Deep Weeds

Current U.S. national debt

"...by the end of September 2012, the Debt will have soared to $16.2-trillion – which amounts to nearly 100% of the projected Gross Domestic Product that year."

My husband is an expert in finance. Friday evening he said something that was so simple and summed everything up so well:

"No one builds wealth on debt. No one."

We owe a lot of money. The government says to those we owe: rest assured, do not worry, we're good for it.

"...the U.S. government’s power to tax stands behind all of its debt."

So rest assured (if you dare) if you are say, China. But if you live here and work hard and earn a decent paycheck, not so much.

We became a society comfortable with, and dependent upon, debt to fuel our lifestyles and meet our obligations. Most of us are guilty on some level, right? And the goverment sure is...

"It took the U.S. government 191 years – from 1791 until 1982 – to run up its first trillion dollars in debt."

But we're way better at it now!

It feels like the government is playing a financial shell game; like a person paying off credit cards with other credit cards to trade it around and push the ultimate due date down the road.

The market rallied today, as it very well might when an announcement seems plausible on paper. The market has also shown us very clearly in recent months that Theory and Application are two different things. Experts are divided about the Public-Private Partnership To Buy Toxic Crap. We'll see who wants to get in bed with the government on that one.

I think we are in deep weeds. It is my belief that our current situation will result in a lifestyle adjustment for most Americans that will last longer than we are currently considering possible. Hopefully, I'm wrong.

On a personal level, it's been food for thought. Wouldn't a giant deflation of everything be a bit of a relief? Painful to go through certainly, but in the end, maybe I would be more grateful. Perhaps I would be more content with what I have once I've purged the excess.

Back to basics, as they say. Seems that's never such a bad idea, you know?

What changes have you made in reaction to all the uncertainty? What are you considering doing? Are you bullish or bearish right now about our near to mid-term future?

edited to add: My friend Alli posted this HERE today and it's so perfect it gives me the chills.


Missy said...

Great post.
My husband and I opted not to buy a house during the easy terms, easy financing (sure we'll give you a loan we know you can't pay for) years. We also don't buy a lot on credit. So we are not in the hole. Anymore than we were 5 years ago anyway.
And even through we are not having to go without (things we never had to begin with) I am terrified. I think that if your not terrified right now, you have been living under a rock, and maybe you should stay there.
I am tapping my fingers and pacing, waiting until my youngest goes to school in the fall. I am anxious to get back into the work force and start contributing to our retirement. A year ago I would have been content to stay a small business owner. And I may still do that too. But my business is not bringing in enough to justify not finding outside work.
So I guess our change is semi-abandoning my business dream and going to work for someone else.

josetteplank.com said...

Here's what I've been doing to keep myself realistic about what's going to happen and what needs to happen:

I read Jim Kunstler's blog. (And blog's like yours.)

Jim is a bit more doom and gloom, but between him and the "Happy Days Are Here Again" song every time the stock market goes up a few points, I figure I'm even steven.

Mommycosm said...

My husband's layoff last year showed us how much extra spending we were doing. He made very good money and we just seemed to spend it needlessly. There was no such thing as a budget.

We've wised up. He's working again and makes $30k a year less than before, yet we are in a much better place financially. We got smart. No credit cards. No car loans. We try to stick to a budget. Our house is our biggest debt right now and we'd sell it in a heartbeat if we could find a buyer. That would leave us 100% debt free - how cool?!

Cynthia said...

I just think America is going to have to learn a lesson in consuming less.
I am such an odd duck since...I. Never. Shop. Living in downtown Big City means I don't have access to Target/WalMart/Big Crap Store. I'm glad, I think they just tempt folks to buy more than they need.
This whole disaster has turned Husband into a pessimist, and me into an optimist. At the end of the day, I think America will find a way to work again.
In the short term...save your dough, 'cause we're on our own.

Elisa @ Globetrotting in Heels said...

I hate the "instant gratification" mentality in this country.

People worship their credit cards, because they allow them to buy things they often cannot afford. Every store has its own credit card. Sure, buy and just run it on your card, and the in a couple of months you'll find yourself with a huge bill from Target, Macy's, Victoria's Secret, and even The Gap. Honestly. This way of thinking is at the root of the problem, like the "Sure, we'll give you a loan we know you cannot pay" trend a couple years back, like Missy said.

But who is left to set a good example, when the national debt is so scary?

Anonymous said...

