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Monday, February 1, 2010

US Debt

Even though the markets may pull back, or advance wildly, there is one troubling aspect to the fiscal picture, US Government Debt. There is something about paying 700 billion in interest annually to pay for the existing debt owed at the lowest interest rates in a generation, that just screams train wreck.

It's like the government has followed it's citizens in over-spending while it's credit cards aren't maxed. Does anyone thing that it will end better for the government than the millions of citizens being evicted from homes they can't afford or credit cards they can't pay?

I ran across an interesting article at Forbes titled "The Global Debt Bomb", which is worth a read. In the article there are a few graphs, which I am a sucker for.

I am lifting one image from that article, to hopefully intrigue you to clicking through to read more. Of the projected total WORLD debt issuance by ALL governments, the USA is issuing 45% of all debt. That is stunning. What happens if the US issues 55%? 75%? The point is there has to be a saturation point and it may not be that far off.

Once saturation hits, and it will, that will be the time to jump into natural resources. The goal will be to maintain savings in something that over the long haul retains value relative to costs. And when that wall gets hit, interest rates will rise and housing will fall, as the cost to pay for debt rises.

I'm fun at parties.

From WebSufinMurfs FinancialBlog2

Thanks to reader Ryan Swan for the link.

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