Tag Archives: financial meltdown

All that Glitters: Gold hits $1600 an Ounce as People Lose Faith in the Western Governments and Western Currencies

As the socialist democrats play chicken with the debt crisis in Washington DC and as the governments of Europe split on how to deal with their debt fiasco its becoming increasingly clear that our western governments have failed in dealing with the financial crisis. As much as the rest of the world is loath to admit it; our western financial mess will tank the world economy when we reach critical mass and sovereign debt begins to be defaulted on. In America, a two party system, it’s a fact that one of the two party’s is entirely dependent on providing ever more extravagant social programs and so if you take spending away from the socialist democrats they have no party left. Democrats have abandoned their principles years ago in favor of a strictly “bring home the bacon” world view and their politics of division means that they now view patriotism and any good feeling about this country as “republican propaganda.” Democrats maintain their supplicants by dividing the nation into controllable voting groups, convincing them that they are a persecuted minority; con their leaders into accepting Democrat legislative protection and then they harvest the vote while never actually solving the problems.

This works great until you have a problem, like the financial crisis, that actually needs a real solution. We need the spending spigot to be turned off, now, and for the foreseeable future. The socialist governments of Europe don’t have the money to pay for their lavish social benefits and are facing default on their ever increasing debt and here in America we’re doing our best to pretend that we don’t have a spending problem at all. The sane people, who remain, around the world, are looking at our government’s failure to solve the financial crisis and they’re turning increasingly to Gold because neither the Euro nor the Dollar seems to be worth much these days. As Western Governments are increasingly revealed as too weak to fix the financial woes of the world: it’s only natural that the world’s wealth will find its way into units of value that are not dependent on government to maintain that value. Hence we’re seeing Gold take off like a rocket, again, as faith in our politicians craters once again. Our elected representatives are unable to take unpopular but necessary actions for the good of the country but instead while away the hours figuring out how to fix the blame on the other party.

The Debt Crisis is like Marley’s Ghost, with chains clanking, and the unearthly groans of the utterly dammed, trying in vain to get our attention. At least Ebenezer Scrooge opened a dialog with the Ghost; he faced the apparition and worked the problem to the salvation of his soul. Our Ghost is, in fact, Franklin D. Roosevelt’s Ghost who now wears the crazy Marxist programs he forged in life; as he watches the nation he lead come apart at the seams because it’s no longer administering the social programs——- the social programs are governing us. As Marley and Scrooge sold their soles to the quest for profit; the Marxist Democrats have sold their soul to redistribution of wealth as a means of maintaining power and extending control over the people. As the Ghost of Roosevelt stands in the center of the Oval Office groaning and clanking its chains while the cancerous programs it spawned threatens to kill the United States: Obama sits in the oval office, oblivious to the cancerous spending, unwilling to compromise with evil capitalists, ghosts of presidents past, or anyone else, because he’s too engrossed on planning yet another vacation.

Sixteen Hundred Dollars for an Ounce of Gold! As the Congress abdicates is responsibility for love of the cowardly McConnel plan and as Obama lays the foundation for blaming the Republicans when the debt talks fail and as the hapless Germans stand alone in Europe for fiscal sanity gold is on a tare. As our governments continue to fail us look for more and more people and organization around the world to turn to gold for wealth preservation. Sixteen Hundred Bucks an ounce with no end in sight! For more on Gold consider this article from Bloomberg.com:
http://www.bloomberg.com/news/2011-07-18/gold-rallies-to-record-in-best-run-since-1980.html

The Peoples Republic of California Chronicles Episode 2: Big Banking Tells California to Drop Dead with their Worthless IOU’s

 

 

 

 

The Peoples Republic of California has long since spent itself into receivership.  Its latest scam to camouflage its bankrupt, corrupt and hideously bloated condition, has been to issue IOU’s in lieu of paying their bills. Heaven forbid that they should take an ax to spending and simply cut all the liberal social spending that destroyed this once prosperous state.  The money is gone and the goofy “warrants” they want to issue, mature, (Become due for payment in real money) in October.  Well the big mainline banks are looking at this plan, and the unilateral actions of the state to put off all payments until October, and are saying, in unison: We don’t think so California!  There are still small banks and credit unions that plan to continue enabling the spending addicts of Sacramento but with the big boys getting out this Friday one wonders if the small banks will continue to fork over a “fix”. The banks are letting it be known that they want their money and if California doesn’t pay up the banks won’t play ball!  The big spending liberals of California have finally run out of other people’s money (OPM) and the banks are cutting them off!

It’s about time!

