Astonishing Incongruities
Is It Time to Bail Out of
the US?
By Paul Craig Roberts
http://www.informationclearinghouse.info/article21867.htm
January 28,
2009 "Information Clearinghouse" --
California State Controller John Chiang announced on
January 26 that California’s bills exceed its tax revenues and
credit line and that the state is going to print its own money
known as IOUs. The template is already designed.
Instead of receiving their state tax refunds in dollars, California
residents will receive IOUs. Student aid and payments to disabled
and needy will also come in the form of IOUs. California is
negotiating with banks to get them to accept the IOUs as
deposits.
California is often identified as the world’s eighth largest
economy, and it is broke.
A person might think that California’s plight would introduce some
realism into Washington, DC, but it has not. President Obama is
taking steps to intensify the war in Afghanistan and, perhaps, to
expand it to Pakistan.
Obama has retained the Republican warmongers in the Pentagon, and
the US continues to illegally bomb Pakistan and to murder its
civilians. At the World Economic Forum at Davos this week,
Pakistan’s prime minister, Y. R. Gilani, said that the American
attacks on Pakistan are counterproductive and done without
Pakistan’s permission. In an interview with CNN, Gilani said: “I
want to put on record that we do not have any agreement between the
government of the United States and the government of
Pakistan.”
How long before Washington will be printing money?
On January 28 Obama announced his $825 billion bailout plan. This
comes on top of President Bush’s $700 billion bailout of just a few
months ago.
Obama says his plan will be more transparent than Bush’s and will
do more good for the economy.
As large as the bailouts are--a total of $1.5 trillion in four
months--the amount is small in relation to the reported size of
troubled assets that are in the tens of trillions of dollars. How
do we know that by June there won’t be another bailout, say $950
billion?
Where will the money come from?
Obama’s bailout plan, added to the FY 2009 budget deficit he has
inherited from Bush, opens a gaping expenditure hole of about $3
trillion.
Who is going to purchase $3 trillion of US Treasury
bonds?
Not the US consumer. The consumer is out of work and out of
money. Private sector credit market debt is 174% of GDP. The
personal savings rate is 2 percent. Ten percent of households are
in foreclosure or arrears. Household debt-service ratio is at an
all-time high. Household net worth has declined at a record rate.
Housing inventories are at record highs.
Not America’s foreign creditors. At best, the Chinese, Japanese,
and Saudis can recycle their trade surpluses with the US into
Treasury bonds, but the combined surplus does not approach the size
of the US budget deficit.
Perhaps another drop in the stock market will drive Americans’
remaining wealth into “safe” US Treasury bonds.
If not, there’s only the printing press.
The printing press would turn a deflationary depression into an
inflationary depression.
Unemployment combined with rising prices would be a killer.
Inflation would kill the dollar as well, leaving the US unable to
pay for its imports.
All the Obama regime sees is a “credit problem.” But the crisis
goes far beyond banks’ bad investments. The United States is
busted. Many of the state governments are busted. Homeowners are
busted. Consumers are busted. Jobs are busted. Companies are
busted.
And Obama thinks he has the money to fight wars in Afghanistan and
Pakistan.
Except for the superrich and those banksters and CEOs who stole
wealth from investors and shareholders, Americans have suffered
enormous losses in wealth and income.
The stock market decline has destroyed about 45% of their IRAs,
401Ks, and other equity investments. On top of this comes the
decline in home prices, lost jobs and health care, lost customers.
The realized gains in mutual funds and investment partnerships, on
which Americans paid taxes, have been wiped out.
The government should give those taxes back.
Americans who have seen their retirement savings devastated by
complicity of government regulators and lawmakers with financial
gangsters should not have to pay
any income tax when they draw on their pensions.
The financial damage inflicted on Americans by their own government
is as great as would be expected from foreign conquest. While
Washington “protected” us from terrorists by fighting pointless
wars abroad, the US economy collapsed.
How can President Obama even think about fighting wars half way
around the world while California cannot pay its bills, while
Americans are being turned out of their homes, while, as Business
Week reports, retirees will work throughout their retirement (which
assumes that there will be jobs), while careers are being destroyed
and stores and factories shuttered.
Americans are facing tremendous unemployment and hardship. Obama
doesn’t have another dollar to spend on Bush’s wars.
Taxpayers are busted. They cannot stand another day of being milked
by the military-security complex. The US government is paying
private mercenaries more by the day than the monthly checks it is
providing to Social Security retirees.
This is insanity.
The banksters robbed us twice. First it was our home and
stock values. Then the government rewarded the banksters for their
misdeeds by bailing out the banksters, not their victims, and
putting the cost on the taxpayers’ books.
The government has also robbed the taxpayers of $3 trillion
dollars to fight its wars. About $600 billion are out of pocket
costs, and the rest is on the taxpayers’ books.
When foreign creditors look at the debt piled on the taxpayers’
books, they don’t see a good credit risk.
Washington is so accustomed to ripping off the taxpayers for the
benefit of special interests that the practice is now in the DNA.
While bailouts are being piled upon bailouts, wars are being piled
upon wars.
Before Obama gets in any deeper, he must ask his economic team
where the money is coming from. When he finds out, he needs to tell
the rest of us.