This blog post cites Audacity:
Since the start of the finical crisis, banks and insurance companies have been begging for government bailouts. Does the U.S government have the money to save them? No. Now the need is for money from the working-class taxpayers to stay alive.
Along side all this is the fact that middle class America may not be able to survive this kind of finical pressure. What the “American dream” consists of is credit cards and monthly payments. People live large but can’t even afford it. With new high taxation coming from the Obama administration to pay for all the debt, people still spend as if there was no increase taxation. The Economist magazine wrote in May 2009, “Having spent a fortune bailing out their banks, Western governments will have to pay a price in terms of higher taxes to meet the interest on that debt. In the case of countries (like Britain and America) that have trade as well as budget deficits, those higher taxes will be needed to meet the claims of foreign creditors. Given the political implications of such austerity, the temptation will be to default by stealth, by letting their currencies depreciate. Investors are increasingly alive to this danger”.
Wall street has come back according to Nomi Prins, former investment banker turned journalist, who worked at Goldman Sachs. Prins wrote a book called, Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street. Her book points out that the current crisis did not happen because ordinary citizens were able to borrow money or put money they could not pay back on their credit cards, for example, but because Wall Street converted loans into assets that allowed it to borrow much more than it could afford. Prins does not stop there. In an article called Obama Banking Too Much On Banks, she looks at the problems of Obama’s economic plan and says, “Obama’s reforms do not strike deeply enough”. The article shows that Wall Street has been able to come back but is that enough? No. Prins told Amy Goodman of democracynow.org in an interview that, “Obama is making the grave error of mistaking the health of Wall Street for the health of the American economy.”
Obama said a lot while campaigning for office. He talked about change and hope. But how does that change and hope play out for the people that voted and stood by him, mostly students and youth? On the subject of Obama’s promise to make college affordable, John F. Wasik said in his new book, The Audacity of Help: Obama’s Economic Plan and the Remaking of America, “While Obama proposed an American opportunity tax credit of $4,000 toward free college education, Congress actually adopted that name for the former Hope Scholarship, offering only as much as $2,500/year, just through 2010. Eligibility stipulations include an income limit. Congress also did nothing to simplify the cumbersome financial aid process, which Obama promised to eliminate.”
On a similar note, the United States faces a Zimbabwe-style economic collapse, says South Carolina Governor Mark Sanford. Sanford has compared Zimbabwe’s economic collapse to what is happening to America today. He has said Zimbabwe attempted to stimulate the economy by printing money, exactly what Obama is doing. Zimbabwe even created a $100 trillion bill. The governor has compared America to Zimbabwe’s 11 million percent inflation rate which might be a bit extreme, but in reality, the U.S is going down a hard road if Obama keeps printing and spending money that does not in reality exist. Sanford has said, “What you’re doing is buying into the notion that if we just print some more money that we don’t have and send it to different states, we’ll create jobs,” he then said. “If that’s the case, why isn’t Zimbabwe a rich place?”
Another issue on this topic of the financial crisis is China. China has the U.S in an economic headlock. As a world power, gaining almost all control, China has bought more than 1 trillion dollars of American debt. Barack Obama himself has predicted the possibility of trillion-dollar deficits as he said “for years to come,” which basically means Obama will be taking it in the rear from his counterpart Hu Jintao. Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers. China in the last five years has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American which primarily was to finance the wars in Iraq and Afghanistan. Economists have said that huge deficits have raised worries about the enthusiasm of foreigners like China to keep purchasing US Treasury debt. This fret alone has contributed to recent falls in the value of the US dollar.
The United Nations (U.N.) view of the dollar is that it should be replaced with a global currency. The U.N. has planned the largest service of the world’s monetary system since World War two In are port by the The United Nations Conference on Trade and Development (UNCTAD). China is on bored with replacing the dollar as the world’s reserve currency since they know they will not be effected especially since China now has America in an economic headlock because of it’s trillions of dollars in debt. Detlef Kotte, one of the report’s authors, said “Replacing the dollar with an artificial currency would solve some of the problems related to the potential of countries running large deficits and would help stability”. But on the other end of that the deficit nations such as the UK and US would have to take the main burden of adjustment . Of course economists have yet to come up with another alternative and even major institutions, including the G20, are at a loss for ideas. Unfortunately, no one else has come up with another substitute. So now we wait and watch history be made.
Sources:
Economist Magazine-A New Global System is Coming Into Existence
Nomi Prins, It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street, Publisher: Wiley (September 22, 2009 http://www.amazon.com/Takes-Pillage-Bailouts-Backroom-Washington/dp/0470529598
Motherjones.com, Nomi Prins, Obama Banking Too Much On Banks, Mon Sep. 14, 2009 http://motherjones.com/politics/2009/09/obama-banking-too-much-banks
Democracynow.org, September 15, 2009
http://www.democracynow.org/2009/9/15/nomi_prins_obama_banking_too_much
John F. Wasik, The Audacity of Help: Obama’s Economic Plan and the Remaking of America, Publisher: Bloomberg Press; Original edition (August 26, 2009)
http://www.amazon.com/Audacity-Help-Economic-Remaking-America/dp/1576603563
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