Chili Palmer

The greatest mob movie of all time was Get Shorty. (Please, don’t argue.) The whole movie revolved around this exchange:

Ronnie Wingate: Excuse me bro', but who the fuck are you? Chili Palmer: I'm the one tellin' you how it is...

Last Sunday, Greece was Chili Palmer. A few days later, Angela Merkel is.

 

Funny how things change.

You probably heard that Greece’s Prime Minister called for a referendum on the troika’s terms. And the PM encouraged Greeks to vote no. And the Greeks did—by a whopping 61-39 laugher.

Turns out, though, Prime Minister Tsipras was sort of bluffing. He expected Greeks to vote Yes no matter what he told them. In other words, he doubted his own mandate.

He hoped Greek voters would accept the Troika’s terms, reject his leadership, and make the whole thing somebody else’s problem.

When Greece followed Tsipras’s advice and rejected the offer, Tsipras fired the mastermind of the strategy, Marxist game theorist Yanis Varoufakis. Varoufakis rode is motorcycle into the sunset.

As last Monday morning dragged on, Tsipras turned his blinking eye toward Germany and . . . and needed to change his pants. In the North stood Europe’s Chili Palmer who goes by the name Angela Merkel—pronounced, like her policies, with a hard “G.”

Tsipras offered to accept the Troika's terms—the ones his people had just overwhelmingly rejected. Merkel spake “nein!”

Now, Germany, Finland, and other Eurozone members are laying out terms Greek can’t accept. The alternative is a five-year leave of absense from the Eurozone—a term Greece has little choice but to take. As the Wall Street Journal puts it:

Sunday’s statement on Greece by eurozone finance ministers will go down as one of the most brutal diplomatic démarches in the history of the European Union, a bloc built to foster peace and harmony that is now publicly threatening one of its own with ruination unless it surrenders.

Greece’s new best friend, Vladimir Putin, waits in the wings with oil and gas and gold on ships ready to dock in Greece’s warm-water ports.

The Eurozone isn’t an economic venture: it’s a loan-sharking racket. Europe happily fed Greece’s voracious appetite for debt for over a decade, knowing full well Greece would never make good on the loans.

Why? Exports. The same reason our own establishment freaks out over the Export Import Bank.

Since the creation of the Euro, Germany has pressured European banks to make risky loans to Greece, Italy, Portugal, and other countries. The loans allowed the southern countries to buy German goods. The scheme worked remarkably while while it lasted:

clipped from http://www.zerohedge.com/news/2015-07-12/latest-out-europe-pretty-steady-level-shittiness

Now, Europe owns Greece and doesn’t want it.

What happens next? Who knows. But everyone has learned never to borrow money from Germany or the European Central Bank. Or the IMF, for that matter. Never. Any alternative is better.

I can’t imagine this ends well for Greece, Europe, or the world.

Chili Palmer: Look at me. What I'm thinking is, 'You're mine. I fuckin' own you.' But what I'm not doing is feeling anything about it one way or the other. You understand? You're not a person to me, you're a name in my collection book, a guy who owes me money, that's all.

I wonder if John Travolta will play Merkel in the movie.

[embed height="315" width="560"]http://youtu.be/FbSIk3Q2KrI[/embed]

This David Stockman Quote Should Scare the Hell Out of Everyone

Is the US economy about to collapse worse the Greece’s? 

Some, like Paul Krugman, say that it’s okay for governments to print unlimited money.  Others, who have actually managed businesses, say otherwise.

ronald-reagan-david-stockmanDavid Stockman is among the latter.  He was Reagan’s budget director for a few years.  He became a media sensation because of his command of numbers.

He left the White House early, fretting over federal debt.  But debt in the 1980s was as a piggy bank to Wells Fargo.

In an interview with Business Insider, Stockman warned that America’s financial end is nigh, and that you better hope the Lord returns before it gets here.

