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Post by linsal on Aug 10, 2011 20:07:57 GMT -5
Dollar falls...guess this is how our Pretender-In-Chief is going to increase exports... www.bloomberg.com/news/2011-08-09/dollar-falls-on-fed-pledge-to-keep-interest-rates-low-through-mid-2013.htmlThe dollar tumbled the most in at least 40 years against the Swiss franc after the Federal Reserve pledged to keep its key interest rate at a record low at least through mid-2013 to revive the flagging economic recovery. The greenback declined versus the majority of its most- traded peers as the Fed said growth was “considerably slower” than it expected and it’s prepared to use a range of policy tools to boost the economy. The meeting came a day after economic weakening and a Standard & Poor’s U.S. credit-rating cut spurred a global stock rout. Commodity currencies recouped losses sustained just after the meeting. Stocks and gold surged. “With the Fed saying they have tools available that they are willing to use and giving a more definitive time frame, that is overall going to be a dollar negative,” said John Doyle, a strategist in Washington at the currency-trading firm Tempus Consulting Inc. “Swiss franc and gold have absolutely been the beneficiaries of uncertainty.” The dollar fell 4.5 percent to 72.09 Swiss centimes at 5 p.m. in New York, from 75.50 yesterday. It dropped as much as 6.3 percent, the most since the beginning of Bloomberg records in January 1971, touching a record low 70.71 centimes. The euro dropped 3.2 percent to 1.0364 after touching the record low 1.0075. The U.S. currency depreciated 1.4 percent to $1.4376 per euro and fell 1 percent to 76.96 yen. “The Swiss franc is a falling knife, and no one wants to catch it,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “It will take a policy action to stop and reverse the uptrend in the Swiss.” Aussie Gains Australia’s dollar rose 1.7 percent to $1.0355 per greenback after earlier dropping to $1.0064 U.S. cents just after the Fed meeting, while the New Zealand currency climbed 2 percent to 83.74 U.S. cents after depreciating to 80.72 cents after the meeting. U.S. stocks rallied the most in more than two years. The S&P 500 Index (SPX) climbed 4.7 percent, the biggest advance since March 2009, after falling briefly as much as 1.6 percent following the Fed meeting. It tumbled 6.7 percent yesterday in its biggest drop since December 2008. Gold for December delivery reached a record $1,782.50 an ounce today. The greenback rose yesterday against the majority of its most-traded peers as investors sought safety on the first day of trading after S&P lowered the U.S. credit rating Aug. 5 to AA+ from AAA. FOMC Effort The Federal Open Market Committee’s decision represents the biggest effort since November to spark the U.S. economy and revive confidence while stopping short of initiating a third round of large-scale asset purchases. The benchmark interest rate has been at zero to 0.25 percent since December 2008 to support the economy. IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, increased 0.3 percent on June 22 to 74.783 after falling 0.7 percent the previous day. It dropped 1.2 percent today to 73.902. “The dollar obviously has tested record lows against the Swiss franc today; I think you have to think the dollar’s going to continue to test the downside,” Robert Sinche, global head of currency strategy at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said in an interview on Bloomberg Television’s “Bottom Line” with Mark Crumpton. “Certainly guaranteeing no dollar support of rate increases through the middle of 2013, two years from now, I think is a pretty aggressive position.” Swiss National Bank The Swiss franc’s gains came even after the Swiss National Bank on Aug. 3 lowered its target for the three-month London interbank offered rate to weaken the currency and protect Switzerland’s economy. Implied volatility, a key gauge of option prices that tends to rise in times of uncertainty, for euro-Swiss franc one-month options climbed to 30 percent for the first time. The equivalent dollar-franc volatility rate reached 23.9 percent, the most since January 2009. Sterling declined against most of its 16 major peers tracked by Bloomberg. U.K. factory output decreased 0.4 percent in June from the previous month, when it rose 1.8 percent, the Office for National Statistics said today in London. Civil unrest that began in north London Aug. 6 spread to other parts of the capital and other cities. The pound fell 1.4 percent to 88.11 pence per euro. Canada’s currency rose 1.8 percent to at 97.72 cents per U.S. dollar in its first gain in eight days. Decline Erased The Japanese currency has erased its decline since the nation’s unilateral intervention in the foreign-exchange market pushed it to as weak as 80.24 per dollar on Aug. 4. That day, the Bank of Japan added 10 trillion yen ($129 billion) of monetary stimulus. BOJ Governor Masaaki Hirakata today said volatile exchange rates could have a “negative impact” on the nation’s economy.
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Post by linsal on Aug 10, 2011 20:10:05 GMT -5
The Chairman of the Federal Reserve is Clueless By Gerald Celente 08/10/11 Kingston, New York – When it came to financial failure, there was no one in Washington – or on earth – who had masterminded more disastrous policies or produced more erroneous forecasts than Federal Reserve Chairman Ben Bernanke. Had he been an imperial soothsayer in a medieval court he would have lost his head or, at best, he’d be rotting in a dungeon. Instead, with real estate home prices plunging more sharply than they did during the Great Depression, with unemployment intractable and rising, retail sales softening, consumer confidence sinking and the equity markets falling, Ben “He of Short Sight” Bernanke finally saw what we and a few others had been screaming about for over four years: Economic Trouble Puzzles Fed Chief Too The economy’s continuing struggles aren’t just confounding ordinary Americans. They’ve also stumped the head of the Federal Reserve. Fed Chairman Ben Bernanke told reporters Wednesday that the central bank had been caught off guard by recent signs of deterioration in the economy. And he said the troubles could continue into next year. “We don’t have a precise read on why this slower pace of growth is persisting,” Bernanke said. He said the weak housing market and problems in the banking system might be “more persistent than we thought.” It was the Fed chief’s most explicit warning yet that the economy will face serious challenges next year. For several months, he had said the factors working against economic growth appeared to be “transitory.” The Fed’s statement Wednesday stood in contrast to the Fed’s more upbeat view when officials last met, eight weeks ago. At that time, the central bank said the job market was gradually improving. (AP, 22 June 2011) But instead of headlines blaring, “Fed Chief Batting Zero Fails Again” or “Bumbling Bernanke Baffled by Bad News” or “Wrong Again Ben – Only an Imbecile Would Still Take You Seriously,” the media played it with a straight face. A Presstitute is a Presstitute is a Presstitute. ABC, CBS, CNN, AP, BBC, PBS; reporters and journalists massage the egos of the rich, powerful and famous, while reducing the rest of the population to a mass of lower beings barely capable of tying their shoes, incapable of having an original thought, and lost without direction from higher authorities. It made perfect media sense that the “economy’s continuing struggles” would confound “ordinary Americans,” but that the non-recovery had also stumped the head of the Federal Reserve … that was newsworthy. After all, if Bernanke was “caught off guard by recent signs of deterioration in the economy” how could lesser beings expect to be unstumped? The bland journalistic language conceals a shrieking message: “troubles could continue into next year … We don’t have a precise read on why this slower pace of growth is persisting … more persistent than we thought … factors working against economic growth appeared to be transitory … economy will face serious challenges next year … in contrast to the Fed’s more upbeat view when officials last met, eight weeks ago.” What this story is saying, without saying it, is that the Chairman of the Federal Reserve is clueless and, by extension, so is everyone else in charge. The real story should have read, “Fed & White House Fail Again… they didn’t see it coming, and once it came the measures they took to fix it didn’t work.” When we said that the Fed’s financial policies and Washington’s fiscal policies would serve only to devalue the dollar and do next to nothing to regenerate the economy, some, such as Fox’s phony-liberal, Wimpocrat, Obamapologist Alan Colmes, dismissed us as “alarmists,” and others ignored us. But when Alan Greenspan, the cheap money chief engineer and mastermind behind the ruinous policies that would culminate in the Great Recession, belatedly acknowledged what we had been saying for years, the media minions treated his proclamation with the respect due a Papal encyclical: Fed’s Massive Stimulus Had Little Impact: Greenspan The Federal Reserve’s massive stimulus program had little impact on the U.S. economy besides weakening the dollar and helping US exports, Federal Reserve Governor Alan Greenspan told CNBC Thursday. In a blunt critique of his successor, Fed Chairman Ben Bernanke, Greenspan said the $2 trillion in quantitative easing over the past two years had done little to loosen credit and boost the economy. “There is no evidence that huge inflow of money into the system basically worked,” Greenspan said in a live interview. Greenspan said he “would be surprised if there was a QE3” because it would “continue erosion of the dollar.” (CNBC, 30 June 2011) The unholy alliance between Washington and Wall Street proved how fixed the game was, and how far it extended; and when the layers of fraud and corruption were peeled back, why and how those four simple words, “too big to fail” destroyed the American dream. Monumental failures were rewarded with bonanzas of billions while the rest of the nation was left to make it on their own. Regards, Gerald Celente for The Daily Reckoning Read more: The Chairman of the Federal Reserve is Clueless dailyreckoning.com/the-chairman-of-the-federal-reserve-is-clueless/#ixzz1Ug7Ji2QG
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Post by linsal on Aug 10, 2011 20:13:06 GMT -5
The Federal Reserve Saves The Stock Market?
