The Number One U.S. Export To China: Waste Paper And Scrap Metal

Historians tell us that by the very end of the Roman Empire, goods were pouring into Rome from all over the known world, but about the only thing being sent out of Rome was human waste and garbage.  America has not yet reached that point, but we are certainly well on our way.  In 2010, the number one U.S. export to China is “scrap and trash”.  Yes, you read the correctly.  The number one thing that China buys from us is our garbage.  According to author Clyde Prestowitz, China’s number one export to the U.S. is computer equipment (nearly $50 billion) while our number one export to them is waste paper and scrap metal (approximately $8 billion).  When it comes to world trade, China is literally wiping the floor with the United States.  In August, the U.S. trade deficit with China set a new one month record of $28 billion dollars.  Our insane trade policies are making China (along with several of our other “trade partners”) incredibly wealthy, and the U.S. government ends up begging China to lend that money back to us to fund the exploding U.S. national debt.  That just isn’t stupidity – that is insanity.

The truth is that our “twin deficits” are literally bankrupting this nation.  We are completely and totally destroying the economic future of our children and grandchildren.

But hey, the Vikings beat the Cowboys, Dancing With The Stars is heating up and we all have a bunch of DVDs to get caught up on so why worry ourselves, right?

Unfortunately, the reality is that we can’t afford to be “comfortably numb” any longer if we hope to have any kind of a future.

It is time to wake up people.

Sadly, a significant percentage of young Americans these days can’t even tell you what a “trade deficit” is. 

If you don’t believe this, just try a little experiment some time.  Just go up to a few young Americans on the street and ask them to define “trade deficit” for you.

But fortunately, the vast majority of the readers of this column are quite informed.  Unfortunately, I still don’t believe that most of you really understand how incredibly dangerous the trade deficit is.

So just how dangerous is the trade deficit?  Well, world famous investor Warren Buffett once put it this way….

“The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil… Right now, the rest of the world owns $3 trillion more of us than we own of them.”

Between 2000 and 2009, America’s trade deficit with China skyrocketed nearly 300 percent.  Wealth, factories and jobs are leaving the United States at an astounding pace.  The danger that this represents to our economy is so vast that it is hard to even describe.

If you ever find yourself in a debate with proponents of “free trade”, you can almost always get them to eventually admit that “free trade” will raise the standard of living for workers in countries like China while significantly lowering the standard of living for U.S. workers, but that this must be done for the good of the emerging “global economy”.

Of course U.S politicians never really mention this nasty little fact when they give speeches about how wonderful our trade policies are.  They never really get around to mentioning that “free trade” is one of the key foundations of “globalism” and that we are being merged into a one world economy.

Today, American workers do not just compete with other American workers.  Instead, U.S. workers now find themselves in direct competition for jobs with workers in China that makes less than a tenth of what an American worker would make.  In China, a garment worker makes approximately 86 cents an hour.  Apple iPhones are manufactured in China by workers making about 293 dollars a month (and that was after a big raise).

So exactly how long do you think you and your family would be able to survive on 293 dollars a month?

But unfortunately, millions more Americans will lose their jobs and millions more Americans will be forced to take a cut in pay in order to compete in the new global economy.

According to a disturbing new study by the Economic Policy Institute, if the trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

The sad truth is that it is NOT a good time to be a blue collar worker in America.  If your job does not get offshored or outsourced, then it is likely to be made obsolete by computers and automation. 

The need for manual labor is rapidly declining in today’s world.  For example, there is a Japanese firm called Fanuc, Ltd. that actually has industrial robots manufacturing other industrial robots in a “lights out” factory.

How bizarre is that?

But things wouldn’t be quite as bad for U.S. workers if China was not cheating so badly.  The truth is that they just do not play the game fairly.

For instance, it is estimated that the Chinese government is keeping China’s currency valued about 40 percent lower than it should be.  This is essentially a de facto subsidy to China’s exporters.

There has been a little bit of rumbling in the Obama administration about this in recent weeks, but it is quite unlikely that they will push China too far on this issue.  After all, the Obama administration desperately needs China to keep loaning us massive quantities of money so that we can keep funding our runaway debt.

If you sit back and objectively analyze the facts, it quickly becomes undeniable that China is beating the living crap out of us economically.  In fact, one prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.

This all could have been turned around a decade or two ago, but now China has us by the throat.  At any time, China could decide to start selling off massive quantities of U.S. Treasuries.  At any time, China could decide to cut off our supply of rare earth elements (of which they have a virtual monopoly).   

China is now even the number one supplier of components that are critical to the operation of U.S. defense systems.  How smart were we to allow that to happen?

It is a direct threat to national security for China to have so much leverage over us.  But you rarely hear anyone talking about this.

The truth is that trade with China is not a left/right issue.  As I have written about previously, it is impossible for any self-respecting conservative to justify our trade policies with China and it is impossible for any self-respecting liberal to justify our trade policies with China.

Yet very few current members of the U.S. Congress ever discuss the possibility of sweeping changes to our trade policies.

So we will continue to lose thousands of factories, we will continue to lose millions of jobs and we will continue to see the biggest transfer of wealth in the history of the world accelerate.

So do any of you think that I am wrong about this?  Please feel free to leave a comment with your opinion below….

