The federal government keeps two sets of books.

The set the government promotes to the public has a healthier bottom line: a $318 billion deficit in 2005.

The set the government doesn't talk about is the audited financial statement produced by the government's accountants following standard accounting rules. It reports a more ominous financial picture: a $760 billion deficit for 2005. If Social Security and Medicare were included — as the board that sets accounting rules is considering — the federal deficit would have been $3.5 trillion.

Congress has written its own accounting rules — which would be illegal for a corporation to use because they ignore important costs such as the growing expense of retirement benefits for civil servants and military personnel.

Last year, the audited statement produced by the accountants said the government ran a deficit equal to $6,700 for every American household. The number given to the public put the deficit at $2,800 per household.

A growing number of Congress members and accounting experts say it's time for Congress to start using the audited financial statement when it makes budget decisions. They say accurate accounting would force Congress to show more restraint before approving popular measures to boost spending or cut taxes.

"We're a bottom-line culture, and we've been hiding the bottom line from the American people," says Rep. Jim Cooper, D-Tenn., a former investment banker. "It's not fair to them, and it's delusional on our part." ...

By Rex Nutting, MarketWatch
Last Update: 4:59 PM ET Aug 23, 2006

WASHINGTON (MarketWatch) -- The United States is headed for a recession that will be "much nastier, deeper and more protracted" than the 2001 recession, says Nouriel Roubini, president of Roubini Global Economics.
Writing on his blog Wednesday, Roubini repeated his call that the U.S. would be in recession in 2007, arguing that the collapse of housing would bring down the rest of the economy. Read more.
Roubini wrote after the National Association of Realtors reported Wednesday that sales of existing homes fell 4.1% in July, while inventories soared to a 13-year high and prices flattened out on a year-over-year basis. See full story.
'This is the biggest housing slump in the last four or five decades: every housing indictor is in free fall, including now housing prices.'
— Nouriel Roubini, Roubini Global Economics
"This is the biggest housing slump in the last four or five decades: every housing indictor is in free fall, including now housing prices," Roubini said. The decline in investment in the housing sector will exceed the drop in investment when the Nasdaq collapsed in 2000 and 2001, he said.
And the impact of the bursting of the bubble will affect every household in America, not just the few people who owned significant shares in technology companies during the dot-com boom, he said. Prices are falling even in the Midwest, which never experienced a bubble, "a scary signal" of how much pain the drop in household wealth could cause.
Roubini is a professor of economics at New York University and was a senior economist in the White House and the Treasury Department in the late 1990s. His firm focuses largely on global macroeconomics.
While many economists share Roubini's concerns about imbalances in the global economy and in the U.S. housing sector, he stands nearly alone in predicting a recession next year.
Fed watcher Tim Duy called Roubini the "the current archetypical Eeyore," responding to a comment Dallas Fed President Richard Fisher made last week in referring to economic pessimists as "Eeyores," after Winnie the Pooh's grumpy friend.
"By itself this slump is enough to trigger a U.S. recession: its effects on real residential investment, wealth and consumption, and employment will be more severe than the tech bust that triggered the 2001 recession," Roubini said.
Housing has accounted, directly and indirectly, for about 30% of employment growth during this expansion, including employment in retail and in manufacturing producing consumer goods, he said.
In the past year, consumers spent about $200 billion of the money they pulled out of their home equity, he estimated. Already, sales of consumer durables such as cars and furniture have weakened.
"As the housing sector slumps, the job and income and wage losses in housing will percolate throughout the economy," Roubini said.
Consumers also face high energy prices, higher interest rates, stagnant wages, negative savings and high debt levels, he noted.
"This is the tipping point for the U.S. consumer and the effects will be ugly," he said. "Expect the great recession of 2007 to be much nastier, deeper and more protracted than the 2001 recession."
He also sees many of the same warning signs in other economies, including some in Europe. End of Story

I first came across the name of John Kenneth Galbraith during my student years at Princeton where I picked up his book American Capitalism. Wondering why it was not on any reading list for my economics course, I put the question to the professor. He replied: "It's really not about economics. It's about political economy."

