Tag: deficits

FISCAL FARCE, FAILURE, FANTASY & FORNICATION

I’ve put off writing an article about what is likely to happen in 2013 so I could peruse the thousands of other articles by reputable bloggers, paid pundits, Wall Street shills and captured charlatans to gather their wisdom. It’s essential that I make predictions for 2013 so I can write another article in December rationalizing why 90% of my predictions failed to materialize. Reading all of these 2013 prediction articles made things much clearer for me. I now know for sure:

  • The stock market will reach an all-time high.
  • The stock market will fall 42%.
  • The economy will strengthen as the year progresses.
  • The economy will descend into a depression.
  • The USD will strengthen.
  • The USD will collapse.
  • Gas prices will set new highs.
  • Gas prices will fall below 2012 levels.
  • Gold will rise to $10,000 per ounce.
  • Gold will drop below $1,000 per ounce.
  • We will experience hyperinflation.
  • We will experience horrific deflation.
  • Obama will compromise with the Republicans and put the country on a path to prosperity.
  • Obama will create a debt ceiling crisis and assume dictatorial powers as a result.
  • Snooki will be a better mother than Kim Kardashian.
  • Honey Boo Boo will beat I Didn’t Know I Was Pregnant in the Neilson ratings.

The majority of 2013 prediction articles are written to support the agenda of the writer. Many are trying to sell newsletter subscriptions or investment services. Their predictions will match the theme of their newsletter. Others are Wall Street paid shills who will predict what they are paid to predict by their owners. Then there are the political hacks who tow the party line with their predictions. But no one can top the predictive powers of the CBO. They just put out their ten year updated forecast reflecting the fabulous fiscal cliff deal that saved the country. According to the CBO, the “compromise” to reduce our deficits will add a mere $4 trillion to the national debt over the next ten years. I’m sure this will prove to be accurate. Just take a look at their 2002 projection, after passage of the Bush tax cuts:

The CBO predicted the FY2012 surplus would be $641 billion, the national debt would total $3.5 trillion, the debt held by the public would total $1.273 trillion, and GDP would total $17.2 trillion. They missed by that much.

The actual FY12 results were:

  • The true deficit was $1.37 trillion (amount national debt increased – not the phony deficit number reported by the mainstream media).
  • The national debt was $16.1 trillion.
  • The debt held by the public was $11.3 trillion.
  • GDP was $15.8 trillion.

Based on these results, I won’t be asking the CBO for help with my Super Bowl bet. Making ten year predictions is beyond worthless, but public policy in Washington DC is based on these useless CBO projections. The entire fiscal cliff kabuki theater fictitious crisis reveals the politicians and mainstream media pundits to be liars, fools and frauds. The tax the rich to cut the deficit storyline was sold to the public and won the day. Of course, the highly accurate CBO immediately revealed that the Orwellian named American Taxpayer Relief Act of 2012 adds $4 trillion to the national debt over the next ten years. Based on the accuracy of their previous predictions, it’s a guarantee the national debt goes up by $8 trillion, as the rich take advantage of the thousands of loopholes in the IRS code they paid for to avoid paying the taxes expected by the CBO.

Hypocrisy abounds on both sides of the aisle in Washington DC and on the media company propaganda channels. As the national debt soared from $10.6 trillion on the day Obama took office to $16.4 trillion today, I heard shrieking liberal talking heads on MSNBC, CNN, and the rest of the liberal media blame the debt on the Bush tax cuts and the Bush wars. If the Bush tax cuts were so horrific, why did Obama and his minions just make 98% of these tax cuts permanent? Liberals held protest marches across the country against Bush’s wars and burned him in effigy. Obama’s defense budgets have been larger than Bush’s and he doubled down on our miserable failure in Afghanistan. You don’t hear a peep from the liberals about the warmongering Barack Obama who has kill lists and unleashes predator drones, killing women and children across the globe. Liberals pretend to be concerned about the welfare of the citizens, but continue to support a President that uses executive orders to imprison citizens indefinitely without charges, has expanded surveillance on citizens, has kept Guantanamo open, signs the continuation of the Patriot Act, and proposes overturning the Second Amendment by executive order. Liberals shriek about the evils of an unregulated Wall Street, while remaining silent as Obama hasn’t prosecuted a single banker for the greatest financial fraud in world history. You don’t hear a peep about Jon Corzine, who stole $1.2 billion from the accounts of farmers and ranchers. Liberals talk about regulation and then stand idly by while Wall Street lobbyists wrote the Dodd Frank law and insurance and drug company lobbyists wrote the Obamacare law. Liberal hypocrisy knows no bounds and is only matched by Neo-Con hypocrisy.

The Neo-Con controlled Republican Party is a pathetic joke. They have the guts to declare themselves the party of fiscal responsibility, after Bush’s eight year reign of error. He and his fiscally responsible party were handed a budget in surplus and managed to add $4.9 trillion to the national debt by waging undeclared wars, encouraging Wall Street to create the biggest fraudulent financial bubble in history, creating a new $16 trillion unfunded entitlement (Medicare Part D), cutting taxes without paying for them, and creating a massive new government agency (DHS) to take away our liberties and freedom. Federal government spending grew from $1.9 trillion to $3.0 trillion under Bush and the Republicans. Does that sound fiscally responsible?

Does anyone believe the Republican Party is serious about cutting anything? Tough guy Republicans like Big Chris Christie preach fiscal responsibility when going to war with teachers’ unions, but he squeals  like a stuck pig when a $60 billion pork filled, unpaid for, Sandy Relief bill is held up in Congress. The courageous fiscally responsible Congress critters passed the entire pork filled, unfunded, bloated, vote buying joke. It included $28 billion to mitigate future disasters, $3 billion to repair or replace Federal assets, and $6 billion for transportation projects completely unrelated to Sandy damage.   The hypocrisy of politicians who proclaim the $50 billion of 2013 fiscal cliff tax revenue as deficit cutting, and then immediately piss it away by paying people to rebuild their houses yards from the Atlantic Ocean while funding billions of non-disaster related projects is disgusting to behold. There is nothing like compromise to add another $60 billion to the national debt.

Our entire economic and political system is a farce. The American people are being played by the powerful interests that provide them with an illusion of choice. Both parties serve the interests of their masters and the fiscal cliff show and debt ceiling show are a form of reality TV to keep the masses alarmed, fearful, and believing there is actually a difference between the policies of the ruling class. The charade has played out in its full glory in the last few weeks with Obama convincing the masses he had stuck it to the rich, while in reality the working middle class got it good and hard when they got their January paychecks. This chart details the tax changes that went into effect on January 1.

taxbill

The funniest part this fiscal fiasco farce is watching the reaction of the sheep who believed Obama and the mainstream media storyline. Obama was able to raise the published top rate on people making over $400,000. The newly defined “rich” laughed heartily as they know only fools pay anywhere near the top rate. The rich just call their tax advisor and instruct them to use one of the thousands of tax loopholes in the 75,000 page IRS tax code to “legally” avoid the new Obama rates. Meanwhile, both parties and their mainstream media mouthpieces downplayed the 2% payroll tax increase on every working American. This tax increase has been a complete surprise to the reality TV zombies and Facebook aficionados. Even college educated professionals in my office had no idea their next monthly paycheck was going to be $150 to $200 lighter. This will wipe out most, or all, of the annual raise they received. The tax will fall heavily on the 75% of households that make less than the $113,700 Social Security cutoff. For a struggling family of four earning the median income of $50,000, the $1,000 less in their paychecks will mean less food, putting off trips to the doctor, driving on bald tires, or not taking the family on a vacation to the Jersey shore. The $2,274 increase in taxes (.57%) for the Wall Street banker making $400,000 probably won’t put too much of a crimp in his Hamptons lifestyle.

The joke is on the American people as the rich will ante up maybe $50 billion of taxes in 2013, while the working middle class will be skewered for $125 billion. How’s that “Tax the Rich” slogan working out for you?

Only in the Orwellian capital of Washington DC would a bill that was supposed to provide tax relief to the middle class and spending cuts to reduce the deficit, actually increase the tax burden of a median household by $1,000 and perpetuate the pork spending payoffs to campaign contributors and friends of the slimy politicians that slither through the halls of Congress. The list of pork and bribes should be nauseating to hard working Americans across the country:

$30 billion extension of the 99 weeks of unemployment benefits, even though we are supposedly in the 3rd year of economic recovery. Continuing to pay people to not work for two years will surely boost employment.

