Beyond the Cusp

January 14, 2016

President Obamas Last State of the Union Address Finally

Part I

As the President takes to the podium to deliver his State of the Union Address, his final by all estimations, takes place with the pall of Ten American Sailors being held by Iran and the President announced ahead of his speech that he would not, repeat, not be mentioning the sailors as the Commander in Chief which explains why we prefer to call him the Ditherer in Chief. We have been told to expect to speak on broad terms and demand that the American people and Congress are responsible for making a President ‘all that he can be,’ to use that well-worn to death phrase may, we beg your forgiveness. He opened with praise for the Republicans in Congress caving on a budget likely to push the debt ceiling necessarily over twenty-trillion dollars and mentioning that there is a serious prescription drug abuse problem. The nerve of the man who made fighting drug abuse, specifically prescription drug abuse and heroin use a central theme of his as far back as 2010 and likely farther and now he claims the nation needs to tackle this problem as if he had not already promised that by 2015 drug use would be down by a measurable percent and instead it has drastically increased. It is almost as if the White House battle against drugs worked as well as his running of guns into Mexico in order to find the drug cartels when he could have simply asked the DEA except that plan was more to set-up a straw man to target funds and use as a central theme in a anti-Second Amendment campaign, and it might have gained traction except when an United States Border Agent was murdered with one of the guns provided by the White House Department of Justice gun scheme which began by providing thousands of firearms to the drug cartels right across the border in their blinded by hate of guns which Americans, according to President Obama himself “They get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.” as previously stated. If things continue like this we will be very glad he promised a short speech.

 

Laundry list time, and that right after he claimed he wanted “to go easy on the traditional list of proposals for the year ahead” started off “I’ve got many such as helping students write computer code to personalizing medical treatment and I will keep pushing for the things I believe need to be done.” Oh joy, here we go! Ready to rock-n-roll with the targets ladies and gents, let’s start with “fixing the broken immigration system, protecting our kids from gun violence, equal pay for equal work, paid leave, raising the minimum wage, all these things still matter to hard working families.” He wants to focus on the next five years. Five years, a five year plan, where have I heard that idea before, a five year plan, Oh! I remember, uncle Joe Stalin was big on Five Year Plans as was that jolly rotund individual, no, not Santa and while on that, take down those Christmas lights already, the other fat man, Mao Tse Tung, they both loved five year plans to death and that was exactly what they were, five year plans that starved millions to death. Oh even better, Ten year plan and beyond, then you will know you have entered the Twilight Zone. (queue music) He’s noticed change; wonder if it is the same change the rest of us see. Change that is reshaping the way we live, way we work, the planet, our place in the world. Umm, yea, and it don’t look like change we want or should want but I bet we are about to hear how wonderfully he has worked to bring us these changes. What a wonderful list of things we just heard and then for the clincher President Obama claims we have “everything we need for security and prosperity for generations to come,” and we’ll settle for finishing this generation handing a better world to our next generation and he probably thinks a world on the edge is better because at least the United States stayed out of things. Little hint, that is the problem, but we don’t expect you to see that because as you said, it is in that spirit we have made progress since President Obama’s rise to power, that is how you see it, right? You rose to power as the Caesars did in ancient Rome and that is why you had those Grecian pillars behind you for that acceptance speech in Denver, or your coronation and accepting the crown of might and the orb of power and the scepter of wisdom, I have those things correct, right? “That is how we recovered from the worst financial crisis in our history,” President Obama stated and I immediately thought that he had to be referring to the Great Depression of the 1930s because we still have yet to recover from the one you expanded upon in a manner even George W. Bush would have been amazed had he failed so spectacularly, but the President was referring to his handling of the financial crisis which has placed the largest percentage of the working force either working part time at as many as three jobs to earn the income one would have provided before Obamacare, where the largest percentage of the workforce has completely surrendered and have ceased even pretending to seek employment, and where graduates from the nations universities, even the finest of schools, are so desperately under employed or given wages that similar graduates fifteen years ago would have scoffed upon. But no, the President continued to spectacularly amaze us with further claims of greatness by listing his greatest failures domestically telling us, and a paraphrase as I really cannot continue rewind and suffer through his complete and willful blindness to the misery and hardships he has caused at home in the United States and throughout the world and the full ramifications will not be finished rippling back and forth through the world for at least another decade or more. The President continued his hall of shame bragging about his, as he put it, “we” as he had the Democrats who forced some of these monstrosities that plague the nations going forward as he listed the great reform of the healthcare system which when first released refused to permit people to remain logged into the site long enough to find out their doctor was not on the list, their healthcare was inadequate and thus cancelled and their premiums would necessarily skyrocket, if not immediately, within the next five years as that is the first five year plan. Then he claimed the reinventing of the energy sector. Does he mean by fracking which his administration did all it could to kill, the Keystone pipeline which the administration did kill, Solyndra which received half a billion dollars and failed, and the following list of only administration failed energy companies which received millions as hundreds of thousands just do not make the grade there is so many larger fish; Amonix, $20 million; Bright Source, $1.6 billion; Beacon Power, $43 million; Ecotality, $115 million; A 123 Solar, $279 million; Evergreen Solar, $527 million; Ener1, $118 million, and the equal number of eco-companies who lost hundreds of millions but still the greatest fail was in trust as money was thrown down known black holes simply to reward people who formed these companies and received gargantuan salaries and then declared bankruptcy and nobody batted an eye and they walked away fat, happy and wealthy with a wink and a nod. The final special notice was the Fisker Karma (pictured below) plug-in hybrid with an A123 battery system of lithium-ion batteries for electric cars failed during a test by Consumer Reports magazine and is reported to have been a fire hazard on wheels. The repair to make the vehicle useable will run around $67 million which contributed to A123 filing for bankruptcy. Fisker Automotive had designed a very attractive vehicle but the battery problem will necessarily set that project back and might even cause Fisker Automotive financial difficulties due to this unforeseen problem which was not of their doing. BMW hybrid 3-Series and 5-Series cars and GM’s all-electric Chevy Spark also were presumed to be run on A123 battery systems and also will need new sources.

