We are hearing about overheated reactors, fuel rods and cooling pools all over the news.  This news will diminish as times go on but what will not go away is Japan’s economic meltdown.   Greece, a much smaller economy, was in debt about 127% to GDP in 2009 and should be around 150% 2011.  Japan will be more than 230% in 2011 and this doesn’t include the massive money needed to clean things up.  Yen collapsing, hyperinflation a very real threat – frankly japan should have already melted down ages ago.  The disaster, although terrible, may just be the beginning of the high speed train wreck a huge problem for the US.   And hey I even hear California is selling Iodine like crazy in case of nuclear Fallout as Jerry Brown has a meltdown of one of the world’s largest economies on his hands too.

Not only has the Japanese stock market all but crashed, the Bank of Japan hoping for a Hail Mary by intervening, their currency is toxic too – hence why the G7 is chocking on it right now.  This is all very tragic.  But remember this, in the earl 1990’s Japan was experiencing a meltdown and was going to sell some of it US treasuries.  The President of the United States called their Prime Minster to plead with them not to.  Right!  The Baily Bank and Trust.  It would be a run on the US Bank for certain – once one starts selling – the rest will follow.  Washington Mutual bank all over again.

Japan owns $877 Billion of US debt and China $907 billion – give or take a billion or two.  Ahhh now we see – if they are radioactive and dying than so are we.  So why does the G7 care about the Yen.  Why are the US and many nations lock step with Japan singing Kumbaya around the currency, the Bank of Japan and their stock markets?  If Japan gets sicker right now, their economy is already dying of cancer after all, the rest of the world will may lay right down in their respective economic coffins too.  Oh but for China and India it won’t be so bad considering their debt to GDP is only 4.7% and 4.8%.

Mark my words – the unnatural – man made disaster will be much worse when it comes home to roost.

“Summer of Recovery?” NOT! “The economy was in a ditch and we are pushing it out.” NOT!  “The economy is headed in the right direction.” NOT!  “The Democrats will keep a majority in the House and Senate.” NOT!  Pile it on my plate and yours, too.  Oh, and add some incompetence gravy and a side of housing mess and hopelessness.  Tastes good, doesn’t it?  “Choke on it!”  That is what the chefs in the D.C. kitchen say.

I want to put this out there and have Frank Luntz poll it!  If we had a choice and a ballot item for an UP or DOWN VOTE, what would your answer be to the following?

Do you want the government (federal, state, local, etc.) to continue managing our money?  [Up Vote for Congress]

Do you want an Office of Homeland Financial Security to step in and hire the best executives in the world to oversee every single penny this government borrows and spends?  [Down Vote for Congress]

I’M SERIOUS.  Put it up on your sites!  Put it out there on radio and TV.  What do you think the outcome would be?  How about I predict it would be close to 100% giving a down vote to Congress.

Well, aside from that treat, I have to point out that I warned everyone the other shoes would drop and housing is just the beginning.  Who is listening?  Wall Street is for sure.  Housing numbers came in and look so abysmal, it seems like 1968 all over again (the year I was born).  But there is more to come.  Commercial properties and jumbo homes are headed for a wall too.  We just don’t hear about all those.

The reason why I wrote “The United States of Bankruptcy” wasn’t just to be prophetic, but getting the word out about what is really happening and how to fix it.  Just look at credit card interest rates getting hiked, banks not lending, and now 80 million people are deemed credit unworthy with scores below 650 and 55 million of them with scores below 600.

The economy will not and cannot recover with half of our consumer population unable to afford big-ticket items and just getting by on necessities.  Sure, companies are doing well for the most part, but they are selling most of their goods overseas.  Austerity measures around the world will quell that soon, too.  And what is going to force us right back down the hole and beat our brains out, like the “Whack-A-Mole” game is taxes.  Even if the Bush tax cuts remain, there are so many more taxes and social welfare programs hitting our pockets in 2011, we might as well abandon the ship.

Bill Gross and I were correct in the need for a consumer refinance program.  I cannot stress enough how enormous a boost it would be for everyone and every business.  Instead, the government just keeps putting money out there like somehow what has been proven to fail is going to work.  It is a recipe for more disaster, hopelessness, bankruptcy and on what we are choking to death.

