There's a storm coming...

News.com.au - MORE than 42,000 people have taken up the Federal Government's first home buyers grant since extra money was poured into the scheme last October, new figures reveal. Under the Government's $1.5 billion first home buyers boost, the first home buyers grant was doubled from $7000 to $14,000. Those first home buyers who purchase a new home receive an extra $7000 to take the total cost of government assistance to $21,000.

It's set to expire in a few months and I myself have been tempted by the increase in this grant, but one has to stop and ponder the other side of all this. Sure, Kevvie is just throwing our money around willy-nilly, but when you consider that this government-grant is actually only about 10% of the price of a home, depending on where you live in Australia, you ought to get a bit worried. You only get this money once you've signed up, and then you still have to pay back the other 90% of the price. If you lose your job or the ass falls out of the market, you still have to pay it back. When interest rates go up in two years or less and you suddenly have to cough up your lungs, Rudd and his gang of big-spenders aren't going to be around to save you, they'll be long gone.

Read the following bits I've seen in the last couple of days and you might also share my wariness of the days ahead. A lot of people are waffling on about stimulating this and that with money they're borrowing and don't even have, all to save us, but I have this niggling feeling that something's gonna give and it's gonna give in a really bad way.

News.com.au - THE Rudd Government is preparing to ditch a number of key promises in the May Budget because it can no longer afford them. A day after Prime Minister Kevin Rudd admitted Australia could not avoid a recession Treasurer Wayne Swan warned the Government can no longer meet all its commitments.

Yahoo!7 News - In his strongest language yet, Prime Minister Kevin Rudd has admitted it is "virtually impossible" for the Australian economy to avoid recession. It's a tacit acknowledgement that government action - including pumping more than $50 billion directly into the economy since December - won't be enough to stave off recession.

The previous government left us with a $20 billion surplus, that was gone before we blinked, now we're in debt and the recession is going to be choked down our throats anyway. Read on.

HeraldSun - In a move that will further strain relations with the Defence Department, the Government is looking to wind back a promised 3 per cent increase in military spending as it seeks billions of dollars in budget savings. The savings measure could strip about $1 billion from proposed Defence funding over the next few years.

Daily Telegraph - AUSTRALIA is facing its own version of the US sub-prime housing crisis, with thousands of young home owners risking bankruptcy as a result of Kevin Rudd's economic stimulus package. ......Professor Keen said that in trying to avoid an economic crisis caused by too much borrowing, Australia was in effect encouraging the poorest in the community to take on even more debt. ......Meanwhile, the first-home buyer end of the market has been booming. But economists fear this flurry of activity at the lower end has inflated prices to unsustainable levels. The average Sydney property already costs nine times the average annual household income, yet Britain and the US reached a peak of only seven times average income before their markets crashed.

That's just in Australia.

Times Online - GORDON BROWN’S carefully laid plans for a G20 deal on worldwide tax cuts have been scuppered by an eve-of-summit ambush by European leaders. Angela Merkel, the German chancellor, last night led the assault on the prime minister’s “global new deal” for a $2 trillion-plus fiscal stimulus to end the recession. “I will not let anyone tell me that we must spend more money,” she said. The Spanish finance minister, Pedro Solbes, also dismissed new cash being pledged at Thursday’s London summit. Nicolas Sarkozy, the French president, has insisted that “radical reform” of capitalism is more important than tax cutting.

Times Online - As Brown left the Strasbourg parliament, however, word began to reach the Downing Street party of worse trouble back home. Mervyn King, the Bank of England governor, appearing before the House of Commons Treasury select committee had in effect destroyed the prime minister’s hopes of turning the April 22 budget into Britain’s second fiscal stimulus. Bank governors are supposed to stick to interest rates and the money supply. Matters of tax and spending are traditionally seen as the province of elected politicians, but King was not in a mood to respect these distinctions. “I think the fiscal position in the UK is not one where we could say, ‘Well, why don’t we just engage in another significant round of fiscal expansion?’,” he said.

Listen to this fellow, every child born in Britain now owes 20,000 pounds, thanks to all the stimulating and squandering! There is hope though, that not all the world's leaders are completely off their heads.

New York Times - But she [Angela Merkel] is clear that she is not about to give ground on new stimulus spending, stressing the need to maintain fiscal discipline even as she professes to want to work closely with the new American president. ......During the hourlong interview, Mrs. Merkel made clear that she was not wavering in her response to the economic crisis, by loosening the German checkbook or encouraging the European Central Bank to follow the Federal Reserve in pumping money into the system. ......It is not, she pointed out, simply a philosophical difference. Borrow and spend today, repay down the road, is a particularly difficult proposition for a country with a shrinking population, she said.

