First National Bank of Montgomery vs. Daly (1969) was a courtroom drama worthy of a movie script.3 Defendant Jerome Daly opposed the bank's foreclosure on his $14,000 home mortgage loan on the ground that there was no consideration for the loan. "Consideration" ("the thing exchanged") is an essential element of a contract. Daly, an attorney representing himself, argued that the bank had put up no real money for his loan. The courtroom proceedings were recorded by Associate Justice Bill Drexler, whose chief role, he said, was to keep order in a highly charged courtroom where the attorneys were threatening a fist fight. Drexler hadn't given much credence to the theory of the defense, until Mr. Morgan, the bank's president, took the stand. To everyone's surprise, Morgan admitted that the bank routinely created money "out of thin air" for its loans, and that this was standard banking practice. "It sounds like fraud to me," intoned Presiding Justice Martin Mahoney amid nods from the jurors. In his court memorandum, Justice Mahoney stated:
Plaintiff admitted that it, in combination with the Federal Reserve Bank of Minneapolis, . . . did create the entire $14,000.00 in money and credit upon its own books by bookkeeping entry. That this was the consideration used to support the Note dated May 8, 1964 and the Mortgage of the same date. The money and credit first came into existence when they created it. Mr. Morgan admitted that no United States Law or Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the Note.
The court rejected the bank's claim for foreclosure, and the defendant kept his house. To Daly, the implications were enormous. If bankers were indeed extending credit without consideration – without backing their loans with money they actually had in their vaults and were entitled to lend – a decision declaring their loans void could topple the power base of the world. He wrote in a local news article:
This decision, which is legally sound, has the effect of declaring all private mortgages on real and personal property, and all U.S. and State bonds held by the Federal Reserve, National and State banks to be null and void. This amounts to an emancipation of this Nation from personal, national and state debt purportedly owed to this banking system. Every American owes it to himself . . . to study this decision very carefully . . . for upon it hangs the question of freedom or slavery.
Needless to say, however, the decision failed to change prevailing practice, although it was never overruled. It was heard in a Justice of the Peace Court, an autonomous court system dating back to those frontier days when defendants had trouble traveling to big cities to respond to summonses. In that system (which has now been phased out), judges and courts were pretty much on their own. Justice Mahoney, who was not dependent on campaign financing or hamstrung by precedent, went so far as to threaten to prosecute and expose the bank. He died less than six months after the trial, in a mysterious accident that appeared to involve poisoning
Sunday, August 22, 2010
Wednesday, August 18, 2010
Deflation and You: A Guide to Understanding this Peculiar Economic Model
http://theautomaticearth.blogspot.com/2010/08/august-16-2010-deflation-and-you-acting.html
Aaron Wissner:
Deflation and You: A Guide to Understanding this Peculiar Economic Model
I just wanted to share a little bit about deflation. Deflation is when the combined amount of money and credit in an economic system is shrinking, and the velocity of money is stagnant or drops.
Once deflation begins, it is self reinforcing. To see how this works, first think of your own recent spending decisions.
If you are like me, your spending behavior and patterns have probably changed quite a bit since the housing bubble started to bust, and especially since the Dow Jones Industrial Average hit its all time high on October 11, 2007 and then started its wild ride down.
Before you begin to think about your spending behavior, though, one thing must be understood: Money is created by people when they take out loans. People offer up an asset or a promise, which the bank takes and files, and then the bank simply increases the number in their account. That is all there is to it. This might be hard to accept at first, but this is simply how it works in this economic model.
The amount of coins and dollar bills in the economy are a very, very small fraction of the total amount of money out there. Most of what we see as "money" is actually bank credit, which is created when people go to banks, are approved for a loan, and then spend that "money". If you imagine all those loans, all of them in the country, all at once, that is basically the money supply.
Behind each "dollar" (or bank credit) in a bank account, there is a loan document somewhere that was used to bring that "dollar" (or bank credit) into existence. If the size of all of those loans, let's just call this the "public debt" for simplicity, if that starts to shrink, for whatever reason, then that means there is less money in the economy. Less money to spend. Less money to earn.
At the moment, the money supply is shrinking because people are behaving perfectly sensibly. They see what is going on with the rising unemployment rate, the falling housing prices, the unstable stock market, the inability of the government to fix it, and the bad economic news that comes out on the TV, the radio, the internet, and in print.
What does a reasonable person do?
How have your thoughts for the future changed since October 2007? Think about that for a moment or two. Then, allow me to examine the top ten ways that I have changed my spending, and my thinking about what things constitute "money".
1. I don't think my house is a source of money anymore.
I used to think my house would increase in value, and that I was getting rich by just sitting on it, and that I could take out a huge home equity loan, and buy whatever I wanted.
Today, I think that if I'd take out the "Home Equity Line Of Credit" I've been approved for, I would not be able to sell my house for that amount, which is to say, I'd be stuck in my house, unable to sell, with no money. In fact, I don't want to take any money, not even a penny, out on this "HELOC".
True story: We were looking to buy a little summer cottage, and so we got this HELOC all set up, and we could have bought the place twice over using that HELOC, but I thought to myself, no way, I'm not doing it, I'm not going to put myself in debt, especially if the job market gets worse, and my wife, or I, or both of us, could lose our jobs. No, I'm not using that HELOC, and I convinced my wife that we shouldn't use it.
We weren't willing to bid much on the house, since we were only willing to buy it with money out of our current savings, and so it sold for even LESS than we would have bid, less than if we had been confident about the future.
2. I don't think that buying a house is a good idea.
I used to think that I could buy a second house, fix it up, use it, and then sell it for a tidy profit. Hey, yo, let's "flip that house".
Since 2006, I've seen that home prices were going down. And they just keep going down, relentlessly. Why would I buy until I was confident that prices were moving up? How many months of rising home prices would that take? Six months? A year? Why would I buy when there was a good chance that it would be worth less in the future? Why not wait?
And wait we did. We were looking for a second house, that summer home, for two years now, but the housing prices keep going down. Why would we buy?
In looking over the place we were going to buy this summer, we figured up the various monthly and yearly expenses, including taxes, and realized that we were going to be paying $4,000 per year, every year, at a minimum, just to have it.
Why not just rent some place for the week or two that my wife can take off in the summer, and stay at the parents’ house for the few weekends that we might visit?
Why saddle ourselves with another $4,000 annual obligation when the job market is looking worse and worse? We have enough bills as it is, plus two preschoolers to take care of.
No, buying a house is not a good idea, and buying a second house is really not a good idea.
3. I don't think I'll be getting any raises in the future.
It used to be that I'd get a 3%, or a 2%, or even a 1% raise to the top step of the salary schedule at the school where I teach.
This year, in negotiating a "master agreement" with the Board of Education, it took us over a year just to get our wages figured out for the year. That was a year beyond the end of our previous agreement. Our negotiating team had to fight tooth-and-nail to get a compensation package that wasn't all that much worse than previous years.
Then the state came and decided that since our state pension fund had lost billions since October 2007, and since the state was broke, that we needed to contribute more towards the pension that we had already been guaranteed, in a special teacher tax. The government showed that it could, in the swipe of a pen, decrease my salary, and our local negotiations really meant nothing.
I will be bringing home less this year, and the state is likely to try to cut salaries again, as it becomes clear that the budget is getting worse.
If I don't think I'll be getting any raises in the future, I'm certainly not going to spend like I'm expecting a raise, in fact, I started saving up, because we will need a cushion in hard times.
4. I don't see my pension fund, or my social security, as money.
A number of years ago, I was so excited about my state pension, that I "bought" five additional years of service credit, and sent the State thousands of dollars, so that I could either retire earlier, or have a bigger monthly retirement check. This was on top of the thousands that my school district already was sending back each month into "my" pension account.
Now, with all the news coming out about how all of the states are broke, and the pensions are underfunded, I don't think that any of "my" pension money will be there when I'm old enough to retire.
It's not "my" money anymore. I gave it to the State. It is gone. And I will probably never get it back.
So, I'm going to have to save for retirement myself, and not in a pension fund.
By the same token, with all the news about the national debt, and social security no longer paying for itself, I don't think that money will be there either.
The reports showing that most young people don't expect it to be there, well, that just confirms to me that it probably won't.
So, I'll need to start saving up more, on my own.
5. I don't see my 403(b), mutual funds, or stocks as money anymore.
At one time, we went to a "financial advisor" and agreed to set up a 403(b) investing in mutual funds. We believed that this was basically a sure thing, and sure, there might be dips and bumps, but it was definitely, DEFINITELY, better than keeping our money in a credit union savings account.
But, with the stock markets crashing over 50% from October 2007 to March 2008, I don't have any faith that my 403(b), or my wife's large 401(k), which she automatically contributes to each pay period, will be worth anything.
I don't even know how, or if, she could get out. Can she sell? I don't know.
If the market crashes, it may never recover, and most or all of that "value" will be gone.
So, we do not have that money for retirement either. Here, we have yet another incentive to save.
6. I don't think the banks are safe anymore.
I used to think that they were great places to put money, to save up, and at one point we had over a year's salary in our bank account. I suppose I thought that because I'd opened a passbook savings account when I was about 5 years old, and was always taught to save up for a rainy day.
Now, I see that the banks are being bailed out left and right, and that they are paying their employees huge salaries for doing nothing but draining money from the person on the street.
Lehman's failed. AIG failed. Northern Rock failed. Fannie and Freddie failed. And -most of- the rest are dead-men walking, "zombie" banks.
If any bank tried to sell all of its assets today, or even over the next month, or even the next year, (in the open market, that is), it would get far less cash back than what it owes to its depositors.
The banks are "insolvent". They are bank-rupt. But the government keeps on trying to "help them". Plus, more banks fail every single week. Here is the list.
When a local bank failed a few weeks ago, a bank which was flagged as "in trouble" on BankRate.com, and one that I had used as an example of a bank that would fail, well, when it failed, I FELT the failure.
Add to that the fact that the FDIC has used all of its money and is itself broke and is now relying on the government so that it can prevent a bank run.
And still more: I've learned that most banks only have as much actual cash as what is in the ATM machines and in the cash drawers. There are no piles of cash in the vaults.
Maybe, MAYBE, there is enough for a week or so of typical withdrawals, based on what they know people tend to take out in cash each week. But that amount is a tiny fraction, well less than 10%, of what the depositors believe to be in their accounts.
Finally, I've learned that depositors like us can only take out a certain amount of cash in a given day. At my credit union, the limit is $10,000 cash a day. At a smaller local credit union, the limit is $600 per day. If I had a lot of money "in the bank", I would not be able to get it out all at once.
All of these facts about banks combine to make me think that my deposits are not safe, and are not money in the same way as I used to think of them.
Obviously, I still think it is slightly safer, or more convenient, to have "money" in the bank, but only barely so. If I could figure out a way to save that money myself, and keep it safe from theft or fire, then I would only have as much in the bank as was necessary for paying bills.
7. I don't think of my gold coins as money anymore.
I used to think, when their prices were going up, that gold coins were so great, and a great investment. In fact, I bought in 2005, and now in 2010, those few coins have more than doubled in "value". There are websites galore that say "Buy Gold", and signs in shop windows that say "We Buy Gold", and everyone seems to think that "gold is REAL money".
But I've very recently realized that if there were a banking system failure, and people only had cash and gold coins to use as money, that the value of those coins would drop like a stone, because all the people that end up running out of cash would then be pulling out their coins to use as money, and this would happen all at once. The value of the coins would fall rapidly as they flooded the market, and my "doubling of value" would end up being "took a bath".
Interestingly, the American Gold Eagle 1-ounce coins do have a $50 mark on them. Perhaps they will not fall in value below that. That is some cold comfort with gold selling for over $1,200 per ounce right now.
The fact that I have them in the bank, and the bank could close at any minute, makes me less and less confident that I could use them as money. Also, the last time there was a major crash in the markets, back in 1929, the President of USA ordered all the safe-deposit boxes sealed, and all the gold coins confiscated and sold for a rate that the Government selected (See Executive Order 6102).
8. I don't think of our personal possessions as money.
I used to count the cars, the appliances, the electronics, the furnishings, the lawn tractor, even my clothes, as money. I could put them up for sale, and get a decent price, especially for the cars. In fact, I vaguely remember making a spreadsheet on the computer, listing all these sorts of things as part of my "net worth".
Now, everyone is starting to look broke.
There are tons of used cars on the market.
People only want things for free off FreeCycle or Craigslist.
My DVD collection isn't work $20 per DVD, like I used to figure. The video store chain in my area went out of business, and those same DVD's wouldn't even sell for $5.
I've been to some garage sales this year, and second hand stores, and arts and craft shows, and flee markets, and I start to recognize that most of this stuff is literally value-less, despite what it might have sold for in the past.
My personal possessions are no longer money.
9. I don't think I'll get any inheritance anymore.
For a couple of years, I received an "inheritance" check from my grandmother. Her stocks were doing well. Her house was increasing in value. She was healthy and happy. And this could have continued; I expected that, and I think my family did as well.
Now, my grandmother is in the medical care facility which costs thousands of dollars per month. The stocks had to be sold, and they had lost lots of value before that.
My grandmother's house has now been vacant for years, and the most recent attempt to sell it, for a new lower price, fell through.
I won't be getting any more checks. In fact, my wife and I have talked about saving up some money for my grandmother, in the case that she completely runs out, because her diminishing cash reserves are going fast.
And while I know that my parents are healthy and will live for another twenty or more years, I no longer see their house as increasing in value until then.
No, the values of homes are falling everywhere, and unlikely to even return to those 2006 levels. Historically, some housing bubbles have been so big that it has taken hundreds of years to return to the same level.
So, no "inheritance", which means even less money in the future.
10. I'm not spending money.
A while back, my wife and I made a nice long list of home improvements, trips we'd like to take, things we'd like to buy, and painted some pictures in the air of a fancy-dancy future: a new barn, a new carpet, a new hardwood floor, a new addition, a new fireplace, etc.
We aren't spending on those things because we think we need to have some extra money saved up, in the event that one or both of us lose our jobs, as we would need if for food, health care, taxes, and all those other bills.
We are saving. We are not spending, not really.
Everyone Is Doing It
If this story resonates with you, it is because parts of it resonate with all of us. We are the ones who have the capacity to spend, and yet, we save instead. We could increase the money supply by signing up for loans, and buying things, but we are not.
We are doing what anyone would do. The prudent thing. The logical thing. The responsible thing. The sensible thing.
But we are all doing this at the same time, including all of the businesses, and that is causing the money supply to shrink, day after day, and each new day makes us want to save more, and each new day we feel more that we need to get out, or stay out, or debt.
All of that money we are saving, those of us lucky enough to be able to save, that money goes into the banks, the same banks that are insolvent, and they can't get rid of it, because no one who is sensible will borrow it. They won't touch it with a 10-foot pole.
The banks -which are insolvent, with less in assets than they owe in deposits-, when they get in money, they have to find something to do with it, so they buy Treasury bonds, which "earn" the banks interest, and which are very safe bets. Contrast this with the choice of offering up subprime loans, or alt-A loans, or jumbo loans, or any of those. They aren't stupid. They know that they might not be able to sell those things anymore. They know those mortgages would be risky at best. They do the prudent thing and raise lending standards, and look elsewhere for profits.
"Go Out and Spend"
Savings in a bank, just like savings under the bed, are not being used to buy things, so it is as if that money did not exist. It has the potential to be money, but if it is not spent, then it can not be earned by someone else.
This lack of spending is slowing down the speed (velocity) at which money moves in the economy. It is the same as if there were actually less money.
Right now, both things are happening at once. The money supply, or credit supply, is shrinking because few loans are being created, and consequently, that money is not being used to purchase things AND the "velocity of money" is slowing because people are not spending at the rate that they once did.
Now, these two are really the same thing, what we're talking about is how much you are buying this year, as compared to, say, 2006. And not just you, of course, but everyone. And we're not just looking at "net income" paycheck money here, no, we're also looking at how much you, and me, and other people, are spending out of credit sources... whether they are increasing their debt load to buy things, like in 2006, or decreasing their debt load by paying off that debt, and not spending, like now.
Most important to this is that so many people continue to pay down the principle on their mortgages, while very few new mortgages are being created to make up the difference. The money goes into the banks, and never comes out.
As mortgages are paid down, the mortgage documents, also known as promissory notes, become worth less; their value as an asset is less.
An example: image that a person pays off $500 in principal on their mortgage. Now, that mortgage document is worth $500 less than the day before. If no one takes out a loan of at least $500 to replace that, then this $500 is gone from the money supply.
Remember that it is the total value of all the mortgages, the public debt, that determines the money supply.
As everyone is "getting out of debt", the money supply is shrinking.
Money is literally debt, in this peculiar economic model at least.
And as we all engage in this very, very, sensible, reasonable, logical paying down of debt, preparing for tough times, so too does everyone else, which means that people are spending less, so businesses are earning less, and then they have less to pay employees, and then those employees are either laid off, or their hours or wages are cut, so they can spend less, and then we see the unemployment report on the TV, and we all tighten our belt one more notch, and then we save a bit more, and we spend a bit less, and the businesses...
This is a vicious cycle which is self reinforcing. It is a positive feedback mechanism.
There is not a single thing that the political candidates, or the bank presidents, or the Federal Reserve chairman, or the Treasury secretary, or the President of the USA can do to make us stop acting sensibly.
What is deflation?
It is being sensible, all at once.
Aaron Wissner:
Deflation and You: A Guide to Understanding this Peculiar Economic Model
I just wanted to share a little bit about deflation. Deflation is when the combined amount of money and credit in an economic system is shrinking, and the velocity of money is stagnant or drops.
Once deflation begins, it is self reinforcing. To see how this works, first think of your own recent spending decisions.
If you are like me, your spending behavior and patterns have probably changed quite a bit since the housing bubble started to bust, and especially since the Dow Jones Industrial Average hit its all time high on October 11, 2007 and then started its wild ride down.
Before you begin to think about your spending behavior, though, one thing must be understood: Money is created by people when they take out loans. People offer up an asset or a promise, which the bank takes and files, and then the bank simply increases the number in their account. That is all there is to it. This might be hard to accept at first, but this is simply how it works in this economic model.
