Bankrupt

The Worst Retail Cataclysm Ever: Sears Warns It Is On The Verge Of Collapse As Payless Prepares To File For Bankruptcy

Alarm Clock Abstract - Public DomainMore than 3,500 retail stores are going to close all across America over the next few months as the worst retail downturn in U.S. history gets even deeper.  Earlier this week, Sears shocked the world when it announced that there is “substantial doubt” that the company will be able to “continue as a going concern” much longer.  In other words, Sears has announced that it is on the verge of imminent collapse.  Meanwhile, Payless stunned the retail industry when it came out that they are preparing to file for bankruptcy.  The “retail apocalypse” that I have been warning about is greatly accelerating, and many believe that this is one of the early warning signs that the economic collapse that is already going on in other parts of the globe will soon reach U.S. shores.

I have repeatedly warned my readers that “Sears is going to zero“, and now Sears is officially saying that it might actually happen.  When you file official paperwork with the government that says there is “substantial doubt” that the company will survive, that means that the end is very near…

The company that operates Sears, the department store chain that dominated retail for decades, warned Tuesday that it faces “substantial doubt” about its ability to stay in business unless it can borrow more and tap cash from more of its assets.

“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” Sears Holdings said in a filing with the Securities and Exchange Commission. Sears Holdings operates both Sears and Kmart stores.

In the wake of that statement, the price of Sears stock dipped 13.69% to $7.85 a share.

Personally, I am going to miss Sears very much.  But of course the truth is that they simply cannot continue operating as they have been.

For the quarter that ended on January 28th, Sears lost an astounding 607 million dollars…

The company said it lost $607 million, or $5.67 per diluted share, during the quarter that ended on Jan. 28. That compared with a loss of $580 million, or $5.44 per diluted share, a year earlier. It has posted a loss in all but two of the last 24 quarters, according to S&P Global Market Intelligence.

How in the world is it possible for a retailer to lose that amount of money in just three months?

As I have said before, if they had employees flushing dollar bills down the toilet 24 hours a day they still shouldn’t have losses that big.

This week we also learned that Payless is heading for bankruptcy.  According to Bloomberg, the chain is planning to imminently close at least 400 stores…

Payless Inc., the struggling discount shoe chain, is preparing to file for bankruptcy as soon as next week, according to people familiar with the matter.

The company is initially planning to close 400 to 500 stores as it reorganizes operations, said the people, who asked not to be identified because the deliberations aren’t public. Payless had originally looked to shutter as many as 1,000 locations, and the number may still be in flux, according to one of the people.

Of course these are just two examples of a much broader phenomenon.

Never before in U.S. history have we seen such a dramatic wave of store closures.  According to Business Insider, over 3,500 retail locations “are expected to close in the next couple of months”…

Thousands of mall-based stores are shutting down in what’s fast becoming one of the biggest waves of retail closures in decades.

More than 3,500 stores are expected to close in the next couple of months.

Once thriving shopping malls are rapidly being transformed into ghost towns.  As I wrote about just recently, “you might be tempted to think that ‘Space Available’ was the hottest new retail chain in the entire country.”

The demise of Sears is going to be an absolute nightmare for many mall owners.  Once “anchor stores” start closing, it is usually only a matter of time before smaller stores start bailing out…

When an anchor store like Sears or Macy’s closes, it often triggers a downward spiral in performance for shopping malls.

Not only do the malls lose the income and shopper traffic from that store’s business, but the closure often triggers “co-tenancy clauses” that allow the other mall tenants to terminate their leases or renegotiate the terms, typically with a period of lower rents, until another retailer moves into the anchor space.

Years ago I wrote of a time when we would see boarded-up storefronts all across America, and now it is happening.

Instead of asking which retailers are going to close, perhaps we should be asking which ones are going to survive this retail cataclysm.

In the past, you could always count on middle class U.S. consumers to save the day, but today the middle class is steadily shrinking and U.S. consumers are increasingly tapped out.

For instance, just look at what is happening to delinquency rates on auto loans…

US auto loan and lease credit loss rates weakened in the second half of 2016, according to a new report from Fitch Ratings, which said they will continue to deteriorate.

“Subprime credit losses are accelerating faster than the prime segment, and this trend is likely to continue as a result of looser underwriting standards by lenders in recent years,” said Michael Taiano, a director at Fitch.

The last time so many Americans got behind on subprime auto loans was during the last financial crisis.

We are seeing so many similarities to what happened just prior to the last recession, and yet most Americans still seem to think that the U.S. economy is going to be just fine in 2017.

Unfortunately, major red flags are popping up in the hard economic numbers and in the financial markets.

The last recession probably should have started back in late 2015, but thanks to manipulation by the Fed and an unprecedented debt binge by the Obama administration, official U.S. GDP growth has been able to stay barely above zero for the last year and a half.

But just because something is delayed does not mean that it is canceled.

All along, our long-term economic imbalances have continued to get even worse, and a date with destiny is rapidly approaching for the U.S. economy.

Debt Apocalypse Beckons As U.S. Consumer Bankruptcies Do Something They Haven’t Done In Almost 7 Years

Bankrupt - Public DomainWhen debt grows much faster than GDP for an extended period of time, it is inevitable that a good portion of that debt will start to go bad at some point.  We witnessed a perfect example of this in 2008, and now it is starting to happen again.  Commercial bankruptcies have been rising on a year-over-year basis since late 2015, and this is something that I have written about previously, but now consumer bankruptcies are also increasing.  In fact, we have just witnessed U.S. consumer bankruptcies do something that they haven’t done in nearly 7 years.  The following comes from Wolf Richter…

US bankruptcy filings by consumers rose 5.4% in January, compared to January last year, to 52,421 according to the American Bankruptcy Institute. In December, they’d already risen 4.5% from a year earlier. This was the first time that consumer bankruptcies increased back-to-back since 2010.

However, business bankruptcies began to surge in November 2015 and continued surging on a year-over-year basis in 2016, to reach a full-year total of 37,823 filings, up 26% from the prior year and the highest since 2014.

Of course consumer bankruptcies are still much lower than they were during the last financial crisis, but what this could mean is that we have reached a turning point.

For years, the Federal Reserve has been encouraging reckless borrowing and spending by pushing interest rates to ultra-low levels.  Unfortunately, this created an absolutely enormous debt bubble, and now that debt bubble is beginning to burst.  Here is more from Wolf Richter…

The dizzying borrowing by consumers and businesses that the Fed with its ultra-low interest rates and in its infinite wisdom has purposefully encouraged to fuel economic growth, if any, and to inflate asset prices, has caused debt to pile up. That debt is now eating up cash flows needed for other things, and this is causing pressures, just when interest rates have begun to rise, which will make refinancing this debt more expensive and, for a rising number of consumers and businesses, impossible. And so, the legacy of this binge will haunt the economy – and creditors – for years to come.

Despite all of the economic optimism that is out there right now, the truth is that U.S. consumers are tapped out.

If the U.S. economy truly was doing great, major retailers would not be closing hundreds of stores.  Sears, Macy’s and a whole host of other big retailers are closing stores because those stores are losing money.  It truly is a “retail apocalypse“, and this trend is not going to turn around until U.S. consumers start to become healthier financially.

We also see signs of trouble in the auto sales numbers.  Compared to 2016, sales were way down in January this year…

Compared to January last year, car sales collapsed for all three US automakers, and the largest Japanese automakers didn’t do much better:

  • GM -21.1%
  • Ford -17.5%
  • Fiat Chrysler -35.8%
  • Toyota -19.9%
  • Honda -10.7%
  • Nissan -9.0%

For all automakers combined, car sales sagged 12.2% from a year ago.

A lot of attention is given to our 20 trillion dollar national debt, and rightly so, but a similar amount of attention should be paid to the fact that U.S. households are collectively more than 12 trillion dollars in debt.

About two-thirds of the nation is essentially living paycheck to paycheck.  Most families really struggle to pay the bills from month to month, and all it would take is a major event such as a job loss or a significant illness to plunge them into financial oblivion.

In America today we are told that the secret to success is a college education, but most young Americans have to go deep into debt to afford such an education.

As a result, most college graduates start out life in the “real world” with a mountain of debt.  And since many of them never find the “good jobs” that they were promised, repayment of that debt becomes a very big issue.  In fact, the Wall Street Journal has discovered that student loan repayment rates are much worse than we were being told…

Last Friday, the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers.

