FedUpUSA

Archive for the ‘Debt Ceiling’ Category

That didn’t take long….

United States of America Long-Term debt rating lowered to “AA+” on political risks and rising debt burden; outlook negative.

And so it begins.  With the outlook, it is clear that S&P believes this is not a one-step “and done” move either.

Why?  Oh, they were rather expansive on that point:

· The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.

“We said $4 trillion and we meant it.“

· More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

· Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.

Granny cannot have her two new hips and Gramps cannot have his quad-bypass.  We cannot pay $100,000 for every man who gets Stage IV prostate cancer to have four more months of life.  We cannot have 1 in 6 families on food stamps and half the working population paying no income tax to buy their votes, yet at the same time spend $750 billion on wars (half of which is really about securing oil supplies; ergo, we cannot spend $300/bbl on imported oil and $200/bbl on all oil on average while claiming it’s only $100) nor can we spend $15,000 a year “educating” kids who do not understand nor care about the basic function of exponents.

And we cannot sit idly by while both political parties lie about:

• Cuts that are not actually cuts. Spending less than you intended to, but more than last year, is not a “cut.”  This is like a 400lb man going to the Chinese Buffet every day and eating five plates instead of six, claiming that he’s “dieting.”  Ok, in a year he’ll weigh 500lbs instead of 600, but that’s not a “cut.”
• “Stimulus” that is nothing more than demand replacement. We’re now up to more than 12% of GDP.  This is not a “bridge” to tide us over either – we’ve been doing it for three straight years and will be four by the end of the year. This is a major problem as once this becomes part of what the economy “expects” it is no longer stimulative and results in people doing less work and expecting more “cheese.”
• The promise to reduce spending (and raise taxes) “tomorrow” and “on someone else.” There’s a 30 year history on this – spending decreases come never, tax increases usually do occur.  But this time tax decreases that were allegedly “temporary” (e.g. the Bush Tax cuts) wind up permanent (even among those who say they won’t support it, ala Democrats) and they even get added to – such as the FICA tax reduction!

We suffer from the utter inability of either political party to stand at a podium and tell the truth. We cannot have $100,000 in income and spend $170,000+ a year.  Yet we have and we are.  Try this in your household and see what happens.  More to the point it is mathematically impossible to sustain any economic system where debt rises at a faster rate than actual productive output does. This is fifth-grade mathematics and yet we have intentionally and willfully ignored it for thirty years.  There is not one politician from either major political party who will stand before the public and tell the truth on these matters.  Not one.

· The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

In short: Stop lying, right now, or else. “We said $4 trillion, we meant it, and oh by the way that was a down payment, not the total amount of reduction.  Care to try our patience again?”

To the “Tea Party” that was crowing about how they were “successful”, how does that success taste? Half of your members in fact defected when it came time to vote, and despite the crows of “success” (which was really nothing more than glee over “beating the Democrats desire to increase taxes”) the bad outcome that you claimed to be trying to avoid happened. Now what?

To the Democrats who said this was a “good bill” or even one “we can support”: How does abject failure taste? Your refusal to admit that you cannot spend more than you take in on a perpetual basis and your incessant demands to spend more and more without any plan to pay for it, despite screeches of “tax the rich” and “fair shares” has gone nowhere.

To the “mainstream” Republicans who said this was “the best we could do” or even “a good bill”: How are you feeling this morning? Got out of town in seconds after that vote did ‘ya?  Well gee, that worked out real well eh?  Now what?

Some more facts – and you’re not going to like any of them:

• Within hours of the passage of the bill more than half of the authorized increase in the debt ceiling (the first tranch) was blown and gone as Geithner unwound all the screwball theft games he had played for the previous two months.  More than $200 billion instantly vanished.  The scale and price of his deception was instantly laid bare upon the table, as was our fiscal trajectory, since June is one of the heavy tax receipt months (estimated taxes.)
• In calendar year 2007 GDP was $14.3 trillion, more or less.  The actual borrowing increase was $548 billion.  The Federal budget was $2.73 trillion.  To balance our fiscal house we would have had to cut 20% of the Federal government – in 2007.

