National Debtbusters

Friday, April 8, 2011

The Most Perilous National Security Crisis Since 1860

By Mark Alexander · Thursday, April 7, 2011

A Time to Choose: Prosperity or Poverty

"To preserve independence...we must not let our rulers load us with perpetual debt. We must make our election between economy and Liberty, or profusion and servitude. ... The fore horse of this frightful team is public debt. Taxation follow that, and in its turn wretchedness and oppression." --Thomas Jefferson

In the news this week, Barack Hussein Obama announced his 2012 re-election bid¹.
Plus...
The Treasury Department quietly mentioned that last month the government spent 8.2 times its net revenue.
Plus...
The Continuing Resolution authorizing additional borrowing for federal spending, a source of much political pretentiousness, expires on Friday. If there is no renewed CR, the result will be a partial government shutdown² (read: "debt accumulation slowdown"), with dire consequences such as the suspension of IRS audits and cherry blossom festivals. (Republicans could shutter 80 percent of central government operations, and the effect on those of us who actually pay taxes would be beneficial not detrimental.) Of course, the shutdown showdown³ is just the opening salvo in a war over how to fund the remaining five months of FY2011, which ends on 30 September, and, moreover, government budgets for 2012 and beyond.
Plus...
The price of oil, amid the Middle East meltdown precipitated by Obama's leadership vacuum, is on the fast track back to its record high of $147/barrel. Indeed, it may be headed to more than $200/barrel if the Saudi government is the next to fall. Despite what the Obama administration would have us believe, oil is the lifeblood of the U.S. and world economy, and we have a critical national interest in sustaining that supply. However, because of Leftist energy policies, we do not have energy hedges including domestic oil and nuclear power alternatives.
Plus...
Consequently, gold bullion -- the world's primary barometer measuring concern about inflation, national debt, securities and real estate price declines, fiat currency failures, and warfare and social unrest -- hit a nominal record high of $1,457 per troy ounce.
However, the most significant news this week, in light of the aforementioned reports, is the big Beltway budget brawl between those who are advocating the right path to economic prosperity and Liberty, and those who would stay the course toward economic catastrophe and tyranny.
The raucous political rhetoric over the federal budget sounds much like the perennial hyperbole between Right and Left over the constitutional authority⁴ of the central government and its spending priorities. However, the outcome of the current debate is much more than a budget agreement for next year and the next decade: It will determine whether our nation will avert systemic economic collapse or collide with it head-on, plunging us into the most significant National Security Crisis since 1860, and condemning our posterity to the inevitable institution of socialism and the abject tyranny that accompanies it.
If a majority of our countrymen are not able to distinguish between the veracity of this grave assertion and political playbook hyperbole, the consequences for the next generation of Americans will be grim as the light of Liberty fades.
The danger of public debt was of great concern to our nation's Founders.
As George Washington wrote, "No pecuniary consideration is more urgent, than the regular redemption and discharge of the public debt: on none can delay be more injurious, or an economy of time more valuable." James Madison declared, "Having never been a proselyte to the doctrine, that public debts are public benefits ... I consider them, on the contrary, as evils which ought to be removed as fast as honor and justice will permit." Thomas Jefferson warned, "To preserve independence ... we must not let our rulers load us with perpetual debt. We must make our election between economy and Liberty, or profusion and servitude. ... The fore horse of this frightful team is public debt. Taxation follow that, and in its turn wretchedness and oppression."
Regrettably, few today attach much reverence to the words of such men. Fewer still -- especially those who lived through the last Great Depression -- remain among us to attest in first person to its tragic consequences for our nation, for its people, and for our legacy of Liberty⁵.
To paraphrase philosopher George Santayana, "Ignorance of historical tragedy begets its replication."
Make no mistake: We are at a tipping point.
There is a gathering economic storm, one that will grind down the pillars of free enterprise and, ultimately, erode our Constitution's First Principles⁶ and the Rule of Law⁷ it enshrines.
This dispute between Republicans of the 112th Congress and Barack Hussein Obama's Leftists cadres⁸ is an epic contest to determine whetherObama's agenda⁹ to "fundamentally transform the United States of America" by imploding free enterprise¹⁰ will ultimately succeed.
On the front line of this debate is House Budget Committee Chairman Paul Ryan (R-WI) and a supporting cast of Speaker John Boehner¹¹ and a Republican majority, including 87 House freshmen¹², most of whom were elected on their singular devotion to the restoration of constitutional authority over the central government. Notably and unfortunately, however, there has been scant mention of our Constitution, though anydebate with a Leftist¹³ should start there.
Earlier this week, Rep. Ryan introduced his Prosperity Project Budget¹⁴, which slows our slide toward insolvency by cutting $6.2 trillion in spending and $4.4 trillion in new debt over the next 10 years. (See the full budget proposal for FY2012 and beyond here¹⁵.) Ryan rightly claims his budget proposal is the last opportunity to avert the looming economic crisis, and proper analysis¹⁶ bears him out.
"Washington," Ryan said, "has not been telling you the truth¹⁷" about the consequences of unbridled government spending and debt accumulation. He's right, of course, and the Democrats are, therefore, desperately trying to defeat the Republicans' House budget resolution in favor of Obama'sDebt Bomb¹⁸.
"This path," said Ryan, "has left us on the brink of national bankruptcy, and continuing down it will push our nation into ... an unprecedented economic collapse."
"[Obama] ... is not the first public official to have drifted down this perilous path," he said, "and those members of his party who are defending his do-nothing approach while demagoging our solutions -- well, they are certainly not the first, either. In recent years, both political parties have squandered the public's trust."