Before the discipline of economics broke off from what students used to major in--"political economy"-early in the 20th century, my professor's comment would not have been a put down. Today, most economists see economics as a branch of mathematics and tend to dismiss economists who bring into their study the variables of politics and power.

The passing at age 97 of Harvard Professor emeritus Ken Galbraith was a loss to the political economy of the United States. His books, articles, letters, testimony and advice to Presidents, members of Congress and the general public for over 60 years connected numbers to understanding what was really going on between the powers-that-be--the haves--and the powerless--the have nots. He proposed policies that were designed to lift the livelihoods of regular people and their essential public services.

What would a Galbraithian economy look like in the United States? For starters, major public investments--fueled by corporate tax reforms--in public works--public transit, repaired schools, clinics, upgraded drinking water systems, good parks and libraries, and environmental health projects. These forms of public wealth for everyone, he believed, would also advance the objective of a full employment economy.

Galbraith believed that uncontrolled capitalism, especially the giant corporations, required prudent regulation to diminish the damage their out-of-control greed and power inflict on society. Always a realist, he was more than aware of the capture of regulatory agencies by the very companies that they were created to regulate.
...

By Lou Dobbs
CNN

Editor's note: Lou Dobbs' weekly commentary will return on September 6.

NEW YORK (CNN) -- The Soviet Union, Marxist Leninism, the Evil Empire and their ugly metaphor, the Berlin Wall, crumbled and collapsed almost 17 years ago.

At the time, I thought it was strange that the United States didn't have the inclination to celebrate. There were no victory parades and no fireworks; nor did Congress declare a V-CW Day, as in Victory in the Cold War. There weren't even any grand speeches about America's emergence as the World's Only Superpower.

But a grand smugness did grip most of Washington. And hubris became the foundation of almost every national policy, foreign and domestic. And why not? We were entitled as the World's Only Superpower.

What a blessing, all these superpower advantages. What other people besides Americans can afford not to make their own clothes? The world has other people for such menial tasks, and they sell us all but a few of our shoes, shirts, slacks, suits, dresses and coats (and, of course, accessories). We now import around 96 percent of our clothing.

What other nation can afford to dismantle its manufacturing base and export high-paying middle-class jobs overseas to lesser, cheaper foreign labor markets and then buy back the goods those poorer people provide us?

And energy? Why, we Americans have money to burn. We spend $15-20 billion each and every month to import fuel for our cars, trucks, office buildings and few remaining factories and plants. We can be heedless to the consequences, because as Vice President Dick Cheney suggests, conservation doesn't work well anyway. So why be bothered with such irritating constraints?

Because we're a superpower, we needn't concern ourselves with silly little annoyances like trade and budget deficits. Who cares? What greater proof of our superpower status can there be than 30 consecutive years of trade deficits, evaporating surpluses in services and agricultural goods and even technology.

Our trade deficit in manufacturing soared nearly 300 percent from 1997 to 2005, surging to $662.5 billion. Our business and government leaders soothingly remind us that we are a technology economy and needn't be distracted by developments like the reversal of what was a $35-billion surplus in high-tech goods to what is now a $44-billion deficit. It's great to be The Superpower.

What about all that money we're burning? Not to worry. Spend it if you got it. Well, we really don't have it, actually. We're borrowing more than $2 billion a day to send to those lesser souls who are uncomfortably situated in poorer nations that can only aspire to our superpower status.

As to our government's budget deficit, again, that's not a problem. Our federal government keeps two sets of books: one that shows our budget deficit shrank to $319 billion last year and the Treasury Department set that shows $760 billion. Now, we don't want anyone to get needlessly anxious here. It turns out that our national debts and commitments actually stand at an incredible $49 trillion. But let's just keep that little number amongst ourselves.

