A look at how an American made crisis has shaken economies the world over.

I remember the eve of the Iraq war. Samuelson backed the Iraq war and assured us that we could easily afford the war in Iraq and a tax cut for the rich. Now he is writing about the world of debt and blaming it all on Obama. (NOt himself.) And, of course we cannot afford to provide scholarships for the poor or decent health care for the middle class - but we can afford to bomb everyone in the Middle East to smithereens. And we're supposed to be a Christian country.

So, since we are a Christian country, what would Jesus do? Jesus told the rich man to sell all he had and give to the poor. So we need to tax the rich to provide decent jobs and medical care for the poor and middle class. I might add that during World War II we also had a massive national debt, but the rich paid about 88% of their income into taxes. That tax rate continued during the 50's which everyone agrees was a period of widespread prosperity. So we need to tax the rich, provide jobs for the poor and launch the green technological revolution. That's a multi trillion dollar industry PLUS I have stock in green tech. So green tech would definitely make my day.

We are like the Frog in Water, where the temperature is gradually raised a notch higher, a notch higher and before the Frog can take evasive action, He is boiled to Death. These Debt Profiles are plain unsustainable and the situation will surely Tip, as it always does. Mrs. Thatcher said You could not buck the markets and she was very rarely ever wrong.

Aly-Khan Satchu
www.rich.co.ke
Twitter alykhansatchu

There is a story of the Frog in Water. Gradually the Temperature is raised and its reaches boiling Point without the Frog ever taking any evasive action. We are that Frog.
Aly-Khan Satchu
www.rich.co.ke
Twitter alykhansatchu

I didn't read where the author, Mr. Samuelson, blamed the POTUS. Maybe I missed it. This reminds me of an economics class in college, a lower level class. The topic was Guns and Butter and the time was during the Vietnam war. "Can a nation afford prosperity for its citizens and conduct a war"? This faced President Johnson who was trying to fund his "Great Society" and pay for the war. The modern presiden faces an even more difficult task since the politics of the country has escalated into what may be called taking care of an "Empire", defined as having 700 bases in 120 countries and embarking on Nation building. Almost 40 years after the VN war I think we have put the country into a possibly unsusstainable situation continually fueled by excessive government spending that is never funded by new tax dollars. I support green and the environment but that technology is very expensive with very long payback periods. A geo thermal system on one average house may have a 50 year payback (time it takes to start saving dollars versus current energy costs to pay for the system).

Yes, another $1 trillion "stimulus" bill.
There is another way. These projections were made on assumption that Obama would stay in power. Change the conditions (Obama) and the result will be quite different.

My, Mr. Samuelson, you are a messenger of the dismal science. My question for you is simply this...you're quite adept at raising the problem, what's your solution?

One solution would be entitlement reform, particularly Medicare. But in the context of health care reform, suddenly Republicans are Medicare's greatest protector. So that's out. How about tax increases? Well, no Republican in Congress will support a tax increase for any reason, regardless of the fact that supply side theory advocates cuts on marginal rates, rather than a reflexive opposition to tax increases overall. So that leaves spending cuts....without entitlement reform, entitlements and net interest will consume about 20% of GDP in 2030 vs. 10% today. Since overall Federal government spending is about 20% of GDP, that means unless we increase spending as a % of GDP or increase taxes, we'll have to cut the military, all federal departments, VA, National Parks...shall I go on?
These structural deficits will occur regardless of which party is in power in Washington and it is simple political intransigence that prevents us from confronting and solving the long term problem. What dismays me is your sudden alarm 8 months into a Democratic administration, after 8 years of Republican rule which doled out 8 trillion dollars on foreign wars and tax cuts that yielded precisely 0% long term growth in the economy. Your crocodile tears are quite telling.

The countries which have accumulated debt have aging populations, with Japan the furthest along. The countries with little debt have large parts of their population who have almost nothing spent on them, China and Brazil stand out there. Sometimes it is useful to remind ourselves economics is simply a way of accounting, not the reality it is doing the accounting for.

No, we'll just print money to pay it off. Hopefully. Because as much as that sucks, it's better than the alternative.

