Prepare for collapse:
The government is effectively bankrupt. Using GAAP accounting principles, the annual deficit is running in the range of $4 trillion to $5 trillion. That’s beyond containment. The government can’t cover it with taxes. They’d still be in deficit if they took 100% of personal income and corporate profits. They’d also still be in deficit if they cut every penny of government spending except for Social Security and Medicare. Washington lacks the will to slash its social programs severely, to change its approach to ever bigger government. The only option left going forward is for the government eventually to print the money for the obligations it cannot otherwise cover, which sets up a hyperinflation.
IMF analysis suggests the US is fiscally bankrupt (Photo: Getty)
And you thought we’d got problems here in the UK. Have a read of this terrifying article by Professor Laurence Kotlikoff of Boston University, which using recent IMF analysis pretty convincingly demonstrates that the US is as fiscally bankrupt as a busted flush. No wonder stock markets are in meltdown again.
I have to confess to missing this at the time of publication, but apparently the IMF in its “selected issue paper” on the US economy calculates that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.” As Professor Kotlikoff notes, the entire Federal tax base amounts to 14.7 per cent of GDP, so to close the gap from a revenue perspective would require the authorities to double the rate of taxation in the US.
Of course, it won’t work out that way in practice. Many future spending pledges and entitlement promises will simply be cancelled instead. What this article highlights is quite how irrelevant much of the US debate around the merits of further fiscal stimulus really is. The Obama administration seems to have its head buried in the sand. The same might be said about the Republican opposition, which is fiercely resistant to anything in the way of tax rises.
There is little sign of fiscal stress in the US right now. To the contrary, bond yields have rarely been lower. But if nothing is done, this won’t remain the case for long. There is surely a limit to how much the world is prepared to lend even to the mighty US.
By Jeremy Warner Economics
Last updated: August 12th, 2010
Source: The Telegraph
Change:
– 20 States Fight Unconstitutional ObamaCare In Court
– Elena Kagan Blocked At Least 9 Obama Eligibility Lawsuits
– US: Food stamp Use Hit Record 40.8 Million in May
– US Heads For Civil War Over ObamaCare
– Judge Rules Virginia Can Continue Its Lawsuit To Stop Unconstitutional Obamacare
– Admiral Mike Mullen: US has plan to attack Iran (if needed)
– Arizona Sheriff Paul Babeu: ‘Our Own Government Has Become Our Enemy’
– President Obama Kills 66 More US Soldiers in July
– Obama Administration Proposal To Give FBI Access To Your Internet History Without Court Order
– SEC Says New Financial Regulation Law Exempts it From Public Disclosure, incl. FOIA!!!
– Nancy Pelosi Blocks Gulf Disaster Investigation
– And Now ObamaService? H.R. 5741: Universal National Service Act
– Obama Bankster Bill Lets Banks Have US Over A Barrel Again
– Obamacare: Gold Coin Sellers Angered by New Tax Law
– GLOBE MAGAZINE: OBAMA BORN IN AFRICA! WHY HIS PRESIDENCY IS ILLEGAL (!)
