Experts Warn Debt May Threaten Economy

[Robert Oak]

You owe $145,000. And the bill is rising every day. That's how much it would cost every American man, woman and child to pay the tab for the long-term promises the U.S. government has made to creditors, retirees, veterans and the poor.


And it's not even taking into account credit card bills, mortgages — all the debt we've racked up personally. Savings? The average American puts away barely $1 of every $100 earned.

http://news.yahoo.com/s/ap/20050827/ap_on_re_us/drowning_in_debt

[mbperrin]

1. Where can I get a high paying job as one of these experts?

My German granny gave me great advice on debt 35 years ago - avoid it! Instead of observing the ashes, and saying, Oh by the way, fire can burn your house down.....

[swag]

2. Steve Roach was worrying about this (and oil) just yesterday . . .

http://www.morganstanley.com/GEFdata/digests/20050826-fri.html

. . .
In my view, the American consumer is very much at risk in the current oil shock (see Beneath the Surface, 16 August 2005). First, US households have drawn their saving rates down to “zero.” By contrast, in earlier oil shocks, US consumers had a cushion of saving they could rely on in order to maintain existing lifestyles -- saving rates that averaged 9.5% in the two shocks of the 1970s and 7% in the shock just prior to the Gulf War of early 1991. Today, the only saving backstop is embedded in an increasingly precarious housing bubble.

Second, just prior to the two oil price spikes of the 1970s, discretionary spending of US households had gone to excess -- setting the stage for America’s most severe consumer-led recessions. A similar overhang is evident today: The GDP share of consumer durables and residential construction has averaged 14.3% of GDP over the past year. That’s virtually identical to excesses hit just before the two energy-shock-induced consumption collapses of the 1970s.

Third, mounting pressure from higher energy prices is already more acute than in the past. While US consumers have reduced the portion of their budgets spent on energy-related items to 5.7% of total consumption -- down from readings hit in earlier oil shocks -- these outlays have already increased by 1.6 percentage points of GDP from the early 2002 low. By contrast, this same share had increased by only about 1 percentage point in comparable periods running up to the three previous energy shocks
. . .

[lovuian]

3. Hey the rich got richer and the poor got poorer!!!

there is a truth that when 90% of a country's assets is owned by a few ...You have a Depression!!!

Thats what we are headed for!!!

We maybe seeing capitalism's last gasp here!!!

[Robert Oak]

4. $145k that's just incredible

They are outsourcing the jobs, they treat the middle class like dogs,
firing them whenever the "executive class" feels the need to get a little stock boost, wage increase went negative recently, if they cannot offshore outsource the job they want to insource the job and it's to the point now where it's blatant discrimination against Americans (they won't even consider an American when they post some of these jobs and many that are US jobs are not even posted for applicants in the United States) and of course they created a perpetual debt machine by
making it impossible to declare bankruptcy and now the credit card companies are going to double and sometimes triple the minimum payments starting October 17, 2005.

It all is spelling a massive economic disaster IMHO. I can't believe
these sorts of statistics are still a blip on the blog radar instead of
front and center.

This is just as important as a bogus war on false pretenses.

[cyberpj]

17. still a blip instead of front and center......

And nary a vocal Dem with balls to call Bush Co out on any of it.

That's the saddest part of all.

[leesa]

5. It takes an "expert" to figure this out? Any 8 year-old could figure

this out.

[Robert Oak]

6. Actually there are instances when debt is good

There are, when one cranks the big macro economic numbers instances
where debt stimulates the economy and makes sense.

This ain't one of them as you point out that an 8 year old knows this.

I think at 8 if someone said I owe $145k I might start to cry and ask for ice cream.

[Iowa]

7. This article is dripping in bias.

"...Blame the bust of the dot-com boom, the ensuing recession, President Bush's federal tax cuts, the Sept. 11 terrorist attacks and the subsequent wars in Afghanistan and Iraq..."

He minimizes Bush's role by slipping him in among several other less important causes. He should have said "President Bush's federal tax cuts and President Bush's war in Iraq". Instead he links 9-11 to Iraq and he deflects the blame from Bush.

"...You owe $145,000. And the bill is rising every day. That's how much it would cost every American man, woman and child to pay the tab for the long-term promises the U.S. government has made to creditors, retirees, veterans and the poor..."

Parroting the Republican line, he blames retirees, veterans, and the poor - instead of the corporate leeches who turned our budget surpluses into staggering deficits with breathtaking speed.

An on and on.

If/when the economy collapses there should be trials. Reporters and editors who spewed corporate propaganda like this should be convicted of treason.

[lovuian]

9. Iowa I totally agree these people should go to jail!!!

What they don't say is Bill Gates and a few others can give their fortunes to this debt and we will be just fine!!!

It doesn't make sense to have poor people foot this bill when the rich get richer in leaps and bounds on this debt!!! They need to step and pay not 145,000 but billions!!!

[nashville_brook]

28. we need to be ready for after labor day when the tax cut legislation is

flying. can't let them have this issue. see my post below, i got an email from Move On to sign an emergency petition on the Repeal of the Estate Tax.

http://political.moveon.org/estatetax/?id=5934-5186446-MKZd4rAwypUJnrZLuExFSg&t=3

everything is such a whirl when they get back into session. shouldn't let this one pass by.

[cliss]

12. "Yeah, well I ain't payin'

I haven't read the article, but I have no doubt the author will excuse Bush. This isn't the first time. They're all covering for him.

When I started reading the thread, the first word that hit me was "May". Notice the title of the thread, "May threaten economy".

There's a little cushion for you.

I'm electing myself to be TruthTeller of the Day and saying, "DEFICITS ARE THREATENING THE ECONOMY". Or how about this one; "DEFICITS HAVE KILLED OUR ECONOMY". There's a front-page article for you.

[Robert Oak]

13. you're right! Thank you Iowa!

Damn it, those propaganda news articles I try to screen and some get
by.

I was hypnotized by the 145k.

It is completely bogus to blame the dot con, 9/11 (gotta love it
that this tragedy is becoming synonymous with snow job excuse)..

it's Bush and his "give the rich" tax cuts plus even bigger, congress
has been giving corporate tax cuts on some sort of premise that it will keep jobs in the US. I read a couple of studies (don't have the links right now) that examined any correlation to corporate incentives to keep jobs in the US (states have bent over backward trying to keep corporations operating in their states) and there wasn't any!

[nashville_brook]

24. yeah -- it's the crap they are feeding us so we will swallow MORE CUTS

i hate them.

i hardly ever let myself have that emotion, but when i think about the real pain this is going to cause it just sets my indignation buttons off.

this is one place tho, where i think working the message will pay off. i don't think people will buy this, "oh you don't get any SS b/c you wanted that $400 check, remember?" nah -- this isn't what we send people to government for, to steal our shit.

[Yo_Mama_Been_Loggin]

27. It can't be the dim son's fault

He's God's chosen.

[FormerRepublican]

8. There are causes behind this...

One is the love of pork in Washington, including Corporate Welfare.

Second is the BushCo longing to never let the rich (including rich corporations) pay any taxes on their wealth.

Add the two together and you get economic disaster.

If Bush's private accounts plan for Social Security isn't a devious plan to kill the program, than I don't know what is. Their little plan would bankrupt the government - something they don't tell you in the fine print.

[nashville_brook]

25. yep -- and you haven't heard much about *'s SS "plan" lately

my intuition is telling me the economy is whack us in the spring. god, it's scary. we are just barely making it as it is. we, like so many families, could lose e v e r y t h i n g if my husband lost his job.

[proud patriot]

10. Jeez the last time I checked the Debt clock it was 26,141.22 per person

It has grown tremendously :wow: scary shit .
My 9 year old will pay for all this his whole life .
I let him know too.

[Robert Oak]

15. that's current debt

http://defazio.house.gov/

the $145k is projected debt and the thing I didn't realize about this article is this is looking like another propaganda attempt to privatize social security, Medicare/Medicaid.

Which is bogus. So, alas looks like one got by me, but we need to analyze this for social safety nets are hugely important.

http://www.gao.gov/special.pubs/longterm/simulations.html

What these articles are NOT pointing out is these projections are based on Bush's permanent tax cuts and current policies...
if left unaltered, this is the result.

Where they are getting this 145k:

The nation's three biggest entitlement programs - Social Security, Medicare and Medicaid - make promises for retirement and health care that carry a huge price tag that balloons as the population grows and ages.

Add it up: current debt and deficit, promises for those big programs, pensions, veterans health care. The total comes to $43 trillion, says Walker, the nation's comptroller general, who runs the Government Accountability Office. That's where the $145,000 bill for every American comes from.

Then there are dissenting views from economists who are pointing to the massive trade deficit as a huge chunk of the problem.

http://www.cbc.ca/cp/business/050827/b082710.html

[milkyway]

11. Monetary genius Greenspan whored for the bush tax cuts, now tells us, gee,

the huge deficits might really fuck up the economy. Thanks, Alan. You can go stand with Powell and lots of others in history's Hall of Shame.

[Iowa]

14. Exactly. And I'm convinced this is an orchestrated plan:

Run up staggering government debt (and give the proceeds to the uber-wealthy), create a massive economic crisis, and blame it all on elderly Social Security recipients, the poor, the disabled, and anyone else who is at the mercy of the government safety net. Despite trying, Republicans haven't been able to destroy social programs politically, but this plan may actually work for them. It's Robin Hood in reverse - steal from the poor, give to the rich, and destroy social programs - all in one fell swoop. It doesn't get much more evil than this. Greenspan is just following the plan and reading his lines.

[cyberpj]

19. And... uh.... anyone hear any Dems loudly vocalizing opposition?!?

Not a plain talkin, truth-tellin, front and center Dem for "the people" anywhere to be heard for months now.

[Robert Oak]

20. Norquist "Starve the Beast"

This is a well known strategy.

To me it's traitorous and should be called out and condemned by
Democrats at every turn.

http://en.wikipedia.org/wiki/Starve_the_beast

[katsy]

18. Hall of Shame????

Ohhh no my friend... they belong in prison.

[Zorra]

16. Our current republican government is the most fiscally irresponsible

US government in history by far.

Bu$h and his Congress make Herbert Hoover look like a financial wizard.

[Daphne08]

22. Ironic, isn't it?

Republicans used to be fiscally conservative, but these jackasses in Washington today are an economic disaster!

Unfortunately, my children, grandchildren and great-grandchildren will be paying the price for it, too! :grr:

[nashville_brook]

26. puts the lie to the idea these whackos are "conservatives" -- criminal is

more like it. at least with a real conservative you would have stability to fall back on.

[SharonRB]

21. Duh!

For this we need experts?

[nashville_brook]

23. good place to start: no repeal on ESTATE TAX, dammit (vote this up, ya'll)

i'm a little punchy on herbal tea and saturday housework, but hell, this is the means to revolt. you can't just empty the coffers and not expect a backlash. that's our money. our future. that's our legacy they have STOLEN.

the first i noticed chimpy looking nervous was after his meeting with the economic advisors. their first term was one big ORGY of LOOTING and now the hamsters are coming home to roost at the same time he's pissed off the world so bad they are fleeing from the dollar. petroeuros, my friends. next spring is going to be ugly, so don't go planning a big holiday season. best to mend your clothes and pay off the credit cards. now, dammit.

using their incompetance as a reason to kill FDR's saftey net is unacceptable. they stole the damn money, now they can give it back. no to the repeal of the estate tax is a good place to start:

(this is a move on email i got yesterday, nice timing)
HOLD THEM ACCOUNTABLE
As soon as the Senate returns to Washington in September, they'll be voting on the permanent elimination of the Estate Tax for the richest 2 percent of Americans.

Our federal deficit already exceeds $400 billion, if the Estate Tax is repealed millionaires will save another $1 trillion dollars in the first ten years and that tax burden will shift to ordinary Americans and future generations. The vote will be really close, Republican leaders are just one or two votes away.

Responsible Democratic senators have been able to hold the line on the Estate Tax for some time, but now a few Democrats are starting to waver. They continue to feel heat from President Bush and the tax-cut lobby, but they haven't heard from you. That's why we're launching an emergency petition to let the Senate know that we're paying attention and are ready to hold them accountable. If we can gather 200,000 signatures by next week, we will deliver them to senators in key states.

Will you sign our petition before the Senate vote?

http://political.moveon.org/estatetax/?id=5934-5186446-MKZd4rAwypUJnrZLuExFSg&t=3

[HadItUpToHere]

29. it's better to pay taxes with a cold hand than a warm one-

their side likes to play the semantics game, continually refering to it as the "death tax"...maybe we could use that same moniker to get people to support it- as a tax that you pay after you're dead, to avoid paying those same taxes in the form of higher rates during your lifetime.
and perhaps there could be a market for an insurance policy that covers your estate taxes when you die, instead of burdening your family- except that so few people are actually affected by the Estate Tax that it wouldn't make sense...yet.

[mom cat]

30. Done...thanks for the link!

[struggle4progress]

31. kick