• In the last year GDP was $14.8 trillion, more or less.  The actual borrowing increase was $1,700 billion.  The Federal budget (which was never actually passed and signed, a rank violation of Constitutional requirements) was $3.8 trillion.  To balance our fiscal house we would have had to cut 45% of the Federal government – more than double the 2007 figure.

• To bring the economy into balance debt must not grow faster than GDP.  In a time when GDP is shrinking debt must shrink faster, not grow faster. This is basic exponential mathematics.  15 minutes with Excel will prove this to anyone’s satisfaction.  This has been the foundation of my perspective on the economy and our errors since I started pontificating in public on it in the 1990s while running MCSNet, and has been the foundation of The Ticker as well.  Twice in the last month or so I have posted links to Google spreadsheets for those too lazy to do it themselves, making it even easier to visualize what I’ve been talking about.  Anyone arguing otherwise must be able to demonstrate why the laws of mathematics do not apply and prove they are correct, and if they’re unable to they must be ejected from the debate on the path we take as a nation.

So for exactly how long did CONgress think it was going to get away with this?

Washington DC has turned into a bunch of sodomites and the American public and our currency are the victims of their serial abuse.  The alleged filibuster threat on the debt ceiling bill, which would have delayed passage (oh no!) turned out to be a bunch of hot air.  Sure, they had the votes for cloture but those threatening to force the vote never did so, so the threat was simple hot air – political theater.

Vote-buying with entitlements and other spending is an easy sport to engage in but it ultimately fiscally dooms a nation.  I have warned of this path for years, going back to the earliest Tickers, and pointed to how companies like Washington Mutual (and others) were doing it as well, paying dividends out of money they didn’t have.  This always ends in disaster, as it simply must – it is a matter of mathematics that when you continually spend more than you make you will eventually go broke.

To those in the economics “profession” who say that a sovereign that prints its own money cannot go broke, you’re technically correct and factually lying, and you know it.  Yes, we can print as many dollars as we wish, but doing so makes each dollar worth less in terms of goods and services.  The same outcome as if we didn’t print the money is inevitable – the “free shit” ends because the recipients all starve due to the fact that their “money” doesn’t buy anything any more.  When you’re in an economy that is reliant on the import of various goods (especially energy) this sort of destructive cycle is akin to sodomizing puppies and claiming that since they’re not people your sin (and crime) doesn’t count.

These very same “economists” all laud the “virtue” of free trade.  In fact it’s trade with economic slave-holders and there’s nothing “free” – or fair – about it.  China’s whining about the downgrade last night and this morning needs to be met with one response: Die in a fire – and if you try anything hinky, we’ll ignite the fire. There is nothing innocent or victim-like about their role here; they were not only willing participants they have been exploiting the imbalances, stealing our intellectual property and abusing their citizens the entire time.  Bluntly: China deserves the skullfucking it is about to receive.

We must rebuild our labor force.  This means wage and environmental parity tariffs.  Yes, this means that Giganticus Corporatus will have a 15% pretax operating margin instead of 30% and its stock price will be $40 instead of $400.  So what? There will be actual income generated by actual people here in the US building actual things instead of conspiring with one another on how to steal another $15,000 from a homeowner through serial refinance fees.  The former is a productive enterprise; the latter legalized extortion and theft.

We must fix the tax code.  Rip the damn thing up!  There are two rational choices: A flat tax with no more than three or four brackets and no zero bracket or deductions and The Fair Tax.  In either case capital formation must not be penalized and borrowing must not be incented. This means that dividends must be taxed once.  Taxing short-term capital gains as income is fine (speculators should not be able to get a free ride) but the long-term capital formation (e.g. pick a period – 3 years sounds about right) must not be deterred.  The government could have taxed away the roughly $60,000 in cash that formed the base of MCSNet.  If it had the many millions in revenue, spending, payroll and taxes ultimately resulting from the formation of that capital would not have happened.

