US Government Budget Crisis: Obamacabre Turbo-Boost

President Obama's recently signed health care bill greatly increases the likelihood of a severe US government budget crisis within the decade.

Two weeks before the House vote [Ed.: on Obamacabre], the Congressional Budget Office released its estimate of Obama's budget, including its health-care program. From 2011 to 2020, the cumulative deficit is almost $10 trillion. Adding 2009 and 2010, the total rises to $12.7 trillion. In 2020, the projected annual deficit is $1.25 trillion, equal to 5.6 percent of the economy (gross domestic product). That assumes economic recovery, with unemployment at 5 percent. Spending is almost 30 percent higher than taxes. Total debt held by the public rises from 40 percent of GDP in 2008 to 90 percent in 2020, close to its post-World War II peak.

To criticisms, Obama supporters make two arguments. First, the CBO says the plan reduces the deficit by $143 billion over a decade. Second, the legislation contains measures (an expert panel to curb Medicare spending, emphasis on "comparative effectiveness research") to control health spending. These rejoinders are self-serving and unconvincing.

Suppose the CBO estimate is correct. So? The $143 billion saving is about 1 percent of the projected $12.7 trillion deficit from 2009 to 2020. If the administration has $1 trillion or so of spending cuts and tax increases over a decade, all these monies should first cover existing deficits -- not finance new spending. Obama's behavior resembles a highly indebted family's taking an expensive round-the-world trip because it claims to have found ways to pay for it. It's self-indulgent and reckless.

But the CBO estimate is misleading, because it must embody the law's many unrealistic assumptions and gimmicks. Benefits are phased in "so that the first 10 years of [higher] revenue would be used to pay for only six years of spending" increases, a former CBO director, Douglas Holtz-Eakin, wrote in the New York Times on March 20. Holtz-Eakin also noted the $70 billion of premiums for a new program of long-term care that reduce present deficits but will be paid out in benefits later. Then there's the "doc fix" -- higher Medicare reimbursements under separate legislation that would cost about $200 billion over a decade.

Proposals to control health spending face restrictions that virtually ensure failure. Consider the "Independent Payment Advisory Board" aimed at Medicare. "The Board is prohibited from submitting proposals that would ration care, increase revenues or change benefits, eligibility or Medicare beneficiary cost sharing," says a summary by the Henry J. Kaiser Family Foundation. What's left? Similarly, findings from "comparative effectiveness research" -- intended to identify ineffective care -- "may not be construed as mandates, guidelines or recommendations for payment, coverage or treatment." What's the point then?

So Obama is flirting with a future budget crisis. Moody's emphasizes two warning signs: rising debt and loss of confidence that government will deal with it. Obama fulfills both. The parallels with the recent financial crisis are striking. Bankers and rating agencies engaged in wishful thinking to rationalize self-interest. Obama does the same. No one can tell when or whether a crisis will come. _WaPo

The one-party Obama-Pelosi reich is driving the US economy over a cliff. The cliff has been visible for decades. But instead of slowing down or turning to the side, the Obama-Pelosi reich has declared "full speed ahead and damn the taxpayers!"

There is No Polite Way of Dealing With This Crowd

Obamacabre has been signed into law, and will soon be spinning off expensive new amendments, revisions, lawsuits, and pork. But how familiar are members of the one-party government with the details of Obamacabre?


Al Franken may actually be the most intelligent, informed, and courteous of the current one-party government in Washington DC. Had a journalist seriously tried to get Speaker Pelosi to answer a question about what was in a $1 trillion bill, the journalist would probably be spending the next few months in hospital and rehab.

Personally, I would not like to have a congressional staffer put his hand on my shoulder so many times. It would make me feel violated, somehow. But that is just me. Fortunately, Jason Mattera kept his cool and kept the pressure on the Senator -- in an attempt to see just how much the Senator knew about the $1 trillion monstrosity he supported (soon to become a several $trillion monstrosity).

The US government is exploding in size and entitlement spending. Soon there will be no room for discretionary spending on the real functions of government: protecting citizens from violence, theft, and fraud. Entitlements + interest payments on the debt will soon exceed government revenues -- and both are on an exponential path to the stratosphere.

It does not look good. And knowing that the government is in the hands of a one-party cabal of social engineers who cannot bother themselves to understand what a $1 trillion bill will do -- that is not reassuring.

Make your plans now.

One-Party Rule Wearing Badly on Once Free Nation

Video Source via News Alert
The US is reeling under the blitzkrieg approach of the Obama - Pelosi reich to government. Having overrun private health care choice in favour of government dictate, the O - P reich now turns its eyes to overhauling the demographic makeup of the US.

The coming storm over immigration could be even more contentious than all the "ObamaCare" town hall meetings combined. It will also be a perilous challenge for Democrats trying to balance the conflicting interests of the Latino voters they wish to court, the businesses they promise to bolster, and the blue collar workers they need to turn out to vote in November. _Guardian

And yet the one-party reich cannot seem to help itself. It appears dedicated to transforming a once free, advanced, and prosperous nation into a nation of desperate government dependents who will have no choice but to keep returning the dictators to power -- echoes of Castro, Saddam Hussein, Mao, and other one-party state dictatorships that attempted to maintain an illusion of democracy.

The innovation and industry of the US private sector was once the pride of the world. But with time and corruption, constitutional protections from government overreach were torn down by bureaucrats, judges, and elected officials. Obama y Pelosi appear to see the end in sight -- permanent one party dictatorship. They cannot wait.

Helping Asia Deal with World-Spanning Pollution

Pollution from Asia rises with the monsoons up to the stratosphere, and circles the globe for years before dropping down to cover all the countries of the world.

The study suggests that the impact of Asian pollutants on the stratosphere may increase in coming decades because of the growing industrial activity in China and other rapidly developing nations. In addition, climate change could alter the Asian monsoon, although it remains uncertain whether the result would be to strengthen or weaken vertical movements of air that transport pollutants into the stratosphere. _ImpactLab

We know that up to 70% of melting of glaciers and polar ice is due to black carbon pollution -- mainly from Asia. What is not known is what other effects is the entire world suffering due to the ongoing pollution of the world's rivers, oceans, and atmosphere -- up to the stratosphere -- by Asian countries?

It is time to help these massive third world countries of Asia -- such as China and India -- to deal with their devastating problems of pollution. How can we do this?

First, while most of the world's pollution is coming from Asia, almost none of the world's environmental lobbyists, environmental trial lawyers, environmental community organisers, or environmental political activists are headquartered or working in Asia. Most of these busy little worker bees are buzzing around the capitals and large cities of western nations -- where for the most part skies and waters are relatively clean.

