Debt

Why Is NASA Using The Discovery Of 7 New Earth-Sized Planets To Promote The Idea That Alien Life May Exist?

February 22, 2017February 22, 2017 by Michael

NASA told us in advance that there would be a huge announcement on Wednesday, and it certainly was not a disappointment. NASA’s declaration that 7 new Earth-sized planets had been discovered approximately 40 light years away from our sun made headlines all over the globe, and the Internet immediately started buzzing with lots of discussions about the possibility that these newly discovered worlds may have life on them. This isn’t the kind of thing that I normally write about on The Economic Collapse Blog, but some of the things that were being said by the scientists involved in this discovery seemed quite odd. It is one thing to say that some new planets have been found, but it is another thing entirely to start speculating about life on those planets. With each new discovery that is made, why does it always seem like NASA is trying to promote the idea that alien life may exist somewhere out there? Could it be possible that they are trying to mentally prepare us for something?

After the announcement was made on Wednesday, I went to the official NASA website, and sure enough in the article that had just been posted about this new discovery there was discussion about the possibility of alien life…

NASA’s Spitzer Space Telescope has revealed the first known system of seven Earth-size planets around a single star. Three of these planets are firmly located in the habitable zone, the area around the parent star where a rocky planet is most likely to have liquid water.

The discovery sets a new record for greatest number of habitable-zone planets found around a single star outside our solar system. All of these seven planets could have liquid water – key to life as we know it – under the right atmospheric conditions, but the chances are highest with the three in the habitable zone.

“This discovery could be a significant piece in the puzzle of finding habitable environments, places that are conducive to life,” said Thomas Zurbuchen, associate administrator of the agency’s Science Mission Directorate in Washington. “Answering the question ‘are we alone’ is a top science priority and finding so many planets like these for the first time in the habitable zone is a remarkable step forward toward that goal.”

If this discovery is confirmed, it is definitely quite remarkable.

But why engage in speculation about whether or not we are alone in the universe?

You can view a YouTube video from NASA about this new discovery right here. As you can see from the video, the scientists involved in this project are extremely excited…

Of course we must acknowledge that nobody has actually seen any of these planets. Based on data that astronomers have been able to observe, they assume that those seven planets must be there. The following comes from Smithsonian Magazine…

To detect these other worlds, Gillon and his team used the so-called “transit” method, one of several techniques for hunting planets. Other techniques include measuring the wobble of a star caused by a planet’s gravitational pull, observing how light from a distant star bends around a planet or capturing a direct image of the planet.

The power of the transit method comes from its simplicity: Astronomers measure the level of light from a star, and look for any dips in brightness that could be the result of a planet passing between the star and Earth. By seeing how much and how often the level of light is reduced during each “transit” of the planet in front of the star, astronomers can then estimate its size and orbit.

So it is entirely possible that scientists may be misinterpreting the data.

Someday we may find out that there are more planets in the system, or we may discover that there aren’t any planets there at all.

But assuming that those planets are actually there, what has astronomers buzzing more than anything else is the possibility that they may contain “life”…

“Looking for life elsewhere, this system is probably our best bet as of today,” study co-author Brice-Olivier Demory, a professor at the Center for Space and Habitability at the University of Bern in Switzerland, said in a statement.

The key is that these planets appear to have the right conditions for water to exist. Without water, it is generally assumed that a planet would not be able to support life. The following comes from an article posted on the website of The Independent entitled “Nasa’s ‘holy grail’: Entire new solar system that could support alien life discovered“…

No other star system has ever been found to contain so many Earth-sized and rocky planets, of the kind thought to be necessary to contain aliens.

The researchers might soon be able to find evidence of life on the planets, they have said. British astronomer Dr Chris Copperwheat, from Liverpool John Moores University, who was part of the international team, said: “The discovery of multiple rocky planets with surface temperatures which allow for liquid water make this amazing system an exciting future target in the search for life.”

And of course NASA is not just looking at these planets in their obsessive search for alien life.

In fact, NASA is sending a probe to one of Jupiter’s moons named Europa specifically to search for alien life…

NASA believes there’s a gigantic ocean locked beneath its frozen surface and is planning to send a robotic craft to see if aliens are swimming in it.

This week, the space agency has revealed its three goals for the upcoming search for life.

It wrote: “The primary goal is to search for evidence of life on Europa.

“The other goals are to assess the habitability of Europa by directly analyzing material from the surface, and to characterize the surface and subsurface to support future robotic exploration of Europa and its ocean.”

