Will the government of Greece default on its debt, or not?  Will the governments of Portugal, Ireland, Italy or Spain default on their debt, or not? Will French or German banks go bankrupt as a result of government debt defaults?  

The US government has a $14T debt that is expanding at more than a $1T per year.  More than 40 percent of US government spending is borrowed money, much of it from foreign sources.  US government entitlement program obligations will be increasing steadily in future years due to the aging of the baby boom generation. The US government has unfunded future debt obligations that are at least $40T.  I have seen estimates that the US governments debt obligations could reach $200T.

The fundamental problem is that the western government financial system is based on a central bank fiat money debt system. Is it time for everyone to acknowledge that this system is a failure?  While a financial system based on the gold standard wasn't perfect at least it was based on honest money.  Now we have highly educated, highly paid bureaucrats managing a failed financial system that has no honest money foundation.

It is becoming more and more obvious that the western economies will undergo tremendous stress in the years to come as the debt based financial system unravels.  Greece is bankrupt.  The Greeks are not prepared for the fundamental economic restructuring that is required to keep them in Euroland. Greece needs to default, reinstate the drachma as their currency, tremendously devalued from the rest of Europe and start over to rebuild the economy.   Other European countries need to default, exit Euroland and start over.

US political leaders must recognize that the current financial system is a failure and the only alternative is to start over.   A modernized version of the gold standard needs to be created that will put limits on government debt creation and Federal Reserve money printing.  The US needs to accept that its government and financial system must be restructured.  The sooner this task is completed, the sooner the US can begin to move forward.  The restructuring may cause a depression or severe recession to occur.  This is the price we must all pay for our collective excess consumption during the past forty years.

The time has come to acknowledge that it is time to restructure.  The general population knows our monetary and financial system don't work and that government promises can't be kept.  Now is the time for change we can believe in.  We don't believe the story being told to us by our Federal Government and the Federal Reserve. 

The time to restructure the US government and financial system is now!

TPM

A few weeks ago I wrote a blog questioning the extent of the lack of jobs problem in the US.  The  US government continues to report an unemployment rate of approximately 9.0 percent with a large number of people underemployed or dropped out of the work force.  The number of people on food stamps is reported to be about 1 in 7 Americans and the President is attempting to get unemployment benefits extended for those that are out of work.  The government and media continually tell us how bad the unemployment situation is.

My wife and I are currently having a new home constructed.  We periodically watch the construction of our home and the new community where we will be living in a few months.  We find it very interesting that all of the unskilled and semiskilled laborers working on the site are Hispanic.  There are dozens of workmen on the site working very hard in good weather and bad, in excessive heat and rainy conditions.  We observed Hispanic brick layers building new fronts for the homes in our new community, building foundations, putting up framing and roofing homes.  All of these men are working very hard.  Their work looks to be very good and we have been amazed at the speed of the construction.

We don't know if the workers are legal or illegal immigrants.  We assume their paperwork must be ok or they wouldn't be working on the site.  But why is the entire work force Hispanic?   Could it be that white or black or Asian Americans won't do the very hard work the Hispanics are doing for the pay they will receive?

The fast food industry in the Washington DC suburbs is staffed almost exclusively by adult immigrants, mostly Hispanic with a sprinkling of other immigrant groups.  There are very few teenagers working in what was in the past a major source of jobs for suburban kids.

There are many other industries around the US that are almost exclusively staffed by immigrants willing to work very hard for low pay by American standards, but good pay by standards in their home countries.  It appears that many Americans that are out of work would rather sit at home and collect unemployment, food stamps and free health care than take jobs where they have to work very hard to make a modest living.

The entitlement mentality that has been established in the US over decades has put aside commitment to personal responsibility in millions of people.  Until Americans are forced to take responsibility for their lives, our unemployment problems will persist. 

We don't need more government programs or subsidies to solve the unemployment problem.  We need the government to stop subsidizing the lives of able bodied people.  Those people will be forced to take the necessary actions that are required to meet the basic necessities of their lives.  They will be forced to take jobs that are available that require hard work.  Maybe some of those people will help build the next new home community.

TPM

Ten years ago this morning I was sitting in a corporate conference room waiting for an executive staff meeting to begin.  One of the participants in the meeting walked into the room and told us that a plane had crashed into one of the World Trade Center towers in NY.   My immediate assumption was that a small private plane had probably crashed into the World Trade Center.  Accidents happen all the time.  In comparison to other major accidents in big cities this was probably a relatively minor one.  As we began the meeting we were advised that a second plane had crashed into the World Trade Center.  We knew that this was no accident.

