The Next Great Depression

Why Are Food Prices Rising So Fast?

If you do much grocery shopping, you have probably noticed that the cost of food has been rising at a very brisk pace over the past year.  So why are food prices rising so fast?  According to Federal Reserve Chairman Ben Bernanke, inflation is still very low and the economy is improving.  So what is going on here?  When I go to the grocery store these days, there are very few things that I will buy unless they are on sale.  In fact, I have noticed that many of the new “sale prices” are the old regular prices.  Other items have had their packages reduced in size in order to hide the price increases.  But with millions of American families just barely scraping by as it is, what is going to happen if food prices keep rising this rapidly?

The food prices are especially painful if you are trying to eat healthy.  Most of the low price stuff in the grocery stores is garbage.  Eating the “typical American diet” is a highway to cancer, heart disease and diabetes.

But if you try to stick to food that is “healthy” or “organic” you can blow through hundreds of dollars in a heartbeat.  In fact, the reality is that tens of millions of American families have now essentially been priced out of a healthy diet.

Soon there will be millions more American families that will not even be able to afford an unhealthy diet.

Some recent statistics compiled by the Bureau of Labor Statistics are absolutely staggering.  According to a recent CNBC article, over the past year many of the most popular foods in America have absolutely soared in price….

Coffee, for instance, is up 40 percent. Celery is 28 percent higher while butter prices rose 26.4 percent. Rounding out the top five are bacon, at 23.5 percent, and cabbage, at 23.3 percent.

Unfortunately, it looks like the trend of rising food prices is accelerating.  Just look at what the CNBC article says happened in the month of April alone….

Just in April—the most recent month for which data is available—grapes went up nearly 30 percent, cabbage jumped about 17 percent and orange juice surged more than 5 percent.

Meat is becoming more expensive as well.  Since March 2009, livestock prices have risen by 138%.

So when Ben Bernanke tells us that inflation is very low, that really is a lie.  On the stuff that people spend money on every day (like food and gas), prices have gone up dramatically.

Sadly, this is not just a phenomenon that is happening in the United States.  The truth is that the entire planet is rapidly approaching a horrific global food crisis.

Over the past year, the global price of food has risen by 37 percent and this has pushed approximately 44 million more people around the world into poverty.

When food prices rise in the U.S. it may be painful for millions of American families, but around the world a rise in food prices can mean the difference between surviving and not surviving.

That is why it has been so alarming that the global price of wheat has approximately doubled over the past year.

But it is not just wheat that has been soaring.  Check out what a recent Bloomberg article had to say about what has been happening to many key agricultural commodities over the past year….

Corn futures advanced 77 percent in the past 12 months in Chicago trading, a global benchmark, rice gained 39 percent and sugar jumped 64 percent. There will be shortages in corn, wheat, soybeans, coffee and cocoa this year or next, according to Utrecht, Netherlands-based Rabobank Groep. Prices also rose after droughts and floods from Australia to Canada ruined crops last year. European farmers are now contending with their driest growing season in more than three decades.

Even before this recent spike in food prices the world was struggling to get enough food to everybody.  It has been estimated that somewhere in the world someone starves to death every 3.6 seconds, and 75 percent of those are children under the age of five.

So what is going to happen if food prices keep on rising at the current pace?

That is a very good question.

We really are starting to move into unprecedented territory.  Nobody is quite sure what is going to happen next.

So why is all of this happening?

Well, a lot of people are blaming the Federal Reserve.  All of the “quantitative easing” that the Fed has done has flooded the financial markets with money.  All of that money had to go somewhere.  Much of it has pumped up the prices of hard assets such as oil, gold and agricultural commodities.

But it is not just the Fed that is to blame.  The truth is that central banks all over the world have been recklessly printing money.

When the amount of money in an economy goes up, the purchasing value of all existing money goes down.  In the United States, that means that your dollars will not go as far as they did before.

But it is not just monetary policy that is affecting food prices.  In 2010 and 2011 we have seen an unprecedented wave of natural disasters and crazy weather.  This has caused problems with crops all over the globe.

In addition, U.S. economic policies are also playing a role.  At this point, almost a third of all corn grown in the United States is used for fuel.  This is putting a lot of stress on the price of corn.

Also, there are some long-term trends that are not in our favor.  For example, the systematic depletion of the Ogallala Aquifer could eventually turn “America’s Breadbasket” back into the “Dust Bowl”.  If you have not heard of this problem I would encourage you to do some research on it.

Things are going to get a lot worse, but already America is having a really hard time feeding itself.  According to Feeding America’s 2010 hunger study, more than 37 million Americans are now being served by food pantries and soup kitchens.

So is that number unusual?

Yes, it sure is.

The number of Americans that are going to food pantries and soup kitchens has increased by 46% since 2006.

That is not a good trend.

Another stat that I talk a lot about in this column is the number of Americans on food stamps.

Right now, there are 44 million Americans on food stamps.  Nearly half of them are children.

How did we ever get to the point as a nation where more than 20 million children end up on food stamps?

It is estimated that one out of every four American children is currently on food stamps, and it is being projected that approximately 50 percent of all U.S. children will be on food stamps at some point in their lives before they reach the age of 18.

So what is going to happen if the economy gets even worse?

What is going to happen if there really is a major food crisis in this country someday?

Food prices have been going up for decades and they are going to continue to go up.  But the frightening thing is how fast they are increasing now.

As the U.S. middle class continues to be destroyed, the number of Americans that can’t afford to buy enough food is going to continue to rise.  Food prices are rising much faster than wages are, and that is not likely to change any time soon.

Food is rapidly becoming one of the most important global economic issues of this decade.  The farther one looks down the road, the bleaker things look for the global food situation.

I hope you are prepared for that.

Is The Economy Improving?

Is the U.S. economy improving?  That is what Federal Reserve Chairman Ben Bernanke would have us believe.  Bernanke declared today that the “recovery appears to be proceeding at a moderate pace” and that everything is going pretty much as planned.  Sadly, the mainstream media and most of the American people still seem to have faith in the economic pronouncements of Helicopter Ben.  They seem to have forgotten all of the Bernanke quotes from before the financial crisis.  Bernanke pledged that there would not be a housing crash and that there would not be a recession.  It is amazing that anyone still believes that Bernanke has any credibility left.

Of course “economic recovery” is one of Barack Obama’s favorite new terms.  He loves to talk about all of the signs that the economy is improving.  To Obama, all of the recent bad economic news is no big deal.  He says that what we are experiencing right now are simply “bumps on the road to recovery“.

Well, whether you want to call them “bumps” or “potholes” or “massive gaping wounds that are gushing blood all over the place”, the truth is that the U.S. economy is not improving at all.  In fact, it is rapidly getting worse.

Let’s take a look at just a few areas of the economy….

Federal Government Finances

As I wrote about yesterday, the national debt is completely and totally out of control.  Since Barack Obama took office, the U.S. national debt has increased by nearly 4 trillion dollars.

Keep in mind that from George Washington to Ronald Reagan, the U.S. government accumulated only 1 trillion dollars in debt.

Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.

Now the Democrats and the Republicans are busy negotiating over some modest reductions in spending.

But unprecedented federal spending is one of the only things propping the economy up right now.

If the U.S. economy is performing so poorly after being flooded with “stimulus money” from the federal government, what is going to happen once the federal government cuts back?

State And Local Government Finances

All over the United States, there are large numbers of state and local governments that are on the verge of bankruptcy.

For the moment, let’s just focus on the state of Illinois.

Did you know that things have gotten so bad in Illinois at this point that the Illinois state government is letting bills go unpaid for long periods of time on a regular basis?

It’s true.

Right now they have billions in unpaid bills and they are facing a financial future that is so bleak that it is almost indescribable.

In one recent article, author Stephen Lendman described the horrific financial crisis that Illinois is facing right now….

