VK, roving reporter for The Automatic Earth, has been playing with the numbers from the January 7 employment report issued by the U.S. Bureau of Labor Statistics. It seems valuable to look at unemployment from this, a different, angle. Some of it may even surprise you.
The total non institutional civilian labor force (Americans 16 years and older who are not in a institution -criminal, mental, or other types of facilities- or an active military duty) is reported as 238.889 million. Of these, we see:
Employed: 139.206 million people (58.3% of labor force)
Unemployed: 14.485 million people (6.1% of labor force)
Obviously, that can’t be the total picture, we’re only at 64.4%. This is why:
Part time employed for economic reasons: 8.931 million people. This concerns people who want a full-time job but can’t get one.
Part time employed for non-economic reasons: 18.184 million people. Non-economic reasons include school or training, retirement or Social Security limits on earnings, but also childcare problems and family or personal obligations.
But the by far largest category “missing” from both the Employed and Unemployed statistics is the “Not In Labor Force”: 85.2 Million people.
The BLS definition states: “Not in the labor force (NILF). A person who did not work last week, was not temporarily absent from a job, did not actively look for work in the previous 4 weeks, or looked but was unavailable for work during the reference week; in other words, a person who was neither employed nor unemployed.” (Clearly, this does include lot of unemployed people).
To summarize: 108.616 million people in America are either unemployed, underemployed or “Not in the labor force”. This represents 45.5% of working age Americans.
If you count the “Part time employed for non-economic reasons”, you get 126.8 million Americans who are unemployed, underemployed, working part time or “Not in the labor force”. That represents 53% of working age Americans.
So only 47% of working age Americans have full time jobs. While the official unemployment rate is 9.4%. Something’s missing somewhere.
Last yearÃ¢â¬â¢s sure thing is rapidly turning into this yearÃ¢â¬â¢s sure loser. After bringing in a torrid 29% return in 2010, the barbarous relic has only managed a flaccid 7% loss so far this year, much to the distress of hedge funds and gold bugs alike. The triple top on the charts that set up over the last three months could not be more clear. What is giving traders ulcers now is the prospect of a much more serious sell off in the yellow metal in coming weeks and months.
They are right to be worried. The shift out of hard assets and into paper ones, like stocks, has been undeniable in 2011. One of the main drivers for gold in recent years has been buying from a newly enriched middle class in emerging nations. They have been joined by their own central banks, which have been scrambling to find alternatives to the US dollar to store massive reserves generated by record trade surpluses.
ItÃ¢â¬â¢s looking like inflation fears are going to pee on this parade. A witchÃ¢â¬â¢s brew of rising commodity prices, soaring real estate, and increased wage demands has sent inflation over 5% in China. Much higher figures can be found in India and Vietnam. This is prompting governments to sharply raise local interest rates, making gold a less attractive investment alternative.
ThatÃ¢â¬â¢s just for starters. The CFTC has already raised margin requirements for the entire metals complex to dampen unwarranted speculation. While JP Morgan and Goldman Sachs managed to get Ã¢â¬ÅgrandfatherÃ¢â¬Â exemptions to keep the markets open (as I do), most smaller players are having to pay up, increasing the amount of capital they must commit to each trade, reducing returns. Small and medium sized hedge funds and wealthy individuals trading on margin provided much of the juice for last yearÃ¢â¬â¢s bull market.
‘Perfect storm’ of issues will bring widespread starvation if nothing is done
Food prices to rise by 50 per cent over the next decade
GM crops will be needed to feed the world
Global population to grow to 9billion by 2050
The cost of food will soar by 50 per cent over the next few decades as the world becomes racked by famine, mass migrations and riots, experts have warned.
The increase will be triggered by the exploding world population, rising cost of fuel and increased competition for water, according to a leading Government think-tank.
Spiralling food prices will push hundreds of millions of people into hunger, trigger mass migration and spark civil unrest, the report warned.
And in the UK, the price of basics such as bread, rice and milk will spiral to inflation-busting record prices within the next few decades.
The report, from Foresight, a think-tank set up to predict future crises, called for Ã¢â¬Ëurgent actionÃ¢â¬â¢ to prevent food shortages, and said genetically modified crops may be needed to prevent famines.
The world’s expected economic growth will have to be supported by an extra $100 trillion (ÃÂ£63 trillion) in credit over the next decade, according to the World Economic Forum.
This doubling of existing credit levels could be achieved without increasing the risk of a major crisis, said the report from the WEF ahead of its high-profile annual meeting in Davos.
But researchers warned that leaders must be wary of new credit “hotspots”, where too much lending takes place, as the world emerges from a financial catastrophe blamed in large part “to the failure of the financial system to detect and constrain” these areas of unsustainable debt.
