A Nation of Negative-Millionaires...

[4est_4est_Gump]

The thesis of my recent book After America is stated on page six thereof — “that the prevailing political realities of the United States do not allow for any meaningful course correction.” That’s what the political class confirmed yet again this week. Which brings me to the sentence immediately following: “And, without meaningful course correction, America is doomed.”

Washington’s governing systems are in a bad way. Government by “continuing resolution,” a term foreign to most foreigners, ought to be embarrassing to any self-governing, not to say self-respecting, people. Instead, in the course of the “shutdown,” this repugnant phrase advanced to acronymic status — “CR,” as cable news had it, the pundit class lovingly caressing this latest insider jargon with their customary onanistic shiver. Presented as a resolution of the Obamacare/debt-ceiling standoff, the “CR” came, as the car dealers say, fully loaded — including a $174,000 payment to the widow of New Jersey’s multimillionaire senator Frank Lautenberg. Because, even when you’re saddling the next generation of Americans with another trillion bucks of debt, six-figure payouts to the relicts of the most exclusive rich man’s club in America is just the way it is.

How can you “control” spending under such a system? Congress has degenerated into a Potemkin parliament, its ersatz nature embodied by those magnificent speeches senators give to themselves, orating for the benefit of TV sound bites into the cavernous silence of an empty room, an upper chamber turned isolation chamber. The “law of the land” means machinations and procedural legerdemain culminating in a show vote on unread omnibus fill-in-the-blanks pseudo-legislation to be decided after the fact by the regulatory bureaucracy.

This structural degeneration is a big part of the problem. My friends on the American right fret that if we’re not careful we’ll end up like Europe. But we’re already worse than many parts of Europe, and certainly than the non-European West — by any measure you care to use. According to the IMF, the Danish government’s net debt is 10.3 percent of GDP, Australia’s is 12.7 percent, New Zealand’s 28.8 percent, the Netherlands’ 35.5 percent, Canada’s 35.9 percent, Germany’s 56.2 percent, France’s 86.5 percent — and the United States’ 89 percent. If you take America’s total indebtedness, it averages out to three-quarters of a million dollars per family: We are on course to becoming the first nation of negative-millionaires. But let’s just stick with the federal debt, the figure for which those bipartisan schmoozers are officially responsible: In Australia, each citizen’s share of the debt is $12,000; in New Zealand, it’s $15,000 per person; in Canada and Spain, $18,000; in the United Kingdom, $28,000; in Germany and France, $38,000; Italy, $44,000. And in the United States it’s $54,000 per person — twice as much as Britain, thrice as much as Canada, closing in on five times as much as Oz. On this trajectory, America is exiting the First World.

And that’s before counting the “unfunded liabilities” that Washington keeps off the books but which add another million bucks per taxpayer. Nor does it include Obamacare, with which the geniuses of the “technocracy” have managed to spend a fortune creating the Internet version of a Brezhnev-era Soviet supermarket.

I think of recent “left-wing” governments among our allies. Up north, Jean Chrétien was a thuggish wardheeler presiding over a regime of repellent industrial-scale cronyism; Down Under, Kevin Rudd was a uniquely loathsome specimen of a human being, who communicated through a blizzard of effing asterisks and in idle moments ate his ear wax live on camera. Yet Australia was the only Western nation not to go into recession in 2008, and Canada spent the “fat” years of the Nineties paying down the national debt. Imagine that! As my old comrade Kate O’Beirne put it, “If only we could get American conservatives to be as fiscally responsible as Canadian liberals.” When I met Kevin Rudd a few years ago, he said to me, “I’m part of the pro-American Left.” “Crikey,” I replied, “America doesn’t have a pro-American Left, and in Europe they don’t even have a pro-American Right.” I didn’t know the half of it: These days, it’s not clear to me that the Republican party functions as a pro-American Right. That’s to say, Chrétien and Rudd, ghastly as they were, not only did less damage to their national finances than Obama, Reid, and Pelosi but they also did less damage than the GOP. I’m sure they dreamed the usual crazy dreams of wild-eyed lefties, but the system imposed disciplines on them that Washington doesn’t — on left or right.

That’s the problem. Either you think those numbers above are serious or you don’t. And, if you do think they’re serious and you’re a “lawmaker” (as the New York Times quaintly insists on calling our rubber-stampers), when are you going to get serious? Next month? Next year? Or shall we all sportingly agree to leave it till 2015 after the bipartisan deal on a $20 trillion debt ceiling?

