It took 191 years for the US government to run up its first trillion dollars of debt: from 1791 to 1982. When G.W.Bush became President in January 2001, the national debt was at 5.7 trillion dollars. Last Friday, official statistics published by the Treasury Department reported a staggering 11 trillion. In other words the US debt has doubled in exactly 8 years.
And it is not over: it is now estimated that by the end of the US fiscal year (September 30th), the US debt will stand at 12.7 trillion dollars, and could peak in 2012 at 16.2 trillion dollars where it should represent 100% of the forecast GDP.
Actually the current dollar GDP fell in the fourth quarter of 2008 by 212 billion dollars to 14,200 billion. And this trend shall continue for the rest of the year. I am in fact thinking that the psychological barrier of 100% of GDP could be broken this year. Back in 2007, the US debt to GDP ratio was around 45%.
Countries like Germany or France were criticized for years by the anglo-saxon world for their lack of discipline when it came to tackle public debt. The truth is, they all had forgotten that households debt can be even more lethal. In fact we have just been proven that households debt can be easily converted into public debt, by the banking bailout mechanism. To prevent banks from collapsing under the burden of mortgage defaults and debt-backed assets depreciation, the US government had no other choice but using taxpayers money to save its financial system.
I hope someone one day will ask: what is that system they are really saving ?
And it is not over: it is now estimated that by the end of the US fiscal year (September 30th), the US debt will stand at 12.7 trillion dollars, and could peak in 2012 at 16.2 trillion dollars where it should represent 100% of the forecast GDP.
Actually the current dollar GDP fell in the fourth quarter of 2008 by 212 billion dollars to 14,200 billion. And this trend shall continue for the rest of the year. I am in fact thinking that the psychological barrier of 100% of GDP could be broken this year. Back in 2007, the US debt to GDP ratio was around 45%.
Countries like Germany or France were criticized for years by the anglo-saxon world for their lack of discipline when it came to tackle public debt. The truth is, they all had forgotten that households debt can be even more lethal. In fact we have just been proven that households debt can be easily converted into public debt, by the banking bailout mechanism. To prevent banks from collapsing under the burden of mortgage defaults and debt-backed assets depreciation, the US government had no other choice but using taxpayers money to save its financial system.
I hope someone one day will ask: what is that system they are really saving ?
In the meantime, debt to GDP ratios in France and Germany will only be affected by a few percentage points, moving from respectively 63% to 70%.
Meanwhile Japan's debt is over 200%...
ReplyDeletehttp://cli.gs/rich.countries.debt
Maybe America has been looking at Japan as a "if-they-can-do-it-we-can-do-it" model. But Japan is nearly bankrupt.