California government has clearly failed.  They’ve had ample time to solve this budget disaster and the Legislature and Executive Branch has clearly failed to do their jobs and avoid a condition of massive default.  One can hope that this means the tacit control of the state budget would fall to a bankruptcy judge who will make the necessary cuts, since the banks are cutting them off from mainlining more “credit”, as cutting the budget becomes the last option open to the incompetent liberals. What should have been the first option, cutting spending, became the only option the California government would never, seriously, consider!  If the executive and legislative arms become unable to cut the budget: the courts must step in and make the cuts necessary to survive once the state is in true default.  Once again: the banks are saying no to “warrants” in lieu of cash and without the banks the state will shut down!

Consider this article from the Wall Street Journal now because as off Friday the Big Banks are cutting off the spending addicts of the Golden State:

 

JULY 7, 2009

Big Banks Don’t Want California’s IOUs

 

By RYAN KNUTSON

A group of the biggest U.S. banks said they would stop accepting California’s IOUs on Friday, adding pressure on the state to close its $26.3 billion annual budget gap.

Associated Press

Dorothy Cottrill of the state controller’s office inspects IOUs last week.

The development is the latest twist in California’s struggle to deal with the effects of the recession. After state leaders failed to agree on budget solutions last week, California began issuing IOUs — or “individual registered warrants” — to hundreds of thousands of creditors. State Controller John Chiang said that without IOUs, California would run out of cash by July’s end.

But now, if California continues to issue the IOUs, creditors will be forced to hold on to them until they mature on Oct. 2, or find other banks to honor them. When the IOUs mature, holders will be paid back directly by the state at an annual 3.75% interest rate. Some banks might also work with creditors to come up with an interim solution, such as extending them a line of credit, said Beth Mills, a California Bankers Association spokeswoman.

Meanwhile, on Monday morning, a budget meeting between Gov. Arnold Schwarzenegger and legislative leaders failed to produce a result. Amid the budget deadlock, Fitch Ratings on Monday dropped California’s bond rating to BBB, down from A minus, the latest in a series of ratings downgrades for the state.

The group of banks included Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and J.P. Morgan Chase & Co., among others. The banks had previously committed to accepting state IOUs as payment. California plans to issue more than $3 billion of IOUs in July.

Ms. Mills of the CBA said some banks were concerned that there aren’t processes in place to accept IOUs, and also worried about fraud issues. She noted that not all banks have set a July 10 deadline, and that dozens of credit unions in the state will keep accepting IOUs.

Wells Fargo’s head of community banking, Lisa Stevens, said: “We’re very disappointed, as are many Californians, that California has taken the unfortunate step of issuing IOUs in lieu of payments to some businesses and individuals.”

State officials said they were disappointed by the banks’ decision. Garin Casaleggio, a spokesman for Mr. Chiang, said: “We don’t want anybody to suffer who can’t redeem them when they need cash.”

The Peoples Republic of California Chronicles: The Hassett Commentary on Abject Stupidity

 

 

 

Here’s an opinion article run by Bloomberg.com that’s worth reading on the failure of the California Government to meet its financial responsibilities.  The moral of the story is to keep the government small because once you start using it like a magic wand to “solve” everyone’s problems: not only do the problems not get solved, they get perpetuated; and you become the servant to the government rather than its master.

California’s Nightmare Will Kill Obamanomics: Kevin Hassett

Commentary by Kevin Hassett

July 6 (Bloomberg) — Last week, we discovered that the state of California will gladly pay you Tuesday for a hamburger today.

With California mired in a budget crisis, largely the result of a political impasse that makes spending cuts and tax increases impossible, Controller John Chiang said the state planned to issue $3.3 billion in IOU’s in July alone. Instead of cash, those who do business with California will get slips of paper.

The California morass has Democrats in Washington trembling. The reason is simple. If Obama’s health-care plan passes, then we may well end up paying for it with federal slips of paper worth less than California’s. Obama has bet everything on passing health care this year. The publicity surrounding the California debt fiasco almost assures his resounding defeat.

It takes years and years to make a mess as terrible as the California debacle, but the recipe is simple. All that you need is two political parties that are always willing to offer easy government solutions for every need of the voters, but never willing to make the tough decisions necessary to finance the government largess that results. Voters will occasionally change their allegiance from one party to the other, but the bacchanal will continue regardless of the names on the office doors.

California has engaged in an orgy of spending, but, compared with our federal government, its legislators should feel chaste. The California deficit this year is now north of $26 billion. The U.S. federal deficit will be, according to the latest numbers, almost 70 times larger.

Bleak Picture

The federal picture is so bleak because the Obama administration is the most fiscally irresponsible in the history of the U.S. I would imagine that he would be the intergalactic champion as well, if we could gather the data on deficits on other worlds. Obama has taken George W. Bush’s inattention to deficits and elevated it to an art form.

The Obama administration has no shame, and is willing to abandon reason altogether to achieve its short-term political goals. Ronald Reagan ran up big deficits in part because he believed that his tax cuts would produce economic growth, and ultimately pay for themselves. He may well have been excessively optimistic about the merits of tax cuts, but at least he had a story.

