About Me

Name: Brenda Bee
Biography
Loading...

Create Your Own Blog Find Other Townhall Blogs

Comments

Archives

Blog Roll

 

Are Housing, History and Money Connected? You Bet, and it is Looking Bad.

I am not an economist or even a CPA. In fact, I can’t even balance my check book accurately, but I have read a bit of history and I am listening to the news and at this point I am not sure what to do to position my family and myself so as not to suffer too badly when the bottom falls out of the US economy. They look to me to make the decisions on investments and such and I don’t know what to tell them to do with their savings. Perhaps cash them all in and stick the greenbacks under the mattress? This is what my grandparents did with the little savings they were able to get their hands on right before all the banks closed their doors at the beginning of the Great Depression. I just plain don’t know. But when I saw people standing in line outside of a bank last week trying to get in to draw out their money as in the pictures I had seen of the beginning of America’s worse nightmare the Great Depression it sent a chill up my back and I knew I was witnessing the first scene in the fall of this Fools Paradise we Americans have been living in.


Why do I think this is about to happen? Because the housing busts precipitated the Panic of 1837, the Panic  of 1893-97, the Great Depression of the 1930’s and the long recession Japan has struggled with since the late 1980’s.


Why does housing have so much effect on the money market? Housing is the measurement of the wealth a person has. It reflects how much they can spend and how much they can borrow. It is the single most reliable measurement of a person’s wealth because it is the single most expensive investment they will probably ever make. So when the housing market does a nose dive as is happening right now in the United States then the value of the homes people own goes down therefore their wealth goes down. Their ability to buy and borrow goes down. The result is inflation, or higher prices for the goods we need..This of course leads to unemployment employers are unable to sell their product and therefore unable to pay their workers. Unemployement in all housing related products, furniture, appliances, etc is especially hard hit.


Well if you haven’t notice the housing market is in a real nose dive into deep deep water with nothing to stop it from going down even further.  Foreclosures are htting an all time high and builders are selling their new homes at bargains prices.  The foreclosures came about because of the low interest rates  to borrow money so people over estended buying homes thinking the boom would continue and they would make their fortune on the  equity built up in their homes.  amost are now caught with huge outstanding debt, higher interest rates as their low cost Adjustible Rate Mortgage rates increase to reflect market conditions and home values so low that even if they are able to sell their homes the chances are they will not realize enough profit to pay off the mortgage leaving tthem with no home but still a huge monthly payment to make.


In the Great Depression the government was able to bail the economy out by creating jobs. You might have heard of the WPA and the CCC and a few more such programs. Then WWII created more need and much more government spending to finally pull the country out of the hole the people’s mindless euphoric spending of the 1920's had gotten them into. The government was able to do this because the government was not in debt; the people and businesses were in debt.


After WWII the US economy continued to boom as the countries in the rest of the world had to rebuild their cities and factories and infrastructure that had been destroy in the war. The only problem with that was that we Americans got used to the good life and just plain didn’t know when to stop buying and borrowing and buying more and more. And where did we get all this money to buy with? Well, we got the money from those same countries we had helped rebuild as they sent us their money in the form of goods and investments for them and mortgages (debts) for us.


Now with this massive housing bust in the United States the people are losing their wealth, the foreign investors are calling the debt and our government is the most indebted nation in the world and unable to pay it’s debts let alone create jobs to stabilize the economy.


The US government:

1) U.S. Treasury Secretary Henry Paulson told Congress last week that as of October 1, 2007 America's IOUs will surpass the current debt cap of US$8.9 trillion. So unless Congress jacks up the limit yet again and piles on even more debt, the government of the world's largest economy will cease to function.  If you weren't listening real hard you would have missed this dire warning because the MSM didn't make a whole lot out of it.

2) Just since 2000 America's national debt has ballooned by more than 50 per cent. Congress has already hiked its limit on how much the U.S. can borrow four times in the last five years.Foreign countries have been backing this flagrant borrowing by our government with the approval of our elected officials by lending us their money by investing in our country.

Our Congress has of course been borrowing hand over fist to give the American people all the bells and whistles they have demanded as their right just for being Americans. Some will naturally start shouting it is the war in Iraq or Bush’s War that is causing all the problems, but a quick look at the actual budget will show that it is domestic programs that are getting the bulk of the money. Domestic programs like Social Security, Medicare and the Senior Drug Program cost a full 40 per cent of our federal budget!


Here is Presidents Bush’s 2007 budget which Congress has been increasing steadily since it was submitted to them. Take a very close look at just where the money is going.


