Goodbye, US dollar.

[mikefam]

good... maybe once the cheap Chinese crap gets more expensive, American companies will start manufacturing goods here again

Ya right  CAFTA is comong next   US companies will always find a cheeper place to manufacture

[Kat Kanning]

A 'fiscal hurricane' on the horizon

By Richard Wolf, USA TODAY Tue Nov 15, 1:47 PM ET

The comptroller general of the United States is explaining over eggs how the nation's finances are going to hell.
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"We face a demographic tsunami" that "will never recede," David Walker tells a group of reporters. He runs through a long list of fiscal challenges, led by the imminent retirement of the baby boomers, whose promised Medicare and
Social Security benefits will swamp the federal budget in coming decades.

The breakfast conversation remains somber for most of an hour. Then one reporter smiles and asks, "Aren't you depressed in the morning?"

Sadly, it's no laughing matter. To hear Walker, the nation's top auditor, tell it, the United States can be likened to Rome before the fall of the empire. Its financial condition is "worse than advertised," he says. It has a "broken business model." It faces deficits in its budget, its balance of payments, its savings - and its leadership.

Walker's not the only one saying it. As Congress and the White House struggle to trim up to $50 billion from the federal budget over five years - just 3% of the $1.6 trillion in deficits projected for that period - budget experts say the nation soon could face its worst fiscal crisis since at least 1983, when Social Security bordered on bankruptcy.

Without major spending cuts, tax increases or both, the national debt will grow more than $3 trillion through 2010, to $11.2 trillion - nearly $38,000 for every man, woman and child. The interest alone would cost $561 billion in 2010, the same as the
Pentagon.

From the political left and right, budget watchdogs are warning of fiscal trouble:

? Douglas Holtz-Eakin, director of the non-partisan
Congressional Budget Office, dispassionately arms 535 members of Congress with his agency's stark projections. Barring action, he admits to being "terrified" about the budget deficit in coming decades. That's when an aging population, health care inflation and advanced medical technology will create a perfect storm of spiraling costs.

? Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, sees a future of unfunded promises, trade imbalances, too few workers and too many retirees. She envisions a stock market dive, lost assets and a lower standard of living.

? Kent Conrad, a Democratic senator from North Dakota, points to the nation's $7.9 trillion debt, rising by about $600 billion a year. That, he notes, is before the baby boom retires. "We're not preparing for what we all know is to come," he says. "We're all sleepwalking through this period."

? Stuart Butler of the conservative Heritage Foundation projects a period from now until 2050 in which tax revenue stays stable as a share of the economy but Medicare, Medicaid and Social Security spending soars. To avoid big tax increases, he says the government has to "renegotiate" the social contracts it made with its citizens.

? Alice Rivlin and Isabel Sawhill of the centrist Brookings Institution put their pessimism into a book titled Restoring Fiscal Sanity. Rivlin, who became the first director of the Congressional Budget Office in 1974, says it will take an "economic scare" such as the 1987 stock market crash to spur action. Sawhill likens the growing gulf between what the government spends and takes in to a "Category 6 fiscal hurricane."

'The Fiscal Wake-Up Tour'

They are the preachers of doom and gloom. Liberals and conservatives, Democrats and Republicans, they are trying to be heard above the ka-ching of the cash register as it tallies the cost of government benefits and tax cuts,
Iraq and Hurricane Katrina. To raise their profile in recent months, several have traveled together to places such as Richmond, Va., and Minneapolis for what they call a "Fiscal Wake-Up Tour."

Leon Panetta, former White House budget director and chief of staff to
President Clinton, calls them "disciples of balanced budgets. ... And at some point, they'll be proven right."

The White House and Congress are trying to address the nation's short-term budget deficits, but their response pales against the size of the long-term problem.
President Bush proposed nearly $90 billion in savings over five years in his 2006 budget. He also tried to trim future Social Security benefits for wealthier recipients. The Senate this month approved $35 billion in savings over five years. House Republicans tried to save more than $50 billion last week, but objections from moderates stalled action. Either way, the savings could be wiped out by $70 billion in proposed tax cuts.

