….

Rather than setting off a boom in the U.S. manufacture of replacement lights, the leading replacement lights are compact fluorescents, or CFLs, which are made almost entirely overseas, mostly in China.

But GE is far from alone in shipping jobs and economic infrastructure out of the United States.  For example, big automakers such as Ford are being very aggressive in China.  Ford is currently “building three factories in Chongqing as part of $1.6 billion investment that also includes another plant in Nanchang”.

Today, China accounts for approximately one out of every four vehicles sold worldwide.  The big automakers consider the future to be in China.

Just a few decades ago, China was an economic joke and the U.S. economy was absolutely unparalleled.

But disastrous trade policies have opened up the door for a mammoth transfer of jobs, factories and wealth from the United States to China.

China has become an absolute powerhouse and America is rapidly declining.

Beautiful new infrastructure is going up all over China even as U.S. infrastructure rots and decays right in front of our eyes.

You can see some amazing pictures of the stunning economic development that has been going on in China here, here, here and here.

America is being deindustrialized at lightning speed and very few of our politicians seem to care.

Back in 1979, there were 19.5 million manufacturing jobs in the United States.

Today, there are 11.6 million.

That represents a decline of 40 percent during a time period when our overall population experienced tremendous growth.

We used to have the greatest manufacturing cities on the entire globe.  The rest of the world was in awe of us.

Today, most of those formerly great manufacturing cities are decaying, rotting hellholes.

The following is what one reporter from the UK saw during his visit to Detroit….

As you pass the city limits a blanket of gloom, neglect and cheapness descends. The buildings are shabbier, the paint is faded. The businesses, where they exist, are thrift shops and pawn shops or wretched groceries where the goods are old and tired. Finding somewhere to have breakfast, normally easy in any American city, involves a long hunt. ‘God bless Detroit’, says one billboard, just beside another offering the alternative solution: liquor.

You can see some really shocking images of the decline of Detroit right here.

Our politicians insisted that globalism would not result in a “giant sucking sound” as millions of jobs left America.

But that is exactly what has happened.

Sadly, most American families still don’t understand what has happened.  Most of them are still waiting for things to get back to “normal”.

Millions of unemployed Americans are dealing with incredible amounts of stress right now as they wait for jobs to start opening up again.  But the jobs that have been shipped overseas are not coming back.  In a globalized economy, it doesn’t make sense to hire American workers when you can legally pay workers slave labor wages on the other side of the globe.

Millions of good middle class jobs have been replaced by low paying service jobs.  Today there are huge numbers of Americans that are cutting hair or flipping burgers because that is all they can get right now.

Many others are only able to survive because of the safety net.  One reader named David recently left a comment in which he shared his story.  David did everything that the system asked him to do, but the promised rewards never materialized.  Now David is broke, unemployed and he feels deeply frustrated….

A year ago I had a job, we were struggling, but bills were getting paid, and somehow we were getting by. Then I made the mistake of getting sick, one day before my company insurance kicked in. An auto-immune illness almost killed me, if it weren’t for the amazing efforts of my physicians and an emergency spleenectomy, I would not be here.

My wife would have been a single mother,raising two young sons, one of which is autistic. Instead, I pulled through. The disease damaged my liver, leaving me with a chronic condition, and even after a year, it is hard to get up and go some days. My “employer” dumped me as soon as I left the hospital, and I haven’t worked since. It isn’t for lack of looking. There just isn’t anything.

Oh, I get my government cheese money. Here I am college educated, unable to find something that can pay the bills better than the money that we get from the government. It sickens me to be this dependent on the system like this. But the system de-incentivizes work, and makes living on the dole make a perverse economic sense.

I used to have dreams, but I have given up on them. My wife and I have no savings, we have no life raft and if it weren’t for the generosity of her parents and mine, things would have ground to a halt a long time ago.

I believed every thing adults told me. Work hard, I did. Get an education, I did. Find a nice girl and settle down, I did. Two cars, a dog, a cat and couple of kids, a nice townhouse…the american dream. Yep.

I love my country. My heart is broken, broken because I have been betrayed. I did what you asked, I played by the rules. I did what you said to do; I submitted, I conformed, I stopped dreaming. Now what?

I am willing to pay for my faults and transgressions; my failures are my own, I get that. My children should not have to suffer for my failures, they did not do anything wrong. My youngest boy is autistic, we hope he will be able to integrate into society, but the fact is we may have to take care of him for the rest of his life. How do I do this with nothing, and no opportunity in the foreseeable future?

