Thursday, August 31, 2017
"Weekly News Wrap-Up 9/1/2017"
By Greg Hunter’s USAWatchdog.com
"Hurricane Harvey has ravaged Texas and Louisiana, but losses will spread across the United States. Everyone will feel the impact in some way. Hurricane Katrina losses totaled $175 billion, and Harvey could be twice that or more. (Texas Rep. Pete Sessions: Harvey Impact Could Reach $1 Trillion.) Oil prices will spike, and banks and insurance companies, ultimately, will face big losses on flooded housed and vehicles.
At least 25% of refinery capacity has been shut down by Hurricane Harvey. Experts say that this will cause fuel and petroleum product prices to spike. How high will prices go? Will there be shortages? It will take weeks and months to find this out, but higher prices are locked in now.
The latest figures from ShadowStats.com are out, and economist John Williams says it looks like a recession is “imminent or one is already underway.”
"Join Greg Hunter as he looks at these stories and more in the Weekly News Wrap-Up."
X22 Report, “Armstrong's Cycle Analysis Predicts A Major Event This Fall”
Related followup report:
X22 Report, “Economic Indicators Plunge And Banks Move To The Block Chain”
by Brian Maher
"The spirit of doom has stolen over us today, and our usual placid features are creased with worry… For evil seeds are in the wind.
Congress has until Sept. 29 to raise the debt ceiling. Should it fail, the dreaded “X date” follows shortly thereafter. The “X date” - when the national collection box starts running dry - and the United States Treasury can no longer meet all its expenses.
"On a day-to-day basis,” warns the Congressional Budget Office, “handling all payments for important and popular programs (e.g., Social Security, Medicare, Medicaid, defense, military active duty pay) would quickly become impossible." How will seniors get their Social Security checks… how will soldiers defend democracy abroad… how will cronies defend their turf at home?
So we kneel in prayerful meditation this day, beseeching the Almighty for timely resolution. The nation’s Founders must be somewhere looking on in wonder… or horror… “That government is best which governs least,” said Jefferson. "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents,” said Madison. America “goes not abroad in search of monsters to destroy,” said Adams (John Quincy).
But the modest American Republic of hard hearts and harder heads perished long ago. It was first a casualty of war, then of peace. America’s head first went mushy during the Spanish-American War, with its first intoxicating drink of imperial glory. Americans remembered the Maine. And forgot Adams. They spent the next century and change forgetting Adams.
America went abroad in search of monsters during WWI, WWII, Korea, Vietnam, Iraq (twice) and Afghanistan. At home, under the folds of the stars and stripes, America eventually discovered its own monsters, and its heart. Poverty, inequality, social injustice of every make and model became worthy of great crusades. The New Deal and the Great Society fell upon the monsters, hammer and tong. But poverty and inequality and human nature proved monsters tougher than Nazism or communism.
The battle rages yet... outcome in doubt. Meantime, the federal snout has hooked its way into every cranny and nook of American life. The Federal Register totaled 2,620 pages when first published in 1936. By the end of last year America’s book of rules and regulations ran to 97,110 pages - single-spaced.
Of course America is an empire now, though few dare whisper the word. But it is a strange kind of empire - an “empire of debt,” as our own founders Addison Wiggin and Bill Bonner argued in 2006. It is certainly an empire in debt - some $20 trillion at last count. Include unfunded liabilities such as future Social Security and Medicare payments and some estimates have Washington in hoc for up to $200 trillion. $200 trillion! Now Imperial Washington faces a debt ceiling crisis, and a possible government shutdown.
Absent a deal, “there will be blood,” wails Beth Ann Bovino, S&P chief economist. The subsequent chaos would be “more catastrophic to the economy than the 2008 failure of Lehman Bros.,” adds the bovine economist. But we’ve concluded she’s wrong. There won’t be blood. We began today’s reckoning in grim spirits.
