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Sunday, March 29, 2009

If you don't hear the canary hit the bottom of the cage, how about an eagle?

I've written many times about the looming financial disaster called Social Security and Medicare. The head of the Dallas Federal Reserve has calculated the amount of money we need to put aside today is $99,000,000,000,000 to meet future outlays.(BTW, that $99,000,000,000,000 figure increases $4,650,000,000,000 each year according to Dr. Walter E. Williams). I've written that Bernie Ebbers went to prison for running MCI/Worldcom the same way Congress and the Treasury have run Social Security/Medicare. I've also written that when the "surplus" goes away, that will become the opening shot in an inter-generational civil war.
How does Social Security/Medicare work?
Poorly. Here is a simple explanation. One note: the money the SS Admin lends to the treasury is spent. It also goes on the books as an "asset" or "revenue" which it is not, rather than a "liability" which it is. In other words, the SS Trust Fund has nothing but IOU's in it, the Treasury is cooking the books and the annual deficit has been made to look a lot lower than it is.
Most analysts predicted that we had 6-8 years before the surplus went away. It appears that that date has already arrived (for a real scary laugh, go down in the article and read how the now Director of the Office of Management and Budget, Peter Orszag, predicted in 2002 that the chances of failure for Fannie Mae/Freddie Mac were less than 1 in 3,000,000. Oh, and Mr. Orszag is now the man in charge of the federal budget!) The most optimistic forecast is that the surplus will be gone in 2 years.

I can not begin to tell you how incredibly concerning this development is.

Excuse me...did I just hear squeaking gun carriage wheels across Charleton Harbor?


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