[seahorse2]

Here's an editorial arguing the US is insolvent. In support of its argument, it cites the recent "Finanical Report of the United States Government" released on December 15, 2006 by the US treasury.

The editorial makes the valid point that this recent US Financial Report got zero MSM attention, I thought we should start and thread on it and give it some attention here.

The editorial cites this statement in the US Statement:

$this->bbcode_second_pass_quote('', 'G')iven 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.

[Heineken]

Is "insolvent" a polite way of saying bankrupt? Or better yet "broke"?

[seahorse2]

I'm not sure there's really a good economic term to describe it, maybe its best to say the US economy has the potential of becoming a rogue wave. Maybe people would understand that?

[dbruning]

It's the economy that drives the military efforts in the ME.

I'd say it IS a rogue wave already...see how it swamped Iraq?

[perdition79]

nonsense! we can always print more money!

[MOCKBA]

US government is by no means bankrupt and in fact is less bankrupt then most European governments. What this report shows though is how small recent deficit is in comparison with Social Security obligations, or in other words US would get away from what it did over last 5 years just because everybody would face "baby boomers" retiring in the next 5 years.

What we would probably see soon are
1. Higher taxes, especially SS taxes
2. Lower SS benefits

The easiest trick of them all is to publicize today total obligations (403% of GDP as in this article), then say slash SS benefits in half and raise taxes. This way total obligations would get back into 200% of GDP (better then say Germany or France), but "balance sheet" debt would get bellow 50% of GDP. The faith in US government obligations would soar, so would USD... but why would US economy want that? Anyway, see how easy it would be to pay for both recent wars?

[Last_Laff]

$this->bbcode_second_pass_quote('perdition79', 'n')onsense! we can always print more money!

[Concerned]

$this->bbcode_second_pass_quote('MOCKBA', 'U')S government is by no means bankrupt and in fact is less bankrupt then most European governments. What this report shows though is how small recent deficit is in comparison with Social Security obligations, or in other words US would get away from what it did over last 5 years just because everybody would face "baby boomers" retiring in the next 5 years.

What we would probably see soon are
1. Higher taxes, especially SS taxes
2. Lower SS benefits

The easiest trick of them all is to publicize today total obligations (403% of GDP as in this article), then say slash SS benefits in half and raise taxes. This way total obligations would get back into 200% of GDP (better then say Germany or France), but "balance sheet" debt would get bellow 50% of GDP. The faith in US government obligations would soar, so would USD... but why would US economy want that? Anyway, see how easy it would be to pay for both recent wars?

[rogerhb]

$this->bbcode_second_pass_quote('Last_Laff', '')$this->bbcode_second_pass_quote('perdition79', 'n')onsense! we can always print more money!

[mmasters]

$this->bbcode_second_pass_quote('Concerned', 'T')he big danger tho is that people get it into their heads to vote someone in even a 3rd party that promises to re-distribute wealth or otherwise "save" them. Then you would really see some SHTF if the current political masters can't keep a lid on a groundswell of discontent. (obvioulsy dependent on how many people it impacts)

[MOCKBA]

$this->bbcode_second_pass_quote('Concerned', '
')Good post MOCKBA thats exactly what the govt. is aiming at. Create a fiscal train wreck and then dump social security entitlements and other entitlements. Easy way to balance the budget.

[NEOPO]

well heck then all we need is about 600 more million of them and we are good to go!

[rogerhb]

$this->bbcode_second_pass_quote('MOCKBA', 'T')hose illegal mexicans will be paying for baby boomers retirement after all.

[joewp]

$this->bbcode_second_pass_quote('rogerhb', '')$this->bbcode_second_pass_quote('MOCKBA', 'T')hose illegal mexicans will be paying for baby boomers retirement after all.

[nero]

$this->bbcode_second_pass_quote('', 'T')o see how this demographic thing would play out, look at Canada over next 15 years. On one hand Canadians are fiscally conservative, on the other hand like Europeans they cannot dump social security and on top of this all Canadian problem with baby boomers is a lot worse then in US (or Europe).

[benzoil]

The book you need to read is "The Coming Generational Storm: What You Need to Know About America's Economic Future" by Kotlikoff and Burns. Its on Amazon here.

In a nutshell?
1) Increased taxes won't fix the problem
2) Immigrants won't fix the problem
3) Reduced benefits won't fix the problem

Its eminently readable for something as scary as it is. I don't think they talked about super duper hyperinflation though. THAT might definitely fix the problem.

[rogerhb]

$this->bbcode_second_pass_quote('benzoil', 'I') don't think they talked about super duper hyperinflation though. THAT might definitely fix the problem.

[seahorse2]

And Mockba says, after we cut all those nasty entitlements, "let them eat cake." And all those dumb hay bailers looked up at him, grabbed their hammers and started building a guillotine.

Look at places without any welfare, like Iraq, Afghanistan, Nigeria, etc. and ask what happens when the system just breaks down. Sure, its easy to stop entitlements, but are you ready for "blow back?"

[benzoil]

$this->bbcode_second_pass_quote('rogerhb', '')$this->bbcode_second_pass_quote('benzoil', 'I') don't think they talked about super duper hyperinflation though. THAT might definitely fix the problem.

[vision-master]

Keep knocken down our social programs. Seems as if the younger generation is buying into this pile of crap. Them and the Repub's.

Without these programs people will be taken their guns to the streets and the "haves" will need to live behind barbed wire fences.