Exits Blocked & The Real Pain Begins

Sorry, for not posting- hopefully I'm not needed to shout fire anymore. Peter Schiff has another great update video about what's likely the next leg down.

To recap- We all know about dramatic fall in asset prices, the pain from the debt bubble and the dramatic rise in unemployment. But it really looks like the real pain is just getting started.

The near total collapse of the private economy has been offset so far by a dramatic increase in federal spending that we only thought we could afford. The initial Lehman shock caused a massive pull back from almost every asset class except super duper safe-- US government debt which allowed team Obama to cheaply- if temporarily push out trillions in new bonds most of which are short term notes.

Meanwhile our real ability to pay off this debt has gotten much worse.

"The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.(or more)

Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever."

As foreign economies seem to be leading the recovery, the conditions which made finacing the U.S debt so easy are going into reverse- exposing the country to far higher interest rates-- or galloping inflation.Our rising market has underperformed most and in fact has hardly kept up with the rapid decline in the dollar's value.

Video Of Anti Pelosi Rally In Texas

The March To Fascism And How To Stop It

People know I've been beating the drum, warning of the Fascist trends in our government which have been building for years and are reaching a crisis.

Jack Gildern did a much better post on this subject than I have called Fascism: Foolish Fallacy Or Frightening Fact. I urge you to read it-please.

He starts with a simple definition of Fascism.

Here is the literal definition of Fascism:
fas⋅cism [fash-iz-uhm]
–noun
1. A governmental system led by a dictator having complete power, forcibly suppressing opposition and criticism, regimenting all industry, commerce, etc., and emphasizing an aggressive nationalism and often racism.
2. The philosophy, principles, or methods of fascism.

Of course, we haven't reached this level yet. Exactly when one says something that walks like a duck and quacks like a duck can be described as a duck is always a judgement call. The problem is--- This is not a duck we are talking about here-- It's Fascism!-- or perhaps some other brand of totalitarianism. We test and test for cancer in a way we don't for colds because- it's a deadly and often fatal disease and when we find it we try to kill it and cut it out. (no that was not just a call to kill the president. Our troubles go much deeper than one man. He was actually elected)

I made two comments that prescribe what I think might be the quickest and most effective way to stop this train and get people to think. You need to read the post and comments for context.

Comment One

"One of the best posts on here ever. I think one of the biggest factors at work here is what Hitler called the big lie. Admiting just how bad, Obama is means confronting our own guilt for having elected him and going deeper into just how the government got this out of control means looking at almost a century of guilt.

We as American's as whole- not all, have betrayed our founders and the basic ideals and foundations our country was founded on in exchange for a few favored programs or vague promises.

People need to stop and admit they live a nearly bankrupt and nearly Fascist country and then decide what role they have played in it and what they are going to do about it.

As, I mentioned before-- I think the Tenth Amendment route might be the fastest clearest way to stop this train. There are states and places in the country where enough broad support for individual rights and the Constitution exists. We need to work from there, to both educate and broaden this base and use it to confront the Monstrous powers in Washington.

After all, the Constitution and the founding documents of the country are on our side. If enough people scream that they really matter, and that the law matters and rights and truth matter, something might be done."

Comment Two

Well, I'm going to have to admit to living in "blue states" all my life in either NY or PA.

But my perception from my reading, interactions and occasional travels is that there really are very large chunks of the country that could almost be called "occupied territory" at this point. I mean when was the last time Wyoming, Utah or Alaska voted blue. I think we need to start from there and work to educate the people about just how deeply damaging the federal occupation of their states has been. Instead of working from positions of weakness, we can start from strength where there is already a lot of political and media support and build on that.

The starting point should be for the "occupied states" to one by one re-affirm their commitment to the original Constitution and it's tenth amendment- which in reality is an implied threat to take the clear course out of the union that the Constitution allows.

Hopefully, a chain of firm resolutions by a large number of states that seem very serious will in itself put a radical brake on things. Remember that just by taking these actions, one is calling attention to all the Constitutional and legal violations, which may help more people in other states to wake up and think deeply about what's going on. This will be hard for the media to ignore.

Remember---the Constitution and all the legal traditions of our country are on our side. Every founding document shows a clear intent to protect individuals from out of control federal power and to protect minorities from a possible tyranical majority.

