Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

[PhilT]

Not living in the USA it's not easy to judge, but is it really this bad over there?

If so, where are we all headed?

http://www.naturalnews.com/032063_fe...ankruptcy.html

[dibl]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

That's one of those "How horrible is horrible?" questions. The present "crisis" is largely driven by an event that has been predictable, and predicted, for some 60 years. The large population demographic group known as the "baby boom" generation is now exiting the workforce (i.e. their earnings taxes are leaving the revenue stream), they are selling their large single-family homes and taking apartments or condominiums (increasing/aggravating the supply of unsold and discounted homes on the market), they are moving onto the rolls of government-funded "safety net" social welfare (i.e. they are becoming consumers of the earnings taxes of the smaller generations behind them). So, my answer is, the cowardly Congresses of the past two decades have allowed this approaching storm to roll right in, and the consequences of their cowardice are now on the citizens who let it happen. In the American democracy, there really is no one to blame but the people. Yes, I do expect to hear disagreement on this view, but it is my view.

[67GTA]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

What "dibl" said plus the fact that the US gov has massively grown and illegally taken over almost every aspect of our lives (according to our constitution). Half the citizens are living off the gov, and not contributing. We borrow money every day to keep it running. It has to be rebooted, or just crash. Most Americans won't go along with the gradual socialization of our country as evidenced by the rise of the Tea Party. The only problem is that you can't hire someone to cut their own throat. They talk big about cuts until you start reaching for their own pockets. Either way, the current system is insolvent and unsustainable. Four more years of the current administration will probably do us in. If enough people wake up and vote the right people in for 2012, we might climb out of this hole in about 20-30 years, but a lot of what has been promised will have to be taken away. I hope for the sake of my children that the country will wake up from the lull of the socialist "safety net" and learn to be self sufficient again like the people that founded this nation. Gov is never the answer. The worst part about all of this is the fact that we affect the entire globe's economy. It all started when we abandoned the gold standard, and created this system of global consumerism. If people don't buy stuff, we all crash. Talk about a rat race! I will stop ranting now...

[GreyGeek]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

I think you are pretty much right on, Dibl.

When Carter signed the "Community Reinvestment Act" (to legalize NINJA loans (loans to people with No Income, No Jobs, and no Assets)) I wasn't too concerned because it had no penalty clauses. Clinton added penalty clauses by requiring banks to issue NINJA loans (euphemistically called "Sub-Prime Mortgages) as a prerequisite for doing business with the Federal government. Banks and lending institutions were still leery because they understood the risks and were libable for them because they held the notes, i.e., the toxic paper. Their reluctance was over come when the Congress passed laws mandating the Freddie Mac and Fanny Mae BACK those loans with the "faith and trust" (.i.e. - money) of the Federal government. That's when the flood gates opened up. With the US taxpayer backing the toxic paper the banks began issuing loans to any warm bodies. Foreign investors wouldn't touch the toxic paper so Wall Street and the bankers smoothed things over by creating a complicated mathematical formula which cut the toxic paper up into small parts and mixed them with small parts of AAA paper to create a negotiable document which couldn't be traced back to specific borrowers. The US tax payer was on the hook for ALL of it. Meanwhile, Fannie Mae was being mishandled and back in 2004 & 2005 several politicians tried to warn Congress, but Congress wouldn't have any of it. They pulled out the race card to fight the whistle blowers.
See a time line of the debacle starting at the beginning is documented here:
http://www.youtube.com/watch?v=1RZVw3no2A4
You can see CSPAN footage of how the attempts to stop the debacle were blocked here:
http://www.youtube.com/watch?v=_MGT_cSi7Rs


The next year Barney Frank still couldn't see any problems with housing:
http://www.youtube.com/watch?v=iW5qK...eature=related
Then he lied about it and its cause:
http://www.youtube.com/watch?v=2UZ9l...eature=related


Saturday Night Live did a skit which outlined the causes of the housing bubble but it was pulled by NBC. However, pulling stuff off the internet is often a futile attempt to control information: http://www.moonbattery.com/archives/...y_night_2.html

The excuse was "legal concerns", but that hasn't stopped them in the past when the targets were not Liberals.

