US: $455,000 debt per household

As the Bush administration proposes backstopping mortgage giants Fannie Mae and Freddie Mac with a $300 billion line of credit and Congress contemplates another economic stimulus, the question is who will bail out the government?

“People seem to think the government has money,” said former U.S. Comptroller General David Walker. “The government doesn’t have any money.”

A rare consensus has developed across the political spectrum that the government’s own fiscal affairs are precarious, with an astonishing $53 trillion in long-term liabilities, according to the Government Accountability Office.

To put that number in human terms, the debt has reached $455,000 per U.S. household. As that debt grows, the United States increasingly relies on foreigners, including China and Middle East oil producers, for financing.

Read moreUS: $455,000 debt per household

US: The Cattle Industry Is Struggling To Survive

Beef prices are likely to increase as rising food and fuel prices threaten many cattle ranches

The American beef industry is in trouble. Though the financial strain of rising fuel and food prices is being widely felt across the U.S. economy, the livestock industry, which consumes about 5 billion bushels of corn annually, is suffering more than most.

Feedlot operators, who fatten their animals on corn before sending them to a slaughterhouse, are losing $150 a head with corn prices near record levels because of demand for corn-based ethanol. In Texas, the country’s largest beef-producing state, a quarter of the once-packed feedlot space is unoccupied. Some operations are shutting their doors, and “liquidation”-the culling of herds-has become a frequent escape hatch for the seriously struggling.

Read moreUS: The Cattle Industry Is Struggling To Survive

If the price of oil doubles, food prices will at least double

At virtually every link in the nation’s food chain, the cost of oil is pushing expenses ever higher.

Retail bills for some food staples have risen at least 20 percent since 2006, and they probably will continue their upward march. A gallon of gasoline could cost $7 within the next two years, some analysts say.

“If you double the price of oil, I would assume that food would at least double, and it might be more because the cost of oil gets magnified in the food chain,” said Milt McGiffen, a vegetable specialist for the University of California cooperative extension in Riverside County.


SCOTT LINNETT / Union-Tribune Nancy Owens Renner of Ocean Beach expanded her backyard garden last winter in an effort to offset rising food and fuel prices. “I am thinking about how to maximize production in my yard,” Renner said.

By the numbers:
Price increases between May 2006 and May of this year:
53% – Eggs
25% – Bread
25% – Rice
19% – Milk
14% – Coffee
11%
– Chicken
Source: Bureau of Labor Statistics

Farmers are paying more money to fill their tractors with diesel for planting and harvesting. They also spend more for fertilizer, pesticides and plastic packaging, most of which are petroleum-based.

When the food is stored and processed, it takes a huge amount of energy, which is linked to the price of fossil fuels as well.

Then, products are shipped using diesel trucks and rail cars that are far costlier to run now than in years past.

The result is bigger and bigger food bills that are causing financial hardship for millions of Americans.

Read moreIf the price of oil doubles, food prices will at least double

Status Report on the Collapse of the U.S. Economy

“But, realistically, all ordinary people can do today is try to survive, perhaps by working with friends and neighbors in planting food and living within the underground economy. At least people might not then have to starve to death, because hard as it is to believe that “it could happen here,” widespread famine in the U.S. seems a real possibility over the next several years. Nations take such risks when they allow capitalist agribusiness to destroy local agriculture.”

With the economic news of the week of July 14-the continuing crisis among mortgage lenders, the onset of bank failures, the announced downsizing of General Motors, the slide of the Dow-Jones below 11,000-we are seeing the ongoing collapse of the U.S. economy.

Even the super-rich are becoming nervous as cries for an emergency suspension of short selling ring out.

What is really taking place, however, is that the producing economy of working men and women is being crushed by the overall debt burden on households, businesses, and governments that could reach $70 trillion by 2010. The financial system, including mortgage giants Fannie Mae and Freddie Mac, is bankrupt, as the debts it is based on cannot be repaid.

Read moreStatus Report on the Collapse of the U.S. Economy

US faces global funding crisis, warns Merrill Lynch

Merrill Lynch has warned that the United States could face a foreign “financing crisis” within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.


Draining away: The US may struggle to plug its capital gap

The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.

Read moreUS faces global funding crisis, warns Merrill Lynch

Saudis offer Moscow billions to break with Tehran

MOSCOW – Saudi Arabia has offered to buy Russian arms worth 2.4 billion dollars (1.5 billion euros) if Moscow stops supporting Iran, a Russian newspaper reported Tuesday, citing diplomatic sources.

“The kingdom’s government advised Moscow to cease its cooperation with Tehran, and in exchange it held out the prospect of profitable contracts with Saudi Arabia,” the daily business newspaper Kommersant wrote.

The report came one day after Russian Prime Minister Vladimir Putin met with the General Secretary of Saudi Arabia’s Security Council, Prince Bandar bin Sultan.

Citing sources in Russia’s defence industry, the newspaper said Saudi Arabia was ready to buy at least 100 BMP-3 combat vehicles, 150 T-90 tanks and 160 Mi-17, Mi-26 and Mi-35 helicopters.

Read moreSaudis offer Moscow billions to break with Tehran

The Wall Street Journal Senses Something is Wrong

A subscription to the Wall Street Journal costs several hundred dollars a year, so most people out there don’t get it and DollarCollapse.com rarely posts links to its articles. But everybody should see today’s edition, which probably sets the modern-day record for disturbing headlines. Here’s a sampling of what subscribers read this morning:

Read moreThe Wall Street Journal Senses Something is Wrong

Five Years Late and a Trillion Dollars Short

On Tuesday, the SEC issued an emergency rule in an attempt to curb naked short selling in 19 major financial institutions, including Goldman Sachs, Morgan Stanley, Citigroup, and JP Morgan Chase and Company.

Read moreFive Years Late and a Trillion Dollars Short