I know the MSM is all caught up in the Britney / Kevin divorce and sex tape, but there was this little tidbit that should have made the news the other day. A small little thing really, but since the MSM didn't report it, figured I'd give it a shot.
The United States is unsustainable.
OK, now back to Britney and Kevin. But if anyone is interested, here's the GAO report, and here's an overview. I'm off to buy more gold now.
GAO's simulations lead to an overarching conclusion: current fiscal policy is unsustainable over the long term.
Absent reform of federal retirement and health programs for the elderly--including Social Security, Medicare, and Medicaid--federal budgetary flexibility will become increasingly constrained.
Assuming no changes to projected benefits or revenues, spending on these entitlements will drive increasingly large, persistent, and ultimately unsustainable federal deficits and debt as the baby boom generation retires.
Other federal programs and activities also bind the future by obligating the federal government to future spending or create an expectation for spending. These fiscal exposures range from explicit liabilities such as environmental cleanup requirements to more implicit obligations presented by lifecycle costs of capital acquisition or disaster assistance. More accurate and transparent measurement is needed so that today's budget decisions can take into account these potential future costs.
Ultimately, making government fit the challenges of the future will require looking at the entire range of federal activities. A fundamental review of what the federal government does and how it does it will be needed. All types of federal spending, that is, for both discretionary and entitlement programs--and tax expenditures will need to be re-examined.
As we move forward, the federal government needs to start making tough choices in setting priorities and linking resources to results. GAO maintains a list of specific options for congressional consideration stemming from our audit and evaluation work that can be used in re-examining the federal base.
November 14, 2006
Get ready for economic disaster - the US General Accounting Office spells it out - "Fiscal policy is unsustainable over the long term"
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American Economy in Crisis
From ECONORTH@aol.com Date 11/11/06 19:26
America Today - Dangerously Vulnerable Printed
on: Friday, November 10, 2006
http://www.economyincrisis.org/articles/showarticle.asp?ID=1045
1. Wholesale sellout of core strategic assets to
foreign acquirers:
according to official figures, more than 8,000
American companies have
been sold to foreign corporations in the last 10
years for at least $1.2
trillion (US Dept of Commerce)
2. Decline of vital industries through
bankruptcy, foreign predatory
competition, and foreign acquisition: foreign
interests now own a
majority of US industries in areas like mining,
publishing/movies,
cement, mineral manufacturing, rubber and
plastics, and engine
manufacturing and own substantial portions in
areas like
pharmaceuticals, glass, coal, chemicals,
industrial machinery,
transportation equipment, petroleum, and others
(Internal Revenue Service)
3. Inability to manufacture competitively:
American manufacturers suffer
a 30+ percent structural cost disadvantage
compared to overseas
competitors through taxes, health and pension
benefits, litigation,
regulation, and energy costs – this
disadvantage is more than the total
labor cost of production in many other countries
(National Association
of Manufacturers)
4. Overdependence on imports: $1 in $4 of US
consumption of manufactured
goods now goes immediately and directly to
imports (US Dept of Commerce)
5. Massive wealth transfer to foreign ownership:
our trade deficit, at
$723 billion in 2005, is funding foreign
competitors with $1.4 million
per minute of our dollars or $2,400 per US person
per year spent on
imported cars, clothes, toys, and thousands of
other products (US Census)
6. Loss of job and career opportunities for
people at all educational
levels: 3 million high-paying manufacturing jobs
lost over past 5 years
(US Bureau of Labor Statistics)
7. Transition to low-paying services-oriented
("servant") economy:
high-paying goods-producing industries have lost
net employment over the
past 25 years while non-tradable
service-providing employment has nearly
doubled (US Bureau of Labor Statistics)
8. Insourcing of foreign manufacturers destroys
our domestic industries,
takes profits and taxes overseas, and provides
only low-skill jobs for
American workers: foreign manufacturers operating
in the US now account
for over 20 percent of our exports and
manufacturing assets, and a large
percentage of our employment (Internal Revenue
Service)
9. Foreign financing of vast majority of
government debt: foreign
countries now control 47 percent of our total
federal deficit and
finance nearly 100 percent of all new borrowings
– our competitors are
now our bankers (US Federal Reserve)
10. Outsourcing key manufacturing, research, and
design: unchecked
offshore outsourcing benefits individual
companies and shareholders but
destroys entire industries and communities
11. Lost scientific, engineering, technological
prowess: in 2004, China
and India graduated a combined 950,000 engineers
versus 70,000 in the
US. US ranks near the bottom of science/math
proficiency (Associated Press)
12. Wealth shift into less productive assets:
residential real estate
now represents a record 38 percent of household
net worth on record
over-inflated home valuations and record mortgage
levels (US Federal
Reserve)
13. Record levels of personal and government
debt: household liabilities
at record levels, federal government adding
record levels of debt each
year financed mostly by foreign countries, trade
deficits transferring
unprecedented accelerating amounts of wealth to
foreign hands each year
(US Federal Reserve)
14. Misleading commonly used economic statistics:
misleading incomplete
statistics like GDP, job creation, and
productivity belie our crumbling
economic infrastructure
15. Proven failed trade policies and other
legislation contributing to
our demise continue unchallenged: destroying our
industry and allowing
our assets to be sold or taken from us
If these trends continue unabated, what future
could we possibly have?
