If we did a simple division by 20million so that U.S. financial numbers resembled household numbers, then we'd get the following (on an annual basis for the most current figures): Income: $100,000 Spending: $120,000 (of which $18,000 would be interest payments) Debt: $420,000 (Credit Limit of $450,000) When you look at it this way, it doesn't look that bad. U.S. financials look a lot like the typical financials of many households (especially if you include mortage debt and interest payments as you must). The U.S. federal govt is in no worse shape than most of us are financially, I think.
I don't know if that's bad for the u.s., but spending more than you make and having over 4x debt to income is not good for a household.
I don't spend the equivalent of my pre- or post- tax income in a given year, and certainly not 20% more. If that's what most households are like - you suckas need to get on the ball, or else bone up on your bankruptcy law, cause that's where your headed with that outlook. With a credit limit of 450k, you'll be bankrupt within a year and a half.
Seriously! I was about to say that my house is in much better shape that the "national average" thank you very much! BTW r35352, got a link to those numbers?
i can not imagine the typical american household has 4x debt to income. by the way...where are assets reflected? make it a balance sheet. if you have 4x debt to income but own 20x income in assets, well that ain't so bad.
So lets compare it to a business. So lets look at the balance sheet and income statement 420,000 in accounts payable 102,000 in revenue per year 24,000 net loss and only profitable once in the last 25 years. I wouldn't invest in this company.
Let's see, we own National Parks, which would be worth something, especially to developers...we own lots and lots of guns, tanks, planes, etc., but we can only sell those off to certain folks and in the long run, it may end up doing more harm than good... we own the airwaves, but we've already sold most of those off for less than they are worth... we own a bunch of polluted sites that would cost more to clean up than they are worth... we own Alaska and could ask the Russians if they wanted to buy it back... we own a bunch of office buildings and post offices across the country and they might be worth something... we own our debt and routinely sell it off... we've got lots of stuff in the Smithsonian, National Archives, and other places that would fetch a pretty penny from art and antiquities collectors...everyday it seems we own more Veteran's health bills and insolvent pension funds, but they are tough to sell... oh, and we used to own a budget surplus.
Baby boomers are going to retire. Entitlements to them could reach mid 40% of the GDP at its height if the current plan holds...
Well I just did a quick Google search for these numbers, but here are the exact numbers. According to The Congressional Budget Office, in 2006, the US govt will collect $2.212T in revenue but spend $2.507T in expenditures. According to this "Federal Budget" website our debt is $8.4T and interest payments are $0.35T. Recently the Congress raised the debt limit, which is the maximum allowed to be borrowed by law to $9T. This is the national "credit limit". Dividing all of these numbers by 20,000,000 so they resemble everyday household numbers that we can much better relate to, then you get: Income: $110,000 Expenses: $125,000 (of which interest is $17500) Debt: $420,000 (credit limit of $450,000) I bet the most households have this at least this much. Remember to be fair you have to count the mortgage debt. A family making $100,000 likely borrowed several $100K in debt. I know most people don't count it but debt is still debt and if we're going to compare the total debt of the U.S. govt, then we should compare to the total household debt, mortgage and all. But remember one additional advantage. If your household defaults, the creditors can take the house, cars, etc from you. If the US govt defaults, what is China, Japan, Saudi Arabia (these countries own a lot of the US debt) gonna do about it? Nothing! Its not like they can come over and repo parts of the U.S.! Additionally while an ordinary household has to ask a bank to up its credit limit, Congress can just up the U.S. credit limit by law. If we exceed the current limit, Congress can just up it again. In fact, they should just get rid of the limit and declare the U.S. has an unlimited credit limit. So with the above in mind, the U.S. is in better shape than your typical household.
First off, I still don't see how your "average US household" numbers in any way refelct the finances of the average household ...umm, they can refuse to lend us any more money and try to redeem the bonds that they own. If this happened all at once, to say it would be chaotic would be an understatement.
That would not be in the best interest of any one of those countries. China and Japan are extremely dependent upon our purchases of their exports, as is Saudi with their oil. Crippling us would cripple them right back. Not good for anybody.
At what point are interest rates going to start rising? Wouldn't that hurt the US economy? If the US defaults on its debt, there will be a lot of angry American creditors as well. I don't have the figures but isn't most the US debt owned by American citizens? I thought the Republicans were supposed to make government smaller.
If it gets to the point where the US is simply defaulting on its debt and not paying bondholders, I don't see a positive outcome for anybody.
I see Argentina. I'm sure most of the citizens of that country, back when it was the most properous in Latin America, and compared favorably to many European nations, didn't think their currency and economy could collapse, along with their accumulated wealth, leaving them decades later still struggling to see their former standard of living return.
I thought about owning a house and that's still a lot of debt. in houston, a household income of $90K will get you a home at $200K, cars $40K, and credit cards of about $10K. that's $250K but that's assuming you haven't begun to pay any of your debt off.
Neah, it will almost never get to that point, if US defaults on its debt, the bonds will drop like a rock (especially when everyone is trying to sell it). China and Japan will lend more money to us to cover the debt repayment. They are holding too much US treasuries to let it happen. They can slowing reduce their holdings, but you still need to put that money somewhere, so far there aren't a lot of better alternatives.
How did we get the 20,000,000 household figure? I believe there are over 250 million people in the US... so unless an average household consists of 12 people these days, something's wrong... So all the hard numbers should be smaller, although it doesn't change the fact that some of the ratios really suck. The worst part, though, is that most people in this type of debt aren't just accumulating more and more of it with no plan in place to ever pay it back.
