Economic Crisis

Warning Signs That We Should Prepare For The Worst

The warning signs are all around us.  All we have to do is open up our eyes and look at them.  Almost every single day there are more prominent voices in the financial world telling us that a massive economic crisis is coming and that we need to prepare for the worst.  On Wednesday, it was the World Bank itself that issued a very chilling warning.  In an absolutely startling report, the World Bank revised GDP growth estimates for 2012 downward very sharply, warned that Europe could be on the verge of a devastating financial crisis, and declared that the rest of the world better “prepare for the worst.”  You would expect to hear this kind of thing on The Economic Collapse Blog, but this is not the kind of language that you would normally expect to hear from the stuffed suits at the World Bank.  Obviously things have gotten bad enough that nobody is even really trying to deny it anymore.  Andrew Burns, the lead author of the report, said that if the sovereign debt crisis gets even worse we could be looking at an economic crisis that could be even worse than the last one: “An escalation of the crisis would spare no-one. Developed- and developing-country growth rates could fall by as much or more than in 2008/09.”  Burns also stated that the “importance of contingency planning cannot be stressed enough.”  In other words, Burns is saying that it is time to prepare for the worst.  So are you ready?

But of course it isn’t just the World Bank that is warning about these things.  The chorus of voices that is warning about the next great financial crisis just seems to grow by the day.

Some of these voices were profiled in a Bloomberg article the other day entitled “Apocalypse How? Dire ’12 Forecasts“.  The following is just a sampling of quotes from that article….

-John Mauldin, president of Millennium Wave Advisors: “We’ve got a cancer. That cancer is debt”

-Mark Spitznagel of Universa Investments: “Too much malinvestment has been kept alive, and history shows an inevitable wipeout, which started in 2000.”

-Michael Panzner of Financial Armageddon: “The fundamental outlook is even worse now than it was a few weeks ago, given (the lack of positive) developments in Europe and growing evidence that the economies of major countries around the world are deteriorating fast.”

If you have time, you should go check out the rest of that article.  It really is fascinating.

When this crisis is over, all sorts of people are going to be running around claiming that they predicted it.  But it does not take a genius to see what is coming.  All you have to do is open up your eyes and look at the flashing red warning signs.

So what should we all be looking for next?

March 20th is a key date to keep your eye on.  That is the day when Greece will either makes its 14.5 billion euro bond payment or it will default.

Greece does not have a prayer of making that payment without help.  If Greece can convince the EU and the IMF to release the next scheduled bailout payment and if Greece can reach a satisfactory deal with private bondholders, then the coming Greek default might be “orderly”.  But if something goes wrong, the coming Greek default might be quite “disorderly”.

At this point, almost everyone in the financial world is anticipating a Greek default of one form or another….

-Edward Parker, the managing director for Fitch’s sovereign and supranational group in Europe, the Middle East and Africa, recently declared that a Greek default is inevitable….

“It is going to happen. Greece is insolvent so it will default.”

-Moritz Kraemer, the head of S&P’s European sovereign ratings unit, made the following statement on Bloomberg Television on Monday:

“Greece will default very shortly. Whether there will be a solution at the end of the current rocky negotiations I cannot say.”

-Richard McGuire, a strategist at Dutch bank Rabobank, was recently quoted by CNBC as saying the following….

“People often ask if Greece is going to default which … is a misnomer because Greece is (already) defaulting”

-Diane Swonk, the chief economist at Mesirow Financial in Chicago, says that the default by Greece will probably be an “orderly” one but that the situation could change at any moment….

“It appears at the moment that the market is accepting a Greek default as inevitable, and it will be an orderly default. But that can change on a dime.”

But whether there is a default or not, the reality is that Greece is already experiencing a full-blown economic depression.  In Greece, 20 percent of all retail stores have already shut down.  The unemployment rate for those under the age of 24 is now at 39 percent.  Large numbers of Greeks are trying to get themselves and their money out of the country while they still can.

Pessimism regarding Greece is at an all-time high.  Michael Fuchs, the deputy leader of Angela Merkel’s political party, recently made the following statement….

“I don’t think that Greece, in its current condition, can be saved.”

But of course Greece is not the only declining economy in Europe by a long shot.

Italy has a much larger economy, and if Italy totally collapses it will be an absolute nightmare for the entire globe.

Right now, the Bank of Italy is forecasting a significant recession for the Italian economy in 2012.  The following is from a statement that Bank of Italy has just released….

“The uncertainty that surrounds the medium-term perspectives of the Italian economy … are extraordinarily high and are directly linked to the evolution of the eurozone debt crisis”

Italy’s youth unemployment rate has hit the highest level ever, and nearly all sectors of the Italian economy are showing signs of slowing down.

Plus there is the looming problem of Italian debt.  As I wrote about yesterday, when you add the maturing debt that the Italian government must roll over in 2012 to their projected budget deficit, it comes to 23.1 percent of Italy’s GDP.

Originally it was hoped that the economic problems in Europe could be contained to just a few countries.  But now it has become clear that is just not going to happen.

Trends forecaster Gerald Celente recently explained to ABC Australia that much of Europe is already essentially experiencing an economic depression….

“If you live in Greece, you’re in a depression; if you live in Spain, you’re in a depression; if you live in Portugal or Ireland, you’re in a depression,” Celente said. “If you live in Lithuania, you’re running to the bank to get your money out of the bank as the bank runs go on. It’s a depression. Hungary, there’s a depression, and much of Eastern Europe, Romania, Bulgaria. And there are a lot of depressions going on [already].”

The troubling news out of Europe just seems to keep coming in waves.  Here are some more recent examples….

-Manufacturing activity in the euro zone has fallen for five months in a row.

-Germany’s economy actually contracted during the 4th quarter of 2011.

-It is being reported that the Spanish economy contracted during the 4th quarter of 2011.

-Bad loans in Spain recently hit a 17-year high and the unemployment rate is at a 15-year high.

So will all of this economic trouble eventually spread to the United States?

Of course it will.

The global economy is more interconnected today than ever.  Back in 2008 the financial crisis that started on Wall Street ended up devastating economies all over the planet.  The same thing will happen during this next great financial crisis.

Only this time the U.S. is in a much weaker position.  The U.S. debt problem has gotten much worse since the last crisis.

During 2008, our national debt crossed the 10 trillion dollar mark.  Less than 4 years later, we have crossed the 15 trillion dollar mark.

So what are we going to do the next time large numbers of banks fail and unemployment skyrockets?

Where are we going to get the money to bail out all of those banks and to take care of all of those newly unemployed people?

Some people say that socialism is the answer, but the truth is that we are already a socialist welfare state.  If you can believe it, nearly half of all Americans live in a household that receives some form of financial benefits from the U.S. government.

During the next great crisis, the number of people that are dependent on the government will go even higher.

