Monday, August 1, 2011

Obama Administration failing badly on the Economic Front

Or is it their plan?

With the debt-to-GDP ratio at 95%(the highest it's been since WWII era) under Obama administration. Ronald Reagan debt-to-GDP was 32.5% at one point but increased it to 53.1% in his second term but still manageable. The debt-to-GDP is a very important statistic to a stable government and a stable economy. With the debt-to-GDP ratio at 95% the debt ceiling has to be raised by 1 trillion a year to keep from a currency default. Meaning the 1 trillion debt ceiling raise will have to be raised again another 1 trillion within 1 yr to meet the debt obligations. Obama hasn't done anything net productive for the economy and has increased the debt - that is why the debt ceiling has to be raised faster.

Obama acts as if he's done something important by raising the debt ceiling and by his looks he thinks he really accomplished something. While in office Obama has not done anything net productive for the economy while doing everything counter productive to it so we are in a tsunami of debt now vs a sea of debt. The loss of jobs is higher, the debt is higher, the US is an uncompetitive welfare collecting nation, there have been many bailouts of corporations and banks, and there is more war. So rather than trying to cut the countries debt (it's not all his doing) but he has done everything imaginable (but still stay in office) to increase the countries debt.

My prediction is there will be a huge market crash but when that happens I don't know. It will likely be a pump and dump or it could just suddenly happen. After the market crash we will get more QE or a new currency (we may be on QE4 or 5 when this happens but I think we are in pretty bad shape now so it could happen at any time especially if China pulls the plug). If this were a chess match China has the Queen totally surrounded but just keeps moving forward pawns and Obama keeps throwing away key pieces like Bishops and Rooks while China has all it's pieces on the board. Since China is not going to forfeit the uneventful will ultimately happen. Perhaps they will try to juice it more with QE and then when it all fails the new currency will be introduced. Note that QE may be called something else but it will be the equivalent of.

Oh the democracy!

Obama did accomplish one thing and that was have an economy so bad that even many of the illegals have left back to Mexico where the unemployment rate is not as high and the cost of living is lower. Mexico unemployment rate 5.4 percent, US unemployment rate 9.2%. In California (where many illegals seeked opportunity) the unemployment rate is 2nd highest in the nation at 11.8%. Over 40 million Americans (over 14% of the population) are on food stamps to add to the debt to GDP imbalance.

If the US sees temporary relief look for more flare ups in Europe over their debt crisis but the US won't be off the hook. Surely more war fits into the predictable theme. Currently there is an uprising in Israel and the whole middle east looks unstable. Wasn't Rome heavily engaged and had a currency crisis before the collapse? Hmmm. Makes you wonder.

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