Barack Obama

Will Barack Obama Use The 14th Amendment As A Way To Get Around The Debt Ceiling?

As the deadline to raise the debt ceiling draws closer, many are now wondering if Barack Obama will try to go around Congress if a deal is not reached by August 2nd.  In particular, a number of voices (including U.S. Treasury Secretary Timothy Geithner) are now touting the 14th Amendment as a way to get around the debt ceiling.  There are others that believe that Barack Obama should invoke “national security” in order to avoid a default.  If the Republicans and the Democrats do not reach a deal by the end of July, things are going to get really, really interesting and there is no telling what Barack Obama may do.

Section 4 of the 14th Amendment to the U.S. Constitution says the following….

“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

At a breakfast hosted by Politico last month, U.S. Treasury Secretary Timothy Geithner actually pulled out a copy of the Constitution and read this clause out loud.

Geithner (and others) are now attempting to argue that the debt ceiling is actually unconstitutional.  They believe that the phrase “shall not be questioned” means that if the U.S. government refuses to make debt payments it would be directly violating the U.S. Constitution.

So what does Barack Obama think of this legal theory?

Reporters have been trying to ask him this question, but right now Obama is not answering.

Certainly Obama would very much prefer to have the Republicans and the Democrats reach a deal far before the debt ceiling deadline arrives.

So what will Obama do if a deal is not reached?

Nobody seems to know.

But this clause of the 14th Amendment brings up some deeper issues as well.

Does this clause make it unconstitutional for all future generations to renounce the national debt?

Does this clause make it illegal for all U.S. citizens to even question the validity of the U.S. national debt?

Most Americans would like to think that when it comes to constitutional questions there should always be some clear answers.  But the truth is that for many constitutional questions there are a lot of gray areas.

When there is something in the U.S. Constitution that we do not like, that does not mean that we get to ignore it.  We have way too many politicians doing that already.

Personally, I would like to see this phrase in the 14th Amendment changed.  I think that this phrase is way too vague and could potentially open up a whole can of worms.

But of much more immediate concern is raising the debt ceiling.

Yesterday, I talked about how horrible our national debt is and I also talked about how dangerous refusing to raise the debt ceiling would be.

A large number of Americans that are deeply concerned about the national debt are also completely opposed to raising the debt ceiling.

But if we default right now, it is going to make our national debt problem much, much worse.

Think of it this way – if you had friends that were drowning in debt, would you tell them to immediately start defaulting on their mortgage, their car loans and their credit cards?

Of course not.

The penalties, fees and interest rate hikes would kill them.

Well, it is the same thing with the federal government.  Right now we have a great credit rating and we are able to borrow money at extremely low interest rates.

If that suddenly changed, interest rates on our debt would go up dramatically.  Just look at Greece.  Greece is paying somewhere around 28 percent interest on 2 year bonds.  If that happened to us, it would be a complete and total nightmare.

Even if we adopted a “balanced budget” next fiscal year, we would still need to roll over gigantic amounts of debt.

If interest rates on U.S. government debt started skyrocketing, interest payments on the U.S. national debt would very quickly start eating up the majority of our tax dollars.  We would soon have very, very little money to spend on anything else.

Wrecking our credit rating just to make a point about fiscal responsibility is not going to solve anything.

What point would there be to wrecking our financial system when neither political party has a viable plan for something better?

A lot of people (including some readers of this column) are actually rooting for a financial crash so they can watch the world go down in flames.

Yes, an economic collapse is coming, but that doesn’t mean that we should wish for it and try to get it to happen faster.

Look, you are probably going to die someday.  That doesn’t mean that you should go out and run your car into the nearest tree.

If we blow out our national credit rating right now, it is going to make it 10 times worse to try to get a handle on our national debt.

Plus, if the world financial system was to crash, it would create a massive amount of economic pain for hundreds of millions of people.

Most Americans cannot even conceive of what the consequences of a complete and total financial collapse would be.  It is not something that we should be wishing for.  Life as we know it would change dramatically.

Once our economic system crashes, it is not going to be able to be put back together again so easily.  Most Americans have no idea how bad things could get.

Yes, we must do something about the national debt.  We must stop spending ourselves into oblivion.  We must dismantle the current debt-based financial system that we are operating under and we must transition to something new.

But to purposely default by refusing to raise the debt limit would bring a whole lot of future financial pain into the present and would make it almost impossible to transition to a new financial system in an orderly fashion.

The sad thing is that a whole lot of people out there actually believe that the current system can be fixed.  Many Republicans believe that if we can just cut spending enough we will be okay.  Many Democrats believe that if we can just raise taxes on the wealthy enough we will be okay.

But the truth is that the current system cannot be fixed.  It is designed to be a perpetual government debt machine from which there is no escape.  We have reached a terminal phase of the debt spiral and we get closer to a collapse every single day.

According to John Williams of Shadow Government Statistics, if the U.S. government used GAAP accounting principles the “real” U.S. government budget deficit each year would be somewhere in the neighborhood of 5 trillion dollars.  Williams believes that the U.S. government is essentially bankrupt and that our current system is not anywhere close to sustainable….

Generally, you’ll find that the accounting for unfunded liabilities for Social Security, Medicare and other programs on a net-present-value (NPV) basis indicates total federal debt and obligations of about $75 trillion. That’s 15 times the gross domestic product (GDP). The debt and obligations are increasing at a pace of about $5 trillion a year, which is neither sustainable nor containable. If the U.S. was a corporation on a parallel basis, it would be headed into bankruptcy rather quickly.

Sadly, Williams is right.  We are drowning in debt.  Something has got to be done.

But refusing to raise the debt limit is not going to help.  If we allow our credit rating to be destroyed we could quickly find ourselves paying a trillion dollars or more just in interest on the national debt every single year.

