Let’s Prognosticate

May 15, 2008 | 71 comments
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Gas prices. Food prices. Credit crisis. Recession. Iraq. Iran.

Business as usual or the beginning of major changes for the American way of life?

(My vote: a ‘normal recession,’ which means that some people will be in for a world of hurt but many people won’t feel a thing.)

Social security and Medicaid/care funding.

Solvable problems or pretty much the end of the world as we know it?

(My vote: we’re in deep with no obvious way out. I have no idea what will happen except that it won’t be pretty.)

Your votes?

71 Responses to Let’s Prognosticate

  1. Josh on May 15, 2008 at 6:09 pm

    I think it’s going to be a normal recession as well. it’s impossible for any economy to always be on the upswing. One very simple reason why gas prices are rising is because the dollar is weakening. Food prices are rising because the cost to transport them from the farms to the markets are rising as well because of the aforementioned rising gas price and because again the dollar is weakening.

    As for social security I think the only solution would be to start having more babies because there are not enough workers to support everyone who needs social security.

  2. kevinf on May 15, 2008 at 6:21 pm

    Julie, the weakening dollar is a big factor. Wealthy foreign investments no longer park in US dollars, but increasingly in oil trades, which is considered as fungible as any financial investment, and is going up faster than the stock market these days. That’s a bigger factor in oil prices than corporate greed.

    Mild recession is my vote, but I can’t help but see all the rising prices for food, energy, fuel, etc, and really believe the government’s inflation figures that were announced yesterday. Something in the mix hasn’t caught up yet, because I’m paying a lot more for just about anything these days.

    However, economic balance is tricky, and the stock market, with even more people involved either in direct investments or through 401K or retirement plans, is becoming more and more emotionally driven, making the swings more extreme. The number of daily 100 point swings in the Dow really seems to have risen exponentially over the last couple of years. And fear can tip the balance.

  3. Adam Greenwood on May 15, 2008 at 6:23 pm

    Domestically: normal to mild recession.

    Foreign affairs: remains distant from most people’s lives. American position not fundamentally altered no matter the outcome.

    Social Security, Medicare: big problems, badly, badly exacerbated by demographic trends, but solvable in advance (and only in advance). Political will to push through the solutions is doubtful however.

    Having more kids will help in a long while, but it doesn’t really solve anything for awhile because everyone who will matter in the workforce in 18 years is already born. And kids are actually an economic drag until they mature.

  4. kevinf on May 15, 2008 at 6:28 pm

    I didn’t weigh in on Social Security and Medicare.

    Social Security, despite many of the claims, does not go into the negative (ie, more withdrawals than deposits) on the trust fund for a few more years, and even at projected trends, doesn’t run out till 2040 or later, according to my liberal friends at NPR. The new Medicare prescription drug program, however, is almost totally unfunded, and a looming crisis.

    I agree with Adam (!) about the lack of will to push through a solution at present.

  5. Adam Greenwood on May 15, 2008 at 6:32 pm

    Social Security, despite many of the claims, does not go into the negative (ie, more withdrawals than deposits) on the trust fund for a few more years, and even at projected trends, doesn’t run out till 2040 or later, according to my liberal friends at NPR

    As I understand it (correct me if I’m wrong) the few-more-years date is the only one that matters. The Trust Fund is illusory. Social Security is just as unfunded as Medicare, so both will be drags on the budget, though the severe problems are still down the road.

  6. JimD on May 15, 2008 at 6:45 pm

    I don’t mean to get overly political, but it seems to me that when Clinton wanted to overhaul Social Security everyone agreed that reform was needed immediately. When Bush wanted to overhaul Social Security, suddenly we decided that it wasn’t really such a pressing matter.

    Is there a reason for this? Or am I just hyper-sensitive to the “mainstream liberal press”?

  7. Josh on May 15, 2008 at 6:54 pm

    I guess many on the Left were alarmed that Bush wanted to privatize Social Security while Clinton and Al Gore wanted to keep it in a “lockbox”

  8. Rick on May 15, 2008 at 6:54 pm

    I predict a long recession that starts shallow but gets progressively worse until we\’re finally forced to get real about our energy situation. High gas prices are primarily due to the fact that we\’re running out of cheap oil. We need to do things differently. I\’m bearish on the 2010s, but bullish on the 2020s. That\’s how long it will take to emerge from the age of oil. Energy independence for the US means winning the war on terror, securing the homeland, reducing the deficit, saving the environment, and ensuring that our children inhabit a peaceful, beautiful world all in one. Energy policy should dwarf all other political issues this fall.

  9. Ardis Parshall on May 15, 2008 at 6:59 pm

    Rerun of the ’70s, when all these same issues were causing the same angst, and I suspect we’ll survive them the same way — adapt to higher prices, and rant and rave about the need to develop alternative energies and save Social Security (and then do nothing about either). There is always the possibility that THIS will be the time for an energy breakthrough, or for the final collapse of Social Security, but I bet not. Not that I’m cynical or anything. No, ma’am.

  10. Doc on May 15, 2008 at 7:02 pm

    #1. A greater depression than the great depression leading to the collapse of western civilization as we know it, perhaps leading to a fourth world war.

    #2. The collapse of the government and breakup into tribal units and nuclear families like in the Book of Mormon, so we can actually care for our elderly ourselves.

    But then again, I’ve been a little blue lately so perhaps that is affecting my judgement.

