We Are So Screwed…

October 17, 2010

I’m not kidding. As a nation, we’re well and truly screwed. Alan has written about this again and again, and it’s possible that people are finally starting to sit up and take notice. Another financial writer has been calling attention to our failing Social Security system. As far back as December, 2009, Gary North was pointing out the 800-pound gorilla in America with his article cleverly entitled, “U.S. Social Security Will Go Bankrupt in 2010“:

“We are floating down the fiscal river of no return. We are moving faster and faster. Some of us can hear the falls ahead. The sound gets louder and louder. But our companions on board say, “Let’s party!” They head for the dining room. After that, they will head for the slot machines.

“Americans respond favorably to these words: “Free” and “all you can eat.” That is what politicians promise.

“Either the falls will get us (deflationary depression) or else an explosion of the overheated engine will (hyperinflation).

“Our companions are still in the dining room or heading toward the slot machines. You and I should begin to move toward the lifeboats.”

Here’s the thing: Currently, we’re funding Social Security by dipping into its trust fund. The only problem is that trust fund shares can only be “sold” to the U.S. Treasury. And how is the Treasury doing lately? Better ask our expert head of the Treasury – Tim “Turbo Tax” Geithner.

So what will eventually happen? As Mr. North predicted, either we’ll have deflation – not enough dollars and goods will become over-valued; or we’ll have hyperinflation – far too many dollars on the loose and the Benjamins will be virtually useless.

But don’t fret yet, because that’s not the bad news. That 800 pound Social Security gorilla suddenly looks like unicorns and rainbows and fuzzy bunnies compared with Medicare. Medicare is in at least five times worse shape than Social Security. And just how do the politicians solve the problem? They don’t. They simply pass the buck by cooking the books, having one broke gov’ment sector loan to another broke gov’ment sector, or they sell what will soon be worthless treasury bonds to other countries like China or Japan.

Not so long ago I was ranting to a friend about this because our country had sold $2 trillion to China and Japan and eight other countries. Well, I just checked… Now we owe $4 trillion to over 30 countries. That didn’t take long. My guess is that they’re waiting for the fire sale.

So what are our unfunded liabilities (which include Social Security, Medicare Part D, and Medicare in general)? According to the United States Federal Reserve, our total unfunded liabilities are over $110 trillion (or $110,000,000,000,000). Ah, for the good old days when I first started writing about this and the number was well under $100,000,000,000,000).

Numbers of this magnitude can be difficult to grasp. I watched Fox News the other day, and even their “financial experts” couldn’t get the numbers right. They screwed them up not once, but twice. One expert tried to explain that a trillion is a million billion. It is not. A trillion is a thousand billion.

  • One million is 1 x 106, or 1 followed by six zeroes. (Or 1,000 thousand…)
  • One billion is 1 x 109, or 1 followed by nine zeroes. (Or 1,000 million..)
  • One trillion is 1 x 1012, or 1 followed by 12 zeroes. (Or 1,000 billion…)

To put these number in some perspective:  Our own Milky Way galaxy holds about 400 billion stars or 400,000,000,000 which is 0.4 trillion, or just four-tenths of one trillion. If each star in our entire galaxy was one dollar, we’d need to create another 274 Milky Way galaxies just to cover our unfunded obligations.

To intellectually understand something is one thing. To absorb the impact and repercussions is entirely another.

I’m thinking we all should have goose bumps right about now.

Stoutcat


Financial Reform: The Good, The Bad and The Butt-Ugly.

July 16, 2010

You probably heard that the Financial Reform Bill just passed the Senate and is on it’s way to being signed into law by Emp-error Obama, probably some time next week.

“Yes,” you ask, gritting your teeth. “But how, exactly, does it affect me?”

