Consider it Fair Warning

In recent years, world-class investment gurus such as Jim Rogers, Peter Schiff and more, have been recommending that ordinary investors start planning to provide basic life necessities for themselves and their families, in the face of a potentially catastrophic global economic breakdown caused by suicidal government economic policies.

Post-Apocalyptic Trading Post

Such quasi-apocalyptic talk is not necessarily hyperbole. Consider it more in the territory of "fair warning."

Modern government economic policies from the US to Europe to Australia, are built upon tens or hundreds of $trillions of imaginary capital and wealth which does not actually exist in the real world. This "phantom wealth" resides mainly within the imagination. It is an article of faith and economic belief systems.

Whether there is a catastrophic and bloody economic collapse depends largely upon the psychology of the herd -- and what it might take to collapse the belief system and set off a stampede.

The combination of exponentially growing debt with an ongoing demographic collapse of core populations, casts ominous spells over the futures of most of the nations of the developed world. There is still time to change course and correct past mistakes -- but there is no political will to do so. And there is not enough "grit" in most modern populations to turn toward sustainable demographic and fiscal policies, even if a few politicians at the top had the backbone to promote such changes in policy.

The US is on a suicidal economic course to disaster. This is not a new finding, but the rate of economic decline has accelerated significantly in recent years, and is likely to accelerate even more over the next few years.

It takes almost $10 in new US government spending to achieve $1 in new GDP growth. That "return on investment" has been falling steadily as the type of new government spending changes away from the "infrastructure" category, inexorably over to the "entitlement" category. The same dead end trend is taking place from Australia to Europe to Japan to Canada.

Entitlements Overwhelm Revenues

As spending for entitlements overruns and overwhelms all sources of revenue, government borrowing to pay for both infrastructural and entitlement spending -- plus the interest on pre-existing debt -- explodes through the roof. Eventually lenders -- both foreign and domestic -- bail out of government bonds and notes. The government will no longer be able to borrow on open markets, and will be forced to print money to pay its debts and operating expenses.

Any student of history worth his salt understands what happens to the empire when it runs out of "gold," or whatever is perceived as real wealth to pay its bills and the salaries of its centurions, clerks, and PR flacks.

The Obama administration was given a magnificent gift in the form of the "fracking revolution." The economic growth that has occurred and will continue to occur as a result of this unexpected "gift horse" will help cover up and take the edges off the near term decline.

But the Obama administration's thick-headed and reactionary economic policies are poison to the economy as a whole. Real unemployment remains at historically high levels, dependency on government benefits continues growing to record levels, and there is only so much happy talk that the media can spread around to cover up what is essentially a crappy economic outlook.

Here is a brief summary of the "Ponzi Finance Scheme" that underlies the economies of modern developed nations.

Argentina has gone through this cycle multiple times, and is approaching the critical stage of yet another dysfunctional populist economic cycle. It is easy to sit back in one's easy chair before a fire in Munchen or Victoria, and "tut tut" over Argentina's perennial dysfunction and economic dunderheadedness. But when the dysfunction reaches your front doorstep, if you have not made preparations you will have a few other choice expletives forced from your lips.

It is never too late to have a dangerous childhood.

A Grim Destiny Hidden Beneath the Glitter

The destiny of Japan -- and all modern nations including those of the west -- is obscured by the gee-whiz! glitter of modern technology and media. Everything at surface level is meant to distract the attention of moderns from what is happening under the surface. For example, look under the glitzy surface of Tokyo and what will you find?

Ageing Population of Japan

One cause of depopulation, which is likely to lead to the downfall of Japan if it is not reversed, is a collapse in the total fertility rate (TFR) for Japanese females in their child-bearing years (from 15-49). This TFR fell precipitously from 5.10 in 1925 to an exceptionally low 1.39 by 2010 (compared to a UN world average of 2.52 for 2010). [5] The replacement rate for a population is two children per woman. With its TFR not just below 2 but now under 1.5, it is not surprising that Japan’s population is shrinking and getting older. The CIA World Factbook ranks Japan 202 out of 222 countries in its country comparison table for TFRs. [6] Japan’s net reproduction rate fell by over half from 108.2 in 1925 to 44.0 by 2010.

Ominously, such a depletion of population will be accompanied by an equally significant fall in economically active citizens (those in the working age bracket of 15-64).

This shrinking population with its declining workforce will also be ageing. Sadly, the only aspect of Japan’s population which will continue to grow relative to other age groups will be its senior citizenry (those aged 65 and over).

The mean age of the Japanese is expected to rise from 45 years old in 2010 to 54.6 years old by 2060. [7] We are looking at the world’s oldest society. [8] _Demographic Sunset of Japan

Fewer productive workers and builders -- combined with more sick and elderly dependent upon government social benefits -- will lead to a more impoverished nation. Robots can compensate for a portion of this worker deficit, but anyone who believes that robots can keep Japan wealthy in the face of such a monumental demographic change, has an impoverished and dysfunctional mental model of how societies evolve.

Japanese Population Meltdown

The pyramids in the chart shows Japanese demographic spreads in 1950, 2008 and the projected in 2050, with Age on the vertical axis and Millions of People on the horizontal. You can see the huge increase in the Over 65’s over the three charts and the huge decline in the under 14’s. Japan’s population is shrinking and ageing rapidly.

What are the implications of this?

As the population ages, the greater the reliance will be on government welfare and aged services. This means that there will be even greater strains on government debt as less and less people are contributing to wealth through income tax and more and more people rely on government hand-outs.

In a nutshell, the Japanese economy has been in systematic decline since its peak in 1990, and the government has tried everything in the Keynesian book of economics with little or no effect except the racking up of massive debt for 20 years now. _Japanese Meltdown

What is happening in Japan is also happening in Europe, South Korea, North America, and Oceania. The decline is masked somewhat by immigration. A very small proportion of immigrants to Europe and the Anglosphere are cracker-jack entrepreneurs and professionals who add to national productivity and GDP. Unfortunately -- due to dysfunctional government immigration policies -- a large number of perpetual social welfare dependents are also immigrating, leading to a significant net depletion in productivity and prosperity over the long run.

The demographic decline that we see clearly in Japan due to a lack of immigration, is happening at ramming speed in the modern west, within their core populations. The core populations of a prospering society, are the central ethnic and cultural populations which have fostered the underlying prosperity. When doing demographic projections, if you look mainly at the core populations, you will see exactly the same phenomenon across the western world, as you see in Japan.

OECD sees global growth slowing as a result of ageing populations

Many readers have suggested that we at Al Fin spend too much time on demographic issues. Perhaps some would rather be distracted by the glitter-news of new iPads, Androids, or any number of "technological wonders" with which modern media obscures disastrous underlying trends in society.

You should know by now that the writing staff here at the Al Fin Blogging Syndicates will write about whatever they think is interesting and important, regardless of expressed reader preferences. There are more than enough media sluts out in the skankstream media.

Hope for the best. Prepare for the worst. And remember that it is never too late to have a dangerous childhood.

A Look at Firepower for the Period of Coming Decline

An Accelerating and Unsustainable Trend that Spells Ultimate Decline

The consequences of the re-instatement of US President Obama will be global in nature. But the first stages of coming decline resulting from the final unmasking of the Obama agenda, will be largely borne by North Americans -- yes, that includes Canadians.

The survival industry is certain to boom like never before. If you have a good survival - related invention or innovation, now would be a good time to perfect it and test its feasibility in the marketplace.

And if you think the guns & ammo business was highly stimulated by an Obama first term: just wait.

