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America’s Challenge Why we are here, What’s coming, What we can do.

America’s Challenge Why we are here, What’s coming, What we can do. Sam Houston Tea Party November 21, 2011. Disclaimer

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America’s Challenge Why we are here, What’s coming, What we can do.

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  1. America’s ChallengeWhy we are here, What’s coming, What we can do. Sam Houston Tea Party November 21, 2011 Disclaimer This Presentation is based on information available to the public from various sources at the time of writing as well as various private and internet sources. No assurances are made for the accuracy and correctness of the information in the Presentation and the consequences being a result of using the information herein. New and different information may be available at a later stage that can vary or modify the current views. The information, opinions, and analysis contained herein are based on sources believed to be reliable but no representation, expressed or implied, is made as to its accuracy, completeness or correctness. The opinions contained herein reflect my current judgment and are subject to change without notice. Lyle Henderson

  2. Perspective • Used to hearing from Politicians and Pundits. • Politicians focus on getting elected. • Pundits/Media focused on “sound bites” • Engineers trained to look at the numbers • Look at analogs • Understand the underlying forces • Boil down to solutions

  3. Talk Outline • America’s Financial Problem • Global Demographics • Europe • Progressivism • Civilization • Solutions

  4. America’s financial Problem

  5. Poverty is 14.3% Problem started with: Lyndon Johnson War on Poverty Great Society Poverty is 14%

  6. 55% or 16,700 Per family 33% of avg income

  7. GDP by Country Current Growth Rate

  8. Great Society

  9. In 2000, Alan Greenspan Said by 2011 we would be debt free.

  10. U.S. Debt Problem • US Revenue: $ 2,170,000,000,000 • Federal Budget $ 3,820,000,000,000 • New Debt $ 1,650,000,000,000 • National Debt $14,271,000,000,000

  11. U.S. Debt ProblemAverage Family Perspective • Revenue: $ 50,000 • Spending: $ 88,000 • New Debt $ 38,000 • Cumulative Debt $ 328,000

  12. Raise “Revenue” ?

  13. U.S. Government Revenue2012 Projected • Individual Income Taxes $1.14 Trillion • Corporate Income Taxes $ 329 Billion • Social Insurance $ 925 Billion • Other $ 233 Billion • Total $ 2.6 Trillion

  14. Adjusted Gross Income and Federal Tax +$160,000 +$114,000 +$67,000 +$392,000 +$33,000 2008 numbers

  15. To Pay for Obama’s $ 1.6 Trillion Deficit: • Raising Marginal Tax on top 1% from 35% to 39.5% • Raises only 50 of 1,600 Billion needed. • Raise all tax brackets by 5% (e.g. 15% 20% or +33%) • Raises only 200 Billion • Double Taxes on top 10% • Raises 1.37 Trillion • But: At what cost to the Economy?

  16. The Wealth Tax • Spain is re-introducing it. • France has long had one. • Italy is considering one. • Tax on physical assets, Financial assets, Pension funds, etc.

  17. The Greedy 1%A lesson for the occupiers • When you see the poor around the world and the concentration of wealth in the hands of a few, don’t you start having doubts about Capitalism and greed? • Tell me a society that doesn’t run on greed. Do you think Russia or China don’t run on greed? • The world runs on individuals pursuing their self interest. • The great achievements of civilization did not come from Governments • The only cases where the masses have escaped grinding poverty is where they have had capitalism and relatively free markets. • The masses are worst off in societies without capitalism and free trade • But it doesn’t seem to reward virtue as much as ability to manipulate the system. • What does reward virtue? Do you think a soviet commisar rewards virtue? Or a Hitler rewards virtue? • Where do you think you will find these angels who will organize society for us? Milton Freedman being interviewed by Phill Donahue – 31 years ago

  18. Cut Spending?Where?

  19. Cut to Eliminate Borrowing

  20. 20% Cut w/0 cutting Entitlements

  21. Interest Other Military Social Security Medicade Medicare

  22. The limit to National debt • Washington is dependent on the bond markets being willing to absorb an increase in federal debt: • $ 100+ Billion every MONTH. • Equivalent of the GDP of Canada or India every year. • We know we are outspending America • What happens if we outspend the entire planet?

