Reading time: 839 words, 2 to 3 minutes
Beware Wednesday, November 23! If you’re planning cash withdrawals or financial transactions such as selling stocks or bonds or whatever – do it before Wednesday. That’s the deadline for America’s “Super Committee” to find $1.5 trillion in budget cuts annually. That’s not just over a period of years but ANNUALLY. Good luck with that!
The Joint Select Committee on Deficit Reduction, known as the “Super Committee” was established by Congress a couple months ago to find massive budget cuts as a reaction to the political turmoil caused by this past summer’s endless partisan political disputes during the debt ceiling crisis. When you think about it, its failure is practically foreordained.
The incompetent members of Congress couldn’t agree on budget cuts so they created this dysfunctional and stale-mated “Super Committee” as a scapegoat. Thus, the committee can be blamed when, they too, fail to find more than a trillion dollars in budget cuts. Originally tasked with finding $1.5 trillion in cuts, the ass media is now talking about only $1.2 trillion. In other words, the spin has already begun to try to mitigate the fallout from the committee’s failure to do the impossible.
There is no “fixing” the U.S. debt. It is now 100% of GDP. Rogoff and Reinhart, after studying 800 years of history, concluded that never, ever in history has a country recovered when debt exceeded 90% of GDP. Japan has been in a 20 year depression and their debt has climbed to over 200% of GDP. Most southern European countries are well in excess of 100%. The future is preordained and it ain’t pretty.
The committee might do a number of things.
1) Admit they failed. However, nobody in politics admits to failure.
2) Spin vague nostrums and hope they can BS their way out of it.
3) Make so-called cuts to future budgets that are so distant they’re meaningless.
4) A combination of 2 and 3 and hope the media spins it as a success.
5) “Kick the Can Down the Road” i.e. make a few cuts and delay, stall, procrastinate and put it off for a while longer.
The committee consists of both Democrats and Republicans. The Democrats want to raise taxes. The Republicans want to cut spending. In normal times the correct answer is: BOTH. However, these are not normal times. The American economy is still melting down (despite media spin to the contrary.) So, there a slight problem: it’s too late. Raising taxes now would hurt an already ailing economy. Cutting spending would also hurt the economy because so much of the economy already relies on government spending.
As I’ve written on numerous occasions, we are past the Point of No Return. There is no “fix”. Not anymore. There is only a continuing economic downward death spiral.
Whatever the committee does, the fallout could take several avenues depending on the public’s reaction.
1) The media does what it does best: nothing and doesn’t report it. Maybe we can ignore the failure, pretend everything is fine and continue the downward spiral.
2) The media does what it does second best: spin it as a success, the majority of people believe the spin and we continue the slow downward spiral.
3) Enough people disbelieve the hype and the stock markets crash into a fast spiral.
4) … or worse and we see even a faster global financial downward spiral.
5) America starts a nice new war in Iran as a distraction and we continue the slow downward spiral.
6) Aliens land and save us from ourselves. Ok, I’m kidding!
Notice, most of these are downward spirals; either slow or fast. The only one that’s not is aliens. Don’t hold your breath.
In any case, make sure you conclude financial transactions before Wednesday. Make sure you have paper copies or statements of all your financial assets such as stocks, pension funds, bank accounts, investments, etc. Don’t assume you’ll have internet access forever. And, make sure you have plenty of cash on hand, just in case. Maybe we can continue to whistle past the graveyard. However, given the increasingly fragile state of global economies, Wednesday could be an inflection point.
Keep your fingers crossed and let’s hope the aliens are friendly.
November 20, 2011
Update: barely 2 hours after I posted, the propaganda mothership, The New York Times issued a Breaking News Alert, “Lawmakers Concede Budget Talks Are Close to Failure” . They’re starting to prepare us for failure.
Not only that, they’re lowering our expectations: now it’s $1.2 trillion over 10 YEARS, no longer annually. Come on! They can’t find a measly $120 billion a year? Obama probably spends as much golfing.
Listen up people … I’ve said it before and I’ll say it again.
– You can’t spend your way to prosperity.
– You can’t borrow your way out of debt.
– You can’t pretend your way out of trouble.
You know we’re in deep shit when they’re trying to do all three. They don’t work!
Your comments are WELCOME!
If you like what you’ve read or not, please “Rate This” below.
Lengthy comments may time-out before you’re finished so consider doing them in a word doc first then copy and paste to “Leave a Reply” below.