23% Of Americans In Their Prime Working Years Are Unemployed

Submitted by Tyler Durden on 03/28/2016 08:26 -0400
http://www.zerohedge.com/news/2016-03-28/23-americans-their-prime-working-years-are-unemployed
Submitted by Michael Snyder via The Economic Collapse blog,
Did you know that when you take the number of working age Americans that are officially unemployed (8.2 million) and add that number to the number of working age Americans that are considered to be “not in the labor force” (94.3 million), that gives us a grand total of 102.5 million working age Americans that do not have a job right now?  I have written about this before, but today I want to focus just on Americans that are in their prime working years.  When you look at only Americans that are from age 25 to age 54, 23.2 percent of them are unemployed right now.  The following analysis and chart come from the Weekly Standard…

Here’s a chart showing those in that age group currently employed (95.6 million) and those who aren’t (28.9 million):



“There are 124.5 million Americans in their prime working years (ages 25–54). Nearly one-quarter of this group—28.9 million people, or 23.2 percent of the total—is not currently employed. They either became so discouraged that they left the labor force entirely, or they are in the labor force but unemployed.

This group of non-employed individuals is more than 3.5 million larger than before the recession began in 2007,” writes the Republican side of the Senate Budget Committee.

Clearly, we have never recovered from the impact of the last recession.
But let’s try to put these numbers in context.
Below, I would like to share two charts with you.  They show what has happened to the inactivity rates for men and for women in their prime working years in the United States in recent years.
In order to be considered “inactive”, you can’t have a job and you can’t be looking for a job.  So this subset of people is smaller than the group that we were talking about above.  The 23.2 percent of Americans in their prime working years that are unemployed right now includes those that are looking for a job and those that are not looking for a job.
These next two charts do not include anyone that has a job or that is currently looking for a job.  These charts only cover “inactive” people in their prime working years that are not considered to be in the labor force.
As you can see in this first chart, the inactivity rate for men in their prime working years exploded higher during the last recession and then continued to go up even after the recession supposedly ended.  At this point, it is hovering near all-time record highs.  Does this look like an “economic recovery” to you?…

For women, we see a similar thing.  In this next chart, you can see that the inactivity rate for women in their prime working years rose during the last recession and then just kept on rising.  At this point, it is also hovering near all-time record highs…

What are we to make of all this?
For both men and women in their prime working years, the inactivity rate is even higher than it was during the last recession and is hovering near the all-time record.
All of these people neither have a job nor are they looking for one.
So what in the world is going on here?
Are they independently wealthy?
Have these people found rich spouses to marry so they don’t have to work?
No, the truth is that the middle class in America is steadily eroding and poverty is absolutely exploding.  Credit card debt has soared to a new record high, and 48 percent of all U.S. adults under the age of 30 believe that “the American Dream is dead”.
The issue isn’t that people don’t want to work.
The issue is that people cannot find enough work.
And even if you have a job, that does not mean that you are on easy street.  According to the Social Security Administration, 51 percent of all American workers make less than $30,000 a year.
Tens of millions of Americans are now among the ranks of “the working poor”.  So many families are watching their expenses soar while their paychecks go down or stagnate.  If you are in this situation right now, then you probably know how exceedingly stressful it can be.
Just look at what is happening to the cost of health insurance.  The following comes from Fox News…

Health insurance premiums have increased faster than wages and inflation in recent years, rising an average of 28 percent from 2009 to 2014 despite the enactment of Obamacare, according to a report from Freedom Partners.

And I am not exactly sure where they got those numbers.  Personally, I know that my health insurance rates have gone up far faster than that.
Two years ago, my health insurance company wanted to double the health insurance premiums for my family even though we never get sick.  So I switched to another insurance company that offered a policy that was only about 30 percent higher than my last one.  But then when it came time to renew, that insurance company wanted to raise my rate by another 50 percent.
Thanks to Obamacare, American families are being absolutely crippled by the cost of health care.  And of course we are seeing the rising cost of living so many other places as well.  Our paychecks are being squeezed harder and harder, and this is absolutely killing the middle class.  In fact, the middle class in America is now a minority for the first time ever.
And now for the real bad news – this is about as good as things are ever going to get in this country.  As you can see from what I have shared above, we never really had any sort of meaningful “economic recovery”, and now we have entered the early phases of the next major downturn.
So where do we go from here?  Unfortunately, our debt-fueled prosperity has provided us with a massively inflated standard of living that is not even close to sustainable.  As this bubble bursts, the economic pain is going to be absolutely unprecedented.

