Sunday, August 9, 2009

Don't drink the kool-aid

We have now begun the next stage of the crisis-the consumer confidence crisis.Why,you may ask?Because over confidence in what is happening today will help escalate the crisis to come.The White House will continue to step up the green shoots reporting as the economic numbers have appeared to stabilize.Unemployment has dipped.GDP is now nearly flat.Housing sales have increased.The Dow is climbing rapidly at an unwarranted pace.The cash for clunkers bill has been a boon.Obama will certainly promote each one of these as a result of his policies at work.The likely result will be consumer confidence rising as most people want to believe in Obama and that his policies are working.

This is a huge problem because consumers will revert back to the habits which helped inflate the various bubbles.The housing bubble is well known.The bubbles to come such as commercial real estate,unsecured credit,the price of oil,and the granddaddy of them all-the debt bubble won't be overcome by TARP or stimulus or the Fed manipulating interest rates.Nobody wants to hear gloom and doom predictions,but the evidence is out there and you don't need to be an economist to decipher it.

The inspector general for TARP,Neil Barofsky,has reported in July that we have $23.7 trillion in debt exposure meaning if all our liabilities were maxed out,that's what taxpayers would be on the hook for.Our entire GDP for 2008 was only $14.2 trillion meaning the total output of all goods and services produced in the US.The entire personal gross income for 2007 was only $8.8 trillion so even if we paid 100% of our income in Federal taxes we couldn't meet the debt obligations that Obama has committed us to.Taxing the rich isn't going to save anybody.

We may not find out the total extent of our debt until Ron Paul's audit the Fed bill passes if Congress is even able to obtain what it wants.In the meantime,we'll be caught up in healthcare reform,which is really health insurance reform,cap and trade,immigration reform and all the other items on the Obama agenda.

I encourage all to do your research and you will see these claims are warranted and not fear mongering as the left would have you believe.All of the actions taken so far will only have the effect of delaying the inevitable.There simply is no alternative other than to flush out the toxic garbage from the system.Shifting obligations is only a band-aid to buy time.Besides,all of those who are warning of what's to come are only asking you to protect yourself and your investments.Being cautious won't cause you any harm but will pay huge dividends later.More to come...

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