The American economy: living on debts

[Where is Hassan Nasrallah ?]

http://www.arte.tv/fr/Les-pays-riches-sont-ils-en-faillite-_3F-/1681764.html

The (always interesting) german-french channel ARTE aired an interesting documentary last night on rich countries' debts and economy. The documentary was put together at the end of 2006 and try to analyse (with various interview of NYU and Harvard economy professors) the economy of western countries, focusing on America (then France and Italy).

The distinctiveness of the american system is that the 3 actors of the economic life - governement, corporation and households - live a life of debts.
Families play with 5 or 6 credit card, live way above their means, buy things they cannot afford. Corporation (exemple of auto industry) focus on the stock market and their credit service now represent 30% of their turnover. The american governement has a debt of 8, 000 billion dollars (66% of GDP - france is the same, italy 106%, sweden 55%) mostly contracted from China and Arab oil-countries.

The interesting part was that, at the time, in 2006, the show predicted man things that happened later (sub prime...) and more to come ...
The national debt was one of the issue of the presidential campaign in France this year, (1,100 billion dollars).

Is this an issue that is discussed a lot overseas? What do you think? What can happen? China and other creditors will turn their back on the usa? Do the american need to re-think their consumerism behavior?

[Nightfall]

Do the american need to re-think their consumerism behavior?

everyone needs to do this. But yeah perhaps the americans the most...i hate being in dept, i recently took out a loan to pay for my study, although it's an acceptable reason for taking a loan...it's still a loan and i can't wait to have paid it off.

[Where is Hassan Nasrallah ?]

Do the american need to re-think their consumerism behavior?

i recently took out a loan to pay for my study, although it's an acceptable reason for taking a loan

i dont think it is ...

[Loaded NightraiN]

Do the american need to re-think their consumerism behavior?

i recently took out a loan to pay for my study, although it's an acceptable reason for taking a loan

i dont think it is ...

But is there anywhere you dont have to??

[Nightfall]

Do the american need to re-think their consumerism behavior?

i recently took out a loan to pay for my study, although it's an acceptable reason for taking a loan

i dont think it is ...

But is there anywhere you dont have to??

@Where is Hassan Nasrallah
why isn't it, it will provide me with a better income later on and then i can be deptfree again (even if i don't get a better job i still will have paid it off in 2 years)...and having a great job i truly enjoy, not everyone can have the luxury to have a high income job and save alot of money so they can pay everything in cash.

@Loaded NightraiN

What do you mean? (i can't follow your sentence)

[Where is Hassan Nasrallah ?]

i said i dont think citizen should have to pay that much (and therefore get loans) for education.

but i wanted to talk more about national/state debts rather than petty personal credits.

[Nightfall]

well...taking all the depts of those petty personal credits...and it's pretty bad...look at the morgage-situation in the US...caused alot of banks (worldwide) big financial problems.

[Where is Hassan Nasrallah ?]

yes off course, it's a big part of the issue. you're right.

[The Dog]

Paulson Tells Congress the Current Debt Ceiling Will Be Hit on Oct. 1

WASHINGTON (AP) -- Treasury Secretary Henry Paulson told Congress on Wednesday that the federal government will hit the current debt ceiling on Oct. 1.

He urged quick action to increase the limit, saying it was essential to protect the "full faith and credit" of the country, especially at a time of financial market turmoil.

The current debt limit is $8.965 trillion. Unless Congress votes to raise that ceiling, the country would be unable to borrow more money to keep the government operating and to pay debt obligations coming due. The United States has never defaulted on a debt payment but the decision on whether to raise the debt ceiling often sparks a prolonged political battle in Congress.

In his letter to congressional leaders, Paulson said that according to data now available, the Treasury expects to hit the current debt ceiling on Oct. 1 -- the first day of the new federal budget year. However, that projection does not take into account maneuvers the government often has to employ of withdrawing investments from certain trust funds to create room for extra borrowing until Congress finally approves a debt increase.

"The full faith and credit of the United States, to which we all remain committed, is a national asset and a cornerstone of the global financial system," Paulson said in his letter. "In light of current developments in financial markets, which would be exacerbated by uncertainty in the Treasuries market, I urge the Senate to pass the legislation reported by the Finance Committee to increase the debt limit as soon as possible."

The Senate Finance Committee earlier this month approved increasing the limit on the national debt to $9.82 trillion. That boost of $850 billion would be the fifth increase in the government's borrowing limit since President Bush took office in 2001.

The national debt is the total accumulation of annual budget deficits, which must be financed with borrowed money.

Democrats blame Bush's tax cuts and the war in Iraq for pushing the debt to record levels. Republicans defend the tax cuts, saying the deficit is now on a downward trajectory in part because of the economic stimulus provided by the tax cuts.

The House approved an increase in the debt limit in May when it adopted the annual congressional budget resolution, but the full Senate has yet to act to raise the limit.