Here's the heart of the matter. The Fed is a patsy. It is a pathetic dependent of the big Wall Street banks, traders and hedge funds. Everything (it does) is designed to keep this rickety structure from unwinding. If you had a (former Fed Chairman) Paul Volcker running the Fed today 7/8— utterly fearless and independent and willing to scare the hell out of the market any day of the week — you wouldn't have half, you wouldn't have 95 percent, of the speculative positions today. [Emphasis added]

Read more: http://www.businessinsider.com/david-stockman-youd-be-a-fool-to-hold-anything-but-cash-now-2012-3#ixzz1oA6pTfdp

The GOP is our best hope, but its candidates better get their brains around this, and fast.  I really don’t feel like spending the rest of  my life foraging for roots and wrestling nuts from a squirrel.

What Scrooge Teaches Millennials

This is the fourth in a series. If you haven’t, please read part 1, part 2, and part 3 Because so many school systems have driven great English literature out of students’ hands and minds, it’s possible that some kids never read Charles Dickens’s A Christmas Carol.  If you’ve never read this classic, please do so now.  You need it.

Scrooge_Marley

Back?  Good. Fascinating stuff, isn’t it?  And so much more accessible than David Copperfield, which was my introduction to Dickens.

So now you know that Scrooge was a miser who treated the whole world and all of its inhabitants with a cruel contempt.  Scrooge loved money and nothing else.

But during the course of the story, a series of spirits massage Scrooge’s conscience. They begin with his own happy youth, when Scrooge still enjoyed the presence of other people.  They proceed through Scrooges present and into his future.

Somewhere along the way, Scrooge changes.  He has a conversion. He learns to love others as himself.

If I were a Millennial—those born between 1983 and about 2002—I’d ask myself, “why?”

The spirits didn’t argue politics or morality with Scrooge.  They didn’t tell him his taxes were too low, and they didn’t send bureaucrats to audit his books and extract fines.

Instead, they made it personal.  They showed him his real life—past, present, and future—in living color and 3D.  They simply held up a mirror and provided him clear evidence of what his future would be if remained on the path he’d taken.

Scrooge reformed because he knew a lonely, unhappy death awaited him. He knew that people would mock his memory.

Millennials should take a hard look at our national debt. Not just where it stands, but the direction it’s going.

Look at the amount of debt that Gen X, Boomers, and WWII have saddled you with.  It’s about $50,000 and going up every day.

What did you get for that money?  Not a damn thing, really.  Most of that debt went to pay for people who are already retired. In other words, your grandparents are borrowing money, spending it, and passing the bill onto you.

I know you’re a generous group. You want to help. You believe in this country, and you’re willing to sacrifice to make it stronger.

We all are.  That’s a common trait of Americans.

But how much can you bear?  How much of a debt burden can your generation really handle?

On top of Washington’s $15 trillion in debt and $60 trillion in unfunded liabilities, most states hold hundreds of billions or more in combined debt and future pension obligations.  Those aren’t your pensions, but the pensions of people in older generations.

Well, you weren’t asking for all that debt. Now you’re stuck with it.

Again, how much more can you and our society handle? And does it really help anyone for the government to make promises it can’t keep?

Scrooge looked at “Christmas Yet To Come” and saw his horrible death. Unless he changed.

When I look at America’s future, I see the same.

The spirits gave Scrooge the chance to reform, and he took it.

Will you?

Why Tea Party?

A college student asked me a question:  Why join the Tea Party? stltpc-image

He was wondering why anyone would want to associate with people who behaved reprehensibly at two earlier Republican debates.

Here’s how I replied:

Johnny,

Sorry that I'm just getting to this.  I get a lot of email, and sometimes I miss things.

I organized the tea party in St. Louis in 2009. I did so because I've seen that governments accumulate power until they crush liberty and freedom. Governments use every means to increase their power over the people.  Most recently, it's been debt.  

Did you know that you owe about $50,000 in federal debt--in addition to all other debts and taxes? You.  If you get married, you'll have a combined $100,000.  

You'll pay that debt in one of three ways:  taxes, inflation, or reduced income.  Either way, you have no chance of out-earning me if you follow my exact career path and work just as hard.  

