Open Letter...

[White Magic]

...to Obama from Mike Shedlock. Part of it anyway.

Mish's Global Economic Trend Analysis: Open Letter To Obama

Dear Senator Obama. The US economy is in the worst economic crisis in decades, arguably since the great depression. Housing is collapsing, state budgets are in shambles, unemployment is soaring, and the US dollar is sinking.

Things are going to get even worse when the commercial real estate bust picks up steam. We have seen six bank failures already this year. There are 90 more banks on the problem list. Many of them will fail.

Meanwhile, Treasury Secretary Paulson and President Bush are both stressing "The U.S. economy is fundamentally strong, diverse and resilient." Indeed, Paulson speaks of the "strong dollar policy" at every opportunity.

The vast majority of citizens in the United States know that the above statements by President Bush and Paulson are lies.

What we really need is for politicians to face the public and state the truth.

The Truth Is Easy To See

- The US can no longer afford to be the world's policeman.
- Congress has been spending beyond its means.
- Deficit spending is cheapening the US dollar.
- Cutbacks and sacrifices have to be made.

Interest On The National Debt Is $377 Billion

The national debt as of July 17, 2008 is $9.5 Trillion dollars. Interest for the first nine months of Fiscal Year 2008 as noted in Interest Expense on the Debt Outstanding is $377 billion!

Paulson talks about the "strong fundamentals" of the US dollar. Our entire "Strong Dollar Policy" consists of nothing more than Paulson yapping about the strong dollar. It is an international disgrace. It is sad the Treasury Secretary does not understand that the two biggest factors affecting the US dollar are interest rates differentials and deficit financing.

Our Feds Fund Rate is 2.00% in comparison to 5.00% in the UK and 4.25% in the EU. In regards to the budget deficit, China and Japan have been financing our out of control spending.

Some fundamentals! If Paulson believes what he says, he is not qualified to be Treasury Secretary.

US Banking System Is Unsound

Senator Obama our banking system is unsound. I presented the case in You Know The Banking System Is Unsound When....
I ask you to take the time to read that post. In it, I presented 25 reasons our system is unsound. Here is reason number 25.

25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.

What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
The problem is not bank regulation or lack thereof. The problem is fractional reserve lending accompanied by runaway spending in Congress.

Congress Must Be Held Accountable

Congress must be held accountable for deficit spending. Clearly the Republican plan of reducing taxes, foolishly wasting hundreds of billions in Iraq, and praying for an economic miracle did not work.

Phil Gramm, senator McCain's economic advisor, said we were in a "mental recession". You rightfully blasted him for it, stating "He didn't say this but I guess what he meant was that it's a figment of your imagination, these high gas prices."

Economically, you are calling for another $50 billion dollar spending stimulus. If that fails (which it will) do you want another one, and another one after that? Where does it stop? I am all in favor of returning $50 billion to the taxpayers. I just want to know how we are going to pay for it.

Senator Obama how do you propose we pay for that?

[bearcat428]

Congress must be held accountable for deficit spending. Clearly the Republican plan of reducing taxes, foolishly wasting hundreds of billions in Iraq, and praying for an economic miracle did not work.

yes it did to an extent. the tax cuts resulted in a huge increase in revenue. it more than payed for the war, which is nearing success. the problem is they out spent the increase in revenue, which is inexcusable. if spending had been cut, maybe because we're in a war? then we would have had a surplus AND fought the war at the same time. and oh yeah, we wouldn't have fucked up the dollar.

the banks were in far worse shape in the late 90's.

and if you have to write a letter to obama to find out where he stands on issues, then you don't have a clue. he's for raising capital gains because it's "not fair". it will result in a decrease in tax revenue, which obama has admitted, but it's unfair he says. that makes sense. the epitome of pandering. especially when 75% who benefited from the capital gains cut make under obama's magic number of 250k. so when he says he will only raise taxes on those who make over 250k he's lieing and he knows it. pandering..... makes me sick.

[PokerDude]

Hey don't go picking on MF's buddy...

I still can't understand how anyone that is in business for himself would even consider voting for that SOB...he wants to raise taxes on small business 25%...in addition to all the other crap he is talking...I just don't get the logic in supporting that.

[master_of_muppets]

to PD's point, i am backing off of my pledge to vote for Obama in order to send a message to the RINOs currently in charge of the GOP. come november i will likely vote with my business in mind: who will cause me to keep more of my money.

though according to all the headlines yesterday, McCain is no longer so sure he'll not raise taxes. my tax preparer has been telling me this for the last year - that she keeps hearing from IRS that taxes are going up with the new president no matter who it is.

[Franny]

I just hope Obama (or the very old man) continues to keep America focused on energy after he is sworn in. With Crude Oil (SWEET) dropping back down to $122/ barrel, I get the sense that the nationwide panic is fading, but that doesn't mean we should ignore the issue. $3.65 gas is not a bargain.