September 13, 2010 by Bob Livingston
President Barack Obama unleashed his October Surprise a little early, announcing last week his plan to get the Federal Reserve to print $50 billion more dollars and funnel it to the unions under the guise of improving America’s roads, railways and runways. Perhaps he wanted to get a head start in case this one fails, too.
The plan will bring the total amount of stimulus dollars allocated for infrastructure to $280 billion. You remember those shovel-ready projects that were supposed to stimulate the economy? They apparently weren’t so ready after all. Only about a third of the original $230 million has been spent.
Yet Obama feels the need to pile on more. He couched the plan, called the “Plan to Renew and Expand America’s Roads, Railways and Runways,” as a way to put people back to work. But the only people who are going to benefit are unions and Democrats running for the House and Senate who are going to get more campaign cash from the unions as a result of what columnist Michelle Malkin calls “The Mother of all Big Boondoggles.”
Malkin points out that because of Obama’s Executive Order 13502, contractors who bid on large-scale public construction projects worth $25 million or more must submit to union representation for its employees. Mandates of this sort raise the cost of projects from 9 percent to 18 percent depending on the project and the market, research has shown.
Even unions recognize that projects using union labor increase costs. Recent reports indicate that when labor unions need construction projects done they more often than not chose non-union contractors to do the work, admitting it’s done to save costs.
But Obama is willing to expedite the collapse of the United States economy for the immediate benefit of his union thug buddies and, ultimately — he hopes — his Democrat lackeys in Congress.
Whether he can get such a bill through Congress is another story. Even Democrats, sensing the mood of a populace growing increasingly skeptical of more government spending, are leery of voting for anything that will add the country’s debt burden.
It’s not that they oppose the spending. Were we a year or more away from elections Democrats — and not a few Republicans — would be eager to pile on the spending. After all, spending other people’s money is what the elected elites do best.
But politicians read polls, and polls showing that Republicans hold a 13-point favorability edge over Democrats in the Congressional elections have the Democrats feeling queasy.
Republicans — once so demoralized by the drubbing they received in the 2006 and 2008 elections — are feeling emboldened by the same news. They are — mostly reluctantly — joining with the Tea Parties to oppose more spending and more debt. Some of the GOP Congressmen who supported stimulus spending pushed first by big government, big spending President George W. Bush and then Obama have been handed their walking papers and are about to join millions of Americans in the unemployment lines.
That’s a good place for them. Hopefully they will be joined by many more elected (and suddenly newly-unelected) elitists after Nov. 2.
But if the GOP does as well as some are predicting and take the House — and possibly the Senate — they’d better not forget that the electorate is cranky. Joe and Jane Voter are fed up with politicians who get richer as “public servants” while Joe and Jane cut back on spending, try to pay down their debt and one or both are either unemployed or supporting an unemployed family member.
Joe and Jane expect the Republicans to repeal Obamacare, cut government spending, cut taxes, bring fiscal sanity back to Washington, eliminate regulations that hamper businesses and finally, create an environment that allows manufacturers and other businesses to return to America. Joe and Jane are aware that the biggest tax increase in U.S. history looms, as the Bush tax cuts are set to expire with 2010, and they expect Republicans to do something about that.
If the Republicans fail and continue to conduct business as usual — that is as they did while in the majority most of the period from 1994 until 2006 — Republicans will suffer in two years hence the same fate Democrats are about to suffer.
Meanwhile Recovery Summer — at least in the minds of Obama and Vice President Joe Biden — rolls on. (Don’t tell them summer’s over and Labor Day is behind us.) Unemployment remains high, housing starts and construction, manufacturing and consumer purchasing remain low. That’s quite the recovery.
By pouring obscene amounts of stimulus dollars into Wall Street, the banks and goofy programs that encourage consumers to spend money they wouldn’t otherwise spend, first Bush and then Obama and their Keynesian economic teams created a lot of little artificial bubbles throughout the economy. They gave the impression of a recovery but are now beginning to pop.