– Rep. Michele Bachmann: Obama Is Making The US ‘A Nation Of Slaves’
– General James Mattis who said it was ‘fun to shoot people’ takes over US Central Command
– EU gives US access to its citizens’ private financial data
– Obama Administration To Sue Arizona Over Immigration Law
– Third US carrier, 4,000 Marines augment US armada opposite Iran
– Now truth is bad for you: ‘Obama warns Erdogan international Gaza flotilla probe bad for Turkey’
– Obama Internet ‘Kill Switch’ Approved By Senate Committee
– Americans buying their own health insurance face an average 20 percent increase in premiums
– Big Brother DHS And DOD Want To Open US Skies To Spy Drones
– President Obama Has Already Outdone Every Previous President In Prosecuting Whistleblowers
– US government debt to rise to $19.6 trillion by 2015
– Left-Wing Icon Daniel Ellsberg: ‘Obama Deceives the Public’
– US: $13 Trillion Debt Poised to Overtake GDP (Chart of Day)
– 10 US States Where An Absurd Percentage Of The Population Works For The Government
– US ’secret war’ expands globally as Special Operations forces are deployed in 75 countries
– Paul Craig Roberts: A Plague Upon The World: The USA is a “Failed State”
– President Obama Wins The Right to Detain People With No Habeas Review
– US posts 19th straight monthly budget deficit; April deficit nearly four times higher than in 2009
– Hyperfast missile to strike anywhere on Earth within an hour wins President Obama’s support
– President Obama Repaying His Masters At Goldman Sachs
– Marriage Penalties Increase Dramatically Under ObamaCare
– The No.1 Trend Forecaster Gerald Celente on ObamaCare, Dollar Devaluation And Gold
– Rep. Ron Paul: President Obama Is ‘Not A Socialist.’ ‘He Is A Corporatist.’
– Dylan Ratigan Show With Alan Grayson: The Great Con Job By The Fed, The Government And The Banksters
– Michelle Obama says Barack’s Home country is Kenya – full statement
– Obama Administration Approves Targeted Killing of American Cleric
– Judge Napolitano on Obama’s Private Army
– Obama Gives ‘Pesticide Lobbyist’ Post as Chief Agricultural Negotiator
– It’s Official: America Now Enforces Capital Controls
– Rep. Ron Paul: Healthcare Will Drive US To Bankruptcy
– Gerald Celente: This time they will close the Banks & Wall Street (03/27/10)
– John Pilger: Have a Nice World War III, Folks
– The War on WikiLeaks … and Why It Matters
– White House Press Corps longest-serving member Helen Thomas on her one question for Obama
– Joe Biden to Barack Obama: ‘Mr. President, This Is A Big F****** Deal’
– Rep. Ron Paul: Healthcare Bill is ‘Blatantly Unconstitutional And Contrary to The Ideals of Liberty’
– US: THE Most Important Chart of the CENTURY
– Health Care Bill ‘Dangerously Expands IRS’s Power’
– US Government Preparing For Civil Unrest In America
– Record: National Debt Up $2 Trillion in Just 421 Days on Obama’s Watch
– Obama agencies invoking secrecy provision more often than under Bush
– US budget deficit hits record $221bn, the largest monthly deficit in history
– Michael Moore: ‘Democrats are a bunch of wusses … It’s disgusting … I’m sick of them’
– President Obama signs one-year extension of Patriot Act
– Cybersecurity Bill To Give President Obama New Emergency Powers
– Judge Napolitano and Angela Keaton on Freedom Watch: Obama’s Bush Foreign Policy
– Obama Signs Law Raising Public Debt Limit from $12.4 Trillion to $14.3 Trillion
– President Obama’s Pledge Never to Raise Taxes on Anyone Making Less Than $250,000 a Year
– Paul Craig Roberts: It Is Now Official: The U.S. Is A Police State
– Prof. Russell Roberts Testifies Before House Committee: ‘I Want My Country Back!’
– Director of National Intelligence Says US May Kill Americans Abroad
– President Obama Ups Pakistan Drone Strikes in Assassination Campaign
– The New Vision of the Obama Administration: War Without End
– Pentagon’s New Record Black Budget Tops $56 Billion
– Rep. Ron Paul on Obama seeking to assassinate ‘US citizens’ he labels as terrorist
– White House to Paint Grim Fiscal Picture: Another Record Budget Deficit
– US: GDP Mirage – The Last Hurrah
– Marc Faber: Obama Makes Bush Look Like a Genius
– Obamanomics: Why Did the ‘Stimulus’ Fail to Help the US Economy?
– Paul Craig Roberts: How Wall Street Destroyed Health Care – Greed, Be Thou My God
– President Obama to indefinitely imprison detainees without charges
– Ron Paul: US Foreign Policy is Bankrupting America
– Rep. Ron Paul: State of the Republic Address – ‘Dangerous Times Indeed.’
