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When Will It End?

September 26, 2009

I just can’t read the news anymore.  Every time I pick up a newspaper, or read it online, I just explode inside.  I get so angry.

It’s nice to hear I’m not the only one pissed.  Read this excerpt written by Bill Maher for the Huffington Post:
Source:  http://www.huffingtonpost.com/bill-maher/new-rule-if-america-cant_b_299383.html

New Rule: If America can’t get its act together, it must lose the bald eagle as our symbol and replace it with the YouTube video of the puppy that can’t get up. As long as we’re pathetic, we might as well act like it’s cute. I don’t care about the president’s birth certificate, I do want to know what happened to “Yes we can.” Can we get out of Iraq? No. Afghanistan? No. Fix health care? No. Close Gitmo? No. Cap-and-trade carbon emissions? No. The Obamas have been in Washington for ten months and it seems like the only thing they’ve gotten is a dog.

Well, I hate to be a nudge, but why has America become a nation that can’t make anything bad end, like wars, farm subsidies, our oil addiction, the drug war, useless weapons programs – oh, and there’s still 60,000 troops in Germany – and can’t make anything good start, like health care reform, immigration reform, rebuilding infrastructure. Even when we address something, the plan can never start until years down the road. Congress’s climate change bill mandates a 17% cut in greenhouse gas emissions… by 2020! Fellas, slow down, where’s the fire? Oh yeah, it’s where I live, engulfing the entire western part of the United States!

Folks, we don’t need more efficient cars. We need something to replace cars. That’s what’s wrong with these piddly, too-little-too-late half-measures that pass for “reform” these days. They’re not reform, they’re just putting off actually solving anything to a later day, when we might by some miracle have, a) leaders with balls, and b) a general populace who can think again. Barack Obama has said, “If we were starting from scratch, then a single-payer system would probably make sense.” So let’s start from scratch.

Even if they pass the shitty Max Baucus health care bill, it doesn’t kick in for 4 years, during which time 175,000 people will die because they’re not covered, and about three million will go bankrupt from hospital bills. We have a pretty good idea of the Republican plan for the next three years: Don’t let Obama do anything. What kills me is that that’s the Democrats’ plan, too.

We weren’t always like this. Inert. …

We all know things are bad, but I wonder how many realize HOW bad.   The banks are still scheming, and there’s warnings the next go around will take a worse toll than what has recently happened.  There’s been zero financial regulation passed, and none of the crooks have went to jail.  They’re still paying themselves the bonuses and salaries.

Top economists are worried our country will become a banana republic. Here’s an excerpt from what Paul Krugman said on Bill Maher’s program.
Source:  http://www.huffingtonpost.com/2009/09/26/krugman-the-american-drea_n_300702.html

“On bad mornings I wake up and think that we are turning into a Latin American country,” Krugman said. “But on good mornings I think, well this is America, we have always in the past managed to turn ourselves around, and there is an FDR just around the corner if we could only find him. I was kind of hoping Obama might be FDR, but maybe not. “

Even Warren Buffett said we’re on our way to becoming a banana republic if we don’t change our ways.  We have to stop these deficits and debts, and grow our economy. Here are some excerpts from his article in the New York Times:  (all bolded emphases my own)
Source:  http://www.nytimes.com/2009/08/19/opinion/19buffett.html?_r=2&th&emc=th

The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy — greenback emissions.

The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.

To understand this threat, we need to look at where we stand historically. If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.

Because of this gigantic deficit, our country’s “net debt” (that is, the amount held publicly) is mushrooming. During this fiscal year, it will increase more than one percentage point per month, climbing to about 56 percent of G.D.P. from 41 percent. Admittedly, other countries, like Japan and Italy, have far higher ratios and no one can know the precise level of net debt to G.D.P. at which the United States will lose its reputation for financial integrity. But a few more years like this one and we will find out.

An increase in federal debt can be financed in three ways: borrowing from foreigners, borrowing from our own citizens or, through a roundabout process, printing money. Let’s look at the prospects for each individually — and in combination.
The current account deficit — dollars that we force-feed to the rest of the world and that must then be invested — will be $400 billion or so this year. Assume, in a relatively benign scenario, that all of this is directed by the recipients — China leads the list — to purchases of United States debt. Never mind that this all-Treasuries allocation is no sure thing: some countries may decide that purchasing American stocks, real estate or entire companies makes more sense than soaking up dollar-denominated bonds. Rumblings to that effect have recently increased.

Then take the second element of the scenario — borrowing from our own citizens. Assume that Americans save $500 billion, far above what they’ve saved recently but perhaps consistent with the changing national mood. Finally, assume that these citizens opt to put all their savings into United States Treasuries (partly through intermediaries like banks).

Even with these heroic assumptions, the Treasury will be obliged to find another $900 billion to finance the remainder of the $1.8 trillion of debt it is issuing. Washington’s printing presses will need to work overtime.

Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, they can opt for high rates of inflation, which never require a recorded vote and cannot be attributed to a specific action that any elected official takes. In fact, John Maynard Keynes long ago laid out a road map for political survival amid an economic disaster of just this sort: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens…. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

But it was a wise man who said, “All I want to know is where I’m going to die so I’ll never go there.” We don’t want our country to evolve into the banana-republic economy described by Keynes.

Our immediate problem is to get our country back on its feet and flourishing — “whatever it takes” still makes sense. Once recovery is gained, however, Congress must end the rise in the debt-to-G.D.P. ratio and keep our growth in obligations in line with our growth in resources.

Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar’s destiny lies with Congress.

The dollar is in trouble.  These debts are overwhelming.  Our deficit spending is unsustainable.  This is terrible.  Kids can’t get grants for school.  California is running a garage sale to pay its bills.  Unemployment is skyrocketing.  Savings and retirements are vanishing.  Everyone is buried in debt up to their eyeballs.  Then there’s talk about it getting much worse?  A second economic crash?  Worse than this?

Latin American country?  The USA?  Uncontrollable inflation.  When I hear Buffet saying, “greenback emissions will certainly cause the purchasing power of the currency to melt”, it sends shivers down my spine.  It means costs of goods will skyrocket, yet paychecks will not.  When the value of the currency melts away, everyone’s quality of life will be melting away with it.  We will be able to afford less and less.

Can it be stopped?  Yes.  If we can regulate the markets, audit the Fed, and get our deficit spending under control.  Stop printing money.  Stop borrowing money.  Be more mindful of our trade deficits, and our debt to GDP ratio.  Reform healthcare and cut costs in half, to what they should be.  Pay off our current debts.

But none of this is happening.  Debts are going up in a mushroom cloud.  We have record deficits, and no way to finance them.  Our government is spending printed money with the mindset they need to do “whatever it takes”, eroding away the currency.  Americans continue to borrow someone else’s money to fund economic consumption, all with the Fed cheering it on with their zero percent interest rates.   We don’t need to get the banks lending.  We don’t need higher limits on our credit cards.  We need out of debt, not more debt.  They need to stop lending, and we need to pay off our debts.  Up the rates, don’t lower them.  Control this inflation.  Let the bubble pop.  Don’t reinflate it.

And this “medicine”, as Buffet called it, will start to have its side effects before long.  I wonder how long before that kicks in.

All of this.  It’s so wrong.  These financial oligarchs have to be stopped.  Bankers and corporations.   It has to end.  But I don’t know if we can really expect change to come out of Washington.  Check out this video by Sen. Bernie Sanders.

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