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10/9/2009
What? Obama, the Peace Prize?
I'm astounded. Sitting here in disbelief. Am I reading The Onion? No, and I'm trying to be respectful.
Only very rarely has a person to the same extent as Obama captured the world's attention and given its people hope for a better future. His diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world's population.
I'm shocked. What do they know that we don't?
The committee said it attached special importance to Obama's vision of and work for a world without nuclear weapons.
"Obama has as president created a new climate in international politics. Multilateral diplomacy has regained a central position, with emphasis on the role that the United Nations and other international institutions can play."
I wonder if the Nobel Committee asked U.S. troops in Afghanistan (American troops in Afghanistan losing heart, say army chaplains).
Wow. Wow. Words fail me.
Jo Egelhoff, FoxPolitics.net
COMMENTS
I'm giving him the Nobel Peace prize for what looked like single handedly stopping the collapse of our countries financial infrastructure that Bush left in a shambles and only days away from complete collapse. Chances are good that the world economy was sure to follow close on our heels. Had that happened our world would not be as safe as it is today. I think he understood the gravity of the situation and did what was necessary to temporarily push off potential complete collapse. Good Job President Obama. Hopefully it is more than temporary.
Mike (Fri Oct 09 10:17:58 2009)
Mike, I don't think you live on the same planet as me. China is now a net SELLER of Treasuries, which means they aren't going to fund our debt party anymore. Our own gov't admits the fiscal problems it has. (Report below.)
Banks that should have been allowed to fail were given taxpayers' money by Dubya and the folly was continued by "Bushama". The dollar is plummeting, and is no longer looked upon as the default currency of the world. Printing Monopoly money is NOT creating wealth! And the TRUE unemployment rate, based on how they calculated it in the 1930s, is 20%. (I.e. don't just count the NEW unemployment claims, look at the TOTAL unemployed.)
Read the following report, from Money and Markets:
"When our leaders have no awareness of the disastrous consequences of their actions, they can claim ignorance and take no action.
Or when our leaders have no hard evidence as to what might happen in the future, they can at least claim uncertainty.
But when they have full knowledge of an impending disaster ... they have proof of its inevitability in ANY scenario ... and they so declare in their official reports ... but STILL don't lift a finger to change course ... then they have only one remaining claim:
INSANITY!
And, unfortunately, that's precisely the situation we're in today: Three recently released government reports now point to fiscal doomsday for America; and one of the reports, issued by the Congressional Budget Office (CBO), says so explicitly:
* The CBO paints two future scenarios for the U.S. budget deficit and the national debt. But it plainly declares that fiscal disaster will strike in EITHER scenario. Furthermore ...
* The CBO states that its fiscal disaster scenarios could cause severe economic declines for decades to come, including hyperinflation and destruction of retirement savings.
* The CBO then proceeds to admit that even its worse-case scenario could be understated by a wide margin due to panic in the financial markets or vicious cycles that are beyond control.
* Separately, in its Flow of Funds Report for the second quarter, the Federal Reserve provides irrefutable data that we are already beginning to witness the first of these consequences in the United States: an unprecedented cut-off of credit to businesses and consumers.
* Meanwhile, the Treasury Department shows that America's fate remains, as before, in the hands of foreigners, with the U.S. still owing them $7.9 trillion!
* And despite all this, neither Congress nor the Obama Administration have proposed a plan or a timetable for averting these doomsday scenarios. Their sole solution is to issue more bonds, borrow more, and print more without restraint.
That, dear Subscriber, is the epitome of insanity.
Yes, the great government bailouts of 2008 and 2009 have bought us some time ... but they have promptly proceeded to sell us into bondage.
Yes, they have given us safe passage over tough seas ... but only to throw our assets onto the global auction block for the highest bidders.
The one bright spot: Unlike some governments, ours does not conceal the evidence of its folly. Quite the contrary, the proof pours forth from these three government reports in relatively blunt language and unmistakably blatant numbers ...
Report #1
Congressional Budget Office (CBO):
The Long-Term Budget Outlook
CBO Reort
The CBO opens with a chart predicting the most dramatic surge in government debt of all time.
It shows that even in proportion to the larger size of the U.S. economy today, the government debt has ALREADY surpassed the massive debt loads accumulated during World War I and the Great Depression ... and will soon surpass even the massive debt load of World War II.
"Large budget deficits," write the authors of the CBO report, would ...
* "Reduce national saving," leading to ...
* "More borrowing from abroad" and ...
* "Less domestic investment," which in turn would ...
* "Depress income growth in the United States," and ...
* "Seriously harm the economy."
Worse, on page 14, the CBO warns that:
* "Lenders may become concerned about the financial solvency of the government and ...
* "Demand higher interest rates to compensate for the increasing riskiness of holding government debt." Plus ...
* "Both foreign and domestic lenders may not provide enough funds for the government to meet its obligations."
The magnitude of the problem cannot be underestimated. The CBO declares on page 15 that:
* "The systematic widening of budget shortfalls projected under CBO's long-term scenarios has never been observed in U.S. history" and ...
