America is broke

http://www.guardian.co.uk/commentisfree/cifamerica/2010/feb/02/america-europe

Simon Tisdall guardian.co.uk, Tuesday 2 February 2010 19.03 GMT


Barack Obama's $3.8tn budget is a vastly complex affair. But one fact stands out plainly: in layman's terms, America is broke. The federal government's outgoings will exceed income by about $1.6tn this year; over the next 10 years combined, the predicted gap is $8.5tn. Given the partisan impasse on Capitol Hill over spending cuts and higher taxes, there is no reason to assume matters will improve any time soon.

Obama suggested this week that such mind-boggling improvidence is unsustainable, economically and even morally. But continuing, chronic American financial vulnerability also carries increasingly serious implications for US global influence and its standing as the world's only superpower. In short, the deficit, and the mindset that produces it, begin to threaten the post-1945 security architecture.

The western world has been here before. In Asia, Africa, and the Middle East after the second world war,

Everyone, D's and R's, need to cooperate on the solution or we are all doomed.

But maybe I am being too optimistic.

....humming along reasonably well last time I checked...

compared to American cars bought by Japanese?

While they may be carrying a greater debt load, they have the industrial capability to back up their debts. What do WE have? Starbucks.

People THINK they know the condition of the US manufacturing base but rarely use numbers to back it up. Do a quick Google search.

but the fact is, we produce far LESS, proportionately, than we did just 20 years ago. That is an indication of how strong we once were, that we could be in constant decline for 20-30 years and still be the world's top manufacturer. The trend, however, is that we are in decline and if it wasn't for a few key industries we'd be far worse off than we are.

We are racking up debt to pay for 780 foreign military bases and two hot wars. Japan is racking up debt developing high speed rail and robotizing its auto industry.

Which is the course with a future?

This chart from the same source measures country output as a percentage of global output. Our decline is there, but not dramatic, and exacerbated by China's sudden willingness to use it's 1.5billion people to make products to sell overseas. How could our % contruibution of global output NOT go down? The decline as a percentage of US GDP is a bit worse, but even there can be explained easily by the stratospheric growth in health care spending as a percent of GDP. It is of course a zero sum game when measured that way.

The fundamental point is that we are making more than we did 20 years ago, and remain #1 by a mile. What we make has changed (skewing towards high cost high tech). How we make it has changed (skewing towards automation and away from labor-intensive) but we still make it.



Incidentally I agree that Japan's spending priorities are preferable. Not necessarily directly transferable (high speed rail between most US towns will never be as viable as it is with Japan's population density) but preferable.

-- almost no foreign currency-denominated debt obligations
-- more than 90 percent of Japanese govt bonds are held by domestic investors
-- Japan is the world's largest creditor nation with a healthy account surplus
-- the yen is still strong and likely will remain so
-- household assets and funds held by private sector are very high
-- ratio of tax burden to national income is one of the lowest in the OECD, leaving it room to raise taxes.

http://www.reuters.com/article/idUSTOE60P0BH20100127?type=usDollarRpt

We are in a much more perilous situation because none of those things listed above are true for the US.

Oh and 83% or so of US debt is held by domestic investors too.

Military spending INCREASED,
and we are fighting and expanding several unnecessary Wars of Choice.

How could we do THAT if we are broke? :shrug:

The US is declining. Even if we weren't in the this bad of an economic quagmire, we'd still be looking in the rearview as countries like China, and India rapidly approach. After all, China is the US's biggest creditor. We don't only owe our own citizens money, we owe the WORLD money...that's a lot to pay back. Our influence across the globe has been waning since the naughts and will continue to do so. We have to wake up and smell the sinking ship if we're gonna gain back any of the global pull we had, instead of ignoring it and continuously over-spending here and abroad and over-policing the world.

China holds 799B of our $12.5T debt. It's the largest single foreign creditor sure but holds only about 6.5% of our debt. Foreigners in toto hold less than 20%. Our biggest creditor (holder of treasury instruments) is other government agencies at over $4T.

You can quote 4 full paragraphs, you know. :shrug:

...and invested in the Stock Market! Even without that gimmick look how good it's been:


"Let'em eat dirt"


...But I find it hard to worry about the national debt (in the future) without a fucking job!

WALESA (via translator): The United States is only one superpower. Today they lead the world. Nobody has doubts about it. Militarily. They also lead economically but they're getting weak. But they don't lead morally and politically anymore. The world has no leadership. The United States was always the last resort and hope for all other nations. There was the hope, whenever something was going wrong, one could count on the United States. Today, we lost that hope.

We can't afford to be an empire any more.