The
American Dream
Wednesday, March 9, 2011
If you are not
aware of how rapidly the global economic situation is unraveling you need to
snap out of it and start paying attention. The world economy was
relatively stable in 2010, but here in 2011 things are deteriorating very quickly.
Right now there is major civil unrest in at least a dozen different nations in
Africa and the Middle East. The civil war going on in Libya has sent the
price of oil skyrocketing and the protests that are scheduled to begin in Saudi
Arabia later this month could send oil prices even higher. Meanwhile, the
sovereign debt crisis in Europe just seems to get worse by the day.
Several nations in Europe are suddenly finding that it has become extremely
expensive to finance more debt. It appears that it will only be a matter
of time before more bailouts are needed. Meanwhile, the United States is
also covered in a sea of red ink and the economic situation in the largest
economy on earth continues to deteriorate rapidly. It is as if the entire
world financial system has caught a virus that it just can’t shake, and now it
looks like another massive wave of financial disaster could be about to
strike. Does the global economy have enough strength to weather a major
oil crisis in 2011? How much debt can the largest nations in North
America and Europe take on before the entire system collapses under the
weight? Will 2011 be a repeat of 2008 or are we going to be able to get
through the rest of the year okay? Only time will tell.
But it is quickly
becoming clear that we are reaching a tipping point. If the price of oil
keeps going up, all hopes for any kind of an “economic recovery” will be
completely wiped out. But if the globe does experience another economic
slowdown, it could potentially turn the simmering sovereign debt crisis into an
absolute nightmare. The U.S. and most nations in Europe are having a very
difficult time servicing their debts and they desperately need tax revenues to
increase. If another major economic downturn causes tax revenues to go
down again it could unleash absolute chaos on world financial markets.
The global
economy is more interconnected than ever, and so a major crisis in one area of
the world can have a cascading effect on the rest of the globe. Just as
we saw back in 2008, if financial disaster strikes nobody is going to escape
completely unscathed.
So what should we
expect for the rest of 2011? Well, the truth is that it doesn’t look
good. The following are 21 signs of impending doom for the 2011 economy….
#1 The civil war in Libya now looks like it could drag on
for an extended period of time, and that is likely to drive the global price of
oil even higher.
#2 Barack Obama is publicly saying that NATO is now
considering “potential military options”
for solving the crisis in Libya.
#3 Kuwait exports more oil than Libya does, and it
looks like the civil unrest that has been sweeping the rest of the Middle East is now
starting to spread to that country.
#4 In Saudi Arabia, protest groups are planning a “Day of Rage” on March 11th. If a
revolution breaks out in that nation the entire global economy is going to be
thrown into turmoil.
#5 The average price of a gallon of gasoline in the
United States increased by 33 cents during the two-week
period that ended last Friday.
#6 According to the Oil Price Information Service, U.S.
drivers spent an average of $347 on gasoline
during the month of February, which was 30 percent more than a year earlier.
#7 It is being reported that the average price of a
gallon of gasoline in Europe has hit an all-time record of $8.63 a gallon.
#8 Ivory Coast produces nearly 40 percent of all the
cocoa in the world and protests against the government there are becoming
increasingly violent. If this violence continues to escalate you will
soon be paying a lot more for chocolate.
#9 The yield on 10-year Portuguese bonds has increased to 7.6%.
#10 The yield on 10-year Irish bonds has soared to 8.1%.
#11 The yield on 10-year Greek bonds has skyrocketed to a whopping 12.8%.
#12 Moody’s Investors Service has reduced the rating of
Greek government debt three levels all the way down to B1.
#13 According to the United Nations, the global price of
food set another brand new
record high during the month of February. That was the 8th month in a
row that global food prices have gone up.
#14 According to the World Bank, global food prices have soared 29% over the last 12
months.
#15 The United Nations is projecting that the global
price of food will increase by
another 30 percent by the end of 2011.
#16 23 percent of all residential properties with a
mortgage in the U.S. were in negative equity as
of the end of 2010.
#17 In the state of Nevada, approximately 65 percent
of all homeowners with a mortgage owe more on their mortgages than their homes
are worth.
#18 Two years ago, the average U.S. homeowner that was
being foreclosed upon had not made a mortgage payment in 11 months.
Today, the average U.S. homeowner that is being foreclosed upon has not made a
mortgage payment in 17 months.
#19 Since 2005, the United States has shelled out 1.1 trillion dollars for
products from China but China has only spent 272 billion dollars on products
from the United States. This trade imbalance is causing the global
financial system to become increasingly unstable.
#20 Collectively, the 50 U.S. state governments are
facing a budget shortfall of
125 billion dollars for fiscal 2012.
#21 The U.S. government had a budget deficit of 233 billion dollars
during the month of February, which was the largest federal budget deficit ever
recorded for a single month.
We are living in
the middle of the biggest debt bubble in the history of the world…’
Inflation
Is Here – Just Open Up Your Eyes And Look At These 5 Financial Charts! ‘The
Economic Collapse March 2, 2011 Despite what Federal Reserve Chairman Ben
Bernanke says, rampant inflation is officially here. The federal
government is constantly monkeying with the numbers to keep the “official” rate
of inflation below 2 percent, but it is becoming very difficult to deny that
the cost of almost everything is really going up these days. The American
people are not stupid. They notice the difference when they go to the
grocery store or stop at the gas station. The dollar is losing value
rapidly now. The price of gold set another new all-time record today and
is currently hovering just above $1430 an ounce. The price of West Texas
crude has moved above 100 dollars several times recently and the price of Brent
crude is currently above 116 dollars. These higher oil prices are really
starting to be felt in the United States. The average price for a gallon
of gasoline in the United States has now reached $3.38.
There are some gas stations in the U.S. where the price of a gallon of gas is
already over 4 dollars. But it is not just the American people that are
feeling the pain. The global price of food recently hit a new record high
and almost every major agricultural commodity has absolutely skyrocketed in
price over the past 12 months. Meanwhile, Ben Bernanke just told the
Senate Banking Committee that he really isn’t concerned about inflation at all.
When it comes
to inflation, the key is not to look at the official U.S. government numbers
(they are highly manipulated) or how the U.S. dollar is performing against
other major currencies (because they are all being devalued as well).
Instead, you can get a truer sense of what is really happening to inflation by
looking at what the U.S. dollar is doing against precious metals, commodities
and other hard assets.
So are we
experiencing rampant inflation right now? Well, just open up your eyes
and look at these 5 charts….
1 – The
price of oil is racing back up to record levels. The chart below from the
Federal Reserve is a couple weeks out of date. As noted above, the
current price of West Texas crude is about $100 a barrel….[chart]
2 – The
price of a gallon of gasoline in the United States seems destined to hit a
brand new all-time record at some point this year. Was it really just a
few short years ago when the average price of gas in this country was about a
dollar a gallon?…. [chart]
3 – The
value of most precious metals is very consistent over time. So when you
see precious metals go up dramatically in price, it means that the dollar is
being devalued. The price of gold just set another new all-time high and
it seems destined to keep going even higher….[chart]
4 – The
chart below from the Federal Reserve is a measure of the price of all commodities.
These price increases are inevitably going to be passed along to consumers in
the United States….[chart]
5 – After
a couple of years of stable food price, the price of food is starting to take
off yet again….[chart]
In fact, many
analysts are warning that we could experience a major food crisis over the next
couple of years. The global demand for food continues to grow at a very
brisk pace, but all of the crazy weather we have been having around the world
has caused some very bad harvests.’
