$9,700,000,000,000 and counting
February 16, 2009 7:08 AM Subscribe
"The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages. ... The pledges [amount] to almost two-thirds of the value of everything produced in the U.S. last year... Commitments may expand again soon." - Bloomberg. "Try to grasp the truth: the United States government has no resources left. The full truth is far, far worse: the United States government is bankrupt and in debt for trillions of dollars. Almost all our leaders and major Establishment voices tell us there is only way to solve this frightening problem: increase the debt still more." - Silber.
This post was deleted for the following reason: This is kinda thin "hey here's some more stimulus talk" stuff when we're not exactly hurting for posts on the subject lately. Maybe hold out for something a bit more meaty and new next time. -- cortex
SLBOE.
posted by SeizeTheDay at 7:23 AM on February 16, 2009
posted by SeizeTheDay at 7:23 AM on February 16, 2009
I can't imagine the reason for discussing this here. It just looks like an invitation to a political flame war...
Ya'll have fun...
posted by HuronBob at 7:24 AM on February 16, 2009
Ya'll have fun...
posted by HuronBob at 7:24 AM on February 16, 2009
I can't imagine the reason for discussing this here.
Because the Ron Paul R[evol]ution never died, it just mutated to target specific sites. Metafilter is infected.
posted by billysumday at 7:26 AM on February 16, 2009
Because the Ron Paul R[evol]ution never died, it just mutated to target specific sites. Metafilter is infected.
posted by billysumday at 7:26 AM on February 16, 2009
WCityMike: "You're beginning to show a bias in your FPPs, Joe. Although you've been posting near-daily and thus far your ratio of good stuff to crap is better than anyone else that comes to mind."
I didn't think that being unbiased was a requirement for an FPP, just that it be interesting. I can think of a lot of posts that are biased — I'd argue that, in fact, the great majority of posts on controversial subjects are, in one way or another — it just never seems to get called out unless that bias isn't the popular one.
posted by Kadin2048 at 7:28 AM on February 16, 2009
I didn't think that being unbiased was a requirement for an FPP, just that it be interesting. I can think of a lot of posts that are biased — I'd argue that, in fact, the great majority of posts on controversial subjects are, in one way or another — it just never seems to get called out unless that bias isn't the popular one.
posted by Kadin2048 at 7:28 AM on February 16, 2009
When Japan faced this, they ended up spending 100% of their GDP on stimulus. The problem, though, was that they didn't fix their banking system, so the banks simply soaked up the money, which is the risk we run here if we don't nationalize the banks.
So far, our stimulus is something like 6% of the GDP, which is $13 Trillion, according to Google.
Anyway, look this alarmism about debt is really aggravating. The GDP is the amount of stuff produced in the U.S. each year. The only way thing that would make the debt unbearable is if the interest on the debt was higher then the GDP. That is, if the amount we had to pay to service the debt was more then we produced.
It's like a person who has a $60k/year job, and $60k in student loans. Are they bankrupt? Hell no, likely they'll have no problem paying back their loans, and with a 10% interest rate they'll only have to pay $6k a year in interest (and even that is high for student loans).
And of course, the government can borrow money (by issuing treasuries) at much lower rates
So the idea that the U.S. government now has no resources left or is bankrupt is totally absurd. It's the kind of nonsense spouted by no-nothings who don't even get the difference between deficit, debt, income, interest, and wealth. The total amount of "resources" in the U.S. is far greater then it's GDP, the amount of debt that the U.S. or any other country can have can be greater then it's GDP, because it doesn't have to pay back the debt in one year.
--
Also, it's unlikely that we would actually lose all of that $9.7 trillion dollars. What's happening is that the fed is lending money and taking bad assets as collateral. It's unlikely that the assets are completely worthless.
posted by delmoi at 7:32 AM on February 16, 2009 [7 favorites]
So far, our stimulus is something like 6% of the GDP, which is $13 Trillion, according to Google.
Anyway, look this alarmism about debt is really aggravating. The GDP is the amount of stuff produced in the U.S. each year. The only way thing that would make the debt unbearable is if the interest on the debt was higher then the GDP. That is, if the amount we had to pay to service the debt was more then we produced.
It's like a person who has a $60k/year job, and $60k in student loans. Are they bankrupt? Hell no, likely they'll have no problem paying back their loans, and with a 10% interest rate they'll only have to pay $6k a year in interest (and even that is high for student loans).
And of course, the government can borrow money (by issuing treasuries) at much lower rates
So the idea that the U.S. government now has no resources left or is bankrupt is totally absurd. It's the kind of nonsense spouted by no-nothings who don't even get the difference between deficit, debt, income, interest, and wealth. The total amount of "resources" in the U.S. is far greater then it's GDP, the amount of debt that the U.S. or any other country can have can be greater then it's GDP, because it doesn't have to pay back the debt in one year.
--
Also, it's unlikely that we would actually lose all of that $9.7 trillion dollars. What's happening is that the fed is lending money and taking bad assets as collateral. It's unlikely that the assets are completely worthless.
posted by delmoi at 7:32 AM on February 16, 2009 [7 favorites]
...the United States government is bankrupt and in debt for trillions of dollars.