“Pockets of credit grew rapidly to excess Ã¢â¬â and brought the entire financial system to the brink of collapse,” said the report, written in conjunction with consulting firm McKinsey. “Yet, credit is the lifeblood of the economy, and much more of it will be needed to sustain the recovery and enable the developing world to achieve its growth potential.”
Like many environmentalists, Lester Brown is worried.
In his new book “World on the Edge,” released this week, Brown says mankind has pushed civilization to the brink of collapse by bleeding aquifers dry and overplowing land to feed an ever-growing population, while overloading the atmosphere with carbon dioxide.
If we continue to sap Earth’s natural resources, “civilizational collapse is no longer a matter of whether but when,” Brown, the founder of Worldwatch and the Earth Policy Institute, which both seek to create a sustainable society, told AFP.
What distinguishes “World on the Edge” from his dozens of other books is “the sense of urgency,” Brown told AFP. “Things could start unraveling at any time now and it’s likely to start on the food front.
“We’ve got to get our act together quickly. We don’t have generations or even decades – we’re one poor harvest away from chaos,” he said.
“We have been talking for decades about saving the planet, but the question now is, can we save civilization?”
Yellowstone National Park’s supervolcano just took a deep “breath,” causing miles of ground to rise dramatically, scientists report.
The simmering volcano has produced major eruptionsÃ¢â¬âeach a thousand times more powerful than Mount St. Helens’s 1980 eruptionÃ¢â¬âthree times in the past 2.1 million years. Yellowstone’s caldera, which covers a 25- by 37-mile (40- by 60-kilometer) swath of Wyoming, is an ancient crater formed after the last big blast, some 640,000 years ago.
The rate slowed between 2007 and 2010 to a centimeter a year or less. Still, since the start of the swelling, ground levels over the volcano have been raised by as much as 10 inches (25 centimeters) in places.
“It’s an extraordinary uplift, because it covers such a large area and the rates are so high,” said the University of Utah’s Bob Smith, a longtime expert in Yellowstone’s volcanism.
Video: YellowstoneÃ¢â¬âWorld’s First National Park.
In November 2010, the Federal Reserve announced a second round of economic stimulus commonly referred to as Quantitative Easing (QE2).ÃÂ The reason, according to the Fed, was Ã¢â¬Åprogress toward its objectives has been disappointingly slow.Ã¢â¬Â ÃÂ ÃÂ So, to try and turn the economy around, the Fed said, Ã¢â¬Å. . . the Committee intends to purchase a further $600 billion of longer-term Treasury securitiesÃÂ by the end of the second quarter (June) of 2011, a pace of about $75 billion per month.Ã¢â¬Â(Click here to read the complete announcement from the Fed.) QE means the Fed basically creates money out of thin air to buy debt. ÃÂ The current money printing orgy is financing more than half of U.S. government right now.ÃÂ The first round of QE bought toxic mortgage debt and bailed out the bankers.
What was not said in the press release was much more important and may go down as one of the biggest turning points in the history of America.ÃÂ Bringing on QE2 meant QE1 ($1.75 trillion) failed to provide a sustained recovery.ÃÂ It also exposed the $12.3 trillion total spent or loaned by the Fed since the meltdown of 2008 failed to give the economy a lasting boost.ÃÂ The Fed did save some businesses and all the big Wall Street Banks from bankruptcy, but we now know nothing has really been fixed.
This brings me to one really important question. ÃÂ ÃÂ I put this question to a group of well-known market experts, economists, investment bankers and big thinkers.ÃÂ The five guys you are about to hear from have at least one major thing in common.ÃÂ They all predicted tough times for America when most didnÃ¢â¬â¢t see it coming.ÃÂ So, I asked them all last week to peer into the not-so-distant future for their take on Ã¢â¬ÅWhat happens when QE2 ends?Ã¢â¬Â
World renowned gold expert Jim Sinclair said, Ã¢â¬ÅStates and Municipalities can and will go broke.ÃÂ The economic impact will act to foil QE.ÃÂ That will result in QE to Infinity regardless of MOPE. (Management of Perception Economics)ÃÂ Therefore, Washington and the Fed will backdoor rescues by buying State & Municipal debt, a form of QE.Ã¢â¬Â
How do you sell a movie called Ã¢â¬ÅCaptain AmericaÃ¢â¬Â to an overseas market? In South Korea, Russia and the Ukraine, apparently, the answer is you donÃ¢â¬â¢t even try.
