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Boston University's Kotlikoff Explains Why The US Is Bankrupt

Tyler Durden's picture


Earlier, we posted a link to Boston University's Lawrence Kotlikoff who penned an OpEd for Bloomberg titled simply enough "U.S. Is Bankrupt and We Don't Even Know." In it Kotlikoff took a direct stab at Krugman and all the other hard core Keynesian paradise or bust demagogues: "Some
doctrinaire Keynesian economists would say any stimulus over the next
few years won’t affect our ability to deal with deficits in the long
run. This is wrong as a simple matter of arithmetic. The fiscal gap is
the government’s credit-card bill and each year’s 14 percent of GDP is
the interest on that bill. If it doesn’t pay this year’s interest, it
will be added to the balance. Demand-siders say forgoing this year’s 14
percent fiscal tightening, and spending even more, will pay for itself,
in present value, by expanding the economy and tax revenue. My reaction?
Get real, or go hang out with equally deluded supply-siders. Our
country is broke and can no longer afford no- pain, all-gain 'solutions'." To hammer his critical point in that delaying the inevitable crunch will only make things worse in the end, Kotlikoff also appeared on Bloomberg TV with Erik Schatzker. Koltikoff's argument is anchored by the IMF's July report that notes the US needs to grow at 14% in perpetuity to "grow into" its balance sheet. Obviously, we will be lucky to get a tenth of that.

Some of Kotlikoff's other observations on why the yields on the near and mid-part of the UST curve are now into record territory is that "we have systematic failure of disclosure of what is really happening on the fiscal side. Government and international organizations are lying effectively lying to us, there is no question about it. The present value of the difference between spending and revenues from the CBO is $200 trillion." The BU economist suggests to introduce a comprehensive healthcare reform with vouchers subject to budget constraints, a progressive low-rate consumption tax, and social security reform. He ends: "There are things we could do but we are in deep doo doo." Not the most eloquent interview, but he is certainly correct in broad strokes.


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Wed, 08/11/2010 - 12:27 | 515517 reload
reload's picture

I hope for his sake he is not planning on going swimming or crossing a busy road anytime soon.

Wed, 08/11/2010 - 12:33 | 515535 Internet Tough Guy
Internet Tough Guy's picture

If you live your life in fear you are a slave.

Wed, 08/11/2010 - 12:51 | 515613 Clampit
Clampit's picture

"We are turning into a nation of whimpering slaves to Fear -- fear of war, fear of poverty, fear of random terrorism, fear of getting down-sized or fired because of the plunging economy, fear of getting evicted for bad debts or suddenly getting locked up in a military detention camp on vague charges of 
being a terrorist sympathizer."

Wed, 08/11/2010 - 12:55 | 515637 aerojet
aerojet's picture

That's because fear is all the Boomers have left.  And I would add that as soon as the fear is broken by the populace, the game is up.

Wed, 08/11/2010 - 14:10 | 515875 Ripped Chunk
Ripped Chunk's picture

We are gettting closer.  All species, no matter how stupid reach a point where they are tired of being afraid. Then the situation changes.

Mon, 04/04/2011 - 12:32 | 1132877 kito
kito's picture

just the other day, i heard the antelope were fed up with fear of the cheetahs continuous assault on their herds, and they are now staging "gorilla" warfare :)

Wed, 08/11/2010 - 14:38 | 515963 sgt_doom
sgt_doom's picture

Negative -- David Rockefeller, Peter G. Peterson, Hank Greenberg and Henry Kissinger aren't boomers, but they are part of Tom Brokaw (the newsy whore) "The Greatest Generation" (Man oh man, did he ever get the generations mixed up!) who screwed the pooch most royally.

Wed, 08/11/2010 - 12:28 | 515527 whatsinaname
whatsinaname's picture

I sense a few smiles lighting up on ZHer faces today..

Wed, 08/11/2010 - 12:48 | 515601 Rainman
Rainman's picture

What he says is not really news to most of us. The fact that Bloomberg posted it is news.....their most popular view of the day.  

Wed, 08/11/2010 - 14:40 | 515976 sgt_doom
sgt_doom's picture

+1000, Rainman, those of us paying attention realize that the US of A technically went bankrupt in 2004, and that Korporate AmeriKa is only capable of offshoring jobs (and bringing in foreign scab workers), peddling securitized debt and doing those godawful leveraged buyouts to further destroy companies and employment.

