The big thud theory

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By Ken Begley

Tipping Point: The critical point in an evolving situation that leads to a new and irreversible development.

We’re all going to die!

Well, that’s true, but just not today.

I do feel that America is racing to a financial “tipping point” where we must agree to make some hard decisions, or else we’re going to go economically “over Niagara Falls in a barrel.”  One thing is for certain - the ride might be spectacular and the view incredible, but the end result will be one big thud!  It won’t be pretty or pleasant for anyone, even if you think you’re safely watching from the sidelines.  There are no sidelines in this event.

The real question is will America back away from this “tipping point” or plunge ahead with incredible ill-placed optimism and abandon?  Do we honestly believe that we can make no major gut-wrenching changes to the way this country is run and the promises we have made and everything will miraculously turn out “OK”?

If you think we can, then please e-mail me what you’re smoking.  I want a couple of cartons of it.

Currently, over 10 percent of our population, and some say 20 percent based on how you calculate it, are under or unemployed.  The number of people that have been unemployed for more that six months is at an all-time historic high.  

Some 25 percent of individuals that have mortgages owe more on their home than what the home is worth.  The levels of defaults are mind blowing while the value of homes most everywhere are going down.  There’s a rise in “jingle mail” where individuals that owe more than their homes are worth, but can pay the monthly mortgage bill, are refusing to do so.  Instead they’re throwing their keys in the mailbox and calling the bank to inform them that the house now belongs to the bank.

Add to that the cost of going to college.  The average student coming out of college has over $20,000 in debt, and a good percentage is much higher, over what was paid as they went along.  The result is even if you do get through college, you may take years to pay off your debt, if in fact you ever will.  That’s also assuming you can find a job.

We also have extremely generous government pensions promised, but under-funded by most local and state governments.  These obligations alone are estimated to be $1 trillion ($1,000,000,000) that ultimately must be paid by new taxes.

The federal government is even worse.  

The national budget deficit for fiscal year 2009 was $1.4 trillion (that is $1,400,000,000,000).  The estimated deficit for 2010 is expected to be higher. The government now has $63 trillion ($63,000,000,000,000) in unfunded military and civil servant pension obligations, Medicare, Social Security, and current debt obligations.  That breaks down to roughly $547,000 owed by each household in America today.

What’s the answer to those problems? I’m not smart enough to tell you.  I doubt anybody is. But I can tell you when you’ll know that we’re turning this nation around from its current trip over the falls. It will be when we allow our leaders to tell us the cold, hard facts and we don’t vote their political posteriors out of office.

It will be when we decide that our government has over-promised and entitled us to almost everything, and those promises must be pushed back, delaying retirement by the vast majority of Americans by probably 10 or more years.

It will be when we all agree to pay more taxes for the common good of our nation, and that the common good may mean paying down our debt.

It will be when we come to realize that our greatest assets are people, and we must take care of them.  Big homes, big cars, and an endless pursuit of entertainment do not make us any happier.

It will be when we realize that it’s morally despicable for the current generation to borrow on the good name of the United States of America and turn over all our debt to future generations expecting them to work like economic slaves to make good on what we have spent already.

It will be when we remember our obligation to hand over this country to our kids and grandkids as strong as it was handed over to us, and not as a bankrupt nation of broken promises.

We can do it.  

It will be hard slogging by everyone, and I do mean everyone.  Anything less will not work.

So, the choices are clear. But it boils down to one question.

Can we handle the truth?

If not, then fasten your seatbelts, kids, and look out below!

It’s going to be a bumpy ride for everyone.