US Debt Crisis – View of a Common Man
News & Updates
I rarely write about non hypnosis things but this issue screams at me to write about it. 🙂
I have recently been looking at the USA’s financial woes. It is a scary thing. 14+ trillion in debt which costs 40% of thier income to service aka pay the interest. They just borrowed 2 trillion more to get them by for a year or so…so by the start of 2013 the debt will be 16 trillion. They will not balance thier budget for 8-10 years. Lets assume in 2021 it is balanced, meanwhile to balance it and accumulated interest in that time, their national debt will be about 5 trillion more, so 21 trillion. That would mean to service their debt it will take about 60% of their revenue to do it.
I see only three solutions and all either really tough or really scary.
My personal choice…
1) The USA has to cut spending and raise taxes but that will not be enough. They have to start manufacturing their own goods and stop relying on foreign imports, this will create more jobs than it will lose and it will be sustainable. They will only allow foreign raw materials and a few things they cannot make themselves, the rest, huge import taxes on. If they do this they also have to devalue their dollar to make their goods less expensive in other markets therefore more attractive to foreign buyers.
2) Devalue their dollar to such an extreme that thier debt is not worth the money its printed on, they may have to sell things, like Alaska and Hawaii.
3) This I hope does not happen but if history teaches us anything, is that it repeats itself. GO TO WAR with your foreign debters. If you win, debt forgiven, if you lose your enemies may help to rebuild you..maybe. This is a worry some scenario for all Canadians, we generally view the US an ally and friend but if the US puts themselves so deep in a corner, they may roll their military into Canada and have at our plentiful natural resourses. I doubt the rest of the world would do much except trade embargoes and sanctions.
This is how I see it, it goes from bad to worse. The silly thing about some of the US debt, which was spent for securing future oil reserves in the middle east, is they could of traded with Canada for our tar sands oil, spend twice the going rate per barrel, the excess money going to clean the water needed to proccess the tar sands(and anything else that got dirty) save piles of money and not lost one human life thru war and violence. But that would mean they would want our “dirty” oil….oil not dirtied by blood.
My $0.02 CDN
p.s. check out this debt clock link http://www.usdebtclock.org/