Merry Christmas 2009! The Deficit Now Equals The Cost Of All US Houses!
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This may seem like a completely impossible statistic but it is one that is difficult to negate. The current market cost of every single residential property (houses, condos, apartments, cabins, etc.) in the United States is currently $19 trillion. The current US deficit is bubbling under the $15 trillion mark and with the prospect that more trillions need to be allocated towards TALF and other programs, could be significantly higher by year's end. When we take into consideration that the cost of residential properties is plummeting, the continuation of this trend through the next three quarters reaches a magical meeting point: The total cost of every single house in the United States equals approximately $17 trillion which will be what the country owes by then.
Look at it this way: When you buy a house for $250,000 and put a $200,000 mortgage on it, you can be said to have $50,000 equity. However, when we are calculating the total cost of all residential structures in the nation, we are not even remotely concerned with how much of the house value is home owner's equity and how much is mortgaged value. We're looking at the total cost of the house. All of it. Every brick. Who owes what to whom, whether it be mortgage lender, bank, etc. is irrelevant.
We owe our entire houses... all of them... to pay off the national debt.
Therefore let us assume that there is some hypothetical trillionaire out there. Maybe some Chinese Madoff who managed to out Ponzi the Ponzi Master himself with a ripoff scheme that preyed upon the Beijing elite and has managed to accumulate himself a nice, tidy fortune of around $17 trillion. Through the goodness of his heart, he decides that he is going to pay off America's national debt before the $1.5 billion a day interest payments (yes, you read it right... that national debt bears current interest of $1.5 billion a day) wipe the country off the face of the earth. So he goes to Washington, D.C. with the biggest check that the planet has ever seen and "poof" the deficit is paid off. Yippee! America is finally debt free! What a time for celebration!
Er... except for one minor issue. You see, Mr. Chinese Madoff wanted to have his $17 trillion collateralized so guess what? He now owns your house. All of it. It doesn't matter if you're living in a studio apartment in a bad part of Detroit, or if you're residing in a $20 million mansion overlooking Zuma Beach. You no longer own your house. Mr. Chinese Madoff does. Your mortgage lender no longer has any claim or lien on your house either. The money owing on the mortgage disappeared as well, with barely even a thank you from Mr. Chinese Madoff. He now owns, free and clear every single residential structure in the United States.
Granted, the chances of a Mr. Chinese Madoff or anyone else coming up with a $17 trillion check are remote at best. But the basic point is that our incredibly myopic leaders and our own merciless thirst for consumer baubles on credit have wiped out the value of every single house in the United States of America. We owe it all. Every dime.
Oh, and did I mention that the current Medicare and Social Security outstanding liabilities are approximately three times the national debt, at almost $50 trillion?
Well... I sure hope that you, and your children, and your grandchildren are going to be very wealthy, as you have a lot of money to pay off in taxes!
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Merry Christmas 2009! The Deficit Now Equals The Cost Of All US Houses!
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Right now the USA is for sale. Anyone can come up with the money and they own the country. Now, the amount of money is very high, but hey, who knows? Stranger things have happened in human history!
I know, it's scary. I heard Chinese was a hard language to learn. LOL
Mandarin Chinese was developed by the ancient ruling classes as a way to enslave their peasant populations by keeping them illiterate. It took about 20 years to master Mandarin and the peons couldn't possibly afford the time or the money to learn to read and write! :(
I would love toknow where you found those stats. I do not dispute them. Someone is going to have to hand wave the fake money away, it is long past ludicrous
The value of housing comes from the S&P/Case-Shiller Home Price Indices
http://www2.standardandpoors.com/portal/site/sp/en
The deficit figure comes from the Treasury Dept.
http://www.treasurydirect.gov/NP/BPDLogin?applicat
Note that this site shows it as close to $11 trillion and I am taking into account the rest of the announced bailouts which will take place this year and have not yet been actually disbursed for another $4 trillion.
Long past ludicrous is a very good way of putting it. :(
Merry Xmas Hal, we might not have a chance to say this to one another when it comes :)
Misha, my friend, by Xmas time this year, I am half expecting to be in an off the grid cabin in the mountains spending my day splitting wood, guarding my food stash, and oiling my guns. I hope that there really will be a Xmas this year, but right now, it doesn't look too good! Therefore, advanced Merry Xmas to you and yours! :(
Everybody deposits money in banks. When 50% of them withdraw at the very same hour, the entire system collapses, right? All these years the economists have been relying on statistics and the law of probablity. The fact remains that the law of probablity is controlled by statistics. Ha ha ha ha ha ha !!!!!!!!
