FedUpUSA

Archive for the ‘Insolvency’ Category

Even though most Americans have become very frustrated with this economy, the reality is that the vast majority of them still have no idea just how bad our economic decline has been or how much trouble we are going to be in if we don’t make dramatic changes immediately.  If we do not educate the American people about how deathly ill the U.S. economy has become, then they will just keep falling for the same old lies that our politicians keep telling them.  Just “tweaking” things here and there is not going to fix this economy.  We truly do need a fundamental change in direction.  America is consuming far more wealth than it is producing and our debt is absolutely exploding.  If we stay on this current path, an economic collapse is inevitable.  Hopefully the crazy economic numbers from 2011 that I have included in this article will be shocking enough to wake some people up.

At this time of the year, a lot of families get together, and in most homes the conversation usually gets around to politics at some point.  Hopefully many of you will use the list below as a tool to help you share the reality of the U.S. economic crisis with your family and friends.  If we all work together, hopefully we can get millions of people to wake up and realize that “business as usual” will result in a national economic apocalypse.

The following are 50 economic numbers from 2011 that are almost too crazy to believe….

#1 A staggering 48 percent of all Americans are either considered to be “low income” or are living in poverty.

#2 Approximately 57 percent of all children in the United States are living in homes that are either considered to be “low income” or impoverished.

#3 If the number of Americans that “wanted jobs” was the same today as it was back in 2007, the “official” unemployment rate put out by the U.S. government would be up to 11 percent.

#4 The average amount of time that a worker stays unemployed in the United States is now over 40 weeks.

#5 One recent survey found that 77 percent of all U.S. small businesses do not plan to hire any more workers.

#6 There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.

#7 Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

#8 According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006.  Today, that number has shrunk to 14.5 million.

#9 A Gallup poll from earlier this year found that approximately one out of every five Americans that do have a job consider themselves to be underemployed.

#10 According to author Paul Osterman, about 20 percent of all U.S. adults are currently working jobs that pay poverty-level wages.

#11 Back in 1980, less than 30% of all jobs in the United States were low income jobs.  Today, more than 40% of all jobs in the United States are low income jobs.

#12 Back in 1969, 95 percent of all men between the ages of 25 and 54 had a job.  In July, only 81.2 percent of men in that age group had a job.

#13 One recent survey found that one out of every three Americans would not be able to make a mortgage or rent payment next month if they suddenly lost their current job.

#14 The Federal Reserve recently announced that the total net worth of U.S. households declined by 4.1 percent in the 3rd quarter of 2011 alone.

#15 According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

#16 As the economy has slowed down, so has the number of marriages.  According to a Pew Research Center analysis, only 51 percent of all Americans that are at least 18 years old are currently married.  Back in 1960, 72 percent of all U.S. adults were married.

#17 The U.S. Postal Service has lost more than 5 billion dollars over the past year.

#18 In Stockton, California home prices have declined 64 percent from where they were at when the housing market peaked.

#19 Nevada has had the highest foreclosure rate in the nation for 59 months in a row.

#20 If you can believe it, the median price of a home in Detroit is now just $6000.

#21 According to the U.S. Census Bureau, 18 percent of all homes in the state of Florida are sitting vacant.  That figure is 63 percent larger than it was just ten years ago.

#22 New home construction in the United States is on pace to set a brand new all-time record low in 2011.

#23 As I have written about previously, 19 percent of all American men between the ages of 25 and 34 are now living with their parents.

#24 Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row.

#25 According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980.  Today they account for approximately 16.3%.

#26 One study found that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt.

#27 If you can believe it, one out of every seven Americans has at least 10 credit cards.

#28 The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

#29 It is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.

#30 The retirement crisis in the United States just continues to get worse.  According to the Employee Benefit Research Institute, 46 percent of all American workers have less than $10,000 saved for retirement, and 29 percent of all American workers have less than $1,000 saved for retirement.

#31 Today, one out of every six elderly Americans lives below the federal poverty line.

#32 According to a study that was just released, CEO pay at America’s biggest companies rose by 36.5% in just one recent 12 month period.

#33 Today, the “too big to fail” banks are larger than ever.  The total assets of the six largest U.S. banks increased by 39 percent between September 30, 2006 and September 30, 2011.

