Bubbles, bubbles, everywhere!

 

 

"I love bubbles! They are so fun to watch! So relaxing, so mesmerizing!.....that is until they burst..."

This weekend I was listening to my favorite radio gal as I was out cutting the grass. The subject during one of the segments: student debt. One of my favorite topics for sure. And she talked about how big it is right now. How it has turned into another one of our "bubbles". And because we don't have the will to rein in our out of control spending at the university level, it is only going to get worse. (Hint: a "tuition freeze" does nothing to control costs.)

Now I like bubbles. I think they are kind of fun to watch. My grandson blows tiny bubbles from his spit. I like watching young children blow bubbles and see them ascend into the sky. Then at some time, they burst. And then there is no more bubble.

We have numerous bubbles in our economy right now. All are on the verge of becoming unsustainable. When that tipping point comes with sustainability, the bubbles will burst. I have already mentioned the student debt bubble. That by itself is almost $1.4T! And it gets bigger all the time! Our national debt now stands at $18.2T. Our Social Security liability is almost $20T. Our Medicare liability is over $28T. In fact the total amount of unfunded liabilities in our country right now is over $111T! Now that the grand bubble for sure!

Then there is one more bubble which does not receive much press. However, my belief in the near future it will. The underfunding of municipal pensions. This one can bankrupt states. How big is the number? Nobody seems to know for sure. A recent study by the Harvard School of Business puts the number somewhere between $1T and $4.4T. The belief of Harvard however, is the real number is much closer to the higher end than the lower end. Add this number to the list of things to worry about.

So what is up with all these bubbles? When one or more of these bubbles bursts, it can really ruin the day. The lesson here is quite simple. We (collectively) have been living too large. For way too long. We have spent too much. We have saved too little. We keep electing people to manage our national money who are financial morons. The way our federal and state governments handle money makes Common Core math look like a settled science. Soon it will be time to pay the piper. And it ain't going to be fun.

If we are lucky, we can tame these bubbles before they burst. Taming them is going to take a whole lot of work and discipline. It will not be fun at all. It will involve paying for the party we have already had. If we can't tame the bubbles before they burst, events will take care of themselves. And it will be a "dark day in Blackduck" as the old tale goes. Simply put, it will ruin our great nation - and all the lifestyles within.