I went to another conference room where a television had been turned on to follow the news in New York.  I could not believe what I was seeing, gaping holes in the World Trade Center towers and the buildings on fire.  I continued to watch the events in NY from the conference room.  I watched the World Trade Center towers collapse.  I had been to the top of World Trade 2 many times for both business and personal reasons.  I could not believe what I was watching.  My immediate reaction upon watching the towers collapse was that it looked like explosive destruction of the buildings.  The building collapsed in the same manner that one would expect if they were been demolished in a controlled demolition.

I guessed that ten to fifteen thousand people must be dead as a result of the buildings collapse.   I didn't understand how the buildings could collapse from the airplanes hitting the buildings and fires.  I knew the World Trade Center towers had been designed to absorb a direct hit from large commercial aircraft.  What I was watching didn't make any sense to me.

I don't fully recall the exact order of events of 9/11 as I write this blog.  An American Airlines jet crashed into the Pentagon sending the Washington metropolitan area into turmoil.   United flight 93 crashed in Pennsylvania.  I went into sensory overload.  After I watched the collapse of the World Trade Center towers I went back to my office.  The team of people that worked for me were listening to radio reports and talking on the phone to family and friends.  I did my best to keep everyone calm.  I tried to comfort those that appeared to be breaking down under the stress.  Rumors of additional attacks were flying around the building.  I sent people home that needed to be with their young children or with other family members.  I don't remember when I got home that day.

In the days, months and years that have followed 9/11 I have watched and read a substantial amount of what has been reported about that day.  I have seen the videos of people jumping out of the burning towers.  I have seen videos of the black dust clouds moving down the streets of NY as the towers collapsed.  I have watched memorial services for innocent people that died that day.  It is amazing that only three thousand people were killed on 9/11.  It is a miracle that many people hadn't arrived at work before the towers were hit or were able to be evacuated before the buildings collapsed.

Our nation launched two wars, Afghanistan and Iraq, as a result of 9/11, and spent trillions of dollars as a result.  We have had more military personnel killed in the wars than the number of civilians that died on 9/11.  We have more severely wounded military personnel than those injured in 9/11.  Osama Bin Laden, Al-Qaeda's founder, leader and architect of the 9/11 attacks, is now dead, killed by US Navy Seals in Pakistan just a few months ago.

After ten years the strongest memory I have of 9/11 is watching the collapse of the World Trade Center towers.  I sat in a conference room and watched the buildings collapse in real time.  To this day I don't understand how fires from burning airliners could have possibly caused the towers to collapse.  World Trade Center building 7 also collapsed in a similar manner and it wasn't hit in the attack.  I have watched and read official explanations of why the towers collapsed and they are unsatisfying.  Since I am not a civil or structural engineer or an expert in building design I can't say that I am an expert in these matters.  My engineering education and experience tells me that the official explanations don't make sense. 

I have watched and read well researched and analyzed unofficial accounts of how the towers collapsed that are far more believable that the official versions.  The 9/11 BluePrint for Truth, a two hour video explaining the collapse of World Trade 1, 2 and 7,  http://www.youtube.com/watch?v=OQgVCj7q49o, is an in-depth technical analysis of the collapse of the towers.  It is highly probable that the three towers did not collapse due to fires.  The probability is very high that all three World Trade Center towers were purposely brought down by explosives.  The evidence has been found and analyzed by fully qualified professionals.  I suggest you invest two hours watching the video and consider the evidence that is presented.  It is very difficult for any person or group to challenge official government reports on the events of 9/11. 

I don't pretend to know who may have been involved in causing the destruction of the towers.  I leave it to the reader to determine who may have had a vested interest in teaming up with Al-Qaeda to turn the crash of four large commercial aircraft into a catastrophic event that sent the US to war in in the Middle East.

TPM

Every individual and family has had to establish spending priorities.  Should we buy a new car? Can we afford a larger home?  How much money is appropriate to spend on a vacation?  Can we afford to buy expensive new clothes?  Some people are borrowers and some don't routinely borrow money.  In every case there are ultimate limits as to how much money can be spent within a certain period of time.  People have to decide how that want to spend their money within their limits.  Priorities are set.

The same limitations apply to businesses and corporations.  Budgets are established each year. Spending priorities are set.  General managers oversee the business or corporation on a day to day basis and make decisions regarding unanticipated events that impact how money should be spent.

Local and almost all state governments are required to operate with balanced budgets and have established limits regarding how much debt that is allowable.  State and local politicians are required to make hard decisions regarding their approaches to taxation and spending.  When times are tough they must reduce spending and are forced to restructure their approach to the services they provide to their citizens.

Unfortunately, the US federal government doesn't have enforced debt or spending limitations. The creation of the Federal Reserve System as the US central bank about 90 years ago and elimination of the gold standard about 40 years ago have handed our federal government a blank check.  For decades our national leaders have abdicated establishing spending priorities and balancing budgets.  Generations of politicians have promised future benefits without establishing appropriate funding sources.   As world events have changed the broad economic picture, programs have not been adjusted to new realities.