Obama has no story. Nobody believes that his unprecedented expansion of the welfare state will lead to enough economic growth. Nobody believes that it will pay for itself. Everyone understands that higher spending today begets higher spending tomorrow. That means that his economic strategy simply doesn’t add up.

Character Deficit

Back in the 1980s, Reagan’s own economist, Martin Feldstein, spoke up when he felt that the Reagan administration was pushing the deficit too far. Where are the economists with such character today? Apparently, the job description for economists has transformed from recommending policies that are defensible to defending whatever policies that the political hacks in the West Wing dream up.

As bad as the California legislature has been over the years, it has never entered a fiscal crisis like the one that we face today and then doubled down with a massive spending increase. In the end, when times got tough, patriotic and sensible Californians of both parties stood up and began acting like adults.

Maybe the same thing is starting to happen in our nation’s capital. The key players in Washington are Senator Evan Bayh and 15 Senate Democrats who joined him this year in forming a coalition of moderates. One thing that has distinguished moderate Democrats from the garden variety of the species is heightened concern about fiscal responsibility.

Off a Cliff

With the price tag of Obama-care likely to exceed $1 trillion, moderate Democrats face a simple choice. They can jump off the cliff with the president, or they can stay true to the principles that they have espoused throughout their careers.

There are reassuring signs that principle is winning. One of the most expensive components of the Obama plan is the so- called public-insurance option, which opponents fear would result in massive government subsidies. Senator Mary Landrieu said that she is “not open” to a public option that will compete with private insurance.

Many other Democratic Senators, including Ben Nelson, Blanche Lincoln, and Tom Carper, also oppose the public option. As the cost estimates increase and support wanes, the Senate Finance Committee is even going as far as to pursue its own health-care plan, meaning that the health-care end game is now in sight.

Tax Bite

Moderates might support Obama’s health-care objectives if the bill also included tax increases to cover the spending increases. But those tax increases would likely be unpopular, making it almost impossible to pass a bill.

Given the increasing public concern about deficits that heightened significantly last week because of the California crisis, there are only two possibilities left. Either the Obama plan will come crashing down or Senate Democrats will concoct some bill that has health in the title but costs almost nothing and does even less. With Al Franken arriving in the Senate and providing Democrats with a crucial 60th vote, the latter seems most likely.

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He was an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)

The Trickle-Down Economic Depression: State and Local Governments Raising Taxes

 

 

The mass confiscation of individual wealth and property by government continues as insolvent state and local governments adopt a perverse “Me-to-ism” to raise taxes like the federal government and lay claim to their share of your pie.  Instead of massive cuts necessary to balance their budgets; the politicians at all levels of government, are stealing the money from the taxpayers who have already been beaten, nearly to death, by Obama’s insane spending.  In the old days, both people and governments would tighten their belts in hard times: but now the commissars of government, at all level, are tightening their belts around your neck. It’s monkey see monkey do as everyone watches  the federal government massively increase spending, hikes taxes on nearly everything, and ignores the constitution, whenever convenient, to perpetuate waste and corruption that is big government.

Government at all levels is out of control.

The answer to our government woes is clear.  It no longer matters if you are a republican or democrat the question is do you believe in limited government, rule of law, term limits and Capitalism above socialism and communism?  We need to vote for anyone that will support smaller government and the destruction of our professional political class because when you have career politicians, elitists, running the show you have either the seeds or the reality of tyrannical government.  The time has come to remove government from trying to solve social problems that it perpetuates for the purpose of political control. Identity politics must be ended.  We need to be Americans again instead of Black—Americans, Hispanic Americans, Homosexual-Americans, Atheist-Americans and any other sub group hyphenated identification.  This sort of thing is killing this country. 

Socialized Government divides us, to control us, because we’ve abdicated our individual responsibility to a bizarre form of politically-correct-group-think that is now clearly destroying the country. 

We don’t have the money for all the government programs that are currently strangling the life from our economy, and our retirement accounts, to say nothing of our declining home values, and the coming inflationary wave that will wipe out what’s left of our individual saving and checking accounts. The amount of insane duplication of social programs in federal, state, county, local, governments is stunning.  Must we have a sort of Environmental Protection Agency duplicated at every level, from federal to local governments?  Must we have the federal government involved in education at all?  Shall we have “diversity” programs and political correctness commissars at every level of state, federal, county and city government?  Isn’t the purpose of government to create conditions conducive to living our lives as we see fit without becoming obtrusive?  Do you think it’s getting a tad intrusive when government nationalizes whole industries, regulates soda pop because it makes you fat, and mandates health care coverage at a time when the economy is being kept alive be a respirator? Do you like government owning the bank that owns your mortgage?  Do you want to drive a government designed car?  Do you want government to make you weaker while government becomes so bloated, dictatorial and arrogant that they look at you as a necessary evil instead of as the boss of government? Are you the Boss of Government?  Are you waiting for Obama to help you and tell you what to do, think and believe?  When is enough; enough where this government is concerned?

