Financial

Mainstream Reporter Tells The Truth About Audit The Fed And The Creation Of The Federal Reserve

When someone in the mainstream media goes out on a limb to tell the truth, then the rest of us should go out of our way to applaud that effort.  Reporter Ben Swann of Fox 19 in Cincinnati is one of the few local television reporters in the United States that consistently tackles the tough issues.  As you can see from his “Reality Check” archives, he regularly does reports on the Federal Reserve, the emerging police state, the loss of our freedoms and liberties, the advance of globalism, the economic collapse, political corruption, etc. etc.  That is one reason why his YouTube channel is rapidly approaching a million views.  In his most recent Reality Check, Ben Swann asked this question: “Is auditing the Federal Reserve really necessary?”  In just four minutes, Swann covered the creation of the Federal Reserve, where money comes from, the 16 trillion dollars in secret loans given out by the Fed during the last financial crisis, and why an audit of the Fed is so important.  It really was extraordinary to watch a local mainstream news reporter tell the truth about these things.  We could definitely use about 1000 more reporters just like him.

The video of Ben Swann’s recent Reality Check is posted below.  If you have not seen it yet, it is definitely worth the 4 minutes that it takes to watch it….

What in the world would this country look like if we had hundreds of other real journalists such as Ben Swann that were willing to tackle these kinds of issues head on?

Certainly nobody is perfect, but when a reporter like Swann is willing to go out on a limb and attack the Fed we need to applaud his efforts.

The mainstream media is supposed to hold those in positions of power accountable.

But most in the mainstream media treat the Federal Reserve with kid gloves.  It is incredibly rare to hear any real criticism of the Fed by mainstream reporters.

If the mainstream media was actually doing their job, then perhaps we could get some answers to some questions that have gone unanswered for a very long time.

For example, Zero Hedge has published a “smoking gun” that proves that the Federal Reserve was heavily involved in manipulating the price of gold long after the gold standard was abandoned.  If you have not read that piece yet, you can find it right here.

I would love to know to what extent this is still going on today, and why nobody ever asks Federal Reserve Chairman Ben Bernanke about this.

Another mystery that I would like to see addressed is the trillions of dollars of “off balance sheet transactions” that are unaccounted for at the Federal Reserve.  This was brought up once during a Congressional hearing, but nobody seemed to have any answers.  Video from this hearing is posted below….

As you can see from the video, nobody in the federal government seems to have any idea what is really going on over at the Fed.

But the Fed has more power over our economy and over our financial system than anyone else does.

Isn’t it about time that the American people got some answers?

The Federal Reserve is at the very heart of our debt-based financial system that was created by the big Wall Street banks and for the benefit of the big Wall Street banks.

The Federal Reserve (and virtually every other central bank in the world) is not accountable to the people.  The Federal Reserve has created a perpetual debt bubble that is designed to systematically transfer the wealth of the American people to the banks.  In this system, the total amount of money and the total amount of debt is designed to continually expand.

Since the Federal Reserve was created, the value of the U.S. dollar has declined by well over 95 percent and the U.S. national debt has gotten more than 5000 times larger.

But nobody seems to want to hold the Federal Reserve accountable for any of this.

Just what in the world is going on here?

In a previous article about auditing the Fed, I listed some more questions that I would like to see someone ask the Federal Reserve….

If the Federal Reserve is supposed to prevent shocks to our economy, then why have there been 10 different economic recessions since 1950 and why are we about to enter another one?

Was the Federal Reserve involved in the manipulation of Libor?

What role did the Federal Reserve play in creating the housing bubble that resulted in our unprecedented housing crash?

Why has the value of the U.S. dollar fallen by 83 percent since 1970?

Why is the Federal Reserve paying U.S. banks not to lend money?

Why did Barack Obama nominate Ben Bernanke for a second term as head of the Federal Reserve when Bernanke has a track record of failure that makes the Chicago Cubs look like a roaring success?

Why is the U.S. national debt more than 5000 times larger than it was when the Federal Reserve was created in 1913?

Why were the Federal Reserve and the personal income tax both pushed through Congress in the same year in 1913?

Why does the Federal Reserve argue that it is “not an agency” of the federal government in court?

Why do all 187 nations that belong to the IMF have a central bank?

Most Americans are pinning their hopes for an “economic turnaround” on the upcoming election in November.

But the truth is that until something is done about the Federal Reserve it isn’t going to matter very much who is in the White House.

As I wrote about yesterday, the total amount of all debt in America has grown from about 2 trillion dollars to nearly 55 trillion dollars over the past 40 years.

Yes, we should blame the American people for being really stupid about debt, but we also need to keep in mind that this is exactly what the debt-based Federal Reserve system was designed to do.

We have been enslaved by design and most Americans do not even realize what has happened.

Let us encourage reporters like Ben Swann to keep speaking out about the Federal Reserve, and the rest of us need to keep speaking out about the Fed too.

11 Signs That Time Is Quickly Running Out For The Global Financial System

Are we rapidly approaching a moment of reckoning for the global financial system?  August is likely to be a relatively slow month as most of Europe is on vacation, but after that we will be moving into a “danger zone” where just about anything could happen.  Historically, a financial crisis has been more likely to happen in the fall than during any other time, and this fall is shaping up to be a doozy.  Much of the focus of the financial world is on whether or not the euro is going to break up, but even if the authorities in Europe are able to keep the euro together we are still facing massive problems.  Countries such as Greece and Spain are already experiencing depression-like conditions, and much of the rest of the globe is sliding into recession.  Unemployment has already risen to record levels in some parts of Europe, major banks all over Europe are teetering on the brink of insolvency, and the flow of credit is freezing up all over the planet.  If things take a really bad turn, this crisis could become much worse than the financial crisis of 2008 very quickly.

All over the world people are starting to write about the possibility of a major economic crisis starting this fall.

For example, a recent article in the International Business Times discussed how some economists around the globe are fearing the worst for the coming months….

The consensus? The world economy has entered a final countdown with three months left, and investors should pencil in a collapse in either August or September.

Citing a theory he has been espousing since 2010 that predicts “a future lack of policy flexibility from the monetary and fiscal side,” Jim Reid, a strategist at Deutsche Bank, wrote a note Tuesday that gloated “it feels like Europe has proved us right.”

“The U.S. has the ability to disprove the universal nature of our theory,” Reid wrote, but “if this U.S. cycle is of completely average length as seen using the last 158 years of history (33 cycles), then the next recession should start by the end of August.”

The global financial system is so complex and there are so many thousands of moving parts that it is always difficult to put an exact date on anything.  In fact, history is littered with economists that have ended up looking rather foolish by putting a particular date on a prediction.

But without a doubt we are starting to see storm clouds gather for this fall.

The following are 11 more signs that time is quickly running out for the global financial system….

#1 A number of very important events regarding the financial future of Europe are going to happen in the month of September.  The following is from a recent Reuters article that detailed many of the key things that are currently slated to occur during that month….