$14.3 billion for a two-year extension of the corporate research credit benefiting large technology companies like IBM and Hewlett Packard.

$12.2 billion one-year extension of the production tax credit for wind power.

$11.2 billion two- year extension of the active financing exception, which lets GE, Caterpillar Inc. (CAT) and Citigroup Inc. (C), among others, defer taxes on financing income they earn outside the U.S.

$1.9 billion extension of the Work Opportunity Tax Credit for hiring workers from disadvantaged groups, benefitting mega-restaurant chains like McDonalds.

$1.8 billion extension of the New Markets Tax Credit for investments in low- income areas, benefitting JP Morgan and other Wall Street shyster banks.

$650 million tax credit for manufacturing energy-efficient appliances, benefitting mega-corps like Whirlpool.

$430 million for Hollywood through “special expensing rules” to encourage TV and film production in the United States. Producers can expense up to $15 million of costs for their projects. NBC thanks you.

$331 million for railroads by allowing short-line and regional operators to claim a tax credit up to 50% of the cost to maintain tracks that they own or lease.

$248 million in special expensing rules for films and television programs.

$222 million for Puerto Rico and the Virgin Islands through returned excise taxes collected by the federal government on rum produced in the islands and imported to the mainland.

$78 million for NASCAR by extending a “7-year cost recovery period for certain motorsports racing track facilities.”

$59 million for algae growers through tax credits to encourage production of “cellulosic biofuel” at up to $1.01 per gallon.

$4 million for electric motorcycle makers by expanding an existing green-energy tax credit for buyers of plug-in vehicles to include electric motorbikes.

So when you see the cut in your take home pay, just comfort yourself knowing that JP Morgan, Citigroup, GE and hundreds of mega-corporations were able to retain their tax breaks. As they have done for decades, Congress and the President agreed to address spending cuts at a future date. Of course, a government spending cut isn’t actually a cut. It’s a lower increase than their previous projection. Nothing is ever cut in Washington DC. The austerity storyline is a lie. Not a dime has been cut from the Federal budget. Intellectually dishonest ideologues try to peddle the wind down of the Obama $800 billion porkulus program as a cut in Federal spending. They sold this Keynesian “shovel ready” crap to a gullible public as stimulus to jumpstart the economy. Federal spending was $3.0 trillion before the Obama stimulus. After the two year stimulus was pissed away without helping the economy one iota, the baseline should have been back in the $3.2 trillion range. Instead, FY13 Federal spending will be $3.8 trillion. This hasn’t kept liberal ideologues like Krugman and his minions in the mainstream media from blaming crazy Tea Party Republicans for inflicting horrendous austerity measures on the poor and disadvantaged.

The chart above reveals a few truths:

  • The country has been blessed with two of the worst presidents in U.S. history over the last twelve years.
  • When Federal spending as a percentage of GDP is beyond two standard deviations over the normal range during the last sixty years, your problem is not lack of tax revenue.
  • Obama and the current Congress are spending at a level of 24% of GDP versus the 18% of GDP when Clinton left office. This amounts to a nose bleed altitude $950 billion higher than the level Clinton was spending in his final year in office.

The Op-eds in liberal rags across the land decry the lack of civility in Washington DC and plead for politicians on both sides of the aisle to come together and compromise for the good of the country. This line of bullshit would be laughable if it wasn’t so wretched in its falsity. Compromise is what has left this country with a $16.4 trillion national debt, $200 trillion of unfunded liabilities, and $1 trillion deficits as far as the eye can see. Democrats have compromised and let the Republicans create a warfare state. Republicans have compromised and let Democrats create a welfare state. The two headed monster living in the swamps of Washington DC just voted to increase taxes on all Americans. They voted to hand criminal Wall Street banks $700 billion. They voted to pass the Patriot Act. They voted to pass the NDAA. They’ve allowed the President to wage undeclared wars in Iraq, Afghanistan, Libya, and now Iran. They voted for a $663 billion Defense bill that includes tens of billions the Secretary of Defense doesn’t even want. They will vote to raise the debt ceiling in the next two months. The last thing this country needs is more compromise. We can’t afford any more compromise. The chart above proves what can happen when gridlock ensues, spending restrictions are enforced, and confrontation displaces compromise. After the 1994 Republican takeover of Congress, gridlock ensued for the next six years. PAYGO restrictions in the Omnibus Budget Reconciliation Act of 1990 didn’t allow unfettered spending increases. The result was Federal spending falling from 22% of GDP to 18% of GDP and a budget surplus. The Pay-Go restrictions expired in 2002 and Democrats and Republicans have compromised to the tune of a $10.2 trillion increase in the national debt in ten years. The hypocrisy of pandering deceitful politicians is boundless and shows utter contempt for the intelligence of the American populace.

“Raising the debt ceiling does not authorize more spending. It simply allows the country to pay for spending that Congress has already committed to. If congressional Republicans refuse to pay America’s bills on time, Social Security checks, and veterans benefits will be delayed. We might not be able to pay our troops, or honor our contracts with small business owners. Food inspectors, air traffic controllers, specialist who track down loose nuclear materials wouldn’t get their paychecks. Investors around the world will ask if the United States of America is in fact a safe bet. Markets could go haywire, interest rates would spike for anybody who borrows money – Every homeowner with a mortgage, every student with a college loan, every small business owner who wants to grow and hire. We are not a deadbeat nation.

It would be a self-inflicted wound on the economy. It would slow down our growth, might tip us into recession. And ironically it would probably increase our deficit. So to even entertain the idea of this happening, of the United States of America not paying its bills, is irresponsible. It’s absurd. Republicans in Congress have two choices here. They can act responsibly, and pay America’s bills, or they can act irresponsibly and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy.” – President Barack Obama – January 14, 2013

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. The Senate continues to reject a return to the common sense Pay-go rules that used to apply. Previously, Pay-go rules applied both to increases in mandatory spending and to tax cuts.

The Senate had to abide by the common sense budgeting principle of balancing expenses and revenues. But we must remember that the more we depend on foreign nations to lend us money, the more our economic security is tied to the whims of foreign leaders whose interests might not be aligned with ours. Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘‘the buck stops here.’’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.” – Senator Barack Obama – March 16, 2006

I could have shown quotes from George W. Bush during the 2000 Presidential campaign talking about a non-interventionist foreign policy and no need for the U.S. to get involved in nation building and then proceeding to pre-emptively attack sovereign countries while wasting trillions and impoverishing unborn generations trying to create “democracy” in the Middle East at the point of a gun as a cover to protect “our” oil. The point is that we are being given the illusion of choice. Everyone knows the debt ceiling will be raised after another episode of Washington DC Kabuki Theater, presented by the corporate mainstream media in breathtaking detail, because the politicians are beholden to their owners and those owners want more of our money. That is why spending will never be willingly cut by the spineless puppet congressmen, as their strings are pulled by the corporate puppet masters and they dance to the tune of the banking oligarchs that own this country.

After witnessing the fighting of undeclared never ending wars, passage of freedom destroying legislation like the Patriot Act & NDAA, approval of pork barrel spending to the tune of hundreds of billions, rule by Executive Order, using ZIRP to extract hundreds of billions from senior citizen savers and give it to criminal Wall Street banks, forcing the American people at gunpoint to replenish the Wall Street banks with $700 billion after they had committed the greatest financial fraud in history, and a continuing trampling of the U.S. Constitution, the American people continue to remain willfully ignorant of the truth. The American Dream is dead. We’ve allowed a rich, privileged, elite few to achieve hegemony over our economic and political system with their control of the media and manipulation of our financial markets. They will collapse the country because they will never be satisfied with the amount of wealth and power they’ve accumulated. Their voracious greed will be their downfall. The sooner we can channel the anger of George Carlin, the sooner we can put an end to this corporate fascist reign of terror.

“Politicians are put there to give you that idea that you have freedom of choice. You don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land, they own and control the corporations, and they’ve long since bought and paid for the Senate, the Congress, the State Houses, and the City Halls. They’ve got the judges in their back pockets. And they own all the big media companies so they control just about all the news and information you get to hear. They’ve got you by the balls.

They spend billions of dollars every year lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else. But I’ll tell you what they don’t want—they don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interest. You know something, they don’t want people that are smart enough to sit around their kitchen table and figure out how badly they’re getting fucked by a system that threw them overboard 30 fucking years ago.

