Economy

Happy Thanksgiving! Are You Better Off Today Than You Were Four Years Ago?

As you gather around the table with your family this Thanksgiving, ask yourself this question: are you better off today than you were four years ago?  Unfortunately, most Americans are not.  Both political parties have controlled the White House during the last four years – Barack Obama has been in office for nearly two years and before him it was George W. Bush – and yet no matter what politicians we send to Washington D.C. things just seem to keep getting worse.  We buy more than we produce, we spend more than we bring in, we have 18 times as many “problem banks” as we did 4 years ago, the number of Americans on food stamps continues to set a new all-time record every month and we are living in the greatest debt bubble in the history of the world.  But at least the majority of Americans are still prosperous enough to enjoy a happy Thanksgiving inside a warm, comfortable home.  Unfortunately, if things keep going the way they are going, we are going to experience a national economic nightmare that nobody will be thankful for.

If you watch the economic statistics from week to week and month to month, it will seem like sometimes they are getting worse and sometimes they are getting better.  However, once you take a longer-term view of things, exactly what is happening to us starts to come clearly into focus.  The truth is that the United States is in the midst of a long-term economic collapse, and many economic statistics just keep getting worse every single year.

The following are 11 statistics that reveal just how far the U.S. economy has fallen over the past four years….

#1 In November 2006, the “official” U.S. unemployment rate was 4.5 percent.  Today, the “official” U.S. unemployment rate has been at 9.5 percent or greater for more than a year.

#2 At Thanksgiving back in 2006, 26 million Americans were on food stamps.  Today, there are over 42 million Americans on food stamps and that number is climbing rapidly.

#3 According to the U.S. Census Bureau, median household income in the United States fell from $51,726 in 2008 to $50,221 in 2009.  Median household income declined the year before that too.  Meanwhile, prices have continued to rise throughout that period.

#4 At the end of the third quarter in 2006, 47 banks were on the FDIC “problem list”.  At the end of the third quarter in 2010, 860 banks were on the FDIC “problem list”.

#5 California home builders began construction on 1,811 homes during the month of August, which was down 77% from August 2006.

#6 In 2006, new home sales in the United States were near record highs.  In 2010, new home sales in the United States are at record lows as the following graph from Calculated Risk demonstrates….

#7 A recent survey of last year’s college graduates found that 80 percent moved right back home with their parents after graduation.  That was up substantially from 63 percent in 2006.

#8 According to one analysis, the United States has lost a total of 10.5 million jobs since 2007.

#9 In 2006, the Social Security program took in somewhere in the neighborhood of 100 billion more dollars than it paid out.  Of course the U.S. government spent all that money instead of setting it aside.  So now more U.S. retirees than ever are ready to start drawing on Social Security and a “tipping point” is rapidly coming.  Social Security will pay out more in benefits in 2010 than it receives in payroll taxes.  This was not supposed to happen until at least 2015, and the years ahead look very, very grim….

#10 The U.S. government’s debt ceiling has been raised six times since the beginning of 2006.

#11 In 2006, the U.S. national debt was getting close to 9 trillion dollars.  Today, the U.S. national debt is well past 13 trillion dollars and is rapidly closing in on 14 trillion dollars.

So is there much hope for an economic turnaround any time soon?

No, not really.

Even the Federal Reserve, usually one of the biggest cheerleaders for the U.S. economy, is not very optimistic right now.  In fact, the Fed has just announced that they are projecting that unemployment will still be at about 8 percent when the next presidential election arrives in 2012.

Actually, if the official unemployment rate was to get that low by then that would really be something to celebrate.  Many economists fear that unemployment will be even higher than it is now by then.

Several years ago, a very foolish politician (Dick Cheney) famously said that “deficits don’t matter”.  That is kind of like saying that credit card balances don’t matter.  For decades, politicians from both political parties have been running up staggering amounts of government debt as if it would never catch up with us.  For decades, Americans have been addicted to debt and have been buying more than they produce.  We have enjoyed living beyond our means for so long that most of us simply have no idea that there are any consequences for doing so.

Living on debt is fun on the way up, but on the way down the pain can be excruciating.  We are about to experience that on a national level, and it is going to be an absolute nightmare.

Did any of you actually believe that we were just going to go on living way, way, way beyond our means indefinitely?

America has piled up the biggest mountain of debt in the history of the world, and unfortunately we are all going to pay the price for that.

So enjoy your turkey while you can.  In future years we may have a lot less to be thankful for.

11 Reasons Why North Korea Is The Most Bizarre Nation On Earth

Is the United States about to go to war with the most bizarre nation on earth?  A lot of Americans would actually welcome “the Korean War Part 2”, but before people get too excited it is important to keep in mind that we have never been at war with a nation that actually possesses nuclear weapons.  At this point it is unclear exactly how powerful North Korea’s nuclear weapons are, but nearly everyone does agree that they are crazy enough to use them.  North Korea reportedly has thousands of missile batteries that are capable to hitting the 10 million people that live in Seoul.  The death and devastation that an all-out strike on Seoul could potentially cause is almost unimaginable.  In fact, the 24.5 million people living either in or around Seoul make it the second largest metropolitan area in the world.  The next conflict on the Korean peninsula will be extremely bloody.  Nobody should be wishing for that.

Unfortunately, the next Korean war seems closer than ever.  Tensions on the peninsula are at a record high.  Today, North Korea has one of the largest armies in the world.  Some reports claim that they have over 1 million soldiers on active duty.  But South Korea is highly militarized as well, and there are 28,000 U.S. troops stationed in South Korea that the North Koreans would have to contend with.

Right now the rest of the world is getting quite nervous, because a war between nuclear powers could get out of hand very quickly.  If North Korea hits South Korea with nuclear weapons, it seems almost certain that the U.S. would hit North Korea with nukes.  The death and destruction that would result would be unprecedented.

So what does China think about all of this?  Well, North Korea would not be acting so belligerent right now if they did not have permission from China.  Perhaps China is trying to send a message to the West.

On the other hand, there are others that believe that it could go a lot deeper than that.  The regime in North Korea is on the verge of collapsing in on itself.  Even the Chinese are getting tired of propping up their government and dealing with their nonsense.  The truth is that a new Korean war could benefit the Chinese in several ways.