If we want to handle the national debt monster, we need to do it the right way.  One thing that we need to do is to admit how bad the situation really is.

The truth is that we are in a lot more than $14.3 trillion in debt.

For example, according to The Financial Armageddon blog, the combined total for all “U.S. government bailouts” and “U.S. government guarantees” related to the financial crisis comes to a grand total of over 20 trillion dollars.

Also, the “unfunded liabilities” of the U.S. government are estimated to be somewhere between $60 trillion and $100 trillion.

If Bill Gates gave every penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.

There are no easy solutions to our problems.  If we refuse to raise the debt ceiling our interest costs on the national debt may end up doubling or even tripling in short order.  That is not going to help us get our fiscal house in order.

Right now the state of the economy is so fragile that one really bad “shock” could cause it to totally fall apart.  The U.S. economy is like a patient that is barely hanging on in the operating room.  If we don’t show patience and discipline we could end up with a total disaster.

Look, you will probably not find many writers on the entire Internet that harp on the horror of the U.S. national debt more than I do.  It is a crisis that is so nightmarish that it is hard to even put into words.

But refusing to raise the debt ceiling is not going to solve anything.  In fact, it would only accelerate our demise.

Our economic system is in bad enough shape already.  Let’s not do any unnecessary damage to it.

According to a new poll conducted by CBS News and The New York Times, 39 percent of all Americans believe that the U.S. economy is now in a “permanent decline”.

Sadly, that is the truth.  We are in a permanent decline.  Just “tweaking” a few things is not going to work.  Doing what the Democrats are telling us to do is not going to work.  Doing what the Republicans are telling us to do is not going to work.

Our financial system is fundamentally flawed from the Federal Reserve on down.  If we continue on the path that we are on, a horrific collapse is inevitable.

We need truly dramatic changes if our way of life is going to survive.

Unfortunately, most Democrats and most Republicans believe that they can fix the current system somehow.

It is not going to work.

Barack Obama’s White House Rural Council: Central Economic Planning For America’s Heartland

Barack Obama has issued a brand new executive order that establishes a White House Rural Council.  This Rural Council has been given the task of developing “public-private partnerships” that will seek to bring the “economic prosperity” of our big cities to rural America.  In other words, the U.S. government and the big corporations are going to team up to dominate the economies of our small towns and rural communities just like they dominate the economies of all of our big cities.  So should those that live in rural America be excited about this?  After all, the U.S. government and the big corporations have done such a great job of bringing “economic prosperity” to places like Detroit, Michigan and Camden, New Jersey.  Won’t it be great to have the federal government come in and tell rural communities how they should be doing things?

The chair of the White House Rural Council will be Agriculture Secretary Tom Vilsack.  Vilsack is a former governor of Iowa and a Democrat.  Swing states like Iowa will be key in 2012, and so perhaps Obama is trying to show that he really cares for middle America.

But it is really hard to forget the remarks that Obama made about rural Americans during the 2008 campaign.

In particular, the following quote about the “bitterness” of those living in rural America got a lot of attention at the time….

“And it’s not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”

Look, the vast majority of the people who live in rural America do not want to hear that they need to let go of their guns or their religion.

And most of them certainly do not want the federal government to come in and tell them how to run their local economies.

But according to Obama, the U.S. government “has an important role to play” in managing the economies of rural communities.  The following is a direct quote from the executive order establishing the White House Rural Council….

Though rural communities face numerous challenges, they also present enormous economic potential. The Federal Government has an important role to play in order to expand access to the capital necessary for economic growth, promote innovation, improve access to health care and education, and expand outdoor recreational activities on public lands.

To many Americans, all of this will sound really great.  The federal government is going to come in and help the “backwoods folk” catch up with the rest of us.  What could be wrong with that?

Well, the truth is that whenever the federal government gets its fingers into something it tends to really mess it up.  Many of the biggest problems our country is facing today can be traced directly back to Washington D.C.

Many small towns and rural communities are doing just fine without the interference of the federal government.  In fact, large numbers of Americans have purposely moved out to rural areas because they don’t want the interference of the federal government in their lives.

But according to this new executive order, the Obama administration plans to stick its itchy little fingers into just about every aspect of rural life.  One of the stated goals of the White House Rural Council is to do the following….

coordinate and increase the effectiveness of Federal engagement with rural stakeholders, including agricultural organizations, small businesses, education and training institutions, health-care providers, telecommunications services providers, research and land grant institutions, law enforcement, State, local, and tribal governments, and nongovernmental organizations regarding the needs of rural America

This is yet another example of how we are rapidly becoming a centrally-planned economy.

Today, there are way too many Americans that expect the federal government to solve all their problems and take care of them from birth to death.

But that is not what our founding fathers intended, and our federal government has become so corrupt and so incompetent that it could not do those things even if we wanted it to.

Before the federal government “fixes” the problems of rural America, perhaps it should focus on “fixing” many of the other problems it has created first….

*Growing numbers of military veterans cannot find jobs once they leave the U.S. military.  In fiscal 2008, the Pentagon spent $450 million on unemployment benefits for military vets.  In fiscal 2010, the Pentagon spent almost twice as much – $882 million.  According to the U.S. Bureau of Labor Statistics, the unemployment rate for military veterans between the ages of 18 and 24 is more than 30%.

*The housing collapse that the Federal Reserve and the U.S. government caused is a nightmare that never seems to end.  According to the New York Times, at the current pace it will take 62 years for the banks to repossess all of the homes that are in severe default or foreclosure in the state of New York.

*The recent commodity price increases caused by the Federal Reserve have resulted in much higher prices at the gas pump and at the grocery store.  These higher prices are hitting the poor and the lower middle class much harder than they are hitting the wealthy.