#34 The six heirs of Wal-Mart founder Sam Walton have a net worth that is roughly equal to the bottom 30 percent of all Americans combined.

#35 According to an analysis of Census Bureau data done by the Pew Research Center, the median net worth for households led by someone 65 years of age or older is 47 times greater than the median net worth for households led by someone under the age of 35.

#36 If you can believe it, 37 percent of all U.S. households that are led by someone under the age of 35 have a net worth of zero or less than zero.

#37 A higher percentage of Americans is living in extreme poverty (6.7%) than has ever been measured before.

#38 Child homelessness in the United States is now 33 percent higher than it was back in 2007.

#39 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

#40 Sadly, child poverty is absolutely exploding all over America.  According to the National Center for Children in Poverty, 36.4% of all children that live in Philadelphia are living in poverty, 40.1% of all children that live in Atlanta are living in poverty, 52.6% of all children that live in Cleveland are living in poverty and 53.6% of all children that live in Detroit are living in poverty.

#41 Today, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.

#42 In 1980, government transfer payments accounted for just 11.7% of all income.  Today, government transfer payments account for more than 18 percent of all income.

#43 A staggering 48.5% of all Americans live in a household that receives some form of government benefits.  Back in 1983, that number was below 30 percent.

#44 Right now, spending by the federal government accounts for about 24 percent of GDP.  Back in 2001, it accounted for just 18 percent.

#45 For fiscal year 2011, the U.S. federal government had a budget deficit of nearly 1.3 trillion dollars.  That was the third year in a row that our budget deficit has topped one trillion dollars.

#46 If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.

#47 Amazingly, the U.S. government has now accumulated a total debt of 15 trillion dollars.  When Barack Obama first took office the national debt was just 10.6 trillion dollars.

#48 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

#49 The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

#50 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

Of course the heart of our economic problems is the Federal Reserve.  The Federal Reserve is a perpetual debt machine, it has almost completely destroyed the value of the U.S. dollar and it has an absolutely nightmarish track record of incompetence.  If the Federal Reserve system had never been created, the U.S. economy would be in far better shape.  The federal government needs to shut down the Federal Reserve and start issuing currency that is not debt-based.  That would be a very significant step toward restoring prosperity to America.

During 2011 we made a lot of progress in educating the American people about our economic problems, but we still have a long way to go.

Hopefully next year more Americans than ever will wake up, because 2012 is going to represent a huge turning point for this country.

The Economic Collapse

The Federal Reserve has been going back and forth with reporting from Bloomberg regarding the massive bailouts and loans made to the financial sector during the crisis.  What is rather astonishing is the ability to discuss trillions of dollars of loans made to largely irresponsible financial institutions with absolutely no oversight.  Like an angry couple on Maury Povich, only an objective outsider can see how dysfunctional the relationship has become.   All of this happened in the shadows.  What is more astonishing is a large amount of questionable assets that were shifted from bank balance sheets are still sitting comfortably in the balance sheet of the Federal Reserve.  This is not disputed.  Profits at banks are on the rise but it is hard to lose money when you have unlimited access to taxpayer bailouts and the ability to dilute the currency of the nation.  U.S. banks hold $9.7 trillion in deposits with a FDIC Deposit Insurance Fund (DIF) that currently has $7.8 billion.  Do the math on that one.

A glance of U.S. banking data

Here is a nice snapshot of U.S. banking data:

Source:  Bank Tracker

What is the most amazing fact is that over $9.7 trillion in deposits is backed by a measly $7.8 billion.  This is like trying to stop a hurricane with a paper napkin.  Most Americans are earning virtually nothing on their deposits at banks but what other options are available?  Should they enter the highly volatile and opaque stock market?  When a typical savings account is paying close to 0 percent it is hard to digest but the volatility of the stock markets for this entire year have rendered a nearly neutral result.  Even money market accounts have fallen strongly since the recession hit:

“The typical money market account is down over 80 percent since 2006.  It isn’t like inflation has suddenly disappeared or that our debt problems have gone away like dust in the wind.  To the contrary the economy has gotten much more mired in a stagnating funk.”