If you don’t want to end up dependent on the government, you should heed the warning signs and you should use this time to prepare for the hard times that are coming.

When even the World Bank tells us to hope for the best but to prepare for the worst, you know that it is late in the game.

Unfortunately, the vast majority of people out there only believe what they want to believe.  They don’t want to believe that a great economic crisis is coming, and so when it does happen they are going to be absolutely blindsided by it.

Is The U.S. Government Stockpiling Food In Anticipation Of A Major Economic Crisis?

Is the U.S. government stockpiling huge amounts of food and supplies in anticipation that something bad is about to happen?  Is something about to cause a major economic crisis that will require large quantities of emergency food?  For a while, I have been hearing things about the government storing food through the grapevine and I have not been sure what to think about those rumors.  Well, today I received a phone call that blew me away.  I debated for quite a while before I decided whether or not to share this information with you all.  Normally I do not like to talk about anything unless I am able to prove it by pointing to an article in the mainstream media.  But the source of the information that I am about to share with you is rock solid.  I cannot reveal his name, so you will just have to trust me on that.  Hopefully the following information will be one more “dot” as we all try to connect the dots about what is really going on out there.

This morning I received a call from a very prominent person in the storable food industry.  He has asked me not to reveal his name.  I have been dealing with him for an extended period of time and I consider him to be a rock-solid source.  When I talked to him today, he had just received a huge order for storable food from a U.S. government source.  He told me that the dollar amount of the order was in the “five figures”.

When he asked about why so much food was being ordered, the government source told him essentially that “you know what is coming”.  When pushed further, the government official did not elaborate.

It was unclear whether this was part of a larger food stockpiling program by the government.  Perhaps this order was just part of the normal preparations that government agencies make for potential emergencies.

Nobody could blame the government for storing up some emergency food.  That is something that we all should be doing.

The truth is that the government is taking emergency preparedness very seriously these days.  For example, you can see video of a high-level NASA official urging NASA employees to develop preparedness plans for their own families right here.

But what if this is a sign of something bigger?

Remember, this is not some rumor I just pulled off the Internet.  This is not something that someone got from “an aunt” somewhere.

I got this information over the telephone from the person who took the order.

I promised that I would not reveal any more specific details, so I won’t.

But this does seem to fit with a pattern that we are beginning to see emerge.

Earlier this year, FEMA issued an RFI (Request For Information) that inquired about the availability of 140 million meals of emergency food.  Apparently the food was meant to be stored up in case there was a “catastrophic disaster event” along the New Madrid Fault.

You can view this FEMA RFI right here.  The following is an excerpt….

The Federal Emergency Management Agency (FEMA) procures and stores pre-packaged commercial meals to support readiness capability for immediate distribution to disaster survivors routinely.  The purpose of this Request for Information is to identify sources of supply for meals in support of disaster relief efforts based on a catastrophic disaster event within the New Madrid Fault System for a survivor population of 7M to be utilized for the sustainment of life during a 10-day period of operations.   FEMA is considering the following specifications (14M meals per day):

– Serving Size – 12 ounce (entree not to exceed 480 calorie count);
– Maximum calories – 1200 and/or 1165 per meal;
– Protein parameters – 29g-37g kit;
– Trans Fat – 0;
– Saturated Fat – 13 grams (9 calories per gram);
– Total Fat – 47 grams (less than 10% calories);
– Maximum sodium – 800-930 mg;

Requested Menus to include snacks (i.e. fruit mix, candy, chocolate/peanut butter squeezers, drink mix, condiments, and utensils).  All meals/kits must have 36 months of remaining shelf life upon delivery.   Packaging should be environmentally friendly.

Mysteriously, seven days later this RFI was cancelled.

At that same time, FEMA also issued an RFI that sought to identify a supplier for 140 million blankets.  You can view that RFI right here.  The following is an excerpt….

The Federal Emergency Management Agency (FEMA) procures and stores blankets to support readiness capability for immediate distribution to disaster survivors routinely.  The purpose of this Request for Information is to identify sources of supply for blankets in support of disaster relief efforts based on a catastrophic disaster event within the New Madrid Fault System for a survivor population of 7M to be utilized for the sustainment of life during a 10-day period of operations.   FEMA is considering the following specifications (14M blankets per day):

– 100% cotton;
– White;
– 66″ x 90″

Also, there have been some much publicized shortages of storable feed recently.  There has been much speculation about whether or not the government is part of the reason for these shortages.

There are some products that simply were not available for an extended period of time.  For example, the following was posted on the Mountain House home page….

As you know we have removed #10 cans from our website temporarily. The reason for this is sales of #10 cans have continued to increase. OFD is allocating as much production capacity as possible to this market segment, but we must maintain capacity for our other market segments as well.

The shortages around the country got so bad at one point earlier this year that a special alert was posted on Raiders News….

Look around you. Read the headlines. See the largest factories of food, potassium iodide, and other emergency product manufacturers literally closing their online stores and putting up signs like those on Mountain House’s Official Website and Thyrosafe’s Factory Webpage that explain, due to overwhelming demand, they are shutting down sales for the time being and hope to reopen someday.

Unfortunately, shortages have not been limited to storable food.  Most Americans don’t realize this, but there is a significant shortage of certain pharmaceutical drugs in many areas of the country right now.  Just check out the video news report posted below….

In addition, it is not just in the United States where food is being aggressively stored up.  For example, a recent article in The Telegraph noted that governments all over the globe are now stockpiling food….

Authoritarian governments across the world are aggressively stockpiling food as a buffer against soaring food costs which they fear may stoke popular discontent.

Also, some governments are now gobbling up as much farmland as they can.

According to the New York Times, China has been buying up “vast tracts of Latin America’s agricultural heartland” and is seeking to acquire quality farmland all over the globe.

So what does all of this mean?

It could mean something.

It could mean nothing.

But as I have written about so much recently, we really do seem to be on the verge of a major economic crisis.

The signs that the financial world is melting down are all around us.  I won’t take the time to repeat what I have covered in the last few days here.  If you missed any of it, just go back and read these articles over….

*Is Financial Instability The New Normal?

*Depressed As A Nation? 80 Percent Of Americans Believe That We Are In A Recession Right Now

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

One thing that I haven’t covered yet is a very curious move by Lloyd’s of London.  It turns out the Lloyd’s of London has started pulling money out of banks in Europe’s peripheral economies according to Bloomberg….

Lloyd’s of London, concerned European governments may be unable to support lenders in a worsening debt crisis, has pulled deposits in some peripheral economies as the European Central Bank provided dollars to one euro-area institution.

At this point, world financial markets have officially entered “bear” territory.  In fact, global stocks are down approximately 20 percent since May.

Many believe that what we have seen is just the beginning of another major financial crisis.