*The federal government has piled up the biggest debt in the history of the world and the U.S. dollar is dying.  Standard & Poor’s has altered its outlook on U.S. government debt from “stable” to “negative” and is warning that the U.S. could soon lose its prized AAA rating.  Russian presidential economic adviser Arkady Dvorkovich says that his nation is going to keep dumping U.S. government debt.  China has been dumping U.S. government debt.  The entire U.S. financial system is on the verge of financial collapse and the federal government seems to be powerless to make any meaningful changes.

But instead of fixing the glaring problems that are staring them directly in the face, the control freaks and the bureaucrats in Washington D.C. seem obsessed with figuring out more ways to interfere in our lives.

Over the past couple of months, bad economic news has been pouring in almost constantly.  Our economy appears to be in danger of breaking apart.  We are in the midst of a horrific economic crisis and nobody is sure what is going to happen next.

So please excuse the good folks of rural America if they are not in the mood to put up with federal government interference in their communities.

The federal government has failed so dramatically so many times before that it is really hard to have any faith that the federal government can do much of anything right at this point.

You Call This An Economic Recovery? 44 Million Americans On Food Stamps and 10 Other Reasons Why The Economy Is Simply Not Getting Better

When Barack Obama, the Federal Reserve and the mainstream media tell us that we are in the middle of an economic recovery, is that supposed to be some kind of sick joke?  According to newly released numbers, over 44 million Americans are now on food stamps.  That is a new all-time record and that number is 13.1% higher than it was just one year ago.  So how many Americans have to go on food stamps before we can all finally agree that the U.S. economy is dying?  50 million?  60 million?  All of us?  The food stamp program is the modern equivalent of the old bread lines.  More than one out of every seven Americans now depends on the federal government for food.  Oh, but haven’t you heard?  The economy is showing dramatic improvement.  Corporate profits are up.  The stock market is soaring.  Happy days are here again.

It just seems inconceivable that anyone can claim that the economy is improving when the number of Americans on food stamps continues to set a brand new record every single month.  But the food stamp program is not the only indicator that the economy is still having massive problems.  The following are 10 more reasons why the U.S. economy is simply not getting any better….

#1 Some recent statistics actually indicate that the number of unemployed Americans is still going up.  According to Gallup, unemployment in the United States rose to 10.3% at the end of February.  That is the highest number Gallup has reported since early last year.

#2 The housing industry is still a complete and total disaster.  In fact, new home sales in the U.S. in January were 11.2% lower than they were in December.  Not only that, the number of new home sales in January was 18.6% lower than the number of new home sales in January 2010.  That is not a sign of improvement.

#3 There wouldn’t even be much of a housing industry at all at this point if it was not for the U.S. government.  Right now the U.S. government is either writing or guaranteeing well over 90 percent of all mortgages in the United States.  So what would the housing market look like in 2011 if the government was not in the picture?

#4 In 2010, more than a million U.S. families lost their homes to foreclosure for the first time ever, and that number is expected to go even higher in 2011.

#5 Due to rampant economic decay and record numbers of foreclosures there are areas in most of our major cities that now look like “war zones”.  For example, the Huffington Post is reporting that there are now approximately 15,000 vacant buildings in the city of Chicago and there are approximately 60,000 vacant houses and apartments in the city of Las Vegas.

#6 According to the Oil Price Information Service, U.S. drivers spent an average of $347 on gasoline during the month of February, which was 30 percent more than a year earlier.  This represented 8.5% of median monthly income.  So what is going to happen when gas prices go even higher?  Sadly, the average price of gasoline in the U.S. has risen another 4 cents since yesterday and it is likely to go much higher from here.

#7 The U.S. trade deficit continues to grow.  The trade deficit was about 33 percent larger in 2010 than it was in 2009, and the 2011 trade deficit is expected to be even bigger.

#8 The CredAbility Consumer Distress Index, which measures the average financial condition of U.S. households, declined in every single quarter in 2010.

#9 The number of Americans that have become so discouraged that they have given up searching for work completely now stands at an all-time high.

#10 The U.S. national debt is growing faster than ever.  The Obama administration is projecting that the federal budget deficit for this fiscal year will be a new all-time record 1.65 trillion dollars.  It is hard to even imagine how much money that is.  If you went out today and started spending one dollar every single second, it would take you over 31,000 years to spend one trillion dollars.  Long ago the U.S. government should have been getting these deficits under control, but instead they are just getting even larger.

So in light of the statistics above, can anyone really claim that we are in the middle of an economic recovery?

The truth is that there is no sign that any of the long-term trends that are destroying the U.S. economy are even slowing down.

Millions of jobs continue to be shipped overseas.

The U.S. dollar continues to be devalued.

The federal government continues to go into more debt.

State and local governments continue to go into more debt.

Our trade deficit continues to grow.

Our cities continue to be transformed into wastelands as they are being systematically deindustrialized.

The number of Americans that are dependent on the government continues to soar.

The U.S. middle class continues to shrink.

I know that I harp on these themes over and over, but it is vitally important that everyone understands that the mainstream media is lying to us.

The U.S. economy is dying a very painful death and there is no hope on the horizon.

Things are not going to be getting better.  Well, they may get a bit better for the boys down on Wall Street, but for the rest of us our standards of living are going to continue to decline.

The best days for the U.S. economy are already behind us.  What lies ahead is a whole lot of pain.

We are going to pay the price for decades of corruption and incompetence.

An economic collapse is coming and you had better get ready.