PIMCO’s Gross Calls for Massive Mortgage Refinance

(Reuters) – Influential bond investor Bill Gross dispensed more policy advice than the U.S. Treasury bargained for on Tuesday, calling for a massive program to refinance mortgages at low rates to boost the flagging economy.

Everyone reading this knows I have been promoting a massive two-step program to refinance ALL Americans’ debt if they choose to opt into the program I am suggesting.  Note: this does not cost the government a dime.  Here are the facts: the government is on the hook with a $5 trillion guarantee to Freddie and Fannie.  The government is on the hook with TARP.  This is a fact!  Consumers, vital to our recovery, are in debt already.  This is a fact – credit addicted or not!  Interest rates are at an all-time low, but 46 million consumers have credit scores under 600, and 70 million with credit scores under 650.  They are credit unworthy today and financial reform will make that worse.  Therefore, they have little chance to get those great rates, refinance or borrow.

So we are here with massive spending and guarantees by the government and Main Street twisting in the wind.  Well, there will be no sustainable recovery until we attack the root of the problem.  PEOPLE CAN’T AFFORD TO PAY THEIR BILLS! The plan is so simple it makes me wonder why it has taken so long for the “big dogs” to step it up a notch, and thank God they are.  I’m suggesting that we redirect up to half of the government’s $5 trillion guarantee to support the program.  Not a dime of money needs to be spent and they are already on the hook, as I said before, so it is just taking the same guarantee and splitting it up.

Take the guarantee to all banks that want to participate in the program, and most will, to offer a ONE-TIME refinancing of debt for every American, rich or poor, or small business.  If you opt into the program, you can reduce your monthly payments up to at least half of what they are today by gaining access to those great rates.  However, if you opt in, you will have NO CREDIT AVAILABLE!  That’s right, you cannot pay off your credit cards and use them again, and you are still on the hook for everything.  You will not GET CREDIT for two years.

That’s the methadone we need to take people off of credit addiction and into a cash mentality again.  People could more easily afford to pay their bills and therefore cost the government less in having to bail out Freddie and Fannie and buy more bad debt from the banks.  The root of the problem is people can’t pay their bills.  If we help them afford to pay without having to borrow and spend any money from the government, this would add tens of billions of dollars of disposable income into the pockets of Americans to fuel the economy that is 70% driven by consumption.  The banks would have to create hundreds of thousands of jobs to implement the program.  So would mortgage brokers, title companies, insurance companies, the housing industry, auto industry – you name it.  In fact, every single American and every single industry in this country would feel a huge impact.

It’s about time that our leaders buy in to programs like this.  I was wondering how long it would take.

“A government big enough to give you everything you want is big enough to take everything you have.”

–Gerald Ford

Does all this make you mad as hell?  Horrified?  Embarrassed?  All the above?  There has never been a society or empire in human history that has survived itself once liberalism sets in.  Fat, dumb and lazy!  That’s what we have become and Generation Zero is stuck right in the thick of it.  Just look around the country and you will see the plight that Americans face.  This isn’t the land of opportunity anymore; it’s a welfare state that can’t afford itself and can no longer afford inaction and incompetence.  We are witnessing our cities and towns disintegrating every day overrun by gang violence, child abductions and predators, murder, rape, theft, hopelessness, drugs, unemployment, and so on…  And here we are with a Congress that just can’t clean up its act and agree to put this country back on course.

“Every kingdom divided against itself is brought to desolation.”

–Jesus of Nazareth

The economy is front and center and elections are coming up.  The CIA has clearly stated that the biggest threat to our national security is our economy.  But what about all the other issues we have here that are already assuring we will go the way of Rome?  Every issue du jour is politicized: for instance, sending someone to the border and publicizing it for political gain…  Why on earth are we even having a discussion about a mosque being built near Ground Zero?  Then there is the photo-op in the Gulf…  Don’t you see what’s happening?  Laws are being created and jammed through our system for political brownie points as well as to buy off voter blocks.  What on earth is wrong with us?  I just can’t help feeling embarrassed about what we have become and down right scared for our future.  We have become a second rate nation, whether anyone wants to say it or not.  Even if the economy eventually recovers, what do we do about all the other issues we are facing, not to mention the political bankruptcy and corruption of our system, leading ultimately to the breakdown of the American way of life?

