The End Is Near

Are you tired of the Watchman's doom and gloom?  So is he.  But the sky really is falling and without immediate fiscal adjustments, the sky is going to kill us.

It's absolutely imperative you understand that the world as you know it will soon cease to exist.  A global financial panic like none the world has ever seen is warming up in the bull pen.  When panic takes the mound, he will be an effective closer for he game we call prosperity.

His first strike was thrown in 1929 and it lead to the Great Depression.  As bad as that was, it was just strike one.  Worldwide debt levels were still relatively low so we were able to bounce back.

His second fast ball came in the fall of 2008.  The world came perilously close to a total financial collapse at that time.  The only things that saved us was 'Helicopter' Ben Bernanke.  True to his earlier promise to 'drop bundles of cash from a helicopter' if that's what it takes to avoid deflation, that's just what he did.  And it worked -- at least temporarily.

Strike three will come when the central banks of the world, having already blown their collective wads in 2008/2009, are unable to prevent the domino failure of one currency after another.  The same 'print money' approach to the 2008 crisis, will only make the next crisis worse.

When will this chain reaction start? Nobody knows for sure, but the US Treasury Department marked the trail Friday when we estimated that the total US debt would reach $19.6 Trillion by 2015.  At that point our national debt to GDP ratio will be at or above 100%.

Tthe US won't start the dominoes falling.  The chain reaction will likely start in Europe and spread around the world.  Banks (central and otherwise) hold debt from other banks.  When the debtor nations start defaulting on their debts, there will be nothing to stop the whole thing from spiraling out of control.   We'll probably be the last man standing, but who cares if you're the last one standing when everyone else is already dead.

Pick 3

Which of the following will do the most damage to the Obama presidency?

• Obama's Katrina:  The BP oil gusher
• Obama's Impeachment:  The Sestak bribe
• Obama's Neutering:  The November elections

Mull it over and see what you think.  Then scroll down to read what the Watchman thinks.

Have We Gone Over The Cliff?

Everyone knows the US is in terrible fiscal shape.  We're broke.  We're bleeding red ink at what virtually all economists agree is an unsustainable rate.

But what if that unsustainable rate is even higher than we've been told?  What if instead of a total bar tab of $1.5 trillion for 2010, the total is going to be $2 trillion or maybe even $3 trillion?

Yesterday's data from the Treasury Department couldn't be more grim.  For the month of April, the feds ran a deficit of $82.69 billion.  Compare that to the 'modest' $20.91 billion deficit a year earlier in 2009 -- when things were supposedly worse than they are now during 'recovery'.  How can we have 4 times the deficit during a recovery month than we did during the deepest part of the recession?

Consider that April is a special month.  Money is supposed to pour in during April because personal income taxes are due.  But this April the government took in $20 billion less in income taxes than last April.  Why?  Because so many people are unemployed and many of those still employed are earning less.  Even the government can't tax money we don't make.

Consider too that April is supposed to be a surplus month.  In 43 of the last 56 years, the government took in more money in April than it spent.  This year, the government had the highest April deficit ever.  Ever.

If April is this bad, what will the rest of the year look like?  A $1.5 trillion deficit for 2010?  Don't you believe it, gentle reader.  Even Obama's own budget director, Peter Orszag, said "the United States must tackle its deficits quickly to avoid the kind of debt crisis that hit Greece."

Ya think?

Enemies of the People

Enemies of America are loose in our land. I'm not talking about Timothy McVeigh or Nidal Malik Hasan.  I'm not talking about Oklahoma City or Fort Hood.  I'm talking about Washington DC and the enemies named Nancy Pelosi, Harry Reid, and Barack Obama.