Broke, but not broken

Sometimes it's good to step way, way back and look at what's going on. In this case, let's zoom up to 30,000 feet and take a look at our economy. We keep hearing about all the recovery -- sure foreclosures, bankruptcies, and layoffs are skyrocketing, but nothing's perfect.

If individuals are still clearly suffering, who is leading this recovery, and with what resources? Banks are broke. Hundreds will likely go bankrupt this year. Most are engaging in "extend and pretend" by constantly postponing the day the have to admit many of their loans are in default.

For that matter, FDIC is broke. They are on the hook for up to $5.1 TRILLION. Ask me how much money they have set aside for that. Go ahead and ask me... Close to zero.

Businesses are broke. Tax receipts from businesses are down more than 90%.

The Treasury is broke. Remember this chart that shows tax receipts more or less steady, but spending exploding?

Social Security is far beyond broke. So is Medicare.

The Fed is essentially broke. They only have 6% reserves and hundreds of billions of dollars of toxic assets. If the toxic assets are worth 7% less than they are supposed to be worth, the Fed is upside down. Do you suppose toxic assets are worth at least 7% less than they were originally supposed to be?

Our government is printing money to loan itself money. I ask again, who is leading the "recovery" and with what resources? Printing presses and stacks of paper?

Am I missing something?

U.S. Government Revenue vs. Outlays


Is there something wrong here? Hmmm. So, our "unfunded liabilities" (money we owe because we promised) are in the $100 TRILLION range, yet we feel free to spend far, far more than we take in, and plan to year after year? Somehow, that doesn't seem smart. Or maybe it's so stupid it's smart? No, it's straight-up stupid. There's no way those numbers work.

There is one amusing thing on these. In the year 2000 it shows a surplus. If you remember, Clinton changed the accounting rules so that the shoebox of IOU's for Social Security counted against the deficit, conjuring up a phantom "surplus" for a few years. Kind of cute in a cheap card trick kind of way. Some people even report those "surpluses" as if they were real-life numbers, which is fun.