Posts tagged global economy

After Several Near Misses, Experts Warn The Next Carrington Event Will Plunge Us Back Into The Dark Ages

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Source: http://thetruthwins.com

By Michael Snyder

After Several Near Misses, Experts Warn The Next Carrington Event Will Plunge Us Back Into The Dark Ages

 

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Most people have absolutely no idea that the Earth barely missed being fried by a massive EMP burst from the sun in 2012, in 2013 and just last month.  If any of those storms would have directly hit us, the result would have been catastrophic.  Electrical transformers would have burst into flames, power grids would have gone down and much of our technology would have been fried.  In essence, life as we know it would have ceased to exist – at least for a time.  These kinds of solar storms have hit the Earth many times before, and experts tell us that it is inevitable that it will happen again.  The most famous one happened in 1859, and was known as the Carrington Event.  But other than the telegraph, humanity had very little dependence on technology at the time.  If another Carrington Event happened today, it would be a complete and utter nightmare.  A study by Lloyd’s of London has concluded that it would have taken a $2,600,000,000,000 chunk out of the global economy, and it would take up to a decade to repair the damage.  Unfortunately, scientists insist that it is going to happen at some point.  The only question is when.

Just this week, the near miss of 2012 is suddenly making headlines all over the globe.  The following is from a recent Reuters report

Fierce solar blasts that could have badly damaged electrical grids and disabled satellites in space narrowly missed Earth in 2012, U.S. researchers said on Wednesday.
 
The bursts would have wreaked havoc on the Earth’s magnetic field, matching the severity of the 1859 Carrington event, the largest solar magnetic storm ever reported on the planet. That blast knocked out the telegraph system across the United States, according to University of California, Berkeley research physicist Janet Luhmann.

The two bursts that the Reuters article is referring to happened very closely to one another, and the scientists that study these things say that it could have taken a decade to recover from such a catastrophe…

“Had [the latest storm] hit Earth, it probably would have been like the big one in 1859, but the effect today, with our modern technologies, would have been tremendous,” said Janet Luhmann, who is part of the STEREO (Solar Terrestrial Observatory) team and based at UC Berkeley’s Space Sciences Laboratory.
 
Luhmann and physicist Ying Liu of China’s State Key Laboratory of Space Weather led a team in analysing the magnetic storm, which was detected by NASA’s STEREO A spacecraft and published their results in Nature Communications.
 
“An extreme space weather storm – a solar superstorm – is a low-probability, high-consequence event that poses severe threats to critical infrastructures of the modern society,” warned Liu.
 
“The cost of an extreme space weather event, if it hits Earth, could reach trillions of dollars with a potential recovery time of 4-10 years. Therefore, it is paramount to the security and economic interest of the modern society to understand solar superstorms.”

You can see video of this massive coronal mass ejection event on YouTube

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But this is not the only near miss that we have had in recent years.

In fact, there was another harrowing near miss in 2013

The earth barely missed taking a massive solar punch in the teeth two weeks ago, an “electromagnetic pulse” so big that it could have knocked out power, cars and iPhones throughout the United States.
 
Two EMP experts told Secrets that the EMP flashed through earth’s typical orbit around the sun about two weeks before the planet got there.
 
“The world escaped an EMP catastrophe,” said Henry Cooper, who led strategic arms negotiations with the Soviet Union under President Reagan, and who now heads High Frontier, a group pushing for missile defense.
 
“There had been a near miss about two weeks ago, a Carrington-class coronal mass ejection crossed the orbit of the Earth and basically just missed us,” said Peter Vincent Pry, who served on the Congressional EMP Threat Commission from 2001-2008.

And very few people have heard of it, but we had another one just last month

A huge magnetic filament shot out of the sun Monday, sending shockwaves racing at 1.7 million miles per hour and a brief roar of static through shortwave radios across the planet. And with a geomagnetic storm causing Northern Lights to dance across the Canadian border and into North America, the sun is clearly acting up.
 
According to a report on Spaceweather.com, Monday’s massive blast shot off the sun and into space, away from our planet, so it didn’t have the same effect on radio signals, power grids and communication satellites that an Earth-facing eruption would have.

So what is going to happen when one of these things finally hits us?

Well, basically it will be a technological Armageddon.  The following is a brief excerpt from one of my previous articles

An electromagnetic pulse can range from a minor inconvenience to a civilization-killing event.  It just depends on how powerful it is.  But in the worst case scenario, we could be facing a situation where our electrical grids have been fried, there is no heat for our homes, our computers don’t work, the Internet does not work, our cell phones do not work, there are no more banking records, nobody can use credit cards anymore, hospitals are unable to function, nobody can pump gas, and supermarkets cannot operate because there is no power and no refrigeration.  Basically, we would witness the complete and total collapse of the economy.  According to a government commission that looked into these things, approximately two-thirds of the U.S. population would die from starvation, disease and societal chaos within one year of a massive EMP attack.  It would be a disaster unlike anything we have ever seen before in U.S. history.

Without any electrical power, our society would descend into a state of chaos very rapidly.  The following is an excerpt from an article by Mac Slavo that explains some of the things that we would be likely to see in the immediate aftermath of such an event…

The first 24 – 48 hours after such an occurrence will lead to confusion among the general population as traditional news acquisition sources like television, radio and cell phone networks will be non-functional.
 
Within a matter of days, once people realize the power might not be coming back on and grocery store shelves start emptying, the entire system will begin to delve into chaos.
 
Within 30 days a mass die off will have begun as food supplies dwindle, looters and gangs turn to violent extremes, medicine can’t be restocked and water pump stations fail.

Today, our lives have been made very comfortable by technology.

But that technology could be stripped away from us in a single moment.

We should be thankful for the good things that we have, and we should not take for granted that we will always have them.

All it would take is one giant burst from the sun, and everything would change.


This article first appeared here at The Truth.

About the author: Michael T. Snyder is a former Washington D.C. attorney who now publishes The Truth. His new thriller entitled “The Beginning Of The End” is now available on Amazon.com.

 

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Is “Dr. Copper” Foreshadowing A Stock Market Crash Just Like It Did In 2008?

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Source: http://theeconomiccollapseblog.com

By Michael Snyder

Is “Dr. Copper” Foreshadowing A Stock Market Crash Just Like It Did In 2008?

 

Stock-Market-Decline-Photo-by-Nodulation-300x180Is the price of copper trying to tell us something?  Traditionally, “Dr. Copper” has been a very accurate indicator of where the global economy is heading next.  For example, back in 2008 the price of copper dropped from nearly $4.00 to under $1.50 in just a matter of months.  And now it appears that another big decline in the price of copper is starting to happen.  So far this year, the price of copper has dropped from a high of $3.40 back in January to a price of $2.95 as I write this article, and many analysts are warning that this is just the beginning.  By itself, this should be quite alarming to investors, but as you will see below there are a whole host of other signs that a stock market crash may be rapidly approaching.