We are powerless and impotent and chained to the platonic TV being fed gallons of sewage.  We all are crying out for a leader who will attack every single issue in such a massive way that our hearts can be jumpstarted.  We have already lost our minds, but if we can restore the heart again at least we will have a fighting chance.  Do we really think the people that founded and built our nation would be happy with what the country has become – decadent and weak?  No wonder much of the world is projecting our downfall, because it is not just the economy; it is the confluence of so much wrong with America that we can do nothing more than throw our hands up and just let it happen.  The people have lost all power and control over America and this just isn’t the way it’s supposed to be.

Congress is calling its members into an emergency session to borrow and spend $26 billion, tax foreign companies, and pay off the teachers unions… oh, and toss in a few billion for Nancy Pelosi’s state of California.  News coverage yesterday was focused on some key elections but investors and economists focused on what signals the Federal Reserve was sending.

It is very important to understand that the Federal Reserve is limited in its ability to play a dramatic role in pumping blood into our economy.  They can buy treasuries to keep interest rates at an all-time low, but their balance sheet is already bloated.  They are privy to information and a view of the economy that we are not.  One moment they say we are experiencing a “modest” recovery and then they turn and say the recovery is not all it’s cracked up to be.  Their solution?  They point to Washington to step in again and implement more failed programs.  But the government is just like a deer in the headlights.

It’s election time and politicians are hocking programs while the Fed is trying to convey that we are still in trouble and will be for a long time.  Saving jobs and bailing out states that have to make very hard choices is not the answer.  It just makes us further in debt and is like placing a band-aid on the fiscal irresponsibility of the states.  Something massive needs to be done across the entire economy, but it seem like the political machine is just trying to win more votes while they jam through every piece of legislation they can to help them maintain their jobs.

It is clear from what we heard yesterday that Wall Street is not swayed.  In fact, they are scared to death.  All the negative numbers coming out (and more to come) is causing big economic problems and unless they fix the root of the problem, consumers, we are going to stay in big trouble.  I am hopeful someone will listen to the 2-step program I have come up with to solve this issue once and for all.

Did I hear right?  Timothy Geithner just said that unemployment is going to go up and the Bush tax cut will stay for 95%.   I don’t even need to write one more sentence.  This is financial discrimination and a death knell for recovery! It couldn’t come at a worse time for the “shaky” economy.  This is pandering for political gain.  They are playing Russian roulette with the economy and how many bullets can you dodge?

The Bush tax cuts are the news of the day, but taxes in so many forms are coming.  50 to 60% of your hard earned income will go to pay for everyone else in America if you are part of the 5% that have been categorized as a separate class – treated differently, discriminated against, and the critical component to the recovery.  Career politicians, academics, socialists and Marxists are busy plotting how to redistribute your wealth, how to use class warfare to maintain power through elections, and how to stomp out the capitalist heart and soul of our country.  Even if they pull a fast one and pander for votes then decide to keep the Bush tax cuts, there are so many more taxes already coming that most just don’t even know they are coming and more will come from the Debt Commission.  These recommendations, of course, come after the election and from a convenient third party, so the political machine can insulate itself.

Here are a few definitions that we all need to know.  When completely understood, what is going on in our country is not Capitalism, but a predominately Socialist society with weavings of Communism and Marxism leaving little room for Capitalism.  This patchwork plan will be the death of America, as we know it.

Class Warfare: Conflict between social or economic classes (especially between the capitalist and proletariat classes) – the age-old Democratic mantra.

Redistribution of Wealth: In economics, redistribution is the transfer of income, wealth or property from some individuals to others. Most often it refers to progressive redistribution, from the rich to the poor.  One of the important purposes of tax collection is to transfer the wealth from the rich people to the poorer ones.

Discrimination: Referring to the treatment taken toward or against a person of a certain group in consideration based solely on class or category.

Socialism: Rule by the political bourgeoisie.  Socialism is a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.

Capitalism: An economic system in which the means of production are privately owned; supply, demand, price, distribution, and investments are determined mainly by private decisions in the free market, rather than by the state through central economic planning or through democratic planning; profit is distributed to owners who invest in businesses, and wages are paid to workers employed by businesses.

Marxism: In order to overcome the fetters of private property, the working class must seize political power through a social revolution and expropriate the capitalist classes around the world and place the productive capacities of society into collective ownership.

