A recent headline about a possible US credit default caught my eye, AFP reported:
‘A Chinese ratings house has accused the United States of defaulting on its massive debt, state media said Friday, a day after Beijing urged Washington to put its fiscal house in order.
“In our opinion, the United States has already been defaulting,” Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.’ (end of excerpt)
So good. America is defaulting. Let’s admit it. After all the first step to curing yourself is first to admit you have a problem. And often that is the hardest step. And America has a big problem.
America’s current fiscal outlook is bleak. And often a business or a person needs to be declared bankrupt so that they will make the necessary reforms. Otherwise they will continue to make the same mistakes.
Look at what happened with General Motors and Chrysler. They were in the hole because the unions had stripped them of their capital for decades. But rather than allow them to declare bankruptcy – which would have allowed them to abrogate the union contracts that were strangling them – Obama bailed them out. This allowed the unions to keep on collecting their huge paychecks. It did not force GM/Chrysler and the unions to make the big changes necessary. And so they will need another bailout down the road, rest assured.
Remember when the communists and unionists in Greece were rioting last year over their fiscal situation? What finally shut them up?
A big bailout from the European Union, leaving the basic problems unsolved. Now one year later they are back looking for another handout. And they cannot get it. The jig is up. The money no longer is there. And they will get violent again.
And our basic problem is never going to be solved until the United States makes massive changes in the way our government does business, when all the freeloaders, from scientists studying pot-smoking monkeys to the idle poor , finally lose their grants and handouts along with millions of other deadbeats. Because it all is a huge waste of money.
Thus China is right. We are bankrupt. Let’s admit it.
And here is the best part: If America finally is declared bankrupt, then the world will stop lending us money. Which is a good thing. They indeed should stop lending us money. So that we are forced to fix ourselves.
But many American Democrat politicians think that we are not bankrupt because we still can borrow money. This is like saying you are not broke because you still have checks in the checkbook. And that is why Democrats want to raise the debt limit – to keep the money spigot open to their constituents and prevent fiscal reforms that would cut their power.
This overspending is the road to ruin and the phenomenon is worldwide. We already are ruined. We must halt further deterioration.
Because America has been spending way too much money for way too many years now. And now only a recognition of our government guilt will allow the government to abrogate and possibly cancel all these contracts and agreements that are killing us financially – handouts to National Public Radio, the Cowboy Poetry Festival and thousands of other left-wing organizations; welfare, food stamps, housing subsidies, Medicare, Medicaid, Social Security and a hundred other programs; and every single federal salary, benefit and pension. We need a clean slate in every area, including the military. Out of Afghanistan now…
This fiscal tightening is what the Democrats fear most, and this is what the unions at GM/Chrysler feared most. Now look at this other quote from the AFP story:
‘The US government will run out of room to spend more on August 2 unless Congress bumps up the borrowing limit beyond $14.29 trillion — but Republicans are refusing to support such a move until a deficit cutting deal is reached.
Ratings agency Fitch on Wednesday joined Moody’s and Standard & Poor’s to warn the United States could lose its first-class credit rating if it fails to raise its debt ceiling to avoid defaulting on loans.
A downgrade could sharply raise US borrowing costs, worsening the country’s already dire fiscal position, and send shock waves through the financial world, which has long considered US debt a benchmark among safe-haven investments.’ (end of excerpt)
So good, let’s not raise the debt ceiling and let’s default. And let’s officially default sooner rather than later. And let the truth come out – that America is not a credit-worthy nation as currently configured. Because the only way to truly get our good American credit rating back is not to jack up the debt limit and borrow more money, but to be forced to spend the same amount of money (or less) every year as the government takes in. Like a family does. Period. End of story.
For decades, Europe and especially Japan have had very high debt-to-GDP ratios, well over 150% of GDP in Japan for many, many years. As recently as the Bush presidency, however, America had a manageable debt in comparison to our total annual national wealth (GDP), like a family’s debt in comparison to its annual income. But those days are over.
In the last full year of Ronald Regan’s tenure in 1988, GDP was $5.1 trillion, and the debt was 51% of GDP. In 1995 under Clinton, GDP was $7.4 trillion and debt was 67.1% In 2001, GDP was $10.2 trillion and debt was 56.5%. By 2005, under George Bush, GDP was $12.64 trillion and debt had grown to 62.8%. This still was manageable.
Now after just three years of Obama, our debt is 100% of our GDP and growing by more than 10% of GDP per year, or $1.5 trillion a year. This is unsustainable since our debt is growing but our GDP is not. Everyone knows what the problem is and Democrats plan to just spend more and more money in the hope that the deadbeat culture that pays no taxes and collects huge amounts of money from the government keeps them in power. Or the scientists with multimillion dollar grants to study pot-smoking monkeys.
It is time to declare America bankrupt. Indeed for once, we should listen to communist China.
Please visit my website at www.nikitas3.com for more. You can read excerpts from my book, Right Is Right, which explains why only conservatism can maintain our freedom and prosperity.