Folks! We Have $16.0 Trillion in Debt
When you scroll through the pages of Investment Contrarians, you cannot help but notice the running U.S. national debt counter that sits at over $16.2 trillion and rapidly moves higher. With every passing second, America is growing poorer and will continue to unless major changes are made, but it will be difficult. At the core of the problem is the direction of the upcoming “fiscal cliff” and its impact on the economy and national debt.
Automatic and massive budget cuts are forthcoming in January, unless an extension is made. At first, this may sound like the correct strategy but, as many of you know, cutting government spending will impact the country’s already fragile economic recovery. And what concerns me more is where the cuts will be made.
The problem is that a significant cut in fiscal spending could make the economy worse, according to the Congressional Budget Office (CBO). The CBO predicts the U.S. economy could contract by 0.5% in 2013 if the spending is curtailed. (Source: www.CBO.gov.)
While there is no indication of what areas will be affected, my feeling is that the cuts will likely be from Medicare/Medicaid, Social Security, defense/wars, and federal pensions.
Whether President Obama extends his term in office or Mitt Romney takes over, the next government has major decisions to make, including what to do with the pending budget cuts.
The media continues to focus on the debt distress in Spain and the tough road ahead for Greece, but there is seldom any mention regarding the massive and runaway U.S. debt.
Spain has a national debt of around 758 billion euros, about US$988 billion, or US$21,485 per citizen. (Source: www.NationalDebtClocks.com.) While the situations in Spain, Italy, Greece, Portugal, and Ireland look bad, everyone seems to be ignoring the $16.2 trillion of national debt in the U.S. That’s $51,432 per U.S. citizen, more than double the Spaniards’ debt per capita. The mounting national debt isn’t going away anytime soon; worst of all, it’s growing at an alarming rate every minute. The country’s low bond yields are the only plus. If the U.S. had to pay out the high yields that Spain does, the U.S. would go broke and face a credit crisis.
It will take decades to pay off the national debt or even get it to more manageable levels.
The reality is that something drastic needs to be done regarding the national debt, or the country’s financial strength will go down the toilet!
Never mind Europe’s debt issues. Just look in our own backyard; there’s plenty of work to be done.
You cannot go on printing money and hope the national debt problem goes away. Action must be taken. The days of easy-flowing money are over.
The market has been focusing largely on the debt crisis developments in the eurozone and, in the process, has ignored this country’s own debt and deficit issues.