Ryan added that the House is calling for "fundamental reforms" that lower tax rates and broaden the base. "We don't have a tax problem," he insisted. "The problem with our deficit is not because Americans are taxed too little. So we're not going to go down the path of raising taxes on people and raising taxes on the economy."
While Ryan's plan puts the brakes on Obama's unmitigated spending proposals, it is notable that, despite all the Leftist consternation, it reduces the growth of government spending (not overall spending) by only 40 percent over the next decade; it increases government debt from $14 trillion to more than $23 trillion (almost a trillion each year); and it doesn't project a balanced budget (including interest payments) until 2040.
There's the added caveat (wildcard) that Ryan's projections don't take into account the potential for hyperinflation.
As I have noted before, however, it will likely take as long to undo this debt debacle as it took to create it, which elucidates the urgency of electing a veto-proof conservative majority in the U.S. Senate in 2012, and adding to the ranks of constitutional constructionists in the House. With Ryan's plan as a foundation, only then can Congress begin to restore constitutional Rule of Law in defense of our Essential Liberty.
However, in the unlikely event that some significant portion of Ryan's prosperity proposal is actually implemented, without strong conservative majorities in Congress it is doubtful that legislators will stay the course. Thus, should conservatives win the Senate and White House in 2012, the first order of business must be to enact the chief components of the Patriot Declaration¹⁹, sections the First and Fourth: The Enumerated Powers Act and a Balanced Budget Amendment.
On his way out of town on a re-election campaign junket, Obama, who once declared he would "cut the budget deficit in half by the end of my first term," paused to insist pejoratively that Republicans should "act like grownups." He added, "I think the American people recognize we are in some pretty unsettled times right now, we don't have time for games, we don't have time for trying to score political points and maneuvering, not on this."
Of course, "trying to score political points and maneuvering" is precisely Obama's game.
White House press secretary Jay Carney summed it up this way: "While we agree on ... Congressman Ryan's goal, we strongly disagree with his approach, because any plan to reduce our deficit substantially must reflect American values of fairness and shared sacrifice." These, of course, are metaphors for redistribution of wealth. In fact, even if Obama confiscated all individual income over $250,000, the income threshold he has targeted for tax increases, that wouldn't begin to defuse his debt bomb. Of course, it would put tens-of-millions of people who produce goods and services supported by "the rich," out of work, and by year two, there would be few incomes over $250,000.

Of course, Obama is banking on the assumption that the American people are just too dim-witted to understand the consequences of the debt bomb he's preparing to drop on their heads. In the case of his Democrat Party²⁰, he is undoubtedly correct.
Democratic Socialism²¹, like National Socialism, is nothing more than Marxist Socialism repackaged. Likewise, it seeks a centrally planned economy directed by a single-party state that controls economic production via regulation and income redistribution.

In 1964, Ronald Reagan²² introduced "A Time for Choosing²³." Four decades later, and much closer to the decline that Reagan foretold, Congressman Mike Pence (R-IN) issued "Another Time for Choosing²⁴," reiterating the Reagan model for restoration²⁵.
"You and I have a rendezvous with destiny," Reagan concluded. "We will preserve for our children this, the last best hope of man on earth, or we will sentence them to take the first step into a thousand years of darkness."
Our time to choose²⁶ has nearly expired.

Monday, March 14, 2011

Spain hit by debt downgrade; Moody's cites banks

(AP) – March 10, 2011

MADRID (AP) — Moody's downgraded Spain's credit rating on Thursday, citing worries over the cost of the banking sector's restructuring, the government's ability to achieve its borrowing reduction targets and grim economic growth prospects.

The agency reduced Spain's rating by one notch to Aa2 and warned that a further downgrade is possible if indications emerge that Spain's fiscal targets will be missed, and if the public debt ratio increases more rapidly than currently expected.

Moody's Investors Services also warned that concerns could rise if funding requirements for Spain's troubled savings banks — called cajas — end up greater than anticipated. They have been hit particularly hard by the nation's real estate bubble that burst, saddling them with billions of euros in bad loans.

On the plus side, Moody's noted the government's resolve in dealing with its problems and added that Spain's debt sustainability is not under threat.

Spanish Finance Minister Elena Salgado said the government agrees that the nation must make a better effort to push debt-laden regional governments to reduce their deficits, but added that Moody's should have waited to issue its report until the Bank of Spain later Thursday issues detailed breakdown on how much money the cajas need.

Spain's main stock index sank 1.3 percent after the report was released, and the yield on Spain's ten-year bonds rose 0.01 percentage point to 5.50 percent.

One of the main reasons for the downgrade was Moody's expectation that the eventual cost of recapitalizing the cajas will be much more than the government's current projections. While the government has previously estimated they need at most euro20 billion ($27.8 billion), or less than 2 percent of Spain's gross domestic product, Moody's predicted the cost could reach euro40-50 billion and might eventually come in at a massive euro100-120 billion.

