Debt silver lining

According to the NY Times, our national credit rating is close to dropping down a notch. If we become less credit-worthy as a nation, further borrowing will be increasingly expensive. Just like if you personally have a bad credit rating from borrowing too much or missing payments, you’ll have to suffer higher interest on future purchases.

But the situation isn’t all bad:

In the United States, the Obama administration estimates that the deficit will rise to 10.6 percent of gross domestic product in the current fiscal year, the highest since 1946, and federal debt will reach 64 percent of G.D.P. Government expenditures are expected to rise to a postwar high of 25.4 percent of G.D.P. For now, the U.S. debt remains affordable, Moody’s said, as the ratio of interest payments to revenue fell to 8.7 percent in the current year, after peaking at 10.0 percent two years ago.

We aren’t in crisis-mode yet, but we need to power out of this recession quickly. We also need to make sure we don’t quickly lapse into another banking led catastrophe. We clearly can’t afford to have so much of the country out of work for so long.

6 Comments

  1. Greece is having a similar problem….they hid their debt and then it was to late when some of it came due…..the US is looking at a similar scenario….like I said on Info Ink….hard choices need to be made….but who has the guts?

  2. Clint

    I think the first hard choice should deal with the $700 bln. militarized elephant in the room.

  3. GOD Yes! Ending two wars would go a long way at helping the budgetary crisis….but then as I have said before we chance unemployment going thru the roof….once the reservists and guardsmen come back and out of the active military…..what would happen to the figures when they look for jobs? And the promise of their jobs being held for them until their deployment is over…..companies can not afford that in this economy….so ending wars is a two bladed problem…

  4. Clint

    “once the reservists and guardsmen come back and out of the active military…..what would happen to the figures when they look for jobs?”

    It would certainly rise, but I think that, if the military money was redirected toward direct employment programs (e.g. high speed rail, green energy conversion, etc.) in addition to job training services, they could be absorbed into the workforce.

  5. I think you are right but we already have 15-17% “real” unemployment and then you add the million or so back into the picture…..the problem is in Washington they do everything in 5 year increments….I do not think that a jobs creation bill will put all back to work as quickly as we would hope….if not then we are looking at a continuation of high high unemployment…..I think the war in Afghanistan will continue ad nauseum just to protect any recovery that Obama would get….it would be politically expedient

  6. Chris

    Lobotero,
    Are you saying we’re on a five year plan? Commie!

    (Sorry, please feel free to ignore me and go back to your serious discussion)