President George Bush has been claiming for a long time that tax cuts for the wealthy are what drives the economy.
In this video he states "The great thing about our system is that it's the consumer that drives our system. It's the individual Americans and their collection that end up driving the economy."
This would mean that tax cuts to the middle class and lower income families,
enabling them to purchase more goods such as cars and homes, are what
drives the economy and not tax cuts for the wealthy.
The video includes footage of different explanations such as the falling US dollar,
caused by the deficits and added debt, are what caused the current economic crisis.
The US dollar went down 25%-40% compared to other currencies making the
middle class "poorer". This reduced the middle classes purchasing power
of foreign goods such as oil and many started to default on their
mortgages. Real-estate values most likely went down because of this fact
as well. Domestic goods also became more expensive since more domestic
goods are now being exported to countries who's purchasing power of
American goods went up. A Senator in the video states that in the year 2000,
Bill Clinton's last year,
that year had a budget surplus and the dollar was strong. Ever since then there have been significant deficits
and the dollar started falling. According to the
USA page the added deficit is an average of
over $450 Billion
annually which started after the implementation of the tax cuts by
George Bush in June of 2001 which were mostly aimed at the wealthy.
Summary and Comments on the Video
July 15th.President George Bush has been claiming for a
long time that tax cuts to the wealthy are what drive the economy. He
now states that the consumer and individuals that purchase goods and
cars are what drive the economy. (mostly the middle class). Note: The
middle class purchasing homes also drive the economy.
March 16th. Treasury Sec Paulson describes the economic situation as a
rough patch and says that the financial institutions and banks are
strong and that they will be strong for many years to come in spite of
the mortgage crisis and the collapse of bear sterns.
With the drop in the US dollar the cost of imports such as oil became
much more expensive. With American exports being cheaper to other
foreign markets and being bought by these foreign markets the cost to
the US people went higher as well.
The Senate Hearings July 15th
The Note: paragraphs or sections are my opinion and not facts.
The subprime crisis has affected markets all over the world and has
stressed the banks.
In 2000 there was a budget surplus and ever since then the Federal deficit has
been increased significantly by the tax cuts and the Iraq war. The
weakening dollar has contributed to the rising cost of oil. The
weakening dollar is related to the dynamic (change) of the trade deficit
as per Bernanke.
Note: Bernanke, The Federal Chair, understands the dynamic of the
trade deficit with the weakening dollar. What is strange is that he could not
predict a future or coming problem of the current administration
economic policy of adding an average of $500 Billion to the Federal deficit each
year for a total of $3824 Billion. The current US debt is $9504 Billion.
Bernanke is asked if the banks are stable and capitally strong. He answers that
they are well capitalized and that they came in with strong capital. He
is asked by another Senator how many banks can potentially go down and he refers the
Senator to chairman bear's list (not answering the question or trying to
evade the question in my opinion). When asked again how many are on that
list he says 95 banks.
Note: Paulson, the Treasury Sec, has been saying that the banks are strong. When
Bernanke, the Fed chair,
is asked by the Senator if the banks are strong he tries to evade the question saying they came in with strong capital.
This is psychological manipulation, deception, and his response also seems to have been a memorized response.
Treasury Sec Paulson is asked if the money amount requested is
unlimited. His answer is yes.
The senator tells Paulson that he wants to make the government the back
stop. Where will the money come from? Paulson answers from the
government which is the tax payers.
Note: Paulson, the Treasury Sec, wants to make the US government, the tax payers, the back stop for the crisis and wants access to an
unlimited amount of money. Big banks are collapsing and there are 95 others on a watch list. So if some collapse or if there is a domino effect the
US government and tax payers are the ones who will pay. His attempt to
make the US government the back stop for the collapsing banks may have
also been an attempt to be able to exert more pressure, coercion, and
cooperation from the US government once this legislation is passed.
The SEC chair claims that spreading rumors used for gain are a crime.