In that month a German court makes a ruling that could neuter the new euro zone rescue fund, the anti-bailout Dutch vote in elections just as Greece tries to renegotiate its financial lifeline, and decisions need to be made on whether taxpayers suffer huge losses on state loans to Athens.

On top of that, the euro zone has to figure out how to help its next wobbling dominoes, Spain and Italy – or what do if one or both were to topple.

#2 Reuters is reporting that Spanish Economy Minister Luis de Guindos has suggested that Spain may need a 300 billion euro bailout.

#3 Spain continues to slide deeper into recession.  The Spanish economy contracted 0.4 percent during the second quarter of 2012 after contracting 0.3 percent during the first quarter.

#4 The unemployment rate in Spain is now up to 24.6 percent.

#5 According to the Wall Street Journal, a new 30 billion euro hole has been discovered in the financial rescue plan for Greece.

#6 Morgan Stanley is projecting that the unemployment rate in Greece will exceed 25 percent in 2013.

#7 It is now being projected that the Greek economy will shrink by a total of 7 percent during 2012.

#8 German Finance Minister Wolfgang Schäuble says that the rest of Europe will not be making any more concessions for Greece.

#9 The UK economy has now plunged into a deep recession.  During the second quarter of 2012 alone, the UK economy contracted by 0.7 percent.

#10 The Dallas Fed index of general business activity fell dramatically to -13.2 in July.  This was a huge surprise and it is yet another indication that the U.S. economy is rapidly heading into a recession.

#11 As I have written about previously, a banking crisis is more likely to happen in the fall than at any other time during the year.  The global financial system will enter a “danger zone” starting in September, and none of us need to be reminded that the crashes of 1929, 1987 and 2008 all happened during the second half of the year.

So is there any hope on the horizon?

European leaders have tried short-term solution after short-term solution and none of them have worked.

Now countries all over Europe are sliding into depression and the authorities in Europe seem to be all out of answers.  The following is what one eurozone diplomat said recently….

“For two years we’ve been pumping up the life raft, taking decisions that fill it with just enough air to keep it afloat even though it has a leak,” the diplomat said. “But now the leak has got so big that we can’t pump air into the raft quickly enough to keep it afloat.”

The boat is filling up with water faster than they can bail it out.

So what is the solution?

Well, some of the top names in economics on both sides of the Atlantic are urging authorities to keep the debt bubble pumped up by printing lots and lots more money.

For example, even though the U.S. government is already running trillion dollar deficits New York Times “economist” Paul Krugman is boldly proclaiming that now is the time to print and borrow even more money.  He is proud to be a Keynesian, and he says that “you should be a Keynesian, too.”

Across the pond, the International Business Editor of the Telegraph, Ambrose Evans-Pritchard, is strongly urging the ECB to print more money….

Needless to say, I will be advocating 1933 monetary stimulus à l’outrance, or trillions of asset purchases through old fashioned open-market operations through the quantity of money effect (NOT INTEREST RATE ‘CREDITISM’) to avert deflation – and continue doing so until nominal GDP is restored to its trend line, at which point the stimulus can be withdrawn again.

But is more money and more debt really the solution to anything?

In the United States, M2 recent surpassed the 10 trillion dollar mark for the first time ever.  It has increased in size by more than 5 times over the past 30 years.

Unfortunately, our debt has been growing much faster than GDP has over that time period.

For example, during the second quarter of 2012 U.S. government debt grew by 274.3 billion dollars but U.S. GDP only grew by 117.6 billion dollars.

Our problem is not that there is not enough money floating around.

Our problem is that there is way, way too much debt.

But this is how things always go with fiat currencies.

There is always the temptation to print more.

That is one of the big reasons why every single fiat currency in history has eventually collapsed.

Printing more money will not solve our problems.  It will just cause our problems to take a different form.

In the end, nothing that the authorities can do will be able to avert the crisis that is coming.

A lot of people are starting to realize this, and that is one reason why we are seeing so much economic pessimism right now.

For example, according to a new Rasmussen poll only 14 percent of all Americans believe that children in America today will be “better off” than their parents.

That is an absolutely stunning figure, but it just shows us where we are at.

Our economy has been in decline for a long time, and now we are rapidly approaching another major downturn.

You better buckle up, because this downturn is not going to be pleasant at all.

17 Reasons Why Those Hoping For A Recession In 2012 Just Got Their Wish

If you were hoping for a recession in 2012, then you are going to be very happy with the numbers you are about to see.  The U.S. economy is heading downhill just in time for the 2012 election.  Retail sales have fallen for three months in a row for the first time since 2008, manufacturing activity is dropping like a rock, sales of new homes are declining again, consumer confidence has moved significantly lower and a depressingly small percentage of businesses anticipate hiring more workers in the coming months.  Even though the Federal Reserve has been wildly pumping money into the financial system and even though the federal government has been injecting gigantic piles of borrowed cash into the economy, we still haven’t seen an economic recovery.  In fact, we appear to be on the verge of yet another major downturn.  In California the other night, Barack Obama told supporters that “we tried our plan — and it worked“, but only those that are still drinking the Obama kool-aid would believe something so preposterous.  The truth is that the U.S. economy has been steadily declining for many years and now we have reached another very painful recession.

And don’t let the second quarter GDP number on Friday fool you.  Analysts are expecting to see GDP growth of about 1.4 percent for the second quarter, but the only reason for our very small amount of “economic growth” is because the economy has been flooded with new dollars.

Let me give you an example.  If I could go out overnight and magically double the bank accounts of every single American, would we all be twice as wealthy?

No, because there would be twice as many dollars now chasing the same amount of goods and services.  The price of those goods and services would soon rise dramatically to reflect this new reality.

With all of those new dollars spinning around in the economy it would look like “economic growth” was going through the roof, but in reality the amount of real economic activity would be about the same.

So whenever we talk about GDP, we need to properly adjust it for inflation.  That means using accurate inflation figures and not the highly manipulated inflation figures that the U.S. government is putting out these days.

And as I noted the other day, after properly adjusting for inflation the U.S. economy has been continually experiencing negative economic growth since about 2005.

So let’s not deceive ourselves.  The U.S. economy has been declining for a long time.

But soon even the GDP number that the government gives us will turn negative.  We will probably see a slightly positive number for the second quarter, and the number will likely go negative either in the third quarter or the fourth quarter.

Economists will debate when this new recession officially “began” just like they do with every recession, but it doesn’t take a genius to figure out what is happening to our economy right now.

The following are 17 reasons why those hoping for a recession in 2012 just got their wish….

1. U.S. retail sales have declined for three months in a row.  This is the first time this has happened since 2008.  Every other time this has happened in U.S. history (except for once) this has signaled that the U.S. economy was either already in a recession or was about to enter one.

2. The Philadelphia Fed index of manufacturing activity contracted for the third month in a row during July.  According to the Financial Post, this is a very bad sign….

Seven out of eight times when the average reading has been that low (-11.8) for that long the U.S. economy has tipped into recession.