It’s a big club and you ain’t in it! You and I are not in the Big Club. By the way, it’s the same big club they use to beat you in the head with all day long when they tell you what to believe. All day long beating you over the head with their media telling you what to believe, what to think and what to buy. The table is tilted folks, the game is rigged. And nobody seems to notice, nobody seems to care. That’s what the owners count on, the fact that Americans are and will probably remain willfully ignorant of the big red, white, and blue dick that’s being jammed up their assholes every day. Because the owners of this country know the truth, it’s called the American Dream, because you have to be asleep to believe it.” – George Carlin

I never did get around to making my 2013 predictions. I’ll give it a stab in my next article: Apparitions in the Fog.

WILL A PROPHET ASSUME COMMAND?

“The next Fourth Turning is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation and empire. The very survival of the nation will feel at stake. Sometime before the year 2025, America will pass through a great gate in history, commensurate with the American Revolution, Civil War, and twin emergencies of the Great Depression and World War II.” – Strauss & Howe – The Fourth Turning

Strauss & Howe wrote these words in 1997. They had predicted the arrival of another Crisis in this time frame in their previous book Generations, written in 1990. This wasn’t guesswork on their part. They understood the dynamics of how generations interact and how the mood of the country shifts every twenty or so years based upon the generational alignment that occurs as predictably as the turning of the seasons. The last generation that lived through the entire previous Crisis from 1929 through 1946 has virtually died off. This always signals the onset of the next Fourth Turning. The housing bubble and its ultimate implosion created the spark for the current Crisis that began in September 2008, with the near meltdown of the worldwide financial system. Just as the stock market crash of 1929, the election of Lincoln in 1860, and the Boston Tea Party in 1773 catalyzed a dramatic mood change in the country, the Wall Street created financial collapse in 2008 has ushered in a twenty year period of agony, suffering, war and ultimately the annihilation of the existing social order.

We have experienced the American High (Spring) from 1946 until 1964, witnessing America’s ascendancy as a global superpower. We survived the turbulent Consciousness Revolution Awakening (Summer) from 1964 until 1984, as Vietnam era protests morphed into yuppie era greed. The Long Boom/Culture Wars Unraveling (Fall) lasted from Reagan’s Morning in America in 1984 until the 2008 Wall Street/Federal Reserve spawned crash. The pessimism built to a crescendo as worry about rising violence and incivility, widening wealth inequality, and the splitting of the national consensus into extremes on the left and right, led the country into a winter of discontent. The Global Financial Crisis (Winter) has arrived in full fury and is likely to last until the late 2020’s. It will be an era of upheaval, financial turbulence, economic collapse, war, and the complete redefinition of society, as the existing corrupt status quo is swept away in the fury of powerful hurricane winds of change. History is cyclical and we’ve entered the most dangerous season, when the choices we make as a nation will have profound long lasting implications to the lives of future unborn generations.

The linear thinkers and so called progressives who believe that history charges relentlessly forward and human ingenuity overcomes all obstacles as the world becomes progressively richer, advanced, and humane ignore the lessons of history that have been re-written every 80 to 100 years for centuries. Generational theory is so simple that even an Ivy League intellectual economist, corrupt congressman, or CNBC anchor bimbo could grasp the basic concept. The four turnings in the ongoing cycle of history match a long human life. There is a reason we forget the lessons of the past. Those who remember the lessons die off after 80 years. The linear thinking status quo keep predicting an improving economy based upon their beliefs that the next fifteen years will proceed in a similar fashion to the last fifteen years. They refuse to acknowledge we’ve entered a new era that cannot be reversed to a previous point in time. Once you’ve experienced the harsh bitter winds of the Winter, you have to deal with months of depressing darkness, harsh conditions, and stormy weather before experiencing the return of the warm breezes of Spring. The tranquil days of autumn are long gone. This dynamic can be clearly visualized by comparing our economic situation in 2007, prior to entering this Fourth Turning, to our economic situation today:

End of Unraveling in 2007 versus fourth year of Crisis in 2012

  • In 2007, the unemployment rate was 4.6%; 146 million people, or 63% of the working age population, were employed; and 78 million Americans were not in the labor force. Today, after three years of “recovery”, the unemployment rate is 7.9%; 143 million people, or 58.8% of the working age population are employed; and 88 million Americans are not in the labor force.
  • Real median household income was $55,039 in 2007. It has fallen by 8.2% to $50,502 today.
  • BLS reported inflation has risen by 12% since 2007. True inflation has risen at twice that rate.
  • Median net worth in 2007 was $126,400. By 2010 it had fallen to $77,300, a 39% drop in three years. As of today, it may be a few thousand dollars higher as stock prices have risen and home prices have stopped falling.
  • In 2007 there were 5.7 million existing homes sold at a median price of $218,900. Today there are 4.3 million existing homes being sold at a median price of $183,900. Over 1 million of these home sales are foreclosures or short sales, as 30% of all the homes with a mortgage in the country owe more than their house is worth.
  • Federal government spending in 2007 was $2.73 trillion. Federal government spending today is $3.8 trillion, a 39% increase in five years. GDP in 2007 was $14.2 trillion. Today GDP is $15.8 trillion, an 11% increase in five years. Approximately 25% of the GDP increase is due to increased government spending.
  • Government entitlement transfers totaled $1.7 trillion in 2007. Today they total $2.4 trillion, a 41% increase in five years. Interest income paid to senior citizens and savers totaled $1.25 trillion in 2007. Today interest income totals $985 billion, a 21% decrease in five years. Wall Street bankers needed the money to pay themselves bonuses, so Ben Bernanke obliged.
  • The annual deficit in 2007 totaled $161 billion. Today, the annual deficit is $1.1 trillion. We add $3 billion per day to the national debt as a gift to unborn generations.
  • The national debt in 2007 was $9 trillion. Today the national debt is $16.3 trillion, an 81% increase in five years. The national debt will reach $20 trillion during the next presidential term. Normalization of interest rates to 2007 levels would result in annual interest expense of $1 trillion, or 40% of current government revenues.

There is nothing normal about our current economic situation. The unfunded liabilities at the Federal, State and local levels of government accumulate to over $200 trillion. Do the facts detailed above lead you to believe we can return to pre-2007 normal in the near future, or ever? Not only has the economic situation of the country deteriorated enormously, the very culprits who created the disaster are more powerful than they were before the global catastrophe caused by their criminal risk taking. The largest Wall Street banks control 74% of all the deposits in the country, up from 66% in 2007, and double the levels from the mid-1990’s. These bastions of capitalism wield all of the power in this country, dictating who wins elections, who writes the laws, and who benefits from the distribution of wealth. Only in a corrupt, crony-capitalist, citadel of kleptocracy could the perpetrators of the greatest theft of national wealth in the history of mankind be rewarded with taxpayer financed bailouts, the ability to borrow an unlimited amount of fiat currency at 0% from a Central Bank they control, write the new banking regulations and be applauded by their corporate mainstream media for becoming even Too Bigger to Fail. This Fourth Turning will ultimately come down to a clash between the people and the Wall Street filth.

 

Those in power today are using their ample wealth and control over the legal, economic and political systems to pretend that an epic crisis does not beckon at our doorstep. Propaganda and media spin cannot avert the brutally hard choices that must be made over the next fifteen years. The existing system is unsustainable. It can either be changed by choice or after a complete collapse. We haven’t reached the point of regeneracy yet when civic purpose begins to strengthen. The outcome of this presidential election will determine the next phase of this Crisis. Strauss & Howe described the normal course of a crisis in 1997:

“A CRISIS arises in response to sudden threats that previously would have been ignored or deferred, but which are now perceived as dire. Great worldly perils boil off the clutter and complexity of life, leaving behind one simple imperative: The society must prevail. This requires a solid public consensus, aggressive institutions, and personal sacrifice. People support new efforts to wield public authority, whose perceived successes soon justify more of the same. Government governs, community obstacles are removed, and laws and customs that resisted change for decades are swiftly shunted aside. A grim preoccupation with civic peril causes spiritual curiosity to decline. Public order tightens, private risk-taking abates, and crime and substance abuse decline. Families strengthen, gender distinctions widen, and child-rearing reaches a smothering degree of protection and structure. The young focus their energy on worldly achievements, leaving values in the hands of the old. Wars are fought with fury and for maximum result.” – The Fourth Turning – Strauss & Howe

Clearly this country has not reached a common consensus and is split 50%/50% on most important issues. Debates about the role of government are waged with vitriolic passion, but the reality is that, as in past Fourth Turnings, the government has already assumed a greater level of power and control over our lives. The majority believe that government can protect them, provide for them, and pay their way. This is a delusion which will be revealed as fraudulent and mathematically impossible. The incompetent government preparation prior to Superstorm Sandy and the dysfunctional, bureaucratic and painfully slow response afterward are opening the eyes of many people. The decisions which are yet to be made are what kind of society shall we be and who will be required to sacrifice to achieve a positive outcome at the end of this Crisis. Turnings are driven by a mood change in the country and the constellation of generations at that point in time. The generations are now aligned as they always are during a Crisis:

  • Boomers entering elderhood
  • Gen-Xers entering midlife
  • Millennials entering young adulthood
  • Homelanders entering childhood

History does not repeat but it does rhyme, because of the cyclical nature of human experience. The specific events that drive this Crisis are unknowable, but the generational response to these events can be predicted with uncanny accuracy. Each generation will play its assigned role during this Crisis. The current generational configuration will propel events and create a feedback loop that will change the course of human history on a scale consistent with the Depression/World War II, the Civil War and the American Revolution.

