Financial

5 New Lies That The Federal Reserve Is Telling The American People

The Federal Reserve says that everything is going to be okay.  The Fed says that unemployment is going to go down, inflation is going to remain low and economic growth is going to steadily increase.  Do you believe them this time?  As you will see later in this article, Federal Reserve Chairman Ben Bernanke has been dead wrong about the economy over and over again.  But the mainstream media and many Americans still seem to have a lot of faith in the Federal Reserve.  It doesn’t seem to matter that Bernanke and other Fed officials have been telling the American people lies for years.  As I always say, most people believe what they want to believe, and many people seem to want to have blind faith in the Federal Reserve even when logic and reason would dictate otherwise.  The truth is that things are not going to be getting much better than they are right now.  When the next wave of the financial crisis hits, the U.S. economy is going to fall back into recession, financial markets are going to crash and unemployment is going to absolutely skyrocket.  But you will never hear any of that from the Federal Reserve.

The following are 5 new lies that the Federal Reserve is telling the American people.  After each lie I have posted what The Economic Collapse Blog thinks is actually going to happen….

#1 The Federal Reserve says that the labor market has improved and that unemployment is going to decline significantly over the next few years.

The following is a quote from the FOMC press release that was released on Wednesday….

Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated.

The Federal Reserve is projecting that the unemployment rate will fall within the range of 7.8 percent and 8.0 percent by the end of 2012.

The Federal Reserve is also projecting that the unemployment rate will fall within the range of 6.7 percent and 7.4 percent by the end of 2014.

The Economic Collapse Blog says that the labor market has not improved.  In March 2010, 58.5 percent of all working age Americans had a job.  Exactly two years later in March 2012, 58.5 percent of all working age Americans had a job.  If the labor market was improving, the percentage of working age Americans with a job should have gone up.

The Economic Collapse Blog also says that while there is a chance the official unemployment rate may go down slightly in the short-term, the truth is that it is going to go up into double digits once the next wave of the financial crisis hits us.

#2 The Federal Reserve says that that U.S. economy is going to experience solid GDP growth over the next couple of years.

In fact, the Federal Reserve is projecting that U.S. GDP will be rising at an annual rate that falls between 3.1 percent and 3.6 percent by the end of 2014.

The Economic Collapse Blog says that a great economic cataclysm is coming….

“When the European banking system crashes (and it will) it is going to reverberate around the globe.  The epicenter of the next great financial crisis is going to be in Europe, and it is getting closer with each passing day.”

#3 The Federal Reserve says that we can expect low inflation for an extended period of time.

The Federal Reserve is officially projecting that the annual rate of inflation will not be higher than 2.0 percent by the end of 2012.  Federal Reserve Chairman Ben Bernanke reinforced this projection during his press conference on Wednesday….

“But we expect that to pass through the system, and assuming no new shocks in the oil sector, inflation ought to moderate to about 2 percent later this year.”

The Economic Collapse Blog says that the Fed is being tremendously dishonest and that if inflation was measured the exact same way that it was measured back in 1980, the annual rate of inflation would be more than 10 percent right now.

The truth is that most middle class families know that we do not have low inflation right now.  This is hammered home millions of times a day when average Americans visit the gas station or the grocery store.

At the beginning of the next recession inflation will likely subside, but that will only be because economic activity will be slowing down dramatically.

#4 The Federal Reserve says that it has built up a 30 year reputation for keeping inflation low.

Ben Bernanke actually had the gall to make the following claim during his press conference on Wednesday….

“We, the Federal Reserve, have spent 30 years building up credibility for low and stable inflation, which has proved extremely valuable in that we’ve been able to take strong accommodative actions in the last four, five years to support the economy.”

Oh really?

The Economic Collapse Blog says that the Federal Reserve has nearly a 100 year reputation for destroying the value of the U.S. dollar.  Even using the Fed’s doctored numbers, the value of the U.S. dollar has declined by more than 95 percent since 1913.

To get a really good idea of just how much the dollar has been destroyed by the Fed over the years, just check out this chart.

#5 Federal Reserve Chairman Ben Bernanke says that we should trust him because the Federal Reserve stands ready to do whatever is necessary to support the U.S. economy.

“If appropriate… we remain entirely prepared to take additional action”

The Economic Collapse Blog says that Federal Reserve Chairman Ben Bernanke is doing a great disservice by not warning the American people about the tremendous crisis that is coming.  In a recent article I stated that this next crisis will blindside most Americans just like the last one did….

“Sadly, just like back in 2008, most people will never even see this next crisis coming.”

So who should you trust – the Federal Reserve or all of the half-crazed bloggers out there that are warning about the “serious doom” that is coming.

Well, come back to this article in a year or two and compare how accurate the predictions were.

In the end, time will tell who is telling lies and who is not.

If we do not learn from history, we are doomed to repeat it.

For example, let’s take a quick look at Ben Bernanke’s track record over the past several years.

The following are statements that Bernanke actually made to the public….

#1 (July, 2005) “We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

#2 (October 20, 2005) “House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.”

#3 (November 15, 2005) “With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

#4 (February 15, 2006) “Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”

#5 (February 15, 2007) “Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.”

#6 (March 28, 2007) “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

#7 (May 17, 2007) “All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.  The vast majority of mortgages, including even subprime mortgages, continue to perform well.  Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.”

#8 (January 10, 2008) “The Federal Reserve is not currently forecasting a recession.”

#9 (June 10, 2008) “The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”

But don’t worry, Ben Bernanke insists that he knows exactly what is going on this time.

So do you believe him?

A lot of Americans don’t.  In fact, an “economic collapse” is the number one catastrophic event that Americans worry about according to one recent survey.

Perhaps that is one reason why so many Americans are preparing for doomsday these days.

The central planners over at the Federal Reserve are not going to solve our economic problems.

The truth is that the Fed is at the very heart of our economic problems.

We have been living in the greatest debt bubble in the history of the world and that debt bubble has been facilitated by the Fed.

Over the past three decades, the total amount of debt in America has increased by about 50 trillion dollars.  By stealing from future generations, we have been able to live like kings and queens, but there is going to be a great price to pay for our foolishness.

Ben Bernanke and the other folks running the Federal Reserve are just going to keep insisting that everything is going to be okay for as long as they possibly can.  They are going to tell you that they know exactly how to fix things and that the economy will be back on track very soon.

Don’t be stupid and believe them this time.

22 Red Flags That Indicate That Very Serious Doom Is Coming For Global Financial Markets

If you enjoy watching financial doom, then you are quite likely to really enjoy the rest of 2012.  Right now, red flags are popping up all over the place.  Corporate insiders are selling off stock like there is no tomorrow, major economies all over Europe continue to implode, the IMF is warning that the eurozone could actually break up and there are signs of trouble at major banks all over the planet.  Unfortunately, it looks like the period of relative stability that global financial markets have been enjoying is about to come to an end.  A whole host of problems that have been festering just below the surface are starting to manifest, and we are beginning to see the ingredients for a “perfect storm” start to come together.  The greatest global debt bubble in human history is showing signs that it is getting ready to burst, and when that happens the consequences are going to be absolutely horrific.  Hopefully we still have at least a little bit more time before the global financial system implodes, but at this point it doesn’t look like anything is going to be able to stop the chaos that is on the horizon.

