FDIC head states next national debt crisis will be USA

[Melensdad]

Printed by the Washington Post and reported by CNBC, it seems that the USA may be the next nation to face a dramatic economic upheaval and catastrophic debt crisis.

I'm still waiting for people to wake up. The TEA party groups fired the first warning shot at Washington but polls of TEA party members seem to indicate they don't have much of an appetite for spending cuts. It will be interesting to see if the American politicians can react before a collapse.

Full CNBC story at link => http://www.cnbc.com/id/40378597

The US needs to take urgent action to cut its debt in order to prevent the next financial crisis. . .

The federal debt has doubled over the past seven years, to almost $14 trillion, and the growth is a result of both the financial crisis and the government's "unwillingness over many years to make the hard choices necessary to rein in our long-term structural deficit," Bair wrote.

Retiring baby boomers will impact government spending heavily and this year, combined spending on Social Security, Medicare and Medicaid are expected to make up 45 percent of primary federal spending. . .

"Defense spending is similarly unsustainable, and our tax code is riddled with special-interest provisions . . . "Overly generous tax subsidies for housing and health care have contributed to rising costs . . .

"Eventually, this relentless federal borrowing will directly threaten our financial stability . . .

Washington Post Editorial link => http://www.washingtonpost.com/wp-dy.../11/25/AR2010112502215.html?hpid=opinionsbox1

. . . Unless something is done, federal debt held by the public could rise from a level equal to 62 percent of gross domestic product this year to 185 percent in 2035. Eventually, this relentless federal borrowing will directly threaten our financial stability by undermining the confidence that investors have in U.S. government obligations. Financial markets are already sending disquieting signals. The cost for bond investors and others to purchase insurance against a default by the U.S. government rose markedly during the financial crisis, from an annual premium of less than 2 basis points in January 2007 to 100 basis points in early 2009, before falling to the current level of 41 basis points.
. . .
Recent proposals by the co-chairs of the National Commission on Fiscal Responsibility and Reform and by the Bipartisan Policy Center represent credible first steps toward recognizing and addressing the nation's fiscal problem. Both propose to reduce and cap discretionary spending, enact comprehensive tax reform, reduce mandatory spending on health care and other programs, and ensure the long-term solvency of Social Security. . .​

 

[tsaw]

It's gonna happen and it won't be pretty. I still can't comprehend how people refuse to face the truth. If this was a meteor on a collision course with earth, rather than the financial collapse of the dollar, would more people get it?

 

[muleman]

Is this why they spent the last 3 years pissing money down the drain on bailouts and letting all the fat cats get their money out before it hits? Those companies run by crooks and feeding greedy investors should have been allowed to fail. Let the chips fall where they may. Now we are all going to be screwed while the companies they bailed out are still making bonuses and profits at our expense.