Michael T. Snyder

25 Shocking Facts About The Earth’s Dwindling Water Resources

Drought - No Swimming Sign - Photo by PeripitusWar, famine, mass extinctions and devastating plagues – all of these are coming unless some kind of miraculous solution is found to the world’s rapidly growing water crisis.  By the year 2030, the global demand for water will exceed the global supply of water by an astounding 40 percent according to one very disturbing U.S. government report.  As you read this article, lakes, rivers, streams and aquifers are steadily drying up all over the planet.  The lack of global water could potentially be enough to bring about a worldwide economic collapse all by itself if nothing is done because no society can function without water.  Just try to live a single day without using any water some time.  You will quickly realize how difficult it is.  Fresh water is the single most important natural resource on the planet, and we are very rapidly running out of it.  The following are 25 shocking facts about the Earth’s dwindling water resources that everyone should know…

#1 Right now, 1.6 billion people live in areas of the world that are facing “absolute water scarcity“.

#2 Global water use has quadrupled over the past 100 years and continues to rise rapidly.

#3 One recent study found that a third of all global corn crops are facing “water stress“.

#4 A child dies from a water-related disease every 15 seconds.

#5 By 2025, two-thirds of the population of Earth will “be living under water stressed conditions“.

#6 Due to a lack of water, Chinese food imports now require more land than the entire state of California.

#7 At this point, the amount of water that China imports is already greater than the amount of oil that the United States imports.

#8 Approximately 80 percent of the major rivers in China have become so polluted that they no longer support any aquatic life at all.

#9 The Great Lakes hold about 21 percent of the total supply of fresh water in the entire world, but Barack Obama is allowing water from those lakes “to be drained, bottled and shipped to China” at a frightening pace.

#10 It is being projected that India will essentially “run out of water” by the year 2050.

#11 It has been estimated that 75 percent of all surface water in India has been heavily contaminated by human or agricultural waste.

#12 In the Middle East, the flow of water in the Jordan River is down to only 2 percent of its historic rate.

#13 Due to a lack of water, Saudi Arabia has essentially given up on trying to grow wheat and will be 100 percent dependent on wheat imports by the year 2016.

#14 Of the 60 million people added to the major cities of the world every year, the vast majority of them live in deeply impoverished areas that have no sanitation facilities whatsoever.

#15 Nearly the entire southwestern United States is experiencing drought conditions as you read this article.  It has been this way for most of the past several years.

#16 Thanks in part to the seemingly endless drought, the price index for meat, poultry, fish, and eggs in the U.S. just hit a new all-time high.

#17 As underground aquifers are relentlessly drained in California, some areas of the San Joaquin Valley are sinking by 11 inches a year.

#18 It is being projected that Lake Mead has a 50 percent chance of running dry by the year 2025.

#19 Most Americans don’t realize this, but the once mighty Colorado River has become so depleted that it no longer runs all the way to the ocean.

#20 According to the U.S. Geological Survey, “a volume equivalent to two-thirds of the water in Lake Erie” has been permanently drained from the Ogallala Aquifer since 1940, and it is currently being drained at a rate of approximately 800 gallons per minute.

#21 Once upon a time, the Ogallala Aquifer had an average depth of approximately 240 feet, but today the average depth is just 80 feet. In some areas of Texas, the water is already completely gone.

#22 Approximately 40 percent of all rivers and approximately 46 percent of all lakes in the United States have become so polluted that they are are no longer fit for human use.

#23 Because of the high cost and the inefficient use of energy, desalination is not considered to be a widely feasible solution to our water problems at this time…

The largest desalination plant in the Western Hemisphere is currently under construction in Carlsbad in San Diego County at great expense. The price tag: $1 billion.

Right now, San Diego is almost totally dependent on imported water from Sierra snowmelt and the Colorado River. When the desalination plant comes online in 2016, it will produce 50 million gallons per day, enough to offset just 7 percent of the county’s water usage. That’s a huge bill for not very much additional water.

#24 We have filled the North Pacific Ocean with 100 million tons of plastic, and this is starting to have a very serious affect on the marine food chain.  Ultimately, this could mean a lot less food available from the Pacific Ocean for humans.

#25 One very shocking U.S. government report concluded that the global demand for water will exceed the global supply of water by 40 percent by the year 2030.

Sadly, most Americans are not going to take this report seriously because they can still turn on their taps and get as much fresh water as they want.

For generations, we have been able to take our seemingly endless supplies of fresh water completely for granted, but things have now changed.

We are heading into a horrendous water crisis unlike anything that the world has ever experienced before, and right now there do not seem to be any large scale solutions capable of addressing this crisis.

Hundreds of millions of people living in North Africa, the Middle East, India and parts of China already deal with severe water shortages as part of their daily lives.

But this is just the beginning.

If nothing is done, the lack of fresh water will eventually be deeply felt by nearly everyone on the entire planet.

The Death Of The Rust Belt

Abandoned House in Ambridge, Pennsylvania - Public DomainTheir names are familiar to all of us: Cleveland, Flint, Youngstown, Saginaw, Gary, Toledo, Reading, Akron, Flint and Buffalo were all once booming manufacturing cities that were absolutely packed with thriving middle class families.  But now most of the manufacturing jobs are gone and all of those cities are just shadows of their former selves.  When you drive through many of these communities, you will notice that a lot of people have a really hollow look in their eyes.  Decades of slow, steady economic decline have really taken a toll, and even the architecture in these cities looks depressed.  But despite all of the decay, there is still evidence that there was once something truly great about these communities.  Will we be able to recapture that greatness before it is too late?

