Stimulus is not FREE

On October 23, 2009 a budget proposal by the Latvian government will have global implications. The Latvian government will send a message to the IMF, EU, Switzerland and Swedish banks and the rest of the world. Will the government continue to penalize Latvian taxpayers because of an orchestrated financial crisis or default on its debt? Latvia is technically broke and will allocate 61% of GDP by 2011. All parties recognize payments at this level are unsustainable. Latvian will decide whether they will continue to participate in a global RMBS derivative ponzi scheme or let chip fall where they may.

Back in state side, it has been acknowledged by financial agents elected to congress; defaults on RMBS are good and help to maintain the value of real estate. As long as banks can keep none paying mortgages on their books without foreclosing or restricted by the liability, banks will retain all stimulus or bailout money to cover all financial requirements

Since the first stimulus and bailout package did not give much of a bang for the buck. Government has decided to keep stimulating until there is some measurable growth in the economy. Yes, taxpayers will have to allow a little congressional pork for having unwilling skin in the game.

A two front financial crisis, deflation and inflation, will lower wages and salaries while increasing unemployment, enlarge the supply of money and devalue the dollar, keep interest rates low, expand the budget and national debt. A two front financial crisis is dismantling the U S dollar carry trade and infusing a gold market with none filling demand.

The U S economy has been attacked by both deflation and inflation. Although the credit industry in general has raised interest rates on credit cards, less people have a large enough credit line to stimulate the last quarter of this year. Cash for clunkers deflated the number of insured, older and working automobiles but inflated the number of foreign cars on U S roads. What price is the taxpayer willing to pay for another stimulus?