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News and Headlines About The Economic Meltdown

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Don't Think Peak Oil Didn't Cause This Mess Just Because Prices Have Fallen!

Are peak oil and the economic meltdown related? In my humble opinion , absolutely!  Some believe that the rising price of oil is what broke the back of the largest growth phase in history.  Much of this growth was due to initially low energy prices which enabled homes to be built cheaply  in subdivisions far from where people work. The government  then fed the country cheap credit which enabled people to buy more and more goods that they could not afford and live on the brink of bankruptcy while saving nothing.  As high energy prices crept up on consumers, affecting everything from the price of bread to electricity, they could not afford to keep spending on the overpriced goods and imported Chinese junk that kept the  world's false economy moving and the house of cards began to fall. It was going to fall anyway, but peak oil  definitely helped it along. All we have to do is look back  in history at what happened to the economy when oil prices rose. A market crash soon followed.

Now the oil price bubble has "burst" but it is still selling for three times per barrel what it was before the stock market boom. Get ready for round two and the one-two knockout punch, inflation followed by a complete worldwide financial collapse when oil prices rise again. How screwed are we? See the chart below from Bianco Research and Bloomberg:

 

 Current Stories...

Ten Scenarios That Could Derail A Recovery

There is no sure bet of a recovery. Any number of things, including a resurgence of a stronger swine flu virus, war in Iran, high oil prices and more could send the economy crashing to depression era levels. see Ten Things That Could Derail a Recovery

 Recommended Article: "Boomers, Your Crisis Has Arrived"

One of the best articles I have seen so far that gives an explanation both for the global financial crisis and where we may be heading. Excerpt: "Oil prices below $40 a barrel will lead to a deepening of this crisis in the not too distant future. At these prices it is no longer profitable to develop alternative fuels and search for new supply. Rigs are being shutdown, deepwater projects canceled, shale and oil sands projects being delayed, and natural gas exploration dramatically scaled back. The fact remains that the world has reached peak oil supply. The Saudi wells are 50 years old and are depleting rapidly. Mexico’s Cantarell oil field is in rapid decline and Mexico, the supplier of 12% of U.S. supply, will become a net importer in five years. The drastic decline in oil revenue will further exacerbate social unrest in a country on our border. The complete lack of a comprehensive energy plan will result in oil prices exceeding $200 a barrel in the next five years. Politicians will blame oil companies and the Arab countries, further alienating us from the world."  see "Boomers, Your Crisis Has Arrived"

All 16 US Intelligence Agencies Rank The Economic Meltdown "Security Threat #1"

More than the threat of Al Qaeda or rogue states, the CIA, FBI, NSA, etc, all rate the chaos caused by the economic meltdown and global financial crisis as threat #1 to the United States. Read More.. Global economic crisis is threat #1 

Around Twelve Million Homeowners "Underwater" or upside down on their loans.

About twelve million American homeowners have seen their biggest investment become their biggest liability. The figure is around twelve million and growing, up from around 6 million at the end of last year. Many homeowners are simply walking away and filing bankruptcy. Yahoo News

 

Sheriff Stops Enforcing Eviction Orders

Chicago Sheriff Tom Dart says he will stop enforcing eviction orders. Is this a sign of things to come and what will his precedent mean to banks and landlords?  Chicago Tribune

GM Now Worth Less Than It Was Before The Great Depression (Oct 9, 2008)

Shares of the once proud automaker General Motors fell to their lowest level since 1958, bringing the net worth of the company to pre depression era levels. Analysts now have GM on a warning list for a possible failure. How many jobs will be lost if GM goes down and who will buy it? Read More: The Guardian

60% of Americans Believe A New Great Depression Is Upon Us

In a recent poll over sixty percent of Americans believe that a new great depression is coming. Six out of ten people believe that we will see unemployment over 25%, bank failures (now happening) and legions of homeless (also happening). Read More: CNN 

Homeless Numbers Rise Rapidly

The number of homeless  have risen in states  like Massachusetts which have been hard hit by the mortgage meltdown, overwhelming shelters and relief agencies. How much worse will it get and how will those shelters cope with swelling numbers when cold weather hits.  Under Massachusetts law every family seeking shelter that cannot find it in nonprofit agencies will be put in a hotel paid for by the state.  There are currently 588 families in 28 hotels across the state. This is coming at the same time that the state is asking Washington for more money for vital services. How will Massachusetts or Washington for that matter afford to put all the mortgage meltdown displaced homeowners in hotel rooms?  This story is only one of many that indicate a possible new great depression is upon us. Read More: CNN News

States Beg Washington For Money As Large Shortfalls Are Predicted

Over thirty two states are anticipating budget shortfalls and are asking Washington for help. Gov. Arnold Swartznegger is asking for seven billion to pay teachers, firefighters and keep other vital government running. States like Delaware, home to many financial companies are being especially hard hit. Expect all but basic services in those states to be cut back. Will water and  electric utilities soon be faltering because they can't issue bonds or raise tax revenue to keep the services we depend on flowing? Read Story: Yahoo - Business Week

