If you make your living by building or selling new homes in the United States, you might want to consider taking up a different career for a while. New homes sales in the United States hit yet another new all-time record low in the month of February, and there are a whole lot of reasons why new home sales are going to stay extremely low for an extended period of time. The massive wave of foreclosures that we have seen has produced a giant glut of unsold homes in the marketplace, mortgage lenders are making it really hard to get approved for home loans, unemployment is still rampant and the global economy looks like it may soon plunge into another major recession. None of those things is good news for the new home construction industry. The truth is that we were supposed to have seen new home sales already bounce back by now. If you look at the historical numbers, new home sales in the U.S. always increased significantly after the end of every recession since World War 2. But that did not happen this time. Instead, new home sales have just continued to decline. This is absolutely unprecedented, and economists are puzzled. So what is going to happen if the U.S. economy suffers another major downturn?
New home construction has always been one of the foundational pillars of the U.S. economy. When times were good new home construction would boom, and when times were bad new home construction would falter.
Well, unfortunately the industry is stuck in the midst of a multi-year decline right now. The reality is that you can stick a fork in the new home construction industry in the United States. It is toast. There is going to be no recovery for the foreseeable future.
Not that previously owned homes are doing that much better. According to the National Association of Realtors, sales of previously existing homes in the United States dropped 9.6 percent in February. But at least sales of previously owned homes are not at all-time record lows like new home sales are.
As you can see from the facts posted below, new home sales are absolutely abysmal right now, and there are a lot of indications that things may get even worse. The following are 18 reasons why you can stick a fork in the new home construction industry….
#2 Only 19,000 new homes were sold in the United States during the month of February. The previous record low for new home sales during the month of February was 27,000, which was set last year.
#3 The “months of supply” of new homes in the U.S. rose from 7.4 months in January to 8.9 months in February.
#4 The median price of a new home in the United States declined almost 14 percent to $202,100 in the month of February.
#5 The median price of a new home in the U.S. is now the lowest it has been since December 2003.
#6 As of the end of 2010, new home sales in the United States had declined for five straight years, and they are expected to be lower once again in 2011.
#7 Now home sales in the United States are now down 80% from the peak in July 2005.
#8 New home construction starts in the United States fell 22.5 percent during the month of February. This was the largest decline in 27 years.
#9 In February, the number of new building permits (a measure of future home building activity) declined to the lowest level in more than 50 years. In fact, new building permits were 20 percent lower during February 2011 than they were in February 2010.
#10 There is a major glut of foreclosed homes that still need to be sold off. David Crowe, the chief economist for the National Association of Home Builders, recently told CNN that the constant flow of new foreclosures being put on the market is a huge hindrance to a recovery for new home sales….
“One of the biggest detriments to building new homes is the flow of existing foreclosed homes.”
#11 The number of foreclosures just continues to increase. This means that those trying to sell new homes are going to continue to be competing against a giant mountain of foreclosed homes for the foreseeable future. An all-time record of 2.87 million U.S. households received a foreclosure filing in 2010, and that number is expected to be even higher in 2011.
#12 In fact, there are a whole lot of signs that there will be very high levels of foreclosures for years to come. For example, according to the Mortgage Bankers Association, at least 8 million Americans are at least one month behind on their mortgage payments at this point.
#13 A stunningly high number of Americans are “underwater” on their mortgages right now. This could lead to an increase in the number of “strategic defaults”. 31 percent of the homeowners that responded to a recent Rasmussen Reports survey indicated that they are “underwater” on their mortgages, and Deutsche Bank is projecting that 48 percent of all U.S. mortgages could have negative equity by the end of 2011.
#14 The truth is that the U.S. doesn’t need a whole lot of new housing at the moment. Right now, 11 percent of all homes in the United States are currently standing empty.
#15 Mortgage lending standards have become extremely tight. Back during the housing bubble, almost anyone that was breathing could get a zero-down mortgage. Today, mortgage lenders have made it extremely difficult to acquire a home loan, and it is quite typical these days for lenders to demand down payments of 20 percent or more. This is dramatically reducing the number of home buyers in the marketplace.
#16 American families cannot buy homes if they do not have good jobs. Unfortunately, it has become extremely difficult to find a job in the United States today. This is especially true if you are looking for a good job. It now takes the average unemployed worker in America about 33 weeks to find a job.
#17 There is not going to be a jobs recovery until the overall economy improves. Unfortunately, the price of oil continues to rise dramatically and economic disasters all over the planet threaten to plunge the global economy into another major recession.
#18 On top of everything else, perceptions regarding home ownership are shifting in the United States. In 1996, 89 percent of Americans believed that it was better to own a home than to rent one. Today that number has fallen to 63 percent.
Barack Obama recently made the following statement to American families that are struggling to survive in this economy: “If you’re a family trying to cut back, you might skip going out to dinner, or you might put off a vacation.” A few days after making that statement Obama sent his wife and children off on yet another vacation, this time to a luxury ski hotel in Vail, Colorado. But the Obamas are not the only ones enjoying the high life. Wealthy corporate executives and greedy Wall Street fatcats insist that profit margins are too tight to hire more American workers, and yet sales of luxury cars, private jets and vacation homes are soaring. Meanwhile, most American families are going through economic hell right now. In 2010, more Americans than ever before were living below the poverty line. Over 4 million Americans have been unemployed for more than a year, and over 5 million Americans are at least two months behind on their mortgage payments. As the Obamas and wealthy corporate executives jet off to fancy ski resorts, half of all American workers are earning $505 or less per week and 55 percent of American families are living paycheck to paycheck. Something is very wrong with this picture.
So is there anything wrong with working hard and enjoying the fruits of success? Of course not, as long as it was done honestly and not on the backs of the American taxpayers. But the truth is that many of the corporate executives that are enjoying luxury vacations right now would not even have companies to run if the American taxpayers had not stepped in and bailed them out during the financial crisis. Thanks to the U.S. government and the Federal Reserve, Wall Street bankers and top corporate executives are once again enjoying bonuses that most of us would consider obscene.
Meanwhile, most of the rest of the country is suffering very deeply.
