Paul Ryan admited on "Morning Joe", today, May 16, 2012, that the debt crisis will hit the US in 2-3 years. Joe Scarborough asked Ryan the timing question in regards to Greece, Spain, Italy, France and California. Ryan at first said he didn't know but later said that people speaking to the budget committee were saying we've got 2-3 years.
The message seems to be gaining traction in the main stream media. Anyone know of other examples?
Some Dr. from Texas named "Paul" has been talking about this since the late 70s I think.....
There's gonna be an interesting hit come the end of this year.
The "sequestration" effects of the Budget Control Act of 2011 start coming into effect.
Of course that's $1.2 trillion in cuts from both military/defense and social spending, spread out over the next 10 years. Which really mean curbs to growth in spending, not actual cuts.
But with a larger population, more people struggling, and more elderly people to take care of, that will effectively be a cut for social programs.
That said, it is interesting (spending-wise) that the military budget has continually been INCREASED even after "withdrawal from Iraq" and the killing of Bin Laden - not decreased.
Have to disagree with the assesment of 2-3 years. If the banking system were not so interconnected and so over leveraged, I would agree. Money is starting to fly out of Europe and there are already official bank runs in Greece with the lines out the door.
Greek banks owe French banks a great deal of money, and then on to Germany. I could go on about that aspect, but you get the point, and then there are the questions concerning derivatives. Anyone who tells you they know what the ramifications of what $750 trillion of derivatives when bank runs start is mistaken.
The last big factor is that European banks owe US banks $750 billion. The banks have been trying to insulate themselves, but who are we kidding? Actually, one of the reasons the Fed is allowing the big banks to park $1.5 trillion at the Fed is they are scared to death of how fast a crisis can spread with all these derivatives. Can we say J. P. Morgan? There could be $20 trillion in losses there. They probably don't even know.
All I know is that the problems are larger than in 2008, and there is no one on Earth who can tell you what could cause the system to collapse. In my opinion it is collapsing now! The Fed and the ECB will pump trillions into the system, but has the problem grown so big that they can't stop a much larger ball going down hill?
To reiturate, yes we have 2-3 yrs to get our house in order, but what about those black swans swarming everywhere? In addition to that, in 2-3 yrs we'll have $20 trillion in debt. How can the Fed raise interest rates? The only choice will be a bank holiday and devalue the dollar by half.
We have allowed the two headed monster one party system in bed with Wall Street to______ us. Just be prudent.
P. S. I leave you with this:???????????????????????????????????????????????????????????????????
I do not believe the 2-3 years. I don't think we have that long. It all depends on so many factors it is hard to estimate. There will be an event. I do not know what that event will be or when it will be. A war. A financial event. An election. I do not know what it will be. This event will trigger a loss of confidence. They are having a loss of confidence in Greece right now. That is why people are lining up taking their money out of the banks in EUR.
America is not managing its government spending responsibly. Everyone knows this. We are massively over spending and the Fed Res is doing all kinds of things trying to compensate. The only reason we are not having a problem right now is because Europe is having an even worse problem. Socialism does not work. It has never worked on a large scale. Somehow we are unable to learn this lesson from history and keep repeating the same mistakes. Liberalism leading to statism always fails - usually with civil unrest. We are racking up massive debt to GDP. If we do not stop it there will be a loss in confidence. We are over spending by so much that if we bring spending in line with revenue there will be a financial emergency and civil unrest. If we continuing spending there will be a different financial emergency and civil unrest. So we are basically toast. I do not see a way to fix it. It has gone too far. At this point it is a waiting game - how long until the event happens that causes the loss in confidence. Maybe a year ???
The good part is this gives us time to prepare.
The FY12 Defense budget was formulated before OBL was killed so that's probably not a good metric. Planning for FY12 actually started in FY07 with the FY07 Future Year Defense Plan (FYDP) which is the FY07 budget, plus a 5 year projection.
THE FY12 Defense baseline budget requested a total of $676 billion ($553B discretionary, $5B mandatory and $118B in war funding for Afghanistan and Iraq.) Overall, the FY12 budget total was a 3% increase over FY11, but the $118B in war funding for FY12 was a decrease of 27% from FY11 - consistent with the Iraq force drawdown - and is the lowest amount in the war funding portion of the Defense budget since FY05.
Comparing FY11 FYDP to the FY12 FYDP it actually shrank 2.6% - the first time the FYDP dropped significantly from one year's FYDP to the next since 1996.
The FY13 Defense budget is still being massaged, but the current baseline request is $525 billion which if it sticks will be the first time since FY01 that the Pentagon has asked for less than in the previous year. There are a couple of reports out there commenting on the current efforts to cut almost $500 B from the defense budget over the next 10 years.
Predictably, the hawks have their bowels in an uproar while the doves are drooling over how to spend it on entitlement programs we don't need.
Ooops, meant to add a few links to supporting articles:
I paraphrased and summarized from this one: www.csbaonline.org/wp.../2011.07.16-FY-2012-Defense-Budget.pdf
FY13 Budget infor from here: http://www.huffingtonpost.com/2012/01/26/military-budget-cuts-pentagon_n_1234761.html
This site can be a little cumbersome and is a bit bandwidth intensive, but there is some pretty good detail here: http://www.usfederalbudget.us/federal_budget_detail_fy12bs12011n_3031#usgs302 (Warning - the numbers don't line up with some of the other articles, but what's a couple of billion here and there?)
I made a mistake in my first post. I should have said that the US is controlled by corrupt politicians, Wall Street, and the military industrial complex. That is why my hopes of pulling out of this spiral down are dismal. We lost true Democracy and capitolism. Ernest
With democracy, once people realize they can vote themselves benefits at the expense of others or at the expense of future generations (by borrowing), they'll do more of it. Borrowing is especially "easy" because everyone gets what they want in the short-term at the expense of a long-term that will be years or decades off.
With capitalism, businesses will seek every competitive advantage. There is nothing to stop them from working to craft regulatory and tax environments to be more favorable. It's not even capitalism. In any form of economic organization - communism, socialism, etc. - there will be those with levers of power who will work to make a situation more favorable to themselves.
And yet democracy and capitalism remains relatively better compared to the alternatives.
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