Experts Warn Debt May Threaten Economy

Colorado Springs Gazette ^ | Aug 27, 2005 | Robert Tanner (A.P.)

[Graybeard58]

"We're living beyond our means," Roubini says,

I'm not.

Even though the government takes a lot of my "means" and gives it to others.

[mtbopfuyn]

Waiting for AP to write a story on how much the rest of the world owes the US.

[Graybeard58]

Waiting for AP to write a story on how much the rest of the world owes the US.

Don't hold your breath on that.

A big part of the world owes their very existence to the U.S. and they spit in our face.

I'm thinking France.

[thoughtomator]

Very little incentive to save when Money Market accounts yield half a percent interest.

[keithtoo]

What really matters is not debt, what matters is net worth. In government or personal issues, net worth, or net debt is the key.

If I have 10,000 in credit card bills, but $5000.00 net in a car, and 30,0000 in equity in my house, and $15,000 in an IRA, then my 'debt' doesn't really exist.

The same goes for government, or public debt. If our National Debt is $13 Trillion, but our GNP is $11 Trillion, and our net national worth is $160 Trillion, then we are still pretty well off.

Don't panic, in the 80's our national debt went up $2 Trillion, but our GNP went from $3 Trillion to $6 Trillion per year.

Pretty good debt to asset ration if you ask me.

[BIGZ]

45 percent is owed to ourselves most of which is Social Security, fix the Ponzi scheme that Social Security is and a large portion of the problem is solved.

[DTwistedSisterS]

"A chorus of economists, government officials and elected leaders both conservative and liberal is warning that America's nonstop borrowing has put the nation on the road to a major fiscal disaster - one that could unleash plummeting home values, rocketing interest rates, lost jobs, stagnating wages and threats to government services ranging from health care to law enforcement. "

Well, I think that just about covers every major financial thing. Could've said Depression... but, then we'd be using terms from the campaign, which makes us then goto BUSH"S ECONOMY IS THE WORST SINCE HOOVER! Then we talk about the 04 election, and then all the way back to how the PResident stole the 00 election, right?

</sarcasm>

[Nowhere Man]

Pinging the ones who usually ping me on stuff like this.

[Brilliant]

And why, exactly, did Congress just approve a $289 billion highway bill? We don't need it, and it's just going to add to the debt.

Someone ought to make these guys liable for their malpractice, but I guess it's not going to be them!

[Graybeard58]

45 percent is owed to ourselves most of which is Social Security, fix the Ponzi scheme that Social Security is and a large portion of the problem is solved.

Yep, fix that and everything associated with it, medicare, medicade etc. Then get rid of a few other massive giveaways like the Earned Income Credit.

[Brilliant]

My view is that Soros, Buffett, and Gates are not paying their fair share. They help elect these spendthrifts, and then they expect us to pay the consequences.

[layman]

No one's asking you to write a check to cover that $145,000

Like Foxworthy says, ... "A CHECK? You'll take a CHECK? ... Why didn't you say so ... Hell yes, I can write you a check ... I'll just round it off to $150,000 if that's OK with you."

[balrog666]

The entire article is crap. They deliberately don't count 401K's, IRA's, stock brokerage accounts, mutual fund holdings, direct stock investments, real estate holdings, gold, or any other form of "savings" or assets. And anybody who puts their assets into a "savings account" deserves exactly what they get.

[palmer]

The same goes for government, or public debt. If our National Debt is $13 Trillion, but our GNP is $11 Trillion, and our net national worth is $160 Trillion, then we are still pretty well off.

Including the promises for SS, medicare, govt and military retirement, etc, the debt is more like $40 trillion (in present dollars). A lot of it can't be inflated away since it is indexed. It might be possible to grow the economy enough to pay the debt but I doubt it. Ultimately we will seen as unable to pay and the lending (Asian countries buying T-bills) will stop. It may not happen for a while, but it will be quick when it happens. Maybe at that point we can sell our bridges to the Chinese (for scrap).

[spinestein]

[Experts Warn Debt May Threaten Economy]



A few observations about this:

-- excessive accumulated debt does have a negative effect on the economy

-- the debt is caused by the government consistently spending more money than is available

-- the only time the debt was decreasing was in the late 90s's as a result of mandatory federal spending caps passed as part of the Republican's "Contract with America"

-- those mandatory federal spending caps have expired and the debt is increasing again

-- there is currently no mandate from anything near a majority of voters for the government to be fiscally responsible

-- the "old media" only warns about the accumulating national debt when there is a Republican president


And I have one question, admittedly rhetorical:

-- If we had a both a Democratic congress and a Democratic president would the debt decrease, or would the debt increase faster?

[snowsislander]

For those of you interested in our net position with respect to international investment, here's the thread I started on the latest U.S. Net International Investment Position at Yearend 2004 report from the U.S. government's Bureau of Economic Analysis:

http://www.freerepublic.com/focus/f-news/1433780/posts

[spinestein]

[The nation's three biggest entitlement programs - Social Security, Medicare and Medicaid - make promises for retirement and health care (for the elderly and the poor) which carry a huge price tag that balloons as the population grows and ages.]



It's a good thing we have 7 trillion dollars built up in the social security "trust fund" to keep the program solvent for another 30 or 40 years.

And I'm not really worried that there is only an I.O.U. in the "trust fund" put there by congress when they "borrowed" the 7 trillion dollars to make up for some of the deficits in the general fund over the last few decades.

I'm sure congress will replace the money before it will be needed to cover promised benefits when the social security system starts operating in the red in the next couple of years.

I'm especially confident because distinguished Senators like Ted Kennedy and John F. Kerry promised the 7 trillion dollars would be there in the "trust fund" for retirees, and I assume that means they guarantee the money will be available even if they have to cover the cost out of their own private fortunes. They promised.


Why do I hear laughing?

[ordinaryguy]

0.5%? Please, shop around. You can do much better than that!

[putupjob]

Oh yeah, save cash. Oh Sure. For all those who saved 100,000 five years ago, it is now worth about 110,000. For all those who invested it in "bloated" real estate, it is now worth about $300,000. I think that explains the near 0% cash save rate.

[A. Pole]

[...] "I see people younger than me with comparable jobs that drive new vehicles and have a boat and mortgage and things," says Canelon, who responded to the AP/Ipsos poll. "And I just wonder about their debt."
[...]
But only 35 percent were willing to cut government spending and experience a drop in services to balance the budget. Even fewer - 18 percent - were willing to raise taxes to keep current services. Just 1 percent wanted to both raise taxes and cut spending. The poll has a margin of error of 3 percentage points.
[...]
Nearly two decades ago, the country fretted over a trade imbalance equal to 3.1 percent of the overall economy, or the gross domestic product. It's more than twice as big now, roughly 6.5 percent.
[...]
At the same time, the government provides more services to the public than it can afford to - and goes into debt to cover the cost. Other nations actually purchase that debt, in the form of U.S. Treasury bonds and notes. Those bonds have increasingly been snapped up not just by private investors but by foreign banks. [...]

Some radio talk show hosts say "Don't worry, be happy. We are living better than previous generations of Americans."