Over the past several decades, the biggest financial institutions and the biggest corporations have worked really hard to “fix” the rules of the game in their favor. The truth is that our economy is no longer a “free market” capitalist system. Rather, what we have now is more accurately described as “corporatism” or “neo-feudalism”. The big corporations dominate almost everything, and whatever they don’t dominate the government does.
One of the key features of a “corporatist” system is that it tends to funnel all the wealth to the very top.
Back in 1976, the top 1 percent of earners in the United States took in 8.9 percent of all income. By 2007, that number had risen to 23.5 percent.
There are two different Americas today. There is the America of the gated communities, the private planes and the good life, and there is the America of declining wages, thrift stores and rising desperation.
What is saddest of all is that the most vulnerable people in society often suffer the most from all of this.
Do you think that the Obamas are thinking about any of this while they are enjoying their stay at a luxury ski hotel in Vail, Colorado?
The truth is that leadership is not just about words. Leadership is about setting an example.
Back in August, Michelle Obama took her daughter Sasha and 40 of her friends for a vacation in Spain.
So what was the bill to the taxpayers for that little jaunt across the pond?
It is estimated that vacation alone cost U.S. taxpayers $375,000.
Hey, Barack Obama won the most votes in 2008 and so if he wants his family to get as much enjoyment out of these four years as they can that is his prerogative.
However, if he wants to tell American families that they “might put off a vacation” after all the vacations that the Obamas have taken over the past two years then he is just being a massive hypocrite.
According to the New York Post, Barack Obama enjoyed a total of 10 separate vacations that stretched over a total of 90 vacation days during the years of 2009 and 2010.
During his first two years in office, he also managed to play 29 rounds of golf.
Oh, but it is the rest of us that have to cut back on our vacations.
But it is not just the Obamas that are enjoying the high life right now.
The wealthy have recovered nicely from the “recession” and now they are spending money by the gobs once again.
According to Moody’s Analytics, the wealthiest 5% of households in the United States account for approximately 37% of all consumer spending.
Life is very good in America if you have got enough money.
A recent article in USA Today detailed some of the things that wealthy corporate executives are spending money on in 2011….
Luxury and high-end marketers have picked up on what they hope is a growing trend, offering products that bank on a looming spending spree. Germany’s PG-Bikes is rolling out the $80,000 Black Trail, a battery-powered bicycle. Swiss watchmaker Richard Mille is selling $525,000 timepieces. Steinway has launched a John Lennon-themed grand piano — at $90,000 and up. After selling out a $245,000 model, automaker Porsche is planning the 918 Spyder, a hybrid car that could sell for more than $630,000.
Nearly all luxury brands experienced a resurgence in 2010. Just check out some of the sales increases for luxury car brands….
At the exact same time, however, life is getting really, really hard for the rest of America.
There are tens of millions of Americans that would like to have a full-time job that are not able to get a full-time job. The number of Americans on food stamps has gone from about 26 million at the start of 2007 to 43 million today and it continues to set a brand new record every single month. One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.
Our economy has become a complete and total nightmare.
Over the past couple of days some of the readers of this column have been sharing some of their economic horror stories. But they are far from alone. There are literally millions of Americans with economic horror stories out there. It is just that we don’t get to hear too many stories from the “other America” on our televisions.
The following stories of economic pain are from people just like you and me. Times are incredibly hard for most of America right now, and they are only getting harder with each passing month….
My mother is unemployed. She is 61 years old, has 25 years of experience working for a major telecommunications corporation, and has a four-year degree. I watch her send application after application to employers with no response. I watch her get contacted by recruiters who say she is a ‘perfect fit’ for a job and never deliver. I watch her slide into depression and staying in bed many hours of the day.
I am 38 years old, I have mental illness, and I recently lost my job as a delivery driver because the owner sold his business to a competitor.
I don’t believe that either my mother or I will ever be employed again. I am beginning to feel that I am permanently in the world of the unemployed.
I graduated college in May 2000 with a Bachelors degree in Broadcasting/Minored in History. I have worked for major corporations as an Enterprise Sales Consultant selling Servers. I was a Network Engineer for Qwest Communications. I even worked for the Federal Government and held a Security Clearance for 4 years. I also won Dell Small Business Sales Consultant of the quarter as well. But since I don’t have an active clearance anymore no one wants to hire me in D.C. I lost my job in 07/2010 and from 07/2010-Present I have been unemployed. My food stamps were also recently cut off last month since the State of Virginia decided that for a household of 1 you can’t make more than $1178 a month. I make $1250 a month in Unemployment compensation before taxes so according to the Government I am too rich to receive Food stamps now. My Rent, Gas and Car insurance is $1000 a month and I am holding on for dear life. I am currently in the process of declaring Chapter 7 Bankruptcy and using my tax return to pay the attorney $1500 to file. That leaves me with only #250 a month for food, water and cell phone.
I have a list compiled in my Google email with approximately 784 applications I have filled out for every government agency, defense contractor and job available in the Washington, DC area. I even applied to Carmax and my old job in college waiting tables at red Lobster and the moving company I used to work at during the summers in college. If its bad for someone like me with over 10 years of Sales, Server/computer experience, Investigations and Network Engineering than I can’t imagine how bad it is for people that just have a high school diploma. I have been on one interview out of the almost 1000 jobs I have applied to (It takes about 2 hours to apply to one job). The one interview I went on offered me less than my unemployment gives me at $8 an hour. I can sit at home and make more money on unemployment than 80% of the jobs that I have applied too and even those jobs don’t call me. Is this what America has become? Is this what I sacrificed 5 years of my life in college from 17 years old to 21 years old and spent $40,000 to get a worthless degree that won’t even get you hired?
Well, My family has been ripped to shreds alright.
Overall combined (My father, and myself) make about 60k a year. We can barely survive we keep looking to cut things, and make things cheaper but it’s just not working fast enough.
My wife can’t find a job, and now student loans are starting to become issues. (won’t go in to further details).
Tax returns taken, and various other things, Can’t even afford dental care. We don’t even get to go out anymore, and lucky to get any type of snacks. Just so you know there are 5 people living in this house.
The only reason I am not out on the street is that when I had money I paid off my mortgage.
However, because I did that, my food stamp allotment is only $25 a month. The heating assistance I get only paid for less than one months’ heat out of the six months I need here in Pennsylvania. All other expenses use up what’s left, so you learn to eat at home; I try not to leave the house because it’s going to cost me money.
