Wednesday, September 05, 2007

Dear Future Generations

One of my favorite "blogs" is the Of Two Minds blog (ok, it's not a blog, it's a web site) operated by Charles Hugh Smith. This letter by Mr. Smith is too precious to miss and so well expresses how a lot of us undoubtedly feel that I decided to shamelessly copy-and-paste it here:
Dear Future Generations:

We come to you hat in hand to borrow trillions from you to pay off our insanely risky gambles in the housing bubble. Because you can't vote yet, and our spineless, morally corrupt and short-sighted politicians are so cravenly desperate to win the next election that they will gladly sell you down the river to pander to the Greediest Generation now, well, you don't really have a choice.

We've already burdened you with deficits adding up to $8 trillion--money we squandered today on ourselves, leaving you the bill, and the interest payments of trillions, for the rest of your lives. You don't yet know that the interest on the National Debt--money we wasted on our own entitlements-- costs taxpayers $243.7 billion (+13.4% year over year) this year.

That's more than Education and training $89.9 billion (+1.3%)
Transportation $76.9 billion (+8.1%)
and Veterans' benefits $72.6 billion (+5.8%) combined, and 62% of the enormous Medicare expenditures ($395 billion). (Source: U.S. Federal Budget 2007)

(Note: National Debt numbers sometimes include "debt we owe ourselves," i.e. Social Security Trust Funds and other sums; the interest of $243 billion is on external debt, i.e. owed to foreign banks and individuals foreign and U.S.. Sources: United States public debt and
Why the National Debt Matters (OMB Watch)

You know, kids, interest rates are set to rise due to our gluttonous, outrageous borrowing, so the interest payments will rise to $500 billion or more a year by the time you can vote. (See bond chart above for the trendlines.) By then, it will be hopeless; by the time you pay the interest on the debt we racked up so thoughtlessly, and our stupendous entitlements like Medicare, Medicaid and Social Security, there will be nothing left for you or your kids. Except, of course, higher taxes.

But you want the unvarnished truth? We don't care about you. We want our Big Daddy, the Federal government, to bail us out of our speculative housing losses. Sure, we know that ultimately Big Daddy is you, the future taxpayers, but that reality is too painful for the fragile, weak-willed, fools that we collectively are--so we hide it behind layers of obfuscation like Fannie Mae and other accounting legerdemaine to hide the fact that every bailout is all taxpayer money being used to bail out private companies and individuals.

Some people will try to say we didn't know better--but that's just a lie. We knew that buying houses with no money down and liar-loans was a gamble, a gamble that housing would rise forever and we could sell for outlandishly easy profits from the gamble we'd taken on huge leverage (no money down! Teaser rates! Stated-income loans!).

Those of us who worked for mortgage companies and money-center banks and brokerages also knew it was all a massive gamble, highly risky and fraught with dangers--but we said nothing because we profited immensely from the charade of "low risk lending." We all knew you don't get something for nothing, but we saw everyone else getting something for nothing and we all wanted to join the party.

We are the most gutless, greediest, most irresponsible generation of consumers, borrowers and lenders in the history of this nation. Not only are we spineless, whimpering, self-piteous worms, we are completely shameless. Rather than stand up and take our losses like adults, we go on TV and rant and rave that Big Daddy is obligated to save us, conveniently forgetting that the money used to bail us out comes from you, our children and grandchildren. We are truly pond scum, life of the lowest order, borrowing from our children so we can keep gambling and trying again for that big "something for nothing" profit.

If a riverboat or Vegas gambler had borrowed every cent possible against his assets and income, how much sympathy would he garner from those who scrimped and saved to have what they have? Zero, zip, nada. Now he demands to borrow money from his children and grandchildren to bail him out of his insane speculation. What should our answer be?

1. Throw him in jail for criminal stupidity and greed

2. Take him out and whip him for criminal stupidity and greed

3. Take away his children and place them in the care of someone responsible

4. All three (whipping first, then jailing, then protect the kids)

5. Cravenly cave into his whining demands and give him more money to continue his speculative frenzy, indenturing his children and their offspring for decades to come.

If we borrow $1 trillion or $2 trillion to bail out all the speculators who gambled and lost playing the Real Estate Roulette Wheel, we are in effect saddling you with trillions in interest payments. $250 billion a year times 20 years is $5 trillion. A trillion here, a trillion there, and pretty soon you're talking real money.

But you know what, kids? We don't care. We loved getting something for nothing, and huge profits without having to make any sacrifices or risk our own capital. Now that we've lost our unearned profits, now we want you to spend your lives paying interest on trillions in debt so we can go on spending frivolously and lending without regard for risk.

Yes, it's pathetic, but we're the Greediest Generation. Sorry about your bad luck to be born to such selfish, short-sighted, blinded-by-avarice people. Hopefully you won't wake up some day and cut off all our entitlements and refuse to pay the debt we saddled you with; that's what we so richly deserve.
The Of Two Minds "blog" is one of the best out there IMHO. Please visit it often and consider making a donation.

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