If you increased your credit card spending by a couple thousand dollars per month would your lifestyle improve? Of course it would. By going into large amounts of debt, it is possible to live a lifestyle that you can’t really afford, at least for a while. But if you keep racking up huge amounts of credit card debt every single month, eventually it gets to a point where it is extremely difficult to even keep up with the minimum monthly payments and the credit card companies will not lend you any more money. Well, on a larger scale it is the same thing with government debt. Right now, the U.S. government is spending more than a trillion dollars more than it takes in every year. Even if the U.S. government spends all of that money on incredibly stupid stuff, it still gets into the pockets of ordinary Americans. In turn, those ordinary Americans use that money to pay the mortgage, buy food, shop at the mall, etc. All of this borrowing and spending by the U.S. government has created a “false prosperity” bubble that is not real. It may feel real to you right now, but it is unsustainable by definition. If the U.S. government suddenly started spending only the money that it actually brought in every year, our economy would be doomed and all of this “false prosperity” would rapidly disappear. But if the U.S. government continues to rack up debt at this pace we are doomed as well. In fact, every dollar that gets borrowed makes our eventual collapse ever worse. We are heading down the exact same road that Greece has gone. Eventually the rest of the world is not going to lend us gigantic mountains of super cheap money anymore. When the flow of cheap money stops, it can be extremely painful. Anyone that has ever seen the interest rates on their credit cards go above 20 percent knows how this feels. If we had addressed these problems as a nation a decade or two ago, perhaps we could have found a solution. But now there is no way out under our current financial system and a devastating economic collapse is on the horizon no matter what we do. (Read More...)
The Global Elite Are Hiding 18 Trillion Dollars In Offshore Banks
In recent days, the fact that Mitt Romney has millions of dollars parked down in the Cayman Islands has made headlines all over the world. But when it comes to offshore banking, what Mitt Romney is doing is small potatoes. The truth is that the global elite are hiding an almost unbelievable amount of money in offshore banks. According to shocking research done by the IMF, the global elite are holding a total of 18 trillion dollars in offshore banks. And that figure does not even count any money being held in Switzerland. That is a staggering amount of money. Keep in mind that U.S. GDP in 2010 was only 14.58 trillion dollars. So why do the global elite go to such trouble to hide their money in offshore banks? Well, there are two main reasons. One is privacy and the other is low taxation. Privacy is a big issue for those that are involved in illegal enterprises such as drug running, but the biggest reason why people move money into offshore banks is in order to avoid taxes. Some set up bank accounts in foreign nations because they want to legally minimize their taxes and others set up bank accounts in foreign nations because they want to illegally avoid taxes. You would be absolutely amazed at what some large corporations and wealthy individuals do to get out of paying taxes. Unfortunately, the vast majority of the rest of us don’t have the resources or the knowledge to play these games, so we get taxed into oblivion. (Read More...)
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. (Read More...)
Warning Signs That We Should Prepare For The Worst
The warning signs are all around us. All we have to do is open up our eyes and look at them. Almost every single day there are more prominent voices in the financial world telling us that a massive economic crisis is coming and that we need to prepare for the worst. On Wednesday, it was the World Bank itself that issued a very chilling warning. In an absolutely startling report, the World Bank revised GDP growth estimates for 2012 downward very sharply, warned that Europe could be on the verge of a devastating financial crisis, and declared that the rest of the world better “prepare for the worst.” You would expect to hear this kind of thing on The Economic Collapse Blog, but this is not the kind of language that you would normally expect to hear from the stuffed suits at the World Bank. Obviously things have gotten bad enough that nobody is even really trying to deny it anymore. Andrew Burns, the lead author of the report, said that if the sovereign debt crisis gets even worse we could be looking at an economic crisis that could be even worse than the last one: “An escalation of the crisis would spare no-one. Developed- and developing-country growth rates could fall by as much or more than in 2008/09.” Burns also stated that the “importance of contingency planning cannot be stressed enough.” In other words, Burns is saying that it is time to prepare for the worst. So are you ready? (Read More...)