The amount of coins and dollar bills in the economy are a very, very small fraction of the total amount of money out there. Most of what we see as "money" is actually bank credit, which is created when people go to banks, are approved for a loan, and then spend that "money". If you imagine all those loans, all of them in the country, all at once, that is basically the money supply.
Behind each "dollar" (or bank credit) in a bank account, there is a loan document somewhere that was used to bring that "dollar" (or bank credit) into existence. If the size of all of those loans, let's just call this the "public debt" for simplicity, if that starts to shrink, for whatever reason, then that means there is less money in the economy. Less money to spend. Less money to earn.
At the moment, the money supply is shrinking because people are behaving perfectly sensibly. They see what is going on with the rising unemployment rate, the falling housing prices, the unstable stock market, the inability of the government to fix it, and the bad economic news that comes out on the TV, the radio, the internet, and in print.
What does a reasonable person do?
How have your thoughts for the future changed since October 2007? Think about that for a moment or two. Then, allow me to examine the top ten ways that I have changed my spending, and my thinking about what things constitute "money".
1. I don't think my house is a source of money anymore.
I used to think my house would increase in value, and that I was getting rich by just sitting on it, and that I could take out a huge home equity loan, and buy whatever I wanted.
Today, I think that if I'd take out the "Home Equity Line Of Credit" I've been approved for, I would not be able to sell my house for that amount, which is to say, I'd be stuck in my house, unable to sell, with no money. In fact, I don't want to take any money, not even a penny, out on this "HELOC".
True story: We were looking to buy a little summer cottage, and so we got this HELOC all set up, and we could have bought the place twice over using that HELOC, but I thought to myself, no way, I'm not doing it, I'm not going to put myself in debt, especially if the job market gets worse, and my wife, or I, or both of us, could lose our jobs. No, I'm not using that HELOC, and I convinced my wife that we shouldn't use it.
We weren't willing to bid much on the house, since we were only willing to buy it with money out of our current savings, and so it sold for even LESS than we would have bid, less than if we had been confident about the future.
2. I don't think that buying a house is a good idea.
I used to think that I could buy a second house, fix it up, use it, and then sell it for a tidy profit. Hey, yo, let's "flip that house".
Since 2006, I've seen that home prices were going down. And they just keep going down, relentlessly. Why would I buy until I was confident that prices were moving up? How many months of rising home prices would that take? Six months? A year? Why would I buy when there was a good chance that it would be worth less in the future? Why not wait?
And wait we did. We were looking for a second house, that summer home, for two years now, but the housing prices keep going down. Why would we buy?
In looking over the place we were going to buy this summer, we figured up the various monthly and yearly expenses, including taxes, and realized that we were going to be paying $4,000 per year, every year, at a minimum, just to have it.
Why not just rent some place for the week or two that my wife can take off in the summer, and stay at the parents’ house for the few weekends that we might visit?
Why saddle ourselves with another $4,000 annual obligation when the job market is looking worse and worse? We have enough bills as it is, plus two preschoolers to take care of.
No, buying a house is not a good idea, and buying a second house is really not a good idea.
3. I don't think I'll be getting any raises in the future.
It used to be that I'd get a 3%, or a 2%, or even a 1% raise to the top step of the salary schedule at the school where I teach.
This year, in negotiating a "master agreement" with the Board of Education, it took us over a year just to get our wages figured out for the year. That was a year beyond the end of our previous agreement. Our negotiating team had to fight tooth-and-nail to get a compensation package that wasn't all that much worse than previous years.
Then the state came and decided that since our state pension fund had lost billions since October 2007, and since the state was broke, that we needed to contribute more towards the pension that we had already been guaranteed, in a special teacher tax. The government showed that it could, in the swipe of a pen, decrease my salary, and our local negotiations really meant nothing.
I will be bringing home less this year, and the state is likely to try to cut salaries again, as it becomes clear that the budget is getting worse.
If I don't think I'll be getting any raises in the future, I'm certainly not going to spend like I'm expecting a raise, in fact, I started saving up, because we will need a cushion in hard times.
4. I don't see my pension fund, or my social security, as money.
A number of years ago, I was so excited about my state pension, that I "bought" five additional years of service credit, and sent the State thousands of dollars, so that I could either retire earlier, or have a bigger monthly retirement check. This was on top of the thousands that my school district already was sending back each month into "my" pension account.
Now, with all the news coming out about how all of the states are broke, and the pensions are underfunded, I don't think that any of "my" pension money will be there when I'm old enough to retire.
It's not "my" money anymore. I gave it to the State. It is gone. And I will probably never get it back.
So, I'm going to have to save for retirement myself, and not in a pension fund.
By the same token, with all the news about the national debt, and social security no longer paying for itself, I don't think that money will be there either.
The reports showing that most young people don't expect it to be there, well, that just confirms to me that it probably won't.
So, I'll need to start saving up more, on my own.
5. I don't see my 403(b), mutual funds, or stocks as money anymore.
At one time, we went to a "financial advisor" and agreed to set up a 403(b) investing in mutual funds. We believed that this was basically a sure thing, and sure, there might be dips and bumps, but it was definitely, DEFINITELY, better than keeping our money in a credit union savings account.
But, with the stock markets crashing over 50% from October 2007 to March 2008, I don't have any faith that my 403(b), or my wife's large 401(k), which she automatically contributes to each pay period, will be worth anything.
I don't even know how, or if, she could get out. Can she sell? I don't know.
If the market crashes, it may never recover, and most or all of that "value" will be gone.
So, we do not have that money for retirement either. Here, we have yet another incentive to save.
6. I don't think the banks are safe anymore.
I used to think that they were great places to put money, to save up, and at one point we had over a year's salary in our bank account. I suppose I thought that because I'd opened a passbook savings account when I was about 5 years old, and was always taught to save up for a rainy day.
Now, I see that the banks are being bailed out left and right, and that they are paying their employees huge salaries for doing nothing but draining money from the person on the street.
Lehman's failed. AIG failed. Northern Rock failed. Fannie and Freddie failed. And -most of- the rest are dead-men walking, "zombie" banks.
If any bank tried to sell all of its assets today, or even over the next month, or even the next year, (in the open market, that is), it would get far less cash back than what it owes to its depositors.
The banks are "insolvent". They are bank-rupt. But the government keeps on trying to "help them". Plus, more banks fail every single week. Here is the list.
When a local bank failed a few weeks ago, a bank which was flagged as "in trouble" on BankRate.com, and one that I had used as an example of a bank that would fail, well, when it failed, I FELT the failure.
Add to that the fact that the FDIC has used all of its money and is itself broke and is now relying on the government so that it can prevent a bank run.
And still more: I've learned that most banks only have as much actual cash as what is in the ATM machines and in the cash drawers. There are no piles of cash in the vaults.
Maybe, MAYBE, there is enough for a week or so of typical withdrawals, based on what they know people tend to take out in cash each week. But that amount is a tiny fraction, well less than 10%, of what the depositors believe to be in their accounts.
Finally, I've learned that depositors like us can only take out a certain amount of cash in a given day. At my credit union, the limit is $10,000 cash a day. At a smaller local credit union, the limit is $600 per day. If I had a lot of money "in the bank", I would not be able to get it out all at once.
All of these facts about banks combine to make me think that my deposits are not safe, and are not money in the same way as I used to think of them.
Obviously, I still think it is slightly safer, or more convenient, to have "money" in the bank, but only barely so. If I could figure out a way to save that money myself, and keep it safe from theft or fire, then I would only have as much in the bank as was necessary for paying bills.
7. I don't think of my gold coins as money anymore.
I used to think, when their prices were going up, that gold coins were so great, and a great investment. In fact, I bought in 2005, and now in 2010, those few coins have more than doubled in "value". There are websites galore that say "Buy Gold", and signs in shop windows that say "We Buy Gold", and everyone seems to think that "gold is REAL money".
But I've very recently realized that if there were a banking system failure, and people only had cash and gold coins to use as money, that the value of those coins would drop like a stone, because all the people that end up running out of cash would then be pulling out their coins to use as money, and this would happen all at once. The value of the coins would fall rapidly as they flooded the market, and my "doubling of value" would end up being "took a bath".
Interestingly, the American Gold Eagle 1-ounce coins do have a $50 mark on them. Perhaps they will not fall in value below that. That is some cold comfort with gold selling for over $1,200 per ounce right now.
The fact that I have them in the bank, and the bank could close at any minute, makes me less and less confident that I could use them as money. Also, the last time there was a major crash in the markets, back in 1929, the President of USA ordered all the safe-deposit boxes sealed, and all the gold coins confiscated and sold for a rate that the Government selected (See Executive Order 6102).
8. I don't think of our personal possessions as money.
I used to count the cars, the appliances, the electronics, the furnishings, the lawn tractor, even my clothes, as money. I could put them up for sale, and get a decent price, especially for the cars. In fact, I vaguely remember making a spreadsheet on the computer, listing all these sorts of things as part of my "net worth".
Now, everyone is starting to look broke.
There are tons of used cars on the market.
People only want things for free off FreeCycle or Craigslist.
My DVD collection isn't work $20 per DVD, like I used to figure. The video store chain in my area went out of business, and those same DVD's wouldn't even sell for $5.
I've been to some garage sales this year, and second hand stores, and arts and craft shows, and flee markets, and I start to recognize that most of this stuff is literally value-less, despite what it might have sold for in the past.
My personal possessions are no longer money.
9. I don't think I'll get any inheritance anymore.
For a couple of years, I received an "inheritance" check from my grandmother. Her stocks were doing well. Her house was increasing in value. She was healthy and happy. And this could have continued; I expected that, and I think my family did as well.
Now, my grandmother is in the medical care facility which costs thousands of dollars per month. The stocks had to be sold, and they had lost lots of value before that.
My grandmother's house has now been vacant for years, and the most recent attempt to sell it, for a new lower price, fell through.
I won't be getting any more checks. In fact, my wife and I have talked about saving up some money for my grandmother, in the case that she completely runs out, because her diminishing cash reserves are going fast.
And while I know that my parents are healthy and will live for another twenty or more years, I no longer see their house as increasing in value until then.
No, the values of homes are falling everywhere, and unlikely to even return to those 2006 levels. Historically, some housing bubbles have been so big that it has taken hundreds of years to return to the same level.
So, no "inheritance", which means even less money in the future.
10. I'm not spending money.
A while back, my wife and I made a nice long list of home improvements, trips we'd like to take, things we'd like to buy, and painted some pictures in the air of a fancy-dancy future: a new barn, a new carpet, a new hardwood floor, a new addition, a new fireplace, etc.
We aren't spending on those things because we think we need to have some extra money saved up, in the event that one or both of us lose our jobs, as we would need if for food, health care, taxes, and all those other bills.
We are saving. We are not spending, not really.
Everyone Is Doing It
If this story resonates with you, it is because parts of it resonate with all of us. We are the ones who have the capacity to spend, and yet, we save instead. We could increase the money supply by signing up for loans, and buying things, but we are not.
We are doing what anyone would do. The prudent thing. The logical thing. The responsible thing. The sensible thing.
But we are all doing this at the same time, including all of the businesses, and that is causing the money supply to shrink, day after day, and each new day makes us want to save more, and each new day we feel more that we need to get out, or stay out, or debt.
All of that money we are saving, those of us lucky enough to be able to save, that money goes into the banks, the same banks that are insolvent, and they can't get rid of it, because no one who is sensible will borrow it. They won't touch it with a 10-foot pole.
The banks -which are insolvent, with less in assets than they owe in deposits-, when they get in money, they have to find something to do with it, so they buy Treasury bonds, which "earn" the banks interest, and which are very safe bets. Contrast this with the choice of offering up subprime loans, or alt-A loans, or jumbo loans, or any of those. They aren't stupid. They know that they might not be able to sell those things anymore. They know those mortgages would be risky at best. They do the prudent thing and raise lending standards, and look elsewhere for profits.
"Go Out and Spend"
Savings in a bank, just like savings under the bed, are not being used to buy things, so it is as if that money did not exist. It has the potential to be money, but if it is not spent, then it can not be earned by someone else.
This lack of spending is slowing down the speed (velocity) at which money moves in the economy. It is the same as if there were actually less money.
Right now, both things are happening at once. The money supply, or credit supply, is shrinking because few loans are being created, and consequently, that money is not being used to purchase things AND the "velocity of money" is slowing because people are not spending at the rate that they once did.
Now, these two are really the same thing, what we're talking about is how much you are buying this year, as compared to, say, 2006. And not just you, of course, but everyone. And we're not just looking at "net income" paycheck money here, no, we're also looking at how much you, and me, and other people, are spending out of credit sources... whether they are increasing their debt load to buy things, like in 2006, or decreasing their debt load by paying off that debt, and not spending, like now.
Most important to this is that so many people continue to pay down the principle on their mortgages, while very few new mortgages are being created to make up the difference. The money goes into the banks, and never comes out.
As mortgages are paid down, the mortgage documents, also known as promissory notes, become worth less; their value as an asset is less.
An example: image that a person pays off $500 in principal on their mortgage. Now, that mortgage document is worth $500 less than the day before. If no one takes out a loan of at least $500 to replace that, then this $500 is gone from the money supply.
Remember that it is the total value of all the mortgages, the public debt, that determines the money supply.
As everyone is "getting out of debt", the money supply is shrinking.
Money is literally debt, in this peculiar economic model at least.
And as we all engage in this very, very, sensible, reasonable, logical paying down of debt, preparing for tough times, so too does everyone else, which means that people are spending less, so businesses are earning less, and then they have less to pay employees, and then those employees are either laid off, or their hours or wages are cut, so they can spend less, and then we see the unemployment report on the TV, and we all tighten our belt one more notch, and then we save a bit more, and we spend a bit less, and the businesses...
This is a vicious cycle which is self reinforcing. It is a positive feedback mechanism.
There is not a single thing that the political candidates, or the bank presidents, or the Federal Reserve chairman, or the Treasury secretary, or the President of the USA can do to make us stop acting sensibly.
What is deflation?
It is being sensible, all at once.
Wednesday, July 28, 2010
Whats a prepper?
Many that have realized the mess we are in are asking, what do i do now? While i do not offer financial advice, I can tell you how i would prepare. This is a lifestyle change, and some may not agree with it, but we have to break free from the system that is killing us. All of my advice in regards to being prepared for any crisis is going to be good for you even if no crisis ever comes about(thrown in for any sheep reading).
Your first thought should be about plans, where do you live? city/suburb or country? Are you staying in your small community fighting off the hordes of hungry or are you bugging out? To the woods, that cabin you built, family or friends farms,etc?
Where ever you end up, your going to need to be stocked up on some items. We all need certain things to live, water and food come to mind first of course.
If a crisis happens, how can your family have clean drinking water? How much food do you have put away, and how many ways can you cook it(electric stove may not have power).
How will you defend what you have saved? All these questions need anwsered and you need to prepare now, not tomarrow. Imagine how much better you will feel with a years worth of food and different ways to cook them if you lose your job.
Do you know how to grow your own food and save it for the winter? You need to learn these skills now before your forced too.
There was a write up in the american thinker that should help you understand some of the problems we are facing today.
http://www.americanthinker.com/2010/07/repent_the_end_is_near.html
Then when you realize that things are not like they should be, read this write up by Chris martenson about being prepared.
http://www.chrismartenson.com/blog/what-should-i-do-part-i/42449
Your first thought should be about plans, where do you live? city/suburb or country? Are you staying in your small community fighting off the hordes of hungry or are you bugging out? To the woods, that cabin you built, family or friends farms,etc?
Where ever you end up, your going to need to be stocked up on some items. We all need certain things to live, water and food come to mind first of course.
If a crisis happens, how can your family have clean drinking water? How much food do you have put away, and how many ways can you cook it(electric stove may not have power).
How will you defend what you have saved? All these questions need anwsered and you need to prepare now, not tomarrow. Imagine how much better you will feel with a years worth of food and different ways to cook them if you lose your job.
Do you know how to grow your own food and save it for the winter? You need to learn these skills now before your forced too.
There was a write up in the american thinker that should help you understand some of the problems we are facing today.
http://www.americanthinker.com/2010/07/repent_the_end_is_near.html
Then when you realize that things are not like they should be, read this write up by Chris martenson about being prepared.
http://www.chrismartenson.com/blog/what-should-i-do-part-i/42449
Thursday, July 15, 2010
More of what is to come friends.
http://www.nbcbayarea.com/news/local-beat/Suffer-These-Crimes-in-Oakland-Dont-Call-the-Cops-98266509.html[/url]
Oakland PD has said it will no longer dispatch officers for certain crimes due to layoffs.
Here's a partial list:
* burglary
* theft
* embezzlement
* grand theft
* grand theft:dog
* identity theft
* false information to peace officer
* required to register as sex or arson offender
* dump waste or offensive matter
* discard appliance with lock
* loud music
* possess forged notes
* pass fictitious check
* obtain money by false voucher
* fraudulent use of access cards
* stolen license plate
* embezzlement by an employee (over $ 400)
* extortion
* attempted extortion
* false personification of other
* injure telephone/ power line
* interfere with power line
* unauthorized cable tv connection
* vandalism
* administer/expose poison to another's
Oakland PD has said it will no longer dispatch officers for certain crimes due to layoffs.
Here's a partial list:
* burglary
* theft
* embezzlement
* grand theft
* grand theft:dog
* identity theft
* false information to peace officer
* required to register as sex or arson offender
* dump waste or offensive matter
* discard appliance with lock
* loud music
* possess forged notes
* pass fictitious check
* obtain money by false voucher
* fraudulent use of access cards
* stolen license plate
* embezzlement by an employee (over $ 400)
* extortion
* attempted extortion
* false personification of other
* injure telephone/ power line
* interfere with power line
* unauthorized cable tv connection
* vandalism
* administer/expose poison to another's
Wednesday, July 14, 2010
Will people even realize what this report means to them?
http://www.npr.org/templates/story/story.php?storyId=128490874
Whats interesting about todays post is that, this is something i have come up with before in my past research, and have even spoke of this in my past blog posts. The problem people seem to have with understanding the world around them is what they "know" 100% for a fact.
