October 04, 2004

The coming economic Depression...are you prepared? Certainly can't blame this on Black leadership! Maybe its time to start looking at white leaders.

The “Boom” of the “Baby Boomers” was prophetic in that it forecast the sound of the economy crashing from that generation’s retirement and the irresponsible behavior of political leaders who only focus on the short term. However, in a representative democracy such as ours, it is really the fault of the people who are obsessed with maximizing the present and a desire not to pay taxes. I have stated all along that we are living in borrowed time due to our nation’s economy being structurally weak. I can bet that they (the government) will try to postpone the calamity by raising the retirement age to 70. They can only hope to reach a point of equalibrium by raising the age of retirement high enough so that more people die before they can recieve what they paid into it, relative to the working population. One bright spot, if any, is that the retirements will create many job openings as the jobs the baby boomers retire from need to be replaced, in most cases.

It is not simply Social Security that casts an ominous shadow over our future. Competition from China, India, Asia and the competition in the currency market from the Eurodollar, plus a never ending war on terror, will radically change our economic prospects. The only question is whether the decline will be gradual or abrupt…but it is sure to manifest. The present is the creation of the past and the future is hence the creation of the present. Consequently, this is unavoidable, barring a major restructuring of the world in regards to the growing power of China and who directly controls the oil reserves. Maybe that is why we are in Iraq, not because of Saddam…but to help protect our economic future by controlling Iraqis oil reserves.

....The worst-case scenario is a sudden crisis — perhaps a major terrorist attack or a shutoff of oil from the Middle East — that triggers a loss of confidence by investors in the U.S. economy. Foreign investors refuse to lend more money to the government to finance its deficits; drastic tax increases and benefit cuts occur suddenly; the dollar's value plummets, which raises the cost of imported goods; and a severe recession or depression results from falling incomes.

A softer landing: The USA acts swiftly and becomes more like Europe. Taxes are higher, retirement benefits are less generous but widely distributed; health care costs are controlled; and the economy is sound but less productive.

Big payments on the debt start coming due in 2008, when the first of 78 million baby boomers — the generation born from 1946 to 1964 — qualify at age 62 for early retirement benefits from Social Security. The costs start mushrooming in 2011, when the first boomers turn 65 and qualify for taxpayer-funded Medicare.

Early warning signs
But Americans needn't wait until 2008 or 2011 to see firsthand the escalating costs of these benefit programs. Medicare last month announced the largest premium increase in the program's 39-year history. In 2004 alone, federal spending on Medicare and Social Security will increase $45 billion, to $789 billion. That one-year increase is more than the $28 billion budget of the Department of Homeland Security.
Many economists say a failure to confront the nation's debt promptly will only delay the inevitable.

"The baby boomers and the Greatest Generation are delivering an economic disaster to their children," says Laurence Kotlikoff, a Boston University economist and co-author of The Coming Generational Storm, a book about the national debt. "We should be ashamed of ourselves."

USA TODAY used official government numbers to compute what the burden means to the average American household. To pay the obligations of federal, state and local government:

• All federal taxes would have to double immediately and permanently. A household earning $100,000 a year would see its federal taxes double from an average of about $20,000 to $40,000 a year. All state taxes would have to increase 20% immediately and permanently.

• Or, benefits for Social Security, Medicare and government pensions would have to be slashed in half immediately and permanently. Social Security checks would be cut from an average of $1,500 per month for couples to $750. Military pensions would drop from an average of $1,782 per month to $891. Medicare spending would fall from $7,500 to $3,750 annually per senior. The Medicare prescription-drug benefit enacted last year would be canceled.

•Or, a combination of tax hikes and benefit cuts — such as a 50% increase in taxes and a 25% reduction in benefits — would avoid the extremes but still require painful changes that are outside the scope of today's political debate. Savings also could come in the form of price controls on prescription drugs, raising retirement ages and limiting benefits to the affluent......

See full article in USA TODAY Online


At 10:34 AM, Anonymous Anonymous said...

Great post NA. We will all soon be facing the reality of the failed economic thinking
that these gurus have been pushing. Retiring at age 62 seems to be one of the best remedies for baby boomers. Paying off all yours debts will help and reducing the use of credit will also help. Use credit when it is only extremely necessary, such as in medical emergencies. Your post is definitely scary, especially if you also consider the coming of the devaluation of the dollar in the very near future.


At 12:00 PM, Blogger Noah TA said...

This is the fault of politics and the people (majority rule). The reason being is that people do not hold politicians accountable to speak the truth. Whenever you hear a politician speaking, it is simply pandering. The reason that they pander is that people do not want to hear the truth...so they just pander to what the electorate wants to hear. It is the combination of politicians seeking to maintain their positions and the people only willing to vote for people who will tell them that the glass is full, when it is not even half empty. The people want dillusional optimism in regards to maintaining their already glutonous lifestyle...without there ever being a cost. They (not we) did this to us.

At 12:48 PM, Blogger Scott said...

