Despite all the hype about the U.S. economy still being the largest in the world, and certainly too big to fail without dragging the rest of the world along with it, a close analysis of several factors reveal that it does indeed appear to be failing. I’m writing this because every once in a while, I just seem to enjoy mucking around in doom and gloom.
Like William Bowles in his article, “The Imperial Mindset”, I think the collapse of a once great nation can happen rather suddenly, just as the usual glacial pace of changes in the natural world can also happen suddenly (think volcanoes erupting, tornadoes slamming homes apart, typhoons destroying buildings, earthquakes collapsing billions of dollars of property in minutes, floods submerging streets and whole cities near rivers, and tsunamis crashing into coastlines, destroying life and property on a massive scale in seconds).
China’s Role in Pumping Up the U.S. Economy
I’m not an economist, so I could be wrong, but I woke up this morning and it occurred to me that China’s foreign currency reserve, which has ballooned from about one trillion to three trillion dollars this year (largely in U.S. Treasury bonds), has been keeping the U.S. economy afloat.
Although this has kept up the appearance of the U.S. economy still being functional, it’s just hot money that China doesn’t want inflating its own economy, and China is exporting its inflation to the U.S. at the same time it is pumping up the U.S. economy. (I’m not sure why this brings to mind what happens when you pump up a bicycle tire too much.)
And the criminal bankers and corrupt government leaders are so desperate for money (they even attacked Libya to get their gold, oil and money for a quick infusion of real assets), that they welcomed a couple extra trillion dollars of investment from China in recent months. What’s the problem here?
Can anyone else see this? Now China’s talking about reducing the foreign currency reserve back down to around a trillion dollars. If China does this (and there seem to be a number of people worried about it), the U.S. economy will be effectively bankrupt. Actually it already is nearly bankrupt, but China’s continued investment has kept up the illusion of a viable U.S. economy.
So how will the U.S. respond to any moves from China that it perceives threatens the economy? Yup, you got it, if you see as clearly as I do. There will be a tremendous military escalation by the U.S. in the next few months. And we should really be on guard against efforts to make Americans perceive China as an enemy, instead of the ruling elites such as the Rothschilds and global banking mafia who are manipulating what happens in the world. (I’m an American living in China; I have few illusions about either country, but I am a peace activist, so all of this concerns me very much.)
U.S. Bankruptcy Tsunami
According to statistics released by the Administrative Office of the U.S. Courts, the number of bankruptcy cases filed in federal courts has been steadily increasing for the past three years: 1,596,355 for fiscal year 2010 (the 12-month period ending September 30), 1,402,816 for fiscal year 2009, and nearly 1,100,000 for fiscal year 2008.
And you better believe the people in China are keeping track of their investment in the U.S. According to a 12/31/2010 article in the Beijing Time, More U.S. Cities, Even States Face Bankruptcy in 2011: Report, California Governor Arnold Schwarzenegger went to Washington earlier this year to get seven billion dollars for his state government, which resorted to paying off vendors with scrip and delaying state income-tax refunds. And “Illinois seems to be in even worse shape. A recent credit rating showed it weaker than Iceland and only slightly stronger than Iraq.” California was said to be facing a deficit of $25,000,000,000 and Illinois’ deficit was projected to be $15,000,000,000.
The paper reported that there is a good prospect that the bond market will quit financing California and Illinois long before the federal government, which may already be happening.
In an article posted by James Sinclair back in December 7, 2008, 41 US States Face Bankruptcy In 2009, he stated that as the recession deepens, so will the state’s budget problems, turning this “budget crisis” into a humanitarian disaster. He added that projections have already been made for a $200,000,000,000 shortfall by 2010. (Note: Under present law, states are not allowed to declare bankruptcy. However, there is a move afoot to change the law to make it possible.)
Sinclair further pointed out that these deficits are causing real suffering to the most vulnerable sections of society. “In dozens of states across the country, vital services are being cut to the elderly, disabled, the poor, and recently unemployed. Teachers are being cut from schools and tuitions are rising. Workers from state construction sites are being laid off, while social service employees suffer a similar fate. Non profits are closing their doors.”
Now let’s fast forward two years from December 2008 to an article published in December 2010 in the Business Insider by Gus Lubin and Leah Goldman, 16 US Cities Facing Bankruptcy If They Don’t Make Deep Cuts In 2011. The cities listed are: San Diego, Los Angeles, San Francisco, Chicago, New York City, San Jose, Cincinnati, Honolulu, Washington DC, Newark New Jersey, Detroit, Reading PA, Joliet, Camden New Jersey, Hamtramck, Michigan, Central Falls, Rhode Island and Paterson, New Jersey. (These are some of the largest cities in the U.S.)
The authors are predicting 2011 as the year of the municipal default, citing analysts such as Meredith Whitney, as well as bond investors who have been fleeing the muni market. Lubin and Goldman give reasons to be worried about failing municipalities: (1) the expiration of Build America Bonds will make it harder for cities to raise funds, (2) city revenues are crashing and keep getting worse, (3) property taxes haven’t reflected the total damage from the housing crash, and (4) high joblessness is cutting into city revenues while increasing costs for services.
And if that’s not bad enough, the picture gets even gloomier when you start to look at the rising number of bank failures in the U.S.
Banks Failing in the U.S.
So far in 2011, there have been 39 bank failures. In 2010, there were 157. In 2009, it was 140. In 2008, it was only 25. In 2007 there were only three, and in 2006 and 2005, there were none. The banks that have failed ranged in size from very small to large, although none of the banks that were too large to fail made the list, of course.
Americans need to start brainstorming like crazy what we’re going to do to turn this around. Obviously we can’t rely on our political or top business leaders. We’re going to have to pull ourselves up by our bootstraps out of this mess.