So why is NASA so sure that alien life must be out there somewhere?

Do they know things that they aren’t disclosing to the rest of us?

As a society, we are constantly being conditioned to the idea that “alien life” must exist. This is one of the major themes in our movies, our television shows and our video games.

And now the scientific community has fully embraced this idea.

Could it be possible that the stage is being set for “the great deception” that authors such as L.A. Marzulli are constantly warning us about?

If someday a big announcement is made that “we are not alone” in the universe, humanity will already have been heavily conditioned to accept it as the truth.

Unfortunately, we live at a time when deception is running rampant, and that is why it is absolutely critical to not let someone else do your thinking for you.

Why Melania Trump Leading The Public In The Lord’s Prayer At A Rally In Florida Was A Historic Event

February 19, 2017February 19, 2017 by Michael

We just witnessed Melania Trump’s finest moment as First Lady so far. After a week in which her husband declared war on the mainstream media, Melania absolutely electrified a huge crowd at a rally in Melbourne, Florida by reciting the Lord’s Prayer. What Donald Trump had to share afterwards was remarkable as well, but that night will always be remembered for what Melania did. After beginning with the phrase “let us pray”, Melania stunned the entire world by slowly but carefully leading the crowd in the Lord’s Prayer, and it is being reported that the assembled throng responded to her prayer with “thunderous applause“.

She did not pronounce all of the words perfectly, but that didn’t matter.

What matters is that her courage enabled her to create the most powerful moment that we have seen from a First Lady in decades. The following is from a transcript of her remarks…

Our Father who art in heaven, hallowed is your name. Thy kingdom come, thy will be done, on earth as it is in heaven. Give us this day our daily bread, and forgive us our trespasses as we forgive those who trespasses against us.

‘Lead us not into temptation, but deliver us from evil. For thine is the kingdom and the power and the glory forever and ever. Amen.

If you have not seen footage of this incredible moment yet, you can watch it right here…

One of the primary reasons why this moment evoked so much emotion is because the Lord’s Prayer is undeniably a Christian prayer.

Over the decades, our politicians have become very adept at speaking of “god” in a very generic sense. Even when they pray, most of our politicians are careful to use universal language that could apply to almost any religion.

That is why what Melania Trump did was so radical. By reciting the Lord’s Prayer, she was clearly identifying herself as a Christian, and there was absolutely no question about who she was addressing.

It was such a simple prayer, but needless to say it sent liberals into a social media frenzy. They started calling her every name in the book and used some of the most foul language imaginable.

Some of the more moderate liberals objected to the prayer on the basis of separation of church and state, but nowhere in the Constitution does it say that our elected officials cannot be Christian. And nowhere in the Constitution does it say that they cannot speak on matters of faith.

In fact, if we are to have any hope of turning this nation around we desperately need the favor of God, and that is why what Melania Trump did was so important.

In her prayer, she asked for God’s will to be done on Earth just as it is done in heaven.

If we truly were to follow that course, there would be no limits to what we could achieve as a people.

But in order for that to happen, we must completely change direction as a nation, and Melania’s prayer was also a prayer of repentance.

The phrase “forgive us our trespasses as we forgive those who trespasses against us” was not a perfect quotation of the Lord’s Prayer, but it was immensely powerful.

By asking for forgiveness, that implies that we have done things that we need to be forgiven for. And without a doubt, that list is very long. We have killed tens of millions of babies since Roe v. Wade was decided in 1973, we produce more pornography than the rest of the world combined, sexual immorality of every kind you can imagine is running rampant in our society, our entertainment is mostly pure filth, and we have pushed God and His ways out of almost every corner of public life.

If we want to get on the right track as a country, one of the very first things that should be done is to defund Planned Parenthood. The Republicans finally have control of the White House, the Senate and the House of Representatives, and so there are no more excuses.

If Donald Trump and the Republicans truly are “pro-life”, Planned Parenthood will be defunded in 2017.

But if it doesn’t happen, then they will share in the accountability for the Great American Holocaust, and the blood of every baby that is murdered from now on will be on their hands.

That is why this is one of the most important moments in American history. If we don’t turn around now, I don’t think that we ever will, and choosing to go down the same path that we are currently on will only lead us to judgment.

So that is why I was so thrilled with Melania’s prayer. By boldly identifying themselves as Christians, the Trumps are giving those of us that also consider ourselves to be Christians hope that a new day is ahead.

But it can’t just be words. That is why what happens over the next few months is so incredibly important.