For example, in a recent editorial for The Ticker, Karl Denninger (who saw the 2008 crash coming) warned that the house of cards is starting to fall once again….

Well, America (and the world), you’ve been scammed by the financial institutions and governments for the last 30 years.  2008 was the first spasm of recognition but was short-circuited by…. you guessed it…. even more scams.  Rather than demand truth and an end to the games the American consumer lapped up the frauds and schemes of the politicians on both sides of the aisle who conspired with the financiers to rip you off once again.

Later on in the editorial, Denninger stated that he hopes that all of us have “taken the last couple of years to become prepared”….

Now recognition of that fact is dawning on people in a convulsive fashion, and markets of all sorts are reacting as one would expect when their entire worldview is exposed as having been a gigantic and intentional pyramid scheme constructed of debt layered upon debt thatcannot be paid down.  The wrong thing was done in 2008 and there is zero evidence that our government has changed one iota in their singular focus on misdirection and lies in this regard.

Welcome to awareness; I hope you’ve taken the last couple of years to become prepared.

Well, if the anecdotal evidence presented above is an indication of a larger trend, it appears that the government is getting prepared.

And if the government is stockpiling food, who can blame them?

It should be obvious to anyone that the world has become an incredibly unstable place.

Hopefully we are not about to enter another major economic crisis, but it never hurts to be prepared.

If anyone out there has any additional information that is relevant to this report, please let me know.

If the government really has started to aggressively stockpile food, that would be an important thing to know.

If it is happening, the mainstream media surely will not tell us about it.  So we will have to rely on one another for information.

So what do you think about all of this?  Please feel free to post a comment with your opinion below….

The Coming Economic Hell For American Families

Tens of millions of American families are about to go through economic hell and most of them don’t even realize it. Most Americans don’t spend a whole lot of time thinking about things like “monetary policy” or “economic cycles”.  The vast majority of people just want to be able to get up in the morning, go to work and provide for their families.  Most Americans realize that things seem “harder” these days, but most of them also have faith that things will eventually get better.  Unfortunately, things aren’t going to get any better.  The number of good jobs continues to decline, the number of Americans losing their homes continues to go up, people are having a much more difficult time paying their bills and our federal government is drowning in debt.  Sadly, this is only just the beginning.

Since the financial collapse of 2008, the Federal Reserve and the U.S. government have taken unprecedented steps to stimulate the economy.  But even with all of those efforts, we are still living in an economic wasteland.

So what is going to happen when the next wave of the economic crisis hits?

During one recent interview, Peter Schiff made the following statement….

If you look at the economic relapse that’s going on right now, look at Friday’s abysmal job numbers, look at the housing numbers, understand that all of this is taking place with record monetary and fiscal stimulus. What happens if we remove those supports?

At the end of June, the Federal Reserve’s quantitative easing program is slated to end.  The U.S. Congress and state legislatures from coast to coast are talking about budget cuts.  The amount of borrowing and spending that has been going on is clearly unsustainable, but will the U.S. economy start shrinking again once the current “financial sugar high” has worn off?

Already, all sorts of bad economic news has been coming out and all kinds of economic indicators are turning south.  The American people are becoming increasingly restless.  One new poll has found that 59 percent of the American people disapprove of Barack Obama’s handling of the economy (which is a new high).  According to another recent poll, 63% of Americans say that they feel “not good” or “bad” about how the U.S. economy is performing.

If most Americans had good jobs, could afford their mortgages and could pay their bills, the economy would not be such a big issue.

Unfortunately, times are really tough for American families right now and they are about to get a lot tougher.

*Jobs*

The official unemployment rate just went up to 9.1 percent, but that figure only tells part of the picture.

There are some areas of the country where it seems nearly impossible to find a decent job.  Millions of Americans have fallen into depression as they find themselves unable to provide for their families.

According to CBS News, 45.1 percent of all unemployed Americans have been out of work for at least six months.  That is a higher percentage than at any point during the Great Depression.

Just two years ago, the number of “long-term unemployed” in the United States was only 2.6 million.  Today, that number is up to 6.2 million.

Can you imagine being out of work for 6 months or more?

How would you survive?

Just look at the chart below.  What we are going through now is really unprecedented.  The average duration of unemployment in this country is now close to 40 weeks….

So will things get any better soon?  Well, there were only about 3 million job openings in the United States during the month of April.  Normally there should be about 4.5 million job openings.  The economy is slowing down once again.  Good jobs are going to become even more rare.

There are millions of other Americans that are “underemployed”.  All over the United States you will find hard working Americans that are flipping burgers or working in retail stores because that is all they can get right now.

Most temp jobs and most part-time jobs don’t pay enough to be able to provide for a family.  But there are not nearly enough full-time jobs for everyone.

Sadly, the number of “middle class jobs” is about 10 percent lower than a decade ago.  There are simply less tickets to the “good life” than there used to be.

*Homes*

But without good jobs, the American people cannot afford to buy homes.

Without good jobs, the American people cannot even afford the homes that they are in now.

U.S. home prices have fallen 33 percent since the peak of the housing bubble.  That is more than they fell during the Great Depression.

This decline in housing prices has caused a lot of problems.

28 percent of all homes with a mortgage in the United States are in negative equity at this point.  There are millions of American families that are now paying on mortgages that are for far more than their homes are worth.

Millions of American families literally feel trapped in their homes.  They can’t afford to sell their homes, and if they simply walk away nobody will approve them for new home loans for many years to come.

Many Americans are sticking it out and are staying in their homes until they simply can’t pay for them anymore.

As the number of good jobs continues to decline, the number of Americans that are losing their homes continues to rise.

For the first time ever, more than a million U.S. families lost their homes to foreclosure in a single year during 2010.

If the economy slows down once again and millions more Americans lose their jobs this problem is going to get a lot worse.

*Bills*

Even if they aren’t losing their homes yet, millions of other Americans families are finding it increasingly difficult to pay the bills.

Wages have been very flat over the past few years and yet the cost of most of the basics just seems to keep going up and up.

According to Brent Meyer, a senior economic analyst at the Federal Reserve Bank of Cleveland, the cost of food and the cost of energy have risen at an annualized rate of 17 percent over the past six months.

Have your wages gone up by 17 percent over the past six months?

As 2009 began, the average price of a gallon of gasoline in the United States was $1.83.  Today it is $3.77.

American families are finding that their paychecks are going a lot less farther than they used to, but Ben Bernanke keeps insisting that we have very little inflation in 2011.

Most Americans don’t care much about economic statistics – they just want to be able to do basic things like take their children to the doctor.

According to one recent survey, 26 percent of Americans have put off doctor visits because of the economy.

Sadly, soon a lot more American families will not be able to afford to go to the doctor.

According to one recent survey, 30 percent of all U.S. employers will “definitely or probably” quit offering employer-sponsored health coverage once Obamacare is fully implemented in 2014.

