Are you ready to wake up?????
September 03, 2009
– Comments (8)
As many of you know, the United States is now a consuming economy with many agreeing the consumer represents 70% of GDP.
What many of you don't know is the biggest consumer in America is government consuming $6.5 Trillion dollars per year....about half the GDP.
http://www.usgovernmentspending.com/index.php?year=2009
Government gives out about $1 Trillion dollars per year in welfare payments including Food Stamps to tens of millions of Americans. If government didn't hand out that money, sales to our retailers in America would evaporate.......and since we are now running a collective $2 Trillion dollar deficit, there would be no savings in taxes if we didn't borrow and give out those welfare payments.
In other words, our consumption economy has now become very dependent on Obama handing out hundreds of billions of dollars of Welfare payments with money that doesn't exist. Those checks support our retailers, millions of employees, and commercial real estate across the nation....not to mention servicing the trillions of dollars of debt underlying the above. You can get by with this for a little while, but soon someone will have to pay as it is simply a Ponzi scheme that you can no longer conceal.
We could make the same argument for health care as over 50% of health care dollars comes directly from government spending money it doesn't have. Health Care is a HUGE employer in our economy and responsible for about 20% of GDP.
Why do you think Obama is so confident when he talks about health care reform?.... because he knows whatever he talks about is simply a distraction until we resolve the deficit issue.
Further, even running a $2 Trillion dollar deficit, sales to our S&P 500 companies are DOWN about 16%. A HUGE percentage of sales to the S&P comes from government spending....and if the government doesn't spend, sales will evaporate.
The problem now is that the banking system infected our nation with an unservicable amout of debt over the past five years. They were incentivized to write insane loans due to credit default swaps. When the debt started defaulting, instead of lowering rates to stem the defaults, the banks raised interest rates and tightened credit causing even more defaults.
Don't worry, they knew what they were doing, this was the plan......because in the end, they knew the taxpayer would bail them out as the economy imploded and millions would lose their jobs. As long as they told you everything was improving, most of you Fools wouldn't know the difference.
So here we are....a shrinking private economy and a government bringing in less revenues each month as the nation and economy depends on it more and more. Pretty soon, the government will be almost the entire economy.
Soon we are gonig to have to make a choice.....depression or totalitarianism.....you can't have both when government needs everything you have to drive the economy. We as a nation don't make enough for government to consume $6.5 trillion dollars.
Soon you will learn...... we really don't have much of an economy unless Obama spends our nation into bankruptcy(which in large part is due to swap induced overleverage created over the past five years).....and some may argue we are already there....we just don't know it yet. The question now, is how do we get out of it and whether we will have any imput in the matter.
That is pretty much the way things are in a nutshell......so as revenues keep evaporating and debt keeps defaulting and jobs keep getting slashed, it is impossible to grow a consumer based credit dependent economy when you are incentivizing banks to contract credit to the private economy.
Now the question is why are we being told things are getting better when bankers are cutting off credit to the private economy?....the two are logically inconsistent.
RSS Headlines
Fool UK