Minyanville overlooked my obviously brilliant response to Kevin Depew's "Five Things" today, so here it is, in all its glory:
I borrowed some signs of a compulsive debtor from the Debtor's Anonymous website, and tried to apply them to the way we do policy. As an exercise, you could ask these same questions about a business, an industry, or the global economy.
1. Being unclear about your financial situation. Not knowing account balances, monthly expenses, loan interest rates, fees, fines, or contractual obligations.
Yes. It's called "government accounting."
2. Frequently "borrowing" items such as books, pens, or small amounts of money from friends and others, and failing to return them.
Like our use of other people's militaries and other capabilities to "help" us with problems they don't much care about, like Iraq? Or how about our "war on drugs", in service of which we employ all sorts of other countries' capabilities and use endless arm twisting to force them to see things our way even when they prefer otherwise? (Look at how much effort we put into blocking recent attempts at decriminalization of low-level use in Mexico and Canada.) Or our insistance that other countries help the IRS, even though other countries don't expect the same from us (most of them don't tax citizens living abroad, so don't care). And of course we resent it when they begin to walk away and ignore our preferences.
3. Poor saving habits. Not planning for taxes, retirement or other not-recurring but predictable items, and then feeling surprised when they come due; a "live for today, don't worry about tomorrow" attitude."
Social Security, Medicare, Drug benefits, $60 trillion in future liabilities we have no idea how to pay for. Need I continue?
4. Compulsive shopping: Being unable to pass up a "good deal"; making impulsive purchases; leaving price tags on clothes so they can be returned; not using items you've purchased.
Congress primary activity. Bridges in Alaska. Mobile homes rotting in Arkansas because we decided after buying them that they were inappropriate for use in Louisiana. Repurchasing those same mobile homes after selling them to people for their private use because we never bothered to check on simple things like whether they were toxic. After all, wegave GE Capital a great opportunity to unload crappy inventorygot a great deal! Examples are endless.
5. Difficulty in meeting basic financial or personal obligations, and/or an inordinate sense of accomplishment when such obligations are met.
The ongoing bragging from some parties about actually having a one year surplus once during the Clinton administration is a classic example. Wow, once in fifty years we didn't add to our debt.
6. A different feeling when buying things on credit than when paying cash, a feeling of being in the club, of being accepted, of being grown up.
Not just a feeling of being in the club. There is a club! Actually several clubs, G-7 and the WTO being the most obvious.
7. Living in chaos and drama around money: Using one credit card to pay another; bouncing checks; always having a financial crisis to contend with.
The Federal budget. Failure to insulate Social Security (the old lockbox idea) so we can use it to fill in for other funds in the short term. Here in California, the annual budgetcomedystalemate.
8. A tendency to live on the edge: Living paycheck to paycheck; taking risks with health and car insurance coverage; writing checks hoping money will appear to cover them.
The core of "government accounting." Ongoing "emergency appropriations" rather than facing up to how expensive some of our choices are turning out to be and being honest about them."Government accounting" would send you to jail if you used it anywhere else, with the key issue being that in the "government accounting" world you can make $60 trillion in commitments, but don't have to record a $60 trillion liability. In this alternate universe, commitments don't become "real" until congress actually passes the budget for the year in which the money is spent. In the real world, the liability becomes "real" as soon as you make the commitment. If we required the government to account for its activities this way, it would be obvious to even the densest idiot that the US is effectively insolvent.
"Government accounting" is a smokescreen worse than anything anybody at Enron ever dreamed up, designed to make unsustainable levels of outstanding commitments appear to be managable.
9. Unwarranted inhibition and embarrassment in what should be a normal discussion of money.
Often resulting in endless dogmatic ranting rather than discussing (eg: Larry Kudlow) or lecturing at a kindergarten level (Suze Orman).
10. Overworking or underearning: Working extra hours to earn money to pay creditors; using time inefficiently; taking jobs below your skill and education level.
"Low unemployment"
11. An unwillingness to care for and value yourself: Living in self-imposed deprivation; denying your basic needs in order to pay your creditors.
Bridges, roads, airports, transit systems, levees, power grids, national parks, I could go on.
12. A feeling or hope that someone will take care of you if necessary, so that you won't really get into serious financial trouble, that there will always be someone you can turn to.
The Fed can issue all the debt it wants! China and Japan will always be willing to buy it! We're saved!
-btc
