Tuesday, January 15, 2008

Pat Buchanan Gets It Right

I just read through this commentary written by Pat Buchanan. It was a really good column that illustrates his very good understanding of economics and the toll that debt has taken on our nation. I do disagree with his paranoia with foreign investment, mostly because I've felt that a foreign power or institution will not let their investments fail. But because of the extreme amounts of debt the federal government has racked up, they will probably be unable to borrow any more money from any foreign nation. The federal government's credit rating will drop and they will be forced to cut spending (yay!) or raise taxes. One method will shrink and depress the economy, the other will make it more prosperous.

One of the major factors that will cause the Imperial Federal Government's credit rating to drop is the fact that they don't seem to reign in on the unfunded liabilities in Medicare and Social Security they keep promising we'll all get on retirement. I know I get a statement every year stating how much money I'll get when I retire. I know this is a lie. The money isn't there and it won't be when I retire. Anyone who is 50 years or younger would do wise to not count on such money to be there for them. When the federal government's credit rating drops, they will be unable to fund such plans with bonds and the economy will be so bad at that point that raising taxes will unfeasible. Meanwhile, the elderly will probably start a lynch mob for every Congressperson who promised them Social Security.

I wrote earlier this month on how the greatest generation wasn't really that great and I outlined some examples of why. The truth is, the government we have now is a reflection of the government that the people wanted a generation ago. Our nation is going bankrupt fast, mostly due to debt and dumb people who think a BMW is a display of wealth. I know these people are rampant. I live around them all the time. I see these young people driving cars that are way above their league. I see them living in homes that are too expensive for their income. I know this because I have a professional job myself and my salary is above average. Yet I chose to live well below my means because I know that when times get bad, as they probably will within the next few decades if this behavior keeps up, I'll be fine.

Whenever I hear politicians promising to help out the poor and those living paycheck to paycheck, I scoff and try to make sure my ears aren't bleeding. I don't buy for moment that the so-called poor and paycheck-to-paycheck folks couldn't pick themselves up out of their own situation and become financially independent. This doesn't mean that they will be wealthy in terms of money. Just not tied down to debt and stuck in a job because it funds their lifestyle.

So it really comes down to us as individuals to fix this. Live a life that is well below your means. I am not saying that you should all rent small apartments and eat nothing but beans and rice for the rest of your life (although some of you may have to for a year or two). Pay off all of your debts, save your first mortgage, and save up 6 months of personal expenses. If you achieve that, you'll be much better off and won't need some stupid government to bail you out of economic downward curves.

As for the national economy, I welcome a recession. In fact, a short depression may be what this nation needs to snap it back into shape. We have ignored one of the most basic cardinal virtues for too long: Temperance. When even the poor are clearly gluttons, there is something seriously wrong with the financial soul of America. While such things will become problems for everyone, including myself, I know that in the end we will all be OK. I have faith that things will only get for this nation.

The failures of the past two generations in terms of economics are coming to a head. It would not surprise me if there was a huge drop in value on many industries over the next decades here in America. It is going to be tough, but I will not whine but will face these challenges and be one of those who will try and rebuild the former greatness this nation had.