Reality will set in after the worship the supposedly objective media poured on President Obama’s inauguration has subsided. Laughable comparisons to the unabashedly racist Lincoln along with hordes of shivering fans standing in the cold for our first Global Warming President made it watchable.
Two foreign wars, a crumbling global military empire, an economy teetering on the edge and a looming entitlement crisis combine to create arguably the worst situation a new president has ever faced.
Perhaps the most interesting thing to observe will be the new administration’s foreign policy. Obama has already promised to double the number of troops in Afghanistan and will likely leave tens of thousands of “support” troops in Iraq even after the 16-month deadline. We didn’t build the biggest embassy in the world for nothing.
The mountains and valleys of Afghanistan harbor the remnants of some notable empires and history has a chance of repeating itself with the war in Afghanistan in its eighth year. Fighting has already spread to Pakistan with near-daily CIA drone attacks, including one that killed three children last Friday. Congratulations to Obama on his first collateral damage incident, or, as they said in less civilized times, murder.
Afghanistan could very well become Obama’s Vietnam, a war that lasted 14 years and inflamed the whole Central Asian region. Pakistan will implode if the weakening government can’t protect its people from continued American attacks. The possibility of nuclear weapons falling into the hands of religious nut jobs doesn’t sound very fun.
Obama promised to increase the government’s bloated military budget which is already bigger than that of all the other world’s nations combined. Further increases could be seen later when the stimulus fails and military spending is fallaciously touted as the answer.
The economic troubles are far from over and could easily get worse worldwide. The British banking system is on the verge of collapse and there are serious talks of nationalization. Nouriel Roubini, an economist who predicted the recession, estimates U.S. financial losses at $3.6 trillion, half by banks and broker-dealers. Roubini says “the U.S. banking system is effectively insolvent” as the total capitalization of U.S. banks is $1.4 trillion. We could follow the British and see a banking system run by the government quite soon.
The adjusted monetary base has increased from $850 billion in September 2008 to $1.8 trillion today. This is frightening because it took about 25 years for the base to rise to $850 billion from $183 billion. This money forms the foundation for banks to lend money at a multiplier. With zero percent interest rates the banks will lend out their excess reserves and all this new cash. The result will be a debasement of the dollar and price inflation.
As if the economy wasn’t bad enough, the present value of unfunded liabilities for social security and Medicare is $100 trillion. These programs need major overhauls and cuts very soon so future generations won’t be enslaved by this enormous debt.
Our economic problems are too vast and systemic to simply paper over with more money. The government always uses crises to increase its powers; this is our economic 9/11. Instead of yet more government, real change is needed – across the board tax cuts together with massive cuts in spending and entitlements and a dismantling of our trillion-dollar-a-year empire.