Home » Welcome to the Third World » Welcome to the Third World, Part 6: Portraits of a Quiet Depression

Welcome to the Third World, Part 6: Portraits of a Quiet Depression

by John Rubino on August 7, 2012 · 101 comments

Last month I took a long, winding West Coast trip, partially for work and partially to see some old friends. It was…shocking. Almost without exception the old friends are having money or career troubles, in some cases catastrophically so. Most, to one degree or another, have lost the lifestyles they once saw as every well-educated American’s birthright.

These are people who expected to live the life of the 10%, if not the 1%, right through to an easy, low-stress retirement. That most didn’t make it is both scary and instructive for reasons I’ll get to in a minute. But first, some stories, with names and details changed for privacy, but otherwise true:

* Rebecca was an investment analyst right out of school, and a natural. We worked together in our late 20s and there was no doubt which of us was headed for bigger things. After a few years of promotions and big raises she took a new, more challenging job for way more money, rode it for a while in the 1990s, and then ran into one of the conflicts typical of finance and got fired — and never recovered. Today she’s divorced and working multiple crappy jobs while going on a never-ending series of interviews, trying desperately to get back the life that seemed like such a sure thing 15 years ago.

* Charles was a division head in a big regional company back in the early 1990s. A good-natured alpha male who dominated meetings and won clients over with cogent presentations, he seemed, despite a, um, complex personal life, to have unlimited options. His self-confidence and the hot market led him to go out on his own with a series of new companies. But none panned out, and now he’s working for people he might have hired back in the day, and earning less than he did 15 years ago.

* Tara and Mark ran a kick-ass (literally and figuratively) martial arts studio that by the late 1990s had hundreds of students, a dozen or so instructors and a jammed class schedule. More room meant more classes and more revenue, so during the real estate bubble they accepted a sweet-looking deal from a developer to anchor a new strip mall with a three-fold jump in space. The rent was high but manageable if a reasonable number of new students enrolled. Then a couple of instructors left, taking a sizable chunk of the student body with them, and the students that remained didn’t cover the rent. Tara and Mark lost the studio, their cars, house, and savings, and now live in a cramped apartment and teach for other studios at barely above minimum wage.

The list goes on; there were eight sets of friends on the trip, and six of them had stories with the same arc: smart, successful, overconfident, crash-and-burn. The other two were solvent but stressed.

That one or two from a sample this size would fall on hard times is statistically probable. That most end up this way is a sign of a world that has become a lot less forgiving. Back in the 80s and 90s, jobs and/or financing were everywhere and it was easy to recover from a misstep. The start-up didn’t work out? No problem, the big companies in your field are hiring. Need more money? Just tap one of the dozen pre-approved credit cards that hit your mailbox this month.

That’s not the case anymore. Very few fields are hiring, some for economic reasons and some, like publishing, because of technological change. And non-usurious credit has disappeared for all but those who don’t need it. So a mistake can take years to correct, if it’s fixable at all, and the downtime can be fatal to a middle-class lifestyle.

Austrian economics says that easy money sends false signals, leading people to make unwise decisions. Usually this is presented in terms of entrepreneurs over-expanding (thus creating “malinvestment”) and then going bust, but the same principal applies to individuals: when things are artificially easy because of low interest rates and rising inflation, we find it tempting to take big risks – because they don’t seem that big when jobs are plentiful and credit abundant. When the easy money stops flowing we end up out of work and unable to get back into our chosen fields.

This is what stage one of a depression looks like: Millions of people losing the middle-class lives they took for granted and falling several rungs into a different category – lower-middle-class, underemployed, working poor, destitute. But so far it’s been a quiet depression. If you’re working, as most people still are, life is tough but the detour feels at least potentially temporary. But lose a job and suddenly your old world and its assumptions evaporate. That’s what an increasingly large number of Americans are apparently going through right now.

Another group that isn’t represented here but must also be suffering is retirees who put away enough to live comfortably – assuming they could earn 5% a year on a bank CD. Now that the going rate is more like 0.5%, income doesn’t match outflows and the downward spiral gains momentum, as they have to eat into capital to live.

The question now is how much longer the depression stays quiet.

{ 94 comments… read them below or add one }

Jason Carter August 7, 2012 at 9:38 pm

Seems like a bummer, but there is a silver lining… less focus on the accumulation of wealth. How many of us are content with what we have? How many prioritize the health of our family and church above attaining a higher standard of living? Intelligence does not correlate with wisdom.

If you’re going to start a business, know your business well as you won’t have the forgiveness of easy money to gain experience on the job. The 3 examples above were lucky enough to have ridden the large wave of historic credit expansion. The first two relied on companies to employ them while the karate instructors over-expanded. Perhaps, Rebecca and Charles are disciplined enough to start a business of their own; more personally and financially rewarding. They seem to have great experience. We’re in a brave new world. No bank is going to lend money for a small business.

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Dirk August 14, 2012 at 4:21 pm

Church? You have got to be kidding me.

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Matt August 16, 2012 at 1:20 pm

Yes Church. The Lord Jesus Christ can give peace this world cannot. When your focus is on The Lord and the peace He offers and not the material things of this world set-backs are not so crushing. Look ahead 100 years not 20.

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paul August 24, 2012 at 4:39 pm

church……you are crazy mate.

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deb August 24, 2012 at 9:58 pm

we don’t have 20 years….Jesus Christ is returning soon. I do not believe in “pretrib” like we are outa hear before the final 7 years. we are hear till the end and the Lord gave me specific words in the middle of the night on 3/5/2012…Quit looking for the covenant ( the covenant of Daniel 9:24-27) you are in the final 7 years now. The next thing to look for is hte abomination of desolation. Religious/spiritual or not, believe it. I pray you do. Time is short….it is NOT going to get better BUT we I am looking forward to that day when I see him in the eastern sky…and seeing the words written on his thigh…KING OF KINGS, AND LORD OF LORDS. we have only 3-4 years to go…and prophecy states it is going to be worse than it is now.

