海角大神

02/16/10 London, England 鈥� Let鈥檚 focus on the good news. Well, our first item is good news if you were fool enough to follow our 鈥淭rade of the Decade.鈥�

We suggested that buying Japanese stocks could be the best investment you can make in the next 10 years. We immediately heard from dozens of friends and enemies. The friends were concerned because they thought we鈥檇 made a bad bet. Enemies were delighted that we鈥檇 lost our grip completely. After all, they remarked, who in his right mind would buy Japanese stocks?

Well hardee, har, har鈥� Guess what market is leading the world so far this year? That鈥檚 right鈥� Japan. (Here, colleague Alex Green explains why .)

We鈥檙e six weeks into the new decade, we鈥檒l claim victory now鈥�and change the subject. Who knows what will happen in the next 514 weeks.

Meanwhile, here comes more good news: the US federal government may not go broke after all. Rep. Paul Ryan, who hails from the sovereign state of Wisconsin, has come up with a solution.

Before we get to the solution, however, let us take a minute to describe the problem. In short, the feds are spending too much money they don鈥檛 have. The Obama administration says it doesn鈥檛 see any balanced budgets anywhere in America鈥檚 future. The Congressional Budget Office, a far-sighted group if ever there was one, looks all the way to 2080. It sees no hint of fiscal equilibrium either. Just deficits and debt. By its estimate the US budget grows to 50 percent of GDP and the official US debt rises to 7 times GDP.

This exercise by the CBO is not a forecast. It is merely an extrapolation. If present trends continue, that is where we would end up by the time your author is 131 years old. Of course, there is no way present trends could continue that long. Even at 2 times GDP鈥�debt cannot be sustained. It would cost more than half of all America鈥檚 tax revenues to the pay the interest on such a large debt. Already, depending on how things go in the economy, as much as 30 percent of the money borrowed by the US could soon be necessary just to pay the cost of past borrowing.

Fortunately, Mr. Ryan has a solution. He calls it a 鈥淩oadmap for America鈥檚 Future.鈥� After studying it for all of 30 seconds, we鈥檙e convinced that Mr. Ryan should get a GPS. His roadmap is a series of squiggles, dodges and twists to US tax laws鈥�along with a few torques to the spending side too鈥� that leads the country to a dead end. Most of his effort has been concentrated on bringing health care outlays under control. No effort is made, on the other hand, to cut military spending. Typical. Weak, limp, pusillanimous. The benefits now; the costs later. That鈥檚 why America鈥檚 residual respect for Congress is just about exhausted. The institution is incapable of correcting its own mistakes. Instead, it just makes them worse. Even with Mr. Ryan鈥檚 roadmap, America drives in the wrong direction for the next half a century. It is only sometime after 2050 that the federal budget deficits finally stop.

Any solution that doesn鈥檛 pay off until we鈥檙e all dead is no solution at all. It鈥檚 a way of avoiding a solution鈥�which is what Congress desperately wants to do. A real solution will come. But not from Congress. Instead, it will come unbidden. And unwelcome. Like the plague.

At least, that鈥檚 our reading of history. Once the system tips out of control it stays out of control until it finally blows itself up.

It would be fairly easy to get the budget under control鈥�that is, if there were no political system to prevent you. The US government shouldn鈥檛 be in the business of giving out drugs or regulating heart transplants. It also shouldn鈥檛 be in the business of telling the rest of the world what to do. The solution is simple: abandon the imperial agenda鈥�let people take care of themselves, both at home and abroad鈥�and downsize the federal government.

But that is not going to happen. We may be on the road to ruin鈥�but too many people are enjoying the ride. We鈥檙e not going to stop any time soon. More than 40 million people on food stamps鈥�thousands of military contractors鈥�millions of government employees鈥� People who want the government (other citizens) to pay for their gall bladder operations. People who pay no taxes. GM executives. AIG bondholders. University administrators. Lobbyists.

It is a wholly rational and completely foreseeable trend. People always seek to improve their wealth and status in the easiest way possible. What鈥檚 the easiest way? Take wealth from someone else. That鈥檚 why criminals are still in business鈥�after thousands of years of trying to stop them.

But common criminals lack status 鈥� except in the ghetto. So, the smarter, better connected and better educated of their ilk go into government. Or they use government for their own ends. That way, they get other peoples鈥� money. But they also get respectability鈥�even an elevated social status.

Congress is supposed to confront the problems of the nation鈥�and solve them. But with more people getting something from the government than supporting it, Congress is not likely to change course. It responds to the perverse will of the people鈥�and to its own corrupt predilections. We are all victims of democracy now鈥�

The government grows鈥�deficits become unstoppable鈥�and the empire sinks under the weight of so many parasites.

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