"In A Real Life SHTF Situation, Firepower Is the Only Thing"

In a real life SHTF situation the only important thing is firepower. It is the only thing. You must absolutely overwhelm the enemy with superior firepower.

In close quarters the 12 gauge is arguably king. However, as effective as it is, if you step out into the street where ranges easily exceed 100 meters, you may quickly find yourself outgunned. Yes, that also includes your slug gun. Your .22LR will fit thousands of rounds in a backpack, yes. However, if this is your weapon of choice, then your plan will inevitably fail. If you can show me a military that fields a .22LR, I can show you a defeated army. Nations around the world have sought out solutions to maximize the number of rounds their soldiers can carry while considering weight limitations. It is not an accident that they haven’t arrived at the .22LR. You are depending on your weapon to keep you alive. Select your weapon’s chambering wisely, and make sure it has enough horse power to do its job of protecting you effectively. Think in terms of maximizing your capabilities in any scenario. If I only could own one weapon (not recommended), it would be a carbine.

Generally speaking, it easily transitions from close quarters to medium, to moderately long range offering far more security than a shotgun. Be aware of your specific weapon’s limitations and capabilities. Understand its intended purpose and keep it assigned only to tasks in which it excels, if possible.

An M4 is not an M16 for all intents and purposes. While the M4 is more suitable and controllable in close quarters, your maximum effective range on a point target is limited by its shorter barrel. With the M16, you extend your effective range at the cost of cumbersome handling in confined spaces. If you anticipate longer range encounters in your area of operation you may opt for a different weapon system altogether. _SurvivalBlog

More on weapons selection from Captain Dave:

One, you need a battle rifle. Military weapons are built to take punishment and keep on working. If you are on a budget then get an SKS, I prefer the Russians, but the Chinese weapon is good also. The rifle comes with a shortened stock, and most women I know that have shot the weapon like the short stock and light recoil. The weapon's price is from $200 to $300 and ammo for a case is about $100. The SKS is a proven battle rifle, chrome barrel and very reliable. Compared to the .30 caliber carbine the SKS is far superior. The SKS round past a 100 yards has more knockdown power then the M16. I have choreographed the SKS and most brands come in at 2400 fps.

...The next choice is the M 1 Garand. This 30-06 caliber is a very proven weapon. The U.S. used this caliber in WW I, the bolt action A03-06, and in the M1 Garand in WW II. You see, I talked to an Army sniper in WW11 who thought the M1 Garand was the best rifle ever invented. I hunted with this gentleman and saw him drop running deer at 100 yards. He was so good, before we even walk up to the deer he told me within a 1 inch of where the bullets hit the deer.

...The next weapon is the M14; this shoots a .308 caliber, the same as the M60 machine gun. The US Army uses this caliber for their sniping needs. FMJ's can be found for this weapon and it is a great one to have. The gun is semi-auto with clips for quick reloading.

...The next gun on my list, is a .22 rifle. I like the Ruger 10-22, a well-built repeater. With good ammo, the gun quite accurate. You can use it running traps and you can use it for light defense. A well placed .22 round, using solid points have killed bears, moose, and deer all over North America. Plus, with the TV on or sleeping most people can't hear the shot. It is a good small-game gun and you will find many uses for it. _Captain Daves

Here is more from M. D. Creekmore:

Below I’ll outline five arsenals covering a broad range of tasks, needs and budgets. If nothing else my suggestions should generate discourse.

I work at Wal-Mart Arsenal
1. Mosin Nagant 91 rifle
2. Single Shot .12 gauge
3. Smith&Wesson model 10

The Government Welfare Arsenal
1. Short Magazine Lee-Enfield
2. Mossberg Maverick 88 12 gauge pump
3. Smith&Wesson model 10
4. Ruger 10/22

I have a full-time Job Arsenal
1. Ruger Mini-14 Ranch Rifle or AR-15
2. Mossberg 500 12 Gauge
3. Glock Model 19
4. Ruger 10/22

Two Jobs and Maxed Credit Card Arsenal
1. Ruger Mini-14 Ranch Rifle or AR-15
2. Reminton 870 express with spare riot barrel
3. Glock 19
4. Ruger 10/22
5. Winchester Model 70 in .308 Win.
6. Taurus CIA Model 850 .38 SPL. Revolver

And Finally the Yuppie Survival Arsenal
1. L1A1 Rifle chambered in .308 Winchester
2. Remington Model 7 bolt-action chambered in .223
3. Winchester Model 70 in 308 Win.
4. Remington 870 express with spare riot gun barrel
5. Colt 1911 A1 .45 ACP
6. Taurus CIA Model 850 .38 SPL. Revolver
7. Savage Model 24F .223 Remington over 12 gauge (if you can find one used)
8. Ruger 10/22 _MD Creekmore

So there you go. An arsenal for every type of common man. As for the economically well-off, the sky is the limit. Guns are expensive, and the more expensive the gun, the more expensive the ammo.

Elections have consequences -- whether they were fairly fought or not. And this US election just past is likely to have a larger number of more interesting consequences than most US elections.

Hope for the best. Prepare for the worst.

Where Did All the Global Growth Go, Long Time Passing?

A year ago, economic analysts were giddy with optimism about the prospects for economic growth in the developing world. In contrast to the United States and Europe, where the growth outlook looked weak at best, emerging markets were expected to sustain their strong performance from the decade preceding the global financial crisis, and thus become the engine of the global economy.

Economists at Citigroup, for example, boldly concluded that circumstances had never been this conducive to broad, sustained growth around the world, and projected rapidly rising global output until 2050, led by developing countries in Asia and Africa. The accounting and consulting firm PwC predicted that per capita GDP growth in China, India, and Nigeria would exceed 4.5% well into the middle of the century. The consulting firm McKinsey & Company christened Africa, long synonymous with economic failure, the land of “lions on the move.”

Today, such talk has been displaced by concern about what The Economist calls “the great slowdown.” Recent economic data in China, India, Brazil, and Turkey point to the weakest growth performance in these countries in years. Optimism has given way to doubt.

...Consider India, which demonstrates the limitations of relying on services rather than industry in the early stages of development. The country has developed remarkable strengths in IT services, such as software and call centers. But the bulk of the Indian labor force lacks the skills and education to be absorbed into such sectors. In East Asia, unskilled workers were put to work in urban factories, making several times what they earned in the countryside. In India, they remain on the land or move to petty services where their productivity is not much higher. _Source

A lot can change in a year's time. Europe and the US are headed toward recession. Australia and Canada are looking at assorted financial bubbles in danger of bursting. And the emerging nations are threatening to catch pneumonia from the more developed world's cold virus.

Has China's rise peaked? If one were to pose this question a few years ago, he would probably be laughed out of the room. The conventional wisdom then was that China's rise was certain to continue. But today, this question is very much on everyone's mind.

... For awhile, Beijing's ability to keep its economic growth high was lauded around the world as a sign of its strong leadership and resilience. Little did we know that China paid a huge price for a misguided and wasteful stimulus program. The bulk of its stimulus package, roughly $1.5 trillion (with two-thirds in the form of loans from state-owned banks), was squandered on fixed-asset investments, such as infrastructure, factories, and commercial real estate. As a result, many of these projects are not economically viable and will saddle the banking system with a mountain of non-performing loans. The real estate bubble has maintained its froth. The macroeconomic imbalance between investment and household consumption has barely improved. Today, Chinese economic policy-makers are hamstrung in trying to revive economic growth. The combination of local government indebtedness, massive bad loans hidden in the banking system, anemic external demand, and diminishing returns from investments has made it all but impossible for Beijing to use the same old economic playbook to fire up the economy.