As the economic situation has unraveled, an increasing number of people are being forced to turn to the federal government for assistance.

One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.

Some of the hardest hit members of our society have been our children.  Today, one out of every four American children is on food stamps.

Back in the old days, a large percentage of American families were self-sufficient, but that is no longer the case.

Back in 1850, approximately 50 percent of all Americans worked on farms.

Today, less than 2 percent of Americans do.

So these days when American families can’t feed themselves what do they do?

They turn to the federal government of course.

At the moment, approximately 44 million Americans are on food stamps.

But our federal government cannot afford to spend money like this forever.

According to a recent USA Today analysis, the U.S. federal government took on $5.3 trillion in new financial obligations during 2010.  USA Today says that the U.S. government now has $61.6 trillion in financial obligations that have not been paid for yet.

Wow!

Who is going to end up paying that bill?

So with so much bad news, are our leaders alarmed?

Not really.

According to Federal Reserve Chairman Ben Bernanke, “growth seems likely to pick up somewhat in the second half of the year.”

Yeah, we’ll see how that prediction works out.

Others are not so sure that everything is going to turn out okay.

Recently, James Carville warned that we could literally see rioting in the streets if the economic situation does not turn around soon.  Just check out the last part of the video below….

The truth is that America is in decline.  Just like with all of the great empires of the past, our empire is starting to crumble too.

A recent article in the Guardian touched on some of the reasons for America’s decline….

The experience of both Rome and Britain suggests that it is hard to stop the rot once it has set in, so here are the a few of the warning signs of trouble ahead: military overstretch, a widening gulf between rich and poor, a hollowed-out economy, citizens using debt to live beyond their means, and once-effective policies no longer working. The high levels of violent crime, epidemic of obesity, addiction to pornography and excessive use of energy may be telling us something: the US is in an advanced state of cultural decadence.

The economic news is only part of the puzzle.  This country has rejected the ancient wisdom that was passed down to us and we have rejected the principles of our founding fathers.

We have piled up the biggest mountain of debt in the history of the world and yet somehow we expected that everything would turn out okay.

Well, everything is not going to turn out okay.

All of this debt is going to come down on us like a ton of bricks and the U.S. economy is going to continue to fall apart.  Millions of American families are going to lose their jobs and their homes.

Economic hell is coming.

You better get ready.

Will Thousands Of Police Layoffs Unleash Chaos And Anarchy Across America?

Thousands of police officers have been laid off all across America since the current economic crisis began.  Thousands more are getting ready to be laid off.  So could we be on the verge of a new era of chaos and anarchy in America as crime runs wild and there are just far too few police to respond to it all?  That is the message that one blood-smeared billboard in Stockton, California is trying to get across.  Paid for by the Stockton, California police union, the message of the billboard is chillingly clear: “Welcome to the 2nd most dangerous city in California. Stop laying off cops.”  As state, city and local governments across the United States continue to be devastated by the ongoing economic crisis, budget cuts are becoming much deeper and police forces have suddenly become a very popular target.

Officer Steve Leonesio, the president of the Stockton Police Officers Association, has announced that the police union plans to spend approximately $20,000 on at least 20 more billboards.

Why is the union putting up all of these billboards?

Well, it turns out that Stockton has been considering a plan to lay off 53 police officers in an effort to eliminate a $23 million budget deficit.

But law enforcement in Stockton has already been cut to the bone.  Recently, the Stockton Police Department dropped this bombshell….

“We absolutely do not have any narcotics officers, narcotics sergeants working any kind of investigative narcotics type cases at this point in time.”

Do you think drug dealers will be flocking to Stockton after they hear that?

But the truth is that so many of these local governments around the nation are just flat broke at this point. 

Even major cities are having to admit that they have accumulated such large debts that they cannot even afford to provide the most basic services any longer.

In Oakland, California the battle over police layoffs has made national headlines over the past couple of weeks.  Oakland has laid off 80 police officers, and now the police chief says that there are some crimes that his department simply will not be able to respond to.

In fact, Chief Anthony Batts has compiled a list of exactly 44 situations, including grand theft, burglary, car wrecks, identity theft and vandalism, that his officers will not be available to handle any longer.

What in the world?

Once upon a time in America you could get a police officer to come out for just about anything – including for getting a cat down out of a tree.

But those days are long gone.

Today it is very hard to get a police officer to come out for anything short of murder. 

The following is a partial list of crimes that police officers in Oakland will no longer be responding to….

  • burglary
  • theft
  • embezzlement
  • grand theft
  • grand theft: dog
  • identity theft
  • false information to peace officer
  • required to register as sex or arson offender
  • dump waste or offensive matter
  • discard appliance with lock
  • loud music
  • possess forged notes
  • pass fictitious check
  • obtain money by false voucher
  • fraudulent use of access cards
  • stolen license plate
  • embezzlement by an employee (over $ 400)
  • extortion
  • attempted extortion
  • false personification of other
  • injure telephone/power line
  • interfere with power line
  • unauthorized cable tv connection
  • vandalism

Not that Oakland wasn’t already a mess, but now how long do you think it will be before total chaos and anarchy reigns on the streets of Oakland?

But Oakland is far from alone.

The sheriff’s department in Ashtabula County, Ohio has been slashed from 112 to 49 deputies, and there is now just one vehicle remaining to patrol all 720 square miles of the county.

So what are the citizens of that county supposed to do to protect themselves?

Well, when asked about what they should do, Judge Alfred Mackey gave this stunning piece of advice….

“Arm themselves.”

So is that what we are left with?

Is American society degenerating into a “Road Warrior-style” wasteland where we are all left to fend for ourselves?

It gets really frightening when you start considering just how many police are actually being laid off across the United States….

*Acting State Police director Jonathon Monken has announced that the Illinois State Police will lay off more than 460 troopers and close five regional headquarters by this fall.

*Atlantic City Mayor Lorenzo Langford has proposed a plan to lay off 40 police officers.

*The police department in Vallejo, California will temporarily suspend its K-9 and SWAT programs at the end of the month in a move to delay officer layoffs.

*Last year, 18 special police units in Toledo, Ohio – including the gang task force and the mounted patrol – were eliminated or downsized in an effort to replace the 130 patrol officers who were laid off because of a $20.7 million budget deficit.

*Of 315 municipalities the New Jersey State Policemen’s union canvassed, more than half indicated that they were planning to lay off police officers.

*Four police officers in one town in New Jersey were greeted at work this past Monday morning with notices informing them that they will be laid off on August 31st.

*Police in Phoenix, Arizona have been told that more than 400 officers could be impacted by layoffs if “the worst case scenario” plays out.

*Police and firefighters in Flint, Michigan decided that layoffs were preferable to taking a 15 percent pay and benefits cut.

