George Rebane

[This is the transcript of my regular bi-weekly KVMR-FM 89.5 commentary aired on 5 August 2011.  It was recorded on the morning of 4 August 2011 before the markets took their 6% historic swoon.  As has been reported for some considerable time on RR, this market reaction is expected and reflects how the world assesses governments firmly on the socialist path to economic destruction, which always precedes worse things.  As we head into Depression2, the 21apr34 Chicago Tribune cartoon is as prescient today as it was when first published during Depression1.]

If we believe the media pundits, the country has let out a collective sigh of relief that America has dodged the fiscal bullet.  We don’t have to worry about defaulting on our debts.  Entitlements and other transfer payments will be paid, and we can now merrily skip down the middle of the road into a less stressful future, having demonstrated that bi-partisanship is again alive and well.

Nothing could be further from the truth, which in the coming year will become a rarer commodity than it is today.  The compromise debt limit bill that the President signed into law this week is an extremely clever victory for the progressive wing of the Democrats, their cries of ‘Oh no, don’t throw me into the briar patch!’ notwithstanding.

After all the hullabaloo of the last couple of months, the country’s liberals got exactly what they wanted.  But to make the bamboozle work, they can’t let the cat out of the bag until after the election.  Well, maybe just before the election.

So how do we know that the country is still firmly headed for the ‘fundamental transformation’ that President Obama has promised us.  For starters, we get to keep borrowing at essentially the same breakneck rate; our national debt will increase by more than 50% to over $23T in ten years.  The promised $917B spending cuts are a fantasy scheduled to begin in the foggy future under a Congress that is not beholden to anything done today.  So the country’s profligate behavior has not changed one iota.

In the process, the progressives have wrapped themselves in the mantle of ‘fighting for Main Street’ and vowed that they will continue the never-ending battle to raise taxes on the rich, up to at least the ‘fair share’ level, and once more get the burden off the backs of the poor who pay no taxes at all.  Oh yes, and they have convinced the tearful upturned faces that it’s not really business, but government spending, that creates jobs.  And the next stimulation from Washington will this time actually make that happen.

At the same time, the tea party movement was successfully branded by the administration and congressional Democrats as composed of “radical terrorists” and “hostage takers” for daring to hold some members of Congress to their 2010 campaign promises.  And President Obama has sailed above the fray as the calming and guiding light bringing everyone together and in for a safe landing.

But just for giggles let’s peek behind the curtain.  Since the compromise did nothing but immediately let us start borrowing again, they also jerry rigged a bipartisan congressional committee of twelve to come up with the remainder of the $2.4T of advertized spending cuts and tax increases by Thanksgiving, all of it to be voted into law before Christmas.  And if those Twelve can’t agree, then automatic cuts will kick in that promise to castrate the military, and put some more pixy dust on entitlement cuts scheduled for the never-never years.

Meanwhile, the credible response to the theatrics comes from the world’s markets.  There the big news is concern over the future of the two biggest faith-based global currencies – the American dollar and the euro.  While we have been worried about other things, the largest central banks in the world have been buying enormous amounts of gold for their vaults while still trying to convince the rest of us that gold is just an “ancient relic”.  This year alone, governments have almost tripled their net gold purchases, driving the price to record highs – now almost $1,700/oz.  When pressed, the bankers respond that they “see bullion as protection against risks posed by declining paper currencies and global economic upheaval.”

So the markets confirm that nothing has been settled in America, we are still holding steady on our old course of borrow and spend, and the crisis just passed will soon return and then return again.  But during this little intermission, we can credit the tea parties with one thing – no debt limit will ever be raised without a debate on taxes and spending cuts. 

In The Christmas Carol Dickens included the third scenario he called ‘The Christmas Yet to Come’ which showed what the future will be if we continue in our old ways.  And, dear listener, this Christmas, the one yet to come, will be a doozy.  Now please let go of the curtain and step back.

My name is Rebane, and I also expand on these and other themes in my Union columns, and on georgerebane.com where this transcript appears.  These opinions are not necessarily shared by KVMR.  Thank you for listening.