Income

Brace Yourselves For The Most Dramatic Shift In The Standard Of Living In All Of U.S. History

They are assuring us that we don’t have to be concerned about “inflation” because they have everything under control.  Do you believe them?  The value of the U.S. dollar has been steadily declining for a long time, and most Americans have grown accustomed to having the cost of living rise at a faster pace than their paychecks do.  But over the past 12 months an enormous paradigm shift has begun.  Instead of devaluing our currency a little bit at a time, now our leaders are going “full Weimar”.  Our money supply is growing at an exponential rate, and this is becoming a major national crisis.  As I pointed out yesterday, it took from the founding of our county all the way to 2020 for M1 to reach 4 trillion dollars.  But then from the start of the pandemic to today, M1 has gone from 4 trillion dollars to 18 trillion dollars.  To call that “economic malpractice” would be way too kind.  The truth is that it is complete and utter lunacy, and we are all going to literally pay the price for such madness.

Sadly, inflation is already starting to show up in a major way all throughout our economy.

For example, most Americans have noticed that the price of gasoline has really started to shoot up over the last several weeks…

Gas prices have been increasing at the pump for the past few weeks, reaching a national average of $2.77 a gallon as of Monday, which is 39 cents higher than the same time in 2020, according to AAA.

A lot of people are alarmed by this, but the Federal Reserve insists that this is completely normal.

Meanwhile, the price of agricultural commodities has risen by 50 percent over the past year…

The price of agricultural commodities traded on the global stage has shot up by 50 percent since the middle of 2020, according to economists at Rabobank.

In a new report, the bank pins the lift in the price of wheat, corn, soy, sugar, and a range of other commodities on the northern La Niña, a weakening US currency, market speculators, and rising demand from importing nations.

As those prices are passed along to the consumer, you will be paying more for groceries at your local supermarket, but authorities assure us that prices will stabilize once the economy returns to “normal”.

The good news is that at least the price of food is not rising as fast as the price of lumber is…

Lumber prices have increased more than 180 percent since last spring, and this price spike has caused the price of an average new single-family home to increase by $24,386 since April 17, 2020, according to the NAHB standard estimates of lumber used to build the average home.

Now that is some serious inflation!

There are so many people that have had to put their plans to build a home on hold in recent months because the price of lumber has gotten so ridiculously high.

But the experts at the Fed insist that those that are warning of hyperinflation just have wild imaginations.

Over the course of the past year, our leaders have pumped trillions and trillions and trillions of dollars into the system, and all of that money has to go somewhere.

In such a highly inflationary environment, this sort of a thing can happen…

A digital collage by American artist Beeple which exists only as a JPG file sold Thursday for a record $69.3 million at Christie’s, fetching more money than physical works by many better-known artists.

‘Everydays: The First 5,000 Days’ became the most expensive ever ‘non-fungible token’ (NFT) – a collectible digital asset that uses blockchain technology to turn virtual work into a unique item – after being listed at the start of the two-week auction for only $100.

The U.S. dollar is being transformed into “toilet paper money”, and we are rapidly approaching the point of no return.

At least if our paychecks were rising as fast as the cost of living was, American families would be able to keep up with the escalating prices.

But of course that is not happening, and more Americans are falling out of the middle class with each passing day.

In fact, vast numbers of formerly middle class Americans no longer have jobs at all.  Last week another 712,000 Americans filed new claims for unemployment benefits, and the number of claims continues to hover around “four times the typical pre-crisis level”…

Weekly jobless claims have remained stubbornly high for months, hovering around four times the typical pre-crisis level, although it’s well below the peak of almost 7 million that was reached when stay-at-home orders were first issued a year ago in March.

There are roughly 10 million fewer jobs than there were last year in February before the crisis began.

This is not what an “economic recovery” looks like.

The truth is that the U.S. economy is broken, and the only solution our leaders have is to print, borrow and spend even more money.

Now Biden and his minions are about to pump another 1.9 trillion dollars into the system.

Do you think that will make the inflation crisis better or do you think that it will make it worse?

You don’t need to answer, because the answer is self-evident.

As prices soar into the stratosphere, life is going to become increasingly difficult for most Americans.

If your income does not rise as fast as prices are going up, your standard of living will go down.

Of course you will be far from alone.  The vast majority of Americans are about to experience a dramatic shift in the standard of living, and most of the population doesn’t even realize what is happening.

All they know is that more government checks are on the way, and most of them are absolutely thrilled about that.

But all of this printing, borrowing and spending has put us on a path to national financial suicide.

As we continue to recklessly destroy the value of our currency, other nations will begin to realize that a move to a different reserve currency is needed.

And once the U.S. dollar is no longer the reserve currency of the world, there will never be any going back to the “good old days”.

We are so close to the economic endgame, and the word “collapse” is not nearly strong enough to describe what is eventually going to happen to us.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  By purchasing the books you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on Facebook, Twitter and Parler, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

Free Money: Potential Presidential Candidate Mark Zuckerberg Suggests That All Americans Should Get A ‘Universal Basic Income’

Should everyone in America receive a “basic income” directly from the federal government?  Considering the fact that we are already 20 trillion dollars in debt, such a concept may sound quite foolish to many of you, but this is an idea that is really starting to gain traction in leftist circles.  In fact, Facebook CEO Mark Zuckerberg suggested that this was something that we should “explore” during the commencement speech that he just delivered at Harvard.  For quite a while it has been obvious that Zuckerberg is very strongly considering a run for the presidency in 2020, but up until just recently we haven’t had many clues about where he would stand on particular issues.  If he is serious about proposing a universal basic income for all Americans, that would make Zuckerberg very appealing to the far left voters that flocked to the Bernie Sanders campaign.

