Doctor Fate wrote:danivon wrote:The divergence comes recently - your recovery continued, and ours followed about a quarter or two behind, until the last quarter when the initial impact from the policies of the new government kicked in. We just had the revised figures today, and they are slightly worse than was first estimated. The annualised rate of contraction was 2.4%.
If you had cancer, would you be thrilled if your white blood count went down for a week? Would you declare yourself cured?
In other words, you are engaging in short-term thinking. Our economy is experiencing modest growth as a result of record-breaking spending. I would expect to get more bang for the buck
No, I am thinking medium term. Your growth is modest but steady, which bodes well for the future. Ours looked like it was modest but steady, but then headed the wrong way, and that raises concerns not just about the near future, but the longer term.
I'm sure you are aware of how over time a small difference in growth rates (or interest rates, or inflation rates), makes a big difference over the longer term. It is you who is thinking short term expecting 'more bang for the buck' within a couple of years of coming out of recession.
Furthermore, the President projects to borrow at least another $11T over the next decade. I am not saying we HAVE to stop borrowing ALL money tomorrow. I am saying that this is not a plan and it is not leadership. It is a road map to insolvency.
One minute you are saying how much stronger you are than the UK, as if that explains our recent divergence on GDP, the next you can't afford to borrow.
That would be roughly a doubling of debt. But with inflation and GDP growth, it would not be a doubling of the debt as a proportion.
No, I don't. What I do know is that the country owes as much as it's GDP. I know that we are borrowing 40 cents of every dollar we spend. I know that no entity can do that for long and survive. What is scary is that you are fine with it--and so is the President.
You don't need to do it for long. Just until you recover the lost growth and the pressure on spending (and the effect of tax collection) recedes.
By the way, it's common for people to owe multiples of their annual income. It's how people get a mortgage (not even sub-prime ones)
So, if China, for example, decides to stop buying our notes tomorrow, that's not a problem? If they won't unless promised a higher rate of return, that's not a problem?
Sure, it would be a problem. But China needs America as much as anything, as an export market. It's not only China buying your debt, though. A lot of American investors are buying US government debt.
No country can borrow its way to prosperity, particularly while doling out the cash to unions and local governments along the way.[/quote]How do companies become prosperous, Steve? They start out by borrowing. They issue shares or seek investment (which are borrowing), and use that to expand. America started as a nation with massive debt. It came out of WWII with massive debt. I doubt the Civil War was cheap. Those debts were large, but yet the USA was able to become prosperous - partly as a result of those expensive wars - despite the large debts hanging over it. You can do it, Steve, have faith in your countrymen!