Japan shows how to defuse debt time-bomb

Ellen Brown
Asia Times

"Threatening to default should not be a partisan issue. In view of all the hazards it entails, one wonders why any responsible person would even flirt with the idea." -- Alan S Blinder, Princeton professor of economics, former vice chairman of the Federal Reserve.

A game of Russian roulette is being played with the national debt ceiling. Fire the wrong chamber of the gun, and the result could be the second Great Depression.

Social Security, Medicare burning through funds

A health care activist
© AFP/Getty Images/File Chris Hondros

AFP

WASHINGTON (AFP) - The United States is burning through its health care and retirement fund pools faster than planned, with the Medicare trust fund to be exhausted by 2024, five years earlier than expected, officials said Friday.

A combination of higher costs and lower-than-expected revenues has worsened the outlook for Medicare as well as for Social Security, which will use up its huge trust fund in 2036, one year earlier than was projected last year, plan trustees said in their annual reports.

They emphasized that the forecasts point to dates when the level of payouts to beneficiaries to match incoming funds -- mostly payroll deductions and investment earnings -- will have to be reduced.

Medicare, which offers health care to retired and disabled Americans, would only be able to offset 90 percent of the costs of care, while Social Security would pay out only 75 percent of scheduled benefits, after the respective dates.

The Medicare report stressed that the program had gained a "sizable improvement" in its financial outlook due to the controversial Affordable Care Act of the administration of President Barack Obama.

US Debt Rating Should Be 'C': Independent Agency

CNBC

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U.S. Debt Jumped $72 Billion Same Day U.S. House Voted to Cut Spending $6 Billion

National Debt Clock/Wiki Commons image

Terrence P. Jeffrey
CNS News

The national debt jumped by $72 billion on Tuesday even as the Republican-led U.S. House of Representatives passed a continuing resolution to fund the government for just three weeks that will cut $6 billion from government spending.

If Congress were to cut $6 billion every three weeks for the next 36 weeks, it would manage to save between now and late November as much money as the Treasury added to the nation’s net debt during just the business hours of Tuesday, March 15.

At the close of business on Monday, according to the Treasury Department’s Bureau of the Public Debt, the total national debt stood at $14.166 trillion ($14,166,030,787,779.80). At the close of business Tuesday, the debt stood at $14.237 trillion ($14,237,952,276,898.69), an increase of $71.9 billion ($71,921,489,118.89).

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Collapse Coming: Budget Cuts Will Only Speed It Up

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Another Economic 'Martial Law in the Streets' Moment Approaches

Eric Blair
Activist Post

In the fall of 2008, during the lead up to the TARP bailout of the financial industry, Treasury Secretary Henry Paulson warned members of Congress that there will be Martial Law in America should they fail to pass the multi-trillion dollar looting of the taxpayer.

Well, despite the American public being overwhelmingly against the bailout, the blackmail worked and the banks got their money. If it worked once, why not try it again?

With the economy no better off for having borrowed trillions to "stabilize" criminal financial institutions, the national debt ceiling is rapidly approaching.  As some Republicans begin to float the notion of blocking this extension of credit, the Treasury Department, Democrats in Congress, and Ben Bernanke issued apocalyptic warnings clearly showing how pathetically fragile the U.S. economy is.

These threats, reminiscent of Paulson's 2008 ransom demands, once again appear to be offering two black-and-white choices: Armageddon or more debt.  The coordinated pitch for higher debt levels is echoing the same urgency as the TARP looting, as Treasury Secretary Geithner said the government is insolvent and will run out of money in about two months' time unless Congress votes to raise the federal debt ceiling.


The AFP reported Thursday that Senate Democrats warned that the government would "shut down" if the debt ceiling was not raised.  Chuck Schumer (D-NY) explained what that would mean if a shutdown were to occur: "citizens couldn't get their checks, veterans couldn't get their benefits, military payments would stop."

Ben Bernanke doubled down on the debt-fear campaign in a rare press conference where he said, "Beyond a certain point . . . the United States would be forced into a position of defaulting on its debt. And the implications of that on our financial system, our fiscal policy and our economy would be catastrophic."

Fiscal conservatives who oppose raising the debt ceiling say it is just delaying necessary belt-tightening and massive spending cuts, and say that raising the debt ceiling further only forestalls needed austerity moves to avoid a more catastrophic collapse in the future. House Republicans presented a plan to cut $32 billion from the budget, which is laughable given the impossible-to-pay-off debt levels.

The U.S. national debt is approaching the ceiling of $14.29 trillion; unfunded liabilities like Social Security and Medicare are estimated to be around $100 trillion; and the total cost of stabilizing the financial industry is reportedly upwards of $23.7 trillion.  And these numbers say nothing of the fraudulent $600-trillion derivatives scam. No amount of tax increases, spending cuts, or economic growth will be sufficient to satisfy this equation.

