FedUpUSA

Archive for August, 2011

Most of the worst financial panics in history have happened in the fall.  Just recall what happened in 1929, 1987 and 2008.  Well, September 2011 is about to begin and there are all kinds of signs that the financial world is about to hit the big red panic button.  Wave after wave of bad economic news has come out of the United States recently, and Europe is embroiled in an absolutely unprecedented debt crisis.  At this point there is a very real possibility that the euro may not even survive.  So what is causing all of this?  Well, over the last couple of decades a gigantic debt bubble has fueled a tremendous amount of “fake prosperity” in the western world.  But for a debt bubble to keep going, the total amount of debt has to keep expanding at an ever increasing pace.  Unfortunately for the global economy, sources of credit are starting to dry up.  That is why you hear terms like “credit crisis” and “credit crunch” thrown around so much these days.  Without enough credit to feed the monster, the debt bubble is going to burst.  At this point, virtually the entire global economy runs on credit, so when this debt bubble bursts things could get really, really messy.

Nations and financial institutions would never get into debt trouble if they could always borrow as much money as they wanted at extremely low interest rates.  But what has happened is that lending sources are balking at continuing to lend cheap money to nations and financial institutions that are already up to their eyeballs in debt.

For example, the yield on 2 year Greek bonds is now over 40 percent.  Investors don’t trust the Greek government and they are demanding a huge return in order to lend them more money.

Throughout the financial world right now there is a lot of fear.  Lending conditions have gotten very tight.  Financial institutions are not eager to lend money to each other or to anyone else.  This “credit crunch” is going to slow down the economy.  Just remember what happened back in 2008.  When easy credit stops flowing, the dominoes can start falling very quickly.

Sadly, this is a cycle that can feed into itself.  When credit is tight, the economy slows down and more businesses fail.  That causes financial institutions to want to tighten up things even more in order to avoid the “bad credit risks”.  Less economic activity means less tax revenue for governments.  Less tax revenue means larger budget deficits and increased borrowing by governments.    But when government debt gets really high that can cause huge economic problems like we are witnessing in Greece right now.  The cycle of tighter credit and a slowing economy can go on and on and on.

I spend a lot of time talking about problems with the U.S. economy, but the truth is that the rest of the world is dealing with massive problems as well right now.  As bad as things are in the U.S., the reality is that Europe looks like it may be “ground zero” for the next great financial crisis.

At this point the EU essentially has three choices.  It can choose much deeper economic integration (which would mean a huge loss of sovereignty), it can choose to keep the status quo going for as long as possible by providing the PIIGS with gigantic bailouts, or it can choose to end of the euro and return to individual national currencies.

Any of those choices would be very messy.  At this point there is not much political will for much deeper economic integration, so the last two alternatives appear increasingly likely.

In any event, global financial markets are paralyzed by fear right now.  Nobody knows what is going to happen next, but many now fear that whatever does come next will not be good.

The following are 25 signs that the financial world is about to hit the big red panic button….

#1 According to a new study just released by Merrill Lynch, the U.S. economy has an 80% chance of going into another recession.

#2 Will Bank of America be the next Lehman Brothers?  Shares of Bank of America have fallen more than 40% over the past couple of months.  Even though Warren Buffet recently stepped in with 5 billion dollars, the reality is that the problems for Bank of America are far from over.  In fact, one analyst is projecting that Bank of America is going to need to raise 40 or 50 billion dollars in new capital.

#3 European bank stocks have gotten absolutely hammered in recent weeks.

#4 So far, major international banks have announced layoffs of more than 60,000 workers, and more layoff announcements are expected this fall.  A recent article in the New York Times detailed some of the carnage….

A new wave of layoffs is emblematic of this shift as nearly every major bank undertakes a cost-cutting initiative, some with names like Project Compass. UBS has announced 3,500 layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told.

#5 Credit markets are really drying up.  Do you remember what happened in 2008 when that happened?  Many are now warning that we are getting very close to a repeat of that.

#6 The Conference Board has announced that the U.S. Consumer Confidence Index fell from 59.2 in July to 44.5 in August.  That is the lowest reading that we have seen since the last recession ended.

