The Bubble Machine - Part II

Here are some more bubbles that have failed to find a solution. The US Government and its willing partners in various state capitols has been running a spectacular Ponzi scheme designed to make sure that the American taxpayer keeps funneling a good portion of their income into government sponsored entities (GSE’s) that dwarf the lending and compensation plans at FNMA and FHLMC, or AIG for that matter. These GSE’s include some household names such as American Federation of Teachers (AFT), National Education Association (NEA), Service Employees International Union (SEIU), American Federation of State, County and Municipal Employees (AFSCME) and countless police and fire fighters unions. Look at the result below:
Bubble: US Education Costs
Problem: US Education Cost Index reaches an all time high of 187.256 in Feb 2009 (Dec 1997 = 100)
Solution: NONE. US Education Cost Index has risen steadily over the last 10 years
Bubble: US Medical Costs
Problem: US Medical Cost Index reaches an all-time high of 372.405 in Feb 2009 (1982-84 = 100)
Solution: NONE. US Medical Cost Index has risen steadily over the last 10 years
Bubble: US Government Spending
Problem: US Government budget reaches an all-time high of $3.6 trillion for the fiscal year 2010
Solution: NONE. Government spending, deficits and debts rise almost geometrically!
Bubble: Unfunded Government Pension Costs
Problem: State and Local Government Unfunded Pension Costs are estimated to exceed $1 trillion
Solution: NONE. Until and unless these pensions are changed to defined contribution plans the unfunded pension costs will be a huge real and contingent liability to all taxpayers.
Bubble: State and local government debt
Problem: Debt totals $1.18 trillion in 1999
Solution: NONE – debt has grown to $2.2 trillion in 2008
Bubble: US Sovereign Debt
Problem: US Debt outstanding reached an all-time high of $11,042,553,971,450.47 on 03/17/2009
Solution: NONE. US Debt continues to rise each hour of each day thereafter
The cost of these bubbles is spectacular; way beyond the cost of AIG and subprime lending. On Tuesday, TheFundamentals detailed bubbles that corrected under market forces. Government has replaced market forces in the above bubbles. Governments sustain these bubbles for many reasons but mostly for self interest. Consequently these bubbles are not solved. They expand and are paid for by taxpayers current and future. The stimulus and bailout spending plans and other efforts masquerading as ploys to save the system are solely designed to save these self interest groups. Where are the sacrifices made by these interest groups? Where are the layoffs in the bubbles in education, health care and bureaucracies at all levels of government? Where are the forces to correct these bubbles? When will these price/cost/spending/deficits/debt bubbles burst and decline as in the case of the bubbles subject to market forces?