The federal government uses a quaint accounting system that would be illegal for any large enterprise in America, and there are those who believe our government should be more transparent, or perhaps honest, if you will. One of those with a very unpopular wet-blanket attitude is David Williams of the Citizens Against Government Waste. "If this happened in the private sector, we would call the government 'Enron,' " Williams says.

David, David, David...A little less negativity, please. David Williams is among that small, insignificant and clearly irrelevant group of eccentric rationalists who care about cause and effect, truth and consequence.

Rep. Jim Cooper, a Tennessee Democrat, is among them as well. In his new book, Cooper writes about things like the fact that our federal government last year paid out $38 billion to the wrong people and that $20 billion of taxpayer money simply disappeared from the government's treasury.

Negativists like Williams and Cooper get all a-gaggle over the fact that the GAO can't certify the books of the Pentagon, the Department of Homeland Security, the Energy Department and NASA. They're even upset that the federal government has failed its annual audit for nine years in a row. Talk about Nervous Nellies.

So what if the U.S. debt rating is heading for junk status by 2025, according to Standard & Poor's. That's a problem for nations that aren't superpowers, don't you think?

When it comes to international relations, our superpower status is even clearer. Though admittedly, it is a little embarrassing to watch how easily the United States imposes its will on the Middle East and brings aspiring superpowers like China to heel on issues like human rights and democracy.

Looking back, I'm grateful that we didn't celebrate our emergence as the World's Only Superpower those many years ago. In our current exalted state, it's clear we were wise not to do so.

Global Growth, Weaker Dollar Unleash a Wave of U.S. Exports

By MARK WHITEHOUSE
July 19, 2006

As trade data roll in, an encouraging picture is taking shape for American industry: Helped by a weaker dollar and strong global economic growth, U.S. companies are finding increasingly eager customers abroad.

In the first five months of this year, U.S. exports of goods totaled an inflation-adjusted $376 billion, up 10% from a year earlier. Exports of capital goods, such as heavy construction equipment and machine tools, were up even more sharply -- at 15%. Goods imports, meanwhile, rose 6% to $666 billion, also in inflation-adjusted terms.

With the nation's imports continuing to far exceed its exports, the U.S. trade deficit remains stubbornly wide. But economists say the pickup in export growth relatively to imports is important because it could stabilize the gap between what the U.S. buys abroad and what it sells to the rest of the world. Many economists regard that gap as a major threat to world economic and financial stability.

Accelerating exports would also allow the nation's businesses to keep expanding despite a projected slowdown in economic growth at home.

"You're starting to see a story that's fairly clear and fairly encouraging," Jan Hatzius, chief U.S. economist at Goldman Sachs in New York, says of the trade picture. "There have been false starts before, but so far so good."

The improvement in exports stems in part from the delayed impact of a weaker dollar, which has given U.S. producers a competitive edge in pricing. Since 2002, the dollar has lost about 14% of its value against the currencies of major U.S. trading partners. It takes time for changes in exchange rates to produce shifts in trade flows, in part because customers are often slow in switching suppliers.

In addition, Europe and Japan, the world's second- and third-largest economies, respectively, are growing faster than most economists had expected, while the robust growth in emerging economies such as China, Brazil and India shows little or no sign of slowing.

As those foreign markets gear up to meet growing demand, they need more precision pumps, computer-aided design systems, big-lift cranes and other high-end capital equipment -- just the kind of big-ticket products U.S. companies are particularly good at making.

"You've got two positives: the improvement in domestic demand in overseas economies, and an effective repricing of U.S. capital goods" from the weaker dollar, says Jim Meil, chief economist at Eaton Corp., which makes everything from electric motors to high-tech power systems.

Citing a surge in global demand, the Manufacturers Alliance, an organization that represents U.S. manufacturers, said yesterday that it expects U.S. export growth to accelerate to 7.7% this year and 9.4% in 2007 from 6.9% in 2005. "Demand is so strong, not only are we able to sell to the rest of the world but to broader parts of the world," says Cliff Waldman, the group's economist.