We must eject the illegal aliens in this nation.  I know neither side of the political aisle wants to, but that doesn’t matter.  At a time when we have a huge percentage of citizens out of work it is an outrage that illegal Mexicans are taking any jobs in this country. Make our policy clear: Leave voluntarily right now, or we will find you, will lock you up, make you break rocks for five years and repave our freeways as your work while imprisoned, then deport you.

We must fix the health care system, not “Medicare” or “Medicaid.”  I have written on this extensively and it features prominently in Leverage (the book) as well.  This means an immediate end to the cost-shifting by providers, drug and device makers.  It means an honest debate as to what, if anything, society owes people in this regard and that subsidy must be transparent and paid for with current tax revenues. If it cannot be, it cannot be provided.  Period.

We must have that same honest debate about all other government programs.  For each program the people want, they must be able to fund it with current tax revenues, and nobody can be exempt from paying something toward it. Yes, some people will get more benefit than they pay in taxes – that’s the nature of such things, but those benefits that are intangible (e.g. national defense) are different than those that are direct and personal.  Nonetheless, no program may be funded and operated that we refuse to fund with present tax revenue. Period.

Stop talking about “growth” being able to fix this mess. It cannot.  From 1990 onward our average GDP growth has been under 5% and since 2000 approximately 4%.  But in fact all of that was false, as this chart conclusively shows:

We didn’t produce any of the so-called “economic growth” since the 1980s.  We borrowed more and more money to cover up the offshoring and shrinking of our productive enterprises here in this country!  That borrowing allowed us to continue to pretend we were making economic progress when in fact we were not.  Consider this: The 1980s and 1990s, which were all about the great “productivity improvements of the Internet and computers” we all heard about, were pathological lies enabled by leverage abuse.

We must stop this crap – right now, right here.

Our politicians must stand and tell the truth: You were promised great things by government, but those promises were lies.  We didn’t impose taxes sufficient to pay for these great things, and worse, the tax money we did collect was spent buying votes instead of providing what we promised you.  We are all collectivity responsible for this – you for demanding that which you were unwilling to pay for, and we in continuing to lie to you for thirty years and enabling the fraud and leverage abuse that made the illusion of prosperity possible, along with bailing out the so-called “captains of industry and finance” that conspired with us to delude you.

Yes, this will result in a monstrous economic contraction.  That was unavoidable in 2000, but it was reasonable in size.  It was unavoidable in 2007 too, and was worse than in 2000.  Now it’s even worse than in 2007 by a considerable degree and the longer we wait to accept reality the worse it gets.  I’ve now got more than ten years of consistent, every-single-year history on my side – the claims of the “supply-siders” and “Keynesians” have not translated into a reduction or elimination of these imbalances, they have made them worse!

Stand up politicians, tell the truth, and deal with the consequences.

We are dangerously close to running out of options in this regard.

America's Primary Crack Dealers

One day you call your doctor because last night you felt a tightness in your chest.  You feel fine now, but it was bad last night.  He chews your ass, telling you that you know better and should have called 911.

But you didn’t, not because you didn’t think you were having a heart attack (you did), but because you were in the middle of a crack binge, and had you done so, you would have gone to the hospital – and then straight to jail.

So you toughed it out, and didn’t keel over.  He tells you to come in – right now.

When you get there he hooks you up to the EKG and looks you over.  Then he asks: You’re doing drugs, aren’t you, and don’t worry – I’m not going to call the cops, but you have to level with me – this is about your health, not the law.

You admit it – you were, in fact, binging on crack last night. 

It started out as just a little high, you see, with some friends.  But then one night you did too much, and the next morning when the alarm went off you had trouble getting out of bed.  So you took a hit before going to work.

Soon you needed it.  You had a hit in the morning when you got up.  You took some powder cocaine in a little vial and had a snort at lunch to keep going.  And then in the evening a bit more, just so you didn’t collapse before you had dinner.  And finally, as your system ran out of (fake) energy, you collapsed in bed.

