If the Vice President of the United States refers to discussions he has had with the President, indicating that they know the country will go bankrupt if nationalized health care isn’t passed, then the Country already has gone over the financial cliff!

These political idiots keep coming to the financial wishing well to cry wolf and are allowed to tax Americans for financial institution bailouts, nationalization of the auto industry, stimulate the economy with pork barrel projects, now the professional idiot squad says:

“We’re going to go bankrupt as a nation,” Vice President Biden says, if health care legislation isn’t passed, the president knows, and I know, that the status quo is simply not acceptable,” Biden said at the event on Thursday in Alexandria, Va. “It’s totally unacceptable. And it’s completely unsustainable. Even if we wanted to keep it the way we have it now. It can’t do it financially.”

Vice President Joe Biden told people attending an AARP town hall meeting that unless the Democrat-supported health care plan becomes law the nation will go bankrupt and that the only way to avoid that fate is for the government to spend more money.

How many times will the American people idly sit by while they are lied to again and again on the status of the economy, that the sky will fall if taxpayers don’t buck up with more money!

Folks, its a done deal, the sky has fallen, the politicians have bankrupted the Untied States of America!

There aren’t enough people employed to tax to ever cover the debts that Comrade President Obama has presided over to save America from itself!

It is not bordering on ludicrous its complete and utter insanity, while America sinks further into depression these jerks want to borrow more money to create more debt to fund a health care system that  isn’t broke, it works, Americans needs employment not lipstick on every pig in the pen!

Where is the cost cutting necessary to save the country, let alone common sense cost savings measures to create more efficiencies in the health care system?

The early estimates are $1 Trillion to fix rather to nationalize health care. Why not use the profits from the Nationalized banks, or how about using profits from the Nationalized Auto industry, or maybe the repayments of TARP from banks, perhaps all these great government programs could be used to save America from bankruptcy and the health care scare, mad hatter spending has already pushed the Nation over the financial cliff!

One thing is for sure, nationalized health care will bankrupt and put the country even further in debt.  Americans couldn’t afford it even if it were the best thing since sliced bread!

How can Americans stand for any more of this complete nonsense from the mouths of political idiots?

Not only is the American Rome burning, Congress and the Administration are cheering while they spray gasoline on the fire they have set and feed with more money than every budget passed in the USA since George Washington was President.

Take it from the mouths of our top leaders – “America is Bankrupt “and Comrade President Obama, Congress and the American People who voted these idiots into office are to blame!

Its time to buy a gun and run for the hills, the Chinese, Japanese, and Arab red coats are coming for their money!

THE INSANITY HAS TO STOP!

As Comrade President Obama traveled Thursday in Green Bay, Wisconsin, he was greeted by demonstrators holding signs that said, “No socialism” and “Taxed Enough Yet?“

Even politicians in his own party are starting to voice concerns about the reckless spending and debt driven recovery that does not have the ability to sustain itself, let alone get a recovery off the ground, while unemployment is headed to 10% and over 3 million currently unemployed.

The government can’t possibly hire this many people by the 2010 elections, let alone try to change people’s spending habits to be more green, it takes years to institute the legislation required to mandate what the people shall be required to buy.  Comrade President Obama hasn’t given up Hope for this Change.

The big question is can Comrade President Obama keep his popularity up to hoodwink the populous by his phony lies, that his plans actually are saving jobs and creating new ones with no statistical proof to support his silver tongued blustering.

Although there is no more telling lies about the debt he has created, during a town hall forum in New Mexico last month, Obama admitted that the “long-term deficit and debt that we have accumulated is unsustainable.” A dictator has to throw a few truths’ in with the lies to be believable.

In April, he publicly instructed his Cabinet secretaries to find $100 million in savings, a fraction of the more than $3 trillion annual budget.  As all liberal progressives with a Marxist-fascist inclination, Comrade President Obama cannot let go of his ideology, it drives him to new heights of government control and debt creation.  He uses token antidotes as if they are a cure for the larger game of controlling public opinion.