As The Obamas And The Ultra-Wealthy Live The High Life Most Americans Are Going Through Economic Hell

Barack Obama recently made the following statement to American families that are struggling to survive in this economy: “If you’re a family trying to cut back, you might skip going out to dinner, or you might put off a vacation.” A few days after making that statement Obama sent his wife and children off on yet another vacation, this time to a luxury ski hotel in Vail, Colorado.  But the Obamas are not the only ones enjoying the high life.  Wealthy corporate executives and greedy Wall Street fatcats insist that profit margins are too tight to hire more American workers, and yet sales of luxury cars, private jets and vacation homes are soaring.  Meanwhile, most American families are going through economic hell right now.  In 2010, more Americans than ever before were living below the poverty line.  Over 4 million Americans have been unemployed for more than a year, and over 5 million Americans are at least two months behind on their mortgage payments.  As the Obamas and wealthy corporate executives jet off to fancy ski resorts, half of all American workers are earning $505 or less per week and 55 percent of American families are living paycheck to paycheck.  Something is very wrong with this picture.

So is there anything wrong with working hard and enjoying the fruits of success?  Of course not, as long as it was done honestly and not on the backs of the American taxpayers.  But the truth is that many of the corporate executives that are enjoying luxury vacations right now would not even have companies to run if the American taxpayers had not stepped in and bailed them out during the financial crisis.  Thanks to the U.S. government and the Federal Reserve, Wall Street bankers and top corporate executives are once again enjoying bonuses that most of us would consider obscene.

Meanwhile, most of the rest of the country is suffering very deeply.

Over the past several decades, the biggest financial institutions and the biggest corporations have worked really hard to “fix” the rules of the game in their favor.  The truth is that our economy is no longer a “free market” capitalist system.  Rather, what we have now is more accurately described as “corporatism” or “neo-feudalism”.  The big corporations dominate almost everything, and whatever they don’t dominate the government does.

One of the key features of a “corporatist” system is that it tends to funnel all the wealth to the very top.

Back in 1976, the top 1 percent of earners in the United States took in 8.9 percent of all income.  By 2007, that number had risen to 23.5 percent.

Ouch.

There are two different Americas today.  There is the America of the gated communities, the private planes and the good life, and there is the America of declining wages, thrift stores and rising desperation.

What is saddest of all is that the most vulnerable people in society often suffer the most from all of this.

According to one recent study, approximately 21 percent of all children in the United States were living below the poverty line in 2010.

Do you think that the Obamas are thinking about any of this while they are enjoying their stay at a luxury ski hotel in Vail, Colorado?

The truth is that leadership is not just about words.  Leadership is about setting an example.

Back in August, Michelle Obama took her daughter Sasha and 40 of her friends for a vacation in Spain.

So what was the bill to the taxpayers for that little jaunt across the pond?

It is estimated that vacation alone cost U.S. taxpayers $375,000.

Hey, Barack Obama won the most votes in 2008 and so if he wants his family to get as much enjoyment out of these four years as they can that is his prerogative.

However, if he wants to tell American families that they “might put off a vacation” after all the vacations that the Obamas have taken over the past two years then he is just being a massive hypocrite.

According to the New York Post, Barack Obama enjoyed a total of 10 separate vacations that stretched over a total of 90 vacation days during the years of 2009 and 2010.

During his first two years in office, he also managed to play 29 rounds of golf.

Oh, but it is the rest of us that have to cut back on our vacations.

But it is not just the Obamas that are enjoying the high life right now.

The wealthy have recovered nicely from the “recession” and now they are spending money by the gobs once again.

According to Moody’s Analytics, the wealthiest 5% of households in the United States account for approximately 37% of all consumer spending.

Life is very good in America if you have got enough money.

A recent article in USA Today detailed some of the things that wealthy corporate executives are spending money on in 2011….

Luxury and high-end marketers have picked up on what they hope is a growing trend, offering products that bank on a looming spending spree. Germany’s PG-Bikes is rolling out the $80,000 Black Trail, a battery-powered bicycle. Swiss watchmaker Richard Mille is selling $525,000 timepieces. Steinway has launched a John Lennon-themed grand piano — at $90,000 and up. After selling out a $245,000 model, automaker Porsche is planning the 918 Spyder, a hybrid car that could sell for more than $630,000.

Nearly all luxury brands experienced a resurgence in 2010.  Just check out some of the sales increases for luxury car brands….

Porsche: 29%

Cadillac 36%

Rolls-Royce 171%

At the exact same time, however, life is getting really, really hard for the rest of America.

As I wrote about yesterday, the U.S. middle class continues to be decimated even in the midst of this “economic recovery”.

There are tens of millions of Americans that would like to have a full-time job that are not able to get a full-time job.  The number of Americans on food stamps has gone from about 26 million at the start of 2007 to 43 million today and it continues to set a brand new record every single month.  One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.

Our economy has become a complete and total nightmare.

Over the past couple of days some of the readers of this column have been sharing some of their economic horror stories.  But they are far from alone.  There are literally millions of Americans with economic horror stories out there.  It is just that we don’t get to hear too many stories from the “other America” on our televisions.

The following stories of economic pain are from people just like you and me.  Times are incredibly hard for most of America right now, and they are only getting harder with each passing month….

Colin:

My mother is unemployed. She is 61 years old, has 25 years of experience working for a major telecommunications corporation, and has a four-year degree. I watch her send application after application to employers with no response. I watch her get contacted by recruiters who say she is a ‘perfect fit’ for a job and never deliver. I watch her slide into depression and staying in bed many hours of the day.

I am 38 years old, I have mental illness, and I recently lost my job as a delivery driver because the owner sold his business to a competitor.

I don’t believe that either my mother or I will ever be employed again. I am beginning to feel that I am permanently in the world of the unemployed.