When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country.

The new analysis shows that at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years.

If you do find yourself deep in debt, a lot of families have found success by following a plan that was pioneered by author Dave Ramsey.  His “Debt Snowball Plan” really works, but you have to be committed to it.

Getting out of debt can be tremendously freeing.  So many people spend so many sleepless nights consumed by financial stress, but it doesn’t have to be that way.

Most of us have had to go into debt for some reason or another, and not all debt is bad debt.  For example, very few of us would be able to own a home without getting a mortgage, and usually mortgages come with very low interest rates these days.

But other forms of debt (such as credit card debt or payday loans) can be financially crippling.  When it comes to eliminating debt, it is often a really good idea to start with the most toxic forms of debt first.

It has been said that the borrower is the servant of the lender, and you don’t want to spend the best years of your life making somebody else rich.

Whether economic conditions turn out to be good or bad in 2017, the truth is that each one of us should be trying to do what we can to get out of debt.

Unfortunately, a lot of people never seem to learn from the past, and I have a feeling that both consumer and commercial bankruptcies will continue to rise throughout the rest of this year.

Black Friday: A Shameful Orgy Of Materialism For A Morally Bankrupt Nation

Black Friday It has been called “America’s most disturbing holiday”.  Black Friday is the day when millions of average Americans wait outside retail stores in the middle of the night in the freezing cold to spend more money that they do not have for more cheap Chinese-made products that they do not need.  It is a day when the rest of the world makes fun of Americans for behaving like “rabid animals” and “zombies” as we indulge in a tsunami of greed.  It truly is a shameful orgy of materialism for a morally bankrupt nation.  It is being projected that approximately 140 million Americans will participate in this disgusting national ritual this year.  Sadly, most of them have absolutely no idea that they are actively participating in the destruction of the economic infrastructure of the United States.  If you don’t understand why this is true, please be sure to read this entire article all the way to the end.

The amount of merchandise that is purchased on Black Friday is absolutely staggering.  For example, just consider how much stuff is sold at Wal-Mart alone…

Wal-Mart said it recorded more than 10 million register transactions between 6 p.m. and 10 p.m. Thursday in its stores and nearly 400 million page views that day on walmart.com. It sold 2.8 million towels, 2 million televisions, 1.4 million tablets, 300,000 bicycles and 1.9 million dolls. Big-ticket electronics like big-screen TVs and new videogame consoles were among the top sellers.

But each and every year, Black Friday also seems to bring out the worst in many people, and this year was certainly no exception.  The following are just a few of the national headlines about the rioting and the violence that we witnessed…

-“Holiday shopping season kicks off with fights, arrests”

-“Violence flares as shoppers slug it out for best Black Friday deals”

-“Watch Screaming Mobs Fight Over Televisions At Wal-Mart”

-“Two Arrested After Stabbing Over Parking Space At Wal-Mart”

-“Rialto Walmart Thanksgiving brawl sends one police officer to hospital”

-“Walmart Ejects Customer For Filming Violent ‘Black Thursday’ Mobs”

-“Cops: Shoplifting suspect shot after dragging officer”

And sometimes the violence extends out into the parking lots and into the surrounding neighborhoods.  In Las Vegas, a man that was carrying a big-screen television home from Target was shot in the leg…

According to police, a man purchased a big-screen television from the Target store near Flamingo Rd. and Maryland Pkwy. While he was walking to a nearby apartment complex, a man approached and fired a warning shot, causing the victim to drop the television, police said.

Officers tell 8 News NOW the gunman then took the television to a nearby car that was waiting, where a second man helped the gunman load the TV into the car.

The victim approached the two men and tried to get the television back. That prompted the gunman to fire several more rounds, shooting the victim in the leg.

Every year I go over to YouTube to check out the madness that breaks out on Black Friday night all over the nation.  Posted below is the best compilation video from Black Friday that I could find.  In particular, I love how this video compares American shoppers to zombies…

And there is one more video that I wanted to share with you.  In this video, activist Mark Dice dresses up like Santa Claus and mocks Black Friday shoppers for being “parasites” and for ruining Thanksgiving…

Meanwhile, as retail stores all over America actively encourage this zombie-like behavior, police are actually cracking down on other groups of Americans that are actively trying to make this country a better place.  For example, a Christian group in Lake Worth, Florida was kicked out of a public park for trying to feed the homeless on Thanksgiving.  Of course this kind of thing happens all the time.  In fact, dozens of major cities all over the country have now passed laws that make it illegal to feed the homeless.  For much more on this, please see my previous article entitled “One Lawmaker Is Literally Smashing The Belongings Of The Homeless With A Sledgehammer“.

At the beginning of this article, I stated that those who go shopping on Black Friday “are actively participating in the destruction of the economic infrastructure of the United States”.

How could that possibly be?

Aren’t they helping the economy by spending their money?

Actually, it isn’t that simple.

Just think about it for a moment.  Where are most of the “advertised specials” that people go crazy over on Black Friday actually made?

If you guessed “China”, you would be correct.  In fact, it is very difficult to find any “Black Friday specials” that are actually made in the United States.

When you buy stuff made in China, you support workers and businesses in China.  As I mentioned in a recent article, the U.S. economy loses approximately 9,000 jobs for every 1 billion dollars of goods that are imported from overseas.

Overall, the U.S. has run a total trade deficit with the rest of the world of more than 8 trillion dollars since 1975.

So when you look around and see lots of unemployed people, it should not be a surprise to you.

Right now, the labor force participation rate is at a 35-year-low and more than 102 million working age Americans do not have a job.  That number has increased by 27 million just since the year 2000.

Because the American people are not supporting American businesses, our formerly great manufacturing cities are being transformed into rotting, festering hellholes.  Just take a look at Detroit.  At one time Detroit had the highest per capita income in the entire nation, but now it is a dying, bankrupt ghost town.

And of course this is happening to manufacturing cities all over the nation.  Since 2001, more than 56,000 manufacturing facilities in the U.S. have permanently shut down and we have lost millions upon millions of good paying manufacturing jobs.

Back in the 1980s, more than 20 percent of the jobs in the United States were manufacturing jobs.  Today, only about 9 percent of the jobs in the United States are manufacturing jobs.

Good job America.  And the following are some more facts from one of my previous articles about how our massively bloated trade deficit is absolutely killing our economy…

-There are less Americans working in manufacturing today than there was in 1950 even though the population of the country has more than doubled since then.

-Back in 1950, more than 80 percent of all men in the United States had jobs.  Today, less than 65 percent of all men in the United States have jobs.

-When NAFTA was pushed through Congress in 1993, the United States had a trade surplus with Mexico of 1.6 billion dollars.  By 2010, we had a trade deficit with Mexico of 61.6 billion dollars.

-Back in 1985, our trade deficit with China was approximately 6 million dollars (million with a little “m”) for the entire year.  In 2012, our trade deficit with China was 315 billion dollars.  That was the largest trade deficit that one nation has had with another nation in the history of the world.

-According to the Economic Policy Institute, America is losing half a million jobs to China every single year.

-According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades if current trends continue.

Unfortunately, most Americans never stop to think about what happens when we buy stuff from China.

When we buy stuff from them, our money goes over there.

At this point, they are sitting on trillions of our dollars and they have purchased more than a trillion dollars of our debt.

Up until now, Chinese demand for our dollars has helped keep the value of the U.S. dollar artificially high.  This is one of the reasons why Wal-Mart can sell you those Chinese imports so inexpensively.

And up until now, Chinese demand for our debt has helped keep long-term interest rates artificially low.  So the U.S. government has been able to borrow money at ridiculously low interest rates and U.S. home buyers have been able to get mortgage rates that are well below the real rate of inflation.

But no irrational state of affairs ever lasts indefinitely, and the Chinese recently announced that they are going to quit stockpiling U.S. dollars.  Many analysts believe that this means that the Chinese will soon stop stockpiling U.S. debt as well.

So enjoy those super cheap “Black Friday specials” while they last.  That era is rapidly coming to an end.

Now that the Chinese have stolen tens of thousands of our businesses, millions of our jobs and trillions of our dollars, perhaps they feel that there is not much more looting to be done.  Our economic infrastructure has been essentially gutted at this point.  Moving forward, China can afford to let the value of the U.S. dollar fall and the value of their own currency rise because even Barack Obama admits that “those jobs are never coming back”.