Setting Criminals free because we can’t afford jails is Insane.

California is 24 Billion Short and its answer is to release criminals from prison early instead of taking a meat cleaver to its bloated and crazy budget and reordering its priorities to reflect a freedom loving American state instead of France.  Maine is taxing candy while Wisconsin taxes Oil companies.  Kentucky is taxing cell phone ring tones while Pennsylvania does a 16% increase in state income tax.  Revenue from all sources to government is drying up as the economy gets worse and unemployment continues to rise as the value of the dollar continues to fall.  The Federal Government is thinking about a National Sales Tax, just like Europe, to pay for “healthcare” and the Cap and Trade debacle is still a possibility. It doesn’t matter that gas costs are up over $70 a barrel and expected to continue to climb.  Illinois wants to stop paying for poor people’s funerals and New Hampshire wants to sell nearly 30 state parks.  The beat goes on and on and on. 

There’s no more money and the only intelligent thing to do is to keep first things first at every level of government and to take government out of social spending because it’s dividing the nation and bankrupting us.

We stand in the midst of our own folly.  We’ve elevated government above God and the Family and even the Constitution: and it turns out we were wrong.  Big Government can’t work because it becomes big corruption.  The only way government can be made to truly serve the people is to keep it small and sharply restrict its growth and intrusion into society.  Government won’t give us social justice: it’s just not designed to do so.  Government cant end racism but it can perpetuate it and harvest the votes of perpetual victims to justify more government, bigger government, more powerful government. Government should ensure equality of opportunity: NOT EQUALITY OF OUTCOMES.  The only person who can ensure the equality of an outcome is you.

The Answer to every level of government with a financial problem is the same: Cut taxes and Cut Spending until your budget is balanced.

The only way to prosper and remain free is to demand that government cut itself down to size and to reject any politicians who favor big government and tax increases of any kind. Right now we’re facing a political crisis in which government is out of control.   Government is on a self destructive spending binge, the nefarious Federal Reserve is on an America destroying currency printing spree, and the people are increasingly out of work, exhausted and despondent while trying to maintain a criminal government that’s at least 50% larger than it should be. Why should we pay for big corrupt governments we don’t want don’t need, and that now creates more problems than it solves?  Its incumbent on a free people to put an end to big government before big government put an end to freedom for the people.  You can side with political correctness; social engineering and “activist” judges and government or you can side with limited government, the constitution and personal responsibility.  You can’t have both.

Consider this article by the New York Times that I found on the Drudge Report:

 

States Turning to Last Resorts in Budget Crisis

 By ABBY GOODNOUGH

Published: June 21, 2009

In Hawaii, state employees are bracing for furloughs of three days a month over the next two years, the equivalent of a 14 percent pay cut. In Idaho, lawmakers reduced aid to public schools for the first time in recent memory, forcing pay cuts for teachers.Skip to next paragraph

And in California, where a $24 billion deficit for the coming fiscal year is the nation’s worst, Gov. Arnold Schwarzenegger has proposed releasing thousands of prisoners early and closing more than 200 state parks.

Meanwhile, Maine is adding taxes on candy and ski tickets, Wisconsin on oil companies, and Kentucky on alcohol and cellphone ring tones.

With state revenues in a free fall and the economy choked by the worst recession in 60 years, governors and legislatures are approving program cuts, layoffs and, to a smaller degree, tax increases that were previously unthinkable.

All but four states must have new budgets in place less than two weeks from now — by July 1, the start of their fiscal year. But most are already predicting shortfalls as tax collections shrink, unemployment rises and the stock market remains in turmoil.

“These are some of the worst numbers we have ever seen,” said Scott D. Pattison, executive director of the National Association of State Budget Officers, adding that the federal stimulus money that began flowing this spring was the only thing preventing widespread paralysis, particularly in the areas of education and health care. “If we didn’t have those funds, I think we’d have an incredible number of states just really unsure of how they were going to get a new budget out.”

The states where the fiscal year does not end June 30 are Alabama, Michigan, New York and Texas.

Even with the stimulus funds, political leaders in at least 19 states are still struggling to negotiate budgets, which has incited more than the usual drama and spite. Governors and legislators of the same party are finding themselves at bitter odds: in Arizona, Gov. Jan Brewer, a Republican, sued the Republican-controlled Legislature earlier this month after it refused to send her its budget plan in hopes that she would run out of time to veto it.

In Illinois, the Democratic-led legislature is fighting a plan by Gov. Patrick J. Quinn, also a Democrat, to balance the new budget by raising income taxes. And in Massachusetts, Gov. Deval Patrick, a Democrat, has threatened to veto a 25 percent increase in the state sales tax that Democratic legislative leaders say is crucial to help close a $1.5 billion deficit in the new fiscal year.

