I sent this today to my NJ Senators Menendez and Lautenberg
President Leadership is required to prevent IMF and G20 control over our economy – this summer!
Richard Nixon, a renowned stark hawk paved the way to relations with China. No way could this have happened with a liberal Democrat. This “China opening” resulted in many benefits. We feel one right now. They, along with the Federal Reserve have financed our increasing debt. However this may end very soon (think Summer) and a dollar collapse may lead to IMF and G20 control over our economy. This can result in a drastic change in life as we know it in the US. IMF/G20 may impose 50% or more entitlements cuts due to a bankrupt US. Our best chance to avert this is for our radical leftist President to come out and state:
My dear Americans:
Our economy may collapse in a few months due to our ever increasing debt. We can no longer borrow 43 cents of every dollar we spend this year. Our creditors may soon balk at buying T bills. They may have better investments elsewhere or need to address their own internal economic investments. Due to the economic consequences of Japan’s earthquake/tsunami, Japan’s leadership has informed me that their ability to continue to finance our debt has virtually disappeared. Our other foreign creditors have gotten to a point where financing US debt may result in steep investment losses, unless we act now.
We can not let our total government debt double 4 years to 18 trillion dollars. I will not allow this. I have painfully learned hard economic facts. I will do everything possible to improve our financial status to the point where our creditors will view the US T Bills as an investment that will result in positive returns. I therefore am calling for immediate action on Paul Ryan’s budget plan. Although I have some differences with it, I applaud Mr. Ryan’s meticulous economic analysis and genuine attempt to save our entitlements, and more importantly our nation as we know it. Let us work together, revise it so that it reaches broader support. Nevertheless let us agree on the trillions of dollars it calls for over the next decade. Once we pass this I am confident our creditors will view the US as a stable place to invest in.
If we do not act before this summer, time may run out. Why?
Our creditors have witnessed our fight to decrease our budget by only 1% or $38.5 billion. This is only good for no more than 10 days as we increase our total debt by 4 to 5 billion per day. Investors in China now may increasingly view internal investments as their middle class has been growing, instead of buying our T bills.
The dollar has lost 14% of its value past 10 months. This may accelerate. Our Fed has been averaging $4 billion a day financing our debt since November (our debt increases 4-5 billion per day). No wonder the 10 year T Bill is only 3.5%. If the Fed backs off QE2 in July, rates will increase and we may witness a severe US Dollar collapse. Pimco, the world’s largest bond fund, already sold off all of their T Bills few months ago.
Let us not look back and blame wars, tax cuts, sincere but economically naive attempts growing entitlements. Let us not blame Democrats or Republicans. One factor for this stark change in policy is due to the economic consequences of Japan earthquake/tsunami. Japan’s leadership has informed me that they their ability to continue to finance our debt has virtually disappeared. Let us address the present and future and save our nation. I therefore have asked Secretary Geithner to closely work with Congressmen Ryan, Boehner, Pelosi, Senators Reed and McConnell to finalize a deal by the end of June. I have also asked several consultants to assist in this process. These consultants are our (or have been) our key creditors. They include investors from Pimco, T Rowe Price, Fidelity, sovereign debt managers from Saudi Arabia and Kuwait, China.
Far fetched – yes but not impossible. Obama is bright. What gains can he envision in a bankrupt US? He must step out of the belt way box, take a deep breath, and unemotionally assess our paths. He may then conclude that he is in a rare position to embark on a history making mission to save the US economy. If so then history will judge him in very, very high regard.
Senator – Please present this to our president