Decline

The sad truth of the matter is that the United States is a nation in decline. Not that it's effecting me a whole lot, of course. While I'm not without my own financial woes or looming problems, I got launched on this train of thought while enjoying CB's company over another exceptionally bourgeois weekend at the Red Rock Hotel and Casino. In fact, this recent trip put the last trip to shame from a culinary perspective, yet somehow managed to cost slightly less than our last similar outing. Go figure. In any rate, the only real issue I've had lately with finances is wondering whether or not the dollar is going to be worth anything after any given day of stock market activity, and whether or not I just just simply spend every dime I have, and convert hypothetical solid liquidity (which is becoming more and more a contradiction in terms) into tangible chattels.

But while watching our national debt issues being spun by the media and politicians, and with The United States of American being declared a bad credit risk, I got to considering the long-term future of the United States. At least for the time being, we are a nation in decline, with the greatest evidence being the general disparity between parents and their adult children. Rather than parents moving in with their children as they grow physically infirm, adult children are moving back in their parents, because the parents are financially firm. These days, children aspire to the levels of success achieved by mom and dad, rather than dazzling mom and dad with successes and the reaching of new heights.

To a certain degree, this trend of parents having to play host and financier to their insolvent adult children is a little dose of justice. In many cases, the success and stability currently enjoyed by elderly Americans exists because they've spent their lives gathering wealth in an economy based largely on borrowing from the future. Only fair that they help out the younger generations, since those younger generations are charged with paying off the debt incurred by the older generations. The American populace and government has spent $14 trillion that they didn't actually have in order to get where they are.

From my own financial perspective, this is not an overwhelming problem. Both CB and I are highly educated, capable, and motivated when we need to be. So long as the legal and associated system remains operating in any meaningful form, we will be able to get desk jobs. And if there are no desk jobs, we'll find work doing other things, since we also have too much pride to spend substantial time on any sort of wellfare. To one degree, this means that we will feel the effects of a national economic decline worse than others, since we will remain in the minority who work, pay taxes, and so forth. But it also means that we will never be dependent on parents or Big Brother for our meals and comforts.

But beyond the issue of how to make ends meet (which I'm not worried about except insofar as I might have to eat more grains and veggies and less filet mignon), I've been thinking about the future because CB and I have been seriously discussing the issue of children, which has me thinking about the world such child(ren) might be brought in to.

Given the Way of Things, the United States economny may be unlikely to recover. On paper, the United States is over $14 trillion in debt, and that doesn't count toxic assets held by banks and other financial centers. The reason that Bank of America owns thousands of foreclosed upon homes: it LITERALLY cannot afford to put them on the market. So long as no new valuation is assigned to a property (as is the case in a sale), the theoretical value is the most recent purchase price. The reason that we are where we are is that nuances of the '90s and 00s financial booms supported vast overvaluation of real estate. Your took out a loan. The bankers used the value of your mortgage note as capitol, which was loaned to others. The higher property values rose, the more capitol the banks were able to generate for loans in vestments.

Then the crunch came and passed. Houses are no longer worth the price of the loans given to buy the property. What does that say about the value of the loan (which is secured by the property), which the bank lists as a debit to balance some credit? Much of the "money" in circulation is supported by only by a bank's listing of a loan value. If the house underlying that loan is foreclosed upon and sold, the bank needs to admit that it's accounts are undercapitolized, as the actual value of the debits not longer meets the actual value of the credits. Multiply this by the millions of homes and properties that the banks gave loans on, which are no longer worth the value lent. So the banks allow those properties to sit empty, to preserve the lie that they are an asset, rather than a liability. The sad truth of the matter is that many of the property loans made in the last decade or so are upside down, and represent financial liabilities, which banks are listing as actual assets. The privately owned totality of the United States is, to one degree or another, a toxic asset.

So. Besides the $14 trillion that we acknowledge as national debt, there is the hole that represents the cumulative liability of every upside-down property in the free world. More and more Republicans are likely to be elected to office with hard-line positions on debt management, but the truth of the matter is that we really have overspent to the point of no return. Nobody really wants to stop spending, much less start paying off debt. The only real question seems to be how long we can preserve the lie that our books balance, and thereby prevent the sudden and catestropic loss of value of every account evidenced only by a dollar value in a computer somewhere.

I think this will actually last quite a while, since - with the wonders of our global economy - everything in the world is valued in dollars, and NOBODY really wants to own up to the lie we've all been living. So we will keep spending, allow interest to continually accrue, continue to borrow more money to pay existing liaiblities, and so forth. It will get really fun if interest rates rise. Anecdotal note: the United States nation debt is largely funded with T-bills and other notes based on variable rates (prime), currently dirt-cheap at 3% or less. If the interest rate rises to as must as 5.7% (which is the average for the last 20 years or so), the United States debt will grow by $5 trillion in the next decade, BASED ON INTEREST ALONE. So realistically, the United States Treasury CANNOT raise the interest rate, which takes away a check-and-balance on the financial system, with all sorts of interesting consequences on inflation and other financial factors.

Given the numbers, the still-hidden toxic assets, and the inability of elected officials to make hard decisions (the ones that cause austerity for the electorate), one would think it must necessarily come to an end, and perhaps sooner rather than later. Eventually, people are going to realize that a dollar is no longer worth a dollar, and slowly, steadily, move their assets into other values, while shifting their liabilities into dollars. That's the hope for an orderly transition; that the change happen slowly, rather than catastrophically. The worst case is a sudden upheaval, which might result from such things as Texas Secession, or China calling its loans due.

But alas, like Rome, the Holy Roman Church, and the British Empire, the United States will ultimately decline and be subsumed. A younger, healthier world leader will arise, and human existence will continue on as it always has. Until the zombies come, that is.

In the end, I guess what I'm really wondering is, in the course of maximizing the ability of my hypothetical child(ren) to succeed, should I or should I not be considering a move to another country? Or at least to Texas?