Well, those are the dirty details. But, there is one other fact you should be aware of. The Dollar is one of two currencys that serve as the "World Reserve Currency". What that means is that if a country wants to buy oil, it has to convert its currency into Dollars (or Euros) which it then uses to pay for the oil. All countries accept Dollars or Euros as payment for goods and services to or from other countries. This means that the value of all other currencies is pegged to the Dollar or Euro. When the US prints more Dollars it is exporting its debt to other countries. (This is in addition to selling foreign investors the toxic financial packages containing pieces of sub-prime mortgages)

When, and it suspect it is not "if", the Dollar's status as a World Reserve Currency is removed, the value of the Dollar will drop like a rock and inflation will skyrocket. I suspect that it will happen sometime this year (2011). NAFTA has shipped our manufacturing plants over seas and put our high priced workers and their fringe benefits in competition with workers who have no benefits, work 6 or 7 days a week, and are paid 1/10th or less what American workers WERE paid. With H-1B laws Congress has made it possible for foreign workers to take high paying technical jobs at much less than what American workers were paid, and law firms went around the country explaining to employers how they could legally avoid hiring American workers. The major employer in the United States is now Walmart, which I call "China Inc.". Currently, the only high paying jobs are doctors, nurses, pharmacists, teachers, plumbers, electricians and various manager level government jobs. Enrollment in med school is deliberately restricted by the AMA specifically to keep their income potential high. Nurses do most of the work, especially as "physicians assistants", but make only a fraction of the doctor's pay. Teacher's pay is steadily falling and class loads are climbing. With little economic future for their students they have been reduced to baby-setting while the parents each work two part-time jobs to make ends meet. The un-employment rate is supposedly 8.8% but government manipulation of those figures for political reasons renders them useless. They only "count" those who are "actively looking" for employment, not all who are unemployed. IF all of the unemployed were counted the percentage would be closer to 18-20%.
The 1929 depression saw 21-22% unemployment by 1934. Government programs created a second spike in 1938, but the depression was killed by WWII. Our depression began in 2008. So, if the unemployment matches the way the economic comparisons do, we will reach our peak unemployment in 2013. If our current depression follows the 1929 depression a major global war will pull us out of it in 2015.

Regardless, it is a recession if you have a job and a depression if you do not.

I do not see as many new cars as I used to. I see a LOT of cars with un-repaired collision damage (they spent the insurance money on something else), and there are a LOT of junker cars smoking up the air and dropping parts on the road. People use to pay $40-$80 for what looked to me like worn out jeans. Shabby-sheik I think they called them. Now I see people wearing clothes with worn or frayed collars, cuffs and elbows, hair is growing longer, and shoes often show holes in the soles. My wife does volunteer work with FoodNet and the number of people picking up food have increased. She recognizes many of them because they are friends or acquaintances. No one is embarrassed to go through the food line anymore because MANY people are in difficult situations. They've sold, or tried to sell, their one or two SUVs and now drive a single junker. The yard sales hit a high point last summer but about everything that can be sold in a yard sale has been sold, or there is no one who can afford to buy the items. When I taught in a rural school I often supplemented our diet with small game, fish and deer. In this metropolitan area the wild game is too far way to hunt, and with gasoline climbing to $5/gal travel to hunting is getting too expensive. I used to teach my rural students how to survive in the wild eating worms, plants, pond scum soup and insects. Don't laugh. Worms are 78% protein and have no diseases. Boil them with three changes of water to eliminate the slime coat and then fry them. They taste like shoe-string potato chips. Insects? Stay away from the brightly colored and shiny ones. They are usually toxic. Pond scum soup? Duckworts, the plants floating on the water, is the food source. Scoop up a gallon of it. Boil it down with water three times. You will get a soup with the consistency and taste of pea soup. If you live in a rural farming area you can grab a 50lb bag of sow chunks. A pound or two of that per day will keep you strong and active. Eat two pounds and you could gain weight. Fifty pound bags of Corn are not as nutritious but it will prevent you from starving or getting weak due to malnutrition. Food is everywhere if you know where to look for it.

Most of what I've written about has been predictable and several years ago I started preparing for a barter society that will follow the collapse of government infrastructure. Within 1 hour I and my wife will be able to "pull up stakes" and move, if necessary, with a tent, water purification equipment, fishing and hunting tools, fuel and food stocks to last three or more months. But, we won't. I am going to let the others move away and we'll live on what is here.

[woodsmoke]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

GG has summed things up to a tee.

