A graphic illustration of why an economic collapse is inevitable:

[Pale Blue Dot]

From the New York Times:



According to wikipedia, there were about 116,011,000 households in the U.S. in 2006. That means that in 2007, Americans were personally in debt to the tune of $14,110,417,930,000 - 14 trillion dollars. Our national public debt as of this moment is $9,522,891,951,511. This that every household in this country owes somebody $203,716. The current household income? $48,201. The figures above don't even include corporate, and most importantly, banking debt. It's no coincidence that the current "crisis" is in the banking sector - the people who lend us money.

Thanks to the burst of the housing bubble and the massive increase in fuel prices, we are losing out ability to pay back our creditors. Unemployment is rising and our rates of pay are not keeping up with inflation. And here's the thing: this slowdown is worldwide. This means our creditors (mostly foreign governments) are also feeling the squeeze. Not only are they finding it more difficult to lend us money, they also are going to want back the money they've loaned to us.

For years Americans have been living as if we can have anything we want - more than that, we deserved anything we wanted. As people and as a nation we have been borrowing money like crazy to finance our desires. As any small-time crook knows, you can only borrow from the mob for so long before they want their money back. When the mob comes for us, we can't possibly pay them.

There is no solution to this crisis that's not going to be very painful. Taxes need to be raised, and we need to cut back severely on our consumption. These cutbacks are going to cause more layoffs and foreclosures.

Don't shoot the messenger. We are all to blame for this. Let's stop pretending that everything's going to be OK. Let's stop telling the fairy tale of the "American dream" and let's deal with this while we still have a tiny bit of control over how it will be dealt with.

[givemebackmycountry]

1. Nah, that's bullshit...

Haven't you been listening?

It's all in our heads, it's all psychological.

:sarcasm:

[Pale Blue Dot]

2. Oh yes, states owe a ton of money too.

New Jersey, whose median household income of $64,470 is second only to Maryland, is one of 29 states that ran short of revenue to balance this year's budget, up from three in 2006, the Center on Budget and Policy Priorities in Washington found. Lawmakers across the country, who previously sought to trim debt and cut taxes, are instead increasing borrowing as the slowest economy since 2001 erodes consumer spending and home values.

States will likely turn to bonds to fill gaps of more than $30 billion to balance budgets for 2009 amid reduced tax receipts, Standard & Poor's forecast. U.S. municipal bond sales may reach $470 billion this year, exceeding the record of $430 billion in 2007, JPMorgan Chase & Co. analysts predict.

``If he can't get it through, it's hard to see how someone else could,'' Clark Wagner, who oversees about $1.5 billion of municipal bonds at First Investors Management in New York, said of Corzine, a former co-chief executive officer at Goldman, Sachs & Co. ``Here's a guy who isn't really beholden to any political parties because he's independently wealthy and knows what needs to get done.''

Turning to Bonds

California Governor Arnold Schwarzenegger is looking to bridge a $17 billion budget gap by borrowing against future lottery profits. Illinois Governor Rod Blagojevich wants to issue bonds to plug a shortfall in pension-plan funding and cut spending on health care and education. Corzine plans to borrow for school construction, and officials in Arizona may too.

http://www.bloomberg.com/apps/news?pid=20601109&sid=a4rssheZuR1k&refer=exclusive

And let's not forget city, town and municipal budgets.

[Kip Humphrey]

3. Then there's the small matter of $ trillions of hedge funds/derivatives due to reset in the 3rd qtr.

:nuke: :nuke: :nuke: :nuke: :nuke:

[panader0]

4. In Saturdays NYT there are charts that compare this to other

economic bad times. This one doesn't look as bad as '73.
To me economic collapse means that people with a lot more money than I have won't be able to jet set around, buy big SUVs, expensive homes, and endless fancy gadgets. Those of us that live at the poverty level don't have far to fall.

[Pale Blue Dot]

5. We lived in a very different world in 1973.

Even adjusting for inflation, the amount of debt is not comparable, and the "global economy" was in its infancy them.

[Tierra_y_Libertad]

6. Unfortunately, there's that nasty ripple effect.

The rich folks that buy all that stuff, won't be buying. But, the people who make all that crap won't be working.

And, guess who the politicians are going to bail out?