Yesterday, I discussed the fact that the number of Americans that are receiving money from the government each month has reached an all-time high, but Zuckerberg would take things much farther.  According to Zuckerberg, society would be far better off if everyone got an income from the government…

“Every generation expands its definition of equality. Now it’s time for our generation to define a new social contract,” Zuckerberg said during his speech. “We should have a society that measures progress not by economic metrics like GDP but by how many of us have a role we find meaningful. We should explore ideas like universal basic income to make sure everyone has a cushion to try new ideas.”

Zuckerberg said that, because he knew he had a safety net if projects like Facebook had failed, he was confident enough to continue on without fear of failing. Others, he said, such as children who need to support households instead of poking away on computers learning how to code, don’t have the foundation Zuckerberg had. Universal basic income would provide that sort of cushion, Zuckerberg argued.

Such a proposal is going to look really good to a lot of people at first glance.

But who is going to pay for this?

Of course the truth is that the money for the people that are not working would come from taxing the people that are working.

I don’t think that Zuckerberg has really thought this through.  Are young people going to have an incentive to work if they can just stay home and watch movies and play video games all day while collecting their “universal basic incomes” from the government?

And why would anyone want to bust their rear ends working for a living when their incomes are just going to be taxed extremely heavily to pay for all the people that aren’t working?

We are already 20 trillion dollars in debt, but politicians on the left just want to keep giving even more free stuff to people.  During his presidential campaign, Bernie Sanders suggested that everyone in America “deserves a minimum standard of living” and that every citizen is “entitled” to universal health care, free college education and basic housing…

So long as you have Republicans in control of the House and the Senate, and so long as you have a Congress dominated by big money, I can guarantee you that the discussion about universal basic income is going to go nowhere in a hurry. But, if we can develop a strong grassroots movement which says that every man, woman and child in this country is entitled to a minimum standard of living — is entitled to health care, is entitled to education, is entitled to housing — then we can succeed. We are living in the richest country in the history of the world, yet we have the highest rate of childhood poverty of almost any major country and millions of people are struggling to put food on the table. It is my absolute conviction that everyone in this country deserves a minimum standard of living and we’ve got to go forward in the fight to make that happen.

In previous generations, very few people would have ever taken someone like Bernie Sanders seriously.

But in our day and time socialism is really starting to catch on.  In fact, one survey found “that four out of every ten adults say they prefer socialism to capitalism”…

The American Culture and Faith Institute recently conducted a survey of adults 18 and older. It shows not only how deeply divided Americans are on some issues but also how their view of the nation stands in many cases in stark contrast to our nation’s founding principles. Most Americans (58 percent) see themselves as politically moderate, while a quarter identify as conservative, and 17 percent as liberal. Those who were both socially and fiscally conservative, the group tracked by the ACFI in greatest detail, were 6 percent of the population.

But those differences don’t reveal the greatest divide and danger to America’s future. “The most alarming result, according to [George] Barna, was that four out of every ten adults say they prefer socialism to capitalism,” the ACFI noted in its commentary on the poll. “That is a large minority,” Barna said, “and it includes a majority of the liberals — who will be pushing for a completely different economic model to dominate our nation. That is the stuff of civil wars. It ought to set off alarm bells among more traditionally-oriented leaders across the nation.’” That 40 percent of Americans now prefer socialism to capitalism could spell major change to the policies advanced by legislators and political leaders and to the interpretations of judges ruling on the application of new and pre-existing laws.

And as I noted yesterday, Millennials are particularly attracted to socialism.  This could have dramatic implications for our society as older generations of Americans slowly die off.

Unfortunately, there is just one huge problem with socialism.

It doesn’t work.

If you want to see the end result of socialism, just move to Venezuela or North Korea for a while.

In socialist nations, there is very little incentive to work hard.  Instead, people tend to become very lazy and expect the government to provide everything that they need.

When people work hard and are productive, the overall wealth of a society goes up.  And when people sit around and wait for someone else to provide for them, the overall wealth of a society goes down.

Would Mark Zuckerberg have worked so hard to develop Facebook if he knew that the government would just come in and take most of the money away so that others could have a “universal basic income”?

Yes, we want to do all that we can to reduce poverty and to build a strong, vibrant middle class.

But socialism is not the answer and it never will be.

Detroit Has Gone From Being The Greatest Manufacturing City In The World To A Global Joke

The Ruins Of Detroit - Photo by CsmcmIn 1960, the city of Detroit was the greatest manufacturing city that the world had ever seen.  Nearly two million people lived there, and it had the highest per capita income in the United States.  That may be hard to believe, because today it actually has one of the lowest per capita incomes of all of our major cities.  Over the decades more than a million people have left the city, and thousands of abandoned homes have been torn down.  But there are still tens of thousands of abandoned dwellings that remain standing, and some have sold for as little as one dollar in recent years.  Once Detroit was the envy of the entire planet, but now it has become a global joke and in other countries they love to do news stories about “the ruins of Detroit” to show how rapidly America is rotting and decaying.  Sadly, Detroit is far from alone, because there are other formerly great manufacturing cities that have declined just as fast as Detroit has.

Earlier today, I came across a video that contains footage that someone recently captured as they drove through the city of Detroit at night.  To say that the footage is disturbing would be a tremendous understatement…

It has become known as a mecca of violent crime and poverty, and now a viral video is giving an unpleasant view of Detroit after dark.

The clip, called Driving through Detroit at night, was filmed by a woman who was a passenger in a car going around the Motor City and was posted to Twitter at the weekend.

It shows terrifying scenes of gangs gathered on the sidewalk, prostitutes lifting up their skirts and dancing, and even a man being run over by a car on purpose.

I would have liked to share the video with you all, but it is just way too graphic.  There really are prostitutes lifting up their skirts in the video, and a man really is hit by a vehicle.  If you want to watch it for yourself, it is very easy to find on YouTube.  But please be warned that children should not be watching this.