I actually knew a guy who did the whole NINJA thing. He had people signing pieces of paper that he would cut the cost of a house 5000 bucks for them painting the inside, anotherr 5000 for painting the outisde, 3000 bucks for seeding the lawn, 3000 bucks for building a deck, on and on.
He...did not sign anything...he had over a hundred houses going at a time and had his secretaries "signing for him".. he finally ended up going through four states till the feds caught him.

And why did this happen? Read most of what GG said and add in that part of this was a reaction to "redlining" that people inside/outside of a "red line" on a map couldn't get loans.

You had SEIU and ACORN protesting outside the bank president's houses, having sitins in banks you name it to get "fair" loans for people.

read...no credit, not enough income to pay the loan because of the "balloon" ten years, five years down the road, and the stuff the guy above was doing...

The basic idea of Clinton's idea was.... eliminate the down payement, or most of it, and IF....notice the IF... the people could "otherwise" make the payments then give them the loan...

instead of putting the money into a rental.

But.... when all of the people who could meet Clinton's requirements were gone through....the government can't get smaller, the protestors cant stop protesting... Barney Frank "had a friend" that ummmm got special treatment and was instrumental in getting the payments down SO LOW....at the front end...that basically ANYbody could get a loan...

But they didn't have the income five years down the road to handle the MUCH higher payments than would have been needed with the original loan of 20 percent down...

And where are we now? Back to a downpayment and a good credit history to get a house.... so we went through all of this to be back to where we were before Clinton's......very GOOD idea...

During the Bush admin, more African Americans owned homes and had businesses than ever before....that was a WONDERFUL Thing....but then....came the next double down and double up....

With my little addendum.....GG did a great job outlining, not just "basically" but really what happened.

To see a lot of this if you search wikikpedia you will have to go into "history' because a lot of the "real" history has been neutered or just eliminated because nobody is reading the stuff anymore and the "maintainers" are swamped just trying to keep up with the new stuff.

Great Job GG!!

woodsmoke

[Detonate]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

Our huge trade imbalance is killing us. No policy makers in this country have any understanding of the basic definition of money. It should represent the value of production. I make something in excess of my personal needs, I trade with you for something you make in excess of your personal needs, and we use money to facilitate the transaction. If someone gives me money without me producing anything of value, that dilutes the value of the money. If I am buying a lot more than I am selling, I create debt, and if I have no prospect of being able to produce enough offset this imbalance and pay the debt, I am insolvent. The only way to increase wealth is to sell more than you buy. For a country, this means your exports have to exceed your imports. If not, then the recipient of the trade imbalance getting wealthier and you getting poorer. That means China and OPEC.

[woodsmoke]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

I agree Detonate you have given a very pithy summary of part part of what can only be described as a "wicked problem"

Please allow me to add in a couple of other things that gets into the way of that simple idea is what might be described as a "Sleeping Beauty" thicket of things like union agreements here at home, business agreements here at home, special rules of special people here at home, politicial favours, politicial infighting, then other countries haveing the same thing going on in their societies and then the edges of things rubbing on each other and then the last which is the basic outlook of the people "in control" of the countires.

The basic attitude of the U.S. has always been optimism and being slightly right of center politically(and yes I know that the definitions of "right and left" have switched from a hundred years ago, but the basic stance was that of optimism.

However, all societies have had in them the "pessimistic" viewpoint also.

Both viewpoints can lead to a totalitarian control, but with different methods and different end views.

The people that are "in control" of the U.S. now are of the basic "pessimistic" viewpoint.

And the one operative thing about all of them is that none of them have spent time in the "hurly burly" of the "real world"...all of them are "academics".

John Holdren is a scientist that hooked onto population studies way back when it was the de jour of the sixties and is massively pessimistic. I have, in my library, ALL of his population books.

I am a plant ecologist, when I was doing research it was on the populations of plants in disturbed areas.

So I was a big "believer" in Holdren (Population Bomb) from way back, but then, the predictions did not come true.

I also came to realize that Malthus' basic premise was wrong. He stated that all populations grow in size until they are .....notice this word...... CONTROLLED by a) famine, b) pestilence c) war(in humans).

The fundamental thing that Malthus did not know, he was NOT a biologist, he was an economist, was one thing. And that thing is called "carrying capacity"... The carrying capacity is where a population rises and then levels off because it has met the carrying capacity of the environment.

And....also....since he was an economist, an academic, he was fundamentally "pessimistic".

