Our Economy

Washington D.C. Is Essentially Just A Gigantic Money Machine

July 19, 2017July 19, 2017 by Michael

If you have ever wondered why our leaders in Washington D.C. seem to act so strangely, the truth is that it almost always comes down to just one thing. It has been said that “money makes the world go round”, and that is definitely true in Washington. This year the federal government will spend more than 4 trillion dollars, and that represents well over one-fifth of our national GDP. With so much money coming in and so much money going out, the stakes are incredibly high, and that is why so much money is poured into political campaigns on the national level.

And it shouldn’t surprise anyone that those that live the closest to this gigantic money machine have benefited greatly. Forbes just released their brand new rankings for 2017, and they found that five out of the top 10 wealthiest counties in the entire country are suburbs of Washington D.C.…

Virginia’s Loudoun County holds the title of the nation’s richest county with a median household income of $125,900. While nearly 10,000 residents commute to the District, according to Forbes, about 11,700 businesses employ 161,000 county residents, with Dulles International Airport, Loudoun County Public Schools and the Department of Homeland Security leading that charge.

The nearby city of Falls Church, Fairfax and Arlington counties in Virginia and Howard County in Maryland also lead the nation based on wealth.

In general, salaries for federal workers are significantly higher than in the private sector, and benefit packages are usually much better.

But in addition to having a very high concentration of federal workers, the D.C. area is also home to hordes of lawyers, lobbyists, defense contractors and other government vendors. Big government means big business for those guys, and business has been very good in recent years…

The federal government has a lot to do with this: The Capitol and the economy orbiting around it (including lawyers, defense contractors, computer engineers along the Dulles Corridor, and doctors near NIH) attract college graduates who reliably contribute to six-figure households. Crucially, there was a $1.7 billion increase in lobbying between 1998 and 2010, as Dylan Matthews explained. With each $1 million of lobbying “associated with a $3.70 increase in the D.C. wage premium,” the money pouring into Washington wound up in the pockets of its residents.

This certainly isn’t the limited government that our founders intended.

So where did we go wrong?

One of the big turning points came in 1913. That is the year when the Federal Reserve and the modern version of the income tax were established. The Federal Reserve was designed by the elite to get the federal government very deeply into debt, and an income tax was needed to help service that debt and to help pay for the much larger government that the progressives were wanting.

Back then, D.C. was nothing like it is today. In fact, even in the 1970s there were still large farms inside the Beltway. But the federal government just kept getting bigger and bigger and bigger, and now it is a four trillion dollar monstrosity.

What I believe we should do is to dismantle as much of that monstrosity as we possibly can. Instead of asking which government agencies we should close, I believe that we should be asking which government agencies we really need to leave open.

A great place to start would be by abolishing the Federal Reserve, the IRS and the income tax. Those institutions are at the very core of the Washington money machine, and so it would essentially be like tearing the heart out of big government.

And don’t worry, the federal government would still have plenty of money coming in. The individual income tax only accounts for about 46 percent of all federal revenue, and theoretically we could still have an absolutely enormous federal government without an income tax. I once wrote an article that listed 97 different ways that various levels of government get money out of us each year, and so getting rid of the federal income tax would still leave 96 ways for the politicians to extract money from us.

As I remind my readers so frequently, the greatest period of economic growth in U.S. history was when there was no income tax and no central bank. But I know that a lot of people out there love the 1.33 percent average yearly GDP growth rate that we have been experiencing over the past decade and would have a really hard time giving that up.

Unfortunately, it would actually be a very tough transition to a much more limited federal government because so much of our society is geared around the enormous money machine in Washington. In 2018, more than a billion dollars will be spent on the mid-term elections, and most of that money will be going to incumbents that are committed to maintaining the status quo.

If we ever want things to really start changing in Washington, we have got to start sending people there that haven’t been bought off by the big money interests.

In my congressional district there is no incumbent running in 2018, and nobody else in the race is nearly as conservative as I am. But since I can’t be bought by the special interests, I am going to have to rely on grassroots support.

Donald Trump showed us that anything is possible in American politics. When Jeb Bush decided to run for president, he had an extremely long list of endorsements and a hundred million dollars behind him, and he still got trounced by Trump because Trump had a much stronger message.

If we stand united, we can take our government back and there won’t be anything that the establishment will be able to do about it.

But if we sit back and do nothing, the cesspool of corruption in Washington D.C. will just continue to get deeper and deeper.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Donald Trump’s Convention Speech Highlighted The Truth About America’s Decline

July 21, 2016July 21, 2016 by Michael

America is in decline. There are some that still attempt to deny this, but the reason why Donald Trump’s campaign slogan has so strongly resonated with the American people is because deep inside most of us realize that America is not as great as it used to be. Our economy is a mess, we are 19 trillion dollars in debt, our infrastructure is crumbling, crime is on the rise, moral decay is all around us, other countries don’t respect us as much anymore, and our nation is the most divided that it has been in decades. Anyone that believes that America is better than it has ever been in 2016 is either completely delusional or simply has not been paying attention.