But our disposition has vastly brightened… and our throat crowds with joy. Yes, they will raise the debt ceiling. We’ll eat these words - without salt - if wrong. What swayed our view? Hurricane Harvey. Are they really going to stop the checks while the good people of Houston soak in four feet of water? There is politics to consider. Texas has 34 electoral votes… second most in the union, behind only California. Need we say more?
Yes, they will raise the debt ceiling - or as David Stockman says, it’s “can-kicking time in the Imperial City.” Kick the can, they will. And the business of empire will continue, as it has, as it will, until the day it can’t. Meantime, the gods watch the unfolding spectacle, barely able to contain their laughter, as the will of Zeus moves toward its ultimate end…
Below, David Stockman shows you why the debt ceiling will be lifted next month. But will they have to do it all over again by Christmas? Read on.”
"Can-Kicking Time in the Imperial City"
By David Stockman
"You have to hand it to the Donald. He speaks his mind. Last week he dropped an unwelcome stink bomb on Capitol Hill during his Phoenix rant Tuesday night. If Mexico won’t pay for my wall, he seemed to say, than Congress will - even if I have to shutdown the Imperial City to extract the first $1.6 billion of seed money: “We’re going to get our wall,” Mr. Trump said at a rally in Phoenix. “If we have to close down our government, we’re building that wall.”
The Mexican Wall would cost an estimated $20 billion to complete, and place ICE agents at the border handing out guest worker papers to anyone who comes across looking for a job. That would mean more domestic production and tax revenue, and a tad less addition to the crushing national debt that Washington is handing generations to come. It didn’t take long for Washington’s permanent political class to say “no dice” to the shutdown idea. It seems Speaker Paul Ryan has been domiciled in the Imperial City since he was 21 years old and makes no bones about his priorities.
“I don’t think anyone’s interested in having a shutdown,” House Speaker Paul Ryan said at a stop at an Intel Corp. facility in Oregon on Wednesday… Mr. Ryan said he expected lawmakers would need to pass a short-term spending bill in September to give them more time to work out a broader budget agreement later this year.
What has the GOP Congress been doing the last nine months that it hasn’t enacted into law a single one of the 12 annual appropriations bills? The same bills that would provide upwards of $1.1 trillion to run the Pentagon and the domestic agencies.
The answer is simple. They’ve been deliberately burning up the clock in order to force spending measures through as emergency continuing resolutions (CRs) or 11th hour compromises to keep the government open. This has been going on for years. It is the very reason Washington now stands on the edge of raising the national debt ceiling above $20 trillion.
So we’ve officially enter the kick-the-can season. You can count on Paul Ryan to spin and misdirect in order to obfuscate what’s actually going on. The House Speaker is about to capitulate again to the nation’s fiscal doomsday machine. Expect clever maneuvers designed to hide the truth through yet another election cycle. That’s exactly what Ryan did back during the 2013 shutdown crisis when he negotiated a sell-out deal with ultra-liberal Dem Senator Murray to keep the government open through the 2014 election.
In that case, he agreed with Sen. Murray to bust the sequesters caps by $64 billion over FY 2014-2015. Per the typical routine, Ryan got $32 billion on top of the $1.01 trillion already slated to be wasted by the Pentagon during that two year period, while Murray got $32 billion more (a 3.5% increase ) to sprinkle across a host of domestic social programs. At the end, all parties were praised by the beltway lobbies.
Likewise, Ryan’s first act as Speaker after succeeding John Boehner following the shutdown crisis of 2015 was to pass the Boehner-Obama deal that suspended the national debt limit and empowered the Obama Treasury to borrow at will.
That it did! As of October 1, 2015, the net debt of the US was $17.66 trillion. After the Ryan-enacted debt limit suspension expired on March 15, 2017, the net debt soared to $19.82 trillion. This time, Speaker Ryan is going to need to deploy his best tricks to avoid a giant fiscal mishap. That’s because the White House is occupied by the Great Disrupter. By the looks of Trump’s Twitter account he’s still capable of unleashing the kind of impulsive curve ball that the Imperial City simply cannot anticipate.