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Tom August 24, 2012 at 10:45 pm
Freemon Sandlewould August 18, 2012 at 5:34 pm

Here’s the problem. The one dimension in which American life excels at is business. All others are second level for the most part. Freedom is so so here any more. However the rub is a socialist like Obama is taking USA’s only strong dimension and ruining it.

I know all this because 10 years ago I started my exit after a visit to Brazil. There I saw the comparisons of a different society. When I need money i work in the USA. When I want to live…..I go back to Brazil.

Discover the low consumption lifestyle and freedom people. And remember:

Anybody but Obama. He’s not helping and can never do so. Happiness will not be brought about by his anger.

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Willy2 August 7, 2012 at 10:47 pm

Foreigners bought from 1973 up to 2008 US Agency paper and thereby supported the US housing market. Now that support is gone and one John Rubino is surprised to see the country suffering ?

Guess what will happen now US interest rates have started to rise. Again foreigners unwilling to buy US T-bonds.

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Juan R August 7, 2012 at 10:57 pm

Two years ago I bought a house for a steal of price. Thanks for the recession. Anyhow, the neighbourhood that it is in used to be the minority middle class area (read barrio, the place where there were no caucasians). After a short while I began to notice that the area started to gentrify, more of the neighbourhood started to become the just ready to graduate/graduated college students who found that this was the only area that they could comfortably (pay rent, have money left over to party) afford. This really got me thinking, if they are parked here where is the minority middle class going to sink to?

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Emily August 7, 2012 at 11:03 pm

We are no where near the point where people like this will grab their torches and pitch forks. That is when you will see blood in the streets! The next step on this path is when the formerly middle class people end up on wellfare. The third step is when all the states and municipalities go broke trying to provide for their wellfare recipients and must turn everyone over to the Federal government which, then, becomes the big daddy-of-last-resort. Fourth step is when even the Federal gov goes bust and can’t afford anything except payments on the debt, so in order to survive, it must dump everyone receiving wellfare into the streets. Then, and only then, will you see the depression go explosive. And then — look out!

At that point there will be only two options left to people: a violent every-man-for-himself Mad Max world (that no sane person would want) or guerilla homesteading where we reclaim the national parks and golf courses and build gardens, barns, orchards, and fields which is what we SHOULD have been doing all along!

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Russell Shute August 11, 2012 at 4:21 am

I like your comment. Cuba is the center of permaculture and may show some hope for the future. As I understand it, we hit global peak oil about 2005.

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Emily August 7, 2012 at 11:38 pm

I should add that my homesteading scenario in no way excludes home-based businesses and small town businesses. A country like what Thomas Jefferson imagined where everyone provides for some or most of their own needs and sells their surplus to acquire the things they cannot get or make would be very stable and fair.

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Chris August 7, 2012 at 11:50 pm

I watch the western nations decline from the 80s when Ronald Reagan took office and globalisation was progressing in earnest. Extreme deregulations and free market had bankrupted the western nations and the people who gain from this are the super rich and the ruling elites. The decision makers are the winners. The problem is when the nation decline, the pie gets smaller and the tendency of failure for businesses or any career person will increase. May the elites come to their senses and stop the decline. Basically the top people are overpaid and self serving. The media is also a problem. America needs a Theodore Roosevelt. May the greatest among you be your servant.

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FunnyMunny August 8, 2012 at 4:38 am

@Chris

I applaud your logical chain of reasoning. If only we had never left the gold standard in 1971, we would never have had Reagan …

See where I am going?

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David Kachel August 8, 2012 at 2:55 pm

Absolutely NOT! Yours is the typical leftist/collectivist grasp of economics.
There is NO pie! There is no magical giant pile of cash from which some have taken “more than their fair share”. To believe this nonsense is to loudly proclaim, “Yes Mr. Government, I prefer to be your perpetual slave!”

Collectivist government has turned banking and Wall St. into a giant casino where the government promises the gamblers they will never lose (bail outs; the absolute STUPIDEST idea government ever had). Wouldn’t you bet billions too?

Self interest outweighs greed. No one will risk losing everything they have on a stupid high-risk investment unless “someone” promises to reimburse their losses.

Wall Street is quite plainly behaving badly, because they are encouraged to.

And banks, they create their own money out of thin air because… (wait for it)

Government gave them a license to.

It is ALL due to big, out-of-control government, and eager leftists trying to convince you that capitalism is the problem. We haven’t had real capitalism in this country for half a century. The government has their fingers in every pie and picks the winners and losers. Then they invest billions of taxpayer dollars in so-called alternative energy companies that, surprise, surprise, all go belly up!

Now I wonder why all the leftists want you to think everything is the fault of the rich and the greedy? Oh yeah, so you will surrender more power and more freedom, which is what they have really been after for nearly a century.

Study economics. Study the Federal Reserve. Study the history of leftists. Then you’ll know what’s really going on.

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Steven in Dallas August 8, 2012 at 6:36 pm

>> “Yes Mr. Government, I prefer to be your perpetual slave!”

The big government bogy man is a red herring. Truth is, we get the government that we deserve – and lazy, greedy voters who choose not to educate themselves about the issues get big, corrupt, expensive and intrusive governments. Between the government bogy man and the corporate/wallstreet/military-industrial-complex bogy man, I’ll choose to deal with the government bogy man because that’s the ONLY one that we even have a pretense of having control over. 99.9% of us are not on the board of directors, so we have squat for control over the decisions of the corporations of this country; but if you don’t like what your government is doing then get off your lazy a$$ and change it – that’s the only thing we can change other than ourselves.

(I’m NOT a fan of big governemnt, but I realize that some tasks can only be performed by government. Wall Street will screw this country over, and won’t stop until they have the gold out of your teeth. Gov ~can~ be just as bad, but only if we let it.)

Steven in Dallas

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paper is poverty August 9, 2012 at 4:28 am

I disagree that there is any difference between the US government and the corporate / Wall St / military industrial surveillance complex. Most politicians are now merely technocrats doing the bidding of those industries. No president has thwarted the military industrial complex since JFK.

And I am sort of tired of hearing about the stupid, ignorant voters (or worse, the non-voters). If you read some of the history of the early 20th century there were many activists who argued against voting and in favor of direct actions: boycotts, protests, strikes, general strikes, etc. And in the end that was what improved life for the common people– NOT voting.