As I write this article, the prepared text of Trump’s speech has already been released to the press. So the following remarks may differ slightly from how he actually delivered them, but the differences are not likely to be too great. At one point during his speech, Trump highlighted the rising crime and violence in our cities, and the numbers that he had to share were more than just a little bit alarming…

Decades of progress made in bringing down crime are now being reversed by this Administration’s rollback of criminal enforcement. Homicides last year increased by 17% in America’s fifty largest cities. That’s the largest increase in 25 years. In our nation’s capital, killings have risen by 50 percent. They are up nearly 60% in nearby Baltimore.

In the President’s hometown of Chicago, more than 2,000 have been the victims of shootings this year alone. And more than 3,600 have been killed in the Chicago area since he took office.

The number of police officers killed in the line of duty has risen by almost 50% compared to this point last year. Nearly 180,000 illegal immigrants with criminal records, ordered deported from our country, are tonight roaming free to threaten peaceful citizens.

And it is really hard to argue with Trump about this. We have all seen what just happened in Orlando, in Dallas and in Baton Rouge. As I have said so many times before, a spirit of violence and civil unrest is rising in America.

Donald Trump thinks that he can fix this. Unfortunately, I don’t think that any politician will be able to do that at this point.

Our long-term economic decline is another puzzle that our national leaders have been unable to solve. Gallup’s U.S. economic confidence index just hit the lowest level so far this year, and poverty levels continue to rise all over the country. The following is another excerpt from the text of Trump’s speech…

Nearly 4-in-10 African-American children are living in poverty, while 58% of African-American youth are not employed. Two million more Latinos are in poverty today than when the President took his oath of office less than eight years ago. Another 14 million people have left the workforce entirely.

Household incomes are down more than $4,000 since the year 2000. Our manufacturing trade deficit has reached an all-time high – nearly $800 billion in a single year.

The budget is no better. President Obama has doubled our national debt to more than $19 trillion, and growing.

Yet, what do we have to show for it? Our roads and bridges are falling apart, our airports are in Third World condition, and forty-three million Americans are on food stamps.

Even during Obama’s so-called “economic recovery”, the middle class has continued to shrink. Right now, 62 percent of all Americans have less than $1,000 in savings, and millions upon millions of ordinary families find themselves desperately clawing and scratching as they try to survive from month to month.

One very frustrated mother recently shared her feelings about her family’s ongoing financial struggles on scarymommy.com…

I’m tired of my stomach flipping inside when my son mentions he’d like to take a computer class after school. Or when my other son wants to enroll in swim lessons, take an art class, or buy a new bicycle. I’m tired of wondering where on earth we’ll come up with the cash for our children to pursue their interests.

I’m tired of never, ever going on vacations that don’t involve someone flying us out to see them or crashing at someone’s house for free.

I’m tired of wondering how on earth we’ll be able to send our kids to college.

I’m tired of renting, and the almost certain feeling I have that we’ll never be able to afford to buy a house.

I’m tired of having to pretend I’m not worried about it all.

I’m tired of my kids overhearing our worries, of knowing that money is a constant struggle for us.

Before I wrap up this article, I want to share one more stunning example of America’s decline.

Under Barack Obama, corruption and incompetence has spread throughout every part of our government. Sadly, that even includes the Secret Service.

Secret Service agents are supposed to be “the best of the best”, and they are charged with protecting our most important national leaders.

But instead of doing their jobs with seriousness and professionalism, they have been acting like wild animals. Documents that have just been made public reveal that the Secret Service has become an absolute disgrace in recent years…

They highlight incidents in which agents had sexual encounters with underage girls, married agents took part in ‘wheels up, rings off’ parties, and a manager who sexually harassed female subordinates dubbed the National Threat Assessment Center (NTAC) the ‘Nice **** and *** Club.’

The documents contain a report about “a male agent who had his gun stolen by a male prostitute he solicited using his government computer in Puerto Rico“, and they also detail the behavior of one agency manager in particular that deserves to be immediately fired…

The report says the manager kept alcohol in his office and forced employees to drink ‘so he could trust them.’

‘He sexually harassed every female subordinate,’ the report says.

The manager would ‘publicly’ male employees: ‘Where are my little whores/*******? Have you slept with them yet?’

If this is what is happening in the Secret Service, can you imagine what is going on in other federal agencies behind closed doors?

America is a complete and total mess, and Donald Trump is completely correct when he talks about the need to make America great again.

But is that even possible, and if so, what would that look like?

Please feel free to tell us what you think by posting a comment below…

If The Economy Is Fine, Why Are So Many Hedge Funds, Energy Companies And Large Retailers Imploding?

November 18, 2015November 18, 2015 by Michael

If the U.S. economy really is in “great shape”, then why do all of the numbers keep telling us that we are in a recession? The manufacturing numbers say that we are in a recession, the trade numbers say that we are in a recession, and as you will see below the retail numbers say that we are in a recession. But just like in 2008, the Federal Reserve and our top politicians will continue to deny that a major economic downturn is happening for as long as they possibly can. In this article, I want to look at more signs that a dramatic shift is happening in our economy right now.

