Unfunded Liabilities

[phattonez]

This currently sits at $120 trillion. That is, $1 million PER CITIZEN. This never gets mentioned by the media. All we hear on the news is the national debt. This is the horrifying number, and it makes the US debt seem miniscule by comparison. Did you even know about this number. Why does the media ignore this perilous fact?

 

[OpportunityCost]

This currently sits at $120 trillion. That is, $1 million PER CITIZEN. This never gets mentioned by the media. All we hear on the news is the national debt. This is the horrifying number, and it makes the US debt seem miniscule by comparison. Did you even know about this number. Why does the media ignore this perilous fact?

Because Paul Ryan is the only one to propose a serious solution for it and they want Obama re-elected? Just guessing.

 

[phattonez]

Because Paul Ryan is the only one to propose a serious solution for it and they want Obama re-elected? Just guessing.

You think Paul Ryan's proposal is serious? Come back to me in 30 years when the debt reduction is supposed to happen.

 

[Rainman05]

Because Paul Ryan is the only one to propose a serious solution for it and they want Obama re-elected? Just guessing.

Dude, Paul Ryan is a chump. His plan reduced everything except military spending which is actually increased. He won't balance the budget, meaning you will still get in debt, until 10 years from now... and the way he will do it is by cutting benefits to veterans, old people, poor people, etc. The only cuts I can actually agree with is the defunding of several departments including federal education... giving the money back to the states.... Now I am not saying that the dems are doing a proper job, but if you want a real change, don't go for paul ryan plan... and whatever you do, don't go for the obama plan of more of the same.

 

[cpwill]

You think Paul Ryan's proposal is serious? Come back to me in 30 years when the debt reduction is supposed to happen.

You may not like his pace, but that does not make Ryan's plan not a serious one. It (probably) manages to avoid complete collapse a'la Greece, and is plausible. Being politically palatable is an important part of a plan being "serious" as well, and Ryan's is probably about as far as we can go right now.

 

[Cardinal Fang]

Greece? You may as well claim that the "Ryan Plan" (probably) manages to avoid stampedes of elephants through downtown Topeka. There is no threat at all of elephants stampeding through downtown Topeka, and there is no threat at all of the US turning into Greece. Or Zimbabwe. Protection against non-existent risk is not worthwhile.

Where risk very definitely does exist however is in the Ryan Plan. Capitalists should be out there today hawking Protection Against the Ryan Plan insurance policies. There would be plenty of good short-term money in that, though all the sponsoring companies might well go bust after 2022.

Whichever one of the five or six or whatever it is now versions of the Ryan Plan you want to look at, what it does is pull the rug out from under people. Mostly people in groups that don't typically vote Republican. In essence, the Ryan Plan is just a re-issue of the failed BushCo release of an Ownership Society. All that one really owns under such a system is MORE RISK. Risk is bad. Risk is something you want to hedge against. The Ryan Plan seeks to make that impossible. If health care costs in general rise faster than the CPI does, too bad. Everybody is on the hook for that. If your personal health care costs are suddenly higher than average, too bad. You're on the hook for that. If you are among the elderly who are disabled, too bad. You're on the hook no matter what.

What do people do when they are overwhelmed by being on Ryan's hook? Well, they can take out a loan. No wait, nobody but rich people can get a loan anymore. So, they can declare bankruptcy. No wait, we made that much harder to do as well. Okay, they can sell their homes if they have one. No wait, we just torpedoed home values also. People who get stuck on Ryan's hook are basically just plain screwed.

That isn't some accident or oversight. It is Ryan's deliberate intention that large numbers of people simply get screwed so that small numbers of people he likes better can save a few bucks. That pretty much sums up not just Ryan, but latter-day Republicans in general.

 

[Cardinal Fang]

Juist to sort of get back to the point of the thread, those who are white-as-a-sheet paranoid over the numbers associated with what are called unfunded liabilities are invited to go back 25-30 years into our past and see what the inflation-adjusted numbers for unfunded liabilities over the next 25-30 years were at that time. Might be illuminating.

If you're not really interested enough to do something like that, consider that a part of the unfunded liability that exists today has to do with pension benefits that someone in the year 2085 will be due to collect. Do you feel that you should cough up extra money today to assure that this 2085 liability is fully funded right now, or would you rather wait until this guy manages to get out of grade school, finishes off the rest of his education, and then ask him to start paying to cover any shortfall once he gets out into the real world and starts earnning an income?

