The American People Don’t Need More Handouts – What They Need Are Good Jobs

Without millions more good jobs, the U.S. economy is simply never, ever going to recover.  But at this point, there is every indication that the U.S. economy is going to continue to bleed jobs.  In the past, employment would bounce up and down as the economy went through various cycles.  But today what we are witnessing is something much different.  Over the past 30 or 40 years, literally millions of good jobs have been shipped off to China, India and to dozens of third world nations where half-starving workers are more than happy to slave away for big global corporations for less than a dollar an hour.  In the new “global economy” that we were promised would be so good for us, the expensive American worker is obsolete.  The giant global predator corporations that now dominate our economy do not exist to provide you and your family with a nice home, two cars and college educations for all your children.  No, their goal is to keep costs as low as possible so that their profits will be as high as possible.  For many of these giant global predator corporations, that means that paying workers as close to zero as possible is the best decision for the bottom line. 

The truth is that the American people were never told that “free trade” and a “global economy” would mean that they would soon be lumped into a giant global labor pool and would be forced to compete for jobs with people on the other side of the globe.

No, we were just told that we should enjoy all of the cheap plastic crap made overseas that all of the “big box” retail stores were pushing us to buy.

Well, the party was fun while it lasted.  Americans ran up unprecedented amounts of debt on their credit cards buying all this stuff, while our once great manufacturing cities degenerated into rotted-out war zones.

But isn’t it a good thing to get all these products at such a cheap price?

After all, who wants to pay substantially more for things?

Well, running an economy this way is kind of like tearing off pieces of your house in order to keep your fire going.  Sure the fire will burn brightly for a while, but eventually you will have torn down your entire house.

One way or another, we end up paying dearly for the jobs we have shipped overseas.

You see, the millions of Americans who are now chronically unemployed because of “free trade” have to be supported by the U.S. government.

That means that it is the U.S. taxpayers who end up footing the bill.

You didn’t think that we were going to let all of those unemployed workers starve in the streets, did you?

Without good jobs, an increasing number of Americans are becoming completely dependent on government handouts.

Already, state governments across the United States are going broke trying to pay out unemployment benefits to the hordes of Americans who don’t have a job and can’t find a job.

In addition, 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.

Also, according to one new study, somewhere around 21 percent of all children in the United States are living below the poverty line in 2010, which is the highest rate in 20 years.

The truth is that more Americans are dependent on direct payments from the federal government than ever before.

But how long can we afford to support the millions upon millions of Americans who have been impoverished by this new “global economy”?

The U.S. government budget deficit was a record $1.4 trillion in 2009.  Now the White House says that we will exceed that figure in 2010 and again in 2011.

So just how long can we afford to run deficits equivalent to 10 percent of GDP?

Anyone with half a brain knows that these kind of debts are not anywhere close to sustainable.

So where is the money going to come from to pay for these exploding government programs?

Well, from you of course.

Recently I dubbed 2011 “the year of the tax increase”.  A whole slew of new taxes is scheduled to go into effect starting next year that will impact every single American taxpayer.

It is almost enough to make you want to stop working and start collecting government handouts instead.

But the American people don’t need even more handouts.

Handouts are only a temporary solution to a long-term problem.

What the American people need are good jobs.

But where in the world are these jobs going to come from?

The reality is that in the new “global economy”, the United States is a very unattractive place to do business.

If you were a global corporation, would you rather open a new facility in the third world where there are very few rules and regulations and where people will work for less than a dollar an hour, or would you rather open a new facility in the United States where there are literally thousands of laws and regulations to comply with and where you are going to have to pay workers at least ten times as much?

It doesn’t take a genius to see where all of this is headed.

For decades, an increasing number of Americans have been forced into lower paying service jobs, but now there aren’t even nearly enough of those to go around. 

But it isn’t just the jobs that have been shipped overseas that are depressing wages and causing unemployment to skyrocket.  The millions of illegal immigrants that have flooded unchecked across the border have depressed wages and fundamentally changed the employment picture in industries such as construction and food service. 