It's these beliefs and belief systems that in fact shut down our ability to think clearly. Preconcieved notions are known to be one of the biggest learning blocks known to man.
Instead of a belief system, i find the thought of an ideal system much more enlightening and refreshing. As new information comes into contact with us, we can evaluate it based on it's merits, instead of dismissing it out of hand due to our preconcieved notions.
Does anyone believe that our leaders have not figured out the innermost workings of group think(crowd psychology)? Does anyone not think they would not be using it against us? Are you sure when you say no way, it's not your prconcieved notion dismiss the ideal out of hand?
Everyone of us has fallen for this trap, wake up now and help to save your self and loved ones.
Quote below from link above, enjoy!!
Whats interesting about todays post is that, this is something i have come up with before in my past research, and have even spoke of this in my past blog posts. The problem people seem to have with understanding the world around them is what they "know" 100% for a fact.
It's these beliefs and belief systems that in fact shut down our ability to think clearly. Preconcieved notions are known to be one of the biggest learning blocks known to man.
Instead of a belief system, i find the thought of an ideal system much more enlightening and refreshing. As new information comes into contact with us, we can evaluate it based on it's merits, instead of dismissing it out of hand due to our preconcieved notions.
Does anyone believe that our leaders have not figured out the innermost workings of group think(crowd psychology)? Does anyone not think they would not be using it against us? Are you sure when you say no way, it's not your prconcieved notion dismiss the ideal out of hand?
Everyone of us has fallen for this trap, wake up now and help to save your self and loved ones.
Quote below from link above, enjoy!!
CONAN: Well, Brendan Nyhan is a health policy researcher at the University of Michigan. He recently published "When Corrections Fail: The Persistence of Political Misperceptions." That was in the June issue of the Journal of Political Behavior, and he joins us now from the studios of WUOM, Michigan Radio, our member station in Ann Arbor. Nice to have you with us today.
Mr. BRENDAN NYHAN (Robert Wood Johnson Scholar in Health Policy Research, University of Michigan): Thanks for having me.
CONAN: And when facts are readily available, why are they not enough to change people's minds?
Mr. NYHAN: Well, the problem is, you know, as human beings, we want to believe, you know, the things that we already believe. And so when you hear some information that contradicts your pre-existing views, unfortunately, what we tend to do is think of why we believed those things in the first place.
And, you know, so when, you know, we get these corrections, we tend to say I'm right, and I'm going to stick with my view. And the thing that my research, which is with Jason Reifler at Georgia State University, found is that in some cases, that corrective information can actually make the problem worse.
So some people who read Dana's article about immigration may actually have come away from it more strongly committed to the belief that crime has gone up along the border.
CONAN: And indeed are probably demanding his birth certificate.
(Soundbite of laughter)
Mr. NYHAN: That's right.
CONAN: This is a phenomenon described as backfire. You say it's a natural defense mechanism to avoid cognitive dissonance.
Mr. NYHAN: That's right. You know, it's hard, it's threatening to us to admit that things we believe are wrong. And all of us, liberals and conservatives, you know, have some beliefs that aren't true, and when we find that out, you know, it's threatening to our beliefs and ourselves.
And so what we think happens is that the way people, you know, try to resolve this in some cases is to, you know, buttress that belief that they initially held, and, you know, there's a long line of research showing results like this.
CONAN: And again, we'd like to think of our brain as something that's been trained in, you know, Cartesian logic, when in fact, our brain is sort of hard-wired to leap to conclusions very quickly.
Mr. NYHAN: That's right
Tuesday, July 13, 2010
Are we "Trending Towards Deflation" or in It?
found a couple of good reads for you folks this morn, hope you take the time to read and understand them.
http://globaleconomicanalysis.blogspot.com/2010/07/are-we-trending-towards-deflation-or-in.html
http://www.safehaven.com/article/17456/deflation-becomes-the-dominant-economic-trend
http://www.calculatedriskblog.com/2010/07/deflation-and-fed.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29&utm_content=My+Yahoo
http://globaleconomicanalysis.blogspot.com/2010/07/are-we-trending-towards-deflation-or-in.html
http://www.safehaven.com/article/17456/deflation-becomes-the-dominant-economic-trend
http://www.calculatedriskblog.com/2010/07/deflation-and-fed.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29&utm_content=My+Yahoo
Recession, Deflation and Deficits
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2010/07/12/recession-deflation-and-deficits.aspx
read the rest at the link, for more eye popping info.
I look forward at the beginning of every quarter to receiving the Quarterly Outlook from Hoisington Investment Management. They have been prominent proponents of the view that deflation is the problem, stemming from a variety of factors, and write about their views in a very clear and concise manner. This quarter's letter is no exception, where they once again delve into the history books to bring up fresh and relevant lessons for today. This is a must read piece.
Hoisington Investment Management Company (www.hoisingtonmgt.com) is a registered investment advisor specializing in fixed income portfolios for large institutional clients. Located in Austin, Texas, the firm has over $4-billion under management, composed of corporate and public funds, foundations, endowments, Taft-Hartley funds, and insurance companies. And now let's jump right in to the essay.
John Mauldin, Editor
Outside the Box
read the rest at the link, for more eye popping info.
Monday, July 12, 2010
For the people in my hometown
Maybe you think people are not getting prepared, maybe your thinking that in a total collapse the government would take care of you.
They wont.
Direct your attention to this Indiana based forum
http://ingunowners.com/forums/survival_and_disaster_preparedness/99510-inner_circle_and_looter_mentality.html
Think about this people, already crime occurs daily, people get shot for 20 bucks worth of drugs. What is going to happen when people cant feed their kids? When the dollar is worthless and the shelves are empty?
A lot of drug dealers and thugs have guns but no food,The cities will empty out fast into the country side looking for food, not just looters mind you, but honest hard working families. It will be hard to turn those folks away, but you must, as mentioned earlier on in my blog. Refugees must be turned away, before the community becomes over run and can not support itself anymore and they all starve.
We all know this area is filled with meth users and people who are not prepared, we must work to help get them prepared.
We have but only a little time, what we must do, each one of us.
1. secure a way to get water/filter water with no power
2. secure a way to get/raise food with no power to help
3. heat our homes during winter and be able to cook
Their are many ways we can go about doing all of these items and much more. I would suggest you take the time to get back to the old way of doing things like providing for yourself and your family with your own land.
Remember, at least have food for a year and 2 gallons of water per day per person in the family. After that, you better have some heirloom seeds and chickens/cows/pigs/goats or something.
Always have multiple ways to defend yourself and your family, there are classes and online resource's for these skills, learn them,NOW, not later.
You have maybe 2 years if we are lucky.
care to check the facts out for yourself? i invite you to read all of Gordon Long's "Extend and Pretend" series here....
http://lcmgroupe.home.comcast.net/~lcmgroupe/2010/Commentary-Reader.htm
On the left hand side, yes it is a long series, so it might take awhile, and you might miss your favorite tv show or video game.
They wont.
Direct your attention to this Indiana based forum
http://ingunowners.com/forums/survival_and_disaster_preparedness/99510-inner_circle_and_looter_mentality.html
Think about this people, already crime occurs daily, people get shot for 20 bucks worth of drugs. What is going to happen when people cant feed their kids? When the dollar is worthless and the shelves are empty?
A lot of drug dealers and thugs have guns but no food,The cities will empty out fast into the country side looking for food, not just looters mind you, but honest hard working families. It will be hard to turn those folks away, but you must, as mentioned earlier on in my blog. Refugees must be turned away, before the community becomes over run and can not support itself anymore and they all starve.
We all know this area is filled with meth users and people who are not prepared, we must work to help get them prepared.
We have but only a little time, what we must do, each one of us.
1. secure a way to get water/filter water with no power
2. secure a way to get/raise food with no power to help
3. heat our homes during winter and be able to cook
Their are many ways we can go about doing all of these items and much more. I would suggest you take the time to get back to the old way of doing things like providing for yourself and your family with your own land.
Remember, at least have food for a year and 2 gallons of water per day per person in the family. After that, you better have some heirloom seeds and chickens/cows/pigs/goats or something.
Always have multiple ways to defend yourself and your family, there are classes and online resource's for these skills, learn them,NOW, not later.
You have maybe 2 years if we are lucky.
care to check the facts out for yourself? i invite you to read all of Gordon Long's "Extend and Pretend" series here....
http://lcmgroupe.home.comcast.net/~lcmgroupe/2010/Commentary-Reader.htm
On the left hand side, yes it is a long series, so it might take awhile, and you might miss your favorite tv show or video game.
Saturday, July 10, 2010
The good news!!
A lot of times people say i need to be more positive, that i'm all doom and gloom. So i decided to write about the "good" news today.
We all know that our debt, public, government and our unfunded liability's total close to/around 100 trillion dollars. Our inflated gdp was around 14 trillion i think, imagine how many years it would take to pay off our debt, if we ONLY spent ALL our gdp on paying off the debt And we had NO new debt added(7+ years folks).
But lets forget about that and focus on the good news so we can tell ourself everything is going to be alright.
This comes to us via the Hill
Ah, so that is how they are going to pay for all this borrowing they are doing. But wait, thats only part of the good news. The other part is the inflation that will take hold if a "recovery" ever does manage to rear it's disformed face.
So while most of my blog tells you the dangers of the collapse, this post will talk about the "good" news of a recovery, where inflation is running at 10-15%, where government services are less, but the taxes are higher.
Oh yes folks, the "good" news you are going to get with this recovery is plentiful. Imagine the happiness paying 50-80% of your income to federal/state/local/property/add the other 5000000 other taxes in here. Then imagine after paying those taxes, having LESS service from your government then you do now.
Imagine food prices rising because of taxes like the one posted above, or higher fuel taxes,etc.
The bottom line is thier is no "good" news folks, so understand that it is time to hope for the best, but prepare for the worst.
Another good read for you to look at is by Mr. long at this link....
EXTEND & PRETEND: Stage I Comes to an End!
http://home.comcast.net/~lcmgroupe/2010/Article-Extend_and_Pretend-Stage_I_Ends.htm
We all know that our debt, public, government and our unfunded liability's total close to/around 100 trillion dollars. Our inflated gdp was around 14 trillion i think, imagine how many years it would take to pay off our debt, if we ONLY spent ALL our gdp on paying off the debt And we had NO new debt added(7+ years folks).
But lets forget about that and focus on the good news so we can tell ourself everything is going to be alright.
This comes to us via the Hill
http://thehill.com/opinion/columnists/lanny-davis/107351-a-debt-free-america-yes-its-possible
One idea for raising taxes to pay down the debt is the bill introduced this February by Rep. Chaka Fattah (D-Pa.). His “Debt Free America Act” (H.R. 4646) would impose a 1 percent “transaction tax” on every financial transaction — whether paid by cash, credit card or any form of financial transfer, the only exception being transactions involving the purchase or sale of stock. Theoretically, everyone would pay one cent on the dollar for every such transaction in America every day — whether $3 million on a $300 million business acquisition, $300 on the purchase of a $30,000 car, or $5 on a $500 ATM withdrawal.
To reduce the impact of such a flat tax on the poor, Fattah’s bill provides for a 1 percent tax credit for couples earning $250,000 or less ($125,000 or less for individuals) and discretion by the Treasury Department to exempt certain transactions on which lower-income people disproportionately rely. Another idea would be to amend his bill to exempt all transactions below $500.
Ah, so that is how they are going to pay for all this borrowing they are doing. But wait, thats only part of the good news. The other part is the inflation that will take hold if a "recovery" ever does manage to rear it's disformed face.
So while most of my blog tells you the dangers of the collapse, this post will talk about the "good" news of a recovery, where inflation is running at 10-15%, where government services are less, but the taxes are higher.
Oh yes folks, the "good" news you are going to get with this recovery is plentiful. Imagine the happiness paying 50-80% of your income to federal/state/local/property/add the other 5000000 other taxes in here. Then imagine after paying those taxes, having LESS service from your government then you do now.
Imagine food prices rising because of taxes like the one posted above, or higher fuel taxes,etc.
The bottom line is thier is no "good" news folks, so understand that it is time to hope for the best, but prepare for the worst.
Another good read for you to look at is by Mr. long at this link....
EXTEND & PRETEND: Stage I Comes to an End!
http://home.comcast.net/~lcmgroupe/2010/Article-Extend_and_Pretend-Stage_I_Ends.htm
Monday, June 28, 2010
Whats this you say?
[url]http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7857595/RBS-tells-clients-to-prepare-for-monster-money-printing-by-the-Federal-Reserve.html[/url]
[QUOTE]The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster that at any time in the post-War era.
The latest data from the CPB Netherlands Bureau shows that world trade slid 1.7pc in May, with the biggest fall in Asia. The Baltic Dry Index measuring freight rates on bulk goods has dropped 40pc in a month. This is a volatile index that can be distorted by the supply of new ships, but those who watch it as an early warning signal for China and commodities are nervous.
Andrew Roberts, credit chief at RBS, is advising clients to read the Bernanke text very closely because the Fed is soon going to have to the pull the lever on "monster" quantitative easing (QE)".
[/QUOTE]
Very interesting things going on right now, talking on another board i find this post.
[QUOTE]A collapse in the ECRI (which so many of us economists watch) below -3.5% has predicted a negative GDP print 70% of the time with only two false readings and with a three month lag. A collapse below -10% has been 100% accurate. The rate of change in the decline of the ECRI is picking up..... draw your own conclusions from there.
[/QUOTE]
[QUOTE]The three month lag means that within 3 months of the ECRI turning down by 3.5% (with only two headfakes in the history of the series), the idiots over at the BLS declare that we are in a recession, which means we "have" been in one since their data lags. In other words, within 3 months of the ECRI dropping to -3.5% (which it now stands at a revised -6.9%) the economy is declared to be in a recession (again, with two false readings)...
Now, over 42 years of data, and never being wrong, when the ECRI crosses -10%, you have a recession. 100% of the time. We are now at -6.9% and plummeting.[/QUOTE]
Where is the good news in this mess of a recovery? seriously?
New houses down 32.7 % in may
[url]http://money.cnn.com/2010/06/23/real_estate/new_home_sales/index.htm[/url]
existing home sales down 2 %
[url]http://money.cnn.com/2010/06/22/news/economy/existing_home_sales/index.htm[/url]
excess reserves showing NO lending going on
[IMG]http://research.stlouisfed.org/fred2/data/EXCRESNS_Max_630_378.png[/IMG]
Unemployment benefits cut for 1.2 million people now and 200k each week after.
http://michiganmessenger.com/39113/death-of-unemployment-bill-means-more-state-budget-cuts
On the housing side
All 50 states are reporting year-over-year increases in bank repossessions!
http://www.prescottenews.com/?option=com_content&task=view&id=3621
So whats the problem here? how come all of that money did not kick start the economy and we are not back at before 08 levels again?
It's because the system is dying out, throwing money at the problem is only extending the timeframe of total failure. You dont need a phd in economics to see what is clearly before your unemployed, underemployed or soon to be either one of those, eyes.
Take the time now, to buy what you need to live by your means only, there is plenty of information on the web to help you. If you have kids or someone you love, and think there is a 5% chance of this happening, is that not to much of a chance for you to take some kind of action?
[QUOTE]The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster that at any time in the post-War era.
The latest data from the CPB Netherlands Bureau shows that world trade slid 1.7pc in May, with the biggest fall in Asia. The Baltic Dry Index measuring freight rates on bulk goods has dropped 40pc in a month. This is a volatile index that can be distorted by the supply of new ships, but those who watch it as an early warning signal for China and commodities are nervous.
Andrew Roberts, credit chief at RBS, is advising clients to read the Bernanke text very closely because the Fed is soon going to have to the pull the lever on "monster" quantitative easing (QE)".
[/QUOTE]
Very interesting things going on right now, talking on another board i find this post.
[QUOTE]A collapse in the ECRI (which so many of us economists watch) below -3.5% has predicted a negative GDP print 70% of the time with only two false readings and with a three month lag. A collapse below -10% has been 100% accurate. The rate of change in the decline of the ECRI is picking up..... draw your own conclusions from there.
[/QUOTE]
[QUOTE]The three month lag means that within 3 months of the ECRI turning down by 3.5% (with only two headfakes in the history of the series), the idiots over at the BLS declare that we are in a recession, which means we "have" been in one since their data lags. In other words, within 3 months of the ECRI dropping to -3.5% (which it now stands at a revised -6.9%) the economy is declared to be in a recession (again, with two false readings)...
Now, over 42 years of data, and never being wrong, when the ECRI crosses -10%, you have a recession. 100% of the time. We are now at -6.9% and plummeting.[/QUOTE]
Where is the good news in this mess of a recovery? seriously?
New houses down 32.7 % in may
[url]http://money.cnn.com/2010/06/23/real_estate/new_home_sales/index.htm[/url]
existing home sales down 2 %
[url]http://money.cnn.com/2010/06/22/news/economy/existing_home_sales/index.htm[/url]
excess reserves showing NO lending going on
[IMG]http://research.stlouisfed.org/fred2/data/EXCRESNS_Max_630_378.png[/IMG]
Unemployment benefits cut for 1.2 million people now and 200k each week after.
http://michiganmessenger.com/39113/death-of-unemployment-bill-means-more-state-budget-cuts
On the housing side
All 50 states are reporting year-over-year increases in bank repossessions!
http://www.prescottenews.com/?option=com_content&task=view&id=3621
So whats the problem here? how come all of that money did not kick start the economy and we are not back at before 08 levels again?
It's because the system is dying out, throwing money at the problem is only extending the timeframe of total failure. You dont need a phd in economics to see what is clearly before your unemployed, underemployed or soon to be either one of those, eyes.
Take the time now, to buy what you need to live by your means only, there is plenty of information on the web to help you. If you have kids or someone you love, and think there is a 5% chance of this happening, is that not to much of a chance for you to take some kind of action?
