Debt

Madness: 39 Things That Are Driving Ordinary Americans Absolutely Crazy

Have you noticed that almost everyone seems really angry these days?  Frustration with the government and with most of the other major institutions in our society seems to grow by the day.  According to a brand new ABC News/Washington Post poll, 80 percent of Americans say that they are either dissatisfied or angry with the government.  Americans are deeply divided about what the solutions to our problems are, but what almost everyone can agree on is that our problems are getting worse.  Watching all of the madness that is going on in Washington D.C. and in our state capitals is almost enough to drive anyone absolutely crazy.  Our nation is drowning in an ocean of debt, jobs are being shipped overseas at an alarming rate, thousands of stores are closing, poverty is exploding, greed has become a national pastime and corruption is seemingly everywhere.  The American people are incredibly frustrated because the vast majority of our “leaders” appear to be too incompetent or too corrupt to deal with our problems.

If you visit just about any website on the Internet that deals with politics or the economy and spend some time reading the comments that people leave you will quickly see how angry people are becoming.  A lot of times people have no other outlets for the intense frustration that they are feeling and so they just let it all come out online.  Yes, Americans have always complained about the government, but the madness that we are seeing today is really unprecedented in modern U.S. history.  Something has fundamentally changed.

The U.S. government and most of our other major societal institutions are rapidly losing the faith of the American people.  But society cannot function without trust.

So what is going to happen once all of the trust is gone?

The following are 39 things that are driving ordinary Americans absolutely crazy right now….

#1 According to Newsweek, close to one out of every five American men between the ages of 25 and 54 does not have a job at the moment.  So why is the “greatest economy on earth” unable to provide jobs for nearly 20 percent of the men that are in their prime working years?

#2 Last year, over a million homes were repossessed by financial institutions.  This year a similar number of repossessions is expected.  Sometimes these evictions are absolutely heartbreaking.  Just check out the following excerpt from a recent Newsweek article….

To understand American anger, that roiling storm sometimes dubbed our national “mood,” spend a day with Cook County Sheriff Tom Dart. Since 2006 the unlikely lawman—a tea drinker who listens to Bobby Kennedy speeches on his way to work—has overseen all foreclosures and evictions in the Chicago area, one of the hardest hit nationwide. The process does not always go well. One evictee shot himself in the head, remained conscious, and calmly tried to raise the pistol again as deputies battered the front door.

#3 Companies like Netflix and Chipotle are significantly raising prices.  Meanwhile, Ben Bernanke claims that there is hardly any inflation.  He must not go grocery shopping much.

#4 The government keeps telling us that the economy is improving, and yet more stores keep closing.  The Gap has announced that up to 200 stores will be closed over the next two years.  Perkins has announced that they will be closing 58 restaurants.  Borders has announced that they will be shutting down their remaining 399 stores and that 10,700 employees will lose their jobs.  Yes, the economy is really buzzing right now.

#5 Government services all over the nation are being cut back.  An atmosphere of austerity has descended on the entire country.  For example, Postmaster General Patrick Donahoe says that we may soon have to say goodbye to Saturday mail delivery.

#6 Many broke public school systems are now charging parents lots of money for things that used to be free.  The Wall Street Journal says that one family in Ohio has to shell out over $4,000 a year for basic school activities….

Budget shortfalls have prompted Medina Senior High to impose fees on students who enroll in many academic classes and extracurricular activities. The Dombis had to pay to register their children for basic courses such as Spanish I and Earth Sciences, to get them into graded electives such as band, and to allow them to run cross-country and track. The family’s total tab for a year of public education: $4,446.50.

#7 The Federal Reserve gets to give out tens of billions of dollars of nearly interest-free loans to their bankster friends while tens of millions of American families desperately try to survive an economic downturn that was caused by those same banksters.

#8 We have gotten ourselves into a position where we are in so much debt to China that we have to constantly be concerned about how they feel about our financial status.  Earlier this week, one top Chinese official urged the U.S. government to do something to boost confidence in the U.S. dollar and in U.S. government debt….

“We hope the U.S. government will take responsible policies and measures to boost global financial market confidence and respect and protect the interests of investors.”

#9 The national debt continues to spiral out of control and our politicians seem unwilling to do anything serious about it.  If you combine all sources of income, it is estimated that LeBron James makes about 42 million dollars a year.  If he continued to make money at that rate, it would take him 23,809 years to make a trillion dollars.  Yet our politicians see no problem with running trillion dollar deficits year after year.

#10 Unless our politicians do something dramatic, the federal government is headed straight toward financial hell.  It is being projected that the U.S. national debt will hit 344% of GDP by the year 2050 if we continue on our current course.

#11 It is not just the federal government that is broke.  Right now, there are a lot of state and local governments that are teetering on the brink of financial disaster.  Moody’s has announced that it will be reviewing, and possibly downgrading, the credit ratings of Maryland, New Mexico, South Carolina, Tennessee and Virginia.  The city of Harrisburg, Pennsylvania is such a financial mess that nobody really has any idea how to fix their problems.

#12 All over the United States, highways, water treatment plants, libraries, parking meters, airports and power plants are being sold off (much of the time to foreigners) in order to plug short-term holes in state and local budgets.

#13 The combination of federal government spending, state government spending and local government spending now accounts for a larger share of U.S. GDP than at any other time in our history.

#14 Police all over America have been shutting down lemonade stands run by little children.  At least one police chief in Wisconsin was good enough to apologize when it happened in his area.  It is too bad that there aren’t more police out there that have a little common sense.

#15 The U.S. housing crash shows no signs of abating.  Real estate construction is absolutely dead.  In fact, right now we are on track for the lowest number of total housing completions that the U.S. government has ever recorded in a single year.

#16 In June, sales of previously-owned homes in the United States declined to a seven month low.  Without good jobs, the American people cannot afford to buy homes.  Many of those that do have good incomes are being turned down by mortgage lenders.

#17 The supply of existing homes for sale continues to go up.  That means that it is going to get even harder for average Americans to sell their homes.

#18 The value of U.S. homes has fallen by a total of approximately 6.6 trillion dollars since the peak of the housing market.

#19 It isn’t just banks that are kicking people out of their homes.  All over the country, homeowners’ associations are aggressively using their powers to boot American families out on to the streets.

#20 Instead of being used by families, all over the country thousands of foreclosed homes are rapidly filling up with mold.

#21 Really bizarre thefts are being reported all over the United States right now.  For example, it was just reported that some crooks in Pennsylvania ripped up and hauled away about 100,000 pounds of train track.

#22 Authorities continue to insist that violent crime is going down, and yet the number of police officers killed by gunfire is on pace to easily set another all-time record for the second year in a row.

#23 One recent study found that approximately 47 percent of all meat and poultry in the United States “is contaminated with antibiotic-resistant Staph“.

#24 The health insurance companies keep jacking up rates on all of us, and yet they also continue to report record breaking profits.

#25 The Obama administration is now using “mystery shoppers” to spy on doctors.  The following is from a report in the New York Times….

Alarmed by a shortage of primary care doctors, Obama administration officials are recruiting a team of “mystery shoppers” to pose as patients, call doctors’ offices and request appointments to see how difficult it is for people to get care when they need it.

#26 Corruption appears to be rampant on every level of American society today.  For example, one NYU professor recently discovered that 20 percent of his students were blatantly cheating on assignments.

#27 Thanks to insane tax loopholes, a substantial percentage of the billions of dollars of income that hedge fund managers make is only taxed at a maximum rate of 15 percent.  Meanwhile, middle class American families are being absolutely hammered with taxes.