“What will propel these events? As the saeculum turns, each of today’s generations will enter a new phase of life, producing a Crisis constellation of Boomer elders, midlife 13ers, young adult Millennials, and children from the new Silent Generation. As each archetype asserts its new social role, American society will reach its peak of potency. The natural order givers will be elder Prophets, the natural order takers young Heroes. The no-nonsense bosses will be midlife Nomads, the sensitive souls the child Artists. No archetypal constellation can match the gravitational of this one – nor its power to congeal the natural dynamic of human history into new civic purposes. And none can match its potential power to condense countless arguments, anxieties, cynicisms, and pessimisms into one apocalyptic storm.” – The Fourth Turning – Strauss & Howe

The mood of the country continues to blacken. A simmering anger boils beneath the surface of an everyday façade of normalcy. The middle class majority is being squeezed in a vice, with the rich powerful plutocrats on Wall Street and in Washington DC stealing their hard earned net worth through financial scams, the gutting of our industrial base and a tax system designed to benefit those who write the laws on one side and the parasitic willfully ignorant underclass that is sustained only through the extraction of taxes from the working middle class on the other side. Our society has become a hunger games tournament, with the few benefitting while the many scramble to survive. The stench of class warfare is in the air. The generational resentment and rage is palatable as the Millenial generation has taken on a trillion dollars of student loan debt at the behest of the Federal government, Wall Street and older generations, only to graduate into a jobless economy. The generational contract has been broken, as the older generations will not or cannot leave the workforce due to their own financial missteps. Younger generations are being denied entry level positions, even as the older generations expect them to fund their retirements and healthcare. This presidential election will only exacerbate the anger, disappointment, bitterness and fury among the populace, no matter who wins.

Prophets & Nomads

Can generational theory predict who will win the presidential election? Probably not, but based upon historical precedent, during times of Crisis the country usually turns to a Prophet generation leader who provides a new vision and summons the moral authority to lead. This leader may not have the right vision or have the backing of the entire population, but he is not afraid to take bold action. Franklin Delano Roosevelt was despised by many, but he boldly led the country during the last Crisis. Abraham Lincoln won the 1860 election with only 39.8% of the popular vote, but he unflinchingly did whatever he thought was necessary to achieve victory and preserve the union. Prophet leaders like Samuel Adams and Benjamin Franklin offered the sense of moral urgency required to sustain the American Revolution. Strauss & Howe give a historical perspective on Prophet generations.

“Prophet generations are born after a great war or other crisis, during a time of rejuvenated community life and consensus around a new societal order. Prophets grow up as the increasingly indulged children of this post-crisis era, come of age as narcissistic young crusaders of a spiritual awakening, cultivate principle as moralistic mid-lifers, and emerge as wise elders guiding another historical crisis. By virtue of this location in history, such generations tend to be remembered for their coming-of-age passion and their principled elder stewardship. Their principle endowments are often in the domain of vision, values, and religion. Their best-known historical leaders include John Winthrop, William Berkeley, Samuel Adams, Benjamin Franklin, James Polk, Abraham Lincoln, Herbert Hoover, and Franklin Roosevelt. These were principled moralists, summoners of human sacrifice, and wagers of righteous wars. Early in life, few saw combat in uniform; later in life, most came to be revered more for their inspiring words than for their grand deeds.” – The Fourth Turning – Strauss & Howe

 

 

Barack Obama was born in 1961. According to the Strauss & Howe generational distinctions, this makes him an early Gen-Xer. His life story matches that of the Nomad archetype. His chaotic early life, confused upbringing by an array of elders, frenetic alienated early adulthood as a community organizer, and his rise to power through his public speaking talent and pragmatic ability to achieve his agenda is a blueprint for a Nomad. Mitt Romney was born in 1947 and grew up during the American High. His childhood was idyllic and privileged. His moral Mormon youth as a missionary eventually devolved into his yuppie “greed is good” career at Bain Capital acquiring companies, making them more efficient (firing Americans & hiring Asians), and spinning them off, while siphoning millions in fees. He has tried to convince Americans to vote for him, based upon his business acumen and moral lifestyle, as the cure for what ails America. With the continued downward spiral of societal mood, record low trust in Congress and 60% of Americans thinking the country is on the wrong track, the odds should favor the Prophet candidate. The 40% of Americans who think the country is on the right track are a tribute to our awful government run public education system or are smoking crack.

The Barack Obama presidency has many similarities to the one-term presidencies of Herbert Hoover and James Buchanan. Both men were overwhelmed by rapidly deteriorating events, an inability to understand the true nature of the Crisis, and failure to inspire the American people to rally behind a common cause. Both men drifted off into obscurity and are overwhelmingly acknowledged as two of the least successful presidents. The men who succeeded them are ranked by historians at the top of the list, even though they are both despised by more libertarian minded citizens as proponents of big government solutions and control. Libertarians will not be happy with developments over the next fifteen years. This Crisis is an era in which America’s corrupt social order will be torn down and reconstructed from the ground as a reaction to the unsustainable financial pyramid scheme which is an existential threat to the nation’s very survival. Civic authority will revive, cultural manifestation will find a community resolution, and citizens will begin to associate themselves as adherents of a larger cluster.   

Barack Obama has fallen short as a Crisis leader, just as Buchanan and Hoover fell short. Buchanan also tried to maintain the status quo and not address the key issues of the day – secession and slavery. His handling of the financial Panic of 1857 led to annual deficits that exceeded 13% of GDP during his entire presidency. His legacy is one of failure and hesitation. Hoover was a technocrat with an engineering background who failed to recognize the extent of the suffering by the American people during the early stages of the Great Depression. It is a false storyline that he did not attempt to use the power of the Federal government to address the economic crisis. Federal spending increased by over 20% during his term and he was running a deficit when Roosevelt assumed power. Hoover was an activist president who began the public works programs that FDR expanded and dramatically increased taxes on the rich and corporations in 1932.

Obama inherited a plunging economic situation and proceeded to make choices that will make this Crisis far worse than it needed to be. He has failed miserably in addressing the core elements of this Crisis that were foreseen by Strauss and Howe over a decade before the initial spark in 2008. Debt, civic decay, rising wealth inequality due to the rise of our plutocracy, and global disorder are the underlying basis for this Crisis. Obama’s response was to run record deficits driving the national debt skyward, failing to address the unfunded entitlement liabilities that loom on the horizon, bowing down before the Wall Street mobsters and paying their ransom demands, layering on more complexity and unfunded healthcare liabilities to an already teetering government system, and extending our policing the world foreign policy at a cost of $1 trillion per year. A Crisis requires a bold leader who makes tough choices and leads. Obama has proven to not be that leader. Based on historical precedent and the rapidly deteriorating mood of the country, it would be logical for the country to select Romney, a Prophet generation leader.