The following are 22 red flags that indicate that very serious doom is coming for global financial markets….

#1 According to CNN, the level of selling by insiders at corporations listed on the S&P 500 is the highest that it has been in almost a decade.  Do those insiders know something that the rest of us do not?

#2 Home prices in the United States have fallen for six months in a row and are now down 35 percent from the peak of the housing market.  The last time that home prices in the U.S. were this low was back in 2002.

#3 It is now being projected that the Greek economy will shrink by another 5 percent this year.

#4 Despite wave after wave of austerity measures, Greece is still going to have a budget deficit equivalent to about 7 percent of GDP in 2012.

#5 Interest rates on Italian and Spanish sovereign debt are rapidly rising.  The following is from a recent RTE article….

Spain’s borrowing rate nearly doubled in a short-term debt auction as investors fretted over the euro zone’s determination to deal with its debts. 

And Italy raised nearly €3.5 billion in a short-term bond sale today but at sharply higher interest rates amid fresh concerns over the euro zone outlook, the Bank of Italy said.

#6 The government of Spain recently announced that its 2011 budget deficit was much larger than originally projected and that it probably will not meet its budget targets for 2012 either.

#7 Amazingly, bad loans now make up 8.15 percent of all loans on the books of Spanish banks.  That is the highest level in 18 years.  The total value of all toxic loans in Spain is equivalent to approximately 13 percent of Spanish GDP.

#8 One key Spanish stock index has already fallen by more than 19 percent so far this year.

#9 The Spanish government has announced a ban on all cash transactions larger than 2,500 euros.  Many are interpreting this as a panic move.

#10 It is looking increasingly likely that a major bailout for Spain will be needed.  The following is from a recent Reuters article….

Economic experts watching Spain don’t know how much money will be needed or precisely when, but some are near certain that Madrid will eventually seek a multi-billion euro bailout for its banks, and perhaps even for the state itself.

#11 Analysts at Moody’s Analytics are warning that Italy has now reached financially unsustainable territory….

“Italy is already out of fiscal space, in our estimate.” said Moody’s. “Its debt levels relative to GDP already exceed a manageable level. The manageable limit for Italian 10-year bond yields is estimated at 4.2pc. As of Wednesday, Italian 10-year yields were 5.46pc.”

#12 It is being projected that the Portuguese economy will shrink by 5.7 percent during 2012.

#13 There is even trouble in European nations that have been considered relatively stable up to this point.  For example, the Dutch government collapsed on Monday after austerity talks broke down.

#14 The head of the IMF, Christine Lagarde, says that there are “dark clouds on the horizon” for the global economy.

#15 The top economist for the IMF, Olivier Blanchard, recently made this statement: “One has the feeling that at any moment, things could get very bad again.”

#16 A recent IMF report admitted that the current financial crisis could lead to the break up of the eurozone….

Under these circumstances, a break-up of the euro area could not be ruled out. The financial and real spillovers to other regions, especially emerging Europe, would likely be very large.

This could cause major political shocks that could aggravate economic stress to levels well above those after the Lehman collapse.

#17 George Soros is publicly declaring that the European Union could soon experience a collapse similar to what happened to the Soviet Union.

#18 A member of the European Parliament, Nigel Farage, stated during one recent interview that it is inevitable that some major banks in Europe will collapse….

There are going to be some serious banking collapses and the impact of that on some sovereign states, will be serious. I’m afraid we’ve gotten to a point where we really can’t stop this now. We’re beginning to reach a stage where however much false money you create, the problem becomes bigger than the people trying to solve it. We are very close to that point.

When I talk about the threats and the risk that this thing could wind up in some kind of rebellion, some sort of awful social cataclysm, they (other European politicians) are now very worried indeed. They will talk to you in private, but in public, nobody dares utter a word.

I think the deterioration, in the last two or three weeks, in the eurozone is very serious indeed. It’s the bond spreads in Italy and Spain. It’s the fact that youth unemployment is now over 50% in some of these Mediterranean countries.

It’s riot and disorder on the streets. And yet a month ago I was here and there was Herman Van Rumpuy telling us, ‘We’ve turned the corner. Everything is solved. There are no more problems with the eurozone.’ What a pack of jokers they look like.”

#19 The IMF is projecting that Japan will have a debt to GDP ratio of 256 percent by next year.

#20 Goldman Sachs is projecting that the S&P 500 will fall by about 11 percent by the end of 2012.

#21 Over the past six months, hundreds of prominent bankers have resigned all over the globe.  Is there a reason why so many are suddenly leaving their posts?

#22 The 9 largest U.S. banks have a total of 228.72 trillion dollars of exposure to derivatives.  That is approximately 3 times the size of the entire global economy.  It is a financial bubble so immense in size that it is nearly impossible to fully comprehend how large it is.

The financial crisis of 2008 was just a warm up act for what is coming.  The too big to fail banks are larger than ever, the governments of the western world are in far more debt than they were back then, and the entire global financial system is more unstable and more vulnerable than ever before.

But this time the epicenter of the financial crisis will be in Europe.

Outside of Europe, most people simply do not understand how truly nightmarish the European economic crisis really is.

Spain, Italy and Portugal are all heading for an economic depression and Greece is already in one.

The European Central Bank was able to kick the can down the road a little bit by expanding its balance sheet by about a trillion dollars over the last nine months, but the truth is that the underlying problems in Europe just continue to get worse and worse.

It truly is like watching a horrible car wreck happen in slow motion.

The good news is that there is still a little time to get yourself into a better position for the next financial crisis.  Don’t leave yourself financially exposed to the next crash.

Sadly, just like back in 2008, most people will never even see this next crisis coming.

So do you have any other red flags to add to the list above?  Please feel free to post a comment with your thoughts below….

The Too Big To Fail Banks Are Now Much Bigger And Much More Powerful Than Ever

The Democrats, the Republicans and especially Barack Obama promised that something would be done about the too big to fail banks so that they would never again be a threat to destroy our financial system.  Well, those promises have not been kept and the too big to fail banks are now much bigger and much more powerful than ever.  The assets of the five biggest U.S. banks were equivalent to about 43 percent of U.S. GDP before the financial crisis.  Today, the assets of the five biggest U.S. banks are equivalent to about 56 percent of U.S. GDP.  So if those banks were “too big to fail” before, then what are they now?  They continue to gobble up smaller banks at a brisk pace, and they continue to pile up debt and risky investments as if a day of reckoning will never come.  But of course a day of reckoning is coming, and when it arrives they will be expecting more bailouts just like they got the last time.

The size of these monolithic financial institutions is truly difficult to comprehend.  They completely dominate our financial system and everywhere you look they are constantly absorbing more wealth and more power.  The following comes from a recent Bloomberg article….

Five banks — JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc., Wells Fargo & Co. (WFC), and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to central bankers at the Federal Reserve.

Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy

Despite all of the talk from the politicians, they just keep getting bigger and bigger and bigger.

So why isn’t anything ever done?

Well, one reason is because these gigantic financial entities funnel huge quantities of cash into political campaigns.

For example, Barack Obama gives nice speeches about the dangers of the too big to fail banks, but he is also more than happy to take their campaign contributions.  Goldman Sachs, JPMorgan Chase and Citigroup were all ranked among his top 10 donors during the 2008 campaign.