First of all, if you are making $250K, for instance, you are definitely not rich.  Now, let us say you are making $1 million or more a year.  It is very likely that you spend a lot of money on products, good and services that the economy requires for sustained recovery.  Taking 40% of a person’s income right off the top, followed by state taxes, Social Security and everything else, is flat out wrong.  Over 50% of a person’s income is gone right out the window. Then, God forbid, you have anything left over to invest, and you will pay another whopping 20% if you ever make any money.  Toward year-end expect a lot of people selling stocks so they don’t get hit with another 5% tax in 2011 and the stock market will be a big problem once again.  And whatever you do, don’t die because all your life you were taxed egregiously and they will take half of everything!  That alone is massive double and triple taxation.

Frankly, there is no way to tax America out of debt; there is just too much of it.  Although even some Democrats are challenging this strategy along with some of our financial leaders, the drum continues to beat.  If tax cuts are allowed to expire on the “rich” and maintained for what they say are 95% of Americans, you will have layoffs, hiring freezes and long-term economic woes for sure.  It is already the case that the 95% are not buying things at the present tax rate now; and I think we all know those making more money are consuming a large percentage of products and employ a vast majority of the other 95%.

Now, on top of that, ObamaCare is coming and that just means another tax and trillions to support a social welfare system while the others have proven to be failures.  The Debt Commission will be putting forth ideas to solve the growing crisis.  Again, our leaders think we can tax our way out of this.  I assure you, if taxes rise both on individuals and corporations, financial reform takes hold, HealthCaid, stimulus and only God knows what else is lurking around the corner, it will crush the economy.

The simple fact is if you tax people more, they will have less money to spend and invest and, worse, much less money to hire workers and a corporate tax rate that will be #2 in the world.  Think about it and don’t forget how much more attractive it’s going to be for big companies to do business overseas.

First of all, I have mentioned Freddie and Fannie in the past, but don’t forget Ginnie.  The government committed $5 trillion off the balance sheet to prop up these abysmal failures that despite their guarantee have been reduced to worthless pink sheet stocks.  The government has already borrowed over $150 billion to turn around and give it to them and this will be over a trillion dollars, at least in the foreseeable future, and Ginnie is a huge problem on the horizon.  This policy is flat out wrong!

What should be done immediately is that a large portion of that same guarantee be redirected to afford all the citizens of this nation, rich and poor, the onetime option to consolidate and refinance ALL their debts.  This one move will significantly reduce toxic loans – the horrifying loan guarantees coming home to roost – and reduce the cost of the debt that Americans already have.  This would immediately increase disposable income in America by tens of billions and that means more spending, saving, and investing.

Why? The root cause of the housing, credit card, auto, student loan and other bad debts is Americans not being able to pay their bills.  You can keep cutting limbs off the tree and buying up all the bad debt, but that costs hundreds of billions at a minimum.  It is essential to help people afford the debt they owe and, thus, get to the root of the problem.  This doesn’t require minting or borrowing more money; they are already in debt and managing this is increasingly becoming worse or has already imploded and virtually destroying their lives.

If a massive refinancing program was put in place, then every single industry – banks, mortgage brokers, real estate, auto – you name it – would skyrocket.  The result would be a large-scale resurgence of entire industries and would CREATE hundreds of thousands of jobs, if not more.  It would take a Herculean workforce increase just to manage the program in the private sector alone and the economy-wide impact on employment would be utterly huge.  What is very important to understand is that more disposable cash would be in the pockets of every American who takes advantage of the program while rates are at an all-time low.

Today at least 50 to 70 million couldn’t take advantage of the great rates even if they wanted or needed it.  If every American, credit addicted or not, could refinance everything they owe and pay significantly less or even just pay it all off, it would mean much less bad debt, more money to spend on products, goods and services, and more money left to save and invest.  One caveat for those who take advantage of the program is a 2-year period where more credit cannot be obtained.  This allows them to rebuild their bad credit, reduce payments, manage and put their household or business affairs in order.  As it is now, the government has to clean up and bury the toxic waste from the rotting corpses of tens of millions of American debtors.

