Posted on 08/09/2009 5:35:58 PM PDT by Robert Drobot
On December 9, 2008, $65 billion of investor money was at peace. On the fear-greed seesaw that is said to characterize investor emotion, fear was down on the ground, while greed was high in the sky, having all the fun. Greed was earning a steady 1% per month, making fear look like an over-cautious fool.
On December 10, 2008, six simple syllables transformed that greed into lead, sending it crashing to earth while launching fear to the moon. The syllables were these: "It's all just one big lie," and they were spoken by Bernard Madoff. It was an admission that his investment fund was nothing but an illusion and a fraud. These syllables represented a savage truth that would wipe out the savings of thousands, and toll the bell for the rest of the world's investing public.
Those six syllables possessed powers far beyond their size. They forced $65,000,000,000.00 to vanish back into the thin air from which they had materialized. Thin air has been busy these days, as you will see.
The fact that a mere six syllables could cause a multi-year, $65,000,000,000.00 fraud to implode is testament to the truth's simplicity and power. The truth represents intellectual gravity, and sooner or later, all things fall into its arms, whether they want to or not. The truth does not need phalanxes of lobbyists, czars, public relations personnel, pundits, pontificators, propagandists, pollsters, or politicians to express itself. Rather, it represents magnetic north, toward which the human consciousness is naturally inclined. In the beginning of the revelation of a truth, only those with courage can see it; in the end, it is clear to everyone.
[Editorial note: In this article, we will express numbers in digits. The government, financial "services" industry, and television talking heads, to name a few, are currently bombarding society with the terms "billions" and "trillions." The constant repetition of these terms has given people a false sense of familiarity with them, and made them appear "normal" and "everyday." These colossal sums are anything but normal and everyday. They are monsters that are tearing apart our fiscal, financial and monetary systems. Those who casually throw around a trillion here and trillion there, such as the steady parade of CNBC commentators, try to act as if they understand the magnitude and implications of these sums, but they don't, because the sums are incomprehensible and their systemic consequences are totally unknowable and unpredictable. This is patently obvious given the extreme financial crisis afflicting our nation and the world. Also, only "two" of something, such as trillions, doesn't seem like very much to most, whereas the written expression of that same number, in this case $2,000,000,000,000.00, does.]
Compared to current fiscal, monetary, economic and financial reality in the United States, Madoff's losses were modest, even quaint.
The United States' fiscal year 2009 federal loss (euphemized for the masses by the term "deficit," which sounds technical, econometric, and not nearly as bad as what it really is, a loss) will exceed $2,000,000,000,000.00, more than 30 times Madoff's $65,000,000,000.00 loss. Keep in mind that it took Madoff a professional lifetime to lose that money; the United States will lose $2,000,000,000,000.00 in just one year, and according to official budget projections will continue losing hundreds of billions more, annually, for decades to come. (More on this in a minute.)
The cost of the government's financial-crisis-related bailouts and guarantees currently exceeds $13,500,000,000,000.00, which is 200 times larger than the Madoff scandal. And the nation's unfunded contingent liabilities, for programs such as Social Security, Medicare, Medicaid, government pensions and the like stand at $75,000,000,000,000.00, 1,150 times larger than Madoff's fraud. They should let Madoff out of jail and put him in charge of the Treasury. Maybe America could get some relief.
Of course, these numbers make laughable the government's righteous indignation and shocked disbelief that a "Ponzi scheme!" as "large" as Madoff's could have operated in the United States. The government's response is a textbook example of the intelligence industry's attention-diverting technique known as misdirection.
In June, 2009, the Congressional Budget Office (CBO), a government entity, issued its "Long Term Budget Outlook" for the period 2010 through 2080. The executive summary begins with these words: "Under current law, the federal budget is on an unsustainable path – meaning that federal debt will continue to grow much faster than the economy over the long run."
While that statement might seem stark, it is the verbal equivalent of morphine compared with the actual numbers in the CBO's long-term budget projection, which are nothing short of terrifying.
