'There's no one to bail out America'

I don't know whether it's not as bad as we think or even worse.

Some people see the Good News from a Bad Year

The last 12 months may prove not to be the most fondly recalled in recent American history, but things aren't all that bad. Most social indicators are still moving in the right direction. In general, our standard of living continues to improve. Advances in technology are helping us beat the diseases most likely to kill us; giving us more leisure time; making us more comfortable; giving us more convenience; and with the Internet, putting much of the world—quite literally—at our fingertips.

It unnerves me that no one really knows what to do about the financial mess we're in. 

Michael Lewis sees The End of the Financial World as We Know It

AMERICANS enter the New Year in a strange new role: financial lunatics. We’ve been viewed by the wider world with mistrust and suspicion on other matters, but on the subject of money even our harshest critics have been inclined to believe that we knew what we were doing. They watched our investment bankers and emulated them: for a long time now half the planet’s college graduates seemed to want nothing more out of life than a job on Wall Street. 

This is one reason the collapse of our financial system has inspired not merely a national but a global crisis of confidence. Good God, the world seems to be saying, if they don’t know what they are doing with money, who does?
--
What’s interesting about the Madoff scandal, in retrospect, is how little interest anyone inside the financial system had in exposing it. It wasn’t just Harry Markopolos who smelled a rat. As Mr. Markopolos explained in his letter, Goldman Sachs was refusing to do business with Mr. Madoff; many others doubted Mr. Madoff’s profits or assumed he was front-running his customers and steered clear of him. Between the lines, Mr. Markopolos hinted that even some of Mr. Madoff’s investors may have suspected that they were the beneficiaries of a scam. After all, it wasn’t all that hard to see that the profits were too good to be true. Some of Mr. Madoff’s investors may have reasoned that the worst that could happen to them, if the authorities put a stop to the front-running, was that a good thing would come to an end.
--

Rather than tackle the source of the problem, the people running the bailout desperately want to reinflate the credit bubble, prop up the stock market and head off a recession. Their efforts are clearly failing: 2008 was a historically bad year for the stock market, and we’ll be in recession for some time to come. Our leaders have framed the problem as a “crisis of confidence” but what they actually seem to mean is “please pay no attention to the problems we are failing to address.”

Could it be that our elites have become more impressionable and so too easily snookered?

more removed from everyday problems, more trusting of what they hear, and more likely to adopt unthinking viewpoints based on brand or emotion.

Bernard Madoff proves the point. Here he is, in the most numbers-dominated part of our economy, and no one questioned his numbers. He sold himself to people on the basis of brand, and he got access to more marks by using the smart, rich and famous to introduce him to more of the smart, rich and famous.
--
Elites are on information- and time-management overload, and the result is that they have been making big decisions with less information, not more. They throw their hands up in the face of adversity and complexity, relying upon the judgment of others instead of forming their own.

The entire financial crisis was started by small microtrends overlooked by some of the best and brightest minds at institution after institution.

Maybe we're all easily snookered.  After all, isn't social security the largest Ponzi scheme of all?

The problem is that generations of U.S. workers have been misled to believe that Social Security's annual surpluses accumulate in a trust fund that will be used to meet future costs. But like Madoff's investment fund, these assets are largely smoke and mirrors.

All surplus Social Security taxes that the Treasury collects are spent immediately, used to pay for government programs or interest on the national debt. In exchange, the Treasury gives Social Security nonmarketable special-issue government securities: IOUs. That's what accumulates in the trust fund.

These promissory notes are backed by nothing of tangible value, other than the political promise that Washington will come up with a way to redeem them when they're needed.

That day of reckoning is coming soon. Social Security actuaries have estimated that benefit payments will exceed revenues starting in 2016, less than a decade from now.

--
Just as the schemes of Charles Ponzi and Bernard Madoff collapsed, Social Security will become unsustainable when payroll taxes no longer cover program benefits. Then, benefits will have to be cut or more money will have to be pumped into the system through increased payroll taxes, higher income taxes or increased borrowing.

I just want to know when our elected officials will begin to deal with the serious entitlement crisis that can no longer be put off.  After all, there's no one to bail out America.