[seahorse2]

According to this writer, the US accounting office has produced a little publicized document that shows a financial doomsday for the US in a decade.

Washington Post

[Fishman]

Should make things interesting. No way for conservatives to fund war, no way for liberals to fund social programs. You think we fight now amongst ourselves, consider this senario.

[Geko45]

For those eager beavers among us who would like to read the report for themselves, it can be downloaded in .pdf format from here:

http://www.fms.treas.gov/fr/05frusg/05frusg.pdf

[Leanan]

Well, I guess we now know why Bush was trying to cut veterans' benefits even as he was sending soldiers into harm's way...

[RonMN]

The last paragraph of this report says: The message is clear: Congress is balking at even minimal actions needed to get a grip on the budget

That tells me we DON'T have a decade...we may not even have 2 years.

[bartholland]

Is this the reason stocks have been booming while oil has too?

[UnpreparedMF]

Unfortunately, it will probably take that 'perfect storm' to hit before people put down their lattes and pay attention to the way we have been misrepresented over the last couple decades.

I fear that my kids will be inheriting a third world America...

[Colorado-Valley]

Paul Krugman in "The Great Unraveling" says America is being turned into a banana republic that will be ruled by a military oligarchy.

[Eli]

Thanks for that great article.

Man, this is depressing shit.

[DantesPeak]

I agree with the assessment that the US has only ten years or less before real budget deficits spiral out of control.

In the reality of the present, the overwhelming deficit spending problems already greatly influence financial and commodity markets. Granted we are reaching "peak" production on many natural resources, and the prices of those goods will rise relative to services. On a more subtle level, the need to finance huge budget deficits causes the Fed to take expansionary money measures. When combined with petrodollar recycling, a great amount of new fiat money is created in the world economy - causing a strong inflationary trend throughout the world.

Don't belive the mainstream media - over the last year or so, the Fed has not been 'tighter' with money creation but looser - least higher interest rates (needed to prop up the $) slow the economy too fast.

[DesertBear2]

The Fed strategy may be to raise rates high enough to shock the system and slow down futher accumulation of household debt. They are hoping that the crazy price action in the RE/home equity markets will level off.

After that they will loosen the taps and run inflation up to a moderate flow...which will slowly decrease the existing debt mountain a percent at a time. The rise in inflation will liquify the economy and help to limit the number of economic disaster stories that are so damaging to an economy that runs on constant mass consumption.

In other words, they are running on a wing and a prayer....good stuff for adrenaline addicts.

Of course, this interest-rate high-wire act will not do anything to address the deep structural issues of the US economy.

[ohanian]

I made some back of the envelope calculations last year or the year before and I came to the conclusion that

USA would be a financial basketcase in 2020

However, it would not even get to 2020. At some point between now and 2020, the rest of the world would lose faith in USA economically speaking.

The only problem is that it is impossible to work out the year this lost of faith would occured.

My bet is on 2014-2016.


So say Ohanian.

[Pops]

Thanks for the link Geko.

As bad as the current year's numbers look, this looks even worse:
(Emphasis mine)

GOVERNMENT ACCOUNTABILITY OFFICE REPORT

$this->bbcode_second_pass_quote('', ' ')Second, the U.S. government’s total reported liabilities, net social insurance commitments and other fiscal exposures continue to grow and now total more than $46 trillion, representing close to four times current GDP and up from about $20 trillion or two times GDP in 2000.