American Debt

[roadguy]

Watched the news last night.
The USA borrows 19,000 thousand dollars
a second or around 1.4 billion dollars a day.
George W Bush is flushing money down the
toilet like no government in history.
Social Security is underfunded by trillions
and when the baby boomers start trying to
draw social security in the US the shit will
hit the fan.
This has implications for Canada.
Remember when the US sneezes we catch
a cold.
Well this time they will are going to get pneumonia.
As Americans have to attract capital interest
rates could spike dramatically.
There has not been a nation in the world that
has borrowed it's way to prosperity.
This will get ugly.

 

[PinkLady]

Buy more at the US malls.

Aw shucks.
But our Canadian Dollars are buying more at Bellis Fair Mall these days. I for one, like a strong Canadian Loonie.

 

[Buntoss]

Given Canada has a Federal surplus in the last few years, we have the potential to gain from lending money to the US at higher interest rates.

 

[LonelyGhost]

Given Canada has a Federal surplus in the last few years, we have the potential to gain from lending money to the US at higher interest rates.

... doesn't work like that ... besides, which, we have our own bloody debt to worry about ...

the worst stat out there is that the average canuck has 75% of their invested net worth in their houses ... what happens when interest rates rise or people decide to sell their homes to finance their retirement and realize that there are more houses than buyers?

it is the irritating population bulge around the early 60's that drove the prices up on the demand side and when they go to sell, there will be fewer buyers by far ...

the problem will only be made worse by the gov't borrowing even more and off-loading the tax burden on the young workers who would have bought a house if not for the fact that 75% of their wages will be going to taxes ...

great system we got here ...

 

[WC Drifter]

Canadian National Debt

We wonder where the money comes from. According to Statistics Canada:

"As a result of persistent deficit financing, Canada's total debt load (the accumulation of all past deficits and surpluses since Confederation) had grown from $20 billion in 1971 to over $545 billion in 1995."

"By 1994/95, covering the interest costs alone was costing Canadians $42 billion—more than the annual deficit and some 26% of the entire federal budget."

"By March 1997, the net federal debt reached an all time high of $588 billion."

After seven years of debt reduction, Canada's debt still stands at $501 Billion. According to federal law, any budgetary surplus must be applied to the debt.

It is most frustrating to hear people chant "Spend the money, spend the money!" In fact, we already HAVE spent the money.

 

[timec]

US debt - over $7 trillion today having risen by $700 billion within and to the end of 2004... $1.6 trillion of that is money borrowed from the US Social Security Trust.

Thanks to those strong Fiscal Conservatives, Ronny Raygun, Daddy Bush and Monkey Boy... all other US Presidents brought the debt down during their terms:

 

[LonelyGhost]

fucking scarey ...

but thanks for the stats.

 

[tiger]

I read this week (sorry I do not remember my source off of the top of my head) that deficit spending in the US is at 3.5% of GDP. The economic analysis concluded that it is a managable number as long as it is eventually brought down as a % of GDP and that GDP growth in the US is strong. The US faces the most trouble if there is a prolonged global recession and GDP growth stops or GDP begins to shrink.

One thing that is possibly misleading in the chart above is that there have been individual presidents other than the three shown who have run a deficit in certain years, and others have had a surplus, but all the other presidents combined other than those shown do have close to a net zero effect on the debt. US presidents also usually have their first year or two of spending in office already committed by the previous administration. Also, in US government, the house of representatives appropriates funds, not the Senate, not the president. It is a complex system with checks and balances, but if a US citizen wants to cast his or her vote with deficit spending as a major issue, they must really do their homework on who they vote for for representative. It is a scary situation, but it is salvagable, and that is why all citizens should think long and hard about who they choose to represent them in congress.

Enough civics for the day.

 

[Maury Beniowski]

Statistics & facts that have little or no impact on our lives...

Given Canada has a Federal surplus in the last few years, we have the potential to gain from lending money to the US at higher interest rates.

1. If Canada's National Debt was paid down, would anybody in this world care? Would our taxes be lowered? Would our lives be improved? No... Further, after doing so, Canada's economy would still perish if the US economy collapsed. So keep cheering them on!

2. Canada owes most of its debt to Canadians...

3. Lending to Americans is done through trade surpluses or deficits, so we already do. Consumer or business loans are handled through traditional bank channels and overnight settlements. If we were to "hypothetically" lend "cash" to them, it would have to be at "their interest rates", which are lower than ours anyway. No, as it has been and always will be, when America needs money, it prints money, and it has done so in record numbers in the last few years. That's why they are in such bad shape. But like many others before, never bet against the American economy. It will be the darling of world economies again soon. The only fly in the ointment is the Chinese economy. If China decides to float its currency, then all bets are off.

As for the housing effect, real estate prices are driven by supply, demand and "emotions". That's why when you sell to buy, you are only travelling sideways. If you want to reap the rewards of investing for all these years, sell, and move to Thailand or the Philippines.

Little known fact about the National Debt: If the Canadian government took in all its real estate holdings and crown land into its balance sheet, its net worth would instantly erase the debt. Besides, it's better to keep Canadians under the psychological burden of working hard to pay something off than to tell them that they don't owe any money at all. They might turn lazy and want to spend more time in the sun.

And politicians don't want us to have more time off than they do...

 

[roadguy]

The looming national benefit crisis
By Dennis Cauchon and John Waggoner, USA TODAY

The long-term economic health of the United States is threatened by $53 trillion in government debts and liabilities that start to come due in four years when baby boomers begin to retire. (Related graphic: U.S. economy threatened by aging of America)


The "Greatest Generation" and its baby-boom children have promised themselves benefits unprecedented in size and scope. Many leading economists say that even the world's most prosperous economy cannot fulfill these promises without a crushing increase in taxes — and perhaps not even then.

 

[Hennesy]

... start to come due in four years when baby boomers begin to retire. ...

...baby-boom children have promised themselves benefits unprecedented in size and scope. ...

I can't wait to make those damn kids start slaving away for me.

 

[esam]

the solution?

Actually, there's one factor for helping to shore up programs like American Social Security that many are overlooking.

Immigration.

If the pool of those drawing is growing too large, then simply increase the pool of contributors with immigrants with decent job skills (and earning potential).

In the last census, the US had over 10% of its population foreign born. That was a tenfold increase in twenty years.

 

[wilde]

Re: the solution?

If the pool of those drawing is growing too large, then simply increase the pool of contributors with immigrants with decent job skills (and earning potential).

Sounds kind of like a government sanctioned pyramid scheme...........