The President's budget for 2007 totals $2.8 trillion. This budget request is broken down by the following expenditures:

$586.1 billion (+7.0%) - Social Security

$466.0 billion (+4.0%) - Defense

$394.5 billion (+12.4%) - Medicare

$367.0 billion (+2.0%) - Unemployment and welfare

$276.4 billion (+2.9%) - Medicaid and other health related

$243.7 billion (+13.4%) - Interest on debt

$89.9 billion (+1.3%) - Education and training

$76.9 billion (+8.1%) - Transportation

$72.6 billion (+5.8%) - Veterans' benefits

$43.5 billion (+9.2%) - Administration of justice

$33.1 billion (+5.7%) - Natural resources and environment

$32.5 billion (-15.4%) - Foreign affairs and Foreign Aid 

$27.0 billion (+3.7%) - Agriculture

$26.8 billion (+28.7%) - Community and regional development

$25.0 billion (+4.0%) - Science and technology

$20.1 billion (+11.4%) - General government

$1.1 billion (-47.6%) - Energy

 http://en.wikipedia.org/wiki/Image:Fbs_us_fy2007.png


Every cent of that budget is in effect debt! Our national debt stands at $,8,708 Billion. In case you can not fathom those numbers try reading the words: eight thousand seven hundred and eight BILLION DOLLARS.  That is one whole lot of zeros! This figure was for the first quarter of 2007 so it is higher now.


Below just for comparison I have enclosed a chart of the growth in the National Debt.

Year to
30 September

U.S. Govt Debt
US$ billions

1910

2.6

1920

25.9

1930

16.2

1940

43.0

1950

257.4

1960

290.2

1970

389.2

1980

930.2

1990

3,233.3

2000

5,674.2

2005

7,932.7

2006

8,506.

 

The debt for 1950was of course for the cost of WWII and it remained very steady through the 1950’s as the country’s economy grew and the federal government spent massively to build the infrastructure, highways, interstates and bridges.


Notice though after 1960 how the debt grew by leaps and bounds. What happened during the 1960’s to cause this astonishing growth? The Viet Nam War was over in 1973, the infrastructure was pretty well in place by then. What then was the one thing we didn’t have before that we have suddenly become burdened with after the 1960”s?


Very simply: it was President Lyndon B. Johnson’s Great Society and the massive social welfare programs he and Congress at the demands of the American people initiated.

I am afraid the time has come to pay the piper and the piggy bank is empty folks. That’s all there is to it. BB



References:

Who owns America? A pie chart of just who owns the national debt.

http://www.optimist123.com/optimist/2007/03/updated_pie_cha.html

The National Debt as a Per Cent of Gross Domestic Product. Was much higher after WWII but then the country went into a high growth economy. What now if there is a depression as is looking likely?

http://zfacts.com/p/318.html 

The Canadian loonie outstrips the US dollar for the first time in three decades. Bad news and just the beginning as the money of countries around the world follow suit making the dollar worth less and less and making goods we buy from other countries cost more and more.

   http://www.macleans.ca/article.jsp?content=20071008_110106_110106&source=srch

There is no such thing as a surplus, there is only debt!   A so called surplus is merely a word the government uses to say they are spending this musch less this year than last year.  It does not mean found money or extras money at all.

 http://www.uwsa.com/uwsa-usdebt.html

Daily debt tally. Dare you to check this site.

http://www.treasurydirect.gov/NP/BPDLogin?application=np

Just what is the national debt?

http://www.ustreas.gov/education/faq/markets/national-debt.html
Email ItEmail It | Print ItPrint It | CommentsComments (0) | TrackbacksTrackbacks (0) | Flag as offensiveFlag as Offensive

Another Step Towrds Socialism and the End of the American Dream

The House of Representatives took one more step down the slippery slope of socialized medicine and spending money that the government doesn’t have yesterday by passing a $35 billion dollar Children’s health care package which would extend coverage of children not already covered by the current low income children’s health care program SCHIP. It is not that these children do not already have coverage mind you, but that they are not covered by the SCHIP program.


To pay for this bill a 61 cent a pack tax has been added to cigarettes. (Just an aside here: Isn’t it ironic that the cigarette tax will hit the groups it is meant to cover harder than any other since low income individuals, adult, teens and even children are the heaviest smokers in the country.)


The bill calls for $35 billion dollars this year, but we all know it will not stay in that range. Medical costs have historically inflated by double digits since the mid 1960’s. There is another irony in this particular bill: Our government has already committed our great-grandchildren to pay the debt for our current profligate spending and now our legislators are working hard to extend the debt to the next generation. This bill is only creating another entitlement program that will become a monster.