Unfortunately, his Vice President Biden, is much more candid he tells “Meet the Press” that “everyone guessed wrong” on the impact of the stimulus, the economy was worse off than anyone thought.”

Who would have thought the administration is guessing on its economic strategy?

Of course liberals would not use American history as a guide, with so much at stake for the American people, why utilizing the private sector economy as an engine that has shown its ability to drive out of any recession or depression just by getting government out of the way and reducing taxes, the Regan Economic Model worked.

The Democratic rats are setting up to leave the sinking economic ship Obama!  Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, said, “The second five years is where we’re on a completely unsustainable course.” “People know we have an overall situation here that doesn’t add up,” he said.

“Everything that the White House does concerning this deep recession contains an element of gambling because no one has been here before,” said Robert B. Reich, labor secretary under President Bill Clinton.  Where was Reich during the Regan administration, certainly he was asleep, or just liberally instep. “There’s no formula that can be applied, and that’s why the president’s popularity and credibility are vitally important.”

This is the reason for all the Obama TV face time provided by ABC and MSNBC the propaganda arm of the Administration, if they can keep him smiling and lobbing inaccurate suppositions as if they are facts to the dummed down public, he can keep them believing that what they are seeing isn’t reality.

The emperor’s new clothes aren’t his birthday suit after all, through popularity and campaigning skills he hopes to make the public see that his economic recovery program is working even though there is no way to “cloth the concept” that a country can borrow and spend its way to recovery.

Obama and his advisers hope that by the 2010 elections, the stimulus spending; the bank rescues; AIG take over; GM and Chrysler government nationalization; the redistribution of executive pay by TARP recipients and via congressional mandate private sector pay; not to mention tax increases like cap and trade and the new global warming tax; plus the theft and hijacking of the health care to nationalize another free enterprise American system; all this fascist ideology and radical change to the American capitalist system will have pushed the economy into recovery.

This will require a big white rabbit for Obama to pull out of the hat given the destruction he has wrought upon the US economy with his Marxist-fascist economic plan for recovery.  Reich noted, democrats are beginning to see that the public is not blind that if the Republicans “can get their act together and come up with something that is halfway respectable, and if the public begins to lose patience by Election Day, Democrats could have some real problems,” he said. “And those problems, of course, could possibly extend through 2012.”

The democratic rats have been eating the liberal progressive cheese but they are beginning to see that the US economic ship is sinking, that the captain’s new cloths are not cloths at all, and if they want to survive they had better leave the cheese and jump ship before it is too late.

When Humpty Dumpty fell off the wall that was the end, even if you are Barrack Hussein Obama Comrade President of the United States, with more face time on TV news than the host of any news show, the US economy cannot be put back together again under a socialist regime.

There are basic economic factors that any economy throughout history has used to steal from its subjects, all in the name of the state, that have broken the economic rules that society and the state must live by.  By breaking these basic natural rules upon which politics has no influence, that nation is doomed to financial oblivion.

From ancient Rome to modern day America you cannot do the following and survive as a viable nation:

• As stated last month by S&P government debt was 100% of GDP
• Public borrowing cannot exceed the nation’s ability to repay
• In a depression a Nation cannot tax the poor by increasing the price of their food, clothing and transportation by cap and trade global warming taxes upon the gaseous omissions of their livestock and transportation in the name of clean air.
• Government cannot steal Banks, Insurance Companies, Car Companies from the same noblemen and bond holders they intend on taxing, telling them it is their patriotic duty on behalf of the State’s new social fascist order to submit and expect them to willingly pay.
• When Federal income tax revenues for the prior year fall by 44% it is not a good idea for the Fed to start printing money and buying the treasury’s debt.  This will cause the value of the currency to drop and be worthless.  When this happens there is nothing a nation can quickly do to stop inflation of its currency

On fears of recession and depression the US dollar rose to $90.00 in March 2009.  Since that time the dollar has continued to drop and is today at $78.40, indicating that decisions of the Fed and Treasury are causing the dollar to rapidly lose value.  If the dollar does not make a significant attempt to stop the downward trend THIS WEEK the economy is seriously headed for hyperinflation due to the Obama economic policy, no matter how much he wants to blame Bush, Humpty Dumpty has has a Great Fall and has not his bottom yet!

