The Senate has signed off. The president's borrowing power has been floated up to $10 trillion, which beats the AmEx black card. The president's limit when he came into office in 2001 was $6 trillion. So it's been hiked an average of $500 billion per year during his eight years of office. As of this week, according to the national debt clock, the U.S. government owes nearly $30,000 to every citizen.
Over the weekend Mayor Bloomberg assailed the continuing huge U.S. budget deficits in a friendly speech to British conservatives: "Too many of our conservatives in the United States want to run up enormous deficits and hope that some way, somehow, someone else will pay for it. That's not conservatism, that's alchemy at best, or, if you like, lunacy."
The mayor's comment may stem from envy. New York City must balance its budget every year. A former NYC mayor allegedly said: "a bad loan is better than a good tax."
The United States is not alone in borrowing to finance the national budget. A CIA table shows the national debts of France and Turkey cluster with us at 64.7 percent of our GDPs. Nearly 30 countries have even higher ratios.
Some see no problem with heavy borrowing. If Americans owe the money to one another, it's just a wash that has the side benefit of providing a secure asset for savers. The burden of the debt may be shifted to the next generation, they say, but it's only fair because this generation is leaving behind so much infrastructure.
But there is lunacy in benign neglect of the national debt on at least two fronts:
1. The U.S. debt is largely being financed overseas, which creates the potential for financial crisis.
2. The debt is not accumulating because of major infrastructure improvements or other long-term investments. It is growing to fight wars in Afghanistan and Iraq that are tragically costly in human terms and are not accomplishing their missions.
Foreigners buy U.S. debt to make sure Americans keep buying goods and services from them. Foreign central banks buy the debt to neutralize the extra dollars from foreign countries' current account surpluses. Figures on U.S. external debt, i.e., public and private debts repayable in foreign currencies calculated in U.S. dollars at current exchange rates, show the extent of the cumulative overhang. While U.S. external debt is the highest at $10 trillion, it isn't much higher than the $8.3 trillion figure for the UK, so from the cumulative perspective Mayor Bloomberg was preaching fiscal prudence to the wrong crowd.
Five Countries with the Highest External Debt, 2006
1. United States $10.0 trillion
2. United Kingdom, $8.3 trillion
3. Germany, $3.9 trillion
4. France, $3.5 trillion
5. Italy, $2.0 trillion
Source: CIA, The World Factbook, as of 9/20/07.
The U.S. current account deficit in 2006 was $862 billion, nearly 15 times the UK's deficit of $58 billion. So on a current basis Britain is indeed more thrifty than the United States.
Five Countries with the Highest Current Account Deficits, 2006
1. United States, -$862.3 billion
2. Spain, -$98.6 billion
3. United Kingdom, -$57.7 billion
4. Australia, -$41.6 billion
5. France, -$38.0 billion
Source: CIA, The World Factbook, as of 9/20/07.
The current account balance, ranked for 163 countries, is the trade balance (net export of goods and services such as legal advice) + net factor income from abroad (such as interest and dividends) + net unilateral transfers from abroad (such as foreign aid, pension payments from overseas or workers' remittances from overseas).
The danger is a return to the 1970s problem of expensive oil and other commodities, leading to both high unemployment and high inflation - i.e., a high Misery Index, which peaked at 22 percent in June 1980. For the first half of 2007, the Index was low, under 6 percent. But this level will rise if a weakened dollar shows up more signficantly in what we pay for fuel and food.
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Supposedly the fascist Nazis were defeated in 1945, but were they ?
the america peso is just abouth worthless.
I wouldn't expect any major changes in economic policy while the current administra
For a country that in large measure continues to vote for politician
The first Baby Boomers qualify for early Social Security benefits in January (only three months away) and for Medicare only three years after that. We don't have a whole lot of time to get our financial house in order.
Assuming debt to repair long neglected infustruct
Few Inspectors of food, we don't know what chemicals are comming into the USA in our foods.
Few mining Inspectors and we all know the result of that.
Few bridge inspectors and they will fall.
Highways getting worse each year around the country.