In federal elections both candidates are chosen by the elites and serve the elites, and the whole electoral circus merely drains the attention and resources of the citizenry, which would best be engaged elsewhere (at least in local and state elections, if not in direct actions).

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Eric August 25, 2012 at 1:23 pm

$3.6trillion/year to feed a “red herring”?

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Rick August 8, 2012 at 8:53 pm

So right wing conservatives are really leftist? (Patriot Act come to mind)?

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bob August 8, 2012 at 9:19 pm

Right on, Dave.

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paper is poverty August 9, 2012 at 3:48 am

But the banks and the corporations control government, so it becomes a chicken-and-egg problem. Congress and the President mostly just do what they are told to do.

You sure are quick to pigeonhole someone as a “typical leftist” rather than to try to find common ground. It’s as if you already have a script in your head for how this left-right economics debate is going to go– but maybe this guy isn’t the boilerplate leftist you imagine.

Globalization is a joint project of the elites and government and is supported by both parties, and there’s no denying it has impoverished the United States. You might disagree on the details but if both of you could agree on re-localization of power, you’d be fighting on the same side.

And if you dislike the term “pie” just insert “GDP”. Don’t freak out about some word that has (apparently) huge connotations… people are way too easily programmed into hating each other.

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JJ Suprise August 9, 2012 at 2:30 pm

SPOT ON David Kachel. Couldn’t have spelled it out better myself. Thanks.

HooDeeHoo!

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January24 August 9, 2012 at 2:45 pm

I completely agree with you, David. American private enterprise worked just fine before the government decided to get involved in every little nook and cranny. The federal government IS the culprit. For all of it.

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Sacia August 9, 2012 at 7:05 pm

Very well said…couldn’t have put it better…

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bert sargent August 11, 2012 at 12:14 pm

this leaves out the reason for the demise of the u.s. and it is the governments control of the un-educational schools. look at the choice
for commander in thief facing our country ,well you deserve what you voted for folks and the body bag count will increase . the future may have one
for you also as times get out of control. bert, west colo

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Chris August 12, 2012 at 1:41 am

If you look at economic strategy on a macro basis, US has trade deficit all the time. This translate into a bleeding economy. No way the man on the street is going to benefit fromsuch an economy. It means on a broad basis, the country will fail. Why then the government keep on with this strategy when it will surely fail. Because some people in powerful positions are benefitting big time. The people in decision making positions are paying themselves too much and would like the scheme to carry on, even charities CEOs are overpaying themselves. Ultimately all will suffer when the system totally fail just like the Russians.

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Dirk August 14, 2012 at 4:25 pm

Sounds like rich people talk right there

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slavador August 8, 2012 at 12:48 am

Up here in Western Canada the mines, light manufacturing and oil and gas fields are quite busy. There are not nearly enough youth and marginal adults to fill the McJobs. I believe that things are good and improving. Surely there are great swathes of California, Oregon and Montana with similar characteristics. Those with nebulously useful skills like real estate salesmen, nail salon professionals and martial arts coaches have had to get real jobs up here as well. Folks that want compensation for their hobbies rather than what is in demand get disappointed in all economies…

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Wm of the High Desert August 8, 2012 at 2:34 am

My grandparents invented an information biz in 1919. In 1997 a merger of two giants in my industry was declared by the FTC to be a monopoly formation and they had me on a conference call with several FTC lawyers. They said they were going to create a new giant national coverage company to compete with them. They asked me if I wanted it. I said no. My biz is doing fine. The one they created by taking assets, information, from the merged guys and setting up a willing private partner with all the free stuff, lost lots of money for five years and are long gone. You see, they merged because there wasn’t enough pickins for both of them. There are many temptations out there, I admit to a flash of WOW at their offer, but I abhor poverty too much for that kind of foolishness.

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Frank August 8, 2012 at 2:40 am

Chris,
The repeal of Glass-Steagall was voted for by both parties (yes, both Glass and Steagall were repubs but the dems got paid too, including Blarney Frank, Steny Hoyer, James Moron, etc.) and signed by Bill Clinton. And anyway the regulation argument is a false one due to the fact that the banks control the regulatory agencies such as the SEC, FDIC, etc. More regs, less regs, it doesn’t matter because nobody gets prosecuted for any financial crimes. The Congress, again both sides, are in the pockets of the banking lobby, insurance, big pharma, etc. Tastes great, less filling, either way its Miller Lite.

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Frank August 8, 2012 at 2:42 am

Oh, and the western nations declined due them becoming welfare states that believe money grows on trees. It doesn’t.

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Gregg August 8, 2012 at 11:37 am

@Frank

RE: (Quote) ”…the regulation argument is a false one due to the fact that the banks control the regulatory agencies such as the SEC, FDIC, etc. More regs, less regs, it doesn’t matter because nobody gets prosecuted for any financial crimes.”

As much as that is true (i.e. ”non-existent prosecution”), repealed regulations such as Glass-Stegall resulted directly in (and would not have otherwise been able to result in) what we now call ”Too Big To Fail” banksters. With no ”too big to fail”, there would have been no ”bailouts”. No bailouts, no current problems (as they _currently_ exist) — Which is to say we’d be swimming in different unsolvable problems; unsolvable due to the fact that they all stem from floating fiat currency via Nixon 1971.

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Chris August 8, 2012 at 12:55 pm

Do not demonise those on welfare. If jobs were lost by bad decisions made by the government, not having plans to replace jobs that cannot compete with low wage countries, then the jobless are not to be blamed. It is like going to war in Iraq based on fantasied reasons and when people go against it, they are labelled as unpatrotic and they are shouted down. This type of argument had been used far too often and is very frustrating. It is not clever argument. There is no way that US or other western nations can go on having budget deficits and trade deficits. It is not sustainable. The moment inflation starts to build up, it will feed on itself. It is the bond market that is acting like a dam that is holding the money that could create the inflation. Once those money starts to flow away from the bond market, that is when inflation fire will become hard to stop. Remember 1970s. Interest rate will have to be raised and this will add more trouble to the bond market and more money will flow out of the bond market to fuel the inflation. This is going to be frightening.

