Choices and Consequences

An excellent analysis of the real choices and their concomitant costs facing the U.S. on budgetary matters. The article ends with a quote basically saying it appears no one will want to make these choices ...until they are forced . The bond vigilantes can appear at any time and they will essentially make the choices for us.

Choices Choices

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Losing Control

Social Security (one part of the 3 part sinkhole we are facing) may run deficits starting THIS year, not 4 or 5 years from now as many had projected. Moreover, SS will be totally broke in 2037 according to the analysis. This boils down to control- we still have control over how to deal with (or not deal with ) these problems. Fairly soon that control will reside in others hands.

Muddled Debt Math

I keep thinking about the ways folks understand numbers and the basic math behind them. The interest on the federal debt in 2010 totaled $413 billion! None of the proposals being floated presently (even the most aggressive by our own Sen Demint)come anywhere close to that figure. During the last 3 months alone the interest has been $197billion. Remember, the costs are at historically low interest levels. If the rates rise to "normal " levels, the interest charges rise exponentially. To actually "cut" spending enough to reduce the deficit you likely need more than a half TRILLION a year reduction in spending. Not sure anyone has that in mind.

Muni Bonds...then and now

Once upon a time we recommended individual tax free municipal bonds to clients. We gradually ceased doing so for several reasons. First, as this article points out, it is nearly impossible to obtain any reasonably accurate or timely financial statements from most of these entities. On top of that, the tendency over the past decade or more to "insure" bonds so that everything has the highest rating (even though the insurance has now mostly disappeared ). Finally, the lack of transparency on commissions/mark-ups make for a difficult trading environment tilted in favor of the brokers.

Crony "Capitalists"

This is a good article discussing the crony "capitalists" rummaging through our economy . I put "capitalists" in quotes because they destroy instead of create capital. It becomes difficult to determine where government ends and big business begins.

Health and Wealth

Health and Wealth are closely related. The language used in each area is somewhat unique and both areas suffer from the immediacy/pill popper syndrome. That is, we want a pill to ease the pain not a strategy to change longer term behavior. The key to each is having a trusted physician/advisor . Well, several studies that have come out since the passage of the Healthcare law estimate a physician shortage of up to 130,000 by 2025. This is a problem that can't be solved overnight given the 8-10 year schooling/training period for physicians. Big, big trouble ahead if we don't act quickly to reverse the trend.