The Bernanke Speech

When Federal Reserve Chairman Ben Bernanke gives a speech about the U.S. economy, it gets a whole lot more attention than when Barack Obama gives a speech about the U.S. economy.  Why is this true?  Well, it is because Bernanke has a whole lot more control over the U.S. economy than Obama does. It is the Federal Reserve that controls monetary policy and interest rates. It is the Federal Reserve that can create money out of thin air. It is the Federal Reserve which is going to have the most influence over whether there will be inflation or deflation. So when Bernanke gives a speech, world financial markets listen. On Friday, news of the Bernanke speech sent gold and silver soaring towards new highs and send the U.S. dollar tumbling once again.  This new Bernanke speech was yet another very strong indication that Helicopter Ben is getting ready to fire up the printing presses in an attempt to get the U.S. economy moving.   

So is it a good thing for an unelected, virtually unaccountable private central bank called the Federal Reserve to have more power over the U.S. economy than the president of the United States?

Of course not.

But that is the way our system works.

So what did Bernanke say during his speech in Boston that was so earth shattering?

Well, you can read a full transcript of what Bernanke said right here.  The following are a few key excerpts from Bernanke’s remarks….

*”Although output growth should be somewhat stronger in 2011 than it has been recently, growth next year seems unlikely to be much above its longer-term trend. If so, then net job creation may not exceed by much the increase in the size of the labor force, implying that the unemployment rate will decline only slowly. That prospect is of central concern to economic policymakers, because high rates of unemployment–especially longer-term unemployment–impose a very heavy burden on the unemployed and their families. More broadly, prolonged high unemployment would pose a risk to consumer spending and hence to the sustainability of the recovery.”

Clearly, Bernanke feels as though unemployment is way, way too high and that lowering unemployment is now the number one policy priority of the Federal Reserve.

So how will this be accomplished?  After all, interest rates are already kissing the floor and that hasn’t brought the U.S. economy back to life.

Well, as most financial analysts are anticipating, the Fed could launch a substantial new round of quantitative easing.

But wouldn’t that cause a rise in the inflation rate?

Well according to Bernanke’s speech, the U.S. economy is supposed to have a certain amount of inflation….

*”Similarly, the mandate-consistent inflation rate–the inflation rate that best promotes our dual objectives in the long run–is not necessarily zero; indeed, Committee participants have generally judged that a modestly positive inflation rate over the longer run is most consistent with the dual mandate.”

Do you understand what Bernanke is saying there? 

He is actually saying that the goal of the Federal Reserve is not to have a zero inflation rate.  Rather, he says that we should expect to always have at least some inflation and that this is normal.

In fact, in his speech Bernanke said that inflation in the United States is currently too low….

*”…inflation is running at rates that are too low relative to the levels that the Committee judges to be most consistent with the Federal Reserve’s dual mandate in the longer run.”

Inflation is too low?

Is he joking?

No, sadly he is not.

Instead, he seems ready to break out the money hoses and start showering dollars from every street corner….

*”Given the Committee’s objectives, there would appear–all else being equal–to be a case for further action.”

“Further action” being code words for the “quantitative easing” that we have all been anticipating.

The funny thing is that in the nearly 4,000 word Bernanke speech there was not a single word about the value of the U.S. dollar.

This month the U.S. dollar has been plummeting like a rock, but apparently it is not an important consideration for Bernanke.

In essence, Bernanke’s message is that the focus is on trying to “fix” the U.S. economy and if it is necessary to jack up the rate of inflation and to radically devalue the U.S. dollar then that is what we are going to do.

Bernanke also did not mention the foreclosure fraud crisis which threatens to throw the entire U.S. mortgage industry into a state of absolute turmoil.

But the rest of the financial world is definitely starting to take notice of this crisis.

All of this uncertainty is already starting to take a huge toll on U.S. bank stocks.  Several of the largest U.S. banks have seen their stock prices significantly decline in recent days.

The truth is that this could be the biggest challenge for big U.S. banks since the 2007 financial collapse.  Just consider the following very troubling signs….

*JPMorgan announced on Wednesday that it has boosted its reserves by a billion dollars in order to cover faulty mortgages that it was obligated to repurchase from Fannie Mae, Freddie Mac and private insurers.  In all, JPMorgan has set aside approximately 3 billion dollars for potential mortgage repurchases.

*But a few billion dollars may not be nearly enough for many of these big banks.  According to an estimate by Branch Hill Capital, Bank of America could be forced to repurchase up to $74 billion in mortgages.

*The losses from this crisis could be absolutely staggering.  Analyst Dick Bove is projecting that U.S. banks could lose a combined 80 billion dollars as a result of this foreclosure fraud crisis.

The truth is that it would be hard to understate just how much of a financial mess this foreclosure fraud crisis could possibly become.  A recent article by Nomi Prins did a great job of discussing some of the potential implications of this crisis….

If foreclosed homes couldn’t be sold because of fraudulent paperwork or had to wait for more detailed inspections, you can imagine how difficult selling assets stuffed with faulty loans might be. If it’s tough to find a title for a foreclosed home, think how tough it is to back the related loan out of a pyramid of securities sitting on top of it.

See, the loan that might be analyzed in a foreclosure situation could be part of a chain connecting the underlying home to 20 or 50 different securitized assets, all depending on it for either the interest payments the loan was supposed to provide, or the value of the foreclosure property if those payments stopped (in Wall Street speak, the “recovery value”). If a foreclosed property isn’t selling, it’s not recovering any money back to any asset waiting for it. Think what that can do to the value of toxic assets living at the Fed and the Treasury Department.

This foreclosure fraud crisis is extremely complicated, but the reality is that this could be the thing that breaks the back of the U.S. financial system.  For much more on the specifics of this crisis, please check out the following articles that I have previously posted….