Saturday, June 26, 2010
Is America Destined to Starve?
http://usarmyguyretired.com/wordpress/?p=308
Americans are no longer prepared to take care of their basic needs without the involvement of the federal government. The majority of Americans have relinquished the responsibility of their future survival to bureaucrats. How and when did we, as an intelligent and formerly self-reliant populace, decide to become wards of the state?
Since September 11, 2001 this country has faced numerous disasters both man-made and natural. It is evident after these disasters the majority of the population is unable to fend for themselves without government assistance. In only a matter of days, people run out of food and water, no longer able to take care of their families. They then expect some level of government to open up centers which will provide the necessary sustenance to support their families during these emergencies. Basic needs cannot be met without outside assistance. In less than 60 years Americans have lost the knowledge and will to be self-sufficient. How did this happen?
The federal government, in conjunction with large food suppliers, has seduced the citizens into servitude. The greater part of the population no longer maintains more than seven days of food supply in their homes (paycheck to paycheck). Some may argue this is untrue but it is imperative to be able convert raw foodstuffs into an edible product. If you have basic ingredients but no water, heat source, or electricity those raw foodstuffs might as well be located on another planet. American citizens have succumbed to the lie that everything will be available to them at all times in all circumstances. Americans now spend their money on frivolous goods and services which will not protect them against a possible disaster. If one had the ability to inspect any citizen’s food supply they would be minimal and nutritionally harmful. Food products purchased today are processed to the point of having the actual nutrients degraded in the attempt at extending shelf life. Even Americans themselves seem to have a shelf life after death. A lifetime ingesting foods packed with preservatives and the residuals have significantly altered the very essence of what makes our bodies tick. Americans have fallen into the trap of a never-ending supply of food stuffs from the local grocery store. The just in time inventory system we mimicked from the Japanese has certainly increased efficiency but it has greatly increased risks in food supply if interruptions occur. No one ever questions what happens if that supply suddenly stops or their income ceases to exist.
The example before us today is the oil spill catastrophe in the Gulf of Mexico. This affects a wide swath of wage earners in the gulf region with immense and unpredictable second and third order effects for the rest of the country. The impacted individuals no longer have the capacity to earn a living and limited job prospects, at least in this country. Food lines are now the order of the day in the region. The people now find themselves at the abject mercy of an indifferent, disengaged government bureaucracy only intent on expanding their agenda and the population’s dependency. Listen to the rhetoric from the federal government. Their major concern is not the people or the cleanup, it is how they will extort large sums of money from BP, how they will push forward their Cap and Trade fiasco and how they can take over yet another sector of the economy. The old-school media will cover any usurpation for the current administration in the face of this catastrophe. There will be limited blame placed on some minor bureaucrats with the majority of the fault falling to BP. The assignation of blame is only relevant because the federal government will use this as an opportunity to seize more power and control over business and the lives of the citizens. The economic illiteracy on the part of the government media complex is astounding. If BP is fined, that will have no impact on fuel prices down the line?
Hurricane Katrina and Rita were only small windows into what the country might face in the future. Those natural disasters were limited in scope and therefore did not reach the full consciousness of the American people. Yes, we were quick to blame the political powers for failing to act quickly in response to those disasters, especially if we were diametrically opposed to their agendas. Those disasters pale in scale to what the Gulf Coast now faces in conjunction with a grossly incompetent federal government and complicit media. The lethal combination of incompetence and the ability to have an unlimited scope in meddling is a recipe to make the Greater Depression worse than it is already.
Controlling the food supply has been the plan of the federal government for an extremely long time. The creation of the FDA was fundamental to the execution of this plan. Working in conjunction with large agribusiness and complicit media they now control the destiny of the majority of the population of the United States. They are attempting to eliminate all small farming operations through overbearing regulations and a wink and a nod in the courtroom to patent regulations for the agribusiness lobby. Part of the agenda is to force all small operations to microchip every animal and provide tracking information to the federal government. The large agribusiness operators will not be subject to the same regulations as small farmers. They will be exempt from providing the same information because of the political power they wield through the purchase of politicians.
It is a historical fact that whoever controls the food controls the people. History is replete with examples of what happens when a corrupt and ruthless government controls the food supply. In the 1930’s, Russia starved 10 million Ukrainians to death by stealing all the food produced in their country because they would not support Stalin’s farm collectivization program. Hitler used starvation in Poland for the mass murder of the Jews in the Warsaw ghetto. America is now poised for the same fate since they are unable to feed their families in the face of a disaster or corrupt government.
There are many reasons the food supply might cease functioning in United States. Natural or man-made disasters are the preeminent possibilities which might precipitate a food stoppage. We do not want to contemplate the stoppage may be due the interference of the federal government. The question that must be asked is how we survive as a people in the event of a long-term interruption of the food supply? The majority of the population no longer has any understanding of raising their own food supply. No longer are we capable of going to our seed supply and planting a survival garden. If a family does have seed, it is imperative to ask a question. Is the seed the heirloom variety or the genetically altered large agribusiness strain? If it is the genetically altered variety then it is part of the trap and that family will starve. Genetically altered seeds render them viable for one season with no ability to harvest seed for future planting. The unprepared with no stockpile of heirloom seeds will be at the mercy of the government or whoever holds the power.
The stoppage of the food supply is only an example of what might transpire in the event of a disaster. We, as a people, are an unprepared population. There are many books written concerning what this country might face in a disaster which also address the impact of a massive economic or social collapse of the government. I urge everyone to read these tomes and educate themselves as to what might transpire and to better prepare for the unspeakable but inevitable future. It is incumbent upon each family to prepare themselves for the coming crisis our country will eventually have to endure. It is naïve at best and foolish at worst to believe our country is too big to fail. The preparation of an informed populace will define how we survive as a people in the event of a major disaster or economic collapse.
Are you ready, or will your family starve?
Americans are no longer prepared to take care of their basic needs without the involvement of the federal government. The majority of Americans have relinquished the responsibility of their future survival to bureaucrats. How and when did we, as an intelligent and formerly self-reliant populace, decide to become wards of the state?
Since September 11, 2001 this country has faced numerous disasters both man-made and natural. It is evident after these disasters the majority of the population is unable to fend for themselves without government assistance. In only a matter of days, people run out of food and water, no longer able to take care of their families. They then expect some level of government to open up centers which will provide the necessary sustenance to support their families during these emergencies. Basic needs cannot be met without outside assistance. In less than 60 years Americans have lost the knowledge and will to be self-sufficient. How did this happen?
The federal government, in conjunction with large food suppliers, has seduced the citizens into servitude. The greater part of the population no longer maintains more than seven days of food supply in their homes (paycheck to paycheck). Some may argue this is untrue but it is imperative to be able convert raw foodstuffs into an edible product. If you have basic ingredients but no water, heat source, or electricity those raw foodstuffs might as well be located on another planet. American citizens have succumbed to the lie that everything will be available to them at all times in all circumstances. Americans now spend their money on frivolous goods and services which will not protect them against a possible disaster. If one had the ability to inspect any citizen’s food supply they would be minimal and nutritionally harmful. Food products purchased today are processed to the point of having the actual nutrients degraded in the attempt at extending shelf life. Even Americans themselves seem to have a shelf life after death. A lifetime ingesting foods packed with preservatives and the residuals have significantly altered the very essence of what makes our bodies tick. Americans have fallen into the trap of a never-ending supply of food stuffs from the local grocery store. The just in time inventory system we mimicked from the Japanese has certainly increased efficiency but it has greatly increased risks in food supply if interruptions occur. No one ever questions what happens if that supply suddenly stops or their income ceases to exist.
The example before us today is the oil spill catastrophe in the Gulf of Mexico. This affects a wide swath of wage earners in the gulf region with immense and unpredictable second and third order effects for the rest of the country. The impacted individuals no longer have the capacity to earn a living and limited job prospects, at least in this country. Food lines are now the order of the day in the region. The people now find themselves at the abject mercy of an indifferent, disengaged government bureaucracy only intent on expanding their agenda and the population’s dependency. Listen to the rhetoric from the federal government. Their major concern is not the people or the cleanup, it is how they will extort large sums of money from BP, how they will push forward their Cap and Trade fiasco and how they can take over yet another sector of the economy. The old-school media will cover any usurpation for the current administration in the face of this catastrophe. There will be limited blame placed on some minor bureaucrats with the majority of the fault falling to BP. The assignation of blame is only relevant because the federal government will use this as an opportunity to seize more power and control over business and the lives of the citizens. The economic illiteracy on the part of the government media complex is astounding. If BP is fined, that will have no impact on fuel prices down the line?
Hurricane Katrina and Rita were only small windows into what the country might face in the future. Those natural disasters were limited in scope and therefore did not reach the full consciousness of the American people. Yes, we were quick to blame the political powers for failing to act quickly in response to those disasters, especially if we were diametrically opposed to their agendas. Those disasters pale in scale to what the Gulf Coast now faces in conjunction with a grossly incompetent federal government and complicit media. The lethal combination of incompetence and the ability to have an unlimited scope in meddling is a recipe to make the Greater Depression worse than it is already.
Controlling the food supply has been the plan of the federal government for an extremely long time. The creation of the FDA was fundamental to the execution of this plan. Working in conjunction with large agribusiness and complicit media they now control the destiny of the majority of the population of the United States. They are attempting to eliminate all small farming operations through overbearing regulations and a wink and a nod in the courtroom to patent regulations for the agribusiness lobby. Part of the agenda is to force all small operations to microchip every animal and provide tracking information to the federal government. The large agribusiness operators will not be subject to the same regulations as small farmers. They will be exempt from providing the same information because of the political power they wield through the purchase of politicians.
It is a historical fact that whoever controls the food controls the people. History is replete with examples of what happens when a corrupt and ruthless government controls the food supply. In the 1930’s, Russia starved 10 million Ukrainians to death by stealing all the food produced in their country because they would not support Stalin’s farm collectivization program. Hitler used starvation in Poland for the mass murder of the Jews in the Warsaw ghetto. America is now poised for the same fate since they are unable to feed their families in the face of a disaster or corrupt government.
There are many reasons the food supply might cease functioning in United States. Natural or man-made disasters are the preeminent possibilities which might precipitate a food stoppage. We do not want to contemplate the stoppage may be due the interference of the federal government. The question that must be asked is how we survive as a people in the event of a long-term interruption of the food supply? The majority of the population no longer has any understanding of raising their own food supply. No longer are we capable of going to our seed supply and planting a survival garden. If a family does have seed, it is imperative to ask a question. Is the seed the heirloom variety or the genetically altered large agribusiness strain? If it is the genetically altered variety then it is part of the trap and that family will starve. Genetically altered seeds render them viable for one season with no ability to harvest seed for future planting. The unprepared with no stockpile of heirloom seeds will be at the mercy of the government or whoever holds the power.
The stoppage of the food supply is only an example of what might transpire in the event of a disaster. We, as a people, are an unprepared population. There are many books written concerning what this country might face in a disaster which also address the impact of a massive economic or social collapse of the government. I urge everyone to read these tomes and educate themselves as to what might transpire and to better prepare for the unspeakable but inevitable future. It is incumbent upon each family to prepare themselves for the coming crisis our country will eventually have to endure. It is naïve at best and foolish at worst to believe our country is too big to fail. The preparation of an informed populace will define how we survive as a people in the event of a major disaster or economic collapse.
Are you ready, or will your family starve?
Wednesday, June 23, 2010
Guess What America? Your Cities And States Are Flat Broke
http://endoftheamericandream.com/archives/guess-what-america-your-cities-and-states-are-flat-broke
Now that the economic boom times of the earlier part of the decade are over, cities and states across America are going bust. In fact, for a growing number of local governments throughout the United States, there is no getting around the fact that "flat broke" accurately describes the situation that they are facing. For many of these cities and states that are on the verge of bankruptcy, the American Dream is quickly turning into the American Nightmare.
Unlike the federal government, which can ask the Federal Reserve to print up some more money when they get into trouble, state and local governments have nowhere to go when the well runs dry. They either have to raise taxes or cut spending. But in many areas of the country, services have already been cut to the bone and people are already being taxed into oblivion. So what can be done? Well, many of these state and local governments are just going to have to cut spending even deeper, squeeze even more taxes out of their residents, or go to the federal government for a handout.
America Your Cities Are Broke
Once upon a time, municipal bonds (used to fund such things as roads, sewer systems and government buildings) were viewed as one of the very safest of investments.
But now all of that is changing.
According to Distressed Debt Securities, in 2009 183 municipal borrowers were unable to make $6.4 billion in loan payments.
Just two years earlier, those numbers were 31 and $348 million.
As you can see, that is not a good trend.
The truth is that municipal governments are facing an unprecedented fiscal crisis.
In fact, the National League of Cities recently announced that municipal governments will collectively come up somewhere between $56 billion and $83 billion short between now and 2012.
So where will all of that money come from?
It will have to come from spending cuts, tax hikes or handouts from the federal government.
Or, if something is not done, we are going to see a massive wave of municipal defaults.
Case Study: Detroit
The situation is particularly dire in areas that have been hit hardest by the economic crisis.
To make up for a projected 2010 budget shortfall of 280 million dollars, the city of Detroit issued 20-year municipal notes totalling 250 million dollars in March. But there is a real question as to whether or not Detroit is actually going to be able to meet these obligations. In fact, Detroit officials are openly admitting that if the financial state of the city does not rapidly improve, it could be forced to declare bankruptcy.
What a sad state of affairs for what was once one of America's greatest cities.
During the economic boom times of the 1950s, Detroit was a thriving metropolis of approximately 2 million people.
Today, the current population is less than half that and people are leaving in droves.
But even the people who are still there can't get jobs. The mayor of Detroit says that while the "official" rate of unemployment in Detroit is 27 percent, the "real" unemployment rate in his city is somewhere in the neighborhood of 50 percent.
But at least houses are cheap.
In Detroit, it is not uncommon to see homes advertised for under $1000, and in fact there are some houses in the city that you can actually purchase for just one dollar.
Not that you would want to live in those homes.
Violent crime is dramatically increasing in Detroit and vandals have been running around stripping everything of value off of many of the homes.
So what is Detroit doing about this crisis?
Well, they have decided to downsize.
Emergency Financial Manager Robert Bobb recently announced a plan to close 44 Detroit schools.
Also, Mayor Bing has promised to bulldoze 3,000 Detroit homes this year, and an additional 7,000 over the following three years.
But that will only make a dent in the urban blight. According to one estimate, the city of Detroit has 33,500 empty houses and 91,000 vacant residential lots.
So if you are looking for some really cheap housing you might want to consider moving to Detroit.
Just don't count on getting a job.
America Your States Are Broke
But it is not just local governments that are broke. Entire U.S. states are on the verge of bankruptcy.
In fact, a large number of U.S. states are preparing for their biggest budget cuts in decades.
An article in CNN recently put it this way....
"Think states have made deep spending cuts? You ain't seen nothing yet."
In 2008 and 2009, economic stimulus money helped many states make it through the financial crisis, but now that money is drying up and many states do not know what they are going to do.
Already, half a dozen cash-poor U.S. states have announced that they are delaying their tax refund checks.
That would have been unthinkable a couple of decades ago, but these are desperate times.
In fact, New York state has delayed paying bills totalling $2.5 billion as a short-term way of staying solvent.
But those bills have got to be paid some time.
So what has caused this huge financial mess?
Debt.
Just like the U.S. federal government, state governments have gotten themselves into reckless amounts of debt, and now the day of reckoning is here.
And things are going to get a lot worse.
According to EconomicPolicyJournal.com, 32 U.S. states have already run out of funds to make unemployment benefit payments and so the federal government has been supplying these states with funds so that they can make their payments to the unemployed.
So what happens when the U.S. government says that it wants to stop making those payments for the states?
But the pension crisis on the state level is something that is far more alarming.
Two university professors recently calculated that the combined unfunded pension liability for all 50 U.S. states is 3.2 trillion dollars.
Yes, you read that right.
3.2 trillion dollars.
So where will that 3.2 trillion dollars come from?
Nobody really knows.
Case Study: California
Many states are in massive financial trouble, but California is perhaps in the worst condition of all.
The economic crisis has hit the "golden state" particularly hard.
Businesses are shutting down at a stunning rate. In the area around Sacramento, California there is now one closed business for every six that are still open.
Unemployment in California is absolutely exploding. There are now 8 counties in the state of California that now have unemployment rates of over 20 percent.
In fact, the number of people now unemployed in the state of California is equal to the populations of Nevada, New Hampshire and Vermont combined.
The truth is that in this economic environment, not even teachers are safe. Just recently, the state of California handed pink slips to nearly 22,000 teachers across the state.
Can you imagine firing 22,000 teachers?
But canning all of those hard working teachers barely even made a dent in California's budget problems.
California Governor Arnold Schwarzenegger is promising to seek "terrible cuts" in an effort to bring the exploding debt of the government of California under control, but the truth is that it is hard to squeeze blood out of a rock.
Bob Herbert of the New York Times recently described California's horrific budget crisis this way....
California has cut billions of dollars from its education system, including its renowned network of public colleges and universities. Many thousands of teachers have been let go. Budget officials travel the state with a glazed look in their eyes, having tried everything they can think of to balance the state budget. And still the deficits persist.
The truth is that California is bankrupt. They can try to keep borrowing more money as fast as they can in an effort to push their problems off to another day, but in the end California is going to go belly up.
But the same thing could be said for the entire U.S. economy. The total government, corporate and consumer debt of the United States has now reached 360 percent of GDP and is accelerating. We have reached a point where there is simply no way out. The only thing that can even delay the inevitable is to borrow even more money and to try to crank the debt spiral up one more time.
We have created an economic nightmare of epic proportions, and we have wrecked the future for our children and our grandchildren.
What a mess.
Now that the economic boom times of the earlier part of the decade are over, cities and states across America are going bust. In fact, for a growing number of local governments throughout the United States, there is no getting around the fact that "flat broke" accurately describes the situation that they are facing. For many of these cities and states that are on the verge of bankruptcy, the American Dream is quickly turning into the American Nightmare.