And every single American that went shopping on Black Friday and bought Chinese-made goods actively participated in the ongoing destruction of the U.S. economy.

Good job America.  You are a nation that is utterly consumed by materialism and greed, and you don’t even realize that you are destroying yourself with your own foolishness.

Billionaire Issues Chilling Warning About Interest Rate Derivatives

WarningWill rapidly rising interest rates rip through the U.S. financial system like a giant lawnmower blade?  Yes, the U.S. economy survived much higher interest rates in the past, but at that time there were not hundreds of trillions of dollars worth of interest rate derivatives hanging over our financial system like a Sword of Damocles.  This is something that I have been talking about for quite some time, and now a Mexican billionaire has come forward with a similar warning.  Hugo Salinas Price was the founder of the Elektra retail chain down in Mexico, and he is extremely concerned that rising interest rates could burst the derivatives bubble and cause “massive bankruptcies around the globe”.  Of course there are a whole lot of people out there that would be quite glad to see the “too big to fail” banks go bankrupt, but the truth is that if they go down our entire economy will go down with them.  Our situation is similar to a patient with a very advanced stage of cancer.  You can try to kill the cancer with drugs, but you will almost certainly kill the patient at the same time.  Well, that is essentially what our relationship with the big banks is like.  Our entire economic system is based on credit, and just like we saw back in 2008, if the big banks start failing credit freezes up and suddenly nobody can get any money for anything.  When the next great credit crunch comes, every important number in our economy will rapidly start getting much worse.

The big banks are going to play a starring role in the next financial crash just like they did in the last one.  Only this next crash may be quite a bit worse.  Just check out what billionaire Hugo Salinas Price told King World News recently…

I think we are going to see a series of bankruptcies. I think the rise in interest rates is the fatal sign which is going to ignite a derivatives crisis. This is going to bring down the derivatives system (and the financial system).

There are (over) one quadrillion dollars of derivatives and most of them are related to interest rates. The spiking of interest rates in the United States may set that off. What is going to happen in the world is eventually we are going to come to a moment where there is going to be massive bankruptcies around the globe.

What is going to be left after the dust settles is gold, and some people are going to have it and some people are not. Then the problem is going to be to hold on to what you’ve got because it’s not going to be a very pleasant world.

Right now, there are about 441 trillion dollars of interest rate derivatives sitting out there.  If interest rates stay about where they are right now and they don’t go much higher, we will be fine.  But if they start going much higher, all bets will be off and we could see financial carnage on a scale that we have never seen before.

And at the moment the big banks have got to behave themselves because the government is investigating allegations that they have been cheating pension funds and other investors out of millions of dollars by manipulating the trading of interest rate derivatives.  The following is from an article that the Telegraph posted on Friday…

The Commodity Futures Trading Commission (CFTC) is probing 15 banks over allegations that they instructed brokers to carry out trades that would move ISDAfix, the leading benchmark rate for interest rate swaps.

Pension funds and companies who invest in interest rate derivatives often deal with banks to insure against big movements in the ISDAfix rate or to speculate on changes to interest rate swaps

ISDAfix is published each morning after banks submit bids for swaps via Icap, the inter-dealer broker, in a number of currencies. The CFTC has been investigating suggestions that the banks deliberately moved the rate in order to profit on these deals.

Given the hundreds of trillions of dollars worth of interest rate derivatives trades that occur annually, even the slightest manipulation can have a substantial effect. The CFTC, which started to investigate ISDAfix after last summer’s Libor scandal has now been handed emails and phone call recordings that show the rate was deliberately moved, according to Bloomberg.

Essentially they got their hands caught in the cookie jar and so they have got to play it straight (at least for now).

Meanwhile, it looks like the Fed may not be able to keep long-term interest rates down for much longer.

The Federal Reserve has been using quantitative easing to try to keep long-term interest rates low, but now some officials over at the Fed are becoming extremely alarmed about how bloated the Fed balance sheet has become.  For example, the following was recently written by the head of the Dallas Fed, Richard Fisher…

This later program is referred to as quantitative easing, or QE, by the public and as large-scale asset purchases, or LSAPs, internally at the Fed. As a result of LSAPs conducted over three stages of QE, the Fed’s System Open Market Account now holds $2 trillion of Treasury securities and $1.3 trillion of agency and mortgage-backed securities (MBS). Since last fall, when we initiated the third stage of QE, we have regularly been purchasing $45 billion a month of Treasuries and $40 billion a month in MBS, meanwhile reinvesting the proceeds from the paydowns of our mortgage-based investments. The result is that our balance sheet has ballooned to more than $3.5 trillion. That’s $3.5 trillion, or $11,300 for every man, woman and child residing in the United States.

Fisher has compared the current Fed balance sheet to a “Gordian Knot”, and he hopes that the Fed will be able to unwind this knot without creating “market havoc”…

The point is: We own a significant slice of these critical markets. This is, indeed, something of a Gordian Knot.

Those of you familiar with the Gordian legend know there were two versions to it: One holds that Alexander the Great simply dispatched with the problem by slicing the intractable knot in half with his sword; the other posits that Alexander pulled the knot out of its pole pin, exposed the two ends of the cord and proceeded to untie it. According to the myth, the oracles then divined that he would go on to conquer the world.

There is no Alexander to simply slice the complex knot that we have created with our rounds of QE. Instead, when the right time comes, we must carefully remove the program’s pole pin and gingerly unwind it so as not to prompt market havoc. For starters though, we need to stop building upon the knot. For this reason, I have advocated that we socialize the idea of the inevitability of our dialing back and eventually ending our LSAPs. In June, I argued for the Chairman to signal this possibility at his last press conference and at last week’s meeting suggested that we should gird our loins to make our first move this fall. We shall see if that recommendation obtains with the majority of the Committee.

But of course it should be obvious to everyone that the Fed is not going to be able to reduce the size of its balance sheet without causing huge distress in the financial markets.  A few weeks ago, just the suggestion that the Fed may eventually begin to slow down the pace of quantitative easing caused the markets to throw an epic temper tantrum.

Unfortunately, the Fed may not be able to keep control of long-term interest rates even if they continue quantitative easing indefinitely.  Over the past several weeks long-term interest rates have been rising steadily, and the yield on 10 year U.S. Treasuries crept a bit higher on Monday.

At this point, many on Wall Street are convinced that the bull market for bonds is over and that rates will eventually go much, much higher than they are right now no matter what the Fed does.  The following is an excerpt from a recent CNBC article…

The Federal Reserve will lose control of interest rates as the “great rotation” out of bonds into equities takes off in full force, according to one market watcher, who sees U.S. 10-year Treasury yields hitting 5-6 percent in the next 18-24 months.

“It is our opinion that interest rates have begun their assent, that the Fed will eventually lose control of interest rates. The yield curve will first steepen and then will shift, moving rates significantly higher,” said Mike Crofton, President and CEO, Philadelphia Trust Company told CNBC on Wednesday.

If the yield on 10 year U.S. Treasuries does hit 6 percent, we are going to have a major disaster on our hands.

Hugo Salinas Price is exactly right – the derivatives bubble is the number one threat that our financial system is facing, and it could potentially bring down a whole bunch of our big banks.

But for the moment, Wall Street is still in a euphoric mood.  The Dow is near a record high and many investors are hoping that this rally will last for the rest of the year.

Unfortunately, I wouldn’t count on that happening.  The truth is that the stock market has become completely divorced from economic reality.

Since March 2009, the size of the U.S. economy has grown by approximately $1.3 trillion, but stock market wealth has grown by an astounding $12 trillion.

And the stock market has just kept on rising even though GDP growth forecasts have been steadily falling.

It doesn’t make any sense.

But Obama, Bernanke and the wizards on Wall Street assure us that there is no end to the party in sight.

Believe them at your own peril.

The people at the controls are completely and totally clueless and we are rapidly careening toward disaster.

Perhaps we should do what one little town in Minnesota did and put a 4-year-old kid in charge.

That kid certainly could not be much worse than our current leadership, don’t you think?

