I find it strikingly strange to receive emails from my readers who are angry because the tone of our articles makes it sound as if the sky over America is falling and economic recovery is not going to happen. They think that I have no clue as to what I am writing about. I can only wish them a happy life and may all of their dreams come true.
But before you close your browser, I would like to present to my readers who believe that economic collapse is highly unlikely, 7 undeniable and dreadful signs or proof of the economic downfall. There are countless of evidence that the economy will come to a point that is impossible to save. I am sure many who believe that the collapse is now inevitable already know about these. However, for those who don’t, here are the most dreadful proof which is seldom heard of.
The bottom 40% of the population in America which is 120 million people owns less than 1% of the whole nation’s wealth. Yet, these 120 million poorest (and statistically most of them being African-American and Hispanic) are the reason why the economy is collapsing now. As surprising as it sounds, it is the bottom 40 percent who forced themselves to get loans and mortgages that they could not afford, and now they are defaulting almost at the same time.
What impresses me about this is the UN statistics that says a whooping 40 percent of the richest country in the world actually only owns less than 1% collectively of the nations wealth.
Pay close attention to the next two years. You will see that approximately 360,000 mortgages are scheduled to “reset” nationwide. When this happens, the mortgage monthly payment will increase by an average of $1,000 per month. Who can afford an increase of monthly payment this much? Within 2 years the US dollar will have depreciated about 35-50% and the $1,000 per month increase will become even more unaffordable. This will cause another housing crash which will completely crush the housing market.
The official unemployment rate currently is at 9.9%. However, the real unemployment rate that is hidden by the government has reached 22%.
According to USDebtClock.org the national debt of the US has passed $13 trillion. In 2000 it was $5.7 trillion and it increased by $2 trillion within 5 years. Six months ago, the national debt was $12 trillion and in a frighteningly short period of time it is now $1 trillion more! The reason why the debt clock runs this fast is because the larger the US debt grows, the faster the interest is piling up. If you watch closely the US Debt Clock you will notice that the national debt tracker jumps to over 100,000 in less than one minute.
5 more banks were shut down by Regulators last Friday, May 28th, 2010, which brings the number of US bank failures to 78 this year alone.
Last March alone, homes that went into foreclosure reached 367,056 which is an increase of 19% since February. This amount is the highest foreclosure number since January 2005 when the first report of foreclosure statistics was first issued. Apparently Obama’s foreclosure help programs do not work.
Interest rates have already gone up and according to an assessment by New York Times rates have nowhere to go but up. This is going to cause a lot of pain and problems for consumers. The first thing that will be hit by the increasing rates is the housing market although it has just begun to rebound. The rise in mortgage interest rates will continue and therefore in the next few months it will be highly unlikely for people to take Obama’s refinancing program with a higher rate and thus trigger another wave of a housing crash.