Well, Obama is talking tough with the Big Three, even letting on that the bankruptcy of GM and Chrysler is a very real possibility and may happen soon.

Since these are bankrupt companies, I suppose this makes a certain amount of sense, leaving aside the perplexing silence on why a similar approach is not being taken with insolvent banks. I guess it’s possible that manufacturing paper profits is now “more American” than fashioning real goods out of hard materials.

But it goes further than this. The current administration might as well be worrying about the fact that the US government itself is hurtling towards bankruptcy.

Not only are debts exploding – moving smartly past “unsustainable” and into “ruinous” – but revenues (tax receipts) are falling like a rock.

Yesterday it was reported that the difference between Social Security income (taxes) and outlays (benefits payments), which is known in Washington-speak as “the SS surplus”, would shrink to zero next year.

Alan Abelson has a tremendous article in the recent issue of Barron’s where he recounts some of the massive statistical revisionism that accompanied a broad swath of government data released this past week.

In this two part dance, the government first employs some highly dubious statistical tricks, in this case “seasonal adjustments” and then the press runs off with the information often slathering a layer of spin and hype on top of the obviously dodgy data. I wrote about this in my 3 posts last week on existing and new home sales and durables.

Here’s the relevant part from that article (all emphasis mine) – I especially love the opening paragraph:

Okay, this is really just desperate and sad. No I am not referring to my fixation on parsing government numbers, although I suppose I could be, but instead to government statistical wizardry and the press’ unquestioning rhetorical support for these tortured numbers.

First up, here’s the verbiage:

If you read my recent blog post on existing home sales, you may experience déjà vu reading this one. My point in exposing the ways in which “news” is spun to the positive, instead of realistically, is to help you see the ways in which we are still being systematically misled. I consider this to be important to reveal because while problems are still being identified, realism is more important than optimism.

Would you tell an overweight man with chest pains that “it’s probably heartburn and that most people are just fine after experiencing chest pains” or would you advise them to obtain a careful examination of their condition?

Here, we are going to give the patient a close examination.

I want to talk about the renewed tendency of the press to reiterate the pronouncements of the National Association of Realtors (NAR) apparantly without consideration for how badly they were bamboozled by the NAR from 2003 to 2008.

Check out this opening paragraph announcing the latest “great news” on existing home sales (emphasis mine):

On Wednesday of last week, I wrote these words in an Alert:

Given the recent revelations that Goldman Sachs and other well-connected players in the AIG scandal got billions of dollars directly from the US taxpayers for their side-bets with AIG, I will not be at all surprised to find out in a few weeks or months that Goldman Sachs, JPM, and others were magically positioned to make a killing off of this move.

That’s just raw speculation, but it fits with the general pattern of conflicted enrichment that has stalked every move in this grand looting operation so far.

In fact, the constant drip-drip-drip of news about self-dealing by insiders with zero legal consequences for the perpetrators leaves me with the queasy feeling that every attempt at finding a legitimate resolution to this crisis will be thwarted by a crowd of Wall Street insiders who simply cannot resist an opportunity to redirect money into their own pockets. But that’s another story.

Yesterday that story got published in Rolling Stone Magazine.

Matt Taibbi, the author, deserves a standing ovation for the most outstanding explanation of how truly corrupt the situation is, and capturing the hubris and entitlement that infuse our entire power structure.

It is the best I’ve yet read on the subject. You must read it. The whole thing.

Below is an alert I sent out on Wednesday evening.  I want everyone to see what is at the forefront of my thinking right now.

I am busy writing up my next layers of thought around this development and will make that the basis of my next Martenson Report or two.  

Why?  Because this recent action by the Fed is a "game changer."

In a shocking development that I frankly hoped we’d never actually see, the Federal Reserve dropped a bombshell yesterday and announced that it is going to create an extra $1 trillion dollars out of thin air to support the spending desires of the US government and to drive down interest rates for mortgage borrowers.

Of course, this will continue to punish savers and pension plans, but those, frankly, are of no concern to the Fed.

Below I explore this outrageous turn of events. Please note that I have not had much time to digest this incredible news and that I reserve the right to add to (or amend) my thinking over the next few days.