Well, just the fact that it was written by Democratic Senator Chris Dodd, and Massachusetts Representative Barney Frank should have you running, screaming towards the Canadian border.  I find the irony rather horrific: one of the chief proponents of Fannie-Mae and Freddie-Mac (the two programs that are chiefly responsible for the economic mess we’re in regards to banking) is one of the architects of the legislation to get us OUT of the trouble he caused. Think about that: If you had to trade your car in because the mechanic at your dealer ruined your engine, would you turn to that same mechanic to write the service manual for your new car?

As to the impact, in some minor areas, we gain, but as is always the case when government gets involved, it’s gonna cost you at the other end… Translation: Break out the KY Jelly, folks. Try to minimize the pain.

The legislation took well over a year to develop, and it wound up taking slightly over 2,300 pages to contain it. But NOT TO WORRY!  I’m sure His Sly-ness, the Omnipotent Lord Obama will give us 72 hours to look at it on-line before signing it into law, just like he did with the stimul… uh, woops. Never mind… “Nothing to see here, folks. Just keep moving, please.”

Better yet: If you are into Masochism, download it yourself here and enjoy your week-end: The Dodd-Frank Wall Street Reform and Consumer Protection Act (as a public service announcement, I recommend using a condom while reading it).

If I may, here’s a highly condensed version of some of what you’ll find buried in this legislation:

1.) The legislation creates an agency that can seize and liquidate any bank (including those considered “too big to fail”).

The Good News: We shouldn’t get stuck paying to bail out banks for their failures as George Bush had us do.
The Bad News: It does NOT, however, control just how big a bank can grow. Recipe for disaster? Guess we’ll have to wait to find out. You know, like Nancy Pelosi’s take on health care: “We have to pass it to find out what’s in it!”
The REALLY Bad News: Hello? The government now has permission to seize any bank (and its assets) at any time, based on the whim of… the government. Translation: More power taken away from the people and given to the government (who wrote this legislation again? Hugo Chavez?)

2.) A new federal agency (under the banner of the Federal Reserve) that will impose more regulatory control over credit card companies, payday advance companies and mortgage companies.

The Good News: Perhaps more restrictions on the types and amounts of fees they can gouge customers with. Pre-payment penalties will likely be eliminated or greatly reduced on certain types of loans and mortgages.

The Bad News: Those fees are where these institutions make much of their profit. While the government presents these regulations as “consumer protection, ” that translates into “less profit” for these entities which, ultimately, means more restrictions on their service to you. Look for new fees on other services to make up the difference, harder to obtain credit cards, harder to qualify for mortgages and more restrictions on availability of payday advances…  Yeah, that ought to help the economy recover. If you’re in the construction industry, plan on selling a lot fewer houses. A LOT fewer.

The REALLY Bad News: With new regulations on mortgage companies, it doesn’t take a rocket scientist to realize mortgage money will be much harder to qualify for. With a plethora of unsold homes in foreclosure already flooding the market, that could keep the housing market depressed for years.  Couple this with an economy that’s already on life-support and a job market that is – well, for lack of a better term – flat-lining, in most parts of the country, and we could actually see a society where we could have millions of homeless people living on the streets and hundreds of thousands of empty homes sitting in foreclosure. If and when that happens, how long before the government will write (and pass) legislation allowing the government to seize homes that are sitting empty and redistribute the right to live there.

Who would have thought the pompous idiots  who helped the Fannie Mae/Freddie Mac debacle trash our economy could come up with something even more foreboding for the future? Way to go Barney and Chris! Would you like to inject us directly with poison next?

3.) The new legislation requires more transparency in the derivatives market.

The Good News: None we can actually measure. Not until the “bad” news is resolved (which the government has absolutely no incentive to do)..

The Bad News: Fill in your own sarcastic comment here about “transparency,” especially if it’s going to work the same way it has with the Obama administration.  And it probably will, because they have apparently left it up to Bill Clinton to ask for the definition of “transparency.”


4.) New limits on how much Banks  can charge retail businesses when customers use debit cards for purchases and how much they can charge for overdrafts.

The Good News: If you’re a business owner, this means less cost to you when a customer swipes a debit card to make a purchase. So this means the businesses will pass those savings on to us, right?  Nope. Not necessarily.  Nothing requires businesses to do so.

