America Must Default Now

Remember the classic story of the leak in the dike? A young boy hiking along a dike in Holland stuck his finger in a leak that threatened to collapse the dike and let the waters of the North Sea rush in to destroy his village. He stayed the night holding fast to his duty until the men of the village came to find him and to repair the leak. The legend goes that this small boy, acting on his sense of duty, saved his community with his single act of bravery and that all of Holland might have perished had he not. Perhaps not the prime moral of the story but as important, had the village leaders not found this young patriot and quickly repaired the dike, he would have perished and his bravery would have been in vain. It took a village to ultimately stop the dike from collapsing.

The Tea Party has been America’s little Dutch boy. Tea Partiers claim that America’s debt is as ominous as the stormy North Sea bearing down on the dikes of Holland, threatening to destroy our economy. They also suggest that just as the dikes of Holland held back the seas, America’s economy must hold strong against our national debt to keep it from limiting our future. Seeing our historic deficits as powerful enough leaks to collapse our nation’s credit, in 2010, the Tea Party rose up to stick their finger in the dike, pledging to stop America’s excessive public debt from growing further until we could agree on a path for recovery. In the meantime, other leaks have sprung up on America’s dike.

Clearly, our Federal budget is not the only ill that is afflicting us. Another little Dutch boy, the Occupy Wall Street movement, with just as much valor and patriotism as the Tea Party, has now climbed the dike to stick its finger in political leaks as equally important as our federal deficit. Occupiers have identified the illicit bond between Wall Street bankers and our politicians that threatens to diminish America’s future and they pledge to remain on the dike until all of America can persuade our leaders to relieve both the Tea Party and the Occupy Wall Streeters from their patriotic duties.

Unlike Holland, where village leaders relieved the little Dutch boy’s first aid plugging of the leak by repairing their dike, our nation’s leaders have been conspicuously absent in rushing in to relieve our patriotic Tea Party and Occupy Wall Streeters from their first aid missions. Our President and presidential candidates are reluctant to present bold reformation plans, Congress’s Super Committee is unable to compromise on material Federal budget reductions, the rest of Congress is unwilling to put forth substantial jobs bills or to work on restructuring a healthier business environment, our state and local governments are dangerously close to insolvency by refusing to resize to fit lower tax revenues, our banks are refusing to restructure upside down mortgages that are stagnating America’s private economy, and our multinational corporations are unwilling to reinvest in America’s workforce.

Without substantial and coordinated efforts by all in leadership to increase our national productive output, to support corresponding jobs that can sustain a right sized government budget, and to reduce our public debt that is stagnating economic growth, America’s dike will collapse. Whatever we do going forward to solve our leadership crisis, whatever the terms of restructure, Our leaders must know that Middle America will not complacently wither through decades of high unemployment nor will our military complex accept the eventual severe lack of domestic military resupply capability that will result from such languishing. America must now face the inevitability of “DEFAULT”.

The word default is an enemy of the state yet its effects are already sinisterly invading our country. Our Federal government has already defaulted on the value of the dollar with its stimulus and quantitative easing. Our state and local governments have already defaulted on public services to keep bloated public employees in place. Our multinational corporations have already defaulted on America employment by slashing work forces to sustain profitability through the monetary collapse. Our bankers have already defaulted on their obligations to provide financial liquidity, first by choosing to bet against America and then by creating the monetary implosion that sent millions of Americans into foreclosure and bankruptcy. Now, the American people must join in this cacophony of defaults by forcing a restructuring of America’s business and political environment to sustain our families and our country into the 21st century.

Americans must default on our support of indefinite extensions of trillion dollar budget deficits that reflect commitments to unsupportable baby boomer ideals of social justice and vast military dominance. We must default on our submission to government policies supporting unrealized promises that free trade and globalization would enrich all Americans. We must default on our acceptance of the status quo shenanigans of a financially democratized two party system that places the overwhelming benefit of the few over the welfare of the many. And as importantly, we must default on subservience to the mountain of debt that has been yoked to our economic future for the benefit of bankers, multinational businesses and political parties.

Ultimately, the legal power of Americans to default rests in Government acting on our behalf. However, rather than focusing on these transformative needs of the electorate, America’s government representatives are locked in an addictive trance, fixated on meeting the desires of powerful masters. To constitutionally affect change, we will have to break the grotesque relationship between Wall Street, multinational corporations, and Congress; one in which Congress depends upon bankers’ and businessmen’s’ financial elixir for re-election, where Congress has the power to dole out favors, contracts, tax breaks, and laws in return for their election fix, and where bankers have the power to print money to support Congress’s illicit behavior. If America is to ensure an equitable solution in which our Congress, bankers and businesses help to fix the mess they’ve made, we must forever sever our enabling support for this addictive relationship.