*The city of Maywood, California laid off all 68 of its employees July 1st and is now “contracting out” police services.

*In Colorado Springs, dozens of police positions are going unfilled and the police helicopters were put up for sale on the Internet.

The sad thing is that as local police forces across America are being stripped down or dismantled, many communities are opening their arms wide to increased federal law enforcement “assistance”. 

In recent years, we have seen a large number of examples where the U.S. military is being used for domestic law enforcement, which is supposed to be against the law.  In addition, federal government agencies are increasingly taking over the financing, training and even command of local police.

But is this “federalization” of local law enforcement a good thing?

Of course not.

Unfortunately we live at a time when almost everything is being centralized under federal government control.  Of course this is completely contrary to everything that our founders intended, but most of our “officials” don’t seem too concerned about actually following the Constitution these days.

So what are you seeing in your own local community?  Is the police force being slashed where you live?  Is crime on the rise?  Feel free to leave a comment with your opinion….

Bad Economic News

It seems like almost everywhere you turn these days there is bad economic news.  Foreclosures are setting records, unemployment remains depressingly high, poverty is exploding, U.S. government debt is wildly out of control and Europe is on the verge of an economic collapse that could send the entire globe into a devastating financial panic.  If all that wasn’t enough, the oil spill in the Gulf of Mexico has destroyed the seafood and tourism industries along the Gulf coast and threatens to push that entire region into a depression for years to come.  The truth is that the more you look at the economic statistics coming in from around the globe the more it becomes obvious that we are headed for a complete and total economic nightmare. 

Just consider some of the most recent economic news…. 

*The number of U.S. home foreclosures set a record for the second consecutive month in May.  How can the U.S. housing industry be recovering when the number of Americans being foreclosed on continues to set all-time records?

*As of March, U.S. banks had an inventory of approximately 1.1 million foreclosed homes, up 20 percent from a year ago.  Instead of working their way through the huge backlog of unsold homes, U.S. banks continue to pile up a massive inventory of foreclosed homes at a staggering pace.

*According to figures from the U.S. Commerce Department, housing starts in the United States fell 10 percent in May, the biggest decline since March 2009.  The data also revealed that single-family home starts suffered the biggest drop since 1991.  There is already a massive glut of unsold homes on the market, so builders simply do not think it is profitable to build many new homes right now.

*Officials now tell us that the cost of “fixing” Fannie Mae and Freddie Mac, the government-backed mortgage companies that last year bought or guaranteed the vast majority of all U.S. home loans, will be at least $160 billion and could grow as high as $1 trillion.  The twin pillars of the U.S. mortgage industry have become financial black holes that the U.S. government endlessly pours massive amounts of cash into.  That is not a good sign.

*Fannie Mae and Freddie Mac are to be delisted from the New York Stock Exchange because their stock prices have been trading under $1 per share for more than 30 trading days.  The truth is that Fannie Mae and Freddie Mac would have completely imploded by now if the U.S. government had not decided to step in and bail them out.

*The average duration of unemployment in the United States has risen to an all-time high.  Not only are a ton of Americans out of work, they can’t find work for a very, very long time once they are unemployed.

*For Americans younger than 25 years of age, the unemployment rate is 18.8%.  But even those young Americans that can find employment often find themselves working in very low paying service jobs.

*Federal Reserve Chairman Ben Bernanke says that the U.S. unemployment rate is likely to stay “high for a while”.  Considering how badly Bernanke has been doing his job, it would be really nice if we could add just one more person to the unemployment rolls.

*According to one new study, approximately 21 percent of children in the United States are living below the poverty line in 2010 – the highest rate in 20 years.  There are hundreds of thousands of American children on the streets each night, and yet we continue to insist that we are the greatest country in the world. 

*For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.  How many tens of millions of Americans have to be on food stamps before we officially say that we are in a depression?

*According to the Wall Street Journal, the debates have begun inside the Fed about what it should do in the event of a “double dip” recession.  If they are already debating what to do during the next economic downturn that means it is probably a foregone conclusion. 

*If you were alive when Christ was born and spent one million dollars every single day from then until now, you still would not have spent one trillion dollars by now.  But somehow the U.S. government is now over 13 trillion dollars in debt.  According to a U.S. Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015. 

*It is being projected that the U.S. national debt will grow to surpass our gross domestic product in 2012.  Needless to say, that is a really, really bad sign.

*The total of all government, corporate and consumer debt in the United States is now equal to 360 percent of GDP.  At no point during the Great Depression did we ever even come close to such a figure.

But things may be even worse in Europe right now.  Unfortunately for the U.S., when Europe experiences an economic collapse it will devastate the American economy as well. 

The economic news coming out of Europe lately has been extremely alarming….

*George Soros says that a European recession next year is “almost inevitable”.  Considering how much access George Soros has to inside information, the fact that he is so pessimistic about Europe is a very troubling thing indeed.

*A report by the Bank for International Settlements says that the debt crisis hitting southern Europe resembles the 2007 subprime mortgage crisis.  Is history about to repeat itself?

*Moody’s has downgraded Greece government bond ratings into junk territory, citing the risks inherent in the rescue package that the rest of the eurozone has put together for them.  Soon Spain, Portugal, Italy, Ireland, Romania and a number of other European nations could have their debt downgraded as well. 

*The U.K.’s  new Office for Budget Responsibility has announced that the U.K. economy was more damaged by the recent financial crisis than previously admitted, and that it may never fully recover.  But the same could be said for many other nations across the world as well.

*21.5% of all working-age people in the U.K. do not have a job.  It seems like almost every country has a shortage of jobs these days.

*New U.K. Prime Minister David Cameron is warning that Britain’s “whole way of life” is about to be significantly disrupted for years by the most drastic public spending cuts in a generation.  In fact, severe austerity measures being implemented all across Europe could make this one of the most “interesting” European summers in ages.

*Spanish banks are borrowing record amounts of money from the European Central Bank as Spain’s financial institutions are finding it increasingly difficult to acquire funds in international capital markets.  But the truth is that it isn’t just Spanish banks that are facing a liquidity squeeze – the entire world is heading for a massive credit crunch.

But the biggest piece of bad economic news of all is the nightmare that is unfolding in the Gulf of Mexico.  There is no way that the southeast United States is going to be the same after this.  Hordes of businesses and entire industries have been literally destroyed over the past two months.  The total economic damage from this unprecedented disaster will easily run into the hundreds of billions of dollars.  This is an economic blow that the teetering U.S. economy simply could not afford right now.  Once the oil finally stops flowing the crisis will not be over.  In fact, the aftermath from this oil spill could end up echoing for decades.

So are things bad out there?  Yes, things are incredibly bad and they are about to get a whole lot worse.  In fact, there are so many cancers eating away at the U.S. economy that it would take an entire book to detail them all. 

