Sara Nunnally: It is clear the U.S. economy is “too big to fail.” But what happens when that is the only option? You won’t like the answer.
There’s an idea out there that some folks just aren’t paying their fair share… And that if they did, the economy would be able to right itself, and the good ol’ USofA would be the land of milk and honey once again.
Ironically, this argument is used on both sides of the aisle… and across classes. The poor and lower middle class think the rich get out of paying taxes through special loopholes their personal accountants find for them. And the rich and upper middle class think the poor don’t pay taxes because of all the government handouts in the form of tax breaks.
The simple truth is, each of our “fair shares” isn’t enough to put our economy back on track.
What we desperately need to do is stop blaming each other for the economic crisis.
Let me share with you some math from our friends at EverBank:
The total National Assets are $83.3 Trillion. The total U.S. Unfunded Liabilities are $118.5 Trillion. If each taxpayer were to “ante up” and give the Gov’t money to pay off our Unfunded Liabilities, each taxpayer would have to put up $1,045,026.00. A million dollars!
And here’s something else… The combined wealth of the 40 richest people on Earth is $1.1 trillion. At the same time, hedge funds saw $16 billion in net new capital from investors, which contributed to a $130 billion pop in assets for the first quarter of 2012. That means hedge funds are holding a record $2.13 trillion in assets.
As much as that is, it doesn’t amount to much. Not when there are hundreds of trillions of liabilities to pay off.
And not when another economic shock could be headed our way. We’ve seen a couple ofbanks report lukewarm earnings this week. Bank of America (NYSE:BAC) saw earnings fall to $653 billion from $2 billion a year ago. Morgan Stanley (NYSE:MS) actually swung to a loss.
Reports are saying that these two banks saw these drops in profits because of one-time accounting charges or valuations.
In Morgan Stanley’s case, the loss was from accounting charges related to the company’s credit spreads. For Bank of America, the accounting expenses stemmed from how its debt is valued.
I think these are the canaries in the coal mines, folks.
Tags: Simple Truth, Fat Cats, Economic Shock, Unfunded Liabilities, Paying Taxes