America is in deep trouble. In fact, it was broken. If America was a public company, it would have shut down a long time ago. The receivers would have looked at the company's books, said the business was dead and called it quits.
Like a family whose spending is more than its income and then borrows to make up the difference, the US government's deficit spending is mostly paid for by Asian central banks, especially those of China and Japan.
Did you know that just twenty years ago, the United States was the world's biggest borrower? Now, it says it is the country with the most debt. After years of spending like a drunken sailor, America's net foreign debt is now getting close to the unbelievable amount of $3 trillion.
During Bush's time in office, things have gotten worse very quickly. The Iraq war, tax breaks, and homeland security have all made government spending go up a lot, which hurts the country's finances even more.
Now, you won't hear much about this from government spokespeople or from the mainstream press and business media, which have mostly sold out. You won't hear it from the con artists on Wall Street, that's for sure. If you only listened to them, you might think everything is fine. They were able to make the stock market look like it was getting better and even stop the dollar from falling as much as it had been.
But trust me, this is just a trick, like the story of the emperor's clothes. A great country that has been brought to its knees while its leaders watch and seem helpless.
Alas, it gets worse. You see, five different things are getting stronger and will soon come together like a perfect storm, causing a lot of trouble in the economy. All of these things lead inexorably to a big drop in the economy.
EVENT 1: The "Twin Deficits," which are the US Trade and Federal Budgets, are out of control and have broken all records a long time ago. To pay for these deficits, the government keeps borrowing money. All of the world's great empires have fallen, not because of their enemies, but because of their own people. They all ran out of money. It seems hard for America to keep from going the same way.
EVENT 2 - A Dollar Collapse. When the government needs money badly, it turns to the printing press. As more and more dollars are printed, inflation takes hold and interest rates go through the roof. The weekly money-supply numbers are no longer broken down by the financial markets. But other people do. There's no doubt that alarm bells are going off. They won't make any more loans or investments in US assets. On the currency markets, the value of the dollar has been going down for three years. It will keep going on. The dollar has no future.
EVENT 3: The real estate bubble finally bursts. For a few years, easy money caused prices to rise so quickly that they were almost ridiculous. But, the times are changing. Both mortgage arrears and foreclosures are on the rise. Prices are falling all over the country. When interest rates go up, mortgage payments go up, too, which leads to more foreclosures. As prices go down, even more, the dreaded "mortgage deficit" happens: the mortgage is more than the house is worth. This makes more people want to buy homes. The story goes on...
EVENT 4 - Job Losses Pile Up. As our great "Captains of Industry" close or downsize plants all over the United States because slave labor in China is cheaper, a lot of people lose their jobs. The government makes a lot of noise about finding new jobs. Sure, sure. A factory job that used to pay well has been replaced by a low-paying job at a Walmart or Pizza Hut near you. Economists call this the "employment gap," and it just means that people have less money to spend. In turn, company profits go down, which leads to more layoffs. It's a never-ending cycle.
EVENT 5 - Stock Market Crash! Even if the smartest people on Wall Street try to convince you otherwise, the stock market is in trouble and can't get better. With everything else going on, the market is about to fall. We'll be able to see the worst crash ever.
So what the hell can you do to keep yourself safe? In the second part of this article, I suggest that you take five steps. In the meantime, I'd like to share with you a quick thought that will be discussed in more depth in the next article:
Get a second job as soon as possible. Do your own thing. If your job goes away, at least you have something to fall back on. If this means you have to work all the time you have leftover, tough! It's up to you what you do. Just make sure you have what you need to do well. Start an online business, which is probably the cheapest and easiest way to go. But take action. Get online and start making a second income right away!