If they didn't offshore all those jobs to China, how would China ever afford to buy all those Treasuries which Goldman Sachs, JPMorgan Chase & Morgan Stanley speculate on their ELX Futures?

Wed, 08/11/2010 - 12:54 | 515628 Perseid.Rocks
Perseid.Rocks's picture

We can play tricks with the balance sheet for a long, long time, but when outflows exceed income and our debt is so high that we're borrowing to pay debt service, and interest is compounding on itself, then things start to break, promises (social security, medicare, medicaid) get reneged on, and debts are defaulted on. We're just about there right now.

Bennie better consider buying up ALL the treasuries, lest interest rates start ramping upward and we have to sell Old Faithful and Jellystone Park to the Chinese.

Wed, 08/11/2010 - 12:35 | 515533 Noah Vail
Noah Vail's picture


So . . . even the establishment is starting to have bad dreams. Yes, Mom, there REALLY are snakes under my bed.

" . . . we have systematic failure of disclosure of what is really happening on the fiscal side." Uhm, methinks you mean systematic REFUSAL  of disclosure. The miracles of denile, not just a river in Egypt.

Wed, 08/11/2010 - 14:37 | 515947 hedgeless_horseman
hedgeless_horseman's picture

Take a moment to email the following message to your Congressman.  You can find there email here


U.S. Is Bankrupt and We Don’t Even Know It: Laurence Kotlikoff -


"Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future."


INSERT CONGRESSMAN'S NAME HERE, this is exactly why the people operating Enron went to prison. Do you believe that Congress is held to a lower standard than corporate management?

Wed, 08/11/2010 - 21:16 | 516961 Buck Johnson
Buck Johnson's picture

The elite and the financial leaders of this country have produced a web so intricate and complex, that it has caught even the spider/them.  They never thought that this would happen and know that it is, they are running scared and are wanting to keep everything quiet.  But as one person said, how long can our outflow be larger than your inflow of money.  Eventually it has to end and when it does, the promises as another said get reniged on and taxes go up and jobs get cut (both private and public including the federal govt.). 

Imagine if you will if all those 78 million babyboomers find out that as they are a few years or just got on to SS that it will be cut 50% or eliminated.  They will hit the roof, and go crazy.  What I think is going to happen is that there are two big lumps of money sitting on the market, pension funds and 401k's.  They will either by hook or crook make it mandatory that these have to be invested into US treasuries or US debt of some type.  This way it will mitigate or not make them make that announcement and allow them more time to figure out what to do.  It has already been trial ballooned already on more than one occasions having one the 401k's being invested in the SS fund (which doesn't make sense since we have been paying into it already), and 6 months after that seeing if they would invest in US debt/treasuries.


Wed, 08/11/2010 - 12:34 | 515541 Fidel Sarcastro
Fidel Sarcastro's picture

Debt?  We don't have debt!  We're the United States of Arrogance, baby!!  We never have to pay debt back...USA...U S A...(chant with me) U...S...A!


Wed, 08/11/2010 - 12:36 | 515543 Overpowered By Funk
Overpowered By Funk's picture

That's all well and good, but you see the Fed has this thing called a printing press and they will print, print, print and print until it all get's better. A Nobel prize winning economist told that to a Nobel prize winning president. So, it's cool man.

Wed, 08/11/2010 - 12:37 | 515554 Noah Vail
Noah Vail's picture

Hah, if they print, try importing with worthless dollars. We don't make anything any more, not even the clothes on your back or the shoes on your feet, nor the forks we feed our faces with. Wreck the dollar and we starve to death for lack of fuel.

Wed, 08/11/2010 - 16:34 | 516427 Nonconformist
Nonconformist's picture

That is what aircraft carrier battle groups are for.  It isn't that difficult to convince the American public that the oil really should belong to the USA.  Don't expect the US to go under quietly.  The sense of entitlement is way too strong.

Wed, 08/11/2010 - 13:44 | 515794 BorisTheBlade
BorisTheBlade's picture

Every taxpayer should get a Nobel prize, maybe then the whole thing is gonna work.

