The After Mass of Bush Presidency

Inheriting the white house after 2008
By Joe Smitjh cc

Whether or not John McCain or Barrack Obama wins the election one thing is for sure, they will be left to clean up after one of the worst Presidents of the United State. They will be left with the after mass of and illegal war, a growing deficit, a fail housing market, and the collapse of financial institutes. No matter what they say or do the American people are feeling the effect of a collapse system of government. They can only hide the true condition of America for so long. They will eventually have to come out and tell us, that the county is broke. We are in a recession headed strait for a depression. American only God can save us now, what we’re seeing is the end of America. The time of good and plenty has come and gone, all you have to do is look at the articles blow to see the real course we’re headed.




Record deficit for next president

The next US president is expected to face a record federal budget deficit of almost half a trillion dollars.

The White House has lifted its deficit forecast for 2009 to $482bn (£242bn) up from $407bn.

The budget deficit measures how much more the government is spending than it is raising through taxes.

The slowing economy is reducing the tax take and the government has launched a stimulus plan by making payments to 130 million households to boost spending.

The forecast figure excludes about $80bn of war costs.

The budget deficit is measured from the beginning of October to the end of September.

It is possible that the deficit for 2008 will also break the record of $413bn, which was set in 2004.

A $482bn deficit would represent about 3% of the total output of the US economy, which is well below some of the deficits seen in the 1980s and 1990s in percentage terms.

Nonetheless, whoever turns out to be the next US president may be reluctant to enact any further tax cuts or increases in spending that would raise the deficit.

The deficit figure also is flattered by including the surpluses that are currently being accumulated by the social security trust fund, but that will soon turn into deficits in the next decade.

And it takes no account of the potential costs of a full-scale Federal bail-out of the mortgage giants Fannie Mae and Freddie Mac, who have been given a Federal guarantee in the housing bill that has just passed Congress.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7529372.stm

Published: 2008/07/28 19:20:03 GMT

© BBC MMVIII



US inflation quickest in 17 years

US inflation accelerated at its fastest pace in 17 years in June, official figures have shown, driven higher by surging energy prices

Consumer prices were 5% higher than a year ago and rose 1.1% on a monthly basis, the Labor Department said.

Federal Reserve boss Ben Bernanke has warned that the threat of rising inflation has intensified recently.

Minutes from the Fed's latest meeting on interest rates indicated the next move in borrowing costs could be up.

It faces the dilemma of having to stem the rise in inflation while not further choking an economy under serious strain.

'Fed in a hole'

June's annual inflation increase was the highest since 1991 while the monthly jump is the sharpest since September 2005.

In his second day of congressional testimony on Wednesday, the Fed boss said inflation was too high and it was a key objective for the central bank to bring it down.

Many analysts now believe that the central bank may have to leave borrowing costs on hold, or even increase them, as it tries to steer a faltering economy through turbulent times.

This increases concern that the Fed is not going to be able to lower interest rates if the economy remains weak
Gary Thayer, from Wachovia Securities
At the same time as inflationary pressures are rising, the US faces a severe housing slump, a credit crunch and financial market turmoil stemming from the collapse of the sub-prime mortgage market.

According to minutes of the Fed's interest rate meeting in June, policymakers believed "the next change in the stance of policy could well be an increase" due to "upside risks to inflation and inflation expectations".

The impact of surging living costs in June "really puts the Fed in a hole," said Alan Ruskin, an economist at RBS Greenwich.

Gary Thayer, from Wachovia Securities, agreed that the Fed was facing a tricky balancing act.

"This increases concern that the Fed is not going to be able to lower interest rates if the economy remains weak."

But he added: "And as long as the economy remains weak, it will be hard for the Fed to raise rates to fight inflation."

Energy surge

Energy prices were the main driver of price growth, and were 6.6% higher in June as the cost of petrol, natural gas and heating oil increased.

But expectations that that a slowing US economy will dampen demand for oil helped crude prices fall more than $4 to below $135 a barrel, their second sharp daily fall.

Annual core inflation, which strips out volatile fuel and food prices, touched 2.4%.

The surge in living costs has dented the earning power of Americans.

Average weekly wages, after adjusting for inflation, fell by 0.9% in June - the biggest monthly decline in 24 years, the Department said.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7509729.stm

Published: 2008/07/16 22:08:24 GMT

© BBC MMVIII



More misery for US mortgage firm

Freddie Mac, which offers funding for a huge proportion of US mortgages, has posted a quarterly loss amid continued problems in the housing market.

As mortgage defaults climb and house prices sink, it made a loss of $821m (£420m) in the three months to the end of June, down from a profit of $729m.

Shares in Freddie Mac fell sharply last month on fears that it would run out of money to fund its business.

The US government was forced to take radical steps to ease the panic.

Stronger position?

Freddie Mac, and its counterpart Fannie Mae, are the backbone of the US mortgage market as almost all US lenders rely on them to buy their mortgages in order to access the funds to lend to consumers.

As mortgage guarantors, they must pay out when homeowners default on their loans.

With the housing market across the US crumbling, their finances have come under severe stress.

In its latest set of earnings, Freddie Mac set aside $2.5bn, compared with $1.2bn in the first quarter of 2008, and slashed its dividend by 80% to five cents pending board approval.

The company said this reflected increases in mortgage delinquency rates, foreclosures and estimated losses due to continued declines in home prices, it said.

