Economy

2012 Will Be More Difficult Than 2011

Do you believe that 2012 will be more difficult for the global economy than 2011 was?  Well, that is what German Chancellor Angela Merkel believes.  The woman that has become the most important politician in Europe recently declared that 2012 “will no doubt be more difficult than 2011”.  The funny thing is that she has generally been one of the most optimistic public figures in Europe throughout this debt crisis.  But now even Merkel is openly admitting that 2012 is going to be a really, really bad year.  Sadly, most Americans simply do not understand how important Europe is or how interconnected the global financial system has become.  The United States actually has a smaller population and a smaller economy than the EU does.  In fact, the EU has an economy that is nearly as large as the economies of the United States and China combined.  The EU also is home to more Fortune 500 companies that the U.S. is, and the European banking system is far larger than the U.S. banking system.  Anyone that does not believe that a financial collapse in Europe will have a devastating impact on the U.S. economy is living in a fantasy world.  Americans better start paying attention to what is going on over there, because we are about to be broadsided by a massive financial tsunami originating out of Europe.

It is not just Angela Merkel that is warning that 2012 is going to be a difficult year.  The following are several more very prominent individuals that are warning that bad times are on the way….

*Citigroup’s chief equity strategist, Tobias Levkovich, recently made the following statement….

“Europe is likely to have a meaningful recession in 2012”

*Christine Lagarde, the head of the IMF, recently said that we could soon see conditions “reminiscent of the 1930s depression” and that no country on earth “will be immune to the crisis”.

* Willem Buiter, the chief economist at Citigroup, recently said the following….

“Time is running out fast.  I think we have maybe a few months — it could be weeks, it could be days — before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it.”

* Even Paul Krugman of the New York Times is sounding quite apocalyptic….

“At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France.”

I have written quite a bit recently about all of the signs that parts of Europe have already entered a recession.

Well, in just the past few days even more numbers have been released that indicate that a recession has now begun in Europe…..

-Manufacturing activity in the euro zone has fallen for five months in a row.

-Bad loans in Spain recently hit a 17-year high and the unemployment rate is at a 15-year high.

-Government revenues in Spain have not been up to the level that was expected.  The Spanish government just announced that the budget deficit for 2011 is going to end up being much larger than anticipated.

-Unfortunately, it appears that virtually all sectors of the Spanish economy seem to be slowing down….

The central bank said early indicators show that Spanish tourism, exports, spending and investment have been hit, which is likely to have led to a contraction in GDP in the fourth quarter.

Of course one of the most alarming things happening in Europe is the rapid contraction of the money supply.  It is almost impossible to avoid a recession when the money supply shrinks substantially.  The following comes from an article a few days ago in the Telegraph….

Simon Ward from Henderson Global Investors said the ECB’s “narrow” M1 money figures – tracked for clues on shorter-term spending patterns – show a drastic divergence between the North and South of the eurozone. “Parts of the core may avoid recession but there is no light at the end of the tunnel for the periphery. Real M1 deposits in Greece and Portugal have been falling at an annual rate of roughly 20pc over the last six months,” he said.

Right now, the rest of Europe is heading down the same road that Greece has been traveling on for several years.

Today, Greece is essentially bankrupt and is experiencing a full-blown depression.  At this point, nobody in Europe is even pretending that Greece is going to be okay.  The following comes from a recent Der Spiegel article….

“With debts amounting to 150 percent of GNP, Greece is de facto bankrupt. Over the course of 2011, even the leading representatives of the euro zone finally accepted this fact — after having claimed its opposite a year previously.”

Greece desperately needs relief from all of this debt, but the other nations in the eurozone do not want to provide that relief.  Instead, it looks like Germany is going to ask private creditors to take an even bigger “haircut” on Greek debt than previously proposed.  The following comes from a recent Bloomberg article….

“Germany’s government declined to comment on a report that it may push for creditors to accept bigger losses on Greek debt than previously agreed upon, saying only that talks on lowering Greece’s debt level may end soon.

Germany is studying a proposal to write down 75 percent of Greek government bonds held by private creditors as part of a planned debt swap to ensure greater debt sustainability”

If Germany ends up publicly proposing this, it will shatter what confidence is left in European sovereign bonds.

There is not that much of a difference between a 75 percent haircut and a full default.  If investors are forced to take a 75 percent haircut on Greek debt, then the financial world will have to start wondering if it is just a matter of time before giant haircuts are proposed for Italian debt, Spanish debt, Portuguese debt and Irish debt as well.

Hopefully Germany will not be this stupid.

But something has to be done about Greece.  Right now the IMF is projecting that Greek debt will reach 200% of GDP at some point in 2012 if changes are not made.

Of course Greece could cut government spending even more, but the cuts that have already been made have pushed that country into a total economic nightmare.

In a recent article, I discussed how the brutal austerity measures that we have seen have plunged the economy of Greece into a full-blown depression….

Just look at what happened to Greece.  Greece was forced to raise taxes and implement brutal austerity measures.  That caused the economy to slow down and tax revenues to decline and so government debt figures did not improve as much as anticipated.  So Greece was forced to implement even more brutal austerity measures.  Well, that caused the economy to slow down even more and tax revenues declined again.  In Greece this cycle has been repeated several times and now Greece is experiencing a full-blown economic depression.  100,000 businesses have closed and a third of the population is living in poverty.  But now Germany and France intend to impose the “Greek solution” on the rest of Europe.

The “solution” that the EU and the IMF have imposed on Greece is not working.

So why are all of the other troubled nations in Europe being pushed down the same path?

Just consider the following statistics out of Greece….

*The unemployment rate for those under the age of 24 is 39 percent.

*The number of suicides has increased by 40 percent in the past year.

*Thefts and burglaries nearly doubled between 2007 and 2009.

Is that what we want to see throughout the rest of Europe?

The financial path that Europe is now on was criticized very harshly recently in the New York Times….

“Every government in Europe with the exception of Germany is bending over backwards to prove to the market that they won’t hesitate to do what it takes,” said Charles Wyplosz, a professor of economics at the Graduate Institute of Geneva. “We’re going straight into a wall with this kind of policy. It’s sheer madness.”

Yes, it is sheer madness.

Right now, authorities in Europe are desperately trying to keep a lid on this crisis.  The European Central Bank has been trying really hard to keep the yield on 10 year Italian bonds from rising above the very important 7 percent level.  But unless the ECB is prepared to spend hundreds and hundreds of billions of euros buying up Italian debt in 2012, the yield on Italian bonds is likely to go much higher eventually.

At this point, it is hard to find any economist that is optimistic about Europe or about the euro in 2012.

One of the leading economic think tanks in Europe, the Centre for Economics and Business Research, is extremely pessimistic about the future of the euro as we enter 2012….

“It now looks as though 2012 will be the year when the euro starts to break up”

In fact, they say that there is a 99 percent chance that the eurozone will break up within the next ten years.

Terry Smith, the chief executive of Tullett Prebon, recently used language that was even more apocalyptic….

“If the eurozone crisis could be solved by confident pronouncements, it would already be saved. I would be shocked if Greece does not leave the eurozone in 2012 and this does not lead the markets to test the resolve to defend the positions of Portugal, Spain, Italy and, ultimately, France.”