According to the CBO, over the next 70 fiscal years, the federal government will NEVER have a surplus. Rather, the United States will continue to suffer massive, escalating, multi-hundred billion dollar losses ("deficits") each and every year for the next SEVEN DECADES, which is when the budget projection stops. Under both CBO budget scenarios (catastrophic and worse-than-catastrophic), losses in fiscal year 2080 will be the largest of the entire 70 year series, meaning that the budget crisis will continue well beyond 2080. In the best case, the 2080 loss will be 17.8% of Gross Domestic Product (GDP); in the worst case, it will be 42.8% of GDP. To put this in context, the 2009 federal budget loss is projected to be 11.9%, in this, the worst financial crisis in American history. So 2080 will be 50% to 300% worse than now. Who the CBO thinks will fund these trillions of dollars' worth of forever losses, it does not say. Apparently, America is headed back to the Stone Age, thanks to our profligate politicians and corrupt financial elite.
The United States has already reached the point where it is arithmetically impossible for it to pay its debts or keep its promises, unless it devalues its currency to the point where it impoverishes its citizens and creates international financial chaos. And even devaluation as a means of ending the country's budget nightmare will be difficult, given that so many government programs have cost-of-living escalators, making inflation a “No Exit” horror story. This is not subjective opinion, but rather objective, arithmetic fact, now supported even by government agencies themselves, such as the CBO. As John Williams of shadowstats.com has observed, even if personal incomes were taxed at 100%, the United States still could not pay its bills.
Astonishingly, given this fiscal context, the government now proposes to effectively nationalize the nation's health-care industry, with projected additional losses of $1,000,000,000,000.00, a number we can be 100% certain will prove to have been grossly understated. Additionally, it has created $13,500,000,000,000.00+, so far, to bail out Wall Street, at the direct expense of America's citizens, adding to the nation's debt misery and hopelessness.
All the while, government has looked on with apparent admiration, envy and awe as Goldman Sachs announced that despite America's financial catastrophe and despite the fact that it gorged earlier this year at the feed trough of taxpayer bailout money, it will reward its staff with record bonuses in 2009, totaling some $20,000,000,000.00. It is taking the taxes paid by everyday people such as nurses, teachers, auto workers and fast food clerks, and stuffing its pockets with it. Of course, that is just the tip of the iceberg. The rest of Wall Street will lavish itself with taxpayer-funded bonuses, too.
Even more astonishingly, on June 26, 2009, in the midst of America's employment and economic meltdown, Congress approved $108,000,000,000.00 in loan-guarantee funding for the International Monetary Fund (IMF), so the IMF can provide financial assistance to "poorer nations." No citizens on earth are as indebted as Americans, given the nation's $11,500,000,000,000.00 federal debt, and more than $85,000,000,000,000.00 of combined federal debt and unfunded contingent liabilities. So how the world's most indebted nation proposes to provide assistance to "poorer" nations is a fiscal mystery, the solution to which is apparently known only to the spendthrifts in Washington. Unless, of course, the money were slated to return to the United States as "foreign aid," but that is not the plan. What arrogance, callousness and conceit on the part of our government, to strap this added tax burden onto the backs of American citizens, who are already the most debt-enslaved people in the world.
The IMF funding is in ADDITION to the government's June 26, 2009, $106,000,000,000.00 supplemental war appropriations bill, which was supposedly meant to pay for continuing military operations in Iraq and Afghanistan, but which includes U.S. taxpayer gifts of $660,000,000.00 for Gaza, $555,000,000.00 for Israel, $310,000,000.00 for Egypt, $300,000,000.00 for Jordan, $420,000,000.00 for Mexico, and $889,000,000.00 for the United Nations, for so-called "peacekeeping" missions. War is peace. Orwell must be laughing himself sick, six feet under.
Congress is in such massive denial about the fiscal and financial crisis it has already created that its spending orgy continues without restraint. In fact, the out-of-control spending is now so outrageous that one can seriously argue that Congress, the Treasury and the Federal Reserve (Fed) are deliberately trying to destroy the United States. Bob Chapman (www.theinternationalforecaster.com), a brilliant analyst and publisher of one of best newsletters in the world, has long argued that what is happening is part of a systematic plan to bring this country to its knees so a one-world government-for-profit, owned and operated by global power brokers can be implemented. His ideas deserve deep and thoughtful consideration, because his track record thus far has been nearly perfect.
