22 March 2010

Tell Me Lies, Tell Me Sweet Little Lies

The Obama Pelosi regime has won a huge victory, with yesterday's US House of Representatives vote to approve the US Senate version of Obamacare.  It is a victory only in a Pyrrhic sense, of course, but these days any victory seems worth celebrating to Obama y Pelosi.

Obamacare is not so much a program or an actual bill, as it is a promise -- a campaign promise -- that was never really meant to be kept.  No one knows what the final bill will say or do beyond its unsustainable unfunded mandates for individual states, but the fact of victory for Obama y Pelosi is undeniable, regardless of what the ultimate fallout from Obamacare may be.

You can be sure that the Congressional Budget Office lied about the budgetary and economic fallout from this bill.  The result of those lies will be added to the exponential growth of US Federal debt over the next several years (at least).  Here is what this growing debt will bring:
From a fiscal stability standpoint, the US can manage a national debt up to around $20 Trillion – but paying those debts off will require huge spending cuts and tax increases.

How much can the US government borrow before it becomes a bad credit risk? How much can the government borrow before it has to resort to inflating its way out of debt rather than simply paying off the bills? On the surface, the US government does not appear overly leveraged, as analysts point to the fact that public debt is only 60% of GDP. But is this a realistic way to look at America’s debt situation?

...The federal government’s DTI and LTV would be unsustainable for any private borrower. However, since individuals and governments have been willing to lend the US money at close to 0%, the US has been able to comfortably cover its debt service thus far. As the federal debt balloons that may begin to change.

...While the US might be capable of borrowing $20 Trillion, at that point only 60% of revenue would be available for government programs. Since the government is currently spending 180% of revenue on programs, it’s unlikely that it would be able to reduce spending on government programs by almost 70%. It’s most likely that a combination of taxes, spending cuts, and inflation will have to be used to keep debt at sustainable levels at that point... _SeekingAlpha
When will US debt officially hit $20 Trillion? Much sooner than any government budget office will admit. If Mr. Obama is unlucky enough to be elected for a second term, he may well be in office when the US passes the big 20. If so, it is almost certain that the incompetent clown will still be blaming previous administrations.

This is a deadly serious matter. What Nancy Pelosi's congress did yesterday was in essence a mini coup. But mini coups lead to maxi coups, and every successive coup will lay the foundations for an ever accelerating federal debt -- no matter what sweet little lies you are told by agents of the Obama Pelosi reich. It is debt all the way down, from now on, with no possibility of parole.

Japan is reeling from its descent into debt and demographic decline. The US birth rate is much higher than that of Japan, so in theory the US could conceivably bounce back into sustainability -- if its government stopped deficit spending. But it won't. It just gets in deeper.

The end to debt is when no one will lend to you anymore. That is when inflation begins. The end of inflation is either an overthrow of government, or a war.

The kind of war that Obama Pelosi scale debt will lead to, is the kind of war you do not want to be around to experience.

Labels: ,

Bookmark and Share


Blogger kurt9 said...

Al fin,

This is all true. However, what you do not realize is that increased socialization of the economy does tend to reduce birth rates. The bill that passed last night is essentially the national equivalent to the Massachusetts health care plan, which is currently imploding. Also, this bill radically reduces medicare and medicaid reimbursement to doctors and hospitals. This is significant because 95% of all health care spending in the U.S. is paid by medicare because it is due to the aging process (aging is expensive). This will drive many doctors and hospitals out of the industry and will make health care worse for all. There could be Canadian or European rationing as well. This will certainly create a disincentive for thought-full middle-class young people to have kids. The underclass will continue to have kids because they don't give a shit and the wealthy will have kids because they have the money to pay for them even with the increased taxes under these plans.

If this health care plan is not repealed or altered in the next 4 years, I expect the birth rate to drop significantly in the next 5-10 years, down to European or even Japanese levels.

I don't have or want kids. However, if I was considering to have kids, this health care reform, along with the increased socialization of the economy, in general, would give me cause to reconsider. Places like California are a mess. I would not even consider living in California, let alone have kids there. If the rest of the country becomes like California (or worse, Argentina), why should people consider having kids when there is no great opportunity to await them when they grow up?

Monday, 22 March, 2010  
Blogger ee_ga said...

