by D. Sherman Okst
Look, I’m not an economist, I’m not a financial planner so don’t go out and sell your stocks based on what I said or am going to say. But I do follow the economy closely. I have only seen a handful of economists calling this thing what it really is -- an insolvency crisis.
The USA is in debt for about $10.8 trillion ($10,800,000,000,000.00.) We have earnings/GDP (Gross Domestic Product) of about $12 trillion pre meltdown. That GDP figure is about as cooked as Enron’s books. Clinton implemented the Boskin Commission Findings, which used Hedonics (Greek for feels good) to adjust GDP. They use a bogus deflation factor and imputations. Let’s talk imputations here, if you own a house they calculate what you would pay in rent and then add that rent figure to GDP, even though you don’t pay rent.
Basically, GDP is off by almost 40%.
Now you don’t have consumers, which account for 70% of GDP borrowing like they did. In 2008 consumers put 9 billion dollars on their credit cards to buy coffee at Starbucks.
Take all this away from GDP and I’d estimate you are down at about 6 trillion in GDP. Now lets look at off balance USA debt. Roughly, according to the book I.O.U.S.A. we have liabilities/obligations for Social Security, Medicare Parts A & D that amount to about $53,000,000,000,000.00 ($53 trillion).
Add all this up and we have about $65,000,000,000,000.00 and we “make” $6,000,000,000,000.00.
Those, to me, are Enron numbers.
So basically I see the insolvent giving money to the insolvent and I ask myself how on God’s earth is this going to work?
Something tells me it won’t work and that the next 10 or 20 years aren’t going to look like the past 10 or 20 years. I think this county will really need to pull together. I’m talking neighbor helping neighbor, county helping citizen and citizen helping county. I don’t see how paying more than a home is worth, or, will be worth, in taxes will help anyone.
One thing is certain: We aren’t in Kansas anymore, these are different times. And please, don’t look at the guy sitting in the car that is doing 120 mph and headed for a brick wall as a pessimist because he is yelling, “Swerve or slow down.” He isn’t the one driving, but we ALL need to be driving our Congressional leaders to realize, at the very least, that this is an insolvency crisis and the credit crisis is a symptom of insolvency and you have to treat the disease, not the symptom and giving the symptom what got it sick will only make things worse.
This is the last in a five-part series. Previous: Part 1, Part 2, Part 3, Part 4.
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D. Sherman Okst is an Augusta County resident who with his wife runs a small technology business. He reads extensively and studies the economy blogging as "Davos" at the Daily Digest, a column for Chris Martenson, which gets 1.5+ million reads a year. Sherman writes code, was a high school computer science teacher, and ex-airline captain with 15,000 hours and 18 years of service. He was a builder, managed a lumber yard and as a kid was a mate on a fishing boat. Sherman has also had work published in a few magazines.
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