Apart from the posturing and gaining political points, debt ceiling debate is just another grand puppet show, designed to fool the American public. They do not realize, nor do they care that their country is more bankrupt than the PIIGS combined.
The world is going nuts with Greece, a small country with insignificant amount of bailout requirement of some $ 100 or $200 billion. US Govt. borrows that much or more every day. And the whole world is willing to give them the money sometimes at no cost and less than 3% for 10years. At least till now. Isn’t that a sucker’s game! Sweet.
Let us look through some facts.
· As of June 29, 2011, the Total Public Debt Outstanding of the United States of America was $14.46 trillion and was approximately 98.6% of calendar year 2010's annual gross domestic product (GDP) of $14.66 trillion. (Wikipedia).
· So how much is a trillion? A trillion seconds is 31,688 years. USA and the Western civilization have not existed for a trillion seconds. So a million dollar is just 5 seconds for US Govt.
· When a country has borrowed almost 100% of its GDP and is hardly growing, how long it will take that country to repay that borrowing? You must be joking, right? Who will repay that debt? Now they are talking of increasing the debt ceiling and if we add the unfunded liability of USofA, the total debt is near 100 Trillion. You still think they will repay a dime, ever?
· Bill Buckler of “The Privateer” presents some amazing facts as follows:( 1st Presented by Zero Hedge):
1. Not one penny of US debt has been repaid for 51 years:
2. 97% of today's funded debt has been accumulated since August 1971.
- Obama projects 2.5% Fed Funds rate in budget calculations through 2020. Average Fed Funds rate since 1980: 5.7%; Since 2008: 0.00%, If average 5.7% rate was used, projected US deficit would increase by another $4.9 trillion by 2020
- Obama projects 4.2% growth rate over next 3 years. If a normal growth rate of 2.5% is used, deficits would increase by another $4 trillion by 2020
5. The US government borrows 40-50 cents for every dollar it spends.
A balanced budget would mean cutting government spending in half.
· So what makes you think that US will repay its debts? Why do you think US spends so much money on defense. In fact US defense budget is almost equal to the defense budget of all other countries combined.
How the Chinese will ever get back their money? Mostly in devalued currency or in bombs.
I have a feeling we shall see a major war soon.. This is kind of end game for cornered politicians.
· So let us now spend what we do not have and when the time comes calling for repayment, we shall create mother of all crisis so solve it. The Wall St. Economorons will be there to guide us.