A Deficit to Remember.....

Its quite the ironic situation to find ourselves discussing debt and the problems it can cause only 8 days after the release of the 2011 Fiscal Year Federal Budget. We learned today that an individual, company, or country that can be considered high risk has to pay more in interest to keep the money juices flowing. This is an intuitive, straight forward, and can easily be applied: as our national debt rises the interest rates we pay as a nation will rise. A conclusion easily reached. Also easily grasped is the idea that every new yearly deficit we incur will cost more and more, than it's proposed face value.

Now I would like you to contemplate this string of numbers

12388010613153

This is not a random assortment, nor is it something fabricated and purposed to scare. This is how much we owe as a nation. As an aggregate society we owe over 12 trillion dollars to lenders of various types. I got this number off one of the many debt clocks. I highly recommend everyone to take one look at that page, I was literally frightened. I watched with my own eyes as the national debt grew over $50,000 in less than a second. $12,388,010,613,153... quite impressive, and the first thought is how in the hell can all that money possibly be spent period, let-alone by one entity. But this number was not the only one i found intriguing on this site. Over 16 Trillion dollars in debt is held by individuals in the US, over 14 Trillion is held in mortgage debts by U.S. Citizens, and a mere 2 Trillion dollars in U.S. Consumer debt. There is one vital difference in these numbers though, and it took me a minute to notice it. They're DECLINING, if one result of the Great Recession (as some have now labeled it) is a new U.S. individual mindset, that reemphasizes the importance of being in the black then i will be truly happy. This financial crisis and consequent economic reeling is not so much a correction of markets, but of market psychology( My opinion of course) and these declining numbers show at least some evidence of this change on Main Street.

But Wall Street and the Government seem not to have gotten the message or at least not yet. There will be arguments into the next decade surrounding this I'm sure but the mind set that once drove Main Street into the continuing housing crisis has already found financial markets making the same mistakes. Ill-proportioned risk is still rampant in U.S. Financial markets and will lead them straight into another crisis. Which could have resounding effects on the economy once again. The fear of a "double dip" recession has a large factual basis here. Eventually i see regulation finally taking hold of this renegade reclusive society, but in the mean time problems shall remain.

In the Government however longterm financial solvency may have some effects that are not so often thought about as described by the Brookings Institute contributor in this article:

"Paralysis in the face of such dire warnings tells the public that their government is not working, undermines trust in our political institutions, and leads to more cynicism about the entire process, with ramifications that go far beyond the fiscal problem itself."

"the problem is so dire now that instead of doubling down on our efforts to do something we have moved the goal posts and redefined our deficit reduction goals."

" the goal has shifted from balancing the budget to keeping deficits below 3 percent of GDP in the president’s budget. That would mean accepting a deficit of over $400 billion (in today’s dollars) as a goal. However, even this much more modest goal now appears impossible to reach. "

I can tell you right now that my trust in our political institutions is close to nothing, i see reckless abandonment (again my personal opinion, and there are many many others who see otherwise) and until something can be done to reign in spending just slightly more than already projected I'm going to continue my skepticism. I will leave my readers here with a couple final quotes from another Brookings Institute article that scared me even more.... here are the projections for the next decade. Enjoy!

"

• The deficit never goes below $700 billion and then rises to $1 trillion by 2020.
• We will add $8.5 trillion to the national debt during this period, a pace that does not slow from the first five years (2011-2015) to the second (2016-2020)
• Debt held by the public rises from 63.6 percent of GDP to 77.2 percent, a figure that never stabilizes.
• Net interest payments on the debt rise from $188 billion in 2010 to a stunning $912 billion in 2020—almost at much as total projected spending on national security that year.
• Social Security increases from $703 billion in 2010 to $1,204 billion in 2020; Medicare more than doubles, from $451 billion to $957 billion; Medicaid nearly doubles, from $275 billion to $488 billion.
• These projections assume that total spending for discretionary domestic programs will decline from $553 billion next year to $529 billion a decade later—a trajectory without precedent in modern U.S. history."

I Don't know bout you but Im seeing Red....