Friday

United States is Going the Way of Detroit

“I compare it to what’s happened in Detroit, where 10 years ago we knew they were broke, and finally, one day they said they were ‘broke.’ The outcome of that was they told the pensioner, ‘You can only get 33 cents on the dollar.’ And the same will happen to the US (pensioners).

What happens when someone’s (social security or pension) check falls by 50% or 60%? The economic chaos that will ensue will be unbelievable. But it’s going to happen. It’s so clear cut there is nothing that can be done about it. The whole world has this huge debt problem. If you have this view that the countries are insolvent, what does it mean for all of us? I’m talking about, as human beings, how is everyone going to survive? It’s a scary prospect.

We don’t have enough jobs and income to support the profligate governments that we have. We just don’t have enough. The disposable personal income and wages keep going down. We have 50 million people on food stamps, and we get 10,000 people a day retiring. Anybody, mathematically, can tell you we can’t afford it.

What do we cut first? So far in the US they have cut nothing. It’s interesting, Eric, by analogy, even in Canada, which has a pension fund, people under 35 have already been told that they can’t retire until they are 67. We (Canadians) know we don’t have enough, and we have a fund with money in it. In the US there is no fund. They pretend that there is some fund there, but there is literally nothing in the fund. So there are going to be some (horrific) consequences down the line.”