If you live in a peaceful rural or suburban setting, the kind of behavior displayed in this video may seem very foreign to you.  In America today, it is way too easy to allow our televisions to define reality for us.  But the warped view of reality that we get through our televisions is nothing like the real world.  The real world is cold, cruel and very unforgiving.

If you are in the wrong place at the wrong time, the real world will eat you alive.

In the city of Detroit today, close to half the population is functionally illiterate, and one survey found that 60 percent of all children in the city are living in poverty.  It has been reported that 40 percent of the street lights do not work, and as you can see from the video it is a very frightening place to be after dark.

And don’t count on the police to help you.  The size of the police force in Detroit has been reduced by about 40 percent over the years, and it has been estimated that it takes the Detroit police an average of 58 minutes to respond to a call.

If it was just one major city where all of these things were happening, that would be bad enough.

Sadly, the truth is that what is happening in Detroit is happening all over the nation.  In fact, St. Louis and Memphis now have higher gun crime rates than Detroit does…

The listing places St Louis above the notoriously dangerous Detroit which has topped the list in previous years thanks to the city’s high gun crime rate.

Detroit is now listed as third after Memphis, Tennessee which had 84.2 violent crimes per 10,000 residents.

Birmingham, Alabama comes in fourth place with 82.8 violent crimes per 10,000 residents while Rockford, Illinois was fifth with a rate of 76.3.

Earlier this month, we saw how a major city such as Milwaukee can erupt in flames in just a matter of hours.  And in Chicago, some of the major gangs have agreed to use automatic weapons and sniper fire in their battle against the police.

A spirit of chaos and violence has descended on America, and things are going to get much worse during the months and years to come.

Meanwhile, crime continues to rise in our smaller cities and in our suburbs as well.  For a moment, I want you to consider a short excerpt from a recent Bloomberg article entitled “Walmart’s Out-of-Control Crime Problem Is Driving Police Crazy“…

The call log on the store stretches 126 pages, documenting more than 5,000 trips over the past five years. Last year police were called to the store and three other Tulsa Walmarts just under 2,000 times. By comparison, they were called to the city’s four Target stores about 300 times. Most of the calls to the northeast Supercenter were for shoplifting, but there’s no shortage of more serious crimes, including five armed robberies so far this year, a murder suspect who killed himself with a gunshot to the head in the parking lot last year, and, in 2014, a group of men who got into a parking lot shootout that killed one and seriously injured two others.

Police reports from dozens of stores suggest the number of petty crimes committed on Walmart properties nationwide this year will be in the hundreds of thousands.

Did you catch that?

This Bloomberg report says that there will be “hundreds of thousands” of crimes just committed at Wal-Mart stores alone this year.

If people are behaving like this while times are still relatively stable and relatively good, what would things look like during a real crisis?

Many people openly wonder what happened to Detroit, but it really isn’t much of a mystery at all.

Over the decades, our politicians have stood idly by as tens of thousands of businesses and millions of good paying jobs have left the country.  Our economic infrastructure has been absolutely gutted, and as a result formerly great manufacturing cities have become rotting, decaying hellholes.

And it certainly doesn’t help that voters in many of these cities have willingly chosen to put radical leftists into power time after time.

Unfortunately, it appears that the nation as a whole is about to hand the keys to the White House to a radical leftist that has a violent temper that is absolutely legendary.  If she gets into power, that might just be the final nail in our coffin.

What has already happened to Detroit is slowly happening to the entire country, but we never seem to learn from our past mistakes.

So now we will suffer the consequences for our very foolish decisions, and it will not be pretty.

Do You Remember When Black Friday Actually Still Mattered In America?

Bored - Public DomainOnce upon a time, “Black Friday” was a major event in the United States.  Yes, the mainstream media is still endlessly hyping it up, and major retailers are still rolling out their “incredible deals”, but it appears that most Americans are tiring of this particular gimmick.  Or perhaps it is just that U.S. consumers don’t have as much discretionary income as they once did.  As you will see below, retail traffic this Black Friday was “much, much slower” than anticipated.  And expectations were not great anyway – the number of shoppers was down last year, and it was being projected that there would be another decline in 2015.  Yes, there were still a few fights on Black Friday, but mostly the “holiday” was marked by giant piles of unsold merchandise sitting around collecting dust.  The inventory to sales ratio in the U.S. has surged to levels not seen since the last recession, and so the truth is that most retailers were hoping for much more contrived chaos on Black Friday than we actually witnessed.

Personally, I wish that this whole phenomenon would just simply disappear, because it definitely doesn’t bring out the best in the American people.

Who wants to see fellow citizens trampling one another and fighting with one another for cheaply made electronics that aren’t even manufactured in this country anyway?

Black Friday was always a disgusting spectacle, and now it appear to be fading.

Let’s start with Thanksgiving sales.  More stores than ever are opening on Thanksgiving Day itself, and according to SunTrust that was a total “bust” this year…

We believe Thanksgiving shopping was a bust. We note that traffic seemed below last year both on- and off-mall. Members of our team who went to the malls first had no problem finding parking or navigating stores. Crowds were tame and, with some exceptions there seemed to be more browsing than buying and less items purchased. We heard many people discussing that deals were not that compelling compared to years past. Interestingly, many retailers closed at midnight- which contributed to a sharp decline in traffic shortly thereafter. Off-mall, members of our team visited Walmart and Target for the openings and had no problem finding parking. Customers at both were focused on electronics. Lines, even early, were about half of what they were last year and quickly dissipated. The only off-mall big box retailer we visited with consistently long lines and customers making multiple item purchases was Kohl’s — where buys were focused on deals not available online.