Unlike the federal government, which can ask the Federal Reserve to print up some more money when they get into trouble, state and local governments have nowhere to go when the well runs dry. They either have to raise taxes or cut spending. But in many areas of the country, services have already been cut to the bone and people are already being taxed into oblivion. So what can be done? Well, many of these state and local governments are just going to have to cut spending even deeper, squeeze even more taxes out of their residents, or go to the federal government for a handout.
America Your Cities Are Broke
Once upon a time, municipal bonds (used to fund such things as roads, sewer systems and government buildings) were viewed as one of the very safest of investments.
But now all of that is changing.
According to Distressed Debt Securities, in 2009 183 municipal borrowers were unable to make $6.4 billion in loan payments.
Just two years earlier, those numbers were 31 and $348 million.
As you can see, that is not a good trend.
The truth is that municipal governments are facing an unprecedented fiscal crisis.
In fact, the National League of Cities recently announced that municipal governments will collectively come up somewhere between $56 billion and $83 billion short between now and 2012.
So where will all of that money come from?
It will have to come from spending cuts, tax hikes or handouts from the federal government.
Or, if something is not done, we are going to see a massive wave of municipal defaults.
Case Study: Detroit
The situation is particularly dire in areas that have been hit hardest by the economic crisis.
To make up for a projected 2010 budget shortfall of 280 million dollars, the city of Detroit issued 20-year municipal notes totalling 250 million dollars in March. But there is a real question as to whether or not Detroit is actually going to be able to meet these obligations. In fact, Detroit officials are openly admitting that if the financial state of the city does not rapidly improve, it could be forced to declare bankruptcy.
What a sad state of affairs for what was once one of America's greatest cities.
During the economic boom times of the 1950s, Detroit was a thriving metropolis of approximately 2 million people.
Today, the current population is less than half that and people are leaving in droves.
But even the people who are still there can't get jobs. The mayor of Detroit says that while the "official" rate of unemployment in Detroit is 27 percent, the "real" unemployment rate in his city is somewhere in the neighborhood of 50 percent.
But at least houses are cheap.
In Detroit, it is not uncommon to see homes advertised for under $1000, and in fact there are some houses in the city that you can actually purchase for just one dollar.
Not that you would want to live in those homes.
Violent crime is dramatically increasing in Detroit and vandals have been running around stripping everything of value off of many of the homes.
So what is Detroit doing about this crisis?
Well, they have decided to downsize.
Emergency Financial Manager Robert Bobb recently announced a plan to close 44 Detroit schools.
Also, Mayor Bing has promised to bulldoze 3,000 Detroit homes this year, and an additional 7,000 over the following three years.
But that will only make a dent in the urban blight. According to one estimate, the city of Detroit has 33,500 empty houses and 91,000 vacant residential lots.
So if you are looking for some really cheap housing you might want to consider moving to Detroit.
Just don't count on getting a job.
America Your States Are Broke
But it is not just local governments that are broke. Entire U.S. states are on the verge of bankruptcy.
In fact, a large number of U.S. states are preparing for their biggest budget cuts in decades.
An article in CNN recently put it this way....
"Think states have made deep spending cuts? You ain't seen nothing yet."
In 2008 and 2009, economic stimulus money helped many states make it through the financial crisis, but now that money is drying up and many states do not know what they are going to do.
Already, half a dozen cash-poor U.S. states have announced that they are delaying their tax refund checks.
That would have been unthinkable a couple of decades ago, but these are desperate times.
In fact, New York state has delayed paying bills totalling $2.5 billion as a short-term way of staying solvent.
But those bills have got to be paid some time.
So what has caused this huge financial mess?
Debt.
Just like the U.S. federal government, state governments have gotten themselves into reckless amounts of debt, and now the day of reckoning is here.
And things are going to get a lot worse.
According to EconomicPolicyJournal.com, 32 U.S. states have already run out of funds to make unemployment benefit payments and so the federal government has been supplying these states with funds so that they can make their payments to the unemployed.
So what happens when the U.S. government says that it wants to stop making those payments for the states?
But the pension crisis on the state level is something that is far more alarming.
Two university professors recently calculated that the combined unfunded pension liability for all 50 U.S. states is 3.2 trillion dollars.
Yes, you read that right.
3.2 trillion dollars.
So where will that 3.2 trillion dollars come from?
Nobody really knows.
Case Study: California
Many states are in massive financial trouble, but California is perhaps in the worst condition of all.
The economic crisis has hit the "golden state" particularly hard.
Businesses are shutting down at a stunning rate. In the area around Sacramento, California there is now one closed business for every six that are still open.
Unemployment in California is absolutely exploding. There are now 8 counties in the state of California that now have unemployment rates of over 20 percent.
In fact, the number of people now unemployed in the state of California is equal to the populations of Nevada, New Hampshire and Vermont combined.
The truth is that in this economic environment, not even teachers are safe. Just recently, the state of California handed pink slips to nearly 22,000 teachers across the state.
Can you imagine firing 22,000 teachers?
But canning all of those hard working teachers barely even made a dent in California's budget problems.
California Governor Arnold Schwarzenegger is promising to seek "terrible cuts" in an effort to bring the exploding debt of the government of California under control, but the truth is that it is hard to squeeze blood out of a rock.
Bob Herbert of the New York Times recently described California's horrific budget crisis this way....
California has cut billions of dollars from its education system, including its renowned network of public colleges and universities. Many thousands of teachers have been let go. Budget officials travel the state with a glazed look in their eyes, having tried everything they can think of to balance the state budget. And still the deficits persist.
The truth is that California is bankrupt. They can try to keep borrowing more money as fast as they can in an effort to push their problems off to another day, but in the end California is going to go belly up.
But the same thing could be said for the entire U.S. economy. The total government, corporate and consumer debt of the United States has now reached 360 percent of GDP and is accelerating. We have reached a point where there is simply no way out. The only thing that can even delay the inevitable is to borrow even more money and to try to crank the debt spiral up one more time.
We have created an economic nightmare of epic proportions, and we have wrecked the future for our children and our grandchildren.
What a mess.
State Budgets: Serious, Ridiculous, Ugly
by John Rubino on June 23, 2010
This week the focus shifted from Europe, where (apart from the French World Cup team) things are quiet, to the US, where state budget deadlines are forcing some tough, and occasionally bizarre, choices. Time Magazine’s cover, for instance blares “The Broken States of America”. An excerpt:
… Almost no one — and no place — is exempt. Nearly everywhere, tax revenue plummeted as property values tanked, incomes dwindled and consumers stopped shopping. Falling prices for stocks and real estate have made mincemeat of often underfunded public pension plans. Unemployed workers have swelled the demand for welfare and Medicaid services. Governments that were frugal in the past are just squeaking by. Governments that were lavish in the good times, building their budgets on optimism and best-case scenarios, now risk being wrecked like a shantytown in an earthquake.
How the Money Ran Out
For the first time in four decades of collecting data, the National Governors Association (NGA) reports that total state spending has dropped for two years in a row. In hard-hit Arizona, for example, the state budget has sagged to 2004 levels, despite blistering growth in population and demand for government services. Starting with the 2008 fiscal year, state governments have closed more than $300 billion in cumulative budget gaps, with another $125 billion already projected for the coming years, says Corina Eckl, fiscal-program director at the National Conference of State Legislatures (NCSL). Similar figures aren’t collected for the nation’s counties, villages and towns, but when the National League of Cities surveyed mayors recently, three-fourths of them described worsening economic conditions.
Accustomed to the ups and downs of the ordinary economic cycle, elected officials and budget planners are facing something none of them have experienced before: year after year of shortfalls, steadily compounding. Ordinarily, deficits are resolved mostly through budgetary hocus-pocus. But the length and depth of the recession are forcing governments to go beyond sleight of hand to genuine cuts. And that makes lawmakers gloomy in all but a handful of states. (It’s a swell time to be North Dakota.) According to an NCSL survey, worry or outright pessimism is the reigning mood in the vast majority of capitals.
And here’s a brief look at how some states are dealing with their deficits, starting with California:
A three-way stalemate over California’s budget
Budget, budget, who’s got a budget?
The governor has a state budget that his fellow Republicans more or less support. Assembly Democrats have a budget whose centerpiece is a complex scheme to borrow billions of dollars. And Democratic senators have a budget that’s based on raising taxes and shifting some programs from the state to counties.
Democrats control the 10-member, two-house conference committee that’s supposed to be reconciling all three budgets into one version that would be placed before the entire Legislature. They have the votes to do it. However, the committee has been going through the budget page by page for more than two weeks without settling any big issues and only some little ones. It’s now in hiatus after repeatedly hitting a political wall, unable to proceed because it doesn’t know how much money it has to spend.
That’s because the two Democratic versions of the budget are very much at odds, even if they both agree on rejecting Gov. Arnold Schwarzenegger’s slash-and-burn approach to closing a $19.1 billion deficit. It’s a three-way stalemate, with the new fiscal year due to begin next week and with state Controller John Chiang warning that the state will run out of cash this summer if a new budget is not in place.
Nothing will happen until Democrats in both houses are in sync on whether to borrow or tax their way out of this year’s version of the chronic deficit. But even if they do – and they appear to be very far apart – it would be merely a step, and not a particularly big one, on the budget road. They could put a budget up for floor votes, but they would still need to get some votes from Republicans, who have said anything that depends on higher taxes, or even extending some temporary taxes due to expire next year, is dead on arrival.
California budget idea: Ads on e-license plates
California’s legislature is exploring the feasibility of electronic license plates with digital ads, a move that its leading proponent says could add jobs and help in combating the state’s budget crisis.
Sen. Curren Price, a Democrat from the Los Angeles area, said the technology will resemble traditional license plates, with plate numbers visible at all times. However, digital ads and public service announcements would flash on the plate’s screen when the vehicle is stopped for more than a few seconds.
The technology could provide an additional source of revenue for the cash-strapped state, according to Price, the bill’s author, as advertisers and technology companies contract with the Department of Motor Vehicles. He said the plates could also aid small businesses and add jobs to the ailing economy in the technology, sales and marketing, and service industries.
“State governments are facing unprecedented budget shortfalls, and are actively rethinking the use of existing state assets to create new ongoing revenue opportunities,” he said. “This is a unique opportunity for public-private partnership.”
However, Price said he doesn’t know how much revenue electronic license plates would generate, or how many jobs they would create. California’s budget deficit is an estimated $19.1 billion.
New York:
Cigarette Tax Increased to Keep State Running
New Yorkers who like to smoke will have to dig a little deeper to light up next month, after the Legislature passed a bill on Monday that will give the state the highest cigarette taxes in the country. The new law, part of an emergency budget measure to keep the government running, adds another $1.60 in state taxes to every cigarette pack sold starting on July 1, pushing the average price of a pack to about $9.20. The average price in New York City, which imposes its own cigarette taxes, will be even higher, nearly $11 a pack.
Those who prefer other tobacco products will also be forced to pay significantly more. The tax on smokeless tobacco will more than double, to $2 an ounce from 96 cents an ounce, starting on Aug. 1. And the wholesale tax on cigars, dips and other kinds of tobacco will rise to 75 percent from 46 percent .
And in what may be the legislation’s most controversial provisions, starting on Sept. 1, the state will begin collecting — or try to collect — taxes on cigarettes sold on Indian reservations to off-reservation visitors, an issue that led to violent protests during the early 1990s. One Indian chief has said that trying to collect taxes would be considered an act of war.
Massachusetts:
Hill eyes another savings draw to blunt cuts if no federal funds
BOSTON — Girding for the start next week of a new fiscal year amid growing uncertainty about nearly $700 million in federal aid, legislative budget writers tentatively plan to withdraw $100 million from the state’s atrophying main savings account while refraining from deeper reductions in aid to cities and towns.
Gov. Deval Patrick and legislative leaders met Monday and discussed Beacon Hill’s narrowing menu of options for coping with Washington’s reluctance to authorize Medicaid funds that the administration, House and Senate all banked on for fiscal 2011. House budget chief Charles Murphy said the budget intended for the floor this week would contain two sets of line items, one in case the funds do not arrive and one if they do.
State lawmakers acknowledged not having much insight into Congress’s plans for the money, part of a $24 billion package that has received backing at one time or another from both legislative branches and the White House. “Frankly, they’ve recessed until this week sometime, so nobody knows,” Murphy said.
“We haven’t given up on it,” Patrick told reporters Monday. “I don’t think we should give up on it, given the fact that both the U.S. House and the U.S. Senate have voted on it. But if we don’t have it in hand by the time of the fiscal year, then we should have a budget that doesn’t account for it.” The Senate accounted for $687 million in additional federal assistance, while both Patrick and the House used $79 million less. In filing a contingency budget last week, Patrick, who has taken heat from his gubernatorial rivals for his budgeting practices, proposed holding harmless state support for local aid and public schools.
Colorado:
More state budget cuts likely, officials forecast
Colorado is looking over the edge of a $1 billion budget abyss, with key services, from schools to health care for the needy, on the chopping block next year. In a clear sign that economic recovery is not keeping pace with demand for governments services, economic forecasters warned a General Assembly budget committee on Monday that the state fiscal picture has worsened in the past three months and could be darker still in a year.
Economic forecasts prepared by the Governor’s office and by advisers to the General Assembly backed away from optimism seen earlier this year. They outlined a $1 billion crisis for the budget year that begins July 1, 2011.State revenue fell from a March economic forecast by more than $120 million, largely because tax collectors are having a difficult time getting people and businesses to pay up. That cuts into the state’s savings account, leaving Gov. Bill Ritter to come up with as much as $75 million in immediate cuts from the state’s $7 billion general fund.
On Monday, Gov. Bill Ritter said he is scouring the budget to cover the shortfall, with a plan due by August. He covered bigger shortfalls last year by furloughing state workers, cutting programs and releasing some inmates from state prisons. Ritter said that in the past two years he’s done his best to preserve essential state services while closing budget gaps totaling $3.5 billion. “As you go forward it becomes increasingly difficult to find ways to do that,” he said.
Colorado Springs Democratic Sen. John Morse has been predicting deeper budget cuts for months.
“Colorado is recovering, but, as predicted, it will be a slow and long recovery,” he said Monday. “While more cuts are inevitable, we, as legislators, must do what we can to make those cuts as painless as possible.”
New Jersey:
Budget compromise reached in N.J.
New Jersey Gov. Chris Christie and lawmakers reached a compromise on a $29.38 billion state budget Monday, which is scheduled for final votes on Monday.
The budget will make funds available for approved, shovel-ready Urban Enterprise Zone projects and uses $74 million in additional cost-savings to restore funding for several programs, including $22 million for general assistance. The budget plan, which closes a $11 billion deficit, will leave a more than $300 million surplus, Christie said.
“This budget stays true to the principles I originally outlined, keeping spending within our means and restoring fiscal order without raising taxes,” Christie said.
The state’s budget is due by June 30, a deadline Senate President Stephen M. Sweeney, D-Gloucester/Cumberland/Salem, said would be met.
“The budget we will introduce is far from perfect and will still be a tough sell among Democratic lawmakers, but the governor should be commended for working with us to take the sting our of some of its most harmful cuts,” Sweeney said of the budget compromise reached with Christie. “Most importantly, this budget will be signed on time, and all the rumors of a shutdown will remain just that.”
Some thoughts:
It’s clear who is serious and who isn’t. New York raises cigarette prices to 11 bucks a pack, and expects higher revenues rather than increased smuggling and a more powerful mafia. Massachusetts spends its savings while hoping for a federal bailout. And let’s not even bother with California. At the other end of the spectrum are Colorado and New Jersey, where real cuts will bring budgets closer to real balance.
It’s also clear that sometime in the next year or two, the worst-run states will balk at laying off half their workers and will choose instead to default on their debt, presenting Washington with the same choice as with the banks in 2008: bailouts or contagion.
Even where states make real cuts in spending, the resulting economic contractions will be brutal.
Muni bonds, which are funded by sport stadiums and the like — or by state/city general revenues — are the next sector to blow up.
This week the focus shifted from Europe, where (apart from the French World Cup team) things are quiet, to the US, where state budget deadlines are forcing some tough, and occasionally bizarre, choices. Time Magazine’s cover, for instance blares “The Broken States of America”. An excerpt:
… Almost no one — and no place — is exempt. Nearly everywhere, tax revenue plummeted as property values tanked, incomes dwindled and consumers stopped shopping. Falling prices for stocks and real estate have made mincemeat of often underfunded public pension plans. Unemployed workers have swelled the demand for welfare and Medicaid services. Governments that were frugal in the past are just squeaking by. Governments that were lavish in the good times, building their budgets on optimism and best-case scenarios, now risk being wrecked like a shantytown in an earthquake.
How the Money Ran Out
For the first time in four decades of collecting data, the National Governors Association (NGA) reports that total state spending has dropped for two years in a row. In hard-hit Arizona, for example, the state budget has sagged to 2004 levels, despite blistering growth in population and demand for government services. Starting with the 2008 fiscal year, state governments have closed more than $300 billion in cumulative budget gaps, with another $125 billion already projected for the coming years, says Corina Eckl, fiscal-program director at the National Conference of State Legislatures (NCSL). Similar figures aren’t collected for the nation’s counties, villages and towns, but when the National League of Cities surveyed mayors recently, three-fourths of them described worsening economic conditions.
Accustomed to the ups and downs of the ordinary economic cycle, elected officials and budget planners are facing something none of them have experienced before: year after year of shortfalls, steadily compounding. Ordinarily, deficits are resolved mostly through budgetary hocus-pocus. But the length and depth of the recession are forcing governments to go beyond sleight of hand to genuine cuts. And that makes lawmakers gloomy in all but a handful of states. (It’s a swell time to be North Dakota.) According to an NCSL survey, worry or outright pessimism is the reigning mood in the vast majority of capitals.
And here’s a brief look at how some states are dealing with their deficits, starting with California:
A three-way stalemate over California’s budget
Budget, budget, who’s got a budget?
The governor has a state budget that his fellow Republicans more or less support. Assembly Democrats have a budget whose centerpiece is a complex scheme to borrow billions of dollars. And Democratic senators have a budget that’s based on raising taxes and shifting some programs from the state to counties.