We can't do this blindly so each resolution needs to state clearly the exact Federal moves that would trigger further action. For example, I think every state should declare federal limitations on free speech and the press to be an instant trigger for further action. Moves against the Second Amendment are in close to the same territory.

Is Obama Offering Military Technology To China To Cancel Debt?

This was also first posted on Smart Girl Politics

I want to start this out in bold print. This falls into the unbacked rumor category.

We do know that, the U.S. is deep, deep, deep in debt, much of which is held by foreigners. This has been the underlying theme behind the trips abroad to creditor nations by the President and administration officials. People on Wall Street call them Dog And Pony Shows.



We also can make an educated guess that Obama doesn't see many government programs he wants to cut, but rather an ever larger number of worthy causes and bankrupt party backers that need help. We also know that nations like China are becoming more and more nervous about our debt and eager to start exchanging their dollars holdings into things they really want like--oil fields, gold, copper, iron ore and uranium mines as well American technology.



Placed in this context, the president of Squanderville may soon have to shop around some real assets like this...

"According to the Administration, this proposal will help the United States resolve its debt issues. They point out their belief that the B-2 bomber is "strategically obsolete", according to a source in the White House Press Office. In addition, the
source claims that the Chinese would be unable to create their own functioning stealth bomber fleet for "at least eight years."

"American allies Taiwan, Japan, and South Korea are very wary of the proposal. Koo Syi, a geopolitical analyst from South Korea, points out that this technology could be passed to China's allies. This was the case when Chinese nuclear technology was transferred to Pakistan and North Korea. According to Koo, Obama has rendered US allies' opinions as "irrelevant."

My point, really isn't that this rumor is true or false, it's that it points out the underlying fact that sooner or later, we will have to do things like this to keep on spending the way we have been."

I honestly blame not only the Democrats for this but also many of the so called
Neo-Cons many of whom seemed to think we could remain a powerful nation while allowing spending levels that were sure to make us weak. Remember the Suez Crisis?

Racist Chinese Disrespecting Obama Again

Here in the good old USSA, where all the children have drinken deeply from the state's endless Kool aid supply, we all know that critics of Obama are driven solely by "white male rage." But what's going on overseas? First, Pravda the former voice of the Soviet Union say's we are Commies and now this...

Tim Gethner, one of a parade of officials panning the globe for spare change; while at the same time assuring everyone what a good credit risk we are; is now in China. Kool Aid seems scarce there.

A number of students laughed heartily at the bromide swill, we suck up here.

"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s. (refering to their holdings of U.S. Treasury and agency debt)

His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home."

Comments from a former Central bank advisor, Yu Yongding were even more blunt and filled with disparaging references to American officials and their policies.

In response to Obama's current promise to cut federal deficits from close to 13% of GDP to 3, Yu said:

"It may be helpful if “Geithner can show us some arithmetic,” said Yu. “We need to know how the U.S. government can achieve this objective.”

Fed Chairman Ben Bernanke gets it worse.

"Referring to the Federal Reserve “as the world’s biggest junk investor,” and to Chairman Ben S. Bernanke as “helicopter Ben,” Yu said the Fed has dropped “tons of money from the sky since the subprime crisis.”

“The balance sheet of the Federal Reserve not only has expanded like mad but is also ridden with ‘rubbish’ assets,” he said".

Are these "people of color" crazed with racist rage or just stating simple questions we all should be asking. Thankfuly the rest of the world is looking fairly and squarely at Barak Obama and judging him and his administration by the content of the character they have shown.

Why We Must End The Fed

I'll start this out with a warning. This is a long post, the bulk of which I wrote late last year, in the hopes that some of it might be avoided.

Contrary, to the story told in the popular media, there were in fact a large number of trained economists and investors who predicted and warned about the situation we are now in. Of course, they were called kooks and rarely got much air time in the media or in college campuses. Ron Paul, is likely the one most of us would know.

Anyway, when the "Schiff started hitting the fan", Glenn Beck was one of the few major media figures to point bring up the Weimar Republic.

Here's my post which I titled "Weimar America"



Sorry, they pulled that one since they want you to see the full film.



I've put a lot of videos and links about America's debt and financial condition in this post. I think that only by understanding this condition fully can one see the connection between America today and that of Weimar Germany.

Most people, to the extent they know anything about the Weimar Republic know only a few things-- it was a period of interesting art, Mann, Kandinsky, Klee, Grosz; -- something about carts of money to buy loaves of bread-- and finally, that it was shortly followed by the Third Reich.