Can Americans Handle Four More Years Of This?

Submitted by Tyler Durden on 03/01/2016 21:30 -0500
http://www.zerohedge.com/news/2016-03-01/peddling-non-fiction

inShare35

 

Some folks were peddling fiction... for everyone else, there's this reality!

No child (or student, or poor person, or grandchild, or debtholder, or healthy person, or retiree, or African American, or family, or homeowner, or renter) left behind untouched...
Now that is a legacy.

The Uncomfortable Truth About The Great Boom And This "Recovery"

Submitted by Tyler Durden on 12/31/2015 08:53 -0500
http://www.zerohedge.com/news/2015-12-31/uncomfortable-truth-about-great-boom-and-recovery
Submitted by Harry Debt via EconomyAndMarkets.com,
A Yahoo Finance headline this morning reads: “Unhappy New Year: The U.S. Economy Is Stalling Out.”
We recently learned that existing home sales in November crashed 10.5% from the month before.
Guess when the last time was when we saw these levels? The housing crisis of the mid- to late-2000s!
I also recently shared a chart showing a cataclysmic 82% drop in the ratio of new home sales to the U.S. population. To put it simply, we won’t need more real estate for decades to come, with baby boomers increasingly dying to offset rising millennial home purchases.
I and a few other experts like David Stockman have continued to argue that this re-bound since 2009 has been all smoke and mirrors – artificial stimulus that has only created greater bubbles in financial assets like stocks, and financial engineering to create rising corporate profits. None of it goes toward real expansion for future jobs, productivity and growth… things like new office space and industrial capacity.
Wall Street analysts and corporate CEOs can argue against this with their “this is not a bubble” logic, but this chart tells the real story.
Below is a chart that shows the office space per worker in square feet. It shows a rise into the height of the financial crisis, after which it’s fallen like a rock!
At first this could seem counterintuitive. Why did the square footage per worker go up into the worst of the recession into mid- to late-2009? That’s because companies were laying off workers going into that recession, meaning there were more workers per square feet.
But the real story comes in the recovery from late 2009 forward.

Square footage per worker has declined very sharply from 371 square feet to 270, down a whopping one-third in just over six years as businesses have rehired a large portion of the laid-off workers – which means largely NOT creating new jobs.
You should not look at this chart and assume that because less square footage per worker means more workers than in the past that everything is hunky dory.
What’s more important is that the sharp decrease in square footage implies a lack of demand in commercial real estate. And that’s because commercial real estate is already way over-expanded! We overbuilt it in the great boom of 1983 to 2007, so even these hires have not filled up the available space. Which means businesses aren’t expanding their office or industrial space!
So while hiring more workers sounds fine out of context… it’s masking much more severe, deeper-set issues in our capacity to build for the future.
This is the hard truth that no one is looking at: businesses are merely re-employing their past capacity, and not creating new plants and offices for future employment. All the 200,000-plus jobs numbers per month, if they are even fully real, are just catching up with the past. And we shouldn’t be investing in such new work space as we already have all we need for decades ahead.
This is the reality of demographics that clueless economists just don’t get.
Meanwhile, more and more people drop out of the workforce either from giving up on finding a job, or retiring earlier once their kids have left the nest.
And more jobs are part-time or in the low-end service sector – like bartenders and waiters, not the higher-paid manufacturing and professional jobs of the past.
To top it off, fewer and fewer people are entering or staying in the workforce. Hence, the workforce participation rates continue to edge down – after falling sharply for years.
And all of that means… we’re not even at capacity for all this overbuilt real estate.
Folks, this “recovery” isn’t working! And no one has expected it to given the over-expansion in the greatest debt bubble in U.S. history from 1983 to 2008.
Inflation hasn’t risen due to excess capacity here and around the world, especially China…
Money velocity continues to drop without lending and productive investment to expand it…
Businesses are struggling with stagnant earnings because we already hit the peak of debt capacity and demographic spending growth in the great boom that finally peaked in late 2007, as I forecast two decades before.

