We are navigating through truly uncharted political and economic territory.  Members of the financial cognoscenti have freshly alluded to the notion of the ‘government bubble’ as the next blow to the world economic order.

Since 2008 we have seen the housing, financial, and insurance markets hit on a global level, one after the other.  At one point, they all burst because they were unsustainable.  You don’t have to be a politico to know that the sovereign debt crisis is real.  Just look around.  As European countries (Portugal, Ireland, Italy, Greece, Spain, and Belgium) reshuffle hundreds of billions of dollars to lighten rising government deficit and debt levels, Republican appropriators here at home futilely attempt to get our books in order.  Ladies and gentleman, something is afoot.

The recent crisis in Egypt has only intensified discussion on the stability of the world economic order. No one knows what’s going to happen.  In an ideal situation, a peaceful transition of power will re-stabilize what has triggered a sell-off in equity markets and posed more geo-political uncertainty in the region as energy commodities are poised for gains based on fear.  And the bad news just keeps pouring in.

According to Reuters,

Adding to Cairo’s financial woes, ratings agency Moody’s downgraded the country’s debt rating on concern the Mubarak regime may spend more to placate protesters.

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Charlie Gasparino in today’s New York Post:

The municipal-bond market is in crisis, with prices fall ing and investors running for cover — and for good reason.

Munis — bonds sold by states, cities, counties and other localities to finance government operations — are in trouble because the Ponzi scheme of Big Government is coming unglued. The markets are merely reflecting this reality, as they always do.

The $3 trillion muni market was once regarded as the safest of all investments because the bonds are backed by government taxes. Now it’s showing all the earmarks of the 2007-08 meltdown.

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Vice President Joe Biden met with state and local government officials from across the country last year to provide guidance on spending federal stimulus funds. Biden implored local leaders to focus on only essential infrastructure needs that will put people back to work and to avoid frivolous projects: “No swimming pools! No tennis courts! No golf courses! No Frisbee parks!”

Since then, dozens of Minnesota cities and counties have taken advantage of a little known stimulus bond program, borrowing $684 million for projects that include municipal swimming pools, a multi-million dollar golf course renovation and a new mega-community center, a Freedom Foundation of Minnesota analysis shows.

The Build America Bonds program offers a substantial subsidy by the federal government to help cover interest payments and entice local governments to borrow money, making it the fastest growing portion of the municipal bond market.

While most of the 65 bonding projects across Minnesota appear to be public improvement projects for roads and basic infrastructure, concerns have been expressed that Build America Bonds could encourage borrowing for unessential government projects, as well.

The City of Plainview approved borrowing $1.5 million through Build America Bonds for renovations to its municipal swimming pool. The City of Coon Rapids leveraged Build America Bonds for a $4.23 million facelift to the city-owned Bunker Hills golf course. Despite a budget crunch, St. Paul Mayor Chris Coleman pitched using Build America Bonds to help fund $24 million in projects.  The construction work includes installing a new $7.2 million swimming pool with a “lazy river”at Como Park, renovations to the Highland Park swimming pool, and building a 36,000 square foot community center.

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It is not the magnitude of the rapidly collapsing Greek economy that should concern us in America.  It is, rather, that Greece is unquestionably the proverbial canary in the coal mine that should have the American ruling class burning the midnight oil to extract us from the mess they and their predecessors have created for us.  Instead, our government is ignoring the warning.

The left in America, has flirted with the European economic welfare paradigm for years and now we have an Administration that has morphed that flirtation into a full blown love affair.  Greece, which has spent itself into oblivion providing unsustainable benefits (mostly to ever-growing public payrollers) is, we are told, an aberration and the Administration will, no doubt, say the same thing about Portugal and Italy and Ireland too.  But then we have Spain and Great Britain and even France (and let’s not forget Iceland) staggering down the same path toward economic never-never land, all suffering from the same delusional affliction that is now being pursued with gusto by our ruling class…the belief that we can best improve life for all Americans, nearly half of whom pay no taxes, by raising taxes on the declining number of Americans who do.

The left has always believed that prosperity is something that can be bought through government taxation of society’s income, rather than something that is simply a by-product of society’s productivity.  Let us say it again.  Government cannot create sustainable wealth or prosperity.  Only the people, individually and through the commercial and industrial institutions they create, can do that.

Healthy societies are growing societies that earn the means (the capital) for reinvestment in continued health and growth.  In this process of market-driven growth everyone who participates eventually prospers. Healthy societies are not those such as we are witnessing in Europe, whose earnings are sucked dry by government for redistribution to accomplish objectives as dictated by government planners.   Yet it is this withering European model that our current Administration and its congressional majority have embraced, notwithstanding the warnings screaming at us from across the Atlantic and throughout nearly every precinct in America.  President Obama has stated, unambiguously, that he personally believes that at some level of income no one needs to earn any more, presumably the point at which government should take the balance for redistribution. He acknowledged, however, that this view was, “not the American way.”

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On Wednesday, I testified before the Congress about the biggest Rip-Off of the century.  And I can’t say that anyone really cared.

I was arguing that the deceptive  accounting techniques used by  the federal government–techniques that would send anyone to jail in the private sector– is hiding the fact that $4 trillion (more than the federal government spends in a year) is unaccounted for. Well, it’s accounted for but as if the money still exists, when in fact, it has been gone for a while. And guess who will be stuck with the tab?

Okay, now bear with me because it’s a little geeky. However, I promise that this is a story worth reading  about (if you like sickening stories that is).

Remember Al Gore’s lock box or FDR’s bank-account-with-your-name-on-it? Yes, the lock box in which your payroll taxes were supposed to go to produce interests until you can get it back in the form Social Security and Medicare payments when you are old and sick. Well, as it turns out, the federal government had the key of that lock box and helped itself with the $4 trillion accumulated to pay for its daily consumption of wars, Prescription Drug Bill, Freddie and Fannie and ACORN and else.

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