Banks are back at making profits but it is hard to lose when you have unlimited taxpayer bailouts:

Source:  FDIC

While the Federal Reserve was trying to cast doubt on the results published by Bloomberg, they failed to address the massive amount of “assets” that remain on their balance sheet.

Read the rest at My Budget 360

The Federal Reserve released its Quarterly Report on Household Debt and Credit report this week. Calculated Risk duly reported on the results, which included this text from the Fed.

Aggregate consumer debt fell approximately $60 billion to $11.66  trillion in the third quarter of 2011 according to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit.”

The decline in outstanding consumer debt reveals that households  continue to try and deleverage in the wake of a challenging economic  environment and large declines in home values,” said Andrew Haughwout,  vice president in the Research and Statistics Group at the New York Fed. “However, our findings also  provide evidence that consumer credit demand continues to increase, a  positive sign for consumer sentiment.”

Even as “consumers” struggled to get out of debt while also facing a “challenging” economic environment—this is a euphemism for the the economy can’t suck enough—and large declines in home values, credit demand continues to increase according to the Fed, although aggregate debt fell by about $60 billion out a total of $11.66 trillion. That’s $60,000,000,000 out of a total if 11,660,000,000,000, which works out to about 0.5%.

I’ll leave it to you to work out the various contradictions in the Fed’s statement. Hint: is more debt the solution to a debt problem?

But more importantly, did “consumer” debt actually decline? Consider this stink bomb—

Aggregate consumer debt fell slightly in the third quarter. As of  September 30, 2011, total consumer indebtedness was $11.66 trillion, a  reduction of $60 billion (0.6%) below its (revised) June 30, 2011 level.   The 2011Q2 and 2011Q3 totals reflect improvements in our measurement  of student loan balances, which we had previously undercounted … As a result, student  loan and total debt balances for 2011Q2 and 2011Q3 are not directly  comparable to earlier data …

These balances are not directly comparable to earlier data? Oh, yes they are! The first graph below shows 2011Q2, which reflects “undercounted” student loan balances. The second graph shows the new data for 2011Q3, which incorporates those balances.

The 2011Q2 graph from Calculated Risk. Total debt, including “undercounted” student loans, was $11.4 trillion.

The new 2011Q3 graph from Calculated Risk. Total debt, including the revised student loan balance, is now $11.66 trillion.

Using the new accounting, total household debt fell $6 billion relative to the 2nd quarter, the data for which has also been updated in Calculated Risk’s current (second) graph above. But if we compare 2011Q2 in the first chart with the 2011Q3 in the second, we see that total debt has increased by $266 billion when that new student loan data is included.

So the Fed has told us that total household debt decreased, which it did if you don’t take all the data into account, when in fact total household debt has increased. Do they think we’re stupid? I think they do. They certainly think we’re dumber than they are, and let’s face it, Fed economists are pretty thick. And the worst part of this is that nobody, not even Calculated Risk, noted the disparity. Everybody led with headlines like Bloomberg’s Household Debt Falls by 0.6% in Third Quarter. That article noted that there were “improvements” to the Fed’s student loan data.

In short, nobody gives a damn. Or didn’t bother to look at the previous data.

Here’s unorthodox economist Steve Keen talking about why we should forgive all this debt and start all over again. Keen’s views, which I have agreed with in the past, are not bullshit, although let’s face it, when all is said and done, Keen still an economist. That’s always troubling. You’ll note that the BBC interviewer Sarah Montague simply can’t wrap her mind around the idea of forgiving debt (aka. a debt jubilee). Her cognitive density, the impermeability of Sarah’s brain to unconventional thinking, becomes very annoying as the interview goes along.

You see, she has been taught that debt must always be paid back, even if it can’t be paid back, or else there is a moral hazard, although the same criteria apparently do not apply to those who issued the bad debt in the first place. Thus you will find that things really bog down in the middle of this long interview, as Sarah keeps asking the same question over and over again, and Keen struggles to answer it each time.