The Federal Reserve has saved the stock market! Well, at least for a day. That was one heck of a "dead cat bounce" that we saw on Tuesday. Normally, after the kind of dramatic decline that we saw on Monday there is some sort of a rebound, but on Tuesday the market did not begin to soar until the Federal Reserve pledged to leave interest rates near zero until mid-2013. Once the Fed made their announcement, the market went haywire. At one point the Dow was down more than 200 points, but by the end of the day it was up 430 points. It was a desperate move for the Federal Reserve to pledge not to raise interest rates for the next two years, and it has stabilized financial markets for the moment. But what is the Fed going to do to save the stock market when it starts crashing next week or next month? The underlying financial fundamentals continue to get worse and worse. Europe is a mess, Japan is a mess and the United States is a mess. The Federal Reserve can try to keep all of the balls in the air for as long as possible, but at some point the juggling act is going to end and the house of cards is going to come crashing down.
This move may calm nerves for a day or two, but there is still a tremendous amount of fear out there at the moment. Many investors are pouring money into "safe havens" right now. Huge amounts of cash are being poured into U.S. Treasuries and the price of gold is absolutely soaring. The price of gold is up about $220 in just the last 30 days alone.
So how high could the price of gold go in the coming months? Well, analysts at JP Morgan are forecasting that the price of gold could hit $2,500 by the end of this year.
Yes, that is how wild things are becoming. The Federal Reserve is painting itself into a corner. Never before has the Fed pledged to leave interest rates near zero for the next two years. The following is an excerpt from the statement that the Fed released earlier today....
To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate. Needless to say, the rest of the world is not pleased by this nonsense from the Fed. Yes, the Fed has stabilized financial markets for the moment, but a lot of ill will is being created with the rest of the globe. The following is what Bruce Krasting had to say about how the rest of the world is going to react to this latest Fed move....
Brazil, Argentina, Korea, Indonesia are going to scream bloody murder over perpetual ZIRP. Russia is likely to get downright ugly with their rhetoric. I wouldn’t be surprised if they took this opportunity to vote with their feet and just abandon the dollar as a reserve holding. China will also make noise. They will make more calls for a new international currency to replace the dollar. The Central bankers in Japan and Switzerland are puking in the trashcan over this. Bernanke is exporting US deflation to them. Shame on the Fed for pursuing Beggar my neighbor policies. They deserve all the global criticism they are about to get. The Federal Reserve is using up all of the ammunition it has available and the game has barely even begun.
Things are going to get a lot worse. The U.S national debt continues to pile up at lightning speed. The debt ceiling deal essentially does nothing to fix our debt problems. Thousands of businesses and millions of jobs continue to leave the United States. As a nation, we are constantly becoming poorer and we are constantly getting into more debt.
Meanwhile, Europe is on the verge of a financial meltdown and Japan has a "zombie economy" at this point.
Many fear that we could be on the verge of another major global recession. The following is how a recent Der Spiegel article described the current global financial situation....
Many economists have been pointing out that last week's panic resembled the fear that swept financial markets after the collapse of US investment bank Lehman Brothers in September 2008.
Then as now, banks stopped lending each money. Then as now, banks' cash deposits at the central bank doubled within days. The European Central Bank reacted by assuring banks of unlimited liquidity in the coming months. It was an emergency measure that led to short-term relief but sparked anxious questions among bankers and stock market players. How long can the central bank keep up its market-soothing liquidity operations before it finally loses its credibility, the most important asset of a central bank? Is the financial crisis about to escalate? In the old days, the U.S. and Europe could just borrow gigantic stacks of cash in order to solve any problems. But now things are dramatically changing.
China's official news agency recently stated that the U.S. needs to understand that things are different now....
"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone" Not that the U.S. government and the Federal Reserve are going to suddenly give up their old habits. The U.S. government is addicted to debt and the Fed is addicted to printing money. When push comes to shove, they are going to resort to their favorite tricks.
But at some point the rest of the world is not going to play along anymore. When that moment arrives, it is going to be very interesting to see what happens.
Meanwhile, the U.S. economy continues to slowly unravel, and people in this country are getting very angry. Millions of Americans families are barely scraping by right now. Most Americans just want someone to "fix" things, but unfortunately there are no easy "fixes" to our financial problems.
As our economic problems grow even worse, frustration inside the United States is going to continue to escalate. A brand new Rasmussen survey found that only 17 percent of Americans now believe that the U.S. government has the consent of the governed.
That was a brand new all-time low.
Faith in the major institutions of our society is already dangerously low and the economy is not even that bad yet.
As horrible as things are now, the truth is that this is rip-roaring prosperity compared to what is coming.
In the months and years ahead, America is going to be greatly tested. As the recent London riots have shown, things can spiral out of control very quickly.
When the economy completely collapses will America be able to handle it?
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Post by bcreech on Aug 10, 2011 20:20:22 GMT -5
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Post by linsal on Aug 15, 2011 20:05:12 GMT -5
We need more doom!!!
You should let the video footage of the wild violence that just took place in London burn into your memory because the same things are going to be happening all over the United States as the economy continues to crumble. We have raised an entire generation of young people with an "entitlement mentality", but now the economy is producing very few good jobs that will actually enable our young people to work for what they feel they are entitled to. If you are under 30 in America today, things look really bleak. The vast majority of the good jobs are held by people that are older, and they aren't about to give them up if they can help it. It is easy for the rest of us to tell young Americans to "take whatever they can", but the reality is that there is intense competition for even the most basic jobs. For instance, McDonald's recently held a "National Hiring Day" during which a million Americans applied for jobs. Only 6.2% of the applicants were hired. In the old days you could walk down to McDonald's and get a job whenever you wanted to, but now any job is precious. The frustration among our young people is palpable. Most of them feel entitled to "the American Dream" and they feel like the system has failed them. Unfortunately, many of them are already turning to violence. But the economic riots and the civil unrest that we have already seen are nothing compared to what is coming. Americans are angry, and as the economy continues to collapse that anger is going to reach unprecedented heights.
In recent days, even many in the mainstream media have been openly wondering if the riots that happened in London could happen here too. There is a growing acknowledgement that this country is headed down a very dark path.
The sad thing is that these riots accomplish absolutely nothing. The recent London riots did not create any jobs and they certainly did not solve any economic problems. Instead, they actually hurt the economy even more because a huge am0unt of property was destroyed and people are even more afraid to continue with business as usual.
But when people get to the end of their ropes, most of the time they are not thinking rationally. When frustration erupts, the results can be very, very messy.
All over the United States we are already seeing some very troubling signs of the violence that is coming. The following are 10 signs that economic riots and civil unrest inside United States are now more likely then ever....
#1 Going to the state fair used to be such a fun thing for American families to do. But now no place is safe. The following is how one local ABC News affiliate described the "flash mob" attacks that took place at the Wisconsin state fair recently....
Milwaukee police said that around 11:10 p.m., squads were sent to the area for reports of battery, fighting and property damage being caused by an unruly crowd of "hundreds" of people. One officer described it as a "mob beating."
Police said the group of young people attacked fair goers who were leaving the fair grounds. Police said that some victims were attacked while walking. They said others were pulled out of cars and off of motorcycles before being beaten. One eyewitness said that the flash mob attacks at the Wisconsin state fair absolutely overwhelmed the limited police presence that was there....
When I saw the amount of kids coming down the road, all I kept thinking was, 'There's not enough cops to handle this.' There's no way. It would have taken the National Guard to control the number of kids that were coming off the road. They were knocking people off their motorcycles. #2 According to a new Rasmussen survey, 48% of Americans believe that reductions in government spending are "at least somewhat likely" to result in civil unrest inside the United States. Unfortunately, perception often greatly influences reality.
#3 U.S. consumer confidence is now at its lowest level in 30 years.
#4 Joblessness among young Americans is at an epidemic level, and when rioting does break out it is usually young people that are leading the way. That is why the following statistics from an article in The Atlantic are so troubling....
One in five Americans are between 15 and 29-years old. And one in five of those Americans are unemployed. For minorities and the under-educated, the picture is much worse. Black teenagers have an unemployment rate of 44 percent, twice the rate for white teens. #5 We are starting to see mindless violence in a lot of areas that used to be considered safe. In Kansas City on Saturday night, three young people were hit with bullets as they walked the streets of the Country Club Plaza. Mayor Sly James was about 50 yards away when the gunfire erupted. Authorities in Kansas City are considering a stricter curfew for that area.
#6 "Flash mobs" have become such a problem in Philadelphia that the mayor has imposed a strict curfew on young people. Now all teens between the ages of 13 and 18 must be indoors by 9 o'clock at night. The mayor also says that teens need to start pulling up their pants....
