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Despite growing concerns about the growth in Federal spending, voiced this week by none other than Warren Buffett, Washington seems determined to keep its foot on the money pumping accelerator for as long as it can. But even though Washington continues to ignore the realities, alarm bells are beginning to ring at town halls across the country.
Last week the Fed left its key short-term rates frozen at 0 to 0.25 percent, enabling banks to borrow at near zero and reap spreads as high as 6 to 24 percent. The Fed also continued its policy of paying interest on banks' reserves, further boosting Wall Street's bottom line. The government has decided to save the banks, no matter how much the public has to suffer.
Worse still, the Administration has been largely silent over the obscene bonuses paid by banks to the very executives whose 'casino' mentality caused a financial crisis that the IMF now estimates has cost the world some $7 trillion. At financial firms that have received bailout money, it has been estimated that thus far in 2009 bonuses paid to executives have exceeded profits.
However, with the pedal still hitting the metal, the Fed has begun to discuss plans of a so called "exit strategy" that would pave the way toward higher interest rates.
These statements of economic neutrality were based upon the Fed’s impression that the recession is ending. But the Fed has not yet taken any meaningful actions to curb its potentially inflationary policies.
For now mere words are enough to encourage American stock markets, but only briefly. More recently, U.S. equity investors gradually are facing up to the fact that, while stock prices rose recently by some 45 percent, earnings, although "ahead of estimates", have fallen by almost 30 percent, despite savage cost cutting and deep inventory depletion. The more important top line revenues have fallen by about 15 percent and free cash flows are tumbling in response.
The public, who feel the vicious bite of 'real' 20 percent unemployment (rather than the official rate of 9.8 percent), are becoming increasingly distrustful of big government and deeply resentful of its increasing grasp of their lives. The cracks are beginning to show.
A key element of the Obama Administration is its 1,000-page healthcare reform bill. Despite the impossibility of reading, let alone understanding, the legislative behemoth, Obama tried forcefully to push it through Congress in just two weeks.
And, despite the clear failure of government healthcare in many parts of the world, including domestically in Massachusetts, the Administration is still looking to move ahead with a public option plan.
The public is not yet willing to play ball. While much of the biased media paint the rowdy town hall meetings across the country as merely the clumsy machinations of the Republican Party, the events are revealing the deep misgivings average Americans have about the growth of government. If this movement spreads, it could have a dramatic and healthy effect on the American economy in the long-term.
At their core, Americans hold individual freedom and self-reliance dear. Therefore, by nature, they are not socialists and resent big government. To them the actions of the Administration, supported by a compliant Congress, are clear: use massive amounts of public funds to support the financial elite, maintain massive entitlement spending to secure votes, and extend the grasp of big government through healthcare and other measures. Their anger is justified.
President Obama campaigned on political 'change' and an end to the abuse of taxpayers. So far, he has massively increased government entitlement spending and has failed to loosen Congress's firm grasp of the pork barrel.
It may be that the deep resentment expressed in town halls will embolden ordinary people to pressure Congress to stop the train. If that happens, America will begin the long and painful road towards economic restructuring, individual freedom and enterprise. Under those conditions America would represent a great investment opportunity.
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If you mean can something be salvaged from the wreckage? Well, it is going to be tough, but it has to be worth an attempt!
Ultimately, the US will only become a viable centre for inward investment once again if Government debt is brought under control. Frankly, this can only be done by accepting a more realistic valuation for the dollar, which is probably about half of what it is now. Yes, that is going to mean high interest rates, high inflation and high unemployment. There simply is no "Get Out of Jail Free Card". This is an End of Empire scenario and they are always painful. Readjusting to the new reality is going to be very painful. Ask the Brits! But if you observe the British Model, whereby we underwent a probably bigger fall from grace, it is possible to find a role in the World and have a viable economy even if other nations don't take much notice of you anymore.
> If you mean can America get back to where it was? No, and it is not
> even desirable to even attempt it.
>
> If you mean can something be salvaged from the wreckage? Well, it
> is going to be tough, but it has to be worth an attempt!
>
> Ultimately, the US will only become a viable centre for inward investment
> once again if Government debt is brought under control. Frankly,
> this can only be done by accepting a more realistic valuation for
> the dollar, which is probably about half of what it is now. Yes,
> that is going to mean high interest rates, high inflation and high
> unemployment. There simply is no "Get Out of Jail Free Card". This
> is an End of Empire scenario and they are always painful. Readjusting
> to the new reality is going to be very painful. Ask the Brits! But
> if you observe the British Model, whereby we underwent a probably
> bigger fall from grace, it is possible to find a role in the World
> and have a viable economy even if other nations don't take much notice
> of you anymore.