21
Signs That The Once Great U.S. Economy Is Being Gutted, Neutered, Defanged,
Declawed And Deindustrialized Once upon a time… The Economic Collapse Feb 12, 2011 ‘Once upon a time, the United
States was the greatest industrial powerhouse that the world has ever
seen. Our immense economic machinery was the envy of the rest of the
globe and it provided the foundation for the largest and most vibrant middle
class in the history of the world. But now the once great U.S. economic
machine is being dismantled piece by piece. The U.S. economy is being
gutted, neutered, defanged, declawed and deindustrialized and very few of our
leaders even seem to care. It was the United States that once showed the
rest of the world how to mass produce televisions and automobiles and airplanes
and computers, but now our industrial base is being ripped to shreds.
Tens of thousands of our factories and millions of our jobs have been shipped
overseas. Many of our proudest manufacturing cities have been transformed
into “post-industrial” hellholes that nobody wants to live in anymore.
Meanwhile,
wave after wave of shiny new factories is going up in nations such as China,
India and Brazil. This is great for those countries, but for the millions
of American workers that desperately needed the jobs that have been sent
overseas it is not so great.
This is the
legacy of globalism. Multinational corporations now have the choice
whether to hire U.S. workers or to hire workers in countries where it is legal
to pay slave labor wages. The “great sucking sound” that Ross Perot
warned us about so long ago is actually happening, and it has left tens of
millions of Americans without good jobs.
So what is to
become of a nation that consumes more than it ever has and yet continues to
produce less and less?
Well, the
greatest debt binge in the history of the world has enabled us to maintain (and
even increase) our standard of living for several decades, but all of that debt
is starting to really catch up with us.
The American
people seem to be very confused about what is happening to us because most of
them thought that the party was going to last forever. In fact, most of
them still seem convinced that our brightest economic days are still ahead.
After all,
every time we have had a “recession” in the past things have always turned
around and we have gone on to even greater things, right?
Well, what
most Americans simply fail to understand is that we are like a car that is
having its insides ripped right out. Our industrial base is being gutted
right in front of our eyes.
Most Americans
don’t think much about our “trade deficit”, but it is absolutely central to
what is happening to our economy. Every year, we buy far, far more from
the rest of the world than they buy from us.
In 2010, the
U.S. trade deficit was just a whisker under $500 billion. This is money
that we could have all spent inside the United States that would have supported
thousands of American factories and millions of American jobs.
Instead, we
sent all of those hundreds of billions of dollars overseas in exchange for a
big pile of stuff that we greedily consumed. Most of that stuff we
probably didn’t need anyway.
Since we spent
almost $500 billion more with the rest of the world than they spent with us, at
the end of the year the rest of the world was $500 billion wealthier and the
American people were collectively $500 billion poorer.
That means
that the collective “economic pie” that we are all dividing up is now $500
billion smaller.
Are you
starting to understand why times suddenly seem so “hard” in the United States?
Meanwhile,
jobs and businesses continue to fly out of the United States at a blinding
pace.
This is a
national crisis.
We simply
cannot expect to continue to have a “great economy” if we allow our economy to
be deindustrialized.
A nation that
consumes far more than it produces is not going to be wealthy for long.
The following
are 21 signs that the once great U.S. economy is being gutted, neutered,
defanged, declawed and deindustrialized….
#1 The U.S. trade deficit with the rest of the world
rose to 497.8
billion dollars in 2010. That represented a 32.8% increase from 2009.
#2 The U.S. trade deficit with China rose to an
all-time record of 273.1
billion dollars in 2010. This is the largest trade deficit that one
nation has had with another nation in the history of the world.
#3 The U.S. trade deficit with China in 2010 was 27 times
larger than it was back in 1990.
#4 In the years since 1975, the United States had run a
total trade deficit of
7.5 trillion dollars with the rest of the world.
#5 The United States spends more
than 4 dollars on goods and services from China for every one dollar that
China spends on goods and services from the United States.
#6 In 1959, manufacturing represented 28 percent of all U.S. economic
output. In 2008, it represented only 11.5 percent and it continues to
fall.
#7 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.
#8 The Bureau of Labor Statistics originally predicted
that the U.S. economy would create approximately 22 million jobs during the
decade of the 2000s, but it turns out that the U.S. economy only produced about 7 million jobsduring
that time period.
#9 Japan now manufactures about 5 million more
automobiles than the United States does.
#10 China has now become the world’s largest
exporter of high technology products.
#11 Manufacturing employment in the U.S. computer
industry is actually lower in 2010 than
it was in 1975.
#12 The United States now has 10 percent fewer “middle class jobs” than it did
just ten years ago.
#13 According to Tax Notes,
between 1999 and 2008 employment at the foreign affiliates of U.S.
parent companies increased an astounding 30 percent to 10.1 million.
During that exact same time period, U.S. employment at American multinational
corporations declined 8 percent to 21.1 million.
#14 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.
#15 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.
#16 The number of Americans that have become so
discouraged that they have given up searching for work completely now
stands at an all-time high.
#17 Half of all American workers now earn $505 or less per week.
#18 The United States has lost a staggering 32 percent
of its manufacturing jobs since the year 2000.
#19 Since 2001, over 42,000 U.S. factories have closed
down for good.
#20 In 2008, 1.2 billion cellphones were sold
worldwide. So how many of them were manufactured inside the United
States? Zero.
#21 Ten years ago, the “employment rate” in the United
States was about 64%. Since then it
has been constantly declining and now the “employment rate” in the United
States is only about 58%. So where
did all of those jobs go?
The world is
changing.
We are
bleeding national wealth at a pace that is almost unimaginable.
We are
literally being drained dry.
Did you
know that
China now has the world’s fastest train and the world’s largest high-speed
rail network?
They were able
to afford those things with all of the money that we have been sending them.
How do you think
all of those oil barons in the Middle East became so wealthy and could build
such opulent palaces?
They got rich
off of all the money that we have been sending them.
Meanwhile,
once great U.S. cities such as Detroit, Michigan now look like war zones.
Back in 1985,
the U.S. trade deficit with China was about 6 million dollars for the entire
year.
As mentioned
above, the U.S. trade deficit with China for 2010 was over 273billion
dollars.
What a
difference 25 years can make, eh?
What do you
find when you go into a Wal-Mart, a Target or a dollar store today?
You find row
after row after row of stuff made in China and in other far away countries.
It can be more
than a bit difficult to find things that are actually made inside the United
States anymore. In fact, there are quite a few industries that have
completely and totally left the United States. For certain product
categories it is now literally impossible to buy something made in America.
So what are we
going to do with our tens of millions of blue collar workers?
Should we just
tell them that their jobs are not ever coming back so they better learn phrases
such as “Welcome to Wal-Mart” and “Would you like fries with that”?
For quite a few
years, the gigantic debt bubble that we were living in kind of insulated us
from feeling the effects of the deindustrialization of America.
But now the
pain is starting to kick in.
It has now
become soul-crushingly
difficult to find a job in America today.
According
to Gallup, the U.S. unemployment rate is currently 10.1% and when you throw
in “underemployed” workers that figure rises to 19.6%.
Competition
for jobs has become incredibly fierce and it is going to stay that way.
The great U.S.
economic machine is being ripped apart and dismantled right in full view of us
all.
This is not a
“conservative” issue or a “liberal” issue. This is an American issue.
The United
States is rapidly being turned into a “post-industrial” wasteland.