Yes, there are a whole lot of people out there saying that 2012 will be more difficult than 2011.

Fortunately, there are a few nations out there that are choosing to try some different things.

We aren’t hearing much about it in the United States, but right now Hungary is actually taking some measures to get their central bank under control.

The following comes from a recent article in the Telegraph….

Hungary passed laws for its central bank in a move that experts warned could jeopardise its chances of securing international bail-out funds if it needs them. Officials from the International Monetary Fund (IMF) have warned about the rules which will undermine the independence of the central bank. Hungarian prime minister Viktor Orban the country would not bow to the “European fashion that the central bank must be in a sacred state of independence”.

Of course the IMF is absolutely furious about this.  The IMF is warning that there will be no bailouts for Hungary if they mess with the “independence” of the central bank.

But hopefully more countries out there will start going after their central banks.  The truth is that it is the central banks and the endless debt spirals that they create that got us into this mess in the first place.

If central banking truly worked, Europe would not be in such a massive amount of trouble.  The euro would not be dropping like a rock and the European financial system would not be paralyzed by panic and fear.

The reality is that central banking does not work and it a colossal failure.

For example, in the United States the U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created, and the U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was created.

It is amazing that there is anyone out there that is still willing to defend central banking.

2012 is going to be one of the most interesting years that we have seen in a long, long time.

Yes, 2012 will be more difficult than 2011 was, but it will also be a great opportunity to wake people up.

Our world is changing faster than ever before, and the Internet has made it possible for average people such as you and I to significantly participate in that change.

Resolve to do what you can to make a difference in this world in 2012, because time is rapidly running out.

The Number One Catastrophic Event That Americans Worry About: Economic Collapse

Can you guess what the number one catastrophic event that Americans worry about is?  There are certainly many to choose from.  Many Americans are deathly afraid of a major terrorist attack.  Others live in constant fear of natural disasters such as earthquakes, volcanoes and hurricanes.  Still others are incredibly concerned that a massive pandemic will break out at any time or that World War III will erupt in the Middle East.  Yes, there are certainly a lot of potential catastrophic events that one can worry about in the times in which we live, but the number one catastrophic event that Americans worry about is actually “economic collapse”.  At least that is what a recent survey conducted by Leiflin Inc. for the EcoHealth Alliance found.  But this goes along with what so many other polls have found over the past few years.  Over and over again, opinion polls have found that the number one issue that American voters are concerned about is the economy.  The truth is that average Americans are deeply, deeply concerned about unemployment, debt, the housing crash and the steady decline in the standard of living.  It has been years since the U.S. economy has operated at a “normal” level, and many Americans are afraid that things could soon get a whole lot worse.

In the new survey mentioned above, those contacted were asked to select the top three potential catastrophes that worry them the most.

The following results come directly from the survey….

Economic Collapse: 63%
Natural Disaster: 46%
Terrorist Attack: 44%
Global Disease Outbreak: 33%
Global War: 27%
Nuclear Accident: 25%
Global Warming: 22%
Fuel Shortage: 15%
Cyber War: 8%
Famine: 8%
Oil Spill: 6%
Industrial Accident: 5%

As you can see, “economic collapse” was the winner by a wide margin.

So are there good reasons for the American people to be concerned about an economic collapse?

Of course there are.

Back in 2008, a financial crisis that began on Wall Street was felt in the farthest corners of the globe.

This time, ground zero for the financial crisis is going to be in Europe.  As I have written about previously, the European financial system is rapidly coming apart at the seams.  The euro continues to drop like a rock, and banking stocks continue their long-term decline.

Many people expect a “financial collapse” to happen on a particular day.  But that is not how it happens usually.  Instead, it is often like a snowball that starts rolling downhill very slowly at first but that eventually become a huge avalanche.

Right now, we are seeing the financial world come apart in slow motion.  A recent article posted on Automatic Earth included a list of the year-to-date performance of some of the most prominent global banking stocks.  These numbers are absolutely staggering….

  • BofA: -60.38%
  • Citi: -44.76%
  • Goldman Sachs: -46.41%
  • JPMorgan: -23.03%
  • Morgan Stanley: -45.24%
  • RBS: -50%
  • Barclays: -34.32%
  • Lloyds: -63.02%
  • UBS: -29.33%
  • Deutsche Bank: -28,55%
  • Crédit Agricole: -56.04%
  • BNP Paribas: -37.67%
  • Société Générale: -59.57%

But because these numbers happened over the course of a year and not on a single day it doesn’t feel quite as much like a “collapse”.

Unfortunately, things are about to get a whole lot worse.  Global credit markets are really freezing up – especially in Europe.

Considering the fact that the entire global financial system is based on credit and debt, that is a very bad thing.

Our system simply does not work when banks do not want to lend money to each other or to businesses.

Just yesterday there was an article in the Guardian that talked about how it looks like the credit crunch may be getting even worse….

“If European banks are still this concerned, it’s not a good sign,” said Karl Schamotta, senior markets strategist with Western Union Business Solutions. “That underlines the possibility that this liquidity crunch is getting worse and will continue into the new year.”

When banks cut back on lending, that causes the money supply to shrink.  When the money supply shrinks substantially, it is almost impossible to avoid a recession.  A recent article by Ambrose Evans-Pritchard detailed how the money supply in many eurozone nations is shrinking at a very rapid pace right now….

Simon Ward from Henderson Global Investors said “narrow” M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.

While real M1 deposits are still holding up in the German bloc, the rate of fall over the last six months (annualised) has been 20.7pc in Greece, 16.3pc in Portugal, 11.8pc in Ireland, and 8.1pc in Spain, and 6.7pc in Italy. The pace of decline in Italy has been accelerating, partly due to capital flight. “This rate of contraction is greater than in early 2008 and implies an even deeper recession, both for Italy and the whole periphery,” said Mr Ward.

Those are very, very frightening numbers.

About the only thing propping up European banks right now is the fact that the European Central Bank is loaning them gigantic piles of cheap money.

But there is a big problem.

European banks are running out of collateral for those loans as an article in the Wall Street Journal recently noted….

Even after the European Central Bank doled out nearly half a trillion euros of loans to cash-strapped banks last week, fears about potential financial problems are still stalking the sector. One big reason: concerns about collateral.

The only way European banks can now convince anyone—institutional investors, fellow banks or the ECB—to lend them money is if they pledge high-quality assets as collateral.

Now some regulators and bankers are becoming nervous that some lenders’ supplies of such assets, which include European government bonds and investment-grade non-government debt, are running low.

So what happens when banks all over Europe start running out of collateral and can’t get any more loans?

The answer should be obvious.

As I detailed a few days ago, many prominent voices in the financial world now believe that we could be looking at a financial crisis that will be even worse than 2008.

If you want to see what happens when a collapse happens and a depression begins, just look at what is happening in Greece….

*100,000 businesses have been closed since the beginning of the crisis.

*About a third of the nation is now living in poverty.

*The unemployment rate for those under the age of 24 is 39 percent.

*The number of suicides has increased by 40 percent in the past year.

*Thefts and burglaries nearly doubled between 2007 and 2009.

Things have gotten so bad that hundreds of families in Greece are abandoning their children.

Some are taking their children to charitable institutions and others are handing them directly over to the government.

