The Next Great Depression

Obama’s Five Trillion Dollar Lie

Why isn’t the U.S. economy in a depression right now?  The number one reason is because the federal government has stolen more than five trillion dollars from future generations since Barack Obama was elected and has used that money to pump up our grossly inflated standard of living.  Whether the federal government spends money wisely or foolishly, the truth is that the vast majority of it still ends up in the pockets of the American people who then use it to buy the things they need for their daily lives.  If the U.S. government had not borrowed and spent an extra five trillion dollars that we did not have over the past several years, we would be in the middle of a rip-roaring economic depression right now.  So any talk that Barack Obama is “improving the economy” is a total farce.  It is a five trillion dollar lie.  The reality is that Barack Obama and the U.S. Congress have been stealing trillions of dollars from future generations in order to make things tolerable in the present.  If the federal government adopted a balanced budget next year, the debt-fueled prosperity that we are currently enjoying would start disappearing very rapidly and all hell would break loose in America.

At this point, the U.S. national debt is over 15.7 trillion dollars.

When Ronald Reagan took office it was less than a trillion dollars.

If you were to divide the national debt up equally, it would come to more than $50,000 for every man, woman and child in the United States.

So the share of the national debt for an average family of four would be about $200,000.

When the government borrows and spends money that it does not have, that increases the amount of dollars in circulation and it causes GDP to go up.

That is one of the reasons why our politicians like to borrow and spend money that we do not have.  It makes the economic statistics look good.  They can point to those economic statistics as a reason to send them back for another term.

This is a major flaw in our system.  Most of our politicians do not care about how they are raping future generations financially.  Most of them just care about getting elected again.

If you will notice carefully, neither Mitt Romney nor Barack Obama are promising to balance the budget any time soon.  Like so many politicians in the past, they promise to do it “eventually”, but “eventually” never arrives.

According to a recent article in the Washington Times, Mitt Romney declared during a recent campaign appearance that he has no plans to balance the federal budget in his first year….

“My job is to get America back on track to have a balanced budget. Now I’m not going to cut $1 trillion in the first year”

Why would he say that?

Why wouldn’t he want to balance the budget?

He went on to explain that….

“The reason,” he explained, “is taking a trillion dollars out of a $15 trillion economy would cause our economy to shrink [and] would put a lot of people out of work.”

Romney is right about this.  Taking a trillion dollars out of a 15 trillion dollar economy would plunge us into an economic nightmare.

And that would make him look bad.

Of course if Obama wins the election we can just expect more of the same from him as well.

For example, just check out what White House Chief of Staff Jack Lew had to say about balancing the budget recently….

“The time for austerity is not today,” Lew told NBC News “Meet the Press.” “If we were to put in austerity measures right now, it would take the economy in the wrong way.”

Why is the time for austerity not today?

It is because the 2012 election is coming up and Obama wants the economic statistics to look good.

But can you blame our politicians for being cowardly?

Just look at what is happening in Greece.  After several years of austerity they are in the midst of a full-blown economic depression and they still have not balanced their budget.

Do we want to end up like Greece?

Most Americans do not realize this, but the U.S. already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.

So why haven’t we collapsed yet?

Well, because we continue to borrow larger and larger amounts of money.

It took from the founding of America until 1995 for the federal government to accumulate 5 trillion dollars of debt.

Under Obama, we have accumulated more than 5 trillion dollars of new debt in just over 3 years.

Amazingly, Obama has added more to the national debt than George W. Bush did during his entire 8 year term.

And let there be no mistake – George W. Bush was a wild spender.  A fiscal conservative he most certainly was not.

But Barack Obama does not seem troubled by any of this.

Barack Obama is prancing about the countryside touting his great “economic plan”, but the truth is that the only reason the economy has not totally collapsed is because he is stealing 150 million dollars an hour from our children and our grandchildren.

Sadly, most Americans don’t understand that the current level of prosperity that we are enjoying is a grand illusion.  Most Americans still expect things to return to the way that they used to be, and they are increasingly becoming angry that it is taking so long to get back there.

In fact, a whole host of recent surveys have shown that Americans are very dissatisfied with the direction the economy is heading in….

Four recent surveys have found that on average only 28% of Americans are satisfied with the condition of the country, while 70% are dissatisfied. Three recent surveys have found that between 69% and 83% of Americans believe that the country is still in recession (it isn’t), and only half believe that a recovery is under way.

What they don’t realize is that if we were not massively ripping off our kids and our grandkids things would be much, much worse.

Thomas Jefferson understood that government borrowing is essentially the same as theft from future generations.

He once made the following statement….

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

What we are doing to our children and our grandchildren is so immoral that it is hard to put into words.

We are running up trillions upon trillions of dollars of debt in their name just so that our lives can be more comfortable right now.

How could we be so selfish?

The sad thing is that even with all of this reckless spending our economy is still not in great shape.

In fact, the middle class continues to shrink at an alarming rate.  The following are just a few statistics from a recent article I did about this phenomenon….

-Today, approximately 48 percent of all Americans are currently either considered to be “low income” or are living in poverty.

-Back in 1960, social welfare benefits made up approximately 10 percent of all salaries and wages.  In the year 2000, social welfare benefits made up approximately 21 percent of all salaries and wages.  Today, social welfare benefits make up approximately 35 percent of all salaries and wages.

-The United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.

-Every year now, we see millions of Americans fall out of the middle class.  In 2010, 2.6 million more Americans descended into poverty.  That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

-At this point, approximately 22 percent of all American children are living in poverty.

-When Barack Obama took office, there were 32 million Americans on food stamps.  Now, there are more than 46 million Americans on food stamps.

So how much worse would things be if a trillion dollars of federal spending was suddenly removed from the economy?

Are you starting to get the picture?

As bad as things are right now, they are about to get a whole lot worse.

So why can’t we just keep on borrowing and spending forever?

Well, just like Greece found out, debt always catches up with you eventually.

During fiscal 2011, the U.S. government spent over 454 billion dollars just on interest on the national debt.

But just like we are seeing in Europe, if confidence in U.S. government debt starts to disappear the U.S. government could end up facing much higher interest rates to borrow money.

