Budget Battle Rages On

Posted: April 18, 2011 in Debt
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This country was founded on capitalist principles, and has made America great. We’ve had rough seasons throughout our history, as has everyone else. However, we’ve always weathered the storm, because it was our founding principles that drove our economy. Now we are heading to a Socialist/Marxist country before our very eyes with this administration.

The two parties on Capitol Hill and the president will not be coming together to solve the gravest financial and fiscal crisis America has faced since the Great Depression. Between them today is a high wall and a deep ditch.

Obama wants bigger government. He doesn’t want the private sector to perform, so that masses of people become dependent on the government like an addict.

  • Welfare spending is up 54%.
  • Government spending is up 41

Nobody noticed, but in Obama’s speech on his deficit-reduction policy, he proposed stripping congress of the power to tax and establishing an automatic tax trigger if deficit reduction goals are not met. Taxes by Immaculate Conception…the new democratic plan to soak us.

Dick Morris take on the budget speech.

http://www.youtube.com/watch?v=c74xZB0_35w&feature=player_embedded

Now Obama is proposing to do away with or scale back severely.

  • Charitable Deductions
  • The Mortgage Deductions

Has anybody noticed the housing depression we are in? That would kill any kind of recovery for housing in this generation.

How many charitable organizations would be put out of business with deductions taken away?

And that raises another question. How long can the Federal Reserve continue financing these deficits?

China, choking on U.S. debt, is reportedly beginning to divest itself of U.S. bonds. Japan will need to sell U.S. bonds to get hard currency to repair the damage from the earthquake and tsunami. And the Fed is about to end its QE2 monthly purchases of $100 billion in U.S. bonds.

Where is the Fed going to borrow the $125 billion a month to finance this year’s deficit of $1.65 trillion, and another of comparable size in 2012?

Bill Gross’ Pimco, the world’s largest bond fund, has sold all his U.S. bonds and begun to short U.S. debt. Pimco is betting that the value of U.S. Treasury bonds will begin to fall.

We may be about to enter a maelstrom.

With interest rates rising, gas prices rising and inflation rising, the squeeze is on, and there is talk of a double-dip recession. And if that happens, Obama is toast. But, then, so are we.

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