Wednesday, July 20, 2011

This is a Joke, Right?

Apparently it isn't meant as a joke, but if you think this plan is anything but another hopeless dodge by legislatwhores eying next year's elections, think again. Lets start with the most glaring bit of evidence that what we are dealing with from the, so called, "Gang of Six" is just more crapulous kabuki theater. Hold on to your hat, folks, but this plan involves finding eighty billion dollars to cut from the most electrified third rail in U.S. politics, the military. Just to give you an idea of what eighty billion dollars amounts to in military spending these days, please note that the total cost of the military operations in Afghanistan and Iraq had reached the 900 billion dollar mark in 2008, and that expenditure was considered supplemental to the 600 billion dollar plus official yearly budget. So, first they have to find what is a puny amount and then on finding it, they will cut it. Get the picture?

In addition to the far from courageous posture towards the nation's immense military spending, the Gang has decided to go after the tax code and reduce such things as the mortgage interest deduction. How savvy is that in the middle of a RE depression. Corporations will be taxed at a lower rate, and the alternative minimum tax will, it is said, be abolished. Then there's the once vaunted Social Security system, now a hapless, bleating, sacrificial lamb if ever there was one. You thought that Social Security was a third rail of U.S. politics did you? Well, not anymore. The Gang are going to see to it that, by certain accounting legerdemain no doubt, Social Security recipients will receive less.

In short, what this plan amounts to is merely 1.) a decrease in the rate of increase in U.S. government spending, and 2.) an exercise in engaging in the time honored canard of equating putative enhanced revenue projections (as a result of, in this case, diddling with the tax code and eliminating certain key deductions) with the actual act of really, truly putting the financial and fiscal condition of the nation on a new, healthy track. Setting aside the absolute certainty one should have that any projected revenue enhancements are going to be exaggerated, this pending agreement-as yet uncertain to pass, but out of the gate in impressive fashion- is absolutely more of the same smoke and mirrors rubbish from our political class that one has long since come to feel is de rigueur.

Friday, July 15, 2011

The horror, the horror distilled.

Forgive me, but here is a distilled version of today's same post. Things have crystalized even more for me regarding the debt ceiling farce.

There is no chance of a debt default. None, zero, nada. The government has the funds to pay its interest obligations on the principal they owe, and, if necessary, and it will be -by design- they will take what they need to pay debt obligations from government programs as per the dictates of the 14th Amendment. That is what will transpire assuming they don’t reach an agreement. However, an agreement will achieve the exact same thing as no agreement, except less messily, as it will involve decimating those very same government operations that will be plundered if there isn't an agreement. That’s what I call checkmate, mate. Heads I win, tails you lose.

My bet is that they will come to an agreement because Obama is just another neo-liberal shyster sellout. The third rails of U.S. politics were/are thought to be certain entitlements and military spending. In retrospect it will be clear that when the chips were down it was only the latter that was untouchable not the former.

The horror, the horror.

The title above is not meant to be a reference to Joseph Conrad's brilliant novella Heart of Darkness, but, rather, a reference to the Debt(berg) ceiling talks where the threat of unspeakable, almost indescribable disaster is being asserted anywhere and everywhere as a means to guarantee an outcome that squares with the governing elite's desired ends. Put more succinctly, a certain cohort of The Legislature and The Executive are engaging in what has now become a time honored strategy perhaps best described as a kinder gentler form of extortion. The only difference between government's brand of gangsterism and a true blue gangster style protection racket is that the government isn't posturing as if they will be the ones to use the blunt instrument should they not get their way. No, the pain, we are told, and lots and lots of it, will be administered from other realms.

The truth is that what scares some number of desperate actors in government is not a sovereign default but a sovereign debt credit downgrade. After all, there will be no default if an agreement isn't reached since the U.S. Constitution's 14th Amendment necessitates that all government debts, and interest on such debts, must be paid prior anyone to else in government getting paid. That means that, in the event the debt ceiling is not raised by August 2nd, a lot of government operations would be frozen as their funds were instead redirected to pay Uncle Sugar's creditors. Such an outcome would be unpleasant for many, but no one should confuse that with a sovereign debt default. However, a partial government shutdown, along with various other developments related to said government shut down, could trigger a credit downgrade which is what worries our legislators the most. Well, it should worry them the most since such a development would make all present and future sovereign debt obligations substantially more expensive for Uncle Sugar.

Just so you know, whatever next week holds legislatively, the death of the dollar is assured. It's demise will not be avoided. Belabored? Almost certainly. Postponed? Perhaps, though that too is looking increasingly unlikely as things are unraveling at an accelerating pace. You see, there is a timeline involved with respect to the life of our currency, our medium of exchange, and while it is very difficult, perhaps impossible, to say precisely when that timeline concludes-picture if you will the sand running out of the top of an hourglass-conclude it will. In in the meantime, as more and more sand runs out of the top of the dollar's hourglass, the ability to say with some precision when that last grain of sand will fall to the bottom of the hourglass becomes easier and easier to predict.