The Emperor Has No Credit

8 08 2011

All the little children were standing at the side of  the road, watching the parade, pointing at the Emperor, laughing and saying out loud, “The Emperor has no Credit!”  This has been going on for a long time but the Emperor’s advisers were telling him everything was fine.

Are you surprised and shocked at the S&P downgrade?   Tim Geitner and Barak Obama are.

In the words of Good Ol Gomer Pile – “Surprise, Surprise, Surprise!”

Obama surprised at S&P downgrade

Is Obama really surprised?

The Obama Emperor Administration and their surrogates are screaming that S&P made a big mistake.  Tim Geitner a little while ago said that there was no possible chance that the U.S. credit would be downgraded.

At this point it is simply perpetual self delusion or flat out lies. Are they that stupid or that dishonest?  Perhaps it’s a mixture of both.

The general population has known for years that we can’t keep living beyond our means.

Geitner also said he wouldn’t be firing up the printing presses before Quantitative Easing 1&2.  He pulled the surprise on us and printed as if in a counterfeiters fantasy.  Trying to print your way out of a recession with unparalleled debt is just plain stupid.  Stupid is as stupid does.

We should have know that a Treasury Secretary who didn’t pay his taxes is either incompetent, immoral or perhaps both.  Obama, what were you thinking?

It has been evident for a long time that  ……  The emperor has no credit. They’ve been caught with their financial pants down, messing with the fundamentals of the country.  Get your filthy hands off our fundamentals.

Here’s the problem.  The U.S. government income (taxes and fees) is much less than the U.S. expenses.

That’s all there is to it.

Countries and companies are have been losing faith in the U.S. governments ability to balance the budget and pay down the debt or stay solvent for some time.  S&P just confirmed reality.

Let’s do a family household comparison.

Let’s say that a family of four has roughly an annual income of $46,000.

This household also has had expenses of almost $80,000.   They also have not stayed within their means or spent less than they brought in for a long time.

This family has also racked up a debt on their revolving line of credit of $300,000 and is borrowing to make the monthly payments on that debt.  They offer no collateral or assets on the loan but are offering a simple full faith and credit of the family household.  They ask for you to just trust them.

Question.  Would you loan $35,000 loan to this family?  Do you trust that this family will someday learn to live within their means and pay down their debts?

This family household example is a rough estimate of the ratios that the U.S. Federal Government is operating under and what the Standard and Poor’s rating agency took into account to find the U.S. government lacking.

S&P would be foolish to continue giving the U.S. a best rating.  The argument could be made that they have been derelict in their duty in waiting so long to downgrade the U.S.

There seems to be no shortage or morons out there that blame the wrong source of the problem.

Michael Moore, the inflammatory and distorting entertainer has done just that. He says that Obama should arrest the CEO of S&P.  That’s like arresting a bank for denying a loan to someone about to go bankrupt.

One of the congressmen directly responsible for the mortgage debacle, Barney Frank, says that it’s the military’s fault that S&P downgraded.  As David Letterman says, “WHAT?!!!”

Other morons like David Assholerod and Coward Dean are blaming the Tea Party for the downgrade. That’s like suing someone for the loss of a leg when all they tried to do was stop the bleeding after the leg was already chopped off.

Congress is simply addicted to buying votes.  They don’t want to tell the American public that the gravy train and free lunch is over.

For years, warnings have been raised and ignored.

The idot Congressman Pete Stark of California is a perfect example.  See this warning that was raised more than a decade ago and see the treatment the interviewer got from the foolish Pete Stark.  Believe it or not, the megalomaniac Congressman is still in office making just as idiotic decisions as ever.

Also today, S&P downgraded the associated Fannie Mae, Freddie Mac,
Depository Trust Co., National Securities Clearing Corp., Fixed Income Clearing Corp. and the Options Clearing Corp.

That means that the pseudo or quasi governmental companies or those backed by the full faith and credit of the United States have less backing.  That’s a little like your bodyguard getting his had busted in a fist fight.

There are intelligent solutions to the problem but they are not easily done.  It’s tough to undo sausage once it’s made.

There is a reckoning coming.  Hell’s a coming unless …………





Congress Must Balance The Budget Now!

10 07 2011

If you’ve ever known anyone addicted to drugs, they have to hit rock bottom before they will do anything.

Unfortunately, sometimes they die, rob you blind or kill someone. That’s Congress right now.

Watch this to see intelligent men discuss the potentials.  Rick Santelli says it as it is!

 

Click on this image to see the debate.

Congress addicted to spending

Has Congress Hit Rock Bottom?

 





Economic Growth Prospects For The United States

5 06 2011

Prospects for Economic Growth in the USEconomic growth for the next few years are not good.  The tools to game the growth are gone.  The Republicans, Democrats and Independents are in a pickle for the next elections.  The typical methods of “Juicing” the economy will not be available.  Taxes can’t be lowered to seduce anyone paying taxes.  Increasing spending is out of the question to seduce those with their hands out.