Short-term difficulties are not the least of Beijing's worries. In the coming decade, many of the favorable structural factors that have helped power China's double-digit growth in the past two decades are going to disappear. Topping the list is the demographics. The proportion of the Chinese population of working age peaked in 2011 and has started decreasing in 2012, according to a RAND study. At the same time, the share of the elderly in the population is beginning to rise rapidly. In 2010, 8.6 percent of the population was 65 and older. By 2025, the figure will likely be 14.3 percent. An aging population will increase labor costs, reduce savings and investments, inflate healthcare and pension costs — and slow down growth.

Another difficult obstacle ahead is environmental degradation. Beijing has neglected environmental protection for the sake of rapid growth. But the costs of environmental degradation have become unbearable, both economically and politically. Water and air pollution today cause 750,000 premature deaths and around 8 percent of GDP. China's long-suffering population has finally begun to fight vigorously for their environmental rights. This year alone, large-scale protests forced the government to cancel plans to build plants that would threaten the health and livelihoods of the residents in two Chinese cities. In the decade ahead, the combination of environmental degradation and the effects of global warming will further drag down Chinese growth. _Diplomat

More at the article linked above.

China is in danger of many other types of near to intermediate-term degradation than mere environmental degradation. Degradation of poorly constructed infrastructure is inevitable, as is degradation of social and national cohesion.

More: Can Global Growth be Saved?

The true picture for most of the developed and emerging worlds, is actually much worse than can be contained in the phrases "slow growth," "no growth," or "negative growth." The true picture can best be described by the phrase "on the brink of disaster."

But since a combination of wise, selfless, and heroic leadership would be required to overhaul the government systems of developed world nations as well as the BRICS and the third world, don't hold your breath.

International Capital Seeks Safe Haven

Russia's capital flight is intensifying under a threatened international economic crisis and collapse of the global oil & gas price bubble

Russia, which relies on oil and gas exports for half of its budget revenue and Europe as a market for more than 50 percent of its exports, may suffer a worse recession than in 2009 if energy prices plunge, according to Dmitriev.

..."There is large-scale capital flight from Russia, despite the economic recovery," Dmitriev said. "And this capital is flying into the epicenter of the global financial crisis, which is in Europe. That is actually the same as creating a food supply in the center of an atomic explosion." _SFGate

China's rich elites are unnerved by the twin political and economic situations popping up in the middle kingdom, and are looking for a safe place to stash their cash and valuables.

The two China crises are entwined, although the China bubble had been looking for an excuse to deflate for a few years.

The Eurozone is beginning to feel the stress of the building chaos and fiscal crises in Greece, Italy, Spain, and Portugal. An underswell of capital flight is starting to build, even in Europe.

The world is watching the US for any sign that the former global economic bulwark is willing to turn away from its mindless and wasteful spending spree of the last few years that has occurred for no better reason than support for political cronies and a suicidal green energy starvation.

If November elections in the US provide reassurance of a long needed change in US fiscal and monetary policies, global markets may be reassured before the bottom completely erodes.

Economic Implications of Southern Europe's Demographic Collapse

The southern Europeans are doomed. They have passed a demographic point of no return. There simply aren’t enough females entering their child-bearing years in those countries to reverse the rapid aging. _SeekingAlpha

Southern Europe
You could as easily state the problem as: "Demographic implications of Southern Europe's economic collapse," since in such situations causation is decidedly circular. The implications of Southern Europe's economic / demographic decline for investors are relatively clear: stay away unless you know exactly what you are doing.

Between 2020 and 2045...the infertility of Southern Europe will catch up with it, and the elder dependent ratio will rise to over 60%–an impossible, unmanageable number. At that point the character of these countries will change radically; they will be overwhelmed with immigrants from North Africa as well as sub-Saharan Africa, who will not have the skills or the habits of civil society to maintain economic life. And their economies will slide into a degree of ruin comparable only to that of classical antiquity. Perhaps the Chinese will operate Greece as a theme park. Spain, which can draw on Latin American immigrants, is likely to be the least badly off.

...Why would anyone buy a 30-year bond from any of these countries? By 2041, there won’t be enough taxpayers left to pay the coupons. And that raises a related question: what is time horizon of an equity investment in those countries? Although Standard and Poor's calculates the duration of equities at somewhere between 20 and 30 years, that is a somewhat dubious estimation of interest sensitivity, not a measure of the horizon of expectations. Markets are notoriously short-sighted. But at some point markets must recognize that companies that have a rapidly-shrinking pool of workers as well as customers are in no position to earn profits. The real demographic crunch will start to hit in the mid-2020s, and it is possible that markets will ignore the inevitable demographic doom until then.

There’s little reason to expect European contagion to blow up the financial system today. But there’s also no reason to invest in those countries, except on a very opportunistic basis. _DavidGoldman_SeekingAlpha

"The demographic point of no return" happens when the population of fertile females falls below the point where population recovery can be reasonably expected. Japan is flirting with that point of no return, as are various populations in southern and eastern Europe. Immigration is not an answer unless the replacement populations are of equivalent or superior aptitude for managing and improving a high tech infrastructure.

When economic collapse is thrown into the middle of an ongoing demographic collapse, there is even less justification for procreation than existed before. And as population declines in the midst of economic contraction, opportunities for economic growth, innovation, and invention typically decline.

Obama Doubles Down on Stupid as US Economy Stalls

The US economy is facing another extended downturn, as Obama's economic policies fail yet again to lift US employment prospects. Years ago, Obama promised to keep unemployment under 8% -- as it was when he took office. Unfortunately, unemployment seems to be heading back toward double-digit territory, in the long term.

Under President Obama unemployment has remained above 8 percent for every single month, with the exception of January 2009 when he entered the Oval Office, rising as high as 10.1 percent in October 2009. By any measure, this is a terrible track record, and as even The New York Times acknowledged earlier this week, “no American president since Franklin Delano Roosevelt has won a second term in office when the unemployment rate on Election Day topped 7.2 percent.”

The dire jobs figures are just part of an extraordinarily grim picture for the US economy, nearly two and a half years into the Obama presidency. As ABC News reported yesterday, “a cascade of negative economic reports this week is leaving Americans wondering if this is really a recovery from the recession that officially started December 2007 and ended June 2009.” And the housing market, in which 67 percent of Americans have a stake, is in serious trouble, with home prices sinking to their lowest levels since 2002, falling by 4.2 percent in the first quarter of 2011 and for eight straight months in a row.

In addition, the White House is paralysed in the face of the nation’s towering debts, which reached 62 percent of GDP by the end of 2010, the highest percentage since the end of World War Two. The Congressional Budget Office warned last year in its “alternative fiscal scenario” that “with significantly lower revenues and higher outlays”, the federal debt could grow to a staggering 87 percent of GDP by 2020, rising to 109 percent by 2025 and 185 percent in 2035.
It is little wonder that 66 percent of Americans now worry the federal government will finally run out of their money, and Moody’s Investors Service is threatening to downgrade America’s sterling credit rating unless it gets to grips with the debt crisis. Undoubtedly, the very future of the United States’ position as the word’s only superpower is at stake in the next few years _Telegraph

So what is Obama doing to fix the US' economic problems? He is doubling down on stupid by shutting down a big new oil pipeline from Canada. Not only does this new "Marie Antoinette-esque" policy hurt American energy, industry, and jobs, but it threatens to rile up Canada as well. While in keeping with an overall Obama policy of energy starvation, taking this action at this time makes the US President look even more foolish than usual.

