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situation might be resolvable with a hard-nosed turnaround specialist in charge [Romney?] but, even here, the emphasis is on “might”! In a political context, where citizens have been conditioned to believe they are entitled to live at the expense of government (i.e other citizens because, after all, government has nothing that it first does not take from someone else), the situation is beyond hopeless. Let me address the true economic situation of the U.S. by way of an email I received from a regular reader recently. Words: 615So says Monty Pelerin’s World (www.economicnoise.com) in edited excerpts from the original article* which Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.Below is the email which reads, in part:
“Monty,
Today the Congressional Budget Office (CBO) released “The Budget and Economic Outlook: Fiscal Years 2012 to 2022″ (www.cbo.gov/ftpdocs/126xx/doc12699/01-31-2012_Outlook.pdf)…which clearly shows that the fiscal situation is MUCH worse than people realize and that the American people are wildly under-estimating the deficits America is going to run in this decade. Here is why:
1) The average rate of interest the Fed has had to pay to borrow for the last two decades has been 5.7%. However, CBO is projecting the cost of money at only 2.5%. A return to the normal Fed rate would, by 2020, add $5 trillion to the cumulative deficit.
2) The CBO are over-estimating growth in 2012-2022. 2.5% is more likely than the ridiculous numbers they are projecting. That would add $4 trillion by 2020…
3) The 5 biggest budget items are Defense-Military ($700 B), Social Security ($725 B), Medicare ($560 B), Medicaid ($275 B), and Interest on the Debt ($227 B) totaling $2.467 T but only collected $2.302 T in taxes!… Since it is (politically) impossible to cut any of these items, at best, this Congress will only slightly reduce the rate of speed at which we are heading toward a debt default.
4) America is headed for an entitlement crisis. Between 2010 and 2030, spending on Medicare, Medicaid and Social Security will explode – and with the Baby Boomers retiring en mass over the next 18 years (2011-2029), at the rate of 10,000 a day, it will be impossible for any politician to do what is necessary in order to save us from going over the falls. Any talk of cutting entitlements and they will be quickly thrown out of office.
Is America then headed for an inevitable default? [Is it] Weimar Germany, here we come? [The fact is, the above] are all symptoms but they are not the problem. They are mere symptoms of the disease, the rot of our soul.
Who in the world is currently reading this article along with you? Click here
Eventually the world will realize that the U.S. deficit and debt are beyond the capacity of this U.S. government to bring under control and, at that point, the ratings agencies and world markets will begin to treat the U.S. debt the way they treat the debts of Italy and Spain.
[Frankly,] as soon as interest rates rise the deficit-debt will explode…and it will be all over for America…The situation is much worse than the government is willing to admit. There would be a Revolution in this country if they put out the real numbers and accurate projections.
This letter has been long enough…
Blessings and all the best,”
[Name Withheld]*www.economicnoise.com/2012/02/01/government-is-dead-man-walking/
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