The film Ã¢â¬ÅCaptain America: The First AvengerÃ¢â¬Â will have its title truncated to, simply, Ã¢â¬ÅThe First AvengerÃ¢â¬Â in those three overseas markets, according to Marvel Studios insiders. The choice was made by Marvel, Paramount PicturesÃ¢â¬â¢ international team and distributors in those three countries based on market research results. Those involved in the decision are being careful to frame the move as a matter of brand management and consumer awareness and not as a decision tilted by cultural or political winds.
In private, Marvel insiders said that early on in the projectÃ¢â¬â¢s planning there was talk that the title might need to be changed in numerous international markets but that there was a Ã¢â¬Âpleasant surpriseÃ¢â¬Â Ã¢â¬â the brand recognition of the comic-book superhero was so strong that it overrode those considerations in many places. That was not the case in Russia, South Korea and the Ukraine.
ItÃ¢â¬â¢s not uncommon for American films to undergo name changes for overseas to suit the international variables in taste, translation and temperament.ÃÂ Still, this particular title tweak might not sit well with those pundits and purists who frowned on comments last year by the filmÃ¢â¬â¢s director, Joe Johnston, that suggested that Captain America and his alter ego, Steve Rogers, would be more measured in the way they saluted their country.
Cuba suspended indefinitely all mail service to the United States on Friday, extending a ban announced in November and expanding it to cover letters as well as packages.
The move is a setback for relations between the two countries, enemies for more than half a century. It came just days after the Obama Administration announced it was easing travel restrictions on academics and church groups seeking to visit the island.
“Until further notice, we cannot continue to accept any type of delivery,” Cuba’s mail service, Correos de Cuba, said Friday in an announcement read over state television.
Mail service was suspended in the 1960s, shortly after Fidel Castro came to power. Limited mail service routed through third countries resumed in 2009, following talks between U.S. and Cuban officials.
The University of Canberra is to introduce a total ban on bottled water from its campus.
It’s believed to be the largest ban of its kind in Australia and the first across a university.
Organisers say the ban will stop 140,000 plastic bottles from being sold annually.
Instead, students will have access to free water bubblers of the same kind which have been installed in the New South Wales town of Bundanoon, where water bottles have been banned since 2009.
“By supplying free water and cheap, chilled water, the university will be helping students to break a bottled water habit that’s costing Australians half a billion dollars a year,” the founder of environmental group Do Something, John Dee said in a statement.
The ban will be phased in. Sales of water on the campus will totally cease by late March.
President Obama’s comments on Wednesday in a joint press conference with Chinese President Hu Jintao, misinformed the public about potential changes in foreign exchange rates and their effects on U.S. citizens. Obama on Wednesday said that he would like to see the Chinese yuan appreciate faster in value. While Hu indicated that China is committed to allowing the free market to better dictate the value of the yuan, Obama said China is implementing their steps to allow the yuan to appreciate “not as fast as we’d like.”
For years, the U.S. has been criticizing China by calling them “currency manipulators”. The fact is, the Federal Reserve is the real currency manipulator because their actions will soon lead to a U.S. Hyperinflationary Great Depression that destroys the lives of all Americans who aren’t prepared for life with a worthless U.S. dollar. All China is doing is pegging the yuan to the U.S. dollar so that their product manufacturers and exporters can maintain some level of stability. However, the U.S. is using this as an excuse to explain its rapidly deteriorating export market.
Obama was correct when he explained to the world how China would benefit by having a stronger yuan. Obama understands perfectly how a stronger yuan would bring down prices for Chinese citizens and allow them to enjoy a much higher standard of living. In fact, NIA believes China could solve their current inflation crisis simply by allowing the yuan to appreciate alone.
China has seen the prices of many food items soar by 25% or more in recent months, which is horrific for a country where many of its citizens spend half of their income on food. While most mainstream economists on CNBC, Bloomberg, and FOX Business are quick to blame China’s food inflation crisis on the weather, NIA believes the weather has very little to do with it. It seems like the weather is always the excuse every time food prices rise. Mainstream economists would have you believe that the world has been experiencing never-ending droughts and floods that continue to worsen each year.
It is because of the enormous differences between gold and silver inventories that a Ã¢â¬Ådefault eventÃ¢â¬Â is likely to be much different between gold and silver. With gold bullion being principally a financial asset in global markets, it is much easier to forestall a true Ã¢â¬Åfailure to deliverÃ¢â¬Â from occurring at the official bullion exchanges (i.e. London or New York) through the unofficial default-mechanism of Ã¢â¬Åcash settlementsÃ¢â¬Â.
Indeed, the bankers consider this mechanism to be a Ã¢â¬Åperfect solutionÃ¢â¬Â for the parameters of having very finite amounts of (extremely leveraged) bullion, while having access to infinite amounts of banker-paper from central bank printing presses.