Having already complicated the appropriations and CR, the Donald piled on more by suggesting GOP leadership had already screwed up raising the debt ceiling during the few days available when Congress returns from August recess.
Opined the Donald: "I requested that Mitch M & Paul R tie the Debt Ceiling legislation into the popular V.A. Bill (which just passed) for easy approval. They… didn’t do it so now we have a big deal with Dems holding them up (as usual) on Debt Ceiling approval. Could have been so easy - now a mess!"
Here’s the thing. Trump is 70 years old and has spent just eight months in the Imperial City, or about 1% of his life. Ryan and McConnell are collectively 122 years old and have been playing their trades in the Great Swamp for 82 collective years, or two-thirds of their lives.
The rank and file Republicans on Capitol Hill desperately fear being blamed for a shutdown. They have bound themselves as hostage to both the Fiscal Doomsday machine and the main street media’s need to safeguard Uncle Sam’s credit at all costs.
CNN talking boxes would have a field day excoriating the GOP for shutting down the government. Now that the GOP allegedly controls the White House and both chambers of Congress the situation is even more muddled. Thus, as one member of the Freedom Caucus opined to the Wall Street Journal: "A government shutdown hurts Republicans - it’s the last thing I want,” said Rep. Trent Franks (R., Ariz.), a member of the House Freedom Caucus who was at Mr. Trump’s rally Tuesday. “It is a political liability of profound significance to us.”
Many GOP lawmakers worry a shutdown or a failure to raise the government’s borrowing limit - another deadline they are facing this fall - could harm their chances of retaining the House majority in next year’s midterm elections. Treasury officials have said Congress must raise the government’s borrowing limit at some point near the end of September.
The real aim is herding legislators into the Christmas holiday. In that circumstance, as has been proven over and over in the past, not even the most resolute hawks have been able to stand by their convictions. The mantra always becomes “on to next year for real reform!”
But perhaps this time it will be even worse. The Goldman Sachs Regency in the White House would readily sign up for the skinny bill and three-month punt. They are flat-out desperate to keep the casino at bay and the stock average from plunging.
Assuming that the Donald doesn’t blow-up the proceedings on a skinny bill, the maneuvering for a December deadline would be where the rubber could finally meet the road. That’s because there would need to be at least a $1.5 trillion debt ceiling increase just to make it to December 2018 under current tax and spending policy.
The Treasury will need to borrow $500 billion or more to replenish its depleted cash balances and to pay back the funds which allowed it to pay the bills since March 15. The Treasury will be running upwards of an $800 billion annualized cash deficit between now and December 2018.
Even with a $1.5 trillion interim debt ceiling increase, there still wouldn’t be room for a single dime of tax cuts on top of the red ink that is already baked in. When it comes to Wall Street’s hope that Congress will pass a tax bill before the end of the year, or the next election - fuggedaboutit!
There’s no way to get a big enough debt ceiling increase to accommodate the current structural deficits and the Trump Stimulus, without major help from the Democrats. The can kicking season is once again here, and this one will be like no other."
“What powers the Heart Nebula? The large emission nebula dubbed IC 1805 looks, in whole, like a heart. The nebula's glow - as well as the shape of the gas and dust clouds - is powered by by stellar winds and radiation from massive hot stars in the nebula's newborn star cluster Melotte 15.
Click image for larger size.
This deep telescopic image maps the pervasive light of narrow emission lines from atoms of hydrogen, oxygen, and sulfur in the nebula. The field of view spans just over two degrees on the sky, so that it appears larger than four times the diameter of a full moon. The cosmic heart is found in the constellation of Cassiopeia, the boastful mythical Queen of Aethiopia.”
“Asperges Me, Domine” *
by Chet Raymo
“Greystone Books publishes a series of "Literary Companions" to natural environments- mountains, rivers and lakes, deserts, gardens, and the sea, so far. Now they come to my environment- night- and have been kind enough to include a chapter from “The Soul of the Night”, the chapter called "The Shape of Night." I am in lovely company, admired companions of several generations- Diane Ackerman, Timothy Ferris, Annie Dillard, Henry Beston, Loren Eiseley, Louise Erdrich, Pico Iyer, and Gretel Ehrlich, to name but a few- all connoisseurs of darkness.