I blame Congress for destroying America. They have given tax breaks to themselves and their rich friends at our expense. Did you know that anybody who serves 5 years in Congress gets a FULL pension at age 62? Us peasants work for 45 years and then if we retire at age 62 we are forced to give up 25% of what we earned.
I lost my house, my family was split, and all my savings is gone.
I have lost hope. I served in the military, went to college and have high tech skills. My country doesn’t give a ***** about me. The bankers are as evil as the communists and I hate them.
I’m also 38, and have worked in IT since the mid 90s. I lost my full time job in April ’03, and have only been able to find short term temporary work since. The contracts started to get shorter and fewer as the years went on, so in spring ’10 I retrained to be an Emergency Medical Technician (EMT) but have not been able to find work in the last 9 months. An ambulance company I applied with said that they have hundreds of applications in several Northern CA counties but no job openings. And health care jobs are supposed to be on the the only areas of growth. I deliver pizzas for cash on and off and am getting unemployment.
I lost track of how many resumes I’ve sent out during the past several months. My neighbors think I’m trying to win the Publishers Clearing House sweepstakes or something (yeah, that would help too! Ha!)
Maybe I should go back to school and become an RLP (Rejection Letter Professional).
The rent at the place I lived was so high that I couldn’t afford it on a school bus driver’s salary, which I was doing for the past few years, because in spite of 30 years clerical experience, where I performed every function from clerk typist to executive legal secretary, I could not find employment. So I applied for subsidized housing and was forced to move back to Chicago, where the crime rate is very high in certain areas.
Before I moved I was getting $200 in food stamps, but now that I am in subsidized housing, I have to go and reapply and if I get anything at all, I have heard that it will be about $52 a month! Although the rent is subsidized, I have to pay for my own heat, and the building in which I live is completely electric! Energy assistance doesn’t cover it. They give with one hand and take away with the other.
All of the people above are still “surviving”, but what do you think is going to happen to many of them as the cost of living goes up dramatically? Brent crude just hit $108 a barrel and the UN says that the global price of food recently hit a new all-time high.
Americans on fixed incomes or that are on government assistance are going to be absolutely devastated if prices for basics such as food and gas rise substantially.
Not only that, but budget cuts on the federal, state and local levels are also going to hurt many of these people deeply.
But this is where we are at as a nation. A small privileged class is enjoying the high life while a rapidly growing poverty class pleads for the government to toss them some more crumbs.
The American people deserve better than this. They deserve an economy that will provide them with good jobs which will enable them to pay their mortgages and feed their families.
Unfortunately, the U.S. economy is dying. The number of good jobs is actually declining. The middle class is being systematically wiped out.
The answer is not to “tax the rich” so that we can toss the rapidly growing poverty class a few more crumbs. The answer is to radically transform our economy back into the kind of economy our founding fathers originally intended.
But wealthy corporate executives and politicians such as Barack Obama are not going to have any of that. Those sitting on top don’t want any real change to happen. Sadly, the general population has become so dumbed-down that they don’t even know the questions that they should be asking.
So unfortunately it appears we are going to keep heading down the exact same economic path that we have been heading for decades. The middle class will keep being ripped apart and politicians like George W. Bush and Barack Obama will just keep on smiling.
What you are about to read is perhaps the most heartbreaking story that I have ever come across. It is so tragic that I am not even quite sure how to introduce it. Some time ago, a reader named Ashley sent me an email that described the nightmare that she has been living through over the past year. Ashley’s email was very different from the vast majority of emails I usually receive, and I wrote her back right away and asked her some questions. One of the most important questions I asked was whether or not she really wanted me to share her story with the public. Privacy is such a precious thing, and I wanted her to understand that if I shared her story that thousands upon thousands of people would end up seeing it. After considering what I had to say, Ashley said that she was 100% sure that I should share her story because she felt that it could really help some people.
Sometimes it can be really easy to get lost in the economic numbers and to forget that this economy is really and truly destroying lives. The truth is that there are millions of Americans out there today that are hurting just like Ashley is. Her story is more dramatic than most, but that doesn’t mean that we all don’t know someone that could use our help. We have lost our sense of community in America, and thousands upon thousands of people like Ashley are falling through the cracks.
I cannot even imagine going through the things that Ashley has had to go through over the past year. If you think about it, please say a prayer for her. Also, let this story be an inspiration to all of us to stop being so cold-hearted and to help out those in need that are all around us.
The following is Ashley’s story as told in her own words….
My name is Ashley. I live in Upstate New York I have been reading your Economic Collapse blog for the past year. Everything that you have said is true. Our economy is dying, and the economic collapse has destroyed the lives of many, many people. I should know. I am one of them. I lost my house, my car, my feet and my father, all in just seven months.
My father and I had a great life together. He raised me as a single parent. My mother died while giving birth to me. So it was just him and me as I was growing up, and things were wonderful for us, but then everything changed.
In September of 2009, my father was laid off from his job after 26 years. He tried so hard to find another job, but he just couldn’t get one. The economy was too horrible. As a result of the loss of income, he was unable to continue making the mortgage and car payments. Our car was repossessed, and not long after that, the bank foreclosed on us and we lost our house.
We moved into a low rent, hole in the wall apartment and lived off of his savings and his unemployment benefits for the next few months. Finally, in December of 2009, I was lucky enough to get a part time job at a pizza place. It was a really long walk from our apartment, but we needed the money badly. So I took the job.
By mid winter, my old snow boots, which had successfully lasted me through several terrible winters, were beginning to rapidly deteriorate. They had holes all over them and they were splitting at the seams. My feet were soaked and freezing all day long. At that point, we were lucky to have food on the table. We had to watch every penny. We couldn’t afford to get me new boots. So I had to make do with the ones I had. My father worked feverishly to try and repair them. He spent hours supergluing them duct taping them. In addition to that, I doubled up on socks and wore plastic bags inside my boots, but nothing did any good. My feet still got drenched.
