With QE3 Federal Reserve And Obama Administration Fully Qualify For Definition Of Insanity (Doing SAME Thing Over And Over And Expecting Different Results)

Things aren’t getting better.  Obama told you a lie.  Democrats have been telling you lies.  I (and other conservatives) have accurately and reliably told AND PREDICTED the truth from the get-go.  As I will document in this article.

First of all, the QE3 that was launched today is an open recognition of the failure of the Obama administration by the Federal Reserve.

The initial title of this article – as you can see by examining the link itself – was “GOLDMAN: Bad Jobs Report Puts Odds Of QE Next Week Above 50%.”

GOLDMAN: It Looks Like QE Is Coming Next Week
Joe Weisenthal|Sep. 7, 2012, 8:47 AM

Quick blast outta Goldman.

BOTTOM LINE: With today’s August employment report showing a nonfarm payroll gain of 96,000 and an unemployment rate of 8.1% because of a drop in the participation rate, we expect a return to unsterilized and probably open-ended asset purchases at the September 12-13 FOMC meeting.

MAIN POINTS:

1. We now anticipate that the FOMC will announce a return to unsterilized asset purchases (QE3), mainly agency mortgage-backed securities but potentially including Treasury securities, at its September 12-13 FOMC meeting. We previously forecasted QE3 in December or early 2013. We continue to expect a lengthening of the FOMC’s forward guidance for the first hike in the funds rate from “late 2014” to mid-2015 or beyond.

So this isn’t a “good thing.”  This is a bad thing.  The 200 point increase in the stock market is a temporary blip and ultimately only the institutional investors who can move money around in microseconds will be able to benefit from it.

Here’s another article I wrote back in August that cites proof that the QE3 that we just saw Friday is the result of the Obamanomics disaster.  The Fed simply didn’t launch QE3 because Obama’s economic policies are working; they did it because Obamanomics has utterly failed.

Second, let’s look at the “success” of quantitative easing:

Here’s more on that from an article I wrote back in August 2011.  Notice that I predicted with complete accuracy that QE2 would fail and that we would be at precisely the point where we are now trying a THIRD round of quantitative easing.

And this isn’t really even “QE3”; it’s really “QE4.”  Because Operation Twist basically WAS QE3.  It was certainly at the very least a “primer” for QE3.  I’m hardly the only one to say that, as it’s rather easy to show.  Just how many times do we have to keep trying this???

As long as Wall Street keeps getting its massive doses of sugar (really more like crack cocaine) from the government, it keeps feeding and feeding from the massively-government-subisidized feeding trough.

Look at the chart above and answer this question: if I were a drug addict pursuing doses of crack, how would a graph of my behavior look different?  I’d have my hit (QE1) and then crash; then I’d take another hit (QE2) and then crash; so I’d need another hit (QE3).  And then another one, ad infinitum.  That is the nature of destructive addictive behavior; and the addict either changes or he dies.  We’ll see in November if we’re ready to change or if we want to keep pursuing economic crack until we collapse and die as a nation.

How many times do you keep doing the same thing?  Now that we are at “QE3,” how is this not the classic definition of insanity???

What do you think the odds are that the market is going to tank again just like it did the first two times in anticipation of a QE4????  And you need to realize that a vote for Obama IS a vote for QE4.  And QE5.  And we’ll be a banana republic before Obama’s Fed would have a chance to do a QE6.

Not counting QE3 today, the Federal Reserve has pumped (or dumped) more than $2.3 trillion in money that it invented by adding zeros to their computer under Obama.

Let me ask you a question?  Where did that $2.3 trillion go?  Are you richer???

You sure aren’t.  In fact, even if you blame the ENTIRE recession on Bush (as liberals invariably do), Obama has still been very nearly TWICE as disastrous for household incomes in his “recovery” than you can blame Bush for during “his” recession.  You’re being lied to every single day.

When George Bush left office, a senior citizen with $300,000 in bonds – basically a fairly average retirement nestegg – could collect $1,500 a month in interest.  Which was enough for them to live on and be able to have the principal for emergencies and hopefully be able to leave that principal to their children.  But Obama and Bernanke have obliterated that; now that same $300,000 is producing only $200 a month in interest.  Which is very obviously nowhere NEAR enough to live on.  And so senior citizens are eating away at that nestegg that they counted on at a very alarming rate.  Obama and his failed policies have screwed these people – and the mainstream media will NOT talk about it.

Now the Fed balance sheet is going to be over $3 trillion.  And you can add to that shocking tally another $40 billion every single month for the foreseeable future.  Before Obama took office, it was $800 billion.  Nobody’s talking about what that massive devaluation of our currency is going to ultimately cost us.  Nobody is talking about the fact that the people who are going to pay the highest tax as a result of this action – and it IS a regressive tax – will be retirees who will see the value of their savings drop even as they look at interest rates and pension funds that pay them nothing.  Retirees are not in a position to snort the crack of quantitative easing; they depend mostly on bonds.  And the Obama administration and the Federal Reserve have decided to stab the bond market  that older investors necessarily depend upon in the heart to artificially inflate the stock market.  Until they have to do it again.  And again.  And of course pretty soon again and again after that.

Commodities like oil and food – which conveniently are being ignored as proof positive that we are already seeing MASSIVE inflation – will continue to go up and up and up (see here and here and here for examples).   The fact of the matter is that prices are rising dramatically and HAVE BEEN rising dramatically, and what just happened today will sure that they CONTINUE to rise dramatically.  And everybody but Obama and the Federal Reserve know it.

I put it in biblical terms here.  And I pointed out:

The only thing propping up the economy under Obama’s morally and fiscally idiotic policies is QE2. Banks and major businesses are not being allowed to fail (it’s all too big too fail in an increasingly fascist system in which the government dominates the banking and corporate spheres). Right now, the system Obama has only made more broken is being kept afloat in cash being created out of thin air. The last time quantitative easing ended, the DOW immediately lost 16% of its value in two weeks. And QE2 is set to end in June.

This means QE3, and then of course QE4. Because “QE” means “Quack Economics” far more than it should mean anything else.

I also pointed out that this would fail way back in 2010.  And I pointed out that all the Federal Reserve is doing is monetizing Obama’s damn insane deficits.

But the real inflation monster is still yet to come.

Back in May of last year I wrote this:

QE2 is the economic equivalent of sugar in nutrition. Will it provide quick energy? Sure it will. Will that quick energy come at the expense of future health? You bet it will.

Right now, as a result of the Obama Federal Reserve’s policy of increasing the monetary supply by buying debt from itself (literally creating money out of thin air), there is more economic activity. Right now, as a result of this policy, credit rates are lower. Fewer banks and corporations are going under because of the ready access to cheap money. Investors see the stability and invest.

We should all feed our children tons of sugar, so we can enjoy the short term bonanza of frenetic activity.

Unless you worry about all the cavities, the weight gains, the diabetes, and of course that huge depressing crash with all of those catastrophic health consequences that necessarily come later.

The first time we ended QE1, the stock market lost 16% of its value in two weeks. Which is to say it didn’t work the first time for the same reason it won’t work this second time. Or a necessary third time, etcetera.

One of the more sinister effects of quantitative easing is that it essentially becomes a tax on saving. You were busy at work putting away as much as you could during a period when your money was worth more. But now, as a result of artificially increasing the money supply, all that money you accumulated in saving is worth less. Why is this? Because you can increase the money supply all you want, but you’ve still got the same finite amount of goods and services. And when you’ve got twice as many dollars in the money supply as you had before, over time those same goods and services will cost twice as much as before, and so on.

Right now, prices are going up dramatically on virtually everything that matters. And yet the only ones who refuse to admit it are the federal government and its staunchest mainstream media propagandists who think and report what the Obama regime wants them to think and report.

In another article I wrote over two full years ago:

An increase in the money supply is rather like an overdose of drugs. And in this case the effect of the overdose will be hyperinflation. Basically, the moment we have any kind of genuine recovery, our staggering deficit is going to begin to create an ultimately gigantic inflation rate. Why? Because we have massively artificially increased our money supply beyond our ability to actually produce real wealth, and that means that money will ultimately be devalued. There’s simply no way it can’t be. If simply printing money solved financial problems, the government could just mail everyone several million dollars, and we could all retire. The problem is that more money chasing a limited supply of goods simply pushes up prices higher and higher without doing anything to solve the underlying economic problems. If we have a recovery, with increased economic activity, there will be increased demand on the money supply, forcing an upward climb in interest rates as a means of controlling the currency. And then we’ll begin to seriously pay for Obama’s and the Democrat Party’s sins. Paradoxically, the only thing preventing hyperinflation now is the recession, because people aren’t buying anything and therefore aren’t competing for those limited goods.

THAT is why we haven’t yet experienced truly catastrophic inflation YET.  But the moment we ever actually start to get out of the economic hellhole Obama has dug us into, we will see inflation at levels that will shock and dismay you.  You mark my words.

Now that we are officially at QE3, I want you to watch this video to see what necessarily awaits you:

Get ready, because the American economy WILL be going on a scary ride:

The Pathological Stupidity Of Obama’s ‘Fairness’ Meme Of Taxing The Rich

We need to balance our insane budget deficit, Democrats say.  And it’s time the rich paid their fair share.

All the top 10% of earners paid is 73 percent of the income taxes collected by the federal government.  That’s nothing.  It’s those poor poor who suffer the most.  The bottom 50% have to pay a whole bunch of nothing.  It’s just brutal for them every April.  They want to write a check to the government, but only the rich get to do stuff like that.  And the bottom 40% are so screwed by our federal income tax system that they actually are forced to accept free money in addition to paying a whole bunch of nothing.  Unless the Associated Press is lying about it.

Nothing makes me more annoyed than the phrase “give the rich tax cuts.”  Because it presumes that the government owns us and graciously allows us to keep some of what we earn.  The way liberals understand things, they own all the means of production.  They own my labor and whatever I earn from my labor.  And I am lucky if the commissars allow me to keep enough to feed myself.  It derives from a tenant of Marxism: “From each according to his ability, to each according to his need.”  At the core is central planning; government stands above us, it stands above God (which is why consistent Marxists deny God exists and religion is merely an opiate of the masses), and government should redistribute everything according to its divine power.

That is the intrinsic logic of their view that allowing the rich or anyone else to keep more of their own money is considered a cost to the government.  But it ISN’T a cost to the government to allow me to keep more of my own money; anymore than it is a cost to me to allow my next door neighbor to keep more of his own tools.

Obama gave an address in which he paid lip service to reducing spending – even though his budget that he released only TWO MONTHS AGO didn’t reduce any spending at all – and in fact stated that it would be dangerous to do so.  Obama has no plans to cut spending; in fact, the deficit in just the first six months of this year shot up another 15.7%.  Obama is going to do what he’s been doing since he started running for president; he’s going to offer meaningless rhetorical platitudes about cutting spending and reducing costs, while demonizing the rich and demanding that the ONLY people who pay REALLY START TO PAY.

Obama is going to talk about “fairness.”

The ‘fairness’ meme
April 12, 2011 – 4:47 am – by Roger Kimball

We don’t know exactly what Barack Obama is going to say when he fires up his teleprompters at George Washington University tomorrow. The color, we do know, however: it’s red, as in “red ink,” what Mitch Daniels at his speech at CPAC earlier this year called “the new red menace.” (I like to think that the invocation of the old “red menace,” the Communist, socialist one, was deliberate: it is, I would argue, apt.)

The substance of the speech, as ABC notes, is “closely held.” Everybody thinks that there will be at least pro forma acknowledgement that spending on such programs as Medicare and Social Security needs to be reined in. But the big O will also return to one of his favorite themes, a by-word from his 2008 campaign: “increased taxes on the wealthy” (that’s according to “White House officials”).

Here’s my bet: the operative word in Obama’s speech tomorrow night, the mantra that will be repeated endlessly not only by O but also by the left-wing commentariat, is “fairness.” You remember his campaign shtick: the Saddleback Church event, for example, when Rick Warren asked candidates John McCain and B.O. about taxes. “Define rich,” he asked. McCain tossed out an income of $5 million, which elicited derision. But the gravamen of his response came in the elaboration: “I don’t want to take any money from the rich. I want everybody to get rich.”

How different was B.O.’s response: What he was looking for, he said, was “a sense of balance, and fairness in our tax code. It is time for folks like me who make more than $250,000 to pay our fair share.”

“Our fair share.” That, as I noted at the time, is B.O.’s refrain. “[W]e will save Social Security for future generations by asking the wealthiest Americans to pay their fair share.” It’s a small step from the invocation of “our fair share” to Obama’s call for a tax on “the windfall profits of oil companies,” a tax increase on capitals gains, elimination of the tax on Social Security tax, etc., etc.

