As Treasury Secretary Tim Geithner outlined his broad principles for regulatory reform, which included government takeover and divestiture of private firms that posed a "systemic risk" to the economy, I started counting up all the private firms that posed a systemic risk in the current financial crisis. I came up with one – AIG. The only other systemic risk sized outfit I could think of was Fannie Mae, formerly a quasi-government firm, now completely a government firm. Fannie Mae bundled and securitized half the mortgage loans in the country, which included the lion's share of the subprime mortgages that melted down and are now referred to as "toxic assets."
What do you think the chances are that Fannie Mae will be broken up and divested ? Because it is a government entity, I would say the chances of that happening are near zero. I'm also waiting to hear when subprime mortgages are going to be outlawed so this won't happen again. I haven't heard a peep from the government about that either.
This brings me to the one entity that poses the greatest systemic risk to the economy by far – the federal government itself. There are plenty of alarm bells going off regarding the danger posed by this entity known as the federal government. It is $11 trillion in debt, and the debt is projected to soon double and triple, as Obamanomics parts ways with fiscal sanity. The federal government is printing money out of thin air to cover up it's state of complete bankruptcy. And it's growing by leaps and bounds, consuming an ever larger portion of our GDP. The systemic risk associated with the federal government makes the systemic risk associated with AIG look like child's play. I think we better tear up our contracts with the federal government, divest it, and sell off the pieces to recoup some of our losses. It's far past time for us to admit that the federal government has been a miserable failure, and it's only getting miserabler and miserabler. The federal government also needs to be heavily regulated. It is way out of control. We used to have a regulatory framework to oversee government, to reign in it's excesses. It was called the Constitution Of The United States, but the regulators of the government (the people) haven't done their jobs. We the people have been much like the Securities And Exchange Commission. The rules were there, we just didn't enforce them. As a result, the federal government runs around acting like Bernie Madoff, stealing our money and running crazy Ponzi schemes.
Mentioning Ponzi schemes reminds me of one particular government entity (of many) that is posing a systemic risk to our economy – the Social Security Administration. Most people know that SS, the biggest Ponzi scheme ever devised, is on the road to bankruptcy. What most people don't know is that the current recession has brought the day of reckoning for SS much closer. It may even go into the red THIS YEAR. SS revenue is decreasing as unemployment is increasing, and as more people are taking disability and early retirement. Watch the following video:
Only Democrats pretend not to know that SS is just a hidden income tax. When SS payroll tax revenue flows into the federal government, current retirees are paid from those funds. What is left over goes into the general fund and is spent (bye, bye trust fund). IOU's in the form of Treasury Bonds are written back to the imaginary "trust fund." That's what makes SS a Ponzi scheme. Due to the recession, there is much less revenue left over after the retirees are paid. When the revenue can't keep pace with the payouts, SS is in the red. We're almost there.
If you watched the video, you heard the announcer and somebody named Barbara Kennelly claim that there is $2.5 trillion in the SS "trust fund," enough to pay retirees FOR YEARS. Kennelly's comments in the video were pure Bernie Madoff-type rubbish. It was the biggest bunch of voodoo economic baloney you will ever hear. There is NOTHING in the "trust fund" except those bonds (the IOU's). To redeem those bonds, the government would have to CREATE $2.5 trillion out of thin air, drastically devaluing the dollar, or it would have to borrow another $2.5 trillion and add it to the deficit. Either way, future taxpayers will have to pay for the "trust fund" all over again (after they already paid for the trust fund the first time and Congress spent/stole the money). The taxpayers will be subject to endless bailouts of SS (we've already had about 20 of these SS bailouts, in the form of tax increases and/or benefit cuts). In order to believe there is $2.5 trillion in the SS trust fund, you have to literally believe you can spend money and save money at the same time, an impossibility.
SS is but one example of the substantial systemic risk our federal government is posing to our economy. There are lots more examples, but I only have so much space.