First of all, South Korea (the biggest U.S. ally in the region) would be absolutely devastated even if they “won” the war.  That would cripple an incredibly important geopolitical chess piece.

Secondly, the U.S. would be embroiled in yet another costly conflict and would undoubtedly suffer some costly losses as well.  The opinion of the rest of the world toward the United States would darken even more – especially if nuclear weapons were used.

Thirdly, China could gain a ton of “leverage” by stabbing North Korea in the back after the conflict had started.  In return for supporting the U.S./South Korean coalition, China could ask for all kinds of things that they wouldn’t even dream of getting right now.  In fact, it is not unthinkable to imagine China walking away with a significant chunk of North Korea in the aftermath of the war.  The Chinese government is regularly involved in “border disputes” (just Google it), and China would never pass up a chance to pick up a big slice of new territory.

In the end, the “winner” of any new war on the Korean peninsula would probably be China.  The U.S. would get rid of the “North Korean problem”, but it would come at a great cost.  It is hard to imagine any scenario that would end up greatly benefiting the United States.

Let us hope that a new all-out Korean war does not erupt.  North Korea is ruled by delusional leaders who are insane enough to actually use nuclear weapons.  If you doubt this, just consider the following 11 facts….

#1 The first “Great Leader” of North Korea, Kim Il-Sung, is deeply revered in North Korea.  In fact, there are over 500 statues of Kim Il-sung scattered throughout the country.  Many Koreans apparently believe that Kim Il-Sung actually created the world.

#2 It is said that hanging up pictures of Kim Il-Sung is compulsory for every household in North Korea.

#3 Millions of North Korean citizens have literally starved to death over the past 10 years.

#4 The North Korean constitution actually guarantees freedom of speech and freedom of the press.

#5 It has been reported that during times of extreme hunger in North Korea, cannibalism is quite common.  Several years ago the Washington Post shared what one 29-year-old female defector told them about what is going on inside the country….

“When one is very hungry, one can go crazy. One woman in my town killed her 7-month-old baby, and ate the baby with another woman.”

The sad thing is that the 29-year-old female defector didn’t even consider what she had seen to be wrong….

“I can’t condemn cannibalism. Not that I wanted to eat human meat, but we were so hungry. It was common that people went to a fresh grave and dug up a body to eat meat. I witnessed a woman being questioned for cannibalism. She said it tasted good.”

#6 In 1987, North Korea began construction on the Ryugyong Hotel, which would have been the tallest hotel in the world if it had been finished on schedule in 1989.  Instead, construction of the bizarre 105-story skyscraper that somewhat resembles a pyramid was suspended in 1992, and the unfinished structure was just a massive concrete shell towering over Pyongyang completely empty for the next 16 years.  Work began once again on the project in 2008, and it is anticipated that it will finally be completed in 2012.

#7 One of North Korea’s greatest “tourist attractions” is the Pueblo – a U.S. naval vessel that the North Koreans captured from “the imperialist Americans” back in 1968.

#8 According to North Korean media, Kim Jong-il is a phenom at just about everything.  It is claimed that he shot 38 under par (including 11 holes-in-one) the first time he ever played golf.

#9 Christians are slaughtered in some of the most brutal ways imaginable in North Korea.  The following is just one example…..

“While Interviewee 17 was in the North Korean Army, his unit was dispatched to widen the highway between Pyongyang and the nearby port city of Nampo. They were demolishing a vacated house in Yongkang county, Yongkang district town, when in a basement between two bricks they found a Bible and a small notebook that contained 25 names, one identified as pastor, two as chon-do-sa (assistant pastors), two as elders, and 20 other names, apparently parishioners, identified by their occupations. The soldiers turned the Bible and notebook over to the local branch of Department 15 of the Korean Workers Party (KWP), but the Party officials said it was up to the military police unit, Bowisaryungbu gigwanwon, to investigate. Tracked down at their place of work through the listing of occupation in the notebook, the 25 persons were picked up without formal arrest by the military bowibu. The interviewee was not aware of any judicial procedures for those seized. In November 1996, the 25 were brought to the road construction site. Four concentric rectangular rows of spectators were assembled to watch the execution. Interviewee 17 was in the first row. The five leaders to be executed – the pastor, two assistant pastors, and two elders – were bound hand and foot and made to lie down in front of a steamroller. This steamroller was a large construction vehicle imported from Japan with a heavy, huge, and wide steel roller mounted on the front to crush and level the roadway prior to pouring concrete. The other twenty persons were held just to the side. The condemned were accused of being Kiddokyo (Protestant Christian) spies and conspiring to engage in subversive activities. Nevertheless, they were told, “If you abandon religion and serve only Kim Il Sung and Kim Jong Il, you will not be killed.” None of the five said a word. Some of the fellow parishioners assembled to watch the execution cried, screamed out, or fainted when the skulls made a popping sound as they were crushed beneath the steamroller. Interviewee 17 thought, at the time, that these church people were crazy. He thought then that religion was an “opiate,” and it was stupid for them to give up their lives for religion. He heard from the soldiers who took away the other twenty prisoners that they were being sent to a prison camp.”

#10 A few years ago when China was sending humanitarian aid into North Korea the North Koreans decided that they would just start keeping the trains as well.  The Chinese crews were sent back over the border on foot.

#11 A song entitled “No Motherland Without You” was written specifically for Kim Jong-il and is one of the most popular songs in North Korea.  It is regularly sung by the North Korean military.

Are you convinced yet?  The truth is that North Korea is very, very dangerous and they should not be underestimated.  Let us hope that the United States never has to fight another war with them.

