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American • America’s Bubble Economy Is Going To Become An Economic Blac
America’s Bubble Economy Is Going To Become An Economic Black Hole
By Michael, on May 21st, 2013
What is going to happen when the greatest economic bubble in the history of the world pops? The mainstream media never talks about that. They are much too busy covering the latest dogfights in Washington and what Justin Bieber has been up to. And most Americans seem to think that if the Dow keeps setting new all-time highs that everything must be okay. Sadly, that is not the case at all. Right now, the U.S. economy is exhibiting all of the classic symptoms of a bubble economy. You can see this when you step back and take a longer-term view of things. Over the past decade, we have added more than 10 trillion dollars to the national debt. But most Americans have shown very little concern as the balance on our national credit card has soared from 6 trillion dollars to nearly 17 trillion dollars. Meanwhile, Wall Street has been transformed into the biggest casino on the planet, and much of the new money that the Federal Reserve has been recklessly printing up has gone into stocks. But the Dow does not keep setting new records because the underlying economic fundamentals are good. Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of 1929. Margin debt is absolutely soaring, and every time that happens a crash rapidly follows. But this time when a crash happens it could very well be unlike anything that we have ever seen before. The top 25 U.S. banks have more than 212 trillion dollars of exposure to derivatives combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up. After all, U.S. GDP for an entire year is only a bit more than 15 trillion dollars.
But most Americans are only focused on the short-term because the mainstream media is only focused on the short-term. Things are good this week and things were good last week, so there is nothing to worry about, right?
Unfortunately, economic reality is not going to change even if all of us try to ignore it. Those that are willing to take an honest look at what is coming down the road are very troubled. For example, Bill Gross of PIMCO says that his firm sees "bubbles everywhere"…
We see bubbles everywhere, and that is not to be dramatic and not to suggest they will pop immediately. I just suggested in the bond market with a bubble in treasuries and bubble in narrow credit spreads and high-yield prices, that perhaps there is a significant distortion there. Having said that, it suggests that as long as the FED and Bank of Japan and other Central Banks keep writing checks and do not withdraw, then the bubble can be supported as in blowing bubbles. They are blowing bubbles. When that stops there will be repercussions.
And unfortunately, it is not just the United States that has a bubble economy. In fact, the gigantic financial bubble over in Japan may burst before our own financial bubble does. The following is from a recent article by Graham Summers…
First and foremost, Japan is the second largest bond market in the world. If Japan’s sovereign bonds continue to fall, pushing rates higher, then there has been a tectonic shift in the global financial system. Remember the impact that Greece had on asset prices? Greece’s bond market is less than 3% of Japan’s in size.
For multiple decades, Japanese bonds have been considered “risk free.” As a result of this, investors have been willing to lend money to Japan at extremely low rates. This has allowed Japan’s economy, the second largest in the world, to putter along marginally.
So if Japanese bonds begin to implode, this means that:
1) The second largest bond market in the world is entering a bear market (along with commensurate liquidations and redemptions by institutional investors around the globe).
2) The second largest economy in the world will collapse (along with the impact on global exports).
Both of these are truly epic problems for the financial system.
And of course the entire global financial system is a giant bundle of debt, risk and leverage at this point. We have never seen anything like this in world history. When you step back and take a good, hard look at the numbers, they truly are staggering. The following statistics are from one of my previous articles entitled "Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers"…
-$70,000,000,000,000 – The approximate size of total world GDP.
-$190,000,000,000,000 – The approximate size of the total amount of debt in the entire world. It has nearly doubled in size over the past decade.
-$212,525,587,000,000 – According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States. But those banks only have total assets of about 8.9 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.
-$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives generally fall within this range. At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.
The financial meltdown that happened back in 2008 should have been a wake up call for the nations of the world. They should have corrected the mistakes that happened so that nothing like that would ever happen again. Unfortunately, nothing was fixed. Instead, our politicians and the central bankers became obsessed with reinflating the system. They piled up even more debt, recklessly printed tons of money and kicked the can down the road for a few years. In the process, they made our long-term problems even worse. The following is a recent quote from John Williams of shadowstats.com…
The economic and systemic solvency crises of the last eight years continue. There never was an actual recovery following the economic downturn that began in 2006 and collapsed into 2008 and 2009. What followed was a protracted period of business stagnation that began to turn down anew in second- and third-quarter 2012. The official recovery seen in GDP has been a statistical illusion generated by the use of understated inflation in calculating key economic series (see Public Comment on Inflation). Nonetheless, given the nature of official reporting, the renewed downturn likely will gain recognition as the second-dip in a double- or multiple-dip recession.
What continues to unfold in the systemic and economic crises is just an ongoing part of the 2008 turmoil. All the extraordinary actions and interventions bought a little time, but they did not resolve the various crises. That the crises continue can be seen in deteriorating economic activity and in the panicked actions by the Federal Reserve, where it proactively is monetizing U.S. Treasury debt at a pace suggestive of a Treasury that is unable to borrow otherwise.
And there are already lots of signs that the next economic downturn is rapidly approaching.
For example, corporate revenues are falling at Wal-Mart, Proctor and Gamble, Starbucks, AT&T, Safeway, American Express and IBM.
Would revenues at Wal-Mart be falling if the economy was getting better?
U.S. jobless claims hit a six week high last week. We aren’t in the danger zone yet, but once they hit 400,000 that will be a major red flag.
And even though we are still in the "good times" relatively speaking, the federal government is already talking about tightening welfare programs. In fact, there are proposals in Congress right now to make significant cuts to the food stamp program.
If food stamps and other welfare programs get cut, that is going to make a lot of people very, very angry. And that anger and frustration will get even worse when the next economic downturn strikes and millions of people start losing their jobs and their homes.
What we are witnessing right now is the calm before the storm. Let us hope that it lasts for as long as possible so that we can have more time to prepare.
