From The Ramparts

Hard Times Are Coming

Hard Times Are Coming

“We are the American generation that only promises massive debt to those who will follow. Diane Lim Rogers from the Brookings Institution calls this ‘a birth tax’ -- a stark, absolute tax that cannot be repealed yet is imposed on every American newborn. The nation's comptroller general, David Walker, who heads the U.S. General Accountability Office, said it's important for every citizen to know that the country's finances are ‘worse than advertised.’ The problem, he says, is that we've gone from $20 trillion in liabilities and unfunded commitments for things such as Social Security and Medicare in 2000 to $50 trillion in 2006. ‘That's $435,000 per American household. The median household income in the United States is $36,000 -- that's a 9-to-1 debt-to-income ratio and it's going up every second,’ he said. ‘We're spending more than we make and we're charging it to our credit card.’” Wake up, America! We've got to pay our bills By MARK TRAHANT P-I EDITORIAL PAGE EDITOR http://seattlepi.nwsource.com/opinion/294391_trahant03.html

It’s not just the housing, auto, airline and mortgage industries that are in dire straights, it’s the whole AmeriKKKan economy. AmeriKKKa’s debt problems especially the looming US entitlement programs that are set to trigger a massive tsunami of increased red ink that will swamp the country in the not too distant future if something drastic isn’t done soon. Things are so bad David Walker the US Comptroller General who heads the US Government Accountability Office is on a nationwide speaking campaign dubbed the Fiscal Wake Up Tour to tell citizens the US is on a doomsday coarse with fiscal insolvency. This is no Chicken Little “The Sky is Falling” scenario. Walker’s alarm is based upon bottom line accounting procedures and real facts. Unlike his counterparts in the US Congress or the privately owned Federal Reserve banking system, Walker appears to be a man of integrity, he wants US citizens to know the truth!! And in this case the truth is scary. Go to the GAO Website http://www.gao.gov/special.pubs/longterm/challenge.html and click on any link. You will see information and a perspective you won’t get from the corporate mind control apparatus or our compromised Congress critters.
Unlike Arthur Anderson and similar accounting firms, the GAO doesn’t cook the books nor do they keep separate accounting ledgers. They tell it like it is. Their bottom line is relatively accurate and the truth is not pleasant. “Over the next few decades, the nation’s fiscal outlook will be shaped largely by demographics and health care costs. As the baby boom generation retires, federal spending on retirement and health programs—Social Security, Medicare, and Medicaid—will grow dramatically. A range of other federal fiscal commitments, some explicit and some representing implicit public expectations, also bind the nation’s fiscal future. Absent policy change, a growing imbalance between expected federal spending and tax revenues will mean escalating and ultimately unsustainable federal deficits and debt.” Our Nation's Fiscal Outlook: The Federal Government's Long-Term Budget Imbalance GAO
This report focuses primarily on Social Security, Medicare and Medicaid commitments and their lack of adequate funding to meet the future demographic realities and obligations in the coming years. Keep in mind this doesn’t even address the daily two to three billion dollar debt the US government incurs just to pay its’ bills (including interest to the bankers whose loans keep the government afloat), wage perpetual war and waste billions in Corporate Welfare and fraud for the rich!
Walker and the people traveling with him are trying to wake the people up, they are attempting to let us know what is really happening. Unfortunately the mass media cares more about Anna Nicole Smith or some other foolishness than the state of the government’s finances. Walker to his credit, is sounding an alarm. “I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility. I’m going to show you some numbers…they’re all big and they’re all bad. You know the American people, I tell you, we’ve been to 13 cities outside of Washington with the fiscal wake up tour. They are absolutely starved for two things: the truth, and leadership. The first baby boomer will reach 62 and be eligible for early retirement of Social Security January 1, 2008. They’ll be eligible for Medicare just three years later. And when those boomers start retiring in mass, then that will be a tsunami of spending that could swamp our ship of state if we don’t get serious. What’s going on right now is we’re spending more money than we make…we’re charging it to credit card…and expecting our grandchildren to pay for it. And that’s absolutely outrageous. We've gone from surpluses to huge deficits and our long range situation is much worse. If nothing changes, the federal government's not gonna be able to do much more than pay interest on the mounting debt and some entitlement benefits. It won't have money left for anything else – national defense, homeland security, education, you name it.” David Walker - Wake Up America http://www.stockhouse.com/blogs.asp?
Walker’s projections augur dismal times and very difficult decisions will have to be made to stave off a financial collapse down the road. But most folks don’t have any incentive to think about what is going to happen in 2020 or 2030. Nevertheless, if these issues are not confronted those of us who are still around in 2020 9and our children and grandchildren) will face major problems funding government entitlement programs like Social Security, Medicare and Medicaid. “Today, Social Security taxes are running ahead of benefits by about $70 billion. But by 2009, the annual excess will start to fall and by 2017 there won't be any excesses at all. From then on, widening deficits are projected for as far as the eye can see. At first, the gap between promised benefits and dedicated revenues will be relatively small -- $9 billion in 2017 -- but it will grow very quickly as those who were born in the peak of the baby boom begin to retire in large numbers during the 2020s. The Social Security Trustees project that the annual shortfall will grow to $256 billion by 2030 in inflation adjusted dollars and that the program's cost will grow from roughly 4.3 percent of the nation's gross domestic product (GDP) today to 6.1 percent in 2030. While seemingly a small increase, it means Social Security will draw nearly half as much more out of the economy in 2030 as it does today. Expressed as a share of workers' pay (taxable payroll), Social Security will grow from about 11 percent today to nearly 17 percent in 2030. This means the Social Security program will require 50 percent more from workers' wages as it does today.”