With spending exceeding revenues, and obligations not postponed, unpaid bills are growing “at a frightening rate. For instance, IGPA’s Fiscal Futures Model indicates (they) could reach $40 billion by July 1, 2013, with an associated delay in paying those bills of more than five years.”

Besides its $13 billion deficit and $6 billion in unpaid bills, its pension fund is about $130 billion in the red – a red flag that state workers may lose out altogether, wiping out their promised retirement savings.

But it isn’t just the state government that is having problems.  According to Cook County Treasurer Maria Pappas, the average household in Chicago would owe a whopping $63,525 if all local government debt was divided up equally among all of the households.

The truth is that even if the finances of the federal government could somehow be fixed, there would still be dozens and dozens of very significant “government debt problems” all across America.

With so many state and local governments drowning in debt, jobs are being slashed at an alarming rate.  UBS Investment Research is projecting that state and local governments in the U.S. will combine to slash a whopping 450,000 jobs by the end of next year.

So would the U.S. government step in and start bailing out state and local governments?

Not likely.

U.S. Representative Paul Ryan has said the following about the prospect of bailing out the states….

“If we bail out one state, then all of the debt of all of the states are almost explicitly on the books of the federal government.”

So for now, state and local governments are on their own.

Commercial Real Estate

Commercial real estate continues to decline all across America.

Moody’s/REAL All Property Type Aggregate Index fell 3.7% in April and is now the lowest it has been in over 10 years.

Overall, commercial real estate is down by over 40 percent since the peak back in 2007.

Residential Real Estate

The United States is dealing with a housing crash that never seems to end.

According to the National Association of Realtors, existing home sales in the United States fell another 3.8% in May.

During this housing crash home values have declined more than they did during the Great Depression and there does not appear to be any hope in sight.

New home sales are in even worse shape.  During the first three months of this year, less new homes were sold in the U.S. than in any three month period ever recorded.

Unemployment

As 2009 began, the official U.S. unemployment rate was 7.6 percent.  Today it is 9.1 percent.

The American people keep waiting for a “jobs recovery”, but it has not shown up.

Sadly, all of this is part of a long-term trend.

Over the past decade, U.S. multinational corporations have been laying off millions of workers in the U.S. and hiring millions of workers overseas to take their place.

The labor of American workers is rapidly losing value in a globalized economy.  Big corporations have a tough time justifying paying ten times more to a worker in the United States when they are allowed to hire people for slave labor wages overseas.

The share of the national income taken in by U.S. workers continues to decline.  Just consider what Mortimer Zuckerman had to say in a recent article for usnews.com….

Labor’s share of national income has fallen to the lowest level in modern history, down to 57.5 percent in the first quarter as compared to 59.8 percent when the so-called recovery began. This reflects not only the 7 million fewer workers but the fact that wages for part-time workers now average $19,000—less than half the median income.

In the United States today, there are not nearly enough jobs for everyone.  The number of “middle class jobs” has fallen by about 10 percent over the last decade.

Only 66.8% of American men had a job last year.  That was the lowest level that has ever been recorded in all of U.S. history.

We are seeing the rise of a whole class of people that are chronically unemployed.  At the beginning of 2009, the number of “long-term unemployed” in the United States was approximately 2.6 million.  Today, that number is up to 6.2 million.

So in light of these employment statistics, can anyone really say that the economy is improving?

Economic Anxiety

The economy is the number one issue on the minds of the American people.  There is an extraordinary about of economic pain out there today, and Americans are becoming impatient.

According to CNBC, the Money Anxiety Index is at its highest level in 30 years….

The latest indicator to ring up trouble is the Money Anxiety Index, which uses traditional economic metrics as well as other factors to gauge the level of consumers’ worry regarding their personal financial conditions.

According to the May figures, the MAI is not only at its highest level in 30 years at 91.9 but also two months away from indicating another dip into recession. In the past, five straight months of increases in the index often signaled recession.

Most recent polls show that the American people are rapidly becoming more pessimistic about the direction the U.S. economy is headed.

According to a recent CNN poll, 48 percent of Americans believe that “another Great Depression” is likely within the next 12 months.

When you really stop and think about that number, it is really frightening.

Inflation

Ben Bernanke may not admit it, but the truth is that the price of just about everything is soaring.

For example, when Barack Obama took office, the average price of a gallon of gasoline in the United States was $1.83.  Today it is about $3.74.

So what are our politicians doing about it?

Not much.

They just want to pretend that it isn’t happening.

In fact, members of Congress are actually tinkering with the idea of changing the way that inflation is calculated once again.

By making inflation appear lower, it would be easier for Congress to deny cost of living increases to those on Social Security and other social programs.

How sad is that?

Economic Suffering

As American families find it increasingly difficult to pay the mortgage and put food on the table, many of them find themselves forced to put off other expenses.  According to one recent survey, 26 percent of Americans have put off doctor visits because of the economy.

Other Americans can’t make it at all without government assistance.  As 2007 began, there were only 26 million Americans on food stamps.  Today, there are more than 44 million Americans on food stamps, which is an all-time record.

It is not good to have so many Americans on food stamps, but it is probably better than the alternative.

If there were tens of millions of Americans that could not feed themselves we would probably already have economic riots in the streets.

Solutions?

So do our politicians have any solutions?

Of course not.  Everything that they have tried has failed.

Several top Democrats in Washington D.C. are now calling for a new economic stimulus package.  When in doubt, our politicians usually revert to spending more money.

Sadly, this is about the best that our economy is going to get.

What we are experiencing right now is “the recovery”.  As we move forward things are going to get progressively worse.

A lot of people don’t like to hear that we are in the middle of a long-term economic decline, but that is the truth.

The era of tremendous economic prosperity for America is coming to an end.

An economic nightmare is coming.

You better get ready.

48 Percent Of Americans Believe Another Great Depression Is Likely In The Next 12 Months – 19 Reasons Why They Are Not Completely Crazy

Do you believe that the U.S. economy is steamrolling toward a depression?  If so, you are not alone.  According to a recent CNN poll, 48 percent of Americans believe that “another Great Depression” is likely within the next 12 months.  Americans have been waiting for almost three years for a “recovery” to materialize, but instead there are all kinds of signs that the economy is about to get worse yet again.  Inflation is rising but wages are not.  There are millions of Americans that would do just about anything to get a decent job.  The “misery index” is the highest it has been in almost 30 years.  All of the recent polls show that the American people are more pessimistic about the economy than at any other time in recent memory.  World financial markets are incredibly unstable right now and many analysts are expecting a repeat of 2008 (or worse).  Meanwhile, our state and local governments are drowning in debt, the federal government is drowning in debt and governments all over Europe are drowning in debt.  No, it is not crazy for 48 percent of Americans to believe that we are about to go into another Great Depression.

Just think about that statistic for a moment.  Nearly half of the country expects the economy to fall to pieces at some point over the next year.

So do I agree with them?

Yes, I certainly believe that an economic collapse is coming.  But that doesn’t mean that it will necessarily happen within the next year.  The United States is in the midst of a long-term economic decline, and the next big financial crisis could potentially happen in 2011 or 2012.

But it might not.

There are so many variables and it is so hard to predict with certainty the exact timing of how things will play out.

However, it is true that incredibly painful economic times are coming.  Our long-term economic future looks unbelievably bleak.

So anyone that believes that we are headed for another depression is certainly not crazy.  The following are 19 reasons why it is perfectly rational to be pessimistic about the U.S. economy right now….

#1 Today, 25 million Americans are either unemployed or underemployed.  6 million of those have been out of work for at least 6 months.  The average duration of unemployment in the U.S. is now close to 40 weeks.

#2 The unofficial misery index, which is calculated by combining unemployment and inflation, is now at a 28 year high.