  11. Bob on May 15, 2008 at 7:06 pm

    I see America less and less in control of what happens in the world and inside itself. It is going to get the level playing field it has been demanding. I see a downhill glide, I just don’t know the angle.
    Social Security will not be solved by more workers. Either the rich will pay a bigger share, or your parents will be moving in with you.

  12. kevinf on May 15, 2008 at 7:19 pm

    Not directly related to either question, but an interesting comment about our prospects for the future, to which both questions relate. My wife’s principal at her junior high said the thing that keeps him awake at night is that the top 5% of students academically that graduate in China this year, outnumber all students graduating this year in the US. Says something about our future economically, I suspect.

  13. Chris Bigelow on May 15, 2008 at 7:22 pm

    Personally I’ve felt a lot of fears that this year’s combination of events and forces does signal the beginning of a noticeably pronounced downward trend for America. I mean, you have to admit that there are more long-term troubling trends coming to a head at the same time than usual. It feels different from other recessions I’ve seen in my 41 years, deeper and more complex, almost a perfect storm. I can’t even hold all the elements in my head at one time: infrastructure crumbling, massive populations in China and India competing more aggressively for resources, climate concerns, immoral legislation on gay marriage, the mortgage and housing crisis, consumer debt and waste, out-of-control inflation of oil and health care, the fall of the dollar, the social and cultural and moral changes continually being wrought by and through the Internet, etc. etc. Even all the Mormonism in the news so far this century has felt really different to what I’ve been accustomed to growing up in the Church, further evidence to me that we’ve entered a new phase of some kind, advanced to the next level of this video game of the last days. (The whole FLDS thing is a wonderful parry by the Adversary, by the way.)

    Personally, I have a growing sense that America has already peaked economically and socially and culturally and geopolitically. But I don’t imagine that it will be a steady downward decline from here. We’ll hit plateaus, and hopefully we’ll still enjoy temporary upturns at times. Maybe we’ll even get through this particular shadow and come out OK for now on the other end, but if nothing else it should be a wakeup call for how fast things can change. One more thing on our plate right now, such as a nationwide trucker’s strike or another big 9-11 type of terrorist attack, and things could really collapse. Everything’s so tied together globally now in such a complex way that I can begin to see how the whole world could go down all together at once, rather than one civilization falling on one side of the planet while another new one arises on the other side. I’m talking about going down not just economically but also socially and culturally and morally. I can see how the planet could eventually really NEED the Second Coming, at a point when there simply isn’t any hope left for humans to manage themselves effectively. Hopefully not for several more generations!

    As for me, I’m spending 10% of my tax stimulus on food storage and the rest on a trip to Disneyland…

  14. Rick on May 15, 2008 at 7:25 pm

    the top 5% of students academically that graduate in China this year, outnumber all students graduating this year in the US

    Only scary if you see the Chinese as competitors instead of potential collaborators. This planet needs as many smart people as possible.

  15. queuno on May 15, 2008 at 7:26 pm

    There’s a good excerpt of Fahreed Zakaria’s new book here: http://www.fareedzakaria.com/articles/newsweek/051208.html

    “The Post-American World”

    It basically says that the US is still the most influential player, but that it will seek some challenges to its authority. It needs to learn to adjust its thinking.

    He also shoots some holes in the engineering graduate numbers. India and China count mechanics and repairmen as engineering graduates. Per capita, the US still graduates more engineers than anywhere else in the world. Zakaria’s ideas are a mix of both left- and right-wing (he’s in favor of drastically cutting corporate taxes, yet calls for more liberal policies on immigration).

  16. queuno on May 15, 2008 at 7:29 pm

    Only scary if you see the Chinese as competitors instead of potential collaborators. This planet needs as many smart people as possible.

    I work in outsourcing, a component of which is offshoring. I see nothing to fear from collaboration with other smart people in other countries. Something like 50% of Silicon Valley startups have an immigrant in a founding role (another statistic from Zakaria’s link in #15).

  17. Thomas Parkin on May 15, 2008 at 7:33 pm

    Long and increasingly deep recession. The housing / equity boom poured so much cash into the economy. That pretty much rescued us from any lingering effects of the 2001 recession brought on by the Nasdaq crash. It’s hard to see antying bringing that kind of money back into the economy – at least for now.

    It’s all good – whatever reins in our sense of entitlement, our ludicrous self-involvement and our ahistorical view of reality has got to be seen as having a silver lining.

    ~

  18. Bob on May 15, 2008 at 7:34 pm

    #8: It’s not that we have been dependent on foreign oil. It’s they are no longer dependent on us. If the USA is going to be “independent”. it will be with 4 cylinder cars and 1500 sq. ft. homes. ( with your parents in them). This model of living now found though out the industrial world.

  19. queuno on May 15, 2008 at 7:39 pm

    breakup into tribal units and nuclear families like in the Book of Mormon

    What if I don’t want to live near my family units?

    4 cylinder cars and 1500 sq. ft. homes

    Really, I’m quite OK with both of these…

  20. Josh on May 15, 2008 at 7:42 pm

    How much space do human beings need to live, anyway? I guess it’s all about the need for space in privacy. When gas was cheap, people moved to the suburbs and were willing to put up with the commute to work. I guess it’d be impossible now for there to be a migration back to the cities.

  21. Julie M. Smith on May 15, 2008 at 7:46 pm

    I don’t think a reverse migration is impossible but a major factor mitigating against it is that most people want the good schools of the suburbs.