Why not ship these eager beavers to the places where they could be doing the most good? To Mumbai, to the hinterlands of industrial China, to Beijing, to the polluted slums of Africa and South America? Those are the places where the enviro-activists need to be working -- where conditions are the absolute worst.

They would not make nearly as much money, but they would be doing so much more good for all the people of the world if they would shower their attentions upon the activities that are genuinely causing harm to Earth's human and animal populations.

Imagine, for example, if all of the "scientists" who are busy making up and falsifying data in the attempt to prove the existence of catastrophic anthropogenic global warming (CAGW) were instead engaged in useful activities. What if these "scientists" were using their intelligence for good, instead of for energy starvation? What a better world we might have.

Finally, imagine if public sector employees in the west were required to spend 10 years in the third world at the end of their working years at age 55. Ten years helping third world people to provide themselves with clean water, clean air, healthy and abundant food, efficient sanitation, and other advantages enjoyed in the first world. And then these public servants could retire, at age 65 like everyone else, but with the knowledge that they had finally done something worthwhile with their lives. At that point they could sponge off struggling young private sector families to their heart's content, and take all the extended luxury cruises that their bloated pensions could support.

Truly, the western world has a lot of assets that could be devoted to the purpose of cleaning up the filth of the third world. It is only a matter of political will.

Obamacare? No -- Obamacabre

The macabre machinations of ramming health care reform down the throats of the US Congress and the American people, will be studied by historians for decades. The macabre repercussions of the passage of Obamacabre will be suffered by everyone who once relied on the American system of biomedical and scientific innovation. Because those days are going, going, gone.

Unique blogger Bayou Renaissance Man presents a thoughtful look at the transition -- or phase state change -- that the passage of Obamacabre represents. Quoting well known authors such as Mark Steyn, Victor Davis Hanson, Bill Whittle, and ?Al Fin??(who's that?) BRM presents one of the best overviews of Obamacabre's passage available.

I'm frankly sickened by the duplicity, immorality and bare-faced gall displayed by the Democratic Party in passing this bill. I won't bother to recap all of their shabby tactics, bribery and arm-twisting - you've doubtless read all about it in the news media. Nevertheless, a few commentators have said things about Obamacare over the past day or so that I think are worth circulating. _BayouRenaissanceMan

Go to the source to read the whole thing.

The deceit and strong-arm tactics perpetrated by the Obama - Pelosi government to bring this bill to signing is a classic illustration of mob-machine political chicanery. And yet the general US public knows and understands virtually nothing about what is soon to begin unfolding.

Had Jimmy Carter signed such legislation in the late 1970s, US physicians would have rebelled virtually as a group. But over the decades, US physicians have been so corrupted and beaten down by government health care and every conceivable type of bureaucratic health care administration and governance, that at least half of them are constantly in a daze -- and unable to react to most things that are happening outside of their immediate realm of responsibility and expertise.

Even so, plenty of physicians are already making plans to close up their practises and retire early -- or to shift to other areas of employment not falling under Obamacabre provisions.

If you are elderly -- or love someone who is elderly -- there is nothing but bad news from Obamacabre. You will be called upon to walk the extra mile to compensate for what the government's burgeoning neglect for the elderly would otherwise do to you or your loved ones.

If you are a person of colour, a racial minority who approves of affirmative action, and wants to take the system for everything you can -- well, you are in luck. Obamacabre opens yet more doors for such opportunism and stripping the flesh from your countrymen. Proceed at your own risk.

The passage and signing of this ill-defined, unfinished piece of garbage is but the harbinger of a new way of doing business in America. It is not pretty, but it is Chicago. It is corrupt, it is divisive, and it only deepens the schisms between the diverse peoples of a formerly free America.

The way to govern best, is to govern least. But that is the opposite of the Obamacabre approach to governing. Obama Pelosi take the "smothering" approach to the nanny state. People who love freedom would do well to make preparations for a long siege. Unless something amazing happens, and this form of politics is somehow overturned before it is too late. It could happen.

Apocalypse Now: The Mother of All EMPs

What happens when North America gets hit by either a nuclear EMP or a 110 year cycle solar flare? It would be the mother of all power surges, and everything would seem to go out at once.

What could happen: Everything that would happen in the previous four scenarios, and then some. Forget clean water. Forget health care. Wipe out the last 20 years of recorded history, because most of it was stored digitally...

..."We'd feel it first in the economy and our financial institutions, where everything is digital. Markets will collapse," says Siciliano. "Where's everything backed up -- in a filing cabinet? The economy would collapse, the banks would lock their doors and keep whatever money they had in the vault, because the rest has evaporated into thin air. Once the money's gone, we're resetting the clock."

How long to recover: Unknown. According to a January 2009 report by the National Academy of Sciences, the effects of a severe geomagnetic storm would be felt for years, most acutely in societies that are the most dependent on technology. The U.S. could take from four to 10 years to bounce back, according to the NAS -- if it bounces back at all.

"It will take a tremendous amount of manpower to clean up the mess," adds Siciliano. "Something that catastrophic, the gas pumps won't be operating, so a guy who's supposed to take a part to repair a facility can't get there because he has no gas. It could literally throw us back to 1840. Suddenly we're a third-world country again." _Infoworld

It would take years for a full recovery, perhaps decades. Since the big power transformers are no longer made in the US, and require up to a year from order date to be delivered, it all depends upon the extent of the damage worldwide. It is likely that wars would spring up in the middle of the tumult, drawing away the only US force competent and capable enough to re-boot US society -- the US military. Up to 90% of the US population could be dead within 1 year of such a devastating power failure, according to some estimates.

It is also possible for computer hackers to bring down large sections of the North American power grid, but recovery from such an attack would probably take no longer than a few weeks. Of course, a large scale power outage of a week up to a few weeks could have fatal repercussions.

Like the grid itself, other failures tend to cascade when the lights go out. In 2003, landline and cellular phone systems still worked but were so overloaded with calls that they effectively shut down. Electric railways stopped in their tracks, flights were canceled, and gas pumps would no longer pump. Water supplies that relied on electric filtering systems got contaminated. Food and medicine got spoiled; looting occurred; people died. _Infoworld

If you do not have a backup power generator for your home, and several weeks worth of food and clean water, get to work. If you have an insulin requiring diabetic in your household, stock a few months worth of extra insulin, and rotate your stock to keep it fresh. And so on.