PHMSA is mandating that TransCanada provide a detailed “restart plan,” conduct “mechanical and metallurgical” testing, and analyze the pipeline components that failed last month.

In addition, the order instructs TransCanada to conduct a review of its entire pipeline system within 60 days, among other things.

The order comes at a politically sensitive time for TransCanada. The company is seeking federal approval to expand its Keystone pipeline to carry Canadian oil sands from Alberta to Texas.

The proposed project, known as Keystone XL, is currently undergoing a multi-agency review that is being headed up by the State Department. Comments on the project’s latest layer of environmental review are due by Monday. _The Hill

When combined with the Obama administrations attacks against offshore oil drilling, shale oil fracking, new nuclear reactor design approval, coal plants and new coal technology etc. -- this latest attack on the importation of Canadian oil sands liquids reveals the Obama administration as even more anti-energy than Jimmy Carter.

In the meantime, Obama's crew continues to promote expensive and unreliable solar and wind energy mega-projects technologies -- presumably in an attempt to prevent these funds from reaching other energy projects which might actually supply usable and reliable energy to the American economy.

Of course, never attribute to ideology what could more easily be explained by corruption: One of Obama's biggest financial supporters and public fans, General Electric, is heavily invested in big wind energy and is diving into big solar. The administration is always happy to supply waivers and grant favours to those who are willing to play on the team.

Meanwhile the rest of the US economy is floundering, with no help to be found from an administration of corrupt revolutionaries without a clue.

More: Brian Wang describes the significant buildup of Canadian oilsands production. The Obama - Salazar - Reid policy of energy starvation never made very much sense. If these stuck-on-stupid idiots remain at the controls of US energy policies for much longer, the US may have to join the Organisation of Third World Countries.

More 6June11: More on the political / faux environmental forces lining up in opposition to the Keystone XL cross-border project (including map). With such a large and influential part of government and society promoting suicidal energy policies, the rot will be difficult to excise in time to prevent significant hardship, unless an electoral and taxpayer revolution occurs in the next 2 years.

China: "An Unsettling and Unending Vista of Emptiness?"

video via economiccollapse.net
Most of the modern worldwide commodities bubble is being driven by demand from China -- both directly and indirectly. China's GDP continues to impress the outside world's economic gurus and analysts. But "it's not the quantity of GDP that matters, it's the quality." If, after the collapse of much of China's huge export market, China's economic growth is now being built upon ghost infrastructure (to nowhere), a financial reckoning will eventually come. When that happens, what will global commodities markets do?

Source for Table

As western economies begin to crumble and even China’s cheap manufactured items become too expensive, the Asian powerhouse could be in big trouble. Maybe even more trouble than the western economies.

Fact is, its domestic market isn’t robust enough to take up the slack. Not nearly robust enough. The government overlords can only keep the factories running, people employed and inventories piling up for so long.

At some point, even the Chinese must submit to the inexorable forces of supply and demand. Factories will be shuttered. Massive layoffs will ensue. Unrest will rise among millions of Chinese factory workers (nee peasants). _EconomicCollapse

More from the Atlantic
Dramatic Slowdowns in China Coming

If your investment strategy is based upon a continuing exponential growth in demand for petroleum and other commodities, it may be time for a rethinking.

Certainly most believers in "peak oil doom" are counting on continued high global demand, to make their dreams of doom come true. For those in better tune with the global economic and demographic symphony, it is not too late to move away from the groupthink to a more justifiable position.

Further, if you are an American who is coming to see your president as a combination of Nixon's paranoia and Carter's incompetence, you may want to take a look a some "going Galt" options that many of your cohorts are eyeing.

More interesting takes on why the government -- any government -- is not a friend to your financial well-being, by Doug Casey

The US population is drowing in debt and demographic decline. The same twin disasters are beginning to take hold of many European nations, if they are not careful about who immigrates. Japan and Russia may well be beyond the point of demographic return, for their core populations.

As long as the "intelligensia" of the world can be distracted by hysteric nightmares of carbon climate catastrophe, overpopulation doom, resource scarcity doom, ecological collapse, and other figments of inadequate and undisciplined minds, attention of the masses will be diverted from the genuine disaster creep of debt and demographics.

Simmering Panic over Loss of US Reserve Currency Status?

More: Is the US Dollar Still a Safe Haven? asks the same question in less strident tones. Clearly Americans elected a wrecking crew in 2008 to run their government, rather than responsible leadership. A deep fatalistic Carteresque malaise appears to be smothering the American Dream. Is the economic prophecy of doom displayed in the video below a realistic scenario?

The video above lasts over 1 hour, presenting a message of impending collapse of the US dollar and the US economy due to hyper-inflation and the loss of US dollar reserve currency status. But is the idea realistic, or even frightening?

There are rumours that China plans to shift to a new gold-backed international reserve currency to replace the US dollar. If that happens, will the resulting monetary shock overturn the US economy?

First, China may be holding a lot more US securities than it has admitted up until now. It will not be easy for China to throw these securities away, or do anything to significantly depreciate their value. Second, the US dollar may not be so easy to replace.

...the definition of reserve currency: "A foreign currency held by central banks and other major financial institutions as a means to pay off international debt obligations, or to influence their domestic exchange rate."

Foreign Currency Reserve Factors

1. Trade Volumes
2. Trade Deficits
3. Currency Manipulation
4. Hot Money

_Mish

Mish then goes on to explain how the US dollar fits into the four factors as an international reserve currency. It will be difficult -- but not impossible -- to replace.

But even if a better reserve currency can be created, will the utter devastation predicted by the video above actually come to pass inside the US? Mish has a lot to say about that as well. In a two word summary: "no disaster."

The true disaster to be faced is the US fiscal and monetary policies of the Obama government, combined with suicidal US energy, business, and foreign policies. Those are the things to worry about.

Should you be worried? Sure, if you are unprepared you should worry just enough to motivate yourself to become prepared. Do not expect a government or organisation to take care of you. That's your job.

As mentioned previously on multiple occasions, precious metals are a vital part of any integrated preparation for a prolonged chaos of an economic or other type. Food, water, medicines, backup power supplies and lighting, backup heating, sanitation, a low profile, etc. etc. are all crucial for the short term. For a longer term disruption, skill competencies, materials, food-growing capacity, water-purification, organisation into groups for trade and defense, etc. become more important.

The Obama regime is still in power. Any meaningful long-lasting financial recovery is out of the question -- although pockets of economic sanity may crop up in parts of the US willing to face the creeping rot head-on, such as Wisconsin.

Hope for the best. Prepare for the worst.

Extreme Yoga: When You Learn to Bend So Far You Can Kiss Your . . . . Self Good-Bye

Economists at Bank of America Merrill Lynch say one key to a jobs recovery is an improvement in housing -- because so much job creation is driven by new businesses that have in recent years been financed in part by home equity borrowing.

This sort of job creation has been missing the last couple years, thanks to the housing crash. If U.S. house prices embark as expected on a new decline, the long-awaited hiring renaissance could be put on hold yet again. _Fortune

Image Source

... a disproportionate amount of job creation comes from new business start-ups, which of course typically at least start small. Start-ups account for just 3% of overall employment but 20% of new jobs in any given year, according to Meyer.

When that engine sputters – as it has in recent years, with tight credit and consumer belt-tightening – it robs the economy of one of its driving forces.

..."We have bad news for an awful lot of people, but it's a Goldilocks economy for stocks," said Keith Springer, a financial adviser in Sacramento. "The Fed is trying to create a bubble of artificial demand to create the wealth effect. It doesn't do much for jobs, but for now it's pretty good at driving stock prices." _Fortune

At the low end of the housing problem, the US is experiencing an epidemic of homelessness. With a steady growth of structural unemployment, fewer people are able to maintain mortgage payments -- or even to make rent payments.