A lot of writers make economics really complicated, but the truth is that it does not have to be.  For example, if you want your country to have a great economy it has got to produce wealth.  And one of the primary ways to produce wealth is to make stuff.  Immediately after World War II, the United States had the greatest manufacturing base the world had ever seen and we outproduced the rest of the planet combined.  Great manufacturing cities sprouted up all over America and the middle class thrived.  It was truly a great time to be an American.

But then we decided to start shipping in cheaper products from overseas.  At first it didn’t create too much of a problem for our massive economy, but eventually the floodgates opened up and we lost tens of thousands of manufacturing facilities and millions upon millions of good paying jobs.  Our labor pool was merged with the labor pool of countries such as communist China where it is legal to pay slave labor wages to manufacturing workers.  Needless to say, our workers could not compete with that and our middle class started to shrink rapidly.

Today, there are many American cities that were once truly great that are now truly frightening to visit.  For example, a recent CNBC article detailed the plight of Reading, Pennsylvania…

In August 2008, factory workers David and Barbara Ludwig treated themselves to new cars—David a Dodge pickup, Barbara a sporty Mazda 3. With David making $22 an hour and Barbara $19, they could easily afford the payments.

A month later, Baldwin Hardware, a unit of Stanley Black & Decker, announced layoffs at the Reading plant where they both worked. David was unemployed for 20 months before finding a janitor job that paid $10 an hour, less than half his previous wage. Barbara hung on, but she, too, lost her shipping-dock job of 26 years as Black & Decker shifted production to Mexico. Now she cleans houses for $10 an hour while looking for something permanent.

They still have the cars. The other trappings of their middle-class lifestyle? In the rear-view mirror.

I once had an aunt that lived in Reading.  She is dead now, and so is most of the city.  At this point, more than 40 percent of those living in Reading are impoverished and the city government is flat broke.

But similar things could also be said about the rest of the Rust Belt…

Perhaps no other region in the country has more eerie examples of urban decay than the once dominant industrial region known as the Rust Belt. Covering the Midwestern states of Illinois, Indiana, Michigan, Ohio and Pennsylvania, the region is plagued by a number of abandoned factories, houses and buildings that lay in crumbling ruins.

You can see some incredible photographs by Seph Lawless of the decay in the Rust Belt right here.  The pictures are incredibly depressing, but it doesn’t take too much imagination to see that these cities were once truly impressive.

Just take Gary, Indiana for instance.  It was once known as “the Magic City” because it was doing so well, but now it is a rotting, decaying hellhole.  The following is from an excerpt from a Daily Mail article about Gary…

Gary, a struggling city 30 miles south of Chicago along the shores of Lake Michigan, is a prime example of the trend.

Known as the ‘Magic City’ in the roaring 1920s for its spectacular growth, Gary is still home to U.S. Steel’s largest plant, but the number of mill jobs has shrunk to 5,000 from 30,000 in the 1970s.

Gary’s population in 1960 was more than 178,000, but it disintegrated to just 79,000 by 2012.

Some one-third of its residents live in poverty and the home and business vacancy rate is about 35 percent. Gary recorded 43 murders in 2012 – three times as many per capita as nearby Chicago.

At one time, Gary was the envy of the rest of the globe.

But now very few people would ever want to willingly live there.

The following is how James Kunstler described what he saw when he traveled through Gary, Indiana…

Between the ghostly remnants of factories stood a score of small cities and neighborhoods where the immigrants settled five generations ago. A lot of it was foreclosed and shuttered. They were places of such stunning, relentless dreariness that you felt depressed just imagining how depressed the remaining denizens of these endless blocks of run-down shoebox houses must feel. Judging from the frequency of taquerias in the 1950s-vintage strip-malls, one inferred that the old Eastern European population had been lately supplanted by a new wave of Mexicans. They had inherited an infrastructure for daily life that was utterly devoid of conscious artistry when it was new, and now had the special patina of supernatural rot over it that only comes from materials not found in nature disintegrating in surprising and unexpected ways, sometimes even sublimely, like the sheen of an oil slick on water at a certain angle to the sun. There was a Chernobyl-like grandeur to it, as of the longed-for end of something enormous that hadn’t worked out well.

Sadly, what is happening to Reading and Gary is just a preview of what is slowly happening to the entire nation as a whole.

Since 2001, the United States has lost more than 56,000 manufacturing facilities.

That is absolutely astounding.

Most of those jobs have gone overseas.  That is why it seems like most of our products say “Made in China” these days.  They are getting rich while our communities suffer, and then we have to beg the Chinese to lend our money back to us.

Meanwhile, we have a permanent epidemic of unemployment in this country.  Back in the 1980s, over 20 percent of the jobs in the U.S. were manufacturing jobs.  Today, only about 9 percent of the jobs in the U.S. are manufacturing jobs.

And an astounding number of our young men are just sitting at home instead of doing something productive.  As I wrote about the other day, one out of every six men in their prime working years (25 to 54) do not have a job at this point.

Also, the percentage of working age Americans not participating in the labor force is up to 37.2 percent – a 36 year high.