3. Manufacturing activity in the mid-Atlantic region has also declined for three months in a row.  In fact, the only time in the past decade when manufacturing activity in the mid-Atlantic has fallen more dramatically was during the last recession.

4. A factory index calculated by the Institute for Supply Management has fallen to its lowest level since June 2009.

5. The Conference Board index of leading economic indicators has fallen for two of the past three months.

6. According to a recent survey conducted by the Conference Board, only 17 percent of CEOs had a positive view of the economy during the second quarter of 2012.  During the first quarter of 2012, 67 percent did.

7. Gallup’s U.S. Economic Confidence Index is now the lowest that it has been since January.

8. Optimism among small business owners has declined in three of the last four months and is now at its lowest level since last October.

9. Believe it or not, the amount of waste being carted around on trains in the United States has an 82 percent correlation with U.S. economic growth.  Unfortunately, right now the number of garbage carloads on trains is falling dramatically.

10. Sales of previously occupied homes dropped by 5.4 percent during June.

11. Sales of new homes declined by 8.4 percent during June.  At this point new home sales are less than a third of what they were during the boom years.

12. An increasing number of Americans are relying on high interest “payday loans” to pay the rent and put food on the table.

13. Far more companies are defaulting on their debts this year than last year.

14. According to the U.S. Labor Department, the unemployment rate fell in 11 states and Washington, D.C. last month, but it rose in 27 states.

15. The unemployment rate in New York City is now back up to 10 percent.  That equals the peak unemployment rate in New York City during the last recession.

16. The teen unemployment rate in Washington D.C. right now is 51.7 percent.

17. A recent survey conducted by the National Association for Business Economics found that only 23 percent of all U.S. companies plan to hire more workers over the next 6 months.  When the same question was asked a few months ago that number was at 39 percent.

All of those are very powerful pieces of evidence that a new recession has started.

But do you want to know one of my favorite indicators that the U.S. economy is sliding into recession?

In a previous article, I noted that Federal Reserve Chairman Ben Bernanke made the following statement to Congress recently: “At this point we don’t see a double dip recession. We see continued moderate growth.”

As I mentioned the other day, Bernanke has a track record of failure that is absolutely embarrassing.  Back on January 10, 2008 Bernanke made the following statement….

“The Federal Reserve is not currently forecasting a recession.”

That turned out to be a great call, didn’t it?

On June 10, 2008 he doubled down on his call that the U.S. economy was going to avoid a recession….

“The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”

Just before Fannie Mae and Freddie Mac collapsed Bernanke made this statement….

“The GSEs are adequately capitalized. They are in no danger of failing.”

And there are dozens of other examples just like these.

This is the guy running our economic system.

I am very critical of the Federal Reserve, but there are very good reasons for this.

The Federal Reserve is running our economy into the ground, and we need to pound this into the heads of the American people so that they will wake up and demand change.

Perhaps this next recession will be painful enough to wake people up.

The Wall Street Journal is already even using the “D word” to describe what we are experiencing.  Just today, the Wall Street Journal ran an article that asked this question: “Do Two Recessions Equal One Depression?”

Sadly, this is just the leading edge of what is coming.  By the time 2014 or 2015 rolls around, we are going to look back and long for the “good old days” of 2011 and 2012.

Over the next few years, the unemployment rate is going to skyrocket and poverty in the United States is going to get a whole lot worse.

Now is not the time to goof off.  Now is the time to work really hard to get yourself and your family into the best position that you can for the storm that is coming.

Nothing is going to stop the terrible economic crisis that is coming, but at least we can get prepared for it.

There is hope in being prepared.

Sadly, most people will never even see the next crisis coming until they get blindsided by it.

27 Things That Every American Should Know About The National Debt

The U.S. government has stolen $15,876,457,645,132.66 from future generations of Americans, and we continue to add well over a hundred million dollars to that total every single day day.  The 15 trillion dollar binge that we have been on over the past 30 years has fueled the greatest standard of living the world has ever seen, but this wonderful prosperity that we have been enjoying has been a lie.  It isn’t real.  We have been living way above our means for so long that we do not have any idea of what “normal” actually is anymore.  But every debt addict hits “the wall” eventually, and the same thing is going to happen to us as a nation.  At some point the weight of our national debt is going to cause our financial system to implode, and every American will feel the pain of that collapse.  Under our current system, there is no mathematical way that this debt can ever be paid back.  The road that we are on will either lead to default or to hyperinflation.  We have piled up the biggest debt in the history of the world, and if there are future generations of Americans they will look back and curse us for what we did to them.  We like to think of ourselves as much wiser than previous generations of Americans, but the truth is that we have been so foolish that it is hard to put it into words.

Whenever I do an article about the national debt, Democrats leave comments blaming the Republicans and Republicans leave comments blaming the Democrats.

Well you know what?

Both parties are to blame.  Both of them get a failing grade.

If the Republicans really wanted to stop the federal government from running up all this debt they could have done it.

If the Democrats really wanted to stop the federal government from running up all this debt they could have done it.

So let’s not pretend that one of the political parties is “the hero” in this little drama.

The damage has been done, and both parties will go down in history as being grossly negligent on fiscal issues during this period of American history.

Sadly, neither party is showing any signs of changing their ways.

Neither Barack Obama nor Mitt Romney is promising to eliminate the federal budget deficit in 2013.  They both talk about how the budget will be balanced “someday”, but as we have seen so many times in the past, “someday” never comes.

I didn’t mean to get all political in this article, but the truth is that the national debt threatens to destroy everything that previous generations have built, and our politicians continue to give us nothing but excuses.

The following are 27 things that every American should know about the national debt….

#1 It took more than 200 years for the U.S. national debt to reach 1 trillion dollars.  In 1986, the U.S. national debt reached 2 trillion dollars.  In 1992, the U.S. national debt reached 4 trillion dollars.  In 2005, the U.S. national debt doubled again and reached 8 trillion dollars.  Now the U.S. national debt is about to cross the 16 trillion dollar mark.  How long can this kind of exponential growth go on?

#2 If the average interest rate on U.S. government debt rises to just 7 percent, the U.S. government will find itself spending more than a trillion dollars per year just on interest on the national debt.

#3 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.

#4 Since Barack Obama entered the White House, the U.S. national debt has increased by an average of more than $64,000 per taxpayer.

#5 Barack Obama will become the first president to run deficits of more than a trillion dollars during each of his first four years in office.

#6 If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.

#7 The U.S. national debt has increased by more than 1.6 trillion dollars since the Republicans took control of the U.S. House of Representatives.  So far, this Congress has added more to the national debt than the first 97 Congresses combined.

#8 During the Obama administration, the U.S. government has accumulated more new debt than it did from the time that George Washington became president to the time that Bill Clinton became president.

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

#10 As Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.

#11 Today, the government debt to GDP ratio in the United States is well over 100 percent.

#12 A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.

#13 The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.

#14 At this point, the United States government is responsible for more than a third of all the government debt in the entire world.