As the National Inflation Association wrote on Sept. 1:
The pain that was felt after the collapse of Lehman Brothers (in September 2008) is nothing compared to the pain that will come when we begin to feel the effects of bailing out the rest of Wall Street. U.S. second quarter GDP growth was revised down on (Aug. 27) from 2.4% to 1.6%. In order to get this 1.6% GDP growth, the U.S. government had to spend $3.7 trillion on bailouts, stimulus bills, the buying of mortgage backed securities, and other commitments.
General Motors reported today that their August deliveries fell 25% from one year ago to 185,176 vehicles. The U.S. government used "cash for clunkers" to buy GDP growth in 2009, but that growth stole from future automobile sales. NIA believes that GM’s sales decline is a sign that the U.S. will likely see a sharp contraction in GDP beginning in the third-quarter, which will lead to the Federal Reserve implementing the mother of all quantitative easing and cause a massive sell off in the U.S. dollar.
Christina Romer, outgoing Chairwoman of Obama’s Council of Economic Advisers, today called for more government spending and less taxes as a way to bring down unemployment. The combination of more government spending and less taxes equals massive inflation, but this represents the state of mind in Washington today. Inflation is still the last thing on their minds because they don’t see it yet.
Even though we might not see massive across the board price inflation at this time, gold and silver prices have been surging ever since NIA released its article "Gold and Silver Capitulation is Near" on July 28th. Gold is very close to breaking its all time nominal high of $1,264.90 per ounce set during June and silver is getting ready to test the critical $20-$21 per ounce resistance level.
Rising gold and silver prices indicate that the U.S. is headed for an explosion in budget deficits that will rise far beyond what it can pay for through borrowing. Leading Chinese economists are now calling Japanese debt less risky than U.S. debt and with the Japanese savings rate in decline, the U.S. will soon have nobody left to borrow from. The only option will be monetization and already the Federal Reserve is getting ready to buy $10 billion to $30 billion per month in U.S. treasuries to keep its balance sheet at inflated levels.
There are now 50 million Americans on Medicaid, with annual Medicaid costs rising 36% over the past two years to $273 billion. The recently enacted health care bill will add 16 million more Americans to Medicaid beginning in 2014, but the U.S. government will likely go bust by then. It is impossible to have an economic recovery when jobless benefits are encouraging Americans to stay unemployed. U.S. unemployment insurance spending has nearly quadrupled since 2007 to $160 billion annually. Even food stamp costs have surged 80% over the past two years to $70 billion annually.
Once Americans get used to receiving and relying on government entitlement programs, it is hard to wean them off of them. NIA has been hearing reports from members with friends who say they will only "come out of retirement" if they can find a job that pays $25 per hour or more, because with anything less it wouldn’t be worth losing their jobless and food stamp benefits. Americans expect to receive their jobless benefits forever and we are sure Obama will continue to extend them leading up to the 2012 election.
There are now countless warning signs all around us on a daily basis that the U.S. is headed for a complete societal collapse.
The Federal Reserve’s reign of economic terror is nearing an end. It has led to the loss of wealth — the dollar has lost about 95 percent of its value since 1913 — and mounting debt and those who thought they were coming out ahead by putting their money in a savings account have learned their money actually lost value due to inflation.
For the last 11 years the stock market has been stagnant, so those with retirement plans in mutual funds have not made money either. And some economists are predicting a 50 percent market crash by year’s end. (Meanwhile gold has climbed from $278 per ounce to $1,250 an ounce in the same time frame. Gold expert Jim Sinclair predicts gold to rise to $1,650 and beyond by mid-January.)
It seems the only ones making money are the elected elites, CEOs of the now mostly nationalized (through regulations that removed competition and granting of favored status gained by subsidizing the elected elites) large corporations, Wall Street fat cats, and Big Pharma. According to Philstockworld.com, about 10,000 individuals hold 30 percent of the nation’s wealth. The middle class has grown poorer and the number of people on the government dole has increased.
This discrepancy can’t continue and a major correction will have to occur. The free-spending actions of Bush and Obama have only pushed that correction down the tracks a little further. We agree with the NIA that the U.S. is headed for an economic collapse.
The question is; are you prepared? If you have bought gold and silver, stockpiled food, water, guns and ammunition and are prepared to grow your own food and barter for more food, water and guns, you are as ready as you can be.
Get ready. The ride is about to get bumpy. And who knows? Obama may yet have another surprise for us in October.