Debt, Corruption, and the Good Life in Sherwood Forest
(snip)"The wave of Obama excitement is sweeping the nation. Change, it seems, is upon us. Or is it? I often wonder if people such as Obama get what kind of change is really needed. I hope he does.
There are two things that need to be changed about this country starting ASAP. There is no time for delay.
CHANGE 1: STOP THE DEBT FLOW.
With oil at $95 and gold above $900, Bernanke is testifying that the Fed is likely to implement more rate cuts and do whatever is needed to provide liquidity to the banking system. The Fed, he says, "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risk."
Sounds nice, but central banks throughout the world are hiking interest rates to fight inflation. From China to Australia to Sweden, rates are going up. Yet in America, with wheat prices setting record highs, and gold, oil, corn, platinum, and myriad other commodities going up and up, Bernanke is cutting rates as fast as he can! No wonder the dollar is falling!
Lowering rates, of course, encourage more spending and less savings. Does anyone out there get it? We need MORE SAVINGS and less spending. We are like some drug addict that has convinced himself that coming down off the high has only one solution: more drugs. More debt! That is the answer.
Obama recently announced he wants $210 billion in spending to create "green" jobs. He wants health care for everyone, when we can't even pay for social security! He wants massive increases in ethanol production, supported by the government. Poor people throughout the world are suffering from a near doubling in basic grain prices, and he wants to artificially drive up the price of food via ethanol so we can feel less guilty about driving our SUVs?
Now, don't get me wrong. I'm not partisan. Statistics prove that Republican presidents since Eisenhower have spent more than Democrats! In my lifetime, the biggest spenders have been W. Bush and Ronald Reagan. W's Dad and Clinton seemed to be the more moderate spenders. So this isn't an issue of he-said-she-said. It's not he did wrong so I can do wrong.
No, this is an urgent call to our country to stop the debt flow! More debt and more government programs will only lead to us being in a bigger hole, massive inflation, and the debasement of our currency. The answer to the debt problem isn't more debt. The answer to the credit crunch, Mr. Bernanke, isn't more credit.
What we need is a leader who tells us what we don't want to hear. Unfortunately, I think Obama is so popular because he's telling us exactly what we do want to hear! The problem isn't us. The problem is Washington. The problem won't require pain. It requires hope and imagination! It's simply that the people in Washington haven't been creative enough. If "creative" is code for more spending, count me out.
The more things change, the more they stay the same.
Figure 1: The U.S. government budget
http://www.safehaven.com/images/fake_ben/9469_a.png
"(snip)
Re: Debt, Corruption, and the Good Life in Sherwood Forest
Well, if the old saying that, "As goes California, so goes the nation," is true, these are going to be interesting times indeed...
http://www.latimes.com/news/local/la...,6381078.story
http://www.dailynews.com/search/ci_8....dailynews.com
Re: Debt, Corruption, and the Good Life in Sherwood Forest
well, speaking of 'corruption' ... from your first link
(snip)"A reduction measure that failed was aimed at buyers of yachts, airplanes and luxury recreational vehicles. The state Senate passed a bill to close a loophole that allows many of those buyers to avoid paying sales tax by keeping their new vessels out of state for 90 days."(snip)
... yet more proof of the 'dirty little secret' that the 'very rich' don't actually have to pay the high tax rates that 'ordinary people' do !
In the larger picture, it would appear that California has chosen to ...
- maintain public sector employment at current levels
- cut state level funding for certain programs that will de-facto transfer funding obligations to the local gov't level instead
- employ 'one trick pony' accounting to shift certain costs into the NEXT fiscal year (which makes this year's deficit look smaller but will make next year's deficit much larger)
- re-fi's of existing California bonds, adding two years (and untold extra interest payments) to the repayment schedule
... all of which do nothing to permanently reduce California's budget deficit. For that to happen, one of two options must be selected - raise taxes big time, or make serious cuts in social welfare / public health care spending. The future direction seems pretty clear ...
(snip)""If these cuts were serious, then the cuts coming our way in June and the summer are going to be devastating," said Assembly Speaker Fabian Nunez, D-Los Angeles.
Nunez and other Democrats are expected to insist that tax and fee increases will have to be part of the eventual solution because they see cutting state services for everyone, from students and the elderly to Medi-Cal recipients, as crippling. "(snip)
Arguably, California is now a victim of the 'tyranny of the majority' ... i.e. more than 50% of state voters now have low enough earnings that they do not have to actually pay state income tax and are also eligible for social welfare benefits (thus they don't care if other people's taxes are raised to pay for continuing their benefits), plus public sector workers (whose continued paychecks depend on raising income taxes on private sector taxpayers as well as themselves), and the 'very rich' (who are able to sidestep actually having to pay higher taxes via loopholes similar to the one in the news blurb, via investment tax credits, via buying California muni bonds which will soon pay much higher tax free interest rates etc.).
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