It's easy to assume that you can continue to go on depending upon large institutions for your power, fuel, food, medicines, and civil order in your neighborhood. But under the current US government, such assumptions are foolish. Start taking responsibility.

Suicide of Europe

Across Europe, once-mighty and ambitious nations are singing a siren song of death and oblivion. Once great empires that spanned the globe are now dedicated to passing from the world stage without leaving a trace. A sad benediction to societies and cultures that once looked forward to an unending ascent of the human spirit.

In Britain, a government commission has drawn up plans for a "steady state economy" that forgoes future economic growth in the name of sustainability by cutting work hours and banning TV commercials (to reduce consumerism). In Germany, new bestseller called Exit: Prosperity Without Growth is just the latest in a growing body of literature pleading for Germans to learn to live with less. In France, President Nicolas Sarkozy—who once came to power exhorting the French to work harder and earn more—has thrown his weight behind an expert report that declares the pursuit of GDP growth a "fetish" and strives to replace the GDP statistic with a broader measure of national contentment.

...today's no-growthers seem to make the same mistakes as their many predecessors, from Thomas Malthus—who predicted in 1798 that rising populations would inevitably starve—to the Club of Rome, a group of scientists who warned in 1972 that the world would start running out of key resources in the 1980s. Such movements extrapolate growth rates for resource use and pollution but don't take enough account of technical innovation, environmental regulation, greater efficiency, and behavioral change. Take Exit author Meinhard Miegel's claim that the world is running out of food. It largely ignores, among other things, the barely tapped potential of genetic engineering and other plant-breeding technologies.

Such faults are often overlooked because the no-growthers resonate in Europe today for intellectual and political reasons, not economic or technological ones. Critiques of growth have always been, at their core, about uneasiness with capitalism itself. That this critique becomes mainstream when capitalism seems to be failing us is no surprise. After all, the Club of Rome made its first splash in the 1970s, during a long slowdown when people were also becoming newly aware of environmental degradation.

...the no-growthers are unrealistic about how painful a no-growth reality would be. As the Harvard scholar Benjamin Friedman argues eloquently in The Moral Consequences of Economic Growth, a society that gives up on growth invites nasty fights over the distribution of limited resources and paves the way for intolerance and populism. That economic growth isn't everything—it doesn't measure the value of our relationships, our communities, our culture—is obvious. But so is the correlation between prosperity and quality of life, including health, longevity, and the freedom to pursue happiness. _Newsweek

Indigenous Europeans are failing to replace their own numbers through rudimentary childbirth, and are steadily being replaced -- at least in their cities -- by Muslim immigrants who may be on welfare, but can reproduce all the same.

The failure of Europeans to reproduce is part and parcel of the dying Euro spirit, the culture of the human dieoff. It is the essence of the modern green left, which is strongest and most suicidal in Europe. But it is almost as strong in Toronto, Seattle, and Sydney. The Obama - Pelosi reich is fanning the flames of the dieoff with every legislative drive and push -- in the quest to catch up with Europe.

But do Americans really want to be like Europe in that regard? Perhaps of those who voted for Obama, half do. But of those who did not vote and those who voted for other candidates, it is likely that over 80% oppose the dieoff mentality.

Certainly China, India, Brazil, and other third world nations trying to emerge into a more modern era have no wish to share the Luddite dreams of death with Euro-greens. The billions of the third world, in all of their wasteful polluting splendour, will hardly miss Europe when it is gone. They will simply move in and call it something else, something more populated and polluted, to be sure.

Cross posted at Al Fin

Why Do Oil Prices Go Up?

Over the past decade or two, oil prices have experienced a whip-saw of fluctuations. It is instructive to look at some of the underlying causes and non-causes for oil price whiplash.

In late 2008, equity and commodity prices crashed. Oil prices fell from $147 per barrel to a low of $32 per barrel in December 2009. Those who all along maintained that China and India were the cause of oil and commodity price inflation must have been embarrassed by this crash. Surely, they could no longer defend their view that China and India were the key determinant of oil and commodity price inflation.

If rapidly increasing demand from China and India was behind the explosion in oil and commodity prices, a student of economics would have had to infer that demand from China and India had crashed, or possibly supply had exploded. But this is not supported by the facts. Despite a fall in oil prices by 82% in less than four months, oil output and oil demand remained stable at 86 million barrels per day (mbd) during September-December 2008.

Similarly, the acceleration of oil prices from $71 per barrel from August 2007 to $147 per barrel in July 2008 would have made the same student think that oil demand had increased dramatically or oil supply had fallen dramatically. Neither event took place nor realistically could they have. Oil demand and supply remained stable at 86 mbd during August 2007-July 2008.

... Speculators are interested in profits from short-term changes in commodity and equity prices. Traders in oil futures could be commercial traders, non-commercial traders, or others. Non-commercial traders could include banks, hedge funds, commodity funds, pension funds, and a number of other institutions; brokers could trade for their own account.

Non-commercial trade may account for 60% to 80% of traded futures contracts. A seller of an oil futures contract does not need to be Exxon, British Petroleum, Shell, or any other oil company. A hedge fund that buys oil futures contracts would become a seller of a futures contract when it closes a position to reap gains or prevent losses from its futures contracts. In fact, futures contracts are settled in offset cash settlement and very rarely through actual delivery of commodities.

Why were oil prices stable during 1983-2000 at about $18-$20 per barrel? Does it mean that there were no speculators in the market during that time? Or similarly, why did the New York Exchange not crash during 1920-1929? Were there no speculators during that time? Speculators are always operating in the market.

...It is cheap liquidity that fuels speculation. When central banks generously provide very cheap liquidity, speculation is fired up. The speed at which equity, commodity, and asset prices rise would depend on the speculative euphoria and the real economic activity. Buoyant real activity would accelerate the speed at which speculative prices rise. Nonetheless, a drop in real activity would not necessarily preclude a rapid rise in prices when interest rates are very low and liquidity abundant. For instance, oil prices rose from $32 per barrel in December 2008 to $82 per barrel in March 2010 even though oil demand declined from 86 mbd in December 2008 to 85 mbd in March 2010. In 2009, major banks posted large profits from trading in commodities and equities in spite of a sluggish economy and rising unemployment.

...Commodity markets rapidly transmit the inflationary effects of US Fed and other major reserve currency central banks monetary policies. Commodity prices are very sensitive to interest rates and availability of liquidity through borrowing. Cheap money policies have operated through a number of channels, including credit channel, exchange rate channel, and commodity channel. The commodity markets channel operates faster in comparison to other channels with instantaneous impact on consumer prices. For instance, while US banks are at present awash with $1.175 trillion in excess reserves, which they could not lend profitably and with reduced risk, futures markets have been on a speculative rise as illustrated by large rebounds in gold, oil, food, and many other commodity prices.