Black Friday: A Festival Of Greed In The Midst Of A Sea Of Pain And Suffering

Black Friday – the day after Thanksgiving when millions of Americans line up before the crack of dawn at retail stores across the nation hoping to find great deals on cheap plastic stuff made outside the United States.  The Friday after Thanksgiving has become an “unofficial holiday” in recent years, and in fact in many ways it is starting to become as big as Thanksgiving itself.  A recent search on Google News found over 31,000 stories about “Thanksgiving” and over 24,000 stories about “Black Friday”.  Almost every major news organization has been running stories about Black Friday for weeks now.  Some of the biggest retailers, including Wal-Mart, Sears, Old Navy and Toys R Us, have had such success with Black Friday sales that they have decided to stay open for Thanksgiving now.  You would think that we could all have one day off to spend with family and friends to give thanks for all that we have been blessed with, but apparently that is not going to be possible.  Just like so many of our other holidays, the true purpose behind having a holiday called “Thanksgiving” is being totally obliterated by a tsunami of greed.  Meanwhile, more Americans than ever are living in poverty this year and very few people even seem to notice.

Not that there is anything wrong with enjoying all the things you and your family have been blessed with.  However, perhaps we should all take time this week to remember the tens of millions of Americans that are going to be deeply suffering this winter.  They keep telling us that “the recession is over” and yet poverty continues to spread like an out of control plague.  But for most Americans life is still relatively “normal”, and so the horrible suffering going on out there doesn’t really affect them.

The truth is that the U.S. economy is dying.  Americans have been living beyond their means for decades, and now we are starting to pay the price for the gigantic mountains of debt that we have accumulated.  But instead of preparing for harder times and looking for ways to help those who are hurting, most Americans are preparing for another orgy of shopping this holiday season….

*According to a new study by America’s Research Group and UBS, more Americans than ever before will be out shopping this Black Friday.

Meanwhile, nearly 15% of all American households experienced a food shortage at some point during 2009, and experts anticipate that the final number for 2010 will be even worse.

*Approximately 48.9 percent of all Americans plan to shop on Black Friday this year.

Meanwhile, many other Americans only have a very, very cold winter to look forward to.  According to the National Energy Assistance Directors’ Association, more than 10 million U.S. households will not be able to afford to heat their homes this winter without assistance, which would be a new all-time record.

*The National Retail Federation estimates that holiday retail sales will hit $447.1 billion for 2010.

Meanwhile, more Americans are on food stamps than ever before.  Today, more than 43 million Americans are enrolled in the food stamp program.  The number of Americans on food stamps has increased almost 60 percent since 2007.  If our economy is getting better, then why is hunger spreading like an out of control virus?….

*Millions of American families will be streaming into Wal-Mart and Target to buy foreign-made electronic gadgets this upcoming Friday.

Meanwhile, millions of other American families would gladly give up their Thanksgiving meals in exchange for a decent job for a family member.  According to one recent survey, 28% of all U.S. households have at least one person that is looking for a full-time job.  Unfortunately, there are not even close to enough jobs to go around in post-industrial America.

*Consumer Reports has posted a Black Friday shopping guide that encourages people to be prepared to wait in line out in the cold for several hours if they want to get the “best deals”….

It’s not always worth breaking down the ‘door.’ … But consumers shouldn’t bother to show up unless they are willing to wait in line, sometimes for hours before the store opens, and should be prepared for possible disappointment. There are no guarantees.

Meanwhile, there are millions of American children that barely have enough to eat.  According to one recent study, approximately 21 percent of all children in the United States are living below the poverty line in 2010.

The age of consumerism is coming to a close so enjoy it while it lasts.

Sadly, many proponents of “free trade” (which is actually not “free” or “fair” at all) point to the “great deals” available on Black Friday as evidence that globalism works.

Yes, you might get 20 extra bucks off on that 32-inch television, but in the end American workers are going to be supported somehow.

Either we provide jobs for American workers that enable them to feed their families or we provide for them by giving them food stamps and unemployment checks.

The United States has lost over 42,000 factories since 2001.  Are you willing to have your taxes raised to provide food and shelter for all of those displaced workers?

The following is how Wikipedia defines deindustrialization….

Deindustrialization (also spelled deindustrialisation) is a process of social and economic change caused by the removal or reduction of industrial capacity or activity in a country or region, especially heavy industry or manufacturing industry. It is an opposite of industrialization.

In case you haven’t noticed, that is what is happening to America.

The United States is rapidly becoming a post-industrial nation.

As of the end of 2009, less than 12 million Americans worked in manufacturing.  The last time less than 12 million Americans were employed in manufacturing was in 1941.

Not that all trade is a bad thing.  Trading with other nations such as Canada and Germany that have similar standards of living and that pay their workers similar wages could potentially be beneficial to both sides.

However, merging our economy with nations such as communist China was a colossal mistake.  In China, most workers earn less than a tenth of what most American workers make.  Today, our factories, our jobs and our wealth are being transferred to China at a pace that is almost unbelievable.

In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year.  In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.

In case you are wondering, that is not a good trend.

Every single month, tens of billions of dollars more goes out of the United States than comes into it.

In other words, we are being drained.

But that isn’t going to stop tens of millions of Americans from running out on Black Friday and buying huge piles of stuff that nobody really needs with money that they can’t really afford to spend.

America is in the midst of a long-term economic decline, but nearly everyone in the media keeps expecting the economy to “snap out of it” and for the good times to start rolling once again.

Unfortunately, things aren’t going to get better.  This is about as good as things are going to get.

The federal government has piled up the biggest mountain of debt in the history of the world.  Our state and local governments are drowning in a sea of red ink.  Average Americans are seeing their incomes decline and their standards of living go down.  The greatest economic machine in world history is being dismantled and most Americans have become so dumbed-down that they don’t even understand what is going on.

But as they say, ignorance is bliss.

So enjoy this “Black Friday” while you still can.  Perhaps the memories of these good times will keep us warm during the truly dark days that are ahead.

The Prepper's Blueprint

Tent Cities, Homelessness And Soul-Crushing Despair: The Legacy Of Decades Of Government Debt And Mismanagement Of The Economy

For decades, our politicians have been deeply addicted to government debt, they have stood idly by as millions of our jobs have been shipped overseas and they have passed countless business-crushing regulations and they never thought that it would catch up with us.  Well, it has.  America has been living in the biggest debt bubble in the history of the world, and now that bubble is starting to pop.  There has never been such an extended period of unemployment in the United States since the Great Depression, and millions of Americans are losing their homes.  Homelessness is skyrocketing, tent cities are popping up everywhere and countless numbers of American families are experiencing the soul-crushing despair that comes from desperately trying to hang on for month after month after month.

