Month: February 2014

Submitted by Zachary Zeck via The Diplomat,

“There is a low level of strategic trust between the United States and China, which could make bilateral relations more turbulent,” warned a recent report jointly issued by the Carnegie Endowment for International Peace and the Beijing-based China Strategic Culture Promotion Association (CSCPA).

It was hardly the first such report to assess that the U.S. and China fundamentally distrust one another. Two years ago, Wang Jisi and Kenneth G. Lieberthal wrote a report for the Brookings Institution that warned, “Although both Beijing and Washington consider the U.S.-China relationship to be the most important in the world, distrust of each other’s long term intentions (‘strategic distrust’) has grown to a dangerous degree.” Two years before that, in 2008, Phillip Saunders spoke of the need to enhance trust between the U.S. and China; an argument picked up recently by Chinese academics and the foreign minister.

Although it would be preferable if the two countries trusted one another, this is an unrealistic goal. The U.S. and China are right to distrust one another and this won’t change anytime soon. Therefore, the goal should be to find ways to manage the bilateral relationship without strategic trust.

In general, trust is a rare commodity in the world of international politics, and for good reason.

To begin with, it is impossible for states to know each other’s intentions. Even if a state is confident it knows another country’s current leadership’s intentions—which is unlikely in and of itself—it certainly cannot know what the country’s future leaders’ intentions will be.

 

Secondly, international politics is hyper-competitive. Although there are some issues like climate change that might be somewhat conducive to cooperation, the main realms of world politics—economics, politics, and military affairs—are based on relative power. Thus, each state has a strong incentive to gain an advantage over other ones. Even issues like climate change are ultimately about relative gains since there are strong economic advantages to be gained by having other states shoulder a larger share of the burden for addressing climate change. Hence why China and many developing countries argue that the U.S. and the West should bear a disproportionate share of the burden on climate issues, and why Washington and its allies refuse to oblige these demands.

 

Thirdly, the anarchic nature of the international system also incentivizes distrust. In most industries in the United States, individuals and countries can place a modicum of trust in one another to honor contracts because ultimately they know they can turn to the U.S. legal system to force compliance (or receive restitution). But in illegitimate industries in the U.S.—such as the illegal narcotics trade—the protection of the legal system is absent. Consequently, there tends to be a lot more distrust in the narcotics industry and other illegal enterprises. International politics is far more like the illegal drug trade in the United States than legitimate industries, at least in this respect.

 

Finally, international politics is a high-stakes game where getting burned has severe consequences. The U.S. promises freedom of navigation in the high seas, including to China which is increasingly economically dependent on its continuation. Should China decide to take the U.S. at its word on the matter and forgo modernizing its military, it would be helpless a decade down the road if a U.S. president decided to erect a blockade around China over a political dispute or simply to cripple its economy. And this blockade would have profound negative consequences for the Chinese people and ultimately for the Chinese Communist Party’s rule. It’s no surprise that CCP leaders aren’t appear anxious to make this gamble now that they have an economy capable of supporting a modern navy and air force.

Thus, at most states can trust other states to pursue their own interests (even this is not advisable since it assumes both sides are able to correctly identify that state’s interests). And this is preciously why the U.S. and China do not trust each other and aren’t likely to start anytime soon– namely because they largely have opposing interests in the Western Pacific. America’s interest is in preserving the current status-quo, which is a regional order built around the United States. China’s interest is in rebuilding the regional status-quo that existed before the arrival of the Europeans. That is, Beijing seeks a Sino-centric order.

True, neither side is eager for a war in pursuit of this aim. But both sides must first admit that they have opposing visions for the region’s future, before they can leverage their mutual aversion to war in reaching a negotiated peace.

 

via Zero Hedge http://ift.tt/1gIdhsi Tyler Durden

Europe has an odd definition of recovery: we already knew that in Greece “recovery” means record high unemployment, an entire generation unable to find work, the return of neo-nazism, no ink with which to print tax forms, and even instances where people infect themselves with HIV to get medical benefits. That, and of course, soaring suicides. Now it is Spain’s turn.

