Posts Tagged ‘Bernanke’

Things To Consider As Obama’s Propagandists Attack Rick Perry For His Remark About Bernanke

August 17, 2011

The mainstream media and the Obama administration are trying to make the most of Rick Perry’s remark:

“If this guy prints more money between now and the election, I don’t know what you all would do to him in Iowa, but we would treat him pretty ugly down in Texas,” Perry said. “Printing more money to play politics at this particular time in American history is almost … treasonous in my opinion.”

Charles Krauthammer said that it was somewhat tactless for Rick Perry to use the “t” word to describe what he and almost every other conservatives agrees is fiscally despicable behavior on the part of Obama’s Federal Reserve Chairman and the Obama Fed.  And then Krauthammer turned the shining white-hot lens back at Obama and pointed out that Obama is engaging in this very same conduct every time he demonizes Republicans as the political equivalent of terrorists, and that he is basically too cunning (I would have chosen the word ‘weaselly’) to use the “t” word when his rhetoric clearly matches it.

Recently, Obama claimed that Republicans basically wanted to turn America into a banana republic.

As one example, Obama said this:

BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES: “The only thing that is holding us back is our politics. The only thing that prevents us from passing the bills I just mentioned is the refusal of a faction in Congress to put country ahead of party. And that has to stop. I need your help sending a message to Congress that it’s time to put politics aside and get something done.”

Geez, I wonder what “faction” of which “party” that eagerly puts party ahead of country, and seeks to hurt the country for political gain.  Because, I mean, that would be practically, well, treasonous.

And then Obama said this:

Some in Congress would rather see their opponents lose than America win … we can’t have patience with that kind of behavior anymore,” Obama told a crowd.

Which prompted this dose of rational commentary on Obama’s transparent tactic:

He’s accusing his opponents of being unpatriotic, and at some point the next step is [accusing them of] being traitorous,” Michael Franc, vice president for government studies at the Heritage Foundation, told The Daily Caller Monday afternoon. “If Michele Bachmann had said ‘If you disagree with me, you’re unpatriotic,’ [Democrats] would be calling it a loyalty oath or a religious test,” Franc said.

And of course it would – and the media would be all over Obama for his vicious demoagic tactics – if they were even remotely honest.

What Michael Franc said is obviously true.  But the media simply won’t report Obama’s words.  I had a very easy time finding Perry’s rhetoric and a very difficult time finding Obama’s.  But Obama is doing the very same thing that everybody and their dog is accusing Perry of doing.

Krauthammer responds to Obama’s tactics:

KRAUTHAMMER:When the president accuses the Republicans of putting party over country and another stop he said they want America to fail so they will succeed politically, that is a sophisticated way of essentially accusing the Republicans of near treasonous behavior. He is sophisticated and practiced and articulate so he won’t use the word the way Perry did. But it’s the same idea.

BAIER: Are you suggesting that Texas Governor Perry is not articulate?

KRAUTHAMMER: I’m saying the way he articulated attack on Bernanke was a demonstration that he does not have the art and the artful way of presenting it that Obama does.

It’s an essentially an equivalent claim. These people care nothing about country, only about self-interest and politics and reelection. So “A,” it demonstrates that the president is practiced at this. Perry could use practice. But it’s essentially the same unhealthy kind of attack. It’s really something neither party ought to do.

And the president combines it with a pretense that he stands above all of this. But look at this scene. He is on a political trip, which he pretends is not. Therefore our tax money is paying for this trip under the pretense that he is explaining his policies. It’s clearly a campaign trip. It’s all a stump speech.

So he is on political trip in which he accuses his opponents of playing politics when he himself is engaged of politics at the same time and pretending only he speaks in the name of the national interest. He does it over and over again. I know it’s going to be a theme of his campaign. If you call out Perry on his use of that, I’d call out the president on that as well.

OBAMA has been putting his narrow partisan political interests ahead of the well-being of the United States and America and the American people ever since the day he came to office.  His boondoggle stimulus that cost the American people $3.27 TRILLION and pissed away our resources – and went overwhelmingly to Democrat districts.  His unconstitutional ObamaCare that he rammed down America’s throat along with its more than 160 death panels. His hostile takeover of the financial industry a.k.a. the Dodd-Frank act.  His being in the pocket of labor unions on issue after issue.  And he’s the guy who is lecturing us about putting country ahead of party and partisan interest?!?!?

Hey, Obama, how about if you pay for your damn bus tour instead of making the American people pay for it since it is obviously a campaign tour?!?!  I mean, given that you alone are above politics and all…

But, of course, the mainstream media would report on any of the above (other than the stuff that makes Rick Perrylook bad), because that would be fair and objective and honest.  And today’s media is none of those things.

I actually believe Perry’s taking on Fed policies – which are impoverishing grandmas and grandpas to enrich The State, and which have destroyed 3.5 million jobs – is a dang good idea.

Ron Paul rightly compares this policy of artificially creating money out of thin air with counterfeiting. The federal government is counterfeiting its own money, with the same exact motive that all other counterfeiters have.

The White House jumped all over this, self-righteously proclaiming, “We take the independence of the Federal Reserve quite seriously and certainly think threatening the Fed chairman is probably not a good idea.”  But other than the fact that just who in their right mind actually believes Rick Perry physically threatened Bernanke with literal violence?!?!?  I would point out that shouldn’t Obama therefore take the independence of the Supreme Court quite seriously, too?  And yet Obama has REPEATEDLY belittled their rulings.  In one speech Obama deceitfully demonized the court for exercising it’s “independence,” prompting Samuel Alito to mouth the words “That’s not true” to Obama’s demagogic attack.  And it was just today that Obama essentially said that either the Supreme Court would rule the way he wanted them to rule on ObamaCare, or they would be making up the law like some sort of kangaroo court:

“If the Supreme Court follows existing precedent, existing law, it should be upheld without a problem,” Obama said. “If the Supreme Court does not follow existing law and precedent, then, you know, we’ll have to manage that when it happens.”

But hey, refusing to honor the independence of one of the three branches of our government (the executive, the legislature and THE JUDICIARY) established by our Constitution is nothing.  Refusing to honor a Federal Reserve Entity having nothing whatsoever to do with our Constitution and in fact flying in the very face of it is quite another, indeed.

If Rick Perry used a word that cunning, weaselly political strategists say is ill-advised to describe his personal and political disgust and contempt for a disgusting and contemptible fiscal and political policy by an out-of-control Federal Reserve system, I can live with that.  In fact, I’m just glad that somebody is out there on my side who is willing to get in somebody’s face over the crap that is imploding our country.