[pretzel4gore]

14. cannibalism....after we eat the pets!

reagan wasn't elected in 1980- the media lied in support of the forces of reaction. 1980 was ONLY 6 years after nixon, a rightwing thug, was fired by the US, yet here a rightwing boor famous for sending cops into Berkely university to break up anti war protests, hired to replace peacemaker Jimmy Carter! People can believe anything they want, but the fact is there was no way for a reagan to win in 1980 unless most voters did not vote, and even then flipping the numbers whenever reagan was losing, giggle giggle nudge wink. And what did the big tough Americans do? They shrugged shoulders and went along with it. Hohum. More then a quarter century has passed since then, and the fact baldfaced criminals have power in the USA, use the power to defraud the commons by outright relentlessly lying in their pigmedia about everything, meanwhile siccing big tough americans on peasant farmers in one little beaten down 3rd world country after another, and end up with a huge personal debt (which most still have no idea about anyway) while corporate China's mercenery Blackwater is getting in legal position to round up 'terrorists' or child porn addicts, or drug dealers or people who express rebelliousness toward police...

[Bigmack]

17. Screw "eat the pets"!

My dog and my family are gonna do just fine.

I would never resort to actually cannibalize a Repub. (Jaysuss... did you ever clean one of those things! Yuck!)

They'd be fine for uses like crab bait or garden fertilizer, tho.

[natrat]

19. my god not affording skyrocketing food prices and starving seems like a ways to fall

[indepat]

7. Can't really deal with this as long as America is spending as much for war as the rest of the world

combined and mostly borrowing from other countries to do so. The sheer fiscal madness commenced with the Gipper's voodoo economics was continued by GHWB and by junior with reckless abandon. The impact of these profligate fiscal policies has been exacerbated by Greenspan's reckless monetary policies which created multiple bubbles, the first leading to a crash in the NASDAQ, and now the housing market. No soft landing is in the offing. :D

[hfojvt]

8. I don't think that is accurate

Is that gross debt, or net debt? People have 401Ks and IRA accounts and equity in their homes and other personal goods. Comparing total household debt to household savings per year is not apples to oranges. It's more like apples to concrete blocks. Again, household debt compared to annual income is not necessarily a meaningful figure. The interest on $225,000 of debt at 7% is only $15,750. Add in 150 a month for payment on principle and the total payment cost is only $17,550, which is only about 1/3 of household income.

By the way, if, god forbid, the entire financial system goes blooey, both your debt and my savings are wiped out. Who wins? I don't think it's me.

[Pale Blue Dot]

9. A couple of things:

First, you talk about "The interest on $225,000 of debt at 7%." I don't know what world you're living in, but most Americans are paying significantly more than 7% in interest.

Second, in my brief search, I could not find any figures on 401K savings rates (you're right that they're not included in the figures for our national savings), however, consumers have been losing equity in both their homes AND their 401Ks thanks to the financial crisis and the drop in the stock market.

[elehhhhna]

12. He's talking mortgage debt, and 7% is probably accurate.

[hfojvt]

13. it depends on the debt

I have had credit cards lend me money at 3.9% until the debt was paid off. I have bought a laptop computer with 0% financing. Some people buy new cars that way while others pay 10% on used car loans, and some pay 5,000% on payday loans. Much of the debt is probably mortgage debt at 5.5% or lower. I am not sure what student loans run for these days.

For another example the IRS records that the value of IRAs held by Americans in 2004 was $3.299 trillion.
http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html#_grp4

Not all IRA money is in the stock market. Mine, perhaps foolishly, is in CDs. I am not sure if my house has lost value. Considering that I paid $35,000 for it in November 2001 and it was recently assessed at $50,000 or so by the city, it can 'lose' 30% of its current value and still put me at break-even. The same is doubtless true of many people's IRAs and 401Ks.

One of the big ways my IRA has lost alot of value is more hidden. When I put $2,000 into my IRA in the year 2000, it would have bought 2,000 gallons of gas or 4,000 loaves of bread, or over 1,000 gallons of milk. Now that same $2,000 will only buy 500 gallons of gas or 2,000 loaves of bread or 500 gallons of milk. It has lost a lot of value.

But at the same time, inflation helps those with debt because they borrowed 2,000 gallons of gasoline and are only paying back 500.