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January24 August 9, 2012 at 2:49 pm

You’re completely right, Frank. Democrat President Lyndon Johnson destroyed what was — up until then — a perfectly functional, perfectly affordable health care system. Middle class people could, and did, pay for health care (including hospitalizations) out of salary.

It was only when Johnson told the doctors and hospitals, “Charge whatever you want to and send the bill to Uncle Sam” that the beginning of the end came.

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Eric August 25, 2012 at 1:27 pm

Chris you are correct on the repeal of Glass-Steagal.
In the late 90′s when I heard they got the votes in Congress I shouted “do they want another depression?” What arrogance.
That one act led me to believe that too many politicians are in the bag for the banks in one way or another. After all you need money to campaign.

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rafeal August 8, 2012 at 2:44 am

Learn from the ant as the Bible says- they store up for the coming winter. Did any of your friends save up when times were good or spent it as fast as possible? Are we saving now for even harder times?

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paper is poverty August 8, 2012 at 4:15 pm

Contrary to popular belief it is possible to have savings and still fall on hard times.

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deb August 24, 2012 at 10:04 pm

you are right. I am preparing for what is to come. Food shortages, war, the mark of the beast, you name it. if you have any extra money or even if you don’t try to buy canned food and water unless you can grow your own. Beware…do not be deceived. prepare…your heart with Jesus first, then do what you can to prepare for what is to come. the final 3.5 years of the last of this age as we know it before we see Jesus Christ. NO JOKE. read your bible. when you see Damascus destroyed in one day…look it up …prophecied to happen in the last days. then…just pray you will be able to make it till Jesus returns at the end of the 3.5 years.

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Mark August 8, 2012 at 2:49 am

I graduated in the top quartile of my Electrical Engineering/Computer Science class in 2002, entering an industry that was supposed to be hot and in high demand. Except that the hiring basically stopped of domestic citizens in 2000-2001, and never really resumed (a few folks at social media startups excepted). I have had the opportunity to visit the San Jose/Silicon Valley area a number of times in the past few years and the devastation is quite apparent — its been taken over by foreigners (despite most of my fellow grads being citizens), and its practically devoid of the nightlife that existed a decade and a half prior.

The Silicon Valley used to account for 10% of the USA’s exports. Now the Valley is likely a net importer from overseas.

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FunnyMunny August 8, 2012 at 4:40 am

Did you hear about the Tech Bubble? It was some wild thing, man.

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Doug August 8, 2012 at 11:35 am

Speaking of taken over by foreigners, seems you can expect more of that in the very near future. China will be buying more of our real estate, manufacturing and natural resources in order to get out of dollars. They’re already scaling back treasury purchases, and like us who have taken the red pill, are looking for something real instead of fiat trash. My 12 year old is taking French in school. I told him several times to take Chinese instead (to no avail). If you have to take a foreign language, it may as well be one you could use!

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Helix6 August 10, 2012 at 6:05 am

What the Chinese will be buying from us is military hardware. Or the resources needed to produce it on their own. How do you folks think this is going to end, anyway?

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swamp August 25, 2012 at 12:45 am

It’s going to end very badly, for the USA, because China owns almost all of the Rare Earth Minerals needed for all military operations, your computer, for NASA, for satellites, and just about everything that is micro chipped. The USA and other places have some Rare Minerals, but start up to mining takes about 10 years. That’s an eon in computer time.

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Freeiran August 22, 2012 at 5:44 pm

I’m a Chinese.

Almost all (99.9%) of the communist high, medium and low rank officers send their wives and kids to USA, Canada, Australia ….etc. And you want your kid to learn Chinese to earn RMB?

You western countries have been importing cheap cheap china made goods in the past decades. Not only the basic industries are lost. Free trade is a double edge sword. You import not only the goods but also their social system!

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John Green August 9, 2012 at 7:26 pm

We continue to import over one million legal immigrants per year. Many of them are educated and work hard, and are by no means bad people, but there is still no doubt that their presence here has helped businesses to keep a lid on wages and benefits and avoid hiring those pesky U.S. citizens. Other immigrants are “refugees” and immediately go on welfare. We also get hundreds of thousands of illegal immigrants each year, which puts downward pressure on wages in the sorts of jobs that the working poor are most likely to get. The people most in favor of this (liberal Democrats) tend to be the ones most likely to complain about the increase in economic inequality in our country and are happy to call people like me who believe we should enforce immigration law bigots.

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Bruce Lustigson August 8, 2012 at 3:00 am

I also recently had an experience that relates to the quiet depression theme. This past weekend my family and I went on a short trip to the Sonoma CA coast stopping for an evening in Santa Rosa, a large town in the middle of wine-country about 50 miles north of San Francisco. It had been at more than 10 years since I had visited Santa Rosa and I was expecting the place to be basking in new development and displaying the ubiquitous wealth like many other bay area communities. While there certainly was new development including a new shopping mall and renovated area near downtown with several good restaurants, I noticed something very interesting and also disconcerting. We were staying at the Hyatt in a very nice section of the town and when I went out in the morning to walk our dog I observed a multitude of people in the area with backpacks who had clearly been living on the streets for quite some time. I was approached by one of them and his female companion. He was very polite and I could tell he wanted to hit me up for money but never did. These people reminded me of the vagabond types one pictures from the great depression. And during the previous evening, we went for an evening stroll along the river near the hotel which was abruptly ended when I noted that most of the other folks on the river walk appeared to be drug dealers or gangster types with pit bulls. Yes, it’s becoming increasingly difficult to hide the tragic fallout from our “silent” depression. These homeless people leave one with the chilling feeling that bekons with “take a good look at me, cause one day soon you and I may share the same fate”.

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Gary W August 9, 2012 at 2:35 pm

Bruce you are right on. My brother in law just got out of prison after being locked up for 12 years, and the first thing he noticed was the increase of homeless people standing on street corners. He could not believe his eyes. After reading many of these posts I think about the 90′s when I had a thriving start up company that slowly went down hill because of number 1:Insurance costs, Number 2: inflation and cost of raw materials. 3: taxes (payroll especially) and large corporations who could pay more for Labor. I finally sold out and scaled back before retirement. I am now comfortable living at the poverty level with no bills and enough food and bullets to last me a couple of years.