First of all, let’s consider what is happening to hedge funds. For many years, hedge funds had been doing extremely well, but now they are closing up shop at a pace that we haven’t seen since the last financial crisis. The following is an excerpt from a Business Insider article entitled “Hedge funds keep on imploding” that was posted on Wednesday…

BlackRock is winding down its Global Ascent Fund, a global macro hedge fund that once contained $4.6 billion in assets, according to Bloomberg’s Sabrina Willmer.

“We believe that redeeming the Global Ascent Fund was the right thing to do for our clients, given the headwinds that macro funds have faced,” a BlackRock spokeswoman told Business Insider.

The winding down of the Ascent fund is the second high-profile hedge fund closing in 24 hours. The Wall Street Journal reported Tuesday that Achievement Asset Management, a Chicago-based hedge fund, was closing.

And those are just two examples. Quite a few other prominent hedge funds have shut down recently, and many are wondering if this is just the beginning of a major “bloodbath” on Wall Street.

Another troubling sign is the implosion of so many energy companies. Just like in 2008, a major crash in the price of oil is hitting the energy sector really hard. Just check out these stock price declines…

-Cabot Oil & Gas down 37.27 percent over the past 12 months

-Southwestern Energy down 68.11 percent over the past 12 months

-Chesapeake Energy down 73.98 percent over the past 12 months

A number of smaller energy companies have already gone out of business, and several of the big players are teetering on the brink. If the price of oil does not rebound significantly very soon, it is just a matter of time before the dominoes begin to fall.

We are also seeing tremendous turmoil in the retail industry. The following comes from Investment Research Dynamics…

The retail sales report for October was much worse than expected. Not only that, but the Government’s original estimates for retail sales in August and September were revised lower. A colleague of mine said he was chatting with his brother, who is a tax advisor, this past weekend who said he doesn’t understand how the Government can say the economy is growing (Hillary Clinton recently gave the economy an “A”) because his clients are lowering their estimated tax payments. Businesses lower their estimated tax payments when their business activity slows down.

The holiday season is always the best time of the year for retailers, but in 2015 there is a lot of talk of gloom and doom. Most large retailers will not start announcing mass store closings until January or February, but without a doubt many analysts are anticipating that once we get past the Christmas shopping season we will see stores shut down at a pace that we haven’t seen since at least 2009. Here is more from the article that I just quoted above…

Retail sales this holiday season are setting up to be a disaster. Already most retailers are advertising “pre-Black Friday” sales events. Remember when holiday shopping didn’t begin, period, until the day after Thanksgiving? Now retailers are going to cannibalize each other with massive discounting before Thanksgiving. Anybody notice over the weekend that BMW is now offering $6500 price rebates? The collapsing economy is affecting everyone, across all income demographics.

Last week we saw the stocks of Macy’s, Nordstrom and Advance Auto Parts do cliff-dives after they announced their earnings. I mentioned to a colleague that the Nordstrom’s report should be the most troubling for analysts. Nordstrom in their investor conference call said that they began seeing an “unexplainable slowdown in sales in August in transactions across all formats, across all catagories and across all geographies that has yet to recover.”

I think that a chart would be helpful to give you an idea of how bad things have already gotten. Jim Quinn shared this in an article that he just posted, and it shows the change in retail sales once you remove the numbers for the auto industry. As you can see, the numbers have never been this dreadful outside of a recession…

But stocks went up 247 points on Wednesday so everything must be great, right?

Wrong.

The stock market has never been a good barometer for the overall economy, and this is especially true these days.

In 2008, stocks didn’t crash until well after the U.S. economy as a whole started crashing, and the same thing is apparently happening this time around as well.

One of the things that is keeping stocks afloat for the moment is stock buybacks. In recent years, big corporations have spent hundreds of billions of dollars buying back their own stocks. The following comes from Wolf Richter…

IBM has blown $125 billion on buybacks since 2005, more than the $111 billion it invested in capital expenditures and R&D. It’s staggering under its debt, while revenues have been declining for 14 quarters in a row. It cut its workforce by 55,000 people since 2012. And its stock is down 38% since March 2013.

Big-pharma icon Pfizer plowed $139 billion into buybacks and dividends in the past decade, compared to $82 billion in R&D and $18 billion in capital spending. 3M spent $48 billion on buybacks and dividends, and $30 billion on R&D and capital expenditures. They’re all doing it.

Later in that same article, Richter explains that almost 60 percent of all publicly traded non-financial corporations have engaged in stock buybacks over the past five years…

Nearly 60% of the 3,297 publicly traded non-financial US companies Reuters analyzed have engaged in share buybacks since 2010. Last year, the money spent on buybacks and dividends exceeded net income for the first time in a non-recession period.

Big corporations like to do this for a couple of reasons. Number one, it pushes the price of the stock higher, and current investors appreciate that. Number two, corporate executives are usually in favor of conducting stock buybacks because it increases the value of their stock options and their own stock holdings.

But now corporate profits are falling and it is becoming tougher for big corporations to borrow money. So look for stock buybacks to start to decline significantly.

Even though it is taking a bit longer than many would have anticipated, the truth is that we are right on track for a massive financial collapse.

