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“Once again, for the very cheap seats, the re-recession predicted by the ECRI, has materialized (at least according to Ben the Bernank) and is being resolved with $900 billion in monetization.” — ZeroHedge’s Tyler Durden
The US Empire is toast. FDIC was bankrupt as of mid 2009 and has been getting the ‘unlimited taxpayer bailout’ to keep the zombie banks in the US afloat for a little while longer, but the wheels on this bus (US Empire) are really coming off at a breakneck pace. Indeed, any time there is a major crash in the economy (last few decades) there are major pump & dumps and masive insider selling/trading prior to the CRASH.
To prove this, Zerohedge provides an interesting insight: In the first full week of the latest iteration of post-QE2 POMO, which was supposed to see a dramatic ramp in stocks, the only thing we have seen is the biggest insider buying to selling imbalance since the data has been tracked. Overall, selling by S&P500 insiders was 8,279.5x times greater than buying (per Bloomberg). There were 5 insider buys for a total of $150,673, and 117 sales for a total of $1,247,500,249. There is no point to even discuss what this data point indicates.
So much of the explanation behind the huge deficit America faces is gargantuan (really out of control) military spending – about half of all U.S. government spending. That, combined with the fact that corporations in that country now account for something like 10 per cent of domestic taxes collected, compared with about 40 per cent 50 years ago, all the while the tax burden as been shifted to the individual thru illegal income taxes collected by the IRS in the USA and Revenue Canada in their northern neighbor.
When you have these two situations: spending money on the military and a global empire like drunken sailors; and letting profitable corporations (and many of the wealthy who own much of these, as well) off the tax hook altogether, then you have a recipe for financial disaster and a collapse of (the American) empire. The only question is how soon that will happen.
It is obvious Obama can’t change things because he is under the control of the military industrial complex and the wealthy elite who benefit from these unsustainable deficits and reckless spending. He does their bidding, despite contrary campaign promises; and so the American ship of state just continues to take on more water, and Obama and others fiddle with the deckchairs as it sinks lower and lower.
President Clinton was a tax and spend liberal until 1994 when he had his hat handed to him losing control of the Congress. Under the Republicans the Congress enacted the Contract with America, Clinton being much wiser than Obama, in the 95 State of the Union speech declared the era of big government over and yes by 1999/2000 they had a tiny surplus but with the tech bubble bursting and the beginning of the recession in 2000 the projected surpluses often quoted were already gone when Bush came to power.
The recession of 2000 coupled with the attack on 9-11 ended any hope of regaining the lost benefits of the mid-90′s. In 2002 a huge tax cut was enacted and between 2003-2007 the US saw the greatest economy growth in its history but much this growth was fueled by the housing bubble which burst, dragging with it the financial services. Couple this with one unavoidable war and one avoidable war and you have a problem. In 2006 the Democrats regained control of Congress and did nothing to reign in Bush in fact they went to town and in 3 yrs doubled the deficit. Bush did nothing to reign them in, refusing to veto their budgets.
President Obama has continued his crooked Senator ways. He said he would veto any budget with earmark and then when elected said ok not this year. Now he proposes a freeze that will be in budget 2011 which is for year 2012 which are years away and instead allows congress to continue to increase spending in the mean time.
Mark these words: the phrase “deficits for the next three years” and other predictions will, at some point when the history books are written for this period, go down as one of the most wildly optimistic projections made in regards the current financial crisis.
Our prediction is that it won’t be three years but rather three decades (possibly longer) that Americans will be reeling under the weight of mountains of debt that just keep getting bigger (regardless who’s in the Oval office or controlling the Fed, or which party is passing or vetoing the budgets), exacerbated by declining productivity and a wholly outsourced-to-China rapidly vanishing manufacturing base. If you can’t make stuff to sell for a profit you can’t pay off your debts, period.
Here’s the house of cards about to tumble down (from lowest to highest):
- Municipalities going bankrupt (it’s happening across the land as we speak).
- States collecting less and less in tax revenue thereby teetering on insolvency (that’s also happening right now – relative to GDP 2009 was the worst year on record).
- Federal debt exacerbated by the bankruptcy of lower levels of government (see 1 and 2 above).
- An increasingly ugly “tax revolt” uprising which could very well lead to creation of a viable Third Party in opposition to the existing duopoly of Republicans and Democrats, who will increasingly be blamed for “creating the current mess”.
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This entry was posted on Tuesday, November 23rd, 2010 at 5:22 pm and is filed under Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.