[elehhhhna]

10. 14T divided by 5 million campanies in the US would be 2.8 million per company

14 110 417 930 000 / 5 000 000 = 2 822 083.59

[Popol Vuh]

11. Stop Whining

:sarcasm:

[Fire Walk With Me]

15. Why spend ruinously, for years, on an invasion not required? To purposely destroy the US economy

and to then profit financially and in terms of social power/superstructure re-invention/replacement.

Then allow global warming to take its toll, to further this trend

They are predators. They are eating us. Witness the social and financial trends and extrapolate.

Don't worry; we'll make great pets. Or, Obama will be able to wave a magic wand and make this all go away, make them all stop and just go away.

Yep.

Edit: 9/11 was an attempt to tip the economy into disaster. They've been kicking the economy in the weak spots ever since.

Edit 2: Perhaps they have raised oil prices in order to force the results of such an extended stranglehold on the economy, not merely to profit financially. If you consider the application of power to produce results, to damage something, everything that they at minimum are allowing and at worst, actively doing, makes perfect sense. They're destroying America for sadistic fun and profit. This is a power struggle, clear and simple.

[flamingdem]

16. Why are we all to blame for this?

Live like I could have anything I wanted??? No one I know bought into that concept.

[Hannah Bell]

18. This is bullshit.

On personal debt - I have none, & plenty like me.

If joe flipper bought too much house, it's not my debt. If joe mortgage loaned him too much $, not my debt. If both go under, the debt is extinguished, but the property remains, at whatever real value. Let the mortgage co./bank sell it for what they can get & make up the difference with the commissions & fees they took for originating bad loans & their execs' inflated salaries.

The sky-is-falling hype is psychological warfare to prime you for austerity as they cut public services & privatize more to make YOU bail out the corps that perpetuated the fraud in the first place.

On public debt: nearly 1/2 is social security debt, which, if it actually needs to be repaid (& so far SS performance indicates it won't need to be, that we'll just continue being overtaxed on SS & generating surplus for the general budget, see bruce webb's blog for info), will come due incrementally. Second, rescinding Bush's tax cuts would pay for the nut.

The real assets remain in place. The labor is ready to work to create wealth. The rest is a complicated shell game designed to transfer wealth upward, as is the "you all owe hundreds of thousands!!!!!" hype.

[Popol Vuh]

20. Our Main Problem: Our Monetary System

Since all of our money is created on the basis of debt and within that debt there is only the principle amount to payback the debt. And since in order to pay on the interest of that debt we have to borrow more, etc. There will never be a time where we'll get out of this suffocating debt. That is the simple fact of our monetary system. Add to that the inflationary problem inherent with fractional reserve banking and how it transfers wealth from the many to the very few at the top.

The only answer that is not just a temporary band-aid is to scrap the federal reserve act and enact a monetary system based on GNP & population. No not a gold standard because the bankers own most of that and it'll only be trading one monopoly for another one and it won't be long before we'll be in the same boat.

Money needs to represent a fixed value of the goods & services and increase only at a rate that matches GNP and population growth. If we do that I guarantee you that not only will there be no debt, but, there will be no need for income taxes since 100% of our income taxes goes to pay on the interest of that debt in the first place.

This is one thing I have to say that I agree with Ron Paul on. We need to run out of town the federal reserve and start printing United States Treasury notes on the basis described above.





Edit: Worth the time to watch: http://video.google.com/videoplay?docid=-9050474362583451279

[Kansas Wyatt]

22. Didn't JFK decide the U.S. needed to start printing U.S. Treasury notes again?

Was JFK really outraged at how the U.S. taxpayer was being ripped off by the Federal Reserve?

I recall seeing something about him making a decision to start printing Treasury notes again, right before he was assassinated... Along with pulling troops out of Vietnam.

[soothsayer]

23. Yup. "Money as Debt" is an interesting flick.

[ProdigalJunkMail]

21. please consider the worth of the dollar

when looking at graphs like this. the dollar is worth CRAP now...lowest value ever. that doesn't help the savings rate...but the ballooning debt becomes of less and less impact as the dollar loses value. i mean, Zimbabwe just started printing $100billion banknotes...and no, that isn't a mistake...$100billion notes! owing a few trillion in their world is like owing less than $100 here...for now.



sP

[soothsayer]

24. How can we be $14 trillion in debt when there's only around $829 billion in currency in circulation?

I think that means we can never, ever pay off these debts. Not with cash anyway.