Here is an extended quote from the book, The Age Of Inflation. The roots of Germany's problems began with the promises of Bismark's welfare state and the way Germany financed the costs of WWI.

"Like all the other banks, it offered assistance to the central government in financing the war effort. Since taxes are always unpopular, the German government preferred to borrow the needed amounts of money rather than raise its taxes substantially. To this end it was readily assisted by the Reichsbank, which discounted most treasury obligations.

A growing percentage of government debt thus found its way into the vaults of the central bank and an equivalent amount of printing press money into people's cash holdings. In short, the central bank was monetizing the growing government debt.

By the end of the war the amount of money in circulation had risen fourfold and prices some 140 percent. Yet the German mark had suffered no more than the British pound, was somewhat weaker than the American dollar but stronger than the French franc. Five years later, in December 1923, the Reichsbank had issued 496.5 quintillion marks, each of which had fallen to one-trillionth of its 1914 gold value.[1]

How stupendous! Practically every economic good and service was costing trillions of marks. The American dollar was quoted at 4.2 trillion marks, the American penny at 42 billion marks. How could a European nation that prided itself on its high levels of education and scholarly knowledge suffer such a thorough destruction of its money? Who would inflict on a great nation such evil which had ominous economic, social, and political ramifications not only for Germany but for the whole world? Was it the victors of World War I who, in diabolical revenge, devastated the vanquished country through ruinous financial manipulation and plunder? Every mark was printed by Germans and issued by a central bank that was governed by Germans under a government that was purely German. It was German political parties, such as the Socialists, the Catholic Centre Party, and the Democrats, forming various coalition governments, that were solely responsible for the policies they conducted. Of course, admission of responsibility for any calamity cannot be expected from any political party."

This was just the start of the problem. Germany was already deep in debt but it didn't feel like it could handle the sharp recession all the industrial countries had as they demobilized. To put off this pain and potential instability, they began to spend more and more. Many, many people, soldiers, farmers, workers and businesses needed help.

"Immediately after the war the German government, under the leadership of the Socialist Party, embarked upon heavy expenditures for health, education, and welfare. The demands on the treasury were extremely heavy anyway because of demobilization expenses, the demands of the Armistice, the disorders of the revolution, and the staggering deficits of the nationalized industries, especially the railroads, postal services, telephone, and telegraph. Public administration by the new men raised to power by the revolution, nevertheless, was extravagant, as the resources made available by the creation of new money were apparently unlimited. A number of measures for the nationalization of certain industries (e.g., the coal, electrical, and potash industries) were introduced, but failed to become law. The eight-hour day was enacted, and labor unions were given many legal immunities and privileges. In fact, a system of labor councils was set up which authorized the workers in each enterprise to elect representatives who shared in the management of the company! While government expenditures rose by leaps and bounds, the revenue suffered a gradual decline until, in October 1923, only 0.8 percent of government expenses were covered by tax revenues. For the period from 1914 to 1923 scarcely fifteen percent of the expenses were covered by means of taxes. In the final phase of the inflation the German government experienced a complete atrophy of the fiscal system."

The immediate effects of their actions weren't clear to most and the monetary authorities went to great lengths to tell people that the inflation people saw in their daily lives wasn't really there.



The other thing that reminds one of this time was not just that Germany was up to it's eyeballs in debt but that this debt was largely owed to foreigners who had once considered it a good credit. They continued to lend and only slowly realized their mistake. When they did, the Mark dropped like a stone and the real pain began.



The situation since only a reinforced and confirmed my worst fears. The receding tide exposed the pyramid of lies and false promises behind not just the Federal, but almost every local and state budget. It's a very grim situation, I talked about here. We have been living far beyond our means and have to make serious cuts on a personal and national level. A new confrontation with reality is slowly taking shape, which we saw at the Tea Parties, and was carried forward by the votors in California.

But, But, But, This is the rub. We all know that the government run by people like Barak Obama, Joe Biden, Nancy Pelosi, or for that matter Arlen Specter, Colin Powell or Arnold Schwarzenegger will never allow itself to shrink and can in fact never live within it's means.And, as long as they a have the Fed, they don't have to. We know almost every state can count on a bail out.