In the first five months of 2006, Japan, China and Brazil increased their purchases of U.S. machinery by 22%, 16% and 31%, respectively, from a year earlier, according to the Commerce Department. That partly reflects a pickup in business investment, which grew at an annualized first-quarter rate of about 13% in Japan and 9% in Germany. In China, investment during the first five months was up 30% from a year earlier.

In a recent interview, Herbert Henkel, chief executive of diversified manufacturer Ingersoll-Rand Co., estimated his company's sales growth in China, where the company has a significant manufacturing presence, at 30% to 50% a year, compared with 8% to 10% in the U.S. "That's like the edge of chaos," says Mr. Henkel, whose company's products range from air compressors to electronic locks.

Some companies that have recently posted second-quarter earnings have reported rising overseas revenue, though that increase has sometimes reflected both rising exports and rising sales by their local subsidiaries overseas.

Yesterday, United Technologies Corp. raised its earnings forecast for 2006, saying faster growth abroad would boost sales. In a conference call, Vice President Greg Hayes said that certain parts of the company's business are growing "at more than two times" the rate of world-wide gross domestic product, due in part to "good penetration in emerging markets."

In a sign that the global appetite for big-ticket consumer items is also healthy, Harley-Davidson Inc. reported that its international sales -- all of them exports -- grew more than 17% in the second quarter from a year earlier, well above its 8% growth rate in the U.S. "We anticipate that our international growth will continue to outpace domestic growth," said Tom Bergmann, the motorcycle maker's chief financial officer.

To be sure, plenty can still go wrong. The U.S. trade deficit has shown signs of stabilizing before, only to resume its expansion. Because the U.S. sells much less than it buys from abroad, exports must grow twice as fast as imports just to keep the trade deficit stable. And the global economy remains heavily dependent on the U.S. consumer: If Americans decide to cut their spending sharply, both global growth and U.S. exports would suffer.

Faster export growth also could complicate life for the Federal Reserve, which is trying to figure out how high U.S. interest rates should be to contain inflation pressures. If a better trade balance stokes domestic growth, the Fed might have to push rates up more than it otherwise would to keep prices from getting out of control.

"You're going to have a little more inflation risk," says Goldman Sachs's Mr. Hatzius.

So far, however, the indications are positive. Last week, the U.S. posted a trade deficit of $63.8 billion for May, down from $64.2 billion in December. The smaller-than-expected gap led some economists to boost their estimates of the inflation-adjusted growth rate for U.S. GDP in the second quarter by as much as half a percentage point to more than 3%. (The government will report its advance estimate of second-quarter GDP growth July 28.) That comes as forecasters are expecting a slowdown in inflation-adjusted GDP growth from an annualized rate of 5.6% in the first quarter of this year to well under 3% by the first quarter of 2007.

Recent signs also suggest that the housing market and consumer spending could cool off faster than previously thought. "For a long time people have been talking about a transition for the economy, a reduced dependence on the consumer and housing and more reliance on exports and business investment," says Nigel Gault, U.S. economist at consulting firm Global Insight. "The latest news on exports is a signal that maybe that's happening."

The export trend should also be pleasing news to the U.S. government, which has tacitly allowed the dollar to slide in the hopes that the decline would help stabilize or narrow the trade deficit. So far this year, the dollar has fallen 5.3% against the euro and 0.5% against the yen; as of yesterday, a euro bought $1.2508 and a dollar bought 117.38 yen.

The dollar-euro exchange rate is particularly important for U.S. exporters, because European -- particularly German -- producers of capital goods are among their biggest competitors for customers all over the world.

Take, for example, Hoffman International Inc., Piscataway, N.J., which sells heavy equipment such as oil-drilling supplies to Russia, Kazakhstan and other parts of the former Soviet Union. Tim Waters, Hoffman's president, says he expects his exports this year to grow 50% to $15 million, in part thanks to the changing dollar-euro exchange rate.