Unfortunately, this bubble of false hope will not last forever. At some point it will end, and then the pain will begin.
http://theeconomiccollapseblog.com/arch … black-hole
Statistics: Posted by yoda — Tue May 21, 2013 8:13 pm
View full post on opinions.caduceusx.com
America’s Bubble Economy Is Going To Become An Economic Black Hole
What is going to happen when the greatest economic bubble in the history of the world pops? The mainstream media never talks about that. They are much too busy covering the latest dogfights in Washington and what Justin Bieber has been up to. And most Americans seem to think that if the Dow keeps setting new all-time highs that everything must be okay. Sadly, that is not the case at all. Right now, the U.S. economy is exhibiting all of the classic symptoms of a bubble economy. You can see this when you step back and take a longer-term view of things. Over the past decade, we have added more than 10 trillion dollars to the national debt. But most Americans have shown very little concern as the balance on our national credit card has soared from 6 trillion dollars to nearly 17 trillion dollars. Meanwhile, Wall Street has been transformed into the biggest casino on the planet, and much of the new money that the Federal Reserve has been recklessly printing up has gone into stocks. But the Dow does not keep setting new records because the underlying economic fundamentals are good. Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of 1929. Margin debt is absolutely soaring, and every time that happens a crash rapidly follows. But this time when a crash happens it could very well be unlike anything that we have ever seen before. The top 25 U.S. banks have more than 212 trillion dollars of exposure to derivatives combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up. After all, U.S. GDP for an entire year is only a bit more than 15 trillion dollars.
But most Americans are only focused on the short-term because the mainstream media is only focused on the short-term. Things are good this week and things were good last week, so there is nothing to worry about, right?
Unfortunately, economic reality is not going to change even if all of us try to ignore it. Those that are willing to take an honest look at what is coming down the road are very troubled. For example, Bill Gross of PIMCO says that his firm sees “bubbles everywhere”…
We see bubbles everywhere, and that is not to be dramatic and not to suggest they will pop immediately. I just suggested in the bond market with a bubble in treasuries and bubble in narrow credit spreads and high-yield prices, that perhaps there is a significant distortion there. Having said that, it suggests that as long as the FED and Bank of Japan and other Central Banks keep writing checks and do not withdraw, then the bubble can be supported as in blowing bubbles. They are blowing bubbles. When that stops there will be repercussions.
And unfortunately, it is not just the United States that has a bubble economy. In fact, the gigantic financial bubble over in Japan may burst before our own financial bubble does. The following is from a recent article by Graham Summers…
First and foremost, Japan is the second largest bond market in the world. If Japan’s sovereign bonds continue to fall, pushing rates higher, then there has been a tectonic shift in the global financial system. Remember the impact that Greece had on asset prices? Greece’s bond market is less than 3% of Japan’s in size.
For multiple decades, Japanese bonds have been considered “risk free.” As a result of this, investors have been willing to lend money to Japan at extremely low rates. This has allowed Japan’s economy, the second largest in the world, to putter along marginally.
So if Japanese bonds begin to implode, this means that:
1) The second largest bond market in the world is entering a bear market (along with commensurate liquidations and redemptions by institutional investors around the globe).
2) The second largest economy in the world will collapse (along with the impact on global exports).
Both of these are truly epic problems for the financial system.
And of course the entire global financial system is a giant bundle of debt, risk and leverage at this point. We have never seen anything like this in world history. When you step back and take a good, hard look at the numbers, they truly are staggering. The following statistics are from one of my previous articles entitled “Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers“…
-$70,000,000,000,000 – The approximate size of total world GDP.
-$190,000,000,000,000 – The approximate size of the total amount of debt in the entire world. It has nearly doubled in size over the past decade.
-$212,525,587,000,000 – According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States. But those banks only have total assets of about 8.9 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.
-$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives generally fall within this range. At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.
The financial meltdown that happened back in 2008 should have been a wake up call for the nations of the world. They should have corrected the mistakes that happened so that nothing like that would ever happen again. Unfortunately, nothing was fixed. Instead, our politicians and the central bankers became obsessed with reinflating the system. They piled up even more debt, recklessly printed tons of money and kicked the can down the road for a few years. In the process, they made our long-term problems even worse. The following is a recent quote from John Williams of shadowstats.com…
The economic and systemic solvency crises of the last eight years continue. There never was an actual recovery following the economic downturn that began in 2006 and collapsed into 2008 and 2009. What followed was a protracted period of business stagnation that began to turn down anew in second- and third-quarter 2012. The official recovery seen in GDP has been a statistical illusion generated by the use of understated inflation in calculating key economic series (see Public Comment on Inflation). Nonetheless, given the nature of official reporting, the renewed downturn likely will gain recognition as the second-dip in a double- or multiple-dip recession.
What continues to unfold in the systemic and economic crises is just an ongoing part of the 2008 turmoil. All the extraordinary actions and interventions bought a little time, but they did not resolve the various crises. That the crises continue can be seen in deteriorating economic activity and in the panicked actions by the Federal Reserve, where it proactively is monetizing U.S. Treasury debt at a pace suggestive of a Treasury that is unable to borrow otherwise.
And there are already lots of signs that the next economic downturn is rapidly approaching.
For example, corporate revenues are falling at Wal-Mart, Proctor and Gamble, Starbucks, AT&T, Safeway, American Express and IBM.
Would revenues at Wal-Mart be falling if the economy was getting better?
U.S. jobless claims hit a six week high last week. We aren’t in the danger zone yet, but once they hit 400,000 that will be a major red flag.
And even though we are still in the “good times” relatively speaking, the federal government is already talking about tightening welfare programs. In fact, there are proposals in Congress right now to make significant cuts to the food stamp program.
If food stamps and other welfare programs get cut, that is going to make a lot of people very, very angry. And that anger and frustration will get even worse when the next economic downturn strikes and millions of people start losing their jobs and their homes.
What we are witnessing right now is the calm before the storm. Let us hope that it lasts for as long as possible so that we can have more time to prepare.
Unfortunately, this bubble of false hope will not last forever. At some point it will end, and then the pain will begin.