Jeff:

I graduated college in May 2000 with a Bachelors degree in Broadcasting/Minored in History. I have worked for major corporations as an Enterprise Sales Consultant selling Servers. I was a Network Engineer for Qwest Communications. I even worked for the Federal Government and held a Security Clearance for 4 years. I also won Dell Small Business Sales Consultant of the quarter as well. But since I don’t have an active clearance anymore no one wants to hire me in D.C. I lost my job in 07/2010 and from 07/2010-Present I have been unemployed. My food stamps were also recently cut off last month since the State of Virginia decided that for a household of 1 you can’t make more than $1178 a month. I make $1250 a month in Unemployment compensation before taxes so according to the Government I am too rich to receive Food stamps now. My Rent, Gas and Car insurance is $1000 a month and I am holding on for dear life. I am currently in the process of declaring Chapter 7 Bankruptcy and using my tax return to pay the attorney $1500 to file. That leaves me with only #250 a month for food, water and cell phone.

I have a list compiled in my Google email with approximately 784 applications I have filled out for every government agency, defense contractor and job available in the Washington, DC area. I even applied to Carmax and my old job in college waiting tables at red Lobster and the moving company I used to work at during the summers in college. If its bad for someone like me with over 10 years of Sales, Server/computer experience, Investigations and Network Engineering than I can’t imagine how bad it is for people that just have a high school diploma. I have been on one interview out of the almost 1000 jobs I have applied to (It takes about 2 hours to apply to one job). The one interview I went on offered me less than my unemployment gives me at $8 an hour. I can sit at home and make more money on unemployment than 80% of the jobs that I have applied too and even those jobs don’t call me. Is this what America has become? Is this what I sacrificed 5 years of my life in college from 17 years old to 21 years old and spent $40,000 to get a worthless degree that won’t even get you hired?

Todd:

Well, My family has been ripped to shreds alright.

Overall combined (My father, and myself) make about 60k a year. We can barely survive we keep looking to cut things, and make things cheaper but it’s just not working fast enough.

My wife can’t find a job, and now student loans are starting to become issues. (won’t go in to further details).

Tax returns taken, and various other things, Can’t even afford dental care. We don’t even get to go out anymore, and lucky to get any type of snacks. Just so you know there are 5 people living in this house.

Sharonsj:

The only reason I am not out on the street is that when I had money I paid off my mortgage.

However, because I did that, my food stamp allotment is only $25 a month. The heating assistance I get only paid for less than one months’ heat out of the six months I need here in Pennsylvania. All other expenses use up what’s left, so you learn to eat at home; I try not to leave the house because it’s going to cost me money.

I blame Congress for destroying America. They have given tax breaks to themselves and their rich friends at our expense. Did you know that anybody who serves 5 years in Congress gets a FULL pension at age 62? Us peasants work for 45 years and then if we retire at age 62 we are forced to give up 25% of what we earned.

Niles:

I lost my house, my family was split, and all my savings is gone.

I have lost hope. I served in the military, went to college and have high tech skills. My country doesn’t give a ***** about me. The bankers are as evil as the communists and I hate them.

Michael:

I’m also 38, and have worked in IT since the mid 90s. I lost my full time job in April ’03, and have only been able to find short term temporary work since. The contracts started to get shorter and fewer as the years went on, so in spring ’10 I retrained to be an Emergency Medical Technician (EMT) but have not been able to find work in the last 9 months. An ambulance company I applied with said that they have hundreds of applications in several Northern CA counties but no job openings. And health care jobs are supposed to be on the the only areas of growth. I deliver pizzas for cash on and off and am getting unemployment.

Mondobeyondo:

I lost track of how many resumes I’ve sent out during the past several months. My neighbors think I’m trying to win the Publishers Clearing House sweepstakes or something (yeah, that would help too! Ha!)

Maybe I should go back to school and become an RLP (Rejection Letter Professional).

Dorothy:

The rent at the place I lived was so high that I couldn’t afford it on a school bus driver’s salary, which I was doing for the past few years, because in spite of 30 years clerical experience, where I performed every function from clerk typist to executive legal secretary, I could not find employment. So I applied for subsidized housing and was forced to move back to Chicago, where the crime rate is very high in certain areas.

Before I moved I was getting $200 in food stamps, but now that I am in subsidized housing, I have to go and reapply and if I get anything at all, I have heard that it will be about $52 a month! Although the rent is subsidized, I have to pay for my own heat, and the building in which I live is completely electric! Energy assistance doesn’t cover it. They give with one hand and take away with the other.

All of the people above are still “surviving”, but what do you think is going to happen to many of them as the cost of living goes up dramatically?  Brent crude just hit $108 a barrel and the UN says that the global price of food recently hit a new all-time high.

Americans on fixed incomes or that are on government assistance are going to be absolutely devastated if prices for basics such as food and gas rise substantially.

Not only that, but budget cuts on the federal, state and local levels are also going to hurt many of these people deeply.

But this is where we are at as a nation.  A small privileged class is enjoying the high life while a rapidly growing poverty class pleads for the government to toss them some more crumbs.

The American people deserve better than this.  They deserve an economy that will provide them with good jobs which will enable them to pay their mortgages and feed their families.

Unfortunately, the U.S. economy is dying.  The number of good jobs is actually declining.  The middle class is being systematically wiped out.

The answer is not to “tax the rich” so that we can toss the rapidly growing poverty class a few more crumbs.  The answer is to radically transform our economy back into the kind of economy our founding fathers originally intended.

But wealthy corporate executives and politicians such as Barack Obama are not going to have any of that.  Those sitting on top don’t want any real change to happen.  Sadly, the general population has become so dumbed-down that they don’t even know the questions that they should be asking.

So unfortunately it appears we are going to keep heading down the exact same economic path that we have been heading for decades.  The middle class will keep being ripped apart and politicians like George W. Bush and Barack Obama will just keep on smiling.

