Wednesday, August 15, 2007
Learn from the fall of Rome, US warned
I want to step out of my role as permabear and say that the Social Security and health care problems will be solved by simply not paying for them. The way I imagine it happening is that the underfunding crisis hits and we decide to cut the benefits. We being the majority who pay taxes.
The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned.
David Walker, comptroller general of the US, issued the unusually downbeat assessment of his country’s future in a report that lays out what he called “chilling long-term simulations”.
Not to mention a currency which the central bank has no problems debasing year after year. Just as long as our major trading partners do the same. The only problem with this analysis is that national defense is a very small fraction of our GDP. Even with the war.
Drawing parallels with the end of the Roman empire, Mr Walker warned there were “striking similarities” between America’s current situation and the factors that brought down Rome, including “declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government”.
Ironically, the Federal gov't looks financially stable with debt as a percentage of GDP quite average. John Q Public is in much worse shape, however. Savings is almost negative and consumer debt and mortgage debt have stretched the credit worthiness of the average American to
“I’m trying to sound an alarm and issue a wake-up call,” he said. “As comptroller general I’ve got an ability to look longer-range and take on issues that others may be hesitant, and in many cases may not be in a position, to take on.
“One of the concerns is obviously we are a great country but we face major sustainability challenges that we are not taking seriously enough,” said Mr Walker, who was appointed during the Clinton administration to the post, which carries a 15-year term.
The fiscal imbalance meant the US was “on a path toward an explosion of debt”.
In Florida and California it is.
"A decline in prices, like increases, tends to be self-fulling," Michael Carney, head of Cal Poly Pomona's Real Estate Research Council, tells the LATimes here. "If buyers see prices falling, they hold off and don't buy and cause prices to fall even further. But it takes a while.So we stand at stalemate while sellers have no real pressure to lower their prices. Which is a shame because I have a couple of houses in mind that fill my bill for the almost perfect home. And it looks like we might be moving to Mokena. Any house that has an English Pub and a swimming pool with a pool house that is almost a house unto itself is tops on my list. Mom? Forget the flying car, how about a down payment. P.S. Work is going well enough that I am actually thinking this might be possible in a couple of years. One thing I did learn is to keep my overhead very low to keep the pressure off me when I trade. Too many bills to pay means I think about those bills when I make trading decisions. Traders have to pay cash. It is the only way to avoid worry and the losses which accompany them.