The Spanish government is trying to get a handle on its borrowings by reducing spending and raising taxes, and reduced its budget deficit by around two percentage points last year to 9.2 percent of national income.

But unemployment has shot up to more than 20 percent amid predictions of gloomy economic growth, and Spain is also being clobbered by high oil prices sent skyrocketing by the unrest in Libya.

"Spain's vulnerability to market disruption remains elevated given the high funding requirements, not only for the sovereign but also for the regional governments and the banks," Moody's said.

The big worry in the markets is that Spain will get sucked into Europe's debt crisis, which has already seen Greece and Ireland get financial bailouts from their partners in the EU and the International Monetary Fund. Portugal is widely expected to be next.

Most analysts think that the EU can contain the government debt crisis, even if Portugal is forced to tap a bailout fund. However, Spain has the eurozone's fourth largest economy and could test the limits of the existing bailout fund — the European Financial Stability Facility, or EFSF. That would potentially put the euro project itself in jeopardy if governments don't put up more cash.

"It remains essential that the EFSF is bolstered to reassure markets that there is enough ammunition to protect monetary union against all eventualities," said Jane Foley, senior currency strategist at Rabobank International.

Earlier this week, Moody's Investor Services cut its rating on Greece, prompting a sharp tirade from the Greek government about the role of credit rating agencies.

The downgrades have come amid signs that Europe's debt crisis is flaring up again ahead of the March 24-25 summit of EU leaders in Brussels. Portugal's cost to borrow 10-year bonds stands near a euro-era record.

Though a "comprehensive solution" to the debt crisis has been trumpeted, there are growing fears that the 17 countries that use the euro will not agree a revamped bailout mechanism, set new rules on budget deficits and a system of support funds to flow from richer countries in the single currency bloc to the poorest.

Moody's had put Spain on notice for a downgrade in December.

Pylas reported from London.

Escalating national debt threatens future

By Edgar Ortiz

Atlanta Journal-Constitution

February 13, 2011

The future of America can’t be built on the foundations of debt, deficits and lack of fiscal discipline.

Ensuring the prosperity and sustained growth of the American economy requires federal, state and local governments to make serious and drastic changes to their profligate spending habits.

Current levels of government spending can’t be maintained, and at their current rate, threaten our economy, way of life and national security.

Deficit spending has been a financing tool widely used by both political parties in Washington.

The growth of the national debt paints a grim and sobering picture of what we are passing down to future generations:

● The national debt has nearly tripled over the last decade, growing from $5.5 trillion in 1998 to more than $14 trillion in 2011.

● In fiscal year 2010, Washington ran a budget deficit of $1.3 trillion, the largest since World War II, for a record spending of $30,000 per U.S. household.

Another major reason for concern is the increased dependency of our federal government on foreign lenders to pay for our spendthrift ways. Foreign lenders own more than 49 percent of the U.S. public debt.

Records show some of the largest holders of our debt are foreign governments whose policies and economic ambitions may be on a collision track with our best interest.

Research by economists Kenneth Rogoff and Carmen Reinhart puts the spotlight on the impact of high levels of debt on the economy. Their findings show that debt weighs heavily on GDP growth. Once a nation’s public debt exceeds 90 percent of GDP, the “tipping point,” the growth rate of the economy slows down by 1 percent.

The U.S. economy with a debt to GDP ratio of 84 percent is approaching this critical threshold.

The looming state, local and pension fund imbalances could easily push our debt levels beyond this critical point and this doesn’t bode well for our economic future, lower unemployment and a sustained recovery.

The key question is then, what’s the solution?

If history is a guide, research by the McKinsey Global Institute can help us find the answer. Their analysis of 32 episodes of deleveraging that followed a financial crisis shows that responses to a crisis fit into one of the four archetypes:

1. “Belt Tightening”

2. “High Inflation”

3. “Massive Default”

4. “Growing Out of Debt”

Although historically, “Belt Tightening” was the most common response, there is no credible signal from Washington of a legislative strategy to reign upon government spending — making the required cuts to entitlement programs (Medicare, Medicaid, Social Security), eliminating perks, increasing taxes and shrinking the size of government.

The likelihood of “Massive Default” is extremely low, but things could change and “Growing out of Debt” is a nice, theoretical discussion.

The most likely scenario, given the Federal Reserve predilection for keeping interest rates low via quantitative easing programs is “High Inflation” (printing money).

Each tax dollar that goes to pay for interest on the debt is a missed opportunity to invest in America’s future, improve its schools, update its aging roads and bridges, invest in innovation and find new sources of energy to lessen our dependency on external energy sources.

In our present course of spend now, pay later, we are not being fair to future generations. It is not part of the American character that built the most affluent and freest nation on earth. They deserve better. We need to live within our means and pay for our own expenses.

Edgar Ortiz is founder and CEO of Strategic Analytic Solutions LLC, an Atlanta-based consultancy in business planning, strategic marketing and information-based strategies.

Monday, February 14, 2011

Greek gov't slams international debt inspectors

By ELENA BECATOROS

BusinessWeek

Feb. 12, 2011

ATHENS, GREECE - Greece on Saturday slammed European and International Monetary Fund debt inspectors overseeing the country's efforts to reform its economy, accusing them of interfering in the debt-ridden country's internal affairs and saying they had overstepped their mark.

