Barron's - Budget Disaster

[Catwhoshatinthehat]

Thought this was an interesting article:

 

http://online.barrons.com/article/SB50001424053111903533504579095343582443818.html?mod=BOL_hpp_cover#articleTabs_article%3D1

 

While they bicker about the debt ceiling as has been discussed on here through various threads the long term issues continue to be ignored.

[TobiasFunke]

We have to subscribe to read the whole article

[TobiasFunke]

So while we wait for you to post the link I'll semi-hijack this thread.

 

Bohner, good dude, backtard!

http://sierraclub.typepad.com/compass/2013/09/on-the-eve-of-a-shutdown-polluted-priorities-contaminate-boehners-house.html

[Catwhoshatinthehat]

Subscriptiowned.  The article was coming up at first and now it requires the subscription so epic fail on my part.  Basically at our current pace by the 2030's we'll make Greece's situation look like a walk in the park unless they address entitlements coming to retirees.  The ratio of workers to retirees will be cut almost in half and spending will skyrocket.  They also showed a graphic of how deficit spending from 1850-1980 was used mostly for wars and since then it's become the norm.  The information came from the CBO and not an economist.  I've criticized the CBO before as far as some of their estimates being conservative but in this case it's anything but a pretty picture.  Here's a brief overview of the article from another site and mods feel free to remove if necessary:

 

"Unless Washington stops dithering, says this week's cover story in Barron's, the nation's aging population will destroy the economy within 25 years. The cost of Obamacare, Medicaid, Medicare and Social Security will mushroom as tens of millions of baby boomers reach retirement age, according to a report by the nonpartisan Congressional Budget Office (CBO).

The CBO's new 25-year projections show that the next decade will be the relative calm before the coming storm. One scenario has the debt-to-economic-output ratio modest over the next 10 years, and then exploding by 2033. American politicians rarely look beyond the next election, so fiscal planning has devolved into a series of standoffs verging on defaults and shutdowns.

Barron's takes a look at the demographics that make this tragedy inevitable, including a graphic showing the plunging "dependency ratio." And the article examines both the baseline scenario, and the so-called alternative fiscal scenario, which is much more realistic and sees a much greater looming disaster.

See how the media has helped stoke complacency about the budget. See why any short-term improvement in the budget during the recent upswing in the business cycle is negligible when measured against the long term. See how President Obama seems to be ignoring the issue, as well as what Bill Clinton, Alan Greenspan and Paul Krugman have said about the problem."

 

[Catwhoshatinthehat]

So it's not as pretty as an article that summarizes the key points but here's the CBO's report: http://www.cbo.gov/publication/44521

[Lhalo]

Just wait until the interests rates go up and the US can't service it's own debt. That should be fun.

[Angel Oracle]

But, but, we have a FAKE debt. 

[arch stanton]

The only thing we should be blaming the aging population for is election this piss poor miserable excuse for leadership that have spent the past 50 years handing our country over to their donors.

[Catwhoshatinthehat]

I don't see it as the blame game it's just the reality of the situation.  We could point fingers but that does nothing to fix the problems facing our country and the cuts that will need to be made.  Concessions weighed more heavily towards the younger generations who have more time to save and prepare simply aren't going to cut it.   

[arch stanton]

Then get the concessions from the corporations. According the the Supreme Court they're people too.

[shellback]

in the fascist state we are citizens of, the corporations bear resposibility- they control our government and bear moral, social and probably legal resposibility to pensioners.

[Angel Oracle]

Stop fighting wars that we have no business of being in!

Iraq should have NEVER happened.    Syria should NOT happen. 

 

People talk about the corporations like they are the king.   But they contributed to this mess by offshoring and thus costing a lot of people their jobs, which of course means less revenues for guberment to bring in, while corporations sit on BIG record profits. 

 

This mess was started many years ago, and the blame goes to a lot of folks: guberment, corporations, greedy Americans wanting everything and lawyers preying on them, and idiots like Dodd and Frank trying to give every family a purchased home even though one should not expect to own a home if they work for Taco Bell or McDonald's at the food counter.    

 

What's next, a 50,000 page bill that tries to save the 27,000 page bill?

