Is the US in denial over its $14 trillion debt??

[Sisko]

Intersting article on the matter.

I'd like to hear from some of the American members on here. The article claims that there doesn't appear to be any real efforts by the US Administration at cutting the debt. I'm sure that's not entirely true, as I would like to think that no country can simply continue to forge ahead with debt piling up without taking any efforts to cut it.

Increasing apparently at some $40,000 a second......that's quite something if it holds true.

http://www.bbc.co.uk/news/world-13906274

Are there any Americans here that can provide some more information to discuss this?

[Admiral Piett]

We are in danger of losing our credit rating if we do not either raise the debt ceiling or cut spending. The government is too deadlocked to do either I'm afraid. One side is gonna have to give in the coming election.

[King Gambrinus]

The US will be screwed once it defaults on it's debt. China will feel double-crossed and at the least will stop trade with them.


Right now the American government is spending money that just isn't there. A neo-Keynesian model would not work at the moment which is a sure sign of a country that's screwed. And before the Republicans say it's Obama's fault, the reality is that it all started with their tough talking hero Reagan, who decided to spend huge amounts of money that has probably still yet to be paid off.


Looking at their political deadlock right now, the US can surely not be the world's superpower much longer.

[charles the hammer]

The US will be screwed once it defaults on it's debt. China will feel double-crossed and at the least will stop trade with them.


Right now the American government is spending money that just isn't there. A neo-Keynesian model would not work at the moment which is a sure sign of a country that's screwed. And before the Republicans say it's Obama's fault, the reality is that it all started with their tough talking hero Reagan, who decided to spend huge amounts of money that has probably still yet to be paid off.

I wouldnt blame him as much I would go it towards both sides refusing to cut programs for fear of loosing votes when there "Babies" that appeal to there base are cut, and to be honest us voters havent exactly proven then wrong either.

[King Gambrinus]

I wouldnt blame him as much I would go it towards both sides refusing to cut programs for fear of loosing votes when there "Babies" that appeal to there base are cut, and to be honest us voters havent exactly proven then wrong either.

See my edit . Sphere hit the nail on the head in terms of the political problem.

[Hotspur]

The US will be screwed once it defaults on it's debt. China will feel double-crossed and at the least will stop trade with them.

What utter nonsense. China is not going to stop a billion dollars a day in exports.

[King Gambrinus]

What utter nonsense. China is not going to stop a billion dollars a day in exports.

If the US defaults, yes it will, because it'll cost them a trillion dollars. China practically owns the US debt. They would never stand for a default that could happen if somebody doesn't intervene. Besides, it can find other customers such as Europe, Africa (who they are buying into as we speak) and South America. It certainly doesn't want to be involved with a country that defaults its debt.

[Hotspur]

If the US defaults, yes it will, because it'll cost them a trillion dollars. China practically owns the US debt. They would never stand for a default that could happen if somebody doesn't intervene. Besides, it can find other customers such as Europe, Africa (who they are buying into as we speak) and South America. It certainly doesn't want to be involved with a country that defaults its debt.

More nonsense. Total US debt is ~14 trillion dollars. Foreign ownership accounts for ~4.5 trillion dollars, and of that China holds ~1.1 trillion dollars.

So China owns 7% of total US debt. [Source]

Japan and the UK combined hold more than China.

As for finding other customers, give me a break. The US represents fully 1/5th of all of China's exports.

As amusing as doomsday scenarios are, they aren't grounded in reality.

[King Gambrinus]

More nonsense. Total US debt is ~14 trillion dollars. Foreign ownership accounts for ~4.5 trillion dollars, and of that China holds ~1.1 trillion dollars.

So China owns 7% of total US debt. [Source]

Japan and the UK combined hold more than China.

As for finding other customers, give me a break. The US represents fully 1/5th of all of China's exports.

As amusing as doomsday scenarios are, they aren't grounded in reality.

Oh dear. I quote myself.

If the US defaults, yes it will, because it'll cost them a trillion dollars.

That's pretty much the figure you stated.