If the average rate on U.S. government debt only rose to 7 percent (in the past it has actually been much higher than that), then the U.S. government would be spending about 1.1 trillion dollars a year just on interest on the national debt.

During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in about 2.4 trillion dollars.

So if we were spending 1.1 trillion dollars just on interest, that would be close to half of all the revenue the federal government brings in.

Right now, the Federal Reserve is manipulating the system in a desperate attempt to keep interest rates down.  During 2011, the Federal Reserve bought up approximately 61 percent of all government debt issued by the U.S. Treasury Department.

But most Americans have no idea how fragile our financial system is.

Most Americans just assume that we will always be the greatest economy on the planet and that there is nothing to be worried about.

Sadly, one way or another this debt bubble is going to burst and then our debt-fueled false prosperity is going to disappear.

Most Americans are not going to understand what is happening and they are going to go absolutely nuts.

20 Economic Statistics To Use To Wake Sheeple Up From Their Entertainment-Induced Comas

The Dow has closed above 13,000 for the first time since 2008, and the mainstream media is declaring that a strong economic recovery is underway.  Barack Obama is telling anyone who will listen that his economic policies are a huge success, and U.S. consumers are piling up astounding amounts of new debt.  Unfortunately, this euphoria about the economy will be short-lived.  None of the long-term problems that are destroying the U.S. economy have been solved.  In fact, there are dozens of statistics that can be quoted that prove that the U.S. economy is in far worse shape than it was when the recession supposedly ended.  If dramatic changes are not made very rapidly, our nation is going to smash directly into an economic brick wall.  Sadly, most Americans are so addicted to entertainment that they have no idea what is about to happen.  Most of them are “sheeple” that are content to trust that the “experts” know exactly how to fix our problems as they continue to enjoy their entertainment-induced comas.  After all, it is much easier to turn on “American Idol” or “Dancing With The Stars” than it is to think about debt ratios and monetary policy.  But that doesn’t mean that we should not try to wake the sheeple up.  It just means that it will not be easy.

If you went to the doctor tomorrow and he told you to take some little blue pills without telling you anything else, would you take them?

Of course not.

You would want to know what the little blue pills are for.

But if your doctor told you that you have a deadly incurable disease that is about to kill you, and that the little blue pills are the only cure, then you would definitely be interested in taking them.

Well, it is the same way with the American people.  Until they understand just how sick the economy is, they will not be interested in fighting for a solution.

We need to show all the sheeple out there that the U.S. economy has terminal cancer and is headed for death.

We need to show them that the future of our children and our grandchildren is literally being destroyed.

Way too many Americans are sitting around waiting for the government to save them.

It isn’t going to happen.

It is up to those of us that are awake to wake up those that are asleep.

And there are many out there that think that they are awake that are only partially awake.

One very famous author once wrote that “people are destroyed for lack of knowledge”, and that is exactly what is happening in America today.  Most Americans simply don’t understand what is happening economically, politically, socially, morally or financially in this nation.

Please help me wake the sheeple up.

The following are 20 economic statistics to use to wake sheeple up from their entertainment-induced comas….

#1 The United States has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.

#2 The European Commission has formally declared that Europe has now entered another recession.  German banks are leveraged 32 to 1 and the European financial system is rapidly approaching a nightmare.  Lehman Brothers was only leveraged 30 to 1 when it finally collapsed.

#3 There are clear signs that economic activity is also significantly slowing down in the United States.  For example, new orders for goods manufactured in the United States experienced the biggest drop in three years in January.

#4 U.S. consumers are busy racking up staggering amounts of debt once again.  Total consumer debt rose at an annual rate of 9.3 percent in December.  It is now sitting at a grand total of 2.498 trillion dollars.

#5 The U.S. Postal Service has announced plans to eliminate 35,000 more jobs.

#6 There are more unemployed Americans than there are people living in the entire nation of Greece.

#7 The percentage of American men that have jobs is near an all-time record low.

#8 Right now, there are 88 million working age Americans that do not have jobs and that the government says are not looking for jobs.

#9 The average duration of unemployment in the United States is nearly three times as long as it was back in the year 2000.

#10 In January 2009, there were 2.6 million “long-term unemployed workers” according to the federal government.  Today, there are 5.6 million.

#11 The average price of a gallon of gasoline in the United States has risen by 14 cents in just the past week, and the average price of a gallon of gasoline in the state of California is now an astounding $4.29.  Sadly, the price of gas is expected to continue rising over the next few months.

#12 The U.S. housing market continues to struggle deeply.  Home prices in the 4th quarter of 2011 were four percent lower than they were during the 4th quarter of 2010.  Overall, U.S. home prices are 34 percent lower than they were back at the peak of the housing bubble.

#13 Large numbers of Americans are putting off basic health procedures due to the declining economy.  Just consider the following example from a recent Huffington Post article….

Americans between the ages of 50 to 64 got 500,000 fewer colonoscopies, or screenings aimed at detecting colon cancer, during the recession, compared to the two years before, according to a recent study from researchers at the University of North Carolina’s medical school.

#14 The number of Americans on food stamps has increased by almost 50 percent since Barack Obama first took office.

#15 Right now, 48 percent of all Americans are considered to be either “low income” or “living in poverty”.

#16 The U.S. government is stealing about 150 million dollars from our children and our grandchildren every single hour of every single day.

#17 If Bill Gates gave all of his money to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.

#18 Since the Federal Reserve was created, the U.S. dollar has declined in value by more than 95 percent and the U.S. national debt has gotten more than 5000 times larger.

#19 Approximately 25 million American adults are living with their parents.  Most of them are doing it for economic reasons.

#20 According to a new Politico poll, only 30 percent of all Americans believe that the next generation will be “better off economically” than the previous generation.

For many more current statistics about the U.S. economy, check out the interesting facts which I documented in this previous article.

Thankfully, there are others out there such as trends researcher Gerald Celente that are tirelessly working to sound the alarm.  Celente is convinced that the U.S. financial system is rapidly heading for a disaster.  Just consider the following quotes from Celente in a recent USA Today article….

“2012 is when many of the long-simmering socioeconomic and political trends that we have been forecasting and tracking will climax,” Celente noted in his Top 12 Trends 2012 newsletter. In an interview he added: “When money stops flowing to the man on the street, blood starts flowing in the street.”