* It will also be larger than the debt accumulations of any other industrialized nation in the post-World War II period, including Belgium and Italy, the two worst cases of all.
But the CBO admits that even these frightening projections may be grossly understated because:
* "The analysis omitted the pressures that a rising ratio of debt to GDP would have on real interest rates and economic growth."
* "The growth of debt would lead to a vicious cycle in which the government had to issue ever-larger amounts of debt in order to pay ever-higher interest charges."
* "More government borrowing would drain the nation's pool of savings, reducing investment" and ...
* "Capital would probably flee the United States, further reducing investment."
But none of these are factored into the analysis. On page 17 of its report, the CBO writes ...
"The analysis ... does not incorporate the financial markets' reactions to a fiscal crisis and the actions that the government would adopt to resolve such a crisis. Because [our] textbook growth model is not forward-looking, the analysis assumes that people will not anticipate the sustainability issues facing the federal budget; as a result, the model predicts only a gradual change in the economy as federal debt rises.
"In actuality, the economic effects of rapidly growing debt would probably be much more disorderly as investors' confidence in the nation's fiscal solvency began to erode. If foreign investors anticipated an economic crisis, they might significantly reduce their purchases of U.S. securities, causing the exchange value of the dollar to plunge, interest rates to climb, and consumer prices to shoot up.(Bolding is mine.)
Report #2
U.S. Federal Reserve:
Flow of Funds Accounts
of the United States
Flow of Funds
The Fed's data on page 12 tells it all: The impact on the U.S. credit markets is not just a future scenario. It's happening right now.
Yes, the government is getting its money to finance its exploding deficits (for now). But it's hogging all the available supplies, while American businesses and average consumers are getting shut out or even shoved out.
Specifically ...
* In the first half of last year, the U.S. Treasury raised funds at the annual pace of $411 billion in the first quarter and $310 billion in the second quarter.
* But if you think that was a lot, consider this: THIS year, the Treasury has stepped up its pace of borrowing to annual rates of $1.443 TRILLION in the first quarter and $1.896 TRILLION in the second quarter. That's 3.5 times and over SIX TIMES MORE than last year's, respectively.
Meanwhile, the private sector is getting killed ...
* Last year, banks provided new credit at the annual pace of $472.4 billion in the first quarter and $86.7 billion in the second. This year, they're not providing ANY new credit — they're actually LIQUIDATING loans at the rate of $857.2 billion in the first quarter and $931.3 billion in the second. So if you're running a business, you may want to think twice before asking your bank for more money. Instead, they may decide to TAKE BACK the money they've already loaned you!
* Ditto for mortgages. Last year, mortgages were being created at the annual clip of $522.5 billion and $124 billion in the first and second quarters, respectively. This year, on a net basis, mortgages haven't been created at all. Quite the contrary, the Fed reports that, on a net basis, they've been liquidated at an annual pace of $39.3 billion in the first quarter and $239.5 billion in the second.
* Getting cash out of credit cards and other consumer credit is even tougher. Last year, folks were able to add to their consumer credit at annual rates of $115 billion and $105 billion in the first two quarters. This year, in contrast, they've been forced to CUT back on their credit at annual rates of $95.3 billion in the first quarter ... and at an even faster pace in the second quarter — $166.8 billion.
Never before in my lifetime have I witnessed a more severe case of crowding out in the credit markets!
And never before has the CBO been so right in its forecasts of fiscal doomsday: One of its dire forecasts was already coming true even before it issued its report.
Report #3
U.S. Treasury Department:
Treasury Bulletin
Treasury Bulletin
Each and every month, the Treasury reminds us of the single fact that no one in the Treasury wants to face:
The U.S. is deep in debt to the rest of the world, and on page 48, it provides the evidence: total liabilities to foreigners of $7,898,435 million (nearly $7.9 trillion)!
This isn't a new record. It was actually slightly more last year. But the fact is NOTHING has been done to reduce our debt to foreigners. Quite the contrary, it is the deliberate policy of our government to pile up more — to sell foreign investors and central banks on the idea that they must continue to lend us money.
The fact that this could potentially put our nation into deeper jeopardy is overlooked. And the dire forecast by the CBO that foreign investors might pull the plug is pooh-poohed."
(This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.)
emily matthews (Fri Oct 09 12:43:11 2009)
Mike, except Obama didn't do the things you're mentioning. First of all, it was Bush who started the bank bailout. Second, Obama was only in office a week when the Nobel Committee voted to award the prize to him. The stimulus bill, cap and tax and socialized medicine had not even been introduced. The Nobel Committee has tarnished its reputation by awarding the prize to someone with no discernable accomplishments.
Mark Rahmlow (Fri Oct 09 12:46:09 2009)
The Nobel Prize committee lost its credibility when they chose Jimmy Carter and Al Gore. But still, I was absolutely dumbfounded at the Obama choice.
Babs (Mon Oct 12 01:33:30 2009)
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