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paper is poverty August 8, 2012 at 3:36 am

Those who have fallen to lower economic levels face a whole host of hassles and expenses which the middle class doesn’t have to deal with. A friend who lives on the edge of real poverty has always had to pay deposits to the electric company in order to have the power turned on, despite never having been in arrears on the electric bill. This last move to a rented house, it was a $350 deposit. (I, a lucky member of middle class, have never paid an electricity deposit in my life.) The rental truck company wanted a $150 deposit which they then held for 5 business days after the truck was returned, which my friend had not expected, and which more than zeroed out the checking account. Naturally the bank debits the largest checks first as a matter of policy, thus maximizing the number of overdraft fees ($35 a pop, even on a $20 check). Security deposits on rentals are, it goes without saying, always the legal maximum. It used to be that credit cards were the fallback, but once you’ve declared bankruptcy that disappears as well and you’re faced with payday loan outfits charging 400% annualized interest.

There are a great many people in the lower middle class and the working poor who get screwed over for lack of $300. If wages had kept pace with real inflation, that $300 would be there.

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Don't take me seriously sarcasm August 8, 2012 at 12:06 pm

@paper is poverty

Well, if yor frend, thay bum, wood just git sacan job and be willed to wurk 26 owers a day, he be abled to pay hes bells AND have they exter $300 dallars sateed in hes bank accowt.

NO MERR ENTITMENTS! PUT THEY BUMS OWT ON THEY STRATE! MAKE THEYM WURK 26 OWERS A DAY FOR WATT AMOWNS TO LAYS THAIN MINEMUM WHAGE WHYS 20 YARSGO!!!

VOTE ROMNEY!!!

YEAH BABY!!!

BooYah!… BooYah!… BooYah!!!

Ps: Uh, Um, Note my screen name above…

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Beggar index August 8, 2012 at 6:49 am

It’s the beggars

I retired just after 9/11. Actually I had no choice. My wife retired last year at my insistence. We still have 3 kids at home going to college so things are pretty tight. Nevertheless I still keep $5 bucks in my wallet for a beggar. I try to size up the beggar and make a decision as to how old s/he is. You may think I’m stupid giving away money but it is just my thing.

Well guess what. There are so many beggars now. What’s going on? Maybe the economists should have a beggar index.

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deb August 24, 2012 at 10:07 pm

you will be blessed for this.

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Goldman August 8, 2012 at 12:59 pm

John,

While to private sector jobs die the non-profits thrive and the days of being poor and working for a non-profit are long gone. In the last 6 months 3-4 friends have secured new jobs and the have all move into non-profit companies (these companies include University, hospital, and research organizations. Another friend told me that the smart graduating Dental students in Massachusetts are choosing to work in non-profti dentistry (yes, non-profit dentistry pays approximately $250,000-$300,000 and you can count on the Government to pay the bills of all your patients).

Want to see how lucrative the non-productive sector of our society has become look at local charities – may latest example is a Boston based shelter for the homeless.

Working for Homeless Shelter in Boston is apparently some of the best work in town. The executives of the Pine Street Inn ( a Mens homeless shelter). The top seven executives for the Pine Street Inn are making $100,000 or more. According to the IRS 990 forms for the Pine Street Inn for 2011, the President makes $159,000 plus $13,000 in other comp, the CFI is paid $127,000, the VP for Development makes $148,000 plus $16K in other, VP for Programs makes $123,000. The best part of these jobs is your customer base is always expanding and you don’t need to be successful.

The Pine Street Inn is a Homeless Shelter and it offers executive salaries that are comparable or better than most people I know in the private sector.

So, more and more the best place to be is an organization or Industry that receives some form of government support.

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sharonsj August 8, 2012 at 10:19 pm

Your numbers seem too high. I tried to google info but all I could find was that non-profit dentists in New Hampshire earned about $165,000. Other dentists’ salaries varied depending on the state, non-profit or not, and could be as low as $40,000 in (where else?) Texas.

I also checked out Pine Street homeless shelter. The employees get $11 to $16 an hour, one salary was for $40,000. If the execs get paid that much, I wouldn’t be surprised because–non-profit or not, the higher-ups suck up all the money and don’t leave a lot for the working stiffs.

It isn’t only non-profit companies that get government money. Every damn CEO of every corporation has taken government money, including Mitt Romney. If it wasn’t for government money, this country would come to a standstill.

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Jason Carter August 9, 2012 at 1:24 am

That’s right. You didn’t build that business, the government did.

My pharmacy competes with a 340b clinic in the same town that can acquire medication at a fraction of the cost. Poor in service but long on benefits are the norm, not the exception. The top execs make $300k. My wife’s friend is a CCO for another not-for-profit and makes 150k+ with only a master’s degree in psychology. What can you do with a master’s degree in psychology besides teach? Apparently, make a lot more money via tax-payer subsidized companies that claim to be helping the poor while giving themselves fat salaries and benefits.

The best the government can do is misallocate precious capital that would be otherwise used to create real jobs and increase our standard of living. The worst government can do is actively destroy free-market jobs, vilify the hard-working and successful, and make the middle class welfare dependent.

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Goldman August 9, 2012 at 2:51 pm

Jason, I feel your pain its impossible to compete with a non-profit that has a steady flow of cash from the Government and an ever expanding list of customers (immigrants and downsized americans).

Sharon, you need to do better research the Pine Street Inn Salary are listed in the IRS 990 forms – I took the info from the 2010 or 11 forms. Check out Miles for Smiles – a non-profit Dentistry business – two dentist and a number of hygenists – http://www.milesofsmilesinc.org/images/11annualreport.pdf Keep in mind that my numbers were for Boston area Salaries (much higher cost of living than Missouri). There are hundreds of these non-profit dentistry units that basically help bid up the cost of dentistry for the private Sector Americans that have jobs. If these were true Charities were the Dentist were donating their time and getting a tax credit for their donated time non-profit dentistry would be such a problem. This non-profit Dentistry clinic with two dentist had costs (including salaries) of $700,000. The services that the Government buys for immigrants and poor results in inflating the costs of everyone else buying these services.

