Is America's financial collapse inevitable?

[Danno 1,228]

IN DEBT WE TRUST

Is America's financial collapse inevitable?

Looming crisis is critical test of republic's sustainability

Posted: January 14, 2010

We were blindsided. We never saw it coming.

So said Goldman Sachs CEO Lloyd Blankfein of the financial crisis of 2008. He likened its probability to four hurricanes hitting the East Coast in a single season.

Blankfein was reminded by the chairman of the Financial Crisis Inquiry Committee, Phil Angelides, that hurricanes are "acts of God." Financial crises are manmade. Yet Blankfein was backed up by Jamie Dimon of JPMorgan, who said, "Somehow, we just missed ... that home prices don't go up forever."

The Wall Street titans thus conceded they did not foresee the housing bubble ever bursting and they did not consider the possibility of a collapse in value of the sub-prime mortgage securities piled up on their books.

Backing up Blankfein's plea of ignorance and incomprehension is this: The crisis killed Lehman Brothers and would have killed every one of them had not the Treasury and Fed, neither of which saw it coming, either, intervened with hundreds of billions in bailout cash.

Yet there were those who warned a housing bubble was being created like the dot-com bubble; others who predicted the Empire of Debt was coming down – as, today, there are those warning that the United States, with consecutive deficits running 10 percent of gross domestic product, is risking an eventual default on its national debt.

The warnings come from the Committee on the Fiscal Future of the United States, chaired by Rudolph Penner, former head of the Congressional Budget Office, and David Walker, former head of the Government Accountability Office and author of "Comeback America: Turning the Country Around and Restoring Fiscal Responsibility."

Who's getting richer under the Obama regime? Find out in Tim Carney's new book, "Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses"

With that share of the U.S. national debt held by individuals, corporations, pension funds and foreign governments having risen in 2009 from 41 percent to 53 percent of GDP, Penner and Walker believe it imperative to get the deficit under control. Unfortunately, it is not possible to see how, politically, this can be done.

Consider. The five largest elements in the budget are Social Security, Medicare, Medicaid, defense and interest on the debt.

With interest rates near record lows, and certain to rise, and back-to-back $1.4 trillion deficits, this budget item has to grow and has to be paid if the U.S. government is to continue to borrow.

Second, with seniors on fire against Medicare cuts in health-care reform, it would be fatal for the Obama Democrats to curtail Social Security or Medicare benefits any further this year. Next year, they will not only lack the congressional strength but any desire to do so, after their anticipated shellacking this fall.

The same holds true for Medicaid. The Party of Government is not going to cut health benefits for its most loyal supporters. Indeed, federal costs may rise as state governments, constitutionally required to balance their budgets, cut social benefits and beg the feds to pick up the slack.

This leaves defense. But the president is deepening the U.S. involvement in Afghanistan to 100,000 troops, and the military needs to replace weaponry and machines depreciated in a decade of war.

Where, then, are the spending cuts to come from?

Can the administration cut Homeland Security, the FBI or CIA after the near disaster in Detroit? Will Obama cut the spending for education he promised to increase? Will he cut funding for food stamps, unemployment insurance or the Earned Income Tax Credit in a recession? For the near term, the entitlements are untouchables.

Is this Democratic Congress, which increased the budgets of all the departments by an average of 10 percent, going to take a knife to federal agencies or federal salaries, when federal bureaucrats and beneficiaries of federal programs are the most reliable voting blocs in their coalition?

What about tax hikes?

Obama has promised to let the Bush tax cuts lapse for those earning $250,000 but has pledged not to raise taxes on the middle class. Any broad-based tax would be politically suicidal for him and his increasingly unpopular party.

But if taxes are off the table, Afghan war costs are inexorably rising and cuts in Social Security, Medicare, Medicaid and entitlement programs are politically impossible, as pressure builds for a second stimulus, how does one reduce a deficit of $1.4 trillion?

How does one stop the exploding national debt from surging above 100 percent of GDP?

America is the oldest and greatest constitutional republic, the model for all the others. But if our elected politicians are incapable of imposing the sacrifices needed to pull the nation back from the brink of a devaluation or default, is democratic capitalism truly, as Francis Fukuyama told us just two decades ago, the future of mankind?

What the looming fiscal crisis of this country portends is nothing less than a test of whether this democratic republic is sustainable.

By Patrick J. Buchanan

[Hilarious Clinton 452]

Not a problem. Obama will just print more money.

[Danno 1,228]

Not a problem. Obama will just print more money.

KInda like pissing to fill your drinking cup... and believing it will keep you from dehydrating?

[Danno 1,228]

Of course it is only fair to point out this problem was before Obama, he has simply "greased the skids" and added even more weight. (a lot more weight)

[Hilarious Clinton 452]

Of course it is only fair to point out this problem was before Obama, he has simply "greased the skids" and added even more weight. (a lot more weight)

Exactly. It started before Obama. W spent like a drunken sailor, Obama spends like a coke addict.

"We contend that for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."

-Winston Churchill

[SMR 368]

The word on the street is that it's possible to drink your pee twice through the system. After the third time, it becomes toxically concentrated. The trick is to know how many times a certain portion of pee has been through the system.

[Dan J 277]

No suggestion to cut the largest department of them all, DoD. Bombing people is noble, helping the poor, not so much. It's always interesting how fiscal responsibility is only now an issue, when it wasn't during Bush's 8 years in office. Bush had the best opportunity in the last 10 years to get the country in a position with a lot less debt, but he squandered it.

[Danno 1,228]

The word on the street is that it's possible to drink your pee twice through the system. After the third time, it becomes toxically concentrated. The trick is to know how many times a certain portion of pee has been through the system.

No actually, the TRICK is to balance the budget and keep it balanced by not committing the govt to these ever growing social entitlements, hell.. wars are bad enough but the typically have an ending point at some time.

[w¡n9Nµ7 §£@¥€r 123]

Is pee fungible?

[FortLaudy 10]

I have a simple theory: whatever goes down, must come up

[Sc0tt28 26]

The word on the street is that it's possible to drink your pee twice through the system. After the third time, it becomes toxically concentrated. The trick is to know how many times a certain portion of pee has been through the system.

"The word on the street"? Where do you get this stuff?

[justashooter 430]

No actually, the TRICK is to balance the budget and keep it balanced by not committing the govt to these ever growing social entitlements, hell.. wars are bad enough but the typically have an ending point at some time.

no, actually, the trick is to get two other countries fighting, and sell bullets to both of them.

[SMR 368]

"The word on the street"? Where do you get this stuff?

If you type into google "How many times can I drink", the first suggestion is "my own urine." Googling this leads to several answer pages. This:

http://www.fluther.com/disc/11063/how-many...urine-before-i/

for example, gives the answer as two.

[w¡n9Nµ7 §£@¥€r 123]

I remember the good ol' days when the street was real.

[Sc0tt28 26]

IN DEBT WE TRUST

Is America's financial collapse inevitable?

Looming crisis is critical test of republic's sustainability

Posted: January 14, 2010

there are those warning that the United States, with consecutive deficits running 10 percent of gross domestic product, is risking an eventual default on its national debt.

How does one stop the exploding national debt from surging above 100 percent of GDP?

,

What the looming fiscal crisis of this country portends is nothing less than a test of whether this democratic republic is sustainable.

By Patrick J. Buchanan

The US will probably eventually go bankrupt.

I believe that Congress (and the states of course) needs to amend the Constitution to read that for the President to submit a budget that results in a deficit, the same shall be an impeachable offense.