#15 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.

#16 The U.S. national debt is now more than 22 times larger than it was when Jimmy Carter became president.

#17 It is being projected that the U.S. national debt will surpass 23 trillion dollars in 2015.

#18 Mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011.  That was not supposed to happen until 50 years from now.

#19 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.

#20 The U.S. government has total assets of 2.7 trillion dollars and has total liabilities of 17.5 trillion dollars.  The liabilities do not even count 4.7 trillion dollars of intragovernmental debt that is currently outstanding.

#21 U.S. households are now actually receiving more money directly from the U.S. government than they are paying to the government in taxes.

#22 The U.S. government is wasting your money on some of the stupidest things imaginable.  For example, in 2011 the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.

#23 If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for last year would have been 5 trillion dollars instead of 1.3 trillion dollars.

#24 The Federal Reserve purchased approximately 61 percent of all government debt issued by the U.S. Treasury Department during 2011.

#25 At this point, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

#26 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 480,000 years to completely pay off the national debt.

#27 The official government debt figure does not even account for massive unfunded liabilities that the U.S. government will be hit with in the years ahead.  According to Professor Laurence J. Kotlikoff, the U.S. government is facing a future “fiscal gap” of more than 200 trillion dollars.

As the U.S. economy continues to crumble, even more Americans are going to become financially dependent on the federal government.

For example, spending on food stamps has doubled since 2008.  Millions of Americans have lost their jobs and have needed some assistance from the government.  Since Obama became president the number of Americans on food stamps has gone from 32 million to 46 million.

But the Obama administration believes that a lot more Americans should be enrolled in the food stamp program.  The Obama administration is now spending millions of dollars on ads that urge even more people to sign up for food stamps.  In fact, their efforts to get even more Americans to sign up for food stamps have become very creative….

The government has been targeting Spanish speakers with radio “novelas” promoting food stamp usage as part of a stated mission to increase participation in the Supplemental Nutrition Assistance Program (SNAP), or food stamps.

Each novela, comprising a 10-part series called “PARQUE ALEGRIA,” or “HOPE PARK,” presents a semi-dramatic scenario involving characters convincing others to get on food stamps, or explaining how much healthier it is to be on food stamps.

I’m all for helping those that cannot feed themselves, but do we really need to run ads urging more people to become dependent on the government?

Of course Obamacare is going to cause our debt to balloon in size as well.  It is being projected that Obamacare will add more than 2.6 trillion dollars to the U.S. national debt over the first decade alone.

So where are we going to get all this money?

We can’t keep spending money that we do not have.  We have got to prioritize.  Every single category of government spending needs to be cut.

But instead we feel like we can keep ripping off future generations of Americans and that we will always be able to get away with it.

What we have done to our children and our grandchildren is beyond criminal.

The truth is that we should have listened to the warnings of our founding fathers about government debt.  For example, Thomas Jefferson once said that if he could add just one more amendment to the U.S. Constitution it would be a complete ban on all borrowing by the federal government….

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

Where would we be today if we had taken the advice of Thomas Jefferson?

That is something to think about.

Scenes Of Despair

Sometimes it can be easy to forget that behind all of the horrible economic numbers that we hear about are millions of real people that have had their lives absolutely devastated by this economy.  Elderly couples are being brutally evicted from their homes, young families are living in their cars, terminally ill people are dying because they cannot afford medication that they need and millions of parents can’t sleep at night as they wrestle with anxiety over not being able to provide for their children.  Often those that lose their jobs or their homes discover that people start looking at them very differently and that there is very little compassion out there these days.  As you will read about below, one major U.S. bank is even kicking an elderly woman with stage 4 breast cancer out of her home because she cannot make her full mortgage payment each month.  When the next major global financial catastrophe happens, we are going to see a whole lot more economic despair.  Will society respond to that crisis by becoming warmer and more compassionate, or will the world around us become even more cold and even more cruel?  As bad as things are right now, it truly is frightening to think about what the world is going to look like after the next major economic downturn.

Many of the stories that you are about to read are truly heartbreaking.  Unfortunately, they represent thousands upon thousands of other stories that never make it into the news….

Foreclosing On An Elderly Woman With Stage 4 Breast Cancer

Wells Fargo is threatening to evict an elderly woman with stage 4 breast cancer named Cindi Davis from her family home in North Carolina….

“They want us to make a house payment of almost $900 a month,” Cindi told the station of their lender, Wells Fargo bank. “We can afford maybe half that. I pay $1,100 a month in prescription medications.”

The couple says they have tried to work with Wells Fargo, even sending notes from Cindi’s doctors explaining her condition, but haven’t been able to come to a workable solution.

“They’re just going to put us out and it’s like, we are willing to pay what we can pay, but it’s not enough,” Cindi said.

Her cancer is in her lungs, lymph nodes and on her liver and she’s gone through a double mastectomy and multiple chemotherapy treatments, but Cindi has handled her disease like a fighter.

Cindi and her husband say that if they are evicted they may have to move in to their pickup truck.

Can you imagine living your last days in a truck as you try desperately to battle stage 4 breast cancer?

Crushing Poverty In Greece

As I have written about before, Greece is essentially experiencing a full-blown economic depression at this point.

There is a severe shortage of medicine in Greece right now, and many doctors are essentially volunteers at this point because so few people can actually afford to pay their bills.  The following description of the chaos in the Greek healthcare system comes from a recent Natural News article….

The economic situation in Greece is only continuing to worsen, as reports indicate that hospitals and care centers throughout the nation are running completely out of medicines, and many healthcare workers are now voluntarily providing care services without pay.

Strapped with spiraling debt, the Greek healthcare, which is government-run, has had to receive gobs of international financial aid just to keep operating with some semblance of normalcy. There has also been plenty of IOUs issued, and desperate patients quietly forking over cash “gifts” to doctors to receive treatments. All in all, the healthcare situation is in utter chaos, save for those that have sacrificed their own time, often free of charge, just to help those in need.

But it is not just the healthcare system that is deeply troubled.

Economic conditions have gotten so bad in Greece that some parents are actually abandoning their children in the streets according to the Daily Mail….

Children are being abandoned on Greece’s streets by their poverty-stricken families who cannot afford to look after them any more.

Youngsters are being dumped by their parents who are struggling to make ends meet in what is fast becoming the most tragic human consequence of the Euro crisis.

Could you ever do that to your children?

Sadly, it looks like things are going to get even worse in Greece.  It is being projected that the unemployment rate in Greece will reach 30 percent by the end of the year.

Economic Shutdown In Portugal

Greece is not the only European nation that is going through an economic nightmare right now.  The truth is that much of southern Europe is virtually shutting down right now.

Simon Black has described what he witnessed during a recent visit to Porto – the second largest city in Portugal….

Excluding the city’s still-bustling tourist areas, it’s very quiet around the city.

Street-level retail shops and restaurants are either devoid of customers or have been vacated. On many blocks I’ve seen more “for lease” signs than operating businesses.