[JMack]

 ? ?Personal debt and national debt, probably go hand in hand due to the governments insurance factor in the banking industry. ?If the banks and govt. lending institutions lend out money to people who really don't have the income to get the loans, then they do relate to each other. ?The same people who aren't able to pay their mortgage tend to have hugh credit card debt. ?which causes rate increases and fees which relate to banks which result to everything. ?There's nothing petty about personal credit it has a causal effect on the whole debt problem.
 ? ?I saw this coming about 6 years ago when every parcel of land available was purchased and the tag of affordable housing was placed on these new buildings. ?The price of the building was high to me for some of these areas and the 3% down on a mortgage was just setting the people up for failure. ?The homes were built so that the buyer would have to rent either 1 or 2 floors to be able to pay for their homes. ?Many were bought by roll over shitty real estate brokers to make some quick cash on some poor sap, which of course ends the govt low income status for some.
 ? ?However some areas have revitalized which is good but thoughs locations had some low income areas included in a private area of houses and apartment buildings. ?Many include assisted living for elderly within new homes which makes the community diverse and set up to continue to maintain itself. ?

But I digress- The biggest problem for Government debt is pork spending and worthless grants and no interest loans (if paid before a given time) that are given to people who don't need it. ?Including lending and forgiving to other nations and yes even war.? Although war or military build up and weaponry produces jobs which is an inconvient truth to borrow a phrase. 
? If you took all the monies that go to worthless causes and certain non-profit orginizations that launder money for personal gain, subsidized temporary (permanent) housing, (permanent)welfare and medicaide and disability recipients and insurance fraud "employees" if eliminated can really be used to balance the books.
 ?There should also be a limit on golden parachute packages that the CEO's of public utility companies recieve. ?Just for an example: ?How much money does some suit need to retire on. ?When electric/gas bills are extremely high and the CEO of the company who never even worked "in the field" gets 166 million dollars to retire after laying guys off while being the CEO to reduce spending is sickening. ?This is done all over the world in the white collar corporate sector but in the state/municipal companies where blue collar workers do the work for the state or city and survive check to check, it shouldn't happen. ?Why should the states subsidize OTB or horseracing tracks? ?Why are they always in the red after being taken over by the state? ?The same goes for some school districts, money goes to everyone but not for the students behalf.
  ?There is too many people in government who make too much to do so little. ?Even if they don't actually work for the state or municipality "Consultants" they're called, and they get paid nicely.? They are usually a friend of someone's and not qualified to hold a position Like "Brownie" in FEMA.  He wasn't a consultant but he wasn't qualified to do his job either.

[The Dog]

anyone wanna take bets on when the recession starts?   

[JMack]

If we do have one, it won't be this year and it always runs in cycles?  There's to many variables now that influence the markets.

[Where is Hassan Nasrallah ?]

anyone wanna take bets on when the recession starts? ?

can you lend me some money for that bet?

[SLCPUNK]

anyone wanna take bets on when the recession starts?   

I see one one the horizon. The housing market is going down, down, down and has already brought many things down with it. With no bottom in site, that only says one thing to me.

[The Dog]

anyone wanna take bets on when the recession starts?   

can you lend me some money for that bet?

sure, luckily i have no debt and awesome credit 

but i might need to save when the recession comes and everyone and their sister loses their jobs 

[SLCPUNK]

anyone wanna take bets on when the recession starts?   

can you lend me some money for that bet?

Lets just put the bet on our credit cards...

[polluxlm]

anyone wanna take bets on when the recession starts?   

can you lend me some money for that bet?

sure, luckily i have no debt and awesome credit 

but i might need to save when the recession comes and everyone and their sister loses their jobs 

Buy gold, the dollar is walking a very thin line.

[SLCPUNK]

Invest outside of Merika....

[polluxlm]

If we do have one, it won't be this year and it always runs in cycles?  There's to many variables now that influence the markets.

America has had a recession every 10 years since the creation of the FED, so it's not an if there will be a recession. It's coming, and since they didn't really fix the last one it's going to be big, '75/'87 big.

[SLCPUNK]

What do you mean "fix the last one"?

Edit: I'm also curious if the latest fed rate cut will help, other than a short run up on wall street. I'm thinking it may not, but we'll see.

[polluxlm]

What do you mean "fix the last one"?

Edit: I'm also curious if the latest fed rate cut will help, other than a short run up on wall street. I'm thinking it may not, but we'll see.

The 2001 crack should have been bigger, but instead of dealing with it Greenspan lowered interest rates and pumped more fiat into the economy. The result was that the problem only poured into every other aspect of the economy, like the real estate market, and now there's no room for maneuvering any more.

And I don't think the rate cut will do much good when all the banks are hoarding the liquidity. 

[SLCPUNK]

The Senate Finance Committee earlier this month approved increasing the limit on the national debt to $9.82 trillion. That boost of $850 billion would be the fifth increase in the government's borrowing limit since President Bush took office in 2001.

Amazing. I mean, really.

In an updated article (see if I was Dim, I'd now be claiming that you have been "debunked") from the yahoo financial section had this little tid bit:

"The economic growth encouraged by the president's tax cuts is now producing sharply increased federal tax receipts," Cheney wrote.

If the economy was so spectacular, producing a generous surplus of revenue receipts we'd have no need to raise the debt ceiling. These guys will lie until their last day in office.

[SLCPUNK]

Every Breath Bernanke Takes

 

[The Dog]

This news, coupled with how weak the dollar is now, really frightens me.

i had no idea the defeciet was that big (i knew it was high, but jesus...)

dems should be repeating that number everytime they talk. ?

i feel bad for the next president, they're going to inherit a recession and a costly war. ?not a good combo.