U.S. Is Bankrupt and We Don't Even Know It(bloomberg.com)
bloomberg.com
U.S. Is Bankrupt and We Don't Even Know It
http://www.bloomberg.com/news/2010-08-11/u-s-is-bankrupt-and-we-don-t-even-know-commentary-by-laurence-kotlikoff.html
9 comments
The Starbucks Principle: Just because something seems stupid and wrong, like opening four Starbucks outlets on the same intersection, that doesn't mean the market will punish it.
Some people are deeply offended by the fact that America's unique position in the world economy allows it to run an incredible deficit without being punished by the market. The bond vigilantes are just a bogeyman invoked to preserve the illusion of a just world. The reality is that heavily-indebted examples like Japan suggest that the US can probably be mismanaged for decades before real consequences kick in.
Some people are deeply offended by the fact that America's unique position in the world economy allows it to run an incredible deficit without being punished by the market. The bond vigilantes are just a bogeyman invoked to preserve the illusion of a just world. The reality is that heavily-indebted examples like Japan suggest that the US can probably be mismanaged for decades before real consequences kick in.
I would think that news about U.S. bankruptcy should be of interest to the startup community, so let's maybe re-orient this discussions towards: "Does this kind of doom-and-gloom news also scares the crap out of you as a startup founder? Or is it just meh?"
But this article isn't "news" about US bankruptcy - it's one-sided polemic. The US can't default on its debt in pretty much any scenario, because its debt is denominated in a currency it can print, and even more so since deflation looks like the problem, no inflation in sight; but that's only the beginning of its one-dimensional perspective, and it really doesn't belong here.
I voted you up, though I disagree that it shouldn't be here. I think it would be interesting to take the article and have an interesting discussion around its main points. These kinds of rational and intelligent discussions at HN are what make it so worthwhile, regardless of the topic. With the caveat that I don't want a Repub vs Democrat or Apple vs Android flamewar, but I don't think this qualifies as that type of piece.
Interesting you put Apple vs. Repub and Android v.s Liberal in the same sentence.
"Hacker news" is getting more and more political everyday. Thought I signed up for a tech and VC news site.
Disclaimer: I actually agree with the opinion in this article, but I don't want politics with my tech news.
Disclaimer: I actually agree with the opinion in this article, but I don't want politics with my tech news.
http://ycombinator.com/newsguidelines.html
On-Topic: Anything that good hackers would find
interesting. That includes more than hacking and startups.
If you had to reduce it to a sentence, the answer might be:
anything that gratifies one's intellectual curiosity.
Please don't submit comments complaining that a
submission is inappropriate for the site. If you think
something is spam or offtopic, flag it by going to its
page and clicking on the "flag" link. (Not all users will
see this; there is a karma threshold.) If you flag
something, please don't also comment that you did.Yeah, I'm going to flag this, as I try to do to all non-tech related politics sites.
The state of the economy is not inherently political (although the response to any proposed solution is often coloured by political ideology)
This is no mere political news, but an ominous sign of the times - of today's broken system. It might/will directly affect more than half of the hackers and indirectly all of us.
In what sense is "mere political news" distinct from an "ominous sign" of "today's broken system" that will "indirectly [affect] all of us?"
These submissions are getting really tiresome, not least because of the way discussions proceed: the article is submitted, it's silently upvoted by people who agree with it, and everyone who disagrees posts comments explaining why. This was the pattern on the "Why I'm Not Hiring" submission a while ago; nearly every comment explained the many idiotic deficiencies of the article, but it was still a highly upvoted submission because of people who agreed with its substance.
Very annoying.
edit: And now I'm getting silently downvoted too, in the mirror image of the above phenomenon. Excellent.
These submissions are getting really tiresome, not least because of the way discussions proceed: the article is submitted, it's silently upvoted by people who agree with it, and everyone who disagrees posts comments explaining why. This was the pattern on the "Why I'm Not Hiring" submission a while ago; nearly every comment explained the many idiotic deficiencies of the article, but it was still a highly upvoted submission because of people who agreed with its substance.
Very annoying.
edit: And now I'm getting silently downvoted too, in the mirror image of the above phenomenon. Excellent.
Fair enough. I'll explain why I find this article important.
The current crisis is not cyclical, it's man-made:
http://www.rollingstone.com/politics/news/12697/64796
Some have seen it coming, ie it could be averted.
http://www.youtube.com/watch?v=2I0QN-FYkpw
Countries have been breaking the basic economic law - income >= spendings - for a long time. There are several ways to get rid of the debt, eg inflation or nationalization. All of them are unethical and are basically stealing from all but a select few at the top. That's what this article is about.
If things come as far as the author writes, it will affect all of us here at Hacker News. There is a lot of people here trying to create something, to enrich the others and thus to get rich. It will all be in vain if our governments decide it's time to rob us.
I could have been less emotional and more specific about this. Thank you for challenging me.
The current crisis is not cyclical, it's man-made:
http://www.rollingstone.com/politics/news/12697/64796
Some have seen it coming, ie it could be averted.
http://www.youtube.com/watch?v=2I0QN-FYkpw
Countries have been breaking the basic economic law - income >= spendings - for a long time. There are several ways to get rid of the debt, eg inflation or nationalization. All of them are unethical and are basically stealing from all but a select few at the top. That's what this article is about.