For those of us who live paycheck to paycheck and occasionally overdraft our account, banks will be forced to reduce the penalty for doing so, meaning they would be limited to how much they can gouge you when they (as comedian Gallagher would say), “charge you more of what they already know you don’t have any of.”

The Bad News: Under the old laws, businesses were required to allow you to use your debit card for ALL purchases, no matter how small. Under the Financial Reform legislation, that restriction is lifted. Look for retailers to jump on the bandwagon of having minimum amounts for purchases using debit cards. You may have to forget about buying that McDouble using the debit card. The consumer’s new credo: “Cash: Don’t leave home without it.” Look for armed robberies to increase as a result.

Even MORE Bad News: With banks making less money per transaction with retailers, reduced fees for overdrafts and other fees, look for them to make it up elsewhere. This could mean buh-bye to that free-checking or, perhaps, more or higher fees for using that debit card to obtain cash at the ATM. Where banks are concerned, you may want to keep that KY Jelly handy. If they can’t screw you one way, they’ll screw you another. And, from what I’ve seen, this 2,319 page legislation isn’t going to do a thing to end that.

Here’s a couple of videos that show various aspects of the legislation:
A) The Good

B) The Bad

C) The Ugly: A Paul Shanklin tribute to the man who helped create the banking debacle, and then in true “End of days” fashion, has co-authored the legislation that’s supposed to resolve the very problem he helped create.

Enjoy your week-end, folks. Good news: Stoutcat returns from vacation next week.

H/T Michelle Malkin

Gerry Ashley


Ten Reasons the Public is At Odds with the Government

March 22, 2010


OK, I’ve been around the block a few times. I’ve known a boatload of people from every station of  life. And being an avid listener, here’s what I’ve heard from Americans concerning what they hate about government and politicians…

  1. They don’t listen to us. Just consider the health care debate: We all know that most Americans don’t want this mess. Yet, here we are.
  2. Americans don’t like “Holier than thou”: What do you think would happen if you failed to pay tens of thousands of dollars in taxes? Bet you wouldn’t be treated as was “Turbo Tax” Tim Geithner.
  3. The electorate hates waste: Fox News’ Neil Cavuto often talks about the “10% waste and fraud” factor in government. (That sounds like a fair assessment to me…) When we start throwing around numbers like a trillion dollars ($1,000,000,000,000.00), a waste-and-fraud factor of 10% means that one-hundred billion dollars ($100,000,000,000.00) will either be squandered or line the pockets of a bunch of scum. We don’t like that. (BTW… One-hundred billion dollars breaks down to the squandering or out-and-out theft of $300 from every man, woman, and child in America.)
  4. We don’t like smarmy politicians, lawyers, and lobbyists:  Are they all bad? No, of course not. But is DC slithering with weasels? Absolutely! From Blago, to Charlie Rangel to John Edwards, we’re sick of the rodents.
  5. We don’t like disingenuousness: How many times have you heard the following from a pol? “While I respect the opinion from my friend on the other side of the isle, I disagree with him…” No… Odds are that there is no respect, and they hate each other’s guts. Enough B.S. already.
  6. Working folk really don’t like the greedy little bastards: Rep. William “Cold Cash” Jefferson… Say no more.
  7. They think we’re stupid: Ummm… Yeah, I believe that Larry Craig was reaching down to pick up a piece of toilet paper in a public restroom stall… Yeah, yeah… Sure I do.
  8. Politicians just aren’t like us: Imagine going to your boss and blatantly admitting that you approve a crucial company manual even though you haven’t read it. But so it goes with the health care bill… What planet are these people from?
  9. All too often, they’re flat-out idiots: There’s Nancy “500 million” Pelosi, Dana “Cuban Missile Crisis” Perino, and John “I actually did vote for the $87 billion before I voted against it” Kerry… The list just goes on and on…

But perhaps the most stupefying thing that drive the electorate crazy as an outhouse rat (me anyway), is this:

10:  Politicians put party before the public.