One morning, in mid February of 2010, I took the last walk I would ever take on my own two feet. There was a huge blizzard raging outside, but we couldn’t afford to lose a day’s worth of pay. So I ventured out into the blizzard and made the long trudge to work anyway. As usual, my feet were drenched and freezing within minutes of leaving my apartment, but there was no choice but to just stick it out. So I kept going. I finally arrived at work to find the place closed. Nobody had called to tell me. There was nothing to do but turn around and make the long trudge back home. By the time I got home, I knew that something was seriously wrong with my feet. They felt horrible. My father helped me out of my drenched boots and socks and we discovered that my feet were all purple and swollen. They were severely frostbitten.
My father was terrified to take me to the emergency room because that would have bankrupted us. So he did everything he could to try and rewarm my feet at home. He spent the next several days giving me hot chocolate, bundling my feet up in blankets, putting my feet on his stomach, etc. But nothing did any good. My feet didn’t get any better. They just kept getting worse. They eventually turned black and began to ooze. At that point, my father broke down and called a car service to take us to the hospital. The doctors told us that, given the extent of the damage, they would not able to save my feet. The frostbite had progressed too far. I ended up having both of my feet amputated.
For the next whole month, my father didn’t do anything but sob. He sobbed himself to sleep every night. He blamed himself for me losing my feet. I rolled myself into his room on my wheelchair every night and wrapped my arms around him as tight as I could. I told him that it wasn’t his fault and that I didn’t blame him for anything. I told him he was the best father any girl could ever have and that I wouldn’t trade him for anything. I think it helped a little in the moment, but as time went on, he just fell further and further into depression.
On the morning of March 15th, 2010, I was awakened by a knock on the door from a police officer. He told me that my father was dead. I told the officer that was ridiculous and that there had been a mistake, but he insisted that my father was dead and that I should come with him. I went racing into my father’s room as fast as my wheelchair could carry me, but he was gone. There was a note on his bed that he had left for me. In the note, he told me that he loved me dearly. He loved me more than anything, but that he had failed me. He told me that I would be better off without him. At that moment, my heart stopped as I began to realize what must have happened. Horrified, I made my way back to the police officer, and he told me that my father had jumped out the window of our apartment in the middle of the night. I went into shock and begged the police officer to let me see him, but he insisted that I wouldn’t want to see him that way. I started sobbing so hard that the police ended up having to take me to the hospital.
I’ve cried myself to sleep every night since. I’ll never understand how my father could have thought that I’d be better off without him. If only he had known how much I needed him. If it wasn’t for my extremely kind hearted and caring neighbor, I don’t know where I would be right now. She’s such a sweet lady. After I lost my father, she took me in and took care of me as though I were her own family. She has gradually helped nurse me back to health, both physically and mentally.
This is probably going to sound really crazy, but throughout this past year, you have been one of my heroes, Michael. As devastating as the truth of your words may be, it is refreshing that somebody has the good sense and the good judgement to come forward and say them. All the government and the media do is lie to us, every single day. I only wish more people would listen to you and heed your warnings. Feel free to post my story on your blog if you would like. You have my permission to do so. I just ask that you not reveal my full name and my email address. Just use my first name. Perhaps my story will serve some purpose in the way of helping to wake some of these idiots up and getting them to realize that this nightmare is real.
In a shocking new interview, Donald Trump has gone farther than he ever has before in discussing a potential economic collapse in America. Using phrases such as “you’re going to pay $25 for a loaf of bread pretty soon” and “we could end up being another Egypt”, Trump explained to Newsmax that he is incredibly concerned about the direction our economy is headed. Whatever you may think of Donald Trump on a personal level, it is undeniable that he has been extremely successful in business. As one of the most prominent businessmen in America, he is absolutely horrified about what is happening to this nation. In fact, he is so disturbed about the direction that this country is heading that he is seriously considering running for president in 2012. But whether he decides to run in 2012 or not, what Trump is now saying about the U.S. economy should be a huge wake up call for all of us.
Trump says that the U.S. government is broke, that all of our jobs are being shipped overseas, that other nations are heavily taking advantage of us and that the value of the U.S. dollar is being destroyed. The following interview with Trump was originally posted on Newsmax and it is really worth watching….
Now, you may or may not think much of Donald Trump as a politician, but when a businessman of his caliber starts using apocalyptic language to describe where the U.S. economy is headed perhaps we should all pay attention.
The following are 12 key quotes that were pulled out of Trump’s new interview along with some facts and statistics that show that what Trump is saying is really happening.
#1“If oil prices are allowed to inflate and keep inflating, if the dollar keeps going down in value, I think there’s a very distinct possibility that things could get worse.”
Donald Trump is exactly right – we are headed for big trouble if we continue to allow the Federal Reserve to pump hundreds of billions of new dollars into the system. As I have written about previously, all of this new money will give us the illusion of short-term economic growth and it will pump up the stock market, but in the end all of the inflation the new money is gong to cause is going to be very painful. Just look at how rapidly M1 has been skyrocketing over the last couple of years. Is there any way that we are going to be able to avoid paying a very serious price for all of this reckless money printing?….
Already all of this money printing has had a very serious affect on world financial markets. The price of agricultural commodities is skyrocketing and the price of oil has almost reached $100 a barrel once again. The last time that the price of oil soared above $100 a barrel was in the early part of 2008, and we all remember the horrific financial collapse that followed in the fall of 2008.
#2“….you’re going to pay $25 for a loaf of bread pretty soon. Look at what’s happening with our food prices. They’re going through the roof. We could end up being another Egypt. You could have riots in our streets also.”
The price of corn has risen 88 percent over the past year and the price of wheat has soared a whopping 114 percent over the past year. Let’s hope that we don’t have to pay $25 for a loaf of bread in the United States any time soon, but in some areas of the world that is what it now feels like.
Approximately 3 billion people in the world today live on the equivalent of $2 a day or less, and most of that money ends up getting spent on food. When food prices go up 10 or 20 percent in deeply impoverished areas of the globe, suddenly the lives of millions are threatened. The riots that we have seen in Egypt, Algeria, Tunisia and other nations recently were not entirely caused by rising food prices, but they were certainly a big factor.
#3“I think gold will go up as long as people don’t have confidence in our president and our country. And they don’t have confidence in our president.”
