Housing starts drop underscores economic woes

(Reuters) - New construction of homes fell more than expected in August, dragging on economic growth and keeping pressure on President Barack Obama to do more to help the sputtering economy.

Housing starts dropped 5 percent, the most since April, to a seasonally adjusted annual rate of 571,000 units, the Commerce Department said on Tuesday.

Economists polled by Reuters had forecast groundbreaking activity would fall to only a 590,000-unit rate in August. Housing starts are at less than a third of their peak during the housing boom.

"The housing market is not only bad, but still missing low expectations," said Sal Catrini, a managing director for equities at Cantor Fitzgerald & Co in New York.

An overhang of previously owned homes on the market has left builders with little appetite to break ground on new projects and is frustrating the economy's recovery from the 2007-09 recession.

The housing market "won't improve until the labor market improves substantially and that doesn't look like that would happen this year," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

Housing has been a persistent headwind to the U.S. recovery, although now it only accounts for about 2.4 percent of gross domestic product, down from about 6.1 percent reached during the housing boom.

U.S. stock prices rose as investors shook off the data and turned their focus to a two-day meeting the Federal Reserve that kicked off on Tuesday. The Fed is expected to end its meeting with a decision to take further steps to aid the economy. U.S. Treasury debt prices were little changed.

The ongoing weakness in housing keeps pressure on the White House to provide more support.

Obama, who is struggling with a 9.1 percent unemployment rate that imperils his re-election bid next year, has proposed a $447 billion stimulus package combining tax cuts with infrastructure spending and extended jobless benefits.

The administration is also working with the Federal Housing Finance Agency, a regulator, to try to expand a program that helps distressed borrowers with government-backed loans.

Some other government props for the sector, however, are set to fall away. At the end of this month, the size of the loans federal housing agencies can purchase will fall, and next year government-controlled mortgage companies Fannie Mae and Freddie Mac will begin to raise fees on the loans they purchase.

RECESSION WATCH

The fall in new residential construction in August may have been fueled in part by tropical storms, including Hurricane Irene, which pummeled the East Coast at the end of the month. Starts in the Northeast fell 29.1 percent.

Most of the weakness in new construction nationwide was concentrated in the multi-family housing sector, where starts dropped 13.5 percent.

Single-family home construction -- which accounts for a larger share of the market -- slipped 1.4 percent.

With overall economic growth looking less steady, the International Monetary Fund warned on Tuesday the United States could slip back into recession.

However, the consensus view among economists is that the country will dodge that bullet.

Heavy manufacturer Caterpillar Inc on Tuesday reported a slight acceleration in machinery sales to North American dealers in the three months through August, a sign demand remains steady.

In another upbeat sign, General Motors reached a tentative deal to create more than 6,000 U.S. factory jobs, union officials said.

The housing sector also saw a glimmer of hope in Tuesday's data, with permits for future construction up 3.2 percent in August. A day earlier, home-builder Lennar Corp had forecast a strong fourth quarter.

Still, the sector does not look ready to provide much support to economic growth anytime soon.

"Housing isn't going anywhere fast," said Sean Incremona, an economist at 4Cast in New York. "The permits side is a little bit more positive looking, but it doesn't look like things are really finding their way off the ground."
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Turkish FM: With Cairo, we will lead new regional axis

Turkey and Egypt could lead a new regional axis in the face of apparently diminishing American influence, the Turkish foreign minister said Sunday, and Israel is solely responsible for the deteriorating ties with its erstwhile Mediterranean ally.

“This will not be an axis against any other country — not Israel, not Iran, not any other country, but this will be an axis of democracy, real democracy,” Ahmet Davutoglu toldThe New York Times.

“That will be an axis of democracy of the two biggest nations in our region, from the north to the south, from the Black Sea down to the Nile Valley in Sudan,” he said, before departing for the United Nations to throw his country's support behind the Palestinian statehood bid.

“For the regional balance of power, we want to have a strong, very strong Egypt,” said Davutoglu, who has visited the Egyptian capital five times since Mubarak's overthrow in February. “Some people may think Egypt and Turkey are competing. No. This is our strategic decision. We want a strong Egypt now.”


