Senate Banking Chairman Chris Dodd (D.-Conn.) and House Financial Services Chairman Barney Frank (D.-Mass.) with President Barack Obama. (Associated Press photo)
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Hubbard, dean of Columbia Business School, joined Dan Gross and I to discuss the "major structural imbalances" facing America, chief among them being the government's profligate spending.
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Our world is changing at a pace that is so staggering these days that it can be really hard to fully grasp the significance of what we are witnessing. Hopefully the collection of random facts below will help you to "connect the dots" just a little bit. On one level, the facts below may not seem related. However, what they all do have in common is that they show just how much the United States has fundamentally changed. Do you ever just sit back and wonder what in the world has happened to America? The truth is that the America that so many of us once loved so much has been shattered into a thousand pieces. The "land of the free and the home of the brave" has been transformed into a socialized Big Brother nanny state that is oozing with corruption and has accumulated the biggest mountain of debt in the history of the world. The greatest economic machine that the world has ever seen is falling apart before our very eyes, and even when our politicians actually try to do something right (which is quite rare) the end result is still a bunch of garbage. For those who still love this land (and there are a lot of us) it is heartbreaking to watch America slowly die. The following are 50 random facts that show just how dramatically America has changed....
#50) A new report released by the United Nations is publicly calling for the establishment of a world currency and none of the major news networks are even covering it.
#49) The state of California is so broke that Arnold Schwarzenegger has ordered California State Controller John Chiang to reduce state worker pay for July to the federal minimum allowed by law -- $7.25 an hour for most state workers.
#48) A police officer in Oklahoma recently tasered an 86-year-old disabled grandma in her bed and stepped on her oxygen hose until she couldn't breathe because they considered her to be a "threat".
#47) In early 2009, U.S. net national savings as a percentage of GDP went negative for the first time since 1952, and it has continued its downward trend since then.
#46) Corexit 9500 is so incredibly toxic that the UK's Marine Management Organization has completely banned it, so if there was a major oil spill in the North Sea, BP would not be able to use it. And yet BP has dumped over a million gallons of dispersants such as Corexit 9500 into the Gulf of Mexico.
#45) For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
#44) It has come out that one employee used a Federal Emergency Management Agency credit card to buy $4,318 in "Happy Birthday" gift cards. Two other FEMA officials charged the cost of 360 golf umbrellas ($9,000) to the taxpayers.
#43) Researchers at the State University of New York at Buffalo received $389,000 from the U.S. government to pay 100 residents of Buffalo $45 each to record how much malt liquor they drink and how much pot they smoke each day.
#42) The average duration of unemployment in the United States has risen to an all-time high.
#41) The bottom 40 percent of all income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
#40) In the U.S., the average federal worker now earns about twice as much as the average worker in the private sector.
#39) Back in 1950 each retiree's Social Security benefit was paid for by 16 workers. Today, each retiree's Social Security benefit is paid for by approximately 3.3 workers. By 2025 it is projected that there will be approximately two workers for each retiree.
#38) According to a U.S. Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015.
#37) The federal government actually has the gall to ask for online donations that will supposedly go towards paying off the national debt.
#36) The Cactus Bug Project at the University Of Florida was allocated $325,394 in economic stimulus funds to study the mating decisions of cactus bugs.
#35) A dinner cruise company in Chicago got nearly $1 million in economic stimulus funds to combat terrorism.
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, one which will be much more severe than the Great Depression, Nobel Prize winning economist Paul Krugman warns.
ough the U.S. financial system nearly experienced a total meltdown in late 2008, the truth is that most Americans simply have no idea what is happening to the U.S. economy. Most people seem to think that the nasty little recession that we have just been through is almost over and that we will be experiencing another time of economic growth and prosperity very shortly. But this time around that is not the case. The reality is that we are being sucked into an economic black hole from which the U.S. economy will never fully recover. The problem is debt. Collectively, the U.S. government, the state governments, corporate America and American consumers have accumulated the biggest mountain of debt in the history of the world. Our massive debt binge has financed our tremendous growth and prosperity over the last couple of decades, but now the day of reckoning is here.
And it is going to be painful.
The following are 20 reasons why the U.S. economy is dying and is simply not going to recover....
#1) Do you remember that massive wave of subprime mortgages that defaulted in 2007 and 2008 and caused the biggest financial crisis since the Great Depression? Well, the "second wave" of mortgage defaults in on the way and there is simply no way that we are going to be able to avoid it. A huge mountain of mortgages is going to reset starting in 2010, and once those mortgage payments go up there are once again going to be millons of people who simply cannot pay their mortgages. The chart below reveals just how bad the second wave of adjustable rate mortgages is likely to be over the next several years....