Once Black Friday rolled around, things didn’t get any better.  For example, one analyst said that traffic at the Mall of America didn’t “look much busier than an average Saturday morning”…

At the Mall of America in Minneapolis, the largest in the country, Edward Yruma, managing director at KeyBanc Capital Markets, said he’s seeing less traffic than years past as well. He was there from 6 p.m. to 1 a.m. last night and arrived again at 8 a.m. this morning.

“It doesn’t look much busier than an average Saturday morning,” said Yruma.

And in North Carolina, retailers saw “much less traffic than was anticipated”…

Jeff Simpson, a director at Deloitte Consulting LLP’s retail practice, surveyed shopping centers in North Carolina and saw smaller crowds than expected for Black Friday.

“Across the board, much less traffic than was anticipated,” he said. “Much, much slower.”

Of course this wasn’t much of a surprise.  A global recession has already begun, and investors were dumping retail stocks ahead of Thanksgiving in anticipation of a horrible shopping season.  The following comes from the New York Post…

Wall Street, fearful that consumers are running out of cash heading into the crucial Christmas retail season, are selling off retail stocks and everything else sensitive to consumer spending.

So why are consumers running out of cash?

Well, it is because the middle class is dying, poverty in America is exploding and the cost of living continues to soar.

Just look at what is happening to healthcare costs.  It turns out that employees that work for medium and large companies in the U.S. are now paying more than double for health insurance than they were a decade ago…

Employees of midsize and large companies in 2015 paid an average of $4,700 for their health insurance, up from $2,001 in 2005, according to recent analysis from Aon Hewitt.

For much more on how the cost of living is absolutely crippling families all over this nation, please see my previous article entitled “Inflation Is Crushing The Middle Class“.

Meanwhile, things continue to get worse around the rest of the globe as well.  The number of unemployed job seekers just hit a brand new record high in France, Puerto Rico is on the verge of a major debt default, and on Friday there was an absolutely massive stock market decline in China…

In China, equities saw a significant sell off as a result of investigations by the Chinese securities regulatory body into several brokerages for breaking regulations. The Shanghai Composite closed 199 points, or 5.48 percent, lower; the Shenzhen Composite closed 6.1 percent lower, the Chinext was down 6.1 percent, and the CSI300 Index saw a decline of 5.38 percent.

Chinese brokerages took major hits, with Citic Securities, Founder Securities, and China Merchants closing 10.1, 10, and 9.98 percent lower after news broke that the China Securities Regulatory Commission (CSRC) has launched investigations into these firms to weed out short selling and speculation.

I hope that you enjoyed this Thanksgiving as much as you possibly could, because all of the underlying economic numbers are absolutely screaming that hard times are ahead.

This year, Americans are going to spend an average of $130 on “self-gifting” and more than $800 on the holiday season overall.  People are spending money that they don’t have on things that they don’t need, and meanwhile very few of us are actively preparing for what promises to be a very challenging 2016.

So yes, let us enjoy the time that we have with our families, but let us also not be completely oblivious to the huge changes that are literally happening all around us.

Anyone That Believes That Collapsing Oil Prices Are Good For The Economy Is Crazy

Oil - Public DomainAre much lower oil prices good news for the U.S. economy?  Only if you like collapsing capital expenditures, rising unemployment and a potential financial implosion on Wall Street.  Yes, lower gasoline prices are good news for the middle class.  I certainly would rather pay two dollars for a gallon of gas than four dollars.  But in order to have money to fill up your vehicle you have got to have an income first.  And since the last recession, the energy sector has been the number one creator of good jobs in the U.S. economy by far.  Barack Obama loves to stand up and take credit for the fact that the employment picture in this country has been improving slightly, but without the energy industry boom, unemployment would be through the roof.  And now that the “energy boom” is rapidly becoming an “energy bust”, what will happen to the struggling U.S. economy as we head into 2015?

At the start of this article I mentioned that much lower oil prices would result in “collapsing capital expenditures”.

If you do not know what a “capital expenditure” is, the following is a definition that comes from Investopedia…

“Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operations. These expenditures can include everything from repairing a roof to building a brand new factory.”

Needless to say, this kind of spending is very good for an economy.  It builds infrastructure, it creates jobs and it is an investment in the future.

In recent years, energy companies have been pouring massive amounts of money into capital expenditures.  In fact, the energy sector currently accounts for about a third of all capital expenditures in the United States according to Deutsche Bank…

US private investment spending is usually ~15% of US GDP or $2.8trn now. This investment consists of $1.6trn spent annually on equipment and software, $700bn on non-residential construction and a bit over $500bn on residential. Equipment and software is 35% technology and communications, 25-30% is industrial equipment for energy, utilities and agriculture, 15% is transportation equipment, with remaining 20-25% related to other industries or intangibles. Non-residential construction is 20% oil and gas producing structures and 30% is energy related in total. We estimate global investment spending is 20% of S&P EPS or 12% from US. The Energy sector is responsible for a third of S&P 500 capex.

These companies make these investments because they believe that there are big profits to be made.

Unfortunately, when the price of oil crashes those investments become unprofitable and capital expenditures start getting slashed almost immediately.

For example, the budget for 2015 at ConocoPhillips has already been reduced by 20 percent…

ConocoPhillips is one of the bigger shale players. And its decision to slash its budget for next year by 20% is raising eyebrows. The company said the new target reflects lower spending on major projects as well as “unconventional plays.” Despite the expectation that others will follow, it doesn’t mean U.S. shale oil production is dead. Just don’t expect a surge in spending like in recent years.

And Reuters is reporting that the number of new well permits for the industry as a whole plunged by an astounding 40 percent during the month of November…

Plunging oil prices sparked a drop of almost 40 percent in new well permits issued across the United States in November, in a sudden pause in the growth of the U.S. shale oil and gas boom that started around 2007.

Data provided exclusively to Reuters on Tuesday by industry data firm Drilling Info Inc showed 4,520 new well permits were approved last month, down from 7,227 in October.

If the price of oil stays this low or continues dropping, this is just the beginning.

