Sunday Edition: November 11, 2007

Posted In: 2008 Election, Crash Prophets, Currencies, Debt, Delinquencies, Dollar, Economy, Euro, Medicare, Mortgages, Politicians, Social Security, Sunday Edition, U.S. Government

The United States Of Debt
On November 6, the Denver Post talked about U.S. Comptroller General David M. Walker as he participates in the “Fiscal Wakeup Tour.” In an earlier post I spoke of tour, which is sponsored by the Concord Coalition and attempts to explain in plain terms why budget analysts of diverse perspectives are increasingly alarmed by the nation’s long-term fiscal outlook. Walker, who is the chief auditor of all federal programs and activities, is a political independent who is pleading with American voters to elect only presidential candidates who make budget reform a top priority. Why is he so concerned? According to the Post:

The federal budget is crumbling, he says. The nation continues to borrow at an alarming rate and to saddle today’s toddlers with exorbitant debt they may not ever be able to repay. The country can’t afford the Medicare and Social Security benefits it has promised. And politicians seemingly refuse to level with Americans about how much financial trouble the country faces if it sticks with the status quo much longer.

According to the nation’s auditor:

Let me tell it to you straight. The. Math. Politicians. Sell. Does. Not. Work. And if we don’t start dealing with the truth soon, this country could face dire consequences.

He adds:

Do not vote for anyone who is unwilling to make fiscal responsibility and intergenerational equity one of their top three priorities.

In response to those who insist that the United States can grow its economy enough to head off its impending trillion-dollar debt, Walker says his calculations show our annual economic growth must be at least 10% for the next 75 consecutive years for this to work (by the way, in the nineties the economy grew at an annual average of only 3.2%). Walker concludes, “We can’t grow our way out of this. Some very tough decisions must be made.”

Click here to watch the Denver Post’s presentation of “The United States Of Debt.” According to the Post, “This colorful video primer featuring Walker and some of the information he highlights when meeting with civic groups across the country will bring you up to speed in a hurry on one of the nation’s most pressing issues.”

Dissing The Dollar
I usually don’t pay attention to the antics of the in-crowd, but the following two are worth mentioning. On November 5, Bloomberg reported that Brazilian supermodel Gisele Bundchen wants to remain the world’s richest model and is insisting that she be paid in almost any currency but the U.S. dollar. Patricia Bundchen, the model’s twin sister and manager in Brazil, said in a telephone interview back in September that, “Contracts starting now are more attractive in euros because we don’t know what will happen to the dollar.”

Peter Schiff of Euro Pacific Capital had this to say about the greenback’s slide in the latest issue of his free newsletter The Global Investor:

The dollar’s fall is now so pervasive that the world is walking away from it en masse. The story has even been given some sizzle with the announcement from Brazilian supermodel Gisele Bundchen that she will no longer accept modeling contracts in dollars. Never seeing a cloud attached to any silver lining, knee-jerk bulls such as Larry Kudlow have suggested that Bundchen’s decision is a contrary indicator that the dollar has bottomed. In truth, the only notable bottom here belongs to Gisele herself.

On Friday, the Wall Street Journal reported that in the video for his new single “Blue Magic,” American rap artist Jay-Z is shown spending euros rather than dollars, “thus annointing the European currency as the rap world’s new bling,” according to the Boston Herald. Jim Cramer, host of CNBC’s “Mad Money, remarked, “But when things have gotten to the point that even people like Gisele and Jay-Z realize the dollar is too weak, things have gotten out of control.”

Parting Shot
Time magazine reported in its November 12 issue that some parents are skipping a mortgage payment so that they can get their hands on a ticket ($1,000 and up in some cases) for their child to attend a Hannah Montana concert. In case you didn’t know, Disney’s Hannah Montana is the number one show for kids and tweens on basic cable. The 54-city accompanying concert has sold out within minutes in every town.

On a side note, St. Louis-based radio station Y98 offered dads the chance to be their daughter’s hero- by putting on high heels and racing 50 yards to win 4 concert tickets.

According to Reuters, Mark Edwards, director of programming at Y98, said, “We got a couple of hundred phone calls from people asking questions about where to get high heeled shoes big enough for husbands and about 150 men turned up in high heels.”