Now, because of the horrific hole that our politicians have dug for us, we are faced with some heartbreaking choices.  For example, right now the U.S. Congress is deciding whether or not to extend long-term unemployment benefits for the nation’s jobless.

Extending those benefits through the end of February would add another $12.5 billion to the U.S. national debt.  But not doing it would cut off the only lifeline that many Americans have just in time for the holidays.

The extension of jobless benefits that was passed last summer expires on December 1st.  If these long-term benefits are not renewed, approximately 2 million unemployed Americans will lose their checks.

But what can the U.S. Congress do?  Just keep going into endless amounts of debt?  As I have written about previously, the United States is never going to see another balanced budget ever again under the current system.  The U.S. government is flat out broke.  Somehow our politicians desperately need to find a way for the federal budget to stop hemorrhaging red ink.

There is no more “extra money” to spend.  The U.S. government has piled up the biggest mountain of debt in the history of the world and we are headed for a complete and total economic disaster because of it.

But what are we going to do?  Are we going to let millions of Americans starve in the streets?

It’s not just the rapidly rising number of homeless Americans that is the problem.  Millions of Americans are not going to be able to heat their homes this winter.  Millions of others are going to have to choose between buying medicine and buying food because they will not be able to afford both.

How would you like to be at a point where you could not go to the doctor because you knew that you could not pay the deductible?

How would you like to be at a point where you had to decide whether to buy diabetes medicine or to buy macaroni and cheese to feed your family?

More than 42 million Americans are now on food stamps, and that number keeps going up month after month after month.

Just think about that.

42 million Americans would not be able to eat if the U.S. government did not give them handouts.

The safety net is getting awfully crowded.

If you really want to see some soul-crushing desperation, go check out the flood tunnels under the city of Las Vegas.  But do not do this alone – it is very dangerous down there.  Today, there are hordes of “tunnel people” who call those dark tunnels home.  Nobody knows for sure how many people are down there (some people say that it is well into the thousands), but everyone agrees that the number is rapidly growing.

But in many major U.S. cities there are no flood tunnels to go to.  Instead, in many areas of the United States huge tent cities have sprouted.  The following is a video news report from the BBC about the tent cities that are popping up all over America….

But it is not just “drug addicts” and the “mentally ill” that are going to these tent cities.  One anonymous unemployed woman identified only as “Kaynonymous” is a highly educated professional who figures that she will end up in a tent city soon….

“I’m a 99er too. 53, female, single and once on track with an IT career. No one in their right mind would consider me for an IT position after being gone from the field for over 2 years. I have officially been a 99er since May 2010. In Aug. 2010 all of my savings and retirement funds were finally depleted–not only can I no longer make my mortgage payment, I can no longer afford utilities either. I’m just not sure that the 99ers ever had a voice outside of union organizers and even with them it was too little too late. Guess I’ll be seeing ya’ll in the soup kitchens and tent cities. I do still have my tent…”

So we should just extend the long-term unemployment benefits, right?  Well, according to a recent poll commissioned by the National Employment Law Project, 73 percent of Americans want Congress to continue paying out extended unemployment benefits.

But it is not just that simple.

America is broke.

The entire financial system is dying.

The U.S. government desperately needs to stop spending so much money.

But how can we turn our backs on people who are desperately hurting?

There are millions of Americans that have just about reached the end of their ropes.  For example, one 43-year-old woman named Jacqueline recently expressed some of the extreme frustration that she is experiencing on her blog….

I am one of the 6 million poor, unemployed middle-aged Americans struggling without any safety net or income other than food stamps. I have resorted to salvaging scrap metal just to survive while keeping up an increasingly hopeless job search. On May 4th, 2010 just three weeks before my 43rd birthday ago I got slapped with a diagnosis of very early stage glaucoma when I had a six year long overdue optical exam for badly needed new glasses. Without treatment — including ophthalmologist’s glaucoma monitoring exams — I will end up blind and permanently disabled. It’s not a matter of “if”, it’s a matter of when.

As a society, we will be judged by how we treat those who are the most vulnerable.  It can seem easy to bash those who have lost everything, but someday you might end up in that position.  In the following video, police in St. Petersburg, Florida are seen using box cutters to slice up the tents that the homeless were sleeping in….

Hopefully you were deeply disturbed by that video.

We have gotten ourselves into a giant mess, and things are only going to get worse.

Unfortunately, some extremely painful decisions are going to have to be made.

The truth is that we are so deeply in debt that the U.S. government just cannot be spending any extra money right now.

However, we also cannot turn our backs on millions of American families that are going to lose their homes and go hungry if we do not help them.

So what do we do?

What hurting Americans need most of all are not handouts – what they really need are good jobs.

But good jobs are being shipped overseas at a breathtaking pace.  The United States has lost approximately 42,400 factories since 2001.  The greatest economic machine in the history of the world is literally having its guts ripped out, and most of you kept voting in jokers who supported all of this deindustrialization.

For decades, our politicians kept telling us how wonderful globalization would be for America.  We didn’t listen when Ross Perot warned us about “the great sucking sound” that these “free trade” agreements would bring about.

Well, look how all of that turned out.  In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year.  In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars.

In case you can’t figure it out, that means that 28 billion dollars of our national wealth was transferred to China in just one month.

This is happening month after month after month.

And yet Barack Obama continues to get up and tell us how wonderful globalism is.  During his recent trip to India, Barack Obama made the following statement….

“This will keep America on its toes. America is going to have to compete. There is going to be a tug-of-war within the US between those who see globalization as a threat and those who accept we live in a open integrated world, which has challenges and opportunities.”

Yes, globalization is a threat.  We should have never merged our economy with the economy of China where workers make less than a tenth of what an American worker makes.

Jobs are flooding out of the U.S. and they are flooding into places like India and China where labor is far, far cheaper.

But without good jobs, how in the world are average Americans going to pay the bills?

The answer is that an increasing number of them are not.  1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.

Incomes are going down.  According to the U.S. Census Bureau, median household income in the United States fell from $51,726 in 2008 to $50,221 in 2009.

Things are getting worse instead of getting better.