#7 The University of Michigan Consumer Sentiment Index has fallen by almost 20 points over the last three months.  This index is now the lowest it has been in 30 years.

#8 The Philadelphia Fed’s latest survey of regional manufacturing activity was absolutely nightmarish….

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009

#9 According to Bloomberg, since World War II almost every time that the year over year change in real GDP has fallen below 2% the U.S. economy has fallen into a recession….

Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.

#10 Economic sentiment is falling in Europe as well.  The following is from a recent Reuters article….

A monthly European Commission survey showed economic sentiment in the 17 countries using the euro, a good indication of future economic activity, fell to 98.3 in August from a revised 103 in July with optimism declining in all sectors.

#11 The yield on 2 year Greek bonds is now an astronomical 42.47%.

#12 As I wrote about recently, the European Central Bank has stepped into the marketplace and is buying up huge amounts of sovereign debt from troubled nations such as Greece, Portugal, Spain and Italy.  As a result, the ECB is also massively overleveraged at this point.

#13 Most of the major banks in Europe are also leveraged to the hilt and have tremendous exposure to European sovereign debt.

#14 Political wrangling in Europe is threatening to unravel the Greek bailout package.  In a recent article, Satyajit Das described what has been going on behind the scenes in the EU….

The sticking point is a demand for collateral for the second bailout package. Finland demanded and got Euro 500 million in cash as security against their Euro 1,400 million share of the second bailout package. Hearing of the ill-advised side deal between Greece and Finland, Austria, the Netherlands and Slovakia also are now demanding collateral, arguing that their banks were less exposed to Greece than their counterparts in Germany and France entitling them to special treatment. At least, one German parliamentarian has also asked the logical question, why Germany is not receiving similar collateral.

#15 German Chancellor Angela Merkel is trying to hold the Greek bailout deal together, but a wave of anti-bailout “hysteria” is sweeping Germany, and now according to Ambrose Evans-Pritchard it looks like Merkel may not have enough votes to approve the latest bailout package….

German media reported that the latest tally of votes in the Bundestag shows that 23 members from Mrs Merkel’s own coalition plan to vote against the package, including twelve of the 44 members of Bavaria’s Social Christians (CSU). This may force the Chancellor to rely on opposition votes, risking a government collapse.

#16 Polish finance minister Jacek Rostowski is warning that the status quo in Europe will lead to “collapse“.  According to Rostowski, if the EU does not choose the path of much deeper economic integration the eurozone simply is not going to survive much longer….

“The choice is: much deeper macroeconomic integration in the eurozone or its collapse. There is no third way.”

#17 German voters are against the introduction of “Eurobonds” by about a 5 to 1 margin, so deeper economic integration in Europe does not look real promising at this point.

#18 If something goes wrong with the Greek bailout, Greece is financially doomed.  Just consider the following excerpt from a recent article by Puru Saxena….

In Greece, government debt now represents almost 160% of GDP and the average yield on Greek debt is around 15%. Thus, if Greece’s debt is rolled over without restructuring, its interest costs alone will amount to approximately 24% of GDP. In other words, if debt pardoning does not occur, nearly a quarter of Greece’s economic output will be gobbled up by interest repayments!

#19 The global banking system has a total of 2 trillion dollars of exposure to Greek, Irish, Portuguese, Spanish and Italian debt.  Considering how much the global banking system is leveraged, this amount of exposure could end up wiping out a lot of major financial institutions.

#20 The head of the IMF, Christine Largarde, recently warned that European banks are in need of “urgent recapitalization“.

#21 Once the European crisis unravels, things could move very rapidly downhill.  In a recent article, John Mauldin put it this way….

It is only a matter of time until Europe has a true crisis, which will happen faster – BANG! – than any of us can now imagine. Think Lehman on steroids. The U.S. gave Europe our subprime woes. Europe gets to repay the favor with an even more severe banking crisis that, given that the U.S. is at best at stall speed, will tip us into a long and serious recession. Stay tuned.

#22 The U.S. housing market is still a complete and total mess.  According to a recently released report, U.S. home prices fell 5.9% in the second quarter compared to a year earlier.  That was the biggest decline that we have seen since 2009.  But even with lower prices very few people are buying.  According to the National Association of Realtors, sales of previously owned homes dropped 3.5 percent during July.  That was the third decline in the last four months.  Sales of previously owned homes are even lagging behind last year’s pathetic pace.