View full post on The Economic Collapse
Other • Reason to believe the next global economic crisis will star
Reason to believe the next global economic crisis will start in the East and not the West
Posted on 19 May 2013
Mirror, mirror on the wall where are the biggest bubbles of all? That is the question to ask when looking for where the next global economic crisis is most likely to erupt. It’s been five long years since the last crisis and we are about due for another. The long gap between the Asian financial crisis of the late 90s and the subprime debacle was a bit of an anomaly.
Sure the Fed appears to have saved the US from economic collapse and the death of the eurozone was greatly exaggerated. But what about the bubbles inflating in Asia today and the nationalistic governments unable to call on the moderate federalism of the US or even the eurozone to solve these problems?
Japan’s money printing
Japan is inflating its money supply three times faster than the Fed’s QE program. It is weakening the yen as intended and exporting deflation to its customers, making them less competitive. The sugar-rush effect is reflected in a booming Japanese stock market as profits from abroad will also now be higher in yen.
However, devaluation in a highly indebted economy is fraught with danger. Why hold a currency like the yen that pays almost zero interest rates if it collapsing in value? Besides the increased profits are coming to companies whose product lines are out-dated and at the cost of a ballooning money supply and inflation down the pike.
It’s also very bad news for Japan’s main trading partner China, though the response by nationalistic Chinese politicians has been to whip up public fervor over some disputed and uninhabited islands. That put a dent in Japanese car sales last year.
Of course, the situation is much worse on the Korean peninsula where the lunatics are running the assylum in the North. These guys have their triggers on nuclear weapons and can only stay in power by taking an increasingly aggressive stance.
Chinese banking crisis?
Then again the biggest threat to Asia could well turn out to be the Chinese banking system. Hedge fund manager Carson Block whose Muddy Waters Research has uncovered a series of huge financial scandals in China in recent years is now warning that the risks within China’s banking system are more severe than those in Western financial institutions before the crisis.
He told the Sunday Telegraph: ‘Our view is that China is a massive asset bubble. This puts resource-based emerging market economies and Australia, Canada and New Zealand at direct risk. A China unwind will have significant knock-on effects in other developed markets too, likely implicating liquidity and asset prices. The severity of the effects in the rest of the developed world of course partly depend on the timing of the unwind.’
Timing is the tough call, all the same. Hedge fund billionaire Jim Chanos has been shorting China for a couple of years. Still if you want to spot the next global financial crisis perhaps you should be looking East and not West.
http://www.arabianmoney.net/islamic-fin … -the-west/
Statistics: Posted by yoda — Sun May 19, 2013 12:27 am
View full post on opinions.caduceusx.com
10 Scenes From The Economic Collapse That Is Sweeping Across The Planet
When is the economic collapse going to happen? Just open up your eyes and take a look around the globe. The next wave of the economic collapse may not have reached Wall Street yet, but it is already deeply affecting billions of lives all over the planet. Much of Europe has already descended into a deep economic depression, very disturbing economic data is coming out of the second and third largest economies on the globe (China and Japan), and in most of the world economic inequality is growing even though 80 percent of the global population already lives on less than $10 a day. Just because the Dow has been setting brand new all-time records lately does not mean that everything is okay. Remember, a bubble is always the biggest right before it bursts. The next major wave of the economic collapse is already sweeping across Europe and Asia and it is going to devastate the United States as well. I hope that you are ready.
The following are 10 scenes from the economic collapse that is sweeping across the planet…
#1 27 Percent Unemployment/60 Percent Youth Unemployment In Greece
The economic depression in Europe just continues to get worse with each passing month. According to the Daily Mail, the unemployment rate in Greece has nearly tripled since 2009…
Greek youth unemployment rose above 60 per cent for the first time in February, reflecting the pain caused by the country’s crippling recession after years of austerity under its international bailout.
Greece’s jobless rate has almost tripled since the country’s debt crisis emerged in 2009 and was more than twice the euro zone’s average unemployment reading of 12.1 percent in March.
While the overall unemployment rate rose to 27 per cent, according to statistics service data released on Thursday, joblessness among those aged between 15 and 24 jumped to 64.2 percent in February from 59.3 percent in January.
#2 Detroit, Michigan Is Insolvent And Is Rapidly Running Out Of Cash
I love to write about Detroit because it is a perfect example of where the rest of the country is headed. They have just gotten there first. At this point, Detroit is essentially bankrupt, and the new emergency financial manager is saying that Detroit may totally run out of cash next month…
Detroit may run out of cash next month and must cut long-term debt and retiree obligations, according to emergency financial manager Kevyn Orr’s preliminary plan to save Michigan’s largest city from bankruptcy.
Orr’s report says the cost of $9.4 billion in bond, pension and other long-term liabilities is sapping the ability to provide public safety and transportation. He listed cutting debt principal, retiree benefits and jobs among his options.
“No one should underestimate the severity of the financial crisis,” Orr said yesterday in a statement. He called his report “a sobering wake-up call about the dire financial straits the city of Detroit faces.”
#3 Economic Despair In France
France is going down the same path that Greece, Spain, Portugal and Italy have gone. The following is an excerpt from a recent article in the Economist…
HELDER PEREIRA is a young man with no work and few prospects: a 21-year-old who failed to graduate from high school and lost his job on a building site four months ago. With his savings about to run out, he has come to his local employment centre in the Paris suburb of Sevran to sign on for benefits and to get help finding something to do. He’ll get the cash. Work is another matter. Youth unemployment in Sevran is over 40%.
#4 7,000 Abandoned Buildings In Dayton, Ohio
All over the upper Midwest, there are formerly great cities that are dealing with thousands of abandoned buildings. Dayton, Ohio is one example…
Like many urban cities in recent years, Dayton still finds itself knee-deep in abandoned, dilapidated properties as the result of the foreclosure crisis and economic downturn five years ago.
Boarded up buildings that appear to be on their last legs litter the city as it attempts to recover.
Kevin Powell, the city’s acting manager of housing inspection, says officials plan to use $5.2 million — half from the state’s Moving Ohio Forward program and a matching grant from the city’s general fund — to raze 475 abandoned properties by the end of September.