Mark Steyn, NRO

They become apt to take because they wish to spend and cannot do this easily; for their possessions soon run short. Thus they are forced to provide means from some other source. At the same time, because they care nothing for honor, they take recklessly and from any source.
Aristotle

 

[Wat_Tyler]

Does "the prevailing political realities of the United States do not allow for any meaningful course correction" mean that it's time to shoot the double-tongues now?


It sounds like it's time to start shooting.


Or at least to load yer gunz if'n th'ain't ahready.

 

[4est_4est_Gump]

No Negotiations, No Compromise

We will let the Republicans shut down the government again.

Judging from the speech Obama gave following the deal to end the government shutdown, Republicans better get wise to the president’s next fiscal gambit when the three-month stop-gap budget and debt measures come due. As was the case with his hard-line defense of Obamacare, the president likely will be inflexible on ending sequestration budget caps, pushing for massive tax hikes, and permitting only the most inconsequential entitlement reforms.

Obama is interested in busting the GOP in 2014. He’s not interested in true budget restraint or other economic-growth measures.

Example: This week, instead of a conciliatory work-together message for the negotiations ahead, President Obama gave us another Republican scold speech: “All of us need to stop focusing on lobbyists and bloggers and talking heads on radio, and professional activists who profit from conflict.”

But of course, it was Obama who wouldn’t negotiate. And it was Obama and his followers who demonized the GOP with words like “hostage,” “ransom,” and “terrorists.”

Another example: Out of nowhere in his post-shutdown speech, the president pledged to “close these corporate-tax loopholes that don’t help create jobs, and freeze up resources for the things that do help us grow, like education and infrastructure and research.”

Huh? Where did this come from? There’s no discussion of corporate tax reform in the whole speech, except for this one derogatory mention. So don’t count on progress for the single biggest growth and jobs creator, namely full-fledged business tax reform. It may be in Obama’s budget, but it’s not really on his agenda.

The real agenda is to jack up taxes on businesses and the wealthy. On top of this year’s $700 billion tax hike, the Democrats are going back to the $1 trillion tax-hike idea mentioned in recent years by Obama, Harry Reid, and Nancy Pelosi.

True pro-growth tax reform should broaden the base, lower marginal rates, and simplify the code. The Democratic objective, however, is to raise as much additional taxpayer money as possible.

Why? Well, of course, to provide the spending fuel after they get rid of the budget-capping sequester. The Obama democrats are manic about this. They know that the sequester has effectively stopped their grandiose spending plans, and is actually bringing the discretionary budget back to 2007 levels. In fact, the real budget-winning move of recent years was the Republican reverse bait and switch (the bait came from the White House) in 2011 to embrace the sequester and implement it. It’s the only true pro-growth fiscal measure we’ve seen in the Obama years.

Closing tax loopholes is a good idea so long as it is accompanied by lower marginal tax rates on the other side. (Repatriating over $1 trillion in overseas corporate profits at a minimal sanction of 5 percent would also help grow the economy.) So companies, wealthy entrepreneurs, and small-business owners shouldn’t be fooled when they hear the president talk about closing tax loopholes. Why is he saying this? That’s easy: He wants to spend more money on his pet projects. More for the teachers’ unions, the local construction unions, the quick-fix, shovel-ready infrastructure projects, the clean-energy Solyndras, and all the other oddball social programs put in place by this administration.

Government spending cuts amount to tax cuts, which provide economic stimulus. But Obama and the Democrats want no part of it. Step back and read the president’s economic speeches in August and September. You see a pattern: Raise taxes on business and successful entrepreneurs, kill the sequester, and use the new tax revenues to spend more and grow the government — and probably even finance Obamacare, which is going bankrupt even before it starts, and has become the laughingstock of the country with its catastrophic breakout.

Finally, while Obama again may occasionally say otherwise, the Democratic party opposes all manner of entitlement reforms. All. That includes the chain-CPI reform (which would lower benefits), Medicare means testing, longer retirement eligibility, and higher co-pays for federal-employee benefits.

Labor doesn’t want this stuff. House and Senate Democrats don’t want it. And I seriously doubt if the president would push for it. Which means, in terms of the new budget conference (another fiscal cliff?) due to report in mid December, the GOP better be super careful not to end the sequester budget caps in return for phony entitlement reforms.

