Black Listed News (Link) - Michael Snyder (March 23, 2011)
2011 is shaping up to be a really bad year for the U.S. economy. There are all kinds of indications that big trouble is ahead. So far financial markets are weathering all of the chaos around the world fairly well, but just as there were huge flashing warning signs before the 2008 financial crisis there are also huge flashing warning signs now. The price of oil is soaring, the U.S. housing market is experiencing huge problems, the cost of living in America recently hit a new record high and each week the globe seems to become even more unstable. How much pounding can our fragile economic system take before it completely collapses? As the price of oil goes even higher, it is going to cause economic growth to slow down and it is going to cause the prices of the things that we all buy at the stores to go up at the same time. It is very likely that we are entering a period of �stagflation� similar to what we experienced in the 1970s. This is going to cause a huge amount of money trouble for millions of American families. Already there are vast numbers of American families that are barely making it every month. Tens of millions of Americans are already receiving government assistance. So what is going to happen when the next financial crash happens and we experience yet another major economic downturn?
The truth is that the financial system was never �fixed� after the crash of 2008. If anything, it is more vulnerable today than it was back then. Even as you read this, major imbalances are building up in the global financial system, and at some point a �tipping point� will be reached.
Once that tipping point is reached, it will not be too long before the U.S. economy experiences the next wave of economic problems. Perhaps we will be fortunate and it will not be as bad as the 2008 crash. Perhaps this next wave will be even worse than 2008 was. Only time will tell.
But all of the warning signs are there. The following are 15 indications that bad times are about to hit the U.S. economy�.
#1 The price of gasoline is about to cross the psychologically-important $4 a gallon threshold in some areas of the United States. For example, the average price of gasoline is now $3.977 in San Diego County and it is $3.955 in Riverside and San Bernardino counties.
#2 The price of oil moved up close to the $105 mark by the end of the day today, and that means that more gasoline price increases are likely on the horizon for American consumers.
#3 In February, food prices in the United States rose at the fastest rate in 36 years.
#4 According to the U.S. Labor Department, the cost of living in the United States hit a brand new all-time record high in the month of February.
#5 According to the National Association of Realtors, sales of previously existing homes in the United States dropped a stunning 9.6 percent in February. The National Association of Realtors also has announced that the median home price is the lowest it has been in 9 years.
#6 The U.S. is already in the midst of a real estate crash that never seems to end, but many are warning that it is about to get even worse. For example, prominent housing analyst Gary Shilling is warning that U.S. housing prices are likely to drop another 20 percent.
#7 According to the Mortgage Bankers Association, at least 8 million Americans are at least one month behind on their mortgage payments at this point.
#8 According to the U.S. Census Bureau, the number of new building permits declined 20.5 percent in February on a year over year basis. According to John Carney of CNBC, a huge decline in building permits is usually an indication that a recession is coming�.
#9 31 percent of the homeowners that responded to a recent Rasmussen Reports survey indicated that they are �underwater� on their mortgages.
#10 Millions of American families are drowning in debt and debt collectors are becoming increasingly aggressive. According to a new Federal Trade Commission report, consumer complaints about debt collectors rose by 17 percent last year.
#11 Meredith Whitney is warning that even though it may take longer than she originally projected, we are still going to see a wave of municipal bond defaults worth hundreds of billions of dollars.
#12 The war in Libya is putting upward pressure on the price of oil, it is yet another drain on U.S. government finances, and it is raising tensions across the globe. Vladimir Putin has called the NATO operation in Libya a �crusade� and China is calling for an immediate cease-fire. Financial markets do not like instability of this nature.
#13 The rest of the Middle East is melting down as well. More than 40 demonstrators have been killed in Yemen and the president of that country has declared a state of emergency. Government buildings are still being set on fire in Egypt. Ivory Coast is in the midst of a full-blown revolution, and there are ongoing protests in about a dozen other nations across North Africa and the Middle East. This is really bad for global economic stability.
#14 The damage from the tsunami in Japan continues to affect more American Workers. GM has just announced that they are going to temporarily lay off workers at a Buffalo engine plant due to a shortage of parts from Japan. When supply chains are going to get fully back to normal is anyone�s guess. GM has also temporarily shut down a facility in Shreveport, Louisiana due to supply problems.
#15 There continue to be indications that the amount of radiation being released by the damaged Fukushima Daiichi nuclear power plants is much higher than we have been led to believe. The following is an excerpt from a recent report by NHK World�.
400 times the normal level amount of radiation 40 kilometers from the plant?
That is something that should be taken very seriously.
Sadly, radiation levels continue to rise throughout northern and central Japan. If a significant amount of people have to be evacuated from Tokyo at some point that is going to be absolutely devastating for the global economy.
So what should Americans be doing? How can middle class families weather the storm that is coming?
Well, one thing that can be done is to start saving money and not spending it on frivolous things like new cars and international vacations. Many Americans did not learn the lessons of 2008 and they are running around blowing money as if the good times will never come to an end.
Also, now is a good time to get out of debt. Millions of American families are literally drowning in debt, and when the next financial crash comes it is the families that are overextended that will be the most financially vulnerable.
When you see a storm coming, the prudent thing to do is to make preparations. Most people believe what they want to believe, but anyone that cannot see the economic storm clouds on the horizon at this point has got to be pretty clueless.
Our entire economic system is slowly failing. Hopefully the folks running things will be able to hold the economy together for a while longer, but when you stop and think about who we have in charge, there are not many reasons to be optimistic. �
America ~ Economic Crisis