This wealth of this country was created under far
different conditions
than those that now exist. We are being misled
into believing a false
sense of perpetual invulnerable self-sufficiency.
We largely fail to
acknowledge just how extremely vulnerable we are.
Given the scale of the
problems outlined below, any single major
disruption to our economy
could have devastating consequences. Decide for
yourself.
great post richard
and Americans could care less. America's next top model is on right?
definitely time to drop those tax breaks and move towards a single payer health care system to cap costs, for sure!
"Inability to manufacture competitively:
American manufacturers suffer a 30+ percent structural cost disadvantage"
I wonder if this is true. When I last looked at China, they were having big polution problems and those will come back and bite their asses in the future. Additionally, the citizens in China are starting to wake up and say: "we need enough profit to pay for our health care and start fixing our environmental problems and maybe even upgrade our military."
Yes, America doesn't win if living wages are considered but China isn't winning with their poverty wages either!
You can put off paying for things only so long!
C'mon Keith - football is on, basketball just started, American Idol is gearing up for the new season. Is there *really* anything more important than this? I think not...
I apologize in advance for this long post and the post immediately following it. You may be the judge as to whether it is worth a read. What does this post have to do with housing?
After America exports the remainder of its good-paying jobs, who will be able to afford the price of a home? Here is what the future of the remaining high-paying technical jobs in the US looks like:
I work for a firm that makes electronics. Below is part of my employer's plan to move everything to China. A few years ago this firm shut down all of it’s manufacturing and moved it to China. Now they are beginning to move the engineering jobs there as well. (A while back I shared my experience in China on this blog [as an anon]; following this is a repost, albeit tweaked a bit.)
Below is an excerpt from an internal company email (the names have been changed to protect the innocent):
---------
“Please welcome Hang Dong and Bang Gong to the Engineering team. They will both be working out of the China office. Hang Dong has been working contract for one year as project engineer. He brings to the team a lot of knowledge about manufacturing, our firm’s processes, and our products.”
“Bang Gong is a recent graduate from The University of Illinois, where he earned his BSEE degree. He has worked as a test engineer as an intern at Itec in Chicago, Illinois.”
---------
Bang is a US-educated electrical engineer (EE) who is working, in China, for approximately 1/10 of what an EE here in the US is paid. We likely subsidized his education here with our tax dollars. Hang’s hiring coincides with a project manager being laid off here last week.
Sorry to add to all the doom and gloom on this board, but this is just a glimpse of what America’s future looks like. How secure is your job?
Can we change this? Got any ideas how to, aside from NOT buying products with the words, “Made in China” on them? Or do we just go to the mall, or turn on the TV, or just go back to sleep and do nothing?
-Mammoth
Here is the repost, as promised:
In May I spent 10 days in China, in the city of Xiamen, on a business trip to launch the initial build of a new product. Now, granted, China is huge and not all cities are just like this one. Xiamen is a big manufacturing center, and the electronics factory that I was sent to employs 8,000 people.
If you imagine a dark, dreary factory full of beaten-down, oppressed people chained to their workbenches, then think again. This modern facility was clean and filled with busy, cheerful workers who seemed to take their tasks seriously. The automated machinery that installed components on circuit boards was state-of-the-art, and the technical people with whom I worked (engineers and test technicians) were every bit as knowledgeable and competent as my American colleagues.
