As a journalist I don’t need to sugarcoat anything. You want something sugar-coated, go find a jelly doughnut. America is in a deep financial crisis, and to listen to Washington or MSNBC you’d never know it. To both, it’s about keeping their ratings, getting re-elected and having corporate sponsors continue to pat them on the back. Financial Armageddon looks terrible on a politicians resume, particularly a president’s. Ben Bernanke and Henry Paulson begged Washington a few years ago for an 800 billion dollar bailout on the verge of the election. Ben Bernanke was quoted as saying he wasn’t going to have a depression on his watch.
Smoke and Mirrors
What Bernanke begged for, and what congress did, was put a tiny band-aid on a wound that was bleeding out faster than the poor guy crawling up the beach with no legs on Saving Private Ryan.
“Medic, Medic, my legs are blown off, I need a boo-boo ban-aide quick!”
recently called America a debtor nation
and then went on to say America was insolvent and on the verge of bankruptcy. China is both pissed off and worried. Why; because they’re the largest holder of U.S. Treasuries in the world behind the U.S. (but not far behind.) China rants that the U.S. credit rating is a joke and that Moody’s credit rating of the U.S. is propped-up and ridiculous.
Let’s put things in perspective. The U.S. has hit its debt ceiling. This comes as bad news, because we’re currently fighting 3 un-winnable wars. No, it’s not just Iraq and Afghanistan. We’re also fighting a war on drugs
(hard approaching our 40th anniversary.) According to USA Today, we’ve spent 24.2 billion dollars from January to June on the war on drugs. One thinks of George Carlin who used to describe his farts: “hey man, they don’t smell that bad
," but extrapolate the 24.2 billion over 40 years, and you hit something like 1.2 trillion dollars (that’s spelled with a t) and it smells pretty bad to me.
we spend over 6.7 per month and according to the Washington Post we’ve spent over 3 trillion dollars on the war in Iraq.
U.S. Credit Cards Maxed-Out.
So America is now sitting in a position like most college kids holding daddy’s credit cards that are all maxed out. Sorry, no more keggers, raves, days at the mall, and stupid foreign and domestic wars. Johnny and Uncle Sam, you gotta start paying cash for things, because if you don’t you’ll bury yourself in finance charges and creditors are gonna start calling. In America’s case, the creditors have already knocked on the door, it’s called China. Yea America, China is a big creditor and holds over 1.2 trillion dollars of U.S. securities. Don’t even think about defaulting! “Uh, China, the checks in the mail.”
Baby Boomer Boondoggle Health Care and Social Security
Which brings me to my last point: not only is the U.S. insolvent (being able to simply print money doesn’t count), but it’s sitting on a time bomb called social security. You don’t need to be a Harvard MBA, or a Brookings Fellow to know that the demographics of the Social Security system point towards a huge catastrophe. Why; because there’s just too many boomers out there starting to take social security and there is simply not enough young-uns coming up behind them to foot the bill. Sorry Gen-Xer’s, but we’re gonna have to quadruple your social security withholdings to make up the difference.
We’re also facing a crisis in health care. Baby Boomers
are getting older and that’s a lot of bad hips, Viagra, and Alzheimer's. You get no argument from me that we should have national, universal, health care for all, but we gotta figure out a reasonable way to pay for it (see note above about costly, un-winnable wars.)
Finger Pointing Time
The U.S. is in bad financial shape and is indeed on the verge of at least a metaphorical bankruptcy. It wasn’t Obama’s fault, he walked into it; I don’t even blame George W. Bush, he walked into it to, but I do think the cronies on Wall Street need to go to jail for the way they raped the world with what Warren Buffet called “Weapons of Mass Financial Destruction.”
The world and the U.S. are still on the brink of disaster because of the massive amount of bad paper still floating around. They’re called derivatives. Those ugly investments that were ponzi-stacked in pyramids of worthless paper based on mortgage backed securities and insured with credit-default swaps about as protective as a golf umbrella in a tornado. Trillions upon trillions of dollars, enough to take down Bear Stearns and Merrill Lynch and countries like Iceland, Portugal and Greece. Wall Street, you’re a bunch of greed mongering, self-centered, snot-nosed know-it-all's. If I could kick your ass, I would.