As the months went on the doses increased.  A lot.  The one hit in the morning became one when the alarm went off, and one after your shower.  Then it was three – one just before you left the house.  Then four.  The one little snort at lunch turned into two, three, four.  Then one at each bathroom break – which you “needed” every hour. 

The price of all the drugs started to cause problems too.  First to go was the beer and nights out – you were paranoid anyway that someone would know you were doing dope, so you didn’t want to go out anyway.  Then the girlfriend – she left you but she was an evil bitch anyway.  What does a woman know who doesn’t enjoy the finer things in life (like crack)? You were sure you were better off without her and besides, now you have more money for drugs..

The night you had the chest pains was really scary.  You thought you were going to die.  But you didn’t, and the next morning you feel fine – with another hit off the pipe, of course.

The doctor delivers his sermon: Stop the drugs, right now, or you’re dead.

You solemnly nod your head in understanding.  You know he’s right – you had that feeling the night before.  But you also know that if you quit you won’t get to work the next day and you’ll get fired.  You might get thrown into the street and starve.

When you get home you gaze longingly at the pipe.  “Just one more hit” you promise yourself.  “I can taper it off… over ten years” you say.  “It’ll be ok” you reassure yourself.

And you reach for the pipe……..

Was that crack cocaine, or was it this?  Was it the Hummer in the driveway? The big house in the suburbs?  The $40,000+ in college tuition for the kids – each – five times what you paid to go just a couple of decades earlier?  The boat down at the lake?  The fancy vacations to Europe - and Maui – last year?

2008 was the tight chest where you avoided death.  The chart even looks like a heart attack.  But the debt ceiling increase and the refusal to admit to the truth and talk to the American people about what’s really going on, that we’ve been binging on drugs and nearly died, and that if we don’t quit now we will expire is you, sitting in that apartment, right after you get back from the doctor and see the old glass pipe on the nightstand.

Your buddies who talked you through the scary night are Tim Geithner, President Obama, the CNBC crew and the ivory-tower “eCONomists” like Krugman.  Then there are the bankers, who have been selling you the dope.  The latter, of course, will go broke if you stop doing the drugs and they bribe the politicians with campaign contributions and buy advertising on the media outlets, insuring that their point of view gets wide dissemination – and nobody else’s does.  In fact, they both call the doctors names and claim they really don’t know what they’re talking about.

You’d think that all the above would care if you die, for a dead man doesn’t buy any drugs.  You’d be wrong because your drug dealer managed to get the title to all your assets in his name before you took the first hit.

So let’s ask the question: Are we prepared to “Just Say No” yet?  Or do we prefer death?

See, we’re getting another warning right now.  The wild gyrations in the market?  Those are heart palpitations, and they’re scary.  If you’re in the market you probably have had that sinking feeling in the pit of your stomach over the last week.  It wasn’t as bad as 2008 but it sure had that familiar tinge to it…..

We’ve trashed our economy folks and it didn’t happen overnight.  We offshored our labor, destroyed the incentives for capital formation and bought more and more drugs – including the legal sort – instead of eating reasonably and being active.  It’s easier to take a pill (or a snort) than to go to the gym, ride a bicycle or put on a pair of running shoes.

The politicians think they have years.  Most believe we have a decade, some (like Ryan) think we have two or more decades.  We don’t.  The warnings are emergent now.  The heart palpitations are happening as you read this.  The first “heart attack” was bad, and we nearly died.  But the damage was not repaired: employment has not come back, trade policy was not rationalized, the illegal aliens in the country are still sucking down tax funds we need for citizens, the people who sold us the drugs originally were not cut off and jailed and we all didn’t stop binging.  All we did was get our dope from a new pusher – the Federal government - and the government told us we didn’t have to pay for the drugs as they called them “benefits” and “entitlements.”  In short we squandered the opportunity of 2007 when we could have accepted a 15% contraction in the Federal government’s size.  Now we have to accept a forty percent contraction.  The required contraction to restore balance not only has gotten worse it will continue to do so the longer we wait before we act.