Wall Street Journal - That idea -- growing a nation out of recession by improving productivity -- puts Mr. Key [Prime Minister of New Zealand] and his conservative National Party at odds with Washington, Tokyo and Canberra. Those capitals are rolling out billions of dollars in stimulus packages -- with taxpayers' money -- to try to prop up growth. That's "risky," Mr. Key says. "You've saddled future generations with an enormous amount of debt that then they have to repay," he explains. "There is actually a limit to what governments can do."

The only problem is that they may not be enough to ward off the coming storms. Back to America and the old saying, when America sneezes, we all catch a cold. Well, what happens if America doesn't just sneeze but actually catches a cold or pneumonia or worse, which seems to be the way Hussien wants it.

Mark Steyn - This year federal government spending will rise to 28.5 per cent of GDP, the highest level ever, with the exception of the peak of the Second World War. The 44th president is proposing to add more to the national debt than the first 43 presidents combined, doubling it in the next six years, and tripling it within the decade. ......If you listen to the principal spokesmen for U.S. economic policy — Obama and Geithner — they grow daily ever more explicitly hostile to the private sector and ever more comfortable with the language of micro-managed government-approved capitalism — which, of course, isn’t capitalism at all.

......Where does the world’s hyperpower go to borrow more dough than anyone’s ever borrowed in human history? More to the point, given that, partly at the behest of Obama and Geithner, almost every other western government is ramping up national debt to cover massive bank bailouts and other phony-baloney “stimuli,” is there enough money out there to buy up the debt that’s already been run up? Last week, at the official British Treasury auction, investors failed to buy the full complement of so-called “gilt-edged” 40-year bonds. Two such auctions have already failed in Germany.

The U.S. Treasury, facing similar investor reluctance to snap up $34 billion of five-year notes, was forced to increase the interest it will pay on them. The Chinese and the Saudis have long taken the view that it’s to their advantage to own as much of the western world as they can snaffle up, but it’s unclear whether even they have pockets deep enough for what America and the many Bailoutistans of Europe are proposing to spend. In their first two months, Obama and Geithner have done nothing but vaporize your wealth, and your children’s future.

Think Steyn is just a doom-monger talking out of his backside, go back to what Angela Merkel said about the future demographics of Germany, Steyn was right about that, wasn't he. Here's some more detail on that 'vaporization' he's referring to.

Victor Hanson - 1) Aggregate tax rates are going to approach 70% in some states, effectively destroying the idea that anyone from the lower classes can ever achieve wealth in a single lifetime, and pass some of it on to his children (increases in estate taxes will be next).

2) The pulverizing of the Dow (cf. Obama’s flippant talk of gyrations and advice to invest now at rock bottom prices, as if those who were wiped out have disposable cash to buy more stocks) means that the aggregate wealth in 401(k)s and stocks for millions — along with equity in homes — of the upper middle classes has effectively vanished. In some cases, the lawyer or contractor who a year ago had $400K put away in retirement funds and $300K in home equity has effectively lost half, if not more, of his hard-won wealth. And when one computes the additional taxes on future income he will pay, it will be almost impossible in his remaining lifetime to make it back.

3) The promises of free health and free education for everyone most surely will come with salary considerations and mean-testing (we are seeing that already with ideas floating about charitable contributions). In other words, the more you of the upper middle class will pay for new expansive entitlements, the more likely you will not be eligible to use the full extent of them.

4) The power of anti-“rich” rhetoric is already beginning to demonize the wealthy as those who have somehow done something wrong in paying the full ticket for their children’s’ educations, or their own health care, or their full mortgage payments. Of all the things that worry me about Obama, the most troublesome is his conflation of the super wealthy — who are so rich that even Obama cannot touch them and who often are his most fervent supporters — with the entrepreneurs, the scramblers of the small business class who make between, say, $250,000 and $600,000.

These already pay over 50% in various taxes, are eligible for almost no government support, do not have access to insider government breaks and special legislation, pay their own way — and create both jobs and new innovations critical to the performance of the U.S. economy. Yet between Wall Street and DC they have been targeted for extinction.

......I’ve come rapidly to the point where I simply do not believe (cf. the claim that all those companies every thirty minutes are going broke due to the lack of federal health care) that what our President says is at all accurate. And worse have come to think that he knows it is not, and, worse still, knows that the media largely know too but will do their part as disciples must. In short, we are soon to see an end to things as they once were for the last quarter-century.

The way I see it, one thing's for sure, most of us will be in the crapper in years if not months to come, the only question is, how far down it will we find ourselves. Batten down the hatches folks and hang on, storm coming.