Will the second half of 2012 bring another financial crisis and, with it, the end of our beloved American Dream?
Americans are still struggling to recover from the last recession, and another financial crisis so soon could spell even more disaster for millions of people and the American Dream. The following reasons should have every American concerned about the second half of 2012.
The GlobalEurope Anticipation Bulletin (GEAB), which provides independent, “state-of-the-art analyses” of geo-political and financial situations from a European point-of-view, has issued a “red alert” for a “Global Systemic Crisis in September-October 2012.” GEAB warns that the red alert is real, and that the “components of the global situation are in fact pointed in a negative, even catastrophic direction.” Additionally, they state that they have “never seen the chronological convergence of such a series of explosive and so (many) fundamental factors (economy, finances, geopolitical…) since 2006.”
Global lending is slowing, and credit is beginning to “freeze up.” Both of these are occurring while McAfee and Guardian Analytics reports that millions of dollars are being pilfered from banks worldwide through cyber attacks. “Credit unions, large multinational banks and regional banks have all been attacked.” Money is disappearing at alarming rates. What happens if all the money in the banks suddenly “disappears?”
Bank runs in Europe are increasing, occurring daily across much of southern Europe. Most of the “smart money” is already writing off southern Europe. A financial collapse there could trigger a destructive worldwide recession.
The U.S. banking system is deeply integrated with the European banking system. The Euro banks are in serious trouble, and what happens in Europe and its banking system affects the U.S. JPMorgan’s trading losses, which are Euro-centered, could reach $9 billion dollars according to the New York Times, and possibly require a bailout.
Derivatives. Moody’s recently downgraded the credit ratings of 15 major banks around the world, and many of these banks will now be required to put up billions in additional collateral monies against derivatives exposures. The largest U.S. banks, including Citigroup and Morgan Stanley, have more than $200 trillion dollars of exposure to derivatives.
Derivatives play a vital role in risk management of both financial and non-financial institutions globally. There is concern, however, that derivative market operations destabilize the efficiency of these markets, especially if derivative instruments are misused. Also, with the derivatives market beginning to show signs of fracturing, at some point this situation will become a major disaster.
America’s middle class continues to be “gutted.” America once had the largest and most prosperous middle class in the history of the world. Today, millions of Americans are out of work and millions more have found themselves newly “relocated” from the middle class to the lower class. The American Dream is systematically being destroyed. “Close to half of all American workers are living month-to-month, and many American families have gone deep into debt as they struggle to pay the bills. Millions more are falling into poverty each year and dependence on the government is at an all-time high.”
Scores of U.S. municipalities are on the verge of financial disaster or bankruptcy. Just last week, Stockton, California, became the largest U.S. city ever to declare bankruptcy.
Many small business owners across America are facing financial ruin. According to the Christian Science Monitor, more than half of all small business owners in America cannot even afford to put food on the table from their earnings; and another survey found that almost a quarter of all small business owners have gone an entire year without pay. And with the Supreme Court upholding Obamacare, many small business owners say that they may have to let workers go because they won’t be able to afford to keep them under Obamacare.
Our country is being divided into “two Americas.” “The richest one percent now owns over 36 percent of all the wealth in the United States. That’s more than the net worth of the bottom 95 percent combined. This one percent has pocketed almost all of the wealth gains of the last decade,” says Chuck Collins of the Huffington Post. It’s becoming clear that the American Dream is quickly becoming the American Nightmare.
As the “rich get richer, and the poor get poorer,” we’re watching a slow-motion train wreck unfold that no one seems to know how to stop. Have we already passed the event horizon?
If history is an indicator, we could be facing another round of financial crisis this fall. According to a report by Luc Laeven and Fabian Valencia of the IMF, banking crises are more likely to arise in September than any other month of the year. Many of the nation’s worst financial crises occurred during the fall months, including the stock market crash of 1929, “Black Monday,” and the financial crisis of 2008.
Will the fall of 2012 bring more economic disaster for America? America desperately needs a new American Dream, but first we must wake up, and then do something about, the nightmare we are already in.
“It’s called the American Dream because you have to be asleep to believe it.” – George Carlin
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