All of the indicators that I watch are flashing red, and even though things are moving slowly, they are definitely moving in the same direction that we saw in 2008.

But just like in 2008, there will be people that mock the warnings up until the day when it becomes completely and utterly apparent that the mockers were dead wrong.

21 Facts About The Explosive Growth Of Poverty In America That Will Blow Your Mind

November 2, 2015November 2, 2015 by Michael

What you are about to see is more evidence that the growth of poverty in the United States is wildly out of control. It turns out that there is a tremendous amount of suffering in “the wealthiest nation on the planet”, and it is getting worse with each passing year. During this election season, politicians of all stripes are running around telling all of us how great we are, but is that really true? As you will see below, poverty is reaching unprecedented levels in this country, and the middle class is steadily dying. There aren’t enough good jobs to go around, dependence on the government has never been greater, and it is our children that are being hit the hardest. If we have this many people living on the edge of despair now, while times are “good”, what are things going to look like when our economy really starts falling apart? The following are 21 facts about the explosive growth of poverty in America that will blow your mind…

#1 The U.S. Census Bureau says that nearly 47 million Americans are living in poverty right now.

#2 Other numbers from the U.S. Census Bureau are also very disturbing. For example, in 2007 about one out of every eight children in America was on food stamps. Today, that number is one out of every five.

#3 According to Kathryn J. Edin and H. Luke Shaefer, the authors of a new book entitled “$2.00 a Day: Living on Almost Nothing in America“, there are 1.5 million “ultrapoor” households in the United States that live on less than two dollars a day. That number has doubled since 1996.

#4 46 million Americans use food banks each year, and lines start forming at some U.S. food banks as early as 6:30 in the morning because people want to get something before the food supplies run out.

#5 The number of homeless children in the U.S. has increased by 60 percent over the past six years.

#6 According to Poverty USA, 1.6 million American children slept in a homeless shelter or some other form of emergency housing last year.

#7 Police in New York City have identified 80 separate homeless encampments in the city, and the homeless crisis there has gotten so bad that it is being described as an “epidemic”.

#8 If you can believe it, more than half of all students in our public schools are poor enough to qualify for school lunch subsidies.

#9 According to a Census Bureau report that was released a while back, 65 percent of all children in the U.S. are living in a home that receives some form of aid from the federal government.

#10 According to a report that was published by UNICEF, almost one-third of all children in this country “live in households with an income below 60 percent of the national median income”.

#11 When it comes to child poverty, the United States ranks 36th out of the 41 “wealthy nations” that UNICEF looked at.

#12 The number of Americans that are living in concentrated areas of high poverty has doubled since the year 2000.

#13 An astounding 45 percent of all African-American children in the United States live in areas of “concentrated poverty”.

#14 40.9 percent of all children in the United States that are being raised by a single parent are living in poverty.

#15 An astounding 48.8 percent of all 25-year-old Americans still live at home with their parents.

#16 There are simply not enough good jobs to go around anymore. It may be hard to believe, but 51 percent of all American workers make less than $30,000 a year.

#17 There are 7.9 million working age Americans that are “officially unemployed” right now and another 94.7 million working age Americans that are considered to be “not in the labor force”. When you add those two numbers together, you get a grand total of 102.6 million working age Americans that do not have a job right now.

#18 Owning a home has traditionally been a signal that you belong to the middle class. That is why it is so alarming that the rate of homeownership in the United States has been falling for eight years in a row.

#19 According to a recent Pew survey, approximately 70 percent of all Americans believe that “debt is a necessity in their lives”.

#20 At this point, 25 percent of all Americans have a negative net worth. That means that the value of what they owe is greater than the value of everything that they own.

#21 The top 0.1 percent of all American families have about as much wealth as the bottom 90 percent of all American families combined.

If we truly are “the greatest nation on the planet”, then why can’t we even take care of our own people?

Why are there tens of millions of us living in poverty?

Perhaps we really aren’t so great after all.

It would be one thing if economic conditions were getting better and poverty was in decline. At least then we could be talking about the improvement we were making. But despite the fact that we are stealing more than a hundred million dollars from future generations of Americans every single hour of every single day, poverty just continues to grow like an aggressive form of cancer.

So what is wrong?

Why can’t we get this thing fixed?

Tell us what you think we should do as a nation to solve this problem by posting a comment below…

2 Things That Are Happening Right Now That Have Never Happened Outside Of A Recession

June 2, 2015June 2, 2015 by Michael

If we are not heading into a recession, why does our economy continue to act as if that is precisely what is happening? As you will see below, we learned this week that factory orders have declined year over year for six months in a row. That is something that has never happened outside of a time of recession. We have also seen new orders for consumer goods fall dramatically. In fact, the only time we have seen a more dramatic decline in that number was during the last recession. And when you add these two items to what I have written about previously, the overall economic picture becomes even more disturbing. Corporate profits have fallen for two quarters in a row, our exports fell by 7.6 percent during the first quarter of 2015, and U.S. GDP contracted by 0.7 percent during Q1. Even though Barack Obama and the mainstream media are willingly ignoring them, the truth is that these numbers are absolutely screaming that we are going into a new recession.