It is time to
wake up America.’
This is
that unmentionable reality as I alluded to earlier on close scrutiny of the
data, ‘that stock prices have been manipulated to the upside beyond any and all
rational basis‘ and as I previously wrote: Perception vs. Reality: Four Reasons to Remain Cautious on U.S.
Equities [ Hey, Abbott … That’s Lou
Costello calling him from the other side … Wake up! … Just kidding … but I’m
not kidding when I say that contrary to Abbott’s view, infra, if you’re not a
successful market timer you should rethink your position as an equity investor.
Moreover, in contradistinction to Mr. Abbott’s implication, if you’re not a
successful speculator (there are very few), you should rethink your position as
a short seller: reason…, you could be wiped out, lose more than your principal,
forced to cover (that’s why
the same is considered a contrary market indicator, particularly in these
manipulated, contrived markets). When I did my MBA thesis (1977, NYU, GBA,
Eve.Prog., Finance), a review of the data revealed even then (and much more so
now with computer programmed market manipulation) that the market remained
biased / propped up (artificially, especially now with computerized
manipulation) to the upside for far longer periods of time than for the
downside which meant that dollar-cost averaging (through regular, periodic
investment, for example), meant you were accumulating shares at higher prices
generally for longer periods of time skewing the average cost to the upside
(dollar-cost-averaging in declining markets was ok if analysis / forecast saw
resurgence based on fundamentals - now absent – which is timing, as even senile
wall street / gov’t shill Buffet would attest, that ‘greedy when others are
fearful thing’). Abbott discusses perception which is the psychological factor
involved in security evaluation / analysis; but investors need not and should
become nuts themselves, particularly when as now, the inmates are running the
asylum. ] Abbott ‘Perception
determines short-term market movements. The difference between perception and
reality determines the direction of major market trends. Though I generally try
to avoid making macro prognostications, I believe bottom-up analysis can be
informative about the current level of stock prices. I want to share what my
recent work tells me about where stocks are (and where they might be headed). I
will outline some various nuggets of collective wisdom that are taken for
granted right now by stock bulls, and I will attempt to demonstrate how reality
is likely to differ from these perceptions.
First, a
disclaimer. This is not a market timing call. At all times, I stay away from
market timing predictions. I think that's a loser's game in the long run. Even
if I'm correct about the discrepancies between the following perceptions and
realities, there's no saying when people will change their minds or shift their
focuses. That said, let's dive in.
Perception
vs. Reality #1
Perception: Low Interest Rates, Questionable Bond Outlook Means Stocks are
Attractive
Reality: Interest Rates Are Being Artificially and Deliberately Manipulated
It's no secret
that the Federal Reserve's low interest rate policy and quantitative easing
efforts have held interest rates very low for very long. However, when people
talk about stock market implications of bond yields, they rarely mention the
fact that bond yields are artificially low. In an unmanipulated
market, bond prices and stock valuations should be related, but I regard that
connection as highly dubious right now. Investors who say that stocks deserve
higher multiples (lower earnings yields) because bond yields are so low may
well be setting themselves up for disappointing returns/frustrating losses when
bond prices normalize. Again, this isn't a market timing call, and yields may
remain low for quite some time. But, eventually this discrepancy will correct itself,
and stock performance is likely to suffer at that time.
Perception
vs. Reality #2
Perception: Earnings Growth Has Been Strong and Will Remain That Way
Reality: Top-Line Growth Will Have to Pick Up; Cost-Cutting has Run Its
Course
Earnings growth
has certainly been robust, but much of the strength has come from companies
running lean cost structures and wringing as much efficiency as possible out of
their employees and their assets. Though the recession has ended, the economy
is not yet healthy enough to fuel strong sales growth. Companies can only boost
profits by cutting costs and increasing productivity for so long. Therefore,
top-line growth will have to play a larger role going forward than it has over
the past 4-6 quarters. Whether or not economic growth is strong enough to drive
revenue increases is unsure, but the current level of stock prices undoubtedly
assumes it is. Any stagnation of the recovery and concomitant sluggish sales
will likely hit stock prices.
Perception
vs. Reality #3
Perception: European Debt Crisis Drives Short-Term Volatility, but It's Not
a Long-Term Concern
Reality: Crisis May Be a Harbinger of What's to Come in the U.S. if States,
the Feds Don't Improve Balance Sheets
So far, turmoil
in Greece and Ireland has served only as a temporary headwind to U.S. stocks.
In keeping with the investment world's increasingly short-term focus, people
seem more concerned with what fiscal crises in Europe mean for U.S. stocks over
the coming days and months than with what they might mean down the road. I
believe that this interpretation misses the mark. Since the U.S. fiscal
situtation is generally considered to be stronger than that in many European
countries, U.S. federal and municipal debt issuance has been relatively smooth,
and interest rates have only risen modestly. If the U.S. doesn't get serious
about its fiscal woes, eventually the crisis will arrive on American shores.
There's no way of telling when this might happen, but the current level of
stock prices seems to imply that it never will.
Here's the
problem with that. To fix the federal balance sheet and/or to improve state and
municipal balance sheets, legislators will have to raise taxes and/or cut
spending. Tax hikes and spending cuts both reduce consumer spending. This hurts
growth. There's no way around this. Stocks can certainly continue to rise for
some time, but austerity will be bearish if/when it comes. If it doesn't come,
we're in for a much bigger crisis some time down the road.
Perception
vs. Reality #4
Perception: Everywhere You Look, You See Good Companies at Cheap Prices
Reality: It's Hard to Find Genuine Bargains, but There are Intriguing Short
Prospects Everywhere
There is no
shortage of stock market commentators who claim that they see bargains
everywhere they look. Perhaps I'm not looking in the right places, but I've
been having a difficult and increasingly impossible time finding good companies
at reasonable prices. I use similar criteria to assess long and short
investments, and I find intriguing shorts in lots of sectors right now. This
tells me that valuations are stretched. Certainly they can become more so
before we get a selloff, but every day that stocks rally, they get more
expensive.
I've written on Seeking
Alpha about a number of stocks which I regard as expensive (CRM, OPEN, GMCR), and take my word for it:
there are plenty more than these whose shares I do not want to own at present
levels. A few weeks ago, I also mused about the Facebook-Goldman deal and argued
that this valuation is indicative of excessive investor enthusiasm. Bargains
are hard to find, and as valuations go up, so does positive sentiment. While
this is not a prediction of an impending correction or bear market, it is a
message of caution for people who think stocks are cheap right now.
All that said, I always try to consider both sides of any investment issue, and there are some reasons for optimism. Job growth has shown signs of improvement, and some economic data have been increasingly (though not uniformly) positive. The Federal Reserve remains accommodative, and I'm skeptical about whether or not there is political will for austerity. For these reasons, stocks could continue onward and upward. That said, I see too many reasons for caution, and investors are turning a blind eye to these concerns as their complacency rises.’
12
Economic Collapse Scenarios That We Could Potentially See In 2011 What
could cause an economic collapse in 2011? Well, unfortunately there are quite a
few “nightmare scenarios” that could plunge the entire globe into another
massive financial crisis.
The Economic Collapse Jan
20, 2011 ‘What could cause an economic collapse in 2011? Well, unfortunately
there are quite a few “nightmare scenarios” that could plunge the entire globe
into another massive financial crisis. The United States, Japan and most
of the nations in Europe are absolutely drowning in debt. The Federal
Reserve continues to play reckless games with the U.S. dollar. The price
of oil is skyrocketing and the global price of food just hit a new record
high. Food riots are already breaking out all over the world.