So do you really expect that Barack Obama is going to bite the hands that feed him?

Of course he is not going to do that.

The truth is that the Obama administration and the Federal Reserve have done everything they can to make life very comfortable for the big Wall Street banks.

During the last financial crisis, the too big to fail banks were absolutely showered with bailouts.

Meanwhile, hundreds of small and mid-size banks were allowed to die.

When representatives from those small and mid-size banks contacted the federal government for help, often they were told to try to find a larger bank that would be willing to buy them.

Sadly, the last financial crisis simply accelerated the consolidation of the banking industry in the United States that has been going on for several decades.

Today, there are less than half as many banks in the United States as there were back in 1984.

So where did all of those banks go?

They were either purchased by bigger banks or they were allowed to go out of existence.

This banking consolidation trend has allowed the big Wall Street banks to absolutely explode in size.

Back in 1970, the 5 biggest U.S. banks held 17 percent of all U.S. banking industry assets.

Today, the 5 biggest U.S. banks hold 52 percent of all U.S. banking industry assets.

So where will this end?

That is a good question.

The funny thing is that Federal Reserve Chairman Ben Bernanke and other Fed officials keep giving speeches where they warn of the dangers of having banks that are “too big to fail”.  For example, during a recent presentation to students at George Washington University, Bernanke made the following statement about the U.S. banking system….

“But clearly, it is something fundamentally wrong with a system in which some companies are ‘too big to fail.'”

So does that mean that Bernanke is against the too big to fail banks?

Of course not.

The truth is that he showered those banks with trillions of dollars in bailout money during the last financial crisis.

The amount of money in secret loans that some of the big Wall Street banks received from the Federal Reserve was absolutely staggering.  The following figures come directly from a GAO report….

Citigroup – $2.513 trillion
Morgan Stanley – $2.041 trillion
Bank of America – $1.344 trillion
Goldman Sachs – $814 billion
JP Morgan Chase – $391 billion

Bernanke has shown that he is willing to move heaven and earth to protect those big banks.

So what did those banks do with all that money?

They certainly didn’t lend it to us.  Lending to individuals and small businesses by those big banks actually went down immediately after those bailouts.

Instead, one thing that those banks did was they started putting massive amounts of money into commodities.

One of those commodities was food.

Over the past few years, big Wall Street banks have made huge amounts of money speculating on the price of food.  This has caused food prices all over the globe to soar and it has caused tremendous hardship for hundreds of millions of families around the planet.  The following is from a recent article in The Independent….

Speculation by large investment banks is driving up food prices for the world’s poorest people, tipping millions into hunger and poverty. Investment in food commodities by banks and hedge funds has risen from $65bn to $126bn (£41bn to £79bn) in the past five years, helping to push prices to 30-year highs and causing sharp price fluctuations that have little to do with the actual supply of food, says the United Nations’ leading expert on food.

Hedge funds, pension funds and investment banks such as Goldman Sachs, Morgan Stanley and Barclays Capital now dominate the food commodities markets, dwarfing the amount traded by actual food producers and buyers.

Goldman Sachs alone has earned hundreds of millions of dollars in profits from food speculation.

Can you imagine what kind of mindset it takes to do this?

Can you imagine taking food out of the mouths of hungry families on the other side of the world so that you and your fellow employees can pad your bonus checks?

It really is disgusting.

But that is the way the game is played.

It is set up so that the big guy will win and the little guy will lose.

The other day I wrote about how this is particularly true when it comes to our system of taxation.

Well, since that article I have discovered some new numbers that were just released by Citizens for Tax Justice.  Some of the things that they have uncovered are absolutely amazing….

Between 2008 and 2011, Verizon made a total profit of $19.8 billion and yet paid an effective tax rate of -3.8%.

Between 2008 and 2011, General Electric made a total profit of $19.6 billion and yet paid an effective tax rate of -18.9%.

Between 2008 and 2011, Boeing made a total profit of $14.8 billion and yet paid an effective tax rate of -5.5%.

Between 2008 and 2011, Pacific Gas & Electric made a total profit of $6 billion and yet paid an effective tax rate of -8.4%.

So why should middle class families continue to be suffocated by outrageous tax rates when hugely profitable corporations such as General Electric are able to get away with paying nothing?

Our current tax system is an utter abomination and should be completely thrown out.

But as is the case with so many other things, our current system is going to persist because the “big guys” really enjoy the status quo and they are the ones that fund political campaigns.

It would be bad enough if the “big guys” were beating us on a level playing field.

But the truth is that the game has been dramatically tilted in their favor and they know that the politicians are going to take care of them whenever they need it.

So what is going to happen the next time the too big to fail banks get into trouble?

They will almost certainly get bailed out again.

Unfortunately, the big Wall Street banks continue to treat the financial system as if it was a gigantic casino.  The derivatives bubble just continues to grow larger and larger, and it could burst and absolutely devastate the entire global financial system at any time.

According to the New York Times, the too big to fail banks have complete domination over derivatives trading.  Every month a secret meeting that includes representatives from JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup is held in New York to coordinate their control over the derivatives marketplace.  The following is how the New York Times describes those meetings….

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

When the derivatives market fully implodes, there will not be enough money in the world to bail everyone out.  According to the Comptroller of the Currency, the too big to fail banks have exposure to derivatives that is absolutely outrageous.  Just check out the following numbers….

JPMorgan Chase – $70.1 Trillion

Citibank – $52.1 Trillion

Bank of America – $50.1 Trillion

Goldman Sachs – $44.2 Trillion

So what happens when that house of cards comes crashing down?

Well, those big banks will come crying to the federal government again.

They will want more bailouts.

They will claim that if we don’t give them the money that they need that the entire financial system will collapse.

And yes, if several of the too big to fail banks were to collapse all at once the consequences would be almost unimaginable.

But of course all of this could have been avoided if we would have made much wiser decisions upstream.

Our financial system is more vulnerable than it ever has been before, and the too big to fail banks just continue to grow.

The lessons from the financial crisis of 2008 have gone unheeded, and we are steamrolling toward an even greater crash.

What a mess.

25 Signs That Middle Class Families Have Been Targeted For Extinction

The middle class in America is being systematically wiped out, and most people don’t even realize what is happening.  Every single year, millions more Americans fall out of the middle class and become dependent on the government.  The United States once had the largest and most vibrant middle class in the history of the world, but now the middle class is rapidly shrinking and government dependence is at an all-time high.  So why is this happening?  Well, America is becoming a poorer nation at the same time that wealth is becoming extremely concentrated at the very top.  At this point, our economic system is designed to funnel as much money and power to the federal government and to the big corporations as possible.  Individuals and small businesses have a really hard time thriving in this environment.  To most big corporations these days, workers are viewed as financial liabilities.  Most corporations want to reduce their payrolls as much as possible.  You see, the truth is that most corporations want to be just like Apple.  If you can believe it, Apple makes $400,000 in profit per employee.  Big corporations don’t care that you need to pay the mortgage and provide for your family.  Their goal is to make as much money as possible.  And most of the control freaks that run our bloated federal government don’t care much about middle class families either.  To many politicians and federal bureaucrats, middle class families are “useless eaters” that are constantly damaging the environment with their “excessive” lifestyles.  In this day and age, neither the federal government nor the big corporations really have much use for middle class Americans, and that is really, really bad news for the the future of the middle class family in America.