Rotting, Decaying And Bankrupt – If You Want To See The Future Of America Just Look At Detroit

The Future Of The United States - Photo by Albert DuceEventually the money runs out.  Much of America was shocked when the city of Detroit defaulted on a $39.7 million debt payment and announced that it was suspending payments on $2.5 billion of unsecured debt, but those who visit my site on a regular basis were probably not too surprised.  Anyone with half a brain and a calculator could see this coming from a mile away.  But people kept foolishly lending money to the city of Detroit, and now many of them are going to get hit really hard.  Detroit Emergency Manager Kevyn Orr has submitted a proposal that would pay unsecured creditors about 10 cents on the dollar.  Similar haircuts would be made to underfunded pension and health benefits for retirees.  Orr is hoping that the creditors and the unions that he will be negotiating with will accept this package, but he concedes that there is still a “50-50 chance” that the city of Detroit will be forced to formally file for bankruptcy.  But what Detroit is facing is not really that unique.  In fact, Detroit is a perfect example of what the future of America is going to look like.  We live in a nation that is rotting, decaying, drowning in debt and racing toward insolvency.  Already there are dozens of other cities across the nation that are poverty-ridden, crime-infested hellholes just like Detroit is, and hundreds of other communities are rapidly heading in that direction.  So don’t look down on Detroit.  They just got there before the rest of us.

The following are some facts about Detroit that are absolutely mind-blowing…

1 – Detroit was once the fourth-largest city in the United States, and in 1960 Detroit had the highest per-capita income in the entire nation.

2 – Over the past 60 years, the population of Detroit has fallen by 63 percent.

3 – At this point, approximately 40 percent of all the streetlights in the city don’t work.

4 – Some ambulances in the city of Detroit have been used for so long that they have more than 250,000 miles on them.

5 – 210 of the 317 public parks in the city of Detroit have been permanently closed down.

6 – According to the New York Times, there are now approximately 70,000 abandoned buildings in Detroit.

7 – Approximately one-third of Detroit’s 140 square miles is either vacant or derelict.

8 – Less than half of the residents of Detroit over the age of 16 are working at this point.

9 – If you can believe it, 60 percent of all children in the city of Detroit are living in poverty.

10 – According to one very shocking report, 47 percent of the residents of Detroit are functionally illiterate.

11 – Today, police solve less than 10 percent of the crimes that are committed in Detroit.

12 – Ten years ago, there were approximately 5,000 police officers in the city of Detroit.  Today, there are only about 2,500 and another 100 are scheduled to be eliminated from the force soon.

13 – Due to budget cutbacks, most police stations in Detroit are now closed to the public for 16 hours a day.

14 – The murder rate in Detroit is 11 times higher than it is in New York City.

15 – Crime has gotten so bad in Detroit that even the police are telling people to “enter Detroit at your own risk“.

16 – Right now, the city of Detroit is facing $20 billion in debt and unfunded liabilities.  That breaks down to more than $25,000 per resident.

As Detroit Emergency Manager Kevyn Orr noted last week, it took a very long time for Detroit to get into this condition…

“What the average Detroiter needs to understand is that where we are right now is a culmination of years and years and years of kicking the can down the road,” said Orr, adding that his proposal should not be seen as a “hostile act” but as a step in the right direction.

Does that sound familiar?

It should.

U.S. politicians have also been kicking the can down the road for “years and years and years”.

But eventually you can’t kick the can down the road anymore.

Sometimes it is helpful to step back and look at what we have done to ourselves over the past several decades.

For example, back in 1980 the U.S. national debt was less than one trillion dollars.  Today, it is rapidly approaching 17 trillion dollars.

And our debt binge has greatly accelerated under Barack Obama.

During Barack Obama’s first term, the federal government accumulated more debt than it did under the first 42 U.S presidents combined.

Isn’t that insane?

In fact, if you started paying off just the new debt that the U.S. has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.

The following are a lot more facts about our exploding national debt from one of my previous articles entitled “55 Facts About The Debt And U.S. Government Finances That Every American Voter Should Know“…

#1 While Barack Obama has been president, the U.S. government has spent about 11 dollars for every 7 dollars of revenue that it has actually brought in.

#2 During the fiscal year that just ended, the U.S. government took in 2.449 trillion dollars but it spent 3.538 trillion dollars.

#3 During fiscal year 2011, over a trillion dollars of government money was spent on 83 different welfare programs, and those numbers do not even include Social Security or Medicare.

#4 Over the past four years, welfare spending has increased by 32 percent.  In inflation-adjusted dollars, spending on those programs has risen by 378 percent over the past 30 years.  At this point, more than 100 million Americans are enrolled in at least one welfare program run by the federal government.  Once again, these figures do not even include Social Security or Medicare.

#5 Over the past year, the number of Americans getting a free cell phone from the federal government has grown by 43 percent.  Now more than 16 million Americans are enjoying what has come to be known as an “Obamaphone”.

#6 When Barack Obama first entered the White House, about 32 million Americans were on food stamps.  Now, 47 million Americans are on food stamps.  And this has happened during what Obama refers to as “an economic recovery”.

#7 The U.S. government recently spent 27 million dollars on pottery classes in Morocco.

#8 The U.S. Department of Agriculture recently spent $300,000 to encourage Americans to eat caviar at a time when more families than ever are having a really hard time just trying to put any food on the table at all.

#9 During 2012, the National Science Foundation spent $516,000 to support the creation of a video game called “Prom Week”, which apparently simulates “all the social interactions of the event.”

#10 The U.S. Department of Agriculture gave the largest snack food maker in the world (PepsiCo Inc.) a total of 1.3 million dollars in corporate welfare that was used to help build “a Greek yogurt factory in New York.”

#11 The National Science Foundation recently gave researchers at Purdue University $350,000.  They used part of that money to help fund a study that discovered that if golfers imagine that a hole is bigger it will help them with their putting.

#12 If you can believe it, $10,000 from the federal government was actually used to purchase talking urinal cakes up in Michigan.

#13 The National Science Foundation recently gave a whopping $697,177 to a New York City-based theater company to produce a musical about climate change.

#14 The National Institutes of Health recently gave $666,905 to a group of researchers that is studying the benefits of watching reruns on television.

#15 The National Science Foundation has given 1.2 million dollars to a team of “scientists” that is spending part of that money on a study that is seeking to determine whether elderly Americans would benefit from playing World of Warcraft or not.

#16 The National Institutes of Health recently gave $548,731 to a team of researchers that concluded that those that drink heavily in their thirties also tend to feel more immature.

#17 The National Science Foundation recently spent $30,000 on a study to determine if “gaydar” actually exists.  This is the conclusion that the researchers reached at the end of the study…

“Gaydar is indeed real and… its accuracy is driven by sensitivity to individual facial features”

#18 Back in 2011, the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.

#19 The U.S. government spends more on the military than China, Russia, Japan, India, and the rest of NATO combined.  In fact, the United States accounts for 41.0% of all military spending on the planet.  China is next with only 8.2%.

#20 In a previous article, I noted that close to 500,000 federal employees now make at least $100,000 a year.

#21 In 2006, only 12 percent of all federal workers made $100,000 or more per year.  Now, approximately 22 percent of all federal workers do.

#22 If you can believe it, there are 77,000 federal workers that make more than the governors of their own states do.

#23 During 2010, the average federal employee in the Washington D.C. area received total compensation worth more than $126,000.

#24 The U.S. Department of Defense had just nine civilians earning $170,000 or more back in 2005.  When Barack Obama became president, the U.S. Department of Defense had 214 civilians earning $170,000 or more.  By June 2010, the U.S. Department of Defense had 994 civilians earning $170,000 or more.

#25 During 2010, compensation for federal employees came to a grand total of approximately 447 billion dollars.

#26 If you can believe it, close to 15,000 retired federal employees are currently collecting federal pensions for life worth at least $100,000 annually.  That list includes such names as Newt Gingrich, Bob Dole, Trent Lott, Dick Gephardt and Dick Cheney.

#27 During 2010, the federal government spent $33,387 on the hair care needs of U.S. Senators.

#28 During 2010, U.S. Senators pulled $72,370 out of the “Senate Restaurant Fund”.

#29 During 2010, an average of $4,005,900 of U.S. taxpayer money was spent on “personal” and “office” expenses per Senator.

#30 In 2013, 3.7 million dollars will be spent to support the lavish lifestyles of former presidents such as George W. Bush and Bill Clinton.

#31 During 2011, the federal government spent a total of 1.4 BILLION dollars just on the Obamas.