Conservatives are beyond furious. They want a candidate who will punch Barack Obama right in the mouth and then keep punching until he is politically down on his back and able to get up. The last thing we want to see is another wimpy establishment candidate refuse to go after Obama as a guy who spent 23 years in a racist, Marxist, anti-American “God damn America!” church.

Racist, because imagine the Republican candidate having spent 23 years in a church with a WHITE values system and a commitment to the WHITE family. Because Obama’s “church” continued to spout racism while Obama was there and after he finally left it to cover his political backside. Because imagine the Republican candidate being so inspired of the equivalent of “White folk’s greed runs a world in need” – maybe “Black folk’s crime runs a world of slime” – and being so inspired he writes a book bearing the same title as that sermon.

Marxist because the “liberation theology” that Trinity United preached every single day was Marxist to its core, deriving from Marxist priests who were aiding the Marxist Sandinistas in Nicaragua. Because then Cardinal Ratziger (Now Pope Benedict) officially pronounced liberation theology as coming “from radically marxist positions”. Because the Obama Party is the Party of self-avowed communist Van Jones. Because the “reverend” who was Obama’s “spiritual mentor” is an open Marxist and socialist. Because the Communist Party USA backed Obama in the last election and is backing him in this one, too. And because just what the hell is the difference between Obama’s redistribution of wealth agenda and Karl Marx’s redistribution of wealth agenda?

Anti-American because Obama’s church and Obama’s presidency is “GOD DAMN AMERICA!” Because this is the Cloward and Piven presidency to implode America so it would be forced to embrace communism. Because it continues to the Cloward and Piven administration that is looking to achieve communism in America. Because we have continued to see that this is the Cloward and Piven ideology unfolding in hopes of imploding America.

Conservatives are looking for a guy who will tear into Barack Obama like a junkyard dog going after a thief who’s trying to rob its master. Only in this case the thief was a cynical liar who illegitimately seized the White House in 2008 with a fraudulent campaign of lies, and the “master” is the American people who need someone to fight for them.

You’ve got to be smart and polished, Governor Perry.  Because the same dishonest mainstream media that overlooks Obama’s and Democrats’ constant vile rhetoric will eagerly report every single thing you say that either crosses the line or that they can make appear to have crossed the line.

It’s up to Governor Perry to do a better job walking through the long field of land mines the media will place in his path.  And it is up to every single Republican and conservative and tea party member to keep a documented record of everything that Obama and the Democrats say so we can play the game of finger-pointing that is the quintessential tactic of liberals.

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The Fruit Of Obama’s Hope And Change: Food Prices Highest Since 1974

March 17, 2011

Obama is working out great for you, if you’re the sort of person who needs to lose weight, but needs to experience an actual famine to do so.

Otherwise, you’re pretty much screwed.

Food Prices Skyrocket: Highest Since 1974
Posted on March 16, 2011 at 12:35pm by  Emily Esfahani Smith

WASHINGTON (AP) — Higher energy costs and the steepest rise in food prices in nearly four decades drove wholesale prices up last month by the most in nearly two years. Excluding those categories, inflation was tame.

The Producer Price Index rose a seasonally adjusted 1.6 percent in February, the Labor Department said Wednesday. That’s double the 0.8 percent rise from the previous month. Outside of food and energy costs, the core index ticked up 0.2 percent, less than January’s 0.5 percent rise.

Food prices soared 3.9 percent last month, the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent. That was the most in almost a year. Meat and dairy products also rose.

Energy prices rose 3.3 percent last month, led by a 3.7 percent increase in gasoline costs.

David Resler, an economist at Nomura Securities, said the jump in prices is likely temporary, echoing remarks made by the Federal Reserve on Tuesday. Much of the increase in food prices was due to winter freezes in Florida, Texas and other agricultural areas, Resler said. Turmoil in the Middle East is a major reason that motorists are facing higher gas prices.

“Both food and gasoline prices are going to stop rising so rapidly,” Resler said.

But John Ryding, an economist at RDQ Economics, disagreed, noting that consumers will feel the impact for some time.

“We do not buy the Fed’s reassurance that these pressures will be temporary and we believe the public, seeing these strong increases in food and energy … will not be marking back down their inflation expectations,” Ryding said.

Gas prices spiked in February and are even higher now. The national average price was $3.56 a gallon Tuesday, up 43 cents, or 13.7 percent, from a month earlier, according to the AAA’s Daily Fuel Gauge. Rising demand for oil in fast-growing emerging economies such as China and India has pushed up prices in recent months. Unrest in Libya, Egypt and other Middle Eastern countries has also sent prices higher.

But economists expect the earthquake in Japan to lower oil prices for the next month or two, which should temper increases in wholesale prices in coming months. Japan is a big oil consumer, and its economy will suffer in the aftermath of the quake. But as the country begins to rebuild later this year, the cost of oil and other raw materials, such as steel and cement, could rise.

Oil prices fell sharply Tuesday as fears about Japan’s nuclear crisis intensified. Oil dropped $4.01, or 4 percent, to settle at $97.18 per barrel on the New York Mercantile Exchange.

Prices rose 1 percent for apparel, the most in 21 years. Costs also increased for cars, jewelry, and consumer plastics.

There was little sign of inflationary pressures outside of food and energy. Core prices have increased 1.8 percent in the past 12 months.

Separately, the Commerce Department said Wednesday that home construction plunged to a seasonally adjusted 479,000 homes last month, down 22.5 percent from the previous month. It was lowest level since April 2009, and the second-lowest on records dating back more than a half-century.

The building pace is far below the 1.2 million units a year that economists consider healthy.

Two-and-a-half years into Obama’s presidency, food prices are the worst, and home construction is the lowest, in more than 36 years.  Obviously it’s Bush’s fault.  Because all liberals can do is spew demagoguery and lies.

Allow me to again remind you that I TOLD YOU OBAMA WOULD BRING AMERICA DOWN.  Oh, yes, I told you a long time ago, didn’t I?  And now we know what “hope ‘n change” means: it means hoping you don’t starve to death when the most incompetent and most wicked “God damn America” president in American history is ruining America one vile policy at a time.

Obama and his evil, reckless policies are not just responsible for the devastation to the American economy; because his morally idiotic stupidity is so monumental it is bringing down an entire planet.

Allow me to provide the highlights (or lowlights) from the following Wall Street Journal article:

FEBRUARY 23, 2011
The Federal Reserve Is Causing Turmoil Abroad
Few protesters in the Middle East connect rising food prices to U.S. monetary policy. But central bankers do.
By GEORGE MELLOAN

In accounts of the political unrest sweeping through the Middle East, one factor, inflation, deserves more attention. Nothing can be more demoralizing to people at the low end of the income scale—where great masses in that region reside—than increases in the cost of basic necessities like food and fuel. It brings them out into the streets to protest government policies, especially in places where mass protests are the only means available to shake the existing power structure.