Wed, 08/11/2010 - 12:36 | 515546 Sulla
Sulla's picture

No comment from Washington, I presume. Maybe Churchill was right - "America always does the right thing - when all other options are exhausted".

Wed, 08/11/2010 - 12:36 | 515550 ElvisDog
ElvisDog's picture

Since when does "eloquence" = "wisdom"? I know that is how we choose our presidents, but I think we need to listen to what people say rather than how smooth and soothingly they say it.

Wed, 08/11/2010 - 14:16 | 515893 romanko
romanko's picture


Wed, 08/11/2010 - 17:18 | 516558 clotario
clotario's picture

So true! We should have elected nonsense-spewing Palin and that other guy...what was his name again? At least with her you knew you were being handed a plate of horsesh*t!


Please, although O might be a disappointment to all and sundry, remember the choice we were left with back in '08.

Wed, 08/11/2010 - 12:38 | 515551 Malaespina
Malaespina's picture

He is not bear enough, Boston U is bankrupt too!

Wed, 08/11/2010 - 12:39 | 515557 Jason T
Jason T's picture

"they are lieing." so blunt as if it's all so obvious.  but yet it is so obvious...the lies.

Wed, 08/11/2010 - 12:40 | 515561 Turd Ferguson
Turd Ferguson's picture

This is from JSM this morning. I feel this is 100% spot on.


Hi Jim,

Given today’s Federal Reserve balance sheet policy, could this be The Playbook?

1. The Federal Reserve feels constrained in their ability to purchase treasuries if they have to wait for mortgage backed securities to mature. They decide to sell this junk paper to free space on their balance sheet.
2. The Federal Reserve offers to sell the junk mortgage paper back to the Big Banks whom they purchased it from in the great bailout of 2008-09. 
3. The Big Banks only offer to pay market rates for the worthless paper, quite a discount to what is on the Fed’s books and what they were paid a short while ago (good news, an audit of the Fed on this is not likely). 
4. The Federal Reserve clears substantial worthless dollars from their balance sheet which allows for quite substantial purchases of treasuries. 
5. The Big Banks, realizing the last "dip at the bonus well" may have passed, devise a revitalized pretend and extend and mark up the recently purchased worthless paper back to a "reasonable mark to model level." 
6. The Big banks report record paper profits and more importantly, record bonuses. 
7. Main Street remains asleep as this policy is reported as non inflationary. 
8. Quantitative Easing accelerates toward infinity.

I doubt this playbook would make much of a stir with Main Street. Who cares, right? "They" are just trying to help us, right?

Perhaps a cheeseburger for $300 is the only thing that will get through to anyone. At that point, it’s too late.


Dear CIGA Glen,

You have put it all together. If this was not the playbook, it sure as hell is now.


Wed, 08/11/2010 - 12:53 | 515626 traderjoe
traderjoe's picture

Why does the private Central Bank need to clear up room on their balance sheet? They have a government granted monopoly on money/credit creation. They can simply create the create the credit/money for free - without any constraints (and probably even with some market encouragement) and then earn [free] interest on their entire balance sheet. BTW, banks receive 6% dividends on their ownership stakes of the FR. 

Wed, 08/11/2010 - 13:07 | 515600 MarketFox
MarketFox's picture

The gentleman is telling it like it is....

He mentioned to eliminate the income tax....and replace it with a consumption tax...

And he has it right about this.....

Just think about it...


Businesses wanting to domicile in the US....

Job creation via entrepreneurs....

Just to start....


This gentleman has it together....

Wed, 08/11/2010 - 12:48 | 515605 lynnybee
lynnybee's picture

..... the government is bankrupt, my kids are bankrupt, i'm bankrupt, my ex is REALLY bankrupt... so what else is new ! ?   What I want to know is who allowed this much money to be lent out in the first place !   When I was young (1960's) NO ONE in their right mind would allow me to borrow money !   We're all bankrupt, right .......... or, was it that the big banks were so greedy for a steady stream of interest payments TO THEM FROM ALL OF US !   Our young people are not experienced in finances & THEY KNEW IT & TARGETED OUR PRECIOUS YOUNG PEOPLE TO GO INTO DEBT FOR ANYTHING / EVERYTHING !    fuckers.

