Saturday, July 30, 2011

Is the US really flat broke?

With the political stalement in the U.S., it is hard to believe that the US of A is in such debt. How did the most financially successful country in the history of the mankind reach such a point where the state doesnt have enough money to run and needs foreign borrowing to survive?
These are very strange times indeed. For Greece,may be. But then the U.S,?
The United States was a country founded on the ideals of self-reliance, individualism, the free market and it's embarasing and humuliating that the US finds itself in this position in the first place. The founding fathers would have surely chided the current generation of Americans.
Many argue that the very idea of capitalism led the US, and subsquently the rest of the world, in this state of affairs.
The US is now heavily indebted to China(most of all), to Japan,the UK, Germany and city-nation of Singapore!
The economic decline of the US is very astonishing especially given the speed with which it is being manifested. Even ten years ago,no one really saw this coming. We all knew that Americans love to live beyond their means and that they love the credit card but flat broke? That would have been pure fiction.
And the trouble for the world is that the US's financial woes dont end in Washington DC but extend to the rest of the world. The U.S. is still such a central player in the global economy.
The global financial crisis which started in 2008/2009 was actually sparked off by events on Wall street. Remember Lehman Brothers,Freddie Mae, AIG and the 'too big too fail' talk?
Industrial production is declining in the US as is export perfomance and it is hard to see that the US will regain its economic predominance pre-global financial crisis.
Its a difficult situation that President Obama finds himself-politically. He cant borrow to run government and the republicans wont let him increase taxes to finance the budget deficit. How in the hell is one supposed to run a government in these circunstances?
President Obama shouldnt be blamed for economic times that the US finds itself. In all fairness the root causes of the American malaise go back many years.

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