Star One Smart Blog's

Poor old Barack Obama. No matter what he wants to do, his agenda is now forced to become "The Economy, Stupid!". He is trapped in the most politically vulnerable job in the land; he's a die-hard far-left redistributionist who wants desperately to enact benevolent social welfare programs for 'his' people so as to keep them in thrall to 'his' politics. And what happens?

Reality craps on BHO's redistributionist parade route.
 
"We believe there is a material risk that US policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the US fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns."

S&P shot one across BHO's dirty socialist bow, rating the U.S.'s fiscal outlook from 'stable' to 'negative'. Stocks fell, politicians must now take serious note. There are hard choices ahead for all of us, lifestyle changes, retirement changes.

The New York Times features a 'debate', actually a bundle of seven economists of NYT's choosing, to mostly pooh-pooh the S&P's rating change. One right after the other, solid (left-leaning, no doubt) 'opinions' that the S&P rating can be safely ignored; with the caveat that politicians need to shut up and do something. Hopefully, something nice and pleasant, AFA Democrats are concerned.

One mentions the ongoing "Gang of Six" Senators, three Democrats and three Republicans, putting together a 'workable' budget plan that involves ideas from both Left-Liberal-Progg (Sen. Dick Durbin) and 'Conservative' (Sen. Saxby Chambliss) fonts of 'wisdom'. We'll see.

One of the seven NYT debaters, Arnold Kling (author of this George Mason - Mercatus 'working paper', "Guessing the Trigger"), isn't so blindly optimistic, and therefore worth reading. A snippet...

If we have a crisis, it will occur suddenly as markets reach a tipping point, taking people by surprise.

To me, the important thing to keep in mind is that some people's expectations for their future retirement will have to be disappointed. Government obligations, including worker pensions, Social Security, and Medicare, are underfunded. Government may renege on its promises. If instead it tries to keep its promises, it will probably have to confiscate the wealth of those who are trying to provide for their own retirement. One of those unpleasant scenarios, or a combination of the two, is fairly certain to occur.

The decisions over how to distribute the pain are likely to involve intense political conflict. The longer we avoid making the hard decisions, the worse the ultimate conflict is likely to be. If you think that the tough choices will only be made under crisis conditions, then you might actually root for a crisis to occur sooner rather than later.

Ummm, no. The last 'crisis' gave politicians an excuse to run up massive 'stimulus' deficits we'll never pay back. We need to correct this problem now, under the cloud of a 'pre-collapse crisis' rather than wait for a 'post-meltdown showdown' when pants-shitting politicians can do little more than make things worse.

But the bottom line, as Kling points out, is that Government can no longer fund Social Security, Medicare and pension programs without raiding and stealing monies from 'private' retirement funds.

If you have a 401(K) or similar vehicle, then you best beware.

I'm not saying pull out the funds right this minute (you'll take a severe tax hit) but that option must be considered. Because the next crash will likely wipe out any funds you have, OR the government will raid and 'confiscate' those monies (the least level of 'charity') to use for it's unsustainable obligations to other people.

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