We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
The sheer size of the fiscal hole that the Obama administration is digging us into, or burying us within, is mindboggling enough.But, that isn’t stopping them from purposely adding to our confusion as they try to dig the hole deeper.
Tom Blumer exposes the tomfoolery at his valuable everyday read Bizzyblog.
Until now the US Treasury has hidden the size of our deficits by including Social Security taxes, and treating them as if in a Trust Fund although there is none and the monies have been spent, so Social Security is actually in negative cash flow within the next two years.
Now Blumer finds the Treasury Department under Wall Street-import Tim Geitner bringing along the tricks that sank Wall Street.The Treasury is now reporting the deficit of receipts versus expenditures as $175-billion less between last October and March. How?The Treasury is somehow calculating a Net Present Value of its TARP bailout expenditures, in other words what they think they’re going to be worth.
As Blumer points out:
Mixing hundreds of billions of dollars of NPV into what has essentially been a cash flow report turns the Monthly Treasury Statement, and deficit reporting in general, into an exercise that will become not only become ever more difficult to comprehend, but one that will also be routinely subject to political manipulation. Judgments as to what discount rate to use, how collectible loans are, and even what should and should not be considered an “investment,” will have multi-billion dollar impacts on the publicly reported deficit. NPV might even directly affect policy. Why should Geithner or Obama allow banks chomping at the bit to get out from under TARP to do so, when their repayments will only increase the reported deficit? Already, the administration, which has projected a fiscal 2009 deficit of over $1.8 trillion, has avoided the political embarrassment of estimating a shortfall that would round off to $2 trillion using true cash-flow reporting.
Hope ‘n Change requires prestidigitation, otherwise known as quick fingers, picking our pockets.
The banks now get to manufacture phony earnings through accounting fraud, why not the government too?
Good Reuters (I believe) article today mentioned Geithner speaking to a bunch of students in China. One of them asked him about whether China's huge holdings in dollars are safe given the US's reckless fiscal policy. Geithner said something like "yes we have a strong dollar policy. China's investments are safe." The crowd erupted into laughter. China gets it. Most of America still doesn't.
Don't trust any analysis that mentions a Trust Fund for Social Security.
There are some things that operate differently for a nation as a whole and for an individual. Saving is one of them.
``If everybody stood on their toes, everybody could see better'' might the the prototype fallacy here.
Money is wealth about as much as tickets are concerts.