Something is very wrong with this picture

“Throw in a few billion here and a few billion there, and before you know it, you are talking about real money…” . I don’t recall who first coined that phrase, (I think it was in the late ’80s), but when I first heard it, it was Millions not Billions!

America’s states are facing a projected budget shortfall of $165 billion for fiscal year 2010, the cumulative total projected through 2011 is estimated somewhere between $350 billion and $375 billion and that’s only if the unemployment rate flattens out and begins to drop by mid- 2010.

Economics 101: When states and local municipalities run out of cash to pay their bills, their options are: 1) anger working families [by raising the “jambalaya” of taxes they pay every day], 2) hurt the working poor and those unemployed [by cutting spending on essential services] or 3) just piss everyone off by doing both. When the federal government is short of cash, they can do the same things or just simply vote to print more cash – in Football, that is called a punt. When you are elected to Congress, you punt a lot.

As obscene as $165 billion of “real money” may sound to you, consider that the US tax payers gave $180 billion to bail out just one company, AIG, $13 billion of which went straight to pay AIG’s debt to another company, Goldman Sachs.
That’s right, for what we tossed just to AIG, we could have covered the budget shortfall of every state in the nation for 2010 and still have $15 billion to spend. Add in the $50 billion to another company (Citigroup) and $45 billion to another (Bank of America) and Goldman Sachs who received their own $10 billion tax payer toss, and we are on the path to ensuring that no state in the nation needs to cut vital services through 2011.

I know what you are thinking … “but we averted a global financial meltdown that would have resulted from the banks inability or fear to lend money (a.k.a., the credit freeze)”. Perhaps, but credit is as cold today as it was last Fall. And when was the last time you heard of anyone walking into a Goldman Sachs branch to get a home mortgage? [Hint: NeverGoldman Sachs, along with others, became a “bank” only after the TARP program was announced.]

Fed Chairman Bernanke, in his testimony to the House and Senate finance committees, used the recent recovery of the stock markets and the swelling bottom line of the large financial institutions (and by definition, their record bonus payouts) as a vindication of the Treasury and the Fed policies, and proof that they had averted a global financial disaster.

Perhaps, Bernanke also made clear that the prospects for improved employment, home values or even a decrease in home foreclosures, wasn’t likely for the next couple of years. He went on to say that “financial conditions remain stressed, and many households and businesses are finding credit difficult to obtain”…e.g., in spite of the massive amount of money the US taxpayers have tossed to the banks, the credit freeze remains.

Moody’s predicts that 1.8 million borrowers will lose their homes this year, up from 1.4 million last year. I know what you are thinking … “but wasn’t that the reason we tossed out all those billions and billions of dollars (a.k.a., real money) to the banks?” Perhaps.Obviously, homeowners in or at risk of foreclosure are also not paying their local real estate taxes.

The Center on Budget and Policy Priorities reports that 20 or more states have already made cuts to public health programs, programs for the elderly and disabled, and aid to K-12 education. Over 30 states have cut assistance to public colleges and universities. Across the nation, states have announced additional cuts to; health coverage to elderly and disable, school meals, homeless shelters, services to seniors, occupational therapy, Alzheimer services, drug assistance, mental health issues, legal services for foster children, K and Pre-K programs, and more. But all is not gloom, the Feb Chairman is correct; the stock market is indeed up and so are the Wall Street bonuses.

Something is very wrong with this picture, but you may have noticed there is not much “buzz” in the press these days about TARP money. The new “House” fire everyone in Washington is running to is the one where our nation’s first black president is being compared to a Nazi because of his health care policies. That one may take me a lifetime to figure out so I will do as Congress does and just punt.

-Surface Earth columnist: CB


15 thoughts on “Something is very wrong with this picture

  1. what I have learned from the state of the economy was to be very wary of what debt I accumulate, especially with credit cards. Here we have credit cards and debit cards. When we use our debit card we use money that is there, that we have, but when we use our credit cards we use money that is not there, what we do not have. I think a debit card should actually be called a credit card, and a credit card, a debt card.

    and I have always wondered, why is it that they qnot more money made

  2. most of us have no idea how much the entire world depends on the average tax paying middle class American.

  3. OK, I’ll play!

    Notice that in all the budgetary crisis, not one mention has been made to slash military budgets?

    As in, “get out” of whatever country we are in and if the people do not have the self respect, the self governing or the self discipline to create and build a “democracy”, then they do not get to enjoy one. Period.

    Do I dare say that a “lack of self discipline” in regards to issues of instant self gratification are now coming home to roost?

    Economics 101: When I borrow from Peter to pay Paul, I end up with a sore Peter.

  4. Sue: Hello, hello. If a mention has been made, I have not heard it. I’m a simpleton in many ways, when I hear of “trillions”, all i can think is: WHAT??????????????? We need so little compared to that to truly make a difference for kids. Sigh, I better stick with finger painting.

  5. It’s gone beyond our comprehension of how MUCH…my dad would be throwing a fit if he was still living. Take the figure of $10 Billion a month and multiply it by how many months we’ve been at ‘war’. We are now a “third world country”. We are a debtor Nation.

    Of course, I already know no one would go along with my ~idea~ of selling Texas to China to pay off the debt. Seems that would solve a couple of problems at once, since China is rather known for its wall building capabilities. And China could most likely work something out with the North Vietnamese, in helping to ferret out the tunnel system of highways that has been developed all along the border running underneath the wall.

  6. I would leave a ‘PS’ if I may SE?

    Look at our consumer debt.

    We are a government of ‘the People’.

    If We, the People, do not understand the wisdom of fiscal self discipline, then how would governing bodies composed of ‘We the People’ going to know any better or different? The Wisdom of any group cannot exceed the total of its parts.

    There is a motivational value towards self improvement, when desires for instant sense gratification are denied. It is this motivational value that our credit economy negated and nullified.

  7. I would wish to be a farmer, because they have all the land and all the food :).

    We, The People, allowed this situation to come to pass because too few of us care enough to take our roles as active citizens seriously. People in other countries die for the rights of which we take advantage.

    I, for one, am disgusted at the world I’m leaving my child.

  8. If the dollars/monetary base were to be erased, it would simply mean another means of trade value would take its place.

    The purpose of money is as a symbol of energy. Life energy, that is traded value for value between people. It is called “commerce”. So the farmer who farms apples can trade with the farmer who raises pigs.

    At one time we used goats and pigs for monetary units. But making change was difficult. Then we used precious minerals, molded in all different forms: coins, balls, disks, jewelry, flasks, etc. But a great amount was burdensome to transport.

    Our paper monetary units at one time were backed up with gold. But that went out in the 50’s, when we were taken off the gold standard. Prior to that, it was illegal for any of us to own gold coins or gold bullion.

    Right now, another ~new~ commodity unit is coming forward. Notice that unlike previous times when our economy went sour, the precious metals market hasn’t risen exponentially.

    The ~new~ World commodity will be land.

    And there will always be commerce, as it is the exchange of energy between people. It’s “credit” that is the false exchange.

  9. I hope another type of newness comes too, a newness of thinking maybe that land cannot really be owned by any one person, country, place, or thing. But if we think we own it, then I hope we will treat it like we would wish to be treated ourselves, but I guess to do this, we must first see how do we wish to be treated. and so:) to me it comes down to again this buy local first then extend it when there is access, to others. but at least, if we see in ourselves, this type of respect, locally, it builds excess that we wish to extend and so we might extend it to the land locally,this respect, then the land will see it too and begin to have excess as well to extend to others:)

  10. Pingback: Putting all that cash in perspective « Surface Earth

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