Jan

The Economy - WW
Is America on the verge of declaring some kind of bankruptcy? The short answer is yes, she is. How the attempts will be made to stave off this inevitable result of our fiscal excesses remains to be seen but nothing now short of a massive reorganization of our economy and fiscal priorities will stop it and even then, at this point in time, it is just too late. When America (under Obama's Leadership as President and with his strong support when he was a still a Senator) decided to essentially bankrupt America and its treasury in order to save America's major Wall Street banks who created the biggest fiscal crisis since the Great Depression, due primarily to financial corruption and criminal acts which have yet to be prosecuted, we embarked on a course of economic destruction. What we did was essentially to say that Wall Streets Money Center Banks were more important than Social Security, Medicare, Food Stamps, Education, Trasnportation, Health and every single thing the US government does including National Security. It was a seminal act of exploited panic designed to drain the US Treasury of funds and funnel them to criminals. This crisis will almost certainly surpass that seminal event of the Great Depression in pain and suffering before this crisis ends, and it has only just begun.

I know few of you really understand the magnitude of the economic forces heading our way and really think a recovery is headed our way. But nothing out there other than a few stats in the Housing market could lead any reasonable and informed (key) person to that conclusion. There are several major 'Bangs' headed this way. Mr CB Willie (whose newsletter is probably one of best out there) has this to say about it.

Finally, the harsh reality from the weight of gravity and the passage of time resulted in a second bang. One can always question the motivation of the Dubai World default, and the fact that it occurred when the USDollar was badly oversold. One can question the wisdom to attempt to force Abu Dhabi to cover the bad debts or assumptions that it would cover the bad debts. One can point to a hidden motive to ruin Iranian assets and trade routes, since they own 30% of Dubai properties and benefit from restricted product shipment through Dubai corporations. Regardless, the aerial view is most important. The biggest victims are the London and European banks heavily exposed to Dubai debt. The Powerz prefer to call it a rally on the USDollar from seeking the safety and security. But to the rotten ramparts of the US financial core? HARDLY!! Instead what happened was that the British Pound and Euro currency fell during an expected retreat after a realization of upcoming declared losses. The US has fortified a false front from accounting marked to fantasy that produced a stock rally and recent culmination in the most fraudulent Non-Farm Payroll report in modern history....

...The second bang from Dubai is the most important destabilizing debt event in 14 months, but minimized in the United States. The US press hardly even mentions the downgrades across European on sovereign debt. The US press actually boasts that the financial markets are handling the Dubai situation very well, and might be past it already. What incredible denial, but much expected. The second bang signals the beginning of sovereign debt defaults, several of them, and the reshaping of Europe, both with the European Union and the Euro currency. The movement toward a Parliamentary European Union might soon be dead on arrival. The split of the Euro currency is soon to become a reality, a forecast made months before the Persian Gulf debt default forecast. The prudent action is to put the Lisbon Treaty on hold while member nations default on sovereign debt...

...No forecast invites more private anger, insults, dismissive comments, and generally negative email than my forecast made in autumn 2008 of a USTreasury Default. The climax of the string of global sovereign defaults will be the government debt default for the USGovt, in the USTreasurys. Events in the last year support the forecast. Federal deficits are rising dangerously, over a trillion$ annually. The Greenspan-Guidotti criterion for debt default has long ago been triggered, even assuming the USGovt OWNS ANY GOLD. It does not. Rather it owns clear ledger items called 'Deep Storage Gold' that is not deep in underground vaults, but deep in mountain ore deposits, not yet mined, kept very secretive. The short-term USGovt debt is over $2 trillion, closer to $3.5 trillion if immediate debt finance is counted, as in the next 12 months. The Stimulus Bill was a travesty, more wasted funds and opportunities. The TARP Fund was an $800 billion slush fund, clouded still in secrecy. The foreign wars are a sacred big money loser, with more deficits associated. The competent economists like former USFed Chairman Volcker warn that structural reform is non-existent in the USEconomy and financial sector. Volcker further warns that derivatives have done great harm, and contain no value, only a shift of financial rents. The Global Paradigm Shift is in full force since the spring months, led by the twin concepts of diversification out of US$-based reserves, and of the movement to establish an IMF basket currency as an alternative for international commerce and transaction settlement. The end of the US$ for crude oil sales has been written on the walls. The end to the US$ credit card with unlimited balance is soon to end. - Full Circle Of Gov't Debt Default (Golden Jackass)

Ponzi Scheme: The Federal Reserve Bought Approximately 80 Percent Of U.S. Treasury Securities Issued In 2009

No, the headline is not a misprint. According to CNBC, the Federal Reserve bought approximately 80 percent of the U.S. Treasury securities issued in 2009. In other words, the Federal Reserve has been gobbling up the massive tsunami of U.S. government debt that has been created over the past year. This is absolutely unprecedented, and it is yet another clear indication that the U.S. financial system is on the verge of a major economic collapse.

You see, the Federal Reserve is not part of the federal government. In fact, the Federal Reserve is about as "federal" as Federal Express is.

Due to the massive explosion in the size of the U.S. government debt and due to the very weak U.S. economy, interest rates on U.S. treasuries should have shot through the roof by now. Rational investors would normally require an increased return for the increased risk that U.S. treasuries now represent.

But that is not happening.

Instead when there are no buyers for U.S. treasuries at current interest rates, the Federal Reserve just steps in and buys up all the excess bonds that need to be purchased. But in a normal free market situation, interest rates would rise on U.S. treasuries until they would be attractive enough for investors to buy them all.