Sometimes, a picture is worth more than a thousand words, and I believe that is certainly the case with the chart that I have posted below. It comes from Zero Hedge, and it shows that factory orders have declined year over year for six months in a row. The only times when this has ever happened before have been when the U.S. economy has been in recession…

When we look at new orders for consumer goods, we see a similar thing happening. This next chart comes from Charles Hugh Smith, and it really doesn’t need much explanation…

Here is another chart from Charles Hugh Smith. This one shows the percentage change in new orders for consumer goods on a year over year basis…

These charts that I just shared with you are rather compelling. How anyone can see them and still believe that we are in an “economic recovery” is beyond me.

When the economy starts to turn, there are certain things that we look for. As I have written about over and over on my website, so many of the exact same patterns that we have seen emerge just prior to previous economic downturns are happening again right now.

Yes, the stock market is still sitting pretty for the moment. But almost everyone can see that it is massively overvalued and could start tanking at any time. And when the market does start crashing it is just going to cause our economic problems to accelerate even more.

Sadly, most Americans are totally oblivious to all of this.

Most Americans just continue to do the same things that they have always done. That includes going into ridiculous amounts of debt. For instance, this week we learned that the percentage of auto loans that are being stretched out for periods of greater than 6 years is at an all-time high…

The average new car loan has reached a record 67 months, reports Experian, the Ireland-based information-services company. The percentage of loans with terms of 73 to 84 months also reached a new high of 29.5% in the first quarter of 2015, up from 24.9% a year earlier.

Long-term used-vehicle loans also broke records with loan terms of 73 to 84 months reaching 16% in the first quarter 2015, up from 12.94% — also the highest on record.

But you know what?

Even though most Americans are being exceedingly foolish and are living paycheck to paycheck, that still isn’t good enough for the boys and girls on Wall Street.

Just consider the following excerpt from a recent Wall Street Journal piece entitled “A Letter To Stingy American Consumers”…

Do you know the American economy is counting on you? We can’t count on the rest of the world to spend money on our stuff. The rest of the world is in an even worse mood than you are. You should feel lucky you’re not a Greek consumer. And China, well they’re truly struggling there just to reach the very modest goal of 7% growth.

The Federal Reserve is counting on you too. Fed officials want to start raising the cost of your borrowing because they worry they’ve been giving you a free ride for too long with zero interest rates. We listen to Fed officials all of the time here at The Wall Street Journal, and they just can’t figure you out.

Please let us know the problem. You can reach us at any of the emails below.

Sincerely,

The Wall Street Journal’s Central Bank Team

-By Jon Hilsenrath

They just want all of us to keep borrowing and spending our way into oblivion. But of course when things do fall apart and millions of Americans can’t pay their debts, they will be there to foreclose on our homes and repossess our vehicles without any hesitation.

And when the next major economic downturn does strike, don’t expect the rest of the planet to feel sorry for us. We like to think that the rest of the world looks up to us, but the exact opposite is actually true. At this point, much of the globe is pointing fingers at us and mocking us. Just consider the following excerpt from an article that appeared in Pravda…

The land of illusion; the land of entertainment producing songs and movies to warp reality. People pretending to be something they are not. Likewise, Washington DC has people who pretend to represent the people’s interests. Pretending to bring hope and a change for the better. Pretending to bring unity and peace among all races. Lying through their teeth and laughing like clowns behind closed doors. Setting up a consumer based economy forcing the once mighty middle class to shrink and work at customer service jobs. “Ya want fries with that?“

It would be easy to dismiss that paragraph as “Russian propaganda”, but the cold, hard reality of the matter is that there is nothing in that quote that is not true.

They are mocking us, and they are dead on. We are the land of illusion. We do have a shrinking middle class. And we are definitely addicted to entertainment. If you doubt this, just check out what one study recently found…

If you weren’t reading this article, you would probably be scanning something else on the internet, watching TV, or maybe—just maybe—reading a newspaper or magazine. In short, you would be consuming media.

On average, people spend more than 490 minutes of their day with some sort of media, according to a new report by ZenithOptimedia. Television remains dominant, accounting for three hours of daily consumption—an hour more than the internet, in second place.

Other studies have actually discovered that the amount of time that Americans spend connected to media is even greater. This is something that I discussed in a previous article entitled “How Much Time Do Americans Spend Plugged Into The Matrix Every Day?”

For the moment, the mainstream media is assuring everyone that everything is going to be just fine and that they should go out and spend lots and lots of money.

But instead of spending your money on frivolous things like boats, electronic toys and expensive vacations, I believe that now is the time to get prepared for the great economic crisis which is currently starting to unfold.

Right now, I know that most people don’t actually believe that life in America is about to dramatically change.

So many of the things that people (including myself) have been warning about for so long are about to happen. Our politicians and national leaders have turned a deaf ear to all of the warnings and have continued to conduct business as usual. Soon, the error of their ways will be apparent to all.

We are heading into the greatest economic crisis in U.S. history, and there is going to be no coming back to the false, debt-fueled “prosperity” that we are enjoying today.