In an unusually harshly worded statement issued in the early hours of Saturday morning, government spokesman Giorgos Petalotis said the behavior of the inspectors at a news conference the previous day had been unacceptable.

The IMF, European Central Bank and European Commission delegation said Greece must privatize euro50 billion ($68 billion) in state assets and speed up structural reforms in the next few months to keep the country's troubled finances afloat. The IMF representative also said some of Greece's frequent demonstrations against the government's reforms were being carried out by groups angry at the prospect of losing "unfair advantages and privileges."

Petalotis said in his statement that, "We have needs, but we also have limits. And we do not negotiate the limits of our dignity with anyone," He added: "We take orders only from the Greek people."

It is the first time the government has publicly struck back at the IMF and EU, which have rescued Greece from bankruptcy but at a price many Greeks consider too harsh.

The opposition conservative party, however, struck back at the government, saying it was "too late for false tears" and that the government's "post-midnight theatrical performance is a farce."

Greece's economy is under strict supervision as part of a deal for the country to receive a euro110 billion package of bailout loans from the IMF and other European Union countries that use the euro -- funds that saved Greece from defaulting on its mountainous debts last May.

In return, the government has been pushing through stringent and unpopular reforms, including cutting public sector salaries and pensions, increasing taxes and overhauling labor laws. The austerity program has led labor unions to stage a series of strikes and demonstrations.

Batches of the loan are released every quarter, before which representatives from the IMF, EC and ECB visit Athens to review progress.

On Friday, the representatives -- collectively dubbed the 'troika' in Greece -- said Greece must privatize euro50 billion ($68 billion) in state assets and speed up structural reforms in the next few months to keep the country's troubled finances afloat.

IMF mission chief Poul Thomsen said Greece's long-term reforms were being "fiercely tested by vested interests." He said some of those demonstrating against the reforms, such as truck drivers and pharmacists, were "people who are angry because the government wants reforms that will take away their privileges."

Thomsen said he was "not surprised that these groups are protesting but I'm also convinced ... that the Greek population see it for what it is: an attempt to preserve their unfair advantages and privileges."

The troika's Friday afternoon press conference had led to quick outrage in sections of the Greek press, with one anchor on a private network describing Thomsen's remarks as being "unacceptable." But there was no government reaction until Petalotis' statement shortly before 2 a.m.

"We asked them to help and we are fully honoring our commitments. But we didn't ask for anyone to intervene in our country's internal affairs," he said, adding the government would make clear that "everyone must understand their role."

Greek national debt is set to exceed 150 percent of GDP this year, and during the news conference the troika laid out the new privatization program worth euro50 billion through 2015 -- seven times larger than a target set three months ago.

Thomsen scoffed at a suggestion that Greece might sell its ancient monuments to raise money, but argued "the mismanagement of public property is a major source of waste" in Greece.

Privatization targets are likely to include state companies not listed on the stock market and the development of public land, including Olympic facilities that have languished since the Athens Games in 2004. Greece will seek euro15 billion ($20 billion) in privatization and real estate development this year alone, according to Finance Ministry officials.

Petalotis said the government had frequently spoken of the need to utilize state property, but stressed that any such program would have to be done transparently and "in no case means the sale of public land."

"It is equally obvious that only the Greek government is able to take these decisions," he said.

--------

Associated Press writer Derek Gatopoulos contributed to this report.

Japan Government Debt Hits Record Y919 Trillion

TOKYO (Dow Jones)--Japan's outstanding public debt hit a record Y919.151 trillion at the end of last year, the Finance Ministry said Thursday, likely fueling concerns over the nation's fiscal health and adding to a sense of urgency within the government to quickly formulate a tax hike plan.

The ministry's quarterly data showed public debt rose 1.1% from the end of September, reaching a level equivalent to 194% of Japan's nominal gross domestic product for the fiscal year ended March 2010.

[This article is a stub - You must be a subscriber to the Wall Street Journal to view the rest.]

In Congress, Bernanke Faces Questions About Inflation

By SEWELL CHAN

Feb 9, 2011

WASHINGTON — The Federal Reserve chairman, Ben S. Bernanke, parried tough questions Wednesday about rising gasoline prices in the United States and the soaring cost of food and grains in the emerging world as he defended the central bank’s $600 billion program to shore up the recovery.

Mr. Bernanke said it was “certainly possible” that the Fed might cut short its efforts to loosen credit by buying Treasury bonds, especially if domestic inflation were to flare. But Mr. Bernanke maintained that for now, inflation was comfortably in check despite rising commodity prices overseas.

In his first appearance before House lawmakers since Republicans took control of the chamber last month, they repeatedly tried to draw him into the fierce debate over a looming vote to raise the government’s $14.3 trillion borrowing limit.

But the Fed chairman repeatedly declined to side with one party or the other on what was needed to plug the budget deficit. “Congress is going to have to decide where its values are, whether it wants to raise taxes, whether it wants to cut spending or whether it wants some combination,” Mr. Bernanke said.

The chairman reiterated his view that toying with the debt ceiling — some Republicans want to use the vote to force the Obama administration to make immediate spending cuts — could be disastrous if it resulted in a time-consuming debate that worried debt markets and forced the Treasury to default.

