PrintJuly 28, 2010
Repent -- The End Is Near
It is a lazy afternoon. Or at least it was until I came across a blog by Mish. There was little in the post that I didn't know or suspect, but this quote triggered a reaction:
It hides the economic substance of what's really happening-an unlimited taxpayer bailout.
William Black, a former no-nonsense regulator, described in that statement everything that has happened and continues to happen. It represents the federal government's approach to "saving" the economy -- subterfuge and no limits. Mish went on to add:
To address the situation, the FDIC is going to start selling U.S.-guaranteed FDIC senior certificates. However, it has no Congressional authority to do so according to former thrift regulator William Black.
These quotes summarized the double-speak, unconstitutional acts, bullying, outright lies, and trampling of the Rule of Law that now describes our government.
As I reflect on the country and where it is headed, it not easy to be optimistic. I have children and grandchildren who will not have the opportunities or amenities that I had. That is not my or their fault. No one has meaningful input as to what is happening. Everything is imposed, whether it is popular or not. We have become mere pawns in the Ponzi scheme of government. The Great Parasite has drained most of the life from its host (the country, its citizens, and its private sector).
The administration and other politicos, along with the media, do their best to promote a rosy picture. Images are all they have -- the TV actor who plays president, tax-forgetter Treasury Secretary Timmy Geithner, a supporting cast inexperienced in anything practical, a shadow government made up of czars, a press secretary disdainfully called "Baghdad Bob," and innumerable other disgraces. Republicans are not excluded from blame. The problems existed before Obama.
We are ruled by a political class that lacks ethics, integrity, and ability. We are lied to daily. We are not in an economic recovery. The financial crisis is not over. The reality is that the economy and financial system are in worse trouble today than they were two years ago. We have not seen anything yet compared to what lies ahead!
Your future is in your hands. When things erupt, the government will not care for your family. You will be "collateral damage," just as you were in the original bailouts. Main Street got job losses and massive debt; the power elite bailed themselves out with your money.
The current situation is especially dangerous because the ruling class is cornered. The economy has been pushed into a grave as a result of elitists spending money they didn't have, making promises they couldn't keep, and expanding government into areas where it does not belong. After fifty-plus years of abuse, the golden goose is on its deathbed. It is so laced with toxic debt, regulations, and cynicism that a normal cure is impossible.
To understand the intractable, if not impossible, financial problems in the U.S., see "Spiraling to Bankruptcy." Conditions in Europe are similar to the U.S.'s. As pointed out in "Welfare States R.I.P." all democratic welfare states are on the verge of default.
It is necessary to provide only a short list of economic problems to see the critical condition we are in:
- Virtually everything you look at is broken and unfixable, from both a mathematical and political standpoint.
- All democratic welfare states are insolvent and incapable of meeting their obligations.
- Sovereign defaults are likely and will likely occur in domino fashion.
- Insane economic policies and regulations are making matters worse.
- Businesses are not hiring or investing because of the uncertainty that has been imposed on the country.
- Wealth, intellect, and corporations will flee this country.
- More than half of the states are likely to default on their obligations.
- Most major municipalities have pension obligations that will be unable to be met.
- Individuals are still over their heads in debt with no hope in sight.
- The housing market has farther to go on the downside. Foreclosures will accelerate.
- Commercial real estate is a disaster that has not yet hit full force.
- Joblessness is not improving and will get worse.
- Infrastructure has deteriorated. There are no funds available upgrade it to proper standards.
- Private pensions and union pensions are grossly underfunded and likely to become worse when financial markets tank.
- The welfare system is unsustainable and has to be dismantled.
- Generations have grown accustomed to entitlements and will not take kindly to the necessary reductions and eliminations.
- Education has deteriorated to levels such that many graduates are literally unemployable at a minimum wage, or at any wage.
- The banking system is insolvent, with many banks unlikely to survive.
- Social Security and Medicare are unsustainable programs that will collapse or have benefits so reduced as to make them virtually unrecognizable.
- Government guarantees of Fannie, Freddie, FHA, and a host of other programs will likely require $2 trillion-plus to honor at taxpayer expense.
- Anything the government touches, it destroys, be it social programs, the post office, Amtrak, education, or (soon to be) the entire credit system, General Motors, student loans, etc. -- and finally, the entire economy.
- The FDIC is in a deep hole from which there is no escape other than additional taxpayer bailouts.
This economic list is off the cuff and not comprehensive. Geopolitical risks, if considered, would produce another frightening list.
The world is headed for a Depression much greater than the 1930s. That is unavoidable at this point. An Economic Dark Age is about to descend on the civilized world. Every welfare state, to avoid failure, will have to cut entitlements and benefits. These solutions will be met with resistance and probably violence. The government model known as democratic socialism is dead. It will be dismantled one way or another. The power elite will not give up their roles willingly.
It is impossible to know how this crisis resolves. As Angelo M. Codevilla stated in a highly recommended article:
How the country class and ruling class might clash on each item of their contrasting agendas is beyond my scope. Suffice it to say that the ruling class's greatest difficulty -- aside from being outnumbered -- will be to argue, against the grain of reality, that the revolution it continues to press upon America is sustainable. For its part, the country class's greatest difficulty will be to enable a revolution to take place without imposing it. America has been imposed on enough.
History written a century from now will likely label the twentieth century as "The Myth of Government." Historians are unlikely to understand how and why citizens allowed themselves to be preyed upon by a ruling class.
For those who believe I am a pessimist, I offer this definition from Ambrose Bierce:
Cynic, n: a blackguard whose faulty vision sees things as they are, not as they ought to be.
In Bierce's terms, I consider your characterization a compliment.
Monty Pelerin blogs at www.economicnoise.com.
