- Callifornia State Controller John Chiang announced on
January 26 that California's bills exceed its tax revenues and credit line
and that the state is going to print its own money known as IOUs. The template
is already designed.
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- Instead of receiving their state tax refunds in dollars,
California residents will receive IOUs. Student aid and payments to disabled
and needy will also come in the form of IOUs. California is negotiating
with banks to get them to accept the IOUs as deposits.
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- California is often identified as the world's eighth
largest economy, and it is broke.
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- A person might think that California's plight would introduce
some realism into Washington, DC, but it has not. President Obama is taking
steps to intensify the war in Afghanistan and, perhaps, to expand it to
Pakistan.
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- Obama has retained the Republican warmongers in the Pentagon,
and the US continues to illegally bomb Pakistan and to murder its civilians.
At the World Economic Forum at Davos this week, Pakistan's prime minister,
Y. R. Gilani, said that the American attacks on Pakistan are counterproductive
and done without Pakistan's permission. In an interview with CNN, Gilani
said: "I want to put on record that we do not have any agreement between
the government of the United States and the government of Pakistan."
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- How long before Washington will be printing money?
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- On January 28 Obama announced his $825 billion bailout
plan. This comes on top of President Bush's $700 billion bailout of just
a few months ago.
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- Obama says his plan will be more transparent than Bush's
and will do more good for the economy.
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- As large as the bailouts are--a total of $1.5 trillion
in four months--the amount is small in relation to the reported size of
troubled assets that are in the tens of trillions of dollars. How do we
know that by June there won't be another bailout, say $950 billion?
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- Where will the money come from?
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- Obama's bailout plan, added to the FY 2009 budget deficit
he has inherited from Bush, opens a gaping expenditure hole of about $3
trillion.
- Who is going to purchase $3 trillion of US Treasury bonds?
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- Not the US consumer. The consumer is out of work and
out of money. Private sector credit market debt is 174% of GDP. The personal
savings rate is 2 percent. Ten percent of households are in foreclosure
or arrears. Household debt-service ratio is at an all-time high. Household
net worth has declined at a record rate. Housing inventories are at record
highs.
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- Not America's foreign creditors. At best, the Chinese,
Japanese, and Saudis can recycle their trade surpluses with the US into
Treasury bonds, but the combined surplus does not approach the size of
the US budget deficit.
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- Perhaps another drop in the stock market will drive Americans'
remaining wealth into "safe" US Treasury bonds.
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- If not, there's only the printing press.
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- The printing press would turn a deflationary depression
into an inflationary depression.
- Unemployment combined with rising prices would be a killer.
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- Inflation would kill the dollar as well, leaving the
US unable to pay for its imports.
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- All the Obama regime sees is a "credit problem."
But the crisis goes far beyond banks' bad investments. The United States
is busted. Many of the state governments are busted. Homeowners are busted.
Consumers are busted. Jobs are busted. Companies are busted.
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- And Obama thinks he has the money to fight wars in Afghanistan
and Pakistan.
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- Except for the superrich and those banksters and CEOs
who stole wealth from investors and shareholders, Americans have suffered
enormous losses in wealth and income.
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- The stock market decline has destroyed about 45% of their
IRAs, 401Ks, and other equity investments. On top of this comes the decline
in home prices, lost jobs and health care, lost customers. The realized
gains in mutual funds and investment partnerships, on which Americans paid
taxes, have been wiped out.
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- The government should give those taxes back.
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- Americans who have seen their retirement savings devastated
by complicity of government regulators and lawmakers with financial gangsters
should not have to pay
- any income tax when they draw on their pensions.
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- The financial damage inflicted on Americans by their
own government is as great as would be expected from foreign conquest.
While Washington "protected" us from terrorists by fighting pointless
wars abroad, the US economy collapsed.
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- How can President Obama even think about fighting wars
half way around the world while California cannot pay its bills, while
Americans are being turned out of their homes, while, as Business Week
reports, retirees will work throughout their retirement (which assumes
that there will be jobs), while careers are being destroyed and stores
and factories shuttered.
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- Americans are facing tremendous unemployment and hardship.
Obama doesn't have another dollar to spend on Bush's wars.
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- Taxpayers are busted. They cannot stand another day of
being milked by the military-security complex. The US government is paying
private mercenaries more by the day than the monthly checks it is providing
to Social Security retirees.
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- This is insanity.
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- The banksters robbed us twice. First it was our home
and stock values. Then the government rewarded the banksters for their
misdeeds by bailing out the banksters, not their victims, and putting the
cost on the taxpayers' books.
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- The government has also robbed the taxpayers of $3 trillion
dollars to fight its wars. About $600 billion are out of pocket costs,
and the rest is on the taxpayers' books.
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- When foreign creditors look at the debt piled on the
taxpayers' books, they don't see a good credit risk.
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- Washington is so accustomed to ripping off the taxpayers
for the benefit of special interests that the practice is now in the DNA.
While bailouts are being piled upon bailouts, wars are being piled upon
wars.
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- Before Obama gets in any deeper, he must ask his economic
team where the money is coming from. When he finds out, he needs to tell
the rest of us.
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