With all the common sense minded talking heads, Limbaugh, Hannity, Beck.  O’Reiley, Ingram pounding home the institutional changes to the American form of government with fascists now in complete control, they may as well be filling empty containers with sand at the beach.

This is in effect what is happening, perhaps combined they have 3 million listeners, the US population is 360 million give or take a few illegal’s, this is roughly .8 percent of the population listening to an alternate voice.  Comrade President Obama continues his campaign mode across the airwaves feeding 60% of the population with feel good gibberish that is nothing but peanut butter in the center of the mouse trap.  Little do these people know the trap is sprung, the American way of life as we have known it the one with freedom and liberty has ended.

The faith and morals the founding principles of a society not believed in but intrinsically known have been changed.  Narcissistic emotion based college students, inner city folks in densely populated areas and those who see themselves as victims of society who have fallen prey to the TV reality have lost their way to what is real.  These folks and those who wanted to believe in a higher authority have chosen their fascist messiah from the TV and turned their lives over to government power as if it were god almighty.

Now government will be their instrument of change rather than the calling of their own personal responsibility as their destiny.  They have given their principals over to National Government Motors, Government Banks, Government Media, Government Insurance, Government Entitlements, Government Environmental Control, lets not forget the instrument that makes all this possible GOVERNMENT DEBT!

As all the mouse’s lick the peanut butter of change and hope, and those with some semblance of personal responsibility have their heads filled with sand there is no political counter for the economic loss that each individual will come to intimately know as their own personal savior, TAXES.

Marxist-fascist economic policy relies on massive debt that will require government sponsored authorities control into the future.  It is a necessary evil one must pay their debts, its the American way, at least for those not in government.

For the TV reality verses Real World Crowd those who get it, they do not have one elected champion who is brave enough to come forward, who can even get the air time to be heard.  The lambs are being led to slaughter and the American Politburo is not even lifting a finger, not one currently elected government representative is coming to the rescue of principals upon which America was founded.

They are fools, cowards, and afraid of losing their place at the messiahs dinner table. We are not talking about the talk show circuit here we are talking about a Paul Revere riding through America, lantern in hand Screaming The RED COATS ARE COMING, THE RED COATS ARE HERE!

Debt Onslaught Boosting Bond Yields

By: Dan Weil; The 10-year Treasury note rose to a six-month high of 3.75 percent Wednesday amid concern about the $2 trillion of debt that the Treasury will sell to the bond market this year.  The money is needed to finance the government’s budget deficit. The Congressional Budget Office estimates the deficit will total $1.7 trillion in fiscal 2009, ending Sept. 30.  Bill Gross, co-chief investment officer of PIMCO, told Bloomberg, “the raft of debt being issued by the U.S. Treasury is pushing bond yields higher.  “The market is beginning to wonder who is going to be buying these bonds.”

The only buyer in the market for American debt is the Fed, it is printing money and buying U.S. bonds two trillion is what is needed and this will send inflation surging higher there can be no stopping it, but for death and taxes!

Federal Obligations to a Record $546,668 per Household

By Dennis Cauchon, USA TODAY; The latest increase raises federal obligations to a record $546,668 per household in 2008, according to the USA TODAY analysis. That’s quadruple what the average U.S. household owes for all mortgages, car loans, credit cards and other debt combined.  Federal obligations per household to cover rising federal commitments made just in the past year for retirement benefits, the national debt and other government promises. What federal obligations?  The costs of Medicare and Social Security, and President Bush’s Medicare prescription drug benefit added in 2003.