US housing is in fact on life support. This is the 53d month of housing value declines in the US -- exceeding the number during the great depression of the 1930s.

There is nothing in either President Obama's or Paul Krugman's bag of big government tricks which can possibly turn this economic farce around. While Obama's allies continue to hope for another Oklahoma City bombing or 9/11 attack in order to improve the president's poll numbers, the real economy (not the stock market) and real people continue to suffer in ever larger numbers.

Financial Armageddon
One day you will wake up to find that 100% of US tax revenues are going to pay interest on the national debt. If you have waited until that day to begin preparations, you will need to begin practising your extreme yoga immediately ;-).

And to imagine, the situation in Europe is actually worse than in the US. The rest of the world actually still needs Europe and the US as export markets -- despite all the excessive protestations to the contrary. Interesting times.

14Jan11 More: Mish provides a very interesting look at the extreme contortions undergone by Obama and the Fed in claiming to have created or saved millions of jobs, and having reduced the "unemployment rate." The reality is certainly not the same as what you are being told by your president-for-life.

Hedge Funds Help Set Table for Next Financial Apocalypse

Mish
Lest anyone forget, hedge funds played a large part in the unprecedented loss of wealth that occurred in the financial crash of 2008-2009. And now, like tragic brain injury cases incapable of learning anything new, hedge fund operators are setting the stage for a repeat performance.

A lot of financial observors think that these institutional investors -- who are betting other people's pension money, university endowments, etc etc -- are making a big mistake. Many sophisticated investors are betting on a significant downturn. Some observors even see the next ten years as the decline and fall of the American empire.

Over 1.5 million Americans filed for bankruptcy in 2010, and the count for 2011 is expected to be higher -- perhaps much higher. Wages, employment, and non-government related startups in the US have been declining steadily, and the ongoing housing collapse reflects this decline.

And rather than working constructively to make America friendlier to business and markets, the Obama regime has been spending most of its time and resources on making government bigger and more corrupt, and on starving US industry of its energy supplies using the great climate hoax as a pretense.

Waiting in the wings is the potential for cascading bond defaults by US States and European nations. If that happens, the great 2008-2009 wealth destruction will look like a pleasant holiday in comparison.

Debt, Power, and Revolution: In Media Res

Image Source
We are living in interesting times, and any attempt to predict exactly how our world dynamics will resolve is doomed to fail. Here are some things that are happening around the world.

The Western World

The western world is looking at massive and growing debt combined with an enormous demographic transition. That particular combination points to a coming of potentially cataclysmic change in the everyday existence of most of the region's residents.

...once the fatal spiral begins, how can a state escape disaster? There are only eight options: (1) higher taxes; (2) less spending; (3) more growth; (4) more lenient interest rates; (5) worse inflation; (6) war; (7) external aid; or (8) default. All eight options have been used in the past, but only one of them is both plausible and desirable today: growth. A growing economy (which raises tax revenue) permits the absorption of debt and restores sustainable public finances. Then borrowing can resume—if it will encourage further growth. Responsible governments do not finance their everyday expenses by borrowing, and they keep their investments at a level they can repay.

History offers one final lesson. The power of sovereign states can foster a sense of impunity that encourages excessive debt. In the past, sovereign states have sometimes rid themselves of creditors by simply driving them out (as they did repeatedly with Europe’s Jews), by tormenting them, or by simply refusing to pay. When modern states borrow from a range of anonymous investors on global markets, sovereign immunity protects their assets against seizure—China cannot seize the White House as collateral for U.S. Treasury debt. But creditors can still negotiate, even with sovereign debtors. When a state loses the market’s confidence, the threat of a financial cutoff is a jolt back to reality. Just ask Greece, as its leaders scramble to reduce its public deficit as quickly as possible. The West needs to wake up now, shake off the yoke of public debt, and take the path of liberty. That path is long and difficult. It means balancing budgets and stabilizing the financial sector. But the great reward will be a return to confidence and growth—for those who put in the effort, and for those with the audacity to see it through. _Newsweek

Russia

The recent second conviction of former Yukos head Khodorkovsky opens a window on what may be one of many potentially fatal dynamics at the core of Russian power.

the real meaning of the Khodorkovsky case is that the authorities are weak, and scared. If the first trial of Khodorkovsky was a kind of perverse victory for Putin over the once-powerful oligarchs, the second trial shows that the Kremlin is afraid of showing what it sees as weakness. More, the ham-handedness of the charges themselves, and the heavy police presence and mass arrests at the trial today, betrays a dangerous amateurishness. Totalitarianism is scary. Incompetent totalitarianism is actually scarier.

For evidence of just how totalitarian – and now incompetent – Russia’s authorities are, look no further than the desperately eloquent scene in the courtroom during the trial, day in, day out. On one side sat the state prosecutors in their 1980s-style uniforms, surrounded by stacks of paper bulging out of Victorian-style ledgers. They mumbled their evidence in a monotone. At several points in the trial their accusations were so absurd that even the judge burst into laughter (my favorite prosecution malapropism – “The defendant is doing an excellent impression of being a normal person.”) On the other side sat the Khodorkovsky defense team, smartly dressed, each with a laptop. In a glass cage behind them, looking more at ease and in a strange way freer than anyone in the room, sat Khodorkovsky and Lebedev, taking turns to follow the documentary evidence on a large Mac screen set up in front of their box while the other made notes. It was as though two Russias were sparring in the courtroom, one mediocre, nervous and browbeaten, the other smart, modern and surprisingly relaxed. As Khodorkovsky himself said last year, a country that plunders its best companies and jails its brightest businessmen and instead puts its trust in the secret police and bureaucrats has its priorities seriously wrong.

The oligarchs were, unarguably, bad for Russia. They used their money to buy political power, and in the process corrupted the Duma, the press and the government. But the bureaucrat-kleptocrats who succeeded them are far worse. Khodorkovsky, in his years of incarceration in a Siberian labor camp, has transformed himself from a symbol of the hated oligarchy into a bellwether for a different sort of Russian rottenness. The oligarchs abused their money, the Kremlin now abuses power to silence opposition and to cover up the mass theft by the bureaucratic class of what has been estimated as a third of Russia’s GDP, annually. Medvedev is right that Russia is rotting from within; he’s even put his finger on exactly how. But the second conviction of Khodorkovsky shows that Medvedev, with all his brains and talk of reform, hasn’t made a whit of difference. _Newsweek

China

China is widely celebrated as the economic success story for the 21st century. The rapid growth of China's economic and military power suggests that the world may be approaching a change of hegemons. But is it possible that both China's military power, and its economic prospects, may be somewhat overstated?

When a government loses control of monetary policy, inflation follows. A few months ago, only the scariest "China bears" predicted 6% inflation for next year; now the People's Daily is admitting it may reach those levels "in some months."

The nonindependent People's Bank of China, staffed by reform-oriented technocrats, is being allowed to raise interest rates a few basis points. But allocating credit on the basis of its cost threatens the whole political economy. The state-owned companies have become accustomed to negative real interest rates. If the price of capital rises, many of the Communist Party elite will face a crunch. _WSJ

When one looks beneath China's Potemkin facade, one is apt to see enormous corruption, infrastructure overbuild, massive misallocation of resources, and a shockingly shoddy level of construction and impending collapse of poorly-built structure.

Emerging Markets

There is a lot of money to be made in emerging markets, if one understands some of the hazards involved.

