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<back | home Has the Global Fiscal Train Wreck Begun under the Bushies? by Frank Kahl WARNING TO READER: Reading this could give you a massive headache, stir your ulcers up, stress your system and cause you to vote Bush out in November. As an economist for over 40 years, I have seen recessions, currency crises, oil crises, monetary collapses and big-time bank failures. Although I was born in 1940 and therefore missed out on the joys of The Great Depression, today Iam more troubled and worried than ever about the massive and imminent threats to our society and the entire world economy coming from the Bush Administration and his Republican-led Congress imposition of record and runaway debt loads. Dire warnings are falling on deaf ears as major world financial leaders and players ring alarm bells all over the economic and political landscapes. Global synchronized recessions are now a distinct possibility as we “wire-up” global financial institutions and create interlinked financial arrangements and transactions. THREE DIRE WARNINGS FALLING ON DEAF EARS! QUESTION: What do Clinton’s Treasury Secretary, today’s USA Comptroller General and the International Monetary Fund all have in common? ANSWER: In early 2004, all three warned us that: (A) USA massive federal budget deficits are a NATIONAL DISASTER (B) The only way to avert a fiscal train wreck would be with tax increases AND budget cuts that are INFEASIBLE now and that (C) The result is the deficits could DESTROY the dollar, drive interest rates higher, CRASH stock markets and THREATEN the economy of the ENTIRE WORLD. Clinton’s Treasury Adviser, Robert Rubin, warned us that the $5 trillion in MORE red ink over the next decade will have huge impacts on the USA stock, bond and treasury markets. He worries that a loss of investor and creditor confidence, both here and abroad, may cause investors to dump USA investments. Worst case scenario would be that the economy and markets enter a DEATH SPIRAL of increasing levels of lost confidence (a feeding frenzy domino effect). USA Comptroller General David Walker has warned us that Federal government accountants are hiding massive amounts of debt, making it impossible to know how big these Bushie deficits and debt really are. He argues that the difference between the debt that the Bush Administration admits to and its REAL DEBTS are in the TRILLIONS of DOLLARS and that alternatives to the budget disaster are INFEASIBLE. The International Monetary Fund report dated 1/7/04 warned us of USA deficits “as far as the eye can see,” which could lead to the global risks of disorderly (dollar decline) financial markets. The outcome of this would be disastrous. Put simply, the runaway USA debt load is a massive and imminent threat to all of us and could lead to severe global synchronized recessions and/or MOTHER-of-all-DEPRESSION! Major USA financial publications have featured stories on what BUSINESS WEEK calls “The Casino Society.” What exactly is the extent or magnitude of the USA debt load? (A) RECORD United States National Debt on 7/1/04 of $7.2 trillion ($7,200,000,000,000.00) or $24,513 for every woman, child and man, and growing at about $1.58 billion per day. The projected National Debt 10 years out ranges from $10 to14 trillion. (B) In five short years, the fed budget has gone from a record Clinton Administration surplus of $236 billion to a projected Fiscal Year 2004 Bush deficit of $521 billion (over a half-trillion dollars). And FY 2005 deficits are projected at around $364 billion. Thanks to Bush’s failed Reaganomics II policies, these are at RECORD levels!! (C) In January 2004, the Congressional Budget Office projected $2.4 trillion total deficits over the next 10-year period. The red ink spigot has been wide open since Bush entered the Imperial Palace in January 2001. (D) RECORD consumer credit outstanding as of May 2004 of $2.03 trillion, which translates to about $19,000 per USA household. (E) As of April 2004, Americans owed nearly $9 trillion (a RECORD) in home mortgages, car loans, credit card debt and other forms of personal borrowing. But what is really alarming is that they have accumulated nearly 40% of this total in just four years, according to published Federal Reserve data. (F) RECORD level of international trade deficits in 2003 of $490 billion. USA is the world’s #1 debtor nation. Net debt owed to the world exceeds $2.5 trillion (G) RECORD-high consumer credit card delinquencies in first quarter 2004 (H) USA RECORD-high for most bankruptcies filed in a single year (1.57 million) set in 2002. (I) Over the past three Bush years, state budget gaps (the difference between tax revenues and outgo) have aggregated to nearly $200 billion.....the highest figure since WWII. (J) In 2003, a RECORD was set for most residential real estate foreclosures (K) Collapse of Medicare system by 2019--seven years earlier than expected--because