Barack Obama’s Budget For 2012: A Complete And Total Joke

Is Barack Obama trying to play a joke on all of us?  The budget that the Obama administration has submitted for fiscal 2012 is so out of touch with reality that it may as well be a budget for “Narnia”, “Fantasy Island”, “Atlantis” or some other mythical land.  You can view the hard numbers for Barack Obama’s 2012 budget right here.  Obama’s budget assumes that the U.S. will experience economic growth of over 5 percent for most of the coming decade.  That is so far-fetched that “optimistic” is not the right word for it.  It also assumes that U.S. government income (primarily made up of taxes on all of us) will more than double over the next ten years.  For 2011, the budget projects that the U.S. government will take in a total of 2.1 trillion dollars, and for 2021 the budget projects that the U.S. government will take in a total of 4.9 trillion dollars.  For the Obama administration to assume that the federal government will be able to drain an extra 2.8 trillion dollars per year out of the American people by the year 2021 is ridicul0us beyond belief.  In his new budget Barack Obama does propose some very, very modest spending cuts that he knows have no chance of getting through Congress.  Barack Obama’s budget for 2012 also does not even attempt to make any cuts to entitlement programs such as Social Security and Medicare.  In essence, you can sum up Barack Obama’s budget proposal for 2012 by saying that it is a complete and total joke.  This budget is so delusional and so out of touch with reality that it is hard to imagine anyone taking it seriously.

Oh, but Obama is really trying to sell it hard.  When Obama unveiled this new  $3.7 trillion budget for 2012 at a middle school in Baltimore, he insisted that his plan will make it “so that every American is equipped to compete with any worker anywhere in the world.”

Well, that is a nice sound bite, but as I have written about previously, unless Barack Obama suddenly finds a way to stop multinational corporations from paying slave labor wages to their workers on the other side of the globe the job losses in America are going to continue.

But that is a topic for another day.  Getting back to the 2012 budget, Obama is proposing to cut more than a trillion dollars from federal budget deficits over the next ten years.

That sounds really good until you figure out that means that the cuts only amount to about $100 billion a year.  Considering the fact that Obama’s budget is projecting that we will have a $1.6 trillion budget deficit this year alone, that really is not a whole heck of a lot to be cutting.

The truth is that Barack Obama should be proposing spending cuts that are at least ten times as large if he was actually serious about addressing our budget woes.

But at least Obama is not proposing an increase in spending.

Oh wait, he actually is.

In fact, under Obama’s budget, U.S. government spending will soar from 3.8 trillion dollars this year to 5.6 trillion dollars in 2021.

But the mainstream media is solely focusing on the budget cuts that Obama is proposing.

Apparently they are trying to cast him as some sort of “fiscal conservative”.

Try not to laugh.

But the modest cuts that Obama is proposing are at least some place to start.

Under Obama’s budget, approximately half of all government agencies will have their funding decreased from 2010 levels.

In fact, approximately 33 billion dollars would be saved by scaling back or shutting down 200 federal programs.

Of course Obama’s fellow Democrats in Congress will never go along with many of these cuts, but at least it is something.

However, this is where most in the mainstream media stop their analysis.

They don’t take a closer look at the numbers in Obama’s budget.

They don’t question the wacky economic growth assumptions.

They don’t question the bizarre government income projections.

But even with the Obama administration’s crooked numbers, the federal deficit still never drops below 600 billion dollars over the next decade and a total of 7.2 trillion dollars is still added to the national debt over the next decade.

If economic growth ends up being much lower, or if the U.S. government is not able to get twice as much money out of the American people by the end of the decade then the projections would look much, much different.

So where does the Obama administration assume all of that extra money for the government is going to come from?

Oh, from raising taxes of course.

The Obama budget assumes that there will be significant tax increases starting in the year 2013.

A recent article on CNBC summarized some of the tax increases that the Obama budget calls for….

The plan unveiled Monday includes tax increases for oil, gas and coal producers, investment managers and U.S.-based multinational corporations. The plan would allow Bush-era tax cuts to expire at the end of 2012 for individuals making more than $200,000 and married couples making more than $250,000.

Wealthy taxpayers would have their itemized deductions limited, including deductions for mortgage interest, charitable contributions and state and local taxes.

There are many liberals (such as my friend Gary) that would love to see these tax increases go into effect, but Obama knows that there is no chance that they will ever see the light of day unless the Democrats retake the House of Representatives.

But most of Obama’s budget for 2012 is based on things that simply never even have a chance of happening.

The reality is that Obama’s budget for 2012 is a great work of fiction.

Meanwhile, the U.S. government continues to accumulate staggering amounts of debt.

In fact, Obama’s budget admits that we will witness the biggest one year debt increase in history this year.

In 2011, the gross federal debt with surpass 15 trillion dollars.  In fact, it is being projected by some analysts that this will be the year when the debt finally becomes larger than the size of the entire U.S. economy.

Ouch.

But Obama insists that he is taking this debt problem very seriously.

Obama insists that he is committed to making “deep” cuts.

In fact, as he announced this new budget Obama stated that these budget cuts hit “many programs whose mission I care deeply about, but meeting our fiscal targets while investing in our future demands no less.”

Do any of you actually believe him?

Not that the Obama administration is in an easy position.  The truth is that the U.S. government (both Republicans and Democrats) have been horribly irresponsible with our money for decades.

The 14 trillion dollar national debt problem that we have now did not develop overnight.

Neither will it be solved overnight.

But Obama is not even trying to address the tough issues such as Social Security and Medicare.

The truth is that the federal debt problem cannot be solved without addressing our out of control entitlement programs.

So why didn’t Obama address them in his budget?

Well, the reality is that Obama is not stupid.  Social Security and Medicare are political sacred cows.  Obama is not going to do anything at this point that would cost him millions of votes in 2012.

So Barack Obama ignored most of the $4 trillion in budget cuts recommended by the White House-appointed deficit commission.

It kind of makes you wonder why Obama ever appointed a “deficit commission” in the first place.

One area that Obama does attempt to cut in his new budget is military spending.  Obama’s budget for 2012 sets military spending at 5 percent below what the Pentagon requested for 2011.

