The Great Deception

There is little sense in recounting the attempts made by foreign and domestic governments and financial institutions over the past week to forestall a deep and protracted global recession. It's not what's being discussed that concerns me. It's what isn't.

Over the last 2½ years, I've submitted a number of "Comments" to article in the Washington Post and a few other papers, all pretty much on the same theme; The US is in dire financial straights. What little attention these submissions got can be summarized by: "It can't happen here. The US has regulations in place that will prevent any serious damage to the overall economy. The American Economy is basically sound and growing. You obviously don't understand the situation."

It isn't that I thought I knew more than the publishers and writers, or as much as the media pundits, or anything approximating the keen savvy of government advisors and the men and women we glibly call the "Financial Wizards of Wall Street". But what I had done was read the entire GOA Report for fiscal 2005, as presented to President Bush in October, 2006.

http://www.gao.gov/financial/fy2005/05gao2.pdf

In it, the Controller General of the United States, David M. Walker, laid out a stunning picture of the straights into which the US had plunged. He stated clearly that the accounting system used by the Federal Government did not conform to any standard accounting model (specifically FASAB: Federal Accounting Standards Advisory Board) and that the figures in the public domain did not reflect the fiscal reality, the "Consolidated Financial Position", of the US.

At time of writing, Walker reported a fiscal discrepancy based on the difference between $8.5 trillion that was published as the "Official" National Debt, and the actual debt that was about $43 trillion. I did the math. The country was insolvent and probably had crossed that threshold several years before.

Same time, Washington, Wall Street and all the luminaries and pundits ACME could fetch were all saying that the economy was flourishing, jobs were being created, profits were soaring ... Americans were buying houses faster than they could get built...

I am convinced they all knew better, and they deliberately lied in hopes of grabbing as much as possible for themselves before the public caught on and the bottom fell out.

The reason I'm taking the trouble to insert this blog is that this "Great Deception" is still going on, despite the upheaval and confusion that seems to defy rational understanding. Bear in mind ACME is, by definition, Corporate. It has a vested interest in promoting the impression the economy is thriving. What might hurt the economy, would also hurt them; their profits that is. If anyone doubts the collusion between Washington and ACME's Media Magnates, they should check with Dan Rather and Phil Donahue.

I see some terrible and desperate times in the near future; all because the Main Stream Media failed to fulfill its public trust when it knew full well its demurring was tantamount to defrauding the public of its right to be informed. The Media, and the folks we call Main Street, are in a state of denial that resembles the intractable affliction of the inveterate gambling addict. There really is no secret to the current distress.

“Only the small secrets need to be protected. The big ones are
kept secret by public incredulity.”
Marshall McLuhan

I posted the following this morning. I'm sticking in here in the unlikely chance someone might pester their favorite newsies into
taking up the matter seriously.

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/09/AR2008100902693_Comments.html

Your Comments On...
Main Street's Rescue
By Sebastian Mallaby

Market panic and apparent government panic have fed on each other.
-

Comments

roderickwstillwell wrote:

Orders from the bridge "Don't panic; Keep bailing", don't do any good when the ship has already sunk.

The American Media (aka. ACME: American Corporate Media Establishment) has consistently reported the US National Debt as per the "Official Debt Clock" (which figure is calculated on a deprecated accounting model, "The Cash Basis") that isn't recognized by the SEC for any public company. The Cash Basis in only used by small businesses and those that do not use or extend credit.

According to this method, the National Debt is $10 trillion; and rising fast.

This brings us to what shall, in all likelihood, go down as the most underreported story of the 21st Century: "The Great Deception". Perpetuating this deception is at the root of why Washington, ACME and Wall Street seem to be stumbling all over the place and conjuring arcane economic theory like so many "Medicine Men", delirious on some native hallucinogen, dancing around, shaking rattles, and making a show of trying to raise the dead.

The sum of the US household, corporate and public (all levels of gov.) debt is projected to be slightly over $57 trillion at the end of 2008; not $10 trillion. ...that's more than half the NDs of all the countries in the entire world; approx $103 trillion.

The *difference* between the Official ND and the Actual Debt is about $47 trillion, which equates to about $340,000 of additional, undisclosed debt per American Taxpayer (including those who don't pay taxes). At present rates (3.77%) this equates to $12,800 interest per year, per taxpayer.

By any accounting standard (GAAP, FASB, FASAB), these figures fit the definition of "Insolvent". Adding even more debt by selling TB's abroad to "inject liquidity into the market" is like giving a drowning man a glass of water.

These purported "bailings" are no more than 'busywork'; like bailing water from one compartment of a sinking ship into another. The only guys with their heads still above water are the ones who have commandeered all the lifeboats, bellowing advice to the drowning passengers and crew to "Keep Bailing".

Until ACME gets some 'grit & gristle' and begins to engage the people in the Real Issue, "The USA is Bankrupt", no one can begin to make realistic plans for the future. Tweaking the system, moving failed equity accounts around on the premise that they will increase in value, when the country's GDP of $13.7 trillion can't hope to catch up to the spiraling debt it already has, is idiotic.

Shut Up and Keep Bailing!

Friday, October 3, 2008

This is a week that shall go down in history. It might well mark the beginning of the end of Western Civilization. The months and years that follow portend calamities and human suffering not seen since our emergence from The Dark Ages.

