a major reason for our current economic disaster is all the americans that spent money that they did not have, over extending themselves.

Now that the american government is doing just that, on a scale never before seen, we should be all set right?

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Originally posted by djjoshuaallen a major reason for our current economic disaster is all the americans that spent money that they did not have, over extending themselves. Now that the american government is doing just that, on a scale never before seen, we should be all set right?

you're oversimplifying and understating the problem. first of all this is money that needs to be spent to make sure the economy doesn't keep nosediving into deep depression due to the reciprocal disasters of frozen credit, lay offs, bankruptcies and foreclosures. our economy is driven by credit. i'm not talking about the consumption end, i'm talking about the production end. businesses rely on lending to pay for costs like inventory and payroll. without a lending, businesses will wither and die fueling the cycle of misery. before anything happens, the banks need to be able to lend again. how do you unfreeze the banks? you have to make them solvent by buying or backing their toxic assets. much of the spending is going to back these toxic assets so the wheels of industry can keep turning. the important thing is that we aggressively attack this economic stagnation. lessons should be learned from the premature fiscal tightening in japan during the 90's which led to their "lost decade". in times when the economy is approaching depression, the government is the only entity large enough and powerful enough to stimulate a quick rebound. obama's fear is that if we don't turn this around fast, we could lose a decade.

if you looked at his budget outlays, you'd see several other reasons why the number is so high. first, he's eliminated bush's enron-style creative accounting practices such as excluding the cost of war and natural disaster spending, incorporating tax increases and spending trims that he knew would never occur, masking policy impacts on the deficit by shortening the forecast horizon to 5 years from 10. so yea, the true cost of bush's policies are finally coming to light under obama's transparent budget. surprise! wars and hurricanes cost a lot of money! second, this budget recognizes the astronomic health care cost projections for the coming decades and plots an investment trajectory for working those costs down. after the huge fiscal jumpstart in 2009, obama's spending rolls back substantially from 12% gdp to 3%.

the difference between the debt accumulated over the last few decades and the debt being created today is that now we are spending to contain the hemorrhaging economy, and putting serious effort into building a strong infrastructure in energy, transportation, water supply, technology and education. things that help create a healthy and wealthy society. it's the first time the government has even sought to address such system-wide problems. it is just the first step in a fundamental retooling of the economy that seeks to make us more efficient, more sustainable, more independent. it also recognizes that the american people are a valuable resource to this country and invests in our future.

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Last edited by R!CH on Mar-03-2009 at 07:22

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Originally posted by R!CH the difference between the debt accumulated over the last few decades and the debt being created today is, well first and foremost the government doesn't ever default on loans, and second that we are now using capital to produce stronger infrastructure in energy, transportation, water supply, technology, education, things that really matter.

The government doesnt ever default on loans? CA owes me $1,011.80 I lent them in 2008, and has not given me any indication that they intend to pay it back. If its up to the Fed Gov to bail CA out, is it up to China to bail out the Fed Gov? Do you want our Federal Government to depend on China for its lavish spending habits as CA depends on the Federal Government?

Im not going to bother giving examples of empires that have collapsed in their own debt throughout human history, but if it happened to the great roman empire, I think the American Government can be consider vulnerable to say the least. Is there anything that you really think COULD bring down current american international dominance OTHER then our own wastful borrowing, spending, and accumulating debt?

Nice of you to recognize that we are now using capital for important things such as infrastructure, energy, and education. Just recognize that the capital used for it has not be generated yet, and we are depending for future generations to generate that capital for us. The democrats cried at all the spending that has taken place over the past 8 years under the Bush Administration, and used it to win an election. Yet in less then 1 month in office, they have already signed the check to spend more than an entire generation of administrations.

At what point will the nations and investors of the world become skeptical of the ability of the United States to pay off their debt. When will holders of american treasuries begin to reject our request for them to pay for our lavish & wasteful spending. Because thats when the international investors will lose faith in our dollars, mass inflation will set in, interest rates will soar, and our real economic nightmares will be upon us. Debt has ruined many nations over our short human history, I dont understand how we are incapable of learning from these past examples.

josh i reworded my last post to emphasize where most of the money is going and why. the united states treasury has a perfect credit rating. it has never once in the history of this nation defaulted on a debt. so yes that is one major difference between the federal government and the american homeowner.

china does hold a lot of our debt in treasury securities, but not the most. japan is actually the one that holds most of our foreign debt. either way there's no way china or japan would dump all our debt at once in some hair brained scheme to harm us. their economic well being is closely tied to ours, as is the rest of the world's. i don't know if you are following the economic news around the globe, but no world power is benefiting from our misery. china's already expressed their resentment towards our devaluing of the dollar, but stated that there's nothing they can do about it. remember who their number one customer for pretty much everything the chinese economy is built on is? this is the effect of globalization. you can no longer talk about toppling an empire without knowing for a fact that you will topple the entire world economy. ask yourself which leader of a major nation stands to gain anything from that? not even venezuela is coming out of this ahead.

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Originally posted by R!CH not even venezuela is coming out of this ahead.

Well thats what happens when you forcast your entire economy around Oil trading at $100+ per barrel.

As for our debt, Im not sure we will be able to gather even enough for this first stimulus package, the mortgage package, plus a 4 trillion dollar budget. Not to mention the next stimulus package around the corner that will come during Obama's first term. The Fed will resort to printing money out of nowhere. Unless our financial system is reformed quickly, responsible spending by the american people, and consumer confidence is restored making for a fast recovery we are going to see mass inflation, and that could cause the holders of our foriegn debt to begin to send our dollars back. A domino effect could prove disasterous. Borrowing this much money seems a bit risky at a time of such economic uncertainty.

http://www.cnn.com/2009/POLITICS/03....act/index.html

WASHINGTON (CNN) -- President Obama on Tuesday overturned a last-minute Bush administration regulation that many environmentalists claim weakened the Endangered Species Act.
President Obama, with Interior Secretary Ken Salazar, marked the agency's 160th birthday Tuesday.

President Obama, with Interior Secretary Ken Salazar, marked the agency's 160th birthday Tuesday.

The regulation, issued a few weeks before George W. Bush left office, made it easier for federal agencies to skip consultations with government scientists before launching projects that could affect endangered wildlife.

By overturning the regulation, Obama said during an enthusiastic reception at the Interior Department, he had restored "the scientific process to its rightful place at the heart of the Endangered Species Act, a process undermined by past administrations."

Under the Bush administration rule, there was no need for a federal agency to consult with the U.S. Fish and Wildlife Service or the National Marine Fisheries Services if that agency determined that no harm would come to an endangered species as a result of its project.

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