  22. Josh on May 15, 2008 at 7:54 pm

    That’s true. And also I think that, in the case of Chicago anyway, the crime rate in the cities are higher than they are in the suburbs.

  23. queuno on May 15, 2008 at 8:00 pm

    I don’t think a reverse migration is impossible but a major factor mitigating against it is that most people want the good schools of the suburbs.

    sssh. Don’t tell the people over at mormonmentality that. Because, you know, the NYC schools are better than suburbia any day…

  24. Raymond Takashi Swenson on May 15, 2008 at 9:08 pm

    The Democrats are so tied up in their constituencies that they cannot act rationally about energy or Social Security or the environment. And the Republicans who have spent time in power want to be loved by the people who already love the Democrats, and lack any confidence in their ability to explain to voters why they should not place their particular interest group above all else, that they are useless.

    The economy will continue trending down as energy becomes more and more costly. That will be exacerbated by a new set of regulations by government to “control greenhouse gases” which will establish central control over the economy in the name of protecting the polar bears. Like all centrally planned economies, the US will tank.

    In the meantime, the Chinese, having realized that the only way to have a powerful government is to have a rich government, and the only way to a rich government is a rich people, will dominate the world economically and militarily within 20 years. They will establish a permanent base on the moon, mine Helium 3 to create real fusion electric generators, and be the creditors of the world. Japan and Korea will be client states.

    As to Iraq, the Democrats will eventually have their way and pull the US out of Iraq before the locals can sustain control on their own. Iraq will dissolve into chaos, with the Shiite South and the Kudish North declaring independence and fighting for control of oil fields. Turkey will invade Kurdistan and Iran will be invited to come into Shia-stan. 5 million Iraqis will claim asylum as refugees in the US, doubling our Muslim population, and creating an internal terrorism problem among the 1% of them who will be disaffected and mad at the US.

    Iran will build a nuclear arsenal, and nuclear bombs will flatten Tel Aviv and the Jewish part of Jerusalem. The US will then have to take in 5 million Jewish refugees as Israel ceases to exist. Extremists among the Israelis will carry on a terrorism campaign against the extremists among the Iraqi refugees.

  25. Don Murphy on May 15, 2008 at 9:12 pm

    I agree with #13 and the perfect storm idea. It has been misty and dreary for some time now. We are starting to see some light rain.

    Its all about the people. The appetites of the Boomer, X and Y generations have and are producing people that, for the most part have no will to address problems created by… us. Worse, most have no concept of responsibility and would be appalled if anyone suggested we should be the ones to handle it. Thus stalling action on the entitlements and energy policies for the forseeable future is perfectly acceptable to most in these demographics. This amazing lack of vision will ensure that we go straight into the heart of the storm.

    To mix a metaphor, we now have millions willing to fiddle while Rome, er, New Orleans floods.

  26. Dan on May 15, 2008 at 9:32 pm

    Julie,

    Gas prices. Food prices. Credit crisis. Recession. Iraq. Iran.

    Gas prices will continue to go up. There is some talk in the business world that Wall Street futures markets bear some blame for the rising costs of oil, and I can see where that is coming from. There is a lot of money to be made in the futures market predicting higher oil prices, which in turn feeds the self-fulfilling prophecy.

    Food prices will also go up more, causing lots of starvation and riots and revolutions. Yeah the future is looking fun. :)

    We’re only at the end of the first act of the credit crisis. We’ve got about two more acts to go. Hold on to your hats, and don’t try to sell your houses for about a year.

    We’re in a recession.

    Iraq…well, I think most of y’all know my views about Iraq. If Obama wins in November, we might see some good news about Iraq. If McCain wins, we’ll see more war. Your choice, America.

    Iran. Well, once again, if Obama wins, we’ll see progress vis-a-vis Iran. If McCain wins, well he said it himself: “bomb bomb bomb bomb bomb Iran.” You can’t get any clearer than that about his views.

    Social security and Medicaid/care funding

    If there is a will, there is a way. You know, I have seen numbers that the amount of money that we would need to spend to “save” Social Security is only a little more than what we’re spending on Iraq. Huh….we’re very willing to put $500 billion dollars on a credit card for our children to pay so that we go destroy Iraq, but we’re unwilling to put the same amount on a credit card to ensure that our senior citizens have a safety net when they retire.

    The priorities of those on the right have truly befuddled me.

  27. Mark B. on May 15, 2008 at 9:55 pm

    Reverse migration to the cities as the suburbs become increasingly poor–who wants that 4,000 sq. ft. albatross one hour from the city center anyway?

    McMansions will become the new tenements, with three or four families in each.

    Air conditioning? Do you really need it when electricity is $1/kw/hr?

    Central heat? Global warming will reduce the need, and expensive fuels will make us all find ways to lower the thermostat.

    Social security will crash and burn, or the intention of the New Dealers who foisted that ponzi scheme on the nation will be turned on its head and two major changes will occur: benefits will be means tested, so those who have saved for retirement won’t get any benefits, and the retirement age will rise to 75.

  28. Thomas Parkin on May 15, 2008 at 9:58 pm

    #24.

    I was talking to my bishop here a few weeks ago, and had to forward some of my comments as ‘more gloom and doom from Bro Parkin.’ In the future, Raymond, I’ll remember you in comment #24 and recall to myself that I’m a doggoned sunbeam of hope.