What he also did not factor into his thoughts was the basic "optimism" of people....that they would "figure out" a way to get things done.

Another thing that gets involved with this is a fundamental teaching of college english classes in the U.S.

That fundamental thinking that is in the minds of the professors is that the "United States people read on a fourth grade level". They are taught that when they take a class in "journalism". It is a given, it is a truism in the classes.

The reason I know is that I'm also a fullly certified english teacher and have published two newspaper columns and took several "journalism" classes.

That idea is then TRANSLATED INTO.....

The U.S. population THINKS on a fourth grade level.....

Except for, of course, academics....

And all of the people in the present admin are academics.

Just think of Anita Dunn saying that Mother Teresa and Chairman Mao are here two greatest role models.

Think of van Jones who, validly, it might be said, would bring a different perspective for African Americans to the White House since he had served jail time, but says, in no uncertain terms that he is a communist.

The other science Czar in the WH is a world wide respected physicist, who I thought would bring some sanity and rigor to the WH and he says:

a) we have to "engineer" the atmosphere so we won't have Katrinas(I mean engineering the atmosphere was written off fifty years ago and look at the comical/tragical effects of trying it in China for their olympics
b) we should paint house roofs white and go to all white cars to reduce the a/c burden.

I mean the stuff is laughable at best... now WOULD painting roofs white help on a/c burden...? ummm yes....where the sun shines all the time, but not so much in say Minneapolis... but it was to be a "mandate"....

Obama's wife said, in a speech that FOR THE FIRST TIME IN HER LIFE....she thought the U.S. was not (basically) not quite so racist ....

Ok....again....there are a lot of African Americans that think that but I will state as a fact that the little old African American that lives across from us voted against Obama because she said that he would be the worst thing that happened to the U.S. in a long time because he was one of the "Chicago crowd"...her husband worked for the railroad and spent a lot of time in Chicago. And one of the security guards that works at the college just shook his head when Obama was elected.. and said he thought Obama would set back race relations in the U.S. and that "the elevator didn't go all the way to the top" with him.

I've known this guy for 9 years now and he is not "playing to whitey".

The middle of the U.S. has some racism, yes, but it is NOT nearly as racist as the big cities, as shown in a recent survey...

So what we have in the WH now is a group of academics who think they are smarter than the rest of the country and have the goal of somehow "making their mark in the real world" instead of academics...

and one of those "marks" has always been "Universal health care".

All of the Democratic power structure have had a burr under their saddles for twenty years about "universal health care"......

On the OTHER side of health care ....we have the BIG BUSINESS mix in it of keeping insurance "inside" state lines so they can keep the "pools" low and the prices up.

So there have always been to forces tugging on Health care and the "other side" is now in power...

There is NO thought of "compromise"....there is only "I've gotta do it NOW or forever lose my chance".

One simple fix to "health care" would have been to have a two stage approach. A) eliminate the state boundaries thing to see what happened to prices for say ....four years....Obama's first term. If prices plummeted or whatever then that was the fix. If they did NOT then some kind of "Obama care" would kick in and we would experiment with that..but no...

This was the "big chance" to a) get control of healthcare b) get control of the evil businesses that are ruining the environment

A calculation was made that instead of Obama care if all of the money that was going to just be spent on setting up Obama care was GIVEN to every uninsured person in the U.S. to buy insurance of their choice ....that everybody...would have health care..

And lastly you have Obama's statement tied with George Soros( a long time associate in Chicago who preened him for the Presidency through Obama's mother who ran a somewhat questionable database system for one of Soros' companies....

Soros said in an interview day before yesterday that his goal is to "fundamentally eliminate capitalism" and "replace it with a system that works'...

Obama told Joe the Plumber ............on television..........that "we need to spread the wealth around".

That combined with a couple of other facts:

a) there are now more people in the U.S. working for the government than are working in factories.
b) we have something like 4/5 of the taxes being paid by somewhat less than half of the population
c) we have the "baby boomers" retiring and drawing sometimes almost their WHOLE SALARY....
that is what the argument is about in Wisconsin..... to teach ONE class they are now going to be paying TWO people....the person in the classroom and the retiree...

Our police and fire people in our town.... are going to retire with almost their whole salary so that we can just GET fire and police people here... they will ALSO have all benefits...so we are actually going to be paying for almost 2.2 people to fight a fire...