Meanwhile, the rampant fraud and corruption going on in world financial markets
is starting to be exposed and the whole house of cards could come crashing down
at any time. Most Americans have no idea that a horrific economic
collapse could happen at literally any time. There is no way that all of
this debt and all of this financial corruption is sustainable. At some
point we are going to reach a moment of “total system failure”.
So will it be
soon? Let’s hope not. Let’s certainly hope that it does not happen
in 2011. Many of us need more time to prepare. Most of our families
and friends need more time to prepare. Once this thing implodes there
isn’t going to be an opportunity to have a “do over”. We simply will not
be able to put the toothpaste back into the tube again.
So we had all
better be getting prepared for hard times. The following are 12 economic
collapse scenarios that we could potentially see in 2011….
#1 U.S. debt could become a massive crisis at any moment.
China is saying all of the right things at the moment, but many analysts are
openly worried about what could happen if China suddenly
decides to start dumping all of the U.S. debt that they have
accumulated. Right now about the only thing keeping U.S. government
finances going is the ability to borrow gigantic amounts of money at extremely
low interest rates. If anything upsets that paradigm, it could potentially
have enormous consequences for the entire world financial system.
#2 Speaking of threats to the global financial system,
it turns out that “quantitative easing 2″ has had the exact opposite
effect that Ben Bernanke planned for it to have. Bernanke insisted that
the main goal of QE2 was to lower interest rates, but instead all it has done
is cause interest rates to go up substantially.
If Bernanke this incompetent or is he trying to mess everything up on purpose?
#3 The debt bubble that the entire global economy is
based on could burst at any time and throw the whole planet into chaos. According
to a new report from the World Economic Forum, the total amount of credit
in the world increased from $57 trillion in 2000 to $109 trillion in
2009. The WEF says that now the world is going to need another $100 trillion
in credit to support projected “economic growth” over the next decade. So
is this how the new “global economy” works? We just keep doubling the
total amount of debt every decade?
#4 As the U.S. government and the Federal Reserve
continue to pump massive amounts of new dollars into the system, the floor
could fall out from underneath the U.S. dollar at any time. The truth is
that we are already starting to see inflation really accelerate and everyone
pretty much acknowledges that official U.S. governments figures for inflation
are an absolute joke. According
to one new study, the cost of college tuition has risen 286% over the last
20 years, and the cost of “hospital, nursing-home and adult-day-care services”
rose 269% during those same two decades. All of this happened during a
period of supposedly “low” inflation. So what are price increases going
to look like when we actually have “high” inflation?
#5 One of the primary drivers of global inflation
during 2011 could be the price of oil. A large number of economists are
now projecting that the price of oil could surge well
past $100 dollars a barrel in 2011. If that happens, it is going to
put significant pressure on the price of almost everything else in the entire
global economy. In fact, as
I have explained previously, the higher the price of oil goes, the faster
the U.S. economy will decline.
#6 Food inflation is already so bad in some areas of
the globe that it is setting off massive food riots
in nations such as Tunisia and Algeria. In fact, there have been reports
of people setting themselves on fire all
over the Middle East as a way to draw attention to how desperate they
are. So what is going to happen if global food prices go up another 10 or
20 percent and food riots spread literally all over the globe during 2011?
#7 There are persistent
rumors that simply will
not go away of massive physical gold and silver shortages. Demand for
precious metals has never been higher. So what is going to happen when
many investors begin to absolutely insist on physical delivery of their
precious metals? What is going to happen when the fact that far, far, far
more “paper gold” and “paper silver” has been sold than has ever actually
physically existed in the history of the planet starts to come out? What
would that do to the price of gold and silver?
#8 The U.S. housing industry could plunge the U.S.
economy into another recession at any time. The real estate market is
absolutely flooded with homes and virtually nobody is buying. This
massive oversupply of homes means that the construction of new homes has fallen
off a cliff. In 2010, only
703,000 single family, multi-family and manufactured homes were completed.
This was a new record low, and it was down 17% from the previous all-time
record which had just been set in 2009.
#9 A combination of extreme weather and disease could
make this an absolutely brutal year for U.S. farmers. This winter we have
already seen thousands of new cold weather and snowfall records set across the
United States. Now there is some very disturbing news emerging out of
Florida of an “incurable
bacteria” that is ravaging citrus crops all over Florida. Is there a
reason why so many bad things are happening all of a sudden?
#10 The municipal bond crisis could go “supernova” at
any time. Already, investors are bailing out of bonds at a frightening
pace. State and local government debt is now sitting at an all-time high
of 22
percent of U.S. GDP. According to Meredith Whitney, the municipal
bond crisis that we are facing is a gigantic threat to our financial system….
“It has
tentacles as wide as anything I’ve seen. I think next to housing this is the
single most important issue in the United States and certainly the largest
threat to the U.S. economy.”
Former Los Angeles mayor Richard Riordan is convinced
that things are so bad that literally 90% of our states and cities could go
bankrupt over the next five years….
#11 Of course on top of everything else, the quadrillion
dollar derivatives bubble could burst at any time. Right now we are
watching the greatest financial
casino in the history of the globe spin around and around and around and
everyone is hoping that at some point it doesn’t stop. Today, most money
on Wall Street is not made by investing in good business ideas. Rather,
most money on Wall Street is now made by making the best bets.
Unfortunately, at some point the casino is going to come crashing down and the
game will be over.
#12 The biggest wildcard of all is war. The Korean
peninsula came closer to war in 2010 than it had in decades. The Middle
East could literally explode at any time. We live in a world where a
single weapon can take out an entire city in an instant. All it would
take is a mid-size war or a couple of weapons of mass destruction to throw the
entire global economy into absolute turmoil.
Once again,
let us hope that none of these economic collapse scenarios happens in 2011.
However, we
have got to realize that we can’t keep dodging these bullets forever.
As bad as 2010
was, the truth is that it went about as good as any of us could have
hoped. Things are still pretty stable and times are still pretty good
right now.
But instead of
using these times to “party”, we should be using them to prepare.
A really, really vicious economic storm is coming and it is going to be a complete and total nightmare. Get ready, hold on tight, and say your prayers.’
In a column
last week, Myerson points out that the devastation of The Great Recession has
fallen disproportionately on the blue collar population, those without a
college degree. And he traces the rolling over of median family income in this
century, not just in the downturn, but since the turn of the century. Even at
the peak, in 2007, median family income was less than in 2000.
What Meyerson
doesn't point out is that average incomes have faired better in the 21st
century and in all of the past 50 years. In fact, average family income has
risen more than 2.5 times as much and median income over the last 30 years. Why
is this important? Because the more there is a fat tail of ever higher incomes
for a few, the greater the difference between average and median income
becomes.
Myerson says:
The great sociologist William
Julius Wilson has long argued that the key to the
unraveling of the lives of the African American poor was the decline in the
number of "marriageable males" as work disappeared from the inner
city. Much the same could now be said of working-class whites in neighborhoods
that may not look like the ghettos of Cleveland or Detroit but in which
productive economic activity is increasingly hard to find.
This grim new reality has yet to inform our debate
over how to come back from this mega-recession. Those who believe our downturn
is cyclical argue that job-creating public spending can restore us to
prosperity, while those who believe it's structural - that we have too many
carpenters, say, and not enough nurses - believe that we should leave things be
while American workers acquire new skills and enter different lines of work.