Representative Paul D. Ryan of Wisconsin, the new chairman of the House Budget Committee and a vocal skeptic of the Fed’s bond-buying effort, told Mr. Bernanke: “My concern is that the costs of the Fed’s current monetary policy — the money creation and massive balance sheet expansion — will come to outweigh the perceived short-term benefits.”

Mr. Ryan described “a sharp rise in a variety of key global commodity and basic material prices,” and an increase in interest rates of longer-term Treasury securities. And while conceding that American consumers were not yet experiencing substantially higher prices, Mr. Ryan warned that “the inflation dynamic can be quick to materialize and painful to eradicate once it takes hold.”

Mr. Ryan all but accused Mr. Bernanke of devaluing the dollar, saying, “There is nothing more insidious that a country can do to its citizens than debase its currency.”

Mr. Bernanke said the rise in commodity prices was mostly “a result of the very strong demand from fast-growing emerging market economies, coupled, in some cases, with constraints on supply.” He did not mention China by name, but he has in the past.

He added that overall inflation was “still quite low” and that longer-term inflation expectations, which can influence short-term changes in prices, were stable.

In 2010, a closely watched measure of inflation, the price index for personal consumption expenditures, rose by 1.2 percent, compared with 2.4 percent in 2009. And core inflation, which excludes the food and energy prices, was 0.7 percent in 2010, compared with around 2.5 percent in 2007. Wages rose only 1.7 percent last year.

Mr. Bernanke also denied printing money to finance government borrowing, saying, “What we’re doing here is a temporary measure that will be reversed.” Eventually, the Fed sells the bonds it acquires.

While part of the historically large deficits of the last two years stem from the government’s responses to the recession, Mr. Bernanke said the budget would remain on an unsustainable path even as the economy improved because of an aging population and rising health care costs.

Though Mr. Bernanke did not take sides on the most volatile questions of fiscal policy — whether to cut military spending, change entitlement programs like Medicare and raise personal income tax rates — he did offer lawmakers some suggestions.

He told Representative Betty McCollum, a Minnesota Democrat, that Congress should close myriad corporate tax loopholes and then lower the corporate tax rate. He told Representative Mike Honda, a California Democrat, that wise investments in education, including community colleges and on-the-job training, were essential to lowering unemployment.

The chairman also offered some of his most detailed comments to date on what he called China’s “counterproductive policy” of undervaluing its currency, the renminbi.

“They have an inflation problem, and the way they’re addressing it is not by raising their currency value, which would reduce the demand for their exports,” he told Representative Tim Ryan, an Ohio Democrat. “Rather, they are leaving it where it is, and they are instead trying to reduce domestic demand through higher interest rates. And it would seem like a better strategy would be to let domestic demand be what it is and let people enjoy a higher standard of living in China, and reduce their exports via a higher exchange rate.”

On Tuesday, China raised interest rates for the third time since October, and many economists in Asia expect that China will do so again this year.

Mr. Bernanke said the Fed was prepared to start raising interest rates when the time came. “Just like a quarterback has to lead a receiver,” he told Representative James Lankford, an Oklahoma Republican, the Fed has to begin tightening monetary policy before inflation becomes a problem.

But Representative Todd Rokita, Republican of Indiana, said the Fed had a poor track record in that regard. “Can you name one time in your agency’s history where you got it right, where you got on the brakes in time to correct runaway inflation?” he asked.

Mr. Bernanke pointed to his predecessor Paul A. Volcker, who crushed inflation in the early 1980s by sharply raising interest rates. But Mr. Rokita said the Fed had not acted in time.

As Mr. Bernanke spoke, Representative Ron Paul, a Texas Republican, held his own hearing to lambast the Fed.

“There is a great recovery going on,” said Mr. Paul, who has advocated abolishing the Fed and now leads a Financial Services subcommittee that oversees the Fed. “But the people don’t feel that way.”

The Fed did not take part in the hearing, at which three experts testified.

Christine Hauser contributed reporting from New York.

Saturday, January 29, 2011

NYT: Day of angry protest stuns Egypt

With the January 2011 protests in Egypt in full swing, it is appropriate to take a look at some of the roots of this international crisis. This New York Times story in 2008 was a precursor to what we are experiencing in January 2011. - Editor

By Michael Slackman

Published: Sunday, April 6, 2008

CAIRO — The center of this normally bustling, overcrowded, traffic-clogged city was largely quiet Sunday, the roads nearly empty, many of the stores shuttered, as the riot police came out in force to prevent a general strike aimed at signaling widespread discontent with President Hosni Mubarak and his government.

Egypt has virtually no organized political opposition, except the Muslim Brotherhood, which is banned and barred from politics.

But events Sunday underscored the rise of a potentially more dangerous challenge to the government's monopoly on power: Widespread public outrage and a growing willingness by workers and professionals to press their demands by striking.

The main complaint is economic, driven by rising food prices, depressed salaries and what opposition leaders say is an unprecedented gap between rich and poor. It is hard to say if the streets were empty Sunday because people stayed home for fear of getting caught in the crossfire between protesters and police, or because of the call to stay home as a form of protest.

Either way, the government took the threat of a mass mobilization so seriously that it issued a warning to potential strikers, saying it would "take necessary and resolute measures toward any attempt to demonstrate, impede traffic, hamper work in public facilities or to incite any of this."