Meanwhile, the flow of good jobs that this industry has been producing is also likely to start drying up.

According to the Perryman Group, the energy sector currently supports 9.3 million permanent jobs in this country…

According to a new study, investments in oil and gas exploration and production generate substantial economic gains, as well as other benefits such as increased energy independence. The Perryman Group estimates that the industry as a whole generates an economic stimulus of almost $1.2 trillion in gross product each year, as well as more than 9.3 million permanent jobs across the nation.

The ripple effects are everywhere. If you think about the role of oil in your life, it is not only the primary source of many of our fuels, but is also critical to our lubricants, chemicals, synthetic fibers, pharmaceuticals, plastics, and many other items we come into contact with every day. The industry supports almost 1.3 million jobs in manufacturing alone and is responsible for almost $1.2 trillion in annual gross domestic product. If you think about the law, accounting, and engineering firms that serve the industry, the pipe, drilling equipment, and other manufactured goods that it requires, and the large payrolls and their effects on consumer spending, you will begin to get a picture of the enormity of the industry.

And these are good paying jobs.  They aren’t eight dollar part-time jobs down at your local big box retailer.  These are jobs that comfortably support middle class families.  These are precisely the kinds of jobs that we cannot afford to lose.

In recent years, there has been a noticeable economic difference between areas of the country where energy is being produced and where energy is not being produced.

Since December 2007, a total of 1.36 million jobs have been gained in shale oil states.

Meanwhile, a total of 424,000 jobs have been lost in non-shale oil states.

So what happens now that the shale oil boom is turning into a bust?

That is a very good question.

Even more ominous is what an oil price collapse could mean for our financial system.

The last time the price of oil declined by more than 40 dollars in less than six months, there was a financial meltdown on Wall Street and we experienced the deepest recession that we have seen since the days of the Great Depression.

And now many fear that this collapse in the price of oil could trigger another financial panic.

According to Citigroup, the energy sector now accounts for 17 percent of the high yield bond market.

J.P. Morgan says that it is actually 18 percent.

In any event, the reality of the matter is that the health of these “junk bonds” is absolutely critical to our financial system.  And according to Deutsche Bank, if these bonds start defaulting it could “trigger a broader high-yield market default cycle”…

Based on recent stress tests of subprime borrowers in the energy sector in the US produced by Deutsche Bank, should the price of US crude fall by a further 20pc to $60 per barrel, it could result in up to a 30pc default rate among B and CCC rated high-yield US borrowers in the industry. West Texas Intermediate crude is currently trading at multi-year lows of around $75 per barrel, down from $107 per barrel in June.

“A shock of that magnitude could be sufficient to trigger a broader high-yield market default cycle, if materialized,” warn Deutsche strategists Oleg Melentyev and Daniel Sorid in their report.

If the price of oil stays at this level or continues to go down, it is inevitable that we will start to see some of these junk bonds go bad.

In fact, one Motley Fool article recently stated that one industry analyst believes that up to 40 percent of all energy junk bonds could eventually go into default…

The junk bonds, or noninvestment-rated bonds, of energy companies are also beginning to see heavy selling as investors start to worry that drillers could one day default on these bonds. Those defaults could get so bad, according to one analyst, that up to 40% of all energy junk bonds go into default over the next few years if oil prices don’t recover.

That would be a total nightmare for Wall Street.

And of course bond defaults would only be part of the equation.  As I wrote about the other day, a crash in junk bonds is almost always followed by a significant stock market correction.

In addition, plunging oil prices could end up absolutely destroying the banks that are holding enormous amounts of energy derivatives.  This is something that I recently covered in this article and this article.

As you read this, there are five “too big to fail” banks that each have more than 40 trillion dollars in exposure to derivatives.  Of course only a small fraction of that total exposure is made up of energy derivatives, but a small fraction of 40 trillion dollars is still a massive amount of money.

These derivatives trades are largely unregulated, and even Forbes admits that they are likely to be at the heart of the coming financial collapse…

No one understands the derivative risk positions of the Too Big To Fail Banks, JP Morgan Chase, Citigroup, Bank of America, Goldman Sachs or Morgan Stanley. There is presently no way to measure the risks involved in the leverage, quantity of collateral, or stability of counter-parties for these major institutions. To me personally they are big black holes capable of potential wrack and ruin. Without access to confidential internal data about these risky derivative positions the regulators cannot react in a timely and measured fashion to block the threat to financial stability, according to a National Bureau of Economic Research study.

So do we have any hope?

Yes, if oil prices start going back up, much of what you just read about can be averted.

Unfortunately, that does not seem likely any time soon.  Even though U.S. energy companies are cutting back on capital expenditures, most of them are still actually projecting an increase in production for 2015.  Here is one example from Bloomberg…

Continental, the biggest holder of drilling rights in the Bakken, last month said 2015 output will grow between 23 percent and 29 percent even after shelving plans to allocate more money to exploration.

Higher levels of production will just drive the price of oil even lower.

At this point, Morgan Stanley is saying that the price of oil could plummet as low as $43 a barrel next year.

If that happens, it would be absolutely catastrophic to the most important industry in the United States.

In turn, that would be absolutely catastrophic for the economy as a whole.

So don’t let anyone tell you that much lower oil prices are “good” for the economy.

That is just a bunch of nonsense.

Hillary Clinton Has Got To Be Joking – This Is What ‘Dead Broke’ Actually Looks Like…

Hillary Clinton Smiling - Photo by ZammermanDuring a recent interview with Diane Sawyer, Hillary Clinton claimed that Bill and her were “dead broke” when they left the White House.  And then on Sunday, Hillary told the Guardian that they are not “truly well off” despite having earned about a hundred million dollars since leaving the White House and owning a couple of luxury homes.  This is yet another shocking example of how disconnected our political elite have become to the rest of the American people.  Perhaps Hillary Clinton is not “truly well off” when compared to some of the ultra-wealthy individuals that she rubs shoulders with at Democratic fundraisers, but according to numbers provided by the Social Security Administration, the Clintons would easily be in the top 0.01% of all income earners in America since leaving the White House.  So was Hillary Clinton joking, or is she really this out of touch with ordinary Americans?