It is time to choose America, even though choosing to get well will be painful.  It will result in much more unemployment in the short term, and the government will not be able to increase assistance.  It will result in the stock market plunging.  And it will result in the big banks and may over-levered firms, large and small, being gutted, with many of them going out of business.

But if we don’t do it – and do it now – we’ll have “the big one”, and that voluntary assumption of pain will pale beside the outcome that will occur.

It is time to choose, and remember: Choosing to not decide is, in fact, a choice.

Is the debt ceiling deal supposed to be some sort of a cruel joke?  Is this what the American people have been waiting months and months for?  The “debt ceiling deal from hell” is a complete and total fraud.  Barack Obama will not need to worry about the debt ceiling again until after the 2012 election, and no “real” spending cuts will happen until after the 2012 election.  The way the political game in Washington D.C. is played today, if you don’t get something right now, you probably will never end up getting it.  The Republicans have traded a massive debt ceiling increase right now for the possibility of very skimpy budget cuts in the future.  Meanwhile, this deal establishes a new “Super Congress” that threatens to fundamentally alter our political system (and not in a good way).  The funny thing is that everyone is running around proclaiming that the Tea Party won this battle.  That is a complete and total lie.

So what about the $917 billion in “immediate” spending cuts that the Republicans are getting as part of this deal?

Well, they aren’t really spending cuts at all.  Rather, they are spending caps.  Basically what is happening is that future spending increases are being cancelled and our politicians are selling that to us as “spending cuts”.

What is even sadder is that the $917 billion is spread over ten years and the vast majority of the “cuts” are in the latter years.

For example, even if you consider these to be “spending cuts” (which they are not), the deal calls for only about $25 billion in “cuts” in 2012 and only about $47 billion in “cuts” in 2013.

25 billion dollars is far less than one percent of the federal budget, so needless to say these “cuts” are not very impressive at all.

Okay, so how about the second stage of the deal which will produce “spending cuts” of between 1.2 and 1.5 trillion dollars?

Well, yes, these would actually be spending cuts and they would be spread over 10 years.

Near the end of the year, the new “Super Congress” (more on that in a minute) will submit a proposal to Congress which could cut spending over the next 10 years by a total of up to 1.5 trillion dollars.

If the recommendations of the “Super Congress” are not implemented, then “automatic” spending cuts of $1.2 trillion will go into effect over the next 10 years.

However, there are some very important things to remember about these “spending cuts”.

First of all, none of these “automatic” spending cuts would even go into effect until 2013.  The face of American politics will be dramatically different by then, and there is absolutely nothing that makes these cuts binding on Congress.

As Gregg Easterbrook recently noted, Congress can cancel spending cuts at any time and for any reason….

By projecting the only tangible savings — which aren’t even specified, but are merely caps — into the future, the plan allows Congress to cancel them. In 2012 or any future year, Congress will say, “We can’t have caps this year because of the [INSERT ANY WORD CHOSEN AT RANDOM] crisis. We are postponing action till next year.” Rinse and repeat.

As I have written about so many times before, the U.S. national debt is completely and totally out of control.  This was supposed to be the moment when at least some members of Congress were finally going to get serious about our exploding debt.  Unfortunately, our politicians have sold us down the river once again.

Even if the best case scenario happens (which it never does) and Congress sticks to this deal for the full ten years (which is about as likely as hell freezing over), the “savings” that this deal would produce are quite pathetic as Peter Schiff recently explained….

The Congressional Budget Office currently projects that $9.5 trillion in new debt will have to be issued over the next 10 years. Even if all of the reductions proposed in the deal were to come to pass, which is highly unlikely, that would still leave $7.1 trillion in new debt accumulation by 2021. Our problems have not been solved by a long shot.