Even some politicians on the state level are deeply concerned about the possibility of a massive financial meltdown.

For example, a bill has been introduced in Wyoming that would set up “a state-run government continuity task force” which would develop plans for how Wyoming would deal with potential disasters such as a “complete meltdown of the federal government”, an economic collapse or a major disruption in food and energy supplies….

State Rep. David Miller, R-Riverton, has seen the national debt rise above $15 trillion and protest movements grow around the country. Wealthy Americans are fleeing the country, he says, and confidence in the dollar has taken a hit around the world.

If America’s economic and social problems continue to escalate and spiral out of control, Miller said, Wyoming needs to be ready. So, he’s introduced legislation to create a state-run government continuity task force, which would study and prepare Wyoming for potential catastrophes, from disruptions in food and energy supplies to a complete meltdown of the federal government.

It would even look at the feasibility of quickly providing an alternative currency in Wyoming should the U.S. dollar collapse entirely.

But for many Americans, the “meltdown” has already happened on a personal level.

Many are going to extreme lengths in an attempt to survive in this economy.

For example, one ex-police officer in Ohio got so desperate that he decided that it would be better to get arrested for bank robbery and be thrown in prison than to be homeless and living in the streets….

Former Columbus police officer Edward Pascucci had been jobless for more than a year and was facing homelessness last summer when he decided to rob a local bank. Making off with stacks of cash, however, never was his intention.

Pascucci told a federal judge on Thursday he’d run out of options, was facing “severe health problems” and opted to avail himself of the services offered by the federal penal system rather than live on the street.

Can you imagine that?

Can you imagine getting arrested just so that you could get free health care and wouldn’t have to sleep in the streets?

Meanwhile, the Obamas are living the high life and seem to have developed a “let them eat cake” mentality.  The following is from a recent article in The Daily Mail….

The Obama family just finished a luxury ski vacation in Aspen, Colorado. This comes on the heels of a Hawaiian Christmas vacation for the family that lasted a few weeks. The 2011 Hawaiian vacation cost the American taxpayers $4 million and a big increase from the 2010 bill sent to the American people for $2.5 million, according to the Huffington Post.

Over the past three summers, the Obama’s have vacationed in the exclusive Blue Heron Farm in Chilmark, Martha’s Vineyard in Massachusetts. President Obama has a reputation for hitting every golf course on this island vacation spot for the rich and famous.

There is nothing wrong with a President taking a modest vacation, but there is a problem when the political leader of America is taking frequent swanky vacations when average Americans are experiencing economic pain.

Shouldn’t the Obamas be setting an example for the rest of us during these hard economic times?

Unfortunately, Barack Obama seems to believe that the worst of our economic troubles is now behind us.

If only that were true.

During this short-lived bubble of false hope, we should all be working hard to prepare for what is ahead.

A menacing storm is on the horizon and it will be here way too soon.

Let us wake up as many of the sheeple as we can while there is still time.

 

A Warning Sign For The World

Any financial system that is based on debt is doomed to fail.  Today, we are living in the greatest debt bubble that the world has ever seen, and if all of a sudden people could not use credit to buy things our economy would immediately ground to a halt.  Unfortunately, no debt bubble can last forever.  When this current debt bubble finally bursts, faith in the financial system is going to disappear, credit is going to freeze up and there is going to be a massive wave of bank failures.  Right now, Greece is a warning sign for the world.  Nobody wants to lend money to Greece, the Greek banking system is dying, one out of every four businesses has already shut down, unemployment is soaring and the Greek economy has now been in recession for five years in a row.  Sadly, the economic implosion in Greece is rapidly accelerating.  The Greek economy shrunk at a 7 percent annual rate during the 4th quarter of 2011.  That wasn’t supposed to happen.  Things were supposed to be getting better in Greece by now.  But instead the Greek depression is getting even worse, and very soon the rest of the world is going to be going through what Greece is currently experiencing.

Unfortunately, most in the mainstream media are treating what is happening in Greece as an “isolated incident” rather than as a very serious warning sign for the world.

Thankfully, there are at least a few reporters out there that are realizing the gravity of the situation.  The following is how one reporter from the New York Times recently described what life is like in Greece now….

By many indicators, Greece is devolving into something unprecedented in modern Western experience. A quarter of all Greek companies have gone out of business since 2009, and half of all small businesses in the country say they are unable to meet payroll. The suicide rate increased by 40 percent in the first half of 2011. A barter economy has sprung up, as people try to work around a broken financial system. Nearly half the population under 25 is unemployed. Last September, organizers of a government-sponsored seminar on emigrating to Australia, an event that drew 42 people a year earlier, were overwhelmed when 12,000 people signed up. Greek bankers told me that people had taken about one-third of their money out of their accounts; many, it seems, were keeping what savings they had under their beds or buried in their backyards. One banker, part of whose job these days is persuading people to keep their money in the bank, said to me, “Who would trust a Greek bank?”

Can you imagine?

Greece is experiencing a full-blown economic collapse and nobody can see a light at the end of the tunnel at this point.

As I have written about previously, the overall rate of unemployment in Greece has now risen above 20 percent and the youth unemployment rate in Greece has soared to an astounding 48 percent.

Deleveraging can be an extremely painful process.  Greece has been forced to try to reduce the size of its budget deficit, but every time it cuts government spending that causes economic activity (and thus government revenues) to slow down as well.

Now the EU and the IMF are demanding that even more very painful austerity measures be implemented in Greece even though Greece is already experiencing a full-blown depression.

The EU and the IMF are demanding that Greece fire 15,000 more government workers immediately and a total of 150,000 government workers by 2015.

The EU and the IMF are demanding that wages for government workers be cut by another 20 percent.

The EU and the IMF are demanding that the minimum wage be slashed by more than 20 percent.

The EU and the IMF are also demanding significant reductions in unemployment benefits and pension benefits.

Of course all of those cuts are going to make the short-term economic conditions in Greece even worse.

The rioting, looting and burning of buildings that we are witnessing right now in Greece is likely to continue for quite some time as exasperated citizens attempt to express their frustrations to politicians that simply do not seem to care.

According to the National Confederation of Greek Commerce, recent rioting resulted in damage to 153 businesses in Athens.  45 of those businesses were totally destroyed.

