Bernie Madoff Meets Barack Obama

What are Barack Hussein and Hugo Chavez smiling about? One can only imagine . . . On my other blog for Tuesday I have a column entitled: "Palin Class Hatred Victim." I hope you'll visit.

What do Bernie Madoff and Barack Hussein Obama have in common? Ah, let me count the ways. But first they need to meet John Goodman, who has their number . . .

John C. Goodman, President, National Center for Policy Analysis, "A Prescription for American Health Care." (available at www.imprimis.hillsdale.edu). Goodman says:

"I'll start with the bad news: When we get through the economic time that we're in right now, we're going to be confronted with an even bigger problem. The first of the Baby Boomers started signing up for early retirement under Social Security last year. Two years from now they will start signing up for Medicare. All told, 78 million people [more than one-quarter of the nation's population] are going to stop working, stop paying taxes, stop paying into retirement programs, and start drawing benefits. The problem is, neither Social Security nor Medicare is ready for them. The federal government has made explicit and implicit promises to millions of people, but has no money put aside in order to keep those promises. Some of you may wonder where Bernie Madoff got the idea for his Ponzi scheme. Clearly, he was studying federal entitlement policy."

Steve adds: Some of my friends, especially those in the PUMA movement (mostly Hillary backers who tend to be supportive of Sarah Palin -- more or less), tell me they have some sympathy with Republicans' call for limited government, but they "want" some form of universal health care. Mr. Goodman and I tell them that's all well and good, BUT THE COUNTRY HAS NO ADDITIONAL MONEY FOR UNIVERSAL HEALTH CARE. My PUMA buddies hope we're mistaken, but mathematics is mathematics.

We hear about the $20 trillion-plus national debt we'll have within the next decade, but that's basically peanuts. As economic historian Niall Ferguson (Oxford-Harvard-Stanford) pointed out (in Colossus: The Rise and Fall of the American Empire), the 78 million baby boomers are going to confront the nation with $70 trillion-plus in entitlement costs (for Social Security and Medicare).

Where are we to get that $70 trillion (in addition to the $20 trillion in debt Obama will leave for the next generation)? Are we supposed to borrow it from Communist China? Sorry, they don't have $90 trillion to lend us. Anyway, they aren't stupid enough to give us money we could never repay.

Universal health care? We can't afford it -- and neither can those nations that already have some form of such care. We are heading for a fiscal calamity that will make the current situation look like "the good ole days."

In the future, how will we pay for things like education, infrastructure improvements, and national defense? The answer is that we won't. All the federal resources we have -- plus many we don't have -- will go to paying for Social Security and Medicare. Taxes -- not just "taxes on the rich" -- will have to rise stratospherically to pay for the entitlements. The American way-of-life will become no more than a fond memory.

The "hope" and "change" Obama promised the American people looks suspiciously like the pie-in-the-sky returns Madoff promised his "investors." When the bill Obama is chalking up comes due, the American economy is going to start looking like New Orleans after Katrina.

At that point, we'll all be hoping that the dramatic change we see is merely an illusion. But it won't be.

U.S-China: Deal with Devil

Yes, many factors led to the global financial crisis, but a major element was the U.S. and China striking "a deal with the devil." In the 1990s and the current century, the two countries cane up with this agreement: The U.S. would buy massive amounts of goods from China . . . in exchange for China buying massive amounts of U.S. debt. In a sense, China, a large net exporter, would provide much of the money for the U.S., a large net importer, to buy the Asian products. Great deal, right? Nope.

Unlike Bernie Madoff's activities, the U.S.-China deal was not a pure "Ponzi Scheme," one where old investors are paid off by new investors' cash. However, there is a major similarity: in both cases, the assumption was that market values -- of stocks, bonds, and other properties -- would continue rising. In a rosy economy, Madoff could "cover" his obligations -- and so could the U.S. and China.

But what if the global economy went into a downturn? In the case of the U.S., we would no longer be able to purchase goods at anything like former levels. (In the case of Japan, another important buyer of U.S. debt, their exports have gone down by half.) In the case of China, it would be increasingly less likely to want to buy large quantities of U.S. debt.

"Those were the days, my friend, we thought they'd never end." Well, they did end. The assumption that good times would remain forever was exposed as a fantasy.

As you'll see on my other blog, the Obama Administration's answer to financial problems caused by over-borrowing, over-spending, and over-lending is to encourage . . . (much) more borrowing, (a great deal) more spending, and (massively) more lending. In other words, if you swallow some arsenic, the solution is to swallow a jug-full of the same poison.

On the other blog, I note that Gov. Palin understands exactly the folly of Obama's economic policies. Obama is behaving a great deal like Bernie Madoff. If he can hold off the calamity long enough to get re-elected, then he has succeeded.

But his success will the nation's -- and the world's -- failure. He's taking us out of recession and leading us into a full-fledged Depression.