Officially, the unemployment rate is 15.2% in Portugal, and the economy will contract 3% this year… yet the clear lack of economic activity suggests the real figures are much greater.

Without doubt, reality has set in. Locals have capitulated ‘hope’ that the good times will magically re-appear and have adjusted their habits accordingly.

American Families Living In Their Cars

In some areas of the United States you would never even know that an economic crisis is happening, but in other areas things are clearly falling apart very rapidly.  There is a very serious shortage of decent jobs in most parts of the country, and we are seeing clear signs of societal breakdown in many of our major cities.

During the last recession, millions of Americans lost their jobs.  Because a lot of them did not have much money saved up, many of those unemployed Americans also quickly lost their homes.

In the end, some of them ended up living in their vehicles.

And living in a car can be absolute hell.  The following is from an ABC News report….

Three children — one suffering second-degree burns — were taken into protective custody Monday after they were discovered living with their parents in a “filthy” car in a Walmart parking lot.

Police were called to the parking lot Monday morning in Mount Dora, Fla., where they found the family of five living in a 1987 Cadillac Coupe de Ville full of clothes and garbage. Police told the Orlando Sentinel that days-old chicken bones were strewn about the car, along with a spoiled carton of milk and a bottle of tequila.

Other families try to make the best of it that they can.  The following is one touching example from a recent 60 Minutes report….

This is the home of the Metzger family. Arielle, 15. Her brother Austin, 13. Their mother died when they were very young. Their dad, Tom, is a carpenter.  And, he’s been looking for work ever since Florida’s construction industry collapsed. When foreclosure took their house, he bought the truck on Craigslist with his last thousand dollars. Tom’s a little camera shy – thought we ought to talk to the kids – and it didn’t take long to see why.

Pelley: How long have you been living in this truck?

Arielle Metzger: About five months.

Pelley: What’s that like?

Arielle Metzger: It’s an adventure.

Austin Metzger: That’s how we see it.

Pelley: When kids at school ask you where you live, what do you tell ’em?

Austin Metzger: When they see the truck they ask me if I live in it, and when I hesitate they kinda realize. And they say they won’t tell anybody.

Arielle Metzger: Yeah it’s not really that much an embarrassment. I mean, it’s only life. You do what you need to do, right?

Could you imagine being 13 years old or 15 years old and living in a truck?

Unfortunately, during the next major economic downturn a whole lot more families are going to end up living like this.

Desperately Hoping For Rain

Yesterday I wrote about how corn crops are dying all over the United States right now.

For most Americans, this will just mean higher prices at the grocery store.

But for corn farmers, a lack of rain can be absolutely devastating.  The following are some recent comments from farmers about this crippling drought on agweb.com….

I am a small farmer, but my crops in Wayne County, Ill., are the worst I have had sine 1952-53. Corn will be lucky to make 10 bu. and beans are going downhill. It’s been over 100 degrees for 11 straight days. Bad crop.

—-

Dryland corn is done! Some people in denial need to walk in field. Later corn tasseled and pollinating with no silks! No rain in seven days or low humidity 90 degrees and warmer by weekend. Yield range for corn on our farms…0 to 0 bpa. Soybeans…if it rains which is a big if may have some hope, not holding my breath!!

—–

This is my 50th year of grain farming, so I think that I can say that I’ve seen it all. This is worse than 1988-Much worse for corn. Beans could still be fair if it starts to rain soon. Sat.-Sun. rains totaled only 1/4 inch.

—–

This is worse than 1983 and 1988. Corn yield will be 30 to 40% of last year’s yield. The jury is still out on the beans. $10 corn is likely, because there will be so little of it relative to demand. Very sad…

You can see some incredible pictures of the drought in the middle part of the country right here.

When the economy falls to pieces, the politicians and the big banks get all the air time, but it is average hard working people that feel the most pain.

As the economy gets a lot worse (and it will) there is going to be a huge need for more love and compassion.  The government is not going to be able “to save” everyone, and even now way too many people are falling through the cracks in the “safety net”.

Instead of looking down on the homeless and the unemployed, don’t be afraid to give them a helping hand up.

You never know, you might be the one in need of some assistance someday.

The Biggest Financial Scandal In History?

We always knew that the financial markets were rigged, but this is getting ridiculous.  It is now being alleged that 20 major banks have been systematically fixing global interest rates for years.  Barclays has already been fined hundreds of millions of dollars for manipulating Libor (the London Inter Bank Offered Rate).  But Barclays says that a whole bunch of other banks were doing this too.  This is shaping up to be the biggest financial scandal in history, and criminal investigations have been launched on both sides of the Atlantic.  What those investigations are likely to uncover could shake the financial markets to their very core.  In the end, this scandal could absolutely devastate confidence in the global financial system and it could potentially bring down a number of major global banks.  We have never seen anything quite like this before.

What Is Libor?

As mentioned before, Libor is the London Inter Bank Offered Rate.  A recent Washington Post article contained a pretty good explanation of what that means….

In the simplest terms, LIBOR is the average interest rate which banks in London are charging each other for borrowing. It’s calculated by Thomson Reuters — the parent company of the Reuters news agency — for the British Banking Association (BBA), a trade association of banks and financial services companies.

Why Does Libor Matter?

If you have a mortgage, a car loan or a credit card, then there is a very good chance that Libor has affected your personal finances.  Libor has been a factor in the pricing of hundreds of trillions of dollars of loans, securities and assets.  The following is from a recent article by Maureen Farrell….

These traders influenced the pricing of the London Interbank Offered Rate or Libor, a benchmark that dictates the pricing of up to $800 trillion of securities (yes trillion)

$800 trillion?

That is a number that is hard to even imagine.

Most American consumers do not even know what Libor is, but it actually plays a key role in the U.S. economy as the Washington Post recently explained….

In the United States, the two biggest indices for adjustable rate mortgages and other consumer debt are the prime rate (that is, the rate banks charge favored or “prime” consumers) and LIBOR, with the latter particularly popular for subprime loans. A study from Mark Schweitzer and Guhan Venkatu at the Cleveland Fed looked at survey data in Ohio and found that by 2008, almost 60 percent of prime adjustable rate mortgages, and nearly 100 percent of subprime ones, were indexed to LIBOR

Who Was Involved In This Scandal?

According to the Daily Mail, in addition to Barclays it is being alleged that at least 20 banks (including some major U.S. banks) were involved in this interest rate fixing scandal….

Hundreds of bankers across three continents are embroiled in the interest-rate fixing scandal that has left Barclays chief executive Bob Diamond fighting to save his job.

As pressure intensified on Britain’s highest paid banking boss to quit, MPs heard a string of other financial institutions across the world were under investigation.

At least 20 banks are believed to be under suspicion, with growing demands for a criminal investigation.

There are also indications that the Bank of England itself may have been involved in this scandal.

What Did They Do?