Larry Kudlow, NRO

 

[4est_4est_Gump]

Does "the prevailing political realities of the United States do not allow for any meaningful course correction" mean that it's time to shoot the double-tongues now?


It sounds like it's time to start shooting.


Or at least to load yer gunz if'n th'ain't ahready.

It is time to have iron in your words, in your weapon and in the fire.




They will start shooting first. Doin' right's got no end...

 

[Que]

Mark Steyn, NRO

They become apt to take because they wish to spend and cannot do this easily; for their possessions soon run short. Thus they are forced to provide means from some other source. At the same time, because they care nothing for honor, they take recklessly and from any source.
Aristotle

I had read a portion of that Mark Steyn quote somewhere yesterday or today... probably because they know that most Americans eyes glaze over at numbers the whole section on the numbers in the comparison to other economies was left out.

I think that's the most interesting part of the piece and the most indefensable. The same people that didn't believe a rising tide lifts all boats somehow believe that a rising something will somehow wipe that out in the future somehow.

I can't decide if liberals that ignore those kinds of storm warnings either don't understand the numbers or do understand the numbers and are simply being disingenuous. Like if they were the king for the day how would they solve the problem with a simply hyper deflate the currency through a hyper inflation? With all the talk about caring about grandma I can't believe that they're simply going to default on the unfunded liabilities so how do they plan to pay for them?

I can see how with their keynesian mindset (wrong-headed that they are) they might argue about some of the short term stuff but how on earth are they explain ing the long-term problem? Green jobs solves that too? Don't care?

 

[4est_4est_Gump]

To the side here, but interesting:

Why China Wants To Dump the Dollar
Chriss Street
October 19, 2013

China's Dagong credit rating agency on October 17th downgraded its United States sovereign credit rating to A- and maintained its negative outlook on America's solvency. Dagong warned that despite Washington's last-minute resolution of the debt ceiling deadlock: "The fundamental situation that the debt growth rate significantly outpaces that of fiscal income and gross domestic product remains unchanged." China's official state-run news agency, Xinhua, reiterated its earlier statements that because of the contnuing risk of a United States debt default, it is "a good time for the befuddled world to start considering building a de-Americanized world." This language is code for Chinese want to abandon the U.S. dollar as the world's "reserve currency" and move international financial transactions to the renminbi, the currency of the People's Republic of China. Having benefited for twenty years from an undervalued currency that imported manufacturing jobs and exported lower priced products, China's economic advantage is being destroyed by America's oil and natural gas fracking boom. The Chinese communist authorities are terrified their loss of competitiveness will cause unemployment and the social consequences that flow from it. But with the terms of trade now substantially against China, convincing the world to dump the U.S. dollar as reserve currency and switch to the Chinese "renminbi" is their best hope to try to save tens of millions of manufacturing jobs.

Background: http://www.americanthinker.com/prin.../10/why_china_wants_to_dump_the_dollar_1.html

China remains an impoverished nation, where 900 million people have an annual per capita income around the same level as Guatemala, $3,000-$3,500 a year, and 500 million have an annual per capita income around the same level as Nicaragua, $1,500-$1,700. China's per capita GDP is around the same level as the Dominican Republic. Stimulating the domestic consumer economy will not help manufacturers when the vast majority of Chinese cannot afford to buy the products they currently produce for export.

The Chinese benefited enormously from being allowed to devalue their currency and participating with the dollar as their reserve currency. But if China continues aggressive lending to failing businesses, they will generate higher inflation and make Chinese exports more uncompetitive. But allowing businesses to fail would cause unemployment and cause massive social and political problems. If China sells their $3.3 trillion of U.S. Bonds, the dollar will fall and America will become even more competitive. As China's economic decline becomes obvious, it is doubtful they will convince the world to allow China to devalue and make the renminbi the world's reserve currency.

China as the second largest economy in the world will continue to be a major international power. But its days as the low-wage, high-growth center of the earth are over. Their ability to project military power in Asia will also fade. China's future may be similar to what George Friedman of Stratfor famously said about the future of Japan after the end of its high-growth cycle: "it will play a different role."

 

[kbate]

You will notice that no math is performed in the article.

Our current debt is: 18 trillion (ish).
Our current population is: 306,000,000 (ish)
Our debt per person is: $59000 (ish)

so to get that $750,000 per family average debt - we now have an average American Family size of: 12.71. (ish).

