The Coming Default

And just who will pay all of these pensions, retirement plans, benefits?  Certainly not the next generation or the one after that.  Just because Roosevelt decreed it, that does not, in fact, lay a burden upon as-yet unborn grandchildren to suck up the debt for our comfy ending days.  When we are gone and the debt remains, there will be a “pinch” generation; those who try to retire in the face of (and on the backs of) an angry, indignant generation which both outnumbers and out-influences them.  By then, the once-powerful AARP might as well be NAMBLA.  By then, debt will be unsustainable, and the sacrosanct 50% of government spending, the supposedly untouchable entitlements, will suddenly be very touchable.

If you think this generation’s constitutional awakening is impressive, wait until you see the next.  So who gets the pinch?

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37 Responses to The Coming Default

  1. TKC1101TKC1101 says:

    There will be no political will to fix it, it will just crack and then break.

    I am 65 and have not filed for Social Security. I plan to keep working. I am annoyed my health plan which I pay for demands I enroll in Medicare A and B to move them to a secondary payer position, but it is within the bounds of the contract and required by law.

    At some point my wife or I will be too infirm to work and will have to live on our assets. Given we are looking at Government run healthcare by law, I expect we will eventually confront some painful end of life decisions.

    So when the next generation comes for me, I will save the last two bullets for us after we take some of the entitled sobs out.

    Given they will be angry and come for us whether I take social security or not, I might as well take the checks and have a better supply of ammo.

    Democracies cannot solve some problems. This is one of them. I have known that for a while. Plan your end game accordingly.

  2. AvatarEThompson says:

    “So who gets the pinch?”

    The Boomers. We’ve been coerced with no guarantee or contract to “contribute” 15% of our paychecks to social security since we started working and by the time I retire, I won’t see a dime of this. I could have taken that money and invested it far more profitably in an IRA.

    Example: my father opened a $2,000 IRA for me when I first graduated college. It’s been mine to monitor since so I invested it all in a little known company called “Facebook.” I forgot about it.

    Recently, my acct commented that my silly little IRA was now worth $75k and I didn’t even know it existed. What if I’d had the 15% of my income to contribute to that!!

    My least favorite govt rip-off is Medicare. My older brother was forced against his will to sign on to Medicare at age 65. He was perfectly happy with his old plan, but now spends $400 dollars a month for supplementary insurance. Considering everyone in my family has contributed to HSAs for years, catastrophic insurance has worked well for us all. Medicare is income redistribution at its worst.

    Let’s stop worrying about Millennials. We ‘codgers’ have worked hard and been heisted, but we survived despite the efforts of the U.S. govt.

  3. DevereauxDevereaux says:

    The “Math Party” will ALWAYS win. You simply cannot escape from it, no matter how much you try to will it, or hide in “safe spaces”. When it wins, it will be ugly, because America will take down a whole bunch of people around the world. Too many rely upon us for trade, wealth, etc. China would suddenly be in a world of hurt without us.

    So don’t only save your ammo. Stock up on casings, powder, primers, bullets. You will come to the point of not being able to but ammo and will rely upon making it.

    Archery is also good – for hunting for food. You can take most smaller game with an arrow (and some bigger, but it’s a harder shot).

    I believe the founders were highly aware of the shortcomings of a democracy – including the fact none has ever survived very long; we have only survived as long as we have because for most of this time we were not a democracy but a republic. That distinction seems lost on modern people.

    • AvatarEThompson says:

      One more reminder, Dev. Be sure to insure your savings and assets in increments of $200k. I recommend Charles Schwab because I consider them a sound company.

  4. BrentB67BrentB67 says:

    This is how I recommend looking at the debt – the debt is a non-issue.

    I believe every dollar guaranteed in those pensions or sovereign debt will be paid in full face value in dollars.

    The issue to me isn’t whether the pension guarantees will be paid. The issue is of what value will the currency received be to the recipient.

    Sovereign debt and guaranteed pension crises don’t always end in default as much as they end in a currency crisis where the fiat notes are devalued to hyperinflation.

  5. AdministratorAdministrator says:

    Unlike feudal Europe, all sides see a printing solution for what it is. The codgers will not allow a loaf of benefits to be re-defined as a slice. Even faster than printing money is amending legislation to read “or the equivalent purchasing power in 1997 dollars, whichever is greater”.

  6. AvatarXennady says:

    Reality doesn’t go away because people don’t like math, or can’t count. Unless the present regime can solve the impending default, it will die a bloody death. Its preferred solution- to screw over the people most likely to vote Republican- won’t work, not least because the marks have figured it out. Hence, Trump.