Employees at Barclays (and apparently at about 20 other major banks) were brazenly manipulating interest rates.  A recent Yahoo Finance article described how this worked…

To help the bank’s trading positions between 2005 and 2009, and most notably during the global financial crisis of 2007-09, the bank made false submissions to the Libor-setting committee, which agrees rates daily in London.

At the request of its own traders of interest-rate derivatives, Barclays made false submissions relating to Libor and Euribor (the eurozone benchmark rate). By doing this, Barclays personnel aimed to help their trading colleagues to profit by manipulating Libor.

Rigging the world’s leading benchmark for interest rates is pretty serious stuff. Indeed, in the words of the FSA, “Barclays’ behaviour threatened the integrity of the rates, with the risk of serious harm to other market participants”.

Many in the financial world have been absolutely horrified by the details of this scandal that have been emerging.

One recent CNN article declared that “the stench” coming from London is now “overwhelming”….

The Libor scandal has confirmed what many of us have known for some time: There is something smelly in the London financial world and the stench is now overwhelming.

But It is only when I read the Financial Services Authority report — all 44 pages of it — that is became clear just how widespread, how blatant was the fixing of the benchmark interest rate Libor and Euribor by Barclays. Brazen is the only word for it.

The emails and phone calls reveal that on dozens of occasions those who stood to gain by the decisions asked for favors (and got them) from those who helped set the interest rates.

You can read many examples of the kinds of emails that were exchanged between traders in New York and traders at Barclays in London right here.

What Does This Scandal Mean For The Future?

This scandal is making the global financial system look really, really bad.  Confidence in global financial markets has already been declining, and these new revelations are not going to help at all.  The following is how an article in the Huffington Post put it….

The ballooning interest rate manipulation scandal at Barclays, coupled with stock market instability, is likely to fuel fresh doubts about the integrity of the stock market, insiders said.

“Every time people begin to gain a little confidence, something else comes up,” said Randy Frederick, managing director of active trading and derivatives at Charles Schwab. “If it’s not Europe, it’s [troubled] IPOs, or JPMorgan or Barclays. Something new blows up and people say, ‘I knew it was rigged.’”

In addition, we are undoubtedly going to see a huge wave of lawsuits come out of this scandal.  Those lawsuits alone will gum up the financial system for a decade or more.

So needless to say, this is a very big deal.

Sadly, the revelations that have come out about Barclays in recent days are probably just the very tip of the iceberg.  Before this is all over, we are probably going to find out that most of the major global banks were involved.

At a time when the global financial system is already on the verge of a major implosion, this is not welcome news.

This financial scandal is just another reason to be deeply concerned about the second half of 2012.  The house of cards is starting to look really shaky, and nobody knows exactly when it will fall, but anyone with half a brain can see that things are progressively getting worse.

A “perfect storm” is rapidly developing, and when it strikes it is going to be very, very painful.

Are You A Slave Of The System?

If you went out and took a poll of the American people on July 4th (Independence Day) and asked them if they are free, what would the results look like?  Of course the results would be overwhelmingly lopsided.  Most Americans believe that they live in “the land of the free” and that they are not enslaved to anyone.  But is that really the case? Slavery does not always have to involve whips and shackles.  There are many other forms of slavery.  One dictionary definition of a slave is “one that is completely subservient to a dominating influence”.  I really like that definition.  Today, millions of Americans are slaves of the system and they don’t even realize it.  Debt is a form of slavery, and millions of Americans having become deeply enslaved to our debt-based financial system.  When someone enslaves someone else, the goal of the master is to reap a benefit out of the slave.  You don’t want the slave to just sit there and collect dust.  Today, most Americans have willingly shackled themselves to a system that systematically drains their wealth and transfers it to the very wealthy.  Most of them don’t even realize that they have been enslaved even as the system sucks them dry.

Just think about it.  Where is the “big money” in the United States today?

When asked that question, most Americans think of Wall Street.

Well, who controls Wall Street?

The bankers do.

The borrower is the servant of the lender, and they generate massive amounts of wealth by lending us money.

Perhaps an example will be helpful.

Have you ever run up $5000 of credit card debt?  Many people have run up much, much more than that, but let us use $5000 for our example.

According to the Federal Reserve, if you only make the minimum payment every month, at a 20% interest rate it will take you 49 years to pay that credit card off and you will pay back a total of $26,169.

So you would have gotten the original benefit of spending the $5000 and you would have had to work extremely hard to pay back an additional $21,169 to the bankers.

In essence, you would be working as a servant of the bankers until you had paid back that entire debt plus interest.

Unfortunately, our entire system is now designed to get you to go into debt.

It starts before we even get into the “real world”.  We are constantly told that we cannot get a “good job” without a college degree, but a college education is so ridiculously expensive these days that most of us cannot afford one without going into lots of debt.

Many of you out there know exactly what I am talking about.

Do you have a pile of student loan debt?

I do.

In fact, the total pile of student loan debt in the United States is now over a trillion dollars.

Unfortunately, when a lot of us graduated we found out that the “good jobs” that we were promised simply were not there.  Last year, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.

So many young adults are starting out life already enslaved to a gigantic pile of debt but without a good job that will enable them to comfortably service that debt.

The really “lucky” graduates from the top schools flock to Wall Street so that they can make lots of money running the debt-based financial system that is enslaving all the rest of us.

Once young people leave school, there are lots of other “debt traps” to fall into.

Once you get out into the “real world”, just about every major purchase is going to involve another pile of debt.

Do you want a house?

That is going to mean more debt.  As I have written about previously, mortgage debt as a percentage of U.S. GDP has more than tripled since 1955.

Do you want a car?

About 70 percent of all vehicle purchases in the U.S. now involve at least some borrowed  money.

Consumer debt is particularly insidious.  Our stores are filled with very beautiful things, and it is really easy to buy a bunch of stuff and “put it on plastic”.

Since 1971, the total amount of consumer debt in the United States has increased by 1700%, and approximately 46% of all Americans now carry a credit card balance from month to month.

We just keep plunging ourselves deeper and deeper into debt slavery.  Most Americans never seem to learn.  Over the past 30 years those of us in the “bottom 95 percent” have seen our financial shackles just get heavier and heavier.  The following is from a recent CNN article….

In 1983, the bottom 95% had 62 cents of debt for every dollar they earned, according to research by two International Monetary Fund economists. But by 2007, the ratio had soared to $1.48 of debt for every $1 in earnings.

When you pile up lots of debt, you aren’t just working for yourself anymore.  You are also working for those that you owe the debts to.  Your hard work and sweat end up making them a lot wealthier.

Our state and local governments have enslaved themselves to debt as well.  Total state and local government debt is now about 8 times higher than it was 30 years ago.

At this point, many U.S. cities are in very serious trouble with debt.  In fact, another California municipality has just declared bankruptcy.  On Monday, the town of Mammoth Lakes announced that it has formally filed for bankruptcy.

But this is just the beginning.

The truth is that we are a nation that is absolutely drowning in debt and we need a lot more money in order to keep up with all of this debt.

