Our county sits at over 16 trillion dollars in debt, with unfunded obligations that make the actual debt number about $120 trillion. The reality of the situation is there’s really no way out of the situation. Our government, thanks to both political parties, has spent us into a hole that we cannot dig ourselves out of. The facts, that nobody seems to want to talk about, indicate our country is still heading towards a complete meltdown of the financial system.
You can choose to believe the lies that are being spoon feed to you by the mainstream media, or you can look at the reality of the situation; our Economy is still facing some enormous challenges, and the prospects for a full economic recovery don’t look very good. The financial problems that lead to the housing / financial market crash of 2008 have not been fixed; in fact, many of these problems are even worse today than they were in 2008.
Preparing for an economic collapse
Twenty years ago, most people would have said you were crazy for thinking our system could collapse. Even today, most of our country is either unaware, or has forgotten how closely we came to a complete collapse of the financial system during the banking crisis of 2008.
Here we sit five years after our government spent $700+ billion to bailout a system they told us would never fail, and our system is still in just as much danger of collapse as it was in 2008, maybe more. If you’re not prepared, you need to start taking steps to protect yourself and your family from future troubles.
Whenever I endeavor to explain America’s current economic situation to a person who likely receives most of his information from skewed mainstream news sources, I try to use two comparisons; the Great Depression, and Weimar Germany, because what we are experiencing is actually a combination of elements from both events. Some people, unfortunately, have little understanding of the Weimar hyperinflationary crisis, but at the very least, the imagery of the Great Depression is present in the minds of most Americans, if only through television and film.
When the depression is mentioned, they begin to grasp the gravity of our fiscal disaster, or at least what I am trying to convey. However, those slow on the draw almost always sneer at the validity of the threat. After all, during the Great Depression, there were bank runs, endless soup kitchen lines, roving masses of dirty homeless drifters looking for employment, shanty towns, and desperation everywhere. We’ve all seen the old stock black and white photos, and the America of today looks nothing similar…
To give you a sense of what I mean (keep in mind that real numbers are likely much worse than reported statistics)…
Despite talk of recovery, U.S. poverty levels have hit all time highs. Over 50 million Americans are below the official poverty line:
In 2009, food stamp enrollment stood at around 32 million Americans. Today that number has grown to around 48 million; a 50% increase in only 5 years:
The number of citizens on federal disability is at record highs, climbing to almost 9 million people, and has expanded every month for the past 192 months:
Requests for emergency food assistance are on the rise in most cities across the country, and homeless numbers continue to climb:
Now ask yourself this: How many people in this country rely on government money for most if not all of their survival needs?
Without government funding, and without the fiat printing press at the Federal Reserve to feed that funding, the veil of financial recovery fades away, not just in the stock market, but everywhere. All the poverty that has remained hidden for the past five years will suddenly be visible on our streets and doorsteps. Welfare programs to individuals and to states ARE the modern day soup lines. When they go, those reliant on them have nowhere to turn.
Already, homeless shelters in numerous states are suffering from funding shortfalls and many are closing their doors:
Obamacare will increase the long-term federal deficit by $6.2 trillion, according to a Government Accountability Office report that will be released today.
Senator Jeff Sessions (R., Ala.), who requested the report, revealed the findings this morning at a Senate Budget Committee hearing. The report, he said, “confirms everything critics and Republicans were saying about the faults of this bill,” and“dramatically proves that the promises made assuring the nation that the largest new entitlement program in history would not add one dime to the deficit were false.”
Read the full GAO report here: http://www.scribd.com/doc/127378889/GAO-Patient-Protection-act
The coming pension crisis: States face a $3 trillion funding gap. Only about 10 percent of Americans now covered by pensions.
Many Americans look at the crisis in Greece and shake their heads wondering how it is possible for an entire country to derail the future of its younger generation. One big problem in Greece was massive government liabilities funding very generous pensions. Yet this came at an enormous cost. The US is facing a different crisis but the markets have already responded over the last few decades. In the early 1980s, roughly 60 percent of private sector workers had a pension. Today, it is down to 10 percent in the latest data and will likely continue to decrease. For young Americans entering the workforce, the self-funded 401k is likely the only path to having a nest egg and any sort of retirement. This is why so many people get angry when they hear about some in California that retire in their early 50s pulling in annual pensions of $100,000. Over 20 to 30 years this can range from $2 to $3 million of payouts. And we wonder why states face a $3+ trillion funding gap with pensions. Are we simply ignoring another looming crisis?
#2 The average price of a gallon of gasoline has risen by more than 50 cents over the past two months. This is making things tougher on our economy, because nearly every form of economic activity involves moving people or goods around.
