Making Obese Debt Levels Possible

Posted on July 26, 2011 by MN Gordon

Make no bones about it…this economy sucks eggs.  Just ask anyone who’s looking for a job and they’ll tell you, ‘no one’s hiring.’  Despite official decree from the National Bureau of Economic Research that the Great Recession ended in June 2009, an uncanny disappointment has emerged for nearly everyone living outside the beltway.

For the middle class, their most valuable asset – their home – has become their most underwater liability.  And for the lower class, the economic current has turned against them in earnest…no matter how hard or fast they paddle, it seems, they can’t move even a short distance upstream.

What’s more, college graduates are hitting the workforce with a noose of debt around their neck and few employment options…other than hawking coffee.  According to the Labor Department the unemployment rate for 16- to 24- year olds is over 17 percent.  What gives?

No doubt, it has been a peculiar recovery for anyone who has paused to consider it.  New economic growth has not been based on the spending of savings accumulated during the recession.  Nor has it been based on capital spending and investment. Continue reading →

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Europe Doubles Down on Greek Bailout

Posted on July 22, 2011 by MN Gordon

Hot dry Santa Ana winds blow from the east across the California desert every fall.  They rip and roar their way over and down the mountain passes and rumble their way across the vast Los Angeles basin, pushing the smog trapped against the San Gabriel Mountains out to sea.

For a day or two the sunsets are magnificent from our perch in Long Beach…thick hues of oranges and pinks floating lowly above the Pacific Ocean as the sun dips behind the Palos Verdes Peninsula.  But before long the Santa Ana winds have dried the flora out to tinder kindling.  Sometimes nothing more happens. Other times, with just one spark, Malibu Canyon explodes in flames.

There’s a financial Santa Ana blowing across Europe this summer.  Hot dry winds, originating from Greece, blow west across Italy like volcanic ash from Mount Vesuvius nearly 2000 years ago.  They whip their way west across the Iberian Peninsula drying out the finances of Spain and Portugal to an explosive tinderbox.  But the winds don’t stop there…

They reach gale force as they gust across the Bay of Biscay, encircling France and Germany on the west, while blasting northward past the Celtic Sea where they parch Irelands finances like an Irish coffee…or an Irish car bomb. Continue reading →

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Broken Promises Broken Dreams

Posted on July 19, 2011 by MN Gordon

White House and Congressional efforts to reach a Grand Bargain are merely a distraction. The basis for such a bargain – reduce spending so the debt limit can be raised – is fraud and folderol.  Nothing that we’ve seen suggests the government’s even pretending to solve the debt problem.

Last week’s discussions, before they fell apart, centered on deficit cuts of $4 trillion, $2 trillion or $1.5 trillion over 10 years.  These proposals are nonsense.  For example, $2 trillion in deficit cuts over 10 years amounts to a deficit reduction of just $200 billion per year.

The government’s current deficit is $1.65 trillion.  So under that proposal the government would have to borrow $1.45 trillion per year rather than $1.65 trillion.  What this means is, either way, over the next 10 years the national debt will double.  Moreover, what this means is the big charade going on in Washington is not addressing the debt problem.

Major news organizations are not reporting this.  They are too enamored with the politicking going on…and who’s walking out of meetings.  The problem, you see, is not the need to increase the debt limit.  The problem is the government’s finances have reached and exceeded total debt saturation. Continue reading →

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A Run on the United States Government

Posted on July 15, 2011 by MN Gordon

Things are ugly out there.  The governments of the world are going broke in unison.  Over in Europe, the credit ratings of Greece, Ireland, and Portugal have been downgraded to junk bond status.  Italian and Spanish debt is sure to follow.

If just one of these countries were to default, the big banks in France and Germany, which loaned out all the money, will be wiped out.

Here in the U.S. things keep slipping and sliding along.  Congress and the President can’t figure out how to cut spending so they can raise the debt limit…if you can believe that.  But that’s not the half of it…

The economy’s taking on water like the Titanic and we have a lunatic in the Federal Reserve that’s hell bent on trying to bail it all out – again – by cranking up the printing press.

“We have to keep all the options on the table.  We don’t know where the economy is going to go,” said Federal Reserve Chairman Ben Bernanke to the House Financial Services Committee on Wednesday.  Several hours later Moody’s Investor Service placed the nation’s credit rating under review for downgrade.

No doubt, there are limits to everything.  Continue reading →

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