You can view some stunning footage of the current rioting in Greece right here.

Despite all of the austerity measures that have already been implemented, the truth is that Greece is very likely to default soon anyway.

There is a very good chance that the new austerity agreement that the Greek parliament just approved will never be implemented.  There are new elections scheduled for April and the current party in power is polling in the single digits.

The new Greek government is likely to look much different from the current one, and nobody knows for sure if the new government will follow through on any of the promises being made by the current government.

In addition, the German parliament must approve this new deal with Greece, and the German parliament is not scheduled to vote on it until February 27th.  Considering the mood in Germany right now, approval is not guaranteed.

So there are all kinds of things that could go wrong with the “deals” that are currently being discussed.  The truth is that a Greek default in the coming months seems to become more likely by the day.

Some in the financial world almost seem eager for a Greek default.  The following is what Jon Moulton, the chairman of Better Capital, recently told CNBC….

“If I was Greek, I wouldn’t be going for these measures, I’d be going for default and getting it over with. Would you like two to three years of pain or 20?”

But a disorderly Greek default would not be a pleasant thing for the global economy at all.  A recent article in the Guardian detailed what some of the consequences of a Greek default and exit from the eurozone might be….

But default and “re-drachmatisation” would be a costly and chaotic process. In the long term the euro might be strengthened if some of its weaker members headed for the door. But in the short term banks across the eurozone might have to be closed to prevent a run on the single currency as investors speculated about which country might be next. A new wave of bank nationalisations would be likely to follow as lenders counted their losses on now worthless Greek debt.

Capital controls would have to be imposed and borders shut to stop money flooding out of Greece. Portugal, Italy and Spain would come under intense pressure from investors wary about the risk of another victim. Banks everywhere, already reluctant to lend, would cut back hard, nervous about their exposure to the bonds of all Europe’s crisis-hit states.

And the financial crisis in Europe is going to continue to spread well beyond Greece.  Moody’s Investors Service just downgraded the credit ratings of six European nations.  The following is how Bloomberg described the downgrades….

Spain was downgraded to A3 from A1 with a negative outlook, Italy was downgraded to A3 from A2 with a negative outlook and Portugal was downgraded to Ba3 from Ba2 with a negative outlook, Moody’s said. It also reduced the ratings of Slovakia, Slovenia and Malta.

Countries such as Italy, Spain, Portugal, Ireland and Hungary are heading down the exact same road that Greece has gone.  Greece was the first one to experience a full-blown depression, but soon Greece will have a lot of company.

Greece is most definitely a warning sign for the world.  If you keep recklessly piling up debt, eventually a day of reckoning comes.  It is inevitable.

But Barack Obama does not seem to understand this.  He continues to pile another 150 million dollars on to our national debt every single hour.  He knows that cutting spending significantly right now would hurt the economy and that would significantly hurt his chances for another term.

Needless to say, Barack Obama is not likely to do anything that is going to significantly hurt his chances for another four years in the White House.

So we continue to roll on toward disaster.

The U.S. financial system is like a car with no brakes that is heading straight toward a 5,000 foot drop at 100 miles an hour.

It is all going to seem like fun and games to some people until we hit the canyon floor.

Once that happens, nobody will be laughing.

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

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

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

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

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

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

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

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

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

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

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

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

Sadly, that projection is probably way too optimistic.

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

Another normal day at the Hellenic Statistical Authority.

We learn that:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So what is going to happen next in Greece?

The truth is that nobody knows.

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

Unfortunately, Greece is not an isolated case.

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

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

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

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

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

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

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

You better get ready.

Yes, It Is Halftime In America – So Now Is The Time To Get Your Financial Priorities In Order

Did you see the Chrysler commercial featuring Clint Eastwood that aired during the Super Bowl the other night?  It was entitled “It’s Halftime In America”, and it was truly a great ad.  To me, it was the most memorable Super Bowl ad this year by far.  It conjured up images of the America that so many of us remember so fondly.  It reminded us of how life in this country used to be.  Unfortunately, America is currently headed down a road that is taking us in the opposite direction.  Yes, it is halftime in America, but there is no guarantee that what is ahead is going to be great.  In fact, if we continue to make the same choices that we have been making, a national nightmare is inevitable.  Let us hope and pray for a fundamental change of direction for America, but let us also prepare for what is going to happen if that does not take place.  There is a “pause in the action” at the moment, so now is the time to get your financial priorities in order.  Now is the time to prepare for the storm that is coming.  If you wait until the storm is right on top of you it will probably be too late.

But I must admit that I really loved that ad.  First of all, any Super Bowl ad that includes Clint Eastwood is almost automatically going to be a great ad.  Secondly, it was very refreshing to see a commercial address some of the very serious problems that this country is facing.

The ad ended with Eastwood making the following statement….

“This country can’t be knocked out with one punch. We get right back up again, and when we do the world is going to hear the roar of our engines. Ya, it’s halftime in America, and our second half is about to begin”

A video of the complete ad is posted below….

Kudos to Chrysler for producing such an extraordinary ad.  I have to admit that I actually prefer Chrysler to Ford and GM.  I like their style and I think they make some very nice vehicles.

But Chrysler is far from out of the woods.  They almost went under during the last recession, and if the U.S. economy experiences another major recession they might not survive it.

Yes, Chrysler did earn $183 million in 2011.

But in 2010, Chrysler lost $652 million.

Hopefully Chrysler can string a few more profitable years together, but there is certainly no guarantee that is going to happen.

As I have written about previously, the U.S. auto industry is in the midst of a nightmarish long-term decline.

The combined U.S. market share of the “Big Three” U.S. automakers fell from 70% in 1998 to 53% in 2008.

When you examine the numbers over a longer time frame, they are even more striking.

For example, in 1970 General Motors had about a 60 percent share of the U.S. automobile market, but today that figure is down to about 20 percent.

In an effort to cut costs, U.S. automakers have been eliminating jobs and sending jobs out of the country.

In the year 2000, the U.S. auto industry employed more than 1.3 million Americans.  Today, the U.S. auto industry employs about 698,000 people.

So the U.S. auto industry has not exactly bounced back.

They have survived for now, but there is no guarantee that this is going to be permanent.