But there is a problem.

In our debt-based financial system, the creation of more money actually creates more debt.

So how are we ever going to get out of the hole that we are in?

Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created back in 1913.  This is why it is so important for the American people to realize that the Federal Reserve is a perpetual debt machine.

The Federal Reserve system itself does not make much money.  The vast majority of the profits that the Federal Reserve makes are transferred back to the U.S. government.

But that is not what the Federal Reserve was created to do.

What the Federal Reserve was created to do was to set up a system where the U.S. government would borrow money and pay interest on it instead of just creating the money itself.

Last year the U.S. government spent more than 454 billion dollars just on interest on the national debt.  That is a form of national slavery.  454 billion dollars that we worked very hard to make was taken from us and transferred into the pockets of some very wealthy people.

The truth is that the U.S. government does not actually need to ever borrow a single penny from anyone.  As a sovereign government it could directly issue money into circulation.

But lending money to governments is very, very profitable and it is the kind of thing that wars are fought over.

For example, the First Bank of the United States (the very first central bank in our country) was established in 1791 and the charter for that bank expired in 1811 and was not renewed.

So what happened the very next year?

The War of 1812.  During that war Washington D.C. was actually captured and burned.  The final major battle of that war was the battle of New Orleans which took place on January 8, 1815.

So what happened the very next year?

President James Madison signed the charter for the Second Bank of the United States on April 10, 1816.

The goal has always been to enslave the American people.  Debt is used to enslave us individually, it is used to enslave our businesses, it is used to enslave our state and local governments and it is used to enslave our federal government.

So are you a slave of the system?

If you are in debt, then you are a slave at least to some degree.

Unfortunately, the global financial system has become so saturated with debt that it is now on the verge of collapse.  It appears that things could be getting significantly worse during the second half of this year, and the years ahead do not look very promising at all.

Sadly, most Americans do not see any of this coming.  In fact, a new CNN/ORC International poll has found that about 60 percent of all Americans think that the U.S. economy will be in good shape next year.

Can you believe that?

The mainstream media has done a fantastic job of brainwashing the general public.

The “blue team” is convinced that if Barack Obama wins the election and the Democrats take control of both houses of Congress that prosperous times are on the way.

The “red team” is convinced that if Mitt Romney wins the election and the Republicans take control of both houses of Congress that the U.S. economy will be put back on the right track.

Well, the truth is that there is not going to be a solution to our economic problems on the national level.  We have accumulated the greatest mountain of debt in the history of the world, and it is going to collapse and crush us no matter which brand of corrupt politicians we sent to Washington.

On July 4th, millions upon millions of Americans will celebrate “Independence Day” with cookouts, parades and fireworks without ever realizing the true nature of what is really going on.

Hopefully we can get more of them educated while there is still time.

17 Reasons To Be EXTREMELY Concerned About The Second Half Of 2012

What is the second half of 2012 going to bring?  Are things going to get even worse than they are right now?  Unfortunately, that appears more likely with each passing day.  I will admit that I am extremely concerned about the second half of 2012.  Historically, a financial crisis is much more likely to begin in the fall than during any other season of the year.  Just think about it.  The stock market crash of 1929 happened in the fall.  “Black Monday” happened on October 19th, 1987.  The financial crisis of 2008 started in the fall.  There just seems to be something about the fall that brings out the worst in the financial markets.  But of course there is not a stock market crash every year.  So are there specific reasons why we should be extremely concerned about what is coming this year?  Yes, there are.  The ingredients for a “perfect storm” are slowly coming together, and in the months ahead we could very well see the next wave of the economic collapse strike.  Sadly, we have never even come close to recovering from the last recession, and this next crisis might end up being even more painful than the last one.

The following are 17 reasons to be extremely concerned about the second half of 2012….

#1 Historical Trends

A recent IMF research paper by Luc Laeven and Fabián Valencia showed that a banking crisis is far more likely to start in September than in any other month.  The following chart is from their report….

So what will this September bring?

#2 JP Morgan

Do you remember back in May when JP Morgan announced that it would be taking a 2 billion dollar trading loss on some derivatives trades gone bad?  Well, the New York Times is now reporting that the real figure could reach 9 billion dollars, but nobody really knows for sure.  At some point is JP Morgan going to need a bailout?  If so, what is that going to do to the U.S. financial system?

#3 Derivatives

Last week, Moody’s downgraded the credit ratings of 15 major global banks.  As a result, a number of them have been required to post billions of dollars in additional collateral against derivatives exposures….

Citigroup’s two-notch long-term rating downgrade from A3 to Baa2 could have led to US$500m in additional liquidity and funding demands due to derivative triggers and exchange margin requirements, according to the bank’s 10Q regulatory filing at the end of the first quarter.

Morgan Stanley – which Moody’s downgraded from A2 to Baa1 – said a two-notch downgrade from both Moody’s and Standard and Poor’s could spur an additional US$6.8bn of collateral requirements in its latest 10Q. The bank did not break down its potential collateral calls under a scenario where only Moody’s downgraded the bank below the Single A threshold.

Royal Bank of Scotland estimated it may have to post £9bn of collateral as a result of the one-notch Moody’s downgrade to Baa1 in a statement on June 21, but did not detail how much of this additional requirement was driven by margin for swaps exposures.

The worldwide derivatives market is starting to show some cracks, and at some point this is going to become a major disaster.

Remember, the 9 largest U.S. banks have a total of more than 200 trillion dollars of exposure to derivatives.  When this bubble completely bursts it is going to be impossible to fix.

#4 LEAP/E2020 Warning

LEAP/E2020 has issued a red alert for the global financial system for this fall.  They are warning that the “second half of 2012” will represent a “major inflection point” for the global economic system….

The shock of the autumn 2008 will seem like a small summer storm compared to what will affect planet in several months.

In fact LEAP/E2020 has never seen the chronological convergence of such a series of explosive and so fundamental factors (economy, finances, geopolitical…) since 2006, the start of its work on the global systemic crisis. Logically, in our modest attempt to regularly publish a “crisis weather forecast”, we must therefore give our readers a “Red Alert” because the upcoming events which are readying themselves to shake the world system next September/ October belong to this category.

#5 Increasing Pessimism

One recent survey of corporate executives found that only 20 percent of them expect the global economy to improve over the next 12 months and 48 percent of them expect the global economy to get worse over the next 12 months.

#6 Spain

The Spanish financial system is basically a total nightmare at this point.  Moody’s recently downgraded Spanish debt to one level above junk status, and earlier this week Moody’s downgraded the credit ratings of 28 major Spanish banks.

According to CNBC, Spain’s short-term borrowing costs are now about three times higher than they were just one month ago….

Spain’s short-term borrowing costs nearly tripled at auction on Tuesday, underlining the country’s precarious finances as it struggles against recession and juggles with a debt crisis among its newly downgraded banks.

The yield paid on a 3-month bill was 2.362 percent, up from just 0.846 percent a month ago. For six-month paper, it leapt to 3.237 percent from 1.737 percent in May.