However, that would create some huge problems.

If the U.S. government was not able to borrow all of the money it wanted to at artificially low interest rates, the results would be absolutely disastrous. Much higher interest rates on U.S. government debt would cause the U.S. federal budget deficit to absolutely explode. Interest rates on everything else throughout the economy would also skyrocket. As mortgage rates climbed dramatically, the housing market would completely collapse. The U.S. economy would be totally in flames.

But for now (and this situation cannot last forever) the Federal Reserve is keeping interest rates artificially low by lending the U.S. government as much money as it wants at extremely low interest rates. Of course the Federal Reserve is making an insane amount of money out of the arrangement, so it is working out quite nicely for them as well. But by essentially "printing" a flood of cheap money for the U.S. government to borrow, the Federal Reserve is ultimately going to end up destroying the value of the U.S. dollar. - The Economic Collapse Blog

The looming fiscal crisis

The economic crisis that the United States just experi- enced resulted in the deterioration of the country’s fiscal metrics as revenue plummeted and spending soared due to the recession’s effects and the government’s response.

The 2009 budget deficit was $1.4 trillion, almost 10 per- cent of GDP. The public debt grew 31 percent from $5.8 trillion to $7.6 trillion. And the total debt, which includes what the government has borrowed from itself, grew from almost $10 trillion to $11.9 trillion.

However, even after the recession abates, its lingering effect, the extension of a number of deficit-financed poli- cies, demographic changes, and growing health care costs will all create an unsustainable fiscal situation where the debt will continue to grow as a share of the economy. Under the Commission’s “fiscal baseline” (Box 1), which assumes the extension of many of the 2001 and 2003 tax cuts and other expiring policies, lower war costs, and dis- cretionary spending that keeps pace with the economy, the United States would see:

• Total government spending—driven by an aging popu- lation and rising health care costs—rise from 25 percent of GDP today to 36 percent in 2038.

• Revenue—which fell to below 15 percent of GDP during the recession—grow gradually to 18.5 percent in 2018, surpassing historical averages, but not by nearly enough to keep pace with spending.

• Deficits slip from their current level of 10 percent of GDP to below 6 percent over the next five years but rise to above 16 percent in 2038.

Without a dramatic shift in course, the debt will grow to unprecedented levels, breaking the 200 percent mark in 2038. Well before the debt approaches such startling heights, fears of infiation and a prospective decline in the value of the dollar would cause investors to demand higher interest rates and shift out of U.S. Treasury securities. The excessive debt would also affect citizens in their everyday lives by harming the American standard of living through slower economic growth and dampening wages, and shrinking the government’s ability to reduce taxes, invest, or provide a safety net. - Pew Research

States are currently facing one of the worst, if not the worst, fiscal periods since the Great Depression. Fiscal conditions significantly deteriorated for states during fiscal 2009, with the trend expected to continue through fiscal 2010 and even into 2011 and 2012. The severe national recession drastically reduced tax revenues from every revenue source during fiscal 2009 and revenue collections are expected to continue their decline in fiscal 2010. As state revenue collections historically lag behind any national economic recovery, state revenues will remain depressed throughout fiscal 2010 and likely be sluggish into fiscal years 2011 and 2012. The “official” economic recession, which began in December 2007 and may have recently ended, has significantly affected state spending, as more than half the states decreased their general fund expenditures in fiscal 2009, and over two-thirds of states enacted fiscal 2010 budgets with general fund spending lower than the previous year. - National Governors Association/National Association of State Budget Officers

Raising the alarm of the Kremlin about the United States latest move towards totalitarianism was Obama's signing yesterday of an Executive Order establishing a Council of Governors to be comprised of 10 American State Governors of his choosing and headed by the Secretary of Defense and which will also comprise the Secretary of Homeland Security, the Assistant to the President for Homeland Security and Counterterrorism, the Assistant to the President for Intergovernmental Affairs and Public Engagement, the Assistant Secretary of Defense for Homeland Defense and Americas Security Affairs, the US Northern Command Commander, the Commandant of the Coast Guard, and the Chief of the National Guard Bureau.

Important to note about Obama's move to complete the militarization of the United States, these reports continue, was it being process of subverting the American people begun under former President Bush, who in 2007 vetoed the National Defense Authorization Act for Fiscal Year 2008 ( H.R. 1585) for not allowing the Presidency this unprecedented power, but when put into the new version of this act was signed by him to become US Public Law No: 110-181.

The establishment by Obama of this new American regime, headed by the United States military and intelligence agencies and giving them unprecedented power over their elected officials, these reports warn is 'exactly' shadowing those actions of last century's National Socialist Party (Nazis) in Germany, and include:... - Obama's Shock Plan

The bipartisan Council will be composed of ten State Governors who will be selected by the President to serve two year terms. In selecting the Governors to the Council, the White House will solicit input from Governors and Governors associations. Once chosen, the Council will have no more than five members from the same party and represent the Nation as a whole.

Federal members of the Council include the Secretary of Defense, the Secretary of Homeland Security, the Assistant to the President for Homeland Security and Counterterrorism, the Assistant to the President for Intergovernmental Affairs and Public Engagement, the Assistant Secretary of Defense for Homeland Defense and Americas Security Affairs, the U.S. Northern Command Commander, the Commandant of the Coast Guard, and the Chief of the National Guard Bureau. The Secretary of Defense will designate an Executive Director for the Council. - White House

FEMA's 10 regions