#28 The “too big to fail” banks now control 77 percent of all of the banking assets in the country.

#29 In 2010, the United States had the worst current account balance in the world.  The U.S. had a current account balance of negative 561 billion dollars for 2010.  No other nation had a negative current account balance that even exceeded 70 billion dollars.  The amount of wealth leaving our country and being transferred to the rest of the world is absolutely mind blowing.

#30 One recent poll found that 72 percent of Americans believe that we are involved in too many wars.  But the Obama administration seems to think that we should be “the police of the world” and they just keep getting the U.S. military involved in more conflicts.

#31 Startling revelations are starting to come out about a scandal so big that it could shake up Washington D.C. for years to come.  Apparently, ATF agents were ordered to get thousands of guns into the hands of the Mexican drug cartels and they were also apparently ordered not to follow those guns to see where they ended up.

#32 The top 5 percent of all income earners in America account for almost as much consumer spending as the bottom 80 percent of all income earners.

#33 The number of Americans that are going to food pantries and soup kitchens has increased by 46% since 2006.  But instead of being treated with kindness, many communities are treating the growing ranks of the poor as “outcasts” or criminals.

#34 Despite the promises of our politicians, globalism is absolutely shredding the American economy.  According to Forbes, the United States has been losing an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

#35 There are no signs that our rampant unemployment problem is going to end any time soon.  In fact, right now it takes the average unemployed worker about 40 weeks to find a new job.

#36 The vast majority of U.S. consumers are tapped out at this point.  Just consider the following quote from the New York Times….

The auto industry is on pace to sell 28 percent fewer new vehicles this year than it did 10 years ago — and 10 years ago was 2001, when the country was in recession. Sales of ovens and stoves are on pace to be at their lowest level since 1992. Home sales over the past year have fallen back to their lowest point since the crisis began.

#37 Right now in Congress there is a proposal to change the way that inflation is calculated.  According to The Senior Citizens League, this change would cause the average retiree to lose out on $18,000 in Social Security benefits over a 25 year period.

#38 Our tax system is fundamentally unjust.  Just look at the example of General Electric.  G.E. is a favorite of the Obama administration and somehow they get away with not paying taxes year after year. Just check out what the New York Times claims G.E. got away with in 2010….

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

#39 The TSA continues to abuse U.S. travelers in some of the most bizarre ways imaginable.  For example, one 95-year-old grandmother in a wheelchair that is dying from cancer was asked to remove her adult diaper so that TSA “officials” could feel her up properly.  In what kind of a society does this type of thing go on?

No wonder the American people are losing faith.  It is hard to keep believing when you see rampant corruption and decay everywhere you look.

But mostly, the American people want to be able to take care of their families.

The American people are not going to start feeling better about things until there are plenty of good jobs to go around.  If people cannot pay their mortgages and provide for their families then they are not going to be content no matter what our politicians tell them.

Unfortunately, the “new normal” is going to be a lot different from what the “old normal” was.  The United States is a declining power.  Every month our nation is bleeding more jobs, more factories and more wealth.  Every month our debt problems on the federal, state and local levels get even worse.  We have been living far beyond our means for decades, and we are rapidly getting to the point where that simply will not be possible anymore.

The long-term trends that have gotten us to this point have taken decades to develop.  There is no “quick fix” that some politician is going to bring in that is going to create some kind of miracle.

We are now starting to pay the price for decades of bad decisions.  As the consequences of our decisions become more apparent, the American people are going to get angrier and angrier.

Unless something very dramatic happens, we are heading for a very ugly chapter in American history.

Let us hope for the best, but let us also prepare for the worst.

18 Signs That Global Financial Markets Smell Blood In The Water

Can you smell it?  There is blood in the water.  Global financial markets are in turmoil.  Banking stocks are getting slaughtered right now.  European bond yields are absolutely soaring.  Major corporations are announcing huge layoffs.  The entire global financial system appears to be racing toward another major crisis.  So could we potentially see a repeat of 2008?  Sadly, when the next big financial crisis happens it might be worse than 2008.  Back in the middle of 2008, the U.S. national debt was less than 10 trillion dollars.  Today it is over 14 trillion dollars. Back in 2008, none of the countries in the EU were on the verge of financial collapse.  Today, several of them are.  This time if the global financial system starts falling apart the big governments around the world are not going to be able to do nearly as much to support it.  That is why what is happening right now is so alarming.  As signs of weakness spread, the short sellers and the speculators are starting to circle.  They can smell the money.

Back in 2008, bank stocks led the decline.  Today, that appears to be happening again.  The “too big to fail” banks are getting absolutely pummeled right now.  Most people don’t have much sympathy for the banksters, but if we do see a repeat of 2008 they are going to be cutting off credit and begging for massive bailouts once again, and that would not be good news for the economy.

In Europe, the EU sovereign debt crisis just seems to get worse by the day.  Bond yields for the PIIGS are going haywire.  The higher the yields go, the worse the crisis is going to get.

Meanwhile, as I have written about previously, a bad mood has descended on world financial markets. Pessimism is everywhere and fear is spreading.  The short sellers and the speculators are eager to jump on any sign of weakness.  Investors all over the globe are extremely nervous right now.

So what happens next?

Well, nobody knows for sure.

But things certainly do not look good.

The following are 18 signs that global financial markets smell blood in the water….

#1 Banks stocks are absolutely getting hammered right now.  Bank of America hit a 52 week low on Monday.  Bank of America shares declined 4 percent to $9.61.

#2 So far this year, Bank of America stock is down about 27 percent.

#3 Bloomberg is reporting that Bank of America may be forced to increase its capital cushion by 50 billion dollars.

#4 Shares of Goldman Sachs and Morgan Stanley are near two year lows.

#5 Shares in Citigroup fell 2.5 percent on Monday.

#6 Moody’s recently warned that it may be forced to downgrade the debt ratings of Bank of America, Citigroup and Wells Fargo.

#7 Barclays Capital, Goldman Sachs, Bank of America, JPMorgan Chase and Morgan Stanley are all either considering staff cuts or are already laying workers off.

#8 The deputy European director of the International Monetary Fund says that the Greek debt crisis is “on a knife’s edge“.

#9 Moody’s has slashed Ireland’s bond rating all the way to junk status.

#10 The yield on 2 year Portuguese bonds is now over 20 percent, the yield on 2 year Irish bonds is now over 23 percent and the yield on 2 year Greek bonds is now over 35 percent.

#11 Shares of Italy’s largest bank dropped by a whopping 6.4% on Monday.

#12 On Monday, the yield on 10 year Italian bonds was the highest it has been since the euro was adopted.

#13 On Monday, the yield on 10 year Spanish bonds was also the highest it has been since the euro was adopted.

#14 Shares of Germany’s largest bank fell by a staggering 7% on Monday and are down a total of 22% so far this month.

#15 Citigroup’s chief economist, William Buiter, says that without direct intervention by the ECB there is going to be a wave of sovereign defaults across Europe….

“Nothing stands in the way of multiple sovereign defaults except the ECB: they are the only game in town, there is nothing else”

#16 Cisco has announced plans to axe 16 percent of its workers.

#17 Borders Group has announced that it will be liquidating all remaining assets.  That means that 399 stores will be closed and 10,700 workers will lose their jobs.

#18 During times of great crisis, many investors seek safe havens for their money.  On Monday, the price of gold shot past $1600 an ounce.