In reality, as the Ã¢â¬Åcash settlementsÃ¢â¬Â continue to get larger and more frequent, at some point one or more large holders in this banker Ponzi-scheme are going to lose their nerve, and insist on real bullion rather than paper bribes. Such an event does not need to result in an official default. It merely needs to Ã¢â¬Åspook the herdÃ¢â¬Â.
As word gets out of some prominent investor refusing any quantity of banker-paper in favor of physical bullion (i.e. real Ã¢â¬ÅmoneyÃ¢â¬Â), this will cause the holders of $100Ã¢â¬â¢s of billions of dollars of Ã¢â¬Åpaper bullionÃ¢â¬Â products to ask themselves a very pointed question: Ã¢â¬Åam I holding Ã¢â¬ËbullionÃ¢â¬â¢ or am I holding ÃÂ Ã¢â¬ËpaperÃ¢â¬â¢?Ã¢â¬Â
More importantly will be their response to such a question. The two obvious responses are either to demand delivery or to sell their paper bullion. At that point, it wonÃ¢â¬â¢t matter which path is taken, since both roads will lead to the obliteration of the bankersÃ¢â¬â¢ 100:1-leveraged, paper gold Ponzi-scheme.
We can add another victim to the Tucson tragedy Ã¢â¬â the right to criticize government without fear of getting a knock on your door from the feds. Despite the fact that shooter Jared Loughner was not politically motivated, the FBI is now compiling a list of Americans deemed a potential threat because they criticized their representative Ã¢â¬â and targeting them with home visits.
An Ozark man who ran a blog last year critical of Republican Congressman Billy Long was shocked to see an FBI agent turn up on his doorstep asking questions. The agent was accompanied by Green County Sheriff Jim Arnott, who had stepped outside of his jurisdiction to become involved in this act of political repression directed against Clay Bowler, a resident of Christian County.
The FBI agent wanted to know if Bowler was a threat to Long because he had used an Internet blog to highlight claims of cronyism and corruption involving the Congressman before the southwest Missouri election in November, in which Long defeated Democrat Scott Eckersley to replace outgoing Rep. Roy Blunt.
The most heated confrontation Bowler had with Long was when he asked him a question about political donations Long had made. The video clip of the incident shows Bowler calmly asking Long a question as the Congressman walks away. He ran a website called Ã¢â¬ÅLong is wrongÃ¢â¬Â in an attempt to prevent Long from being elected last year. The website has since been discontinued and Bowler hasnÃ¢â¬â¢t had any contact with Long since September.
As worshipers of Islam congregate on the streets of Paris, opponents of the practice suggest it is against France’s freedom of religion laws. According to some, the government ignores the issue because it is a political hot potato.
Armoured vehicles will use a new technology known as “e-camouflage” which deploys a form “electronic ink” to render a vehicle “invisible”.
Highly sophisticated electronic sensors attached to the tank’s hull will project images of the surrounding environment back onto the outside of the vehicle enabling it to merge into the landscape and evade attack.
The electronic camouflage will enable the vehicle to blend into the surrounding countryside in much the same way that a squid uses ink to help as a disguise.
Unlike conventional forms of camouflage, the images on the hull would change in concert with the changing environment always insuring that the vehicle remains disguised.
In Helmand, for example, all armoured vehicle have desert sand coloured camouflage, which is of little use in the “Green Zone”, an area of cultivation where crops are grown and the Taliban often hide.
Up until recently such concepts were thought to be the stuff of science fiction but scientists at the defence company BAE Systems now believe battlefield “invisibility” will soon become science fact.
AuthorÃ¢â¬â¢s Note: These questions were emailed to our D.C. Insider, who then responded.ÃÂ Unfortunately, no follow-up was allowed.ÃÂ We hope to be able to do a follow-up soon.ÃÂ Some information was later edited per request prior to final publication.
Question: How would you rate the performance of President ObamaÃ¢â¬â¢s Tucson Tragedy speech?