No Escape   

“Don’t think you can escape the Fourth Turning the way you might today distance yourself from news, national politics, or even taxes you don’t feel like paying. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted. The Fourth Turning necessitates the death and rebirth of the social order. It is the ultimate rite of passage for an entire people, requiring a luminal state of sheer chaos whose nature and duration no one can predict in advance.” – Strauss & Howe – The Fourth Turning

No matter who wins the election, there will be no turning back. It isn’t Morning in America anymore. It is more like Midnight in America on a bitterly cold dark February night as the gale force winds begin to gust, foretelling the approach of an epic winter blizzard. There are no easy solutions. The opportunity to alleviate the impact of this Crisis was during the late 1990’s and early 2000’s, and we made all the wrong choices. Now we will pay the price. An era of depression and violence will be ushered in by an economic calamity that will make 2008 look like a minor blip. The next president will still be presiding over a country divided 50%/50%, with little or no common ground on most of the key issues that must be confronted. But, as we’ve seen in previous Crisis periods, bold leadership and history making decisions did not require consensus or even majority support. Only 10% of the colonial population drove the American Revolution. Lincoln was despised by half the country and not exactly loved by everyone in the North. FDR’s popular support progressively declined during his four terms in office. It is the Fourth Turning events, not the nation, which elevates the person to the apex of power. The regeneracy of the nation will occur during the next presidential term.

“Soon after the catalyst, a national election will produce a sweeping political realignment, as one faction or coalition capitalizes on a new public demand for decisive action. Republicans, Democrats, or perhaps a new party will decisively win the long partisan tug of war. This new regime will enthrone itself for the duration of the Crisis. Regardless of its ideology, that new leadership will assert public authority and demand private sacrifice. Regardless of its ideology, that new leadership will assert public authority and demand private sacrifice. Where leaders had once been inclined to alleviate societal pressures, they will now aggravate them to command the nation’s attention. The regeneracy will be solidly under way.” – Strauss & Howe – The Fourth Turning

The Millenial generation is coming of age faced with the burdens of $1 trillion of student loan debt, a stagnant job market clogged by the Boomer generation that can’t afford to retire because they never got around to saving, ever increasing taxes to fund the promises made to their elders by politicians, and an unfunded entitlement liability of $100 trillion for healthcare and pension benefits they will never see. The mathematical impossibility of sustaining our economic system is absolute. It will require courage, sacrifice, fortitude and a dramatic shift of our egocentric selfish culture to a culture of sustainability and caring about future generations. We’ve made many bad choices over the last few decades. Choices matter. These are the times that will try men’s souls. The choices we make as a nation over the next few years will determine whether this Fourth Turning ends in a renewal of our founding principles or tragedy. Glory or ruin – the choice is ours.

“Thus might the next Fourth Turning end in apocalypse – or glory. The nation could be ruined, its democracy destroyed, and millions of people scattered or killed. Or America could enter a new golden age, triumphantly applying shared values to improve the human condition. The rhythms of history do not reveal the outcome of the coming Crisis; all they suggest is the timing and dimension.” – Strauss & Howe – The Fourth Turning

The next stage of this Crisis is likely to be ignited by a downward spiral of societal trust caused by the next financial implosion, which is certain to occur. A world built upon debt, false promises, interconnected webs of deceitful derivatives, fiat currency backed only by the promises of lying politicians and captured central bankers, and a diminishing supply of easy to access natural resources, is hopelessly dependent upon the willful ignorance of the masses. As long as people want to be lied to rather than facing the truth, those in power can maintain the status quo. Once the jarring realization of reality overwhelms the propaganda and lies of the oligarchs, the battle for middle earth will begin. What will trigger the next phase of this Crisis? No one knows for sure, but based on the fault lines already evident, these are a possibility:

  • The inevitable breakup of the European Union with the consequences of massive bank defaults in Europe triggering worldwide bank defaults as the interconnected trillions of derivatives are lit like a string of firecrackers.
  • A sudden Greece like surge in interest rates on Japanese bonds results in a collapse of their debt ridden economic system, with reverberations throughout the world.
  • The Middle East tinderbox explodes as Israel attacks Iran and the law of unintended consequences takes hold. Alliances and treaties would draw Turkey into war with Syria and Iran. Russia and China could side against the U.S. Iran and their vassals would unleash terrorist attacks and disruption of Middle Eastern oil would drive prices over $200 per barrel, crushing the American economy.
  • A showdown on the debt ceiling and/or fiscal cliff results in a stock market crash, derailing the pitiful fledgling recovery created by Ben Bernanke’s QE to infinity measures.
  • A tipping point is reached with regards to the amount of debt that can be accumulated by our Federal, State and Local governments. A cascade of defaults could lead to a loss of faith in the U.S. dollar and a surge in interest rates. The defaults and increased interest on the national debt could lead to mass depression or in a worst case scenario – hyperinflation.
  • A large terrorist attack in one or more American cities would cause chaos, panic and fear, leading to more government control over our daily lives. This could trigger a counter response by those fed up with an overbearing government presence.
  • A catastrophic natural disaster or series of natural disasters would reveal the fragile nature of our just in time economic system. A breakdown of our logistical and infrastructure systems would lead to chaos and mass hysteria as the citizens who believed their government leaders would keep them safe, secure, warm, and fed realized it was all a sham. Their leaders were in it for the power and riches, not looking out for the best interests of the common folk.

No one knows for sure what will trigger the next leg down during this Crisis, but I can guarantee you that things will not be getting better in the near future. Don’t believe the mainstream media or politicians who tell us life in the good old U.S. of A will be back to normal in the near future. And those who predict a long slow gentle decline of the American Empire that can be managed by the oligarchs are badly mistaken. That is not how things roll in a Fourth Turning. Transformative change, chaos, desperate measures, and total war will propel our nation through this cataclysmic saeculum and a positive outcome is not assured. An armed conflict – class war, sectional war, religious war, or war for oil – will be waged at some point and fought to the finish. Fourth Turning wars do not end inconclusively. Each Fourth Turning war has resulted in greater destruction and more horrendous numbers of human casualties. The trials and tribulations that await this nation over the next fifteen years will challenge every living generation to play their roles and bravely confront the tasks needed to reach a new High, just as their ancestors did.

“History offers no guarantees. Obviously, things could go horribly wrong – the possibilities ranging from a nuclear exchange to incurable plagues, from terrorist anarchy to high-tech dictatorship. We should not assume that Providence will always exempt our nation from the irreversible tragedies that have overtaken so many others: not just temporary hardship, but debasement and total ruin. Losing in the next Fourth Turning could mean something incomparably worse. It could mean a lasting defeat from which our national innocence – perhaps even our nation – might never recover.” – Strauss & Howe – The Fourth Turning

For those who doubt generational theory and believe history is a linear path of human progress, I would point to the last week of chaos, disarray, government dysfunction, and misery of those who didn’t prepare for Superstorm Sandy, as a prelude to the worst of this Crisis. The lack of preparation by government officials and citizens, death, destruction, panic, anger, helplessness and realization of how fragile our system has become is a perfect analogy to our preparation for this Fourth Turning. The brittleness of our infrastructure and lack of redundancy in our systems has left us vulnerable to any large storm. Building mansions yards from a dangerous unpredictable sea is akin to allowing Wall Street bankers to create interconnected financial derivatives which will ultimately result in a great worldwide flood that will obliterate billions of wealth. Going decades without upgrading our power grid, transportation systems, or storm protection is akin to allowing our unfunded entitlement liabilities to accumulate to such an extreme level that it will be impossible to honor and the coming storm will swamp those depending on those promises. The lack of foresight by citizens in having food, water, and backup sources of power and heat in case of an emergency is akin to the millions of people that have lived the good life in debt up to their eyeballs while never saving for a rainy day or their retirement. When the rainy day arrives they panic and demand to be saved by an inept bureaucratic government.

Winter has arrived. The gathering storm is about to strike. Are you prepared?