If we do not act to break these addictive bonds, our Federal Government will most certainly continue to provide cover for banks and businesses while authorizing massive deficits that expand its growing $15 trillion dollar debt. If not forced by the Tea Party or international credit rating agencies to finally face its unsustainable lack of institutional moral fiber and financially driven dearth of governing judgment and foresight, Congress will recklessly inflate our dollars beyond any semblance as a safe store of value. But private debtors do not have the luxury to print money. Private debts can only be repaid by the output of our people. We now have to decide if our output will be used to invest in America’s future or to pay our mounting Federal debt.

Certainly our multinational corporations have been given free rein to invest where they will and to employ whom they will. Because of substantial market opportunities to the East, America’s ignorance in creating a hostile business environment at home, and our bankers, businessmen, and politicians’ complicity in exploiting both, our multinational corporations have chosen to invest overseas. Yet somehow, America’s politicians hoped that our businesses, which are made up of citizens of this great country, would also act as model “virtual citizens” making business decisions in the best interests of all Americans. Our government even went as far as to dictate from the decisions of our Supreme Court these hopes. The Federal Government’s complicity with bankers and multinational corporations would be much more guilt free if they could imagine businesses having a patriotic conscience, but alas the vast majority do not. Our businesses are hardwired for maximum, risk adjusted profit and for the reasons previously mentioned, maximum profits exist offshore.

No American Dutch boy movement has yet risen to force government to soberly recognize business’s profit nature. Until such a movement pressures Congress, it most likely will not create laws to protect the public from the more destructive nature to our economy of business’s international profit motive, nor will it attempt to find win-win solutions to harness this profit motive for the mutual benefit of both multinational businesses and our people.

Certainly America’s bankers have created their own free rein to conduct at will commerce by the power of their purse. Unfortunately, this rein has been out of alignment with America’s domestic interest for decades. Now that our bankers have indebted America beyond our ability to pay, they will fight any attempts by others to loosen their financial hold on our political system. America’s bankers would have Congress force us to stagnate in debt for decades while China surges past us into the new millennium, and why not?

Bankers used our debt to place investment bets on China’s rising over the past three decades, and in so doing shorted America’s future. They now are counting on Americans to pay this historic debt to protect their clients’ and their own disproportionate, concentrated, and increasingly risky investments in China. Because they placed their mountain of eggs in one basket, A sure bet is that our banker’s actions going forward will be singularly focused on ensuring that America complies with the terms of our debt obligations, whether or not they are in our best interests.

The Occupy Wall Street movement has become the little Dutch boy in defense of America’s interests against international bankers and they have rightfully begun asking if we should follow the terms that have been structured by America’s bankers. Our bankers set the initial terms of indebting America beyond its means to repay. They reneged on terms of protecting us from over indebtedness and covered up their own complicity in doing so. And now that they have extracted maximum debt from America, our bankers are threatening to destroy our economy if we even question their bastardization of the American financial system.

Occupiers are rightfully asking why our bankers set lending terms to soar America’s debts to levels that they knew through historical ratios could never expect to be paid without a high degree of default. Why were bankers comfortable in doing so? Were they hoping that the American ethic of fiscal responsibility would hold even when seduced into unchartered waters of financial servitude? It seems that betting banks’ fortunes on mere hope would be too risky. Did they expect that banks could dictate to our government that it subordinate the will of the electorate to that of America’s financially elite, even if excessive debt deteriorated America’s future? This strategy was successfully exploited before and therefore less risky, but given the emergence of social media democracy, it is becoming self delusional. Whatever their reasoning at the start of the housing Ponzi, bankers’ fortunes are now so dependent on maintaining the status quo that they will defend it with all available measures, even if exposed to the light of day.

Given the stagnating wages of our citizens for the past three decades, Occupy Wall Streeters are right to question why bankers did not meet their obligations to protect America from excessive debt. The prime reason that America awards bankers the right to charge us interest is because we expect our bankers to discern who is capable of repaying debt, and to judiciously discriminate by providing loans only to those that meet repayment qualifications. It is for this sole risk mitigation responsibility of protecting America from excessive debt that we pay America’s bankers such a disproportionate percentage of America’s wealth. Otherwise, we could pay technicians much less to merely print and distribute money.