The budget-cutting effort is being led by conservatives, who recoiled when Congress quickly voted to spend $62 billion after Hurricane Katrina struck New Orleans and the Gulf Coast. "Katrina served as a wake-up call," Walker says.

In prior years, facing a less imminent demographic explosion, Congress cut in politically agonizing increments of $500 billion over five years. Bush's father gave up his "no new taxes" campaign pledge in 1990. After
Ross Perot focused attention on the deficit in his 1992 presidential campaign, Clinton and the Democratic-run Congress raised taxes even more in 1993. Clinton and the Republican-run Congress forced two government shutdowns before agreeing on a deficit-reduction package in 1997.

In each case, cutting the deficit backfired at the polls. The elder Bush lost re-election, the Democrats lost Congress, and Republicans' obstinacy helped Clinton win a second term. "The choices you have to make are almost exactly the opposite of what wins political elections," Panetta says.

The problem is also easy for Congress to postpone because the day of reckoning is years away. This year's deficit was $319 billion, down $94 billion from the year before. That's 2.6% of the nation's economy, an amount easily borrowed from foreign investors.

From 'Grenada' to 'Vietnam'

But there is every reason to act - and soon. Budget watchdogs cite these looming problems:

? Prescription-drug coverage under Medicare takes effect Jan. 1. Its projected cost, advertised at $400 billion over 10 years when it passed in 2003, has risen to at least $720 billion. "We couldn't afford" it, Walker says of the new law.

? The leading edge of the baby boom hits age 62 in 2008 and can take early retirement. The number of people covered by Social Security is expected to grow from 47 million today to 69 million in 2020. By 2030, the Congressional Budget Office projects, Social Security spending as a share of the U.S. economy will rise by 40%.

? The bulk of Bush's 10-year, $1.35 trillion tax-cut program is set to expire at the end of 2010. But Congress is moving to make the reductions permanent. That would keep tax revenue at roughly 18% of the economy, where it's been for the past half-century - too low to support even current spending levels. "We can't afford to make all the tax cuts permanent," Walker says.

? Baby boomers begin to reach age 65 in 2011 and go on Medicare. Of all the nation's fiscal problems, this is by far the biggest. If it grows 1% faster than the economy - a conservative estimate - Medicare would cost $2.6 trillion in 2050, after adjusting for inflation. That's the size of the entire federal budget today.

"Social Security is Grenada," Holtz-Eakin says. "Medicare is Vietnam."

Inaction could have these consequences, experts say: Higher interest rates. Lower wages. Shrinking pensions. Slower economic growth. A lesser standard of living. Higher taxes in the future for today's younger generation. Less savings. More consumption. Plunging stock and bond prices. Recession.

Some veterans of the deficit-cutting wars are pessimistic about avoiding disaster. "In the end, CBO and others are no more than speed bumps on the highway of fiscal irresponsibility," says Robert Reischauer, former Congressional Budget Office director and now president of the non-partisan Urban Institute.

'Where's Ross Perot?'

The gloom-and-doom crowd hopes to avoid that fate. Increasingly in recent months, they are traveling the country, writing and speaking out about the need to cut spending, raise taxes - or both.

The most outspoken is Walker, an impeccably dressed CPA whose 15-year term as head of the
Government Accountability Office runs through 2013. He was a conservative Democrat, then a moderate Republican, and is now an independent. He's also a student of history, a Son of the American Revolution who lives on Virginia property once owned by George Washington.

Walker's agency churns out reports with titles such as "Human Capital: Selected Agencies Have Opportunities to Enhance Existing Succession Planning and Management Efforts." But he knows he must try to humanize the numbers, and his rhetoric on the nation's fiscal course has become more acerbic. "Anybody who says you're going to grow your way out of this problem," Walker says, "would probably not pass math."

Holtz-Eakin, a soft-spoken economist who said Monday he will leave CBO at the end of the year, takes a different approach. Less prone to giving speeches, he sees his role as a consultant and truth-sayer to Congress. "Numbers are the currency of the realm in Washington," he says, and most agree his agency has the best in town. But he concedes, "Sometimes it falls to the consultant to tell the client the bad news."

