Debt

By The Numbers: 20 Facts About The Collapse Of Europe That Everyone Should Know

By The Numbers - 20 Facts About The Collapse Of Europe That Everyone Should KnowThe economic implosion of Europe is accelerating.  Even while the mainstream media continues to proclaim that the financial crisis in Europe has been “averted”, the economic statistics that are coming out of Europe just continue to get worse.  Manufacturing activity in Europe has been contracting month after month, the unemployment rate in the eurozone has hit yet another brand new record high, and the official unemployment rates in both Greece and Spain are now much higher than the peak unemployment rate in the United States during the Great Depression of the 1930s.  The economic situation in Europe is far worse than it was a year ago, and it is going to continue to get worse as austerity continues to take a huge toll on the economies of the eurozone.  It would be hard to understate how bad things have gotten – particularly in southern Europe.  The truth is that most of southern Europe is experiencing a full-blown economic depression right now.  Sadly, most Americans are paying very little attention to what is going on across the Atlantic.  But they should be watching, because this is what happens when nations accumulate too much debt.  The United States has the biggest debt burden of all, and eventually what is happening over in Spain, France, Italy, Portugal and Greece is going to happen over here as well.

The following are 20 facts about the collapse of Europe that everyone should know…

#1 10 Months: Manufacturing activity in both France and Germany has contracted for 10 months in a row.

#2 11.8 Percent: The unemployment rate in the eurozone has now risen to 11.8 percent – a brand new all-time high.

#3 17 Months: In November, Italy experienced the sharpest decline in retail sales that it had experienced in 17 months.

#4 20 Months: Manufacturing activity in Spain has contracted for 20 months in a row.

#5 20 Percent: It is estimated that bad loans now make up approximately 20 percent of all domestic loans in the Greek banking system at this point.

#6 22 Percent: A whopping 22 percent of the entire population of Ireland lives in jobless households.

#7 26 Percent: The unemployment rate in Greece is now 26 percent.  A year ago it was only 18.9 percent.

#8 26.6 Percent: The unemployment rate in Spain has risen to an astounding 26.6 percent.

#9 27.0 Percent: The unemployment rate for workers under the age of 25 in Cyprus.  Back in 2008, this number was well below 10 percent.

#10 28 Percent: Sales of French-made vehicles in November were down 28 percent compared to a year earlier.

#11 36 Percent: Today, the poverty rate in Greece is 36 percent.  Back in 2009 it was only about 20 percent.

#12 37.1 Percent: The unemployment rate for workers under the age of 25 in Italy – a brand new all-time high.

#13 44 Percent: An astounding 44 percent of the entire population of Bulgaria is facing “severe material deprivation”.

#14 56.5 Percent: The unemployment rate for workers under the age of 25 in Spain – a brand new all-time high.

#15 57.6 Percent: The unemployment rate for workers under the age of 25 in Greece – a brand new all-time high.

#16 60 Percent: Citigroup is projecting that there is a 60 percent probability that Greece will leave the eurozone within the next 12 to 18 months.

#17 70 Percent: It has been reported that some homes in Spain are being sold at a 70% discount from where they were at during the peak of the housing bubble back in 2006.  At this point there are approximately 2 million unsold homes in Spain.

#18 200 Percent: The debt to GDP ratio in Greece is rapidly approaching 200 percent.

#19 1997: According to the Committee of French Automobile Producers, 2012 was the worst year for the French automobile industry since 1997.

#20 2 Million: Back in 2005, the French auto industry produced about 3.5 million vehicles.  In 2012, that number dropped to about 2 million vehicles.

One thing that these shocking numbers cannot convey is the tremendous amount of pain that many average Europeans are living through on a daily basis at this point.  To get a peek into what life is like in Greece these days, check out this short excerpt from a recent Bloomberg article…

Anastasia Karagaitanaki, 57, is a former model and cafe owner in Thessaloniki, Greece. After losing her business to the financial crisis, she now sleeps on a daybed next to the refrigerator in her mother’s kitchen and depends on charity for food and insulin for her diabetes.

“I feel like my life has slipped through my hands,” said Karagaitanaki, whose brother also shares the one-bedroom apartment. “I feel like I’m dead.”

For thousands of Greeks like Karagaitanaki, the fabric of middle-class life is unraveling. Teachers, salaries slashed by a third, are stealing electricity. Families in once-stable neighborhoods are afraid to leave their homes because of rising street crime.

All over Europe, people that have lost all hope are actually setting themselves on fire in a desperate attempt to draw attention.  Millions of formerly middle class Europeans have lost everything and are becoming increasingly desperate.  Suicide and crime are skyrocketing all over southern Europe and massive street riots are erupting on a regular basis.

Unfortunately, this is just the beginning.  Things are going to get even worse for Europe.

Meanwhile, those of us living in the United States smugly look down our noses at Europe because we are still living in a false bubble of debt-fueled prosperity.

But eventually we will feel the sting of austerity as well.  The recent fiscal cliff deal was an indication of that.  Taxes are going up and government spending is at least going to slow down.  It won’t be too long before the effects of that are felt in the economy.

And of course the reality of the situation is that the U.S. economy really did not perform very well at all during 2012 when you take a look at the numbers.  The cold, hard truth is that the U.S. economy has been declining for a very long time, and there are a whole bunch of reasons to expect that our decline will accelerate even further in 2013.

So if you are an American, don’t laugh at what is happening over in Europe at the moment.  We are headed down the exact same path that they have gone, and we are going to experience the same kind of suffering that they are going through right now.

Use these last few “bubble months” to prepare for what is ahead.  At some point this “hope bubble” will disappear and then the time for preparation will be over.

EU Poster Tower Of Babel

If Obama Can Just Create A Trillion Dollar Coin, Then Why Do We Have To Pay Taxes?

If Obama Can Just Create A Trillion Dollar Coin, Then Why Do We Have To Pay TaxesIf Barack Obama can “solve” the debt ceiling crisis by printing up some trillion dollar coins, then why does the federal government need our money?  As another debt ceiling showdown approaches, many in the liberal media are suggesting that if Congress does not raise the debt ceiling that Obama should just have the U.S. Treasury create a trillion dollar platinum coin and use it to pay our bills.  It sounds crazy, but many notable voices (including Paul Krugman of the New York Times) are supporting this idea.  But if the federal government has had the power to create trillion dollar coins out of thin air all this time, then why do we have to pay taxes?  Not only that, why do we have a national debt?  If the federal government can just create money whenever it wants, then why does the federal government ever have to borrow it from others?  The U.S. Constitution actually grants Congress the power to “coin money”, so why is the Federal Reserve doing it?  Those are some very important questions.  Most Americans don’t even realize that the U.S. government never actually needed to borrow a single penny from anyone else.  The U.S. Congress has the authority to create debt-free money whenever it wants to.  Conceivably, the entire federal government could be funded without ever borrowing a single dollar and without ever receiving a single dollar from any of us in taxes.  Just imagine that – a nation without a single penny of national debt, no income tax and no IRS.  What a wonderful world that would be.  Of course there would be other potential dangers under such a system (such as runaway inflation), and those dangers would have to be addressed.  But the truth is that we don’t have to have an income tax or 16 trillion dollars of government debt.  We only have those things because we have chosen to have those things.

Sometimes, a crisis can illuminate options that most people had not considered previously.  As another debt ceiling crisis draws closer, many are looking for ways for the U.S. government to be able to continue to pay its bills if Congress does not authorize an increase in the debt ceiling.

If a debt ceiling agreement is not worked out, the U.S. government will soon only be able to pay about half the bills that are coming due after interest payments on the national debt (which will almost certainly be prioritized) are made.

That is why a lot of people on the left are pushing the “trillion dollar coin” alternative.  So how would this work exactly?  The mechanics were recently explained by Jim Pethokoukis on his American Enterprise Institute blog…

There are limits on how much paper money the U.S. can circulate and rules that govern coinage on gold, silver, and copper.  BUT, the Treasury has broad discretion on coins made from platinum.  The theory goes that the U.S. Mint would create a handful of trillion dollar (or more) platinum coins.  The President would then order the coins deposited at the Fed, who would then put the coin(s) in the Treasury who now can pay all their bills and a default is removed from the equation.  The effects on the currency market and inflation are unclear, to say the least.

