Federal Debt: doom or non-issue

[lordtwinkie.livejournal.com]

I caught CNN the other morning and they had a special on this film

I.O.U.S.A. The Movie

I.O.U.S.A. – the 30-Minute Version from IOUSA the Movie on Vimeo.

short version on youtube as well.
http://www.youtube.com/watch?v=O_TjBNjc9Bo

I was wondering if anyone else had seen this film and what they thought. I'm not an economist I just know if this is how I spent money I'd be up shit creek. Then again I'm not a sovereign nation either. This was made two years ago, and it looks pretty damning, but is it manipulation of numbers and pretty charts and graphs? This was before a lot of shit went down and that big healthcare bill got passed... Starting at the 26 minute mark kinda sums up what the issues are going to be.

Although this was a good sign to me, Consumer debt falls by $11.5 billion in February

WASHINGTON (MarketWatch) - U.S. households paid down their debts in February for the 15th time in the past 17 months, the Federal Reserve reported... Outstanding consumer credit dropped by $11.5 billion, or a 5.6% annual rate, to $2.45 trillion in February following an upwardly revised $10.6 billion increase in January. Debts had declined for 12 straight months before January's increase and are down 5.2% from the peak in July 2008.

In February, revolving credit, such as credit cards, declined by $9.4 billion, or a 13.1% annual pace, to $858.1 billion. It's the third largest decline in revolving credit in the past 32 years. Read more on the Fed's website.

Non-revolving credit, such as auto loans, student loans and personal loans, fell by $2.1 billion, or a 1.6% annual rate, to $1.59 trillion in February.

although apparently its not all because we are actually saving monies and paying bills some of it is because agencies are just writing off bad debt as uncollectable

Outstanding debts can fall because consumers paid back more than they borrowed or because lenders wrote down the debt as uncollectable. Both factors have been important in the decline since the summer of 2008.

Like i said i'm not economist, i'd like to hear from people smarter then me in this area, right now it looks to me like this is untenable, we can't keep doing what we are doing now somethings got to change higher taxes, less benefits or a mix of both. Personally i could do away with the "benefits".

also is it just me or is Sarah Palin getting hotter

Comments

No shit, Sherlock.

[papasha-mueller.livejournal.com]

I'd too get hot having McCain at the rear.

Re: No shit, Sherlock.

[lordtwinkie.livejournal.com]

Re: No shit, Sherlock.

[enders-shadow.livejournal.com]

did you photoshop that yourself?

[udoswald.livejournal.com]

It's just you.

[rosicrucian.livejournal.com]

She's looking a bit low-res these days.

[lordtwinkie.livejournal.com]

heres the hi-res version

Palin's looking pretty

[sophia-sadek.livejournal.com]

She looks great on the outside. As soon as she opens her mouth, though, she looks like a moron. I know some guys who say that they would never have sex with her for fear she would name their love child, "Snipe" or "Nuke."

As for the debt, it's nothing to worry about. Washington, DC will soon go into receivership. Americans will all go on crash courses to learn Mandarin.

[lucazzo.livejournal.com]

I did see the film (it's on instant streming on Netflix, which makes it easier to catch).

I didn't go online and corroborate the facts, but the picture they paint is VERY grim.

[lordtwinkie.livejournal.com]

thank you for being the first to actually comment to the meat of the post then being fixated on an off the cuff mention of sexy sarah palin.

yea the picture painted was grim in 2008 before everything thats been going on i'd hate to see what it looks now. i'm wondering if this is a lot of hyperbole and if not is there anything realistic we can do about it.

[sgiffy.livejournal.com]

I'm not an economist I just know if this is how I spent money I'd be up shit creek.

Actually you would be just fine. Having a debt to income ratio of 60% is not at all bad (debt not debt payments). Most people with a mortgage are in the 3-500% range. Many business operate just fine with higher ratios especially if they are financing expansions or the like.

The questions is really not how much we are borrowing, but how we are spending it. If we borrow say a trillion at 4% interest, but use that trillion to increase our GDP in real terms by 6-7% then we come out ahead.

[jerseycajun.livejournal.com]

"...but use that trillion to increase our GDP in real terms by 6-7% then we come out ahead."

It's virtually impossible to predict where the money should be spent beforehand in order to achieve this. Investment in things which end up being market winners (i.e. things which are self-sustaining outside of subsidies) are as much based on luck as they are about smart decision making, if not more based on it than otherwise. Even smart investors can and do end up being market losers. And this isn't even including the very different human dynamic which is introduced when the ones spending the money don't feel the pressure of going 'out of business' or the pressure of risk in how they're going to procure the funding for such spending.

[allhatnocattle.livejournal.com]

People loose their houses all the time.

[almightyspaz.livejournal.com]

Heh, Sarah Palin make look attractive, but she's pretty much like the vampires in the Dresden Files. Pretty on the outside, evil soul sucking creature on the inside.