The crucial point here is that what Obama is interested in is not increasing revenue but in promulgating redistributionist policies that make it harder for people to prosper economically. William McGurn, writing in The Wall Street Journal back then, recalled Obama’s response to ABC’s Charlie Gibson when Gibson observed that raising taxes led to decreased revenues: “Well, Charlie,” Obama replied, “what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.”

“For purposes of fairness”: that means, “for purposes of economic egalitarianism.”

McGurn observed:

[I]t doesn’t really matter whether a tax increase actually brings in more revenue. It’s not about robbing from the rich to give to the poor. Robbing from the rich will do, especially if it’s done in the name of fairness.

Now there are good reasons Mr. Obama is not likely to pursue the revenue side of the fairness question. As this newspaper noted in a recent editorial, the latest data from the Internal Revenue Service does not show to Mr. Obama’s advantage. As we come to the end of the Bush administration, the top 1% of American taxpayers already pay 40% of all income taxes — the highest level in 40 years. The top 10% of income earners pay 71% of the taxes.

The bottom line is that when Obama invokes “fairness,” he wants us to feel guilty about economic success. This is the secret of his appeal to the socialistically inclined.

It worked in 2008. Let’s see how it goes down tomorrow. Over the last two years, Barack Obama has presided over an economic Armageddon. Everyone knows about that $14 trillion that is the federal debt. Few people, I suspect, really appreciate what that unimaginable figure represents. And the kicker is, $14 trillion is only a tithe of the trouble. As Kevin Williamson and others have pointed out, the country’s real debt, when you facotr in state indebtedness and unfunded so-called “entitlement” liabilities, is closer to $130 trillion. That horror-movie figure is just too awful to contemplate, so I will draw a veil.

[…]

For the record, I wrote an article entitled, “Tax Cuts Increase Revenues; They Have ALWAYS Increased Revenues,” in which I documented that every single time the United States has reduced the income tax rate, federal revenues have gone up.  I go back to Warren Harding to document that.  I include John F. Kennedy, Ronald Reagan, and George Bush – who increased federal revenues by lowering tax rates.

But this recurring documented fact of U.S. history is tantamount to rocket science to liberals.  Because they adhere to the entirely unrealistic premise that if I were to double your taxes, I would collect double the revenue, because people wouldn’t react to the tax increase by altering their behavior.

Recent developments give me a crystal clear example of why liberals couldn’t be more wrong:

Gas Price Rise, Americans Drive Less
By Rachel Smith
Posted: Apr 12, 2011 10:30 a.m.

Americans are taking rising gas prices seriously. They’re already driving less, “reversing what had been a steady increase in demand for fuel,” the Associated Press writes. “For five weeks in a row, they have bought less gas than they did a year ago.”

The average price of gas is an obvious indicator of why national fuel consumption is dropping. At the end of March, AAA reported that gas reached an average of $3.60 nationally. Today, AAA says the national average is $3.79 for regular grade, a 29 cent jump in about two weeks. Business Week reports that many analysts forecast that these numbers will worsen, and expect that consumers could pay as much as $5 a gallon this year due to political unrest in North Africa and the Middle East, which supply much of the United States’ oil. The $5 per gallon speculation has been floating around the industry for some time, but last year, CNN stated that former president of Shell Oil, John Hofmeister predicted that Americans could pay $5 a gallon by 2012. Analysts have bumped that date up.

“Drivers are already reacting to the change,” writes Kicking Tires. “In the first week of April, consumption was down 3.6%, or 2.4 million gallons of gasoline,” based on data from MasterCard Spending Pulse.

One of the best ways to combat rising gas prices is to drive less, but there are other simple things you can do. […]

Even uneducated, ignorant and frankly stupid people understand this incredibly basic concept: cost goes up, activity goes down.  And yet you have liberals with PhDs staffing agencies such as the Congressional Budget Office utterly fail to understand that if they make taxes go up, they will end up with reactions that will invariably produce less revenue for the government.

If even high-school dropouts understand that if the price of gasoline goes up, they need to drive less, how is it that brilliant businessmen won’t realize that if their tax rates go up, they need to protect their money?

Here’s another analogy that might be spot on the money.  Suppose your going to work and a mugger jumps you and takes all your money.  As he’s walking off, counting your (well, his now) cash, he says, “I hope you’ve got as much dough tomorrow, because I’m going to mug you again.”  Now, if you’re smart, you won’t be happening by that way at all the next day.  But if you’ve absolutely got to go that way to get to work, will you have as much money that next day?  Not if you’ve got a single functioning brain cell.  On my analogy, if you figure out some other way to get to work, that’s tax avoidance.  If you stash your cash somewhere so you don’t have it for the robber to take, that’s tax sheltering.  And if you’re too stupid to understand that this is what people do when their taxes go up, that’s liberalism.

The more taxes increase, the more activities that were previously not worth doing – such as sheltering assets, moving assets overseas, investing in collectibles, purchasing tax-exempt investment vehicles, or just dodging taxes – become worth doing.

And so,what happens every single time happens yet again.  Raise taxes expecting more revenue, get less revenue, and hurt the economy in the process by penalizing productivity and investment risk and thereby restricting growth.  And when you encourage growth by reducing the tax burden and allowing people to keep what they earn, lo and behold, cetaris parabis, there is a surge in activity, an increase in economic growth and a corresponding increase in federal tax revenue.

I say “cetaris parabis” because if you throw in a socialist Fannie Mae and Freddie Mac that undermine something as vital as our housing mortgage market by imposing morally and fiscally insane policies until the system comes crashing down, such as what occurred leading up the crash in 2008, the best tax rates in the world can’t save the system.

Here are just a few articles I wrote on that subject, in order of date written with the earliest listed first:

Biden: ‘We Misread The Economy, And It’s All Republicans’ Fault

AEI Article: How Fannie And Freddie Blew Up The Economy

Barney Frank And Democrat Party Most Responsible For 2008 Economic Collapse

More Proof Democrats Destroyed The Economy In 2008: The Ongoing Fannie Mae/Freddie Mac Disaster

We need to have intelligent economic policies.  If we don’t have such policies, we’re going to struggle regardless of our tax rates.

Quickly, another liberal policy that will not even possibly work is the Federal Reserve QE2 (that’s the second shot at quantitative easing) that artificially reduces interest rates by artificially increasing the money supply in order to increase lending.

Here’s the problem with that.  Short term, it might seem to work.  The stock market looks at the apparent backstopping of our economy and follows the leader (Uncle Sam) up until the ship starts to sink.  After which they will sell, sell, sell.  But the ship ALWAYS sinks.  Why?  Because you have a lot more dollars chasing after the same supply of finite goods and services (if anything, in the last few years, we have a LOWER supply of finite goods and services).  So what happens?  More dollars chasing less stuff.  That’s inflation.  It will INVARIABLY require more devalued dollars to buy the same things.  The more you inflate the money supply, the worse that inflation gets.  And we have massively increased our money supply.

Let me go back to what I wrote going on a year ago now:

An increase in the money supply is rather like an overdose of drugs.  And in this case the effect of the overdose will be hyperinflation.  Basically, the moment we have any kind of genuine recovery, our staggering deficit is going to begin to create an ultimately gigantic inflation rate.  Why?  Because we have massively artificially increased our money supply beyond our ability to actually produce real wealth, and that means that money will ultimately be devalued.  There’s simply no way it can’t be.  If simply printing money solved financial problems, the government could just mail everyone several million dollars, and we could all retire.  The problem is that more money chasing a limited supply of goods simply pushes up prices higher and higher without doing anything to solve the underlying economic problems.  If we have a recovery, with increased economic activity, there will be increased demand on the money supply, forcing an upward climb in interest rates as a means of controlling the currency.  And then we’ll begin to seriously pay for Obama’s and the Democrat Party’s sins.  Paradoxically, the only thing preventing hyperinflation now is the recession, because people aren’t buying anything and therefore aren’t competing for those limited goods.

And let me point out that we’re looking at huge inflation now – even as Obama declares victory over the recession – in insanely rising gas prices, food prices, clothes prices, all prices:

Hope ‘n Change Coming To Fruition: Cost Of EVERYTHING About To Go Up

Instability, Food Riots And A Heaping Dose Of ‘I Told You So’

Just like I said would happen.  And just like the long list of economists said would happen when they begged Obama not to do the $3.27 trillion stimulus.

This phenomenon is going on all over the world because most of the world is tied to the U.S. dollar – the currency that Obama has been poisoning hoping for short-term political gains.

And, again, a temporary extension of the Bush tax cuts (which doesn’t help businesses and individuals who are desperately searching for consistency so they can predict their costs) is not going to help us out of this kind of moral and fiscal insanity.

But what we are going to see is Obama now demagoguing all the massive economic failure that his own policies are responsible for creating in the first place to demand that the rich “pay their fair share.”

Actual U.S. Debt Exceeds GDP Of Entire Planet

Here’s one for you to put in your pipe to smoke on.  Even if the U.S. were to seize the wealth of the entire planet, and even if we taxed all the wealth of not only the rich but the miserably poor as well, we STILL couldn’t pay off the debts that Democrats demand that we keep adding to until after we’ve reached that “straw that broke the camel’s back” point:

True U.S. debt exceeds world GDP by $14 trillion
Obama 2010 budget deficit now 5 times larger than nation’s output
Posted: March 21, 2011
By Jerome R. Corsi

As the Obama administration prepares to finance a Fiscal Year 2011 budget  deficit expected to top $1.6 trillion, the American public is largely unaware that the true negative net worth of the federal government reached $76.3 trillion last year.

That figure was five times the 2010 gross domestic product of the United States and exceeded the estimated gross domestic product for the world by approximately $14.4 trillion.

According to the U.S. Department of Commerce Bureau of Economic Analysis, U.S. GDP for 2010 was $14.861 trillion. World GDP in 2010, according to the International Monetary Fund, was $61.936 trillion.

“As government obligations continue to spiral out of control and the U.S. government shows no willingness to make the magnitude of spending cuts required to return to fiscal responsible, the U.S. economy is headed to a great collapse coming in the form of a hyper-inflationary great depression,” says economist John Williams, author of the website Government Shadow Statistics.

Statistics generated in Williams’ most recent newsletter demonstrate the real 2010 federal budget deficit was $5.3 trillion, not the $1.3 trillion previously reported by the Congressional Budget Office, according to the 2010 Financial Report of the United States Government as released by the U.S. Department of Treasury Feb. 26, 2010.

The difference between the $1.3 trillion “official” 2010 federal budget  deficit numbers and the $5.3 trillion budget deficit based on data reported in  the 2010 Financial Report of the United States Government is that the official  budget deficit is calculated on a cash basis, where all tax receipts, including  Social Security tax receipts, are used to pay government liabilities as they  occur.

The calculations in the 2010 Financial Report are calculated on a GAAP basis  (Generally Accepted Accounting Principles) that includes year-for-year changes  in the net present value of unfunded liabilities in social insurance programs  such as Social Security and Medicare.

Under cash accounting, the government makes no provision for future Social  Security and Medicare benefits in the year in which those benefits accrue.

“The broad GAAP-based federal deficits, including the Social Security and  Medicare unfunded liabilities, have been in the $4 trillion to $5 trillion range  in 2008 and 2009, and 2010’s deficit again likely was near $5 trillion,  remaining both uncontrollable and unsustainable,” Williams wrote.

“The federal government cannot cover such an annual shortfall by raising  taxes, as there are not enough untaxed wages and salaries or corporate profits  to do so,” he warned.

In his analysis of the 2010 Financial Report of the United States, Williams  listed both an official accounting and an alternative.

“The estimate of a broad 2010 GAAP-based deficit at $5 trillion is mine,” he  noted. “At issue with the published report, consistent year-to-year accounting  was not shown, with a large, one time reduction in reported 2010 Medicare  liabilities, based on overly optimistic assumptions of the impact from recently  enacted health care legislation.”

U.S. Government GAAP Accounting  Federal Budget Deficits U.S. Treasury, Financial Report of the United States,  2002-2010 (John Williams, Shadow Government Statistics, ShadowStats.com)

Williams argues the total U.S. obligations, including Social Security and  Medicare benefits to be paid in the future, have effectively placed the U.S.  government in bankruptcy, even before we take  into consideration any future and continuing social welfare obligations that may  be embedded within the Obama administration’s planned massive overhaul of health  care.

“The government cannot raise taxes high enough to bring the budget into  balance,” Williams said. “You could tax 100 percent of everyone’s income and 100  percent of corporate profits and the U.S. government would still be showing a  federal budget deficit on a GAAP accounting basis.”