Not only that, but in this environment not even high tech workers are safe.  In fact, there are some corporations in the high tech industry that have been openly abusing worker visas to ship in large numbers of foreign workers to replace more expensive American employees.

What all this means is that it is becoming much more difficult to live a middle class lifestyle in the United States.

Perhaps that is why one of my articles struck such a nerve recently.  An article that I originally wrote for The American Dream blog and adapted by Business Insider has gone mega-viral and has ended up on Yahoo Finance.  The article was entitled “The Middle Class In America Is Radically Shrinking – Here Are The Stats To Prove it” and it has received over 9000 comments on Yahoo.

So why did it provoke such an extraordinary response?

Well, because it hits people where they live.

Today, millions of American families are really struggling.  Record numbers of middle class Americans are receiving foreclosure notices and record numbers of middle class Americans are going bankrupt.

In fact, more Americans than ever find themselves just trying to survive.

According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.

You see, the truth is that most American families are not concerned with saving for retirement or even with planning for next year.  In this economic environment, most American families are worried about how they are going to survive until next month.

So who has been doing well in the new global economy?

The very, very wealthy of course.

According to Harvard Magazine, 66% of the income growth between 2001 and 2007 went to the top 1% of all Americans.

Now, the truth is that there is absolutely nothing wrong with making money, but by any reasonable standard an economic system that produces such skewed results is horribly broken.

So will “redistributing the wealth” solve things?

No, it won’t.

At best, “redistributing the wealth” is only a temporary solution and it always ends up creating a lot of long-term problems.

What the American people really need are millions more good jobs.

But as we have seen, the current imbalances in the new “global economy” make it more likely that the American people will continue to lose millions more good jobs rather than gaining them.

Unless something is done, the standard of living for middle class Americans will continue to be forced down as labor increasingly becomes a global commodity.

So are you just going to accept that, or are you going to start demanding that your representatives change things?

The choice is up to you.

79 Percent Of American Voters Say They Think The U.S. Economy Could Collapse – And They Are Absolutely Right

An overwhelming majority of American voters now believe that the United States could experience a total economic collapse.  According to the latest Fox News poll, 79 percent of U.S. voters believe “it’s possible the nation’s economy could collapse”, and the poll found that this belief in the fragility of the American economy cuts across the entire political spectrum.  The truth is that the American people, at least on some level, know that a day of reckoning is at hand.  For decades, America has been enjoying the biggest party in the history of the world, but unfortunately that party was fueled by a gigantic mountain of debt, and now the bills are starting to come due.  Unfortunately for those trying to do something about this economic mess, the American people are starting to realize that the U.S. economy is now basically a house of cards, and that could lead to massive financial panic when things really start to fall apart.

Normally when a poll is taken, you can see big differences in the responses based on the party affiliation of those being surveyed.  But in this poll everyone seems to agree – the U.S. economy could experience a complete and total collapse.

Not only did the poll find that 84 percent of Republicans believe the U.S. economy could fall apart, 80 percent of Independents did as well, as did 72 percent of Democrats.

Only 18 percent of the respondents to the survey believed that the economy is “so big and strong it could never collapse.”

It is very rare these days when a large majority of the American people will agree on something.

But unfortunately, they are completely and totally correct.

The U.S. economy is in a death spiral.

So how in the world did we get here?

The answer can be summed up in one word.

Debt.

The United States has piled up household, corporate and government debt at a pace that is mind blowing.

Once upon a time, the United States was the wealthiest nation in the history of the world.

But that was not enough for us.

We had to have more.

So we went out and squandered the wealth of this nation but that wasn’t enough either.

So we started spending hundreds of billions and then trillions of dollars that belong to future generations.

All of this to fuel the greatest party the world has ever seen.

And it has been a great party.

But you can turn out the lights because the party is almost over.

It is very easy to blame the U.S. government for getting into so much debt, but they are not the only ones who have been piling up debt at an insane pace.

In fact, millions of individual Americans have been living beyond their means for decades.  Just check out the chart below which shows the growth of household debt since the mid-1960s….

