Drinking Tea While D.C. Drowns…

The Bankruptcy of the United States is Now Certain
by Porter Stansberry

It's one of those numbers that's so unbelievable you have to actually think about it for a while… Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion. Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from?

…

According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. So looking only at short-term debt, we know the Treasury will have to finance at least $2 trillion worth of maturing debt in the next 12 months. That might not cause a crisis if we were still funding our national debt internally. But since 1985, we've been a net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe foreign creditors at least $880 billion in the next 12 months – an amount far larger than our reserves.

Keep in mind, this only covers our existing debts. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months.

…

Read it and weep…

© Copyright Porter Stansberry, S&A Digest, 2009

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The Shopping Mall of Government

Earlier this month, on Independence Day, a VOX neighbor posted the text of the American Declaration of Independence. Thank you, Cap’n Stephel.

The 56 signatories signed the Declaration as a rejection of the Old World Order, based as it was upon an absolute, remote and central seat of power held in very tight hands, (King George III of Britain and his cronies). In doing so, they committed treason and thereby put themselves in serious peril.

Tip: it is actually quite fun to read the Declaration today and try to imagine that it had been addressed, not to George III but instead, to King George XLIII… (You know: “Dubya”.)

So that post got me wondering about just what it is that makes the American Constitution special. What, in particular, is its genius? I’d be interested to hear what people think, especially Americans.

For me, the most striking aspect of the spirited debates that stirred the early colonialists was the controversy between the Federalists and the Anti-Federalists. Both factions were very much against a powerful, federal government and held the common goal of strongly restricting it from mischief. With perhaps the exception of the execrable Alexander Hamilton, they all understood that “[small] government is a necessary evil; [large government is an intolerable abomination]”.)

The Federalists carried the day and so wrote the constitution restricting the federal government by specifying only those powers the federal government was to wield. The objections of the Anti-Federalists were later partially assuaged in the Bill of Rights, a series of amendments, (1-10).

So I want to venture here the notion that the genius of what the Framers of the Constitution conceived is what I call, “the shopping mall of government”.

The Union was to be a loose collection of democracies, united by some common principles, but allowing the states to determine local laws according to the wishes of their electorates. The Founders rejected the kind of centralized, remote, absolute government that they, and Europeans, had long suffered under. In the Constitution, they sought to promote local determination with citizens free to choose how they would live, work and trade. In the realm of government, small is beautiful. (Or at least, less “evil”. )

So imagine 50 states, each free to determine the majority of issues for themselves, with the union ensuring only the freedom for people to move and trade between states and securing the common defence against external threats. Imagine how this might work with 50 states, some “red” and some “blue”. Imagine the interesting comparisons that would inevitably arise.

The following benefits might accrue:

1. citizens unhappy with the status quo and unable to change it by any other democratic means are able to simply “vote with their feet” by moving to a different state, (the story of my life and much more effective and satisfying than occasionally pulling something in a voting booth);
2. more importantly, states that abuse their citizens soon lose some number of them – enough that the loss subjects those states to a kind of “free market dynamics” that impels them to compete harder to satisfy their constituents, (libertarians should appreciate this point as it puts the power of ultimate decision back with each and every individual); conversely, states that serve their constituents well soon prosper;
3. simple comparison of outcomes across states reveals much about the wisdom (or folly) of certain, political ideas, prompting voluntary correction; the concentration of political power is distributed, limiting the opportunity and incentive for, and damage by, a major attack from would-be tyrants; thus, no single point of failure/corruption.

The following objections might be raised:

1. “I don’t want to spend a lot of effort on politics and I certainly don’t want to have to move to another state to get what I want — someone should just hand my happiness to me along with an iron-clad guarantee;” [uninformed electorate]
2. “I have a lot of strong, political opinions and I need a way to impose them on other people, whether they like it or not — it makes me feel good about myself;” [tyranny of the majority]
3. “well, gee, these ideas of decentralized power and local determination are so far off the way we do things in our country today: it can’t be right.” [complacency, myopia]
4. “without a dictatorial, federal government, there’d still be slaves in the South…” [think so?  misplaced faith; read "Civil War", by Bruce Catton]

(To be even-handed about this last, I must say that I think the greatest flaw in the Constitution, (which sought to protect life and liberty), was that it did not explicitly forbid slavery and that slavery was tolerated for nearly one hundred more years under the operation of the US government.)

Well, food for further thought.

Thanks again to Cap’n Stephel.

From: The Monday Morning Quarterback

Next: Exodus 2

The Division (and Defeat) of Democracy in America

As I continue to happily explore Vox, I am still intrigued by the robust, often rancorous debate between liberals and conservatives.  My most striking sense is one of the seeming futility of the debate.