Our earliest mammalian ancestors were presumably nocturnal- to escape the predations of dinosaurs- but for most of human history we have been afraid of the dark, huddling in caves around stuttering fires, curled together in darkness like mice in a burrow. Night belonged to animals with big, dark-adapted eyes and sharp teeth, to footpads and graverobbers, to werewolves and vampires. Ironically, it was with the coming of electric illumination that it became reasonably safe to go out and about at night, even as the illumination erased the best reason to do so.
William Blake called day Earth's "blue mundane shell... a hard coating of matter that separates us from Eternity." At night we peer into infinity, awash in a myriad of stars. We creep to the door of the cave and look up into the Milky Way and catch a glimpse of divinity- everlasting, all-embracing, utterly unknowable. Night- that cone of shadow, that wizard's cap of spells and omens- is the chink in Earth's shell through which we court Ultimate Mystery the way Pyramus courted Thisbe.
Which is why, I suppose, that whenever I think of "the porch" of people who visit here, I imagine Carolina rockers on a southern summer verandah, far from city lights, Vega, Deneb and Altair swimming in the Milky Way, fireflies flickering on the lawn. At some point the conversation ceases and we simply sit, rock, and listen to the sounds of the night- the whippoorwill, the bullfrog, the cricket and the owl- and let starlight fall upon our heads like a sprinkling of holy water.”
* “Wash me, Lord. Sprinkle me with hyssop and I shall be clean.”
- The Catholic Mass
- The Catholic Mass
"Isn't it the moment of most profound doubt that gives birth to new certainties?
Perhaps hopelessness is the very soil that nourishes human hope; perhaps
one could never find sense in life without first experiencing its absurdity."
- Vaclav Havel
“The World in the Evening”
"As this suburban summer wanders toward dark
cats watch from their driveways — they are bored
and await miracles. The houses show, through windows
flashes of knife and fork, the blue light
of televisions, inconsequential fights
between wife and husband in the guest bathroom,
voices sound like echoes in these streets,
the chattering of awful boys as they plot
behind the juniper and ivy, miniature guerillas
that mimic the ancient news of the world
and shout threats, piped high across mock fences
to girls riding by in the last pieces of light,
the color of the sky makes brilliant reflection
in the water and oil along the curb
deepened aqua and the sharp pure rose of the clouds.
There is no sun or moon, few stars wheel
above the domestic scene — this half-lit world
still, quiet calming the dogs worried by distant alarms
there — a woman in a window washes a glass,
a man across the street laughs through an open door
utterly alien, alone. There is a time, seconds between
the last light and the dark stretch ahead, when color
is lost — the girl on her swing becomes a swift
apparition, black and white flowing suddenly into night.”
- Rachel Sherwood
"Thoughts from Below the Rio Bravo:
A Preliminary to Going into Hiding"
by Fred Reed
"To understand many Mexican attitudes toward the United States and immigration, you have to go back to the Mexican-American War of 1846-48, of which most Americans have never heard. The United States attacked Mexico in a war of territorial acquisition, occupied Texas, California, New Mexico, and Arizona, and drove south to conquer Mexico City. It did it because it could.
The attitude of Americans who have heard of the war is usually, “Get over it.” Mexicans have not gotten over it. People get over things they have done to others more easily than they get over things others have done to them. Tell Americans to “get over” Nine-Eleven, or Jews to get over Germany.
There is in Guadalajara a large and prominent monument to Los Niños Heroes, the adolescent cadets who marched out to defend Chapultepec as the Americans conquered Mexico City, much as the VMI cadets tried to defend Virginia in the Civil War. Countless Mexican towns have a street called Niños Heroes. They remember.
The base of the monument to Los Niñoes Heroes in Guadalajara. It reads, “Died for their country.” You know, like Iwo Jima and all.