That will scratch the surface of an estimated 7,000 abandoned property problem that is growing.
#5 Overwhelmed By Squatters In Spain
In Spain, unemployment is rampant and people have become incredibly desperate. In fact, in some Spanish cities you can now find entire apartment buildings that are being overwhelmed by squatters…
A 285-unit apartment complex in Parla, less than half an hour’s drive from Madrid, should be an ideal target for investors seeking cheap property in Spain. Unfortunately, two thirds of the building generates zero revenue because it’s overrun by squatters.
“This is happening all over the country,” said Jose Maria Fraile, the town’s mayor, who estimates only 100 apartments in the block built for the council have rental contracts, and not all of those tenants are paying either. “People lost their jobs, they can’t pay mortgages or rent so they lost their homes and this has produced a tide of squatters.”
#6 The Collapse Of Chinese Power Consumption
Energy consumption tends to closely mirror economic activity. That is why the recent collapse of Chinese power consumption is so alarming. The following is from Zero Hedge…
According to CLSA’s Chris Wood using NEA data, China’s monthly power consumption (the most accurate proxy for underlying economic strength according to the current premier) growth slowed from 5.5% YoY in Jan-Feb 2013 to 1.9% YoY in March, the slowest growth rate since May 2009 (as discussed in-depth here).
#7 Horrible Economic Data Coming Out Of The Second Largest Economy On The Planet
The economic data that has been coming out of the second largest economy on the globe has been quite alarming recently…
For starters, China’s recent economic data, as massaged as it is to the upside, is downright awful. China’s PMI numbers were the worst in two years. Staffing levels in the Chinese service sector decreased for the first time since January 2009 (remember that year).
China’s LEI also shows no sign of recovery. If anything, it indicates China is heading towards an economic slowdown on par with that of 2008. And if you account for the rampant debt fueling China’s economy you could easily argue that China is posting 0% GDP growth today.
#8 One Out Of Every Five U.S. Households On Food Stamps
Back in the 1970s, about one out of every 50 Americans was on food stamps. Today, even though we are supposedly in the midst of an “economic recovery”, food stamp enrollment continues to soar to new highs. The following is from CNS News…
The most recent Supplemental Assistance Nutrition Program (SNAP) statistics of the number of households receiving food stamps shows that 23,087,886 households participated in January 2013 – an increase of 889,154 families from January 2012 when the number of households totaled 22,188,732.
The most recent statistics from the United States Census Bureau– from December 2012– puts the number of households in the United States at 115,310,000. If you divide 115,310,000 by 23,087,866, that equals one out of every five households now receiving food stamps.
#9 Child Hunger In America
Those that work for the big banks on Wall Street may have no problems feeding their children, but overall there is a rapidly growing child hunger crisis in America today. Just check out the following statistics from one of my previous articles…
*For the first time ever, more than a million public school students in the United States are homeless. That number has risen by 57 percent since the 2006-2007 school year.
*In Miami, 45 percent of all children are living in poverty.
*In Cleveland, more than 50 percent of all children are living in poverty.
*According to a recently released report, 60 percent of all children in the city of Detroit are living in poverty.
#10 The Tremendous Suffering Of Hundreds Of Millions Of Desperately Poor People That We Never Hear About
There are billions of people around the globe that are deeply suffering but that do not have a voice. We usually never hear about the desperate poverty that these people are living in, but that doesn’t mean that they don’t exist. The following statistics that Stephen Lendman recently compiled should shock and alarm you…
At least 80% live on less than $10 a day. Over three billion people live on less than $2.50 a day. More than 80% live in countries where income disparity is increasing.
The poorest 40% of world population has 5% of global income. The bottom fifth has $1.5%. The top 20% has 75%.
According to UNICEF, 22,000 impoverished children die daily. They “die quietly in some of the poorest villages on earth, far removed from the scrutiny and the conscience of the world. Being meek and weak in life makes these dying multitudes even more invisible in death.”
An estimated 28% of children in developing countries are underweight, malnourished and/or stunted.
How can so many people be living like that in a world with such wealth?
Sadly, things are going to get much worse. The economic and financial systems of the world are rapidly breaking down, and in a few years these are going to look like “the good old days”.
And a growing number of people are starting to realize the direction that things are headed. For example, according to a survey that has just been released, 48 percent of all Americans believe that the best days of America are now behind us.
So what do you think?
Are our best days behind us, or are they still ahead of us?
Please feel free to post a comment with your thoughts below…
View full post on The Economic Collapse
Other • 10 Scenes From The Economic Collapse That Is Sweeping Acros
10 Scenes From The Economic Collapse That Is Sweeping Across The Planet
By Michael, on May 13th, 2013
When is the economic collapse going to happen? Just open up your eyes and take a look around the globe. The next wave of the economic collapse may not have reached Wall Street yet, but it is already deeply affecting billions of lives all over the planet. Much of Europe has already descended into a deep economic depression, very disturbing economic data is coming out of the second and third largest economies on the globe (China and Japan), and in most of the world economic inequality is growing even though 80 percent of the global population already lives on less than $10 a day. Just because the Dow has been setting brand new all-time records lately does not mean that everything is okay. Remember, a bubble is always the biggest right before it bursts. The next major wave of the economic collapse is already sweeping across Europe and Asia and it is going to devastate the United States as well. I hope that you are ready.
The following are 10 scenes from the economic collapse that is sweeping across the planet…
#1 27 Percent Unemployment/60 Percent Youth Unemployment In Greece
The economic depression in Europe just continues to get worse with each passing month. According to the Daily Mail, the unemployment rate in Greece has nearly tripled since 2009…
Greek youth unemployment rose above 60 per cent for the first time in February, reflecting the pain caused by the country’s crippling recession after years of austerity under its international bailout.
Greece’s jobless rate has almost tripled since the country’s debt crisis emerged in 2009 and was more than twice the euro zone’s average unemployment reading of 12.1 percent in March.