In the case of the Republicans, they had eight stinking years to build a stupid fence, but danced around the issue for fear of losing the Hispanic vote. Now, we’ve blown $2.4 billion on a flawed system that is going to be mothballed at best. Gee, at least the border towns of Mexico are bastions of stability and safety…

And now the Dems have rammed a health care bill down our throats, even though we currently owe over $74 trillion on Medicare alone!

As the Geico Caveman would say… “Unbelievable! Where’s my coat? … Suede… With fringe!

Alan Speakman


Why the 2010 Census Ticks Me Off

February 25, 2010


When it comes to the census, forget about the cheap politics involved. (As you may recall, one of the first things Obama did when he took office was to snatch the power of the U.S. Census from the Commerce Department and pull it directly into the White House… To control the Census is to control how state populations are counted and therefore how representation is doled out.)

But just forget about that. That’s the kind of crap we’ve come to expect from D.C…

Here’s the math that drives me crazy…

In 1970 it cost $1.22 per person to count every person in the United States – all 203.3 million of us.

In 2010, it’s projected to cost $45.31 per person to make the count.

Why such a vast difference? Well, there are two main factors: inflation and population growth. Fair enough. In today’s economy, a 1970’s dollar doesn’t buy much. In fact, due to inflation, it would take $5.58 to equal that old single-buck buying power.

Add to that the fact that our population has grown by a factor of 1.5, and you should start to see a Census cost per person count (in today’s dollars) of $10.25 [$1.22 *5.58*1.5]. Heck, let’s completely ignore the phenomenal efficiency of 40 years of technological revolution and call it an even $15 per person. This nets out to $5 billion for the entire Census count (and that’s an extremely generous estimate).

Instead, the actual projected amount for the 2010 Census is actually about $14.3 billion.

And why do you suppose it will cost $45.31 per person (just toss in a sleaze factor of three) in 2010 for a system that will no doubt be crooked as hell? You do the math.

Yeah, I’m ticked. You should be, too.

Alan Speakman


Last Call For America’s Economy And Freedom?

December 18, 2009


Beware Of Harry “The Grinch” Reid:
He’s After More Than Just  Christmas!

While the Obama administration and Congress are hoping our attention is diverted for the holiday season, it’s time for all Americans to educate themselves on the real state of the economy and what Harry Reid (President Obama’s hatchet man who claims – in a smarmy manner – “you can smell the tourists when they enter the Senate Chamber”) and Congress intend to do to ruin not only our Christmas, but the very health care system which is the envy of the world and, quite possibly, our entire economy.

Now is not the time to let your guard down. Your activism is crucial!

We all have discussed the impact of health care reform in regard to the destruction of our existing health care system. But in order to truly understand the economic impact of health care reform, one needs to educate him/herself beyond the obvious social impact.

Simply put, if passed, health care reform could very possibly become the straw that breaks the United States economy beyond the point of fixing… part of what many see as the Obama administration’s goal to take complete control of our economy and implement full-on socialism.

Whether that’s Obama’s agenda or not, the failure of America’s economy is a very distinct possibility.  And most of the liberals in Congress either dismiss it as folly or refuse to accept the facts. Or worse, they could be complicit.

Grand Rants has written a number of articles about our economic crisis both warning us and educating us about where we are and why. Those who have taken the time to read those articles have a much better understanding of:

  • Where we are, financially speaking
  • How we got here
  • The economic “Perfect Storm” that’s heading directly as us
  • What in the name of all that’s holy do we do now?

Those of you who haven’t yet read the below articles: It’s time.

No really. It’s time.

Without being informed, you’ll have no idea what we’re likely facing. Hiding your head in the sand will not work. Without that knowledge,  you’ll have no clue what a monstrous impact it will have on life in the United States if we don’t act now.

NOW. Not in three or four years.  NOW.