#23 According to John Lohman, the decline in U.S. economic data over the past three months has been absolutely unprecedented.

#24 Morgan Stanley now says that the U.S. and Europe are “hovering dangerously close to a recession” and that there is a good chance we could enter one at some point in the next 6 to 12 months.

#25 Minneapolis Fed President Narayana Kocherlakota says that he is so alarmed about the state of the economy that he may drop his opposition to more monetary easing.  Could more quantitative easing by the Federal Reserve soon be on the way?

Things have not looked this bad for global financial markets since 2008.  Unless someone rides in on a white horse with trillions of dollars (or euros) of easy credit, it looks like we are headed for a massive credit crunch.

What we witnessed back in 2008 was absolutely horrifying.  Very few people want to see a repeat of that.  But as things in the U.S. and Europe continue to unravel, it appears increasingly likely that the next wave of the financial crisis could hit us sooner rather than later.

None of the fundamental problems that caused the crisis of 2008 have been fixed.  The world financial system is still one gigantic mountain of debt, leverage and risk.

Authorities around the globe will certainly do all they can to keep things stable, but in the end it is inevitable that the house of cards is going to come crashing down.

Let us hope for the best, but let us also prepare for the worst.

The Economic Collapse

When are we going to stop pretending that banks are solvent when they really are not?

This morning we’re treated to two articles in the Journal bearing on the issue; we’ll start with this one:

BRUSSELS—European politicians signaled Tuesday that there is no quick fix to the row over Finland’s insistence on receiving collateral for taking part in Greece’s second bailout, even as the European Commission insisted talks were yielding progress.

Euro-zone governments are looking into alternative forms of collateral to meet Finland’s demand in order for the country to contribute to Greece’s second bailout, after a cash deal reached earlier between Greece and Finland was rejected by key member countries, including Germany and the Netherlands.

Why should Finland provide any more money to Greece at all?  Greece has proved that it will lie, cheat and steal to get what it wants from the rest of the Euro zone, and it’s not alone.  The Euro Zone treaty obligations to keep deficits to no more than 3% of GDP are not suggestions.  Of course they’re treated as such, for one simple reason: Nations have gotten away with this sort of crap for years, and banks have gotten away with helping nations to lie.

Nobody has faced sanction, say much less indictment, for what amounts to deception upon the public and the other nations in Europe (and elsewhere.)  Yet this sort of deception is well-recognized in the corporate space as actionable conduct – so why isn’t it at this level?

Ultimately the problem is that currency unions don’t work well without some sort of enforcement mechanism, and that enforcement mechanism is problematic when you have nations with disparate economic fortunes.  The premise that opening the door to trade benefits everyone and thus currency union is a good thing because it obviates exchange-rate differences and potential tariff problems is a chimera – some nations will inevitably be bled of capital if there are differences in productivity, social spending and economic health between the members.  Bereft of the adjustment that normally takes places when one has floating currencies in the presence of these capital flows the incentive to cheat becomes strong, as the alternative is an admission that what you did originally wasn’t workable.

Unfortunately what has happened here is more-complex, in that in addition to pretending that nations could pay infinite debts when they in fact could not banks were also given the ability to mark their portfolios to a fantasy, provided they claimed their financing of profligate nations debts were done “to maturity.”  Then these nations and the ECB severed their own femoral artery by allowing banks to consider government bonds as “risk free” and thus they became part of a leverage chain that has turned into a monstrous outrage and yet another fraud upon the public:

Twenty months into the euro-zone’s sovereign-debt crisis, this ought to be obvious. The main reason that the specter of an unruly default keeps policy makers up at night is its likely consequences for Europe’s banks, whose balance sheets hold some 45% of Europe’s government bonds. Repeated stress tests by bank regulators have ignored the vast majority of those bonds that are held to maturity.

This flatters bank balance sheets by pretending that a sovereign default in Europe is impossible, but it has done nothing to increase investor confidence. The recent volatility in bank stocks and the trouble some European banks have faced getting all but the shortest-term financing in the private markets underline the skittishness.

