03 February 2010

World Debt Bomb Obama: Fuse We Were Waiting For

20 reasons to expect the world economy to explode, from Marketwatch. Which ones are real and which are overblown? Al Fin analysts say that most of the list items are valid and quite worrisome.
1. Federal Budget Deficit Bomb. [AF: Already bad under Bush, now on steroids under Obama]

2. U.S. Foreign Trade Bomb.

3. Weakening U.S. Dollar as Foreign Reserve Currency Bomb. .

4. Cheap Money Bomb

5. Global Real Estate Bomb

6. Peak Oil and the Population Bomb. [AF: Political Peak Oil is indeed a serious problem, and the failure of the advanced world to breed in the face of a third world population overgrowth is indeed worrisome]

7. Social Security Bomb

8. Medicare: A Nuclear Bomb

9. Health-care Insurance Bomb

10. State and Local Government Budget Bombs. Deficits of $110 billion in 2010, $178 billion in 2011 on top of more that $450 billion in underfunded state and municipal employee pension funds.

11. Underfunded Corporate Pensions Bomb. From $60 billion surplus in 2007 to $409 billion deficit in 2009. And a whopping 92% of the pension plans of companies are now underfunded. Defaults are guaranteed by taxpayers.

12. Consumer Debt Bomb.

13. Personal Savings Bomb.

14. War and Military Defense Deficits

15. Homeland Insecurity Bomb. Security at airports, seaports, borders, vulnerable chemical plants all increase budgets.

16. Fed/Treasury Bailout Bombs. Tax credits, loans, cash and purchase of toxic assets from Wall Street banks estimated at $23.7 trillion as new debt was shifted from too-big-to-fail Fat-Cat banks to taxpayers.

17. Insatiable Washington Lobbyists Bombs. Paulson, Goldman, Geithner, Morgan and Wall Street banks, through their lobbyists and former employees working inside now have absolute power over government spending.

18. Shadow Banking: The Derivatives Bomb.

19. Dysfunctional Two-Party Political Bomb.

20. The Coming Populous Rebellion Bombs. [AF: The US Tea Party movement has barely made itself known. Persistent joblessness and pension worries will add rocket fuel to the movement]

....Historians and behavioral economists tell us most investors are blind optimists. Investors cannot see bubbles from inside their bubble. Nor Fat Cat Bankers from inside their mega-bonus-bubble. Nor politicians from inside the beltway bubble.

Why? The optimist's brain filters out bad news. They know their dreams of prosperity will come true. Then, when they finally do see that the proverbial light at the end of the tunnel is an oncoming train, it's always too late.  [AF: The pessimist's brain filters out good news.  A doom-seeker knows things will crash no matter what is done.  Both optimists and pessimists have their blindspots.]

I will say it again, gently: A new meltdown is coming. The Great Depression II is coming, soon. And yet, I know your mental filters are working, blocking warnings of a bomb. I can even hear you calling me "the fool on the hill who sees the sun going down, the world spinning round" ... sees you kissing your retirement goodbye. _Marketwatch

Unemployment making everything come unglued The unemployment bomb is caused by the bloated and overreaching government bomb. And nobody grows government like Obama.

The world needs a strong US economy -- or else!

The US private sector was mortally wounded in 2009 -- 2010 may kill it off

Economic data from the US government is smoke and mirrors

Economic recovery not likely

US society and economy hamstrung by political correctness If you throw in America's tort crisis (thanks to Obama's friends the trial lawyers) and public employees pension crisis (thanks to Obama's friends the public employee's unions), and America's energy shortages (thanks to Obama's "environmental" buddies), and America's flight of jobs overseas crisis (thanks to anti-business rules, regulations, taxes etc. from Obama's mind-twins in the US congress) and so on, you see that most of America's problems are self inflicted by the same mentality which drives the Obama - Pelosi agenda. Under this agenda, things can only get worse.

If the agenda is overturned by popular upheaval -- and the follow-on cleanup of government and economic rules, regulations, and taxation is scrupulous -- there is a chance that a crisis can be averted.   That is a long shot of long shots.

Be prepared.

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Blogger yamahaeleven said...

While the debris is fluttering to the ground, forward thinking economies can adopt "natural" money, described by Bernard Lietaer and first theorized by Silvio Gesell. The depression could then be cured in a month or two, but central banks would all be obsolete overnight. But since the central bankers will all be drawn an quartered by an angry mob, they may not be able to put up much of a fight this time.

Google "The Wörgl Experiment" to see how well this money worked in the last depression.

Wednesday, 03 February, 2010  
Anonymous Anonymous said...

"The Wörgl Experiment" had it wrong (but less wrong than the rest of Austria at the time).
Money with a negative interests rate have an built-in inflation. So people spend it immediately to rid themselves of it. But, given the local government could not inflate, like national governments do so often, it was a better store of value than the national currency.
I think the local money could have increased his net value (deflate) given the growing quantity of goods and services it could buy.

Gold money is better, in the long term.

Sunday, 07 February, 2010  
Anonymous Anonymous said...

A Place to Stand has a interesting article about cellphone, payments and international (private) currency.

Now, micro-payment systems using the cellphones are spreading in all the world but more where there is not a diffused bank system - like Africa. They are starting to diffuse in Europe and US.
What would happen if a service provider started to meter its services in gold? Second/gold, SMS/gold and so on?
People could use their debased fiat money to buy phone time meted in gold. Then use the gold credit to pay for goods and services.
People could move their credits, with their call number to a different company, if they want (this is the default in the EU from 1/1/2010).
With a single move people could have an international currency, gold-backed. If the telco add to the mix an audited gold reserve to maximize the trust of the clients using its services this would be a gold backed, 100% reserve system of banking.

Sunday, 07 February, 2010  

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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