The national deficit and debt are astronomical.  Unemployment is high.  The economy is sluggish with large and small businesses gun-shy with a potential double dip recession looming.  Real estate foreclosures are not letting up and could increase.  Commodity prices are not coming down.  Uncertainty perpetuates a lack of investment.

As Ronald Regan said, “Government isn’t the solution to the problem, Government IS the problem!”

Until our government spending is under control and the national debt stops growing, the dollar will continue to suffer internationally which helps keep the price of oil and other goods higher.  Domestic energy production has been and is being hampered.  Inflation is real and the cost of borrowing may be going up.

According to CNS News China has now divested itself of 97 percent of its short-term US Treasury Bonds.  The next step for China is to cease buying any long-term Treasury Bonds and stop buying any new long term bonds.  Who wants to be left holding the bag if the US defaults?  Think it can’t happen?

Besides the bond problems with Greece, Portugal, Spain, Iceland and Ireland, here is a list of countries that have defaulted recently on their bond obligations:

Venezuela, July 1998

Russia, August 1998

Ukraine, September 1998

Pakistan, July 1999

Ecuador, August 1999

Ukraine, January 2000

Peru, September 2000

Argentina, November 2001

Moldova, June 2002

Uruguay, May 2003

Dominican Republic, April 2005

Belize, December 2006

Ecuador, December 2008

Some of the situations were cleared up or restructured quickly and others were not.

Is the US too big to fail?  What caused this potential failure?

The big ideas in the US Constitution of limited and separated powers have been altered or ignored.  The beginning of the end was when the Supreme Court allowed Congress to spend on anything is wants for “the general welfare” of the country instead of following Article I, Section 8 of the Constitution.

The tipping point is soon approaching where the US will not have the luxury of honoring all the obligations it has made to taxpayers and bond holders.  The interest rates of the bonds will be going up drastically when the buyers dry up which will further cut into Congressional ability to balance a budget.

If Congressional spending were under control, the lack of bond buyers would not be an issue.  They could simply retire the debt.

Congress and the Executive seem still to have little or no will to do the hard thing.  Both branches fear being voted out of office for making hard choices that will be bitter medicine for the voters to swallow.  Honesty in politics hasn’t been the policy for some time.  Is honesty really the best policy to get re-elected?  The general population has been seduced with unrealistic promises for so long that they are not prepared for what is about to hit them.

What are the solutions?  Cut spending.  Phase out all welfare programs and any activity not listed in Article 1 Section 8 of the Constitution.  Keep taxes basically where they are until the debt is substantially reduced.  Make it favorable for corporations to stay and move to the US.  Foster pro-business policy and regulation in general.   Easy to say.  Tough to do.





So You Want To Be A Socialist.

2 05 2011

Maxine Waters wants you to be a Socialist.

Maxine Waters, the self proclaimed Liberal (aka Socialist or Progressive) accidentally spoke her truth and tried to cover it up.  See her long uncomfortable pause while trying to rephrase her real intent into something more palatable to the American public was pathetic.  After realizing that there was no realistic way to re-phase her comments without looking more foolish, she continued on her train of thought of her Socialistic dream to take over the oil companies.

Are you shocked?  I am shocked that she felt politically safe enough that when she slipped up she eventually spoke her mind.  What a terrible job we have done at educating our Americans that would allow such a person to be and stay in office.

Maxine Waters and her friends planned and succeeded to take over the mortgage industry to provide loans to those who didn’t deserve it.   She helped perpetuate the corruption before the housing bubble burst.  Let’s look at Maxine Waters and friends wisdom in the housing crisis.  This video is from 2004 was long before the housing bubble burst.  There were certain regulators that saw what was going on and tried to raise the alarm and make corrections.  See what crooks are running our country still.

Will she get kicked out of Congress for her pending ethics violations investigations?

There are plenty of her types in the federal government right now so she may get a pass.

Do you really want Socialists running the company you work for or if you own your own business?  There has been no successful model of Socialism EVER!  If you want to see the model she prefers, look no further than Hugo Chavez of Venezuela.  Contracts and property rights are not well respected.  Government spending is on the rise. The government has taken over many private enterprises. Private investment has decreased drastically.

Yes, Venezuela’s gasoline is artificially cheap but not for long.  Despite cheap gas, their economy is dwindling.

Maxine’s still trying to wreak havoc this month.  Maxine reintroduced H.R. 1567, the Foreclosure Prevention and Sound Mortgage Servicing Act of 2011.  Hasn’t she done enough already?  She said in April, “This bill is the first in a series of legislative proposals that I plan to introduce to further regulate the servicing industry and to protect homeowners.”

She’s done such a fine job already in housing and she wants to take over the oil industry too?  Who keeps voting these clowns into office?





What Will The Standard and Poor’s bond rating affect?

