Main US Threat Not Terrorists, But Fiscal Irresponsibility. - Tilted Forum Project Discussion Community

Randerolf · 03-11-2007, 07:21 PM

Watch the story (11 minutes)

Read the Story (your speed varies {if drunk})

Quote:

(CBS) When the stock market plunges like it did this week, everyone pays attention. The man you're about to meet says hardly anyone is paying attention to what really threatens our financial future. Like an Old Testament prophet, David Walker has been traveling the country, urging people to "wake up before it's too late."

But David Walker is no wild-eyed zealot. As Steve Kroft reports, David Walker is an accountant, the nation’s top accountant to be exact, the comptroller general of the United States. He has totaled up our government's income, liabilities, and future obligations and concluded the numbers simply don’t add up. And he’s not alone. Its been called the "dirty little secret everyone in Washington knows" – a set of financial truths so inconvenient that most elected officials don’t even want to talk about them, which is exactly why David Walker does.

"I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility," Walker tells Kroft.

David Walker is a prudent man and a highly respected public official. As comptroller general of the United States he runs he Government Accountability Office, the GAO, which audits the government's books and serves as the investigative arm of the U.S. Congress. He has more than 3,000 employees, a budget of a half a billion dollars, and a message he considers urgent. ...

I'd like to look at the above information on the individual level rather than the nation-state level.

I just spoke with my finance professor about past results not dictating future returns. He said that businesses can be very volatile, but as a group, they can have a stable trajectory.

I didn't bring up government, though my class assumes US treasury bills to be "risk-free." In The Clash of Civilizations and the Remaking of World Order Sam Huntington predicts the decline of the West and along with it the US. An assumption that the US will always pay its debts could prove costly.

Are US operations, as they lie currently stand, sustainable? Will the government overcome upcoming problems? If so, how?
How could you protect yourself from possible upcoming US financial trouble?
How would this trouble affect you and where you live?
If the stock market has returned 10% the last fifty years, is it safe to assume comparable returns in the future?

Infinite_Loser · 03-11-2007, 07:46 PM

Well... I'm not really sure what you're asking but here's my $.02 on the subject.

1.) No, current US operations aren't sustainable. Currently, the US has a savings rate of somewhere around -1% and, as a result, relies heavily on overseas investors to finance it's operations. This can only continue for as long as the savings rate in other countries remains high. Of course, trends show that the savings rate in foreign countries are gradually decreasing per year (Especially in Japan, one of the biggest investors into the US), meaning that sooner or later they'll no longer be able to finance the US' operations. If the US is no longer seen as a profitable investment, then other countries will begin to call in their debts and that'll not only screw over the US market, but every country who relies on the dollar to remain strong in comparison to their currency (As an interesting side note, I believe China has about $10 billion worth of US government issued bonds). There's little to nothing the government can do about it (They can do like Australia and force households to save a part of their yearly income, but that's not likely to happen). US consumer savings have to increase for there to be any type of hope for the future.

Edit: Also, on the issue of medicare... Just socialize it (Like Canada). The problem is that most big businesses won't like that >_<

2.) Save more and spend less.

3.) I'm not really sure... If I had to guess I'd say that the US would switch from being a major importer to being an exporter specializing in cheap, domestic labor (Something like China currently). Though, that's probably a bit drastic.

4.) No, because the stock market is unpredictable.

filtherton · 03-11-2007, 09:30 PM

Quote:

Originally Posted by Randerolf

Are US operations, as they lie currently stand, sustainable? Will the government overcome upcoming problems? If so, how?
How could you protect yourself from possible upcoming US financial trouble?
How would this trouble affect you and where you live?
If the stock market has returned 10% the last fifty years, is it safe to assume comparable returns in the future?

1. No, the government is exactly as fiscally short sighted as the majority of its citizens.
2. Learn tangible survival skills, like how to work on a farm or fix machinery.
3. I live in a city; at the bare minimum i predict increasing crime and decreasing quality of life. At worst, widespread panic, disease and starvation.
4. No, once the price of oil inevitably starts rising the stock market will implode.

Ourcrazymodern? · 03-18-2007, 02:04 PM

Totally random:

The upcoming U.S. financial trouble seems to base 1-4.
1. Probably not.
2. Buy gold.
3. (Cannibalism and grave-robbing?)
4. heh

03-11-2007, 07:46 PM	#2 (permalink)
Infinite_Loser Junkie Location: Lake Mary, FL	Well... I'm not really sure what you're asking but here's my $.02 on the subject. 1.) No, current US operations aren't sustainable. Currently, the US has a savings rate of somewhere around -1% and, as a result, relies heavily on overseas investors to finance it's operations. This can only continue for as long as the savings rate in other countries remains high. Of course, trends show that the savings rate in foreign countries are gradually decreasing per year (Especially in Japan, one of the biggest investors into the US), meaning that sooner or later they'll no longer be able to finance the US' operations. If the US is no longer seen as a profitable investment, then other countries will begin to call in their debts and that'll not only screw over the US market, but every country who relies on the dollar to remain strong in comparison to their currency (As an interesting side note, I believe China has about $10 billion worth of US government issued bonds). There's little to nothing the government can do about it (They can do like Australia and force households to save a part of their yearly income, but that's not likely to happen). US consumer savings have to increase for there to be any type of hope for the future. Edit: Also, on the issue of medicare... Just socialize it (Like Canada). The problem is that most big businesses won't like that >_< 2.) Save more and spend less. 3.) I'm not really sure... If I had to guess I'd say that the US would switch from being a major importer to being an exporter specializing in cheap, domestic labor (Something like China currently). Though, that's probably a bit drastic. 4.) No, because the stock market is unpredictable. __________________ I believe in equality; Everyone is equally inferior to me. Last edited by Infinite_Loser; 03-11-2007 at 07:51 PM..

03-18-2007, 02:04 PM	#4 (permalink)
Ourcrazymodern? still, wondering. Location: South Minneapolis, somewhere near the gorgeous gorge	Totally random: The upcoming U.S. financial trouble seems to base 1-4. 1. Probably not. 2. Buy gold. 3. (Cannibalism and grave-robbing?) 4. heh __________________ BE JUST AND FEAR NOT