The fact is that the United States is suffocating in what has become an airless House of Lies. Social Security is a promise that cannot be kept with anything even remotely resembling America's current "money," and is therefore a lie. Medicare and Medicaid are promises that cannot be kept, and are also lies. SSI benefits cannot be paid into the future, and are lies. The federal debt cannot be paid, and is a lie. Government pensions cannot be paid, and are lies. The prescription drug program is unaffordable, and is a lie. Food stamps and other forms of welfare are unaffordable, and are lies. And the list goes on and on.
Arnold Toynbee wrote, "An autopsy of history would show that all great nations commit suicide." This is exactly what we are witnessing today in the United States: fiscal and economic suicide. As America's "leadership" injects financial poison into the country's veins, the citizens stand by and watch, having not a clue about what to do to stop the destruction. Today's unavoidable reality is that tens of millions of American citizens are going to die financially before they die physically, thanks to government losses and crony payoffs that enrich and empower a small, shameless, greed-stricken minority at the expense of the entire nation. This latter point is amply demonstrated by Washington's race to Wall Street's defense via the recent bailouts, where trillions of taxpayer dollars were handed over to centimillionaires for nothing, while for the past 20 years, it stood by and did nothing as the lives of millions of American workers were turned upside down when they lost jobs that migrated overseas thanks to state-sponsored globalization, another moronic and disastrous market intervention.
Despite the CBO's calm outline of the next seven decades' worth of ceaseless, staggering American operating losses and surging debt, we are fast approaching endgame. One of the greatest prize fights in all of history is about to begin. In one corner of the ring will be a scrawny, sick-looking contender called The Lie, coached by Washington, D.C., and Wall Street. In the other corner will be a 250-pound, aerobically perfect, experienced fighter called The Truth, coached by the collective wisdom, experience and technique of Time. Once the fight starts, it will be over in a second. The same way Madoff's fund was knocked out with one punch, once he put his Lie into the ring with The Truth.
Speaking once again of Madoff, as a citizen, you must ask yourself this: what if an official at the Fed or Treasury woke up one morning, seized by his or her conscience? What if this official could not continue to lie about America's finances?
What if, in a moment of personal honesty and catharsis, that official repeated in public, say, at a Congressional hearing, those six simple syllables spoken by Madoff? What if someone in authority admitted that, "It's all just one big lie"?
What would happen to the bond market? The stock market? The financial system? Your local bank? The Federal Reserve Note? It seems logical that all of these would all suffer, probably mightily. And the prices of gold and silver? Wouldn't they go up, potentially by an order of magnitude, as millions scrambled for financial sanctuary?
The financial laws of gravity are exactly that: laws. The narcotics of hope and denial cannot repeal them, just as they cannot make a butterfly turn into a 747, convert lead into gold, make America's debt disappear, or transform Fed Chairman Ben Bernanke into a mangod who can make the consequences of gross fiscal and economic dereliction go away, just because he says so.
The financial laws of gravity say that it is impossible to indebt a society into prosperity, or money-print everyone rich. In fact, reality says the exact opposite: endless debt and money creation impoverish and enslave a people, while enriching to a grotesque degree a relatively few opportunistic, immoral, greedy, insider manipulators, just as we have seen and continue to see.
If government were genuinely trying to fix this mess, then perhaps we could have some hope, even though we are already beyond the fiscal point of no return. But recent actions, such as the June, 2009, $108,000,000,000.00 ($108 BILLION) added funding for the IMF, and the proposed nationalization of health care, to cite just two relatively minor examples, demonstrate that Washington is, at best, incapable of recognizing the seriousness of the country's circumstances, or, at worst, is spending us into oblivion on purpose. (Collectively, could they really be this reckless, stupid and destructive? Is that conceivable? Or is something far more evil and diabolical at work?) Pinning one's hopes to "change" is an act of insanity given the situation. The only change in America is the total lack of it.
There is a solution: It is called the truth. The United States government must irrevocably admit that its wanton, escalating experiment with socialism, which is now veering into something even more sinister, called corporatism, which is another word for fascism, has failed catastrophically, just as it has failed every other time throughout history that it has been attempted. And the people must be told that this nation can return to greatness only if they and their government will re-embrace the virtues that made it great in the first place: honesty, responsibility, restraint, ingenuity, hard work, self-reliance, morality, character, dignity, honor, duty, sacrifice, patriotism and an abiding belief in something greater than ourselves.