The solution to this problem is to not let banks do that crap. 

That is, institutions should be forced to both mark to the market nightly for all instruments where there is a price, and where there is not, the “market price” is taken to indicate that the entire loan is unsecured.  If you then force banks to hold one dollar of actual capital for each dollar of unsecured lending they do at all times then there is no systemic risk.

There’s also no levered 50:1 returns, or 20:1, or 30:1 of course, but is this a good thing or a bad thing?

For the banksters it’s a bad thing.  But for society as a whole, the stability of the markets and sustainable economic policies it is a very good thing.

If banks can’t withstand their balance sheets being marked to the truth then shut them down.  That’s why we have bankruptcy – to cover exactly this contingency.

Of course Lagarge argued over the weekend that these institutions should be “recapitalized” – including by financially raping you, your children, grandchildren and those not yet born if necessary.  But financial rape is really no different than the more-pedestrian sort, in that both take place through the use of force.  That we have sharply-dressed protagonists in one case and a sweaty, disgusting example of a thug in the second doesn’t change a thing about the essential character of the act – in both cases you are violated, being forced to do something for the pleasure of another at gunpoint.

Four years into blindingly-obvious examples of this abuse by Treasury Secretaries, Congress, Presidents and international organizations such as the IMF, each of which has endeavored to protect those who took knowingly and outrageously unsound actions and asset-stripped the populace through these practices we are long past the point in time where the public’s reactions to such jackals at the door should be to slam said door on their fingers – or necks.

Oops:

• FDIC OBJECTS TO BANK OF AMERICA MORTGAGE-BOND ACCORD
• THE REASON FOR THE OBJECTION IS THAT THE FDIC DOES NOT HAVE ENOUGH
  INFORMATION TO EVALUATE THE SETTLEMENT

Time to sell the other half of that China Constricution Bank stake… And Merrill… and Countrywide (goodluck), and pretty much anything else that is not nailed down. But don’t worry: it’s a liquidity, not a capital issue, or something. In other news, the Buffett “Eureka alert” is on BathCon 1.

Full FDIC objection attached:

bofaMBC–fdicpetition

ZeroHedge

Bank of America stock jumped over 9% Thursday on news that Warren Buffett is making a $5 billion investment in the bank. But, at $7.65, the stock closed more than a $1 below its high of the session and BofA shares were falling anew Friday morning, trading as low as $7.45 before stabilizing.

When the news broke that Buffett was investing in BofA, the chattering class rejoiced….Buffet has “saved” Bank of America”…Buffett Deal Is “Seal of Approval” … “Time to Buy Bank of America“… and my personal favorite: Buffett’s vote of confidence in B of A, US economy.

Warren Buffett is a great investor but the idea his deal with Bank of America is good for anyone but Warren Buffet is baloney.

Warren Buffett is investing in Bank of America for one simple reason — to make money. A lot money.

Follow the Money

Bank of America will pay Buffett a 6% dividend for the privilege of getting access to his money — and his brand. Shareholders will have to pay for that and live with the threat of a massive dilution as Buffett also got the right to buy up to 700 million shares of Bank of America stock at $7.14 per share. (See: Buffett: The One-Man Blue-Chip Bailout Machine Strikes Again)

From Salomon Brothers in 1987 to Goldman Sachs and GE in 2008 to Bank of America today, Buffett has always been willing to help a fellow corporate citizen who’s down on their luck — for the right price.

Not that there’s anything wrong with that… but don’t confuse Buffett’s profit game for altruism, patriotism or any other “ism” other than capitalism.

Buffett has carefully cultivated an image of America’s kindly grandfather. Just a simple, humble guy from Omaha who just happens to be one of the world’s richest men. Many journalists and pundits eagerly peddle this glorified version of the man they call “The Oracle of Omaha” because it’s a good story and appeals to the huddle masses yearning to be free — and looking for a hero.