These are not normal financial times.  The worldwide debt bubble is starting to burst and nobody is quite sure what is going to happen next.  Certainly we are going to continue to see financial authorities all over the world do their best to keep the system going.  But as we saw in 2008, things can spiral out of control very quickly.

Just remember, back at the beginning of 2008 very few people would have ever imagined that the biggest financial institutions in America would be begging for hundreds of billions of dollars in bailouts by the end of that year.

When confidence disappears, the game can change very quickly.  To the vast majority of economists it would have been unimaginable that the yield on 2 year Greek bonds would be over 35 percent in mid-2011.

But here we are.

The entire global financial system is a house of cards built on a foundation of sand.  It is more vulnerable today than it has been at any other time since World War II.  When a couple of major dominoes fall, it is likely to set off a massive chain reaction.

The global financial system of today was not designed with safety and security in mind.  It was designed for greedy people to be able to make as much money as possible as quickly as possible.  The banksters don’t care about the greater good of mankind.  What they care about is making huge piles of cash.

There is way too much risk, way too much debt and way too much leverage in the global financial marketplace.  You would have thought that 2008 should have been a major wake up call for financial authorities around the world, but very few significant changes have been made since that time.

The financial news is just going to keep getting worse.  This financial system is simply unsustainable.  It is fundamentally unsound.  The reality is that financial bubbles cannot keep expanding forever.  Eventually they must burst.

Over the next few weeks, keep a close eye on banking stocks and keep a close eye on European bond yields.

Hopefully things will stabilize.

Hopefully the next wave of the financial collapse is not about to hit us.

Hopefully the entire global financial system is not on the verge of a major implosion.

But you might want to get prepared just in case.

Too Big To Fail?: 10 Banks Own 77 Percent Of All U.S. Banking Assets

Back during the financial crisis of 2008, the American people were told that the largest banks in the United States were “too big to fail” and that was why it was necessary for the federal government to step in and bail them out.  The idea was that if several of our biggest banks collapsed at the same time the financial system would not be strong enough to keep things going and economic activity all across America would simply come to a standstill.  Congress was told that if the “too big to fail” banks did not receive bailouts that there would be chaos in the streets and this country would plunge into another Great Depression.  Since that time, however, essentially no efforts have been made to decentralize the U.S. banking system.  Instead, the “too big to fail” banks just keep getting larger and larger and larger.  Back in 2002, the top 10 banks controlled 55 percent of all U.S. banking assets.  Today, the top 10 banks control 77 percent of all U.S. banking assets.  Unfortunately, these giant banks are also colossal mountains of risk, debt and leverage.  They are incredibly unstable and they could start coming apart again at any time.  None of the major problems that caused the crash of 2008 have been fixed.  In fact, the U.S. banking system is more centralized and more vulnerable today than it ever has been before.

It really is difficult for ordinary Americans to get a handle on just how large these financial institutions are.  For example, the “big six” U.S. banks (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets equivalent to approximately 60 percent of America’s gross national product.

These huge banks are giant financial vacuum cleaners.  Over the past couple of decades we have witnessed a financial consolidation in this country that is absolutely unprecedented.

This trend accelerated during the recent financial crisis.  While the big boys were receiving massive bailouts, the hundreds of small banks that were failing were either allowed to collapse or they were told that they should find a big bank that was willing to buy them.

As a group, Citigroup, JPMorgan Chase, Bank of America and Wells Fargo held approximately 22 percent of all banking deposits in FDIC-insured institutions back in 2000.

By the middle of 2009 that figure was up to 39 percent.

That is not just a trend – that is a landslide.

Sadly, smaller banks continue to fail in large numbers and the big banks just keep growing and getting more power.

Today, there are more than 1,000 U.S. banks that are on the “unofficial list” of problem banking institutions.

In the absence of fundamental changes, the consolidation of the banking industry is going to continue.

Meanwhile, the “too big to fail” banks are flush with cash and they are getting serious about expanding.  The Federal Reserve has been extremely good to the big boys and they are eager to grow.

For example, Citigroup is becoming extremely aggressive about expanding….

Citigroup has been hiring dozens of investment bankers, dialing up advertising and drawing up plans to add several hundred branches worldwide, including more than 200 in major cities across the United States.

Hopefully the big banks will start lending again.  The whole idea behind the bailouts and all of the “quantitative easing” that the Federal Reserve did was to get money into the hands of the big banks so that they would lend it out to ordinary Americans and get the economy rolling again.

Well, a funny thing happened.  The big banks just sat on a lot of that money.

In particular, what they did was they deposited much of it at the Fed and drew interest on it.

Since 2008, excess reserves parked at the Fed have grown by nearly 1.7 trillion dollars.  Just check out the chart posted below….

The American people were promised that TARP and all of the other bailouts would enable the big banks to lend out lots of money which would help get the economy going for ordinary Americans again.

Well, it turns out that in 2009 (the first full year after Congress passed the bailout legislation) U.S. banks posted their sharpest decline in lending since 1942.

Lending has never fully recovered since the crash of 2008.  The big financial institutions like Goldman Sachs, Morgan Stanley and JPMorgan Chase have been able to get all the cash that they need, but they have not passed that generosity along to ordinary Americans.

In fact, the biggest U.S. banks have actually reduced small business lending by about 50 percent since the crash of 2008.

That doesn’t sound like what we were promised.

These “too big to fail” banks have been able to borrow gigantic amounts of money from the Fed for next to nothing and yet they still refuse to let credit flow to local communities.  Instead, the big banks have found other purposes for all of the super cheap money that they have been getting from the Fed as Ellen Brown recently explained….

It can be very profitable indeed for the big Wall Street banks, but the purpose of the near-zero interest rates was supposed to be to get banks to lend again. Instead, they are, indeed, paying “outrageous bonuses to their top executives;” using the money to engage in the same sort of unregulated speculation that nearly brought down the economy in 2008; buying up smaller banks; or investing this virtually interest-free money in risk-free government bonds, on which taxpayers are paying 2.5 percent interest (more for longer-term securities).

What makes things even worse is that these big banks often pay next to nothing in taxes.

For example, between 2008 and 2010, Wells Fargo made a total profit of 49.37 billion dollars.

Over that same time period, their tax bill was negative 681 million dollars.

Do you understand what that means?  Over that 3 year time period, Wells Fargo actually got 681 million dollars back from the U.S. government.

Isn’t that just peachy?

Meanwhile, the big financial giants have not learned their lessons and they continue to do business pretty much as they did it prior to 2008.

The big banks continue to roll up massive amounts of risk, debt and leverage.

Today, Wall Street has become one giant financial casino.  More money is made on Wall Street by making side bets (commonly referred to as “derivatives“) than on the investments themselves.

If the bets pay off for the big financial institutions, mind blowing profits can be made.  But if the bets go against the big financial institutions (as we saw in 2008), firms can collapse almost overnight.

In fact, it was derivatives that almost brought down AIG.  The biggest insurance company in the world almost folded in 2008 because of a whole bunch of really bad bets.

The danger from derivatives is so great that Warren Buffet once called them “financial weapons of mass destruction”.  It has been estimated that the notional value of the worldwide derivatives market is somewhere in the neighborhood of a quadrillion dollars.

The largest banks have tens of trillions of dollars of exposure to derivatives.  When the next great financial collapse happens, derivatives will almost certainly be at the center of it once again.  These side bets do not create anything real for the economy – they just make and lose huge amounts of money.  We never know when the next great derivatives crisis will strike.  Derivatives are essentially like a “sword of Damocles” that perpetually hangs over the U.S. financial system.