Five years ago I was granted a loan for way more than I could afford. We haven't lost the house, but we're living below the national poverty level as we took turns putting each other through school. We eat A LOT of spaghetti!

Meadowlark said...

I've been a "doomer chick" for a couple of years now and am paying like crazy to get rid of debt (including those damn parent loans for undergrad students. Sigh)

It will get worse. Our area just released Feb unemployment numbers at 16%. I am glad I have a job, but glad I have a garden and taught myself to can food.

But it will be good for this nation, if we survive. Have you checked out what China and Russia and Venezuela are doing lately? Hmmmmmm.

purejoy said...

i'm sorry to say i couldn't finish your post because i was becoming nauseaous. i am in shock at how the mainstream media is letting our government get away with all of this. i'm just sick.
great post, and maybe i'll take some maalox and finish reading it!

fordmw said...

Well said. We are trying to solve a debt and spending problem with more debt and spending.

LannaM said...

Yup, back to lots of basics (but we still love ourselves some internet!). We got rid of all our credit card debt last year on one income to boot and having two homebirths in all that (have to pay up front). My garden gets bigger and bigger. I can/dehydrate/freeze/root-cellar as much as I can, and up the ante each year. I'm more preparing for a minor apocolypse, honestly. Having enough of things on hand to keep my family going when the store can't get anything (due to price hikes, gas too expensive to deliver anything, natural disaster, whatever) and such. Had that gut feeling for the last few years which is how my family's doing okay right now as long as hubby still has his job. :)

Unknown said...

Yeah, I'm all doom and gloom about the economy myself. I think it's going to take a very long time for it to get worked out. And I think it's going to SUCK, but I also think maybe we'll all be better off at the end of it.

Meadowlark said...

Sorry for the temporary hijack...

LannaM, do you have a website? I saw your last update was in 2008 but the food there is AMAZING!!!! While I don't have grandkids (yet) I'd love to know if you have an etsy shop or something.

Again, sorry for the hijack.

Amy said...

Meadowlark - No problem! The food is amazing!! I left a message over there and asked her to email me. If I hear from her I'll try to get y'all hooked up.

nikkicrumpet said...

It is depressing...and the scariest part is that we haven't even hit bottom yet. Sometimes I think a depression would be good for all of us...especially the spoiled youth who haven't known anything in their lives but excess. But then I'm old and don't really want to give up my chance to retire! That quote from Abraham Lincoln just floored me. What amazes me is that Obama keeps saying that Lincoln is his mentor and hero....HEY OBAMA...how about you FOLLOW YOUR HERO'S ADVICE!!! Before this country is completely doomed.

Ellen aka Ellie said...

I've been thinking about this for a couple of days. Wait, who am I kidding, I've been thinking about this (in the back of my mind) for a while now.

I do not understand financial things. My dad died in 2000, so there went my advisor and my landlord (among other more important roles). I was single with a high-school-aged son, and a good Ex who paid support for him faithfully. Ah, but I was/am also a teacher.

As you know, we make the big bucks.

When it was time to buy, when I had a good down payment, I went to an expert who told me I qualified for a $160,000 (can't buy much where I live) loan.

Instead I found a cute and just right condo (kind of a crappy place in a great neighborhood--it had potential that I carefully tapped) for my son and myself, and I had money to put into the bank each month.

The thing is, most of us aren't financial wizards, and we DO listen to those we hope will guide us well. I'll bet many of the folks who are overextended simply didn't understand ARM's versus fixed, were banking on both partners keeping their jobs where they worked loyally, and thought it was safe to buy at the top of their price range--because they were guided to think this way.

We are each responsible for ourselves, but we are also responsible for helping others. Good stewards who love others. Hm, what a concept, eh?

I was sitting conservatively pretty for a long while, and now I'm in a more risky position having gotten married (happily) to a man who was then downsized two months later (rats). We had moved into a conservative townhome, but on just my salary its payment is tough.

But then...

So are we. So is God. So is our marriage.

Anonymous said...

LannaM - please instruct us!

Hi, got here through Evenshine.

We were doing ok until my husband lost his job. Basically, we take the bus as much as possible to curb gas costs.

For food I buy strictly what's on sale and so far I've been able to keep the food budget at around $300 for the two of us for a month.

Lot of home cooking.

Great post by the way; back to basics wouldn't be so bad. Maybe we'd come out of it as better human beings!

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