The U.S. Debt: Why It Will Continue To Rise - by Mike Patton

 In the classic movie “Network,” there was a point when people began to shout, “I’m mad as hell and I’m not gonna take it anymore.” I feel a similar sentiment brewing in America regarding our national debt which has exploded in recent years. In this article, we’ll look at a few of the reasons for the debt increase and discuss what the future may hold, especially if politicians continue to kick the ‘proverbial’ can down the road. Let’s begin with a little perspective.

America has the largest debt burden in the world. There were some precipitating events which contributed greatly. For the sake of perspective, consider this. Japan, the world’s fourth largest economy (as measured by GDP), has a debt-to-GDP ratio of 227%. This is the highest such ratio in the world. The U.S. has a debt-to-GDP ratio of 101% which seems rather modest in comparison. Modest perhaps, but in absolute terms, our debt is rapidly approaching $18 trillion . Japan’s debt is approximately $13.4 trillion, however, its economy is only one-fourth the size of America’s.

How did our debt grow so large? Why does it continue to rise? We’ll look at these issues. But first, to be perfectly clear, when our federal government spends more than it collects, the result is a “deficit” which is added to the debt. Therefore, debt expansion is a result of fiscal deficits or if you prefer, overspending. We’ll examine this more closely in a moment. First, let’s look at the average percentage change in the public debt during various periods.

The greatest period of debt expansion occurred from 1980 to 1991 at 13.4% (measured by average percentage). The next largest increase was during the period from 1974 to 1979 and was 10.9%. Surprisingly, even though the debt has exploded since 2008, the period from 2008 through the end of 2013 ranks third at an average of 10% per year.

The economic boom, from 1982 until the housing bubble burst and the stock market collapsed, was predicated on debt. This debt deluge led to the worst financial crisis since the Great Depression of the 1930s. In the wake of the 2008 recession, our fiscal deficits exceeded $1 trillion for several years. More recently, the deficit has been improving, but is still greater than $550 billion per fiscal year. Hence, the debt continues to rise, albeit at a slower pace.

Note EU-Digest : Bottom line -  there’s a storm brewing on the horizon. There are red flags visible to those who are inclined to educate themselves on this issue. You should, however also beware of the conspiracy theorists.

Read more: The U.S. Debt: Why It Will Continue To Rise

US Debt Default: US could learn from the Netherlands says EU’s Rehn

Squabbling U.S. politicians could learn from the Netherlands, where the government has just struck a "very significant" budget agreement, Olli Rehn, the vice-president of the European Commission, told CNBC on Monday.

After two weeks of wrangling, the Dutch government struck a deal on Friday that included 6 billion euros ($8.1 billion) in budget cuts in 2014, despite opposition from three political parties, and the lack of a majority in one house of the legislature.

In an exclusive interview with CNBC, Rehn praised the Netherlands' pact as a triumph of "responsibility over brinkmanship" and hinted that the U.S. could do likewise.

Read more: US could learn from the Netherlands: EU’s Rehn

US Congress: Boehner asks why Obama willing to negotiate with Putin and not with GOP" - possible answer :"because GOP are bunch of obstructionists"

The Speaker contrasts the White House’s policy on Syria with its stance on debt-limit negotiations.

Speaker John Boehner (R-Ohio) released a Web video on Thursday seeking to contrast the White House’s willingness to work with the Russians to find a diplomatic solution in Syria against President Obama’s declaration that he won’t negotiate with Republicans over the debt limit.

“The Obama administration on working with Congress to address the debt and deficit,” the ad says, before cutting to a montage of Obama and senior members of his staff saying they will not negotiate over the country’s debt ceiling.

“The Obama administration on working with Putin on Syria,” the ad continues, before cutting to pictures of Obama looking chummy with Russian President Vladimir Putin.

“Why is the Obama administration willing to negotiate with Putin on Syria … But not with Congress to address Washington’s spending problem?,” text from the ad asks.

Note EU-Digest: answer should be simple for Mr.Boehner  - Mr. Putin is flexible and  intelligent while the GOP is obstructionist and without any vision.  

Read more: nmBoehner: Obama Will Work With Putin, But Not GOP? : Stop The ACLU

Euro zone fiscal deficit cut in 2011, but debt climbs

The euro zone’s fiscal deficit fell sharply last year as governments slashed expenses and raised taxes to regain market confidence in their public finances, but public debt still climbed, data from the European Union’s statistics office showed on Monday.

Eurostat said the aggregate budget deficit in the 17 countries using the euro fell to 4.1 per cent of gross domestic product in 2011 from 6.2 per cent in 2010 – the first year of the sovereign debt crisis.

Euro zone public debt, however, rose to 87.3 per cent of GDP in 2011 from 85.4 per cent, Eurostat said.

The euro zone’s biggest economy, Germany, slashed its budget deficit to 0.8 per cent in 2011 from 4.1 per cent in 2010 and its debt fell to 80.5 per cent of GDP from 82.5 per cent.

Ireland reported a spectacular drop in the deficit to 13.4 per cent from 30.9 per cent as the one-off expense of shoring up its banking sector disappeared from its books. But its debt jumped to 106.4 per cent from 92.2 per cent.

Greece, where the crisis started, had the highest debt in Europe last year, reaching 170.6 per cent of GDP even though it reduced its deficit to 9.4 per cent from 10.7 per cent in 2010 and 15.6 per cent in 2009.

