Attention Congress: We don't want debt

I am amazed at what I see in the mainstream media in regards to lending. We have been told over and over again that the problem with our financial system is that banks aren't lending. They don't have the capital to lend, thus freezing lending and bringing our economy to a stand-still. Thus, the Treasury has injected billions into banks nationwide, whether they wanted the gracious gift or not. We were told that would allow banks to lend again and would get our economy moving. That was back in October.

Here we are in February, and the economy is in worse shape, and yet still the media tells us it's the bank's fault for not lending. They are paying themselves huge bonuses with the TARP money, CNBC trumpets. They are chartering private jets, Congress screams! The banks still aren't lending, they are abusing our money!

But what about this: what if consumers don't want any more debt! Americans are swimming in debt, whether it be credit card debt, auto loans, huge mortgage payments, or all of the above, American's do not want any more debt! Why would they?

Those Americans who are lucky enough to have employment are doing what they should be doing: cutting back their spending and paying off their existing debts (hmm, maybe our government should take notice). They are repairing their own balance sheets! And doing so without the help of a government bailout, mind you.

Besides that, the bigger issue is that people are scared to death. They are scared to apply for a mortgage, even if they are approved. They are scared to take on an auto loan, even if they need a new vehicle. They are scared to open that new pre-approved credit card account. Why? Because of the fear mongering by the media, most recently by President Obama, who ensures a cataclysmic disaster just about every time he opens his mouth. Who would want to take on additional debt in this environment?

Banks aren't lending because consumers don't want to borrow, plain and simple. On the commercial side, there is still demand for credit as a way to jumpstart capital intensive projects. Banks are more than willing to supply that capital, provided the borrower is credit worthy! Remember, one of the main reasons we got into this mess because of excessively loose borrowing standards, so naturally banks are being extremely cautious in the face of lending.

Then there are those who say "businesses rely on credit lines to make payroll!" My answer is this: businesses who rely on credit to make payroll deserve to fail, and fail miserably. Plain and simple. Such reckless and financially irresponsible methods for running a business should not go unpunished. Let them fail.

This speaks to a larger point. The American economy is based on credit, and credit is based on savings. This country has no savings, therefore this economy is a house of cards. Consumers don't want credit, they want financial security. The government needs to stop intervening in the healing process and allow that to occur.

Explained - what the dollar and the US economy is facing

We're moving toward a savior-based economy - Gov. Mark Sanford

WASHINGTON (CNN) – As many state and local officials clamor for their share of the billions of dollars in federal aid in the stimulus bill under consideration in Washington, South Carolina’s Republican governor is sounding a note of dissent about federal efforts to help the economy.

“A problem that was created by building up of too much debt will not be solved with yet more debt,” Gov. Mark Sanford said Sunday, making a reference to the federal deficit spending that will likely finance the federal stimulus package.

“We’re moving precipitously close to what I would call a savior-based economy,” Sanford also said Sunday on CNN’s State of the Union.

The South Carolina Republican said such an economy is “what you see in Russia or Venezuela or Zimbabwe or places like that where it matters not how good your product is to the consumer but what your political connection is to those in power.”

“That is quite different than a market-based economy where some rise and some fall but there’s a consequence to making a stupid decision,” Sanford said after pointing to the powers granted to the Treasury Department and the Federal Reserve to help deal with the current economic crisis.

“A lot of people who’ve made some very stupid decisions are being bailed out by the population at large,” he added.

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It's the Federal Reserve, stupid.

By Chuck Baldwin
February 10, 2009
NewsWithViews.com

According to Bloomberg News (Monday, February 9, 2009), "The stimulus package the U.S. Congress is completing would raise the government's commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation's home mortgages.

"The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more. The Senate is to vote this week on an economic-stimulus measure of at least $780 billion. It would need to be reconciled with an $819 billion plan the House approved last month.

"Only the stimulus bill to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates enacted in 2008 have been voted on by lawmakers. The remaining $8 trillion is in lending programs and guarantees, almost all under the Fed and FDIC. RECIPIENTS' NAMES HAVE NOT BEEN DISCLOSED. [Emphasis added]

"'We've seen money go out the back door of this government unlike any time in the history of our country,' Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. 'Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?'"

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The fallacy that is FDR

U.S. Treasury delays bank bailout announcement

My take? They are out of "traditional" options. All options left are not without dire consequences down the line. 350 billion is a drop in the bucket compared to the capital needed to keep the banks solvent. And you know every cent will go to the banking sector...this talk of foreclosure mitigation is pure political theater, as it has been since day one.

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WASHINGTON (Reuters) - The Obama administration on Sunday pushed back until Tuesday the announcement of a keenly awaited bank rescue plan as it pressed lawmakers to settle their differences over a huge economic stimulus package.

"We're focussed on working with Congress to pass an economic recovery bill so we can create the jobs and make the investments necessary to get our economy moving again," Treasury Department spokesman Isaac Baker said.

Treasury Secretary Timothy Geithner will outline the bailout plan in a speech at 11 a.m. EST (4 p.m. British time) on Tuesday, the Treasury Department said.

The announcement of the bank rescue plan -- which will seek to shore up some of the biggest commercial banks in the United States -- had been due on Monday.

But the Senate is now expected to be focussed on that day on a massive economic stimulus ahead of a vote on Tuesday.

For that reason, Geithner had postponed release of the bank plan, Baker said in a statement.

The stimulus and the bank rescue plan are key parts of President Barack Obama's strategy for tackling the deepest financial crisis in the United States since the Great Depression.

Shares in major U.S. banks such as Bank of America and Citigroup have been volatile in recent weeks on speculation about the contents of the financial rescue plan.

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Treasury interest expense on outstanding debt

Current Fiscal Year
December $97,775,030,034.07
November $18,558,733,892.95
October 18,984,305,636.29
Fiscal Year Total $135,318,069,563.31

2008 $451,154,049,950.63
2007 $429,977,998,108.20
2006 $405,872,109,315.83
2005 $352,350,252,507.90
2004 $321,566,323,971.29
2003 $318,148,529,151.51
2002 $332,536,958,599.42
2001 $359,507,635,242.41
2000 $361,997,734,302.36
1999 $353,511,471,722.87
1998 $363,823,722,920.26

See additional years here...