Keep in mind much of this problem has been acerbated by the US government “raiding” the Social Security Trust Fund of billions of dollars to fund its operation! The excess Social Security funds not used to fund current liabilities and obligations are “invested” in US Treasury notes. Supposedly these investments earn interest. However one economist offers his take on what is really happening. “The Social Security Trust Fund currently claims to hold assets of $1.6 trillion. What do these assets consist of? Nothing more than IOU's from the U.S. Treasury. Of the $7.4 trillion in gross federal debt outstanding at the end of the last fiscal year, $1.6 trillion represented money that the federal government (in the form of the U.S. Treasury) owes to itself (in the form of the Social Security Trust Fund). Considered as a single fiscal entity, the federal government has no net assets whatsoever that have been set aside to provide Social Security payments to future beneficiaries. Rather, the federal government owes a vast sum that needs to be paid in the future even if it never delivers a dime to the retiring baby boomers. The trust fund amounts to nothing more than an accounting fiction that the dollars currently collected from Social Security contributions are a different color from the dollars collected from income taxes.” Concerns about the latest Social Security proposal http://www.econbrowser.com/archives/2005/06/concerns_about.html
This is just one problem the US government is facing. The GAO also audits each department and publishes reports on their operations. I suggest you log onto their Website and peruse the various issues and reports they post. Take for example their audit of waste and fraud during Katrina or the ongoing debacle in Iraq. The GAO documents the mismanagement of our tax dollars. Speaking of tax dollars, George W. Bu$h’s tax cuts for the rich were nothing but a resurrection of Ronald Reagan’s failed Voodo Economics which resulted in Clinton having to raise taxes to forestall an economic meltdown. Well that meltdown is coming and David Walker and several other folks are going around the country trying to educate the public about it. But the entitlement meltdown will start around 2019. There is a current crisis that may sink the economy that is unraveling now right before our very noses. It’s the housing and mortgage burst that is sending ominous ripples across the world. “Mortgages requiring little or no documentation became known colloquially as liar loans.’ An April 2006 report by the Mortgage Asset Research Institute, a consulting concern in Reston, Va., analyzed 100 loans in which the borrowers merely stated their incomes, and then looked at documents those borrowers had filed with the I.R.S. The resulting differences were significant: in 90 percent of loans, borrowers overstated their incomes 5 percent or more. But in almost 60 percent of cases, borrowers inflated their incomes by more than half. A Deutsche Bank report said liar loans accounted for 40 percent of the subprime mortgage issuance last year, up from 25 percent in 2001. Securities backed by home mortgages have been traded since the 1970s, but it has been only since 2002 or so that investors, including pension funds, insurance companies, hedge funds and other institutions, have shown such an appetite for them. Wall Street, of course, was happy to help refashion mortgages from arcane and illiquid securities into ubiquitous and frequently traded ones. Its reward is that it now dominates the market. While commercial banks and savings banks had long been the biggest lenders to home buyers, by 2006, Wall Street had a commanding share — 60 percent — of the mortgage financing market, Federal Reserve data show losses. The big firms in the business are Lehman Brothers, Bear Stearns, Merrill Lynch, Morgan Stanley, Deutsche Bank and UBS. They buy mortgages from issuers, put thousands of them into pools to spread out the risks and then divide them into slices, known as tranches, based on quality. Then they sell them... Wall Street became so enamored of the profits in mortgages that it began to expand its reach, buying companies that make loans to consumers to supplement its packaging and sales operations. In August 2006, Morgan Stanley bought Saxon, a $6.5 billion subprime mortgage underwriter, for $706 million.And last September, Merrill Lynch paid $1.3 billion to buy First Franklin Financial, a home lender in San Jose, Calif. At the time, Merrill said it expected First Franklin to add to its earnings in 2007. Now analysts expect Merrill to take a large loss on the purchase. Indeed, on Feb. 28, as the first fiscal quarter ended for many big investment banks, Wall Street buzzed with speculation that the firms had slashed the value of their numerous mortgage holdings, recording significant losses” Crisis Looms in Market for Mortgages new York Times March 11, 2007 http://www.nytimes.com/2007/03/11/business/11mortgage.html?
What can we do to stop from going over the cliff? Personally each of us must begin to get out of debt. While that may be easier said then done, we must make a serious effort. Start crafting a strategy that will significantly cut into your debt, eliminate your high interest credit cards and cease conspicuous consumption!!! Stop going for the okey-doke. The ruling elites want to make us all wage/debt peons. Don’t co-operate in your own debauchery and enslavement! There are agencies both non profit and for profit that can assist you in getting out of debt. Look them up but make sure you do your homework. There are a lot of snake oil salesmen and con artists out there. Start thinking of ways you can save money, AmeriKKKans have minus savings as a nation. We need to promote savings and responsible handling of our finances. Lastly think for yourself. Don’t buy into the gloom ad doom or th e media hype.
Self-determination and empowerment are achievable, but it takes courage and perseverance! We don’t have to go out like paupers, beggars and indigents. We can survive the coming hard times in AmeriKKKa. Better yet, if you can handle your business so you avoid them altogether.

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posted by Junious Ricardo Stanton @ 4:56 PM