Debt was running at 2.54 times GDP for 26 years. It doesn’t take a rocket scientist or nuclear physicist to tell you that pretty much guarantees a massive period of deleveraging and depression – not continued expansion.
So since growth is all but impossible, corporations have resorted to financial engineering to keep the wagon rolling – all courtesy of the Fed, with near-zero short- and long-term interest rates.
They’ve had two options: either increase stock buybacks to leverage their stagnant earnings with rising earnings-per-share on fewer shares, or increase dividends to compete with lower and lower yielding bonds (also courtesy of the Fed). And they’ve been milking both options for all they’re worth!
But financial engineering does not result in real growth.
And speculation does not expand the money supply.
It is only a sign of decreasing money velocity, and a bubble that will only burst – like in 1929, 2000, and now again!
It’s a mirage.
It isn’t real.
And it isn’t sustainable.
Despite such endless financial engineering, sales for the S&P 500 have been declining for the last three quarters. And profits have declined for the first time since the 2009 expansion.
I’d be surprised if both didn’t continue down in the 4th quarter.
This will end badly… which is the only way bubbles end.
My forecast today: the stock market will start to crash by early February, if not sooner, when it gets this clear realization.

Congress Wants To Seize Your Passport For Unpaid Taxes

Submitted by Tyler Durden on 11/20/2015 14:10 -0500
http://www.zerohedge.com/news/2015-11-20/congress-wants-seize-your-passport-unpaid-taxesSubmitted by Simon Black via SovereignMan.com,
Sometimes you just have to stand in awe at the level of corruption and incompetence in government.
Case in point, the new highway bill in the Land of the Free. And, trust me, you’ll love this.
The latest version of the highway bill is called the “Developing a Reliable and Innovative Vision for the Economy Act.”
And yes, they abbreviate it as the DRIVE Act.
I cannot even begin to imagine how large the team of monkeys is that works on these silly acronyms. And as is typical for legislation, the more high sounding the name of the law, the more destructive its consequences.
On the surface, the DRIVE Act aims to fund the federal transportation network and investments in highway infrastructure for the next several years, as well as recapitalize the Highway Trust Fund.
Federal trust funds are supposed to responsibly and conservatively manage money that has been set aside for a specific purpose to benefit taxpayers.
There are so many of these trust funds. There are the big ones like Social Security’s “Old Age Survivor’s Insurance” and “Disability Insurance” (which is literally days away from running out of money).
And there are many more you’ve probably never heard about, like the “Black Lung” trust fund and the “Leaking Underground Storage Tank” trust fund.
Most of these funds are insolvent, or at least pitifully undercapitalized, clearly proving the government to be one of the worst asset managers in history.
The Highway Trust Fund is no exception: it has completely run out of money, and at this point literally has a ZERO account balance. The DRIVE Act intends to fix that.
And even though it has nothing to do with funding highways, the bill also aims to re-authorize the Export-Import Bank.
The Ex-Im Bank was created during the Great Depression and is designed to facilitate trade. That’s code for ‘boost the profits of Boeing and General Electric.’
Even the government’s own Congressional Research Service found that “more than 60% of Ex-Im Bank’s loan guarantees, by dollar value, supported the sale of Boeing airplanes in foreign countries”.
Ex-Im is essentially a gift on a golden platter from the taxpayers of the United States to a handful of mega-companies.
The Bank’s charter lapsed earlier this year. But rather than let it die, they’re jumpstarting Ex-Im with even more taxpayer money.
Clearly the government needs cash. They need to fund Ex-Im, the Highway Trust Fund, and all the improvements for America’s dilapidated infrastructure.
And their solutions to address this cash crunch are nothing short of remarkable.
For example, they plan to steal $300 million from the Leaking Underground Storage Tank trust fund (LUST… yes, that’s really what they call it), and transfer that money to the Highway Fund.
The only problem is that LUST is insolvent. So they’re stealing from one insolvent trust to fund another insolvent trust. It’s genius!
One of my favorite sections in the bill is a directive to sell off 100+ million barrels of oil from the Strategic Petroleum Reserve.
Only a politician could think to sell off oil supplies at a time when oil price is at multi-year lows.
(It also really gives you a sense of how broke the government really is that they’re driven raise cash by selling off strategic assets.)
Another gem buried in the 864 pages of the bill is a provision that allows the government to revoke your passport if they believe that you owe more than $50,000 in federal tax.
There will be no judicial review, and no due process. You don’t get to go in front of a judge first to have a fair and impartial hearing over whether or not the government’s tax allegations are accurate.
The language in the law is very clear: they can simply revoke your passport if you owe them money in their sole discretion.
Once the law is passed, this would go into effect on January 1, 2016, and they claim it will generate $40 million per year in tax revenue.
There was one more provision that proposed raising revenue from the biggest banks in America by reducing the dividend they receive from the Federal Reserve.
Curiously, though, this specific provision was defeated yesterday after a heated committee meeting in Congress.
So while the banks’ profits are off-limits, and the government will spend billions of taxpayer dollars to boost profits at Boeing, American citizens are threatened with having their passports revoked in order to raise money.
It couldn’t be any more obvious how much the system is stacked against the little guy.
They treat you like a dairy cow that exists only to be milked dry… like a medieval serf tied to the land and forced to serve his overlords.
It’s revolting. But it doesn’t have to be this way.
You can take sensible, rational steps to divorce yourself from this madness, or at least have a Plan B to protect yourself from it.
If the government is threatening to take away your passport, for example, there are countless ways you can obtain another one from a country that will roll out the red carpet for you.
If you’re sick and tired of having your income confiscated so that you can bail out big companies, there are completely legal steps you can take to reduce what you owe.
It’s hard to imagine you’ll be worse off being more free and having more control over your life and finances.