Perhaps she thought that she could just tell a little white lie about how wealthy Bill and her truly are.  After all, 66 percent of Americans believe that when it says “natural” on a food label that it actually means something.  It seems like people will fall for almost anything these days.

Unfortunately for Clinton, people are not letting this one go.  In fact, CNN anchor Alison Kosik recently burst out laughing on air in response to Clinton’s claim that she is not “truly well off”…

If Hillary Clinton really does want to see what “dead broke” actually looks like, she should travel to some of the deeply impoverished communities in the heartland of America.

For instance, just consider what the BBC found when they interviewed two young kids being raised by a single mother in Iowa.

10-year-old Kaylie Haywood and her brother spend much of their time desperately hungry and thinking about food…

And of course Kaylie and Tyler are far from alone.  In fact, there are 49 million people that are dealing with food insecurity in America right now, and that number is growing.  For more sobering examples of crushing poverty in rural communities all over the United States, please see my previous article entitled “Vast Stretches Of Impoverished Appalachia Look Like They Have Been Through A War“.

But Hillary Clinton and politicians like her usually only interact with those kinds of people when it is time to win another election.

And that goes for most politicians from both political parties.

For the moment, life is good for the elite.  In places such as New York City, Washington D.C. and San Francisco, unemployment is relatively low and home prices are soaring.

But for the bottom half of the country, things just continue to get even worse.  Just consider the following numbers…

-According to one recent survey, 26 percent of all Americans have absolutely no emergency savings whatsoever.

–Approximately two-thirds of all Americans do not have enough money saved up to cover six months of expenses if an emergency arose.

-Close to half of those living in Detroit cannot pay their water bills.  It is being reported that the United Nations may step in to help.

-One report discovered that 60 percent of all children in the city of Detroit are living in poverty.

-One out of every three grocery store workers in the state of California is currently receiving public assistance.

-According to the U.S. Census Bureau, about one out of every six Americans is now living in poverty.  The number of Americans living in poverty is now at a level that has not been seen since the 1960s.

-Even if you do have a job that does not mean that you are able to escape poverty in the United States today.  In fact, about one out of every four part-time workers in America is now living below the poverty line.

-According to numbers provided by Wal-Mart, more than half of their hourly workers make less than $25,000 a year.

-At this point, one out of every four American workers overall has a job that pays $10 an hour or less.

-It is a number that does not seem right, but it is actually true that half the country makes $27,520 a year or less from their jobs.

-Right now, one out of every six men in America in their prime working years (25 to 54) do not have a job.

-Half of all college graduates are still financially dependent on their parents even when they are two years out of school.

-One study discovered that nearly half of all public students in the United States come from low income homes.

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

-It is hard to believe, but right now 1.2 million students that attend public schools in America are homeless.  That number has risen by an astounding 72 percent since the start of the last recession.

-According to a Feeding America hunger study, more than 37 million Americans are now being served by food pantries and soup kitchens.

-Numbers from the U.S. Census Bureau reveal that 49.2 percent of all Americans are now receiving benefits from at least one government program.

But if you still feel sorry for Hillary Clinton after reading all of this, there is a way that you can help.

For just pennies a day, you can contribute to “The Hillary Clinton Fund For Broke Politicians”.  In the video posted below, you can see how ordinary Americans respond when they are asked to donate to the fund…

So what do you think about all of this?

Are we being too harsh on Hillary Clinton or does she deserve the flak that she has been getting?

Please feel free to share what you think by posting a comment below…

20 Ordinary Americans Talk About The Economic Despair That Is Growing Like A Cancer All Around Them

MicrophoneThere are hundreds of formerly prosperous communities all over America that are being steadily transformed into rotting, decaying hellholes.  The good paying middle class jobs that once supported those communities are long gone, and they have been replaced with low paying service jobs if they have been replaced at all.  When you visit those communities, it is almost as if all of the hope has been sucked right out of the air.  It can be absolutely heartbreaking to look into the hollow eyes of someone that has totally given in to despair, but unfortunately the number of Americans that are giving up on the economy continues to grow.  Today, the labor participation rate is the lowest that it has been in 35 years, and more than 100 million Americans are enrolled in at least one welfare program.  It is easy to say that they should just “get a job”, but as I have written about repeatedly, our economy simply is not producing enough jobs for everyone anymore.  The percentage of working age Americans with a job has remained at the same level that it was at during the worst days of the last recession, and meanwhile the quality of our jobs has continued to steadily decline.  Median household income has fallen for five years in a row, but the cost of living continues to rise rapidly.  The middle class is being systematically shredded, and poverty is growing at an alarming rate.  The U.S. economy has been in decline for a long time, and the really bad news is that it appears that this decline is about to accelerate.

We are a nation that consumes far more wealth than we produce.  We are a nation that buys far more from the rest of the world than they buy from us.  We are a nation that has a “buy now, pay later” mentality.

As a nation, we have accumulated the largest mountain of debt in the history of the world.  40 years ago, the total amount of debt in our system (government, business and consumer) was about 2 trillion dollars.  Today, it is more than 56 trillion dollars.

The consequences of decades of incredibly foolish decisions are starting to catch up with us, and it is those at the bottom of the food chain that will suffer the most.

