Many of my family, friends and associates speak of a financial collapse as if it’s coming in the future; but the truth is, it’s already come. I’ll say it again, the commencement of a financial collapse has already occurred. Oh, I’ll grant it that we haven’t yet seen the very worst of the a global financial collapse, but it most certainly has taken place—just as plainly as the nose on your face, with no less drama than what took place on Wall Street crisis that took place on October 29, 1929. The question is though, do YOU believe it, and if you do, are you living your life now as if a financial collapse has occurred.
You don’t think a financial collapse has occurred yet? Tell that to the millions of Americans who lost more than 110% of their net worth, including every penny of their retirement funds, and who are now upside down on any equity that had been built up in their home. Still think it’s not really that bad? Perhaps I’m a “fear mongerer?” Well, let’s look at some viable evidence.
In light of the news reflecting the financial collapse of Spain at present I don’t think any of us would disagree that Spain is in an economic collapse right now. Spaniards are trampling into grocery stores with organized, angry mobs in order to steal over 3 tons of food—and that’s just in one day! Unemployment in Spain is presently over 25% with their Youth Unemployment numbers at 53% and yet today global headlines report that Spain had just increased taxes by the largest percentage EVER! Their social security fund has officially run out of money even after a billions of dollars of bailout money thrown at them. Meanwhile banks in Spain have been seriously downgraded by every notable rating agency there is.
Now, let’s look at us in the U.S. We all know that our REAL unemployment rate isn’t the 8.3% number that we keep being fed, because we know that the way that our government calculates unemployment is strictly based on the numbers of people who are receiving unemployment. This obviously doesn’t take into account the more than 5 million Americans who are unemployed but who no longer qualify for unemployment, nor does it take into account the 15% of the population that are woefully underemployed. Nor does it take into consideration the 10.1 millions of individuals who have created jobs for themselves and become self-employed. We all know that there are millions of such persons who are earning below poverty wages. Some states are officially reporting unemployment rates for individuals over the age of 16 from 24% to as high as 46.1%!! Additionally, while Spain’s Youth Unemployment numbers are at 53%, while our government conservatively estimates that our Youth Unemployment numbers are at 49.8% at a time in which we should be seeing our peak youth employment. Though the end of the recession was officially declared (by SOMEbody) to be over in June of 2009, even our officially reported unemployment numbers have remained steady over 8% for 42 consecutive months—because that’s what happens when there’s a financial collapse. Do you notice how similar our situation is to Spain’s and yet not even our lamestream media would be foolish enough to try and say that all is well in Spain. There’s only so much reality that government reports can cover and hide from and when there’s been a genuine financial collapse, employment is certainly one of those realities that can’t be hidden.
Let’s look at the moment in history that most of us are willing to accept as a financial crash—Tuesday, October 29, 1929. The stock market crash lost 40 percent of its value—more than $35 billion dollars were lost in shareholder equity. At that time the entire American Federal Budget wasn’t even 3 billion dollars. By comparison, 2008 robbed us of $34.4 trillion dollars! That’s more than the GDP (gross domestic product) of the U.S., Japan, and the European Union COMBINED! In the U.S. alone, $8 trillion in wealth plus over $6 trillion in home equity for a total of $14 trillion which was more than the U.S. GDP in 2008. (2008 Federal Budget was $2.9 trillion and our estimated 2012 Federal Budget is $3.7 trillion dollars) People may say, “Oh, but we gained that all back, look at what Wall Street did thereafter.” Such a supposition is mathematically impossible. Sure, some wealthy folks who could take the financial hit and then buy up the stocks at rock bottom prices were able to regain ground, but that’s not the case with the millions of Americans who lost everything. When you lose EVERYTHING in your portfolio, retirement accounts, etc. then you have nothing with which to purchase low priced stocks that may rise again. You have nothing with which to earn interest no matter how attractive the return is. 130% return times ZERO is still ZERO, right? On the bright side of things some middle class workers “only” lost minimum of 70% of their retirement fund as a result of this collapse but they also lost 110% of their home value. This kind of a scenario far exceeds even the Great Depression financial loss by several times over.