Holtz-Eakin's father was in steel, a cyclical business rocked by strikes and shutdowns. "I thought, 'This is nuts. No one should live like this,' " he says. That explains why he wants the government to prepare for new demands on its New Deal and Great Society benefit programs. "The baby boom has been getting older one year at a time with a striking regularity," he says.

MacGuineas is the outside agitator. An independent, she worked for Sen. John McCain (news, bio, voting record)'s presidential campaign in 2000. She respects politicians who deliver bad news, as presidential candidate Walter Mondale did in 1984 when he said tax increases were inevitable - and then was defeated in 49 states.

"I want to see a presidential election where the candidates are talking about what taxes they'll raise and what spending they'll cut," she says. "It's not always a winning campaign slogan."

Conrad ran for the Senate in 1986 promising to reduce the budget deficit or quit after six years. By 1992, the deficit had hit an all-time high, and he said he would not seek re-election. Only the death of North Dakota's other senator kept him in Congress.

The former state tax commissioner has been doing this longer than other congressional budget officials - and he has the most charts. He's so numbers-oriented that at baseball games, he can instantly compute a hitter's average after each at-bat. "Numbers speak to me in a way that they don't speak to others," he says. "I guess it's the way my brain is wired."

Sawhill and Butler, from opposite ends of the political spectrum, lead a group of about 15 budget experts at Washington think tanks who gather periodically to discuss their dour crusade. Aided by Walker and the non-partisan Concord Coalition, a fiscal watchdog group, they have taken their show on the road.

Butler, a native of Britain, witnessed there in the 1960s and '70s the effects of slow growth and high unemployment, driven partly by generous government benefits. "We have a responsibility" to start the debate, he says, "because we don't have to get re-elected." But Sawhill says it's "an indictment of our political leadership that it is being left to outside groups such as ours to put these issues on the agenda."

After three decades in the business, Rivlin is frustrated by lawmakers' inaction and blames balanced-budget advocates for not better articulating the problem. "There may be better ways to talk about it," she says. "I sometimes think, 'Where's Ross Perot when we need him?' "

[Russell Kanning]

Bad for fake money but not for the economy?

Does the widening US trade deficit pose a threat to the economy?
by Frank Shostak
http://www.mises.org/story/2029

According to Rothbard,
    It should be clear that the principles applying to the balance of payment of the United States are the same for one region of the country, for one state, for one city, for one block, one house, or one person. Obviously no person or group can suffer only because of an "unfavorable" balance; he or the group can suffer only because of a low level of income or assets.[3]

[Mr.fabulous]

Today, China and Malaysia dropped their currencies' alignments with the US dollar.  Now Hong Kong is the only country left with a peg of its currency to the US dollar.  China will now stop accumulating US dollars, and may even divest itself of its current holdings.

Imports to China will become cheaper.  Imports to the US will become more expensive.

Austrian economists have predicted doom for the dollar and the US economy for decades now, but is this the final blow to the US economy?  We'll soon find out!   



Who Says No One Rings a Bell?
By Peter Schiff         
July 21, 2005
www.europac.net

The old saying "no one rings a bell," certainly doesn't apply today, as China rang the "mother of all bells."  So deafening was its sound, that its vibrations will be felt around the world.  Nowhere will the amplitude of these waves be more pronounced than in the United States. 

China's decision to change the nature of its currency peg means that it will no longer be in the dollar buying business, or by extension, the U.S. Treasury buying business.  That means that America will be losing its biggest benefactor.  China will no longer act as the principal enabler of America's irresponsible extravagance, ending its subsidies to American consumers and borrowers.

Changing the nature of the yuan peg is a first step in the ultimate direction of either allowing the Yuan to float freely or possibly pegging it to gold.  In the meantime the Yuan will remain undervalued, as it will likely be pegged to a basket of other currencies using current exchange rates that clearly undervalue the Yuan.  Chinese imbalances will continue to grow, along with all the domestic inflationary implications that result.