There are three key factors that are constantly chipping away at the middle class….

-Globalization

-Inflation

-Taxes

Labor has become a global commodity, and American workers are often 10 to 20 times as expensive as workers on the other side of the world are.  Middle class jobs (such as manufacturing, etc.) have been leaving this country at an astounding pace.  Competition for the jobs that remain has become extremely fierce, and this has driven wages down.  The following is from a recent article in the New York Times….

But in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.

As paychecks have stagnated, the cost of living has continued to escalate.  Middle class families are finding that their paychecks simply do not go nearly as far as they did before.  This is creating a tremendous amount of financial stress in households all over America.

Meanwhile, our politicians are taxing the middle class like crazy.  Most people only focus on federal and state income taxes, but that is only a small part of the story.  As I detailed the other day, our politicians are taxing us in literally dozens of different ways and it is almost always the middle class that ends up getting hit the hardest.

If America wants to be great again, it is going to need a thriving middle class.  But right now the federal government and the big corporations are gobbling up all of the power and all of the money and the middle class is shrinking rapidly.

If current trends continue, eventually there will not be much of a middle class left.

The following are 25 signs that middle class families have been targeted for extinction….

#1 Over the past several decades, millions upon millions of middle class Americans have been systematically turned into government dependents.  Back in 1960, social welfare benefits made up approximately 10 percent of all salaries and wages.  In the year 2000, social welfare benefits made up approximately 21 percent of all salaries and wages.  Today, social welfare benefits make up approximately 35 percent of all salaries and wages.

#2 Unemployment is at epidemic levels and the vast majority of the new jobs that have been “created” in recent years have been low paying jobs.  Of those Americans that do have a job at this point, one out of every four works a job that pays $10 an hour or less.

#3 The “working poor” is a group that is rapidly growing in this country.  If you can believe it, the United States actually has a higher percentage of workers doing low wage work than any other major industrialized nation does.

#4 Over the past several decades, the percentage of low income jobs has steadily increased.  Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

#5 The way that our economic system is structured today, almost all of the economic rewards go to the very top of the food chain.  The following is how income gains in the United States were distributed during 2010….

-37 percent of all income gains went to the top 0.01 percent of all income earners

-56 percent of all income gains went to the rest of the top 1 percent

-7 percent of all income gains went to the bottom 99 percent

#6 Several decades ago, there was a much more even distribution of income in this country.  Back in the 1970s, the top 1 percent of all income earners brought in about 8 percent of all income.  Today, they bring in about 21 percent of all income.

#7 As the middle class shrinks, the number of “low income” and “poor” Americans is rapidly rising.  Today, approximately 48 percent of all Americans are currently either considered to be “low income” or are living in poverty.

#8 Manufacturing jobs once enabled huge numbers of Americans to enjoy a middle class lifestyle.  Unfortunately, those jobs are leaving this country at a breathtaking pace.  Back in 1940, 23.4% of all American workers had manufacturing jobs.  Today, only 10.4% of all American workers have manufacturing jobs.

#9 In the old days, any man that was willing to work hard and wanted a job could get one.  Today, there are millions of American men sitting on their couches at home wondering why nobody will hire them.  Back in 1950, more than 80 percent of all men in the United States had jobs.  Today, less than 65 percent of all men in the United States have jobs.

#10 The middle class is shrinking at the same time that America is getting poorer as a nation.  In the middle of the last century, the United States was #1 in the world in GDP per capita.  Today, the United States is #13 in GDP per capita.

#11 Every year now, we see millions of Americans fall out of the middle class.  In 2010, 2.6 million more Americans descended into poverty.  That was the largest increase that we have seen since the U.S. government began keeping statistics on this back in 1959.

#12 The shrinking middle class is having a disproportionate impact on children.  At this point, approximately 22 percent of all American children are living in poverty.

#13 In the old days, most Americans grew up in middle class neighborhoods.  Sadly, this is no longer true.  In 1970, 65 percent of all Americans lived in “middle class neighborhoods”.  By 2007, only 44 percent of all Americans lived in “middle class neighborhoods”.

#14 The concentration of wealth at the very top of the food chain is astounding.  Right now, over 50 percent of all stocks and bonds are owned by just 1 percent of the U.S. population.

#15 When you concentrate too much power in the hands of the federal government and the big corporations, it is inevitable that massive amounts of wealth will become concentrated in just a few hands.  In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

#16 There is nothing wrong with making money, but there is something wrong with a game where individuals and small businesses cannot compete fairly.  According to Forbes, the 400 wealthiest Americans now have more wealth than the bottom 150 million Americans combined.

#17 When the number of poor people rapidly expands in a society, that is a recipe for social unrest.  At this point, the poorest 50 percent of all Americans collectively own just 2.5% of all the wealth in the United States.

#18 The hidden tax of inflation is absolutely devastating middle class families all over America.  Since 1970, the U.S. dollar has lost more than 83 percent of its value.  Any dollars that middle class families try to save are constantly losing a little bit more value every single day.

#19 American workers that try to play by the rules find that they are constantly fighting a losing battle.  According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.

#20 In recent years, many middle class families have seen their paychecks get smaller.  Median household income in the United States has fallen 7.8 percent since December 2007 after adjusting for inflation.

#21 In recent years, many middle class families have seen many of their basic expenses absolutely soar.  For example, health insurance costs have risen by 23 percent since Barack Obama became president.

#22 Just turning on the lights and heating their homes has become a major burden for many middle class families.  Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

#23 Just putting gas in the car has become a major financial ordeal for millions of hard working Americans.  The average price of a gallon of gasoline in the United States has increased by more than 100 percent since Barack Obama became president.

#24 Sadly, government dependence is now at an all-time high, and that is the way that many among the elite like it.  When Barack Obama took office, there were 32 million Americans on food stamps.  Now, there are more than 46 million Americans on food stamps.  In particular, an astounding number of children are on food stamps right now.  At this point, approximately one-fourth of all American children are enrolled in the food stamp program.

#25 Many middle class families will not be in the middle class for too much longer.  According to a shocking new study from the National Bureau of Economic Research, 200,000 U.S. households will use the money from their tax refunds this year “to pay for bankruptcy filing and legal fees“.

Unless major changes are made on a national level, the middle class is going to continue to disappear.

If you are playing the game the way that the system tells you to play it and you expect to live a middle class lifestyle for many years to come there is a good chance that you will be deeply disappointed at some point.

Millions upon millions of Americans have done everything that the system told them to do and the system has still failed them.  They got good grades all the way through school, they went to college, they worked really hard, they stayed out of trouble and they gave everything they could to their employers.  In spite of all that, millions of hard working families have still lost their jobs and their homes in recent years.

Do not trust that the system will take care of you, and you should not trust that the government will take care of you either.

We don’t need the federal government to hand out more money to everyone.  Government handouts are already at record levels and the government is not even coming close to paying for all of this reckless spending.

More government spending is not going to solve any of our problems.

Instead, what we need is an environment where the size and power of the federal government is limited and the size and the power of the big corporations is limited.  We need an environment where individuals and small businesses can thrive and compete fairly.