What we are dealing with is not “just another recession” or “just another economic downturn”.  What we are witnessing is the fundamental unraveling of the monstrous debt spiral that our economy is based upon.  Any economy that is built on a foundation of debt and paper money is inevitably doomed.

So yes, the bad economic news is going to continue.  Things may get better for a while here and there, but the truth is that we are caught in a long-term spiral of economic decline from which there is no escape.

So what do you think?  Do you believe that there is hope for the U.S. economy?  Feel free to leave a comment with your opinion….

9 Reasons Why Spain Is A Dead Economy Walking

Barring an economic bailout of mammoth proportions, the economy of Spain is completely and totally doomed.  The socialist government of Spain is drowning in debt, unemployment is running rampant and everywhere you turn there are major economic problems.  So will Spain be the next Greece?  No.  When the economy of Spain implodes it is going to be a whole lot worse for the world economy.  The economy of Spain is more than four times the size of the economy of Greece.  Spain accounts for 11.5 percent of eurozone GDP while Greece only accounts for approximately 2.5 percent.  Spain is the 4th largest economy in the 16 nation eurozone and it is the 10th largest economy in the world.  If the economy of Spain fails it will cause a shockwave that will be felt in every corner of the globe.  In fact, there are quite a few analysts that believe if Spain defaults it would ultimately lead to the breakup of the eurozone.

So will the EU step up and bail out Spain?  Well, there are rumors that EU officials have begun work on a bailout package for Spain which is likely to run into the hundreds of billions of dollars, but on Monday the European Commission, the Spanish government and the German government all denied that the European Union was preparing a bailout for the Spanish economy.

Of course we all know that politicians don’t always tell us the truth.

So who knows what is going on over there right now.

But the reality is that the economy of Spain is not going to make it much longer without serious help, and some EU officials are already using apocalyptic language to describe what an economic collapse in Spain would mean.

For example, EU Commission President Jose Manuel Barroso recently warned that democracy could completely collapse in Greece, Spain and Portugal unless urgent action is taken to tackle the burgeoning European debt crisis.

So could democracy actually fail in those nations?

Well, considering the fact that Greece, Spain and Portugal only became democracies in the 1970s, and that all three of those countries have a history of military coups, such a scenario is not that far-fetched.

Without a doubt there would be serious public unrest in those nations if public services collapsed because their governments ran out of money.

So are there signs that the economy of Spain is about to collapse?

Well, yes, there are quite a few of them.

The following are 9 reasons why Spain is a dead economy walking….

#1) Even before this most recent crisis, unemployment in Spain was approaching Great Depression levels.  Spain now has the highest unemployment rate in the entire European Union. More than 20 percent of working age Spaniards were unemployed during the first quarter of 2010.  If people aren’t working they can’t pay taxes and they can’t provide for their families.

#2) In an effort to stimulate the economy, Spain’s socialist government has been spending unprecedented amounts of money and that skyrocketed the government budget deficit to a stunning 11.4 percent of GDP in 2009.  That is completely unsustainable by any definition.

#3) The total of all public and private debt in Spain has now reached 270 percent of GDP.

#4) The Spanish government has accumulated way more debt than it can possibly handle, and this has forced two international ratings agencies, Fitch and Standard & Poor’s, to lower Spain’s long-term sovereign credit rating.  These downgrades are making it much more expensive for Spain to finance its debt at a time when they simply can’t afford to pay more interest on their debt.

#5) There are 1.6 million unsold properties in Spain.  That is six times the level per capita in the United States.  Considering how bad the U.S. real estate market is, that statistic is incredibly alarming.

#6) The new “green economy” in Spain has been a total flop.  Socialist leaders promised that implementing hardcore restrictions on carbon emissions and forcing the nation over to a “green economy” would result in a flood of “green jobs”.  But that simply did not happen.  In fact, a leaked internal assessment produced by the government of Spain reveals that the “green economy” has been an absolute economic nightmare for that nation.  Energy prices have skyrocketed in Spain and the new “green economy” in that nation has actually lost more than two jobs for every job that it has created.  But Spain so far seems unwilling to undo all of the crazy regulations that they have implemented.

#7) Spain’s national debt is so onerous that they are now caught in a debt spiral where anything they do will harm the economy.  If they cut government expenditures in an effort to get debt under control it will devastate economic growth and crush badly needed tax revenues.  But if the Spanish government keeps borrowing money their credit rating will continue to decline and they will almost certainly default.  The truth is that the Spanish government is caught in a “no win” situation.

#8) But even now the IMF is projecting that the Spanish economy is going nowhere fast.  The International Monetary Fund says there will be no positive GDP growth in Spain until 2011, at which point it will still be below one percent.  As bleak as that forecast is, many analysts believe that it is way too optimistic considering the fact that Spain’s economy declined by about 3.6 percent in 2009 and things are rapidly getting worse.

#9) The Spanish population has gotten used to socialist handouts and they are not going to accept public sector pay cuts, budget cuts to social programs and hefty tax increases easily.  In fact, there is likely to be some very serious social unrest before all of this is said and done.  On May 21st, thousands of public sector workers took to the streets of Spain to protest the government’s austerity plan.  But that was only an appetizer.  Spain’s two main unions are calling for a major one day general strike to protest the government’s planned reforms of the country’s labor market.  The truth is that financial shock therapy does not go down very well in highly socialized nations such as Greece and Spain.  In fact, the austerity measures that Spain has been pressured to implement by the IMF have proven so unpopular that many are now projecting that Spain’s socialist government will be forced to call early elections.

So what is going to happen in Spain?

The truth is that nobody can predict for sure how things are going to play out over the coming weeks and months.

But what everyone can agree on is that the stakes are incredibly high.

Speaking at the World Economic Forum in Davos, Switzerland, world famous economist Nouriel Roubini put it this way: “If Greece goes under, that’s a problem for the eurozone. If Spain goes under, it’s a disaster.”

But right now the entire population of Spain (along with much of the rest of the world) is completely distracted by the World Cup.  As long as the Spanish team does well, that is likely to keep the Spanish population sedated.  But if the Spanish team gets knocked out of the tournament early that will put the entire Spanish population in a really, really bad mood and that could mean a really chaotic summer for the nation of Spain.

