FedUpUSA

Another Day, Still All Lies

 

Another day of lies has dawned on the markets.

After being up close to 2% the market is now bleeding again with the S&P threatening to negative and the Nasdaq down into red territory.

The culprit?  The continuation of lies.

Roughly 20% of Italian debt is held by French banks.  And they, of course, are almost-certainly marking that debt to fantasy prices.

Apple is getting cored as the claimed “we’ll be on top of the world forever” crap is turning out to be more than a bit vapid.  Green Mountain got destroyed last night with allegations of “aggressive accounting” (or worse) being thrown around for some time; they had an inadequate response on their call last night and detonated.

The entire damn world is full of Ponzi and nobody is facing reality.  If we don’t cut this crap out the rout you saw yesterday is going to look like a Girl Scout picnic.

There is nothing — literally nothing in the form of leadership showing up from anywhere in any of the international leadership.  The French 10 year yield is now spiking and the spread against Bunds has widened by 12% today.

The ECB appears to have been playing “aggressive buyer” but this will not work.  It can’t work.  You cannot solve a debt problem with more credit; you must stop the excessive spending!

Last night I saw the most outrageous display of political bullshit and pandering I’ve been witness to in decades.  The Rethuglicans simply cannot bring themselves to speak the truth.  While I heard “excessive spending” a few times nobody is talking about nor will they talk about where it’s coming from — the large budget items and the only ones that matter are all entitlements and defense!

Go ahead and argue with the facts if you want but you’re a buffoon if you do.  The fact of the matter is that Social Security, Defense, Unemployment/Welfare/Etc, Medicare, Medicaid, Interest and Health and Human Services are fully 3/4 of the federal budget.

We’re well over a trillion in the hole meaning that you could cut everything from that point downward in that chart to zero and the budget would not be balanced.

There is no solution that does not involve addressing the “Big Five”: Social Security, Defense, Unemployment/Welfare, Medicare and Medicaid. 

Period.

Now you can dislike this all you want but you can’t change it.  Nor can you argue that cutting Defense along will make a material impact on the whole or bring us “balance.”  How much would you cute defense by?  Let’s say 50% – about $350 billion worth.  That’s nice; we’re still more than a trillion in the hole!

Put a different way those “big five” plus interest consume all of the tax revenues that the government takes in.

Deal with facts folks.  I don’t care if you like them or not; that’s not material.  We call them facts for that reason; it is immaterial if you find the facts savory or distasteful — they just are.

I have seen nothing from any of the Republican Candidates that have made sense in this regard.  Not even Ron Paul, who said he’d cut $1 trillion — but he didn’t say how and someone needs to ask him that before they blow him again with claims that he has a real solution, because the above chart makes clear that if you were to cut $1 trillion from the budget you’d have to basically zero everything other than entitlements were you to cut defense in half to achieve his numbers.  What he’s put forward in public (in the form of “block grants”) are lies since all that does is shift spending and thus taxing demands from one place to another.  This is raw douchebaggery and those who support this crap without calling it out as what it is are blind partisans.

Bald claims such as anything counted in “block grants” must be deemed knowing and intentional lies when put against the above chart because they are.  Cost-shifts from the federal government to the states are not reductions in spending – they’re simply a shift of where taxation has to happen from one place to another and thus are also dishonest.

We are watching the spiral downward in Europe as they simply will not accept that the government cannot spend that which the people will not fund with current tax revenues.  This reality is coming here ladies and gentlemen in the very near future and we can either face it or we will suffer a ruinous financial collapse.

Those on the other side of the issue often ask “but won’t we collapse anyway if we do the right thing?” 

The answer is no.  The raw damage cannot be avoided but there are mitigating steps we can take in tax policy, immigration policy, trade policy, energy policy and reform of the medical and banking industries that will help.  They will not make the pain go away and they will not stop the damage from occurring but they can prevent the damage from being catastrophic.

The problem is that in order to do any of them we have to stop pretending that this is all someone else’s problem, that Medicare will be “as promised” for everyone 50 and older and that the government can continue to run on that chart above while we’re going to “make a serious dent in the deficit.” The truth is that we are refusing to actually reduce spending (not cut from a “baseline increase”) in those five major programs.

We either act now or the choices will be made for us.

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