CBS – “60 Minutes” – We Reached a Critical Point for the United States Economy.

Discussion in 'Economics' started by SouthAmerica, Oct 2, 2006.

  1. BCE

    BCE

    :D
     
    #11     Oct 2, 2006
  2. maxpi

    maxpi

    Captain Dale Dye called Iraq a "seventeen way goat screw" this morning. If they can ever put together a government there it will be a remarkable achievement.
     
    #12     Oct 2, 2006
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    Arnie: Give us a timeline. Anyone can go around saying the sky will fall. Lets get a concrete estimate of WHEN this will happen. Maybe you could enlighten us all and show us where this has happened in the past.


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    October 3, 2006

    SouthAmerica: Reply to Arnie

    I gave you a timeline – from 2006 to 2030 we are talking about 24 years.


    ................ Population............ Population
    Year …………. Aged 65 + ………...Aged 85 and Older

    2006……………….39.0………………………..5.3
    2007……………….40.4……………………....5.5
    2008 ………………41.8 ………….……….….5.7
    2009 ………………43.2 ……………………….5.9
    2010 ………………44.6 ……………………….6.1
    2011 ………………46.0 ……………………….6.3
    2012 ………………47.4 ……………………….6.5
    2013 ………………48.8 ……………………….6.7
    2014 ………………50.2 ……………………….6.9
    2015 ………………51.6 ……………………….7.1
    2016 ………………53.0 ……………………….7.3
    2017 ………………54.4 ……………………….7.5
    2018 ………………55.8 ……………………….7.7
    2019 ………………57.2 ……………………….7.9
    2020 ………………58.6 ……………………….8.1
    2021 ………………60.0 ……………………….8.3
    2022 ………………61.4 ……………………….8.5
    2023 ………………62.8 ……………………….8.7
    2024 ………………64.2 ……………………….8.9
    2025 ………………65.6 ……………………….9.1
    2026 ………………67.0 ……………………… 9.3
    2027 ………………68.4 ……………………….9.5
    2028 ………………69.8 …………………….…9.7
    2029 ………………71.2 ……………………….9.9
    2030 ………………72.6 ………………………10.1



    The above table gives you a concrete estimate of the number of people age 65 and plus that we can reasonable expect here in the United States from 2006 to 2030.

    I want to bring to your attention that these people are already here – they are your mother, your father, your grandparents, your relatives and friends – these are actual people living today in the United States.

    These numbers can be even higher if we have some major breakthroughs in medicine, in healthcare, and also if the United States absorbs a massive amount of older illegal immigrants from other countries in the coming years.

    What is happening here in the United States today regarding its population has never happened before. We don’t have a past history to be able to study the past. The United States never had so many old folks around. I want to remind you that the average age when people died in 1900 was around 47 years old.


    Population of the United States

    Year …….Millions of People

    1900 …………….76
    1910 …………….92
    1920……………106
    1930……………123
    1940……………132
    1950……………151
    1960……………179
    1970……………203
    1980……………227
    1990……………249
    2000……………281
    2006……………300



    Longivity

    People in the United States are living longer and healthier lives than ever before. Average life expectancy at birth rose from 47.3 in 1900 to 76.9 in 2000.

    When Ronald Reagan was president in the 1980’s the United States still could afford to play the deficit game and heavy expenditure on defense since the “time bomb” of the Baby Boomer generation still decades in the future.

    In 2006 the story is different the Baby Boomers are reaching age 60 and from now on they are going to have a tidal wave of people living in the United States over age 65.

    The sudden increase in longevity will create a large pool of people over 85 and older and these older folks are going to cost a fortune to the US government in the coming years in Social Security, Medicare, and so on…..


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    Regarding the current state of affairs in Iraq a book published in 2003 comes to mind: "After the Empire - The Breakdown of the American Order" by Emmanuel Todd (Columbia University Press - February 2004), this book was a best seller in Europe in 2003. Among a number of interesting facts that he mentions on his book; Mr. Todd gives an analysis of the Arab countries on the Middle East.

    If you read this book by Mr. Todd then you would have a better understanding of why Iraq is in the middle of a sectarian civil war today. Only FOOLS would think that they could stay in Iraq and baby-sit an Iraqi sectarian civil war – and finance the Iraq War on credit.


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    #13     Oct 3, 2006
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    October 4, 2006

    SouthAmerica: Today, October 4, 2006 the cable television channel “CNBC” on its program “Power Lunch” they did broadcast a live speech by Ben S. Bernanke the Federal Reserve Board Chairman at the Economic Club of Washington.

    And on his remarks Ben Bernanke has raised the “red flag” that I have been mentioning on this thread – the tidal wave of Baby Boomers that will need Social Security, Medicare, and Medicaid in the coming years.

    This “Tsunami” (a very large tidal wave) is not something that is going to happen some day in the future. The “Tsunami” is here and it is time to run for the hills.

    His speech was very good and “almost” to the point. Here is why:

    The real problem “is not” with the Social Security fund, and Ben Bernake knows that, and in my opinion the government should leave the Social Security fund alone.

    The real problem is with the “Medicare and Medicaid” funding. Here is were we have no way of knowing how much the old folks are going to cost the federal government in the future. Here is where the major problem lies and we need to develop new solutions for the Medicare and Medicaid problem.

    Ben Bernanke told us on his remarks about the savings rate, about pensions, about deficits, about everything that he could think of – while he discussed anything and everything including cutting benefits in Social Security, Medicare and Medicaid – but he ignored and did not say a word and nobody wants to talk about it, including Mr. Bernanke, about “the elephant standing in the room.”