“Legislators have never dealt with a recession as precipitous and rapid as this one,” said Susan K. Urahn, managing director of the Pew Center on the States. “They’re faced with some of the toughest decisions legislators ever have to make, for both political and economic reasons, so it’s not surprising that the environment has become very tense.”

In all, states will face a $121 billion budget gap in the coming fiscal year, according to a recent report by the National Conference of State Legislatures, compared with $102.4 billion for this fiscal year.

The recession has also proved politically damaging for a number of governors, not least Jon Corzine of New Jersey, whose Republican opponent in this year’s race for governor has tried to make inroads by blaming the state’s economic woes on him. Mr. Schwarzenegger, who sailed into office on a wave of popularity in 2003, will leave in 2011 — barred by term limits from running again — under the cloud of the nation’s worst budget crisis. And the bleak economy has played a major role in the waning popularity of Gov. David A. Paterson of New York.

Over all, personal income tax collections are down by about 6.6 percent compared with last year, according to a survey by Mr. Pattison’s group and the National Governors Association. Sales tax collections are down by 3.2 percent, the survey found, and corporate income tax revenues by 15.2 percent. (Although New Jersey announced last week that a tax amnesty program had brought in an unexpected $400 million — a windfall that caused lawmakers to reconsider some of the deeper cuts in a $28.6 billion budget they were set to approve in advance of the July 1 deadline.)

As a result, governors have recommended increasing taxes and fees by some $24 billion for the coming fiscal year, the survey found. This is on top of more than $726 million they sought in new revenues this year.

The proposals include increases in personal income tax rates — Gov. Edward G. Rendell of Pennsylvania has proposed raising the state’s income tax by more than 16 percent, to 3.57 percent from 3.07 percent, for three years — and tax increases on myriad consumer goods.

“They have done a fair amount of cutting and will probably do some more,” said Ray Scheppach, executive director of the governors association. “But as they look out over the next two or three years, they are also aware that when this federal money stops coming, there is going to be a cliff out there.”

Raising revenues is the surest way to ensure financial stability after the stimulus money disappears, Mr. Scheppach added, saying, “You’re better off to take all the heat at once and do it in one package that gets you through the next two, three or four years.”

While state general fund spending typically increases by about 6 percent a year, it is expected to decline by 2.2 percent for this fiscal year, Mr. Pattison said. The last year-to-year decline was in 1983, he said, on the heels of a national banking crisis.

The starkest crisis is playing out in California, where lawmakers are scrambling to close the $24 billion gap after voters rejected ballot measures last month that would have increased taxes, borrowed money and reapportioned state funds.

Democratic legislative leaders last week offered alternatives to Mr. Schwarzenegger’s recommended cuts, including levying a 9.9 percent tax on oil extracted in the state and increasing the cigarette tax to $2.37 a pack, from 87 cents. But Mr. Schwarzenegger has vowed to veto any budget that includes new taxes, setting the stage for an ugly battle as the clock ticks toward the deadline.

“We still don’t know how bad it will be,” Ms. Urahn said. “The story is yet to be told, because in the next couple of weeks we will see some of the states with the biggest gaps have to wrestle this thing to the ground and make the tough decisions they’ve all been dreading.”

In one preview, Gov. Tim Pawlenty of Minnesota, a Republican, said last week that he would unilaterally cut a total of $2.7 billion from nearly all government agencies and programs that get money from the state, after he and Democratic legislative leaders failed to agree on how to balance the budget.

In an example of the countless small but painful cuts taking place, Illinois announced last week that it would temporarily stop paying about $15 million a year for about 10,000 funerals for the poor. Oklahoma is cutting back hours at museums and historical sites, Washington is laying off thousands of teachers, and New Hampshire wants to sell 27 state parks.

Nor will the pain end this year, Ms. Urahn said, even if the recession ends, as some economists have predicted. Unemployment could keep climbing through 2010, she said, continuing to hurt tax collections and increasing the demand for Medicaid, one of states’ most burdensome expenses.

“Stress on the Medicaid system tends to come later in a recession, and we have yet to see the depth of that,” Ms. Urahn said. “So you will see, for the next couple years at least, states really struggling with this.”

She Who Pays the Piper Calls the Tune: The Emergence of Angela Merkel in Germany

 

 

As Barak Obama begs the world, and his own people to spend, and borrow, and pretend not to notice the deluge of dollars that will at worse destroy our currency or at best, launch a tsunami of hyper inflation the Chancellor of Germany, Angela Merkel stands strong.  She’s not going along with an endless array of “stimulus packages” and massive government spending.  She’s quite convinced that Obama is making matters worse with his spending and will not emulate the new American President. Merkel is helping Europe to avoid the spending trap Obama has stumbled into and exhibiting the kind of leadership and statesmanship that we used to have.  Once again it begins to look like Europe will experience a depression while the United States will suffer a Great Depression II; or a lost decade like Japan. 

