A World Of Financial Freeloaders
Tampa, Florida- I was reading Doug Noland’s Credit Bubble Bulletin at PrudentBear.com and I gulped in surprise and fear as he quotes Market News International as reporting that “The Congressional Budget Office said Wednesday that the fiscal year 2009 deficit will be $1.186 trillion” which, as bad as it looks, is actually on the low side of projections! Yikes!
Even more horrifically, I have seen other people calculating that the budget deficit will range upwards to $2 trillion, and maybe more. Maybe much more!
I say this because I thought I had become a hardened veteran of the government and the Federal Reserve acting like morons, and I had bravely resigned myself to the collapse that such idiocy deserved. As a result, I had a swagger in my step and a sneer in my voice to prove it, but now, this prospect of a multi-trillion dollar budget deficit caused me to have a little “accident” in my pants at the news that the federal budget, which was already scheduled to be $3 trillion before any of this stuff happened, is now going to have a deficit of trillions of dollars, all in an economy that is only about $13 trillion! Gaaaahhhh! I am freaking out here!
I keep thinking to myself that this is so Freaking Much Money (FMM) that it would only cost $2 trillion to give $10,000 in cash to every one of the 200 million adults in the whole damned country! Gaaahhhhh!
I seem to remember, and police reports confirm, that this horrific news sent me screaming into the night, shouting not only, “Gaaaahhhh!” but also, “We’re freaking doomed, you morons! Buy gold and protect yourselves from Mother Nature’s Backlash (MNB) against your constantly acting stupid by electing spendthrift, promise-them-everything morons to government office, who have allowed the Federal Reserve to create so much money and credit to accommodate government deficit-spending that that government has now spent you into debtor’s hell to support a government So Freaking Huge (SFH) that the total of government spending constitutes half – half! – of all spending in the freaking country! Half!”
Somewhere around 52nd Avenue I am heard saying, “And you have spent yourself to a debtor’s hell as well, you morons, by buying your own debt to fund your own stupid retirement plans, which is akin to trying to make money by eating one’s own, ummm, poop, you morons!!”
Fortunately, I calmed down before the police could actually arrive and catch me in the act of disturbing the peace or actually making threats against my neighbor who is so stupid that he will not buy gold, no matter what I do, or even shut up long enough to listen to me when I am trying to politely explain to him what a moron he is for not doing as I tell him.
And the reason that I calmed down was because I suddenly thought to myself, “Whoa! I sure as hell could use $10,000 for myself, and a nice $20,000 for being married; filing jointly for a wad of lovely, lovely cash would be lovely, too!”
And then, as another benefit of giving money to people, I thought of older people who’ve had their damned grown children move “back home” to live with them, all crammed into the one house, sometimes dragging their kids along; but if you kick them out to live in their stupid car like they deserve, even offering to let them use the garden hose outback to clean up, everybody yells at me and calls me names, like I did something wrong!
But with a $20,000 windfall between them, you would feel vindicated, and indeed righteous, to kick them the hell out of your house! “Get lost, parasites!” Hahahaha! Sweet!
But apparently the “shocking” quality of this $1.186 trillion budget deficit has given the CBO a sudden clairvoyance, because they figure that the budget deficit will, somehow (they don’t explain how, or why), “decline to $703 billion in FY10”, which I mention only because I thought I could turn it into some scathing sarcasm of some kind before I lost interest in it, but, then again, a $703 billion budget deficit is still nothing to sneeze at!
Even so, the article goes on, “The CBO report almost certainly understates the severity of the nation’s fiscal woes”, because. “For example, the CBO report does not account for the emerging fiscal stimulus bill that may cost more than $800 billion over two years” which brings us up to a budget deficit of $1.98 trillion!
And while you are gasping for breath at the horror of it all, it certainly does not even take into account the inevitable hundreds of billions of dollars in “supplemental appropriations” that Congress routinely authorizes all year, every year, and which in the last 12 months amounted to more than an incredible $1.4 trillion dollars of additional public debt, and which now stands at the unbelievable sum of $10.635 trillion, in an economy that is only $13 trillion, where now these weenies are proposing to borrow and spend another $2 trillion freaking dollars! Gaaahhh! We are so freaking doomed!
Those who are paranoid enough, smart enough or lucky enough to be sitting on piles of gold, silver and oil are no doubt sitting cool right about now, while those who are not similarly paranoid enough or well-stocked with gold, silver and oil must be going freaking nuts and their hearts are hammering boom, boom, boom as they watch their own destruction approaching.
And as a guy who has some of all three, I say, “Whee! This investing stuff is easy!”
Until next time,
The Mogambo Guru
for The Daily Reckoning
January 19, 2008
Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter – an avocational exercise to heap disrespect on those who desperately deserve it.
The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning and other fine publications.
Tomorrow, the man called Obama takes up the president’s job. Poor man. He seems like a decent sort. A shame…something like that happening to him.
But he hung around with the wrong crowd – lowbred types in high political circles – and look where it has gotten him. Tomorrow, he’ll be called upon to stand before a hundred million viewers, put his hand on a Bible, and lie.
To the question – will he swear to uphold the Constitution of the United States America – he will give the answer he has rehearsed. Yes, I can! Then, like almost every American president since John Quincy Adams, he will ignore it.
But before we return to tomorrow, let’s turn back to yesterday…or, Friday. So far this year, stocks are down nearly 7%. But at least the Dow bounced a little at the end of last week – up 68 points.
