Cliff LyonEconomics - Debt and Borrowing
Since the conversation seems to be headed in the direction of economics, I thought I would post some important facts we should all be aware of.
Taken from Full article
“At the end of fiscal year 2001, the outstanding federal government debt totaled $3.3 trillion, 31% of it held by foreign lenders. Over the succeeding four years, the debt grew by $1.3 trillion, but borrowing from abroad accounted for more than 80% of the increase.
Using Congressional Budget Office (CBO) projections for different scenarios, the Center on Budget and Policy Priorities estimates that the federal debt will rise to $6.7 trillion by 2011 under current policies. If foreign lenders continue to buy 80% of new federal debt, the federal government will owe more than half—$3.8 trillion dollars—to foreign lenders by 2011, which is equivalent to 23% of expected gross domestic product that year.”
March 14th, 2006 at 7:53 pm
Cliff
This is one article I agree with you whole heartedly. Federal Spending has gone way out of control. You would think this would not happen under a Republican held congress. This is not why we voted them in back in 94. Unfortunate our current Republican majority is not following the conservative ideals they espoused during election time. The bad part is if Democrats were spending this wildly Republicans would rightfully be up in arms about it. We should at least be as equally incensed when the spending is done by Republicans. It may be time for a second Republican revolution.
Just like you said foreign interests will own most of our debt, and we are griping about the UAE just owning our ports. Fiscal policy also needs to be looked at as a national security issue.
Not even drunken sailors could spend this wildly. I know Ronald Reagan is spinning in his grave.
March 14th, 2006 at 9:04 pm
The Bush Administration has gone the way of the Johnson Administration, Cut taxes, pay for a war, and pay for great society. Though the Bush admin. has not been working on a great society, they are spending money on a plenty of other things. There was a weak FED, and then Nixon started a Free Market policy when it didn’t workout fast enough, and reelection on its way he reversed course and tired everything he could think of, Wage and Price control. Most economists will tell you that some debt is good. Most economists, I am talking about both Keynesian and Hayek followers. But they will also tell you that this is a little ridiculous. Greenspan was holding well with the interest rates and pulling money out of the economy. A recent sign of that, for those of you that have credit cards and bank loans you may have been paying double your min. payment since Jan. That is an attempt by the FED to pull extra funds out of the economy and keep it from overheating. A great example is Greenspan’s ’soft landing’ in 1991. However there is a report by each Federal Reserve bank released every quarter called the Beige Book http://www.federalreserve.gov/fomc/beige…) this is an excellent tool to see what is going on not only in your part of the country but in the other areas as well. You speak of foreign interests owning our debt and yes that always been true. This is an investment. When you invest your money, you put into something that pays back, you don’t invest in something that has a bad track record or looks like it is going to be bankrupt. The US govt. has always made its payments since it started borrowing money. We are the safest bet out there; this isn’t bad this works to the health of economy such as ours. The very freedom that was financed back in the 1700s was financed by foreign dollars. Though we have enemies, the people that have invested in our debt are not going to do anything to risk that investment. Why would they?
There was study done on the 10 worst Presidents and the 10 best Presidents in history. This was determined by Scholars and Historians. Then the list was compared to economic history the 10 best had huge deficits, and the 10 worst had balance budgets every year they were in office. Kind of neat huh, I wish I had the copy it was something else. Most readers here wont think Bush would be in the top 10, that is something that only time and history will tell.
March 15th, 2006 at 12:59 am
Under forty years of democratic rule we didn’t see the kind of pork and boon doggles we are seeing under this republican feeding frenzy.
I agree some debt is not bad, but at some point, as debtors will do, they may begin to discount our debt and sell it off which would lead to the kind of US currency devaluation inflation typically associated with countries from Brazil to Nigeria.
Now there is real talk about some countries pegging their currency to a “basket of currencies” and buying more Euros. Ooops. There goes US control over US monetary policy - something we are not used to.
As per “the people that have invested in our debt are not going to do anything to risk that investment.” That is a good argument up to a point. But if they get nervous, they can do sell our debt at a discount to cover their behinds, and drive inflation through the roof which could shrink out economy over night which is what happened to the Japanese and more recently the Asian (contagion) currencies and the Russians currency.
The net result of that is 10 years of stagflation and the discounting of America in a way that would rival Hiroshima and Nagasaki in terms of devastation.
But the good news is, American cars would be a lot cheaper overseas. But our parent’s retirement would be cut in half.
James (lK’s Liver) I’d love to get clearer on the ranking thing. The best studies I’ve seen show a consistent coloration between economic strength under democrat’s vs. republicans since Reagan pushing us down.
See, there is a proven theory that says if you give money to poor people, they will spend it immediately, and it stimulates the economy all the up until the rich guy ends up with it as he always does. (trickle up). But if you give it to the rich guy in the form of tax cuts, he either puts it into the market, or savings.
Rich people do not invest their OWN money ever. That’s why they are rich. (Trickle down). if you pick up an economics text book today, it will describe “trickle up” as a political term with a dual purpose neither of which stimulates the economy.
March 15th, 2006 at 7:15 am
So basically you are saying they could sell our debt and crash our economy and go with Japan’s dept. What army does Japan have? Japan’s Govt doesn’t invest lots of Tax dollars in a large scale of things. No Govt. in the world can have the financial spending that the US Govt can, well others could, they wouldn’t able to back it up. The countries that you are refering to as far as peging their currency to a basket or/and the Euro are just over reacting to the change in value to USD.
