Our Children’s Debt
April 12, 2008 > MAUI TODAY, Maui Curmudgeon No Comments |
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Big Wind Day
HAWAIIAN WORD OF THE DAY — Ai’e: Debt PIDGIN WORD OF THE DAY— Got Dinau: owe HAWAIIAN PROVERB OF THE DAY — “Stand firm. (Oni Pa’a)” HAOLE SAYING OF THE DAY — “”It is the mark of an educated mind to be able to entertain a thought without accepting it.” (Aristotle) WEB SURF SPOT OF THE WEEK — Maui Culinary Academy - Class Act WEB VIDEO OF THE WEEK — Iraq War Veterans Speak Out PODCAST OF THE WEEK — Slate.com podcasts BLOG OF THE WEEK — BoingBoing.netApril 12: 2008: Last week something happened in the financial markets which affects us all. The way the interest on the national debt is calculated was altered, primarily though not exclusively because of the interest changes springing from the housing debacle.It is difficult to wrap one’s mind around the concept of the debt because $9.46 trillion dollars in an inconceivable number. So let’s bring it closer to ground: right now, each minute, every minute of every day, the national debt increases by $1,160,000. This is money which the Federal Government has borrowed in your name to run itself. You owe it to the bond holder, although, you, ms. average American, have absolutely no understanding about how it works. Zero.Recently, debt (or surplus) was calculated for each president in our history. 77% of our current debt has been accumulated with three presidents - Reagan, Bush I and Bush II. (The next time someone tells you conservatives are fiscally sound, laugh in his face.) The largest surplus came under Bill Clinton. (The next time someone tells you liberals are “tax and spend” spit in his face.)
At any time, a debt bondholder may turn the bond in and receive his or her cash. Currently the largest bondholder outside the U.S. is the government of China, which holds more than a trillion dollars in on-demand bonds.
While one cannot know precisely the reaction of any financial market to an outside stimulus, it is strongly believed that if China presented that trillion dollar note for payment the financial structure of the U.S. would collapse. (We don’t have the trillion to pay them.) It does not do so because the U.S. is China’s largest market for goods. If we collapse, we won’t buy any more Chinese stuff, and the manufacturing base of that country would shudder. So, it’s in China’s best interest that it keep us going.But China is pissed, at the spendthrift ways of U.S. Citizens, by the incomptence of its government, and in February, it stopped buying U.S. Bonds because it no longer believes the U.S. to be a good risk investment. Further, in the next year, prices for goods made in China are going to increase substantially - some estimates predict 20% to 30% - and Americans are going to be hit very hard by that. (China has its own problems and it needs money.)
Where does that leave us? In a word, screwed. We’re in a recession now, and we’re not going to pull out quickly. We’re losing our homes, we don’t save any money anymore, we owe more trillions in private debt (our houses, fat SUVs, credit card debt) than we do in public debt. And now, with the increased interest the federal government has to offer to attract people to buy bonds, our national debt is going to accelerate its increase.
On Monday, we’ll tell you what leading financial advisors have to say about this mess.
It isn’t good.
HISTORICAL EVENTS ON THIS DAY — April 12th
- 1831: Construction begins on the first U.S. railroad tunnel (Staple Bend Tunnel between Hollidaysburg and Johnstown in Pennsylvania)
- 1833: Charles A. Gaylor of New York City is granted a U.S. patent for a fire-proof safe
- 1923: Scientists evaluating Einstein’s Theory of Relativity announce evidence that the theory is correct
- 1945: Harry Truman becomes President of the U.S. following the death of Franklin Delano Roosevelt
- 1954: Bill Haley records “Rock Around the Clock”
- 1968: A large die-off in flocks of sheep in Skull Valley Utah is attributed to a nerve gas sprayed earlier by the Army on the nearby Dugway Proving Grounds (the Army denies it, but finally admits to it - 30 years later!)
- 1988: The first U.S. patent is issued on an animal life form to Harvard scientists for a genetically engineered mouse
- 1999: U.S. District Judge Susan Webber Wright finds President Clinton in contempt of court for giving “intentionally false” testimony
- 2007: A suicide bomber breached security in Iraq’s parliament and blew himself up in the dining hall; a Sunni parliament member was killed.
BORN ON THIS DAY — April 12th
- 1777: Henry Clay, (the Great Compromiser), U.S. politician
- 1913: Lionel Hampton, orchestra leader and vibraphone improvisor
- 1923: Maria Callas, opera singer
- 1925: Tiny Tim, (Herbert Khaury), singer
- 1931: Billy Vaughn, Glasgow Ky, singer
- 1940: Herbie Hancock, pianist
- 1946: Ed O’Neill, actor
- 1947: David Letterman, comedian
- 1950: David Cassidy, singer/actor
- 1956: Andy Garcia, actor
- 1958: Fish, (Derek Dick), rock vocalist
- 1967: Mellow Man Ace, Spanish rapper
- 1971: Shannen Doherty, actress
- 1979: Claire Danes, actress
- 1979:Jennifer Morrison, actress