Good, cut those benefits. It just welfare for white people.

At 12:59 PM, Blogger Noah TA said...

And what do you think the effect will be of cutting welfare for white folks? That will reduce their disposable incomes which will have a trickle down effect for the entire economy since their consumer consumption is the most major component of our economy.

At 2:27 PM, Blogger Noah TA said...

Does anyone think it will be called the victim syndrom when the future generation of whites start suffering from the effects and greed of past generation of whites?
Of course not...it will simply be called the cause of their effect.

At 4:35 PM, Blogger Faheem said...

You know Noah, I find it interesting that there is no one articulating that the looming fall of this nations economy is prof positive of the failure of capatalism. America is a capitalist nation but the capatalist themselves wil blame shortfalls in the system on socialist or communist type programs or people and not the product of capatalism. If any other nation was facing the problems this nation is facing the American economist would use their looming problems as proof that their economic system was bound to fail since the begining. However there is no such talk like this about America's impending fall and the various changes America makes to prolong the inevitable. Capatalism while having many benifits is an oppressive economic system.

At 6:46 PM, Blogger Noah TA said...

Indeed. Every action manifest a reaction. However, many reactions are not real-time, but rather, conserved or pushed into the future. Therefore, no one can really judge the worth of a system, based simply upon a point in time. It may very well be the case that the reactions to actions that create many positives in the present are due to release its negative offsetting reaction into the future. Think of it like steroids and how people use them to pump of their strength and physic in the short run, but in the long run the negative reaction manifest as the failing of organs. If one just simply looks at a point in time, when the benefits have not been reconciled with cost, it gives a false impression.

The only way that a phenomenon can truly be judged is when the complete reactions have manifested from actions. Theoretically that can never happen as long as time continues. However, negative reactions will ultimately be applied. Capitalism is not a win-win system. The thing is the capitalism has been able to shift the burden of negative reaction upon others in time and space. Communist or socialist systems has more immediate reactions that create the impression, in point in time comparisons, that it is inferior to capitalism whose negative reactions are more conserved for the future.

At 5:47 AM, Blogger Scott said...

At the end of the day, capitalism will adapt. Capitalism in the true meaning ended with Rosevelt, and we have been living on borrowed time since he created the social security ponzi scheme.

But the system will adapt. Unlike communism which just broke.

Most likely we will allow large number of non-immigant workers into the US. Work visa, we will tax them with income tax and social security tax and since they are non citizens we will never have to pay out benefits.

Alternatively we can become more automated and generate wealth from machines.

Or we can co away from cash based benefits to service based benefits where economies of scale can fix it. IE no cash soocial security but instead you get meals delivered to you home.

Democracy is a very bad system where the majority basically vote themselves a payday. Unfortunety we have yet to find a better political system so for now we are stuck with it.

At 6:31 AM, Blogger Noah TA said...

Once again we hear from Scott, a perpetrator of delusional optimism born from a belief in our systems supremacy. Capitalism, as practiced in the West, has simply been a Trojan horse transporting and hiding a core of exploitation. It takes money, as the general rule, to make money and capitalism got off to a good start from the accrued wealth from centuries of exploitation. Capitalism has existed in an undiluted form, whether it is its integration with exploitation or from social policies of Roosevelt. However, given the latter, that cannot be used as an excuse for capitalism failures. If that were the case, then Europe would be facing the same threats of failure to a worse degree than America…and so would Canada for that matter….but they are not.

Contrary to propaganda, Scott, Communism did not “just break”. Rather, it was BROKEN. The West conspired and actualized on destroying these nations’ economies. They restricted trade with them and more importantly, they forced them into a “guns vs butter” geopolitical calculus which eventually had them spending way too much of the GDP on military expenditure, thus setting the stage for the collapse of their economies.

White people will not allow changing demographics to turn them into minorities and culturally change the white culture of this nation. Thus, your immigration theory will not work in the long run. Also, living off of machines will only put more people out of work, if machines start replacing what humans do.

In truth, the only options are to accept an inevitable lowering of our standard of living OR…as the great Hannibal, the Carthaginian general once noted, “It is not that I must succeed…rather, its that others must fail”. The USE could work to sabotage its competitors or gain control of the vital fuel to most modern economies…which is OIL.

At 8:54 AM, Blogger Faheem said...

An interesting fact about what Scott is saying when he boldly states Capitalism ended with Roosevelt is that the U.S. had tremendous growth and some would say its best growth long after Roosevelt died, thus if Capitalism did not spawn this growth, what did? And if all the problems we see are not products of Capitalism as practice by the U.S. what are they products of?

At 6:58 PM, Blogger Scott said...

Of course we had best growth after we had a war that destroyed every major economy that existed before world war 2. We were the global suplier of everything.

At 8:04 PM, Blogger Faheem said...

Does that contradict your previous statement about Capitalism not being practiced in its truest form since Roosevelt, or did capitalism not spawn the growth we have seen since Roosevelt.


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