"Pull your pants up and buy a belt ’cause no one wants to see your underwear or the crack of your butt." #7 All over the United States we are seeing that many struggling Americans will do just about anything for money. For example, in Detroit recently three masked men crashed a vehicle through the entrance of a gas station and took off with an entire ATM machine.
#8 Desperate people do desperate things. Many of America's "forgotten poor" are trying to survive any way that they can. For instance, a group of vagrants recently set up "a makeshift camp" near Prospect Park lake in Brooklyn. According to the New York Post, many nearby residents have been disturbed by what these "drifters" are doing to survive....
The drifters have been illegally trapping and cooking up the critters that call the park home, including squirrels, ducks and swan-like cygnets.
They used crude tactics to hunt their prey, including barbed fishing hooks that ripped off the top half of one poor gosling's beak. They then cooked the meat over illegal fires. Some of the animals were eaten raw. #9 According to CNN, sales of safes and vaults are absolutely soaring right now. One store owner told CNN that she believes that she is selling a lot more safes now because people are scared that civil unrest could be coming....
"Folks are worried about the decreasing value of the dollar, burglaries on the rise in their neighborhoods ... and even the possibility that the unrest we are seeing in other parts of the world slipping over to our country." #10 Over the past 100 years, the American population has moved steadily into our big cities and the surrounding suburbs. This has created virtual "ghost towns" in our rural areas from coast to coast. Back in 1910, 72 percent of Americans lived in rural areas. Today, only 16 percent of Americans live in rural areas. But when you crowd huge masses of people close together that makes riots and civil unrest much more likely.
Most Americans are already fed up, and the economy is not even that bad yet. One recent survey found that 73 percent of Americans believe that the nation is "on the wrong track". Another recent poll found that only 17 percent of Americans now believe that the U.S. government has the consent of the governed.
Millions of very frustrated young people believe that the economic system has failed them and that the political system no longer holds any answers.
America is rapidly approaching a breaking point. I have written previously about the collapse of society that we are already witnessing all over the United States. When the economy totally breaks down, most Americans are not going to be able to handle it.
Sadly, instead of coming together and trying to do something productive, many Americans will resort to rioting, looting and civil unrest. We have already seen this during local emergencies such as Hurricane Katrina.
But mindless violence accomplishes absolutely nothing positive. It just always makes things worse.
Unfortunately, logic and reason are not going to be enough to stop the gigantic wave of frustration that is coming. For most of the rest of us, it will be hard enough to get out of the way and protect our own families from the economic riots and the civil unrest that are coming.
The thin veneer of civilization that we all take for granted is starting to disappear. Hatred and anger are growing by the day. The United States is becoming a very frightening place.
So get ready. Our politicians certainly don't have any answers for us. The debt ceiling deal was a complete and total joke, and corruption is absolutely rampant in Washington right now. Barack Obama is getting ready to leave for yet another vacation, and most of our politicians are only focused on the next election.
So don't expect a "miracle" from those that are supposed to be leading us.
They don't care about you.
You need to take care of yourself and your family and your friends.
A massive economic collapse is coming, and most Americans are going to be totally blindsided by it.
Don't let that happen to you.
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Post by linsal on Aug 16, 2011 20:01:18 GMT -5
16 Statistics Which Prove That The American People Are Absolutely Seething With Anger
According to a whole host of polls and surveys, the American people are incredibly angry right now. The American people are hopping mad at the government, the American people are hopping mad about the economy and the American people are hopping mad about the direction that this country is headed. Never before in modern U.S. history have the American people been this angry. There is vast disagreement about what the solutions to our problems actually are, but what everyone can agree on is that the American people are absolutely seething with anger right now. The statistics that you are about to read are mind blowing. We used to be such a happy country. Once upon a time we were one of the happiest places on earth. But as the economy has fallen to pieces anger has been steadily growing. If something is not done to turn the economy around eventually this anger is going to erupt in frightening and unpredictable ways.
The American people are not equipped to handle hard times. We are incredibly spoiled. Most of us have only known good times, and most of us have been taught that we will have endless prosperity all of our lives because we live in the greatest nation on earth.
Well, "the greatest nation on earth" is about to get a massive wake up call. We are up to our eyeballs in debt and we are bleeding jobs, businesses and wealth at an astounding pace. Our economy is dying right in front of our eyes, and most Americans have been so "dumbed-down" that they don't even realize what is happening.
But what most Americans do know is that things are "bad" and they want someone to "fix" things. They know that something is "not right" and they want things to go back to the way things used to be. The longer it takes for things to return to "normal", the angrier they are going to get.
The following are 16 statistics which prove that the American people are absolutely seething with anger right now....
#1 A new Washington Post poll has found that a whopping 78 percent of Americans are dissatisfied "with the way this country’s political system is working".
#2 That same poll found that only 26 percent of Americans believe that the federal government can solve the economic problems that we are now facing.
#3 Gallup says that Barack Obama's job approval rating has hit an all-time low of 39%.
#4 According to a recent CBS News/New York Times poll, Congress has a disapproval rating of 82%.
#5 A new Rasmussen survey has found that 85 percent of Americans believe that members of Congress "are more interested in helping their own careers than in helping other people."
#6 That same survey found that 46 percent of the American people believe that most members of Congress are corrupt. That figure was a new all-time high.
#7 According to a different Rasmussen survey, only 17 percent of Americans now believe that the U.S. government has the consent of the governed.
#8 A recent Reuters/Ipsos poll discovered that 73 percent of the American people believe that the nation is "on the wrong track".
#9 A recent poll taken by Rasmussen found that 68 percent of Americans believe that we are actually in a recession right now.
#10 According to Gallup, the percentage of Americans that lack confidence in U.S. banks is now at an all-time high of 36%.
#11 U.S. consumer confidence is now at its lowest level in 30 years.
#12 According to a recent Washington Post-ABC News poll, 90 percent of Americans believe that the economy is performing poorly.
#13 That same poll found that approximately 80 percent of Americans believe that it is "difficult" to find a job these days.
#14 According to one recent poll, 39 percent of Americans believe that the U.S. economy has now entered a "permanent decline".
#15 Another recent survey found that 48 percent of Americans believe that it is likely that another great Depression will begin within the next 12 months.
#16 According to a brand new Rasmussen survey, 48% of Americans believe that reductions in government spending are "at least somewhat likely" to result in civil unrest inside the United States.
So why doesn't the government step in and spend a whole bunch of money and make everything all better?
Well, the problem is that we have done this time after time before and now we are broke.
We have been living way, way beyond our means for decades and now the bills are coming due.
David Walker, the former Comptroller General of the United States, has been warning about our debt problem for years. Walker says that the United States is heading for a "sudden and very painful" economic collapse....
"Here’s the bottom line. If you take the total liabilities of the United States – public debt, unfunded pensions, retiree health care, under funding with regard to social security, with regard to medicare, a range of commitments and contingencies – as of September 30 2010 we would have had to have had $61.6 trillion dollars in the bank in order to be able to defease those obligations." The cold, hard truth is that the U.S. national debt should have been addressed many years ago when it was still relatively small.
At this point, there is no solution to our national debt problem under our current financial system.
Most state governments are also facing huge financial problems. The state government of Illinois is so broke at this point that it can't even afford to bury the poor people that are dying.
But Illinois is not alone. All over the country, state and local governments have been implementing austerity measures.
According to the Center on Budget and Policy Priorities, state and local governments have slashed more than half a million jobs since August 2008.
That is a whole lot of good jobs that aren't there anymore.
But government debt is not the only debt problem that we are facing. Personal debt is also a raging crisis.
According to USDebtClock.org, the total amount of personal debt in the United States is now over 16 trillion dollars. The exploding levels of personal debt have created a tremendous amount of stress in households from coast to coast.
When I was growing up, it seemed like almost everyone was in the middle class. But today the middle class is shrinking at lightning speed.
According to author David DeGraw, 17.3% of all Americans were living in poverty during 2009. Not only that, DeGraw also says that 9 major U.S. cities have a poverty rate of over 25 percent.
Can you imagine that?
In fact, there are some cities such as Detroit where the poverty rate is over 35 percent.
It is hard to believe what is happening to America. Today, there are over 45 million Americans on food stamps. That number has increased by approximately 12 percent in the last year alone.
There are currently 34 million Americans that need a full-time job. Unemployment is rampant and there is intense competition even for part-time jobs that pay minimum wage.
So where did all of the jobs go?
Well, as I have written about previously, globalism is absolutely devastating our economy. Millions of our jobs have been shipped to countries where labor is far, far cheaper and they aren't coming back.
In addition, millions of Americans that do still have jobs are also deeply struggling right now. There are millions and millions of Americans that are working part-time jobs because that is all that they can find right now. Millions of other Americans are flat broke and are discovering that their paychecks are "shrinking" due to inflation. Wages have barely risen while prices for food and other necessities are skyrocketing.