Never in the history of our world have we had so many nations downgraded. Never have we had this many global banks downgraded (after all, how can a bank fail when it’s making exorbitant amounts of interest on AIR??) The FDIC which insures the $13 trillion dollars worth of assets is broke with only 70% of the assets properly covered. Never in the our nation’s history have we had this many municipalities, cities, school districts, states, essential goods manufacturers and vital utilities downgraded like this, let alone all at the same time. Even our own nation has been downgraded as severely as it was in 1933 just before it went bankrupt. The largest global economies have been downgraded. The largest global manufacturing has slowed down including Germany, Australia, China, and Japan. On top of all of that we’ve got record shortages of wheat and other grains in nearly every nation of the world. Meanwhile our cost of the most basic necessities have increased substantially—food, water, fuel, electricity, natural gas, clothing, education tuitions, as well as the non-essentials such as travel and entertainment. Oh yeah, and at the end of this year we’re in store for yet another speed bump in the form of the deep spending cuts and tax increases because Congress has yet to pass a budget in the past 3 years!
Ask yourself this, though you may not believe that a financial collapse has actually occurred as of yet, do you see ANYTHING that gives you ANY reason to believe that our nation’s economy is going to get BETTER?
Unfortunately, the evidence supporting this belief is mounting. In order to detail all of it, I’m certain it would require at least 300 pages. So the big question that you should be asking yourself is are you spending like everything is sunshine, Skittles and puppy dogs or are you drastically restraining yourself to pay for essentials that you know will still have their value and their use in the years to come? If there really has been a financial collapse then why in the world would you eat out like money is growing on trees? Why would you apply for another credit card or rack up the ones that you’ve got?
Sorry to be the bearer of rough news, but this full-blown depression is here to stay for a while. Historically situations like this have taken 10 years to fully recover however we’ve NEVER had such a serious situation go denied for so long either. I’m not sure what kind of effect such denial will have on our economic scenario as a result, but you and I both know it certainly won’t make it an easier or shorter recovery. Your gut is telling you that I’m not so crazy as some might think. You know things are ugly financially and I know it. But there are an awful lot of people around you that would rather we not ACT on that knowledge until the absolute bitter end because they don’t want people to stock up, they don’t want to suffer the consequences of their actions—whether that be panic purchasing, tightening the purse strings which will bring about even HIGHER unemployment numbers (and remember, no one has ever won an election with these kind of unemployment numbers). I don’t think I’ve ever seen a time in history in which the tale of “The Emperors New Clothes” ever had a more exact application. All of this denial and smoke and mirrors reminds me of the scene from “Monty Python’s The Holy Grail” in which the Black Knight has both of his arms cut off and declares such as “Tis nothing but a scratch.” “Just a flesh wound” he declares. When one of his legs is then cut off in the battle the Black Knight boldly declares “I’m invincible!” while hopping around on one leg. (If you haven’t seen this famous scene of warped British humor you can see it here. (Warning, PG-13 for a swear word and the bleeding from “the flesh wound” is present.)
It’s interesting to note that the headlines in the newspapers on October 30th , 1929 attempted to distract Americans from the truth using the same tactics that exist today. The headlines read “Rally at Close Cheers Brokers; Bankers Optimistic”. Unfortunately today we have so many more ways that the deceptive messages can influence us—more channels, more newspapers, blogs, social media—all trying to tell us it’s OK in hopes that they can fix it before we really catch on. Regardless of these efforts though, we literally can’t afford to still behave like “all is well”—like it’s all going to still be there for us when we retire or ready to take out a loan. It’s time we ALL got very serious about being extremely frugal and wise about what we spend our money on today and how we are going to work NOW in order to mitigate the great pain that’s coming our way when EVERYONE realizes that reality can no longer be spun into anything else.
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