In recent years, Buffett has opined about why we should ‘Buy American’ — stocks that is — to tax policy, and his prognostications have been greeted as gospel by everyone from the thousands of individual investors who flock to Berkshire’s annual “Woodstock of Capitalism” up to and including President Obama, who cited Buffett’s recent complaint that he and other ‘super-rich’ super-friends aren’t taxed enough. (See: Buffett Blasts Low Taxes On Billionaires, Says Congress Must Stop Coddling Them)

But I’d like to take these Buffett brown nosers to Task for failing to see that Buffett is nothing more than an investor, and like any other good investor, his only goal is to make money.

Buffett: Myth vs. Reality

By putting his “stamp of approval” on Bank of America, Buffett no doubt hoped to profit not just on the BofA deal, but also on his massive holdings in other blue-chip stocks — including financials like USBancorp and Wells Fargo, which would be at risk if a “systemically important” bank like Bank of America were to get into ‘real’ trouble, as appeared to be the case earlier this week.

The idea Buffett is doing the rest of us a favor is naïve, at best. He’s not saving our economy, nor is he giving us a road map on how we can make money. He’s just trying to make money for himself and his shareholders.

Again, not that there’s anything wrong with that…but it says something about our society that we deify this billionaire rather than celebrate researchers seeking the cure for cancer, scientists trying to solve the world’s energy crisis or our children’s school teachers, not to mention our soldiers in uniform.

And while Buffett has never been accused of breaking the law, he’s not without sin either. Consider:

• Buffett is the largest shareholder in Moody’s, one of the rating agencies that placed AAA ratings on subprime mortgages that later proved toxic — arguably one of the biggest causes of the crisis of 2008 and its aftermath, including up to present day. And Buffett started selling Moody’s once the rating agencies’ role in creating the crisis became evident.
• More recently, Buffett came under scrutiny for defending former executive David Sokol, who bought shares of Lubrizol last winter just ahead of the company’s purchase by Buffett’s Berkshire Hathaway. But once public opinion turned against him, Buffett threw Sokol to the curb faster than you can cook a minute steak. (See: The Sokol Saga: Buffett Can’t Remove “Black Mark,” Tuck’s Paul Argenti Says)
• Berkshire subsidiary General Reinsurance paid a $92 million fine to the SEC last year after being found guilty of helping insurance clients like AIG mislead investors about their financial health.
• Buffett has had other run-ins with the SEC, including over Berkshire’s recent purchase of Burlington Northern and as far back as 1974 over a transaction to buy Wesco Financial, The NY Post reports.

Moreover, investors who’ve followed Buffett into investments like Goldman Sachs and GE got burned, assuming they adhered to Buffett’s dictum about “forever” being the best holding period. The rest of us didn’t get the big dividends Buffett earned and both stocks are currently trading below the levels when Buffett made his “confidence-boosting” investments in 2008, Goldman by 12% and GE by 37%.

Finally, shares of Buffett’s own company, Berkshire Hathaway, have underperformed the S&P 500 in the past year and the company recently split its B-shares, violating yet another of Buffett’s not-so-sacred tenants.

Nobody’s perfect but you wouldn’t know it listening to most of the coverage surrounding Buffett where there’s way too much fawning and not enough ‘fair and balanced’ analysis.

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com

This is rather stinging indictment….

Once you read the allegations in the cases included in this post, I strongly suspect you will agree that the “ruining lives” in the headline is not an exaggeration. And as important, these two cases, with very similar fact sets, also suggest that these abuses are not mere “mistakes”. These are clearly well established practices that Chase can’t be bothered to clean up, since cleaning them up costs money and letting them continue is more profitable.

Both cases took place in Alabama. In both cases, the borrowers had made every mortgage payment on time. One was a couple with three children, the Barnetts. The second is a widow, Besty Barlow, but her husband was still alive when this ugly saga started.

Read the rest over at Yves blog.  Basically, the allegation is that these two people had homes and were making every payment on their mortgage.  They were not in arrears.  Their homes burned down due to no fault of their own – that is, they didn’t commit arson, they had an ordinary house fire.

And there things went sideways – it is alleged Chase intentionally dickered around with the payment from the insurance company, thereby forcing a default that would not have otherwise happened, and then foreclosed, effectively stealing the insurance proceeds and the property.

Yes, Chase is getting sued, as they should be.

The better question is why the OCC isn’t in there and why the executives of this organization aren’t being led away in irons.

Of course we know the answer, right?  The Obama administration, just like the Bush administration, is perfectly happy to watch banks steal.