  23. Monetizing the debt

  24. Experience teaches us: • Mid ‘60’s Fed started buying Treasuries to finance Vietnam War • Led to Recession of late ‘70’s • Job losses • Inflation • High unemployment • Interest rates of 20%

  25. A look at Global Demographics • Reading Suggestions: • “America, Alone” and “America, After” by Mark Steyn

  26. Fertility rates by countrybirths per woman 2.1 to Maintain Population, Below 1.7 is “Death Spiral” Europe & The West Asia Italy 1.39 Russia 1.42 Germany 1.41 Spain 1.47 France 1.96 U.K. 1.91 India 2.62 China 1.54 Japan 1.21 Africa Canada 1.58 U.S. 2.06 Mexico 2.29 Australia 1.78 Uganda 6.69 Angola 5.97 Nigeria 4.73 Source: CIA – 2011 est.

  27. Falling Fertility Rates • Experts attribute to: • increasing costs of raising a child • rising women’s labor force participation • delayed childbearing • U.S. fertility remains higher • increased access to child care • increased male domestic involvement?

  28. Japan’s DemographicsNo Immigration

  29. Global Trends • By 2050, most of the developed countries in both Europe and East Asia will become veritable old-age homes: • A third + of their populations will be older than 65 • Only a fifth in the U.S. • 30 percent of China over 60 United Nations est.

  30. Depopulation • In eastern Germany, rural communities are dying. • Sewer systems don’t have enough people flushing to keep the flow moving. • Environmentalists got it backward. • Not a question of “sustainable growth” • But of sustainable lack of growth. • By 2050: Public pensions as % of GDP: • US – 6.5%, Germany - 16.9%, Spain – 17.3%, Greece – 24.8%

  31. “End of the Postwar Welfare State”Paul S. Hewitt – 2002 paper • Economic consequences of depopulation. • Current society depends on continued economic expansion. • Rapidly depopulating nations face “aging recessions” • vicious cycle of falling demand, collapsing asset values, shrinking corporate profits, deteriorating household and financial institution balance sheets, weakening currencies, and soaring budget pressures. • 2002 assessment concluded “aging recessions” would begin appearing sometime after 2010, • and continue for the next three or four decades.

  32. China’s Future • Due to one child policy, China will get old before it gets rich. • Millions of surplus young men lead to: convulsions at home or war abroad. • Has to maximize its power before demographic decay sets in. Incentive to push, hard and fast.

  33. africa • Sub-Saharan Africa will double its population between 2010 and 2030 • It would be asking a lot for them to remain in the teeming, pathogenic, shanty megalopolises into which the third world’s population is consolidating. • Pressure to move to Europe or America

  34. An Instructive Look at Europe

  35. 2.2 T$ 2.2 T$ 0.5 T$

  36. The Global Picture • About half of the Global Economy • is living beyond it’s means • Also beyond it’s diminished number of children’s means • Instead of addressing that fact • Countries with government debt of 160% of GPD • Are being “rescued” by countries with 80% debt levels. • Good luck with that.

  37. European AusterityPoliticians avoid it, but: • Depopulation means government-sponsored insurance and pension plans must change. • Options are: • Increase taxes on a proportionately smaller working population • or decrease benefits. • A threshold for higher taxation will be reached • Only choice will be to cut benefits.

  38. Greece • 1.3 Children per couple • 100 grandparents have 42 grandkids. • Greeks retire at 58. Who pays for the last 1/3 of their lives? • Get 14 “monthly” payments per year for 30 weeks work. • Work day ends at 2:30 PM • Ever fewer customers and even fewer workers • But ever more retirees and more government • How do you increase GPD? • By export? To where? Totally uncompetitive. • Government introduced an austerity package to rein in spending. • In response, Greek tax collectors went on strike.

  39. Greece: Will they reform?TakisMichas, Wall Street Journal • In the last 12 months not one civil servant has been fired. • Trying to tax the private sector out of existence. • In August more than 1000 Greeks in the private sector were losing their jobs every day. • The government was assuring civil servants with lifetime tenure that their job privileges were not in danger. • Greece’s plans resemble Soviet five year plans: They look good on paper but have no bearing on reality. • Anyone in government who tries to point this out is forced to resign.

  40. Italy • 7 of 10 adults aged 18 – 39 • live with their folks. • When the government does too much, nobody else does much of anything.

  41. Germany • 30% of German women are childless. 40% among university graduates. • During the 21st Century, Germany’s population will fall by over 50% to 38 million or lower. • German worker puts in 22% fewer hours per year than American • Germany has shrinking economy, shrinking and aging population, and potentially catastrophic welfare liabilities.

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