To begin:

The truth of the matter is: The USA is bankrupt and has been since 2003-2004.

The American Corporate Media Establishment (ACME) is largely to blame, ... shamefully co-opted by The Bush Administration and the cartel of rapacious Wall Street financiers. This purported $7-8 billion “Bail Out” is another “Fake Out”, even more egregious than the one that “gas-lighted” Americans into believing invading Iraq was in the best interests of America; a mistake that has cost more than 4000 American lives. This Fake Out fits the classical definition of “The Big Lie”.

Simply stated, the “Big Lie” is that the National Debt of the USA is $10 trillion. This figure has been inculcated into the American consciousness by incessant repetition and made to appear “Official” in just about every source conveniently available to public inquiry. It is cited as:

U.S. NATIONAL DEBT CLOCK

http://www.brillig.com/debt_clock/

The Outstanding Public Debt as of 28 Sep 2008 at 12:41

The estimated population of the United States is 304,806,978

$9,854,152,437,208.21
so each citizen's share of this debt is $32,329.14.

The National Debt has continued to increase an average of
$2.32 billion per day since September 28, 2007!


The $10 trillion figure is bruited with rare exception in everyday economic and financial news sources just as it appears below.

http://www.rushprnews.com/2008/10/02/the-united-states-public-debt-tops-ten-trillion-dollars-for-the-first-time/

“YORK(RUSHPRNEWS)10/02/2008-According to Treasury Direct (a United States Government website, link below), the total public debt outstanding for the United States of America topped ten trillion dollars for the first time as of September 30th, 2008. The total public debt outstanding? $10,024,724,896,912.49 and counting.
The united states is under a big pile of debt - illustration According to Treasury Direct, the total public debt outstanding for the United States of America topped ten trillion dollars for the first time as of September 30th, 2008. The total public debt outstanding? $10,024,724,896,912.49 and counting.”

That is a lie. The household, corporate and public debt, the real Federal Debt of the USA is projected to be more than $53 trillion by year end, 2008; more than 5 times what Washington and ACME are telling the American People. The Debt load according to this Official, but bogus, rendering is about $32,300 per citizen living 'legally' in the US.

The actual debt load, per taxpayer, comes in at 10 times that, in excess of $385,000 based on GAAP, FASB and/or FASAB; take your pick. A 2 income family comes up owning $770,000; three quarters of a million dollars.

This really is not news in the strict sense. In October, 2006, President Bush was made aware of the unsustainable debt load already incurred during his administration.

http://www.gao.gov/financial/fy2005/05gao2.pdf

"Second, the U.S. government’s total reported liabilities, net social insurance commitments [9] and other fiscal exposures continue to grow and now total more than $46 trillion, representing close to four times current GDP and up from about $20 trillion or two times GDP in 2000. Finally, while the nation’s long-term fiscal imbalance continues to grow, the retirement of the “baby boom” generation is closer to becoming a reality with the first wave of boomers eligible for early retirement under Social Security in 2008. Given these and other factors, it seems clear that the nation’s current fiscal path is unsustainable and that tough choices by the President and the
Congress are necessary in order to address the nation’s large and growing long-term fiscal imbalance."

Signed: David M. Walker; Controller General of the United States

That this ineluctable truth has been virtually ignored/suppressed/discounted in the Main Stream Media should give insight into what is behind this Administration's, behind Wall Street's and behind ACME's using the prospect of impending catastrophe to coerce Congress into adding even more debt. It is pure subterfuge; an attempt to buy a little more time with a lot of taxpayers' money for the sole and selfish purpose of escaping exposure and accountability for the disaster they have perpetrated on the US and indeed, the World.

To see things in a broader perspective consider:
The sum of the US household, corporate and public (all levels of gov.) debt is projected to be slightly over $53 trillion at the end of this year; not $10 trillion.

The combined GNPs of all the nations in the world for this year is projected to be around $55 trillion!!! ... and the total Consolidated ND for the planet is going to come in at around $100 trillion.

The projected US GDP for 2008 is $13.8 trillion (current dollars). The average interest rate that applies to the Debt is 3.77% or $2 trillion, ...$14,493 for each of the 138 million American taxpayers. This means that 14.5 cents of every dollar that turns over in the US this year is already committed to interest expense; an expense that must be be deferred (accrued) because the US can't pay it and this Administration knows it; ...not without borrowing abroad or, as it has been doing, capitalizing upon the peoples' retirement funds, home equities, and the future earnings of generations to come, ...converting these assets into the wherewithal to meet the carrying cost on more than $50 trillion.

The alternative is for the Administration to admit that is has driven the country into bankruptcy.

Authorizing an additional $7-$8 billion makes no more sense than bailing water from the Engine Compartment (Debt) to Steerage (Taxpayers' Equity) in a ship whose hull is full of holes.

By refusing to authorize this “Fake Out”, Congress has the opportunity today to distinguish itself by finally confronting the Bush Administration by exposing their fraudulent exploitation of the Public Trust. If Congress authorizes the Bail Out, history will undoubtedly indict them as co-conspirators. and so it should.

It's now 6:30 a.m. my time. I'm not optimistic that Congress will
either see or do its duty today.