#32 When you combine all federal government spending, all state government spending and all local government spending, it comes to approximately 41 percent of U.S. GDP.  But don’t worry, all of our politicians insist that this is not socialism.

#33 As I have written about previously, less than 30 percent of all Americans lived in a home where at least one person received financial assistance from the federal government back in 1983.  Today, that number is sitting at an all-time high of 49 percent.

#34 Back in 1990, the federal government accounted for just 32 percent of all health care spending in America.  This year, it is being projected that the federal government will account for more than 50 percent of all health care spending in the United States.

#35 The number of Americans on Medicaid soared from 34 million in 2000 to 54 million in 2011, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

#36 In one of my previous articles, I discussed how it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

#37 If you can believe it, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for each and every household in the United States.

#38 In the United States today, more than 61 million Americans receive some form of Social Security benefits.  By 2035, that number is projected to soar to a whopping 91 million.

#39 Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

#40 When Barack Obama first took office, the U.S. national debt was about 10.6 trillion dollars.  Now it is about 16.7 trillion dollars.  That is an increase of 6.1 trillion dollars in a little more than 4 years.

#41 The federal government has now run a budget deficit of more than a trillion dollars for four years in a row.

#42 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

#43 If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.

#44 Some suggest that “taxing the rich” is the answer.  Well, if Bill Gates gave every single penny of his entire fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.

#45 If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for 2011 would have been 5 trillion dollars instead of 1.3 trillion dollars.

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

#47 At this point, the United States government is responsible for more than a third of all the government debt in the entire world.

#48 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.

#49 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.

#50 The U.S. national debt is now more than 37 times larger than it was when Richard Nixon took us off the gold standard.

#51 The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was first created.

#52 The U.S. national debt jumped more on the very first day of fiscal year 2013 than it did from 1776 to 1941 combined.

#53 Historically, the interest rate on 10 year U.S. Treasuries has averaged 6.68 percent.  If the average interest rate on U.S. government debt rose to that level today, the U.S. government would find itself spending more than a trillion dollars per year just on interest on the national debt.

#54 A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.

#55 Boston University economist Laurence Kotlikoff is warning that the U.S. government is facing a gigantic tsunami of unfunded liabilities in the coming years that we are counting on our children and our grandchildren to pay.  Kotlikoff speaks of a “fiscal gap” which he defines as “the present value difference between projected future spending and revenue”.  His calculations have led him to the conclusion that the federal government is facing a fiscal gap of 222 trillion dollars in the years ahead.

Please share this article with as many people as you can.  We are in the process of committing national financial suicide and time is rapidly running out to do anything about it.

Just like Detroit, a day is rapidly approaching when America will not be able to kick the can down the road anymore.

Sadly, our politicians don’t seem inclined to do anything about it and most of the population seems to think that our exploding national debt is not a significant problem.

By the time it becomes clear how wrong they were, it will be far too late to do anything about it.

Bankrupt, Decaying And Nearly Dead: 24 Facts About The City Of Detroit That Will Shock You

Bankrupt, Decaying And Nearly Dead: 24 Facts About The City Of Detroit That Will Shock You - Photo by Angelique DuLongIf you want to know what the future of America is going to be like, just look at the city of Detroit.  Once upon a time it was a symbol of everything that America was doing right, but today it has been transformed into a rotting, decaying, post-apocalyptic hellhole.  Detroit was once the fourth-largest city in the United States, and in 1960 Detroit had the highest per-capita income in the entire nation.  It was the greatest manufacturing city the world had ever seen, and the rest of the globe looked at Detroit with a sense of awe and wonder.  But now the city of Detroit has become a bad joke to the rest of the world.  Unemployment is rampant, 60 percent of the children are living in poverty and the city government is on the verge of bankruptcy.  They say that Detroit is just a matter of “weeks or months” away from running out of cash, and when Detroit does declare bankruptcy it will be the largest municipal bankruptcy in the history of the United States.  But don’t look down on Detroit, because the truth is that Detroit is really a metaphor for what is happening to America as a whole.  In the United States today, our manufacturing infrastructure has been gutted, poverty is absolutely exploding and we are rapidly approaching national bankruptcy.  Detroit may have gotten there first, but the rest of the country will follow soon enough.

Back during the boom years, Detroit was known for making great cars.  Today, it is known for scenes of desolation and decay.  It is full of vandalized homes, abandoned schools and empty factories.  The following description of what Detroit looks like at this point is from an article by Barry Yeoman…

It’s hard to describe the city’s physical landscape without producing what Detroiters call “ruin porn.” Brick houses with bays and turrets sit windowless or boarded up. Whole blocks, even clusters of blocks, have been bulldozed. Retail strips have been reduced to a dollar store here, a storefront church there, and a whole lot of plywood in between. Not a single chain supermarket remains.

So what caused the downfall of one of the greatest cities on earth?

Well, here is a hint…

Between December 2000 and December 2010, 48 percent of the manufacturing jobs in Michigan were lost.

When you are a manufacturing area, and you lose half of your manufacturing jobs over the course of a single decade, of course things are going to get really, really bad.

So just how bad have things gotten in Detroit?

The following are 24 facts about the city of Detroit that will shock you…

#1 Detroit was once the fourth-largest city in the United States, and it was once home to close to 2 million people.  But over the last several decades people have been fleeing in droves.  According to the 2010 census, only 713,000 people now live in Detroit, and city officials admit that the population has probably slipped under 700,000 at this point.

#2 The population of Detroit has declined by about 25 percent over the past decade.  The last time the population of Detroit was this low was all the way back in 1910.

#3 Today, Detroit is only the 18th-largest city in America.  It is now smaller than Austin, Texas and Charlotte, North Carolina.

#4 Back in 1960, the city of Detroit had the highest per-capita income in the United States.

#5 Today, the unemployment rate in Detroit is more than 18 percent, which is more than twice as high as the nation as a whole.

#6 According to a report that was just recently released, approximately 60 percent of all children in Detroit live in poverty.

#7 Approximately one-third of Detroit’s 140 square miles are either vacant or derelict.

#8 The city government of Detroit has closed dozens of schools and has decided to cut off public services to the “heavily blighted areas“.

#9 According to one estimate, there are 33,500 empty houses and 91,000 vacant residential lots in the city of Detroit today.

#10 The median price of a home in Detroit is just $9,000, and there are some areas of Detroit where you can still buy a house for $100.

#11 There are more than 85,000 streetlights in Detroit, but thieves have stripped so much copper wiring out of the lights that more than half of them are not working.

#12 Mayor Bing has announced a plan to reduce the number of streetlights in the city of Detroit to just 46,000.

#13 According to one very shocking report, 47 percent of all people living in the city of Detroit are functionally illiterate at this point..

#14 The murder rate in Detroit is 11 times higher than it is in New York City.

#15 There were 377 homicides in Detroit in 2011.  In 2012, that number rose to 411.

#16 Justifiable homicide in Detroit rose by an astounding 79 percent during 2011.

#17 In one recent year, the rate of self-defense killings in the city of Detroit was 2200% above the national average.

#18 Ten years ago, there were approximately 5,000 police officers in the city of Detroit.  Today, there are only about 2,500 and another 100 are scheduled to be eliminated from the force soon.

#19 Due to budget cutbacks, most police stations in Detroit are now closed to the public for 16 hours a day.

#20 Crime has gotten so bad in Detroit that even the police are are telling people to “enter Detroit at your own risk“.

#21 At one point, 100 bus drivers in Detroit refused to drive their routes because they were afraid of being attacked out on the streets in broad daylight.  The head of the bus drivers union, Henry Gaffney, said that the drivers were literally “scared for their lives“….

“Our drivers are scared, they’re scared for their lives. This has been an ongoing situation about security. I think yesterday kind of just topped it off, when one of my drivers was beat up by some teenagers down in the middle of Rosa Parks and it took the police almost 30 minutes to get there, in downtown Detroit,” said Gaffney.

#22 There have been reports that gangs of young men with AK-47s have been terrorizing gas stations all over Detroit.

#23 Detroit was once known for making some of the greatest cars in the world.  Now, it is known around the world as a dumping ground for the dead…

From the street, the two decomposing bodies were nearly invisible, concealed in an overgrown lot alongside worn-out car tires and a moldy sofa. The teenagers had been shot, stripped to their underwear and left on a deserted block.

They were just the latest victims of foul play whose remains went undiscovered for days after being hidden deep inside Detroit’s vast urban wilderness — a crumbling wasteland rarely visited by outsiders and infrequently patrolled by police.