In fact, Obama’s defense budget would slash military spending by $78 billion over the next five years.

His budget also assumes that we are not going to get involved in any more wars, which is not necessarily a safe assumption.

So will these military spending cuts actually get through Congress?

Not likely.

The Republicans control the House of Representatives, and they are not likely to take too kindly to large cuts to the defense budget.

In fact, the truth is that not too many of Barack Obama’s spending cuts are likely to survive in Congress.

As a recent article on CNN explained, Barack Obama’s budget plan must navigate a vast array of congressional committees in the coming months and by the time it emerges it is likely to be radically changed from its current form….

Before it gets back to Obama’s desk for a signature, the spending blueprint will go through no less than 40 congressional committees, 24 subcommittees, countless hearings and a number of floor votes in the House and Senate.

As our Congress critters have demonstrated over and over and over, they love to spend our money on some of the most wasteful things imaginable.

For example, a total of $3 million has already been granted to researchers at the University of California at Irvine so that they can play video games such as World of Warcraft.

Something seems to happen to people who get elected to Congress.  Almost all of them seem to develop an addiction to spending our hard-earned money.

Let us hope that something changes in that regard, because right now government debt is completely and totally out of control.

In fact, the U.S. national debt is currently increasing by approximately 4 billion dollars every single day.

In the end, if something is not done about all this debt it will destroy the entire U.S. financial system.

But our politicians just keep putting it off and putting it off.

Eventually we will reap what we have sown.  Debt is a very cruel master, and nobody can run from it forever – not even the U.S. government.

Has The United States Become A Nation With No Economic Spine?

What are hard working Americans who have scrimped and saved and have done everything “right” financially for decades supposed to think about all of these “bailouts” and of the massive financial mess in Washington?  How are people who have handled their own finances admirably supposed to feel now that the foolishness of others is leading us all towards a horrific economic collapse?  Well, a reader named “Mae” recently left a comment that I think does a good job of communicating what a lot of hard working Americans are feeling right now: My situation is this – we have lived our lives playing by the rules: never carried debt on a credit card that we couldn’t pay off by the due date. If we couldn’t afford the item, we didn’t buy it. We always had a Christmas Club which enabled us to pay cash for the holiday. We payed ourselves first after every paycheck whether it was $10 or $100, whatever we could afford. We made double payments on our mortgage when we could which helped us to pay off our modest home 10 years early. We knew that we couldn’t afford to “have it all” so we made our choices early on and stuck with it. We sacrificed the fancy vacations in order to do large home repairs (like a new roof) ourselves. We didn’t buy expensive cars and now own one outright and carry a small loan on another. That’s our only debt besides monthly bills. We chose jobs that provided health care benefits. We did everything right…we saved and saved and saved to have a decent retirement but of course last year took half the value of our 401k.

Now, I’m expected to sit back and watch Bush, Congress and Obama bail everyone out because they didn’t have the fiscal discipline to manage their money?? I’m supposed to feel bad for people who bought homes they couldn’t afford? or cars they couldn’t pay for? or $1000 cell phone bills? or $20,000 in credit card debt? HELL NO! I’m livid! If I ran my checkbook the way Washington is running the national checkbook, I’d be thrown in jail!

All we can do now is educate as many people as possible about what is happening and hopefully vote all these s.o.b.’s out of office and replace them with fiscally conservative candidates who will vote for term limits. The days of a career politician are over. I don’t know if we can turn any of this around – it will take a lot of hard work to make the tough decisions, but they have to be made if we’re to survive. How many people have the guts to work through this? Not many…we’ve become a spoiled, selfish, arrogant and hypocritical nation with no spine.

Liberty Silver Coins

15 Reasons Why Barack Obama’s Declaration That “A Second Depression Is No Longer A Possibility” Is Dead Wrong

Is the United States economy headed for another Great Depression?  Well, according to Barack Obama, that is no longer possible.  According to Obama, the United States has avoided an economic collapse and is headed for another wonderful era of growth and prosperity.  But is Obama right?  Do the economic signs indicate that the U.S. is headed towards recovery or towards even more difficult times?  As you shall see below, there is no way in the world that Barack Obama should have ever said that “a second depression is no longer a possibility”.  In fact, as the U.S. financial system continues to crumble, it is likely that those words will be exploited by his political adversaries again and again.  If you are a politician and you are going to issue a guarantee, you had better be able to deliver the goods.  In this case, Obama is making a promise that defies all of the economic data.

Video of Obama making his declaration that “a second depression is no longer a possibility” is posted below….      

So why is Obama wrong?  Well, if you want a full examination of why the United States is headed for an economic collapse, please read the rest of this blog.  In this article we just wanted to highlight a few of the reasons why the U.S. is headed for a complete financial meltdown….

#1) The U.S. housing market is continuing to come apart like a 20 dollar suit.  The U.S. government just announced that in January sales of new homes plunged to the lowest level on record.  This is not a sign that the U.S. economy is recovering.

#2) In fact, a lot more houses may be on the market soon.  The number of U.S. mortgages more than 90 days overdue has climbed to 5.1 percent.  An increasing number of Americans find themselves simply unable to keep up with their mortgages.  This is another indication that things are getting worse instead of better.

#3) Over 24% of all homes with mortgages in the United States were underwater as of the end of 2009.  So in other words, nearly one out of every four U.S. homeowners with a mortgage owe more on their homes than the homes are worth.  That is a giant mess, and it is going to be very painful to untangle it.

#4) If all of that wasn’t bad enough, a massive “second wave” of adjustable rate mortgages is scheduled to reset beginning in 2010.  The “first wave” of mortgage resets from 2006 – 2008 absolutely crippled the U.S. housing market, and this second wave threatens to make things far worse.