 

 

Fisker Automotive Karma Failed Testing as A123 Lithium-ion Batteries System Failed and Presented a Fire Hazard as Pictured on Right

Fisker Automotive Karma Failed Testing as
A123 Lithium-ion Batteries System Failed and
Presented a Fire Hazard as Pictured on Right

 

 

Continuing onward; President Obama continued with a claim of providing more benefits and better care to our returning troops and veterans; and secured the freedom, wait for it, in every state, wait a little more for emphasis and this is huge and serious, to marry the person we love; (lick lips so as to look as we are using great effort) and such progress is not inevitable, which was the argument for same-gender-marriage, and it is the result of the choices we make. Now comes the ‘shame on you’ part of the speech where the American people are told of their shortcomings. How will they face the future and the challenges he wants to know. Will they have fear, turn inward and against each other or display confidence (something he knows so much about when talking of himself and all he has accomplished but what he refused to represent America as having as he approached the world leading from behind and cowering from every threat except one, the one threat he faced as it needed to be corrected and cut down just as America needed to be taught a lesson, and that nation was Israel, carrying on.

 

Now come the four questions Americans have to answer, big questions, and yes, I kid you not, four questions, next he will be reading from the Haggadah. 1) How to get all involved with opportunity and security in this new economy: return to the old economy which worked well until you and the Democrats further exploded the debt and removed opportunities. 2) How do we get technology to work for us in like repairing climate change: well, applying standard to China and India might help as the United States had met climate change challenges better than Europe or any other nation on any continent with only Antarctica producing less pollutants and climate change gasses per square mile than the United States and Israel. 3) How do we lead the world and keep it safe without becoming its police: not by leading from behind and pulling out of every dangerous situation and allowing the likes of the Islamic state, you remember them, they’re the Junior Varsity. Mr. President, you have given us seven years examples of how not to accomplish that and only Hillary Clinton is even less prepared than you were but at least she might get upset one morning and take some brash move out of anger as she was a tad bit peeved when she awoke and some idiot got her anger riled and she just told the Joint Chief of Staff to handle it and make sure she never hears from them again, and then she would have been far more adroit at getting the world to sit-up and pay attention as they never die for you. 4) How do we make our politics reflect what is best in us and not what is worst: reverse every last one of your foreign policy decisions and attempt to get the United States and the Western World out of the hole you helped dig that the third world would bury all of us given another eight years like yours.

 

President Obama just claimed that the United States has the strongest, most durable economy in the world. This is not supposed to be comedy hour at the local pub, is it? Now he says that the United States is in the longest private sector job increase in history. OK. Job creations, whatever and then the whopper, unemployment cut in half: yes sir, after you cut the work force by anywhere from five percent to fifteen percent and these numbers do not include those graduates from college who had to return to their parents’ house and reclaim their bed room from grandma’s sewing room and they are now taking care of grandma with their BA degree in renaissance literature and library science. Industry surge that created nine hundred thousand new jobs in the past six years, which is one hundred fifty thousand a year, and he is touting that as an accomplishment as otherwise he would have used a percentage increase per year which was likely near two percent, not exactly write home to mom in Indonesia, is it. Did he just say, While cutting our deficit by three quarters? Yes, he did, PULEEEZE!! I’m afraid I will explode listening to too much more of lies, deceptions, misrepresentations and we are not even one third the way through. Can I please stop now? Oh, I’m suffering so you do not have to except by reading this laboriously strange article.

