Another War Is Required to Burn $13 Trillion of U.S. National Debt
Politics / US Debt Jun 04, 2010 - 07:57 AM GMTBy: Pravda
The national debt of the United States reached the record level of $13 trillion, which means that every US citizen owes the world $42,000. It seems that the US administration does not seem to care much about the fact. Barack Obama believes that it is the fault of the previous government. Obama stated during his speech at Pittsburg that his administration was not guilty of the enormous national debt. He said that he took office during the time of the crisis, when the economic recession in the country resulted in the creation of a huge hole of $3 trillion in the budget of the country.
Obama did not refer to George Bush personally, but said that the increase of the state debt was a consequence of the politics run by the administration of his predecessor. The amount of the national debt has increased by $4.9 trillion during eight years of Bush’s presidency.
US Treasury slips into the red announcing $13 trillion debt
However, in February 2010 Obama signed a document to increase the limit of the US national debt to $14.3 trillion (it was previously limited to $12.4 trillion).
Thirteen trillion dollars is obviously an enormous number. It can also be a critical number taking into consideration last year’s reports about the possible default of the United States. However, today investors and analysts stick to different opinions.
Alexander Razuvayev of Gallion Capital Investment Group (Moscow) believes that there are no real problems as far as the US national debt is concerned.
“As it was expected, the Americans have coped with the economic crisis successfully and much better than the Europeans. A possibility for any borrower to meet their obligations depends on the trust to their debts, on the refinancing opportunity. The USA does not have any problems with that and I believe that it won’t have such problems in the future. Many experts were saying during the crisis that the dollar would soon collapse. We do not hear anything like that today,” the expert said.
Anna Bodrova, an analyst with LiteForex also thinks that one should not be worried about the States and the future of the world economy.
“As experience shows, printing dollars is considered an easy matter in the United States. The volumes of “green assets” grow at an exponential rate. In light of this, any other country, but not the USA, would be on the brink of default,” she said.
Anna Bodrova also said that the US economy uses another reliable method to cope with such problems. The United States takes either physical or financial participation in military actions somewhere across the ocean.
It is not ruled out that the US will soon increase the defense spending to write off a big part of its debt,” the expert suggested.
One year ago, experts shared similar thoughts about the military solution for financial problems of the United States. They said that a war was highly profitable for the USA against the background of the nation’s enormous debt. A war burns excessive liquidity and obligations.
Indeed, the USA has been using military actions for its economic revival since the Great Depression of the 1930s. A war boosts the industrial development, gives more jobs to people, etc.
Experts believe that the war in Iraq was launched to postpone the American crisis, which started brewing in the USA at the end of 2000.
It is worthy of note that the GDP of the United States has grown by three percent during the first quarter of 2010. The world’s largest economy had been in a recession until the third quarter of 2009, but managed to demonstrate the growth of the GDP during the recent two quarters.
The deficit of the US federal budget in April 2010 made up $82.69 billion vs. $20.9 billion in April 2009. Ben Bernanke said in the beginning of April that the deficit of the budget threatened the economic recovery. It would be even helpful to simply discuss a plan about the reduction of the deficit, the official added.
The US debt will most likely grow, and Mr. Obama will happily push its limits again in a year.
Ekaterina Yevstigneyeva
Bigness
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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