But that's just money. What about life and liberty?  

No weak government ever committed a holocaust.  But powerful governments do it all the time.  The Nazis.  The Soviets.  Pol Pot.  Ho Chi Minh. Mao.  Castro.  

Talk to someone who fled one of those regimes.  Learn what happens when all the power, all the police forces, all the taxing and permits and borrowing and judging accumulate to a small group of people.

Hell is what happens.  

Show me what happens when good people, people of character, are free to live their own lives. 

Prosperity.

Were there idiots at those debates?  Sure.  Then again, look at the idiots at OWS encampments, defecating on police cars and raping women. Put 100 people in a room and 5 will lack the ability to form human bonds.  

Do we need police and anti-trust laws and other regulations?  Of course. But we also need a constant and vigorous defense of our liberty. 

That's why I called for a Tea Party in February 2009, and that's why I hope you'll join our little band in St. Louis. We stand on guard for your liberty.  And that's one of hell of an important job. 

Here's some other people's views on Why I Tea Party

Cordially,

Bill Hennessy

Why do you tea party?

At Last, Obama’s Ready to Borrow More Money from China

The headline on July 15 was knee-slapping funny:

Obama says he’s “ready to move” on debt ceiling.

Really?  The man who dug a deeper debt hole in two years than anyone else did in 8—or 15—is willing to borrow more?

12716Say it ain’t so.

For those who believe Obama’s some sort of deficit hawk, let’s take a quick stroll down memory.

  1. Obama wanted to increase the debt limit by $2.5 trillion in April, and he want no conditions on that increase.  In April 2011, Barack Obama opposed any measures to reduce federal spending.
  2. Obama refused to produce a plan. Period. He has no plan for reducing debt. He has no plan for eliminating deficits. He has no plan for creating jobs or helping small business.  He has no plan for anything but golf and party.

3.  Obama says 80 percent of Americans demand a tax increase, though he is incapable of citing any source for that number. In other words, he made it up.

Of course Obama’s ready to move on borrowing more money.  Borrowing is his only plan. His credit card is maxed out, and he wants the limit raised.

Only, this time, there are men and women in Congress who more beholden to the Millennial generation than to Boomers. Like a good banker, this Congress wants the borrower to produce a debt reduction plan before lending another penny.

I’m glad Obama’s finally ready to move on something besides a tee box.  But I won’t be completely satisfied until he moves out of 1600 Pennsylvania Avenue.

What’s Your FICA Score?

Your FICO score is a number between 380 and 820 (or something like that) that banks use to determine your credit worthiness.  The higher your FICO score, the better. But that’s not what I’m talking about here.

I’m talking about your FICA score.

bi_weekly_stub

Your FICA score is the minimum payment on your federal loan.

You didn’t know you had a federal loan?  You do.

If you’re 18 years old, you owe the federal government about $46,000.  That’s before your take out your first student loan. 

You can see your FICA score on your very first pay stub. 

The good news:  you should earn enough in your lifetime to pay off this $48,000 loan that my generation and my dad’s took out on your behalf.

The bad news: we keep borrowing more against your loan.  You’ll never be able to earn money as fast as we can borrow it.

Your best bet? Here’s two rules for getting out of other people’s debt:

1.  Don’t trust anyone who tells you that you’ll be better off deeper in government debt.

2.  Don’t trust people born before 1982, since we’re the ones using identity theft to live richer lives and leave you poor.

And look at your FICA score every payday.  It’ll remind you of Rules 1 and 2 above.

Money Problems? Borrow Your Kids’ Social Security Numbers

Why not? Kids have a clean slate when it comes to credit scores.  Sure, they don’t have a long history, but you can help with that. 

And you can buy that 56-inch 3D LED TV you’ve been craving.  In a few months, you might even be able to buy a new car—on your kid’s credit.

Best of all, you really don’t need to pay it off.  Let your kids pay that loan.

happy-peopleThink about it: most kids rack up a ton of college debt. They borrow and borrow to go to college.  And they can’t even eliminate school loans with bankruptcy.

