Today the New York Times proclaimed what we in the real world have known for a long time. The headline on the front page of the paper reads, “PAYBACK TIME Wave of Debt Payments Facing U.S. Government.”
The United States has been borrowing cheap money in short-term loans to fund its spending binges for decades. Now those loans are coming due, and the Department of the Treasury is scrambling as it faces the sticker shock it has been avoiding all these years. (Poor Tim!)
Skyrocketing national debt, creditors knocking on the government’s door, and soon-to-rise interest rates have mixed together just right into a sort of economic Molotov Cocktail. Now all we need is a match and the result will be an explosion that will affect the whole world’s economy — coming from the general direction of the northwestern hemisphere.
This is a problem decades in the making, and one that most of the current crop of politicians in Washington will only make worse in their desperate attempt to fix it. Case in point: the Administration is now toying with the idea of a new federal stimulus (while simultaneously proclaiming that something must be done about our deficit), and Congress is flirting with trillions of dollars in new medical spending and threatening to impose crazy new taxes on the already-taxed-to-death American people in the form of cap and trade.
The New York Times had a great little visual aid to go along with their (shockingly reality-based) assessment. In it they list four possible solutions to our terrible debt woes: raise taxes/cut services, allow inflation to rise, default on our loans, or grow the economy.
I’d like to vote for the fourth option, please. However, the current party-in-power has a hard time with this one. Their idea of growing the economy consists of sucking everything out of it and then divvying up the spoils to their political cronies. Not exactly a winning strategy for improving the economy.
One thing’s for sure, we’ve got to stop spending money. The government has been borrowing money at close to 0% interest rates (teaser rates), and the payments are about to balloon. “Free” money in the hands of Congress has never been a good thing. Spending the money our children and grandchildren have yet to earn should be criminal.
When Americans were purchasing homes they couldn’t afford using teaser-rate loans, they got a wake-up call when the real interest rates kicked in. Many of them could no longer afford to make their mortgage payments and were foreclosed upon. This is the same situation our country faces right now, and we are stuck with the bill.
The good news: 2010 is almost here!! We can foreclose on the lousy Members of Congress who overspend, overtax, and overpromise — from BOTH parties. It’s payback time.