Middle Class Is Crashing

The Economic Collapse comes to the same conclusion -

If you haven’t read “It’s Impossible to Get By In the US”by Graham Summers of Phoenix Capital Research, you really need to. In his article, Summers analyzes the expenses of a typical family making the median U.S. household income of $50,300 (he was using 2008 figures). According to Summers, if a family making that much did everything right financially, they would maybe have a couple hundred bucks at the end of the month for discretionary spending. But if they overpaid for their house or had any consumer debt then according to his calculations the typical American family would be operating in the red.

The truth is that the day is fast approaching when it will not be possible for the average American family to make it from month to month.

Even now record numbers of American families are failing financially.

In March 2010, there were 158,000 bankruptcy filings. That was up 19% from March 2009’s number, and it was also up 35% from February 2010’s number.

Things are getting scary out there.

The Real Effect

Good to see that the obvious is now observable to anyone who is remotely paying attention. As I have been droning on about for the five years that I have run this blog, this is a DEPRESSION. The kind your grandparents lived through. Now that you're listening you need to hear the following:

1. This depression cannot be avoided. Perhaps it could have been 10 years ago, but not now.
2. Anything done to try to prevent it from happening will make it significantly worse. (Go back, read the commentary on the Great Depression.)
3. Everyone is broke. There are few individuals that actually have the capital to not be broke.
4. The bankers want that capital.
5. This lust for power is the primary reason for much of the suffering in the earth's history.
6. The banking elite don't want you to know that, because if you did, you'd take away their power.
7. The depression will give way to war, probably a world-wide war.
8. The elite want the war because that allows them to consolidate their power and remove potential challenges to their power.

Don't believe me? Here's Karl Denninger -

We now have both driven the low end of the rate curve to zero and taken on more than $3 trillion in new Federal debt. To put this in perspective the total outstanding accumulated Federal Debt at the end of 1992 - from the founding of the US to January 1st of 1993 - was just $4.2 trillion. We added more Federal debt than had been accumulated in 217 years in just a little over THREE years - from 2007 to the third month 2010.

The ugly is that this debt load (currently $12.8 trillion, more or less) presents interest expense. If the Fed Funds Target was to reach just five percent, and every bit of the Treasury debt was to be refinanced into overnight obligations at that same 5%, the interest expense alone of the current debt would be $640 billion a year.

If the Treasury was to have to pay a roughly 6% average coupon (reasonably aggressive with a 5% Fed Funds Target) the interest expense would be $768 billion annually.

To put this in perspective that is an amount roughly equivalent to that spent on defense, and is higher than Social Security, Medicare, or all other "mandatory" program spending combined.

It would consume nearly all of Social Security and Medicare tax receipts ($891 billion) or the personal income tax ($915 billion) (ed. All 2009 federal budget numbers)

It is also four times what we spent last year on interest.

There is not a snowball's chance in Hades that the Federal Government can afford that.