Williams argues the U.S. government has condemned the U.S. dollar to “a  hyperinflationary grave” by taking on debt  obligations that will never be covered by raising taxes and/or by severely  slashing government spending that has become politically untouchable.

“Bankrupt sovereign states most commonly use the currency printing press as a  solution to not having enough money to cover  obligations,” he cautioned. “The U.S. government and the Federal Reserve have  committed the system to its ultimate insolvency, through the easy politics of a  bottomless pocketbook, the servicing of big-moneyed special interests, gross  mismanagement, and a deliberate and ongoing effort to debase the U.S. currency.”

He is concerned that the Federal Reserve will supplement its current policy  of Quantitative Easing 2, or QE2, under which the Fed intends to purchase by  mid-year 2010 another $600 billion of Treasury debt with “QE3.”

“These actions (QE2 and QE3) should pummel heavily the U.S. dollar’s exchange  rate against other major currencies,” he concludes. “Looming with uncertain  timing is a panicked dollar dumping and dumping of dollar-denominated paper  assets, which remains the most likely event as a proximal trigger for the onset  of hyperinflation in the near-term.”

Williams predicts that the early stages of hyperinflation will be marked by  an accelerating upturn in consumer prices, a pattern that has already begun to  unfold in response to QE2.

“For those living in the United States, long-range strategies should look to  assure safety and survival, which from a financial standpoint means preserving  wealth and assets,” he advises.

Williams suggests that physical gold in the form of sovereign coins priced  near bullion prices remains the primary hedge in terms of preserving the  purchasing power of the dollar, as well as stronger major currencies such as the  Swiss franc, the Canadian dollar and the Australian dollar.

And as totally insane as that is, it might well even be worse than that.

$61.936 trillion sounds like a lot.  And that’s the official figure for the International Monetary Fund’s estimate for U.S. indebtedness.  But the IMF is giving credibility to a figure that makes that $62 trillion seem almost manageable:

I Can Give You 200 Trillion Reasons Why We Need To Cut Government Spending NOW
By Michael Eden     March 7, 2011

Republicans are trying to get our spending under control, and Democrats are demonizing them every single step of the way.  Because Democrats are demons, and demonizing is the only thing they know how to do.

For the record, Republicans are trying to cut an amount which is basically 1/30th of Obama’s budget deficit.

News from globeandmail.com
The scary real U.S. government debt
Wednesday, October 27, 2010

NEIL REYNOLDS

Ottawa — reynolds.globe@gmail.com

Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”

Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”

This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling.

Prof. Kotlikoff says: “The IMF is saying that, to close this fiscal gap [by taxation], would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.

“America’s fiscal gap is enormous – so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems – as well as military and other discretionary spending cuts.”

He cites earlier calculations by the Congressional Budget Office (CBO) that concluded that the United States would need to increase tax revenue by 12 percentage points of GDP to bring revenue into line with spending commitments. But the CBO calculations assumed that the growth of government programs (including Medicare) would be cut by one-third in the short term and by two-thirds in the long term. This assumption, Prof. Kotlikoff notes, is politically implausible – if not politically impossible.

One way or another, the fiscal gap must be closed. If not, the country’s spending will forever exceed its revenue growth, and no one’s real debt can increase faster than his real income forever.

Prof. Kotlikoff uses “fiscal gap,” not the accumulation of deficits, to define public debt. The fiscal gap is the difference between a government’s projected revenue (expressed in today’s dollar value) and its projected spending (also expressed in today’s dollar value). By this measure, the United States is in worse shape than Greece.

Prof. Kotlikoff is a noted economist. He is a research associate at the U.S. National Bureau of Economic Research. He is a former senior economist with then-president Ronald Reagan’s Council of Economic Advisers. He has served as a consultant with governments around the world. He is the author (or co-author) of 14 books: Jimmy Stewart Is Dead (2010), his most recent book, explains his recommendations for reform.

He says the U.S. cannot end its fiscal crisis by increasing taxes. He opposes further stimulus spending because it will simply increase the debt. But he does suggest reforms that would help – most of which would require a significant withering away of the state. He proposes that the government give every person an annual voucher for health care, provided that the total cost not exceed 10 per cent of GDP. (U.S. health care now consumes 16 per cent of GDP.) He suggests the replacement of all current federal taxes with a single consumption tax of 18 per cent. He calls for government-sponsored personal retirement accounts, with the government making contributions only for the poor, the unemployed and people with disabilities.

Without drastic reform, Prof. Kotlikoff says, the only alternative would be a massive printing of money by the U.S. Treasury – and hyperinflation.

As former president Bill Clinton once prematurely said, the era of big government is over. In the coming years, the U.S. will almost certainly be compelled to deconstruct its welfare state.

Prof. Kotlikoff doesn’t trust government accounting, or government regulation. The official vocabulary (deficit, debt, transfer payment, tax, borrowing), he says, is vulnerable to official manipulation and off-the-books deceit. He calls it “Enron accounting.” He also calls it a lie. Here is an economist who speaks plainly, as the legendary straight-shooting film star Jimmy Stewart did for an earlier generation.

But Prof. Kotlikoff’s economic genre isn’t the Western. It’s the horror story – “and scarier,” one reviewer of his book suggests, than Stephen King.

Enron-style accounting?  From our government?  Say it aint so!!!

It’s isn’t a matter of IF America will financially collapse; it is only a matter of WHEN.  And “WHEN” is SOON.

And it will necessarily happen because Democrats are genuinely depraved.

Recklessly spending money on fools’ projects that your grandchildren will become debt slaves just trying to pay the interest on is immoral.

I can only keep begging Republicans to turn the Democrats’ demonization game back at them.  Democrats are running around on their talking points denouncing Republicans as “extremists” who want to kill poor people.

Bullcrap.

It is DEMOCRATS (I call them “Demoncrats,” for “Demonic Bureaucrats”) who want to implode America and kill tens of millions of American people by plunging this country into a great depression that will make the last one in the 1930s seem like a fun-filled day at the beach.

It’s not going to be the richest people who starve to death and die miserably in the cold.  It’s going to be all the people liberals love to say they care about – when in reality all they do is cynically manipulate them toward their own increasingly certain doom.

Don’t you dare forget that it has been LIBERALS who have been dreaming of undermining and imploding America financially since Cloward and Piven back in the 1960s.  And now we’ve got a JUST-ex SEIU official on tape plotting to send America into a financial crisis that will dwarf anything ever seen.

If you have a true death wish, and you vote Democrat, then by all means keep doing so, because they will give you the destruction and nihilism that you seek.  That’s the real meaning of Obama’s “hope and change.”

Obama Causes Official End Of The Nation Of Makers

This is something that conservatives saw coming from the very fist days of the Obama administration.  From Cato, February 26, 2009:

Cato begins that article with a quote from Obama from a couple of days previous: “As soon as I took office, I asked this Congress to send me a recovery plan by President’s Day… Not because I believe in bigger government — I don’t. Not because I’m not mindful of the massive debt we’ve inherited — I am.”

But like virtually everything else, it was a lie.  Obama’s own proposed massive increase in federal spending proved that.  And since Obama took office, he has spent as no government has ever spent in the history of the human race.

And thus is it utterly no surprise at all to anyone but ignorant fools that we are now here:

APRIL 1, 2011
We’ve Become a Nation of Takers, Not Makers
More Americans work for the government than in manufacturing, farming, fishing, forestry, mining and utilities combined.

By STEPHEN MOORE
If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

Every state in America today except for two—Indiana and Wisconsin—has more government workers on the payroll than people manufacturing industrial goods. Consider California, which has the highest budget deficit in the history of the states. The not-so Golden State now has an incredible 2.4 million government employees—twice as many as people at work in manufacturing. New Jersey has just under two-and-a-half as many government employees as manufacturers. Florida’s ratio is more than 3 to 1. So is New York’s.

Even Michigan, at one time the auto capital of the world, and Pennsylvania, once the steel capital, have more government bureaucrats than people making things. The leaders in government hiring are Wyoming and New Mexico, which have hired more than six government workers for every manufacturing worker.

Now it is certainly true that many states have not typically been home to traditional manufacturing operations. Iowa and Nebraska are farm states, for example. But in those states, there are at least five times more government workers than farmers. West Virginia is the mining capital of the world, yet it has at least three times more government workers than miners. New York is the financial capital of the world—at least for now. That sector employs roughly 670,000 New Yorkers. That’s less than half of the state’s 1.48 million government employees.

Don’t expect a reversal of this trend anytime soon. Surveys of college graduates are finding that more and more of our top minds want to work for the government. Why? Because in recent years only government agencies have been hiring, and because the offer of near lifetime security is highly valued in these times of economic turbulence. When 23-year-olds aren’t willing to take career risks, we have a real problem on our hands. Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles.

The employment trends described here are explained in part by hugely beneficial productivity improvements in such traditional industries as farming, manufacturing, financial services and telecommunications. These produce far more output per worker than in the past. The typical farmer, for example, is today at least three times more productive than in 1950.

Where are the productivity gains in government? Consider a core function of state and local governments: schools. Over the period 1970-2005, school spending per pupil, adjusted for inflation, doubled, while standardized achievement test scores were flat. Over roughly that same time period, public-school employment doubled per student, according to a study by researchers at the University of Washington. That is what economists call negative productivity.

But education is an industry where we measure performance backwards: We gauge school performance not by outputs, but by inputs. If quality falls, we say we didn’t pay teachers enough or we need smaller class sizes or newer schools. If education had undergone the same productivity revolution that manufacturing has, we would have half as many educators, smaller school budgets, and higher graduation rates and test scores.

The same is true of almost all other government services. Mass transit spends more and more every year and yet a much smaller share of Americans use trains and buses today than in past decades. One way that private companies spur productivity is by firing underperforming employees and rewarding excellence. In government employment, tenure for teachers and near lifetime employment for other civil servants shields workers from this basic system of reward and punishment. It is a system that breeds mediocrity, which is what we’ve gotten.

Most reasonable steps to restrain public-sector employment costs are smothered by the unions. Study after study has shown that states and cities could shave 20% to 40% off the cost of many services—fire fighting, public transportation, garbage collection, administrative functions, even prison operations—through competitive contracting to private providers. But unions have blocked many of those efforts. Public employees maintain that they are underpaid relative to equally qualified private-sector workers, yet they are deathly afraid of competitive bidding for government services.

President Obama says we have to retool our economy to “win the future.” The only way to do that is to grow the economy that makes things, not the sector that takes things.

Mr. Moore is senior economics writer for The Wall Street Journal editorial page.

California?  Unions?  Consider this from the Los Angeles Times:

California’s $500-billion pension time bomb
The staggering amount of unfunded debt stands to crowd out funding for many popular programs. Reform will take something sadly lacking in the Legislature: political courage.
April 06, 2010|By David Crane

The state of California’s real unfunded pension debt clocks in at more than $500 billion, nearly eight times greater than officially reported.

That’s the finding from a study released Monday by Stanford University’s public policy program, confirming a recent report with similar, stunning findings from Northwestern University and the University of Chicago.

The People’s Republic of Kalifornia was cursed with a R.I.N.O. governor who championed abortion, a $6 porker giveway for stem cell research, gay marriage, and a whole bunch of other liberal crap.  And the legislature is one of the most overwhelmingly Democrat in the country.  And the only things that have changed is that the People’s Republic is now officially under a Democrat Governor (Jerry Brown) and they actually added a Democrat seat in the legislature.

Illinois was described by NBC as having the worst unfunded pension crisis in the country.  Maybe they didn’t know how bad California’s really was when they reported that.  But more likely, they probably had no idea how bad Illinois’ problem truly was and is, either.

The United States is so screwed it is absolutely unreal.  And that is largely due to unions and the Democrats who support those unions in exchange for votes.  It’s an unAmerican scheme that works like this: labor unions give Democrats big campaign donations and provide the muscle and infrastructure for the Democrats’ get-out-the-vote campaign.  And in exchange, Democrats give unions other peoples’ money to the tune of hundreds of billions of dollars.  They don’t give a damn about the 88% of Americans who AREN’T in unions.

Unions are parasites that have sucked the blood out of every industry they have ever seized their vile little talons onto.  Autos, airlines, manufacturing, education government at every possible level – you name it; they’ve ruined it.  And the rest of America is the host that the parasites feed off of.  And Democrats care about the parasites, and not one damn about the rapidly dying host.

And Barack Obama is far and away the most pro-union president ever.  And that was true BEFORE he signed three new hard-core union-agenda executive orders into law.

