Punchinello’s Chronicles

November 23, 2009

It’s Not About Our Children’s Future

Filed under: Foolish Rants — Punchinello @ 11:40 pm
Tags: , , , ,

The new healthcare repair bills moving through congress promise to cost “only” $800-billion or so. The far more likely truth is they’ll cost upwards of $2-trillion. But those numbers ALWAYS come with the caveat, “over the next 10 years.” Why are we hearing about the next ten years, not about tomorrow afternoon? And have you noticed that we hear over and over again that we’re mortgaging our children’s future and that of our children’s children?

I think the problem here is with marketing. The GOP and conservative independents are looking at the bailouts, healthcare repairs, housing industry and so forth, telling us that we should think about the future. They want us to get with the program that “it’s for the children.” It isn’t! It’s about OUR future, tomorrow! Not some other day, not years from now! Tomorrow!

We’re told that spending money will make us rich. We’re told that debt is wealth. We’re told that “leverage” (a.k.a. debt) is a sound business practice. That’s actually true, but only when you use that debt to buy and develop assets! Assets are things that create something, produce something, make something, work in some form, and actually create wealth.

Using debt to finance minimum monthly payments, or to pay off one card to free up debt on another isn’t sustainable. Using debt to keep a store or bank open when bad business practices are making it fail is stupid! Borrowing money to spend on immediate consumables (like food or gasoline) is insane! Spend the debt money and you have nothing to show for it! Bail out failed banks and you have what? Nothing!

No, this is all about OUR coming years! We’re about to go absolutely, catastrophically, and astoundingly broke!

We don’t need to look ten years down the road. What happens when a family goes broke? They lose their money, then their savings. Then they lose their luxury assets, then their “I kinda like this” assets. Finally, they lose their basic survival assets. They lose their homes, they’re thrown out on the streets, and they lose their basic communication infrastructure.

Without a shower, an address, a phone number and a car, how do you get a job?

America is massively in debt. Policies set by the Federal Reserve have given congress an unlimited credit card. We just reached the statutory $12-trillion in debt, and congress simply voted to raise their own credit limits. Everywhere we look, congress is producing more spending, more programs, more pork projects. Banks are using all this bailout money and free interest rates to invest in a market that has no real meaning.

Yet we’re told that we’re affecting a long, lonnnnnnng future. Something about our children and our grandchildren.

Y’know what? Nobody cares! We’re the most self-absorbed, narcissistic generations to come down the pike in a very long time. Ten years? That’s NOTHING! We won’t be around, we don’t care, it’s too long, we can’t worry about it. We’ve got today to worry about, today’s crises to handle. We’re Very Important People! Our children will figure it out. Somehow.

No, it’s not about our children. It’s not about their children. The United States is on the verge of a monumental and immediate bankruptcy. The US Dollar is worthless, we have no actual gold reserves, our debts are astronomical, and we’re producing just about nothing anymore.

Oh, but look at the markets! They’re all up! With what? Who actually takes the time to understand the economics behind the rise and fall of today’s markets? Our children? Our grandchildren?

People seem to think that the big issue is that we’re spending “a little too much” here and there. We’re going into debt for worthwhile things, like healthcare repairs, insurance, fixing the banking system. And look; it’s working! Many publicly traded corporations are showing improving bottom lines. Might that be due to their firing all their expensive employees?

We’re not going to have to worry about our children and our children’s children. We’re going to have to deal with a United States of America default! Possible? Impossible? Well, to listen to the economists, academics and politicians, it’s impossible for the US to go into default. We own the world’s money, after all, so how could we default?

The problem is that because we own the world’s currency, we’ll simply take down the world economy at the same time. The UK is the most at risk right now for default. They produce almost nothing whatsoever other than financial services. Nearly 50% of their entire economy resolves to those financial services. With more and more people being let go, what’s left? Default.

“Default” means you don’t pay your bills. The latest sport, here in the US, is to get a whole lot of credit cards, run them up to around $20,000, buy whatever you want (hopefully some hard assets, gold or silver), then default. There’s no debtor’s prison, after all, so you only lose your credibility.

