Back in the seat — and it's July!

After some time off with the kids last week, I am today back in the seat so to speak.

One is really never off in this line of work though.  Thanks to the Blackberry and Internet we are always hooked in.  I admit that I did do some work from unlikely spots like a horse drawn buggy around Niagara-on-the-Lake and our boat in the middle of Kempenfelt Bay.  But all in the weather was great and we all had good fun.

This morning we are back reviewing developing trends like sagging corporate earnings, rising defaults, rising interest rates and over-levered participants.  Sure looking forward to happier themes ahead.  Getting a little weary of the looming storm clouds ominously building day after day.  Unfortunately the air is not likely to get clearer until the storm comes to its inevitable crisis.

Bloomberg today reports “US Rebound May Be Bumpier Than Fed Expects as Credit Tightens”.  No surprise there.  An interesting piece was the lead CBS 60 Minutes story last night:  U.S. Heading for Financial Trouble?”  Evidently David Walker, the US Comptroller General, is tired of helplessly watching storm clouds build in US federal deficits.  He has now taken the issue past the politicians to the people and is touring the country alerting Americans to the truth.  In his words the politicians are spending the nation to bankruptcy unless some immediate and dramatic steps are taken to cut entitlements and spending and increase taxes:

“Well, because we promise way more than we can afford to keep. Eight trillion dollars added to what was already a 15 to $20 trillion under-funding. We're not being realistic. We can't afford the promises we've already made, much less to be able, piling on top of 'em.”

With one stroke of the pen, Walker says, the federal government increased existing Medicare obligations nearly 40 percent over the next 75 years.

“We’d have to have eight trillion dollars today, invested in treasury rates, to deliver on that promise,” Walker explains.

Walker points out that the government has so far managed to allocate zero dollars of the many trillions needed to fund upcoming liabilities.

The politicians are all going on hope for a miracle that can allow them to avoid making unpopular cuts and increased taxes.  The citizens have so far largely stuck their head in the sand rather than owning up to responsibility for the failures and burdens of the current structure.

Someday the masses will have to admit that debt is nowhere near the same thing as real money in the bank.

 

This entry was posted in Main Page. Bookmark the permalink.

Leave a Reply

Your email address will not be published.