Thursday, May 10, 2012

I hate being right, again...about the Federal Budget

It is with great sadness that I have watched our great nation wade ever deeper into debt.  I found it alarming two decades ago.  I found it very alarming during the Bush administration.  Now I am out of euphemisms to describe how bad this has gotten.  I became aware some time ago that we were approaching a "point of no return" where the US national debt becomes impossible to pay off.  We have now crossed that point.  This has serious repercussions. Rather than give you tedious charts with numbers, I will refer you to a 6 minute video that describes the problem:

We have ignored or rejected every possible solution that presented itself over the last 20 years.  While each of those solutions would have involved sacrifice and pain, it would have been a trifling thing compared to the pain and suffering we will endure now, all because of the inability of the Feds to do something unpopular which might limit their power or cause them to lose an election.

They will be able to maintain the appearance of normalcy for another year or two at the most.  Because of the "stimulus" money they are now dumping into the economy, it will appear that things are turning around.  The stock market will go up.  The unemployment numbers will improve (whatever that means, the numbers are all fudged anyway:  ).  Housing will make a mild "turnaround".  8-18 months after the election, I expect to lose all those artificial gains as the "free money" peters out, and in fact the economy should really do worse.  So mark it on your calendars that somewhere between May 2013 to February or March of 2014, the economy is going to take a dive.

The mainstream media will be all surprised.  You might hear the term triple dip recession, but it will all be a big lie.  The recovery will be all a big sham.  So reduce your debt, which represents financial risk.  Pile up your savings/emergency fund.  Plan on not getting a raise, and maybe plan on some wage reduction.  A garden and a deeply stacked pantry would not be a bad thing.

The reference to Greece in the video is an apt one.  That's what it will look like here, up to and including the riots when austerity measure finally get put in place.  Don't be taken by surprise.  This is a mathematical certainty.  The only doubt is when exactly, and I mentioned dates based on my estimates just to give some guidance in planning, but they could be wrong.  But even if my timing is not spot on, do not doubt the absolute certainty or the magnitude of the looming problem.

Once again, I pray that I am wrong and everything just gets better and better.  My predictive track record would suggest otherwise, but I can always hope.

Finest regards,


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