Most families are really struggling to get by right now.
According to the Washington Post, the average yearly income of the bottom 90 percent of U.S. income earners is $31,244.
It is really hard to pay a mortgage and feed a family on that income.
The only people that seem to be doing well are at the very top.
The average yearly income of the top 0.1% of U.S. income earners is 5.6 million dollars.
Not that making money is a bad thing, but when an economic system funnels all of the rewards to the very top you know something is deeply broken.
The poorest 50% of all Americans now own just 2.5% of all the wealth in the United States.
A lot of poor Americans have literally fallen off the map. The Daily Mail recently did a feature on one tent city that has been constructed deep in a forest in New Jersey....
In scenes reminiscent of the Great Depression these are the ramshackle homes of the desperate and destitute U.S. families who have set up their own 'Tent City' only an hour from Manhattan.
More than 50 homeless people have joined the community within New Jersey's forests as the economic crisis has wrecked their American dream. You can see shocking pictures of this tent city right here.
So it is no wonder why so many Americans are so angry.
If you lost your job or your home you would probably be angry too.
Most Americans just want to be able to go to work, make a decent living, pay the mortgage and provide for their families.
But in America today that is becoming increasingly difficult to do.
Our economy is a giant mess and the American people are becoming very angry.
If the economy gets even worse, they are going to become even angrier.
Storm clouds are gathering on the horizon.
Things are about to get very, very interesting.
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Post by glowplug on Aug 18, 2011 19:31:45 GMT -5
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Post by linsal on Aug 19, 2011 5:09:19 GMT -5
he bad news about the economy just keeps rolling in. If this is an economic recovery, what in the world is the next "recession" going to look like? Today there was another huge truckload of bad economic news. The stock market had another 400 point "correction", applications for unemployment benefits are up again, inflation is higher than expected, home sales have dropped again and Europe is coming apart at the seams. The financial markets have been in such a state of chaos recently that days like today don't even seem "unusual" anymore. But we should all be alarmed at what is happening. We haven't seen anything quite like this since the darkest days of 2008 and 2009. If more bad news keeps pouring in, we may soon have a very real panic on our hands.
I would have thought that my article yesterday, "20 Signs That The World Could Be Headed For An Economic Apocalypse In 2012", would have contained enough bad economic news to last for a while. But today there was another huge bumper crop of depressing numbers.
Are you ready for the carnage?
*The Dow fell 419 points today. That was a 3.7% drop. The S&P 500 shot down 4.5% and the Nasdaq plummeted by a whopping 5.2%.
*European bank stocks got absolutely hammered.
*The number of Americans applying for unemployment benefits jumped back above 400,000 last week.
*The recent inflation numbers have really taken analysts by surprise. The consumer price index rose at a 6.0% annual rate during the month of July. As I mentioned yesterday, the producer price index in the U.S. has increased at an annual rate of at least 7.0% for the last three months in a row.
So now we have high unemployment and high inflation. Oh goody! All of this stagflation is almost enough to make one nostalgic for the 1970s.
*The housing market is getting even worse. According to the National Association of Realtors, sales of previously owned homes dropped 3.5 percent during July. That was the third decline in the last four months. Sales of previously owned homes are even lagging behind last year's pathetic pace. Mortgage rates are now the lowest they have been since the 1950s, but there are very few interested buyers in the marketplace.
*The Philadelphia Fed's latest survey of regional manufacturing activity was absolutely nightmarish....
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009 *Morgan Stanley now says that the U.S. and Europe are "hovering dangerously close to a recession" and that there is a good chance we could enter one at some point in the next 6 to 12 months.
All of this bad news is sending the price of gold through the roof. The price of gold soared to a brand new all-time high of $1,829.70 an ounce on Thursday morning. So far, the price of gold is up almost 30 percent in 2011.
Meanwhile, millions of average American families are deeply suffering and are desperately hoping that things won't get even worse. Everywhere you turn, there is a tremendous amount of stress in the air.
According to the New York Times, 25 million Americans "could not find full-time jobs last month".
As the economy crumbles, good paying full-time jobs are becoming increasingly scarce. People are hurting and they are looking for leadership.
Well, Barack Obama is running around the country promising that he will unveil some "solutions" very shortly.
So what are those solutions going to include? Well, the plans are still in the development stage, but the Obama administration is reportedly considering the following....
-The creation of a new government agency that will be dedicated to job creation. This will entail more government spending and more government paper pushers, but it will probably not do much to create good paying full-time jobs.
-Pushing even more free trade agreements through Congress. That way even more of our good jobs can be shipped to countries on the other side of the globe where paying slave wages to workers is still legal.
-A "reverse boot camp" that will train military veterans for civilian jobs. That sounds like a good idea, but we already have millions and millions of highly trained Americans that can't get jobs.
-An extension of the payroll tax cut for at least another year. That will put more money into the pockets of U.S. workers, but it will also mean less revenue for the federal government. The existing payroll tax cut has not exactly resulted in a "jobs boom", but removing that tax cut is certainly not going to help the economy either.
-An extension of long-term unemployment benefits. Yes, that will help the unemployed survive and will give them some money to spend into the economy, but it will not create many jobs for them. Plus it will put the government into even more debt.
-The creation of an infrastructure bank. Like most of the proposals above, this will entail even more government spending. I know that a "shovel-ready" joke is called for about now, but I can't think of one at the moment.
The ironic thing is that Barack Obama is riding around on his multistate "jobs tour" in a $1.2 million bus that was made in Canada.
You just can't make this stuff up.
Things have gotten so bad out there that even Wal-Mart is suffering now. Sales at Wal-Mart stores that have been open for at least a year have fallen for nine quarters in a row.
Not that anyone should have much sympathy for Wal-Mart, but it is a sign of just how bad things are getting out there.
So is there much hope for the future? Well, considering the fact that only 32 percent of 15-year-olds in the United States are proficient in math, things don't look good.
Our education system is a joke, tens of thousands of factories have already closed, more are closing every day, millions of jobs have been shipped overseas and most of our politicians are either incompetent or corrupt (or both).
So you would think that with all of our problems, authorities would be focused on the big issues.
But no, time after time they just keep picking on average Americans.
For example, a woman that lives in the Salem, Oregon area that is fighting terminal bone cancer tried to raise some money for her medical bills by holding a few garage sales on the weekends.
Well, the authorities in Salem got wind of this and now they are shutting her down.
This is absolutely unbelievable. A video news report about this incident is posted below....
Massive fraud and corruption at the big banks caused a worldwide financial crisis in 2008 and yet not a single Wall Street executive has gone to prison because of it.
Yet a cancer-stricken lady tries to hold a few yard sales to pay her bills and authorities come down on her like a ton of bricks.
Does that seem fair to you?
Our world is getting crazier every day. The bad news is going to keep pouring in. Global financial markets are being held together with chicken wire and duct tape. At some point the pyramid of corruption and con games is going to come crashing down.
If you still have faith in the system, you are not very wise. We are heading for an economic collapse that will be absolutely unprecedented, and you need to be getting prepared.
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Post by linsal on Aug 19, 2011 5:20:13 GMT -5
If you thought that 2011 was a bad year for the world economy, just wait until you see what happens in 2012. The U.S. and Europe are both dealing with unprecedented debt problems, the financial markets are flailing about wildly, austerity programs are being implemented all over the globe, prices on basics such as food are soaring and a lot of consumers are flat out scared right now. Many analysts now fear that a "perfect storm" could be brewing and that we could actually be headed for an economic apocalypse in 2012. Hopefully that will not happen. Hopefully our leaders can keep the global economy from completely falling apart. But right now, things don't look good. After a period of relative stability, things are starting to become unglued once again. The next major financial panic could literally happen at any time. Sadly, if we do see an economic apocalypse in 2012, it won't be the wealthy that suffer the most. It will be the poor, the unemployed, the homeless and the hungry that feel the most pain.
The following are 20 signs that we could be headed for an economic apocalypse in 2012....
#1 Back in 2008 we saw major rioting around the world due to soaring food prices, and now global food prices are on the rise again. Global food prices in July were 33 percent higher than they were one year ago. Price increases for staples such as maize (up 84 percent), sugar (up 62 percent) and wheat (up 55 percent) are absolutely devastating poverty-stricken communities all over the planet. For example, one expert is warning that 800,000 children living in the Horn of Africa could die during this current famine.
#2 The producer price index in the U.S. has increased at an annual rate of at least 7.0% for the last three months in a row. We are starting to see huge price increases all over the place. For example, Starbucks recently jacked up the price of a bag of coffee by 17 percent. If inflation keeps accelerating like this we could be facing some very serious problems by the time 2012 rolls around.
#3 The U.S. "Misery Index" (unemployment plus inflation) recently hit a 28 year high and many believe that it is going to go much, much higher.