Not only that, but the quality of our jobs has also steadily declined as we have lost good paying manufacturing jobs to overseas workers.

Right now, half the country makes $27,520 a year or less from their jobs.

No wonder the middle class is dying.

And of course there is so much more that could be said about this.  For even more numbers about our manufacturing decline, please see my previous article entitled “Shocking Facts About The Deindustrialization Of America That Everyone Should Know“.

These problems were not created overnight, and they are not going to be solved overnight either.

But as a nation, we have got to understand that we cannot consume our way to prosperity.  That is only going to result in even more debt.

Instead, we have got to make the decision to produce our way to prosperity.

In other words, we have got to start making stuff in this country again.

That may sounds “crazy” to a lot of people, but it is possible.  We have just got to have the willingness to do it.

The United States Of Debt: Total Debt In America Hits A New Record High Of Nearly 60 Trillion Dollars

America Is BrokeWhat would you say if I told you that Americans are nearly 60 TRILLION dollars in debt?  Well, it is true.  When you total up all forms of debt including government debt, business debt, mortgage debt and consumer debt, we are 59.4 trillion dollars in debt.  That is an amount of money so large that it is difficult to describe it with words.  For example, if you were alive when Jesus Christ was born and you had spent 80 million dollars every single day since then, you still would not have spent 59.4 trillion dollars by now.  And most of this debt has been accumulated in recent decades.  If you go back 40 years ago, total debt in America was sitting at about 2.2 trillion dollars.  Somehow over the past four decades we have allowed the total amount of debt in the United States to get approximately 27 times larger.  This is utter insanity, and anyone that thinks this is sustainable is completely deluded.  We are living in the greatest debt bubble of all time, and there is no way that this is going to end well.  Just check out the chart…

Total Debt

When the last recession hit, total debt in America actually started going down for a short period of time.

But then the Federal Reserve and our politicians in Washington worked feverishly to reinflate the bubble and they assured everyone that everything was going to be just fine.  So Americans once again resorted to their free spending ways, and now total debt in the United States is rising at almost the same trajectory as before and has hit a new all-time record high.

We see a similar thing when we look at a chart for consumer debt in America…

Total Consumer Credit

For a while after the recession it was trendy to cut up your credit cards and get out of debt.

But that fad wore off rather quickly, didn’t it?

It is almost as if 2008 never happened.  We are making the same mistakes with debt that we did before.

As I noted recently, total consumer credit in the U.S. has risen by 22 percent over the past three years alone, and at this point 56 percent of all Americans have a subprime credit rating.

And have you noticed that a lot of people are not afraid to extend themselves in order to buy shiny new vehicles these days?

During the first quarter 0f this year, the size of the average vehicle loan soared to a new all-time record high of $27,612.

Five years ago, that number was just $24,174.

And as I noted in one recent article, the size of the average monthly car payment in this country is now up to $474.

That is practically a mortgage payment.

Speaking of mortgage payments, even though home sales have been falling and the rate of homeownership in the United States is the lowest that it has been in 19 years, a very large percentage of those who own homes are still overextended.

In fact, one recent survey discovered that a whopping 52 percent of Americans cannot even afford the house that they are living in right now.

At the same time, an increasing number of Americans are acting as if the last financial crisis never happened and are treating their homes like piggy banks.   Home equity loans are soaring again, and when the next great crisis strikes a lot of those people are going to end up getting into a lot of financial trouble.

There has been much written about what is wrong with the housing industry, but the truth is that home prices are still way too high and young adults cannot afford to purchase homes because they are already loaded down by huge amounts of debt even before they get to the point where they are ready to buy.

In fact, a newly released survey found that 47 percent of millennials are spending at least half of their paychecks on paying off debt…

Four in 10 millennials say they are “overwhelmed” by their debt — nearly double the number of baby boomers who feel that way, according to a Wells Fargo survey of more than 1,600 millennials between 22 and 33 years old, and 1,500 baby boomers between 49 and 59 years old.

To try to get out from underneath it, 47% said they spend at least half of their monthly paychecks on paying off their debts.

When I read that I was absolutely astounded.

Of course the biggest debt that many young adults are facing is student loan debt.  According to the Federal Reserve, there is now more than 1.2 trillion dollars of student loan debt in this country, and about 124 billion dollars of that total is more than 90 days delinquent.

What we have done to our young people is shameful.  We have encouraged them to sign up for a lifetime of debt slavery before they even understand what life is all about.  The following is an excerpt from my previous article entitled “Is College A Waste Of Time And Money?“…

In America today, approximately two-thirds of all college students graduate with student loan debt, and the average debt level has been steadily rising.  In fact, one study found that “70 percent of the class of 2013 is graduating with college-related debt – averaging $35,200 – including federal, state and private loans, as well as debt owed to family and accumulated through credit cards.”

That would be bad enough if most of these students were getting decent jobs that enabled them to service that debt.

But unfortunately, that is often not the case.  It has been estimated that about half of all recent college graduates are working jobs that do not even require a college degree.

Considering what you just read, is it a surprise that half of all college graduates in America are still financially dependent on their parents when they are two years out of college?

According to the U.S. Census Bureau, only 36 percent of all Americans under the age of 35 own a home at this point.  That is the lowest level that has ever been recorded.

