In alt.politics.usa.republican Melanie Ford
<spoofedatnospam@rockieford.nte> wrote:
: http://www.axisoflogic.com/artman/publish/article_23613.shtml

: Economy
: The United States is Insolvent
: By Dr. Chris Martenson
: Dec 26, 2006, 18:56

: Prepare to be shocked.

: The US is insolvent. There is simply no way for our national bills
: to be paid under current levels of taxation and promised benefits.
: Our combined federal deficits now total more than 400% of GDP.

: That is the conclusion of a recent Treasury/OMB report entitled
: Financial Report of the United States Government that was quietly
: slipped out on a Friday (12/15/06), deep in the holiday season, with
: little fanfare. Sometimes I wonder why the Treasury Department
: doesn?t just pay somebody to come in at 4:30 am Christmas morning to
: release the report. Additionally, I?ve yet to read a single account
: of this report in any of the major news media outlets but that is
: another matter.

: But, hey, I understand. A report is this bad requires all the
: muffling it can get.

: In his accompanying statement to the report, David Walker,
: Comptroller of the US, warmed up his audience by stating that the
: GAO had found so many significant material deficiencies in the
: government?s accounting systems that the GAO was ?unable to express
: an opinion? on the financial statements. Ha ha! He really knows how
: to play an audience!

: In accounting parlance, that?s the same as telling your spouse ?Our
: checkbook is such an out of control mess I can?t tell if we?re broke
: or rich!? The next time you have an unexplained rash of checking
: withdrawals from that fishing trip with your buddies, just tell her
: that you are ?unable to express an opinion? and see how that flies.
: Let us know how it goes!

: Then Walker went on to deliver the really bad news:

: Despite improvement in both the fiscal year 2006 reported net
: operating cost and the cash-based budget deficit, the U.S.
: government?s total reported liabilities, net social insurance
: commitments, and other fiscal exposures continue to grow and now
: total approximately $50 trillion, representing approximately four
: times the Nation?s total output (GDP) in fiscal year 2006, up from
: about $20 trillion, or two times GDP in fiscal year 2000.

: As this long-term fiscal imbalance continues to grow, the
: retirement
: of the ?baby boom? generation is closer to becoming a reality with
: the first wave of boomers eligible for early retirement under Social
: Security in 2008.

: Given these and other factors, it seems clear that the nation?s
: current fiscal path is unsustainable and that tough choices by the
: President and the Congress are necessary in order to address the
: nation?s large and growing long-term fiscal imbalance.

: Wow! I know David Walker?s been vocal lately about his concern over
: our economic future but it seems almost impossible to ignore the
: implications of his statements above. From $20 trillion in fiscal
: exposures in 2000 to over $50 trillion in only six years? What shall
: we do for an encore?shoot for $100 trillion?

: And how about the fact that boomers begin retiring in 2008?that
: always seemed to be waaaay out in the future. However, beginning
: January 1st we can start referring to 2008 as ?next year? instead of
: ?some point in the future too distant to get concerned about now?.
: Our economic problems need to be classified as growing, imminent,
: and unsustainable.

: And let me clarify something. The $53 trillion shortfall is
: expressed as a ?net present value?. That means that in order to make
: the shortfall disappear we?d have to have that amount of cash in the
: bank ? today - earning interest (the GAO uses 5.7% & 5.8% as the
: assumed long-term rate of return). I?ll say it again - $53 trillion,
: in the bank, today. Heck, I don?t even know how much a trillion is
: let alone fifty-three of ?em.

: And next year we?d have to put even more into this mythical interest
: bearing account simply because we didn?t collect any interest on
: money we didn?t put in the bank account this year. For the record,
: 5.7% on $53 trillion is a bit more than $3 trillion dollars so you
: can see how the math is working against us here. This means the
: deficit will swell by at least another $3 trillion plus whatever
: other shortfalls the government can rack up in the meantime. So call
: it another $4 trillion as an early guess for next year.

: Given how studiously our nation is avoiding this topic both in the
: major media outlets and during our last election cycle, I sometimes
: feel as if I live in a small mountain town that has decided to
: ignore an avalanche that has already let loose above in favor of
: holding the annual kindergarten ski sale.

: The Treasury department soft-pedaled the whole unsustainable
: gigantic deficit thingy in last year?s report but they have taken a
: quite different approach this year. From page 10 of the report:

: The net social insurance responsibilities scheduled benefits in
: excess of estimated revenues) indicate that those programs are on an
: unsustainable fiscal path and difficult choices will be necessary in
: order to address their large and growing long-term fiscal imbalance.

: Delay is costly and choices will be more difficult as the
: retirement
: of the ?baby boom? gets closer to becoming a reality with the first
: wave of boomers eligible for retirement under Social Security in
: 2008.