While the Iberian nation is furiously scrambling to catch up to Greece in terms of sheer economic collapse, even if the government has changed the definition of GDP so many times, somehow Spain dares to look people in the eye and claim its GDP is growing with 26% total, and 54% youth unemployment, one statistic Spain can’t change is that the suicide rate has soared and is now the highest in eight years.

The Local reports, using figures from Spain’s National Institute of Statistics that in the most recent data from 2012, released on Friday, 402,950 people died in Spain, some 15,039 (3.9 percent) more than in 2011. Of these deaths, there were 3539 suicides (2,724 men and 815 women), up 11.3 percent from the year before, a rate of 7.6  per 100,000 inhabitants. The figures were the highest since 2005.

According to official broadcaster RTVE, suicide was second only to cancer (15 percent of deaths) in the overall 25-34 age group, but the leading cause of death in young men (17.8 percent). Fatalities as a result of traffic accidents fell by 9.5 percent, to 1,915 – that’s probably because so few young men and women can afford to buy a car. Or gas. Or both.

Finally in tangential news, a 21 percent spike in the death rate in February and March compared with the previous year was attributed to a late-breaking flu epidemic. The same period saw deaths as a result of respiratory failure rise 53.6 percent year-on-year.

So the next time you hear about the PIIGS much trumpeted “recovery” (which now is finished even before it started courtesy of the sharp relapse of the global economy courtesy of EMs, and in the case of Greece, quite literally based on the latest growth forecasts), think:

via Zero Hedge http://ift.tt/1bpaD6b Tyler Durden

Afghanistan’s insurgents have endured hard times before, but nothing quite like this. At first glance the war might seem to be turning in their favor. Hundreds of Taliban foot soldiers – the heart and soul of the armed struggle against the U.S.-backed Kabul government – are running out of food, money and ammunition. As Vocative reports, their plight is unlikely to improve anytime soon – people familiar with the Taliban’s finances say the organization’s main sources of revenue have dried up. Wealthy Arab donors, Afghan businessmen and even Pakistan’s powerful and secretive spy agency have all reduced or stopped funding, each for their own reasons.

Via Vocativ,

Mullah Yaseen is penniless. Wrapped in a heavy black coat, the 45-year-old Afghan insurgent huddles inside a heatless tea shop near the Pakistani-Afghan border and pours out his troubles. Over the past eight months, he and his 15 Taliban fighters have received no support from the group’s central command, Yaseen says. Not a bullet or a cent.

 

…

Yaseen needed to requisition supplies and ammunition for the fighting season ahead.

He had no luck. Instead, he was told that there were temporary cash-flow problems and he should ask his fellow villagers for a loan. He would be given the money to reimburse them within a month, he was promised. Back home, Yaseen scraped up roughly $2,000 to keep his men fighting. He has yet to be repaid, and his neighbors want the money.

 

…

Nevertheless, Mullah Yaseen and hundreds of Taliban foot soldiers like him—the heart and soul of the armed struggle against the U.S.-backed Kabul government—are running out of food, money and ammunition.

Their plight is unlikely to improve anytime soon. People familiar with the Taliban’s finances say the organization’s main sources of revenue have dried up. Wealthy Arab donors, Afghan businessmen and even Pakistan’s powerful and secretive spy agency, the Inter-Services Intelligence directorate, have all reduced or stopped funding, each for their own reasons.

 

The Arabs’ departure is a crippling blow. Support from private Saudi donors has been crucial to Afghanistan’s insurgents ever since the war against the Soviets in the 1980s—many years before the rise of Mullah Mohammed Omar and his armed followers. But interest in Afghanistan has faded among hard-liners in the Gulf region. Osama bin Laden is dead; most of Al Qaeda’s surviving operatives have fled the constant threat of U.S. drone attacks, and the Taliban never really shared bin Laden’s desire to take his holy war worldwide. Now global jihad and its Arab backers have moved on to more promising arenas, like Iraq and Syria.

As the financial crisis continues, Afghan civilians say they aren’t merely disappointed with the Taliban—they’re fed up.

…

 

Many former contributors no longer trust the insurgents. “We don’t regard the Taliban as soldiers of God anymore,” says a conservative Afghan businessman in Peshawar.

