Don’t expect to find the truth while tuning in to the Liberal bias media that help elect Barack Obama. They are still engaged in bashing George W. Bush and building false hopes of a brighter future with the candidate that they grossly endorsed with money from their sponsors. Have no fear payback time is near, as the economy dips deeper into a depression and their sponsors money dry up they will also be standing in line begging the Obama Administration for a bailout payback.
Tuesday’s coverage and extravagant expenditure of $160 plus million dollars for the inauguration of a President in a bankrupt country is another example of how out of touch with reality most of our elected officials and citizens are. Do these people honestly believe that our problems will go away on January 20th or are they just hiding their heads into the sand? At this point our nation appears to be more interested in hope than in truth, as long as the head is in the sand they avoid panic.
Our new unchallenged Congress is about to put into effect the biggest and doomed to fail rescue package ever assembled. The proposed $850 billion economy stimulus package is loaded with expenditures that will do little to revive the economy. This was the reaction from House Minority Leader (R) John Boehner when he was informed of the expenditures breakdown.
They are trying to put on a happy face on the grim reality. The greatest fear from those who understand the predicament that we are in is deflation as the first face of the depression. While the incoming administration is trying to present a rosy picture, the people are feeling the reality. The rising unemployment, lack of consumer confidence, shrinkage of 401ks, depreciated mortgage assets, etc…, have put our society on savings mode. The people have cut back on spending and do not want to add on more credit. Since our economic growth was based on borrowed money; tight credit and fear has brought spending near to a halt. The Government’s solution is to give the people worthless freshly printed money and drive our country deeper into bankruptcy. Too little, too late! It has been one bad idea after another while pursuing an inevitable final outcome.
At this point who knows what the proper approach should have been or whether it would have made any difference or not. Personally, I feel that considering our government will dump on our economy trillions of dollars and ultimately help no one, it would have been better to give all of the bailout money directly to the tax payers. Among other things when the housing bubble first started to pop, they could have done the following:
Because most homeowners are Federal tax payers, without exception all holders of primary home mortgages under $500,000 should have had their principle reduced by 20% to 30%. Payment made directly from the Federal Government to the banks for the benefit of tax payers who help finance our government. Such move as an example would have brought a $200,000 mortgage down to $140,000 or $160,000 and avoided foreclosures. This move at the same time would have stabilized the value of homes. What would it have cost? Probably a trillion or two but that would have been it. More has been spent so far with no end in sight. The reduction on monthly payments would have avoided foreclosures and freed consumer money to stimulate other segments of the economy. The banks would not have needed bailouts, credit cards payment would have continued, the auto industry still be selling cars, the realtors houses and the Chinese would be exporting and lending us more money to help pay for it. Instead, we are at the edge of an unstoppable depression and the collapse of the entire world economies. We are having a falling dominoes effect as the first chip went down with a mortgage crisis that could have been avoided.
With the interest rate near zero, the Government has lost the ability to further control deflation. Lack of consumer spending has already ignited a chain reaction of business failures and subsequent unemployment. When the unemployment report for January comes out in early February, we could expect that number to exceed one million. Based on new filings from early January in which the unemployment websites from several states crashed due to more hits that they could handle (New York, Ohio, North Carolina, Kentucky) it is a certainty that it will be high and such could bring serious consequences. Another big drop on the stock market and deflation will certify the beginning of the 2009 depression.
An economic depression for the U.S. will bring about a depression for the whole world. There is a long list of ramification that will come from this. Near the top of the list is another drop in the stock market probably 40% with the Dow dropping below 5,000. Decimation of 401ks, and pensions, more foreclosures and more declines of home values. If the dollar is devalued because of its insolvency then more money would be needed to finance the recovery and bailout funds. Hyperinflation will settle in next and make everything much more costly, it would make savings worth a fraction of what they once were. Bigger deficit and no credit from China would mean more paper printing that would equal more currency devaluation and eventually its collapse.
Let us hope that as the result of these events people will see through what brought about such misery and return to the basic concept that made our nation great. Our Capitalistic system did not collapse on its own; it was mainly the infusion of Socialism that accelerated the demise of our fiat currency and brought down our country. Capitalism has had its critics for not being compassionate enough thus leaving behind some who are not as fortunate or motivated. People helping people and not government helping people is in the essence of a capitalist free society and true compassion. It is easy for Government to be compassionate with someone else’s money. Hopefully with the fall of our economic system and subsequent events most will understand that Socialism has no compassion for anyone. As an example much have been said of Cuba's free medical system but little about the economic suffering of the people and we can be sure that the Doctors are thrilled making less than $300 a month. It was that erroneous path that will have brought us misery and make us all equally poor. In addition, such socialist mentality has left us at the mercy of a bigger and more regulatory government that chips away at our freedom.
Hope is that when the dust settles, us as a nation if we are still allowed will find the wisdom to choose a new breed of leaders that will raise our nation from the abyss and restore the principles that once made it the greatest nation on earth.
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