Decline of the Empire

The global economy is heading for a massive amount of trouble in the months ahead.  Right now we are seeing the beginning of a credit crunch that is shaping up to be very reminiscent of what we saw back in 2008.  Investors and big corporations are pulling huge amounts of money out of European banks and nobody wants to lend to those banks right now.  We could potentially see dozens of “Lehman Brothers moments” in Europe in 2012.  Meanwhile, bond yields on sovereign debt are jumping through the roof all over Europe.  That means that European nations that are already drowning in debt are going to find it much more expensive to continue funding that debt.  It would be a huge understatement to say that there is “financial chaos” in Europe right now.  The European financial system is in so much trouble that it is hard to describe.  The instant that they stop receiving bailout money, Greece is going to default.  Portugal, Italy, Ireland, Spain and quite a few other European nations are also on the verge of massive financial problems.  When the financial dominoes start to fall, the U.S. financial system is going to be dramatically affected as well, because U.S. banks have a huge amount of exposure to European debt.  The other day, I noted that investor Jim Rogers is saying that the coming global financial collapse “is going to be worse” than 2008.  Sadly, it looks like he is right on the money.  We are in a lot of trouble my friends, and things are going to get really, really ugly.

The sad thing is that we never have recovered from the last major financial crisis.  Right now, the U.S. economy is far weaker than it was back in 2007.  So what is going to happen if we get hit with another financial tsunami?  The following is what PIMCO CEO Mohamed El-Erian said recently….

“What’s most terrifying, we are having this discussion about the risk of recession at a time when unemployment is already too high, at a time when a quarter of homeowners are underwater on their mortgages, at a time then the fiscal deficit is at 9 percent and at a time when interest rates are at zero.”

Can things really get much worse than they are now?

Unfortunately, yes they can.

Not that things are not really, really bad right now.

In Los Angeles earlier this week, approximately 10,000 people lined up for free turkey dinners.

So how many people will be lining up for free food when the unemployment rate in the U.S. soars into double digits?

Right now there is so much economic pain in America that it is hard to describe.  According to a recent report from one nonprofit group, 45 percent of all people living in the United States “do not have enough money to cover housing, food, healthcare and other basic expenses”.

If this is where we are at now, how much trouble will we be in as a nation if a financial crisis worse than 2008 hits us in 2012?

The primary cause of the coming financial crisis will almost certainly be the financial meltdown that we are seeing unfold in Europe.

The economic downturn that began in 2008 caused the debt levels of quite a few European nations to soar to unprecedented heights.  It has gotten to the point where the debts of many of those nations are no longer sustainable.

So investors are starting to demand much higher returns for the much greater risk associated with investing in the bonds of those countries.

But that makes it much more expensive for those troubled nations to fund their debts, and that means that their financial troubles get even worse.

Over the past 12 months, what we have seen happen to bond yields over in Europe has been nothing short of amazing.

Just check out this chart of what has been happening to the yield on 2 year Italian bonds over the past 12 months.

And keep in mind that these bond yields have been spiking even while the European Central Bank has been buying up unprecedented mountains of bonds in an attempt to keep bond yields low.

There has been a fundamental loss of faith in the financial system, and it is not just happening in Europe.

Just check out this chart.  As that chart shows, credit default swap spreads all over the globe are absolutely skyrocketing and are now higher than we have seen at any point since the great financial crisis that shook the world during 2008 and 2009.

Panic and fear are everywhere – especially in Europe.  In fact, it looks like a run on the banks has already begun in Europe.

The following comes from a recent article in The Economist….

“We are starting to witness signs that corporates are withdrawing deposits from banks in Spain, Italy, France and Belgium,” an analyst at Citi Group wrote in a recent report. “This is a worrying development.”

Nobody wants to lend money to European banks right now.  There is a feeling that they are all vulnerable and could fail at any time, and this lack of confidence actually makes that possibility even more likely.

The following is a short excerpt from a recent CNBC article….

Money-market funds in the United States have quite dramatically slammed shut their lending windows to European banks. According to the Economist, Fitch estimates U.S. money market funds have withdrawn 42 percent of their money from European banks in general.

And for France that number is even higher — 69 percent. European money-market funds are also getting in on the act.

So what can be done?

Well, in a different CNBC article, Mitchell Goldberg was quoted as saying that even “a bazooka” is not going to be good enough to fix this situation….

“It’s too late for a bazooka,” said Mitchell Goldberg, president of ClientFirst Strategy. “Now we need inter-continental ballistic missiles. This is getting worse very quickly.”

This is kind of like watching a horrific car wreck happen in very slow motion.