Even more scary than all of this is the bold honesty of the looters who now run the Fed and their fellow travelers. through most of it's history, the Fed made the pretense of "protecting" the value of the dollar-- even as it destroyed it. In fact, this is supposed to be it's primary job. How's it doin?

This exposes the real and only reason governments need fiat paper money -- to use inflation to paper over bills they cannot or do not want to pay. Be very afraid, because they can no longer hiding this.

Here's advice from a prominent economist and Bush advisorBut Bernanke has made many similar statements.

"In advocating that the Fed commit itself to generating some inflation, Mankiw, 51, likens such a step to the U.S. decision to abandon the gold standard in 1933, which freed policy makers to fight the Depression.(the FED caused the depression)

Faster inflation might be preferable to increased unemployment, or to further budget stimulus packages that push up the national debt, says Mankiw, who was chairman of the Council of Economic Advisors under President George W. Bush.

The White House has forecast that the budget deficit will hit $1.84 trillion this fiscal year, or 12.9 percent of gross domestic product. Rogoff doubts that politicians will be willing to reduce that shortfall by raising taxes as much as needed. Instead, he sees them pressing the Fed to accept faster inflation as a way of easing the burden of reducing the deficit.

Easier Debt Repayment

Inflationary increases in wages -- and the higher income taxes they generate -- would make it easier to pay off debt at all levels."

This is the kind of sick morality that's at work here. Here is a major economist who doesn't see any difference between paying off debts normally through savings, work and hard choices like normal people do-- and just printing fake money. We have to understand that the FED is no longer an impartial actor here. It's backing up major banks, companies and most especially itself by conducting a massive theft from any responsible person.

Also, please, please remember the cold cruely of these actions which put the lie to the sham of government concern for the poor. Inflation is a sharply regressive tax on all the basic necessities of life.

The Real Stress Test Starts

"May 7 (Bloomberg) -- U.S. stocks slid from a four-month high as declines in financial, telephone and technology shares snuffed out an early rally. Treasury 30-year bonds fell the most since February as investors demanded higher-than-forecast yields at an auction of $14 billion of the securities."

No doubt it's racism that's made foreign investors nervous about our national debt.

Find Out The True Numbers

I am not an accountant, but I have some knowledge of it.

True accounting is about trying to get an accurate picture of not just one's current"cash flow" but also all assets and liabilities. A person for example with $5000 in the bank, no job, negative home equity and a leaking roof in need of $40,000 in repairs would be called broke by an honest accountant. Suppose that person had also co-signed loans promising to bail out everyone else on the block.

Let's be honest, American's would likely not have bought into most of "free" gifts offered by the government, if they knew their true cost, to themselves and future generations.

Look up the film IOUSA on the internet, to get some idea of the real reality which has only gotten much worse since the film was made.

Here is an organization dedicated to exposing the ponzi frauds both our federal, state and local governments are running.

(No, printing monopoly money in your basement, like our federal government does doesn't make you rich either)

The Wise Chinese

As the U.S. and the west's bubble economy implodes, exposing the thin air at it's core, the political players and crony capitalists have grasped at the hope that they can pull the world's last solvent countries into one last "collective" effort to save themselves.They need a bigger rug to sweep the dirt under. Luckily, it looks like China, which was already burned on U.S. investments will not be in on this. This is wise.

"Asked whether China might pursue economic policies aimed at saving the world, Mr. Lou said that the country’s leaders had a narrower focus. “China can only save herself because the scale of China is still rather small,” he said, adding that while China has more people than any other country, economic output is still low enough that the Chinese economy is not yet big enough to have a big effect on the global economy.

“If China can do a good job domestically, that is the best thing it can do for the world,” he said.

Mr. Lou’s comments represent the clearest statement yet that as global financial markets have plunged this year and economies have slowed, the attention of China’s leaders is turning inward."

The Chinese government seems to have a grip on how small it's economy still is and how much it needs to retain it's currency reserves and savings to boost it's own productivity.

They also are rightly afraid of the ever changing legal and financial environment in America with it's ever changing soup of programs and bailouts sold as way to "instill confidence in the markets."

"Mr. Lou said that the sheer pace of new initiatives and new rules issued by Western regulatory agencies was disconcerting and made it even harder for him to choose worthwhile investments. “If it is changing every week, how can you expect me to have confidence?” he asked."

That leaves the government ever more reliant on the printing press to fund it's schemes.