Government Spending as a Percentage of GDP. We Discuss the Manufactured US Debt Crisis at The Real News Network. A stroll down memory lane. July 29, 2011 12:35 PMA stroll down memory lane By Steve Benen It’s pretty obvious at this point that when it comes to the debt ceiling, Republican standards have recently changed quite a bit.
GOP officials, for example, routinely voted to raise the limit — without threats or preconditions — as if the matter was just housekeeping, which it was. Jeffrey Sachs: Budgetary Deceit and America's Decline. As I shuttle between East Africa, where a severe drought threatens the lives of more than 10 million people, and Athens, where a financial crisis threatens Greece and all of Europe, I am shocked by the U.S. budget negotiations between Congress and President Obama.
Every part of the budget debate in the U.S. is built on a tissue of willful deceit. Consider the Republican Party's double-mantra that the deficit results from "runaway spending" and that more tax cuts are the key to economic growth. Republicans claim that the budget deficit, around 10 percent of GDP, has been caused only by a rise in outlays. Warning to Washington: Don’t mess with the debt ceiling. To raise or not to raise the debt ceiling; that is the question: Whether ’tis nobler to suffer the slump and arrows of default today or in some distant future. Oh, bards of Washington, give us your answer. This Shakespearean financial dilemma hangs in the balance between now and a somewhat theoretical Aug, 2, but I can tell you what an unbiased investment manager thinks: Don’t mess with the debt ceiling. Raise it unencumbered if necessary. I say unbiased because my credentials have become very public over the past several months.
Pimco owns very few Treasury securities, and its clients would theoretically benefit if yields rose on an under-owned asset class that was technically in default. Gallery Video Republicans scuttle negotiations with President Obama Congressional Republicans and GOP presidential candidates almost unanimously dispute this conclusion. Responsibility in this case, however, is not an either/or proposition. Bond investors are a conservative lot. So What? By James Kwak Everyone (well, the media at least) seems to be acting as if Moody’s downgrading the United States would be a bad thing.
I feel like I must be missing something. First of all, we know what bond ratings are worth. See, oh, the entire past decade for evidence. Just North of Something Important - “The market” Defaulting to Big Government - Simon Johnson. Exit from comment view mode.
Click to hide this space WASHINGTON, DC – Leading United States congressmen are determined to provoke a showdown with the Obama administration over the federal government’s debt ceiling. Ordinarily, you might expect House Republicans to blink at this stage of the negotiations, but there is a hardline minority that actually appears to think that defaulting on government debt would not be a bad thing. These representatives – with whom I've interacted at three congressional hearings recently – are convinced that the US federal government is too big relative to the economy, and that drastic measures are needed to bring it under control.
Depending on your assessment of “Tea Party” strength on Capitol Hill, at least a partial debt default does not seem as implausible as it did in the past – and recent warnings from ratings agencies reflect this heightened risk. Moody's suggests U.S. eliminate debt ceiling. Obama’s Debt Ceiling Doublespeak. Transcript PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network.
A Story More Important than Debt Limit Kabuki. I take it the American news cycle is dominated by the artificial debate over raising the debt limit.
Priorities in a declining empire « unsettling economics. Schumpeter, Joseph A. 1954.
“The Economic Crisis of the Tax State.” International Economic Papers, 4; reprinted in Schumpeter, Joseph A. 1991.
Tax and Spend, but Keep Your Balance - Economic View. Bond market. Reinhart, Rogoff: Debt Endangers Growth. As public debt in advanced countries reaches levels not seen since the end of World War II, there is considerable debate about the urgency of taming deficits with the aim of stabilizing and ultimately reducing debt as a percentage of gross domestic product. Our empirical research on the history of financial crises and the relationship between growth and public liabilities supports the view that current debt trajectories are a risk to long-term growth and stability, with many advanced economies already reaching or exceeding the important marker of 90 percent of GDP. Nevertheless, many prominent public intellectuals continue to argue that debt phobia is wildly overblown. Countries such as the U.S., Japan and the U.K. aren’t like Greece, nor does the market treat them as such. Indeed, there is a growing perception that today’s low interest rates for the debt of advanced economies offer a compelling reason to begin another round of massive fiscal stimulus.
Changing Interest Rates. Bad Education. The Project On Student Debt estimates that the average college senior in 2009 graduated with $24,000 in outstanding loans.
Last August, student loans surpassed credit cards as the nation’s single largest source of debt, edging ever closer to $1 trillion. Yet for all the moralizing about American consumer debt by both parties, no one dares call higher education a bad investment. The nearly axiomatic good of a university degree in American society has allowed a higher education bubble to expand to the point of bursting. Since 1978, the price of tuition at US colleges has increased over 900 percent, 650 points above inflation.