TARP to break even!?

[Caliga]

@ Berkut No, it's a 'reboot' of the economy like Batman Begins was a reboot of the Batman films, because we didn't like Joel Schumacher's faggot-ass Batman movies. 

[Valmy]

But...but...we just had good news to 

[Grallon]

Well it does seem to be the norm -> http://www.visualeconomics.com/gdp-vs-national-debt-by-country/

Canada's debt is listed as representing 62.3% of its GDP...  Russia is at 6.8% though.



G.

[KRonn]

Because if they're actually true, we are screwed so badly that I find it hard to fathom.

That's not true.

A lot of knowledgeable people are pretty concerned at the direction of things with the budget and spending. Spending and deficits have gone up hugely between Bush and now Obama has accelerated it greatly. I'm concerned, trying not to be, but worried that we may be whistling past the graveyard in thinking that this will all be ok. I'll give it time, as we'll know soon enough what direction things are going, but this is damn worrying.

[alfred russel]

Well it does seem to be the norm -> http://www.visualeconomics.com/gdp-vs-national-debt-by-country/

Canada's debt is listed as representing 62.3% of its GDP...  Russia is at 6.8% though.



G.

And Russia is the country people worry about defaulting, while Canada and the US would have a hard time shouldering Japan's debt/GDP ratio.

I do think we have a problem, btw, but not a bigger one than most western countries.

[jimmy olsen]

There is nothing to worry about. The debt is no threat to the American economy.


http://www.nytimes.com/2009/08/28/opinion/28krugman.html?_r=1

Till Debt Does Its Part

Article Tools Sponsored By
By PAUL KRUGMAN
Published: August 27, 2009

So new budget projections show a cumulative deficit of $9 trillion over the next decade. According to many commentators, that's a terrifying number, requiring drastic action — in particular, of course, canceling efforts to boost the economy and calling off health care reform.
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Fred R. Conrad/The New York Times

Paul Krugman

The truth is more complicated and less frightening. Right now deficits are actually helping the economy. In fact, deficits here and in other major economies saved the world from a much deeper slump. The longer-term outlook is worrying, but it's not catastrophic.

The only real reason for concern is political. The United States can deal with its debts if politicians of both parties are, in the end, willing to show at least a bit of maturity. Need I say more?

Let's start with the effects of this year's deficit.

There are two main reasons for the surge in red ink. First, the recession has led both to a sharp drop in tax receipts and to increased spending on unemployment insurance and other safety-net programs. Second, there have been large outlays on financial rescues. These are counted as part of the deficit, although the government is acquiring assets in the process and will eventually get at least part of its money back.

What this tells us is that right now it's good to run a deficit. Consider what would have happened if the U.S. government and its counterparts around the world had tried to balance their budgets as they did in the early 1930s. It's a scary thought. If governments had raised taxes or slashed spending in the face of the slump, if they had refused to rescue distressed financial institutions, we could all too easily have seen a full replay of the Great Depression.

As I said, deficits saved the world.

In fact, we would be better off if governments were willing to run even larger deficits over the next year or two. The official White House forecast shows a nation stuck in purgatory for a prolonged period, with high unemployment persisting for years. If that's at all correct — and I fear that it will be — we should be doing more, not less, to support the economy.

But what about all that debt we're incurring? That's a bad thing, but it's important to have some perspective. Economists normally assess the sustainability of debt by looking at the ratio of debt to G.D.P. And while $9 trillion is a huge sum, we also have a huge economy, which means that things aren't as scary as you might think.

Here's one way to look at it: We're looking at a rise in the debt/G.D.P. ratio of about 40 percentage points. The real interest on that additional debt (you want to subtract off inflation) will probably be around 1 percent of G.D.P., or 5 percent of federal revenue. That doesn't sound like an overwhelming burden.

Now, this assumes that the U.S. government's credit will remain good so that it's able to borrow at relatively low interest rates. So far, that's still true. Despite the prospect of big deficits, the government is able to borrow money long term at an interest rate of less than 3.5 percent, which is low by historical standards. People making bets with real money don't seem to be worried about U.S. solvency.

The numbers tell you why. According to the White House projections, by 2019, net federal debt will be around 70 percent of G.D.P. That's not good, but it's within a range that has historically proved manageable for advanced countries, even those with relatively weak governments. In the early 1990s, Belgium — which is deeply divided along linguistic lines — had a net debt of 118 percent of G.D.P., while Italy — which is, well, Italy — had a net debt of 114 percent of G.D.P. Neither faced a financial crisis.

So is there anything to worry about? Yes, but the dangers are political, not economic.

As I've said, those 10-year projections aren't as bad as you may have heard. Over the really long term, however, the U.S. government will have big problems unless it makes some major changes. In particular, it has to rein in the growth of Medicare and Medicaid spending.

That shouldn't be hard in the context of overall health care reform. After all, America spends far more on health care than other advanced countries, without better results, so we should be able to make our system more cost-efficient.

But that won't happen, of course, if even the most modest attempts to improve the system are successfully demagogued — by conservatives! — as efforts to "pull the plug on grandma."

So don't fret about this year's deficit; we actually need to run up federal debt right now and need to keep doing it until the economy is on a solid path to recovery. And the extra debt should be manageable. If we face a potential problem, it's not because the economy can't handle the extra debt. Instead, it's the politics, stupid.

[DGuller]

A lot of knowledgeable people are pretty concerned at the direction of things with the budget and spending. Spending and deficits have gone up hugely between Bush and now Obama has accelerated it greatly. I'm concerned, trying not to be, but worried that we may be whistling past the graveyard in thinking that this will all be ok. I'll give it time, as we'll know soon enough what direction things are going, but this is damn worrying.

There are things to be concerned about, but they're not the things you quoted.  Having a debt of 75% of GDP is not an unfathomable situation.  Having a gigantic deficit with absolutely no exit plan is an unfathomably bad situation, but those projections make no claims about that.  You should also keep in mind that when it comes to economics, a large percentage of "knowledgeable people" are in fact morons whose only skill is to look knowledgeable.

[alfred russel]

Lou Dobbs has an economics degree from Harvard.

[DGuller]

Lou Dobbs has an economics degree from Harvard.

Exactly.

[Valmy]

There is nothing to worry about. The debt is no threat to the American economy.

Tim that joke is six years old.

[Berkut]

Now suddenly increasing the amount of debt the US is carrying by what, an order of magnitude, is no big deal? What an amusing change of tune.

[Neil]

Japan's debt is around 170% of GDP, so we should be able to keep it up a while longer.

Japan finances its debt differently than the US.  Japan sells bonds to Japanese people, not to foreigners.

[Valmy]

Now suddenly increasing the amount of debt the US is carrying by what, an order of magnitude, is no big deal? What an amusing change of tune.

It is basically the same thing Hans was saying a couple years ago.  Funny how that works.

[Berkut]

Now suddenly increasing the amount of debt the US is carrying by what, an order of magnitude, is no big deal? What an amusing change of tune.

It is basically the same thing Hans was saying a couple years ago.  Funny how that works.

Indeed. I am kind of amazed at people's ability to say stuff like this with a straight face.

[alfred russel]

Now suddenly increasing the amount of debt the US is carrying by what, an order of magnitude, is no big deal? What an amusing change of tune.

I reread the thread, and the only two people I think you could interpret as minimizing the debt burden are myself and DGuller. I can't speak for DGuller, but I think the explosion in debt is a big deal. I just wouldn't describe it as surreal when other first world countries already have a more difficult burden than we are projecting ten years from now.