And we are passing on to our young people the largest single debt in all of human history.  Weighing in at 17.5 trillion dollars, the U.S. national debt is a colossal behemoth.  And almost all of that debt has been accumulated over the past 40 years.  In fact, 40 years ago the U.S. national debt was less than half a trillion dollars.

But this is just the beginning.  As the Baby Boomer “demographic tsunami” washes through our economy, we are going to be facing a wave of red ink unlike anything we have ever contemplated before.

Meanwhile, the rest of the planet is drowning in debt as well.

As I wrote about the other day, the total amount of debt in the world has risen to a new all-time record high of $223,300,000,000,000.

Our “leaders” keep acting as if these debt levels can keep growing much faster than the overall level of economic growth indefinitely.

But anyone with even a shred of common sense knows that you can’t spend more money that you bring in forever.

At some point, a day of reckoning arrives.

2008 should have been a major wake up call that resulted in massive changes.  But instead, our leaders just patched up the old system and reinflated the old bubbles so that they are now even larger than they were before.

They assure us that they know exactly what they are doing and that everything will be just fine.

Unfortunately, they are dead wrong.

Economists: The U.S. Economy Shrank In Q1, But Better Days Are Just Around The Corner

Smiley Face - Photo by FlyingtigersiteDuring the first three months of this year, the U.S. economy contracted at a 1 percent annual rate.  Despite this, mainstream economists flooded the mainstream media with assurances that much better days are just around the corner on Thursday.  In fact, many of them boldly predicted that U.S. GDP would grow at a 3 or 4 percent annual rate in the second quarter.  None of them seem the least bit concerned that another major recession is rapidly approaching.  Instead, they just blamed the bad number for the first quarter on a “severe winter“, and the financial markets responded to the GDP news quite cheerfully.  In fact, the S&P 500 soared to another brand new record high.  No matter how bad the numbers get, almost everyone in the financial world seems quite optimistic.  But is there actually good reason to have such optimism?

As Zero Hedge has pointed out, if it wasn’t for dramatically increased healthcare spending due to the implementation of Obamacare, U.S. GDP would have actually dropped at a 2 percent annual rate during the first quarter of 2014.

That would have been an absolutely disastrous number.

But within a very short time of the revised U.S. GDP number being released, the mainstream media was inundated with positive stories about the news.

For example, CNN published a story entitled “U.S. economy shrinks, but it’s not a big deal” and CNBC released a survey of nine prominent economists that showed that their consensus forecast for the second quarter of 2014 is GDP growth at a 3.74 percent annual rate.

It just seems like almost everyone wants to forget about what happened during the first quarter and wants to look ahead to a great number for quarter two.

Joseph Lavorgna, the chief U.S. economist at Deutsche Bank, is boldly forecasting a 4 percent growth rate for the second quarter.  So is Jim O’Sullivan.  In fact, it is hard to find any “expert” in the mainstream media that does not expect rip-roaring economic growth this quarter.

For example, just check out these quotes…

–Stuart Hoffman, the chief economist for PNC Bank: “The first quarter was disappointing, but rather than view that as an omen of a recession or the first of a down leg in the economy, I see the seeds of a big bounce back in spring.”

–Paul Ashworth of Capital Economics: “For those worried about a recession, it’s worth remembering that employment increased by nearly 300,000 in April.”

–The Bank of Tokyo’s Chris Rupkey: “2Q growth seen at nearly 4%… Weak 1Q is stone cold dead as an indicator of where the economy is headed.”

–Jan Hatzius of Goldman Sachs: “Because of weaker inventory investment in Q1, we increased our Q2 GDP tracking estimate by two-tenths to 3.9%.”

–Dun & Bradstreet Credibility Corp. CEO Jeffrey Stibel: “Using an alternative model for projecting job growth, we see an entirely different scenario, one in which the U.S. unemployment rate will fall below 5 percent by no later than the middle of next year.”

Hopefully they are right.

Hopefully we are not heading into another recession.

But as I discussed in an article earlier this week, evidence continues to mount that another recession has already begun for much of the country.

And there was another number that was released today that seems to confirm this.  According to CNBC, there was a 6 percent drop in exports in the first quarter of 2014 when compared to the first quarter of 2013…

The U.S. economic reversal was led by a 6 percent drop in exports year over year, until recently hailed as a key driver of the U.S. recovery, and which had risen 9.5 percent in the last three months of 2013.

The slackening of trade has spread to the developing world, where emerging economies are seeing less demand from the U.S., Europe and China for raw materials and other exports.

We saw a similar decline happen in mid-2008 as the U.S. economy plunged into recession.

And Bloomberg’s Consumer Comfort index has fallen to the lowest level that we have seen in six months.  U.S. consumers are increasingly tapped out, and the ongoing “retail apocalypse” is evidence of that fact.

A declining middle class simply cannot support the massive retail infrastructure that America has developed.  As the middle class has fallen to pieces, it was just a matter of time before big trouble started erupting for the retail industry.  This is something that David Stockman recently wrote about…

It does not take much analysis to see that these bell ringers do not represent sustainable prosperity unfolding across the land. For example, around 1990 real median income was $56k per household and now, 25 years later, its just $51k—-meaning that main street living standards have plunged by about 9% during the last quarter century. But what has not dropped is the opportunity for Americans to drop shopping: square footage per capita during the same period more than doubled, rising from 19 square feet per capita at the earlier date to 47 at present.

