Friday, June 24, 2011

Digging Our Way Out of a Hole


Here are some fun thoughts going into the weekend...

Greece could still tip over...
First, the bailouts are not actually making it any more likely that Greece will be able to pay its debts back. Perhaps just the opposite. The bailouts are trying to solve Greece's debt problem with debt. 

And then what? However you slice it and dice it, Greece's debt is unsustainable, and the bailout process being employed to fix the problem is equally unsustainable. (Time)
The US is in worse shape than Greece...

All that separates us from Greece is the fact that we can still print our own money.
The national debt will exceed the size of the entire U.S. economy by 2021 — and balloon to nearly 200 percent of GDP within 25 years — without dramatic cuts to federal health and retirement programs or steep tax increases, congressional budget analysts said Wednesday.

“The health care programs are the main drivers of that growth,” the CBO said, responsible for 80 percent of the projected rise in spending on those programs over the next 25 years. (WaPo)
We would have to cut $700 billion per year just to keep our debt from getting worse!
According to the CBO report, policymakers would have to come up with immediate and permanent savings of more than $700 billion a year — more than $7 trillion over the next decade — just to keep the debt at its current level of roughly 69 percent of GDP through 2035. Reducing the debt as a share of the economy would require even more dramatic changes. (WaPo)
Even Democrats are ringing the alarm bells, so you know this is serious, unlike VP Biden's paltry $2 trillion in phony cuts over 12 years or whatever the latest unserious White House proposal is.  We are out of easy answers

Have a great weekend!