My opinion
The current administration caused this problem by cutting taxes to the
wealthy for political gain claiming tax cuts to the wealthy results in
them investing in the US economy and this is false since the middle
class and the people, consumers, purchasing goods such as cars and homes
are the real economic engine. There are also no measures to insure that
the profit resulting in the tax cuts is reinvested in the US instead of
a foreign economy sure as China. From the numbers I have and simple
calculation I’ve concluded that the tax cuts cost approximately $3000 Billion while
the Iraq war cost approximately $700 Billion. The resulting added deficits and debt
resulted in speculation on currency markets that caused the US dollar
to fall 25%-40%. Imports such as oil became more expensive and so did domestic
goods due to cheaper exports that are bought by world currencies that
are now higher to the falling US dollar. The result is
that the middle class's cost of living went up and consumers started defaulting on their
mortgages. The Fed Reserve then pushed down interest rates lower in an
attempt to prevent this and provide relief but caused more stress to the
banks which have been accumulating serious losses. The US actions have affected banks worldwide.
Bernanke maintains that the financial institutions and banks are strong
and then answers the Senator that 95 banks have the potential of going
down. The requested money amount by Paulson is unlimited and unspecified and he wants to
make the US government, the tax payers, the back stop to the crisis and collapsing banks.
The SEC states that spreading false rumors for gain is a crime. In my
opinion Bernanke and Paulson have been deceiving or trying to deceive
the US people and senators and continue to maintain that the financial
institutions and banks are strong when they are in fact collapsing and
95 banks are on a watch list.
I also believe my opinion that the current US administration committed a
fraud, see the
fraud page, and the information on the fraud page was sent to the FBI and
received by the FBI on April 8, 2008.
The US Economic Dooms Day Scenario
Inflation is high and the normal procedure to reduce it is to raise
interest rates. Banks worldwide will soon do the same to bring in
capital as well. Given the nature of interest rate fluctuations it is a
fact that interest rates will rise. When interest rates rise this will
cause the foreclosure of more mortgages and the collapse of more banks.
The Fed chair and Treasury Sec, Bernanke and Paulson, who wants to make the US
government and tax payers the back stop will throw in everything
including the white house building resulting in a 3rd world status of
the US. Other world banks who try to rescue the US banks will be dragged
down as well resulting in the worst economic disaster in history.
For the past several months billions of dollars have been leaving the
US.
The current administration does not seem to have the will to correct the
situation and it seems to be only a Political game to them. Treasury Sec
Paulson claims that it's a question of faith but you should note that
people worldwide and in the US have lost faith in this current US
administration and it's faith continues to go in the downward direction.
How Governments Affect Speculation and the Price of Oil
The current US administration refers to Iran as being part of an axis of evil, talk of regime change (Chaney), and have a policy of trying to
destabilize the Iranian government.
The US has been threatening Iran ever since the Iranian people threw out the US backed Iranian government and continues to try to isolate them. The result is that Iran wishes to arm it's self.
When the US lets Israel conduct military exercises over Iraq for example and Iran then reacts by conducting it's own military exercises by firing
missiles, the result is that the price of
oil goes up due to speculation and the Republicans, Senator McCain, gains politically because of talk of war. Both the
Republicans and the Iranian radicals gain politically from talk of war.
With the US continuing to threaten Iran and Iran continuing on it's present path for a nuclear bomb, a war will result for a certainty when European countries and the US have enough justification
to start this war and eliminate this threat to themselves.
By legislating the need to use Ethanol the current US administration caused the price of food to go up even higher. It also has the effect of hiding why the price of food went up in the US in the first place which is the
fall of the US dollar (down 25%-40%). Many experts also claim that Ethanol is not a good alternative because of it's cost and other factors.
It is possible that the legislation of the need to use Ethanol was
another attempt to cover-up or deceive the American people as to
why the cost of goods in the US went up, which is the fall of the US
dollar (down 25%-40%) due to the deficits and speculation, but the
propaganda will be that it is all related to the price of oil.
The Oil Business
The oil business is big business and about profit and not about what's good for the economy. There are large amounts of oil on US land, the licenses are taken but there is no drilling. Off shore drilling
is more costly and the effects of off shore drilling will not be seen for several years,
possibly over 10 years. The Economic Crisis is now. Many people also claim that the oil business is a monopoly.
Effects on Society
Another predicted effect of the middle class and general population becoming poorer is that crime will go up.