In Cairo, riot police officers massed in Tahrir Square, the center of the city. They stood in formation outside the lawyers', doctors' and journalists' syndicates. State security agents had visited government workers in advance and ordered them to attend work on Sunday, some workers said. At the lawyers' syndicate, a few hundred protesters stood on the roof and on a balcony chanting "Down, down Hosni Mubarak."

Hundreds of students demonstrated at three universities in Cairo.

In Mahalla al-Kobra, the center of Egypt's textile industry north of Cairo, a melee broke out late in the day as the riot police fired tear gas and workers threw stones. Officials said there were more than 200 arrests around the country, including at least seven people arrested for their efforts to use the Internet to promote the call for a day of unrest.

"I am not about to claim that the Egyptian people are finally rebelling," said Abdel Ahab El Meseery, an organizer with Kifaya, an opposition movement, who once served as the Arab League's cultural attaché to the United Nations. "The element of fear is there. The people are afraid of the government, but the government is as afraid of the people."

Under Mubarak and his governing National Democratic Party, officials have succeeded in stunting the growth and influence of political opposition. The only opposition group with a broad network and a core constituency is the Muslim Brotherhood, which has little ability to effect political change because its members are routinely arrested and jailed. Local elections are scheduled for Tuesday, and the government has arrested hundreds of Brotherhood members and supporters in advance.

The Brotherhood, struggling to regain its footing after the intense and persistent police pressure, distanced itself from the call to strike and said it would not participate.

Since September 2007 the government itself has scrambled to keep pace with the growing reliance on strikes as a tool to press worker demands. Textile workers, tax clerks and university professors have all held strikes or threatened to strike.

Doctors have also threatened to strike, complaining that physicians with 20 years experience, for example, often make no more than 450 Egyptian pounds a month, the equivalent of about $80.

"What made us take more confrontational measures is that we saw other groups doing so and making their demands," said Hamdy El Sayyid, longtime chairman of the doctors' syndicate.

But what has turned the demands of individual workers into a potential mass movement, officials and political analysts said, has been inflation on food products, mostly bread and cooking oil. The rising cost of wheat, coupled with widespread corruption in the production and distribution of subsidized bread, has prompted the president to order a resolution to the problem.

But that has done little to calm public outrage, or lower bread prices.

On Adly Street, a broad thoroughfare in central Cairo, many more stores than usual were shuttered Sunday, according to street vendors and local residents. It was a windy day, with a sandstorm and rain showers, which may have offered people added encouragement to stay off the streets.

"People are staying at home today," said Ashraf, a clerk in a luggage store on Adly Street. He was afraid to give his last name, for fear of arrest, but he said he kept his children home from school and dressed in all black as signs of support for the protest. "Because of the prices, because we can't get food," he said explaining the reason for the strike.

The strike plans began with the workers in Mahalla, who had said they would strike at 7 a.m., when workers changed shifts, to protest low wages. But state security forces arrived in mass and workers said they grew intimidated and went to work.

But the initial plan led other, smaller groups to call for the day of protest as a general sign of discontent with the direction Egypt is taking.

Kifaya, which had been in the vanguard of opposition movements until 2005, when its public following dwindled, joined the call. What may have spooked government officials mostly is the way in which technology - especially text messages on cellphones - was used to spread the word, without any formal organization promoting the call, political analysts said.

Residents of Imbaba, a conservative, poor neighborhood inside Cairo, asked neighbors to stay home as a sign of protest.

Belal Fadl, a scriptwriter and satirist in Cairo, said that Egypt was going through a very confusing time, one in which, he warned, the government should not rely on a population that is politically apathetic.

The problems, he said, were now too widespread, and too close to home.

"People in Egypt," Fadl said, "don't care about democracy and the transfer of power - they don't believe in it because they didn't grow up to it in the first place. This is unfortunately the case. Their problem is limited to their ability to survive and if that is threatened then they will stand up."

Mona el Naggar contributed reporting.

National Review Online - Democrats, The Financial Crisis and Evil-Man Economics

JANUARY 28, 2011 4:00 A.M.
National Review Online

Chairman Phil Angelides and the Democratic majority on the Financial Crisis Inquiry Commission have released their report, a textbook-worthy example of the “Evil Man School of Economics.” Something went wrong, and a villain must be identified. This is tediously familiar territory for those who have followed the political establishment’s years-long attempt to evade responsibility for the crisis of which it was a cause.

“We conclude this crisis was avoidable,” they write. “The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire.” That much is hardly objectionable. But which human actions? On that question, the commission’s report is both implausible and nakedly political: The Evil Men are greedy corporate executives and Wall Street moneymen, and the crisis might have been averted if only they had been endowed with sufficient moral fiber — or had an appropriately mindful policeman appointed over them, which is the real point of the Angelides report. Which is to say, the Democrats have produced an analysis that relies upon and reinforces the mythology of the Left, producing a document that may as well have been written by Rolling Stone’s Matt “Vampire Squid” Taibbi, minus the literary flair.

Yes, this crisis was avoidable. To avoid it, we would have had to do a number of things differently. The first is to alert the authorities, beginning in the 1930s, that federal policies designed to encourage homeownership — well-intentioned though they have been — would create, and today continue to sustain, a set of economic incentives driving vast amounts of capital from around the world into the U.S. residential real-estate market.

