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2011-06-02 Economy

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Posted by Fred 2011-06-02 00:00|| || Front Page|| [11126 views ] Top

#1 failure to increase the debt limit could be devastating for the US and other economies

This is a true statement. It is also true to say that increasing the debt limit would be devastating. The essential question is which would be more devastating.

Posted by Glenmore 2011-06-02 11:08|| 2011-06-02 11:08|| Front Page Top

#2 How is it "devastating"? It doesn't mean we're not gonna repay the debt we already have, does it? All it means is we're not gonna incur any more debt, right?

It sounds like common sense to me. If your credit card is maxed out you don't get another one and keep spending. You stop spending and pay down the balance on the card you have. Is that too much to ask from our elected representatives?

Or is there something here I don't understand?

Is the interest growing faster than we can pay it down?

Does it mean we're not gonna borrow from Peter to pay Paul?

Posted by Ebbang Uluque6305 2011-06-02 13:36|| 2011-06-02 13:36|| Front Page Top

#3 Some in our government seem to be more fixated on Weinergate at this moment instead of trying to get the damned fiscal mess they created straightened out. Time to clean house again if things don't get straightened out.

Posted by JohnQC 2011-06-02 16:37|| 2011-06-02 16:37|| Front Page Top

#4 Is the interest growing faster than we can pay it down?

It is if you can't imagine cutting the size of a bloated, cumbersome, bureaucratical power pyramid.

Posted by gorb 2011-06-02 17:01|| 2011-06-02 17:01|| Front Page Top

#5 How is it "devastating"? It doesn't mean we're not gonna repay the debt we already have, does it? All it means is we're not gonna incur any more debt, right?

Ebbang: correct. However, this would be devastating because the current gap between revenues and expenses is about $1.5 trillion/year. So if the US government can't borrow any more, the FY 2012 budget would have to be cut by almost half. Politically impossible. The fight that almost shut down the government in April resulted in a compromise of $35 billion in cuts - about a week's worth of spending. A drop in the bucket.

There is no flaw in your common sense. Problem is, this household has come to rely on credit for almost half its expenses. Try snatching the credit card away from someone used to throwing money around like that (and those who feel entitled to their handouts): that's where "devastating" comes in.

Posted by RandomJD 2011-06-02 17:47|| 2011-06-02 17:47|| Front Page Top

#6 So then we are living beyond our means. How long can that last?

The thing that's disturbing here is that the people who got us into this mess are still running things and they don't show any signs of changing their ways. I don't see this ending well.

Posted by Ebbang Uluque6305 2011-06-02 17:59|| 2011-06-02 17:59|| Front Page Top

#7 Yep. It can last longer than you might expect - longer than a household could - because the US and its currency occupy a unique position in the world. Also, the government has an option besides borrowing that households don't: printing money, which is what the Fed's "quantitative easing" amounts to. Legal counterfeiting. Flooding the markets with funny munny is what's keeping stocks afloat, while every other economic indicator is screaming STALL. Like pumping a dying man full of cocaine. Absent a radical change in his fundamental underlying condition, he's still gonna die.

So no, this won't end well.

Posted by RandomJD 2011-06-02 23:35|| 2011-06-02 23:35|| Front Page Top

23:35 RandomJD
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