While the overall unemployment rate rose to 27 per cent, according to statistics service data released on Thursday, joblessness among those aged between 15 and 24 jumped to 64.2 percent in February from 59.3 percent in January.
#2 Detroit, Michigan Is Insolvent And Is Rapidly Running Out Of Cash
I love to write about Detroit because it is a perfect example of where the rest of the country is headed. They have just gotten there first. At this point, Detroit is essentially bankrupt, and the new emergency financial manager is saying that Detroit may totally run out of cash next month…
Detroit may run out of cash next month and must cut long-term debt and retiree obligations, according to emergency financial manager Kevyn Orr’s preliminary plan to save Michigan’s largest city from bankruptcy.
Orr’s report says the cost of $9.4 billion in bond, pension and other long-term liabilities is sapping the ability to provide public safety and transportation. He listed cutting debt principal, retiree benefits and jobs among his options.
“No one should underestimate the severity of the financial crisis,” Orr said yesterday in a statement. He called his report “a sobering wake-up call about the dire financial straits the city of Detroit faces.”
#3 Economic Despair In France
France is going down the same path that Greece, Spain, Portugal and Italy have gone. The following is an excerpt from a recent article in the Economist…
HELDER PEREIRA is a young man with no work and few prospects: a 21-year-old who failed to graduate from high school and lost his job on a building site four months ago. With his savings about to run out, he has come to his local employment centre in the Paris suburb of Sevran to sign on for benefits and to get help finding something to do. He’ll get the cash. Work is another matter. Youth unemployment in Sevran is over 40%.
#4 7,000 Abandoned Buildings In Dayton, Ohio
All over the upper Midwest, there are formerly great cities that are dealing with thousands of abandoned buildings. Dayton, Ohio is one example…
Like many urban cities in recent years, Dayton still finds itself knee-deep in abandoned, dilapidated properties as the result of the foreclosure crisis and economic downturn five years ago.
Boarded up buildings that appear to be on their last legs litter the city as it attempts to recover.
Kevin Powell, the city’s acting manager of housing inspection, says officials plan to use $5.2 million — half from the state’s Moving Ohio Forward program and a matching grant from the city’s general fund — to raze 475 abandoned properties by the end of September.
That will scratch the surface of an estimated 7,000 abandoned property problem that is growing.
#5 Overwhelmed By Squatters In Spain
In Spain, unemployment is rampant and people have become incredibly desperate. In fact, in some Spanish cities you can now find entire apartment buildings that are being overwhelmed by squatters…
A 285-unit apartment complex in Parla, less than half an hour’s drive from Madrid, should be an ideal target for investors seeking cheap property in Spain. Unfortunately, two thirds of the building generates zero revenue because it’s overrun by squatters.
“This is happening all over the country,” said Jose Maria Fraile, the town’s mayor, who estimates only 100 apartments in the block built for the council have rental contracts, and not all of those tenants are paying either. “People lost their jobs, they can’t pay mortgages or rent so they lost their homes and this has produced a tide of squatters.”
#6 The Collapse Of Chinese Power Consumption
Energy consumption tends to closely mirror economic activity. That is why the recent collapse of Chinese power consumption is so alarming. The following is from Zero Hedge…
According to CLSA’s Chris Wood using NEA data, China’s monthly power consumption (the most accurate proxy for underlying economic strength according to the current premier) growth slowed from 5.5% YoY in Jan-Feb 2013 to 1.9% YoY in March, the slowest growth rate since May 2009 (as discussed in-depth here).
#7 Horrible Economic Data Coming Out Of The Second Largest Economy On The Planet
The economic data that has been coming out of the second largest economy on the globe has been quite alarming recently…
For starters, China’s recent economic data, as massaged as it is to the upside, is downright awful. China’s PMI numbers were the worst in two years. Staffing levels in the Chinese service sector decreased for the first time since January 2009 (remember that year).
China’s LEI also shows no sign of recovery. If anything, it indicates China is heading towards an economic slowdown on par with that of 2008. And if you account for the rampant debt fueling China’s economy you could easily argue that China is posting 0% GDP growth today.
#8 One Out Of Every Five U.S. Households On Food Stamps
Back in the 1970s, about one out of every 50 Americans was on food stamps. Today, even though we are supposedly in the midst of an "economic recovery", food stamp enrollment continues to soar to new highs. The following is from CNS News…
The most recent Supplemental Assistance Nutrition Program (SNAP) statistics of the number of households receiving food stamps shows that 23,087,886 households participated in January 2013 – an increase of 889,154 families from January 2012 when the number of households totaled 22,188,732.
The most recent statistics from the United States Census Bureau– from December 2012– puts the number of households in the United States at 115,310,000. If you divide 115,310,000 by 23,087,866, that equals one out of every five households now receiving food stamps.
#9 Child Hunger In America
Those that work for the big banks on Wall Street may have no problems feeding their children, but overall there is a rapidly growing child hunger crisis in America today. Just check out the following statistics from one of my previous articles…
*For the first time ever, more than a million public school students in the United States are homeless. That number has risen by 57 percent since the 2006-2007 school year.
*In Miami, 45 percent of all children are living in poverty.
*In Cleveland, more than 50 percent of all children are living in poverty.
*According to a recently released report, 60 percent of all children in the city of Detroit are living in poverty.
#10 The Tremendous Suffering Of Hundreds Of Millions Of Desperately Poor People That We Never Hear About
There are billions of people around the globe that are deeply suffering but that do not have a voice. We usually never hear about the desperate poverty that these people are living in, but that doesn’t mean that they don’t exist. The following statistics that Stephen Lendman recently compiled should shock and alarm you…
At least 80% live on less than $10 a day. Over three billion people live on less than $2.50 a day. More than 80% live in countries where income disparity is increasing.
The poorest 40% of world population has 5% of global income. The bottom fifth has $1.5%. The top 20% has 75%.
According to UNICEF, 22,000 impoverished children die daily. They "die quietly in some of the poorest villages on earth, far removed from the scrutiny and the conscience of the world. Being meek and weak in life makes these dying multitudes even more invisible in death."