Unfortunately, neither major political party is going to move us in that direction, so there is not much hope for solutions on the national level any time soon.

On an individual level, we can all learn how to prepare for the very difficult years that are coming.  It is imperative that we all work to become more independent of the system, because the system could fail at any time.

If you have blind faith that your job will always be there and that the federal government will rescue you if the economy crashes then you are likely to be bitterly disappointed at some point.

The truth is that our economy is slowly dying and the great American middle class is being systematically wiped out.

Many of the things that worked in the past are not going to work any longer.

You can choose to adapt or you can suffer the consequences.

Our world is rapidly changing, and we all need to prepare for what is coming.

27 Statistics About The European Economic Crisis That Are Almost Too Crazy To Believe

The economic crisis in Europe continues to get worse and eventually it is going to unravel into a complete economic nightmare.  All over Europe, national governments have piled up debts that are completely unsustainable.  But whenever they start significantly cutting government spending it results in an economic slowdown.  So politicians in Europe are really caught between a rock and a hard place.  They can’t keep racking up these unsustainable debts, but if they continue to cut government spending it is going to push their economies into deep recession and their populations will riot.  Greece is a perfect example of this.  Greece has been going down the austerity road for several years now and they are experiencing a full-blown economic depression, riots have become a way of life in that country and their national budget is still not anywhere close to balanced.  Americans should pay close attention to what is going on in Europe, because this is what it looks like when a debt party ends.  Most of the nations in the eurozone have just started implementing austerity, and yet unemployment in the eurozone is already the highest it has been since the euro was introduced.  It has risen for 10 months in a row and is now up to 10.8 percent.  Sadly, it is going to go even higher.  As economies across Europe slide into recession, that is going to put even more pressure on the European financial system.  Most Americans do not realize this, but the European banking system is absolutely enormous.  It is nearly four times the size that the U.S. banking system is.  When the European banking system crashes (and it will) it is going to reverberate around the globe.  The epicenter of the next great financial crisis is going to be in Europe, and it is getting closer with each passing day.

The following are 27 statistics about the European economic crisis that are almost too crazy to believe….

Greece

#1 The Greek economy shrank by 6 percent during 2011, and it has been shrinking for five years in a row.

#2 The average unemployment rate in Greece in 2010 was 12.5 percent.  During 2011, the average unemployment rate was 17.3 percent, and now the unemployment rate in Greece is up to 21.8 percent.

#3 The youth unemployment rate in Greece is now over 50 percent.

#4 The unemployment rate in the port town is Perama is about 60 percent.

#5 In Greece, 20 percent of all retail stores have closed down during the economic crisis.

#6 Greece now has a debt to GDP ratio of approximately 160 percent.

#7 Some of the austerity measures that have been implemented in Greece have been absolutely brutal.  For example, Greek civil servants have had their incomes slashed by about 40 percent since 2010.

#8 Despite all of the austerity measures, it is being projected that Greece will still have a budget deficit equivalent to 7 percent of GDP in 2012.

#9 Greece is still facing unfunded liabilities in future years that are equivalent to approximately 800 percent of GDP.

#10 In the midst of all the poverty in Greece, several serious diseases are making a major comeback.  The following comes from a recent article in the Guardian….

The incidence of HIV/Aids among intravenous drug users in central Athens soared by 1,250% in the first 10 months of 2011 compared with the same period the previous year, according to the head of Médecins sans Frontières Greece, while malaria is becoming endemic in the south for the first time since the rule of the colonels, which ended in the 1970s.

Spain

#11 The unemployment rate in Spain is now up to 23.6 percent.

#12 The youth unemployment rate in Spain is now over 50 percent.

#13 The total value of all toxic loans in Spain is equivalent to approximately 13 percent of Spanish GDP.

#14 The GDP of Spain is about 1.4 trillion dollars.  The three largest Spanish banks have approximately 2.7 trillion dollars in assets and they are all on the verge of failing.

#15 Home prices in Spain fell by 11.2 percent during 2011.

#16 The number of property repossessions in Spain rose by 32 percent during 2011.

#17 The ratio of government debt to GDP in Spain will rise by more than 11 percent during 2012.

#18 On top of everything else, Spain is dealing with the worst drought it has seen in 70 years.

Portugal

#19 The unemployment rate in Portugal is up to 15 percent.

#20 The youth unemployment rate in Portugal is now over 35 percent.

#21 Banks in Portugal borrowed a record 56.3 billion euros from the European Central Bank in March.

#22 It is being projected that the Portuguese economy will shrink by 5.7 percent during 2012.

#23 When you add up all forms of debt in Portugal (government, business and consumer) the total is equivalent to approximately 360 percent of GDP.

Italy

#24 Youth unemployment in Italy is up to 31.9 percent – the highest level ever.

#25 Italy’s national debt is approximately 2.7 times larger than the national debts of Greece, Ireland and Portugal put together.

#26 If you add the maturing debt that the Italian government must roll over in 2012 to the projected budget deficit, it comes to approximately 23.1 percent of Italy’s GDP.

#27 Italy now has a debt to GDP ratio of approximately 120 percent.

So why hasn’t Europe crashed already?

Well, the powers that be are pulling out all their tricks.

For example, the European Central Bank decided to start loaning gigantic mountains of money to European banks.  That accomplished two things….

1) It kept those European banks from collapsing.

2) European banks used that money to buy up sovereign bonds and that kept interest rates down.

Unfortunately, all of this game playing has also put the European Central Bank in a very vulnerable position.

The balance sheet of the European Central Bank has expanded by more than 1 trillion dollars over the past nine months.  The balance sheet of the European Central Bank is now larger than the entire GDP of Germany and the ECB is now leveraged 36 to 1.

So just how far can you stretch the rubberband before it snaps?

Perhaps we are about to find out.

The European financial system is leveraged like crazy right now.  Even banking systems in countries that you think of as “stable” are leveraged to extremes.

For example, major German banks are leveraged 32 to 1, and those banks are holding a massive amount of European sovereign debt.

When Lehman Brothers finally collapsed, it was only leveraged 30 to 1.

You can’t solve a debt crisis with more debt.  But the European Central Bank has been able to use more debt to kick the can down the road a few more months.

At some point the sovereign debt bubble is going to burst.

All financial bubbles eventually burst.

What goes up must come down.

Right now, the major industrialized nations of the world are approximately 55 trillion dollars in debt.

It has been a fun ride, but this fraudulent pyramid of risk, debt and leverage is going to come crashing down at some point.

It is only a matter of time.

Already, there are a whole bunch of signs that some very serious economic trouble is on the horizon.

Hopefully we still have a few more months until it hits.

But in this day and age nothing is guaranteed.

What does seem abundantly clear is that the current global financial system is inevitably going to fail.

When it does, what “solutions” will our leaders try to impose upon us?

That is something to think about.