Foreclosed Homes Vandalized, Suburban Slums Developing

In many neighborhoods across the U.S. nice, well kept homes sit next to dozens of foreclosed homes. Those vacant homes are being vandalized for copper wires and fixtures which can be sold for cash and becoming havens for drug users and the homeless.  Abandoned pools are becoming breeding grounds for West Nile virus bearing mosquitos. (see related story). Who could have imagined nice "Wisteria Lane" looking neighborhoods becoming suburban slums so fast? Washington Post

Pools at Foreclosed Homes Become Breeding Ground For West Nile Virus

Desperate neighbors besieged by clouds of mosquitos carrying West Nile can't get any help from local governments. Thousands of abandoned pools across the nation are now urban swamps teeming with mosquitos and other pests such as water snakes. Bankrupt local governments can't afford to mount a response to this growing problem.  Aerial photos show as many as 17% of pools have turned green with algae after being abandoned. Read More: WebMD.com

New Auto Sales Plunge As Mortgage Crisis Worsens

Any hopes that environmentalists had for a quick turnover of America's old gas guzzling auto fleet are being dashed as consumers hold onto older cars. This means more oil consumption in the long run as consumers avoid hybrids and fuel efficient vehicles in favor of their current automobiles. Even those that can afford a new fuel efficient vehicle may not be able to get a loan as banks tighten up on consumer lending in the face of the crisis. Read More: NPR.org

 

World Food Crisis May Be On The Horizon

A world food crisis may be on the horizon due to lack of investment in new farms and equipment. A growing world population  and consumers in China adding meat to their diet compound the problem. Add in the credit crunch and farmers delaying planting fall wheat due to credit concerns and all signs point to a crisis. Read More: Sciencedaily.com

IMF Says That US Faces "Sharp Downturn" As Financial Crisis Worsens

Back in July of 2008 the IMF stated that a downturn might be avoided in the U.S. Now they are stating that the U.S could face as sharp downturn or economic recession if the mortgage crisis worsens. What started as a mild downturn in late 2007 is now a full blown financial crisis, this likes of which we have not seen before. Read More: Bloomberg.com

Why The Bailout Won't Work

From government officials to newspaper editors there seems to be an almost universal giddiness that the bailout plan will save us from a recession or depression. The reason for the optimism is  denial since the alternative, a global meltdown would be very ugly. Bob Prechter at Elliot Wave International supplies us with his theory as to why the bailout plan will ultimately fail. Read More: elliotwave.com

Tent Cities Spring Up Outside Major Metropolitan Areas Due To Mortgage Crisis

In scenes that remind you of 1930's depression era photos, tent cities have sprung up outside major U.S. cities as people are forced from their homes due to the mortgage crisis. Here we see the real evidence of the largest transfer of wealth in the history of the United States. How much worse will the situation get and how will these people fare with winter coming on? Read More: BBC Report on YouTube

Economic Crisis Spurs Boom In Garden Seed Sales As People Plant Modern Day "Victory Gardens"

Not since the bleak days of World War II have Americans considered returning to gardening in a big way to make ends meet. One bright spot in the economy is the seed company Burpee which has seen seed sales skyrocket due to the economic crisis. Unfortunately for many areas of the country it is the wrong time of year to garden and hunger is a real possibility this winter for millions of Americans who have lost their jobs. Read More: New York Times

Housing Crash Affects Forest Product Sales and Causes Hardship In U.S. Northwest and Canada

Forest products including processed lumber and raw, unprocessed logs are the backbone of the U.S. Northwest and Canada. British Columbia was just recovering from the recession caused by the U.S. lumber embargo and now is facing an even deeper downturn. Thousands of jobs are being lost and lumber is piling up in mills with nowhere to go. Read More: dailycommercialnews.com 

Number Of Homeless Teenagers Up 100% Over Last Year On Las Vegas Streets

Urban crime is set to rise with thousands of new homeless under the age of 19. Las Vegas is seeing a 100% increase in the number of homeless teens over this same time last year thanks to the mortgage crisis and foreclosures. Read More: kxnt.com

Unemployment Skyrockets as US Sheds Most Jobs Since 2003. More Cuts To Come

Current unemployment figures show that the US economy has shed more jobs than any year since 2003 and more job cuts are on the way. It appears as if the mortgage bailout bill isn't going to stop the bleeding economy any time soon. The unemployment rate could be as high as 7.5% by 2009. Unemployment for black Americans is currently at 11.5%. Read More: Associated Press

 

Here is a quote from "Atlas Shrugged" by Ayn Rand

 "Watch money. Money is the barometer of a society's virtue. When you see that trading is done not by consent, but by compulsion - when you see that in order to produce, you need to obtain permission from men who produce nothing - when you see that money is flowing to those who deal not in goods, but in favors - when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed.'"

 

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