Flat Broke, Living In A Moldy Basement And Relying On Food Stamps And Medicaid

April 16, 2015 by Michael

Could you imagine being a single parent and trying to survive in America today on $10.50 an hour? For a moment, I want you to imagine that you are living in a moldy apartment that is so badly maintained that rain seeps in whenever it rains. You are employed, but you are completely dependent on government programs such as food stamps and Medicaid in order to make ends meet. Sometimes you would really like to take your small child somewhere fun, like a movie theater, but you can’t really afford the gas money. You are working as hard as you can, but you never seem to get anywhere, and you feel trapped because nobody seems to want to hire you for a better job. What I have just described for you is real life for a 22-year-old single mother from Chicago named Adriana Alvarez, but there are tens of millions of other Americans that have similar stories. If every day seems like it is a soul-crushing struggle for you, I want you to know that you are not alone. The long-term economic collapse that I chronicle on my website is not just about facts and figures. It is about real people that are quietly leading lives of silent desperation, and by now it has becoming exceedingly apparent that our politicians, the mainstream media and the gigantic corporations that dominate our economy do not really care much about the rest of us at all.

Life fundamentally changes once you become a parent. Instead of living just for yourself, all of a sudden you have a precious little child that is completely and totally dependent on you. And it is absolutely heartbreaking for any parent to look into the eyes of a little child and try to explain why there is not enough food or why they can’t afford a better place to live.

With that in mind, I want you to read an excerpt from Adriana’s recent blog post entitled “What It’s Really Like To Support Yourself On McDonald’s Pay“…

I’m a single mom with a three-year-old son named Manny. To support him, I work full-time as a cashier at a McDonald’s in Chicago.

I’ve worked at McDonald’s for five years, but still make only $10.50 an hour. The only way my son and I can make it is with food stamps, Medicaid, and a child care subsidy. Most of my coworkers are in the same boat, no matter how long they’ve held their jobs.

With child care, transportation to work, food, rent, and our other basic expenses, there’s no money left over for living. Every time I think about taking Manny somewhere fun, like to a movie, I have to think about whether we can really afford the gas.

When you only make $10.50 an hour and you have a child to take care of, you are obviously very limited as far as where you can live, and where Adriana lives sounds extremely depressing…

We live in a basement apartment, because it’s all I can afford. When it rains, water seeps into the apartment. This wetness brings mold, and I can’t get rid of the smell. We can’t even leave anything on the floor, which is tough with a three-year-old. Toys or anything else on the floor may get ruined when the water comes in.

So what is the solution for Adriana?

Well, she is taking part in nationwide strikes to try to force McDonald’s to pay workers like her a livable wage.

Unfortunately, that simply is not going to happen. McDonald’s restaurants are already experiencing a sales downturn, and if they raise wages substantially they will get crushed by the competition.

And of course those jobs were never meant for people that are trying to raise families. When I was growing up, it was teenagers and senior citizens that worked at McDonald’s. I know, because I was one of those teenagers.

But now millions upon millions of Americans in their prime working years are doing these kinds of jobs. As good jobs have disappeared from our economy, the competition for the jobs that remain has become extremely intense. It is really easy to tell Adriana that she should “get a better job”, but that can be extremely difficult in this economy, especially if you don’t have much education.

I know a lot of sharp, talented, responsible people that have been unemployed for a very long time or that are working at places like McDonald’s because nobody else will hire them. I am amazed that there is not a place for their talents and abilities in the “greatest economy on Earth”. But you know what? Things are about to get a whole lot worse out there.

A few months ago, I wrote that the crashing price of oil was going to cause massive job losses in the energy industry, and now it is happening.

According to Yahoo, more than 100,000 layoffs have already been announced, and this could be just the tip of the iceberg…

Since crude prices began tumbling last year, energy companies have announced plans to lay off more than 100,000 workers around the world. At least 91,000 layoffs have already materialized, with the majority coming in oil-field-services and drilling companies, according to research by Graves & Co., a Houston consulting firm.

And remember, these are not $10.50 an hour jobs. Many of these jobs pay well into the six figures annually. These are exactly the kinds of jobs that the U.S. economy simply cannot afford to lose.

Meanwhile, Barack Obama is colluding with Congress to push through the next great job killing trade agreement. The following was in the Wall Street Journal on Thursday…

Lawmakers introduced fast-track trade legislation into the House and Senate Thursday that could pave the way for President Barack Obama to conclude a major agreement with 11 nations around the Pacific.

This agreement is called “The Trans-Pacific Partnership”, and it would result in millions more good jobs being sent overseas. For much more about this shocking betrayal of the American people, please see my previous article entitled “Obama’s Secret Treaty Would Be The Most Important Step Toward A One World Economic System“.

What our economy desperately needs is more jobs, not less jobs.

And traditionally, small businesses have been the primary engine of job growth in this country.

