Obama's Road to Economic Ruin

By: Gerard Jackson | Sun, Mar 28, 2010
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When Obama ran for the presidency I warned that if elected the American people won't know what hit them. Obama supporters immediately responded with an avalanche of abuse. Last June Obama told a wildly applauding congregation of Hollywood celebrities that "You ain't seen nothing' yet!" I observed at the time that "he was speaking the truth. Americans really have seen nothing yet". Even now millions of Americans still cannot grasp the enormity of his fiscal depredations. Nevertheless, it does appear that the majority of Americans are beginning to catch on to this dedicated leftwinger's -- to put it mildly -- intellectual shortcomings.

Sound economic reasoning leads to only one conclusion: Obama's policies will ruin the United States. (Whether this is intentional -- and I think it is -- is neither here nor there for the purpose of this article.) Before his inauguration the idea that America's triple AAA rating could be put at risk in a very short time was considered by the punditry as ludicrous. Yet Obama has manage to do just that. Thanks to his ideologically driven economic lunacy it now seems that treasuries have already lost their glitter as the world's safest investment haven. An accomplishment that no other president in American history came close to achieving.

I have no doubt that many shrewd minds in the market saw this coming. A couple of friends who deal with currencies asked for my opinion shortly after Obama's election win. I warned them that his economic policies were extremely dangerous and most certainly unsustainable and that if pursued America's triple AAA rating would be quickly threatened. We now find that Berkshire Hathaway was selling two-year bonds that had a lower interest rate than two-year treasuries while Johnson & Johnson and Lowe have been borrowing at lower rates than the Obama administration. The same goes for Procter & Gamble Co. Moreover, about ten days ago Moody's publicly warned that treasuries are close to losing their triple AAA rating.

Let us try to put this in perspective. Under the brilliant financial leadership of one Barack Hussein Obama USA Incorporated -- the world's largest company with 300 million captive shareholders and astronomical resources at its disposal -- can no longer borrow at a lower rate than a certain octogenarian and a company that manufactures pharmaceuticals and medical devices. I guess this is one of the reasons Obama told those Hollywood airheads that "You ain't seen nothing' yet!"

Now what could possibly have spooked the markets? Let me see. There is the Democrats' utter contempt for the American people, the constitution, parliamentary procedure and anything remotely related to common decency as demonstrated by the ruthless way they rammed Obama's financially ruinous healthcare bill through Congress while America's absolutely corrupt media cheered them on.

This witches brew is so poisonous that the markets are clearly reacting. But why? Oddly enough when people lend money it is customary for them to expect repayment. It is equally customary for loans to include a risk premium in case of default. The greater the risk the higher the premium. Thanks to the Democrats' criminal behavior the risk premium on US bonds is rising. These mendacious, ignorant and venal wastrels actually believed they could deceive the markets with rigged estimates.

These people are so clever they thought no one would notice that they had fixed the deficit figure by counting 10 years of revenue while only including six years of spending. How stupid are these political hacks to think clumsy tricks like this would succeed? They are clearly guilty of practicing the kind of financial chicanery that has put company accountants and CEOs in jail, which is where most of these Democrats should be.

No sooner did they produce the fantasy figures than it was revealed that that their bill would actually raise deficits by nearly $600 billion over 10 years. The Cato Institute estimated a annual increase in costs of 7 per cent (meaning that they double ever 10 years), a rate that exceeds predicted revenue. Meanwhile, the immediate effects of the bill are already being felt with respect profits and jobs. The Democrats' response was swift and predictable, with Kommissar Waxman from California demanding show trials for CEOs so he can entertain his Hollywood comrades with his impersonation of the execrable Andrei Vyshinsky.

But the monstrous health bill needs to seen as part of a comprehensive attack on the US economy. Therefore the markets are also examining Obama's tax policies, regulatory proposals, insane views on energy production and pricing plus his borrowing and spending programs. And let us not forget the country's social security Ponzi scheme that is just about to go negative. But it is not just the financial side that is being considered, there are also the political aspects. And they ain't pretty.

Some of these market participants may have come to the conclusion that they are witnessing the beginning of the irreversible decline of the Republic as the country's ruling gang of politicians behave like the Third-World thugs they admire so much.

The first thing socialist gangsters do when they grab power is exempt themselves from the laws they lay down for the masses. The first thing the Democrats did when they passed their hideous bill was to exempt themselves from its regulations and laws. Welcome to America's nomenklatura. The conclusion: The whole bloody ball of wax is unsustainable. USA Incorporated is being run into the ground by a bunch of thuggish leftwing incompetents blinded by a destructive ideology, greedy for power and having complete contempt for the US and its Constitution.

If left unchecked this mob of economic wreckers will eventually turn the once mighty United States into an unrecognizable slagheap. Those who think this is not possible, that somehow the US is invulnerable to these policies, are not acquainted with economic history. Every economy -- no matter how powerful -- is capable of being destroyed from within. Seventy-five years ago Fritz Machlup wrote:

Austria was successful in pushing through policies which are popular all over the world. Austria has most impressive records in five lines: she increased public expenditures, she increased wages, she increased social benefits, she increased bank credits, she increased consumption. After all those achievements she was on the verge of ruin. (Fritz Machlup, The Consumption of Capital in Austria, Review of Economic Statistics, II, 1935, p. 19).

Perhaps history really does repeat itself.



Author: Gerard Jackson

Gerard Jackson

Gerard Jackson is Brookes economics editor.

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