#4 Jared Bernstein, the former chief economist for Vice President Joe Biden, says that the unemployment rate in this country will not go below 8% before the 2012 election. In fact, Bernstein says that "the most optimistic forecast would be for about eight-and-a-half percent."
#5 Working class jobs in the United States continue to disappear at an alarming rate. Back in 1967, 97 percent of men with a high school degree between the ages of 30 and 50 had jobs. Today, that figure is 76 percent.
#6 There are all kinds of indications that U.S. economic growth is about to slow down even further. For example, pre-orders for Christmas toys from China are way down this year.
#7 One recent survey found that 9 out of 10 U.S. workers do not expect their wages to keep up with the rising cost of basics such as food and gasoline over the next year.
#8 U.S. consumer confidence is now at its lowest level in 30 years.
#9 Today, an all-time record 45.8 million Americans are on food stamps. It is almost inconceivable that the largest economy on earth could have so many people dependent on the government for food.
#10 As the economy crumbles, we are also witnessing the fabric of society beginning to come apart. The recent flash mob crimes that we are starting to see all over America are just one example of this.
#11 Some desperate Americans are already stealing anything that they can get their hands on. For example, according to the American Kennel Club, dog thefts are up 32 percent this year.
#12 Small businesses all over the United States are having a really difficult time getting loans right now. Perhaps if the Federal Reserve was not paying banks not to make loans things would be different.
#13 The U.S. national debt is like a giant boulder that our economy must constantly carry around on its back, and it is growing by billions of dollars every single day. Right now the debt of the federal government is $14,592,242,215,641.90. It has gone up by nearly 4 trillion dollars since Barack Obama took office. S&P has already stripped the U.S. of its AAA credit rating, and more downgrades are certain to come if the U.S. does not get its act together.
#14 Tensions between the United States and China are rising again. A new opinion piece on chinadaily.com is calling for the Chinese government to use its holdings of U.S. debt as a "financial weapon" against the United States if the U.S. follows through with a plan to sell more arms to Taiwan. The U.S. and China are the two biggest economies in the world, so any trouble between them would mean economic trouble for the rest of the globe as well.
#15 Most state and local governments in the U.S. are deep in debt and flat broke. Many of them are slashing jobs at a feverish pace. According to the Center on Budget and Policy Priorities, state and local governments have eliminated more than half a million jobs since August 2008. UBS Investment Research is projecting that state and local governments in the U.S. will cut 450,000 more jobs by the end of 2012. How those jobs will be replaced is anyone's guess.
#16 The U.S. dollar continues to get weaker and weaker. This is renewing calls for a new global currency to be created to replace the U.S. dollar as the reserve currency of the world.
#17 The European sovereign debt crisis continues to get worse. Countries like Portugal, Italy and Greece are on the verge of an economic apocalypse. All of the financial problems in Europe are even beginning to affect the core European nations. For example, German industrial production declined by 1.1% in June. There are all kinds of signs that the economy of Europe is slowing down and is heading for a recession. French President Nicolas Sarkozy and German Chancellor Angela Merkel are proposing that a new "economic government" for Europe be set up to oversee this debt crisis, but nothing that the Europeans have tried so far has done much to solve things.
#18 The Federal Reserve is so desperate to bring some sort of stability to financial markets that it has stated that it will likely keep interest rates near zero all the way until mid-2013. The Federal Reserve is operating in "panic mode" almost constantly now and they are almost out of ammunition. So what is going to happen when the real trouble starts?
#19 Central banks around the world certainly seem to be preparing for something. According to the World Gold Council, central banks around the globe purchased more gold during the first half of 2011 than they did all of last year.
#20 Often perception very much influences reality. One recent survey found that 48 percent of Americans believe that it is likely that another great Depression will begin within the next 12 months. If people expect that a depression is coming and they quit spending money that actually increases the chance that an economic downturn will occur.
There is already a tremendous amount of economic pain on the streets of America, but unfortunately it looks like things may get even worse in 2012.
The once great economic machine that was handed down to us by our forefathers is falling to pieces all around us and we are in debt up to our eyeballs. The consequences of our bad economic decisions are hurting some of the most vulnerable members of our society the most.
As the following video shows, large numbers of formerly middle class Americans are now living in their cars or sleeping in the streets....
It is a crying shame what is happening out there on the streets of America today.
Please say a prayer for all of those that are sleeping in cars or tents or under bridges tonight.
Soon even more Americans will be joining them.
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Post by linsal on Aug 22, 2011 20:29:43 GMT -5
All over America tonight, millions of elderly Americans are wondering if their money is going to run out before it is time for them to die. Those that are now past retirement age are not going to be rioting in the streets, but that doesn't mean that large numbers of them are not deeply suffering. There are millions of elderly Americans that are leading lives of "quiet desperation" as they try to get by on meager fixed incomes. Many are surviving on Ramen noodles, oatmeal, peanut butter or whatever other cheap food they can find in the stores. There are some that are so short on cash that they will not turn on the heat in their homes until things get really desperate. As health care costs soar, millions of elderly Americans find themselves deep in debt and facing huge medical bills that they cannot possibly pay. A lot of older Americans would go back to work if they could, but jobs are scarce and very few companies seem to even want to consider hiring them. Right now caring for all of the Americans that have already retired is turning out to be an overwhelming challenge, and things are about to get a whole lot worse. On January 1st, 2011 the very first Baby Boomers turned 65. A massive tsunami of retirees is coming, and America is not ready for it.
Sadly, most retirees have not adequately prepared for retirement. For many, the recent economic downturn absolutely devastated their retirement plans. Many were counting on the equity in their homes, but the recent housing crash crushed those dreams. Others had their 401ks shredded by the stock market.
Meanwhile, corporate pension plans all across America are vastly underfunded. Many state and local government pension programs are absolute disasters. The federal government has already begun to pay out significantly more in Social Security benefits than they are taking in, and the years ahead are projected to be downright apocalyptic for the Social Security program.
So needless to say, things do not look good for the Baby Boomers that are now approaching retirement age.
The following are 21 signs that the new reality for many Baby Boomers will be to work as wage slaves until they drop dead....
#1 According to a shocking AARP survey of Baby Boomers that are still in the workforce, 40 percent of them plan to work "until they drop".
#2 A recent survey of American workers that included all age groups found that 54 percent of them planned to keep working when they retire and 39 percent of them plan to either work past age 70 or never retire at all.
#3 A poll conducted by CESI Debt Solutions found that 56 percent of American retirees still had outstanding debts when they retired.
#4 A recent study by a law professor from the University of Michigan found that Americans that are 55 years of age or older now account for 20 percent of all bankruptcies in the United States. Back in 2001, they only accounted for 12 percent of all bankruptcies.
#5 Between 1991 and 2007 the number of Americans between the ages of 65 and 74 that filed for bankruptcy rose by a staggering 178 percent.
#6 Most of the bankruptcies among the elderly are caused by our deeply corrupt health care system. According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States. Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance.
#7 The U.S. government now says that the Medicare trust fund will run dry five years faster than they were projecting just last year.
#8 Starting on January 1st, 2011 the Baby Boomers began to hit retirement age. From now on, every single day more than 10,000 Baby Boomers will reach the age of 65. That is going to keep happening every single day for the next 19 years.
#9 Over 30 percent of all U.S. investors currently in their sixties have more than 80 percent of their 401k retirement plans invested in equities. So what happens if the stock market crashes again?
#10 All over the United States predatory lenders are coldly and cruelly foreclosing on elderly homeowners. You can read what one lender is doing to a 70-year-old woman and her terminally ill husband right here.
#11 Medical bills are absolutely devastating large number of elderly Americans right now. Many are going to great lengths to try to pay their bills. An elderly woman that lives in the Salem, Oregon area that is fighting terminal bone cancer tried to raise some money for her medical bills by holding a few garage sales on the weekends. However, a neighbor ratted her out, and so now the police are shutting her garage sales down.
#12 Social Security's disability program has already been pushed to the brink of insolvency and wave after wave of new applications continue to pour in.
#13 Approximately 3 out of every 4 Americans start claiming Social Security benefits the moment they are eligible at age 62. Most are doing this out of necessity. However, by claiming Social Security early they get locked in at a much lower amount than if they would have waited.
#14 According to the Congressional Budget Office, the Social Security system paid out more in benefits than it received in payroll taxes in 2010. That was not supposed to happen until at least 2016. Sadly, in the years ahead these "Social Security deficits" are scheduled to become absolutely nightmarish as hordes of Baby Boomers retire.
#15 In 1950, each retiree's Social Security benefit was paid for by 16 U.S. workers. In 2010, each retiree's Social Security benefit was paid for by approximately 3.3 U.S. workers. By 2025, it is projected that there will be approximately two U.S. workers for each retiree. How in the world can the system possibly continue to function properly with numbers like that?
