"Economic Chaos?"

It's official, people. This country really is unraveling. The wheels are coming off and there's no one in charge. The Government Accountability Office (GAO), responsible for auditing the federal government's books, released its annual report last week. The news is actually worse than the rumors flying around the internet.

It seems our government is incapable of providing accurate financial information. The GAO "must have ready access to reliable and complete financial and performance information" in order for an audit to be done. But guess what? The federal government hasn't bothered to keep track of the money!

The report states, "Absent policy changes, the federal government continues to face an unsustainable fiscal path." Translation: If they don't do something quick...put a fork in us 'cuz we're done.

The GAO report, which borders on the pathetic, cites the following 'weaknesses':

• serious financial management problems at the Department of Defense
• an "inability to adequately account for and reconcile intra-governmental activity and balances between federal agencies"
• an "ineffective process for preparing consolidated financial statements"

The incompetence of our government staggers the imagination. Where is the media? How is it we've barely heard a word about it? It seems the mainstream media won't touch this story with a 10-foot pole. Why are they so committed to painting a rosy picture? You'd think they'd want to expose what's going on, but you'd be wrong.

Straight-talking Bill O'Reilly at the Fox News Channel broke the trend and said the unthinkable in his Talking Points Memo on January 18th: "If the feds do not stop the wild spending, the U.S. dollar will collapse."  (see for yourself at www.billoreilly.com -- Talking Points Archive).

Alarmist?

• Government debt is now 73% of GDP
• National debt is roughly $52,000 per U.S. citizen
• Feds continue to monetize $85 billion every single month
• There has been no budget whatsoever in 3-1/2 years

Boston University Economics Professor Laurence Kotlikoff warns, "The situation is getting worse and worse and worse. We are actually in worse shape than any developed country...we are using accounting that would make Bernie Madoff blush." Financial analyst Karl Denninger says, "The truth of what we have to do is still politically impossible. All you are seeing now is the tap dance around the fact we have to accept a 7, 8, maybe 10 to 15% fiscal contraction in GDP in order to come back into balance." The contraction in 2008 when the financial crisis began was only about 3%. Investment manager Tom Cloud warns, "People are starting to pull away (from U.S. dollar) and take care of themselves...you don't want to be the last guy holding the bag."

Neither political party is acting like grown-ups. The Dems whine the GOP won't cooperate and the GOP claims they have no one to negotiate with. All they seem to do is point fingers at each other and complain. Worst of all, they keep pulling in revenue from the future and count it as spending cuts!

Both parties are equally responsible. All spending bills originate in the House of Representatives and the Republicans have had the ability to cut off spending for over 2 years now. So, what exactly are they doing--rearranging the deck chairs?

It's time for us to wake up and face the music.

When governments take in less than they spend, unchecked, year after year after year (without even keeping tabs!) and then print money ad nauseum, there is bound to be trouble. Big trouble.

Clearly, there are no adults in the room. We're on our own.

Where will you be when the music stops?

A wise woman once said: "You can avoid reality, but you cannot avoid the consequences of avoiding reality."-- Ayn Rand, author of Atlas Shrugged

"A prudent person foresees the danger ahead and takes precautions; the simpleton goes blindly on and suffers the consequences." Proverbs 22:3

News:

• CNN: Israeli PM Benjamin Netanyahu wins re-election by the skin of his teeth and is significantly weakened politically. Not likely to strike Iran.
• Huffington Post: House of Representatives votes to raise nation's debt ceiling by an unspecified amount, suspending the federal government's restriction on borrowing until late May
• MSN: Pentagon lifts ban on women fighting in combat
• Fox News Channel: U.S. sends gift to Egyptian Muslim Brotherhood: 20 F-16 Fighter jets
• NBC News.com: Dangerously cold temps cause serious health concerns and several deaths in Mid-west and Northeast