Using all federal data USA TODAY compute all government liabilities, from Treasury bonds to Medicare to military pensions.  The government under President Bush took on $6.8 trillion in new obligations in 2008, pushing the total owed to a record $63.8 trillion.

Social Security – Average benefit: $12,089 in 2008.

Medicare. – Average 2008 benefit: $11,018.

Retirement programs. Congress has not set aside money to pay military and civil servant pensions or health care for retirees. These unfunded obligations have increased an average of $300 billion a year since 2003 and now stand at $5.3 trillion.

American capitalism gone with a whimper

Pravda.Russia; It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.

True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.

Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.

First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their “right” to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our “democracy”. Pride blind the foolish.

Then their faith in God was destroyed, until their churches, all tens of thousands of different “branches and denominations” were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more then happy to sell out their souls and flocks to be on the “winning” side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the “winning” side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America.

The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America’s short history but in the world. If this keeps up for more then another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe.

These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the shear volumes. Should we congratulate them?

In 1995 the elected leaders in the House of Representatives balanced the budget for four consecutive years while lowering taxes, increasing defense spending and increasing spending on intelligence spending.  What was discovered by this process was that by cutting taxes economic growth occurred through increased revenues that assisted with balancing the budget.  Priorities were set to increase spending in key areas while reducing it in nonessential areas.  Additionally, they eliminated pork barrel spending all together for that four year period.

Consider the priorities of the Obama Administration 9000 pork barrel projects in the $3.7 trillion dollar 2009-10 budget.  Massive entitlement spending and government public works projects and at the same time increasing taxes.  The  result of higher taxes and an economy in recession is a decrease in Federal Government revenue.  This is exactly what is happening today due to the poor choices of the American people in selection of representatives to Washington that are concerned with socialist ideals instead of the long term economic well being of the American people.

IRS Tax Revenue Falls Along with Taxpayers’ Income

By John Waggoner, USA TODAY, Federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago – the biggest April drop since 1981, a study released Tuesday by the American Institute for Economic Research says.

When the economy slumps, so does tax revenue, and this recession has been no different, says Kerry Lynch, senior fellow at the AIER and author of the study. “It illustrates how severe the recession has been.”

For example, 6 million people lost jobs in the 12 months ended in April – and that means far fewer dollars from income taxes. Income tax revenue dropped 44% from a year ago.  “These are staggering numbers,” Lynch says. Big revenue losses mean that the U.S. budget deficit may be larger than predicted this year and in future years.

“It’s one of the drivers of the ongoing expansion of the federal budget deficit,” says John Lonski, chief economist for Moody’s Investors Service. The Congressional Budget Office projects a $1.7 trillion budget deficit for fiscal year 2009.

The other deficit driver is government spending, which, the AIER’s report says, is the main culprit for the federal budget deficit.

The White House thinks that tax revenue will increase in 2011, thanks in part to the stimulus package, says the report from AIER, an independent economic research institute. But it warns, “Even if that does happen, the administration also projects that government spending will be so much higher each year that large deficits will continue, and the national debt held by the public will double over the next 10 years.”

The government may have a hard time trimming spending to reduce the deficit when the recession ends. The 77 million Baby Boomers- those born in 1946 through 1964 – will start tapping their federal retirement benefits soon, which means increased government outlays for Social Security and Medicare.

“It will be doubly difficult for federal government to reduce expenditures and narrow the deficit as rapidly as they did following previous recessions,” Lonski says. At the end of the last major recession, in 1981, Boomers were in their 30s. Their incomes were expanding, as was their appetite for goods and services.

The Boomers now are in their 50s and 60s and unlikely to keep increasing incomes for long, which means that revenue from income taxes could flatten in the next few years. Also, Lonski says, they are more likely to save for retirement than spend – and consumer spending is a big driver of the economy.

“The American consumer led us out of previous recessions with some semblance of gusto,” Lonski says. “They’re too old to do it now.”