This complete contradiction—declining real living standards and soaring investment in retail space—did not occur due to some embedded irrational impulse in America to speculate in real estate, or because capitalism has an inherent tendency to go off the deep-end. The fact that in equally “prosperous” Germany today there is only 12 square feet of retail space per capita is an obvious tip-off, and this is not a teutonic aberration. America’s prize-winning number of 47 square feet of retail space per capita is 3-8X higher than anywhere else in the developed world!

Without middle class jobs, you can’t have a middle class.  That is why our employment crisis is at the very heart of our economic problems.  Even using the government’s highly manipulated unemployment figures, there are still quite a few cities out there that have official unemployment rates in the double digits…

The unemployment rate in Yuma, Ariz., is 23.8%. In El Centro, Calif., it is 21.6%. El Centro sits in an area of California in which unemployment in many metro areas is double the national average. In Merced the figure is 14.3%, in Yuba City the figure is 14.5%, in Hanford it is 13.1% and in Visalia it is 13.4%. In several metros close to these, the figure is above 10%. Most of them are inland from San Francisco and the area just south of it, which also happens to be among the nation’s most drought-plagued regions. This means jobs recovery is highly unlikely.

But of course the truth is that if the government actually used honest numbers, the unemployment rate for the entire nation would be in double digits.

And as I like to remind people, according to the government’s own numbers approximately 20 percent of the families in the entire nation do not have a single member that is employed.

So how is it possible that the “unemployment rate” is just a little above 6 percent?

It is a giant sham.

But that is what they want.

They want us feeling good and thinking that everything is going to be okay.

Unfortunately, they used the same approach back in 2007 and 2008, and we all remember how that turned out.

Dust In The Wind: Dust Bowl Conditions Have Returned To Kansas, Oklahoma And North Texas

Dust BowlIn early 1978, a song entitled “Dust in the Wind” by a rock band known as Kansas shot up the Billboard charts.  When Kerry Livgren penned those now famous lyrics, he probably never imagined that Dust Bowl conditions would return to his home state just a few short decades later.  Sadly, that is precisely what is happening.  When American explorers first traveled through north Texas, Oklahoma and Kansas, they referred to it as “the Great American Desert” and they doubted that anyone would ever be able to farm it.  But as history has shown, when that area gets plenty of precipitation the farming is actually quite good.  Unfortunately, the region is now in the midst of a devastating multi-year drought which never seems to end.  Right now, 56 percent of Texas, 64 percent of Oklahoma and 80 percent of Kansas are experiencing “severe drought”, and the long range forecast for this upcoming summer is not good.  In fact, some areas in the region are already drier than they were during the worst times of the 1930s.  And the relentless high winds that are plaguing that area of the country are kicking up some hellacious dust storms.  For example, some parts of Kansas experienced a two day dust storm last month.  And Lubbock, Texas was hit be a three day dust storm last month.  We are witnessing things that we have not seen since the depths of the Dust Bowl days, and unless the region starts getting a serious amount of rain, things are going to get a whole lot worse before they get any better.

Over the past two months, very high winds and bone dry conditions have made the lives of ordinary farmers in the state of Kansas extraordinarily difficult.  Just check out the following excerpt from a recent article posted on Agriculture.com…

The dust has settled, but for how long no one can be sure. At any moment, the winds may blow, moving the topsoil — soil that took Mother Nature generations to craft — even farther from its origin.

One farmer reckons that precious topsoil, native to his farm in Kearny County, Kansas, now sits in a field at least 200 miles away, blown there by the relentless winds of March and April 2014.

Affecting counties in western Texas, Oklahoma, and Kansas, and eastern Colorado, it was reminiscent of what folks in the same region faced 80 years ago.

“There were several days we couldn’t see 100 yards in front of us,” says Tom Hauser, a farmer near Ulysses, Kansas. “We didn’t know where the dust was coming from. It was moving in here from somewhere else, just like it did back in the 1930s.“

When heavy winds blow day after day but there is no rain, it creates ideal conditions for dust storms.  According to the same article that I just mentioned, the average wind speed in the little community of Syracuse, Kansas has been over 50 miles an hour so far this year…

Since the beginning of 2014, the average maximum daily wind speed in Syracuse, Kansas, is 50.6 miles per hour, according to the Kansas State University Weather Data Library. In that same time, Syracuse has received just 1 inch of total precipitation.

That is a recipe for disaster.

“I’ve had to chisel more ground this year than the last 20 years put together,” says Gary Millershaski, who farms near Lakin in Kearny County. Chiseling the ground roughs it up, and helps prevent soil from blowing – at least for a little while.

I couldn’t imagine living somewhere with such high winds day after day.

But this is what farmers in the High Plains have to deal with on a constant basis.

And needless to say, when things are this dry those kinds of winds can kick up some immense dust storms.  In fact, a dust storm in late April was so large that it covered most of the region…

Monday’s dust storm was so large it covered most of Kansas, western Oklahoma, the Texas Panhandle and eastern Colorado, said weather service meteorologist Jeff Hutton in Dodge City. Tuesday’s dust cloud was more localized, only found in some parts of Kansas.

“That is what happens when you get drought, a lack of vegetation and you have wind,” Hutton said. “I mean, that is just the nature of the High Plains. And then that dirt that was lofted is eventually carried into eastern Kansas.”