In my opinion, if anyone in the federal government is going to be creating money out of thin air, it should be the U.S. Congress.  After all, according to Article I, Section 8 of the U.S. Constitution, it is the U.S. Congress that has been granted the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.

But those that are pushing Obama to create a “trillion dollar coin” point to a law that Congress passed that allows the U.S. Treasury to mint platinum coins.  The following is from a recent CNN article…

Normally, the Federal Reserve is charged with issuing currency. But U.S. law, specifically 31 USC § 5112, also grants Treasury permission to “mint and issue platinum bullion coins and proof platinum coins.”

This section of law was meant to allow for the printing of commemorative coins and the like. But the Treasury Secretary has the authority to mint these coins in any denomination he or she sees fit.

But it wouldn’t quite be that easy.  According to a recent ABC News article, some elements of the coin design would have to be determined by legislation…

The more difficult part comes sometime after the decision is made to coin the platinum and before the Mint gets to work in sculpting the pieces.

At that point, the American people must decide whose face will adorn the trillion dollar trinket. The process to determine the “specs” of the coin, U.S. Mint Public Affairs Specialist Genevieve Billia warns, must be “determined by legislation,” creating the potential for another congressional impasse.

So we would likely end up back at square one.

But if printing up a “trillion dollar coin” does not work out, Paul Krugman of the New York Times has come up with another option…

Don’t like the platinum coin option? Here’s a functionally equivalent alternative: have the Treasury sell pieces of paper labeled “moral obligation coupons”, which declare the intention of the government to redeem these coupons at face value in one year.

It should be clearly stated on the coupons that the government has no, repeat no, legal obligation to pay anything at all; you see, they’re not debt, and therefore don’t count against the debt limit. But that shouldn’t keep them from having substantial market value.

Of course there is a very, very low probability that any of these wild ideas will ever be tried, but this debate has raised some very interesting points.

The truth is that we do not have to have a system where more money is only created when more debt is created.  We could have a system where the federal government directly creates debt-free money that is spent directly into circulation by the federal government.

In fact, this has happened before.

As I have written about previously, during the presidency of JFK a limited number of debt-free United States Notes were issued by the U.S. Treasury and spent by the U.S. government directly into circulation without any new debt being created.  In fact, each bill said “United States Note” right at the top.

Unfortunately, after JFK’s presidency no more debt-free United States Notes were ever issued.

But even before JFK, there were times when debt-free United States Notes were being used.  According to Wikipedia, United States Notes were first used during the Civil War….

They were originally issued directly into circulation by the U.S. Treasury to pay expenses incurred by the Union during the American Civil War. Over the next century, the legislation governing these notes was modified many times and numerous versions have been issued by the Treasury.

So why are we using debt-based Federal Reserve Notes today instead of debt-free United States Notes?

If the Federal Reserve did not exist and the U.S. government directly created money instead of borrowing it, it is conceivable that we could have a national debt of $0.00 today instead of $16,432,707,263,449.56.

Which option do you think our children and our grandchildren will wish that we had opted for?

In a system where the government directly created money, it is also conceivable that we could completely do away with the income tax and the IRS completely.  The U.S. once prospered greatly without an income tax, and it could do so again.

And the truth is that our system of taxation is broken beyond repair.  If you doubt this, just read this article.

So what would the downside be to such a system?  Well, of course rampant inflation would be a huge danger.  Allowing Congress to print up money whenever they wanted to would be playing with fire.  That is why it would be imperative for there to be a hard cap on what the federal government could spend.  For example, you could set the cap on spending by the federal government at 20 percent of GDP.  That way we would hopefully never end up looking like the Weimar Republic.

And the current federal debt could be paid down a little at a time using newly created debt-free currency.  This would have to be done slowly to keep inflation under control, but it could be done.

Of course if you wanted to continue to fund the federal government through taxation, there are other options that would still allow you to do away with the income tax.  For example, one of the ways that our founders intended for the federal government to be funded was through tariffs, and we could definitely raise a lot of money that way.  Plus, that would have the added benefit of making American companies much more competitive again and it would reduce the flow of American jobs out of the country.

So am I in favor of having Barack Obama create a trillion dollar coin to get around the debt ceiling crisis?

Most definitely not.  If it does not violate the letter of the Constitution (which I believe it does), it sure does violate the spirit of it.

But if the U.S. Congress decided to shut down the Federal Reserve and the IRS and they decided to abolish the income tax, and instead they started directly issuing debt-free currency directly into circulation, that is something I would very much be in favor of.

Yes, that system would not be perfect either, but it would be far more preferable to what we have today.

So what do you think?  Should we keep our current system of debt-based money, or would a system of debt-free money be better?

Please feel free to post a comment with your opinion below…

Trillion Dollar Coin?

The Good, The Bad And The Ugly From The Fiscal Cliff Deal

The Good, The Bad And The Ugly From The Fiscal Cliff DealThe fiscal cliff deal contains more bad news than it does good news.  Yes, the tax increases on the middle class could have been much worse, and we should be thankful that Congress at least did something for the middle class.  Unfortunately, they didn’t do enough.  Every American worker is going to pay higher taxes next year as a result of this deal.  The fiscal cliff deal represents the biggest tax increase in 20 years, and it is also projected to increase the U.S. national debt by an additional 4 trillion dollars over the next decade.  In the final analysis, U.S. government finances are still wildly out of control and we are all going to be paying higher taxes.  Not a whole lot to be excited about, and nothing has really been fixed for the long-term.  Our politicians have kicked the can down the road once again, but someday they will run out of road and all of this debt will absolutely crush us.  And of course a lot of our politicians didn’t even really know what they were voting for.  The fiscal cliff bill was more than 150 pages long, and our Senators got the bill into their hands just 3 minutes before they voted on it.  So none of them actually read the bill.  But that is the way things work in America today.  The blind are leading the blind and everyone is mindlessly hoping that everything will turn out okay somehow.

For a few moments, let’s take a closer look at the fiscal cliff deal.  There are some good things in there, there are some bad things in there, and there are some things about the deal that are downright ugly.

The Good

-One of the best things about the fiscal cliff deal is that income tax rates did not rise on the poor and the middle class.  This is great news for millions of families that are struggling to make ends meet each month.  A significant rise in income tax rates would have been crippling.

-The Alternative Minimum Tax will now be permanently adjusted for inflation.  This is something that I had screamed about in previous articles.  If an AMT fix had not been passed, approximately 28 million households would have been hammered with the Alternative Minimum Tax on their 2012 earnings.

-Millions of unemployed workers will continue to receive extended federal unemployment benefits.  We probably cannot really afford to keep doing this, but at least now there won’t be millions of unemployed workers that suddenly have their only source of income shut off.  The next trick will be to find jobs for all of those workers.  Unfortunately, millions of our jobs continue to be shipped to the other side of the world.

The Bad

-Payroll taxes are going up for every American worker.  The fiscal cliff deal allows the 2 percent payroll tax cut to expire, and so now the average U.S. household bringing in about $50,000 a year will pay approximately $1,000 more per year in payroll taxes.  As a result, it is being projected that U.S. consumers will have $115 billion less in disposable income to spend in 2013.  Happy New Year American workers!

-The fiscal cliff deal did nothing about the new Obamacare taxes that went into effect on January 1st.  Many of these taxes will hurt the middle class.  To see an example of a receipt where a consumer was charged the new “medical excise tax” in Obamacare, just check out this article.

-The carried-interest deduction loophole remains intact, so incredibly wealthy hedge fund managers will continue to get away with paying very little in taxes.  If the rest of us are being taxed into oblivion, then they should share in the pain with the rest of us.  Of course I personally believe that the income tax should be abolished entirely, but none of our politicians seem interested in that idea at all.

