Posted on 02/01/2009 10:37:34 AM PST by BobL
So what's the answer?
We're looking at something on the order of $5-10T (if not more) in added national debt by the time this little event is over (this includes standard budget deficits, "stimulii", and bank failures). This gives us a total debt of around $20T, which will cost $1T to service at 5% interest and $2T to service at 20% interest. Considering that the government collected $2.6T in all taxes in 2007 (income, corporate, etc.) and will probably collect a lot less in the next few years, you should be able to see the problem here. This may well lead people to give up on our dollar. If people give up and we have to print the money, it will be a Mexico/Argentina type situation. So what are the options? I'll start with a few of mine:
1) Default. Why not, everyone else is doing it, and no more stigma. Also, lots of foreign countries (like China) will be out of luck. Of course anyone with T-Bills will also be out of luck.
2) Figure out why we don't produce anything anymore. Here are some hints: Environment, Labor, Safety Mandates, Courts. I'm not saying that we get rid of all regulation and protections, but I am saying that we are simply no longer wealthy enough to be doing really stupid things (such as shutting down agriculture in California due to a fish, or forcing air bags and tire pressure sensors in cars, or closing off HUGE areas of the country to mineral exploration and forestry, or essentially banning nukes and now coal power plants). We also need to end the regulation of air quality levels in cities (since it prevents industries from locating there or expanding). We need to keep reasonable pollution requirements on cars and point sources, but if the air gets a bit dirty in a city, then sensitive people can move out (i.e., we are not yet Communist, we do allow people to choose where to live). Needless to say, ALL California environmental regulations that have a national effect (such as mileage standards) need to be eliminated. And, needless to say, Global Warming will have to wait a bit, we can get back to saving the world once we're able to feed our people and supply them with toilet paper (don't laugh, this is going to be bad).
3) Eliminate labor unions. If you don't like your job, find a better job. Even with some reasonable back-off in labor and safety regulations, there will still be no need for unions...those days are long gone and THEY are responsible for the DESTRUCTION of our manufacturing base, more than anyone else. Obviously also get rid of government labor unions too…and you’ll see why in the next section.
4) Cramdown all government pensions to PBGC levels. It's insane that a firefighter who retires at age 42 gets $65,000 per year, inflation adjusted, for the rest of his life. This is no different than welfare. I'm sorry if they feel that they had a "deal", but this country is now broke and we have much higher priorities than paying country club dues for someone who probably is still working and living in a mansion. Sorry. On the same note, scale back early retirement health care to at least 55 years old, if not 60 years old. Again, this 42 year old guy should not be treated like a ward of society, he is perfectly capable of finding productive work with benefits. There's probably more here, like dealing the 90% of these guys that claim "disability" when they retire.
5) Likewise, increase the Social Security retirement age to at least 70, if not 72. We need to get that system solvent without decimating the younger workers. As for the old-timers saying that they had a "deal", just tell them that we made a mistake in calculating their benefits, based on what they paid in, and now we're adjusting our payouts.
6) For energy...instead of having windmills all over the place, why not build 500 or so nukes and be done with the issue? Of course you have to make it possible to build nukes in a reasonable timeframe, so you need to eliminate the interference of environmental groups, unfriendly local/state governments, etc. Also use standardized designs and consider giving $1B of "stimulus" to each plant (through progress payments as they get built). At least with nukes we will get something back for our "investment", much as Hoover Dam and the TVA are still paying returns from the Great Depression.
7) Financially, no easy answers. These welfare payments of $500/$1000 (called tax rebates...even if you don't pay taxes) are a JOKE and a waste of money. The only thing I might recommend in this area is to continue Bush's tax cuts (people have NO CLUE how much they will be hammered, even middle class people, if these cuts expire). As we all know, the idea of trying to keep housing prices artificially high is about the dumbest thing possible, but seems to be the top priority now. A country with several million extra houses will not get wealthy by building millions more.
8) As to banks. First, stop increasing the bleeding. We keep trying to force them to lend money to people who probably will not pay it back...so stop that. Second, most of us (here at HBB) well know that the banks are effectively insolvent and need trillions to get past this mess. We need to decide whether to add that to the debt (it is part of the 5-10T that I mentioned above), or simply let them collapse and deal with whatever happens. But the idea of giving them a $20-$50B at a time, drip, by drip, and then forcing them to lend to deadbeats is just plain stupid.
Anyway that's all for me. If you notice, the only place I would spend new government money is possibly to help build nukes, as that is where you actually get a long-term payback. Other than saying that the stimulus welfare payments are a dumb idea, I see nothing of value in the rest of the bill.
Obviously, what I have above would be met by vicious opposition, particularly from the party in power. But then again, it is a great chance for them to show leadership, sharing the pain, and changing the direction of this country, FOR THE BETTER.
Finally, what needs to be understood here is that this country is BROKE and its present structure will condemn us to THIRD WORLD status, unless it changes. There can be no recovery as long as this country has its levels of debt and future obligations, and then does everything possible to prevent economic growth. Unless we attack these things systematically, we lose. The only reason we did not slide down earlier is that China essentially kept us supplied with goodies for free (by buying our debt), and we sucked out the money from the trillions of dollars in retirement funds (by having them invest in REITs).
Just some thoughts.
TAX revolt and/or refusal to work.
I’ve heard postulations that even a large scale program of submitting extensions for income taxes would seriously cripple the government’s ability to conduct business - in this case, giving (squandering) away this nations wealth. Granted, one is ‘supposed’ to pay fair and reasonable estimations of what they owe, but whatever the penalty would be for incorrectly filing for an extension, it would still not be as bad, legally, as not filing and paying.
“TAX revolt and/or refusal to work.”
Won’t happen...but you might see some states start looking at bailing out of the union. It wouldn’t surprise me to see Texas looking at options.
Your suggestions will only come to pass after the crash. The Left lives in a delusion and will not allow any of that to occu. We may need to revolt to get it done. Washington has enough Democrats and enough panty-waist Republicans that actually want Socialism if not outright Communism. That is what they created all these bubbles: to crater the economy and middle-class wealth. I wouldn’t be at all surprised if 2008 was the last Presidential election.
I tend to agree...unfortunately.
I was trying to show just how far we are from actually recovering. The solutions out there are a JOKE, especially the idea (from Republicans, of all people) of trying to kick-start the economy by restarting the housing bubble.
Of course, the ideas of the Dems are just as bad.
...but not a peep about our underlying problems that really led to the loss of our industrial base...from either party (as you allude to).
If Texas did that you’d best move quickly as the would soon be millions moving there, including me. They would have a warm water port or three, access to the Gulf for oil, and no one getting in the way of their Capitalism.
Response: Start to stock arms, ammunition and food.
We didn't need any regulation or protections for the first 100 years.
Interesting idea...
If the Dems take us far enough in the direction they are heading, it CAN happen!
They (Dims & Pubbies) both had a hand in our de-industrialization, especially with trade agreements and corporate tax policy. It might have worked better if the government had reduced corporate taxes but mandated that the manufacturing remained here. It would seem that all of this has been in the planning stage for years. After the T-bill bubble bursts, the country will be broke and ripe for takeover or defeat, which, I think, is the whole idea. The Constitution was designed to prevent the tyranny of government, and now we know why.
Is it possible that all this pork to groups like ACORN is to make sure they are well funded after the crash so they can help the Democrats keep control?
What can we use for a salt-lick?
Salt lick and freshly printed dollars are permitted.
Until people get angry enough to take to the streets - think Viet Nam antiwar level demonstrations, the crazy left will do whatever they want to screw the country.
There are far too many people - even upstanding indidividuals, waiting for their “piece of the pie.”
This is what 60 years of government/union run schools, liberal media and professors has given us - an ignorant mass of people who vote for leaders that promise them gifts from the treasury.
But its never too late. There are a few of us who still believe that big government is never the answer and more times than not the problem.
If not too late, I suggest March 5th as a nice day to rally across the country for freedom from tyranny. That is the anniversary of the Boston Massacre - the epitome of despotic government abuse. April 15th is also a splendid day for a rally.
Is there a process whereby the people can recall a President? Congress?
I’m up for any suggestion.
“Question: “(Vanity) So What do we do next?”
Response: Start to stock arms, ammunition and food.
The kooks have been saying that for years, but now I’m starting to think that their day is coming. Ask yourself some questions, such as:
1) How will a populist government respond to $20 gasoline (after a dollar crash)? Hello Rationing!!
2) What will happen to the prices of everything else and what will be the response?
In fact, I’m thinking of setting up a doomsday thread, so we can collaborate on preparations. For example, I have set up the gutters on my house to support rainwater collection (I still don’t have a place to put the water, though). I also have a water purification system (that I bought from a camping store) that has a very high capacity. I bought it mainly for hurricanes, but now I may need it for other contingencies.
There are lots of other things to think about, like clothing (especially if you have growing family), tools (particularly hand tools), solar panels, and just about any other consumable. It will get ugly.
Of course when brought in they are tied to the left front fender of the vehicle. The government could make a little extra by selling hunting stamps depicting a running politician etc.
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