But there's a third way to look at the recession: that it's institutional, that
it's the consequence of the decisions by leading banks and corporations to stop
investing in the job-creating enterprises that were the key to broadly shared
prosperity.
Since Meyerson has chosen income disparity as a
cornerstone of his argument, let's look at how incomes have grown over the last
50 years. These are shown in the following graph, not adjusted for inflation.
click to enlarge images [chart]
Real median income and average income seem to grow
similarly in the 1950s and 1960s, the growth of average income starts to pull
away in the mid-1960s and appears to continue to gain gound for the the next
40+ years. The more average income deviates from median income the more money
is found in the high income tail on the distribution curve. This is often
called a "fat tail", which is very appropriate in this discussion
because that is where the fat cats are. The fat tail has not gotten so because
ten times as many people equaled the incomes of the former fat cats, but more
because a few fat cats have received 10 times the income. This is exemplified
by the often quoted statistic that average CEO salaries were 40x average worker
pay 50 years ago and today are more like 400x.
The change income distribution that seems to be
appearing in the above graph becomes more apparent in the following graph where
real income gains are shown for the last six decades starting with the ten
years from 1949 - 1959 (the 1950s) and ending with 1999 - 2009 (the 2000s). [chart]
The 1950s and 60s were real boom years. Starting with
the 1970s a lower level of income growth was established, but even that lower
level could not be maintained in the 2000s.
After the 1950s every decade has seen average real
income grow more than the median. The fat tail has gotten fatter over the past
half century in every decade, without exception. Yes the average did decline in
the 2000s, but the median declined 76% more!
The most dramatic pattern of change is evident when
the data is divided into two halves: 1949 to 1979 and 1979 - 2009. This is done
in the following graph: [chart]
For thirty years after World War II the wealth of the
country increased in a balanced manner. The average income containing the
greater contribution from the top earners of the day, grew at a rate very
similar to the income growth of the broader population, represented by the
median.
Yes there were "fat cats" and they had
significantly larger incomes than the bulk of the population. And these top
incomes grew over those three decades, but at almost the same rate as the
majority of the populace.
Then something happened. From 1979-2009 it appears
that the American pie suddenly got smaller. In the later three decades the real
median income growth was less than 10% of the rate seen from 1949 to 1979. And
as the pie got smaller, the fat cats took a much larger share. The average
income grew at a rate 254% that of the median income. You might say that, as
the cow gave less milk, the top of the economic ladder skimmed more and more
cream off the top.
Meyerson identifies the force majuere to be
corporate America:
Our multinational companies still invest, of course -
just not at home. A study by the Business
Roundtable and the U.S. Council Foundation found that the
share of the profits of U.S.-based multinationals that came from their foreign
affiliates had increased from 17 percent in 1977 and 27 percent in 1994 to 48.6
percent in 2006. As the companies' revenue from abroad has increased, their
dependence on American consumers has diminished. The equilibrium among
production, wages and purchasing power - the equilibrium that Henry Ford
famously recognized when he upped his workers' pay to an unheard-of $5 a day in
1913 so they could afford to buy the cars they made, the equilibrium that
became the model for 20th-century American capitalism - has been shattered.
Making and selling their goods abroad, U.S. multinationals can slash their
workforces and reduce their wages at home while retaining their revenue and
increasing their profits. And that's exactly what they've done.
Meyerson doesn't get into some of the other areas that
might be brought to bear on the current condition of the American economy:
Part of the problem is that Americans have fallen
into the way of the easiest path, where, either by credit card or by making
quick trades, the desires of the moment are satisfied with no seemingly current
cost.
It seems that few want to think about the needs of
tomorrow. This is true starting with the masses who kiss off the idea of
working hard in school to prepare for what they will need 20 years down the
road. This is also true of the "capitalist" who finds that skimming a
few percent off each of many deals a year to get quick, large quarterly returns
is much easier than investing and building something that will will make much
larger returns extending over decades and producing things of real economic
utility.
There are a number of things that Meyerson does not
address, but if you want to hit one nail at a time, I think he has picked the
baddest nail in the plank. He finishes his column thusly:
Our economic woes, then, are not simply cyclical or
structural. They are also - chiefly - institutional, the consequence of U.S.
corporate behavior that has plunged us into a downward cycle of
underinvestment, underemployment and under-consumption. Our solutions must be
similarly institutional, requiring, for starters, the seating of public and
worker representatives on corporate boards. Short of that, there will be no
real prospects for reversing America's downward mobility.
If we were to address all the other issues I
mentioned previously and did not address the institutional problem Meterson has
identified, we would not ultimately solve our economic puzzle.’
20
Shocking New Economic Records That Were Set In 2010 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 Economic
Collapse Jan 14, 2011 ‘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….
#1 An all-time record of 2.87
million U.S. households received a foreclosure filing in 2010.
#2 The number of homes that were actually repossessed reached
the 1 million mark for the first time ever 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.
#5 At one point during 2010, the average time needed to
find a job in the United States had risen to an all-time record of 35.2 weeks.
#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.
#11 The number of Americans on Medicaid surpassed 50
million for the first time ever in 2010.
#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.
#16 Americans now owe more than $881 billion on student loans,
which is a new all-time record.
#17 In July, sales of new homes in the United
States declined to the lowest level
ever recorded.
#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….[chart]
14 Eye Opening Statistics Which Reveal Just How
Dramatically The U.S. Economy Has Collapsed Since 2007 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.
‘The
Economic Collapse Jan 10, 2011
’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, whichis
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.
#6
According to one analysis, the United States has lost a total of approximately
10.5 million jobs since 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 sheltersincreased 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.
#13
In 2007, the “official” federal budget deficit was just 161 billion
dollars. In 2010, the “official” federal budget deficit was approximately 1.3 trillion dollars.
#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.’
The Economic Collapse
Dec 17, 2010
The financial
collapse that so many of us have been anticipating is seemingly closer then
ever. Over the past several weeks, there have been a host of ominous signs
for the U.S. economy. Yields on U.S. Treasuries have moved up rapidly and
Moody’s is publicly warning that it may have to cut the rating on U.S.
government debt soon. Mortgage rates are also moving up
aggressively. The euro and the U.S. dollar both look incredibly
shaky. Jobs continue to be shipped out of the United States at a
blistering pace as our politicians stand by and do nothing. Confidence in
U.S. government debt around the globe continues to decline. State and
local governments that are drowning in debt across the United States are
savagely cutting back on even essential social services and are coming up with
increasingly “creative” ways of getting more money out of all of us.
Meanwhile, tremor after tremor continues to strike the world financial
system. So does this mean that we have almost reached a tipping
point? Is the world on the verge of a major financial collapse?
Let’s hope
not, but with each passing week the financial news just seems to get eve
worse. Not only is U.S. government debt spinning wildly toward a breaking
point, but many U.S. states (such as California) are in such horrific financial
condition that they are beginning to resemble banana republics.
But it is not
just the United States that is in trouble. Nightmarish debt problems in
Greece, Spain, Portugal, Ireland, Italy, Belgium and several other European
nations threaten to crash the euro at any time. In fact, many economists
are now openly debating which will collapse first – the euro or the U.S.
dollar.
Sadly, this is
the inevitable result of constructing a global financial system on debt.
All debt bubbles eventually collapse. Currently we are living in the
biggest debt bubble in the history of the world, and when this one bursts it is
going to be a disaster of truly historic proportions.