But before we get to those other signs, let us discuss copper a bit more first.  I cannot remember a time since 2008 when there has been such an overwhelming negative consensus about where the price of copper is heading.  The following is from a CNBC article that was posted this week…

Cascading copper prices have multiple root causes that lead to one conclusion: The anticipated global economic recovery may not be all it’s cracked up to be.
 
Consequently, analysts are in virtual unison that the extended-term trajectory is lower for the metal often used as a growth barometer. Copper futures are off more than 12 percent in 2014 and 7 percent over just the past three days, though they rose less than 1 percent in Wednesday trading.
 
A slowdown in the global economy, forced selling by Chinese banks and technical factors have converged in multiple calls for more weakness in a commodity known by traders and economists as “Dr. Copper” for its ability to accurately make economic prognoses.

Of course there are some out there that are trying to claim that “this time is different” and that the price of copper is no longer a useful indicator for the global economy as a whole.

We shall see.

Meanwhile, there are lots of other signs that the financial markets are repeating patterns that we have seen in the past.  For instance, the level of margin debt on Wall Street just soared to another brand new record high

The amount of money investors borrowed from Wall Street brokers to buy stocks rose for a seventh straight month in January to a record $451.3 billion, a potential warning sign that in the past has coincided with irrational exuberance and stock market tops.

We saw margin debt spike dramatically like this just prior to the crash of the dotcom bubble in 2000 and just before the great financial crisis of 2008.  Just check out the chart in this article.

Shouldn’t we be alarmed that it is happening again?

If you listen carefully, there are many prominent voices in the financial world that are trying to warn us about this.  Here is one example

“One characteristic of getting closer to a market top is a major expansion in margin debt,” says Gary Kaltbaum, president of Kaltbaum Capital Management. “Expanding market debt fuels the bull market and is an investors’ best friend when stocks are rising. The problem is when the market turns (lower), it is the market’s worst enemy.

And of course margin debt is far from the only sign that indicates that we are in a massive stock market bubble that is about to crash.  The following is a list of 10 signs that comes from a recent article by Lance Roberts of STA Wealth Management

I was recently discussing the market, current sentiment and other investing related issues with a money manager friend of mine in California. (Normally, I would include a credit for the following work but since he works for a major firm he asked me not to identify him directly.)  However, in one of our many email exchanges he sent me the following note detailing the 10 typical warning signs of stock market exuberance.
 
(1) Expected strong OR acceleration of GDP and EPS  (40% of 2013′s EPS increase occurred in the 4th quarter)
 
(2) Large number of IPOs of unprofitable AND speculative companies
 
(3) Parabolic move up in stock prices of hot industries (not just individual stocks)
 
(4) High valuations (many metrics are at near-record highs, a few at record highs)
 
(5) Fantastic high valuation of some large mergers (e.g., Facebook & WhatsApp)
 
(6) High NYSE margin debt
 
Margin debt/gdp (March 2000: 2.7%, July 2007: 2.6%, Jan 2014: 2.6%)
 
Margin debt/market cap (March 2000: 1.8%, July 2007: 2.3%, Jan 2014: 2.0%)
 
(7) Household direct holdings of equities as % of total financial assets at 24%, second-highest level (data back to 1953, highest was 1998-2000)
 
(8) Highly bullish sentiment (down slightly from year-end peaks; still high or near record high, depending on the source)
 
(9) Unusually high ratio of selling to buying by corporate senior managers (the buy/sell ratio of senior corporate officers is now at the record post-1990 lows seen in Summer 2007 and Spring 2011)
 
(10) Stock prices rise following speculative press releases (e.g., Tesla will dominate battery business after they get partner who knows how to build batteries and they build a big factory.  This also assumes that NO ONE else will enter into that business such as GM, Ford or GE.)
 
All are true today, and it is the third time in the last 15 years these factors have occurred simultaneously which is the most remarkable aspect of the situation.

And for even more technical indicators such as these, please see Charles Hugh Smith’s excellent article entitled “Why 2014 Is Beginning to Look A Lot Like 2008“.

So do all of these numbers and charts actually prove that something is about to happen?

Not necessarily.

But if we do not learn from the past then we are doomed to repeat it.

At this point, even representatives from the big Wall Street banks are warning about the “euphoria” on Wall Street…

The stock market entered “euphoria mode” late last year and has remained there, except for a week in February, as “speculative froth” bubbles around the market’s hottest sectors, Citi’s chief equity strategist told CNBC on Tuesday.

And even market cheerleader Jim Cramer is warning that the stock market is now exhibiting “top behavior“…

The parabolic moves of stocks such as Plug Power and FuelCell Energy have the stock market exhibiting “top behavior,” CNBC’s Jim Cramer said Wednesday.
 
Cramer said he has tracked the fuel cells stocks since his days as a hedge fund manager. Runups in Freddie Mac and Fannie Mae also had him worried.

None of what you just read above guarantees that the stock market will crash this week, this month or even this year.

And nobody knows the exact date when the next stock market crash will happen.

But one thing is for certain – this massive stock market bubble will burst at some point, and when it does our economy is far less equipped to handle it than it was the last time.

Based on my research, I am entirely convinced that the coming economic crisis is going to be substantially worse than the last one, and that is very bad news for the United States.

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 

 

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The Top 12 Signs That The U.S. Economy Is Heading Toward Another Recession

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Source: http://theeconomiccollapseblog.com

By Michael Snyder

The Top 12 Signs That The U.S. Economy Is Heading Toward Another Recession

 

12-Reasons-To-Be-Extremely-Pessimistic-About-The-Direction-That-The-Economy-Is-Headed-300x300Is the U.S. economy steamrolling toward another recession?  Will 2014 turn out to be a major “turning point” when we look back on it?  Before we get to the evidence, it is important to note that there are many economists that believe that the United States never actually got out of the last recession.  For example, data compiled by John Williams of shadowstats.com show that the U.S. economy has continually been in recession since 2005.  So if anyone out there would like to argue that America is experiencing a recession right now, I certainly would not have a problem with that.  In fact, that would fit with the daily reality of tens of millions of Americans that are deeply suffering in this harsh economic environment.  But no matter whether we are in a “recession” at the moment or not, there are an increasing number of indications that we are rapidly plunging into another major economic slowdown.  The following are the top 12 signs that the U.S. economy is heading toward another recession…

#1 We recently learned that the number of new mortgage applications in the United States had fallen to the lowest level that we have seen in nearly 20 years.

#2 Radio Shack has announced that it is going to close more than 1,000 stores.  This is just another sign that we are in the midst of a “retail apocalypse“.

#3 The ISM Services index just fell to its lowest level in 4 years, and ISM Services Employment just experienced its largest decline since the collapse of Lehman Brothers.

#4 Obamacare is really starting to hammer the U.S. health care industry

“The Affordable Care Act is creating significant financial uncertainty to health care organizations,” said a survey respondent from the health care and social assistance industry.
 