From the Federal Housing Administration to Fannie Mae and Freddie Mac to the mortgage-interest deduction, U.S. government policies distorted the market, creating a massive misallocation of capital under the naïve theory that housing prices only move in one direction: up.

The second action would be to prevent the dot-com bubble of the 1990s, of which the housing-market meltdown was both an echo and a consequence. Like the real-estate bubble, the dot-com bubble was cheered on by the American government, the American consumer, and the American banker, because nearly everybody likes appreciating asset prices and the illusion of wealth that accompanies them. When the dot-com bubble burst, Washington responded the way Washington always responds: by slashing interest rates, hoping that a sluice of cheap money and easy credit sloshing through the economy would stimulate productive economic activity, or the illusion of productive economic activity, sufficient to disguise the damage done by the bubble. Having been burned by unprofitable start-ups at home and disappointing emerging-market investments abroad, a great many Americans decided to invest that easy money in houses. Washington was keeping interest rates down and encouraging the loosening of mortgage-lending standards; at the same time, Washington’s creatures, Fannie Mae and Freddie Mac, helped give the mortgage market enough liquidity to alarm Noah. They were helped mightily in that endeavor by the rise of massive savings in China and elsewhere in the developing world, all of which went looking for somewhere to invest: Where better than the American mortgage market, where a great many of the underlying loans were insured by the government or its proxies?

Third, we would need to convince a great many Americans not to take out mortgages they could not afford should their houses fail to appreciate, and convince a great many financial managers not to make bad investments large enough to bring down their firms.

Mr. Angelides, formerly the treasurer of California, should know something about man-made financial disasters. And the truth is that Goldman Sachs did not cause this crisis, and neither did Barney Frank. Bad investments, economics, and well-meaning government policies caused it. There were, and are, bad actors in this story. But the main problems have been the natural limitations on human knowledge, including the knowledge of government officials and the managers of large financial institutions.

The dot-com bubble actually destroyed more wealth than did the decline in housing prices; the housing meltdown became a crisis because the related securities losses were concentrated in a small number of firms, and because those firms were dramatically over-leveraged. If there is a public-policy proposal to be extracted from this mess, it is that in a world of “too big to fail” banks — and, like it or not, that is the world in which we live — large financial institutions should be subject to tighter leverage controls, with higher standards for capital reserves and liquidity. That dry, technical reform would solve most of the problems that we might hope to solve with new financial regulation, but it would not provide any emotional satisfaction to those who wish to use this crisis to rail against executive bonuses, which had almost nothing to do with the problem, or to those who wish to sermonize about the alleged moral failings of capitalism. Still less would it offer any political opportunity to former real-estate developer Phil Angelides and his Wall Street–backed Democratic colleagues, who wish to use the crisis as an opportunity to expand the size and scope of the managerial state that did so much to create it.

Monster debt threatens our future

5:15 PM, Jan. 28, 2011
Indianapolis Star

The Congressional Budget Office issued yet another warning this week about the fiscal calamity awaiting the nation if the federal deficit is not soon brought under control. It's questionable, however, whether anyone on Capitol Hill or in the White House is prepared to seriously heed those warnings, delivered with ever-higher intensity over the past year.

In its latest projection, the CBO forecast that an additional $7 trillion will be added to the national debt in the next decade. If that occurs, annual interest payments on the debt, according to the CBO, would hit nearly $780 billion by 2021, which is more than the nation now spends each year on military defense.

Neither the president nor congressional Republicans have offered remedies that fully confront the looming crisis. President Barack Obama this week proposed a five-year freeze on optional domestic spending. Republicans have called for deep cuts in nondefense spending but haven't been willing to take on the Pentagon, Social Security or Medicare, all of which must be trimmed if the debt is to be tamed.

The CBO pointed out that the extension of the so-called Bush tax cuts and the temporary cut in the Social Security payroll tax, which Congress approved and the president signed last month, will add about $400 billion to the deficit this year alone. But the nation's long-term fiscal problems have more to do with spending levels than tax rates.

By 2021, federal revenues are projected to rest above the historical average of 18 percent of gross domestic product. Current projections, however, also show federal spending to be at more than 26 percent of GDP in 10 years.

It's more critical than ever that someone in Washington step forward to speak honestly about the painful choices facing the nation. Our government cannot continue to spend far more than it takes in without serious consequences. Our promises to future retirees cannot be met without substantive changes in Social Security and Medicare. Our future as a nation will be badly compromised, our children's future painfully altered, unless serious corrections are made in short order.

The alarms are sounding louder than ever. When will those elected to lead stop to listen?

Monday, November 1, 2010

Presidential Administrations and their percentage of the National Debt - Part II

The last time the National Debt went down was in 1960, the last year of the Eisenhower administration. My previous post yesterday on the matter was incorrect when I stated 1959. In 1960, the debt went down by $580,956,475.95. Since then, it has never gone down - only up. Part of the problem is the fact that the interest payments are off-ledger.

While it is conceivable to have a "budget surplus" like we did in the 1990s, this is negated from the mandatory interest payments that are not considered part of the budget. At the lowest rate of increase, 1999, the debt still went up $17,907,308,271.43. The next year, 2000 and President Clinton's last year in office, the debt rose by $133,285,202,313.20 - which was hardly leaving office under the economic conditions the American left claim.

