Doomsayers see some disaster in country’s growing debt

SUSAN TOMPOR

Doom and gloom, as the fashionistas might conclude, seems to be the new black. And the natural accessory, of course, is anxiety.

“Nothing is solved in this crisis,” declared Marc Faber, a contrarian investor who writes a monthly newsletter called “The Gloom Boom & Doom Report.”

“The government uses this crisis to expand like a cancer,” said Faber, who spoke last week on an economic panel at a meeting of the Chartered Financial Analysts Society of Detroit. He told the audience of money managers, financial professionals and their clients that there is no means of avoiding a final collapse of a boom that’s brought about by a credit expansion.

Faber predicts that the United States is ultimately heading for hyperinflation, where the dollar ends up worth very little. And he has taken to saying that the collapse of capitalism is inevitable.

OK, so where is my copy of “The Road”?

I never did get far reading Cormac McCarthy’s novel about the death of civilization. I tried for months but could not get beyond the image of the man and his young son, survivors in the darkness, pushing a grocery cart on this road to nowhere.

But for those of you who loved the novel, I hear “The Road” the movie rolls out later this month in time for the holidays.

Kevin K. Yousif, president of the CFA Society of Detroit, and other advisers say the worst appears to be over.

“We’re not at the brink like we were a year ago,” said Christopher Ruth, chief investment officer for Comerica Asset Management in Detroit.

Even so, Ruth acknowledged that rational people are alarmed these days when it comes to local, state and federal government budgets as they see deficits grow.

On Thursday, the Treasury Department reported that the federal deficit for October was $176.4 billion, above what was expected to be a $150 billion imbalance.

David L. Littmann, senior economist with the Mackinac Center for Public Policy, a research and educational institute in Midland, Mich., stressed again that Michigan isn’t just dealing with the aftermath of a recession; auto manufacturing is in a secular decline.

Litttmann, who also spoke on the economic panel for the Detroit analysts group, said Lansing’s policies of “tax, spend, subsidize and regulate” won’t help matters. Ruth said Littmann is on target when he asserts that government leaders must become more disciplined on spending.

Ruth noted that the lack of faith in government is one reason gold prices — and doom and gloom scenarios — are soaring.

Consumers realize, all too well in some cases, that too much debt will eventually fall on you like a house of cards. They’re wondering whether part of the solution — which involved the federal government taking on mountains of debt — isn’t just kicking the crisis down The Road.

“You can’t fight a debt problem with more debt,” Ruth said.

XSusan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at stomporfreepress.com.

2009 McClatchy Tribune