10 Reasons Why The Reign Of The Dollar As The World Reserve Currency Is About To Come To An End

The U.S. dollar has probably been the closest thing to a true global currency that the world has ever seen.  For decades, the use of the U.S. dollar has been absolutely dominant in international trade.  This has had tremendous benefits for the U.S. financial system and for U.S. consumers, and it has given the U.S. government tremendous power and influence around the globe.  Today, more than 60 percent of all foreign currency reserves in the world are in U.S. dollars.  But there are big changes on the horizon.  The mainstream media in the United States has been strangely silent about this, but some of the biggest economies on earth have been making agreements with each other to move away from using the U.S. dollar in international trade.  There are also some oil producing nations which have begun selling oil in currencies other than the U.S. dollar, which is a major threat to the petrodollar system which has been in place for nearly four decades.  And big international institutions such as the UN and the IMF have even been issuing official reports about the need to move away form the U.S. dollar and toward a new global reserve currency.  So the reign of the U.S. dollar as the world reserve currency is definitely being threatened, and the coming shift in international trade is going to have massive implications for the U.S. economy.

A lot of this is being fueled by China.  China has the second largest economy on the face of the earth, and the size of the Chinese economy is projected to pass the size of the U.S. economy by 2016.  In fact, one economist is even projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

So China is sitting there and wondering why the U.S. dollar should continue to be so preeminent if the Chinese economy is about to become the number one economy on the planet.

Over the past few years, China and other emerging powers such as Russia have been been quietly making agreements to move away from the U.S. dollar in international trade.  The supremacy of the U.S. dollar is not nearly as solid as most Americans believe that it is.

As the U.S. economy continues to fade, it is going to be really hard to argue that the U.S. dollar should continue to function as the primary reserve currency of the world.  Things are rapidly changing, and most Americans have no idea where these trends are taking us.

The following are 10 reasons why the reign of the dollar as the world reserve currency is about to come to an end….

#1 China And Japan Are Dumping the U.S. Dollar In Bilateral Trade

A few months ago, the second largest economy on earth (China) and the third largest economy on earth (Japan) struck a deal which will promote the use of their own currencies (rather than the U.S. dollar) when trading with each other.  This was an incredibly important agreement that was virtually totally ignored by the U.S. media.  The following is from a BBC report about that agreement….

China and Japan have unveiled plans to promote direct exchange of their currencies in a bid to cut costs for companies and boost bilateral trade.

The deal will allow firms to convert the Chinese and Japanese currencies directly into each other.

Currently businesses in both countries need to buy US dollars before converting them into the desired currency, adding extra costs.

#2 The BRICS (Brazil, Russia, India, China, South Africa) Plan To Start Using Their Own Currencies When Trading With Each Other

The BRICS continue to flex their muscles.  A new agreement will promote the use of their own national currencies when trading with each other rather than the U.S. dollar.  The following is from a news source in India….

The five major emerging economies of BRICS — Brazil, Russia, India, China and South Africa — are set to inject greater economic momentum into their grouping by signing two pacts for promoting intra-BRICS trade at the fourth summit of their leaders here Thursday.

The two agreements that will enable credit facility in local currency for businesses of BRICS countries will be signed in the presence of the leaders of the five countries, Sudhir Vyas, secretary (economic relations) in the external affairs ministry, told reporters here.

The pacts are expected to scale up intra-BRICS trade which has been growing at the rate of 28 percent over the last few years, but at $230 billion, remains much below the potential of the five economic powerhouses.

#3 The Russia/China Currency Agreement

Russia and China have been using their own national currencies when trading with each other for more than a year now.  Leaders from both Russia and China have been strongly advocating for a new global reserve currency for several years, and both nations seem determined to break the power that the U.S. dollar has over international trade.

#4 The Growing Use Of Chinese Currency In Africa

Who do you think is Africa’s biggest trading partner?

It isn’t the United States.

In 2009, China became Africa’s biggest trading partner, and China is now aggressively seeking to expand the use of Chinese currency on that continent.

A report from Africa’s largest bank, Standard Bank, recently stated the following….

“We expect at least $100 billion (about R768 billion) in Sino-African trade – more than the total bilateral trade between China and Africa in 2010 – to be settled in the renminbi by 2015.”

China seems absolutely determined to change the way that international trade is done.  At this point, approximately 70,000 Chinese companies are using Chinese currency in cross-border transactions.

#5 The China/United Arab Emirates Deal

China and the United Arab Emirates have agreed to ditch the U.S. dollar and use their own currencies in oil transactions with each other.

The UAE is a fairly small player, but this is definitely a threat to the petrodollar system.  What will happen to the petrodollar if other oil producing countries in the Middle East follow suit?

#6 Iran

Iran has been one of the most aggressive nations when it comes to moving away from the U.S. dollar in international trade.  For example, it has been reported that India will begin to use gold to buy oil from Iran.

Tensions between the U.S. and Iran are not likely to go away any time soon, and Iran is likely to continue to do what it can to inflict pain on the United States in the financial world.

#7 The China/Saudi Arabia Relationship

Who imports the most oil from Saudi Arabia?

It is not the United States.

Rather, it is China.

As I wrote about the other day, China imported 1.39 million barrels of oil per day from Saudi Arabia in February, which was a 39 percent increase from one year earlier.

Saudi Arabia and China have teamed up to construct a massive new oil refinery in Saudi Arabia, and leaders from both nations have been working to aggressively expand trade between the two nations.

So how long is Saudi Arabia going to stick with the petrodollar if China is their most important customer?

That is a very important question.

#8 The United Nations Has Been Pushing For A New World Reserve Currency

The United Nations has been issuing reports that openly call for an alternative to the U.S. dollar as the reserve currency of the world.

In particular, one UN report envisions “a new global reserve system” in which the U.S. no longer has dominance….

“A new global reserve system could be created, one that no longer relies on the United States dollar as the single major reserve currency.”

#9 The IMF Has Been Pushing For A New World Reserve Currency

The International Monetary Fund has also published a series of reports calling for the U.S. dollar to be replaced as the reserve currency of the world.

In particular, one IMF paper entitled “Reserve Accumulation and International Monetary Stability” that was published a while back actually proposed that a future global currency be named the “Bancor” and that a future global central bank could be put in charge of issuing it….

“A global currency, bancor, issued by a global central bank (see Supplement 1, section V) would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy. As trade and finance continue to grow rapidly and global integration increases, the importance of this broader perspective is expected to continue growing.”

#10 Most Of The Rest Of The World Hates The United States

Global sentiment toward the United States has dramatically shifted, and this should not be underestimated.

Decades ago, we were one of the most loved nations on earth.

Now we are one of the most hated.

If you doubt this, just do some international traveling.

Even in Europe (where we are supposed to have friends), Americans are treated like dirt.  Many American travelers have resorted to wearing Canadian pins so that they will not be treated like garbage while traveling over there.

If the rest of the world still loved us, they would probably be glad to continue using the U.S. dollar.  But because we are now so unpopular, that gives other nations even more incentive to dump the dollar in international trade.

So what will happen if the reign of the U.S. dollar as the world reserve currency comes to an end?

Well, some of the potential effects were described in a recent article by Michael Payne….

“The demise of the dollar will also bring radical changes to the American lifestyle. When this economic tsunami hits America, it will make the 2008 recession and its aftermath look like no more than a slight bump in the road. It will bring very undesirable changes to the American lifestyle through massive inflation, high interest rates on mortgages and cars, and substantial increases in the cost of food, clothing and gasoline; it will have a detrimental effect on every aspect of our lives.”