19 04 2011

Standard and Poor's outlook for US downgradedThe news from The Standard and Poor’s site is, “On April 18, 2011, Standard & Poor’s Ratings Services revised its outlook on its ‘AAA’ long-term sovereign credit rating on the government of the United States of America to negative.”

These are some of the items at stake in the USA: home values and the ability to buy and sell, credit card interest rates, business loans, pension or 401k values, checking or savings account values, life insurance long term values, annuities, college savings …. and so on and so on.

Ok, here’s the big news.  The Obama Administration and the folks in Congress are not stupid (well, most of them).  They are just political cowards or are intent on destroying the United States fundamental economy.  President Obama has said he wanted to fundamentally change the USA and is doing an effective job.

If anyone in Congress says what needs to be said, they are attacked as executioners of senior citizens and pre-school children.  Everyone wants the other guys golden egg.

On my previous post in 2009, I noted that the famous Julian Robertson’s words in 2008 that inflation could hit 15-20%.  Things have not improved since then and have gotten worse.

Depending on who’s doing the math, the US spent more than $400 billion in interest on the approximately $13 Trillion debt in 2010.  The  deficit spending was and still is out of control.  The interest rates paid are at historic lows.  The average interest rate paid on the debt was around 3%.  Most of that debt is short term treasury bills and those historic rates will not last.

Here is what will most likely happen. If the bond rating of US treasuries are downgraded by  Standard and Poor’s 6 months to 2 years from now, interest rates on new Treasury bills or bonds will skyrocket to around 8-12% within 3 months, no matter what Moody’s says.  The overnight bank to bank interest rate will skyrocket.  Rates on loans to businesses will shoot through the roof.  Loans to home purchasers will go sky high causing real estate prices to crash.  The ability of people to move or transfer will be severely hampered.  Those who are upside down on their homes will default and foreclosures will rise again.  The speed of all financial transactions will slow down as will economic growth.  Unemployment rates will go up and either hyper inflation or deflation will kick in full gear.  We could have another round of deflay-inflation, where real estate crashes and commodities prices inflate.

The ability of the USA to pay it’s bond obligations will not be able to be met.  Over a 4 year period the interest on the national debt will average 6-8%, depending on how high the downgrade interest rate on new bonds will be.

By that time, the national debt will be $20 Trillion at least.  But lets say for whatever reason, that the deficit gets reigned by January 2012  and caps out at $16 Trillion (very unlikely before a new election cycle).  If the average interest rate on the debt is 6% instead of 3% in 2010, the interest payment on the debt would be just $40 billion shy of $1 Trillion dollars per year.

Current folks in power are talking of slowing the growth of the debt over 10 years.  Six months to 2 years doesn’t allow for that luxury.  The solution is to radically cut or eliminate spending on all welfare programs including Medicaid/Medicare and Social Security.  The nation is not taking this seriously

Hang on for a wild ride because we are sitting on a time bomb.  The golden goose egg has been replaced with a rotten one about to explode.





You’ve Got To Be Kidding

18 02 2011

These people live in the land of The Greed and the Home of the Depraved.

This is serious folks.

This is ultimate insider trading.

When the ship is sinking, our leaders are punching holes in the boat instead of plugging and bailing.

This needs a full investigation and a cease and desist order NOW.

The Indymac FDIC is criminal!

 





National Debt Just Under $14 Trillion

7 12 2010

We’ll fall short of my previous prediction (Don’t Look At This).  That was written almost 2 years ago.  The projection was that by the end of 2010, the national debt would reach 14.5 Trillion.  We will reach just under $14 Trillion.

The national debt ceiling is currently $14.3 Trillion.  In my humble opinion, it is Treason to raise the debt ceiling.  We are ready to implode and collapse as a country.  Take a look at Greece, Iceland, Ireland, Portugal and Spain.

It is Treason to raise the debt ceiling!

Those burying us in debt are traitors.  It does not matter what the political excuse is.  To put us collectively into slavery is treasonous and should be punishable by removal of office.  That goes for any Congressman, Executive, politician or bureaucrat perpetuating and growing the debt.  It should be zero.

The debt should be reduced by 3% compounded every year by statute.

Over 70 welfare programs including Medicare/Medicaid and Social Security are bleeding us to death.  We’re wiping out the sacrifice that patriots fought and died for.  Our freedom is being swallowed as we voluntarily surrender to slavery.  The current deal about to go down is another glut of spending by the Democrats and Republicans.

The Gross National Product is $14.4 Trillion per year currently.  If the debt goes above the GNP, serious implications will follow.  If we continue down the road of fiscal foolishness, our AAA national credit rating will be in jeopardy.  At this rate it will be in 2012 to 2016 that our treasury bonds will be less useful than toilet paper.

It is insanity to try to save people from the black hole of poverty when it will impoverish the whole nation.  Freedom is the only salvation from poverty.  Freedom is not free but the cost is much lower than collective slavery.

Where has individual independence gone?  Are we to become a nation of slaves and serfs?

Are we as a Nation going to climb the cliff or jump off?








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