 

[hikari]

The problem is the Ryan plan isn't very politically viable nor is it particularly good at actually paying back our debt.

Ask Americans the specifics on the mqjorty of the plan and you will find they are quite against it, we want more Pell grants, we want coverage for preexisting conditions, we want a strong military, etc

What I am getting at is I doubt there is the will in this country to impose real austerity measures here. People like to talk about cutting spending and taxes but when those things come into practice, the resistance to it will make congress immediately turn against it to keep themselves electable.

What we need are alternative means of funding things while being aggressive about efficiency in how we run government. This might mean nationalizing an industry that tends to be profitable, and running it with a profit Sharing model to incentivize employees, while the government takes it's cut.

Of course even if you don't like those ideas, at least they are different neither Ryan nor Obama have really proposed anything structurally radical only more or less of things we already have.

 

[cpwill]

Greece? You may as well claim that the "Ryan Plan" (probably) manages to avoid stampedes of elephants through downtown Topeka. There is no threat at all of elephants stampeding through downtown Topeka, and there is no threat at all of the US turning into Greece.

that's a good point. Greece has someone to bail them out and soften the blow.

 

[a351]

Not only does Greece's fate rest largely in the hands of a seemingly reluctant to act monetary union unlike the US, how the US and Greece are viewed by the Financial and International community is an apples to orangutan comparison.

 

[cpwill]

Not only does Greece's fate rest largely in the hands of a seemingly reluctant to act monetary union unlike the US, how the US and Greece are viewed by the Financial and International community is an apples to orangutan comparison.

thus far. but multiple large collapses make any asset into a depreciated class. All homes and mortgage backed securities suffered, not just the worst ones. In an era where sovereign debt is no longer seen as the same safety that it is today, US Soveriegn debt will not be sacrosanct.

 

[Napoleon]

You may not like his pace, but that does not make Ryan's plan not a serious one. It (probably) manages to avoid complete collapse a'la Greece, and is plausible. Being politically palatable is an important part of a plan being "serious" as well, and Ryan's is probably about as far as we can go right now.

Except that its effectiveness at actually reducing debt is not plausible. Never consider as serious plans which only reduce debt in the long term because they are based on the premise that the dollar amount of Congressional budgetary allocations will remain stagnant for the entire length of time it takes for debt reduction to occur. Problem is that the dollar amount of Congressional budgetary allocations changes on a yearly basis and have never been or ever will be stagnant for decades at a time.

 

[cpwill]

Except that its effectiveness at actually reducing debt is not plausible. Never consider as serious plans which only reduce debt in the long term because they are based on the premise that the dollar amount of Congressional budgetary allocations will remain stagnant for the entire length of time it takes for debt reduction to occur. Problem is that the dollar amount of Congressional budgetary allocations changes on a yearly basis and have never been or ever will be stagnant for decades at a time.

well, as I understand that, you can lay your worries to rest as he assumes increase in the raw dollar cost of all programs.

 

[Napoleon]

well, as I understand that, you can lay your worries to rest as he assumes increase in the raw dollar cost of all programs.

The Ryan plan only accounts for an increase in federal spending of $700 billion dollars over a period of 10 years or $70 billion per year. He and Romney have already scuttled that by promising to increase the DOD budget by, what turns out to be, $2.1 trillion over the next ten years.

 

[Cardinal Fang]

that's a good point. Greece has someone to bail them out and soften the blow.

Well, Greece has a tiny GDP and no sovereign currency, and they are left to play the victim in light of EU sloppiness in failing to establish any sort of stabilization facility for Euro users who encounter fiscal imbalances. Then at least until Sarkozy vanished, they had to deal with pompous overlords who dreaded the letters I-M-F but refused to shoulder the necessary responsibilities themselves. Those are differences as well. Real, live, actual differences. Not stupid propaganda site talking points.

 

[Cardinal Fang]

...how the US and Greece are viewed by the Financial and International community is an apples to orangutan comparison.

You mean it matters that we could pay off ALL of Greece's external debt using only a little more than 20% of the Social Security surplus???

 

[Neomalthusian]

1) Is there a such thing as too much US debt?
a) If yes, approximately how much would that be?
b) If no, then why don't we just double our debt every year, instead of only every 8 years?

 

[Cardinal Fang]

thus far. but multiple large collapses make any asset into a depreciated class. All homes and mortgage backed securities suffered, not just the worst ones.

