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W. Curtiss Priest, Ph.D.
Center for Information, Technology & Society
466 Pleasant Street Melrose, MA 02176
E-mail: BMSLIB@MIT.EDU, Voice: 781-662-4044, FAX: 781-662-6882
February 26, 2004
Public Issue #:114
CITS Debt Watch
"Greenspan scuttles Social Security to Attempt
to
save ailing economy"
Commentary by Dr. W. Curtiss Priest, Director:
Yesterday Greenspan worried about the fact that 75% of
all home mortgages are backed by Fannie Mae or Freddie Mac.
Today, we hear Greenspan asking for a decrease in Social
Security benefits.
Are we on a road to catastrophe? This author firmly believes
that the answer is yes.
With mounting household debt, how can this U.S. government
back huge liabilities involving household mortgages?
With mounting debts, reaching $44 trillion in one recent
account, it is no wonder that Greenspan espouses reducing
social security payments.
With 2/3rds of couples having no children (Boston Globe
Magazine, 2/22/2004), we have an extremely precarious
situation. When social security was conceived in the
'30s, there was no provision for either a U.S. Federal
government so sorely in debt, and no provision for a
reduced workforce due to demographic changes.
All of this does appear to me as a matter of rearranging
deckchairs on the Titanic.
We are incurring foreign debt at $1.5 billion a day,
we have lost most of our manufacturing industry to
other countries, we precariously hold onto computer
software (as it is easily copied), and we precariously
hold onto film and audio productions, too.
CPB's NOW program describes in detail how factory
jobs in textiles are disappearing due to foreign
competition.
I need to ask. What do we have left? Yes, we have a
"grain belt" which produces food. No, we don't have
much oil.
The current administration turned a blind eye to all
issues of vehicular fuel economy and safety and emissions.
This occurred because the regulations for passenger cars
did not apply to trucks/recreational vehicles.
This was a huge hole in the barn's gate.
Are we out of the woods? Ohmy. With a record level
of household indebtedness, and with a level of debt
service that exceeds any recent numbers, it will only
take a percent or two rise in the FED rate, to scuttle
households on the brink of bankruptcy.
Can the FED continue to hold interest rates at historic
lows? Should the FED continue to hold interest rates at
historic lows.
In summary, this is an attempt by the current administration
and the "federal bank" to prevent a disaster that is sorely
waiting to happen.
Yes, you can create the illusion of increased corporate
profits in this narrow period, but, can you remedy all
of the debt-financed consumpton that has occurred via
banks that have let their lending standards go to practically
nothing regarding risk, and a government that backs much
of the risk -- home equity loans -- 2/3rds of which are
backed by federal agencies.
This is an extremely unstable state of affairs.
Sincerely,
W. Curtiss Priest
CITS Debt Watch
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--
W. Curtiss Priest, Director, CITS
Research Affiliate, Comparative Media Studies, MIT
Center for Information, Technology & Society
466 Pleasant St., Melrose, MA 02176
781-662-4044 BMSLIB@MIT.EDU http://Cybertrails.org
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