Investors run to gold and other precious metals when they don’t feel secure. We saw that happen a lot in 2010. As confidence in the paper currencies and the financial systems of the world has rapidly diminished, precious metals have become increasingly attractive.
In fact, the price of gold has doubled since the beginning of the economic downturn in 2007. As the global financial situation continues to become more unstable, the demand for precious metals is likely only going to become more intense.
#4“The banks have really let us down. Number one, they did some bad things and caused some bad problems. Number two, if you have something that you want to buy, like a house, they’re generally not there for you.”
Banks were given massive bailouts with the understanding that they would open up the vaults and start lending money to average Americans again.
Well, that has not happened.
In particular, it has become much, much harder to get a mortgage in the United States today. Not that the big banks didn’t need to make changes to their lending practices, but things have gotten so tight now that it is choking the real estate market to death.
#5“I see $3.50 for a gallon of gas for cars, and cars are lined up trying to get it and it’s $3.50. It’s a shame, a ridiculous shame.”
Our lack of a cohesive energy policy is a national disgrace. There is no way in the world that a gallon of gas should be $3.50 a gallon.
The U.S. has massive reserves of oil and natural gas that it should be using. In addition, the lack of progress on developing alternative energy sources in light of our sickening dependence on foreign oil is very puzzling. We should be very far along towards solving our energy problems by this point.
Meanwhile, we keep pouring billions into the pockets of foreign oil barons every single month. Unfortunately, Trump was exactly correct in the interview – if something is not done the price of gas is going to keep going higher.
#6“I think the biggest threat is that our jobs are being stolen by other countries. We’re not going to have any jobs here pretty soon.”
Donal Trump is one of the few prominent leaders that is openly speaking the truth about the predatory economic practices of some of our “trading partners”. Most of our politicians have just kept endlessly promising us that free trade is “good for us” even as tens of thousands of factories and millions upon millions of jobs have been shipped overseas.
Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs.
Yes, computers and robots have replaced a lot of manual labor today, but technology does not account for most of the decline we have seen in manufacturing.
n 1959, manufacturing represented 28 percent of all U.S. economic output. In 2008, it represented only 11.5 percent. Meanwhile, manufacturing in the “developing world” has absolutely exploded.
#7“We’re like a whipping post for other countries. We are standing there and just being beaten by South Korea, by Mexico, by China, by India.”
Most Americans have absolutely no idea how lopsided many of our “trade agreements” actually are. Other nations openly manipulate their currencies in order to keep their exports dirt cheap and we allow it. Other nations openly subsidize their domestic industries that are directly competing with businesses in the United States and we don’t complain. Other nations make it incredibly difficult for American companies to do business in their countries while we allow foreign corporations to come on in and do pretty much whatever they want here.
Then there are certain nations (such as China) that brazenly rip off trade secrets from foreign corporations time after time after time and never get penalized for it.
Meanwhile, our economy continues to bleed jobs at a staggering pace. The number of net jobs gained by the U.S. economy during this past decade was smaller than during any other decade since World War 2.
Fortunately, more Americans than ever seem to be waking up and are realizing that globalism is causing many of these problems. A NBC News/Wall Street Journal poll conducted last year discovered that 69 percent of Americans now believe that free trade agreements have cost America jobs.
#8“All of our jobs are going to China. We’re rebuilding China and other places.”
Most Americans don’t realize that China is literally kicking the crap out of us.
Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.
Every single month we buy about 4 times as much stuff from them as they buy from us. Our trade deficit with China has ballooned to enormous proportions. In fact, the U.S. trade deficit with China during this past August was more than 4,600 times larger than the U.S. trade deficit with China was for the entire year of 1985.
So when Donald Trump says that we are rebuilding China he is not joking around.
Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.
Yes, that is how serious things have become.
#9“We are a laughingstock throughout the world.”
Donald Trump has said on several occasions that his friends and business partners in China just laugh and laugh at us. They can’t even believe what they are getting away with.
We have become an incompetent giant that is the butt of all the jokes.
According to Stanford University economics professor Ed Lazear, if the U.S. economy and the Chinese economy continue to grow at current rates, the average Chinese citizen will be wealthier than the average American citizen in just 30 years.
Our formerly great industrial cities are slowly becoming ghost towns. The number of long-term unemployed Americans is at an all-time high. Tens of millions of Americans can’t even survive without government assistance anymore. The number of Americans on food stamps set a new all-time record every single month during 2010, and now well over 43 million Americans are enrolled in the program.
We really have become a joke.
#10“The federal government has no money.”
Unfortunately, our federal government has continued to borrow and spend like there is no tomorrow.
Do you have an extra $150,000 to contribute for your share?
By 2015 our national debt will be somewhere in the neighborhood of 20 trillion dollars.
It is the biggest mountain of debt in the history of the world by far, and it is the gift that we are going to pass down to future generations of Americans.
If there are any future generations of Americans.
#11“I hate what is happening to this country.”
We should all hate what is happening to this country. Our economic guts are being ripped out, we are being abused by the rest of the world, America’s infrastructure is being sold off piece by piece, our federal government is drowning in debt, our state governments are drowning in debt and our local governments are drowning in debt.
The only way we can even keep going is to run around to the rest of the world and beg them to keep lending us more money.
The mainstream media keeps proclaiming that we are the greatest economy on earth, but the truth is that we are being transformed into a pathetic loser and our politicians are just standing there with their hands in their pockets letting it happen.
All red-blooded Americans should be horrified by what is happening to this nation. We have been betrayed by corrupt and incompetent leaders. As a nation, we have become fat, lazy and stupid.
Hopefully what Donald Trump and others are saying about a coming economic collapse will serve as a huge wake up call and the sleeping giant will arise once again.
If the sleeping giant does not arise, we are in a massive amount of trouble, because right now the road we are on is leading to the biggest economic collapse the world has ever seen.
We are officially in the middle of the worst housing collapse in U.S. history – and unfortunately it is going to get even worse. Already, U.S. housing prices have fallen further during this economic downturn (26 percent), then they did during the Great Depression (25.9 percent). Approximately 11 percent of all homes in the United States are currently standing empty. In fact, there are many new housing developments across the U.S. that resemble little more than ghost towns because foreclosures have wiped them out. Mortgage delinquencies and foreclosures reached new highs in 2010, and it is being projected that banks and financial institutions will repossess at least a million more U.S. homes during 2011. Meanwhile, unemployment is absolutely rampant and wage levels are going down at a time when mortgage lending standards have been significantly tightened. That means that there are very few qualified buyers running around out there and that is going to continue to be the case for quite some time to come. When you add all of those factors up, it leads to one inescapable conclusion. The “housing Armageddon” that we have been experiencing since 2007 is going to get even worse in 2011.