Perhaps it’s in the American character, or lack thereof, in these decadent times, to try to avoid the pain associated with the economic mess we’ve made; but in this case the cure is destine to extend the disease and the crisis atmosphere for years.  Merkel is the lone voice of sanity in the West saying that more insanity will not cure the insanity: it will extend the insanity for as long as we persist in insanity. Merkel is doing for Europe what we desperately need for someone to do for us: we need to put the checkbook away and take our medicine.  

We don’t have the money to stimulate the economy.  When we have to borrow money from China or print it in the basement of the Federal Reserve we debase our currency and instead of the massive increases in government and anti business policy of the Obama Administration we need to cut the spending and sharply reduce government involvement with entitlement programs.  They just don’t work.  All the money collected for Social Security and Medicare has long since been spent and the baby boomers who used the money for social programs will find that there will be no retirement for them!  I guess there’s a certain justice in that but the times in which the people figure out the sheer magnitude of the theft that government has perpetrated on them will touch off some kind of social backlash.  The breaking of the Social Security, Medicare, and Entitlement social contract can’t help but crash the government as we knew it because people are confronted with government corruption and the loss of their retirement, housing values, wealth, savings, and opportunity to work. Its going to be a big eye opener as to the role of government in society.

In the not too distant future the USA is going to look around and realize that Big Government means Big Corruption and either we get the government back and shrink it down to an appropriate size and scope or we go whole hog into a new fascist philosophy.  Socialism for us is a given: we’re already there.  The question is as socialism takes hold will we branch off into communism or Fascism as our final destination.  Obama is leading us toward certain disaster and the only voice out there making any sense is the German Chancellor Angela Merkel. 

Consider the following clips from Bloomberg.com and don’t forget to read the whole story at the following URL:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aL4VMcMofiI8&refer=home

Angela Merkel, taking advantage of Germany’s economic heft, is now the European Union’s dominant figure.

Just as the German chancellor vetoed a bailout for eastern Europe on March 1, she is now leading European opposition to U.S. President Barack Obama’s call for a global pump-priming package.

Merkel’s rejection of more stimulus touched off the first trans-Atlantic clash of the Obama administration and led critics to say she risks deepening the global recession. Even as finance ministers from the Group of 20 nations were meeting in southern England March 14, seeking to paper over differences with a pledge to deliver a “sustained effort” to boost growth, Merkel was 42 miles (67 kilometers) away in London, defending her opposition to further spending.

“Germany really has contributed its share,” said Merkel, 54, as she stood alongside Brown, the U.K. prime minister.

It is a reversion to type for Germany, which built its postwar society on the principle of monetary stability after the economic havoc of two world wars. Germany authored the limits on budget deficits for countries using the euro currency — only to flout them during the reign of Merkel’s Social Democratic predecessor, Gerhard Schroeder.

With the world economy set to shrink for the first time since World War II, Merkel has forged a European position not to go beyond tax cuts and emergency spending that the EU says amounts to 3.3 percent of gross domestic product.

“Merkel is definitely a woman to watch,” says Robert Leonardi, senior lecturer in European politics at the London School of Economics. While Sarkozy may be more flamboyant, he says, “she’s emerging more and more as a strong leader” of Europe.

Living on Empty: Baby Boom Politics Leave USA Bankrupt and Defenseless

 

 

 

Remember the Oil Shock of the summer? It was our introduction to hard times and as we learned, abruptly, to drive less and hang on to our money; the prices at the grocery store sky rocketed and we discovered just how vulnerable we are because we rely on foreign oil.  Anyone who can manipulate, threaten, or disrupt our supply of foreign oil can fundamentally destroy the United States within a matter of months because our economy begins to crater from the first threat to the oil.

Do you remember the T. Boone Pickens commercials about regaining energy independence?  Do you remember the Drill Here, Drill Now t shirts and bumper stickers? 

Crude Oil is under $40 a barrel right now, down from a High of $150 a barrel just last summer. The Oil Crisis seemed to ignite the subprime crisis and, in turn, ignited the banking crisis; resulting in the near loss of the world financial system, distracting us from our vulnerability to foreign oil.  Demand for Oil sharply dropped from the economic heart attack massive increases in transpiration costs produced. People and Businesses just stopped spending on anything that was not absolutely necessary.  Economic activity around the globe not only lost momentum but began to contract and that trend is with us to this day.    The economic disaster, the sharply reduced demand for oil,  has created a disaster in Russia, Venezuela, and Mexico.  There is the real possibility of political instability in both Russia and Mexico as the crashing of oil prices has destroyed their economy creating increasing political unrest and riots that now threaten the governments in those countries. 

The world economy has slowed to such a degree that there are fully loaded oil ships on the high seas that are just sitting there waiting for the prices to come up and the slack demand to pick up.  Gas prices are up around the country because one of our refineries is facing a potential labor strike even with crude oil at about $37.00 a barrel right now.  Do you remember the sickening feeling of things spinning out of control as the gas prices rose to threaten our household budgets and prices went crazy as the increase costs in shipping made their way through the economy?  What have we done to fix this mess? 