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January24 August 9, 2012 at 2:55 pm

Ronald Reagan said the scariest words in the English language are, “We’re from the government and we’re here to help you.” He was right.

The federal government is about 85% finished with its work of utterly destroying American society. Your examples, Jason, illustrate perfectly how government programs are destroying private enterprise. I think that’s the way Obama wants it. But either way, that is definitely the outcome.

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Gary W August 9, 2012 at 2:45 pm

That may all come to an end soon.

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Wm of the High Desert August 8, 2012 at 2:41 pm

Automation.

It concentrates wealth.

What to do? Socialism sucks soul.

There used to be 4 at my little business, now it’s just me, I didn’t need to hire replacements when the other 3 moved on.

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Wm of the High Desert August 8, 2012 at 2:46 pm

Automation also saved my financial a s s
Learning Pascal, dBase, Visual Basic, SQL coding was my best investment, and now I play with C coding model autopilots

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TC August 8, 2012 at 9:52 pm

The New World Order requires everyone 100% dependent on government or one of its corporations. Independent businesses give individuals political power to challenge the elite and so must disappear. This article and comments describe a way stations on this journey where the most talented are denied the possibility of freedom and are forced into servitude. The elite who print money and use it to control armies and media are delighted. As for the rest of us, it’s great to still have the right to complain, but for how long? The elite keep us so comfortable that we are willing to give up our last chance for freedom Ron Paul and embrace their men Robama. When we finally have nothing but pitchforks, will they work?

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Tom August 8, 2012 at 10:35 pm

With benefits, the average American makes $130/day. The average China worker makes $12/day. Things will continue to contract until both reach parity. The depression has many years to run.

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Gary W August 9, 2012 at 2:50 pm

Tom Martial Law will make it to your door before your theory comes to pass. A vote for the status quo either side will only hasten the outcome.

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Helix6 August 10, 2012 at 6:25 am

I hope you’re not seriously using the official exchange rate between CHY and USD to make that earnings comparison. As an example, consider the cost of a pound of rice in China and in the US. The Chinese pay about 3.6 yuan for one kilogram of rice. In American money this comes out to about .44 cents per kilogram, or 20 cents per pound. In the US, a pound of rice costs about $1.00 in a grocery store, but an be as low as 50 cents per pound for inferior grains in bulk on sale. So for this commodity, which is ccomonly used in both countries, Americans pay 2.5 to 5 times as much according to the “official” exchange rate. I invite you to compare other (non-imported) commodities.

If the exchange rate was anything even remotely resembling reality, incomes in China would be seen as being much closer to those in Japan and other developed Asian economies, not to mention the US. It is only the manipulation of the two curriencies via money printing and asset purchases that perpetuates the competitive disadvantage of the US relative to China.

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Fred August 9, 2012 at 12:34 am

I can totally sympathize with most of these stories. I was a successful college dean in a growing school when we changed presidents and I came up on the short list. we had grown the school by 900% from around 100 studnents to over 1000 in just four short years. I was told my contract would not be renewed for the following year and told that I would be accepted as an adjunct instructor the next day. going from a salary of over $60,000 a year to less that $25,000 has really hurt. I have had many interviews across the country, the first being a phone interview followed be a face-to-face. Being over 60 has killed me on the face-to-face. Success at previous institutions doesn’t seem to matter. Now I am looking at an early dip into Social Security that will put us at the pvoerty level. something I never planned on. The thing is I don’t want to retire. My health is good and I am a workaholic. I just want to work full time for a decent salary.

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truthslinger August 9, 2012 at 2:15 pm

i appreciate that you are 60, and in my opinion, you should not have to work at all or very hard, but you are saying you are a workaholic and complaining no one will “hire” you. but that is exactly the attitude that has brought america into this. everyone looking for someone to hire them to provide some semiworthless service and overpay them for it. nobody is thinking about what they can produce. i always do, and thats why i havent run into real problems, i have been getting less for my goods and services but so is everyone, i am still surviving and i am doing what i can to convince others and get my senators to AUDIT the fed. that is where the base of this problem is and if you are doing nothing on that front, you have no reason to compain.

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Jj August 9, 2012 at 12:38 am

Jeez, did no one notice the Canadian saying there are jobs up there? My Canuck cousins have long said the tar sands north of Edmonton are screaming for people. N Dakota has now jumped in. In my day it was the Alaska pipe line, and in 3 yrs the Pace brothers came home paying cash for their houses, which they still live in. Break out some Jack London books and get a clue. This is going to get tough, but we’ll get through because WE Will Have To. There comes a point where you turn and face what is coming at you. Until then, nothing said here surprises me

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John Braintree August 9, 2012 at 12:57 am

I read articles like this all the time and can never, ever begin to understand why, all these things being so, our government goes right on spending like there’s no tomorrow, the very thing that got us into this mess. What are they thinking? What are the American people thinking? Why do they not demand fiscal sanity of their law makers? It looks like we are going right over the cliff and when we do, my question will be, don’t tell me you are surprised, what did you expect?!

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January24 August 9, 2012 at 2:58 pm

John,

All across America, Tea Party candidates who have made an absolute pledge to reduce government spending, are being elected. This is a very good thing. Keep voting Republican and eventually we will get the government back under control. The new fiscally disciplined candidates “get it.”

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John Green August 9, 2012 at 7:55 pm

Be very selective about which Republicans you support. The Tea Party types have often been all too happy to endorse the same mainstream neocon Republicans that got us into this mess. Does your Republican candidate want a war with Iran? Most do. Wars are very expensive. Do you want jihadists trying to bring us down for the next 50 years? Start a war with Iran. The unconstitutional War on Terror is also very expensive. One of the biggest growth sectors of the past decade has been the Department of Homeland Security, including the notorious TSA. I can count on one hand, without using my thumb, the number of Republican representatives or senators that want to get rid of the DHS.