 

Ah, the problem is ATMs replacing bank clerks and automation replacing workers because the cost of workers skyrocketed with Obamacare and next he wants to force the entire fast-food industry to automate as many $15.00/hr. jobs as they can with a living minimum wage when minimum wage jobs are where you prove to your first employer he did not make a mistake hiring you, not a support your family job and they never should be. Too many workers and insufficient jobs and many of the work seekers are not unemployed because they have not been able to find one of those one hundred and fifty thousand jobs created in manufacturing each year and too many of them are out of work bank clerks. And worldwide competition is only true because America’s employers are unable to afford American workers as the price due to government demands, regulations, stipulations and healthcare requirements amongst the highest corporate taxes in the world. It is no wonder they are fleeing to even Europe such as Spain where they have workers who are capable and a situation where the employer has all the advantages as Spain is indeed working to get employers, especially employers who need many busy little hands doing repetitive jobs which are not yet automated and cannot afford the price of business in the United States. The one area where the United States does have one of the finest pool of workers is in high skill work such as electronics but that is automating and price of production is making pass/fail without repair of failures a viable option. As far as the rest of the jobs, as Ray Kurzweil divined and he will tell you the humanoid robotic worker is only fifteen years away and then none of you will have jobs unless you are a futurist or a politician and for many of the same reasons except futurists are at least entertaining.

 

Almost every dramatic pause even some despite rousing applause, President Barack Hussein Obama bites his lower lip as if this is so important and he is concentrating so unbelievably hard reading the words somebody else wrote and he has been studying and even making changes so it would be easier for him to read, remember the tonal intonations which is sitting on either side (and possibly straight before him projected on the podium) and likely in a screen centered in front all hidden from view. He has already slipped once or twice and halfway made the eyes slightly squinted and chin stuck forward and his head tilted back making for the near perfect Mussolini pose which he would take as a side stance often when before purely Democrat crowds who apparently loved it. We appear to be entering the special dimensional-shifting, trans-dimentional,  intra-perceptibility, rose-colored-lensed-interferometer, and reality-free-video-generating-display where up is forward and backwards is left and he is she and who is he and we are all in Ulpan and that means that if not for what the President managed through Herculean efforts to manage the economy and if instead those others who have impeded his every move had been in charge things would have been so much worse and if only the Democrats would have kept all the power then the entire economy would be more fantastic that what President Obama managed to salvage. Now that we have cleared up who is to blame for the difficulties. We need to look at where all Americans agree, oh, I just can’t wait for this part. All Americans agree we should provide pre-K for all just in time for my second childhood, every student hands-on computer and math classes to make them job ready, recruit more and great teachers, affordable college for all, no student should start in the red, not probably green, blue and eggshell are fine; and we, there goes that plural reference to himself, and the rate of payment has been put at ten percent of nothing, because that is what too many college graduates are making, nothing. Moving along, provide free two years in community college, onward and upward as the United States college age child deserves benefits and protections that provides a basic measure of security that is where Obamacare comes in and saves the day but there are needs such as wage insurance and advanced training, plus food stamps didn’t cause the crisis, Wall Street did.

 

The President claimed there are outdated regulations which need to be changed, not eliminated, just adjusted to reflect how government can grab more of industrial might through costly regulations which agrees with his appointment of Cass Sunstein as the Administrator of the Office of Information and Regulatory Affairs whose job it was to go through the entirety of Congressional Legislation and find what laws could be utilized to write additional regulation so as to be as onerous upon the American economy as possible. Now he is going to complain about record corporate profits because as any good little socialist redistributionist, corporations are not in business to make money for the owners and the shareholders as they are the wealthy, and that includes all of you with 401K retirement plans which are reaping those record profits for your retirement. You and they did not make those profits, government did and thus government should be permitted to spend those profits as they please.

