(4 pm. – promoted by ek hornbeck)
Well, you’ve got your diamonds and you’ve got your pretty clothes And the chauffeur drives your car/ You let everybody know/ But don’t play with me, ’cause you’re playing with fire
(I wrote about this two days ago posted on another board and today its making headlines. Just goes to show that the bloggers are way ahead of the game.)
Playing with fire is what the Chinese Central Bank just warned the US about.
Never at a loss for seeking political advantage the Republican House leadership has designs on regaining the WH in 2012. They are attempting to do this by forcing the Obama administration into fiscal austerity there-by making his rebid for POTUS politically untenable. They have convinced themselves of a “theory” which could bring about a worldwide collapse all for political gain.
What use is political gain if the entire system has melted down?
Now I am not against reducing government spending by any means but lets be clear on what is happening.
Bohner, like many other political whores on both sides of the isle, has been in office since 1991. Never once did the Republicans scream for a balanced budget under the the Bush administration. In fact the budget soared to new records under GWB while at the same time presiding over two economic contractions.
Before the readership gets their undergarments all bunched understand I’m not making excuses for Obama by any means. He has failed thus far to turn this problem around because nobody in the WH has addressed the root cause. I have my reasons as to why this is true.
Still he was handed a big steamy pile of poop entering into office and the Bush admin literally lied what was going on right up until the crises was undeniable. Therefore much of the increase of government debt falls with the Bush balance sheet.
As the title suggests the Republicans are playing with fire.
In a fiat money system where there is nothing to ground the monetary expansion once the decision is made to “print” history has shown that you must print more and more, faster and faster to keep the crises from reasserting itself.
Now the Republican leadership seeking to gain political favor are experimenting with the idea of defaulting on the debt. YES … I said defaulting on the debt, in order to force their new found conservative principles that have been all but absent for the last decade.
(Reuters) Li Daokui, an adviser to the People’s Bank of China, said a default could undermine the U.S. dollar, and Beijing needed to dissuade Washington from pursuing this course of action.
“I think there is a risk that the U.S. debt default may happen,” Li told reporters on the sidelines of a forum in Beijing. “The result will be very serious and I really hope that they would stop playing with fire.”[..]
The idea of a technical default — essentially delaying interest payments for a few days — has gained backing from a growing number of mainstream Republicans who see it as a price worth paying. The Republicans’ theory is that bondholders would accept a brief delay in interest payments if it meant Washington finally addressed its long-term fiscal problems, putting the country in a stronger position to meet its debt obligations later on.
These are the same people who oversaw a ballooning of the debt under GWB. These are people who argued over how to cut a pittance of $30B recently in a budget of $14Trillion. While the debt actually expanded $70B in the course of the three week debate.
Increasing the debt ceiling is nothing new. Of the 74 times the debt ceiling has been raised since 1960, Republicans have raised it a staggering 66 times, increasing the debt from $4.5 to $11.6 trillion. The GOP raised it ten times when Bush was in office, not one Republican voted AGAINST raising the debt ceiling.
Some of the last increases in the debt ceiling provided TARP bailouts which did not fall along party lines.
For all the tax payer funds, TARP, QE1, QE2 and the various other “lending programs” created to stave off the economic slide … what has happened? Unemployment (U-6) is 16%, housing and wages are both declining, and savers are being denied a decent return for being prudent. Due to the massive amounts of liquidity injected into the system prices across the spectrum are rising .. aka inflation.
It seems the only people making out in this entire fiasco are the connected and the elected. In fact the closer you are to the money source the better off you are.
Make no mistake we have a very bad mix of people controlling the nations purse strings. Elected officials of all persuasions incapable of balancing a check book are voting on how to spend Trillion$ of tax dollars. Wall Street OTOH is incapable of losing on any bad gambling bet and require corporate socialism to give them their money fix. Corporate America also benefitted from tax payer injections which is small compared to their reward of not being cut out of the lobby influence. Thereby using tax dollars to influence legislation (read: bribery) that specifically benefit them.
Key dates to keep in mind. June 30 QE2 is suppose to conclude. August 2 the USGovt runs out of funds to pay its bills. This is going to be an interesting summer.