Protecting Social Security from the Looters

[Nitrox]

All this from someone who still persists in believing that the SS "Trust Fund" is composed of something other than special purpose Treasuries that will have to be funded out of general revenues when SS spending exceeds inflows and the SSA has to redeem them to cover the difference.

 

The net economic output of the US is not sufficient to cover all of the claims that state, local, and federal governments have issued against it alone, let alone in conjunction with private debt. The only possible outcomes when there aren't enough real resources to fund current consumption are default, devaluation, or massive decreases in current spending. A partial, de-facto default via devaluation is the most likely of these three.

 

IMO the fundamental solvency issues at play here are far more serious and worrisome than anything associated with the housing bubble and its inevitable collapse. The expansion of public debt can only exceed the expansion of output for so long before the chickens come home to roost, and they've just landed in Greece. My sense is that the southern Euros will give up their entitlements when they're pried out of their cold, dead hands and we'll see the whole thing go down in flames (most likely via inflation) before seeing any structural reforms sufficient to keep the thing afloat.

 

 

I think you're likely to see the Euro in its current form collapse. Greece had to con their way in and now that they've had to be honest its obvious that there is major problems.

 

 

 

 

[j_b]

Anti-government psychopaths blame the deficit on an extremely successful federal program like Social Security that has a several trillion dollar surplus, and will only need minor tweaking to be sustainable through the end of this century, yet they won't say a word about the 10's of trillion dollar hole created by the policies THEY advocated like cutting taxes on the wealthy and corporations, perpetual war to control the flow of resources and the free for all financial markets shenanigans that have bankrupted the world economy and caused the loss of trillions in pensions and savings, as well as millions of jobs. The sleight of hand you expect people to swallow couldn't be any more obvious. Not only the policies you defended are responsible for the deficit, but it was all along the intention of the looters to destroy the integrity of government in order to "drown it in a bath tub" and better pillage the commons.

[JayB]

All this from someone who still persists in believing that the SS "Trust Fund" is composed of something other than special purpose Treasuries that will have to be funded out of general revenues when SS spending exceeds inflows and the SSA has to redeem them to cover the difference.

 

The net economic output of the US is not sufficient to cover all of the claims that state, local, and federal governments have issued against it alone, let alone in conjunction with private debt. The only possible outcomes when there aren't enough real resources to fund current consumption are default, devaluation, or massive decreases in current spending. A partial, de-facto default via devaluation is the most likely of these three.

 

IMO the fundamental solvency issues at play here are far more serious and worrisome than anything associated with the housing bubble and its inevitable collapse. The expansion of public debt can only exceed the expansion of output for so long before the chickens come home to roost, and they've just landed in Greece. My sense is that the southern Euros will give up their entitlements when they're pried out of their cold, dead hands and we'll see the whole thing go down in flames (most likely via inflation) before seeing any structural reforms sufficient to keep the thing afloat.

 

 

I think you're likely to see the Euro in its current form collapse. Greece had to con their way in and now that they've had to be honest its obvious that there is major problems.

 

 

I think it's certainly possible.

 

In the long terms things would be much better for everyone if they allowed things to work out the old fashioned way.

 

Any creditors dumb enough to lend money to the Greeks at low interest rates would have to take it in the shorts during a major restructuring of the debt. There's no reason why creditors should get taxpayer money to exempt them from the consequences of their choices. You make a risky loan, you take the pain when it can't be repaid.

 

I think this would also make it easier for the Greeks to swallow the structural reforms that'd be necessary to give their corrupt, inefficient, squalid economy half a chance to turn around, or at least stagger forwards for a while.

 

A final benefit of this is that it would make investors in other Euro bonds with more assurance that they'd only lose their shirts if the entity they loaned money to went under, as opposed to investors in Norway seeing the value of their assets getting hosed by bailout driven inflation.