Saturday, March 2, 2013

Weekly Fear-Mongoring: Death of an Empire Part II

Part II of my expose on who gave America HIV - last week we identified P.E. #1 - The Federal Reserve. Closely behind it is this week's culprit - your United States government!!!!!!

Our government is front and center in the 'Biggest Loser' department, except there's no Jillian Michaels to whip them into shape. You hear the usual numbers - $16.7 trillion in debt, 7.9% unemployment, $220 trillion of unfunded liabilities. We have sequesters (and the bogus scare tactics behind them), fiscal cliffs, government stoppage at the end of March, May's debt ceiling debate, pork-barrel spending, sweetheart deals if you vote for certain legislation, disgusting amounts of waste........and that's just through February 2013!!!!! I finally saw the light and disassociated myself with those gutless GOP cowards in January and continue to despise the Democrat party with every fiber of my being. So how did these worthless, dickless, blowhards cause the mess we are in now? "The media tells me it was all George Bush's fault. I don't have time to research it, so I just spit out the same tired line at the water cooler." Well it behooves everybody to dig down a little bit to uncover some uncomfortable truths.

I already talked about how the Fed's easy money policy in the 1980's started things rolling on the way to a banner 25 year bull market, but it also set the stage for the biggest crisis since the Great Depression by encouraging an epic housing bubble. Government also played a role in it, but I wouldn't expect the media to give you a truthful explanation of how. Starting in the early 1990's, it became one of Bill Clinton's top priorities in his first term to grant every American the right to own a house, no matter how rich or poor. As is standard protocol, low income voters tend to gravitate to the democratic party for the handouts and gimme gimme gimme mentality that they foster (hope this offends my liberal readers because it's true). Now shared accountability here - Jimmy Carter had the idea first in the 1977 'Community Reinvestment Act' that brought loans to lower income folks. But they at least had some semblance of standards, which is why the program skated by for the first 15 years (and two republican administrations) without a 'bubble' of sorts, and the rising wave of lower mortgage rates certainly helped things. But when the Clinton administration took over, things were revamped and legislation modified to ensure anybody and everybody could join the picket fence club.

'Reckless Endangerment' by Gretchen Morgenson, a Pulitzer Prize-winning business reporter and columnist at The New York Times, and Joshua Rosner, an expert on housing finance blew the lid off what was already known in conservative circles - the democrats and government mortgage agencies Fannie Mae and Freddie Mac (big Clinton donors, especially ex-Fannie CEO James Johnson, formerly of Obama's advisory team) decided to lower the standards and launch the era of the 'nothing down, sub-prime loans here we come' housing boom. Clinton reaped the benefits of the 1990's tech boom, but remains blameless for the deregulation that untethered investments from any reasonable regulatory oversight. His administration rewrote the Community Investment Act to increase lending to lower income neighborhoods (and trick those bastards into sub-prime adjustable rate mortages). He also was heralded for the victory that was the Gramm-Leach-Bliley Act of 1999, which REVERSED the necessary Glass-Steagall Act, requiring banks to separate investment and commecial banking activities, or "improper banking activity". Finally, he had an extreme lack of foresight by exempting credit default swaps (the financial instrument that blew up the economy in 2008) from regulation. But he escaped the throne in 2000, before the mild recession that Bush inherited and certainly before any housing bubble. Former House Banking Committee Chairman Barney Frank forced Fannie and Freddie to buy up risky mortgages and used his influence to push through legislation forcing affordable housing mandates. And he got his then-boyfriend a sweet gig in Fannie. And I don't mean a dick. Oh and we bailed out these agencies for hundreds of millions of dollars. But our government has your best interests at heart. And again, it's Bush's fault.

Now I realize republican Phil Gramm (whose name was attached to GLBA 1999) bears responsibility for not raising any eyebrows on the legislation and going along with this bipartisan bill, and republicans for the next ten years were unable to make enough of a stink to reverse policy, even when they had control of Congress in Bush's first term), and even when they raised the idea of an eventual housing crisis five times in the six years before the crisis. But its fun to blame George Bush cause he talks funny and is wildly inarticulate. And since the GOP is a bunch of spineless baboons, they didn't stick up for themselves and deny culpability (a noble trait yet a frustrating trait).