...Who is in a position to determine whether oil prices move to $100 per barrel, $147 per barrel, or even higher? It is not the Organization of the Petroleum Exporting Countries, China or India. It is not even the speculators. Speculators are simply microstructures that are risk-averse and seek to profit from opportunities for gains; they were not able to prevent a sharp decline in oil prices from $41 per barrel in 1981 to $8 per barrel in 1986, nor were they able to push oil prices beyond $18-$22 per barrel during 1985-2000.

...Fictitious money creation by reserve currency central banks was conducive to high oil and commodity price inflation. Since the US Fed could not push oil output above 85 mbd nor could it prevent a sharp drop in sugar output, its fictitious money creation has amounted to a real redistribution of purchasing power in favor of borrowers and speculators and imposed a heavy tax on workers, pensioners, and other fixed-income groups - and a cut in real incomes for millions of consumers around the world. By paying threefold to fourfold more for basic commodities, consumers are cutting dramatically their real consumption of these goods and at the same are being taxed directly through commodity price inflation by central banks.

__ATimes

The authors of the above article appear to believe that central banks can cause the world economy to become locked in a continuous spiral of oil and commodity price inflation. But we saw what happened in late 2008 and early 2009, and it was not pretty.

Today's oil prices -- hugely influenced by a weak US dollar -- are toward the high end of the historical scale. That means that very little price inflation would be required to produce a dramatic demand destruction and deflationary spiral.

The apparent close connection between quasi-governmental central bankers and big investment banking houses suggests that the big financial interests of the western world are in the process of picking the bones of the established economies. They have discovered some of their limits from the circumstances of the current world recession. But that will not stop them from continuing to probe for profitable lodes of salvageable gold.

It is important to understand the cynicism of those who have clawed their way to power over the giant institutions that have so much influence over our lives. That way, when we go about doing the things that we must to make those institutions unnecessary, we will not have to feel bad about their downfall.

Big Trouble in Russia

Russia is a huge land area occupied by a rapidly dwindling population of Russians. But that isn't the trouble of which I write. It is Putin who is big trouble for Russia, and finally more and more Russians are starting to understand the kind of trouble Putin is making for them.

A revolution is brewing in Vladimir Putin's Russia. The chickens of his incompetence and shameless artifice are finally coming home to roost. Now, he has only neo-Soviet brutality to fall back upon. How long that will maintain him, only the likes of Barack Obama can say.

The Bruce Springsteen of Russia, Yuri Shevchuk of the seminal rock band DDT, recently launched into an unprecedented, lengthy, and biting critique of the Putin regime from the stage of one of Russia's most prestigious arenas. A video of the speech went viral and has already been viewed nearly 200,000 times and received over 500 comments.

Then an online petition surfaced, attracting the support of virtually every significant opposition leader, and it too went viral. The call: Putin must go, now and permanently. The websites hosting the petitions were soon under furious attack from Putin's army of hackers.

Russians have good reasons to despise the increasingly neo-Soviet regime that Putin, a proud KGB spy, has created. And despite the shameful lack of support from Barack Obama and other craven Western leaders, they have good reason to be brave enough to challenge him...

...Putin is likely delighted to see that Russia's performance has become even worse under Medvedev because it gives him the chance to further justify a return to power. Never mind that under Putin's two terms, Russia's scores dropped enough to lag behind some of the most lawless African states. Putin can claim that he is once again riding to Russia's rescue.

The scheme can work only because of the poor excuse for leadership being provided by the Obama administration, which has driven France into Putin's waiting arms and which has remained silent despite the opportunity to speak out for freedom that the Kremlin's ongoing failure has presented. _AT

Obama behaves as a pathetic enabler to Putin's tyranny, in total callous disregard of the plight of the people of Russia. That is no surprise. Obama really has no competence or expertise in anything except given telepromptered speeches. What is surprising is how totally incompetent and foolish Obama's entire team in the cabinet and executive branch is turning out to be.

The Russian people are dying fast, and being born very slowly. They are disappearing like tiny tortured stick men from the vast expanse of the largest country in terms of area, and probably the wealthiest country in terms of mineral resources.

Who is on their side?

Al Fin Says "No!" to California's Request for Hit Men

Despite being pressured by some of California's most powerful political operatives, Al Fin is holding steady in his refusal to allow hit men from the Al Fin Syndicate to assist California state, county, and municipality governments to balance their budgets. With California municipalities -- starting with Vallejo -- being forced to declare bankruptcy over the cost of their exploding pension obligations, some of the craftier government executives appear to be looking into creative methods for reducing their liabilities.

While some retired government workers in California may collect yearly pensions as high as $200,000 to $500,000, a good hit man will generally charge no more than $25,000 a hit, according to the FBI. Australian hit men receive only about US $10,000 per hit, and Russian hit men will rarely charge over US $1,000 a hit. Depending upon contractual benefits to surviving family members, a government might well come out ahead by seeking professional help.

Across the US, government employee pensions are roughly $2 trillion in the red. Already overburdened taxpayers in the private sector are left holding the bag, being forced to work into their seventies so that government workers who retired in their fifties can take expensive and extended vacation cruises.

California's unfunded pension liability is about $60 billion, and that for Illinois is about $55 billion. Both states are sinking rapidly due to the absence of government executives willing to stand up to public employees' unions. New Jersey is also in a serious situation, but the new governor, Chris Christie, is attempting to implement some tough measures which may save the state from defaulting on its sovereign bond debt.

Thanks to public sector unions, several US states are in danger of defaulting on sovereign debt -- just like Greece and Spain. Governments whose workforce is thickly infiltrated with union workers will find it easy to raise wages and benefits when their economies are doing well. But when the economy crashes and tax revenues dry up, the same governments find it virtually impossible to adjust wages or benefits downward, for union employees. Default on sovereign debt can follow.

US federal government programs such as Medicare and Social Security, are likewise ballooning in cost, as the baby boom generation hits retirement age and younger generations fail to maintain tax revenues high enough to pay for the exponential rise in expenses. Consequently, President Obama and the Pelosi congress have devised a clever means to kill off large numbers of US senior citizens, and called it ObamaCare. An unfortunate side effect of ObamaCare is that it will burden the US economy with many $trillions more debt, but perhaps to Obama and Pelosi that is another good thing about the plan.