“Nobody can blame Turkey or any other country in the region for its isolation,” Davutoglu said of Israel. “It was Israel and the government’s decision to isolate themselves.

And they will be isolated even more if they continue this policy of rejecting any proposal," he said, referring to Jerusalem’s refusal to apologize for the May raid on the Gaza-bound flotilla that killed nine people.

Last week Turkish Prime Minister Tayyip Erdogan was given a hero's welcome on his visit to North Africa, enjoying a particularly hearty reception in the Egyptian capital. Crowds thronged Erdogan’s car as it traveled to the Egyptian parliament and Arab League headquarters, and the city’s highways were dotted with billboard- sized portraits of the Turkish premier.

But it is Davutoglu whom many analysts say has been behind Turkey’s transformation from a staunch American and Israeli partner to a self-appointed leader of the Muslim world.

Its new-found status is due in large part to the ruling AK Party's confrontational foreign policy toward Israel, as well as its domestic agenda of reinserted Islamic values into traditionally secular Turkish politics.

Turkey, Davutoglu said, shares a “psychological affinity” with the Arab world, which as the Ottoman Empire it ruled for four centuries from Istanbul.

He said Egypt would become the focus of his government’s efforts, as an older US-backed order consisting of Turkey, Israel, Saudi Arabia and Hosni Mubarak-era Egypt begins to unravel.

Davutoglu projected his country's $1.5 billion investment in Egypt to rise to $5 billion within two years, and total trade to jump from $3.5 billion to $10 billion by 2015. Some 280 businessmen accompanied the Turkish delegation to Cairo, and Davutoglu told theTimes they had signed about $1 billion in contracts in a single day.

Turkey’s top diplomat reserved some of his harshest words for its neighbor and former ally Syria, whom he accused of lying and reneging on promises to reform.

After meeting Bashar Assad last month, Davutoglu said the Syrian president had agreed on a road map, including setting parliamentary elections, allowing multi-party rule and drafting a new constitution. Despite Assad's assurances, he said, the Syrian leader did not follow through.

“For us, that was the last chance,” he said, accusing Assad of “not fulfilling promises and not telling the truth.”

Jerusalem Post

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Keiser Report: Dollar-Trapped

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Bernanke Joins King Tolerating Inflation

Inflation flashing red may be less of a green light for higher interest rates as global growth falters.

Some Federal Reserve policy makers favor keeping their benchmark rate close to zero until price increases reach a level Vincent Reinhart, a former top official, says could be 3 percent. The Bank of England has held its key rate at a record low even as U.K. inflation breached its 2 percent target for 21 months. Brazil executed a surprise cut Aug. 31 to safeguard its economy even after inflation quickened to a six-year high.

Policy makers such as Fed Chairman Ben S. Bernanke and Bank of England Governor Mervyn King may be challenging central-bank orthodoxy to replenish depleted toolkits and support recoveries at risk of sliding back into recession. Tolerating higher inflation may make long-term Treasuries less attractive while supporting stocks and commodity prices, said Jim Kochan, chief fixed-income strategist at Wells Fargo Advantage Funds.

“There’s a hint of desperation here,” said Kochan, who helps manage $216 billion in Menomonee Falls, Wisconsin. “They’re clearly concerned that monetary policy to date hasn’t really accomplished what they expected it to. So they ask themselves, why? And what could we do about it?”

If adopted, the strategy might be called “Generate Inflation Now,” or GIN, Reinhart said, a reversal of the Ford Administration’s “Whip Inflation Now,” or WIN, program in the 1970s.

‘Cutoff’ Question

“Everybody knows high inflation is bad,” said Reinhart, the Fed’s director of monetary affairs from 2001 to 2007 who will become Morgan Stanley’s chief U.S. economist in October. “Nobody is sure of where the cutoff is.”