{ 11 comments… read them below or add one }
. Thanks to the Da King for all you do to keep the rest of us informed. Social Security has become welfare and most of us don’t even know it. I’m a small landlord working in Akron's inner city. I provide safe, clean affordable housing for my tenants. Most of my apartments rent for around $450, not much money. I require an income of three times the rent which I’m having trouble enforcing. Over the years I have watched as the quality and income of my tenants has changed. About fifteen years ago, just after all the hoopla about welfare reform, I recognized a trend. Grandmothers were taking in there children's children. The children's children were collecting Social Security which the Grandparent was using for income to support them all. These were young children under 10 years old collecting Social Security. It’s still going on and becoming more prevalent. Now I’m getting tenant applicants in their 20’s collecting Social Security disability benefits. They drive their car to the apartment, walk to the door, and stand during the entire interview. Now I know I can be pretty hard nosed about some things and uncompassionate and even flat out red necked and old fashioned. But for God’s sake and for the sake of all of this country my children and their children can anyone else see a problem here? Where is the disabilty? These people are content to live on $676. per month plus food stamps and help from HEEP for their utilities for the rest of their lives. The other day I had an appointment with a tenant prospect that had walked almost a mile to see an apartment I know because I drove them back to their current apartment. I was told by them that the man was collecting Social Security disability benefits the woman was not. They walked almost a mile to the apartment to see it. The woman told me “we don’t work and we aren’t looking for a job” our income is from Social Security. She was telling me that this meager income of 600 plus dollars a month was all they were going to have and she wasn’t going to try to do anything about it. They were in their mid 30’s. I’m frustrated, confused, I don’t understand how anyone can be content to live in poverty and not have any motivation to “work”out of it. I just don’t get it. What have we allowed our Government to create here? Why do we continue to allow it? This problem is HUGE. Call me anti-government, call me a terrorist, call me what ever you like, but this isn’t what America should be, a welfare state without the will to succeed.
I work in social services & this is sadly the mindset of the population I work with. It is learned helplessness and feed by the very services that are hawked to be necessary & helpful.
Time we do something instead of just complaining & reinforcing each other about how awful it is.
Not sure if I can post a link here, but we sure could use some press about the CLE tea party. Just go north on 77 on 4/15/09 between 4-6. Public square is a fitting venue to our voices to be heard!
http://clevelandteaparty.webs.com/
I'll be there, blue.
I mentioned the Cleveland Tea Party a few posts back myself. I'll bring it up here some more before April 15th. I thank you again for providing the link to the Patriotic Resistance. It's good to know there are people out there who want to stop this insanity.
concerned,
What you and blue describe is a very sad situation. I know many people in Akron who live exactly as you said. They have figured out a way to do nothing or as little as humanly possible by having the government provide a meager living for them. And it's getting worse. Nearly half of all Americans depend on the government in some way now for their survival.
I'm sorry…..but you guys are seriously off the tracks on this moronic Tea Party stuff.
I went to blue's link…..and seriously now, you guys have lost your minds here.
Obama is LOWERING taxes for 95% of working Americans. So this misguided Tea Party must only be about the richest 5% who simply can't endure paying 4% more of their income in 2 more years.
Why would any, you know, average joe without the last name plumber, want to join a protest for the richest 5% of Americans?
Makes absolutely no sense. And King….surely you know better than this.
Furthermore….while concerned citizen is bashing away at poor, disabled folks looking for housing….he profits from the government's program to house them.
Is this a counter attack of welfare and poverty bashing to combat the well-deserved bashing of the richest Americans who brought our economy to it's knees?
Seriously, unless you are making over $250K a year and simply don't give a damn about the other 95% of us, I don't get it.
Rev~
Time to decide if you believe in the Constitution or not. This is not about Party. Read the mission statement and think of what kind of change you want for your kid's future.
" Is this a counter attack of welfare and poverty bashing to combat the well-deserved bashing of the richest Americans who brought our economy to it's knees? ".
Nothing of the sort. You are inciting class rhetoric as a means to an argument that is not about class envy. I work in mental health with clients that are below poverty level. I don't need to be told about poverty and I am an advocate for the poor. They need help to get out of the system, not stay in it. If poverty is made comfortable where is the incentive to get out of it??
I believe in Capitolism. I believe in the Constitution. Obamabots have to reject these principles if they support the bailouts and gov't grab for power right out of the American peoples hands, via taxes.
You will never get it unless you learn to think as an individual beyond gov't rhetoric.
That's the thing that most liberals don't get. It's not a class warfare issue. It's a matter of those who can take care of themselves doing so.
My cousin is on social security, because she has a real, honest-to-God physical disability (paralyzed). I don't dispute that she needs help, because she can't earn enough to care for her basic needs. If she weren't handicapped, she'd be earning about $15-20/hour like her brothers, I'm sure. She's tried to go back to work many times, but she's just not able.