#1 Foreclosure-Gate

#2 Foreclosure Fraud: 6 Things You Need To Know About The Crisis That Could Potentially Rip The U.S. Economy To Shreds

#3 The Real Horror Story: The U.S. Economic Meltdown

The truth is that the U.S. economy is headed for extreme danger and what Bernanke wants to do is douse it with gasoline and light it on fire.

Once the Federal Reserve starts down the road of trying to “stimulate inflation” in order to get the U.S. economy going, it is going to be really hard to turn back around again.

But the truth is that this is what the U.S. Federal Reserve has always done.  They have always destroyed the value of the U.S. dollar.  The U.S. dollar has lost over 95 percent of its value since the Federal Reserve was created in 1913, and now Bernanke says that we need to actually accelerate the pace of the destruction of the dollar in order to “help” the economy.

In the end, this whole thing is going to fall apart.  In the end, all of the juggling and fancy financial moves by the Fed are going to fail. 

The U.S. financial system is a pyramid of fraud built on a mountain of debt.  By definition it is unsustainable.  At some point it is going to dramatically collapse.  The only real question left to answer is when it will happen.

Is America In Decline? 24 Statistics About The United States Economy That Are Almost Too Embarrassing To Admit

Does anyone really want to hear that America is in decline?  For decades, most of us have been raised to believe that the United States is “number one” and that anyone who doubts that fact is a “gloom and doomer” that should just pack up and move to “Russia” or “Iraq” or some other country where things are not nearly as good.  But does it do us or future generations any good to ignore the very serious signs of trouble that are erupting all around us?  The truth is that it is about time to wake up and admit how much trouble we are actually in.  The U.S. government is absolutely drowning in debt.  The entire society is absolutely drowning in debt.  We are being slaughtered in the arena of world trade, and every single month tens of billions of dollars (along with large numbers of factories and jobs) leave our shores for good.  Our infrastructure is failing, our kids are less educated and our incomes are going down.  We have serious, serious problems.  At one time, the U.S. economy was so dominant that it was not even worth talking about who was in second place.  That is no longer the case in 2010.  Our forefathers handed us the greatest economic machine in history and we have allowed it to fall apart right in front of our eyes.  A national economic crisis of historic proportions is getting worse with each passing month, and yet most of our leaders seem to be asleep at the switch.  

So is American in decline?  Well, read the statistics below and decide for yourself.  The reality is that when you start connecting the dots it gets really hard to deny what is going on.

Urgent action must be taken if things are going to be turned around.  It is time to get our heads out of the sand.  It is not guaranteed that the United States will always be the greatest economy in the world or that we will even continue to be prosperous. 

For many Americans, it will be incredibly difficult to admit that our nation has become a debt addict and an economic punching bag for the rest of the world. 

But if we are never willing to admit what the problems are, how are we ever going to come up with the solutions?

What you are about to read below is going to absolutely shock many of you.  But hopefully it will shock you enough to get you to take action.  We desperately need to change course as a nation.

The following are 24 statistics about the United States economy that are almost too embarrassing to admit….

#1 Ten years ago, the United States was ranked number one in average wealth per adult.  In 2010, the United States has fallen to seventh.

#2 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

#3 In the 2009 “prosperity index” published by the Legatum Institute, the United States was ranked as just the ninth most prosperous country in the world.  That was down five places from 2008.

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

#5 The economy of India is projected to become larger than the U.S. economy by the year 2050.

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

#7 According to a new study conducted by Thomson Reuters, China could become the global leader in patent filings by next year.

#8 The United States has lost approximately 42,400 factories since 2001. 

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

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

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

#12 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.

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

#14 Back in 1980, the United States imported approximately 37 percent of  the oil that we use.  Now we import nearly 60 percent of the oil that we use.

#15 The U.S. trade deficit is running about 40 or 50 billion dollars a month in 2010.  That means that by the end of the year approximately half a trillion dollars (or more) will have left the United States for good.

#16 Between 2000 and 2009, America’s trade deficit with China increased nearly 300 percent.

#17 Today, the United States spends approximately $3.90 on Chinese goods for every $1 that China spends on goods from the United States.

#18 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

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

#20 Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009.  That was the second yearly decline in a row.

#21 The United States has the third worst poverty rate among the advanced nations tracked by the Organization for Economic Cooperation and Development.

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

#23 U.S. government spending as a percentage of GDP is now up to approximately 36 percent.

#24 The Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.

Please share these statistics with as many family members and friends as you can.  It is time to get real.  It is time to admit that we have some really big problems.

America is in decline and the situation is getting worse by the day.  If we are not willing to admit how bad things really are, then we are never even going to have a chance to find the solutions that we need.

10 Reasons Why Ordinary Hard-Working Americans Are About To Really Start Feeling The Squeeze

American families better get ready to tighten their belts again.  There is every indication that we are all going to really start feeling the squeeze in the months ahead.  The price of gas is starting to spike again.  The price of food is moving north.  Health insurance premium increases are being announced coast to coast and a whole slate of tax increases is scheduled to go into effect in 2011.  Meanwhile, household incomes are down substantially all over the nation and the U.S. government is indicating that there will not be an increase in Social Security benefits for the upcoming year once again.  So if the cost of most of the basic things in our monthly budgets is going up and our incomes are going down what does that mean?  It means that average American families are about to be squeezed like nothing we have seen in decades.

The reality is that it is getting really hard to make it out there.  Not only do most households have both parents working, but in many cases both parents are getting second or even third jobs.  Things have gotten so bad that millions of Americans have felt forced to turn to the government for assistance just to survive. 