They can get out of the loan for your Hummer, though.  And if they love you, they’ll be happy to help.

Besides, you need the Hummer to haul the kids and their friends around to malls and soccer practice, right? 

Plus you’re establishing their credit for them.

Only one problem: pretending to be your kids by stealing their identity is identity theft.  And sort of like financial molestation.

So why isn’t federal borrowing a crime? 

The US government has borrowed $14+ trillion using my Social Security number and yours.  The same government has bribed older generations to buy their silence—even their complicity.

Worse, most of this debt has been charged to the accounts of Millennials.  And their kids. 

Where’s the outrage?

Thomas Jefferson showed appropriate fury at the notion of borrowing to benefit the present generation at the expense of future generations.

I sincerely believe... that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.

and

Then I say, the earth belongs to each of these generations during its course, fully and in its own right. The second generation receives it clear of the debts and incumbrances of the first, the third of the second, and so on. For if the first could charge it with a debt, then the earth would belong to the dead and not to the living generation. Then, no generation can contract debts greater that may be paid during the course of its own existence.

If you were born after 1982 (Millennial Generation), I’d love to hear your thoughts on the matter. How do you feel about entering the workforce almost $50,000 in debt for things no one every asked you about?

Gimme More Money or Granny Gets It!

Obama showed his breaking point today. The stress got to him. Today Obama threatened to stop Social Security payments if Congress doesn’t bend to his will on the debt ceiling.

The president told reporters that there may not be enough money to pay Social Security benefits on and after August 3rd. 

But the President lies.

Revenue from taxes and other fees would cover Social Security and other payments. What won’t be covered is additional borrowing to service the country’s already outrageous debt. 

In desperation, Obama put a gun to the heads of the elderly.

Smart. Very smart.

Jefferson on Debt

With the debt ceiling negotiations closing in, it’s worth looking to Thomas Jefferson. ThomasJefferson250

Jefferson was very opposed to federal government borrowing.  (He was less concerned with states borrowing.)  What I love about the quote below is Jefferson’s concern for leisure time. 

"To preserve [the] independence [of the people,] we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses, and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers . [emphasis added]"

--Thomas Jefferson to Samuel Kercheval, 1816. ME 15:39

Pay a mortgage? Have student loans? Make a car payment?  Then you might know what Jefferson was talking about.  Debt limits your freedom. You work to pay off the debt, not to live a better life. While you might be perfectly happy selling sea shells you hunted and painted by hand, you cannot. You must work for the man to earn the wage to repay the debts.

These obligations, of course, are your own. If you feel trapped by debt, you trapped yourself.

Government debt, however, enslaves us just as surely. Yet we had little choice in the matter. In many cases, we opposed the borrowing that now forces us to labor.  Our children were born into this financial slavery, and their children will be. 

Free the children.

Obama Makes It Worse

"It" could refer to anything. Anything at all. 
In this case, though, I'm referring to unemployment.  Well, maybe I'm referring to the economy overall.
Unemployment rate rises to 9.1%, 54K jobs added « Hot Air
Obama has increased regulation, seized entire industries (auto, student loans, commercial banking, medicine), and borrowed more money faster than all previous presidents combined. 
Obama is a one-dictator disaster.  And an incompetent one at that.
If you don't have a job, Obama made it worse.
If you have a job, Obama made it worse.
If you live in America, Obama made it worse.
Unless you're a communist college professor or union boss, Obama made it worse.

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Steve Tilley vs. Fiscal Responsibility

Four men risked their political lives to help solve the problem of our lifetimes, but they forgot to massage Steve Tilley’s monstrous ego. When John McCain (R-AZ) and Roy Blunt (R-MO) agree with Michele Bachmann and Rush Limbaugh, you can bet the issue is beyond debate.

In this case, the issue is the massive U.S. debt and what that debt is about to do to America.

McCain compared the U.S. situation to Greece and Spain, saying we should prepare for a “fiscal meltdown.”