If things get really bad our kids will be who takes care of us as we age in exchange for inheriting a mortgage. They are also good to have if you need a kidney. All kidding aside only stupid people are breeding and if that doesn't change we will never get ourselves out of this mess. The real problem is that most women are dumb, there is a reason ME is only 10% female and it has nothing to do with interest, but I digress. Al is right we have a demographics issue and the only way to fix it is to convince intelligent women that America is going to hell and it is our fault and we are going to have to sacrifice our careers and bodies to fix it.

Monday, 22 March, 2010  
Anonymous Anonymous said...

1. Karl Denninger recently reported that Warren Buffett is borrowing money for three basis points less than the US Treasury, which means that the US is no longer getting prime interest rates.

2. Lawrence Auster has a post up here that states that this bill will destroy the private healthcare sector in six months.

3. A little known fact is that the federal government already runs a network of hospitals aside from the ones owned by the Veteran's Administration. These Federal hospitals exist to fulfill the Fed's obligations to enrolled members of Indian tribes to provide for their healthcare needs. If you are ever in Phoenix, go to the Phoenix Indian Hospital on Central avenue and you will feel like you have been transported to Tijuana.

4. In all likelihood this bill will destroy the US semiconductor industry, even if it does save Detroit. About five years ago Intel negotiated with the state of AZ to secure a tax break for itself before investing $1b in remodeling its Chandler plant for a new chip line. One of the arguments presented by Intel in arguing for a tax break was that it could build a plant in Malaysia and pay an income tax on earnings of 10% versus almost 40% in AZ. The actual rate paid in AZ would be lower than 40%, but still a hell of a lot higher than SE Asia. Intel is still based in California, indicating some sentimental thinking on the part of upper management for unprofitable plant locations so Intel was doing the US and AZ a favor by extending the life of the plant. Considering that the management of Intel should be retiring in the next few years, their replacements may not be so soft hearted, especially if they are immigrants from China.

5. In order for Obama to win he needed more than just the colored vote, some group of Whites had to vote for him.

White Catholics were the group that made Obama's election possible. I assume you already know this, but if you want some proof I can provide a few polls.

Tuesday, 23 March, 2010  
Anonymous Anonymous said...

I forgot one point. Medicare currently reimburses only 70% of a medical provider's costs for treating the elderly, so those costs get passed onto the bills of customers with private insurance and this cost shifting is the source of ever-rising private premiums. Medicaid has the same rate of underreimbursement so it too is a leach on other people's medical care.

Tuesday, 23 March, 2010  
Blogger al fin said...

No, Ron, the under-reimbursement for Medicaid is much, much worse than for Medicare. That is why there are so many more top-rank specialists who still accept Medicare -- and almost none who still accept Medicaid.

Of course, everything will change with Obamacabre. Medicaid-style under-reimbursement will become the norm for everyone. Except people in government, and the wealthiest.

It will be fascinating to see who will be excempted from Obamacabre, and who will have to suffocate and die under the new regime.

Saturday, 27 March, 2010  
Anonymous Anonymous said...

I knew from articles in the AZ Republic that Medicaid underreimbursed doctors but my figure of 70% for both programs was based on a comment at Lawrence Auster's blog. I'll admit that a comment on a blog is probably not a reliable source, but my general point stands.

You mention that people in government and the rich will both get top-notch care, but that is a redundancy. Most of the rich live around DC and therefore already work directly or indirectly for the government. source

A lot of the wealthy in this country make their living off of healthcare, so many of them may see their incomes drop with the coming of Obamacare. Even more wealth may end up concentrated in the northeast, specifically around DC.

Saturday, 27 March, 2010  
Blogger Sojka's Call said...

In trying to understand Federal debt levels, which Presidents contributed to the debt most/least, and overall gov't spending (inflation/deflation adjusted) separated from debt, I took numbers available from OMB and BLS and then plotted the numbers. Some interesting insights though the inescapable fact is as mentioned here - gov't spending is increasing at an unsustainable level. Post for anyone's review.... http://sojkascall.blogspot.com/2010/03/federal-spending-adjusted-for-cpi-by.html

Wednesday, 31 March, 2010  

Post a Comment

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

<< Home

Newer Posts Older Posts