The consumer-price index in Egypt rose to more than 18% annually in 2009 from 5% in 2006, a more normal year. In Iran, the rate went to 25% in 2009 from 13% in 2006. In both cases the rate subsided in 2010 but remained in double digits.

Egyptians were able to overthrow the dictatorial Hosni Mubarak. Their efforts to fashion a more responsive regime may or may not succeed. Iranians are taking far greater risks in tackling the vicious Revolutionary Guards to try to unseat the ruling ayatollahs.

Probably few of the protesters in the streets connect their economic travail to Washington. But central bankers do. They complain, most recently at last week’s G-20 meeting in Paris, that the U.S. is exporting inflation.

China and India blame the U.S. Federal Reserve for their difficulties in maintaining stable prices. The International Monetary Fund and the United Nations, always responsive to the complaints of developing nations, are suggesting alternatives to the dollar as the pre-eminent international currency. The IMF managing director, Dominique Strauss-Kahn, has proposed replacement of the dollar with IMF special drawing rights, or SDRs, a unit of account fashioned from a basket of currencies that is made available to the foreign currency reserves of central banks.

About the only one failing to acknowledge a problem seems to be the man most responsible, Federal Reserve Chairman Ben Bernanke. In a recent question-and-answer session at the National Press Club in Washington, the chairman said it was “unfair” to accuse the Fed of exporting inflation. Other nations, he said, have the same tools the Fed has for controlling inflation.

Well, not quite. Consider, for example, that much of world trade, particularly in basic commodities like food grains and oil, is denominated in U.S. dollars. When the Fed floods the world with dollars, the dollar price of commodities goes up, and this affects market prices generally, particularly in poor countries that are heavily import-dependent. Export-dependent nations like China try to maintain exchange-rate stability by inflating their own currencies to buy up dollars. […]

Oil is going up. Foodstuffs are going up. And when the Fed sneezes money, the weak economies of the world, and the poor masses who are highly vulnerable to price rises in the necessities of life, catch pneumonia. […]

The Fed is financing a vast and rising federal deficit, following a practice that has been a surefire prescription for domestic inflation from time immemorial. Meanwhile, its policies are stoking a rise in prices that is contributing to political unrest that in some cases might be beneficial but in others might turn out as badly as the overthrow of the shah in 1979. Does any of this suggest that there might be some urgency to bringing the Fed under closer scrutiny?

Federal Reserve Chariman Bernanke was appointed by Obama to do Obama’s bidding.  And the Fed under Bernanke is trying to cover for the most reckless government policies in American history.

Obama is exporting “God damn America” all over the world.  And pretty soon the world will start paying us back in giving us hell like even the Great Depression generation has never seen.

Jesus said that in the last days, many false messiahs would rise up and begin to lead the world astray to disaster after disaster (Mark 13:5-6).  And Barack Obama is very much one of those false messiahs.

I ended the above article that I wrote before the election in 2008 (October 10, 2008) saying:

Is Barack Obama the Antichrist?  There sure are a lot of signs that he is in the media!  But I believe that he is just one of the false messiahs (Matthew 24:24).  Rather than being THE Antichrist, I believe that Obama is just one of the false messiahs who will so completely screw up the United States and the world that Antichrist will be able to emerge to “save the day.”

The United States isn’t mentioned in Bible prophecy.  Now we begin to see why: we wont’ matter because our economy will be in ruins.  And we certainly won’t be the kind of nation that will be willing to come to Israel’s aid against the Beast when they need us most.

Last days, here we come.  The race toward Armageddon (Revelation 16:16) begins.

When you voted for Barack Obama, you generation of fools, you voted for Armageddon.  Weakness is a provocation to the violent, and Obama is weak.  And out of the economic hell that Obama has spent going on 2 1/2 years enacting – and which is already having dangerous global consequences – dictators always come.

I keep saying it, but I’ll say it again: the beast is coming.

Financial Reform ALREADY Injuring Economy

July 22, 2010

This is something else.

From Business Insider:

Financial Reform Meets First Huge Unintended Consequence As Ford Halts Bond Offering
Joe Weisenthal | Jul. 22, 2010, 8:57 AM

Whenever you get new laws and “reform,” unintended consequences are sure to follow.

Usually they take awhile.

Not so with Dodd-Frank.

WSJ reports that Ford has already yanked a bond deal, because the ratings agencies, fearing legal liability, won’t let the automaker puts their ratings in the prospectus, making a sale impossible.

So did Dodd-Frank just kill the bond market? Well, probably not.. Regulators will likely find some way around this impasse, but it’s still amusing to see the bill INSTANTLY slow down the gears of capitalism (or at least capital raising) as its fiercest critics might have suggested.

Click here to see 15 signs the economy is rolling over

Here’s the Wall Street Journal piece cited above:

JULY 21, 2010
Ford Scuttles Debt Deal as Overhaul Chills Market
BY ANUSHA SHRIVASTAVA

Ford Motor Co.’s financing arm pulled plans to issue new debt, the first casualty of a bond market thrown into turmoil by the financial overhaul signed into law Wednesday.

Market participants said the auto maker pulled a recent deal, backed by packages of auto loans, because it was unable to use credit ratings in its offering documents, a legal requirement for such sales. The company declined to comment.

The nation’s dominant ratings firms have in recent days refused to allow their ratings to be used in bond registration statements. The firms, including Moody’s Investors Service, Standard & Poor’s and Fitch …

Oh, well. Nobody needs those stupid jobs that Ford would have financed through an expansion, anyway.  And who really cares if numerous deals that would have happened don’t now because of “finance reform”?  Surely we’re all fine with scraping our own feces to heat our homes as in the other socialist Utopia in North Korea?  Who isn’t willing to personally suffer to punish those greedy businesses?

Analyst David Rosenberg, in agreement with other market experts such as Bob Farrell, said on CNBC that the Dow could challenge the terrifying lows of March 2009 and drop below 5,000.

Well, surely the Chairman of the Federal Reserve would bring confidence to the market.

Not so much:

Bernanke says economic outlook is ‘unusually uncertain’
In congressional testimony, the Fed chairman predicts that unemployment will remain stubbornly high for years. His comments send stocks down sharply.