I guess that "starve the beast" thing is going according to plan, then, huh?
posted by Thorzdad at 7:33 AM on February 16, 2009
I guess that "starve the beast" thing is going according to plan, then, huh?
posted by Thorzdad at 7:33 AM on February 16, 2009
Now that Bush is out of office, Republicans are trying to restore their image as "fiscally conservative" so that the majority of Americans who consider themselves "fiscally conservative" will vote for them in 2010.
As part of this image makeover, they are attacking the stimulus as being pork, excessive, dangerous etc.. despite almost every economist, including their own economic advisers, agree the stimulus is needed, and despite that most of them voted for the bailouts last year under Bush.
posted by stbalbach at 7:34 AM on February 16, 2009 [1 favorite]
As part of this image makeover, they are attacking the stimulus as being pork, excessive, dangerous etc.. despite almost every economist, including their own economic advisers, agree the stimulus is needed, and despite that most of them voted for the bailouts last year under Bush.
posted by stbalbach at 7:34 AM on February 16, 2009 [1 favorite]
The US' debt is not excessive compared to some nations, including Japan. Moral hazard and deficits are not really important right now. This is still the crisis phase of the problem, where we have to do everything possible to stem the bleeding.
posted by krinklyfig at 7:43 AM on February 16, 2009
posted by krinklyfig at 7:43 AM on February 16, 2009
delmoi excellent point and something a lot of people don't understand. When one looks at the debt alone it looks terrifying. But it has to be looked at in comparison with GDP.
Despite all this new debt, China is still buying us treasuries as a safe haven:
Despite all this new debt, China is still buying us treasuries as a safe haven:
China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its “only option” in a perilous world, a senior Chinese banking regulator said on Wednesday.posted by stbalbach at 7:45 AM on February 16, 2009
“We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] . . .we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.”
“Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”
It's like a person who has a $60k/year job, and $60k in student loans. Are they bankrupt? Hell no, likely they'll have no problem paying back their loans, and with a 10% interest rate they'll only have to pay $6k a year in interest (and even that is high for student loans).
And what will happen when those who are employed remain in their positions far longer as they have no real pension to collect? People coming out of school these days will be "lucky" to even have the option of a job to pay back their loans.
posted by gman at 7:45 AM on February 16, 2009 [1 favorite]
And what will happen when those who are employed remain in their positions far longer as they have no real pension to collect? People coming out of school these days will be "lucky" to even have the option of a job to pay back their loans.
posted by gman at 7:45 AM on February 16, 2009 [1 favorite]
That's okay, we can all just work for a year to pay it off. Make sure to eat a big meal on Dec. 31, because 100% of output is going to go to debt service.
posted by grobstein at 7:50 AM on February 16, 2009 [1 favorite]
posted by grobstein at 7:50 AM on February 16, 2009 [1 favorite]
You know what's even worse? Salma Hayek married that French Billionaire. I mean, jesus, how do I compete with that? Guy's even got more hair than I do.
posted by From Bklyn at 7:51 AM on February 16, 2009 [1 favorite]
posted by From Bklyn at 7:51 AM on February 16, 2009 [1 favorite]
And what will happen when those who are employed remain in their positions far longer as they have no real pension to collect? People coming out of school these days will be "lucky" to even have the option of a job to pay back their loans.
That's an easy one. The older workers get rightsized in favor of younger, cheaper, and more malleable droids. I'm of an age where I've seen it happen time and time again. I've had it happen to myself, actually.
posted by Thorzdad at 7:55 AM on February 16, 2009
That's an easy one. The older workers get rightsized in favor of younger, cheaper, and more malleable droids. I'm of an age where I've seen it happen time and time again. I've had it happen to myself, actually.
posted by Thorzdad at 7:55 AM on February 16, 2009
Open question:
When does the US debt become "too much"? There's got to be some point - as delmoi indicated, when the interest is greater than the GDP, the US is in big trouble. Of course, that occurs roughly when the debt is about 2624% of GDP given today's interest rates. I don't think anyone seriously considers that amount of debt to be a good idea.
I am curious about people that continually say "our debt is not too much compared to Japan." It seems odd to use as a metric a country that essentially failed at economic stimulus via governmental spending.
posted by saeculorum at 7:56 AM on February 16, 2009 [1 favorite]
When does the US debt become "too much"? There's got to be some point - as delmoi indicated, when the interest is greater than the GDP, the US is in big trouble. Of course, that occurs roughly when the debt is about 2624% of GDP given today's interest rates. I don't think anyone seriously considers that amount of debt to be a good idea.
I am curious about people that continually say "our debt is not too much compared to Japan." It seems odd to use as a metric a country that essentially failed at economic stimulus via governmental spending.
posted by saeculorum at 7:56 AM on February 16, 2009 [1 favorite]
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Hasn't that been the case for the last 40 some odd years?
Republican mantra: "We don't want to increase the national debt (anymore)."
posted by billysumday at 7:12 AM on February 16, 2009