Right now there is a gigantic mountain of unsold homes in the United States. It is estimated that banks and financial institutions will repossess at least a million more homes this year and this will make the supply of unsold properties even worse. At the same time, millions of American families have been scared out of the market by this recent crisis and millions of others cannot qualify for a home loan any longer. That means that the demand for unsold homes is at extremely low levels.
So what happens when supply is really high and demand is really low?
That’s right – prices go down.
Hopefully housing prices don’t have too much farther to go down. Ben Bernanke and the boys over at the Federal Reserve are doing their best to flood the system with new dollars in order to prop up asset values, but you just can’t create qualified home buyers out of thin air.
Many analysts are projecting that U.S. housing prices will decline another ten or twenty percent before they hit bottom. In fact, quite a few economists believe that the total price decline from the peak of the market in 2006 will end up being somewhere in the neighborhood of 40 percent.
But whether prices go down any further or not, the truth is that the housing crash that we have already witnessed is absolutely unprecedented.
The following are 12 facts which show that we are in the midst of the worst housing collapse in U.S. history….
#3 According to the S&P/Case-Shiller index, U.S. home prices fell 1.3 percent in October and another 1 percent in November. In fact, November represented the fourth monthly decline in a row for U.S. housing prices. Many economists are now openly using the term “double-dip” to describe what is happening to the housing market.
#5 According to RealtyTrac, a total of 3 million homes were repossessed by mortgage lenders between January 2007 and August 2010. This represents a huge amount of additional inventory that somehow must be sold.
#672 percent of the major metropolitan areas in the United States had more foreclosures in 2010 than they did in 2009.
#8 It is estimated that there are about 5 million homeowners in the United States that are at least two months behind on their mortgages, and it is being projected that over a million American families will be booted out of their homes this year alone.
#9 Deutsche Bank is projecting that 48 percent of all U.S. mortgages could have negative equity by the end of 2011.
#10 Some formerly great industrial cities are rapidly turning into ghost towns. For example, in Dayton, Ohio today 18.9 percent of all houses are now standing empty. 21.5 percent of all houses in New Orleans, Louisiana are standing vacant.
#11 According to Zillow, U.S. home prices have already fallen further during this economic downturn (26 percent) than they did during the Great Depression (25.9 percent).
#12 There are very few signs that the employment situation in the United States is going to improve any time soon. 4.2 million Americans have been unemployed for one year or longer at this point. While there has been some nominal improvement in the government unemployment numbers recently, other organizations are reporting that things are getting even worse. According to Gallup, the unemployment rate actually rose to 9.6% at the end of December. This was a significant increase from 9.3% in mid-December and 8.8% at the end of November.
But even many Americans that do have jobs are finding out that it has become very, very hard to qualify for a home loan.
In an attempt to avoid the mistakes of the past, banks and financial institutions have become very stingy with home loans. While it was certainly wise for them to make some changes, the truth is that perhaps the pendulum has swung too far at this point. The U.S. housing industry will never fully recover if they can’t get their customers approved for mortgages.
Congress is talking about passing even more laws that will make it even more difficult to get home loans. Even though they give speeches about how they want to help the U.S. housing industry, the truth is that Republicans and Democrats are both backing proposals that would make home mortgages much more expensive and much more difficult to obtain as a Bloomberg article recently explained….
Government officials and lawmakers want to make the market less vulnerable to another credit crisis, and all the options lead the same general direction: Borrowers will need larger down payments than in the bubble years, have higher credit scores, and pay extra fees to cover risks and premiums for federal guarantees on government-backed mortgage bonds.
While all that may sound reasonable, the truth is that the U.S. middle class has become so cash poor that the vast majority of them cannot afford homes without the kind of mortgages that were available in the past.
Not that we should go back and repeat the mistakes of the past 20 years. It is just that nobody should expect the U.S. housing market to “bounce back” in an environment that has fundamentally changed.
The housing market is not like other financial markets. It is difficult to artificially pump it up with funny money. If the U.S. housing market is going to rebound, it is going to take lots of average American families getting qualified for loans and going out and buying houses. But they can’t do this if they do not have good jobs. Today, only 47 percent of working-age Americans have a full-time job at this point. Without a jobs recovery there never will be a housing recovery.
In fact, there are all kinds of warning signs that seem to indicate that the U.S. economy could get even worse in 2011. Many economists are now openly using the word “stagflation” for the first time since the 1970s. Back in the 70s we had both high unemployment and high inflation at the same time.
Well, we have already had very high unemployment, and thanks to the relentless money printing of the Federal Reserve, it looks like we are going to have high inflation as well.
Middle class American families are going to be spending even more of their resources just trying to survive, and this is going to make it more difficult for them to purchase homes.
In fact, in recent years average Americans have been getting significantly poorer. Over the past two years, U.S. consumers have withdrawn $311 billion more from savings and investment accounts than they have put into them. That is very troubling news.
Now the price of food is soaring and the price of oil is about to cross $100 a barrel again. So what is going to happen if we have another major financial crisis and we witness another huge spike in the unemployment rate?
The Federal Reserve is trying to smooth all of our problems over with a flood of paper money, but it isn’t going to work. Yes, increasing the money supply will produce some false highs on the stock market and some false economic growth statistics for a while, but the tremendous damage that will be done to the economy is just not worth it.
In any event, let us all hope that we see some really great real estate deals over the next couple of years, because in the times ahead land will be something very good to own. In fact, down the road it will be much better to own land than to have your money sitting in the bank where it will continuously decline in value.
Use your paper money wisely. It will never have more value than it does today.
So what do all of you think? Is the “housing Armageddon” almost over, or do housing prices still need to decline a bit more? Feel free to leave a comment with your opinion below….