Many considered the Chrysler Super Bowl ad to be an endorsement of the auto bailouts and of the economic policies of the Obama administration.

But that wasn’t the case at all.  In fact, it turns out that Clint Eastwood was actually a harsh critic of the auto bailouts as Reuters recently noted….

“We shouldn’t be bailing out the banks and car companies,” actor, director and Academy Award winner Eastwood told the Los Angeles Times in November 2011. “If a CEO can’t figure out how to make his company profitable, then he shouldn’t be the CEO.”

And Clint Eastwood certainly did not mean to endorse Obama during the commercial.  The following is what Eastwood told Fox News about the ad….

“I just want to say that the spin stops with you guys, and there is no spin in that ad. On this I am certain.

l am certainly not politically affiliated with Mr. Obama. It was meant to be a message about just about job growth and the spirit of America. I think all politicians will agree with it. I thought the spirit was OK.”

The cold, hard reality of the matter is that America has not “bounced back” since 2008.  Sadly, the truth is that we are even in worse condition than we were back then….

-Our national debt has risen by about 50 percent since 2008.

-Our states are in more debt than ever.

-Our local governments are in more debt than ever.

-The U.S. economy has lost about 6 million jobs since 2008.

-Approximately 14 million more Americans have gone on food stamps since Barack Obama became president.

-More Americans are living in poverty than ever before.

-New home sales in the United States hit a brand new all-time record low during 2011.

-The number of “long-term unemployed workers” has more than doubled since Barack Obama entered the White House.

-The amount of money that the federal government gives directly to Americans has increased by 32 percent since Barack Obama entered the White House.

-Despite claims that things are “getting better”, the truth is that the percentage of Americans that actually have jobs is almost exactly the same as it was two years ago.

Amazingly, Barack Obama seems to think that he has done a good job and that he deserves a second term.  On Sunday, Obama told NBC’s Matt Lauer the following….

“I deserve a second term, but we’re not done”

Many Americans are buying into the hype.  A new ABC News/Washington Post poll has found that Barack Obama’s approval rating is actually rising.

But it won’t last long.  As the economy crumbles his approval rating will start going down once again.

The sad truth is that America is in the middle of a long-term economic decline because our economy is not built on a solid foundation.

The false prosperity that we are enjoying now is being fueled by the biggest debt bubble in the history of the world.  We consume far more wealth than we produce, and we pay for it by constantly going into more debt.

At some point the merry-go-round is going to stop and when it does it is going to be incredibly painful.

An increasing number of Americans are waking up to this reality.  One recent survey found that 61 percent of all Americans believe that there will be “a major catastrophic event” in the United States within the next 20 years.  A significant portion of them believe that the “catastrophic event” will be economic in nature.

That same survey found that only 15 percent of all Americans feel as though they are completely prepared for the coming catastrophic event.

Remember what happened back in 2008.  When the financial crisis struck, millions of Americans lost their jobs very rapidly.  Since many of them did not have any money stored up, a lot of them lost their homes as well.

Since it is “halftime in America”, now is the time to get prepared for the next great financial crisis.

Now is the time to reduce your expenses.

Now is the time to get out of debt.

Now is the time to set aside some money so that you will have something to live on if you do happen to lose your job.  I typically recommend that you have at least 6 months of living expenses stored up.

Now is the time to start a side business.  Even if you are broke, there are some businesses out there that you can start up for no money.  It isn’t easy to start a business with no money, but it can be done.

Now is the time to grow a garden.  Fruits and vegetables are often some of the most expensive items at the grocery store, and by growing them yourself you become less dependent on the system.

And that is the key.  We all want to try to become less dependent on the system.

There is no guarantee that your job will always be there.

There is no guarantee that your insurance company or the financial institutions that you are working with today will always be there.

There is no guarantee that the government will be there “to save you” when you really need it.

Yes, it is halftime in America.

So get ready for the second half, because it is going to be a real nightmare.

The Financial Crisis Of 2008 Was Just A Warm Up Act For The Economic Horror Show That Is Coming

The people out there that believe that the U.S. economy is experiencing a permanent recovery and that very bright days are ahead for us should have their heads examined.  Unfortunately, what we are going through right now is simply just a period of “hopetimism” between two financial crashes.  Things may seem relatively stable right now, but it won’t last long.  The truth is that the financial crisis of 2008 was just a warm up act for the economic horror show that is coming.  Nothing really got fixed after the crash of 2008.  We are living in the biggest debt bubble in the history of the world, and it has gotten even bigger since then.  The “too big to fail” banks are larger now than they have ever been.  Americans continue to run up credit card balances like there is no tomorrow.  Tens of thousands of manufacturing facilities and millions of jobs continue to leave the country.  We continue to consume far more than we produce and we continue to become poorer as a nation.  None of the problems that caused the crisis of 2008 have been solved and we are even weaker financially than we were back then.  So why in the world are so many people so optimistic about the economy right now?

Just take a look at the chart posted below.  It shows the growth of total debt in the United States.  During the financial crisis of 2008 there was a little “hiccup”, but the truth is that not much deleveraging really took place at all.  And since the recession “ended”, total credit market debt has gone on to even greater heights….

So what does this mean for the future?

Well, if a small “hiccup” in the debt bubble caused so much chaos back in 2008, what is going to happen when this debt bubble finally bursts?

That is something to think about.

Sadly, most Americans seem oblivious to all of this.

If you go out to malls in the wealthy areas of America today, people are charging up a storm.  In all, Americans charged a whopping 2.5 trillion dollars on their credit cards during 2011.  Way too many people have already forgotten the lessons that we all learned back in 2008.

Of course some Americans pay off their credit cards every month, but way too many Americans are not doing that.  Today, Americans are carrying 793 billion dollars in revolving credit balances.

And student loan debt is an even bigger bubble than credit card debt is.  As I have written about previously, total student loan debt in America is rapidly approaching a trillion dollars.

So it looks like U.S. consumers have not learned to stay away from debt.

That is not good.

Well, what about the banks?

Has the financial system learned any lessons since 2008?

No, not really.

Sadly, the “too big to fail” banks are now even bigger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.  If they were to fail today, they would be even more of a threat to our financial system than they were back in 2008.

