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.