112 Questions To Ask Yourself In 2012
The beginning of each year is a great time to evaluate the direction of your life and to ask yourself some very important questions. Often we get so busy just living life that we lose our perspective. It is important for each of us to take time once in a while to reassess how our lives are going. It is also important for all of us to reassess the direction that our nation is heading in every so often. The truth is that America has gotten badly off track. We have abandoned the principles which once made this country great, and this country is literally falling apart all around us. Hopefully the questions below will not just get you focused on our problems. Hopefully they will also spur you to think about solutions. Both individually and as a nation, we are in a lot of trouble. We need to start asking better questions and we need to rediscover the things that once made America the greatest nation on earth. If we are willing to humble ourselves and change course then there is hope for us. If not, then the road that we are currently on will only lead to national disaster. (Read More...)
Ack! They Are Actually Going To Let Greece Default!
I wish that I had an “aha moment” to share with you today, but instead all I have is an “ack moment” to share. As I was analyzing all of the info coming out of Europe in recent days, I came to the following realization: “Ack! They are actually going to let Greece default!” The only question is whether it is going to be an orderly default or a disorderly default. Of course the EU (led by Germany) could save Greece financially if it wanted to. But Germany has decided against that course of action. Many in the German government are sick and tired of pouring bailouts into Greece and then watching Greek politicians fail to fully implement the austerity measures that were agreed upon. At this point a lot of German politicians are talking as if a Greek default is a foregone conclusion. For example, Michael Fuchs, the deputy leader of Angela Merkel’s political party, recently made the following statement: “I don’t think that Greece, in its current condition, can be saved.” But that is not entirely accurate. Greece could be saved, but the Germans don’t want to make the deep financial sacrifices necessary to save Greece. So instead they are going to let Greece default. (Read More...)
If You Are A Blue Collar Worker In America You Are An Endangered Species
Have you ever heard of the dodo bird? Once upon a time, dodo birds lived on the island of Mauritius in the Indian Ocean. But if you go there today you won’t find any because they are extinct. Well, if you are a blue collar worker in America today it looks like you are headed for a similar fate. Blue collar workers are truly becoming an “endangered species” in the United States. In the old days, the balance of power between business owners and labor was more even because they both needed each other. But today that has all changed. Thanks to robotics, automation and computers there is simply not as much of a need for physical laborers anymore and nothing is going to reverse that trend. Big employers will continue to look for ways to replace men with machines, and there is nothing wrong with that. But there is another major trend that is also destroying blue collar jobs in America that we should do something about. Right now, it is perfectly legal for big corporations to shut down manufacturing facilities in the United States and send the jobs over to nations on the other side of the globe where it is legal to pay slave labor wages and where there are barely any regulations. As you will see later on this article, this has been the biggest reason for the shocking blue collar job losses in America over the past decade. The big corporations don’t care that you need to pay the mortgage and put food on the table for your families. All they care about it the bottom line, and if dramatic changes are not made soon, the number of blue collar jobs leaving the United States will continue to increase. (Read More...)
Bam! Bam! Bam! Huge Financial Bombs Just Got Dropped All Over Europe
The European debt crisis has just gone to an entirely new level. Just when it seemed like things may be stabilizing somewhat, we get news of huge financial bombs being dropped all over Europe. Very shortly after U.S. financial markets closed on Friday, S&P announced credit downgrades for nine European nations. This included both France and Austria losing their cherished AAA credit ratings. When the credit rating of a country gets slashed, that is a signal to investors that they should start demanding higher interest rates when they invest in the debt of that nation. Over the past year it has become significantly more expensive for many European nations to borrow money, and these new credit downgrades certainly are certainly not going to help matters. Quite a few financially troubled nations in Europe are very dependent on the ability to borrow huge piles of cheap money, and as debt becomes more expensive that is going to push many of them over the edge. Yesterday I wrote about 22 signs that we are on the verge of a devastating global recession, and unfortunately that list just got a whole lot longer. (Read More...)