The financial system of Europe is dying and everybody can see what is happening but nobody can seem to find a way to fix it.

Not that we are solving our own problems here in the United States.

The vaunted “supercommittee” that was supposed to get a handle on our debt problem was a complete and utter failure.

Barack Obama has shown that he has no clue what to do when it comes to the economy, and Ben Bernanke has been preoccupied with roaming around the country trying to get people to feel more “warm and fuzzy” about the Federal Reserve.

The Federal Reserve actually has more power over our economy than anyone else.  But instead of fixing things they only keep making things even worse.

The only people that the Fed seems to be helping are the banksters.

What you are about to read should really, really upset you.  According to a recent article in the Wall Street Journal, the Federal Reserve has actually been tipping off their upcoming moves to top financial professionals.  In turn, these financial professionals have been using that information to make a lot of money for themselves and for their clients….

Hours after an Aug. 15 meeting with Federal Reserve Chairman Ben Bernanke in his office, Nancy Lazar made a hasty call to investor clients: The Fed was dusting off an obscure 1960s-era strategy known as Operation Twist.

The news pointed to a boom in long-term bonds.

It was a good call. Over the next five weeks, prices on 10-year Treasury bonds soared, offering double-digit returns in an otherwise dismal year.

By the time the Fed announced its $400 billion Operation Twist on Sept. 21, the window for quick profits had all but slammed shut.

Ms. Lazar is among a group of well-connected investors and analysts with access to top Federal Reserve officials who give them a chance at early clues to the central bank’s next policy moves, according to interviews and hundreds of pages of documents obtained by The Wall Street Journal through open records searches.

You just can’t make stuff like this up.  The corruption at the Federal Reserve is totally out of control.  After nearly 100 years of total failure, it is time to shut down the Federal Reserve.

Not that Barack Obama should get a free pass for the role that he has played in this economic downturn.  He inherited a complete mess from Bush and has made it even worse.

Today, millions of business owners are so frustrated with Washington D.C. that they don’t know what to do.

For example, one business owner down in Georgia has posted signs with the following message on all of his company’s trucks….

“New Company Policy: We are not hiring until Obama is gone.”

The business environment in this country becomes more toxic with each passing year, and the federal government has already strangled millions of small businesses out of existence.

In addition, politicians from both parties continue to stand aside as tens of thousands of businesses, millions of jobs and hundreds of billions of dollars of our wealth get shipped out of the country.

During 2010, an average of 23 manufacturing facilities a day were shut down in the United States.  We are committing national economic suicide, and the top politicians in both political parties keep cheering for more.

Well, millions of ordinary Americans can see what is happening and they are preparing for the worst.

The following report comes from an article that was recently posted on the website of the local CBS affiliate in St. Louis….

A chain of three stores that sells survival food and gear reports a jump in sales to people who are getting prepared for the “possible collapse” of society.

“We had to order fifty cases of the meals ready to eat to keep up with the demand in the past three months,” said manager Steve Dorsey at Uncle Sam’s Safari Outfitters Inc. in Webster Groves. “That’s not normal.  Usually we sell 20 to 30 cases in a whole year.”

So are you prepared for the coming collapse?

If you still have a great job and things are still going well for you, then you should definitely be thankful.  Compared to the rest of the world, most of us are incredibly blessed.

But let there be no doubt, the U.S. economy is going to get a lot worse in the years ahead.

Just because you have a job today does not mean that you will have one tomorrow.

Just because you have a nice car and a big home today does not mean that you will have them tomorrow.

We all need to try to become a lot less dependent on “the system”, because “the system” is failing.

A whole lot of trouble is coming.

You better get ready.

The Economic Collapse

No doubt emergency meets are underway in numerous countries right now following a failed German bond auction. Bond auctions have failed before, but not in Germany (at least by this much), and never at a worse time.

 

Link if above video does not play: German Bond Auction Disaster

Key Ideas Expressed in Video

“What people are saying is Germany is going to have to pay the bill. … Just possibly, today is the day people may have decided German bonds are not the safe haven they thought they were. … It’s all about confidence isn’t it?”

It’s actually about solvency, not liquidity, not confidence. Solvency issues in Greece, Spain, and Portugal have now affected the core.

