[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.

[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!

[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.

[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?

[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."

[Moonman62]

Federal Reserve Chairman Alan Greenspan echoed those worries just last week, warning that the federal budget deficit hampered the nation's ability to absorb possible shocks from the soaring trade deficit and the housing boom.

I'm not excusing the irresponsible spending by the Republicans, but Greenspan is more a threat to our economy than the debt.

[ex-Texan]

Don't fret and worry about the National Debt. It's only paper. Currency today is only little pieces of green paper with fancy printing and hidden tracking chips installed. The Fed can always print more green paper. Or the Fed can decide to prime the economic pump again and again by lowering interest rates. Besides, the National Debt is not really that important.

People do not really care about the nation's debt. But people do care about what they can purchase. Today the means to purchase anything is available to anybody. All you need to qualify for a loan is a job. Every day people are urged to buy new or used vehicles by means of easy credit. "Nobody is turned away," say the television commercials. Mortgage brokers are saying the same thing to people every day. Anybody can buy anything. Using credit. Which brings me to my next point.

Far greater in importance is our personal debt. I know a guy that earns about $ 35,000 a year and he just bought a $ 200,000 house. Interest rates are about 3.9% or lower on ARM loans. Easy credit, means easy money. Easy money multiplies itself through the economy about three times (M3). Some economists believe that is really M4 today with interest rates so low. $1 spent in the economy really means a multiplied total of $ 3. With the current 'boom' (or 'bubble') in real estate, that $ 1 is $ 4. Inflationary pressures are working away in the economy. But nobody really cares as long as they can make their monthly payments.

What happens if the economy stumbles? Greenspan can always lower interest rates again. Or, is that what got us into this mess at the outset? Not for me to worry, anyway. Nobody cares about my opinions.

Are you really interested?

[FairOpinion]

"A new Associated Press/Ipsos poll finds that barely a third of Americans would cut spending to reduce the federal deficit and even fewer would raise taxes."

People don't want to understand that there is no such thing as a free lunch, and anything the government gives, it first has to take away from the people.

Apparently 2/3 of the people are getting something from the government and that's why they don't want to see spending cut.

[Dont_Tread_On_Me_888]

This article must be a big lie . . .

after all, President Bush can throw $15 billion to Africa and forgive most of the foreign debt owed to us, plus throw away other billions on third-world cesspools, plus spend $200 billion plus on police action nation building in Iraq.

And, the UN says we should give 7% of our GDP to the "poor nations".

So, obviously, we have money to burn, right?

[phil_will1]

"In the end, Roubini, Walker and others say, disaster is still avoidable, but it's going to require the American people and the country's leaders to clean financial house - to reduce the federal deficit and the trade deficit. Global economics may drive some changes: if Japanese cars cost more, for example, Americans may buy less-expensive GMs."


Good article. There is a rather new book out called Three Billion New Capitalists by Clyde Prestowitz which says a lot of the same things.

Part of the answer is clearly tax reform. We can't afford the luxury of a tax system which puts US producers at a disadvantage in the increasingly global economy any more. The FairTax would help greatly in both the federal budget and the trade deficit areas.