And of course the radical left is going to fight Donald Trump and his team every step of the way. About a week ago, I wrote about the army of more than 30,000 activists that Barack Obama is commanding from his new home less than two miles away from the White House. Well, now we have learned that Organizing for Action is going to be working with a network of other radical groups to disrupt town hall meetings all over the nation…

Progressive activists continue to take a cue from the Tea Party movement with plans to funnel into town hall meetings this week while members of Congress are at home and make a ruckus.

Groups, including President Barack Obama’s Organizing for Action, are turning to a newer organization, Indivisible Guide, to coordinate tactics.

Launched in December by former Congressional staffers, Indivisible is providing activists with training manuals, such as one that explains how to have a ‘successful’ town hall.

The progressives hate Trump and they want to keep this nation going down the exact same road that we were heading under Barack Obama.

We are literally in a battle for the future of America, and the outcome is still to be determined.

But what Melania Trump did when she stepped behind that podium was a major step in the right direction, and hopefully we will be seeing much more of that from her and Donald in the future.

11 Deeply Alarming Facts About America’s Crumbling Infrastructure

February 16, 2017 by Michael

No matter what your particular political perspective is, if there is one thing that virtually everyone in the United States can agree upon it is the fact that America’s infrastructure is crumbling. Previous generations of Americans conquered an entire continent and erected the greatest system of infrastructure that the world had ever seen, but now thousands upon thousands of those extremely impressive infrastructure projects are decades old and in desperate need of repair or upgrading. The near catastrophic failure of the Oroville Dam is a perfect example of what I am talking about. We should be constructing the next generation of infrastructure projects for our children and our grandchildren, but instead we are in such sorry shape that we can’t even keep up with the maintenance and upkeep on the great infrastructure projects that have been handed down to us.

Once upon a time nobody on the entire planet could even come close to matching our infrastructure, but now our crumbling infrastructure has become a joke to much of the rest of the industrialized world. Sadly, this is just another symptom of our long-term economic collapse. We simply are not able to put as much of our money toward infrastructure as previous generations of Americans did, and as a result we have a giant mess on our hands. The following are 11 deeply alarming facts about America’s crumbling infrastructure…

#1 According to the American Road and Transportation Builders Association, nearly 56,000 bridges in the United States are currently “structurally deficient”. What makes that number even more chilling is the fact that vehicles cross those bridges a total of 185 million times a day.

#2 More than one out of every four bridges in the United States is more than 50 years old and “have never had major reconstruction work”.

#3 America does not have a single airport that is considered to be in the top 25 in the world.

#4 The average age of America’s dams is now 52 years.

#5 Not too long ago, the American Society of Civil Engineers gave the condition of America’s dams a “D” grade.

#6 Overall, the American Society of Civil Engineers said that the condition of America’s infrastructure as a whole only gets a “D+” grade.

#7 Congestion on our highways costs Americans approximately 101 billion dollars a year in wasted fuel and time.

#8 According to the U.S. Department of Transportation, over two-thirds of our roads are “in dire need of repair or upgrades”.

#9 In order to completely fix all of our roads and bridges, it would take approximately 808 billion dollars.

#10 Federal spending on infrastructure has decreased by 9 percent over the past decade.

#11 According to Bloomberg, it is being projected “that by 2025, shortfalls in infrastructure investment will subtract as much as $3.9 trillion from U.S. gross domestic product.”

The quality of our infrastructure affects all of our lives every single day. For instance, we all simply take it for granted that safe, clean drinking water is going to come out of our taps, but recent events have shown that is not necessarily always going to be the case.

Just ask the residents of Flint, Michigan.

Water pipes, sewer systems and water treatment facilities all over the nation are aging and are in desperate need of repair. Of course the exact same thing could be said about our power grid. It was never intended to handle so many people, and on the hottest days of the summer the strain on the grid is very evident.

And of course the power grid is exceedingly vulnerable to an electromagnetic pulse event, and this is something that I covered in my book on getting prepared. It has been projected that it would only cost a couple billion dollars to harden the grid against an EMP event, but our politicians refuse to spend the money.

Meanwhile, President Trump is completely correct when he says that our airports look like something that you would see in a third world country. Most of our airports are at least several decades old, and they are definitely showing their age.

But things are even worse when you look at other systems of mass transit around the country. While other nations such as Japan and China are investing huge amounts of money into high speed rail, we are doing next to nothing even though what we currently have is absolutely pathetic.

I could go on and talk about our ports, schools, waterways, parks, etc. but I think that you get the point.