 

The problem is not immigration, too much of it illegal with the blessing of the Obama White House and nearly every White House going back to Dwight David Eisenhower, and Yes, I am old enough to remember. It is corporate board rooms putting immediate profits ahead of long term principles, otherwise known as redistribution of profits which is what corporate taxes, highest in the world, EPA regulations, codes, fines, and a whole hearted and cold hearted attempt to put coal powered electricity out of business through compensatory regulations which make any planned coal fired plant a sinkhole that swallows investor monies and makes currently operating coal fired plants on the brink of insolvency and soon bankrupt and out of business despite the fact that three quarters of the power generated in the United States is from coal. They are also working on doing away with as many dams, even with electrical generators hydro-powered inside, on the destruction list for the fishies. Workers and small businesses and, well, let’s say it, the businesses government decides to protect and favor are to be granted freedom and liberty to make money as long as they remain small and under government influence otherwise they will become another big company just making profits and enslaving the world so those, including any we helped get this far last year, big companies, and we all know who they are apparently, must be brought down until they answer to government control and don’t you dare call me a fascist. And we can have a brighter future if I, President Obama, can direct where corporate profits are spent, not necessarily with shareholder, though I realize they must get a few dribbling drabs, but most must benefit the country and be spread throughout which can only happen if we steal, I mean tax, these profits at insane levels and then government taketh away and government giveth, just like in my bible. We must be fair, or is it fare for those making money, those evil capitalists.

 

President Obama just referred to NASA in the 1960s beating the Russians to the Moon; this from a man who constantly had people refer to the almost $2.5 billion that NASA receives, suggesting cutting the fat from the NASA budget would be our savior ignoring the percentage; and these are actual percentages they never tell you, that should the entire, E-N-T-I-R-E, entire NASA budget be completely destroyed and NASA disbanded entirely it would not cut the budget by even one percent. We would lose almost all our discovery programs, no longer have the NASA Big Gun experiments and that wonderfully photogenic man with his almost childlike amazement at how wonderful his job is playing in a high tech sandbox and testing what-ifs through shooting pellets and making explosions he studies. FYI, I really like that man as he exudes the love for discovery that is infectious and I am hoping it spreads. The truth is the NASA budget is three-quarters of one percent of the budget, or less than the average amount of pork placed into any omnibus budget bill like the one just passed by probably Wyoming. I am not sure I can take this; he is comparing the immigration from the mid-nineteenth century through the first half or so of the twentieth century with modern immigration of which two-thirds are illegals from Mexico and the Americas south of Mexico. Sorry Mr. President, but that bird not only does not fly, it is known as the Kiwi and is only found today on shoe-polish lids.

 

President Obama just appointed Uncle Joe; get your gaffs here, Biden as the person in charge of curing cancer. I like Joe, he is overly abundant in amusement and a smile a minute, but in charge of curing cancer, cancer will never have had a better ally than Joe in charge. The Israelis are researching a way of making using nanobots which carry a miniscule flake of gold and they find cancer cells and burrow deep into the cell and even into the nucleus such that a simply radio-frequency signal transmitted days after they were released into the body to seek out only cancer cells and bore into them such that the RF wave causes them to explode and take the cancer, and only the cancer cells with them and leave the surrounding healthy cells almost entirely untouched and the dead cancer cells the body will know how to take out the garbage and the Israelis are seeking more efficient nanobots to make them more affordable and end cancer and genetic diseases and so much more health risks of the past.

 

Well, this will have to do until tomorrow as we are close to half way through. Stay tuned to tomorrow broadcast of how the blogger’s stomach churns with more summaries, snide remarks, guffaws, critiques, reminders of reality and Joe Biden worthy gaffs. Until then my loyal readers who brace the inanities for that rare but priceless kernel of truth, and then there is our commentary giving rare credit where any credit can be found. Until tomorrow.

 

Beyond the Cusp

 

December 24, 2015

United States Potentially About to Fall

 

The United States is precariously balancing between solvency and being revealed as bankrupt. The United States has mortgaged thousands of acres of virgin lands which hold resources above and below the ground. The resources include but are not limited to coal, uranium, lumber, wheat, grazing lands and potential oil deposits or precious metals etc. There are other questions which are relegated to conspiracy theorists and fear mongers but the fact that China has been purchasing gold and could be said to be hoarding gold for quite some time as the gold buying by China in a graph from 2012 displaying the situation in raw numbers as shown below.

 

 

China Gold Purchases of 2012

China Gold Purchases of 2012

 

 

The graph in and of itself is a solid display of a potentially damaging effect on the balance of gold holdings but in all honesty we need to make a confession; the number in metric tons is used as an alarmist shock figure which is a form of deception as taken as a percentage of the total holdings of all nations and one immediately realizes the minor difference eight-hundred-thirty-five metric tons is but three and a third percent of the over well over twenty-five-thousand metric tons owned by all the nations of the world. Perhaps a listing of the top ten nations in gold holdings according to the International Monetary Fund’s records will make a difference and put everything into perspective. Below is a list of the top ten national gold holdings listed below.