Unfortunately, our politicians have been absolutely killing small businesses for decades. Just look at the chart below. It comes from the U.S. Census Bureau, and it is extremely alarming. Back in 1980, nearly half of all firms in America were considered to be “young”, and those young firms accounted for almost half of all job creation. Since that time, there has been a slow, steady, depressing decline…

And as I discussed the other day, more businesses have closed in the United States than have opened for each of the past six years.

Prior to 2008, that had never happened before in all of American history.

Thank you Barack Obama.

When I talk about our “long-term economic collapse”, I am not exaggerating.

Our economy is literally dying right in front of our eyes, and it is people like Adriana Alvarez that are paying the price.

We desperately need to go back and start doing the things that once made this country so great, but unfortunately we continue running in the other direction as fast as we can.

So in the end, things are going to get much, much worse.

Things did not have to turn out this way, but these are the choices that we have made, and now we get to live with them.

If Anyone Doubts That We Are In A Stock Market Bubble, Show Them This Article

April 1, 2015April 1, 2015 by Michael

The higher financial markets rise, the harder they fall. By any objective measurement, the stock market is currently well into bubble territory. Anyone should be able to see this – all you have to do is look at the charts. Sadly, most of us never seem to learn from history. Most of us want to believe that somehow “things are different this time”. Well, about the only thing that is different this time is that our economy is in far worse shape than it was just prior to the last major financial crisis. That means that we are more vulnerable and will almost certainly endure even more damage this time around. It would be one thing if stocks were soaring because the U.S. economy as a whole was doing extremely well. But we all know that isn’t true. Instead, what we have been experiencing is clearly artificial market behavior that has nothing to do with economic reality. In other words, we are dealing with an irrational financial bubble, and all irrational financial bubbles eventually burst. And as I wrote about yesterday, the way that stocks have moved so far this year is eerily reminiscent of the way that stocks moved in early 2008. The warning signs are there – if you are willing to look at them.

The first chart that I want to share with you today comes from Doug Short. It is a chart that shows that the ratio of corporate equities (stocks) to GDP is the second highest that it has been since 1950. The only other time it has been higher was just before the dotcom bubble burst…

Does that look like a bubble to you?

It sure looks like a bubble to me.

In order for the corporate equities to GDP ratio to get back to the mean (average) level, stock prices would have to fall nearly 50 percent.

If that happens, people will be calling it a crash, but in truth it would just be a return to normalcy.

This next chart comes from Phoenix Capital Research. The CAPE ratio (cyclically adjusted price-to-earnings ratio) is considered to be an extremely accurate measure of the true value of stocks…

As I’ve noted before, the single best predictor of stock market performance is the cyclically adjusted price-to-earnings ratio or CAPE ratio.

Corporate earnings are heavily influenced by the business cycle. Typically the US experiences a boom and bust once every ten years or so. As such, companies will naturally have higher P/E’s at some points and lower P/E’s at other. This is based solely on the business cycle and nothing else.

CAPE adjusts for this by measuring the price of stocks against the average of ten years’ worth of earnings, adjusted for inflation. By doing this, it presents you with a clearer, more objective picture of a company’s ability to produce cash in any economic environment.

Based on a study completed Vanguard, CAPE was the single best metric for measuring future stock returns.

When the CAPE ratio is too high, that means that stocks are overpriced and are not a good value. And right now the CAPE ratio is the 3rd highest that it has been since 1890. That only times it has been higher than this were in 1929 (we all remember what happened then) and just before the dotcom bubble burst…

The funny thing is that stocks have continued to rise even as corporate revenues have begun to fall.

According to Wolf Richter, in the first quarter of 2015 corporate revenues are projected to decline at the fastest pace that we have seen since the depths of the last recession…

Week after week, corporations and analysts have been whittling down their estimates. By now, revenues of the S&P 500 companies are expected to decline 2.8% in Q1 from a year ago – the worst year-over-year decline since Q3 of crisis year 2009.

This next chart I want to share with you shows how the Nasdaq has performed over the past decade. Looking at this chart alone, you would think that the U.S. economy must have been absolutely roaring since the end of the last recession. But what is really going on is rampant speculation. Some of the tech companies that make up the Nasdaq are not making any profits at all and yet they are supposedly worth billions of dollars. If you cannot see a bubble in this chart, you need to get your vision checked…

And this kind of irrational euphoria is not just happening in the United States.

For example, Chinese stocks are up nearly 80 percent over the past nine months.

Meanwhile, the overall Chinese economy is growing at the slowest pace that we have seen in about 20 years.

Right now, we are in the calm before the storm. We are right at the door of the next great financial crisis, and most of the people that work in the industry know this.

And once in a while they let the cat out of the bag.

For example, consider what Hans-Jörg Vetter, the CEO of Landesbank Baden-Württemberg in Germany, had to say during one recent press conference…

“Risk is no longer priced in,” he said. And these investors aren’t paid for the risks they’re taking. This applies to all asset classes, he said. The stock and the bond markets, he said, are now both seeing “the mother of all bubbles.”

This can’t go on forever. Or for very long. But he couldn’t see the future either and pin down a date, which is what everyone wants to know so that they can all get out in time. “I cannot tell you when it will rumble,” he said, “but eventually it will rumble again.”