Second, if you are included in the 46 million Americans with a credit score of 600 or less, you are considered a big credit risk and credit unworthy in the eyes of the financial industry today.  The ranks are being joined by millions and there are millions more to come.  Even if you can get a loan or credit card, it will cost you dearly and that just means your financial situation will get worse.  Add to that financial reform and the banks are going to be even pickier about who gets credit and loans.  We all know for a fact that our economy is 70% consumption, and “credit addiction” has artificially supported this for decades.  Someone please tell me how we can sustain the economic recovery if tens of millions are not in a position to support it and, even worse, make it grow.

The government does not have to borrow or spend a dime to require the credit reporting agencies to alter the FICO score during the period of recovery.  Let me reiterate: this system has to be overhauled, reformed and transformed.  The above is true and 70 million have scores lower than 650 and those consumers are dropping and joining the lower credit score crowd by the millions; and the bar for them to get credit or refinance gets higher every day.  Your FICO score is like a tattoo: you wear it all the time and regardless of where it is on your body, it shows up every time you are stripped naked by employers and lenders investigating your life.  For those who are unemployed and/or broke, employers will screen you based on this and it now weighs heavily in their hiring decision.  Needless to say, that does not help unemployment and is severely hurting those trying to get a job.

Consumers, the credit addicted, and even those paying their bills suffer greatly at the hands of the credit bureaus.  Bankruptcy and foreclosure, for millions, was a last resort – a huge embarrassment.  Yet many crushed by the economy had no other choice.  The end result is they are discarded from the economy and many would agree they should be.  But remember that 70% of our nation is dependent on consumption.  Does anyone really believe that these tens of millions will be spending?  They are not going to be borrowing for certain, I assure you.  They need help!  They need a chance.  If foreclosures and bankruptcy stay on a credit report for 10 years, there is very little hope they will work themselves into a position to support the recovery and perhaps be able to rebuild their lives.

We create welfare system after system that hasn’t worked and won’t work but we haven’t even considered tossing these people a lifeline and massively reducing hopelessness, anxiety and depression.  Why don’t we use our massive computing power, algorithms, predictive and behavior analysis to monitor those whose credit score is low – those who have experienced bankruptcy or foreclosure – to measure their ongoing debt levels and correlate that to income tax?  Then thresholds of debt to income can be managed instead of creating some more useless bureaucracy to monitor consumer financial products and predatory lending practices.  Wouldn’t that reduce the chances of it happening again?  Wouldn’t this assure more credit stability in the future?

Now, combine these two programs.  Think about it.  How powerful would this be for the economy, consumer confidence, employment, spending, sales, manufacturing, you name it.  Solving the Main Street issues is the most important thing the government can do today, tomorrow and yesterday.  Unfortunately, the answer is and always has been to tax, borrow, and spend our way out of trouble.  The stimulus hasn’t worked, can’t and won’t work because of glaring mismanagement or incompetence, greed, backroom deals for politicians’ districts and appalling return on investment where hundreds of thousands of dollars have been allocated per job created.  THOSE DAYS ARE OVER!  Can anyone please get these ideas into the hands of anyone that can do something about it, because I often feel like I’m throwing rocks at the sun and banging my head against the wall in D.C.

43 MILLION Americans are in credit jail.  These are people with a credit score lower than 600 and considered credit unworthy today; and I assure you, with financial reform, they are not getting bail for a long, long time.  There will be millions joining the crowd this year and in the years to come; and even more devastating and with longer-term consequences is the continued rise of foreclosures and bankruptcy.  The landmark Financial Reform legislation is about to make it far worse as the result will cause banks and credit card companies to constrain borrowing even more than they have already and taxes will make sure it gets worse.  I offer two solutions at the end of this blog.

70% of our economy is consumption.  If tens of millions of consumers have no access to credit or have to pay huge fees to get credit, doesn’t that mean less consumption?  Add fuel to the fires already burning in “The American Rome” by raising taxes, doing away with tax breaks, imposing new taxes, the imminent inflation, and the whole laundry list of things that will take even more money out of our pockets, and guess what?  There will be less money to consume!  How can a recovery be sustained if people won’t buy goods or services and, worse, can’t?  This isn’t just here and now, but bad credit or mediocre credit will last for long time.  People say it’s better not to use credit or if you are maxed, focus on paying your bills and saving.  But when you are unemployed or trying to make ends meet, it forces one into a box of just consuming the basics.