Insider: The speech itself was a remarkable display. Very powerful speech. ÃÂ Perhaps the presidentÃ¢â¬â¢s finest moment since taking office.ÃÂ The things happening outside the speech though left many of us wondering who was in charge of planning the event because that environment was almost a disaster. ÃÂ You were right to call into question the t-shirts.ÃÂ That was in very poor taste.ÃÂ The excuse that the Obama administration had nothing to do with those t-shirts is completely false.ÃÂ Every detail is run by the administration on this kind of event.ÃÂ Every last detail.ÃÂ Also, many who had attended were actually coached to be Ã¢â¬Åvery supportiveÃ¢â¬Â of President Obama.ÃÂ I donÃ¢â¬â¢t agree that this should have been Ã¢â¬ÅObamaÃ¢â¬â¢s OklahomaÃ¢â¬Â.ÃÂ The media is trying to make it just that, with the full support of the Obama White House/Jarrett.ÃÂ Tucson was a terrible tragedy.ÃÂ Oklahoma was something much-much bigger than that.ÃÂ I find it more than a bit troubling to hear all this comparison between the two events.ÃÂ And regarding ObamaÃ¢â¬â¢s attitude on this tragedy.ÃÂ Here is something that you will never hear from the media but thatÃÂ some witnessed shortly after the memorial service had finished.ÃÂ Behind the staging area, Obama gave Michelle a Ã¢â¬Åhigh fiveÃ¢â¬Â and shared a laugh with her.ÃÂ So withinÃÂ minutes of seeingÃÂ what is ObamaÃ¢â¬â¢s finest moment as president it is followed by one of his worst.ÃÂ It is thisÃÂ easy and always there contradictionÃÂ in the president that concerns me very very much.ÃÂ He was just thrilled at his performance.ÃÂ That was priority #1 for him.ÃÂ It always is. ÃÂ The motivation for his speech was not to heal following the tragedy, but to further appeal to the public and get their approval of him.ÃÂ ItÃ¢â¬â¢s similar to that story I told you about Obama coming into the military meeting at the WH.ÃÂ He came in laughing and left early laughing.ÃÂ Maybe a photo of the high fiveÃÂ will be released?ÃÂ ÃÂ ÃÂ I was told one was taken at any rate.ÃÂ I cannot reconcile with that kind of behavior in a leader.ÃÂ There really is something missing in him.ÃÂ Some basic element of humanity.ÃÂ Or humility???ÃÂ Even by DC political standards the human element in Obama seems to be utterly absent.ÃÂ I donÃ¢â¬â¢t get it. I donÃ¢â¬â¢t understand it.ÃÂ And that scares the hell out of me.ÃÂ So thatÃ¢â¬â¢s my assessment of the Tucson speech.
Over the past couple of years, most Americans have shown little concern as austerity measures were imposed on financially troubled nations across Europe.ÃÂ Even as austerity riots erupted in nations such as Greece and Spain, most Americans were still convinced that nothing like that could ever happen here.ÃÂ Well, guess what?ÃÂ Austerity has arrived in America.ÃÂ At this point, it is not a formal, mandated austerity like we have seen in Europe, but the results are just the same.ÃÂ Taxes are going up, services are being slashed dramatically, thousands of state and city employees are being laid off, and politicians seem to be endlessly talking about ways to make even deeper budget cuts.ÃÂ Unfortunately, even with the incredibly severe budget cuts that we have seen already, many state and local governments across the United States are still facing a sea of red ink as far as the eye can see.
Most Americans tend to think of “government debt” as only a problem of the federal government.ÃÂ But that is simply not accurate.ÃÂ The truth is that there are thousands of “government debt problems” from coast to coast.ÃÂ Today, state and local government debt has reached at an all-time high of 22 percent of U.S. GDP.ÃÂ It is a crisis of catastrophic proportions that is not going away any time soon.
A recent article in the New York Times did a good job of summarizing the financial pain that many state governments are feeling right now.ÃÂ Unfortunately, as bad as the budget shortfalls are for this year, they are projected to be even worse in 2012….
While state revenues Ã¢â¬â shrunken as a result of the recession Ã¢â¬â are finally starting to improve somewhat, federal stimulus money that had propped up state budgets is vanishing and costs are rising, all of which has left state leaders bracing for what is next. For now, states have budget gaps of $26 billion, by some estimates, and foresee shortfalls of at least $82 billion as they look to next yearÃ¢â¬â¢s budgets.
So what is the solution? Well, for state and local politicians from coast to coast, the answer to these financial problems is to impose austerity measures.ÃÂ Of course they never, ever use the term “austerity measures”, but that is exactly what they are.
The following are 22 signs that austerity has already arrived in America and that it is going to be very, very painful….
#1 The financial manager of the Detroit Public Schools, Robert Bobb, has submitted a proposal to close half of all the schools in the city.ÃÂ His plan envisions class sizes of up to 62 students in the remaining schools.
#2 Detroit Mayor Dave Bing wants to cut off 20 percent of the entire city from police and trash services in order to save money.
#6 In the state of Illinois, lawmakers recently pushed through a 66 percent increase in the personal income tax rate.
#7 The town of Prichard, Alabama came up with a unique way to battle their budget woes recently.ÃÂ They simply stopped sending out pension checks to retired workers.ÃÂ Of course this is a violation of state law, but town officials insist that they just do not have the money.