By Don Lee and Walter Hamilton, Los Angeles Times
July 22, 2010

Reporting from Washington and Los Angeles —

Saying the economic outlook was “unusually uncertain,” Federal Reserve Chairman Ben S. Bernanke predicted that unemployment was likely to remain stubbornly high for several years, straining families and endangering the nation’s economic stability and competitiveness.

“Long-term unemployment not only imposes exceptional near-term hardships on workers and their families; it also erodes skills and may have long-lasting effects on workers’ employment and earnings prospects,” he said Wednesday in his semiannual testimony to Congress.

“This is the worst labor market, the worst episode, since the Great Depression,” Bernanke said of long-term unemployment. “Not only for the sake of the unemployed and for the short-term strength of the economy but also for a long-term viability in international competitiveness, I think we need to be very seriously concerned.”

We look at the financial reform imposed by the Democrats and realize that it will cost banks billions and make them even more reluctant to lend than they already are even as they pass the increased costs to their customers in the form of a tax from Obama to you.

Business leaders are flat-out stating that Obama’s economic policies are stifling growth.

And I go back to the prediction of chief executive officers made prior to the worst decision America ever made:

In October 2008 I wrote an article which quoted Chief Executive Magazine as follows:

In expressing their rejection of Senator Obama, some CEOs who responded to the survey went as far as to say that “some of his programs would bankrupt the country within three years, if implemented.” In fact, the poll highlights that Obama’s tax policies, which scored the lowest grade in the poll, are particularly unpopular among CEOs.

Barry Hussein is preaching about his “summer of economic recovery.”  But he’s a liar without shame or principle.

On the flip side of the “summer of economic recovery,” there’s actual reality.

From CNN Money, July 22, 2010:

Jobless claims jump in latest week
By Blake Ellis, staff reporterJuly 22, 2010: 9:28 AM ET

NEW YORK (CNNMoney.com) — The number of Americans filing for initial unemployment insurance climbed last week, the government said Thursday.

There were 464,000 initial jobless claims filed in the week ended July 17, up 37,000 from a revised 427,000 the previous week, the Labor Department said.

The number of claims was much higher than expected. A consensus estimate of economists surveyed by Briefing.com expected new claims to rise to 445,000.

“It’s very disappointing to have this leading indicator of economic conditions jump higher,” said John Lonski, chief economist at Moody’s Economy.com. “This is the latest reminder of a weak labor market, and the jump preserves worries regarding the adequacy of economic growth.”

The Democrats passed a 2,300 page bill that is essentially mystery meat, which creates more than 20 new agencies that will write hundreds of as-yet unwritten regulations.

And even the author of the bill doesn’t have a clue how the massive Rube Goldberg Machine boondoggle will work:

“It’s a great moment. I’m proud to have been here,” said a teary-eyed Sen. Christopher J. Dodd (D-Conn.), who as chairman of the Senate Banking Committee led the effort in the Senate. “No one will know until this is actually in place how it works. But we believe we’ve done something that has been needed for a long time. It took a crisis to bring us to the point where we could actually get this job done.”

Never let a crisis go to waste.

If you are a Democrat, I suggest you burn your testicles off with a blowtorch.  Because that would be change.  And of course change is good.  And who really cares about the irrelevant details of “change,” anyway?

Analyst Meredith Whitney, famous for being one of the very, very few who predicted the economic disaster in 2008, has made another prediction that no one listened to:

“Financial Reform Will Cause ‘Tragic’ Unemployment Levels For An Extended Period Of Time

So, as the economy descends into the hell of unintended consequences, please comfort yourselves with my assuring you that I told you so.

China Alarmed By Obama’s Deficits, Shocking Irresponsibility

September 8, 2009

It’s sad that a communist regime quotes our own founding fathers to us, because our President and the party in power has so blatantly ignored their wisdom.  But that’s what happened, as you will see reading the following article:

China alarmed by US money printing
The US Federal Reserve’s policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.

By Ambrose Evans-Pritchard, in Cernobbio, Italy
Published: 9:06PM BST 06 Sep 2009

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”.

“We hope there will be a change in monetary policy as soon as they have positive growth again,” he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.

China’s reserves are more than – $2 trillion, the world’s largest.

“Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets,” he added.

The comments suggest that China has become the driving force in the gold market and can be counted on to
buy whenever there is a price dip, putting a floor under any correction.

Mr Cheng said the Fed’s loose monetary policy was stoking an unstable asset boom in China. “If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise.

“Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down.”

Mr Cheng said China had learned from the West that it is a mistake for central banks to target retail price inflation and take their eye off assets.

“This is where Greenspan went wrong from 2000 to 2004,” he said. “He thought everything was alright because inflation was low, but assets absorbed the liquidity.”

Mr Cheng said China had lost 20m jobs as a result of the crisis and advised the West not to over-estimate the role that his country can play in global recovery.

China’s task is to switch from export dependency to internal consumption, but that requires a “change in the ideology of the Chinese people” to discourage excess saving. “This is very difficult”.

Mr Cheng said the root cause of global imbalances is spending patterns in US (and UK) and China.

“The US spends tomorrow’s money today,” he said. “We Chinese spend today’s money tomorrow. That’s why we have this financial crisis.”

Yet the consequences are not symmetric.

“He who goes borrowing, goes sorrowing,” said Mr Cheng.

It was a quote from US founding father Benjamin Franklin.

Ever heard the phrase, “own worst enemy”?  That’s the United States, to itself.  Or more particularly, that’s the president of the United States, to the country he’s supposed to be helping.

China can seriously screw us financially; they could literally bankrupt us.  They don’t want to do that, because hurting us would hurt their investment in us.  Yet the subtitle of the article drives the point home: “The US Federal Reserve’s policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy.”  We are pursuing such a fiscally reckless policy that China will be compelled to cut its losses – and truly leave us high and dry.

What Obama is doing is going to gut the U.S. currency, and China is being forced to act like a rat jumping off a sinking ship.  And just to make sure nobody fails to understand: WE’RE the ship that Obama is sinking.

Democrats – flagrant hypocrites that they are – actually had the chutzpah to demagogue Bush for his “fiscal mismanagement.” A lot of Bush’s spending WAS in fact irresponsible – but Democrats complaining about government spending is very much like Stalin complaining about Soviet gulags; it simply flies in the face of any and all reason.

When you realize that Obama’s 2009 deficit – just one year of his spending – is higher than all 8 years of Bush’s deficits COMBINED, it ought to tell you just how shockingly irresponsible Obama and the Democrats are, as well as what appalling hypocrites they are.