When one of these dust storms strikes, you want to get indoors and stay there.  It isn’t even safe to be driving.  When you can’t even see five feet in front of you, the odds of getting into a fatal accident rise exponentially.  Just check out what happened earlier this year near the little town of Liberal, Kansas…

At least 12 vehicles were involved in an pileup accident near Liberal, Kansas.

The accident happened around 1:40 p.m., nine miles southwest of Liberal. It appears that blowing dust limited visibility so severely that it cause vehicles to not see each other until it was too late and they collided. One report states that visibility was less than five feet.

According to Chief Anthony Adams of the Tyrone Fire Department in Oklahoma, six of the vehicles involved were cars and trucks, the other six were tractor trailers.

As bad as things are in Kansas right now, the truth is that things are probably even worse down in Texas.  Amarillo has had 10 dust storms so far this year, and Lubbock has already had 15 days of dust storms in 2014…

The number of dust storms seems to rise with the length of the drought. Amarillo has had 10 this year; it had none in 2010. The city is about 10 percent drier now than the 42 months that ended April 30, 1936, and drier than the state’s record drought in the 1950s.

Lubbock already has seen 15 days with dust storms this year, the National Weather Service said.

And remember, we haven’t even gotten to the summer months yet.

As conditions get even worse in the heartland of America, it is going to end up deeply affecting all of us.  The farmers and ranchers that live there provide a tremendous amount of food for the rest of the country, and food prices are already starting to rise at an alarming pace.

So what is going to happen if this drought extends for several more years or even longer?

Some experts such as paleoclimatologist Edward Cook have suggested that we could be in the midst of a “megadrought” that could last for decades or even centuries.

Many of those that were convinced that we could never see a return of the Dust Bowl days are now being forced to reevaluate their beliefs.  According to the National Weather Service, parts of Kansas, Colorado, Texas and Oklahoma are already drier than they were in the 1930s.  The following is an excerpt from a recent National Geographic article entitled “Parched: A New Dust Bowl Forms in the Heartland“…

Four years into a mean, hot drought that shows no sign of relenting, a new Dust Bowl is indeed engulfing the same region that was the geographic heart of the original. The undulating frontier where Kansas, Colorado, and the panhandles of Texas and Oklahoma converge is as dry as toast. The National Weather Service, measuring rain over 42 months, reports that parts of all five states have had less rain than what fell during a similar period in the 1930s.

It is hard to put into words how incredibly serious this all is.

A few years ago, when I wrote articles with titles such as “20 Signs That Dust Bowl Conditions Will Soon Return To The Heartland Of America“, a lot of people laughed.

Not that many people are laughing now.

The truth is that we are now in the midst of the worst drought crisis since the days of the Great Depression.

Fortunately, over the past week or so there has been some rain in some of the hardest hit areas.  Let us hope that this is a sign of better things to come.

Because if this drought does not come to an end, it is going to become much, much more expensive for Americans to feed their families.

And considering the fact that 49 million Americans are already facing food insecurity, that is a threat that should not be taken lightly.

The Size Of The Derivatives Bubble Hanging Over The Global Economy Hits A Record High

Bubble - Photo by Brocken InagloryThe global derivatives bubble is now 20 percent bigger than it was just before the last great financial crisis struck in 2008.  It is a financial bubble far larger than anything the world has ever seen, and when it finally bursts it is going to be a complete and utter nightmare for the financial system of the planet.  According to the Bank for International Settlements, the total notional value of derivatives contracts around the world has ballooned to an astounding 710 trillion dollars ($710,000,000,000,000).  Other estimates put the grand total well over a quadrillion dollars.  If that sounds like a lot of money, that is because it is.  For example, U.S. GDP is projected to be in the neighborhood of around 17 trillion dollars for 2014.  So 710 trillion dollars is an amount of money that is almost incomprehensible.  Instead of actually doing something about the insanely reckless behavior of the big banks, our leaders have allowed the derivatives bubble and these banks to get larger than ever.  In fact, as I have written about previously, the big Wall Street banks are collectively 37 percent larger than they were just prior to the last recession.  “Too big to fail” is a far more massive problem than it was the last time around, and at some point this derivatives bubble is going to burst and start taking those banks down.  When that day arrives, we are going to be facing a crisis that is going to make 2008 look like a Sunday picnic.

If you do not know what a derivative is, Mayra Rodríguez Valladares, a managing principal at MRV Associates, provided a pretty good definition in her recent article for the New York Times…

A derivative, put simply, is a contract between two parties whose value is determined by changes in the value of an underlying asset. Those assets could be bonds, equities, commodities or currencies. The majority of contracts are traded over the counter, where details about pricing, risk measurement and collateral, if any, are not available to the public.

In other words, a derivative does not have any intrinsic value.  It is essentially a side bet.  Most commonly, derivative contracts have to do with the movement of interest rates.  But there are many, many other kinds of derivatives as well.  People are betting on just about anything and everything that you can imagine, and Wall Street has been transformed into the largest casino in the history of the planet.

