| Epoch said: @Squirrel. Yes that is disgusting. Its hard to believe that it only took about 10 years of irresponsibility and greed to rack up that much bad debt. The only mitigating factor is that alot of that bad debt will be recouped. At a loss, for sure, but they will get some of it back... assuming things get better within the next five years anyways. The U.S. (Canada too) has been overspending for far too long. Its like the family with 5 credit cards and a mortgage who make $150,000/year, and have to go get debt consolidation because even thought they make alot of money, they have managed to dig themselves a huge hole. No matter what the situation, constantly having a budget deficit is never sustainable in the long run, no matter how good your credit is. There is a larger problem that could possibly occur as well. What if Russia and China and Iran are able to convince part of the world to use a different currency as the standard? Then the value of the Dollar drops further, putting the U.S. in a weaker position to ever recover, making more countries abandon their currency and inflation spiking out of control. Not a pretty idea, and one that has stayed out of the media so far as I doubt it is terribly likely for progressive nations to side with China/Russia. Lets just hope all this spending has the intended effect and boosts GDP and business growth. |
I agree with you, but the overspending has been going on for far more than 10 years (probably closer to 50) and just passed a dangerous threshold sometime in the mid 1990s ...
In hindsight, I don't think people realized how much of the success of the United States (and Canada) after World War II was because they were the largest economic block that was unharmed. The entire world needed goods and (regardless of the tax rate or cost of labour) they were forced to buy a large portion of it from North America. We missed the signs and "built our house on sand" focusing on a consumer driven market in the United States ...
Now, the real scary thing with this economic crisis is just how little it would take to push the world close to the worse case scenerio ... A couple of countries losing faith in the American dollar, a major terrorist strike anywhere in the western world, a major natural disaster, disease, famine, or (just about) anything that is major and negative could push us over the edge.
