"America's Utter Denial of the Debt Catastrophe"
"America's Utter Denial of the Debt Catastrophe"by Stewart Dougherty
"To those who study the numbers, it is now obvious that America’s fiscal situation is hopeless. Given the country’s current debt and unfunded liabilities of $75,000,000,000,000, an amount growing by at least $5,000,000,000,000 per year, it will be statistically impossible for the United States to pay its obligations unless it repudiates them in large measure, or the dollar is sacrificed on the altar of searing, society-altering inflation.
Congress and much of the nation are in utter denial about the country’s unfolding fiscal catastrophe, as evidenced by federal spending that is actually accelerating, producing all-time debt and deficit records that exceed anything ever experienced by any nation on earth, at any time in history.
Denial is a psychotropic, mind-altering drug that by comparison makes crack cocaine look like health food, and addiction to it shuts down the brain. America’s denial about its out-of-control spending, non-repayable debt, financial sector fraud and deceit, decadent political institutions, epic dereliction of leadership duty, fiscal and monetary immorality, and disastrously dishonest system of cronyism is leading the nation into an economic nuclear winter of desolation and chaos. Aside from Ron Paul, there is not one politician telling the people the truth about their oncoming debt enslavement and impoverishment; nor is there even one sign of constructive fiscal change on the horizon. Our visionless, gutless and greed-stricken leaders have transformed the United States into a cowardly new world.
After becoming the nation’s top auditor in 1998 as Comptroller General of the United States and head of the Government Accountability Office, David Walker repeatedly warned Congress over a period of several years that government spending was unsustainable, and that unless fiscal policies were reformed, a monetary and economic disaster would ensue. Walker presented irrefutable evidence to Congress to support his warning, evidence so powerful it was never contested because it could not have been. Walker focused Congress’s attention on spiraling, deca-trillion dollar Medicare, Social Security, prescription drug, military and government pension, welfare, trade and general obligation deficits and liabilities, in addition to the crippling impact of ever-increasing interest payments on the rapidly increasing debt.
Instead of heeding Walker’s flawlessly-reasoned warnings, Congress did the exact opposite and went on a spending binge never before seen in American or world history. Just one program, the Medicare Prescription Drug Plan was bankrupt on Day 1, with an unfunded liability of $7,100,000,000,000.00 that was heaped on top of taxpayers’ existing, crushing debt burden. That turned out to be just the warm-up act. It was followed by an unprecedented fiscal year 2009 federal deficit of $1,600,000,000,000.00+, which will then segue into 70 years’ worth of multi-hundred billion to trillion dollar plus deficits. Furthermore, the government approved $13,000,000,000,000.00+ in bailouts for favored insiders. Every penny spent on these programs represents newly created debt, on which interest will accrue in perpetuity since the principal can never be paid.
There are additional, related contradictions, such as presidential candidate Obama promising "change you can believe in," and then, once elected, installing into positions of economic power and influence people such as Lawrence Summers and Timothy Geithner, who had been directly involved with the policies and programs responsible for the crisis in the first place. Obama subsequently proposed that the Federal Reserve be given vast new powers over the financial system. This was astonishing, given that the Fed, under Chairman Greenspan and successor Bernanke was clearly implicated in the meltdown, though not alone in culpability.
The fundamental common denominator in each of these contradictions is immorality. Creating money out of thin air is counterfeiting and theft, no matter who does it. Bonds that can never be paid are promises that cannot be kept, and are dishonest. Lying to the people for self-glorification, and to divert attention away from actions that were negligent and destructive is immoral. A government that robs from the poor and gives to the rich is corrupt. A government that casually throws its workers to the wolves while toadying to the wealthy is morally lost. And a Congress that decides, in direct rejection of the United States Constitution, that there will be two classes of citizens in America, the commoners and the elite, the serfs and the nobles, is derelict in its duty and a disgrace to its high office.
Contemporary society is an amusement park of addictions. Most emphasis is given to the substance addictions, such as to nicotine, food, alcohol, or drugs. Less attention is given to the activity addictions, such as to shopping, gambling, television and sports, habits less physically dangerous and depleting, but life-affecting for those who become consumed by them.
Two other addictions get far less attention than they deserve, given the powerful forces they have exerted on humanity throughout history. Those addictions are to money and power. Washington is about the addiction to power; Wall Street is about the addiction to money. Those two centers of addiction are now galvanizing each other. By finding artificial means by which to temporarily keep the government’s sinking financial ship afloat, Wall Street supports Washington’s power addiction. By funneling trillions of public dollars to Wall Street, Washington supports the bankers’ money addiction.
These twin addictions to money and power represent another piece of the moral hazard puzzle. Addiction breeds immorality. Addicts will stop at nothing to get their drug of choice.
