Who can honestly say that he is not enjoying the show?
Clowns to the left of us, jokers to the right…it’s fun, isn’t it?
Yesterday, the Dow fell and gold rose above $1,600 to a new record high. The euro fell, but against the dollar it is still more than 50% higher than it was when it was introduced 10 years ago.
In Europe, the world’s leading bankers and financial policymakers try to figure out how to avoid doing what comes naturally – going broke.
And in America, politicians scramble to raise the debt ceiling level before it is too late.
The big question is: who will default first? The Europeans? Or the Americans?
Larry Summers, former US Treasury Secretary, warned on TV that failing to raise the debt limit would be worse than after the Lehman bankruptcy in 2008. Ben Bernanke told Congress the same thing.
In Europe, the IMF and the rest of the financial elite have the same message. Don’t let Greece default, or there is a serious risk of “contagion,” and financial catastrophe. Larry Summers even crossed the ocean to give bad advice to the Europeans:
“No big financial institution in any country [should] be allowed to fail.”
On both sides of the Atlantic, the situation is about the same. The geniuses and scam-artists who run the big banks want to keep the honey pots open as long as possible. But there are pressures – mostly from the middle classes, who feel they have been ripped off – to put on the lid.
In Europe, the Germans resist giving more money to the spendthrift Greeks and Portuguese. In America, Tea Party activists want to bring an end to Big Government by cutting off its source of funds. They want to hold the line on the debt limit. Many would be happy to see the nation default.
And here at The Daily Reckoning, we stand with the Tea Party and the Germans. We’d like to see the US government default. Why?
• Because the feds have already done enough damage with their borrowing; it’s time they lived within their means…
• Because we already have enough zombies, supported by borrowed funds…
• Because it will be less painful to stop the debt build up now than later…
• And because we just want to see what happens when the zombies run out of fresh meat.
Finally, at least some people in Congress are getting serious about cutting spending.
WASHINGTON (AP) – One of the Senate’s staunchest budget-cutters unveiled Monday a massive plan to cut the nation’s deficit by $9 trillion over the coming decade, including $1 trillion in tax increases opposed by most of his fellow Republicans.
The plan by Sen. Tom Coburn, R-Okla., is laced with politically perilous proposals like raising to 70 the age at which people can claim their full Social Security benefits. It would cut farm subsidies, Medicare, student aid, housing subsidies for the poor, and funding for community development grants. Coburn even takes on the powerful veterans’ lobby by proposing that some veterans pay more for medical care and prescription drugs.
Coburn would also eliminate $1 trillion in tax breaks over the coming decade, earning him an immediate rebuke from Americans for Tax Reform, an anti-tax organization with which Coburn has had a running feud. He would block taxpayers from claiming the mortgage interest deduction on second homes and limit it to homes worth $500,000. He would also ease taxpayers into higher tax brackets more quickly by using a smaller measure of inflation to adjust the brackets.
Coburn would cut $1 trillion from the Pentagon budget over a decade. He would block military retirees from the Tricare Prime health care plan, the option with the lowest out-of-pocket cost, saving $115 billion, and he would raise the prescription drug co-payment under the program, as well as require higher out-of-pocket fees. He also would reduce the fleet of aircraft carriers from 11 to 10 and Navy air wings from 10 to nine.
“I have no doubt that both parties will criticize portions of this plan, and I welcome that debate,” Coburn told reporters. “But it’s not a legitimate criticism until you have a plan of your own.”
This fellow, Coburn, has the right idea. Throw away the scalpel. Get a chain saw. He’d raise the Medicare eligibility age to 69…and cut $1 trillion out of the Pentagon budget. He needs a much bigger chainsaw…but at least he’s on the job.
The Daily Reckoning
Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.
It seems we have come to the point in history where it is best to surrender.
the french were right all along. cheese eating surrender freaks.
It’s good that you and Addison stay light-hearted about the political and economic circus that we’re living through. I’ve tried to enjoy the show, but it just pisses me off or makes me worry.