#3 Reader’s Digest, once one of the most popular magazines in the world, has filed for bankruptcy.
#4 Atlantic City’s newest casino, Revel, has just filed for bankruptcy. It had been hoped that Revel would help lead a turnaround for Atlantic City.
#5 A state-appointed review board has determined that there is “no satisfactory plan” to solve Detroit’s financial emergency, and many believe that bankruptcy is imminent. If Detroit does declare bankruptcy, it will be the largest municipal bankruptcy in U.S. history.
#6 David Gallagher, the CEO of Town Sports International, recently said that his company is struggling right now because consumers simply do not have as much disposable income anymore…
“As we moved into January membership trends were tracking to expectations in the first half of the month, but fell off track and did not meet our expectations in the second half of the month. We believe the driver of this was the rapid decline in consumer sentiment that has been reported and is connected to the reduction in net pay consumers earn given the changes in tax rates that went into effect in January.“
#7 According to the Conference Board, consumer confidence in the U.S. has hit its lowest level in more than a year.
#8 Sales of the Apple iPhone have been slower than projected, and as a result Chinese manufacturing giant FoxConn has instituted a hiring freeze. The following is from a CNET report that was posted on Wednesday…
The Financial Times noted that it was the first time since a 2009 downturn that the company opted to halt hiring in all of its facilities across the country. The publication talked to multiple recruiters.
The actions taken by Foxconn fuel the concern over the perceived weakened demand for the iPhone 5 and slumping sentiment around Apple in general, with production activity a leading indicator of interest in the product.
#9 In 2012, global cell phone sales posted their first decline since the end of the last recession.
#10 We appear to be in the midst of a “retail apocalypse“. It is being projected that Sears, J.C. Penney, Best Buy and RadioShack will also close hundreds of stores by the end of 2013.
#11 An internal memo authored by a Wal-Mart executive that was recently leaked to the press said that February sales were a “total disaster” and that the beginning of February was the “worst start to a month I have seen in my ~7 years with the company.”
#12 If Congress does not do anything and “sequestration” goes into effect on March 1st, the Pentagon says that approximately 800,000 civilian employees will be facing mandatory furloughs.
#13 Barack Obama is admitting that the “sequester” could have a crippling impact on the U.S. economy. The following is from a recentCNBC article…
Obama cautioned that if the $85 billion in immediate cuts — known as the sequester — occur, the full range of government would feel the effects. Among those he listed: furloughed FBI agents, reductions in spending for communities to pay police and fire personnel and teachers, and decreased ability to respond to threats around the world.
He said the consequences would be felt across the economy.
“People will lose their jobs,” he said. “The unemployment rate might tick up again.”
#14 If the “sequester” is allowed to go into effect, the CBO is projecting that it will cause U.S. GDP growth to go down by at least 0.6 percent and that it will “reduce job growth by 750,000 jobs“.
#15 According to a recent Gallup survey, 65 percent of all Americans believe that 2013 will be a year of “economic difficulty“, and 50 percent of all Americans believe that the “best days” of America are now in the past.
#16 U.S. GDP actually contracted at an annual rate of 0.1 percentduring the fourth quarter of 2012. This was the first GDP contraction that the official numbers have shown in more than three years.
#17 For the entire year of 2012, U.S. GDP growth was only about 1.5 percent. According to Art Cashin, every time GDP growth has fallen this low for an entire year, the U.S. economy has always ended up going into a recession.
#18 The global economy overall is really starting to slow down…
The world’s richest countries saw their economies contract for the first time in almost four years during the final three months of 2012, the Organisation for Economic Co-operation and Development said.
The Paris-based thinktank said gross domestic product across its 34 member states fell by 0.2% – breaking a period of rising activity stretching back to a 2.3% slump in output in the first quarter of 2009.
All the major economies of the OECD – the US, Japan, Germany, France, Italy and the UK – have already reported falls in output at the end of 2012, with the thinktank noting that the steepest declines had been seen in the European Union, where GDP fell by 0.5%. Canada is the only member of the G7 currently on course to register an increase in national output.
#19 Corporate insiders are dumping enormous amounts of stockright now. Do they know something that we don’t?
#20 Even some of the biggest names on Wall Street are warning that we are heading for an economic collapse. For example, Seth Klarman, one of the most respected investors on Wall Street, said in his year-end letter that the collapse of the U.S. financial system could happen at any time…
“Investing today may well be harder than it has been at any time in our three decades of existence,” writes Seth Klarman in his year-end letter. The Fed’s “relentless interventions and manipulations” have left few purchase targets for Baupost, he laments. “(The) underpinnings of our economy and financial system are so precarious that the un-abating risks of collapse dwarf all other factors.”