Just imagine putting Nancy Pelosi and Howard Dean in a time machine, and launching them six years into the future so they could see that – under total Democrat control – they would spend more than eight times more than George Bush spent in his VERY WORST YEAR.  And then realize that such is the loathsomeness of their characters that they would return to their own time and STILL demagogue Bush for his spending.  It’s just what they are. Hypocrisy is their defining characteristic, to go along with their naked demagoguery.

The danger that the Chinese point to is crystal clear.  Even key Obama-ally Warren Buffett is publicly demanding that Obama and the Democrats cut their spending to avoid massive inflation.

I would argue – in disagreement with Buffett – that we didn’t need to launch into such massive government spending (although we sure bailed out Wall Street-types like Buffett by doing so, didn’t we?).  In the initial panic, the Bush team reacted by spending, as though we could patch the holes of our debt-ruined economy by stuffing them with borrowed money.  But already, by the time Obama launched into his even more massive stimulus, it seemed readily apparent that the government wasn’t getting much of a bang for its buck – unless the “bang” was the bang of a future debt-induced economic implosion.

Think about it from this angle: do you know how small businesses are actually the driving engine of our economy and our job creation?  Well, 98% of small businesses didn’t receive any money from the Obama stimulus at all.  If fact, the National Endowment for the Arts – which recently displayed it’s pro-Obama ideological partisanship – received more stimulus funds than the small businesses that drive our economy.

By selecting Bush-appointee Bernanke to serve another term as the Chairman of the Federal Reserve, Obama was implicitly embracing most of the very Bush policies he had personally and repeatedly demagogued during the campaign.

And now in Obama’s spending we have the very worst of Bush — times EIGHT.

The Chinese are quoting Benjamin Franklin to point out America’s insanity under Barack Obama.

I would suggest another Franklin quote as well: “When the people find that they can vote themselves money, that will herald the end of the republic. “

Grayson Grills Bernanke: ‘Where Did Our Half Trillion Dollars Go?’

August 5, 2009

Are you a C-SPAN addict?  Me neither.  It is the truly desperate soul who pauses during a channel surfing session on a C-SPAN channel of some boring Congressional proceeding.  Who wants to watch a bunch of arrogant stuffed-shirt elitists argue with one another in a series of one boring speech after another?

Ah, but every now and then something of significance actually happens – and when such a once-in-blue-moon event occurs – C-SPAN is there to capture the action.

Such a moment occured when Florida Republican Rep. Alan Grayson questioned Barack Obama’s arse-smooching Federal Reserve Chairman Ben Bernanke.

This is by no means an official transcript, but it does reflect the sense of part of the exchange.  Every American should watch it to learn just how screwed up our “experts” have made our system:

Grayson: I would like to direct your attention to page 26 of the report you handed out this morning which consists of your balance sheet.  And one of the entries on your balance sheet under assets is central bank liquidity swaps which shows an increase from the end of 2007 from $24 billion to $553 billion and change at the end of 2008.  What’s that?

Bernake: Those are swaps done with foreign central banks.  Many foreign central banks are short dollars, and so they come into our markets looking for dollars and drive up interest rates and create volatility in our markets.  What we’ve done is create a swap: we buy their currency and they buy ours.  That lowers interest rates across the globe.  They take the dollars, lend it out to the banks in their jurisdiction, and that helps bring down interest rates in the global market for dollars and meanwhile we’re not lending to those banks, we’re lending to the central banks; the central bank is responsible for repaying us.

Grayson:So who got the money?

Bernake: Financial institutions in Europe and other countries.

Grayson: Which ones?

Bernake: I don’t know.

Grayson: Half a trillion dollars and you don’t know who got the money?

Bernake: Uh, the loans went to the, the loans go to the central banks and they, uh, they put them out to their, uh, to their institutions to try to bring down short term interest rates in financial markets around the world.

Grayson: Well let’s start with which central banks got the money.

Bernake: They’re 14 of them which are listed, um, in our, i’m sure they’re listed in here somewhere.

Grayson: Who actually made that decision to hand out half a trillion dollars that way?

Bernanke: The Federal Open Market Committee.

More…

Grayson: All right. We actually looked at one of the arrangements and one of the arrangements is 9 billion dollars for New Zealand. That works out to $3000 for every single person who lives in New Zealand. Seriously, wouldn’t it have been better to extend that kind of credit to Americans than New Zealanders?

Bernake: It’s not costing Americans anything, we’re getting interest back and it comes back, not at the cost of any Amercian credit. We are extending credit to Americans, too.

Grayson: Well, wouldn’t it necessarily affect the credit markets if you extend half a trillon dollars in credit to anybody?

Bernake: We are lending to all US financial institutions in exactly the same way.

Alan Grayson: Well, look at the next page, the very next page has the US dollar nominal exchange rate which shows a 20% increase in the US nominal exchange rate at exactly the same time that you were handing out a half a trillion dollars. You think that’s a coincidence?

Bernake: Yes.

Alan Grayson (Breaks out laughing at the sheer absurdity of Bernanke’s calculated refusal to acknoweldge the obvious no matter how obvious it is…).

Watch the video and pass it along:

The purpose of this is not merely to slam Democrats.  George Bush wanted to do the most massive financial bailout in history – and while Democrats provided the MOST support for the $700 billion Bush-Paulson TARP bailouts – Republicans supported it too.  Enraged House Republicans voted down the measure after Nancy Pelosi used the opportunity to politically demagogue them, but enough of them ended up supporting the bailout plan.  Ultimately two-thirds of Democrats and one-third of Republicans voted to pass the measure.  John McCain supported it as a presidential candidate right along with Barack Obama.  And we have been throwing billions and even trillions of dollars around ever since.

Republicans were wrong.  Democrats were far more wrong, of course, because they are always far more wrong.  But Republicans should have put their foot down to prevent the financial-whiz-kid takeover of our entire political and economic system.

Something is incredibly sick with our system, because somehow that $700 billion TARP bailout has morphed into a $23.7 TRILLION TARP bailout, as the special inspector general for the Treasury’s Troubled Asset Relief Program, Neil Barofsky, recently made public.

And Barack Obama’s and Turbo-Tax Tim Geithner’s Treasury Department – caught red-handed spending and loaning FAR more than they ever should have been allowed to spend and loan – managed to turn the issue into a quibbling over just how much money we could theoretically lose at one time.  When the bigger question was, “Just how does an authorization of $700 billion become an authorization for $23.7 trillion?”

The difference between Democrats and Republicans at this point is that Republicans – who now openly admit they spent too much when they were in power – have wised up.  Meanwhile, Democrats who attacked “dangerous” and “irrepsonsible” federal spending under Bush have taken “dangerous” and “irresponsible” to levels never before even dreamt of. Democrats are utterly determined to keep up the insane spending spree until we are utterly imploded with debts even our children’s children’s children’s children’s children will never be able to hope to repay.