The notion that America can somehow pull itself out of this mess if average citizens, who had no part in creating the national debt, would only "tighten their belts," seems preposterous.

None of the options are exactly attractive to the already over-burdened taxpayer. Indeed, the people are being given a lose-lose-lose scenario: 1) the status quo of slow economic demolition through raising the debt ceiling; 2) crippling austerity cuts and public asset looting; or, 3) catastrophic collapse.

Although the banks and their pocket-change politicians describe market conditions that would result in a collapse should the ceiling not be raised, it seems obvious that the only power capable of drastically changing economic conditions are the banks themselves.  Therefore, market conditions appear to be an increasingly insignificant part of a bigger illusion.

As if the sun would not rise if a piece of legislation was not passed, the gun-to-the-head urgency will likely result in raising the debt ceiling.  If the level of resistance comes close to the near unanimous public disgust over the TARP bill, you can bet we'll hear new warnings of "martial law in the streets" in order to keep the illusion in tact.  If for some reason collapse is unavoidable, the U.S. military is actively war gaming "large scale economic breakdown" and "civil unrest" should they choose otherwise.

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US could reach debt limit by April 15: Treasury

US Treasury © AFP/File Karen Bleier

AFP

WASHINGTON (AFP) - The United States is likely to hit its $14.29 trillion debt limit a little later than expected, the US Treasury said Tuesday, as lawmakers worked to avert a government shutdown.

"The Treasury Department now estimates that the United States will reach the debt limit between April 15, 2011, and May 31, 2011," senior Treasury official Mary Miller said.

If the ceiling is not raised, the United States would only have weeks before it runs out of cash to pay its bills, according to government estimates.

The Treasury had expected to run up against the ceiling between April 5 and May 31.


The warning came as US lawmakers, battling over how to slash spending, eyed a stopgap measure to avert a government shutdown.

Although the issues of extending the debt ceiling and keeping the government funded are not linked, they have become enmeshed thanks to Washington's political deal making.

President Barack Obama's Republican foes have tied raising the debt limit to fierce spending cuts, which are seen as too extreme by many Democrats.

The debt ceiling became a hot-button issue after Republicans took control of the US House of Representatives in early January, leaving Obama's Democrats only in control of the Senate.



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Engineered Economic Collapse Approaching; Budget Cuts Will Only Accelerate the Inevitable

Eric Blair
Activist Post

Ron Paul constantly reminds us that money is created out of thin air, which is to say it's an illusion. Therefore, the debt must be an illusion too, correct? Yet, fiscal conservatives still use the debt as a tool of fear to make budget cuts that they selectively deem expendable.

Sure, they may think these cuts make them look "responsible," but ultimately it is still collectivism -- just more on their terms.  Make no mistake; budget cuts in our corrupt systems are just another form of wealth redistribution. After all, that money is being eliminated to pay off the debt, right? Thus, that money is removed from programs that employ people to pay off the issuers of credit (banks).

Additionally, the costs of the national debt, bank bailouts, war costs, and unfunded liabilities are fundamentally impossible to pay off.  So, the notion that cutting a "historical" $100 billion will have any positive affect on the long-term economy is absolute fiction.  And although many conservative lawmakers feel like it's the right thing to do, they know it will have no measurable affect on the debt. It's a scam, and if the history of modern lawmaking is any indicator, the establishment will surely stick it to the poor and middle classes with these cuts while the oligarchs continue to flourish.


Don't get me wrong; I am in full agreement with the philosophy of less government across the board. The fact that taxpayer funded subsidies, earmarks, foreign aid, and most domestic spending warps the free market is undeniable. In turn, this collectivized system has become so entrenched that determining genuine price discovery of anything is nearly impossible. This lack of price discovery deters private investment into the economy, which leaves the state as the primary economic driver.

When an economy is fundamentally bankrupt and no longer has a competitive productive capacity, government spending is the only thing propping up the economy.  However doomed the system may be, government spending does indeed represent jobs.  For example, even the flabby-assed NSA peon who is monitoring Internet activists all day still eats lunch, gets his lawn mowed, paints his house, raises a family, etc.  In other words, his needless job creates other jobs and supports other economic activity in the matrix.  So, if you cut his position, which I fully support doing, you bring economic hardship on him and the countless people his income contributes to.  This is simply a fact, and if the lost job isn't replaced in the private sector the economy will further contract.

Therefore, sadly, the debate about what to cut and what not to cut doesn't really matter. The controlled demolition of the economy will persist.  Since the U.S. is undoubtedly facing economic decline, and perhaps even a dramatic collapse, the private sector is unlikely to pick up the slack created by any public spending cuts.  And if there is one steadfast indicator, or instigator, of all recessions and depressions, it's that the available money supply in the economy shrinks.