#24 Detroit’s public schools are an absolute nightmare.  The following is from one of my readers that actually attended one of the “best” public schools in Detroit…

The school was a new seven story building just a couple of years old. The bathrooms would often lack toilet paper & soap beyond the second floor (the main floor), the bathroom sinks would often not work. The water fountains on north side of the building on from the third floor & up did not work. The elevators would constantly break down. I even got stuck on the elevator before. I almost tripped down a half a flight of stairs because the elastic seal (it was the metal bar at the front of a treader of I don’t know the name of it.) the stairs was not properly installed.

Students would often have sex on the stairs & throughout the school. Parents actually called the school many times & reported kids having sex on the stairs because all of them had glass windows 270 degrees.

Even over in Europe they write stories about the dramatic decline of Detroit.  For example, the following is how one British reporter described his visit to Detroit…

Much of Detroit is horribly dangerous for its own residents, who in many cases only stay because they have nowhere else to go. Property crime is double the American average, violent crime triple. The isolated, peeling homes, the flooded roads, the clunky, rusted old cars and the neglected front yards amid trees and groin-high grassland make you think you are in rural Alabama, not in one of the greatest industrial cities that ever existed.

For those that want to read even more about the horrifying downfall of Detroit, there are some amazing charts that graphically show the decline of Detroit right here.

So what is the solution?

How can we fix Detroit?

Well, why don’t we just build a monorail!  Of course that sounds ridiculous, but the federal government has actually committed $25 million to construct “a streetcar line” that nobody really wants and that very few people would probably actually use.  Perhaps they could be excused for wasting so much money on a bad idea if there had not already been 24 failed attempts to develop a successful public transit system in Detroit over the past four decades.

Well, why don’t we just build a bunch of theme parks instead?  After all, tourists would just flock to Detroit, right?

It has been suggested that Detroit would be ideal for an “automotive theme park”, and there is actually one group of investors that wants to turn some of the worst areas of Detroit into a “zombie theme park”.

What will they think of next?

Actually, a much better idea would have been to not allow millions of our good paying manufacturing jobs to be shipped to the other side of the world, but it is too late for that at this point.

But once again, please do not look down on the city of Detroit.  Instead, let the city of Detroit serve as a warning for the rest of us.

The truth is that the entire U.S. economy is in an advanced state of decline…

-The percentage of the civilian labor force in the United States that is employed has been steadily declining every single year since 2006.

-An astounding 53 percent of all American workers make less than $30,000 a year.

-Amazingly, there are hundreds of thousands of Americans with either Master’s degrees or Ph.D.s that are enrolled in the food stamp program at this point.

We are a nation that consumes far more wealth than we produce, we are a nation that is constantly bleeding jobs, businesses and wealth, and we are a nation that is going deeper into debt with each passing day.

Yes, Detroit may have gone over the edge into economic oblivion first, but the rest of the nation is steamrolling down the exact same path that Detroit has gone.

Is it too late for us to change direction?

Please feel free to share your thoughts on that question by leaving a comment below…

Detroit - Photo by Albert duce

The Federal Reserve Is Systematically Destroying Social Security And The Retirement Plans Of Millions Of Americans

Last week the mainstream media hailed QE3 as the “quick fix” that the U.S. economy desperately needs, but the truth is that the policies that the Federal Reserve is pursuing are going to be absolutely devastating for our senior citizens.  By keeping interest rates at exceptionally low levels, the Federal Reserve is absolutely crushing savers and is systematically destroying Social Security.  Meanwhile, the inflation that QE3 will cause is going to be absolutely crippling for the millions upon millions of retired Americans that are on a fixed income.  Sadly, most elderly Americans have no idea what the Federal Reserve is doing to their financial futures.  Most Americans that are approaching retirement age have not adequately saved for retirement, and the Social Security system that they are depending on is going to completely and totally collapse in the coming years.  Right now, approximately 56 million Americans are collecting Social Security benefits.  By 2035, that number is projected to grow to a whopping 91 million.  By law, the Social Security trust fund must be invested in U.S. government securities.  But thanks to the low interest rate policies of the Federal Reserve, the average interest rate on those securities just keeps dropping and dropping.  The trustees of the Social Security system had projected that the Social Security trust fund would be completely gone by 2033, but because of the Fed policy of keeping interest rates exceptionally low for the foreseeable future it is now being projected by some analysts that Social Security will be bankrupt by 2023.  Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.  Yes, you read that correctly.  The collapse of Social Security is inevitable, and the foolish policies of the Federal Reserve are going to make that collapse happen much more rapidly.

The only way that the Social Security system is going to be able to stay solvent is for the Social Security trust fund to earn a healthy level of interest.

By law, all money deposited in the Social Security trust fund must be invested in U.S. government securities.  The following is from the official website of the Social Security Administration….

By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are “special issues” of the United States Treasury. Such securities are available only to the trust funds.

In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash.

So in order for the Social Security Ponzi scheme to work, those investments in government securities need to produce healthy returns.

Unfortunately, the ultra-low interest rate policy of the Federal Reserve is making this impossible.

The average rate of interest earned by the Social Security trust fund has declined from 6.1 percent in January 2003 to 3.9 percent today, and it is going to continue to go even lower as long as the Fed continues to keep interest rates super low.

A recent article by Bruce Krasting detailed how this works.  Just check out the following example….

$135 billion of old bonds matured this year. This money was rolled over into new bonds with a yield of only 1.375%. The average yield on the maturing securities was 5.64%. The drop in yield on the new securities lowers SSA’s income by $5.7B annually. Over the fifteen year term of the investments, that comes to a lumpy $86 billion.

So what happens when the Social Security trust fund runs dry?

As Bruce Krasting also noted, all Social Security payments would immediately be cut by 25 percent…..

Anyone who is 55 or older should be worried about this. Based on current law, all SS benefit payments must be cut by (approximately) 25% when the TF is exhausted. This will affect 72 million people. The economic consequences will be severe.

In other words, it would be a complete and total nightmare.

Sadly, the truth is that the Social Security trust fund might not even make it into the next decade.  Most Social Security trust fund projections assume that there will be no recessions and that there will be a very healthy rate of growth for the U.S. economy over the next decade.

So what happens if we have another major recession or worse?

And most Americans know that something is up with Social Security.  According to a Gallup survey, 67 percent of all Americans believe that there will be a Social Security crisis within 10 years.

Part of the problem is that there are way too many people retiring and not nearly enough workers to support them.

Back in 1950, each retiree’s Social Security benefit was paid for by 16 U.S. workers.  But now things are much different.  According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 full-time private sector workers for each person that is receiving Social Security benefits in the United States.

And remember, the number of Americans drawing on Social Security will increase by another 35 million by the year 2035.

Another factor that is rapidly becoming a major problem is the growth of the Social Security disability program.

Since 2008, 3.6 million more Americans have been added to the rolls of the Social Security disability insurance program.

Today, more than 8.7 million Americans are collecting Social Security disability payments.

So how does this compare to the past?

Back in August 1967, there were approximately 65 workers for each American that was collecting Social Security disability payments.

Today, there are only 16.2 workers for each American that is collecting Social Security disability payments.

The Social Security Ponzi scheme is rapidly approaching a crisis point.

Sadly, the Federal Reserve has made it incredibly difficult to save for your own retirement.

Millions upon millions of Baby Boomers that diligently saved money for retirement are finding that their savings accounts are paying out next to nothing thanks to the ultra-low interest rate policies of the Federal Reserve.

The following is one example of how the low interest rate policies of the Fed have completely devastated the retirement plans of many elderly Americans….

You can understand the impact of the invisible tax on the elderly by watching the decline of interest income from $50,000 invested in a five-year Treasury obligation. As recently as 2000, this would have yielded about 6.15 percent and an interest income of $3,075 a year. Now the same obligation is yielding 0.7 percent and an interest income of $350 a year. This is the lowest yield on this maturity of Treasury debt since the Federal Reserve started keeping an index of the yields in 1953.

But it’s more than a low interest rate. It’s an income decline of nearly 89 percent in just 12 years.

And after you account for inflation, those that put money into savings accounts today are actually losing money.

Of course most Americans have not saved up much money for retirement anyway.  According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

Overall, a study conducted by Boston College’s Center for Retirement Research discovered that American workers are $6.6 trillion short of what they need to retire comfortably.