Keep in mind that Congress can change this deal whenever it wants.

So nobody should get excited about these “spending cuts”.  After all, when was the last time that “future spending cuts” actually materialized in Washington?

The reality is that neither political party seems to want to do much to cut government spending.

So the band will play on and the can will get kicked even farther down the road.

When Obama was inaugurated, the U.S. national debt was $10,626,877,048,913.08.

Today, it is $14,342,358,440,969.10.

But what this “debt ceiling deal” will do is it will give the congressional leadership of both parties much more power.

The new “Super Congress” that this deal establishes will be granted “extraordinary new powers” that regular members of Congress do not possess.

For example, The Huffington Post says that any new legislation produced by the “Super Congress” will not be able to be filibustered or amended….

Under the reported framework, legislation the new congressional committee writes would be fast-tracked through Congress and could not be filibustered or amended.

So who will be a part of the “Super Congress”?

The members will be chosen by the leadership of both parties.

So anyone that is not part of the “establishment” is not likely to be included.

The following is what U.S. Representative Ron Paul had to say about this new “Super Congress”….

“Nothing more than a way to disenfranchise the majority of Congress by denying them the chance for meaningful participation in the crucial areas of entitlement and tax reform. It cedes power to draft legislation to a special commission, hand-picked by the House and Senate leadership.”

It is this new “Super Congress” that will decide what will be in the package of “spending cuts” that will be voted on by the end of the year.

Regular members of Congress will be frozen out of the process.

On December 23rd, Congress will be required to vote up or down on the spending cuts proposed by the “Super Congress”.  Regular members of Congress will not be allowed to amend the legislation in any way, and no filibusters will be permitted.

Does that sound very “American” to you?

The more that one examines this “debt ceiling deal”, the worse it looks.

Meanwhile, many Democrats are running around and acting as if their lunch money was just stolen.

For example, the following is what Politico is reporting that U.S. Representative Mike Doyle said about this deal….

“We have negotiated with terrorists,” an angry Doyle said, according to sources in the room. “This small group of terrorists have made it impossible to spend any money.”

Democratic congressman Emanuel Cleaver was even more dramatic when he proclaimed that this deal “looks like a Satan sandwich“.

Well, this deal is a total nightmare, but not for the reasons that Cleaver is suggesting.

This deal opens the door for more rampant deficit spending, and nearly all of the “spending cuts” are put off until after the 2012 election.

Basically, the Republicans got taken out behind the woodshed and beaten to a pulp on this one.  Any Republican that is trying to proclaim that the debt ceiling deal is a “great victory” is a complete moron.

But in the end, it really does not matter which political party gets a “victory” out of all this.  What matters is that our federal government is still steamrolling toward a date with financial oblivion.

If this is the best that our politicians can come up with, we are absolutely doomed.

The Economic Collapse

The latest example of political hyperbole is that the U.S. Treasury is ready to default on its debt. An actual examination of the underlying facts is that the relative purchasing value of the currency has long ago swindled debt holder in U.S. Bonds of their promised returns. A default defined under this definition is part of the equation. Repudiation of the entire debt obligation is the real fear. Contrary to all the public scare tactics that the financial world will stop turning, the Federal Treasury has ample revenue to pay the interests on bonds and notes that come due. The essential issue is whether the new bond lenders are willing to roll over the debt that is coming due and keep the shell game going.

The late conservative journalist, Robert Novak’s favorite president was Calvin Coolidge, he is known for saying, The Business of America is Business.

The real statement comes from a speech by Calvin Coolidge called “The Press Under a Free Government” which was given before the American Society of Newspaper Editors in Washington, D.C. on January 17, 1925. The quote is really: “After all, the chief business of the American people is business.” However, Coolidge goes on to say that, “Of course the accumulation of wealth cannot be justified as the chief end of existence.” He discusses journalism and the thought that the business interests of newspaper owners should not taint reporting. He continues, “American newspapers have seemed to me to be particularly representative of this practical idealism of our people.”