The system is, quite simply, un-sustainable....

Pelosi had an interview about the budget cuts a couple of days ago in which she...appears...to be....just.... out of her head....she just rambled around....saying the same tired things...seniors are going to starve, kids are not going to go to school, her eyes were rolling in her head....

I think that all of the academics in Washington have now finally "read all of the envelopes" that Bush, and Clinton and Bush 1 left....

So...so sum this up...in addition to the above wonderful posts...and they are all quite true....we now add into the mix all of the "previous deals" and all of the "previous agendas"....and people that have no "real world" experience....and that are basically PESSIMISTIC...for no good or real reason...and it is just a train that has so much steam that ...it looks like it will wreck and take the rest of the world with it...

And SOME of the people that are both IN and OUT of the administration....want it...

And why? I think they KNOW just how bad thing could be...but....they will be written about....in the history books...with which they are so much in love.

again, my complicated writing is just an addendum to the well written comments above.

woodsmoke

[GreyGeek]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

Another factor to consider besides carrying capacity is "overshoot". If the factors that are supporting exponential growth have enough pressure then the result will be that the population (or consumption) will rise above the carrying capacity (supply), leading to a rapid die off. The could lead to a temporary reduction in population below the carrying capacity, but the damped oscillations will continue, absent outside driving forces, till the population stabilizes. Under these conditions there is NO growth, only replacement. Businesses and economic models which depend on exponential (or even geometric) growth cannot but fail.

In biological systems the carrying capacity plateau is sustained by the influx of solar energy, which is relatively constant for a given location, and by the reaction rates for the biological processes that in turn sustain the population. The carrying capacity usually gives rise to oscillating populations separated by a phase shift. Because of good vegetation caused by abundant water the rabbit population rises. It may even overshoot the carrying capacity of the vegetation. Coyotes benefit from the increase in rabbits and their population begins to grow. Their over population puts pressure on the rabbit population, which plummets until there are not enough to support the existing Coyote population, which begins to fall, relieving the pressure on the rabbits. Rinse and repeat. The rabbit is a capacitor. The coyote is an inductor. The battery represents the carrying capacity. The resistor represents biological lags in the recovery or exploitation time.

Take a simple thing like water. We seem to have an inexhaustible supply of it. If all of Earth's water (oceans, icecaps and glaciers, lakes, rivers, ground water, and water in the atmosphere) was put into a sphere, then the diameter of that water ball would be about 860 miles (about 1,385 kilometers) across, a bit more than the distance between Salt Lake City, Utah to Topeka, Kansas. A graphic representation of that is here.

The 48 contiguous United States receives a total volume of about 4 mi^3 of precipitation each day, or 1,460 mi^3 per year, a sphere with a radius of 7 miles. We use about 408 billion gallons per day or 149 trillion gallons, a sphere with a diameter of 6.4 miles, of fresh water per year. For the 48 states, from that ball of water 6.4 miles in diameter, comes all of the snow on all of the mountains, and all of the recharge water for all of the lakes and streams. It's no wonder then, that we recycle our fresh water through our sanitation plants SIX TIMES before we dump it into the oceans, too salty to use the 7th time. The closer you are to the oceans the more likely you are drinking water that was flushed down someone's toilet a few days before. It will probably be used to wash a surgeon's hands tomorrow, if she doesn't drink it. Every time fresh water passes through a human or animal body, or is sprinkled over the ground to irrigate crops, the salt content of the water is increased. So does the Nitrate and Phosphorus salts concentration, which is leading to "blooming" of alga in our lakes. When the water approaches the saltiness of the blood it can no longer be used to support life. Plainly, there is a LIMIT to how many times we can recycle fresh water until it becomes too salty to drink, and that limit restricts how many people the 48 states can support. Since nearly all of the potable water is recycled until it is too salty to reuse, it seems to me to be obvious that we have reached the carrying capacity of fresh water available to the 48 states. In fact, with flood of illegal immigrants into this country we may already have gone into an overshoot situation. (And we have FAR less oil than we have fresh water.)

As you point out, Woodsmoke, there is a major problem with economic academics. I was discussing the oil resource problem with one who was working on his Ph.D. in Economics. Mathematically he was brilliant. However, he REFUSED to admit that the world's supply of oil (or any other resource) is limited and that someday we will exhaust them. He said the market will sustain a value of oil, or any other resource, that will encourage investment, discovery and production in what every amounts we need. His FAITH in Adam Smith's "invisible hand" was unshakable. The Tulip crash in Holland and the 1929 stock market crash had no influence on the fallacy of his thinking. As I've said before, lawyers and accountants feel that their degrees make them experts in every other field, even superior than those with earned degrees in those other fields.