So that clears up the housing mess caused and facilitated by our worthless government. How about the deficit spending that began under Reagan (though manageable), but grew out of control starting in Bush's second term? The below chart shows the evolution of the debt since 2000. Blame who you will accordingly:

Date Dollar Amount
09/30/2005 7,932,709,661,723.50
09/30/2004 7,379,052,696,330.32
09/30/2003 6,783,231,062,743.62
09/30/2002 6,228,235,965,597.16
09/30/2001 5,807,463,412,200.06
09/30/2000 5,674,178,209,886.86

Something tells me the deficit money was spent on wasteful pork, entitlements, wars, entitlements, more wars, and more entitlements. This is your country in action. Both parties have failed you, and they continue to fail you today and will fail you for the foreseeable future. But you, the stupid voter, just want a two party system and you'll make fun of the libertarians, the undecided independents, the Ron Paul crowd. You'll call anyone that dislikes Obama 'racist' and you'll point the finger at the other guy when policies go south. Both parties have had their share of control over the years, and alas, we are here, at the end of the road for America. Remember ten years ago when all anyone could talk about was globalization and how awesome it was? Remember when Bill Clinton signed NAFTA in 1993? There goes 500,000 jobs (that's the most conservative figure out there. Other reports show as high as 10 million over the past twenty years!). Add another 3 million in net manufacturing jobs lost over his two terms. Bush didn't help things either by allowing about 4.5 million to leave the country. Both figures are disputed (to be fair), but the trend persists in the absence of an official answer.These jobs aren't coming back because the US worker is so effin expensive. Thanks, unions. Bloated salaries, pensions, healthcare, other liabilities, and a shitty by-product. Neither party can reign in the unions though, and we are seeing state after state go into the red because the cost of pensions are through the roof. We sure as hell don't want to drill offshore either! That would make too much sense! What about the Keystone Energy pipeline that would link Canada to Texas and create tens of thousands of jobs? No thanks. What about removing troops from countries that are not even in a state of war/conflict/unrest? No, we need to be there for some reason, which costs a lot of money. Not to mention the trillion or so spent in the Middle East (to be fair - that's on Bush and the military industrial complex). What about that bastion of uselessness, the United Nations? Nope, we need to keep giving our billions of dollars of dues to them, eventhough they do nothing in our interests.

So basically, whatever political theater you hear coming out of Washington, ignore it. Sequester will not fix our problems, nor will it destroy us. A little reported factoid is that between February 27th-28th, 2013, our overall debt increased by $80 billion. In one day, we wiped out most of any sequester savings over the year. IN ONE FRIGGIN DAY!!!!!! We will be ramping up defense spending soon enough to combat China, Russia, and commit more troops to the Middle East for World War III later this year, or 2014. They'll continue to kick the can on the entitlements problem, which is 67% of our annual budget!!!! Blame defense all you want, but that's 60% less than social security, medicare, and medicaid!!!! How about we cut back in areas that are wasteful? How about we slow entitlements, extend the retirement age, and means test social security recipients? How about we eat healthy and exercise more and thus need less 'lifestyle' based healthcare in our later years (oops - that belongs in Part IV - 'It's YOUR fault'). The deficit will continue to increase every year, more rich people will think of ways to pay less in taxes through tax shelters, the government ('democrats') will expand entitlements to stay in power, and the wussy republicans will find stupid things to spend money on even if they retain congressional power in 2014. Nothing is going to fix our spending problem. Obama will have a $22 trillion deficit on his hands when he leaves office in 2017. The system will have crashed by then, the dollar will be used as toilet paper, and we'll be doing the Chinese goosestep with Russian fur hats on. And Ron Paul would have been right...about EVERYTHING.

One more item - there now appears to be growing congressional support for the full confiscation of guns 401k and IRA accounts. Simply put - if government gets its hands on $19.4 trillion of YOUR retirement money that you EARNED, we can wipe out the debt. How do they do this? They thrust yet another Ponzi Scheme on us by forcing us to liquidate our existing allocations/investments in our retirement accounts and convert all cash to US treasuries as a 'stable' investment. The idea was first floated in 2007 (Bush administration), and though it keeps getting pushed off, support is starting to pick up in 2013. Once the money is in treasuries, government can spend it now on the 'promises' of tomorrow (ie - social security). The retirement money that you think is there will not be there in the same form as it is today when you retire 20-40 years from now. Keep this in mind over the next few months/years as things get worse domestically with our strawman economy and failing dollar. We need to watch both parties as they scramble to fix the growing debt problem that THEY created.  

Next culprit in Part III - Wall Street. Hope things are coming into view for you clueless, knuckle-dragging types!

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