 

“Their fundraisers used to come on foot to collect donations. Now they show up in luxury cars. It’s clear they’re stealing the money.” A 40-year-old former Taliban commander echoes the complaint: “Instead of going to jihad, the donations are cruising down the streets of Peshawar, Quetta and Karachi.”

The group isn’t totally destitute…

According to an official with the Afghan National Security Council, the ISI continues to channel support to those insurgent leaders who reliably do Pakistan’s bidding. But everyone else is on his own, and there are few viable alternatives. Local Taliban units used to drive a lucrative trade in ransom kidnapping, but they finally ran out of potential victims. Although the group still imposes “taxes” on the country’s multibillion-dollar heroin industry, much of that money seems to end up filling private bank accounts, rather than helping fighters in the field.

 

…

 

The Taliban’s finance department has a special office dedicated to resolving complaints, but it was no help. “They told me, ‘Sorry, we don’t have that much money right now.’”

Death is fine – but dying with a debt!! not acceptable…

He says he has left the front lines. As much as he wants to rejoin the jihad, he doesn’t dare go back until he repays the $2,000 he owes his neighbors. He’s not afraid to die, he says. What scares him is the idea that he might die with an outstanding loan. “Anytime I’m out there, I could be martyred,” he says. “And God does not forgive anyone—even a martyr—who dies without paying his just debts.”

via Zero Hedge http://ift.tt/1aXUrem Tyler Durden

With Japanese stocks down 13.6% from their 12/31 highs, the big guns just hit the tape to try to save the day:

• *ABE:BOJ WILL MAKE APPROPRIATE DECISION ON EXIT STRATEGY
• *ABE: NOT EASY TO CHANGE ‘DEFLATIONARY MIND’
• *KURODA: BOJ CAN CONDUCT APPROPRIATE EXIT POLICY AS NEEDED
• *KURODA: BOJ EASING HAS HAD INTENDED IMPACT SO FAR

Following Amari’s earlier “markets are over-reacting” jawboning, so far this is having little to no effect. USDJPY is actually fading back lower and perhaps stunningly Japanese 20Y bond yields and stocks are back at the same levels seen in May 2013 (1 month after the BoJ unveiled QQE). Time for some Depends Mr. Abe.

Oops…

 

Which leaves the Nikkei -13.6% from 2013 closing highs..

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1nKWxkE Tyler Durden

Via Citi FX Technicals,

Up the escalator, down the elevator shaft

The volatility in Local Markets which began in 2013 may just be beginning as much of the excess liquidity that went in search for yield may reverse course. During the next few months to few years, we would not be surprised to see even greater stress as the “Greenspan/Bernanke/Yellen put” begins to fade and volatility returns to markets.

 

LatAm is coming under pressure with Brazil, Mexico, Chile and Colombia all setting up for further losses. In CEEMEA, stress has been more selective with Turkey, South Africa, Russia and Hungary being the countries in focus for now.

 

While Asian Local Markets remain relatively calm compared to LatAm and CEEMEA, the ADXY Index is testing a major support level at 115. A monthly close below there would be concerning and suggest Asian currencies could come under significant pressure.

We can’t help but feel that the current pressure being felt in Local Market currencies and equity indices may only be starting. As we pointed out yesterday (and re-printed here), the backdrop over the last decade is very similar to that seen from 1989-1998 when:

1989-1991: US housing and Savings and Loan crisis: Fed eases aggressively as economy enters deep recession

 

1992-1994: Existing financial architecture in Europe (ERM) blows apart

 

1995-1998: European convergence trade in both FX and Bond spreads keeps European currencies relatively stable vis a vis the USD with a good rally in 1998. By 1996 BUBA has lowered the discount rate to 2.5% while US rates remain well below the pre-crisis highs of 9.75% in 1989.

The carry trade and capital flow into emerging markets (Asia in particular) is center stage:

March 1997: In a seemingly “innocuous” move the Fed “tinkers” by raising rates 25 basis points.