The use of hit men to eliminate the most costly recipients of overblown public employee pensions is likely to be limited to California -- where peculiar rules make it especially easy for mediocre employees to retire to the guaranteed lifestyle of a millionaire -- and to Illinois, where it is impossible to tell the difference between government and the mob. For most of the other 48 states, the stark example of their most irresponsible fellow states may jolt them into at least temporary sobriety. Hit men should not be necessary.

Regardless, you can rest assured that no Al Fin Syndicate hit men will be allowed to assist California to get out of its public employee pension mess. Al Fin feels that the California Assembly got itself into the mess, and it should either get itself out of the mess or die trying. Either way. ;-)

Previously published at Al Fin

When a Society Ages, It Begins to Die

When a society ages, its resource allocation increasingly favors the old. Healthcare costs, for example, rise exponentially. Broadly, an old population is unwilling to take risks, which makes social or economic change difficult. Underlying forces in an aging society favor unproductive expenditures and less competition.

Rising social burdens in an aging society obviously fall on the working population, i.e. the tax burden on the working rises over time. The diminishing reward for work decreases labor supply, as workers choose more leisure. A vicious cycle in labor incentives is quite possible.

The changes in an aging society are far greater than what the arithmetic of the so-called dependency ratio – the ratio of non-working to working citizens – suggests. A society changes in many ways to become more conservative, less hard-working, and less innovative. The society ages....

...Rising national debts in developed economies are driven by aging. The benefits they promised during the high growth period cannot be supported by government revenues anymore. They resort to borrowing to keep promises. Japan's national debt at about 200 percent of GDP is the highest in the world. Other developed economies seem to be on the way there. The average fiscal deficit in Europe is 6 percent of GDP. Britain's is 12 percent, and America's is 10 percent. While most analysts blame oversized deficits on the recession, they could last for many years to come. Japan's deficit in the 1990s was viewed similarly. With such high deficits, it won't take long for them to catch up with Japan....

...Aging has disastrous consequences for asset prices. Property, for example, must be a permanent bear market. Declining population means declining demand for property. As property is a long-lasting asset, permanent surplus is likely, exerting a constant downward pressure on property prices. Japan's property prices have been declining at about 7 percent per annum for nearly two decades. The rental yield happens to be similar to the price decline. Foreigners are enticed by Japan's high rental yield from time to time. Few have made money.

An aged economy is a stagnant economy. Hence, corporate profits are likely to be stagnant. Without growth, stocks should be very cheap, say, around 10 times earnings and 5 percent dividend yields. Japan's stocks were trading at above 70 times earnings at their peak. They have been falling for two decades. Foreigners are sometimes attracted to the improving valuation of Japan's stock market. Periodic foreign buying causes market upturns, but all have turned out to be value traps... 

...Aging is supposed to be deflationary. Japan's experience supports that theory. However, deflation is possible only because governments can borrow to cover the cost of aging. When debt is unsustainably high, inflation is inevitable. Inflation is a form of reneging on promised benefits. I'm afraid the world is heading that way. __Andy Xie

Japan, Eastern Europe, and Russia have a head start on most of the developed and semi-developed world.  Italy, Greece, and Spain are following very closely.  Then will come Canada, Germany, Belgium.

It is uncertain whether China and India will survive as nations long enough to experience the demographic plight of Japan and Europe.  War within the populous nations of Asia grows increasingly likely.  China has played a pivotal role in nuclear weapons proliferation in Asia, and may suffer a bit of poetic justice in that regard.  We should all hope not, however.  Besides the human death toll, the current pollution and toxicity streaming out of Asia is bad enough without adding radioactive dust and soot to the mix.

The aging of societies will create incredible stresses across Europe and Asia.  Things could turn tragically bad, very quickly.

Peak Oil acquires yet another definition:  the time when skilled human populations fall to such low levels that too few remain who can produce the fuels or build the machines that use the fuels.

England Ethnically Cleansed, Euro Civil War 2025!

The UK is being ethnically cleansed by its own limp wristed politically correct government. By walking UK city streets, one can already see results from this ethnic cleansing. Within the next 15 years, the process will be irrevocable.

Tracking ethnic demographics is not an exact science, but it is generally recognised that the ethnic minority population of Britain is approximately 15% which equates to 9 million out of a population of 60 million.

However, the indigenous British population contains many old people, leaving only 50% of the population under 40 years of age, whilst the non-indigenous population tend to be much younger by dint of their higher birth rate, with 75% typically representing those aged under 40.

If we use these statistics, the population of Great Britain under the age of 40 looks like this:

Indigenous Population 2009: 25.5 million
Non-Indigenous Population 2009: 6.75 million

But the current birth rate differentials cause the indigenous population to decline by 25% per generation whilst the non-indigenous population has historically doubled per generation, with the Muslim population growing ten times faster than the rest of society.

If we project this data forward to 2030, the figures look like this:

Indigenous Population 2030: 19 million
Non-Indigenous Population 2030: 13.5 million

On top of this we need to take the following into account:

Approximately 200,000 Brits emigrate every year.
Approximately 200,000 legal immigrants arrive every year.
Approximately 300,000 illegal immigrants enter England every year in order to reach government productivity targets.

If we project this data forward to 2030, the figures look like this:

Indigenous Population 2030: 15 million
Non-Indigenous Population 2030: 23.5 million _GatesofVienna_via_DennisMangan

If you understand that the meaningful fraction of a populations demographic is those either in their reproductive years, or those with their reproductive years ahead of them, it is clear how the UK's policies will result in a rather thorough and rapid ethnic cleansing of the country.

The same process is occurring at variable rates across the sub-continent of Europe. Eventually the indigenous people of Europe will be forced to understand what is being done to them by their own governments. A civil war in Europe will, at that point, become inevitable.

Okay, that is not exactly true. It is highly likely that in some countries of Europe, civil wars will be fought over the issue of the ongoing ethnic cleansing. The indigenous people of other European countries may simply surrender to their fate, accept dhimmitude, and go into oblivion with all the grace of sheep to the slaughter.

Poor Future Orientation, Poor Executive Function

Humans with an inability to postpone gratification for purposes of future profit tend to have poorer executive functioning of the frontal lobes of the brain. This mental deficit is reflected in adult life by a consistently lower personal net financial worth, than will be seen in other adults with better frontal lobe function.

Executive Function (EF) of the human frontal lobes has been found to be a better predictor of life success than a person's IQ score. EF reflects the person's ability to stick to a task until it is finished, and a person's ability to control his emotions in social settings. Delayed gratification for purposes of future gain is a very important aspect of healthy executive function of the brain.