A seminal truth about governments is that they do not function as a business. Every commercial enterprise eventually needs to pay their bills, since limitless borrowing is not an option for lenders. Bankruptcy is a favorite technique for repudiating debt, just ask the General Motors bondholders. Every survivor of the 2008 meltdown knows the rules of the game are now a moving target.

The media invariably seeks to blame the Congress for bringing the country to the brink. Most narrow in on the Republican Tea party freshmen as unreasonable. Little criticism is directed towards the intransigent Democratic leader Senator Reid. The reporting by the press no longer mirrors the standards of 1925 journalism, and the government no longer represents the practical idealism of the people.

Compare the recent settlement of the National Football League lockout with the drama of the Beltway National Theater. Both purports to have a countrywide audience, but only the NFL has avid fans. The government maintains their league through fear and phony promises. Football plays a man’s sport by dedicated lovers of the game. Presidents, Senators and Congressmen prepare their playbook to defeat their opponents, the citizens that elect them to office. The NFL is a business rewarded because of fan support. The Feds are a systemic extortion racket that forces its edicts upon a depressed and financially depleted citizenry.

The reason why the NFL players and owners settled their disputes, agreed to a decade era of labor peace, and anticipated prosperity is based upon the business nature of the conference. The reality why the Federal Government refuses to end the culture of deficit spending is based upon the dictatorial appetites of egomaniacs that serve their financial masters and deceive the public in an endless cycle of staged elections. As long as the State ignores the intrinsic nature of business principles, the social government will grow the welfare dependent society, as a way to dominate their subjects.

Tragically, many people know more about the free agency signing in the NFL, than the political positions of their own representatives. No one should be surprised about this development. Government is the ultimate monopoly and does not depend upon a free market of choice. Officials see spending as growth. However, the bigger a bureaucracy becomes, the more the financial lifeblood of business prosperity diminishes.

The will to correct this core failure is nonexistent, within the federal despotic fraternity. Their talent lies in designing new transfer programs to crony colleagues and constituents, funded by taxpayer levies or inventive exotic debt instruments.

No, wonder why so many American have totally given up on the political system. Unfortunately, that withdrawal of consent alone does not eliminate the treachery of career government officials. The GOP is poised to compromise and accept a dramatic rise in the debt ceiling. Their explanation will offend the most serious and sincere reformers. How else can the incessant spending end, unless the credit card is taken away from the addicted shopaholic?

The formidable financial sage, Paul Craig Roberts uses a political argument, when he warns about the response Obama might use to defeat sound business practices, in his article; The Unintended Consequences of Debt Ceiling Intransigence.

“The US dollar could plummet in exchange value and lose its role as world reserve currency. The US would no longer be able to pay its oil bill in its own currency, and as its balance of payments is heavily in the red, the US has no foreign currencies with which to pay its oil import bill. Or its manufactured goods import bill, or any other bill.

We are talking about a crisis beyond anything the world has ever seen. Does anyone think that President Obama is going to just sit there while the power of the US collapses? He doesn’t have to do so. There are presidential directives and executive orders in place, put there by George W. Bush himself, that President Obama can invoke to declare a national emergency, suspend the debt ceiling limit, and continue to issue Treasury debt. This is exactly what would happen.

The consequences would be that the power of the purse would transfer from Congress to the President. It would be the end of the power of Congress. Congress, Republicans and Democrats alike, have already given away to the President Congress’ Constitutional right to decide whether the country goes to war. Now Congress would lose its power over debt, taxes, and the budget itself.”

Any sober reader should consider Roberts’ insights. Yet, what else can be done within the constitutional Federal system of separation of powers to stop the spending binge? The house of cards can no longer support the burden of the public financing through the fractional reserve fraud used by the Federal Reserve.

The alternative is for the Treasury to issue government bonds directly to the market. All interested paid to the banking elites that own and control the private Federal Reserve needs to take a thunderous haircut. This is the only solution to eliminate the curse of compound interest paid to a criminal cartel, which holds our country hostage.