: I don?t know how that could be any clearer. The US Treasury
: department has issued a public report warning that we are on an
: unsustainable path and that we face difficult choices that will only
: become more costly the longer we delay.

: Perhaps the reason US bonds and the dollar have held up so well is
: that we are far from alone in our predicament. In a recent article
: detailing why the UK Pound Sterling may fall, we read this dreadful
: evidence:

: Officially, [UK] public sector net debt stands at ?486.7bn.
: That?s
: equal to US$953.9bn and represents a little under 38% of annual GDP.
: Add the state?s ?off balance sheet? debt, however ? including its
: pension promises to state-paid employees ? and the total shoots
: nearly three times higher. Research by the Centre for Policy Studies
: in London says it would put UK government deficits at a staggering
: 103% of GDP.

: If we perform the same calculations for the US, however, we find
: that the official debt stands at $8.507 trillion or 65% of (nominal)
: GDP but when we add in our ?off balance sheet? items the national
: debt stands at $53 trillion or 403% of GDP.

: Now that?s horrifying. Staggering. Whatever you wish to call it.
: More than four hundred percent of GDP(!). And that?s just at the
: federal level. We could easily make this story a bit more ominous by
: including state, municipal and corporate shortfalls. But let?s not
: do that.

: Here?s what the federal shortfall means in the simplest terms.

: 1) There is no way to ?grow out of this problem?. What really jumps
: out is that the US financial position has deteriorated by over $22
: trillion in only 4 years and $4.5 trillion in the last 12 months
: (see table below, from page 10 of the report). The problem did not
: ?get better? as a result of the excellent economic growth over the
: past 3 years but rather got worse and is apparently accelerating to
: the downside.

: US net SS positions

: Any economic weakness will only exacerbate the problem. You should
: be aware that the budgetary assumptions of the US government are for
: greater than 5% nominal GDP growth through at least 2011. In other
: words, because no economic weakness is included in any of the
: deficit projections presented, $53 trillion could be on the low
: side. Further, none of the long-term costs associated with the Iraq
: and Afghanistan wars are factored in any of the numbers presented
: (thought to be upwards of $2 trillion more).

: 2) The future will be defined by lowered standards of living. As
: Lawrence Kotlikoff pointed out in his paper titled ?Is the US
: Bankrupt?? posted to the St. Louis Federal Reserve website, the
: insolvency of the US will minimally require some combination of
: lowered entitlement payouts and higher taxes. Both of those
: represent less money in the taxpayer?s pockets and, last time I
: checked, less money meant a lower standard of living.

: 3) Every government facing this position has opted to ?print its way
: out of trouble?. That?s an historical fact and our country shows no
: indications, unfortunately, of possessing the unique brand of
: political courage required to take a different route. In the
: simplest terms this means you & I will face a future of
: uncomfortably high inflation, possibly hyperinflation if the US
: dollar loses its reserve currency status somewhere along the way.

: Of course, it is impossible to print our way out of this particular
: pickle because printing money is inflationary and therefore a
: ?hidden tax? on everyone. Consider, what?s the difference between
: having half of your money directly taken (taxed) by the government
: and having half of its value disappear due to inflation? Nothing.
: Except that the former is political suicide while the latter is
: conveniently never discussed by the US financial mainstream press
: (for some reason) and therefore goes undetected by a majority of
: people as the thoroughly predictable outcome of deficit spending.
: All printing can realistically accomplish is the preservation of
: some DC jobs and the decimation of the middle and lower classes.

: In summary, I am wondering how long we can pretend this problem does
: not exist. How long can we continue to buy stocks and flip houses,
: forget to save, pile up debt, import Chinese made goods, and export
: debt? Are these useful activities to perform while there?s an
: economic avalanche bearing down upon us?

: Unfortunately, I am not smart enough to know the answer. I only know
: that hoping a significant and mounting problem will go away is not a
: winning strategy.

: I know that we, as a nation, owe it to ourselves to have the hard
: conversation about our financial future sooner rather than later.
: And I suspect that conversation will have to begin right here,
: between you and me because I cannot detect even the faintest glimmer
: that our current crop of leaders can distinguish between urgent and
: expedient.

: What we need is a good, old-fashioned grassroots campaign.

: In the meantime, I simply do not know of any way to fully protect
: oneself against the economic ravages resulting from poorly managed
: monetary and fiscal institutions. For what it?s worth, I am heavily
: invested in gold and silver and will remain that way until the
: aforementioned institutions choose to confront ?what is? rather than
: ?what?s expedient?. This could be a very long-term investment.

: Are you shocked?

I'm not shocked at all. Only a small handful of looney tune brain
dead loser lib dems don't know that as is social security will
bankrupt the US.