The Point of Panic, is it Now?
Cut Federal Spending Radically and Right Now!
Okay, now I'm really worried. The market is in free-fall. I've seen dips described as crashes, even called some of them that myself. But the debt default in Greece prompted local panic. In my house, at least.
Greece
Greece's debt totals $473 billion. Its GDP is $330 billion, staking its debt ratio at 1.4 GDP. Remember that number as the point of Greece's financial collapse.
U.S.
Now I wish to point out that the U.S.'s debt ratio is 1.05. Remember that number too. We are not far behind Greece. Can you blame me for the panic right here at home?
What does Greece have to do with us?
Plenty. For those who question what this really means, let me share what little I know.
Number one, I know that big debt isn't good. Did you recognize that pain in the pit of your stomach when you signed yourself into big debt like your mortgage? It's real. You indebted yourself for a big chunk of your life. Some folks realized at that moment they would be unable to pay it back, but they did it anyway. Smart ones waited until they could afford it. Not many of us are that smart.
Number two, debt is taken on by nations in time of inescapably dire need. National debt typically rises during war, the most notable increases having occurred with the Revolutionary War, the Civil War, World Wars I and II. U.S. national debt spiked through the roof in the last two years, sparked more by wanton Federal spending than any inescapably dire national need.
Third in the panic parade is that float called the debt ratio. Remember Greece's number? 1.4 GDP means that more than 100% of a country's ability to produce is required to pay off its debt. 1.4 GDP means that Greece will never be able to pay off its debt, at least not at current national production levels. 1.4 GDP means that Greece will default--taking most of the world's economy with it--unless somebody or something comes to its financial rescue. So far, nobody and nothing are stepping up to that plate.
U.S. debt ratio heads upstairs
It is this national debt ratio that set panic in my house as a reflection of the panic brewing across the country. Remember our nation's number? When national debt is more than the country can pay for with its production, we are in trouble. Remember, our number is 1.05 and rising. We are in trouble.
But, hey, don't take my word for it. Wait for your own panic to set in.
What's the solution?
Two times in our history found the nation in similar trouble. The first was after the Revolutionary War. Alexander Hamilton's plan succeeded in paying down the debt. The second was after WW II. The nation's burst of industrial production, progress, and unencumbered capitalist advance paid down war debt in short order. What's going to pay down our debt now? Congress's solution is to raise the debt ceiling. Yeah, that'll do it.
Where's our plan? Where's the burst of business or production to get us out of this mess? The solution is to cut federal spending, radically and right now! But that's something that's not done in D.C. And it might be too late.
I find no way out of my panic. I am beyond consolation. Share what you know if you know something I don't. And please don't suggest I rely on hope or change. They aren't working for anybody right now.
Sources:
http://finance.yahoo.com/news/In-Greece-Some-See-a-New-nytimes-2124426573.html?x=0&sec=topStories&pos=main&asset=&ccode
http://www.usgovernmentspending.com/federal_debt_chart.html
Greece
Greece's debt totals $473 billion. Its GDP is $330 billion, staking its debt ratio at 1.4 GDP. Remember that number as the point of Greece's financial collapse.
U.S.
Now I wish to point out that the U.S.'s debt ratio is 1.05. Remember that number too. We are not far behind Greece. Can you blame me for the panic right here at home?
What does Greece have to do with us?
Plenty. For those who question what this really means, let me share what little I know.
Number one, I know that big debt isn't good. Did you recognize that pain in the pit of your stomach when you signed yourself into big debt like your mortgage? It's real. You indebted yourself for a big chunk of your life. Some folks realized at that moment they would be unable to pay it back, but they did it anyway. Smart ones waited until they could afford it. Not many of us are that smart.
Number two, debt is taken on by nations in time of inescapably dire need. National debt typically rises during war, the most notable increases having occurred with the Revolutionary War, the Civil War, World Wars I and II. U.S. national debt spiked through the roof in the last two years, sparked more by wanton Federal spending than any inescapably dire national need.
Third in the panic parade is that float called the debt ratio. Remember Greece's number? 1.4 GDP means that more than 100% of a country's ability to produce is required to pay off its debt. 1.4 GDP means that Greece will never be able to pay off its debt, at least not at current national production levels. 1.4 GDP means that Greece will default--taking most of the world's economy with it--unless somebody or something comes to its financial rescue. So far, nobody and nothing are stepping up to that plate.
U.S. debt ratio heads upstairs
It is this national debt ratio that set panic in my house as a reflection of the panic brewing across the country. Remember our nation's number? When national debt is more than the country can pay for with its production, we are in trouble. Remember, our number is 1.05 and rising. We are in trouble.
But, hey, don't take my word for it. Wait for your own panic to set in.
What's the solution?
Two times in our history found the nation in similar trouble. The first was after the Revolutionary War. Alexander Hamilton's plan succeeded in paying down the debt. The second was after WW II. The nation's burst of industrial production, progress, and unencumbered capitalist advance paid down war debt in short order. What's going to pay down our debt now? Congress's solution is to raise the debt ceiling. Yeah, that'll do it.
Where's our plan? Where's the burst of business or production to get us out of this mess? The solution is to cut federal spending, radically and right now! But that's something that's not done in D.C. And it might be too late.
I find no way out of my panic. I am beyond consolation. Share what you know if you know something I don't. And please don't suggest I rely on hope or change. They aren't working for anybody right now.
Sources:
http://finance.yahoo.com/news/In-Greece-Some-See-a-New-nytimes-2124426573.html?x=0&sec=topStories&pos=main&asset=&ccode
http://www.usgovernmentspending.com/federal_debt_chart.html
Published by Lorraine Yapps Cohen
I design jewelry free from the constraints of textbook techniques and write non-fiction free from the rigors of technical expression. Chemist by training, creative by spirit, conservative in values, and art... View profile
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We can't rely on hope. Change is the only thing that will pull us out, and it will be painful.
Extremely well-written. Did you create the lovely trophy necklace?
Whippy, you've pointed out the head-in-the-sand idiocy of the 47% of Americans who think Obama is doing a good job.
You've explained this very well but those that don't want to accept the reality just discount and poopoo all of it...wonder what it's like to live in an alternate reality where truth is nothing; history is old news and when the numbers don't suit one, just ignore them and scream I'm crazy for not agreeing with them!
If enough of the brainwashed stay home next election day, their may be hope.
Panic in this situation doesn't do anyone any good. Everyone... politicians and the people that elect them... need to pull together and understand that we must begin living within our means. That means cutting spending, and eliminating waste, and the things we can no longer afford. I don't think it's too late yet, but it is gonna be a close run thing!
You're right. Hope, nor change is helping any of us at this point. Great article, and very very well written.
Members of Congress - all of government - are too greedy to do what needs to be done. It doesn't seem like they really care about the good of the whole country. I'm panicked...BIG time! Our stocks are what we're depending on for retirement....??? Did I say retirement? Might not be able to do that for years the way things are going. Good article, Lorraine! :)
Someone on Facebook suggested the government start handing out gas vouchers like food stamps...yikes! Where do they think that money will come from? I think some people forget that money doesn't grow on trees.