#8 New Jersey Governor Chris Christie recently purposely skipped a scheduled 3.1 billion dollar payment to that state’s pension system.
#9 The state of New Jersey is in such bad shape that they still are facing a $10 billion budget deficit for this year even after cutting a billion dollars from the education budget and laying off thousands of teachers.
#10 Due to a very serious budget shortfall, the city of Newark, New Jersey recently made very significant cuts to the police force.ÃÂ Subsequently, there has been a very substantial spike in the crime rate.
#14 Oakland, California Police Chief Anthony Batts has announced that due to severe budget cuts there are a number of crimes that his department will simply not be able to respond to any longer.ÃÂ The crimes that the Oakland police will no longer be responding to include grand theft, burglary, car wrecks, identity theft and vandalism.
#15 In Connecticut, the governor is asking state legislators to approve the biggest tax increase that the state has seen in two decades.
#16 All across the United States, conditions at many state parks, recreation areas and historic sites are deplorable at best.ÃÂ Some states have backlogs of repair projects that are now over a billion dollars long.ÃÂ The following is a quote from a recent MSNBC article about these project backlogs….
More than a dozen states estimate that their backlogs are at least $100 million. Massachusetts and New York’s are at least $1 billion. Hawaii officials called park conditions “deplorable” in a December report asking for $50 million per year for five years to tackle a $240 million backlog that covers parks, trails and harbors.
#18 Not only that, but Arizona is do desperate for money that they have even sold off the state capitol building, the state supreme court building and the legislative chambers.
#19 All over the nation, asphalt roads are actually being ground up and are being replaced with gravel because it is cheaper to maintain.ÃÂ The state of South DakotaÃÂ has transformed over 100 miles of asphalt roadÃÂ into gravel over the past year, and 38 out of the 83 counties in the state of Michigan have transformed at least some of their asphalt roads into gravel roads.
#20 The state of Illinois is such a financial disaster zone that it is hard to even describe.ÃÂ According to 60 Minutes,ÃÂ the state of Illinois is six months behind on their bill payments.ÃÂ 60 Minutes correspondent Steve Croft asked Illinois state Comptroller Dan Hynes how many people and organizations are waiting to be paid by the state, and this is how Hynes responded….
“It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state.”
#21 The city of Chicago is in such dire straits financially that officials there are actually toying with the idea of setting up a city-owned casino as a way to raise cash.
#22 Michigan Governor Rick Snyder is desperately looking for ways to cut the budget and he says that “hundreds of jurisdictions” in his state could go bankrupt over the next few years.
But everything that you have just read is only the beginning.ÃÂ Budget shortfalls for our state and local governments are projected to be much worse in the years ahead.
So what is the answer?ÃÂ Well, our state and local governments are going to have to spend less money.ÃÂ That means that we are likely to see even more savage budget cutting.
In addition, our state and local politicians are going to feel intense pressure to find ways to “raise revenue”.ÃÂ In fact, we are already starting to see this happen.
According to the National Association of State Budget Officers, over the past couple of years a total of 36 out of the 50 U.S. states have raised taxes or fees of some sort.
So hold on to your wallets, because the politicians are going to be coming after them.
We are entering a time of extreme financial stress in America.ÃÂ The federal government is broke.ÃÂ Most of our state and local governments are broke.ÃÂ Record numbers of Americans are going bankrupt.ÃÂ Record numbers of Americans are being kicked out of their homes.ÃÂ Record numbers of Americans are now living in poverty.
The debt-fueled prosperity of the last several decades came at a cost.ÃÂ We literally mortgaged the future.ÃÂ Now nothing will ever be the same again.
Detroit Public Schools would close nearly half of its schools in the next two years, and increase high school class sizes to 62 by the following year, under a deficit-reduction plan filed with the state.
The plan, part of a monthly update Emergency Financial Manager Robert Bobb gives the Department of Education, was filed late Monday to provide insight into Bobb’s progress in his attempt to slash a $327 million deficit in the district to zero over the next several years. Under it, the district would slim down from 142 schools now to 72 during 2012-13.
Bobb has said school closures, bigger classes and other measures would be needed if he cannot get help from lawmakers to restructure finances in the state’s largest school district.
DPS considered but declined to file for bankruptcy in 2009. In the past year, debt in the district has increased by more than $100 million, brought on by a mix of revenue declines in property taxes, reduced state aid, declining enrollment and an unplanned staffing surge this past fall.
Starting this fall, the district plans to boost class sizes in grades 4-12 and at all grade levels by fiscal 2012, which begins July 1, to save $16.8 million. The plan would hike class sizes for: Grades K-3 from 17-25 students to 29 in 2012-13 and 31 in 2013-14.