Now tens of millions of Americans are massively overextended and are crying to the U.S. government for help.  But nobody forced them to get mortgages that they couldn’t afford.  Nobody forced them to max out their credit cards.  Nobody forced them to fill up their garages with luxury vehicles.

In large part, we did this to ourselves.  U.S. credit card debt per household only crossed the $1,000 threshold in the mid-1980s.  Now it is over $8,000 per household….

But the corporate world should shoulder plenty of the blame as well.  Corporate debt has been exploding at an exponential rate while profits have remained relatively flat.  There is no way that this ratio of corporate debt to profits is sustainable….

And of course the biggest culprit of all is the U.S. government.  They have piled up the biggest mountain of debt in the history of the world, but are we not at fault for continuing to elect leaders who keep putting us into so much debt?  However, there are some signs that the American people are starting to wake up about this.  According to the Fox News poll, by a nearly three-to-one margin, voters believe that the national debt (65 percent) is a greater threat to America’s future than terrorism is (23 percent).

So will this change anything when the next elections come around?

We will see.

Meanwhile, the damage has already been done.  The U.S. Congress recently approved an increase in the federal government debt cap to 14.3 trillion dollars.  In 2010, the United States government is projected to issue almost as much new debt as the rest of the governments of the world combined.  Thanks to the horrifyingly bad management of our finances by our nation’s leaders, the legacy that we are leaving to future generations is the biggest mountain of debt that humanity has ever seen….

Unfortunately, instead of learning from the past and trying to reduce debt, the U.S. government just keeps spending money and piling up debt faster and faster.

But if they stop all of this reckless spending the U.S. economy could plunge right into a depression of unprecedented magnitude and pretty much everyone would be voted out of office.

But if they keep on with all of this reckless spending the long-term consequences will be catastrophic beyond anything that any of us can even imagine.

Either way, this thing is going to end really, really badly.

Whether you want to face it or not, there is no economic future for the United States under the current system.

Enjoy things while they are still relatively good, because this is as good as things are going to get.  Incredibly hard times are coming and we all need to start getting ready.

Has The United States Become A Nation With No Economic Spine?

What are hard working Americans who have scrimped and saved and have done everything “right” financially for decades supposed to think about all of these “bailouts” and of the massive financial mess in Washington?  How are people who have handled their own finances admirably supposed to feel now that the foolishness of others is leading us all towards a horrific economic collapse?  Well, a reader named “Mae” recently left a comment that I think does a good job of communicating what a lot of hard working Americans are feeling right now: My situation is this – we have lived our lives playing by the rules: never carried debt on a credit card that we couldn’t pay off by the due date. If we couldn’t afford the item, we didn’t buy it. We always had a Christmas Club which enabled us to pay cash for the holiday. We payed ourselves first after every paycheck whether it was $10 or $100, whatever we could afford. We made double payments on our mortgage when we could which helped us to pay off our modest home 10 years early. We knew that we couldn’t afford to “have it all” so we made our choices early on and stuck with it. We sacrificed the fancy vacations in order to do large home repairs (like a new roof) ourselves. We didn’t buy expensive cars and now own one outright and carry a small loan on another. That’s our only debt besides monthly bills. We chose jobs that provided health care benefits. We did everything right…we saved and saved and saved to have a decent retirement but of course last year took half the value of our 401k.

Now, I’m expected to sit back and watch Bush, Congress and Obama bail everyone out because they didn’t have the fiscal discipline to manage their money?? I’m supposed to feel bad for people who bought homes they couldn’t afford? or cars they couldn’t pay for? or $1000 cell phone bills? or $20,000 in credit card debt? HELL NO! I’m livid! If I ran my checkbook the way Washington is running the national checkbook, I’d be thrown in jail!

All we can do now is educate as many people as possible about what is happening and hopefully vote all these s.o.b.’s out of office and replace them with fiscally conservative candidates who will vote for term limits. The days of a career politician are over. I don’t know if we can turn any of this around – it will take a lot of hard work to make the tough decisions, but they have to be made if we’re to survive. How many people have the guts to work through this? Not many…we’ve become a spoiled, selfish, arrogant and hypocritical nation with no spine.