#16 According to a shocking U.S. government report, soaring interest costs on the U.S. national debt plus rapidly escalating spending on entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every single dollar of federal revenue by the year 2019. That is before a single dollar is spent on anything else.
#17 Most states have huge pension liabilities that are woefully underfunded. For example, pension consultant Girard Miller recently told California's Little Hoover Commission that state and local government bodies in the state of California have $325 billion in combined unfunded pension liabilities. When you break that down, it comes to $22,000 for every single working adult in the state of California.
#18 Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern's Kellogg School of Management recently calculated the combined pension liability for all 50 U.S. states. What they found was that the 50 states are collectively facing $5.17 trillion in pension obligations, but they only have $1.94 trillion set aside in state pension funds. That is a difference of 3.2 trillion dollars. So where in the world is all of that extra money going to come from? Most of the states are already completely broke and on the verge of bankruptcy.
#19 According to one recent survey, 36 percent of Americans say that they don't contribute anything at all to retirement savings.
#20 According to another recent survey, 24 percent of all U.S. workers say that they have postponed their planned retirement age at least once during the past year.
#21 Even though prices for necessities such as food and gas have been exploding, those receiving Social Security benefits have not received a cost of living increase for two years in a row. Many elderly Americans that are living on fixed incomes are being squeezed like they have never been squeezed before.
There are millions of Americans out there that have done everything "right" all of their lives, but that now find the system letting them down in their golden years.
So how badly are some people hurting? Well, a reader identified as "Anna44" recently shared with us what some of her family members have been going through in this economy....
My B-I-L was a dealership owner/manager who worked long hours over 38 years and had to close his doors when Saturn was dissolved. When his dealership went under, 72 others lost their job. That’s 72 families who took a hit. He lost his home, everything. A few of his former employees lost their homes as well eventually. They were not lazy or WORTHLESS. It took him a year and a half to finally find something, but now he lives in a hotel unable to qualify for a house or apartment. This is an educated man who competed nationwide for top dog and got it more then once. His biggest fault? He’s almost 60, young enough to need the work, but too old to be hired.
As for my husband- 26 years AF officer, handling millions & billions on International & National levels has just entered his 7th month of unemployment. Two tours abroad- lazy he is NOT. He doesn’t qualify for unemployment, nor is he counted because he gets a retirement check. He wants and needs to work- yet there is little out there. If he doesn’t find something soon, we too will lose the home we sunk every cent into after 20 years of saving for it! These are Americans that should be getting ready to enjoy their golden years, but that are now fighting just to survive.
Today you will find a disturbingly large number of elderly Americans flipping burgers or welcoming people to Wal-Mart. But most of them are not doing it because they are bored with retirement. Rather, most of them are working as wage slaves because that is what they have to do in order to survive.
Sadly, there are a whole lot of companies out there that do not want to hire people that are past a certain age. If you are older than 50, there are a lot of jobs that you should just basically forget about applying for.
Instead of valuing the experience and wisdom of our elders, our society openly makes fun of them and treats them as undesirables.
If you are afraid of getting old, you are not being irrational. Getting old is indeed something to fear in this society. We tend to treat elderly Americans like garbage.
Abuse of the elderly is rampant. For example, a report from a couple of years ago found that 94 percent of all nursing homes in the United States had committed violations of federal health and safety standards.
As the U.S. economy continues to crumble, the way we treat the elderly is probably going to get even worse.
Right now there is tons of bad news about the economy, and another major economic downturn would put even more pressure on federal, state and local government budgets.
The truth is that there is simply no way that we can keep all of the financial promises that we have made to elderly Americans even if the most optimistic projections for our economy play out.
If the worst happens, we are going to see a lot more elderly Americans eating out of trash cans and freezing to death in their own homes.
The United States is facing a retirement crisis of unprecedented magnitude. A comfortable, happy retirement is rapidly going to become a luxury that only the wealthy will enjoy.
For most of the rest of us, our golden years are going to mean a whole lot of pain and suffering.
That may not be pleasant to hear, but that is the truth.
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Post by linsal on Aug 31, 2011 5:32:15 GMT -5
25 Signs That The Financial World Is About To Hit The Big Red Panic Button
Most of the worst financial panics in history have happened in the fall. Just recall what happened in 1929, 1987 and 2008. Well, September 2011 is about to begin and there are all kinds of signs that the financial world is about to hit the big red panic button. Wave after wave of bad economic news has come out of the United States recently, and Europe is embroiled in an absolutely unprecedented debt crisis. At this point there is a very real possibility that the euro may not even survive. So what is causing all of this? Well, over the last couple of decades a gigantic debt bubble has fueled a tremendous amount of "fake prosperity" in the western world. But for a debt bubble to keep going, the total amount of debt has to keep expanding at an ever increasing pace. Unfortunately for the global economy, sources of credit are starting to dry up. That is why you hear terms like "credit crisis" and "credit crunch" thrown around so much these days. Without enough credit to feed the monster, the debt bubble is going to burst. At this point, virtually the entire global economy runs on credit, so when this debt bubble bursts things could get really, really messy.
Nations and financial institutions would never get into debt trouble if they could always borrow as much money as they wanted at extremely low interest rates. But what has happened is that lending sources are balking at continuing to lend cheap money to nations and financial institutions that are already up to their eyeballs in debt.
For example, the yield on 2 year Greek bonds is now over 40 percent. Investors don't trust the Greek government and they are demanding a huge return in order to lend them more money.
Throughout the financial world right now there is a lot of fear. Lending conditions have gotten very tight. Financial institutions are not eager to lend money to each other or to anyone else. This "credit crunch" is going to slow down the economy. Just remember what happened back in 2008. When easy credit stops flowing, the dominoes can start falling very quickly.
Sadly, this is a cycle that can feed into itself. When credit is tight, the economy slows down and more businesses fail. That causes financial institutions to want to tighten up things even more in order to avoid the "bad credit risks". Less economic activity means less tax revenue for governments. Less tax revenue means larger budget deficits and increased borrowing by governments. But when government debt gets really high that can cause huge economic problems like we are witnessing in Greece right now. The cycle of tighter credit and a slowing economy can go on and on and on.
I spend a lot of time talking about problems with the U.S. economy, but the truth is that the rest of the world is dealing with massive problems as well right now. As bad as things are in the U.S., the reality is that Europe looks like it may be "ground zero" for the next great financial crisis.
At this point the EU essentially has three choices. It can choose much deeper economic integration (which would mean a huge loss of sovereignty), it can choose to keep the status quo going for as long as possible by providing the PIIGS with gigantic bailouts, or it can choose to end of the euro and return to individual national currencies.
Any of those choices would be very messy. At this point there is not much political will for much deeper economic integration, so the last two alternatives appear increasingly likely.
In any event, global financial markets are paralyzed by fear right now. Nobody knows what is going to happen next, but many now fear that whatever does come next will not be good.
The following are 25 signs that the financial world is about to hit the big red panic button....
#1 According to a new study just released by Merrill Lynch, the U.S. economy has an 80% chance of going into another recession.
#2 Will Bank of America be the next Lehman Brothers? Shares of Bank of America have fallen more than 40% over the past couple of months. Even though Warren Buffet recently stepped in with 5 billion dollars, the reality is that the problems for Bank of America are far from over. In fact, one analyst is projecting that Bank of America is going to need to raise 40 or 50 billion dollars in new capital.
#3 European bank stocks have gotten absolutely hammered in recent weeks.
#4 So far, major international banks have announced layoffs of more than 60,000 workers, and more layoff announcements are expected this fall. A recent article in the New York Times detailed some of the carnage....
A new wave of layoffs is emblematic of this shift as nearly every major bank undertakes a cost-cutting initiative, some with names like Project Compass. UBS has announced 3,500 layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told. #5 Credit markets are really drying up. Do you remember what happened in 2008 when that happened? Many are now warning that we are getting very close to a repeat of that.
#6 The Conference Board has announced that the U.S. Consumer Confidence Index fell from 59.2 in July to 44.5 in August. That is the lowest reading that we have seen since the last recession ended.
#7 The University of Michigan Consumer Sentiment Index has fallen by almost 20 points over the last three months. This index is now the lowest it has been in 30 years.
#8 The Philadelphia Fed's latest survey of regional manufacturing activity was absolutely nightmarish....
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009
#9 According to Bloomberg, since World War II almost every time that the year over year change in real GDP has fallen below 2% the U.S. economy has fallen into a recession....
Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.
#10 Economic sentiment is falling in Europe as well. The following is from a recent Reuters article....
A monthly European Commission survey showed economic sentiment in the 17 countries using the euro, a good indication of future economic activity, fell to 98.3 in August from a revised 103 in July with optimism declining in all sectors.
#11 The yield on 2 year Greek bonds is now an astronomical 42.47%.