An estimated 28% of children in developing countries are underweight, malnourished and/or stunted.
How can so many people be living like that in a world with such wealth?
Sadly, things are going to get much worse. The economic and financial systems of the world are rapidly breaking down, and in a few years these are going to look like "the good old days".
And a growing number of people are starting to realize the direction that things are headed. For example, according to a survey that has just been released, 48 percent of all Americans believe that the best days of America are now behind us.
http://theeconomiccollapseblog.com/arch … the-planet
Statistics: Posted by yoda — Mon May 13, 2013 3:53 pm
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The US debt “at $65 trillion outstrips the economic output of the entire planet.” (Video)
Always good to have a little perspective. But debt and deficits don’t matter we are told. So don’t worry.
View full post on AgainstCronyCapitalism.org
20 Signs That The Next Great Economic Depression Has Already Started In Europe
The next Great Depression is already happening – it just hasn’t reached the United States yet. Things in Europe just continue to get worse and worse, and yet most people in the United States still don’t get it. All the time I have people ask me when the “economic collapse” is going to happen. Well, for ages I have been warning that the next major wave of the ongoing economic collapse would begin in Europe, and that is exactly what is happening. In fact, both Greece and Spain already have levels of unemployment that are greater than anything the U.S. experienced during the Great Depression of the 1930s. Pay close attention to what is happening over there, because it is coming here too. You see, the truth is that Europe is a lot like the United States. We are both drowning in unprecedented levels of debt, and we both have overleveraged banking systems that resemble a house of cards. The reason why the U.S. does not look like Europe yet is because we have thrown all caution to the wind. The Federal Reserve is printing money as if there is no tomorrow and the U.S. government is savagely destroying the future that our children and our grandchildren were supposed to have by stealing more than 100 million dollars from them every single hour of every single day. We have gone “all in” on kicking the can down the road even though it means destroying the future of America. But the alternative scares the living daylights out of our politicians. When nations such as Greece, Spain, Portugal and Italy tried to slow down the rate at which their debts were rising, the results were absolutely devastating. A full-blown economic depression is raging across southern Europe and it is rapidly spreading into northern Europe. Eventually it will spread to the rest of the globe as well.
The following are 20 signs that the next Great Depression has already started in Europe…
#1 The unemployment rate in France has surged to 10.6 percent, and the number of jobless claims in that country recently set a new all-time record.
#2 Unemployment in the eurozone as a whole is sitting at an all-time record of 12 percent.
#3 Two years ago, Portugal’s unemployment rate was about 12 percent. Today, it is about 17 percent.
#4 The unemployment rate in Spain has set a new all-time record of 27 percent. Even during the Great Depression of the 1930s the United States never had unemployment that high.
#5 The unemployment rate among those under the age of 25 in Spain is an astounding 57.2 percent.
#6 The unemployment rate in Greece has set a new all-time record of 27.2 percent. Even during the Great Depression of the 1930s the United States never had unemployment that high.
#7 The unemployment rate among those under the age of 25 in Greece is a whopping 59.3 percent.
#8 French car sales in March were 16 percent lower than they were one year earlier.
#9 German car sales in March were 17 percent lower than they were one year earlier.
#10 In the Netherlands, consumer debt is now up to about 250 percent of available income.
#11 Industrial production in Italy has fallen by an astounding 25 percent over the past five years.
#12 The number of Spanish firms filing for bankruptcy is 45 percent higher than it was a year ago.
#13 Since 2007, the value of non-performing loans in Europe has increased by 150 percent.
#14 Bank withdrawals in Cyprus during the month of March were double what they were in February even though the banks were closed for half the month.
#15 Due to an absolutely crippling housing crash, there are approximately 3 million vacant homes in Spain today.
#16 Things have gotten so bad in Spain that entire apartment buildings are being overwhelmed by squatters…
A 285-unit apartment complex in Parla, less than half an hour’s drive from Madrid, should be an ideal target for investors seeking cheap property in Spain. Unfortunately, two thirds of the building generates zero revenue because it’s overrun by squatters.
“This is happening all over the country,” said Jose Maria Fraile, the town’s mayor, who estimates only 100 apartments in the block built for the council have rental contracts, and not all of those tenants are paying either. “People lost their jobs, they can’t pay mortgages or rent so they lost their homes and this has produced a tide of squatters.”
#17 As I wrote about the other day, child hunger has become so rampant in Greece that teachers are reporting that hungry children are begging their classmates for food.
#18 The debt to GDP ratio in Italy is now up to 136 percent.
#19 25 percent of all banking assets in the UK are in banks that are leveraged at least 40 to 1.
#20 German banking giant Deutsche Bank has more than 55 trillion euros (which is more than 72 trillion dollars) of exposure to derivatives. But the GDP of Germany for an entire year is only about 2.7 trillion euros.
Yes, U.S. stocks have been doing great so far this year, but the truth is that the stock market has become completely and totally divorced from economic reality. When it does catch up with the economic fundamentals, it will probably happen very rapidly like we saw back in 2008.
Our politicians can try to kick the can down the road for as long as they can, but at some point the consequences of our foolish decisions will hunt us down and overtake us. The following is what Peter Schiff had to say about this coming crisis the other day…
“The crisis is imminent,” Schiff said. ”I don’t think Obama is going to finish his second term without the bottom dropping out. And stock market investors are oblivious to the problems.”
“We’re broke, Schiff added. ”We owe trillions. Look at our budget deficit; look at the debt to GDP ratio, the unfunded liabilities. If we were in the Eurozone, they would kick us out.”
Schiff points out that the market gains experienced recently, with the Dow first topping 14,000 on its way to setting record highs, are giving investors a false sense of security.
“It’s not that the stock market is gaining value… it’s that our money is losing value. And so if you have a debased currency… a devalued currency, the price of everything goes up. Stocks are no exception,” he said.
“The Fed knows that the U.S. economy is not recovering,” he noted. “It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode.”
So please don’t think that we are any different from Europe.
