Once again, so much is happening so fast. The Obama administration has been accused of misleading the taxpayers about the General Motors loan repayment. According to a report confirmed by the Inspector General, one category of TARP loan was repaid with another category of TARP money. According to the report, General Motors did not pay back their taxpayer loan out of production by selling new cars, they paid it back by obtaining another taxpayer loan. This is passed off as free market capitalism. In other words, real capitalism is now DOA. Dead on Arrival.
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If that sounds a bit harsh, a Washington Post article quotes an IMF Official as saying: "For Nations Living the Good Life, The Party is Over". The IMF says the future of the world hinges on "re-balancing and consolidation". These are nothing more than code words for a declining standard of living, significantly higher taxes, working more years until you retire, and the blatant redistribution of whatever wealth you have remaining. The party is indeed over. The dirty little secret is that you, and the future generations of your family, are going to be stuck with the bill. One of the "justified" concepts being openly discussed by IMF economic counselor Olivier Blanchard is: raising the retirement age in line with life expectancy. In other words: you're going to work until you're dead and get shortchanged in the meantime.
How are you going to get shortchanged? According to a report by ABC News this week, states are cutting pension benefits to skirt a massive funding shortfall. A school teacher in Skokie, IL was quoted as saying: Politicians in his state "spent years neglecting their obligations to the state’s public pension funds and now want workers to foot the bill." States across the country are beginning to face the reality of needing to reform pension systems. In other words, they are looking at the insurmountable gap between assets and the benefits governments had promised their workers. No doubt, politicians will be accused of underfunding pensions in good economic times and diverting that money to buy more votes in yesterday's elections. However, it's what the politicians are doing today in the name of "solving" the problem that must be put under scrutiny right now, before their "solutions" take us completely down that road that is supposedly paved with good intentions.
As inflation goes up and pensions go down, people are going to get mad. The realization that our elected officials have been systematically enabling the backdrop of today's economic crisis to unfold for the past several decades is going to create a backlash in American politics the likes of which we have never seen before. It may turn ugly. At a panel discussion I moderated in Chicago this weekend, legendary trader and investor Clyde Harrison said that he hopes the only revolution we see in America is a revolution at the ballot box. I couldn't agree more. The only civil unrest I want to see in America is voters getting feisty at the next election, anxiously waiting in line to vote ALL incumbents, regardless of party, out of office, once and for all. THAT is the only change that can potentially turn America around and get her aimed in the right direction. Absent that, it's game over, because right now we're beyond the point of no return.