Actually, they are now taxed to death and their ancestors are faced with deficits that are not a government priority to resolve but an ideological attempt by the totalitarian administration now in power to enslave the public with debt so that they will be subservient to their over lords and elected liberal party masters.  With less revenue government must borrow and create more debt to fund its Marxist-fascist ideology eliminating freedom, liberty and the American way of life as we have known it.

Richard Fisher, president of the Dallas Federal Reserve Bank, an outspoken free-marketer and believer in the Schumpeterian process of “creative destruction”, has been running a fervent campaign to alert Americans to the “very big hole” in unfunded pension and health-care liabilities built up by a careless political class over the years. “We at the Dallas Fed believe the total is over $99 trillion,” he said in February.”This situation is of your own creation. When you berate your representatives or senators or presidents for the mess we are in, you are really berating yourself. You elect them,” he said.

However, the constitution provides the federal government with the authority to act and has allowed the abuse of power to continue by taking advantage to this financial disaster so that actions by the treasury department are given only through a verbal accounting that  has not been questioned. When the fox is guarding the hen house in an all democratic legislature and executive there are no checks and balances. What we have is violations of the constitution in an effort to serve a public interest that has led to nationalization of private business and the authority of the treasury department to pick and choose the winners and losers under the rubric of national security.  To take out and manipulate private businesses for the ideological good as seen by the liberal progressives now in control of freedom and liberty is contrary to the constitution.

Foreign investors are wary of the tidal wave of U.S. government bond issues flooding the market, as a result, treasury prices are plunging. The U.S. dollar has fallen to a six-month low and higher interest rates on bond issues make corporations ability to compete with the US government for capital a non starter.  This will slow any recovery to a snail’s pace and business’ unable to acquire capital are sure to be stepped on as will the economy due to Treasury Secretary Geithner spending proposals.

For the record here is a brief  verbal accounting of where Treasury Secretary Geithner has spend the TARP funds.  If and when taxpayers money is paid back where will it go?  What socialist program will it fund next?  Would Geithner ever consider paying off the principal of the National Debt, this would only be common sense and does not fit with the liberal progressive agenda of totalitarianism.

Where is Tarp Going

By WSJ Staff

In congressional testimony this morning, Treasury Secretary Tim Geithner outlined where TARP money has been allocated and how much is left. Here is Treasury’s estimate:

Projected Use of TARP/Financial Stability Plan Funds by Administration as of May 18, 2009

Programs Announced Under Previous Administration

AIG

$40 billion

Citi/Bank of America (TIP and Guarantees)

$52.5 billion

Autos

$24.9 billion

Capital Purchase Program

$218 billion

TALF 1.0

$20 billion

Subtotal

$355.4 billion

Programs Announced Under Obama Administration

Housing

$50 billion

AIG (Second Investment)

$30 billion

Auto Suppliers

$5 billion

Additional Autos

$10.9 billion

Expansion of Consumer and Business Lending Initiative *

TALF Asset Expansion (New Issuance) **

$35 billion

Unlocking SBA Lending Markets

$15 billion

Public Private Investment Program ***

TALF for Legacy Securities

$25 billion

Other PPIP Programs for Legacy Assets

$75 billion

Subtotal

$245.9 billion

Total Committed (Without Potential Repayments)

$601.3 billion

Total Remaining (Without Potential Repayments)

$98.7 billion

Conservative Estimate of Potential Repayments

$25 billion

Total Committed (Including Potential Repayments)

$576.3 billion

Total Remaining (Including Potential Repayments)

$123.7 billion

Additional Funding

Additional Support for the Auto Industry

Capital Assistance Program

* The Consumer and Business Lending Initiative also includes the $20 billion committed to TALF under the previous administration and the $25 billion committed to TALF for legacy securities under the PPIP, amounting to an overall total of $80 billion under TALF and $95 billion under the CBLI.

** New assets made eligible under the expansion of TALF include commercial mortgage-backed securities, mortgage servicing advances, loans or leases relating to business equipment, leases of vehicle fleets, and floor plan loans.