30 Shocking Quotes About The Gulf Of Mexico Oil Spill That Reveal The Soul-Crushing Horror This Disaster Is Causing

It is incredibly hard to put into words the absolute horror that is happening in the Gulf of Mexico right now.  The millions of gallons of oil that have gushed into the Gulf of Mexico and BP’s efforts to fight the massive leak are turning the Gulf into a lifeless toxic stew of oil and chemicals.  The damage caused to wildlife in the Gulf by this spill will be incalculable.  Entire species are at risk of being wiped out.  Scientists are telling us that the primary dispersant being used by BP ruptures red blood cells and causes fish to bleed.  This is by far the greatest environmental disaster in U.S. history, and there is no end in sight.  It is a worse environmental and economic disaster than all of the hurricanes of the past ten years combined.  The great wetlands and beaches along the Gulf of Mexico will never be the same in our lifetimes.  The seafood and tourism industries in the Gulf are being completely destroyed.  The thousands of jobs and businesses being wiped out by this disaster could potentially throw the entire Gulf coast region into a depression.  The damage already caused by this oil spill is beyond measure and yet the government tells us that up to 19,000 barrels (798,000 gallons) of oil a day continue to flow into the Gulf of Mexico.

Federal officials have expanded the “no fishing” area in the Gulf of Mexico to 75,920 square miles.  That is 31 percent of all federal waters in the Gulf.  As the oil continues to spread out there may soon be nowhere to fish.

And the oil is starting to come ashore in more places.  Red-brown oil was found on Alabama’s Dauphin Island on Tuesday.  As Gulf coast residents slowly watch this oil destroy everything around them they are starting to realize that this is it.

Life along the Gulf of Mexico will simply never be the same again. 

The following are 30 shocking quotes about the Gulf of Mexico oil spill that reveal the soul-crushing horror this disaster is causing….

#1) Councilman Jay LaFont of Grand Isle, Louisiana:

“As long as you have something to look forward to, a little glimmer of hope, you can move on. But this just drained everything out of us.”

#2) Billy Nungesser, president of Plaquemines Parish:

“They said the black oil wouldn’t come ashore. Well, it is ashore. It’s here to stay and it’s going to keep coming.”

#3) Prosanta Chakrabarty, a Louisiana State University fish biologist:

“Every fish and invertebrate contacting the oil is probably dying. I have no doubt about that.”

#4) Marine toxicologist Dr. Susan Shaw, director of the Marine Environmental Research Institute on BP’s use of chemical dispersants:

“They’ve been used at such a high volume that it’s unprecedented. The worst of these – Corexit 9527 – is the one they’ve been using most. That ruptures red blood cells and causes fish to bleed. With 800,000 gallons of this, we can only imagine the death that will be caused.”

#5) Dr. Larry McKinney, director of the Harte Research Institute for Gulf of Mexico Studies in Texas:

“Bluefin tuna spawn just south of the oil spill and they spawn only in the Gulf. If they were to go through the area at a critical time, that’s one instance where a plume could destroy a whole species.”

#6) Carol Browner, Barack Obama’s adviser on energy and climate:

“This is probably the biggest environmental disaster we have ever faced in this country. It is certainly the biggest oil spill and we are responding with the biggest environmental response.”

#7) Richard Charter of the Defenders of Wildlife:

“It is so big and expanding so fast that it’s pretty much beyond human response that can be effective. … You’re looking at a long-term poisoning of the area. Ultimately, this will have a multidecade impact.”

#8) Reverand Mike Tran:

“We don’t know when this will ever be over. It’s a way of life that’s under assault, and people don’t when their next paycheck is going to be.”

#9) Louis Miller of the Mississippi Sierra Club:

“This is going to destroy the Mississippi and the Gulf Coast as we know it.”

#10) Dean Blanchard, owner of a seafood business:

“I hold Obama responsible for not making BP stand up and look at the people in the face and fix it.”

#11) Louisiana Governor Bobby Jindal:

“The day that we’ve been fearing is upon us.”

#12) Billy Nungesser, president of Plaquemines Parish, about BP CEO Tony Hayward:

“We ought to take him offshore and dunk him 10 feet underwater and pull him up and ask him ‘What’s that all over your face?”

#13) Former Clinton adviser James Carville:

“The country feels like it’s entitled to abuse this state and forget about us, and we are sick of it.”

#14) An anonymous Louisiana resident:

“A hurricane is like closing your bank account for a few days, but this here has the capacity to destroy our bank accounts.”

#15) U.S. Representative Edward Markey:

“I have no confidence whatsoever in BP . I think that they do not know what they are doing.”

#16) Gulf coast resident Marie Michel:

“Immediately, it’s no more fishing, no more crabbing, no more swimming, no more walking on the beach.”

#17) Brenda Prosser of Mobile, Alabama:

“I just started crying. I couldn’t quit crying. I’m shaking now.  To know that our beach may be black or brown, or that we can’t get in the water, it’s so sad.”

#18) Qin Chen, an associate professor of civil and environmental engineering at Louisiana State University in Baton Rouge on the possibility that a hurricane could push massive amounts of oil ashore along the Gulf:

“A hurricane in the Gulf of Mexico this year would be devastating.”

#19) Retired Army General Russel Honore on the effect this spill is having on residents of the Gulf coast:

“I’m sure, every time they hear a negative word, their skin crawls, ’cause they need these jobs. … This is what’s going to put their kids in school, and what pays the rent.”

#20) A group calling itself “Seize BP”:

“The greatest environmental disaster with no end in sight! Eleven workers dead. Millions of gallons of oil gushing for months (and possibly years) to come. Jobs vanishing. Creatures dying. A pristine environment destroyed for generations. A mega-corporation that has lied and continues to lie, and a government that refuses to protect the people.”

#21) Louisiania Governor Bobby Jindal:

“There has been failure, particularly with the effort to protect our coast and our marsh. And that was the biggest topic of discussion in a very frank meeting we had with the president.”

#22) BP’s chief operating officer, Doug Suttles:

“This scares everybody — the fact that we can’t make this well stop flowing, the fact that we haven’t succeeded so far.”

#23) Doug Rader, chief ocean scientist for the Environmental Defense Fund:

“You simply cannot make more (reefs), unless you have a few thousand years to wait.”

#24) Public Service Commissioner Benjamin Stevens:

“You get hit by a hurricane and you can rebuild. But when that stuff washes up on the white sands of Pensacola Beach, you can’t just go and get more white sand.”

#25) Wilma Subra, a chemist who has served as a consultant to the Environmental Protection Agency:

“Every time the wind blows from the south-east to the shore, people are being made sick.”

#26) Hotel Owner Dodie Vegas:

“It’s just going to kill us. It’s going to destroy us.”

#27) Louisiana resident Sean Lanier:

“Until they stop this leak, it’s just like getting stabbed and the knife’s still in you, and they’re moving it around.”

#28) White House energy adviser Carol Browner:

“There could be oil coming up until August.”

#29) Marine toxicologist Dr. Susan Shaw, director of the Marine Environmental Research Institute:

“We’ll see dead bodies soon. Sharks, dolphins, sea turtles, whales: the impact on predators will be seen in a short time because the food web will be impacted from the bottom up.”

#30) Plaquemines Parish President Billy Nungesser:

“We will die a slow death over the next two years as this oil creeps ashore.”

