Two recent news stories added to the voices warning of what the consequences may be for the U.S. government’s current deficit spending.
On November 12, Fergus Hodgson, writing for BradentonHerald.com, compared America’s attempts to spend its way out of economic troubles to a similar approach by Japan 20 years ago. “The only prize the strategy achieved for Japan,” Hodson wrote, “was the largest national debt in the developed world: 200 percent of GDP.” – Japan’s ‘Lost Decade’
In the business section of today’s New York Times, Edmund L. Andrews writes that with “a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb … the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.” – ‘Wave of Debt Payments Facing U.S. Government‘
As the 1929 saying goes, “When America sneezes, the rest of the world catches the cold.” It the world heading for the equivalent of a financial pandemic if America’s rising debt gives Uncle Sam the flu?
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