Quote:
Originally Posted by Lurch
Are they really? Which indicators would those be? Is your assertion that Katrina cost the US Federal gov't over $320 billion, or roughly 2.6% of GDP. If you remove the budget deficit, US growth last year was well negative.
Clearly untrue. If countries use US currency as a reserve currency, the US effectively exchanges paper for real goods. In effect, the world is loaning the US money with interest equal to the negative of inflation. If the US$ comes flooding back to the US b/c foreign economies stop holding it, this would cause massive problems for the US and the rest of the world.
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Not sure how you make the leap to the US exchanging paper for goods? Holding US currency does not result in an exchange of title to the US's favor. Also the kind of flooding your talking about would not be caused merely by one oil market refusing to use US dollars. The iraqi oil market is quite large, but the amount of actual US currency used represents a small fraction when compared to that in circulation. The kind of effect it might have would be solved in a couple of hours.
Also US growth last year was definately not negative. It was approximately 3%. When calculating you never offset deficit directly with growth. Although the budget deficit was fairly large in 2005, it has gotten progressively smaller through 2006. It is expected to reach a balance before the end of George Bush's term. The projected deficit as of october was 247 billion (significantly down from the year before). And yes I am saying that Katrina had an effect on the US economy of several hundred billion dollars. It essentially wiped out the economies of large parts of several states, and resulted in millions of taxpayers not earning any tax money.
Basically George Bush is ahead of his schedule to cut the deficit in half from his peak of 521billion in 2004. He is right on pace for his goal to eliminate it by the time he leaves office.
Aside from that the US jobless rate has hit a five year low
http://news.bbc.co.uk/2/hi/business/6113978.stm
keep in mind that prior to september 11th people were expecting a major adjustment anyway, so you were expected to have lows about 5 years ago.
The only real problem facing the US right now is competition from emerging markets. the US is currently running a massive trade deficit with China. Many people think due to the overpricing of the US dollar. Hence attempts to purposely dive the price of the dollar.