Wed, 08/11/2010 - 13:04 | 515657 divide_by_zero
divide_by_zero's picture


The NEA has targeted them from the first day in public school. Under-educated for the most part, and in place of education subjected to "progressive" indoctrination to do what the man says, practice *correct* group-think, & shout down opposition.

Wed, 08/11/2010 - 14:05 | 515863 VWbug
VWbug's picture

if that's true then I would say parents have done a horrible even irresponsible job raising their children.

whose fault is it that no one is able to think for themselves?



Wed, 08/11/2010 - 12:49 | 515609 traderjoe
traderjoe's picture

It's so OBVIOUS that our country, the EU, Eastern Europe, Iceland, and the UK are fiscally bankrupt. I can't speak for the other countries, but the US is morally BK as well. There is no desire for change. There is no constituency for austerity. Everyone is sucking on the Gov teat. This will all end with so much disappointment, despair, and mistrust when the sheeple finally wake up and realize that there is nothing, and nothing more will be coming to them. I am both frustrated and worried. 

Wed, 08/11/2010 - 13:10 | 515685 lynnybee
lynnybee's picture

good.  I applaud you for being a truth-teller.   keep on talking true.   I told my adult children that long after I'm dead they will still be talking about this time in history.   My children grew up in a bubble, I've been trying to educate them that they will know both lives, the life they had as children in a bubble & their adult lives of chaos, revolution, deflation, hyperinflation & finally a return to some kind of sound money...... we are going back to colonial days if we are lucky.    if we are not lucky, we are going back to the 1400's of serfdom & subsistance living.   God help us all, but, I'm finally ready to face this great unknown & try to live through the hardship.     I cannot remember who said this, it was a few years ago that I read it (I think it was DAVID TICE, but don't quote me)  :   In 10 years from now people will be saying, "WHAT THE HELL WERE THESE PEOPLE THINKING !"

Wed, 08/11/2010 - 13:14 | 515700 Babalooee
Babalooee's picture

is that stand alone frustrated and worried, or taken from a long list? If stand alone, you got it made kiddo.

Wed, 08/11/2010 - 13:23 | 515737 Assetman
Assetman's picture

I can't believe you forgot Japan! :)

Wed, 08/11/2010 - 14:09 | 515871 aerojet
aerojet's picture

Wait a minute, let's not throw morality into the mix, okay?  Europeans are the ashsoles who invented the idea of voting themselves largesse from other people's pockets.  And let's not forget all the whorehouses over there (not that I care, but we are talking morality here).



Wed, 08/11/2010 - 14:40 | 515969 Temporalist
Temporalist's picture

Sex is not immoral. 

Wed, 08/11/2010 - 14:45 | 515988 VWbug
VWbug's picture

whorehouses??  where??

um  my 'friend' wants to know...

Wed, 08/11/2010 - 18:06 | 516651 schadenfreude
schadenfreude's picture

But having worlds biggest porn/sex industry is morally ok?

Wed, 08/11/2010 - 12:51 | 515616 Hunch Trader
Hunch Trader's picture

It would've been so much easier to let the tech bubble deflate in peace...US would probably be over it by now. But Greenspam couldn't let that happen and now here we are, 10 years later, with 10 times the problems...

Who is going to be courageful enough to let deflation happen and let bad debts and leverage be purged out of the system? If it's not done now, the US economy will turn into a surefire future crash, utter and total.



Wed, 08/11/2010 - 12:55 | 515634 traderjoe
traderjoe's picture

Yup, the first recession would have been the easiest. So many lost opportunities. But, this has been the plan all along...

Wed, 08/11/2010 - 14:12 | 515884 VWbug
VWbug's picture

I think that's a key point that doesn't often get discussed.

Krugman and his ilk all say we couldn't possibly let anyone default as that would actually cause pain.

I mean, can you imagine? Some people might actually have to pay for mistakes instead of being rewarded for them?

So now (or down the road i should say, as we surely have kicked the can a long way down IMO) we will suffer a whole lot worse pain when it all comes tumbling down.

I only wonder if krugman et al realize this and just expect to be dead by then?

Wed, 08/11/2010 - 12:52 | 515622 Oniram
Oniram's picture

I loved this article, I agree 1000000%


I am going to go practice with my shotgun after the bell. I am ready for civil unrest, but I do need to work on being more handy, I am a computer nerd, I need to learn a trade. A real trade.

