60 online
 
Most Popular Choices
Share on Facebook 18 Printer Friendly Page More Sharing
OpEdNews Op Eds    H3'ed 2/19/09

The Burning Platform

By       (Page 3 of 8 pages) Become a premium member to see this article and all articles as one long page.   1 comment
Message Jim Quinn
It isn't complicated. It is the same as all bankruptcies, but when it happens pervasively to a country, and the country has a lot of foreign debt denominated in its own currency, it is preferable to print money and devalue. The biggest issue is that if you look at the borrowers, you don't want to lend to them. The basic problem is that the borrowers had too much debt when their incomes were higher and their asset values were higher. Now net worth’s have gone down. The Federal Reserve is going to have to print money. The deficits will be greater than the savings. So you will see the Federal Reserve buy long-term Treasury bonds, as it did in the Great Depression. We are in a position where that will eventually create a problem for currencies and drive assets to gold.

 

The debt service as a % of disposable income for consumers is above Great Depression levels as we enter the Next Great Depression. These levels are unsustainable. Consumers normally have a limited number of choices. They can pull a Trump and declare bankruptcy to wipe out the debt or reduce spending dramatically while paying down their debt. This is what is required to purge our capitalist system of its excesses. Instead, our Government “leaders” are coming to the rescue with your tax dollars. You have already given $7 billion to Capital One (COF) and American Express (AXP) so they can hand out more credit cards with $20,000 limits to pizza delivery boys. When you see someone carting a 52 inch HDTV out the door of Best Buy (BBY), you may be making his credit card payment.

Barney Frank, and his band of merry Congressmen, has also provided $9 billion of your hard earned tax dollars to GMAC Financial and Chrysler Financial. GMAC Financial used the name Di-Tech to lure millions of gullible poor people into negative amortization no doc mortgage loans at the peak of the housing bubble. When you see a BMW 525i parked in front of a boarded up house in West Philly, know that you are making the car payment for that deadbeat.

The stimulus plan will be a complete failure. Politicians have not taken into account the damaged psychology of the American public. We have been hit over the head with a baseball bat and will not be stepping up to the feeding trough of debt financed spending for a long time. If we do not let people and companies fail, we will encourage the same behavior that caused the problem. It will make sense for every upstanding American to stop paying their mortgage and to run their credit cards up to the limit. Pastor Adrian Rogers explained how many Americans feel today.

You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it.

 

Fiscal Deficits

A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned - this is the sum of good government.

 

Thomas Jefferson

The chart below, which shows our National Debt from 1938 onward, is totally outdated. The projections through 2012 were made before the current Congress unleashed its hell fury. The chart is now vertically challenged, topping out at a mere $14 trillion. The little red line that was so sedate until Richard Nixon took the United States off the gold standard in 1971, is about to take off like the Space Shuttle. The current “stimulus” package of $787 billion is more than the entire National Debt in 1978 ($771 billion). By 2012, the National Debt will easily exceed $15 trillion. If economists like Paul Krugman have their way, the debt will surpass $16 trillion. The bill has just been signed and the ultra-liberal Krugman is already saying it isn’t nearly enough spending. Keynes is his god. The man is so disconnected from the real world, it is sad. He is only comfortable in his secluded academic world at Princeton with his models and theories. He needs to shuttle kids to hockey games on the weekend so he can stop thinking of ways to spend our money. He has probably never set foot in a Wal-Mart (WMT) or a Jiffy Lube. I truly believe that his goal in life is that 80 years from now, people will say “We’re all Krugmans now”.

Source: Cedarcomm.com

The chart looks eerily similar to the previous housing chart. How far up can it go before the fat lady sings? It looks like we are going to find out if Dick Cheney was right. “Deficits don’t matter”. We all know Mr. Cheney has never been wrong before. The annual deficit for 2009 is now estimated at between $2 trillion and $3 trillion give or take a few hundred billion. These figures seem incomprehensible to the average person on the street. Some perspective is in order. If we use $2.5 trillion as the estimated deficit that means:

  • We’re adding $6.85 million per day to the National Debt
  • We’re adding $285,000 per hour to the National Debt
  • We’re adding $4,800 per minute to the National Debt

In the time it takes to say Audacity of Hope, we’ve added $250 to the National Debt. There are many pundits who say the National Debt doesn’t matter. We are only paying 3.4% on our 30 Year Treasuries and there is always enough demand. The dollar continues to be steady versus the Euro. Government debt as a percentage of GDP was 122% during World War II, versus only 78% today. All of these statements are true, today. On March 1, 2008 I could have said that the American banking system was sound. I would have appeared to be right. Two weeks later Bear Stearns collapsed and the downward spiral of our worldwide financial system accelerated out of control. Are these reasonable questions to ask?

Next Page  1  |  2  |  3  |  4  |  5  |  6  |  7  |  8

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Must Read 1   Supported 1   Interesting 1  
Rate It | View Ratings

Jim Quinn Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

James Quinn is a senior director of strategic planning for a major university. James has held financial positions with a retailer, homebuilder and university in his 22-year career. Those positions included treasurer, controller, and head of (more...)
 
Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

 
Contact EditorContact Editor
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Could GE Collapse?

Jesus of Suburbia

MASS DELUSION - AMERICAN STYLE

An Economic Lesson from Butch Cassidy and the Sundance Kid

Founding Fathers of our New Country

GRAND ILLUSION - THE FEDERAL RESERVE

To View Comments or Join the Conversation:

Tell A Friend