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Five Crises

During this brief break between conventions, we should all take some time to reflect on what all the noise is about. The stakes this year are unusually high because the USofA is not only much weaker than it has been in a long time, but there are signs that we are at a major inflection point in our history. The reason for both of those is the same: there are Five Crises that are paralyzing our nation that will define the next administration and possibly the next generation. They are all related, and they are all perilous.

Crisis 1: The Federal Debt

Our Federal Debt is closing in on $10 trillion, which is nearly the size of our annual economy. The problem has become more severe in recent years, especially after an auction of Treasury bonds failed to attract one acceptable bid on 13 June, 2006; the potential buyers low-balled financing the debt to gain better interest. The 30 year bond was subsequently re-introduced due to its higher interest, but it’s clear that markets around the world are no longer hungry for our useless paper – and we keep printing more. What’s the limit? We’re obviously quite close, and we don’t want to hit it like a brick wall at full throttle.

Crisis 2: America’s Standing in the World

We ran up our debt for many reasons, the most important being the creation of the American Empire. Since 1950, that $10 trillion in new debt is only half the $21 trillion spent on our military; the two are closely related. The American Empire was built with guns, and the stakes are constantly raised as small nations figure out how to beat us back with guerilla tactics. We’ve reached the point where we’ve stretched our resources so thin that other nations such as Iran, North Korea, and Russia are openly willing to screw with us. Since we built our reputation with our military, we have little in the way of diplomacy and economic ties to fall back on. Now what? Obviously, multi-national cooperation and diplomacy will have to replace the guns we can no longer afford. But we have a terrible reputation as a bully to overcome first.

Crisis 3: Energy Depletion

Almost seventy percent of our oil is imported, which at $120 per barrel is worth $600 billion a year or over $4,200 per household. More importantly, a decent amount goes to nations that we consider our enemies such as the regime of Hugo Chavez. There is no question that having so much money flow all over the world has greatly destabilized the entire planet, let alone the pollution damage. We simply cannot afford to be hostages to other nations any longer, and we must find ways to conserve or develop native energy source. The goal is not necessarily independence but a restoration of a sense of stability to the world market. From there, we can work on keeping the wealth we have inside our own borders as appropriate.

Crisis 4: Failing Financial Institutions

It may sound extreme, but the best estimate yet for cleaning up the problems in the financial sector is about $600 billion. That includes not just Fannie Mae and Freddie Mac, but all the major institutions that are greatly over-extended. We will almost certainly have trouble raising that kind of money in the short term. In exchange for the kind of bailout that is coming the least we can do is to examine how we can regulate markets such as derivatives more closely so that this does not happen again. Perhaps we will not need anything drastic; this may be a matter of improving the disclosure. But it has to be done to prevent another bailout of the same size in the near future.

Crisis 5: The Health Care “System”

One in six Americans has no health insurance, one in three has inadequate coverage, and of the care actually delivered the Rand Corporation deemed 60% to be “sub-standard”. All of this comes with an estimated 25% administrative overhead. How on earth can a civilized people call this acceptable? More importantly, why has the bill for this fallen to employers, the people who create jobs? Could there be a more poorly defined and inefficient system? I’m not one for purely socialized medicine, but it’s clear that nothing is worse than what we have. This must be fixed immediately.

Conclusion

Taken together, the Five Crises are one serious problem. How can one President possibly solve all this? We have to remember that the Five Crises are still less of threat than the problems facing FDR in March of 1933. Our next President will be a Senator, meaning that he will have a reservoir of good will in Congress to tap. Hopefully, with some sharp minds tackling the problems, the USofA will successfully re-invent itself yet again.

These are the stakes at these conventions. This is what the election is about. Anything else is simply noise.

For more on the stakes of this election:
Generations
Generations: Institutionalized
Generations: Do the Right Thing
Generations: Empire
Generations: Re-Invention

15 thoughts on “Five Crises

  1. Wow. Once again, you summarized it like no one else even tries to do. Thanks so much, Erik. I wish more people paid attention to you.

  2. As if all those crises weren’t enough, there’s the dynamics of greed and the fact that players in Congress are inclined to balance special interests with the public interest, which has become little more than leverage for people on both sides of the aisle to get what they want.

    I hope those sharp minds you speak about really do tackle the problems. What concerns me is that solutions too often get stuck in the machinations of party politics, and nothing is accomplished.

  3. Thanks, everyone. The goal is to get some discussion going about difficult topics so that we have the appropriate pressure on the party machinations. I hope that’s possible. As FDR used to tell people who came into his office, “You’ve convinced me, now go out and put pressure on me.”

    I also want to say that I’m not against having a strong military, but I am against having one that is so strong it becomes too easy for the pols to send them off to do missions they can’t do well. As in the Tao Te Ching, “The strongest general keeps his sword sheathed”.

    Getting past the Five Crises is all about brave leadership, and I think we might just have it on the way. But it is needed, and badly so.

  4. Your summary of the crises makes me wonder why _anyone_ would want the job of President. I’m just grateful the Obama/Biden ticket seems to understand and address at least 4 out of 5 of the issues. I’m not convinced a governor of Alaska has any awareness of these national issues…

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  11. How is the economy going to recover without good, high-paying jobs for Americans? The ultimate solution is two-fold: (1) shorter work time to offset labor displacement from productive to nonproductive sectors of the economy, (2) tariffs to shield high-priced U.S. labor from low-paid labor abroad. Both measures would be sternly opposed by the economic priesthood in our country.

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