#3 Sadly, if unemployment and inflation were calculated the same way that they were back in the 1970s, the misery index would actually be much, much higher.  According to John Williams of Shadow Government Statistics, the current “real” rate of inflation is approximately 11.2% instead of the 3.6% figure that the U.S. government wants us to believe.

#4 Greece is on the verge of complete and total financial collapse.  The yield on two year Greek bonds is up to 28 percent.  The European Central Bank and the German government have been fighting over what to do to solve the Greek crisis.  The truth is that without a bailout the Greek government will default.  If Greece defaults, it would be a huge nightmare for world financial markets.

#5 Neil MacKinnon, an analyst at VTB Capital, is warning that a Greek implosion could set off a 2008-style financial crisis….

“The risk of a ‘Lehman moment’ for the eurozone is increasing”

#6 Spain is also potentially a major problem.  The Spanish economy is more than twice the size of the Greek, Irish and Portuguese economies combined.  Over the past 12 months, the yield on 10 year Spanish bonds has been rising steadily, and many believe that Spain could be the tipping point that pushes the sovereign debt crisis in Europe over the edge.

#7 State and local governments all over the United States are cutting their budgets and are implementing brutal austerity measures.  For example, one small town in Alabama has actually decided that they are simply going to stop paying pension benefits to their retirees.  In other areas, teachers and police officers are being fired in massive numbers. UBS Investment Research is projecting that state and local governments in the U.S. will combine to slash a whopping 450,000 jobs by the end of next year.

#8 The middle class in the United States is being systematically ripped to shreds.  The poorest 50% of all Americans collectively own just 2.5% of all the wealth in the United States at this point.

#9 It is never a good sign when even the big Wall Street banks start laying off workers.  CNBC is reporting that Goldman Sachs, Morgan Stanley and many other big firms on Wall Street are planning some large staff reductions in the months ahead.  That is a very bad sign for the economy.

#10 Things have gotten so bad that some mainstream media outlets are actually encouraging Americans to go out and start racking up credit card debt once again.  For example, one recent USA Today article was actually entitled “More credit card debt might be good for the economy“.  Of course the big banks are ready to suck the lifeblood out of anyone that does slip up on making their credit card payments.  One major bank has announced that a single late payment could result in a penalty rate as high as 29.99%.

#11 According to the Bureau of Labor Statistics, the share of national income being taken home by American workers is at a post-war low and is rapidly declining.

#12 Reuters is reporting that many of Wall Street’s biggest banks plan to cut their use of U.S. Treasuries starting in August.  China has already been dumping short-term U.S. debt.  But if most of the big players abandon the market, who is going to buy up the massive amounts of debt that the U.S. government needs to issue?

#13 Dean Baker of the Center for Economic and Policy Research apparently believes that we are already in a depression….

“At some point, the pain of high unemployment may lead to some new thinking in Washington – but until that time, welcome to the second Great Depression”

#14 The U.S. banking system could plunge into disaster at any moment.  The FDIC is backing up 7 trillion dollars in deposits with an insurance fund that barely has anything in it.

#15 It seems like almost everyone is talking about the next financial collapse.  Renowned investor Jim Rogers recently said the  following….

“I would expect to see some serious problems in the foreseeable future….By 2011, 2012, 2013, 2013, I don’t know when, we’re going to have an economic slowdown again.”

#16 Legendary hedge fund manager Mark Mobius is bracing for the worst.  Just consider the following quote from Mobius that recently appeared in Forbes magazine….

There is definitely going to be another financial crisis around the corner,” says hedge fund legend Mark Mobius, “because we haven’t solved any of the things that caused the previous crisis.”

#17 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.  It is clearly unsustainable for our debt to be growing so much faster than our economy is.

#18 Peter Yastrow, a market strategist for Yastrow Origer, recently told CNBC the following….

“Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything,” Yastrow said. “We’re on the verge of a great, great depression. The [Federal Reserve] knows it.”

#19 The American people are extremely pessimistic about the economy right now.  According to one recent poll, 56 percent of Americans have lost sleep due to the economy and about three-quarters of Americans believe that the nation is on the wrong track.

The nation is in a very sour mood right now, and this is causing even many in the mainstream media to ask some very hard questions.

For example, Jack Cafferty recently asked the following question to viewers on CNN….

“What are the chances the U.S. economy could eventually trigger violence in our country?”

You can view the video of Cafferty asking this question right here or you can just watch it below….

Sadly, we are already starting to see violence erupt all over North America.

Yesterday I highlighted the horrifying violence that we saw in Vancouver this week.

In previous articles I have discussed the insanity that has been going on in major U.S. cities such as Chicago.

Now even the mainstream media is being forced to report on the surge in violence.

A recent USA Today article described some of the most recent mob robberies that have been happening in Chicago….

A Chicago Tribune report tells of a 68-year-old man from Washington State who was set upon while he was smoking a cigar on a bench when youths surrounded him, attacked him and reportedly stole a phone and iPad. The report says a 42-year-old Japanese tourist also was beaten and robbed on a bicycle path by the lakefront. The paper says seven were arrested, but that the group participating in the felonies was estimated at 15 to 20 people strong. One 20something suburbanite told Chicago’s WGN TV that he was hit so hard in the head with a baseball that it knocked his motorcycle helmet off. he managed to fight his way out of trouble and hail police, he said.

When people don’t have hope, they get desperate.

There are millions of other Americans that are suffering through this economy quietly.

There are so many people out there that have worked hard and have followed all the rules and yet now find themselves struggling just to survive.

For example, a reader named Carolyn recently left a comment in which she shared her story with my readers….

My husband lost his long-term job in 2009 due to budget cuts. Don’t worry, I said. I’m still working, and we have a year of our salary in savings. You’re smart, you’re educated, you’re a hard worker. You’ll find a job soon.

Two months later, my long-term job was sent to India.

I still wasn’t worried. I’m smart, I’m educated, and I’m a smart worker.

A year and a half later, I haven’t found new career yet. I’m 50. No one is going to hire me. I am working – at a Home Depot. At a 79% pay cut from my prior position. But it doesn’t pay for anything. My husband found a new position in his field – at a 62% pay cut from his prior position.

We lived off unemployment and our savings, until both ran out. We put our house and investment property on the market the day after I lost my job.

We haven’t had one offer.

We just had our Chapter 7 bankruptcy discharged. Our foreclosure is still pending. No word yet when that will be done.

To add insult to injury, we owe Federal income taxes on the penalties we used to make withdrawals from our 401(k)’s to live off. My husband took a job in another state, and we were SHOCKED to learn that we owed NEW YORK STATE taxes on the income he earned in Mississippi – to New York state! Apparently there is some loophole that if you are a property owner in New York, but earn income in another state, you have to pay New York state income taxes on out of state earned income.

We’ve been told once our foreclosure is finalized, we may owe taxes on that as well.

What happened to our country?

It is so sad to see what is happening to America.

Things are so hard out there for so many millions of American families right now.

But the truth is that things are much better at the moment than they will be in a few years.

So what is America going to look like when there is no doubt that the economy has collapsed and people have no hope at all?

Stock Prices Have Fallen For Six Weeks In A Row

Well, it’s official.  U.S. stock prices have fallen for six weeks in a row.  So will next week make it seven?  The last time stocks declined for seven weeks in a row was back in May 2001 when the “dot-com” bubble was bursting.  At this point, the Dow has declined by approximately 5 percent since the beginning of June.  Things don’t look good.  So exactly what is going on here?  Well, it is undeniable that the recent mini-bubble in stocks has been too good to be true.  The S&P 500 had surged nearly 30 percent since last September.  Much of this has been fueled by the Federal Reserve’s latest round of quantitative easing, but now that is coming to an end in a few weeks and investors are a bit spooked.  Meanwhile, wars and revolutions are sweeping the Middle East, Japan is dealing with the damage caused by the tsunami and by Fukushima, Europe is trying to figure out how to bail out Greece again and the U.S. debt crisis is continually getting worse.  In addition, wave after wave of bad economic news is certainly not helping the mood on Wall Street.  In many ways, a “perfect storm” is developing and many are now extremely concerned about what the rest of 2011 is going to bring for Wall Street.