Most Americans don’t realize how low the price of gasoline in the United States is compared to much of the rest of the world.

There are areas in Europe where they pay about twice what we do for gasoline.  Yes, taxes have a lot to do with that, but the fact that the U.S. dollar is used for almost all oil transactions also plays a significant role.

Today, America consumes nearly a quarter of the world’s oil.  Our entire economy is based upon our ability to cheaply transport goods and services over vast distances.

So what happens if the price of gasoline doubles or triples from where it is at now?

In addition, if the reign of the U.S. dollar as global reserve currency ends, the U.S. government is going to have a much harder time financing its debt.

Right now, there is a huge demand for U.S. dollars and for U.S. government debt since countries around the world have to keep huge reserves of U.S. currency lying around for the sake of international trade.

But what if that all changed?

What if the appetite for U.S. dollars and U.S. debt dried up dramatically?

That is something to think about.

At the moment, the global financial system is centered on the United States.

But that will not always be the case.

The things talked about in this article will not happen overnight, but it is important to note that these changes are picking up steam.

Under the right conditions, a shift in momentum can become a landslide or an avalanche.

Clearly, the conditions are right for a significant move away from the U.S. dollar in international trade.

So when will this major shift occur?

Only time will tell.

80 Percent Of Americans Say That They Are Not Better Off Than They Were Four Years Ago

Are you better off today than you were four years ago?  If not, then you are just like most other Americans.  According to a CBS News/New York Times poll that was released a few days ago, 80 percent of Americans say that their financial situation is not “better today” than it was four years ago.  But if you turn on the television and listen to what the “pundits” are saying, you would be tempted to think that we were in the midst of a robust economic recovery.  You would be tempted to think that the U.S. economy is in great shape and that we are heading for a really bright future.  But the fact that the stock market is soaring does not mean much to most Americans.  In fact, most Americans couldn’t care less that the Dow is well above 13,000 and that the NASDAQ is above 3,000.  What most Americans care about is having a job and being able to provide for their families.  If you haven’t paid the mortgage in three months or if you don’t have enough money to take your daughter to go see the doctor it really is not going to matter to you how well the boys and girls over on Wall Street are doing.  Right now most American families are doing worse than they were doing four years ago, and no amount of media hype is going to change that fact.

Yes, the stock market is doing really well for the moment, but the truth is that more than 50 percent of all stocks and bonds are owned by just 1 percent of the U.S. population.

Good for them.  It looks like the trillions of dollars that the Federal Reserve poured into the big Wall Street banks is really paying off nicely for the financial community.

Meanwhile, much of the rest of the country is deeply suffering.

It was recently reported that 1.5 million American families live on less than two dollars a day (before counting government benefits).

That is horrifying.

According to the U.S. Census Bureau, the percentage of Americans living in “extreme poverty” is now sitting at an all-time high.

All across this country poverty is exploding.  Food banks are experiencing more demand than ever before and those offering free healthcare are absolutely swamped.

And every single measure of government dependence has gone way up since Barack Obama entered the White House.

For example, since Barack Obama became president the number of Americans on food stamps has gone up by 45 percent.

Just think about that.

At this point the federal government is helping to feed an all-time record 46.5 million Americans every month.

Oh yeah, times are good.

According to the U.S. Census Bureau, 49 percent of all Americans live in a home that receives direct monetary benefits from the federal government.

That is much higher than it has been historically.

For example, back in 1983 less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.

The big problem is that there are simply not enough jobs for everyone.

Listening to the media, you would be tempted to think that the U.S. economy is now pumping out huge numbers of good jobs.

But that is simply not the case.

Right now there are 5.6 million fewer jobs than there were when the last recession began back in late 2007.

So where are the millions of jobs you promised us Obama?

The federal government is trying to convince us that the unemployment rate is going down, but that is not really true.

The key is to look at the percentage of working age Americans that actually have jobs.  During the last recession that percentage fell dramatically as you can see from the chart below.  After every other recession since World War II the employment to population ratio has always bounced back.  But it has not happened this time.  Instead, the employment to population ratio has remained between 58 and 59 percent since the end of 2009….

We have not had a jobs recovery.  Hopefully we will have one before the next recession hits, but we are running out of time for that.

Tonight there are millions upon millions of hard working Americans that are staring at their television screens and wondering why they can’t find good jobs.  The pretty people on television are telling them that the employment situation is getting much better but they can’t find work no matter how hard they try.  It is a cruel joke on them.

When Barack Obama entered the White House, the number of “long-term unemployed workers” in the United States was approximately 2.6 million.  Today, that number is sitting at 5.6 million.

Thanks for the improvement Obama.

Meanwhile, the average duration of unemployment continues to hover near a record high.  Just look at the chart posted below.  Does this look like a “jobs recovery” to you?….

But of course Obama and those that support him want to make things sound like they are getting better.  They want people to run out and vote for him again in November.

If things are going well for you right now, be thankful, and also remember the millions upon millions of Americans out there that are deeply hurting in this economy.

If you gathered together all of the workers that are “officially” unemployed in the United States at this point into one nation, they would constitute the 68th largest country in the entire world.  It would be a nation larger than Greece or Portugal.

That is a lot of people.

Obama promised us that the Wall Street bailouts would make everything better.  He promised us that if we poured gigantic mountains of money into Wall Street that it would end up helping “Main Street”.

Well, the last time I looked Goldman Sachs was doing just fine.

So where is the help for Main Street?

In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

How much wealthier do they have to get before they start creating more jobs for the rest of us?

Obama (like most of our politicians) is a complete fraud when it comes to the economy.  He is all saddle and no horse.  He talks a good game but he doesn’t have any game.

As Wall Street has recovered, the rest of the country has actually been in decline.  Median household income in the United States is down 7.8 percent since December 2007 after adjusting for inflation.  Millions of American families are reaching the breaking point and millions of other families have already reached it.

Incomes have been declining but the cost of living has not.

For example, health insurance costs have risen by 23 percent since Barack Obama became president.

Has your paycheck increased by 23 percent?

The average price of a gallon of gasoline in the United States has increased by more than 90 percent since Barack Obama became president.

Has your paycheck increased by 90 percent?

Millions of American families have lost their homes while Obama has been president and millions more will soon lose their homes.  At this point there are more than 6 million mortgages in the United States that are overdue.

It is a horrible, horrible feeling to know that you can’t pay your mortgage and that you will soon lose your home and your family will be put out on the street.

None of us would ever want to end up in that situation.

And the housing market sure has not shown any signs of recovery under Barack Obama.

In January, U.S. home prices were the lowest that they have been in more than a decade.

Weren’t home prices and home sales supposed to be turning around by now?

Under Barack Obama, new home sales in the United States set a brand new all-time record low in 2009, they set a brand new all-time record low again in 2010, and they set a brand new all-time record low once again during 2011.

That trend is not going in the right direction.

Of course Barack Obama is not solely responsible for the performance of the U.S. economy.  Congress should share part of the blame as well, and the Federal Reserve is more responsible for our economic performance than anyone else is.

But one area where Barack Obama has had a huge impact is in the area of government spending.

While Barack Obama has been president, the U.S. national debt has risen from 10.6 trillion to 15.5 trillion.

Thanks Obama.