Every time the US economy gets overheated and needs to correct itself the federal government rushes to re-stimulate the economy so that as few people as possible feel any pain from the collective mistakes that have been made.  Instead of acknowledging mistakes and allowing the economy to fully correct the mistakes, our leaders make the situation worse be making more bad decisions by spending more money and adding more debt that is used to fund unproductive activity.  Collectively the US doesn't get the opportunity to feel the intense pain associated from its collective mistakes.  Therefore, the nation stops learning from its mistakes and adjusting to the new world economic system that is evolving.

We have reached the point where the US government has created an unworkable overall economic environment.  Spending priorities must be established at the federal level.  Many government programs must be restructured to reflect the current reality.   The citizens of the US need to feel the full brunt of the pain that the US government has created after decades of mistakes.  We can survive the pain.  We can adjust to the new environment.  We can renew our nation.  We can only do these things if our leaders stop artificially attempting to drive our economy in wrong directions.   We must collectively learn from our mistakes.

We should all remember that our parents and grand parents, the Greatest Generation, survived the Great Depression.  The trauma of the Great Depression created a nation of people that had incredible work ethic.  The Greatest Generation were hardened by the tough economics of their youth.  Their work ethic and hardened approach to life enabled our nation to win World War II.   They could not and would not be defeated.  They experienced tremendous  economic pain and survived it.

The current generations are tough enough to survive economic pain as well.  It is time for our federal government and the Federal Reserve to stop attempting to prevent the natural economic corrections that must occur.  We want the pain to come.  We need to deal with it and then we need to move forward.  Pain is hard to bear for some people.  But pain is part of living.  Our federal government can't continue spending money on economic pain killers.  We need to set spending priorities.

TPM

Yesterday, the US Labor Department reported zero US job growth for the past month.  At the same time they corrected downward the small job growth numbers for the past two months.  During the past 30 or so hours since the jobs report I have seen on TV and read on-line many recommendations by liberal progressive Keynesians for a massive government fiscal stimulus program.  The liberal progressive Keynesians are beginning to panic as they realize that their beloved federal government debt, money printing approach to economics is failing.  

President Obama's massive stimulus programs and current fiscal deficits aren't enough to overcome the impact of the decades of imbalance in the economy created by illogical government spending, unaffordable entitlement programs, globally noncompetitive tax policies and regulations and work rules that have turned an economic giant into a shell of its former self. They also realize that a stagnant economy with over 9 percent unemployed plus an equal amount of underemployed people will be a killer at election time just 14 months from now.  President Obama and the Democratic majority in the Senate are  likely on their way to the dust bin of history.  Nancy Pelosi and the Democratic minority in the House of Representatives are likely to become completely irrelevant beginning in January 2013.

The liberal progressive Keynesian eastern establishment elite now realizes that the course of history and the markets will crush them into irrelevance in the next few years if they don't improve the economic situation dramatically very quickly.  Instead of doing the easy logical things that are necessary to the make the US more competitive in global markets, including getting the government out of way of business by reducing and eliminating unnecessary regulations, and forcing the people to become more self reliant by explaining that entitlement programs are unaffordable in their current forms, the liberal progressive Keynesians are demanding that the US attempt to maintain its unsustainable economic structure by printing trillions of dollars and delivering them to the people through a myriad of transfer payments and programs.

Most of the liberal progressives are people that have been brainwashed by the liberal progressive establishment through their education and/or most of the mainstream media.  I can't condemn people that thought the individuals they learned from were speaking the truth.  It takes a lot of time, effort and experience to do the research and gain the knowledge that is needed to independently evaluate what is happening.  The bottom line is that at its most fundamental level, Keynesianism is a dishonest approach to economic policy.  More and more regular people are figuring out that the government and Federal Reserve are the agents of the dishonest Keynesian philosophy that is destroying our nations economic system.  Collectively this group of regular people is called the Tea Party by the media. TeaPartyers are building in numbers as more and more people realize that the liberal progressive Keynesians are destroying our nation.

We are getting closer and closer to the end of the Keynesian era.  One can never be sure exactly when a philosophical movement will end or become completely irrelevant, but there is no doubt that the Keynesians don't have more than a few years left before their time will have come and gone!

In the meantime don't let the liberal progressive Keynesian panic and the intense political debate that they will be create get you upset.  Under any circumstances the US will have to undergo substantial economic pain in the years ahead as it corrects the mistakes of past decades.  You will have to learn how to deal with the pain as its impacts you.  It is time for every US citizen to take greater responsibility for their own actions and welfare.  It is time for the US to clean up its economic and fiscal act.  Now is the time for the US to begin the next phase of its economic history by putting Keynesian philosophy in the dust bin of history.

TPM