Wed, 08/11/2010 - 13:20 | 515724 papaswamp
papaswamp's picture

Blacksmithing would be handy. personal favorite....alcohol distillation.

Medical uses, fuel or party drink.

Wed, 08/11/2010 - 15:25 | 516107 Moneygrove
Moneygrove's picture

I want to learn how to brew my own beer , I think sam adams has a brew your own beer kit.  

Wed, 08/11/2010 - 14:15 | 515889 VWbug
VWbug's picture

so you are planning to shoot your neighbours?


Wed, 08/11/2010 - 14:43 | 515980 ColonelCooper
ColonelCooper's picture

Maybe he would if they kicked in his door at 3:00 A.M. to take his last can of Spaghettio's.  Can't say as I blame him.

You would do differently?

Not saying it will come to that, but there is neither harm nor shame is being able to defend yourself.

Wed, 08/11/2010 - 15:05 | 516005 VWbug
VWbug's picture

wow  you must live in some shit hole of a place.

me, I know all my neighbours, and we're good friends. I also have lots of other friends from childhood, and we still get together regularly, 40 years later.

Close family too of course.

And no, I don't live in fear that they will kick my door down at any time of day or night. I'd voluntarily help them you see?

That's what normal people do in times of disaster and distress.

The abnormal ones cower in their shelters waiting to be attacked, hoarding their 'precious' gold, like the greedy SOB's they rant and rave about.

They curse the rich and in the same sentence spout hopium of becoming rich by buying an ounce of 'physiçal' which they are going to defend to the death and then buy apartment complexes with.

I've seen hypocrisy before, but nothing like on this site.

Wed, 08/11/2010 - 15:20 | 516089 ATTILA THE WIMP

I am an American. I knew a Croatian whose parents were killed in the war in ‘91. Their throats were slit and their house burnt down with their bodies inside. My Croatian friend found out who did it - neighbors who he had played with when they were kids. He tracked them down and riddled them with an AK47. During starvation and civil war people go insane.

Wed, 08/11/2010 - 15:46 | 516207 VWbug
VWbug's picture

while you worry about starvation and the coming civil war I plan to do a bit of travelling, Croatia is high on my list funnily enough.

You enjoy your paranoia, I'll enjoy a nice crisp reisling, preferably with a view.

Wed, 08/11/2010 - 17:18 | 516557 litoralkey
litoralkey's picture

Your reisling will not be made due to Germany's longstanding problem, lack of energy in form of fossil fuel or oil.

Unless you are going to be drinking Aussie reisling, which be nice, but without international trade lines of credit most of Australia's vinyards will be abandoned due to lack of energy supplies and foreign markets.




Wed, 08/11/2010 - 17:37 | 516604 VWbug
VWbug's picture

ummm  i will be traveling this year, not 5 decades from now

Wed, 08/11/2010 - 17:15 | 516545 litoralkey
litoralkey's picture

First off, my father's family had been chased off their land twice in the last 5 generations by neighbors. 

Secondly, in "gateway states" in the United States, in some counties over a third of the population is foreign born, there is no "community".

Third, in California and Florida and other states with intense floreclosure pressures, depressionary levels of employment and household wealth, which includes more than 1 in 4 Americans in total, the entire stock of food for any particular county is less than a 5 day supply.  NYC's supply is under 72 hours. 

Fourth, FEMA and DHS (and state level equivalents) have planning committees to deal with natural disasters like hurricanes (NOLA), or massive flooding(Tennessee), or the big quake (California), and every single one of those plans will not last upon first contact with the enemy.  The enemy being chaos and fear.

Fifth, 20% of American youth suffer from "food insecurity", (granted this study suspect as a form of lobbying using a damn lie of a statistic ), but using that number, within 2 weeks, a good quarter of American children will be starving to death and the kids and their parents are going to do anything necessary to keep the kids fed.



Wed, 08/11/2010 - 14:34 | 515954 hbjork1
hbjork1's picture

If you are really a computer nerd and actually know the hardware as well as the software, you should be well equipped for survival.  I have at least two old systems that, with temperature measuring ICs that cost less than $1 in modest quantities could be used for household temp control.  There are also a lot of small businesses that could profitably use temp control if some one could set the up with it.  Boards that are now obsolete would have been to die for two decades ago when "modern" heating and cooling systems, still in use, were installed. 