The following sad story of one Greek family comes from an article in the Guardian….

“Psychologically we were all in a bit of a mess,” said Gasparinatos. “We were sleeping on mattresses on the floor, the rent hadn’t been paid for months, something had to be done.”

And so, with Christmas approaching, the 42-year-old took the decision to put in an official request for three of his boys and one daughter to be taken into care.

“The crisis had killed us. I am ashamed to say but it had got to the point where I couldn’t even afford the €2 needed to buy bread,” he told the Guardian. “We didn’t want to break up the family but we did think it would be easier for them if four of my children were sent to an institution for maybe two or three years.”

Does that seem shocking to you?

Well, all of this is coming to America eventually.

Someday we will see American parents abandoning their children because they cannot take care of them anymore.

Someday we will see suicides absolutely skyrocket in America because people have lost all hope.

Someday we will see thefts and burglaries soar to unprecedented heights as millions of desperate people attempt to try to find some way to survive.

It is all coming.

The federal government cannot pile up a trillion dollars of additional debt every year indefinitely.

We cannot afford to see an average of 23 manufacturing facilities a day in the United States shut down.  Eventually there won’t be anymore factories to shut down.

We cannot afford to keep putting millions more Americans on welfare.  At this point the government is feeding 46 million Americans a month.  Will the government eventually be feeding most of us?

The U.S. economy is getting weaker and weaker and weaker.  All of the long-term trends are absolutely nightmarish.  We are accumulating debt faster than ever, and our ability to produce wealth is diminishing faster than ever.

There is no way that things are going to be okay if we stay on the path that we are currently on.

So the truth is that Americans should be very concerned about an economic collapse.

It is coming and it is going to be very painful.

40 Hard Questions That The American People Should Be Asking Right Now

If you spend much time watching the mainstream news, then you know how incredibly vapid it can be.  It is amazing how they can spend so much time saying next to nothing.  There seems to be a huge reluctance to tackle the tough issues and the hard questions.  Perhaps I should be thankful for this, because if the mainstream media was doing their job properly, there would not be a need for the alternative media.  Once upon a time, the mainstream media had a virtual monopoly on the dissemination of news in the United States, but that has changed.  Thankfully, the Internet in the United States is free and open (at least for now) and people that are hungry for the truth can go searching for it.  Today, an increasing number of Americans want to understand why our economy is dying and why our national debt is skyrocketing.  An increasing number of Americans are deeply frustrated with what is going on in Washington D.C. and they are alarmed that we seem to get closer to becoming a totalitarian police state with each passing year.  People want real answers about our foreign policy, about our corrupt politicians, about our corrupt financial system, about our shocking moral decline and about the increasing instability that we are seeing all over the world, and they are not getting those answers from the mainstream media.

If the mainstream media will not do it, then those of us in the alternative media will be glad to tackle the tough issues.  The following are 40 hard questions that the American people should be asking right now….

#1 If Iran tries to shut down the Strait of Hormuz, what will that do to the price of oil and what will that do to the global economy?

#2 If Iran tries to shut down the Strait of Hormuz, will the United States respond by launching a military strike on Iran?

#3 Why is the Federal Reserve bailing out Europe?  And why are so few members of Congress objecting to this?

#4 The U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created,  the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was created and Federal Reserve Chairman Ben Bernanke has a track record of incompetence that is absolutely mind blowing.  So what possible justification is there for allowing the Federal Reserve to continue to issue our currency and run our economy?

#5 Why does the euro keep dropping like a rock?  Is this a sign that Europe is heading for a major recession?

#6 Why are European banks parking record-setting amounts of cash at the European Central Bank?  Is this evidence that banks don’t want to lend to one another and that we are on the verge of a massive credit crunch?

#7 If the European financial system is going to be just fine, then why is the UK government preparing feverishly for the collapse of the euro?

#8 What did the head of the IMF mean when she recently said that we could soon see conditions “reminiscent of the 1930s depression“?

#9 How in the world can Mitt Romney say with a straight face that the individual health insurance mandate that he signed into law as governor of Massachusetts was based on “conservative principles”?  Wouldn’t that make the individual mandate in Obamacare “conservative” as well?

#10 If the one thing that almost everyone in the Republican Party seems to agree on is that Obamacare is bad, then why is the candidate that created the plan that much of Obamacare was based upon leading in so many of the polls?

#11 What did Mitt Romney mean when he stated that he wants “to eliminate some of the differences, repeal the bad, and keep the good” in Obamacare?

#12 If no Republican candidate is able to accumulate at least 50 percent of the delegates by the time the Republican convention rolls around, will that mean that the Republicans will have a brokered convention that will enable the Republican establishment to pick whoever they want as the nominee?

#13 Why are middle class families being taxed into oblivion while the big oil companies receive about $4.4 billion in specialized tax breaks a year from the federal government?

#14 Why have we allowed the “too big to fail” banks to become even larger?

#15 Why has the United States had a negative trade balance every single year since 1976?

#16 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of all jobs in the United States are manufacturing jobs.  How in the world could we allow that to happen?

#17 If the United States has lost an average of 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001, then why don’t our politicians do something about it?

#18 If you can believe it, more than 56,000 manufacturing facilities in the United States have permanently closed down since 2001.  So exactly what does that say about our economy?

#19 Why was the new Martin Luther King, Jr. Memorial on the National Mall made in China?  Wasn’t there anyone in America that could make it?

#20 If low income jobs now account for 41 percent of all jobs in the United States, then how are we going to continue to have a vibrant middle class?

#21 Why do the poor just keep getting poorer in the United States today?

#22 How can the Obama administration be talking about an “economic recovery” when 48 percent of all Americans are either considered to be “low income” or are living in poverty?

#23 Why has the number of new cars sold in the U.S. declined by about 50 percent since 1985?

#24 How can we say that we have a successful national energy policy when the average American household will spend a whopping $4,155 on gasoline by the end of this year?

#25 Why does it take gigantic mountains of money to get a college education in America today?  According to the Student Loan Debt Clock, total student loan debt in the United States will surpass the 1 trillion dollar mark in early 2012.  Isn’t there something very wrong about that?

#26 Why do about a third of all U.S. states allow borrowers who don’t pay their bills to be put in jail?

#27 If it costs tens of billions of dollars to take care of all of the illegal immigrants that are already in this country, why did the Obama administration go around Congress and grant “backdoor amnesty” to the vast majority of them?  Won’t that just encourage millions more to come in illegally?

#28 Why are gun sales setting new all-time records in America right now?

#29 Why are very elderly women being strip-searched by TSA agents at U.S. airports?  Does that really keep us any safer?

#30 The last words of Steve Jobs were “Oh wow. Oh wow. Oh wow.”  What did he mean by that?

#31 How in the world did scientists in Europe decide that it was a good idea for them to create a new “killer bird flu” that is very easy to pass from human to human?

#32 If our founding fathers intended to set up a limited central government, then why does the federal government just continue to get bigger and bigger?

#33 Are we on the verge of an absolutely devastating retirement crisis?  On January 1st, 2011 the very first of the Baby Boomers started to reach the age of 65.  Now more than 10,000 Baby Boomers will be turning 65 every single day for the next two decades.  So where in the world are we going to get all the money we need to pay them the retirement benefits that we have promised them?