Nothing.

President Obama talks about green energy jobs.  We don’t drill.  We won’t increase our production even as China drills for Oil between Cuba and the USA because the Baby Boom Democrats have come to believe that they’re the friends and saviors of the earth. They seem to believe they must destroy America to save the Earth.   Any meaningful disruption in our oil supply will destroy our economy within months if not weeks.  We know this and we’re doing nothing to increase our domestic energy production: no drilling, no nuclear plants, no refineries, no clean coal, no synthetic oil research and production, no shale oil plants, nothing. Given the financial crisis we can’t fund the additional production and the stimulus bill only is going to wind and solar not nuclear plants, off shore drilling or clean coal technology.

 Ideology is making us vulnerable and stupid in confronting both the energy crisis and the Economic Crisis. Massive Spending to end the Economic Crisis has no possibility of working but if we’re going to sell generations of our children into economic slavery wouldn’t it make sense to take steps that could actually make us energy independent?

Do you remember last summer?

Speaker of the House Nancy Pelosi stalled and prevaricated on any energy legislation until after the election and now she can be assured that this loaded, cocked gun, remains pointed at our head.  I don’t know if she sees herself as a savior of the earth, or if she just cynically paid off a volatile liberal constituency, but her malfeasance and stupidity has cost us precious time. Wind and solar won’t save us next year if the world oil supply is disrupted.  We can make safe nuclear power, clean coal and even oil from shale in sufficient quantity to save us but we don’t because of the ideological purity of Pelosi, Reid and Barak Obama.  Former Vice President Al Gore has declared manmade global warming “settled science” and the ideological zombies in the Democrat party click their heels, salute, and lead us down a suicidal path, rather than acknowledge, as an increasing number of climate scientists do, that Global Warming is a fraud.  All of the energy and infrastructure money in the stimulus bill is for technology that we really don’t know how to , and that’s not ready for prime time, while the steps we can take to break our dependence on foreign oil are ignored because they aren’t politically correct.

Do you remember last summer?

Do you think we won’t face the same scenario again soon?  Do you understand that we have a gun to our head?  Can you imagine how easy it would be for an enemy to disrupt oil supplies by some well placed bombs in the Middle East oil fields or at some refineries anywhere in the world?  We’re like children who stubbornly won’t face the facts of our lives even when we know that our pretend world will kill us but still we cling to our illusions and our ideology.

The one question that no one asked in the oil crisis, or the subprime crisis, or the financial crisis is perhaps the most important one and the most fundamental one we could ask.  If we deliberately act so foolishly as to ignore all the causes of our problems and will only consider solutions that can’t succeed because of our political correctness, and our toxic ideology, do we deserve to survive?  How can we survive without producing our own energy?  The answer is that we can’t.  We know how to build more refineries, nuclear plants, drill offshore, develop shale oil and other technologies but we don’t do it.  If you jump off a skyscraper: you die.  If you douse yourself in gas, and light up a cigarette:  you die.  If you tie yourself to a 1000 lbs anchor and drop it in the sea: you die.  If you don’t increase oil production you can lose the country within months as our economy dies.  We can stop this. We can make this one go away by known and tested technology and drastically reduce our reliance on foreign oil.  What  we can’t get past is the weird environmental religion, of the Baby Boom Democrats, who seem hell-bent on making The United States of America a blazing sacrifice on their alter of self-image and political correctness.

Do you remember last summer?

The Great Depression II: We’re in a Downward Spiral with No End in Site

The condition of the United States Economy is a global disaster that will have ramifications economically and geopolitically for decades to come.  For all intents and purposes we’re now in the seminal event of our lifetimes and it promises to be every bit as bad as the Great Depression of the 1930’s.  Too many key aspects of the economy are out of control or hanging by a thread.  44 of 50 state governments are getting clobbered by the massive fall off in revenues as the sickening cycle of deflation continues. Everyone, both corporate and individuals are hording cash and to cutting spending to the bone.  The production of Goods and Services is freezing up just like the credit markets did in the recent past. Many TV analyses will tell you that we have a major crisis in confidence but I would contend that we’ve long passed the problems of poor market psychology into a profound crisis of faith in everything from the dollar, to the banks, to the local Target store. We’re only going to rebound when we have some kind of economic spiritual epiphany and that may take a decade or more as it did in Japan. 

To put it in plain English:

·       The government has no idea how to stop the spiral and is indeed making it worse with ill-advised meddling that gets changed every other week as someone in Treasury has a new bright idea and thus institutionalizes “uncertainty”. The Government started out wanting to buy toxic assets from banks but switched within a few weeks to injecting liquidity.  Now the government wants to go back to some version of dealing with toxic assets while doubling or tripling the bailout to try and help “Main Street”.