And our major banks continue to be very highly leveraged.  In fact, major banks all over the world are absolutely swamped with debt.

The following statistics come from Zero Hedge….

The U.S. banking system is leveraged 13 to 1.

The Japanese banking system is leveraged 23 to 1.

The French banking system is leveraged 26 to 1.

The German banking system is leveraged 32 to 1.

These are insane levels of leverage, and they are just inviting another major financial crisis.

Do you all remember Lehman Brothers?  The fact that they were leveraged so highly is what did them in back in 2008.  When the value of their holdings declined by just a little bit they were totally wiped out.

Well, during this next financial crisis large financial institutions are going to be wiped out all over the world.  Major banks all over the globe are going to be crying out for more bailouts when things take a turn against them.

They are making the exact same mistakes that they made before, and they are going to be expecting more government handouts when things go bad.

Will we ever learn?

So obviously the banking system has not learned any lessons.

What about the federal government?

Well, if you follow my blog regularly, you know that I love to write about how horrific U.S. government debt is.

Unfortunately, over the past four years things have gotten so much worse.

Back in 2008, the U.S. national debt crossed the 10 trillion dollar mark.

Just recently, it crossed the 15 trillion dollar mark.

So now we are in a much weaker position financially to respond to another major financial crisis.

Just check out the chart posted below.  This is a recipe for national financial suicide….

During fiscal 2011, the Obama administration stole close to 150 million dollars from our children and our grandchildren every single hour.

At the moment, the legacy of debt that we are passing on to future generations is sitting a grand total of $15,351,406,294,640.49.

But keep in mind that it is going up every single hour.

Meanwhile, our ability to service that debt is declining.  We are rapidly getting poorer as a nation.

During 2011, the amount of money that left the United States exceeded the amount of money that entered the United States by more than a half a trillion dollars.

This gap is called a trade deficit, and it is absolutely ripping our economy to shreds.

For a moment, imagine Uncle Sam standing next to a giant pile of money on a map of the United States.  Then imagine a half a trillion dollars being taken out of that pile every single year.

So why haven’t we totally run out of money yet?

Well, it is because we borrow those dollars back.  In order to maintain our false standard of living, our federal government, our state governments and our local governments have to go out and beg the rest of the world to lend us our dollars back.

Sadly, our government schools have “dumbed-down” the population so much that most of them don’t even know what a “trade deficit” is anymore.

Meanwhile, our economic infrastructure is being gutted like a fish.

Look, I know that I go over this point over and over and over, but it is absolutely imperative that we all understand this.

The half a trillion dollars a year that leaves this country every year could have gone to support businesses and jobs inside the United States.

But instead it is going to support businesses and jobs on the other side of the world.

The consequences of this are absolutely devastating.

According to U.S. Representative Betty Sutton, an average of 23 manufacturing facilities a day closed down in the United States during 2010.  Overall, more than 56,000 manufacturing facilities in the United States have shut down since 2001.

Even many so-called “American companies” have been bought up by the rest of the world.  The following comes from a recent article posted on Economy In Crisis….

RCA is now a French company, Zenith is a Korean company. Frigidaire is a Swedish company. IBM’s Personal Computer Division—with its 500 patents—is now a Chinese company. Westinghouse Nuclear Energy’s major shareholder is Toshiba—a Japanese Company. Lucent Technologies, a former research division of AT&T, along with all the patents acquired from the beginning of the phone system, is now a French company. In 2008, Brazilian-Belgian brewing company InBev purchased the iconic American brewer Anheuser-Busch, makers of Budweiser. With the sale of these manufacturing companies, the future profit and technologies all belong to foreign entities.

We once had the greatest economic machine in the history of the world.

Now it is being dismantled and bought up by foreigners.

When America’s economic infrastructure declines, that means that there are less jobs available for all of us.

As I wrote about the other day, the employment situation in this country is not getting better and we have never even come close to recovering from the recession that started back in 2008.

During 2008 and 2009, the U.S. economy lost millions of jobs.  Since the beginning of 2010, the percentage of the U.S. population that has had a job has remained very stable….

Normally, when a recession ends the percentage of Americans that have a job bounces back pretty dramatically.

So considering the fact that the employment situation has never recovered from the last financial crisis, what is going to happen when the next financial crisis hits?

And most of the jobs that have been “created” during this so-called “recovery” have been low income jobs.  In fact, if you look closely at the employment numbers that were released last Friday, you will find that the vast majority of the “new jobs” were part-time jobs.

But you cannot pay a mortgage and support a family on a part-time job.

Sadly, the truth is that median household income in America has been steadily dropping over the past several years.  Tens of millions of American families are deeply struggling and more Americans than ever are falling into poverty.

Back in the year 2000, about one out of every nine Americans was living in poverty.  Today, about one out of every seven Americans is living in poverty.

All of this is causing a great deal of anxiety in America today.  Large numbers of Americans know that something has fundamentally changed, even if they don’t understand the specifics.  That is one reason why sites such as this one have become so popular.  People want some answers.

And once people get some answers about what is really happening, they tend to want to prepare for the hard times that are coming.

In a few days, a new series on National Geographic entitled “Doomsday Preppers” premieres.  The mainstream media is starting to take notice of the growing “prepper” movement in America today.  It is estimated that there are at least 2 million “preppers” in the United States at this point.  Of course people are “prepping” for a whole host of reasons, but the number one concern among most groups of preppers is the economy.

As the economy crumbles, more Americans than ever have decided that it is not a good thing to be 100% dependent on the system.

Back in 2008 and 2009, millions of Americans suddenly lost their jobs.  Because they did not have any finances stored up, large numbers of them also lost their homes.  Many went from being solidly middle class to being out on the street in a matter of months.

That doesn’t have to happen to you.  Instead of blowing your money on frivolous things, do what you can to set something aside for the difficult times that are on the horizon.

A lot of those “in the know” are quietly making their own preparations.  For example, legendary film director James Cameron (Avatar, Titanic and Terminator) has purchased more than 2600 acres of farmland in New Zealand and he is getting out of the U.S. for good apparently.

Unfortunately, most of us do not have the resources for something like that.  But what most of us can do is we can change our priorities and start focusing on the things that will help us survive the hard times that are coming.

So are you ready?

