Virtual Voices

Sleepwalking through the valley of financial calamity

Economy

A financial bomb dropped on Friday, but it seemed like nobody noticed. Recovering from the news, I attended a high school graduation party on Saturday and took a walk through the graduate's quintessential middle-class neighborhood. With a bright blue sky and the green hills of a neighboring horse farm providing a panoramic backdrop, I strolled past American flags flying from stately brick homes, lush manicured lawns accented by picket fences, and late-model cars parked neatly in driveways bearing university stickers. I should have felt upbeat but I couldn't shake the ominous news that China's U.S. Treasury bill holdings dropped by 97 percent. As life continues in an eerily peaceful manner, this was another signal that America is in serious financial trouble.

Why did I let this news get the best of me on what should have been a joyful day? Watching the happy college-bound graduate and my four children, I wondered about the world they will inherit knowing that their elders have failed them as financial stewards of their country. It appears certain that America will default on her obligations (e.g., debt, Medicare, Medicaid, Social Security, etc.) and the recent news about China is another flashing warning sign that this is likely to be true.

Although I felt strangely self-isolated at the party, I knew there are others across the country who felt the same way about the nation's finances. For example, CNBC reported on Thursday that wage pessimism is the highest it's been in 25 years. A recent internal survey by the investment firm UBS revealed that its wealthiest clients are far more concerned about America's debt than they are about their own portfolios. In March, The Wall Street Journal reported that the world's largest bond fund, Pimco's Total Return Fund, dumped all of its U.S. Treasury holdings, and Stansberry's Investment Advisory reported in May that the fund is selling Treasurys short (i.e., making a bet that U.S. Treasury bonds will depreciate in value). And one of the world's greatest currency traders, Stanley Druckenmiller, recently recommended that Congress allow the Treasury to technically default on its obligations.

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In short, America is in big trouble and a lot of people know it. Yet, we sleepwalk through the valley of financial calamity as Congress duels over paltry solutions, and the Federal Reserve floods our collapsing economic veins with monetary morphine dulling our reaction to calamitous financial news . . . while another high school class graduates. Our children will pay the price of our addiction unless we rip the IV tube from our arms, shed our selfishness, and get busy correcting our prodigal ways.

Lee Wishing
Lee Wishing

Lee is the administrative director of The Center for Vision & Values at Grove City College.

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