Daily Archives: January 25, 2010

Reflections on the Debt Bomb by Gregory Hilton

Writing in the Examiner newspaper, Mark Tapscott says: “Treasury Secretary Geithner is reassuring Americans the huge deficit and spiralling national debt ‘will never’ damage the country’s sterling credit rating because investors will continue to view the U.S. as a good investment. And in other news, Roman Emperor Romulus Augustus reassured citizens they should not worry about those hordes of barbarians gathering outside the city.
“‘Rome is too big to fail, so they will never invade Rome,’ the Emperor said. ‘Besides, if they were to sack Rome, where would they go for our fine entertainments, including the orgies, drama productions with real executions, and, let’ s not forget, our incomparable gladitorial contests in the Coliseum.’ German barbarian leader Odoacer was asked for comment, but would only say through a spokesman that he would soon confer in person with the Emperor about his future status.”
We actually do not have to go back to ancient Rome to see the consequences of our actions. Just look at today’s Greece where the German’s are forcing the Athens government to its knees to completely reform their pension system and raise their retirement age from 61 to 63. That one action stabilized the euro and averted a currency disaster. The debt bomb we are riding is for real.
UPDATE, June 5, 2010
As of Friday, our total national debt – the sum of all outstanding IOUs issued by the U.S. Treasury – stood at a bit more than $13 trillion, or 88% of our projected gross domestic product for 2010. It was at 70% in 2008. The financial markets have been kind to the U.S. because they believe we will eventually get our spending under control.