[lordtwinkie.livejournal.com]

depends on which court of vampires we are talking about, the black court ones are pretty hideous i think... white court vamps though hooo weee.

[green-man-2010.livejournal.com]

Er, Sarah Palin has always been 'hot' in my opinion, but never been 'smart', in the American sense of the word; or well informed and knowledgeable on world affairs.

[stewstewstewdio.livejournal.com]

If you consider being more shrill than ever as being hit, I guess so.

[mikeyxw.livejournal.com]

Our current debt isn't sustainable but we're hardly up shit creek. We owe about 60% of GDP, in the early 90's, we owed about 65% and the sky didn't fall.

We have two things going for us that keep us from being screwed. First, we borrow very cheaply. The interest on our debt reflect an outflow of wealth. Greece is up shit creek because they are in debt about 90% of their GDP and their debt is headed towards junk status. They will end up paying about 10 - 12% of their GDP just to service their debt in the next few years. Post WWI Germany way paying about 5%. The 10 year t-bill is paying just under 4% right now, meaning we're paying out 2.5% or so, something that's sustainable as long as we keep our AAA rating.

Second, our economy is still growing pretty quickly. Mostly because our population is growing faster than most developed countries. If we owe 60% of our GDP this year and we grow our economy by 3% per year for five years, we'd owe about 50% of our GDP assuming we can stick to some interest only plan.

[allhatnocattle.livejournal.com]

I'm not as optimistic as others here. Debt is one thing we assume is manageable assuming there economy able to continue paying it off. But just like when you loose your job, if the finances of America come screeching to a halt, the debt becomes unmanageable.

When Wall St crashed in Oct of 2008, like many countries, USA took out a 2nd mortgage hoping the economy will recover.

Much of America's manufacturing has been shipped overseas. The natural resources are hardly being exported. Exports in general are addled by being in Imperial measurements, where the rest of the world is comprehensively Metric. Most of America's current wealth in in intangibles (intellectual properties, investments/banking, management, patent ownership, insurance, etc.) While USA seems to have a lot of assets, in a firesale I'm not sure America has much value. I mean if the teabaggers or whatever get their way and successfully win a revolution (which I doubt will happen) and the replacement that emerges has to start over, I'm not sure there is much there.

Something is only worth as much as somebody is willing to pay for it. The bluebook value is one thing, but in the ghetto every car sells for $500. Then again there are no new cars in the ghetto. Just like there's no much new in America.

[enasisabitch.livejournal.com]

I saw it, they basically say you need to reform social security, health care, and taxes. spend less tax more but then again that seems pretty obvious except that people don't want to do either

[enders-shadow.livejournal.com]

i want to tax more

[fizzyland.livejournal.com]

Yes but it's an international house of cards, I don't think U.S. is particularly exceptional in terms of debt. And we have that ability to prop up our economy with the threat of our military so even if things got really dire, that covert "Nuke Standard" would keep us going. Some businesses are too big to be allowed to fail, some nations too crazy and well-armed to.

[root-fu.livejournal.com]

I saw IOUSA 1-2+ years ago.

From what I remember, everything they say is correct.

The main point people miss -- social security, medicare and other assorted debts grow much, much, faster than the US economy.

10-20 years ago, social security, medicare(etc), consumed something like 15%-20% of the total budget. Today, ss and medicare consume something like 30%-40% of the total budget.

Debt/deficit may be "below" post world war 2 levels. But, its growing at a fast enough rate, that it won't be long before its above them. Economic growth and raising taxes definitely are not enough to address the issue.

The displacement of funds via ss and medicare is one of the main reason why the US gov will borrow close to 46% of its entire budget, this year (http://abcnews.go.com/Politics/wireStory?id=7562974). And, the problem will only get worse as time passes.

The 2nd main point people miss, US debt in a post WW II era was owed to americans by americans. The debt owed stayed in the US ecnomy where some suggest it could 'help' the US economy to recover, and didn't represent a transition of wealth from one country to another.

So, yeah, I don't remember everything IOUSA said, really. But, the gist of what it says is definitely true.

I'm not an economist, btw. But, who cares. I have come across ecnomists who were idiots. The honorific may have lost some of its value, lately.

[enders-shadow.livejournal.com]

As another has, I saw it on Netflix insta-watch (lots of interesting documentaries there) and I loved that chart of debt--and I just want to scream at TEA party people:

The national debt went way up under Reagan, Bush I, Bush II. YOU CANNOT BLAME DEMOCRATS FOR IT. It went down under Carter/Clinton. We'll see at the end of Obama's how his score-card looks.

[root-fu.livejournal.com]

Reagan's the man.

Don't dog my Reagan. [:

[gunslnger.livejournal.com]

I know I paid off $10k of credit card debt because I got a $10k tax refund. I would assume some part of that paydown you cite comes from that source too.