My Summary and Opinion
This US administration has committed the crime of fraud (see the USA
Fraud page). The false pretense is that cutting taxes to the wealthy
drives the economy because they reinvest into the Economy. There are no
measures to prevent reinvestments for these tax cuts
and profits into foreign economies and countries instead of the US
economy. An approximate 3 Trillion
dollars have been give to the wealthy in this fashion and the resulting debt has been redistributed to the general public (middle class).
This was done for political gain, power, and greed.
The resulting added debt caused the US dollar to fall 25-40% resulting in making the middle class poorer.
Domestic goods such as food became more expensive because of the now increased purchasing power of
foreign currencies and foreign goods such as oil became more expensive.
The middle class who are now poorer started defaulting on their mortgages.
Many mortgage foreclosures also causes real-estate values to go down.
The banks started to accumulate losses because of the mortgage foreclosures. The Fed pushed down interest rates
lower in order to try to prevent this and this also
effected the banks who were already stressed because of the subprime. The result is that some banks started to collapse.
The propaganda or deception is that oil prices and bank practices caused this crisis instead of the real cause which is the fall of the US dollar 25-40%
because of the greatly increased debt by this current US administration from the tax cuts to the wealthy. It seems to be an attempt to cover up the crime
that has been committed. Another attempt or probable ploy to cover up this crime is the legislation of the
required use of
Ethanol. Food prices went up because of the falling US dollar
25-40% and the legislation caused food costs to go up even more. Therefore people will again assume that the cause is oil prices and not the real cause which
is the increased debt and fall of the US dollar.
95 banks are on a watch list of collapse and they are not strong. Paulson and
Bernanke are trying to
deceive the US people and Senators. I believe that this also violates
the SEC rule of spreading rumors for gain (political and special
interest). Paulson wants access to an unlimited amount of money from the US government.
If more banks collapse the resulting debt will be redistributed to the general public and middle class. As stated in the dooms day scenario when interest
rates rise this will probably cause more foreclosures and possibly
result in more banks collapsing and a domino effect could result. This
could result in a 3rd world status for the US and the worst economic
disaster in history.
The US and current administration have been threatening Iran, the second largest producer of oil, for a long time and
have a current policy of trying to destabilize it's government. The
result is that they wish to arm themselves. Although they claim that the
enrichment of uranium is for energy purposes and have a right to do so,
it probably is for a bomb and war (invasion) deterrent. As already
mentioned this path will result in war when the US and European
countries have justification to eliminate a threat to themselves. Talk of war , regime change by Chaney, and military
exercises over Iraqi
air space by Israel who I believe are not involved in the Iraqi war
causes Iran to react by a show of military power causing oil prices to
go up further. The Republicans gain from this and so do the Iranian
radicals. The US also continues a policy of trying to isolate Iran and
speculation continues to keep oil prices high.
People have lost faith in the current US administration.
Possible Solutions and Speculation
The legislation of required Ethanol use should be reversed because of
it's negative effect on the economy and the consumers. Legislation of
required hybrid cars, hybrid hydrogen cars, and other hybrid electric
cars should be enacted.
The off shore drilling debate is for political reasons, a waste of time, and not common sense. Even if legislation where to pass the effects of this would only happen after 10 years if at all.
This may fool the people of the US but not the investors. Legislation should be enacted to reclaim land licenses that are not used within a period
of time. They should then be redistributed with a guarantee of use or
government action.
At this time positive and constructive talks with Iran should be started directly and hostilities (threats) should be stopped.
The present indirect talks with Iran of possible sanctions, isolation,
and path towards war will probably not have a positive outcome or immediate positive effect on speculation.
Although the current talk from the US is that Iran should show the
international community it's positive intentions while continuing
pressure to isolate them, it's really the US who should engage in trying
to show it's positive intentions and stop the rhetoric and isolation
tactics. The US has not shown it's "good" intentions by circumventing
international law and rhetoric of "axis of evil", regime change, and
destabilizing policies.
When Iraq invaded Kuwait they fled to the US. Perhaps there is potential here during this crisis and time of need by the US.
My knowledge of the mortgage industry is limited but I am aware of long period mortgages in Europe. Perhaps a program of remortgaging
for those foreclosing their mortgages could be created temporarily to prevent a loss and reduce
their monthly payments.
$$$