“With little warning, the negative impact on revenue has been unprecedented.”

#5 Trading revenue at the “too big to fail” banks on Wall Street is way down

Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) are bracing investors for a fourth straight drop in first-quarter trading, a period of the year when the largest investment banks typically earn the most from that business.
 
Citigroup finance chief John Gerspach said yesterday his firm expects trading revenue to drop by a “high mid-teens” percentage, less than a week after JPMorgan Chief Executive Officer Jamie Dimon said revenue from equities and fixed income was down about 15 percent. If trading at the nine largest firms slumps that much, it would extend the slide from 2010’s first quarter to 36 percent.

#6 One of the “too big to fail” banks, JPMorgan, is planning to fire “thousands” more workers.

#7 Moody’s has downgraded the credit rating of the city of Chicago again.  Now it is just three notches above junk status.

#8 The U.S. economy actually lost 2.87 million jobs during the month of January according to the unadjusted numbers.  Over the past decade, the only time the U.S. economy has lost more jobs during the month of January was in 2009 at the peak of the last recession.

#9 In January, real disposable income in the U.S. experienced the largest year over year decline that we have seen since 1974.

#10 Only 35 percent of all Americans say that they are better off financially than they were a year ago.

#11 Global retail sales for machinery giant Caterpillar have fallen for 14 months in a row.

#12 The economic data show that virtually all of the largest economies on the planet are slowing down right now.  The following is from a recent Zero Hedge article

The last 3 weeks have seen the macro fundamentals of the G-10 major economies collapse at the fastest pace in almost 4 years and almost the biggest slump since Lehman. Despite a plethora of data showing that ‘weather’ is not to blame, US strategists, ‘economists’, and asset-gatherers are sticking to the meme that this is all because of the cold on the east coast of the US (and that means wondrous pent-up demand to come). However, as the New York Times reports, for the earth, it was the 4th warmest January on record.

For much more on how the rest of the global economy is also slowing down, please see my recent article entitled “20 Signs That The Global Economic Crisis Is Starting To Catch Fire“.

Meanwhile, things in Ukraine continue to become even more tense, and the Russian government continues to debate how it will respond if the U.S. does end up deciding to hit Russia with economic sanctions.

According to one Russian news source, the Russian parliament is actually considering the confiscation of the property and assets of U.S. businesses in Russia if the U.S. decides to go ahead with economic sanctions against Russia…

The upper house of Russia’s parliament is mulling measures allowing property and assets of European and US companies to be confiscated in the event of sanctions being adopted against Russia over its threatened military intervention in Ukraine.

We are talking about banks, retail chains, mining operations, etc.

U.S. companies have billions invested in Russia, and all of that could be gone in an instant.

So let us certainly hope that economic war between the United States and Russia is averted.  Our economy is hurting enough as it is.

But no matter how things with this crisis in Ukraine play out, it looks like hard times are ahead for the U.S. economy.

Unfortunately, most Americans never learned the lessons that they should have learned back in 2008.

They just assume that the federal government and the Federal Reserve have fixed our problems and have everything under control, so they are not preparing for the next great crisis.

In the end, tens of millions of Americans will be absolutely devastated when they get absolutely blindsided by what is coming.

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This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 

 

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20 Signs That The Global Economic Crisis Is Starting To Catch Fire

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Source: http://theeconomiccollapseblog.com

By Michael Snyder

20 Signs That The Global Economic Crisis Is Starting To Catch Fire

 

Lighting-A-Match-Photo-by-Sebastian-Ritter-300x300If you have been waiting for the “global economic crisis” to begin, just open up your eyes and look around.  I know that most Americans tend to ignore what happens in the rest of the world because they consider it to be “irrelevant” to their daily lives, but the truth is that the massive economic problems that are currently sweeping across Europe, Asia and South America are going to be affecting all of us here in the U.S. very soon.  Sadly, most of the big news organizations in this country seem to be more concerned about the fate of Justin Bieber’s wax statue in Times Square than about the horrible financial nightmare that is gripping emerging markets all over the planet.  After a brief period of relative calm, we are beginning to see signs of global financial instability that are unlike anything that we have witnessed since the financial crisis of 2008.  As you will see below, the problems are not just isolated to a few countries.  This is truly a global phenomenon.

Over the past few years, the Federal Reserve and other global central banks have inflated an unprecedented financial bubble with their reckless money printing.  Much of this “hot money” poured into emerging markets all over the world.  But now that the Federal Reserve has begun “tapering” quantitative easing, investors are taking this as a sign that the party is ending.  Money is being pulled out of emerging markets all over the globe at a staggering pace and this is creating a tremendous amount of financial instability.  In addition, the economic problems that have been steadily growing over the past few years in established economies throughout Europe and Asia just continue to escalate.  The following are 20 signs that the global economic crisis is starting to catch fire…

#1 The unemployment rate in Greece has hit a brand new record high of 28 percent.

#2 The youth unemployment rate in Greece has hit a brand new record high of 64.1 percent.

#3 The percentage of bad loans in Italy is at an all-time record high.

#4 Italian industrial output declined again in December, and the Italian government is on the verge of collapse.

#5 The number of jobseekers in France has risen for 30 of the last 32 months, and at this point it has climbed to a new all-time record high.

#6 The total number of business failures in France in 2013 was even higher than in any year during the last financial crisis.

#7 It is being projected that housing prices in Spain will fall another 10 to 15 percent as their economic depression deepens.

#8 The economic and political turmoil in Turkey is spinning out of control.  The government has resorted to blasting protesters with pepper spray and water cannons in a desperate attempt to restore order.

#9 It is being estimated that the inflation rate in Argentina is now over 40 percent, and the peso is absolutely collapsing.

#10 Gangs of armed bandits are roaming the streets in Venezuela as the economic chaos in that troubled nation continues to escalate.

#11 China appears to be very serious about deleveraging.  The deflationary effects of this are going to be felt all over the planet. The following is an excerpt from Ambrose Evans-Pritchard’s recent article entitled “World asleep as China tightens deflationary vice“…

China’s Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons.
 
The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China’s $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.
 
This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications.

#12 There was a significant debt default by a coal company in China last Friday

A high-yield investment product backed by a loan to a debt-ridden coal company failed to repay investors when it matured last Friday, state media reported on Wednesday, in the latest sign of financial stress in China’s shadow bank sector.

#13 Japan’s Nikkei stock index has already fallen by 14 percent so far in 2014.  That is a massive decline in just a month and a half.

#14 Ukraine continues to fall apart financially

The worsening political and economic circumstances in Ukraine has prompted the Fitch Ratings agency to downgrade Ukrainian debt from B to a pre–default level CCC. This is lower than Greece, and Fitch warns of future financial instability.

#15 The unemployment rate in Australia has risen to the highest level in more than 10 years.

#16 The central bank of India is in a panic over the way that Federal Reserve tapering is effecting their financial system.