#34 If the federal government stopped all borrowing today and began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the U.S. national debt.  So does anyone out there actually still believe that the U.S. national debt will be paid off someday?

#35 If the U.S. economy is getting better, then why are an all-time record 46 million Americans now on food stamps?

#36 How can we say that we have the greatest economy on earth when we have a child poverty rate that is more than twice as high as France and one out of every four American children is on food stamps?

#37 Since 1964, the reelection rate for members of the U.S. House of Representatives has never fallen below 85 percent.  So are the American people really that stupid that they would keep sending the exact same Congress critters back to Washington D.C. over and over and over?

#38 What does it say about our society that nearly one-third of all Americans are arrested by the time they reach the age of 23?

#39 Why do so many of our politicians think that it is a good idea to allow the U.S. military to arrest American citizens on American soil and indefinitely detain them without a trial?

#40 A new bill being considered by the U.S. House of Representatives would give the U.S. government power to shut down any website that is determined to “engage in, enable or facilitate” copyright infringement.  Many believe that the language of the new law is so vague that it would allow the government to permanently shut down any website that even links very briefly to “infringing material”.  Prominent websites such as Facebook, Twitter and YouTube would be constantly in danger of being given a “death penalty”.  The American people need to ask their members of Congress this question: Do you plan to vote for SOPA (The Stop Online Piracy Act)?  If the answer is yes, that is a clear indication that you should never cast a single vote for that member of Congress ever again.

So do you have answers to some of the questions posted above?

Please feel free to leave a comment with your thoughts below….

A Very Scary Christmas And An Incredibly Frightening New Year

Can you hear that?  It almost sounds like a little bit of peace and quiet.  This year, the holiday season has been fairly uneventful, and for that we should be very grateful.  But it isn’t going to last long.  2012 is going to be a much more difficult year for the U.S. economy and the global financial system than 2011 has been.  So if things are going well for you right now, enjoy this little bubble of peace and tranquility while you can.  Because while things may look calm on the surface right now, the truth is that this is a very scary Christmas for financial professionals and world leaders.  Most of them know how fragile the global financial system is at the moment.  Most of them know that we are living in the greatest bubble of debt, leverage and financial risk that the world has ever seen.  As I wrote about the other day, world leaders would not be throwing huge bailouts around like crazy if everything was going to be just fine.  The truth is that we are rapidly approaching another financial crisis that may end up being even worse than the horrific crash of 2008.

Despite unprecedented efforts by the European Central Bank, the yield on 10 year Italian bonds is nearly up to 7 percent again.

Keep an eye on the yield on 10 year Italian bonds.  That is going to be one of the most important financial numbers in the world in the coming months.

But Italy is not the only problem.  The reality is that several European governments are teetering on the verge of default right now.  Meanwhile, confidence in the European financial system has been absolutely shattered and a devastating credit crunch has set in.  Nobody (other than the ECB) wants to loan money to the banks and the banks are massively cutting back on loans to businesses and consumers.  This is causing the money supply to fall.  The ECB is trying to hold things together with chicken wire and duct tape, but it isn’t going to work.

In major financial centers such as the City of London, this is a very scary Christmas and the outlook for the new year looks very frightening.  Because financial activity has dried up so dramatically, a number of firms are already shutting down.  The following comes from a recent Bloomberg article….

London’s stockbrokers are shrinking as Europe’s sovereign debt crisis and competition from international firms squeezes revenue and fees.

“This isn’t just a blip, this is much worse,” said Tim Linacre, who is stepping down as chief executive officer of Panmure (PMR) Gordon & Co., a 135-year-old brokerage. “It’s a desert for activity, which is why you are seeing some firms throw in the towel.”

In the past month, Altium Capital closed its securities unit. Evolution Group Plc (EVG), Merchant Securities Group Plc, Arbuthnot Securities Ltd. and Collins Stewart Hawkpoint Plc have all accepted takeover offers from larger competitors.

“It feels worse than any other time,” said Lorna Tilbian, an executive director at Numis Corp. who began her career in 1984. “All I hear about is people putting up a white flag.”

Many out there are wondering if we are about to face another crisis like the one we saw back in 2008.

Unfortunately, none of the underlying problems that caused that crisis were ever really fixed.

We did not learn from history so now we are in for another round of pain.

In fact, Chris Martenson believes that this next crisis will be even worse than 2008….

There are clear signs of a liquidity crunch in the asset markets right now, and the question I keep hearing is, Is this 2008 all over again?

No, it’s worse. Much worse.

In 2008 there was a lot more faith and optimism upon which to draw. But both have been squandered to significant degrees by feckless regulators and authorities who failed to properly address any of the root causes of the first crisis even as they slathered layer after layer of thin-air money over many of the symptoms.

Anyone who has paid attention knows that those “magic potions” proved to be anything but. Not only are the root causes still with us (too much debt, vast regional financial imbalances, and high energy prices), but they have actually grown worse the entire time.

Frightening stuff.

A couple of months ago, I wrote about the coming derivatives crisis that could potentially wipe out the entire global financial system.

When the next great financial crisis strikes, there is going to be a lot of focus on derivatives once again.

Top global financial authorities such as Ben Bernanke continue to insist that derivatives are perfectly safe.

But there are other voices in the financial world that are warning that we are heading for financial armageddon.  For example,just check out what Mark Faber is saying….

“I am convinced the whole derivatives market will cease to exit. Will become zero. And when it happens I don’t know: you can postpone the problems with monetary measures for a long time but you can’t solve them… Greece should have defaulted – it would have sent a message that not all derivatives are equal because it depends on the counterparty.”

That is very strong language.

Faber also believes that the stock market is going to get hit really, really hard during the coming crisis….

“I am ultra bearish. I think most people will be lucky if they still have 50% of their money in 5 years time. You have to have diversification – some real estate in the countryside, some gold and some equities because if you think it through, say Germany 1900 to today, we had WWI, we had hyperinflation, WWII, cash holders and bondholders they lost everything 3 times, but if you owned equities you’d be ok. In equities in general you will not lose it all, it may not be a good investment, unless you put it all in one company and it goes bankrupt.”

Some of the top financial officials in the entire world have also used some very scary language in recent weeks.

The head of the International Monetary Fund, Christian Lagarde, recently stated that we could soon see conditions “reminiscent of the 1930s depression” and that no country on earth “will be immune to the crisis”….

“There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies that will be immune to the crisis that we see not only unfolding but escalating”

But most people are so busy opening up the cheap plastic presents under their Christmas trees (that were mostly made overseas) that they aren’t even paying attention to these warnings.

Look, when the money supply falls significantly it is almost impossible to avoid a recession.  Just look at the historical numbers.

Unfortunately, money supply numbers all over Europe are falling dramatically right now as an article in the Telegraph recently noted….

All key measures of the money supply in the eurozone contracted in October with drastic falls across parts of southern Europe, raising the risk of severe recession over coming months.

Confidence in the banking system in Europe has never been this low in the post-World War II era.  Sadly, most people simply do not understand how bad things have gotten for major European banks.  One Australian news source recently put it this way….

“If anyone thinks things are getting better, they simply don’t understand how severe the problems are,” a London executive at a global bank said. “A major bank could fail within weeks.”