...there is evidence of growing state involvement in both the economy and corporate sector across many emerging markets. This could hurt investors in a number of ways, most notably by governments forcing companies to prioritise social or geopolitical objectives over economic returns.

From an economic perspective, the main issue facing investors in emerging market equities is currently the degree of overheating, which is evident across a number of economies in the form of rising inflation and/or current account deficits.

Commodity price increases in particular have had a more inflationary impact on emerging than developed economies, because of their higher weightings in price indices and – more importantly – the narrower output gaps. _FT

There are more reasons for caution in the linked FT article.

One Ring to Bind Them, ... To Rule Them All
The United Nations' Intergovernmental Panel on Climate Change (IPCC) aims to write the rules and set the standards which the entire world will live and work under. The goals of the IPCC are ambitious: a massive transfer of resources from the developed world to the undeveloped world. As justification for this resource transfer, the IPCC claims to be saving the world from a cataclysmic collapse resulting from anthropogenic greenhouse gas-caused climate change. How good is the IPCC's record?

Remember all the media brouhaha about global warming causing hurricanes that commenced following the devastating U.S. 2004 season? Opportunities to capitalize on those disasters were certainly not lost on some U.N. Intergovernmental Panel on Climate Change officials. A special press conference called by IPCC spokesman Kevin Trenberth announced "Experts warn global warming likely to continue spurring more outbreaks of intense activity."

But there was a problem. Christopher Landsea, a top U.S. expert on the subject, repeatedly notified the IPCC that no research had been conducted to support that claim--not in the Atlantic basin, or in any other basin. After receiving no replies, he publicly resigned from all IPCC activities. And while the press conference received tumultuous global media coverage, Mother Nature didn't pay much attention. Subsequent hurricane seasons returned to average patterns noted historically over the past 150 years, before exhibiting recent record lows with no 2010 U.S. landfalls.

Much global warming alarm centers upon concerns that melting glaciers will cause a disastrous sea level rise. A globally viewed December 2005 BBC feature alarmingly reported that two massive glaciers in eastern Greenland, Kangderlugssuaq and Helheim, were melting, with water "racing to the sea." Commentators urgently warned that continued recession would be catastrophic.

Helheim's "erratic" behavior reported then was recently recounted again in a dramatic Nov. 13 New York Times article titled "As Glaciers Melt, Science Seeks Data on Rising Seas." Reporters somehow failed to notice that only 18 months later, and despite slightly warmer temperatures, the melting rate of both glaciers not only slowed down and stopped, but actually reversed. Satellite images revealed that by August 2006 Helheim had advanced beyond its 1933 boundary.

According to two separate NASA studies, one conducted by the Jet Propulsion Laboratory, and the other by the Langley Research Center, the oceans now appear to be heading into another natural periodic cooling phase within a typical 55- to 70-year dipolar warm/cool pattern. Although Greenland has recently been experiencing a slight warming trend, satellite measurements show that the ice cap has been accumulating snow growth at a rate of about 2.1 inches per year. Temperatures only recently began to exceed those of the 1930s and 1940s when many glaciers were probably smaller than now. (We can't be certain, because satellites didn't exist to measure them.)

A recent study conducted by U.S. and Dutch scientists that appeared in the journal Nature Geoscience concluded that previous estimates of Greenland and West Antarctica ice melt rate losses may have been exaggerated by double. Earlier projections apparently failed to account for rebounding changes in the Earth's crust following the last Ice Age (referred to as "glacial isostatic adjustment").

Nils-Axel Morner, head of the Paleogeophysics and Geodynamics department at Stockholm University in Sweden, argues that any concerns regarding rising sea levels are unfounded. _Forbes

The same abysmally misleading alarmism as was applied to glacier melting and sea level rise has been applied to "ocean acidification" and "polar bear extinction". Polar bears are thriving, and ocean pH continues within normal historical ranges -- except in specific third world harbour and river delta areas where dumping of waste will continue regardless of what the IPCC says or does.

It is time for thoughtful humans to understand that they must use their own judgment when evaluating the future prospects of nations, regions, and intergovernmental alliances. Everything is now in a state of flux, due to the collapse of leadership in much of the Anglosphere and in the EU. Debt and demography are combining and building to a coming chaos.

The forces of dissolution have been loosed, consequently. Temptation to revolution, secession, and violence on national & international scales will grow as economic and social conditions deteriorate.

The one counter-trend which can be glimpsed across Europe and the Anglosphere are the popular and grassroots movements -- still small and in minority status -- which are opposing the damning trends of debt and demography. It is possible that these groups will provide a mitigating force, at least in particular regions and countries.

Locate the islands of stability which will provide the safest harbours for you and your families. Hope for the best. Prepare for the worst.

Coming World Worse than Peak Oil, Climate Doom Hysterias?

Photo: Sean Heavey
The economic collapse that seems to be falling across most of the western world will make peak oil moot, and reveal carbon hysterics as persons disassociated from reality who have nothing important to do. The US government and the governments of most of Europe have compounded disastrous trends in debt and demography by adding a lethal layer of dysfunctional immigration. There's a storm a comin'.

When the US most needed good economic leadership, Bush and Obama let the US down.

$1.7 trillion in US home value goes up in a puff of smoke in 2010 -- continuing through 2011

Monster US deficit in November 2010, US on track to have another $1 trillion dollar deficit year

US Companies and Banks running scared. Fears over uncertainty in Obama's America leading private decision makers to hold onto cash.

Tax revenues for US governments at all levels continue downward, just as public sector union pay, benefits, and retirement shoot sky high. Layoffs of essential personnel inevitable.

Public employees -- The New Aristocracy (Video)

The tracks leading to the likely economic troubles were laid from 1900 through 1980. They have been well greased ever since, by the real government -- the bureaucracy and regulatory massif. The legal-political-industrial-criminal complex will make sure the demolition job on the economy is carried out, with no backtracking by busybody Tea Party types.

When Governments Build On Debt as if on a Foundation

ImageSourceAn economy built upon debt is not nearly as stable as an economy built upon wealth, productivity, responsible behaviour, and a skilled, intelligent, industrious workforce. Debt trends in the US are looking very ominous at this time, with no sign of abatement. A number of other economic factors are also working against a US economic recovery:

1 - Back in the 1930s, tens of millions of Americans lived on farms or knew how to grow their own food. Today the vast majority of Americans are totally dependent on the system for even their most basic needs.

2 - A vast horde of Baby Boomers is expecting to retire, and the "Social Security trust fund" has nothing but 2.5 trillion dollars of government IOUs in it. According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019. This is a financial tsunami the likes of which Americans back in the 1930s could never have even dreamed of.

3 - American workers never had to compete for jobs with workers on the other side of the world back in the 1930s. But today, millions upon millions of our jobs have been "outsourced" to China, India and a vast array of third world nations where desperate workers are more than happy to slave away for big global corporations for less than a dollar an hour. How in the world are American workers supposed to compete with that?

4 - Back in the 1930s, there was nothing like the gigantic derivatives bubble that hangs over us today. The total value of all derivatives worldwide is estimated to be somewhere between 600 trillion and 1.5 quadrillion dollars. The danger that we face from derivatives is so great that Warren Buffet has called them "financial weapons of mass destruction". When this bubble pops there won't be enough money in the entire world to fix it.