During the build of our product, which was designed in the USA and rushed into production by management before it was ready (against the recommendations of us engineers), numerous design deficiencies came to light. These needed to be resolved right then and there, and the Chinese demonstrated their capabilities by offering solutions to the problems.
Due to the problems we didn’t finish the build in time; my two colleagues bailed and flew back to the states leaving me alone to stay into the next week to finish cleaning up the mess. So I got to spend the weekend there by myself, and did a bit of exploring. Out & about on the streets there are people everywhere, many with cell phones, digital cameras and other electronic toys. Most were well dressed and appeared to be reasonably prosperous; they did not look at all unhappy and oppressed. They all seemed to be enjoying their lives and having a good time.
In the markets and shops, it appeared to me that just about anything and everything was for sale there (EVERYTHING, if you know what I mean), and no government officials telling anybody what they could and couldn’t buy.
So let’s just bury this stereotype of China being full of miserably poor, exploited, browbeaten people subjugated by their government. This is the New China, and America had better understand whom we are dealing with.
Oh, and by the way before anybody flames me for being part of this disturbing trend of moving American jobs overseas, keep in mind that if I wasn’t working here, somebody else would. So, what should I do - quit out of principle and have my house foreclosed?
Yes if I was truly principled I would quit and endure the consequences; then again if many of you were truly principled you wouldn’t have sold your $100,000 house for $450,000 and put this enormous burden on somebody else’s shoulders.
Then again, if you did sell your house for the same price you paid for it 5 years ago, some flipper would likely have bought it, called you a fool, then resold it for $450,000 to some FB.
The world just doesn’t work the way we would like it to. That’s reality!
Since none of us like sending jobs to China, here is the simplest action that we can take:
DON’T BUY ANYTHING MADE IN CHINA!!!
Buy American-made, buy used, or do without.
Now that is truly sticking to your principles!
-Mammoth
Buying stuff from China is unavoidable. Plus alot of the stuff is low tech crap, like clothes etc. YOu can't say the US is hurt by having Chinese making shoes instead of low wage people in the South.
But at some level we need some high tech manufacturing. A country that can't manufacture anything has no soul. How would we conduct a war if we had to? Buy the stuff from China?
Eventually the dollar will weaken to the point that manufacturing here makes sense. Maybe. Or maybe china will be so polluted that people get tired of manufacturing and hurting the environment.
If some guy in China is happy to work for $1 an hour and everyone in this country has a job...jobs that pay more than $1....That's the way the economists look at it anyway.
What was the last country that got really rich on the back of "services"?
In all of history I seem to remember: zero.
Housing Bust..Iran and North Korea...more and more illegal immigrants...moving jobs to china...America being bankrupt and wether we like it or not huge changes will have to be made. I can see Universal Healthcare and 50% personal income taxes ahead. Add to that a rise in property taxes and more rises in sales tax, just as we just had one here in NJ. Time to save up a nice nest egg and move to Canada.
What was the last country that got really rich on the back of "services"?
The world of Max Headroom?
This train wreck is going to be even slower than the housing bubble.
I'm bored already.
Hey, don't worry about the costs continuing to increase and the deficit continuing to balloon!
All we gotta do is tell the illegal aliens at the maternity wards and welfare lines, "NO!"
Oh, wait... I mean tell the aging veterans and elderly who built this country, "NO!"
Oh, wait... I mean tell the big business welfare whores, "NO!"
Oh, wait... I mean tell the home-debtors looking for a free bailout, "NO!"
Oh, wait... I mean tell the other countries who hate us but are continually looking for handouts, "NO!"
Oh, wait... we can't say "NO" to anyone or anything, can we!?!??!
I guess we'll just keep shoveling money out of every possible hole like we have been...
We're screwed.
"The United States is unsustainable."
This is not news. Reform of the Ponzi scheme that we know as Social Security went nowhere. Why? The shapers of public opinion – MSM if you prefer – don't need social programs, and there's nothing in it for them in helping a yokel President they despise with his agenda.
Why do the charts keep rising long after most of the baby boomers die of old age (i.e. thru 2080)?
::"Why do the charts keep rising long after most of the baby boomers die of old age (i.e. thru 2080)?"::
There's a 75 year horizon that SS planners employ.
beebs
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