Since TARP, Obama has passed a $3.27 trillion stimulus that didn’t stimulate, a 9,000 earmark-laden $410 billion omnibus bill, and a $3.55 trillion federal budget that adds more to the debt than all previous US presidents from George Washington to George W. Bush – combined.  And even as we play aound with $2 trillion more for health care “reform” and throw billions of dollars more into “Cash for Clunkers,” there’s no sign that we are on any kind of slowdown as we race toward the economic cliff ahead.

We are experiencing a sickness that might well be epitomized by Vice President Joe Biden’s statement: “We have to spend money to keep from going bankrupt.” They are the words of a fool – and yet fools are now in total charge of our country as they pursue their fools’ agenda.

They want to play their political power games, rewarding their political allies and punishing their political opponents.  They want to stay in power forever.  They want to sit in their offices with their staffs and their benefits and their various fiefdoms.  They don’t want to protect the United States from calamity.  They somehow think that America is eternal and can never be defeated or destroyed.  They’re going to be in for a great wake-up call – and the nation right along with them – when it all goes to hell due to their insane lack of responsibility.

Who REALLY Exploded Your Economy, Liberals Or Conservatives?

August 3, 2009

From Mark Levin’s Liberty and Tyranny, pages 67-71:

From where does the Statist acquire his clairvoyance in determining what is good for the public?  From his ideology.  The Statist is constantly manipulating public sentiment in a steady effort to disestablish the free market, as he pushes the nation down tyranny’s road.  He has built an enormous maze of government agencies and programs, which grow inexorably from year to year, and which intervene in and interfere with the free market.  And when the Statist’s central planners create economic perversions that are seriously detrimental to the public, he blames the free market and insists on seizing additional authority to correct the failures created at his own direction.

Consider the four basic events that led to the housing bust of 2008, which spread to the financial markets and beyond:

EVENT 1: In 1977, Congress passed the Community Reinvestment Act (CRA) to address alleged discrimination by banks in making loans to poor people and minorities in the inner cities (redlining).  The act provided that banks have “an affirmative obligation” to meet the credit needs of the communities in which they are chartered.1 In 1989, Congress amended the Home Mortgage Disclosure Act requiring banks to collect racial data on mortgage applications.2 University of Texas economics professor Stan Liebowitz has written that “minority mortgage applications were rejected more frequently than other applications, but the overwhelming reason wasn’t racial discrimination, but simply that minorities tend to have weaker finances.”3 Liebowitz also condemns a 1992 study conducted by the Boston Federal Reserve Bank that alleged systemic discrimination.  “That study was tremendously flawed.  A colleague and I … showed that the data it had used contained thousands of egregious typos, such as loans with negative interest rates.  Our study found no evidence of discrimination.”4 However, the study became the standard on which government policy was based.

In 1995, the Clinton administration’s Treasury Department issued regulations tracking loans by neighborhoods, income groups, and races to rate the performance of banks.  The ratings were used by regulators to determine whether the government would approve bank mergers, acquisitions, and new branches.5 The regulations also encouraged Statist-aligned groups, such as the Association of Community Organizations for Reform Now (ACORN) and the Neighborhood Assistance Corporation of America, to file petitions with regulators, or threaten to, to slow or even prevent banks from conducting their business by challenging the extent to which banks were issuing these loans.  With such powerful leverage over banks, some groups were able, in effect, to legally extort banks to make huge pools of money available to the groups, money they in turn used to make loans.  The banks and community groups issued loans to low-income individuals who often had bad credit or insufficient income.  And these loans, which became known as “subprime” loans, made available 100 percent financing, did not always require the use of credit scores, and were even made without documenting income.6 Therefore, the government insisted that banks, particularly those that wanted to expand, abandon traditional underwriting standards.  One estimate puts the figure of CRA-eligible loans at $4.5 trillion.7

EVENT 2: In 1992, the Department of Housing and Urban Development pressured two government-chartered corporations – known as Freddie Mac and Fannie Mae – to purchase (or “securitize”) large bundles of these loans for the conflicting purposes of diversifying the risks and making even more money available to banks to make further risky loans.  Congress also passed the Federal Housing Enterprises Financial Safety and Soundness Act, eventually mandating that these companies buy 45% of all loans from people of low and moderate incomes.8 Consequently, a SECONDARY MARKET was created for these loans.  And in 1995, the Treasury Department established the Community Development Financial Institutions Fund, which provided banks with tax dollars to encourage even more risky loans.

For the Statist, however, this was still not enough.  Top congressional Democrats, including Representative Barney Frank (Massachusetts), Senator Christopher Dodd (Connecticut), and Senator Charles Schumer (New York), among others, repeatedly ignored warnings of pending disaster, insisting that they were overstated, and opposed efforts to force Freddie Mac and Fannie Mae to comply with usual business and oversight practices.9 And the top executives of these corporations, most of whom had worked in or with Democratic administrations, resisted reform while they were actively cooking the books in order to award themselves tens of millions of dollars in bonuses.10

EVENT 3: A by-product of this government intervention and social engineering was a financial instrument called the “derivative,” which turned the subprime mortgage market into a ticking time bomb that could magnify the housing bust by orders of magnitude.  A derivative is a contract where one party sells the risk associated with the mortgage to another party in exchange for payments to that company based on the value of the mortgage.  In some cases, investors who did not even make the loans would bet on whether the loans would be subject to default.  Although imprecise, perhaps derivatives in this context can best be understood as a form of insurance.  Derivatives allowed commercial and investment banks, individual companies, and private investors to further spread – and ultimately multiply – the risk associated with their mortgages.  Certain financial and insurance institutions invested heavily in derivatives, such as American International Group (AIG).11

EVENT 4:  The Federal Reserve Board’s role in the housing boom-and-bust cannot be overstated.  The Pacific Research Institute’s Robert P. Murphy explains that “[the Federal Reserve] slashed rates repeatedly starting in January 2001, from 6.5 percent until they reached a low in June 2003 of 1.0 percent.  (In nominal terms, this was the lowest the target rate had been in the entire data series maintained by the St. Louis Federal Reserve, going back to 1982)….  When the easy-money policy became too inflationary for comfort, the Fed (under [Alan] Greenspan and the then new Chairman Ben Bernanke at the end) began a steady process of raising interest rates back up, from 1.0 percent in June 2004 to 5.25 percent in June 2006….”12 Therefore, when the Federal Reserve abandoned its role as steward of the monetary system and used interest rates to artificially and inappropriately manipulate the housing market, it interfered with normal market conditions and contributed to destabilizing the economy.

