Why is the US in such bad debt and will they recover from it?
I want real answers not ones like the oil the stole from iraq was worth nothing. I heard it was $15 trillion. Is this worth than the great depression in the 30s and will they recover
National debt didn’t cause the Great Depression. Actually, unregulated financial institutions caused the Great Depression. In fact, this is all part of the US’s capitalistic model that has been going on now for over 150 years. There are booms and busts, this happens every 5-10 years. Look at the stock market and you can see it–see how there are all these little valleys in the graph (those are the busts). The Great Depression just so happened to be a particularly bad bust, just as the 2008 crash happened to be a particularly bad bust.
Considering that the Federal Reserve loaned out over $16 trillion during the latest recession (and that’s NOT part of our debt!), I don’t think the debt is as important as most people think. First off, as it currently sits, because the dollar is the fiat currency, US debt does NOT matter. We can print as much money as we like…it will cause inflation, but it won’t “bankrupt” us. This only becomes a problem once the world decides to leave the dollar behind in favor of some other currency–although this is not likely to happen anytime in the near future.
So, it terms of recovering, the problem is that the US doesn’t really need to “recover” because we haven’t gone anywhere yet. Yes, unemployment is high, so there are people in our country that aren’t doing so great, but as a whole, the country is doing fine–much better than anybody else. Essentially, our debt has made it so the the US is “too big to fail”.
Now, I haven’t really answered your question, which is WHY are we in this debt? It’s complicated and I don’t really have an answer (although the obvious answer would be 1) we spend too much and 2) don’t tax enough for the expenditures). I do have some theories as to why this is, but they are highly speculative and so I’m not going to go into any detail. In a nutshell, we, as a nation, have embraced inflation (i.e. Debt) over solving the actual problem which is income inequality (i.e. Wages for workers are too low–so they don’t pay enough in taxes and wealth is horded by the extreme top income earners who then, again, don’t pay taxes on that horded wealth).
Actually, that’s a false claim that the US is “owned” by outside sources. By far the largest holder of the US’s debt is actually THE US! Through the federal reserve and IOUs to social security and medicaire.
Sole trader gone bust !?
As a sole trader I had to close my company, it just failed, this left me with a £6k debt with my bank, they are now chasing me as i was a sole trader and as they say “responsible for the debt“, can I do anything ?, also please take on board that they allowed cheques to be cleared that took me £3k over my overdraft without my consent, also i closed the company at the advice of my accountant “who didnt know of the bank debt“, any ideas what i can do ?
Make an appointment to see the manager immediately. While it is true that they might have paid cheques increasing your overdraft, it must have been you who wrote them. It might be possible to come to an arrangement with the bank for a ‘settlement’. Try not to go bankrupt if you can help it because although that would clear this particular debt it has HUGE effects as to what you can and can’t do in the future. The bank will be helpful if they can and it could be possible to see a business planner to see if there is anyway you could trade out of this problem – a friend of mine had a small shop and it was going under and with help and planning (and even a little more borrowing) she was able to improve the business and finally clear all her debts and now has a healthy business. It isn’t unusual for small businesses to have problems and the bank will stop hounding you if you go to them and make a plan. It is important that you are totally honest and don’t agree to impossible plans otherwise you could be in a far worse situation. By being honest they can really help you as they have specialists available for just this purpose. Look at it carefully yourself and see what you want as well. I also know someone who had a debt of much more than yours cut down to less than half as a settlement, which was then paid off over 5 years on a monthly amount. If you take this route then don’t miss payments – banks will help and support but don’t like being mucked around with. Good luck – but act NOW!
What is happening with the UK’s national debt?
We seem to be making no efforts to pay it off, however Cameron and Osbourne brag about how they have cut the deficit by a third… This is really annoying as national debt has actually increased under the coalition. Now you and me, we know they aren’t stupid. They had the best education money could buy and Cameron is the son of a stockbroker with a FIRST CLASS HONORS DEGREE FROM OXFORD he knows money very well. I can only see it as he is an enemy of the state deliberately undermining our economy (what little is left of it). What do you think about the national debt, the economy and the government agenda?
Quite right, the UK national debt is a tad under £1.2 trillion (£1.4 trillion depending on which newspaper you believe) and STILL rising. In actual fact, the UK went bust in 1976. Every man, woman and child now owes around £20k each if you divide 1.2 trillion by 60 million!!!! Not hard to work out when you only have basic O Level maths like I do.
