I guess most will already have heard of it: http://money.cnn.com/2011/02/21/news...down/index.htm
As the budget conflict couldn't be settled between Democrats and Republicans (who, to my knowledge, have the majority at parliaments, opposing Obama as their president), today the US government will run out of money, because they won't be allowed to take any new credits.
This would mean: All governmental officials, with the exeption of the parliament, would be sent into unpaid vacation. This includes public institutes like libraries, street cleaning, zoos, festivals and a lot of other stuff, overall affecting 800.000 workers.
The effect on economy would grow drastically, Washington as a city really depends on state money for example. This could, very realistically, kick the USA back into recession or worse.
At the same time, US households lost 23% of their wealth in only two years. Probably having a huge effect on US economy, too, as it's really dependend on private consumption.
By the way: The USA are quite "okay" with debts per GDP, but extremely bad when measured in debts per annual income - around the level of the worst EU bankrupt states. I suspect that this could be the time that the US will face huge trouble in getting more credits soon, and this could actually lead quite close to a real national bankruptcy.
Edit 18.04.2011: Added "Standard and Poor's potentially lowering U.S. rating" and changed thread title accordingly.
Last edited by Roflkopt3r; April 18, 2011 at 11:11 AM.
You know how when you borrow too much money and can't borrow anymore? Yea, that's what's happening now for the U.S.A. And what's worse, the creditors might come a calling. But I guess we'll see if the U.S.A. will be bailed out.
This is not looking good. -_-
I learned about the bureaucracy shutting down if the budget doesn't get passed last year in my government class. To think that it would actually happen so soon. Now that I think about it, I guess it would be obvious due to the GOP's majority in the House.
With all the other states having trouble with the state budgets and now the federal government, I hope it won't be that long until they pass a budget. The prices here are already getting out of hand ($4 per gallon gas prices D: ) and since the US economy influences the world economy, every country will be affected.
If i recall, the US has always been in debt; that's how it keeps everything running.
Anyone remember the last time this happened? I can't remember.
you know that the average price is Europe is 1.5€ per liter don't you :-)
I let you do the convertion, why is US the only country in the world still using imperial units !!!
Anyway US is still extremely cheap wrt fuel
As for the government issue, it's really a political matter. I've heard it already happened under Clinton presidency
Last edited by k-dom; April 08, 2011 at 03:10 PM.
That's what I thought so too. And I don't mind doing the conversion; I can tell it's a high price already. @_@
If it should really come so far that nobody would want to buy US state bonds anymore, then it would be really lights out - national bankrupcy would necessarily follow.
Congresswoman Donna Edwards, nice lyrics. And quite appropriate.
So, the government screwed up by fighting and not agreeing with each other. GOOD GOING, YOU IDIOTS! What I read anyway. But, rather than opposing everything, they need to come up with a compromise or something. Looks like higher governmental authorities are safer than most. :\
Start exporting more than importing would be a good way. From what I heard, so many businesses decided to go out of country due to Obama charging higher tax, which results in US employees being laid off due to this. GOOD GOING, SO-CALLED PATRIOTIC BUSINESSES AND OBAMA!
Debt takes many forms, in that sense it has always been around in some way or another. Debt in itself is not a bad thing though. The truth is that it would be outright impossible for a government to function without the capacity to fall into debt. In mere months or less it would lack any form of liquidity. The issue with debt is when you really go crazy with it as you do eventually have to pay every cent. I would think USA did go overboard with the trillion dollar bailout out for that matter. At some point there will really be no alternative but to cut expenses as debt has to be paid. Unfortunately expenses will invariably have to be cut from education and social services. Taxes are also bound be required to increase however that would indeed not be an incentive for investment which the US economy definitely needs. I guess it deepends on what the economy looks like a few years from now I don't think the issue I describe will come up in the next elections). I guess stopping the wars as a whole would actually be the best way to go but in turn it is the least likely thing to happen. I bet this is also likely to be a political tool a few years from now. Whichever party which proposes and ending to the war as to avoid the expense cuts for the things I mentioned before is likely to get a huge advantage. Wonder which one will wise up to the idea.