Worldwide credit got everyone into a mess, but just think logically.  The world would not have grown over the past thirty years without all this leveraged buying.  Tens of millions are now simply knocked out of the credit markets and I assure you, many countries will feel the same pressure; and if they can borrow, they will pay much higher rates.  With all this pullback internationally and people just hobbled and punch drunk, our 70% consumption economy is going to suffer badly.  Everything you see coming down the pipe – especially new taxes and reform – will significantly hurt consumers, significantly reduce disposable income, and topping the list are high ticket items – homes, cars, appliances, etc.  People that can’t qualify for credit can’t purchase these types of items because they are just too expensive.  Reliance on credit – especially for expensive products – has been necessary to afford them.  Car loans and home loans are just two cases of where most Americans require credit and if they can’t get it, how is a long-term recovery possible?   This means the worst is definitely not over and the government will make sure of that. So what can we do now?

Credit Bureaus

The credit transformation in America and around the world can no longer support all of the businesses that need consumers to buy things and won’t allow many businesses to use credit to help their businesses to survive.  I believe the credit bureaus need to be tweaked during this economic crisis to weigh the last eighteen months and next eighteen months differently. You want to provide relief immediately? You want to reduce anxiety and hopelessness and increase consumer confidence? Then allow people to get access to decent loans and relieve the stress on families just trying to get by and pay their bills. If Americans cannot refinance or borrow in the future – and millions won’t be able to for years – huge segments of our economy will continue to under-perform or collapse.

I propose that the weighing placed on 30-, 60-, 90-, and 120-day late marks on credit reports, bankruptcy, and foreclosures be diminished and not counted as heavily in the FICO score during this relief period. This alone would put major confidence back in the hands of struggling consumers and businesses. Anyone who was forced into foreclosure or bankruptcy during this time will have the black mark removed in three to five years, instead of ten years, so they can get back on their feet.

Now, with rates at all-time lows, it is irrelevant because so many people can’t get loans to take advantage of the low rates. Those Americans who pay their bills but are falling behind should be given relief, and this is one way to do it very quickly. When it can take an individual months or years of struggle to remove one bad mark from their credit score, but it only takes one second for it to get there – even if it is not correct or not even theirs – it’s time for the system to be overhauled.

Debt Consolidation

Here is another idea that doesn’t require any government money. Why not allow all Americans, rich and poor, to consolidate debt under one payment so the toxicity of the bank loans and credit portfolios isn’t as bad? If we can use the government smartly to drive and backstop a program of debt consolidation – not bailout – everyone would be much better off, and in many cases better able to pay back what they owe. Those with bad credit would have constraints for several years on any additional credit or financing so they can get their present affairs under control. This also would help the imminent crisis that Freddie Mac and Fannie Mae are staring at. Instead, the government is minting and borrowing money to acquire all these loans and credits with cash (although some of it is necessary to make sure the large banks have liquidity and don’t collapse). But doesn’t it make more sense to proactively get all institutions to immediately help ALL Americans with debt to get it under control instead of just writing it off? Also, this would be a huge uplift for the mortgage industry, housing industry, banking industry, and others, as refinancing is a very lucrative business and will also free up consumers’ disposable income.

A program like this would help every single American, unlike the current foreclosure plan that very, very few can even qualify for. The paper that piece of legislation was written on belongs in the bathroom. If they can backstop Freddie and Fannie with $5 trillion, why on earth wouldn’t they try to go to the root of the whole problem? Oh, did I reiterate that the government had to borrow any money from the world just to spend it?

The future doesn’t just appear to be bleak it is! While the numbers are up and down (mostly down) and despite rhetoric and pandering the country is not heading in the right direction and the “Double Dip” is coming because of the policies our leaders are implementing.  The Dip may not be as bad but we are right on the edge of the toilet already and I assure you when all the taxes, HealthCaid, Cap and Trade, financial reform and global austerity are in place Americans will get hurt and badly and this may cause a Dip to be much worse.