It can be really disheartening to come to the end of the month and realize that despite your best efforts you have less money than you did at the beginning of the month.  But that is where millions upon millions of American families now find themselves. 

The economic despair in the air is almost palpable.  Already hordes of Americans are truly and honestly hurting and things are only going to get worse.

The following are ten reasons why ordinary hard-working Americans are about to really start feeling the squeeze….   

#1 Gas prices are going up again.  AAA says that the average price of a gallon of regular gasoline in the United States was $2.80 on Sunday.  That is 32.6 cents higher than it was during the same time period in 2009.  As oil and gas prices continue to go up, that is also going to have a significant impact on utility bills for American families this winter.

#2 The price of food is poised to rise substantially.  Bloomberg is reporting that the the cost of meat in the United States is going nowhere but up.  But meat is not the only thing that you will soon be paying much more for at the supermarket.  Wheat, corn, soybeans and almost every other major agricultural commodity is absolutely soaring this fall.  As this continues, it is inevitable that ordinary Americans will see much higher food prices at their local grocery stores.

On a previous article, a reader named Erica left a comment in which see detailed the stunning food inflation that she is seeing where she lives….

Food inflation is real, and it is here. Just yesterday I compared my receipt from a grocery run to prices I have from the same exact store from September 15, 2009. Bacon? Up 52% to $13.69 from $8.99 for 4 lbs. Butter? Up 73% to $9.99 from $5.79 for 4 lbs. Pure vanilla extract up 14% to $6.79 from $5.95. Chopped dried onions up a mere 2% but minced garlic (wet) was up 32%.

#3 It looks like those receiving Social Security are not going to be seeing cost-of-living increases again.  The Associated Press is reporting that the  U.S. government is expected to announce some time this week that the tens of millions of Americans that receive Social Security will go through yet another year without an increase in their monthly benefit payments.  You see, Social Security cost-of-living adjustments are tied to the official government inflation numbers, and according to the U.S. government there is basically very little inflation right now.  Of course we all know that is a lie, but it is what it is.

#4 The cost of health care continues to soar into the stratosphere.  Americans already pay more for health care than anyone else in the world, and yet costs continue to spiral out of control.  The cost of health care increased a staggering 9.6% for all U.S. households from 2007 to 2009.  Now, health insurance companies from coast to coast are announcing that they must raise health insurance premiums substantially due to the new health care law that Barack Obama and the Democrats have pushed through.  So in 2011 it looks like the average American family is going to have to carve out an even bigger chunk of the budget for health care.

#5 American families could desperately use a recovery in the housing industry, but that is simply not going to happen.  Foreclosure-Gate is getting worse by the day, and it threatens to bring the U.S. real estate industry to a complete and total standstill.  If it is ultimately proven that the paperwork for millions of mortgages in the United States is seriously deficient, it could push hordes of mortgage lenders into bankruptcy and render mountains of mortgage-backed securities nearly worthless.  Regardless, it is now going to be much more difficult to get a mortgage, much more difficult to buy a home and much more difficult to sell a home.  We could very well be looking at the next stage of the housing crash.  Ordinary Americans could end up losing trillions more in home equity.   

#6 More Americans than ever find themselves unable to pay their bills, and an increasing number of frustrated creditors are actually resorting to wage garnishment.  Yes, you read the correctly.  Creditors are starting to ruthlessly go after the weekly paychecks of debtors.

The following is an excerpt from a recent New York Times article that discussed the rise of wage garnishment as a weapon against debtors….

After winning, creditors can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, but the pay seizures are rising fast in some areas — up 121 percent in the Phoenix area since 2005, and 55 percent in the Atlanta area since 2004. In Cleveland, garnishments jumped 30 percent between 2008 and 2009 alone.

So if you are getting behind on your debt, you better watch out – your creditors may soon decide to garnish your wages.

#7 Americans now owe more on student loans than they do on credit cards.  As hard as that is to believe, that is actually true.  Americans now owe more than $849 billion on student loans, which is a new all-time record. 

Student loan payments can be absolutely crippling to a household budget.  This is especially true for young Americans that have just gotten out of school.  Sadly, student loan debt is nearly impossible to get rid of.  Once you are committed, it will follow you around for the rest of your life. 

#8 Even as expenses rise, incomes are down from coast to coast.  Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009.  There are very few areas that have not been affected.  In fact, of the 52 largest metro areas in the United States, only the city of San Antonio did not see a decline in median household income during 2009.

#9 If all of this was not bad enough, now there are rumblings that the U.S. Federal Reserve is actually thinking that we need more inflation.  A number of top Federal Reserve officials have come out recently and have publicly supported the notion that the Fed needs to purposely create more inflation in order to stimulate the economy.  Of course what they don’t tell the American people is that inflation is a hidden tax on every single dollar in our wallets and in our bank accounts.  More inflation would be really bad news for ordinary Americans, because they are already having a tough time getting their dollars to stretch far enough. 

#10 Apparently the U.S. government (and many state and local governments) think that this is a great time to stick it to the American people by hitting them with a slew of new taxes.  There are so many tax increases scheduled to go into effect in 2011 that it is hard to keep track of them all.  In fact, there are many (myself included) that are calling 2011 “the year of the tax increase“.  But the Americans that are going to get it the worst of all are those that are going to get hit with the Alternative Minimum Tax.  One out of every six American households is going to be hit with a tax increase averaging $3,900 (thanks to the AMT) and most of them don’t even know that it is coming.

So did you think that 2010 was bad?