"We're competing against European products, so it's absolutely helping us get deals," says Mr. Waters. "We are definitely counting on exports to buoy our entire business as domestic demand slows."

In heaviest demand among U.S. companies' foreign customers are the kinds of technology-heavy equipment and supplies that can help them produce things cheaper and faster. "Most of what U.S. capital-goods makers and exporters are selling is, in effect, productivity," says Mr. Waldman of the Manufacturers Alliance.

Glen Tellock, president of Manitowoc Crane Group, a unit of Wisconsin-based Manitowoc Co., says his exports to Europe and Asia are up about 20% and 30%, respectively, in the first half of this year. He says larger crawler, all-terrain and tower cranes -- the kind of technologically advanced equipment that can help speed up big construction projects -- are selling particularly well in China as that country prepares to host the 2008 Olympics.

"They don't have until 2011, they have to get this done by 2008," he says.

In 2002, the total deficit was $157 billion. Yet total debt outstanding increased from $5.807 trillion to $6.228 trillion, or $421 billion.
In 2003, the total deficit was $377 billion, yet total debt outstanding increased from $6.228 trillion to $6.783 trillion, or $555 billion.

In 2004, the total deficit was $412 billion, yet total debt outstanding increased from $6.783 trillion to $7.379 trillion, or $596 billion.

In 2005, the total deficit was $318 billion, yet total debt outstanding increased from $7.379 trillion to $7.932 trillion or $553 billion.

So far in 2006, total debt outstanding has increased from $7.932 to $8.413 trillion, or $481 billion.

Notice that in each of the last 5 years, the total amount of debt issued was larger than the reported fiscal deficit. In addition, notice that total amount of debt is between $553 billion to $596 billion for the last 3 years.

Is Cheney betting on Economic Collapse?

The Florida Supreme Court upheld today a decision that threw out a $145 billion judgment against the nation's largest tobacco companies.

The decision, which was widely expected to be in the tobacco companies' favor, reaffirms a lower court decision to void what was the largest punitive award by a jury in United States history.

The decision also removes a major roadblock for the Altria Group, the parent of Phillip Morris, as it tries to spin off its Kraft food division.
...

In every decade, certain socio-cultural archetypes arise to become the avatars of their time. In the 1950s, there was the corporate "organization man" in his gray flannel suit; in the '60s, the tie-dyed flower-power hippie. In the '70s, there was the polyester-leisure-suited big-lapeled "est" sensitivity trainer, and in the '80s, it would have been the Hugo Boss-wearing avaricious corporate raider. In the '90s, we had the perpetually casual-Friday-looking 'Net entrepreneur.

And for this decade? It can be none other than the international hedge-fund manager, who "bestrides the world like a colossus" (as William Shakespeare's Cassius described Julius Caesar just before assassinating him), from offices looking out over Long Island Sound in Greenwich, Connecticut.

But has pride come before a very big fall? Recent events in the financial markets suggest that the answer could be yes.

On the real-estate pages of the New York Times, any story about the latest outrageous selling price of some co-op on the Upper West Side, or on the beach in St Barts, or the slopes of Vail is bound to have some reference to a hot hedge-fund manager as the purchaser. A new off-Broadway play, Burleigh Grime$, celebrates the wild ways of the title character, a hedge-fund manager who, in one of his more legitimate profit-making schemes, has dead fish dumped on the beaches of California to try to profit from an El Nino market panic.

Perhaps most cheeky of all, early last month, a manor estate just north of London became the venue for "Hedgestock", a psychedelic '60s-themed hedge-fund networking event, complete with groovily painted Volkswagen vans, and millionaire hedge-fund managers dressing as penniless tie-dyed hippies. In contrast to the original Woodstock (whose famous moniker of "three days of peace, love and music" was morphed into Hedgestock's "three days of peace, love and money"), where commerce was limited to trading in home-made jug wine and bad grass, the Financial Times reported that attendees at Hedgestock had to be satisfied with equally intoxicating Moet and Breitlings.