President Trump’s instincts are right on the money when he says that he wants to spend a trillion dollars on infrastructure. Without a doubt, we desperately need it.

The problem is that we are flat broke.

We are 20 trillion dollars in debt, and we are adding more than a trillion dollars to that total every year.

So where are we going to get the money?

It is easy for liberals to say that we should raise taxes, but how much more are you going to squeeze out of U.S. consumers? Two-thirds of the country is living paycheck to paycheck, and we just learned that U.S. household debt has risen to a grand total of 12.58 trillion dollars.

Once upon a time, America was the wealthiest nation on the entire planet and we could afford to construct bold, new infrastructure projects from sea to shining sea.

But today we have the biggest mountain of debt in the history of the world and we can’t even afford to repair what we already have.

When I speak of our long-term economic collapse, this is precisely the sort of thing that I am talking about. We have clearly been in decline for a very long time, and anyone that would suggest otherwise is simply not being honest with you.

This Is One Of The Big Reasons Why So Many Families Are Feeling Extreme Financial Stress

February 15, 2017February 15, 2017 by Michael

When the cost of living rises faster than paychecks do year after year, eventually that becomes a very big problem. For quite some time I have been writing about the shrinking middle class, and one of the biggest culprits is inflation. Every month, tens of millions of American families struggle to pay the bills, and most of them don’t even understand the economic forces that are putting so much pressure on them. The United States never had a persistent, ongoing problem with inflation until the debt-based Federal Reserve system was introduced in 1913. Since that time, we have had non-stop inflation and the U.S. dollar has lost more than 98 percent of its value. If our paychecks were increasing faster than inflation this wouldn’t be a problem, but in recent years this has definitely not been the case for most Americans.

And unfortunately inflation is starting to accelerate once again. In fact, it is being reported that inflation rose at the fastest pace in four years in January…

The prices Americans pay for goods and services surged in January by the largest amount in four years, mostly reflecting a rebound in the cost of gasoline that’s taking a bigger chunk out of household incomes.

The consumer price index, or cost of living, rose by a seasonally adjusted 0.6% in January, the government said Wednesday.

Meanwhile, our incomes have been incredibly stagnant. In fact, we just learned that median household income did not go up at all during 2016.

This is one of the reasons why we consistently see families fall out of the middle class month after month. Even if you keep the same job year after year, your standard of living is going to steadily go down unless your pay goes up.

The things that we all spend money on month after month just keep going up in price. I am talking about food, housing, medical care and other essentials. If there is one thing that we can always count on, it is the fact that things are going to cost more tomorrow than they do today.

Let’s talk about food for a moment. Whenever I go to the grocery store, I am almost always shocked. I still remember a time when I could get everything that I needed for an entire week for about 20 bucks, but these days you can’t even fill up one cart for 100 dollars.

That is because food prices have been rising aggressively for many years. The following is a list that was posted on The Economic Policy Journal that shows how much some food and grocery items have increased over the past decade…

1. Tobacco and smoking products

-Price increase: 90.4%

2. Margarine

-Price increase: 63.6%

3. Uncooked ground beef

-Price increase: 46.3%

4. Shelf stable fish and seafood
-Price increase: 45.0%

5. Prescription drugs
-Price increase: 43.5%

6. Rice, pasta, cornmeal
-Price increase: 40.3%

7. Bread
-Price increase: 38.9%

8. Snacks
-Price increase: 38.4%

9. Miscellaneous poultry including turkey
-Price increase: 37.0%

10. Apples
-Price increase: 36.6%

11. Frankfurters
-Price increase: 35.8%

12. Canned vegetables
-Price increase: 35.3%

13. Salt and other seasonings and spices
-Price increase: 34.0%

14. Miscellaneous fats and oils including peanut butter
-Price increase: 34.0%

15. Miscellaneous processed fruits and vegetables including dried
-Price increase: 33.7%

16. Bacon and related products
-Price increase: 33.2%

17. Fresh whole chicken
-Price increase: 32.5%

18. Cakes, cupcakes, and cookies
-Price increase: 32.1%

19. Flour and prepared flour mixes
-Price increase: 32.1%

20. Canned fruits
-Price increase: 32.0%

And thanks to out of control government spending and reckless manipulation by the Federal Reserve, we have come to a time when inflation is starting to accelerate once again.

According to John Williams of shadowstats.com, if honest numbers were being used the government would be telling us that inflation is rising at a 6 percent annual rate for the first time since 2011.

At the same time, evidence is mounting that U.S. consumers are simply tapped out. Previously, I have explained that interest rates are going up, consumer bankruptcies are rising, and lending standards for consumers are really tightening up.

