Wednesday, April 4, 2012


More good news on the budget.  President Obama has abandoned the idea of a budget, since he cannot even convince Democrats that his budget ideas are worth voting for.

Our government debt situation is at least as problematic as Greece's.  Our present Administration is simply ignoring the issue.  It has no plan at all to stop borrowing.  The Eternal Optimist views all this as a good thing.  President Obama and his comrades are being true to their principles. The sooner the dollar craters out the sooner the average citizen will begin to understand that magical thinking really doesn't work out, and that we cannot keep electing Congressmen and Presidents who insist that borrowing 40% of our budget is a good thing, and what we need is higher taxes, more revenues and more government spending.

This is not sustainable.

It doesn't really matter if President Obama delivers nasty and untrue criticisms of Congressman Ryan's budget proposals, while not proposing any budget himself, because at some point all this is a self-correcting problem. That's the funny thing about money - at some point reality sets in, no matter how good your political skills.  Economics and gravity share that quality.

Right now the question seems to be not whether the U.S. will drive off the insolvency cliff, but when, and who it will drag down with it when it goes.

We really do need a catastrophe to bring us around.  I am optimistic that a "sooner" catastrophe, rather than a "later" catastrophe, would be in our national interest.  And I am optimistic that we will have a government cash flow "bubble" bursting in the relatively near future.  At that point we will not be able to absorb the bubble and pass it on to another part of the economy, as we've been doing for two decades.  There is no American government out there to bail out the American government, when it pancakes.

Just us little people, who have to live within a budget or go bankrupt.  The cool thing is listening to economists and politicians tell us that living within our means is passe and stupid, and that the U.S. government can keep borrowing to fund current obligations indefinitely, without penalty.  Because the government is "different."  It's like listening to realtors tell me that real estate was on a permanent "high" and would never go down, because things were "different" now.  That was just before real estate crashed.

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