Previous studies have suggested that EF is highly heritable. A recent study of net financial worth of women ages 36 to 49, compared by race, provides rough support for inheritance of EF as a partial explanation for wealth discrepancy.

In a groundbreaking report released Monday by a leading economic research group, social scientists turned a spotlight on the grave financial challenges facing an often overlooked group of women, many of whom could not take an unpaid sick day or repair a major appliance without going into debt.

"It's rather shocking," said Meizhu Lui, director of the Closing the Gap Initiative based in Oakland, Calif., who contributed to the report "Lifting as We Climb: Women of Color, Wealth and America's Future."

Among the most startling revelations in the wealth data is that while single white women in the prime of their working years (ages 36 to 49) have a median wealth of $42,600 (still only 61 percent of their single white male counterparts), the median wealth for single black women is only $5. _Source

Executive Summary of report PDF

Full report PDF

In mainstream academic and media culture, there is no room for explanations that include inherited characteristics such as EF or IQ -- at least when it comes to deficiencies of people of colour. But in the real world of falsifiable science, it is criminal and corrupt not to look at genetic and heritable characteristics that may partially explain group differences.

Of course we are seeing a lot more corrupted science in these days of radical political correctness and engineered green leftist dieoff policies. Such policies are largely responsible for a diminished respect for science and academia.

There is a developmental window when executive function can be trained -- up to the age of 7. Children of all races and ethnic backgrounds could profit from such training. But if those with a heritable deficit in EF are not trained to maximise their EF, society itself is at fault. And every person in that society will pay for that neglect.

Russia's Crumbling Four "I's" Spell Dismal Future

In February of 2008, weeks before being elected to presidential office, President Medvedev of Russia called for the development of Russia's four "I's": Institutions, Infrastructure, Innovation, and Investments. After two years, how is Mr. Medvedev's Russia doing?

1. Institutions. According to the latest annual Global Competitiveness Report published by the World Economic Forum, Russia’s institutions have not only failed to improve, they have gotten worse. Of the 133 countries ranked, Russia dropped 12 slots to 63rd place. What’s more, the country’s rating based on the development of a fair and impartial judicial system — Medvedev’s pet project — dropped from 109th place to 116th. Protection of property rights — a key prerequisite for economic development — fell to an equally shameful 119th place. Moreover, Russia has turned into one of the world’s most-closed economies, ranked 109th of 121 in this category in the World Economic Forum report and falling behind even Mozambique, Kenya and Ethiopia.

According to the World Bank, conditions for doing business also worsened, with Russia dropping eight notches to 120th of 183 countries ranked. Only one country in the world had more onerous procedures for obtaining building permits — Eritrea, a dictatorship that is subjected to United Nations sanctions....

2. Infrastructure. In 2009, Russia suffered one of its worst disasters at Sayano-Shushenskaya, the country’s largest electrical power station. Moreover, it built only 1,000 kilometers of roads, as compared with the 47,000 kilometers of roads China built in 2007. Russia has allocated 18 percent less funding for the construction of roads in 2010 than it did last year, and it plans to build only 942 kilometers of roads this year. In contrast to Russia, most other countries are trying to stimulate their economies during the crisis by allocating more money for infrastructure projects. Over the next three years, for example, China will extend its railways by 31,000 kilometers, 13,000 kilometers of which will be built for bullet trains.

At the same time, the cost of building roads in Russia remains the highest in the world, and it continues to climb by 30 percent to 40 percent annually. Although hundreds of billions of dollars were allocated for infrastructure projects, as always, only a small portion of these funds has ultimately made it to its “destination point.”

3. Innovation. According to the State Statistics Service, 30 percent of Russian firms are developing innovative products or technologies. But this is a highly deceptive figure because all it takes to be considered “innovative” is for a factory to buy a new industrial machine, for example. This is clearly an attempt by the authorities to inflate the country’s “innovation quotient,” but few people are fooled by this. The real innovation quotient, which is much closer to 1 percent or 2 percent, is evident to any Russian consumer or businessperson.

The country’s scientific rating also continues to fall. Recent findings by Thomson Reuters show that Russia now publishes fewer scholarly papers and journals than India and China. Russia is even lagging behind in Medvedev’s favorite area: information technology. The World Economic Forum’s Global Information Technology Report put Russia in 70th place in 2007, and at 74th of 134 countries in 2009. That does not mean that IT is not developing in Russia — only that it is progressing far more rapidly elsewhere.

4. Investment. The global average decrease in direct foreign investment was 39 percent in 2009 as a result of the crisis, but in Russia it totaled 41 percent. With Russia’s low quality of government institutions, aging infrastructure and high cumulative foreign debt, Russia will not see an influx of foreign investment anytime soon.

To sum up Medvedev’s Four I’s, institutions are corrupt to the core, the infrastructure is falling apart, the country’s homegrown innovators are abandoning Russia in droves, and investment is evaporating. Perhaps it would be better to redefine his Four I’s to better reflect Russian reality: illusion, inefficiency, instability and incompetence._MoscowTimes

Russia is considered an "energy superpower" on the world stage, comparable to Saudi Arabia in that sense. But is Russia an energy superpower only by default?

How can Russia be an energy superpower if Gazprom extracted 25 percent less natural gas than the United States in 2009?

The answer is simple. Russia is an energy superpower by default. It lacks a real chemical industry.

The U.S. chemical industry is the largest in the world and consumes about 2 million terajoules of energy annually. Russia’s chemical industry is the 12th-largest and consumes 110,000 terajoules annually. Russia, with its massive territory, freezing temperatures and low energy efficiency consumes 280 bcm of natural gas on its domestic market. The United States — a country with both higher temperatures and energy efficiency — consumes 670 bcm of gas on its domestic market. Consolidated revenues of the U.S. chemical industry totaled $400 billion in 2008.

Ever since Putin gained control of Gazprom, he has been trying to gain control of Europe with the help of gas pipelines. Instead of pouring money and energy into gas pipelines that are carrying less gas every year and that were built with money that will never be recouped, why doesn’t Putin develop Russia’s chemical industry?

For Putin to develop the chemical sector requires a completely different business approach than producing gas. First, Dow Chemical and Dupont in the United States are privately held, and it will be hard to explain why Russian chemical plants must be state-owned. Second, the products of chemical plants are sold on the free market, whereas Putin’s approach is to crush markets — within Russia and abroad — using monopolies to drive up prices and generate “easy money.”