The colossal miscalculation made by Washington and Wall Street is that they could control the moral hazard genie once they removed it from the bottle. They believed they could use the genie to enrich themselves with trillions of dollars’ worth of taxpayer money, and then replace it in the bottle before its magic spell of immorality metastasized throughout society at large. They assumed that the people would be too stupid to see what was going on. And that even if the people did figure things out, they would willingly wear the thick, choking chains of debt being welded to their necks by the financial elite and its Washington enablers.
Instead, thanks to the Internet and the democracy of information and insight it affords, the people were instantly wise to what was happening, and it stirred them. The concept of "an eye for an eye, a tooth for a tooth," harkens to the Bible. And perhaps Shylock was speaking for all of humanity when he said, "If you prick us, do we not bleed? If you tickle us, do we not laugh? If you poison us, do we not die? If you wrong us, shall we not revenge?"
There is accumulating evidence that the Washington – Wall Street moral hazard experiment has gone disastrously wrong, and that just like any other accidental discharge of a deadly virus, the moral hazard virus is now loose and swiftly propagating throughout society. By so blatantly colluding with Wall Street, Washington has lost all moral authority, and the people now have only one place to turn: themselves. An ethic of, "If they can do it, so can I," is spreading, as people realize that fabric of American society has been shredded and replaced by a free-for-all mentality whereby everyone must fend for oneself in order to survive.
If this is so, it is a serious game changer for America.
Evidence of the spread of moral hazard is noticeable everywhere. Despite government reports that the economy contracted only 1% last quarter and is now stabilizing, 13% of all home mortgages were either delinquent or in foreclosure in the second quarter, 2009, an all-time record. Credit card write-offs hover near 10%, also a record. Automobile, home equity and personal loan defaults are at or near record levels. Fiscal year 2009 federal personal tax receipts have declined 22% and corporate receipts have plunged by 57%, even though the economy has supposedly declined by only a fraction of that amount. Compared with January through April, 2008, state personal income tax receipts have plummeted by 26% in 2009, with eight states seeing declines ranging from 30% to 54.9%. Prime and Alt-A mortgage delinquencies and foreclosures are climbing rapidly, and are the true canaries in the banking industry mineshaft. Homeowners evicted by foreclosure trash their homes in rage on the way out the door, with an estimated 50% of such dwellings damaged. Looters and squatters destroy many of the rest, stealing copper pipes, wiring, granite counter tops and anything else of value. Dozens of Internet sites such as "youwalkaway.com" provide calculators to help homeowners decide whether or not to "strategically" default on their mortgages. Shoplifting costs retail businesses $35+ million per day, as 27 million shoplifters go on the hunt. Drug addicts who have become shoplifters say that the activity is equally as addicting as drugs, leading to a continuing cycle of theft. Insurance fraud is a systemic financial risk, with 25% of fires caused by arson or suspected arson, making this the greatest cause of property damage in the United States. Even before this financial crisis, which has bankrupted millions, 10% of respondents said it was acceptable to submit a false insurance claims. Medicare fraud exceeds $60 billion per year. Phony automobile and other bodily injury claims cost billions annually, and are difficult to control since it is impossible for a court to tell someone they are not in pain. Despite a massive consumer education campaign designed to thwart it, Identity Theft rose 22% in 2008, to 10 million cases, a record. It takes the average victim 330 hours to repair the damage to their personal reputation. Identity Theft is estimated to cost individuals and businesses $221 billion per year. Each day, 175,000 phony checks are presented as payment. The cost of check fraud is estimated to exceed $50 billion annually. And on and on it goes. The stress tests never envisioned this.
The people, whose predictive instincts have been uncannily accurate throughout this crisis, sense that trouble is coming: 80% of them say they expect crime to increase due to the deteriorating economy.
As average American citizens lose their jobs by the millions, become mired in financial distress and are crushed by the largest debt increase in the history of civilization to pay for government bailouts and fiscal stimulus programs, several Wall Street firms, in actions so arrogant they beggar and defy belief, have announced that they will pay record bonuses in 2009. These bonuses commonly amount to 20 – 200+ times the median American wage, in other words, 20 – 200+ times the earnings of the citizens whose taxes were spent only a few months ago to keep the Wall Street firms from imploding.
Nurses, police officers, school teachers, store clerks, truck drivers, gas station attendants, firemen, flight attendants, ambulance drivers and everyday workers of every other description, many of them struggling to provide only a humble, basic lifestyle for themselves and their families, were asked to reach deep into their pockets to help Wall Street survive. Now that Wall Street has taken their money, it will use it to lavish huge bonuses upon itself, in a callous Roman orgy of excess.
The American psychological landscape has been parched by the searing winds of financial desperation, surging inequality and dying hopes. And the tinder of the desiccated American Dream, once the great calling and aspiration of a nation, is now piled so high that a spark igniting it would unleash raging flames reaching up to and scorching an astonished Sun. Yet politicians and the press are so divorced from reality that when the people express at town meetings and other venues their deep, legitimate frustration over the loss of their hopes and nation, they are viewed as whiners, or paid political activists. As noted earlier, denial is very dangerous drug."
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