But you would have to know what to do. 


Wed, 08/11/2010 - 15:02 | 516031 VWbug
VWbug's picture

can I politely suggest you might want to learn some social skills? You know, make some friends, meet some new people, stop worrying about your neighbours wanting to steal your stuff?


Wed, 08/11/2010 - 17:51 | 516634 Jendrzejczyk
Jendrzejczyk's picture

May I politely point out that you have been the most abrasive poster on this thread.

Wed, 08/11/2010 - 18:46 | 516702 VWbug
VWbug's picture

interesting take on things

guy says he is practicing shooting (people), which in most conversations, even on the insane web, would be considered reason to recommend serious psychological help, if not a call to the local authorities.

Me suggesting (however rudely) he reconsider is abrasive.

Interesting thought process there.

I suppose 'columbine' gets your rocks off huh?

seriously, seek some help.

Wed, 08/11/2010 - 19:53 | 516821 Jendrzejczyk
Jendrzejczyk's picture
"by Oniram
on Wed, 08/11/2010 - 12:52


I loved this article, I agree 1000000%


I am going to go practice with my shotgun after the bell. I am ready for civil unrest, but I do need to work on being more handy, I am a computer nerd, I need to learn a trade. A real trade."

I assume you were responding to this post. TPTB must have blocked the part about him rolling in his neighbor's blood and laughing with glee from my computer.

Thu, 08/12/2010 - 08:31 | 517389 VWbug
VWbug's picture

I'm sorry that you are not able to follow an assumption to it's logical conclusion

Thu, 08/12/2010 - 08:32 | 517390 VWbug
VWbug's picture

I'm sorry that you are not able to follow an assumption to its logical conclusion

Wed, 08/11/2010 - 12:55 | 515630 SheepDog-One
SheepDog-One's picture

Krugman needs to be strung up by his nuts!!

Wed, 08/11/2010 - 14:42 | 515981 sgt_doom
sgt_doom's picture

I've always though Krugman a complete douchebag -- which is not to say he's despicable -- simply never been a bright nor knowledgeable guy.

Does anyone know his SAT scores?

Wed, 08/11/2010 - 13:01 | 515649 Thomas
Thomas's picture

Kotlikoff has been saying this for years. The $44 trillion liabilities quoted by O'Neill that, I believe, got him fired came from Kotlikoff's studies. He wrote up his dire views in "The Coming Generational Storm". He declared we were bankrupt in a paper published while at the Federal Reserve as part of their VWP (Visiting Weasel Program) on Federal Reserve letterhead He is, BTW, a cash/gold kinda guy also with his personal finances I believe.

I have suggested that these forces of goodness (Simon, Warren, Kotlikoff, Stiglitz, Ferguson, Rogoff, etc. etc.) begin to speak with more of a synchronous voice, although it is unclear whether that would help.

I am guessing that the solution will be to simply hit the wall with a big "thud". It will bring onomatopoeia to a new level.

Wed, 08/11/2010 - 13:08 | 515672 unionbroker
unionbroker's picture

What is wrong with saying the same thing for years , if you get cancer it is not going to go away just because you ignore it and say you don't have it

Wed, 08/11/2010 - 13:12 | 515696 Thomas
Thomas's picture

It was my intent to give him full credit not criticize.

Wed, 08/11/2010 - 13:26 | 515745 eatthebanksters
eatthebanksters's picture

Its as clear as can be...we're headed down the same road as Greece.  Yet our government does not seem to understand or care.  The $26 billion aid to teachers package yesterday (which by the way works out to $162,500 per teacher) may buy a few votes at the next election, but will it matter when we run out of money and the riots start.  I don't understand it, tough choices now should be much easier than austerity choices later.  Can someone explain it to me?

Wed, 08/11/2010 - 15:28 | 516125 Moneygrove
Moneygrove's picture

Duh read the bill !!! only 10 billion is for teachers !!!!!! end bush tax cuts now !!!!!!!!

Wed, 08/11/2010 - 13:32 | 515768 Temporalist
Temporalist's picture

Argentina isn't so bad...could be Haiti instead.

