27 August 2008

Looming Financial Catastrophe: A Real Inconvenient Truth

“Sometimes I wonder whether the world is being run by smart people who are putting us on….or by imbeciles who really mean it.” – Mark Twain

The United States of America is about as far from united as we’ve been since the Civil War. The two major parties agree on virtually no major issues. The only time they agree is when it involves tax rebates and pork projects for their constituents. They have no problem spending our grandchildren’s money to get re-elected in November. No politician is willing to tell the American people the blunt truth that we have an epic financial crisis that must be addressed in the next 10 years. When I watch the Republicans and Democrats respond to these issues by spinning them to make the other side seem evil, it infuriates me. We are wasting precious time. If you take a poll of Americans and ask them if they want make sacrifices for future generations, I can guarantee you that 85% would say no. Our society is dominated by present self interest to the detriment of the best interests of our future generations. We need leaders who are willing to speak the truth and convince the country to change course before it is too late.

Our fiscal crisis is complex, multi-faceted and dangerous to our long-term future. The major issues that we need to confront include the current fiscal situation, the colossal amount of unfunded liabilities that our politicians have obligated us to pay, our dependence on foreign oil, our education system, and a dearth of leadership and political courage. These issues are intertwined and cannot be addressed individually. To successfully solve these issues we need to ignore political affiliations and choose the best solutions. It seems strange to me that the best ideas for dealing with our crisis come mostly from billionaires. The people that we should believe in my opinion are: David Walker, Pete Peterson, Warren Buffett, Ross Perot, T. Boone Pickens, Matt Simmons, Bill Gates, and Ron Paul.

These men have put aside partisan politics and name calling to work together to save our country. They have an extremely difficult task. There are different challenges they must overcome. The largest hurdle is getting the attention of the majority of Americans who are apathetic towards the entire political process. These are the 71 million voting age citizens who decided not to vote in the last presidential election. If they don’t care enough to vote in the presidential election, they certainly won’t care about future unfunded liabilities. I think the only thing that will get the attention of this group is a major recession that negatively impacts their quality of life. There are millions of Americans living lives of silent desperation. They are living on the edge and the debt contraction that is underway is pushing many over that edge. The anger that is building will hopefully eliminate the apathy.

“The punishment of wise men who refuse to take part in the affairs of government is to live under the government of unwise men.” - Plato

The next obstacle is what I call the Great Deniers. They deny that there are any problems in America. They ignore the hard facts and spout rhetoric like: “We are the greatest country in the history of the world; There is nothing that's going to occur to our economy except a continuance of the great economic success our great nation has always enjoyed; The sun is not setting on our great nation, it is rising!; It is morning in America.” It is difficult to have a logical discussion with these shills. They are disciples of the Ben Stein School of ignoring facts and figures. They are cheerleaders for America, when what we need are wide eyed realists. Many of these people have secure well paying comfortable positions in our society and fear a change in the status quo.

Using a baseball analogy is the best way I can describe our current situation. When I hear the denial gang speak, I see America as a baseball team on par with the NY Yankees dynasty. They have been the dominant team in baseball for decades, with 26 World Series championships in 39 World Series appearances. Their payroll is bigger than any other team. They start to read their press clippings, rely on their reputation and allow their minor league system to deteriorate. Their star players are getting long in the tooth, no longer in their prime. Changing managers (Presidents) hasn’t worked. They are still good, but the competition is younger, talented, and has greater desire to succeed. The upstart Devil Rays (Emerging Market Countries) and the reviled Red Sox (China) have moved past them. It is late August and they are 10 games out of 1st place. It is time to trade the aging veterans for young minor leaguers and begin the rebuilding process. This is where America stands today. We are at a crossroads. We can continue on our current course and be in the middle of the pack in the future, or we can completely retool to compete in this 21st Century world.

By far, the greatest challenge that our selfless patriots must overcome is the entrenched ruling elite that run this country. The ruling elite includes the crooked politicians in Washington, the lifetime bureaucrats who run the various governmental agencies, the paid lobbyists who write the laws for Congress, obscenely overpaid short-term profit driven corporate CEOs, media conglomerates, and the privileged Wall Street aristocracy. These privileged few are surrounded by leeches and parasites (media consultants, pollsters, spin artists, and PR agencies) that attack anyone who threatens their position of power. The only way to overturn their comfortable world is an uprising among the masses. An educated population would not allow them to herd us like the sheep they think we are.

Congress consists of 100 Senators and 435 Representatives. Based on the data below there are 32 lobbyists for every member in Congress. They spend $5.3 million per member of Congress every year. Lobbyists will spend $3 billion this year to persuade our noble politician leaders. PACs and 527 Plans will spend hundreds of millions of dollars pushing their agendas. Who is looking out for my senior citizen parents? Certainly not their Congressman or Senator. They are earning a pitiful 2% on their IRA money market fund because JP Morgan, General Electric and Fannie Mae have lobbyists to fight for their rights. When our government has to use your tax dollars in the next few months to take over Fannie Mae and Freddie Mac, it should warm your heart knowing that these two quasi-governmental entities have spent $175 million in the last 10 years lobbying Congress. Not much has really changed in the last hundred years. Will Rogers pegged politicians back in the 1920’s.

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