[fan_since79]

Don't look now, AO, but there's a new housing bubble starting. Yellen will print so much money it will make your head spin, and mortgage rates will be driven into the ground. The only way this house of cards can remain standing is to continue to inflate the credit bubble.

 

When the music finally stops the pain will be beyond belief.

 

[mrwicked]

Don't look now, AO, but there's a new housing bubble starting. Yellen will print so much money it will make your head spin, and mortgage rates will be driven into the ground. The only way this house of cards can remain standing is to continue to inflate the credit bubble.

 

When the music finally stops the pain will be beyond belief.

 

not for those who make money off it.

[Bruce Nye]

not for those who make money off it.

 

 

Not if the money is in U.S. dollars.

[fan_since79]

Not if the money is in U.S. dollars.

 

There will be painful decisions to make...whether to buy that $100 loaf of bread or the $50 box of crackers.

[Adam]

The Republicans, as fiscally responsible public servants, are only looking out for our best interest. I'm sure if <insert self-less america loving republican> wins the next election, these same brave gentlemen and gentleladies will, with completed integrity, oppose any talk of raising the debt ceiling during that presidency. 

[Bruce Nye]

The Republicans, as fiscally responsible public servants, are only looking out for our best interest. I'm sure if <insert self-less america loving republican> wins the next election, these same brave gentlemen and gentleladies will, with completed integrity, oppose any talk of raising the debt ceiling during that presidency. 

 

Term limits - short ones - is the only dynamic that can rein in those jackasses.  I have never been more disgusted with this country.

[DowningRules]

We are so naive, it's really remarkable.  We are entering/have entered another meltdown, only this one is a slower burn.  Mortgages are slowing, bond trading down (later days monetary flow!) and Obamacare is freaking employers out to the point where hiring will continue to be sluggish, if there is any growth at all.  Meanwhile, Obamacare is the law and will start costing you, me and everyone we know more money than we could ever imagine.  At precisely the time we could least afford it. 

 

We were promised so much but they forgot to tell us (because we didn't demand to know!) how are treats were going to be paid for.  Pie in the sky when election time nears.

 

...AND!  Interest rates will tick up.  Tic tic tic like a bomb.  Learn to speak Chinese.  Ni hao ma?  Not very well, thank you very much.

 

This will all happen in time for the next Wall Street house boy to become President.  And he will be as beholden to Wall Street as the current shell-gamer. 

 

United States of Naivete. 

[Count Orlok]

What's everyone's obsession with China anyway? They only own about 10% of the debt. 

[DowningRules]

What's everyone's obsession with China anyway? They only own about 10% of the debt. 

 

Because they manipulate the worth of the US dollar and they manipulate trade in general.  And China is trying to convince the world to move away from the US dollar and use Chinese currency as the world's standard.  Our debt to China is only part of the problem.  There's a host of other problems involving China, but these are a few to contemplate.

[Vernster52]

I don't plan on being alive in 2030 anyway.

[mp170.6]

On this same theme, the part which nobody takes seriously is the implications of longer life expectancy on retirement planning. 

 

My grandfather had a new roof put on his house when he retired in the 80's.  He said back then, "at least I'll never have to worry about the roof again."  He's now 92 and the roof needs to be replaced again.  He planned well for retirement, but those stocks, annuities and savings accounts are drying up.  He never imagined he would live this long after surviving colon and skin cancer twenty years ago.

 

The average bid to replace his roof is $17,000 -- or, to put it another way, one whole year of Social Security benefits.  This is for a typical 3 bedroom, 2 bath house with mid-grade materials.  Let's be honest, not many working class folks have this kind of cash available. 

 

What the hell are the baby boomers going to do?

[arch stanton]

It seems pretty obvious from the article what baby boomers will do. They will spend their retirement years battling politicians and billionaires who see the money that retirees worked their entire lives for as the means to cut deficits or increase profits. Payroll taxes were created to finance Social security and Medicare and they did so. Pensions were offered by corporations in lieu of salary and were earned and expected.

 

I know I speak for myself and probably for many more baby boomers when i say that if you come for my pension THERE WILL BE BLOOD.