Dead Government Walking

[Bill Hicks]

http://www.sprott.com/Docs/MarketsataGlance/MAAG_10_2009.pdf

Braaaaaaaaaaaains!  (sorry, got caught up in the Haloween spirit  ).

This is an excellent report on the state of the Federal Government's finances that is almost as scary as a horde of zombies banging at the door.     Here is a snippet:


In case you failed to catch it in our previous articles this year, we thought we’d state it outright for our readers this month: the United States Government is on a trajectory to default on their obligations. In its current financial condition, it will not be able to fund its forecasted budget deficits and unfunded Social Security and Medicare promises on top of its current debt obligations. This isn’t official yet, and we don’t know when the market will react to it, but there is no longer any doubt about the extent of their trajectory. There simply isn’t enough taxing power, value creation or outside capital willing to support its egregious spending.

Stating the obvious may be construed by some as fear mongering, ‘talking up our book’ or worse, but our view is not as severe as you might think. In the Federal Reserve Bank of St. Louis’ Review from July/August 2006, Lawrence Kotlikoff stated that “partial-equilibrium analysis strongly suggests that the U.S. government is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments of various kinds.”  He went on to suggest that the US should immediately close the Social Security program to reduce future liabilities (could you imagine?), use a voucher system for Medicare to limit costs, and replace personal, corporate, payroll and estate taxes with a single federal sales tax. All this, published in an article from 2006, well before the credit crisis and subsequent meltdown had even begun!

Three years later, the financial condition of the US government is completely untenable. The projected US deficit from 2009 to 2019 is now slated to be almost $9 trillion dollars.3 How on earth does anyone expect them to raise this capital? As we stated in a previous article, in order to satisfy US capital requirements, all existing investors would have had to increase their US bond purchases by 200% in fiscal 2009. Foreigners, however, only increased their purchases by a mere 28% from September 2008 to July 2009 - far short of what the US government required.4 The US taxpayer can’t cover the difference either. According to recent estimates, tax revenue from all sources would have to increase by 61% in order to balance the 2010 fiscal budget. Given that State government income tax revenues were down 27.5% in the second quarter, the US government will be lucky just to maintain its current level of tax revenue, let alone increase it.

The bottom line is that there is serious cause for concern here – and don’t be fooled into thinking this crisis will fix itself when (and if) the economy recovers. Just how bad is it? Below we outline the obligations of the US Federal Government from 2004 to 2009. We present two sets of numbers, as government accounting can vary widely depending upon the source. In column A, we outline the Total US government Obligations, using actuarial reports from the Social Security Administration and the Medicare Trustees Reports. In column B we identify Total Federal obligations according to GAAP accounting provided by Shadow Government Statistics, calculated on a US fiscal year end basis with estimates for 2009. The differences in the absolute amount of total obligations ($114.7 trillion vs. $74.6 trillion in 2009) are a function of timing, the calculation timeline for Social Security and Medicare, and other obligations included under GAAP rules. Either way we choose to calculate it, the total number is preposterously large. From 2004 to 2009, US unfunded obligations increased by an average of almost 50% over this six year period under both calculation methods, while US government revenue increased by only 12%.  No company or government can increase its liabilities by more than four times the rate of its revenue and stay solvent for an extended period of time.

[cozdiver]

ALERT ALERT ALERTNo company or government can increase its liabilities by more than four times the rate of its revenue and stay solvent for an extended period of time.
DOOM IS UPON THE USA

[ajhammered365]

 I always wanted to right a good article like this except mine would be titled "10 Reasons Why YOU!!!! (the little guy) Are Fucked"   
 Honestly it wouldn't change a lot of peoples minds. You could get some crayons, a calculator and construction paper, draw them a map and they still wouldn't get it. At this point I don't think it is doom. It's just a fact waiting to happen.
 Luckily, I'm only  second generation electricity having, supermarket shopping USA idiot. Like my chickens, it takes a couple of generations to breed out all of the stuff you don't want and keep all of the stuff you do want. I'm not a huge slave to the system. But if this doesn't wake up some people nothing will. Buy guns, ammo, animals, seeds. Learn to shoot, farm, slaughter animals etc.  My family is a bunch of poor hill billy farmers that came from Ireland to North Carolina to make a better way.
  We'll be alright in the end. Or not. I try to imagine how people in the past felt. And it saddens me to realize that when it all shakes out, this will be a boring chapter in some kids history book, not the end of the human race as we know it.

