To All: I started with this basic message and then was helped by Navy Retired Commander, a personal friend of mine, who has a vast back ground in these maters and a great capability to put into words the information in support of seeing the problem clearly and objectively. It was a joint effort.

Why I Think it Could Possibly be WORSE Now than in the 1929 Crash (As I see it)

There were actually many things in our favor when FDR took office. Looking back, there was the CCC he would establish, although something like that, but more ambitious, could be established by Pres. Obama. The total national debt was only $19 billion $487 million on June 30, 1932. Debt service on the National debt was handleable. There were no Social Security or Medicare payments. There were no wars draining our treasury. Our military was mainly at home. People expected to be taxed as required to pay for what the Government was asked to do for all of us. Many attribute the final success of coming fully out of the depression to WWII and all the expenditures to build up our military hardware inventory and the preceding "Arsenal for Democracy" to help our soon-to-be allies.


At the present time, we have a $10.6 trillion debt that costs $424 billion a year just in interest at 4%, if we are lucky to get it or keep it that low. We have two wars going on at a cost of at least $10 billion a month. There is not a dime left in our Treasury. We have to borrow from those nations that are willing to buy US Treasury Bonds, many of them deep down unfriendly to the USA. How long we can keep that up is questionable. Our baby boomers are coming into Social Security and Medicare age. A total of $4.8 trillion, of which $2.4 trillion is owed to Social Security alone, is owed by Congress, in the form of US Treasury Bonds. Baby boomers are already coming on board. As people get laid off by the thousands each month, less is going into these trust funds as withholding taxes, as well as less into the Treasury in the form of income taxes. Any money we loan to financial institutions or manufacturing companies also has to be borrowed (beyond our means) from foreign sources.... basically Communist China, Japan, Saudi Arabia and other oil rich countries. We Americans just don't have the Treasure any more. It's all been spent. Again, how long will they continue to buy our Bonds, particularly when they fully realize these two facts:

Fact One: FY 2008 saw a budget of $3 trillion, with a short fall of an over one trillion dollar deficit. That simply means our government spent 50% more than we had coming in.

Fact Two: In the first 50 days of FY 2009, we already have a deficit of over $627 billion... already more than half of last full year's woeful deficit!


The government or powers to be can raise the FDIC insurance limits just as high as they want. That is purely a Good Feeling event. It would be absolutely worthless in a serious depression. The FDIC is already short of money. They are now borrowing from foreign sources to cover these losses. There is an ominous and impending limit to our borrowing ability or even debt extension capability. And to print money with no backing would further devalue the American dollar, which would be very bad (although it might help exports, of course, if anybody out there is in a position to buy anything from us.)

Again, money coming in will continue to be less available for Social Security and Medicare as more people become eligible and less people are paying into these funds due to being laid off work. Also, because of these lay offs, less money goes into the Treasury as Income Tax. It sure looks to me like it could be a never ending spiral down into the abyss unless highly creative minds and policies come very quickly to the rescue and Republicans in the Congress can free themselves from the short slogans that have prevented intelligent action in the recent past. (Just imagine if the Bush Administration had the responsibility to handle this onrushing genuine crisis on which the whole future of our Nation depends, even for a couple of additional months, or if the G.O.P. had picked up additional "NO, NEVER" seats on the Senate. We are VERY lucky as a Nation that Inauguration day was moved up to January from where it had been!)

Oh, to have it as good as FDR had it in 1932 compared to the mess left to him that Obama now has to face after eight years of ignorance, lack of observation, perception, even care, and ever present overhanging susceptibility to freezing in the headlights when prompt intelligent steps were called for. This will take some really smart maneuvering, adequate paths toward sufficient effective solutions for which are not yet obvious to me.

Oh, how I do hope I am wrong..... very, very wrong.


Colin