All of those are things we would expect to see if a new recession was starting.

And today we learned that the number of Americans refinancing their homes has fallen to the lowest level that we have seen since 2009…

A slowdown in refinancing pulled down the total mortgage application volume last week as changes to certain government-loan programs made refinances less lucrative. Refinance volume now stands at its lowest level since June 2009.

If you will remember, we also saw a slowdown in mortgage refinancing just before the great financial crisis of 2008.

For mortgage applications overall, they are now down almost 31 percent from where they were a year ago…

Total mortgage application volume fell 3.7 percent on a seasonally adjusted basis last week from the previous week, and are nearly 31 percent lower than the same week a year ago, according to the Mortgage Bankers Association.

A 31 percent decline in a single year is catastrophic.

If this continues, it won’t be too long before everyone is talking about a new housing crash.

And we also learned this week that FHA mortgage delinquencies increased during the fourth quarter “for the first time since 2006”…

Federal Housing Administration mortgage delinquencies jumped in the fourth quarter for the first time since 2006, the Mortgage Bankers Association reported Wednesday. The FHA insures low down-payment loans and is a favorite among first-time homebuyers.

The seasonally adjusted FHA delinquency rate increased to 9.02 percent in the fourth quarter from 8.3 percent in the third quarter, MBA data show.

So many things are happening right now that we have not seen happen in many years, but most people are choosing not to see the red flags that are popping up all around us.

None of our long-term economic problems have been fixed. And even though Donald Trump won the election, the truth is that our economy is in the worst shape it has been since the last financial crisis. I continue to encourage all of my readers to get prepared for very hard times, but just like back in 2007 we are experiencing a wave of tremendous optimism right now and most people think that the party can somehow continue indefinitely.

Whether Donald Trump won the election or not, the truth is that a major economic downturn was going to come anyway. You see, Donald Trump is not some magician that can just wave a wand and somehow make the consequences of decades of very foolish decisions instantly disappear.

We have been on the biggest debt binge in human history, and there is going to be a great price to pay when this immense debt bubble finally bursts.

Unfortunately, most people are not going to acknowledge the truth until it is too late.

Recession 2017? Things Are Happening That Usually Never Happen Unless A New Recession Is Beginning

February 8, 2017February 8, 2017 by Michael

Is the U.S. economy about to get slammed by a major recession? According to Gallup, U.S. economic confidence has soared to the highest level ever recorded, but meanwhile a whole host of key economic indicators are absolutely screaming that a new recession is beginning. And if the U.S. economy does officially enter recession territory in 2017, it certainly won’t be a shock, because the truth is that we are well overdue for one. Donald Trump has inherited quite an economic mess from Barack Obama, and it was probably inevitable that we were headed for a significant economic downturn no matter who won the election.

One of the key indicators to watch is average weekly hours. When the economy shifts into recession mode, employers tend to start cutting back hours, and that is happening right now. In fact, as Graham Summers has pointed out, we just witnessed the largest percentage decline in average weekly hours since the recession of 2008…

In addition to the decline in hours, Summers has suggested that there are a number of other reasons to believe that a new recession is here…

The fact is that the GDP growth of 4%-5% is not just around the corner. The US most likely slid into recession in the last three months. GDP growth collapsed in 4Q16, with a large portion of the “growth” coming from accounting gimmicks.

Consider the following:

Tax receipts indicate the US is in recession.

Gross private domestic investment indicates were are in a recession.

Retailers are showing that the US consumer is tapped out (see AMZN’s recent miss).

UPS, another economic bellweather, dramatically lowered 2017 forecasts.

To me, even more alarming is the tightening of lending standards. In our debt-based economy, the flow of credit is absolutely critical to economic growth, and when credit starts to get tight that almost always leads to a recession.

So the fact that lending standards have now tightened for medium and large sized firms for six quarters in a row is very bad news. The following comes from Business Insider…

“Although modest over the past couple of quarters, it is still worth noting that this is now the sixth quarter in succession that standards have tightened for large and medium sized firms,” Deutsche Bank economist Jim Reid wrote in a research note to clients.

“This usually only happens in recessions.”

Reid is 100 percent correct on this point. This is precisely the kind of thing that we would expect to see if a new recession was beginning, and if this trend continues it is hard to imagine that the U.S. economy will be able to continue to grow.

And it is interesting to note that job growth at S&P 500 companies has gone negative for the first time since the last recession, and so large firms are definitely starting to feel the pressure.