So will we
reach a tipping point soon? Well, the following are 25 signs that the
financial collapse is rapidly getting closer….
#1 The official U.S. unemployment rate has not been
beneath 9 percent since
April 2009.
#2 According to the U.S. Census Bureau, there are
currently 6.3
million vacant homes in the United States that are either for sale or for
rent.
#3 It is being projected that the U.S. trade deficit
with China could hit 270 billion dollars
for the entire year of 2010.
#4 Back in 2000, 7.2 percent of blue collar workers
were either unemployed or underemployed. Today that figure is up
to 19.5 percent.
#5 The Chinese government has accumulated approximately
$2.65 trillion in
total foreign exchange reserves. They have drained this wealth from the
economies of other nations (such as the United States) and instead of
reinvesting all of it they are just sitting on much of it. This is
creating tremendous imbalances in the global economy.
#6 Since the year 2000, we have lost 10% of our middle class jobs. In the
year 2000 there were approximately 72 million middle class jobs in the United
States but today there are only about 65 million middle class jobs.
#7 The United States now employs about the same number
of people in manufacturing as
it did back in 1940. Considering the fact that we had 132 million
people living in this country in 1940 and that we have well over 300 million
people living in this country today, that is a very sobering statistic.
#8 According to CoreLogic, U.S. housing prices have now
declined for
three months in a row.
#9 The average rate on a 30 year fixed rate mortgage soared
11 basis points just this past week. As mortgage rates continue to
push higher it is going to make it even more difficult for American families to
afford homes.
#10 22.5 percent of all residential mortgages in the
United States were in negative equity as of the end of the third quarter
of 2010.
#11 The U.S. monetary base has
more than doubled since the beginning of the most recent recession.
#12 U.S. Treasury yields have been rising steadily
during the 4th quarter of 2010 and
recently hit a six-month high.
#13 Incoming governor Jerry Brown is scrambling to find
$29 billion more to cut from the California state budget. The
following quote from Brown about the desperate condition of California
state finances is not going to do much to inspire confidence in California’s
financial situation around the globe….
“We’ve been living in fantasy land. It is much worse
than I thought. I’m shocked.”
#14
24.3
percent of the residents of El Centro, California are currently unemployed.
#15
The average home in Merced, California has declined in value by
63 percent over the past four years.
#16
Detroit Mayor Dave Bing has come up with a new way to save money. He
wants to cut 20
percent of Detroit off from essential social services such as road repairs,
police patrols, functioning street lights and garbage collection.
#17
The second most dangerous city in the United States – Camden, New Jersey – is
about to lay off about
half its police in a desperate attempt to save money.
#18
In 2010, 55
percent of Americans between the ages of 60 and 64 were in the labor
market. Ten years ago, that number was just 47 percent. More older
Americans than ever find that they have to keep working just to survive.
#19
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.
#20
The U.S. government budget deficit increased to a whopping $150.4 billion last
month, which represented the biggest November budget deficit on record.
#21
The U.S. government is somehow going to have to roll over existing debt and
finance new debt that
is equivalent to 27.8 percent of GDP in 2011.
#22
The United States had been the leading consumer of energy on the globe for
about 100 years, but this past summer China took over the number one spot.
#23
According to an absolutely stunning new poll, 40 percent of all U.S. doctors plan to bail out of the
profession over the next three years.
#24
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.
#25
All over the United States, local governments have begun instituting “police
response fees”. For example, New York Mayor Michael Bloomberg has come up
with a plan under which a
fee of $365 would be charged if police are called to respond to an
automobile accident where no injuries are involved. If there are injuries
as a result of the crash that is going to cost extra.
As you examine
the long-term trends, you quickly come to realize that the U.S. is trapped in
an endless spiral of debt, the middle class is being wiped out, the U.S. dollar
is being destroyed and America is rapidly becoming a post-industrial wasteland.
Posted below
are 16 nightmarish economic trends to watch carefully in 2011. It is
becoming exceedingly apparent that unless something is done rapidly we are
heading for an economic collapse of unprecedented magnitude….
#1 Do you want to see something scary? Just check
out the chart below. Since the beginning of the economic downturn, the
U.S. monetary base has more than doubled. But don’t worry – Federal
Reserve Chairman Ben Bernanke has promised us that this could never cause
inflation. In fact, Bernanke says that we need to inject even more
dollars into the economy. So if you are alarmed by the chart below, you
are just being irrational according to Bernanke….
#2 Thousands of our factories, millions of our jobs and
hundreds of billions of dollars of our national wealth continue to be shipped
overseas. In 1985, the U.S. trade deficit with China was 6 million dollars
for the entire year. In the month of August
alone, the U.S. trade deficit with China was over 28 billion
dollars. 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.
#3 The United States is rapidly becoming a
post-industrial wasteland. Back in 1959, manufacturing represented 28
percent of all U.S. economic output. In 2008, it represented only
11.5 percent and it continues to fall. Sadly, the truth is that America
is being deindustrialized. As of the end of 2009, less
than 12 million Americans worked in manufacturing. The last time that
less than 12 million Americans were employed in manufacturing was in 1941.
#4 The number of Americans that have been out of work
for an extended period of time has absolutely exploded over the last few
years. 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.
#5 The middle class continues to be squeezed out of
existence. According to a poll
taken in 2009, 61 percent of Americans ”always or usually” live
paycheck to paycheck. That was up substantially from 49 percent
in 2008 and 43 percent in 2007.
#6 The number of Americans living in poverty is
absolutely skyrocketing. 42.9 million Americans are now on food
stamps, and one out of every six Americans is now enrolled
in at least one anti-poverty program run by the federal government.
Unfortunately, many of those that have been hardest hit by this economic
downturn have been children. According to one new study,
approximately 21 percent of all children in the United States are
living below the poverty line in 2010 - the highest rate in 20 years.
#7 Many American families have been pushed beyond the
breaking point during this economic downturn. Over 1.4 million Americans
filed for personal bankruptcy in 2009, which represented a
32 percent increase over 2008. The final number for 2010 is expected
to be even higher.
#8 The U.S. real estate market continues to
stagnate. During
the third quarter of 2010, 67 percent of mortgages in Nevada were
“underwater”, 49 percent of mortgages in Arizona were “underwater” and 46
percent of mortgages in Florida were “underwater”. So what happens if
home prices go down even more?
#9 More elderly Americans than ever are being forced to
put off retirement and continue working. In 2010, 55
percent of Americans between the ages of 60 and 64 were in the labor
market. Ten years ago, that number was just 47 percent.
Unfortunately, it looks like this problem will only get worse in the years
ahead. In America today, approximately half of all workers have
less than $2000 saved up for retirement.
#10 In the United States today, there are simply far too
many retirees and not nearly enough workers to support them. Back in 1950
each retiree’s Social Security benefit was paid for by 16
workers. Today, each retiree’s Social Security benefit is paid for
by approximately 3.3 workers. By 2025 it is projected that
there will be approximately two workers for each retiree.
#11 Financial assets continue to become concentrated in
fewer and fewer hands. For example, the “big four” U.S. banks (Citigroup,
JPMorgan Chase, Bank of America and Wells Fargo) had approximately 22
percent of all deposits in FDIC-insured institutions back in 2000. As of
the middle of 2009 that figure was up to 39 percent.
#12 The Federal Reserve has been destroying the value of
the U.S. dollar for decades. Since the Federal Reserve was created in
1913, the U.S. dollar has lost over 95 percent of its purchasing power. An
item that cost $20.00 in 1970 would cost you $112.35 today. An item
that cost $20.00 in 1913 would cost you $440.33 today.