[kjjjjshab]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

... we have the "baby boomers" retiring and drawing sometimes almost their WHOLE SALARY....
that is what the argument is about in Wisconsin..... to teach ONE class they are now going to be paying TWO people....the person in the classroom and the retiree...
...
woodsmoke

The WRS is paying the pension benefit, not the school district. The employee made the contribution out of their compensation while they worked... your argument doesn't make sense... the only reason why WRS survived the last couple decades unlike other pension plans is that no one was allowed to "steal" from it. The argument in Wisconsin is about the governor laying the groundwork for stealing the ~$100 billion.

[GreyGeek]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

Not living in the USA it's not easy to judge, but is it really this bad over there?
...

Getting back to your original question: Wikipedia has an excellent list of business cycles which show that before 1929 there was a mild recession about every other year, lasting a year or less. The Great Depression lasted nearly 10 years and saw a 27% reduction in the Gross Domestic Product (GDP). The recessions in the 1950s and 60s I hardly noticed. The first recession I really noticed was that caused by the Arab Oil embargo between 1973 and 1975. Long lines at gas pumps and the high price of gas and food at the time made that one noticeable. But, I was teaching in a country school at the time and supplemented food by hunting fish, fowl and deer. I noticed the early 1980s recession because under Carter interest rates rose to 21% just as I was in the market to buy a new home.


I never noticed any subsequent recessions until what is euphemistically referred to as "The Great Recession" of 2008. It has been the worst economic downturn that I can recall in all of my 70 years, FAR exceeding any other. I have little doubt that the "facts" of this "recession" are being manipulated by the government to make it appear to be not as bad as it is, but what I see happening in day to day life is worse than I've ever seen before. By a LONG ways. For example, the unemployment figure is given as 8.8%, but that figure only represents those ACTIVELY looking for jobs. There are many, many people who have been out of work for two or more years but they are not counted as "unemployed" because they've stopped looking. Why? Because they have been repeatedly turned down by every employer they can economically afford to contact, by resume or in person. Even though professionally trained and with skills and experience many, in order to eat, have resorted to part-time jobs at Walmart, fast food places, telemarketers and other "service" industry minimum wage jobs. Electrical engineers fixing laptops and rebuilding Windows on infected computers, etc. Marginal side uses for their skills and experience. Goodwill has become extremely popular, and the $30K-$50K cars parked out front belongs to shoppers, not a donors. There are more food lines and more people in them than ever before. We have two major homeless shelters in this town where folks can eat and sleep. Both are packed, and not by derelicts or drug abusers, but by formerly middle class home owners evicted and laid off. Schools have gone to serving free breakfasts so that kids can at least have strength to study. Besides the free school breakfasts and the lunches, which have also dramatically spiked, some schools are giving kids sandwiches, cookies, energy bars and other food items to give them something to eat in the evening.

I started my computer consulting business just when Carter's 21% inflation hit. A certain percentage of people, especially the older, higher paid ones, were laid off. They couldn't find jobs then and many of them decided to take their savings and start their own business, i.e. employ themselves. Most started nick-knack shops ("Phones and Things" was one I remember) and for a couple years I had a thriving business selling them computers and writing business software for them. But, when their business expenses ate up their savings and sales didn't come, they had to start looking for a jobs again. By then the economy had recovered and many found jobs. I see that happening today ... people using their savings to "employ themselves". That tactic will be less successful today than it was 30 years ago.

I've never seen so many people, left, center and right, so mad and about so many things, and so unwilling to compromise. All sides feel as if they're the ones who have been making all the compromises and they aren't going to do it any more. IF sanity can be maintained until the next election, in November of 2012, and significant changes can be made, things might begin to turn around, especially if we can avert the disaster of runaway inflation caused by the current administration's willingness to spend our way out of debt. If the next election doesn't bring a change in leadership or hope of relief (even Pres Obama can change his political views in the face of pending disaster) I expect segments of the population, or even entire states, to break away (economically if not politically). Alaska could be the first. They have oil and gas, gold and other mineral resources, agriculture, fish and game, a low population, and they even have a nuclear armory and an active missile defense (US missile battalion), plus a fighter squadron, all of which I have no doubt they'd expropriate for their own good. They'd probably form their own republic.