Depression, stress…yep, I’ve got all that. I used to be hopeful and optimistic about the future. Now all I am is afraid.

As the United States continues to bleed good jobs, stories like the one you just read are going to become much more common.

So what are our politicians doing about all of this?

They tell us that we need even more “free trade”!

Barack Obama says that we need more free trade.

The Republicans say that we need more free trade.

In Washington D.C. our politicians do not agree on much, but one thing they do agree on is that we need to keep shipping jobs out of the country.

Until the American people wake up and start demanding an end to the globalization of the U.S. economy, the job losses are just going to continue to get worse.

The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.  If this trend continues, millions more Americans will soon be surviving on food stamps or living in tent cities.

The American people are deeply concerned about the economy, but they still have not connected the dots on these issues.  The mainstream media and most of our politicians keep telling them that the globalization of the economy is a wonderful thing.

It is so sad that people just do not understand what is going on right in front of their eyes.

Whether you are a conservative or a liberal or a libertarian, you should be against the deindustrialization of America.

Allowing our industrial base to be raped is not a good thing.

Allowing big corporations and foreign governments to pay slave labor wages to workers on the other side of the globe making things that will be sold inside the United States is not a good thing.

Allowing the destruction of our industrial capacity to threaten our national security is not a good thing.

Allowing millions of precious jobs to leave the country is not a good thing.

The biggest corporations are making some extra profits by exploiting cheap labor on the other side of the globe.  Corporate executives love to shower themselves with larger and larger bonuses.

But our current trade policies are not working for American workers.

We need “fair trade”, not “free trade”.

The United States is being taken advantage of, and the Democrats and the Republicans are both laying down like doormats and letting it happen.

If you want to know where all the good jobs went, it is not a big mystery.

They have been shipped out of the country and they are not coming back.

Unless fundamental changes are made, things are going to get worse and worse and worse for American workers.

So what is going to happen next?

It is up to you America.

Start A Business? In The United States? Are You Kidding Me?

Many of you have decided that you are going to attempt to start a business in the United States today.  Many of you are still convinced that this is “the land of opportunity” and that starting a business is fairly easy.  Are you sure about that?  Are you certain that you have considered all of the headaches involved?  Are you sure that you are ready to handle the thousands of regulations that apply to your business and the mountains of paperwork mandated by various levels of government?  Are you prepared to deal with entrenched unions, predatory lawyers and rabid environmentalists?  The truth is that the business environment has never been this toxic in all of U.S. history.  So even if you are able to start a viable business that can compete with the monolithic global corporations that dominate our economy, you still might not be able to make it.  In the end, thousands upon thousands of businesses across America have been doomed to failure by ridiculous regulations, mountains of paperwork, health insurance costs, predatory lawsuits or corrupt government officials.  So do you really think that you can beat the odds?

Historically, small businesses have been the driving force behind America’s economic growth.  But today, we have made the business environment so complicated that small business owners are being completely smothered by red tape.

The following are 10 areas that anyone wishing to start a small business had better think about before moving forward.  When you really stop and think about it, the fact that anyone out there is still attempting to start small businesses in America today is absolutely amazing.

#1 Regulations

If you plan to start a business in America today, you better get a hold of a good lawyer.  In fact, if you want to be safe, you better get a small army of lawyers.  You are going to need an expert on the federal regulations that apply to your business, you are going to need an expert on the state regulations that apply to your business and you are going to need an expert on the local regulations that apply to your business.

There are going to literally be thousands of regulations that apply to any business started inside the United States today.  There is no way that you will ever be able to learn them all.  Not only that, but the truth is that your lawyers will only be aware of a small fraction of them.

Do you know what the Federal Register is?  The Federal Register is the primary source of regulations for U.S. government agencies.  In 1936, the number of pages in the Federal Register was about 2,600.  Today, the Federal Register is over 80,000 pages long.  That is just one example of how bad things have gotten.

So what do you do?  Well, just do your best to try to learn about the major regulations that apply to your business and pray that you don’t end up violating some important regulation that you are not even aware of.

#2 Paperwork

Do you know what paperwork the federal government expects you to fill out?  Do you know what paperwork the state government expects you to fill out?  Do you know what paperwork the city or the county expect you to fill out?  Do you know what paperwork you will be required to fill out when hiring a new employee?

The truth is that the paperwork burden on small businesses has multiplied in recent years.  Many small business owners are so swamped with paperwork that they barely have time to conduct their actual businesses.