-Income tax rates will increase for high earners.  This will hurt a lot of small businesses.  Many small businesses that earn more than $400,000 a year will now be faced with making some really tough choices.  Some may have to lay off workers.  The top rate will now be 39.6 percent, but when other federal and state taxes are factored in, many small businesses will now be paying a top marginal rate of well over 50 percent.  That is absolutely obscene.

-A compromise was reached on the estate tax.  The exemption was scheduled to fall to just $1 million and the rate was scheduled to go up to 55 percent, and fortunately Congress decided to do something about that.  As I have written about previously, that would have been a disaster for many small businesses and family farms.  As a result of the fiscal cliff deal, the estate tax will only rise from 35 percent to 40 percent.  The exemption for individuals will be about 5 million dollars and for couples it will be about 10 million dollars, and those figures will now be indexed for inflation.  A tax increase is never a good thing, but if Congress had done nothing things would have been far worse.

-The fiscal cliff deal contains a lot of pork.  In particular, it contains provisions that extend specific tax breaks related to Puerto Rican rum, electric motorcycles, biodiesel and renewable diesel fuel, the film and television business, and motorsports entertainment complexes.

The Ugly

According to the Congressional Budget Office, as a result of this deal the U.S. national debt will be about $4 trillion higher a decade from now than it would have been if Congress had done nothing.

The deficit for fiscal year 2013 alone will be about $330 billion higher than it would have been if Congress had done nothing.

So this deal has made our debt problems even worse.

Right now, the U.S. has a debt to GDP ratio of about 103 percent.  We are already well into the “danger zone”, yet most Americans still don’t seem very concerned about all of this debt.

The fiscal cliff deal contained hardly any spending cuts at all.  In fact, there was a 41 to 1 ratio of tax increases to spending cuts in the deal.  The Democrats definitely won this round.  But of course they had most of the leverage.  If Congress had done nothing, the middle class would have been absolutely devastated by all of the tax increases, and the Republicans were desperate to prevent that.

But now that the battle over taxes is done, the leverage is going to shift over to the Republicans for the next big fight.

The battle over the debt ceiling is next.  If Congress does not act, the U.S. government will soon not be able to borrow any additional money.  This battle will be one of the stories that dominates the headlines over the next few months.

If the Republicans want to do something serious about spending, now is their chance.  The battle over tax rates is already over, and there is no election in November.  The Republicans could conceivably say “NO” to a debt ceiling increase if they want to.  If that happened, the federal government would only be able to spend the money that it already has.  It would not be able to borrow more.  That would mean that we would have to start living within our means.

What a novel concept.

Of course there is no reason to believe that the Republicans in the House will suddenly grow a spine.  They have folded every other time that the debt ceiling has come up.  It will probably be the same again in 2013.

And Barack Obama is already saying that there will be “no negotiations” over the debt ceiling this time.  He expects the Republicans to raise the debt ceiling for him without getting anything in return…

“I will not have another debate with this Congress over whether they will pay the bills they’ve already racked up.”

But the U.S. government cannot spend a single penny or borrow a single penny without the approval of the U.S. House of Representatives.

If the Republicans in the House want to ever get serious about government spending, the upcoming battle over the debt ceiling is a golden opportunity.

They could stop the Obama administration from piling up crazy amounts of debt if they want to.  All they need is the courage to take a stand.

During the first four years of the Obama administration, the U.S. government accumulated about as much debt as it did from the time that George Washington took office to the time that George W. Bush took office.

The Republicans have had control of the House for about half of that time.  That means that they have been willing accomplices.

So will they take a stand?

That is very doubtful.  Over the past few years they have exhibited the intestinal fortitude of a frightened chicken.  They will probably huff and puff a little bit, but in the end they will probably give in to Obama once again.

But what we are doing to our children and our grandchildren is so immoral that it is hard to describe.  We are stealing more than 100 million dollars from them every single hour of every single day, and we plan on leaving them with the biggest pile of debt the world has ever seen.  We should be absolutely ashamed of ourselves.

Why can’t we just spend the money that we have?

What would be so wrong with that?

Unfortunately, that would mean such a painful downward adjustment in our standard of living that most Americans would freak out.  We are addicted to debt-fueled prosperity, and so we can’t stop stealing from future generations.  We need their money to feed our addiction.

In the end, this gigantic mountain of debt is absolutely going to destroy everything that our forefathers built for us.  There have been some people that have been warning about this for decades, but the American people did not listen.

Soon enough, we will all pay the price for this foolishness.

Obama And Boehner - The Debt Ceiling Battle Comes Next

50 Predictions For 2013

50 Predictions For 2013Are you ready for a wild 2013?  It should be a very interesting year.  When the calendar flips over each January, lots of people make lots of lists.  They make lists of “resolutions”, but most people never follow through on them.  They make lists of “predictions”, but most of those predictions always seem to end up failing.  Well, I have decided to put out my own list of predictions for 2013.  I openly admit that I won’t get all of these predictions right, and that is okay.  Hopefully I will at least be more accurate than most of the other armchair prognosticators out there.  It is important to look ahead and try to get a handle on what is coming, because I believe that the rest of this decade is going to be extraordinarily chaotic for the U.S. economy.  The false bubble of debt-fueled prosperity that we are enjoying right now is not going to last much longer.  When it comes to an end, the “adjustment” is going to be extremely painful.  Those that understand what is happening and have prepared for it will have the best chance of surviving what is about to hit us.  I honestly don’t know what everybody else is going to do.  Many of the people that don’t see the coming collapse approaching will be totally blindsided by it and will totally give in to despair when they realize what has happened.  But there is no excuse for not seeing what is coming – the signs are everywhere.

So with that being said, the following are 50 bold predictions for 2013…

#1 There will be a major fight between the Republicans and the Democrats over raising the debt ceiling.  This will be one of the stories that dominates news headlines in the months of February and March.

#2 Most of the new “revenue” that will be raised by tax increases in 2013 will come out of the pockets of the middle class.

#3 No matter what “fiscal deals” the Democrats and the Republicans make in 2013, the federal budget deficit will still end up being greater than a trillion dollars for the fifth consecutive year.

#4 The credit rating of the U.S. government will be downgraded again in 2013.

#5 The Federal Reserve, along with major central banks all over the globe, will continue to wildly print money.

#6 There will be more criticism of the Federal Reserve in 2013 than at any other time since it was created back in 1913.

#7 The term “currency war” will be used by the media more in 2013 than it was in 2012.

#8 The movement away from the U.S. dollar as the primary reserve currency of the world will pick up momentum.  This will especially be true in Asia.

#9 The economic depressions in Greece and Spain will get even worse and unemployment in the eurozone will go even higher in 2013.

#10 A financial crisis in Europe will cause officials to grasp for “radical solutions” that will surprise many analysts.

#11 The unemployment rate in the United States will be higher by the end of 2013 than it is now.

#12 The percentage of working age Americans with a job will fall below 58 percent by the end of the year.

#13 At least one “too big to fail” bank will fail in the United States by the end of 2013.

#14 By the end of the year, more people than ever will understand what “derivatives” are, and that will be because they have caused major problems in the financial world.

#15 We will see the beginnings of another major housing crisis before the end of 2013 and foreclosure activity will start rising once again.

#16 We will see another new wave of “tent cities” start to go up in communities around the nation before the end of the year.

#17 There will be another major drought in the United States this upcoming summer and there will be widespread crop failures once again.

#18 The massive dust storms that we have seen roll through cities like Phoenix in recent years will become even larger and even more intense.

#19 Traffic along the Mississippi River will be significantly interrupted at some point during 2013.  This will be a very negative thing for the economy.

#20 Food prices will soar in 2013.  This will especially be true for meat products.

#21 In some of the poorer areas of the globe, major food riots will break out.  Governments will have trouble containing the civil unrest.

#22 There will be more genetically-modified foods in our supermarkets than ever before, and more Americans than ever will reject them and will seek out alternatives.

#23 The average price of a gallon of gasoline in 2012 was about $3.60.  The average price of a gallon of gasoline in 2013 will be lower than that.  Yes, you read that correctly.