Note EU-Digest: the figures are somewhat nebulous when it comes to giving a precise picture on the US debt but several reports indicate it is now over 100%. GDP growth has also slowed and deficit spending has increased. 

Today, the US is also running its fourth $1+trillion deficit. US deficit to GDP ratio is nearly 10%. and the “official” Total Debt to GDP is well over 100% though when you include the debt hidden in various Government entities and unfunded liabilities the US could be well over a Debt to GDP ratio of 300% at this point.

Read more: Euro zone fiscal deficit cut in 2011, but debt climbs - The Globe and Mail

US Presidential elections: Romney: No U.S. Bailout for Europe

Republican presidential candidate Mitt Romney told an Italian newspaper that Europe must solve the euro zone debt crisis without any help from the United States.

"The U.S. must take care of its own crisis, and won't give a dollar to save Europe," Romney told La Stampa. Romney, a former Massachusetts governor, said he was aware that a collapse in Europe would have "enormous repercussions" for the world's economy and that it was in Washington's interest to avoid it.

"But it is not our job to avoid it. Europeans have a duty to solve their crisis with the means at their disposal," he was quoted on Tuesday as saying."Germany, France, Italy all have the resources to pay back their debts, solve the confidence crisis, invest and start growing again, ideally through a real market economy."

Note EU-Digest: Obviously....the US does not even have the money to pay back their own deficit of 14 trillion dollars.

For more: Romney: No U.S. Bailout for Europe

"AFTERSHOCK" -2010: America Will Be Bankrupt, 40-60% Unemployment Coming - by James Holland

“Don’t Worry, Not a Single Penny of your Tax Dollars Will Fund the Bailouts.”

“That’s right. The bank and corporate bailout money is not coming from our taxes. Instead we’re just borrowing it from foreign investors. We’re also printing some of it…Of course, we will never, ever have to pay it all back, because even if we tried (and we won’t), we never could.” That is why the U.S. Government will eventually be unable to borrow money and the nation will have to start living within its means. That will be the beginning of the brave new world of life in America. The book Aftershock explains this.

While Aftershock is a scary book because of what is happening all around us, it is also a hopeful book. The nation will survive after the country stops ignoring the basic laws of economics. The three authors are optimistic that the American people will be able to make the adjustments needed to achieve economic survival without having to become survivalists who have to grow their own food and defend their homes from roving mobs with guns. They feel that even dictators will be unable rise from the chaos because Americans will be frequently changing elected government officials as soon as it’s obvious that their policies don’t work.

The nation will survive because basically the country is wealthy and will still be so after the economic bubbles have all popped and forced everyone and their government to live within their means.

For the report: BASIL AND SPICE FINANCIAL WELL BEING - 2010: America Will Be Bankrupt, 40-60% Unemployment Coming

Bloomberg: U.S. Cuts Borrowing Need 43% for October to December - by Rebecca Christie and Vincent Del Giudice

For the complete report from Bloomberg.com click on this link

The U.S. Treasury Department cut its estimate for government borrowing in the current quarter by 43 percent largely because of reductions in a program for helping the Federal Reserve manage its balance sheet. Borrowing will total a net $276 billion from October through December, compared with a previous estimate of $486 billion, and it projects borrowing of $478 billion in the three months to March 31, the department said in a statement today in Washington. In the quarter that ended Sept. 30, the Treasury borrowed $393 billion compared with $406 billion projected three months ago. The Treasury is financing a budget deficit that may exceed $1 trillion for a second straight year, even as the economy starts to recover.

Treasury officials today declined to comment about when the country’s $12.1 trillion debt ceiling might be reached. Earlier estimates indicated the limit might be reached by December.

Brisbanetimes: US deficit at a record $1.5 trillion

For the complete report from the Brisbane Times click on this link

US deficit at a record $1.5 trillion

THE United States federal budget deficit has surged to a record high of $US1.4 trillion ($1.5 trillion), with the recession causing tax revenues to plunge as the Government was spending massive amounts to stabilise the financial system and jump-start the economy. The imbalance in the budget year, ending on September 30, more than tripled last year's record. The Obama Administration has projected deficits will total $US9.1 trillion over the next decade unless action is taken. As a portion of the economy, the budget deficit stood at 10 per cent, the highest level since World War II, according to government data released on Friday.

President Barack Obama has pledged to reduce the deficit once the recession ends and the unemployment rate starts falling. But economists worry the Government lacks the will to make the hard political choices to cut spending and raise taxes.

SMH.com.au: US deficit climbs to 1.3 trillion US dollars

For the complete report from the smh.com.au click on this link

US deficit climbs to 1.3 trillion US dollars

The US budget deficit reached 1.3 trillion US dollars for the current fiscal year in July, official data showed, news set to fuel opposition to US President Barack Obama's ambitious health care and climate change proposals. The deficit for the first 10 months of fiscal year 2009, which began October 1, reached 1.3 trillion US dollars, close to 880 billion US dollars greater than the deficit recorded through July 2008, said the US Congressional Budget Office (CBO). Outlays rose by almost 530 billion US dollars, or 21 percent, and revenues fell by more than 350 billion US dollars, or 17 percent, compared with the amounts recorded during the same period last year, the non-partisan CBO said.