Sunday, December 20, 2009

 

America’s Really, Really Big Debt Problem

This isn’t the first time I’ve written about the absolutely hopeless debt situation that the US faces. Perhaps you think I am exaggerating. World’s largest economy! High bond rating! Frontier spirit! Yes indeed, these and other sterling qualities of the US and its people will pull the fat out of the fire. Just in time, as in a Hollywood movie.

But even sterling qualities cannot prevail over insurmountable odds. On that note, I turn your attention to a quite shocking article over at Forbes, “Trillions Of Troubles Ahead: A crushing burden of debt threatens to sap America’s growth for years to come.” Sap America’s growth? You have got to be kidding. Just check out some of these desperate, impossible figures. According to the article, adding up public, household, and corporate debt comes to a whopping 557% of GDP. And then it goes on to say, “Add the unfunded portion of entitlement programs and we’re at 840% of GDP.” Allow to remind you to breathe here.

Even the writer of the article recognizes that America’s situation is worse than Japan’s, when you start adding up all the numbers. So when finance/business gurus or politicians tell us that somehow, everything will turn out all right, we can safely conclude that (1) they are self-deluded, or (2) they are lying through their teeth.

For more fun facts, read the whole article. And get ready for the defaults.



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