Friday, October 11, 2013
Everyone the US owes money to in a graph
I found this really simple, informative graph that relates to what we have been talking about with respect to a possible US default on their debts. It was in an article posted by Fareed Zakaria, a journalist and author that worked for Newsweek and now works for CNN. (Graph after the jump.)
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This is amazing! Clearly the US Debt ceiling needs to be raised, or else the globe will face a serious financial collapse. This is because if the United States Congress refuses to raise the debt ceiling we will see:
ReplyDelete1) Significantly increased interest costs on the national debt
2) Long-term negative impacts for the U.S. economy
3) Real, tangible, and costly consequences for everyday Americans
4) Severe, unpredictable consequences for the U.S. and the world financial system
5) Macroeconomic consequences that increase with each day the debt ceiling restrains activity
6) An immense amount of unpredictable downside risk to the U.S. economy
In this respect, the power of the United States will severely diminish, and a majority of US political power and legitimacy could be jeopardized as countries from around the globe lose faith in US Treasury bonds. This is possibly because an increase risk of default has economic and political issues across the globe that would dramatically effect interdependence and foreign relations.
I found this graph so helpful! The US Debt Ceiling will have extremely adverse affects if it is not raised sooner rather than later, according to the graph. Clearly, the US' power and debt ceiling are closely integrated and the last thing our country needs is to be not taken seriously by other countries because our bonds are rapidly loosing value. I agree completely with Jake's list of negative affects if the debt ceiling is not raised.
ReplyDeleteThis is so great, thank you! It is such a great representation of the debt that makes it very easy to understand. I think Jake breaks it down really nicely as well. If the debt ceiling isn't raised, the repercussions will be global and will leave the US in a spot we don't want to be. Referring to what we discussed in class, a default would make the US unaccountable and less credible. This is a huge deal that the government needs to take seriously and address. International investors are having doubts and getting increasingly concerned that this hasn't been solved yet, China is even earning us to raise the ceiling before these international repercussions go into effect.
ReplyDeleteI like that this graph shows the debt owed to Social Security. It is kind of funny how we owe more to Social Security, than we owe to China. There needs to be a plan that allows the government to pay back the debt, unfortunately there has not been a technology boom in the US that allows for the economy to turn around, and thats something that the economy desparately needs.
ReplyDeleteThis is a fine graph sir, one that illustrates our allocation of debt in a precise and understandable manner. I am very concerned about the potential of a U.S. default and the repercussions this could have on the average American. By defaulting all of the investments in government bonds from this point forward would not be paid, costing billions in investment money immediately. In the short term very few people/countries would be inclined to invest in U.S. bonds fearing they will not be paid back. Federal employees would still be out of work and after talking to some friends of mine who work for the government, it seems clear that they would feel inclined to begin looking for new jobs should this last more than a month. Without an extension of the budget, "emergency" funds would be used up in federal pension plans. Veterans retirement and disability pay, social security, and disability pay would not be given next month making it difficult for a large number of people to pay their bills (because these are generally the members of our society who live paycheck to paycheck). So while the default would primarily effect the upper class who have money and invest in government bonds, millions more would likely be effected with the loss of government jobs and subsidies. All these things combined would propel our economy on a downward spiral, making this a particularly scary situation.
ReplyDeleteLoved this graphic, I think it gives interesting perspective on the what is at stake in this political show-down we are seeing. Something I've discussed with other classes (Foreign Policy) is the international implications of a default on the debt. While this would absolutely cause enormous amounts of domestic problems, what would be the world's reaction to this default? If all the sudden China, Japan, and all the other countries with trillions of dollars in US debt find themselves holding nothing, what will their reaction be. Could it possibly lead to conflict as a way for them to reclaim that wealth or as revenge for wreaking havoc on the global markets?
ReplyDeleteThis graph is really surprising! Usually when anyone talks about the US debt, they talk about China. Because of this, I somehow thought that the US owed much more to China. Don't get me wrong though, it's still quite a lot owed to a single country. Also, the debt owed to Social Security is just ridiculous. I know see why having so many baby boomers begin to age has been problematic for the US.
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