This does not make for a keen appreciation of the Exceptional Nation. Nor does memory of the conquest arouse sympathy about immigration– or, as Mexicans see it, emigration. It explains the occasionally heard phrase, “La Reconquista.”
Throw in the drumbeat from racialist sites to the effect that Mexicans are stupid, filthy, criminal, and parasitic, and Trump’s asserting that they are rapists and what all, which resonates in Mexico as Hillary’s Deplorables speech did in Middle America. And of course there was the bombardment of Veracruz, of which Americans have never heard, and Pershing’s Incursion, and Washington’s history of attacks, invasion, installation of dictators in Latin America and support for others.
For Mexico, as for most of the world, the US is not the shining city on a hill that it thinks it is. Over and over it attacks other countries and invariably is surprised when they don’t like it. Note that America and its vassals in Europe kill huge numbers of people in Muslim cities, yet express outrage when Muslims kill people in their countries.
In America, conservatives will erupt in fury on reading the foregoing. Well, bully for them. The behavior of Mexicans is determined by their history and what they think, not by what others think they ought to think.
These days, people often want a philosophical framework to justify their aggression. Among the better educated of Mexico, emigration is sometimes intellectualized by saying that flows of population have occurred all through history, Rome and such. These flows, they say, are inevitable and perhaps favored by Divine Providence. They don’t quite say, “Get over it.”
This reasoning is self-serving. If twenty million Haitians swam ashore in Veracruz, Mexicans would not regard it as a natural and inevitable flow. Note, though, that the Mexican inevitable-flow theory precisely parallels the doctrine of Manifest Destiny, which held that that America’s expansion across the continent was inevitable. It was an early form of American Exceptionalism, the idea that America is special and need not follow norms of decent behavior. Now it seems that Manifest Destiny is reversible. This notion too will anger many Americans, but then, the invasion of Mexico angered many Mexicans.
American attitudes toward Latinos, chiefly contempt, do not get a rousing welcome here. Americans both north and south of the border tend to see Mexicans only as gardeners, waiters, maids and, here, a few English-speaking doctors. Typically they have no idea of the lands between the Rio Bravo and Tierra del Fuego. They have not been there, do not speak or read Spanish. Americans, increasingly losing their own intellectual tradition, are unaware that Latin America has its own rich intellectual history going back for centuries. Fortifying this blankness is the charming view that Latinos are stupid and so, obviously, cannot have an intellectual anything. This annoys Mexicans.
Latin America has in fact produced a great many writers of the first rank, not ot mention philosophy, architecture, and music. Pick a few: Vargas Llosa, Garcia Marquez, Juan Rulfo, Pablo Neruda, Borges, Ortega y Gasset, Octavio Paz, Carlos Monsivais, Mario Benedetti, on and on. I didn’t know most of them either, but my wife Violeta, a Mexicana, does. All of this ties in with the literature and art of Spain, the mother country, just as ours does with that of England. There is a major civilization down here, despite the views of internet louts.
While there is much discussion of immigrants in the US, it consists mostly of ideology, of impractical hostility on the Right and moral preening on the Left. Neither seems to have much interest in knowing what it is talking about.
For example, the illegals, a source of horror, are mostly not diseased, drug-dealing rapists with drooping IQs and psychopathic murderousness. This will come as a disappointment to many. Actually, come in flavors. They are not one thing.
At the negative end are the MS 13 types, tattooed killers. These could profitably be taken up in a helicopter and allowed to come down independently. Then you have the kid brought over at age two and who now, at nineteen, speaks perfect California English and horrible Spanish and thinks he is an American, never having been to Mexico. You have the guys who come for two, three, four years, save money, and return to Mexico to buy a house for their families.
You have our friend Rosa, I will call her, who came over illegally after high school, worked dirt jobs, found free English lessons, went briefly on welfare, and finally worked her way up to be head of food-services at a high school. (Incidentally, it annoys her that her kids do not speak Spanish, but, she says in flawless English, this is America, what do you expect. Many immigrants favor bilingual schooling so that their children can learn Spanish.) Anyway, after a few years she went to whoever you go to, said she wanted legal residence, was told she had to pay back the welfare, did, and is now a permanent resident in in line for citizenship if Trump doesn’t stop her.