    ~

  29. Bob on May 15, 2008 at 10:22 pm

    #24: Raymond, I think you are a little too dark. We will maybe hit a flat spot, but so will China. ( see Japan ). Growth comes with it own problems. Iraq will likely fall apart. But maybe that’s for it’s best (?).
    Energy may cost more, but humility, technology, conservation, etc., will offset a lot of that,
    Frankly , I think our day of taking in millions of refugees is over.

  30. Bob on May 15, 2008 at 10:45 pm

    #27: What’s this ‘Inner city” people keep talking about?? We don’t have one in LA. What few houses there are, already have 14 people living in them. Are the people of Las Vegas going to move from their suburbs to The Strip?

  31. Adam Greenwood on May 15, 2008 at 10:45 pm

    My wife’s principal at her junior high said the thing that keeps him awake at night is that the top 5% of students academically that graduate in China this year, outnumber all students graduating this year in the US

    Can that really be right? The population of the US is 300 million. The population of China is 1.1 billion. There are 4x as many mainland Chinese as there are Americans. But this principal is saying that there are 20x as many Chinese students graduating as there are American students. Maybe China has an enormous youth bulge, but I doubt its that big.

  32. Julie M. Smith on May 15, 2008 at 10:55 pm

    “Maybe China has an enormous youth bulge”

    I would have thought just the opposite with the one-child policy. Anyone have any numbers?

  33. Bob on May 15, 2008 at 11:03 pm

    #32: LAUS graduated 17 this year alone.

  34. Adam Greenwood on May 15, 2008 at 11:07 pm

    Here’s it claimed that China is in a dramatic bulge in the 15-29 age bracket, with numbers dropping off quickly for those who are younger:

    http://demographymatters.blogspot.com/2008/03/chinas-inflation-and-labour-shortage.html

    If I’m reading the graph right (scroll down) this year there are about 125 million mainland Chinese in the 15-29 age bracket, which is 10% of the Chinese population. 1/20th of that figure is 6 million, which is 2% of the US population.

  35. Joseph D. Walch on May 15, 2008 at 11:27 pm

    Just to clarify, there is no recession. The word ‘recession’ is an economic term with a specific definition. We are definitly NOT in a recession. The media has really hammered the recession zeitgiest into the public, but facts are stubborn things.

  36. MikeInWeHo on May 16, 2008 at 1:07 am

    re: 24

    You are now my favorite commenter, Raymond. Great stuff. But those are going to have to be mighty small nuclear bombs to “flatten…..the Jewish part of Jerusalem.”

  37. Bob on May 16, 2008 at 1:13 am

    #35: In all kindness. MY FACTS are:I lost $100.000 on my house, and I am paying close to $4.00 a gallon on gas. For me…it’s a recession.

  38. Nathan Bunker on May 16, 2008 at 9:48 am

    I think we’re in the 4th turning: http://www.fourthturning.com/

  39. James McMurray on May 16, 2008 at 10:42 am

    #20 \”I guess it’d be impossible now for there to be a migration back to the cities.\”

    You\’re way behind on this one…it\’s already happened in the strongest metro areas in the country (as evidenced by the recent post on momronmentality) and will continue to become more established in just about every metro area. Repeated studies have shown that anywhere from 1/3 to 1/2 of the market actually prefer an alternative to suburbia. Outside of a few metros, the supply is nowhere close to this – eventually this imbalance will sort itself out.

    What will the end result be? Some (but not all) suburbs will remain viable, while parts (but not everywhere) of the central cities will evolve to the point that even young families with children will have a decent urban alternative to the suburban lifestyle. This also has potentially profound implications on energy consumption and our energy-based foreign policies…

    For an interesting read on this shift, see http://www.theatlantic.com/doc/200803/subprime

  40. StillConfused on May 16, 2008 at 11:08 am

    I hear lots of doom and gloom talk but the practical effects for me aren’t that great. My retirement stock portfolio is a little lower… but it is prone to rise and falls. My house didn’t decrease in value because of home improvement projects, but even if it did, that really only impacts me if I am selling the property (which I am not). I view all economic cycles as a potential opportunity. For instance, if stocks are very low, now would be a good time to buy. If house prices are depressed, time to pick up a rental property. Now the fuel prices… well we are all hurt by that to some extent… especially the price of diesel. But if it gets high enough, maybe politicians will finally open up drilling areas in US properties. Social security and medicare are a disaster. I find the government often too incompetent to even widen a street properly… I sure as heck don’t want them handling my retirement funds or my medical care. I wish those of us who wanted to could simply opt out of those programs and handle them ourselves. Somehow the human race survived for many many years without the government providing these mandatory services.

  41. paula on May 16, 2008 at 11:16 am

    Social Security and Medicare are a disaster? Any evidence for that? I’m very glad they are there. They’ve certainly saved the elderly people in my family from a totally poverty-stricken old age. They were blue collar workers, in Utah, and never made enough to save much. I suppose, StillConfused, that they should have been wiser and saved enough to pay for their own heart problems?

  42. Researcher on May 16, 2008 at 11:52 am

    Paula, the last Social Security Statement (that yearly green and black paper) that we received said:

    In 2017 we will begin paying more in benefits than we collect in taxes. Without changes, by 2041 the Social Security Trust Fund will be exhausted* [*These estimates are baed on the intermediate assumptions from the Social Security Trustees’ Annual Report to the Congress.] and there will be enough money to pay only about 75 cents for each dollar of scheduled benefits.