Instead of dealing massively with the many issues we face politicians are spending billions on media and most of their time pandering for votes to defend their shoddy consumer brands, jobs and to give the people their opinion.  There is no “Invisible Wall” as Alan Greenspan says – I can see it clearly.  It is the blind leading the blind who can’t see it.  Here are some visible and “invisible” facts:

70 percent of the US economy is consumption.  Businesses live or die by this.  We cannot tax our way out of debt – there is too much of it.  But taxes is what we are in for and logic would say that people already can’t or won’t buy enough products, goods and services to sustain any recovery and now new levies will take even more money out of their pockets.  Add to that the global pull back on debt and tax hikes and now the world can’t borrow and spend more either.  Am I just stupid or does that mean people will have less money to spend?

• Tax Hikes here and more coming.
• The Debt Commission will include increasing taxes but after the elections of course.
• Financial Reform already guarantees more taxes.  The cost will be passed right along to you and me in more fees and lending will be severely affected breaking the other leg and the backs of many Americans.
• The Bush Tax Cuts are expiring and those that make more than $250k a year will get taxed even more.  Tax the “rich” and businesses and see how much they buy and invest.   
• VAT Tax is coming too it is just a matter of when – and there you go again making more products, goods and services more expensive.
• Capital Gains going up and up.  The investment climate is bad enough and you are already taxed on your income prior to investing and God forbid you invest, take risk and make money – because you are taxed again.
• Non Profit donations will be taxed.
• Home Equity and property taxes will increase.
• HealthCAID may as well be called a massive tax hike.
• Cap and Trade will be vile and will cause fuel prices to go up for certain and many more jobs lost.
• Environmental companies will require a lot of investment to comply – let’s just call it a tax.

Shall I continue or do you get the point?  Consumers are broke already so why don’t we just tax them more.  Once again we CANNOT tax ourselves out of debt!

The 3 most impactful things we can do are a flat tax system, elimination of capital gains and government commercialization.  Get the other 50% that don’t pay taxes to pay their equal share – although even with the VAT taxes coming the lower income people will get tax credits back – so the other 50% pays even more.  Secondly, Capital Gains cheats our economy more than anything else – unleash massive investment here – get rid of it or put it on hold for several years.  Finally, instead of borrowing and using tax revenues to grow and sustain government we should take huge portions of the bureaucracy and privatize it.  This would have a dramatic impact on government revenue, the budget and a windfall of capital and investment (perhaps we can use that to pay off some of the debt as well).  The effects would be dramatic and this is the kind of massive action we need – not more failed policies based on government borrowing.

Unemployment.  Much worse in some areas than others and nationally these numbers do not represent the facts at all.  Unemployment is a record of those getting government subsidies through money borrowed and handed to them.  The people that leave the workforce, not getting benefits anymore, didn’t apply for unemployment, temporary workers (still can’t imagine we hired all these new people for the Census when we could just have the unemployed do it) and the biggie UNDER employment.

• Unemployment is an epidemic.  It will not recover all the jobs lost and even over many years it will not be back.  Many are not going to find work and their benefits have and will run out – that may make the numbers look better because they are not counted in the statistics anymore but this is a misrepresentation of the truth.
• Underemployment is a far greater number than unemployment.  Simple – to work people have had to accept lower wages than they were earning a few years ago.  This would have a massive impact on the overall employment numbers but no one includes them and a result is people have less money and that means less buying.
• Hiring will stagnate and go down.  Tax companies and us to death and wait to see how many layoffs, little or no investment to grow a workforce and a mass migration overseas.
• Overseas will be a much better place to build a business and hire workers.  We will be #2 in the world for taxes and have massive government oversight and intervention.  Companies and the affluent, that employ most Americans, will leave in droves.  Look at NJ, NY and other high tax states – an exodus of businesses and jobs.
• Cap and Trade will crush the energy sector and many companies that rely on energy to operate – so they will raise prices at the pumps and get rid of employees.

Shall I go on or do we all get the point?

These unfortunate citizens won’t be consuming and won’t be able to consumer for a long long time.  Why wouldn’t the government allow all US citizens, rich and poor, small and large businesses to consolidate all their debt this one time?  Why wouldn’t the government step in and mandate that the Credit Bureaus reduce the impact of late payments, the longevity of bankruptcy and foreclosure reporting during the recession times?  Doesn’t it make way more sense to attack Main Street with massive force and help people afford just to live and pay their bills instead of just writing it off and borrowing more money for failed stimulus programs?  I am certain the toxicity of the loans held by Freddie, Fanny, banks, The Fed and Ginnie among many others would not be as bad and people could take advantage of the ultra-low interest rates instead of bankruptcy, foreclosure, 30,60,90 + day lates on their credit.  What a huge boom that would make for the housing industry, banks, brokers and a massive injection of liquidity into American’s pockets.  If they can backstop failed Federal programs with $10 trillion plus they can step in and use the balance sheet to save our streets.  See below how bad the balance sheet is and note the backstops the government has committed to programs.  I believe pure logic says if we make all the current debt more affordable then people are more than likely to be able to repay much more than they can today and the government wouldn’t have to buy all this worthless paper and real estate.