Both sides are convinced that it alone holds the truth — and that the other side is wrong, harmful and even evil.  Both sides believe that what the USA needs is its government, (Democrat or Republican), in perpetuity.  Both are saved from the reality of their claims by a system that ensures that government flip-flops moodily and inconclusively between one side and the other.

Put bluntly, the Democrats seem to believe that America is being ruined because the Republicans occasionally get a turn to govern.  The Republicans believe the flip-side.  How can either ever hold any hope for the welfare of the country?

Yet I doubt that either side is at all contented with the current condition or prognosis of the United States.  Can the two sides even continue to co-exist?  Or are they doomed to be mortal enemies?

To be charitable — and to eschew strict, political definitions — I think of liberals as idealists who are dedicated to "fixing the future".  And of conservatives as realists who wish society to "learn from the past".  We know that "the devil is in the details" but why should these two impulses be contrary or mutually exclusive?

By these (admittedly loose) definitions, I view myself as both the realist and the idealist!  Surely, to make a better future, the two sides should be able to work together?

Again being charitable, I think of Americans as people made great by the desire to "live free or die", (as it used to say on my car's license plate).  Is there left no common ideal nor palatable future for Americans?

I have long had the sense that liberals and conservatives "talk past each other" and, hence, no traction is gained.  Let me explain the reason for my opinion, if I can.

(Not all political contention is about issues of money, but there are very few issues that are not; even some of those that, on the face, seem purely a matter of morality.)

The key disagreement between liberals and conservatives seems to me to be principally over government: revenue and expenditure.

Liberals see the defects and ills of our society and wish government to spend more money to combat these problems.

Conservatives refuse — and again, I will be charitable — not because, in the hardness of their hearts, they don't care about those suffering, but, let's say, because they distrust government and believe that government money is already being wasted, diverted and/or stolen.

The left-versus-right debate might be more productive if each side could somehow bridge this gap in addressing its opponent.  Specifically, the key issue is trust in government.

I don't think I can say much to aid any better understanding, but I should like to opine that, not only is government in the USA broken, corrupt and untrustworthy but, the current economic crisis is proving that that other, latter-day, unreformed anachronism — capitalism — is equally broken, corrupt and untrustworthy.  Nowhere in sight is The Invisible Hand of Adam Smith to magically correct the market-place.

(The top five holders of derivatives in the world — Citicorp, Bank of America, Goldman Sachs, JP Morgan and Wells Fargo/Wachovia — are technically insolvent.  Congress is required by the Prompt Corrective Action Law to take these companies into receivership.  But Congress considers them to be "too big to fail".  Actually, I'd prefer to see them fail rather than the American people be looted and bankrupted by these companies and the likes of AIG…)

So I believe that both democracy and capitalism in America have proven themselves anachronistic and corrupt.  And that both are, in fact, co-dependent.  The corruption of one serves the evil of the other.  Therefore, reform of both is urgent and mandatory; else there will be no change people can enjoy.

Needless to say, this reform is going to require the concerted efforts of both sides of the political spectrum.

[Footnote: in this post, I have intentionally been simplistic, utilizing the conventional, uni-dimensional, left-versus-right spectrum used to classify political thought in the US.  This should not at all detract from the thrust of this post.]

From: The Monday Morning Quarterback

Next: Exodus 1

Political spectra: left vs right

[This is the first in a series from The Monday Morning Quarterback.]

I am impressed by the level of courtesy and thoughtfulness of discussion in VOX.  ("You are not in YouTube anymore, koan911.")  Inspired even: more than one Vocalist has recently attempted to understand the thinking of people at the opposite end of the political spectrum, a rare feat.

But what is this political spectrum?  In the US, and certainly according to the corporate media, it is left versus right.  Demographically, red versus blue.  Compressing the gamut of all political thought and expression into a single dimension may be useful for simplification and hence comprehension; it is certainly very convenient for the Democrat and Republican parties!

And yet the bitter unhappiness amongst voters in the US is most palpable.  Liberals believe that all will be right [sic] if only everyone would vote Democrat, and at every election, forever.  Conservatives also believe that America can be saved, but only if everyone votes Republican, every time.  It never happens and the electoral results change by a small percentage, oscillating in favor of one party of the other, but keeping the majority of incumbents… seated.  Nothing significant changes.  Really.  In terms of customer satisfaction, democracy in America is in deep trouble and has been for a very long time.  The US government is not serving the interests of society.  Nor, actually, is any Western, "democratic" government.  Dispute it??