When I start talking about derivatives I get a lot of people in the financial community mad at me.  On Wall Street today you can bet on just about anything you can imagine.  Almost everyone in the financial world has gotten so used to making wild bets that they couldn’t even imagine a world without them.  If anyone even tried to put significant limits on futures, options and swaps it would cause Wall Street to throw a hissy fit.

But someday the dominoes are going to start to fall and the house of cards is going to come crashing down.  It is an open secret that our financial system is fundamentally unsound.  Even a lot of people working on Wall Street will admit that.  It is just that people are so busy making such big piles of money that nobody wants the party to stop.

It is only a matter of time until some of these big banks get into a huge amount of trouble again.  When that happens, we might really find out whether they are “too big to fail” or whether we could get along just fine without them.

10 Signs That The American People Are Starting To Freak Out About The Condition Of The Economy

All over America, restlessness and frustration are growing. It has now been almost three years since the great financial crash of 2008, and yet the U.S. economy is still a complete and total mess.  In fact, there are all sorts of signs that things are about to get even worse, and the American people are just about fed up.  Virtually every major poll, survey and measure of consumer confidence shows that the American people are becoming more pessimistic about the economy.  Millions of hard working Americans that worked their fingers to the bone for their employers and that did everything “right” are sitting at home on their couches tonight staring blankly at the television.  Many of them still have a hard time believing that they were laid off and that there is nobody out there that wants to give them a good job.  There are millions of other Americans that won’t get much sleep tonight because they will spend much of the night rolling around in bed wondering how they are possibly going to be able to pay the mortgage.  We have never faced such an extended economic downturn in modern U.S. history, and a lot of people are starting to freak out about the condition of the economy.  As Gerald Celente likes to say: “When people lose everything and have nothing left to lose – they lose it.”

Every single month, the number of good jobs continues to go down.  Wall Street actually rewards companies that have a good “outsourcing strategy”.  As I have written about previously, a growing percentage of the jobs that are being “created” these days are very low paying jobs.  But you can’t support a family, pay a mortgage or even afford decent health insurance on what you would make stocking shelves at Target or passing out buckets of chicken for KFC.

The American people keep waiting for “hope” and “change” to show up, but all they get instead are more helpings of “despair” and “frustration”.

Sadly, most Americans still cling to the hope that if the “next election” will just turn out the right way that things will be okay.  But the truth is that things seem to stay on pretty much the same course no matter who we put into office.

For many years the status quo seemed to be okay for most people, but now we are starting to reap the results of the economic seeds that we have sown.

Now our economic decline is starting to accelerate and people are starting to panic.  Most Americans may not know why all of this is happening, but what many of them do know is that something in their gut is telling them that things have gone terribly, terribly wrong somehow.

The following are 10 signs that the American people are starting to freak out about the condition of the economy….

#1 Things have already gotten so bad that Americans will literally trample one another just to get on a waiting list for rental assistance vouchers.  Just check out the following excerpt from a local news report about a recent incident in Texas….

At least eight people were hurt Thursday morning while scrambling to line up for a limited number of Dallas County rental vouchers — after waiting for hours in their cars.

People lined up Thursday morning to apply for Dallas County Section 8 housing vouchers. Dallas County sheriff’s spokesman Kim Leach estimated the crowd at about 5,000.

Video of this incident is posted below.  One of the people that was trampled was a pregnant woman….

#2 Almost every measurement of consumer confidence is going down.  For example, the Conference Board’s consumer confidence index fell from 61.7 in May to 58.5 in June.

#3 The Reuters/University of Michigan consumer sentiment index has fallen to 63.8 after being at 71.5 in June.  It is now the lowest that it has been since the last recession “ended”.

#4 The Rasmussen Consumer Index is down 9 points from a month ago.

#5 A recent poll taken by Rasmussen found that 68 percent of Americans believe that we are actually in a recession right now.

#6 According to Gallup, the percentage of Americans that lack confidence in U.S. banks is now at an all-time high of 36%.

#7 In many areas of the United States this summer, just about anything that is not bolted down is being stolen by people that are desperate for money.

#8 According to one recent poll, 39 percent of Americans believe that the U.S. economy has now entered a “permanent decline”.

#9 Another recent survey found that 48 percent of Americans believe that it is likely that another great Depression will begin within the next 12 months.

#10 According to a brand new Reuters/Ipsos poll, 63 percent of Americans believe that the nation is on the wrong track.  That figure is three percent higher than it was last month.

One of the only things preventing chaos from breaking out in the streets of our cities from coast to coast is government handouts.

Today, almost 20 percent of all personal income in the United States comes from benefits provided by the federal government.

You don’t believe this?  Just check out what the New York Times recently had to say….

Close to $2 of every $10 that went into Americans’ wallets last year were payments like jobless benefits, food stamps, Social Security and disability, according to an analysis by Moody’s Analytics.

There are tens of millions of Americans that are living “on the edge”, but at least the massive government handout programs are enabling most of them to survive.

So what happens when the checks from the government stop coming?

Look, I am not advocating that the “welfare society” that we have become is a good thing.  Today, Americans receive more in direct government benefits than they pay in taxes.  That is not even close to sustainable.

What I am pointing out is that tens of millions of Americans that are deeply suffering are currently being pacified by these government handouts.  Once the handouts are cut significantly or taken away completely it is going to unleash a lot of anger and frustration.

Of course what the American people really need are good jobs that will give them dignity and allow them to provide for their families, but millions of those keep getting shipped out of the country.

So the only thing that millions of Americans still have to hang on to are their government benefits.  Once that changes a whole lot of people are going to throw a fit.

In fact, we are already seeing some really bizarre behavior across the United States.  In many areas of the country we are literally watching society crumble right in front of our very eyes.

If you doubt this, just check out these two articles….

1) “Americans Gone Wild”

2) “18 Signs The Collapse Of Society Is Accelerating”

But not all Americans will resort to lawless behavior.  In fact, there are a lot of really good, hard working people out there that this economy has left behind.

There are some people that have put in decades of hard work only to see their dreams shrivel up over the past few years.

Some of the stories people send me are absolutely heartbreaking.  I have looked at each and every comment that has been left on The Economic Collapse over the past couple of years.  Needless to say, it has taken a huge investment of my time to go through more than 20,000 comments.  But in the process I have gotten a very good idea of what people are going through across the nation.

So how badly are people hurting?  Well, a reader identified as “Anna44” recently shared with us what some of her family members have been going through in this economy….

My B-I-L was a dealership owner/manager who worked long hours over 38 years and had to close his doors when Saturn was dissolved. When his dealership went under, 72 others lost their job. That’s 72 families who took a hit. He lost his home, everything. A few of his former employees lost their homes as well eventually. They were not lazy or WORTHLESS. It took him a year and a half to finally find something, but now he lives in a hotel unable to qualify for a house or apartment. This is an educated man who competed nationwide for top dog and got it more then once. His biggest fault? He’s almost 60, young enough to need the work, but too old to be hired.

As for my husband- 26 years AF officer, handling millions & billions on International & National levels has just entered his 7th month of unemployment. Two tours abroad- lazy he is NOT. He doesn’t qualify for unemployment, nor is he counted because he gets a retirement check. He wants and needs to work- yet there is little out there. If he doesn’t find something soon, we too will lose the home we sunk every cent into after 20 years of saving for it!

All across America tonight there are similar stories.  People have done everything “right” all of their lives and they are frustrated that now they have been pushed to the edge of poverty by this economy.