Yes, despite the cranked-up printing presses at the Fed, the real money supply in America is shrinking to levels not seen since the Great Depression, leading some conservatives to call it "frightening." And it will continue to shrink even more with these proposed budget cuts.  It appears that most of the money printing is just being absorbed by the fraudulent financial system itself, and while the Fed's balance sheet continues to grow, inflation drives the price of essential goods like food and energy higher and higher.  In other words, inflation hits main street where it hurts at a time when main street has less dollars to spend.  It's the ultimate pinch.

Inversely, the budget cuts may indeed spur some short-term dollar strengthening in the matrix as the international banks will likely hype them as responsible governing.  This may cause dollar-based commodities to decline in price, which may temporarily simmer the outrage over record prices for food and other spiking commodities. However, this manufactured bliss for the dollar will be short-lived, as, again, the endless debt is not going away -- at least not until total default occurs.

Unfortunately, it seems that a return to a true free-market economy with sound money and limited government is only possible pending the total collapse of the current system. Perhaps free-market fiscal conservatives believe they can pragmatically chip away at entrenched collectivism of the State by incrementally de-funding the system. However, it would seem to only accelerate the slow demolition approach, and it definitely won't prevent the catastrophic debt-induced meltdown that America is headed for. What's more, budget cuts don't address the monopolistic control big business has over all industries.  Therefore, it appears unlikely that genuine free markets will manifest even after the money-illusion collapses so long as the global cartels control the real resources.

As much as I would like to believe these budget cuts will somehow erode the corporate collectivist state, it appears they will only cause more suffering to a good many people who had nothing to do with creating the suffocating national debt. In addition, the economic injustice in the recent past has been too great to believe those seeking these cuts have the people's interest at heart. Ultimately, I fear that the painful fallout will be used to discredit advocates for small government, and global corporate Statism will sprint to the endgame unchallenged.

Watch video below for an interesting perspective the national debt and collapse of the State:

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The Great Global Debt Prison

Dees illustration

Giordano Bruno
Neithercorp Press

Tense and terrible times inevitably summon an odd coupling of two very different and difficult human conditions; honesty, and brutality. Certain painful truths are revealed, and often, a palpable fury erupts. Being that times today are particularly tense, and on the verge of being spectacularly terrible, perhaps we should embrace both conditions in a constructive manner, and become brutally honest with ourselves. This begins by admitting to that which most ails us. It begins by admitting how far we have fallen…

Our economy, our culture, our entire world, is built upon debt. No one ever asked us if that’s how we wanted it, it is simply how the system was designed when we came into it. Many of us have lived our entire lives under the assumption that debt is a necessary function of daily commerce and a valuable driver of successful society. Most households in America operate at a steep loss, trapped in constantly building cycles of liability and interest. There are even widely held schools of economic thought that are centered completely on the production and utilization of nothing but debt. Only recently have many people begun to ask themselves what the tangible benefits are (if any) in being dependent on debt based finance.

After careful examination, it becomes evident that debt does not fuel economy, it suffocates it. It does not nurture growth, it stunts and poisons it. Extreme debt is not a fundamental organ in a body of commerce; it is an aberration, a spreading cancer which disrupts the circulation of healthy trade. Debt is, in large part, unnecessary.

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The Debt is NOT Yours, Let the Slavemasters Default

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The National Debt is NOT Ours, Let the Slave Masters Default (VIDEO)

Freedomain Radio

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10 Re-Solutions for Non-violent Rebellion

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U.S. fiscal health worse than Europe's: China adviser

AFP image

Reuters

The U.S. dollar will be a safe investment for the next six to 12 months because global markets are focused on the euro zone's troubles but America's fiscal health is worse than Europe's, an adviser to the Chinese central bank said on Wednesday.

Li Daokui, an academic member of the central bank's monetary policy committee, said that U.S. bond prices and the dollar would fall when the European economic situation stabilized.

"For now, market attention is still on Europe and for the coming 6-12 months, it will not shift to the United States," Li said, when asked about U.S. President Barack Obama's plan to extend tax cuts for all Americans.

"But we should be clear in our minds that the fiscal situation in the United States is much worse than in Europe. In one or two years, when the European debt situation stabilizes, attention of financial markets will definitely shift to the United States. At that time, U.S. Treasury bonds and the dollar will experience considerable declines."

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Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World

The Economic Collapse Blog

Do you want to see something truly frightening?  Just check out the 3 charts posted further down in this article.  These charts prove that we are now in the biggest debt bubble in the history of the world.  As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none.  But that is not even close to accurate.  The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world.  Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us.  So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal.