I don't care how much the dollar deflates, we're already international pariahs due to the effects of the Bush Presidency, and little-trusted as it is. If we give our debtors the finger, that will complete the notion that America is NOT to be trusted, and they'd be right to think that way.

For all Glenn Beck's semi-psychotic fears of "Zimbabwean hyperinflation", we are so far from THAT particular edge that it's ludicrous to hear him speak. The reason? Hyperinflation mostly occurs when the economy is so damaged that you have goods shortages - my favorite phrase for it is "five suitcases of money chasing two loaves of bread". America is not only still the nation with the largest GDP, we are also the biggest consumer of other nations' goods on Earth. As much as they hate our politics, they love American money. I can't seem to find anyone who DOESN'T like American money, no matter how much they hate our politics.

I sure as hell don't know anybody who would go, "Man, that stack of $20 American bills isn't going to be worth anything in a few years, might as well use them to light the fireplace or something." THAT is hyperinflation.

Everybody is on the wrong track. We won't seriously inflate, because the rest of the world needs the prices of their goods to stay low here so we keep buying and their factories stay employed. More likely, the need to print money to pay off the debt will cause the dollar to DEFLATE and erode wealth, and that's where I think the discussion needs to go.

That is one man's analysis of the situation, anyway.

People have the problem misdiagnosed. They keep "expanding the money supply", which ought to have caused serious inflation already if it were going to. But the Fed and its collection of semi-moral (at best) bankers keep siphoning off the vast majority of it to pay the kind of morally and spiritually ****ed people who demand million-dollar bonuses from failing companies. Then these folks "invest" that money in ridiculous luxury goods that do nothing to help the larger economy, as well as cocaine and other worldly pleasures (Madoff's offices were apparently like a Colombian mountaintop in that respect, no surprises there to me), and money STILL doesn't serve as the barter lubricant that it should, because the corrupt heart of our financial system keeps allowing these men to skim huge amounts of both public and private money off the top.

The thing is, people have forgotten that money is FIRST and FOREMOST a barter lubricant and only second is it a store of wealth. If it does not accomplish the first it will eventually be no use as the second. But in a world where economic education is so dismal that our "MBA President" presided over a crash that halved the stock market due to massive bubbles and anything John Maynard Keynes ever did is seen as a liberal plan to steal wealth and destroy America but GOP members who are uneducated themselves, this seems to be a hard thing for economists to realize...

No, it won't. Obama is not the problem. Look to why our nation owes something like half its debt to the Federal Reserve if you really want to know where the villains are located. I do not think the Fed is in and of itself completely corrupt, but it is turning a blind eye to those aspects of the American banking sector which are simultaneously selfish and inept and contain a culture where paying the execs is first and foremost and doing a good job of banking is, say, sixth or lower.

It is like having two credit cards. The first one has all the debt so you use the sencond one to pay the first one off. Problem......China owns the second card! Now we have a big problem. China says, well in return maybe I'll forgive part of this debt on this credit card that I own if you give me ........the Hoover Damn or maybe the State of California. California wouldn't be that bad and they are in debt so deep it would be a bargain! Jerome Corse!

It's a sad day when America has gone from the world's biggest loaner, to now the world biggest debtor country. What that says is our elected officials have no sense of right and wrong, and simply spend money to gain power and pass on those debts to our Children. This country may some day default on this huge debt, but, before that day comes we need to throw all the bums out that seem to want to spend us into bankruptcy.

http://cooperscopy.blogspot.com/

maybe people should start paying for their entitlements? We expect a lot from our government (a large and modern military with a global presence, social security that we collect on for 20+ years, infrastructure to get us to and from our jobs, etc.), but we crucify the officials who suggest a tax increase. Nothing comes for free. Either we lower expectations and trim the government (something even Reagan failed to accomplish), or we pay more.

maybe people should start paying for their entitlements? We expect a lot from our government (a large and modern military with a global presence, social security that we collect on for 20+ years, infrastructure to get us to and from our jobs, etc.), but we crucify the officials who suggest a tax increase. Nothing comes for free. Either we lower expectations and trim the government (something even Reagan failed to accomplish), or we pay more.