Europe’s Coming Summer Of Discontent

The summer of 2010 promises to be the most tumultuous summer in the short history of the European Union.  The sovereign debt crisis sweeping the continent threatens to cause economic and political instability on a scale not seen in Europe for decades.  The truth is that governments across the eurozone have accumulated gigantic piles of debt that simply are not sustainable.  Prior to the implementation of the euro, these European governments often “printed” their way out of messes like this, but now they can’t do that.  Now they either have to dramatically cut government expenses or they have to default.  But the austerity measures that the IMF and the ECB are pressuring these European governments to adopt are likely to have some very painful side effects.  Not only will these austerity measures cause a significant slowdown in economic growth, they are also likely to cause the same kinds of protests, strikes and riots that we saw in Greece to erupt all over Europe.

You see, most Europeans have become very accustomed to the social welfare state.  Tens of millions of Europeans aren’t about to let anyone cut their welfare payments or the wages on their cushy government jobs.  In most of the European nations that are experiencing big financial problems there are very powerful unions and labor organizations that do not want anything to do with austerity measures and that are already mobilizing.

As the IMF and the ECB continue to push austerity measures all over Europe this summer, the chaos that we witnessed in Greece could end up being repeated over and over again across the continent.  This could truly be Europe’s summer of discontent.

The following are just a few of the countries that we should be watching very carefully in the months ahead….

Spain

In many ways, the economic situation in Spain is now even worse than the economic situation in Greece.  Spain’s unemployment was already above 20 percent even before this recent crisis.  There are now 4.6 million people without jobs in Spain.  There are 1.6 million unsold properties in Spain, six times the level per capita in the United States.  Total public/private debt in Spain has reached 270 percent of GDP.

But this past week things really started to spin out of control in Spain.   Ambrose Evans-Pritchard of The Telegraph describes the current situation in Spain this way….

For Spain it has been a horrible week. The central bank seized CajaSur and imposed draconian write-down rules on banks to restore confidence. The Spanish Socialist and Workers Party (PSOE) of Jose Luis Zapatero then rammed a 5pc cut in public wages through the Cortes by a single vote, shattering consensus. The government cannot hope to pass a budget. Its own trade union base is planning a general strike.

The austerity measures that Spain has been pressured to implement have proven so unpopular in Spain that many are now projecting that Spain’s socialist government will be forced to call early elections.

Spain finds itself in a very difficult position.  They have a debt that they cannot possibly handle, the IMF and the ECB are pressuring Spain to implement austerity measures which are wildly unpopular with the public, and if Spain does implement those austerity measures it may send the Spanish economy into a downward spiral.

In addition, the fact that Fitch Ratings has stripped Spain of its AAA status has pushed Spain to the edge of financial oblivion.

A recent editorial inEl Pais spoke of the “perverse spiral” that Spain’s economy is entering….

“The Fitch note drives home the apparently unsolvable contradiction in which the Spanish economy finds itself. To maintain debt solvency Spain must squeeze public spending: yet this policy undermines the chances of recovery which itself causes further loss of confidence.”

And Spain’s very powerful labor organizations are not about to take these austerity measures sitting down.  In fact, the two largest trade unions in Spain are already calling for a general strike.

So could Spain end up being the next Greece?

France

France admitted on Sunday that keeping its top-notch credit rating would be “a stretch” without some tough budget decisions.

But French citizens are not too keen on belt-tightening.  We all remember the massive riots in France a few years ago when it was proposed the the work week should be shortened.  It certainly seems unlikely that the French will accept “tough budget decisions” without making some serious noise.

Italy

The Italian government recently approved austerity measures worth 24 billion euros for the years 2011-2012.  But the Italian public is less than thrilled about it.

In fact, Italy’s largest union has announced that it will propose to its members a general strike at the end of June to protest these measures.

Portugal

Under pressure from the IMF and the ECB, Portugal has agreed to impose fresh austerity measures that include much higher taxes and very deep budget cuts.

And the truth is that Portugal desperately needs to do something to get their finances under control.  Recent EU data shows that Portugal’s total debt is 331 percent of GDP, compared to only 224 percent for Greece.

So will the Portuguese public accept these austerity measures?

It doesn’t seem likely.

In fact, Fernando Texeira dos Santos, Portugal’s finance minister, says that he expects “violent episodes” comparable to those in Greece but insists that there is no other option.

So it promises to be a wild summer in Portugal.  The CGTP trade union federation in Portugal has promised to mobilize their members….

“Either we come up with a very strong reaction or we will be reduced to bread and water.”

Romania

They have already been rioting in the streets in Romania.

Tens of thousands of workers and pensioners recently took to the streets in Romania to protest the harsh austerity measures that the Romanian government is imposing at the request of the International Monetary Fund.

The Romanian people have been through incredibly hard times before, and they aren’t about to let the IMF and the ECB impose strict austerity measures on them without a fight.

Germany

It is being reported that Germans are bracing themselves for a “bitter” round of government budget cuts.  It seems that even Germany has some belt-tightening to do.

In addition, resentment is rising fast in Germany as the population there realizes that it is Germany that is going to be the one funding a large portion of the bailouts for these other European nations.

How long will the German people be able to control their tempers?

Ireland

The Wall Street Journal is warning that Ireland could be Europe’s next financial basket case.

Why?

Well, the Irish have gotten into a ton of debt, and they are now finding it very expensive to finance new debt.  The Irish government is now paying approximately 2.2 percentage points more than Germany is to borrow money for 10 years, while Spain (even with their economy in such a state of disaster) only has to pay 1.6 percentage points more than Germany.

But if “austerity measures” come to Ireland, how do you think the public will react?

It likely would not be pretty.

The United Kingdom

The exploding debt situation in the U.K. was a major issue in the most recent election.  David Cameron promised the voters to get the U.K.’s exploding debt situation under control.  But the coming budget cuts are likely to be incredibly painful.  In fact, Bank of England governor Mervyn King has even gone so far as to warn that public anger over the coming austerity measures will be so painful that whichever party is seen as responsible will be out of power for a generation.

But it isn’t just national governments that are in trouble in Europe.  The European Central Bank is warning that eurozone banks could face up to 195 billion euros in losses during a “second wave” of economic problems over the next 18 months.

The truth is that almost everyone is expecting the next couple of years to be very tough economically all across Europe.

But the vast majority of the European public is not going to understand the economics behind what is happening.  All most of them are going to know is that the budget reductions, tax increases and pay cuts really, really hurt and that is likely to result in a whole lot of anger.

When Europeans get really angry it isn’t pretty.  If what happened in Greece is any indication, this upcoming summer and fall could be a really wild one throughout Europe.

“Euroland, burned down. A continent on the way to bankruptcy”
-The front page of Der Spiegel, May 5th, 2010

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