Mike “Mish” Shedlock

Global Economic Analysis

Another day of lies has dawned on the markets.

After being up close to 2% the market is now bleeding again with the S&P threatening to negative and the Nasdaq down into red territory.

The culprit?  The continuation of lies.

Roughly 20% of Italian debt is held by French banks.  And they, of course, are almost-certainly marking that debt to fantasy prices.

Apple is getting cored as the claimed “we’ll be on top of the world forever” crap is turning out to be more than a bit vapid.  Green Mountain got destroyed last night with allegations of “aggressive accounting” (or worse) being thrown around for some time; they had an inadequate response on their call last night and detonated.

The entire damn world is full of Ponzi and nobody is facing reality.  If we don’t cut this crap out the rout you saw yesterday is going to look like a Girl Scout picnic.

There is nothing — literally nothing in the form of leadership showing up from anywhere in any of the international leadership.  The French 10 year yield is now spiking and the spread against Bunds has widened by 12% today.

The ECB appears to have been playing “aggressive buyer” but this will not work.  It can’t work.  You cannot solve a debt problem with more credit; you must stop the excessive spending!

Last night I saw the most outrageous display of political bullshit and pandering I’ve been witness to in decades.  The Rethuglicans simply cannot bring themselves to speak the truth.  While I heard “excessive spending” a few times nobody is talking about nor will they talk about where it’s coming from — the large budget items and the only ones that matter are all entitlements and defense!

Go ahead and argue with the facts if you want but you’re a buffoon if you do.  The fact of the matter is that Social Security, Defense, Unemployment/Welfare/Etc, Medicare, Medicaid, Interest and Health and Human Services are fully 3/4 of the federal budget.

We’re well over a trillion in the hole meaning that you could cut everything from that point downward in that chart to zero and the budget would not be balanced.

There is no solution that does not involve addressing the “Big Five”: Social Security, Defense, Unemployment/Welfare, Medicare and Medicaid. 

Period.

Now you can dislike this all you want but you can’t change it.  Nor can you argue that cutting Defense along will make a material impact on the whole or bring us “balance.”  How much would you cute defense by?  Let’s say 50% – about $350 billion worth.  That’s nice; we’re still more than a trillion in the hole!

Put a different way those “big five” plus interest consume all of the tax revenues that the government takes in.

Deal with facts folks.  I don’t care if you like them or not; that’s not material.  We call them facts for that reason; it is immaterial if you find the facts savory or distasteful — they just are.

I have seen nothing from any of the Republican Candidates that have made sense in this regard.  Not even Ron Paul, who said he’d cut $1 trillion — but he didn’t say how and someone needs to ask him that before they blow him again with claims that he has a real solution, because the above chart makes clear that if you were to cut $1 trillion from the budget you’d have to basically zero everything other than entitlements were you to cut defense in half to achieve his numbers.  What he’s put forward in public (in the form of “block grants”) are lies since all that does is shift spending and thus taxing demands from one place to another.  This is raw douchebaggery and those who support this crap without calling it out as what it is are blind partisans.

Bald claims such as anything counted in “block grants” must be deemed knowing and intentional lies when put against the above chart because they are.  Cost-shifts from the federal government to the states are not reductions in spending – they’re simply a shift of where taxation has to happen from one place to another and thus are also dishonest.

We are watching the spiral downward in Europe as they simply will not accept that the government cannot spend that which the people will not fund with current tax revenues.  This reality is coming here ladies and gentlemen in the very near future and we can either face it or we will suffer a ruinous financial collapse.

Those on the other side of the issue often ask “but won’t we collapse anyway if we do the right thing?” 

The answer is no.  The raw damage cannot be avoided but there are mitigating steps we can take in tax policy, immigration policy, trade policy, energy policy and reform of the medical and banking industries that will help.  They will not make the pain go away and they will not stop the damage from occurring but they can prevent the damage from being catastrophic.

The problem is that in order to do any of them we have to stop pretending that this is all someone else’s problem, that Medicare will be “as promised” for everyone 50 and older and that the government can continue to run on that chart above while we’re going to “make a serious dent in the deficit.” The truth is that we are refusing to actually reduce spending (not cut from a “baseline increase”) in those five major programs.

We either act now or the choices will be made for us.