Then what? Can you get a loan? Will anyone believe that you’re honest or that you’ll do what you say you’ll do? How about if the entire country decides not to pay the bills! Then what!?

After the UK, both Japan and Russia are directly on the precipice of default. The former Soviet Union has no economy, and the Japanese national debt is approaching three times their entire national output! They’re also the largest holder of American debt, right up there with China. Don’t you think they’re desperate for money, and would like their loan to us to be paid back? What happens when we don’t pay it back?

Forget about your children and your children’s children! Think about YOU! When the US dollar collapses, it will wipe out all your savings, all your investments, all your IRAs and 401Ks, and your entire pension fund. You’ll have no retirement, no “social security,” no Medicare or Medicaid. There won’t be any products left on the shelves to buy, and your Automated Teller Machine won’t have any money to give you.

YOU won’t be able to access your bank accounts, and we’ll likely see a “bank holiday.” Only this time, unlike in the 1930s, it will be a moratorium on all electronic transactions. No checks, no e-payments, no e-commerce, no nothing.

It isn’t 10 years from now that matters. Nobody gives a damn about “annualized” probable numbers having nothing to do with reality. No, it’s about unbelievable amounts of unsecured debt, both at the citizen level and the national level. We’re wiping out anything that actually creates or produces any kind of real products. We’re replacing all that with government workers, government jobs, or publicly traded zombie corporations living on millions of dollars of monthly debt.

That debt will collapse. Not in ten years, in 1 year. And yet, countless people want what they want, right now! They want instant gratification. They want free health care, free money, free cars, free TVs, and free everything. Tax someone else. Tax the “rich.” Tax the poor. Tax the animals. Tax the dead! It doesn’t matter, just give us our credit cards, give us our FHA loans.

Today’s headlines tell us that housing “sales” are up 10%, and the morons in the media went gaga-gaga eyes. “See? The Recovery is under way!” Nobody’s mentioning the “shadow market” of undocumented, off-the-books foreclosures that would make the banks look bad. The FDIC seems to have slowed down on bank closings. Why? Because they’ve run out of money. They’ll get more, printed by the Fed-backed US Treasury, but it’ll be more worthless paper.

The holiday shopping season will be pretty bad, particularly for middle-class retail mega-chains. So they’ll default in the first quarter of 2010. Not ten years from now, THIS coming year! When they default, they’ll open the spigot to the global watershed of failed commercial real estate (CRE). Those bad loans, not even being discussed, are all “insured” with credit-default swaps (CDS).

Look around you! Talk with friends who’ve lost their jobs. See how quickly they collapsed through their many and various backup plans, safety nets, and emergency funds. They lost their credit rating, have no money, can’t get cash, and they’re now at survival level. How can a country possibly say that what happens to individuals is nothing at all like what happens to a nation?

The fact is that money is money, business is business, and credibility (your word of honor) is fundamental. Nation or citizen, when you go broke, you’re finished! Let congress pass Stimulus 2, or Health Insurance Reform. So what? It’s all fake money, worth nothing whatsoever. It’s entirely irrelevant how those costs will affect us in 10 years!

We’re going to go broke within 1 year. Our children aren’t going to be paying “our” debt, because they’ll still be children! They won’t be old enough to work so they can’t donate 100% of their salaries to paying off an impossible debt. The next time you hear some stupid line about how we’re putting our children into debt, just take a look at your own debt! Then the nation’s debt!

Then look at the amount of equity being removed from the so-called rallying markets. Look at the amount of product on the shelves of the local stores. Look at the “For Sale” and “For Lease” signs in the yards and strip malls. Do you think all this will just sit around and wait for the next 20 years? Will it all just wait for the next generation? If you’re out of work, will you just wait for your children and their children to take care of you? Or are you going to have to deal with it now!


1 Comment »

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    Pingback by Tweets that mention It’s Not About Our Children’s Future « Punchinello’s Chronicles -- Topsy.com — November 24, 2009 @ 2:42 am | Reply

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