Well, you haven’t seen anything yet.

2010 was a Sunday picnic compared to what is coming.

Get ready to get squeezed.

Get ready for higher food prices, higher gas prices, higher health insurance premiums and higher taxes.

Get ready to try to do a lot more with a lot less.

Inflation is already here, but it is going to get a whole lot worse.  Meanwhile, the U.S. government (along with state and local governments) is going to continue to have a voracious appetite for more revenue. 

Average Americans are going to be squeezed until they have nothing left to give.  Then they are going to be squeezed just a little bit more.  

Are you ready?

27 Signs That The Standard Of Living For America’s Middle Class Is Dropping Like A Rock

If you still have a job and you can put food on the table and you still have a warm house to come home to, then you should consider yourself to be very fortunate.  The truth is that every single month hundreds of thousands more Americans fall out of the middle class and into poverty.  The statistics that you are about to read are incredibly sobering.  Household incomes are down from coast to coast.  Enrollment in government anti-poverty programs sets new records month after month after month.  Home ownership is down, personal bankruptcies are way up and there are not nearly enough jobs to go around.  Meanwhile, the price of basics such as food and health care continue to skyrocket.  Don’t be fooled by a rising stock market or by record bonuses on Wall Street.  The U.S. economy is not getting better.  After World War II, the great American economic machine built the largest and most vigorous middle class in the history of the world, but now America’s middle class is disintegrating at a blinding pace.

Most of those who write about the plight of the American middle class believe that things can be turned around and that the middle class will eventually be stronger than it ever has been.  But unfortunately, that is just not the case.  As a society, we have lived far, far beyond our means for decades.  Now the bills are coming due and none of our leaders seem to know what to do.

Meanwhile, the U.S. economy is being rapidly assimilated into the emerging one world economy.  Middle class American workers now find themselves in direct competition for jobs with the cheapest labor on the other side of the globe.  Of course many multinational corporations have taken advantage of this by moving factories and jobs to countries like China where blue collar workers make about a dollar an hour.  This has helped raise the standard of living for workers in those nations by a nominal amount, but it has been absolutely devastating for the standard of living of America’s middle class.

So what does all of this mean?

It means that the U.S. economy is headed for collapse and middle class Americans are in for some really, really hard times.

The following are  27 signs that the standard of living for America’s middle class is dropping like a rock….

#1 Household spending for the middle fifth of all U.S. income earners was down 3.5% in 2009.  That was the steepest one year decline since records began being kept back in 1984.

#2 Median household income in the United States fell from $51,726 in 2008 to $50,221 in 2009.

#3 According to one new report, in 2009 residents of New York state experienced their first full-year decline in income in more than 70 years.

#4 Of the 52 largest metro areas in the United States, only the city of San Antonio did not see a decline in median household income in 2009.

#5 Home ownership in the United States declined for the third year in a row in 2009.

#6 In 2009, approximately 4 million Americans fell out of the middle class and now live below the federal poverty line.

#7 The number of Americans enrolled in the food stamp program has set a new all-time record for 20 consecutive months

#8 In July (the last month for which data is available), 41.8 million Americans were on food stamps.

#9 The number of Americans in the food stamp program skyrocketed more than 55 percent between December 2007 and July 2010.

#10 In 2009, more than 48 million Americans were enrolled in the Medicaid program.

#11 One out of every six Americans is now enrolled in at least one anti-poverty program run by the U.S. government.

#12 According to one recent study, approximately 21 percent of all children in the United States are living below the poverty line in 2010.

#13 According to the Cato Institute, anti-poverty spending by the U.S. government has increased 89 percent over the past decade.

#14 The cost of health care increased a staggering 9.6% for all U.S. households from 2007 to 2009.

#15 It turns out 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.

#16 35 percent of all U.S. households now live on $35,000 or less.

#17 New York state Comptroller Thomas DiNapoli says that Wall Street bonuses for 2009 were up 17 percent when compared with 2008.

#18 According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck.  That was up substantially from 49 percent in 2008 and 43 percent in 2007.

#19 Today, 28% of all American households have at least one member that is searching for a full-time job.

#20 Nearly 10 million Americans now receive unemployment insurance, which is almost four times as many that were receiving it back in 2007.

#21 A recent Pew Research survey found that 55 percent of the U.S. labor force has experienced either unemployment, a pay decrease, a reduction in hours or an involuntary move to part-time work since the recession began.

#22 In 2009, 43.6 million Americans were living in poverty.  Sadly, the number of Americans living in poverty has increased for three consecutive years, and the 43.6 million poor Americans in 2009 was the highest number that the U.S. Census Bureau has ever recorded in 51 years of record-keeping.

#23 A staggering 25 percent of all American adults now have a credit score below 599.

#24 It is estimated that nearly a third of all Americans cannot qualify for a mortgage because of low credit scores.

#25 For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all American households put together.

#26 Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a stunning 32 percent increase over 2008.

#27 According to a new report by the U.S. Census Bureau, the bottom fifth of all U.S. income earners brought in just 3.4 percent of all income in 2009 while the top fifth brought in a whopping 49.4 percent of all income.

So is there any hope that things will turn around soon?

No, not really.

At this point, even some of the top economic authorities in the nation are admitting that we are headed for very difficult times.

Goldman Sachs recently announced that the U.S. economy is likely to be either “fairly bad” or “very bad” over the next 6 to 9 months.

Not only that, but Federal Reserve Chairman Ben Bernanke now says that the U.S. economy is in a situation that is dire and “unsustainable”.