Democrats control the 10-member, two-house conference committee that’s supposed to be reconciling all three budgets into one version that would be placed before the entire Legislature. They have the votes to do it. However, the committee has been going through the budget page by page for more than two weeks without settling any big issues and only some little ones. It’s now in hiatus after repeatedly hitting a political wall, unable to proceed because it doesn’t know how much money it has to spend.
That’s because the two Democratic versions of the budget are very much at odds, even if they both agree on rejecting Gov. Arnold Schwarzenegger’s slash-and-burn approach to closing a $19.1 billion deficit. It’s a three-way stalemate, with the new fiscal year due to begin next week and with state Controller John Chiang warning that the state will run out of cash this summer if a new budget is not in place.
Nothing will happen until Democrats in both houses are in sync on whether to borrow or tax their way out of this year’s version of the chronic deficit. But even if they do – and they appear to be very far apart – it would be merely a step, and not a particularly big one, on the budget road. They could put a budget up for floor votes, but they would still need to get some votes from Republicans, who have said anything that depends on higher taxes, or even extending some temporary taxes due to expire next year, is dead on arrival.
California budget idea: Ads on e-license plates
California’s legislature is exploring the feasibility of electronic license plates with digital ads, a move that its leading proponent says could add jobs and help in combating the state’s budget crisis.
Sen. Curren Price, a Democrat from the Los Angeles area, said the technology will resemble traditional license plates, with plate numbers visible at all times. However, digital ads and public service announcements would flash on the plate’s screen when the vehicle is stopped for more than a few seconds.
The technology could provide an additional source of revenue for the cash-strapped state, according to Price, the bill’s author, as advertisers and technology companies contract with the Department of Motor Vehicles. He said the plates could also aid small businesses and add jobs to the ailing economy in the technology, sales and marketing, and service industries.
“State governments are facing unprecedented budget shortfalls, and are actively rethinking the use of existing state assets to create new ongoing revenue opportunities,” he said. “This is a unique opportunity for public-private partnership.”
However, Price said he doesn’t know how much revenue electronic license plates would generate, or how many jobs they would create. California’s budget deficit is an estimated $19.1 billion.
New York:
Cigarette Tax Increased to Keep State Running
New Yorkers who like to smoke will have to dig a little deeper to light up next month, after the Legislature passed a bill on Monday that will give the state the highest cigarette taxes in the country. The new law, part of an emergency budget measure to keep the government running, adds another $1.60 in state taxes to every cigarette pack sold starting on July 1, pushing the average price of a pack to about $9.20. The average price in New York City, which imposes its own cigarette taxes, will be even higher, nearly $11 a pack.
Those who prefer other tobacco products will also be forced to pay significantly more. The tax on smokeless tobacco will more than double, to $2 an ounce from 96 cents an ounce, starting on Aug. 1. And the wholesale tax on cigars, dips and other kinds of tobacco will rise to 75 percent from 46 percent .
And in what may be the legislation’s most controversial provisions, starting on Sept. 1, the state will begin collecting — or try to collect — taxes on cigarettes sold on Indian reservations to off-reservation visitors, an issue that led to violent protests during the early 1990s. One Indian chief has said that trying to collect taxes would be considered an act of war.
Massachusetts:
Hill eyes another savings draw to blunt cuts if no federal funds
BOSTON — Girding for the start next week of a new fiscal year amid growing uncertainty about nearly $700 million in federal aid, legislative budget writers tentatively plan to withdraw $100 million from the state’s atrophying main savings account while refraining from deeper reductions in aid to cities and towns.
Gov. Deval Patrick and legislative leaders met Monday and discussed Beacon Hill’s narrowing menu of options for coping with Washington’s reluctance to authorize Medicaid funds that the administration, House and Senate all banked on for fiscal 2011. House budget chief Charles Murphy said the budget intended for the floor this week would contain two sets of line items, one in case the funds do not arrive and one if they do.
State lawmakers acknowledged not having much insight into Congress’s plans for the money, part of a $24 billion package that has received backing at one time or another from both legislative branches and the White House. “Frankly, they’ve recessed until this week sometime, so nobody knows,” Murphy said.
“We haven’t given up on it,” Patrick told reporters Monday. “I don’t think we should give up on it, given the fact that both the U.S. House and the U.S. Senate have voted on it. But if we don’t have it in hand by the time of the fiscal year, then we should have a budget that doesn’t account for it.” The Senate accounted for $687 million in additional federal assistance, while both Patrick and the House used $79 million less. In filing a contingency budget last week, Patrick, who has taken heat from his gubernatorial rivals for his budgeting practices, proposed holding harmless state support for local aid and public schools.
Colorado:
More state budget cuts likely, officials forecast
Colorado is looking over the edge of a $1 billion budget abyss, with key services, from schools to health care for the needy, on the chopping block next year. In a clear sign that economic recovery is not keeping pace with demand for governments services, economic forecasters warned a General Assembly budget committee on Monday that the state fiscal picture has worsened in the past three months and could be darker still in a year.
Economic forecasts prepared by the Governor’s office and by advisers to the General Assembly backed away from optimism seen earlier this year. They outlined a $1 billion crisis for the budget year that begins July 1, 2011.State revenue fell from a March economic forecast by more than $120 million, largely because tax collectors are having a difficult time getting people and businesses to pay up. That cuts into the state’s savings account, leaving Gov. Bill Ritter to come up with as much as $75 million in immediate cuts from the state’s $7 billion general fund.
On Monday, Gov. Bill Ritter said he is scouring the budget to cover the shortfall, with a plan due by August. He covered bigger shortfalls last year by furloughing state workers, cutting programs and releasing some inmates from state prisons. Ritter said that in the past two years he’s done his best to preserve essential state services while closing budget gaps totaling $3.5 billion. “As you go forward it becomes increasingly difficult to find ways to do that,” he said.
Colorado Springs Democratic Sen. John Morse has been predicting deeper budget cuts for months.
“Colorado is recovering, but, as predicted, it will be a slow and long recovery,” he said Monday. “While more cuts are inevitable, we, as legislators, must do what we can to make those cuts as painless as possible.”
New Jersey:
Budget compromise reached in N.J.
New Jersey Gov. Chris Christie and lawmakers reached a compromise on a $29.38 billion state budget Monday, which is scheduled for final votes on Monday.
The budget will make funds available for approved, shovel-ready Urban Enterprise Zone projects and uses $74 million in additional cost-savings to restore funding for several programs, including $22 million for general assistance. The budget plan, which closes a $11 billion deficit, will leave a more than $300 million surplus, Christie said.
“This budget stays true to the principles I originally outlined, keeping spending within our means and restoring fiscal order without raising taxes,” Christie said.
The state’s budget is due by June 30, a deadline Senate President Stephen M. Sweeney, D-Gloucester/Cumberland/Salem, said would be met.
“The budget we will introduce is far from perfect and will still be a tough sell among Democratic lawmakers, but the governor should be commended for working with us to take the sting our of some of its most harmful cuts,” Sweeney said of the budget compromise reached with Christie. “Most importantly, this budget will be signed on time, and all the rumors of a shutdown will remain just that.”
Some thoughts:
It’s clear who is serious and who isn’t. New York raises cigarette prices to 11 bucks a pack, and expects higher revenues rather than increased smuggling and a more powerful mafia. Massachusetts spends its savings while hoping for a federal bailout. And let’s not even bother with California. At the other end of the spectrum are Colorado and New Jersey, where real cuts will bring budgets closer to real balance.
It’s also clear that sometime in the next year or two, the worst-run states will balk at laying off half their workers and will choose instead to default on their debt, presenting Washington with the same choice as with the banks in 2008: bailouts or contagion.
Even where states make real cuts in spending, the resulting economic contractions will be brutal.
Muni bonds, which are funded by sport stadiums and the like — or by state/city general revenues — are the next sector to blow up.
If you have seen flyers for this blog
That means your a part of the community i live in, it's a rather nice place with lots of nice folks. i wont ever mention the state or local name for where we live due to opsec.
I do have to say that if you believe or don't believe the currency will collapse here in America, the tips i will provide you will insure that even if the economy hums back to life and has 10% growth for the next 50 years, these tips will still serve you well.
It seems we have come to rely far to much on other people for our basic needs, including food and water,power,security,etc. We have to get back to providing for our self. Things that we can do now that will help us no matter what(collapse,unemployment,inflation,etc) would include: growing a garden, canning food, solar or wind power, generators, stored fuel, candles, wood burning stoves and furnance's. outdoor ovens/grills.
When the currency collapse comes, and it will my friend, if you want to believe it or not wont matter. You have to be prepared for it, your family will need you to be prepared for it.
A years worth of food put back is going to be a good investment if the currency collapse's, you become unemployed(one less thing to worry about) or rampant food inflation happens.
http://www.msnbc.msn.com/id/24127314/
Still, the higher U.S. prices seem eye-popping after years of low inflation. Eggs cost 25 percent more in February than they did a year ago, according to the USDA. Milk and other dairy products jumped 13 percent, chicken and other poultry nearly 7 percent.
What is going to happen when the power goes out for 2 weeks because of a bad ice or snow storm? well if you listen to my advice, then nothing, cause you have already set up generators or solar/wind power.
your not one of the helpless masses!!
I do have to say that if you believe or don't believe the currency will collapse here in America, the tips i will provide you will insure that even if the economy hums back to life and has 10% growth for the next 50 years, these tips will still serve you well.
It seems we have come to rely far to much on other people for our basic needs, including food and water,power,security,etc. We have to get back to providing for our self. Things that we can do now that will help us no matter what(collapse,unemployment,inflation,etc) would include: growing a garden, canning food, solar or wind power, generators, stored fuel, candles, wood burning stoves and furnance's. outdoor ovens/grills.
When the currency collapse comes, and it will my friend, if you want to believe it or not wont matter. You have to be prepared for it, your family will need you to be prepared for it.
A years worth of food put back is going to be a good investment if the currency collapse's, you become unemployed(one less thing to worry about) or rampant food inflation happens.
http://www.msnbc.msn.com/id/24127314/
Still, the higher U.S. prices seem eye-popping after years of low inflation. Eggs cost 25 percent more in February than they did a year ago, according to the USDA. Milk and other dairy products jumped 13 percent, chicken and other poultry nearly 7 percent.
What is going to happen when the power goes out for 2 weeks because of a bad ice or snow storm? well if you listen to my advice, then nothing, cause you have already set up generators or solar/wind power.
your not one of the helpless masses!!
What Would Fiscal Austerity Look Like In The U.S.?
http://economicrot.blogspot.com/2010/06/what-would-fiscal-austerity-look-like.html
Cafferty's question to viewers: What would fiscal austerity look like in the U.S.?
I think one of the most accurate comments was:
'those who have not prepared for the worst will suffer the most. It would come down to a simple matter of survival of the fittest and it would be brutal since the government has made a habit of propping up the poor with programs that would have to be curtailed. America would clearly become a nation of haves and have-nots. And, as a result, there would be chaos and riots unlike anything America's ever seen."
Cafferty's question to viewers: What would fiscal austerity look like in the U.S.?
I think one of the most accurate comments was:
'those who have not prepared for the worst will suffer the most. It would come down to a simple matter of survival of the fittest and it would be brutal since the government has made a habit of propping up the poor with programs that would have to be curtailed. America would clearly become a nation of haves and have-nots. And, as a result, there would be chaos and riots unlike anything America's ever seen."
Maywood, California Fires all Employees, Becomes a 100% Contracted City
The Los Angeles Times reports Maywood to lay off all city employees, dismantle Police Department
http://latimesblogs.latimes.com/lanow/2010/06/sheriffs-dept-to-patrol-maywood-while-city-employees-now-face-lay-offs.html
http://latimesblogs.latimes.com/lanow/2010/06/sheriffs-dept-to-patrol-maywood-while-city-employees-now-face-lay-offs.html
Report: California on 'Verge of System Failure'
http://www.moneynews.com/StreetTalk/California-verge-System-Failure/2010/06/21/id/362560
As cali goes, so does the nation. As more and more cities/towns and states come to the realization that they are BROKE, more are more will be defaulting on their debt or asking for a government bail-out. For those that hink "hey it's only crazy ass cali that is in trouble", please read thru the last couple of months i have posted here. Illinois is 6 billion behind from LAST year, 32 states had to borrow 37 billion for unemployment benefits this year.
To imagine the good times are comming back is a sad joke your playing on yourself friends, wake up now and get ready so your better prepared for whatever comes your way.
As cali goes, so does the nation. As more and more cities/towns and states come to the realization that they are BROKE, more are more will be defaulting on their debt or asking for a government bail-out. For those that hink "hey it's only crazy ass cali that is in trouble", please read thru the last couple of months i have posted here. Illinois is 6 billion behind from LAST year, 32 states had to borrow 37 billion for unemployment benefits this year.
To imagine the good times are comming back is a sad joke your playing on yourself friends, wake up now and get ready so your better prepared for whatever comes your way.
Sunday, May 30, 2010
List of countries by external debt
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
I simply LOVE how some of these countries have debt to citzens at like 500k and such...if this was not so sick it would be funny.
Look at all those countrys jocked up on credit, when the western countries money goes, so does a LOT of these smaller countries were their debt to gdp is at like 68-70% and higher, simply because you know that without the factory's of freedom(i'm trademarking that bastards!lol) churning out plastic crap for the american massives, these countries have no gdp at all. If our government did not fudge our gdp numbers, our credit rating might be as good as it is now, borrowing might be a little harder. We are on a VERY thin ledge looking over now, while it crumbles away at our feet.
Get out of all dollar and dollar donaminated assets while you can, or dont.
You can only lead the horse to water.
advice, the wise dont need it and the dumb wont heed it.
I simply LOVE how some of these countries have debt to citzens at like 500k and such...if this was not so sick it would be funny.
Look at all those countrys jocked up on credit, when the western countries money goes, so does a LOT of these smaller countries were their debt to gdp is at like 68-70% and higher, simply because you know that without the factory's of freedom(i'm trademarking that bastards!lol) churning out plastic crap for the american massives, these countries have no gdp at all. If our government did not fudge our gdp numbers, our credit rating might be as good as it is now, borrowing might be a little harder. We are on a VERY thin ledge looking over now, while it crumbles away at our feet.
Get out of all dollar and dollar donaminated assets while you can, or dont.
You can only lead the horse to water.
advice, the wise dont need it and the dumb wont heed it.
25 Questions To Ask Anyone Who Is Delusional Enough To Believe That This Economic Recovery Is Real
http://www.silverbearcafe.com/private/05.10/25questions.html
Michael Snyder
If you listen to the mainstream media long enough, you just might be tempted to believe that the United States has emerged from the recession and is now in the middle of a full-fledged economic recovery. In fact, according to Obama administration officials, the great American economic machine has roared back to life, stronger and more vibrant than ever before. But is that really the case? Of course not. You would have to be delusional to believe that. What did happen was that all of the stimulus packages and government spending and new debt that Obama and the U.S. Congress pumped into the economy bought us a little bit of time. But they have also made our long-term economic problems far worse. The reality is that the U.S. cannot keep supporting an economy on an ocean of red ink forever. At some point the charade is going to come crashing down.
And GDP is not a really good measure of the economic health of a nation. For example, if you would have looked at the growth of GDP in the Weimar republic in the early 1930s, you may have been tempted to think that the German economy was really thriving. German citizens were spending increasingly massive amounts of money. But of course that money was becoming increasingly worthless at the same time as hyperinflation spiralled out of control.
Well, today the purchasing power of our dollar is rapidly eroding as the price of food and other necessities continues to increase. So just because Americans are spending a little bit more money than before really doesn’t mean much of anything. As you will see below, there are a whole bunch of other signs that the U.S. economy is in very, very serious trouble.
Any "recovery" that the U.S. economy is experiencing is illusory and will be quite temporary. The entire financial system of the United States is falling apart, and the powers that be can try to patch it up and prop it up for a while, but in the end this thing is going to come crashing down.
But as obvious as that may seem to most of us, there are still quite a few people out there that are absolutely convinced that the U.S. economy will fully recover and will soon be stronger than ever.
So the following are 25 questions to ask anyone who is delusional enough to believe that this economic recovery is real….
#1) In what universe is an economy with 39.68 million Americans on food stamps considered to be a healthy, recovering economy? In fact, the U.S. Department of Agriculture forecasts that enrollment in the food stamp program will exceed 43 million Americans in 2011. Is a rapidly increasing number of Americans on food stamps a good sign or a bad sign for the economy?
#2) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in the month of March. This was an increase of almost 19 percent from February, and it was the highest monthly total since RealtyTrac began issuing its report back in January 2005. So can you please explain again how the U.S. real estate market is getting better?
#3) The Mortgage Bankers Association just announced that more than 10 percent of U.S. homeowners with a mortgage had missed at least one payment in the January-March period. That was a record high and up from 9.1 percent a year ago. Do you think that is an indication that the U.S. housing market is recovering?
#4) How can the U.S. real estate market be considered healthy when, for the first time in modern history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together?
#5) With the U.S. Congress planning to quadruple oil taxes, what do you think that is going to do to the price of gasoline in the United States and how do you think that will affect the U.S. economy?
#6) Do you think that it is a good sign that Arnold Schwarzenegger, the governor of the state of California, says that "terrible cuts" are urgently needed in order to avoid a complete financial disaster in his state?
#7) But it just isn’t California that is in trouble. Dozens of U.S. states are in such bad financial shape that they are getting ready for their biggest budget cuts in decades. What do you think all of those budget cuts will do to the economy?
#8) In March, the U.S. trade deficit widened to its highest level since December 2008. Month after month after month we buy much more from the rest of the world than they buy from us. Wealth is draining out of the United States at an unprecedented rate. So is the fact that the gigantic U.S. trade deficit is actually getting bigger a good sign or a bad sign for the U.S. economy?
#9) Considering the fact that the U.S. government is projected to have a 1.6 trillion dollar deficit in 2010, and considering the fact that if you went out and spent one dollar every single second it would take you more than 31,000 years to spend a trillion dollars, how can anyone in their right mind claim that the U.S. economy is getting healthier when we are getting into so much debt?