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The Credit Card Trap: How U.S. Credit Card Companies Are Sucking The Financial Life Out Of The American Consumer

There have been very few things more damaging to American consumers over the past couple of decades than credit card debt.  Easy credit has enabled many of us to live absolutely fabulous lifestyles, but outrageously high interest rates, ridiculous penalties and predatory fees have sucked the financial life out of millions of American families.  It is very easy to blame the rapidly exploding debt of the U.S. government for the economic collapse that we are now experiencing, but the truth is that tens of millions of Americans have created their own personal economic disasters by overusing credit cards.  The temptation of easy credit has been too much for millions of Americans to resist, but now all of that easy credit is proving to be incredibly difficult to pay back, and massive debt problems are literally tearing many American families apart.

It is hard to underestimate how devastating credit card debt can be to a family.

According to the credit card repayment calculator, if you owe $6000 on a credit card with a 20 percent interest rate and only pay the minimum payment each time, it will take you 54 years to pay off that credit card.

During that time you will pay $26,168 in interest rate charges in addition to the $6000 in principal that you are required to pay back.

That does not even account for any penalties or fees you may have to pay.

Are you starting to get the picture?

The reality is that credit cards are one of the greatest inventions for sucking the wealth out of middle class American families ever invented.

Just consider the following facts….

*According to the United States Census Bureau, there are approximately 1.5 billion credit cards in use in the United States.

*At the end of 2008, the total credit card debt piled up by American consumers was over 972 billion dollars.  This is an amount that is greater than the GDP of the world’s 122 poorest nations combined.

*78 percent of American households had at least one credit card at the end of 2008.

*The top 10 credit card issuers control approximately 88 percent of the credit card market.

*The average U.S. college graduate leaves school with more than $2,000 in credit card debt.

So is Congress doing anything to protect American consumers?

Well, some of the key provisions of The Credit Card Accountability, Responsibility and Disclosure Act, commonly known as the CARD Act, go into full effect for all credit card providers on February 22nd.  In particular, starting on the 22nd limits will be imposed on when credit card issuers can raise rates on existing card balances.

But the truth is that this new law doesn’t really do much to protect us.  U.S. credit card companies will continue to be able to engage in highly predatory practices.  The following are just three examples….

#1) According to Pamela Banks of Consumers Union, the nonprofit publisher of Consumer Reports, there are no current federal laws that cap credit card interest rates.  In fact, CNN is reporting that interest rates on some major bank credit cards are now as high as 36 percent.

#2) New laws only address the existing fees charged by credit card companies.  So credit card companies are working hard to invent all kinds of new fees and penalties that will get around the new laws so that they can keep sticking it to American consumers.  For example, Citibank is now charging some consumers with a fee if they put less than $2,400 on their card annually.

#3) In anticipation of the CARD Act going into effect, many credit card companies have been aggressively bumping up the minimum payments for many of their customers.  Chase, one of the biggest credit card providers, recently increased the mandatory minimum payment for many consumers by 150 percent.  MBNA, Citibank and Bank of America have announced that they are doubling minimum monthly payments on credit card balances for many of their customers.  These increases have been absolutely devastating for many families who are on a tight budget.

The bottom line is that we all need to get out of debt and we all need to stop using credit cards.  It is financial insanity to end up paying two, three, four or five times as much for an item as it cost in the store.  We have been making the big banks rich by spending money that we do not have.

So if we are going to accuse the U.S. federal government of horribly wasting our money, we have got to be certain that we are geting our own financial houses in order.

But for many American families it is already too late.  It is hard to pay off debt if you don’t have a job and you are about to lose your home.  In fact, many American families find themselves literally being torn apart by financial stress.

Unfortunately, economic times are not going to get any easier.  If you are able, get out of debt while you still can.  Now is the time to tighten our belts and to prepare ourselves and our families for what is ahead.

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