I could spend the rest of this article quoting 30 or 40 more statistics that show how bad things are, but today I wanted to do something different.  Today, I wanted to share some quotes from some of my readers about what they are seeing where they live.  The following are 20 quotes from ordinary Americans about the economic despair that is rapidly growing like a cancer all around us…

#1 David:

“Yes, the American economy is in the pits. I know five languages, have three degrees (including two graduate degrees), and have lived overseas for 16 years and I still can’t find a job in the USA. Everything is broken in America. Maybe I should give up my American citizenship.”

#2 Zach:

“I’ve been struggling since I finished college in the summer of 2010. My dream is to work in the courts, law enforcement but it’s almost impossible to get a call back for an interview. I interviewed with Garland, Texas PD for a position in the city jail and I made the final 30 of 300 applicants that applied for the 3 positions.”

#3 Akitawoman:

“I have two Master’s degrees, am 61 years old and earning $10 per hour. What does that say about the current economy?”

#4 Cincinnati Dave:

“I work for one of the banks mentioned in your article. I was in mortgages. I saw all of this coming, so several months ago I asked to get into another area of the bank and fortunately, for me, they granted by request. A lot of people are losing their jobs and there is really no prospects out there for anything else whereby the same kind of money could be made. I will make nothing near what I had been earning but am at the least grateful to be employed. This is all so sad to watch happen.”

#5 Iceman:

“I used to work for WF processing mortgages. The week that the rates went up, I was out of work, not one extra week of work.”

#6 Tim:

“The U.S. economy is producing mostly part-time, low-wage jobs. These jobs barely pay enough to put food on the table.”

#7 K:

“What I am aware of, is every person I know, who had to switch jobs in the last five years took a pay cut. The smallest cut among my friends was 10%, the average was closer to 18%. No we are heading down a bad road, and we are past the point of no return.”

#8 Makati:

“After spending most of my life in the middle class, I now consider myself lower class due to age and income. Nothing wrong with that. I am still able to provide myself with what I need and some of my ‘wants’. I am like most retirees today.”

#9 Mondobeyondo:

“As many of you already know (but maybe some new members of this blog don’t) – I live in Phoenix, Arizona. Where you live here, determines (to a great extent) your economic well being. Those in the “East Valley” – Chandler, Gilbert, Scottsdale, etc – have the jobs, the opportunities and the transportation. Those in the wealthier areas of the “West Valley” also have these benefits.

The remainder – those who live in the older west side of town, and the south side of town – are mainly forgotten and left to struggle. Many are hard working citizens who just want a chance. Unfortunately, chance costs money, in the view of many people, and as far as the municipal government is concerned, there’s no money for us. It’s cheaper to let them live in a tent in the park, where the cops at least have an excuse to evict them.”

#10 2Gary2:

“We are no longer the land of opportunity where anyone can make it.”

#11 GOM:

“There is no middle class here in the Florida Panhandle. Only folks who have money are the retired and they hate everyone. They own all the antique stores [big business] and most thriving businesses and restuarants. Military is big here, they spend every dime they have on stupid stuff and taxis. Tourist are way down since the spill. Now for the good news. A major food chain here is going out of business [Food World] Another is losing 20k a month to theft. Every other property it seems is up for sale. There are tons of empty real estate [store fronts] There are thrift stores opening everywhere. People are selling goods on the streets, only to be run off by the cops. Crime is getting out of hand. Most don’t go out after dark. Police are beating up the homeless at the beaches. Panhandling now is mainly younger people. Where did all the older ones go?”

#12 Rodster:

“In my area which is SW Florida, it’s been getting tighter for my customers so on a case by case basis I lower my price when they need auto repairs. I still find road signs advertising homes for sale (cash only). Many are advertised as foreclosed.

 

I’ve started seeing people living out of their cars. It’s not a daily occurrence but I have been noticing it.”

#13 Devery:

I have been looking after the homeless now for 4 years. Last winter I had an encounter where I was told that I could not hand out blankets and sleeping bags in the dead of winter and that I would be arrested for trespassing if “me and my friends” didn’t move along.

So, I adopted the policy that I would pull up next to them, have them get in the car and we would go for a drive. I would find a place to pull over and give them what they needed then I would drop them off in a different place.

#14 Robert:

“Around where I live in the SE, things seem ok but I live in a university town. Go to some of the surrounding small towns and it is desolate. Car dealerships closed. Entire streets with abandoned stores. The only activity is a one clerk post office. I know people in our church who are a paycheck away from going over the edge or going over due to a spouse dying and losing one of their social security checks. I see grim. More homeless. A local church is feeding many more including some folks living out of their cars—lots of children. Mostly minimum wage jobs in the area. If it were not for the university and its 34,000 students, this place would look as bad as the smaller communities.”

#15 TN Gal:

“Here in southeast TN we have jobs, mostly part-time or low wage. Our problem these days are so many people dependent on government programs no one wants to work. They do better on programs than working partying and paying for insurance. Housing still very depressed. Seeing more homeless around and local churches straining to provide food. Crime is up and drugs, which were down, are coming back with a vengeance. Middle class here are senior citizens on SS, younger retirees not the older ones. Older ones seem to be struggling. Sad.”

#16 Deb:

Michael, I live in North Central Illinois. About 60 miles southeast of Chicago. The town we live in has about 8,000 in it. Very “middle class” farm community. Unemployment is high and so is underemployment. We know many people living off 2 part time jobs. That seems to be the norm around here. Or people taking jobs that they would never of considered in the past, just to get by. My son used to work for CAT in Aurora, but was “let go” in order to bring in new workers at a lower pay scale. It took him over a year(which really isn’t bad) to find a part time job with 3M.

#17 Susan:

“Drive around Los Angeles at 3:00 AM any day and you will see the devastating and pervasive homelessness from 8 to 80 year olds.  And the massage parlors and hookers on the streets of used to be ‘high-end’ neighborhoods are exploding. No other way to make a living.”