If the United States government started only spending the money that it brings in, we would descend into an economic depression tomorrow.
The only way that we can continue to live out the economic fantasy that we see all around us is by financially abusing our children and our grandchildren.
The U.S. economy has become a miserable junkie that is completely and totally addicted to reckless money printing and gigantic mountains of debt.
If we stop printing money and going into unprecedented amounts of debt we are finished.
If we continue printing money and going into unprecedented amounts of debt we are finished.
Either way, this is all going to end very, very badly.
View full post on The Economic Collapse
Economic and Social Abnormality Reigns, American’s Loving Their Servitude (?)
The attached article is, well, strident. But it is full of excellent information about the current state of the United States. Average citizens have given up quite a lot in this country over the past 20 years. Our crony capitalist system expands and the state pushes into nearly every corner of our lives. Many people have made the transition from citizen to subject without even knowing it. With every year the dignity of the individual is eroded. Many do not even care.
Thankfully many others still do.
(From The Market Oracle)
Total government spending (Federal, State, Local) in 1996 totaled $2.7 trillion, or 35% of GDP. Today total government spending is $6.3 trillion, or 40% of GDP. In 1979, before the belief in government became a religion, total government spending was only 31.5% of GDP (27% in 1965). Are you receiving twice the service from government than you received in 1996? Are you safer from terrorists due to the massive expansion of the police state? Are your kids getting a much better education than they did in 1996? Have the undeclared wars benefitted you in any way, other than tripling the price of gas? Are the higher wage taxes, real estate taxes, school taxes, sewer fees, utility fees, phone fees, gasoline taxes, permit fees, and myriad of other government charges worth it? Is it normal for government to account for almost half of our economy?
View full post on AgainstCronyCapitalism.org
Business • Economic Indicators Not So Contained As Politicians Pretend
Economic Indicators Not So Contained As Politicians Pretend
Gold Silver Worlds | April 18, 2013
What is the consistent message that our politicians keep on conveying? Right, everything is contained. The problem arises when politicians talk about economy they simply look at it differently.
In the past couple of weeks there has been an accumulation of worrying economic indicators, to say the least. This short article provides an overview. Is it a coincidence that gold and silver crashed, just like in the summer of 2008 (a couple of months before the Lehman collapse)?
Telegraph writes: “A growing trend towards excessive risk-taking and lack of action to repair broken bank balance sheets could trigger a “chronic” new phase in the financial crisis, the International Monetary Fund has warned.”
Zerohedge reports the downgrade of Germany because of their exposure to bonds and debts from weak Southern countries. Sounds like a “domino risk” downgrade. “Although Germany’s credit metrics are respectable, the country has exposure to its banks and the weaker EU members. Deutche Bank has adjusted shareholders’ equity to asset near 2% and might need €100B of support. Via the ECB’s Target 2, Germany is owed €700B of which perhaps 50% is collectible and then there is the banks’ southern EMU exposures”
“While expectations for global GDP growth are now expected to be +3.3% for 2013 against +3.2% for 2012, the IMF has just slashed the previously rosy 3.6% expectation as the global economy stalls. The US and Europe had significant cuts to their 2013 GDP growth expectations.” (source)
“This is the biggest plunge in macro data in 10 months. Despite the stock market’s exuberance (at all-time highs), macro data has rolled over dramatically to 4-month lows. Of the major economic data points we have missed 18 of the last 20.” (source)
“The University of Michigan Consumer Sentiment preliminary number for April came in at 72.3, a hefty drop from the March final reading of 78.6. The Briefing.com consensus was for 78.0. The latest number takes us back to a level associated with recessionary consumer sentiment.” (source)
With each passing year the level of economic suffering in this country continues to go up, and we haven’t even reached the next major wave of the economic collapse yet. The following 21 statistics show the explosive growth of poverty in America. (source)
“Spain can once again be the engine of growth for Europe,” the troubled nation appears to be going from bad to worse. House prices dropped 9.7% YoY in Q4 2012, its biggest drop on record, taking the price back to 2004 levels.” (source)
Meantime, the US monetary base is expanding again. This has always favoured gold and silver prices … but maybe the economy is in such a bad shape that traditional laws do not work anymore … or that money printing has stopped working. Only time will tell.
http://goldsilverworlds.com/gold-silver … s-pretend/
Statistics: Posted by yoda — Fri Apr 19, 2013 9:26 am
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Other • 11 Economic Crashes That Are Happening RIGHT NOW
11 Economic Crashes That Are Happening RIGHT NOW
By Michael, on April 12th, 2013
The stock market is not crashing yet, but there are lots of other market crashes happening in the financial world right now. Just like we saw back in 2008, it is taking stocks a little bit of extra time to catch up with economic reality. But almost everywhere else you look, there are signs that a financial avalanche has begun. Bitcoins are crashing, gold and silver are plunging, the price of oil and the overall demand for energy continue to decline, markets all over Europe are collapsing and consumer confidence in the United States just had the biggest miss relative to expectations that has ever been recorded. In many ways, all of this is extremely reminiscent of 2008. Other than the Bitcoin collapse, almost everything else that is happening now also happened back then. So does that mean that a horrible stock market crash is coming as well? Without a doubt, one is coming at some point. The only question is whether it will be sooner or later. Meanwhile, there are a whole lot of other economic crashes that deserve out attention at the moment.
The following are 11 economic crashes that are happening RIGHT NOW…
#1 Bitcoins
As I write this, the price of Bitcoins has fallen more than 70 percent from where it was on Wednesday. This is one of the reasons why I have never recommended Bitcoins to anyone. Yes, alternative currencies are a good thing, but there are a lot of big problems with Bitcoins. Why would anyone want to invest in a currency that could lose 70 percent of its purchasing power in just two days? Why would anyone want to invest in a currency where a single person can arbitrarily decide to suspend trading in that currency at any time?
An article by Mike Adams of Natural News described some of the things that we have learned about Bitcoins this week…
#1) The bitcoin infrastructure cannot handle a selloff. Once the rush for the exits gains momentum, you will not be able to get out. Only those who sell early will be able to exit the market.