Here is How The Next Crisis Will Play Out

Submitted by Phoenix Capital Research on 07/02/2015 11:09 -0400
http://www.zerohedge.com/news/2015-07-02/here-how-next-crisis-will-play-out
As I noted yesterday, the Fuse on the Global Debt Bomb has been lit. We are now officially in the Crisis to which the 2008 Meltdown was just the warm up.
The process will take time to unfold. The Tech Bubble, arguably the single biggest stock market bubble of all time, was both obvious to investors AND isolated to a single asset class: stocks. In spite of this, it took two years for stocks to finally bottom.


In contrast, the current Crisis that we are facing involves bonds… the bedrock of the financial system.
Every asset class in the world trades based on the pricing of bonds. So the fact that bonds are in a bubble (arguably the biggest bubble in financial history), means that EVERY asset class is in a bubble.
And what a bubble it is.
All told, globally there are $100 trillion in bonds in existence today.
A little over a third of this is in the US. About half comes from developed nations outside of the US. And finally, emerging markets make up the remaining 14%.
Over $100 trillion...the size of the bond bubble alone should be enough to give pause.
However, when you consider that these bonds are pledged as collateral for other securities (usually over-the-counter derivatives) the full impact of the bond bubble explodes higher to $555 TRILLION.
To put this into perspective, the Credit Default Swap  (CDS) market that nearly took down the financial system in 2008 was only a tenth of this ($50-$60 trillion).
What does all of this mean?
The $100 trillion bond bubble will implode. As it does, the financial system will begin to deleverage as debt is defaulted on or restructured (reducing the amount of US Dollars in the system, pushing the US Dollar higher).
By the time it’s all over, I expect:

1)   Numerous emerging market countries to default and most emerging market stocks to lose 50% of their value.