Remember, it is easy for politicians to promise to cut the spending. Unless they give you a list of the things they intend to cut, complete with numbers that make sense, don’t believe them. Ron Paul at least stated what he wants to cut, but hardly anybody else does.

Of course the Democrats are hopeless. So the rational thing to do is vote third party. Your guy won’t win but at least you didn’t vote for evil.

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Antiehypocrite November 11, 2012 at 1:39 am

Are you retarded?

The Tea Party is a joke – it’s funded by some of the craziest right wing lunatics in America – http://www.nytimes.com/2010/08/29/opinion/29rich.html?_r=0

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Great White August 9, 2012 at 5:11 am

John – I have told this short story a couple of times before, but I will share it again, since it relates so well to your article: About 18 months ago in California, I met a very nice elderly lady/real estate agent who was showing a home for sale. She was in her late 60′s. She and her husband were both real estate agents. They had recently moved to a new city in California and they had their previous home up for sale. She told me that “they were about to lose that home.” They had their home listed for sale for many months and kept lowering the price on their home to no avail. Unfortunately, they were not aggressive enough in lowering the price of their home, and the downward spiral in the real estate market was more aggressive than their pricing stategy. She said “that home was a big part of our retirement.” She also said that the loss of the home was a big reason that she was still working. I was absolutely astounded by what she told me. I couldn’t believe that two hard working real estate professionals were outsmarted by the crashing market. She was the nicest lady, and had sold real estate for many years. I could tell she was a professional, hard working lady, but unfortunately her golden years were transformed into the “I need to work to live” years.

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Bruce C. August 9, 2012 at 1:32 pm

“The question now is how much longer the depression stays quiet.”

That’s an interesting question for a number of reasons.

I think that will depend upon what people think about their circumstances and the reason(s) for them, and maybe even the solutions to them.

Every one’s experiences are unique and so are the ways that people interpret them and react to them. It’s been said that it’s not so important what happens to you but how you respond to what happens.

I know some people who are embarrassed about their situation so they don’t like to talk about it and evade the issue. On the other hand, I also know a number of people who have – at least outwardly – become very reflective and consider their circumstances to be a blessing in disguise, forcing them to appreciate what they do have materially and the value of non-material things (health, family, friends, etc.) Then there are some who are inclined to blame but they don’t know who or what to attack, and if they blame themselves or believe in karma or religious justice then there really isn’t anything “external” to complain about.

Compounding all of this are some of the many conflicting mass beliefs that people have about politics, politicians, government, the justice system, the financial system, etc. Supposedly Americans have lost on average about 40% of their wealth since 2008 yet everyone seems seems to just accept that. No investigations, crimes declared or indictments made concerning the financial crisis, and no one seems to care. The scandals at MF Global, PGHBest, the LIBOR system, and possibly Knight capital are ignored. Only about 15% of those polled have ever heard of Jamie Dimon. Et cetera.

It’s hard to say what will get people to react, other than taking away their cell phones or cutting off their CABLE or internet connections. My sense is that most people are beginning to accept a permanently lower standard of living in certain ways. They’re almost like drug addicts. The present circumstances also remind me of what the early eugenists envisioned in the 1920’s, that there are “technologies” that can be applied to the masses that will literally engender feelings of satisfaction and even happiness despite living amidst otherwise quite appalling conditions.

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PJ McFlur August 9, 2012 at 2:14 pm

Exactly. There will be no recovery.. Only acceptance of a lower standard of living.

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Antiehypocrite November 11, 2012 at 1:35 am

Want to know if people will revolt?

Take a look at countries like the Philippines – huge polarization of wealth.

Do they revolt? Nope.

As Americans are beaten down and told it’s their fault they too will accept their lot – buy lottery tickets – and never rise up

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Adam August 9, 2012 at 2:49 pm

When all you f-ing idiots stop arguing about whether the “left wing” or “right wing” is the cause of all your problems — and realize that the oligarchy, the richest people in the country — are the problem — you aren’t going to get anywhere.

While you sit around arguing about whether Romney or Obama is better than the other — these right wing and left wing a-holes are out playing golf together and clinging their champagne glasses toasting to what a bunch of f-ing idiots all of you are and how easy it was to steal everything from you.

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paper is poverty August 9, 2012 at 3:15 pm

Amen.

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Praetorean August 19, 2012 at 6:35 pm

Their stealing it from you to.

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Antiehypocrite November 11, 2012 at 1:33 am

You got it Pontiac

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nader paul kucinich gravel mckinney baldwin ventura sheehan perot carter August 9, 2012 at 2:51 pm

we shall defend our island, whatever the cost may be

… we shall never surrender

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Gary W August 9, 2012 at 3:06 pm

I believe the best thing many of you can do for yourself and your loved ones is prepare for the worst by hoarding food ,guns and ammunition. You will need to protect your family in the next few months or years. Water is the most important thing. Buy a water filter such as a Berkey that can filter mud puddle water if necessary. as much non perishable food as possible and items for barter. The Republican National Convention at the end of this month may be the main theater of what is coming. The government is preparing for mass unrest and martial law. The people are behind Ron Paul believing he is our last hope regardless of what you hear from main stream Elitist media. You do not have much time to prepare the time is near. When they crash the dollar your paper money will be worthless. Mortgages will not be paid and housing prices will crash. the grocery stores will have empty shelves. Turn to God. He is our only hope.

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Gary W August 10, 2012 at 1:09 am
Antiehypocrite November 11, 2012 at 1:32 am

No. What you should do is buy enough cyanide for your entire family – suicide IS a better solution

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TheZeitGeistMovement August 9, 2012 at 6:08 pm

Ron Paul 2012, Gary Johnson 2012, or The Zeitgeist Movement would be 100x better than what we have today. I’m a longtime libertarian that’s come to the conclusion that what we need today is a RBE (Resource Based Economy).

Google The Zeitgeist Movement & Open Source Ecology. We need to start thinking completely outside of the box.