    Something has to change, obviously. Trump’s plan, I gather, is that he’ll undo enough damage to American governance such that economic activity will return to the country and provide enough of a tax base to pay the promised benefits. Awesome, and I heartily endorse it. But I fear it will not be enough, for incandescently obvious reasons.

    We need to make it cheaper to live here, such that people can survive on what the country can afford to pay them.

    Key problem- we can’t afford the present medical system, period. Obamacare- nuff said. The refusal of the US government to use its position as a monopsony buyer to get cheap drugs- ditto. Once food was a grim problem for society, now it’s medical care. Do to medical costs what modernity did for food, the solvency problem gets vastly easier to fix.

    Easy to say, harder to do.

    • DevereauxDevereaux says:

      Actually, not so hard. Government medicine has been around and has been used as a fall-back for many years. It’s called the VA. One of its advantages is that the doctors there can’t be sued. Makes for more straightforward decisions.

      Problem we have is that we have Cadillac medicine on Fiat prices – and the vultures circle and grab whatever they can. Edwards became a multimillionaire lawyer on bogus “science”. It’s how the whole system works. Plaintiffs get way more than they deserve, no matter what aspect of the law you look at, not just in medicine. ALL the lawyers claim the cost of the litigation on medicine is negligible, but it’s not. It would be like wolves claiming their kills on a herd take negligible numbers.

      There’s a lot that needs fixing.

      • AvatarXennady says:

        “Actually not so hard.”

        Well, I suppose this is like what von Clausewitz said about war, in that everything is very simple, but even the simple things are very difficult.

        Negotiating for lower drug prices is perhaps the most blindingly obvious step to reduce medical costs imaginable, but somehow it never gets done. Restraining the rapacity of folks like John Edwards is another.

        The problem is that the people with the power to change things are also the people who benefit from the present system, in one way or another.

        They aren’t going to let their gravy train be derailed without a fight, obviously. Their preferred solution, I think, is that the country collapses and the people they hate, Americans, get impoverished. We can see that from all the relentless hatred bestowed upon nationalist Trump supporters from not only the openly racist left, but also from the such gop mouthpieces as National Review.

        Normally when regimes get this far out of whack with their populations, it ends in a bloody civil war or violent collapse. Theoretically, elections should give us a way out of all that by enabling a peaceful change of government, but the swamp appears unwilling to accept our recent election results. Alas.

        There’s a lot that needs fixing to be sure, but at this point it may be too late.

  7. DevereauxDevereaux says:

    And now wee see the crux of the problem – lack of WILL. You aren’t likely to succeed if you don’t have the will to actually DO things.

  8. AvatarXennady says:

    Lack of will?

    That isn’t how I’d describe it.

    I note that the American people have repeatedly voted for the party that supposedly wants to make tough choices, and we have also paid heavy prices in blood and treasure over the years because of the tough choices we have made. The problem isn’t with US, or OUR lack of will.

    And I note that our elected representatives have the will in spades when they need it to resist some policy that would be popular with the public, but unpopular with the politically connected. For example, negotiating for lower drug prices.

    To be blunt, we have been betrayed. Much has happened because of that betrayal, and much still will.

  9. AvatarEThompson says:

    “For example, negotiating for lower drug prices.”

    I want to research this one a bit more. I have a super savvy friend who works in the upper echelon of Pfizer and is a registered Republican in the city of New York. (Quietly, of course because she values her life.)

    I tend to trust her opinion.

    Between extensive research (good!) and excessive FDA regulations (bad!), in addition to incoherent federal patent laws so our friends up north in Canada can reproduce generics at $5 dollars in a very short period of time that does not allow U.S. companies to recoup investments and make money, plus absolutely destructive malpractice premiums, it costs Pfizer over 10 years and $1 billion dollars to bring a new drug to market.

    Who suffers from that scenario? We do.

  10. AvatarEThompson says:

    Just one more thing…

    No pharmaceutical company of any merit outside the U.S. exists any longer besides GlaxoSmithKline.

    This is frightening; as we all age, we realize how destitute our lives could become without the innovative drug companies.

    I speak today as a healthy Boomer but I think of my friend with MS and the Depo-Medrol injections that have saved her life and allowed her to continue her medical practice.

    Let’s not attack an industry that helps us to live longer and better lives; let’s go after the impediments imposed by government that make it more difficult for “Big Pharma” to do its job.

  11. DevereauxDevereaux says:

    The problem, ET, is that there is no free market in pharmaceuticals. Doesn’t matter about patents; you have to bring it to market and get people to buy it. Knowing your market, knowing how to sell your product, is essential to making money.