#10) The U.S. Treasury Department recently announced that the U.S. government suffered a wider-than-expected budget deficit of 82.69 billion dollars in April. So is the fact that the red ink of the U.S. government is actually worse than projected a good sign or a bad sign?
#11) According to one new report, the U.S. national debt will reach 100 percent of GDP by the year 2015. So is that a sign of economic recovery or of economic disaster?
#12) Monstrous amounts of oil continue to gush freely into the Gulf of Mexico, and analysts are already projecting that the seafood and tourism industries along the Gulf coast will be devastated for decades by this unprecedented environmental disaster. In light of those facts, how in the world can anyone project that the U.S. economy will soon be stronger than ever?
#13) The FDIC’s list of problem banks recently hit a 17-year high. Do you think that an increasing number of small banks failing is a good sign or a bad sign for the U.S. economy?
#14) The FDIC is backing 8,000 banks that have a total of $13 trillion in assets with a deposit insurance fund that is basically flat broke. So what do you think will happen if a significant number of small banks do start failing?
#15) Existing home sales in the United States jumped 7.6 percent in April. That is the good news. The bad news is that this increase only happened because the deadline to take advantage of the temporary home buyer tax credit (government bribe) was looming. So now that there is no more tax credit for home buyers, what will that do to home sales?
#16) Both Fannie Mae and Freddie Mac recently told the U.S. government that they are going to need even more bailout money. So what does it say about the U.S. economy when the two "pillars" of the U.S. mortgage industry are government-backed financial black holes that the U.S. government has to relentlessly pour money into?
#17) 43 percent of Americans have less than $10,000 saved for retirement. Tens of millions of Americans find themselves just one lawsuit, one really bad traffic accident or one very serious illness away from financial ruin. With so many Americans living on the edge, how can you say that the economy is healthy?
#18) The mayor of Detroit says that the real unemployment rate in his city is somewhere around 50 percent. So can the U.S. really be experiencing an economic recovery when so many are still unemployed in one of America’s biggest cities?
#19) Gallup’s measure of underemployment hit 20.0% on March 15th. That was up from 19.7% two weeks earlier and 19.5% at the start of the year. Do you think that is a good trend or a bad trend?
#20) One new poll shows that 76 percent of Americans believe that the U.S. economy is still in a recession. So are the vast majority of Americans just stupid or could we still actually be in a recession?
#21) The bottom 40 percent of those living in the United States now collectively own less than 1 percent of the nation’s wealth. So is Barack Obama’s mantra that "what is good for Wall Street is good for Main Street" actually true?
#22) Richard Russell, the famous author of the Dow Theory Letters, says that Americans should sell anything they can sell in order to get liquid because of the economic trouble that is coming. Do you think that Richard Russell is delusional or could he possibly have a point?
#23) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. In fact, that was almost twice the level of a year earlier. Does that look like a good trend to you?
#24) In March, the price of fresh and dried vegetables in the United States soared 49.3% - the most in 16 years. Is it a sign of a healthy economy when food prices are increasing so dramatically?
#25) 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005. So shouldn’t we at least wait until the number of Americans filing for bankruptcy is not setting new all-time records before we even dare whisper the words "economic recovery"?
Michael Snyder
If you listen to the mainstream media long enough, you just might be tempted to believe that the United States has emerged from the recession and is now in the middle of a full-fledged economic recovery. In fact, according to Obama administration officials, the great American economic machine has roared back to life, stronger and more vibrant than ever before. But is that really the case? Of course not. You would have to be delusional to believe that. What did happen was that all of the stimulus packages and government spending and new debt that Obama and the U.S. Congress pumped into the economy bought us a little bit of time. But they have also made our long-term economic problems far worse. The reality is that the U.S. cannot keep supporting an economy on an ocean of red ink forever. At some point the charade is going to come crashing down.
And GDP is not a really good measure of the economic health of a nation. For example, if you would have looked at the growth of GDP in the Weimar republic in the early 1930s, you may have been tempted to think that the German economy was really thriving. German citizens were spending increasingly massive amounts of money. But of course that money was becoming increasingly worthless at the same time as hyperinflation spiralled out of control.
Well, today the purchasing power of our dollar is rapidly eroding as the price of food and other necessities continues to increase. So just because Americans are spending a little bit more money than before really doesn’t mean much of anything. As you will see below, there are a whole bunch of other signs that the U.S. economy is in very, very serious trouble.
Any "recovery" that the U.S. economy is experiencing is illusory and will be quite temporary. The entire financial system of the United States is falling apart, and the powers that be can try to patch it up and prop it up for a while, but in the end this thing is going to come crashing down.
But as obvious as that may seem to most of us, there are still quite a few people out there that are absolutely convinced that the U.S. economy will fully recover and will soon be stronger than ever.
So the following are 25 questions to ask anyone who is delusional enough to believe that this economic recovery is real….
#1) In what universe is an economy with 39.68 million Americans on food stamps considered to be a healthy, recovering economy? In fact, the U.S. Department of Agriculture forecasts that enrollment in the food stamp program will exceed 43 million Americans in 2011. Is a rapidly increasing number of Americans on food stamps a good sign or a bad sign for the economy?
#2) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in the month of March. This was an increase of almost 19 percent from February, and it was the highest monthly total since RealtyTrac began issuing its report back in January 2005. So can you please explain again how the U.S. real estate market is getting better?
#3) The Mortgage Bankers Association just announced that more than 10 percent of U.S. homeowners with a mortgage had missed at least one payment in the January-March period. That was a record high and up from 9.1 percent a year ago. Do you think that is an indication that the U.S. housing market is recovering?
#4) How can the U.S. real estate market be considered healthy when, for the first time in modern history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together?
#5) With the U.S. Congress planning to quadruple oil taxes, what do you think that is going to do to the price of gasoline in the United States and how do you think that will affect the U.S. economy?
#6) Do you think that it is a good sign that Arnold Schwarzenegger, the governor of the state of California, says that "terrible cuts" are urgently needed in order to avoid a complete financial disaster in his state?
#7) But it just isn’t California that is in trouble. Dozens of U.S. states are in such bad financial shape that they are getting ready for their biggest budget cuts in decades. What do you think all of those budget cuts will do to the economy?
#8) In March, the U.S. trade deficit widened to its highest level since December 2008. Month after month after month we buy much more from the rest of the world than they buy from us. Wealth is draining out of the United States at an unprecedented rate. So is the fact that the gigantic U.S. trade deficit is actually getting bigger a good sign or a bad sign for the U.S. economy?
#9) Considering the fact that the U.S. government is projected to have a 1.6 trillion dollar deficit in 2010, and considering the fact that if you went out and spent one dollar every single second it would take you more than 31,000 years to spend a trillion dollars, how can anyone in their right mind claim that the U.S. economy is getting healthier when we are getting into so much debt?
#10) The U.S. Treasury Department recently announced that the U.S. government suffered a wider-than-expected budget deficit of 82.69 billion dollars in April. So is the fact that the red ink of the U.S. government is actually worse than projected a good sign or a bad sign?
#11) According to one new report, the U.S. national debt will reach 100 percent of GDP by the year 2015. So is that a sign of economic recovery or of economic disaster?
#12) Monstrous amounts of oil continue to gush freely into the Gulf of Mexico, and analysts are already projecting that the seafood and tourism industries along the Gulf coast will be devastated for decades by this unprecedented environmental disaster. In light of those facts, how in the world can anyone project that the U.S. economy will soon be stronger than ever?
#13) The FDIC’s list of problem banks recently hit a 17-year high. Do you think that an increasing number of small banks failing is a good sign or a bad sign for the U.S. economy?
#14) The FDIC is backing 8,000 banks that have a total of $13 trillion in assets with a deposit insurance fund that is basically flat broke. So what do you think will happen if a significant number of small banks do start failing?
#15) Existing home sales in the United States jumped 7.6 percent in April. That is the good news. The bad news is that this increase only happened because the deadline to take advantage of the temporary home buyer tax credit (government bribe) was looming. So now that there is no more tax credit for home buyers, what will that do to home sales?
#16) Both Fannie Mae and Freddie Mac recently told the U.S. government that they are going to need even more bailout money. So what does it say about the U.S. economy when the two "pillars" of the U.S. mortgage industry are government-backed financial black holes that the U.S. government has to relentlessly pour money into?
#17) 43 percent of Americans have less than $10,000 saved for retirement. Tens of millions of Americans find themselves just one lawsuit, one really bad traffic accident or one very serious illness away from financial ruin. With so many Americans living on the edge, how can you say that the economy is healthy?
#18) The mayor of Detroit says that the real unemployment rate in his city is somewhere around 50 percent. So can the U.S. really be experiencing an economic recovery when so many are still unemployed in one of America’s biggest cities?
#19) Gallup’s measure of underemployment hit 20.0% on March 15th. That was up from 19.7% two weeks earlier and 19.5% at the start of the year. Do you think that is a good trend or a bad trend?
#20) One new poll shows that 76 percent of Americans believe that the U.S. economy is still in a recession. So are the vast majority of Americans just stupid or could we still actually be in a recession?
#21) The bottom 40 percent of those living in the United States now collectively own less than 1 percent of the nation’s wealth. So is Barack Obama’s mantra that "what is good for Wall Street is good for Main Street" actually true?
#22) Richard Russell, the famous author of the Dow Theory Letters, says that Americans should sell anything they can sell in order to get liquid because of the economic trouble that is coming. Do you think that Richard Russell is delusional or could he possibly have a point?
#23) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. In fact, that was almost twice the level of a year earlier. Does that look like a good trend to you?
#24) In March, the price of fresh and dried vegetables in the United States soared 49.3% - the most in 16 years. Is it a sign of a healthy economy when food prices are increasing so dramatically?
#25) 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005. So shouldn’t we at least wait until the number of Americans filing for bankruptcy is not setting new all-time records before we even dare whisper the words "economic recovery"?
Wednesday, May 26, 2010
Cash-strapped Illinois cobbling together emergency budget
http://interact.stltoday.com/blogzone/political-fix/political-fix/2010/05/cash-strapped-illinois-cobbling-together-emergency-budget/
SPRINGFIELD, Ill. — The Illinois House tonight passed emergency budget legislation, which would essentially give Gov. Pat Quinn the authority to decide where to spend the state’s limited money in the coming months.
In a separate measure, the House also passed a “tax amnesty” measure that will allow people who are behind in their state income tax to get caught up without paying any penalty or interests, if they agrees to do it now. The measure could raise more than $200 million for the state in back-taxes, say proponents.
The emergency budget bill, SB3660, opens with this sobering statement: “The General Assembly hereby finds and declares that the state is confronted with an unprecedented fiscal crisis.”
The crisis is a $13 billion budget deficit for the coming fiscal year that has already caused payment shortfalls to schools, hospitals and businesses around the state. With an election looming in November, the Legislature has been unable to bring itself to pass the major budget cuts and/or tax hikes necessary to address it.
This bill is their answer to this rock-and-a-hard-place dilemma. Instead of passing a budget that makes decisions they’d rather not have to make right now, it drops the whole mess into Quinn’s lap — giving him what money there is, and the power to spend it as he sees fit (and, conversely, to take the heat for wherever he decides not to spend it), until the lawmakers are all safely re-elected.
The measure passed along mostly partisan lines, with the ruling Democrats putting it over the top.
“Giving open-ended power like this to a governor, making him king for a year, is ridiculous,” argued state Rep. Rosemary Mulligan, R-Des Plaines, before the vote.
The bill also includes a series of small, largely symbolic spending cuts. It imposes a dozen unpaid furlough days on top officials statewide (including legislators), nixes their scheduled cost-of-living increases next year, cuts state mileage reimbursement and requires widespread review of all existing state contracts.
The bill now moves to the Senate, which could take it up tomorrow.
The tax-amnesty bill (SB377) is expected to raise another $250 million from tax scofflaws who will be given a chance to catch up on what they owe the state, without additional penalities, as long as they pay up before Nov. 8. It now moves to the Senate.
SPRINGFIELD, Ill. — The Illinois House tonight passed emergency budget legislation, which would essentially give Gov. Pat Quinn the authority to decide where to spend the state’s limited money in the coming months.
In a separate measure, the House also passed a “tax amnesty” measure that will allow people who are behind in their state income tax to get caught up without paying any penalty or interests, if they agrees to do it now. The measure could raise more than $200 million for the state in back-taxes, say proponents.
The emergency budget bill, SB3660, opens with this sobering statement: “The General Assembly hereby finds and declares that the state is confronted with an unprecedented fiscal crisis.”
The crisis is a $13 billion budget deficit for the coming fiscal year that has already caused payment shortfalls to schools, hospitals and businesses around the state. With an election looming in November, the Legislature has been unable to bring itself to pass the major budget cuts and/or tax hikes necessary to address it.
This bill is their answer to this rock-and-a-hard-place dilemma. Instead of passing a budget that makes decisions they’d rather not have to make right now, it drops the whole mess into Quinn’s lap — giving him what money there is, and the power to spend it as he sees fit (and, conversely, to take the heat for wherever he decides not to spend it), until the lawmakers are all safely re-elected.
The measure passed along mostly partisan lines, with the ruling Democrats putting it over the top.
“Giving open-ended power like this to a governor, making him king for a year, is ridiculous,” argued state Rep. Rosemary Mulligan, R-Des Plaines, before the vote.
The bill also includes a series of small, largely symbolic spending cuts. It imposes a dozen unpaid furlough days on top officials statewide (including legislators), nixes their scheduled cost-of-living increases next year, cuts state mileage reimbursement and requires widespread review of all existing state contracts.
The bill now moves to the Senate, which could take it up tomorrow.
The tax-amnesty bill (SB377) is expected to raise another $250 million from tax scofflaws who will be given a chance to catch up on what they owe the state, without additional penalities, as long as they pay up before Nov. 8. It now moves to the Senate.
How they fool you
http://www.oftwominds.com/blogmay10/cognitive-dissonance05-10.html?source=patrick.net
a good look at our "recovery" and how the media twists it so you keep guessing.
there is no recovery people.
a good look at our "recovery" and how the media twists it so you keep guessing.
there is no recovery people.
Thursday, May 20, 2010
Central Falls Rhode Island - Bankrupt - Goes Into Receivership
http://globaleconomicanalysis.blogspot.com/2010/05/central-falls-rhode-island-bankrupt.html
It's the end of the line for Central Falls, Rhode Island. Central Falls had been perpetually spending more than they take in. That's about to change.
It's the end of the line for Central Falls, Rhode Island. Central Falls had been perpetually spending more than they take in. That's about to change.
hair of the dog
another great read to help explain some of the problem.
http://fofoa.blogspot.com/2010/05/hair-of-dog.html
http://fofoa.blogspot.com/2010/05/hair-of-dog.html
Great new video from inflation.us......melt-up!
Here's the new documentary by inflation.us
http://www.youtube.com/watch?v=eb1n1X0Oqdw&feature=player_embedded
http://www.youtube.com/watch?v=eb1n1X0Oqdw&feature=player_embedded
Experts Agree - Chaos Is Coming SOON. Trends , Forecasts and Predictions for 2010
A friend sent me this article...by email...not sure of it's source...but it is a collection with links to the various sites of those who make the predictions.
Trends, Forecasts & Predictions for 2010
(Compilation of Forecasts from Well Known Sources)
(Note: Click on blue underlined names for hot-link to related web sites)
Bob Chapman (Investment Expert)
First 6 months of 2010, Americans will continue to live in the ‘unreality’…the period between July and October is when the financial fireworks will begin. The Fed will act unilaterally for its own survival irrespective of any political implications …(source is from insider at FED meetings). In the last quarter of the year we could even see Martial law, which is more likely for the first 6 months of 2011. The FDIC will collapse in September 2010. Commercial real estate is set to implode in 2010. Wall Street believes there is a 100% chance of crash in bond market, especially municipals sometime during 2010. The dollar will be devalued by the end of 2010.
Gerald Celenteue"> (Trends Research Institute)
Terrorist attacks and the “Crash of 2010″. 40% devaluation at first = the greatest depression, worse than the Great Depression.
Igor Panarin (Russian Professor)
In the summer of 1998, based on classified data about the state of the U.S. economy and society supplied to him by fellow FAPSI analysts, Panarin forecast the probable disintegration of the USA into six parts in 2010 (at the end of June – start of July 2010, as he specified on 10 December 2000).
Neithercorp (Web site)
Have projected that the third and final stage of the economic collapse will begin sometime in 2010. Barring some kind of financial miracle, or the complete dissolution of the Federal Reserve, a snowballing implosion should become visible by the end of this year. The behavior of the Fed, along with that of the IMF seems to suggest that they are preparing for a focused collapse, peaking within weeks or months instead of years, and the most certain fall of the dollar.
Webbots
July and onward things get very strange. Revolution. Dollar dead by November 2010.
LEAP 20/20 (European Economists Website)
2010 Outlook from a group of 25 European Economists with a 90% accuracy rating- We anticipate a sudden intensification of the crisis in the second half of 2010, caused by a double effect of a catching up of events which were temporarily « frozen » in the second half of 2009 and the impossibility of maintaining the palliative remedies of past years. There is a perfect (economic) storm coming within the global financial markets and inevitable pressure on interest rates in the U.S. The injection of zero-cost money into the Western banking system has failed to restart the economy. Despite zero-cost money, the system has stalled. It is slowly rolling over into the next big down wave, which in Elliott Wave terminology will be Super Cycle Wave Three, or in common language, “THE BIG ONE, WHERE WE ALL GO OVER THE FALLS TOGETHER.”
Joseph Meyer (Economic Analyst)
Forecasts on the economy. He sees the real estate market continuing to decline, and advised people to invest in precious metals and commodities, as well as keeping cash at home in a safe place in case of bank closures. The stock market, after peaking in March or April (around 10,850), will fall all the way down to somewhere between 2450 and 4125 during the next leg down.
Harry Dent (Financial Newsletter Writer)
A very likely second crash by late 2010. The coming depression (starts around the summer of 2010). Dent sees the stock market–currently benefiting from upward momentum and peppier economic activity–headed for a very brief and pleasant run that could lift the Dow to the 10,700-11,500 range from its current level of about 10.090. But then, he sees the market running into a stone wall, which will be followed by a nasty stock market decline (starting in early March to late April) that could drive down the Dow later this year to 3,000-5,000 with his best guess about 3,800.
