Financial fact, fallacy, or fantasy?

The Pres made a hell of a speech last night and I was happy at the emotion he seemed to convey as to his sincerity and purpose. We ALL want our country to escape this financial death trap.

The major concerns he enumerated were timely and focused: support of renewable energy, establishment of broadly-based universal healthcare, and expansion of the BEST education system money can buy. Where could we possibly go wrong with these?

His immediate goals are to stop the mortgage crisis, put millions of people back to work, and revitalize the engine of small business and corporate profitability. To hear him tell of his plan, the financial meltdown will quickly – maybe – come to an end, and it will only be a short while til we’re singing “bringin’ in the sheaves”.

What a marvelous future.

But wait a minute. I know I’m somewhat of a rude skeptic, but I have to ask – where will the resources to do all this come from? Government debt is currently running over $10T or so, to be around $15T at the end of the Pres’ first term (deficits halved!). Divide that by the 300 million or so folks (not taxpayers) in the country and that equals about $50K debt per person in about 4 years. Let’s see… for a family of 4 thats about $200K.

The Pres was clear to let us know that the end game for his “Recovery Plan” was to re-engage the banks so as to reignite the “lending” that has made this country great! And so yes, the debt load cited above will only grow larger if he gets his way. Is there a problem with that?

Will increased productivity take care of that debt? If you ignorantly said yes… then, how about the other $50T or so that our “obligations” to seniors and the medicare/medicaid crowd require? Do those people deserve a return on the retirement “investment” they have made for so many years? Where will that come from? Can the current recovery approach really be a (not the) solution?

Lets see. There are 2 ways to fund things… capital and debt. With capital, you take money from your “stash” and use it for whatever – assuming you just don’t print more worth-less-and-less money. With debt, you take “money” from your credit card or get a bank loan for the purchase. At the end of the transaction you either have paid in full (capital) or you owe in full (debt). Which is better? Which leaves you without further need to pay?

Now I have read a lot of arguments here and elsewhere as to the virtues of the debt-based financial system, the need to get the banks back to profligate lending, and the need to reestablish the ability of common folk to wield those credit cards/mortgages/car loans, etc., and go further into debt. HELL!!! The country needs it – even if you know you don’t!

What I don’t understand is why the “talking heads” who project such verbal sputum are not thinking of the common folk as they think of themselves… Jeez, I gotta pay off this debt I owe now, in a hurry, so I don’t go bankrupt when the crap hits the fan!

Of course, the same goes for our country… keep borrowing as a way of funding everything and assure our demise – or get our financial house in order by the time-honored tradition of digging ourselves out of debt before the crap hits the fan.