Friday, November 27, 2009

Dubai World Defaults - Implications For The US

Dubai World, an arm of the Dubai government that invests in many mega projects, has defaulted on its $60 Billion debt. Dubai World has billions of dollars in payments due in the next few weeks that it cannot pay. The Dubai government has asked creditors to provide a "six month" standstill on repayments. Banks and other lenders around the world are impacted by this default. As a result, stock markets around the world fell, the dollar continues to fall in value and the price of gold is hitting record levels.

There are Americans, either in denial and or who suffer from a complete lack of understanding of economics or the financial history of nations that simply do not believe that the United States could be forced to default on its debt, which is over $12 Trillion on the books and probably another $80 Trillion of unfunded liabilities for Social Security, Medicare, Government Pensions and other programs. Those delusional or misinformed Americans include President Obama and the Democrat Socialists that control Congress who continue to act recklessly. The fact is that if investors, like the Chinese and others stop buying our debt because we lose our Triple AAA credit rating, which is coming as a result of huge deficits, the US will face difficult and painful choices.

The Obama trillion dollar deficits will result in some combination of the following the day we can no longer sell our debt. The government would have to either dramatically cut expenses, which are significantly more than revenues, raise taxes on all Americans, print money to cover the debt, and/or all of the above. Cutting expenses either means that many social or military programs will need to to be reduced or eliminated, which could lead to civil strife and or danger for our country. Significantly raising taxes will cause much higher unemployment and perhaps another Great Depression. Printing money will lead to the complete collapse of the dollar and very high inflation and interest rates and a lower standard of living for the American people.

President Obama and the Democrat Socialists, who control Congress are bankrupting the United States. It is impossible to continue the trillion dollar deficits that Obama is projecting for the next next ten years without bankruptcy as the end result. The HealthScare Plan will result in Trillions in even more deficits when Medicare and Social Security are already bankrupt. Dubai is defaulting on just $60 Billion in debt. We will see in the weeks ahead the consequences of this default. Just imagine if the United States defaulted on trillions of dollars in debt. By 2019, just the interest on the US Debt will exceed current spending on most government programs. I know Democrat Socialists don't do too well with the facts or with numbers; but in this case the writing is on the wall and it does not take sophisticated computer analysis to see it.

We must take back our country to prevent the economic collapse of the United States. We must amend the US Constitution to mandate term limits, a balanced budget and limitations on federal taxing authority without the approval of the states. We have to do this to stop the corruption and the fiscal insanity that we see daily happening in Washington at the hands of President Obama and the Democrat Socialists that control Congress. We must focus on the 2010 and 2012 elections to elect Conservatives to take back our country. We have to act to save our country for our children and grandchildren. We can do it. We will do it.

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