Then your friendly political commentator adds in 'unfunded liabilities' coming up with an additional million per family - which at the 12.71 per family = 24 million families for an additional $24 trillion in debt. (which strangely doesn't coincide with the oft touted $91 trillion to $170 trillion in unfunded liabilities).

So, what do we have here anyway?

 

[4est_4est_Gump]

I had read a portion of that Mark Steyn quote somewhere yesterday or today... probably because they know that most Americans eyes glaze over at numbers the whole section on the numbers in the comparison to other economies was left out.

I think that's the most interesting part of the piece and the most indefensable. The same people that didn't believe a rising tide lifts all boats somehow believe that a rising something will somehow wipe that out in the future somehow.

I can't decide if liberals that ignore those kinds of storm warnings either don't understand the numbers or do understand the numbers and are simply being disingenuous. Like if they were the king for the day how would they solve the problem with a simply hyper deflate the currency through a hyper inflation? With all the talk about caring about grandma I can't believe that they're simply going to default on the unfunded liabilities so how do they plan to pay for them?

I can see how with their keynesian mindset (wrong-headed that they are) they might argue about some of the short term stuff but how on earth are they explain ing the long-term problem? Green jobs solves that too? Don't care?

The Liberals no longer care about shared prosperity for when they see an ebbing tide, they note with glee that it affects the yachts first...

There are many economists on the Left who are assuring them that this debt is meaningless, sustainable and beneficial. They will cherry-pick moments in the past and make the same mistake that the Socialists of the Chair did when they used the Historical School of Economics to lay the groundwork for the Grand Social State. With the same hubris as Vienna at the turn of the last Century, they note the advances in technology, transportation and communication and declare themselves and their societies evolved and now mature enough to manage directed economies which will require large bureaucracies, as Hoffer might say, the Scribe Classes' wet dream ever since the meritocracy of Capitalism left them as marginalized bit players..

 

[Que]

Have to digest that for a bit... haven't really considered some of the upside of the shenanigans we are doing with our currency.

Not sure what I think about how that article lays it out.

Definately interesting.

You notice the big (C)ommunist Chinese economists have a better handle on our debt/spending/revenue/liabilities than most in our government, much less the economic illiterates I find myself arguing with in so called real life and here?

To the side here, but interesting:

Why China Wants To Dump the Dollar
Chriss Street
October 19, 2013



Background: http://www.americanthinker.com/prin.../10/why_china_wants_to_dump_the_dollar_1.html

 

[4est_4est_Gump]

You will notice that no math is performed in the article.

Our current debt is: 18 trillion (ish).
Our current population is: 306,000,000 (ish)
Our debt per person is: $59000 (ish)

so to get that $750,000 per family average debt - we now have an average American Family size of: 12.71. (ish).

Then your friendly political commentator adds in 'unfunded liabilities' coming up with an additional million per family - which at the 12.71 per family = 24 million families for an additional $24 trillion in debt. (which strangely doesn't coincide with the oft touted $91 trillion to $170 trillion in unfunded liabilities).

So, what do we have here anyway?

His math may not be presented rigorously, but I might ask you to go here:

http://www.usdebtclock.org/#

and look at the bottom right-hand corner, "Liability per Taxpayer."

You see citizens include children and other dependents.

See also that total debt per family is in the 750K range.

 

[rosco rathbone]

If you take America’s total indebtedness, it averages out to three-quarters of a million dollars per family: We are on course to becoming the first nation of negative-millionaires

No. This is how the monetary system actually works:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625

 

[4est_4est_Gump]

Have to digest that for a bit... haven't really considered some of the upside of the shenanigans we are doing with our currency.

Not sure what I think about how that article lays it out.

Definately interesting.

You notice the big (C)ommunist Chinese economists have a better handle on our debt/spending/revenue/liabilities than most in our government, much less the economic illiterates I find myself arguing with in so called real life and here?

Like Mises, Hayek, and Friedman [and myself], the Chinese Economists started on the Left and began moving right wen reality became more important than ideology and feelings.

 

[Que]

You will notice that no math is performed in the article.

Our current debt is: 18 trillion (ish).
Our current population is: 306,000,000 (ish)
Our debt per person is: $59000 (ish)

so to get that $750,000 per family average debt - we now have an average American Family size of: 12.71. (ish).

Then your friendly political commentator adds in 'unfunded liabilities' coming up with an additional million per family - which at the 12.71 per family = 24 million families for an additional $24 trillion in debt. (which strangely doesn't coincide with the oft touted $91 trillion to $170 trillion in unfunded liabilities).