When the USD drops in value, our stuff becomes cheaper overseas and people by more of our exports. Like when Japan’s currency dropped in value in the mid to late 1990s, there was a rush on Toyota’s. Forty years of Democratic Control? I seem to remember the Republicans having a good amount of control in parts of the 50s, 60s, 70s, and 80s. Carter had no control, well he did when he listened to the FED Chair went on National TV and told the American Population to stop spending on credit. Oops.
Al Jubitz in 2001 sold Dial a truck for 500 million dollars, his family has been in the trucking business as far back as there have been trucks on the road. The Law Library at Lewis and Clark is there because he invested money into the University to help produce better lawyers.
In West Jordan there was a new building Development by a multi-millionaire who not only build a warehouse and office, but added retail space (before the request of the city). Invested with his own dollars, to help his own business and to expand. Though he liked the idea of having space to rent out and make a little extra, that investment helped small business find a new clean facaulity to start or grow their business. Thats and investment.
You can find a report at MoneyTree.com, it is the quarterly report on VC firms , Seed Capital, and Angel Funding firms that invest in new, expanding and existing business. They use their money and money invested by their partners other individuals. And well as far as I know people have been investing in the Stock Markets both rich and poor a like. Rich people have the luxury of investing their money and having it work for them. When you put your money into your checking account it is invested, the bank loans it out to other people and other banks. If money wasn’t invested economies would never grow or succeed. Hense the Communist Russia going broke, and part of the reason its still struggling to this day.
I don’t know anyone that has over 50k as income that isn’t invested in some way, and I don’t know anyone who has enough money to be considered wealthy who doesn’t invest their money all over the place.
I have seen Trickly Up, they taught it at my college, the one that believes that people and economies can’t do the right thing without the Govt telling them how to do it. Growing up in a poor neighborhood, I can tell you that Poor spend their money immediatly, $300 nikes aren’t just for the rich. Which is why Bush bribed voters in 2000 with that $300 check. To get poor people excited, of course he failed to mention it would be deducted out of the following year’s taxes.
Oh I am pretty sure we have seen some big boon doggles by Democrats in the past, if you really would like to know, by the end of the day I can post a list. During the 90s there was all kinds of Pork Feeding Frenzy. For example, Congressman from Oregon secured 40 million dollars to building a floating bridge that went no where. It sits on the Williamette running long side the shore. Meanwhile there are several bridges within 1 mile of this floating pork that commercial trucks can’t drive over because there is no funding to repair them. 40 million dollars for a bridge that is essentially wood, in a state where the timber industry used to be a world supplier. That is some expensive wood. Nevermind the fact that commerical trucks can’t get where they are going and cause gridlock at the few points they can cross.
March 15th, 2006 at 8:20 am
Under forty years of democratic rule we didn’t see the kind of pork and boon doggles we are seeing under this republican feeding frenzy.
Vietnam War? Great Society?, the origins of deficit spending. There is no difference between parties here, they are all robbing us, and have for decades
March 15th, 2006 at 8:27 am
“But our parent’s retirement would be cut in half.”
What retirement? The book Boomernomics, written by 2 wall street mutual fund managers, defines the cohort demographic of “baby boomers” in this manner. Average boomer, 47K of equity in his home, and investments, 17 k of value of the crap in the house and garage. That will get you about 2 weeks of intensive care.
Retirement for many will be a wheelchair in a warehouse, in diapers, if not euthanasia. Will you make better predictions based on our debt and the types who lead us on any side?
March 15th, 2006 at 8:29 am
“When the USD drops in value, our stuff becomes cheaper overseas and people by more of our exports. ”
What exports? Our trade deficit this year was THREE QUARTER OF A TRILLION DOLLARS!!!! With a weak piss poor dollar.
March 15th, 2006 at 4:15 pm
I like Ken’s statement, suggesting that if the Democrats were spending like the Republicans are today, all hell would break loose. I would take the statement one step further, though, to include everything that the Republicans are doing today. Just imagine the Democrats getting us into the mess with Iraq today based on the same justification being asserted by the Republicans. The Dems would never hear the end of it. We agree on this one, Ken, the same standard should apply!
March 15th, 2006 at 9:36 pm
Bosnia, Kosovo, Tahiti, every military event that happened under Clinton became a Clusterf**k. Carter, the hostage situation. Kennedy, Johnson the Vet. war. Seems like to be that Democratic Presidents fall right into this catagory you create for Iraq.
“Government Waste from A to Z” by (I think) someone with the last name Martin.
This book doesn’t list just Republican feeding frenzies, it also includes Democrat leaders. Take a look, its a little thick but I imagine you could skim it in a couple of days.
March 16th, 2006 at 2:28 pm
Maybe TKL would not mind being a bit more specific with his comparisons between the so-called Clinton wars and the Bush war. As to Kennedy and Johnson, I seem to recall loud and sustained warnings from many, many folks prior to March 2003 that Iraq would end up no different. Indeed, many provided a loud and sustained prediction that Iraq would end up comprising the worst of both Vietnam and Lebanon (Regan’s war, which TKL apparently overlooked). Looks like they were correct and Bush and his blind, tribal support network were wrong.
Maybe TKL would also not mind providing a point to his various rants! I sense deep, confused and unfocused bitterness, and not much else, in the above collection of gobbledygook bearing the moniker TKL.