I listen to this when I feel that way. I dunno.
Has anyone checked on the Mogambo lately? I was worried about him so I stopped by to check on him. He fired a few warning shots over my head as I approached the bunker, but I bravely continued forward slowly with my hands in the air. He didn’t let me in, of course, but I was able to get close enough to hear his strange laughter coming from inside one of his machine gun nests. I also heard him mumbling something about Bernanke and the “charade that is these debt negotiations”. I wish I had more to report. I just left my small offering of gold, silver, and oil for him along with all the best from the daily reckoning folks. I guess all the latest news has been really hard on him. I hope he is holding up in there.
11 to 10 Carriers and 10 to 9 Wings? They were going to do that anyway.
How about 11 to 2 Carriers and 9 to 2 Wings and cut manpower (including the bulging intelligence agencies) by 70%.
How about tariffs and a return to Glass Steagall.
I know,,, I know. None of that will work. Well if it didn’t work how come we were a creditor nation until we did away with said nonsense????
As an electrical troubleshooter one always returns to something that is known to work before trying something else.
What we have is the blind leading the blind…
Courageous fellow that Mr.Coburn. The only part of the proposal I find fault with is medicare eligibility; -instead of raising it to 69, they should drop it to the day of birth, covert to a single payer system, and free the business community from having to provide healthcare benefits to anyone. As for the insurance companies that would be put out of business, I suspect most Americans would celebrate the day they fail. Of course there will be the same status quo zombies insisting the existing healthcare system is the only viable alternative, and that any replacement will lead to “death panels”… And most of these people will be the same fat, corpulent, lazy-slob Americans who would benefit most from confronting their own mortality. That they might actually take ownership of their own health instead of relying on the drug pushers in the medical community, might prove to be the greatest improvement in their standard of living they are ever likely to experience.
I think instead of reducing spending, the government should just tell the private bankers to take their national debt and shove-it !
It will be almost impossible to ever repay the national debt to the bankers because of how much interest in charged on it and of how it grows continually and exponentially.
The bankers knew this from the start and the only way to get even close to repaying the debt is to completely impoverish Americans. That process is now underway !
Reinstate glass stegall
tariffs!! esp for CHINA
Tell the bankers to STUFF their deficit, they just created money out of thin air to begin with
Cut the pentagon back to 1992 levels
Cut the following departments to $0: the TSA, education, energy. they have had nothing but failure since the start
It is apparent that Coburn is another political shill for the military industrial complex.
He offers only 100 billion dollars a year in cuts for the military?
If we are in such a dire situation, then cut military funding by 50% not 15%.
We need at least 3 trillion dollars in cuts from the military.
Thank you for this blog. It has a lot of great information and some great contributors. Very valuable information Bill.
Of course, my coming from the other end of the planet does lend me the perspective gained by distance. However like the people in that memorable movie (something about a beach…) where the last survivors ended on a beach in Melbourne waiting for the inevitable to reach them, I feel precisely in that situation.
For a long time, (20 years) I expected the events that have all since transpired like clockwork.
I was able to to take cold comfort from the idea that I was basically all alone in my views. The “experts” told me constantly, that I was mistaken.
Then along came Mr Bonner. And Agora. Telling me the same things that my worst fears had produced. My age of innocence has ended.
In a weird way, I really did enjoy his prognostications albeit that they were till now predicting the End Of The World. Very scary.
Suddenly he presents a small, very small light in my darkening world.
IT MIGHT NOT BE SUCH A BAD THING AFTER ALL!
Good night, America, please turn off the lights as you go. It will be better in the morning….. for us all.
So, you want to see what happens when the zombies run out of fresh meat, do you? As long as YOU are in the front row, offering YOURSELF as bait, I’m cool with that. But don’t be throwing the rest of us in the ring as fodder while you watch, thats all I’m saying, because I, for one am not all that interested in becoming zombie lunch. Are we clear on that?
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