Financial Floundering

Are you tired of hearing about the debt ceiling crisis yet?

If you can't stand one more minute of it (and I don't blame you), then go ahead and skip this post. Sometimes a topic like this does nothing more than rile people up and ruin their day, especially if they've been hearing about it non-stop for awhile.

Recently I've been paying a lot of attention to this in the internet world, mostly because I can't seem to help myself. It seems like a very important issue. And now that we have a deal cut and signed to raise the debt ceiling, some people believe the issue should just go away, while others believe we have practically sealed our doom. Many people seem to believe that nothing at all has really changed-- that there really never was a crisis in the first place, or that the crisis still exists (business as usual in D.C.).

Who is right?

As a concerned American who wants to see our country succeed, regardless of the fact that I loathe our current President, I was trying to figure out what really would be the best for the future of our country. But all I could find were such conflicting opinions that I don't know how anybody could have made sense of what was going on. Tea Partiers were compared to terrorists, willing to wreck the world economy for their own nefarious purposes. Harry Reid & Barack Obama were described as evil, power-hungry men, willing to wreck the entire American way of life to prepare us for the "New World Order." We were told grandma would starve if we didn't raise the debt ceiling. We were told that raising the debt ceiling would only lead us to a future situation like that of Greece, with people rioting in the streets after the collapse of giant Ponzi schemes.

I wasn't just hearing these opinions from pundits on the net. I was hearing the different sides from people I know and care about, people who are not evil or secret communists or terrorists. And though I'm an intelligent woman, I'm also realistic enough to realize that there might be issues here that I don't fully understand. Any choices we make could have the consequences predicted by the various factions-- any one who believes that they really understand EVERYTHING about how the economy works, about investments and debt markets, and about the impact of human behavior on financial systems is kidding themselves.

After all my reading and research, I came to one certain conclusion-- our country cannot go on with the status quo. As things currently stand, we are heading for a serious financial mess in the future. I hear people blithely state that we cannot predict the future and so "something" in the future will crop up to solve this problem, but I find this to be an awfully fatalistic view. "Something" will happen if we choose to make a change. (Or somebody chooses for us.) The only way to do that is to have some idea where our government actually stands, and I think this is the real problem.

I don't think any of us really knows where we stand. I don't know if anyone in Congress knows where we stand. I'm almost certain that the president is completely clueless about where we stand. The problem begins with the simple fact that a "budget" in Congress does not mean the same thing as it does to you and me. Do you have "on-budget" as well as "off-budget" revenues and expenses? How can you balance your budget when you don't include all the money you take in or spend as part of the budget? Or if money that you spend is sometimes considered part of the "budget" and sometimes it is not? (Confused? Read an article by Jim Jubak that explains this pretty well.) If we lived our personal lives like this (and some people do, I guess), we would probably find ourselves awash in a financial mess, no matter how much money we were making. Same thing with government. What's the point of raising taxes if we don't even know how much we really need? What's the point of making cuts when you have no true idea of how and where you are currently spending? Should you only worry about spending the money on a short term basis? Or is planning for future rainy days a necessity that should be included in the budget now?

In my dream world, Congress would realize that they can't fix a sinking ship until they figure out where all the holes are. They would make figuring this out their top priority, and they would work together on this, knowing that the future of everyone aboard (including themselves) was at stake. Then they would go to work plugging the holes, recognizing that there are so many holes that they are going to have to call out all the passengers (from the first class ones down to the stowaways) to work really hard and sacrifice to get it done. But that's just my dream world.

In my realistic opinion of the world, business will continue as usual in D.C. They will spend more money than they have. They will cut taxes, they will raise taxes, they will slash spending from some projects and create new "direly needed" stimulus programs. They will argue and call each other names and focus on getting reelected instead of making the necessary changes for a better future. We live in a fallen world. That's just the way it is.

The only thing that will make us change will be when we are forced to change. Don't think we can have that kind of catastrophe here? Look at Greece. I bet they didn't think they would be facing the problems they are either. Do you really think that our country will be so immune to the consequences of chronically spending money we don't have?

Probably not. In my opinion, this crisis isn't over yet. Not by a long shot.