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On another note August 10, 2012 at 10:00 pm

On another note John, I don’t believe all of this sudden “drought in the US” crap we’ve been seeing lately. I think it is most likely propaganda, and that the government will use it as an excuse to why food prices will be going through the ceiling! “It’s the drought.” No, it will really be QE-3 (aka inflation of the money supply). This will surely make us all poorer, and will make this depression even worse.

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Antiehypocrite November 11, 2012 at 1:31 am

And what is your evidence for this?

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Tactical Zen August 11, 2012 at 9:44 am

I watched a program on NatGeo about the drug trafficking in Rio de Janero. One young man said “I can’t get a job but working in the drug business I make enough to support my family”. This is the future coming to the USA very soon. So, if you want to make a decent living, quit thinking inside the box and start thinking about all the illegal things people do to eke out a living. For example, cigarette taxes are insane – wholesale stealing of semi trucks loaded with cigarettes may become common. Or (legal) drugs transfer holdups. Kinda like the wild west only systemic through society. Lot’s of “shrinkage”.

Of course, you’ll have to be prepared for this societal change regardless of whether you’re a participant or observer. Just be sure to carry your Mac 11 on a sling under your coat and life is good.

I wish I were kidding, but I’m not. This is where society is heading. We live in Rome, it is collapsing due to rot and corruption, it is AD 375 and there is nowhere better at the moment. Repeat 2012.

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Steve August 13, 2012 at 3:23 pm

Government and business need to be balanced. When business is not sufficiently controlled, you get piracy. When govt. dominates business, we get Facism. Unfortunately, the unbalanced actions have already occurred; we are starting to reap the inevitable, painful consequences and they will last for a decade or so–a similar amount of time it took to get us here. The blame game (and Monday Morning Quarterbacking) just rubs salt in the wounds. Hunker down, buy some gold, grow a garden, and count your blessings. Don’t trust 90% of what you hear, and 50% of what you tell yourself!

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Jerome Eisen August 14, 2012 at 3:15 am

I would like to add they also live in “Quiet Desperation”

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swamp August 25, 2012 at 12:26 am

Rising tides lift all boats. The matrial arts craze was a fad, fed by the housing equity ATM. Greed got in their way, and ignorance. There’s just too many dumbed down people to even know where to begin. I live near Silicon Valley and anyone who could fog a mirror had a six figure job. Now most of them are pet sitting. Most Americans have not had what it takes to compete since the last generation in the 1960′s.

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Tom Jeffries August 28, 2012 at 6:04 am

I have had the pleasure of talking with Mr. Rubino, on many occasions and he is is bang on with this post.

Let me give you a fast two pronged reason why he is right about this being a Quiet Depression.

As I write you, it’s 7:30 am in Paris. I couldn’t stand hearing all the news from the EuroZone being a dead turkey and so I wanted to get a feeling of what it’s like here. In a word? Nervous. Talking to retailers, cab drivers, RE agents etc – everyone is screaming. The cab driver we had last night said he had a shoe business for thirty years – “poof”. “No Business – nobody has ten centimes”.

Yes, the shops have people (it is back to school time) – but even the woman at H and M said it’s about 1/2 as busy. High VAT, no jobs, and a growing cadre of under employed College Grads is leading to a lot of harsh feelings, that are starting to bubble. No one wants THEIR money to bail out broke Spain, Italy and the other Club Med jurisdictions, that spent like drunken sailors. Ireland? Is anyone left? (*Meet Irish everyday in Canada – newly arrived – desperate – just like another era – it’s very disturbing).

In Canada – in my home Province of BC – we are seeing the start of a Housing Disaster, that is all too familiar to Mr. Rubino’s readers. Desperate boomers thought they would simply cash out their inflated pieces of stucco and live the life of riley. WRONG. Too much supply, tightening credit, and stupid speculation in a recourse jurisdiction means “house Rich – BUSTED”. Kids can’t buy the houses, with a job as a Barista.

Unpaid Intern gigs are the order of the day for many grads and even in Academia and Law and Science, the money is pitiful. Meanwhile all these students have gone into student debt that will never be forgiven. Imagine starting your life as an “adult” – stone broke because you have to pay a loan off, before you eat?

I will make a prediction that we are going to see all heck break loose in Europe and China’s hard landing is going to take your breath away. As for USA ? TROUBLE, with a capital T.
I am glad I am seeing The Louvre today, because we won’t be back in Paris for a long time. How the locals can afford food and lodging and the taxes are beyond me.

In short = the whole world is deleveraging – and if you are specking or you have been using leverage – it’s great on the way up – and death in reverse.

Stay liquid, my friends.

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DESMOND August 31, 2012 at 8:14 am

IT IS TOTALLY DIFFERENT IN OUR COUNTRY IN SINGAPORE. WE ARE HAVING 0.2% UNEMPLOYMENT AND EVERYHTING LOOK PROMISING FOR THE FUTURE. ALL THIS DIFFERENT IS DUE TO THE GOVERNMENT OF SINGAPORE. OUR GOVERNMENT BELIEVE ON NOT OVER SPENDING AND WE HAVE SURPLUS EVERY YEAR.

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AnotherAsian December 30, 2012 at 4:29 pm

Another important point is that your country is filled with people of Asian origin (mostly Chinese, some Indians, etc). They are naturally thrifty and with some nudging from a largely responsible Govt, it makes Singapore an economically sound place to lie in.

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W.L. Williams September 2, 2012 at 1:05 am

Any organized religious organization with the possible exception of Buddhism is part of the problem. Not only have over half the wars in the past 500 years in Western Europe been about differences in religious belief, but the ability of religion to control the minds of the believers — all have allowed dictatorial governments and other negative movements to use “the cross” — along with the flag (nationalism) to hide trends and truthfulness about events from the people so successfully.
As the US enters more fascist territory I expect religious groups to increase their control and power.

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W.L. Williams September 2, 2012 at 1:22 am

The problem is that massive corruption of government by BIG BUSINESS has turned the system into crony capitalism. BIG banks and corporations make all the government decisions, push the media into supporting more and more wars that we never win.
If you speak Portuguese you may be smart to go to Brazil to live. The last time I looked, Brazil was not opening military bases on all the continents – or – planning two more wars (Syria and Iran) after finishing the two presently being conducted.

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