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Thread: weekend commentary - New Orleans and Beached Whales ...

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    Banned Melonie's Avatar
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    Default weekend commentary - New Orleans and Beached Whales ...

    (snip)"United States budgetary and fiscal officials revealed to us that in order for the United States government books to net out to zero there would need to be $53 trillion in the bank, today, earning interest. Of course there isn't any public money of that sort, or any sort, in the bank.

    SCREEEECH! <-- That's the sound of this article pulling over to the side of the road

    Stop. Why is this not our #1 topic of debate in Washington DC? If we suspect that we are insolvent as the Comptroller and Treasury Secretary have indicated, then it's questionable as to whether it does us any good to debate, say, the finer points of federal education reform or a new flag burning amendment. As noted above, insolvency precedes bankruptcy and bankrupt nations cannot afford to do anything so why talk about anything else? We have a bright red oil light lit up on our national dashboard yet the Democratic and Republican leadership continue to drive on bickering about who should have brought the black tape to put over the warning light.

    What would it mean if our nation went bankrupt? A good analogy would be New Orleans. The city is bankrupt; it's a mess, and can only rebuild with federal (outside) assistance. New Orleans completely lacks the ability to rebuild on its own because it doesn't have the funds and its economy is pretty much destroyed. But if the US goes bankrupt, who will help us rebuild? If the answer is ‘nobody', then you might want to take a trip down to The Big Easy to see for yourself what this country is going to look like in a few years.

    The good news is that because the problem only grows more intractable with every passing day, our dithering politicians will have fewer options to chose from when the crisis hits thereby making their jobs that much easier. The bad news is that the more time we spend in denial, the less time remains for us to get busy and do something about it. There is even the danger that if we wait too long, we will face a potentially unfixable problem on the scale of what the Soviet Union experienced – catastrophic economic failure.

    During my time as a consultant, I had ample opportunity to witness a very clear phenomenon. If the person at the top of an organization was ethical, for the most part so were all the rungs and layers beneath them. Conversely, an unethical leader usually presided over an unethical organization. As a social animal, we tend to take our cues from above.

    Our federal government is now several decades into a reckless love affair with unrestrained profligacy. Because we've lacked any clear, moral leadership for so long, it is easy to find reflections of this behavior peering back from every corner of society.

    Consider the evidence:

    1. State pension shortfalls running towards a trillion dollars

    2. Municipal pension shortfalls in the hundreds of billions of dollars

    3. Corporate pension and healthcare deficits of one-and-a-half trillion dollars

    4. 401K savings of only $53k per 55 year old worker

    5. A national savings rate that has steadily eroded since the early 1990s falling from 10&#37; to negative 1.5% , a condition last seen at the depths of the great depression in 1933

    In summary, the list above indicates that at the federal, state, municipal, corporate, and personal levels nobody is saving for the future. I could probably tick off a few more but since I'm out of fingers on my non-typing hand let's agree that pretty much covers it. We are not saving for our future, we are all in this together, but it will take leadership to get us out.

    It is imperative that we return to our heritage of saving and investing for the future. Somehow we've forgotten that a period of living beyond your means must always be balanced by an equal amount of living below your means. The belief that debts can be compounded forever is dangerously naive as it merely shuffles the bills off to the future as though they could be forever hidden by time.

    Leaving aside the obvious moral parallel between this behavior and the fable about The Ant and the Grasshopper , this insolvency issue, large though it appears, is merely a symptom; an effect rather than a cause. At the root of it all is our monetary system, which we need to understand before we can begin to posit solutions.

    Let me be clear – I think that while it was operating well, our monetary system was a great system, one that fostered incredible technological innovation and advances in standards of living. But every system has its pros and its cons and our monetary system has a doozy of a flaw.

    It is run by humans.

    Oh, wait, that's a valid complaint but not the one I was looking for.

    Here it is: Our monetary system must continually expand, forever.

    Which means it has a math problem in the same way that a beached whale has a breathing problem. In each case we have a massive organism that was optimized for a very different set of conditions than those in which it currently finds itself."(snip)

  2. #2
    God/dess Deogol's Avatar
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    It's the hippies fault.