    Sounds like a potential future disaster.

    Talking about potential disasters, I cringe every time I drive across certain interstate bridges. I wish there were some other way to get into our large nearby East Coast city.

    With the high gas prices, it costs us $8 per trip to church now. Most weeks we have two trips to church, some weeks three, so with gas prices what they are we’re spending almost $900 a year just to get to church. Sounds like a luxury. We can afford it; not everyone can.

    Relocating into the city is not a viable alternative since my husband’s work is located in one of the suburban townships. Plus the crime, the constant noise, etc. It’s not a place for sensitive people. I always relax a lot when we come home after staying in the city for any length of time. I’m starting into Jeffersonian theory here, so I’ll end with this:

    I think our governments will remain virtuous for many centuries as long as they are chiefly agricultural; and this will be as long as there shall be vacant lands in any part of America. When they get piled upon one another in large cities as in Europe, they will become corrupt as in Europe.” –Thomas Jefferson to James Madison, 1787

  43. bbell on May 16, 2008 at 11:55 am

    My take,

    Economy: We are in a cyclical downturn…every 6-10 years there is a downturnaround, gas will eventually go down maybe not to $1.25 but it will go down. Commodities always rise and fall

    Iraq: Will eventually work itself out. The surge has worked and eventually violence will wind down.

    Iran: Probable US or Isreali military strikes in future on Nuke facilities.

    Entitlement programs: Probable tax increases, means testing, retirement age raising. If not then runs out of cash. There is no trust fund. Its an illusion. The gov has been using the surplus SS money for decades for the general budget.

  44. Nathan Bunker on May 16, 2008 at 12:38 pm

    I don’t know the future, but I’m pretty sure it will be nothing like the last 20 years. Listening to 80 year-olds is probably the best thing to do at this point. Times like these make me very thankful to be a member of the church.

  45. Last Lemming on May 16, 2008 at 12:57 pm

    Gas prices. Food prices. Credit crisis. Recession. Iraq. Iran.

    Business as usual or the beginning of major changes for the American way of life?

    Gas prices will not return to old levels. The higher energy go, the more competitive renewable sources become in the market place. Eventually, they will become cost effective and a new way of life will be ushered in.

    Food prices will stabilize sooner. The credit crisis will play itself out by the end of this year and housing prices should stabilize by the end of 2009.

    Social security and Medicaid/care funding

    People are debating two different problems with respect to Social Security. One is the trust fund problem, the other is the overall budget problem. The trust fund problem is that benefits must be paid out of the trust fund and it will not have sufficient assets to pay mandated benefits after some point in the 2040s. From then on, only about 75% of mandated benefits could be paid. This would be painful for many, but it is not the end of the world and it does not mean that Social Security will go out of business. It will still be around, just writing smaller checks. Also, everybody in Washington knows that this will eventually be fixed with a combination of tax increases and formal benefit cuts. We are just waiting for somebody with the political courage to get it done.

    The budget problem is much more imminent. Since the mid 80s, the trust fund has been bringing in more money than it sends out. It then lends the excess to the general fund, which means more money can be spent from the general fund without raising taxes or borrowing more from the Chinese. Soon, that flow will be reversed. The general fund will no longer be able to borrow that money from the trust fund, so in order to spend the same amount of money, we will either have to raise taxes or borrow more from other lenders (to date, the Central Bank of China has played the biggest role). There are obvious drawbacks to both options.

    Medicare cannot be saved in its current form. The tax increases wold just be too large. Eventually, it will become a defined contribution program with the government contributing a fixed amount toward each senior citizens private insurance policy. Other reforms will also be necessary to ensure that insurance companies are willing to sell everybody a policy.

  46. kristine N on May 16, 2008 at 3:36 pm

    LL–I hope you’re right about renewable sources becoming more cost effective until they overtake petroleum in importance, but I think we’re going to burn every drop of oil regardless.

  47. Bob on May 16, 2008 at 3:45 pm

    #45: Medicare and Social Security are not ” Budget Problems”. They are human needs that must be addressed. The idea that people will work until 75 is silly. Very few are capable of this. Even if they were, it would only double the number of unemployed at 20. Now, the Military should be cut by 2/3. since there is no one to fight. The money we are now spending in the Middle East, is going into the National Debt. We will fix this as we have always done. Cut the value of the $ in half, so we pay off the debt with ,50 dollars.

  48. Sara R on May 16, 2008 at 4:38 pm

    On Social Security and Medicare, here is a link to a video of David Walker, former head of the GAO, being interviewed by 60 Minutes. He lays out the problem pretty clearly. Medicare is 5 times bigger problem than Social Security. That Medicare prescription drug benefit passed a couple of years ago is a huge unfunded problem. Medical expenses keep growing and growing at a much higher pace than inflation, and stopping that is going to cause tough choices, like not giving quintuple bypass surgeries to 85 year olds.

  49. Bob on May 16, 2008 at 6:29 pm

    #48: Sara, I am 63, on Social Security, and at 65-on Medicare. I am ready to take my cuts. But I am not going alone! I am going to take the fat medical industry with me if I can. My wife is an RN, (lucky for me). I worked a career paying medical bills at an insurance company. THE SICK AND THE ELDERLY ARE NOT THE PROBLEM! It’s the cost of their care and drugs. Other counties do this much cheaper, and it’s not clear the care is less. What I didn’t like about Mr. Walker’s video, was he didn’t talk about this.

