Peace...
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A.) Balanced Federal Budget by General accounting rules used in Business, which takes into account the unfunded liabilities of Medicaid and Social Security. This can only manifest through a massive, and I do mean massive, increase in taxes and or reduction in government spending. Either scenario will result in a major drop in GDP.
Not only will it result in a drop in GDP, any attempt at a massive across the board tax increase will result in a civil war in this country. The political ideology and approaches to solving this countries dillema are shifting further and further apart. There are many who see the TARP funding and the Stimulus Bills as a huge liability waiting to happen. This is probably a good idea in theory, but it is totally unworkable in the present climate.
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B.) A balancing of the nation’s current account (otherwise known at balance of trade). We need to equalize trade so that the difference between imports and exports are not skewed. The US has lost the comparative advantage in many sectors or industries as a result of our higher wages (standard of living made possible by good paying jobs). This trade deficit will likely only be reduced significantly when equilibrium is created between US wages and global wages. What this really means is that US wages must take a big reduction going forward as a trend, which, by the way, makes it harder to achieve item “A”.
Exactly..Man do you know how many people would try to off someone who talking about reducing the wages of the working class, while increasing their taxes?
The trade deficit is irreparable..There is no way to close this gap. The only way would be to suspend trade and require more domestic trading. But..This too is far fetched..
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C.) The savings rate of Americans needs to rise from .05% to about 10%.
This probably wouldnt hurt, however, I would advise that they quicly convert any savings they have into gold. You cannot trust the value of the dollar on any given day.
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E.) Homes need to continue to decline to the level where people with a median income can afford a median priced home at 25% of their net pay (monthly mortgage).
This is happening, however, how do you think this would impact those who are already in jumbo loans? If I owe $600k on my home, and the value goes down to $300k or less, why would I continue to pay?
If those in large loans begin to think like this and forsake thier credit to save their money over the long run, we will see a protracted collapse in the banking and real estate industry.
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F.) The Stock Market should be around 6,000 based upon Price/Earnings ratios and dividend yields
These are just a few of the major things that the US needs to do as our economies problem right now is insolvency. These metrics are what are necessary for a healthy economy, in regards to balance sheets and stabilization. The problem is that you cannot get to those numbers without a massive reduction in our economy. Our economy is economically obese and unhealthy. It’s a culture where status is associated with size…..so the bigger we are the more stature we have. It’s a sign of status. However, it’s mostly fat and not muscle and the nation’s heart, arteries and vital organs are under tremendous stress from the weight. The only solution is to get rid of the fat and slim down to a size that does not stress our vital organs and health. It would be like one of us going to the doctor and the doctor telling us that we need to lose 150 lbs or we won’t live very much longer. However, the hunger pains, a side effect of the SOLUTION, are a price we are not willing to bear. Instead, counter intuitively, we seek to return to the same diet that caused our obesity. We see the problem as being THE HUNGER and not the OBESITY. Consequently, we try to treat the side effects of the solution (which is hunger), with more of the problem (food), because it makes us feel better in the short run.
I know this, you cannot force an obese person onto a diet without having a serious fight on your hand. Food is an addiction just as a life style is an addiction. People, many of them, would be willing to die before they see thier social status substantially diminished. I see many people leaving the USA for other economys which can sustain the lifestyle they are used to. I think we are at the dawn of a very significant shift in where people live on this planet...No one is going to willfully go lean, not unless that are forced to..
Whirling Moat