    Think about it.

    Lying around smoking dope - dancing - and ignoring the things that worked because it was part of "the system."

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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    Great article;thanks Just a little more perspective from a news article this morning. The interest on the National Debt for 2006 was 406 plus billion dollars.
    What is keeping us afloat?

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    God/dess Deogol's Avatar
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    Faith in and Good Will of the United States Government.

    And a whole lot of inertia.

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    Banned Melonie's Avatar
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    The interest on the National Debt for 2006 was 406 plus billion dollars.
    What is keeping us afloat?
    well, let's see ... 400 billion brand new freshly printed pieces of green paper that have a dead president' picture on them, or

    the sale of 400 billion dollars worth of brand new US T bonds which the gov't backs with a promise that we and our children will pay them back with interest over the next 5-10-20 years via increased tax rates, or

    revenues from the sale of US interstate highways etc. to foreign owner / operators (i.e. I90 in Indiana to name an example)

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    Veteran Member StuartL's Avatar
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    Pretty depressing even if you aren't in the US. If only for the fact that the US economy is a driver for so many elements of the rest of the world economy.

    Nice find though Melonie.

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    God/dess Deogol's Avatar
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    It is the demand for the US dollar that really keeps it afloat.

    No one is in a rush to load up on Algerian Dinars eh? One cannot trade them for anything en masse. So why make loans in something to get paid back in that thing that no one else wants!?!?

    This is one of the reasons Iran is trying to get the world oil market on Euro's. There is no reason for people to stock up on dollars anymore to buy oil from Iran. Hence there is no need for dollars as far as this important product for most of the world.

    (Note: Saddam Hussein before the invasion was planning on switching to Euros too since he had closer relationships with Europe than the US.)

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    God/dess Deogol's Avatar
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    Speaking of New Orleans... perhaps we can expect an increase in urban warfare too:

  9. #9
    Jay Zeno
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    Hippies? And here I thought it was FDR's fault, for all those social programs.

    No, wait, Eisenhower with the public works project of the interstate system, squandering our balanced budget like that.

    No, wait, it was Kennedy and fueling the space and arms race.

    No, wait, it was LBJ with the Great Society stuff and pouring money into that rathole of Vietnam.

    No, wait, it was Nixon with social-driven programs like the EPA and opening up trade with China.

    No, wait, it was Carter and that double-digit interest rate stuff.

    No, wait, it was Reagan, mortgaging us into a huge national deficit in order to win the Cold War.

    No, wait, it was Clinton, negating his balanced budget with a false economy.

    No, wait, it was Bush II, taking that balanced budget and shredding it on a needless war and political favors.


    Anyone got a program?

  10. #10
    God/dess Deogol's Avatar
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    Nope. It was the hippies, man!

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    Banned Melonie's Avatar
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    Anyone got a program?
    since you mention it, and the theme of this thread is the bankrupting of America, John Edwards apparently does ...

  12. #12
    Jay Zeno
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    Well, I meant "program" in the nonpolitical sense... like you get at a play, to tell the players apart. Because sometimes it's tough.

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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    Quote Originally Posted by Deogol View Post
    It's the hippies fault.

    Think about it.

    Lying around smoking dope - dancing - and ignoring the things that worked because it was part of "the system."
    Yes the hippies...also known as Gordon Gecko, Bill Clinton and most of the ultra-ricj baby boomers. they were hiippies until they grew up. thene they went for the money and left us all to pay for the debts....just like their fathers.

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    God/dess Deogol's Avatar
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    Default Re: weekend commentary - New Orleans and Beached Whales ...

    Quote Originally Posted by Pinups4DotCom View Post
    Yes the hippies...also known as Gordon Gecko, Bill Clinton and most of the ultra-ricj baby boomers. they were hiippies until they grew up. thene they went for the money and left us all to pay for the debts....just like their fathers.
    Exactly.

    Except for the father's part.

    That was the WW II generation who saved the world from fascism and helped to create the largest American middle class ever.

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