July 31, 2008


America's $53 trillion jumbo loan: The next president and Congress must not let the national debt surprise the country the way the subprime crisis did. (The Monitor Editorial Board, August 1, 2008)

It's true that the $482 billion deficit chasm estimated for fiscal year 2009 doesn't look so deep when taken as a percentage of the overall economy – 3.3 percent of gross domestic product compared to the 1983 nadir of about 6 percent.

But this is just one "mortgage" that the federal government (i.e., taxpayers) must meet. It owes on all the deficits it has accumulated over the years (the national debt), and it has jumbo liabilities to come in the form of Social Security, Medicare, and Medicaid.

Adding all those liabilities together, the government has dug itself into a $53 trillion fiscal hole – the equivalent of $175,000 per person living in the United States.

Meanwhile, we've built a $56 trillion mountain of household net worth. We could pay off all the debts and fund all the liabilities and have $3 trillion left over, it just wouldn't make a lick of economic sense to do so.

Posted by Orrin Judd at July 31, 2008 1:40 PM

$3 Trillion divided by ~300 million Americans comes out to about $30,000 each. Doesn't seem all that impressive...

Posted by: John at July 31, 2008 2:15 PM

$3 Trillion divided by ~300 million Americans comes out to about $10,000 each. Doesn't seem all that impressive...

Posted by: John at July 31, 2008 2:15 PM

Could you pay your college loans and home loan today and have 30k left over? I'll assume not.

Posted by: oj at July 31, 2008 3:49 PM

$10K is the correct number, and no, I couldn't.

Posted by: John at July 31, 2008 4:01 PM

10K for most of the rest of the world is rich.

Posted by: Sandy P at July 31, 2008 7:18 PM

and if I had to hock all my personal property....

Posted by: Sandy P at July 31, 2008 7:21 PM

The 56 trillion is a moving target. Wack 10 to 50 percent as house values come down, bubbles bursting there.

Printing money to bailout Wall street is hurting the dollar and leading to inflation. Take off another large hunk.

At the same time the economy is contracting, we'll soon have rising unemployment and people using their savings.

The household net worth number is fictitious, built on bubble math.

Posted by: Perry at July 31, 2008 11:00 PM

And isn't the 56 trillion personal property? How is this dispositive of the relative size of the government's indebtedness? Are you saying that we can all have garage sales and get that pesky U.S. debt paid off?

The U.S. Government is in-debt by the value of 4 years worth of GDP and is addressing this by ripping-off our lenders with a dollar devaluation. This is dishonorable. It is also a great way to move corporate profits overseas through bargain acquisitions.

It's the master Bush plan that will result in no federal debt and school vouchers for all before he leaves office in January, I am just not elite (effete?) enough to see it.

Posted by: Palmcroft at August 1, 2008 4:54 AM

This is a democracy. You and I are the government. All economics makes more sense if you just treat the question like it's occurring in your own house. You have 56 dollars and owe 53. Are you in a financial crisis?

Posted by: oj at August 1, 2008 8:33 AM

How many people do we have housing for? How many people will America have in 2050?

Economics is just supply and demand. There's no such thing as a bubble in a commodity where you're undersupplied.

Posted by: oj at August 1, 2008 8:41 AM


Macro housing from AEI:

Some Facts about the Housing Market

"There are 129 million housing units in the United States, comprising owner-occupied, rented, and vacant units. Of these, 18.5 million are empty. This vacancy rate is 2.5 percentage points higher than it has been at any point in the half century the data have been tracked, translating into at least 3 million too many empty housing units in the country. This number, moreover, is rising. "

http://www.aei.org/publications filter.all,pubID.28109/pub_detail.asp

Posted by: Perry at August 1, 2008 2:47 PM

So 129 million units for 500 million people?

Posted by: oj at August 1, 2008 4:08 PM

Buddy, I don't know about you but I (hopefully) have a whole lotta living to do between now and 2050 with its 500 million people.

Spending the next 5 to 10 years in economic stagnation or worse, fighting high inflation while working off excess housing stock is not my idea of living.

You should just admit the crooks in government and on wall street screwed the pooch with an Enron type scam and its going to be awhile getting things right.

The real problem is, there is nothing stopping them from doing it again.

Posted by: Perry at August 1, 2008 4:35 PM

I'm a conservative. 2050 is tomorrow and 1060 was yesterday.

The slump is being driven by immigration enforcement. When W announces the amnesty you'll see a real housing bubble.

Posted by: oj at August 1, 2008 8:34 PM

ah, back to illegal aliens bailing out 401k's and fraudulently induces housing bubbles...and you aren't a conservative, you are a liberal.

Posted by: Perry at August 3, 2008 3:33 PM

Neither, a Christian conservative.

Posted by: oj at August 3, 2008 5:03 PM
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