Grades 4-5 from 30 students to 37 in 2012-13 and 39 in 2013-14.
Grades 6-8 from 35 students to 45 in 2012-13 and 47 in 2013-14.
Grades 9-12 from 35 students to 60 in 2012-13 and 62 in 2013-14.
In a major ruling Friday, a coalition of nonprofit defense lawyers and consumer protection advocates in Maryland successfully got over 10,000 foreclosure cases managed by GMAC Mortgage tossed out, because affidavits in the cases were signed by Jeffrey Stephan, the infamous GMAC Ã¢â¬Årobo-signerÃ¢â¬Â who attested to the authenticity of foreclosure documents without any knowledge about them, as well as signing other false statements.
The University of Maryland Consumer Protection Clinic and Civil Justice, Inc., a nonprofit, filed the class action lawsuit, arguing that any case using Jeffrey Stephan as a signer was illegitimate and must be dismissed. In court Friday, GMAC agreed to dismiss every case in Maryland relying on a Stephan affidavit. They can refile foreclosure actions on the close to 10,000 homes, but only at their own expense, and subject to new Maryland regulations which require mandatory mediation between borrower and lender before moving to foreclosure. Civil Justice and the Consumer Protection Clinic also want any cases with affidavits from Xee Moua of Wells Fargo, who has also admitted to robo-signing, thrown out, but that case has not yet been settled.
This was not the plan of GMAC and other banks caught using robo-signers last year. They hoped to undergo a pause in proceedings, run a quick Ã¢â¬Ådouble-checkÃ¢â¬Â and then issue substitute documents in the same cases. That would have been a much more rapid solution for the banks and would have resulted in many more foreclosures. Now GMAC has to go back and basically file the entire case all over again, meaning they have to give notice of foreclosure to the borrower, engage the borrower in modification options, and basically run through the whole process from the beginning. They cannot use the shortcut solution, thanks to the class action suit filed. GMACÃ¢â¬â¢s dismissal of every foreclosure in Maryland shows their doubts they would have won the class action.
Have you noticed that most Americans seem to know far more about American Idol, Dancing with the Stars, Justin Bieber and their favorite sports teams than they do about world affairs?ÃÂ Most Americans cannot even find Tunisia and Algeria on a map, and if you told them that food riots are happening in those nations right now most of them would not even care anyway.ÃÂ We have become a very self-centered, self-involved and self-absorbed nation.ÃÂ Quite a few people have accused this column of being obsessed with “doom and gloom”, but the truth is that the world really is falling apart out there.ÃÂ What are we supposed to do?ÃÂ Are we all supposed to stick our heads in the sand and pretend that everything is going to be okay?ÃÂ Should we all not try to warn others so that they can prepare for what is coming?ÃÂ Until people understand that we are facing absolutely massive problems they are not going to be motivated to take significant action, and hopefully those of us that are proclaiming “doom and gloom” are doing a good enough job of describing what is really going on out there that some people are starting to wake up and actually make changes.
Most Americans may not care, but the food riots that are starting to erupt around the globe are actually very serious.
Do you remember what happened back in the summer of 2008?
That summer, the price of oil spiked to an all-time high of $147 a barrel and that caused a substantial increase in the price of food all over the globe.ÃÂ Suddenly millions of poor people couldn’t afford to feed themselves anymore and food riots erupted all over the world.
Well, here we are in 2011 and the price of oil hasn’t even reached $100 a barrel, and yet the food riots are already beginning.
Violent food riots are being reported in Tunisia, in Algeria, in Chile and in Mozambique.
Yes, that is how serious things are getting already.
Unfortunately, it looks like the global food situation is only going to get even worse.
Australia is a major food producer and right now they are experiencing flooding of Biblical proportions.ÃÂ In fact, it has been reported that at one point the flooding covered an area greater than France and Germany combined.
In Brazil, another major food producer, horrific flooding has killed more than 500 people so far.ÃÂ This flooding is being called the “worst-ever natural disaster” in the history of Brazil.
Meanwhile, record cold temperatures and record snowfalls are playing havoc with winter crops all over the Northern Hemisphere.
But even before all of these weather disasters struck the price of food had been going up significantly.ÃÂ The UN recently announced that the global price of food hit an all-time high during the month of December, and world leaders all over the globe are openly expressing concern about what 2011 is going to bring.
Sadly, the truth is that there has been a trend of rising food prices for quite some time. According to Forbes, corn is up 94% since June, soybeans are up 51% since June, and wheat is up 80% since last June.
As one of my readers recently pointed out to me, it usually takes about six months for the prices of agricultural futures to filter down into the supermarkets.ÃÂ So the very high prices for agricultural commodities that we are seeing right now should really start to be felt around the globe by the middle of 2011.