So needless to say, we have a major problem.

Baby Boomers are just starting to retire and the Social Security system is still solvent at the moment, and yet the number of elderly Americans that are experiencing financial problems is already soaring.

For example, between 1991 and 2007 the number of Americans between the ages of 65 and 74 that filed for bankruptcy rose by a staggering 178 percent.

Also, at this point one out of every six elderly Americans is already living below the federal poverty line.

So how bad are things going to be when Social Security collapses?

That is frightening to think about.

In the short-term, millions upon millions of retired Americans that are living on fixed incomes are going to be absolutely crushed by the inflation that QE3 is going to cause.

Just like we saw with QE1 and QE2, a lot of the money from QE3 is going to end up in agricultural commodities and oil.  That means that retirees (and all the rest of us) are going to end up paying more for food at the supermarket and gasoline at the pump.

But those on fixed incomes are not going to see a corresponding increase in their incomes.  That means that their standards of living will go down.

Things are tough for retirees right now, but they are going to get a lot tougher.

Right now, there are somewhere around 40 million senior citizens.  By 2050 that number is projected to increase to 89 million.

So how will our society cope with more than twice as many senior citizens?

Sadly, we will likely never get to find out.

The truth is that our system is almost certainly going to totally collapse long before then.

We are rapidly approaching a financial crisis unlike anything we have ever seen before in U.S. history, and the foolish policies of the Federal Reserve just keep making things even worse.

Barack Obama Is Wrong: 18 Facts Which Prove That Illegal Immigration Is An Absolute Nightmare For The U.S. Economy

Barack Obama has declared that “immigration reform is an economic imperative“, and is promising to do his best to get an immigration bill pushed through Congress this year.  But will “legalizing” all of the illegal immigration that has taken place over the last several decades improve the struggling U.S. economy or will it actually make our economic problems worse?  One of the favorite tricks of top politicians is to promise that the economy is going to improve if we just support what it is that they are currently pushing.  Hopefully the Americans people will not buy the nonsense that Obama is spewing.  The truth is that Barack Obama is wrong about the economic impact of illegal immigration.  Illegal immigrants don’t do jobs that Americans “don’t want” to do.  A million Americans recently showed up to apply for a job at McDonald’s.  That is how desperate Americans are for work these days.  Please don’t try to tell me that there aren’t millions of Americans out there that would not pick fruit for minimum wage.  The millions upon millions of illegal immigrants in this country are stealing jobs, they are depressing wages in a whole host of industries and they are a huge factor in the erosion of the middle class.  Millions of middle class American families can’t afford to provide for their families anymore and are losing their homes, drowning in debt or going bankrupt.  Rather than what Barack Obama is proposing (which is to essentially “legalize” illegal immigration), we need an immigration policy that makes sense and that protects American jobs.

Before we go any further, it is important for me to make a few points.  It is not a bad thing that people want to come to this nation from another country.  A lot of people that want to come to the United States are really hard working and have really solid character.  This nation has a long tradition of immigrants arriving to build a better life here. At different times this country will need different levels of immigration, but we will always need new immigrants.  People on one side of a border are not more “valuable” than people on another side of a border.  There is a reason why our founding fathers believed that “all men are created equal”.  In every nation on earth there are really wonderful people.  We should love all men, women and children no matter where they were born and no matter what they look like.  God created us all and He loves us all dearly.

The reason I went into all that is because of the way politics is played in America in 2011.  The moment that anyone suggests that there might be a problem with illegal immigration they are immediately branded with all kinds of horrible labels.  To put a horrible label on someone that is completely and totally untrue just to score political points is absolutely despicable.

The funny thing is that some of the organizations that denounce others the loudest should actually be examining themselves.  For example, one of the largest pro-illegal immigration organizations is called “La Raza”, which literally means “The Race” (as if we all couldn’t figure it out).  Perhaps it is time for them to come up with a new name.

Look, we all have to start learning to love each other.  If not, our society is going to continue to break down.

A majority of the American people (yes, that is what the polls show) are not against illegal immigration because they “hate” another group of people.  Rather, they just want all immigrants to go through the “front door” and they want the government to be sensitive to changing economic conditions.

The sad truth is that the U.S. government has absolutely refused to secure the U.S. border with Mexico for decades, and this has allowed millions upon millions of criminals, drug dealers and gang members to cross freely into the United States.  In addition, by refusing to secure the border we have allowed new diseases to spread unchecked into this country.

Meanwhile, the law abiding people that would like to get into this country legally are put through absolute hell.  I used to practice law and I have filled out immigration forms.  The process is a complete and total nightmare.

So we have been making it really easy for law breakers to sneak in the back door of our country and we have been making it really hard for law abiding people to get in the front door.

What in the world could be wrong about wanting to fix that?

Once many illegal immigrants arrive in the United States they either try to make a living legally (by directly competing with blue collar American workers  for jobs and driving their wages down) or illegally by selling drugs or being involved in other kinds of criminal activity.

Apparently Barack Obama believes that this kind of behavior should be rewarded with a “path to citizenship”.

The vast majority of illegal immigrants pay absolutely no federal or state income taxes and they never intend to.  At the same time, they seem more than happy to take advantage of the free social services and benefits offered to them.  In fact, stories of how “good” life in America is just encourages more and more immigrants to come to the United States illegally.

We need an immigration policy that insists that everyone come in through the front door.

Is there anyone out there that cannot agree with that?

We also need to set immigration levels that our economy can handle.

Right now our economy is struggling.  Millions upon millions of Americans are out of work.  44 million Americans are on food stamps.  47 million Americans are living in poverty.  We just can’t take in a whole lot of extra workers right now.

You would think that would just be common sense.

But instead, Barack Obama wants to grant amnesty to all of the illegal immigrants that are already here and put them on a path to citizenship.

Wow – do you think that might embolden millions more illegal immigrants to come flooding in?

Barack Obama is against a border fence.  He says we don’t need it.

Meanwhile, thousands more illegal immigrants pour into this country every single day.

Barack Obama supports all of the “sanctuary cities” that have openly declared that they are not going to enforce our immigration laws.

So where do you think illegal immigrants are going to flock to?  The truth is that word about these “sanctuary cities” gets around really fast.  If you live in one of these cities, then you probably know all about it.

If Barack Obama gets his way, nobody will be breaking our immigration laws because essentially there will not be any more immigration laws.

Not that George W. Bush was any better.  He was an absolute disaster on immigration as well.

The truth is that our immigration policy has been slowly eroding the U.S. middle class for many decades.

But according to Barack Obama, we desperately need to implement his “immigration reform” plan for the good of the middle class….

“One way to strengthen the middle class in America is to reform the immigration system, so that there is no longer a massive underground economy that exploits a cheap source of labor while depressing wages for everybody else.”

What a joke.  The reality is that illegal immigration hurts that U.S. middle class and it is severely damaging to the U.S. economy.  Because of illegal immigration, every single day wages are lost, taxes don’t get collected, hospitals provide “free health care” for which they are never paid, huge criminal gangs of foreigners are roaming our streets and the cost of providing social services to illegal aliens is slowly bankrupting state and local governments.

The following are 18 facts which prove that illegal immigration is an absolute nightmare for the U.S. economy….

#1 Illegal immigrants take jobs away from American citizens. According to a review of U.S. Bureau of Labor Statistics and Census Bureau data, legal and illegal immigrants gained over a million additional jobs between 2008 and 2010 even as millions of American citizens were losing their jobs during that same time period.

#2 The majority of our immigrants now sneak in through the “back door” that the federal government purposely leaves open.  Thanks to the negligence of the federal government, far more people move into the United States illegally than come in through the legal immigration process.  This has got to change.

#3 Illegal immigrants generally don’t pay taxes.  The vast majority of illegal aliens would never even dream of paying income taxes, but Mexicans living in America send billions upon billions of dollars out of the United States and back to Mexico every single year.

#4 Although illegal aliens pay next to nothing in taxes, they have no problem receiving tens of billions of dollars worth of free education benefits, free health care benefits, free housing assistance and free food stamp benefits.  Many communities in the United States now openly advertise that they will help illegal aliens with these things.

#5 The cost of educating the children of illegal immigrants is staggering. It is estimated that U.S. taxpayers spend $12,000,000,000 a year on primary and secondary school education for the children of illegal immigrants.