Obama has just gotten caught red-handed using his ObamaCare to give huge payouts to unions and corporations that advanced his agenda (fascism alert).  Remember that G.E. – one of the corporate beneficiaries of ObamaCare, not only paid zero taxes but actually got money from the taxpayers.

Do you remember Obama’s preacher for over twenty years said, “No, no, no, not God bless America.  God DAMN America.”  And then said that “America’s chickens are coming home to roost”???

You need to understand our actual situation and look at our real debt to understand that AMERICA is the chicken – and Obama has cut its head off and thrown it into a pot of boiling water:

News from globeandmail.com
The scary real U.S. government debt
Wednesday, October 27, 2010

NEIL REYNOLDS

Ottawa — reynolds.globe@gmail.com

Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”

Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”

This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling. […]

Without drastic reform, Prof. Kotlikoff says, the only alternative would be a massive printing of money by the U.S. Treasury – and hyperinflation.

As former president Bill Clinton once prematurely said, the era of big government is over. In the coming years, the U.S. will almost certainly be compelled to deconstruct its welfare state.

Prof. Kotlikoff doesn’t trust government accounting, or government regulation. The official vocabulary (deficit, debt, transfer payment, tax, borrowing), he says, is vulnerable to official manipulation and off-the-books deceit. He calls it “Enron accounting.” He also calls it a lie.

Every single one of these massive entitlements that is poisoning America they way Japan’s tsunami has poisoned her nuclear reactors with toxic meltdowns came from the vile minds of DEMOCRATS.  And it is DEMOCRATS who will cause the once mighty America to shortly go the way of the Dodo bird.

Social Security was a ponzi scheme from the outset.  And the only thing that has kept it going was that it is a really, really BIG ponzi scheme.  We find out that FDR – who wanted a massive takeover of the private sector by the federal government – worked hard to kill an amendment offered by a Democrat (Senator Bennett Champ Clark): ” It would have allowed workers to go with the new government system or, if they wished, to have their money put into a private-insurance plan. Either way, the contributions would be mandatory.”  Had that amendment been allowed to pass, it would have forced the government’s filfthy paws off the “trust fund” that they subsequently ripped off for the next seventy years and beyond:

We wouldn’t be saddled with today’s fiscal disaster. Hundreds of billions of dollars that politicians have “borrowed” from the Social Security trust fund for all sorts of pork spending would not have disappeared. Instead, all that capital would have been invested in the economy, leaving us a lot more prosperous. Moreover, the Clark Amendment would have been a model for state pension plans, which are now bankrupting local governments, as well as for other nations.

There was a much better idea from the private sector – but in the end Democrats wouldn’t have it.  They wanted their government fascist control instead.  They didn’t care about the American people; they wanted to be able to raid those retirement funds for their own partisan ideological ends.

Then there was the much more colossal failure known as Medicare.  Ronald Reagan famously warned America about that fraud in 1961:

One of the traditional methods of imposing statism or socialism on a people has been by way of medicine. It’s very easy to disguise a medical program as a humanitarian project. Most people are a little reluctant to oppose anything that suggests medical care for people who possibly can’t afford it.

Medicare now represents the largest share of our unfunded liabilities today.  The private market could have done a much better job at a much lower cost, but again, Democrats wanted socialism, and they were hell bent upon getting their socialism.

Now we face collectivist bankruptcy.  We were previously told that if current trends held, Medicare would go broke by 2017.  But current trends didn’t hold, because Obama robbed Medicare of $500 billion to fund the ObamaCare boondobble that bears his name.

As the Iron Lady Margaret Thatcher famously said, “The problem with socialism is that eventually you run out of other people’s money.”  And voilà, here we are.

When it comes to how John F. Kennedy viewed the socialist redistribution of wealth via “progressive taxation policies,” you will find that Kennedy was solidly on the side of fiscal conservatives today.  As it stands, today’s vile Democrats are fundamentally at odds with the man widely recognized to be the greatest Democrat president.

As we speak, Republicans are trying to cut a tiny fraction of the bloated, totally-out-of-control federal budget.  And Democrats are demonizing them at every turn for it.  Because Democrats have been using government spending to massively pad the coffers of the government-sector unions who make their elections possible.  And to be a Democrat means you don’t give a damn about America’s future; you only selfishly want – to put it in John F. Kennedy’s famous words – “what your country can do for you.”

God HAS damned America in the person of Jeremiah Wright’s parishoner for 23 years.  And the most ignorant generation in America’s history voted for it.

From Bad To Worse: Japan Was On Path To Debt Default BEFORE Earthquake, Tsunami And Meltdown. America Next.

Meltdown.  That’s a good word for Japan these days.

And I’m not talking about the nuclear reactors, either.  I’m talking about what had been one of the most powerful economic engines on the planet.

Look at the facts in late 2010 BEFORE the earthquake, tsunami and nuclear reactor.  They didn’t look pretty then; they’ve become nightmarish since:

Japan Will Default as Economy Unravels, Bass Says
October 13, 2010, 4:19 PM EDT
By Nikolaj Gammeltoft and Susanne Walker
 
Oct. 13 (Bloomberg) — Japan will be forced to default on its debt, Greece’s economy is “done” and Iceland is worse off than Greece, said J. Kyle Bass, the head of Dallas-based Hayman Advisors LP who made $500 million in 2007 on the U.S. subprime collapse.

Nations around the world will be unable to repay their debt and financial austerity in a country such as Ireland is “too late,” Bass said today at the Value Investing Congress in New York.

Japan’s economy may unravel in the next two to three years, and its interest payments will exceed revenue, he said. “Japan can’t fund itself internally,” Bass said.

The country’s year-over-year gross domestic product was 2.4 percent as of June 30. It has the world’s largest public debt, approaching 200 percent of its GDP amid a 5.1 percent jobless rate. Consumer price fell by one percent in September and has been negative each month since May 2009, as deflation has taken hold.

Pricing on Japanese interest-rate swaps is the best he’s ever seen, Bass said. Investors could make 50 to 100 times their capital betting on them, he said, calling them a lottery ticket on Japan’s economy.

Japanese bonds have returned 3.3 percent this year, according to Merrill Lynch Indexes, compared with a return of 0.872 percent in 2009.

Crisis

Bank Of Japan’s Governor Masaaki Shirakawa refused to expand monthly purchases of government bonds this year even as deflation persisted. The bank on Oct. 5 instead created a 5 trillion yen ($60 billion) fund to buy bonds and other assets, and pledged to keep its benchmark interest rate at “virtually zero” until the end of deflation is in sight. Deflation has been entrenched in the economy since 1998. The GDP deflator, a gauge of prices across the economy, has fallen 14 percent since 1997, according to data compiled by Bloomberg.

A financial crisis in 1997-98 precipitated by bad loans on Japanese lenders’ balance sheets stemming from burst land and stock-price bubbles of the early 1990s set off Japan’s deflation. Property prices have slumped for 17 of the past 19 years, and stocks remain 76 percent off of their 1989 peak, according to the Nikkei 225 Stock Average.

Japan’s currency traded at 81.79 per dollar, compared with 81.72. It touched 81.39 on Oct. 11, the strongest level since April 1995.

Bass began buying securities with shorter durations last year as he predicted central bank and government actions globally to rescue the financial system will result in “outright currency debasement.”

He began buying shorter-term debt and precious metals then, anticipating hyperinflation will lead to higher interest rates. Bass also said in May that Europe’s debt crisis will not be solved by the $1 trillion loan package the International Monetary Fund and the European Union agreed on earlier that month.

–Editors: Nick Baker, Dave Liedtka

And that was all BEFORE Japan went from the frying pan into the nuclear fire.

What’s being said now?

Quake shattered Japan poses global debt worry
GARETH COSTA, The West Australian
March 15, 2011, 6:11 am

Concerns have emerged in global credit markets over how heavily-indebted Japan will be able to pay for its biggest economic reconstruction effort since World War II.

The Bank of Japan’s promise yesterday of a ¥15 trillion ($182 billion) cash injection into its banking system managed to soothe global equities, but not debt markets as Japanese government credit default swap rates used to insure against debt default soared 13 points to 92.

Although not yet at critical levels, analysts said yesterday’s sharp spike in the CDS rates highlighted debt market concerns about Japan’s funding pressures within a cash-strapped global economy.

“When you have a market the size of Japan down this much, it’s going to affect everybody,” Stephen Halmarick, head of investment markets research at Colonial First State Global Asset Management, said.

“A tragedy of this proportion is going to take up a lot of economic resources.

“It’s going to have quite a negative impact on growth.”

Credit markets were already concerned that Japanese government debt had ballooned to $US12.2 trillion, or 200 per cent of GDP.

Insurance experts estimate the repair bill carried by foreign reinsurers will be capped at $US34 billion, with the rest borne by Japanese insurers, the Government and uninsured homeowners.

Japan has so far managed to function under its debt because it has predominantly been funded by domestic investors and because it runs a steady trade surplus.

However, analysts caution that short-term liquidity constraints could prompt strong yen repatriation flows out of foreign markets as occurred after the Kobe earthquake.

Early estimates suggest the cost of the Sendai earthquake will easily exceed the $US100 billion Kobe earthquake in 1995.

Japan’s increased funding pressures are also occurring in a global economy far more cash-constrained than in 1995, and unless export earnings begin flowing soon, escalating funding costs could push the country’s financing costs over the tipping point.

Japan has been one of the biggest buyers of US Treasury debt and in January pledged to also buy up to one-fifth of bonds from the European Financial Stability Fund that was created to bail out Greece and Ireland, all of which will become secondary to Japanese funding needs for the next few months.

The country is also one of the world’s biggest holders of gold bullion.

Any decision to cash in on bullion’s record price and offload much of its sovereign holding would likely depress the gold price.

Japan’s Nikkei equities index slumped 6.2 per cent, its worse daily performance in two years.

[…]

What impact will it have on the global markets if the 3rd largest economy in the world defaults?  What effect will it have on the ability of the world’s largest debtor – that’s YOU, America – to continue to get credit as WE begin to look more and more like a default-likely credit risk???

Japan was the second largest purchaser of American debt, and was so far ahead of #3 (Japan buys 3 1/4 times more of our debt than Britain), that it’s not even funny.  The U.S. needs a sucker, I mean an investor, to continue to artificially prop-up our insane lifestyle.  Who’s going to do that now?

What you’re going to see is either the Fed dramatically hasten the rate at which it devalues the dollar, which in turn will hasten the inevitable result of America becoming a banana republic, or a giant spike in interest rates as other U.S. debt buyers demand more reward for their risks.

A third alternative is that Japan could begin to sell off its US debt to raise money to rebuild.  While that seems like the obvious course, it turns out in this crazy world it isn’t; were Japan to sell it’s U.S. debt, the result would surely kill the U.S. dollar, but it would also dramatically strengthen the yen and hurt Japan’s export market just when they need it most.

My point is it’s a lose-lose.  And the U.S. loses right along with Japan.

Yet “no drama” Obama didn’t care.  He didn’t even bother to mention Japan or it’s earthquake or its tsunami or its nuclear meltdown in his address the day after the disaster.  And just to demonstrate that he truly truly, truly didn’t give a damn, he played 18 holes of golf.

See the photos of Obama’s golf outing from Sadhill.

Then there’s the unfortunate fact that this disaster has coincided with the far more important NCAA basketball tournament.  A president has to choose his priorities, and clearly the basketball won out.

Note #1: this is hardly new behavior from the man who promised “hope and change.”

Note #2: the mainstream media excoriated Bush for golfing a tiny fraction as often as Obama.  One example is the liberal Washington Post headline from August 5, 2002, “Before Golf, Bush Decries Latest Deaths in Mideast.”  I wonder what the Post’s headline would be about Obama if they had even a shred of fairness in their coverage?

We’re in trouble.  And our leader is a fool.  And we have a media that is hell-bent (literally) on ignoring or explaining away this fool’s actions and responses.

One of the things I came to believe as I realized that Obama would actually quite possibly get elected president was that our economy was dead meat.  I entirely got out of the U.S. stock market entirely and won’t return until Obama and the Democrats are out of power.  The reason is that I believed – and STILL believe – that when our economy collapses, it will happen very suddenly, like a house of cards falling down.  And it might not start in America; rather, an event in another country will set off a spiral that will envelope us and expose us for what we truly are.

And just where truly are we?

News from globeandmail.com
The scary real U.S. government debt
Wednesday, October 27, 2010

NEIL REYNOLDS

Ottawa — reynolds.globe@gmail.com

Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”

Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”

This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling.

Our actual debt is not the fourteen trillion dollars that would be scary enough; it is $200 TRILLION.

