Energy Efficiency

The USA likes to think they brought nothing but truth, justice and the American way; and while there were many positives, the negatives outweigh the positives big time.

Like any relationship, when the negatives out-weigh the positives, its time to call it a day; of course the family law court and other legal jurisdictions see the more vengeful side of a wronged one seeking retribution, sometimes well above what one might considered a balanced response, but be that as it may, the reality is that the American people will pay.

The neo-cons (Bush, Rumsfeld and Cheney to name just there) were all about expolitation, a more efficient team of conscious-free thieves looking to self interest and largely protected by a system that is based on taking other people’s possessions and calling them your own.

Just like the League of Nations and now United Nations, the World Bank and IMF (International Monetary Fund), all structured to rip resources from friend or foe (the former usually became the latter, which is pretty much this article).

The problem with all things is that they only can go so far before the skyward growth runs out of fuel; in this case, borrowing so heavily from the future that now that the future is here, it can’t be paid for and on top of that, the future looks like there are no new resources to plunder to maintain growth … and so we start the fall back; ohh there will be attempts to forestall payment demanded now, but the downward slide, the plunging back to solid ground is inevitable and no safe, delicate well crafted landing. Paul Farrell of MarketWatch makes some obvious predictions and we Aussies should look for similar tell-tale signs of unwellness in the corporate structure that is Australia today.

ARROYO GRANDE, Calif. Retire? You can fuggetaboutit if the new Global Debt Time Bomb is detonated by any one of 20 made-in-America trigger mechanisms; yes, 20. And yes any one can destroy your retirement because all 20 are inexorably linked, a house-of-cards, a circular firing squad destined to self-destruct, triggering the third great Wall Street meltdown of the 21st century, igniting the Great Depression II that George W. Bush, Ben Bernanke, Henry Paulson and now President Obama have simply delayed with their endless knee-jerk, debt-laden wars, stimulus bonanzas and bailouts.

Is the deficit a national-security threat ?  WSJ’s Jerry Seib previews his column in tomorrow’s Journal in which he writes the federal budget deficit has become so large, it’s time consider it a natural-security threat. Plus, the News Hub provides a February market outlook and also discusses the findings of a new autism study.

Wow, what an epic Hollywood blockbuster this will make: You know the drama, can’t miss the warnings. The financial press is flooding us with plot lines … a Forbes cover story focuses on a “Global Debt Bomb: How It Could Wreck Your Life” … Leaders at the World Economic Forum on Swiss Mt. Davos fear another global meltdown will trigger mass rebellions … The Economist calls the plot a “Global Asset Bubble,” with cheap money fast driving up asset prices.

Bloomberg BusinessWeek is adding jet fuel to the ticking time-bomb in: “After the Stimulus Binge, a Debt Hangover: Trillions of dollars have been spent keeping the global economy afloat. But now fears about the Great Recession are giving way to worries about something else: The Great Reckoning” when massive debts come due. Then the debt bomb explodes “and the results won’t be pretty for investors or elected officials.”

Forbes discovered the trigger mechanism in “This Time Is Different: Eight Centuries of Financial Folly,” by economists Carmen Reinhart and Kenneth Rogoff: The “90% ratio of government debt to GDP is a tipping point in economic growth.” For 800 years “you increase it over and beyond a high threshold, and boom!” Well guess what? “The U.S. government-debt-to-GDP ratio is 84%.” Soon, Ka-Booom! Depression. Kiss your retirement goodbye.

The financial press and economists try to navigate a fog to find a trigger, but there’s not just one, but many triggers, all linked in a lethal network. What triggers this firestorm ? Thre are 20 economic weapons of mass destruction triggering a ticking Global Debt Time Bomb

1. Federal Budget Deficit Bomb. The Bush/Cheney wars pushed America deep into a debt hole. Federal debt limit was just raised almost 100% with Obama’s 2010 budget, to $14.3 trillion vs. $7.8 trillion in 2005. The Congressional Budget Office predicts future deficits around 4% through 2020. Get it? America’s debt at 84% of GDP will soon pass that toxic 90% trigger point.  [How far has kRudd's government gone into debt after taking over with surplus ... $140 billion ?]

2. U.S. Foreign Trade Bomb. Monthly deficits actually dropped from $50 billion per month to roughly $35 billion. But the total continues climbing as $400 billion is added each year. Foreigners now own $2.5 trillion of America, with China holding over $1.3 trillion in Treasury debt.  [How much foreign currency is invested in Australia and is this why the Federal Reserve wants to keep interest rates high to ensure the $'s stay invested un Australia ?]

3. Weakening U.S. Dollar as Foreign Reserve Currency Bomb. Fear China and other currencies will replace dollar as main foreign reserves. The dollar’s fallen: The main index measuring dollar strength has gone from 120 at the Clinton-to-Bush handoff to below 80 today.  [While our $ slides in value, its more a consequence of monetary exchange rate manipulation by the Amercians than our $ being worth less, however, the higher the debt and with interest rates rising, what proportion of our GDP should go to servicing a debt that was called a stimulus package ]

4. Cheap Money Bomb: Credit Ratings Down, Rates Up. Economists at S&P, Fitch and Moody’s were totally co-conspirators of Fat Cat Bankers, misleading investors before meltdown: Soon, debt up, ratings down, interest rates soar.  [Australian banks have long told porkies about their losses and corporations effectively bleeding Aussie investors is on the rise]

5. Global Real Estate Bomb. Dubai Tower, new “world’s tallest building” is empty. BusinessWeek warns that China’s housing collapse could be worse than America’s. Plus the U.S. commercial real estate bubble is now $1.7 trillion, a “ticking time bomb” bloating 25% of bank balance sheets.  [ Australia has some of the highest priced real estate in the world and we are very primarily dependant on the sale of resources; when they run out ?]