90% OF THE JOBS CREATED UNDER BUSH HAVE BEEN MINIUMN WAGE JOBS. The taxes are not going to be there to pay the debt or repair our infustruct
Uh no. The UK's foreign debt isn't 8.3 trillion dollars even if the CIA claims it is.
That after all is larger than all UK debt, both private and public, combined.
It is however the same amount as the amount of cash that foreigners have invested in the UK, or keep in UK bank accounts. So if a foreign company builds a factory in the UK , that appears in the 8.3 trillion figure. But that's not a loan. Ditto if,say, a german investor buys shares on the london stock exchange , or an american puts money in a deposit account with a UK bank. (and the largest tranche of this 8.3 trillion is deposits held in a UK bank (around 70%)).
See http://www
Ultimately the debt is not a big a deal as it sounds.
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The debt is denominate
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If the debt were denominate
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The debt is denominate
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If the debt were denominate
if countries ever demand payment in euros, americans will be wiping their asses with the $$.
"Every man, woman and child in America owes $30,000 to the nation's bondholder
Government is just the middleman. Our "national" debt is called that because it is owed (to the bondholder
I will never tire of suggesting that we should privatize the national debt. Split the check. Assign each American his fair share of the "national" debt, to service or pay down as he or she sees fit. The _average_ American would be assigned a debit balance of $30,000. Whether the average American would change his voting pattern or his lifestyle, I don't pretend to know.
-- TP
Let's see, 88% of all the National Debt has accumulate
For me, I was happy paying my share in 2000, when there was a surplus. So to be fair, we should also return to the tax policies of 7 years ago and we could share the burden that was working so well then.
Medicare costs a lot more than it should because Bushites are giving part of medicare money to substain the private insurances in Medicare. Most have paid into both programs for 45 years or more when they retire.
What bothers me is the interest we are paying out of the country to Japan and China. They are reinvestin
Someone said if Japan and China call the treasuries all at once, that Bush will just print up more money to pay them, which will make the dollar worthless, so that will keep them from calling in the bonds.
We can pay back the Surplus Social Security which is almost 2 trillion as the boomers retire and need it. They will have to pay regular taxes on every penny they pull out of their 401k, since it is tax deferred and not taxes have been paid on that money. IT is projected they will pay several trillion in taxes. Most will pull out 5% a year, so that will give a steady stream of high taxes collected every year.
Hopefully, it will be enough to pay for the pensions, too.
It is disgusting that companies have restructur
later, China will foreclose. Cat sandwich? LOL
Now through arrogance, sloth, fanaticall
Finally. Nobody ever points this out.
Cheney got it from day One. He sees a tremendous potential for Return on Investment
But he is nuts. He is obsessed and nuts. He is obsessed, nuts, and powerful.
Bad combinatio
Plus America just doesn't do the military based hegemony and imperialis
We completely dumped a rare foreign opportunit
Lebanon finally had itself together. But did we prop up their government and use our influentia
**** no. We cheered as they got bombed back to the 15th Century.
Domestical
And fix an occasional pothole, train track, and bridge.
Well spent money is investing in the people who are the foundation for the production of the common wealth.
Our capital, read taxes and debt, is going to guns. And screw the butter.
Who is stupid enough to fork over power, markets, influence, and corporatew
When they run out of a middle class to trash, they will just move their headquarte
We have just burned a generation
We no longer own this nation. Bush , Cheney , Bush's family and friends , Halliburto
This country has become a Global Corporatio
We the people are numberous and easy to be replaced with any other person in the world for a cheaper wage and younger worker.
But , Bush had a better plan , the one where he gives the wealthey a tax break , cheap workers , give the employees no benefits and let them be responsibl
You know Bush's policy where the money
trickle (flows) UP to the wealthy!!!
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I hope the s* does not hit the fan until after I have gone to my reward. But who knows? It took the Germans only 10 years to go from relative prosperity in 1913 to economic chaos in 1923. 10 years later a dictator came to power. 10 years after that, Jews in Nazi occupied Europe were subject to arrest and deportatio