Literally.

We live today with a literal criminal government.

Do you ever get the feeling that the middle class in America is shrinking?  Well, you are not imagining things.  A confluence of very troubling long-term economic trends has created an environment in which the middle class in America is being absolutely shredded.  Today, most American families would be absolutely thrilled if they could live as well as past generations did.  The dream of receiving a solid education, getting a good job, owning a beautiful home and enjoying the good things that America has to offer is increasingly becoming out of reach for a growing number of Americans.  The reality is that even though our population has grown, there are less jobs than there used to be.  A much higher percentage of the jobs that remain are low income jobs.  Millions of middle class American families are desperately trying to hang on as inflation far outpaces the growth of their paychecks.  Millions of others have fallen completely out of the middle class and are now totally dependent on the government for survival.  We once had the largest, most vibrant middle class in the history of the world, but now way too much unemployment, way too much inflation, way too much greed and way too much debt are all starting to catch up with us.  America is changing, and not for the better.

When most of us were growing up, we understood that there was an unspoken promise that if we got good grades, stayed out of trouble, worked really hard and did everything we were told to do, the system would reward us.

Well, today there are millions of Americans that have done all of those things but don’t have anything to show for it.

As large numbers of hard working people continue to fall out of the middle class, there is a growing sense that “the system” has betrayed us all.

Sadly, the truth is that the U.S. economy is dying.  The endless prosperity that we all enjoyed in the past is gone and it is never going to come back.

The following are 34 pieces of evidence that prove that the middle class in America is rapidly shrinking….

#1 In 1980, 52 percent of all jobs in the United States were middle income jobs.  Today, only 42 percent of all jobs are middle income jobs.

#2 Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

#3 Only 63.5 percent of all men in the United States had a job last month.  According to Bloomberg, that figure is “just slightly above the December 2009 nadir of 63.3%. These are the lowest numbers since 1948.”

#4 In 1969, 95 percent of all men between the ages of 25 and 54 had a job.  Last month, only 81.2 percent of men in that age group had a job.

#5 According to one recent survey, 64 percent of Americans would be forced to borrow money if they had an unexpected expense of $1000.

#6 The wealthiest 1% of all Americans now control 40 percent of all the wealth in this country.

#7 The poorest 50% of all Americans now control just 2.5% of all the wealth in this country.

#8 The wealthiest 1% of all Americans now own over 50% of all the stocks and bonds.

#9 According to the Washington Post, the average yearly income of the bottom 90 percent of all U.S. income earners is just $31,244.

#10 The average yearly income of the top 0.1% of all U.S. income earners is 5.6 million dollars.

#11 Between 1969 and 2009, the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.

#12 Only the top 5 percent of all U.S. households have earned enough additional income to match the rise in housing costs since 1975.

#13 During this economic downturn, employee compensation in the United States has been the lowest that it has been relative to gross domestic product in over 50 years.

#14 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980.  Today they account for approximately 16.3%.

#15 Total credit card debt in the United States is now more than 8 times larger than it was just 30 years ago.

#16 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million people to the population since then.

#17 Since the year 2000, we have lost approximately 10% of our middle class jobs.  In the year 2000 there were about 72 million middle class jobs in the United States but today there are only about 65 million middle class jobs.

#18 The competition for even the most basic jobs has become absolutely brutal.  Approximately 7 percent of all those that apply to get into Harvard are accepted.  At a recent “National Hiring Day” held by McDonald’s only about 6.2 percent of the one million Americans that applied for a job were hired.

#19 It now takes the average unemployed worker in America about 40 weeks to find a new job.

#20 According to a report released in February from the National Employment Law Project, higher wage industries are accounting for 40 percent of the job losses in America but only 14 percent of the job growth.  Lower wage industries are accounting for just 23 percent of the job losses but 49 percent of the job growth.

#21 Half of all American workers now earn $505 or less per week.

#22 The cost of college tuition in the United States has gone up by over 900 percent since 1978.

#23 In the United States today, there are more than 100,000 janitors and more than 317,000 waiters and waitresses that have college degrees.

#24 17 million college graduates are doing jobs that do not even require a college degree.