6. Peak Oil and the Population Bomb. China and India each need 500 new cities. The United Nations estimates world population exploding 50% from 6 billion to 9 billion by 2050: Three billion more humans demanding more automobiles, exhausting more resources to feed their version of the gas-guzzling “America Dream.”   [Australia is over-populated already, yet corporations drive us closer to the cliff of food and water shortages, ably assisted by local, state and federal governments]

7. Social Security Bomb. We have no choice; eventually we must either cut benefits or raise taxes. Politicians hate both, so they’ll do nothing. Delays worsen solutions. Without action, by 2035 Social Security and Medicare benefits will eat up the entire federal budget other than defense.  [As the aging population depends on social security payments - paid for over the last 50 years and squandered by successive governments - and super funds record successive losses not only in negative returns but lost capital]

8. Medicare: A Nuclear Bomb. Going broke faster than Social Security. Prescription drug benefit added an unfunded $8.1 trillion. In 5 years estimates rose from about $35 trillion to over $60 trillion now.  [The medical system - that Rudd said he would take over - is in melt-down, with administration staff outnumbering doctors and nurses]

9. Health-care Insurance Bomb. Burden increasingly shifted to employees. Costs rising faster than inflation. Recent Obamacare plan would have cost $90 billion annually, paid to Big Pharma and insurers.  [Private health funds are increasing their rates, forcing many back under the medicare system]

10. State and Local Government Budget Bombs. Deficits of $110 billion in 2010, $178 billion in 2011on top of more that $450 billion in underfunded state and municipal employee pension funds.  [Each State or Territory in Australia is in financial trouble and mismanagement is rife]

11. Underfunded Corporate Pensions Bomb. From $60 billion surplus in 2007 to $409 billion deficit in 2009. And a whopping 92% of the pension plans of companies are now underfunded. Defaults are guaranteed by taxpayers.

12. Consumer Debt Bomb. Americans are still living beyond their means. Even with a downturn, consumer debt rose from about $2.3 to $2.5 trillion. Fat Cat Bankers love it — yes love making matters worse by gouging cardholders and mortgagees, blocking help in foreclosures and bankruptcies.  [Australians owe more money than even the average American, so our time will likewsie come]

13. Personal Savings Bomb. Before the 2008 meltdown savings rate dropped from about 10% in the early 1980s to below zero. Now it’s increasing, slowing retail recovery. Today, government’s the big “unsaver.”  [Seccessive federal governments have penalised savers for so long in Australia - even taxing Super contributions - that saving is a rarety in OZ]

14. War and Military Defense Deficits. Costs of Iraq and Afghanistan wars — $200+ billion annually, $3 trillion minimum, with massive long-term costs for veteran medical care, equipment renewal, recruitment.  [Barnaby Joyce was right in asking why we send money overseas instead of looking after our own; but then again it was the LNP that sent our troops to Iraq on a false war and Afganstan and other trouble spots]

15. Homeland Insecurity Bomb. Security at airports, seaports, borders, vulnerable chemical plants all increase budgets. [The growing refugee situation is world-wide, so its only natural more people will wnat to life herem as we boast how great it is here]

16. Fed/Treasury Bailout Bombs. Tax credits, loans, cash and purchase of toxic assets from Wall Street banks estimated at $23.7 trillion as new debt was shifted from too-big-to-fail Fat-Cat banks to taxpayers. [Guaranteeing Australian banks just meant protecting them from their bad business decisions]

17. Insatiable Washington Lobbyists Bombs. Paulson, Goldman, Geithner, Morgan and Wall Street banks, through their lobbyists and former employees working inside now have absolute power over government spending. Democracy and voters are now irrelevant in America’s new corporate-socialism.  [Corporate government is likewise well entrenched in Australia]

18. Shadow Banking: The Derivatives Bomb. Wall Street wants no regulation of this $670 trillion, high-risk, out-of-control casino that’s highly leveraged versus the $50 trillion total GDP of all nations. We forget that derivatives almost destroyed global economies in 2008-09, finally will by 2012.

19. Dysfunctional Two-Party Political Bomb. Polarized partisanship increasing: Every day both parties show zero interest in cooperating for the public good. Instead they fight viciously, resisting everything and anything proposed by opponents. Only goal: Score political points, make the other side look bad. [Australian politicians, are you paying attention ?]

20. The Coming Populous Rebellion Bombs. Nobody trusts anyone in authority. For good reason. So immediate gratification, short-term betting and a lack of long-term perspective wins for individual investors, consumers and taxpayers as well as Washington, Wall Street and Corporate America CEOs. Today: “Doing what’s right for the common good and country” is just empty political rhetoric.  [Crime is rising in Australia as people can't take ot anymore; the bombing of TIO is a sign of things to come, where the system will not help the individual because the association betwixt government and corporation is too inter-twined ]

As the chorus of the Beatles tune: “Head in a cloud … The fool on the hill, sees the sun going down … a thousand voices talking perfectly loud. But nobody ever hears him, or the sound he appears to make … And the eyes in his head, see the world spinning round …’

Historians and behavioral economists tell us most investors are blind optimists. Investors cannot see bubbles from inside their bubble. Nor Fat Cat Bankers from inside their mega-bonus-bubble. Nor politicians from inside the beltway bubble.  Why? The optimist’s brain filters out bad news. They know their dreams of prosperity will come true. Then, when they finally do see that the proverbial light at the end of the tunnel is an oncoming train, it’s always too late.

The Great Depression is coming soon and yet, your mental filters are working, blocking warnings of a bomb…