The Kremlin repeatedly assures itself that it is holding Europe hostage with the help of its gas pipelines. In fact, Russia is holding itself hostage by relying exclusively on its gas pipelines and mismanaging its energy and chemical industries on a colossal scale. _ MoscowTimes

Dictators are jealous of power. If it looks as if anyone in the country is achieving a higher status or level of power than the dictator, that person's fate is sealed. That is why Putin must place all lucrative industries under state control.

But unfortunately, state control means state mismanagement and incompetence. That is why the infrastructure of Russia's energy industry is crumbling -- and why dictators such as Putin must frequently invite overseas private industry into the country to develop new infrastructure. Of course, the inevitable nationalisation of the new infrastructure will certainly follow. But private corporations have until recently been able to get insurance to cover ventures inside Russia. Now, it is becoming much more difficult.

Russia has failed to confront its own dismal realities. Its dismal demographic situation. Its dismal morale crisis. Its poor state of health, as a people. Its overdependence upon a single industry -- energy. The hyper-centralisation of its energy assets into the greedy grasp of government officials. The incompetence of its military and military support infrastructure. And on and on... Russia is a third world country, run by dictators, but with first world pretensions. If Russia's people cannot see through the government smokescreen to the terminal crisis beyond -- and make some very hard decisions -- there is no hope for the country.

Russia could be a prosperous and vibrant society. But it would have to open up to the outside world, and open up and overhaul its internal social and governmental structures. Putin and the reigning clowns of Russia will never do that.

New Jersey's Governor Chris Christie: One of a Kind?

Excerpted from Mish's Global Economic Analysis:

Unfortunately I cannot find a transcript, nor is there a YouTube video but you can Watch Chrstie's Speech To League of Municipalities on public television. It starts out with an ad you have to listen to, but it quickly picks up once Christie starts speaking. He starts off in fine fashion calling the legislature's budget "Alice In Wonderland Budgeting"

Partial Transcript

In the time we got here, of the approximately $29 billion budget there was only $14 billion left. Of the $14 billion, $8 billion could not be touched because of contracts with public worker unions, because of bond covenants, because of commitments we made accepting stimulus money. So we had to find a way to save $2.3 billion in a $6 billion pool of money.

When I went into the treasurer's off in the first two weeks of my term, there was no happy meetings. They presented me with 378 possible freezes and lapses to be able to balance the budget. I accepted 375 of them.

There is a great deal of discussion about me doing that by executive action. Every day that went by was a day where money was going out the door such that the $6 billion pool was getting less and less. So something needed to be done.

People did not send me here to talk, the people sent me here to do. So we took the executive action we did to stop the bleeding.

As we move forward, and we evaluate what we need to do three weeks from now in our fiscal year 2011 budget address, you all need to understand the context from which we operate.

Our citizens are already the most overtaxed in America. US mayors hear it all the time. You know that the public appetite for ever increasing taxes has reached an end.

So when we freeze $475 million in school aid, I am hearing the reverberations from school boards saying now you are just going to force us to raise taxes.

Well there is a 4% cap in place as you all know, yet school boards continue to give out raises which exceed that cap, just on salary. Not to mention the fact that most of them get no contribution towards the spiraling increase in health care benefits.

Now, we are going to reduce spending at the state level. And we are going to continue to reduce it because we have no choice but to do so. Our obligation to you is twofold. One, is to let you know that. So I'm' letting you know that.

Second to work with the legislature to give you the tools helping you to reduce spending at the municipal level. Now the pension and benefit reform package that was passed unanimously in the senate this week begins to give you some of those tools.

But it is only a beginning.

Do we need to change some of the rules of arbitration to level the playing field to allow municipalities and school boards to have a more level sense of collective bargaining?

I think the evidence of ever increasing raises being given to public sector workers as a result of the arbitration system tells us that we do. [Applause From Mayors]

But you have to stand up and give the support to the legislators in this building to get them to do that. I can guarantee you this, that more pension and benefit reforms which I will consider arbitration reform to be one of them, are things that when they come to my desk, they will be signed. [Applause From Mayors]

Because we can no longer continue on a path where we say we are going to reduce spending at the state level but we are not going to give you any tools to do that at the municipal level and the school board level.

By the same token I am tired of hearing school superintendents and school board members complain that there are no other options than raising property taxes. There are other options.

You know, Marlboro, after a two year negotiation, they give a five year contract giving 4.5% annual salary increases to the teachers, with no contribution, zero contribution to health care benefits.

But I am sure there are people in Marlboro who have lost their jobs, who have had their homes foreclosed on, and who cannot keep a roof over their family's head there is something wrong.

You know, at some point there has to be parity. There has to be parity between what is happening in the real world, and what is happening in the public sector world. The money does not grow on trees outside this building or outside your municipal building. It comes from the hard working people of our communities who are suffering and are hurting right now.

I heard someone in the legislature say two days ago that they wanted no fare hike in New Jersey Transit, no cuts in service, and no cuts in subsidy. And I was thinking to myself, man I should have made this guy treasurer. [Laughter] Because if you can pull that one off, you're obviously magic.

This is the type of awful political rhetoric that people sent me to this city to stop.

I would love to be able to do that, but I can't. I would love to tell you that municipal aid will stay level, but it's not. And it's not because we don't have the money. So you need to prepare. You need to prepare for what's coming down the line because we have no choice but to do these things.

And so we need to get honest with each other. In this instance, the political class,for which unfortunately all of us are a member of, the political class is lagging behind the public on this. The public is ready to hear that tough choices have to be made. They're not going to like it. Don't confuse the two. But they are ready to hear the truth.

In fact, they find it refreshing to hear the truth.

They are tired of hearing, don't worry I can spare you from the pain, because they have been hearing that for a decade, as we have borrowed and spent and taxed our way into oblivion.

We have done every quick fix in the book that you can do. And now we are left, literally holding the bag.

Leadership should be about making tough decisions. I'm not hear to tell you that anything you are going to have to do as mayors, council people will be easy. But I firmly believe after spending the last year traveling around the state of New Jersey, talking to regular citizens, that this is what they are expecting us to do.

They are also expecting us to ferret out waste and abuse. But they also know that old song that waste and abuse is going to balance the budget is an old and tired one, and it's not going to.

Now we are going to have a fight about COAH. And I have engaged in that fight and I have engaged in it directly. Not only will I be fighting COAH, I will be fighting the courts too. [Applause From Mayors]

That's OK.

We need to understand we are all in this together. And you know, all of you know in your heart, what I am saying is true. You all know that these raises that are being given to public employees of all stripes, we cannot afford. You all know the state cannot continue to spend money it does not have. And you all know that the appetite for tax increases among our constituents has come to an end.

