US ECONOMY SNAPSHOT Nov 4, 2010
First of all, I do want to be sure and have balance. The US economy is of course a function of Industry, Government and Unions, and often any one of those three could make it better or worse. While the recession has been bad, some companies such as Apple have excelled with $15 billion revenue and over $3 billion profit in quarter 3.
Google stock is also doing well. In my small city of Murrieta CA, for small business store vacancies still are high but less than 3 months ago. I consider that the great will of the American people to keep trying, and I for one love that.
STILL US FINANCIAL ISSUES
But given that, there still are some big US financial issues impeding progress or the overall health of the US. Here are some of the major issues that concern me.
US DEBT OUT OF CONTROL - at about $13.7 trillion in US debt, http://www.usdebtclock.org/ , it is starting to close in on total yearly GDP total US economy of about $14.6 trillion, and will likely pass it shortly. This is up $3 trillion since this same date in 2008 (you can set the debt clock to tell you this also). When I look in my wallet, I do not see the $3 trillion and I also wonder what the US got for it. Many of us in the US are not in favor of bailouts, but the first bailout was TARP which had at least some real reasons - at least for me. There was a run on the banks and the economy, and TARP was a loan and not a gift. My understanding is that all but $150 billion of this has been paid back, and hence is not the $3 trillion problem. When I look up where the Stimulus money went, it seems mostly to government agencies and not to the private sector. Each of us as taxpayers can decide what in bailouts they consider fair, and what is not. I was okay with TARP which were loans to stop a run on banks, but not okay with Stimulus which was money never to be returned that I did not see as fruitful.
US MONETIZING DEBT - This means the US buying its own debt by printing money. While this may eliminate the short term issue of the government shutting down, it is going on and will lead of course to inflation. That will make it easier for the US to pay off debt with China, but it will not make China nor Americans happy when their money is devalued. This article says we already are looking at 14% inflation due to money printing.
UNFUNDED LIABILITIES - We are used to hearing that Social Security and Medicare are unfunded. That would seem to be accurate. And now we added unfunded Public Health. I do know that some say Public Health makes money and is free, but I do not understand how giving free medical to 30 million people and hiring thousands of government workers is free. But there is another unfunded number that might be as large a concern - and that is unfunded government pensions (unions). I find few who want to address this "ugly baby", but some people tell us that it takes 22 firemen putting in pension money to pay for one retired, or that some public servants getting 70% to 100% pensions are effectively being given one or two million dollars apiece. Here are just two remarks from states. CA could be $500 billion in trouble due to this just that state alone, and Illinois $120 billion (pension plus medical) in debt due to this. Those are just two states. I have no figure for the total nationwide unfunded pension issue. Oh, the people reading this - you are getting 70% to 100% pensions no? And yes, I am well aware that my wife and I are not.