For example, the U.S. Food and Drug Administration is projecting that the food service industry will have to spend an additional 14 million hours every single year just to comply with a new federal regulation that mandates that all vending machine operators and chain restaurants must label all products that they sell with a calorie count in a location visible to the consumer.

14 million hours just to comply with one ridiculous regulation?  Yes, that is how bizarre things have gotten in America in 2010.

#3 Fees And Fines

Many small business creators in America are absolutely horrified to learn of the fees and fines that they must pay before they can ever even open their doors.  Much of the time it is revenue-starved local governments that are the biggest culprits.

For example, a reader of this column named Gene recently shared his regulatory horror story with us….

Started a new business this year in AZ. Paid over $10,000 in fees for permitting, $10,000 in fee for elec hookup, $10,000 in fees for gas hook up and an extra $200 fee per month just for the “privilige” of having gas. Adding up all the fees to start our business, I don’t think we would do it again. We are now just getting to the point that we are making our bills each month, and so we are not taking a paycheck, and don’t anticipate one for at least another year. Our family has been in business for ourselves for decades,and we know what we are doing, but the rising fees caught us off guard. Cities, municipalities, counties and states are raising all fees at astronomical rates to help offset the slump in their real estate income (since banks apparently don’t have to pay real estate taxes)…I’m telling you every business person I know is on their last leg.

#4 Taxes

The United States has one of the most (if not the most) repressive business taxation scheme in the world.  As a small business owner, do you know what taxes you will be expected to pay?  It is not just federal income taxes and state income taxes that you will be paying.  In a previous article, I detailed the various forms of taxes that Americans pay each year and most of them apply to small businesses as well….

Accounts Receivable Taxes

Building Permit Taxes

Capital Gains Taxes

CDL license Taxes

Cigarette Taxes

Corporate Income Taxes

Court Fines (indirect taxes)

Dog License Taxes

Federal Income Taxes

Federal Unemployment Taxes (FUTA)

Fishing License Taxes

Food License Taxes

Fuel permit taxes

Gasoline Taxes

Gift Taxes

Hunting License Taxes

Inheritance Taxes

Inventory tax IRS Interest Charges (tax on top of tax)

IRS Penalties (tax on top of tax)

Liquor Taxes

Local Income Taxes

Luxury Taxes

Marriage License Taxes

Medicare Taxes

Payroll Taxes

Property Taxes

Real Estate Taxes

Recreational Vehicle Taxes

Road Toll Booth Taxes

Road Usage Taxes (Truckers)

Sales Taxes

Self-Employment Taxes

School Taxes

Septic Permit Taxes

Service Charge Taxes

Social Security Taxes

State Income Taxes

State Unemployment Taxes (SUTA)

Telephone federal excise taxes

Telephone federal universal service fee taxes

Telephone federal, state and local surcharge taxes

Telephone minimum usage surcharge taxes

Telephone recurring and non-recurring charges taxes

Telephone state and local taxes

Telephone usage charge taxes

Toll Bridge Taxes

Toll Tunnel Taxes

Traffic Fines (indirect taxation)

Trailer registration taxes

Utility Taxes

Vehicle License Registration Taxes

Vehicle Sales Taxes

Watercraft registration Taxes

Well Permit Taxes

Workers Compensation Taxes

#5 Health Insurance

Do you know if you will be required to provide health insurance for your new employees?  Have you familiarized yourself with the new 2,409 page health care law enough to be able to set up a health insurance program?

As a result of the new health care law, health insurance premiums for employees are shooting through the roof.  Are you going to be able to afford them?  Would it be better to have fewer employees and work each of them harder so that you won’t have to provide health coverage for as many people?

Will you be able to compete with the companies in your industry that have received waivers from having to comply with the new health care law?

In the United States, our system places the burden of providing health care on to the backs of employers.  So are you ready to handle that burden?

#6 Pensions

Will the employees of your new business need pensions?  Do you know how to set up a 401K program?  Do you know what defined benefit plans are?

You can literally sit through an entire law school course on pension law and still understand virtually nothing about the subject.  The truth is that if you plan to provide your employees with some kind of pension program you had better hire someone who can at least pretend that they know what they are talking about to set it up for you.

#7 Foreign Competition

Especially if you are creating a small business that does manufacturing, you are going to have to deal with foreign competition.

So are you going to be able to compete with the companies in your industry that pay their workers on the other side of the world less than a tenth of what you are paying to your American workers?