Simultaneously, lending standards are also tightening up for consumers…

“The most notable tightening in standards though was in consumer loans,” the Fed said. “During the quarter, banks reported an 8.3% net tightening in credit standards for credit cards and 11.6% net tightening for auto loans.”

US consumer spending accounts for more than two-thirds of economic activity and is thus a key driver of growth in the world’s largest economy.

Those numbers for credit cards and auto loans are major red flags.

It is very simple. Tighter credit means less economic activity which means slower economic growth. The U.S. economy grew at a dismal 1.9 percent annual rate during the 4th quarter of 2016, and it would be absolutely no surprise if we end up with a negative number for the first quarter of 2017.

One of the big reasons why lending standards are tightening is because bankruptcies are rising.

As I reported the other day, consumer bankruptcies just rose on a year-over-year basis in back to back months for the first time in almost seven years. Commercial bankruptcies had already been rising on a year-over-year basis throughout 2016, and so the fact that consumer bankruptcies have now joined the party is a very bad sign.

And we have also just learned that real median household income declined in 2016…

Its official! The spectacular Obama/Fed “recovery” produced no increase in real medin household income in 2016 (the last year of Obama’s reign of [economic] error). In fact, real median annual household income in December 2016 ($57,827) was 0.9 percent lower than in December 2015 ($58,356).

Yes, I understand that there is a tremendous amount of optimism out there right now because of Donald Trump.

But the truth is that it is literally going to take some sort of an economic miracle to avoid a recession.

And if a recession is going to happen anyway, the Trump administration should want it to occur as quickly as possible.

You see, if a recession starts a year from now, it will be much more difficult for Trump to blame it on Obama. But if a recession starts right now, he will definitely be able to argue that it happened because of the mess that he inherited from the last administration.

In addition, the sooner the next recession ends the sooner the next recovery can begin. If a recession is still going on during the 2020 campaign, that would be really bad for Trump, but if a recovery is well underway by then that would be really good for his chances.

If you doubt this, just go back and look at the 1984 campaign. After a very difficult recession, the U.S. economy bounced back strongly and Ronald Reagan was able to ride that momentum to an easy victory.

So this may sound very strange to many of you, but the truth is that if a new recession is coming Trump supporters should want it to happen as rapidly as possible.

Unfortunately, once a new recession begins it may not play out like recessions normally do. The U.S. government is 20 trillion dollars in debt, we are in the midst of one of the biggest stock market bubbles in history, and our planet is becoming more unstable with each passing day. So even though Trump is in the White House and Obama is gone, let there be no doubt that a catastrophic economic crisis could literally erupt at any moment. I continue to encourage my readers to do all that they can to get prepared, because those that are prepared in advance will have the best chance of successfully getting through what is coming.

Unfortunately, a lot of people out there seem to believe that all of our problems have somehow evaporated just because Donald Trump is now living in the White House.

That is simply not true, and we all need to be praying for guidance and wisdom for Trump and his team as they prepare to deal with the great challenges that are ahead for our nation.

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

February 5, 2017 by Michael

When 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.

Is It Just A Coincidence That The Dow Has Hit 20,000 At The Same Time The National Debt Is Reaching $20 Trillion?

January 25, 2017January 25, 2017 by Michael

The Dow Jones Industrial Average provides us with some pretty strong evidence that our “stock market boom” has been fueled by debt. On Wednesday, the Dow crossed the 20,000 mark for the first time ever, and this comes at a time when the U.S. national debt is right on the verge of hitting 20 trillion dollars. Is this just a coincidence? As you will see, there has been a very close correlation between the national debt and the Dow Jones Industrial Average for a very long time.

For example, when Ronald Reagan took office in 1991, the U.S. national debt had just hit 994 billion dollars and the Dow was sitting at 951. And as you can see from this chart by Matterhorn.gold via David Stockman, roughly that same ratio has held true throughout subsequent presidential administrations…

During the Clinton years the Dow raced out ahead of the national debt, but an “adjustment” during the Bush years brought things back into line.

The cold hard truth is that we have been living way above our means for decades. Our “prosperity” has been fueled by the greatest debt binge in the history of the world, and we are greatly fooling ourselves if we think otherwise.

We would never have gotten to 20,000 on the Dow if Barack Obama and Congress had not gotten us into an extra 9.3 trillion dollars of debt over the past eight years.