Unfortunately, it looks like things may soon get even worse.  Economist David Rosenberg recently told CNBC the following….

“We’re just one small shock away from the economy going back into recession.”

That is not what the American people want to hear.

What they want to hear is that things are about to get better.

What they want to hear is that things are going to get back to normal soon.

Sadly, that is just not going to be the case.

The economy is going to get worse and worse, and the frustration and the anger of the American people is just going to continue to grow.

 

If The U.S. Government Loses Its AAA Rating It Could Potentially Unleash Financial Hell Across The United States

For decades, the U.S. government has had a AAA rating.  On the scales used by the big three credit rating agencies, that is the highest credit rating that a government can get.  Moody’s scale actually uses lettering that is a little different from the other two big agencies (“Aaa” instead of  “AAA”), but you get the point. Right now, the U.S. government is closer than ever to losing its AAA rating.  The threat of a rating downgrade is going to continue to grow regardless of how the political theater that we are watching unfold in Washington D.C. plays out.   The truth is that the federal government has accumulated a debt that is so vast that it will never be paid back.  In fact, we are rapidly approaching the point when this debt will no longer be serviceable.  If the credit rating of the U.S. government is not slashed right now, it will be soon enough.  In fact, the truth is that the U.S. government is such a financial mess that it should have been done long ago.  But whenever the United States does lose its AAA rating, we could potentially see financial hell unleashed because it will also mean that there will almost certainly be a wave of credit rating downgrades from coast to coast.

As I have written about previously, government debt becomes more painful the higher that interest rates go.  When the big credit agencies downgrade the credit rating of a government, that is a signal to investors that they should ask for higher interest rates on debt issued by that government.

This does not always play out in practice (just look at Japan), but nations such as Greece, Portugal and Ireland sure are going through financial hell right now as they deal with reduced credit ratings and soaring interest rates.

Right now, the U.S. government is able to borrow gigantic quantities of money at ridiculously low interest rates. This is the primary reason why the debt disaster predicted by so many in the past has not arrived yet.

If the credit rating of the U.S. government is downgraded, it could finally get investors all over the world to realize that the game is over and that they should be demanding much higher returns on debt issued by the U.S. government.  The truth, as U.S. Representative Ron Paul put it recently, is that the U.S. government is already “insolvent” and at some point we are all going to have to face reality….

“Ultimately, the fundamentals show this country is bankrupt.”

So whether or not it happens right now, the truth is that at some point the credit rating of the U.S. government is going to go down and interest rates are going to go up.

Unfortunately, it appears that this might happen sooner rather than later.

Earlier this week, Moody’s Investors Service publicly announced that it would be reviewing our Aaa bond rating for a possible downgrade.

On Thursday, S&P actually went so far as to announce that there is a “50 percent chance” that it will downgrade the credit rating of the U.S. government within the next three months.

S&P has been warning of trouble for some time now.  Back on April 18th, Standard & Poor’s altered its outlook on U.S. government debt from “stable” to “negative” and warned that a downgrade was likely at some point soon if nothing changed.

If the credit rating of the U.S. government gets slashed and if that results in higher interest costs on the national debt, that is going to make it much harder to balance the budget.

The U.S. government will take in somewhere around 2.2 or 2.3 trillion dollars this year.  It will spend somewhere in the neighborhood of 3.5 or 3.6 trillion dollars this year.

Included in that spending is about 400 billion dollars that goes for interest on the national debt.

As I explained in a previous article, if our interest costs double or triple it is going to make it basically impossible to balance the budget under our current system.

If interest rates on U.S. government debt were to rise to moderate levels, we could soon be easily paying a trillion dollars a year just in interest on the national debt.

If interest rates on U.S. government debt were to rise to the levels that Greece, Portugal and Ireland are now facing, it would be beyond catastrophic.

But a reduced credit rating and higher interest rates would not just hurt the finances of the U.S. government.

Any financial institution that is linked to the U.S. government in any way would also probably be downgraded.

This fact was noted in the announcement put out by Moody’s this week….

In conjunction with this action, Moody’s has placed on review for possible downgrade the Aaa ratings of financial institutions directly linked to the government: Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks.

We have also placed on review for possible downgrade securities either guaranteed by, backed by collateral securities issued by, or otherwise directly linked to the government or the affected financial institutions.

Just think of the financial carnage that would cause.

Also, check out what one Bloomberg article had to say about the potential cascading effects of a credit rating downgrade for the U.S. government….

At least 7,000 top-rated municipal credits would have their ratings cut if the U.S. government loses its Aaa grade, Moody’s Investors Service said.

An “automatic” downgrade affecting $130 billion in municipal debt directly linked to the U.S. would occur if the federal level is reduced, Moody’s said yesterday in a report. Additionally, top-rated securities with no direct links to the national government will be reviewed for similar action.

But the nightmare would not end there.  The truth is that the credit ratings of large numbers of state and local governments from coast to coast would likely be reviewed and downgraded as well.  Right now, many state and local governments are scratching and clawing in a desperate attempt to survive financially, and a significant rise in interest costs would be enough to wipe many of them out.

The ripple effects of a U.S. government credit downgrade would be endless.

A lot of people argue that if the federal government ran a balanced budget from now on none of this would matter.

Unfortunately, that is not true.

At this point, a very high percentage of U.S. government debt is short-term debt.  That means that gigantic amounts of debt must be “rolled over” each year in addition to any new debt that we take on.  So even if interest rates rise significantly on just the existing debt that we have it is going to be a total nightmare.

And make no mistake, whether it happens now or later a collapse of U.S. government finances is coming.

David Murrin, the chief investment officer at Emergent Asset Management, recently told CNBC the following….

“It’s inevitable that the U.S. will default—it’s essentially an empire which is overextended and in decline—and that its financial system will go with it”

Right now it is being projected that the U.S. national debt will hit 344% of GDP by the year 2050 if we continue on our current course.  We are on a runaway train that is heading straight for a brick wall.

Europe is also a complete financial wreck.  The sovereign debt crisis over in the EU continues to grow worse by the day and there is no end in sight.

If the U.S. collapses, Europe is not strong enough to save it.  If Europe collapses, the U.S. is not strong enough to save it.

We really are entering an unprecedented time in world history.   We are on the verge of the first truly global financial disaster.

It is going to be interesting to see which major currency crashes and burns first.  Some think that it will be the euro.  Others think that it will be the dollar.

In any event, the reality is that the current global financial system is not sustainable.  The folks that are in charge can try to keep things together for as long as possible, but at some point the dominoes are going to start to fall and the house of cards is going to crash.

We have entered a time when there is going to be financial crisis after financial crisis.  Even if the EU and the U.S. government can somehow fix things for the moment, more problems are going to be just around the corner.

The world has become incredibly unstable and the entire globe is going to be shaken.  Most people cannot even conceive of the kind of financial hell that is coming our way as a nation.

Yes, it can be a bit sad to think about what is happening, but it is much better to be armed with the truth than to be totally clueless and totally unprepared.

15 Examples That Show Many Americans Have Become So Desperate That They Will Do Just About Anything For Money

More Americans than ever are desperate for money and many of them will do just about anything to get it.  The crumbling U.S. economy has pushed millions of ordinary Americans to the brink of utter desperation.  When it comes time to choose between being able to survive or breaking the law, many people are choosing to break the law.  These days it seems like Americans will do just about anything for money.  All over the country, there are areas where just about anything that is not bolted down is being stolen.  A lot of people have resorted to making money however they can – selling drugs, selling their bodies, shoplifting, invading homes, taking bribes, running credit card scams and even stealing from their own family members.  You will have a hard time believing some of the things that you are about to read below.  When people have their backs pushed up against the wall, often they find that they are willing to do things that they never imagined that they would do.  Things are getting crazy out there on the streets of America, and as the economy continues to decline things are going to get a lot crazier.