And things are going to continue to get worse because the U.S. government goes into more debt every single month, most state and local governments go into more debt every single month, and thanks to America’s exploding trade deficit, tens of billions of our national wealth gets transferred out of the United States every single month.

The U.S. economy is dying.  There are going to be even more tent cities and even more hungry Americans.  The scale of the economic nightmare that we are facing in the years ahead is going to be unimaginable.

So if you get to enjoy a warm dinner and you get to sleep in a warm bed tonight, please consider yourself to be very fortunate.  Someday soon you also may find those things cruelly stripped away from you.

12 Facts That Will Blow Your Mind – Federal Employees And Members Of Congress Are Getting Rich While Those Of Us Who Pay Their Salaries Suffer

Do you remember the days when getting elected to Congress or choosing to work for the government was referred to as “public service”?  The idea was that you would be making a sacrifice for the greater good of the country.  Well, those days are long gone.  Today, getting elected to Congress or working for the federal government is a good way to get rich.  Median household income in the United States fell from $51,726 in 2008 to $50,221 in 2009, and yet the personal wealth of members of Congress and the salaries of federal workers (especially at the higher levels) continue to explode.  A lot of corrupt politicians and federal fat cats are raking in stunning amounts of cash, and we are the ones paying the bill.  There is certainly nothing wrong with making a lot of money, but does it seem right that so many of our “public servants” are getting filthy rich while so many of the rest of us are barely getting by?

Posted below are 12 facts that will blow your mind.  Most Americans have no idea just how obscenely wealthy many members of Congress are, and most Americans are totally clueless about how cushy some of these U.S. government jobs are.  If there is one place in America where the good times are still rolling (other than Wall Street), it would have to be Washington D.C.

Members of Congress and employees of the government are supposed to work for us.  We are the ones who pay their salaries.  But today, they are the ones “living the dream” while most of the rest of us scramble just to survive from month to month….

#1 According to an article in the Hill, House Speaker Nancy Pelosi’s net worth soared from $13.7 million in 2008 to $21.7 million in 2009.

#2 In 2005, 7420 federal workers were making $150,000 or more per year.  In 2010, a whopping 82,034 federal workers are making $150,000 or more per year.  That is more than a tenfold increase in just five years.

#3 More than half of the members of the U.S. Congress are millionaires.

#4 The total compensation that the U.S. government workforce is going to take in this year is approximately 447 billion dollars.

#5 Today, all members of Congress earn at least $175,000.  This is far, far more than the average American makes.

#6 60 percent of the federal government workforce is represented by labor unions.

#7 The median wealth of a U.S. Senator in 2009 was 2.38 million dollars.

#8 In 2005, the U.S. Department of Defense had just nine civilians earning $170,000 or more.  When Barack Obama took office, the U.S. Department of Defense had 214 civilians earning $170,000 or more.  In June 2010, the U.S. Department of Defense had 994 civilians earning $170,000 or more.

#9 Insider trading is perfectly legal for members of the U.S. Congress – and they refuse to pass a law that would change that.

#10 According to a recent study conducted by the Heritage Foundation, federal workers earn 30 to 40 percent more money on average than their counterparts in the private sector.

#11 When you factor in such things as retirement and health care benefits, the compensation gap between federal workers and private sector employees gets even larger.  Just consider the following quote from the Heritage Foundation study mentioned above….

“Including non-cash benefits adds to this disparity. The average private-sector employer pays $9,882 per employee in annual benefits, while the federal government pays an average of $32,115 per employee.”

#12 The personal wealth of members of the U.S. Congress collectively increased by more than 16 percent from 2008 to 2009.

So can the U.S. government continue to afford to shell out nearly half a trillion dollars to federal employees every single year?

Of course not.

The truth is that the U.S. government is flat broke and yet most of our politicians still seem extremely resistant to consider anything that would even slow down the wild spending that has been going on.

So what do we get for the $447 billion that we are spending on federal workers every single year?

Not a whole lot – unless you consider paperwork, bureaucracy and a gigantic pile of ridiculous regulations to be a good thing.

America needs a fundamental shift in attitude.  Instead of expecting a “nanny state” to take care of us, we should desperately try to reshape the federal government into a much smaller entity that will finally get off our backs.

We have been living beyond our means for decades, and we cannot afford to pay for this bloated behemoth of a government for much longer.

Hopefully Americans will wake up and do something about this nonsense before it is too late.  Because right now the federal government has become an out of control monster that is gobbling up everything in sight.

9 Reasons Why Quantitative Easing Is Bad For The U.S. Economy

Buckle up and hold on – a new round of quantitative easing is here and things could start getting very ugly in the financial world over the coming months.  The truth is that many economists fear that an out of control Federal Reserve is “crossing the Rubicon” by announcing another wave of quantitative easing.  Have we now reached a point where the Federal Reserve is simply going to fire up the printing presses and shower massive wads of cash into the financial system whenever the U.S. economy is not growing fast enough?  If so, what does the mean for inflation, the stability of the world financial system and the future of the U.S. dollar?  The Fed says that the plan is to purchase $600 billion of U.S. Treasury securities by the middle of 2011.  In addition, the Federal Reserve has announced that it will be “reinvesting” an additional $250 billion to $300 billion from the proceeds of its mortgage portfolio in U.S. Treasury securities over the same time period.  So that is a total injection of about $900 billion.  Perhaps the Fed thought that number would sound a little less ominous than $1 trillion.  In any event, the Federal Reserve seems convinced that quantitative easing is going to work this time.  So should we believe the Federal Reserve?

The truth is that the Federal Reserve has tried this before.  In November 2008, the Federal Reserve announced a $600 billion quantitative easing program.  Four months later the Fed felt that even more cash was necessary, so they upped the total to $1.8 trillion.

So did quantitative easing work then?

No, not really.  It may have helped stabilize the economy in the short-term, but unemployment is still staggeringly high.  Monthly U.S. home sales continue to come in at close to record low levels.  Businesses are borrowing less money.  Individuals are borrowing less money.  Stores are closing left and right.

The Fed is desperate to crank the debt spiral that our economic system is now based upon back up again.  The Fed thinks that somehow if it can just pump enough nearly free liquidity into the banking system, the banks will turn around and lend it out at a markup and that this will get the debt spiral cranking again.