The US Balance sheet tells us we are sunk!  We show everyone the $13 + trillion of debt and deficits far into the future.  But if GAAP accounting rules were used our balance sheet would include all the other liabilities the US has.  These are contingent liabilities – commitments of which many will have to be funded and are backed by the “FULL FAITH” of the US government.  Just remember ENRON!

$5 trillion commitment to the appalling Freddie Mac and Fannie Mae.  The Fed has committed to buy over $1.2 trillion of bad mortgages and already absorbed almost $600 billion and worse Freddie and Fannie bring $5 trillion of liabilities right to the doors step and their stock prices got them right to the Pink Sheets.
$130 trillion in unfunded liabilities.  Much of these projections and current horrifying liabilities is our money that the government has borrowed from and continues to borrow.
$4.8 Trillion commitment by the FDIC to back stop bank accounts.
$1 Trillion already committed to HealthCAID and this is going to go way way up.
$2 Trillion (appx) in new Fed liabilities.
$600 Billion + insured mortgages by Ginni Mae – owned by the government.
$600 Billion + insured by the Federal Housing Administration.
42 states going broke and will have to get a federal bailout at some point.
Declining tax revenue.

Approximate Total:  $145,800,000,000,000

Shall I go on!

The fact is credit addiction got us here and unless we attack the issue at the consumer level the programs will just keep going under water.  So I predict nothing radical will change and this mess will get much messier.

The Oil Spill will have far reaching unemployment, government bailouts, subsidies, cleanup costs, long term economic stifling and drilling bans and moratoriums among much more. This will be a large scale problem on a national basis – just more fuel costs for the fire at a minimum.  Pandering a $20 billion fund that “The President” got for us is a fallacy – BP was already setting it up – how horrifying is that trash.  Then all these trips to the Gulf all of sudden – to make up for the abysmal leadership – Do they really think we are just outright ignorant and stupid!

Global Economy.  The G-19 now face alarming debt problems.  Huge in fact!  But they are all implementing austerity measures to curb spending, increase taxes and reduce debt.  The global economy and the US economy are at odds and the credit addition that fueled the growth has run dry.  Banking reform will suck up the mud too.  The world realizes it is in big trouble yet the US stands alone in policy to borrow and borrow and spend and spend.  What will be the result of a massive pull back in worldwide borrowing to spend and increased taxes – less money for people and governments to buy stuff!  This is going to make things much worse for the global recovery and definitely bad news for America.  China is an overheated economy and is and will slow down.  China is also distancing itself from reliance on the US to buy its stuff and we will see a pull back on their buying our debt – it is a fallacy that we are so economically linked that they wouldn’t do that.  The emerging markets just will not make up the difference by a long shot.  This is going to get a lot worse and riots in Greece are just the beginning.

Up and down the food chain – manufacturing products for stores that went under or are going under for people who can’t or won’t buy will be forced into bankruptcy, downsized and purchased for pennies on the dollar.  To make sure that happens taxes will go up, consumers will have less money and financial reform will dry up their credit.  Services like Airlines, travel and tourism (The Oil Spill will devastate and is devastating many areas of the country that rely on this), restaurants, health clubs you name it.  At least I can predict that liquor and beer sales will be way up.

The long list goes on and on and on.  And what do we see?  Political pandering and billions being spent on media to cover up the terrible truth.  Obama is touring the country to help Democrats stay in power and get reelected.  More promises and promises and promises and using gaffs, negative ads, missteps and anything imaginable to get our attention far from the truth  – when is all this BS going to end.  We have a Gulf disaster, moral, social, political and economy bankruptcy from coast to coast and our leaders are just trying to get reelected instead of doing the things they were elected to do.

WHAT IS WRONG WITH US!
I SAY EVERYTHING!