The following are 15 examples that show many Americans have become so desperate that they will do just about anything for money….

#1 In Utah, one unemployed 28 year old man is offering to be “human prey” for hunters for the bargain price of $10,000.  For an additional $2,000, he will let people hunt him down while he is running around naked.

#2 The Huffington Post is reporting that there has been an epidemic of air conditioning thefts all over the United States….

Across the country, in states like Illinois, Texas, Arizona, Georgia and Florida, there have been reports of thieves stealing unsecured air conditioning units weighing as much as 125 pounds.

#3 In Corpus Christi, Texas thieves have actually been breaking into funeral homes in order to steal the embalming fluid.

#4 Even police officers are committing desperate acts these days.  Just check out what one police officer in Chicago is charged with doing….

A Chicago Police officer stole $50,000 from his ailing elderly father to pay off his bills and gambling debts and unsuccessfully attempted to swipe his dad’s retirement savings by impersonating him

#5 Nothing is off limits to thieves these days.  Criminals recently broke into a southwest Atlanta beauty supply store and took off with $30,000 in hair extensions.

#6 In another area of Atlanta, thieves have been breaking down walls and busting bathroom fixtures with sledgehammers in order to get their hands on copper, brass and steel….

Kids in two Atlanta communities won’t have their neighborhood pools to help beat the summer heat, at least for now. Thieves used what is believed to be sledge hammers to bust walls and break fixtures in bathrooms at Adams and South Bend parks to steal copper, brass and steel.

#7 One grandmother in Florida has been accused of trying to sell her newborn grandson for $75,000.

#8 In Antioch, California a total of approximately 300 power poles were recently knocked down by thieves and stripped of their copper wiring.

#9 In Minnesota recently, a mob of teen girls brutally pummeled a mother and her two daughters until they were black and blue.  Apparently the mob of teen girls was enraged over a pair of missing sunglasses.

#10 In Asheville, North Carolina thieves recently took off with 4 metal tables and 16 metal chairs that were sitting outside a pizzeria.

#11 In Florida, thieves have actually been stealing storm drain covers.

#12 In Oregon, thieves recently broke into a Salvation Army community center and stole 3 large air conditioning units.  Now all the people that come to that facility for help and for community programs this summer will be absolutely sweltering.

#13 In the Cleveland area, two young boys that had set up a lemonade stand were robbed in broad daylight.  The crooks got away with approximately 12 dollars.

#14 In Oklahoma, thieves recently broke into a church and stole “arts and crafts supplies meant to help teach bible stories to children“.

#15 A 59 year old man from North Carolina named Richard James Verone was so desperate for money that he actually robbed a bank and got caught on purpose so that he could be put in prison and be given free health care.

One day Verone walked into an RBC Bank in North Carolina, handed a clerk a note demanding exactly one dollar and sat down and waited for the police to arrive and arrest him.

Verone has a growth on his chest and two ruptured disks but he does not have any health insurance.  He is hoping that in prison he will get the medical treatment that he needs.

As society continues to unravel, prison is going to look like an appealing option for more and more people.

At least in prison you get fed, you have a roof over your head and they will take care of your medical needs.

For a whole lot of Americans, that would be a major step up.

Have you noticed that the thin veneer of civilization that we all take for granted is starting to disappear?

America is becoming a cold, cruel place and lawlessness is everywhere.

For many more signs that our society is starting to crumble, please see these two articles….

*”18 Signs The Collapse Of Society Is Accelerating”

*”12 More Signs That Society Is Collapsing”

For ages, Americans have looked down on the crime and the depravity that goes on in other areas of the world.

Well, now America has all of the crime and depravity it can handle and it is going to get a lot worse as millions of formerly middle class Americans descend into poverty.

A regular commenter on my website who identifies himself as “El Pollo de Oro” recently described the kind of chaos that he believes is coming to the streets of America….

I live in Philadelphia, a city that used to have a ton of blue-collar manufacturing jobs as well as a great deal of white-collar employment, but the blue-collar manufacturing jobs have disappeared–and on the white-collar side, a college degree isn’t necessarily the ticket to prosperity it once was. Philly has its share of nasty, dangerous ghetto areas as well as ritzy, upscale areas like Rittenhouse Square. But then, there are parts of Mexico City that look like Beverly Hills except that the signs are en español. A minority of Chilangos are filthy rich, which is what you expect in a Third World country: an uber-rich minority and a poor majority. And when The Banana Republic of America (formerly the USA) signed on for globalism and ignored Ross Perot’s warning, it opted to become a Third World country—which means that you can kiss the American middle class goodbye.

But there will be some growth industries in The Banana Republic of America: kidnapping, drug smuggling, murder for hire, carjacking, armed robbery. And if you want a taste of what life will be like in American cities in the future, just spend a few weeks in Guatemala City, Johannesburg or Caracas—all of which have the type of horrible crime rates that BRA cities can look forward to in the future. Desperate people do desperate things, and hardcore desperation will be in the norm in the BRA. It won’t be fun (unless, of course, being robbed at gunpoint in broad daylight is one’s idea of a good time).

Welcome to life in a rotting, decaying Third World hellhole. Welcome to the collapse of the Roman Empire. Welcome to life in The Banana Republic of America, formerly the USA.

America is changing.  The safe, secure environment that we all used to take for granted is dying.  The number of truly desperate people rises by the day, and many of those desperate people are willing to do just about anything for money.

The United States used to have a thriving middle class, but our economic system has been so manipulated over the decades that now almost all of the economic rewards go to the very top of the food chain.

25 years ago, the wealthiest 12 percent of all Americans controlled 33 percent of all the wealth.  Today, the wealthiest 1 percent of all Americans control 40 percent of all the wealth.

In the United States today, we are actually witnessing the death of the middle class.  Our jobs have been shipped overseas, the banks have enslaved us to debt, the government keeps finding more ways to tax us and the Federal Reserve keeps debasing our currency.

Everywhere you go, despair is in the air.  According to a brand new Reuters/Ipsos poll, 63 percent of Americans believe that the nation is on the wrong track.

Fortunately, many Americans are responding to these signs of trouble by preparing.

One local Oklahoma newspaper recently did an article that profiled a few of the growing number of Americans that are preparing for hard times….

Rod and Lauretta Smith estimate they could survive a year without going to the grocery store.

A large garden on their 5-acre property in south Tulsa produces hundreds of quarts of canned and frozen beans, tomatoes and other vegetables. Chickens provide eggs.

The Smiths are among a small but growing number of people stocking up on food to become more self-reliant in a time marked by natural disasters and economic uncertainty.

The truth is that all of us should try to become less dependent on the system.  The Democrats, the Republicans, the Federal Reserve and the big corporations are not there to help you.  They are not going to come riding to the rescue if you lose your job and your home.

We all need to do what we can to become more independent and to prepare ourselves and our families for the incredibly difficult economic times that are inevitably coming.  Those that have faith that their jobs will always be there or that the government will always take care of them will be deeply disappointed.

The system is dying and society is coming apart.

The only rational thing to do is to prepare for what is coming.