 

April 1997: Japan raises its consumption tax as USDJPY has rallied from a post Kobe Earthquake low of 79.7 to 127.50. USDJPY collapses to 111 by June

 

June 1997-Jan 1998: Severe reaction in Asian currencies as “hot money flees”

 

August-October 1998: Russia defaults, Long term capital folds and the Fed eases aggressively as the Equity market drops 22% (S&P)

History may not repeat…..but it sure RHYMES

In the years since the Financial Crisis, major Central Banks have been engaged in incredible easing programs that included the injection of massive amounts of liquidity into the financial system. That liquidity had to go somewhere, and in a search for yield, much of it went indiscriminately into Local Markets.

The announcement by the Fed in May 2013 that it would be looking to reduce its bond buying program was the first indication by a major Central Bank that the period of free money/excess liquidity was going to start winding down. The immediate reaction was panic and volatility across all “risk” assets, with Local Market currencies and equities being especially vulnerable. Soon after, though, markets began to adjust to the reality that this was the beginning of the end of the “Bernanke/Yellen put” (at least for now) and since then we have seen Local Markets come under pressure.

So far, the exodus of money from Local Markets has been “tame” compared to previous EM crises and it has also been selective since countries with weaker economies and foreign reserves have been the ones taking the largest hits. However, our bias is that this is just the beginning. We have only begun to see “volatile” price action and the charts in the following pages show just how far some of these Local Market currencies and equities can go. In focus for now is LatAm and select CEEMEA countries as they have come under the most pressure.

However, the bigger danger over the next few months/years is that the markets begin to ‘throw out the baby with the bathwater” and Local Market investors begin to exit through the same small door.

 

 

Though Asia Local Markets have been rather calm in comparison to other regions, we still think caution should be maintained

The ADXY Index is testing very good support at 115, the 55 month moving average, and a close below there on a monthly basis would be bearish. If seen, it would also be the first close below the 55 month moving average since 2008.

There is good support closely below there around 113.58-113.68, the 2012 and 2013 lows which also serve as the 76.4% retracement pivots of the 2011-2012 decline

A break below there would further suggest even larger losses are likely, potentially towards the 200 month moving average which is currently at 106.75 (there is support before there at 108.77, the 2010 low,that would be worth keeping an eye on).

It is important to note that 49% of the Index is made up by CNY and HKD. As we are not currently of the bias that these currencies would see significant (if any) depreciation even if the EM sell-off were to become more aggressive in Asia (as a reminder, during the major ADXY collapse in 2008, USDCNY and USDHKD remained essentially unchanged)

As a result, if we were to see a continued bearish development in the ADXY, it would suggest the other currencies in the Index (INR, IDR, KRW, MYR, PHP, SGD, TWD and THB) would see greater weakness then the overall weakness. We will be watching for any developments closely…

via Zero Hedge http://ift.tt/1nKWuW9 Tyler Durden

Via Citi FX Technicals,

Up the escalator, down the elevator shaft

The volatility in Local Markets which began in 2013 may just be beginning as much of the excess liquidity that went in search for yield may reverse course. During the next few months to few years, we would not be surprised to see even greater stress as the “Greenspan/Bernanke/Yellen put” begins to fade and volatility returns to markets.

 

LatAm is coming under pressure with Brazil, Mexico, Chile and Colombia all setting up for further losses. In CEEMEA, stress has been more selective with Turkey, South Africa, Russia and Hungary being the countries in focus for now.

 

While Asian Local Markets remain relatively calm compared to LatAm and CEEMEA, the ADXY Index is testing a major support level at 115. A monthly close below there would be concerning and suggest Asian currencies could come under significant pressure.

We can’t help but feel that the current pressure being felt in Local Market currencies and equity indices may only be starting. As we pointed out yesterday (and re-printed here), the backdrop over the last decade is very similar to that seen from 1989-1998 when:

1989-1991: US housing and Savings and Loan crisis: Fed eases aggressively as economy enters deep recession

 

1992-1994: Existing financial architecture in Europe (ERM) blows apart

 

1995-1998: European convergence trade in both FX and Bond spreads keeps European currencies relatively stable vis a vis the USD with a good rally in 1998. By 1996 BUBA has lowered the discount rate to 2.5% while US rates remain well below the pre-crisis highs of 9.75% in 1989.

The carry trade and capital flow into emerging markets (Asia in particular) is center stage:

March 1997: In a seemingly “innocuous” move the Fed “tinkers” by raising rates 25 basis points.

