Posted on 03/09/2011 12:03:29 PM PST by SeekAndFind
Debt, debt and more mounting debt is plaguing countries around the globe.
In this U.S., states across the country face a collective $125 billion shortfall for fiscal 2012, while Congress is facing a budget gap nearly 10 times that size.
PIMCO founder and co-CIO Bill Gross has previously said that if the United States were a corporation, no one in their right mind would lend us money. For the last decade, we’ve been “relying on the kindness of strangers” to help cover our debts, he tells Aaron in the accompanying clip.
By “strangers” he is referring to our foreign counterparts, like China for example. Basically, for years Americans have spent their hard-earned dollars on less-expensive Chinese made goods. With great gratitude, China turned around and used all those dollars to buy up U.S. Treasuries and other dollar-denominated assets.
But now after years of reckless spending, America’s debt level is nearing a breaking point and can no longer rely on foreign capital as a last resort. “When a country reaches a certain debt level, confidence in that country’s ability to repay that debt becomes jeopardized,” says Gross, citing the work of Ken Rogoff and Carmen Reinhart in This Time Is Different.
The Way Forward...And Your Pocket Book
The budget crisis situation unfolding at the state and federal government level does not bode well for working men and women in this country. There are really only two choices, says Gross. And, neither favors your pocketbook:
Option #1 – Keep spending and do nothing
Option #2 – Balance our budgets by cutting entitlements
House Republicans ran and won on a platform to cut $100 billion from the budget this year and last month managed to pass legislation that would strip $61 billion in spending.
(Excerpt) Read more at businessinsider.com ...
It's just not very much fun.
For those who don’t know (but most Freepers know )....
Bill Gross is a founder of PIMCO where he oversees more than $1 trillion of fixed income securities.
We will choose or the market will choose for us and that will not be pleasant for most.
I read a book recently called “Aftershock” describing the de-bubbled environment that is our probable future. It looks a little bleak.
ping
There are times when I think it might be better to have Baraq in office for his next term when this thing really implodes.
I’d love to see Dems get full credit for the collapse of SS and Medicare.
A sad ,sad USA without those cowboy poets.
Option 2 is the responsible way to go.It is time that people are told the truth about the situation we are in and if we do nothing everyone is going to be a slave to China.
It's almost game over for us; pretty soon Bernanke will have to monetize all of our new debt, and then hello hyperinflation.
I agree.
Step One: Roll back federal spending to 2006 levels, even amid wailing and gnashing of teeth.
Step Two: Pass legislation requiring all budgets from here on to “balance”, illegal to appropriate more spending than is available from current year revenues..more wailing and gnashing of teeth.
Step Three: Submit a constitutional ammendment to the states requiring balanced budgets as a matter of rule (certain exceptions in case of national emergencey/war, etc)... this will test the “mettle” of the American people.
Step Four: With above in place, pass a 1% national sales tax that is legally bound to be used for one purpose and only one purpose: paying down the national debt, including future unfunded liabilities. This tax will sunset the year the national debt is retired. final round of wailing and gnashing of teeth.
This would wipe out the debt in less than a decade (I think, but if it takes longer so be it), with the financial “structure” in place to keep the nation fiscally solvent until such time as future generations decide to change it and try to commit economic suicide again.
RE: Option 2 is the responsible way to go
Well, in a 3 Trillion dollar proposed budget by the President, the so-called fiscally responsible Republican Congress found out that they are able to cut at MAX : $100 Billion or just above 3% !
Democrats on the other hand, recently proposed for the next budget round of negotiation, a decrease of (GET THIS) -— $6 Billion ( yep, with 6 BILLION ).
Harry Reid could not bear to see such programs as the Cowboy Poetry Festival in Nevada go ( which he claims creates tens of thousands of jobs).
If this is what passes off as leadership in America, I cannot help but agree with Bill Gross — WE’RE SCREWED !
Too bad Washington is run by welfare queens.
There was a way out for us in 2007. It was called let those who created the mess go bankrupt, and throw the fraudsters in Jail so that it would not happen again in our lifetimes.
It is the bailout game in all its various forms, and the cover-up of the fraud, and the protection of its masters that has now led us to a terminal condition. We have virtually no chance to escape now. The FED- Most of all has sealed our fate, but not without the encouragement, and blessings of the rest of our government officials.
And not without the help of the majority of our civilian population who rate on the far side of being Unaware, selectively non-intelligent, irrational, mindless, selfish- Idiots.
watch what is happening in Wisconsin.
We are at the point in this nation where the special interest groups start fighting over the crumbs.
Governments are born stoic, but die epicurean. -Bob Hoye
...related. I don’t know about the hyperinflation predictions, either, but some things are going up (fuel, food, etc.). And as the US dollar falls, eventually, foreign products will go up.
Q.E. Money Printing Negative Feed Back Loop to Hyper-Inflation Oblivion
http://www.freerepublic.com/focus/f-news/2686117/posts
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.