#17 The effects of Federal Reserve tapering are also being felt in Thailand

In the wake of the US Federal Reserve tapering, emerging economies with deteriorating macroeconomic figures or visible political instability are being punished by skittish markets. Thailand is drifting towards both these tendencies.

#18 One of Ghana’s most prominent economists says that the economy of Ghana will crash by June if something dramatic is not done.

#19 Yet another banker has mysteriously died during the prime years of his life.  That makes five “suspicious banker deaths” in just the past two weeks alone.

#20 The behavior of the U.S. stock market continues to parallel the behavior of the U.S. stock market in 1929.

Yes, things don’t look good right now, but it is important to keep in mind that this is just the beginning.

This is just the leading edge of the next great financial storm.

The next two years (2014 and 2015) are going to represent a major “turning point” for the global economy.  By the end of 2015, things are going to look far different than they do today.

None of the problems that caused the last financial crisis have been fixed.  Global debt levels have grown by 30 percent since the last financial crisis, and the too big to fail banks in the United States are 37 percent larger than they were back then and their behavior has become even more reckless than before.

As a result, we are going to get to go through another “2008-style crisis”, but I believe that this next wave is going to be even worse than the previous one.

So hold on tight and get ready.  We are going to be in for quite a bumpy ride.

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 

 

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221 Percent Increase In One Year? Why Are So Many People Renouncing American Citizenship?

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Source: http://theeconomiccollapseblog.com

By Michael Snyder

221 Percent Increase In One Year? Why Are So Many People Renouncing American Citizenship?

 

American-Flag-300x199The number of Americans that renounced their citizenship was 221 percent higher in 2013 than it was in 2012.  That is a staggering figure, and it is symptomatic of a larger trend.  In recent years, a lot of really good people with very deep roots in this country have made the difficult decision to say goodbye to the United States permanently.  A few actually go to the trouble to renounce their citizenship, and that is mostly done for tax purposes.  But most willingly choose to leave America for other reasons.  Some were very serious when they said they would leave the U.S. if Barack Obama got a second term, some (such as Jesse Ventura) are dismayed at how our freedoms and liberties are eroding and are alarmed at the rise of the Big Brother police state, some are absolutely disgusted by the social and moral decay that is eating away at the foundations of our society, and there are yet others that consider “the grass to be greener” on the other side of the planet.  Personally, I have a number of friends that have made the very hard decision to relocate their families thousands of miles away because they see what is coming to America and they believe that there isn’t any hope of turning things around at this point.  I also have a lot of friends that are determined to stay in the United States no matter what.  When it comes to the future of America, almost everyone has a very strong opinion, and these are discussions that we need to start having.

Once upon a time, the United States was seen as “the land of opportunity” all over the globe and it seemed like everyone wanted to come here.

But now that is all changing.  As we have abandoned the principles that this country was founded upon, our economy has gone steadily downhill.

As I wrote about the other day, the middle class in America is slowly dying.  As millions of good paying jobs have been shipped out of the country, the competition for the remaining jobs has become quite intense.  At this point, there is even tremendous competition for minimum wage jobs.

Compared to exactly six years ago, 1,154,000 fewer Americans have jobs.  Meanwhile, our population has gotten significantly larger since then.  There simply are not enough jobs for everyone, and we continue to fall even farther behind.  In January, the economy only added 113,000 jobs and in December the economy only added 75,000 jobs.  Both of those figures are well below what we need just to keep up with population growth.

Looking ahead, things look even more troubling.

The number of “planned job cuts” in January was 12 percent higher than 12 months earlier, and it was actually 47 percent higher than in December.

The competition for jobs has also resulted in an extended period of declining incomes in the United States.

As I mention frequently, median household income in the United States has fallen for five years in a row, and the rate of homeownership in the United States has fallen for eight years in a row.

Those that read my articles regularly probably have those facts memorized by now.

In addition, a study that just came out has shown that the number of “low-wage breadwinners” in the United States is at an all-time high

A staggering number of American households are relying on low-wage jobs as their leading or sole source of income.
 
Meet the low-wage breadwinner. There were about 21 million of them in the United States in 2011, according to a forthcoming study by University of Massachusetts Boston economists Randy Albelda and Michael Carr.
 
Unlike other studies which often focus just on low-wage workers, the researchers looked at those who also live in low-income households. This way, they were able to strip out the teenager making $8 an hour flipping burgers but still living comfortably with his parents. Or the mom who works a part-time job in retail to supplement her husband’s otherwise ample salary.

For tens of millions of average American families, there simply is not enough money left at the end of each month.

That is why many of them turn to debt to try to make up the difference.  Consumer credit is increasing at an alarming pace once again, and when the next great economic shock arrives many of those families are going to be in for a tremendous amount of financial pain.

In this type of economic environment, it should not be a surprise that anger, frustration and desperation are rising to very dangerous levels.

It was desperation and a fear of losing everything that he had ever worked for that drove one 80-year-old man to become a methamphetamine courier.

It was intense anger and frustration that drove a 58-year-old military veteran to package up cat feces and send it to employers that had turned him down

Rather than simply grumble to himself or complain to others, a St. Louis man aggrieved by a company’s failure to hire him took another approach.
 
Jevons Brown packaged up cat feces and sent it through the mail.
 
Brown, 58, was sentenced Friday to two years of probation after pleading guilty in August to a misdemeanor charge of mailing injurious articles.
 
The plea says Brown, a veteran, became frustrated with his lack of employment opportunities and lashed out at employees of companies that failed to hire him.

This is just the tip of the iceberg.

In the years ahead, we are going to see much, much worse.

And if you do lose everything, don’t expect anyone to care very much.  There is already a frightening lack of compassion for those that are down on their luck in the United States today.  For example, in Pensacola, Florida it is actually illegal for homeless people to use blankets or cardboard boxes to shield themselves from the cold…

So there I was with my wife and three kids, all of us huddled under blankets with the fireplace roaring, watching the temperature continue to drop from a comfortable 65 degrees down to 45. But outside it was 17 degrees and raining and sleeting, and if you were homeless, you had to consider that if you used a blanket to shield yourself from the elements, that you might be hauled off to jail for a violation of a local ordinance prohibiting using blankets, cardboard, or newspaper to cover yourself.

Once you lose everything, society just wants you to go away.

And this lack of compassion is going to get a whole lot worse during the very hard times that are coming.

So it is easy to understand why many Americans would want to get out of this country while they still can.

However, the truth is that the grass is not necessarily greener on the other side.

For instance, you may be dreaming of moving to a tropical paradise where you can enjoy the sand and the sun every single day.

In the past, many Americans considered Puerto Rico a good place to relocate to.  After all, it is a United States territory and if you only speak English you can still get around pretty well.