Am I far wrong, or nearly there? :)
You're spot on. In fact, banks in the USA operate at a 10.3% cash asset ratio, (compare that with 80% in Jordan) thus if 11% of all customers want their cash back the bank is sunk. The whole thing is a huge house of cards!
And it is not about probabilities, it is about prevailing social mood :)
As long as general public believes money is save in the bank - it is true. Yet the moment enough people start fearing it is not safe, it stops being safe :)
How about a self fulfilling prophecy at its best? ;)
People who live in a house of cards should not shuffle.
Here and there on hubpages I've heard mention of the Amero. Is there any chance that the powers that be could just throw up their hands and say, well it didn't work out for the dollar. It's just a case of Do Not Resussitate. so now that we have the death certificate, let's roll out the Ameros and see what we can do with them?
Ok, so that's a very far-fetched scenario, but we're in uncharted territory here.
Misha, the prevailing social mood right now is pre-Apocalyptic. All of those countless trillions of dollars which the banks frittered away in illusory "now you see them, now you don't" mortgages were all depositors funds in one way or another. And now they're gone forever, never to return. As far as I'm concerned, the US Gov't can raise the FDIC limit to a milliion dollars or more...you're not going to catch me with any significant amount of money in any bank. There was a time in the not too distant past when money stopped being money and became a commodity to be traded, inflated, deflated, and screwed around with in any way that a handful of powerful bankers and government officials wanted. That was truly the beginning of the end of the American Dream.
Tom Rubenoff, we didn't just shuffle, we shredded.
Amanda Severn, Herb Grubel's Amero concept is profoundly flawed. First of all, any valid North American Union has to exclude Mexico as it is one of the countries which most firmly embodies the "cheap uncompetitive labor" philosophy. Even in that case, the Amero would primarily benefit Canada even though pegging the Canuck buck to the US greenback is an option that countless Canadian governments have rejected. A US-Canada Amero is rather pointless, as it's just another illusory fiat currency that is not going to make any valid difference unless the currency is pegged to gold or another fixed and unfloatable reference point. We could do that to the dollar right now without changing its name or anything else. Bretton Woods worked perfectly well right up to 1971 until Nixon killed it and with a bit of tweaking, Bretton Woods II could certainly help save our economy.
Sorry to be totally ignorant here (I'm a Brit, so don't know all the history) but, what was Bretton Woods?
It was the post WWII international (including Britain) agreement to peg currencies to gold, but it did go far beyond that:
http://en.wikipedia.org/wiki/Bretton_Woods_system
Thanks Hal,
I'll have a read.
Well, its just that you pull out all your money thinking that its not safe there any more. Then you watch ... for a short spell. Nobody else withdraws. Then you put it all back. Then those who were on the verge of withdrawing hold on. It affects everybody else in similar fashion. Then our deposits are safe once more! So it is just that "moods" rule!!!
Is the money then safe or "safe?" LOL!
Bank security of depositors funds is reliant on much more than moods. Had the banking system not so blatantly raped the entire economic structure of the country and the world, the depositors would be in a very different mood. The bottom line is that the deposits are not safe since the currency is not safe. The dollar is an illusion which held together only as long as there was a never ending upward spiral. Now that the entire mirage has dissipated, it is time to pay the piper and what a payment it will be.
As I write this I'm watching the Dow hit intraday lows that haven't been seen since 1996. We're now just 150 points above the 6,500 mark that I stated was the RUN FOR THE HILLS level.
From my:
http://hubpages.com/hub/Surviving-A-Global-Depress
" I’d use this set of circumstances as a rule of thumb: when the Dow averages 6,500 for a two week period and it's accompanied by an uptick in social unrest, it’s time to hit the road. Not next month, not next week, but today."
If you love your family and your children, take steps TODAY to keep them safe. I assure you that what is coming is completely unimaginable. Don't think for a second that anyone will come up with a magic wand to make this all go away. The world we knew even a year or two ago will NEVER EVER EVER return. And what is going to be in its place is going to be ONE SCARY WORLD.
Beedeah, Beedeah, Beedeah... That's All Folks! :(
You might want to read the Hub I've just written about the Fed's jaw-dropping admission that they will not release the names of who is receiving $1.9 trillion or what they're going to do with it! This beggars belief!