The sad truth is that the Federal Reserve is not trying to build an economic recovery on solid financial principles.  Rather, what the Federal Reserve envisions is an “economic recovery” based on new debt creation.

So will $900 billion be enough to get the debt spiral cranked up again?

No.

If 1.8 trillion dollars didn’t work before, why does the Federal Reserve think that 900 billion dollars is going to work now?  This new round of quantitative easing will create more inflation and will cause speculative asset bubbles, but it is not going to fix what is wrong with the economy.  The damage is just too vast as Charles Hugh Smith recently explained….

Anyone who believes a meager one or two trillion dollars in pump-priming can overcome $15-$20 trillion in overpriced assets and $10 trillion in uncollectible debt may well be disappointed.

In fact, economists over at Goldman Sachs estimate that it would take a staggering $4 trillion in quantitative easing to get the economy rolling again.

Of course that may eventually be what happens.  The Fed may be starting at $900 billion just to get the door open.  With these kinds of bureaucrats, once you give them an inch they usually end up taking a mile.

So why should we be concerned about quantitative easing?  The following are 9 reasons why quantitative easing is bad for the U.S. economy….

#1 Quantitative Easing Will Damage The Value Of The U.S. Dollar

Each time you add a new dollar to the system, it decreases the value of each existing dollar by just a little bit.  Now the Federal Reserve is pumping 900 billion dollars into the system and that is going to have a significant impact.  Bill Gross, the manager of the largest mutual fund in the entire world, said on Monday that he believes that more quantitative easing could result in a decline of the U.S. dollar of up to 20 percent….

“I think a 20 percent decline in the dollar is possible.”

#2 Inflation Is Going To Hit Already Struggling U.S. Consumers Really Hard

Already, investors have been fleeing from the U.S. dollar and other paper currencies and have been flocking to commodities, precious metals and oil.  That means that the price of food is going to go up.  The price of gasoline is also going to go up.  American families are going to find their budgets stretched even more in the months ahead.

#3 Once An Inflationary Spiral Gets Going It Is Really Hard To Stop

The Federal Reserve is playing a very dangerous game by flirting with inflation.  Once an inflationary spiral gets going, it is really difficult to stop.  Just ask anyone who lived through the Weimar Republic or anyone who lives in Zimbabwe today.  If the Federal Reserve is now going to be dumping hundreds of billions of fresh dollars into the system whenever the economy gets into trouble it is inevitable that we will see rampant inflation at some point. 

#4 Inflation Is A Hidden Tax On Every American

Tens of millions of Americans have worked incredibly hard to save up a little bit of money.  These Americans are counting on that money to pay for a home, or to pay for retirement or to pay for the education of their children.  Well, inflation is like a hidden tax on all of those savings.  In fact, inflation is a hidden tax on every single dollar that all of us own.  We have been taxed more than enough – we certainly don’t need the Federal Reserve imposing another hidden tax on all of us.

#5 The Solution To The Housing Bubble Is Not Another Housing Bubble

Today, approximately a third of all U.S. real estate is estimated to have negative equity.  The Federal Reserve apparently believes that by flooding the system with gigantic sacks of cash banks will start making home loans like crazy again and home prices will rise substantially once again – thus wiping out most of that negative equity.

But the solution to the housing bubble is not another housing bubble.  The kinds of crazy home loans that were made back in the middle of the decade should never be made again.  Market forces should be allowed to bring the housing market to a new equilibrium where ordinary Americans can actually afford to purchase homes.  But that is not how our system works anymore.  Today, everything has to be manipulated.

#6 More Quantitative Easing Threatens To Destabilize The Global Financial System

We have already entered a time of increasing global financial instability, and the Federal Reserve is not going to help things by introducing hundreds of billions of new dollars into the game.  Over the past two decades, bubble after bubble has caused tremendous economic problems, and now all of this new money could give rise to new bubbles.  Already, we see financial institutions and investors pumping up carry trade bubbles, engaging in currency speculation and driving up commodity prices to ridiculous levels.

#7 Quantitative Easing Is An Aggressive Move In A World Already On The Verge Of A Currency War

Quantitative easing will likely help U.S. exporters by causing the value of the U.S. dollar to sink.  However, this gain by U.S. exporters will come at the expense of foreigners.  It is essentially a “zero sum” game.  So all of those exporting countries that are already upset with us will become even more furious as the U.S. dollar declines.  Could we witness the first all-out “global currency war” in 2011?   

#8 Quantitative Easing Threatens The Status Of The Dollar As The World Reserve Currency

As the Federal Reserve continues to play games with the U.S. dollar, quite a few nations around the globe will start evaluating whether or not they want to continue to trade with the U.S. dollar and use it as a reserve currency.

In fact, a recent article on The Market Oracle website explained how this is already happening….

In September, China supported a Russian proposal to start direct trading using the yuan and the ruble rather than pricing their trade or taking payment in U.S. dollars or other foreign currencies. China then negotiated a similar deal with Brazil. And on the eve of the IMF meetings in Washington on Friday, Premier Wen stopped off in Istanbul to reach agreement with Turkish Prime Minister Erdogan to use their own currencies in a planned tripling Turkish-Chinese trade to $50 billion over the next five years, effectively excluding the dollar.

#9 It Is Going To Become More Expensive For The U.S. Government To Borrow Money

Right now, the U.S. government has been able to borrow money at ridiculously low interest rates.  But as the Federal Reserve keeps buying up hundreds of billions in U.S. Treasuries, the rest of the world is going to start refusing to participate in the ongoing Ponzi scheme.

Peter Schiff, the CEO of Euro Pacific Capital, says that one of the big reasons for more quantitative easing is because the U.S. government is already starting to have difficulty finding enough people to borrow from….

At the end of the day, all this deflation talk is a red herring. The true purpose of QE 2 is to disguise the decreasing ability of the Treasury to finance its debts. As global demand for dollar-denominated debt falls, the Fed is looking for an excuse to pick up the slack. By announcing QE 2, it can monetize government debt without the markets perceiving a funding problem.

But the truth is that foreigners are not stupid.  They can see the shell game that is being played.  As Bill Gross noted on Monday, U.S. government debt will soon become a lot less attractive to foreign investors….