  50. Joseph D. Walch on May 16, 2008 at 9:43 pm

    Bob,

    Re: your #37, the most expensive commodity in the economy is ignorance. I say that respectfully of course, but if average Americas had some minimal understanding of the economy then we wouldn’t be so far deep into this mess; and that goes far beyond stupid decisions to kill the goose and take out nearly all the equity of their homes to pay for consumable goods and services like vacations, cars, etc. It’s no wonder that people’s homes decrease in value by more than $100,000. I don’t feel very sorry for those people in California or Las Vegas who saw their homes increase 1500% in the last 20 years only to be hooting and howeling about how they lost that extra 200% gain last year. As the younger generation would say: boo freakin’ hoo. I live in Texas on the other hand, and my home hasn’t lost it’s value, and continues to increase it’s value. I’m lucky I live here, of course, but with a 30 year mortgage, these ups and downs are inconsequential.

    Let me give you an idea of how things are with health care (since I work in the field). There are costs to do business. Most doctors would like to treat any patient regardless of their financial situation. Medicare/medicid don’t even cover the costs of business. Those two programs constitute the majority of the health care market. When you have price control on the majority of the market you are going to see massive inflationary pressures on the free part of the market to cover the costs and satisfy the high demand/limited supply. It was true with the Soviet Russia’s black market and it’s true with private health care in America (except here we’re talking about surgeries and drugs instead of meat and gasoline). Some people say that the government should just take over health care. If you would like to see how that would work then just look at the VA system. Go visit Walter Reed and you’ll get a taste of what that would be like. You’ll get your drugs, but not any kind of drug that has been developed in the last 15 years and you’ll have to mail-order it a month or two in advance in 3 month increments; no pharmacies.

  51. Sarah on May 16, 2008 at 11:24 pm

    Six months ago, I was reasonably certain that I’d never find a permanent job, that my degree was worth nothing, and that it’d be 2015 before my credit would be “repaired” (and only in the sense that most of my debts would have fallen off by then.) Today things are lots better, I’m about to get my first credit card in eight years — and thanks to working for a public employer, I’m not even in Social Security anymore (irony.) And in a few weeks I’ll be moving from ~20 miles away from work to ~2 miles, allowing me to take the bus. Heck, it’s local taxes on gasoline that pay my salary now. So for me things are, ahem, looking up.

    But for the world at large:

    — Gas will stabilize, but probably not for a year or two, and probably somewhere between $2.25 and $3.50. We’ll get down below $2.00 a gallon again, and probably sooner than any of us think, but I think the new normal will be about a dollar more than it was. Lots and lots of people will have made permanent changes (ranging from moving closer to work, to telecommuting, to closing down their gas station) by then. I remember, sometime in 1986, seeing abandoned gas stations with prices stuck at $.87, and wondering how anyone could possibly have made money at that price (I think prices were around $1.20 at the time.) But, in January of 2002, I bought gas for $.99. So who knows.

    — We’ll go to war with Iran and/or North Korea at some point. We’ll probably end out in some weird war with China (the way we were with the USSR) but no one will call it that. Heck, I think if we do go to war with North Korea it’ll be the way Cuba was in the 1960s.

    — Credit won’t ever go back to how things were before the 1960s (consumer credit basically didn’t exist, revolving credit didn’t exist, etc.) but I bet we’ll get to the point where teenagers and college students with credit cards will seem as stupid as letting five-year-olds drive cars, and we’ll get there before everyone has given up on Social Security.

    — Speaking of Social Security: we’ll either quit it with the central planning and entitlements, or it’ll be a disaster. I hope the Baby Boomers will be heavily outnumbered by younger generations before we get to the point where the decision has to be followed through on.

    — It’s not a recession now, but that matters in the exact same way that the storm we had in March wasn’t really a blizzard because the wind didn’t stay over 30mph for a long enough stretch of time: at the end of the day, we still couldn’t see and the snow was piled higher than a baguette is long. We’ll have at least two or three real recessions before I’m old enough to retire, and more highs and lows in the economy that don’t get nifty names. This is why my shiny new deferred compensation plan is heavily diversified, and why I won’t be monitoring my portfolio on a daily basis.

    — Food prices were too low in some ways and artificially high in others. We’ll adapt, and anyway, we’re still at less than half the level we were at at the turn of the last century (as compared with median incomes.)

    I think that nearly all of these sorts of questions sound much more impressive at the moment than they will later on. When I was a little girl people sang about famines in Africa; my grandfathers were both forced to leave school at the age of 12 (or thereabouts) to feed their families. It’s like people yammering about Latino immigrants not adapting to American life fast enough: no one remembers all the Yiddish-language newspapers and how upset people got over parochial schools in the 19th century. Thinking that this is the best (or worst) of all times is a favorite human sport; I’ve read all kinds of literature from the 1930s and 1940s bemoaning the fact that the highs of the Victorian era have long since faded, and all the early Church fathers were pretty sure the end of the world would be happening any day now. But in the 1920s people talked about how Evolution and Progress and the rest of it were evidence that this was the greatest of all times and civilizations. In the 1990s it was all “Wow, look at us, things are going up, etc.,” and now it isn’t — earlier chatter about “The End of War” or the perfectibility of human societies has similarly faded.