    I understand why he can’t talk about “the elephant standing in the room” because of political reasons and that would be the last thing the Republican administration would expect from him as Fed Chairman.

    The truth is the Fed Chairman can’t talk in public that the United States can’t afford all this “defense expending” and wage wars around the world with an incredible price tag attached to it at a time when there is a major crisis in the horizon that will require a ton of money in the US.

    IN A NUTHSHELL: The United States will require a ton of money to be able to take care of this “Tsunami” of people aged 65 and older. And the United States can’t afford to spend all this money to keep the war in Iraq and in Afghanistan going on forever.

    The worst part is that the United States is not using even its own money to fight the war on Iraq – the United States is using money borrowed from foreign countries at the tune of $ 3 billion US dollars per day.

    I wonder for how long the Chinese, the Japan and other foreigners will continue lending money to the United States for the United States to wage war against other countries?

    This is not money that is being invested for the future – this is money that is being pissed away very fast. Iraq is a money pit and it does not matter how long the US stays in Iraq things just are not going to improve – Only “FOOLS” would keep poring money and invest into baby-sitting a nasty sectarian civil war.

    For the American people the choice is very clear: Use the money to take care of its ageing population at home or “piss the money” in fighting an illusionary war that at the end – it will turn out just like Vietnam and I already can picture seeing on television the last helicopter leaving a rooftop in Iraq with the last American personal that fought in the Iraq War.

    For all practical purposes the Iraq War has been lost, it has been very clear to me for a long time, and now it is just a matter of time for someone to have the guts to cut the US losses short and return the occupational forces home from Iraq.


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    #14     Oct 4, 2006
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    Bernanke: Baby Boomers Will Strain U.S.
    Wednesday October 4, 4:53 pm ET
    By Jeannine Aversa, AP Economics Writer
    AP – Associated Press
    Bernanke: Baby Boomers Retirement Will Place Massive Strains on U.S.


    WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke said Wednesday the burden from retiring baby boomers will strain the nation's budget and economy, unless Social Security and Medicare are revamped.

    "Reform of our unsustainable entitlement programs" should be a priority, Bernanke told the Economics Club of Washington. "The imperative to undertake reform earlier rather than later is great."

    It was his strongest warning yet about the potential perils and tough decisions that will confront the United States with the looming retirement of 78 million baby boomers. Bernanke did not recommend any specific changes, however, that Congress and the Bush administration could make to entitlement programs.

    President Bush once made his efforts to overhaul Social Security a centerpiece of his second-term agenda. But those efforts sputtered last year due to resistance from Republicans and Democrats alike.

    Bernanke said that as the population ages, the United States will have to choose among higher taxes, fewer dollars for other programs, lower spending on entitlement programs, and a sharply higher budget deficit -- or some combination of all those.

    Government spending for Social Security and Medicare alone will increase from about 7 percent of the U.S. economy to almost 13 percent by 2030, and to more than 15 percent by 2050, he said.

    "The fiscal consequences of these trends are large and unavoidable," Bernanke said.

    The government had a budget deficit of $319 billion last year, which the White House believes will fall to $296 billion this year.

    Shoring up the finances of Social Security and Medicare will make for difficult choices, Bernanke said.

    For instance, if the government tried to finance projected entitlement spending entirely by revenue increases, the taxes collected would have to rise from about 18 percent of the total size of the economy to about 24 percent in 2030, he said.

    If the government attempted a fix through spending cuts, spending for programs other than Social Security and Medicare would need to fall sharply -- the equivalent of "a budget cut of approximately $700 billion in nonentitlement spending," he said.

    With an aging population collecting Social Security and Medicare benefits, he said, it will "create severe fiscal challenges, as the cost of entitlement programs rises sharply."

    Joel Prakken, chairman of Macroeconomic Advisers, said he welcomed the Fed chief's message, even if it's not new.

    "I don't believe Bernanke is telling anybody in my profession something we don't know. The federal government has on the table essentially unsustainable promises to the aging population," Prakken said.

    Bernanke did not discuss the future path that interest rates might take in his speech or his brief remarks afterward.

    Fielding questions, Bernanke said a "substantial correction" was taking place in the housing market. He estimated the housing slowdown would trim about 1 percentage point off economic growth in the second half of this year.

    But the fallout from the cooler housing market should be cushioned by other positive factors, including good job creation and income growth, Bernanke added.

    The housing cooldown, after a five-year boom, holds important implications for consumer spending and overall economic activity. "How far will this correction go? It is very difficult to tell, is the honest answer," Bernanke said.

    The Federal Reserve's next meeting is scheduled for Oct. 24-25. Many economists believe the policymakers will leave rates unchanged for the third meeting in a row.

    With the economy slowing, the central bank in August decided to halt -- for the first time -- a two-year campaign to boost interest rates to fend off inflation. Policymakers suggested the cooling economy eventually would lessen inflation pressures.

    There has been relief on the inflation front as once-surging energy prices settled down. Gasoline prices, which topped $3 a gallon in summer, slid and now average $2.31 a gallon, the Energy Department said.

    Bernanke welcomed the recent drop in energy prices, but said that Fed policymakers will keep an eye on inflation, which "is still above what we would consider price stability."

    Bernanke also said he and his colleagues would try to improve the central bank's communications to Wall Street and Main Street. Bernanke, a respected economist who spent much of his professional life in academia, took over the Fed from longtime chairman Alan Greenspan in February.

    "It is a sobering experience," Bernanke said of his eight months on the job.


    Federal Reserve: http://www.federalreserve.gov/


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    #15     Oct 4, 2006