#6 Thanks to illegal immigration, California’s overstretched health care system is on the verge of collapse.  Dozens of California hospitals and emergency rooms have shut down over the last decade because they could not afford to stay open after being endlessly swamped by illegal immigrants who were simply not able to pay for the services that they were receiving.  As a result, the remainder of the health care system in the state of California is now beyond overloaded.  This had led to brutally long waits, diverted ambulances and even unnecessary patient deaths.  Sadly, the state of California now ranks dead last out of all 50 states in the number of emergency rooms per million people.

#7 It was estimated that there were approximately 7.7 million illegal aliens employed by U.S. employers during 2008.  How much better would our economy look if all of those jobs were being filled by American workers?

#8 The region along the U.S./Mexico border is now an open war zone. Just across the U.S. border, the city of Juarez, Mexico is considered to be one of the most dangerous cities on the entire planet because of the brutal drug war being waged there. In fact, Juarez has now become the murder capital of the western hemisphere.  Much of that violence has begun to spill over into areas of the southwestern United States.

For example, a while back NPR described one incident in the Juarez Valley that involved American citizens….

A couple of weeks ago, gunmen in the Juarez Valley killed the Mexican relative of a Fort Hancock high school student. When the student’s family in Fort Hancock heard about it, they crossed the border at 10 a.m. to see the body, and took the student with them.

“By 10:30, they had stabbed the relatives that went with him, which included his grandparents, with an ice pick,” says school superintendent Jose Franco. “My understanding is that the gentleman is like 90 years old, and they poked his eyes out with an ice pick. I believe those people are still in intensive care here in a hospital in the U.S.”

#9 A substantial percentage of young illegal immigrants end up in gangs.  U.S. authorities say that there are now over 1 million members of criminal gangs operating inside the United States. According to federal statistics, these 1 million gang members are responsible for up to 80% of the violent crimes committed in the U.S. each year.  Latino gangs made up primarily of illegal aliens are responsible for much of this violence.

According to the Center for Immigration Studies, some of the most notorious gangs in the country are made up almost entirely of illegal immigrants….

“Gang investigators in Virginia estimate that 90% of the members of MS-13, the most notorious immigrant gang, are illegal immigrants.”

#10 The “18th Street Gang” is certainly giving MS-13 a run for their money.  It is believed that the 18th Street Gang has thousands of members in the city of Los Angeles alone. In fact, the gang has become so notorious that there are even rumors that some police officers in Los Angeles simply will not venture into the areas most heavily controlled by the 18th Street gang.

The following is what Wikipedia says about the 18th Street Gang….

A US Justice Department report from 2009 estimates that the 18th Street gang has a membership of some 30,000 to 50,000 with 80% of them being illegal aliens from Mexico and Central America and is active in 44 cities in 20 states. Its main source of income is street-level distribution of cocaine and marijuana and, to a lesser extent, heroin and methamphetamine. Gang members also commit assault, auto theft, carjacking, drive-by shootings, extortion, homicide, identification fraud, and robbery.

#11 The “drug war” in northern Mexico is one gigantic bloodbath. The Mexican government says that as many as 28,000 people have been slaughtered by the drug cartels since 2007.  A very significant percentage of those deaths have happened in areas right along the U.S. border, and yet our federal government still sees no reason to get serious about border security.

#12 It is an open secret that Mexican drug cartels are openly conducting military operations inside the United States.  The handful of border patrol agents that we have guarding the border are massively outgunned and outmanned.

One agent who patrols the border and who asked to remain anonymous told Fox News the following….

“To say that this area is out of control is an understatement.”

A different federal agent put it this way in an email to Fox News….

“Every night we’re getting beaten like a pinata at a birthday party by drug, alien smugglers.”

#13 Federal border officials say that Mexican drug cartels have not only set up shop on U.S. soil, but they are actually maintaining lookout bases in strategic locations in the hills of southern Arizona.  If you go to Arizona today, there are actually signs that have been put up by the federal government warning American citizens not to venture into certain wilderness routes that are used by Mexican drug cartels to bring in drugs.

#14 The drug war being waged on both sides of the border is so violent that it is almost unimaginable.  For example, one very prominent Mexican assassin known as “the soupmaker” has confessed that he made approximately 300 bodies disappear by dissolving them in acid baths.  But right now there is essentially nothing that is preventing the next “soupmaker” from crossing the U.S. border and moving into your neighborhood.

#15 Arizona police are being openly warned by the Mexican drug cartels that if they try to interfere with the drug traffic in their area that they will be “taken out” by drug cartel snipers.

#16 While the U.S. military endlessly hunts for “members of al-Qaeda” in the caves of Afghanistan and on the streets of Iraqi cities, a very real threat has been building just south of the border.  Over the past 15 to 20 years, Hezbollah has set up operations all over Mexico, Central America and South America.  Hezbollah is reportedly making a lot of money in the drug trade and in trafficking illegal aliens.  Sadly, our government is largely ignoring this.

#17 Each year, it costs the states billions of dollars to incarcerate illegal immigrant criminals that should have never been allowed into the country in the first place. It is estimated that illegal aliens make up approximately 30 percent of the population in federal, state and local prisons and that the total cost of incarcerating them is more than $1.6 billion annually.

#18 The drug cartels and the gangs always seem to be a couple steps ahead of our agents along the border. Approximately 75 tunnels along the U.S. border with Mexico have been discovered by law enforcement authorities in the last four years alone.

How much do you think all of this crime, gang violence and drug cartel activity is costing our economy?

Why won’t the federal government do what the Constitution requires and secure the border?

Oh, but Barack Obama says that he has a plan.

He says that he is going to save the day.

The following is how Barack Obama describes his plan…

“We are not going to ship back 12 million people, we’re not going to do it as a practical matter. We would have to take all our law enforcement that we have available and we would have to use it and put people on buses, and rip families apart, and that’s not who we are, that’s not what America is about. So what I’ve proposed… is you say we’re going to bring these folks out of the shadows. We’re going to make them pay a fine, they are going to have to learn English, they are going to have to go to the back of the line…but they will have a pathway to citizenship over the course of 10 years.”

So how many illegal immigrants do you think are going to step forward to pay a fine?

One percent?

How many of them do you think are going to show up for English classes?

Who is going to make them do it?

Obama?

Are we going to have law enforcement officials running around trying to collect fines from illegal immigrants and trying to get them to attend their English lessons?

According to Obama, the millions upon millions of illegal immigrants that are in this country are going to be glad to willingly do the following….

1) Admit they broke the law

2) Pay back taxes and a fine

3) Learn English

4) Be willing to undergo background checks before starting the legalization process

Those four points are taken directly from Obama’s plan.

So what are illegal immigrants going to do when this plan is passed?

99 percent of them are going to laugh and they are just going to keep on doing what they have been doing.

Large numbers of illegal immigrants are already enjoying the “high life” in the dozens of “sanctuary cities” across the United States.

The following is how the Ohio Jobs & Justice PAC defines sanctuary cities….

Generally, sanctuary policies instruct city employees not to notify the federal government of the presence of illegal aliens living in their communities. The policies also end the distinction between legal resident aliens and illegal aliens–so illegal aliens often benefit from taxpayer funded government services and programs too.

Sounds like a good deal to me.

Can I sign up for that plan?

After all, who wouldn’t want to earn all income tax-free and yet enjoy unlimited government services?

Today we are being told that we need to make life as comfortable as possible for the waves of illegal immigrants that are coming in.  In fact, Barack Obama says that all of us need to make sure that our kids are learning how to speak Spanish….

“I don’t understand when people are going around worrying about, we need to have English only. They want to pass a law, we just, we want English only…Now, I agree that immigrants should learn English, I agree with this. But understand this, instead of worrying about whether immigrants can learn English, they’ll learn English, you need to make sure your child can speak Spanish.”

All of this is utter insanity.

The cold, hard reality of the matter is that we have tightly secured the border between South Korea and North Korea for over 50 years and we could secure our own borders if we really wanted to.

But instead, we continue to leave our border with Mexico completely wide open. Thousands of criminals, gang members and drug pushers continue to come in completely unchecked every single day.

Meanwhile, the rest of us have to subject ourselves to some of the most humiliating “security measures” imaginable before we are even allowed to get on to an airplane.

It doesn’t make a whole lot of sense, does it?

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