Each reader can make his or her own decision as to whether America and its "leadership" will have the strength to face the truth, or not. If they do not, then we will soon enter a period of personal and financial survivalism. If you believe that the nation will not face reality, then you must immediately begin to put your affairs in order. Those who think ahead will be able to survive the whirlwind that denial will unleash. But those who stand before such a tornado, unprepared, have poor and more likely tragic prospects. The odds that you, the reader of this article, will find a way to prevail are good. But unfortunately for your fellow citizens, you are in a small minority. You are distinguished by courage, thoughtfulness, an ability to face facts, resourcefulness, and a genuine concern not just for yourself, but for all who are dear to you. Those virtues were required to get you to this point in this difficult article. Those same virtues will save you as the flag of the future unfurls.
Stewart Dougherty, a Florida-based commentator, is a specialist in inferential analysis, the practice of identifying patterns and trends from specific, contemporary events, and then extrapolating their likely effects upon the future. He was educated at Tufts University (B.A.) and Harvard Business School (M.B.A., and an academic Fellow).
Yes. And it isn’t BO’s fault. Underfunded Medicare and Medicaid exceed underfunded social security by a factor of five.
What I think will happen, is that the debt will be monetized and each of us will start getting a Basic Income Grant from the go’vt. We can work if we want to make more. Frankly, the health care trillon is a drop in the bucket.
parsy, who will become a poet in the new America
Sadly, there is plenty of blame to go around. Both parties have been profligate spenders. The fecal material is starting to hit the fan and it will get much smellier before it gets better. To answer the author’s question, I don’t think there are many, if any, in state and local government who are willing to face the facts and stop the slide to financial oblivion. I think it is time for people to prepare for a bumpy ride.
It may not be BO’s fault, but if it were urgent that we get a fiscally responsible administration at this time in our nation’s history ....
cPete, who will let the poet finish the above thought.
bump for later
Then we ain’t got one. But, maybe what we need is an irresponsible leader at this point in our history. Someone who will just go ahead, throw sense to the wind, and do something stupid. I don’t see how brains can fix this.
parsy, who says sometimes brains are a detriment
Some have the objective of minimizing the damage, keeping the country in one piece and waiting/working for the culture to change.
It’s a sad thing for a nation to have a spiritual/cultural revival in the years right after being reduced to rubble.
cPete, who hears people say that “war is hell” and retorts that “national bankruptcy is permanent”.
I don’t know that it can be minimized. I pulled this off wiki:
http://en.wikipedia.org/wiki/United_States_public_debt
An excerpt:
Calculating and projecting the debt
2010 Budget: Projected deficits and debt increases in President Obama’s 2010 Budget
2010 Budget: Total Debt $ and % to GDP
Tracking current levels of debt is a cumbersome but rather straightforward process. Making future projections is much more difficult for a number of reasons. For example, before the September 11, 2001 attacks, the George W. Bush administration projected in the 2002 U.S. budget that there would be a $1.288 trillion surplus from 2001 through 2004.[61] In the 2005 Mid-Session Review, however, this had changed to a projected deficit of $850 billion, a swing of $2.138 trillion.[62] The latter document states that 49 percent of this swing was due to “economic and technical re-estimates”, 29 percent was due to “tax relief”, (mainly the 2001 and 2003 Bush tax cuts), and the remaining 22 percent was due to “war, homeland, and other enacted legislation” (mainly expenditures for the War on Terror, Iraq War, and homeland security).