Needless to say, this is very, very bad news.

#7 Italy

The situation in Italy continues to deteriorate and many analysts believe that it could be one of the next dominoes to fall.  The following is from a recent Businessweek article….

The euro zone’s third-biggest economy is seen as the next domino at risk of toppling after the European Union’s June 9 deal to lend Spain $125 billion in bank bailout funds. Yields on Italy’s 10-year government bonds reached 6.2 percent on June 13, up from just 4.8 percent in March. By pushing up Italy’s borrowing costs out of fear of default, investors are making a default more likely. 

A recent Fortune article detailed some of the economic fundamentals that have so many economists deeply concerned about the Italian economy right now….

The main glaring risk threats that could propel Italy down the path to become Europe’s next domino is the size of country’s outstanding debt (at €1.9 trillion or 120% of GDP); the mountain of debt it has to roll over in the next 12 months (nearly €400 billion); and the market’s cracking credibility around Prime Minister Mario Monti’s ability to reduce the country’s fiscal footprint and spur growth.

Further, fear around Italy’s creditworthiness, which has recently been expressed by near cycle highs in sovereign CDS spreads and government yields on the 10-year bond, follow some rather glaring negative fundamentals over recent quarters and years:  declining GDP over the last three consecutive quarters; a rising unemployment rate (especially among its youth); deterioration in labor market competitiveness; and increased competition for export goods to its key trading partners.

#8 Greece

I have written extensively about the financial nightmare that is unfolding in Greece.  Unemployment has soared past the 20 percent mark, youth unemployment is above 50 percent, the Greek economy has contracted by close to 25 percent over the past four years and now Greek politicians are saying that a third bailout package may be necessary.

#9 Cyprus

The tiny island nation of Cyprus has become the fifth member of the eurozone to formally request a bailout.  This is yet another sign that the eurozone is rapidly falling apart.

#10 Germany

German Chancellor Angela Merkel continues to promote an austerity path for Europe and she continues to maintain her very firm position against any kind of eurozone debt sharing….

Merkel, speaking to a conference in Berlin today as Spain announced it would formally seek aid for its banks, dismissed “euro bonds, euro bills and European deposit insurance with joint liability and much more” as “economically wrong and counterproductive,” saying that they ran against the German constitution.

“It’s not a bold prediction to say that in Brussels most eyes — all eyes — will be on Germany yet again,” Merkel said. “I say quite openly: when I think of the summit on Thursday I’m concerned that once again the discussion will be far too much about all kinds of ideas for joint liability and far too little about improved oversight and structural measures.”

In fact, Merkel says that there will be no eurobonds “as long as I live“.  This means that there will be no “quick fix” for the problems that are unfolding in Europe.

#11 Bank Runs

Every single day, hundreds of millions of dollars is being pulled out of banks in southern Europe.  Much of that money is being transferred to banks in northern Europe.

In a previous article I included an extremely alarming quote from a CNBC article about the unfolding banking crisis in Europe….

Financial advisers and private bankers whose clients have accounts too large to be covered by a Europe-wide guarantee on deposits up to 100,000 euros ($125,000), are reporting a “bank run by wire transfer” that has picked up during May.

Much of this money has headed north to banks in London, Frankfurt and Geneva, financial advisers say.

“It’s been an ongoing process but it certainly picked up pace a couple of weeks ago We believe there is a continuous 2-3 year bank run by wire transfer,” said Lorne Baring, managing director at B Capital, a Geneva-based pan European wealth management firm.

How long can these bank runs continue before banking systems start to collapse?

#12 Preparations For The Collapse Of The Eurozone

As I have written about previously, the smart money has already written off southern Europe.  All over the continent major financial institutions are preparing for the worst.  For example, just check out what Visa Europe is doing….

Visa Europe is holding weekly meetings to discuss scenarios in the event the euro zone collapses, joining other companies that are preparing for a potential breakup of the currency bloc.

Chief Commercial Officer Steve Perry said Tuesday that management at the U.K.-based credit-card company meets weekly to explore various possible outcomes, including a total collapse of the euro zone.

#13 Global Lending Is Slowing Down

All over the globe the flow of credit is beginning to freeze up.  In fact, the Bank for International Settlements says that worldwide lending is contracting at the fastest pace since the financial crisis of 2008.

#14 Sophisticated Cyber Attacks On Banks

It is being reported that “very sophisticated” hackers have successfully raided dozens of banks in Europe.  So far, it is being estimated that they have stolen 60 million euros….

Sixty million euro has been stolen from bank accounts in a massive cyber bank raid after fraudsters raided dozens of financial institutions around the world.

According to a joint report by software security firm McAfee and Guardian Analytics, more than 60 firms have suffered from what it has called an “insider level of understanding”.

What happens someday if we wake up and all the money in the banks is gone?

#15 U.S. Municipal Bankruptcies

All over the United States there are cities and towns on the verge of financial disaster.  This week Stockton, California became the largest U.S. city to ever declare bankruptcy, but the reality is that this is only just the beginning of the municipal debt crisis….

Stockton, California, said it will file for bankruptcy after talks with bondholders and labor unions failed, making the agricultural center the biggest U.S. city to seek court protection from creditors.

“The city is fiscally insolvent and must seek Chapter 9 bankruptcy protection,” Stockton said in a statement released yesterday after its council voted 6-1 to adopt a spending plan for operating under bankruptcy protection.

#16 The Obamacare Decision

The U.S. economy is already a complete and total mess, and now the Obamacare decision is going to throw a huge wet blanket on it.  All over America, small business owners are saying that they are going to have to let some workers go because they cannot afford to keep them all under Obamacare.  It would be hard to imagine a more job killing law than Obamacare, and now that the Supreme Court decision has finally been announced we are going to see many businesses making some really hard decisions.

#17 The U.S. Election

It is being reported that Barack Obama is putting together an army of “thousands of lawyers” to deal with any disputes that arise over voting procedures or results.  It certainly looks like this upcoming election is going to be extremely close, and there is the potential that we could end up facing another Bush v. Gore scenario where the fate of the presidency is determined in court.  This campaign season is likely to be exceptionally nasty, and I fear what may happen if there is not a decisive winner on election day.  The possibility of significant civil unrest is certainly there.

We definitely live in “interesting” times.

Personally, I am deeply concerned about the September, October, November time frame.

The other day, Joe Biden delivered a speech in which he made the following statement….

“It’s A Depression For Millions And Millions Of Americans”

And what Biden said was right for once.  Millions of Americans are out of work right now and millions of Americans have fallen out of the middle class in recent years.  If you have lost everything, it does feel like you are living through a depression.

When people lose everything, they tend to get desperate.  And desperate people do desperate things – especially when they are angry.

A whole host of recent opinion polls have shown that anger and frustration in the United States are rising to unprecedented levels.  The ingredients are certainly there for an explosion.  Someone just needs to come along and light the fuse.  We truly do live in frightening times.

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

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