Richard Russell (Market Expert)
(from 2/3/10) says the bear market rally is in the process of breaking up and panic is on the way. He sees a full correction of the entire rise from the 2002 low of 7,286 to the bull market high of 14,164.53 set on October 9, 2007. The halfway level of retracement was 10,725. The total retracement was to 6,547.05 on March 9, 2009. He now sees the Dow falling to 7,286 and if that level does not hold, “I see it sinking to its 1980-82 area low of Dow 1,000.” The current action is the worst he has ever seen. (Bob Chapman says for Russell to make such a startling statement is unusual because he never cries wolf and is almost never wrong).
Niño Becerra (Professor of Economics)
Predicted in July 2007 that what was going to happen was that by mid 2010 there is going to be a crisis only comparable to the one in 1929. From October 2009 to May 2010 people will begin to see things are not working out the way the government thought. In May of 2010, the crisis starts with all its force and continues and strengthens throughout 2011. He accurately predicted the current recession and market crash to the month.
Lyndon Larouche (Economist, Political Activist)
The crisis is accelerating and will become worse week by week until the whole system grinds into a collapse, likely sometime this year. And when it does, it will be the greatest collapse since the fall of the Roman Empire.
WALL STREET JOURNAL (Newspaper - 2/2010)
“You are witnessing a fundamental breakdown of the American dream, a systemic breakdown of our democracy and our capitalism, a breakdown driven by the blind insatiable greed of Wall Street: Dysfunctional government, insane markets, economy on the brink. Multiply that many times over and see a world in total disarray. Ignore it now, tomorrow will be too late.”
Eric deCarbonnel (Financial Analyst)
There is no precedence for the panic and chaos that will occur in 2010. The global food supply/demand picture has NEVER been so out of balance. The 2010 food crisis will rearrange economic, financial, and political order of the world, and those who aren’t prepared will suffer terrible losses…As the dollar loses most of its value, America’s savings will be wiped out. The US service economy will disintegrate as consumer spending in real terms (ie: gold or other stable currencies) drops like a rock, bringing unemployment to levels exceeding the great depression. Public health services/programs will be cut back, as individuals will have no savings/credit/income to pay for medical care. Value of most investments will be wiped out. The US debt markets will freeze again, this time permanently. There will be no buyers except at the most drastic of fire sale prices, and inflation will wipe away value before credit markets have any chance at recovery. The panic in 2010 will see the majority of derivatives end up worthless. Since global derivatives markets operate on the assumption of the continued stable value of the dollar and short term US debt, using derivatives to bet against the dollar is NOT a good idea. The panic in 2010 will see the majority of derivatives end up worthless. The dollar’s collapse will rob US consumers of all purchasing power, and any investment depend on US consumption will lose most of its value.
Alpha-Omega Report (Trends Forecasts, End Times Prophesy Analysis)
Going into 2010, the trends seemed to lead nowhere or towards oblivion. Geo-politically, the Middle East was and is trending towards some sort of military clash, most likely by mid-year, but perhaps sooner…At the moment, it seems 2010 is shaping up to be a year of absolute chaos. We see trends for war between Israel and her neighbors that will shake every facet of human activity…In the event of war, we see all other societal trends being thoroughly disrupted…Iran will most likely shut off the flow of oil from the Persian Gulf. This will have immense consequences for the world’s economy. Oil prices will skyrocket into the stratosphere and become so expensive that world’s economies will collapse. There are also trend indicators along economic lines that point to the potential for a total meltdown of the world’s financial system with major crisis points developing with the change of each quarter of the year. 2010 could be a meltdown year for the world’s economy, regardless of what goes on in the Middle East.
Robin Landry (Market Expert)
I believe we are headed to new market highs between 10780-11241 over the next few months. The most likely time frame for the top is the April-May area. Remember the evidence IMHO still says we are in a bear market rally with a major decline to follow once this rally ends.
John P. Hussman, Ph.D. (President, Hussman Investment Trust)
In my estimation, there is still close to an 80% probability (Bayes’ Rule) that a second market plunge and economic downturn will unfold during 2010.
Robert Prechter (Founder of Elliott Wave International – Author, Stock Market Analyst)
Implores retail investors stay away from the markets… for now. Prechter, who was bullish near the lows in March 2009, now says the stock market “is in a topping area, “predicting another crash in 2010 that will bring stocks below the 2009 low. His word to the wise, “be patient, don’t rush it” keep your money in cash and cash equivalents.
Richard Mogey (Research Director - Foundation for the Study of Cycles)
Because of a convergence of numerous cycles all at once, the stock market may go up for a little while, but will crash in 2010 and reach all-time lows late 2012. Mogey says that the 2008 crash was nothing compared to the coming crash. Gold may correct in 2009, but will go up in 2010 and peak in 2011. Silver will follow gold.
James Howard Kunstler (Author, Correspondent) (January 2010)
The economy as we’ve known it simply can’t go on, which James Howard Kunstler has been saying all along. The shenanigans with stimulus and bailouts will just compound the central problem with debt. There’s not much longer to go before the whole thing collapses and dies. Six Months to Live- The economy that is. Especially the part that consists of swapping paper certificates. That’s the buzz I’ve gotten the first two weeks of 2010.
Peter Schiff (3/13/2010) (Economist, Political Activist)
“In my opinion, the market is now perfectly positioned for a massive dollar sell-off. The fundamentals for the dollar in 2010 are so much worse than they were in 2008 that it is hard to imagine a reason for people to keep buying once a modicum of political and monetary stability can be restored in Europe. In fact, the euro has recently stabilized. My gut is that the dollar sell-off will be sharp and swift. Once the dollar decisively breaks below last year’s lows, many of the traders who jumped ship in the recent rally will look to re-establish their positions. This will accelerate the dollar’s descent and refocus everyone’s attention back on the financial train-wreck unfolding in the United States. Any doubts about the future of the U.S. dollar should be laid to rest by today’s announcement that San Francisco Federal Reserve President Janet Yellen has been nominated to be Vice Chair of the Fed’s Board of Governors, and thereby a voter on the interest rate-setting, seven-member Open Markets Committee. Ms. Yellen has earned a reputation for being one of the biggest inflation doves among the Fed’s top players.” Schiff is famous for his accurate predictions of the economic events of 2008.
Lindsey Williams (Pastor, former Chaplain to Major Oil Corporation)
Dollar devalued 30-50% by end of year. It will become very difficult for the average American to afford to buy even food. This was revealed to him through an Illuminati insider.
Unnamed Economist working for US Govt. (GLP)
What we have experienced the last two years is nothing to what we are going to experience this year. If you have a job now…you may not have it in three to six months. (by August 2010). Stock market will fall = great depression. Foreign investors stop financing debt = collapse. 6.2 million are about to lose their unemployment.
Jimmy “Doomsday” (Web site)
DOW will fall below 7,000 before mid summer 2010- Dollar will rise above 95 on the dollar index before mid summer 2010- Gold will bottom out below $800 before mid summer 2010- Silver will bottom out below $10 before mid summer 2010- CA debt implosion will start its major downturn by mid summer and hit crisis mode before Q4 2010- Dollar index will plunge below 65 between Q3 and Q4 2010- Commercial real estate will hit crisis mode in Q4 2010- Over 35 states will be bailed out by end of Q4 2010 by the US tax payer End of Q4 2010 gold will hit $1,600 and silver jump to $35 an oz.
George Ure (Economist)
Markets up until mid-to-late-summer. Then “all hell breaks lose” from then on through the rest of the year.
Trends, Forecasts & Predictions for 2010
(Compilation of Forecasts from Well Known Sources)
(Note: Click on blue underlined names for hot-link to related web sites)
Bob Chapman (Investment Expert)
First 6 months of 2010, Americans will continue to live in the ‘unreality’…the period between July and October is when the financial fireworks will begin. The Fed will act unilaterally for its own survival irrespective of any political implications …(source is from insider at FED meetings). In the last quarter of the year we could even see Martial law, which is more likely for the first 6 months of 2011. The FDIC will collapse in September 2010. Commercial real estate is set to implode in 2010. Wall Street believes there is a 100% chance of crash in bond market, especially municipals sometime during 2010. The dollar will be devalued by the end of 2010.
Gerald Celenteue"> (Trends Research Institute)
Terrorist attacks and the “Crash of 2010″. 40% devaluation at first = the greatest depression, worse than the Great Depression.
Igor Panarin (Russian Professor)
In the summer of 1998, based on classified data about the state of the U.S. economy and society supplied to him by fellow FAPSI analysts, Panarin forecast the probable disintegration of the USA into six parts in 2010 (at the end of June – start of July 2010, as he specified on 10 December 2000).
Neithercorp (Web site)
Have projected that the third and final stage of the economic collapse will begin sometime in 2010. Barring some kind of financial miracle, or the complete dissolution of the Federal Reserve, a snowballing implosion should become visible by the end of this year. The behavior of the Fed, along with that of the IMF seems to suggest that they are preparing for a focused collapse, peaking within weeks or months instead of years, and the most certain fall of the dollar.
Webbots
July and onward things get very strange. Revolution. Dollar dead by November 2010.
LEAP 20/20 (European Economists Website)
2010 Outlook from a group of 25 European Economists with a 90% accuracy rating- We anticipate a sudden intensification of the crisis in the second half of 2010, caused by a double effect of a catching up of events which were temporarily « frozen » in the second half of 2009 and the impossibility of maintaining the palliative remedies of past years. There is a perfect (economic) storm coming within the global financial markets and inevitable pressure on interest rates in the U.S. The injection of zero-cost money into the Western banking system has failed to restart the economy. Despite zero-cost money, the system has stalled. It is slowly rolling over into the next big down wave, which in Elliott Wave terminology will be Super Cycle Wave Three, or in common language, “THE BIG ONE, WHERE WE ALL GO OVER THE FALLS TOGETHER.”
Joseph Meyer (Economic Analyst)
Forecasts on the economy. He sees the real estate market continuing to decline, and advised people to invest in precious metals and commodities, as well as keeping cash at home in a safe place in case of bank closures. The stock market, after peaking in March or April (around 10,850), will fall all the way down to somewhere between 2450 and 4125 during the next leg down.
Harry Dent (Financial Newsletter Writer)
A very likely second crash by late 2010. The coming depression (starts around the summer of 2010). Dent sees the stock market–currently benefiting from upward momentum and peppier economic activity–headed for a very brief and pleasant run that could lift the Dow to the 10,700-11,500 range from its current level of about 10.090. But then, he sees the market running into a stone wall, which will be followed by a nasty stock market decline (starting in early March to late April) that could drive down the Dow later this year to 3,000-5,000 with his best guess about 3,800.
Richard Russell (Market Expert)
(from 2/3/10) says the bear market rally is in the process of breaking up and panic is on the way. He sees a full correction of the entire rise from the 2002 low of 7,286 to the bull market high of 14,164.53 set on October 9, 2007. The halfway level of retracement was 10,725. The total retracement was to 6,547.05 on March 9, 2009. He now sees the Dow falling to 7,286 and if that level does not hold, “I see it sinking to its 1980-82 area low of Dow 1,000.” The current action is the worst he has ever seen. (Bob Chapman says for Russell to make such a startling statement is unusual because he never cries wolf and is almost never wrong).
Niño Becerra (Professor of Economics)
Predicted in July 2007 that what was going to happen was that by mid 2010 there is going to be a crisis only comparable to the one in 1929. From October 2009 to May 2010 people will begin to see things are not working out the way the government thought. In May of 2010, the crisis starts with all its force and continues and strengthens throughout 2011. He accurately predicted the current recession and market crash to the month.
Lyndon Larouche (Economist, Political Activist)
The crisis is accelerating and will become worse week by week until the whole system grinds into a collapse, likely sometime this year. And when it does, it will be the greatest collapse since the fall of the Roman Empire.
WALL STREET JOURNAL (Newspaper - 2/2010)
“You are witnessing a fundamental breakdown of the American dream, a systemic breakdown of our democracy and our capitalism, a breakdown driven by the blind insatiable greed of Wall Street: Dysfunctional government, insane markets, economy on the brink. Multiply that many times over and see a world in total disarray. Ignore it now, tomorrow will be too late.”
Eric deCarbonnel (Financial Analyst)
There is no precedence for the panic and chaos that will occur in 2010. The global food supply/demand picture has NEVER been so out of balance. The 2010 food crisis will rearrange economic, financial, and political order of the world, and those who aren’t prepared will suffer terrible losses…As the dollar loses most of its value, America’s savings will be wiped out. The US service economy will disintegrate as consumer spending in real terms (ie: gold or other stable currencies) drops like a rock, bringing unemployment to levels exceeding the great depression. Public health services/programs will be cut back, as individuals will have no savings/credit/income to pay for medical care. Value of most investments will be wiped out. The US debt markets will freeze again, this time permanently. There will be no buyers except at the most drastic of fire sale prices, and inflation will wipe away value before credit markets have any chance at recovery. The panic in 2010 will see the majority of derivatives end up worthless. Since global derivatives markets operate on the assumption of the continued stable value of the dollar and short term US debt, using derivatives to bet against the dollar is NOT a good idea. The panic in 2010 will see the majority of derivatives end up worthless. The dollar’s collapse will rob US consumers of all purchasing power, and any investment depend on US consumption will lose most of its value.
Alpha-Omega Report (Trends Forecasts, End Times Prophesy Analysis)
Going into 2010, the trends seemed to lead nowhere or towards oblivion. Geo-politically, the Middle East was and is trending towards some sort of military clash, most likely by mid-year, but perhaps sooner…At the moment, it seems 2010 is shaping up to be a year of absolute chaos. We see trends for war between Israel and her neighbors that will shake every facet of human activity…In the event of war, we see all other societal trends being thoroughly disrupted…Iran will most likely shut off the flow of oil from the Persian Gulf. This will have immense consequences for the world’s economy. Oil prices will skyrocket into the stratosphere and become so expensive that world’s economies will collapse. There are also trend indicators along economic lines that point to the potential for a total meltdown of the world’s financial system with major crisis points developing with the change of each quarter of the year. 2010 could be a meltdown year for the world’s economy, regardless of what goes on in the Middle East.
Robin Landry (Market Expert)
I believe we are headed to new market highs between 10780-11241 over the next few months. The most likely time frame for the top is the April-May area. Remember the evidence IMHO still says we are in a bear market rally with a major decline to follow once this rally ends.
John P. Hussman, Ph.D. (President, Hussman Investment Trust)
In my estimation, there is still close to an 80% probability (Bayes’ Rule) that a second market plunge and economic downturn will unfold during 2010.
Robert Prechter (Founder of Elliott Wave International – Author, Stock Market Analyst)
Implores retail investors stay away from the markets… for now. Prechter, who was bullish near the lows in March 2009, now says the stock market “is in a topping area, “predicting another crash in 2010 that will bring stocks below the 2009 low. His word to the wise, “be patient, don’t rush it” keep your money in cash and cash equivalents.
Richard Mogey (Research Director - Foundation for the Study of Cycles)
Because of a convergence of numerous cycles all at once, the stock market may go up for a little while, but will crash in 2010 and reach all-time lows late 2012. Mogey says that the 2008 crash was nothing compared to the coming crash. Gold may correct in 2009, but will go up in 2010 and peak in 2011. Silver will follow gold.
James Howard Kunstler (Author, Correspondent) (January 2010)
The economy as we’ve known it simply can’t go on, which James Howard Kunstler has been saying all along. The shenanigans with stimulus and bailouts will just compound the central problem with debt. There’s not much longer to go before the whole thing collapses and dies. Six Months to Live- The economy that is. Especially the part that consists of swapping paper certificates. That’s the buzz I’ve gotten the first two weeks of 2010.
Peter Schiff (3/13/2010) (Economist, Political Activist)
“In my opinion, the market is now perfectly positioned for a massive dollar sell-off. The fundamentals for the dollar in 2010 are so much worse than they were in 2008 that it is hard to imagine a reason for people to keep buying once a modicum of political and monetary stability can be restored in Europe. In fact, the euro has recently stabilized. My gut is that the dollar sell-off will be sharp and swift. Once the dollar decisively breaks below last year’s lows, many of the traders who jumped ship in the recent rally will look to re-establish their positions. This will accelerate the dollar’s descent and refocus everyone’s attention back on the financial train-wreck unfolding in the United States. Any doubts about the future of the U.S. dollar should be laid to rest by today’s announcement that San Francisco Federal Reserve President Janet Yellen has been nominated to be Vice Chair of the Fed’s Board of Governors, and thereby a voter on the interest rate-setting, seven-member Open Markets Committee. Ms. Yellen has earned a reputation for being one of the biggest inflation doves among the Fed’s top players.” Schiff is famous for his accurate predictions of the economic events of 2008.
Lindsey Williams (Pastor, former Chaplain to Major Oil Corporation)
Dollar devalued 30-50% by end of year. It will become very difficult for the average American to afford to buy even food. This was revealed to him through an Illuminati insider.
Unnamed Economist working for US Govt. (GLP)
What we have experienced the last two years is nothing to what we are going to experience this year. If you have a job now…you may not have it in three to six months. (by August 2010). Stock market will fall = great depression. Foreign investors stop financing debt = collapse. 6.2 million are about to lose their unemployment.
Jimmy “Doomsday” (Web site)
DOW will fall below 7,000 before mid summer 2010- Dollar will rise above 95 on the dollar index before mid summer 2010- Gold will bottom out below $800 before mid summer 2010- Silver will bottom out below $10 before mid summer 2010- CA debt implosion will start its major downturn by mid summer and hit crisis mode before Q4 2010- Dollar index will plunge below 65 between Q3 and Q4 2010- Commercial real estate will hit crisis mode in Q4 2010- Over 35 states will be bailed out by end of Q4 2010 by the US tax payer End of Q4 2010 gold will hit $1,600 and silver jump to $35 an oz.
George Ure (Economist)
Markets up until mid-to-late-summer. Then “all hell breaks lose” from then on through the rest of the year.
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