That isn’t some rightwing thinktank saying that; it’s the IMF.

Japan had a literal meltdown.  It is about to have a financial meltdown.

And America will not be far behind.

As you look at the current fiscal situation, with Democrats not just fighting to keep the status quo of reckless and morally and mentally insane spending that will necessarily bankrupt America – and with Democrats literally sitting back waiting to demonize Republicans as “mean-spirited” the moment they try to do what is absolutely necessary to get our skyrocketing spending under control – realize that the United States is necessarily going to explode and collapse just like those reactors in Japan.

Democrats murdered America.  It was Democrats who were responsible for nearly ALL of those $200 trillion in debt that will destroy us (it is a simple fact that the Social Security, Medicare and Medicaid that constitute virtually all of our actual debt were all Democrat programs).  And it is Democrats who will literally fight to America’s death to prevent the nation from doing what is necessary to fix our situation before it is too late.

Social Security is now paying out more than it takes in.  Workers under forty are rightly quite confident that the system will collapse before they get a chance to collect.  Republicans want to fix the system before it collapses in order to save it.  But Democrats lie about the Republicans efforts (which would kick in slowly and not affect current retirees at all).  And Democrats race us faster, ever faster toward the collapse and nightmare that surely awaits America.

We’re a dead nation walking.  We just don’t realize it yet.

That’s the hope and change you voted for, America.  I hope you enjoy your starving in the soon-coming banana republic your false-messiah president created for you.

Just How Is Obama NOT An Abject Failure?

Under Barry Husseins’ pathetic failure of leadership, 24% of Americans believe that the recession will last 2 years.  And another 51% believe that it will last MORE than two years.  Given the fact that Obama will only be president for another two years, and given the fact that Obama was elected to fix the economy, what we basically have is a statement from 75% of Americans that Obama will be a completely failed president.

Here’s another one, and allow me to quote from below:

Only 13 percent of Americans say Mr. Obama’s economic programs, among them the stimulus package, have helped them personally. Twenty-three percent say they have hurt, while 63 percent say they have had no effect.

Now, understand: the stimulus is officially $862 billion, but it’s actual cost according to the Congressional Budget Office will be $3.27 TRILLION.  And 87% of the American people say that this beyond supermassive sum of money which will burden our children for decades either had no effect at all or actually HURT them.

Now, this $3.27 trillion will surely ultimately be ripped out of the hide of the US economy.  It’s only a matter of time.  An increase in the money supply is rather like an overdose of drugs.  And in this case the effect of the overdose will be hyperinflation.  Basically, the moment we have any kind of genuine recovery, our staggering deficit is going to begin to create an ultimately gigantic inflation rate.  Why?  Because we have massively artificially increased our money supply beyond our ability to actually produce real wealth, and that means that money will ultimately be devalued.  There’s simply no way it can’t be.  If simply printing money solved financial problems, the government could just mail everyone several million dollars, and we could all retire.  The problem is that more money chasing a limited supply of goods simply pushes up prices higher and higher without doing anything to solve the underlying economic problems.  If we have a recovery, with increased economic activity, there will be increased demand on the money supply, forcing an upward climb in interest rates as a means of controlling the currency.  And then we’ll begin to seriously pay for Obama’s and the Democrat Party’s sins.  Paradoxically, the only thing preventing hyperinflation now is the recession, because people aren’t buying anything and therefore aren’t competing for those limited goods.

That said, there is solid evidence that the stimulus actually HURT THE ECONOMY AND EMPLOYMENT IN THE RIGHT-HERE-AND-NOW by sucking money out of the private sector where it would have been put to good use and instead funneling it through the government were it was pissed away on political boondoggles and bureaucratic inefficiencies.  The evidence is clear: the governments that did not pass huge stimulus packages have fared much better than those like the US which did.

A further fact in our economic and political collapse is that Obama is creating a permanent elite class of government bureaucrats.  USA Today found that “At a time when workers’ pay and benefits have stagnated, federal employees’ average compensation has grown to more than double what private sector workers earn.”  Obama has massively expanded government, even as the the real pie for everyone (the economy) has been shrinking.  Since government workers don’t actually create wealth, but merely live off the taxes paid by those who create wealth, and since there are more and more government workers and fewer and fewer private sector workers, we’re heading for a real problem.  Again, “paradoxically” is a good word, as paradoxically Obama is creating a ruling class over the people who consume the peoples’ wealth in the name of helping the people.

And all of the above contributes to why Gerald Celente says America is about to experience what he calls “the Greatest Depression.”

July 13, 2010 6:30 PM
Poll: Americans Say Bad Economy Will Linger
Posted by Brian Montopoli

CBS News Poll analysis by the CBS News Polling Unit: Sarah Dutton, Jennifer De Pinto, Fred Backus and Anthony Salvanto.

(Credit: CBS)

A majority of Americans have a negative impression of the economy and expect the effects of the recession to linger for years, according to a new CBS News poll.

Most also say President Obama has spent too little time on the economy, which Americans cite as the country’s most important problem by a wide margin.

Three in four Americans now say the effects of the recession will last another two years or more. More than eight in 10 say the condition of the economy is bad, up five points from last month.

Just 25 percent of Americans say the economy is getting better – down from 41 percent in April. About half say it is staying the same, and the remaining quarter say it is getting worse.

More than half of Americans – 52 percent – say Mr. Obama has spent too little time dealing with the economy.

And with unemployment near 10 percent, the economy is their priority: Thirty-eight percent volunteer it as the country’s most important problem. That far outpaces the percentage that cited the wars in Iraq or Afghanistan (seven percent), health care (six percent), the deficit (five percent), and the oil spill in the Gulf (five percent).

The county’s most important economic problem, Americans say, is jobs, volunteered by 38 percent of respondents. Coming in a distant second was the national debt, the deficit and spending, cited by 10 percent in the poll, which was conducted between July 9th and 12th.

Just 27 percent of Americans say their local job market is good. Seventy-one percent call it bad. Nearly one in four expect their household finances to get worse over the next year, twice the percentage that expects their finances to improve.

Only 13 percent of Americans say Mr. Obama’s economic programs, among them the stimulus package, have helped them personally. Twenty-three percent say they have hurt, while 63 percent say they have had no effect.

Twenty-three percent say the stimulus package made the economy better – down from 32 percent in April and 36 percent last September. Eighteen percent say the stimulus package damaged the economy, while 56 percent say it had no effect.

The president’s job approval rating on the economy now stands at 40 percent – a drop of five points from last month. Fifty-four percent disapprove of his handling of the issue.

In general, Americans see Mr. Obama as spending too little time on the economy and the oil spill in the Gulf, and too much time on health care: Thirty-nine percent say he has spent too much time on the issue, while 24 percent say he spent too little time.

Americans do believe the president takes decisive action, with two and three suggesting he does. But more than half (53 percent) say he is not tough enough in his approach.

Americans are evenly split, meanwhile, on whether the president shares their priorities. Two in three believe he cares at least to some degree about people like them.

The president’s overall approval rating now stands at 44 percent, matching his disapproval rating. It stood at 47 percent last month.

The Issues: Economic Priorities

Most Americans – 53 percent – say the best way to get the economy moving is to cut taxes. Thirty-seven percent instead choose government spending on job creation.

Americans are split about how the federal government should spend its money: Forty-six percent say the priority should be spending to create jobs, and 47 percent want to put the focus on deficit reduction.

More than half want Congress to extend unemployment benefits now, a Democratic priority that has been blocked by Congressional Republicans.

Immigration:

Support for Arizona’s controversial immigration measure has increased: Fifty-seven percent say the law is “about right,” up five points from May. Just 23 percent say the law goes too far, while 17 percent say it doesn’t go far enough.

More than half say states should be allowed to pass illegal immigration laws, while 42 percent say only the federal government should have that power.

Americans are somewhat split on the impact of illegal immigrants: 42 percent say they take jobs away from Americans, while more – 50 percent – say they take jobs Americans don’t want.

Health Care:

Americans still largely disapprove more than they approve of Mr. Obama’s sweeping health care reforms. Forty-nine percent of Americans disapprove of the health reform legislation, while 36 percent support the law. Support has dropped seven points since May.

The Oil Spill:

Americans are roughly evenly split on whether BP will stop the flow of oil in the Gulf of Mexico by the end of the summer. Most (58 percent) are not confident that the company will fairly compensate those affected by the spill.

Wall Street Reform:

With Democrats poised to pass sweeping reforms of Wall Street this week, a majority (57 percent) say bank regulations should be increased.

Afghanistan and Iraq:

Sixty-two percent of Americans say things are going badly for the United States in Afghanistan, up from 49 percent in May. Just 31 percent say things are going well.

In Iraq, 55 percent say things are going well, while 28 percent say things are going badly.

Most Americans favor a timetable for withdrawing troops from Afghanistan. Fifty-four percent back a timetable, while 41 percent oppose one. Mr. Obama has said the United States will start removing troops from the country in July of next year, but only if conditions on the ground permit.

Elena Kagan:

Most Americans can’t say whether Supreme Court nominee Elena Kagan should be confirmed. Among those who have an opinion, 21 percent say yes and 19 percent say no. Less than half say they are closely following news about her nomination.

The Long Run:

Despite their concerns about the economy, Americans do not believe their country is on the decline. Fifty-nine percent expect things to get better in the long run, while 36 percent say America’s best days have passed.

Read the Complete Poll

More from the poll:

Poll: Support For Health Care Reform Drops

Poll: Most Want Afghanistan Withdrawal Timeline

Poll: Support for Arizona Immigration Law Hits 57 Percent

Obama’s Approval Rating on Economy Drops

---

This poll was conducted among a random sample of 966 adults nationwide, interviewed by telephone July 9-12, 2010. Phone numbers were dialed from random digit dial samples of both standard land-line and cell phones. The error due to sampling for results based on the entire sample could be plus or minus three percentage points. The error for subgroups is higher.

This poll release conforms to the Standards of Disclosure of the National Council on Public Polls.

This article was written in July.  And it is amazing how far we have fallen since those days only a little over the month ago (that was back when Obama was pitching his pseudo “summer of economic recovery, donchaknow).

Now here we are, with Obama’s failures being revealed to be even MORE magnificent, as the jobless claims rise to their highest levels in 9 months (with over half a million new filings).

The Associated Press reports:

The layoffs add to growing fears that the economic recovery is slowing and the country could slip back into a recession.

There’s your double-dip recession for you.  And that recession belongs entirely to Obama and the Democrat Party, which are leading us toward complete ruination.

All Obama has going for him are false blame on Bush to explain his two-years’ worth of abject failure and outright lies, such as his recent one taking credit for a stimulus dollar success when the stimulus didn’t have anything to do with the project Obama cited.

For the record, Obama has been lying about employment all along.

With $862 billion dollars you’d think Obama could find at least one actual success.  But the porkulus was THAT bad; there weren’t any.

Some other things that the poll didn’t mention: a solid majority of Americans now believe that their president is a socialist (as people like me were saying all along).

And Americans now trust Republicans more than Democrats on ALL TEN of the most important issues facing the country, according to the lastest Rasmussen survey:

If all of this doesn’t represent a massive failure of leadership, precipitating a failure of trust which itself creates massive economic suffering, please tell me how it isn’t.

Obama’s Plunging Polls Correspond To America’s Plunging Economy

President Obama’s biggest calender item yesterday was his scheduled “having a beer” with his good friend Henry Louis Gates and the man that both Gates (directly) and Obama (indirectly) called a racist, Sgt. James Crowley.  By sitting down for a beer, Obama was attempting to turn the giant turd he laid at his fourth prime time news conference in six months (which is how many George Bush gave in 8 entire YEARS btw) into a gold-plated turd.

I hope the three men clink their glasses to Obama’s plummeting poll numbers and America’s plummeting economy while they pondered why ‘Skip’ Gates is such a bigot and why Barry Obama acted so stupidly by claiming the Cambridge police “acted stupidly.”

Rasmussen has Obama at a -12 approval rating measuring the difference between those who strongly approve and those who strongly disapprove of his presidency; and he is now at only 48% approval – a far cry from his halcyon days of being in the high 60s.  Only 34% of likely voters think the country is headed in the right direction.  And 49% believe America’s best days have come and gone, versus only 38% who think the country will improve.

The hope that once swelled the hearts of Obama voters is fading fast – especially in the swing states he needs to win to have any chance at either future re-election or even current relevance.  “Hope and change” now means, “I hope I still have some change left in my pocket at the end of the month.”