#12 As I wrote about recently, the European Central Bank has stepped into the marketplace and is buying up huge amounts of sovereign debt from troubled nations such as Greece, Portugal, Spain and Italy. As a result, the ECB is also massively overleveraged at this point.
#13 Most of the major banks in Europe are also leveraged to the hilt and have tremendous exposure to European sovereign debt.
#14 Political wrangling in Europe is threatening to unravel the Greek bailout package. In a recent article, Satyajit Das described what has been going on behind the scenes in the EU....
The sticking point is a demand for collateral for the second bailout package. Finland demanded and got Euro 500 million in cash as security against their Euro 1,400 million share of the second bailout package. Hearing of the ill-advised side deal between Greece and Finland, Austria, the Netherlands and Slovakia also are now demanding collateral, arguing that their banks were less exposed to Greece than their counterparts in Germany and France entitling them to special treatment. At least, one German parliamentarian has also asked the logical question, why Germany is not receiving similar collateral.
#15 German Chancellor Angela Merkel is trying to hold the Greek bailout deal together, but a wave of anti-bailout "hysteria" is sweeping Germany, and now according to Ambrose Evans-Pritchard it looks like Merkel may not have enough votes to approve the latest bailout package....
German media reported that the latest tally of votes in the Bundestag shows that 23 members from Mrs Merkel's own coalition plan to vote against the package, including twelve of the 44 members of Bavaria's Social Christians (CSU). This may force the Chancellor to rely on opposition votes, risking a government collapse.
#16 Polish finance minister Jacek Rostowski is warning that the status quo in Europe will lead to "collapse". According to Rostowski, if the EU does not choose the path of much deeper economic integration the eurozone simply is not going to survive much longer....
"The choice is: much deeper macroeconomic integration in the eurozone or its collapse. There is no third way."
#17 German voters are against the introduction of "Eurobonds" by about a 5 to 1 margin, so deeper economic integration in Europe does not look real promising at this point.
#18 If something goes wrong with the Greek bailout, Greece is financially doomed. Just consider the following excerpt from a recent article by Puru Saxena....
In Greece, government debt now represents almost 160% of GDP and the average yield on Greek debt is around 15%. Thus, if Greece’s debt is rolled over without restructuring, its interest costs alone will amount to approximately 24% of GDP. In other words, if debt pardoning does not occur, nearly a quarter of Greece’s economic output will be gobbled up by interest repayments!
#19 The global banking system has a total of 2 trillion dollars of exposure to Greek, Irish, Portuguese, Spanish and Italian debt. Considering how much the global banking system is leveraged, this amount of exposure could end up wiping out a lot of major financial institutions.
#20 The head of the IMF, Christine Largarde, recently warned that European banks are in need of "urgent recapitalization".
#21 Once the European crisis unravels, things could move very rapidly downhill. In a recent article, John Mauldin put it this way....
It is only a matter of time until Europe has a true crisis, which will happen faster – BANG! – than any of us can now imagine. Think Lehman on steroids. The U.S. gave Europe our subprime woes. Europe gets to repay the favor with an even more severe banking crisis that, given that the U.S. is at best at stall speed, will tip us into a long and serious recession. Stay tuned.
#22 The U.S. housing market is still a complete and total mess. According to a recently released report, U.S. home prices fell 5.9% in the second quarter compared to a year earlier. That was the biggest decline that we have seen since 2009. But even with lower prices very few people are buying. According to the National Association of Realtors, sales of previously owned homes dropped 3.5 percent during July. That was the third decline in the last four months. Sales of previously owned homes are even lagging behind last year's pathetic pace.
#23 According to John Lohman, the decline in U.S. economic data over the past three months has been absolutely unprecedented.
#24 Morgan Stanley now says that the U.S. and Europe are "hovering dangerously close to a recession" and that there is a good chance we could enter one at some point in the next 6 to 12 months.
#25 Minneapolis Fed President Narayana Kocherlakota says that he is so alarmed about the state of the economy that he may drop his opposition to more monetary easing. Could more quantitative easing by the Federal Reserve soon be on the way?
Things have not looked this bad for global financial markets since 2008. Unless someone rides in on a white horse with trillions of dollars (or euros) of easy credit, it looks like we are headed for a massive credit crunch.
What we witnessed back in 2008 was absolutely horrifying. Very few people want to see a repeat of that. But as things in the U.S. and Europe continue to unravel, it appears increasingly likely that the next wave of the financial crisis could hit us sooner rather than later.
None of the fundamental problems that caused the crisis of 2008 have been fixed. The world financial system is still one gigantic mountain of debt, leverage and risk.
Authorities around the globe will certainly do all they can to keep things stable, but in the end it is inevitable that the house of cards is going to come crashing down.
Let us hope for the best, but let us also prepare for the worst.
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Post by glowplug on Sept 3, 2011 23:08:14 GMT -5
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Post by linsal on Sept 12, 2011 18:10:14 GMT -5
20 Signs Of Imminent Financial Collapse In Europe
Are we on the verge of a massive financial collapse in Europe? Rumors of an imminent default by Greece are flying around all over the place and Greek government officials are openly admitting that they are running out of money. Without more bailout funds it is absolutely certain that Greece will soon default on their debts. But German officials are threatening to hold up more bailout payments until the Greeks "do what they agreed to do". The attitude in Germany is that the Greeks must now pay the price for going into so much debt. Officials in the Greek government are becoming frustrated because the more austerity measures they implement, the more their economy shrinks. As the economy shrinks, so do tax payments and the budget deficit gets even larger. Meanwhile, hordes of very angry Greek citizens are violently protesting in the streets. If Germany allows Greece to default, that is going to start financial dominoes tumbling around the globe and it is going to be a signal to the financial markets that there is a very real possibility that Portugal, Italy and Spain will be allowed to default as well. Needless to say, all hell would break loose at that point.
So why is Greece so important?
Well, there are two reasons why Greece is so important.
Number one, major banks all over Europe are heavily invested in Greek debt. Since many of those banks are also very highly leveraged, if they are forced to take huge losses on Greek debt it could wipe many of them out.
Secondly, if Greece defaults, it tells the markets that Portugal, Italy and Spain would likely not be rescued either. It would suddenly become much, much more expensive for those countries to borrow money, which would make their already huge debt problems far worse.
If Italy or Spain were to go down, it would wipe out major banks all over the globe.
Recently, Paul Krugman of the New York Times summarized the scale of the problem the world financial system is now facing....
Financial turmoil in Europe is no longer a problem of small, peripheral economies like Greece. What’s under way right now is a full-scale market run on the much larger economies of Spain and Italy. At this point countries in crisis account for about a third of the euro area’s G.D.P., so the common European currency itself is under existential threat. Most Americans don't spend a lot of time thinking about the financial condition of Europe.
But they should.
Right now, the U.S. economy is really struggling to stay out of another recession. If Europe has a financial meltdown, there is no way that the United States is going to be able to avoid another huge economic downturn.
If you think that things are bad now, just wait. After the next major financial crisis what we are going through right now is going to look like a Sunday picnic.
The following are 20 signs of imminent financial collapse in Europe....
#1 The yield on 2 year Greek bonds is now over 60 percent. The yield on 1 year Greek bonds is now over 110 percent. Basically, world financial markets now fully expect that Greece will default.
#2 European bank stocks are getting absolutely killed once again today. We have seen this happen time after time in the last few weeks. What we are now witnessing is a clear trend. Just like back in 2008, major banking stocks are leading the way down the financial toilet.
#3 The German government is now making preparations to bail out major German banks when Greece defaults. Reportedly, the German government is telling banks and financial institutions to be prepared for a 50 percent "haircut" on Greek debt obligations.
#4 With thousands upon thousands of angry citizens protesting in the streets, the Greek government seems hesitant to fully implement the austerity measures that are being required of them. But if Greece does not do what they are being told to do, Germany may withhold further aid. German Finance Minister Wolfgang Schaeuble says that Greece is now "on a knife’s edge".
#5 Germany is increasingly taking a hard line with Greece, and the Greeks are feeling very pushed around by the Germans at this point. Ambrose Evans-Pritchard made this point very eloquently in a recent article for the Telegraph....
Germany’s EU commissioner Günther Oettinger said Europe should send blue helmets to take control of Greek tax collection and liquidate state assets. They had better be well armed. The headlines in the Greek press have been "Unconditional Capitulation", and "Terrorization of Greeks", and even “Fourth Reich”. #6 Everyone knows that Greece simply cannot last much longer without continued bailouts. John Mauldin explained why this is so in a recent article....
It is elementary school arithmetic. The Greek debt-to-GDP is currently at 140%. It will be close to 180% by year’s end (assuming someone gives them the money). The deficit is north of 15%. They simply cannot afford to make the interest payments. True market (not Eurozone-subsidized) interest rates on Greek short-term debt are close to 100%, as I read the press. Their long-term debt simply cannot be refinanced without Eurozone bailouts. #7 The austerity measures that have already been implemented are causing the Greek economy to shrink rapidly. Greek Finance Minister Evangelos Venizelos has announced that the Greek government is now projecting that the economy will shrink by 5.3% in 2011.