How do the Presidential Administrations compare?

President George Washington through President Gerald Ford, Presidents 1-38, 1791-1976
Debt Increase: $707,142,528,417.78

President James Earl Carter, 39th President, 1977-1980
Debt Increase: $276,666,000,000.00

President Ronald Wilson Reagan, 40th President, 1981-1988
Debt Increase: $1,672,127,712,041.16

President George Herbert Walker Bush, 41st President, 1989-1992
Debt Increase: $1,462,282,943,480.50

President William Jefferson Blythe Clinton, 42nd Presidnet, 1993-2000
Debt Increase: $1,609,557,554,365.20

President George Walker Bush, 43rd President, 2001-2008
Debt Increase: $4,899,100,310,608.44

President Barack Hussein Obama, 44th President, 2009-present
Debt Increase: $3,031,935,408,476.43 (as of 10/28/2010 report on TreasuryDirect.gov)

The current size of the Debt, on Oct. 28, 2010 as we head into the mid-term elections is:
$13,658,812,457,389.51

The percentage of debt by Administration is as follows:
President George W. Bush (35.87%)
President Barack H. Obama (22.20%)
President Ronald W. Reagan (12.24%)
President William J.B. Clinton (11.78%)
President George H.W. Bush (10.71%)
Presidents Washington - Ford (5.18%)
President James E. Carter (2.02%)

In 1835, the total debt was $33,733.05 and the debt was considered to be paid off, as the sum was inconsequential even for that time period. In 1836, it grew to $37,513.05 - only a $3,780.00 increase. That was before President Andrew Jackson issued his famous "Specie Circular" which mandated all payments to the Federal Land Office to be in gold and silver payments only, barred the highly speculative "greenbacks" as a form of payment. This caused a panic. The debt grew by $299,444.78 in 1837 to $336,957.83. A year later, it grew by $2,971,169.24 to $3,308,127.07. It has never been at that level since.

In the modern era (Carter to present), Presidents Reagan and Clinton each served two terms and the National Debt increased by comparable amounts. In those 16 years of Reagan and Clinton, the increase totaled $3,281,685,266,406.36. In less than two years, the Obama increase is just $249,749,857,930.00 shy of that figure.

President George W. Bush had an almost $5 trillion increase during his eight years, yet President Obama's increase is already 62% of the total of that amount in only 616 days. That's 2,306 fewer days than President George W. Bush.

At current spending levels, Obama's Debt will match George W. Bush's Debt in 51 more days - approximately Saturday December 18, 2010 (in 2255 fewer days). If the $4,991,064,525.20 daily average continues, the total increase in the 1457 days of the Obama administration will come to $7,271,981,013,216.40.

Sunday, October 31, 2010

Presidential Administrations and their percentage of the National Debt - Part I

Last night I was asked by a nationally-syndicated radio talkshow host to calculate the percentage of the National Debt growth by each administration. Since the National Debt first crossed the $1 trillion mark under President Ronald Reagan, but the economy suffered greatly under his predecessor, President Jimmy Carter, I will be making those calculations later today from January 20, 1977 when Carter took office to the present, and post them when complete.

For the record, the National Debt, despite erroneous claims by Democrat activists, has not gone down since 1959 under President Dwight Eisenhower. Even at the height of the economic boom in the 1990s, the Debt still grew $17 Billion at it's slowest rate of growth. Under the Kennedy, Johnson, Nixon, Ford, Carter, Reagan, George H.W. Bush, Clinton, George W. Bush and Barack Obama administrations, the debt grew. There was no single year since 1959 when the net size of the Debt actually went DOWN, though periods of governmental spending restraint coupled with a fast growing economy slowed the rate of growth.

I'll post those figures later today.

Sunday, October 10, 2010

Newest National Debt Statistics Now Posted - September 2010 (End FY 2010)

Here are the newest National Debt Statistics for the period ending September 30, 2010 - per www.treasurydirect.gov - the official website of the U.S. Treasury Department's Bureau of the Public Debt. September 30, 2010 is the end of Fiscal Year 2010 for the United States Government.

National Debt (Sept. 30, 2010)
Publicly Held
$9,022,808,423,453.08

Intragovernmental Holdings
$4,538,814,607,438.71

Total Debt:
$13,561,623,030,891.79

Amount of Debt on Sept. 30, 2009:
$11,909,829,003,511.75

Increase in Fiscal Year 2010:
$1,651,794,027,380.04

Debt on Inauguration Day 2009:
$10,626,877,048,913.08

Debt increase in 588 days of President Obama's administration:
$2,934,745,981,978.71
($4,991,064,525.20/day)

Total Debt increase in President George W. Bush's administration:
$4,899,100,310,608.44
($1,676,625,705.20/day - 2922 days)

Difference between Bush/Obama administrations:
$1,964,354,328,629.73
(Bush larger than Obama)

Interest payments
September 2010
$18,186,175,433.65

Fiscal Year 2010
$413,954,825,362.17

Gifts to reduce the Public Debt
August 2010
$81,444.76

Fiscal Year 2010 (one month to report)
$2,824,256.11