As U.S. recession bites, Ohio hopes fade for Obama
Thu Jul 30, 2009 11:12am EDT
By Nick Carey

TOLEDO, Ohio (Reuters) – Hope and jobs are in short supply in Ohio eight months after President Barack Obama won the recession-battered state in the 2008 election with promises of a better future.

“People were looking for a savior to get us out of this mess and that’s why they voted for Obama,” said Jeff Fravor, 55, a retired train conductor on his way to breakfast on the outskirts of Toledo.

“I’ve nothing against Obama personally, but he’s new to the job and ‘hope’ won’t fix this mess.”

Candidate Obama delivered his message over and over again in Ohio, a politically diverse battleground state that often decides presidential elections. Obama went back to the state last week with an approval rating below 50 percent.

A Quinnipiac University opinion poll released on July 7 showed the Democratic president’s popularity in America’s seventh most populous state had fallen to 49 percent from 62 per cent in May. Even worse for Obama, 48 percent said they disapproved of his handling of the U.S. economy, with 46 percent approving.

The reason for the poll drop? Rising unemployment.

The downturn has pummeled Ohio’s manufacturing base.

“As jobs have gone away, that has created a true focus here on job creation,” said Andrew Doehrel, head of the Ohio Chamber of Commerce. “People look at what’s been done on a federal level in terms of bailouts and stimulus and they see that this has not equated to anything more than lost jobs in Ohio.”

Ohio has not been the state hardest hit by the U.S. recession that began in December 2007, but it is not far off.

Unemployment in the state of 11.5 million people reached 11.1 percent in June, compared with the national rate of 9.5 percent, making it the seventh highest rate in the country. Michigan was first with a rate of 15.2 percent.

TWICE THE UNEMPLOYMENT

Ohio’s unemployment has nearly doubled from 5.7 percent in January 2008. That is not a good start for Obama in a state with 20 electoral votes that could be vital for his re-election effort in 2012.

“It’s not a surprise Obama’s numbers have fallen here and they’ll continue to go down as long as jobs keep being lost here,” said Jim Rokakis, treasurer for Cuyahoga County, which includes Cleveland where unemployment hit 10.1 percent in June. “Americans always want a quick fix to problems, but they are going to relearn patience this time round.”

Toledo in northwest Ohio has been especially hard hit by the recession, in particular because of the auto industry-related plants that dot the area.

“Obama set expectations too high here and six months later, things haven’t got better, so some people are losing hope,” said John Johnson, branch manager of the Southeastern Container Inc plant in nearby Bowling Green, which makes plastic bottles for Coca-Cola Co..

Johnson said he had to turn away qualified workers from auto-related plastic companies seeking work. “When people are out of work for a long time, they become very impatient.”

Unemployment hit 14.2 percent in June in Toledo, a city of about 315,000 people. Many of the roads in and out of the city are in a poor state of repair and many downtown stores have closed down. Manufacturing brought the city wealth, so plant closures have taken a heavy toll.

‘DEPRESSION’

“We’re not just in a recession here, it’s a depression,” said Toledo Mayor Carty Finkbeiner. “This downturn has left Ohioans wondering if we’ve lost our place in the sun.”

According to a midyear survey from real estate service company CB Richard Ellis Reichle Klein, Toledo’s retail vacancy rate hit a record level of 14.6 percent.

“Everybody is having a hard time just existing right now,” said Bob Shelley, 72, who runs Shelley Rubber Stamp & Sign Inc for his father in downtown Toledo. “All businesses have been hit, so everybody’s giving everybody a break right now.”

Shelley said he felt Obama had an overcrowded agenda.

“He’s trying to satisfy everyone at once and he’s trying to rush everything through Congress,” he said. “But if you rush like that, you’re bound to make mistakes.”

Angie Carter, 32, a market research analyst in downtown Toledo, said she voted for Obama and he just needed time.

“This is a recession and we live in a manufacturing state,” she said on a cigarette break. “It’s going to take time to turn it around.”

When touting his $787 billion stimulus package earlier this year, Obama cautioned that a recovery would take time.

The president also has time to recover in Ohio if jobs come back. Aware of its importance, he was there last week to tout his healthcare plans. The last candidate who won Ohio but lost the election was Republican Richard Nixon in 1960.

Rokakis said Obama’s speech in Cleveland on July 23 was no accident.

“Obama is a smart man and he knows how important Ohio is,”

The article portrays Obama as having said that recovery would take time under his stimulus.  It fails to mention that the Obama administration – in pushing the failed stimulus package through Congress – predicted that unemployment would rise no higher than 8% if his stimulus passed.

As bad as things are now, there is no realistic reason to believe they will get better.  Meredith Whitney, the Wall Street analyst who gained much credibility in predicting the mortgage meltdown, is predicting unemployment will rise to 13% or higher.

The date for a housing market recovery stretches to 2015.

Obama’s deficits are soaring to stunning levels.  Back in March the Congressional Budget Office estimated that Obama’s “huge annual budget deficits that would force the nation to borrow nearly $9.3 trillion over the next decade — $2.3 trillion more than the president predicted when he unveiled his budget request just one month ago.” And that mindbogglingly ginormous figure doesn’t include the trillion plus hole we would dig passing Obama’s health care plan.

As the Wall Street Journal’s Michael Boskin puts it:

Mr. Obama’s $3.6 trillion budget blueprint, by his own admission, redefines the role of government in our economy and society. The budget more than doubles the national debt held by the public, adding more to the debt than all previous presidents — from George Washington to George W. Bush — combined.”

Obama has blamed President Bush for the deficits, but not only has he racked up far more debt than did Bush, but as a Senator Obama actually voted for the very Bush-budget that Obama is now blaming on Bush – including the $700 billion TARP bailout.

It is also worth knowing that the federal government has exposed itself to $23.7 trillion in risks with its bailouts since TARP (which is turning out to be a thinly disguised anagram for “TRAP”).

Those massive deficits guarantee future economic pain, but recent developments are beginning to show that our future pain may already be here right now:

Weak Treasury Auctions Raise Worries About US Debt Burden
By: Reuters     Wednesday, 29 Jul 2009

The U.S. Treasury sold $39 billion in five-year debt Wednesday in an auction that drew poor demand, raising worries over the cost of financing the government’s burgeoning budget deficit.

It was the second lackluster showing in as many days,  convincing analysts that the stellar results of debt auctions just a few weeks ago were a fluke and that Thursday’s $28 billion seven-year offering could suffer a similar fate.

Under the weight of the ballooning deficit, the government has raised auction volumes and analysts now wonder whether the strain on the market is showing.

“Obviously everyone is inferring that tomorrow’s won’t be good either,” said James Combias, head of government bond trading at Mizuho Securities USA in New York. “Maybe you will see more interest tomorrow but I think the increase in the auctions and the size of them may be starting to have an effect. These are very large auctions.”

We are witnessing a terrifying unfolding scenario in which “Interest due on the debt could easily be $1 trillion toward the end of the next decade.”

Like the Texas Hold’em player who pushes every last dime into the center of a poker table, the federal government is now “all in” with its commitment to push the national debt to 50% of GDP. The Congressional Budget Office believes that the Treasury will have to borrow nearly $2 trillion this year. None of that is new news, but what is beginning to emerge is a picture of a government which has narrowed its options for improving the economy down to one. Either GDP turns sharply up next year or the deficit will become an unmanageable burden. The Treasury will have to default on interest payments if sharply raising taxes in 2010 and 2011 does not bring IRS receipts to historic highs. That would not appear to be likely with unemployment moving toward 10% and American corporate earnings badly crippled.

You may not know it, but your government under Obama has gambled this country’s future – and gambled poorly.  Obama believed his $787 billion stimulus – which was actually scored by the CBO to be $3.27 trillion – would stimulate big, but it has been a total dud.  And as we continue to pile on debt on top of debt on top of debt, and combine that with continuing high unemployment and low economic output, the result is insolvency and doom.  And it is already beginning to rush toward us like an enraged Kodiak bear.

Some are pointing at the seemingly recovering Dow Index to argue that the worst is behind us and that we are on the road to recovery.  As reported by Reuters:

No Economic Recovery in Sight, Only Inflation
Mon May 11, 2009 9:01am EDT

FORT LEE, N.J., May 11 /PRNewswire-USNewswire/ — The National Inflation Association yesterday released the following statement to its http://inflation.us members:

“Wall Street would like you to believe that the Dow Jones’ recent 33% rally from March’s low is due to improving economic fundamentals, but it is our belief this rally is due to nothing but inflation.

“Jobs data released on Friday shows that U.S. employers cut 539,000 jobs in April, the fewest since October. However, these numbers were artificially strong due to the U.S. government increasing their payrolls by 72,000, which included the hiring of about 60,000 temporary workers in preparation for the 2010 census.

“Government jobs are non-productive jobs that normally get paid for by taxpayers. However, because the U.S. already has a huge budget deficit with tax revenues likely to decline substantially, these jobs will be paid for through inflation. An increase in government jobs is not a sign that the economy is improving, but only a sign that we are digging our economy into a deeper hole that will ultimately lead to the U.S. dollar collapsing.

“Even Warren Buffett, who is a huge supporter of Obama and has defended his economic policies, said last week that with political leaders showing little inclination to raise taxes, the only way to pay for excess spending will be by inflating the currency and shrinking the value of the dollar.

“The worst of the recession is not behind us. Nominally, anything can happen to the Dow Jones. If the Federal Reserve prints enough money, the Dow Jones could go back to 14,000, but it won’t mean anything if it costs $2,000 to fill your refrigerator with groceries.

Obama’s spending has put us into a genuine crisis: we are now in a situation where any recovery will be immediately followed by sharp increases in inflation, unless government either sharply raise taxes across the board (which will undermine the economy) or unless they sharply raise interest rates (which will also undermine the economy).  Both options are politically unacceptable.

You’d better be thinking about getting a wheelbarrow, because you’re eventually going to need to one to bring enough cash to the grocery store to buy your daily bread.

That was my long-winded way of saying that Obama’s polls are likely to drop to the point where angry villagers armed with pitchforks and torches start storming Castle Obamastein as the economy drops right along with his popularity by the end of his one-term presidency.

Taxpayers Now On Hook For $23.7 TRILLION In Bailout Money

I don’t know if I should be more scared than angry or more angry than scared.  Suffice it to say, I’m both angry and scared as hell.

The Obama presidency is just one giant nightmare.  And just like most nightmares, it’s going to keep getting scarier and scarier and crazier and crazier the longer it goes on.

While Obama has promised us unparalleled transparency, we have had the truth concealed from us, and we have been lied to.  And the TARP Inspector General’s report should wake up every American and

U.S. Rescue May Reach $23.7 Trillion, Barofsky Says (Update3)

By Dawn Kopecki and Catherine Dodge

July 20 (Bloomberg) — U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.

The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.

“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.

Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.

“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”

Barofsky’s estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in TARP and other aid from the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac, credit unions, Veterans Affairs and other federal programs.

Treasury’s Comment

Williams said the programs include escalating fee structures designed to make them “increasingly unattractive as financial markets normalize.” Dependence on these federal programs has begun to decline, as shown by $70 billion in TARP capital investments that has already been repaid, Williams said.

Barofsky offered criticism in a separate quarterly report of Treasury’s implementation of TARP, saying the department has “repeatedly failed to adopt recommendations” needed to provide transparency and fulfill the administration’s goal to implement TARP “with the highest degree of accountability.”

As a result, taxpayers don’t know how TARP recipients are using the money or the value of the investments, he said in the report.

‘Falling Short’

“This administration promised an ‘unprecedented level’ of accountability and oversight, but as this report reveals, they are falling far short of that promise,” Representative Darrell Issa of California, the top Republican on the oversight committee, said in a statement. “The American people deserve to know how their tax dollars are being spent.”

The Treasury has spent $441 billion of TARP funds so far and has allocated $202.1 billion more for other spending, according to Barofsky. In the nine months since Congress authorized TARP, Treasury has created 12 programs involving funds that may reach almost $3 trillion, he said.

Treasury Secretary Timothy Geithner should press banks for more information on how they use the more than $200 billion the government has pumped into U.S. financial institutions, Barofsky said in a separate report.

The inspector general surveyed 360 banks that have received TARP capital, including Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. The responses, which the inspector general said it didn’t verify independently, showed that 83 percent of banks used TARP money for lending, while 43 percent used funds to add to their capital cushion and 31 percent made new investments.

Barofsky said the TARP inspector general’s office has 35 ongoing criminal and civil investigations that include suspected accounting, securities and mortgage fraud; insider trading; and tax investigations related to the abuse of TARP programs.