QE2 is slated to conclude at the end of June, and many investors are deeply disappointed that it does not appear that we are not going to see QE3 right away.  Many fear that the end of quantitative easing will pop the current mini-bubble in stocks and commodities.  At the moment, financial markets are more jittery than they have been in a long time.

Frank Davis, director of sales and trading with LEK Securities, says that there is a lot of pessimism on Wall Street right now….

“There’s a lot of emotion in this market at the moment, and the conversations among traders are nearly all leaning toward the bear side”

So what are some of the signs that this downturn on Wall Street may turn into a full-blown crash?

Well, according to the Wall Street Journal, junk bonds are being sold off at an alarming rate right now.  Does the following quote from the Journal remind anyone of 2008 at least a little bit?….

A steep decline in prices of bonds backed by subprime mortgages has spread through the riskiest segments of the credit markets, ending rallies in high-yield corporate bonds and commercial real-estate debt.

Also, many of the big Wall Street banks are already laying off workers.  In a previous article I wrote about the potential for Wall Street to go into “panic mode“, I noted that Goldman Sachs, Bank of America, JPMorgan Chase and Morgan Stanley are all laying people off or are considering staff cuts.

The truth is that the big banks on Wall Street are not nearly as stable as most people think that they are.  Moody’s recently warned that it may downgrade the debt ratings of Bank of America, Citigroup and Wells Fargo.

Another major story on Wall Street right now is oil.  OPEC recently announced that oil production levels will not be raised, even though the price of oil has been hovering around $100 a barrel.

World oil supplies are very tight right now.  In fact, the globe actually consumed 5 million barrels per day more oil than it produced during 2010.  This was possible because the difference was apparently made up by drawing down reserves.

But if oil supplies are this tight already, what is going to happen if a major war (as opposed to all of the minor wars that are already happening) erupts in the Middle East?

The world is sitting on the edge of a financial disaster.

It is important to keep in mind that Europe is also in far worse financial condition than it was just prior to the financial collapse of 2008.

It is being reported that German finance minister Wolfgang Schaeuble is convinced that a “full-blown” financial meltdown by Greece is a very real possibility. The cost of insuring Greek debt has soared to a brand new record high, and officials all over Europe are in panic mode.

But financial problems are not just happening in Greece.  The largest bank in France has just cut in half the amount of cash that customers can withdraw from ATMs each week.

Most Americans don’t spend much time thinking about the financial condition of Europe, but the truth is that what happens in Europe is going to play a major role in the months and years ahead.

Of course most Americans already know that the U.S. government is a financial mess.

As the “debt ceiling deadline” of August 2nd draws closer, the U.S. government has been raiding retirement funds in order to stay under the debt limit.

Many investors are quite nervous about what may happen if the U.S. government actually does start defaulting on debt on August 2nd.

Others claim that the U.S. government is already in default.

The only Chinese agency that gives credit ratings on sovereign debt says that the U.S. government “has already been defaulting” and the Chinese government has been repeatedly warning that the U.S. needs to get its finances in order.

In any event, this debt ceiling drama will get resolved one way or another.

The bigger question is this….

How is the U.S. government going to respond when the next financial crash happens?

Back in 2008, the Federal Reserve and the U.S. government took unprecedented steps to prop up Wall Street.

But can they really do that again if we see another major crash in 2011 or 2012?

Many believe that things will be totally different this time around.  Just check out what Jim Rogers recently told CNBC….

“The debts that are in this country are skyrocketing,” he said. “In the last three years the government has spent staggering amounts of money and the Federal Reserve is taking on staggering amounts of debt.

“When the problems arise  next time…what are they going to do? They can’t quadruple the debt again. They cannot print that much more money. It’s gonna be worse the next time around.”

Jim Rogers is right about that.

The next time we see a collapse on the scale of 2008 it is going to be a much bigger mess.

Global financial markets are extremely vulnerable right now and there are a whole host of potential “tipping points” which could push them over the edge.

The Federal Reserve and the U.S. government more or less used up all of their ammunition on the 2008 crisis.

If we see another collapse in 2011 or 2012 there is not going to be much of a safety net available.

The entire world financial system is simply swamped with way too much debt.  The world has never seen anything even remotely close to the gigantic mountains of debt that have been accumulated around the world today.

The current global financial system is not sustainable.  More crashes are inevitable.  A lot of people are going to get steamrolled.

Hopefully you will not be one of them.

12 More Signs That Society Is Collapsing

What we are now witnessing is the slow motion unraveling of America.  Our economy is dying, the American people have lost faith in the government and in almost all of our other major institutions, and our society is collapsing.  Most Americans don’t understand why all of this is happening, but most of them do realize that something has fundamentally changed.  Earlier this year, McDonald’s held a “National Hiring Day” and a million Americans showed up to apply for jobs.  Only 62,000 of them were hired.  That means only 6.2% of the applicants got jobs.  So what are we supposed to tell the 93.8% that didn’t get hired?  Are they supposed to have any hope for the future when they can’t even get a minimum wage job at McDonald’s?  When I was a teenager, I went over to McDonald’s one day, filled out an application and was instantly hired.  My, how things have changed.  Now we have millions upon millions of young people that are staring directly into a very bleak future.  The level of frustration in this country is rising to frightening levels and large numbers of people are already showing that they will stoop to anything in order to survive.

In a recent article entitled “18 Signs The Collapse Of Society Is Accelerating” I focused primarily on the chaos that has been erupting in many of our urban areas.  But the truth is that, as you will see below, there are signs that society is collapsing coming out of very rural areas as well.  This phenomenon cannot just be pinned down to one area of the country or to one group of people.  From coast to coast people are already starting to lose it and the economic collapse has only just begun.

The cold, hard reality of the matter is that what we are experiencing right now is rip-roaring prosperity compared to what is coming down the road.

So if people will behave this wildly now, what is our society going to look like someday when there are millions of Americans that have not had anything to eat for several days?

That is something to think about.

History has shown us that when people are really, really hungry they will do just about anything.

But right now we are not even close to that point and yet people all across America are going crazy.

The following are 12 more signs that society is collapsing….

#1 In my previous article, I detailed how the “mob robbery” phenomenon in Chicago is spinning wildly out of control.  Well, just this morning, the brother of Billy Corgan (the front man for the Smashing Pumpkins) was mugged and had his iPod stolen by a mob of teens while he was riding a Red Line train in Chicago.

Things have gotten so bad that now even The Wall Street Journal is taking notice of the rash of “mob robberies” that have been happening in Chicago.  The following is how a new article in the Journal described one of the recent attacks….

In another incident last Saturday evening, Krzysztof Wilkowski, after shopping on Michigan Avenue, was sitting on his scooter a couple of blocks away checking his phone for a restaurant when he got whacked in the face with a baseball.

At first, he said, he thought it was a prank, but then he looked up and saw 15 to 20 young men approaching. “My first reaction was, ‘I’m about to get robbed, what do I do?’ ” Mr. Wilkowski recalled in an interview.

The 34-year-old insurance company employee from a Chicago suburb grabbed the keys from his ignition and held tight to his phone. A few of the attackers dragged him off his scooter and pulled him onto Chicago Avenue where they punched him, hit him with his helmet and tried to grab his phone.

#2 Sadly, “mob robberies” are not just happening in Chicago.  The following is a video of a mob robbery that took place in Stockton, California….

This next video is an Associated Press video report about how police have become extremely concerned about the “flash mobs” that have been plaguing Philadelphia lately…..

This is a very, very disturbing trend.  Once these videos go up on YouTube, other groups of young people “copycat” them all over the country.