17 Facts About The Decline Of The U.S. Auto Industry That Are Almost Too Crazy To Believe

Very few things illustrate how dramatically America has been deindustrialized than the stunning decline of the U.S. auto industry.  Once upon a time, the United States literally taught the rest of the world how to make cars.  We were the ones that invented the assembly line.  We were the ones that showed the rest of the world what mass production could do for an economy.  For decades, we produced more cars than anyone else and we sold more cars than anyone else.  Detroit was known as “the Motor City” and our manufacturing prowess dominated the planet.  But now all of that has changed.  Japan makes far more vehicles than we do today.  So does Germany.  As you read this, state of the art production facilities are going up all over China.  Meanwhile, the U.S. auto industry continues to rot and thousands upon thousands of good automotive jobs continue to leave our shores.  The rest of the world is making cars better than we are, they are making them cheaper than we are and they really don’t care that many of our formerly great manufacturing cities are turning into rotting, stinking hellholes.  The U.S. auto industry was once a symbol of American dominance, but now it is just a symbol of American decline.  If we want to remain a great nation, then we need to start becoming great at making things once again.

The following are 17 facts about the decline of the U.S. auto industry that are almost too crazy to believe….

#1 The average age of an automobile in the United States has gone up more than 50% since 1990 and is now sitting at an all-time record of 10.8 years.  The average length of a marriage in the United States that ends in divorce is only 8 years.

#2 Germany made 5.5 million cars in 2010.  The United States made less than half that (2.7 million).

#3 When you add up salary and benefits, the average auto worker in Germany makes $67.14 an hour.  In the United States, auto workers only make $33.77 an hour in salary and benefits.

#4 Back in 2000, about 17 million new automobiles were sold in the United States.  During 2011, less than 13 million new automobiles were sold in the United States.

#5 Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe?  Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts with the rest of the world of $110 billion.

#6 Japan builds more cars than anyone else on the globe.  Japan now manufactures about 5 million more automobiles than the United States does.

#7 In 2010, South Korea exported approximately 12 times as many automobiles to us as we exported to them.

#8 According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to new tariffs.

#9 U.S. car companies are spending hundreds of millions of dollars building shiny new automobile factories in China.

#10 In 1970, General Motors had about a 60 percent share of the U.S. automobile market.  Today, that figure is down to about 20 percent.

#11 The combined U.S. market share of the “Big Three” American car companies fell from 70% in 1998 to 53% in 2008.

#12 Detroit was once known as the “Motor City”, but in recent decades automobile production has been leaving Detroit at a staggering pace.  One analysis of census figures found that 48.5% of all men living in Detroit from age 20 to age 64 did not have a job during 2008.

#13 Today, only Chrysler still operates an automobile assembly line within Detroit city limits.

#14 Since Alan Mulally became CEO of Ford, the company has reduced its North American workforce by nearly half.

#15 Today, only about 40 percent of Ford’s 178,000 workers are employed in North America, and a significant portion of those jobs are in Canada and Mexico.

#16 The average Mexican auto worker brings in less than a tenth of the total compensation that a U.S. auto worker makes.

#17 In the year 2000, the U.S. auto industry employed more than 1.3 million Americans.  Today, the U.S. auto industry employs about 698,000 people.

Sadly, it is not just the auto industry in America that is falling apart.  In fact, almost everywhere you look in our economy (and in our society as a whole) there is decay and decline.

For example, our infrastructure was once the envy of the entire globe.  Today, U.S. infrastructure is ranked 23rd.

Recently, I wrote an article entitled “24 Statistics To Show To Anyone Who Believes That America Has A Bright Economic Future“.  In that article, I discussed many of the long-term trends that are systematically destroying this nation.

Just because we have had it so good for so long does not mean that it will always be that way.

As a nation, our wealth is declining.  A decade ago, the United States was ranked number one in average wealth per adult.  By 2010, the United States had fallen to seventh.

We lived off the wealth created by previous generations for a long time, but that was not enough for us.  We always wanted more.  Eventually we started going into massive amounts of debt so that we could keep this bubble of “false prosperity” going.

Today, when you add up all forms of debt in America, it comes to over 50 trillion dollars.

We are a great nation that is in an accelerating state of decline.

We have got to quit living off of the past accomplishments of previous generations.

We have got to quit being so lazy and decadent and spoiled.

There is absolutely no guarantee that America will always be a great nation.  In fact, when great nations fall, it usually happens very quickly.

I’m still proud to be an American, but the decay and the decline that I see all across this country sickens me.

And it should sicken you too.

How To Prepare For The Difficult Years Ahead

How should people prepare for the difficult years that are coming?  I get asked about that a lot.  Once people really examine the facts, it is not too hard to convince them that an economic collapse is coming.  But once they accept that reality, most of them want to know what they can do to prepare themselves and their families for the hard times that are ahead.  Well, the truth is that it does not have to be complicated.  Many of the things discussed throughout this article are things that most of us should be doing anyway.  Now is not the time to be splurging on luxuries or expensive vacations.  Now is not the time to be going into large amounts of debt.  Instead, we all need to get back to the basics and we all need to do what we can to become more independent of the system.  Just remember what happened back in 2008.  Millions of Americans lost their jobs and millions of Americans lost their homes.  Now experts all over the globe are warning that another great financial crisis that could be just as bad as 2008 (or even worse) is coming.  Those that don’t take the time to prepare this time are not going to have any excuse.

But there is also a lot of sensationalism out there.  There are some people out there that claim that the economy is going to collapse all at once and that we are going to go from where we are now to some type of a post-apocalyptic “Mad Max” society almost overnight.

Well, that is just not going to happen.  We are not going to wake up next week in a world where we are all fighting each other with sharp pointed sticks.

Just like anything else, an economic collapse takes time.  I like to describe what is happening using an analogy from the beach.  When you build a mighty sand castle, it is not totally destroyed by the first wave that comes along, right?

Well, it is the same thing with the U.S. economy.  It was the greatest economic machine that the world has ever seen, and it is most definitely in decline.  But there are stages to that decline.

The “wave” that came along in 2008 did a huge amount of damage.  Our economy has not recovered from that.

Now another wave is coming.  But that will not be the end.  There will be other waves after that.

