Party At Your Own Financial Risk
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.
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About the Author
Greg Hunter
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.
Elizabeth Warren – The Coming Collapse of the Middle Class http://bit.ly/3QNELU
The idea of continuing a consumer based economy is ‘unsustainable’ & utterly insane. Wages have remained stagnant for 30 years (inflation adjusted) yet the middle class has taken on more debt during the meantime. There is a reason the private sector is deleveraging yet the Larry Summer & Obama economic team will not let this natural market force to happen.
If there is going to stimulus spending it must create an asset on the United States balance sheet. Instead we are stimulating more speculization. Now I understand not everything is that simple. I am getting a masters in economics but there are simple solutions to this mess. Obama and gang(and Bush before him) type of crony capitalism is sadly destroying our fine country in my opinion.
Joe,
Thank you for the amazing comments!
Greg
Also happy New Years! Keep up the amazing work.
Hello Greg,
I believe many people know in their gut that things won’t get better until things get worse.
Either we continue on the borrow-and-spend federal policy until the system collapses. Or, our governemnt will restrict the money supply, rescind all stimulus packages, cease bail-outs, lay-off governement workers, become pro-business, and balance the budget by cutting spending.
The latter tactic will result in meaningful economic growth after an economic realignment occurs. Unfortunately, we will suffer another recession caused by the realignment.
WASS (We Are So Screwed)
thanks,
markm
Mark,
Anyway you cut it we are screwed. You can only protect yourself. Thanks for the great comment!
Greg