Quote:
Originally Posted by Cowperson
How A Flush Country Gets Into Trouble - an analysis in the Washington Post. Good job of noting that a large percentage of USA debt is held internal to the country versus the external debt issues that once plagued Canada in the 1990's and plague countries like Greece or Italy today:
http://www.washingtonpost.com/busine...AiI_story.html
Japan is another country where most of its debt is held internally by Japanese, meaning they are effectively borrowing from themselves.
Cowperson
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I really like this analogy from that WP article:
The United States is a lot like a rich businessman who owns two homes, a yacht and millions of dollars in stock but is in debt because he took out a big loan to buy a private plane.
This fellow could always have used some of his wealth, for instance his stock, to pay cash for the plane. But he didn’t want to. Now, with the weak economy, he’s finding it hard to pay off the plane simply out of his salary. By putting most of his wealth beyond reach, he has boxed himself in.
I would even use the analogy that the US is like a family where both parents are high income/high asset physicians where one of the spouses decides voluntarily to stop working. They also decide to improve their home and buy a second house. They end up taking more debt even though they reduced their income.
At any point, the non-working spouse can easily take a job but doesn't really have the will to go there. They also decide to make up their income short fall by stopping contributions to their retirement plan and saving for their children's education and, yes, getting rid of cable will help.
The US has the income/assets given the political will via reducing or eliminating tax breaks, tax loopholes etc to reduce the deb/deficit ie. increasing revenue.
It is veritable tax haven in the US versus Canada (and probably most of the other G8 nations though I don't know from either experience or research) and anyone who says they are overtaxed must being comparing their tax rates to 3rd world countries where there are no gov't services.
Property tax, sales tax, state income tax are deductible off your federal return not to mention mortgage interest, just to mention a few "middle class" tax breaks that should be reduced at least. The mortage interest break is up to 1 million in mortgage interest. That is INTEREST. So if you have a million dollar loan, you can essentially deduct $350K off your return assuming you are in the highest bracket courtesy of your fellow tax payers.
You know this country has gone so far to the right that the Democrats are trying to channel Ronald Reagan! It has skewed so far to the supply side that it really doesn't make common sense anymore to the average person.