There are other possible scenarios, including the one predicted by the Russian economist to have happened in 2010 (he may just have missed it by a year or two), but the last places you'd want to live are the socialist havens around the country. Without other peoples money they have no other resources and their food and drugs will run out within 30 days. It will be hell on earth in those regions of high population density and no resources what so ever.

[dibl]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

Alaska could be the first. They have oil and gas, gold and other mineral resources, agriculture, fish and game, a low population, and they even have a nuclear armory and an active missile defense (US missile battalion), plus a fighter squadron, all of which I have no doubt they'd expropriate for their own good. They'd probably form their own republic.

Abe Lincoln must be spinning in his grave, GG!

[woodsmoke]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

ummmmm the WRS is the Wisconsin Retirement System for those who don't know.

You are quite correct, the WRS pays the benefit.

But where does the money come from for the benefit?

The money comes from, in most states from the teacher's salary and a "contribution" from the state or local government( the school).

Where does the workers money come from and where does the "state" or "local" contribution come from?

It comes from TAXES.....that are derived either from income or in almost all cases.. property ....taxes.

Who pays those taxes?

The people of the state...

The "theory" of all of this is that there will be a large enough "base" of taxes, in the form of a pyramid, so that the base(the people paying taxes) will be able to give enough taxes so that
a) they don't feel uncomfortable doing it
b) there is a public benefit to society as a whole, in other words one part of the society, in this case the teachers, derives a comfortable income so that they can teach kids and the society benefits in that the old codger that doesn't want to pay any more "dam*" taxes because "I ain't got no kids in school" still gets a benefit in the form of say a well trained nurse who gives him an IV.

The problem is that there are so "many" taxes, and the amount of them is rising "so fast" for, what seem to many, to be arbitrary reasons that they are just steamed.

To get back to WSR ... a teacher teaches for about 25 years. Some more some less. That person will now live to be almost 90 on the average. So, when that person retires....

the taxpayer....who paid the teacher indirectly through property, and in some cases income or sales, taxes, is now paying for two people, that formerly did one job.

But... given that the average age keeps going up, that retiree will be well into a hundred when he dies.

The person that replaces him will already be retired...

so... at some point down the road...

The taxpayer is paying for
a) the teacher in the classroom.
b) two teachers that WERE in the classroom.

and that includes benefits.

So for one job....the taxpayer is paying three people about full time wages.

I personally, have taught my whole life. I retire at "early and out" if my age plus the number of years added up to, I think it was 85.

I get 3/5 of my former pay because this is a conservative state...and we do just fine by the way becaues the whole state works that way and the cost benefit ratios have been grown "naturally" for the last hundered years.

but....consider this

In the three largest cities, the schools are all union. They make almost three times what I did....the teachers live EXTREMELY well, because the overall cost of living is about the same.

The taxpayer in "outstate" is paying a) property taxes for schools, income taxes which go indirectly to schools, and sales taxes which...go indirectly to schools.

When the teacher in the large town retires that that teacher and the replacement teacher will be drawing the equivalent of FOUR teachers in outstate for income.

Now the "liberal" answer is to increase the pay of the people outstate...

but where does that pay come from?

It comes from the taxpayers in one way or another.

So...if all teachers were "raised" to the level of the big city teacher that means that the taxpayer is now paying....

6 teachers pay to have students in one classroom.

to go over that again, the low paid teacher retires and is replaced by a low paid teacher....so you now have two people being paid for one classroom. That new teacher later retires and you still have the first one alive. so that the taxpayer is now paying to have three people for one classroom.

if you increase the pay of the lower paid teacher to the higher paid teacher you now have the tax payers paying for (formerly) 6 teachers for one classroom.

And into that that the actual number of taxpayers in the form of property holders are going down and you have fewer people paying for more "teachers".

Toss into that mix that commercial property is taxed in a different way, even if the former "house" or "farm" is now commercial property and a mall, the mall gets tax breaks etc. etc. Now, yes, the mall had new stores in it and they are paying more taxes... but...how many new malls can be built?

Right now the number of malls is decreasing.

We are BEING MOVED from a "production" economy to a "move the money from one hand to the other hand" economy.