 

April 1997: Japan raises its consumption tax as USDJPY has rallied from a post Kobe Earthquake low of 79.7 to 127.50. USDJPY collapses to 111 by June

 

June 1997-Jan 1998: Severe reaction in Asian currencies as “hot money flees”

 

August-October 1998: Russia defaults, Long term capital folds and the Fed eases aggressively as the Equity market drops 22% (S&P)

History may not repeat…..but it sure RHYMES

In the years since the Financial Crisis, major Central Banks have been engaged in incredible easing programs that included the injection of massive amounts of liquidity into the financial system. That liquidity had to go somewhere, and in a search for yield, much of it went indiscriminately into Local Markets.

The announcement by the Fed in May 2013 that it would be looking to reduce its bond buying program was the first indication by a major Central Bank that the period of free money/excess liquidity was going to start winding down. The immediate reaction was panic and volatility across all “risk” assets, with Local Market currencies and equities being especially vulnerable. Soon after, though, markets began to adjust to the reality that this was the beginning of the end of the “Bernanke/Yellen put” (at least for now) and since then we have seen Local Markets come under pressure.

So far, the exodus of money from Local Markets has been “tame” compared to previous EM crises and it has also been selective since countries with weaker economies and foreign reserves have been the ones taking the largest hits. However, our bias is that this is just the beginning. We have only begun to see “volatile” price action and the charts in the following pages show just how far some of these Local Market currencies and equities can go. In focus for now is LatAm and select CEEMEA countries as they have come under the most pressure.

However, the bigger danger over the next few months/years is that the markets begin to ‘throw out the baby with the bathwater” and Local Market investors begin to exit through the same small door.

 

 

Though Asia Local Markets have been rather calm in comparison to other regions, we still think caution should be maintained

The ADXY Index is testing very good support at 115, the 55 month moving average, and a close below there on a monthly basis would be bearish. If seen, it would also be the first close below the 55 month moving average since 2008.

There is good support closely below there around 113.58-113.68, the 2012 and 2013 lows which also serve as the 76.4% retracement pivots of the 2011-2012 decline

A break below there would further suggest even larger losses are likely, potentially towards the 200 month moving average which is currently at 106.75 (there is support before there at 108.77, the 2010 low,that would be worth keeping an eye on).

It is important to note that 49% of the Index is made up by CNY and HKD. As we are not currently of the bias that these currencies would see significant (if any) depreciation even if the EM sell-off were to become more aggressive in Asia (as a reminder, during the major ADXY collapse in 2008, USDCNY and USDHKD remained essentially unchanged)

As a result, if we were to see a continued bearish development in the ADXY, it would suggest the other currencies in the Index (INR, IDR, KRW, MYR, PHP, SGD, TWD and THB) would see greater weakness then the overall weakness. We will be watching for any developments closely…

via Zero Hedge http://ift.tt/1nKWuW9 Tyler Durden

Today’s AM fix was USD 1,246.50, EUR 922.58 and GBP 762.39 per ounce.
Friday’s AM fix was USD 1,246.50, EUR 920.54 and GBP 757.34 per ounce.

Gold rose $1.90 or 0.15% Friday to $1,244.90/oz. Silver fell $0.04 or
0.21% to $19.16/oz. Gold and silver were down 1.85% and 3.97% for the
week.

Gold is marginally lower in all major currencies today except
sterling which has weakened due to concerns that the Bank of England
will continue its ultra loose monetary policies. Gold ticked higher in
Asia prior to price falls.

Gold in U.S. Dollars – (Bloomberg)

Gold rose 3.2% in January, its first monthly advance in five, as
concerns about emerging markets and the Fed’s tapering led to declines
in stock markets and safe haven buying.

Australia’s Perth Mint, which refines most of the bullion from the
world’s second-biggest producer, joined the U.S. Mint in reporting gold
demand climbed in January. Sales of coins and the increasingly popular
minted gold bars at the Perth Mint increased 10% to 64,818 ounces last
month from 58,944 ounces in December. The mint sold 912,388 ounces of
silver compared with 845,941 ounces in December, it said.