But you wouldn’t want to move down to Puerto Rico these days.  Right now it is in the middle of a full-blown economic collapse

Puerto Rico’s slow-motion economic crisis skidded to a new low last week when both Standard & Poor’s and Moody’s downgraded its debt to junk status, brushing aside a series of austerity measures taken by the new governor, including increasing taxes and rebalancing pensions. But that is only the latest in a sharp decline leading to widespread fears about Puerto Rico’s future. In the past eight years, Puerto Rico’s ticker tape of woes has stretched unabated: $70 billion in debt, a 15.4 percent unemployment rate, a soaring cost of living, pervasive crime, crumbling schools and a worrisome exodus of professionals and middle-class Puerto Ricans who have moved to places like Florida and Texas.

In fact, Puerto Rico is a preview of the kind of societal chaos that we could be seeing inside the United States in just a few years

Schools sit shuttered either because of disrepair or because of a dwindling number of students. In this typically convivial capital, communities have erected gates and bars to help thwart carjackers and home invaders. Illegal drugs, including high-level narcotrafficking, are one of the few growth industries.

Well, what about South America?

In recent years, South America has been an extremely popular destination for those wishing to leave the United States.

Unfortunately, many areas of South America are experiencing full-blown economic collapse right now as well.  As I wrote about recently, deteriorating economic conditions have resulted in widespread crime, looting, violence, blackouts, shortages of basic supplies, and runs on the banks in Argentina and Venezuela.  The following is an excerpt from a recent interview with Fernando Aguirre who actually lives down in Argentina

Chris Martenson:  Okay. Bring us up to date. What is happening in Argentina right now with respect to its currency, the peso?
 
Fernando Aguirre:  Well, actually pretty recently, January 22, the peso lost 15% of its value. It has devalued quite a bit. It ended up losing 20% of its value that week, and it has been pretty crazy since then. Inflation has been rampant in some sectors, going up to 100% in food, grocery stores 20%, 30% in some cases. So it has been pretty complicated. Lots of stores don’t want to be selling stuff until they get updated prices. Suppliers holding on, waiting to see how things go, which is something that we are familiar with because that happened back in 2001 when everything went down as we know it did.
 
Chris Martenson:  So 100%, 20% inflation; are those yearly numbers?
 
Fernando Aguirre:  Those are our numbers in a matter of days. In just one day, for example, cement in Balcarce, one of the towns in Southern Argentina, went up 100% overnight, doubling in price. Grocery stores in Córdoba, even in Buenos Aires, people are talking about increase of prices of 20, 30% just these days. I actually have family in Argentina that are telling me that they go to a hardware store and they aren’t even able to buy stuff from there because stores want to hold on and see how prices unfold in the following days.

Well, what about Europe?

Isn’t Europe a lot more stable?

Unfortunately, that is not necessarily true.  In recent years we have seen rioting, civil unrest and Depression-like conditions in Ukraine, Greece, Spain, Italy and Portugal.

And now you can add Bosnia to that list…

More than 150 people were wounded in Bosnia on Friday in the worst civil unrest in the country since the 1992-95 war as anger over the dire state of the economy and political inertia boiled over.
 
Angry protesters set fire to part of the presidential palace in Sarajevo in protests over unemployment and corruption, as well as government buildings in the capital Sarajevo, Tuzla and Zenica.

Just because you move out of the United States does not necessarily mean that you will avoid what is coming.

We are heading for a global economic collapse, and the pain is going to be felt to the farthest corners of the planet.

But of course there are many that will end up leaving the United States and will ultimately thrive.

So what do you think?

Is now a time for people to consider leaving the United States permanently?

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 

 

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Image credit: http://theeconomiccollapseblog.com

The Dow Has Already Fallen More Than 1000 Points From The Peak Of The Market

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Source: http://theeconomiccollapseblog.com

By Michael Snyder

The Dow Has Already Fallen More Than 1000 Points From The Peak Of The Market

 

Stock-Market-Decline-Photo-by-Nodulation-300x154That didn’t take long.  On Monday, the Dow was down another 326 points.  Overall, the Dow has now fallen more than 1000 points from the peak of the market (16,588.25) back in late December.  This is the first time that we have seen the Dow drop below its 200-day moving average in more than a year, and there are many that believe that this is just the beginning of a major stock market decline.  Meanwhile, things are even worse in other parts of the world.  For example, the Nikkei is now down about 1700 points from its 2013 high.  This is causing havoc all over Asia, and the sharp movement that we have been seeing in the USD/JPY is creating a tremendous amount of anxiety among Forex traders.  For those that are not interested in the technical details, what all of this means is that global financial markets are starting to become extremely unstable.

Unfortunately, there does not appear to be much hope on the horizon for investors.  In fact, troubling news just continues to pour in from all over the planet.  Just consider the following…

-Major currencies all over South America continue to collapse.

-Massive central bank intervention has done little to slow down the currency collapse in Turkey.

-Investors pulled more than 6 billion dollars out of emerging market equity funds last week alone.

-The CBOE Volatility Index (VIX) has risen above 20 for the first time in four months.

-Last month, new manufacturing orders in the United States declined at the fastest pace that we have seen since December 1980.

-Real disposable income in the United States has just experienced the largest year over year drop that we have seen since 1974.

-In January, vehicle sales for Ford were down 7.5 percent and vehicle sales for GM were down 12 percent.  Both companies are blaming bad weather.

-A major newspaper in the UK is warning that “growing problems in the Chinese banking system could spill over into a wider financial crisis“.

-U.S. Treasury Secretary Jack Lew is warning that the federal government could hit the debt ceiling by the end of this month if Congress does not act.

-It is being reported that Dell Computer plans to lay off more than 15,000 workers.

-The IMF recently said that the the probability that the global economy will fall into a deflation trap “may now be as high as 20%“.

-The Baltic Dry Index is now down 50 percent from its December highs.

If our economic troubles continue to mount, could we be facing a global “financial avalanche” fairly quickly?

That is what some very prominent analysts believe.

Below, I have posted quotes from five men that are greatly respected in the financial world.  What they have to say is quite chilling…

#1 Doug Casey: “Now is a very good time to start thinking financially because I’m afraid that this year, in 2014, we’re going to go back into the financial hurricane. We’ve been in the eye of the storm since 2009, but now we’re going to go back into the trailing edge of the storm, and it’s going to be much longer lasting and much worse and much different than what we had in 2008 and 2009.”

#2 Bill Fleckenstein: “The [price-to-earnings ratio] is 16, 17 times earnings,” Fleckenstein said on Tuesday’s episode of “Futures Now.” “Why would you pay 16 times for an S&P company? I don’t care about where rates are, because rates are artificially suppressed. Why isn’t that worth 11 or 12 times? Just by that analysis, you’d be down by a quarter or 30 percent. So there’s a huge amount of downside.”

#3 Egon von Greyerz of Matterhorn Asset Management: “Nothing goes (down) in a straight line, but the emerging market problems will accelerate and it will spread to the very overbought and the very overvalued stock markets and economies in the West.

So stock markets are now starting a secular bear trend which will last for many years, and we could see falls of massive proportions. At the end of this, the wealth that has been created in the last few decades will be destroyed.”