The next 10 signs are from some of my readers.  In response to my previous article that discussed how society is collapsing, a number of people left comments that described what is happening in their particular areas.  Sometimes so many dozens of comments get left that some real gems get overlooked.  The following is a sampling of what my readers have been sharing about how society is collapsing where they live….

#3 Golden Child (Third Richest County In America):

About a month ago I was robbed in broad daylight walking to the store on a picture perfect 75 degree sunny day at 1 PM by two high school dropout teenagers on the path in my nice suburban town which is located in third richest county in America! A few months before that I was beaten unconscious by random drunk young people on the path near my home that I woke up in the hospital getting stitches in my face. This will be one dangerous summer for places all across America.

#4 Chris (Fargo, North Dakota):

I live in Fargo,ND and we have been having a rash of crime lately. In the past 6 months we have had multiple gas station robberies, bank robberies, and the latest, a shooting at one of our three movie theaters.

#5 Sue (Ogden, Utah):

I am a teacher in Ogden, Utah and this last winter I had a second grade student tell me that if I didn’t tell him how old I was that he was going to “shoot me in the back of my head.” He was suspended from school because that is a threat of violence, but nothing changed. His parents are active gang members.

#6 Heather (Columbus, Ohio):

I live close enough to Columbus, OH to follow the news there. (Thankfully far enough away not to be regularly affected by it.) Every day there is a new report of a violent crime. I believe we are up to 70 or so murders on the year. 10 years ago this wasn’t the case. I could (and did) walk into the worst part of the city and be safe as long as I was vigilant. I wouldn’t try that for the world now. I used to be a bank teller there and there’d be maybe 1 robbery a month throughout the city. It’s at least one a week now, probably more than that. And it’s no longer the downtown banks that are getting robbed–it’s the suburban ones.

#7 The Baroness (Atlanta):

I live in Atlanta Georgia. Everyday there are signs. Today’s headlines are: Babysitter kills toddler, 2 shot outside teen party, Brick thrown from I-75 overpass and several more.

#8 Gas Panic (Unknown):

The first, a 21 year old pizza delivery girl who was held with a knife to her throat while making a delivery. They took all the money she had on her and even took the time to search her car! The second was a 30 year old woman who told me she was walking down the street and was solicited by a pimp telling her she could “make good money”. After she told him to get lost, he stabbed her in the back of the arm. She needed over twenty stitches and showed me the wound.

#9 NS (Fairbanks, Alaska):

Even in Fairbanks, Alaska, there has been similar “mob robbing” going on. Yes, it is spreading everywhere.

#10 Katherine (Unknown):

I’ve also seen a huge increase in theft, vandalism, sexual assault, and violence just in the past couple of years. This is in a city that used to make the list in top places to live in the U.S. year after year.

#11 Doktryn (Richmond, California):

I live in Richmond California aka the city with the 2nd highest murder rate next to New Orleans, aka the city where the probability of you being killed is 5x higher. It is getting very serious out here, and luckily I don’t live in the rough part, however I go to the rough part to try to witness and preach. People are walking zombies. At any point their lives can be taken but the fact is, this is all they know. It is completely hopeless and when you wrote about “American Hellholes” I live in one. Richmond, CA is a post-industrial warzone. I work in the manufacturing industry, and I got here not long ago, but if you just drive through the city, the boarded up homes and abandoned warehouses tell the tale of how a deindustrialized city quickly turns to a battlefield.

#12 IWillSurvive (Rural America):

In my area we have been able to sleep well enough and always known our neighbors – up until a few months ago I did not lock my cars or my home most of the time – there was no need. That has changed, neighbors are now siphoning gas out of cars from desperation, and stealing scrap lumber, metal, livestock, produce and anything else they can get their hands on to sell or eat. Over the last year or so the police departments of some areas have started taking these seriously and actually investigated and caught a few. They are sometimes groups of people working together to amass resources to sell. We now keep a vigilant eye on our little flock of chickens and we have a colony of rabbits as well. We no longer “free range” them on our property at all – the risk of theft is too high if others know we have them. We keep any resources away from the road on the back side of our property – we also keep two German Shepherd Dogs for guarding our property. Living in the country is NOT what it used to be.

———————————————————

Sadly, this is just the beginning.

This is just the tip of the iceberg.

As the economy collapses, the chaos is going to get a lot worse.

I wish that wasn’t true, but this is the world we live in now.

The recent article I did about the “economic hell” that American families are going through right now got a huge response, but honestly what we are experiencing right now is not even worth comparing to how nightmarish things are going to be when our economic system fully collapses.

We have been on the biggest debt binge that the world has ever seen.  Our debt-fueled prosperity has enabled us to enjoy an unprecedented standard of living.  But the largest debt bubble in the history of the world is going to pop, and when it does the party is going to be over.

You better get ready.

18 Signs The Collapse Of Society Is Accelerating

As the U.S. economy collapses, the thin veneer of civilization that we all take for granted is going to begin to disappear.  In fact, there are already an increasing number of signs that the collapse of society is accelerating.  In cities such as Chicago, roving packs of young people are “mob robbing” local businesses, randomly assaulting tourists and shoppers and are even pulling people out of vehicles.  This isn’t just happening in the “bad areas” anymore. Over the past couple of months this type of crime has been common in some of the wealthiest areas of Chicago.  In fact, many Chicago residents are now referring to “the Magnificent Mile” as “the Mug Mile”.  But it isn’t just in Chicago that this is happening.  During this past Memorial Day weekend, cities all over the United States experienced a stunning wave of mass violence.  We are supposed to be an “example” for the rest of the world, but as our economic wealth crumbles we are witnessing the collapse of society all around us.  So what is going to happen when the economy gets even worse?

The United States used to be a fairly civilized society.  But now very few people seem to care how they treat others.  That is even the case with our own government.  As you will see below, the government is now sending SWAT teams in and dragging people out of their homes over unpaid student loans.

So if the government is going to be so brutal, what kind of message does that send to our young people?

Today our young people are facing a future that looks incredibly bleak.  It is hard to have faith in the “system” when the “system” simply does not work any longer.

What are you supposed to say to a young person when you know very well that there are no jobs and that there is very little hope?

Most Americans don’t understand what is causing the collapse of the economy, but most of them do have a sinking feeling that something has seriously gone wrong.

For the last few years the American people have waited patiently for our politicians to “fix things”, but they have not gotten the job done.

Instead, our economic situation is still declining.

So now frustration is starting to boil over, and it is only going to get worse.

The following are 18 signs that the collapse of society is accelerating….

#1 In a brand new article, Janet Tavakoli has vividly described the wave of shocking violence that is currently sweeping the city of Chicago.  What she says is happening to Chicago right now is beyond alarming….

This year, all hell has broken loose in downtown Chicago. Years of under-hiring have resulted in a police force that is unprepared for wildings and gang violence. Moreover, concealed carry in Chicago is illegal, unless one follows the Constitution.

Tourists and residents have been attacked by mobs of youths on buses, on beaches, on bicycle paths, near the shops of the Magnificent Mile, and outside their homes. Mobs of shoplifters plagued “Mug Mile” stores.

Terror has descended on many of the wealthiest areas of Chicago.  Some are even calling on Chicago residents to completely avoid areas like the Magnificent Mile during the weekends until more police are brought in.

Mobs of young people are “swarming” retail stores, assaulting shoppers and pedestrians and even pulling people out of their cars.

The following is one eyewitness account of the “wildings” in Chicago that Tavakoli included in her recent article….

At about 11pm last Friday night, June 3rd, I heard shouting, screaming, horns blaring and tires screeching from my apartment…When I looked out my window to the street below I saw a crowd of about 20 young people…directly across the street from the entrance to my building. They were leaning on parked cars and clogging the street. They were screaming at people walking and driving by. I watched them stop vehicles, including taxi cabs, and pull people from the vehicles…It was a frightening scene and I was sure someone was going to be hurt.

