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.
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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.