#2) The bitcoin infrastructure is subject to the whims of just one person running MTGox who can arbitrarily decide to shut it down whenever he thinks the market needs a "cooling period." This is nearly equivalent to a financial dictatorship where one person calls the shots.
#3) Every piece of bad news will be "spun" by exchanges like MTGox into good-sounding news. As bitcoin was crashing yesterday by 60% in value in mere hours, MTGox announced it was a "victim of our own success!" So while bitcoin holders watched $1 billion in market valuation evaporate, MTGox called it a success. Gee, then what would you call it when bitcoin loses 99%? A "raging" success?
#2 Gold
The price of gold was down by about 4 percent on Friday. Gold has now fallen below $1500 an ounce for the first time since July 2011. Overall, the price of gold has fallen by about 10 percent since the beginning of the year, and it is about 22 percent below the record high set back in September 2011.
Yes, the price of gold is likely being pushed down by the banksters. And yes, gold is a fantastic investment for the long-term. But there will be times when the price of gold does fall dramatically just like we saw back in 2008.
#3 Silver
The price of silver fell by about 5 percent on Friday. If it falls much more it is going to be at a level that presents a historically good buying opportunity.
Just like gold, there will be times when the price of silver swings dramatically. But the truth is that silver is probably an even better long-term investment than gold is.
#4 Oil
The price of oil declined by about 3 percent on Friday. Many will consider this a positive thing, but just remember what happened back in 2008. Back then, the price of oil dropped like a rock. If the price of oil gets below $80, that could very well be a clear signal that a major economic crisis is about to happen.
#5 Consumer Confidence
As I mentioned above, consumer confidence in the U.S. just had its biggest miss relative to expectations that has ever been recorded. The following is from an article posted on Zero Hedge on Friday…
Well if this doesn’t send the market into all-time record high territory, nothing ever will: seconds ago the UMich Consumer Confidence plummeted from 78.6 to 72.3, on expectations of an unchanged 78.6 print. This was not only a 9 month low in the index, but more importantly the biggest miss to expectations in recorded history!
#6 Retirement Accounts
According to Wells Fargo, the number of Americans taking loans from their 401(k) accounts has risen by 28 percent over the past year…
Through an analysis of participants enrolled in Wells Fargo-administered defined contribution plans, the bank announced today that in the fourth quarter of 2012, there was a 28 percent increase in the number of people taking loans out from their 401(k) and that the average new loan balances increased to $7,126 from those taken out in the fourth quarter of 2011 – a 7% increase from $6,662.
Of the participants who took out loans, the greatest percentage were to people in their 50s (34.2%), followed by those in their 60s (28.9%) and then by those in their 40s (27.3%). The increase among participants in their 50s was nearly double the increase among those under 30. This is based on an analysis of a subset of 1.9 million eligible participants in retirement plans that Wells Fargo administers.
“The increased loan activity particularly among older participants is concerning because those are the years when workers can start to make ‘catch-up’ contributions and really need to focus on preparing for retirement,” said Laurie Nordquist, director of Wells Fargo Retirement.
#7 Casino Spending
Casino spending is declining again. Many people (including myself) would consider this to be a good thing, but casino spending is also one of the most reliable indicators about the overall health of the economy. Remember, casino spending crashed during the last financial crisis as well. That is why it is so alarming that casino spending is now back to levels that we have not seen since the last recession.
#8 Employment In Greece
Over in Europe, things just continue to get worse. According to numbers that were just released, the unemployment rate in Greece has soared to 27.2 percent, which was up from 25.7 percent the previous month. That means that the unemployment rate in Greece rose by 1.5 percent in just a single month. That is not just a crash – that is an avalanche of unemployment.
#9 European Financial Stocks
European financial stocks have been hit particularly hard lately. And for good reason actually – most of the major banks in Europe are essentially insolvent at this point. This week, European financial stocks fell to seven month lows, and this is probably only just the beginning.
#10 Spanish Bankruptcies
According to Reuters, the number of Spanish companies going bankrupt has risen by 45 percent over the past year…
A record number of Spanish companies went bust in the first quarter of 2013 as companies remained under intense pressure from tight credit conditions and meager demand, a study showed on Monday.
The 2,564 firms filing for insolvency proceedings in first three months of the year was a 10 percent rise from the previous quarter and a 45 percent increase on the same period in 2012, the survey by credit rating agency Axesor said.
#11 Demand For Energy
Just like we saw back in 2008, the overall demand for energy in the United States is falling rapidly. There are some shocking charts that prove this that were recently posted on Zero Hedge that you can find right here.
Yes, it is good for people to use a bit less energy, but it is also a clear indication that economic activity is really starting to slow down.
But despite everything that you have just read, the Dow and the S&P 500 have been setting new record highs.
And if you listen to the mainstream media, you would think that this stock market bubble can continue indefinitely.
Fortunately, there are a few voices of reason out there. For example, just check out what Marc Faber recently told CNBC…
In the near-term, the U.S. stock market is overbought and adding that any more near-term gains portend big trouble for the market, "The Gloom, Boom & Doom Report" publisher Marc Faber told CNBC on Monday.
"If we continue to move up, the probability of a crash becomes higher," Faber predicted in a "Squawk Box" interview, saying it could happen "sometime in the second half of this year."
As I have written about previously, a bubble is always the biggest right before it bursts. I hope that we still have at least a little bit more time before it happens, but I wouldn’t count on it.
The economic fundamentals tell us that the stock market should be plunging, not rising. At some point the boys over on Wall Street will get the message and the market will catch up to reality very, very rapidly.
But for the moment, the American people are feeling really good. According to CNN, Americans are now more optimistic than they have been in six years…
As the stock market continues to show record highs, the number of Americans who say things are going well in the country has reached 50% for the first time in more than six years, according to a new national survey.
http://theeconomiccollapseblog.com/arch … -right-now
Statistics: Posted by yoda — Fri Apr 12, 2013 1:59 pm
View full post on opinions.caduceusx.com