America's debt

davyjose

As I understand it, America is deeply in debt, as most western economies are. Meanwhile, China (particularly) has the wealth to buy up reserves of the world's resources.

I don't quite get how debt on an international level works. I know that America are borrowing from others, but what exactly is stopping them from simply cancelling their own debts? It's not as if they're a nation frightened to stand up to the rest of the world.

oscarBravo

davyjose wrote: »

I know that America are borrowing from others, but what exactly is stopping them from simply cancelling their own debts? It's not as if they're a nation frightened to stand up to the rest of the world.

The need to borrow more money. If you cancel the debt you currently owe, who's going to lend you the money you need next month?

And they will need money next month, because - like us - they are spending more than they are taking in in taxes. That's what a budget deficit means.

davyjose

oscarBravo wrote: »

The need to borrow more money. If you cancel the debt you currently owe, who's going to lend you the money you need next month?

And they will need money next month, because - like us - they are spending more than they are taking in in taxes. That's what a budget deficit means.

i suppose my point is, though, does America need the support of the rest of the planet? can they not just say, "fcuk it, we don't need you." They'll still sell ipods and laptops. People will still buy McDonald's, and I'm pretty sure Europe would fall into line with them.

What confuses me so much is how America are outsourcig manufacturing and industrial jobs to the East, while they owe them money.

I find it difficult to understand how America can't take more forceful control of their rather bleak situation.

oscarBravo

davyjose wrote: »

i suppose my point is, though, does America need the support of the rest of the planet? can they not just say, "fcuk it, we don't need you."

But they do need them. They're spending more than they're earning. That money has to come from somewhere.

They'll still sell ipods and laptops.

America doesn't sell iPods and laptops. American companies sell them. There's a difference.

What confuses me so much is how America are outsourcig manufacturing and industrial jobs to the East, while they owe them money.

I find it difficult to understand how America can't take more forceful control of their rather bleak situation.

You think they should declare war on the rest of the world? That they should unilaterally cancel their debts, under threat of nuclear strikes?

jay-me

I think what OP means is that, if the USA were to hoard enough resources and lived independant from the rest of the world would they last long.

Overheal

davyjose wrote: »

i suppose my point is, though, does America need the support of the rest of the planet? can they not just say, "fcuk it, we don't need you." They'll still sell ipods and laptops.

Which are generally manufactured in China

People will still buy McDonald's, and I'm pretty sure Europe would fall into line with them.

Which in general sources all of its Beef from South America. Remember that Rain Forest they're turning into cow pasture?

What confuses me so much is how America are outsourcig manufacturing and industrial jobs to the East, while they owe them money.

Because in spite of that, the Manufacturing and Labor of the overseas market is Cheap. Thats why your Tech Support is sourced in India: they can speak English (...) and they work for what would be far less than the Federal Minimum Wage. And how many people do you know that want that job anyway? Theres an initiative by a Mexican Farmer out there who invites any American to come take their (Mexican's) Illegal Farmwork jobs from them. So far he's had less than 5 applicants, one of whom was Stephen Colbert.

I find it difficult to understand how America can't take more forceful control of their rather bleak situation.

You have me there.

Black Swan

This "Debt Economy" article in The New Yorker may answer many of your questions why American companies and citizens are encouraged to expand their debt: http://www.newyorker.com/talk/financial/2009/11/23/091123ta_talk_surowiecki

Dob74

davyjose wrote: »

As I understand it, America is deeply in debt, as most western economies are. Meanwhile, China (particularly) has the wealth to buy up reserves of the world's resources.

I don't quite get how debt on an international level works. I know that America are borrowing from others, but what exactly is stopping them from simply cancelling their own debts? It's not as if they're a nation frightened to stand up to the rest of the world.

You cant not pay your debts but America is doing the next best thing in QE, printing more money.
It will lead to the dollar weakening and make imports more expensive, particularly crude oil. And make Dollar held bonds less valuable.
But on the plus side exports will be helped by cheaper prices, so I am sure most Americans wont be to bothered. Expect when gas is 3 bucks a gallon. Cant win them all

ei.sdraob

davyjose wrote: »

As I understand it, America is deeply in debt, as most western economies are. Meanwhile, China (particularly) has the wealth to buy up reserves of the world's resources.

I don't quite get how debt on an international level works. I know that America are borrowing from others, but what exactly is stopping them from simply cancelling their own debts? It's not as if they're a nation frightened to stand up to the rest of the world.

see this

China is overrated.

fontanalis

davyjose wrote: »

As I understand it, America is deeply in debt, as most western economies are. Meanwhile, China (particularly) has the wealth to buy up reserves of the world's resources.

I don't quite get how debt on an international level works. I know that America are borrowing from others, but what exactly is stopping them from simply cancelling their own debts? It's not as if they're a nation frightened to stand up to the rest of the world.

So America should borrow and instead of pay it back they should threaten the creditor with military action?

mgmt

fontanalis wrote: »

So America should borrow and instead of pay it back they should threaten the creditor with military action?

:eek:

Tell the FCA to get ready, maybe the scouts too.

http://www.ustreas.gov/tic/mfh.txt

Black Swan

davyjose wrote: »

What confuses me so much is how America are outsourcig manufacturing and industrial jobs to the East, while they owe them money.

The question to ask is rather "Which Americans are in debt?"

Given international investment opportunities, the 2 to 3 percent richest Americans that control 80% of the US wealth are not in debt (except on paper for tax write-off purposes). They invest their capital in places like China, where the labour and manufacturing costs are considerably less, regulation is low, and the return on investment (ROI) is significantly greater than investing domestically in the USA.

That's why Trickle-Down Reaganomics is largely myth today. It may have worked decades ago when China was closed to American investment, but now that China is open to capital investment, a large bulk of the monies of the rich flow to where they can realise the greatest ROI. So when you give the rich tax cuts in America, don't expect it all to trickle down domestically to create jobs where the ROI is significantly less; rather, the money will trickle down and create jobs in such places as China where greater profits are to be made.

ValJester

http://www.usdebtclock.org

That should scare anyone.

The Nipp

ei.sdraob wrote: »

see this

China is overrated.

feck it, a ghost estate that puts ours to shame