Archive for May 18th, 2011
Ok, who turned the lights on, and who let this past the editorial board?
For openers, suppose the federal government actually does reduce its expenditures by 40% overnight. That translates to roughly $1.5 trillion at annual rates, or about 10% of GDP. That’s an enormous fiscal contraction for any economy to withstand, never mind one in a sluggish recovery with 9% unemployment. Even contemplating such a possibility is evidence of a dark, self-destructive impulse.
It’s actually $1,700 billion and 12% of GDP, but that’s close enough.
Alan, of course, was talking about how it’s “irresponsible” to talk default.
But what he just said was exactly what I’ve been saying now since 2008, and which, when I’ve said it, has gotten me labeled a “loon.” It’s also why all this arm-waving on the budget is going to go exactly nowhere, and ultimately our nation will hit the wall and self-destruct, as we are incapable of facing the above fact as adults and dealing with it.
For three years we have done this in a futile attempt to get the private economy to take the baton back. But it can’t, because the capacity and willingness for consumers to borrow more and thus generate more false growth is exhausted. The only place consumer credit is increasing is on students, an evil and outrageous act of exploiting those who are too young and foolish to understand what’s being done to them, and an act for which those purveying that “cheap money” deserve to burn in eternal Hell.
Thank you for finally printing what I’ve been saying now for the last three years in the mainstream press, coming out of a former Fed President’s mouth!
Got it yet folks?
The only reason we have not recognized an economic Depression is because of utterly unsustainable government borrowing and spending of money it does not have and which it has no hope or intent to ever take in via taxes in the future.
In other words, the Government has been lying to you.
There has been no economic recovery and we are in an economic Depression right now and have been since 2008.
There was no economic recovery after the 2001 Nasdaq collapse. The government borrowed and spent about 5% of GDP at the time every year to fake a recovery and we ran a debt-based false “recovery” when in fact we were in a five year long recession marked by an orgy of false “wealth” through bubbling home prices.
Now we’re borrowing and spending 12% – more than double that amount – a year to fake a recovery that has shown up in stock prices, and it mathematically must end the same way.
Alan let the cat out of the bag.
A cat that I’ve been telling you for three years has been scampering all around the floor.
NEW YORK (AP) — Treasury Secretary Timothy Geithner said Tuesday that if Republicans insist on passage of their budget plan as a condition for approving an increase in the nation’s borrowing limit, they will be responsible for the consequences.
Speaking to a New York audience, Geithner said that Republicans would bear responsibility for the first debt default in the nation’s history if they insist they will not vote for an increase in the $14.3 billion borrowing limit unless they win approval of a House Republican budget plan.
Your administration has known full-well what the debt limit has been for a very long time. So has CONgress. Both bodies were well aware that raising the limit is discretionary.
You seem to believe that playing the “Armageddon” card is something that can be done with impunity, mostly because your predecessor Hanky-Panky Paulson did so and Bernanke was a party to that.
The fact of the matter is that you seem to think that there’s no limit to the nation’s credit card. You’re wrong.
Yes, I know, the bond market hasn’t cared (yet) about all this idiocy. Then again it didn’t care over in Greece either, right up until it did. Same with Iceland, Ireland and Portugal.
In fact, it seems to work the same way with most personal bankruptcies too. People think they can push things a bit further, a bit more, they get another credit card, they play the balance-transfer rollover game, they feel the pressure and make some sort of maneuver and then breathe easier.
All this works for a little while, right up until it doesn’t in dramatic fashion. And then, once again, we hear “nobody could have seen it coming.”
Well Timmy, lots of people saw this coming. I did. Hundreds of others who write on economics did. The only people who “couldn’t see it coming” are those who are so arrogant as to think they can play Global Thermonuclear Financial Armageddon whenever their social spending and military adventure bonanza is threatened and who have their heads firmly buried up the bankster’s asses.
Let’s cut the crap: That’s exactly what this has been.
The jackbooted games are completely out of control. The Federal Government has doubled in size since 2000. Have we gotten twice as much service from the government? No, we’ve gotten serviced instead. And 2000 was a bad time in that regard as the government was dramatically overblown and overbloated at that point in time.
That was the last time I ran a mid-sized business and had to deal with that crap. I will never do it again, so long as that “mass” is amassed against me. And it will forever be, until the government shrinks.
The Feral Government is like a vampire that has gotten to weigh 500lbs. It loves to suck the blood out of the nation and consume it. Government employees like the TSA folks think that virtually rape-searching people with X-rays is “cool” and “for our safety” – including sticking their hands down a baby’s diaper. What sort of sick bastard engages in that sort of act? The fact is that it was never about safety – it’s entirely about shielding airlines from the risk of failing to secure their own aircraft and terminal facilities. We can’t have certain “favored” businesses risk failure when they blow it; rather, we have to make sure the boot of the government presses ever further on the people’s necks.
The vampire needs to be put on a severe diet. Yeah, it will scream and holler, like every fat man does when told that he can’t gorge at McDonalds’ any more. But just like the 400lb man that needs two seatbelt extensions if the government doesn’t cut this crap out the nation is going to have a heart attack and die.
I say chain the 500lb vapire to its chair and cut its rations by 50%. When it screams, and it will, wear earmuffs and slam the door shut. In short, Geithner, here’s my response to your threats: Pound sand.
We’re well-beyond the time where we should be neutering the government, not enabling it. Emasculating the Federal Government with a nice, sharp knife, feeding its former pair of testes to the closest shark would do more to help this nation’s economy than anything else that could be undertaken.
Ronald Reagan used to talk about “rugged individualism.” He was right in that regard, although he sure didn’t believe it when it came to certain personal choices. He thought it was great if you wanted to drink a beer (boosts the economy) but smoking a doobie was good for 10 years in the slammer. Like most statists he was a hypocrite when it came to that true “rugged individualism” and to add to his hypocrisy the “deal” he made on cutting taxes and slashing the size of government had no verification on the second half – which didn’t happen. Instead he sat back, patted himself on the head and then watched the vampiric Feral Government pack on another 50lbs.
Well, Timmy, it’s time to go cold turkey. You have enough tax revenue to avoid a default. You can pay principal and interest, easily, with the tax money that comes in. You then get to choose – do you send Granny her check (after you blew her contributions over the last 30 years in a puerile display of idiocy) or do you continue to fund the magical oil “reserves” that we “defend” with our $750 billion a year in defense expenditures rather than having a cogent and defensible energy policy?
Choices, choices. They’re tough.
But default, in the legal sense, is in fact a choice, as the government’s income does exceed it’s actual lawfully mandated debt service.
Remember Timmy, Social Security and Medicare are not “obligations” – they’re entitlements. Your very agency has argued this, successfully I might add, in court. The Federal Reserve does not count those “obligations” as actual debts as a consequence.
In short Turbo, your “Armageddon Card” is frayed around the edges and doesn’t work any more. Multiple attempts at a balanced Federal Budget have been circumvented and fraudulently avoided. It is time to pull the rug out from under this game and throw the board on the floor; balancing the budget by refusing to raise the debt ceiling is the right way to do it, and now is the time.