Most "new businesses" are not building "new buildings" so much as replaceing former businesses IN buildings.

So since we are being forcibly moved from a production economy to a consumer and pass the money back and forth economy

so that "the rest of the world" can "get some of the wealth"...

we are in a situation of...

a) increase taxes until there is no way to increase them anymore
b) cut benefits/wages in the public sector
c) or both in some proportion.

and, just to keep the ledger straight. I was also an "entrepeneur" during my whole teaching carreer and also worked two or three jobs.

In other words I am fully vested from teaching and fully vested from the government and also paid employees and taxes directly and indrectly.

but, guess what......

the feds have been "trying to get our retirement" for well into fifty years and put it into social security, which would not make a drop in the bucket's difference.

but the feds sued the state so many times that finally the state and feds reached an "agreement". I cannot draw all of my social security benefits even though I paid all and more....so that social security would have some more money to spread around to other people.

Every teacher in our state experienced what the other states are going to have to do in the future about fifteen years ago...

and guess what...not one of those teachers is starving..and our students do just fine on the ACT and SAT thank you very much.

Sooo....to sum it up....eventually the system becomes unsustainable. It may be ten years or a hundred years but eventually, if there is always an "increase" in wages and benefits.....the system becomes unsustainable.

woodsmoke

[GreyGeek]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

Abe Lincoln must be spinning in his grave, GG!

At VERY HIGH RPM's as well!

I've often thought about him and his circumstances, compared with today. Pres Obama has, IMO, inherited circumstances which are as bad, if not more so, than those inherited by FDR, or Lincoln, or Washington. NO other presidents have inherited such bad conditions. During those presidencies there was as much division in political opinion, as much anxiety from outside influences, and as great a threats to our Republic, as there is today.


When the Southern states succeeded from the Union, Lincoln felt his first task was to preserve the Union above all else. When, after a series of losses on the battle field, it appeared that the Union may be beyond hope of saving, Lincoln decided that the battle should be, if not to preserve the Union, for freedom, and he re-purposed the war into making universal freedom as the reason for the it. In doing so he made the civil war worth fighting because the Union without universal freedom is not a Democracy (all men created free) and wasn't worth saving. The Gettysburg address sums it up better than any other document I could cite.

Like Lincoln's time, I feel our greatest threat is our own internal political division. Each side has interpreted the Founding Documents and Fathers in completely different ways, and both feel that the other side betrays those documents. There does not appear to be any room for toleration of political differences and differences are no longer being tolerated. In many venues it is impossible to hold a civil discussion. Every issue is becoming a mountain to die on. What is also startling is the number of weapons and especially the ammunition being stockpiled by ordinary everyday people, not just the far Left or Right. Because I purchased a fishing license two years ago, and even though I never renewed it because my oldest grandson decided he hated handling fish, I get emails from hunting websites advertizing ammo in lots of 1,000 and even 10,000 rounds. The calibers being offered aren't ones you'd use for for big game. A lot of people are expecting to do a lot of shooting sometime in the future.

[woodsmoke]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

GG wrote:

and so unwilling to compromise.

bravo!

And i might indicate two reasons.

A) the "liberals" who are now in their fifties and up....look at "now" as THEIR....notice THEIR one last chance to grasp the gold ring that was thrown thirty years ahead of them by Kennedy in "camelot stuff", Johnson in "the great society" and Carter in ..."nature, nature, nature".

B) the "conservatives" look at the last thirty years as a gradual, and the last two two years of Bush's admin and the first two years of Obama's as a massively accelerated,reduction of (economic and societal) freedoms which they THOUGHT their kids and grandkids would have and "They are dam@ mad and NOT GONNA TAKE IT ANY MORE!!"

And because of that:

Both sides have become cartoons.

In my humble opinion!!!

woodsmoke

[toad]

Re: Amid global meltdowns, what's the life of the U.S. government's fiscal solvency?

I like the abstraction - makes it less emotive.

Please correct me if I'm wrong, but I thought the real mess with the US household started under the previous administration (what was it, the deficit was more than quadrupled?). The current one was lumbered with a record deficit by a mile, an impossible economy and then came the financial crisis to boot.

afaiac the US of A would do well to pull together in the face of this humongous task it is facing to climb out of this disaster rather than revert to the usual (and of course rather comforting) infighting led by dogma.

Anyway, interesting discussion to follow for a European