Freddie Mac reiterated that it would raise $5.5bn of new capital to shore up its balance sheet and raised the possibility that it may need to raise more than that depending upon "market conditions".

"We are confident the actions we are taking are strengthening Freddie Mac's financial and competitive position and will generate value well into the future," said Richard Syron, Freddie Mac's chairman and chief executive.

Shares in Freddie Mac were down 12% in late morning trade in New York while Fannie Mae shares had dropped nearly 9%.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7544971.stm

Published: 2008/08/06 15:53:29 GMT

© BBC MMVIII


The Collapse of American Power
Publication time: 21 March 2008, 16:19

In his famous book, The Collapse of British Power (1972), Correlli Barnett reports that in the opening days of World War II Great Britain only had enough gold and foreign exchange to finance war expenditures for a few months. The British turned to the Americans to finance their ability to wage war. Barnett writes that this dependency signaled the end of British power.

From their inception, America's 21st century wars against Afghanistan and Iraq have been red ink wars financed by foreigners, principally the Chinese and Japanese, who purchase the US Treasury bonds that the US government issues to finance its red ink budgets.

The Bush administration forecasts a 0 billion federal budget deficit for this year, an indication that, as the US saving rate is approximately zero, the US is not only dependent on foreigners to finance its wars but also dependent on foreigners to finance part of the US government's domestic expenditures. Foreign borrowing is paying US government salaries--perhaps that of the President himself--or funding the expenditures of the various cabinet departments. Financially, the US is not an independent country.

The Bush administration's 0 billion deficit forecast is based on the unrealistic assumption of 2.7% GDP growth in 2008, whereas in actual fact the US economy has fallen into a recession that could be severe. There will be no 2.7% growth, and the actual deficit will be substantially larger than 0 billion.

Just as the government's budget is in disarray, so is the US dollar which continues to decline in value in relation to other currencies. The dollar is under pressure not only from budget deficits, but also from very large trade deficits and from inflation expectations resulting from the Federal Reserve's effort to stabilize the very troubled financial system with large injections of liquidity.

A troubled currency and financial system and large budget and trade deficits do not present an attractive face to creditors. Yet Washington in its hubris seems to believe that the US can forever rely on the Chinese, Japanese and Saudis to finance America's life beyond its means. Imagine the shock when the day arrives that a US Treasury auction of new debt instruments is not fully subscribed.

The US has squandered 0 billion dollars on a war that serves no American purpose. Moreover, the 0 billion is only the out-of-pocket costs. It does not include the replacement cost of the destroyed equipment, the future costs of care for veterans, the cost of the interests on the loans that have financed the war, or the lost US GDP from diverting scarce resources to war. Experts who are not part of the government's spin machine estimate the cost of the Iraq war to be as much as trillion.

The Republican candidate for President said he would be content to continue the war for 100 years. With what resources? When America's creditors consider our behavior they see total fiscal irresponsibility. They see a deluded country that acts as if it is a privilege for foreigners to lend to it, and a deluded country that believes that foreigners will continue to accumulate US debt until the end of time.

The fact of the matter is that the US is bankrupt. David M. Walker, Comptroller General of the US and head of the Government Accountability Office, in his December 17, 2007, report to the US Congress on the financial statements of the US government noted that "the federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of September 30, 2007." In everyday language, the US government cannot pass an audit.

Moreover, the GAO report pointed out that the accrued liabilities of the federal government "totaled approximately trillion as of September 30, 2007." No funds have been set aside against this mind boggling liability.

Just so the reader understands, trillion is ,000 billion.

Frustrated by speaking to deaf ears, Walker recently resigned as head of the Government Accountability Office.

As of March 17, 2008, one Swiss franc is worth more than dollar. In 1970, the exchange rate was 4.2 Swiss francs to the dollar. In 1970, purchased 360 Japanese yen. Today dollar purchases less than 100 yen.

If you were a creditor, would you want to hold debt in a currency that has such a poor record against the currency of a small island country that was nuked and defeated in WW II, or against a small landlocked European country that clings to its independence and is not a member of the EU?

Would you want to hold the debt of a country whose imports exceed its industrial production? According to the latest US statistics as reported in the February 28 issue of Manufacturing and Technology News, in 2007 imports were 14 percent of US GDP and US manufacturing comprised 12% of US GDP. A country whose imports exceed its industrial production cannot close its trade deficit by exporting more.

The dollar has even collapsed in value against the euro, the currency of a make-believe country that does not exist: the European Union. France, Germany, Italy, England and the other members of the EU still exist as sovereign nations. England even retains its own currency. Yet the euro hits new highs daily against the dollar.

Noam Chomsky recently wrote that America thinks that it owns the world. That is definitely the view of the neoconized Bush administration. But the fact of the matter is that the US owes the world. The US "superpower" cannot even finance its own domestic operations, much less its gratuitous wars except via the kindness of foreigners to lend it money that cannot be repaid.

The US will never repay the loans. The American economy has been devastated by offshoring, by foreign competition, and by the importation of foreigners on work visas, while it holds to a free trade ideology that benefits corporate fat cats and shareholders at the expense of American labor. The dollar is failing in its role as reserve currency and will soon be abandoned.

When the dollar ceases to be the reserve currency, the US will no longer be able to pay its bills by borrowing more from foreigners.

I sometimes wonder if the bankrupt "superpower" will be able to scrape together the resources to bring home the troops stationed in its hundreds of bases overseas, or whether they will just be abandoned.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration

Source: CounterPunch