2)   The Euro to break below parity before the Eurozone is broken up (eventually some new version of the Euro to be introduced and remain below parity with the US Dollar).

3)   Japan to have defaulted and very likely enter hyperinflation.

4)   US stocks to lose at least 50% of their value and possibly fall as far as 400 on the S&P 500.

5)   Numerous “bail-ins” in which deposits are frozen and used to prop up insolvent banks.

This process has already begun in Europe. It will be spreading elsewhere in the months to come. Smart investors are preparing now BEFORE it hits so they are in a position to profit from it, instead of getting slaughtered

If You Listen Carefully, The Bankers Are Actually Telling Us What Is Going To Happen Next

Posted on February 10, 2015 by WashingtonsBlog

By Michael Snyder.
Are we on the verge of a major worldwide economic downturn? Well, if recent warnings from prominent bankers all over the world are to be believed, that may be precisely what we are facing in the months ahead. As you will read about below, the big banks are warning that the price of oil could soon drop as low as 20 dollars a barrel, that a Greek exit from the eurozone could push the EUR/USD down to 0.90, and that the global economy could shrink by more than 2 trillion dollars in 2015. Most of the time, very few people ever actually read the things that the big banks write for their clients. But in recent months, a lot of these bankers are issuing such ominous warnings that you would think that they have started to write for The Economic Collapse Blog. Of course we have seen this happen before. Just before the financial crisis of 2008, a lot of people at the big banks started to get spooked, and now we are beginning to see an atmosphere of fear spread on Wall Street once again. Nobody is quite sure what is going to happen next, but an increasing number of experts are starting to agree that it won’t be good.

Let’s start with oil. Over the past couple of weeks, we have seen a nice rally for the price of oil. It has bounced back into the low 50s, which is still a catastrophically low level, but it has many hoping for a rebound to a range that will be healthy for the global economy.

Unfortunately, many of the experts at the big banks are now anticipating that the exact opposite will happen instead. For example, Citibank says that we could see the price of oil go as low as 20 dollars this year…

The recent rally in crude prices looks more like a head-fake than a sustainable turning point — The drop in US rig count, continuing cuts in upstream capex, the reading of technical charts, and investor short position-covering sustained the end-January 8.1% jump in Brent and 5.8% jump in WTI into the first week of February.

Short-term market factors are more bearish, pointing to more price pressure for the next couple of months and beyond — Not only is the market oversupplied, but the consequent inventory build looks likely to continue toward storage tank tops. As on-land storage fills and covers the carry of the monthly spreads at ~$0.75/bbl, the forward curve has to steepen to accommodate a monthly carry closer to $1.20, putting downward pressure on prompt prices. As floating storage reaches its limits, there should be downward price pressure to shut in production.

The oil market should bottom sometime between the end of Q1 and beginning of Q2 at a significantly lower price level in the $40 range — after which markets should start to balance, first with an end to inventory builds and later on with a period of sustained inventory draws. It’s impossible to call a bottom point, which could, as a result of oversupply and the economics of storage, fall well below $40 a barrel for WTI, perhaps as low as the $20 range for a while.

Even though rigs are shutting down at a pace that we have not seen since the last recession, overall global supply still significantly exceeds overall global demand. Barclays analyst Michael Cohen recently told CNBC that at this point the total amount of excess supply is still in the neighborhood of a million barrels per day…

“What we saw in the last couple weeks is rig count falling pretty precipitously by about 80 or 90 rigs per week, but we think there are more important things to be focused on and that rig count doesn’t tell the whole story.”

He expects to see some weakness going into the shoulder season for demand. In addition, there is an excess supply of about a million barrels of oil a day, he said.

And the truth is that many firms simply cannot afford to shut down their rigs. Many are leveraged to the hilt and are really struggling just to service their debt payments. They have to keep pumping so that they can have revenue to meet their financial obligations. The following comes directly from the Bank for International Settlements…

“Against this background of high debt, a fall in the price of oil weakens the balance sheets of producers and tightens credit conditions, potentially exacerbating the price drop as a result of sales of oil assets, for example, more production is sold forward,” BIS said.