Finally you have those illegals who live permanently on welfare and never learn English. When Rosa speaks of them, she sounds like Breitbart News: “I work. I pay taxes. Who do these damned…”
Now permit me once more to infuriate conservatives. It is a service. It will keep their blood flowing briskly: Consider Eduardo and Maria, Salvadorans living in San Salvador in a dirt-floored cinderblock hut. They have little money, not because they are stupid or lazy but because there are no jobs. Their two kids cry at night because they are hungry. Their only hope, they decide, is for Eduardo to try to get to the US, a ballsy and dangerous idea, send money back, and try to figure out how to get Maria and the kids into the US.
So he and Maria scrimp and do without– more without– and lean on relatives to get the money for a pollero to get him across the US border should he get that far. Eduardo sets off hitchhiking, which he has never done, up Central America to the Mexican border where the police or los maras are likely to beat and rob him. Mexico enforces its immigration laws more vigorously than does the US. He rides the Train of Death, well named, to the US frontier, where he doesn’t know anybody or anything and, if he is not robbed, finds himself in a country whose language he does not speak. Somehow he gets to Kentucky, picks tobacco, and sends money back. It is not an undertaking for someone who has feathers for balls.
Yes, it is illegal. No, it is not good for the United States. Yes, immigration should be stopped. But– if you were Eduardo, which would matter more to you, your wife and children, or some law in a remote country where, in any event, a lot of people want you to come and work? What would you do? Would it not be irresponsible not to do it?
I will now go into hiding."
“Your Government Shutdown Survival Guide”
"On or around October 2, the US federal government will shut down – again. The actual date could be a bit earlier or later, depending on how the government’s cash flows. Technically, the government should have shut down on March 15, 2017. That was the date that a congressionally approved temporary extension of the debt ceiling expired. So on that date, the amount of debt on the books ($19.808 trillion) became the new debt ceiling. Since then, the Treasury hasn’t been able to issue any more federal debt.
Instead of shutting down the government, the Treasury has been cooking the books to pay the bills. Payments to federal worker’s retirement and disability funds have ended. The Treasury has also borrowed against federal pension, Social Security, and Medicare trust funds. But that can only go on so long. Without congressional authorization to raise the debt ceiling, some government services will have to end in about a month.
President Trump and congressional leaders want to raise the debt ceiling without any more restrictions. It’s easy to see why. Politicians get re-elected when they spend money on things that benefit voters, and just as importantly, when they spend on things that benefit the people and corporations that finance their campaigns.
But the influential Freedom Caucus in the House of Representatives opposes an unlimited increase in the debt ceiling. It favors raising the debt ceiling “only” an additional $1.5 trillion – just enough to keep the government afloat until after the mid-term elections in November 2018. The Freedom Caucus also wants to cut federal spending. Trump and congressional leaders have to take the Freedom Caucus seriously because the Freedom Caucus’s opposition to the partial repeal of Obamacare doomed that initiative earlier this year.
The History of the Debt Ceiling: While the debt ceiling has existed since 1917, when Congress was debating how to fund US military operations in World War I, it wasn’t a major political issue until the mid-1990s. In 1995, Democratic President Clinton vetoed the spending bill for the 1996 budget that the Republic-dominated Congress had prepared. That budget sharply cut funding for Medicare, public health, education, and the environment. The bill also prohibited the Treasury from borrowing from federal pension or other trust funds to make up the gap between federal income and expenses.
After repeated efforts to forge a compromise failed, on November 14, 1995, the federal government partially shut down. After five days, Congress passed a continuing resolution to fund the government for an additional month. When that funding expired, the government shut down for another 22 days. Public opinion largely blamed the Republicans for the shutdown, but in 1997, a bipartisan consensus emerged in Congress to cut government spending. The result was four balanced budgets in a row, for the first time since the 1920s.