#2 If you don’t pay your student loans you may find yourself getting dragged out of your home by a SWAT team.

You doubt this?

The following is how an article in The Daily Mail recently described one recent SWAT team raid in California that was apparently ordered by the Department of Education….

A father was dragged from his home and handcuffed in front of his children by a SWAT team looking for his estranged wife – to collect her unpaid student loans.

A stunned Kenneth Wright had his front door kicked in by the raiding party at 6 am yesterday before being dragged onto his front porch, handcuffed and led to a police car with his three children.

He says he was then detained for six hours while officers looked for his wife – who no longer lives at the house.

#3 One town in Connecticut was forced to shut down a beautiful new fountain because too many people were using it as a toilet.

#4 This most recent Memorial Day weekend, cities all over America literally turned into war zones.  There were reports of mass violence in Miami, New York, Chicago, Charlotte, Myrtle Beach, Nashville and Boston among other places.

If you want to see video of some of the violence in Miami as it was happening, you can view it here.  The video is quite disturbing so please don’t let any small children view it.

#5 One of the hottest books in America right now is a “children’s book” entitled “Go The F*k To Sleep“.

#6 A teenage girl in Washington state recently shot her Dad with a hunting bow because he took away her cell phone.

#7 In New York City, one 32-year-old man was recently charged with sexually assaulting an 85-year-old woman.

#8 Democratic strategist James Carville recently made national headlines when he told talk show host Don Imus the following….

“You know, look — this is a humanitarian — you know, you’re smart enough to see this . . . People, you know, if it continues, we’re going to start to see civil unrest in this country. I hate to say that, but I think it’s imminently possible.”

#9 According to one new study, the percentage of U.S. households that contain a married couple with children has fallen from 44.3% in 1960 to 20.2% today.

#10 In Atlanta, two dozen teens recently violently assaulted two Delta flight attendants on a train for no apparent reason.  The following is how a local Atlanta newspaper described the attacks….

Their “Clockwork Orange” style blitz was over soon after it began. The teens boarded the train, headed to Hartsfield-Jackson International Airport, at the Garnett station a little after midnight seemingly intent on instilling fear. They succeeded.

“There was blood everywhere, people were hollering and screaming,” a witness told Channel 2 Action News. “We were intimidated. People were terrified. People were trying to run. But there was nowhere to run.”

#11 Federal prosecutors in Indianapolis have announced that they have broken up one of the largest child pornography rings ever discovered.  It was based in Bloomington, Indiana.

Are any small towns still safe?

#12 Barack Obama’s food safety chief is defending armed raids of raw milk producers (including a raid on an Amish farmer) and he says that the FDA will “keep doing our public health job“.

#13 In Florida, a 45-year-old Polk County sheriff’s deputy has been charged with strapping children to a desk and spanking them with sex toys.

#14 In Sioux City, Iowa a 41 year old man recently walked into the office where his boss worked and beat the living daylights out of him.  The boss suffered four chipped teeth and needed surgery to repair his nose.  Apparently the boss was planning to fire the man.

#15 A 20-year-old woman in Oklahoma has been charged with killing the family cat and using the blood as part of a costume she planned to wear to a Lady Gaga concert.

#16 McDonald’s recently held a “National Hiring Day” and about a million Americans showed up to apply for jobs at McDonald’s restaurants all around the nation.  Well, in Cleveland a horrible fight broke out between some girls and it ended up with three people being run over by a car.  You can view video of this incident right here.  Please do not watch the video if you are sensitive to graphic violence.

#17 All over the United States, vicious restaurant brawls have been erupting with alarming frequency and many of them are being posted up on YouTube for the world to see.  You can see one example of this phenomenon right here.

#18 From coast to coast, “mob robbing” has become a very disturbing trend.

So what is a “mob robbing”?

Well, basically dozens of young people storm into a store together, grab whatever they want, and storm back out again.

Recent examples of this have been caught on video in Washington D.C. and in Las Vegas.

So does anyone still doubt that we are starting to see the collapse of society?

Sadly, things are going to get a whole lot worse.

In response to a recent article entitled “The Coming Economic Hell For American Families“, a frequent commenter on my site known as “El Pollo De Oro” left the following comment about the collapse of society that is beginning to unfold….

Yes, it’s going to be VERY violent in The Banana Republic of America. Carjacking, kidnapping, drug trafficking, armed robbery and murder for hire will be major growth industries in the BRA when millions of formerly middle class Americans, now the neo-poor/neo-peasants, become increasingly desperate. The horrifying violence in Mexico will become a fact of life on this side of the border, the brutal kidnappings of the Philippines and Papua New Guinea will plague the BRA as well. Formerly middle class Americans who find themselves living in shantytown slums won’t like their new accommodations, and many of them will turn to violent crime in the hope of improving their miserable circumstances.

The truth is that about the only thing keeping our society together has been the unprecedented affluence that we have been enjoying over the past few decades.

Once that affluence is gone, the true character of the American people will come out, and we may not like what we see.

That is one reason why I pound on the economic crisis this nation is facing day after day.  Once our wealth is gone, there is going to be chaos in the streets of America.

So what are you seeing in your area of the country?  Do you see signs that the collapse of society is accelerating where you live?  Please feel free to leave a comment with your opinion below….

10 Tipping Points Which Could Potentially Plunge The World Into A Horrific Economic Nightmare

The global economy has become so incredibly unstable at this point that it is not going to take much to plunge the world into a horrific economic nightmare.  The foundations of the world economic system are so decayed and so corrupted that even a stiff breeze could potentially topple the entire structure over.  Over the past couple of months a constant parade of bad economic news has come streaming in from Europe, Asia and the United States.  Signs of an impending economic slowdown are everywhere.  So what “tipping point” will trigger the next global economic downturn?  Nobody knows for sure, but potential tipping points are all around us.

Today, the global economic system is even more vulnerable than it was back in 2008.  Virtually none of the systemic problems that contributed to the 2008 collapse have been fixed.

Mark Mobius, the head of the emerging markets desk at Templeton Asset Management, was recently was quoted in Forbes as saying the following….

“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis.”

The “financial reform” law that Barack Obama and the Congress passed a while back was a complete and total joke.  They might as well have written the law on toilet paper for all the good that it is doing.

We did not learn from our mistakes and our future economic lessons are going to be even more painful.

The world is drowning in a mountain of debt, the global financial system is packed to the gills with toxic derivatives, everyone is leveraged to the hilt and the dominoes could start falling at any time.

I am not the only one that is warning that another financial collapse is coming.  In fact, a whole lot of people have been warning about the next financial collapse lately.

So what will the tipping point for the next collapse be?

The following are some potential nominees….

Tipping Point #1: Syria

Syria is a situation to watch very, very closely.  The Syrian government is in a lot of trouble right now.  Sadly, the instability inside Syria probably makes war with Israel even more likely.

Make no mistake – a war between Israel and Syria has been brewing for a long, long time and at some point it will happen.  When it happens, the entire Middle East may erupt in warfare.

Just the other day, a very troubling incident happened in the area around the Golan Heights.  The following is an excerpt from a report by The Daily Mail about the incident….

“About 20 pro-Palestinian demonstrators were killed and 325 injured yesterday when Israeli forces opened fire on them as they crossed the border from Syria into occupied territories, according to reports.”

At this point, the Syrian government is probably glad that the attention has been taken off of them at least for a while.  The Syrian government has been getting a lot of bad press lately.  The following is an excerpt from a recent report by Human Rights Watch about the treatment of protesters inside Syria….

“The methods of torture included prolonged beatings with sticks, twisted wires, and other devices; electric shocks administered with Tasers and electric batons; use of improvised metal and wooden ‘racks’; and, in at least one case documented by Human Rights Watch, the rape of a male detainee with a baton.