“Second, in flow terms, a lower price of oil reduces cash flows and increases the risk of liquidity shortfalls in which firms are unable to meet interest payments. Debt service requirements may induce continued physical production of oil to maintain cash flows, delaying the reduction in supply in the market.”

In the end, a lot of these energy companies are going to go belly up if the price of oil does not rise significantly this year. And any financial institutions that are exposed to the debt of these companies or to energy derivatives will likely be in a great deal of distress as well.

Meanwhile, the overall global economy continues to slow down.

On Monday, we learned that the Baltic Dry Index has dropped to the lowest level ever. Not even during the darkest depths of the last recession did it drop this low.

And there are some at the big banks that are warning that this might just be the beginning. For instance, David Kostin of Goldman Sachs is projecting that sales growth for S&P 500 companies will be zero percent for all of 2015…

“Consensus now forecasts 0% S&P 500 sales growth in 2015 following a 5% cut in revenue forecasts since October. Low oil prices along with FX headwinds and pension charges have weighed on 4Q EPS results and expectations for 2015.”

Others are even more pessimistic than that. According to Bank of America, the global economy will actually shrink by 2.3 trillion dollars in 2015.

One thing that could greatly accelerate our economic problems is the crisis in Greece. If there is no compromise and a new Greek debt deal is not reached, there is a very real possibility that Greece could leave the eurozone.

If Greece does leave the eurozone, the continued existence of the monetary union will be thrown into doubt and the euro will utterly collapse.

Of course I am not the only one saying these things. Analysts at Morgan Stanley are even projecting that the EUR/USD could plummet to 0.90 if there is a “Grexit”…

The Greek Prime Minister has reaffirmed his government’s rejection of the country’s international bailout programme two days before an emergency meeting with the euro area’s finance ministers on Wednesday. His declaration suggested increasing minimum wages, restoring the income tax-free threshold and halting infrastructure privatisations. Should Greece stay firm on its current anti-bailout course and with the ECB not accepting Greek T-bills as collateral, the position of ex-Fed Chairman Greenspan will gain increasing credibility. He forecast the eurozone to break as private investors will withdraw from providing short-term funding to Greece. Greece leaving the currency union would convert the union into a club of fixed exchange rates, a type of ERM III, leading to further fragmentation. Greek Fin Min Varoufakis said the euro will collapse if Greece exits, calling Italian debt unsustainable. Markets may gain the impression that Greece may not opt for a compromise, instead opting for an all or nothing approach when negotiating on Wednesday. It seems the risk premium of Greece leaving EMU is rising. Our scenario analysis suggests a Greek exit taking EURUSD down to 0.90.

If that happens, we could see a massive implosion of the 26 trillion dollars in derivatives that are directly tied to the value of the euro.

We are moving into a time of great peril for global financial markets, and there are a whole host of signs that we are slowly heading into another major global economic crisis.
So don’t be fooled by all of the happy talk in the mainstream media. They did not see the last crisis coming either.

On The Verge Of The Next Economic Crisis, 62 Percent Of Americans Are Living Paycheck To Paycheck

Posted on January 9, 2015 by WashingtonsBlog

By Michael Snyder.
Nearly two-thirds of all Americans are completely and totally unprepared for the next economic crisis.  As you will read about below, a new survey has found that only 38 percent of Americans have enough money on hand to cover “a $500 repair bill or a $1,000 emergency room visit”.  That essentially means that 62 percent of the people in this country do not have an emergency fund.  Even after the extremely bitter financial lessons that millions of Americans learned during the last recession, most of us are still choosing to live on the edge.  That is utter insanity, and when the next major economic downturn strikes most people are going to find themselves totally unprepared.
The number one thing that you need to do to get ready for the coming economic collapse is to build up an emergency fund.
I know that is not the most “sexy” piece of advice in the world, but it is the truth.  Just think about it.  During the last recession, millions of Americans suddenly lost their jobs.  Because they did not have any cushion to fall back on, millions of them also suddenly could not pay their bills and their mortgages.  Foreclosures skyrocketed and countless families went from living a very comfortable middle class lifestyle to being out on the street in very short order.
And now because the people of this country have been so foolish it is going to happen again.
Because of my website, people are constantly asking me what they should do to prepare for the coming economic collapse.
I think that they expect me to say something like this…
“Sell everything that you possibly can and buy gold and silver, go purchase a llama farm, and dig a bunker where you can bury 10,000 cases of MREs.”
Not that there is anything wrong with those kinds of preparations.
But before you do anything else, you have got to have an emergency fund.  My recommendation is to have an emergency fund that can cover at least six months of expenses in case something happens.
Sadly, a solid majority of Americans do not have any emergency cash at all.  The following comes from the Wall Street Journal…

