Ed Zimmer's  Instablog

Ed Zimmer
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Ed is a graduate of The School of the Ozarks (now known as College of the Ozarks) in Southwest Missouri. He spent 14 years in broadcast news in the Midwest covering, among other things, commodities. He is currently manager of a healthcare support facility doing over two million dollars a year in... More
  • 100 mph and a bridge pillar dead ahead. 0 comments
    Aug 11, 2011 11:45 AM
    With the formal naming of a Super Congress which includes half the panel who have already signed pledges not to increase taxes, the disaster that is our body of elected representatives enters the phase of fiat drug induced euphoria where reality becomes fluffy kitties and unicorns defecating their rainbow flavored specials to the folks around them.
    And you thought Alice had a drug problem when she fell down the rabbit hole.
     The Federal Reserve has signaled rock bottom interest rates for the next two fiscal years which will just about cover the US Budget Projections through 2013 and insure that the fiscal road ahead is not only devoid of any good intentions, but actually has dwarves digging potholes as we speak.     So far the cutting of the spending side of the budget will only total about 64 billion dollars through 2013 and the Super Congress is tasked with finding another 1.5 trillion in alterations to cover the 2.4 Trillion dollar increase in the illusionary debt limit.   (We know it’s illusionary because they can find all sorts of ways to ignore the fact that they have exceeded it.)
    But what they can’t ignore is basic math and the direction that the world wide economy is taking as the financial black swans finally come home to roost and seek out their next taxpayer funded bailout.    With President Obama hinting at keeping the 2% cut in payroll taxes in effect through 2012, we are looking at a half trillion dollar loss to the next fiscal year revenue stream.   In effect, it will eliminate a third of the anticipated alterations that the Super Congress is supposed to come to an agreement on.     Without tax increases or changes that result in additional revenues, the 1.5 trillion dollars will have to come through cuts in spending.
    There is no way for this snowball to make it through unscathed.
    Fiscal spending according to the CBO will be virtually unchanged in FY 2012, which starts October 1, 2011.    (Okay, the CBO says it will be 100 billion less than 2011 which in the Trillion dollar scheme of things is virtually unchanged).   If the 500 billion in anticipated revenue is sidelined by a continuation of the 2% payroll tax cut, the yearly deficit will once again push 1.6 Trillion dollars.     In other words, the recent raise in the debt ceiling will barely buy coverage through the 2012 election, leaving one heck of a stocking stuffer for Christmas 2012.     Of course, TPTB may be using the Mayan calendar for their goal seeking which makes everything the CBO does past 2012 a moot point anyway.
    So to sum it up, our Super Congress will encounter kryptonite in their Thanksgiving meal, resulting in a lack of action prior to “automatic” cuts coming into effect which will threaten immense social pain which will result in Congress “tempering” the “automatic” cuts and insuring that our deficit in 2013 will also be in the 1.6 Trillion dollar plus range meaning that the Spring of 2013 at the latest, we as a nation will be well past the event horizon when it comes to the black hole of debt.
    Of course this all assumes that Europe doesn’t get flushed down the toilet before the end of the year, pushing forward the days of reckoning to the end of 2011.
    I think it was  a Chinese curse that said, “May you live in interesting times.”
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