Unfortunately, most people do not understand this, and the mainstream media is treating “Dow 20,000” as if it is some sort of great historical achievement…

The average began tracking the most powerful corporate stocks in 1896, and has served as a broad measure of the market’s health through 22 presidents, 22 recessions, a Great Depression, at least two crashes and innumerable rallies, corrections, bull and bear markets. The blue chip reading finally cracked the 20,000 benchmark for the first time early Wednesday.

During the current bull market, the second longest in history, the Dow has more than tripled since March 2009.

Since Donald Trump’s surprise election victory, the Dow has now climbed by approximately 2150 points.

And it took just 64 calendar days for the Dow to go from 19,000 to 20,000. That is an astounding pace, and financial markets around the rest of the planet are doing very well right now too. In fact, global stocks rose to a 19 month high on Wednesday.

So where do we go from here?

Well, if Donald Trump wants to see Dow 30,000 during his presidency, then history tells us that he needs to take us to 30 trillion dollars in debt.

Of course that would be absolute insanity even if it was somehow possible. Each additional dollar of debt destroys the future of our country just a little bit more, and at some point this colossal bubble is going to burst.

But you can’t tell most of the “financial experts” these things. Most of them simply believe that the “market always goes higher over time”…

The “market always goes higher over time,” Todd Morgan, chairman of Bel Air Investment Advisors. “The lesson here is that through wars, recessions, elections, impeachments, financial crises, and on and on, investing for the long term in high-quality stocks is the key to building wealth. … We are telling our clients that you can’t time the market. Think long term. Stay the course. We expect the market to see Dow 30,000 in my lifetime, and for my grandchildren to see Dow 50,000 in their lifetime.”

My hope is that the market will continue to go up. But nobody can deny that valuations are already at absurdly high levels, and the only way that this party can keep going is to continue to fuel it with more and more debt.

But for the moment, there is a tremendous amount of optimism out there, and most experts expect the Dow to continue to set new highs. In fact, CNBC says that whenever the Dow crosses a new threshold like this it usually means good things for investors…

CNBC looked at market data from the past 30 years and zeroed in on the times when the Dow has crossed levels like 2,000, 3,000, 4,000 … all the way up to the 19,000 level it hit in November. At those times, investors can typically expect traders to push it up even higher, according to data from Kensho. Not only does the Dow go up, but it outperforms the S&P 500 index along the way.

But as USA Today has explained, not all Americans are benefiting from this stock market rally…

The breakthrough came just four trading days into Trump’s presidency, a whirlwind in which the billionaire has reaffirmed his commitment to strengthen the U.S. economy and create more jobs and higher wages for workers. Still, nearly half of Americans have not benefited from the so-called “Trump Rally,” which has generated more than $2.2 trillion in paper gains for the Wilshire 5000 Total Stock Index since Election Day. The reason: only 52% of Americans polled by Gallup last April said they “have money invested in stocks” — the lowest stock ownership rate in the 19 years Gallup has tracked the data and down sharply from 65% in 2007 before the financial crisis.

Hopefully the good times will continue to roll for as long as possible.

But there is no possible way that they can keep going indefinitely.

For decades, our debt has been growing much faster than our GDP has. By definition, this is an unsustainable situation. At some point we will have accumulated so much debt that our financial system will no longer be able to hold up under the strain.

Many were convinced that we would reach that point before the U.S. national debt hit 20 trillion dollars, and yet here we are.

So how much higher can we go before the bubble bursts?

That is a very good question, and I don’t know if anyone has the right answer.

But for President Trump, this is going to present him with quite a dilemma.

Either he can keep the debt party going for as long as possible, or he can try to get us to take some tough financial medicine right now.

If an attempt is made to deal with our debt problems now, we will experience severe economic pain almost immediately.

But if the can keeps being kicked down the road, our long-term prognosis is just going to keep getting worse and worse.

And if we try to delay the inevitable indefinitely, at some point the laws of economics are going to make our hard choices for us.

So let us celebrate “Dow 20,000”, but let us also understand that it is far more likely that we will see “Dow 10,000” again before we ever see “Dow 30,000”.

Foreigners Are Dumping U.S. Debt At A Record Pace And Our $20 Trillion National Debt Is Poised To Become A Major Crisis

January 22, 2017January 22, 2017 by Michael

While most of the country has been focused on the inauguration of Donald Trump, a very real crisis has been brewing behind the scenes. Foreigners are dumping U.S. debt at a faster rate than we have ever seen before, and U.S. Treasury yields have been rising. This is potentially a massive problem, because our entire debt-fueled standard of living is dependent on foreigners lending us gigantic mountains of money at ultra-low interest rates. If the average rate of interest on U.S. government debt just got back to 5 percent, which would still be below the long-term average, we would be paying out about a trillion dollars a year just in interest on the national debt. If foreigners keep dumping our debt and if Treasury yields keep climbing, a major financial implosion of historic proportions is absolutely guaranteed within the next four years.