Oil held at $42. And dollar was steady at $1.33 per euro.
The excitement on Friday was in the gold market – the yellow stuff bounced $32. Why would gold go up…when the world economy is clearly going down? We don’t know. But if we were Mr. Obama, we’d approach this new job like renting a car from a disreputable agency. We’d want to take a good look and take note of all the dents ands defects before driving off the lot. We wouldn’t want to get charged for the previous drivers’ mishaps!
The founding charter of the U.S.A. made no allowance for going into the banking business…nor the auto business…nor any other kind of business. Neither did it allow invasions of foreign countries, without a declaration of war…or imagine a standing army that costs about as much as all the rest of the world’s armies put together.
In the beginning, the U.S. government was specifically limited in what it could do. Now, very little remains that it can’t do. But in all matters – big or small…torturing people or taking their money – government leaders must pretend to be acting in the national interest. It’s a low-down, dirty business that usually attracts people of the same sort. People like George W. Bush and Joseph Biden…people with no sense or no principles – or neither. People who don’t know a lie when they hear it or…don’t mind telling one.
That’s why we’re sorry to seem Obama in the trade; he seems like such a nice fellow.
But politics…alas, someone’s got to do it. As the old Latin expression puts it: The voters want to be deceived; then let them be deceived.
So many patsies…so little time. Bernie Madoff could barely keep up with all the people who wanted to give him money. The hopefuls joined his Palm Beach country club just for the opportunity to slip a few extra large bills in his pocket. Old buddies sought him out…eager to part with their entire fortunes.
And look at the Treasury market! The patsies line up to buy I.O.U.s from a deadbeat debtor who already owes money all over town. And now he’s passing out more I.O.Us…at a faster and faster pace…trillions of dollars’ worth of them. Not only that, the debtor in question has said publicly that he intends to lower the value of his paper – at all costs.
And now the voters…the general public…the lumphouseholders – they’re dying for a lie too. They want someone to tell them that he’s got the recession under control.
Well, if they’re going to be deceived someone’s got to tell them lies. Barack…you’re up!
The people want to believe that if the president weren’t such a screw-up, we wouldn’t be in this mess. In other words, if the administration would get its act together, it could “do something” to get the good, ol’ times back.
Rarely do we get an opportunity to come to the defense of George W. Bush. But here we will say without equivocation: this financial crisis is not his fault.
Sure, he made it worse by wasting $2 trillion on that silly war of his – the ‘war against terror.’ And sure, he should have gotten rid of Alan Greenspan at the beginning of his term…and he should never have signed so many spending bills without a fight. And, it’s too bad he didn’t understand what was going on in the financial sector and warn people – instead of jawing on about how great the U.S. economy was. But, heck, who did? He acted like a moron; no doubt about it. But who didn’t?
So give George W. Bush a break. Let the man skulk back to the ranch without trying to pin this financial collapse on him. He didn’t cause the problems; and he couldn’t cure them either. The financial problems faced by the U.S.A. cannot be solved by politicians. They can only be made worse by politicians.
The problem is that there are a lot of bad loans, bad investments and bad businesses that need to be cleaned out. All the politicians can do is to try to prevent the clean up…
*** The lumpen want to be deceived; so the politicians take it as an opportunity. Last October, for example, they raided the Treasury for $700 billion that they could pass out to their friends on Wall Street. Of course, that program was supposed to be in the ‘national interest.’ The banks were supposed to lend the money out to the taxpayers whence it came.
As absurd as it sounds, and as unconstitutional as it surely is, it is nevertheless the law of the land. And now that a few months have passed…and a few hundred billion have been passed around, we’re beginning to understand what happened to it.
The New York Times reports:
“Speaking at the FBR Capital Markets conference in New York in December, Walter M. Pressey, president of Boston Private Wealth Management, a healthy bank with a mostly affluent clientele, said there were no immediate plans to do much with the $154 million it received from the Treasury.
“‘With that capital in hand, not only do we feel comfortable that we can ride out the recession,’ he said, ‘but we also feel that we’ll be in a position to take advantage of opportunities that present themselves once this recession is sorted out.’
“‘The Treasury secretary, Henry M. Paulson Jr., said in October that banks should ‘deploy, not hoard’ the money to build confidence and increase lending. He added: ‘We expect all participating banks to continue to strengthen their efforts to help struggling homeowners who can afford their homes avoid foreclosure.’
“But a Congressional oversight panel reported on Jan. 9 that it found no evidence the bailout program had been used to prevent foreclosures, raising questions about whether the Treasury has complied with the law’s requirement that it develop a “plan that seeks to maximize assistance for homeowners.”
What did they think? Bankers don’t make loans in the hopes of getting ‘good citizenship’ awards. They lend money when they think they can make money at it. Now, with so many balance sheets in such bad condition, they are afraid their loans won’t be repaid.
Typically, Thomas L. Friedman has a solution. The president should get 300 banking presidents in a room and give them a “come to Jesus” speech, he says. By that, he means the feds should play a more muscular role in the banking crisis. Good banks should be saved. Bad banks should be dissolved.
And what about all those bad loans? Ah…the New York Times columnist has a solution for that problem too. The government should buy them up…hold them…and then “sell them later when the market rebounds.”
See how easy it is, dear reader. Problem solved. That’s what Obama should promise the voters.
And if the patsies will believe that…maybe they’ll kick in a few hundred billion more for Wall Street.
The Daily Reckoning