How the Next Government Shutdown Will Unfold: The best-case scenario for the looming shutdown would be a bipartisan deal along the same lines. In exchange for sharp cuts to entitlement spending, which Democrats want to avoid, Republicans would approve a higher debt ceiling. That outcome is very unlikely. Congress is far more polarized than it was 20 years ago. And in a recent poll, 57% of Americans opposed raising the debt ceiling, versus 20% who favor doing so. A partial shutdown seems inevitable.
To prepare for it, it’s important to understand what parts of the government will be affected. There are two major sources of government spending: discretionary and non-discretionary.
Discretionary spending represents expenditures that are authorized in annual congressional budgets. The Treasury will cut that spending first. That means hundreds of thousands of federal employees will be placed on furlough. Many government agencies will suspend operations. National parks will close. The FDA won’t process applications for new drug therapies. And the IRS won’t answer the phones (although even now, it’s hit or miss getting through to a live person). Some discretionary funding (national defense, border security, etc.) will continue, although perhaps at a reduced capacity.
Non-discretionary spending represents mandatory expenditures that have been permanently authorized by Congress. These include interest payments on federal debt, social security, Medicare, etc. So the Treasury can’t stop making those payments. But new applications for social security or Medicare benefits might not be processed until the shutdown ends. And if you have questions about those benefits, good luck finding someone to respond to your emails or phone calls.
If the shutdown continues indefinitely, mandatory expenditures would be affected. For instance, in the 1995-96 shutdown, the Treasury announced it wouldn’t be able to make social security payments if the spending freeze continued. That won’t happen this time. After a few weeks, Congress will cobble together a deal. Another political crisis will end, at least temporarily.
A Shutdown Doesn’t Change the Fact the US is Broke: Longer term, the situation is much more serious. If Uncle Sam were a corporation, it would have been declared insolvent decades ago. The $19.8 trillion national debt is only one small part of a much darker fiscal picture. Indeed, the audited financial statements compiled by the General Accountability Office for 2015 concluded that the federal government has a net worth of negative $18.2 trillion. (Yes, with a “t.”)
And believe it or not, that’s the good news. The bad news is that the “fiscal gap” – the deficiency in financing for unfunded mandates like social security, Medicare, and military and federal pensions – now exceeds $200 trillion. And that doesn’t factor in the cost of future wars with North Korea or any other nation or group Donald Trump or a future president decides to fight.
Now, without a debt ceiling, the Treasury can continue to issue debt – notes, bills, and bonds of various maturities. And if it can’t find anyone to buy them, the Federal Reserve can step in. That was a big part of the Fed’s quantitative easing initiative (QE) to spur the economy out of the last recession. Indeed, nearly half of the Fed’s balance sheet consists of federal debt.
Could that go on forever? Some economists predict that QE will eventually lead to hyperinflation. If they’re right, your social security check will cover only a week’s worth of groceries, not an entire month’s worth of expenses.
Inflation is good for the government in the short term, because it can repay its obligations in dollars that are less valuable dollars than the ones it borrowed. But over the longer term, inflation will lead to higher interest rates. Businesses would will have to pay more to borrow money. Consumers would will have to pay more to buy a home. Economic growth would will slow. If this process continues indefinitely the US would eventually start to look a lot like Venezuela does now. The value of the dollar would drop like a stone, and your US dollar savings would become worthless.
But I’m not sure that inflation is the inevitable outcome of unlimited QE. For QE to spur economic growth, consumers and businesses must be willing to borrow, and banks must be willing to lend. And that hasn’t happened in Japan, which has embarked upon the world’s largest QE stimulus over the past 16 years to prop up its economy. The Bank of Japan accelerated QE in 2013, announcing its commitment to purchase ¥80 trillion ($733 billion) of bonds annually. Japan is an example of QE on steroids, but inflation is running at only 0.5% annually.
Because of the Japanese experience, I think a more likely outcome than inflation is more economic stagnation, no matter how much QE the Fed engages in. And keep in mind that while QE doesn’t stimulate the overall economy, it’s very effective at producing bubbles in the price of stocks and other assets. When the bubbles burst, we’ll experience a repeat of the global financial crisis of 2007-2008.