Here’s a sampling of the articles that point to an absolute economic “Perfect Storm”. This may well be what is heading our way if we don’t take immediate steps to avoid it:

I urge beg you to read the above links. We need educated, aware, angry Americans to pull this off.

Last year, before Obama won the election,  a documentary was filmed about our economy and how monetary experts were shaking their heads  at our precarious situation.

An abridged version can be viewed at the end of this post. As you watch this, keep several things in mind:

  • This was produced during the Bush administration. Bush, and  his predecessors from both parties are taken to task (and rightfully so) for feeding the 800 pound gorilla that is our debt.
  • Since then, Obama has tripled that debt and long-term commitments to the point where it is simply unsustainable.
  • The Obama administration is waving a $100 billion ANNUAL offering at third-world nations as an entirely new way to apologize to the world for our accomplishments. It’s his combination “apologetic gesture” and “spread the wealth around solution” all wrapped up in one great big “We’ll just borrow more money to make it happen” package.

And now… right now, Harry Reid and the Democratic Congress are attempting to force-feed us a health care bill that, if passed, may be enough all by itself to break the back of our economy once and for all.

Stand up for what’s left of our freedom and capitalism before it’s too late. Contact your Representatives and Senators in Congress. Make sure they know where you stand on this. Everything is on the line: the economy, health care, jobs, and our very way of life. After all, it’s that way of life that has been an inspiration to billions of people around the world.

Still think it’s OK to keep your head in the sand concerning health care? Start reading the links above, then watch the video below. Finally, act! This may be our last chance to preserve our independence and true freedom in this country. Don’t let the Grinch steal your economy, health care, and freedom this Christmas–or ever!

Gerry Ashley


Dems To Plunge The Knife Deeper Into Economy

December 11, 2009


A word of advice to the economy from Speaker of the House Nancy Pelosi, Senate Majority leader Harry Reid, Barney Frank and all the rest of the democrats in Congress: 

“Just stop breathing, will you?” 

Nancy Pelosi (D) CA

If the economy would just die, already,  maybe the Democrats would STOP wasting any more time trying to kill it. On second thought, naw… like a serial killer, they simply enjoy plunging the knife into the victim too much. 

OK, enough of the Glenn Beck-type theatrics. The point is, Democrats in Congress are preparing to raise the federal borrowing limit by nearly $2 trillion.  You remember what a trillion dollars is, don’t you? Alan Speakman summed it up nicely in a rant not long ago. Click here to fully comprehend what a trillion dollars is, and then realize the Democrats want to raise the ceiling (or deepen the pit) by double that amount.     

Double. 

 “Nothing to see here, folks… keep moving please. Nothing to see here…”  At least that’s what they’re hoping you’ll think. 
 

Barney Frank (D) MA

 Make no mistake: This is another nail in the coffin of our economy. It’s another nail in your children’s future. And your children’s children.

This will most likely be another “Let’s slip this through  in the middle of the night” deals. Maybe they can lock out the Republicans from any debate again like they did with the health care bill. No point in having those negative nabobs of negativism putting a downer on the party, eh? 

 According to Fox News: 

Congress is poised to lift the federal borrowing limit by as much as $1.8 trillion before the end of this year, a number large enough to avoid revisiting the matter next year when Democrats will have to defend their majority in midterm elections. 

Harry Reid, (D) NV

Translation: They’re attempting to pull the wool over our eyes by being able to tell us, “See? We’re not fiscally irresponsible!  We were 2 trillion away from our borrowing limit at the last election and we’re STILL 2 trillion under our limit. And yet, we’ve managed to bring you health care reform…” 

The truth had best smack you in the face as hard as the Democrat’s arrogance:  

The Treasury is nearing the current debt ceiling of $12.1 trillion, and Congress must authorize raising the amount the United States can borrow to avoid the country going into default to its creditors. 

You can read the entire article here

Let’s humanize this: Imagine, you were about to lose your home to foreclosure because the bank had a clause buried deep in your mortgage that stipulates the bank can raise the interest level (and, therefore, your monthly payments) an absurd amount. Imagine now that they did that. So that affordable monthly mortgage payment of $1,200 will now cost you $1,900.  

