$100 Trillion in debt and in even worse shape than greece!!!

Discussion in 'Economics' started by S2007S, Jun 13, 2011.

  1. S2007S


    I actually agree that the US is in worse shape financially than Greece, but of course no one believes it and no one wants to say anything about it, but its true. Everyone thinks our economy is back on track when in reality its only the trillions being pumped into the system thats helping float the economy to a 2% GDP growth rate. Seems the $14 trillion in public debt is the number that doesnt include money going towards other programs that are costing even more trillions and trillions of dollars. Just keep ignoring it until you can no longer keep ignoring it, Bubble ben bernake likes asset bubbles and worthless dollars!

    US Is in Even Worse Shape Financially Than Greece: Gross
    CNBC.com | June 13, 2011 | 10:33 AM EDT

    When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC Monday.

    Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.

    The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.

    Taken together, Gross puts the total at "nearly $100 trillion," that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won't find a solution overnight.

    "To think that we can reduce that within the space of a year or two is not a realistic assumption," Gross said in a live interview. "That's much more than Greece, that's much more than almost any other developed country. We've got a problem and we have to get after it quickly."

    Gross spoke following a report that US banks were likely to scale back on their use of Treasurys as collateral against derivatives and other transactions. Bank heads say that move is likely to happen in August as Congress dithers over whether to raise the nation's debt ceiling, according to a report in the Financial Times.

    The move reflects increasing concern from the financial community over whether the US is capable of a political solution to its burgeoning debt and deficit problems.

    "We've always wondered who will buy Treasurys" after the Federal Reserve purchases the last of its $600 billion to end the second leg of its quantitative easing program later this month, Gross said. "It's certainly not Pimco and it's probably not the bond funds of the world."

    Pimco, based in Newport Beach, Calif., manages more than $1.2 trillion in assets and runs the largest bond fund in the world.

    Gross confirmed a report Friday that Pimco has marginally increased its Treasurys allotment—from 4 percent to 5 percent—but still has little interest in US debt and its low yields that are in place despite an ugly national balance sheet.

    "Why wouldn't an investor buy Canada with a better balance sheet or Australia with a better balance sheet with interest rates at 1 or 2 or 3 percent higher?" he said. "It simply doesn't make any sense."

    Should the debt problem in Greece explode into a full-blown crisis—an International Monetary Fund bailout has prevented a full-scale meltdown so far—Gross predicted that German debt, not that of the US, would be the safe-haven of choice for global investors.

    —Jeff Cox is co-author of the recently released "Debt Deficits and the Demise of the American Economy" (Wiley).
  2. This is Bill Gross from Pimco. He runs the largest bond fund in the world. How did he get to be the man in charge of such a fund? Because he knew what he was doing. If he says the US is in deep shit, then the US is in deep shit and we should act accordingly.
  3. No one seems to care. Just borrow more money. Does not matter if you cannot pay it back...borrow more and spend more. Municipalities, states and the federal govt. borrow and borrow more. What could possibly go wrong?
  4. Gross' argument is flawed because he doesn't take into account future receipts from taxes, social security, etc.

    He is short and maybe he is trying to push treasuries down. This is called conflict of interest. Nowhere in the article it is mentioned that he is short treasuries, unless he took the loss already: