It was just a matter of a couple of weeks or so ago when the rating agency, S&P, downgraded Japanese government debt from 'AA' to 'AA-' citing its worsening debt situation and lack of " a coherent strategy" to deal with has now become a chronic problem that threatens to eat like a cancer at any future growth.
The OECD now projects that at some point during this year Japan's total national debt will hit 204% of its entire GDP. Another way of stating is to say that it would require more than 2 entire years of every single bit of economic activity in that nation just to pay the debt.
We learn today that the US has now reached yet another threshold right along the same line. The headline reads:
DEBT NOW EQUALS ENTIRE US ECONOMY:
Here is the full story. Read it and weep for your children and grandchildren.
Not to worry however, since our financial masters tell us that all these fears are but a tempest in a teapot.
http://www.washingtontimes.com/news/2011/feb/14/debt-now-equals-total-us-economy/
President Obama projects that the gross federal debt will top $15 trillion this year, officially equalling the size of the entire U.S. economy, and will jump to nearly $21 trillion in five years’ time.
Amid the other staggering numbers in the budget Mr. Obama sent to Congress on Monday, the debt stands out — both because Congress will need to vote to raise the debt limit later this year, and because the numbers are so large.
Mr. Obama‘s budget said 2011 will see the biggest one-year jump in debt in history, or nearly $2 trillion in a single year. And the administration says it will reach $15.476 trillion by Sept. 30, the end of the fiscal year, to reach 102.6 percent of gross domestic product (GDP) — the first time since World War II that dubious figure has been reached.
In one often-cited study, two economists have argued that when gross debt passes 90 percent it hinders overall economic growth.
This is perhaps one of the most maddening things to me going on right now. It's stupid we've gotten to this point but I really can't believe that this particular news is getting swept under the rug by the mainstream media. Blows my mind.
ReplyDeleteWelcome to our Brave New World where nothing but the Fed matters.
ReplyDeleteThe party will continue until it just stops one day. For the time being, most are punch drunk on the easy money. Nothing serious is done to deal with the chronic structural issues; all is papered over with billions upon billions of debt and the party rages on.
It is reminiscent of the old story about the guy who falls off a 100 story building and as he is passing the windows on each floor on the way down can be heard saying: "So far, so good".
LOL Yeah. That falling guy is a good analogy.
ReplyDeleteToday I was struck again at the media and that "punch drunk" mentality of the sheeple when the news hit that my governor here in Florida is turning down the Federal funds for the High-Speed rail system. I'm really glad to see him doing it and his reasoning is sound to me because it has to do with debt and overly optimistic numbers. But one thing that I've heard is that the rail system really isn't "high-speed". Doesn't even get to those speeds from what I understand because of curves and such that must be made due to cities.
So the whole thing just sounded like a boondoggle to me.
But the media so far has been critical toward the decision and attempting to hang him for the supposed failure to create 24,000 jobs with the Fed stimulus.