of rising health care costs. (L) Threatened and troubled Social Security system with millions of Baby Boomers heavily withdrawing funds starting in 2008. Over the past 35 years or so, money was “borrowed” from the Social Security and other Trust Funds and placed in the general fund; thus deficit numbers and federal debt loads are skewed and under-represented. A hidden “DEBT TAX exists: future generations must pay this “tax” on interest payments coming due on the massive national debt. The current “debt tax” is about $380 billion owed in annual interest due on the National Debt. Added up, all this consumer, corporate and government debt could total $44 TRILLION in the next ten years. IMAGINE THE WORLD ECONOMY AS A HUGE TRAIN Viewed this way, we have about 200 interlinked cars (countries) pulled basically by the G-8 countries. The lead engines (headed by the USA) sputter and then derail from massive debt loads and a long period of irresponsible fiscal behavior. The USA capitalist system and other linked capitalist economies like Canada, Japan, Germany, et.al, dependent on huge capital infusions, are suffering big time or are shattered severely. Could Rubin, Walker and the IMF be right with their warnings? Could Karl Marx have the final laugh? SOME QUESTIONS TO PONDER: 1. Is anyone really paying attention to these alarms? 2. What are the implica tions and consequences if we have this major derailment? 3. Is any one or group capable of averting it? 4. What actions today, if any, could be taken to avert it? 5. Is it imminent and inevitable? 6. Will we take the necessary steps to avert it? 7. Could the collective “we” survive? 8. Is this a part of some larger Death Spiral? 9. How? When? Who? What? 10. Will President John Kerry really want and enjoyhis new job? WHAT HAS BUSH AND REPUBLICAN-LED CONGRESS DONE ABOUT ALL OF THIS? As the presidential election cycle nears and Bush-Cheney are seeking re-election, it is only fair to examine their economic performance to date. The Federal Deficit Machine grinds on at record levels. They want to make existing tax cuts for the extremely wealthy permanent on 1/1/05. How can they justify tax reductions for the upper class by using borrowed in-debt dollars? How can they look today’s children in the eyes without honestly explaining the “debt tax” to their parents? How can they live with this terrible legacy that the Bushies leave for our children, grandchildren, great-grandchildren and beyond? As explained above, under Bush’s presidency we are at RECORD levels of almost every important economic indicator. The Treasury has been plundered, 401K plans have been robbed with the biggest corporate scandal in history, the middle-class Joe and Marie Sixpack have been squeezed, pension plans and overtime pay along with health plan coverage have been stripped away from the average worker, and the wealth redistribution amounts to an all-out CLASS WAR! The Financial House of Uncle Sam was mugged not by the dreaded Bin Laden or the “scourge” of the 20th century--Communism; the enemy of fiscal soundness and sanity has been homegrown “patriotic” politicians (and the disenfranchised or disinterested or dumb voters) with old and tired and dangerous national priorities dining on lard from pork barrel projects favoring special interest groups. Bushies should be so embarrassed of their economic performance (to say nothing of other lies and misdeeds such as the Iraqi War) that Bush should go hide out with Bin Laden in his Club Osama Cave. At a minimum, his colossally irresponsible fiscal behavior does not deserve a second term. The USA economy (patient) is seriously ill while suffering from excessive greed, reckless and wasteful spending, fiscal irresponsibility to future generations, addictive spending behaviors, disrespect to Mother Earth and above all insensitivity and disrespect to the implications and consequences of her actions. The prognosis: the USA society may have a terminal, incurable disease. Shall we Meditate? Shall we Pray? Shall we Organize? Shall we increase our Hedonism? As a first necessary step, I hope you join me in exercising your patriotic duty to DUMP BUSH on 11-2-04! Frank L. Kahl is a retired academic economist now living on the central coast, an avowed Bush disliker, and worried about our collective financial future. His writings can be found at www.patriotsvotingbushout.info. DEBT DEFINITIONS: Debt — excessive spending relative to income that lingers overhead like a long hangover causing pain years into the future Debt Load — amount of debt often used by creditors (lenders) to determine if you are carrying a “safe” amount of credit. Creditors look at debt/income ratio to analyze whether or not you have “too much” debt National Debt — cumulative deficits rolled over yearly with interest payments on the debt required by law Federal Deficit — annual budget shortfall (expenditures exceed revenues) of federal government <back | top^ |