“Interrogators and guards also subjected detainees to various forms of humiliating treatment, such as urinating on the detainees, stepping on their faces, and making them kiss the officers’ shoes. Several detainees said they were repeatedly threatened with imminent execution.”

So in light of the “precedent” that we recently set in Libya, does this mean that we will be “forced” to conduct a “humanitarian mission” inside Syria as well?

Syria is one tipping point that we all need to keep a close eye on.

Tipping Point #2: Iran

The Iranian nuclear program is in the news again. A new report by RAND Corporation researcher Gregory S. Jones claims that Iran could have a nuclear weapon within 2 months.  His report is based on recent findings by the International Atomic Energy Agency.  According to Jones, airstrikes alone would be incapable of stopping Iran’s nuclear weapons program at this point.  Instead, Jones says that a “military occupation” would be required.

It is a minor miracle that a war with Iran has not erupted yet.  It seems almost inevitable that at some point either the United States or Israel will use military force to try to stop Iran’s nuclear program.

When that happens, it is going to cause a major shock to the global economy.

Tipping Point #3: Libya

NATO has made it abundantly clear that Moammar Gadhafi will no longer be tolerated.  In fact, NATO apparently plans to reduce Tripoli to a heap of smoking ruins if that is what it takes to bring about the fall of Gadhafi.

What a “humanitarian mission” we have going in Libya, eh?  It turns out that NATO believes that the United Nations gave it permission to bomb television stations and to make attack runs with helicopters.

Russian Deputy Prime Minister Sergei Ivanov recently said that by using attack helicopters, NATO has moved dangerously close to turning the Libya operation into a ground invasion….

“Using attack helicopters, in my view, is the last but one step before the land operation.”

So why is Libya a potential tipping point?

It isn’t because Gadhafi is a threat.  He is toast.

It is because the rest of the world is watching what is happening in Libya, and that is raising global tensions.

Even if Gadhafi falls, the Libyan operation will still be a failure because it has brought us all significantly closer to World War III.

Tipping Point #4: More Revolutions In The Middle East

The revolutions throughout the Middle East earlier this year sent oil prices absolutely skyrocketing and they have remained at elevated levels.

And in case you haven’t noticed, revolutions continue to sweep the Middle East.

Have you seen what has been happening in Yemen lately?

Yemeni President Ali Abdullah Saleh has burns over 40% of his body and he has suffered a collapsed lung as a result of a recent attack.

If violence and protests throughout the Middle East become even more intense as the weather warms up this summer that could have a very significant impact on world financial markets.

Tipping Point #5: Fukushima

The mainstream news has gotten a bit tired of covering it, but the situation at Fukushima is still a complete and total disaster.

Japan’s Nuclear Emergency Response Headquarters admitted on Monday that three reactors experienced “full meltdowns” in the aftermath of the earthquake and tsunami in March.

Did it really take them nearly three months to figure this out, or were they lying to the rest of the world all of this time?

The truth is that the nuclear disaster at Fukushima is far worse than the mainstream media has been telling us.  If you doubt this, just check out this excellent article or this article by Natural News: “Land around Fukushima now radioactive dead zone; resembles target struck by atomic bomb“.

The economic impact of the Fukushima disaster is going to continue to unfold over an extended period of time.  It turns out that Japan is now officially in a recession.  Their economy contracted at a 3.7 percent annualized rate during the first quarter.

Look for more bad economic numbers to come out of Japan for the rest of the year.  Considering the fact that the Japanese economy is the third largest economy in the world, the fact that they are struggling so badly right now is not a good sign for the rest of us.

Tipping Point #6: Oil Prices

The price of oil is going to continue to be one of the biggest economic stories for the rest of this year and for 2012 as well.

The last time U.S. energy expenditures were over 9 percent of GDP was in 2008 and we quickly plunged into the deepest economic downturn since the Great Depression.

Well, we have reached the significant 9 percent figure once again in 2011, and many fear that once again high oil prices will cause another major economic decline.

Tipping Point #7: Government Austerity

In the United States, it is not just the federal government that is drowning in debt.

All over America, there are state and local governments that are financial basket cases.

I don’t always agree with the time frames that Meredith Whitney puts out there, but she is absolutely correct that we are going to see a massive municipal bond crisis. The following is an excerpt from a recent report about Whitney’s predictions on CNN….

“Meredith Whitney is issuing a fresh warning to mutual funds, banks, and politicians: The state of state finances is far worse than what you think, or at least than what you’ve been willing to tell the investors and taxpayers who will eventually carry the burden.”

Many state and local governments are attempting to get their budgets balanced by making huge budget cuts.  But most of the time these austerity programs also include the elimination of a lot of government jobs.

UBS Investment Research is projecting that state and local governments will combine to slash a whopping 450,000 jobs by the end of next year.

So where will the half a million good jobs come from to replace all of those lost jobs?

Tipping Point #8: The European Sovereign Debt Crisis

Greece is just the tip of the iceberg in Europe.

Moody’s downgraded Greek debt again last Wednesday.  This time Moody’s downgraded Greek debt by three levels all the way down to Caa1.  At this point, the yield on 10-year Greek bonds is over 15 percent.

The EU has been going crazy trying to deal with the Greek debt crisis.  The truth is that a default by the Greek government would be absolutely catastrophic. If you do not understand the kind of chaos a Greek default would set off on world financial markets, just read this editorial.

But Greece is not the only major European nation with a massive debt problem.

The government of Ireland is already indicating that they may need another bailout.

Portugal, Spain and Italy are also on the verge of collapse.

So will the EU bail all of these nations out for years and years to come?

At some point will the whole house of cards come crashing down?

Everyone needs to keep watching what is going on in Europe.  The status quo is not sustainable and it cannot go on forever.

Tipping Point #9: The Dying U.S. Dollar

The euro is not the only major currency that is in trouble.

The U.S. dollar is also slowly dying.

On April 18th, Standard & Poor’s altered its outlook on U.S. government debt from “stable” to “negative” and warned that the U.S. could soon lose its prized AAA rating.

The sad truth is that faith in the U.S. dollar and in U.S. Treasuries is rapidly declining.  The mainstream news is not reporting on it much, but right now the Chinese are rapidly dumping U.S. government debt.

As the dollar declines, so will the purchasing power of average Americans.  We are already seeing a tremendous amount of inflation in 2011.

But this is just the beginning.

A lot worse is going to be coming down the road.

Tipping Point #10: Drought

A lot of people that read my articles doubt that we will ever see a major global food crisis.

But one is coming.

It is just a matter of time.

Even now, many areas of the world are experiencing very serious droughts.  The following is from a recent  Bloomberg article….

Parts of China, the biggest grower, had the least rain in a century, some European regions are the driest in 50 years and almost half the winter-wheat crop in the U.S., the largest exporter, is rated poor or worse. Inventory is dropping 8.8 percent, the most in five years, Rabobank International says. Prices will advance 20 percent to as high as $9.25 a bushel by Dec. 31, a Bloomberg survey of 14 analysts and traders shows.

Are you concerned yet?

You should be.

But if you prefer some mindless pablum that will make you feel better, we have some of that for you too.

Larry Summers, the former director of the National Economic Council under Barack Obama, recently told CNBC the following….

“We definitely hit a slower patch, but I think the basic fact that the terrible financial strains we had are abating, remains in place, and I expect this recovery to continue for a substantial period of time.”

Does that make you feel better?

Larry Summers says that everything is going to be okay.

It would be great if Summers was actually right, but sadly he is not.

In fact, the worst economic times that America has ever seen are ahead.

The following is a brief excerpt from a recent interview with Dmitry Orlov about the coming economic collapse that was posted on shtfplan.com….

First you have financial collapse, which is basically the volume of debt that has to be taken on in order for the economy to continue functioning, cannot continue. We’re seeing that right now in Greece, we’re probably going to see that in Japan, we’re definitely at a point now in the United States where even if you raised the income tax to 100 percent, there’s absolutely no way of covering the liabilities of the U.S. federal government. So, we’re at that point now but the workout of the financial collapse is not all quite there. We don’t quite have a worthless currency but that’s in the works.

