America’s government debt bomb [But No, we're not the next Greece]

Washington Times ^ | 07/20/2015 | Stephen Moore

[SeekAndFind]

I’m asked every day if America is the next Greece or Detroit or Puerto Rico — and the answer is an unequivocal no. The U.S. economy — especially the private sector — is structurally very healthy. That wasn’t the case on the eve of the great financial meltdown of 2008 when American companies and households were leveraged up to their eyebrows.

What’s different today from eight years ago is that now it’s the government that’s in the fiscal intensive care unit while companies and households have rebooted.

The stunning improvement in business and family balance sheets is arguably the most impressive and under-reported characteristics of this U.S. recovery (see chart). The latest government statistics indicate that the private sector has massively deleveraged following the debt binge from 2000 to 2008.

The story is simple: Over the past seven years American companies have become hyper- and even ruthlessly efficient, which has meant shedding unproductive operations and reducing employment, cutting debt burdens, and focusing on profitability. It’s the reason the stock market has soared since 2008. Companies are now sitting on $1 trillion to $2 trillion of reserve cash, according to The Wall Street Journal, and balance sheets are generally pristine. Households have cut their debt, too.

But the borrowing statistics from the Bureau of Economic Analysis and compiled by economist David Malpass of Encima Capital also reveal that there has been one sector of the economy that has been largely immune from this American de-leveraging crusade: the government.

[SeekAndFind]

[Lurkina.n.Learnin]

Ping

[Presbyterian Reporter]

In the chart you posted they are only showing the Federal Government debt of $18 Trillion.

Why are they not also showing the State and Local Government debt which has also increased dramatically?

[Presbyterian Reporter]

In 1981 when Reagan entered the White House the Federal Govt debt was $998 BILLION. When Reagan left it was $2.8 Trillion.

Bush the Elder added another $1.3 Trillion to the debt in his four years.

Clinton added another $1.5 Trillion to the debt in his eight years.

Bush the Younger added another $4.5 Trillion to the debt in his eight years.

Obama is on track to add another $10.0 Trillion to the debt in his eight years.

So after increasing the national debt almost 20 fold, are we better off today than we were in 1981?

[DuncanWaring]

Bush the Younger added another $4.5 Trillion to the debt in his eight years.

I'm not much of a fan of W, but in the interest of completeness, $2 Trillion of that came in the last two years of his administration after the Rats had taken control of Congress in the 2006 election.

[rawcatslyentist]

Not the next Greece, more like the next Weimarbabwe.

[SeekAndFind]

RE: In the chart you posted they are only showing the Federal Government debt of $18 Trillion.

Yep, and what is NOT shown are the UNFUNDED LIABILITIES like Social Security and Medicare. If you include those, it is over 5 times our GDP.

[SeekAndFind]

I'm not much of a fan of W, but in the interest of completeness, $2 Trillion of that came in the last two years of his administration after the Rats had taken control of Congress in the 2006 election

The Budget deficit was on its way DOWN in 2007 and then something happened -- Both houses of Congress were taken over by DEMOCRATS. The rest is history.

[DuncanWaring]

Generally the point I was making.

The chart you posted (yeah, I know, sourced from the govt.) is overly optimistic.

The last time there was actually a Federal Budget surplus on a Fiscal Year basis was during the Eisenhower administration.

[C210N]

[But No, we're not the next Greece]

So, the question might arise, what if any advantage to the Greek owners of gold and silver? I ask this with US fortune telling in mind. Grecians are losing their wealth. Are they better off if some of that wealth are in precious metals? How do they play from here?