And so the path to reform and success is clear. We know what it is. We just have to have the courage to go there. What we are doing is showing people that government can work again for them, not for us. Government has worked for the political class for much too long.

There's no time left. We have no room left to borrow. We have no room left to tax. So we merely have room left now, to do this. We are all reaching the edge of a cliff. And it reminds me a bit of that part of Butch Cassidy and the Sundance Kid where the had a seminal decision to make. So what did they do? They held hands and they jumped off the cliff.

We have to hold hands at every level of government, state county, municipal, school board. We have to hold hands and jump off the cliff.

I firmly believe we will land and we will be fine. It does not mean it will not be a scary ride on the way down. And it does not mean there won't be moments of fear and moments of apprehension.

But for certain, the troops of the decades of overspending and overborrowing and overtaxing have gained on us. So the ruination of New Jersey's economy, and of the quality of life we want all our citizens to have, is certain if we do not take this course.

It's time for us to hold hands and jump off the cliff. It's time for us to do the difficult things that need to be done and to stop playing the petty politics of yesterday, of lying to the people telling them they do not have to pay for it because someone else will.

We are going to make the leap because that's what people elected me to do. We are going to make the leap because it is the responsible thing to do. We are going to make the leap and we are going to do it together because that is what leadership demands for us. That is what the responsibility of the offices we hold requires of us.

Forget about the next election. Forget about the next editorial in the newspaper, and forget about the next angry letter or phone call you are going to get from someone who wants something for nothing.

One thing is certain. The alternative will lead to certain defeat. And so it is time for us to show courage, and resolve. And we can do it because we are from New Jersey. And I have never, in all my travels around the country, met a group of tougher people than we all have the opportunity to lead.

[That was the best speech on spending by any government official I have ever heard. (Mish)] _Mish

Christie is attempting to do what has to be done to save New Jersey. The governor's of Michigan, Illinois, California, New York, Florida, Arizona, and Nevada would do the same -- if they had the intestinal fortitude that Christie apparently has.

Christie personifies what the US Tea Party is all about. Too bad most of the politicians who try to attach themselves to that movement are not 1 / 10th the mensch that Christie apparently is.

Revolution in China On Slow Burn

The ongoing invisible revolution against the Chinese CCP has become slightly more noticeable recently, thanks to the internet. A December 26, 2009 speech given by a top advisor to China's government is making the internet rounds, stirring up discussion of an incendiary kind.

His speech was delivered on December 26, the day after the rights activist Liu Xiaobo was sentenced to 11 years in jail for helping to draft a manifesto for constitutional and democratic government in China, called Charter '08.

The sentence, which shocked liberal intellectuals and international observers, followed a tumultuous year during which the party tightened controls over almost all spheres of China's burgeoning civil society, including the internet, media, legal profession, non-government organisations and business.

Professor Yu's speech has not been previously reported but has recently emerged on Chinese websites.

He cited statistics showing the number of recorded incidents of "mass unrest" grew from 8709 in 1993 to more than 90,000 in each of the past three years.

"More and more evidence shows that the situation is getting more and more tense, more and more serious," Professor Yu said.

He cited a growing range and severity of urban worker disputes and said Mafia groups were increasingly involved in state-sponsored thuggery while disgruntled peasants were directing blame at provincial and even central government.

"For seeking 'bu zheteng' we sacrifice reform and people's rights endowed by law … Such stability will definitely bring great social disaster," he said.

Professor Yu's speech reflects deep disillusionment among liberal thinkers in China who had hoped Mr Hu and Mr Wen would implement political reforms.

Dr Feng said he still hoped the two would "do something" to leave more than a ''dark stain'' on China's political development before stepping down in 2012.

"The conservative forces are currently very strong," he said. China's security-tightening and potential for future loosening were linked to a leadership succession struggle between Mr Hu and the Vice-Premier, Li Keqiang, on the one hand, and the former president, Jiang Zemin, and the current Vice-President, Xi Jinping, on the other.

"I haven't given up the hope that the Hu-Li camp may make some positive political changes to mobilise public support."

The latest edition of the newspaper Southern Weekend broke a two-decade taboo by publishing a photo of a youthful Mr Hu with his early mentor, former party chief Hu Yaobang, who was purged in 1987 for his liberal and reformist leanings. But Chinese internet search results for the names of both leaders were yesterday blocked for "non-compliance with relevant laws". _InsiderRevolution

A movement away from central economic planning in the 1980s has led to a much wealthier China than would have been possible under a pure communist rule. But the reluctance of the CCP to loosen its iron grip on power is creating a number of invisible conflicts which will not go away on their own.

Most of the dissident activity in China occurs among intellectuals. But as communications technologies become more sophisticated and more difficult to block and control, dissident ideas will percolate among other groups. China is experiencing schism along several different lines, including urban : rural, coastal : inland, wealthy : poor, industrial : agricultural, politically connected : politically disenfranchised, etc.

As concentrations of wealth occur outside official governmental circles, corruption becomes more of a problem -- since the only way to get things done in a dictatorship is to bribe officials. The greater the corruption, the greater potential for outrageous injustice -- the type of injustice that can serve as a seed for outright defiance of authority.

Such incidents are occurring commonly outside the public eye, and most references to such incidents are harshly suppressed by any means necessary. But such suppression can serve to create yet more seeds of dissent and defiance.

The modern Chinese government seems unaware of how quickly public sentiment can turn against governments, although the abundant history of popular overthrow of governments is open to anyone who takes the trouble to look. China is likely to divide into multiple competing power centres as the central government's ability to hold things together is exhausted.

The Obama - Pelosi Reich Puts US Economy Down

Images via Financial Armageddon

Obama's home state of Illinois is in a deep economic slump due to corruption and mismanagement. Pelosi's home state of California is in roughly the same situation. Twin clowns of different mothers?

Barack Obama's home state of Illinois is near the point of fiscal disintegration. "The state is in utter crisis," said Representative Suzie Bassi. "We are next to bankruptcy. We have a $13bn hole in a $28bn budget."

The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. "It's a catastrophe", said the Schools Superintedent.

In Alexander County, the sheriff's patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.
Florida, Arizona, Michigan, New Jersey, Pennsylvania and New York are all facing crises. California has cut teachers salaries by 5pc, and imposed a 5pc levy on pension fees. _ComingDepression

If state governments cannot rein in their public employees' unions, they may have to secede from the union and begin printing their own currencies. Debt piled upon debt, with no end in sight until governments learn to control spending.