Sales of gold coins by the U.S. Mint rose 63% in January to the
highest since April. Sales climbed to 91,500 ounces from 56,000 ounces
in December, while sales of silver coins almost tripled to 4.78 million
ounces, the highest in a year, the data showed.

Part of the reason for the surge in demand is due to dealers
restocking inventories and due to collector demand for the newly minted
2014 coins.
 
Austria’s Muenze Oesterreich AG is running 24 hours a day to meet a
surge in demand on behalf of investors – particularly in Germany which
continues to be Europe’s largest buyer of gold.

Find out why Singapore is now one of the safest places in the world to store gold in our latest gold guide – Essential Guide To Storing Gold In Singapore

via Zero Hedge http://ift.tt/1cP4fGb GoldCore

Submitted by Michael Snyder of The Economic Collapse blog,

Would you like to buy a house for one dollar?  If someone came up to you on the street and asked you that question, you would probably respond by saying that it sounds too good to be true.  But this is actually happening in economically-depressed cities all over America.  Of course there are a number of reasons why you might want to think twice before buying any of these homes, and I will get into those reasons in just a little bit.  First, however, it is worth noting that many of the cities where these "free houses" are available were once some of the most prosperous cities in the entire country.  In fact, the city of Detroit once had the highest per capita income in the entire nation.  But as millions of good jobs have been shipped overseas, these once prosperous communities have degenerated into rotting, decaying hellholes.  Now homes that once housed thriving middle class families cannot even be given away.  This is happening all over America, and what we are witnessing right now is only just the beginning.

The photo that I have posted below was sent to me by a reader just the other day.  It is a photo of a house in Yakima, Washington that is apparently being given away for free.  At one time it was probably quite a lovely home, but now nobody seems to want it…

This piqued my curiosity, so I started doing some research and I discovered that homes all over the nation are being sold off for a dollar or less.  The following are just a few examples…

–Buffalo, New York: "The Urban Homestead Program that is offered by the City of Buffalo enables qualified buyers to purchase a home that has been deemed 'homestead eligible' for $1.00 and there are plenty of properties left. There are three main requirements when purchasing a homestead property; the owner must fix all code violations within 18 months, have immediate access to at least $5000, and live there for at least three years. You also have to cover the closing costs of the purchase."

–Gary, Indiana: "Officials say that a third of the houses in Gary are unoccupied, hollowed dwellings spread across a city that, like other former industrial powerhouses, has lost more than half its population in the last half-century.

While some of those homes will be demolished, Gary is exploring a more affordable way to lift its haggard tax base and reduce the excess of empty structures: sell them for $1."

–South Bend, Indiana: "How could you refuse this offer? The city of South Bend, Indiana wants to give this handsome circa-1851 Italianate farmhouse away to anyone willing to properly restore it. Aside from the boarded up windows (the boards are painted to look like real windows), the place is in pretty good shape, with a completely restored exterior, new roof, and all new HVAC, plumbing and electrical systems. All you'll need to do is restore the gutted (but clean as can be) interior."

–Detroit, Michigan: "Now that the motor city has effectively run out of gas and declared bankruptcy, some rather eye-popping deals are presenting themselves to first time home buyers who appreciate the challenge of a fixer-upper.

Hundreds of Detroit homes currently listed on Zillow have asking prices below $5,000, with at least one seller so desperate as to offer his house for just $1, ABC News reported."

—–

And guess who is selling more "one dollar homes" than anyone else?

If you guessed "the federal government" you would be correct.

Right now, the federal government is selling foreclosed homes to low income families all over the country for just one dollar…

HUD's Dollar Homes initiative helps local governments to foster housing opportunities for low to moderate income families and address specific community needs by offering them the opportunity to purchase qualified HUD-owned homes for $1 each.

 

Dollar Homes are single-family homes that are acquired by the Federal Housing Administration (which is part of HUD) as a result of foreclosure actions. Single-family properties are made available through the program whenever FHA is unable to sell the homes for six months.

 

By selling vacant homes for $1 after six months on the market, HUD makes it possible for communities to fix up the homes and put them to good use at a considerable savings.

Before you get too excited, there are a whole bunch of reasons why you wouldn't want to actually buy any of these one dollar homes.

