The Debt Doesn’t Matter
The truth is that even if we avoid this Armageddon on August 2nd, we are still going to fail as a nation sooner or later and sooner if we don’t face it now. Our debt is now 14.5 trillion and after we pass this it will be 17 trillion and in a few years it will be 40 trillion and in under 10 years it will be 100 trillion. Then what do we do?
Why is it necessary to spend more (increasing the debt) in order to cut spending (deficit reductions)? Kind of seems counterproductive.
Since we knew this day was coming for quite some time, wouldn’t it have just been easier to tighten the nation’s belt by cutting spending and reducing the exorbitant waste, and therefore not having to raise the (already unsustainable) debt level?
is why it doesn’t matter what happens with the debt ceiling. The beast has become so
large that it is impossible to kill. The ballgame is over, and
Let’s be honest.
There is no possibility left to fix the
problem. It has become pointless to discuss the “solutions” to
Give me, give me, more
been feeding at the public trough, in one form or another, for so long that
everyone thinks they are “entitled” to damn near everything. And despite the
imminent financial collapse caused by that “let me get mine” mentality, the
people still don’t want to give up the keys to the Treasury. There remains a
naïve belief that
believe that the high standard of living enjoyed in
Like their government, Americans have an unquenchable thirst for things they cannot afford. Three year-old car not new enough anymore? Buy a new one — with debt. Want a 4,000-square-foot house with flat screen TVs in every room? Take out a massive mortgage. Want to tell all your Facebook friends your exciting status of eating out every night? Buy a smart phone you can’t afford.
So while certainly not defending the actions of Congress, it is really only reflecting the will of the people.
is why the debt deal, like most everything in
The economy won’t implode in a firestorm today or tomorrow, as some predict, but will be a slow, painful burn as entitlement programs eventually run out of money, government services dry up, interest rates rise, and inflation goes through the roof.
This is no longer conjecture, but a mathematical certainty. Americans will have to reap what they have sown, and the diseased crop is quickly coming to harvest.
Weiss Ratings has just downgraded
the debt of the
This is critical for you.
Regardless of the outcome of the debt debate now
Moody’s have finally put the
the immediate debt ceiling crisis is resolved to everyone’s apparent
satisfaction, it could be just a dress rehearsal for the true tragedy of a
nation unable to end its own financial decline any more effectively than a
The hard facts:
1. Among the 49
sovereign nations Weiss Ratings covers, the
2. It’s more dependent on foreigners for deficit financing than any other major country in the world.
3. Its consumers are among the most reliant on mortgages, credit cards, and other forms of debt to support its economy.
4. And perhaps
most dangerous of all,
Result: Just in the past few months, we’ve seen riots, the firebombing of banks, and blood in the streets.
Home values are plunging. Unemployment is soaring. The poverty rate is skyrocketing. One in four citizens, including an estimated 450,000 children, live in poverty. Crime is exploding.
Just a few
Then, the bubble burst. Real estate values crashed. Mortgage defaults and bank foreclosures soared. Suddenly, Irish banks, drowning in red ink, were both insolvent and illiquid.
Thus, just as we saw in the United States, the Irish government stepped in and bailed them out … and soon, it was the government itself — not just the banks — that was in danger of going under.
In May 2010,
Now, the Irish people are living under crushing austerity measures. Countless jobs have been wiped out; the official unemployment rate is 15%.
Salaries have been cut to the bone. Pensions and health benefits have been slashed. The Irish tourism industry — once among the richest — is a shambles.
Similar stories are being told in Madrid, Barcelona, and 53 other cities across Spain, where tens of thousands of workers have taken to the streets to protest a problem they thought they’d never see in their lifetime — not just 9.2% official unemployment as in the U.S., but 21% official unemployment.
In picturesque plazas, beggars outnumber tourists and protesters outnumber beggars. In front of Parliament, riot police stand watch to protect lawmakers from angry mobs.
But of all
euro-zone economies now threatened with this kind of chaos,
combined GDP of all three countries that have gone bankrupt and needed a
bailout so far — Greece, Ireland, and Portugal — is $739 billion. The GDP of
In other words,
as the debt contagion strikes
trigger: The demise of
UniCredit will eventually collapse.
These same factors, ironically, led to the failure
of big bank Credit-Anstalt in May 1931. The bank’s
UniCredit’s failure will lead directly to the collapse of the euro currency as it finally dawns on the Europeans that their savings are not safe in the current system.
have turned out to be both prescient and accurate. But how are they relevant to
First, America’s largest banks — JPMorgan Chase, Bank of America, Citibank, and Goldman Sachs Bank — are grossly overexposed to the credit risk associated with their huge holdings in derivatives. Plus, many of these are linked to large European banks like UniCredit.
Third, like the euro zone, the
You could see stiffer limits on government guarantees for failing banks, commercial checking accounts, and consumer deposits.
In the event of new bank failures and turmoil in the nation’s credit markets, you won’t be able to count on Uncle Sam to be the lender, investor, and guarantor of last resort.
Nor can you expect reason to prevail at the Federal Reserve. As Fed Chairman Bernanke declared last week, he’s perfectly willing to devalue your money by running the money printing presses with still another round of quantitative easing.
Partly Plagiarized from http://www.moneyandmarkets.com/.
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