    Of course having “perspective” means you get to lounge about and enjoy watching movies and worry about whether you’re getting enough Vitamin D and paying far less attention to CNN.com, so you can see why I like to cling to this particular strategy. ^_^

  52. The Eggcentric on May 16, 2008 at 11:50 pm

    The recession is a figment of the MSM’s imagination. Bad news sells. The small company I work for has spent upwards of $10 million in the last year and a half on a large expansion project. Each order of new equipment is delayed because of backlogs at the manufacturers, both here in the U.S. and abroad (Germany, Italy, Canada, etc.).

    The credit crisis is the fault of the banks – Wall Street CEOs should lose their shirts for what happened – and idiotic borrowers who got in over their heads thinking they could ride a never-ending wave into real estate riches.

    The housing crisis was exacerbated by investors chasing returns all over the map. When the stock market started to slow, they threw their money at homes and land. Now that housing is tanking, they’re throwing their money at the commodities markets – see food and gas prices. In the Phoenix metro area there were entire city blocks of homes purchased by investors which sat vacant for upwards of 18 months while the investors saw their nest eggs getting ready to hatch.

    It’s for these reasons that I think the bubble that is food and gas prices will eventually pop – I’m personally of the opinion that speculation in food commodities should be outlawed.

  53. It's Not Me on May 18, 2008 at 9:43 am

    The sad thing is that our high councilor, who works at a government facility, mentioned that they discard millions of dollars worth of inventory because they do not want to “inventory” it. There is probably more government waste than we can imagine.

  54. Mormon Paleo on May 18, 2008 at 9:04 pm

    As a libertarian, my perspective is that government intervention economically (i.e. the Federal Reserve) and abroad (Iraq, Iran, and hundreds of other countries with hundreds of thousands of American troops all told) is leading to an increasing number of problems as the level of intervention increases.

    Unfortunately, we keep looking to government to solve the problems it is responsible for. And so it is a self-perpetuating problem. All of the problems (or nearly all) mentioned here can be tied back to government intervention.

    The x-factor is that we do not know how innovative and adaptable the market (individuals acting freely) really is. It hasn’t really been stretched to the breaking point yet.

    The future doesn’t look good. But we can’t see the kinetics. Will the end come in years or decades or generations? Certainly there will be some recovery in the near-term. The world’s not going to collapse tomorrow.

    And prophets are constantly trying to keep us optimistic, despite the realities and the signs.

  55. Bob on May 18, 2008 at 11:12 pm

    #53: We would all like to be like to be libertarian, but everything has to have a government. So the goal has to be good government, but maybe not too much. Markets are fine, as long as the parties are of equal strength. When one of them get too strong, it will just take what it wants, or destroy the other.

  56. Martin James on May 19, 2008 at 12:03 pm

    Social security and Medicare can/(will) be “fixed” by a combination of increasing the age at full eligibility and increasing copayments/premiums for medical coverage. Currently full income benefits are available at age 67 for those born in 1960 or later and Medicare Part B premiums are much greater for those with very high incomes.

    Full benefits will move to age 70 and Medicare eligibility will be reduced to age 62 but with a much greater premium. That way it will be sold as something of a benefit improvement but with an actuarial adjustment ages less than 65.

    With regard to the trust fund, it is correctly pointed out that the trust fund is just government debt. However, if one is going to argue that those bonds are worthless, then one has to admit that the government debt is less than reported also because those bonds count in the national debt calculation.

    Another source of future tax funds that people don’t often consider is all of the 401(k) and IRA holdings of the baby boom generation. These balances (and there will be trillions of dollars worth) have not been taxed but they will be taxed as they are withdrawn for retirement income.

    Finally you often hear that Health care spending is 16% of GDP and growing. Keep in mind that as long as there is economic growth, we can reach, say 33% of GDP for health dollars by spending one-third of NEW GROWTH. We’d still have 2/3rds of growth left over for other goods.

    As for gas and food prices they have been so cheap for so long there has been no strong economic incentive to develop renewable sources of energy. If the developing countries are ever to get to our level of energy consumption a renewable source of energy will likely be required. The sun provides way more energy than we currently use, its just figuring out how to capture it cheaply that’s the problem. (For example, if we bioengineered our skin to perform direct photosynthesis, the food price problem goes away. Hey, the future is futuristic.)

    Back to China and India. Its interesting how few people say what a big problem China is for the Swedes, or Finns or the Swiss or even the Kuwaitis or Saudis. These small countries all seem to have prosperous populations despite all those Chinese high school graduates. I remember reading an interview with Solzhenitsyn where he pointed out what an unfortunate corrupting force superpower status was on a nation’s culture and what a fortunate thing it would be for any country to be rid of that burden.

  57. Bob on May 19, 2008 at 7:08 pm

    #55: I can fix it all now! Just give me 90% senior discounts on everything, I will call it fair.
    Martin, most of the people I know over 60, are wondering how they will be able to work until 65. A lot can’t even make it that far. Bless those who can work until 70 or 75, ( but not if they are making $200.000 or more, tax them). So a higher age will not be the answered. If they are on Medicare and living on SS, you can’t up the cost of Medicare, or lower the benefits either, the money is not there. The ‘fat’ is in the Medical industry. It must be rebuilt, so profit is not a draw.

  58. Julie M. Smith on May 19, 2008 at 7:16 pm

    “if we bioengineered our skin to perform direct photosynthesis”

    Holy cow.

