Email This Post
Deficit Disorder
February 1st, 2010Nero should have been as thorough.
History has witnessed numerous despots fiddle while empires burnt. Barack Obama, aided by a legislature filled with Caligula’s elected descendants, is moving America steadily in the direction of the Zimbabwean empire. The parallels between Obama and Zimbabwe’s loco dictator Robert Mugabe stop only at their body mass index (the latter being a pro-ranked porker, and the former a chain smoking string bean). Both men – and I use the word “men” very loosely – are self-important, functionally clueless, imbued with messianic visions and able to drive entire nations into insolvency solo.
Anyone have a stack of Zimbabwean currency? I need to hit the head.
Nobody with brains blames Obama for the pre-existing national debt. America has run in the red for most of its modern existence. However, aside from times of war (like the last nine years) there has been some semblance of sanity and approximate alignment between federal spending and revenue. Obama is following in Mugabe’s footsteps by printing money at a rate that requires buying more printing presses. Compounding the elaborate theft that was the 2008 bailout of failed businesses (AIG, et al) is Obama’s even more elaborate theft, done with enough audacity to double down and double the deficit. His nearly trillion dollar stimulus spending spree only stimulated Chris Matthews’ leg, but did send the Bureau of Engraving and Printing into overdrive.
Now Barack is ready to spend even more. (Note to the graduating class of 2010: RUN! Barak’s bill has your name on it.)
- · Another 6% for education and civilian research.
- · A cool $25B for states that misspent as effectively as the Feds (this money is, no doubt, reserved for blue states like perpetually insolvent California).
- · A “freeze” that locks-in last years hyper spending, yet excludes the most expensive and fastest growing parts of the federal monster – Medicare, Medicaid, Social Security, national security, and the VA.
Investing in Zimbabwean dollars suddenly sounds sane compared to buying U.S. bonds. Before Mugabe gave in, a Zimbabwean $100 billion banknote could buy three eggs, clearly demonstrating the effects of the hyperinflation soon to rock America, which still produces a quarter of the globe’s GDP. In other words, America will indirectly export its economic mess. You thought $4 a gallon gas was tough … just wait a couple of years and try buying three eggs.
The Congressional Budget Office, an operation with relative sanctity inside the beltway, estimates that even without Obama’s further fiscal indiscretions:
- · The federal deficit next year will be $1.3T – on top of this year’s $1.4T.
- · The total national debt will be 95% of GDP, and 100% within a decade (imagine owing your credit card company as much as you made last year … assuming you had a job last year).
- · Over the next 10-years the interest costs alone will tally $4.8T, a service load more than triple the debt itself.
That is the good news.
If you haven’t grabbed your bottle of Jack Daniels yet, best do so now, even if you are still eating breakfast. You’re going to need a belt. All these budget numbers do not take into account off-the-book liabilities the feds willfully adopted. According to a federal inspector general, the government is the insurer of record for 90% of all home mortgages. Perverse legislation granted Fannie Mae and Freddie Mac the ability to over-leverage their assets (a staggering 70:1 ratio), higher than any commercial bank, while congressional clowns (Barney Frank by name) encouraged Mae and Mac to buy subprime loans, which in the end accounted for 20% of their portfolios. Uncle Sugar assumed all that risk and added it to mortgages protected by the Federal Home Loan Association. If for any reason we enter economic decline – you know, like Zimbabwe – then all that mortgage debt will be paid for by you.
The tally thus far (yes … there is more) is that we are running huge deficits, getting ready to spend even more, pumping up our interest expense, and have a moat full of mortgage paper to insure. Despite this, Barack boosts spending. In his Keynesian hallucination Obama begs for change Americans do not want, much like his health insurance hijack.
So, taxing in your IRA and 401K should not surprise you. No, even your congress critter isn’t insane enough to renege on the promise of tax reduced/free retirement income … yet … though whispers of taxing retirement account capital gains are circulating within I-495. What Obama and his cohorts in Congress are cooking is to tax all banks (including yours) to recapture TARP money (even if your bank didn’t want or take TARP cash). This will result in raised bank fees, including the management fees on your IRA and 401K. As noted in paragraphs above, the epicenter of the current economic emergency was the inane objectives of the Federal government. But since Obama believes government is “cool” (his words, not mine) there is no way he can blame the mess on his own kind. Thus Obama inappropriately harangues all banks in order to compensate for the federal mistake of bailing out a few banks … which was caused by the federal mistake of rigging the mortgage market.
These bank taxes will be passed along to you. Of course, if you lost your job and have no money in the bank, then you may not feel the pinch.