I read it already :)
Well... are you booking a flight to D.C. to join the MILLION HAL MARCH? :)
I don't need to book it - I live 10 minutes drive from the white house :) Yet I won't join the march, sorry. That's your war guys, not mine...
Hey, if you're that close would you mind running up to The Hill for me and delivering a message? :)
Sure, no question about that :)
It's a very simple message: STOP DESTROYING AMERICA'S FUTURE! :(
Do you think anybody will listen to me? They even don't allow me to substract my kid's education expenses from my taxable income and you think they will listen to what I have to say?
Actually even if they do listen and magically want to do something about that, we both know they can't already, the tipping point is long passed...
I agree with you fully about the tipping point. That's why I'm surprised that a wise and intelligent man such as yourself isn't headed to the backwoods right now with a truck full of food and ammo! :(
You are not exactly on your way yet, too :)
I would have been out of this country a couple of years ago if that was entirely for me. My wife loves her job here, and generally is afraid to make any big change since we have two kids.
I don't know what it takes to convince her to take the risks, hope less than hordes running over our house and killing everybody for food...
My dear friend, I'm WAAAAAAAY closer to that step than anyone really knows. Given the fact that we're in North America, which next to Australia may be the safest continent, I wouldn't leave the USA if I were you. There are plenty of places right here that are remote enough that nobody will notice you... as the hordes run over your old house... :(
BEWARE! THE END IS NIGH! Nah... I'm too fat to hang around city street corners wearing a sandwich sign. :)
I would argue about it being the safest. I would rather think about places that were not affected by fiat money and their derivatives, like some parts of East Asia, Africa, and Arab World. Basically third world countries, that are already poor, that know how to handle being poor without killing ya neighbor :)
In my Hub:
http://hubpages.com/hub/Get-Through-Any-Disaster--
I discuss various criteria for the ultimate safe haven, and by my reckoning you're better off in some desolate corner of New Mexico or British Columbia where your only neighbors are a whole bunch of very tasty deer! :)
I mean, let's face it. The DJIA is in the 6500s and the S&P in the 600s. Those are levels that were completely unthinkable just a year ago. This economy is dead as a doornail. I sure as hell don't wanna die with it. :(
LOL I did survive one empire crash, I may survive the other, too :)
My situation is more complex than yours, my legal presence here depends on my wife's employment with her current employer, we either stay around DC while she is employed, or leave the country when her employer goes belly up or she decides we had enough...
Adding illegal presence to the mix and becoming a fair game to every cop is not in my plans :)
Prasite. Mne nuzhna praktikovatsa v Russkam! :)
Misha, maybe you're the Typhoid Mary of societies. Wherever you go the empire collapses! Tell me where you're going next and I'll go somewhere else! :)
Hal your last comment to Misha cracked me up. Misha, try to stay out of oz till I get me swag packed!
earnestshub, I think we're on a good lurk... I'm mad as a cut snake and I sure wouldn't mind hiding out back o'Bourke, so why don't we try to keep Misha out altogether, you can join me, and maybe Oz will survive just fine! :)
LOL Oz is not an empire, so it will do just fine even if I move there :)
I'm not so sure about the Ozan Empire thing. If John Howard was still Emperor... er, I mean PM, I think that they might have had a pretty good shot at it! :)
Merry Christmas 2009! The Deficit Now Equals The Cost Of All US Houses! in the News
- Rand Declines as Trade Deficit Widens to Biggest in Nine MonthsBloomberg2 hours ago
Nov. 30 (Bloomberg) -- The rand weakened after a report showed South Africa had its biggest trade deficit in nine months in October, suggesting the rand’s 27 percent gain against the dollar this year is weakening its export competitiveness.
- Rand Declines as Trade Deficit Widens to Biggest in Nine MonthsBloomberg5 hours ago
Nov. 30 (Bloomberg) -- The rand weakened after a report showed South Africa had its biggest trade deficit in nine months in October as an economic recovery boosted imports and this year’s 27 percent advance in the currency curbed exports.
- France Joins Germany With Commitment to Rein in Deficit by 2013Bloomberg6 hours ago
Nov. 30 (Bloomberg) -- France suggested it may meet European Union deficit rules by 2013, dropping its previous insistence that the date was too early and moving closer to Germany’s position on restoring finances after the recession.
Netters says:
9 months ago
Ya know, that's what I'm afraid of. Some other country owning us.