#24 The number of vehicle miles driven in the United States will continue to decline in 2013.

#25 The Dow will end 2013 significantly lower than it is right now.

#26 When the final statistics for 2013 are compiled, U.S. share of global GDP will be less than 20 percent for the first time in modern history.  Back in the year 2001, our share of global GDP was 31.8 percent.

#27 The U.S. Postal Service will continue to experience massive financial difficulties and will lay off personnel.

#28 As violence in our public schools becomes increasingly worse, more Americans families than ever will decide to home school their children.

#29 The Obama administration and Democrats in Congress will make an all-out attempt to pass gun control measures in 2013.  When their efforts on the legislative front are stalled somewhat by Republicans in the House, Obama will use his executive powers to further his gun control agenda.

#30 One of the cities with the strongest gun laws in the nation, Chicago, had 532 murders in 2012 and it is now considered to be one of the most dangerous cities on the planet.  By the end of 2013, the murder total in Chicago will be above 600.

#31 There will be an increasing amount of tension between state governments and the federal government.  The issue of “states rights” will move front and center at various points in 2013.

#32 CNN will continue to sink to horrifying new lows.  Piers Morgan will end up leaving the network before the end of the year.

#33 The number of Americans on food stamps will surpass 50 million for the first time ever at some point during 2013.

#34 The U.S. trade deficit with China in 2013 will be well over 300 billion dollars.

#35 The phrase “made in China” will increasingly be viewed as a reason not to buy a product as Americans become more educated about the millions of good jobs that we have lost to China over the past decade.

#36 We will see increasing cooperation between the governments of the United States, Canada and Mexico and border restrictions will be loosened.

#37 There will continue to be a mass exodus of families and businesses out of the state of California.  The favorite destination will continue to be Texas, but Texas residents will become increasingly resentful of all of these new transplants.

#38 There will be some truly jaw-dropping examples of violence by parents against their own children in 2013.  Many of these stories will make headlines all over the nation.

#39 The percentage of Americans that are obese will continue to rise and will set another new all-time record in 2013.

#40 There will be more war in the Middle East in 2013.  But it will only set the stage for even more war in the Middle East in 2014 and 2015.

#41 U.S. troops will be deployed in more countries than ever before in 2013.

#42 Volcanic eruptions and major earthquakes along the Ring of Fire will make headlines all over the globe in 2013.

#43 Giant sinkholes will continue to appear all over the United States and all over the globe, and scientists will continue to struggle to find an explanation for why it is happening.

#44 The peak of the solar cycle in 2013 will cause significant problems for satellite communications.

#45 The U.S. government will put more resources into the surveillance of the American people than ever before, but most Americans won’t mind all of this surveillance because they have become convinced that it is important to give up some of our liberties for more “security”.

#46 Our infrastructure (roads, bridges, tunnels, airports, sewers, electrical grids, etc.) will be in worse shape by the end of 2013 than it is now.

#47 The percentage of “two parent households” in the United States will continue to decline.

#48 “Political correctness” will reach ridiculous new heights during 2013, and more Americans than ever will start to rebel against it.

#49 There will be more anger at the wealthy in 2013 than at any other time in modern history.

#50 There will be some shocking political scandals in Washington D.C. in 2013.  We will see some high profile resignations by the end of the year.

Once again, please keep in mind that I do not expect to be 100% correct about all of these things.  I am just trying to put all of the pieces of the puzzle together just like everyone else is.

But I do hope to have a better track record than most of the other people putting out lists of predictions at the beginning of this year.  So save this list and let’s revisit it at the end of the year.

Do you have any bold predictions of your own for 2013?  Please feel free to share them by posting a comment below…

Earth From Space

16 Things About 2013 That Are Really Going To Stink

16 Things About 2013 That Are Really Going To Stink - Photo by Linh_rOmThe beginning of the year has traditionally been a time of optimism when we all look forward to the exciting things that are going to happen over the next 12 months.  Unfortunately, there are a whole bunch of things about 2013 that we already know are going to stink.  Taxes are going to go up, good paying jobs will continue to leave the country, small businesses will continue to be destroyed, the number of Americans living in poverty will continue to soar, our infrastructure will continue to decay, global food supplies will likely continue to dwindle and the U.S. national debt will continue to explode.  Our politicians continue to pursue the same policies that got us into this mess, and yet they continue to expect things to magically turn around.  But that is not the way that things work in the real world.  Bad decisions lead to bad outcomes.  Instead of realizing that what we are doing is not working, our “leaders” continue to give us more of the same.  As a result, there are going to be a lot of things about 2013 that will not be great.  Sticking our heads in the sand and pretending that everything will be “okay” somehow is not going to help anyone.  We’ve got to make people understand exactly what is happening and why it is happening if we ever hope to see real changes.

The following are 16 things about 2013 that are really going to stink…

#1 Taxes Are Going To Go Up

Even if a fiscal cliff deal is reached, some taxes will still go up next year.  And if no deal is reached, there will be a whole bunch of different tax increases in 2013.

According to CBS News, these tax increases would be very painful for the middle class…

If lawmakers fail to work out any sort of deal, there will be severe long-term consequences for the economy: According to the Tax Policy Center, going off the “cliff” would affect 88 percent of U.S. taxpayers, with their taxes rising by an average of $3,500 a year; taxes would jump $2,400 on average for families with incomes of $50,000 to $75,000. Because consumers would get less of their paychecks to spend, businesses and jobs would suffer.

#2 The Middle Class Is About To Be Scorched By The Alternative Minimum Tax

Of more immediate concern for the middle class is the Alternative Minimum Tax.  Many Americans have never heard of the AMT, but it is truly one of the worst things about our tax code.

If Congress does not act, and right now it does not look promising, millions of middle class households will see a massive increase in their tax bills for 2012.

According to one analysis, households that are forced to pay the AMT will end up paying an extra $3,700 in taxes…

Unless Congress acts by the end of the year, more than 26 million households will for the first time face the AMT, which threatens to tack $3,700, on average, onto taxpayers’ bills for the current tax year. Because those people have never paid the AMT, they have no idea they are in its crosshairs — put there by a broader stalemate over tax policy that has kept Congress from limiting the AMT’s reach.

Do you have an extra $3,700 sitting around to send to Uncle Sam?

If not, you had better contact your representatives in Congress and scream like crazy about passing a fix for the AMT.  They have always gotten it done before, but this year there is so much animosity between the Republicans and the Democrats that nothing may end up getting done.

#3 The Economy Will Continue To Get Worse

Despite all of the talk in the mainstream media and from our politicians that our economy is getting better, the truth is that the U.S. economy continued to decline in 2012.  If you doubt this, just read the 75 statistics in this article.

And there are a whole host of signs that the economy is starting to slow down even more as we enter 2013.  For example, consumer confidence in the United States has experienced its largest two-month drop in over a year, and retail sales during the holiday season turned out to be quite disappointing.

#4 Good Paying Jobs Will Continue To Be Shipped Out Of The United States

Thanks to decades of “free trade agreements”, workers in the United States must directly compete for jobs with hundreds of millions of workers on the other side of the globe that live in countries where it is legal to pay slave labor wages.

We continue to see millions of jobs being shipped out of the country and our politicians stand by and do nothing.

Most Americans have no idea how this emerging one world economic system works.  The beautiful product that you buy at the big retail store may have been made by someone working in some of the most horrific conditions imaginable.

A 42-year-old woman named Julie Keith recently found this letter inside a box of Halloween decorations that had been made in China…

“If you occasionally buy this product, please kindly resend this letter to the World Human Right Organization. Thousands people here who are under the persecution of the Chinese Communist Party Government will thank and remember you forever.

People who work here have to work 15 hours a day without Saturday, Sunday break and any holidays. Otherwise, they will suffer torturement, beat and rude remark. Nearly no payment (10 yuan/1 month).

People who work here, suffer punishment 1-3 years averagely, but without Court Sentence (unlaw punishment). Many of them are Falun Gong practitioners, who are totally innocent people only because they have different believe to CCPG. They often suffer more punishment than others.”