Eventually, this thing is coming all the way down.  Someday America will be such a horror show that it will be hard to believe that it is the same place that many of us grew up in.

But in the short-term, we are going to be facing a major league recession and millions of Americans will lose their jobs.  It won’t be the end of the world, but for some people it may feel like it.

So when you are talking about “how to prepare”, the truth is that it depends on what kind of time frame you are talking about.

In the long-term, a lot of the things that even the hardcore survivalists are doing will not be nearly enough.

In the short-term, there are things that all of us can do to weather the coming storm….

Get Out Of Debt

The global financial system is headed for a massive crisis.  Just like in 2008, a lot of people are going to lose their jobs and a lot of people are going to lose their homes.

In such an environment, it makes sense to travel as “lightly” as possible.

That means getting rid of debt.

Some forms of debt are worse than others.  Mortgage debt is not that bad.  We all need somewhere to live, and not all of us can run out and immediately pay off our mortgages.

But there are other forms of debt that are absolutely toxic.  A good example of this is credit card debt.  There are very few things that are as good at bleeding your finances as credit card debt is.  For example, according to the credit card repayment calculator, if you have a $6000 balance 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 those 54 years you will pay $26,168 in interest rate charges on that credit card balance in addition to the $6000 in principal that you are required to pay back.  That is before any fees or penalties are even calculated.

But a lot of Americans still have not learned to stay away from credit card debt.  In fact, one out of every seven Americans has at least 10 credit cards.

Ouch.

The truth is that in future years there is a good chance that you may be facing a situation where you are not making as much income, so you want to try to start reducing your expenses right now.  Getting out of debt will help you to do this.

Save Money

A shockingly high number of American families are operating without any kind of financial cushion whatsoever….

-According to a Harris Interactive survey taken in 2010, 77 percent of all Americans are living paycheck to paycheck.

-According to one recent survey, one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.

This is one reason why so many Americans have lost their homes and why so many Americans have fallen below the poverty level in recent years.  They simply had no cushion.

Last year, 2.6 million more Americans dropped into poverty.  That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

Don’t let this happen to you.  At a minimum, everyone out there should have a cushion that will cover at least 6 months worth of expenses.  Preferably, you should have a cushion that will last you at least a year.

Yes, I know that is a tall order.  But you would be amazed at how much money the average American family wastes in a typical month.  Almost all of us have areas where we can cut back.

Trust me, in the middle of a major recession you will be really glad that you are sitting on a pile of savings.

Get Independent Of The System

What would you do if you lost your job tomorrow?

Would you have any other income?

How long would it be before you lost your home?

Those are very important questions.

The truth is that the system is failing and so we all need to work hard to become more independent of the system.

So what does that mean?

Well, instead of relying on someone else to employ you indefinitely, you can start up a business in your spare time.  Yes, it will cut into your television time, but if someday you lose your job you will be extremely happy that you still have some income coming in.

Another way of becoming more independent is to start a garden.

Yes, you can run down the street and buy giant piles of cheap food right now, but that will not be the case forever.

Store Food And Focus On The Essentials

I might get into a little trouble for saying this, but the truth is that there is not going to be a major famine in America in 2012.

However, that does not mean that you should not be storing food and other essentials.

In the old days, our grandparents always saved up food.  It was just a natural thing for them to do.  This was especially the case if they lived through the Great Depression.

When hard times come, you will be glad that you have food stored up.  Plus, food is never going to be cheaper than it is today.  Having food stored up is a great hedge against the rising food prices that we will see in the future.

No, we are not going to see hyperinflation by the end of the year like many of the sensationalists are warning.  But someday you will be really glad that you stored up food for yourself and your family.

We live in a world that is becoming more unstable with each passing month.  You never know when the next natural disaster, pandemic, war or national emergency will strike.

It only makes sense to store food and other basic essentials that you will need in the future.

In a previous article entitled “20 Things You Will Need To Survive When The Economy Collapses And The Next Great Depression Begins”, I listed 20 of the things that you would need in the event of a major disaster, a national emergency or a total economic collapse.  These are things that you are going to want to make sure that you have ready right now, because after the crisis begins it may be too late to prepare….

#1) Storable Food

#2) Clean Water

#3) Shelter

#4) Warm Clothing

#5) An Axe

#6) Lighters Or Matches

#7) Hiking Boots Or Comfortable Shoes

#8) A Flashlight And/Or Lantern

#9) A Radio

#10) Communication Equipment

#11) A Swiss Army Knife

#12) Personal Hygiene Items

#13) A First Aid Kit And Other Medical Supplies

#14) Extra Gasoline (But Be Very Careful How You Store It)

#15) A Sewing Kit

#16) Self-Defense Equipment

#17) A Compass

#18) A Hiking Backpack

#19) A Community

#20) A Backup Plan

In the comments to that article, the readers suggested the following additional items….

A K-Bar Fighting Knife

Salt

Extra Batteries

Medicine

A Camp Stove

Propane

Pet Food

Heirloom Seeds

Tools

An LED Headlamp

Candles

Clorox

Calcium Hypochlorite

Ziplock Bags

Maps Of Your Area

Binoculars

Sleeping Bags

Rifle For Hunting

Extra Socks

Gloves

Gold And Silver Coins For Bartering

Once again, a lot of these things are not going to be needed right away.  The economy is going to go through a lot more ups and downs before it totally dies.

In the short-term, keep an eye on the European debt crisis, the Japanese debt crisis and the U.S. debt crisis.  There are a lot of similarities between what happened back in 2008 and what is happening now.

And what happened following the crisis of 2008?

Unemployment shot through the roof.

So be prepared for that.

Make a plan for how you and your family will survive if you end up unemployed.

Also, when it comes to “how to prepare”, there is one aspect that is often overlooked.

During the difficult years ahead, we are all going to have to be mentally and spiritually tough.

It won’t matter how good your physical and financial preparations are if you are cowardly and paralyzed by fear.

The times that are coming are going to test all of our hearts.

Some people are going to make it and some people aren’t.

Some people will become so consumed with fear that they will give up completely.

Don’t let that happen to you.

Prepare your heart, soul, mind and body right now for what is coming.  For those that are cowardly the years ahead will be a total nightmare, but for those that overcome the fear the years ahead have the potential to be a great adventure.


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