What gets me is the people I've met who are relying on social security for an income when they're perfectly able to work. I met a woman who attended my church briefly with no job, no money, no desire to find a job. She was at our church looking for handouts and applying for SS, claiming mental illness. I did what I could for her, but I couldn't do what she really wanted. I couldn't afford to care for her, buy her cigarettes, drive her all over town, etc. I gave her food, put her in touch with different back-to-work type programs. She didn't want that. She wanted a free check. That kind of thing disgusts me. I think that there is a need for some form of social security, but not for those who just don't want to work, KWIM?
I think that a lot of people who don't want to work are finding loopholes and worming their way into a program that was only intended for people who cannot work. And that's disgusting many of us. I don't think that we should totally do away with social security, but we should definitely take steps to put people who are able to work to work. Social Security was never meant to be a Ponzi scheme, but that's what's happening right now. Because many of its recipients are people who are just taking advantage of the system.
Rev, the freeloaders of society are the ones that are bringing this country to it's knees. We, the middle class and the rich wouldn't have to endure so much tax if people would decide to work instead of working the system. If you think that the govt is giving 95% of the people tax breaks, let's talk about the tobacco taxes that went up Friday. They take it with one hand and steal it with another. Or how about how our local govt is raising property taxes to more than we could possibly sell these properties, especially in this economy. Then instead of investing in our futures they want to put an f'ing fence on the y-bridge. LOL what a joke. Then they cause class warfare and steal it from both ends and neither one get ahead except for the special interst group lobbied by the politicians
The Constitution says absolutely nothing about capitalism.
If people believe in the Constitution, and I'm taking them on their word…..did they find Bush-Cheney to be a repeat Constitution violator? If not,…end of discussion.
Secondly….SS is being kicked around here as if disabled folks gaming that system dominate the outflow of SS monies. How in the world can folks get all worked up about poor folks taking advantage of SS and food stamps….when socialistic defense spending has been sucking our budget dry for decades?
Where's your sense of proportion?
"I believe in Capitolism. I believe in the Constitution. Obamabots have to reject these principles if they support the bailouts and gov't grab for power right out of the American peoples hands, via taxes."
This is just silly, with all due respect…..do you support nationalized highways? military? national parks? Are you a socialist if you support those things? Of course not. Taking control of a rogue financial industry which has bankrupted the nation…ain't no power grab….it's a survival move. And those bailouts wouldn't have been necessary if deregulation nuts hadn't have set the freer than free market, even freer.
Once again….I simply DO NOT understand the emphasis being placed on the less fortunate, the less ambitious. The powerful over the last 15 years have sucked this nation dry…not the less fortunate. The White House occupants over the last 8 years willfully shredded the Constitution, something Bush called a "goddamn piece of paper." Unbridled capitalism, as it did in the 30's, has once again threatened our very existence as a country…..but you folks are complaining about those on disability, food coupons, section 8 housing, and social security. It's misguided.
Rev, I don't think one person on this thread is attacking the less fortunate. They are attacking the deadbeats. Big difference.
And when you say, "Obama is LOWERING taxes for 95% of working Americans. So this misguided Tea Party must only be about the richest 5% who simply can't endure paying 4% more of their income in 2 more years."
I can only say you must be drinking that Kool-Aid by the gallon. Those yearly trillion dollar deficits Obama plans must be paid for by the taxpayers. His printing of trillions of new dollars out of thin air devalue the currency. Interest must be paid on the debt Obama is projected to double or triple. That takes hundreds of billions to trillions away from the taxpayers. Obama's energy plans are projected to increase our individual energy costs by up to $3,000 per year. He has already jacked up the regressive cigarette tax that hits the poor the hardest. And we haven't even got to Obama's healthcare plans yet, which required a $630 billion "down payment."
How you can possibly think all of that will only affect the "richest 5%" is beyond me.
And Obama's only been in office for TWO MONTHS. I think we should be holding a national tea party on the D.C. Mall.
Rev,
Name for me which firms failure would have "bankrupted the nation" as you say. I already named the ones I thought posed systemic risk – AIG and Fannie Mae, with the latter actually being a government run agency. Bailing out those two entities cost about $250 billion, if I remember correctly.
So why has Obama spent TRILLIONS already on top of what Bush spent ?