Thursday, October 15, 2009

A growing US deficit is seriously bad news!

I majored in Finance, but you don't need a degree in economics to understand this basic principle:

"Long term wealth grows when money is working for you. It's smart. Poverty is preceded by spending more than you have and when money is working against you. It's not smart."

The United States of America is spending too much money. Period!

Obama may be a wonderful person, even a charismatic individual, but Obama's administration is simply on the wrong track to fix the economy. You just don't spend that much money without a plan on how to repay your debts. (Yes, I know what you're thinking, but remember, the subject I'm on about is long term wealth.)

And why am I concerned? Simply because the economy is increasingly interdependent and global. The US economy will affect everyone else. So yes, the decisions made in Washington should concern European citizens (again, long term) just as much as it does any American. That's why I second Tony Blankley's statement: "Don't increase benefits; cut costs. Now".

While in the US these past weeks I enjoyed a favorable exchange rate, but quite frankly, I'd rather pay more for every US dollar, simply because I believe that's what the global economy needs - long term.

6 comments:

  1. Hi Vidar

    There is a similar debate going on here in the UK. I agree that long term debts need to be brought under control, the question is when. Cutting government spending and taking money out of the economy now is exactly the wrong thing to do. The capitalist economy is based on consumerism. This recession came about because spending on the high street was strangled by the credit crunch. Our economies are over reliant on debt and there needs to be a correction of this, the trouble is that those at the bottom will be at the sharp end of a sharp correction. Cutting services, reducing benefits does not hit those with margins like us but those who are the poorest and most vulnerable in society.

    ReplyDelete
  2. Hey Paul,
    long time no see ;)

    Yes, and isn't it interesting... The way I see it, government is trying to buy its way out of problems. That would be appropriate if it's viewed as "buying time" to fix the underlying problems, but the corrective measures "while they still have time" are not taken or they are usually coming much too slow. (And of course, the real debate is about what the "right" measures are ;)

    ReplyDelete
  3. In light of the subject here discussed, this is an interesting article, I think:

    http://online.wsj.com/article/SB10001424052748704322004574477363965641226.html

    ReplyDelete
  4. And here's another one:

    http://blogs.reuters.com/james-pethokoukis/2009/10/20/americas-banana-republic-economy/

    ReplyDelete
  5. OK. I'll share one more article. In my opinion a must read: http://bit.ly/1slvXv

    ReplyDelete
  6. Just to keep track of how this is developing over time: http://bit.ly/9hTlrB

    ReplyDelete