January 10, 2009

Obama's $800 Billion stimulus plan a waste of money

Obama and his team of financial advisers have released a 14 page summary of their $800 billion stimulus plan, you can see it here.

What a waste of money this $800B stimulus plan will be! On page 5 there is a chart that estimates what the unemployment rate will be with or without the plan out through the end of 2013. The difference in peak unemployment is a mere 1%! (8% in 2009 vs 9% in 2010). Is that all that they admit $800 billion will do?

Also in 2013 they have unemployment at about the same rate, 5.5%, after a steep (and optimistic) fall in 2011 & 2012. If the rate is going to be the same with or without the spending, why bother? Just ride the storm out.

The problem is they still don't understand the reasons for the (financial) storm itself, or if they do, still won't admit it in public. Basically, they (the Federal Government) caused it themselves, when they passed banking deregulation that lead to financial over leveraging, and creating a housing market bubble that finally burst when loans couldn't be repaid.

So now we have an exploding budget deficit, a $700 billion undeserved bank bailout (half has been given to the bankers who have hoarded it instead of loaned it as was intended), and a debt to GDP ratio that is approaching an all time high.

This HAS to stop this decade! In 2017 FICA taxes (Social Security & Medicare), currently providing a "surplus" (meaning the total deficit/debt would be WORSE without it!) will also start running a deficit. This combination of wasted spending now and the needed spending in the future will likely result in a debt so high that foreigners will stop financing it, and stop buying our T-bills & Bonds. That's when the bill will finally come due, and with it, the likely death of the USA as we now know it.

January 3, 2009

More on Prof. Panarin's prediction of America's breakup in 2010

Prof. Igor Panarin is in the news again, this time via the Wall Street Journal article As if things weren't bad enough...

Apparently he has become the darling of the Russian media, and is getting frequent interviews about his prediction of the USA's breakup in 2010, a prediction he made back in 1998. The problem is that the Russian media has become more state controlled again, and there may be a bit of wishful thinking on their part, having experienced their own country's breakup in 1991.

While I agree with the reasons Panarin puts forth as to why the breakup will occur, I don't see it happening in 2010. I also find lots to disagree with as to what the post breakup map will look like. (See the map below.) Here are some of the articles highlights:

Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar. Around the end of June 2010, or early July, he says, the U.S. will break into six pieces.

He based the forecast on classified data supplied to him by former Soviet analysts, he says. He predicts that economic, financial and demographic trends will provoke a political and social crisis in the U.S. When the going gets tough, he says, wealthier states will withhold funds from the federal government and effectively secede from the union. Social unrest up to and including a civil war will follow. The U.S. will then split along ethnic lines, and foreign powers will move in.

California will form the nucleus of what he calls "The Californian Republic," and will be part of China or under Chinese influence. Texas will be the heart of "The Texas Republic," a cluster of states that will go to Mexico or fall under Mexican influence. Washington, D.C., and New York will be part of an "Atlantic America" that may join the European Union. Canada will grab a group of Northern states Prof. Panarin calls "The Central North American Republic." Hawaii, he suggests, will be a protectorate of Japan or China, and Alaska will be subsumed into Russia.

U.S. foreign debt is a "a pyramid scheme," and he predicts that China and Russia would usurp Washington's role as a global financial regulator.

Americans hope President-elect Barack Obama "can work miracles, but when spring comes, it will be clear that there are no miracles."

The line about the wealthier states actually withholding funds is interesting, but that would mean the smaller states, as the large states like California and New York are already begging the Feds for their own bailout money, as they are in the red with their budgets. A very large number of the smaller states would have to withhold funds for the threat to be effective.

Also the line about Alaska going back to Russia, and Russia becoming a global financial regulator (ever heard of the EU?) seem to be written for Russian anti-American types only.

I also disagree with the part about foreign influence, I would see these groups of states becoming independent countries, with only Mexico having a strong influence in the Southwest. The part about Canada having influence over the tan colored "Central North American Republic" is absurd, that grouping alone would still be bigger than Canada in both population and GDP.

I also question the way Panarin splits the Old South in two, and splits Arizona and New Mexico. I would see both of them in one group, again under the influence of Mexico.

To sum up, while Panarin's theory is interesting, it seems to me to show a lack of understanding about the regional ethnic differences that exist in America, and wouldn't be a likely final scenario.