Anyways, disaster was just avoided as apparently an agreement was reached on the budget issue.
As someone who thinks themselves as more of an Independent, it seems like Republicans desire to shut down the government is purely for political reasons. They want to de-fund Planned Parenthood and other Women's Health resources. The Democrats have made compromises, while it seems the Republicans refuse to...or at least the Tea Party faction do.
This new budget proposed by Paul Ryan is a sham. It serves to reduce tax rates for the richest, and looks to gut the already shrinking middle class and lower class by de-funding programs. Eliminating Medicare/Medicaid, privatizing Social Security. This is an agenda hardline conservatives have had for years. It's the Democrats' stumble for not passing a budget last year for sure, though. I find it interesting that a fiscal conservative like Ryan, is the same person who voted for TARP and the bailouts of GM and Chrysler. But now all of a sudden it's time to slash spending...it's hypocrisy. Bush spent like no other Republican ever had before and they were fine with it, now it's time to switch ideology?...Having a Democrat as President has a lot to do with that IMO.
I don't really see that as hypocrisy. When the bailout was aproved, it was also implied the money from the bailout would have to be paid back. The US economy has yet to recover and one way or the other the money has to be paid back so one way or another expenses have to be cut from somewhere. The issue here is that there really is no scientific way to determine where to cut expenses from, for the most par it is a matter of subjectively picking from where to reduce expenses. Democrats and republicans both have their own principles and ideas so naturally the places from which expenses are cut will be influenced by both. It is possible that cutting expenses now instead of later had something political rather than technical behind it but it is still something which invariably would have to be done in the future if it is not done now. Lets face it, there is a trillion dollar bailout and it won't pay itself.
Unfortunately that will just be the tip of the iceberg. As it turns out the middle class does not have money so increasing taxes on them will not help pay for the bailout nor reducing would significantly help improve the economy. Taking measures to supposedly create incentives to invest is also seen as making the rich richer so it is politically bad. The alternative would be to charge more taxes from these guys however reducing their potential returns over their investments in an already unstable and weakened economy will invariably reduce or at least slow down overall investment. its a pickle to say the least lol.
That's what quite something ununderstandable view from here. Even more since in term of debt the old system was far from ideal.
I heard some month ago that the federal bank will continue to depreciate the dollar wrt euro. It will sure decrease the debt but at other economy countries expent.
If Republicans had there way they'd obliterate Medicare/Medicaid entirely.
Last edited by xi0; April 09, 2011 at 01:27 AM. Reason: Automerged Doublepost
Well, the US have a problem either way. Decades of lowering taxes ruined the budget big times. How do you think 80% debts/GDP will continue on with low taxes, especially since the ratio of debts per tax income is extraordinarily bad for the USA?
That right wing parties were better with budgets is just a big lie these days. All they do is giving the money to companies, mostly in forms of lowering taxes and in form of subsidies, or lowering their security standards so they don't have to spend as much money on them (with the obvious consequences...)
Theres pretty much no difference in the types of spendings of right wing and left wing governments, with the exeption that right wing governments give the money to the companies (from where it's theoretically supposed to go to the people, which never happens however) while raising taxes for the middle/lower class. While left wing gives it to the people who actually need it, who definitly do spend it again and this way empower national economy.
So, while they were throwing away money like hay just a short time ago, as soon as left wing takes power right wing will start nagging about unnecessary spendings and that the lefts were so bad with money... Which is, as you said, just hypocrisy.
Just have a look at California: Decades of Republican tax-lowering, and now they have such abnormous debts that they're beeing compared to Greece from time to time.
I think that american social security system proved to the entire world that an entire private system is bad for the people AND for profit contrary to what you said. It seems the only ones who make profit are the health insurances.
Seems like the debate starts to slide a bit to much toward the dangerous political path :-)
Roflkopt3r, California has been democrats forever, Schwarzeneger was just a political abheration.