Thursday, February 26, 2009
- We are spending money faster than we can sell debt so we are in effect inflating the currency. The biggest buyer of our debt, Japan not China, had a -12% annualized GDP 4Q2008.
- The collapse of the stock market is causing people to put off retirement and/or move back in with the kids. This makes the idea of the End of the American Dream very real.
- The only regional economies in the country that are growing are some state capitals and Washington. USA Today reported last week that while the National economy shrunk last year Washington DC grew at a 2.5% rate. Expect the people in the red counties sending their money to the blue government counties resentment will grow.
- Big spending state governments like California are close to collapse. You could fire every employee in the state and only close 1/2 of the budget deficit. Their bonds are at junk status and they cannot sell new ones to raise capital. Like the Automotive manufacturers, their legacy costs for retired workers have created a cost structure that cannot be covered.
- Big cities in the midwest like Cleveland or Detroit are going broke and are partly ungovernable. There are literally places in Cleveland that police will not enter unless their are multiple cars and multiple officers.
- The Mexican government, like Pakistan, can no longer exercise control over large swaths of its territory.
- Texas Homeland Security went on alert last week because they are afraid of refugees streaming across their border in the event of civil war in Mexico and don't expect the Federal government to respond.
- Just under 50% of tax payers pay no federal income tax. We are reaching the tipping point where people who pay nothing will be a the majority with nothing stopping them from demanding more and more creating an untenable economic situation.
- We are about to implement a foreclosure program which will move the idea of wealth redistribution from the theoretical level to the very real neighborhood level. Neighbors living within their means and paying their mortgage will be able to go online, look at their neighbors property records and see that the guy who lives outside his means is getting mortgage help the average guy paying his bills cannot get.
- Obama has appointed people with huge tax problems while calling on the rich to pay more.
- We have a new conservative dominated government in Israel which could hit Iran's nuke program and in response Iran could attack a few installations in the region and shut down 20% of the worlds energy supply.
I could go on and on. But we are tearing apart the American social contract while facing huge threats both home and abroad. We are in for rough times.
All that being said, it does not merit this kind of craziness: