Simpson, a former U.S. Senator from Wyoming, and Bowles, the White House chief of staff under President Clinton, say the only way to get the country’s finances on a sustainable path is a combination of cutting costs, increasing taxes and encouraging economic growth — putting everything from Social Security benefits to defense spending and Medicare on the table.
Right. In other words what I’ve said since the beginning: Government cannot spend more than it takes in via current taxes. Period.
Now pay attention folks, because this is a bi-partisan recognition of what I’ve been saying since 2007, and it has a timeline on it:
If the country doesn’t act, the financial markets eventually will raise the cost of credit, likely turning on a dime and moving quickly without warning, as is happening in Europe. If that happens, the cost of everything from credit card debt to home mortgages — along with cost of borrowing for the country — will shoot up and the U.S. will experience “a recession like you’ve never seen before,” Bowles said.
Uh, that’s Depression, not recession. And it’s coming whether we like it or not. The question is whether we’d like a really bad one or whether we want to risk the destruction of our government and society.
We’re doing the latter by refusing to address this problem and playing political games.
Simpson said commission members differed on when they thought the tipping point might come, but no one thought it would be more than two years away.
Incidentally if “it” happens like that the S&P 500 will trade at 1/5th to 1/10th of its current price as will every other asset that has leverage embedded in it, from housing to stocks to bonds to commodities.
If you’re “invested” in such things when it occurs you’re financially done.