#25 According to one recent survey, 36 percent of Americans say that they don’t contribute anything at all to retirement savings.

#26 Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, one out of every 6 Americans is on Medicaid.

#27 As 2007 began, there were 26 million Americans on food stamps.  Today, there are more than 45 million Americans on food stamps, which is a new all-time record.

#28 The number of Americans on food stamps has increased 74% since 2007.

#29 Today, one out of every four American children is on food stamps.

#30 In 1980, just 11.7% of all personal income came from government transfer payments.  Today, 18.4% of all personal income comes from government transfer payments.

#31 The number of Americans that are going to food pantries and soup kitchens has increased by 46% since 2006.

#32 One out of every six elderly Americans now lives below the federal poverty line.

#33 In the United States, over 20 percent of all children are now living in poverty.  In the UK and in France that figure is well under 10 percent.

#34 According to the Federal Reserve, the richest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

As the middle class continues to shrivel up and die, the number of desperate people is going to continue to grow.

In the past, I have written extensively about how many Americans are already becoming so desperate that they will do just about anything for money.

Well, here are a couple more examples….

One unemployed man down in the Phoenix area that had reportedly robbed 12 banks told police the following about why he did it….

“I rob to survive.”

As millions more Americans fall into poverty, we are going to see a lot more crime.

Most of these people are not going to commit crimes because they enjoy them.  Rather, they will be doing what they feel they need to do in order to survive.

Not all of the shady activity will be so violent.  Desperation comes out in different ways.  For example, there are now actually websites where women advertise their “services” to potential “sugar daddies” that will help them with college expenses or support them financially.

Hopefully those reading this article will never resort to those kinds of things.

Yes, things are going to be tough, but there are always good alternatives if you are willing to look hard enough for them.

If you really need a job right now, pay close attention to the next couple of points.  Good jobs are very hard to come by in most areas at the moment, so you may have to be willing to make some sacrifices if you are desperate.

According to Bloomberg, there is a substantial shortage of truck drivers across the nation right now.

Driving a truck is really hard work, and it would take you away from home for extended periods of time, but the pay is pretty good.

If you are desperate for a job, this is something that you may want to look into.  There really is a shortage of truck drivers, and a paycheck is a paycheck.

Also, there are reportedly lots of jobs up in North Dakota right now.  Thanks to the oil boom up there, money is flowing and job opportunities are plentiful.

Just check out the following excerpt from a recent CNBC article about the employment boom going on in North Dakota right now….

Unemployment is a national problem in the U.S., but you wouldn’t know that if you travel through North Dakota.

The state’s unemployment rate hovers around 3 percent, and “Help Wanted” signs litter the landscape of cities such as Williston in the same way “For Sale” signs populate the streets of Las Vegas.

“It’s a zoo,” said Terry Ayers, who drove into town from Spokane, Wash., slept in his truck, and found a job within hours of arrival, tripling his salary. “It’s crazy what’s going on out here.”

Yes, it is really, really cold up in North Dakota.  There is very little housing available in the boom areas and for most of you it would require some significant sacrifices to take a job up there.

But there really are lots of jobs available up in North Dakota.  If you are desperate, you may want to really consider looking into it.

Now for the bad news.  Unfortunately, it is looking increasingly likely that we could have another major financial crisis some time fairly soon.

As I wrote about yesterday, Europe is a financial nightmare right now.  I honestly do not see any way that they are going to be able to fix things.

Fear is seemingly everywhere in Europe right now.  A recent article in The Telegraph entitled “Market crash ‘could hit within weeks’, warn bankers” postulated that we could be on the verge of a horrifying repeat of the financial crisis of 2008….

“The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008,” said one senior London-based bank executive.

“I think we are heading for a market shock in September or October that will match anything we have ever seen before,” said a senior credit banker at a major European bank.

So you might want to try to get whatever kind of a job that you can right now before the next wave of the financial crisis hits.

Dark clouds are gathering on the horizon and things do not look promising.  The coming economic storms are going to be very hard on the middle class in America.

The number of good jobs is going to continue to decline and our paychecks are going to get stretched tighter and tighter.

The “system” is not going to save you.

The “system” is failing.

You better get ready.

The Economic Collapse