Signs of Economic Depression

Economics / Great Depression II Jan 04, 2010 - 11:34 AM
By: Mike_Stathis
Economics

I wanted to remind you not to lose sight of the big picture. It’s advisable to try to make money during an illusion only if you know the reality.

Remember, consumer confidence and investor sentiment can and often creates illusions that can lead to big gains in stock market. But at some point, reality sets in.

So if you understand fact and fiction, you can make money during illusive periods while being prepared to exit when reality sets in, as opposed to riding the wave and getting blasted or being so scared you do nothing and miss out on big gains.

Hunger
The U.S. Supplemental Nutritional Assistance Program (SNAP), otherwise known as the food stamps program, was created in 1964. It has expanded during the past eight years and is likely to expand even more over the next decade.

The program is currently restricted to households with incomes below 130% of the federal poverty level, or $27,560 for a family of four. They cannot have more than $2,000 or, in some cases, $3,000 in assets, not including homes and, in most states, cars. The average benefit is about $3 a day per person. Cost to the government: $38 billion, rising to $40 billion in 2009.

As you can imagine, there are millions in need of assistance but just don’t qualify according to Washington and state criteria.

As of the official data up to April 2009, 1 in 9 Americans were enrolled in the program. U.S. enrollment in recent months has shown a steady increase:

April 2009 - 33.8
March 2009 - 33.157 million
February 2009 - 32.556 million
January 2009 - 32.205 million
December 2008 - 31.784 million
November 2008 - 31.097 million
October 2008 - 31.050 million
Sept 2008 - 31.587 million

Washington estimates the number of enrollees will climb to 35 million by October 2009. I’m willing to bet when the data comes in for July, it will be over 35 million.

Don’t assume these struggling Americans are all homeless, because they aren’t. And you should not assume they are all poorly educated. In fact, many of them have college degrees; some have graduate degrees. Regardless of their background, they all have one thing in common. They aren’t making enough money.

You also shouldn’t assume those who go to food banks are unemployed. Food banks across America report serving morning meals to many people on their way to work. In 2008, about 41% of those receiving food stamps were from working families.

Now that the commodities bubble has burst, food prices really have not come down by much. In fact, there has been a strong trend of food inflation for several months now. Of course, now the unemployment rate is much higher which compounds things.

Over the past year, food banks have reported shortages. Some have shut down temporarily. And Washington has responded. But still, this has not been enough. Food banks continue to run low on supplies.

Under the economic stimulus package, recipients of food stamps got a temporary 13% increase, beginning in April. The increase equals $80 a month for a household of four. But this is simply not enough because food prices are on the rise again.

Homeless
President Obama has stopped short when it comes to helping starving Americans. But when it comes time to help Wall Street criminals, he has handed over trillions of dollars.

With millions of foreclosures and lay-offs since 2007, America’s homeless population has soared.
Certainly, the homeless situation in the U.S. has been bad for well over two decades. But today we are seeing a different homeless crowd. Many of these misfortunate Americans are not drug or alcohol abusers. They simply lost their job and their home.

Fortunately, many of the nation’s homeless have been able to move in with friends and family. Some are living in their cars. More fortunate ones are living in RVs.

Others are living on the streets and in tents. There are so many tent areas across America that they have been called tent cities.

Some have called them modern-day Hoovervilles. They’re all over America—hundreds—with very high numbers in those states hit hardest with the real estate scam: California, Florida, and Nevada.

But they can also be found in states like Tennessee, Ohio, Georgia, and many others.

Many city governments across America have ordered these tent cities to be shut down. This is something Americans are not seeing on the evening news hour.

In some cities, like St. Petersburg, Florida, police have raided tent camps and have used knives to slice up the only shelter these people have.

When these desperate people scream “why!â€