QEII not only produces more dollars but it also lowers the yield that investors earn on them and makes foreigners, which is the key link to the currencies, it makes foreigners less willing to hold dollars in current form or at current prices.

As foreigners begin to balk at all of this nonsense, the U.S. government will either have to start paying higher interest rates on government debt in order to attract enough investors, or the Federal Reserve will just have to drop all pretense and permanently start buying up most of the debt.  Either way, once faith has been lost in U.S. Treasuries the financial world will never, ever be the same.

Most Americans have absolutely no idea how fragile the world financial system is right now.  Once the rest of the world loses faith in the U.S. dollar and in U.S. Treasuries this entire thing could completely unravel very quickly.   

The Federal Reserve is playing a very dangerous game.  They are openly threatening the delicate balance of the world financial system. 

Once the toothpaste is out of the tube, it is really hard to put it back in again.  Cross your fingers and hold on tight, because things are going to get really bumpy ahead.

Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World

Do you want to see something truly frightening?  Just check out the 3 charts posted further down in this article.  These charts prove that we are now in the biggest debt bubble in the history of the world.  As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none.  But that is not even close to accurate.  The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world.  Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us.  So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal. 

We have been robbing future generations blind for so long that it doesn’t even seem to bother most people anymore.  We have become accustomed to living in debt.  We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.

Just check out the chart posted below.  It shows the total credit market debt owed in the United States.  In other words, it is a measure of what everyone owes (government, businesses and consumers). 

30 years ago, total credit market debt owed was less than 5 trillion dollars.  Today, it is over 50 trillion dollars.  Total credit market debt is now at a level equivalent to about 360 percent of GDP.  This is what has been fueling the great era of “economic prosperity” that we have been experiencing….        

So what is the answer to this problem? 

The truth is that there is not an easy answer under our current system.  The only way that the U.S. economy continues to “grow” is if the debt bubble continues to “expand”. 

If our leaders allowed the debt bubble to “pop” and the U.S. economy went into a deleveraging cycle, it would mean that we would start living far below our means for an extended period of time and it would spawn a deflationary depression that would make the Great Depression look like a Sunday picnic.

Most Americans are in no mood to take that kind of hard medicine.

Do you really think that the American people are going to vote in politicians who tell them that it is time to live below our means and that we are going to have to experience a standard of living far below what our parents experienced in order to pay for all the debt that they racked up?

No, that is clearly a dog that isn’t going to hunt. 

The American people want to hear that better times are ahead.

One way to give the American people “better times”, for the short-term at least, is to crank the debt spiral back up.

By introducing another huge flood of paper money into the economy, the Federal Reserve and the U.S. government are hoping that banks will start lending again and that U.S. consumers will start going into more debt again.  Already, as you can see from the chart below, U.S. household debt has started to sink just a little bit.  But considering the fact that approximately 70 percent of our GDP is generated by U.S. consumer spending, that is not good news for “economic growth” statistics.

Three decades of “economic expansion” have been fueled by consumer debt that has spiralled completely out of control.  Over the past 30 years, total U.S. household debt has gone from less than 2 trillion dollars to almost 14 trillion dollars….

So where did the housing bubble come from?  It came from Americans going into insane amounts of debt that they could not afford.  The truth is that only the top 5 percent of all U.S. households have earned enough additional income to match the rise in housing costs since 1975.

Not only that, but Americans are going into staggering amounts of debt in order to pay for their educations.  Total student loan debt in the United States is climbing at a rate of approximately $2,853.88 per second, and today Americans owe an all-time record of more than $849 billion on student loans, which is actually more than the total amount that Americans owe on their credit cards.

The truth is that American families are stretched thinner financially than they ever have been in the post-World War 2 era.  According to a poll taken last year, 61 percent of Americans “always or usually” live paycheck to paycheck.  That was up significantly from 49 percent in 2008 and 43 percent in 2007.

Many Americans have come to the absolute breaking point.  1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.

But remember, approximately 70 percent of our GDP is generated by U.S. consumer spending, so without more consumer spending there won’t be more economic growth.

So, instead of Obama and the Federal Reserve encouraging Americans to get out of debt and to save money, they are trying to get the American people to spend even more money and to go into even more debt because they desperately need positive “economic growth” figures. 

The worst offender of all when it comes to debt, of course, is the U.S. federal government.  Over the last 30 years, the U.S. national debt has gone from about 1 trillion dollars to almost 14 trillion dollars….

This is the largest single debt in the history of the world.

So just how big is one trillion dollars?

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

Yet somehow the U.S. government has accumulated a debt that is well over 13 trillion dollars.

Unfortunately, it keeps getting worse month after month after month.

According to the U.S. Treasury Department, the U.S. national debt is rapidly closing in on 14 trillion dollars and and will climb to an estimated $19.6 trillion by 2015.

Should we all throw a big party when it crosses the 20 trillion dollar mark?

I can just hear the theme song now….

“I’m going to party like I’m 19.99 trillion in debt!”

But the cold, hard reality is that we are in far, far more trouble than what the official government numbers tell us.

In a recent article, Boston University economics professor Laurence J. Kotlikoff analyzed the financial condition of the U.S. government, and he summarized the horror we are facing by making the following statement….

“Let’s get real. The U.S. is bankrupt.”

After carefully going over Congressional Budget Office data, Kotlikoff came to the conclusion that the U.S. government is now facing a “fiscal gap” of $202 trillion dollars.

Now how in the world did that happen?

Well, it turns out that we have made promises to future generations that we cannot possibly even come close to keeping.

Social Security and Medicare are fiscal nightmares that are far more immense than anything that U.S. government has ever faced before.

According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019.  That is before a single penny is spent on anything else.

That is just 9 years away.

When people speak of the financial situation of the U.S. government being “unsustainable”, they aren’t kidding around.

The truth is that the U.S. government has been running gigantic Ponzi schemes which are about to collapse.

Take the Social Security shell game for example.  Back in 1950, each retiree’s Social Security benefit was paid for by approximately 16 workers.  Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers.  By 2025, it is projected that there will be approximately two workers for each retiree.

So exactly how is that supposed to work?