The insane spending is unnecessary. No one who rationalizes that the federal budget is sustainable can be trusted. Anyone who refuses to cut and eliminate entire agencies is perpetuating an illegitimate bipartisan regime of coercive corruption.

The convoluted mechanics that will emerge to justify a higher debt limit will be just one more insult to the hard working citizens that conduct business on Main Street. The total disconnect of the government class from the most simple requirements of authentic wealth creation is at an all time high. The reason the Tea Party movement spontaneously erupted over the unbearable taxation demands demonstrates that common sense still lives in the minds and hearts of real Americans.

The socialistic mentality that relies on government to supply physiological reinforcement for their personal inadequacies and diminished mental capacities is no excuse for national betrayal. The Capitol Dome is the most distinctive landmark in this country. The weight of the burden from all government debt is undeniable. Even a mainstream newspaper like USA Today admits that the U.S. funding for future promises lags by trillions.

“The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.

“The (federal) debt only tells us what the government owes to the public. It doesn’t take into account what’s owed to seniors, veterans and retired employees,” says accountant Sheila Weinberg, founder of the Institute for Truth in Accounting, a Chicago-based group that advocates better financial reporting. “Without accurate accounting, we can’t make good decisions.”

Isn’t that lack of financial reporting, let alone accountability, the forestay of the political class? Do you really think that a sensible leader in the Calvin Coolidge tradition can be elected today? America is no longer a country that conducts business. The international banksters, who peddled the debt drug to a spending addict, own the global empire. The globalists are stealing any wealth that remains in a country of junkies. The political pimps that pump you full of dependency are masters of the delusion. The overdose leads to a terminal condition. Endure the withdrawal shock now, before it is too late.

Get your own house in order. Learn how to do business without debt. There is no signing bonus in this masochistic league of the establishment’s lie and steal game. The only sport left is to cheer for an early repudiation of the illegitimate public debt.

SARTRE

Deal?  What deal?

Cut spending?  Uh, no.  There’s no spending cuts, only claims of reducted increases.  More debt?  Yes, and lots of it.  Balanced budget?  Never.

The economics are clear – unless this gets fixed, and soon, we will start down the gravity well inside the escape radius, and get to choose only between spiraling into the singularity and hitting it head-on.  Incidentally, both end the same way.

http://blogtalkradio.com/marketticker

Well here’s Boehner’s “compromise”; what it does is:

• Lie once again about “cutting spending.” It does no such thing.  It increases spending – every year.  Bogus and outright-fraudulent “baseline budgeting” means that if they intended to boost spending $300 billion but only increase it $200, that’s a $100 billion “cut.”  If you ran your household like this you’d be broke in a week.  For the US, it will take a bit longer.
• No tax increases. That’s nice, but let’s not forget that while the Democrats scream about the “Bush Tax Cuts” the FICA tax cut was theirs.  Obama signed it.  You cannot keep reducing income and increasing spending forever.
• The cuts, fraudulent though they are, aren’t even real anyway – and not binding either. There’s nothing before 2013, which means a downgrade is almost certain.  Further, raising the debt ceiling now for the whole among but allegedly finding the “cuts” over 10 years is an outright fraud by a ratio of 10:1.
• A 2013 timeline for actual changes means nothing, since the next Congress is not bound by what this one does. Period.
• Sequesterization didn’t work in 1997. It won’t work in 2011 either.
• We failed to get to $4 trillion. That’s what S&P said they needed, and they said they needed to see that within the next three years. Now we find out if S&P has any balls.

We also get to find out if the so-called “Tea Party” is worthy of the name.  Yeah, I posted that my opinions change when facts do, and they appeared to.

Boehner needs to be ejected from Congress in the next election, and the remaining “mainstream” Republicans must go with him, along with any claiming to be “Tea Partiers” who vote for this abortion.

All of them.

In the meantime, kill this bill and by doing so balance the budget in three days.