But both political parties continue to tell us how wonderful it is that we are trading with communist China.  They see no problem with the fact that good paying jobs that used to be performed in America are now being performed by slave laborers on the other side of the planet.  And most Americans continue to support this system by filling their shopping carts with lots of stuff that has “made in China” stamped on it.

#5 Small Businesses Will Continue To Be Destroyed

At the same time, small businesses all over America are being strangled to death by taxes and regulations.  Just consider the following numbers from a previous article…

We are told that the economy is supposed to be “recovering”, but the number of “startup jobs” at new businesses has fallen for five years in a row.  According to an analysis of U.S. Department of Labor data performed by economist Tim Kane, there were almost 12 startup jobs per 1000 Americans back in the year 2006.  By 2011, that figure had fallen to less than 8 startup jobs per 1000 Americans.

How is our economy ever going to thrive if we keep killing off our small businesses?

#6 Hunger And Poverty Will Continue To Explode To Unprecedented Levels

As the U.S. economy bleeds jobs and loses small businesses, the number of Americans living in poverty continues to explode.

Here are some numbers to show to people who still don’t understand how desperate the situation is…

-Families that have a head of household under the age of 30 have a poverty rate of 37 percent.

-According to U.S. Census data, 57 percent of all American children live in a home that is either considered to be “poor” or “low income”.

-For the first time ever, more than a million public school students in the United States are homeless.  That number has risen by 57 percent since the 2006-2007 school year.

#7 The Number Of Americans On Food Stamps Will Continue To Increase

If the economy is recovering, then why does the number of Americans on food stamps continue to soar?

As I wrote about yesterday, about 17 million Americans were on food stamps back in the year 2000.

Today, more than 47 million Americans are on food stamps.

Does anyone want to explain to me how that is a sign that things are getting better?

Back in the 1970s, about one out of every 50 Americans was on food stamps.  Today, about one out of every 6.5 Americans is on food stamps.

How much worse do things have to get before people realize that what we are doing is not working?

#8 Millions Of Americans Are About To Lose Their Unemployment Benefits

During this economic crisis, an unprecedented number of American families have been relying on unemployment benefits in order to stay afloat.

Well, if no agreement is reached in Washington D.C., millions of Americans will shortly lose those benefits…

Three million Americans may become unwitting casualties of the political war in Washington over the fiscal cliff.

Since 2008, the federal government has funded extensions of the unemployment insurance offered by states, more than tripling the amount of aid available to the unemployed in some areas. But the program is expensive, with the Congressional Budget Office estimating it would cost $30 billion to extend it through 2013. President Barack Obama wants to extend the benefits for another year, but Congress has already pared back the program, and Republicans insist it represents the kind of largesse Washington can no longer afford.

#9 Our Infrastructure Will Continue To Rot And Decay

The United States once had the most beautiful infrastructure in the entire world.  Our highways, bridges, airports, railroads, sewer systems and electrical grids were the envy of the entire planet.

Well, now we don’t even have enough money to repair what we already have, so our infrastructure will continue to rot and decay in 2013…

Highways and bridges will need $2.5 trillion in upgrades if they are to survive for another 50 years — a must-do to keep commerce thriving. And that figure doesn’t even take into account the airports, railroads, subways, sewage-treatment plants, waterworks, levees, electric grids, pipelines, and all of those other expensive systems that people ignore until they break down.

#10 Many Of Our Major Cities Will Continue To Be Transformed Into Festering Hellholes

A lot of our major cities are also rapidly degenerating.  Detroit is one of my favorite examples, but the same kinds of things could be said about dozens of other major cities all over the country.  The following is a brief excerpt from one of my recent articles…

If you can believe it, more than 50 percent of all children in Detroit are living in poverty, and close to 50 percent of all adults living in the city are functionally illiterate.  The high school graduation rate in Detroit is down to about 25 percent, and the city has become a breeding ground for gangs and violence.  The number of murders in Detroit is already higher than last year, and recently groups of young men toting AK-47s have been running around robbing gas stations.  How much worse can things possibly get for Detroit?

#11 State And Local Governments Will Find Ways To Squeeze Even More Money Out Of Us

In case you haven’t noticed, state and local governments all over the country are bleeding cash and are desperate for money.  In 2013 you can expect them to continue to find more ways to squeeze even more money out of all of us.  Here is one example…

Over the course of 2013, the District government will add 134 traffic cameras to its network, more than doubling the size of a system that generated $85 million in revenues for the city in its last fiscal year.

Police spokeswoman Gwendolyn Crump told The Washington Examiner that the city will intensify its camera-based efforts to cite motorists for speeding and stoplight violations while also adding cameras to detect other moving violations.

#12 Drug Cartels Will Continue To Easily Cross Our Borders And Terrorize Our Citizens

The federal government continues to refuse to protect our borders, and that means that drug runners and gang members will continue to pour into the United States.

Down in the Southwest, many ranchers are being absolutely terrorized by these criminals.  The following is from a recent NBC News article…

Just before nightfall, 73-year-old rancher Jim Chilton hikes quickly up and down the hills on his rugged cattle-grazing land south of Tucson, escorting two U.S. Border Patrol agents.

He wants to show them the disturbing discovery he made earlier in the day: a drug-smugglers’ camp on his private property.  Stacked together under a stand of trees are blankets, jackets, food, water, binoculars and bales of marijuana from Mexico wrapped in burlap. The smugglers, themselves, are nowhere in sight and are believed to have fled the area, which is about 10 miles north of the Mexican border.

Chilton has had his house burglarized a couple of times and his family regularly encounters groups of armed drug smugglers coming across from Mexico…

Their cattle fences are frequently cut and paths heading north from Mexico cross their property.  Beckham says a smuggler even fired shots at him while he walked his land with a U.S. Border Patrol agent.  Several illegal border crossers have also approached his house at night–one even reaching his hand into their bathroom window.

“Several years ago, one of my children was taking a shower and had a gentleman reach into the shower while he was in there, and he came out screaming, absolutely refusing to take a shower for the next couple months.”

But even if you don’t live along the border, all of this still affects you.  According to government figures, Mexican drug cartels are actively operating in more than 1,200 U.S. cities right now.  They are probably hard at work in the community where you live.

So what is the Obama administration doing to fix the problem?

Not much.

In fact, the Obama administration is actually encouraging people to come to the U.S. and become dependent on the system.  If you can believe it, there is actually a website run by the Department of Homeland Security that teaches immigrants how to apply for welfare benefits once they get into the United States.

#13 Social Decay Will Continue To Accelerate

All over America we are seeing signs of social breakdown.  Here is yet another example…

A woman sleeping on a street bench outside a drug store was doused with an accelerant and set on fire early Thursday morning in Van Nuys.

Witnesses told police that a man poured liquid — possibly a beverage containing alcohol — on the sleeping woman at about 1 a.m. outside a Walgreens store near Van Nuys Boulevard and Sherman Way. He lit a match and ran from the location, witnesses told police.

Who would just run up and set a woman on fire?

Sadly, this is not an isolated incident.  For many more examples like this, please see this article: “20 Shocking Examples Of How Sadistic And Cruel People Have Become“.

We need to admit that we have a major problem on our hands.  Violent crime in the United States increased by 18 percent in 2011, and another huge increase is expected when the numbers for 2012 come out.

America is changing, and not for the better.

#14 Global Food Supplies Will Continue To Dwindle

Did you know that for six of the last eleven years the world has consumed more food than it has produced?

As a result, global food reserves have reached their lowest level in almost 40 years.

So what is going to happen if the world continues to eat more food than it makes?

Let us hope that there is not another major drought in 2013.  If there is, we could be looking at a very serious food crunch.

#15 Wall Street Will Continue To Resemble A Giant Casino

Our financial system seems to have not learned any lessons from the financial crash of 2008.

Instead of admitting their mistakes, they just continue to engage in even more reckless behavior.

Today, there are four major U.S. banks that each have more than 40 trillion dollars of exposure to derivatives.

