A game of chicken is going on in Congress, but how many of us understand what is really happening and really at stake? I've been reading online for hours trying to make a list of consequences of a default.
It's not easy. Financial collapse isn't as visually dramatic as the collapse of the World Trade Center towers. It happens in slow motion. And there are lots of different ways it could play out.
I've got lots of notes, but I'm not ready to try to outline what I think is happening. But I offer a challenge to gain some perspective on our national debt which I found responding to Ropi's comments on an earlier post on the debt limit showdown in Congress.
The CIA has a list of national indebtedness as a percentage of GDP. I went there to check Ropi's equating the US and Portugal in this area. Just for the fun of it, can you match the following the rankings and % of GDP from the table to the list of countries below?
(Smart folks will see that two of the columns are really easy to match. The third is harder. Those of you who can't understand the table probably should be humble in your opinions about the debt ceiling and solutions for it.)
| Rank | Country | % of GDP |
| 1 | 225.8 | |
| 9 | 102.4 | |
| 19 | 78.8 | |
| 34 | 41.5 | |
| 37 | 58.3 | |
| 45 | 58.9 | |
| 65 | 55.9 | |
| 113 | 41.5 | |
| 116 | 17.5 | |
| 123 | 16.2 | |
| 132 | 3.3 |
a. USA b. China c. Germany d. Singapore e. Iran
f. Japan g. India h. Libya i. world j. Mexico k. Russia
You can check your answers against the CIA chart here.
I think you can see (after checking with the CIA chart) that just looking at the % doesn't tell us what makes a stable economy. Nor a country we want to emulate.
(And, of course, the CIA numbers can only be estimates. Countries calculate % of GDP (if they calculate it all) using different criteria and some (many?) don't publish any data, so the CIA has to guess through other means.)
This is step 5 or 6 in the progressive financial collapse we've been in, that everyone wants to pretend:
ReplyDeletea.) financial crisis was overestimated and dramatized. We didn't really have one; and
b.) whatever financial difficulty we may have had due to middle-class and poor people living beyond their means, is over.
We've recovered.
CIA is not reliable. I used it in my project when I couldn't find anything better.
ReplyDeleteThere are many ways to calculate deficit (ESA 95, GFS, etc...), however the final results usually do not differ.
ReplyDeleteI would argue with Anonymus. I wouldn't bet that this crisis is over. The growth has started but there are still landmines to avoid.
Ropi, one more thing. I had to read Anon's comment a couple of times. He's not saying our problems are over. He's saying some people pretend that they are.
ReplyDeleteAnd thanks for keeping me on my toes here.