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Letters by a modern St. Ferdinand III about cults

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Plenty of cults exist - every cult has its 'religious dogma', its idols, its 'prophets', its 'science', its 'proof' and its intolerant liturgy of demands.  Cults everywhere:  Corona, 'The Science' or Scientism, Islam, the State, the cult of Gender Fascism, Marxism, Darwin and Evolution, Globaloneywarming, Changing Climate, Abortion...

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Thursday, March 27, 2008

Going bankrupt? Are Western states already there?

5 times GDP of future liabilities to pay off.

by StFerdIII

Government programs are expensive, usually unnecessary and fiscally dangerous. By any measure, every single Western state – even the richest – are technically close to bankrutpcy. Future obligtions outstrip future revenue streams. Welfare, pensions, medicine, and social guarantees by government to their clients or citizens, ensures that future liabilties will result in massive tax increases, more debt, or even bankruptcy. Thanks to the mommy state massive future tax and debt explosions are guaranteed.

This is the brave new world of compassionate, crying, multi-cult socialism. Spend until you can spend no more. Push all liabilities off the balance sheet [this is a crime in the private sector]. Erect programs, pensions, welfare schemes and government controlled industries as 'values; 'part of who we are'; our national identity etc. Then raise tax rates and smile that it is the duty of the citizen-slave to support their own values and identity. Buy votes and lock the citizen to the state as its ward and child. Then declare victory over 'insecurity'; 'poverty'; and hopelessness.

Remarkably macabre.

In the US it was recently announced that the Federal government's off the balance sheet liabilties between today and 2041 now total $53 TRILLION or about 4.5 times the size of the US economy. Over a 30 year period this means that the $53 Trillion in extra debt must be paid by a dwindling work-force.

Perhaps if we are fortunate the US will have an average level of 140 million workers, between now and 2041, to support the US domestic GDP of $13 Trillion. With 140 million working citizens, the costs of the $53 Trillion in unfunded liabilities works out to $408.000 of extra debt or tax per worker. This sum of $400.000 is an enormous obligation to pay over 30 years – it works out to an extra tax per working taxpayer of $11.700 per year. For many people this is impossible to pay. And that amount - $11.700 – of extra tax is the payment if we start NOW, which of course is not going to happen.

So what do you think will happen when we wait until 2030 to fix the social security-pension-unfunded social medicine liability? Instead of paying $11.700 in extra taxes per working slave, the number will be closer to $41.000. Do you have an extra $40.000 sitting around idle? Would you like to donate that to fixing government's unfunded welfare mess? Probably not.

In general in almost every Western state the call to higher taxes and the accumulation of more debt to 'save' our system and 'save the old, the poor, the disadvantaged' etc. will steadily mount between now and 2030. We are looking at increased taxation on capital, income and sales of between 40-100%. Such a taxation level will bankrupt the economy.

As Boston University professor Kotlikoff, who has analysed the disaster has commented; “This figure [future unfunded liabilities] is more than five times US GDP and almost twice the size of national wealth......One solution is an immediate and permanent doubling of personal and corporate income taxes. Another is an immediate and permanent two-thirds cut in Social Security and Medicare benefits. A third alternative, were it feasible, would be to immediately and permanently cut all federal discretionary spending by 143pc [per cent]."

So according to Professor Kotlikoff [article here] tax increases of between 50-100% on income taxes if implemented now, would help but not solve the unfunded liability crisis. Help but not solve. Can you believe that? Along with these huge tax increases the US would have to immediately cut current non-essential spending by 143% or eradicate in other words, almost all non-essential spending from its $3 Trillion US federal budget. Politicians - those who use other people's money to buy public office - are now expected or enjoined or begged, to reduce the Federal budget by 1/3 or more. To say that this is highly unlikely is to state only the obvious. Politicians don't cut spending, they simply increase taxes.

The Europeans and Canadians are in even worse shape than the Americans. The Americans have $60 Trillion dollars in net assets, and the richest per capita incomes and wealth in the West outside Norway [oil] and Switzerland. Canadian unfunded liabilities are close to $200.000 per tax paying slave – only 50 % of US levels but at income and asset levels 35% below that of American levels. That is to say the Canadian state is looking at real unfunded liabilities of $300.000 per person with a more limited way of paying for it since all taxes in Canada are at far higher levels [about 30%] than US levels. Government is therefore more constrained in Canada to raise taxes than they would be in the US.

In Europe absolute unfunded liability levels are even worse than in the US. The Europeans have close to double the US unfunded liability level. EU unfunded liability levels are already at 300% of GDP or about $33 Trillion dollars and growing. By 2041 these unfunded liabilities will be 2-3 times US levels or close to $100 Trillion in total obligations. Compared to the US, Europe has lower per capita GDP, far lower net incomes, fewer assets, less people working and no productivity. It is pretty clear that Europe has no hope in paying $100 Trillion by 2041 in extra liability payments.

Is the US already bankrupt? And if it is isn't Europe already there?

But no worries. Unfunded liabilities are tomorrow's problem. We need massive government programs, market dislocations and a 'caring' bureaucracy to ensure that our 'values' are not lost and that our 'identities' are not corrupted through not having enough government compassion to pass around. It should be interesting to see how many people will support these moronic ideas of marxism and socialism when they are handed a future tax bill. Socialised medicine, state pensions, the ridiculous pay roll and capital taxes they endure, these and other sundry taxes and fees will all need to escalate by 40-100%.

Will they still chatter about state enforced love and 'values' then?

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