[Bill Hicks]

I always wanted to right a good article like this except mine would be titled "10 Reasons Why YOU!!!! (the little guy) Are Fucked"   
 Honestly it wouldn't change a lot of peoples minds. You could get some crayons, a calculator and construction paper, draw them a map and they still wouldn't get it. At this point I don't think it is doom. It's just a fact waiting to happen.
 Luckily, I'm only  second generation electricity having, supermarket shopping USA idiot. Like my chickens, it takes a couple of generations to breed out all of the stuff you don't want and keep all of the stuff you do want. I'm not a huge slave to the system. But if this doesn't wake up some people nothing will. Buy guns, ammo, animals, seeds. Learn to shoot, farm, slaughter animals etc.  My family is a bunch of poor hill billy farmers that came from Ireland to North Carolina to make a better way.
  We'll be alright in the end. Or not. I try to imagine how people in the past felt. And it saddens me to realize that when it all shakes out, this will be a boring chapter in some kids history book, not the end of the human race as we know it.

I don't think anyone will consider the mass die off of at least 5/6th of the human race to be "boring."   

[ajhammered365]

 Oh the Dark Ages and the Black Death are real nail biters huh? 
 Not to sound like a smart ass or anything but this is just a fart in history. It's important to us because we are going through it. Just like the people who were dying of bubonic plague must have thought they had done something to piss off God.
 Face it in a couple of hundred years, this little point in time will be a couple of pages in a book about how we screwed up and should have done this, instead of that. The only difference is we get to live, or die, during this time in history.

[Bill Hicks]

Oh the Dark Ages and the Black Death are real nail biters huh? 
 Not to sound like a smart ass or anything but this is just a fart in history. It's important to us because we are going through it. Just like the people who were dying of bubonic plague must have thought they had done something to piss off God.
 Face it in a couple of hundred years, this little point in time will be a couple of pages in a book about how we screwed up and should have done this, instead of that. The only difference is we get to live, or die, during this time in history.

The Peak Oil collapse is going to make the Black Death look like a Sunday stroll through the park.  We're talking about the total collapse of modern petro-based agriculture and AT BEST, the return of the world's human population to pre-industrial levels (about 1 billion).  And that assumes no nuclear war breaking out as the world flies apart. 

Most likely there aren't even going to BE any history books for the starving, subsitance-level living survivors huddling amid the ruins. 

[ajhammered365]

 So there is going to be a handful of radiation soaked survivors barely surviving day to day?  I mean I like to be doomy with the best of them but c'mon serioulsy?
 What is going to happen, on a massive scale I'll give you that, is a return to the whole natural order of things. People that would have died because of disease or stupidity or just plain bad luck, will die. I know this a doom forum but the fact of the matter is no one gets out alive. The Doors wrote a whole song on it so you know it is important! 
 

[gin]

Face it in a couple of hundred years, this little point in time will be a couple of pages in a book about how we screwed up and should have done this, instead of that. The only difference is we get to live, or die, during this time in history.

who's book would that be.. humans.. maybe not..
do the 'gods' keep books do aliens keep books

[Bill Hicks]

So there is going to be a handful of radiation soaked survivors barely surviving day to day?  I mean I like to be doomy with the best of them but c'mon serioulsy?
 What is going to happen, on a massive scale I'll give you that, is a return to the whole natural order of things. People that would have died because of disease or stupidity or just plain bad luck, will die. I know this a doom forum but the fact of the matter is no one gets out alive. The Doors wrote a whole song on it so you know it is important! 
 

Nah...they won't be radiation soaked.  That's the best case, non-NW scenario.  NW will likely mean complete die-off.

But you're right, no one gets out alive either way.   

[Emeline]

Oh the Dark Ages and the Black Death are real nail biters huh? 
 Not to sound like a smart ass or anything but this is just a fart in history. It's important to us because we are going through it. Just like the people who were dying of bubonic plague must have thought they had done something to piss off God.
 Face it in a couple of hundred years, this little point in time will be a couple of pages in a book about how we screwed up and should have done this, instead of that. The only difference is we get to live, or die, during this time in history.