 

1) United States   with gold holdings of   8,133.5 metric tons
2) Germany          with gold holdings of   3,391.3 metric tons
3) Italy               with gold holdings of   2,451.8 metric tons
4) France            with gold holdings of   2,435.4metric tons
5) China              with gold holdings of   1,054.1 metric tons
6) Switzerland      with gold holdings of   1,040.1 metric tons
7) Russia             with gold holdings of     937.8 metric tons
8) Japan              with gold holdings of     765.2 metric tons
9) Netherlands      with gold holdings of     937.8 metric tons
10) India             with gold holdings of     557.7 metric tons

 

As can be note, 835 metric tons are a mere drop in the bucket providing these are the sole gold acquisitions made by China. There are claims that China has, as well as bringing in the amounts of gold in the graph through Hong Kong, has also established a surreptitious route through the gold markets in Shanghai and that they have acquired an additional 7,000 metric tons through this untraceable route over the past half a decade making China the largest gold reserve on the planet, providing these claims are valid and not just the ravings of conspiracy mongers living in some basement, likely their own basement, but basement all the same (we are located in a basement free apartment, so we can be trusted, well, that along with our track record of opinions over the past half a decade plus). The main problem with the seven thousand metric tons theory would be that such purchases would exceed the amount of gold available for purchase each year. The only way that China could have amassed that seven thousand metric tons would be if a state holding, or a number of state holdings, were to be being liquidated or transferred to China as payment of debts but being done under the radar through gold merchants in Shanghai, but even then one would expect the trade of such amounts would raise some suspicions and keeping them under wraps would be the best kept secret since the hiding of the Ark of the Covenant, itself constitutes a good amount of gold and things far more valuable than mere gold. That would beg the question as to who might be selling gold in such quantities.

 

This aside, China is on a definite path to acquire as much gold as they are able to buy and mine in efforts to improve its position and possibly having delusions that they could one day exceed the gold holdings of the United States, providing that China has not already cashed in their bank notes and other United States debt holdings, demanding payment in gold and routed this through trusted merchants in Shanghai who are actually Chinese government employees, high level Chinese government employees holding really cushy positions living the life in Shanghai. There was an increase in the interest rates charged by the lenders to top line banks by one-fourth-of-one-percent which some are claiming is a sign that the all but free money supplies are about to be tightened over the next year or so. While this very well may be in the plans, it is not what this tightening was about.

 

 

Gold Gold Gold Piled in Stacks Gold Gold

 

 

We can expect the Federal Reserve to hike the rates again this coming spring by as much as one-half-of-one-percent which will send panic waves through a fair number of investors and exactly the opposite through the other bulk of investors as there are going to be arguments that this is the end of expansion of the stock market and a slowing of business as lending will have become tighter and more expensive. Wrong again. These maneuvers are all being manipulated for political reasons and have absolutely nothing to do with the economy as that picture has not changed. After raising the interest rates the Federal Reserve will drop them announcing a reversal of policy claiming there was a misreading of economic indicators and it has become obvious that tightening the money supply is unwarranted and thus the return to the lower rate or an even lower rate. This announcement will be made about mid-September and will unleash a flurry of activity as stocks will soar, jobs will magically appear, most to deal with the holiday seasonal employment jump plus the coming available jobs held by students over their summer breaks. These replacement workers will demand a slightly higher rate of pay than did the summer employees working for near or at minimum wages. This will show a marked improvement in the jobs rate, lowering unemployment and even bringing some who had been dropped from the employment picture may return making the numbers all around look far better going into the fall campaign season. The improved picture will be claimed by President Obama as validation of his handling of the economy and his approach to growing jobs through government investment in the economy, also known as corporate welfare and crony capitalism. This will also make the Democratic candidates claims that theirs is the correct path to a bright future appear less Pollyannish and the claims that the tightening of the belt on government spending is actually necessary. This has been the path the Federal Reserve has taken ever since President Clinton needed a jobs, finances, and general boost in order to gain reelection and is now being extended when there is no President seeking reelections, more specifically a Democrat President seeking reelection, and the hope is to provide the best possible scenario for the election of another Democrat and keeping the republican Party out of the White House.