– America’s Impending Master Class Dictatorship! (MUST-READ!)
– The CFR Controls American News/Media
– US: Unfunded Benefits Dig States’ $3 Trillion Hole
– The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street
– Peter Schiff: The Lunacy of US Government Programs
– Former Dean of Harvard College Harry R. Lewis: Larry Summers, Robert Rubin: Will The Harvard Shadow Elite Bankrupt The University And The Country?
– Experts: Dollar Crisis Looms if US Doesn’t Curb Debt
– Fitch: US Must Cut Spending To Save AAA Rating; US December Deficit Nearly Doubles
– The Coming Sovereign Debt Crisis
– US slides deeper into depression as Wall Street revels
– PIMCO’S Bill Gross: ‘Let’s Get Fisical’ (… or why the US will not make it.)
– Barack Obama’s Health Care Lies And Reversals
– US sheds 85,000 jobs in December; Record 40% Of Unemployed Without Job For 27+ Weeks
– US: Public Pensions Face $2 Trillion Deficit
– U.S. Avoids Technical Default By Three Days
– As an American, I refuse to buy mandatory health insurance … that supports Big Pharma
– Prof. Dr. David Michael Green: Now I’m Really Getting Pissed Off … With Obama
– US Treasuries Post Worst Performance Among Sovereign Markets In 2009
– US losses will top $400 billion on Fannie Mae and Freddie Mac
– US: More Ammo For The Treasury Bazooka
– US government wants farmers to use coal waste on fields
– The No.1 Trend Forecaster Gerald Celente: The Terror And The Crash of 2010
– We’re Screwed! Hyperinflation like in the Weimar Republic; Great Depression worse than in the 1930s
– US Congress: Banksters Get $4 Trillion Gift From Barney Frank
Traitor in chief:
– Treason: Obama gives INTERPOL immunity from the Constitution (Amending Executive Order 12425)
– Peter Schiff on Obamacare, Freddie Mac & Fannie Mae: The Nightmare Before Christmas
– Obama administration backs Fannie Mae and Freddie Mac no matter how big their losses may be
– Rep. Dennis Kucinich: US War Presidents ignore Congress and Constitution
– Obamacare: Big payoffs to senators on health bill stoke public anger
– US: Trillions Of Troubles Ahead
– Chinese central banker Zhu Min: ‘The world does not have so much money to buy more US Treasuries.’
– Obamacare: Change Nobody Believes In
– Obama’s surge comes at a cost: At least $57,077.60 per minute
– US National Debt Tops Debt Limit
Hypocrite in Chief (Funny):
– President Obama: Another Busy Day in The Oval Office!
– Fascism in America: By Political Definition The US Is Now Fascist, Not A Constitutional Republic
– John Williams of Shadowstats: Prepare For The Hyperinflationary Great Depression
Liar in Chief (NOT funny!!!):
– Barack Obama Lies 7 Times In Under 2 Minutes!!!!!
– Rep. Dennis Kucinich: ‘These Wars Are Corrupting The Heart Of Our Nation!’
– Famous Investor Jim Rogers: Incompetence In Washington, Abolish The Fed And The Treasury
– Rep. Dennis Kucinich: The Truth About Afghanistan
– Obama’s Big Sellout (Rolling Stone Magazine)
– Obama administration to lift debt ceiling by $1.8 trillion
– Climategate: President Obama’s rule by EPA decree is a coup d’etat against Congress, made in Britain
– Obama administration tells Pakistan: Tackle Taliban or we will
– MSNBC Rachel Maddow: War President Obama
– Ron Paul: ‘Obama is Actually Preparing Us For Perpetual War’
– Afghanistan Surge to Cost At Least $40 Billion, That Is $1.333.333 For One US Soldier Per Year
Liar in Chief (Over 300 soldiers died in 2009 because of this lie!!!):