    Take a neat drug called Cleviprex. It’s a calcium channel blocker with a half life of nine seconds! That means every 9 seconds you can adjust the rate to further lower or raise the blood pressure. Seeing as the “common” drug is Cardene, which works, but far more slowly and often leads to overshoots with a build-up and too much BP lowering, one would think it’s a no-brainer to use Cleviprex. Try getting it. Pharmacy ONLY looks at the drug cost. It pays no attention to the cost of nursing monitoring, nor the reflective covers for Nipride which add significantly to the OVERALL cost of the drug – but aren’t born by the pharmacy section.

    I could show you any number of similarly biased problems.

    • MLHMLH says:

      . . .you have to bring it to market and get people to buy it.

      You don’t see ads for insulin do you? If a new drug isn’t that much better than an older drug (ie: it’s not really needed), you’ll see a lot of advertising.

      • DevereauxDevereaux says:

        Actually the competition in the insulin market is quite sharp. It just doesn’t spill over into ads much. Until now. ?See all the ads for Jenuvia, Victoza, Trulicity. Lilly is competing with Novo over injectable insulin, too, but that ends up being more in the doctors’ offices.

  12. AvatarXennady says:

    Forgive me, because I have to express some disagreement here. Also forgive me for the length.

    First, for the record, the failure to negotiate for lower drug prices refers to the Bush-era Medicare part D law, when Billy Tauzin was able to insert a provision into the law forbidding the federal government from doing just that.

    Now no sane person would argue that the shareholders of the drug companies should provide their product at a loss, or even at cost. I certainly am not. They have a fiduciary and legal duty NOT to do so, I believe. And their lobbyists are certainly entitled to strive to get the best deal possible.

    But the same also applies to the government, which has a duty to the taxpayers to strive to get the best deal for <us. When our representatives decline to do so, we have been ill-served.

    That has consequences even above and beyond the vast sums of tax dollars foolishly wasted. I know that this particular bit of idiocy was used by the democrats against Republicans in 2006, because I remember watching the ads. It also added an enormous amount to the deficit, helped pave the way for the disaster of Obamacare, and (again) helped lose the GOP control of Congress in 2006.

    It also makes me extremely dubious that the patent system is to blame for any issue with drug supply here. Big pharma has enough influence to get hundreds of billions of extra dollars from Uncle Sugar- yet somehow the patent office thwarts their efforts to provide us with low-margin product?

    Sorry, I’m not buying it. I even recall a campaign to block any American access to cheap Canadian drugs, because they were supposedly “unsafe.” Hogwash. As an aside, any company can open a factory essentially anywhere to produce a product to ship here, undercutting American producers. But somehow this can’t be done for drugs? Even generics?? Gosh, I smell the same sort corruption that gave us those high drug prices, noted above.

    I’ve had enough of this. Watching it is one reason why I’ve grown to despise the Bushes so much, and why I support Trump. It can’t last. We simply cannot afford to pay the drug development costs for the entire planet, no matter how desirable new drugs may be. We don’t have the money, and the drug companies don’t have the political support here, either.

    I still remember, years ago, hearing Pat Caddell say on the Rico podcast that the American people were in a pre-revolutionary state. It seems me that the politically connected- including Big Pharma- still imagine that they can keep the status quo intact, if only they can rid themselves of that meddling Trump.

    No. If they do, the next political iteration will bring us a Bernie Sanders who won’t throw the game- and the drug companies will simply have their product stolen, or just get nationalized.

    I humbly suggest to them- and all the other grifters using political influence to enrich themselves at public expense- they they STOP. The end result will be ugly for all of us, much worse than if they simply accepted half a loaf instead of demanding all.

  13. DevereauxDevereaux says:

    Actually, all this could be solved if you got government out of the business of business.

    Once upon a time, the government had enumerated powers. Today with the bandit Cardozo’s ruling back in the late 30’s, the “General Welfare” clause was transformed into a justification of unlimited meddling. EVERYTHING is for “general welfare”.

    Such was CLEARLY not the meaning of the founders when they put that phrase in the constitution.

  14. AvatarEThompson says:

    I’d also add that the extensive cost of developing a new drug not only eliminates the number of drug companies in existence but leaves people with rare diseases at a great disadvantage.

    • AvatarXennady says:

      Another brief comment- from what I recall patent law was rewritten decades ago to encourage the development of drugs for such rare diseases.

      That is, it was changed so that companies could expend the vast sums necessary to develop drugs to treat them, then recoup their costs by exploiting a period of monopoly pricing.

      From what I’ve read, since this has degenerated into a practice where the drug companies make trivial modifications to drug formulations, then present it to regulatory authorities as a completely new drug for patent purposes, thus extending the period of monopoly pricing indefinitely.