·       Europe is in worse trouble than we are with their loans to emerging market countries that are now in the toilet much deeper than we are.  This is going to be like Europe’s subprime crisis and its effects will surely resonate in the USA just as our subprime mess resonated in Europe.  This is another shoe that will drop at any time; when it does, its going to increase our trouble by several orders of magnitude.

·       Oil Prices have fallen and there’s a report out today that Merrill Lynch thinks it could drop to an astonishing $25 a barrel from $147 a barrel JUST THIS LAST JULY.  Lots of people take this as good news but the fact is that economic production across the planet has virtually stopped.  It’s as frozen as the credit market was until just recently and with oil, the economic lifeblood of the global economy in absolute free fall; it means that the global economic heart has stopped.  The world had an economic heart attack and we just haven’t realized we’re dead yet. Demand is gone because production is gone because no one is spending on anything they don’t absolutely need.  Did I mention the probability of war in the Middle East between Iran and Israel before the summer? So is unemployment going up? Consider this story from Reuters about unemployment this morning:

·       WASHINGTON (Reuters) – Employers axed payrolls by a shocking 533,000 in November for the weakest performance in 34 years, government data on Friday showed, as the recession inflicted a mounting toll on the U.S. labor market.

·       The Labor Department said the unemployment rate rose to 6.7 percent last month in the highest reading since 1993, compared with 6.5 percent in October, after widespread losses across the country’s major industry sectors.

·       November’s job losses were the steepest since December 1974, when 602,000 jobs were shed, and were much worse than forecast by analysts polled by Reuters who had predicted a reduction of 340,000 jobs.

·       In addition, October’s job losses were revised to show a cut of 320,000, previously reported as a 240,000 loss, while September’s losses were revised to a loss of 403,000 from down 284,00.

·       The length of the workweek slipped to 33.5 hours, the shortest since records began in 1964, a Labor Department official said.

In November alone we lost 602,000 jobs and now have a 6.7% unemployment rate with the potential of the big three automakers either getting a bailout or adding millions to the unemployment statistics.  When?  Reports indicate that General Motors doesn’t have the cash to finish out this month, December of 2008, and without a bailout the December numbers will make the November numbers look like a folk dance. The November 2008 unemployment numbers were the worst in 34 years. These numbers don’t reflect an estimated 422,000 people who simply dropped out of the workforce in November as indicated in a Associated Press article.  Here’s some analysis from that AP article that puts things into perspective rather well:

·       Workers with jobs saw modest wage gains. Average hourly earnings rose to $18.30 in November, a 0.4 percent increase from the previous month. Over the year, wages have grown 3.7 percent, but paychecks haven’t stretched that far because of high prices for energy, food and other items.

·       Worn-out consumers battered by the job losses, shrinking nest eggs and tanking home values have retrenched, throwing the economy into a tailspin. As the unemployment rate continues to move higher, consumers will burrow further, dragging the economy down even more, a vicious cycle that Washington policymakers are trying to break.

·       At 12 months and counting, the recession is longer than the 10-month average length of recessions since World War II. The record for the longest recession in the postwar period is 16 months, which was reached in the 1973-75 and 1981-82 downturns. The current recession might end up matching that or setting a record in terms of duration, analysts say.

·       The 1981-82 recessions was the worst in terms of unemployment since the Great Depression. The jobless rate rose as high as 10.8 percent in late 1982, just as the recession ended, before inching down.

·        Given the current woes, the jobless rate could rise as high as 8.5 percent by the end of next year, some analysts predict. Projections, however, have to be taken with a grain of salt because of all the uncertainties plaguing the economy. Still, the unemployment rate often peaks after a recession has ended. That’s because companies are reluctant to ramp up hiring until they feel certain the recovery has staying power.

The Last bit of cheerful economic news comes from the Peoples Republic of California where the Governor is going to try and pay state vendors with “Warrants” (AKA IOU’s) for the second time since the great depression. Since California is the Eighth largest economy in the world, all by itself, and since you can’t deposit a “warrant” in a bank and you can’t use it to make payroll: what do you think will happen to the work force of the vendor companies?  Unemployment?  You betcha.  The Eighth largest economy in the world, the State of California can’t pay its bills, not unlike the big three automakers, and Lord knows how many of our banks. 

I don’t see how we can avoid double digit unemployment of 12-15% by the summer.  If it goes that high look for major social disruptions in the fabric of our society as a likely consequence.  That’s going to feed the fire and people will borough in even more than before.  Once the riots begin no one will be filled with confidence about their economic future and the crisis of faith will worsen.

It took a while in 1929 for the full effects of the stock market crash to become the Great Depression.  Really it was a matter of years.  Things are vastly accelerated in our times so we won’t have to wait years.  18 months should pretty much tell the story and if the recent economic news is any indication:  WE’RE IN BIG TROUBLE AMERICA!