“Reflect on what happens when a terrible winter blizzard strikes. You hear the weather warning but probably fail to act on it. The sky darkens. Then the storm hits with full fury, and the air is a howling whiteness. One by one, your links to the machine age break down. Electricity flickers out, cutting off the TV. Batteries fade, cutting off the radio. Phones go dead. Roads become impossible, and cars get stuck. Food supplies dwindle. Day to day vestiges of modern civilization – bank machines, mutual funds, mass retailers, computers, satellites, airplanes, governments – all recede into irrelevance. Picture yourself and your loved ones in the midst of a howling blizzard that lasts several years. Think about what you would need, who could help you, and why your fate might matter to anybody other than yourself. That is how to plan for a saecular winter. Don’t think you can escape the Fourth Turning. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted.” – Strauss & Howe – The Fourth Turning

survival seed vault

DEFICIT ONLY GOING UP BY $2.6 MILLION PER MINUTE

The deficit only went up by $125 billion in May. No wonder the stock market is soaring. Everyone knows, the bigger the deficit, the better the economy gets. Borrowing always leads to prosperity and growth. Just ask the 3 million people who’ve been kicked out of their houses in the last few years. The deficit through 8 months according to the CBO is $845 billion. We’re right on track for another $1.3 trillion deficit. That Obama is sure serious about deficits. Of course, if you go to the Treasury Dept site and see how much the National debt has risen over the first 8 months it shows a $902 billion deficit. That’s only a $57 billion discrepancy. Close enough for government work.

http://www.treasurydirect.gov/NP/NPGateway

I know math is hard for 98% of willfully ignorant Americans, but I’ll try to put this $902 billion deficit in perspective so that even a CNBC Bimbo might understand:

  • We are spending $3.8 billion more per day than we are bringing in.
  • We are spending $157 million more per hour than we are bringing in.
  • We are spending $2.6 million more per minute than we are bringing in.
  • We are spending $43,500 more per second than we are bringing in.

To make it understandable to my readers in West Philly, this means that the government is buying a Cadillac Escalade on credit, every second of every day, forever.

But don’t worry. The national debt as a percentage of GDP is only 102%. Rogoff & Reinhart said we only have to start worrying when it reaches 90%. See. Nothing to worry about. The stock market is up 100 points and Bernanke has promised to save the world. Back to America’s Got Talent.

U.S. posts deficit of $125 billion in May

By Jeffry Bartash

WASHINGTON (Market Watch) – The U.S. posted a deficit of $125 billion in May to bring the total federal shortfall to $845 billion through the first eight months of fiscal 2012, according to preliminary data from the Congressional Budget Office. That’s about $80 billion less than the deficit reported at the same time a year earlier. Spending rose 1% to $306 billion last month, adjusted for changes in the timing of certain payments and the effects of the TARP emergency-relief program in 2011, the CBO said. The government’s tax intake rose 3% to $180 billion in May. The federal fiscal year runs from October to September.

 

WHO ARE THE EXTREMISTS?

“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.” – Ron Paul

 

The Debt Ceiling Reality Show approaches its grand finale in the next week. The world breathlessly awaits the shocking conclusion. The debt ceiling will be raised. The world will be saved. Wall Street will rejoice. Americans can focus on the important stuff again, like Casey Anthony’s upcoming book, who will win this week’s Toddlers and Tiaras pageant, and the latest app created for their iPads. Based on my observations over the last few weeks, I’m absolutely sure that 90% of the politicians in Washington DC would lose on Are You Smarter than a 5th Grader?

Still, the mainstream media and the performing puppet politicians need to create a fearful frenzy among the masses to insure maximum public relations exposure for their lies, misinformation, and mistruths. Wall Street will exert their control over the debate by threatening to crash the market if they don’t get what they want (aka TARP). I generally ignore the talking heads on Fox, MSNBC, CNN, and CNBC, as I could learn more from watching Cash Cab than listening to ideologues spouting their talking points. But, last night I happened to see an hour or so of Fox, CNN and MSNBC. I saw the full spectrum of right wing and left wing rhetoric and fear mongering. These stations should be ashamed to call themselves news organizations. They do not even purport to report the news. They spew talking points generated by the left and right, depending on the station’s bias. Truth is unavailable on the mainstream media.

What the public doesn’t see is the rooms filled with PR maggots in the bowels of Congress generating talking points and testing them in over night polls of the public. Their sole purpose is to generate a message that will convince the public the fiscal debacle is the fault of the other party. The goal is to gain an advantage in the next elections. The long term future of our country is unimportant to the soulless autobots that get paid to misinform and mislead the masses. Leaving unborn generations with an un-payable debt so we can selfishly cling to benefits promised to us by corrupt politicians who only made the promises so they could be elected, is the ultimate in egocentric myopia.

The deceptive talking points created in smoky backrooms in Washington DC and vetted by Madison Ave maggots are easy to detect. Each side pounds home the exact same phrases on every “news” station:

Republican Talking Points

  • We refuse to increase taxes on all Americans to fix a spending problem.
  • Spending has been out of control since Obama took control of the White House (reference $800 billion stimulus package, home buyer tax credit, and Obamacare).
  • Say that Obama doesn’t have a plan and mention his ten year budget.
  • Tell the American people Republicans are fiscally responsible and the real party of change.
  • The people told them to change Washington with the 2010 election.

Democratic Talking Points

  • The Tea Party EXTREMISTS have hijacked the Republican Party and want to destroy the country by forcing the country to default on its debt.
  • The Bush tax cuts and the Bush wars are to blame for the entire increase in debt and deficits.
  • The Republicans want to protect the richest Americans while cutting Medicare and Social Security benefits for the poor.
  • The Democratic Party will never cut Medicare or Social Security.
  • The Democrats are willing to compromise and act like adults, while the evil Republicans resist all offers to strike a deal.

Depending on your ideology, you will find yourself agreeing with the talking points that strike your fancy. Don’t worry; they’ve all been tested on sample groups of ignorant Americans in order to strike the right nerve. As I listened to that bald headed prick – James Carville – screeching on CNN last night about Bush’s wars and tax cuts causing our economic peril today, I wanted to reach into the TV screen and throttle the weasel faced demagogue. The National Debt on the day Bush took office was $5.7 trillion. On the day he left office the National Debt was $10.6 trillion, a $4.9 trillion increase in eight years. Today, the National Debt stands at $14.4 trillion, a $3.8 trillion increase in two and a half years. That sounds bipartisan to me.

Bush certainly did get the U.S. into two wars of choice and his tax cuts, tax rebate checks and expansion of Medicare have contributed trillions to our deficits. He deserves scorn and contempt. But, I do recall that Democrats supported the invasion of Afghanistan and Iraq. I do recall that Democrats voted for the tax cuts. I do recall that Democrats were gaga about expansion of the Medicare program. A funny thing didn’t happen when Obama was elected. Defense spending did not go down. He increased spending on our war machine. His war budgets put Bush’s to shame. He doubled the war effort in Afghanistan. He upped the ante from two wars to three wars in Libya. The difference between most Bush and Obama policies has been indecipherable.   

Carville’s shrill diatribe against the Tea Party freshman in Congress was the most humorous piece of misinformation of his entire rant. He inadvertently struck upon the most revealing point of this entire debt ceiling farce. He said:

“These Tea Party congressmen act as if they don’t care if they are re-elected in 2012.”

And there you have it. These people are not doing what is in their own best interest to get re-elected. They have shocked the vested interests in Washington by sticking to their principles and not playing the games that left the country bankrupt. This is an outrage to non-principled shills like Carville and Rove. This behavior is declared EXTREMIST by the liberal pundits and self interested Washington hacks. People acting in the long- term best interests of the country are seen as EXTREME by neo-cons like Charles Krauthammer and moderate RINOs like John “Crash” McCain. The entrenched Washington ruling class is uncomfortable with any change. The establishment would prefer to lie to the American public again and let future generations worry about the $100 trillion unfunded obligations they’ve created.

Only in America would people trying to balance the national budget be branded extremists. Is the average American who spends less than they make an extremist? In the eyes of Washington politicians and mainstream media talking heads, you would be an extremist. Let’s peruse some facts and judge who the extremists are:

  • Federal government spending has risen from $1.9 trillion in 2001 to $3.8 trillion in 2011, a 100% increase. Federal government revenues grew from $2.0 trillion in 2001 to $2.5 trillion in 2008, before collapsing to $2.2 trillion today. GDP over this same time frame has grown 47%.
  • The annual Federal budget deficit in 2007 was $160 billion. Annual deficits between 2002 and 2008 ranged between 1% and 4% of GDP. Since 2009, annual budget deficits have exceeded $1.1 trillion and will continue to exceed $1 trillion as far as the eye can see. Annual deficits now exceed 10% of GDP.
  • The Federal government spends in excess of $1.2 trillion per year on the cost of present and past wars, or 55% of all tax revenues.
  • With a gun to their head from Wall Street banks, Congress handed over $700 billion of taxpayer money to the criminal banks that had just crashed the worldwide economic system with their casino gambling. These banks have been getting free money from the Federal Reserve since 2008 and have rewarded themselves with in excess of $70 billion in bonuses since 2008.
  • Obama handed $800 billion of pork to his constituents across the country in order to create 3.5 million jobs. The $800 billion is gone and we’re still waiting for the jobs.
  • The home buyer tax credit scheme cost Americans $22 billion, or $100,000 per additional home sold, and home prices are now 5% lower than they were before this worthless Keynesian scam. And prices continue to fall.
  • The Cash for Clunkers debacle cost Americans $3 billion, or $24,000 per junked car, as a payoff to Government Owned Motors and Obama’s union backers.
  • The taxpayer bailout of Fannie Mae and Freddie Mac has cost Americans $160 billion so far, with at least another $150 billion to go.
  • The Federal Reserve tripled their balance sheet to $2.7 trillion and is now leveraged 55 to 1, twice the leverage of Bear Stearns and Lehman Brothers when they failed. A 2% decline in the value of their assets wipes out their capital.
  • The government and Federal Reserve threatened the FASB into changing the accounting rules so the Too Big To Fail Wall Street banks could fraudulently report the value of the assets on their books, to appear solvent.
  • Obamacare will add 30 million people to the government controlled healthcare system, while adding mountains of new bureaucracy, and trillions of added costs.
  • And last but not least, the country goes $4 billion further into debt every day. Or for further perspective: $166 million per hour; $2.8 million per minute; $46,000 per second.