Except it will be worse this time. Many of the world’s largest banks will be bailed in, and depositors will get worthless stock back in exchange for their savings. And yes, there will be even more QE by the Fed to try to clean up the mess. Not to mention endless escalations of the debt ceiling by Congress."
Kevin Kern, “Above The Clouds”
"For I have learned
To look on nature, not as in the hour
Of thoughtless youth; but hearing oftentimes
The still, sad music of humanity,
Nor harsh nor grating, though of ample power
To chasten and subdue."
- William Wordsworth,
Adiemus, “In Caelum Fero”
"A Photo of a Dog Carrying a Bag of Food After The Storm Hit Texas.
Here’s His Story"
By Kristine Phillips
"Just before Hurricane Harvey hit the Texas coast, Salvador Segovia left his grandson’s dog, Otis, in his screened-in back porch, along with food and water. But the storm must have scared Otis, so he busted open the screen door and ran away on Friday night in Sinton, not far from Corpus Christi. “I stuck my head out yelling and yelling, and no Otis,” Segovia said. “The following morning, I got out and kept yelling, circled the block and everything, and nothing. We didn’t know where Otis was.”
Meanwhile on Saturday morning, Tiele Dockens was on her way to check on the houses of some friends and families who had evacuated when something caught her attention. A dog was walking down a street, carrying a big bag of dog food. “It’s like he’s on a mission,” said Dockens, who lives a few miles away from the Segovias. “I just thought it was so cute.” So she took a picture and shared it on her Facebook page. The photo quickly went viral, and the dog became an online celebrity.
Dockens said the dog looked familiar. In a town of about 5,000 people, she said it’s likely she has seen him before. As she followed the dog to make sure he wasn’t lost, she ended up outside Segovia’s house. “This lady comes by and tells me, ‘Is that your dog coming down the road?’” Segovia said. “And I turn around, there comes Otis, and he’s carrying food!” The brown German shepherd mix with a dark snout and slightly droopy ears walked up to the front porch, set down the bag of food, and lay on the floor, Segovia said.
Otis was a local celebrity in Sinton long before he became a viral sensation. Everywhere Otis went - at the county courthouse, local antique shops, the grocery store - everybody seems to know him. And people always feed him. “He’s got a real sad-looking face and people just admire him whenever they see him,” Segovia said.
Otis also likes to take off alone, and he knows his way around town. Sometimes, he goes to the local Dairy Queen, where someone gives him some ice cream or hamburger, Segovia said. He likes to stop by a local lumber and building supply store that sells dog food. The owners always feed him.
Salvador Segovia and Otis pose outside Segovia’s home in Sinton, Texas, on Saturday. Otis, who belongs to Segovia’s grandson, was seen walking on the street after the storm and carrying the bag of dog food. (Courtesy of Salvador Segovia)
“Otis is a smart dog,” Segovia said. “He knows where to go pick up a treat.” Segovia said Otis might have walked over to the lumber store before he was found Saturday morning. He thinks Otis somehow got inside and grabbed a bag of Ol’ Roy dog food. “I’m thinking he picked up that dog food and he knew where it was,” he said. “Nobody was there to feed him, and he picks up the dog food.”
Segovia said he had been watching Otis for his 5-year-old grandson, Carter, who left Sinton with his parents to escape the storm. Otis is probably about 6 years old, Segovia said. He found the dog when he was just a puppy. A man who was driving around stopped by one day, and said he was planning to just leave the dog somewhere, unless Segovia wanted it. “I said, ‘No, no, no, leave him here, we’ll keep him,’ ” Segovia said. “He left the dog here, and it became my grandson’s dog.”
“It is said that nothing is impossible; but there are lots of people doing nothing every day.”
- Theodor Rosyfelt, “The Foolish Almanak For Anuthur Year”, 1906
View the complete and fascinating “The Foolish Almanak For Anuthur Year” here: