

U.S. Is Bankrupt and We Don't Even Know It - cwan
http://www.bloomberg.com/news/2010-08-11/u-s-is-bankrupt-and-we-don-t-even-know-commentary-by-laurence-kotlikoff.html

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glhaynes
These kinds of articles often seem to include a line like the one in this one:
"And bond traders will kick us miles down our road once they wake up and
realize the U.S. is in worse fiscal shape than Greece."

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.

~~~
gamble
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.

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c1sc0
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?"

~~~
barrkel
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.

~~~
adammichaelc
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.

~~~
c1sc0
Interesting you put Apple vs. Repub and Android v.s Liberal in the same
sentence.

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jinushaun
"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.

~~~
Revisor
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.

~~~
isamuel
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.

~~~
Revisor
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.

~~~
c1sc0
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?

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maukdaddy
How about a nice big disclaimer:

 _Bloomberg Opinion_

~~~
madair
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._

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wonderzombie
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.

~~~
mkramlich
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.

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nanijoe
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?

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gte910h
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.

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spoiledtechie
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.

~~~
spoiledtechie
Why did this get bad reviews when its the truth.

