By Greg Hunter’s USAWatchdog.com
Everybody on Wall Street is breaking out the balloons and party hats and celebrating the end of the recession. Even Larry Summers, the top economist in the Obama Administration, says “Everybody says the recession is over.” Really? “Everybody” says it’s over? I’ll bet you the more than 15 million out of work Americans won’t say the recession is over. Sure, we did have an upturn in the economy, but it took trillions of dollars we do not have to do that. We paid people to buy cars and houses. The Congress passed and injected the biggest economic stimulus into the economy in history. We handed hundreds of billions of dollars to the banks and bought their toxic assets by the trillions. So yes, things look better than they did. But, if you give a terminal cancer patient morphine, it will make things look good, but it sure as hell will not cure the cancer. Printing money and going into massive amounts of debt to bailout everything that burps is not a sign of a healthy economy. What is happening in America today is nothing short of a financial debt spiral that will end badly when the morphine wears off.
One great big sign that it is not time to celebrate is the removal of the bailout limits on mortgage giants Fannie Mae and Freddie Mac. There was a $400 billion cap on the two but, on Christmas Eve, Treasury Secretary Tim Geithner removed the limits. This turns Fannie and Freddie into a financial black hole. Treasury did not remove the limits because everybody had a job and was paying their mortgages on time. Make no mistake, Geithner is seeing trouble in 2010 and beyond. You should take notice because Fannie and Freddie hold more than $5 trillion in mortgages in America.
The Federal Deposit Insurance Corporation is so broke that it has asked for 3 years of insurance premiums up front from member banks. In September, it was $8 billion in the hole. Now, it is gearing up and hiring hundreds of new workers to handle a wave of bank failures coming in 2010. This fact alone is telling me to keep the party hat off, put on a helmet and brace for a crash.
On top of that, we have just escalated the war in Afghanistan, and there is no end in sight for Iraq. Both will cost trillions before they are over, and we are not even considering the wild cards of Iran, Pakistan and now Yemen!
Be grateful 2009 is over, and it was not a total disaster. I am going to celebrate the new year and hope for the best but be prepared for the worst. Have a Happy New Year.