The Horrifying Truth about the Collapse of the U.S. Economy
Most Americans still appear to be operating under the delusion that the “recession” will soon pass and that things will get back to “normal” very soon. Unfortunately, that is not anywhere close to the truth. What we are now witnessing are the early stages of the complete and total breakdown of the U.S. economic system. The U.S. government, state governments, local governments, businesses and American consumers have collectively piled up debt that is equivalent to approximately 360 percent of GDP. At no point during the Great Depression (or at any other time during our history) did we ever come close to such a figure? We have piled up the biggest mountain of debt that the world has ever seen, and now that gigantic debt bubble is beginning to pop. As this house of cards comes crashing down, the economic pain is going to become almost unimaginable.
U.S. stocks slid, sending the Standard & Poor’s 500 Index to a 12-year low, as the government cut shareholders’ stake in Citigroup Inc. by 74 percent and the economy shrank at a faster pace than previously estimated.
Citigroup plunged 39 percent after the Treasury agreed to convert as much as $25 billion of preferred shares into common stock in a third rescue attempt. Bank of America Corp. tumbled 26 percent, snapping a four-day rally in an S&P 500 group of banks. Alcoa Inc. and Boeing Co. fell more than 3.8 percent after the Commerce Department said gross domestic product contracted at a 6.2 percent annual pace in the fourth quarter.
“The City story is a nightmare that keeps getting worse, with no end in sight,” said Matthew Kaufler, money manager at Federated Clover Investment Advisors, which oversees $2.1 billion. “The fact that it’s occurring on a day when we’re getting horrible GDP numbers adds some kerosene to the mix.”
The sad truth is that it is not just the U.S. government that has a massive debt problem. U.S. households have also been accumulating debt at a staggering rate. Total U.S. household debt did not pass the 2 trillion dollar mark until the mid-1980s, but now total U.S. household debt is well over 13 trillion dollars.
The total of all debt (government, business and consumer) in the United States is now well over 50 trillion dollars. For the past couple of years this figure has been hovering around a level that is equivalent to approximately 360 percent of GDP. This is a debt bubble that is absolutely unprecedented in U.S. history.
There are about 3 and a half times as many unemployed workers in the United States today as there was when 1970 began. These jobs losses are going to continue as long as we allow our corporations to pay slave labor wages to workers on the other side of the globe. All of the major trends in global trade are very bad for the U.S. middle class. For example, the U.S. trade deficit with China for 2010 was 27 times larger than it was back in 1990.
Already, things are really, really, really bad out there. Unemployment is at shockingly high levels. Foreclosures and personal bankruptcies continue to set new all-time records. Businesses are being shut down at a staggering rate, more than 40 million Americans are on food stamps, and the U.S. government continues to pile up debt at blinding speed.
There is no use sugar-coating it.
The U.S. economy is collapsing.
The following are statistics that reveal the truth about the collapse of the U.S. economy….
- The U.S. government’s third attempt to help rescue Citigroup Inc. won’t stanch the company’s losses, which will continue to swell and may lead the bank to require more money in coming months, analysts said.
- Yesterday’s action didn’t furnish the New York-based bank with new money, although it cuts expenses by eliminating dividends on preferred stock. Instead, it converted preferred shares into common equity, which absorbs the first hit in the event of further losses, at an above-market-value price of $3.25. The stock, which has fallen 78 percent since the beginning of the year, closed in New York trading yesterday at $1.50, its lowest since November 1990.
- According to one shocking new survey, 28% of U.S. households have at least one member that is looking for a full-time job.
- A recent Pew Research survey found that 55 percent of the U.S. labor force has experienced unemployment, a pay decrease, a reduction in hours or an involuntary move to part-time work since the recession began.
- There are 9.2 million Americans that are unemployed but that are not receiving an unemployment insurance check.
- In America today, the average time needed to find a job has risen to a record 35.2 weeks.
- According to one analysis, the United States has lost 10.5 million jobs since 2007.
- China’s trade surplus (much of it with the United States) climbed 140 percent in June compared to a year earlier.
- This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
- Since the Federal Reserve was created in 1913, the value of the U.S. dollar has declined by over 95 percent. One of the reasons given for the existence of the Federal Reserve is that the Fed helps control inflation. But that is a huge lie. The truth is that the United States never had consistently rampant inflation until the Federal Reserve took control. In particular, once the U.S. totally went off the gold standard in the 1970s inflation really started escalating out of control.
- Now the Federal Reserve says that the solution to our current economic problems is to print even more money out of thin air. The games that the Federal Reserve is playing with our money supply are simply inexcusable. Just look at what the Federal Reserve has done to the monetary base since the beginning of the recession.
- According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck. That was up significantly from 49 percent in 2008 and 43 percent in 2007.
- According to a recent poll conducted by Bloomberg, 71% of Americans say that it still feels like the economy is in a recession.
- Banks repossessed 269,962 U.S. homes during the second quarter of 2010, which was a new all-time record.
- Banks repossessed an average of 4,000 South Florida properties a month in the first half of 2010, up 83 percent from the first half of 2009.
- According to RealtyTrac, a total of 1.65 million U.S. properties received foreclosure filings during the first half of 2010.
- The Mortgage Bankers Association recently announced that demand for loans to purchase U.S. homes has sunk to a 13-year low.
- Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
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