For much more on the coming Social Security nightmare, please see an article that I posted earlier this year: 22 Statistics About America’s Coming Pension Crisis That Will Make You Lose Sleep At Night.

Sadly, Professor Kotlikoff is not exaggerating in the least when he proclaims that the U.S. government is bankrupt.

At our current pace, the Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.

Public debt at a level of 100 percent of GDP is supposed to be an absolute nightmare scenario.

Needless to say, the whole thing is going to come crashing down long, long before we ever get to 2080.

We have been living far, far beyond our means for decades, and it has been the greatest party in the history of the world.

But it is time to turn out the lights because the party is over.

The Calm Before The Storm

An eerie calm has descended upon world financial markets as they await perhaps the two most important financial events of the year this week.  On Tuesday, investors will be eagerly awaiting the results of one of the most anticipated midterm elections in U.S. history.  On Wednesday, the Federal Reserve is expected to end months of speculation by formally announcing the details of a new round of quantitative easing.  If either the election or the meeting of the Federal Reserve open market committee delivers a highly unexpected result, it could have a dramatic impact on world financial markets.  In fact, many are looking at this week as a potential turning point for the U.S. economy.  The decisions that are made or not made this week could set us down a road from which the U.S. economy may never recover.

At this point, it looks like the Republicans will take control of the U.S. House of Representatives and will pick up a number of U.S. Senate seats as well.

There are many in the financial world who already consider Barack Obama to be the most “anti-business” president in U.S. history, so a defeat for the Democrats on Tuesday would be greatly welcomed by many on Wall Street.  Barack Obama’s decline in popularity since he was elected has been absolutely stunning.  According to Gallup, Barack Obama had an average approval rating of just 44.7% during the seventh quarter of his presidency, which was a brand new low.  In fact, Obama’s average approval rating has fallen during every single quarter since he took office.  Things have gotten so bad for Obama that one new poll has found that 47% of Democrats now think that Barack Obama should be challenged for the 2012 Democratic presidential nomination. 

However, if the Democrats were able to do surprisingly well on Tuesday, it would not only shock the political pundits, but it would also likely put world financial markets in a very bad mood. 

If the Republicans do very well on Tuesday, it will likely mean that there will be no more extensions for those receiving long-term unemployment benefits.  Some state governments are already anticipating this and are making preparations.  For example, armed security guards are now being posted at all 36 full-service unemployment offices in the state of Indiana.  It is estimated that approximately 2 million Americans will lose their unemployment insurance benefits during this upcoming holiday season if  Congress does not authorize another emergency extension of benefits by the end of November.  If the Republicans do very well on Tuesday, it would make it much more likely that the extension will not happen.

But if millions of unemployed Americans suddenly find themselves without any unemployment checks, that is only going to cause the anger and frustration regarding this economy to grow.

Either way, the unfortunate truth is that this election is not going to change much.

Over the past five elections, incumbents have been re-elected to the U.S. House of Representatives at an average rate of 96 percent.

This time will be a little different of course, but not that much different.  The sad truth is that we are still likely to see about 80 percent of the exact same faces going back to the U.S. Congress for the next session.

However, even if the American people could somehow vote out every single member of Congress, it would still not do much to fundamentally change our economic situation because the U.S. Congress does not run the economy and neither does the President.

Of course both of those institutions can influence the U.S. economy, but it is actually the Federal Reserve that runs the economy.

The Federal Reserve controls the money supply.  The Federal Reserve controls our interest rates.  If the U.S. government wants more money it has to go get it from the Federal Reserve.  It is the Federal Reserve that is tasked with the mandate of keeping unemployment low while also keeping inflation at a “reasonable” level.

But these days, Federal Reserve officials don’t really seem to be that concerned about the dangers of inflation.  In fact, several top Federal Reserve officials have come out in recent weeks and have made public statements not only advocating more quantitative easing, but also suggesting that inflation is not a danger because it is actually “too low” right now.

In fact, there have been some rumblings that many officials at the Fed would actually welcome more inflation because they think that it would somehow stimulate the economy.  In fact, a Federal Reserve paper that was released in September actually floated the idea that a spike in oil prices would be quite good for the U.S. economy.

And these are the people running our economy?

Are we all caught in an episode of The Twilight Zone?

Well, as far as rising oil prices are concerned, the Fed will almost surely get its wish.  As I have written about previously, the price of oil is almost certainly heading to 100 dollars a barrel.

But if the price of oil shoots up, isn’t that going to cause significant inflationary pressure on the prices of thousands of other goods and services?

Of course.

Unfortunately, very few of our leaders seem too concerned about inflation or about protecting the value of the U.S. dollar these days.

In fact, now even the IMF is publicly proclaiming that the U.S. dollar is “overvalued”.

What a mess.

But there is another aspect of a new round of “quantitative easing” that the American people really wouldn’t like if they could actually figure out what is going on.

You see, the truth is that “quantitative easing” is not only just a way to stimulate the economy, it is also a way to give backdoor bailouts to the big banks without having to go through the U.S. Congress.

In a previous article, I described how this works….

1) The big U.S. banks have massive quantities of junk mortgage-backed securities that are worth little to nothing that they desperately want to get rid of.

2) They convince the Federal Reserve (which the big banks are part-owners of) to buy up these “toxic assets” at significantly above market price.

3) The Federal Reserve creates massive amounts of money out of thin air to buy up all of these troubled assets.  The public is told that all of this “quantitative easing” is necessary to stimulate the U.S. economy.

4) The big banks are re-capitalized and have gotten massive amounts of bad mortgage securities off their hands, the Federal Reserve has found a way to pump hundreds of billions (if not trillions) of dollars into the economy, and most of the American people are none the wiser.

Now how do you think the American people would feel about “quantitative easing” if they really understood all this?

But unfortunately, most Americans will be watching the election results on Tuesday night without having even a basic understanding of how our economy is really run.

Already, there are a ton of signs that the U.S. economy is heading in a very bad direction, and dumping a handful of Congress critters out of office might feel good, but it isn’t going to do much to really change our economic problems.

The American people desperately need to be educated about how our financial system really works.  But unfortunately, most Americans will likely not wake up until the whole house of cards comes crashing down.

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