So you think they won't blink an eye if the US defaults? It might be 7%, which is nothing compared to Japan and the UK, but the latter countries are suck-ups to the US. China will have enough economical and military might to say to the US they aren't dealing with them anymore.

[Mr. Scott]

The US will be screwed once it defaults on it's debt. China will feel double-crossed and at the least will stop trade with them.


Right now the American government is spending money that just isn't there. A neo-Keynesian model would not work at the moment which is a sure sign of a country that's screwed. And before the Republicans say it's Obama's fault, the reality is that it all started with their tough talking hero Reagan, who decided to spend huge amounts of money that has probably still yet to be paid off.


Looking at their political deadlock right now, the US can surely not be the world's superpower much longer.

What? China would never cease trade with it's largest partner.
A us default is unthinkable, it would be a catalyst for a worldwide depression

I think the debt problem was a creation spawned by both parties. It's just easier to blame the president. I think people forget the hell the media and democrats gave bush. The heat Obama is taking doesn't even doesn't even compare.

[Sphere]

To say the US public or government is ignorant of the situation is, well, very ignorant.

It is the political topic. But paradoxically that is probably why it has been somewhat intractable. The US government system requires compromise, but the current US political situation makes compromise almost impossible, even more so on the big issues.

It is primary season, any Republican that votes for a deal that contains revenue increases is likely to face a "Tea Party" challenger candidate and is putting him/herself at great risk of losing their seat. On the other hand, the Dem's stand to gain more politically if they are seen standing up for the very popular entitlement programs of Social Security and Medicare (old people vote apparently). They would be content to wait to cut a deal after the election, with a newly mandated Obama, and more evenly split house.

That being said a deal may still happen before the election. The Republican leadership is probably open to revenue increases as part of a deficit reduction package (the leadership is still center-right, Dole/McCain/Gingrich-type Republican), but any such bill would be voted agaisnt by ~50% of House Republicans who are the new "Tea Party" Republicans. That means relying on Democratic votes in the House, which is unpleasant, and might actually lead to a revolt amongst House Republicans and a vote for new leadership.

[Imperial]

Congress fiddles while America spends.

[Ancient Aliens]

This is a very misleading thread. While the United States is in an enormous amount of debt, a country's debt is related to it's GDP. The U.S. GDP can only be compared to the EU. The United States is in financial trouble, it is true, but no more than many other countries around the world.

Debt Compared to GDP:

http://www.creditloan.com/blog/2009/...bt-by-country/

GDP:

http://en.wikipedia.org/wiki/List_of...y_GDP_(nominal)

By the way, I sense a lot of hostility towards the United States in this thread, for some odd reason. Is there any particular reason why people are so interested in the possibility of "the United States failing economically"? Europeans should be concerned with their own financial issues (of which they have many) instead of concerning themselves with the possibility of a U.S. financial collapse (which most likely will not happen).

[King Gambrinus]

This is a very misleading thread. While the United States is in an enormous amount of debt, a country's debt is related to it's GDP. The U.S. GDP can only be compared to the EU. The United States is in financial trouble, it is true, but no more than many other countries around the world.

Debt Compared to GDP:

http://www.creditloan.com/blog/2009/...bt-by-country/

GDP:

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

By the way, I sense a lot of hostility towards the United States in this thread, for some odd reason. Is there any particular reason why people are so interested in the possibility of "the United States failing economically"? Europeans should be concerned with their own financial issues (of which they have many) instead of concerning themselves with the possibility of a U.S. financial collapse (which most likely will not happen).

Exhibit A here is using the same excuse social conservatives in America are using : "let's look at the others, they're in the too, if it wasn't for Obama, we'd be fine. Just look at our GDP"


Unfortunately that doesn't comply with the classic "America is the leading superpower in the world and God Bless America" party line.

We were never hostile to the US, we were simply pointing out a huge problem that the US has but has chosen to ignore, instead people like Herman Cain want to industrialise the US (good luck competing with China), thinking most Americans will accept any job at the moment. That's when your GDP becomes a problem.


