Going for broke

Standard and Poor’s threat to downgrade U.S. government debt isn’t so much a warning about what might happen as it is a confirmation of what has already happened. After all, the bond rating agencies haven’t exactly been oracles of insight when it comes to financial disasters, else the meltdown of 2008 would have been avoided.

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What’s of interest here is that the ratings agencies are finally noticing that the U.S. government’s spending habits are recklessly unsustainable. With Obama still talking about “the failed policies of the previous administration,” there is a serious question as to whether or not his policies are any better.

Obama’s deficit during his first two years in office exceeds the total of all deficits left by eight years of Bush

Consider that in the month of February of this year the Obama deficit was just over $223 billion, which is about $62 billion MORE than the entire fiscal 2007 deficit under Bush. In point of fact, Obama’s deficit during his first two years in office exceeds the total of all deficits left by eight years of Bush. This is not to excuse Bush’s mishandling of the economy. It’s a moot point undeserving of an argument. But to attempt to “fix” Bush’s bungling by even greater bungling would be downright comical, were it not so costly. There is little doubt that under Obama and his economic brain trust the United States will face a second Great Depression. Considering that the current sum total of debt and unfunded commitments at all levels of government in the U.S. stands at approximately $770,000 for every man, woman and child in the nation, it’s a foregone conclusion that this money will never be repaid. Hence at some point the U.S. will go into default.

Declining Dollar, Rising Gold Prices

Equally frightening is the fact that the Greenback is the world reserve currency, which for which oil and other commodities are paid. While the administration would have us believe that the current high prices for crude are the result of oil shortages and “uncertainty” in the Middle East, it’s much more likely that the price increases are a direct result of the dollar’s declining value. A few months ago when the price of gold was still in the $1200/oz range, financial advisers were urging their clients not to buy more gold, as the gold bubble was about to burst. Yesterday gold hit an all-time high of $1500/oz, a full 25% increase and analysts are predicting more than $1600/oz in the short term. There are few investments paying that kind of dividend and thanks to the U.S. dollar’s tanking gold will continue to increase. It’s almost inconceivable that anyone in Washington is actually fighting spending cuts, given the clear direction in which the country is headed. Is it possible that the nation’s politicians, both Democrats and Republicans are so addicted to spending that they can’t see the looming disaster? Or is it a concerted effort to bankrupt the country? I know it sounds like the paranoid musings from the lunatic fringe, but one can’t help but wonder, given the clear evidence that all the bail-outs and TARP expenditures have accomplished exactly nothing. Inflation is now in excess of 3% per annum while the U.S. economy is languishing at a less than 1.4% growth rate, clearly not even keeping pace with inflation. The end result will be a lot more poor people at the end of the Obama presidency than at the beginning. Let’s hope Obama doesn’t get another four years. Four more years of Obama is simply something the country could never survive.