If things come as far as the author writes, it will affect all of us here at Hacker News. There is a lot of people here trying to create something, to enrich the others and thus to get rich. It will all be in vain if our governments decide it's time to rob us.
I could have been less emotional and more specific about this. Thank you for challenging me.
This is exactly why I think this kind of article is appropriate for HN. If you know as an entrepreneur that you are operating in a closing window of opportunity before the big crash comes, how does this affect your startup decisionmaking? Are you building with the people on Flippa.com in mind or the fine folkds at the Long Now?
perhaps we should allow downvoting on submissions as well as comments.
I assumed that existed, but I hadn't reached the right karma threshold yet. So I keep flagging things, which is pretty much the same I guess.
It doesn't exist at 1900 karma for sure. I think if we allowed downvoting on submissions there would be a lot less about Google and Apple, and perhaps less Zed Shaw, and definitely less politics, less Ruby/Rails, because then the wishes of non-fans would be weighed more in comparison to their fans. Heck, non-fans have no weight presently at all actually.
Except it was just as "broken" under Bush (debt and deficit spending) but the Repubs didn't care then. Now that we have a Dem president they suddenly care. Lately they appear to have a coordinated Message about how we can't afford to spend anymore -- but only on things they don't like such as health care or unemployment, whereas military spending and Iraq and Afghanistan or tax cuts for the rich are just peachy keen aokay.
It is the number one issue affecting business in America today, and this is a particularly interesting economist weighing in with very strong language.
How about a nice big disclaimer:
Bloomberg Opinion
Bloomberg Opinion
Actually this is Laurence Kotlikoff, he's pretty interesting : )
http://en.wikipedia.org/wiki/Laurence_Kotlikoff
Wikipedia: In Kotlikoff's words, using the deficit as a guide to fiscal policy is like driving in LA with a map of NY. For unlike in our physical world in which we are all using the same language (have the same frame of reference), in the world of economics, we are each free to adopt our own frame of reference -- our own labeling convention. Thus, if Joe wants to claim that the U.S. federal government ran enormous surpluses for the last 50 years, he can simply choose appropriate words to label historic receipts and payments to produce that time series. If Sally wishes to claim the opposite, there are words she can find to "justify" her view of the past stance of fiscal policy. And if Sam wishes to claim that that economy has experienced fluctuations from deficits to surpluses of arbitrary magnitude from year to year, he can do so. Language is extremely flexible. And there is nothing in economic theory that pins down how we discuss economic theory.
http://en.wikipedia.org/wiki/Laurence_Kotlikoff
Wikipedia: In Kotlikoff's words, using the deficit as a guide to fiscal policy is like driving in LA with a map of NY. For unlike in our physical world in which we are all using the same language (have the same frame of reference), in the world of economics, we are each free to adopt our own frame of reference -- our own labeling convention. Thus, if Joe wants to claim that the U.S. federal government ran enormous surpluses for the last 50 years, he can simply choose appropriate words to label historic receipts and payments to produce that time series. If Sally wishes to claim the opposite, there are words she can find to "justify" her view of the past stance of fiscal policy. And if Sam wishes to claim that that economy has experienced fluctuations from deficits to surpluses of arbitrary magnitude from year to year, he can do so. Language is extremely flexible. And there is nothing in economic theory that pins down how we discuss economic theory.
As soon as he brought up Social Security as the problem instead of, you know, two Trillion Dollar Infinite Wars^W^W^W^W infinite wars costing trillions or the Bush tax cuts, I stopped reading.
I had a similar reaction. You can often tell where a writer's bias/agenda lies by what is cherry picked and what is ignored.
If the US is bankrupt and we don't know it, does it not then mean that the consequences of being bankrupt are trivia enough that we should not worry about bankruptcy?
Bankrupt means you cannot pay your bills today.
The US has many future obligations, which I'd best characterize as "indebted". We can easily meet them if we war a little bit less and tax people like we used to.
The US has many future obligations, which I'd best characterize as "indebted". We can easily meet them if we war a little bit less and tax people like we used to.
We all know the U.S. is worse off than most citizens earnings compared to the 14% GDP of what the government brings in every year. And to date, the U.S. Government has NEVER missed a payment for their debt, loans or interest. So until they do, will our economy be destroyed.
What this will take is some think tank getting together and congress listening to them with a KEEN ear. We know our country is under bad circumstances, but with personal greed and politicians thinking that this $200k trip won't do anything in the overall scheme of things is what we need to change. It needs to change fast and with a drastic scale, but when are we actually willing to listen.
What this will take is some think tank getting together and congress listening to them with a KEEN ear. We know our country is under bad circumstances, but with personal greed and politicians thinking that this $200k trip won't do anything in the overall scheme of things is what we need to change. It needs to change fast and with a drastic scale, but when are we actually willing to listen.
Why did this get bad reviews when its the truth.
What is it that makes people think people in US bonds are "asleep"? I certainly don't know whether they are or not, but it seems to go against the almost dogmatic claims you see elsewhere that the market "knows" and already has rational future expectations priced in.