Remember we're talking in the long run, but I guess in the long run, we're all dead, right?

[Ancient Aliens]

Exhibit A here is using the same excuse social conservatives in America are using : "let's look at the others, they're in the too, if it wasn't for Obama, we'd be fine. Just look at our GDP"


Unfortunately that doesn't comply with the classic "America is the leading superpower in the world and God Bless America" party line.

I never said anything of the sort. Nor does it have anything to do with Obama, or any president for that matter. Presidents rarely have any substantial effect on the economy directly (other than signing off on economic legislation, if one can even count that). The economic crisis in the United States is a macroeconomical issue, not an issue of national policy...

We were never hostile to the US, we were simply pointing out a huge problem that the US has but has chosen to ignore, instead people like Herman Cain want to industrialise the US (good luck competing with China), thinking most Americans will accept any job at the moment. That's when your GDP becomes a problem.

I was merely pointing out that it is a bit pretentious and hypocritical to point out international faults without acknowledging and dealing national faults first.

[King Gambrinus]

I never said anything of the sort. Nor does it have anything to do with Obama, or any president for that matter. Presidents rarely have any substantial effect on the economy directly (other than signing off on economic legislation, if one can even count that). The economic crisis in the United States is a macroeconomical issue, not an issue of national policy...

You'd be surprised. The US is one of those rare countries that attempts to be fully democratic, which means deadlock is common between those three shiny houses you guys have. This hinders any sort of government cuts that are so sorely needed.

I was merely pointing out that it is a bit pretentious and hypocritical to point out international faults without acknowledging and dealing national faults first.

This is a debate forum. The topic is clear. I'm not saying any countries that I feel a minor affiliation too (I am not nationalistic at all) are perfect either. But we're discussing the US's problems,not Europe's, which have been discussed to death with Greece and the Euro.


Put it this way : If Greece (or another unstable euro country) default, the euro will crash but recover, we'll all lose a lot of money and our friend Keynes will be the hero once again, and we'll live happily ever after.

If the US were to default on it's debt, China would start another Cold War, and hinder any trade with the West. This triggers in turn more spending on missiles, bailing out IMF-bound countries in exchange for puppet governors fearing spring time and huge spending. And we'd be in the same situation we are now without China supplying goods and services to us.


I think we know who's more important. No pressure.

[Dr. Croccer]

It's rather unfair to say that they're in denial. A more accurate description is that they're in too deep. The fact that a recession hit didn't help things either. Obama had to concentrate on fighting that first, which only increased the debt. It's not going to be fixed in one presidency, nor in the next. It's certainly been ignored too much in the past, untill now it's too big to.

[kentuckybandit]

I also think it isn't being helped much by the fact that this subject is a little harder for the general public to conceive, and thus harder for politicians to hit head on for fear of angering their constituents by making concessions to fix a problem they don't fully understand.

[Sphere]

But to put the situation into perspective, the US is not at risk of any near-term default. Believe it or not, the US is actually spending less of its GDP to service debt now than it did before the recession (here's another source, with a questionable prediciton tacked on) . This is because investors seeking a safe haven fled to Treasury Bonds, driving down the interest rates the US had to pay on debt.

That being said, mid to long term, the cost of servicing US debt is going to become very damaging to the economy without some deficit reduction. Though immediate damage is possible if the debt cieling isn't raised and the bond rates spike.

[Platon]

But to put the situation into perspective, the US is not at risk of any near-term default. Believe it or not, the US is actually spending less of its GDP to service debt now than it did before the recession (here's another source, with a questionable prediciton tacked on) . This is because investors seeking a safe haven fled to Treasury Bonds, driving down the interest rates the US had to pay on debt.

That being said, mid to long term, the cost of servicing US debt is going to become very damaging to the economy without some deficit reduction. Though immediate damage is possible if the debt cieling isn't raised and the bond rates spike.

More near term than you think

Of cource you Americans have something we Greeks don't have - Ben Bernanke!
He can print 1-2 trillion$ a year to buy tresury bonds and lend out to his Wall street buddies and keep this ponzi scheme going.