Others said many continental banks, including French, Italian and Spanish lenders, were close to running out of the acceptable forms of collateral, such as US Treasury bonds, that could be used to finance short-term loans.

Some have been forced to lend out their gold reserves to maintain access to US dollar funding.

The outlook is very ominous.

Financial professionals all over the globe are telling us what is coming if we are willing to listen.

The following comes from a report recently produced by Credit Suisse’s Fixed Income Research unit….

“We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.”

The first six months of 2012 are going to be a very key time.  National governments and big European banks are scheduled to roll over huge mountains of debt.  But if they can’t find any takers that could bring the global financial system to a moment of great crisis very quickly.

The following is how former hedge fund manager Bruce Krasting recently described the problem that Italy is facing….

At this point there is zero possibility that Italy can refinance any portion of its $300b of 2012 maturing debt. If there is anyone at the table who still thinks that Italy can pull off a miracle, they are wrong. I’m certain that the finance guys at the ECB and Italian CB understand this. I repeat, there is a zero chance for a market solution for Italy.

But even if we don’t see a formal default by a major European nation such a Italy, that doesn’t mean that major European banks are going to make it through the crippling recession that has now begun in Europe.

Charles Wyplosz, a professor of international economics at Geneva’s Graduate Institute, is absolutely convinced that we are going to see some major European banks collapse….

“Banks will collapse, including possibly a number of French banks that are very exposed to Greece, Portugal, Italy and Spain.”

Authorities in Europe are saying the “right things” publicly, but privately they are preparing for the worst.

As the Telegraph recently reported, the British government is now making plans based on the assumption that a collapse of the euro is only “just a matter of time”….

A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.

Yes, we are heading for a huge financial collapse and massive economic trouble.

So enjoy the good times while we still have them.

They are not going to last too much longer.

Getting Worse: 40 Undeniable Pieces Of Evidence That Show That America Is In Decline

Is America in decline?  That is a very provocative question.  I have found that most people that hate the United States are very eager to agree that America is in decline, while a lot of those that love the United States are very hesitant to admit that America is in decline.  Well, I am proud to be an American, but I cannot lie and tell you that America is doing just fine.  The pieces of evidence compiled below are undeniable.  Our economy is deathly ill and is rapidly getting worse.  We were handed the keys to the greatest economic machine in the history of the world and we have wrecked it.  But until we are willing to look in the mirror and admit how bad things have gotten, we won’t be ready for the solutions that are necessary.  The truth is that there are things that we can do to reverse the decline.  It does not have to be permanent.  We have gotten away from the things that made America great, and we need to admit that we are on the wrong path and start fixing this country.  But if we choose to continue down the road that we are currently on, it will lead us into the darkest chapters in American history.

The following are 40 undeniable pieces of evidence that show that America is in decline….

#1 Back in 1985, 11 million vehicles were sold in America.  In 2009, only 5.4 million vehicles were sold in America.

#2 In 1990, the median age of a vehicle in the United States was just 6.5 years.  Today, the median age of a vehicle in the United States is approximately 10 years.

#3 The average price of a gallon of gasoline in 2011 has been $3.50.  That is a new all-time record.  The previous record was $3.24 in 2008.

#4 The average American household will have spent an astounding $4,155 on gasoline by the time the year is over.

#5 The number of children in the United States without a permanent home has increased by 38 percent since 2007.

#6 A decade ago, the United States was ranked number one in average wealth per adult.  By 2010, the United States had fallen to seventh.

#7 The U.S. tax code is now more than 50,000 pages longer than it used to be.

#8 American 15-year-olds do not even rank in the top half of all advanced nations when it comes to math or science literacy.

#9 The United States once had the highest proportion of young adults with post-secondary degrees in the world.  Today, the U.S. has fallen to 12th.

#10 After adjusting for inflation, U.S. college students are borrowing about twice as much money as they did a decade ago.

#11 The student loan default rate has nearly doubled since 2005.

#12 Our economy is not producing nearly enough jobs for our college graduates.  The percentage of mail carriers with a college degree is now 4 times higher than it was back in 1970.

#13 Our infrastructure was once the envy of the world.  Today, U.S. infrastructure is ranked 23rd.

#14 Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

#15 Since the year 2000, incomes for U.S. households led by someone between the ages of 25 and 34 have fallen by about 12 percent after you adjust for inflation.

#16 According to U.S. Representative Betty Sutton, America has lost an average of 15 manufacturing facilities a day over the last 10 years.  During 2010 it got even worse.  Last year, an average of 23 manufacturing facilities a day shut down in the United States.

#17 In all, more than 56,000 manufacturing facilities in the United States have shut down since 2001.

#18 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#19 Manufacturing employment in the U.S. computer industry was actually lower in 2010 than it was in 1975.

#20 In 1959, manufacturing represented 28 percent of all U.S. economic output.  In 2008, it represented only 11.5 percent.

#21 The television manufacturing industry began in the United States.  So how many televisions are manufactured in the United States today?  According to Princeton University economist Alan S. Blinder, the grand total is zero.

#22 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

#23 The Economic Policy Institute says that since 2001 America has lost approximately 2.8 million jobs due to our trade deficit with China alone.

#24 According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.

#25 Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

#26 The size of the economy in India is projected to surpass the size of the U.S. economy by the year 2050.

#27 One prominent economist believes that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

#28 In 2001, the United States ranked fourth in the world in per capita broadband Internet use.  Today it ranks 15th.

#29 Back in the year 2000, 11.3% of all Americans were living in poverty.  Today, 15.1% of all Americans are living in poverty.

#30 Last year, 2.6 million more Americans dropped into poverty.  That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

#31 According to the U.S. Census Bureau, 6.7% of all Americans are living in “extreme poverty”, and that is the highest level that has ever been recorded before.

#32 The percentage of children living in poverty in the United States increased from 16.9 percent in 2006 to nearly 22 percent in 2010.  In the UK and in France the child poverty rate is well under 10 percent.

#33 As I wrote about the other day, since 2007 the number of children living in poverty in the state of California has increased by 30 percent.

#34 A staggering 48.5% of all Americans live in a household that receives some form of government benefits.  Back in 1983, that number was below 30 percent.

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

#36 Between 1991 and 2007 the number of Americans between the ages of 65 and 74 that filed for bankruptcy rose by a staggering 178 percent.

#37 Today, the “too big to fail” banks are larger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

#38 Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power.

#39 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

#40 The U.S. national debt is now nearly 15 times larger than it was just 30 years ago.

Sadly, most Americans are not fired up about turning this country around.  Way too many of them realize that things are getting worse, but they have “checked out” and are just going through the motions of life.

A perfect example is posted below.  In this video, a FedEx delivery guy just chucks a computer monitor over somebody’s fence….

Can you believe he did that?

The sad thing is that the guy was actually home at the time and all the FedEx employee needed to do was ring the bell.

This is the kind of attitude that is killing America.

We all need to start caring again.  We all need to start taking pride in what we do.  We all need to start working hard again.  We all need to make sure that we are living with a sense of personal integrity.

When a nation simply does not care anymore, even a con man can become president.

During a recent 60 Minutes interview, Barack Obama said that only 3 presidents in U.S. history accomplished more than he did during the first two years of his presidency….