#18 XSANDIEGOCA:

“A couple of years ago it was reported 9K people a night slept in their cars here in San Diego County. Special car parks are set up in some church parking lots. The cops look the other way. Wonder what the figure is now?”

#19 Jimbo:

“My own viewpoint is that a collapse of the current economic system is inevitable and imminent.”

#20 El Pollo de Oro:

“During a conversation on prepping, someone recently said to me, ‘If things get half as bad as these preppers think they will, I don’t want to be alive.’ So, how bad will things will get? Real unemployment is already at Great Depression levels (John Williams’ Shadow Statistics contradicts the BLS’ bogus figures), but when this depression deepens, I think we’ll be looking at 50% or 60% unemployment easily. Much worse than the 1930s. It will be absolute hell for millions of Americans, and when the money stops flowing down to the man on the street, the blood will flow in the streets (Gerald Celente). Lots of it.”

25 Facts About The Fall Of Detroit That Will Leave You Shaking Your Head

Detroit - Photo by Bob JagendorfIt is so sad to watch one of America’s greatest cities die a horrible death.  Once upon a time, the city of Detroit was a teeming metropolis of 1.8 million people and it had the highest per capita income in the United States.  Now it is a rotting, decaying hellhole of about 700,000 people that the rest of the world makes jokes about.  On Thursday, we learned that the decision had been made for the city of Detroit to formally file for Chapter 9 bankruptcy.  It was going to be the largest municipal bankruptcy in the history of the United States by far, but on Friday it was stopped at least temporarily by an Ingham County judge.  She ruled that Detroit’s bankruptcy filing violates the Michigan Constitution because it would result in reduced pension payments for retired workers.  She also stated that Detroit’s bankruptcy filing was “also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy“, and she ordered that a copy of her judgment be sent to Barack Obama.  How “honoring the president” has anything to do with the bankruptcy of Detroit is a bit of a mystery, but what that judge has done is ensured that there will be months of legal wrangling ahead over Detroit’s money woes.  It will be very interesting to see how all of this plays out.  But one thing is for sure – the city of Detroit is flat broke.  One of the greatest cities in the history of the world is just a shell of its former self.  The following are 25 facts about the fall of Detroit that will leave you shaking your head…

1) At this point, the city of Detroit owes money to more than 100,000 creditors.

2) Detroit is facing $20 billion in debt and unfunded liabilities.  That breaks down to more than $25,000 per resident.

3) Back in 1960, the city of Detroit actually had the highest per-capita income in the entire nation.

4) In 1950, there were about 296,000 manufacturing jobs in Detroit.  Today, there are less than 27,000.

5) Between December 2000 and December 2010, 48 percent of the manufacturing jobs in the state of Michigan were lost.

6) There are lots of houses available for sale in Detroit right now for $500 or less.

7) At this point, there are approximately 78,000 abandoned homes in the city.

8) About one-third of Detroit’s 140 square miles is either vacant or derelict.

9) An astounding 47 percent of the residents of the city of Detroit are functionally illiterate.

10) Less than half of the residents of Detroit over the age of 16 are working at this point.

11) If you can believe it, 60 percent of all children in the city of Detroit are living in poverty.

12) Detroit was once the fourth-largest city in the United States, but over the past 60 years the population of Detroit has fallen by 63 percent.

13) The city of Detroit is now very heavily dependent on the tax revenue it pulls in from the casinos in the city.  Right now, Detroit is bringing in about 11 million dollars a month in tax revenue from the casinos.

14) There are 70 “Superfund” hazardous waste sites in Detroit.

15) 40 percent of the street lights do not work.

16) Only about a third of the ambulances are running.

17) Some ambulances in the city of Detroit have been used for so long that they have more than 250,000 miles on them.

18) Two-thirds of the parks in the city of Detroit have been permanently closed down since 2008.

19) The size of the police force in Detroit has been cut by about 40 percent over the past decade.

20) When you call the police in Detroit, it takes them an average of 58 minutes to respond.

21) Due to budget cutbacks, most police stations in Detroit are now closed to the public for 16 hours a day.

22) The violent crime rate in Detroit is five times higher than the national average.

23) The murder rate in Detroit is 11 times higher than it is in New York City.

24) Today, police solve less than 10 percent of the crimes that are committed in Detroit.

25) Crime has gotten so bad in Detroit that even the police are telling people to “enter Detroit at your own risk“.

It is easy to point fingers and mock Detroit, but the truth is that the rest of America is going down the exact same path that Detroit has gone down.

Detroit just got there first.

All over this country, there are hundreds of state and local governments that are also on the verge of financial ruin…

“Everyone will say, ‘Oh well, it’s Detroit. I thought it was already in bankruptcy,’ ” said Michigan State University economist Eric Scorsone. “But Detroit is not unique. It’s the same in Chicago and New York and San Diego and San Jose. It’s a lot of major cities in this country. They may not be as extreme as Detroit, but a lot of them face the same problems.”

A while back, Meredith Whitney was highly criticized for predicting that there would be a huge wave of municipal defaults in this country.  When it didn’t happen, the critics let her have it mercilessly.

But Meredith Whitney was not wrong.

She was just early.

Detroit is only just the beginning.  When the next major financial crisis strikes, we are going to see a wave of municipal bankruptcies unlike anything we have ever seen before.

And of course the biggest debt problem of all in this country is the U.S. government.  We are going to pay a great price for piling up nearly 17 trillion dollars of debt and over 200 trillion dollars of unfunded liabilities.

All over the nation, our economic infrastructure is being gutted, debt levels are exploding and poverty is spreading.  We are consuming far more wealth than we are producing, and our share of global GDP has been declining dramatically.

We have been living way above our means for so long that we think it is “normal”, but an extremely painful “adjustment” is coming and most Americans are not going to know how to handle it.

So don’t laugh at Detroit.  The economic pain that Detroit is experiencing will be coming to your area of the country soon enough.

+ More