Projections between different groups will sometimes differ because they make different assumptions. For example, in August 2003, a Congressional Budget Office report projected a $1.4 trillion deficit from 2004 through 2013.[63]
However, a mid-term and long-term joint analysis a month later by the Center on Budget and Policy Priorities, the Committee for Economic Development, and the Concord Coalition stated that “In projecting deficits, CBO follows mechanical ‘baseline’ rules that do not allow it to account for the costs of any prospective tax or entitlement legislation, no matter how likely the enactment of such legislation may be.” The analysis added in a proposed tax cut extension and Alternative Minimum Tax reform (enacted by a 2005 act), prescription drug plan (Medicare Part D, enacted in a 2003 act), and further increases in defense, homeland security, international, and domestic spending. According to the report, this “adjusts CBO’s official ten-year projections for more realistic assumptions about the costs of budget policies”, raising the projected deficit from $1.4 trillion to $5 trillion.[64]
The 2010 Budget proposed by President Barack Obama projects significant debt increases.[65][66] The debt is projected to nearly double to $20 trillion by 2015, but is expected to increase to nearly 100% of GDP by 2010 and remain at that level thereafter. These estimates assume real GDP growth (after inflation) ranging from 2.6% to 4.6% annually from 2010 through 2019, which exceeds Blue Chip consensus estimates.[67] Approximately 70% of federal spending is in four categories: Defense, Medicare, Social Security, and interest on the debt. As of June 2009, Obama’s policies enacted into law were only a minor influence on debt and deficit projections. However, Obama himself has been criticized for not having a realistic plan for addressing the increasing debt.[68]
parsy, who thinks the numbers are so out of whack, money will have to printed
Today, the powers that be are in the know, or are just too incompetent to fix it...and as the author states, and Ive seen many others state, you cant have a group of people that large, make 100% WRONG decisions w/o it being purposeful...
IMO, they KNOW the bridge is about to collapse, and KNOW that a 'million bucks' aint gonna buy a loaf of bread shortly, so they are hedging and leveraging everything towards becoming trillionairs [thats 12 ZEROS] to have some power in the aftermath...
gilbo, who thinks that all the lies of our 'representatives' have sentenced my kids to suffer while I fight for the rebuilding the new USA in Glory to God...
ping, great report on the financial state of the union, kinda long though, only cause the author uses the actual numbers with all the zeros...
I always love reading your signatures Parsy.
Obviously, nobody here is bullish on America. (Somebody must be, cuz the DOW’s been on a run. Fools.)
I guess, by “minimize the damage”, I meant NOT maximizing the damage, which the marxists are trying to do.
I could come up with plenty of solutions for the Medicare nightmare. Newt has ideas galore. But the only ideas that would be considered by congress are the bad ones.
A $70 Trillion unfunded liability is easier to default on than a loan. It is not as if we ever borrowed $70 Trillion from the boomers. From their perspective, the $70 Trillion is an asset, but it is asset that will be liquidated by them at a fraction of today’s face value.
cPete, who knows the West is melting.
Hopefully, the suffering will be short. The sooner the gov’t realizes this isn’t fixable, the sooner we can start to build the New America. If not, we will spend years trying to get the deficit under control, and it just can’t be gotten under control without printing money, IMHO. And, I hope I am wrong.
But think about taxes as a % of GNP. 20% of GNP on top of current taxes would pay off the “little deficit” in five years. Which would break business in this country for 5 years, which would increase the deficit even more.
But that doesn’t touch the “BIG DEFICIT” of unfunded medicare/medicaid or social security. This is anywhere for 50 to 100 trillion from numbers I have read. We may have to have nat’l health care just to survive, because who knows how many of us are even going to be working.
But on the bright side, in the New America, we will probably have time for family again and those of us who want to be poets, will have plenty to write about.
parsy, who shot an arrow in the air, it came down hard into his hair, and would have killed him except that, it was deflected by his tinfoil hat.
Thank you. I think I am starting a trend.
parsy, the fashion plate.
That might be why BO is pushing so hard for nat’l health care. We can be paid with the service rather than the cash. And I try to be cheerful, but these numbers don’t look like something that can be worked out.
I think the longer we try to fool ourselves, the longer we are going to suffer.Plus, there’s some of us that have poems to write and need that monthly gov’t check so we can discover our inner Longfellow.
parsy, who is palely loitering
Soros is funding the euthanasia/suicide movement in U.S. Obama is with him 100% on it. That is the solution that corporate America has come up with.
It will be an ugly scene.
therefore, we must have a serious de populating of 'troublemakers', followed by a re populating of peoples that will appreciate their newfound third world wealth and eagerly idolize them as the creaters and providers of life itself...
gilbo, weeping for our children and the foolishness of the human spirit...
Look for cigarettes to be pushed. And all this healthy living stuff? All that is going to do is increase life spans and eventually increase the health costs anyway.
I still the easy way out is hyper-inflation.
parsy, who says again he hopes he is wrong.
But, OTOH, there is now the internet. It will be more difficult and, unlike the Jews in Germany, we Americans are well-armed.
parsy, who really isn’t scared about that scenario
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