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Injin

"enron Accounting" Has Bankrupted America: U.s. Deficit Really $202 Trillion

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http://finance.yahoo.com/tech-ticker/%22enron-accounting%22-has-bankrupted-america-u.s.-deficit-really-202-trillion-kotlikoff-says-535354.html?tickers=udn,tlt,tbt,uup,TIP,^gspc,GLD

(Video at link)

The Congressional Budget Office (CBO) forecasts the U.S. budget deficit will hit $1.3 trillion this year. An astronomical figure, to be sure, but that’s lower than was projected in March. It’s also less than last year’s record $1.41 trillion deficit, which was close to 10% of GDP.

And, that's the good news.

As the deficit grows so does the national debt, which is currently more than $13.3 trillion, according to official figures.

But the situation is actually much, much worse, according to Boston University economics professor Laurence Kotlikoff.

“Forget the official debt,” he tells Aaron in this clip. The “real” deficit - including non-budgetary items like unfunded liabilities of Medicare, Medicaid, Social Security and the defense budget - is actually $202 trillion, the professor and author calculates; or 15 times the “official" numbers.

“Congress has engaged in Enron accounting,” says Kotlikoff, who recently penned an op-ed for Bloomberg entitled: The U.S. Is Bankrupt and We Don't Even Know It.

Yet, the debt market continues to have an insatiable appetite for U.S. Treasuries; heading into Monday's session, the yield on the 30-year Treasury bond (which moves in opposition to its price) was at its lowest level since April 2009.

Kotlikoff says that's because the market is focused on the "mole hill" of official debt. In time, the U.S. will have a major inflation problem to rival that of Germany's post World War I Weimar Republic, he predicts. “We have to think about the fact that unless the government gets its fiscal act in order we’re going to have the government printing lots and lots money to pay these enormous bills that are coming due over time.”

America is in need of major reform of the health-care, retirement, tax and financial system, Kotlikoff continues. “We need (to perform) heart surgery on this economy, not putting on more band-aids which is what we’ve been doing.”

Barring that, your hard-earned dollars will soon be worthless, he declares.

Captain Obvious also favours the LPB system.

http://www.google.co.uk/#hl=en&source=hp&q=enron+accounting++Kotlikoff&aq=0&aqi=g10&aql=&oq=&gs_rfai=&fp=388b2507e299203d

Edited by Injin

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Even David M. Walker (of I.O.U.S.A. fame and former U.S. Comptroller General) puts the figure at $61.9 trillion. From memory that's about 12 trillion more than when the film came out.

LINK

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ah the good old official figures, always watered down for public

keep them asleep, no need to worry them

empire is bankrupt, with deficit of that level there is no chance of recovery.

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One assumes though that 'cash is still king' & that this kind of news can be safely ignored for a while, as per usual, for all sorts of complicated reasons well beyond my ken?

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One assumes though that 'cash is still king' & that this kind of news can be safely ignored for a while, as per usual, for all sorts of complicated reasons well beyond my ken?

It can be safely ignored because the people involved usually go to every length to make the figures look as bad as possible, for sales reasons..

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Hold on if individuals can say that debt never existed in te first place, then what stops government from using the exact same method and in doing so destroy the banker and revert to the Stalin or Hitler type for a few years until order is restored?

I mean if you got rid of the debt burden wouldn't this remove a constraint to production?

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Hold on if individuals can say that debt never existed in te first place, then what stops government from using the exact same method and in doing so destroy the banker and revert to the Stalin or Hitler type for a few years until order is restored?

I mean if you got rid of the debt burden wouldn't this remove a constraint to production?

I've suggested how you would do this before - a straightforward debt jubilee would be extremely unfair, but printing/creating an equivalent amount of cash and handing it out to people *net of debt* could work, IF and only if interest rates were hiked at the same moment and strict limits on personal borrowing put in place.

I've yet to see any proposal that would get things back to 'normal' with less pain..

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Never sure how fair this type of analysis is.

If you add up all future projected expenditure then the debt is X.

But what if the economy grows at Y% or the tax contributions go up by Z%?

These massive debts have been building up since tax rates on the rich dropped - particularly in the US.

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america is in need of major reform of the health-care, retirement, tax and financial system

thank god we live in the uk

lol

I know what you mean. I know quite a few people personally who are not getting treatment under the NHS and being told to go privately if they want to be taken care of any time soon. Our NHS is broken and we are starting to see certain drugs being denied patients who really need them due to cost. The drug companies are like the banksters--milking the system for what they can get before it all collapses in a heap.