Occupy Wall Streeters are right to question our bankers why in the height of the frenzy they threw away loan ratios that historically protected Americans from default. Why as America’s debt began to dramatically climb beyond the safety of these ratios did our bankers ignore warning signs and press for even more debt? Why did they pass out credit cards like Halloween treats? Why did our bankers create even more, no income verification, zero money down, speculative debt instruments to extend this bubble to unprecedented heights? Why when some Americans asked why loan ratios were no longer employed, did America’s bankers tell them that we had entered a new economy in which the old ratios no longer applied, one in which appreciating real estate values now dominated the loan equation?

Based on our bankers’ logic, housing prices could just continue to inflate forever without end. The fallacy in their folly to forget fundamentals was that underlying debt has to be paid by the wages of America’s citizens, and these wages were not rising but were in fact stagnating. When the housing bubble burst, we sadly realized that there was no new economy, but instead that greed had only temporarily supplanted old ratios and finance fundamentals. In the wake of America’s monetary collapse, with ratios now re-established, and with debt far exceeding them, America is now faced with the reality of choosing between stagnation and default!

Finally, Wall Streeters are right to ask why America’s bankers are threatening that if we do not honor our public and private debts then they will destroy our economy. What a spurious argument! Were not our bankers complicit in driving America to this debt precipice of their own making? And now that we have arrived at this critical juncture, are not these same bankers arguing that if we fail to honor the predicament in which they placed us that they will cut us off from future credit and capital? Yet theirs is a hollow threat, because it is only by America’s authority that America’s bankers are even given the right to create credit and capital from thin air on our behalf.

Without the self delusional support of a Fed like central bank to cover their losses, European bankers do not need to be cajoled by an Occupy Wall Street movement to accept partial responsibility for excessive European debt in order to stave off full absorption of a complete default. When German led banks first told the Greeks that they must surrender their livelihoods and enter into decades of an austerity program to repay their bank debts, the Greeks simply said “NUTS!” European bankers have since struggled but have finally and responsibly put forth their newest Greece restructuring plan including a bank “forgiveness” of 50% of Greece’s debt held by the banks. And Greece will most likely not be the last to see its debt reduced as other European countries will ultimately demand equitable treatment as well.

America’s bankers are not ready to accept default. Surrounded by the Fed and both political parties, they are well hidden from public view. Yet America’s little Dutch boys are on the dike exposing their defenses. The Tea Party will continue to press Congress to stop the spending. Without the cover of political largesse to mollify the masses, many of America’s politicians will then be forced to take sides, either openly exposing their support for globalist policies in a vain attempt to gain financial backing for re-election in the face of the electorate, or retreating from previous indefensible positions to save their political feathers from the onslaught of social media exposure. As more Dutch boy politicians are elected, America’s bankers will be left exposed in the open.

Occupy Wall Streeters will continue to root out America’s bankers, exposing unpatriotic profiteering. They should have no illusions that banks will respond to sit-ins or even to riots by agreeing to absorb debts as did the European banks. Yet in clarifying through their movement for the American people our bankers’ complicity, America’s social democracy will build political will to force a realignment of political power that will insist on equitable treatment of debt in America just as elsewhere across Europe.

For what other choice will our bankers have in the end really? When debt becomes so excessive that it strains the ability of a nation to repay it, then it loses its character of debt. If a nation defaults on its debt and international banks cannot force it to repay, then the banks have only the choices of either forfeiting their debt, as the European banks have chosen to do, or exchanging their debt for equity if allowed by the nation and as I have proposed in my set of solutions.

Once America’s little Dutch boys persuade America’s leadership to join Europe’s leadership in returning our nations to economic health, our bankers will have no choice but to join the ranks of the disillusioned and disheartened elite. America’s bankers will finally meet Europe’s bankers in dispassionately determining how they will discharge our excessive debt. When America’s banks accept their partial responsibility for America’s failure to thrive, Americans’ debt of $54 trillion dollars which threatens to stagnate our economy for decades, leading to even greater job losses and further threatening our national security, will be held back behind the water tight dikes of a renewed and prosperous future.

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Filed under American Governance, American Media, American Politics, China, European Crisis, Job Voucher Plan, Multinational Corporations, National Security, Social Media Democracy

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