After the last financial crisis, our politicians promised us that they would do something to get derivatives trading under control.  But instead, the size of the derivatives bubble has reached a new record high.  In the New York Times article I mentioned above, Goldman Sachs and Citibank were singled out as two players that have experienced tremendous growth in this area in recent years…

Goldman Sachs has been increasing its derivatives volumes since the crisis, and it had a portfolio of about $48 trillion at the end of 2013. Bloomberg Businessweek recently reported that as part of its growth strategy, Goldman plans to sell more derivatives to clients. Citibank, too, has been increasing its derivatives portfolio, despite the numerous capital and regulatory challenges, In fact, its portfolio has risen by over 65 percent since the crisis — the most of any of the four banks — to $62 trillion.

According to official government numbers, the top 25 banks in the United States now have a grand total of more than 236 trillion dollars of exposure to derivatives.  But there are four banks that dwarf everyone else.  The following are the latest numbers for those four banks…

JPMorgan Chase

Total Assets: $1,945,467,000,000 (nearly 2 trillion dollars)

Total Exposure To Derivatives: $70,088,625,000,000 (more than 70 trillion dollars)

Citibank

Total Assets: $1,346,747,000,000 (a bit more than 1.3 trillion dollars)

Total Exposure To Derivatives: $62,247,698,000,000 (more than 62 trillion dollars)

Bank Of America

Total Assets: $1,433,716,000,000 (a bit more than 1.4 trillion dollars)

Total Exposure To Derivatives: $38,850,900,000,000 (more than 38 trillion dollars)

Goldman Sachs

Total Assets: $105,616,000,000 (just a shade over 105 billion dollars – yes, you read that correctly)

Total Exposure To Derivatives: $48,611,684,000,000 (more than 48 trillion dollars)

If the stock market keeps going up, interest rates stay fairly stable and the global economy does not experience a major downturn, this bubble will probably not burst for a while.

But if there is a major shock to the system, we could easily experience a major derivatives crisis very rapidly and several of those banks could fail simultaneously.

There are many out there that would welcome the collapse of the big banks, but that would also be very bad news for the rest of us.

You see, the truth is that the U.S. economy is like a very sick patient with an extremely advanced case of cancer.  You can try to kill the cancer (the banks), but in the process you will inevitably kill the patient as well.

Right now, the five largest banks account for 42 percent of all loans in the entire country, and the six largest banks control 67 percent of all banking assets.

If they go down, we go down too.

That is why the fact that they have been so reckless is so infuriating.

Just look at the numbers for Goldman Sachs again.  At this point, the total exposure that Goldman Sachs has to derivatives contracts is more than 460 times greater than their total assets.

And this kind of thing is not just happening in the United States.  German banking giant Deutsche Bank has more than 75 trillion dollars of exposure to derivatives.  That is even more than any single U.S. bank has.

This derivatives bubble is a “sword of Damocles” that is hanging over the global economy by a thread day after day, month after month, year after year.

At some point that thread is going to break, the bubble is going to burst, and then all hell is going to break loose.

You see, the truth is that virtually none of the underlying problems that caused the last financial crisis have been fixed.

Instead, our problems have just gotten even bigger and the financial bubbles have gotten even larger.

Never before in the history of the United States have we been faced with the threat of such a great financial catastrophe.

Sadly, most Americans are totally oblivious to all of this.  They just have faith that our leaders know what they are doing, and they have been lulled into complacency by the bubble of false stability that we have been enjoying for the last couple of years.

Unfortunately for them, this bubble of false stability is not going to last much longer.

A financial crisis far greater than what we experienced in 2008 is coming, and it is going to shock the world.

Who Needs The United States? Not Russia And China

Vladimir PutinRussia and China have just signed what is being called “the gas deal of the century”, and the two countries are discussing moving away from the U.S. dollar and using their own currencies to trade with one another.  This has huge implications for the future of the U.S. economy, but the mainstream media in the United States is being strangely quiet about all of this.  For example, I searched CNN’s website to see if I could find something about this gas deal between Russia and China and I did not find anything.  But I did find links to “top stories” entitled “Celebs who went faux red” and “Adorable kid tugs on Obama’s ear“.  Is it any wonder why the mainstream media is dying?  If a particular story does not fit their agenda, they will simply ignore it.  But the truth is that this new agreement between Russia and China is huge.  It could end up fundamentally changing the global financial system, and not in a way that would be beneficial for the United States.

Russia and China had been negotiating this natural gas deal for ten years, and now it is finally done.  Russia is the largest exporter of natural gas on the entire planet, and China is poised to become the world’s largest economy in just a few years.  This new $400 billion agreement means that these two superpowers could potentially enjoy a mutually beneficial relationship for the next 30 years…

Russia reached a $400 billion deal to supply natural gas to China through a new pipeline over 30 years, a milestone in relations between the world’s largest energy producer and the biggest consumer.

President Vladimir Putin is turning to China to bolster Russia’s economy as relations sour with the U.S. and European Union because of the crisis in Ukraine. Today’s accord, signed after more than a decade of talks, will allow state-run gas producer OAO Gazprom (GAZP) to invest $55 billion developing giant gas fields in eastern Siberia and building the pipeline, Putin said.

It’s an “epochal event,” Putin said in Shanghai after the contract was signed. Both countries are satisfied with the price, he said.

Of course countries sell oil and natural gas to each other all the time.  But what makes this deal such a potential problem for the U.S. is the fact that Russia and China are working on cutting the U.S. dollar out of the entire equation.  Just check out the following excerpt from a recent article in a Russian news source…

Russia and China are planning to increase the volume of direct payments in mutual trade in their national currencies, according to a joint statement on a new stage of comprehensive partnership and strategic cooperation signed during high-level talks in Shanghai on Tuesday.