 

Outcasts: Tonight Tens Of Thousands Of Formerly Middle Class Americans Will Be Sleeping In Their Cars, In Tent Cities Or On The Streets

Economic despair is beginning to spread rapidly in America.  As you read this, there are millions of American families that are just barely hanging on by their fingernails.  For a growing number of Americans, it has become an all-out battle just to be able to afford to sleep under a roof and put a little bit of food on the table.  Sadly, there are more people than ever that are losing that battle.  Tonight, tens of thousands of formerly middle class Americans will be sleeping in their cars, even though that is illegal in many U.S. cities.  Tens of thousands of others will be sleeping in tent cities or on the streets.  Meanwhile, communities all over America are passing measures that are meant to push tent cities and homeless people out of their areas.  It turns out that once you lose your job and your home in this country you become something of an outcast.  Sadly, the number of “outcasts” is going to continue to grow as the U.S. economy continues to collapse.

Most Americans that end up living in their cars on in tent cities never thought that it would happen to them.

An article in Der Spiegel profiled one American couple that is absolutely shocked at what has happened to them….

Chanelle Sabedra is already on that road. She and her husband have been sleeping in their car for almost three weeks now. “We never saw this coming, never ever,” says Sabedra. She starts to cry. “I’m an adult, I can take care of myself one way or another, and same with my husband, but (my kids are) too little to go through these things.” She has three children; they are nine, five and three years old.

“We had a house further south, in San Bernardino,” says Sabedra. Her husband lost his job building prefab houses in July 2009. The utility company turned off the gas. “We were boiling water on the barbeque to bathe our kids,” she says. No longer able to pay the rent, the Sabedras were evicted from their house in August.

How would you feel if you had a 3 year old kid and a 5 year old kid and you were sleeping in a car?

Sadly, if child protective services finds out about that family those kids will probably be stolen away and never returned.

America is becoming a very cruel place.

Unfortunately, what has happened to that family is not an isolated incident.  As rampant unemployment has spread across America, the number of people that have lost their homes has soared.

Today, it is estimated that approximately a third of the homeless population in Seattle live in their cars.

It is even happening to my readers.  A reader named JD left the following comment on one of my articles a while back….

I was laid off from my construction job almost 2 yrs ago was on unenjoyment for over a yr they cut me off last september so i lost my apartment. Since then ive been couch surfing and hotel hopping. Now i occaisonally sleep in my car. I was lucky enough to have a friend with a lawn care business so i can at least put ever increasing gas in my car\house. I hate to say it but i think we will see hoovervilles in the major cities soon. When the welfare & food stamps & all the other govt. programs end the anarchy begins.

Desperation is rising all over America.  Most people had hoped to see an economic recovery by now but it just hasn’t happened.

The phenomenon of Americans living in their cars has become so prominent that even Time Magazine has done a story about it….

For people who cannot afford rent, a car is the last rung of dignity and sanity above the despair of the streets. A home on wheels is a classic American affair, from the wagon train to the RV. Now, for some formerly upwardly mobile Americans, the economic storm has turned the backseat or the rear of the van into the bedroom. “We found six people sleeping in their cars on an overnight police ride-along in December,” says John Edmund, chief of staff to Long Beach councilman Dee Andrews. “One was a widow living in a four-door sedan. She and her husband had been Air Force veterans. She did not know about the agencies that could help her. I had tears in my eyes afterwards.”

Unfortunately, it turns out that sleeping in cars has been made illegal in many areas of the United States.

In many cities, police are putting boots on the cars and when the homeless owners can’t pay the fines the vehicles are being taken away from them.

Venice, California is one place where people have been arrested for living in vehicles.  Venice had been a popular spot for people living in their RVs to go, but police started arresting people that were living in RVs and they began towing away their vehicles. The following is an excerpt from an article that appeared on the Daily Kos website….

They took Eric while he was changing his battery in his car. Claimed he lived in his car. A few days later they went to 3th Street and took his RV because he was in jail and no one moved it for 72 hours. Saturday they did a sweep of 7th and took Bear and his RV. They also took Elizabeth’s RV but do not know if they took Elizabeth but can not find her. The police went to 6th and took the white RV that always parks by Broadway on 6th. Everyday they take 1 to 4 RVs. Very soon there will be no one left.

Once you are down on your luck in America you will quickly find that authorities will try to take everything else you still have away from you.

The United States can be a very brutal place to be if you are poor.

All over America, communities are making tent cities illegal or they are simply just chasing them away.

It turns out that many Americans really don’t like large numbers of homeless people camping out in their neighborhoods.

But many of those now living in tent cities used to be just like you and me.

What is being done to tent cities in some areas of the country is absolutely disgusting.

For example, who could ever forget this video of police in St. Petersburg, Florida using box cutters to slash up the tents of the homeless….

What goes through your mind when you watch something like that?

If you don’t feel at least a little bit of compassion for those people then something is wrong.

You never know – you might be the next one forced to take refuge in a tent city.

In many U.S. cities, it is even illegal to sleep on the street.  If you are homeless I am not sure what you are supposed to do.  In some areas of the U.S. you can’t sleep in your car, you can’t sleep in a tent city and you can’t sleep on the street.

So what should we do with all of the Americans that are being forced out of their homes by this economy?

Should we just round them all up and put them into fenced camps?

Don’t laugh – we are getting closer to that kind of thing every day.

We live in very frightening times.

Poverty is absolutely exploding in America.  The number of Americans that are going to food pantries and soup kitchens has increased by 46% since 2006.  There are 44 million Americans on food stamps.  If it was not for measures like these, the streets of America would be filled with destitute people.

Things are tough out there and they are about to get tougher.

At the beginning of next year, the extended unemployment benefits that have been helping the unemployed during this economic downturn will expire.  Up to now, many unemployed Americans have been able to enjoy up to 99 weeks of unemployment benefits.  Now that is coming to an end.

According to the New York Times, this is going to drain 37 billion dollars out of the wallets of unemployed Americans that are just barely hanging on.

What in the world is that going to do to the economy?

This all comes at a time when it looks like unemployment is going to start rising once again.

Cisco has just announced that they are going to be laying off 10,000 workers.  Other large firms are expected to announce more layoffs shortly.  The number of good jobs continues to shrink.

There are other signs that the economy is slowing once again.  Pre-orders for Christmas toys are way down.  Vacancies at U.S. shopping malls are rising again.  Nearly every major poll shows that Americans are extremely pessimistic about the economy right now.

So why in the world is all of this happening?

Where in the world did all of our jobs go?

Well, it turns out that millions of our jobs have been shipped overseas where the labor is far, far cheaper and it is really starting to catch up with us.

On The American Dream website, I just finished an article entitled “How Globalism Has Destroyed Our Jobs, Businesses And National Wealth In 10 Easy Steps“.  It is a 2500 word essay that explains how globalization has absolutely gutted our economy.  The article will hopefully help you understand why so many good jobs have left the United States and why they aren’t coming back.

Many of our great cities that used to be the envy of the entire globe are now a bad joke to the rest of the world.

The following is what one reporter from the UK found when he visited one of the worst areas of Detroit….

Occasionally a half-ruined or half-burned house still stands to remind you that this used to be a cityscape. Pathetic, besieged knots of surviving homes remind you of what was once here. Sometimes amazing efforts have been made to keep them smart. More often, they haven’t.

Many bear menacing notices warning visitors to stay away. On the door of one, easy to imagine as a neat home with an iron-pillared porch where the head of the family must once have sat on summer evenings, are the words ‘Enter at ya own risk’ accompanied by a crude drawing of an angry face.