We were sold the stimulus (more commonly known to people who actually knew what was going on as ‘porkulus,’ and more accurately known as the Generational Theft Act) as a $787 billion package.  But it was actually no such thing.  The media kept talking about billions; but the actual figure was $3.27 TRILLION.  That’s right.  $3.27 trillion.  We were lied to.  Costs that were clearly part of the legislation weren’t disclosed to us, and now on top of getting far less than what was advertised, we are paying far more for the privilege than was advertised.

Now we find out that Obama and his gang of thieves has done much the same with TARP.  Somehow, while we weren’t looking, “TARP evolved into a program of unprecedented scope, scale and complexity.”  And by the same people who promised us an “‘unprecedented level’ of accountability and oversight.”  And lo and behold, TARP has exploded under all the darkness into a mushroom cloud of government obligations that dwarf anything imaginable.

And all that’s coming out of the Obama administration is some stumbling excuse from the Treasury Department’s spin doctor that it really isn’t as bad as the inspector general scrutinizing TARP says it is.

What we are getting from the Obama administration is an unceasing projection of rosey-colored scenarios that have no connection whatsoever to reality.  When they are forced to offer some sort of excuse, they claim they didn’t realize the economy was so weak (even when they were fearmongering it into comparisons of the Great Depression to sell their stimulus package) – and then they immediately offer up yet another mindlessly and freakishly rosy scenario in their very next breaths!!!  And then, of course, based on these projections, they are racking up insane spending atop insane spending.

Wall Street analyst Meredith Whitney, who gained a reputation of credibility after boldly predicting doom when everyone around her was seeing roses last year, is now predicting 13% unemployment and a very tough future for banks due to the continuing mortgage meltdown.

The White House is refusing to release its own annual midsummer US budget update because it doesn’t want the American people to see how bad things are until after they’ve passed their massive health care boondoggle.  Many now believe that budget release accounts for Obama’s frenzied push to pass health care before the August recess.  How’s THAT for “unparalleled transparency”?

As said, Meredith Whitney is predicting 13% or higher unemployment.  What you may not know is that we are already at Great Depression levels of unemployment right now, and that our current 9.5% unemployment rate would be nearing 20% if it were calculated the way it was in 1980.

Note: The SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated “discouraged workers” defined away during the Clinton Administration added to the existing BLS estimates of level U-6 unemployment.

We face a future damned-if-you-do, damned-if-you-don’t dilemma: the only reason interest rates aren’t shooting skyward is because the market is in such a doldrum.  But the moment recovery begins to rear its head in Barack Obama’s game of economic Whack-a-Mole (where he whacks down small businesses and private-sector employment), hyperinflation due to our massive indebtedness will likely attack us.  The prospect of a jobless recovery, followed by Zimbabwe-levels of inflation looms very large in our future.

We’ve set ourselves up for hyperinflation.  We have massively increased our money supply even as our GDP has plummeted.  We have an increasing lack of confidence on the part of investors that we will be able to maintain the value of our currency (and see here), forcing demand for higher and higher interest rate payments on future bonds.  Those were the conditions of the Wiemar Republic; those were the conditions of Zimbabwe; and those are the conditions in the Late Great USA.

Pretty soon, we will be facing the Sophie’s Choice prospect of whether we want massively high interest rates, or massively high inflation – or best of both worlds – both massive interest AND hyperinflation.  We’ve got experts such as Johns Hopkins Professor of applied economics Steve Hanke and National Bureau of Economic Research economist Anna Schwartz seeing the inflation bogeyman rearing its genuinely ugly head.  And we’ve got investors beginning to start betting big on a coming hyperinflationary economy.

The thing is, we have a giant mega-trillion ton anvil cued over our collective heads.  And it is just waiting to drop.

So you see massive debt exposure to US economic structures.  You see higher unemployment.  You see historically low levels of tax revenue.  You see terrible recent mortgage default rates now turning “markedly worse.” You see all kinds of indicators that our debts are getting larger and larger even as our ability to repay them becomes smaller and smaller.

And it is with that backdrop that we should contemplate the massive, mind-numbingly enormous numbers hanging over everything this administration has done, is doing, or is trying to do.  With the debt he’s accumulating going up by the trillions, Obama issued the petty promise to cut his spending by a measly $100 million.  And he couldn’t even fulfill that insignificant budget cut.  All he knows how to do is spend and spend and spend.

So get scared.  Get angry.  And get ready for the beast.

We voted for “No, no, no.  Not God bless America.  God damn America!”  And now we’re going to get to see what “God damn America” looks like.

Biden: ‘We Misread the Economy’ – And it’s all the Republicans’ Fault

Some distant day, many scientists believe, the earth will be devoid of human life due to some cosmic catastrophe or – ultimately – due to our depleted sun transforming into a red giant. The truly good news about such an otherwise bleak future is that the Obama administration will presumably no longer be able to blame Republicans for the economy that they “inherited.”

Biden: We ‘Misread the Economy’

July 05, 2009

Big admission from Vice President Joe Biden today.

“The truth is, we and everyone else misread the economy,” Biden told me during our exclusive “This Week” interview in Iraq.

Biden acknowledged administration officials were too optimistic earlier this year when they predicted the unemployment rate would peak at 8 percent as part of their effort to sell the stimulus package. The national unemployment rate has ballooned to 9.5 percent in June — the worst in 26 years.

“The truth is, there was a misreading of just how bad an economy we inherited,” said Biden, who is leading the administration’s effort to implement it’s $787 billion economic stimulus plan.

“Now, that doesn’t — I’m not — it’s now our responsibility. So the second question becomes, did the economic package we put in place, including the Recovery Act, is it the right package given the circumstances we’re in? And we believe it is the right package given the circumstances we’re in,” he told me.

The vice president argued more time is needed for the stimulus to work.

“We misread how bad the economy was, but we are now only about 120 days into the recovery package,” he said. “The truth of the matter was, no one anticipated, no one expected that that recovery package would in fact be in a position at this point of having to distribute the bulk of money.”

Biden didn’t rule out a second government stimulus package, but downplayed calls from Nobel Prize-winning economist Paul Krugman this week that a second stimulus will be needed.

I pressed the vice president, who is also leading the administration’s middle-class task force, on whether he’d rule out a second stimulus package.

“So, no second stimulus?” I asked.

“No, I didn’t say that,” Biden said, “I think it’s premature to make that judgment. This was set up to spend out over 18 months. There are going to be major programs that are going to take effect in September, $7.5 billion for broadband, new money for high-speed rail, the implementation of the grid — the new electric grid. And so this is just starting, the pace of the ball is now going to increase.”

Let’s not tell anyone that liberal Paul Krugman’s warning that we need a second stimulus is secret code for, “The first stimulus didn’t work worth squat, so let’s throw more money down the toilet.” And let’s for DAMN sure not tell anyone that unemployment benefits are going to be ending for workers starting in September and things will truly begin to increasingly suck after that as the unemployment rate grows like “the other ‘green shoot'” up and up and up.

Joe Biden says, “We and everyone else misjudged the economy.” No, Joe, it just aint so. Just you and your stupid liberal friends misjudged the economy. Don’t drag anyone else into your ignorance. Business professionals back in October predicted that Obama would literally bankrupt the country within three years if he was elected. Republicans (such as Paul Ryan) widely predicted the terribly flawed and terribly partisan pork-laden stimulus would fail – which is why only three out of 239 Republicans voted for it (and you can actually make that TWO out of 239, given that one of the three “Republicans” was RINO traitor-turned Democrat Arlen Specter).

Please don’t try to involve conservatives in your party’s stupidity, Joe. It aint right to lie.

The fact is, the porkulus is a complete failure that will cost the American people’s children’s children’s children $3.27 TRILLION and produce NOTHING.

And the fact is, when the Obama White House assured the American people that his stimulus would save the day, he assumed responsibility for the economy. It is HIS baby now, and he can’t keep racking up trillions and trillions and trillions of dollars in stupid and useless spending that will literally “bankrupt the country” and blame the fact that it isn’t working on Republicans.

It’s also rather funny that Vice President Biden would say “there was a misreading of just how bad an economy we inherited.” Please realize that for the last two years – and most definitely for the last eight or nine months – Barack Obama and Joe Biden have been comparing the present economy to the Great Depression. And now they are claiming they didn’t know how bad it was? What’s worse than the Great Depression? It is beyond ludicrous that these people can spend all this time demonizing the economy as the worst imaginable, and then argue they didn’t know that it was that bad.

Here are the opening two paragraphs from a February 13, 2009 Wall Street Journal piece that proves the lie of Biden’s remark:

President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package.

In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today’s economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.

How can Biden, Obama, or Democrats claim they didn’t realize how bad the economy really was after their previous constant fearmongering of the economy?

And the most famous and oft-used line, of course, is that Democrats keep claiming that they “inherited” the economy.

For the record, the Dow Industrial Average was at 11,986.04 on November 3, 2006 when Republicans were last in control of Congress. The unemployment rate for October of 2006 was at 4.4% when Republicans last ran things. As I write this, the Dow is at 8163.60 (on July 7), and the unemployment rate is at 9.5%, respectively. Nancy Pelosi and Harry Reid have been running the House and the Senate for the last two years, and a fine job of running the country into the ground they’ve done.

Just why is it that Democrats can have control over both the House and Senate while an economy goes from prosperity to impoverishment, and still bear no responsibility for such a result? But that’s the narrative, and both the Democratic Party and the mainstream media stuck to their scripts as though the lines had been written by Shakespeare himself. Do you see the great shining lie that you’ve been told, and told over and over again?

Since the Democrats have been in charge on both branches of Congress, the housing market has collapsed, the banks have collapsed, Fannie and Freddie have collapsed, the auto industry has collapsed, and things have generally turned to the fecal matter that Pelosi’s and Reid’s head are full of, generally.

But, hey, let’s keep blaming everything on Republicans, anyway. When you have an electorate so completely ignorant that 57.4% of voters weren’t even able to identify which party controlled Congress, such demagogic claims work.

The ONLY thing that Democrats actually “inherited” was moron genes, a talent for demagoguery and deceit, and Nancy Pelosi and Harry Reid (please see “moron genes”).

Now, the OTHER thing that Democrats love to claim was that Republicans are to blame for the economic disaster because Republican George Bush was President when it happened. And we are all to conveniently forget the fact that such reasoning should likewise make Democrat Barack Obama – who is president RIGHT NOW – is thereby responsible for the current state of the disaster that he nonetheless keeps blaming on Bush.

On what possible grounds are we to blame Bush? What is it that Bush did or didn’t do that created our disaster, and which Democrats who controlled both the House and the Senate are somehow absolved from having done or failed to do? Bush, we have been repeatedly lectured, failed to regulate the housing finance industry. And that lack of regulation caused the financial industry to self-destruct. Because the government is far better able to run things than the private sector, as we all know.

Well, wrong, wrong, and wrong, respectively. But let’s stick with the Democrats’ chief script item and consider just who truly failed to regulate the housing finance industry when it actually would have done some good, and who was really in bed with the worst players who created the crisis in the first place.

First of all, Bush TRIED to regulate the housing finance industry. And the ONLY thing that kept him from succeeding was DEMOCRATS.

Let’s go back to September 11, 2003, to see what the New York Times had to say. The article begins:

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

And it ends:

Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.

Go back to the phrase at the beginning of the article: “the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.” That would refer to the Clinton Administration’s aggressive push to put even more future poison in the fangs of the terrible Community Reinvestment Act.

Democrats blocked the passage of the Bush attempt to regulate the housing finance industry. They were the ones who killed regulation, not Republicans. They said there wasn’t a problem. They said that everything was just peachy dandy.

Democrats essentially say that the American people should blame George Bush for not being able to stop Democrats from being stupid, incompetent, and depraved vermin. But how can anyone stop Democrats from being stupid, incompetent, and depraved vermin? It would be like trying to stop the wind from blowing.

Bush and Republicans tried again to REGULATE the housing finance industry in 2005. John McCain wrote a passionate letter warning of an impending collapse of the housing finance industry and urging passage of the bill (specifically, the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190). But “without a single Democrat vote, the bill was doomed if brought to the floor for the critical 60-vote cloture.” Housing finance reform died a death by Democrat.

As late as JUST BEFORE THE WHOLE HOUSING FINANCE INDUSTRY COMPLETELY COLLAPSED, Democrat Barney Frank is on the record saying:

REP. BARNEY FRANK, D-MASS.: I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. They’re not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward.

You can watch Democrats fiddling with the economy just before it burned here (Youtube).