Not that Goldman Sachs or Fed Chairman Ben Bernanke should be trusted when it comes to the economy.

When it comes to the problems we are facing, the truth can be found in the long-term trends.  If you have not done so already, please read “11 Long-Term Trends That Are Absolutely Destroying The U.S. Economy“.  It will open your eyes to the true horrors that our economy is now facing.

But statistics alone do not tell the real story.

Sometimes what gets lost in the endless economic statistics is the very real pain of the millions of Americans who are trying to live through this.  The following story from the Unemployed Friends website is from a woman named Leetah who is desperately hoping to be able to get through this upcoming winter….

The place I live in right now has no jobs and no places to live. My fiance, Lloyd, and I have been looking for anything but he lost his job from McDonald’s and the factories (the only jobs to make a living off of) consider him an insurance liability. I can’t get hired to a factory because of I was fired from our major factory for attendance (I had to miss 3 days of work because I was sick). So we are moving to the Edmond/OKC region where we are hoping to find a job and a place with running water and heating. We’ve spent the last few years without heat and running water and so having a place with water and heat would be heaven.

Winter is coming up fast and I am so afraid. Last winter we almost died from the cold and now the thought of cold makes my throat close up and my heart pound. But it isn’t just ourselves we are looking out for, we have our dog too. Our wonderful APBT Maggie who is 2-years-old and has been with us since she was 5-months-old. She’s our baby girl and we can’t lose her. We almost lost her to the cold too and it scared me so much. We are going to be living in our car soon with our dog.

I am hoping to be able to keep our food stamps in the new city so we can still eat. I have already applied for ten+ jobs and nothing yet but I am keeping my hopes up. Hopefully it will get easier to find a job once we get there. Then we just have to save up and then we can afford an apartment. Now finding an apartment with my awesome dog is another story.

Please say a prayer for those who are out of work and on the verge of being forced out on the street.

You never know, you might be next.

Currency War

Are you ready for a currency war?  Well, buckle up, because things are about to get interesting.  This week Japan fired what is perhaps the opening salvo in a new round of currency wars by publicly intervening in the foreign exchange market for the first time since 2004.  Japan’s bold 12 billion dollar move to push down the value of the yen made headlines all over the world.  Japan’s economy is highly dependent on exports and the Japanese government was becoming increasingly alarmed by the recent surge in the value of the yen.  A stronger yen makes Japanese exports more expensive for other nations and thus would harm Japanese industry.  But Japan is not the only nation that is ready to go to battle over currency rates.  The governments of the U.S. and China continue to exchange increasingly heated rhetoric regarding currency policy.  In Europe, there is growing sentiment that the euro needs to be devalued in order to help European exports become more competitive.  In addition, exporters all over the world are already loudly complaining about the possibility that the Federal Reserve is about to unleash another round of quantitative easing.  Virtually all major exporting nations want the value of the U.S. dollar to remain high so that they can keep flooding us with lots of cheap goods.  The sad reality is that our current system of globalized trade rewards exporting nations that have weak currencies, and many nations have now shown that they are willing to take the gloves off to make certain that their national currencies do not appreciate in value by too much.

Some nations have been involved in open currency manipulation for some time now.  For example, Singapore is well known for intervening in the foreign exchange market in order to benefit exporters.  Also, the Swiss National Bank experienced losses equivalent to about 15 billion dollars trying to stop the rapid rise of the Swiss franc earlier this year.

But as we race toward the end of 2010, currency manipulation is becoming a major issue on the world stage.

Rumors that the Federal Reserve is considering a substantial new round of quantitative easing is already causing many major exporting nations around the world to howl in outrage. 

Why?

Well, quantitative easing by the Federal Reserve could put substantial downward pressure on the value of the dollar and that would make exports significantly more expensive in the United States.  The reality is that even a relatively small change in the value of the U.S. dollar can have a major impact on exporters.

But what could really set off a massive currency war is the ongoing dispute between the U.S. and China.

For years, China has kept the value of their currency artificially low.  Even though China has made a few small moves toward a more free-floating currency policy, at this point China’s currency is still pretty much pegged to the U.S. dollar.  It is estimated that the Chinese government is keeping China’s currency at a value about 40 percent lower than what it should be.  This is essentially a de facto subsidy to China’s exporters.

This has enabled China to flood the United States with cheap goods and it is killing entire industries in the United States.  Americans have loved rushing out to Wal-Mart to get super low prices on all kinds of stuff, but in the process we have slowly but surely been shipping our manufacturing base and our standard of living over to China.

In recent years both the Bush administration and the Obama administration have been whining about this currency manipulation by China, but both administrations have stopped short of taking any real action.

But are there now signs that the Obama administration is going to get serious and start a currency war? 

Well, last week Barack Obama did send the head of his national council of economic advisers, Larry Summers, to Beijing to discuss currency issues.

But what can we do other than whine at this point?

Are we willing to start a trade war?

Considering the fact that China holds nearly a trillion dollars worth of U.S. Treasuries, that probably would not go so well for us.

Even though China’s currency manipulation is absolutely raping the U.S. economy, China has so much leverage over us at this point that it isn’t even funny.

For example, China has almost a complete and total monopoly on rare earth elements.  If China totally cut off the supply of rare earth elements, we would have no hybrid car batteries, flat screen televisions, cell phones or iPods.  Not only that, but rare earth elements are used by the U.S. military in radar systems, missile-guidance systems, satellites and aircraft electronics.

But something has to be done.  Essentially we are caught between a rock and a hard place.

Today, the United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States. 