Roy Blunt, meanwhile, said raising the debt ceiling without hard measures to cut spending would be “simply reckless.”

Has Missouri House Speaker Steve Tilley gotten the message?  Apparently not.

Tilley is threatening to knee-cap the spending deal struck by Missouri Senators Lembke, Nieves, Schaaf, and Kraus designed to wean Missouri off Washington’s teat.

According to the News-Leader.com:

And Tilley said the House won’t put too much weight on what he believes the Senate wants him to do.

“I’m not going to be held hostage by a few people,” he said.

Of course not.  Not unless the hostage takers are billionaires.

Nightmarish Carnival of Democrat Mayhem Continues

Congressional Democrats plan to hold a special session in August to pass yet another $26 billion bailout for states.  Specifically for states that have create welfare empires they can no longer sustain.

So responsible states now have to pay for irresponsible states at the point of a federal gun.

It looks like the Democrats want to completely bankrupt America before they lose power in January.

Of course, this also gives empty suits like Russ Carnahan an excuse not to debate their opponents, talk to constituents, or hold town halls. 

Idiot Republicans like Bob McConnell of Virginia don’t help the matter.  Bob’s hand is out, big time.  Virginia has a bloated, expensive education system as complex as ObamaCare, and Virginia wants responsible states to bail them out.

McConnell’s all for fiscal responsibility—right after his state gets some Missouri money.  He told CNN “the federal government is running out of money.”  WRONG!  The federal government IS out of money.  It’s BEEN out of money. It will REMAIN out of money until we STOP BORROWING!

Bi-Partisan Consensus: We’re Screwed

What if:  In January, a new Republican Congress is sworn in. First up on the agenda? A bi-partisan report stating that Congress must enact the most draconian tax increases and entitlement cuts in history or face total economic collapse.

obama-debt[1]

That’s the scenario developing.

President Obama appointed a bi-partisan commission to make recommendations about the US government’s debt.  The commission will not report out until after the November 2010 elections, but the leaders—Republican Alan Simpson and Democrat Erskine Bowles--have given some warning about what we can expect. Here are some of the frightening highlights:

  • “This debt is like a cancer” Erskine Bowles
  • Federal revenue—the sum of all taxes and fees— “is completely consumed by three programs: Social Security, Medicare, and Medicaid.”
  • “We cannot grow our way out of this” Erskine Bowles.
  • Neither Bowles nor Simpson is confident that any measures will prove successful
  • "I don't know that I ever heard a gloomier picture painted that created more hope for me”—Arkansas Governor Mike Beebe
  • Your personal debt obligation—the amount Congress charged to your Social Security Number—is over $47,000 and growing daily. And “you” is every American, born today or 100 years ago.

Among the ideas being tossed around:

  • Reduce or eliminate the home mortgage tax deduction
  • Raise the Social Security age to 70
  • Means tests for Social Security benefits
  • Means tests for Medicare

The irony, of course, is that 100 percent of taxes go to three entitlement programs prohibited by the Constitution. Either we begin a long-term phase out of those programs, or we face a horrific and prolonged depression.  Half the population cannot continue to live off the other half.

What do you think about giving up your home mortgage deduction to pay for wild government spending? Speak out in the comments section.

Obama Insults Americans . . . Again

obamasnob[1] An arrogant and distracted Barack Obama appeared at a press conference for the G20 Summit today. His purpose: to insult, threaten, and cajole the American people from an international stage.

I'm doing it because I said I was going to do it and I think it's the right thing to do. People should learn that lesson about me because next year when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step-up because I'm calling their bluff. We'll see how much of that, how much of the political arguments that they're making right now are real and how much of it was just politics.

This childish behavior reminds me of a very young manager who is unfamiliar with the subtleties of working through others.  We all know the jokes about Second Lieutenants and Ensigns whose troops despise them. Unfit managers become tyrants, stealing the credit, passing the blame, and publicly humiliating instead of leading.

I have worked for such cretins.  They always fail, though they often last longer than expected. Many people will put up with a tyrant a long time before someone stands up.