5 - During the Great Depression, the United States economy was relatively self-contained. But today we truly do live in a global economy. Unfortunately that means that a severe economic crisis in one part of the world is going to affect us as well. Right now, the United States is far from alone in dealing with a massive debt crisis. Greece, Spain, Italy, Hungary, Portugal and a number of other European nations are in real danger of actually defaulting on their debts. Japan (the third biggest economy in the world) is on the verge of complete and total economic collapse. So what happens to the U.S. economy when the dominoes start to fall?

The truth is that by almost any measure, we are in worse economic condition than we were right before the beginning of the Great Depression. We have been living way beyond our means and the debts we have been piling up are clearly not anywhere close to sustainable.

...The U.S. economy is being driven off a cliff, but America's "ruling class" has insisted all along that they know better than we do.

But the truth is that in the final analysis it is not us that they care about.

...the U.S. economic system is broken. However, considering the fact that America's ruling class has a stranglehold on both major political parties, we are not likely to see any fundamental changes any time soon. _Benzinga

China is experiencing some economic uncertainties of its own at this time. Consider the housing bubble that is threatening to burst in the middle kingdom. What happens to the US and the world economies should the Chinese bubbles start bursting in succession? Most of China's economic bubbles are closely tied to China's corrupt banks and state owned enterprises -- which cut very close to the leadership of the CCP. Things could become very messy, temporarily.

If China were no longer in a position to buy massive quantities of US Treasury instruments -- in fact was forced to sell a substantial quantity -- the current stresses on the US debtor economy could grow to unsustainable levels. China has already downgraded US debt to AA from AAA. When push comes to shove, things could unravel quickly.

Several other large nations are in danger of falling into financial difficulty, largely due to debt and demography. The collapse of Greece or Spain would not have the impact on the world economy as that of the US or China collapsing, but as stress on the EU builds, financial institutions around the world will be pushed to the breaking point.

The Impending Fall of America: Is it All Obama's (De)Fault?

When governments default on their debts, deep international economic depressions can follow. This is particularly true when the defaulting power is also a world hegemon and superpower -- such as the United States. With talk about sovereign default growing louder in Europe, what are the odds that the US itself is headed toward default on its sovereign bond debts?

Calculated Risk
We seem to be entering an era of massively accelerating sovereign debt. From Japan to Greece to Argentina to Italy, governments are flirting with debt disaster. Under President Obama, the US itself appears to be following an irrevocable path to default -- it is only a question of when, not if.

CalculatedRisk

The underlying causes of default (such as rises in interest rates, wars, commodity price collapses, and simply borrowing too much money) have been diagnosed for many episodes. Proximate to the default, any of the following six financial changes might occur:

1. Government revenues fall far below history or forecast;
2. Expenses aside from debt service rise far above history or forecast;
3. Interest rates rise substantially; due to inflation, credit spreads, illiquidity, or other causes
4. Demand for bonds suddenly drops or disappears (a sudden stop);
5. Exchange rates move, making payments on foreign denominated bonds much more expensive (currency risk), and,
6. A government simply decides not to pay, even though it has the capacity to pay (repudiation). _CalculatedRisk

Mr. Obama has squandered his early years of goodwill with powerful interests -- both domestic and foreign. Obama Pelosi projects a vision of economic decline and ruin as far as the eye can see.

This past week saw a ’see-change’ at the 2010 Aspen Ideas Festival. Movers, shakers and innovators of American businesses met to discuss the state of affairs. One thing became quite clear during the course of many speakers and seminars. The Obama Administration has disappointed America’s business leaders. They see the Obama White House as hostile to business and view Obama was incompetent on economic issues.

Two of the most harshest speeches came from U.S. News & World Report owner, Mort Zuckerman and Harvard history professor, Niall Ferguson (see video below). Zuckerman said of the Obama Administration that there is “a hostility to the very kind of culture that I think has made America the great country that it is and was, particularly given the energy that the business world gives to the world economy.” He also said “we really have, I think, some of the worst public policies in place today that in my judgment go directly against the long-term interests of the country.”

Ferguson goes one step further. He warns that a total collapse can happen much faster than anyone realizes. Niall Ferguson points out that the notion that civilizations and empires take long periods of time, even centuries in the case of Rome, is wrong. He argues that Rome really collapsed quickly, in one generation. He predicts that American will default due to the fiscal irresponsibility practiced in Washington. _RightPundits

Very dark days lie ahead for America unless a drastic and radical change in direction is initiated -- and it must come from within the US itself. If the radical change comes as a result of an upheaval in the sovereign bond market, it will be too late to prevent massive hardship and pain.

The infrastructure of this nation has been badly injured. Manufacturing jobs have been reduced by more than 9 million since the start of the decade. Small and mid-sized businesses struggle to access the necessary working capital to survive. Healing the plague upon the nation will begin with facing and addressing the truth. We need an antidote to end the plague of joblessness and that solution rests with helping America’s struggling small and mid-sized businesses. I hope Washington will hear our call. America’s future depends on it. _LynnTilton

It has grown obvious to all but the dullest dullards that the US is on a fiscal trajectory to disaster.

Al Fin once believed -- like Niall Ferguson (PDF)-- that the massive increase in entitlements plus interest on national debt, would be the downfall of the US economy. But now, Al Fin economists do not think the US will survive long enough for that particular disaster to fall (sometime in the next 2 decades).

Under the current regime, the US has chosen to accelerate its economic stresses exponentially and at warp speed. With a seemingly intentional destruction of private sector incentives to produce wealth and jobs, plus a radical growth in government pension obligations at all levels, plus an uncanny acceleration of government power and resources into the hands of special interests bordering on criminal organisations -- the US is unlikely to survive long enough for Social Security, Medicare, Obamacare, and the interest on the debt to bring it down.

No, it looks as if Obama Pelosi means to make the US into a third world country, and well before 2030.

No one can tell Obama where he has gone wrong, not even his closest keepers and handlers. But each person can make the critical choices for himself and his family -- if he wants to be as prepared for what is coming as possible.

There is no corner of the world that will be completely safe from a cascade of sovereign defaults, and the subsequent economic hardship and violence which will follow in its footsteps. But some places will be safer than others. You need to learn to read between the lines. That is where you will find the closest approximations to the truth.

Murder of the US Constitution? Suicide by Government?

WSJ
US states and municipalities are drowning under a tsunami of public sector debt.

So what does the US Congress do about it? The Democratic Party controlled Senate is rushing to pass a law to force ALL US states to give public sector employees the right to collective bargaining -- even if the states have explicitly chosen not to do so! Despite the looming catastrophe hanging over virtually all the states and cities that have allowed these workers to unionise, the Obama Pelosi regime is pressing a knife to the throat of states that are already struggling to survive economically.

The Senate is moving closer to passing legislation that would require states to grant public-safety employees, including police, firefighters and emergency medical workers, the right to collectively bargain over hours and wages.

The bill, known as the Public Safety Employer-Employee Cooperation Act, would mainly affect about 20 states that don't grant collective-bargaining rights statewide for public-safety workers or that prohibit such bargaining. State and municipal associations, as well as business groups, oppose it, saying it will lead to higher labor costs and taxes, at a time of budget deficits.

...The House passed a version of the bill in 2007. If enacted, the legislation would be a significant victory for unions, which are smarting over the failure of Democrats to pass a separate, broader bill that would have made it easier for unions to organize workers, especially in the private sector, where union membership has been in decline for years.

...If the bill becomes law, state and municipal associations expect legal challenges, saying the legislation might violate states' constitutional rights.

"If states and localities have chosen not to go in the direction of collective bargaining, that should be their right to do so," said Neil Bomberg, a lobbyist for the National League of Cities. Currently, 15 states don't grant collective-bargaining rights to public-safety workers on a statewide basis, two states, Virginia and North Carolina, prohibit such workers from bargaining, and four states allow collective bargaining for firefighters but not for police.