No, that's just plain silly. During the credit crisis, all potential borrowers were seen as risky because the highly opaque nature of the systemic risk involved made it impossible to judge the ability of any given borrower to repay. The credit crisis however was an issue among financial institutions. The value of quality mortgages has never "suffered". The only suffering that has gone on has been by perfectly well qualified sub-prime and low-prime borrowers to whom credit has recently been denied.

In an era where sovereign debt is no longer seen as the same safety that it is today, US Soveriegn debt will not be sacrosanct.

Bunk. External debt is a claim upon the real goods and services of the economy that issues it. So long as the US continues to produce on the order of 22% of everything that is produced anywhere in the world, our debt will be very highly thought of.

 

[cpwill]

No, that's just plain silly. During the credit crisis, all potential borrowers were seen as risky because the highly opaque nature of the systemic risk involved made it impossible to judge the ability of any given borrower to repay. The credit crisis however was an issue among financial institutions. The value of quality mortgages has never "suffered".

what a fascinating claim. so you believe that all these falling housing prices and the preceding falling value of mortgage backed securities as an asset class never occurred?

Bunk. External debt is a claim upon the real goods and services of the economy that issues it.

No. External debt is a claim upon the currency that represents the goods and services of the economy that issues it. Devaluation of that currency is devaluation of the value of that security.

 

[cpwill]

Well, Greece has a tiny GDP

and a tiny debt and a tiny deficit. Hey! they must be doing swell!


oh, wait. the critical measurement here isn't raw debt, it's debt to GDP. :doh my bad. :roll:

and no sovereign currency

that is true. we've been able to print our way into buying us some time - they don't have that option, though they will again soon enough.

and they are left to play the victim in light of EU sloppiness in failing to establish any sort of stabilization facility for Euro users who encounter fiscal imbalances.

:lol: yeah, that would have gone over real well. when are we going to recognize that europeans have just as much a right to self-governance as we do? Hell, when is the EU going to recognize that?

 

[cpwill]

You mean it matters that we could pay off ALL of Greece's external debt using only a little more than 20% of the Social Security surplus???

the negative one?

 

[Cardinal Fang]

what a fascinating claim. so you believe that all these falling housing prices and the preceding falling value of mortgage backed securities as an asset class never occurred?

What a totally hollow reply. Neither of the things you report here occurred. Declines in home values were not remotely universal. Many mortgage-backed securities continue to perform just as well as they always have. Like most among the knowledge-challeged, you simply presume too much. Hence your irrational claim that All homes and mortgage backed securities suffered, not just the worst ones.

No. External debt is a claim upon the currency that represents the goods and services of the economy that issues it. Devaluation of that currency is devaluation of the value of that security.

So you concede the point and now recognize that debt is backed by GDP and that so long as the US produces some 22% of world GDP, then even in your imaginary Future World where sovereign debt is debased, that of the US will in fact continue to be famously sought after.

 

[Cardinal Fang]

and a tiny debt and a tiny deficit. Hey! they must be doing swell! oh, wait. the critical measurement here isn't raw debt, it's debt to GDP. :doh my bad. :roll:

Yes. your bad indeed. If debt-to-GDP were such a critical measure, Japan would be in considerably worse shape than Greece. A point that you simply fail to grasp is that Greece is an administrative problem, not a financial problem.

that is true. we've been able to print our way into buying us some time.

Some time in advance of what?

- they don't have that option, though they will again soon enough.

When does soon enouigh expire? At any point in any of our lifetimes?

yeah, that would have gone over real well. when are we going to recognize that europeans have just as much a right to self-governance as we do? Hell, when is the EU going to recognize that?

I think you missed the point again. The EU was recently forced to cobble together in haste and amidst "the crisis" the very stabilization faciltiy that it should have thought to set up at least a decade ago. They have lately had to expand the powers of the ECB as well. These were not Greek issues. All this lack of preparedness was an EU problem, plain and simple. Greece is merely singled out to pay a price for such short-sightedness.

 

[Cardinal Fang]

the negative one?

Hmmm. No SS surplus in your world? That's an even weirder place than I thought.

 

[cpwill]

Hmmm. No SS surplus in your world? That's an even weirder place than I thought.

yup. just me and the Congressional Budget Office out here on the planet Zarkon :roll: CBO: Social Security Now Officially Broke.