 

I can hear the skeptics already writing their comments screaming for us to quit with all of the conspiracy craziness and return to planet Earth. The problem is this has gone from crazed theory to actual reality as the economic health of the Western world depends on there never coming to fruition the exploding of the debt bubble. What the Western world, especially Europe and almost as deeply indebted United States, are facing is a huge and unpayable debt which has gotten to the point that there are no longer any credible sources of funding. This has caused these governments to do something which is euphemistically called Quantitative Easing which is where a loop is invented where one party loans funds they do not presently have to the government and then buy that money from the government in order to repay their debt but instead the monies are instead invested by distributing it to banks to lean and thus stimulate the economy. This might have functioned far more efficiently if the Federal Reserve had not already lowered the interest rates to where any corporate venture could be financed almost fee free thus there was no demand for these funds and the banks saw no upside to lending the funds anyways. Thus these funds which have come from a series of Quantitative Easings have basically sat in the larger banks vaults collecting electronic dust as these funds exist solely in the computers which run the economic system. This is known as stagnation of funds and means that the cash has no velocity, simply put the cash is not flowing through the system and thus has had absolutely no effect on the system which is good for keeping inflation low as had these funds been forced into the system then prices would have risen commensurate to the amount of increase is available monies for purchasing of goods and services.

 

So, when will these funds enter the system and what will be their effects? Well, they will come into play when the interest rates rise sufficiently that it becomes advantageous to the banks holding these funds to let them flow into the lending market. The situation will come about most likely when the prime interest rate set by the Federal Reserve reaches around four-and-a-half to five-percent which will mean rates of anywhere from six percent on up depending on one’s credit rating, the amount borrowed and whether the loan is backed by hard goods as in a mortgage or many business loans or if it is unbacked as are investment loans and purchases. There is a side problem which does not often figure into your or my daily life, and that is the Federal Debt which has about exceeded five-trillion dollars for the United States and a similar level in Europe which will only grow worse as more countries end up like Greece where the money flows in but nothing ever comes back including payments on these debts, they have become economic black holes where they take in but even small change cannot escape their borders. Once the IMF along with the Federal Reserve increase the interest rate it will effect an enormous upward jump in the short term interest rates which nations and the European Union all use to finance their debts and this will mean a jump in the interest payments, the minimum payment required for solvency.

 

The current rate is around one-half-of-one-percent for the best rates nations to probably two-percent for the riskiest of nations say Greece. Should the rate on these loans increase as expected for each level of increase in the prime rate, then the best rated nations could be looking at four or even five-percent and the worst risk nations clearing ten percent. Imagine if the United States, as a prime example, faced a change in their interest rates. Currently they receive a generously low rate, let us say one percent to make the numbers easy. Should the rate increase to one-and-one-fourth the United States would see their interest payment on their debt increase accordingly by one-quarter-of-one-percent, something easily handled. But what if the rate increased to around five-percent? Currently the United States uses approximately fifteen percent of their budget to pay their interest on the debt. Should that increase five-fold they would be spending seventy-five-percent of their budget on paying interest on their debt and thus they would reach the point of no return as this could not be sustained and still pay the salaries of the Federal Employees nor could they pay for the vast majority of programs and the military would be necessarily decimated to such an extent as to being unable to even be capable of protecting the mainland from attack. This would be the end of the United State and along with them the world economy as Europe would crash and the only way out for the world would be a total reset. The other definition for a total reset is a world war at whatever level of destruction required allowing for a complete restarting of all economies and the cancellations of all debts. The individual nations would then be dependent on their gold reserves to demand their seating as viable powers in this new world and this may be behind China, Russia, India and Brazil all buying gold and other precious metal and gems at a dizzying rate. Perhaps they know something the rest of us would be wise to note and understand.

 

Beyond the Cusp

 

July 10, 2015

Our Economic World is Shakier Than We’ve Been Told

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The mainstream media, especially the European Media, are all the news all the time covering the Greek economic meltdown. Some of the more honest media has also included the crises that could be soon to topple as if dominoes all in a row of which Greece is but the first domino to be tripped to fall and they have shown how Spain and Portugal would be precariously hanging and soon toppled partly as a result of Greece’s defaulting though it might be likely they would have fallen eventually all on their own. These would trigger a crisis in Ireland and Italy as to which would be the fourth victim and which would follow as the fifth victim signaling the end of the most endangered Eurozone nations too close to default to be comforting. The real horrific effect of these five weaker economies finally tripping the default cable and snagging the economic webbing, which has held the European Union and the Euro together since 1999, doing irreparable damage to the delicate webbing, more fragile than the most slightly laced spider’s web, tearing enormous holes in its intricate weaves slashing at the most vital threads and upsetting the ever so precarious balance that underlies its supporting structures threatening to unbalance and collapse even the previously though stable economies of France, Poland and many of the other east European economies possibly pushing them right to the cliff-face and potentially tipping them beyond the cusp and into default thus lacerating the last remnants of the Eurozone and possibly taking with them Germany and the ECB (European Central Bank) causing unimaginable damage to the financial structure of Europe and beyond, the ripple effect causing a second deep recession well more serious and taking longer to tank-out and hit bottom and then begin a long sluggish scent clawing for every single Red Cent and Dollar and Euro after having taken its toll on Asia and beyond. But the Euro, Greece, and the rest of the European Union and the Eurozone is but one whirlpool looking to sink every last economic boat.