Please remember that 40 per cent of the federal budget last year was for entitlement programs. That is almost half of the tax dollars collected from All Americans paying for the free ride of a relatively small number of Americans. And most of that money is for only two programs: Social Security and Medicare. Yes the old are getting a free ride, both the wealthy and the poor! And soon now as the Baby Boomers begin to retire the cost of Social Security will go sky high and the fund will be depleted soon after that. The fund will be depleted not because so much of Social Security is going for other programs as so many like to say, but because after just two and one half years all Social Security recipients have drawn out every cent they have put into the system and are at that point being paid money they did not contribute. They are  effectly on Welfare for the Elderly. This is rich and poor elderly alike since all get Social Security and free medical care.


****************************

The bill passed in the House by 265 to 159 (45 of those votes were Republicans). President Bush has said he will veto the bill and I truly hope that he does so. He has been the most reluctant among presidents to use the veto to date. The Senate Democrats are working hard to get the 290 votes they need to send him a veto proof bill. There is some doubt that they can do this, but one can not trust to luck especially with an election year coming up and the Republicans know if they do not jump on the band wagon the Democrats will use this as a club to beat them with. It behooves the Republicans to then get the facts out to the people. To tell them and show them frankly what I have been trying to say for several years on this blog. The truth is that too many people are already on the government dole and our politicians are reluctant to tell the ones already on the take that they are sponging off the society. Every time a politician tries to get the truth out there those who are already in an entitlement program raise all kinds of Hell and the Socialist groups in the country such as the AARP starts the fireworks booming. Now we want to put middle class kids who are on their family’s healthcare policies on another government entitlement program. This has nothing to do with covering poor children who are already covered under Medicaid and the current SCHIP programs.


*********************

Some Representatives have slipped in special “ear marks” for their territories and no doubt Senators will also. This special interest goody bag is part of the high tax payer cost of Medicare and Medicaid now as it is funded each year so do we really want to give the jackals another pot to raid?


“The bill's fine print does raise indigent health-care reimbursements to Tennessee and Hawaii, helps county-operated health facilities in California's Ventura and Merced counties, and boosts Michigan's Medicaid subsidies, a provision inserted by House Energy and Commerce Chairman John D. Dingell (D-Mich.).”

***************************

What few know and the ones who do won’t admit is that SCHIP already covers children whose families private insurances policy have paid out the limit for traumatic illnesses. This is one of the main reasons supporters say the family eligibility income limit should be raise and children be allowed to be taken off of those family policies and put on SCHIP. They claim these children who have traumatic illnesses or disabilities have no coverage. These just are not the facts. But the Democrats didn’t let the facts stop them from bringing in a lady and her to ill children who are already in the SCHIP program to try to get the votes for and expansion of the program. Seeing these poor little children in need was sure to generate the right amount of public support for the expansion, you see.


“Briefly, there was a human face to the issue on Capitol Hill yesterday when Bonnie Frost, a Baltimore woman whose four children ages 9 to 14 have been enrolled in the program for eight years, appeared at a news conference with one of them, Gemma, 9, to support the bill.


When Gemma and her brother Graeme, 12, suffered traumatic brain injuries in a car accident in 2004, SCHIP made it possible for them to get the medical care that they needed, Frost said.”


This same thing was done in 1965 when 60% of the elderly had their own private insurance plans but they were ALL put on Medicare. We all know how that program has blown our medical system into the stratosphere with double digit inflation every years since making Health care the giant burden it now is to society. Think hard about that people: 60 percent of the older Americans in 1965 could afford and had their own health insurance coverage. At that time health insurance was affordable for middle and even lower income Americans, and most certainly by wealthier Americans. Inflationary cost increases for health insurance was in line with the inflation rate of most commodities at 1 to 3 per cent a year. Then along comes socialized medical care for the elderly and we have had a bonanza of gold coins flowing into the coffers of the health care industry. Remember the health care industry does not just mean doctors and hospitals. It means drugs and medical insurance too.


***************

House Passes Children's Health Bill

Despite Strong Republican Support, Threatened Veto Will Probably Stand

By

Christopher Lee and Jonathan WeismanWashington Post Staff Writers
Wednesday, September 26, 2007; Page A04
Email ItEmail It | Print ItPrint It | CommentsComments (0) | TrackbacksTrackbacks (0) | Flag as offensiveFlag as Offensive
« Previous1Next »