2010 was quite a year, wasn’t it? 2010 will be remembered for a lot of things, but for those living in the United States, one of the main things that last year will be remembered for is economic decline. The number of foreclosure filings set a new record, the number of home repossessions set a new record, the number of bankruptcies went up again, the number of Americans that became so discouraged that they simply quit looking for work reached a new all-time high and the number of Americans on food stamps kept setting a brand new record every single month. Meanwhile, U.S. government debt reached record highs, state government debt reached record highs and local government debt reached record highs. What a mess! In fact, even many of the “good” economic records that were set during 2010 were indications of underlying economic weakness. For example, the price of gold set an all-time record during 2010, but one of the primary reasons for the increase in the price of gold was that the U.S. dollar was rapidly losing value. Most Americans had been hoping that 2010 would be the beginning of better times, but unfortunately economic conditions just kept getting worse.
So will things improve in 2011? That would be nice, but at this point there are not a whole lot of reasons to be optimistic about the economy. The truth is that we are trapped in a period of long-term economic decline and we are now paying the price for decades of horrible decisions.
Amazingly, many of our politicians and many in the mainstream media have declared that “the recession is over” and that the U.S. economy is steadily improving now.
Well, if anyone tries to tell you that the economy got better in 2010, just show them the statistics below. That should shut them up for a while.
The following are 20 new economic records that were set during 2010….
#3 The price of gold moved above $1400 an ounce for the first time ever during 2010.
#4 According to the American Bankruptcy Institute, approximately 1.53 million consumer bankruptcy petitions were filed in 2010, which was up 9 percent from 1.41 million in 2009. This was the highest number of personal bankruptcies we have seen since the U.S. Congress substantially tightened U.S. bankruptcy law several years ago.
#6 Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, only 9 percent of the jobs in the United States are manufacturing jobs, which is believed to be a new record low.
#7 The number of Americans working part-time jobs “for economic reasons” was the highest it has been in at least five decades during 2010.
#8 The number of American workers that are so discouraged that they have given up searching for work reached an all-time high near the end of 2010.
#9 Government spending continues to set new all-time records. In fact, at the moment the U.S. government is spending approximately 6.85 million dollars every single minute.
#10 The number of Americans on food stamps surpassed 43 million by the end of 2010. This was a new all-time record, and government officials fully expect the number of Americans enrolled in the program to continue to increase throughout 2011.
#12 The U.S. Census Bureau originally announced that 43.6 million Americans are now living in poverty and according to them that was the highest number of Americans living in poverty that they had ever recorded in 51 years of record-keeping. But now the Census Bureau says that they miscalculated and that the real number of poor Americans is actually 47.8 million.
#13 According to the FDIC, 157 banks failed during 2010. That was the highest number of bank failures that the United States has experienced in any single year during the past decade.
#14 The Federal Reserve brought in a record $80.9 billion in profits during 2010. They returned $78.4 billion of that to the U.S. Treasury, but the real story is that thanks to the Federal Reserve’s continual debasement of our currency, the U.S. dollar was worth less in 2010 than it ever had been before.
#15 It is projected that the major financial firms on Wall Street will pay out an all-time record of $144 billion in compensation for 2010.
#18 According to Zillow, U.S. housing prices have now declined a whopping 26 percent since their peak in June 2006. Amazingly, this is even farther than house prices fell during the Great Depression. From 1928 to 1933, U.S. housing prices only fell 25.9 percent.
#19 State and local government debt reached at an all-time record of 22 percent of U.S. GDP during 2010.
#20 The U.S. national debt has surpassed the 14 trillion dollar mark for the first time ever and it is being projected that it will soar well past 15 trillion during 2011.
There are some people that have a hard time really grasping what statistics actually mean. For people like that, often pictures and charts are much more effective. Well, that is one reason I like to include pictures and graphs in many of my articles, and below I have posted my favorite chart from this past year. It shows the growth of the U.S. national debt from 1940 until today. I honestly don’t know how anyone can look at this chart and still be convinced that our nation is not headed for a complete financial meltdown….
How soon will it be before people finally start using the term “depression” to describe what has happened to the U.S. housing market? It has been four and a half years since housing prices began to decline, and they are still falling. In fact, U.S. housing prices have now fallen further during this economic downturn than they did during the Great Depression of the 1930s. Just think about that. We are now in unprecedented territory, and most analysts believe that U.S. house prices will continue to decline in 2011. Mortgage rates have been moving up, mortgage delinquencies are on the rise again, U.S. mortgage lenders have really tightened lending standards and “foreclosuregate” continues to plague the entire mortgage industry. It would be really nice for the overall economy if house prices did go up in 2011, but right now it looks like that simply is not going to happen.
For many U.S. homeowners, all of this is absolutely sickening. Millions of homeowners are stuck in houses that they desperately want to sell, but they don’t want to take huge losses on their investments either.
Millions of other U.S. homeowners are stuck paying on mortgages that are for far, far more than their homes are now worth.
Could you imagine paying $400,000 for a home that is now only worth $200,000?
Unfortunately, U.S. house prices just continue to decline.
According to CoreLogic, U.S. house prices have fallen for four months in a row, and in November (the last month CoreLogic has released numbers for) housing prices actually fell 5.1% on a year-over-year basis.
Sadly, house prices have dropped so much at this point that we have entered truly historic territory.
According to Zillow, U.S. housing prices have declined a whopping 26 percent since their peak in June 2006. Amazingly, this is even farther than house prices fell during the Great Depression. From 1928 to 1933, U.S. housing prices only fell 25.9 percent. A brand new record has now been established.
So have we hit bottom yet?
Will house prices recover in 2011?
Unfortunately, every indication seems to point to even more declines in U.S. home prices. The following are five key factors that will continue to drive house prices down….
#1 Mortgage Rates Are Going Up
Over the past couple of months, mortgage rates in the United States have been moving up fairly steadily. That is going to make mortgages even more expensive for potential home buyers.
#2 Mortgage Delinquencies Are Increasing Again
As we approached the end of 2010, the number of mortgages in the U.S. that are “seriously delinquent” started to creep up once again. That means that we are likely to see another bump in foreclosures at some point in 2011. There are already way, way too many homes on the market, so more foreclosures will only add even more supply to a market that already has way too many homes for sale.