#5) Confidence among U.S. consumers fell dramatically in February to the lowest level in 10 months.  Consumers that are not confident in the economy tend to hold on to their money.  If consumers don’t spend their money then the economy is not going to grow.

#6) Many analysts are predicting that the next “shoe to fall” in the ongoing financial crisis will be commercial real estate.  U.S. commercial property values are down approximately 40 percent since 2007 and currently 18 percent of all office space in the United States is sitting vacant. 

#7) In fact, the commercial real estate sector is just now entering the danger zone.  It is projected that the largest commercial real estate loan losses will be experienced in 2011 and the years following.  Some analysts are estimating that losses from commercial real estate at U.S. banks alone could range as high as 200 to 300 billion dollars.  To get an idea of how rapidly commercial real estate loans are turning sour, just check out the chart below….

#8) All of these bad loans are causing banks to dramatically slow down real estate lending.  During the middle of the decade, the number of commercial real estate loans exploded, but now the bubble has burst, and as the chart below reveals, commercial real estate lending has dropped through the floor….

#9) All of these real estate problems are decimating America’s small and mid-size banks.  The FDIC has announced that the number of banks on its “problem” list climbed to 702 at the end of 2009.  This is compared to only 552 banks that were on the problem list at the end of September and only 252 banks that were on the problem list at the end of 2008.  As you can see from these figures, the banking crisis in the U.S. is escalating rapidly.

#10) The U.S. national debt is now over 12 trillion dollars and it is rising at a rate of about 3.8 billion dollars per day.  In fact, some analysts are projecting that the United States will borrow more money in 2010 than the rest of the governments of the world combined.

#11) The financial mess in the U.S. is scaring off other nations from buying U.S. government debt.  In fact, the Federal Reserve now has to “buy” most U.S. government debt because others are extremely hesitant to purchase the massive amount of bad paper the U.S. is trying to sell.  In addition, other countries are now using the massive amounts of U.S. government debt that they already hold as leverage.  A major U.K. newspaper is warning that evidence is mounting that recent Chinese sales of U.S. Treasury bonds are intended as a warning to the United States government rather than simply being part of a routine portfolio shift.

#12) But the U.S. is not the only economy that is suffering during this economic downturn.  The entire world economy has been impacted.  The World Trade Organization has announced that world trade fell by 12% last year as the world economic crisis caused the biggest drop in world trade since 1945.

#13) The United States should not expect the rest of the world to pick up the economic slack either.  The crisis in Greece has made headlines all over the globe recently, and Harvard University Professor Kenneth Rogoff is warning that we could soon see a huge wave of sovereign defaults.

#14) The reality is that things are so bad in some parts of Europe that it could take years and years to recover.  In fact, the chief economist of the International Monetary Fund is warning that financial “belt-tightening” in Europe will be “extremely painful” and could take up to 20 years.  The truth is that if Europe is suffering economically, it will be very difficult for the U.S. to recover at the same time.

#15) In addition, some of the most prominent investors in the world know what is coming and are issuing their own warnings.  For example, Charlie Munger, Warren Buffett’s long-time business partner, has warned in a new article for Slate.com that “it’s basically over” for the U.S. economy.  Marc Faber is warning that things are going to get so bad that it is time for investors to buy farmland and gold.

But apparently Barack Obama knows better. 

Apparently Barack Obama can guarantee that it is impossible for the United States to go into another depression.

Do you believe him?

Barack Obama, The Federal Reserve And The New York Times: Millions Of Unemployed Americans Are NOT Going Back To Work Any Time Soon

Most Americans seem to be under the impression that the millions of Americans who have lost their jobs over the last few years will soon be going back to work as the U.S. economy recovers.  But that is not going to happen.  In fact, even Barack Obama, the Federal Reserve and the New York Times are all admitting that millions of unemployed Americans are not going back to work any time soon – and they are some of the biggest optimists regarding the long-term prospects for the U.S. economy.  Many are calling this a “jobless recovery”, but what we are experiencing right now is not a “recovery” at all.  Rather, we are currently in a “lull” in the economic storm.  All of the “bailouts” and “stimulus packages” have stabilized the U.S. economy for now, but they have made our long-term debt problems far worse.

So what does that mean?

It means that eventually millions and millions more Americans will lose their jobs.

So don’t count on the millions of Americans who are currently unemployed going back to work any time soon.

Even the most important newspaper in the United States (the New York Times), the most important financial institution in the nation (the Federal Reserve) and the president of the United States (Barack Obama) all say that the employment situation is not going to improve for quite some time…. 

*Barack Obama’s most recent budget proposal projects that the U.S. unemployment rate will remain at about 10% in 2010.  Of course we all know that the current official unemployment rate of approximately 10% is actually more like 18-22% in reality.

*The Federal Reserve also caused a stir recently when they said that the official U.S. unemployment rate will continue to stay up around 10% throughout 2010.

*In a recent article entitled “Millions of Unemployed Face Years Without Jobs”, the New York Times admitted that millions of Americans that have lost their jobs during this “recession” may be out of work for years.

Meanwhile, according to the Department of Labor, approximately 2.7 million unemployed Americans will lose their unemployment check before the end of April unless the U.S. Congress decides to extend their payments.

So what happens when millions of unemployed Americans don’t even have an unemployment check coming in?

Things are getting bad out there, and many financial institutions are beginning to take steps to protect themselves.

In fact, Citibank is now telling some of their customers that they are reserving the right to require 7 days advance notice before allowing a customer to withdraw their own money.

Yes, this is true.

Citibank is currently sending the following notification to their customers all over the United States, but according to them it was only supposed to go to their customers in Texas: “Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change.”

Could you imagine having to give your bank 7 days notice before you take your money out?

Dark economic times are ahead.

The truth is that the once great U.S. economy is crumbling.  Just check out the chart below.  Does this look like part of a “normal” economic cycle to you?….

+ More