One of the most significant aspects of the “Obama legacy” is the appalling mountain of debt that he has left behind. As I write this article, the U.S. national debt is sitting at 19.944 trillion dollars. During Obama’s eight years, a staggering 9.3 trillion dollars was added to the national debt. When you break that number down, it comes to more than a hundred million dollars every single hour of every single day while Obama was living in the White House. In just two terms, Obama added almost as much to the national debt as all of the other presidents before him combined.

What Obama and the members of Congress that cooperated with him have done to future generations of Americans is beyond criminal.

Unfortunately, hardly anyone is talking about this right now, but the consequences are about to start catching up with us in a major way.

The only possible way that our game of “borrow, spend and stick future generations with the bill” can continue is if the rest of the world participates. In other words, we need them to continue to buy our debt.

Unfortunately for us, a major shift is now taking place. According to Zero Hedge, the most recent numbers that we have show foreigners dumping more than 400 million dollars of U.S. debt over the past 12 months…

The wholesale liquidation of US Treasuries continued in November, when according to the just released TIC data, foreign central banks sold another $936 million in US paper in November 2016, which due to an offset of $892 million in buying one year ago, means that for the 12 month period ended November, foreign central banks have now sold a new all time high of $405 million in the past 12 months, up from a record $403 million in LTM sales as of one month ago.

This isn’t a catastrophic emergency just yet, but if we continue down this road we will eventually get there. The only way that the U.S. government can continue on with business as usual is if it can continue to borrow billions upon billions of dollars at ultra-low interest rates. Now that Treasury yields are rising, some people are beginning to get quite nervous…

As we pointed out one month ago, what has become increasingly obvious is that both foreign central banks, sovereign wealth funds, reserve managers, and virtually every other official institution in possession of US paper, is liquidating their holdings at a disturbing pace, something which in light of the recent surge in yields to over 2 year highs, appears to have been a prudent move.

In some cases, like China, this is to offset devaluation pressure; in others such as Saudi Arabia and other petroleum exporting nations, it is to provide the funds needed to offset the drop in the petrodollar, and to backstop the country’s soaring budget deficit. In all cases, it may suggest concerns about a spike in future debt issuance by the US, especially now under the pro-fiscal stimulus Trump administration.

Someday historians are going to look back in horror at what took place during the Obama years.

The amount that was added to the national debt during his years comes to “approximately $75,129 for every person in the United States who had a full-time job in December”. There is no possible justification for this. But because there haven’t been any catastrophic consequences so far, most people assume that this theft from future generations of Americans must be okay.

In a previous article, I explained that government debt greatly stimulates the economy. If we had not borrowed and spent 9.3 trillion dollars over the past eight years, we would be in the worst economic depression in U.S. history right now.

But most people don’t understand this. They don’t get the fact that we are living way, way above our means. And they also don’t get the fact that the only way that Donald Trump can keep the party going is to borrow and spend just like Obama was doing.

And even with all of Obama’s recklessness, he was still the only president in all of U.S. history not to have a single year when U.S. GDP grew by at least three percent. The following comes from the Hill…

Despite the trillions of dollars in government spending pumped into the economy every year under Obama, America has never once enjoyed an annual GDP growth rate at 3 percent or higher, making Obama the least successful president—at least when it comes to economics—in modern history.

A historically sluggish GDP isn’t the only concern worth mentioning. Under Obama’s tenure, average annual food stamp enrollment has risen by more than 15 million (compared to 2008). The home ownership rate is the lowest it has been since 1995, the earliest year provided in the U.S. Census Bureau’s most recent report. The Bureau of Labor Statistics reports more than 590,000 Americans say they are not in the labor force because they are discouraged, a figure that’s 26 percent higher than even the worst annual average under George W. Bush. Additionally, the employment-population ratio has been continuously below the 60-percent threshold under Obama; the last time it was this low was 1985.

Now that Donald Trump is president, he is going to have some very hard choices in front of him.

If Donald Trump and the Republicans stop borrowing and spending so much money, the economy will immediately start suffering.

But if they do continue down the same path that Obama put us on, it is a recipe for national suicide.

So either we take our medicine now, or we risk completely destroying the bright future that our children and grandchildren were supposed to enjoy.

Wake up America, because time is running out.

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