The U.S. is Bankrupt and doesn't even know it

[Speck Tater]

Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.


more at link:

http://www.bloomberg.com/news/2010-08-11/u-s-is-bankrupt-and-we-don-t-even-know-commentary-by-laurence-kotlikoff.html

[bossy22]

1. Heres a quick tip when figuring out if an article is full of

"deficit hawk" propoganda- if they compare the u.s. to greece saying we are worse, but never once mention japan- then you know its FOS (full of shit). Why? well japan has a debt to GDP ratio of 200%, a declining and rapidly aging population. The u.s. on the other hand has a debt of 80% GDP and has a growing but slowly aging population. So who do you think is in worse fiscal shape?

they also use such statements as "when the bond market wakes up", because unless its doing what they want it to do, its being manipulated.

also i will say the CBO estimate is based on a projection of the baby boomers doing an en mass retirement when they reach age 65-67...which is probably not goin to happen. Many baby boomers see themselves working into the early 70's

[girl gone mad]

4. +1

[SlipperySlope]

6. Japan will be facing a dire situation.

Japan will indeed be facing a dire situation. It is primarily a matter of demographics.

Forget about their debt, forget about their savings, forget about their national pension plan. It boils down to a simple allocation of resources.

Unless they can do something quickly about their birthrate, or unless they plan on opening up to widespread immigration, by 2050 it looks like there will be *more* Japanese elderly then their are Japanese workers.

Savings and debts are just means of accounting here. The real problem is how they will handle the pain of allocating the goods and services produced by X workers among a population of 2X.

[Murray_R]

8. how did Japan get to 200% debt to GDP?

Oh, that's right, stimulus after stimulus, and having the BOJ hold the interest rate down next to zero. How many years have they been trying (unsuccessfully) to stimulate their economy in this manner?
Their debt service costs have doubled. The biggest difference, which you left out, is that their society has a much better saving propensity than ours. If you borrow money from your wife to cover the household bills, is that the same as borrowing from the neighbor? Paying your wife back, even with interest, is going to 'stay in the family', but if you're sending that money back across the street with interest, it's a different matter. It's particularly dangerous when you're constantly revolving the debt to the tune of trillions of dollars, and today's low rates could vanish next year. That's when you 'go Greece', when the rest of the world says, 'we'd like a little more risk premium'. The only way to counter that is to crank up the printing presses. Hello stagflation, if you're lucky...


"also i will say the CBO estimate is based on a projection of the baby boomers doing an en mass retirement when they reach age 65-67...which is probably not goin to happen. Many baby boomers see themselves working into the early 70's"

Actually, because so many payrolls have been lost in this recession, more of them are opting for early retirement than expected because they can't find work. That's partly why Social Security is already running deficits years ahead of the projections.
link

[whyverne]

2. Crapola, the US is still raking in over 2 trillion a year in taxes.

Hardly bankrupt. And what will the baby boomers do with all the money? Spend it. And that will be good for the economy.

[bossy22]

3. and if it wasnt for this recession we'd be raking in

over 3 trillion.

[bemildred]

5. What a pantload of ignorant horseshit. nt

[felix_numinous]

7. Pentagon: "We lost the money"

Rumsfeld on 9-10-2001: "There's a couple trillion missing." No audit is done, no questions asked.

American people: "We must be in a recession, let's tighten our belts and cut funding to healthcare and retirement.....?"

There is a fallacy that economics is some kind of unfathomable magic act that only some people can understand. That is what these people are banking on.

[winslowd]

9. hmmmm

I am concerned posts like whyvernev "Hardly bankrupt. And what will the baby boomers do with all the money? Spend it. And that will be good for the economy."
I am struggling with a concept I frequently see, both on news media, forums, and in everyday peer conversation. Whenever a conversation concerning our economy takes place it seems to lead down the same road of "Consumer Spending". It usually follows some discussion concerning the need for, or some forecast concerning the American peoples spending habits. In most of these discussions it seems like the idea is once people begin to spend it will allow the economy to build momentum and improvement will be seen. I agree that the movement of money is important and in theory is what our economy is dependent on. The problem I see with this theory is where the money goes. Lets face the facts, increased spending in our countries current monopoly is on a one way funnel to big corporations. For example someone decides "Im going to buy a new T.V", this and most electronics is going to be made by some huge corporations out of country. "Im going to buy a new G.M car/truck!", the vehicle is made in mexico. "Im going to go grocery shopping, but the local grocer was pushed out of buisiness......looks like Walmart." "Im going to drive up north for vacation!" The gas money moves to a big corp. Obviously I could go on and on. So while the media pushes this spending issue, the money is funneled upwards to a select group of wealthy, and often out of our country. We then are supposed to be re-assured by the "Trickle down" idea. I suppose this is the low wage or lack of healthcare that the guy selling you the t.v, ringing up your groceries, selling, or fixing that new car. Trickle down, sounds great. Its very troubling that we as Americans have allowed this monopoly to thrive. Its amazing how we talk about our great freedom and democracy, when in reality we have sold ourselves into modern day financial slavery. It seems no matter how you try to spend your money today its most likely not going to end up in the right hands. Now if it was the news saying the wealthy need to start increasing their spending that might make sense. I wish when it came to these discussions there was more frequency of talks on infrastructure. One other huge factor that concerns me is America doesnt really produce much anymore. Can you really expect a thriving economy when most jobs are based in a service type industry? How can we as a country become wealthy if we dont export anything? And why do we allow other countries to become wealthy by purchasing their goods with very little import tax? I feel we need some sort of serious production to bounce back, it just seems to take a backseat often to "Consumer spending." I am done with my rant. Does anyone notice this trend? Am I wrong? Can it be fixed with all the protection built around corporate America? No disrespect to whyverne, but what good is all that money if it all heads to the same select people?

[winslowd]

10. and...

2 trillion dollars of the most poorly used money. And if it offset our expenses there wouldnt be a debt...

[Statistical]

11. Depend on what you consider "same select people"

"No disrespect to whyverne, but what good is all that money if it all heads to the same select people?"

Roughly 30% of households own stocks, or mutual funds of some kind. Slightly more than half of the people in this country are employed by the "private sector" thus their employment, benefits, and retirement are based on those ebil corporations.


"I feel we need some sort of serious production to bounce back, it just seems to take a backseat often to "Consumer spending."
US has the largest industrial output of any nation on the planet, roughly equal to China (#2) + Japan (#3) combined.