Only 38% of those polled said they could cover a $500 repair bill or a $1,000 emergency room visit with funds from their bank accounts, a new Bankrate report said. Most others would need to take on debt or cut back elsewhere.
“A solid majority of Americans say they have a household budget,” said Bankrate banking analyst Claes Bell. “But too few have the ability to cover expenses outside their budget without going into debt or turning to family and friends for help.”
The survey found that an unexpected bill would cause 26% to reduce spending elsewhere, while 16% would borrow from family or friends and 12% would put the expense on a credit card. The remainder didn’t know what they would do or would make other arrangements.

And of course this is not the only poll that has come up with these kinds of results.  In fact, a Federal Reserve survey from last year produced similar numbers…

The findings are strikingly similar to a U.S. Federal Reserve survey of more than 4,000 adults released last year. “Savings are depleted for many households after the recession,” it found. Among those who had savings prior to 2008, 57% said they’d used up some or all of their savings in the Great Recession and its aftermath. What’s more, only 39% of respondents reported having a “rainy day” fund adequate to cover three months of expenses and only 48% of respondents said that they would completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money.

Meanwhile, the financial condition of most American families is far worse than it was just prior to the last major economic crisis.  As a recent MarketWatch article detailed, the average family currently has far less wealth than it did back then…

But while the jobs market is improving and the Affordable Care Act has given an estimated 15 million people access to medical care, the Great Recession does appear to have taken its toll on Americans’ finances; in fact, they’re 40% poorer today than they were in 2007. The net worth of American families — that is, the difference between the values of their assets, including homes and investments, and liabilities — fell to $81,400 in 2013, down slightly from $82,300 in 2010, but a long way off the $135,700 in 2007, according to a report released last month by the nonprofit think tank Pew Research Center in Washington, D.C.

So we have a lot less wealth, and almost two-thirds of us have no emergency cushion to fall back on whatsoever.
What could go wrong?
In addition, there is lots of evidence that much of the country has not bothered to make any preparations at all for even a basic emergency that would last for just a few days.  For example, the following are results from a survey conducted by the Adelphi Center for Health Innovation that I featured in a previous article…

• 44 percent don’t have first-aid kits
• 48 percent lack emergency supplies
• 53 percent do not have a minimum three-day supply of nonperishable food and water at home
• 55 percent believe local authorities will come to their rescue if disaster strikes
• 52 percent have not designated a family meeting place if they are separated during an emergency
• 42 percent do not know the phone numbers of all of their immediate family members
• 21 percent don’t know if their workplace has an emergency preparedness plan
• 37 percent do not have a list of the drugs they are taking
• 52 percent do not have copies of health insurance documents

What are all of those people going to do if there is an extended crisis or disaster in this nation?
That is a very good question.
Meanwhile, the signs that we are on the verge of the next major economic crisis just continue to grow.  Yesterday, I shared 10 things that happened just prior to the financial crisis of 2008 that are happening again right now.
Today, we learned that a major oil driller down in Texas has just declared bankruptcy, and many more energy companies are expected to follow suit in the coming months.  The following is from the Wall Street Journal…

[S]igns of strain are building in the oil patch, where revenue growth hasn’t kept pace with borrowing. On Sunday, a private company that drills in Texas, WBH Energy LP, and its partners, filed for bankruptcy protection, saying a lender refused to advance more money and citing debt of between $10 million and $50 million. Neither the Austin-based company nor its lawyers responded to requests for comment.
Energy analysts warn defaults could be coming. “The group is not positioned for this downturn,” said Daniel Katzenberg, an analyst at Robert W. Baird & Co. “There are too many ugly balance sheets.”

