FedUpUSA

More Federal Deficit Nonsense: FAIL

All aboard the FAILboat:

The $1 trillion in cuts would probably be spread out over the next decade or so, meaning roughly $100 billion less in federal spending each year, although the savings might be larger in later years.

As opposed to this:

Hmmm….. $100 billion .vs. $1.6 trillion.  Yeah, that’s gonna make a big difference.

NOT.

But already, $1 trillion in cuts is entering uncharted territory. The cuts would be some of the biggest in history.

Doesn’t that define the problem?

First, we build a Ponzi in the tech industry.  Companies with no profit (and no reasonable expectation of ever having one) sell for hundreds of dollars a share, get 100% (or more) first-day price ramps and then, when the bubble bursts, crashes.

Not content to accept that we built a Ponzi Bubble in tech during a Democrat Presidency, and that the fluff had to come out of the economy, we do it again under a Republican one, this time in houses. This culminates in giving people $500,000 loans with no income, no job and no assets, creating price ramps of 100% or more in significant parts of the economy.  At the same time we accelerate the offshoring of our job base to an insane degree, decimating the tax base.

That blows up and now we’re left with the need to accept a thirty percent short-term contraction in the economy.  Our tax base dwindled severely during these years, with again huge parts of labor being either offshored or shifted toward illegal immigrants.  This latter bubble once again pumped up stock prices to ridiculous levels as the so-called “earnings” were gained by gaming the means of production.

Allowing that correction was unacceptable and we’ve now done it again, but this time it’s much more tenuous, as only stock and similar prices have skyrocketed.  Have we actually blown a “new bubble”?  Well, no – we’ve borrowed and spent ~12% of GDP for three years running in the government, and that cannot continue.

But thus far, the so-called “proposals” to take care of this problem are limp-wristed and dishonest scams.  Representatives and Senators on both sides of the aisle know full well that should they actually address these structural imbalances and stop spending more than the government takes in that the full force of the economic adjustment that should have occurred in 2007 and 2008 will immediately re-assert itself.

The problem with not correcting the imbalances is that the longer they go on the worse the damage is, just as we went from a ~10% of GDP contraction in 2000 to where we are now today – ~20-30%.

If we keep it up the consequence, when the wall is hit, will be collapse.

It is time to be adults folks.

The Market-Ticker

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