Bernanke and his Federal Open Market Committee gather tomorrow inWashington for a two-day meeting and will issue a statement Sept. 21 at 2:15 p.m. New York time. Some economists anticipate additional stimulus aimed at reducing long-term borrowing costs and boosting growth. The Fed cut the target for its benchmark federal funds rate almost to zero in December 2008 and has since purchased $2.3 trillion of bonds.

The FOMC at its Aug. 9 meeting considered conditioning its pledge to keep interest rates at record lows “on explicit numerical values for theunemployment rate or the inflation rate,” according to minutes released Aug. 30. The commitment should be contingent on joblessness falling to around 7 percent or 7.5 percent as long as inflation stays below 3 percent in the medium term, Charles Evans, president of the Federal Reserve Bank of Chicago, said in a Sept. 7 speech.

Focus on Core

Unemployment was 9.1 percent in August, and the Fed’s preferred inflation gauge, which excludes volatile energy and food prices, rose 1.6 percent in July. Policy makers should focus on core inflation to better reflect trends that are “likely to be sustained over the medium term,” the International Monetary Fund said in a chapter of its World Economic Outlook released Sept. 14, ahead of its annual meeting of central bankers and finance ministers this week.

Columbia University’s Michael Woodford and Harvard University’s Kenneth Rogoff are among proponents of faster price increases, which should result in lower interest rates adjusted for inflation. This might stimulate spending, along with a side- effect of helping pare record debt loads.

While computer simulations imply this strategy will work, it’s untested in the real world, said Woodford, a professor who co-taught economics with Bernanke at Princeton University. There has been “nervousness” among central bankers about saying “you would allow inflation,” he said. Now “there’s at least more willingness to discuss the issue.”

Faltering Growth

Consumer prices worldwide may rise at a slower pace after jumping earlier this year as faltering economic growth drags down food and energy costs. JPMorgan Chase & Co. (JPM)economists estimate inflation in developed markets will average 1.3 percent in the second quarter of 2012, down from 2.7 percent in the same period this year.

The Fed should get U.S. prices back to the path they were on before the September 2008 collapse of Lehman Brothers Holdings Inc., Nobel laureate Roger Myerson at the University of Chicago said Aug. 23 on Bloomberg Television.

According to Bloomberg calculations, the central bank would need to generate annual inflation of 3.3 percent in the two years through July 2013 to return to a hypothetical 2 percent path since July 2008, under the Commerce Department’s personal- consumption-expenditures price index. This gauge rose 2.8 percent in July from a year ago.

Weaker Currencies

Changing policy to tolerate higher inflation means lower bond prices in the long run and weaker developed-market currencies, including the dollar and pound, against emerging markets, said Stephen Jen, managing partner at SLJ Macro Partners LLP in London.

Wells Fargo’s Kochan and Pacific Investment Management Co.’s Anthony Crescenzi agree bond prices would suffer. If the Fed successfully implemented this strategy and European officials managed to contain the continent’s sovereign-debt crisis, two-year yields, which traded at a record low of 0.1512 percent today, might be little changed, while 10-year rates increased to a range between 3 percent and 4 percent within two or three years, said Crescenzi, who helps manage $1.3 trillion as executive vice president at Pimco in Newport Beach, California.

Yields on 10-year Treasuries were at 1.99 percent at 9:56 a.m. in London today. U.S. debt was the best-performing asset class in August as bond investors ignored Standard & Poor’s Aug. 5 decision to strip the U.S. of its AAA rating. Treasuries returned 2.8 percent, while the global bond market gained 1.99 percent, Bank of America Merrill Lynch index data show.
Economic Benefits

Crescenzi cautions that faster inflation may not produce the economic benefits proponents project, instead reducing the amount of goods and services households and businesses could buy. That would cut production -- and eventually incomes.

“It would turn a virtuous cycle into vicious,” he said. “I see it as quite negative.”

Central banks with a target also may have to squelch price increases later, risking harm to growth and “a serious disinflation,” said Raghuram Rajan, former IMF chief economist and a professor at the University of Chicago’s Booth School of Business.

More than 20 central banks have adopted some type of inflation target since the Reserve Bank of New Zealand pioneered the strategy two decades ago. Such targets help control expectations of future price pressures and provide clarity about the direction of interest rates.