The Peak Oil collapse is going to make the Black Death look like a Sunday stroll through the park.  We're talking about the total collapse of modern petro-based agriculture and AT BEST, the return of the world's human population to pre-industrial levels (about 1 billion).  And that assumes no nuclear war breaking out as the world flies apart. 

Most likely there aren't even going to BE any history books for the starving, subsitance-level living survivors huddling amid the ruins. 

Thinks you are right Bill, sad to say.  Most of the human race is going back to the Stone Age.

[I_Heart_Petrobilia]

I'm starting to wonder... Will the US gov't collapse before PO causes the real mayhem to break out?  I look at the financial hole the feds are digging for themselves and I have to say, the next few years are filled with a frightening amount of uncertainty.  Never mind PO.  Gov collapse could be the most imminent threat to the US way of life. 

[beamofthewave]

The stone age was not all that bad, humans worked 15 hours a week and the rest of the time was yours to do with what you wanted, I read.  It was much more egalitarian, no human living magnitudes ahead of another like we got now and they were in much better shape physically, the average able to run faster than the Olympic athletes we got now, see the article about the Australian aborigine foot prints from the stone age and how they measured his foot prints and how fast he was running after game.  They were also taller and better fed.  So stone age humans had a good life in my opinion. 

[Tabo]

AH, beam, Typhus, death in childbirth, injury and a thousand other pitfalls industrial civilization protects us from.

No argument. We goin' back to the stone age. But the idyllic tribal thing aint happening.

To the post. We been wondering around the doomstead if financial collapse might get us before PO. I call it a dead heat at this point.

[Bruce]

 There is no option but a bankrupt Government IMO. So, now the question is what happens when the Government defaults? My first impression is that the whole list of social programs will be gone. Good bye Social Security, medicare, medicaid, food stamps, prescription assistance, unemployment benefits, Gov retirement, military retirement and disability, etc.. The FDA, FAA and FEMA. The USDA might have a leg to stand on as it will be the agency responsible for trying to hand out potatoes and cheese. The very last agency to go will be the military, even though they will be downsized at some point. When the SHTF IMO chaos and riots will be like flash paper, OK today then tommorrow without warning the fear and panic boils over. The military will  seemingly be everywhere at first but soon the immensity of the problem will overwhelm them and the lack of resources both in man power, supplies and pay will end their rule. Many will desert because they love their families more than their duties. At some point many will recognize what they are being asked to do is beyond what they signed up for. The best we can hope for is that the majority of casualties and the chaos that caused them has run it's course at the time of the military withdrawal. Then we will slowly try to effectively start communities of close knit people with a bartering system being the new currency. The way of life we all have known will be but a distant dream. Electricity has long ago dissapeared along with shopping malls, drive through ice cream parlors and video stores. A time will come when it is again safe for a short days walk that will take one through a land of forgotten times. The golden arches of McDonald's still stands but all the windows have been shattered. The pumps at the local convenience store still displays the horrible price of what you paid for the last few gallons you purchased. The hoses have been cut away for some unknown use. The pot holes that you used to drive around on your way to work are marked by the grass growing through the weakened asphalt. In the beginning the fabricated remains of businesses with it's bones picked clean where the residence of many homeless including whole families. As communities grew they took in what were previously the homeless because they had services and experiences to offer. Shelter and water needs have been addressed now everyone concentrates on food. During the winter the thick clouds of arid smoke fill the nights. People are resourceful enough to stay warm but the relentless scalding hot summers take it's toll. In the future the most precious thing you can posses is a full stomach. Plan now for what is almost a certainty......................................Bruce

[picasso moon]

Come on, y'all, we know the US government can just print all the money it needs, and the rest of the world will go along no matter what Isn't that interesting how all the people who usually post to the effect that things aren't really so dire have been absent the last 2 days or so?

Bruce: we really have no idea what happens when a government whose currency is the basis of the global economy defaults, nothing remotely like this has ever happened. IMO, well before it comes to that, another FALSE FLAG EVENT will be "arranged", and the nature of the US government and its relations to the rest of the world will be drastically changed in ways we can hardly imagine.