The recent elections in France and in Greece have thrown the global financial system into an uproar. Fear and worry are everywhere and nobody is quite sure what is going to happen next. All of the financial deals that Greece has made over the past few years may be null and void. Nobody is going to know for sure until a new government is formed, and at this point it looks like that is not going to happen and that there will need to be new elections in June. All of the financial deals that France has made over the past few years may be null and void as well. New French President Francois Hollande seems determined to take France on a path away from austerity. But can France really afford to keep spending money that it does not have? France has already lost its AAA credit rating and French bond yields have started to move up toward dangerous territory. And Greek politicians are delusional if they think they have any other choice other than austerity. Without European bailout money (which they won’t get if they don’t honor their current agreements), nobody is going to want to lend Greece a dime. (Read More...)
The Countdown To The Break Up Of The Euro Has Officially Begun
The results of the elections in France and Greece have made it abundantly clear that there is a tremendous backlash against the austerity approach that Germany has been pushing. All over Europe, prominent politicians and incumbent political parties are being voted out. In fact, Nicolas Sarkozy has become the 11th leader of a European nation to be defeated in an election since 2008. We have seen governments fall in the Netherlands, the UK, Spain, Ireland, Italy, Portugal and Greece. Whenever they get a chance, the citizens of Europe are using the ballot box to send a message that they do not like what is going on. It turns out that austerity is extremely unpopular. But if newly elected politicians all over Europe begin rejecting austerity, this puts Germany in a very difficult position. Should Germany be expected to indefinitely bail out all of the members of the eurozone that choose to live way beyond their means? If Germany pulled out of the euro tomorrow, the euro would absolutely collapse, bond yields for the rest of the eurozone would skyrocket to unprecedented heights, and without German bailout money troubled nations such as Greece would be headed directly for default. The rest of the eurozone is absolutely and completely dependent on Germany at this point. But as we have seen, much of the rest of the eurozone is sick and tired of taking orders from Germany and is rejecting austerity. A lot of politicians in Europe apparently believe that they should be able to run up gigantic amounts of debt indefinitely and that the Germans should be expected to always be there to bail them out whenever they need it. Will the Germans be willing to tolerate such a situation, or will they simply pick up their ball and go home at some point? (Read More...)
Is Obama Negotiating A Treaty That Would Essentially Ban All “Buy American” Laws?
69 members of the U.S. House of Representatives have sent Barack Obama a letter expressing their concern that a new international treaty currently being negotiated would essentially ban all “Buy American” laws. This new treaty is known as the Trans-Pacific Partnership, and it is going to be one of the biggest “free trade” agreements in history. Critics are referring to it as the “NAFTA of the Pacific“, and it would likely cost the U.S. economy even more jobs than NAFTA did. At the moment, the Trans-Pacific Partnership includes Brunei, Chile, New Zealand and Singapore. Barack Obama is pushing hard to get the United States into the TPP, and Australia, Peru, Malaysia, Vietnam, Canada, Japan and South Korea are also reportedly interested in joining. But quite a few members of Congress have heard that “Buy American” laws will essentially be banned under this agreement, and this has many of them very concerned. You can read the entire letter that was sent to Obama right here. Unfortunately, the leaders of both major political parties are overwhelmingly in favor of the Trans-Pacific Partnership, so the objections of these 69 members of Congress are likely to fall on deaf ears. The Trans-Pacific Partnership will accelerate the flow of American jobs out of this country, and meanwhile our politicians will continue to insist that they are doing everything that they can to “create jobs”. (Read More...)
There Are 100 Million Working Age Americans That Do Not Have Jobs ***UPDATED***
The unemployment crisis in America is much worse than you are being told. Did you know that there are 100 million working age Americans that do not get up in the morning and go to work? No wonder why it seems like there are so many people that do not have jobs! According to the federal government, there are 12.6 million working age Americans that are considered to be “officially” unemployed, but there are another 87.8 million working age Americans that are not working either. The federal government considers those Americans to be “not in the labor force” so they are not included in the unemployment rate. In fact, this is one of the key ways that the government manipulates the unemployment numbers. The Obama administration would have us believe that the unemployment rate is going down and that that since the start of the last recession about as many Americans have left the labor force as we saw during the entire decades of the 1980s and 1990s combined. Of course that is a bunch of nonsense, but that is what the Obama administration would have us believe. The truth is that the percentage of working age Americans that are employed is just about the same right now as it was two years ago. It was incredibly difficult to get a job back then and it is incredibly difficult to get a job right now. So don’t believe the hype that things are getting much better. If you still do have a good job, you might want to hold on to it tightly, because there is not much hope that things are going to improve significantly any time soon. (Read More...)