Failed to Prevent

The strategy nonetheless took a hit for failing to anticipate or prevent the worst economic crisis since the Great Depression. In the future, inflation targets should be coupled with a tool that helps deliver financial stability, a report sponsored by the Brookings Institution said last week.

The Bank of England has left its benchmark rate at 0.5 percent since March 2009. While inflation may reach 5 percent in the next few months, it might have been below the bank’s 2 percent target without temporary shocks such as this year’s oil- price spike, King said in an Aug. 15 letter to Chancellor of the Exchequer George Osborne.

The U.K. eventually may want to adopt a goal that accounts for stronger global price pressures, said Simon Hayes, chief U.S. economist at Barclays Capital.

Any change at the Fed would face opposition at the U.S. central bank, where policy makers favor a long-run inflation goal of 1.7 percent to 2 percent, according to their most recent economic projections in June.
‘Meager Savings’

Richard Fisher, president of the Federal Reserve Bank of Dallas, told reporters Sept. 12 he couldn’t imagine trying to explain the shift to unemployed workers and others “who don’t want their income or meager savings eroded by price increases.” He was one of three officials to dissent from the August decision to keep rates near zero through at least mid-2013.

Of 27 central banks Morgan Stanley monitors with formal or informal targets, 15 now face inflation running above their aim. Some emerging-market officials may be sacrificing their goal to support economic growth or financial stability, Peter Attard Montalto, an economist at Nomura International Plc in London, said in a Sept. 12 report that identified Turkey and Hungary.

Brazil cut its benchmark rate to 12 percent on Aug. 31 as consumer prices rose 7.23 percent from a year earlier. While the increase exceeded the 6.5 percent upper limit of the bank’s target range for a fifth straight month, officials remain committed to the policy and price increases will start to ease, President Alexandre Tombini, said Sept. 8.
German Legacy

Among developed countries, the European Central Bank has proved less tolerant of faster price increases -- a legacy of Germany’s hatred of the inflation often blamed for weakening democracy in the 1920s and aiding Adolf Hitler’s rise to power.

The Frankfurt-based central bank, which aims to keep inflation just below 2 percent, raised its benchmark rate twice this year, to 1.5 percent, even as the Greek-led debt crisis threatened expansion. With economies slowing, President Jean- Claude Trichet said Sept. 8 that price risks are “broadly balanced” in the medium term, despite inflation at 2.5 percent in August.

More central banks may make similar efforts to “explain away” the temporary nature of inflation as a reason to ignore it, said Jen, a former IMF economist. Policy makers “will put more emphasis on growth,” he said.
Bloomberg

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Four earthquakes rattle Guatemala in under three hours

Four earthquakes hit Guatemala within three hours, killing at least one person and triggering landslides.

The quakes, the biggest a 5.8 magnitude, were centred some 50km (30 miles) southeast of Guatemala City but tremors were felt across the country.

Many residents spent Monday night outside because of fears of further quakes or damage to their homes.

President Alvaro Colom urged calm and said rescuers had been sent to the affected areas.

The first, a 4.8 magnitude earthquake, hit at midday on Monday (18:00 GMT), followed some 30 minutes later by one of 5.8 magnitude and then two smaller ones, according to the US Geological Survey.

The epicentres were near Cuilapa in the Santa Rosa region.


Many of the buildings there are made of mud bricks and are vulnerable to collapse.

"4.8 is a moderate magnitude for well-constructed buildings but for mud brick buildings it's very dangerous," Eddy Sanchez, the head of Guatemala's geological institute, told Reuters.

At least three other people were reported missing in Cuilapa.

There has been serious damage to buildings and large cracks have appeared in roads in the region, Guatemalan media reported.

Mudslides also affected the main road to El Salvador.
BBC

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History’s deadliest volcano comes back to life in Indonesia, sparking panic among villagers

MOUNT TAMBORA, Indonesia — Bold farmers in Indonesia routinely ignore orders to evacuate the slopes of live volcanoes, but those living on Tambora took no chances when history’s deadliest mountain rumbled ominously this month.