By “again” he meant the sort of thing that had taken the bank down last time, the Financial Crisis. It had been triggered by horrendous risk-taking, where risks hadn’t been priced into all kinds of securities. When those securities – mortgage-backed securities, for example, that were hiding the inherent risks under a triple-A rating – blew up, banks toppled.

What Vetter is telling us is what I have been warning about for a long time.

Another great stock market crash is coming.

It is just a matter of time.

33 Strange Facts About America That Most Americans Would Be Shocked To Learn

March 24, 2015 by Michael

Did you know that about one-fourth of the entire global prison population is in the United States? Did you know that Apple has more money than the U.S. Treasury? Did you know that if you have no debt and also have 10 dollars in your wallet that you are wealthier than 25 percent of all Americans? Did you know that by the time an American child reaches the age of 18, that child will have seen approximately 40,000 murders on television? There are some things that are great about the United States, and there are definitely some things that are not so great. Once upon a time we were the most loved and most respected nation on the entire planet, but those days are long gone. We have wrecked our economy, we have lost our values and we have fumbled away our future. But if you look close enough, you can still see many of the things that once made this country a shining beacon to the rest of the world. This article includes some weird facts, some fun facts, but also some very troubling facts. It has been said that a spoonful of sugar helps the medicine go down, and hopefully as people enjoy reading the fun facts in this article they will also take note of the more serious facts. If we are ever going to change course as a nation, we need to come to grips with just how far we have fallen. The following are 33 strange facts about America that most Americans would be shocked to learn…

#1 The amount of cement that China used from 2011 to 2013 was greater than the total amount of cement that the United States used during the entire 20th century.

#2 In more than half of all U.S. states, the highest paid public employee in the state is a football coach.

#3 It costs the U.S. government 1.8 cents to mint a penny and 9.4 cents to mint a nickel.

#4 Almost half of all Americans (47 percent) do not put a single penny out of their paychecks into savings.

#5 In 2014, police in the United States killed 1,100 people. During that same year, police in Canada killed 14 people, police in China killed 12 people and police in Germany didn’t kill anyone at all.

#6 The state of Alaska is 429 times larger than the state of Rhode Island is. But Rhode Island has a significantly larger population than Alaska does.

#7 Alaska has a longer coastline than all of the other 49 U.S. states put together.

#8 The city of Juneau, Alaska is about 3,000 square miles in size. It is actually larger than the entire state of Delaware.

#9 When LBJ’s “War on Poverty” began, less than 10 percent of all U.S. children were growing up in single parent households. Today, that number has skyrocketed to 33 percent.

#10 In 1950, less than 5 percent of all babies in America were born to unmarried parents. Today, that number is over 40 percent.

#11 The poverty rate for households that are led by a married couple is 6.8 percent. For households that are led by a female single parent, the poverty rate is 37.1 percent.

#12 In 2013, women earned 60 percent of all bachelor’s degrees that were awarded that year in the United States.

#13 According to the CDC, 34.6 percent of all men in the U.S. are obese at this point.

#14 The average supermarket in the United States wastes about 3,000 pounds of food each year.

#15 Right now, more than 200 million people around the planet are officially considered to be unemployed. Meanwhile, approximately 20 percent of the garbage that goes into our landfills is food.

#16 There is a city in Bangladesh called Dhaka where workers are paid just one dollar for every 1,000 bricks that they carry. Meanwhile, the “inactivity rate” for men in their prime working years in the United States is hovering near record high levels.

#17 According to one recent survey, 81 percent of Russians now have a negative view of the United States. That is much higher than at the end of the Cold War era.

#18 Montana has three times as many cows as it does people.

#19 The grizzly bear is the official state animal of California. But no grizzly bears have been seen there since 1922.

#20 One recent survey discovered that “a steady job” is the number one thing that American women are looking for in a husband, and another survey discovered that 75 percent of women would have a serious problem dating an unemployed man.

#21 According to a study conducted by economist Carl Benedikt Frey and engineer Michael Osborne, 47 percent of the jobs in the United States could soon be lost to computers, robots and other forms of technology.

#22 The only place in the United States where coffee is grown commercially is in Hawaii.

#23 The original name of the city of Atlanta was “Terminus“.

#24 The state with the most millionaires per capita is Maryland.

#25 There are more than 4 million adult websites on the Internet, and they get more traffic than Netflix, Amazon and Twitter combined.

#26 86 percent of men include “having children” in their definition of success. For women, that number is only 73 percent.

#27 One survey of 50-year-old men in the U.S. found that only 12 percent of them said that they were “very happy”.

#28 The United States has 845 motor vehicles for every 1,000 people. Japan only has 593 for every 1,000 people, and Germany only has 540 for every 1,000 people.

#29 The average American spends more than 10 hours a day using an electronic device.

#30 48 percent of all Americans do not have any emergency supplies in their homes whatsoever.

#31 There are three towns in the United States that have the name “Santa Claus“.

#32 There is actually a town in Michigan called “Hell“.

#33 There are 60,000 miles of blood vessels in your body. If they were stretched out in a single line, they could go around the planet more than twice.

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