I also believe our pension system is busted--there is no money to pay pensions unless we print due to our estimated 5TR black hole (which some might say is more like 50TR).

IMO we are all in it together. Right in it.

Edited by Realistbear

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I know what you mean. I know quite a few people personally who are not getting treatment under the NHS and being told to go privately if they want to be taken care of any time soon. Our NHS is broken and we are starting to see certain drugs being denied patients who really need them due to cost. The drug companies are like the banksters--milking the system for what they can get before it all collapses in a heap.

I also believe our pension system is busted--there is no money to pay pensions unless we print due to our estimated 5TR black hole (which some might say is more like 50TR).

IMO we are all in it together. Right in it.

RB, is this one of the first signs of a flip flop from you?

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We are in the death throes of the exponential credit bubble.

All of us.

Add a dose of energy scarcity, a dash of natural disaster and a pinch of overpopulation and voila... oh christ I just shit myself.

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We are in the death throes of the exponential credit bubble.

All of us.

Add a dose of energy scarcity, a dash of natural disaster and a pinch of overpopulation and voila... oh christ I just shit myself.

Calm down dear. You'll probably be dead in another 40 years time anyway. Enjoy the show.

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I also believe our pension system is busted--there is no money to pay pensions unless we print due to our estimated 5TR black hole

Printing doesn't solve the problem.

The old people still need housing, feeding and clothing.

Unless you plan to turn them into soylent green that is.

Calm down dear. You'll probably be dead in another 40 years time anyway. Enjoy the show.

Speak for yourself, personally I plan to live forever.

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Printing doesn't solve the problem.

The old people still need housing, feeding and clothing.

Unless you plan to turn them into soylent green that is.

Who actually has that problem though?

Is ti ben Bernanke's problem or the old peoples'?

Speak for yourself, personally I plan to live forever.

Very wise.

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Printing doesn't solve the problem.

The old people still need housing, feeding and clothing.

Unless you plan to turn them into soylent green that is.

So? Old people do not make a good armed resistence and or forces for insurrection. They will be eskimo'd i.e. pushed out into the cold and the door shut on them.

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So? Old people do not make a good armed resistence and or forces for insurrection. They will be eskimo'd i.e. pushed out into the cold and the door shut on them.

They are actually mostly still in pretty good nick and can be used to supress wages further.

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They are actually mostly still in pretty good nick and can be used to supress wages further.

You go a bit vague about this on your blog though..... in that the hyperinflation in 2008 you predicted happened (still reading about the $700bn stimulus and now they are asking for $1.5 trn stimulus) what happens then?

I am implying from your blog we are heading for a Neuromancer type society, whereby the rich people live in gigantic self contained archologies and everybody else is left to find for themselves in a gigantic shanty town type arrangement.

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Never sure how fair this type of analysis is.

If you add up all future projected expenditure then the debt is X.

But what if the economy grows at Y% or the tax contributions go up by Z%?

These massive debts have been building up since tax rates on the rich dropped - particularly in the US.

Agreed. While I'm not denying that the US/UK are fiscally f*cked, these sorts of fantastical scare stories always tell us how much our liabilities are, based on the present value of future obligations, but neglect to tell us what our assets are, based on the present value of future tax receipts.

Edited by frugalboy

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This is roughly the equivalent of saying that I owe £250k for the consumption I will have in future years. Its b0ll0cks.

Agreed. While I'm not denying that the US/UK are fiscally f*cked, these sorts of fantastical scare stories always tell us how much our liabilities are, based on the present value of future obligations, but neglect to tell us what our assets are, based on the present value of future tax receipts.

The key is remembering that accrued pensions are liabilities in respect of the past, not future. The government has already had the benefit of those workers doing their jobs, but just deferred part of the payment until the people actually retire. Pensions liabilities are in respect of PAST consumption.

There is a difference between paying for tomorrow's hamburger out of tomorrow's wages, and paying for YESTERDAY's hamburger out of tomorrow's wages. That's why we are in such a mess!

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You go a bit vague about this on your blog though..... in that the hyperinflation in 2008 you predicted happened (still reading about the $700bn stimulus and now they are asking for $1.5 trn stimulus) what happens then?

I am implying from your blog we are heading for a Neuromancer type society, whereby the rich people live in gigantic self contained archologies and everybody else is left to find for themselves in a gigantic shanty town type arrangement.

Oh no.

They are going to die.

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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