The Great Depression No: 2

US economic meltdown

I wasn’t around when the first great depression hit the world. I have absolutely no idea how I would survive the grinding poverty that struck millions upon millions of people who through the machinations of the deregulated banking system lost everything. So I decided to see if I could find some material about that most sad period in our recent history. This amazing photos show how devastating the great depression really was.

In the aftermath the government was able to re- regulate the privately owned Federal Reserve to some extent. It took the banks until 1999 to achieve the same freedom to manipulate the financial world with the same bubble building that caused them to become obscenely rich and caused spectacular collapse of the American economy in 1929, which effects were felt throughout the world.

Today we are perhaps facing an economic collapse which could make the great depression look like a walk in the park.

Not a lot is shown here in the mainstream media about its effects but with a 150,000 households predicted to feel mortgage stress in New Zealand alone because of the collapsing housing bubble it is perhaps prudent to show the reality of the subprime crisis in the United States. Let’s start with foreclosing figures of Los Angeles alone of March 2008. Some 60.000 homes were foreclosed in that month and while that did not mean that there were 60.000 families homeless straight away it did mean that because these families had to sell their houses forcibly they were sold far under the speculatively high prices they paid for them in the first place leaving them in debt and extremely vulnerable. Some of them may have found a place to rent but it will be years before they have paid off their debt to the bank.

Is this happening in Los Angeles alone? Well no, in April alone some 243,353 home owners had received at least one for closure notification nationwide. That is a little under ¼ million of families being threatened to have their house sold from under them. Additionally landlords, who cannot pay their mortgages on the properties they rent out, have the mortgages for closed on them which means automatic eviction for the tenants even if they have been paying their rent on time.

The result is an increase of people who are homeless, live in tents, in caravans and in their cars. The camps in which they live are makeshift on designated areas with the generally only one toilet and shower for as many as 350 people. Some of them have lost their homes not because it couldn’t pay the mortgage as such but because they lost their jobs as a result of outsourcing or budget cuts. It is almost possible to find a new job simply because almost every single production job has been moved overseas. Additionally businesses in need for cash allowed hedge funds to buy up shares. These hedge funds might very well find it more profitable to let these businesses go bankrupt to grab their assets

The expectation is that several million people will lose their homes in the United States due to the subprime crisis. Most of these people have no jobs even if they wanted to. They have no way of getting back on their feet again live in cities where huge areas have been depopulated because of foreclosures. I hope you get the picture. The world’s heading for the great depression number two.

The one mitigating circumstance that helped people in the first depression was the fact that most people at the time were rural and already used to grinding poverty. And while a huge amount of farmers were driven off their land by debt to the bankers they had some knowledge of how to grow food. This time most of the food eaten by the Americans has to be imported and distributed throughout their cities. The United States does not produce its own food which means that millions of city dwellers will face starvation. The United States government has in its drive for Bio fuels destroyed whatever food reserve they had so it’s not very likely that there is a sufficient plan to help its own citizens.

At this moment the United States has to borrow three billion dollars a day to maintain their war efforts and the lifestyle they have become accustomed to. The American citizens have maxed out on their credit cards, their mortgages and it simply is no more money to spend. We are looking at a superpower going Supernova.

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