At some point that house of cards is going to collapse and we will be facing a derivatives crisis of unprecedented magnitude.

Will it be in 2013?

#16 The U.S. National Debt Will Cross The 17 Trillion Dollar Mark

In 2013, our national debt will blow past the 17 trillion dollar mark and start heading toward 18 trillion dollars.

How stupid can we possibly be?

During the first four years of the Obama administration, the U.S. national debt has grown by about as much as it did from the time that George Washington took office to the time that George W. Bush took office.

It really takes something to match more than 200 years of debt accumulation in less than four years.

But our politicians don’t seem to care about all of this debt.  They will continue to steal more than 100 million dollars from our children and our grandchildren every single hour of every single day.  That is beyond criminal, and yet the American people don’t seem to care.

What in the world has happened to this country?

Of course not everything about 2013 will be bad.  Personally, I am looking forward to an exciting year.  I have a new book that will be coming out, and my family is blessed and healthy.  I would like to wish all of you a very blessed 2013.  Things may be falling apart all around us, but that doesn’t mean that we can’t have a great year even in the midst of all the chaos.

Happy 2013

Government Dependents Outnumber Those With Private Sector Jobs In 11 U.S. States

The Number Of People On Welfare Exceeds The Number Of People With Jobs In 11 StatesAmerica is rapidly becoming a nation of takers.  An increasing number of Americans expect the government to take care of them from the cradle to the grave, and they expect the government to dig into the pockets of others in order to pay for it all.  This philosophy can be very seductive, but what happens when the number of takers eventually outnumbers the number of producers?  In 11 different U.S. states, the number of government dependents exceeds the number of private sector workers.  This list of states includes some of the biggest states in the country: California, New York, Illinois, Ohio, Maine, Kentucky, South Carolina, Mississippi, Alabama, New Mexico and Hawaii.  It is interesting to note that seven of those states were won by Barack Obama on election night.  In California, there are 139 “takers” for every 100 private sector workers.  That is crazy!  The American people have become absolutely addicted to government money, and it gets worse with each passing year.  If you can believe it, entitlements accounted for 62 percent of all federal spending in fiscal year 2012.  It would be one thing if we could afford all of this spending, but unfortunately we simply cannot.  We are drowning in debt, and we are stealing more than a hundred million more dollars from future generations with each passing hour.  No bank robber in history can match that kind of theft.

Yes, we will always need a safety net.  There are many people out there that simply cannot take care of themselves.  We certainly don’t want to see anyone sleeping in the streets or starving to death.

But if the number of people jumping on to the safety net continues to grow at the current pace, the net will break and it will not be available for any of us.

For example, the number of Americans on food stamps grew from about 17 million in 2000 to more than 47 million today.  It nearly tripled in just 12 years.

What will happen if it nearly triples again over the next 12 years?

The federal government even has a website (benefits.gov) that guides people through the process of figuring out what welfare programs they can take advantage of.

Overall, the federal government runs nearly 80 different “means-tested welfare programs” and more than 100 million Americans are already enrolled in at least one of those programs.

Yes, I realize that figure is very hard to believe.  I had a hard time believing it when I first came across it.

And it is even more shocking when you realize that the figure of 100 million Americans does not even include those who only receive Social Security or Medicare.

Today, there are 56.76 million Americans on Social Security.

To support all of those Americans on Social Security, there are only about 94.75 million full-time private sector workers.

So there are just 1.67 full-time private sector workers to support each American that is on Social Security.

Medicare is also growing like crazy.  As I wrote about the other day, the number of Americans on Medicare is expected to grow from 50.7 million in 2012 to 73.2 million in 2025.

How much farther can we push things before the entire system collapses?

In order to support this exploding entitlement system, we need a lot more Americans to be working good paying jobs.

Unfortunately, millions of good paying jobs continue to be shipped overseas and they aren’t coming back.

We are even losing good jobs to our own prisoners.  The United States has the largest prison population in the world by far, and the exploitation of that low wage labor pool has become a boom industry in America.  Even Microsoft and Boeing are using prison labor now.  Just check out this video.

Meanwhile, there are millions upon millions of law-abiding Americans that cannot find jobs and that cannot take care of their families.

So poverty and dependence on the government are absolutely exploding.  We have a system that is so messed up that it is hard to even put it into words.  The middle class is being viciously shredded, and most Americans just continue to applaud the politicians from both parties that are doing this to us.

Our economy is being gutted at the same time that the welfare state is experiencing unprecedented growth.  Instead of giving us real answers, our “leaders” just continue to borrow, spend and print more money.  We are about to hit the debt limit again, and the Obama administration is saying that we should just do away with the debt limit permanently.

Most of our politicians don’t seem to understand that they are systematically destroying our economy and the bright futures that our children and our grandchildren were supposed to have.

But there are some politicians out there that get it.  Unfortunately, many of them live in other countries.  For example, Canadian MP Pierre Poilievre seems to have a firm grasp on what debt is doing to the United States.  The following are some excerpts from one of his speeches…

“By 2020, the US Government will be spending more annually on debt interest than the total combined military budgets of China, Britain, France, Russia, Japan, Germany, Saudi Arabia, India, Italy, South Korea, Brazil, Canada, Australia, Spain, Turkey, and Israel.”

“Through government spending the indulgence of one is the burden of another; through government borrowing, the excess of one generation becomes the yoke of the next; through international bailouts, one nation’s extravagance becomes another nation’s debt”

“Everyone takes, nobody makes, work doesn’t pay, indulgence doesn’t cost, money is free, and money is worthless.”

You can see his entire speech right here.

And if we continue down this path it is most definitely true that our money will eventually become worthless at some point.  Just today I was down at the grocery store, and a can of chili that I was able to get on sale for 75 cents a couple of years ago now has a “sale price” of $1.69.  If the Federal Reserve keeps recklessly printing dollars, eventually we will be fortunate to get a can of chili for 10 bucks.  Things cost too much already, and the Fed seems absolutely determined to cut the legs out from under the U.S. dollar.

Unfortunately, printing money is the only way that we are going to be able to service the gigantic amounts of debt that we are accumulating.

According to Chris Cox and Bill Archer, two men who served on Bill Clinton’s Bipartisan Commission on Entitlement and Tax Reform, there is no way in the world that we could raise taxes high enough to pay for all of the obligations that we are currently taking on.  They say that even if we taxed all corporations and all individuals at a 100% tax rate on all income over $66,193,  “it wouldn’t be nearly enough to fund the over $8 trillion per year in the growth of U.S. liabilities.”

Are you starting to get an idea of how much trouble we are in?

We don’t have enough money to pay for all of this.

We are broke.

Our current economy is a debt-induced illusion, and we will soon be waking up to a tremendous amount of pain.

Are you ready?

Are You Ready?

Say Goodbye To The Good Life

Say Goodbye To The Good Life - The U.S. Capitol With A Babylonian Holiday Tree In The ForegroundWill this be the last normal holiday season that Americans ever experience?  To many Americans, such a notion would be absolutely inconceivable.  After all, in the affluent areas of the country restaurants and malls are absolutely packed.  Beautiful holiday decorations are seemingly everywhere this time of the year and children all over the United States are breathlessly awaiting the arrival of Santa Claus.  Even though poverty is exploding to unprecedented levels, most families will still have mountains of presents under their Christmas trees.  Of course a whole lot of those presents were purchased with credit cards, but people don’t like to talk about that.  It kind of spoils the illusion.  Sadly, the truth is that our entire economy is a giant illusion.  The extreme prosperity that we have been enjoying has been fueled by debt, and any future prosperity that we will experience is completely dependent on our ability to go into even more debt.  The total amount of debt in our economy is almost 10 times larger than it was just 30 years ago, but we don’t like to think about that too much.  Most Americans are way too busy living the good life to be bothered with “doom and gloom”.  Well, get ready to say goodbye to normal.  As history has shown us, no financial bubble lasts forever, and time is rapidly running out for us.

You know that the hour is late when even mainstream news sources start publishing articles with titles such as this: “Will 2013 Mark the Beginning of American Decline?”