It’s all very confusingnreally the way they like to give the news about the debt. The govt seldom mention this £1.2 trillion for some strange reason, and will only seem to talk in riddles, and so they talk about the debt in terms of borrowing against GDP as a percentage I think, or interest it pays on the debt against money it takes in taxes, and the figures they release show that THAT figure is now at the lowest since 2008, but it’s still not paying off the ‘actual’ real debt, only the interest on it. They say that the rate of interest paid on the debt is coming down… If you believe that of course…. Especially after the recent Moody down grade and loss of our tripple AAA credit score! If govt figures are really true, then at least they are bringing it down some, albeit at the same time as bailing out countries with even more money we don’t have like Ireland, Greece, Spain, Cyprus etc when we aren’t even in the Eurozone, but paying tons of money into the IMF instead, and that HAS Been bailing out the Eurozone. People that I have spoken to that claim they’re in the know seem very clear about the debt, and try to reassure me that it’s not ‘real money’, but only ‘electronic’ money that changes hands on a weekly basis…. But I think they live in cloud cuckoo land, and the debt is very real, and the chickens will come home to roost at some point. Hell in a hand cart is where we’re all heading!
Politicians are experts in making people think that things are actually better than they really were, when they aren’t. But I think you know that!
Do you see Man U go completey bust in the near future ?
Or can we recover from the debt in time ? I am dreading the day SAF leaves … He’ll surely take something with him .. ;-(
OQ: Will you miss the club ? The fans ? All meanies , don’t answer and break my heart !! cry78
Suggested Category :
Family & Relationship > Marriages & Divorce – WTH !!
Paul B : The first meanie .. gtfo !! cry67
Dylan : come here sweetie !!! *hugs* We are awesome !!;-) Utd ain’t going anywhere hatrezzzz !!!! *evil laugh*
Foxy : That’s a comprehensive answer .. *teary eyed* I don’t want a new MUFC .. This one rocks !! I think 1 bn pounds debt can be recovered in 7 years’ time hopefully .. ;-( OMG , I regret asking this question .. Now , I dunno what our future is like … But thanks for the scenario ya gave me a clue as to what is expected of the club in the future ..
Harm : grrrrrrrrrrrrrrrrrr , meanie , Please don’t say that !!! cry83
SAF ain’t retiring that soon !!! ;-(
It’s a stark possibility.
Although the debt belongs to the Glazers he did take out a £504m bond issue to help raise enough revenue to pay off his debts. It failed.
So now Glazer has the original debt PLUS the PIK notes which he’s failed to repay on time and now the banks have hit him with a 16.25% interest rate which business experts have labelled as ‘suicidal’.
Man Utd FC is currently worth £1.5bn as an asset (i.e. Players, staff, stadium, merchandising empire etc.) IF by 2017 (that’s when the PIK debt matures) the Glazer Family has not been able to raise enough money to repay their outstanding debt the banks will seize all assets belonging to Glazer and sell them off. Currenty MUFC is the only ‘asset’ that Glazer owns that makes any money (But not a profit. Sadly the outgoing expenses overshadow the incoming, which is why money from competitions such as the UCL is so important to their repayment plan, again labelled as suicidal by FT experts)
Man Utd, the club, the players, the stadium could be sold off to repay the £1.2bn debt expected amount when it matures in 2017. One of two things could happen;-
– Man Utd could be sold for a pittance to a like minded football investor who could continue the running of the club but depending on whether the stadium was sold would have to relocate the club to another area. This is more likely as the banks would probably sell the club on the cheap in order to raise the outstanding monies.
– Man Utd could be sold to a company wholly removed from football (i.e. WalMart) who would use Old Trafford for other means besides football. If this happens MUFC would officially cease to exist. The fans may carry it on but the ‘new’ MUFC would have no official connections to their former club.
Public sector net debt… please help!?
Ok, I was trying to find out the UK’s national debt and I’ve found two measurements. The first is ‘public sector net debt‘ which is around 63% of GDP, but then I found out there is also the ‘unadjusted measure of public sector net debt‘ which includes financial sector intervention and is reported to be 147.3% of GDP. Could someone please tell me:
a) Why is the former used as the general measure of national debt? (As far as I know)
b) What exactly is the intervention they are talking about provided by the financial sector?
c) If out national debt is (technically) over GDP, why we are not suffering from runaway inflation like Greece etc?
Thank you for your help I really appreciate it!
Though I totally don’t know the specific answers for the UK, I’ll take a guess based on the sorts of things that exist in the US. Perhaps the “unadjusted” measure includes such things as:
– government insurance on bank deposits
– government-guaranteed loans made by financial and non-financial institutions
– potential guarantees for such things as pensions and insurance funds.
– money loaned to bail out financial firms that needed assistance in recent years during the various financial crises we’ve had.
In all these cases, theoretically these things can become government liabilities (or represent government financial assets that might lose all value). I.e., if all the banks in the UK fail, then the UK government would have to spend an enormous amount of money making good on the deposit insurance for all the UK savers whose banks collapsed. BUT, this is a kind of separate, abstract category of debt, because lets face it, not all banks are going to fail under any likely scenario. (Though a few might).
Further, that sort of theoretical “debt” requires no cost to service it — no interest is being paid to bondholders. THAT’s what gets countries in trouble from having a high debt:GDP ratio … The burden of servicing debt busts the budget and the government runs out of cash, and can’t borrow more.
It’s kind of like counting your credit’s card’s unused credit limit as “debt” — because, after all, you COULD go on a shopping spree and max out your card if you wanted to.
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