#4 Peter Schiff: “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.”

#5 Gerald Celente: “This selloff in the emerging markets, with their currencies going down and their interest rates going up, it’s going to be disastrous and there are going to be riots everywhere…

So as the decline in their economies accelerates, you are going to see the civil unrest intensify.”

—–

Those that do not believe that we could ever see “civil unrest” on the streets of America should take note of what just happened in Seattle.

After the Seahawks won the Super Bowl, fans celebrated by “lighting fires, damaging historic buildings and ripping down street signs“.

If that is how average Americans will behave when something good happens, how will they act when the economy totally collapses and nobody can find work for an extended period of time?

We are rapidly approaching another great financial crisis.  Unfortunately, we didn’t learn any of the lessons that we should have learned last time.  It is being projected that the debt of the federal government will more than double during the Obama years, the “too big to fail banks” have collectively gotten 37 percent larger over the past five years, and the big banks have become more financially reckless than ever before.

When the next great financial crisis arrives (and without a doubt it is inevitable), millions more Americans will lose their jobs and millions more Americans will lose their homes.

Now is not the time to be buying lots of expensive new toys, going on expensive vacations or piling up lots of debt.

Now is the time to build up an emergency fund and to do whatever you can to get prepared for the great storm that is coming.

As you can see from the financial headlines, time is rapidly running out.

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This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 

 

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Are we looking at a “global deflationary shock” triggered by the Fed?

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Source: http://www.againstcronycapitalism.org

By

Are we looking at a “global deflationary shock” triggered by the Fed?

 

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The economic tide has been going out for quite a while, but the pace has just quickened in emerging markets – big time. Things have become quite unsteady and no one knows whether the current instability will trigger something broader in the developed economies. China is slowing. Japan has horns locked with China economically and increasingly politically. Europe is catching its breath before another wave rolls through.

All because the Fed has indicated that it is modestly reducing the amount of money it will pour into world markets. The addict is feeling withdrawal pains.

Those who have argued that the US market was rallying because of fundamental political issues and not because of the QE party created by the Federal Reserve are clearly wrong. Cotton candy and unicorn dreams underlie much of this market. Proceed with caution.

(From The Telegraph)
 
The report said they may need capital controls to navigate the storm – or technically to overcome the “Impossible Trinity” of monetary autonomy, a stable exchange rate and free flows of funds. William Browder from Hermitage says that is exactly where the crisis is leading, and it will be sobering for investors to learn that their money is locked up – already the case in Cyprus, and starting in Egypt. The chain-reaction becomes self-fulfilling. “People will start asking themselves which country is next,” he said.
 
Emerging markets are now half the global economy, so we are in uncharted waters. Roughly $4 trillion of foreign funds swept into emerging markets after the Lehman crisis, much of it by then “momentum money” late to the party. The IMF says $470bn is directly linked to money printing by the Fed . “We don’t know how much of this is going to come out again, or how quickly,” said an official from the Fund.
 
One country after another is now having to tighten into weakness. The longer this goes on, and the wider it spreads, the greater the risk that it will metamorphose into a global deflationary shock.

Click here for the article.

Image credit: http://www.againstcronycapitalism.org


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

 

 

20 Early Warning Signs That We Are Approaching A Global Economic Meltdown

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Source: http://theeconomiccollapseblog.com

By Michael Snyder

20 Early Warning Signs That We Are Approaching A Global Economic Meltdown

 

Earth-From-Space-2013-300x300Have you been paying attention to what has been happening in Argentina, Venezuela, Brazil, Ukraine, Turkey and China?  If you are like most Americans, you have not been.  Most Americans don’t seem to really care too much about what is happening in the rest of the world, but they should.  In major cities all over the globe right now, there is looting, violence, shortages of basic supplies, and runs on the banks.  We are not at a “global crisis” stage yet, but things are getting worse with each passing day.  For a while, I have felt that 2014 would turn out to be a major “turning point” for the global economy, and so far that is exactly what it is turning out to be.  The following are 20 early warning signs that we are rapidly approaching a global economic meltdown…
 
 
#1 The looting, violence and economic chaos that is happening in Argentina right now is a perfect example of what can happen when you print too much money

For Dominga Kanaza, it wasn’t just the soaring inflation or the weeklong blackouts or even the looting that frayed her nerves.
 
It was all of them combined.
 
At one point last month, the 37-year-old shop owner refused to open the metal shutters protecting her corner grocery in downtown Buenos Aires more than a few inches — just enough to sell soda to passersby on a sweltering summer day.

#2 The value of the Argentine Peso is absolutely collapsing.

#3 Widespread shortages, looting and accelerating inflation are also causing huge problems in Venezuela

Economic mismanagement in Venezuela has reached such a level that it risks inciting a violent popular reaction. Venezuela is experiencing declining export revenues, accelerating inflation and widespread shortages of basic consumer goods. At the same time, the Maduro administration has foreclosed peaceful options for Venezuelans to bring about a change in its current policies.
 
President Maduro, who came to power in a highly-contested election last April, has reacted to the economic crisis with interventionist and increasingly authoritarian measures. His recent orders to slash prices of goods sold in private businesses resulted in episodes of looting, which suggests a latent potential for violence. He has put the armed forces on the street to enforce his economic decrees, exposing them to popular discontent.

#4 In a stunning decision, the Venezuelan government has just announced that it has devalued the Bolivar by more than 40 percent.
 

#5 Brazilian stocks declined sharply on Thursday.  There is a tremendous amount of concern that the economic meltdown that is happening in Argentina is going to spill over into Brazil.

#6 Ukraine is rapidly coming apart at the seams

A tense ceasefire was announced in Kiev on the fifth day of violence, with radical protesters and riot police holding their position. Opposition leaders are negotiating with the government, but doubts remain that they will be able to stop the rioters.

#7 It appears that a bank run has begun in China

As China’s CNR reports, depositors in some of Yancheng City’s largest farmers’ co-operative mutual fund societies (“banks”) have been unable to withdraw “hundreds of millions” in deposits in the last few weeks. “Everyone wants to borrow and no one wants to save,” warned one ‘salesperson’, “and loan repayments are difficult to recover.” There is “no money” and the doors are locked.

#8 Art Cashin of UBS is warning that credit markets in China “may be broken“.  For much more on this, please see my recent article entitled “The $23 Trillion Credit Bubble In China Is Starting To Collapse – Global Financial Crisis Next?

#9 News that China’s manufacturing sector is contracting shook up financial markets on Thursday…

Wall Street was rattled by a key reading on China’s manufacturing which dropped below the key 50 level in January, according to HSBC. A reading below 50 on the HSBC flash manufacturing PMI suggests economic contraction.

#10 Japanese stocks experienced their biggest drop in 7 months on Thursday.

#11 The value of the Turkish Lira is absolutely collapsing.