Villagers like Hasanuddin Sanusi have heard since they were young how the mountain they call home once blew apart in the largest eruption ever recorded — an 1815 event widely forgotten outside their region — killing 90,000 people and blackening skies on the other side of the globe.





So, the 45-year-old farmer didn’t wait to hear what experts had to say when Mount Tambora started being rocked by a steady stream of quakes. He grabbed his wife and four young children, packed his belongings and raced down its quivering slopes.

“It was like a horror story, growing up,” said Hasanuddin, who joined hundreds of others in refusing to return to their mountainside villages for several days despite assurances they were safe.

“A dragon sleeping inside the crater, that’s what we thought. If we made him angry — were disrespectful to nature, say — he’d wake up spitting flames, destroying all of mankind.”

The April 1815 eruption of Tambora left a crater 7 miles (11 kilometers) wide and half a mile (1 kilometer) deep, spewing an estimated 400 million tons of sulfuric gases into the atmosphere and leading to “the year without summer” in the U.S. and Europe.

It was several times more powerful than Indonesia’s much better-known Krakatoa blast of 1883 — history’s second deadliest. But it doesn’t share the same international renown, because the only way news spread across the oceans at the time was by slowboat, said Tambora researcher Indyo Pratomo.

In contrast, Krakatoa’s eruption occurred just as the telegraph became popular, turning it into the first truly global news event.

The reluctance of Hasanuddin and others to return to villages less than 6 miles (10 kilometers) from Tambora’s crater sounds like simple good sense. But it runs contrary to common practice in the sprawling nation of 240 million — home to more volcanoes than any other in the world.

Even as Merapi, Kelut and other famously active mountains shoot out towering pillars of hot ash, farmers cling to their fertile slopes, leaving only when soldiers load them into trucks at gunpoint. They return before it’s safe to check on their livestock and crops.

Tambora is different.

People here are jittery because of the mountain’s history — and they’re not used to feeling the earth move so violently beneath their feet. Aside from a few minor bursts in steam in the 1960s, the mountain has been quiet for much of the last 200 years.

Gede Suantika of the government’s Center for Volcanology said activity first picked up in April, with the volcanic quakes jumping from less than five a month to more than 200.

“It also started spewing ash and smoke into the air, sometimes as high as 1,400 meters (4,600 feet),” he said. “That’s something I’ve never seen it do before.”

Authorities raised the alert to the second-highest level two weeks ago, but said only villagers within 2 miles (3 kilometers) from the crater needed to evacuate.


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30 Signs That The U.S. Economy Is About To Go Into The Toilet

If you think the U.S. economy is bad now, just wait for a few months.  Things are about to become absolutely nightmarish.  None of the long-term economic trends that are hollowing out our economy have been addressed and more bad economic news seems to come out virtually every single day.  Now there is constant talk of the "next recession" in the mainstream media.  But did the last recession ever truly end?  The number of good jobs continues to decline, more stores are closing, incomes continue to go down, credit card debt and student loan debt are soaring, the housing market resembles a corpse, the number of Americans living in poverty continues to rise and government debt is at unprecedented levels.  We are losing blood fast, and almost all of our leaders are either too corrupt or too incompetent to be able to do anything about it.  The U.S. economy really and truly is about to go into the toilet, and if something is not done very quickly we are going to experience a complete and total economic disaster in this nation.

Americans have been promised over and over that this economic downturn is just "temporary" and that things will return to normal soon.  During this upcoming election cycle, the Democrats will swear that they have all the answers and that if we just elect them everything will be okay.  The Republicans will also swear that they have all the answers and that if we just elect them everything will be okay.

Well, both sides are lying.  The economic plans of both major political parties are a joke.  Neither of them can restore economic prosperity to this nation.

Our politicians could delay the coming economic collapse by borrowing gigantic piles of money and pumping all of that cash into the economy.  But stealing from our children and our grandchildren is not exactly sound economic policy.

Yes, the U.S. economy is in bad shape right now, but things are about to get even worse.  The long-term problems that are destroying our economy have not been fixed, and the leaks in our ship are going to continue to grow.

