by Melissa Clouthier | December 17, 2008 11:43 am
So I put up a link that makes it seem like the United States is bankrupt–like bankrupt now. Turns out that the data The DC Examiner reported on is manipulated and essentially crap:
The United States of America is bankrupt. Don’t believe it? Consider this: Federal obligations now exceed the collective net worth of all Americans, according to the New York-based Peter G. Peterson Foundation. Washington politicians and bureaucrats have essentially mortgaged everything We the People own so they can keep spending our tax dollars like there’s no tomorrow.
The foundation’s grim calculations are based on Sept. 30 consolidated federal statements, which showed that Americans’ total household net worth, diminished by falling stock prices and home equity, is $56.5 trillion. But rising costs for unfunded social programs like Medicare, Medicaid and Social Security increased to $56.4 trillion – and that was before the more recent stock market crash, $700 billion bank bailout, and monster federal deficits chalked up in October and November.
“Given more recent developments, it’s clear that America now owes more than its citizens are worth,” said Foundation president David M. Walker, the former Comptroller-General of the United States who has been trying to warn Americans of the coming financial tsunami for years, to no avail. So, after Uncle Sam bails out bankers, Wall Street gamblers, carmakers and over-their-head homeowners, who’ll bail out Uncle Sam?
Chas Martin explains:
They palmed a card, actually two cards: the first one is they’re using household net worth … but that leaves out corporate net worth, so they’re ignoring, eg, Exxon. The second is that they’re comparing future obligations to pay with current assets, so it’s like saying you’re “bankrupt” because the total of your expected future living expenses exceeds your net worth.
I wrote about the same comparison in PJM early in the year — can’t link it usefully, PJM has hosed something — making the correct comparison of total US assets per person versus total US obligations per person, and it was about $300K assets vs $160K obligations, or over the whole population, about $90 trillion versus $48 trillion. Most of that wealth is real stuff — land, houses, factories, etc — and hasn’t gone away in the last year.
You know, things are bad enough right now. Much of the economic stall these days is because companies are just sitting and holding. That is, they aren’t taking risks to grow, expand and innovate because they don’t want their cash tied up if the whole shebang is going to implode. Well, it starts to become a self fulfilling prophecy.
There is no question that people have lived beyond their means and some have gone so far that they can’t get it back. It is going to take some time to correct this cultural problem. People are going to have to cut back and pay off debt.
There is no question that the banking industry and the people on Wall Street played with funny money and in some cases outright defrauded people. It is important to remember that stocks and funds are only as good as the businesses they back and the people who are in those businesses. The pressure to perform and profit at all costs creates an environment ripe for fraud.
Even with these problems, it does not help the economy or the American psyche to find problems where there aren’t any. This behavior causes more problems and its irresponsible.
Cross-posted at MelissaClouthier.com
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