————————————————————————————————

1 Howard Husock, “The Trillion-Dollar Shakedown that Bodes Ill for Cities,” City Journal, Winter 2000.

2 Stan Liebowitz, “The Real Scandal,” New York Post, Feb. 5, 2008.

3 Ibid.

4 Ibid.

5 Howard Husock, “The Financial Crisis and the CRA,” City Journal, Oct. 30, 2008.

6 Liebowitz, “The Real Scandal.”

7 Husock, “The Financial Crisis and the CRA.”

8 Ibid.

9 Editorial, “Fannie Mae’s Patron Saint,” Wall Street Journal, Sept. 10, 2008; Joseph Goldstein, “Pro-Deregulation Schumer Scores Bush For Lack of Regulation,” New York Sun, Sept. 22, 2008; Robert Novack, “Crony Image Dogs Paulson’s Rescue Effort,” Chicago-Sun Times, July 17, 2008.

10 Office of Federal Housing Enterprise Oversight, “Report of the Special Examination of Freddie Mac,” Dec. 2003; Office of Federal Housing Oversight, “Report of the Special Examination of Fannie Mae,” May 2006.

11 Lynnley Browning, “AIG’s House of Cards,” Portfolio.com, Sept. 28, 2008.

12 Robert P. Murphy, “The Fed’s Role in the Housing Bubble,” Pacific Research Institute blog.

The government links from footnote 10 have been purged (and I COUNT on left-leaning “news” sources to purge stories that reveal the left for what it is), but there is plenty of evidence that a) Fannie and Freddie were firmly in the hands of Democrats; b) that Democrats and Fannie/Freddie at least twice resisted reforms by President Bush and Republicans; and c) that Fannie and Freddie executives – who were deeply involved with Democrat activismactively cooked the books to obtain huge bonuses prior to the disastrous crash.  We can also demonstrate d) that Barack Obama and Chris Dodd were involved with corrupt Fannie and Freddie (and Obama and Dodd were also receiving large contributions from corrupt Lehman Bros. even as Obama was getting a sweetheart mortgage deal from corrupt Tony Rezko while Chris Dodd was getting sweetheart mortgage deasl from corrupt Countrywide) right up to the tops of their pointy little heads.

When one examines the actual factors that led to the housing mortgage meltdown (as Mark Levin documents), when one examines the Democrat’s patent refusal to even accept that there was even a problem with Fannie and Freddie – much less allow any regulation – prior to the ensuing disaster, and when one examines the record to see which politicians were receiving money from the parties most responsible for the disaster, there is clearly only one party to blame: the Democrat Party.

And they are right back to all their old tricks.  It was rampant and insane spending that got us into this financial black hole – and they want MORE on top of MORE spending.  Meanwhile, Democrats such as Barney Frank are hard at work trying to create the NEXT massively destructive housing bubble, ACORN is trying to seize houses from rightful owners in the name of the “poor,” liberals are making moral hazard that rewards recklessness and irresponsibility and punishes frugality and responsibility official government policy , even as the Obama administration is creating “solutions” to the foreclosure issue that have abjectly failed.

Why We Should Be Seriously Contemplating The Great Depression

December 3, 2008

Revelation 6:6 – “And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.”

There are plenty of financial experts out there assuring us that any comparison between our current economic situation and the Great Depression are utterly baseless.  The problem is that most of these experts are either demonstrated hypocrites who have themselves compared our economy to the Great Depression, or they are employing extremely flawed logic in their dismissals that may well even cross the line into outright deception.

Nathan Burchfiel takes CNBC‘s Jim Cramer to task for the sort of blatant hypocrisy that we’ve seen from all to many other media analysts:

CNBC “Mad Money” host Jim Cramer said on NBC’s “Today” show Dec. 2 that comparisons between the current economy and the Great Depression are “scare tactics.” Maybe he forgot about his own reliance on the juxtaposition….

But Cramer has been among the most vocal scaremongers when it comes to throwing around Great Depression warnings.


Criticizing economists who opposed the $700 billion taxpayer bailout of the financial industry on the “Today” show Oct. 1, Cramer warned the country was “on the precipice of Great Depression II.”

He made a similar claim about the financial bailout in September, arguing that if Treasury Secretary Henry Paulson didn’t find a way to get a rescue package passed, “we are going to have The Great Depression II on our hands.”


On Nov. 11, Cramer supported another proposed bailout – this time for the U.S. auto industry by saying it would prevent another depression. “It’s like look – we got to bail them out,” Cramer told CNBC “Street Signs” host Erin Burnett. “We have to. We have to keep the Great Depression off the table.”

In other words, the “Great Depression” basically becomes a shell game, where you see the shell when the shysters want you to look at it, and then you don’t see the shell when they want to keep it out of sight.  It’s a bogeyman that some journalist, or some academic, or some government official can trot out to frighten us into doing what s/he wants to advance an agenda, and then put it away until they want to frighten us again.

Now, there was a time when a story like this one would have completely discredited a media personality such as Jim Cramer.  But in these Bizarro World days, being discredited seems to be to a journalist’s career what having a tawdry sexual affair does to a movie star’s career.

Then we’ve got the philosophical dismissal of any comparison to the Great Depression, as exemplified by government academics such as Ben Bernanke:

WASHINGTON (AFP) — Federal Reserve chairman Ben Bernanke said Monday the current economic situation bears “no comparison” to the much deeper crisis of the 1930s Great Depression.

“Well, you hear a lot of loose talk, but let me just … say, as a scholar of the Great Depression — and I’ve written books about the Depression and been very interested in this since I was in graduate school, there’s no comparison,” Bernanke said in a question period after an address in Austin, Texas.

Bernanke cited “an order-of-magnitude difference” in the current situation compared to the 1930s.

“During the 1930s, there was a worldwide depression that lasted for about 12 years and was only ended by a world war,” he said.

“During that time, the unemployment rate went to 25 percent, at least, based on the data that we have. The real GDP (gross domestic product) fell by one-third. About a third of all of the banks failed. The stock market fell 90 percent.”

Bernanke said the situation at that time represented “very difficult circumstances,” because “we didn’t have the social safety net that we have today. So let’s put that out of our minds; there’s no — there’s comparison in terms of severity.”

Well, first of all the fact is that Bernanke – just like Cramer – has himself made the comparison between our economy and the Great Depression, as the bottom of the same article clearly demonstrates:

In a related matter, President George W. Bush said in an interview released Monday that Bernanke and Treasury Secretary Henry Paulson warned him weeks ago that bold action was needed to avert a new Great Depression.