That article appeared on Bloomberg.com the other day, and it was written by Simon Johnson, a former chief economist at the International Monetary Fund.  He is convinced that a day of reckoning is coming for U.S. government finances, and he seems resigned to the fact that we will not be ready when that day arrives…

“Sooner or later, it will be America’s turn to fall out of favor with investors and to see its own interest rates rise. It is hard to know when that day will come, or precisely what pressures the country will face.

Let me only venture one forecast: We will not be ready.”

Other analysts are far more pessimistic.  For example, the following is what Gerald Celente said about the “bond bubble” during a recent interview with King World News…

Eric King: “Gerald, I wanted to take a look at this upcoming issue you have coming out. (In here it says,) ‘Bonds Away! The bond bomb is ready to explode … threatening to make the real estate and dot-com bubbles, and even the Great Recession, look like market corrections.’ Can you talk about that?”

Celente: “Yes. This piece is being penned by Dr. Paul Craig Roberts, the former Assistant Treasury Secretary under Ronald Reagan. And he is convinced that the bond bubble is about to burst. This cannot continue to go on the way it is. Everyone knows that the whole game is rigged, and so is this….”

“The whole game is rigged. It’s ready to go down, and Dr. Paul Craig Roberts believes it’s ‘Bonds Away’ in 2013 as the bond bubble explodes and brings about a financial disaster even worse than the Great Depression.”

Eric King: “He’s saying here it’s a road to financial collapse that we are going to head down when this thing bursts.”

Celente: “It is. Because the whole world is being propped up by these phony bonds and it’s going to collapse. It has to happen. Interest rates are going to start going up, and when they do the bond bubble explodes. You cannot keep interest rates at zero for this amount of time and expect anything other than disaster to follow.”

For much more on all this, you can listen to another excellent interview with Gerald Celente right here.

Our politicians just assume that we will be able to borrow trillions upon trillions of dollars far into the future at super low interest rates, but that is a very dangerous assumption.

As I noted the other day, the average rate of interest on U.S. government debt was 2.534 percent at the end of November.  If that number just rose to where it was about a decade earlier we would be in a massive amount of trouble.

Back in the year 2000, the average rate of interest on U.S. government debt was 6.638 percent.  If we were at that level today, the U.S. government would be paying out more than a trillion dollars a year just in interest on the national debt.

But our politicians just keep borrowing and spending as if we could do this forever.

From the time that George Washington was inaugurated (1789) to the time that George W. Bush was inaugurated (2001), the U.S. government accumulated about 5.7 trillion dollars of debt.

During the first four years of the Obama administration, the U.S. government accumulated about 5.7 trillion dollars of debt.

How can anyone support this kind of insanity?

You can see an excellent video demonstrating the vastness of our national debt right here.  In the end, all of this debt will absolutely destroy the U.S. dollar, our economic system and the bright futures that our children and our grandchildren were supposed to have.

As if all of that was not enough to be concerned about, there is also the threat that Wall Street could implode at any time.  Most Americans have no idea that Wall Street has been transformed into the largest casino in the history of the world.  The “too big to fail” banks are the ringleaders, and the derivatives bubble hangs over our financial system like a “sword of Damocles” that could fall at virtually any moment.

Everything will remain fine as long as the spiral of derivatives that our bankers have constructed remains perfectly balanced.  But if something happens and it becomes unbalanced and starts to collapse, the consequences could be unlike anything we have ever seen before.

A recent Zero Hedge article entitled “1000x Systemic Leverage: $600 Trillion In Gross Derivatives ‘Backed’ By $600 Billion In Collateral” detailed how there is barely any collateral backing up the hundreds of trillions of dollars of derivatives that are out there…

But a bigger question is what is the actual collateral backing this gargantuan market which is about 10 times greater than the world’s combined GDP, because as the “derivative” name implies all this exposure is backed on some dedicated, real assets, somewhere. Luckily, the IMF recently released a discussion note titled “Shadow Banking: Economics and Policy” where quietly hidden in one of the appendices it answers precisely this critical question. The bottom line: $600 trillion in gross notional derivatives backed by a tiny $600 billion in real assets: a whopping 0.1% margin requirement! Surely nothing can possibly go wrong with this amount of unprecedented 1000x systemic leverage.

Our entire economy has become a giant pyramid of debt, risk and leverage.  At some point there is going to be a giant crash.  When that happens, people are going to become very desperate.

When people become very desperate, they often accept “solutions” that they were not willing to consider previously.

We need to learn some lessons from history.  This is exactly the kind of thing that happened back in the 1930s.

For example, an elderly woman named Kitty Werthmann is telling audiences what life was like in Austria back in the late 1930s…

“In 1938, Austria was in deep Depression. Nearly one-third of our workforce was unemployed. We had 25 percent inflation and 25 percent bank loan interest rates.”

“Farmers and business people were declaring bankruptcy daily. Young people were going from house to house begging for food. Not that they didn’t want to work; there simply weren’t any jobs.”

The Austrian people were really hurting and they were desperate for answers.  When Hitler came to them with “solutions”, they were ready to embrace him with open arms…

“We looked to our neighbor on the north, Germany, where Hitler had been in power since 1933.” she recalls. “We had been told that they didn’t have unemployment or crime, and they had a high standard of living.”

“Nothing was ever said about persecution of any group – Jewish or otherwise. We were led to believe that everyone in Germany was happy. We wanted the same way of life in Austria. We were promised that a vote for Hitler would mean the end of unemployment and help for the family. Hitler also said that businesses would be assisted, and farmers would get their farms back.””Ninety-eight percent of the population voted to annex Austria to Germany and have Hitler for our ruler.”

“We were overjoyed,” remembers Kitty, “and for three days we danced in the streets and had candlelight parades. The new government opened up big field kitchens and everyone was fed.”

Sadly, America is already starting to go down the same path in many ways.  If you doubt this, you can read the rest of her account right here.

Right now, things are still relatively good in America.  Yes, there are a whole host of economic numbers that look really bad, but what we are experiencing right now is nothing compared to the horrific economic pain that is coming.

When our economy finally crashes, nobody is going to be able to press a button and restore things to how they were previously.  We will be told that we have to “adjust” and consider “new solutions” to our “new challenges”.  Someday we will look back on the good life that we were enjoying in 2010, 2011 and 2012 and wish that we could go back to those days.

So enjoy the relative peacefulness and prosperity of these times while you still can.  A horrific economic collapse is on the way, and once it strikes none of our lives will ever be the same.

Santa Claus - A Symbol Of Our Materialism

75 Economic Numbers From 2012 That Are Almost Too Crazy To Believe

75 Economic Numbers From 2012 That Are Almost Too Crazy To BelieveWhat a year 2012 has been!  The mainstream media continues to tell us what a “great job” the Obama administration and the Federal Reserve are doing of managing the economy, but meanwhile things just continue to get even worse for the poor and the middle class.  It is imperative that we educate the American people about the true condition of our economy and about why all of this is happening.  If nothing is done, our debt problems will continue to get worse, millions of jobs will continue to leave the country, small businesses will continue to be suffocated, the middle class will continue to collapse, and poverty in the United States will continue to explode.  Just “tweaking” things slightly is not going to fix our economy.  We need a fundamental change in direction.  Right now we are living in a bubble of debt-fueled false prosperity that allows us to continue to consume far more wealth than we produce, but when that bubble bursts we are going to experience the most painful economic “adjustment” that America has ever gone through.  We need to be able to explain to our fellow Americans what is coming, why it is coming and what needs to be done.  Hopefully the crazy economic numbers that I have included in this article will be shocking enough to wake some people up.

The end of the year is a time when people tend to gather with family and friends more than they do during the rest of the year.  Hopefully many of you will use the list below as a tool to help start some conversations about the coming economic collapse with your loved ones.  Sadly, most Americans still tend to doubt that we are heading into economic oblivion.  So if you have someone among your family and friends that believes that everything is going to be “just fine”, just show them these numbers.  They are a good summary of the problems that the U.S. economy is currently facing.