      That sort of practice is one reason why I think nationalization of drug companies is on the political table, unlike- say- for Walmart.

      I said this would be brief, so I’ll stop with that.

  15. DevereauxDevereaux says:

    One other point. The poster comments on the benefits that the government pays the people. Those do NOT include Social Security, nor Medicare. WE pay for those.

    I am an old dog, and I have been paying social security for a LONG time. At 15% of income, half of which was paid by the company for when I was employed by a company, and ALL of which was paid by me when I was an independent contractor. There was NO government money paid in. Had that been placed in a dedicated fund with my name on it, it would be worth more than enough to pay me my miserable SS “benefit”.

    THEN there is the question of where all the money went that was paid in by those who died BEFORE they could collect.

    This may be the single largest theft of wealth in history.

    • AvatarEThompson says:

      It is indeed and I cannot bear to read a single thing about FDR, the mastermind behind this redistribution scheme.

    • AvatarXennady says:

      I’m not sure here if you’re responding to what I wrote, or what BDB wrote initially.

      But just in case it was me, let me point out again- as perhaps I didn’t emphasize this enough- that the American people have repeatedly voted to give control of the government to the heartless party that wants to starve children, as the left lyingly tells us, and not the party promising that endless gravy train loaded with welfare checks and freeee stuff.

      That is, we made a tough choice to deny ourselves extra bread and circuses, choosing to decline to spend other peoples’ money upon ourselves. Even California ended in the pitiful state- ha ha- that it is in today because it was overrun by foreigners who eagerly voted themselves OUR money, so to speak, with the people of that state denied by judicial decree the ability to prevent it.

      I agree with what you wrote after my lengthy comment, because it’s true- but it simply isn’t good enough to say, essentially, that if we didn’t have the problems we have today, we wouldn’t have the problems we have today.

      Yep, I know, if the government would stop meddling with what should be private matters we’d all be much better off. But we can’t go back in time and undo the mistakes made by FDR, as if we were starting from scratch. We just can’t, alas. People have been paying taxes for these programs their entire working lives- duh, you obviously know that. People want something in exchange, duh, you know.

      That isn’t the same as saying everyone is a welfare parasite eager to steal from the worthy rich, which is the sense I get from the idiots of the gop.

      In any case, and as I used to write elsewhere, the game we’re playing is politics, which includes a vastly larger set of potential solutions to our problem-set than mere economics, morality, or original intent.

      That’s why FDR was a revered figure for decades, re-elected for four terms, despite you-know, and why Bush left office widely despised.

      The gop has failed repeatedly to use the authority granted to it by elections to solve the political problems we face- unlike FDR- and thus it has expanded the potential political solution-set to include vastly worse outcomes- such as the nationalization of the drug industry.

      I think we can agree that this would be an awful solution to the problem of high drug prices. Again, forgive my rambling.

      • AvatarXennady says:

        That comment was intended for Devereaux, btw.

        • DevereauxDevereaux says:

          Thanks for your comment, but I was actually aiming my comment to the poster, that is, the originator of this thread.

          Can’t say I disagree with much of what you say. I would only wonder if the GOP really COULD pull off what you set forth. On the one hand I suspect they have been way too corrupted, and on the other, I am cynical enough to recollect what happened to the republicans who attempted to carry out Aaanold’s agenda – one reason Kali is now pretty much totally dem.

        • DevereauxDevereaux says:

          You may have caught Boehner’s comments today. Myself, I take them to be yet another justification that Trump is on the right path, more or less. If no less than John Boehner steps up to condemn him, he MUST be doing something right.

  16. AvatarEThompson says:

    I’m afraid you’ve opened a ‘hornets nest’ with me, Dev. As a self-employed person, I not only pay the full 15% for myself, but a large percentage for my employees as well. The latter issue is difficult for me when I see what my people ultimately bring home in their paychecks. They work hard and I’d like to see them reap the benefits of their efforts.

    P.S. You’ll enjoy this one, I know: The state of California where I practice business has now imposed a “debt reduction tax” on all businesses based upon payroll. I of course reward my good employees with raises and bonuses, but now am being punished for that to the tune of 5% annually.

    • MLHMLH says:

      Change them all to independent contractors (-; No payroll!
      Use gift cards for bonuses.
      And I’m not sure I’m saying this in jest.

      • AvatarEThompson says:

        The state is craftier than the both of us, MLH. I did use the independent contractor loophole for bonuses, but it is now taxable. Gift cards are great, but my employees really want the money instead. I was able to give up to $600 dollars per person tax-free; not no more.

  17. AvatarEThompson says:

    Clarification: $600 per person per month tax-free.

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