As plastic surgery makes the rich look younger to the world, maybe this is the next big thing: pompous fantasy charades that make the world look younger to the rich.

Starting with the tax cuts by US president Ronald Reagan of 1981, and especially after the near-worldwide evaporation of socialism in 1989, the regulatory, budgetary, and especially tax policies of the major capitalist democracies began unequivocally to favor the rich. This meant that greater and greater pools of free capital, once spread more or less evenly in smallish amounts among the broad middle classes, began to be concentrated in fewer and fewer hands of those at the very top of the income pyramid. This process barely slowed with the election of center/left-wing governments in the US in 1992, Australia in 1993, Britain in 1997, and Germany in 1998, and it continued after the US victory of George W Bush in 2000, and the passage and implementation of tax cuts heavily skewed to the rich by his administration in 2000-01.

This overabundance of capital presented a problem for the rich. What were they supposed to do with all the new money? Much of it went into mindless consumption of luxury goods, such as those offered by the Paris-based company LVHM. Created in 1987 by the agglomeration of luxury-goods purveyors Louis Vuitton, Moet and Hennessy, its stock rose almost sixfold from 1994 to the market top in 2000. Now having grown to encompass such further luxury brand names as Tag-Heuer, Donna Karan, Fendi, Givenchy and Guerlain, the company reported revenue of almost US$17 billion in 2005, rather impressive considering that amounts to 42% of world software leader Microsoft's $39 billion worldwide 2005 revenue.

But even the elite can only spend so much, and that left a lot of unused cash left over that had to be put to work, had to be invested. It was then that hedge funds came on the scene.

more

By Mike Whitney

07/04/06 "Information Clearing House" -- -- Wouldn’t you like to know where Dick Cheney puts his money? Then you’d know whether his “deficits don’t matter” claim is just baloney or not.

Well, as it turns out, Kiplinger Magazine ran an article based on Cheney’s financial disclosure statement and, sure enough, found out that the VP is lying to the American people for the umpteenth time. Deficits do matter and Cheney has invested his money accordingly.

The article is called “Cheney’s betting on bad news” and provides an account of where Cheney has socked away more than $25 million. While the figures may be estimates, the investments are not. According to Tom Blackburn of the Palm Beach Post, Cheney has invested heavily in “a fund that specializes in short-term municipal bonds, a tax-exempt money market fund and an inflation protected securities fund. The first two hold up if interest rates rise with inflation. The third is protected against inflation.”

Cheney has dumped another (estimated) $10 to $25 million in a European bond fund which tells us that he is counting on a steadily weakening dollar. So, while working class Americans are loosing ground to inflation and rising energy costs, Darth Cheney will be enhancing his wealth in “Old Europe”. As Blackburn sagely notes, “Not all ‘bad news’ is bad for everybody.”

This should put to rest once and for all the foolish notion that the “Bush Economic Plan” is anything more than a scam aimed at looting the public till. The whole deal is intended to shift the nation's wealth from one class to another. It’s also clear that Bush-Cheney couldn’t have carried this off without the tacit approval of the thieves at the Federal Reserve who engineered the low-interest rate boondoggle to put the American people to sleep while they picked their pockets.

Reasonable people can dispute that Bush is “intentionally” skewering the dollar with his lavish tax cuts, but how does that explain Cheney’s portfolio?

It doesn’t. And, one thing we can say with metaphysical certainty is that the miserly Cheney would never plunk his money into an investment that wasn’t a sure thing. If Cheney is counting on the dollar tanking and interest rates going up, then, by Gawd, that’s what’ll happen.

The Bush-Cheney team has racked up another $3 trillion in debt in just 6 years. The US national debt now stands at $8.4 trillion dollars while the trade deficit has ballooned to $800 billion nearly 7% of GDP.