In addition to everything else, reports continue to come in of thousands of birds and millions of fish suddenly dying all over the globe, and nobody seems to really know what is causing it.
Do you want some more doom and gloom?
*There are reports of “panic buying” of silver and other precious metals right now.
*S&P and Moody’s have both warned once again that the United States is in danger of having its credit rating slashed if it does not get government debt under control.
*U.S. housing prices have now fallen further during this economic downturn than they did during the Great Depression of the 1930s.
Meanwhile, America’s economic infrastructure continues to be taken apart piece by piece.
The United States is losing more jobs to China.ÃÂ In fact, the United States is losing more high technology “green jobs” to China.
Evergreen Solar, a company that manufactures solar panels, is closing their factory in Devon, Massachusetts and they are moving their production facilities to China.ÃÂ This is going to result in the loss of 800 good American jobs.
“Solar manufacturers in China have received considerable government and financial support and, together with their low manufacturing costs, have become price leaders within the industry.”
Is it any wonder that a recent survey found that 47 percent of Americans now believe that China is the world’s leading economic power while only 31 percent still believe that the United States is the world’s leading economic power?
As America continues to lose good jobs, millions of Americans find themselves simply unable to pay the bills.ÃÂ In fact, at this point one out of every six Americans is now enrolled in at least one government-run anti-poverty program.
As things have fallen apart in the United States, many private citizens have tried to step forward and do what they can to help people, but now in many areas of the country the government is actually stepping in and shutting down these private avenues of assistance.
For example, in the city of Houston, Texas a couple named Bobby and Amanda Herring has been feeding homeless people for over a year.ÃÂ They never left behind any trash and no trouble was ever caused.
So will they be able to get a permit?ÃÂ Well, it turns out that city officials are saying that this “Feed a Friend” effort most likely will be denied one.
Apparently the city “officials” believe that the homeless “are the most vulnerable to foodborne illness” and that therefore the warm meals that the Herrings were providing for them were potentially dangerous.
Can you believe this?
This is what happens when political correctness and bureaucracy get wildly out of control.
Now it is illegal to go out and feed homeless people?
What is American turning into?
As the economy continues to fall part, the iron grip of the government is likely only going to get tighter as it desperately tries to keep order.
We have previously discussed the way Chinese gold demand will impact the gold price via imported gold.ÃÂ ÃÂ Even we have underestimated that demand.ÃÂ ÃÂ Right now, the demand for physical gold in China is surging. ÃÂ ÃÂ The premiums for gold bars for spot delivery jumped to their highest levels in two years there. ÃÂ ÃÂ Both nations are experiencing food inflation in particular, as well as the rising levels of general inflation.ÃÂ ÃÂ If this is a consequence of urbanization taking productivity away from the countryside, we expect the government will rectify that quickly without using monetary means.ÃÂ ÃÂ ÃÂ But overall gold demand is not a response to inflationary pressures there, but the rising capacity as well as rising numbers of middle class investors turning to one of the two prime investment mediums, bank deposits or gold.ÃÂ ÃÂ We expect this to rise rapidly in this country of 1.4 billion people who are rapidly being enriched.
An increase in 2010 Silver Proof Eagles and record-approaching 2011 Silver Bullion Eagles are the most interesting aspects in the latest US Mint sales report.
The Proof Eagle coins have seen two weekly adjustments since they sold out in late December. The latest brings them up 3,644 to 860,000, which would seem like a natural stopping point. Collectors will have to wait until the July time frame for the 2011 Silver Proof Eagles to make their appearance, according to the US Mint.
2011 bullion eagles launched on January 3, 2011. Silver Eagles already have last yearÃ¢â¬â¢s January record in their sight. The coins have raced to 3,407,000 in less than two weeks after their latest weekly pick-up of 1,322,000. Until January 2009, the silver coins had never topped the 3 million mark during the first month of a year. Those record sales totaling 3,592,500 may get clobbered in mere days. The all-time monthly high of 4,260,000 which was just set in November could be the next victim. As a side note, the 3,407,000 sold this month includes 469,500 of the 2010-dated issues. The US Mint had buyers order one 2010 Silver Eagle for every five of the 2011Ã¢â¬Â²s.
Bullion one-ounce 2011 Gold Eagles are running, but not sprinting like their silver counterparts. US Mint sales has their tally at 42,500 for a weekly increase of 29,000. As a comparison, buyers ordered 85,000 in January 2009. Inventory of the 2010-dated coins also remains. There were 53,000 at the start of the year. US Mint Authorized Purchasers must order one old for every four of the new ones.