#13 Commodity prices continue to soar into the
stratosphere. Ten years ago, the price of a barrel of oil hovered around 20 to 30
dollars most of the time. Today, the price of oil is rapidly closing
in on 100 dollars a barrel and there are now fears that it could soon go much
higher than that.
#14 Federal government spending is completely and
totally out of control. The U.S. government budget deficit increased to a
whopping $150.4 billion last month, which represented the biggest November deficit on record. But our
politicians can’t seem to break their addiction to debt. In fact,
Democrats are trying to ram through a
1,924 page, 1.1 trillion dollar spending bill in the final days of the
lame-duck session of Congress before the Republicans take control of the House
of Representatives next year.
#15 The U.S. national debt is rapidly closing in on 14 trillion dollars. It is more
than 13 times larger than it was just 30 short years ago. According to an
official U.S. Treasury Department report to Congress, the U.S. national
debt is projected to climb
to an estimated $19.6 trillion by 2015.
#16 Unfortunately, the official government numbers
grossly understate the horrific nature of the crisis we are facing. John
Williams of Shadow Government Statistics has calculated that if the federal
government would have used GAAP accounting standards to measure the federal
budget deficit for 2009, it would have been approximately 8.8
trillion dollars. Not only that, but John Williams now says that U.S.
government debt is
so wildly out of control that it is mathematically impossible for us to
“grow” our way out of it….
The government’s finances not only are out of
control, but the actual deficit is not containable. Put into perspective,
if the government were to raise taxes so as to seize 100% of all wages,
salaries and corporate profits, it still would be showing an annual deficit
using GAAP accounting on a consistent basis. In like manner, given
current revenues, if it stopped spending every penny (including defense and
homeland security) other than for Social Security and Medicare obligations, the
government still would be showing an annual deficit. Further, the U.S. has
no potential way to grow out of this shortfall.
The more one examines the U.S. economic situation,
the more depressing it becomes. The U.S. financial system is trapped
inside a horrific debt spiral and we are headed straight for economic
oblivion.
If our leaders attempt to interrupt the debt spiral
it will plunge our economy into a depression. If our leaders attempt to
keep the debt spiral going for several more years it will just make the
eventual crash even worse. Either way, we are headed for a financial
implosion that will be truly historic.
The debt-fueled good times that we have been enjoying
for the last several decades are rapidly coming to an end. Unfortunately
for the tens of millions of Americans that are already suffering, our economic
problems are only going to get worse in the years ahead.’
The following
are 25 unemployment statistics that are almost too depressing to read….
#1 According to the Bureau of Labor Statistics, the
U.S. unemployment rate for November was 9.8
percent. This was up from 9.6 percent in October, and it continues a
trend of depressingly high unemployment rates. The official unemployment
number has been at 9.5 percent or higher for well over a year at this point.
#2 In November 2006, the “official” U.S. unemployment
rate was just 4.5
percent.
#3 Most economists had been expecting the U.S. economy
to add about 150,000 jobs in November. Instead, it
only added 39,000.
#4 In the United States today, there are over 15
million people who are “officially” considered to be unemployed for
statistical purposes. But everyone knows that the “real” number is even
much larger than that.
#5 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.
#6 The number of “persons not in the labor force” in
the United States recently
set another new all-time record.
#7 It now takes the average unemployed American over
33 weeks to find a job.
#8 When you throw in “discouraged workers” and
“underemployed workers”, the “real” unemployment rate in the state of
California is
actually about 22 percent.
#9 In America today there are not nearly enough jobs
for everyone. In fact, there are now approximately
5 unemployed Americans for every single job opening.
#10 According
to The New York Times, Americans that have been unemployed for five weeks
or less are three times more likely to find a new job in the coming month than
Americans that have been unemployed for over a year.
#11 The U.S. economy would need to create 235,120
new jobs a month to get the unemployment rate down to pre-recession levels
by 2016. Does anyone think that there is even a prayer that is going to
happen?
#12 There are 9
million Americans that are working part-time for “economic reasons”.
In other words, those Americans would gladly take full-time jobs if they could
get them, but all they have been able to find is part-time work.
#13 In 2009, total wages, median wages, and average
wages all
declined in the United States.
#14 As of the end of 2009, less than 12 million
Americans worked in manufacturing. The last time that less
than 12 million Americans were employed in manufacturing was in 1941.
#15 The United States has lost at least 7.5
million jobs since the recession began.
#16 Today, only
about 40 percent of Ford Motor Company’s 178,000 workers are employed
in North America, and a big percentage of those jobs are in Canada and
Mexico.
#17 In 1959, manufacturing represented 28
percent of U.S. economic output. In 2008, it represented 11.5 percent.
#18 Earlier this year, one poll found that 28% of all American households had at least one member that
was looking for a full-time job.
#19 In the United States today, over
18,000 parking lot attendants have college degrees.
#20 The United States has lost a staggering
32 percent of its manufacturing jobs since the year 2000.
#21 As the employment situation continues to stagnate,
millions of American families have decided to cut back on things such as
insurance coverage. For example, the percentage of American households
that have life insurance coverage is at its lowest level in
50 years.
#22 Unless Congress acts, and there is no indication
that is going to happen, approximately 2 million Americans will stop receiving unemployment checks over the next
couple of months.
#23 A poll that was released by the Pew Research Center
back in June discovered that an
astounding 55 percent of the U.S. labor force has
experienced either unemployment, a pay decrease, a reduction in hours
or an involuntary move to part-time work since the economic downturn
began.
#24 According to Richard McCormack, the United States
has lost over
42,000 factories (and counting) since 2001.
#25 In the United States today, 317,000
waiters and waitresses have college degrees.
But this is
what we get for creating the biggest debt
bubble in the history of the world. For decades we have been digging
a deeper hole for ourselves by going into increasingly larger amounts of
debt. In America today, our entire economy is based on debt. Even
our money
is debt. We were fools if we ever thought this could go on forever.
Just think about it. Have you ever gone out and run up a bunch of
debt? It can be a lot of fun sitting behind the wheel of a new car,
running your credit cards up to the limit and buying a beautiful big house that
you cannot afford. But in the end what happens? It always catches up with you.
Well, our collective debt is starting to catch up with us. There is a sea
of red ink on every level of American society. It is only a matter of
time before it destroys our economy. IF YOU THINK THAT
THINGS ARE BAD NOW, JUST WAIT. THINGS ARE GOING TO GET A WHOLE LOT
WORSE. A HORRIFIC ECONOMIC COLLAPSE IS COMING, AND IT IS GOING TO BE
VERY, VERY PAINFUL.’
Timid
Tuesday: Is it Safe? Davis
‘… This is how we pay off our current debts and I think bondholders are
simply happy to get anything out of a country that admits it owes $15Tn (1/4 of
global GDP) but probably owes closer to $60Tn (entire global GDP) in the form
of unfunded liabilities. The funniest thing about this (and you have to laugh)
is to see Conservative pundits get on TV and talk about how we need to cut
$100Bn worth of discretionary spending to "fix" this (while
continuing to spend $1Tn on the military and $1Tn on tax cuts for the top 1%
each year). There is no fixing this and even a Republican said you can’t fool
all of the people all of the time. THIS HOUSE OF CARDS IS TEETERING FOLKS – PLEASE BE CAREFUL OUT
THERE! ‘
17 Things Worrying
Investors Lloyd's Wall of Worry
Worry Count: 17
CHINA: 1,330,044,605 people can’t be wrong.