This is lunacy. No country, however powerful, can maintain these staggering numbers. The country is in hock up to its neck and has to borrow $2.5 billion per day just to stay above water. Presently, the Fed is expanding the money supply and buying back its own treasuries to hide the hemorrhaging from the public. Its utter madness.

Last month the trade deficit climbed to $70 billion. More importantly, foreign central banks only purchased a meager $47 billion in treasuries to shore up our ravenous appetite for cheap junk from China.

Do the math! They're not investing in America anymore. They are decreasing their stockpiles of dollars. We’re sinking fast and Cheney and his pals are manning the lifeboats while the public is diverted with gay marriage amendments and “American Celebrity”.

The American manufacturing sector has been hollowed out by cutthroat corporations who’ve abandoned their country to make a fast-buck in China or Mexico. The $3 trillion housing (equity) bubble is quickly loosing air while the anemic dollar continues to sag. All the signs indicate that the economy is slowing at the same time that energy prices continue to rise.

This is the onset of stagflation; the dreaded combo of a slowing economy and inflation.

Did Americans really think they'd be spared the same type of economic colonization that has been applied throughout the developing world under the rubric of "neoliberalism"?

Well, think again. The American economy is barrel-rolling towards earth and there are only enough parachutes for Cheney and the gang.

The country has lost 3 million jobs from outsourcing since Bush took office; more than 200,000 of those are the high-paying, high-tech jobs that are the life's-blood of every economy.

Consider this from the Council on Foreign Relations (CFR) June edition of Foreign Affairs, the Bible of globalists and plutocrats:

“Between 2000 and 2003 alone, foreign firms built 60,000manufacturing plants in China. European chemical companies, Japanese carmakers, and US industrial conglomerates are all building factories in China to supply export markets around the world. Similarly, banks, insurance companies, professional-service firms, and IT companies are building R&D and service centers in India to support employees, customers, and production worldwide.” (“The Globally integrated Enterprise” Samuel Palmisano, Foreign Affairs page 130)

“60,000 manufacturing plants” in 3 years?!?

“Banks, insurance companies, professional-service firms, and IT companies”?

No job is safe. American elites and corporate tycoons are loading the boats and heading for foreign shores. The only thing they’re leaving behind is the insurmountable debt that will be shackled to our children into perpetuity and the carefully arranged levers of a modern police-surveillance state.

Welcome to Bush’s 21st Century gulag; third world luxury in a Guantanamo-type setting.

Take another look at Cheney’s investment strategy; it tells the whole ugly story. Interest rates are going up, the middle class is going down, and the poor dollar is headed for the dumpster. The country is not simply teetering on the brink of financial collapse; it is being thrust headfirst by the blackguards in office and their satrapies at Federal Reserve.

I applaud Mr. Buffett.

He also knows, that he can give it to the US government, which we all know is a corrupt, black hole for money and mismanagement, or he can give it to charity, you know, where things are above board and the majority of people are accountable and responsible. Wise choice Warren.

Billionaire Buffett to give away $37bn
Largest donation in US history goes to Gates foundation.

At this juncture, there are really only two likely scenarios - one bad, one very bad.

The bad one is a recession, perhaps a deep one. Official inflows into USD are a leading indicator of this, in fact, the stagflation of the '70's and the recessions in the '80's were both preceded by this very thing.

The very bad one is the financial crisis the Volcker warns of which, if like the crisis precipitated by Nixon taking the US off the gold standard, may be tolerable, but all the same painful. Of course, back in Nixon's day, US exposure to foreign holdings of US assets wasn't quite what it is today, and even then, development of the Eurodollar market almost caused the US to lose control of its currency, something it is about to lose in the near future. Consider this Bush finishing yet another job for Nixon.

Either way, count on the job market to tighten, wages of average workers to languish even further, and inflation, especially at Wlamart and Target, to take a bigger and bigger bite out of your take-home, pre-heating bill pay.