On the other side of the world, companies often don’t have to worry about unions, worker’s comp, health benefits, retirement benefits, nightmarish environmental regulations, crushing taxes or miles of paperwork and red tape.

Are you certain that you can compete against that?

#8 Lawsuits

The more successful you become, the more inviting of a target you are going to be for predatory lawsuits.  The truth is that the courtrooms of America are packed with thousands of them, and the lawyers that bring them are hardly ever held accountable.

All of your hard work can go down the drain in a single moment.  There are hordes of lawyers out there that make their living by filing lawsuits against small to mid-size businesses.

The truth is that if you are running a small business, you are probably doing something wrong.

Just hope and pray that a predatory lawyer does not find out.

#9 Environmentalists

Protecting the environment is a good thing.  Unfortunately, there are many radical “environmentalist” groups that consider it to be a bad thing that humans even breathe because it produces carbon dioxide.

When Audi ran their now famous “Green Police” commercial during the Super Bowl last year, most Americans laughed it off and thought that nothing like that could ever happen in America.  Well, it turns out that it is happening in America.

Not only are government environmental regulations totally nightmarish at this point, but there are a growing number of radical environmentalist groups that are running around the country filing lawsuits against whoever they feel like.

#10 The Federal Government

Are you prepared for a federal government that can literally change all the rules at any time?

Many businesses across America are frozen in their tracks at this point because they don’t know what Obama and the U.S. Congress are going to do next.

The truth is that things are getting really bizarre in this country.  For example, federal agents recently raided an Amish farm at 5 A.M. in the morning because they were selling “unauthorized” raw milk.

If federal agents will raid an Amish farmer at 5 AM in the morning over some raw milk, do you think that they are going to have any mercy on your small business when the time comes?

The America that once embraced “free enterprise” and the entrepreneurial spirit is dead and gone.

Now we are a country filled with bureaucrats and red tape from sea to shining sea.

Is it any wonder why we can’t compete with the rest of the world?

Is it any wonder why so many millions of Americans are unemployed and can’t find jobs?

In an attempt to “solve” our problems we just keep passing more “reform” which means even more rules and regulations for our businesses to follow.

Just as they are doing on an individual level, the government is attempting to watch, track and control everything that our businesses are doing.

Everywhere you look in American society today, the government is gradually tightening the steel-fisted grip that is has around everyone and everything.  Pretty soon you won’t even be able to sneeze without the government telling you how to do it correctly.

Is that really the kind of society that we all want to live in?

What a nightmare.

Do you have a horror story from starting a business in America that you would like to share?  If so, please feel free to post it in the comments section below….

Happy Holidays? 28 Hard Questions It Would Be Great If We Could Get Some Real Answers To

Over the coming weeks, Americans will be wishing each other “happy holidays” millions upon millions of times.  But are these really happy times?  Record numbers of Americans are going to be going hungry and cold this winter.  Millions upon millions of our fellow citizens would gladly give up all holiday celebrations in exchange for a decent job.  The vast majority of us have plenty of examples of horrible personal tragedy all around us this holiday season, and much of that tragedy has been brought on by the deteriorating economic conditions.  Meanwhile, we have a “control freak” government that wants to establish an even tighter grip over our lives and that now insists on either viewing our exposed bodies or groping our private areas before we can get on an airplane.  Once upon a time in America the holiday season was a time to rejoice because we lived in a prosperous land where liberty and freedom were respected, but today we live in a nation with a highly centralized economy dominated by a federal government that is becoming more “totalitarian” by the day.

But we are told that centralized control by an overwhelmingly powerful national government is good in our case because “they” know what is best for us.

Oh really?  They sure have done a great job “managing” our economic system, haven’t they?  Unfortunately, it seems as though anything that the federal government takes control over just gets more messed up.

The following are 28 hard questions that you should ask anyone who believes that having a highly centralized economy and a highly centralized government is good for us….

#1 Why is the U.S. government trying to put a choke hold on our food production system? S. 510, The Food Safety Modernization Act, is being called one of the most dangerous bills in American history.  This very vague and incredibly broad bill (which you can read here) will give the U.S. government unprecedented control over the growing, storing and sale of food in the United States.

#2 Approximately 14.8 million Americans are unemployed this holiday season.  So why in the world is the “greatest economy on earth” not able to provide jobs for all of them?