We have been robbing future generations blind for so long that it doesn't even seem to bother most people anymore.  We have become accustomed to living in debt.  We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.


Just check out the chart posted below.  It shows the total credit market debt owed in the United States.  In other words, it is a measure of what everyone owes (government, businesses and consumers).

30 years ago, total credit market debt owed was less than 5 trillion dollars.  Today, it is over 50 trillion dollars.  Total credit market debt is now at a level equivalent to about 360 percent of GDP.  This is what has been fueling the great era of "economic prosperity" that we have been experiencing....   

So what is the answer to this problem? 

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The Television Commercial About The National Debt That Is Being Banned By Major Networks (VIDEO)

The American Dream

A new television ad about the U.S. national debt produced by Citizens Against Government Waste has been deemed "too controversial" by major networks including ABC, A&E and The History Channel and will not be shown on those channels. The commercial is a homage to a 1986 ad that was entitled "The Deficit Trials" that was also banned by the major networks.  Apparently telling the truth about the national debt is a little too "hot" for the major networks to handle.  But perhaps it is time to tell the American people the truth.  In 1986, the U.S. national debt was around 2 trillion dollars.  Today, it is rapidly approaching 14 trillion dollars. The American Dream is being ripped apart right in front of our eyes, but apparently some of the major networks don't want the American people to really understand what is going on.


The truth is that the ad does not even have anything in it that should be offensive. The commercial is set in the year 2030, and the main character is a Chinese professor that is seen lecturing his students on the fall of great empires. As images of the United States are shown on a screen behind him, the Chinese professor tells his students the following about the behavior of great empires: "They all make the same mistakes. Turning their backs on the principles that made them great. America tried to spend and tax itself out of a great recession. Enormous so-called "stimulus" spending, massive changes to health care, government takeover of private industries, and crushing debt."

Perhaps it is what the Chinese Professor says next that is alarming the big television networks: "Of course, we owned most of their debt, so now they work for us".

So is this television commercial offensive? Watch it below and decide for yourself....


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Nouriel Roubini: U.S. On Track For A 'Fiscal Train Wreck'

Roubini - CFR

Reuters

The U.S. economy is a "fiscal train wreck" waiting to happen that risks ushering in a period of stagnation featuring by minimal growth, high unemployment and deflationary pressure, U.S. economist Nouriel Roubini wrote on Friday.

In a commentary for the Financial Times, Roubini -- one of the first economists to predict the housing crash in the United States and known as 'Dr Doom' for his pessimistic forecasts -- said fiscal and monetary stimulus had prevented another depression.

But he said that further quantitative easing likely to be announced by the Federal Reserve next Wednesday will have little effect on U.S. growth in 2011, "so fiscal policy should be doing some of the lifting to prevent a double dip recession," he said.


He said the U.S. remains on an "unsustainable fiscal course" and the likely make-up of Congress after elections next Tuesday, in which the Republicans look set for strong gains, virtually takes fiscal reform off the agenda.

"The risk ... is that something on the fiscal side will snap ... The trigger could be a debt rollover crisis in a major U.S. state government," he wrote.

"The worst of the coming fiscal train wreck will be prevented by the Fed's easing. But the risk is (Obama) ... will then preside over ... a Japanese style stagnation, where growth is barely positive, and deflationary pressures and high unemployment linger."

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Economists Say US Must Prepare for "Savage Austerity"

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Howard Davies, chairman of the London School of Economics, and Willem Buiter, chief economist at Citigroup Inc., talk about the potential impact of additional quantitative easing by the Federal Reserve on the U.S. economy. Davies and Buiter say "Savage Austerity" coming to America as they talk with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)


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S&P: 60% of countries will be bankrupt within 50 years

Predicts US will have a debt of 415% of GDP by 2050

Daniel Tencer
Raw Story

Some sixty percent of the world's economies will be so in debt by 2060 that their debt will be downgraded to "junk" status, effectively bankrupting the countries, says a report from Standard & Poor's ratings agency, which also warns that attempts to deal with the problem could cause social instability.

The report (PDF) -- entitled Global Aging 2010: An Irreversible Truth -- says that the proportion of the world's population that is elderly is set to explode to such a degree that many countries will simply not be able to keep up with the ballooning costs of health care and other services.

As elderly people live longer, due to better health care, the proportion of elderly to the rest of the population grows, meaning an ever shrinking proportion of working people is relied upon to fund services for the elderly.

But the report warns that efforts to scale back the costs of government services could "severely test social cohesion." And the authors admit that public opinion, in general, is unfavorable to cutbacks in social services.

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America Plunges To Bankruptcy While DC Plays Politics as Usual

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