So, what do we have here anyway?

You'd laugh if you would see me reading this article as I navigate around the 6 large black spots on the screen on my smartphone... so I may have missed some of those nuances but I was under the impression that the three quarters of a million dollars was talking about including unfunded liabilities.. does sound like some things off but regardless the number none of it can be paid back I think you could concur, yes?

 

[Que]

Like Mises, Hayek, and Friedman [and myself], the Chinese Economists started on the Left and began moving right wen reality became more important than ideology and feelings.

I was always right...still am...usually.sometimes.

 

[4est_4est_Gump]

No. This is how the monetary system actually works:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625

Even Better: http://mises.org/books/whathasgovernmentdone.pdf

 

[Que]

@kbate... I think the million dollars is hyperbole based on the fact that the $750,000 is certainly close enough to a million... but it is phrase arkwardly nd yes I do detest sloppy math when calculators are so prevalent.

Whatever the numbers are, if you get your Givens correct and do the arithmetic right it should still prove your point without hyperbole.

 

[4est_4est_Gump]

I was always right...still am...usually.sometimes.

I matriculated with the hippies...

 

[Que]

Even Better: http://mises.org/books/whathasgovernmentdone.pdf

Ludwig!

He should have taking the time to bury john maynard but no one took him seriously at the time so arguing with a lunatic seems ridiculous.... now we have to argue with an army of lunatics.

 

[kbate]

@kbate... I think the million dollars is hyperbole based on the fact that the $750,000 is certainly close enough to a million... but it is phrase arkwardly nd yes I do detest sloppy math when calculators are so prevalent.

Whatever the numbers are, if you get your Givens correct and do the arithmetic right it should still prove your point without hyperbole.

Indeed.

Yet, the numbers used are samples taken from the most alarming of statistics and then picked to be even more alarming for the article.

Numbers can be manipulated to mean nearly anything, even more easily when you choose to use prose rather than maths as your methodology.

I do not think anyone disputes that the United States is in debt and that the debt is becoming serious.

I also do not think anyone has a way out until the system overloads and a new currency starts. The Electronic Credit Dollar or some other cash-free system.

 

[Ishmael]

You will notice that no math is performed in the article.

Our current debt is: 18 trillion (ish).
Our current population is: 306,000,000 (ish)
Our debt per person is: $59000 (ish)

so to get that $750,000 per family average debt - we now have an average American Family size of: 12.71. (ish).

Then your friendly political commentator adds in 'unfunded liabilities' coming up with an additional million per family - which at the 12.71 per family = 24 million families for an additional $24 trillion in debt. (which strangely doesn't coincide with the oft touted $91 trillion to $170 trillion in unfunded liabilities).

So, what do we have here anyway?

Go back and re-read. The almost a million is including the unfunded liabilities.

Ishmael

 

[Wat_Tyler]

I think the point is s'posed to be, The System is Broke and it ain't gonna get fixed any time soon . . . no, ever.


The more 'Murikan History I have read, the more I can support this basic conclusion.


My theory is that it won't happen in our lifetimes, but our grandchildren may be in for Interesting Times.

 

[kbate]

Go back and re-read. The almost a million is including the unfunded liabilities.

Ishmael

No, it isn't. He adds in 'unfunded liabilities' in the next paragraph with new maths when he states, And that's before counting the "unfunded liabilities".

 

[kbate]

I think the point is s'posed to be, The System is Broke and it ain't gonna get fixed any time soon . . . no, ever.

I proposed an extreme "solution" once and they hated it. the right because it requires taxes to go up to remove trillions from circulation and the left because it requires spending to go down to do the same.

 

[Ishmael]

No, it isn't. He adds in 'unfunded liabilities' in the next paragraph with new maths when he states, And that's before counting the "unfunded liabilities".

The wording is a little awkward but I'm having no problem understanding what he's saying. I think you're on a snipe hunt here.

Ishmael

 

[kbate]

The wording is a little awkward but I'm having no problem understanding what he's saying. I think you're on a snipe hunt here.

Yet you missed his paragraph explaining exactly where unfunded liabilities come in.

Nobody is arguing that we are not in debt and that the debt is becoming a problem. This writer tosses numbers out to be alarmist - using "family" to create bigger numbers than 'citizen' or 'taxpayer' or 'person'. One does not need to seek snipe to see his rhetorical methodology.