  59. Sean on May 19, 2008 at 7:59 pm

    #56: “It must be rebuilt, so profit is not a draw.”

    Bob, it doesn’t sound to me like you would like to be a libertarian!

    I see a long-term trend toward relatively simpler lifestyles in the US. On the whole, the US (both households and the government) has been borrowing and spending. That can only last so long without some serious inflation (none of this single digit stuff).

    As for Medicaid/Medicare/Social Security, the answers are difficult to forecast because they will largely be determined by politics, not economics. But I think that whatever answers are arrived at will be painful. These programs, particularly Medicare & Medicaid, are ticking time bombs. King Theoden in The Two Towers, might well have been speaking of these programs when he said at Helm’s Deep: “How did it come to this?”

  60. Bob on May 19, 2008 at 9:25 pm

    #58+ Sean, your are referring to my #54. What I meant to say was: On my last day, I will become a Libertarian. So when I go, there will be one less of them in this world! I am an old style
    Democrat, who still hopes (see endures until the end ) his party will again stand as a counterweight between big business and the little guy. The old and the sick are the only ones with a serious and painful plan that works for now; they die. The costs then go to zero.

  61. Kaimi Wenger on May 20, 2008 at 1:56 am

    “if we bioengineered our skin to perform direct photosynthesis . . .”

    I don’t think it’s too much of a spoiler to note that this idea is part of John Scalzi’s sci-fi novel, Old Man’s War (which is a really good book, by the way).

  62. Mormon Paleo on May 20, 2008 at 9:38 am

    Bob #54:

    If we’d all like to be libertarian, what’s preventing us?

    You said:

    “So the goal has to be good government, but maybe not too much.”

    How does one define “too much?” I recommend Ezra Taft Benson’s talk “The Proper Role of Government.” Pretty sound principles to me. In any case, the goal and role of government has to be clearly defined. A government with shifting and growing responsibilities (or a living and breathing Constitution, as it’s called) will continue to grow until the chips fall. It’s an inherently unstable structure.

    You also said:

    “Markets are fine, as long as the parties are of equal strength. When one of them get too strong, it will just take what it wants, or destroy the other.”

    How do we make parties of “equal strength?” By maximizing purchasing power (lowering prices) and increasing competition (reducing barriers to growth and development, including taxation and regulation), individuals have more money to spend and more options of where to spend it. In either case, the market accomplishes these much better than government involvement.

    Unfortunately, we have this all backwards. We think that more government is the answer, when time and time again, government failures have produced problems far greater than the absence of government involvement would have. But, as I said, we have this all backwards.

  63. Bob on May 20, 2008 at 11:51 am

    #61: I kept ‘shaking the envelope’, waiting for an example of a Society without rules and laws to protect the little guy, to fall out…it never came. Likewise, of a business based on ‘lowering prices’, or ‘increasing competition’.
    To me, good Government does redistributes the county’s wealth by taking from the rich and giving to the poor, ( but not all of it, people can stay rich) Also, it regulates to protect the weak, young, old, and sick. (And the natural environment).

  64. Martin James on May 20, 2008 at 12:09 pm

    It would sure be nice if there were a libertarian governmental regime somewhere in the world at some time in history that we could analyze. All of the governments I know about are pretty intrusive and all the places without governments seem to lack a lot of modern conveniences.

    Advocates for libertarianism seem rather like advocates that a Yeti would make a nice pet, the argument sound nice enough, but how on earth do you ever test it out?

  65. Bob on May 20, 2008 at 1:37 pm

    #63 Well……there was Gilligan’s Island.

  66. Sean on May 20, 2008 at 5:06 pm

    #63 and 64 – You might consider the early years of the USA as one of the most laissez-faire times and places, especially relative to the rest of the civilized world. That abundance of liberty facilitated the restoration of the Gospel in our time.

  67. Bob on May 20, 2008 at 5:44 pm

    #65: Mostly right, unless you were a slave or indentured servant. But note how much effort was put into changing this.
    Freedom (old school) was the right to do sometime. Liberty was the right to do nothing. Each is a good right or a valued use of Fee Will. To me, Libertarians often choose the second. (But then nothing gets done).

  68. Martin James on May 20, 2008 at 5:52 pm

    Sean,
    The key term is relative.Two words: “Liberty Jail.”

    Yes, it was pretty laissez-faire unless, of course, you happened to be a runaway slave then the GOVERNMENTS conspired to send you home.

  69. Bob on May 20, 2008 at 7:59 pm

    I watched the ” Magnificent Seven” last night. There was a big scene where they were all sitting around a table, (with beer), telling what a waste of time their ‘libertarian’ lives had been, Nothing to show for their lives, no wife, no kids, no farm, no money. Only the faces of the dead men who had got in their way,

  70. anita on May 22, 2008 at 10:29 am

    I just watched “Why We Fight” last night–a Sundance winner documentary about our military-industrial complex. Scary stuff for the future of America. And the other day, all of my Yahoo news headlines read like a D&C last days scripture: earthquake in China, cyclone in Myanmar, volcano in Chile, tornadoes in Virginia, and wildfires in Florida. I keep remembering Pres. Hinckley’s talk about the 7 good years and then the 7 bad coming. I’m worried.

  71. MSG on May 27, 2008 at 1:45 am

    Just a thought…if the prices of everything keep going up and stay up, either husbands will have to earn more money or their wives will have to work outside the home .