#2) The Federal Housing Administration has announced plans to increase the amount of up-front cash paid by new borrowers and to require higher down payments from those with the poorest credit. The Federal Housing Administration currently backs about 30 percent of all new home loans and about 20 percent of all new home refinancing loans. Tighter standards are going to mean that less people will qualify for loans. Less qualifiers means that there will be less buyers for homes. Less buyers means that home prices are going to drop even more.
#3) It is getting really hard to find a job in the United States. A total of 6,130,000 U.S. workers had been unemployed for 27 weeks or more in December 2009. That was the most ever since the U.S. government started keeping track of this statistic in 1948. In fact, it is more than double the 2,612,000 U.S. workers who were unemployed for a similar length of time in December 2008. The reality is that once Americans lose their jobs they are increasingly finding it difficult to find new ones. Just check out the chart below....
#4) In December, there were also 929,000 "discouraged" workers who are not counted as part of the labor force because they have "given up" looking for work. That is the most since the U.S. government first started keeping track of discouraged workers in 1949. Many Americans have simply given up and are now chronically unemployed.
#5) Some areas of the U.S. are already virtually in a state of depression. The mayor of Detroit estimates that the real unemployment rate in his city is now somewhere around 50 percent.
#6) For decades, our leaders in Washington pushed us towards "a global economy" and told us it would be so good for us. But there is a flip side. Now workers in the U.S. must compete with workers all over the world, and our greedy corporations are free to pursue the cheapest labor available anywhere on the globe. Millions of jobs have already been shipped out of the United States, and Princeton University economist Alan S. Blinder estimates that 22% to 29% of all current U.S. jobs will be offshorable within two decades. The days when blue collar workers could live the American Dream are gone and they are not going to come back.
#7) During the 2001 recession, the U.S. economy lost 2% of its jobs and it took four years to get them back. This time around the U.S. economy has lost more than 5% of its jobs and there is no sign that the bleeding of jobs is going to stop any time soon.
#8) All of this unemployment is putting severe stress on state unemployment funds. At this point, 25 state unemployment insurance funds have gone broke and the Department of Labor estimates that 15 more state unemployment funds will likely go broke within two years and will need massive loans from the federal government just to keep going.
#9) 37 million Americans now receive food stamps, and the program is expanding at a pace of about 20,000 people a day. The United States of America is very quickly becoming a socialist welfare state.
#10) The number of Americans who are going broke is staggering. 1.41 million Americans filed for personal bankruptcy in 2009 - a 32 percent increase over 2008.
#11) For decades, the fact that the U.S. dollar was the reserve currency of the world gave the U.S. financial system an unusual degree of stability. But all of that is changing. Foreign countries are increasingly turning away from the dollar to other currencies. For example, Russia’s central bank announced on Wednesday that it had started buying Canadian dollars in a bid to diversify its foreign exchange reserves.
#12) The recent economic downturn has left some localities totally bankrupt. For instance, Jefferson County, Alabama is on the brink of what would be the largest government bankruptcy in the history of the United States - surpassing the 1994 filing by Southern California's Orange County.
#13) The U.S. is facing a pension crisis of unprecedented magnitude. Virtually all pension funds in the United States, both private and public, are massively underfunded. With millions of Baby Boomers getting ready to retire, there is simply no way on earth that all of these obligations can be met. Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern's Kellogg School of Management recently calculated the collective unfunded pension liability for all 50 U.S. states for Forbes magazine. So what was the total? 3.2 trillion dollars.
#14) Social Security and Medicare expenses are wildly out of control. Once again, with millions of Baby Boomers now at retirement age there is simply going to be no way to pay all of these retirees what they are owed.
#15) So will the U.S. government come to the rescue? The U.S. has allowed the total federal debt to balloon by 50% since 2006 to $12.3 trillion. The chart below is a bit outdated, but it does show the reckless expansion of U.S. government debt over the past several decades. To get an idea of where we are now, just add at least 3 trillion dollars on to the top of the chart....
#16) So has the U.S. government learned anything from these mistakes? No. In fact, Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $2 trillion to pay its bills, a record increase that would allow the U.S. national debt to reach approximately $14.3 trillion.
#17) It is going to become even harder for the U.S. government to pay the bills now that tax receipts are falling through the floor. U.S. corporate income tax receipts were down 55% in the year that ended on September 30th, 2009.