 

The Euro is what we have been led to believe is the only threat. Where previously economic ships only had to worry about rising and falling tides, now they are adrift and facing not just one whirlpool representing the Euro dying, but now there is a second even more massive whirlpool coming from deep within Asia. China has hit the road’s end and is attempting to push its enormous mountain of debt using a garden trowel while piling on fresh debt using Caterpillar 990K series front end loader shoveling an additional $19.3 billion in an effort to end their three week slide totaling $3.2 trillion downturn in the past three weeks alone. These losses were the result of a Chinese Stock Market where as many as two-thirds of the stocks were frozen in a further attempt to stem the torrents of dollars flowing from their stock market and their economy like the icy waters which flooded the lower decks of the Titanic as she slowly but inexorably fell beneath the waves, something somewhat prophetic for the Chinese markets and economy. There is actually a comparison between the situation in Greece and the downturn in China as one must remember that Greece is as socialist as a nation can be without being either fascist or Communist and Greece has retained their spirit of a democratic Parliamentary system despite it all but China has taken socialism that one final step to communism, the addition of mostly state owned corporations and central planning of the economic engines and manufacturing. Chinese leaders had been attempting to liberalize their economic sectors, though not all of them, selling a number of previously State run businesses and even permitted competition between companies in the same market hoping this would charge their economy further and it had been working but even free-market economic liberalization was unable to stave off this meltdown. The problem obviously is what will this mean for the liberalization of the Chinese economy as the leadership are still Communists who serve the Party and depend on the Party, may decide that much of their financial woes are the result of these new policies and curtail or even reverse some or all of the liberalized companies, markets and take a giant leap backwards to increased government control over every iota of the economy and the manufacturing and sales etc.

 

United States Treasury Secretary Jack Lew commented Wednesday on the current crisis in China stating at the Brookings Institution, that the economies of the United States and China are “still pretty much separated.” In further testimony Secretary Lew queried, “I think the concern … it is a real one … is what does it mean about long term growth in China?” Further in his speech he pointed to the main potential impacts which could emerge as a result to the Chinese Stock Market bleeding financially leaving the leadership seeing ‘Red’ in more ways than one. The leading question is to figure out as soon as possible what the reaction of the leaders of the Communist Party is and whether they may decide that the problem dictates such as appointing new leadership, freezing prices, injecting even more dollars into the markets through the banks and state owned businesses or closing the banks and Stock Market for a week or two cool down and reset to normalcy again; the choices and potential marrying of any two or three makes predictions near to impossible. The one thing which can be computed and predicted as long as the numbers being released and any steps taken are done so in plain view then the impact of the Stock Market freefall on the Chinese economy’s core condition and whether it appears that it will have much elasticity and dynamics when the end is finally reached and the rollercoaster slides on in to the station signaling the end of the ride, and what a ride it was with vigorous growth only to drop who knows how large a percentage of that growth in this correction, and what a correction. Secretary Lew’s closing thoughts are worthy of being repeated as he emphasized, “The question isn’t their commitment to the goal; the question is the pace at which they implemented it, and do they do it fast enough for it to be effective. I hope this is not something that slows down the pace of reform. If the reaction is to put the brakes on reforms, that will slow that process.”

 

