The Economic Collapse
Oct 9, 2010
On Friday, headlines across the United States declared that “unemployment remains unchanged at 9.6%”. Many analysts rejoiced and heralded this announcement as a sign that we have hit bottom and that things will be turning around soon. But is that the truth? A closer look at the unemployment numbers reveals some disturbing facts. For example, according to the Bureau of Labor Statistics, a broader measure of unemployment that includes workers that have stopped looking for work rose sharply to 17.1%. But that is not the only troubling sign from this past week. Agricultural commodities continue to skyrocket, which means that food price increases are on the way. The foreclosure “robo-signing” crisis continues to escalate, and that threatens to throw the entire mortgage industry into a state of absolute turmoil. Meanwhile, the U.S. national debt continues to grow and wealth continues to leave the United States at a dizzying rate.
So is there reason for optimism?
No, not really.
Even if the unemployment numbers had improved slightly, the longer-term trends for unemployment are extremely troubling as you will see from the statistics and the chart below.
At the same time when so many Americans are out of work or can barely get by on what they are currently making, there is every indication that prices are about to go up. Wheat, corn and soybeans all jumped in price on Friday, and it is inevitable that at some point these price increases will be passed on to consumers. And if that wasn’t bad enough, now some Federal Reserve officials are actually talking about purposely generating more inflation in order to “stimulate” the U.S. economy.
Meanwhile, this “robo-signing” foreclosure crisis threatens to escalate totally out of control. Will we soon see thousands of court cases popping up from coast to coast challenging the legitimacy of foreclosure paperwork? Will title insurers start totally backing off from foreclosed properties? Banks were already completely overwhelmed trying to process the massive backlog of foreclosures. Is this going to make the situation a whole lot worse?
The truth is that more bad news for the U.S. economy comes out almost daily now. The following are 10 things that you need to know about the latest econ0mic numbers….
1 – Gallup’s measure of unemployment, which is not adjusted for “seasonal factors”, showed a sharp increase in September. According to Gallup, unemployment has increased from 8.9% in July to 9.3% in August and to 10.1% in September.
2 – The seasonally-adjusted Alternate Unemployment Rate compiled by Shadow Government Statistics shows that the real unemployment rate in the United States is worse than it has been ever since the economic downturn began. The Alternate Unemployment Rate calculated by SGS reflects estimated “long-term discouraged workers”, which the U.S. government stopped keeping track of back in 1994….
3 – The number of Americans working part-time jobs “for economic reasons” is now the highest it has been in at least five decades.
4 – 15.8% of Americans between the ages of 18 and 29 were unemployed during the month of September.
5 – Agricultural commodities continued to move higher on Friday. Wheat, corn and soybeans all saw their prices soar. Unfortunately for American consumers, this is part of a broader trend of rising agricultural commodity prices. As this continues, it is inevitable that we will all be seeing much higher food prices at our local grocery stores.
6 – It is being reported that PNC Financial Services Group has suspended the sale of foreclosed homes for the next thirty days. This is the fourth major lender to take dramatic action recently. Will nearly all U.S. mortgage lenders eventually be caught up in this crisis before it is over?
7 – Bank of America announced on Friday that it is now going to suspend sales of foreclosed homes in all 50 U.S. states as it continues to evaluate internal foreclosure procedures. This “foreclosure crisis” threatens to decimate the entire U.S. real estate industry. What has happened is that millions of U.S. mortgages were sold and resold around the globe at lightning speed and the chain of ownership for many of these mortgages become muddied. In addition, it is starting to emerge that many of these lenders used fraudulent loan documents during foreclosure proceedings and company officials often used “robo-signers” to sign important foreclosure documents. So now mortgage lenders, title insurers and those buying or selling foreclosed homes will be facing years of gridlock and chaos as foreclosure-related lawsuits multiply exponentially. All of this is going to have a dramatic effect on the U.S. real estate market. In fact, it is being reported that U.S. home sales are already starting to be affected by this crisis.
8 – The U.S. National debt just keep growing. If you took the national debt and divided it up among all Americans, each American (including children) would owe approximately $42,000. So, for an average family of four, their share of the national debt would be $168,000.
9 – Interest payments on the U.S. national debt increased 13% in the fiscal year that ended September 30th. If interest payments continue to increase that rapidly each year they will bankrupt the U.S. government very quickly.
10 – It appears that some weird games are being played with the national debt numbers. Back on September 29th, the U.S. national debt was 13.466 trillion dollars. On September 30th, the U.S. national debt soared to 13.561 trillion dollars. Then on October 1st, the beginning of the new fiscal year for the federal government, the U.S. national debt jumped up to 13.610 trillion dollars. So how in the world does the U.S. national debt jump by a whopping 144 billion dollars in just two days? Somebody has some explaining to do for this kind of accounting.
The United States was once the wealthiest nation by far on the entire planet.
But now we are in such a rapid decline that it is hard for most Americans to even comprehend it.
We are like that one couple that almost every neighborhood seems to have that has two shiny new cars in their driveway, that dresses in designer clothes and that seems to have plenty of money to take vacations and yet is in debt up to their eyeballs.
The truth is that the United States keeps getting poorer every single month. The term “trade deficit” is not very sexy, but it is critically important to understand if you want to comprehend what is happening to the U.S. economy. Every month tens of billions of dollars more wealth goes out of the United States than comes into it. We are continually getting poorer.
To cover up our declining national wealth, we have gone into staggering amounts of debt. We have maintained our lavish standard of living by piling up staggering amounts of debt on the national, corporate and consumer levels.
The sad reality is that the U.S. government is not the wealthiest government in the world any longer. Rather, it is the government that is the most in debt. The U.S. national debt is the biggest debt that the world has ever seen, and it grows larger every single day.
We can’t keep up this charade forever. At some point it is going to stop.
When this house of cards does come tumbling down, do you think that the American people are going to be pleased to learn that our leaders have squandered our once great wealth and have destroyed the greatest economic machine that the world has ever known?
This article was posted: Saturday, October 9, 2010 at 2:47 am