#12 The unemployment rate in France has risen for 9 quarters in a row and recently soared to a new 16 year high.

#13 In Italy, the unemployment rate has soared to a brand new all-time record high of 12.7 percent.

#14 The unemployment rate in Spain is sitting at an all-time record high of 26.7 percent.

#15 This year, the Baltic Dry Index experienced the largest two week post-holiday decline that we have ever seen.

#16 Chipmaker Intel recently announced that it plans to eliminate 5,000 jobs over the coming year.

#17 CNBC is reporting that U.S. retailers just experienced “the worst holiday season since 2008“.

#18 A recent CNBC article stated that U.S. consumers should expect a “tsunami” of store closings in the retail industry…

Get ready for the next era in retail—one that will be characterized by far fewer shops and smaller stores.
 
On Tuesday, Sears said that it will shutter its flagship store in downtown Chicago in April. It’s the latest of about 300 store closures in the U.S. that Sears has made since 2010. The news follows announcements earlier this month of multiple store closings from major department stores J.C. Penney and Macy’s.
 
Further signs of cuts in the industry came Wednesday, when Target said that it will eliminate 475 jobs worldwide, including some at its Minnesota headquarters, and not fill 700 empty positions.

#19 The U.S. Congress is facing another deadline to raise the debt ceiling in February.

#20 The Dow fell by more than 170 points on Thursday.  It is becoming increasingly likely that “the peak of the market” is now in the rear view mirror.

And I have not even mentioned the extreme drought that has caused the U.S. cattle herd to drop to a 61 year low or the nuclear radiation from Fukushima that is washing up on the west coast.

In light of everything above, is there anyone out there that still wants to claim that “everything is going to be okay” for the global economy?

Sadly, most Americans are not even aware of most of these things.

All over the country today, the number one news headline is about Justin Bieber.  The mainstream media is absolutely obsessed with celebrity scandals, and so is a very large percentage of the U.S. population.

A great economic storm is rapidly approaching, and most people don’t even seem to notice the storm clouds that are gathering on the horizon.

In the end, perhaps we will get what we deserve as a nation.

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 


Image credit: http://theeconomiccollapseblog.com
 
 

Top 1% Has 65 Times More Wealth Than The Bottom Half And The Global Elite Like It That Way

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Source: http://theeconomiccollapseblog.com

By Michael Snyder

 

Top 1% Has 65 Times More Wealth Than The Bottom Half And The Global Elite Like It That Way

 

85-Richest-People-Photo-by-Oxfam-300x216Did you know that the 85 richest people in the world have about as much wealth as the poorest 50% of the entire global population does?  In other words, 85 extremely wealthy individuals have about as much wealth as the poorest 3,500,000,000 do.  This shocking statistic comes from a new report on global poverty by Oxfam.  And actually Oxfam’s report probably significantly underestimates the true scope of the problem, because Oxfam relies on publicly reported numbers.  At the very top of the food chain, the global elite are masters at hiding their wealth.  In fact, as I have written about previously, the global elite have approximately 32 trillion dollars (that we know about) stashed in offshore banks around the world.  That would be about enough to pay off the entire U.S. national debt and buy every good and service produced in the United States for an entire year.  These elitists live on an entirely different planet than the rest of us do.  In fact, according to Oxfam, the richest one percent of the global population has 65 times more wealth than the bottom half of the global population combined.

There is certainly nothing wrong with making money.  In fact, the founders of the United States intended for this nation to be a place where free markets thrived and where everyone could pursue their dreams.  Unfortunately, this country (along with the rest of the world) has moved very much in the opposite direction.  Today, we have a debt-based global financial system which is dominated by gigantic predator corporations and big banks.  Working together with national governments, these corporations and banks have constructed a system that I like to call “Corporatism” in which the percentage of all global wealth that is being funneled to the very top of the pyramid steadily grows over time.

The Founding Fathers were very correct to be very suspicious of large concentrations of power.  In the early days of the United States, the federal government was very small and the size and scope of corporations was greatly limited.  Our nation thrived and a huge middle class blossomed.

Sadly, over the past several decades the pendulum has completely swung in the other direction.  Today, our society is completely and totally dominated by big banks, big corporations and big government.

And of course this is also happening in virtually every other nation on the face of the planet.  The global elite have rigged the game to send just about all of the rewards their way, and it is working.  The following are facts taken directly from Oxfam’s latest report

•Almost half of the world’s wealth is now owned by just one percent of the population.

•The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.

•The bottom half of the world’s population owns the same as the richest 85 people in the world.

•Seven out of ten people live in countries where economic inequality has increased in the last 30 years.

•The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.

•In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

Starting on Wednesday, several thousand members of the global elite will gather for the World Economic Forum meetings in Davos, Switzerland.  The following is how USA Today described this conference.

For several days at the end of January, presidents, prime ministers, monarchs and corporate titans jostle with actors, rock stars and major influencers for top billing at the annual meeting of the World Economic Forum. The confab takes place in the Alpine village of Davos, about 90 miles southeast of Zurich, and for a brief spell each year the pristine ski resort half-sheds its Graubünden roots and becomes a ground zero for the political and business elite.

Unless you are independently wealthy, you can forget about going to this conference.  A ticket to Davos is going to cost you about $30,000, and that is on top of the $55,000 that it costs to join the organization.

Needless to say, it is an organization of the elite, by the elite and for the elite.

This year, the theme of the meeting is “The Reshaping of the World: Consequences for Society, Politics and Business“.  And the founder of the World Economic Forum says that the time has come to press the “reset” button for the global economy…

It’s time to press the “reset” button on the world, the founder of the World Economic Forum said Wednesday, addressing media ahead of the WEF’s much ballyhooed annual meeting in Davos-Klosters, Switzerland, that gets underway in a week’s time.
 
“The world is complex, it’s fast-moving, it’s interconnected, and we in Davos want to provide a mirror to the world as it is. It is not a meeting devoted to one set of issues. It’s a meeting that address the complexity of our world,” said Klaus Schwab, the WEF’s founder and executive chairman.

At first glance, that sounds pretty good.

Personally, I would love to hit a “reset” button for the global economy.

But what the elite mean by “reset” is much different from what most of the rest of us would mean.

The following is an excerpt from the executive summary for the agenda for the 2014 World Economic Forum…

“At an international level, the formal architecture for global governance was not designed for the interdisciplinary challenges and collective action problems of today. As a result, international cooperation has yet to fully enter the information age and capture its associated productivity gains.”

For the global elite, the answers to our problems always involve more centralization and more “global governance”.  In other words, the answers to our problems always involve giving them more control and more power.

The elite never actually want the pendulum to swing back in the direction of the “little guy”.  The elite are generally pleased with how the game is being played because they are winning.

Most people don’t even realize that they are participants in a debt-based neo-feudalist system in which money is being used as a form of social control.

As I have written about previously, there is about 190 trillion dollars of debt in the world, but global GDP is only about 70 trillion dollars.

