Great video and commentary! This is definitely startling stuff which I sincerely hope is heeded by the next administration.

It would have been nice if the video matched the grim diagnosis with a suggested remedy. You hear a lot about how bad it is (which I think most people agree that it really is bad) and you also hear about the odd solution. Unfortunately, the solutions are almost unanimously knocked down (like this in this documentary) as steps too small.

If so, what the heck needs to be done? I think it’s time to have a Davos like forum focused strictly on bringing the most brilliant minds together to bridge a consensus strategy on what the U.S. and world needs to do to right our path.

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@ Adam

Very valid question Adam and I agree that I was disappointed no solutions were given. This is the 30 minute condensed version, so perhaps the panels assembled in the full length version went into more detail about possible solutions.

As for my solution, I don’t think that 1, 2 or even 10 major budget cutbacks will cure our debt problem overnight. Just like a person who finds themselves in serious credit card debt, it takes time to dig themselves out. So I think a balanced budget to get us back to the break even point would be a good start so that horrible compounding interest problem is halted. This would be Goal #1.

Goal #2 would be to revive the great American business model and start chipping away at that debt. Enacting long term job programs for repairing aging infrastructure and retrofitting those auto plants to make solar panels/wind turbines would be a good start. It’s not sexy, but it’s better than biannual stimulus checks.

One thing is for certain, I think that once we emerge from the recession, higher taxes will be in our future. And for once, I think that is a worthwhile thing. On the flipside, it’s one of the reasons I wrote about hiding in municipal bonds as a way to hide out in tax free investments.

Thanks for commenting!

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Wow, that was amazing – and so very sad.

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This movie is really good at scaring you. Some of the projections are absolutely bone-chilling. But it largely overstates the problem — the deficit is currently at a manageable level of 3% of GDP. And we need to run a deficit in this economic downturn to ensure we don’t have skyrocketing rates of unemployment. The flim also ignores one of the best solutions to the “problem” — health care reform. If our health care system were as efficient as other industrialized nations, and if Medicare/Medicaid were able to take advantage of these lower costs, then our deficit problem would basically disappear. Check out the Center for Economic and Policy Research, they have a nice graphic that demonstrates this well: http://www.cepr.net/calculators/iousadeficit/calc_iousa_deficit.html

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@ Matt Sherman

Thanks for the comment, and I’m in agreement with you that health care reform should be enacted yesterday. In fact, I think it should be our #2 priority, only after bringing the markets back to normalcy and the unwinding over an over leveraged market.

I think it’s obscene that a person’s net worth can decimated by unrealized medical costs, and it’s the primary reason why I voted toward the left side of the proverbial isle instead of the right. Just think the Dems can get more progress done along these lines.

I’ll follow the research from CEPR in the future and I grabbed your RSS feed.

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This is something I knew about for a few years now and that is y I stop investing in any American company not that I do not like then, it is just that I knew that the USA $ will fol and could not recover for along time.(if it does)

what worry me more is the every one is moving to Asia , so the question is how is making the money ?

where to invest ?, well I give you a hint , the golden rule in business is the man with the gold make the rules.

I strongly believe that china is and will look after there interest and not the USA ones , military forcing them would be a disaster they have the bomb to.
so how are you going to pay up this dept ?

good luck.

Alex A.
PS, if you had cash now what would you do ? lend more ?

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@ Aposto,

I can’t say I agree with the military based scenario you describe. If you’re a debt collector, you break a guy’s leg to get repaid — not kill him. Otherwise, you’re killing off any future potential of being repaid. Taking payment a decade later is better than no repayment at all.

I’m also not a fan of gold hitting $2500 anytime soon. Gold is a fear trade and the net value is based on human emotions or the world’s reserve currency (the US Dollar) collasping. For now, the $1000 mark is the indicator to sell rather than buy. I hear some of the experts touting gold as a portfolio hedge against the market tanking, but with the GLD ETF being so volatile, you really have to pick your spots.

If you’re a market timer (you seem to be), I would wait until the S&P 500 hits the mid to low 600s. Slowly begin accumulating select companies with a sound future or an index fund that meets your specifications. I don’t think the market is going to rally anytime soon so you must be patient.

Right now, the game is about preservation of capital which is partly why you see the market selling off so much.

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Matt, I think it’s obscene that MY net worth can be decimated by YOUR medical costs.

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Matt SF Reply:
March 25th, 2010 at 12:09 pm

@ Chris

At first, I had no idea to what you referring to since the IOUSA movie is about national debt, rampant consumerism, and irresponsible governmental spending across all fronts. After noticing the incoming traffic and considering the subject matter at the MSNBC site, then I get what you mean.

However, I must say, that YOU aren’t paying for MY medical costs. I take care of that myself. Which is why I find it extremely humorous and more fuel to the fire that many of the outlandish individuals who speak out against health care reform are completely clueless. You let your biased assumptions make a completely off the wall comment before even bothering to read my post or watch the film. I appreciate the laugh, though.

FTR, I do not approve of the health care bill as it was written, but here’s to hoping it can reduce the price of a “hospital Tylenol” from $20/pill to $10/pill.

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