And we also learned today that teen retailer Wet Seal is going to be closing two-thirds of its stores.
Dozens more retailers are expected to make similar announcements over the coming months.
We are moving into the most chaotic time for the U.S. economy that any of us have ever seen, and most Americans are totally oblivious to what is happening and are totally unprepared.
So what is our country going to look like when tens of millions of unprepared people are blindsided by a crisis that they never saw coming?

http://www.washingtonsblog.com/2015/01/beginning-end-beginning-end-michael-t-snyder-kindle-version-please-visit-economic-collapse-bookstore-preppers-blueprint-mystery-shemitah-never-t.html

What Happens Next?

http://www.zerohedge.com/news/2014-02-05/what-happens-next

Submitted by Tyler Durden on 02/05/2014
What goes up (via free money and practically infinite leverage and rehypothecation) must come down (when the flow slows)... the dominoes are falling...

First Emerging Markets, then US High-yield credit, then US Stocks, and now European stocks...


and remember - this "selling" overseas does not mean "buying" domestically as the majority of these hot money flow trades are credit-funded and merely extinguish the debt at the margin...

The $23 trillion credit bubble in China is starting to collapse – global financial crisis next?

Posted on January 25, 2014 by The Extinction Protocol

January 25, 2014 – CHINA – Did you know that financial institutions all over the world are warning that we could see a “mega default” on a very prominent high-yield investment product in China on January 31st? We are being told that this could lead to a cascading collapse of the shadow banking system in China which could potentially result in “sky-high interest rates” and “a precipitous plunge in credit.” In other words, it could be a “Lehman Brothers moment” for Asia. And since the global financial system is more interconnected today than ever before, that would be very bad news for the United States as well. Since Lehman Brothers collapsed in 2008, the level of private domestic credit in China has risen from $9 trillion to an astounding $23 trillion. That is an increase of $14 trillion in just a little bit more than 5 years. Much of that “hot money” has flowed into stocks, bonds and real estate in the United States. So what do you think is going to happen when that bubble collapses? The bubble of private debt that we have seen inflate in China since the Lehman crisis is unlike anything that the world has ever seen. Never before has so much private debt been accumulated in such a short period of time. All of this debt has helped fuel tremendous economic growth in China, but now a whole bunch of Chinese companies are realizing that they have gotten in way, way over their heads. In fact, it is being projected that Chinese companies will pay out the equivalent of approximately a trillion dollars in interest payments this year alone. That is more than twice the amount that the U.S. government will pay in interest in 2014.

Over the past several years, the U.S. Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England have all been criticized for creating too much money. But the truth is that what has been happening in China surpasses all of their efforts combined. You can see an incredible chart which graphically illustrates this point right here. As the Telegraph pointed out a while back, the Chinese have essentially “replicated the entire U.S. commercial banking system” in just five years… Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. “They have replicated the entire U.S. commercial banking system in five years,” she said. The ratio of credit to GDP has jumped by 75 percentage points to 200pc of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. “This is beyond anything we have ever seen before in a large economy. We don’t know how this will play out. The next six months will be crucial,” she said. Forbes warned: “A WMP default, whether relating to Liansheng or Zhenfu, could devastate the Chinese banking system and the larger economy as well. In short, China’s growth since the end of 2008 has been dependent on ultra-loose credit first channeled through state banks, like ICBC and Construction Bank, and then through the WMPs, which permitted the state banks to avoid credit risk. Any disruption in the flow of cash from investors to dodgy borrowers through WMPs would rock China with sky-high interest rates or a precipitous plunge in credit, probably both. The result? The best outcome would be decades of misery, what we saw in Japan after its bubble burst in the early 1990s.” –Economic Collapse Blog