The following are 30 signs that the U.S. economy is about to go into the toilet....

#1 An increasing number of unemployed Americans have become so desperate that they have started to look for work overseas.  For example, the number of Americans that are submitting applications for temporary work visas in Canadahas approximately doubled since 2008.  Other Americans are willing to learn foreign languages and travel to the other side of the world if that is what it takes to land a decent job.  Just consider the following quote from a recent USA Today report....

Job placement firms are reporting a surge in American worker interest in booming economies such as Hong Kong, Singapore, China and, increasingly, India. Hunt Partners, an executive search firm, estimates that it's getting 50% to 100% more unsolicited résumés from Americans looking for Asia-based positions today than before the recession.

#2 When Barack Obama first took office, the official U.S. unemployment ratewas 7.6 percent.  Today it is 9.1 percent.

#3 The number of Americans that are concerned that they will lose their jobs continues to hover near record highs.  According to Gallup, 30 percent of all employed Americans are worried that they will soon be laid off.

#4 After three straight years of very high unemployment, you can feel frustration and desperation in the air almost everywhere that you go.  Many unemployed Americans are now at the end of their ropes.  The following is from a testimonial that was recently posted on The Atlantic....

The most difficult part of the job search is:

1. that I don't live near a factory or outsource outlet in China, India, or Malaysia.

2. trying not to appear desperate for a job when I am, in fact, quite desperate for a job.

3. that I am subject to everyone's advice on how to get a job, but no real job leads.

4. that I am reminded that having a good job is not an entitlement.

5. that when I become depressed from my job search, I'm told told to cheer up or else give a bad vibe to prospective employers ... yet when I become happy through non-search related activities, I am reminded that I should be looking for work

7. that when I confide to friends and family that I have "given up" to pursue more fruitful interests,  it elicits a crushing look of disbelief, disappointment, and disgust

8. waiting for permission to give up.

#5 The percentage of American men that are employed continues to plummet.  In July, only 63.5 percent of all men in the United States had a job.  Since 1948, that number has only been lower one time (63.3 percent in December 2009).

#6 Back in the 1950s, manufacturing accounted for about 28 percent of U.S. GDP.  Last year, it accounted for just 11.7 percent.  Meanwhile, manufacturing now accounts for about 25 percent of GDP in China and they now actually have more factory production each year than we do.  Sadly, Barack Obama is pushing for even more trade agreements that will send millions more of our jobs overseas.

#7 The percentage of Americans that are working low paying jobs continues to relentlessly march upwards.  Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

#8 According to John Williams of shadowstats.com, after you add in all short-term discouraged workers, all long-term discouraged workers and all Americans that are working part-time because they cannot find full-time employment, the real unemployment rate should be approximately 23 percent.

#9 We are starting to see another huge wave of store closings and layoffs.  For example, the parent company of Payless stores has announced that it will be permanently closing 475 stores.  Borders is in the process of closing every single one of its 399 stores.  Also, Bank of America has just announced that it will be closing about 600 branches, and that could result in the loss of about 30,000 good jobs.

#10 Median household income has fallen for three years in a row.

#11 Americans are really starting to rack up consumer debt once again.  According to Time Magazine, U.S. consumers are on pace to collectively add 54 billion dollars in credit card debt in 2011.

#12 Student loan defaults are rising very sharply. Just consider the following excerpt from a recent New York Times article....

The share of federal student loan defaults rose sharply last year, especially at for-profit colleges and universities, where 15 percent of borrowers defaulted in the first two years of repayment, up from 11.6 percent the previous year.

#13 According to a chart in The Economist, whenever the number of newspaper articles in the Financial Times and the Wall Street Journal that mention the word "recession" goes over 1,500 in a particular quarter, the U.S. economy almost always goes into a recession.