#3 Why are the U.S. and South Korea insisting on conducting 4 days of naval exercises in the Yellow Sea when tensions in the reason are at an all-time high and when a single mistake could spark an all-out war?  Wouldn’t it be better to postpone these naval exercises until things have calmed down a bit?

#4 What prompted Russia and China to suddenly decide to quit using the U.S. dollar and instead start using their own national currencies when trading with each other?

#5 Why does it cost $181,757 per hour for Barack Obama to travel on Air Force One?

#6 Are we still a “great nation” when so many of our citizens are going hungry?  According to a recent BBC report, 15% of all U.S. households experienced a shortage of food at some point during 2009.  One of our readers named Gary recently left a comment that indicated that he encountered a very big crowd during his recent visit to a local food pantry….

The line at the food pantry was very long. There are a lot of folks who have little food and no money.

#7 If the U.S. economy is recovering, why were new home sales for October down 28.9 percent from a year ago and why were existing home sales for October down 25.9 percent over the previous year?

#8 Why are there so many reports of unprofessional behavior by TSA agents?  For example, it is being reported that some TSA agents have specifically targeted attractive young women for “additional screening”.

#9 Why are U.S. home builders only selling one-fifth of the homes that they were selling during the “boom times” five years ago?

#10 How did a man who had been convicted of misdemeanor harassment and stalking get hired to be a TSA agent?  Now it turns out he is being accused of abducting and sexually assaulting a woman.  These are the people who are supposed to be protecting us?

#11 In the “wealthiest nation on earth”, why are a record number of Americans going to be without heat this winter? According to the National Energy Assistance Directors’ Association, more than 10 million U.S. households will not be able to afford to heat their homes this winter without assistance, which would be a new all-time record.  One of our readers named Elaine recently shared that she is one of those Americans that is going to be cold this winter….

It’s starting to get cold here in the mountains. I’m unemployed, no heat, at risk for foreclosure, etc. Everyone is at risk for this, it’s just that many of the muddleclass can’t face it yet. For a lot of us, it’s not cutting back on that bi-weekly latte that’s going to help, it’s cutting back on having electricity. Don’t judge the poor until you’ve been here.

#12 Why are Americans becoming so pessimistic about the future?  According to one recent poll, now only 51 percent of Americans believe that today’s young people will have a better life than their parents did.

#13 How did we ever get to the point as a nation where only 39 percent of likely voters believe that the U.S. government is operating within the limits established by the U.S. Constitution?

#14 Why does the mainstream media largely ignore the fact that thousands of people are being slaughtered near the U.S. border with Mexico each year and a city just across the Mexican border is now being dubbed “the most dangerous place on earth”?

#15 What does it say about American politics that the companies that produce the new naked body scanners have more than doubled their spending on political lobbying over the last five years?

#16 Why is the Washington Post working so hard to defend the policies of the Federal Reserve?

#17 Have we now gotten to the point where the financial condition of the U.S. government is so bad that it will be virtually impossible to ever have a balanced federal budget ever again?

#18 Why aren’t more Americans deeply concerned about the dozens of nasty diseases that they could catch from TSA agents if they don’t change gloves between each groping?

#19 Why are there 18 times as many banks on the FDIC “problem list” as there were just four years ago?

#20 What does it say about the United States that now 39 percent of Americans believe that marriage is becoming obsolete?

#21 How can anyone claim that the U.S. economy is turning around as long as the number of Americans on food stamps continues to set a new all-time record month after month?

#22 As thousands of factories and millions of jobs continue to be shipped overseas, why does Barack Obama keep publicly proclaiming that globalism is so good for us?

#23 Why aren’t Homeland Security officials willing to consider changes to the new airport security procedures when many women are actually using the term “sexual assault” to describe their experiences with the new “enhanced pat downs”?

#24 The median wealth of a U.S. Senator in 2009 was 2.38 million dollars.  So exactly what does that say about the health of our Republic?

#25 Why have our leaders allowed U.S. strategic grain reserves to shrivel away to almost nothing?

#26 In 2009, 54.9 million international tourists visited the United States, and those tourists spent approximately 93 billion dollars.  How far will those numbers drop once stories of TSA abuse circulate all over the globe?

#27 If Congress does not authorize another emergency extension of long-term unemployment benefits, then what in the world are the 2 million Americans who are going to suddenly lose their checks going to do?

#28 Are there still any areas left in the United States where liberty and freedom are respected, where taxes are low, where regulations are not suffocating, where the people are friendly and where Americans can be free to live an independent lifestyle?

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