#8 Greek Deputy Finance Minister Filippos Sachinidis says that Greece only has enough cash to continue operating until next month.
#9 Major banks in the U.S., in Japan and in Europe have a tremendous amount of exposure to Greek debt. If they are forced to take major losses on Greek debt, quite a few major banks that are very highly leveraged could suddenly be in danger of being wiped out.
#10 If Greece goes down, Portugal could very well be next. Ambrose Evans-Pritchard of the Telegraph explains it this way....
Yet to push Greece over the edge risks instant contagion to Portugal, which has higher levels of total debt, and an equally bad current account deficit near 9pc of GDP, and is just as unable to comply with Germany's austerity dictates in the long run. From there the chain-reaction into EMU's soft-core would be fast and furious. #11 The yield on 2 year Portuguese bonds is now over 15 percent. A year ago the yield on those bonds was about 4 percent.
#12 Portugal, Ireland and Italy now also have debt to GDP ratios that are well above 100%.
#13 Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.
#14 Major banks in the "healthy" areas of Europe could soon see their credit ratings downgraded. For example, there are persistent rumors that Moody's is about to downgrade the credit ratings of several major French banks.
#15 Most major European banks are leveraged to the hilt and are massively exposed to sovereign debt. Before it fell in 2008, Lehman Brothers was leveraged 31 to 1. Today, major German banks are leveraged 32 to 1, and those banks are currently holding a massive amount of European sovereign debt.
#16 The ECB is not going to be able to buy up debt from troubled eurozone members indefinitely. The European Central Bank is already holding somewhere in the neighborhood of 444 billion euros of debt from the governments of Greece, Italy, Portugal, Ireland and Spain. On Friday, Jurgen Stark of Germany resigned from the European Central Bank in protest over these reckless bond purchases.
#17 According to London-based think tank Open Europe, the European Central Bank is now massively overleveraged....
"Should the ECB see its assets fall by just 4.23pc in value . . . its entire capital base would be wiped out." #18 The recent decision issued by the German Constitutional Court seems to have ruled out the establishment of any "permanent" bailout mechanism for the eurozone. Just consider the following language from the decision....
"No permanent treaty mechanisms shall be established that leads to liability for the decisions of other states, especially if they entail incalculable consequences" #19 Economist Nouriel Roubini is warning that without "massive stimulus" by the governments of the western world we are going to see a major financial collapse and we will find ourselves plunging into a depression....
“In the short term, we need to do massive stimulus; otherwise, there's going to be another Great Depression” #20 German Economy Minister Philipp Roesler is warning that "an orderly default" for Greece is not "off the table"....
''To stabilize the euro, we must not take anything off the table in the short run. That includes, as a worst-case scenario, an orderly default for Greece if the necessary instruments for it are available.'' Right now, Greece is caught in a death spiral. The more austerity measures they implement, the more their economy slows down. The more their economy slows down, the more their tax revenues go down. The more their tax revenues go down, the worse their debt problems become.
Greece could end up leaving the euro, but that would make their economic problems far, far worse and it would be very damaging to the rest of the eurozone as well.
Quite a few politicians in Europe are touting a "United States of Europe" as the ultimate solution to these problems, but right now the citizens of the eurozone are overwhelming against deeper economic integration.
Plus, giving the EU even more power would mean an even greater loss of national sovereignty for the people of Europe.
That would not be a good thing.
So what we are stuck with right now is the status quo. But the current state of affairs cannot last much longer. Germany is getting sick and tired of giving out bailouts and nations such as Greece are getting sick and tired of the austerity measures that are being forced upon them.
At some point, something is going to snap. When that happens, world financial markets are going to respond with a mixture of panic and fear. Credit markets will freeze up because nobody will be able to tell who is stable and who is about to collapse. Dominoes will start to fall and quite a few major financial institutions will be wiped out. Governments around the world will have to figure out who they want to bail out and who they don't want to bail out.
It will be a giant mess.
For decades, the governments of the western world have been warned that they were getting into way too much debt.
For decades, the major banks and the big financial institutions were warned that they were becoming way too leveraged and were taking far too many risks.
Well, nobody listened.
So now we get to watch a global financial nightmare play out in slow motion.
Grab some popcorn and get ready. It is going to be quite a show.
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Post by jrtheoriginal on Sept 13, 2011 7:30:40 GMT -5
Oh I am in a gloom mood today so this is my contribution! You are here: Home / Analysis / Walker's World / Walker's World: A dying economy View archive | RSS Feed Receive Free UPI Newsletter Walker's World A dying economy Published: Sept. 12, 2011 at 6:28 AM By MARTIN WALKER, UPI Editor Emeritus Comments (4) Email Print Listen Advertisement WASHINGTON, Sept. 12 (UPI) -- So much for the recovery. In none of the Group of Seven economies, including Germany, has industrial output returned to pre-crash levels. In the United States, for example, industrial output stands at 94.2 percent of its level in the first quarter of 2008. In the last three years since September, 2008, the most reliable market index to the U.S. economy has produced nil returns. Even including dividends, the Standard and Poor's 500 is exactly where it was in the month that the crisis exploded with the Lehman Brothers collapse. Despite vast injections of deficit spending and stimulus packages by the G7 governments and by the unprecedented creation of liquidity by central banks, the developed economies are back to where they started when the crash began. And one crucial element of the global economy -- the stability of the eurozone -- is in worse shape than it was three years ago. Worse still, several of the key strategies put in place three years ago to address the crisis have visibly failed. The first is the failure of the attempt to stabilize and recapitalize those top commercial banks deemed too big to fail. The savaging of bank stocks in Europe and the United States over the past three weeks and the drying up of inter-bank lending across the Atlantic points to the continued vulnerability of the banking system. The plan was to allow the commercial banks to borrow cheaply from central banks, to lend that money at much higher interest rates and to use the resulting profits to buttress their capital base. But there was too little private sector demand to borrow the money. Capital reserves have been increased but far from sufficiently for comfort. The second failed strategy has been the attempt to stabilize the U.S. housing market, where prices continue to flag and foreclosures to rise. Despite record low mortgage rates, demand isn't picking up, even for re-financing. According to Mike Fratantoni, the Mortgage Brokers Association's vice president of research and economics, refinance application volume is more than 35 percent less than levels at this time last year. The old assumption that falling prices would themselves stimulate demand isn't working. The third failed strategy has been the attempt to create jobs, everywhere in the G7 countries except in Germany, where an export boom (already starting to fade) has created demand for traditional industrial jobs. There are three important factors at work here, beyond the flawed and over-politicized design of most government stimulus packages. The first is that consumer demand is down by about $500 billion a year in the United States. The second is that corporations have learned to do more with less, to produce goods with fewer employees and thus to cut costs and boost earnings. The third is more worrying: that current and future employment is being depressed not by the economic cycle but by fundamental structural and technological change in the economy. The success of Amazon in selling books and e-books means the bankruptcy of bookstore chains like Borders, whose final 11,000 employees are being laid off. The U.S. Postal Service, the need for its services eroded by e-mail, is planning to cut 220,000 jobs over the next five years, half of them through layoffs. Whereas automation began by eroding the need for a large blue-collar workforce, we are starting to see the way computerization is eroding the demand for a white-collar workforce, whether in newspapers, paralegal services or accounting. The education industry is likely to follow, as cheap distant learning starts to erode the demand for traditional college education. The next victim will be healthcare services, hitherto one of the fastest-growing employment areas. The coming of constant and automated diagnosis through smart phones, followed by the eventual success of electronic health records, is going to reduce the need for human staff. Then will come the reduced need for cashiers and retail staff (6 percent of U.S employment) as we move to electronic payment by phones. Vodaphone is building hardware on the assumption that by 2020 half of all retail transactions will be conducted by smartphones. The core of the problem is that governments have been trying to tackle this economic crisis by using the tools of the 1930s, as if it were another version of the Great Depression that could be resolved through traditional Keynesian methods. But it is starting to become clear that many of the roots of this crisis stem from the reality that we are already entering a completely different technological era in which the traditional tools of job creation and demand stimulus no longer work in the same old ways. Where this takes us as an economy dependent on mass employment to pay for consumption, taxes and pensions that still unclear. And what it does to us as a society in which most people measure much of their self-worth by their jobs and their incomes and their ability to take care of their families is more uncertain still. But the essence of this crisis is becoming clear; it is less an event than a transition. We won't be getting back to "normal," not ever. © 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent. Order reprints Read more: www.upi.com/Top_News/Analysis/Walker/2011/09/12/Walkers-World-A-dying-economy/UPI-16711315823280/#ixzz1Xq4drYvH
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Post by glowplug on Oct 4, 2011 7:56:03 GMT -5
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