Last month, the monthly trade deficit with China was approximately 26 billion dollars.  For the year, the trade deficit with China will be somewhere in the neighborhood of 300 billion dollars or so.  The transfer of wealth to China that represents is absolutely mind blowing.

The U.S. economy is getting poorer and the Chinese economy is getting richer each and every month.

We are in decline and China is on the rise.  In fact, one prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

This would not have ever happened if we had not put up with China’s open and blatant currency manipulation all this time.

But now they have us over a barrel and standing up to China would be incredibly painful for the U.S. economy in the short-term.

So will we actually see a currency war break out soon?

Well, it seems almost a certainly that countries throughout the world will continue to manipulate their currencies in order to gain a competitive advantage, but if you are waiting for the Obama administration to truly stand up to China you are probably going to be waiting for a very, very long time.

Where Are The Jobs?

Most Americans don’t really care about the economic minutiae that many of us who study the U.S. economy love to pour over.  When it comes to the economy, the typical American citizen just wants to be able to get a good job, make a decent living and put bread on the table for the family.  For generations, this arrangement has worked out quite well.  The U.S. economy has provided large numbers of middle class jobs and the American people have worked hard and have helped this nation prosper like no other.  But now people are starting to notice that something has shifted.  Millions of people are looking around and are realizing that the jobs that are supposed to be there are not there anymore.  The American people are still working hard (and in many cases harder than ever) but all of that hard work is producing fewer and fewer rewards.  Often politicians will placate voters by telling them that they are working harder and harder for less and less.  That tends to ring true with voters because that is a very accurate description of what so many of them are actually experiencing, but what the politicians don’t tell us is that they are the ones to blame for the situation that we are in.  As millions of jobs become obsolete because of technology and millions of other jobs are shipped overseas, our politicians tell us over and over that we can “compete” with anyone and that if we will just go out and get some more education we can make it happen.  But those of us who are extremely over-educated know what a fraud that line is.  The truth is that there are not nearly enough jobs for all of us no matter how “educated” we are.  This is creating a lot of anger and frustration, and now even the IMF is warning that we could see “an explosion of social unrest” if high unemployment persists.

But what can be done?  You can’t force large corporations to hire people.  The reality is that there are a couple of huge factors that have brought us to this point.  First of all, advanced technology means that big corporations need fewer people to do the same amount of work now.  Secondly, the globalization of our economy means that U.S. workers have now been merged into a global labor pool where they are in direct competition with workers who are more than happy to make less than a dollar an hour on the other side of the world.

This all means that the labor of American workers is less valuable to global corporations than it ever has been before.  Advanced technology and computers have enabled corporations to operate leaner and meaner.  If they do need some old-fashioned muscle for certain tasks they can always run out and set up a facility in some third world nation where they can pay people close to slave labor wages and where they don’t have to worry much about taxes, regulations, unions, health benefits or pension plans.  

What did you think was going to happen when the United States entered into all of these “free trade” agreements with nations around the world that did not have minimum wage laws?

U.S. corporations are not in existence to provide the American people with jobs.  They are in existence to make money.  If they can make more money by shipping jobs overseas, then that is exactly what they are going to do.

According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies skyrocketed 30 percent to 10.1 million. During that same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.

Are you starting to see the picture?

Global corporations based in the U.S. have been creating lots of jobs – just not in the United States.

In fact, things only seem to be accelerating.

In 2008 alone, U.S. employment at American multinational corporations fell by 445,500.

In the old days, you could give tax breaks to U.S. firms and that would spur them to do more business and to hire more workers.  But today, if U.S. multinationals decide they wish to expand they will just go hire more third world workers and pocket the rest of the profits for themselves.

The reality is that we are facing a very disturbing long-term trend in the United States.  Today, over half of all unemployed workers in the United States have been out of work for over six months.  In fact, the duration of unemployment in the United States has spiked up to the highest level it has been at since World War II.

This has created a growing subclass of people in the United States who feel that the system has failed them.  The anger and the frustration in the country is rising every day.  You can almost feel it.

In fact, the IMF is warning that we are at risk of “an explosion of social unrest” due to this unemployment crisis.

The head of the IMF, Dominique Strauss-Kahn, recently made the following statement at an Oslo jobs summit with the International Labour Federation….

“The labour market is in dire straits. The Great Recession has left behind a waste land of unemployment.”

So exactly what is going to turn that around?

Are millions of jobs going to suddenly hop up and return home from overseas?

Is the U.S. government going to suddenly eliminate a whole raft of taxes and regulations and are U.S. workers going to suddenly become much cheaper?

Is the U.S. trade deficit crisis suddenly going to reverse and turn into huge trade surpluses for the United States?

Of course none of those things is going to happen.

America is going to continue to bleed jobs, wages inside the United States are going to continue to be forced down and the standard of living for most Americans is going to continue to deteriorate.

Plus, if the American people don’t have good jobs, they can’t buy homes.  In fact, a growing number of Americans are finding out that they can’t even afford the homes they are in right now.  CNBC is reporting that the nation’s banks repossessed a record number of homes in August.

But for many Americans, a foreclosure is just the beginning of their problems.  People are falling out of the middle class at an alarming rate.  Approximately 45 million Americans were living in poverty during 2009.  That is an absolutely astounding figure.

The American people are getting mad and faith in the economy is plummeting.  According to Gallup, confidence in the economy is way down compared to to the same period last year.

So what is going to happen when (not if) things get even worse?