*** The Public-Private Investment Program was announced at a level of $75 to $100 billion, which includes $75 billion in additional resources for the PPIP program on top of $25 billion devoted to TALF for Legacy Securities.

Comrade  President Obama has got to take the American public for complete idiots!  We are out of money because of health care?  Hello  M.President your budget with 9000 pork projects yah the one that is $3.7 trillion dollars, plus your the trillions in bank, auto industry and AIG bail outs, and we are out of money because of health care? Well 60% of the people give you a good approval rating but they just can’t tell the difference between a lie and an overstatement of truth on the path to a new nationalized health care program.

In a sobering holiday interview with C-SPAN, President Obama boldly told Americans: "We are out of money."

C-SPAN host Steve Scully broke from a meek Washington press corps with probing questions for the new president.

SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?

OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we've made on health care so far. This is a consequence of the crisis that we've seen and in fact our failure to make some good decisions on health care over the last several decades. So we've got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it's putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.

So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don't reduce long-term health care inflation substantially, we can't get control of the deficit.

So, one option is just to do nothing. We say, well, it's too expensive for us to make some short-term investments in health care. We can't afford it. We've got this big deficit. Let's just keep the health care system that we've got now. Along that trajectory, we will see health care cost as an overall share of our federal spending grow and grow and grow and grow until essentially it consumes everything...

SCULLY: When you see GM though as "Government Motors," you're reaction?

OBAMA: Well, you know - look we are trying to help an auto industry that is going through a combination of bad decision making over many years and an unprecedented crisis or at least a crisis we haven't seen since the 1930's. And you know the economy is going to bounce back and we want to get out of the business of helping auto companies as quickly as we can. I have got more enough to do without that. In the same way that I want to get out of the business of helping banks, but we have to make some strategic decisions about strategic industries...

SCULLY: States like California in desperate financial situation, will you be forced to bail out the states?

OBAMA: No. I think that what you're seeing in states is that anytime you got a severe recession like this, as I said before, their demands on services are higher. So, they are sending more money out. At the same time, they're bringing less tax revenue in. And that's a painful adjustment, what we're going end up seeing is lot of states making very difficult choices there...

SCULLY: William Howard Taft served on the court after his presidency, would you have any interest in being on the Supreme Court?

OBAMA: You know, I am not sure that I could get through Senate confirmation...

Soon Government will not be collecting sufficient taxes from constituents.  As shown by California’s Legislature government cannot cut its social programs that have created a sea of red ink on its balance sheet.  Now that prosperous times are over the liberal progressives in control of government cannot bear to cut the pork from their precious welfare and environment entitlement programs.  The California taxpayers in a liberal state cannot take any more taxation, they have proven they are mad as hell and are watching their representative’s actions for the necessary spending cuts to non-essential programs.

Liberal progressive priorities are out of touch with common sense as the California’s Governor is calling for borrowing from property tax revenue from cities and counties.  The only cuts discussed are from schools, letting prisoners out early, and cuts in police and fire.  Were governments to attack the massive inefficiency due to absurd labor contracts there may be a start to reform.  For example, state workers at prisons who are “boiler engineers” will not sweep the floor, screw in a light bulb, or do anything that is not in their job description.  If a bolt needs tightening in another department it will not be fixed by a boiler engineer, he will sit at his desk with his feet up and say “not my job!”

Comrade President Obama has ensured labor a seat at the head of the government table with a redefining of contracts where government can subjugate the law to its own power demands.  Governments process of corporate debt restructuring and recent interventions in such restructurings as Chrysler and GM is leading to market concerns that rights of senior creditors such as bondholders are being undermined by preferential treatment of junior creditors  union pension liabilities as junior lien holders are now in senior positions.

The US government is about to lose its triple A bond rating due the disastrous financial shape it has created by debt creation and California has been downgraded my Moody’s such that it cannot even get a loan without guarantees by the Federal Government.  This will do nothing to assist the Federal government’s bond rating and no matter what the Washington politicians say Moody’s analysis will be a ringing bell above the eloquent tongue flapping of Obama.  The US government is now following the State of California because of politicians that will not cut spending but rely on tax increases so that government can survive and politicians can stay in power.