“The issue here is not going be a list of accomplishments. As you said yourself, Steve, you know, I would put our legislative and foreign policy accomplishments in our first two years against any president — with the possible exceptions of Johnson, F.D.R., and Lincoln — just in terms of what we’ve gotten done in modern history. But, you know, but when it comes to the economy, we’ve got a lot more work to do.”

He had to be joking, right?

Sadly, he was not joking.

But it is not just Barack Obama.  The truth is that both political parties are absolutely littered with con men, charlatans and corrupt politicians.

It is going to be up to the American people to get educated about how bad things have really gotten, to start demanding solutions, and to start voting much better people into positions of authority.

If dramatic changes are not made, our economy will continue to get worse and the decline of America will continue to accelerate.

We cannot stay on this road my friends.

It is only going to lead to a total nightmare.

Please share this information as widely as possible, and please try to wake up as many of your fellow Americans as you can while there is still time.

50 Economic Numbers From 2011 That Are Almost Too Crazy To Believe

Even though most Americans have become very frustrated with this economy, the reality is that the vast majority of them still have no idea just how bad our economic decline has been or how much trouble we are going to be in if we don’t make dramatic changes immediately.  If we do not educate the American people about how deathly ill the U.S. economy has become, then they will just keep falling for the same old lies that our politicians keep telling them.  Just “tweaking” things here and there is not going to fix this economy.  We truly do need a fundamental change in direction.  America is consuming far more wealth than it is producing and our debt is absolutely exploding.  If we stay on this current path, an economic collapse is inevitable.  Hopefully the crazy economic numbers from 2011 that I have included in this article will be shocking enough to wake some people up.

At this time of the year, a lot of families get together, and in most homes the conversation usually gets around to politics at some point.  Hopefully many of you will use the list below as a tool to help you share the reality of the U.S. economic crisis with your family and friends.  If we all work together, hopefully we can get millions of people to wake up and realize that “business as usual” will result in a national economic apocalypse.

The following are 50 economic numbers from 2011 that are almost too crazy to believe….

#1 A staggering 48 percent of all Americans are either considered to be “low income” or are living in poverty.

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

#3 If the number of Americans that “wanted jobs” was the same today as it was back in 2007, the “official” unemployment rate put out by the U.S. government would be up to 11 percent.

#4 The average amount of time that a worker stays unemployed in the United States is now over 40 weeks.

#5 One recent survey found that 77 percent of all U.S. small businesses do not plan to hire any more workers.

#6 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.

#7 Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

#8 According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006.  Today, that number has shrunk to 14.5 million.

#9 A Gallup poll from earlier this year found that approximately one out of every five Americans that do have a job consider themselves to be underemployed.

#10 According to author Paul Osterman, about 20 percent of all U.S. adults are currently working jobs that pay poverty-level wages.

#11 Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

#12 Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job.  In July, only 81.2 percent of men in that age group had a job.

#13 One recent survey found that one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.

#14 The Federal Reserve recently announced that the total net worth of U.S. households declined by 4.1 percent in the 3rd quarter of 2011 alone.

#15 According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

#16 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.

#17 The U.S. Postal Service has lost more than 5 billion dollars over the past year.

#18 In Stockton, California home prices have declined 64 percent from where they were at when the housing market peaked.

#19 Nevada has had the highest foreclosure rate in the nation for 59 months in a row.

#20 If you can believe it, the median price of a home in Detroit is now just $6000.

#21 According to the U.S. Census Bureau, 18 percent of all homes in the state of Florida are sitting vacant.  That figure is 63 percent larger than it was just ten years ago.

#22 New home construction in the United States is on pace to set a brand new all-time record low in 2011.

#23 As I have written about previously, 19 percent of all American men between the ages of 25 and 34 are now living with their parents.

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

#25 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980.  Today they account for approximately 16.3%.

#26 One study found that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt.

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

#28 The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#29 It is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.

#30 The retirement crisis in the United States just continues to get worse.  According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

#31 Today, one out of every six elderly Americans lives below the federal poverty line.

#32 According to a study that was just released, CEO pay at America’s biggest companies rose by 36.5% in just one recent 12 month period.

#33 Today, the “too big to fail” banks are larger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

#34 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.

#35 According to an analysis of Census Bureau data done by the Pew Research Center, the median net worth for households led by someone 65 years of age or older is 47 times greater than the median net worth for households led by someone under the age of 35.

#36 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.

#37 A higher percentage of Americans is living in extreme poverty (6.7%) than has ever been measured before.

#38 Child homelessness in the United States is now 33 percent higher than it was back in 2007.

#39 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

#40 Sadly, child poverty is absolutely exploding all over America.  According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.

#41 Today, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.

#42 In 1980, government transfer payments accounted for just 11.7% of all income.  Today, government transfer payments account for more than 18 percent of all income.

#43 A staggering 48.5% of all Americans live in a household that receives some form of government benefits.  Back in 1983, that number was below 30 percent.

#44 Right now, spending by the federal government accounts for about 24 percent of GDP.  Back in 2001, it accounted for just 18 percent.

#45 For fiscal year 2011, the U.S. federal government had a budget deficit of nearly 1.3 trillion dollars.  That was the third year in a row that our budget deficit has topped one trillion dollars.

#46 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.

#47 Amazingly, the U.S. government has now accumulated a total debt of 15 trillion dollars.  When Barack Obama first took office the national debt was just 10.6 trillion dollars.

#48 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

#49 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

#50 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

Of course the heart of our economic problems is the Federal Reserve.  The Federal Reserve is a perpetual debt machine, it has almost completely destroyed the value of the U.S. dollar and it has an absolutely nightmarish track record of incompetence.  If the Federal Reserve system had never been created, the U.S. economy would be in far better shape.  The federal government needs to shut down the Federal Reserve and start issuing currency that is not debt-based.  That would be a very significant step toward restoring prosperity to America.

During 2011 we made a lot of progress in educating the American people about our economic problems, but we still have a long way to go.

Hopefully next year more Americans than ever will wake up, because 2012 is going to represent a huge turning point for this country.

Child Poverty In America Is Absolutely EXPLODING – 16 Shocking Statistics That Will Break Your Heart

If the U.S. economy is improving, then why is child poverty in America absolutely exploding?  If we are experiencing “economic growth”, then why are more than half of all children in major U.S. cities like Cleveland and Detroit living in poverty?  If we are the “greatest economy on earth”, then why are one out of every four American children on food stamps?  The shocking statistics that you are about to read below should absolutely break your heart.  Tonight, millions of precious American children will go to bed without any dinner.  Tonight, millions of American children will shiver as they try to go to sleep because their families cannot afford any heat.  How bad does child poverty have to get before we all finally admit that our economic system is completely failing many of the most vulnerable members of our society?  If you want someone to blame, you can blame Congress, the Obama administration, the Bush administration and the corrupt Wall Street bankers.  But most of all, blame the Federal Reserve and the debt-based monetary system that the Fed administers.  Our economy is in the midst of a long-term decline and is slowly but surely dying.  Many of those that are suffering the most from this decline are children.

The following are 16 shocking statistics about child poverty in America that will break your heart….

#1 Child homelessness in the United States is now 33 percent higher than it was back in 2007.