Standing up is what the tea party movement has been doing since Feburary 27, 2009.  We’re the American people the president threatened today from Toronto. 

Remarkably, Obama is threatening to use the trillions of debts he generated to punish Americans.  He spoke in dictatorial terms, like Chavez or Mussolini, warning his countrymen to fear his wrath.

For those who believe Obama has no ill-will for the USA, let this be your wake-up call

Getting back to the implied antecedent in “I said I was going to do it.”  The “it” is clearly taking on massive government debt. In November, his party could lose control of Congress. So his strategy is clearly to induce economic collapse in 2011, blame it on the “bourgeoisie” Republicans, and hope the American people will give Obama even more dictatorial power in 2012. 

That’s the game, kids. Do you want a dictator?

Terrific: U.S. Pumping $$ into European Economic Abyss

Break out the Depression Glasses to toast the Obama Administration’s latest foray into economic disaster. Just posted on WSJ.com:

BREAKING: The Federal Reserve and other central banks open a credit line to send dollars to Europe to ease debt crisis.

Yes, folks. Your taxes are going up, your kids are going deeper into debt, to bail out lazy, overpaid, spoiled Greek socialists. Thank your president.

The U.S. move follows a panicked decision by EU leaders to pump hundreds of billions of $$ into failing socialist economies in Europe to avert a global economic collapse.

But the scheme may not work.

The problems in Greece, Spain, and Portugal (and Japan, Ireland, and elsewhere) result from too much government debt and too much government regulation.  The countries offering to fund this $650 billion emergency fund are already deeply in debt.  In other words, this is just the latest attempts by socialist governments to borrow their way to prosperity.

In 2008, governments moved debt from underneath Shell A to underneath Shell B.  Now, they’re moving debt to Shell C, the last shell in the game. It looks to me that governments around the world are in an all out panic.  They see the shell game crumbling.  They’re running out of tricks.

Related news stories highlight the problem. Bloomberg reports that banks no longer trust each other, which is driving Credit Default Swaps (CDS) to record levels.

The interest rate that financial companies charge each other for three month loans in dollars is the highest since August, while traders are paying record amounts to hedge against losses in European bank bonds. Yields on all types of corporate bonds rose last week by the most relative to government debt since Lehman Brothers Holdings Inc.’s bankruptcy in September 2008, according to Bank of America Merrill Lynch indexes.

Moody’s, the debt rating organization, says that a Greek-style crisis could his America as soon as 2013, according to Investors.com (HT Drudge Report).

But under more adverse scenarios than the CBO considered, including higher interest rates, Moody's projects that debt service could hit 22.4% of revenue by 2013.

"While we see limited risk of a U.S. sovereign debt downgrade in the next 2-3 years, beyond that we cannot be so certain," wrote Societe Generale's economics team in a recent report.

The Tea Party happened because ordinary Americans sensed something horribly foul in the air steaming out of Washington, DC.  That acrid smell was socialist-driven debt.  And it’s only gotten thicker since then. The White House is imposing policies designed to weaken and break small businesses and to socialize large businesses until there is nothing left but government.

Stop them.  Stop them now. Stopping them is why we created Ensuring Liberty.  Join us today.

Greece: America’s Future

As I waited to appear on Larry Kudlow’s show last Friday, I heard Larry announce over and over again that he’s sick of hearing about Greece’s problems.  Greece isn’t America.  The U.S. economy is booming, and Greece can’t hurt it.

I didn’t tell Larry, but I think he was wrong.

Greece’s problems will hurt the American economy because Greece’s problems foreshadow a far more dangerous crash headed to America.

Markets are people.  People react emotionally to rational thought.  People in America see our government adopting the same reckless socialism that destroyed Greece.  They see America’s debt rising like a hydraulic lift, just as Greece’s did.  They hear warnings that Moody’s or Standard & Poor’s may cut the U.S. treasury rating, as they cut Greece’s debt rating today. People realize that Greece is not just a small European country, but also the canary in the debt coal mine. Portugal is next.