However, the pressure on China to prop up the dollar will be greatly diminished.  To maintain the peg against its new basket, Chinese monetary authorities will most likely now be buyers of those other currencies likely to be included in its basket, such as the Euro or Yen.  Since its reserves are already disproportionately held in dollars, it will likely rebalance those reserves to more accurately mirror the basket to which the Yuan will be pegged.  Such a rebalancing will only exacerbate the dollar's decline.  However, a declining dollar will not automatically require offsetting dollar buying by the Chinese as it has during the period of the yuan-dollar peg.  As long as dollar weakness is offset by strength in others currencies in its basket, the peg can be maintained.

The implications for America are enormous.  Far from being the panacea that American politicians proclaim, China's decision to alter its peg could be the pin that finally pricks America's bubble economy.  For America, the direct result of this action will be the following: 

1.  Higher consumer prices.

2.  Higher interest rates. 

3.  Reduced profits for American companies, particularly those dependent on domestic consumption and consumer debt.

4.  Lower stock prices, as earnings decline and multiples contract. 

5.  The busting of the housing bubble, as tighter credit standards and higher interest rates squeeze current home prices.

6.  Rising unemployment, as higher interest rates and vanishing home equity slow consumer spending and reduce jobs dependant on that spending.

7.  A severe recession as a result of all of the above.

8.  Rising federal budget deficits, as recession reduces tax revenue, while higher interest rates and escalating outlays increase expenditures.

In conclusion, July 21, 2005 will be another date likely to live in infamy.  This time the aggressor is China not Japan, and the bombs are purely economic.  Though there will be no immediate loss of life, and no American retaliation, the financial damages will be devastating.  History will remember this date as the beginning of Chinese independence, and the beginning of the end of America's ability to depend on China.

Peter D. Schiff
President/Chief Global Strategist
Euro Pacific Capital, Inc.