Well, some investors are already anticipating rough times ahead and are flocking to commodities.  The price of gold soared to a record intra-day high of $1,276.50 an ounce on Tuesday, and the price of gold and other commodities will probably continue to climb as economies around the world continue to destabilize.

These are very, very difficult times that we are moving into.  There are not going to be nearly enough jobs for everyone.  People you know are going to be unemployed.  People you know are going to lose their homes.  People you know might even end up living on the streets.

Just hope that you don’t end up being one of them.

Globalism Destroys America: 10 Reasons Why The World Trade Organization Is Bad For The United States Economy

In 2010, education has been so “dumbed down” in America that most Americans don’t even know what the WTO is, and even fewer understand why the WTO is important. The truth is that the World Trade Organization is essentially a global government for world trade.  It is a “contract” that severely restricts the ability of member nations to direct their own economies and set their own trade policies.  The United Nations is perhaps the only international organization that has more power than the WTO.  It was created on January 1st, 1995 as a replacement for GATT (the General Agreement on Tariffs and Trade).  Today, 153 nations representing more than 97% of total world trade are members of the WTO.  It has been largely responsible for the explosion in world trade that we have witnessed over the past several decades.  In fact, world trade is now over 15 times larger than it was 50 years ago.  But is this a good thing? 

No, it is not.

The following are 10 reasons why the World Trade Organization is bad for America…..

1 – The WTO is not accountable to the American people or to any other voters around the globe.  It is a sprawling bureaucracy that wields an almost unbelievable amount of power that is completely unchecked by democratic processes.  The American people could try to elect a large number of politicians who are in favor of pulling the United States out of the WTO, but considering the fact that both major political parties are very much pro-WTO at this point, that is simply not going to happen. 

2 – The WTO acts as the legislature, the executive and the judiciary in matters of world trade.  The WTO has the authority to impose punishments on member nations, and it has not been shy about exercising this authority.  In essence, the WTO is the judge, the jury and the executioner and if anyone does not like this it is too bad for them.

3 – Many of the WTO regulations were authored word for word by the big global predator corporations that now dominate the world economy.  It is an open secret that the WTO is dominated by international bankers, large international corporations and the most developed nations.  Whenever new negotiations are conducted, it almost always seems as though it is the “sharks” that end up winning in the end.

4 – Any nation that attempts to protect itself against the negative effects of globalism and free trade is quickly reprimanded by the WTO.  In essence, the WTO is the enforcement arm for the powerful interests who are determined to merge us all into a one world economy.

5 – The WTO allows countries to sue each other.  This has been primarily used by the wealthy countries to push around the smaller, less developed nations.

6 – The WTO allows global corporations to sue countries.  Forget about sovereign immunity in matters governed by the WTO.  Under the WTO, the monolithic corporations who benefit the most from free trade can easily push around the smallest and least developed nations.

7 – The WTO is widening the gap between rich and poor.  Under the globalized system of free trade we are all living under, all wealth is slowly but surely being transferred into the hands of the very wealthy while the rest of us are left standing around trying to figure out how the game was rigged.

8 – The WTO forces the United States to open its doors to unsafe products.  For example, the United States had been very concerned about the safety of Chinese poultry products.  But the WTO ruled in China’s favor and now the U.S. must allow China to import massive amounts of unsanitary chicken.

9 – Under the WTO, labor has become a global commodity.  Now American workers have been put in direct competition with the cheapest labor in the world.  Millions of American workers have lost their jobs and factories are closing across the United States at a staggering pace.

10 – The American people are deeply upset about the state of the economy, but they don’t even understand what is going on.  According to a new CNN/Opinion Research Corporation survey, 81% of Americans rate the U.S. economy as “poor”.  Americans continue to get angrier and angrier about the economy and they want someone to “fix” it.  But what they don’t understand is that under the new global system that we are being merged into, it is intended that the standard of living for the poorer nations will go up while our standard of living goes down.  In the end, there is supposed to be “equality” all over the world.

But what kind of equality will that be?

If current trends hold up, the top 1% of all income earners will become fabulously wealthy, while the remainder of us will work our lives away for their giant global corporations for near slave labor wages.

A reader of my column named Joe recently left a comment that does a good job of summarizing the kind of world that we are heading into….

I still remember the 60 Minutes program that showed an old company in Massachusetts that made winter jackets and pants. The old timer who owned the company was a wonderful character. He worked hard all his life, made excellent clothes, and treated all his employee’s like his family. Dan Rather followed him throughout the mill as he interacted with each employee, the old man knew every job because he probably had to do them all at one time. This man had integrity, a hard work ethic, honesty, and every other leadership quality. His employees loved him and respected him.

Fast forward to today and we have companies like Nike and Gap who entrap their young girl employees with a scam ad in a newspaper about a job. Then they are caged into a factory with barbed wire and security guards and have to work for .35 cents per hour. The girls have to pay “rent” for a bunk bed and a little food, a debt they can never repay for their freedom. And we buy their clothes at Wal-Mart.

Where did we go off the tracks? How did we go so wrong?

The truth is that the giant global predator corporations are going to continue to use the WTO (and other globalist organizations such as the IMF and the World Bank) to rig the game in their favor and to push us all into one global market and into one global labor pool. 

The WTO is not good for the U.S. economy and it never will be.

But the vast majority of our politicians are 100 percent behind this system which is designed to deindustrialize the United States, ship our jobs overseas and substantially lower our standard of living.

Will the American people wake up and realize what is going on?

No, “Dancing with the Stars” has just announced their new cast, American Idol is looking for some new judges and football season is starting, so the American people are going to have their hands full for a while.