Debt: How long can the USA hold out?

Pa ElGrande

These crushing debt burdens are getting heavier fast. According to the report, as recently as 2000, our national obligations were "only" $20,000bn, but they have more than doubled in five years. This trend, which economists politely term "unsustainable", could destroy America's greatness. President George W.?Bush has already borrowed more money than all previous presidents combined. It took 204 years for America to accumulate $1,000bn in debt, but now we are borrowing that much new debt every 18 months.

A truer measure of America's ballooning deficit
http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=FT&Date=20060430&ID=5681597

IMHO this has bigger implications for Ireland and the world and has the very real possiblity to unravel taking the single biggest economy in the world down, with severe knockon effects for countries like Ireland.

piraka

A quote from the infamous theoretical physicist Richard Feyman

"There are 10^11 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers."

another world

Maybe someone can explain ('cause I'm no economist) how they are the richest country in the world but have a national debt of $20,000bn? I suppose it's based on trade volumes, but I can't see how they will keep going much longer if the countries/institutions they owe the money ask for their money back (even part of it)...

The effect would be dramatic for Ireland because of our over reliance on American MNC's. Although maybe it's what the US needs to shake it up a bit and get it off it's high (crusading) horse!

Maskhadov

debt is irrelevant..no one is ever going to ask the usa for it back.

Cork

debt is irrelevant..no one is ever going to ask the usa for it back.

Don't think so - Financial Markets are not known for charity.


Irish Debt levels are a big cause for concern.

With maasive personal debt - praise has got to go to Eddie Hobbs in his personal crusade aganist financial stupidity.

With rising interest rates - Brian Cowen was right to warn people last week.

Hobbes

Maskhadov wrote:

debt is irrelevant..no one is ever going to ask the usa for it back.

Or rather no one has positioned themselves yet to actually ask. Everyone knows the second they ask for back the US is going to default on its loans.

zuma

another world wrote:

Maybe someone can explain ('cause I'm no economist) how they are the richest country in the world but have a national debt of $20,000bn? I suppose it's based on trade volumes, but I can't see how they will keep going much longer if the countries/institutions they owe the money ask for their money back (even part of it)...

The effect would be dramatic for Ireland because of our over reliance on American MNC's. Although maybe it's what the US needs to shake it up a bit and get it off it's high (crusading) horse!

As long as the world uses US Dollars to buy and sell precious metals and oil the US can continue to keep printing US Dollars.
The Japanese as well as other governments also have massive supplies of US Dollars in their central Banks to falsely prop up the US currency

Pa ElGrande wrote:

the single biggest economy in the world

Im pretty sure the single biggest economy in the world is that of the EU.

Charles Darwin

According to this link, it's only:rolleyes: 8,000 billion (8 trillion), not 20,000.:eek:
http://www.toptips.com/debtclock.html

flogen

zuma wrote:

The Japanese as well as other governments also have massive supplies of US Dollars in their central Banks to falsely prop up the US currency

After asking a friend of mine with a financial mind to explain exchange rates to me, I'm pretty sure that's what every national bank does; maybe I misunderstood him but I'm pretty sure hoarding other currencies is what makes the whole thing work...

mike65

Is a condumdrum, does the rest of the world keep lending the USA money or risk the collapse of the largest single economy? I'd suggest sending the World Bank and the IMF in but that would mean war!

That said the per capita debt is only 28,000 USD. Of course one should consider the level of personal debt too. That money is owed to banks which are funded internationally and is caused in part by US citizens buying foreign made goods.

When the penny drops and people starts reiging in thier spending the Chinese economy will slow down which will be good for commodity prices. This will ease pressures on inflation and interest rates in Europe so on balance it won't be too bad (possisbly).

Mike.

Maskhadov

they will just wipe the debt like they did with the african countries.

Pa ElGrande

Maskhadov wrote:

they will just wipe the debt like they did with the african countries.

And in the process collapse the entire fiat money system. :eek:

Zebra3

zuma wrote:

As long as the world uses US Dollars to buy and sell precious metals and oil the US can continue to keep printing US Dollars.
The Japanese as well as other governments also have massive supplies of US Dollars in their central Banks to falsely prop up the US currency

And the Iranians are thinking of selling oil in euros, aren't they?

zuma

flogen wrote:

After asking a friend of mine with a financial mind to explain exchange rates to me, I'm pretty sure that's what every national bank does; maybe I misunderstood him but I'm pretty sure hoarding other currencies is what makes the whole thing work...

Thats true....but do some investigating into the Japanese situation and you'll see what Im talking about.

meepins

I can't see any other resolution to this situation other than an economic collapse.A time frame is difficult to guess because of many obvious external factors that could be a catalyst. Definitely the near future though and its gonna be baaaaaaaad . Be interesting to see who gets screwed.

Sponge Bob

zuma wrote:

As long as the world uses US Dollars to buy and sell precious metals and oil the US can continue to keep printing US Dollars.

Indeedy. And only today !

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-05-02T162911Z_01_N02268824_RTRIDST_0_ECONOMY-CHILE-UPDATE-1.XML

Chile the worlds biggest Copper producer finds its government in surplus , it invests the money 'abroad' . Thats after the Chileans set up a National Pension fund like ours first which also swallowed surplus cash. Chinese presidents visit Chile because it produces so much copper.


Copper has risen 70% this year (2006) alone. Copper is bought and sold in US$, we now need 70% more of them dollars to stand still if we need to buy copper ...as one does.

Same goes for lots of other US$ denominated commodities. If Chile ever tried to sell its copper in € instead of $ the entire Pacific Fleet would feel bound to rescue that country from tyranny just for all you freedom lovers eh Sand ???

Nevertheless, despite the stunning demand for $ to buy these commodities the US% is a third lower than it was against the € 5 years back.

...and at this rate it will be worth miningCopper in the Allihies and in Wickila again .

luckat

Hobbes wrote:

Or rather no one has positioned themselves yet to actually ask. Everyone knows the second they ask for back the US is going to default on its loans.

It could default, but then no one would lend it any more money, and it'd be in trouble.

Hobbes

luckat wrote:

It could default, but then no one would lend it any more money, and it'd be in trouble.

It would be in trouble but it would drag down most of the world with it. So whoever is to start the ball rolling would have to be in a position to ride the storm out.