These are the facts of our current economic situation and the liberal mainstream media and slimy politicians like Chuck “I Love Wall Street” Schumer brand the Tea Party congressmen as EXTREMISTS for demanding an end to this out of control Roman orgy of spending. It would be hilarious if it wasn’t so utterly disgusting and sad. The only serious proposal to reverse our course and steer away from the approaching iceberg was made by Tom Coburn a couple weeks ago. It was scorned by the ideologues on both sides of the aisle, as it slashed military spending, closed corporate and individual tax loopholes, ended subsidies, and really addressed Medicare and Social Security rather than changing the CPI index. It was DOA and so is this country.

The Boehner plan and the Reid plan are absolute jokes. The Boehner plan cuts $900 billion over ten years with, shockingly, a whole 2.5% of the savings in 2012. Why cut today when you can pretend to cut in the future? We are on track to add $10 trillion of debt over the next ten years and Boehner’s plan will only add $9.1 trillion to the national debt. That is cutting in Washington DC speak. Harry Reid’s plan is even funnier. His $2.2 trillion in “cuts” includes $1 trillion for wars that won’t be fought and the $375 billion of interest expense that won’t be expended for the wars that won’t be fought. No smoke and mirrors in that proposal. These revolting excuses for leaders have both proposed new commissions to recommend spending cuts that won’t be implemented. These brilliant ideas never grow tiresome and old.

The chart created by Mike Shedlock after Paul Ryan offered an alternative ten year budget three months ago shows you everything you need to know about who the real extremists in Washington DC are. The Ryan budget included much deeper cuts than anything proposed by Boehner or Reid and would still add $9 trillion to the National Debt by 2021. After examining this chart it is clear the establishment of both parties in Washington DC have no plan to cut anything. The good news is the national debt will never reach $23 trillion because our economic system will implode long before we approach that figure.  

When you see the old time party hacks and the shrill pundits declare that an agreement must be reached on these fake distant theoretical cuts, you know they just want to protect the status quo. These people have gotten rich from keeping the status quo intact. If EXTREMISM is living within your means, spending less than you bring in, addressing unfunded liabilities, and leaving a country where our children have a fair chance to have a decent future, then count me in the extremist camp. The time is approaching when we need to stand up and be counted. What kind of country shall we be? Do you care? 

“The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are being looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care? When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media? Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.” – Ron Paul

PUMP IT UP

Down in the pleasure centre,
hell bent or heaven sent,
listen to the propaganda,
listen to the latest slander.
There’s nothing underhand
that she wouldn’t understand.
Pump it up until you can feel it.
Pump it up when you don’t really need it.

Elvis Costello – Pump It Up

I had been planning an article based on the Green Day song – Static Age – about the propaganda, lies and misinformation that are endlessly directed at the American people by the government, the mainstream corporate media, and the wealthy elite that control the levers of our society. Then Barack Obama presented his 2012 Budget proposal, including his 10 year projection for our country. I know you’ve heard the term Peak Oil, but the term that came to my mind when I saw Obama’s budget was Peak Bullshit. I thought that would be a great article name, but some sites wouldn’t like the foul language. I was in a quandary until the Elvis Costello song Pump It Up came on the radio while I was driving to work. Down in the pleasure center of Washington DC, the propaganda, slander and most blatant lies are spoken without a hint of guilt or even the faintest whiff of shame. The politicians in Washington DC on both sides of the aisle believe the American people are stupid, gullible, apathetic and easily manipulated. They may be right, but there are a few people out there who can cut through their bullshit and find the truth.

Obama, Wall Street, and the corporate mouthpieces in the mainstream media have been pumping up the American people for months with false data, unwarranted optimism, bank profits created out of thin air by accounting fraud, and attempting to create an economic recovery built on a foundation of sand, supported only by lies. The Obama budget is worse than a joke. It is a tragic joke. It amazes me that he can stand in front of the American people and present such a lie. The liberal media then unquestioningly presents the budget as a frugal cost cutting proposal that will reduce deficits and inflict painful cuts upon the poor American people. It would be laughable, if it wasn’t so sad. One look at Obama’s deficit projections for FY11 and FY12, presented one year ago, should be enough to convince you that no one in Washington DC has a clue what they are doing.

Federal (Deficit)
Year Spending Surplus
2011 $3,834 -$1,267
2012 $3,755 -$828

Obama projected a two year deficit of $2.1 trillion. His current projection, just one year later, is $2.75 trillion. He missed it by this much.

The rocket scientists running our country underestimated the deficit by 31% in the space of one year. I suppose that is considered highly accurate for a government drone. Now let’s get some perspective on Obama’s projected FY11 deficit of $1.65 trillion. This is the projected DEFICIT. Do you remember back to the Clinton administration? Did you feel like your Federal government wasn’t spending enough? In 1998 the TOTAL SPENDING of the Federal government was $1.65 trillion. We now run deficits that equal the entire budget of the United States in 1998, without blinking an eye or questioning how we got here. The politicians have scared the populace into thinking that the country will collapse without the Federal Government spending $3.8 trillion of your money, every year.

Static Age

Can you hear the sound of the static noise?
Blasting out in stereo
Cater to the class and the paranoid
Music to my nervous system
Advertising love and religion
Murder on the airwaves
Slogans on the brink of corruption
Vision of blasphemy, war and peace
Screaming at you

I can’t see a thing in the video
I can’t hear a sound on the radio
In stereo in the static age  – Green Day – Static Age

The politicians prefer their actions be bathed in shades of grey. The corporate payoffs, backroom deals, union arm twisting and selling of votes to the highest bidder are how business is done in Washington DC. They believe that if there is enough static noise being generated by the mainstream media, then the American public will be distracted and not notice they have destroyed the country. When analyzing Obama’s budget we need some perspective. Below is a chart showing actual Federal spending and deficits from 1999 through 2010 and projections from 2011 through 2021. My assessment is that the Great American Empire peaked in 1999-2000. The unemployment rate was 4% and 64.4% of the working age population, or 137 million Americans, were employed. Corporate profits were surging, along with the stock market. The Federal government was spending $1.8 trillion and generating budget surpluses of $236 billion. The National Debt of $5.7 trillion was only 57% of GDP.

The decline of the American Empire can be seen in the chart of woe. The unemployment rate today is 9%. Only 58.4% of the working age population is employed. Eleven years after peak empire, the working age population has grown by 26 million people and the number of employed Americans has grown by 2.4 million. At least 64.4% of the population would like to be working. This means that there are 14.4 million people who would work if the jobs were available. The Federal government is spending $3.8 trillion and generating deficits of $1.6 trillion. The National Debt is $14.2 trillion, or 94% of GDP. Except for Wall Street banks and mega-corporations, small business profits are weak and the stock market is at the same levels reached in 1999. These are the truths you won’t hear from politicians or the mainstream media.

