Three Government Reports Point to Fiscal Doomsday

Discussion in 'Economics' started by ByLoSellHi, Oct 5, 2009.

  1. Three Government Reports Point to Fiscal Doomsday

    by Martin D. Weiss, Ph.D. 10-05-09

    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:


    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 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...

  2. The weird thing is ... The obvious Math is right there in front of every economist but since the USA has somehow managed to buy its way out of every disaster up to date the public thinks (and most US economists think) that somehow the USA is exempt from disaster...

    That America is beyond / above disaster... and poo poo the naysayers...

    American Exceptionalism - will rule supreme until the economic tsunami hits em / us right in the face... with no way out...

    I have felt like i am starring into an abyss since Dec 08 and even told my business partner so... its only a matter of when not if anymore...
  3. Does he take into account that Social Security is already insolvent (paying out more than it takes in)? The "trust fund" is just a bunch of California style IOUs with nothing but faith and credit backing them.
  4. TheMan


  5. "Stay SHORT and stay OFTEN!"


    The markets current price level offerings are a GIFT imo....some see it and some don't. :eek: :D
  6. m22au



    While I agree with you in theory, in practice if you are short equities you are fighting the US Treasury, Federal Reserve, and non-US Govts who are implementing highly stimulatory policies in order to reflate economies and stockmarkets.

    It's possible that despite poor fundamentals (high and rising unemployment, consumers and businesses unwilling to take on more debt etc) that global stockmarkets continue to rise due to the actions of governments, especially those of the UST and the Fed.

  7. Daal


    I'm of the opinion that if the goverment could prevent stocks from finding their fundamental value(eventually) the Nikkei would be at 100K. Nasdaq would be at 10K.
    I'm not even a bit concerned of the Fed inflating a inflation driven stock bubble, as their QE has failed to produce a rising money supply(except for late 08). Plus PE multiples would shrink likes in 70's
  8. Meddling in the stockmarket, in hopes of creating and keeping "reflation," will only add to the sharpness of the declines once they inevitably set in.

    They can't prop it up forever, and every tick upwards resulting from meddling will be met with equal if not greater velocity on the way down.
  9. ....of course the markets can still trade higher, but they cycle PRICE ROTATIONS higher. Selling into new highs as "commercials" get SHORT in futures has been a very profitable strategy these past months. Now if we do get the big pullback, then you get a huge windfall on top of all the price rotational cycling this last price rotational cycle run we just had to the 1012's.
  10. Yes, and some day this fall or in early quarter of 2010... after a mild up day or two the day before.. the market is going to open limit down and not recover much that day and sell off during that day down to its lows... and then open limit down again the next day.. and then the market will sell off a little bit day after day after day for months... and all those who wanted to get short are going to be in shock - they will have to sell in to a raging water fall or miss out... as well as those who wanted to get out of their longs near the top... many will hold on thinking well we will get a snap back like always before...

    nope... not at that time... all the bullets (stimulus) will have been spent... :(
    #10     Oct 5, 2009