“The sides intend to take new steps to increase the level and expansion of spheres of Russian-Chinese practical cooperation, in particular to establish close cooperation in the financial sphere, including an increase in direct payments in the Russian and Chinese national currencies in trade, investments and loan services,” the statement said.

In my recent article entitled “De-Dollarization: Russia Is On The Verge Of Dealing A Massive Blow To The Petrodollar“, I warned about what could happen if the petrodollar monopoly ends.  In the United States, our current standard of living is extremely dependent on the rest of the world continuing to use our currency to trade with one another.  If Russia starts selling natural gas to China without the U.S. dollar being involved, that would be a monumental blow to the petrodollar.  And if other nations started following the lead of Russia and China, that could result in an avalanche from which the petrodollar may never recover.

And it isn’t just the national governments of Russia and China that are discussing moving away from the U.S. dollar.  For example, the second largest bank in Russia just signed a deal with the Bank of China “to pay each other in domestic currencies”…

VTB, Russia’s second biggest lender, has signed a deal with Bank of China, which includes an agreement to pay each other in domestic currencies.

“Under the agreement, the banks plan to develop their partnership in a number of areas, including cooperation on ruble and renminbi settlements, investment banking, inter-bank lending, trade finance and capital-markets transactions,” says the official VTB statement.

The deal underlines VTB Group’s growing interest in Asian markets and will help grow trade between Russia and China that are already close trading partners, said VTB Bank Management Board Vasily Titov.

You can almost feel the power of the U.S. dollar fading.

A few months ago, when I wrote about how China had announced that it no longer planned to stockpile more U.S. dollars, I speculated that it may be evidence that China planned to start making a big move away from the U.S. dollar.

Well, now China’s intentions have become even more clear.

The Chinese do not plan to allow the United States to indefinitely dominate the globe financially.  In the long run, the Chinese plan to be the ones calling the shots, and that means that the power of the U.S. dollar must decline.

These days, instead of piling up mountains of U.S. currency, China has started accumulating hard assets instead.  In the past, I have written about how China is rapidly stockpiling gold, and it turns out that the Chinese have also been very busy stockpiling oil as well…

China is stockpiling oil for its strategic petroleum reserve at a record pace, intervening on a scale large enough to send a powerful pulse through the world crude market.

The move comes as tensions mount in the South China Sea and the West prepares possible oil sanctions against Russia over the crisis in eastern Ukraine. Analysts believe China is quietly building up buffers against a possible spike in oil prices or disruptions in supply.

The International Energy Agency (IEA) said in its latest monthly report that China imported 6.81m barrels per day (bpd) in April, an all-time high.

Once upon a time, China was extremely dependent on the United States economically.  The same was true with most of the rest of the world.

But now economic power has shifted so dramatically that nations such as Russia and China are realizing that they don’t really need to be dependent on the United States any longer.

And with each passing year, the relationship between Russia and China is becoming stronger.  As Pepe Escobar recently observed, this emerging alliance is causing quite a bit of consternation in Washington…

And no wonder Washington is anxious. That alliance is already a done deal in a variety of ways: through the BRICS group of emerging powers (Brazil, Russia, India, China, and South Africa); at the Shanghai Cooperation Organization, the Asian counterweight to NATO; inside the G20; and via the 120-member-nation Non-Aligned Movement (NAM). Trade and commerce are just part of the future bargain. Synergies in the development of new military technologies beckon as well. After Russia’s Star Wars-style, ultra-sophisticated S-500 air defense anti-missile system comes online in 2018, Beijing is sure to want a version of it. Meanwhile, Russia is about to sell dozens of state-of-the-art Sukhoi Su-35 jet fighters to the Chinese as Beijing and Moscow move to seal an aviation-industrial partnership.

Meanwhile, the relationship that the U.S. has with both nations is quickly going sour.  The crisis in Ukraine has caused relations with Russia to drop to the lowest point since the end of the Cold War, and now China is deeply offended by charges that Chinese military officers have been involved in cyberspying on the United States…

China on Tuesday warned the United States was jeopardizing military ties by charging five Chinese officers with cyberspying and tried to turn the tables on Washington by calling it “the biggest attacker of China’s cyberspace.”

China announced it was suspending cooperation with the United States in a joint cybersecurity task force over Monday’s charges that officers stole trade secrets from major American companies. The Foreign Ministry demanded Washington withdraw the indictment.

The testy exchange marked an escalation in tensions over U.S. complaints that China’s military uses its cyber warfare skills to steal foreign trade secrets to help the country’s vast state-owned industrial sector.

The divide between the East and the West is growing.

But the Obama administration has not figured out that we need the East more than they need us.

Right now, the number one U.S. export is U.S. dollars.  Our massively inflated standard of living is very heavily dependent on the rest of the world using our currency to trade with one another and lending it to us at super low interest rates.

If the rest of the world quits playing our game, our debt-based financial system will quickly fall apart.

Unfortunately, nobody in the Obama administration seems to have much understanding of global economics, and they will probably continue to antagonize Russia and China.

In the end, the consequences for antagonizing them could end up being far greater than any of us ever imagined.

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