I believe dec 18th 2005 the Chinese reaffirmed the dumping of dollars in the assoc press .This is why I am so pro secession we have given the CHINESE the Panama canal which was built with the sweat blood finances and lives of Americans (yellow fever ) the chinese also have a port in Long Beach (Cali) as well as ties and connections to Castro in CUBA  its almost as though we are bein surrounded by the chinese for reposession in the wake of an economic collapse civil unrest embargo on american imports exports  catastrophic terrorist event or pandemic viruses which can be designed to go after genetic traits such as race bloodline etc (with these ports they have had years to store and plan for an AMERICAN INVASION the Chinese would be deployed as U.N peace keepers(like we saw Mexican troops in the USA during katrina and illegal gun grabs by our own law enforcement in wealthy white neighborhoods ) from what Ive read and studied sounds crazy yeah I know but weve closed 100+ military bases in the USA and have deployed troops through out the world we have a small navy due too new  technology which is an achilles heel of America all this new tech relies on satelites (which the Chinese are the biggest provider of satelite launches for many militarys in the world as well as global corps) what goods a submarine with nuclear capabilities in an invasion of america under the guise of peacekeeping especially if the satelites that navigate our military and weapons is disabled while are military overseas in conflict lose thier tech its back to grenade launchers and map and compass imagine trying to navigate a fighter or bomber jet at 800mph+ with a compass and accuratley hit targets at those kind of speeds the chinese have announced they are working on a GPS rival system which france and others in the europeon union are backing and awaiting I believe they already have it in military use and are just adding the final touches and troubleshooting before its ready for market you can also thank I.B.M for arming china with our sensitive tech but thats what happens when you allow the nazi banking cartels set up shop in america after ww2 its the same players reaching for global government and the destruction of america and we must also thank George Bush the 2nd for making the world want the collapse in the usa which use to be a beacon of hope for the rest of the world now the words freedom liberty and democracy are just a step away from bein villainized so in the future freedom will be considered an evil word what other word can you use for freedom or democracy or liberty (please let me know) We are bein set up and slated for dehuminazation and world government through the global corps and banksters who pay off our politicians too sell us out they dont see the agenda bein setup they just enjoy the cash and power and cant see past that they dont really get what they are doin but some do.What I am  trying to say is the state of the union is broke and the chinese under the UN  are the federal reserves repo men these situations dont arise over night or by accident they are plans decades long the pyramids were built one block at a time and so is world gov though Ive never thought it possible I see breadlines gun grabs and tyranny in our future just read history and watch it repeat itself 911 = hitlers riechstag the patriot act = the enabling acts which suspended the wernmer the german constitution hitler used the phrase axis of evil like W .Hitler registered all guns then he took them .When the patriot act was passed the house and senate were closed from anthrax attacks it was a blind vote when the president and ashcroft asked the house and the senate to pas this bill they replied they hadnt seen it then they were told they were responsible if this act didnt go through so it was a blind vote out of fear ari fliesher announced in the press that the bush cabinet was on cypro before 911 -how would they know to be on cypro especially before 911  the patriot act 2 was passed on the day saddam was captured 12-13 -04(sounds engineered to me ) americans cheered for the capture of saddam correct me if im wrong wasnt bin laden behind 911 ? But that was the diversionary tactic to install the patriot act 2 which ashcroft claimed didnt exist months before it was on the table and theres a pat act 3 in the works now ( everything hitler did was legal) hell the bush fortune came from jewish slave labor in treblinka prescott presisded over a bank for thyssen mining industries thyssen still does steel work in america as well as build elevators here .The other thing I see in americas future is serious racial tension and the persecution of the jews they always end up the fall guy for the jesuit order in thier plans for a new world order hell it was Jesuits who wrote The Protocols of the Elders of Zion like they wrote The Secrets Of The Elders Of Bourg-Fontaine, and the language of The Protocols is identical to The Secret Meeting At Cheiri [1825].Adam Wieshaupt founder of the Bavarian Illuminati 1776 was a jesuit and schooled by jesuits Bill Clinton was class president at Georgetown University his junior year the following year the student council wouldnt let him run his senior year cause he was so close to the jesuit brothers (clinton gave the chinese the panama canal )Clinton was also a rhodes scholar Rhodes formed an illuminati group in 1540 the same time the jesuits came to be 1540  cecil b rhodes founded the rhodes scholarship in 1897 i believe the jesuits control the knights of malta founded in the 11th century the nights own pepsi jp morgan ibm most pro sports teams proctor gambel lockheed martin diebold the carlyle group chemical bank chase bank etc etc  lee iacocca was a knight as well as henry ford  and our darling presidents father is a 33rd degree knight most major players are members like saddam hussien the binladen familyare masons the kennedys were knights of columbus most of the players in the corporate world are 3rd party owners the front for the jesuits theyre sucess lies in not having wives and families which means they have no loyalties cept to world government you ask how could all these things be every town in america has a masonic hall and catholic church which is always a few  blocks from city hall in my town i grew up the masonic hall is across the street from town hall and dwarfs city hall the 33rd supreme temple is 13 blocks north of the white house (occultism 13 represents fertility extreme rebellion and perfect imperfection all things are ruled from the north as well)coincidence ? no albert pike 33rd degree mason layed out washington and built the 33rd supreme temple what (google an airial view of DC) I am trying to do here is show a brief history of some of  the forces that be and what we are up against and an example of how long they have had the power it was the jesuits who backed stalin the bolsheviks and nicholas the zhar and in the end it was jews who were persecuted stalin was killing them in the 30s 40s and the french were handing them over to germans during occupation.Russia is what makes the present connection of the order to china but the jesuits have been there for some time they were major players in the opium wars and had quite a fleet of ships( hell columbia harvard dartmouth yale princeton stanford brown and others all founded with opium money)John bush presided over the russel trading co which was the weld forbes family and a couple of names ive forgotten governor bill weld of mass mitt romneys a forbes senator kerrys a forbes  but through the jesuit order using other names as the owner (3rd name trusted partys ) to hold titles to thier wealth while pretending to be poverty stricken men of god they have become the black hand that rules from the shadows.--- this is a long reply and I am will to answer ant questions anyone may have and research and correct any mistakes if any are found

[Russell Kanning]

holy schnikees

[Lloyd Danforth]

Just goes to show ya.  A lot of important stuff happens on my birthday!