Wednesday, March 13, 2013

US Becoming Venezuela; Obama is Chavez-lite

Is America becoming Venezuela?

After all, it's the underclass of  poor and uneducated people of Venezuela who elected then re-elected Chavez who was well on his way to ruining the country.  Worse, the future is bleak as the economy has been hollowed-out for current consumption (both literally and politically).   The same story goes for Socialist Argentina--on the verge of another foreign debt default and hyperinflation.

Venezuela has a large, poor underclass who were the staunch supporters of the socialist idiot.  But the people that cast their vote "got theirs."  Well, more correctly, they "got theirs" until inflation put them right back into poverty again.   Now, there's nothing to buy on grocery shelves because of government price controls and hyperactive mismanagement of the economy by Chavez.  Even though things have worsened for everybody, the underclass continues to support their man!

America also has a large and rising underclass who re-elected their slick-talking "man" despite their condition worsening.  It is a similar situation where the people who re-elected Obama are the ones who are receiving benefits from the government without paying anything.  Free money and "no-cost" benefits are the mantra of today's Democratic Party!  Worse, we have a Federal Reserve complicit in this "grand bargain" of providing unlimited free money!  Even worse, Bernanke wants more inflation!  Has hell frozen over??  America IS Venezuela!   

Eventually the costs, well-hidden today, will become clearer.

The Outcome of Socialism Is Stagnation and Collapse

The worst is yet to come in Venezuela (and Argentina) as laws of economics reassert themselves.  Inflation and currency devaluations have sent prices up and real wages down.  Chavez only survived for as long as he did because of sky-high world-wide oil prices which has had the effect of propping up his administration (along with a host of worthless and/or harmful regimes across the world including Russia, Azerbaijan and Iran.).  His regime was an oil-financed socialism.

Meantime, he stole every foreign asset that existed and put his cronies in charge.  Like a petulant, evil emperor he fired 40,000 Petro-Venezuela employees when they had the temerity to oppose his election.   Imagine it for a second.  He fired the 40,000 professionals who ran the state oil company ruining those people's lives and denying each and every one of them a right to make a living.  Predictably oil production, mismanaged and robbed of capital, fell for Chavez's entire term in office.

When you steal every productive asset that you can get your hands on and alienating every foreign investor, then you're basically hallowing out the basis for any future production capacity. It is said that Chavez imported some 70% of the bread that he distributed for "free."  He wasn't smart enough to promote domestic bread production.  Like Obama, Chavez wasn't nearly as smart as he thought he was.  Like a true socialist idiot he lambasted any profit-making company for making money. He ordered companies like Coca-Cola to cut prices or be seized.   Then there are the price controls. Then 5 devaluations. Anybody could see where all of this ends (anybody but Chavez)

If you think there are no parallels between the US and Venezuela, then you are mistaken.  America, with the re-election of Obama, may have reached a tipping point---perhaps a point of no return.   The top 10% pay 70 % of the taxes with roughly 50% of the people paying nothing.  But those 50% continue to have "Representation without Taxation."

From Ashish Advani at Moneynews
Yet most of the people who paid nothing voted in the last election and most voted for the Democrats.  You do not have to be a genius to figure out why.
The people have become addicted to free stuff and do not want to change the system. They want to continue to depend on the government, and in turn, the government wants to continue to exert higher influence on the lives of the people so that they can get larger and become “too big to fail.”

Democrats have fallen into this trap and cannot resist expanding their influence on the lives of the masses. They want the people to be dependent on them and that makes them irreplaceable.
In an environment like this, I am very concerned about the long-term health of the country, as we are raising a growing number of government-dependent addicts rather than a group of entrepreneurs who take the bull by the horns and make it not just for themselves but also spread employment and prosperity as they grow.
Buy gold and take advantage of recent dollar strength to get out of the dollar.  It will take a long time to ruin a great country like America, but it's happening before our very eyes as socialism and populism engulf our country

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