#2 According to the National Center on Family Homelessness, 1.6 million American children “were living on the street, in homeless shelters or motels, or doubled up with other families last year”.

#3 The percentage of children living in poverty in the United States increased from 16.9 percent in 2006 to nearly 22 percent in 2010.  In the UK and in France the child poverty rate is well under 10 percent.

#4 A higher percentage of American children is living in poverty today than was living in poverty back in 1975.

#5 The number of children living in poverty in the U.S. has risen for four years in a row.

#6 There are 10 different U.S. states where at least one out of every four babies is born to a family living in poverty.

#7 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

#8 According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.

#9 In the United States today, more than 35 percent of all African-American children are living in poverty and more than 33 percent of all Hispanic children are living in poverty.

#10 There are seven million children in the United States today that are not covered by health insurance at all.

#11 Today, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.

#12 It is being projected that approximately 50 percent of all U.S. children will be on food stamps at some point in their lives before they reach the age of 18.

#13 In 2010, 42 percent of all single mothers in the United States were on food stamps.

#14 There are 314 counties in the United States where at least 30% of the children are facing food insecurity.

#15 In Washington D.C., the “child food insecurity rate” is 32.3%.

#16 More than 20 million U.S. children rely on school meal programs to keep from going hungry.

So why are so many children suffering so badly?

Well, one reason is that millions of parents are unemployed.  The government tells us that the official unemployment rate is 8.6 percent, but when you take an honest look at the numbers the truth is that the situation is much worse than that.

A recent Washington Post article included the following quote from Ed Luce of the Financial Times….

“According to government statistics, if the same number of people were seeking work today as in 2007, the jobless rate would be 11 percent.”

The U.S. government has artificially reduced “official” unemployment numbers by claiming that millions upon millions of Americans have “left the workforce” over the past 4 years.

In addition, millions upon millions of American parents have been forced to take crappy, low paying jobs because they simply cannot find anything else.

At this point, the share of the economic pie being taken home by U.S. workers has fallen to record lows.

For example, the following comes from a recent CNBC article….

The labor share — the amount paid to workers instead of businesses and other income-earning entities — was reported to have fallen to 57.1 cents on the dollar for the business sector, its lowest level since it was first reported by the Bureau of Labor Statistics in 1947.

Median household income in the United States has fallen for several years in a row, and yet the cost of household basics just seems to keep going up and up.  For example, electricity bills have risen faster than the overall rate of inflation for five years in a row.

American families are being squeezed by this economy, and millions of children are feeling the pain.

Every single day, large numbers of American families get dumped out of the middle class and into poverty.  According to the latest figures, extreme poverty in the United States is now at the highest level ever recorded.  The number of good jobs continues to shrink and the poor are getting poorer.  Things are really bad in America today, and unfortunately it looks like the economy is going to get a lot worse in the years ahead.

But most Americans still do not understand what is happening.  One of the biggest problems we are facing is something called “normalcy bias”.

The following is how Wikipedia defines normalcy bias….

The normalcy bias, or normality bias, refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of governments to include the populace in its disaster preparations. The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred then it never will occur. It also results in the inability of people to cope with a disaster once it occurs. People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.

Most Americans still believe that things will eventually return to “normal”.

After all, every time the U.S. has had a recession in the past we have always recovered and gone on to better things, right?

Well, the cold, hard truth of the matter is that this is not just another economic downturn.  There are a whole host of very bad long-term economic trends that are ripping our economy to shreds.  We are a nation that is drowning in debt even as our economic guts are being ripped out.  The greatest economic machine in the history of the world is being destroyed right in front of our eyes, and most Americans don’t even realize it.

Sadly, most Americans are so brainwashed by the mainstream media that they are not going to believe you the first time that you tell them about all the statistics that point to a coming economic collapse.

Many of them are going to have to be hammered with articles like this time and time again until they finally get it.

America is in a massive amount of trouble, and because of the economic mistakes that we have made millions of children are going to needlessly suffer.

Please share this article with as many people as you can.  The more people that we wake up, the better off America is going to be.

The Tim Tebow Comeback Story Continues But There Will Be No Miracle Comebacks For The U.S. Economy

Never in the history of the NFL has there ever been anything like this.  Today, Tim Tebow engineered yet another miraculous 4th quarter comeback.  Almost everyone has been expecting this unprecedented string of comebacks to come to an end, yet Tebow just keeps pulling off miracle after miracle.  It seems like nearly every week now we are talking about another unbelievable Tim Tebow comeback.  It is truly a great story, and what is wonderful about Tebow is that he is not out to glorify himself.  He is very humble, he always recognizes his teammates and he is a terrific role model for a generation of American youth that is in desperate need of one.  Unfortunately, there is not going to be a similar comeback story for the U.S. economy.  It is late in the 4th quarter, we have accumulated over 50 trillion dollars of total debt as a nation, and our economic guts are being ripped out at a rate that is almost impossible to believe.  The game is essentially over and we are headed for an incredible amount of economic pain as a nation.

We desperately need a “political Tim Tebow” to come along to dismantle our current debt-based economic system.  But instead, the corrupt politicians in Washington D.C. just keep patching up our current system and hope that somehow it will recover.

Unfortunately, this is about as good as things are going to get for the U.S. economy.  The federal government and the Federal Reserve are already pushing things to the “red line”, and all of that effort has not accomplished much.

We have been experiencing “economic stagnation” for much of the past year, and there is not much more that they can do to improve things under our current system.

Right now, the Federal Reserve has pushed interest rates as low as they can go.  They can’t go any lower.

Right now, the federal government is borrowing and spending unprecedented amounts of money.  Federal spending cannot go much higher.

Right now, we have already seen tax cut after tax cut and virtually none of them have been paid for.  Any additional tax cuts will just send our budget deficits even higher.

Right now, we have already seen unprecedented intervention by the Federal Reserve.  They have done just about everything short of dropping huge bags of money over the countryside from helicopters.

The federal government and the Federal Reserve have done just about everything that they can possibly do to “stimulate” the economy, and yet things just keep getting worse.

So what is going to happen when the federal government and the Federal Reserve quit stimulating the economy?

As I wrote about the other day, when evaluating the future of the U.S. economy, it is vitally important to look at the balance sheet numbers and the long-term trends.

When you do that, you suddenly do not feel so good about the upward “blips” that we have seen in the economy lately.

Yes, the “official” unemployment rate recently went down slightly.  But as Mac Slavo recently pointed out, even with the recent “improvement” the truth is that the “real” level of unemployment in the United States is still well over 20 percent.

And all of the long-term trends indicate that we heading for a massive amount of trouble.

The number of good jobs continues to decline.  Even though our population is rapidly increasing, there are 10 percent fewer middle income jobs in the U.S. today than there were a decade ago.

In recent years, the employment to population ratio has been steadily declining.  At the start of the recession it was at 62.7%.  Today, it is at 58.5%.

Household incomes continue to go down as well.  Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

So why is this happening?  Well, as I wrote about recently, the United States has the worst balance of trade in the entire world by far.

Wealth, jobs and economic infrastructure are pouring out of this country and very few politicians are trying to stop it.

An average of 23 manufacturing facilities were shut down every single day in the United States last year.

That represents a huge amount of lost jobs.