With China making a long overdue correction which will be far more severe than it should or could have been if the leadership was not so intent on what numbers they released to the world and on making their predicted economic increase and meet all targets set within the government as to fail was unthinkable and would have been a terrible loss of face thus undermining faith in the economy. This has caused the Chinese to follow the example first used by President George W. Bush and turbocharged by President Barack Hussein Obama which was in the old school simply called a ‘stimulus package’ but is now known by a more enigmatic phrase of ‘Quantitative Easing,’ either of which hides the actual result and method being implemented as who would stand for the government announcing they were devaluing the money supply and taxing every single American by a minimum percentage directly proportional to the percentage increase the total added funding was doled out in stacks of hundred dollar bills, literally thousands of such stacks in the United States and unknown amounts though what is known is the Chinese leadership pumped close to twice the percentage of GDP as did the United States. Just as the United States took their hit starting back in late 2008 and continuing through 2011 and briefly relieved with another round of ‘Quantitative Easing,’ this was like the third pitcher of beer at a table trying to drink their way sober. The economic burst from that mid and late 2011 ‘Quantitative Easing’ gave the economy a burst of hope which appeared to continue due to lowered interest rates and the paring down and mostly neutering of the Dodd-Frank Wall Street Reform Act gave the economy the needed push for President Obama’s reelection as he could run his campaign claiming to have turned the economy around and that great times lie ahead. Well, as far as that goes I’ll point to Greece and China and point out that the United States has followed similar patterns of fueling the economy and especially the Stock Market with borrowed monies and when loans were unavailable the Federal Reserve would electronically buy Treasury Bonds with funds they imagined into existence as a few strokes on a Federal Reserve keyboard and one produces and completed sale with funny money in that the receipt for the Treasury Bonds was used to balance the books as it represented the electronically derived cash used. This is a very convenient way to purchase items this way when you are the government or a very clever fraudster as just try using the sales slip from one register, say men’s clothing from a department store as cash at the Jewelry Counter and see how far that takes you. The catch, and there is always a catch, to ‘Quantitative Easing’ is that eventually you either have to pay back the money that was invented which can only be done some combination of these three methods, first is retire actual money from circulation which can also be done electronically by retiring any electronic payment made on credit cards, second is to remove the funds through higher taxes taking the money directly from the supply, and lastly one could raise the interest rates and siphon off a percentage of each loan to pay the Piper so to speak. The problem is that each of these methods actually hurt the consumer the most; it is the public that pays the price for the economic and financial misdeeds and ill-advised policies.

 

There are but a few redeeming features out of all of this and one serious and potentially unavoidable problem, and it is a big one. So, we will leave the bad news for last and the good news which will cause doom’s day to come and come quickly first. The best of news is that the meltdown in China is most likely to be relatively unfelt even amongst their Asian markets as China does not purchase many goods from outside and the few major needs she has will continue even if slightly abated, things essential like coal and petroleum. Further, the only nation carrying a trade deficit of any note is the United States and even should quotas be placed on any goods currently purchased from China will very likely have ten other sources with some popping up due to China cutting production. The European crisis is more likely to hit the United States harder than anything else on the economic horizon. Should the Eurozone break apart due to the collapse of several of their nations having financial difficulties and teetering at the edge of financial Armageddon plus one, Greece, which has in all honesty gone beyond the cusp and is currently running with his feet well away from solid ground just hanging there for that brief Wiley Coyote moment before collapsing into the darkness below only to make a small puff of dust rising depicting his hitting bottom. Even should the entire Eurozone collapse it may actually serve to keep a lid on inflation and allow for low interests rates, a necessity for the United States. That brings us back to the one thing that at first everyone would be glad to see, a real recovery with rising workforce participation which in the United States is down to approximately 63%, one of the lowest figures since the mid-1970s. This would also bring jobs, especially higher end job market opening up once again which would allow for a ripple effect. As the overqualified people working at menial or minimum wage jobs would leave those as jobs in their field became available and they gain employment thus making room for these other positions to employ more of the nations’ work force and soon inflation will return, something there has been no worry about as even the few months where such measurements showed a possibility for inflation to develop only for indicators to slide back the next couple of months with it often seeming like one big step forward and all promise breaking out only to be followed by three or four months of small to moderate steps backwards and everything gained to be lost and often more. When inflation does finally return for real then there will be a really bad situation. Once inflation starts to threaten then the interest rates will rise as a counter to inflation. Rising inflation takes a bigger bite out of people’s pockets all but actual theft. Inflation also helps with making the national debt somewhat more manageable by deflating the value of the currency taking the currency to new lows and the lessening to of the value of the debt and the purchasing power of that coinage. This was where Greece and the other nations in the Eurozone faced; they no longer had control over their coinage, their monetary worth so they were unable to simply lessen the value in order to get a handle on their debts and also make their nation more attractive to investors and new businesses. Perhaps leaving the Eurozone for a set period of possibly not less than two years and no longer than a decade or quarter century at which point they can reapply at the short end or must face a permanent decision at the longer end. Granted, this will possibly make some nations more reckless but the consequence is the only alternative to having the Eurozone nations turn their entire control of monetary and fiscal planning over to Brussels, they already control the monetary which is part of the problem, and most nations will refuse to be relieved of the power of the purse even if they are no longer able to control the coinage of said purse. Perhaps even a rotating schedule where every nation has to spend a decade using their own coinage would be another compromise. Until the Eurozone finds the answer they will be facing little impossible challenges as is Greece right now and others down the line. Let’s just hope their mistakes don’t become global economic-mines blowing the world markets haywire.

 

Beyond the Cusp

 

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