#3 Mortgage Lenders Have Really Tightened Standards
Most large financial institutions have responded to the mistakes of the past decade by really, really tightening mortgage standards. It is now much harder to get a home loan in the United States. But if less people can qualify for a mortgage that means that less people will be out there buying homes.
#4 The Entire Mortgage Industry Continues To Be Mired In Legal Problems
Foreclosuregate is a huge story that simply refuses to go away. For example, just the other day the highest court in Massachusetts voided the seizure of two homes after the big banks involved failed to prove that they actually held the mortgages at the time they foreclosed. This case made headlines all over the nation, and precedents such as this will encourage even more homeowners to challenge their foreclosures in court. This is going to be really bad for the big mortgage lenders and it is going to really slow down the pace of mortgage lending.
#5 The Underlying Economy Continues To Be Very Poor
The American people cannot afford to buy good homes if they do not have good jobs. But today there are seven million fewer middle class jobs than there were about ten years ago. As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer. Until there is a “jobs recovery” there simply is not going to be a “housing recovery”.
There are very few top economists that are actually optimistic about the U.S. housing market in 2011. In fact, there seems to be an emerging consensus among analysts that house prices in America are going to decline quite substantially this year….
*Mark Zandi of Moody’s Analytics says that U.S. house prices are “double dipping” and that we will likely see another 5 percent decline in housing prices during 2011.
*Zillow chief economist Stan Humphries expects home prices to continue to fall until at least mid-2011 and he is convinced that more hard times for the U.S. real estate market are still to come….
“Zillow believes that we’ll see bottom in national home values in Q2 or Q3 of 2011 (more likely the latter), that home values will fall another 5-7% nationally (in the Zillow Home Value Index) between now and then, and that we’ll experience a very long, protracted bottom before home value appreciation returns to historically normal rates.“
So it looks like the U.S. housing crash is going to continue for a while.
For those that make a living by building or selling homes, this has got to be very depressing news.
But for those that are seeking to buy a house or that are seeking to buy some land, there could potentially be some very good deals out there over the next year or two.
So what do you think is going to happen to house prices in 2011? Please feel free to leave a comment with your analysis….
Most Americans have become so accustomed to the “new normal” of continual economic decline that they don’t even remember how good things were just a few short years ago. Back in 2007, unemployment was very low, good jobs were much easier to get, far fewer Americans were living in poverty or enrolled in welfare programs and government finances were in much better shape. Of course most of this prosperity was fueled by massive amounts of debt, but at least times were better. Unfortunately, things have really deteriorated over the last several years. Since 2007, unemployment has skyrocketed, foreclosures have set new all-time records, personal bankruptcies have soared and U.S. government debt has gotten completely and totally out of control. Poll after poll has shown that Americans are now far less optimistic about the future than they were in 2007. It is almost as if the past few years have literally sucked the hope out of millions upon millions of Americans.
Sadly, our economic situation is continually getting worse. Every month the United States loses more factories. Every month the United States loses more jobs. Every month the collective wealth of U.S. citizens continues to decline. Every month the federal government goes into even more debt. Every month state and local governments go into even more debt.
Unfortunately, things are going to get even worse in the years ahead. Right now we look back on 2005, 2006 and 2007 as “good times”, but in a few years we will look back on 2010 and 2011 as “good times”.
We are in the midst of a long-term economic decline, and the very bad economic choices that we have been making as a nation for decades are now starting to really catch up with us.
So as horrible as you may think that things are now, just keep in mind that things are going to continue to deteriorate in the years ahead.
But for the moment, let us remember how far we have fallen over the past few years. The following are 14 eye opening statistics which reveal just how dramatically the U.S. economy has collapsed since 2007….
#1 In November 2007, the official U.S. unemployment rate was just 4.7 percent. Today, the official U.S. unemployment rate is 9.4 percent.
#2 In November 2007, 18.8% of unemployed Americans had been out of work for 27 weeks or longer. Today that percentage is up to 41.9%.
#3 As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer.
#4 Nearly 10 million Americans now receive unemployment insurance, which is almost four times as many as were receiving it back in 2007.
#5 More than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the “recession” began in December 2007.
#7 As 2007 began, only 26 million Americans were on food stamps. Today, an all-time record of 43.2 million Americans are enrolled in the food stamp program.
#8 In 2007, the U.S. government held a total of $725 billion in mortgage debt. As of the middle of 2010, the U.S. government held a total of $5.148 trillion in mortgage debt.
#9 In the year prior to the “official” beginning of the most recent recession in 2007, the IRS filed just 684,000 tax liens against U.S. taxpayers. During 2010, the IRS filed over a million tax liens against U.S. taxpayers.
#10 From the year 2000 through the year 2007, there were 27 bank failures in the United States. From 2008 through 2010, there were 314 bank failures in the United States.
#11 According to the U.S. Department of Housing and Urban Development, the number of U.S. families with children living in homeless shelters increased from 131,000 to 170,000 between 2007 and 2009.
#12 In 2007, one poll found that 43 percent of Americans were living “paycheck to paycheck”. Sadly, according to a survey released very close to the end of 2010, approximately 55 percent of all Americans are now living paycheck to paycheck.
#14 As 2007 began, the U.S. national debt was just under 8.7 trillion dollars. Today, the U.S. national debt has just surpassed 14 trillion dollars and it continues to soar into the stratosphere.
So is there any hope that we can turn all of this around?
Unfortunately, the massive amount of debt that we have piled up as a society over the last several decades has made that impossible.
If you add up all forms of debt (government debt, business debt, individual debt), it comes to approximately 360 percent of GDP. It is the biggest debt bubble in the history of the world.
If the federal government and our state governments stop borrowing and spending so much money, our economy would collapse. But if they keep borrowing and spending so much money they will continually make the eventual economic collapse even worse.
We are in the terminal stages of the most horrific debt spiral the world has ever seen, and when the debt spiral gets stopped the house of cards is going to finally come down for good.
So enjoy these times while you still have them. Yes, today is not nearly as prosperous as 2007 was, but today is most definitely a whole lot better than 2015 or 2020 is going to be.
Sadly, we could have avoided this financial disaster completely if only we had listened more carefully to those that founded this nation. Once upon a time, Thomas Jefferson said the following….
I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.