Nov 23, 2009

US in real life

I'm not going to post the latest SNL Obama skit because it has a few very crude references in it, and my Mom and Grandma read this blog. Heck, someday my kids will read it. SIGH, because it was very politically interesting, that skit. It was about how much money we owe China.

Here's how the situation is:

China owns a large amount of our US treasury bonds. Those are the things we create when we don't have the cash to cover our expenses (as a nation). We create these bonds and offer them for sale to other countries (or the American people), basically selling "futures" in American currency. They are supposed to mature and create a profit for those who buy them.

China owns so many of these bonds that basically, they own around 25% of our nation's debt (see here for some illustrations of the kind of debt that the US currently owes). Japan owns a further 20%. The rest is owed in smaller bits and pieces... some by countries where we are currently engaged in tricky diplomatic processes.

This, in itself, is troubling. But we see that it's even more of a dilemma when we realize how much of our labor is outsourced to China and Japan. How many goods and products we buy from people who give jobs to people in Japan and China at the American People's expense, because they can do it at a much lower production cost, partially because these countries do not have this debt, as well as other regulations that we in America put on businesses. It's an endless downward spiral.

Another problem is that China is artificially keeping its currency at a low rate, thus giving itself an unfair advantage over other currencies. We can't do much about it, can we? For a very pithy illustration of this, go ahead and watch that SNL video I told you not to watch.

Most people say this isn't a real worry because China and Japan need us to have a stable economy so that we will provide them with a market for the goods that they export, and they will lose a significant investment if they liquidate the bonds they hold. The problem with this argument, is that it's missing the whole point. We are currently in the position of Owing. We are in Debt. Right now, China doesn't seem to have any real reason to liquidate bonds. But they may soon find one.

So, what does this have to do with SNL and Obama and this trip he took to China?

It appears we are becoming more friendly to China. More diplomatic, more chummy. More willing to overlook points upon which we don't agree as nations. This could be good; diplomacy is always good. But not if we're doing it for the wrong reasons.

This is a very clear example of how America as a Nation must be free from entanglements and obligations, if we Americans want to be able to effectively promote our cause (even the most altruistic, noble cause, including things such as human rights.)

Of all the news I've read lately, this is the most troubling, to me. And it's the thing that's causing ME (yes me, Nosurfgirl) to wonder about the future of America; not necessarily related to communism and socialism and the constitution hanging by a thread.. but our Reason for Being. And our ability to be who we're supposed to be... are we going to continue being that City on the Hill? Most would say we've already fallen, because of our ill-conceived actions in the middle east over the past 50 years and the resulting negative image we've gained internationally.

Up 'till now, I've always felt like we're doing things for the right reasons (albeit, sometimes horribly misguided). We're trying. We make mistakes. We get stupid information. Greedy people manipulate numbers and intelligence to further their agenda, but we have tried to make the foreign policy decisions that seem most in line with our mission, our "city on the hill" identity as a nation.

This latest development makes me worry if perhaps we're starting to get on the track to doing the wrong things... because we can't do much when we don't have a leg to stand on, economically speaking.

This is the kind of stuff I'd like to hear more people debate about. I feel like we're skimming the surface in our rhetoric and our debates lately... quibbling over table scraps and finding shallow rhetoric to pit one side against the other. What we need to be doing instead is talking about the things that nobody seems to want to talk about. It's understandable that politicians want to avoid this whole subject, and others that are equally serious and threatening to the future of the US. Because it's not popular to be the voice of gloom and doom. You'll never get elected that way; Americans elect people who tell them they're Great and they're Right and they're on the Right Team. Americans like to see gladiators fighting each other. They like the race and the show, and they like being able to pick the winning side.

Problem is, right now... guess who's on the losing side? It's not the republicans or the democrats. It's US.

We can't allow ourselves to be distracted by pettiness when there are real dangers out there to America itself; what we are as a nation. Why we exist. We can't sequester ourselves in front of our little computer screens playing the Tetris of bill word counts and semantics gymnastics when there's a real problem out there.

Time to take our heads out of the sand, people.


Anonymous said...

I wouldn't too much about our future with China. If the US goes down, so does China. They need us to move forward. What other choice do they have?

NoSurfGirl said...


thank you for commenting. Love you (probably know you in real life, I bet... otherwise you wouldn't have put yourself as anonymous!) But you should re-read the second half of my post.

I'll be doing another one soon on this subject...
that SNL video really hit me hard, in a way other things haven't.

David L said...

Here we go.... You opened a favorite topic of mine.

The number one threat to this nation outside of the disintegration of the family is the national debt.

When we talk about the debt, people often fail to realize that the money we spend on INTEREST alone is larger than the combined budgets for the Department of Education and the Department of Energy. When our debts reset in a few years, our debt payments are estimated to be larger than the ENTIRE US budget. The whole thing. Defense, healthcare, social security, education, energy, transportation.... The WHOLE budget.

Why don't people get that?

This nation is in a serious decline BECAUSE of the debt overload, and this president and the past president have done and are doing nothing to stop it. Obama just recently ended his first fiscal year setting a record deficit of $1.41 TRILLION. He added over 10% to the national debt in less than one year. And while many people blame Bush, Bushes WORST year added $455 Billion to the debt. Still terrible, but put things in perspective.

Over the next 10 years, we are slated to go an additional NINE TRILLION dollars into debt. Over that same 10 years, we will spend just shy of FIVE TRILLION dollars paying interest on that debt.


Right now, there are exactly three options for the United States and our debt:

1--Default on the debt. You thought this recession was bad? You thought the Great Depression was bad? Defaulting on the debt will plunge the world into a global depression that will last decades. The world economy will not stop, it will die. Defaulting on the debt will cause wars, global wars.