Suppose now, you realize, “I can’t afford that $1,900 per month,” but know you could borrow enough money to make the payments. On the surface, life would look fine. Your family is able to stay in the home, you’re employed full-time. To others, you appear to be living the dream. But YOU know that beneath the facade, your finances are  a ticking time bomb. You just hope the kids will be grown and off on their own before your credit house of cards comes crashing down. 

Now you have some idea of what the Democratic Congress is about to do.  Except there’s a couple of small details:  

  •  It’s YOU they are obligating for the additional trillions of dollars. Because when it comes to indebtedness, we are the government.
  • We are already committed to unsustainable debt.
  • These Congressmen don’t give a rat’s ass who the overblown spending hurts. They just don’t want to have to raise the borrowing limit in the light of day or during a re-election year.
  • In fact, one would have to wonder how many of these public servants have already set up their off-shore retirement, knowing exactly what their irresponsible spending is going to result in.

Keep this in mind. It’s your money. If this doesn’t make you mad, you’re not awake. But you’d better awaken fast. Ask any serial killer: It’s always easier to plunge the knife into a sleeping victim.    

Gerry Ashley


Point:Counterpoint:Repoint, Part 3

December 4, 2009

 

Continuing where we left off Wednesday, here is the final response of this discussion series.


 I’m reminded of a speech Patton delivered to his men on the eve of a big battle. Basically, he told them that some would die, but not all. Better to just be honest.

America is like the Titanic in the last hours: Beginning to slip beneath the waves bow down, but it hasn’t snapped in two yet.

[I] thought the slight shake up in Dubai was interesting [the other day]. Piddly little country couldn’t pay its tiny $60 billion debt, and the global marketplace shuddered. The Dow lost 160 points. What happens when we can’t print enough money, and no one will loan us anymore? What happens when the U.S. $100 trillion debt collapses? Well, to put it in perspective, $60 billion is roughly 1/1,600th of $100 trillion; or put another way, $60 billion is roughly .06% of $100 trillion. And of course, when we go, Japan goes.

How could this happen? And why is it that only folks like Walker, Dobbs, Laffer, Payne, Beck, and a few others are screaming their heads off? Here’s how and why via analogy.

In the early 1970s Eastern Airlines flight 401 suffered a slight mechanical failure in its landing lights. For four arduous minutes, the flight crew screwed around with the lights not noticing that the auto pilot had been inadvertently turned off. They ignored audible warnings and falling gauges. In the last ten seconds, they finally realized that the alarms were going off and sat in disbelief.

If the captain or co-pilot had grabbed the yoke and applied full power, they might have made it. But instead they sat stunned in the face of all their instruments, of all their warning signs. Here’s the FAA YouTube recreation for all to see and learn from:

This country has sub-consciously known this financial disaster was coming since the 1970s. My brother used to warn me about it when I was a teenager. The alarms have been going off for decades and we’ve been busy dicking around with disco and pro wrestling. Well, now we’re in those last ten seconds, and we simply cannot believe our eyes. We’re unable to grab the yoke; we’re unable to apply full power.

I just don’t know what’s going to happen, and I don’t think turning to the readers will do a damned bit of good. I’d say go quietly, build a good survival kit, a decent .22 and a bunch of bullets, and invest in silver.

Some of Patton’s men did survive. Some of the people on the Titanic did survive. Some of the folks on flight 401 did survive. I’m not saying all is lost, but I am saying that it looks like excruciating days are getting closer.

Like I said, I don’t know what to write. But I don’t think writing “Barney Frank Started This Whole Mess” will do any good.

Besides, I already wrote that.


 Hope you enjoyed this series as much as I did. The two correspondents occasionally have exchanges like this via email, so if you liked this, let me know, and I’ll see if I can get permission to publish the next time they chew the fat online.

Stoutcat