During the first three years of the Obama administration, the U.S. government has accumulated more debt than it did between 1776 and 1995.

So is Obama planning a change of course?

Of course not.

At this point, our national debt is increasing by about 150 million dollars every single hour.

So should we be thanking Obama for stealing 150 million dollars from our children and our grandchildren every hour?

Should we be thanking Obama for ruining our future?

I think not.

But you know what?

According to the CBS News/New York Times poll mentioned above, about half of America would actually vote for Obama if the next presidential election was held today.

That alone is a clear sign that this country is in a massive amount of trouble.

The truth is that the leaders we elect are an accurate reflection of who we are as a country.

And when you look at the collection of misfits in Washington D.C. right now, that does not say a lot about the character of this nation.

So where does America go from here?

That is up to you America.

Broken Promises: Pensions All Over America Are Being Savagely Cut Or Are Vanishing Completely

How would you feel if you worked for a state or local government for 20 or 30 years only to have your pension slashed dramatically or taken away entirely?  Well, this exact scenario is playing out from coast to coast and in the years ahead millions of elderly Americans are going to be affected by broken promises and vanishing pensions.  In the old days, things were much different.  You would get hired by a big company or a government institution and you knew that the retirement benefits that they were promising you would be there when you retired in a few decades.  Unfortunately, we have now arrived at a time when government institutions and big companies have promised far more than they are able to deliver, and “pension reform” has become one of the hot button issues all over the nation.  Many Americans that have been basing their financial futures on their pensions are waking up one day and finding that their pensions are either gone or have been cut back dramatically.  According to Northwestern University Professor John Rauh, the latest estimate of the total amount of unfunded pension and healthcare obligations for state and local governments across the United States is 4.4 trillion dollars.  America is continually becoming a poorer nation and all of that money is simply not going to magically materialize somehow.  So where is that 4.4 trillion dollars going to come from?  Well, either pension benefits are going to have to be cut a lot more all over America or taxes will need to be raised dramatically.  Either way, we are all going to feel the pain of these broken promises.

There simply is not enough money out there to keep all of the pension commitments that have been made.  Something has got to give.  In the end, millions of elderly Americans will likely be plunged into poverty as pensions disappear.

Some local governments around the nation are already declaring bankruptcy and are either eliminating pensions or are cutting them very deeply.  Just check out what just happened in Central Falls, Rhode Island….

For years, city officials promised robust union contracts and pensions without raising revenue to pay for them. Last August, the math caught up with them. Central Falls was broke, its pension fund short $46 million. It declared bankruptcy.

“My daughters grew up here, went to school here. It’s all gone,” said Mike Geoffroy, a retired firefighter.

He said he could not make the payments on his house after his pension was cut by $1,100 a month.

When will the math catch up with the city where you are living?

For years and years most of our state and local politicians have been ignoring this problem.  But eventually a day comes when you simply cannot ignore it any longer.

Check out what Pensacola Mayor Ashton Hayward said about the situation in his city recently….

“When our annual pension liability is more than our yearly property tax revenues, we have to do something”

Keep in mind that taxpayers don’t get any new services for money spent on pensions.  It is money that goes straight into the pockets of retired workers.  State and local governments are desperately trying to pay retired workers what they are owed and fund ongoing government functions at the same time, but many have reached the breaking point.

All over the country, state and local governments are going broke.  The following is from a recent article by Duff McDonald….

Alabama’s Jefferson County has actually gone bankrupt. Stockton, California is all but ready to do the same. And all you have to do is look to Detroit—or any of the nearby auto towns named after a Buick model of one sort or another—and you see fiscal crisis playing out right now. Look in your own backyard—or at the potholes on your neighborhood roads—and you will likely find the same.

Things are so bad in Stockton, California that they are actually skipping debt payments….

The city of 290,000 that rode the wave of the housing boom in the late 1990s and early 2000s now finds itself littered with foreclosed homes, saddled with pension, health care and other obligations it can’t afford, and unable to pay its bills.

The City Council voted last month to suspend $2 million in bond payments and begin negotiations with bond holders, creditors and unions.

And did you notice what is being blamed for the financial problems in Stockton?

Pension and healthcare benefits.

Sadly, we are seeing pension nightmares erupt all over the nation right now.

For example, check out what is happening to the Public School Employees’ Retirement System and State Employees’ Retirement System in Pennsylvania….

PSERS had an accrued unfunded liability of nearly $26.5 billion, the amount of money the fund is short to cover existing retirement benefits. That hole is expected to grow to $43 billion by 2019. SERS is $12.5 billion in the red, and that shortfall is expected to climb to nearly $18 billion by 2018. Unless the stock market makes giant sustained gains, taxpayers will have to refill those funds.

That doesn’t sound good at all.

In California, the Orange County Employees Retirement System is estimated to have a 10 billion dollar unfunded pension liability.

How in the world can a single county be facing a 10 billion dollar hole?

This is madness.

The state of Illinois is facing an unfunded pension liability of more than 77 billion dollars.  Considering the fact that the state of Illinois is flat broke and on the verge of default, it is inevitable that a lot of those pension obligations will never be paid.

In fact, there are going to be a whole lot of broken promises all over the country.

Pension consultant Girard Miller told California’s Little Hoover Commission that state and local government bodies in the state of California have $325 billion in combined unfunded pension liabilities.

That comes to about $22,000 for every single working adult in the state of California.

So where is all of that money going to come from?

But at least most state and local government employees are still covered by pension plans, even if they are failing.

In the private sector, pension plans are vanishing at lightning speed.

According to the Boston College Center for Retirement Research, the percentage of workers in America covered by a traditional pension plan fell from 62 percent in 1983 to 17 percent in 2007.

That isn’t just a trend.

That is a tidal wave.

And many of the private pension plans that still exist are massively underfunded.  For example, Verizon’s pension plan is underfunded by 3.4 billion dollars.

So what should Americans do in light of all this?

Well, the number one thing to realize is that the pension plan you have been counting on could disappear at any time.

We live in an economic environment that is extremely unstable, and about the only thing you can count on in this environment is rapid and dramatic change.

Do not plan your financial future around a pension plan.  If you do, you are likely to be bitterly disappointed.

Americans that plan to retire in the coming years should do their best to try to fund their own retirements.

Unfortunately, most Americans are not putting away much of anything for retirement.  As I have written about previously, one study found that American workers are $6.6 trillion short of what they need to retire comfortably.

Ouch.

Over the next 20 years approximately 10,000 Baby Boomers will be retiring every single day.

A lot of them are going to be blindsided by empty pension funds and broken promises.

We are facing a retirement crisis of unprecedented magnitude, and there is not much hope in sight.

And if there is a major stock market crash, things are going to be much, much worse.

Most pension funds and retirement plans are heavily invested in the stock market.  If we were to see a major financial crisis like we saw back in 2008 it would be absolutely devastating.  Millions of Americans could see their retirement plans wiped out in short order.

Once again, please do not place your faith in the system.

If you do, you are likely to end up holding a bag of broken promises.

A gigantic tsunami of unfunded pension obligations is coming.  A lot of state and local governments are going to go broke.  A lot of promises are going to be broken.

If you hope to retire any time soon, you better plan on being able to take care of yourself.

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