The PIIGS: Fasten your seatbelts. It’s gonna be a long, bumpy, expensive,
weird, (insert your own adjective here) freak show of a ride.
CALIFORNIA AND THE OTHER 49 STATES: Not yet as dire as “The PIIGS”. Might I
suggest the classier moniker of “The Prosciuttos” for the American basket-case
states?
QE II: Gobble?
U.S. ECONOMY: The “Punky Brewster” of the global economic landscape.
UNEMPLOYMENT: Only thing worse than losing your job, losing your unemployment
check. At least there’s the holiday season to cheer everyone up (read: heavy
sarcasm).
TAXES: Praying to the Financial Market Gods that we don’t have another
TARP-like vote fiasco.
OBAMA ADMINISTRATION PART II: Still two years before the Pres. election and the
peanut gallery is already pleading for a Hail Mary Pass to get them back in the
game.
HFT: Instead of beating up these liquidity supplying traders, let’s honor them
with their very own stock exchange. But wait -- with no retail
saps to pick-off they will never get that Day 1 opening bell tick. Perfect.
XMAS 2010: As my professor friend Nick says, “Nowadays Americans are dining off
of two menus – The Million Dollar and the $0.99 Cent.” And both
are pissed about it.
CURRENCIES: Poor Mr. Greenback. Does someone need a hug?
HOUSING CRISIS: Price Stabilization – Are we there yet? Just a little bit more.
Are we there yet? Just a little bit more. Are we there yet? Just a little bit
more….
INFLATION/DEFLATION: Fed Chief Ben B. comes out swinging from his heels in
defense of inflation promotion. Don’t punch yourself out as this one is likely
to go the distance.
COMMODITIES: Corrected but still sky high; fortunately these prices are only
affecting core, basic, life-sustaining necessities and sparing our electronic
gadgets and plus-sized SUVs. Whew!
INSIDER TRADING: Another black eye for Hedge Funds. I estimate that makes black
eye number 6,597.
INTEREST RATES: South Korea and China slowly turning up the dial to “11”. On
the other hand the U.S. has removed the dial altogether. This never ends well….
NORTH KOREA: Here we go again. (and now Egypt, etc.)
Consumer confidence down, LiveLeak.com - Loonie closes above U.S. dollar … dollar for first time closes below parity on Canadian
loonie … hey, hey, hey … 'Huge' stock decline — but not yet MarketWatch
- Commentary: Adens … ‘mega trend’ looks grim … The
Adens expect a hyperinflationary collapse … ‘ Oh come
on! Manipulated dollar decline with inflated earnings, stock prices thereby,
etc., … we’ve seen this all before … the last few crashes … Jobless
rate jumps to 9.8% as hiring slows (Washington Post) [ The reality is not a mystery! The nation’s
been thrown under the bus for the greater good (wealth) of the very few (frauds
on wall street, etc.); wall street giving out record bonuses from their accomplished
fraud (with no-recession b.s. bernanke help) of $144 BILLION: Come on! This is
gettin’ even more downright ridiculous (if that’s even possible)! Pending home
foreclosure / distress sales up, oil prices (and oil stocks) up, debased dollar
down, plus a little familiar ‘better than expected’ thrown in along with
prospects of a ‘no-recession bernanke’ market-frothing bull session on 60
minutes and, voila, suckers’ rally into the close to keep the suckers suckered!
What’s good for the frauds on wall street is bad for just about everyone else
which includes the vast majority of people and businesses, domestically and
globally, as current dollar manipulation / debasement ultimately results in
higher costs and loss of purchasing power (ie., oil, etc.). Clearly, this is
one of those fraudulent wealth transfers to the frauds on wall street et als
which will ultimately be paid for by those who least are in a position to
afford it, courtesy of the ever more worthless Weimar dollar, etc., inflating
earnings, eps, lowering p/e multiples, etc., see infra. This is an especially
great time to sell / take profits while you can since there's much worse to
come! Previous: Rosy numbers on consumer sentiment, unemployment (far better
than private forecasts) from the government prior to the holiday so-called
‘shop till you drop’? How can anyone believe anything they say? Najerian
interviewed by Motek chimes in with the reason for good retail cheer; viz.,
people have stopped paying their mortgages and are using the funds to purchase
retail goods; while Davidowitz adds that with record numbers of americans on
food stamps, real unemployment at 17+, and wall street giving out record
bonuses from their accomplished fraud (with no-recession b.s. bernanke help) of
$144 BILLION … the high end stores /
jewelers will do well … daaaaah! And, with insiders
and wall street frauds selling into the bubble as preceded last crash, this is
an especially great opportunity to sell / take profits! Suckers’ rally on light volume, full moon, and government
complicity (false data / reports) to keep suckers suckered (easy for the wall
street frauds to do with just a mouse click / push of the button – and, they
know all those technical trade lines that are easy to program in this current
phase of the scam/fraud with the debased dollar). Keep in mind, the totally
mindless blather from the ‘cottage industries’ of and fraudulent wall street
itself in talking up lower P/E multiples when the same is a direct result of
the debasement of the dollar and the consequent manipulation / translation (not
real, see Davis, infra) which preceded the financial crisis / last crash.
Unemployment, trade, deficit, etc., numbers continue decidedly worse than
expected along with other negative data (and in the ‘wrong direction’, that
spin accorded ‘down but not as bad as before’ b*** s*** ) yet the market has
rallied like no tomorrow with used home foreclosure / distressed sales, though
abated owing to ‘foreclosuregate’, the other ‘heralded’ good news. Moreover, the dumbo lemmings of Europe have
jumped on the fraudulent defacto bankrupt american crazy train propelled to the
precipice also as if no tomorrow. This is about keeping the suckers sucked in
with the help of a market-frothing pre-election debased dollar for favorable currency
translation and paper (but not real when measured in, ie., gold, etc.) profits
which preceded the last crisis, inflating a bubble as in the last crisis to
facilitate the churn-and-earn, particularly with computerized (and high
frequency) trades and which commissions they’ll get again on the way down.
There is nothing to support these overbought stock prices, fundamentally or
otherwise. These are desperate criminals ‘at work’. Even wall street shill, the
senile Buffett is saying we’re still in a recession (depression) [
Davis: ‘… all profits are inflated
by 10% (from falling, debased dollar) and that 10% is the E that gets divided
from the P and gives us a much better price/multiple to hang our hats on and
that gets investors to BUYBUYBUY …’ The bull market that never was / were beyond wall
street b.s. when measured in gold ] This is a great
opportunity to sell / take profits (these lower dollar, hyperinflationary currency
manipulations / translations to froth paper stocks will end quite badly as in
last crash)! This
is a global depression. This is a secular bear market in a global depression.
The past up moves were manipulated bull (s***) cycles (at best) in a secular
bear market. This has been a typically manipulated bubble as has preceded the
prior crashes with great regularity that the wall street frauds and insiders
commission and sell into. This is a typical wall street ‘programmed
computerized high-frequency churn and earn pass the hot potato scam / fraud as
in prior crashes ( widely reported, high-frequency trading routinely
accounts for more than 50% of daily U.S. equity trading volume and regularly
approaches 70%. )’. This national decline, economic and otherwise, will not end
until justice is served and the wall street frauds et als are criminally
prosecuted, jailed, fined, and disgorgement imposed.The Stock Market's
Long Decline Has Begun Smith ]
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