The liberal progressives in power on the state and federal levels will not cut spending.  They have been paid by special interests for years to create these programs in the first place.  The lobbying to keep programs over cutting programs will be extremely intense but will not follow the rule of common sense but of special interest money. The need to find the easy way out via taxation and borrowing that has been the hallmark of government will continue until the population faced with abject tyranny revolts at the voting booth.  As California looks to pilfer revenues from Cities and Counties as Stated by Governor Schwarzenegger, so will the Federal Government steal from the States.

The CBO estimates that US public debt to GDP ratio will rise from 40% to 80%, or about $9 trillion dollars. Should long term rates increase to 5%, the resulting increase in the interest rate bill alone would be about $450 billion or 3% of GDP. This can only be offset by an increase in taxes or cutting government spending or theft of dollars collected by the Federal Government that are then returned to states via programs like Medicare and Medicaid.

To prevent an unsustainable Maddof scheme like the Federal Government is now pulling off by massive increases to the stock of public debt as a share of GDP the debt bubble will soon burst. The burden of trillions of dollars of high debt levels will soon only be financed by default, a capital levy on the wealthy, the use of inflation to wipe out the real value of money, more public debt, and an increase in taxes at all levels of society.  Although it may be possible for government to reduce spending and cut programs this is a sacred cow that cannot be slaughtered unless it is for military spending.

Whether the government lets big banks fail or not, the impact on the economy is similar: A massive contraction of bank loans and credit, sabotaging attempts to revive credit flows and stimulate the economy.

Reason: These banks must build capital quickly, and the only realistic way to do so is by cutting back on their lending.

Official stress test results released Thursday on 19 U.S. banks indicated that they’ll need $75 billion. $11.6 trillion in assets held by these institutions, those risking failure and will fail if the economy worsens, represent $6.56 trillion, or 56.5 percent, of the assets; while borderline institutions hold $4 trillion, or 34.7 percent of the assets.

At Risk of Failure:
JPMorgan Chase & Co., Citigroup, Wells Fargo & Co., Goldman Sachs Group, GMAC LLC, SunTrust Banks, Inc., and Fifth Third Bancorp.

Will Fail if Economy Worsens:
Bank of America, Morgan Stanley, PNC Financial Services Group, US Bancorp, BB&T Corp., Regions Financial Corp., American Express Co., and Keycorp

Adequately Capitalized but Cautious:
MetLife, Bank of NY Mellon Corp., Capital One Financial Corp., and State Street Corp. – appear to have adequate capital to withstand worsening conditions.

Note: The government assumes that the GDP will contract no more than 3.3 percent this year. While, GDP is currently contracting at an annual rate of 6.1 percent.  Also, unemployment is at 8.9 percent and on the rise it has just slowed its rate of increase last month.

Systemic risk from highly leveraged instruments like derivatives could default on their trades setting off a series of failures affecting banks that hold the largest share of derivatives. Failing derivatives triggered the collapse of Bear Sterns, Lehman Brothers, and the $180 billion bailout of America’s too big to fail, AIG. This systemic risk is the same that caused former Treasury Secretary Paulson demanded Congress authorize $700 billion in bailout funds for the banking industry or it would fail.

Stress tests have failed to evaluate the credit exposure of each bank to defaults by their trading partners. There are currently $1.25 quadrillion in derivatives now in the market YES QUADRILLION!

JPM has 43.6 percent of all the derivatives held by all U.S. commercial banks and has 52.8 percent of the total of credit default swaps held by all U.S. commercial banks, double the total held by BofA and Citi

Systemic risk from trading in the derivatives market and the concern for the bottom dropping out of the market is what caused the credit freeze seven months ago.

The stress tests were a banks self-evaluation based upon criterion provided by the FED and Treasury but unaudited just estimates that could and were appealed and negotiated for more favorable results through Secretary Geithner, who was afraid to release bad economic information due to the risk of a loss in public confidence and to save face for the Administration.