The most apt comment [by an evidently-European commentator] I have ever encountered on the internet was about Western democratic politics and went as follows, (paraphrased):

"There you [Americans] go again, it's always about left versus right with you.  Whereas in reality it has always been about rich versus poor, the class struggle."

Interesting!  Another one-dimensional, political spectrum: "rich versus poor".

(In the nearly 20 years I lived in the US, I came to think of political debate there as a Punch-and-Judy show with the crowd of bystanders (voters) being worked over by professional pick-pockets. Corporations gained legal access to make contributions to political campaigns back in the 70s and I always marveled at companies donating to BOTH parties but had never puzzled why. It doesn't take a lot of thought, though, to deduce the reason and the mind is instantly repelled by the repugnance of the conclusion.

For fun, I googled this Punch-and-Judy metaphor and came up with: nothing new under the sun.  Other people have also referred to the two-party system in the US as "Dumb and Dumber", evoking a well-known movie.)

According to Orwell, choice of symbology affects the range of expression of ideas and may indeed be used to limit it.  Perhaps this is why the corporate media are continually leading us to constrain our thinking and debate to the matters of left versus right?

So, how does this spectrum, "rich versus poor", measure up in comparison with left versus right?

Maybe it is not so different.  After all, there is the stereotypically superficial view in the US that the Democratic party represents the disadvantaged, the down and out, the poor.  And the Republicans represent the rich, the wanna-be rich and those armchair economists who believe in economic miracle theory such as "trickle-down economics", (the British class ethos of cap in hand, eyes cast downward, "yes, guv'nor").  Superficial though it certainly is, yet this  idea of Democrats representing the poor and Republicans the wealthy might begin to explain why the middle-class is continually being screwed.    Not that I can ever imagine Ms Pelosi has ever sat around a camp-fire under a railway bridge, huddling to keep warm — although at the rate California is going, maybe she and Arnie will soon get that opportunity.  Bottom-line is that Americans are much more comfortable with left-versus-right than with rich-versus-poor because it is a tenet of American society that it, society, is classless.

Great.  Now let's propose a completely hypothetical, political spectrum purely for the purpose of contemplation.  It's long and thus needs to be written down the page.  ("Fellow Vocalists, lend me your ears!"  )  This vertical orientation suggests a nomenclature for it: up versus down.  Which further suggests a semantic mnemonic for it: the welfare of society, (up or down).

The table, Up vs down, which is the heart of this article, has been lost in translation from Vox. I’ll attempt to reconstruct it from faulty memory sometime in the near future. Apologies for this terrible oversight.

Up vs down

I have several suggestions to make about the above.

1. assuming for the purposes of this exercise that we all squeeze ourselves onto this spectrum at the closest point to which each of us can agree, then you, and everyone you know and everyone they know (2 degrees of separation), are statistically likely to find yourselves philosophically in either of the two upper-most camps in this delineation, or even upward of there; unless, of course, you are lucky enough to know Tim Geithner, Ken Lewis or someone from their club.  "Mister, can you spare ten million bucks…"

2. nevertheless, there is a natural flow or devolution downward; unless society is constantly fighting this flow, things tend downward, not upward.  Work begets success; success begets money; capital begets ownership; ownership begets power; power suppresses competition bringing it into conflict with the representatives of the people; the representatives are bought and subverted; the government, working now for elitist interests, comes into direct conflict with the interests of the people; the people are subdued and oppressed…  The coin of this spectrum is clearly wealth and concomitant power.  And the trend is the suppression of democracy.

3. the US was(/is?), as recently as the Cheney administration, arguably totalitarian.  See what Naomi Wolf had to say in 2007.  (And for similar ideas, compare Umberto Eco's "Eternal Fascism".)

The big question facing us today is, of course, whether the American people — by exercise of its quadrennial, binary vote — has succeeded in staunching the downward plunge, with the agency of the admittedly very appealing Barack Obama, (who came seemingly from nowhere as if chosen for this battle).  To think it has, you have to bet your country that politics is indeed confined to a single dimension, left versus right, as advertised by the corporate media, and that the country's direction can be reversed in the span of a single Tuesday in November once every four years.  I am waiting to see the changes I can believe in and the matter — one of fundamental faith — is getting most urgent now, I assure you.

As long as ordinary people keep on believing politics is only about left versus right, it is true that they may have less on their minds to worry about.  Life goes on.  Until, of course, things hit bottom.

From: The Monday Morning Quarterback, (with a nod to Snowy, esteemed Vocalist).

Next: Western Democracy

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