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Sanuk Canuk

The one big thing the US has going for it is that there is enough money floating around in it to turn the problems around. Third world countries get screwed because their interest on their debt matches their GDP so it is impossible to keep up let alone pay the debt down.

Canada was facing a deficit crisis about 15 years ago and through allot of painful fiscal restraint, things are back on track. The states can do the same, the problem is to find the will to do it. I wonder what the debt service costs are for the US debt as a portion of the current budget. I would not be surprised if the debt service cost is a significant portion of the current annual deficits.

On the other hand allowing the currency to devalue helps at both ends of the scale. It will reduce the amount of the debt as a portion of GDP and it also will spur exports to mitigate the trade imbalance. The biggest negative issues are that this will lead to inflation, erosion of wealth and higher interest rates.

I would guess we will see a moderately painful correction but I can't see it becoming a collapse. I would also guess you will see a reduction of the standard of living for most folks. I still think one of the primary issues with the US economy is the inequitable division of wealth. To much of the money is in the hands of a few for a 1st world country.

Milkman

There was never a "crash" in the U.S. in the 1980s.

There was a correction in 1987, which was a 500 point drop, but the percentage was about 22% (?)

The term "crash" is a misnomer.

In 1929 there was a crash. And people jumpted out of windows because of Margin debt. Unemployment hit 25%

Even the contrarians aren't saying this. Some do say there will be a decline, or dip. Note* not necessarily just a correction.

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kingwilly

^ ok ok now your being slightly pedantic - correction / recession / depression / dip / decline.

all more or less parts of the same slippery slope innit!

ok - perhaps the US may not crash but the dollar is certainly gonna drop ........a lot - average workers are gonna loose their job - investors are gonna loose money

in short the USA will become a nonfavourabe place to put money into and many ppl are gonna hurt / feel the pain.

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Milkman

I agree 100%.

But don't use the term "crash" if it's not the appropriate term.

There won't be a crash.

Storekeeper

Army Exceeds Recruiting Goal

By Mark Noonan

As I always say, consult not what people say, but what they do:

WASHINGTON (AP) -- The Army said Friday it surpassed its recruiting goal for May, marking the 12th consecutive month of meeting or exceeding its target.

With a booming economy, the only explanation for this must be continued patriotism and support for the overall War on Terrorism, including the liberation of Iraq element of it. Polls can say this, that and the other thing - but signing up when you know you're likely to be sent to a combat zone is a lot more substantial than answering a question over the phone. Anyone can say they are against the war - but these magnificent men and women are showing they support the war.
As I've also said, a lot of people will be surprised at the results this November, but I won't be.

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Marmite the Dog

That should thin out the rednecks a bit, 'cos no one in their right mind would sign up at the moment. It'd be like joining a company that's just about to go bust.

Storekeeper

Narrow minded retort.

Marmite the Dog

If they weren't allowed this place would be OPs only.

Butterfly

You must be desperate for good news. What's wrong ? troops morale is at an all time low ?

Milkman

It's not pedantic at all.

A correction has nothing to do with a recesion, depression,dip, or decline.

A recession is not a depression.

A depresion is not a recession.

A dip is usually considered to be a correction, and dips/correction happen during high growth and favorble economic times.


There won't be a crash. There may be more inflation; maybe not. There may be declining standard of living.

Don't get me wrong. The U.S. is NOT in good shape economically. Not in good shape at all.

Things have not been good in the U.S. since the late 1970s.

Storekeeper

Lots of people in the US don't agree with this opinion.

Marmite the Dog

Yes it is.

stroller

It may seem pedantic, if you know nought about economics...

Mhz

I just finished my MicroEconomics course last semester.Intresting subject.

Milkman

Of course a lot of people don't agree.

This is the field of economics.

Ask for 3 opinions and you'll get six answers.

Storekeeper

I hear your boy Warren Buffet is very high on Israel. Guess he's investing quite a fw billion $$$ over there.

Milkman

Warren Buffett ain't my boy, but when he speaks I do tend to listen (casually).

He was pretty wrong on the U.S. dollar, recently.


It's easy to look back in the past and try to explain why something happened economically, but when it comes to the future.....

Storekeeper

The answer to panic about America's debt:

"The second mistake was pointed out, as best I recall from my high school researches, by Daniel Webster c. 1832. Then as now, there were vocal worries about foreigners owning too much of America. Webster pointed out that foreign investment meant, not that they had our stuff, but that we had their money. If push came to shove, if foreign governments tried to pressure the U.S. by threatening to withdraw their citizens' investments, we could keep it-refuse to pay back the debt. Their capital, after all, in the form of canals and the first railroads, was immovably located under our jurisidiction."

http://daviddfriedman.blogspot.com/2...-v-daniel.html

Storekeeper

President Bush's Successful Deficit Reduction

Yet another "read it and weep, liberals" piece:

Aided by surging tax receipts, President Bush may make good on his pledge to cut the deficit in half in 2006 — three years early. Tax revenues are running $176 billion, or 12.9%, over last year, the Treasury Department said Monday. The Congressional Budget Office said receipts have risen faster over the first eight months of fiscal '06 than in any other such period over the past 25 years — except for last year's 15.5% jump.
The 2006 deficit through May was $227 billion, down from $273 billion at this time last year. Spending is up $130 billion, or 7.9%.
The CBO forecast in May that the 2006 deficit could fall as low as $300 billion. Michael Englund, chief economist of Action Economics, has long expected a deficit of about $270 billion this year. Now he thinks there's a chance the "remarkable strength in receipts" will push the deficit even lower.
With the economy topping $13 trillion this year, a $270 billion deficit would equal less than 2.1% of GDP, easily beating the president's 2.25% goal. Bush made his vow when the White House had a dour 2004 deficit forecast of 4.5% of GDP, or $521 billion. The actual '04 deficit came in at $412 billion, or 3.5% of GDP, before falling to $318 billion, or 2.6% of GDP, in 2005.
A CBO analysis last week noted that withheld individual income and payroll taxes are up 7.6% from a year ago, with the gains picking up in recent months.
"Those gains suggest solid growth in wages and salaries in the national economy," CBO said.
While gains are broad, those at higher-income levels are enjoying bigger salary hikes. Because they pay higher rates, federal tax revenues soar when they do well.
Those making over $200,000 now pay 46.6% of total income taxes...