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On the Edge with Max Keiser-Increasing US Debt-11-05-2010

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One Piece Of Moderately Good Economic News And 14 Pieces Of Bad Economic News That Are So Horrifying You Might Not Want To Read Them Standing Up

The Economic Collapse
Nov 6, 2010

Today the financial world was buzzing with excitement because there was one moderately good piece of news for the U.S. economy.  U.S. employers added 151,000 jobs during the month of October and the unemployment rate remained unchanged at 9.6%.  This is certainly welcome news, but these days it seems as though there are at least ten pieces of bad economic news for every hopeful economic signal.  So don’t get fooled when the U.S. economy takes one step forward, because it is about to take another dozen or so steps backwards.  We are living in the middle of a nightmarish long-term economic decline that has been building for generations.  The deindustrialization of the United States, the horrific trade deficit caused by globalization and the skyrocketing national debt are problems that have taken decades to develop.  The Federal Reserve has been ripping the guts out of our financial system since 1913.  These are not things that are going to be fixed overnight.  In fact, there are some statistics that just keep getting worse and worse and worse as time goes by.  We are heading straight for a devastating economic collapse and hopefully we can all warn as many people as possible while there is still time.

The more research that you do into our economic situation the more depressing it becomes.  We are in big, big, big trouble.  The following are 14 pieces of bad economic news that are so horrifying you might not want to read them standing up….

#1 More than 42 million Americans were on food stamps during the month of August.  That is a new all-time record, and that number is 17 percent higher than it was one year earlier.  In fact, the number of Americans on food stamps is up more than 58 percent since August 2007.

#2 The number of “persons not in the labor force” in the United States has set another new all-time record.  The United States has not had such an extended bout of mass unemployment since the Great Depression.  The “official” unemployment rate in the United States has been at nine and a half percent or above for 14 consecutive months.

#3 More than 1000 people now live in the 200 miles of flood tunnels that exist under the city of Las Vegas.  Once one of the most prosperous cities in the United States, Las Vegas is now little more than a shiny, glittering corpse that it rapidly decaying.

#4 Poverty is absolutely exploding and it is hitting those who are the most vulnerable the hardest.  According to one recent study, approximately 21 percent of all children in the United States are living below the poverty line in 2010.

#5 In the past 60 days alone, the price of cotton is up 54%, the price of corn is up 29%, the price of soybeans is up 22%, the price of orange juice is up 17%, and the price of sugar is up 51%.

#6 One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.


 

#7 The American Bankruptcy Institute says that there will be about 1.6 million consumer bankruptcies in 2010.  That would represent a huge increase over 2009.

#8 According to one recent survey, 28% of all U.S. households have at least one member that is looking for a full-time job.

#9 The individual U.S. states are mostly flat broke.  For example, it is being reported that the 15 largest U.S. states spent on average over 220% of their tax receipts over the past decade.  Clearly this is not even close to sustainable.

#10 The U.S. government is completely and totally broke.  After analyzing Congressional Budget Office data, Boston University economics professor Laurence J. Kotlikoff concluded that the U.S. government is facing a “fiscal gap” of $202 trillion dollars.

#11 In an attempt to keep our financial system solvent, the U.S. Federal Reserve has announced plans to create $600 billion out of thin air and pump it into the U.S. economy.  The Fed is calling this “quantitative easing“, but what they should really be calling it is “cheating, debasing and inflating”.

#12 Many of the major trading partners of the United States are expressing deep resentment regarding the new quantitative easing policy announced by the Fed.  Ambrose Evans-Pritchard recently described the growing animosity this way….

Li Deshui from Beijing’s Economic Commission said a string of Asian states share China’s “deep bitterness” over dollar debasement, and are examining ways of teaming up to insulate themselves from the tsunami of US liquidity.

#13 For many analysts, the economic collapse of the United States comes down to cold, hard math.  For example, the former CEO of the tenth largest bank in the United States says that it is a “mathematical certainty” that the U.S. government will eventually go bankrupt.

#14 According to a recent article on CNBC, the financial world is already buzzing about QE3….

“They’re already talking about QE3,” said Dave Rovelli, managing director of US equity trading for Canaccord Adams. “Eventually we’re going to be printing so much money the dollar is going to really go down and everybody’s going to try to deflate their currency against us. I just don’t know how this could end well.”

So is that all the Federal Reserve has left?

Are they just going to keep pouring bags of money into the economy until things get back to “normal”?

Are we going to have “Quantitative Easing 3″, “Quantitative Easing 4″, and “Quantitative Easing 5″?

It has been a long-running joke, but perhaps by the end of this thing Ben Bernanke will literally go up in a helicopter and start shoveling out huge piles of cash over the countryside.

The era of great prosperity that we have all enjoyed for so long is coming to an end.  It would be advisable to use the remaining period of economic stability that we still have to prepare for what is ahead.

These economic problems could have been fixed decades ago if people would have actually listened and would have followed sound economic principles on an individual and on a corporate level, but that did not happen.

Now we are up to our eyeballs in debt and the greatest economic machine in history is rotting all around us.

