I went to the opening night of the film I.O.U.S.A.
Here’s my thoughts and observations.
First from just a movies going experience the film is fair.
Not anywhere near as entertaining as a Michael Moore Documentary or a film like “Supersize Me” and not even up to Al Gore movie.
The film is pretty dry, heavy on numbers and content and not very exciting.
The makers point is pretty simple. The US now has a deficit of 9.5 trillion dollars.
A trillion dollars is 1,000 billion dollars, so it’s quite a bit of cash.
If you take into account all the baby boomers that are going to retire soon and project out the US governments obligation for Social Security and Medicare and some miscellaneous other expenses, the US would need 55 Trillion dollars today to cover these obligations or $175,000 per man, woman and child in the US.
Of course both these numbers continue to grow second by second minute by minute, by tens of Millions per hour.
The US owes more money than any other country in the world to other countries.
We owe the most to China.
Because US citizens are poor savers, we have to borrow from other countries rather than from our own citizens, as we have in the past by selling savings bonds or war bonds.
Although the film did not suggest any specific solutions, generally they stated that American’s would have to start saving money, the government would have to cut back on spending, and US citizens would have to pay more in taxes and make other sacrifices.
The movie makes the argument to continue on the path we are on is immoral since it would leave our children and grandchildren responsible to pay the debt our generation has incurred.
Last night after the film there was a discussion by several very wealthy individuals including Warren Buffet and Paul Peterson.
Warren Buffet didn’t buy the arguments made in the film. Buffet’s argument is that the revenue of the US and the Gross National Product of the US will continue to grow and these obligations said to make up the 55 trillion will get covered by growth in the US economy.
However, the rest of the panel generally agreed that to fix the deficit problem:
Americans would have to start saving, even if it meant a forced savings through employee payroll deductions
Social security would have to be adjusted to have a higher retirement age of up to 70 from the current 66, that benefits for both Medicare and social security would have to be income adjusted so that wealthier people would receive less benefits although they would be asked to pay more in.
Taxes, both income and social security/Medicare would have to increase.
Government spending would have to decrease.
Education will have to improve greatly and young people need to learn and understand about governmental issues and get involved in the process.
Citizens will have to sacrifice as previous generation, during the 1940’s did for the betterment of future generations.
That what they had to say.
He’s my thought.
It’s not going to work.
It’s not the 1940’s.
The youth of 2008 are not the same as the 1940’s and the adults aren’t either.
The last hard economic times the US had was in the 1970’s. So unless you were an adult in the 1970’s, you have never seen ‘hard times”. So if you’re not say at least 40, you have not lived through a bad economy.
In the 1940’s everyone had just gone though a depression in the 30’s.
Today’s generation of youth have cell phones, iphones, ipods, Youtube, Myspace, Facebook and 300 channels to watch.
At the movie 99% of the audience were 50 or over. The generation that will be most affected by this problem, didn’t show up.
Those younger people interviewed in the film for the most part had no clue about this problem or any other.
For those of you who watch Jaywalking on Jay Leno’s show can attest there are a lot of clueless people out there in the next generation. Twenty something’s that cannot tell you who the Vice President is.
As for my generation, the ones that would have to pay more taxes and give up a lot of what we are used to, I don’t see it happening anytime soon.
As a country we are used to the good life, having the things we want now, and that is a mindset that didn’t exist in the 1940’s. We have had 35 years of uninterrupted upside, economic growth, living large, and it’s going to take a complete turnabout in the way we think for change to occur. It’s going to take a crisis not just the threat of one.
So what to do.
I kind of fall behind Buffet.
As an individual the best thing you can do is better yourself.
Educate yourself, work hard and get to be one of the best at what you do.
Don’t depend on the government to bail you out, they might but they might not.
Save money.
Invest wisely.
Buy only what you can afford.
Get smart.
Get involved.
Remember that “saving for a rainy day” stuff, it’s old but it’s good.
The best line of the night came from Buffet and its good advice:
I only invest in companies that are so good, that an complete idiot can run it, because one day, it will..
My generation (late 20’s) is growing up with a desire for INSTANT gratification and it is begin financed with debt.
Our culture/government/parents/etc. has taught us that you do not need to be accountable for your obligations.
Can’t pay the credit card bill = bankruptcy
Can’t pay the mortgage = foreclosure
Bad times = stimulus checks
Bad Business Model = bailout
Bad Economy/Stock Market = slash interest rates
Even NFL stars will holdout for a new contract because they had a good year, instead of honoring the contract they signed.
I believe this will hurt our country very badly in the future.
I hit the submit button by accident in the post above.
I lean toward agreeing with Buffett. The projections used in the documentary for the debt/GDP ratios don’t account for American ingenuity which Buffett argued would help increase GDP more than what was estimated (the debt/deficits will take up a bigger piece of the pie but the pie will be much bigger to compensate). Two Stanford grad students started up a $150B paradigm shift in Google 11 years ago. Youtube, Facebook, Myspace, etc are other examples of the human resource factor that the numbers don’t account for.
A breakthrough in battery technology that will allow a car to go a range of 200 miles on a single charge alone would change everything. We wouldn’t import as much oil and that would make us the world’s number 1 energy exporter. Wind farms would be used to charge those batteries and that technology is already here. That alone would save the US if not the world.
Here’s an odd idea to add…
Pass a law requiring that all new paper money and credit cards have a clear section that shows the amount of our deficit at the time of printing the money or card. Kind of like in the UK they have ugly warnings on tobacco boxes.
Would more people actually pay attention when they see new bills having extremely higher numbers than the ones that were printed just a month ago? Maybe people will think twice before spending on credit. Or maybe it will depress the heck out of everyone and they stop buying things (and thus save?).
just a thought.
Ari
Considering the the national debt increase by over 40 million in the 1 1/2 hours it took to watch the movie I don’t think they can print the bills with the updated info fast enough
I totally agree that Gen X and Gen Y are incapable of salvaging this situation. They, (and I am an X), don’t have the fortitude necessary. In spite of this, as mentioned in the movie, it wasn’t fair that the Baby Boomers got to vote for these largesse benefits for themselves, without any idea of what it would do to us.
I’ve been studying and preparing for this problem since 2003. I consider myself a student of the next Great Depression and I disagree with just about everything Buffett said. (Do agree about greater self reliance – absolutely, take it to the extreme).
I encourage people here to read the book the movie was based on. As you all know, the movie is never as good as the book, a cliche that is true. The book is called, Empire of Debt.
In Tulsa, where I saw the movie, my wife and I, 26 and 37, respectively, were 2 of about 5 people our age at the movie, while the other 100 were 50 and older as well. A huge disconnect between generations.
I believe they will be making this movie free on the internet, and selling DVDs. I encourage others to buy for your family and friends, direct your family and friends to the movie, but the book is even better. Check Amazon for savings on used books as well as reviews.
Good movie and even somewhat entertaining and humorous, but it falls short of expectations. I understand the topic, but I doubt the viewers will know much more then they already do before seeing it.
http://www.geldpress.com/2008/08/iousa-review-falls-short-of-expectations/
Here’s another good take on the subject, if you’re into interesting rants:
http://market-ticker.denninger.net/archives/545-Why-America-Is-Headed-For-A-Depression.html
What can you expect – a nation build on credit – not actual cash – the mentality of people within a nation decides the outcome of that Nation.
Steve Forbes for President !
Seriously what are the odds of McCain picking someone like Forbes as his running mate ?
nice & meaningful entry
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