I ventured into a nearby ruin, smashed, charred and half-filled with garbage. You have no idea who or what might be lurking in these houses.

But don’t laugh at Detroit.  What is happening in Detroit is coming to your area soon enough.

America is in an advanced state of decay.  The number of “outcasts” is going to multiply as more Americans lose their jobs and their homes.  Millions more Americans will be sleeping in their cars, in tent cities or on the streets before this is all over.

The U.S. economy is never going to get back to “normal”.  What we are living through now is the “new normal” and it is rip-roaring prosperity compared to what is coming.

Please show compassion to the people around you that are hurting right now.

You never know, as the economy continues to unravel it may be you that needs some compassion soon.

 

A Bad Mood Has Descended On World Financial Markets

Have you noticed that a really bad mood seems to have descended on world financial markets?  Fear and pessimism are everywhere.  The global economy never truly recovered from the financial crisis of 2008, and right now everyone is keeping their eyes open for the next “Lehman Brothers moment” that will send world financial markets into another tailspin.  Investors have been very nervous for quite some time now, but this week things seem to be going to a whole new level.  Fears about the spread of the debt crisis in Europe and about the failure of debt ceiling talks in the United States have really hammered global financial markets.  On Monday, the Dow Jones Industrial Average dropped 151 points.  Italian stocks fared even worse.  The stock market in Italy fell more than 3 percent on Monday.  The stock markets in Germany and France fell more than 2 percent each.  On top of everything else, the fact that protesters have stormed the U.S. embassy in Syria is causing tensions to rise significantly in the Middle East.  Everywhere you turn there seems to be more bad news and large numbers of investors are getting closer to hitting the panic button.  Hopefully things will cool down soon, because if not we could soon have another full-blown financial crisis on our hands.

Even many of those that have always tried to reassure us suddenly seem to be in a really bad mood.

For example, U.S. Treasury Secretary Timothy Geithner admitted to “Meet the Press” that the U.S. economy is really struggling and that for many Americans “it’s going to feel very hard, harder than anything they’ve experienced in their lifetime now, for a long time to come.”

Does Geithner know something that we don’t?

To say that what Americans are facing will be “harder than anything they’ve experienced in their lifetime now, for a long time to come” is very, very strong language.

It almost sounds like Timothy Geithner could be writing for The Economic Collapse blog.

It certainly is not helping things that the Democrats and the Republicans still have not agreed on a deal to raise the debt ceiling.  It is mid-July and Barack Obama and John Boehner continue to point fingers at each other.

Of course if they do reach a “deal” it will likely be a complete and total joke just like their last “deal” was.

But for now they are playing politics and trying to position themselves well for the 2012 election season.

Meanwhile, world financial markets are starting to get a little nervous about this situation.  The newly elected head of the IMF, Christine Lagarde, has stated that she “can’t imagine for a second” that we are going to see the U.S. default on any debt.  Most investors seem to agree with Lagarde for now, but if we get to August 2nd without a deal being reached things could change very quickly.

But it isn’t just the debt ceiling crisis that is causing apprehension in the United States.  The truth is that there are a host of indications that the U.S. economy is continuing to struggle.

Even big Wall Street banks are laying people off.  A recent Reuters article described the bad mood that has descended on Wall Street right now….

Goldman Sachs Group Inc (GS.N), Morgan Stanley (MS.N) and some other large U.S. investment banks are not just laying off weak performers and back-office employees. They are also cutting the pay of those they are keeping, scrutinizing expense reports and expecting even the most profitable workers to bring in more business for the same amount of compensation.

That is not a good sign for the U.S. economy.

If the corrupt Wall Street banks are even struggling, what does that mean for the rest of us?

But the big trouble recently has been in Europe.  The sovereign debt crisis continues to get worse and worse.

As I wrote about yesterday, the emerging financial crisis in Italy has EU officials in a bit of a tizzy.  If Italy requires a bailout it is going to be an unmitigated disaster.

One of the most respected financial journalists in Europe, Ambrose Evans Pritchard, says that financial tensions in the EU are rising to dangerous levels….

If the ECB’s Jean-Claude Trichet is right in claiming that Europe was on the brink of a 1930s financial cataclysm a year ago – and I think he is – it is hard see how the threat is any less serious right now.

Fall-out from Greece flattened Portugal and Ireland last week. It is engulfing Spain and Italy, countries with €6.3 trillion of public and private debt between them.

Last year it was just small countries like Greece and Ireland that were causing all the trouble.

Now Italy (the fourth largest economy in the EU) and Spain (the fifth largest economy in the EU) are making headlines.

Up to this point, the EU has had all kinds of nightmares just trying to bail countries like Greece out.

What is going to happen if Italy or Spain goes under?

At this point things with Greece have gone so badly that some EU officials are actually suggesting that Greece should just default on some of the debt.

Yes, you read the correctly.

There are news reports coming out of Europe that say that EU leaders are actually considering allowing the Greek government to default on some of their bonds.  According to The Telegraph, “the move would be part of a new bail-out plan for Greece that would put the country’s overall debt levels on a sustainable footing.”

All of this chaos is causing bond yields in Europe to go soaring.

Earlier today, The Calculated Risk blog detailed some of the stunning bond yields that we are now seeing in Europe….

The Greek 2 year yield is up to a record 31.1%.

The Portuguese 2 year yield is up to a record 18.3%.

The Irish 2 year yield is up to a record 18.1%.

And the big jump … the Italian 2 year yield is up to a record 4.1%. Still much lower than Greece, Portugal and Ireland, but rising.

Could you imagine paying 31.1% interest on your credit cards?

Well, imagine what officials in the Greek government must be feeling right about now.

If these bond yields do not go down, we are going to have a full-blown financial crisis on our hands in Europe.  If these bond yields keep rising, we are going to have a complete and total financial nightmare in Europe.

The only way that any of these nations that are drowning in debt can keep going is if they can borrow more money at low interest rates.  There are very few nations on earth that would be able to survive very high interest rates on government debt for an extended period of time.

Pay attention to what is happening in Europe, because it will eventually happen in the United States.  Right now we are only paying a little more than $400 billion in interest on the national debt each year because of the super low interest rates we are able to get.

When that changes, our interest costs are going to absolutely skyrocket.

Not that the United States needs any more economic problems.

Right now Americans are more pessimistic about the economy than they have been in ages.

In a recent article entitled “16 Reasons To Feel Really Depressed About The Direction That The Economy Is Headed” I noted a number of the recent surveys that seem to indicate that the American people are in a real bad mood about the economy right now….

*One of the key measures of consumer confidence in the United States has hit a seven-month low.

*According to Gallup, the percentage of Americans that lack confidence in U.S. banks is now at an all-time high of 36%.

*According to one recent poll, 39 percent of Americans believe that the U.S. economy has now entered a “permanent decline”.

*Another recent survey found that 48 percent of Americans believe that it is likely that another great Depression will begin within the next 12 months.

The American people are in a really bad mood and investors around the world are in a really bad mood.  More bad financial news seems to come out every single day now.  Everyone seems to be waiting for that one “moment” that is going to set off another financial panic.

Hopefully we can get through the rest of this summer without world financial markets falling apart.  But the truth is that the global economy is even more vulnerable today than it was back in 2008.  None of the things that caused the financial crash of 2008 have been fixed.

We will eventually have a repeat of 2008.  In fact, next time things could be even worse.

The entire world financial system is a house of cards sitting on a foundation of sand.  Eventually another storm is going to come and the crash is going to be great.

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