We are in deep, deep, deep trouble and denying it is not going to make it go away.

Conspiracy Theory With Jesse Ventura, (Wall St)

http://www.youtube.com/user/Federaljacktube3#p/u/0/qsSOoVjLvg0

http://www.youtube.com/user/Federaljacktube3#p/u/3/nLQYngqtvn0

http://www.youtube.com/user/Federaljacktube3#p/u/2/MkSI8kyqUnk

http://www.youtube.com/user/Federaljacktube3#p/u/1/WAAIPg-i8bg

America’s Two Economies, and Why One is Recovering and the Other Isn’t.


Friday, November 5, 2010

Next time you hear an economist or denizen of Wall Street talk about how the “American economy” is doing these days, watch your wallet.

There are two American economies. One is on the mend. The other is still coming apart.

The one that’s mending is America’s Big Money economy. It’s comprised of Wall Street traders, big investors, and top professionals and corporate executives.

The Big Money economy is doing well these days. That’s partly thanks to Ben Bernanke, whose Fed is keeping interest rates near zero by printing money as fast as it dare. It’s essentially free money to America’s Big Money economy.

Free money can almost always be put to uses that create more of it. Big corporations are buying back their shares of stock, thereby boosting corporate earnings. They’re merging and acquiring other companies.

And they’re going abroad in search of customers.

Thanks to fast-growing China, India, and Brazil, giant American corporations are racking up sales. They’re selling Asian and Latin American consumers everything from cars and cell phones to fancy Internet software and iPads. Forty percent of the S&P 500 biggest corporations are now doing more than 60 percent of their business abroad. And America’s biggest investors are also going abroad to get a nice return on their money.

So don’t worry about America’s Big Money economy. According to a Wall Street Journal survey released Thursday, overall compensation in financial services will rise 5 percent this year, and employees in some businesses like asset management will get increases of 15 percent.

The Dow Jones Industrial Average is back to where it was before the Lehman bankruptcy filing triggered the financial collapse. And profits at America’s largest corporations are heading upward.

But there’s another American economy, and it’s not on the mend. Call it the Average Worker economy.

Last Friday’s jobs report showed 159,000 new private-sector jobs in October. That’s better than previous months. But 125,000 net new jobs are needed just to keep up with the growth of the American labor force. So another way of expressing what happened to jobs in October is to say 24,000 were added over what we need just to stay even.

Yet the American economy has lost 15 million jobs since the start of the Great Recession. And if you add in the growth of the labor force – including everyone too discouraged to look for a job – we’re down about 22 million.

Or to put it another way, we’re still getting nowhere on jobs.

One out of eight breadwinners is still out of work. Most families in the Average Worker economy rely on two breadwinners. So if one out of eight isn’t working, chances are high that family incomes are down compared to what they were three years ago.

And that means the bills aren’t getting paid.

According to a recent Washington Post poll, more than half of all Americans — 53 percent — are worried about making their mortgage payments. This is many more than were worried two years ago, when the Great Recession hit bottom. Then, 37 percent expressed worry.

Delinquency rates on home loans are rising. Distressed sales are up as a percent of total sales.

Most people in the Average Worker economy own few shares of stock, if any. Their equity is in their homes. But with all the delinquencies and distressed sales, the housing market has a glut of homes for sale. As a result, home prices are still dropping. So the net worth of most Americans is still dropping.

And even though interest rates are falling, most people in the Average Worker economy can’t refinance their homes. They can’t get home equity loans. Banks don’t want to lend to the Average Worker economy because people in it are considered bad credit risks. They still owe lots of money, their family incomes are down, and their net worth has fallen.

And according to the Reuters/University of Michigan survey of American consumers, expectations about personal finances are at an all time low.

Inhabitants of the Big Money economy are celebrating Republican wins last week. They figure financial regulations will be rolled back, environmental regulations will be canned, the Bush tax cut will be extended to the top 1 percent, and it will be harder for workers to form unions.

Inhabitants of the Average Worker economy aren’t so sure. The economy has been so bad they’re angry at politicians. They showed their anger at the ballot box. They took it out on incumbents.

But if nothing changes in the Average Worker economy, there will be hell to pay.

Americans On Foodstamps Hits New Record In August, Increase By Over Half A Million To 42.4 Million, 17% Increase Year Over Year

Submitted by Tyler Durden on 11/05/2010 08:51 -0500

Another highlight you may not hear in the President’s address from this morning: according to the last Department of Agriculture update, Americans on foodstamps has increased by over half a million in August, hitting a fresh all time high of 42.4 million people relying on the government for basis sustenance. At least now we know where that labor force is going. The August number is a 17% rise from the same time a year ago. That number is up 58.5% from August 2007, before the recession began.

As the WSJ reports:

By population, Washington, D.C. had the largest share of residents receiving food stamps: More than a fifth, 21.1%, of its residents collected assistance in August. Washington was followed by Mississippi, where 20.1% of residents received food stamps, and Tennessee, where 20% tapped into the government nutrition program.

