Bad For Small Children And Dogs
Last March 16 - barely two months ago - Congress raised the debt ceiling (something they have done 70 times since the 1950s) in an effort to keep the US from defaulting on foreign T-bill investors. They then went on a rampant spending spree to eat up all of those checks they just printed.
Now, with those American Excess bills coming due, they are about to do it again! It's almost like if you or I said to our significant other "Going to work and earning money wastes too much time better used for spending!"
How long could we continue with not bring in money to pay bills, especially like the bill for the $6.1-billion to be spent on Marine One - the one that couldn't fly recently - with lots of chrome, wide tires, spinner hubs, and a LOUD stereo?
That is what the world's T-bill investors who will pay for it are asking.
The dollar's decline - which affects Asian currencies as well - has accelerated since the end of March as the huge U.S. current account deficit widens further, and the Federal Reserve signals that it may pause its 2- year long cycle of raising interest rates.
The end of March - right after the debt ceiling was last raised. Coincidence?
As the year wears on, growth in the American economy also is likely to slow thanks to higher borrowing costs and ebbing consumer spending.
The dollar would fall sharply if the rest of the world lost the appetite that is financing this deficit, a potentially nightmarish scenario. This time around, the dollar has declined against a several currencies in Europe and Asia. The U.S. current account deficit, which rose to $804.9 billion last year and is set to go higher in 2006, also haunts the dollar, economists said.
said Tony Norfield at ABN AMRO in London. "It has arrived."
In the last five years, President Bush has accumulated more national debt than all of the Presidents that preceded him in the 225 years history of the United States. The debt of nations however, is nothing more than the accumulated debt of its individual citizens.
In town, the foreclosure lists are just beginning to rise as the $300,000 homes that have only been lived in for a couple of years start to hit the market. They couldn’t make the dream work. The slide rule was used against them; the treadmill accelerated and bumped them off; and the dream was a mirage, not a reality. The door to the “good Life” was just slammed in the face with the chill of mythical dreams and failed promises.
In a world laden with excess, Ronald Reagan blessed America and said “Greed is good”. Since then, two generations of our young folks have been programmed to believe in grabbing everything you can; living with exorbitant debt, and working till you drop.
While our parents had been raised to believe that everything was possible in America, they had also been raised as products of the Great Depression and the great World War. They knew sacrifice. They abhorred debt. They valued true value. We worried less about debt; were lulled into believing that life was a sock hop, and that glitz and glamour were reality.
But our children were unleashed with the credit card plastic and plastic became their real lives. [T]he first drive was some mental prize that being first was best; that being biggest, loudest and richest was supreme.
But, I digress. [Hey! That's MY Line!!!]
Let’s examine the individual debt as well. This nation has lived on credit. The banking industry encouraged and built its wealth stream on the basis of false economics.
When car prices got too high to afford in the 80s, we developed longer term mortgages and lease agreements and encouraged people to concentrate not on net worth or value basis but on cash flow or making payments basis. The fact was, we produced a car that wouldn’t last but three years under commuting conditions, yet we managed to develop financing schemes – scams, actually – to charge interest on for amortization periods up to seven years. While it makes no practical sense from a consumer sense; it disavows the base problem that the cars have been over-priced; the law of true supply and demand was displaced by the Republican Reagan Administration. Credit restrictions and usury laws were relaxed; banking was totally deregulated and all consumer protections displaced.
This alteration came in the banking industry when I was a banker in the 1970s. I know of which I speak. We knew there had to be a transitional approach because the price of living had exceeded the real ability to pay for goods – especially durable goods. The net effect was that we had to find ways that people could live then – and pay later.
Within a decade, personal bankruptcies became more prevalent.
Regardless, living in excess fuels the end. In every teaching from religion to history we find that a generational rise in excessive living spurred the meltdown leading to change. Maybe it was the accelerator that caused the car to simply go too fast for the blind curve ahead. To me, it was the person whose foot was on that accelerator who was ultimately to blame.
So what does this person with his foot on the accelerator do now? P. M. Carpenter says, "Not much!"
The president has so broadly boxed himself in there’s precious little room in which to turn.
Bush’s weekend speech [at Oklahoma State University] indicated little more than a holding pattern as he waits for his indictment-dodging brain, Mr. Rove, to tell him what to do next. That normally wouldn’t be unduly worrisome -- no more than we’ve become accustomed to, that is -- but this final time around Rove’s strategic suggestion for humiliating the opposition and inspiring the base needs to be a truly inventive whopper. It smells of a major initiative in the making, and Bushian creativity, as we all know, is rarely salutary to world order, domestic peace, small children or dogs.
[D]ebt creationism is inviolable theology to Bush, climbing gas prices are largely independent of political maneuvering, his Social Security plan has already been axed, Medicare screams solely for a fiscal fix (the dreaded tax increase) that won’t happen, private healthcare accounts are a political nonentity, and on and on.
Which leaves foreign policy, the aforementioned cause for (more) worry (than usual), given the bang-up job Mr. Bush has always done in this arena.
Just rest assured of one thing. You and I are going to get to pay for it, whatever it is - Big Time, as Shooter loves to spout. Start saving now.
But don't save your dollars. No one is going to want them.
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