In a sobering holiday interview with C-SPAN, President Obama boldly told Americans: “We are out of money.”
C-SPAN host Steve Scully broke from a meek Washington press corps with probing questions for the new president.
SCULLY: You know the numbers, $1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?
OBAMA: Well, we are out of money now.
The good news is that the President is finally realizing what millions of others had already noticed. As Naked Capitalism explains,
Obama openly says what anyone with common sense has known for quite some time: the US is broke, and will not be able to honor in full its financial and fiduciary obligations.
The question remains how the US restructures that debt and how big a haircut the debt holders will take as a part of it.
20%? 30%? More like upwards of 50% at least in real terms.
And who are these debt holders?
Anyone who has Treasury debt obligations and financial assets, from the Long Bond to the US Dollar, and financial assets guaranteed by the Federal Reserve and the Treasury.
Technically the debt will be serviced and the interest paid according to the terms of the agreements, with devalued US dollars.
The process will continue until the debt is restructured and the dollar is replaced with a new dollar. This may take some years.
Oh, don’t worry too much. There will be spin and qualifications piled upon this admission, most likely before the markets open in Asia on Monday. But this trial balloon of admission is how you start breaking the bad news to people unwilling and ill prepared to receive it.
But regardless of what is said, we are now in the endgame for a credit bubble of historic proportion.
The really bad news is that the President thinks we’re out of money due to
our failure to make some good decisions on health care over the last several decades.
What the hell healthcare? What about the bailout? The spendulus? The budget? The $12.8 trillion that the U.S. government and the Federal Reserve have spent, lent or guaranteed in the past 10 months?
Take a look at that $12.8 trillion: It’s equal to
- 14 times the $899.8 billion of currency in circulation
- $42,105 for every man, woman and child in the U.S.
- an amount that approaches the value of everything produced in the country last year.
- It is debt equal to 90% of GDP
How about some visuals, here?
Obama quadruples the national deficit in one year and now he realizes we’re out of money?
No. Deep down he doesn’t realize we’re out of money. Here’s the video:
OBAMA: Well, we are out of money now. We are operating in deep deficits, not caused by any decisions we’ve made on health care so far. This is a consequence of the crisis that we’ve seen and in fact our failure to make some good decisions on health care over the last several decades.
So we’ve got a short-term problem, which is we had to spend a lot of money to salvage our financial system, we had to deal with the auto companies, a huge recession which drains tax revenue at the same time it’s putting more pressure on governments to provide unemployment insurance or make sure that food stamps are available for people who have been laid off.
So we have a short-term problem and we also have a long-term problem. The short-term problem is dwarfed by the long-term problem. And the long-term problem is Medicaid and Medicare. If we don’t reduce long-term health care inflation substantially, we can’t get control of the deficit.
I fully agree with Michael Laprarie
There you have it. We have to save money on health care or else we’ll be financially ruined by the cost of Medicare and Medicaid. And only the government — presumably by forcing helping doctors to make “cost efficient” health care choices — can turn our rising health care costs around and eventually make health care less expensive (presumably while also making it equally available to everyone and miraculously innovative, via stem cells, etc).
The way Obama and the Democrats see things, none of the trillions and trillions of dollars they have committed to bailouts, buyouts, and pork during the last four months have contributed one bit to our current credit and debt crisis.
Prepare to have “free healthcare” shoved down our throats in the name of “saving Medicare and Medicaid.” Expect medical care rationing, and a quadrupling of current federal spending on it at the same time.
Yes, we’re out of money: But we’re not out of money because Medicaid and Medicare (their proposed budget is $737 billion, a mere 5% of the $13 trillion); we’re out of money because of exhorbitant, out-of-control government spending.
That the President doesn’t recognize that fact is the worst news of all.
We’re not in this fix because of any healthcare decisions he’s made — “so far,” mind you. But what is remarkable is the lack of personal responsibility for our current sea of red ink. No mention of the trillion dollar stimulus or the $3.5 trillion budget. And in the same breath in which he denies running up the deficit he mentions the car bailouts which he “had” to deal with. Actually, it wasn’t necessary; it was a policy choice which now has the ailing car companies permanently affixed to the public dole.