Idaho posted the largest jump in recipients in the past year. The number of people receiving food stamps climbed 38.8% but their rolls are still fairly low. Just 211,883 Idaho residents collected food stamps in August.

The average benefit size per person nationwide in August was $133.90. Per household it was $287.82.

Food stamps have become a lifeline for workers who have lost their jobs, particularly among the growing share of unemployed Americans who have also exhausted their unemployment benefits. Lines at grocers at midnight on the first of the month have signaled that, in many cases, those benefits aren’t tiding families over and they run out before their next check kicks in.

Even during the summer children returned to schools to take advantage of free lunch programs where they were available. Nearly 195 million lunches were dished out in August and 58.9% of them were free. Another 8.4% were available at reduced prices. That number will surge when the fall data are released because children will be back in school. Last September, for example, more than 590 million lunches were served, nearly 64% of which were free or reduced price.

Children whose families have incomes at or below 130% of the poverty level — $28,665 for a family of four — can access free meals. Those families earning between 130% and 185% of the poverty level — $40,793 for a four-person family — are eligible for reduced-price meals that can’t cost more than 40 cents.

We also fail to see just what Fed-induced wealth effect these 42.4 million Americans will receive courtesy of the Fed’s generosity targetting Wall Street, corporate insiders, and nobody else.

Ron Paul Is About to Totally Revolutionize the House Monetary Policy Panel

Published: Thursday, 4 Nov 2010 | 4:35 PM ET
Text Size
By: John Carney
Senior Editor, CNBC.com

Odds are you haven’t heard of the monetary policy subcommittee. Officially known as the House Subcommittee for Domestic Monetary Policy and Technology, it’s a subdivision of the House Financial Services Committee that has mostly occupied itself with pressing questions of issuing commemorative coins and whether or not to eliminate the penny.

Getty Images
Ron Paul (R-Texas)

That’s about to change. Ron Paul, the Republican Congressman from Texas, is the ranking member of the monetary policy subcommittee, and when the next Congress takes over he’ll likely be the chairman of the subcommittee.

And Congressman Paul has some big plans.

“I will approach that committee like no one has ever approached it because we’re living in times like no one has ever seen,” Paul said in an interview with NetNet Thursday.

Paul said his first priority will be to open up the books of the Federal Reserve to the American people.

“We need to create transparency there. To see what it is they are buying and lending, and who it is they are dealing with,” Paul said.

Paul mentioned that he hoped to use subcommittee hearings to educate the public about the causes of business cycles—which he believes are mainly attributable to monetary manipulation by central bankers.

Monetary reform is also on the agenda. Paul is a noted advocate of the gold standard.

“We will have to have monetary reform,” Paul said. “I think those on the other side of this issue are already planning. They are going to try to replace a bad system with an equally bad system.”

ETF’s Are For Sissy’s


Dudley Baker

What happened to the good old day’s when investors actually did their homework and researched new potential investment opportunities? I am talking about investing in individual companies.

Let’s take the natural resource sector as an example. You could invest in many different ETF’s giving you a position in a basket of securities. But, and this is a big issue with us, investors will never achieve the big gains of 100s and 1000s of percent returns with any ETF. How much are you making with your ETF’s?

ETF’s, Exchange Traded Funds, have exploded in popularity particularly after the market meltdown in 2008. Many investors are still scared and are shying away from individual securities because of their perceived risk. The ETF’s give investor’s diversification with a basket of securities. The basket may be a stock sector, a commodity class or mixture of commodities, currency of a country or region; or stocks of an entire continent or grouping of countries. In other words, you can buy an ETF on basically anything.

With an ETF, you will be investing with companies in the same sector. Some of those companies with outperform and some will underperform leaving you with an average performance on your ETF. Why not perform your own research and focus on those outperforming companies?

As advantageous and convenient as the ETF is, a value investor will experience higher profits with the tried-and-true methods of stock selection. Seek those companies with great management, excellent properties, mining friendly countries, etc. It’s is not really that difficult.

If you are content with modest returns on your investments, go for it. Frankly, we want more and are prepared to take ‘some risk’ in order to achieve above average gains. For those investors in the natural resource sector, perhaps you should consider allocating a minimum of 10% to 20% back into individual shares? Something to think about!

We would acknowledge that some of the ETF’s make some sense, like the currency ETF’s, Country specific, i.e., China or Brazil ETF’s and some others. We can also see using ETF’s as a hedging vehicle as you can short the ETF or perhaps even purchase puts or calls on them.

But as a general rule, we would encourage investors to get back to the basics and make your own decisions.

In the natural resource sector common shares and many long-term warrants on those shares have generated monster gains recently. Most investors are missing out because they are taking the sissy approach and investing in ETF’s to reduce their risk but also giving up these significant gains that could change your lifestyle.

Our current opinion is that gold has bottomed and the markets are heading substantially higher very soon. The common shares and long-term warrants trading on those shares will explode in value and this is where we want to be. What about you?

We invite readers to join us in San Francisco, California at the Hard Assets Conference on November 21 and 22. We will have a 2 Hour workshop covering our entire portfolio, insider trading and our great warrant database. Click here for complete details.

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