The government estimates these institutions could suffer $600 billion in additional losses over the next two years.

This is no sign of recovery, but the last financial balloon to pop that causes the perfect storm to implode upon this now debt riddled economy that cannot survive another blow.

One example of an existing problem is that Israel and Iran are preparing for war.  Iran just put a missile defense system in place aimed at Israel.  Russia is now parading its troops around red square in a show of force but why now?  It has a treaty with Iran and is prepared to come to its aid in the event of war.  China is now pushing its new navy fleet and encountering US ships with its new sea worthy authority prepared to protect its shores and its newly acquired interests of natural resources in the region.

A severe catastrophe is building, America is economically severely weakened, its new massive debt of congress and Comrade President Obama cannot possibly initiate a sustained recovery but will be the last straw on the camel’s back that will be too much weight and cause it to fall into depression while war wages and gas prices go out of sight.

Obama is still blaming Bush in prime time, reveling in his new found stardom his ratings are on the rise as he nationalizes more sectors of the economy and taxes away business incentive to succeed from his bully pulpit of White House press corps who will do his bidding and destroy any dissent against his oppressive policies.

The wake up call is coming and America will be looking to its Marxist-fascist leader Obama for international guidance in the face of war in the middle east.

This will cut into his yucking it up time on Letterman, and the thievery of private coffers in the face of a perfect storm.

His liberal progressive lap dogs will be looking to him for the answers and he will sound good but have no substance as he has shown he is a weak leader willing to back down in the face of adversity and bow to those who know how to wield real power.

Sacramento California is a microcosm of what is happening throughout America.  Some think because the DOW industrial are in an apparent rebound and unemployment figures have slowed a bit even though they have not dropped below 600,000 per month that this recession is over or that a bottom has been reached.

But this is not the case, the inventory of homes across America will increase through the summer as government programs and bank hoping for an increase in sales are holding off on selling their inventory in hopes of receiving better prices for the toxic assets they hold on their books. But as the business cycle worsens bank balance sheets will need to rid themselves of this bad debt and face the fact that they need cash to keep their doors open.

Because of the increase in taxes in California the State is reporting $13 billion less in April tax receipts, leaving them $700 million behind the revenue forecasts incorporated into the budget deal reached in February. This is a problem happening all across America, where higher taxes do not result in more State revenue.  This recession cycle is still spiraling lower and when decreasing tax revenues indicate an inability to support massive government spending on bureaucratic jobs there will only be two choices, increases taxes or cut spending.

Here is a review of the current situation in Sacramento the capitol of the Great State of California as reported in the Sacramento Bee, May 5, 2009 by Phillip Reese and Jim Wasserman:

24,000 homes and apartments are vacant in the Sacramento area and nearly a third or 7,200 of the six-county region’s vacant homes have been empty longer than a year. In other sections of the city more than one in 10 homes is vacant, and one in 20 homes are in areas of southern Sacramento.

Real estate agents in the area claim recent foreclosure moratoriums in legislation recently signed by Governor Schwarzenegger  extending the time to six month before foreclosures can be resolved is one of the causes that banks are sitting on an inventory of homes.  Unemployment is forcing apartment communities to report a 11.3 percent rise in vacancy as unemployment forces family members to double up.

Banks are also trying to keep their excessive inventory from coming to the market as this would cause prices to drop further as supply outstrips demand.

Yuba County leads California in the percentage of residences, homes, apartments condominiums, vacant for at last 90 days and half have been empty for over a year:

Among the 10 largest counties in the State, only Riverside held a higher vacancy rate 4.1 % than Sacramento County’s 2.8 %.

Nothing is moving reported one local real estate agent.  Yuba, a rural county that has seen 1,200 foreclosures in the past 15 months, according to a reacher at DataQuick.

Thousands of vacant properties have driven down the value of empty homes and apartments across the region.