Federal   (Deficit)
Year Spending % Change Surplus
1999 $1,702 $125
2000 $1,789 5.1% $236
2001 $1,863 4.1% $128
2002 $2,011 7.9% -$158
2003 $2,160 7.4% -$378
2004 $2,293 6.2% -$413
2005 $2,472 7.8% -$319
2006 $2,655 7.4% -$249
2007 $2,729 2.8% -$161
2008 $2,983 9.3% -$459
2009 $3,518 17.9% -$1,413
2010 $3,456 -1.8% -$1,293
2011F $3,819 10.5% -$1,645
2012B $3,729 -2.4% -$1,101
2013B $3,771 1.1% -$768
2014B $3,977 5.5% -$645
2015B $4,190 5.4% -$607
2016B $4,468 6.6% -$649
2017B $4,669 4.5% -$627
2018B $4,876 4.4% -$619
2019B $5,154 5.7% -$681
2020B $5,422 5.2% -$735
2021B $5,697 5.1% -$774

So now let’s assess the reality of Obama’s ten year budget. If you were to believe the reports in the media, you would think that Obama is cutting deficits and making hard choices. Amazingly, deficits plummet all the way down to “only” $600 billion to $800 billion after 2012. In the chart above, I ignore the revenue side of the equation, because Obama’s assumptions are beyond ridiculous. His assumption of the GDP growing from $15 trillion in 2011 to $24.6 trillion in 2021, a 64% increase, is a fantasy. During the last 10 years, GDP grew by only 51%. So, despite mind numbing debt levels, structurally high unemployment, peak oil, and a rapidly aging population, GDP is going to surge over the next ten years? I certainly believe that. Under the Obama budget, tax revenues will grow from 14.4% of GDP in 2011 to 20% of GDP in 2021. By comparison, the historical average is only 18% of GDP. Some of Obama’s tax revenue assumptions are as follows:

  • Raising the top marginal income tax rate from 35% to 39.6%. This is a $709 billion/10 year tax hike
  • Raising the capital gains and dividends rate from 15% to 20%
  • Raising the estate tax rate from 35% to 45% and lowering the estate tax exemption amount from $5 million ($10 million for couples) to $3.5 million. This is a $98 billion/ten year tax hike
  • Capping the value of itemized deductions at the 28% bracket rate. This will effectively cut tax deductions for mortgage interest, charitable contributions, property taxes, state and local income or sales taxes, out-of-pocket medical expenses, and unreimbursed employee business expenses. A new means-tested phase-out of itemized deductions limits them even more. This is a $321 billion/ten year tax hike
  • Massive new taxes on energy, including LIFO repeal, Superfund, domestic energy manufacturing, and many others totaling $120 billion over ten years
  • Increasing unemployment payroll taxes by $15 billion over ten years
  • Increasing tax penalties, information reporting, and IRS information sharing. This is a ten-year tax hike of $20 billion.

It is an absolute certainty that the Democrats will lose control of the Senate in 2012. Obama will never get any of his tax increases through a Republican controlled Congress. They are DOA. Therefore, his revenue assumptions are overstated by hundreds of billions every year. Even using his optimistic assumptions, the National Debt would reach $18 trillion in 2015. Using real world numbers, the National Debt will exceed $20 trillion in 2015. In what must be a gag, Obama says that interest on the debt will “only” be $500 billion in 2015. Hysterically, this would mean our debt holders will only require a crumbling empire to pay 2.5% on our debt. How about 5% as a minimum and 10% as a more likely rate? This would put interest on the debt between $1 trillion and $2 trillion per year. The collapse of America is a certainty if Obama’s budgeted spending and deficits play out. Somehow, the majority of Americans are overwhelmed with indifference.

Overwhelmed By Indifference

Some of my friends sit around every evening
and they worry about the times ahead
But everybody else is overwhelmed by indifference
and the promise of an early bed
You either shut up or get cut up;
they don’t wanna hear about it. – Elvis Costello – Radio, Radio 

Do you remember when the politicians of both parties were making dire predictions of Great Depressions, economic collapse and 10% unemployment if we didn’t pass their “save an investment banker” rescue package and the $800 billion “jobs creation” stimulus package? They assured the American people that these expenditures were temporary and were only being made to save the country. Before the crisis, Federal spending was $2.7 trillion. The talking heads at the Fed and in the White House assure us they saved the world. GDP is growing and Obama told me we’ve added over 1 million jobs in the last year. Sounds like the emergency is over. The $400 billion per year of emergency spending should now be rolled back, since it was temporary. Therefore, Obama’s budget surely must going from $3.8 trillion back down to a pre-emergency level of $3.0 trillion in 2012. Not quite. You see, government spending never goes down. His proposal shows $3.7 trillion of spending in FY12. Emergencies never end for a politician in Washington DC. Spending equals power and control over our lives. There will always be another emergency that requires more spending.

You are now hearing the spin from the ideologues on both sides of the aisle about their cost consciousness and desire to restrain spending. It’s all a load of bull. Bush and the Republicans added $4.3 trillion to the National Debt during their reign of error. Obama has matched Bush in the space of 2 1/2 years by adding another $4.3 trillion. There is no effort to cut spending. Obama’s budget shows spending rising from $3.7 trillion in FY12 to $5.7 trillion in FY21. The propaganda and misinformation being spewed from these corrupt politicians is mind numbing.

Again, some perspective is needed to realize how out of control our Federal Government has become. According to the BLS, inflation has risen by 33% since 1999. Real GDP has grown by 23%. The population of the U.S. has grown by 10%. The number of employed Americans has risen by 1.8%. The average pay for a Federal drone (aka worker) has risen by 58%, while the average pay for real workers has risen by only 30%. Therefore, the average non-government employee has seen a decrease in their standard of living as inflation has risen faster than wages. As you can calculate yourself, Federal government spending surged by 124% between 1999 and today. Have you noticed a doubling in service level, competence, educational scores, new energy solutions, or safety and security? What did we get for an extra $2.1 trillion of spending?

What we got was exhausting wars of choice, less freedom, less liberties, less safety, more rules, more regulations, more bureaucrats, more corruption, a financial collapse, and a government that has put us on a path to fiscal ruin. We’ve almost tripled spending on Defense. Are we safer? We’ve more than doubled spending on healthcare. Are we healthier? We’ve more than doubled spending on welfare. Are the poor less impoverished? We’ve more than doubled spending on education. Are our children smarter? The Federal government is out of control. When you hear a politician or pundit detailing the horrors of “spending cuts”, please keep in mind they are lying. There will be no cuts until they are forced upon the government by the looming collapse of our economic system.

Year Defense Pensions Health Care Welfare Education
1999 $333 $431 $332 $165 $56
2000 $359 $454 $352 $171 $60
2001 $366 $481 $390 $183 $64
2002 $422 $503 $427 $224 $78
2003 $483 $518 $469 $242 $91
2004 $543 $537 $509 $238 $96
2005 $600 $565 $549 $246 $106
2006 $621 $591 $583 $250 $128
2007 $653 $636 $642 $254 $102
2008 $730 $669 $671 $313 $102
2009 $794 $739 $764 $407 $91
2010 $847 $756 $821 $496 $140
2011F $965 $801 $882 $488 $130
2012B $925 $813 $866 $424 $121
% Increase 177.8% 88.6% 160.8% 157.0% 116.1%

Now the question is what do we do about it? I know my first inclination would be to do what that Iraqi reporter did a few years ago during a Bush press conference in Iraq. I’d love to throw my shoes at Obama and every lying corrupt politician in America, but the momentary feeling of pleasure would be snuffed out in seconds by a hail of bullets from the Department of Homeland Security thugs guarding these traitors to the American republic.

 

 

Below is my CHART OF DOOM. Using real world assumptions, the National Debt will reach $25 trillion by 2019. That level of debt would be 130% of a realistic GDP figure. The interest on this level of debt would likely exceed $2 trillion per year, more than the entire Federal spending budget in 2002. This chart will not come to pass. Our economic system will collapse well before we reach a $25 trillion debt level. This is already baked in the cake. There are not enough politicians willing to tell the truth and not enough citizens that want to hear the truth. The result will be default, insolvency, currency collapse, vaporization of wealth, chaos, and pain.

The only way to avert the coming financial catastrophe is to go Egyptian on their asses. Maybe mobs of Americans surrounding the White House, Federal Reserve building and Wall Street bank headquarters would get their attention. It wouldn’t take a majority, but a minority of angry Americans willing to fight for the future of the country. The anger is building. More people are becoming aware. The internet is working its magic, just as it is doing in the Middle East. Those in control can keep pumping out their lies and propaganda, but the truth is plain to see, if you open your eyes.
 
“It does not take the majority to prevail, but rather an irate, tireless minority, keen on setting brush fire freedom in the minds of men.” – Samuel Adams