So do you hear any political candidates talking about how they are going to stop this from happening or about how they are going to get all of those lost jobs back?

Overall, the U.S. has lost a total of more than 56,000 manufacturing facilities since 2001.

So how can an economy be great when it is constantly bleeding huge amounts of economic infrastructure?

We have become way too dependent on other nations for the things that we need.

How much trouble would we be in if Saudi Arabia suddenly decided to quit shipping us oil or if China suddenly decided to quit shipping us cheap plastic products to sell in our stores?

Right now, businesses are absolutely racing to get out of the United States.  Big corporations are shipping as many jobs as they possibly can out of the country.  Our insane economic policies have turned American workers into tremendous liabilities.

One economist from Princeton University is warning that 40 million more U.S. jobs could be sent offshore over the next two decades if nothing is done to stop this.

So why aren’t more politicians screaming and yelling about this?

Without good jobs, Americans are falling out of the middle class in staggering numbers.

Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

So is that a sign that things are getting better or that things are getting worse?

A higher percentage of Americans is living in extreme poverty than has ever been measured before.  Not only that, 2.6 million more Americans fell into poverty last year.  That was also a new all-time record.

So are those signs that things are getting better or that things are getting worse?

The American people generally do not understand why these things are happening, but they are clearly getting frustrated.

A recent Gallup poll found that an all-time record 76 percent of all Americans believe that most members of Congress do not deserve to be reelected.

But when election time rolls around, they will probably send most of them back to Washington D.C. anyway.

Our politicians keep kicking the can down the road, but time for doing that is running out.  The unprecedented “stimulus” efforts by the federal government will be coming to an end sooner or later.

In a recent article, author Bruce Krasting listed a whole bunch of reasons why the economic can is not going to be able to be kicked down the road much farther.  The following are some of the things that he says are scheduled to end by the beginning of 2013….

A) The Bush tax cuts on those making more than $200k will expire.

B) The Bush tax cuts on those making less than $200k will also expire.

C) The Patch on AMT will expire.

D) The 2% payroll tax holiday will expire for all workers on 12/31/12 (I’m sure the current holiday will be rolled for another year)

E) The 99-week extended unemployment benefits die on 12/31. (The emergency benefits will also be extended for 2012)

F) There will have to be a budget that is approved. Alternatively, a series of continuing resolutions is required to avert a government shutdown. We have not had an approved budget in over 900 days.

G) 2013 is the first year that there will be mandatory caps on discretionary spending. These limits will result in a YoY decline in government spending.

H) The Federal Reserve has promised to keep interest rates at zero into 2013. While it is possible that the Fed could continue the madness for even longer, the reality is that interest rates have nowhere to go but up.

I) By January 2013 it will be painfully evident that the country’s key social programs, Social Security and Medicare will be running in the red at a pace that is far higher than anyone considered possible. The need for dramatic changes in these programs will have to come onto the table. The implications of this will be significant.

J) In 2013 the issues of Fannie, Freddie, FHA and the Federal Home Loan Banks must be addressed. The problems at the housing agencies has festered too long.

K) The country will face another debt ceiling extension. The last time cost us our AAA.

Sadly, we will probably not have to wait until 2013 to feel a whole lot of economic pain.

The reality is that a 15 trillion dollar debt and trillion dollar yearly budget deficits are not sustainable.  We have created a situation where a horrible crash is inevitable, and there is no way that our current debt-based system can be fixed to keep a nightmarish collapse from happening.

During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.  That is a recipe for national financial suicide.

Meanwhile, despite what you may have heard, the European debt crisis has not been fixed.

Not at all.

The truth is that none of the fundamental problems were fixed by this recent “agreement” as Ambrose Evans-Pritchard recently noted in one of his columns….

There is no shared debt issuance, no fiscal transfers, no move to an EU Treasury, no banking licence for the ESM rescue fund, and no change in the mandate of the European Central Bank.

In short, there is no breakthrough of any kind that will convince Asian investors that this monetary union has viable governance or even a future.

Germany has kept the focus exclusively on fiscal deficits even though everybody must understand by now that this crisis was not caused by fiscal deficits (except in the case of Greece). Spain and Ireland were in surplus, and Italy had a primary surplus.

For many more reasons why Europe is headed for big trouble, please read this article: “22 Reasons Why We Could See An Economic Collapse In Europe In 2012“.

When Europe goes down, it is going to have a devastating impact on the United States.

Meanwhile, the economies of China and Japan are also steamrolling toward recession.

There is simply way too much debt in the world, and a great day of reckoning is coming.

Combined, the industrialized nations of the world borrowed more than 10 trillion dollars this year, and that number is expected to soar even higher next year.

Jim Cramer of CNBC stated recently that the global economy is at “DEFCON 3, two stages from a financial collapse so huge it’s hard to get your mind around.”

Most Americans don’t understand this yet.  But hopefully we can get more of them educated while there is still time.

The global financial system is a big shell game.  It is a gigantic mountain of debt, leverage and risk.

You would have thought that we would have learned some key lessons from the financial crisis of 2008, but we didn’t.

Back in 2002, the top 10 U.S. banks controlled 55 percent of all U.S. banking assets.  Right now, the top 10 U.S. banks control 77 percent of all U.S. banking assets.

Today, the “too big to fail” banks are larger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

So instead of doing something about the “too big to fail” banks, they are now more “too big to fail” than ever.

As big banks and big corporations have come to dominate our economy more than ever before, wealth and power have also become much more concentrated….

*The wealthiest 1 percent of all Americans now own more than a third of all the wealth in the United States.

*The poorest 50 percent of all Americans collectively own just 2.5% of all the wealth in the United States.

*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.

*Overall, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

It would be wonderful if we could send a “Tim Tebow of politics” to Washington D.C., but instead the Democrats and the Republicans look like they just plan to give us more of the same.

Are the Republicans really going to nominate someone who co-sponsored 418 bills with Nancy Pelosi?  The truth is that the latest “anti-Romney candidate” is almost a clone of Mitt Romney.

Newt Gingrich is essentially an older, ruder version of Barack Obama.  If you are counting on him to “save America” then you are going to be incredibly disappointed.

Sadly, we just do not have nearly enough men like Tim Tebow in America today.  The following comes from a recent profile of Tebow that recently appeared in the Wall Street Journal….

While at Florida, Mr. Tebow became well known for spending his summers helping the poor and needy in the Philippines. He also spoke in prisons and appeared to accept every opportunity to volunteer. He encouraged his teammates and classmates to follow his lead.

You can see video of Tim Tebow speaking to a group of prisoners at the Lake City Correctional Facility while he was still attending the University of Florida right here.

Unfortunately, there is no “Tim Tebow comeback” on the horizon for the U.S. economy at this point.

But when the U.S. economy does get worse, we can take a cue from Tim Tebow and be very generous with those in need.  There are going to be a lot of people that will be really hurting, and those of us that have been blessed should do what we can to help them out.

A lot of people say that my site is all about “doom and gloom”, but telling the truth to the American people is never a bad thing.

We do not do ourselves any favors by sticking our heads in the sand and pretending that everything is going to be okay.

There is going to be no miracle comeback for the U.S. economy.

A horrific economic collapse is coming.

You better get ready.

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