It Is Unfortunate That "Children Have Ascended To The Highest Posts Of Power" and sabotaged the system.
Americans Will "Right Their Ship" When The Cleansing Begins In Earnest..
Others May Take The Opportunity To Do The Same.
I Do Not Think Americans Want To Be "The World Police" Anymore Even If Their Government Does.
The Worst Is Yet To Come.
US still manufactures 20% of world's goods....... Lower Dollar = Increased Exports
Consumer Deleveraging........In... Saving = Capital Formation
Tax Collection Record Lows...........Gov't has to cut back
This will change, but not quickly enough to avoid tough lessons in discernment. We have been caught up in our older brothers fights and follies. We are being labeled along with as arrogant, malicious and indecent.
But we are not our bullying older brothers. We followed them with blind admiration of the power and influence they wield. We will realize how cruel and unjust the use of power has been. We will step out of that shadow in time.
but trying to convince us "we don't want health-care" because we are "individualistic and resent big government" is getting a little long in the tooth.
Where were you "fiscal-responsibility" guys when Reagan and Bush Jr. were jacking up the deficits ?
If and when the Republicans regain the power, I'm sure you'll go back into silence mode as more trillions stolen from our grandchildren go to fighting unwinnable wars.
If Obama fails with is programs, then I guess it's back to the party that says "government is bad" ---- then turns it into a self-fulfilling prophecy.
" Universal health care? Are you out of your mind?
Where for that, might I ask, would the money you find?
Bridges and roads? What do we need them for?
There's no jobs so you don't need to get there no more!
But wait! Like Iraq, there's terror ahead
Wall Street's meltdown is worse than burning in bed!
Trillions of dollars to bail them all out?
The world's bestest minds - those you would doubt?
Social security - yeah, let's privatize that
if we had, just think where we'd all now be at! "
Hmmmmm...................
David Cameron -- the Conservative party leader -- joined the chorus defending the NHS. Cameron sent out an e-mail stating, "One of the wonderful things about living in this country is that the moment you're injured or fall ill -- no matter who you are, where you are from, or how much money you've got -- you know that the NHS will look after you."
As far as Americans resenting big government--they only resent the big government they don't agree with. Big government spends big on defense, big government spends big on agricultural support/welfare, big government spends big on public education, big government gives generous tax incentives to many big businesses, big government does a lot of big things that people other than "socialists" agree with. Self-reliance, even in the business world, is theory that works only with big government behind it.
P.S. America has the biggest government in the world and every administration I can remember (even those that promised smaller gevernment) increased its size.
The scripted elected airheads are being exposed, I hope, in the town halls despite the usual Pravda-style MSM reporting. Some hope of step one if this translates to a more real-world dialogue and a massive and repeated exodus of incumbents at elections.
There is no reason things can't be better than ever in the good 'ol USA eventually. This would take countless correct steps in actions, which are preceded by some kind of thinking. It is unlikely and a long way off, longer still, every day the present rulers piss everything away. There is much success in our past to draw upon we have strayed far from, and people with great ideas now.
Decline will come from yielding to vested interests in mistaken policies. They aren't easy to shake, as the presence of so many long-time incumbents who are holding us to failed policies and selling us out to the largest failures attests.
Also remember, not all socialized systems are created equal, for instance, U.K. retirees move to France and they rave about the French system (many write glowing letters about how they would have been dead in the UK due to poor care and thank the French doctors for the care they receive). The health care debate in America is VERY important, please, stick your head out the window and try to see, and not just look.
Those in town halls that are working against the health care reform are not doing so because of the costs, they do so because it is their profits that it is at stake here. This movements has sprung up when street is fighting territorial war to maintain cash flow to it members and not when the population was being bamboozled by the street through most massive financial fraud in history .
I will say that it can be proven that the street is behind these movements because they are the voice of the movement just as this author is and they weren't speaking up as the street was complicit in causing the credit crisis for a decade instead the sought more deregulation. The double standard is not only a proof, it is the cause of poor health care plans that Americans are stuck with.
On Aug 20 09:26 AM Speakeasy wrote:
> Frosty, according to Dr. Anne Doig, the incoming president of the
> Canadian Medical Association, "Our Universal Health Care Is 'Sick',
> and 'imploding'". It is common knowledge that many Canadians cross
> our borders to be treated in the U.S. Furthermore, if you get out
> of your bubble and read some of the U.K. you will occasionally read
> articles referencing individuals who have died due to inaccessible
> treatment.