#14 The U.S. housing crash just continues to get worse.  The index of home builder sentiment put out by the National Association of Home Builders fell once again during the month of September.  With such a glut of unsold foreclosed homes on the market, it is making things really hard of home builders.  Things have gotten so bad that even the U.S. government now owns nearly a quarter of a million foreclosed homes.  The impact of this housing nightmare on families has been absolutely devastating.  Just check out what a recent Time Magazine article had to say about what has been going on in California....

The impact on children has been brutal: since 2007, 7% of the state's children have had a foreclosure process started on their homes, the fourth-highest level in the nation, according to a study released this month by the Annie E. Casey Foundation.

#15 Many believe that due to much tighter lending standards, it is now harder to be approved for a mortgage than at any other time since World War II.  This is absolutely crushing the housing market.

#16 Most Americans don't seem to expect housing prices to recover for an extended period of time.  One recent survey found that 54 percent of Americans believe that there will not be a housing recovery until "2014 or later".

#17 The combined debt of the largest GSEs (Fannie Mae, Freddie Mac and Sallie Mae) has increased from 3.2 trillion in 2008 to a whopping 6.4 trillion in 2011.  If that debt goes bad, U.S. taxpayers will be left holding the bill.

#18 There are now nearly 50 million Americans that do not have health insurance, and the percentage of Americans covered by employer-based health plans has fallen for 11 years in a row.  Meanwhile, Americans now spendabout 3 times as much on health care as they did back in 1990.

#19 The Postal Service has publicly announced that it is "on the verge" of financial collapse.

#20 The number of small businesses continues to fall.  I recently noted this fact on The American Dream Blog....

The number of "self-employed" Americans continues to rapidly shrink.  According the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006.  Today, that number has shrunk to 14.5 million.  Even though we have 14 million unemployed people in this country and jobs are incredibly difficult to come by, the number of people trying to work for themselves continues to decrease because the environment for small businesses in this country has become so incredibly toxic.

#21 American consumers have become tremendously pessimistic.  According to one recent survey, 61 percent of all Americans believe that they will not return to their "pre-recession" lifestyles until at least 2014.  According to a different recent survey, 39 percent of Americans actually believe that the U.S. economy has now entered a "permanent decline".

#22 Many U.S. investors certainly seem to believe that trouble is coming. According to CNN, last month the number of bets against the S&P 500 was the highest that we have seen in about a year.

#23 The number of U.S. households that are "doubling up" continues to grow.  According to the U.S. Census Bureau, the number of combined households has increased by 10.7 percent since 2007.

#24 When Barack Obama moved into the White House, the average price of a gallon of gasoline in the United States was $1.83.  Today it is $3.58.

#25 The number of Americans living in poverty grew by 2.6 million last year.  That was the largest increase since the U.S. government began calculating poverty figures back in 1959.

#26 Back in the year 2000, 11.3% of all Americans were living in poverty.  Today, 15.1% of all Americans are living in poverty.

#27 On Barack Obama's first day on the job, there were about 32 million Americans on food stamps.  Today, there are more than 45 million Americans on food stamps.

#28 If there is a financial collapse in Europe, that will definitely plunge us into another recession.  Right now, things do not look promising.  At this point, headlines all over the world are proclaiming that Greece is dangerously close to defaulting.

#29 At some point soon, investors all over the globe may decide that it is time to start dumping U.S. government debt.  For example, Chinese officials are now openly talking about the need to "liquidate" their holdings of U.S. Treasuries.

#30 The U.S. national debt continues to explode in size and spiral out of control.  According to Professor Laurence J. Kotlikoff, the U.S. "fiscal gap" increased by about 6 trillion dollars last year.  In fact, Kotlikoff makes a compelling argument that Greece is actually in better shape financially than the United States is.

Do you now understand how much trouble we are in?

The long-term trends that are destroying us continue to get worse.

The United States is steamrolling directly toward an economic collapse.

When this economy hits bottom and splatters all over the place, it is not going to be easy to fix.

The America that we know today is going to be wiped out by a gigantic mountain of debt and by the consequences of decades of really bad decisions.

We were handed the keys to the greatest economic machine in the history of the world and we have wrecked it.

So prepare for really, really hard times ahead.

The era of endless prosperity is ending.

Next comes the pain.

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