I’m just looking for any feedback and your thoughts on the overwhelming debt that we, as a nation, have gotten ourselves into and the potential for a nation-wide economic downturn. I’m talking about record levels of debt never before seen and no indication as to how it’s going to be overcome, can it really just keep getting pushed forward? Can our financial and government institutions just ignore it and remain afloat? Can we even handle our personal debts?
First, a recent funny (or not?) commercial you may have seen:
Second, a short SNL clip:
Third, an article below, which is an excerpt from a book review on amazon.com for “Empire of Debt: The Rise of an Epic Financial Crisis” by William Bonner, Addison Wiggin. The full review along with others can be found at the following address:
...Bonner and Wiggin also see a parallel between the British Empire at the beginning of the twentieth century and the American Empire at the beginning of the twenty-first. A hundred years ago, the British Empire had become moribund and was going increasingly into debt to the then economically vigorous United States, especially to fund its participation in the Great War. (Indeed, the authors suggest that Wilson sided with the British not because they were more democratic but because they owed us more, and Wilson wanted to make sure that debt could be repaid.) Now, the economy of the American Empire has stagnated as it becomes increasingly indebted to the new global economic engine, China. There are many reasons why China is growing while America stalls, but one important reason has to do with the fact that “Asian workers are younger and cheaper” (p. 233). As a frequent traveler to China over the last sixteen years, I have witnessed firsthand China’s unfolding economic miracle. Its people are young, well-educated and ambitious; they are determined to make themselves wealthy and their country the world’s next superpower.
However, the American economy is not simply being bogged down by an aging population; it is also being destroyed by a collective delusion that debt does not matter. As Bonner and Wiggin point out, “America’s empire of debt rests on many huge deceptions,” such as that “the rest of the world will take American IOUs forever” and that “domestic savings and capital investment are no longer necessary” to maintain the economy (p. 290). Instead of saving, the typical American family takes out home equity loans, thinking that the rising values of their houses means that they are getting richer. Thus, Americans use creative financing and “the savings of poor people in foreign countries” (p. 285) to maintain a standard of living they cannot afford. Nevertheless, this debt will eventually have to be repaid. “For what is a national debt,” the authors observe, “but an intergenerational obligation, a burden placed on infants by their parents and grandparents” (p. 200). The revelers may claim that tomorrow will never come, but those who have remained sober (and solvent) can see that there are major problems ahead for the United States.
It may be too late to turn the United States from economic decline; its people seem to lack the willpower and the foresight. However, that does not mean that individual Americans are doomed to financial despondency, as long as they are willing to face certain facts. Bonner and Wiggin emphasize that you always have to work to make money, either by selling your labor or by putting in many hours learning about good companies to invest in wisely. Furthermore, you do not get rich by playing the stock market; instead, the authors argue, “you get rich by buying companies at good prices, holding them for a long time, and not spending your money” (p. 309). This sounds exactly like the kind of advice that my grandparents would have given.
Lastly, a yahoo article on American debt:
Chicken Smith View:
Now I, like everyone else, don’t know for sure what’s coming, but if you have any theories, pro or con, please share them with me, as I’d hate to see our economy/dollar go down on account that we (as a nation) are all just living off credit and our house of cards doesn’t seem like it can get stacked any higher.
Some semi-related links (don’t discount these as loony sites, as most reference their sources):