Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

Rick Santelli Is Right, the Democrats are the Lunatics!

Politics / Government Spending Jan 05, 2013 - 08:10 AM GMT

By: EconMatters

Politics

Today on CNBC during the coverage of the monthly employment report, Rick Santelli pointed out that there is some absurdity in calling the Republicans “lunatics” when they are the only responsible voice in Washington right now trying to call attention to the out of control government spending in the overall context of an unsustainable federal deficit while the Democrats are running the country into the ground with even additional spending programs that the government has to borrow more money to fund.


His point is that if anybody should be labeled a lunatic, it should be the Democrats and those that are encouraging these unsound financial spending policies.

I was highly disappointed in the Republicans over the weekend. First of all, the Senate and House needed to have one voice on this issue, and the Senate Republicans threw the House Republicans under the bus by going along with the boneheaded tax increases, and ‘no spending cuts’ deal negotiated by the vice president.

Every Senator who voted for that deal needs to lose their seat next election period. But then to add additional pathetic, spineless insult to injury the House Republicans led by John Boehner had a chance to send a message and they shrunk from their responsibility on the issue of being the check and balances to the Democrats spending spree in Washington, and they chickened out when the spotlight was on them to shine!

How hard would it have been to amend the deal, and send it back to the Senate? That is how Washington is supposed to work, to get better deals through a negotiation process between the two legislative bodies, sort of defeats the entire need for two bodies if one is just going to rubber stamp the other`s decisions! Boehner is a terrible leader, he needs to be fired, and every member who voted for that deal in the house needs to be replaced for the next election cycle!

With regard to the Democrats there is no hope for them, and this is literally their last hurrah as the country is faced with Greek style tough love once interest rates go up to the normal levels again, the US will be put on a budget by China our major creditor just like Greece was by Germany.

Rick Santelli then tried to make the point that sound financial principles are in and of themselves good, i.e., the math makes rational business sense. Furthermore, that the government should operate just the way individuals and families do with budgets and within their overall means. The panel rejected this idea stating that government finances are different from household finances. Somehow these government finances are more sophisticated, have more complexity, and are not as straight forward as personal finances.

I get that they are bigger, I get that government finances affect more people when they are forced to adhere to a budget, or their “car/bridge” gets repossessed, or that they can just print more money and have a bigger credit card in essence.

I get all of that, but the numbers are so out of whack right now from a spending standpoint, escalating 16 trillion outstanding debt burden, and the future trend line with obligations due by 2025, that even with today`s once in a lifetime low interest rates, the country is headed for sovereign default on its loan obligations.

Hence Rick Santelli is right, sound financial principles are the same regardless of which level we speak to in personal or government. The government may have a bigger credit line, but that`s the only difference, and it means that the government can dig a far bigger hole and do far more damage than a consumer with a finite credit line.

The problem with having creative finance tools that enable the government to kick the can down the road for so long means that the government is actually in far worse trouble than the consumer who reaches a much more containable default level due to a resource stop loss in effect.

The consumer runs up 100k in debt, the banks stop lending; they declare bankruptcy at much more sustainable default levels. The government on the other hand, through creative finance techniques can dig such a large hole, i.e., Greece, that the damage can not only take down an entire Country`s standard of living, even after default, but hamper growth in the Euro region even though it is a small component of overall GDP.

Just compare the standard of living, and Greek lifestyle of today versus just five years ago. Greece has essentially lost entire parts of their economy due to the effective sovereign default at the hands of creditors. Streets which once thrived with shoppers and business activity are replaced with plywood and graffiti. A modern day ghost town!

Now picture the United States and the size of the hole that the US is digging with these creative money shuffling techniques, and the alarm bells should be sounding off right now all over the world. Because by the time you get to Greece`s level where the bond vigilantes make the government face up to the problem, the problem is too far gone. It is too late; there is nothing that can be done about it.

Right now we have limited options, but it is still possible, but just barely and with a radical change where everything we have done for the last 30 years of spending, annual budget deficits, and taxation needs to be completely reconfigured and overhauled.

And I am not talking about some tweaks that Washington is addressing now in the dialogue. I am talking a major paradigm shift in budgetary thinking, about 2013 and not having a budget deficit, whatever it takes. And it will take spending cuts; we collect enough tax revenue in this country. It is ridiculous how much tax revenue this country takes in each year.

So whatever that number is, we need to spend less than that amount in 2013. That is the first step of the United States 12 step program. Until we balance, and I mean a real balance, not some funny budget gimmicks, the budget everybody in Washington is a bunch of “lunatics”!

Moreover, the mainstream media should be chided for not doing their job, and holding Washington`s feet to the fire with regard to implementing sound financial principles into the government budgetary framework, and not busy promoting additional, irresponsible, creative finance workarounds that just dig the country into a further hole by not facing up to the real issue.

Balance the freaking budget, develop a surplus, and start paying down the country`s debt! Sound financial principles at work whether in the context of a government or household.

Ergo, the media needs to spend less time inventing and promoting “Governmental Coin” budgetary gimmicks and start asking some tough questions of our governmental representatives like, Does the 2013 budget balance with projected revenues? If not, why? What do we need to do to make this the last year where this country runs a budget deficit? Remember, you cannot even start to address the national debt, until you finally have a budgetary surplus!

Yes, Rick Santelli given the context of the consecutive years of running budgetary deficits, the size of the federal debt, and the projected obligations going forward, anyone not for major spending cuts in Washington or the mainstream media is an actual “Lunatic”.

By EconMatters

http://www.econmatters.com/

The theory of quantum mechanics and Einstein’s theory of relativity (E=mc2) have taught us that matter (yin) and energy (yang) are inter-related and interdependent. This interconnectness of all things is the essense of the concept “yin-yang”, and Einstein’s fundamental equation: matter equals energy. The same theories may be applied to equities and commodity markets.

All things within the markets and macro-economy undergo constant change and transformation, and everything is interconnected. That’s why here at Economic Forecasts & Opinions, we focus on identifying the fundamental theories of cause and effect in the markets to help you achieve a great continuum of portfolio yin-yang equilibrium.

That's why, with a team of analysts, we at EconMatters focus on identifying the fundamental theories of cause and effect in the financial markets that matters to your portfolio.

© 2013 Copyright EconMatters - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

EconMatters Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

aubygene
06 Jan 13, 01:32
Santelli

One more Romney looser! Fascist!


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules