Learn from the fall of Rome, US warned

Discussion in 'Business & Economics' started by kmguru, Aug 15, 2007.

  1. kmguru Staff Member

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    Learn from the fall of Rome, US warned

    By Jeremy Grant in Washington

    08/14/07 "FT" -- - - The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned.

    David Walker, comptroller general of the US, issued the unusually downbeat assessment of his country’s future in a report that lays out what he called “chilling long-term simulations”.

    These include “dramatic” tax rises, slashed government services and the large-scale dumping by foreign governments of holdings of US debt.

    Drawing parallels with the end of the Roman empire, Mr Walker warned there were “striking similarities” between America’s current situation and the factors that brought down Rome, including “declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government”.

    “Sound familiar?” Mr Walker said. “In my view, it’s time to learn from history and take steps to ensure the American Republic is the first to stand the test of time.”

    Mr Walker’s views carry weight because he is a non-partisan figure in charge of the Government Accountability Office, often described as the investigative arm of the US Congress.

    While most of its studies are commissioned by legislators, about 10 per cent – such as the one containing his latest warnings – are initiated by the comptroller general himself.

    In an interview with the Financial Times, Mr Walker said he had mentioned some of the issues before but now wanted to “turn up the volume”. Some of them were too sensitive for others in government to “have their name associated with”.

    “I’m trying to sound an alarm and issue a wake-up call,” he said. “As comptroller general I’ve got an ability to look longer-range and take on issues that others may be hesitant, and in many cases may not be in a position, to take on.

    “One of the concerns is obviously we are a great country but we face major sustainability challenges that we are not taking seriously enough,” said Mr Walker, who was appointed during the Clinton administration to the post, which carries a 15-year term.

    The fiscal imbalance meant the US was “on a path toward an explosion of debt”.
    “With the looming retirement of baby boomers, spiralling healthcare costs, plummeting savings rates and increasing reliance on foreign lenders, we face unprecedented fiscal risks,” said Mr Walker, a former senior executive at PwC auditing firm.

    Current US policy on education, energy, the environment, immigration and Iraq also was on an “unsustainable path”.
    “Our very prosperity is placing greater demands on our physical infrastructure. Billions of dollars will be needed to modernise everything from highways and airports to water and sewage systems. The recent bridge collapse in Minneapolis was a sobering wake-up call.”

    Mr Walker said he would offer to brief the would-be presidential candidates next spring.
    “They need to make fiscal responsibility and inter-generational equity one of their top priorities. If they do, I think we have a chance to turn this around but if they don’t, I think the risk of a serious crisis rises considerably”.

    Copyright The Financial Times Limited 2007
     
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Interesting, but nothing I have not posted here for a couple of years.

    I am remined of silly poem I knew as a youth:

    The boy stood on the burning deck,
    Eating peanuts by the peck, and
    as the flames licked 'round his chin,
    Still he poked the peanuts in!

    Translation:
    "boy" = US people
    "deck" = US economy
    "Eating peanuts" = consuming goods
    "flames" = signs of deterioration
    " 'round his chin" = became obious
    last line = continued to consume when he should save.
    (US saving rate has been negative for several years.)*

    BTW do others realize that the popular nursery rhyme: "Jack and Jill" is also about the economics of England and France a several hundred years ago?

    Jack = slang for English coin (as in "Union Jack" also)
    Jill = slang for French coin.
    Up at hill = inflation.
    Jack fell down = English coin value collapsed
    Broke his Crown = Government could not pay debts with collapsed Jack
    Jill came tumbling afterwards = French coins also fell as the depression spread.

    Not sure what "to fetch a pail of water" referes to, but it is obviously a reference as one does not find water at top of hill. - Perhaps that is the idea - namely that foolish adventures lead to disaster. (US's alcohol from corn program, Iraq war, GWB's tax changes, farm subsidies, suburban infrastructure, etc. come to my mind now.)
    ------------------------------
    *Now it will rapidly accelerate to much more negative value because:
    (1)Baby Boomers, who were in their peak earning years are switching to with drawing from their saving, collecting Social Security, spending from savings.
    (2)The value of Joe American's main saving account (his home's value) is dropping, - everywhere in US in "real values" and many places even in "nominal values."
    This is a major part of the reason (together with the US debts and rising interest on it) why I believe it is now too late / impossible to avoid the coming depression in EU and US.
     
    Last edited by a moderator: Aug 16, 2007
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