Wed, 08/11/2010 - 14:06 | 515864 Dr. No
Dr. No's picture

Good thing this Phd has told me what I could not figure out by looking at those huge strange numbers on the debt clock.

Wed, 08/11/2010 - 14:12 | 515881 Victorio
Victorio's picture

All this commonsense, strait forward accounting of the situation is beginning to bore me. All The mystery is gone and has taken the fun out of the whole bubble-pop-surprise thing. I think there might be a few surprises in store yet as the present situation is untenable and requires it being played into a larger heavier game to convert value on the situation so to speak... Make sure you know where you draw the line lest you be surprised to find yourself on the wrong side of it. 

I have spoken.


Wed, 08/11/2010 - 14:45 | 515990 ColonelCooper
ColonelCooper's picture

Chumba wannabe?

Wed, 08/11/2010 - 19:44 | 516804 Victorio
Victorio's picture

Victorio is. None other has come before...

Wed, 08/11/2010 - 14:55 | 516016 Frank Owen
Frank Owen's picture

"They don't want to put out bad news, nobody does... does that mean they're effectively lying to us?" Hilarious.
The dicks in charge can't even get past step 1 of the 12 step program.

Wed, 08/11/2010 - 15:28 | 516121 Grand Supercycle
Grand Supercycle's picture

DOW/SP500 daily charts are now bearish.

So the downtrend I first mentioned in early May this year, can now resume.

Wed, 08/11/2010 - 15:38 | 516167 Temporalist
Temporalist's picture

Kotlikoff is on again now speaking with Carol Massar and Matt Miller.

Wed, 08/11/2010 - 15:49 | 516220 elfuturo
elfuturo's picture

I'm confused....does this mean the gentleman recommends shorting a market in which the US taxpayer of the future can be enlisted as a buyer of last resort (i.e., long bond)?

Wed, 08/11/2010 - 16:40 | 516448 mynhair
mynhair's picture

Geez, saw the whole interview this morning.  The moron said "Clinton administration" twice.  Nobody noticed?

Ya, I know, "they are all the same".

Still, it proves the klown is senile.

Wed, 08/11/2010 - 17:04 | 516522 litoralkey
litoralkey's picture

The CBO first publicly declared a future requirement to double tax collections in the draft 1998 omnibus bills.

During the Clinton administration.


Wed, 08/11/2010 - 17:02 | 516518 litoralkey
litoralkey's picture

I'd like to point out that the CBO has had a consistent line about the future solvency of the US Federal Government and the required doubling of all taxation SINCE THE DRAFT 1998 REPUBLICAN CONTROLLED CONGRESSIONAL OMNIBUS APPROPRIATIONS BILLS.

At the time the only relief was institution of the PAYGO system, which was then floated repeatedly.

One of the ways the IRS suggested improving collections until such time as the politicians were willing or forced to double the tax rate was to introduce electronic tax filing system, which became the IRS Restructuring and Reform Act of 1998.

The IRS has again increased the onerous regulations of tax reporting in 2011 to increase collections until such time as the politicians are willing or forced into doubling the US tax collections.

In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules:

The 2010 Health Care Act adds “amounts in consideration for property” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(1)) and “gross proceeds” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(2)) to the pre-2010 Health Care Act categories of payments for which an information return to IRS will be required if the $600 aggregate payment threshold is met in a tax year for any one payee. Thus, Congress says that for payments made after 2011, the term “payments” includes gross proceeds paid in consideration for property or services.

Wed, 08/11/2010 - 17:39 | 516609 Winston Smith 2009
Winston Smith 2009's picture

His column presents the truth, but also suggests fixes that will not work.  Karl Denninger disects it here:

Wed, 08/11/2010 - 19:51 | 516818 bada boom
bada boom's picture

It was one crazy day, but I think Lawrence Kotlikoff telling it as it is on bloomberg takes the prize.


Wed, 08/11/2010 - 22:56 | 517099 Madhouse
Madhouse's picture

As I have screamed "we are fucking bankrupt" a few times over the last few months on this sight, I know this guy is right. Buy the longest, most out of the money put on TLT and bet the ranch. Fuck it. Then go out and buy a nice bottle of 12-yr old scotch.. 

Believe me, that will make you feel fucking great.


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