“I can remember sitting in the Roosevelt Room with Hank Paulson and Ben Bernanke and others, and they said to me that if we don’t act boldly, Mr. President, we could be in a depression greater than the Great Depression,” Bush told ABC News.

Which clearly means that comparisons to the Great Depression clearly aren’t so silly after all – as evidenced by the very people who are most loudly telling us that such a comparison is silly.

Bernanke and others also imply that our social support structures and our financial expertise would prevent the worst effects of any so-called “Great Depression.”  But is that really so?

When the $852 billion Troubled Asset Relief Program (TARP) suddenly morphed into what one writer mocked as Capital Redistributed As Pork (CRAP), shouldn’t it bother you that an abandonment of such an enormous program’s expressed goal midstream amounts to a de facto declaration that our experts clearly don’t know for sure what they’re doing?

The notion that a Great Depression could never happen because we know so much more doesn’t hold much water for me in the light of our “Keystone Cops-approach” to all of our various bailouts and attempts at political legislation.  The fact is, after seeing our “experts” at work the last couple months, I have less confidence in them than I’ve ever had before.

But there’s another giant problem with Bernanke’s analysis, and it is difficult to imagine that he doesn’t himself recognize it.  The problem is that he’s comparing apples to oranges; he’s comparing an economy that may well be on the throes of a future Great Depression to a 1930s economy that was already well into the worst stages of a depression.  And he’s pointing out the obvious – but in fact completely irrelevant and actually completely absurd – fact that they don’t look alike.  Of course they don’t look alike – yet.

But what would have happened had Bernanke compared the economy as it was in 1929 with our economy today, rather than the worst period of the 1930s?  What would have happened had he looked at the economy just before the Black Tuesday crash of October 29, 1929, or even shortly after that crash?  The numbers would have hardly appeared anywhere near so dire, which means Bernanks’ comparison would have failed.

Let me quote Wikipedia to show you what I mean:

The Great Depression was not triggered by a sudden, total collapse in the stock market. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929.[7] Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the summer of 1930.

In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing. By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worst in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the American economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.

Keep in mind that OUR stock market began to tank only a little over two months ago.  And if the exact same thing were to happen now that it did to the United States in the 1930s, we actually would expect our market to pick up significantly in the coming months – and our economy to even appear to be rebounding – shortly before a downward slope into collapse that would occur one to three years later.  It wasn’t until March 1933 – 3 years and 4 months after the Black Tuesday stock market crash – that the bottom really fell out of our economy.

And while “Great Depression” comparisons may be silly in terms of the actual economic numbers RIGHT NOW (the number of banks going under, the jobless rate, etc.), we actually face potential economic nuclear bombs that would very likely have made 1930s American financial experts faint with dread.

We are looking at $700 TRILLION in derivatives.  Compare this stupefying fact to the associated fact that global GDP is only about a lousy $50 trillion! Assets have been leveraged as much as a hundred and even two-hundredfold.  The Institute for Economic Democracy have an article titled, “Hedging and Derivative Risks Become Infinite Risks.”  The result is MASSIVE exposure such as the world has never seen lurking like some incredibly deadly plague in the form of financial vehicles that few even begin to understand and only advanced computers can calculate.  As these highly leveraged financial obligations result in losses – as has already begun to happen – the result is cataclysmic failure in financial markets beyond the power of any government to prevent.  And anyone but a fool should be able to recognize by now that such disasters can send the entire global economy crashing down very quickly, seemingly from out of nowhere.

None of the bailouts have done ANYTHING to fix the systemic structural problems with our financial system (the worst probably being the massive flow of capital out of production and into speculative markets due to the shift from being a manufacturing-based economy to a service-based economy).  And the fact that the $852 billion bailout package went from being used to buy bad mortgages to a completely different solution should kind of serve to tell you that no one really knows WHAT to do.

So our financial experts are throwing out our money the way out-of-control craps players throw dice.

ABC News had this:

The government’s financial bailout will be the most expensive single expenditure in American history, potentially costing around $7.5 trillion — or half the value of all the goods and services produced in the United States last year.

In comparison, the total U.S. cost of World War II adjusted for inflation was $3.6 trillion. The bailout will cost more than the total combined costs in today’s dollars of the Marshall Plan, the Louisiana Purchase, the Korean War, the Vietnam War and the entire historical budget of NASA, including the moon landing, according to data compiled by Bianco Research.

It remains to be seen whether the government’s multipronged approach to bail out banks, stimulate spending and buy up mortgages will revive the economy, but as the tab continues to grow so does concern over where the government will find the money.

One critical thing to understand is that the aforementioned historic massive expenditures – which combined still only amount to half of the expenditure we are talking about today – took place over many decades, such that the various costs to the economy were absorbed over many years.  What happens when we spend trillions of dollars in only a few months?  Who knows?  No one has ever tried it before! And unlike the what had been the greatest – now the second greatest – expenditure in history, the costs associated with World War II were spent producing, building, and developing, whereas frankly most of the costs associated with our current bailouts essentially amount to paying off Wall Street’s gambling debts.

Meanwhile – as we contemplate forking over still more billions to bail out our automakers – we need to realize that we’re entering a potentially insane realm where there’s simply no end to the companies and now even the states who are “too big to fail” and need bailouts of their own.  And what of the moral hazard incurred by giving money to people, corporations, and states simply because they were the biggest fools and failures?  What impact will this have not only on the economy, but on the hearts and minds of honest people who played by the rules and ended up with nothing to show for it while the failures and the gamblers walk away with money in their pockets?  How many previously stable people will begin to angrily demand, “Where’s my bailout?”

What’s going to happen as our financial system attempts to absorb absolutely mind boggling government debts that dwarf anything ever before seen in human history?

A lot of financial experts aren’t so much anxious about what happens in the next few months.  We might well be able to throw so much money at the economy that we can stimulate it again; rather, they are worried about 3-5 years down the road as our dollar devalues dramatically due to interest payments that can only be repaid by printing more and more money.  You don’t just double an already insanely-out-of-control national debt without severe consequences.

And given the very real probability that massive spending is going to be the cause of our undoing, the social safety net that Bernanke refers to as being a preventative would actually merely be one more causative factor in a pending economic collapse.  We won’t be able to hand out food stamps and welfare checks if our government itself goes bankrupt.

So while it’s obviously not accurate to describe our present situation as a “Great Depression,” the simple reality is that we might well – and in the very near future – experience an economic meltdown that would likely make the Great Depression look tame in comparison.