Ben Bernanke warned today that our debt and deficits must be dealt with sooner rather than later.

But Obama just borrows and borrows. 

Why Focus on Government Spending?

The mounting government debt--$2.98 trillion in recent bailouts and stimuli alone--is an oppressive anchor around the neck of every American.  Currently, every family of 3 is obliged to pay over $118,000 in the next 30 years.  That's a house payment with a variable-rate.  In other words, the government has done exactly what helped cause the mess for individuals by borrowing beyond its means at a teaser rate of 0.8 percent.   That Teaser Rate Will Skyrocket

In order to keep rates low, the Federal Reserve began buying up Treasuries bonds last week.  Sort of like your spouse co-signing a loan for you.  The idea was that the Fed's purchases would take some of the notes off the street, driving up the price (scarcity) which would reduce the interest rates. 

But it didn't work.  According to the Wall Street Journal on March 31:

The 30-year Treasury yield immediately moved higher Monday after the Fed bought $2.49 billion in long-dated government bonds, jumping as high as 3.656% from an overnight low 3.519%. The yield was pushed below 3.6% in the afternoon session as worries about U.S. auto makers and banks spurred a haven demand in Treasurys.

This will be an oft-repeated story until the Fed's spent its Treasuries allowance of $300 billion.  As the economy perks up (which it will for the next 2 weeks to 2 months), bond prices will fall, pushing up the yield.  Those yields will drive up the deficit and the national debt.  That's the adjustable-rate mortgage effect.  

US Debt Will Skyrocket

One reason that the deficits were so high under Carter and Reagan but low (actually some surplus) after the GOP took the House and Senate in 1995 was interest rates for government borrowing.  Even though Reagan's rates were cool compare the fever (18+) rates under Carter, they were still much higher at 8 percent under Reagan than they were in the 1990s. 

Today, rates are much, much lower than they were in 1998.  They are lower than they were late in George W. Bush's second term when, the Democrats tell us, deficit spending was "out of control."  Even with these all-time low interest rates, Barack Obama and the Democrat Congress have managed to explode the deficit and the national debt.

When rates move up, deficits and debt will move even higher.

Consumers Will Pay

In a sense, the worst thing that can happen to consumers is an economic rebound.  With trillions of dollars of cash poised to hit the streets and trillions of dollars of debt to pay, every up-tick in the economy--GDP, stocks, jobs, anything--will increase prices and rates disproportionately.  

Think of it this way (but ignore my numbers which are for demonstration only).  Suppose you own a stock whose volitility rating is 1.0.  That means if the S&P goes up 2 percent, the stock goes up 2 percent.  When the budget is close to balanced, that's how debt, rates, and prices respond to a growing economy.  If the GDP grows at the 3 percent, inflation will be around 2 percent.  

But our volitility rating is more like 1.5.  So a 2 percent increase in the broad market will yield a 3 percent increase in your stock.  In terms of inflation, a 3 percent increase in GDP will yield a 4.5 percent price increase.  (The GDP:inflation ratio might be much higher than 1.5 considering the amount of borrowing that's occured in a very short time.)  So your salary might go up 3 percent, but your cost-of-living will go up 4.5 percent, leaving you worse off than before.  

Unemployment sucks, and I want that rate to fall.  But be realistic.  Someone who lost a $60,000 job and finds a new $60,000 job will not be back where he started.  Even if he managed to survive on savings during the unemployed period, $60,000 will no longer buy what it did before.  That's the problem with inflation:  it erodes the purchasing power of the dollar.

Stop the Borrowing! Stop It Now!

The road to meaningful recovery requires the same steps as life-saving:

1.  Stop the Bleeding:  stop borrowing

2.  Start the Breathing:  cut taxes to drive investment and cash-based spending

3.  Treat for Shock:  let communities help those who need assistance until the economy lifts their boats

Currently, the administration is doing none of these.  It's force-feeding anti-coagulants which will increase the bleeding; it's raising taxes which will deprive the patient of oxygen; and it's forcing its heavy hand on those in need. Bassackwards.