That, of course, is followed by commercial collapse especially in a country like the United States that imports two thirds of its oil. A lot of that is on credit and if a little bit of that oil goes missing then the economy starts to fall apart because nothing moves unless you burn oil in the United States and, of course, a lot of goods that are sold everywhere are imported again, on credit.

When the U.S. dollar dies and our financial system collapses we are not going to be able to get all of the things that we need from the rest of the world so cheaply any longer.

That is going to cause fundamental changes inside the United States.

Right now, the economic news just seems to get worse and worse, but this is just the beginning.

What is eventually going to happen in this country is going to be so nightmarish that most Americans could not even imagine it right now.

So are our leaders doing anything to prepare for the coming economic crisis?

No, they are too busy with other things.

The big political news of the day was U.S. Representative Anthony Weiner finally admitting that he sent out lewd photos of himself over Twitter to women that he was not married to.

We have become the laughingstock of the world and the economic collapse has not even happened yet.

Suddenly Everyone Is Warning About The Next Financial Collapse

Are we about to see a repeat of 2008 (or something even worse)? Suddenly all kinds of people are coming out of the woodwork and warning that we could be on the verge of the next major financial collapse. Of course many economists and financial pundits just enjoy hearing themselves talk, and sometimes they will make outrageous claims just to get attention, but when so many ominous warnings come out all at once it does tend to make one sit up and take notice. The truth is that global financial markets are even more vulnerable today than they were in 2008, and all over the globe we are seeing trouble signs. Japan is trying to recover from the worst natural disaster that they have ever seen and they are dealing with a nuclear crisis that never seems to end. The Europeans are trying to put another bailout package for Greece together and about a half dozen more European nations that are drowning in debt will need bailouts after that. In the U.S., there are all kinds of signs pointing to the collapse of the economy and the politicians in Washington D.C. continue to “kick the can down the road” and hope that our economic problems will somehow fix themselves.  Oil prices are incredibly high and turmoil is sweeping the globe.  Conditions are certainly developing that could bring about a “perfect storm” and cause another global financial collapse.

The following is just a sampling of the financial warnings that we have seen in recent days from some prominent voices….

*Economist Nouriel Roubini: “I think right now we’re on the tipping point of a market correction. Data from the U.S., from Europe, from Japan, from China are suggesting an economic slowdown.”

*Jim Rogers: “I would expect to see some serious problems in the foreseeable future….By 2011, 2012, 2013, 2013, I don’t know when, we’re going to have an economic slowdown again.”

*Mark Mobius, the executive chairman of Templeton Asset Management’s emerging markets group: “There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis.”

*David M. Blitzer, Chairman of the Index Committee at S&P Indices: “Home prices continue on their downward spiral with no relief in sight.”

*Jeffrey Gundlach, CEO of DoubleLine Capital: “I think we’re looking at some type of echo in the credit crisis coming up here. That’s what I’m afraid of.”

*Carl Icahn: “I do think that there could be another major problem. Now, will it happen next week, next year, i don’t know and certainly nobody knows, but i don’t think that the system is working properly. I really find it amazing that we’re almost back to where it was, where there’s so much leverage going on in the investment banks today. There’s just way too much leverage and way too much risk-taking, with other people’s money.”

Sadly, the world really did not seem to learn much of anything from 2008.  Global financial markets are still pretty much operating the same way that they did before the last crisis.

But back before the crisis in 2008 things were much more stable around the globe.

When the horrible earthquake and tsunami struck Japan earlier this year, most economists brushed it off and believed that Japan would be “resilient” and would bounce back very quickly.

At the time, I went directly against the mainstream consensus with this article: “14 Reasons Why The Economic Collapse Of Japan Has Begun“.

I followed that up with another article entitled “The Japanese Economy Is In Much Bigger Trouble Than Most People Think“.

So who was right?

Well, it turns out that Japan is now officially in a recession.  Their economy contracted at a 3.7 percent annualized rate during the first quarter.

As bad as that number is, just remember that the tsunami did not even hit until March 11th.

So what is the 2nd quarter number going to look like?

There is often a lag between a disaster and the economic effects of the disaster.  The economic impact of this nightmare is going to be felt in Japan for many years to come.  In fact, it is going to be very interesting to see what kind of earnings reports we seeing coming out of Japan in the months ahead.

The economic problems in Japan are also really starting to be felt around the rest of the globe.  The other day, USA Today published an article with the following headline: “U.S. economy damaged more than thought by Japan quake“.

Amazingly, everyone seems to be really surprised that the worst tsunami in modern history is having a significant economic impact.

Meanwhile, the crisis at Fukushima just continues to get worse.

In case you haven’t noticed, the Japanese are not even close to finding a solution to this crisis.

If you want to get a good idea just how bad things are getting around Fukushima, just read this article by Natural News: “Land around Fukushima now radioactive dead zone; resembles target struck by atomic bomb“.

The mainstream media has been doing their best to downplay the crisis at Fukushima, but the truth is that it is now a worse disaster than Chernobyl and life in that region will never be the same again.

Conditions are also ripe in Europe for another financial collapse.

Have you been watching what has been going on in Greece?

It’s crazy.  Without another bailout the Greek government will soon start defaulting on their debts.

The EU and the IMF don’t want to give Greece more bailout money unless there are some significant “strings” attached.  But they also know that if Greece is not bailed out it will cause complete chaos in the financial markets.

The Greek population does not want more bailouts and more austerity.  There have been protests all over the country. Greek citizens have been pulling billions out of Greek banks as the country descends into chaos.

In the end, another bailout deal will get pushed through and the can will be kicked down the road a little while longer.

But what about all of the other European nations that need bailouts?

The government of Ireland is already indicating that they may need another bailout.

Portugal, Spain and Italy (along with several other European nations) are also teetering on the brink of financial disaster.

Most Americans do not realize it, but the European sovereign debt crisis really could set off another global financial crash.  Everyone really should be watching Europe.  It is going to be a very interesting summer.

Of course the United States continues to be an economic basket case.

More depressing housing data came out today.  U.S. home prices are now 5.1% lower than they were a year ago and they have fallen back to mid-2002 levels. CNN is declaring that a housing “double-dip” has been confirmed.

Sadly, U.S. home prices have now fallen farther during this economic downturn than they did during the Great Depression.

Also, the consumer confidence index fell from 66 in April to 60.8 this month.

Americans are becoming more pessimistic about the economy.

According to Gallup, 41 percent of Americans believed that the economy was “getting better” at this time last year.  Today, that number is at just 27 percent.

We are seeing a tremendous about of inflation in 2011, but incomes are not rising.  Unemployment is still rampant and very few jobs are being created.  What is even sadder is that a very high percentage of the jobs that are being created are part-time or temporary jobs.

But this was supposed to be the “recovery”.  Barack Obama and the Congress pushed through “stimulus package” after “stimulus package”.  We added trillions to our national debt.  The Federal Reserve has been printing money like crazy.  An all-out effort was made to pump up the U.S. economy in the short-term.

So after all of that, is this what the “recovery” is going to look like?

Meanwhile, all of those efforts have also made our long-term economic problems even worse.

Because of our exploding national debt and the reckless money printing by the Federal Reserve, faith in the U.S. dollar is dying.  Even the United Nations is warning of a potential dollar collapse.

We are in big, big trouble.

This is about as good as things are going to get for the U.S. economy.  Despite unprecedented efforts, the U.S. economy is still struggling mightily and our long-term economic problems are scarier than ever.

Sadly, most Americans still believe that wonderful economic times are on the way.  Most believe that this downturn is just temporary and that things will soon be better than ever.

How do you think they are going to feel when they find out the truth?

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