As Goes GM, So Goes the Nation

One of the things the government can't do is run anything. The only things our government runs are the post office and the railroads, and both of them are bankrupt.

Let’s See How Far We’ve Come

The lyrics to the Matchbox 20 song "Let’s See How Far We’ve Come," describe the country’s $56 trillion unfunded liability dilemma.

I believe the world is burning to the ground
Oh well I guess we're gonna find out
Let's see how far we've come
Let's see how far we've come

Well I, believe, it all, is coming to an end
Oh well, I guess, we're gonna pretend,
Let's see how far we've come
Let's see how far we've come

Rather than address the structural problems of our healthcare and social security systems, our government politicians push off the issues until after the next election. They have been doing this for 30 years. This is why David Walker has described these cowardly politicians as displaying “laggardship” rather than leadership. Our elected leaders flounder from crisis to crisis using stopgap methods to plug holes in the ship of state while ignoring the huge iceberg on the horizon. There is one thing I am sure of. The deficits projected by the CBO over the next four years will be hundreds of billions higher. They haven’t taken into account emergency stimulus packages 2 & 3.

Source: PerotCharts.com

While the U.S. Titanic steams full speed ahead toward the iceberg of unfunded Social Security, Medicare, and Medicaid liabilities, our politicians spend our tax dollars on digging holes and then filling them up again. As these future unfunded liabilities continue to rise, the government’s solution is to print money, keep interest rates at 0%, devalue the dollar, and hope for the best. The U.S. depends on foreigners to buy more than 50% of our newly issued debt. When you owe $10.7 trillion to others, you usually don’t get to dictate the terms. Today, the U.S. is asking foreigners to lend us money for 30 years at 3.5% while telling them that we will pay them back in dollars that will be worth 30% less in the next five years. Even a Wall Street CEO could figure out this isn’t a good investment. The U.S. will default on this debt. It is just a matter of when.

Source: PerotCharts.com

Bill Gross laid out the choices for the U.S. in 2006.

How are we to pay for this future burden of healthcare and social security expenses? Aside from contractual legislative changes to both areas (which are surely just around the corner), the way a reserve currency nation gets out from under the burden of excessive liabilities is to inflate, devalue, and tax.

The U.S. is hard at work on inflating and devaluing, while Mr. Obama is working on the details of the taxing. The Burning Platform for GM has already collapsed. The Burning Platform for the U.S. is a ten alarm fire. Collapse is imminent, unless a leader with guts and courage is willing to lead the U.S. back to fiscal sanity. If you believe in fiscal sanity, please join me at TheBurningPlatform.com.

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