Why New York Times Economist Paul Krugman Is Partly Right But Mostly Wrong
In recent days, New York Times economist Paul Krugman has been doing a whole bunch of interviews in which he has declared that the solution to our economic problems is very easy. Krugman says that all we need to do to get the global economy going again is for the governments of the world to start spending a lot more money. Krugman believes that austerity is only going to cause the economies of the industrialized world to slow down even further and therefore he says that it is the wrong approach. And you know what? Krugman is partly right about all of this. The false prosperity that the United States and Europe have been enjoying has been fueled by unprecedented amounts of debt, and in order to maintain that level of false prosperity we are going to need even larger amounts of debt. But there are several reasons why Krugman is mostly wrong. First of all, we have not seen any real “austerity” yet. Even though there have been some significant spending cuts and tax increases over in Europe, the truth is that nearly every European government is still piling up more debt at a frightening pace. Here in the United States, the federal government continues to spend more than a trillion dollars a year more than it brings in. If the United States were to go to a balanced federal budget, that would be austerity. What we have now is wild spending by the federal government beyond anything that John Maynard Keynes ever dreamed of. Secondly, Krugman focuses all of his attention on making things more comfortable for all of us in the short-term without even mentioning what we might be doing to future generations. Yes, more government debt would give us a short-term economic boost, but it would also make the long-term financial problems that we are passing on to our children even worse. (Read More...)
95 Percent Of The Jobs Lost During The Recession Were Middle Class Jobs
Who is the biggest loser in the ongoing decline of the U.S. economy? Is it the wealthy? No, the stock market has been soaring lately and their incomes are actually going up. Is it the poor? Well, the poor are definitely hurting very badly, but when you don’t have much to begin with you don’t have much to lose. Unfortunately, it is the middle class that has lost the most during this economic downturn. According to Bloomberg, 95 percent of the jobs lost during the recession were middle class jobs. That is an absolutely astounding figure. Yes, some executives lost their jobs during the last recession as did some minimum-wage workers. But overwhelmingly the jobs that were lost were middle income jobs. Sadly, the limited number of jobs that have been added since the end of the last recession have mostly been low income jobs. A higher percentage of Americans are working low income jobs than ever before, and the cost of living continues to rise at a very brisk pace. This is causing an erosion of the middle class unlike anything we have ever seen in American history. (Read More...)
Class Warfare Is Being Used To Divide America – And It Is Working
At a time when America desperately needs to come together, we are becoming more divided than ever. The mainstream media and most of our politicians love to pit us against one another in dozens of different ways, and right now class warfare has become one of their favorite tools for getting us to hate one another. If you are struggling in this economy, you are being told that “the wealthy” are the cause of your problems. If you have money, you are being told that the poor hate you and want to tax you into oblivion. Class warfare has already become a dominant theme in the 2012 race for the White House, and there will certainly be endless speeches given along these lines by politicians from both major political parties all the way up to election day. Class warfare will be used by both sides as a way to divide America and get votes. And the frightening thing is that it is clearly working. There is more hatred between the poor and the wealthy in America today than at any other time that I can remember. But hating people because of how much money they have or don’t have is not going to solve anything. Instead, it is just going to cause more problems. (Read More...)
22 Signs That The Collapsing Spanish Economy Is Heading Into A Great Depression
What happens when debt-fueled false prosperity disappears? Just look at Spain. The 4th largest economy in the eurozone was riding high during the boom years, but now the Spanish economy is collapsing with no end in sight. When a debt bubble gets interrupted, the consequences can be rather chaotic. Just like we saw in Greece, austerity is causing the economy to slow down in Spain. But when the economy slows down, tax revenues fall and that makes it even more difficult to meet budget targets. So even more austerity measures are needed to keep debt under control and the cycle just keeps going. Unfortunately, even with all of the recently implemented austerity measures the Spanish government is still not even close to a balanced budget. Meanwhile, the housing market in Spain is crashing and unemployment is already above 24 percent. The Spanish banking system is a giant, unregulated mess that is on the verge of a massive implosion, and the Spanish stock market has been declining rapidly. The Spanish government is going to need a massive bailout and so will the entire Spanish banking system. But that is going to be a huge problem, because the Spanish economy is almost 5 times as large as the Greek economy. When the Spanish financial system collapses, the entire globe is going to feel the pain and there will be no easy solution. (Read More...)