There is no way that all of this debt could ever be paid off at one time.  It is mathematically impossible.  Over time, all of this debt transfers the wealth of the planet away from us and to the global elite.  If this game was allowed to go on long enough, eventually they would have nearly all of it.

And some would argue that we are already getting close to that point.  A study by the World Institute for Development Economics Research discovered that the bottom half of the global population only owns approximately 1 percent of all wealth, and at this point about a billion people throughout the world go to bed hungry every night.

This is one of the reasons why I am so adamant about the fact that the Federal Reserve needs to be shut down.  It is at the very heart of the debt-based system that we have in the United States, and over the past 100 years it has brought us to the brink of economic Armageddon.

Sadly, most Americans do not understand any of these things.  They just assume that the debt-fueled prosperity that we have been enjoying will be able to go on indefinitely.

So is there any hope for the “little guy”?

Well, you could try to win the one billion dollar NCAA tournament bracket contest that Warren Buffett is backing.

Or you could go out and try to win the lottery or try to date a famous professional athlete.

But the odds of any of those things actually happening are so low that they aren’t even worth mentioning.

Personally, I would rather spend my time trying to wake people up and help them understand how our global system really works.

I believe that a “great awakening” is coming.

I believe that millions of people are going to start breaking out of the “matrix of control” that has such a tight grip on their lives and are going to start thinking for themselves.

I believe that as the darkness gets even darker that the light is going to get even brighter.  I believe that we are going to see “renewal” on a whole bunch of different levels.

Yes, a great economic collapse is coming.

Yes, there is going to be a tremendous amount of pain.

But it won’t all be bad news.

The times ahead are going to be full of adventure and excitement for those who are willing to embrace it.

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This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.

 

Image credit: http://theeconomiccollapseblog.com
 

The Deflation Menace

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Source: http://www.europac.net

By Peter Schiff

The Deflation Menace

 

The article below was taken from the January edition of Euro Pacific Capital’s Global Investor.

Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital

Dedicated readers of The Wall Street Journal have recently been offered many dire warnings about a clear and present danger that is stalking the global economy. They are not referring to a possible looming stock or real estate bubble (which you can find more on in my latest newsletter). Nor are they talking about other usual suspects such as global warming, peak oil, the Arab Spring, sovereign defaults, the breakup of the euro, Miley Cyrus, a nuclear Iran, or Obamacare. Instead they are warning about the horror that could result from falling prices, otherwise known as deflation. Get the kids into the basement Mom….they just marked down Cheerios!

In order to justify our current monetary and fiscal policies, in which governments refuse to reign in runaway deficits while central banks furiously expand the money supply, economists must convince us that inflation, which results in rising prices, is vital for economic growth.

Simultaneously they make the case that falling prices are bad. This is a difficult proposition to make because most people have long suspected that inflation is a sign of economic distress and that high prices qualify as a problem not a solution. But the absurdity of the position has not stopped our top economists, and their acolytes in the media, from making the case.

A January 5th article in The Wall Street Journal described the economic situation in Europe by saying “Anxieties are rising in the euro zone that deflation-the phenomenon of persistent falling prices across the economy that blighted the lives of millions in the 1930s-may be starting to take root as it did in Japan in the mid-1990s.” Really, blighted the lives of millions? When was the last time you were “blighted” by a store’s mark down? If you own a business, are you “blighted” when your suppliers drop their prices? Read more about Europe’s economy in my latest newsletter.

The Journal is advancing a classic “wet sidewalks cause rain” argument, confusing and inverting cause and effect. It suggests that falling prices caused the Great Depression and in turn the widespread consumer suffering that went along with it. But this puts the cart way in front of the horse.  The Great Depression was triggered by the bursting of a speculative bubble (resulted from too much easy money in the latter half of the 1920s). The resulting economic contraction, prolonged unnecessarily by the anti-market policies of Hoover and Roosevelt, was part of a necessary re-balancing. A bad economy encourages people to reduce current consumption and save for the future. The resulting drop in demand brings down prices.

But lower prices function as a counterweight to a contracting economy by cushioning the blow of the downturn. I would argue that those who lived through the Great Depression were grateful that they were able to buy more with what little money they had. Imagine how much worse it would have been if they had to contend with rising consumer prices as well. Consumers always want to buy, but sometimes they forego or defer purchases because they can’t afford a desired good or service. Higher prices will only compound the problem. It may surprise many Nobel Prize-winning economists, but discounts often motivate consumers to buy – -try the experiment yourself the next time you walk past the sale rack.

Economists will argue that expectations for future prices are a much bigger motivation than current prices themselves. But those economists concerned with deflation expect there to be, at most, a one or two percent decrease in prices. Can consumers be expected not to buy something today because they expect it to be one percent cheaper in a year? Bear in mind that something that a consumer can buy and use today is more valuable to the purchaser than the same item that is not bought until next year. The costs of going without a desired purchase are overlooked by those warning about the danger of deflation

In another article two days later, the Journal hit readers with the same message: “Annual euro-zone inflation weakened further below the European Central Bank’s target in December, rekindling fears that too little inflation or outright consumer-price declines may threaten the currency area’s fragile economy.” In this case, the paper adds “too little inflation” to the list of woes that needs to be avoided. Apparently, if prices don’t rise briskly enough, the wheels of an economy stop turning

Neither article mentions some very important historical context. For the first 120 years of the existence of the United States (before the establishment of the Federal Reserve), general prices trended downward. According to the Department of Commerce’s Statistical Abstract of the United States, the “General Price Index” declined by 19% from 1801 to 1900. This stands in contrast to the 2,280% increase of the CPI between 1913 and 2013

While the 19th century had plenty of well-documented ups and downs, people tend to forget that the country experienced tremendous economic growth during that time. Living standards for the average American at the end of the century were leaps and bounds higher than they were at the beginning. The 19th Century turned a formerly inconsequential agricultural nation into the richest, most productive, and economically dynamic nation on Earth. Immigrants could not come here fast enough. But all this happened against a backdrop of consistently falling prices.

Thomas Edison once said that his goal was to make electricity so cheap that only the rich would burn candles. He was fortunate to have no Nobel economists on his marketing team.They certainly would have advised him to raise prices to increase sales. But Edison’s strategy of driving sales volume through lower prices is clearly visible today in industries all over the world. By lowering prices, companies not only grow their customer base, but they tend to increase profits as well. Most visibly, consumer electronics has seen chronic deflation for years without crimping demand or hurting profits. According to the Wall Street Journal, this should be impossible.

The truth is the media is merely helping the government to spread propaganda. It is highly indebted governments that need inflation, not consumers. But before government can lead a self-serving crusade to create inflation, they must first convince the public that higher prices is a goal worth pursuing. Since inflation also helps sustain asset bubbles and prop up banks, in this instance The Wall Street Journal and the Government seem to be perfectly aligned.

Peter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital, best-selling author and host of syndicated Peter Schiff Show. 


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