#18) So where will the U.S. government get the money? From the Federal Reserve of course. The Federal Reserve bought approximately 80 percent of all U.S. Treasury securities issued in 2009. In other words, the U.S. government is now being financed by a massive Ponzi scheme.
#19) The reckless expansion of the money supply by the U.S. government and the Federal Reserve is going to end up destroying the U.S. dollar and the value of the remaining collective net worth of all Americans. The more dollars there are, the less each individual dollar is worth. In essence, inflation is like a hidden tax on each dollar that you own. When they flood the economy with money, the value of the money you have in your bank accounts goes down. The chart below shows the growth of the U.S. money supply. Pay particular attention to the very end of the chart which shows what has been happening lately. What do you think this is going to do to the value of the U.S. dollar?....
#20) When a nation practices evil, there is no way that it is going to be blessed in the long run. The truth is that we have become a nation that is dripping with corruption and wickedness from the top to the bottom. Unless this fundamentally changes, not even the most perfect economic policies in the world are going to do us any good. In the end, you always reap what you sow. The day of reckoning for the U.S. economy is here and it is not going to be pleasant.
"Every Labor government there has ever been from 1926 to the present day has always ended in exactly the same way because they essentially try to run a communist financial system," he contends, "and it doesn't work any better here than it worked in the Soviet Union."
He adds that hope does not trump experience. "We have politicians who simply haven't had enough experience in the real world before going into politics to know how things run, to know how many beans make five," Monckton notes.
Monckton says U.K. markets are starting to realize that tax revenue is collapsing, which in turn makes investment in debt undesirable.
"So you've got government revenues collapsing and government expenditures rocketing because not only do they have to pay the cost of unemployment and other very lavish benefits for people who are no longer employed," he points out, "they're also having to pay eye-wateringly large sums to bail out the banks whom overspending and over-regulation drove under."
He believes the U.S. is poised for the same collapse should they hold fast to a doctrine of socialism.
"She is a large, and for the time being, a relatively prosperous nation, and I think that the likelihood I'm afraid is that Obama is going to change that for the worse. He has all the kindliness intentions I have no doubt; the left usually do," he adds. "They would love to have motherhood and apple pie, as would we all. But they are so busy working out how to distribute the apple pie, that they never think about the people who are going to have to roll up their sleeves and bake it. And that's the difficulty with socialism. It is all about redistribution and not about generation of wealth."
"What it meant was that you always knew you had enough to buy your baked beans because you were careful with your money," he concludes. "And if the government is careful with the people's money, then the people can prosper."
Non-farm employers in the U.S. eliminated 533,000 jobs in November. At the same time, in a typical month the feds give out approximately 140,000 new work permits and green cards to foreign workers.
How can this make any sense for the American people's own government to be recruiting more competitors for a dwindling number of jobs? Month after month as hundreds of thousands of Americans lose their jobs, the feds keep pumping another 140,000 new foreign workers into the laborforce.
The new foreign workers compete with the laid-off and underemployed highly skilled Americans in most professions and occupations, but most foreign workers compete directly in the construction, service and manufacturing industries where unemployment is the highest and where Americans have the least margin of financial security.
The feds add workers in two major ways.
That adds up to an astounding rate of 1,657,266 foreign workers per year, and that doesn't count renewals on foreign work permits or the flow of illegal workers.
While the new Congress and President determine how to best spend a trillion dollars to stimulate more jobs, they should immediately in January suspend most foreign-worker importation. Limiting immigration mostly to nuclear families and our fair share of internationally recognized special needs refugees seems like the logical response to job-loss reports like the one today (Dec. 5).
Roy Beck is Founder & CEO of NumbersUSA
According to all accounts, the United States faces its worst economic crisis since the Great Depression, with $2 trillion in near-term financing needs for bailouts and economic stimulus. This is an enormous sum for any country, especially one that is so heavily indebted that it is close to bankruptcy. If the money can’t be borrowed abroad, it will have to be printed—a policy that carries the implication of hyper-inflation. In normal life, a borrower who must appeal to creditors makes every effort to bring order to his financial affairs. But not the Bush regime.
The out-of-pocket costs of Bush’s Iraq war are about $600 billion at the present moment, a figure that increases by millions of dollars every hour.
In addition, there are the much larger future costs that have already been incurred, such as long-term care for the wounded and disabled U.S. soldiers, the replacement costs of the used-up equipment, interest payments on the war debt, and the lost economic use of the resources and manpower squandered in war. Experts estimate that the already incurred out-of-pocket and future costs of Bush’s Iraq war to be $3 trillion and rising.
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