The following are 50 economic numbers from 2012 that are almost too crazy to believe…

#1 In December 2008, 31.6 million Americans were on food stamps.  Today, a new all-time record of 47.7 million Americans are on food stamps.  That number has increased by more than 50 percent over the past four years, and yet the mainstream media still has the gall to insist that “things are getting better”.

#2 Back in the 1970s, about one out of every 50 Americans was on food stamps.  Today, about one out of every 6.5 Americans is on food stamps.

#3 According to one calculation, the number of Americans on food stamps now exceeds the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”

#4 According to one recent survey, 55 percent of all Americans have received money from a safety net program run by the federal government at some point in their lives.

#5 For the first time ever, more than a million public school students in the United States are homeless.  That number has risen by 57 percent since the 2006-2007 school year.

#6 Median household income in the U.S. has fallen for four consecutive years.  Overall, it has declined by over $4000 during that time span.

#7 Families that have a head of household under the age of 30 have a poverty rate of 37 percent.

#8 The percentage of working age Americans with a job has been under 59 percent for 39 months in a row.

#9 In September 2009, during the depths of the last economic crisis, 58.7 percent of all working age Americans were employed.  In November 2012, 58.7 percent of all working age Americans were employed.  It is more then 3 years later, and we are in the exact same place.

#10 When you total up all working age Americans that do not have a job in America today, it comes to more than 100 million.

#11 According to one recent survey, 55 percent of all small business owners in America “say they would not start a business today given what they know now and in the current environment.”

#12 The number of jobs at new small businesses continues to decline.  According to economist Tim Kane, the following is how the decline in the number of startup jobs per 1000 Americans breaks down by presidential administration…

Bush Sr.: 11.3

Clinton: 11.2

Bush Jr.: 10.8

Obama: 7.8

#13 The U.S. share of global GDP has fallen from 31.8 percent in 2001 to 21.6 percent in 2011.

#14 The United States has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.

#15 There are four major U.S. banks that each have more than 40 trillion dollars of exposure to derivatives.

#16 In 2000, there were more than 17 million Americans working in manufacturing, but now there are less than 12 million.

#17 According to the Pew Research Center, 61 percent of all Americans were “middle income” back in 1971.  Today, only 51 percent of all Americans are.

#18 The Pew Research Center has also found that 85 percent of all middle class Americans say that it is harder to maintain a middle class standard of living today than it was 10 years ago.

#19 62 percent of all middle class Americans say that they have had to reduce household spending over the past year.

#20 Right now, approximately 48 percent of all Americans are either considered to be “low income” or are living in poverty.

#21 Approximately 57 percent of all children in the United States are living in homes that are either considered to be either “low income” or impoverished.

#22 According to one survey, 77 percent of all Americans are now living paycheck to paycheck at least part of the time.

#23 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.

#24 The average amount of time that an unemployed worker stays out of work in the United States is 40 weeks.

#25 If you can believe it, approximately one out of every four American workers makes 10 dollars an hour or less.

#26 According to the U.S. Census Bureau, an all-time record 49 percent of all Americans live in a home where at least one person receives financial assistance from the federal government.  Back in 1983, that number was less than 30 percent.

#27 Right now, more than 100 million Americans are enrolled in at least one welfare program run by the federal government.  And that does not even count Social Security or Medicare.  Overall, there are almost 80 different “means-tested welfare programs” that the federal government is currently running.

#28 When you account for all government transfer payments and all forms of government employment, more than half of all Americans are now at least partially financially dependent on the government.

#29 Barack Obama has been president for less than four years, and during that time the number of Americans “not in the labor force” has increased by nearly 8.5 million.  Something seems really “off” about that number, because during the entire decade of the 1980s the number of Americans “not in the labor force” only rose by about 2.5 million.

#30 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

#31 According to USA Today, many Americans have actually seen their water bills triple over the past 12 years.

#32 There are now 20.2 million Americans that spend more than half of their incomes on housing.  That represents a 46 percent increase from 2001.

#33 Right now, approximately 25 million American adults are living with their parents.

#34 As the economy has slowed down, so has the number of marriages.  According to a Pew Research Center analysis, only 51 percent of all Americans that are at least 18 years old are currently married.  Back in 1960, 72 percent of all U.S. adults were married.

#35 At this point, only 24.6 percent of all jobs in the United States are good jobs.

#36 In 1999, 64.1 percent of all Americans were covered by employment-based health insurance.  Today, only 55.1 percent are covered by employment-based health insurance.

#37 Recently it was announced that total student loan debt in the United States has passed the one trillion dollar mark.

#38 If you can believe it, one out of every seven Americans has at least 10 credit cards.

#39 One survey of business executives has ranked California as the worst state in America to do business for 8 years in a row.

#40 In the city of Detroit today, more than 50 percent of all children are living in poverty, and close to 50 percent of all adults are functionally illiterate.

#41 It is being projected that half of all American children will be on food stamps at least once before they turn 18 years of age.

#42 More than three times as many new homes were sold in the United States in 2005 as will be sold in 2012.

#43 If you can believe it, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed last year.

#44 The U.S. economy continues to trade good paying jobs for low paying jobs.  60 percent of the jobs lost during the last recession were mid-wage jobs, but 58 percent of the jobs created since then have been low wage jobs.

#45 Our trade deficit with China in 2011 was $295.5 billion.  That was the largest trade deficit that one country has had with another country in the history of the planet.

#46 The United States has lost an average of approximately 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001.

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

#48 The U.S. tax code is now more than 3.8 million words long.  If you took all of William Shakespeare’s works and collected them together, the entire collection would only be about 900,000 words long.

#49 According to the IMF, the global elite are holding a total of 18 trillion dollars in offshore banking havens such as the Cayman Islands.

#50 The value of the U.S. dollar has declined by more than 96 percent since the Federal Reserve was first created.

#51 2012 was the third year in a row that the yield for corn has declined in the United States.

#52 Experts are telling us that global food reserves have reached their lowest level in almost 40 years.

#53 One recent survey discovered that 40 percent of all Americans have $500 or less in savings.

#54 If you can believe it, one recent survey found that 28 percent of all Americans do not have a single penny saved for emergencies.

#55 Medical costs related to obesity in the United States are estimated to be approximately $147 billion a year.

#56 Corporate profits as a percentage of GDP are at an all-time high.  Meanwhile, wages as a percentage of GDP are near an all-time low.

#57 Today, the wealthiest 1 percent of all Americans own more wealth than the bottom 95 percent combined.

#58 The wealthiest 400 families in the United States have about as much wealth as the bottom 50 percent of all Americans combined.

#59 The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30 percent of all Americans combined.

#60 At this point, the poorest 50 percent of all Americans collectively own just 2.5% of all the wealth in the United States.

#61 Nearly 500,000 federal employees now make at least $100,000 a year.

#62 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.

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

#64 Nearly 15,000 retired federal workers are collecting federal pensions for life worth at least $100,000 annually.  The list includes such names as Newt Gingrich, Bob Dole, Trent Lott, Dick Gephardt and Dick Cheney.

#65 U.S. taxpayers spend more than 20 times as much on the Obamas as British taxpayers spend on the royal family.

#66 Family homelessness in the Washington D.C. region (one of the wealthiest regions in the entire country) has risen 23 percent since the last recession began.

#67 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.

#68 During fiscal year 2012, 62 percent of the federal budget was spent on entitlements.

#69 Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, approximately one out of every 6 Americans is on Medicaid.

#70 It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

#71 Medicare is also growing by leaps and bounds.  As I wrote about recently, 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.

#72 Thanks to our foolish politicians (including Obama), 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.

#73 Amazingly, the U.S. national debt is now up to 16.3 trillion dollars.  When Barack Obama first took office the national debt was just 10.6 trillion dollars.

#74 During the first four years of the Obama administration, the U.S. government accumulated about as much debt as it did from the time that George Washington took office to the time that George W. Bush took office.

#75 Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was originally created back in 1913.

Please share this article with as many people as you can.  Time is running out, and we need to wake up as many people as possible.

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