Mr. Bomberg said the National League of Cities is "neutral" on collective bargaining, but that the bill would be "a huge problem" for cash-strapped municipalities to hire staff or contract with collective-bargaining experts to negotiate with unions. _WSJ

Clearly, the US Congress is an ass -- a suicidal ass at that. The US Constitution was meant to limit the federal government to a few specified functions. The states were meant to be sovereign over most procedural matters of state government. The passage of this bill would simply add to the ongoing death knell for the constitution, and the US economy.

Such a simple thing, an innocent sounding thing. Until you understand the implications of how it is being done, and what the ultimate effect will be in the long run. Then it becomes absolutely devastating.

More: The US federal government itself is exploding in debt. That means we can expect more huge new spending proposals from Obama Pelosi. The strategy appears to be to overload the US economy with overwhelming debt which is programmed to snowball within a few short years to unimaginable proportions. By that time, most of the perpetrators within the Obama Pelosi government may wisely choose to take a wealthy retirement in Costa Rica.

Doing More With Less in a Recession

In the old days, before cleaning services, illegal domestic help, and WalMarts, people needed to know how to get the most uses out of everything they owned and produced. Thrift was once a necessary part of life, and for most, soon will be again.

Extraordinary uses for ammonia Just don't try to be extra thrifty by mixing bleach with ammonia! Choke, choke, cough cough!

Ten household uses for hydrogen peroxide I never thought of using peroxide to germinate seeds faster!

80 uses for old newspaper
Wrap green tomatoes in newspaper to ripen? Never tried that.

20 great uses for tea tree oil Al Fin has a long and profitable relationship with tea tree oil, and can think of more than 20 uses. But the ones on the list are a decent start.

15 wonderful uses for Witch Hazel For those who think witch hazel is just for hemorrhoids, educate yourselves!

8 Brilliant Uses for . . . . . Urine! Well perhaps not so brilliant, but if you want a reputation for quirkiness -- you might give some of these a try!

101 Money-Saving Tips for Families These tips may help you to have more of something that is often scarce around many homes these days -- money.

Unlimited thrifty living tips This website covers a very wide range of daily activities, where conscious cost reductions can be achieved.

Unless you are living on a gold mine, it is likely that over the next several years you will be forced to reduce expenditures on more than one area of your life where you once swore never to compromise. Too bad. If you voted for Obama then doubly too bad.

But it is never too late to start getting smarter, and become more competent.

Investors Driving the Price of Oil

Investors continue to drive the market for oil, pushing prices above US$86 a barrel Monday -- and this despite the opinion of no less an expert than King Abdullah of Saudi Arabia, who has said a couple of times over the past two years that US$75 to US$80 a barrel would do just fine, thank you.

As long as investors' enthusiasm for oil lasts, we live in a surreal world in which the fundamentals of supply and demand seem to have lost their traction. _FP

Peak oil doomers want to believe that shrinking oil supplies are squeezing world oil prizes higher. All of this is supposed to be the lead up to a gigantic economic crash costing hundreds of millions of lives around the world. But the reality is more mundane.

Supply seems ample, as well. Oil inventories in the United States are at above-average levels, and the futures market is quite happy to guarantee you delivery of oil in 2014 for only about three dollars more than it would cost you to buy a barrel today.

But neither slow-growing demand nor the market's expectation of ample supply for years down the road has been capable of shaking investors' enthusiasm for oil as an asset class.

"This raises a key question," says Bassam Fattouh of Oxford University in a recent paper on oil pricing. "If market participants attach little weight to current market fundamentals and if future market fundamentals are highly uncertain, at which price or price range should the oil market clear?"

His answer is that oil prices have become "indeterminate" -- a professor's way of throwing up his hands and saying you can no longer predict what's going to happen next. Oil's price depends upon a guessing game among major market players in which everybody is trying to guess what prices other players are guessing. If that is correct, oil investors can expect some neck-wrenching swoops in the years ahead as bulls and bears take turns in the pilot's seat._FP

World oil production is approaching the July 2008 peak -- at a much lower price per barrel -- despite all claims that oil production peaked in 2005. And most of the recent increase has come from non-OPEC sources, against all predictions by peak oil gurus.

When prices of a commodity are driven up by big investor speculation, it is called a price bubble. The oil price bubble that culminated in the collapse of 2008 was accompanied by bubbles in prices of other commodities and real estate, along with multiple financial instruments. The current oil price bubble would like to get other economic entities onboard in order to appear more convincing.

But when will demand destruction begin to kick in? And how much demand destruction can the hugely endebted economies of Europe, Japan, the US, and other advanced nations take before they sink back into another full-blown recession?

Demand destruction occurs because of the price of energy, not because of any shortage of supply. If the supply is ample but prices have been driven up by large investors looking for a safe haven, the demand destruction is the same.

Meanwhile, every policy of the Obama - Pelosi regime appears directed toward reducing domestic US energy production. Hang on, it could be a wild ride.

Obama Debt Orgy: Barackanalia and Gotterdamerung

ImageSource

Most credible analysts see the abrupt Obama - Pelosi debt run-up as being unsustainable. The result of the massive acceleration in rate of government debt will be a debt that reaches 90% of the country's total economic output. At that level of debt -- over $20 trillion, combined with the productive segment of the population that is rapidly aging -- it will be clear to all investors that the US government can never re-pay its debt. At that point no one will buy US debt any longer, the treasury will be forced into massive inflation, and the economy and the government begin to crash together even faster.

The federal public debt, which was $6.3 trillion ($56,000 per household) when Mr. Obama entered office amid an economic crisis, totals $8.2 trillion ($72,000 per household) today, and it's headed toward $20.3 trillion (more than $170,000 per household) in 2020, according to CBO's deficit estimates.

That figure would equal 90 percent of the estimated gross domestic product in 2020, up from 40 percent at the end of fiscal 2008. By comparison, America's debt-to-GDP ratio peaked at 109 percent at the end of World War II, while the ratio for economically troubled Greece hit 115 percent last year. _Source

There will be no international community to bail out the post-Obama US government debacle, because the US has been the glue holding the international community together for almost 100 years. No hero nation waits in the wings to take over for the fallen hegemon.

As quoted previously here at Al Fin:

While the US might be capable of borrowing $20 Trillion, at that point only 60% of revenue would be available for government programs. Since the government is currently spending 180% of revenue on programs, it’s unlikely that it would be able to reduce spending on government programs by almost 70%. It’s most likely that a combination of taxes, spending cuts, and inflation will have to be used to keep debt at sustainable levels at that point. _A_Realistic_Look_At_America's_Debt

ImageSource

In other words, without any additional debt or devastation caused by Obama-Pelosi beyond the FY 2011 budget, the US will reach that mythical $20 trillion "point of no return" just by "staying Obama's course."

But as anyone with any intelligence and understanding of government should understand, Obama - Pelosi are just getting started driving the stake through the heart of the private sector. They see no reason to stop now, simply because a bit of simple mathematical analysis shows that they have already done enough to kill the US economy, given a few more years to absorb all that they have set in motion.

This is what happens with an incompetent one-party government that is propped up by the media, the icons of popular culture, most of academia, and the rest of the pseudo-intelligentsia. There is no one left to call the Emperor on his transparently naked debauchery.

Yes, we need to try to slow down the train wreck, and limit the damage as much as possible. But don't be under any delusions that the train wreck is preventable. Just know that there is life, prosperity and happiness on the other side -- if you make your plans now.