First of all, most of them have been totally trashed.  Just to get them up to livable condition would take thousands of dollars in most cases.  Many of them are full of asbestos, and severe wiring and plumbing issues are quite common.

Secondly, you assume all of the liability for a home when you buy it.  So if a homeless person stumbles in and injures himself, you could be liable for his injuries.

Thirdly, many of these homes are in very high crime neighborhoods.  In some of these areas, people will literally rip up and carry away anything that is not bolted down.

Fourthly, property taxes are very high in many of these cities.  Local governments are desperate to get people into these homes so that they can get the taxes flowing again.  In many cases, what you would pay in taxes for a year is more than the true value of the home itself.

So, like I said, these homes are not the "great deal" that they may appear to be at first glance.

But that is not really the issue.

The real question is this: What is causing our communities to decay so dramatically?

And of course a big part of the answer is that the middle class in America is dying.

According to Time Magazine, one new report has discovered that nearly half the country is constantly living in a state of "persistent economic insecurity"…

But as evidenced by a report out Thursday from the Corporation for Enterprise Development, nearly half of Americans are living in a state of “persistent economic insecurity,” that makes it “difficult to look beyond immediate needs and plan for a more secure future.”

That same report also found that 56 percent of all Americans now have "subprime credit".

We are a nation that is losing our independence and sinking into poverty.

Right now, 49.2 percent of all Americans are receiving benefits from at least one government program, and the U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.

Millions of our jobs have been shipped overseas, the control freak bureaucrats that are running things are absolutely killing "the little guy", and poverty in the United States is exploding at a frightening pace.

Things are "changing" in this country, and not for the better.

One way that the death of the middle class is manifesting itself is in the death of shopping malls all over America.  The following is an excerpt from a recent Business Insider article…

All across America, once-vibrant shopping malls are boarded up and decaying.

 

Traffic-driving anchors like Sears and JCPenney are shutting down stores, and mall owners are having a hard time finding retailers large enough to replace them. With a fresh wave of closures on the horizon, the problem is set to accelerate, according to retail and real estate analysts.

According to that same article, one prominent retail analyst believes that we could see up to 50 percent of the shopping malls in America close within 20 years…

Within 15 to 20 years, retail consultant Howard Davidowitz expects as many as half of America's shopping malls to fail. He predicts that only upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive.

And did you catch that last part?  Only the shopping malls in wealthy areas will survive because the wealthy will be the only ones with enough money to support them.

For much more on this phenomenon, please see my previous article entitled "What Recovery? Sears And J.C. Penney Are DYING".

At this point, things have already gotten so bad that now even Wal-Mart is having trouble.  In fact, Wal-Mart is blaming the recent slowdown in sales on cuts to the federal food stamp program…

Wal-Mart announced today that cuts in a federal food stamp program as well as record cold temperatures hurt its fourth quarter profits.

 

After previously reporting “relatively flat” sales for the quarter, Wal-Mart Stores Inc. now says that sales for its namesake store and its Sam’s Club locations would be “slightly negative” for the November-January quarter, according to Agence France-Presse.

 

Wal-Mart’s Chief Financial Officer, Charles Holley, blamed the revised forecast on deeper-than-expected cuts to the U.S. Supplemental Nutrition Assistance Program (SNAP) and the extreme cold weather occurring in the past month.

This is how far the middle class in America has fallen.  So many people are now on food stamps that even a slight reduction in benefits has a huge impact on the largest retailer in the entire country.

And actually, many rural communities could end up losing their Wal-Mart stores in the years ahead as the economy continues to deteriorate.  In a recent CNBC article entitled "Time to close Wal-Mart stores? Analysts think so", it was suggested that Wal-Mart should close about 100 "underperforming" supercenters in rural locations around the nation.

We are rapidly becoming "two Americas".  In the "good America", the wealthy will still have plenty of retail stores to choose from within easy driving distance from their million dollar homes.

In the "bad America", which will include most of us, our shopping malls will be closing down and the rotting, decaying homes of our neighbors will be sold off for next to nothing.

So which America do you live in?

via Zero Hedge http://ift.tt/1cP4fWP Tyler Durden