Even Bill Clinton – hardly a Republican source – blamed Democrats and NOT Republicans for refusing to regulate the housing finance industry:

Bill Clinton on Thursday told ABC’s Chris Cuomo that Democrats for years have been “resisting any efforts by Republicans in the Congress or by me when I was President to put some standards and tighten up a little on Fannie Mae and Freddie Mac.”

So the bottom line is this: Democrats blocked reform and regulation. They denied there was a problem. They continued to deny that there were any problems, and continued to block reform and regulation until right before the whole economy went down the drain.

And then they blamed the Republicans for the mess that they had created, refused to fix, and denied even existed in the first place.

What is utterly beautiful in its moronic perfection is that Barney Frank is now trying to do to the condominium market what he did to the housing market by forcing lenders to make risky loans all over again.

Okay, okay, so it was the Democrats who actually screwed up the universe, but you still have to admit that the Obama Administration inherited the problem. It clearly wasn’t in power when the fit hit the shan. Right?

Not quite so fast.

Technically, the Obama Administration is obviously not be to blame, having only began its hopefully very short life on January 20, 2009. But Barack Obama personally? You should probably know what a nasty piece of work your president was before he became your president.

Barack Obama as a Senator took more money from Fannie Mae and Freddie Mac than anybody except his fellow scumbag and fellow Democrat Chris Dodd (who had direct oversight as Chairman of the Senate Banking Committee). Obama also took more money than disgraced and bankrupted Lehman Brothers than anyone but his fellow sleazeball and fellow Democrat Chris Dodd. Now, maybe you’re one of those people who believe that corrupt and soon-to-be-bankrupted organizations give buttloads of money to politicians just because they’re feeling generous. But people who actually live in the real world understand that Fannie, Freddie, and Lehman Brothers gave money to the politicians whom they believed would be best for their corporate asses and their corporate assets.

Barack Obama as candidate for president made Penny Pritzker – who was at the very EPICENTER of the subprime loan fiasco – his national finance chair. She paid a “fine” of $460 million dollars to basically buy her way out of prison for her part in the early beginnings of the collapse that would eventually extend to the entire economy. Penny Pritzker was to the stability of the housing finance industry on Wall Street what Freddie Krueger was to the dreams of teen agers on Elm Street; just what kind of Faustian deal do you believe the politician who took more money in less time from the worst players in the crisis than anyone bar none struck to have knife-gloved Penny Krueger open up her Rolodex full of demons?

Barack Obama as a private citizen was one of the ACORN lawyers who sued Citibank in 1994 and forced – FORCED – them to reduce their credit standards and make extremely housing mortgage loans to minorities who would subsequently prove unable to pay them. And the ACORN suit took advantage of the openings created by President Bill Clinton in the 1990s. The result of that lawsuit changed the housing finance industry forever afterward – and basically doomed it as soon as housing prices started to drop.

So as President Barack Obama may have “inherited” the crisis; but as a private citizen, as a Senator, and as a candidate for President, he was at the very center of the mess that created the crisis right up to his giant Dumbo ears.

And as Obama continues to blame his inability to handle the economy on what he “inherited,” let us not forget that it was Barack Obama who swore up and down that his Generational Theft Act of 2009 would fix the economy – NOT Republicans and NOT George Bush – and it was his economic plan that completely failed to produce the promised results.

It was Barack Obama who put his credibility behind a plan that his administration promised would hold unemployment down below 8% and it was Barack Obama who has presided over an unemployment rate that is now 9.5% and rising. The Congressional Budget Office predicted that unemployment would only have gone to 9% by 2010 had we done nothing at all. And nothing would have been a heckuva lot cheaper than $3.27 trillion. I, for one, assure you that I could have sent the economy crashing for a lot lower price tag that Barack Obama has charged you.

The unemployment rate in November – when Barack Obama was elected – was a Lilliputian (by comparison to the gigantic mess Obama has since made of the economy) 6.7%. It was 7.2% a few months later when his administration assured the American people that he could keep unemployment under 8% if his stimulus plan was passed. It is now, I should say again, at 9.5% – and it many experts expect it to be 11% by next summer.

Obama’s answer is still MORE colossal spending. The first stimulus – advertised as a $787 billion package but actually costing $3.27 trillion according to the Congressional Budget Office – is now said to have been too low. We need more porkulus, they tell us. A lot more. We need to borrow more massive debt and pile up more massive deficits that will crush our economy with staggering interest payments in the very near future and ultimately cause a complete collapse of our way of life. We need to nationalize our health care so it will be more like the $86 trillion-in-the-hole runaway freight train to destruction that Medicare is. And we need cap-and-trade legislation that will cap our productivity and trade our prosperity to ensure that our economy can never hope to be productive again.

Keep blaming Bush. Keep blaming Republicans. Keep blaming “failed conservative policies.” Blame ANYONE and ANYTHING but Barack Hussein Obama and the Democratic Party that is now in total control of everything.

Just let me shout in your face that by doing so you will help create an economy that will make the Great Depression look like prosperity when the policies that you so stupidly supported implode into staggering debt and even more staggering hyperinflation. And you and your children will starve shoeless in the cold while food riots and tax rebellions erupt all around you as your once great nation is reduced to banana republic status.

Fund Betting Big That Obama Kills U.S. Economy With Hyperinflation

There’s a memorable line in the movie, The Hunt For Red October.  A fanatic  Soviet submarine skipper – trying to complete his mission to destroy the renegade Soviet sub “Red October” before it escapes to America – makes a fatal overconfident miscalculation.  As the torpedo he fired boomerangs back toward the very submarine that fired it, a Russian officer turns to the captain and shouts:

“You arrogant ass!  You’ve killed US!”

Essentially, a hedge fund that was wildly successful last year is betting that the American people will be shouting that very same line at Barack Obama.

The June 2 article from The Wall Street Journal:

Black Swan Fund Makes a Big Bet on Inflation

A hedge fund firm that reaped huge rewards betting against the market last year is about to open a fund premised on another wager: that the massive stimulus efforts of global governments will lead to hyperinflation.

The firm, Universa Investments L.P., is known for its ties to gloomy investor Nassim Nicholas Taleb, author of the 2007 bestseller “The Black Swan,” which describes the impact of extreme events on the world and financial markets.

Funds run by Universa, which is managed and owned by Mr. Taleb’s long-time collaborator Mark Spitznagel, last year gained more than 100% thanks to its bearish bets. …

A Bloomberg article offers a little more.  An excerpt:

June 1 (Bloomberg) — Universa Investments LP, the hedge- fund firm advised by “Black Swan” author Nassim Taleb, is adding a new strategy, betting that government efforts to pump money into economies around the world won’t prevent deflation or could result in hyperinflation. […]

“Policy makers have no control over the outcome of their actions,” Taleb said. “The plane they are flying will either hit the mountain, which is hyperinflation, or crash in the ocean, which is deflation. There is a chance of the pilot hitting the runway. But if he’s not skilled, it’s less than he thinks.”

Obama has – and this is a direct quote from another Wall Street Journal piece – been “adding more to the debt than all previous presidents — from George Washington to George W. Bush — combined.”  We have a national deficit of $11 trillion that has been racking up since the 1920s, and the Congressional Budget Office is estimating that Obama will nearly double it with a further $9.3 trillion in his own deficit spending.  Even as “[t]he U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion.”  And growing.  And spent in order to spend us out of a hole that was created by the weight of excessive debt in the first place.

“You arrogant ass!  You’ve killed US!”

A C-SPAN interview with Obama reveals a fascinating mindset.

SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we’ve made on health care so far. This is a consequence of the crisis that we’ve seen and in fact our failure to make some good decisions on health care over the last several decades.

Notice that Obama acknowledges that the government is out of money, and then immediately starts discussing spending what is expected to top $1.5 trillion MORE for his  health care “investment.”   He is an addict who cannot stop his spending.  He’s like a gambler who thinks he’ll hit it big on the next roll of the taxpayer dice.

And that $1.7 trillion figure from the C-SPAN interview, as bad as it is (I mean, you have to understand: people complained about Bush’s spending raising our debt $1.2 trillion over THREE YEARS), is still likely a lowball figure.  The numbers keep changing.  McClatchy Newspapers has an article describing the rosy numbers, fuzzy math, and constantly changing numbers coming out of the Obama administration.

According to Strategas analyst Dan Clifton’s budget analsis as found in US News & World Report:

Based on our analysis, the deficit is actually $2.2 trillion for the fiscal year or nearly 100 percent higher than is being reported. In fact, the deficit will finish the fiscal year at an astonishing 15.5 percent of GDP! Federal spending will rise to 32 percent of GDP.

The United States will have to borrow nearly 50 cents for every dollar it spends this year.  By 2019 Obama will have so exploded the debt that it will exceed 82% of gross domestic product.  And we are simply doomed.

“You arrogant ass!  You’ve killed US!”

China has been warning the Federal Reserve over “printing money” – a warning that comes amid growing fears that America could lose its AAA sovereign rating.  The dollar has weakened sharply against other currencies due to the Treasury simply creating money out of thin air.  China is increasingly concerned that all this “money creation could end up debauching the dollar … inviting a global inflationary crisis.”   The policies that the Obama administration has been pursuing have led another writer for the UK Telegraph to conclude, “From now on, think of the US as a bigger Zimbabwe.”

A Bloomberg article describing Treasury Secretary Timothy Geithner’s hat-in-hand visit to China said:

U.S. government securities have tumbled 4.3 percent this year, the worst performance since Merrill Lynch & Co. began tracking returns in 1978, as so-called bond vigilantes drove up yields to punish President Barack Obama for increasing the budget shortfall.

Concerns about international investors have grown as the U.S. Dollar Index weakened 8.6 percent since February and Obama and Federal Reserve Chairman Ben S. Bernanke committed $12.8 trillion to thaw frozen credit markets and snap the longest U.S. economic slump since the 1930s.

It was while Geithner was speaking before an audience of Chinese that the following event occurred:

Speaking at Peking University, Mr Geithner said: “Chinese assets are very safe.”

The comment provoked loud laughter from the audience of students. There are growing fears over the size and sustainability of the US budget deficit, which is set to rise to almost 13pc of GDP this year as the world’s biggest economy fights off recession. The US is reliant on China to buy many of the government bonds it is planning to issue but Beijing’s policymakers have expressed concern about the strength of the dollar and the value of their investments.

Obama has until October to sell about $1.9 trillion in debt.  Geithner is actually in China right now to pitch a major bond sale next week.  And neither China nor anyone else seems crazy enough to keep buying our debt in sufficient amounts to fill our bottomless pit of federal spending.  That means either that the US has to raise interest rates to make its debt more attractive – which will kill the economy and plunge the US into a further cycle of recession – or else simply keep printing money which creates the core element of hyperinflation.

“You arrogant ass!  You’ve killed US!”

Obama and the Democratic spin machine keep laying the blame on Bush policies, but it is Obama’s spending that has created this “Sophie’s Choice,” not anything that Bush did.

It wasn’t Bush who fired the salvo of spending “torpedoes” that are now coming back to blow up in the bowels of our economic and financial system.  It has been Obama’s uncontrolled spending.

It certainly isn’t just Universa and it’s “Black Swan” fund that is betting on Obama-caused hyperinflation, just as it isn’t just the UK Telegraph comparing the US under Obama to Zimbabwe, as a brief excerpt from Bloomberg shows:

May 27 (Bloomberg) — The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.

Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.

“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”

David Rosenberg, the chief economist at Gluskin Sheff, disagrees slightly with Marc Farber and the Black Swan fund: he doesn’t think that the savage beast of hyperinflation will begin devouring the U.S. economy until after consumer spending has rebounded.  In a Newsmax article entitled, “Experts Fear U.S. Will Suffer Zimbabwe-Level Inflation,” Rosenberg is quoted as having told The Wall Street Journal, “Not until the household sector expands its balance sheets are we likely to see the re-emergence of inflation on a sustained basis.”  It’s not that we’re not doomed; it’s merely a question as to how long before we’re doomed.

I feel another refrain from the song we’re singing coming on:

“You arrogant ass!  You’ve killed US!”

Famed Trends Research CEO Gerald Celente has predicted food riots in the United States by 2012.  He put his reputation on the line by making that claim.  Now we’ve got more financial experts like Marc Farber, Nassim Nicholas Taleb, David Rosenberg, and a mega-successful hedge fund putting their money where their mouth is in essentially predicting the same scale of disaster.

Like the Russian submarine skipper who arrogantly and foolishly removed the safeties from his missiles which would have protected his sub from his own torpedoes, Barack Obama has arrogantly and foolishly taken actions that will torpedo the U.S. economy.  It’s only a matter of how much time we can dodge the impending explosion of massive spending triggering massive inflation.