2--Print enough money to pay it off. Zimbabwe is currently suffering from hyper inflation at a rate of multiple thousands percents DAILY. Printing enough money to pay off our debt would destroy the world economy. Almost all basic commodities are priced in US dollars. Printing $12 Trillion to pay off the debt would kill the commodities markets, including Oil, gold, metals, coal, and other staples. Are you ready to pay $2,000 for a gallon of gas? That's what you'd see. Hyper-inflation would push the United States into the dark ages. We would lose our position on the national stage permanently. It is also likely that nations that hold our debt (think China and Japan in large part, but also several Arabic nations and most of Europe) would protest this move as well. And when I say protest, I don't hold out the idea of war. Realize that much of their economies and stability relies on the fact that they hold vast reserves of OUR debt. If our debt is suddenly worthless, we destabilize the ENTIRE world.
3--Pay it off. Paying it off would cause a world-wide depression. Face it, the world economy hums to the tune of the US economy. Paying off our debt in an reasonable time frame would require raising taxes dramatically, cutting spending down to nothing but the essentials for 10 years or more, and making other moves to severely limit expenditures or increase Treasury revenues. Such an action would eventually lead to the Golden Age of the US if not the world, but what person is going to stand up and say "let's voluntarily go into the Great Depression II in order to have a better tomorrow."

Nope... far too many of us just don't get it. We'll just keep plunging along as we are. Eventually, Option 3 will be too hard to ever do, and we'll plunge into either Option 1 or 2.

I don't oppose Obama. I don't oppose the Democrats. I don't oppose the Republicans either, but all of them are spend happy. This president is the most dangerous president we have ever had if only because he's got an open check book with no sense of control.

I wonder if the Fall of Rome felt anything like this....

Skywalker said...

[sigh] Bump the knuckles, Dave. That is the sad truth.

I've been trying to come to terms with this for many years (really, since my youth). There is no easy way to comprehend our debt (and yes, it is our own debt, not the National Governments). NoSurf likes to state that the government is our own government and not a separate entity to loath or fight. I'm inclined to agree, until I ponder the National Debt crisis. That makes me feel like "disowning my parents" (an impossible feat). We've inherited a catastrophe from our progenitors, along with their lascivious luxuries that tempt us to continue the decadence.

It's like sharing one bank account with your neighbors (which is a part of a monolithic bank owned by Mr. Potter). Personal responsibility is moot. We will suffer together, regardless of our individual culpability.

How do we prepare for something so huge?

It's like preparing for the Last Days. I don't want to suffer or die, but I do want to get it over with!

Our current recession may be the precipice, or we may shore up the overhang for a few more years/decades. Who knows? But I suspect that most individuals who sense our predicament hope they're dead before their you-know-what hits the fan and spatters the rest of us.

Allison said...

Good thing I have two Mandarin bilingual daughters. When we become China West they can interpret for me.
Remember those 30 million young men without wives? Like right now?
I think they have a choice of facing huge civil unrest and possibly revolutin or starting a dandy patriotic war to reduce the young male population.

David L said...

Yeah, so I have to come back to this yet again and just give a very hearty amen to Skywalker's thoughts....

I have long hoped that my personal end is before the financial end that we are facing, but the other side of that is that I have children and they will have children.

We can either own up to it and fix it or pass it on to them. Someone is going to have to do it, and I'm afraid that we're the ones that should. Will we do it, though?

It's terrifying to think of the debt. It leaves me feeling somewhat hopeless that nothing I do for me and mine will ever matter. We do all we can to live right and within our means, but the sucking vortex of national stupidity will drag us all down eventually.

That debt is the one thing that could drive me to seek a home elsewhere. I love this country more deeply than I can ever truly express, but I'd rather be the bastard son of another motherland than drown along with the grasping greed of the millions I call my brothers.

Putz said...

why don't the pepoles republic of china use our 25% debt to them to get some of the things we have, like homes hd t.v. better health care less war ha ha, i'm teasing, they seem to be manageing correctly

NoSurfGirl said...


they could if it was actual money they were buying. But it's not. It's money that we're (by most appearances) extremely unlikely to pay back. Basically, they're just giving us money so they can sell us stuff and so that the world economy doesn't collapse.

Hannah said...

My question is, "What makes us so much better than the Chinese?"

In all honesty, as Americans we have become WAY too materialistic and we are taking money away from China as a result. However, China needs to be accountable for their own bad judgment in investing in a poorly managed country. This is a get it now, worry later society. My husband works with a couple of Chinese students in his research lab. He was asking them about what it is like to live in China. In China, you have to have 50% of the cost of the home saved up before you can purchase a home. Hm mm. That would solve a lot of U.S. citizens' problems.

The truth is, our politicians are only reflecting the attitudes and spending habits of SO MANY citizens. Charge it to the card, don't care if you can ever pay it because what YOU want NOW is more important than someone else losing money. I often hear some of my LDS friends saying, "If you can afford to live a nice life, there's nothing wrong with living it, as long as you aren't going into debt." I disagree. We should be giving more (of our own accord ... I am a Libertarian, not a socialist) of our money and worldly possessions to help others. We have "waxed fat" ... and many of us our on the verge of kicking ouselves out of the kingdom over money and worldly selfishness. A few years ago, President Monson said that Yesterday's luxuries are Today's necessities. I am witnessing this more and more every day.

Steve said...

I'm not concerned about this for several reasons. Most countries, China included, need the US to be out front on money issues. They aren't about to let the dollar and our economy cause many of the horrible results David outlines. So 'capitalism' will continue to be propped up until it can no longer be sustained or another country wants to be "#1". I have no problem with the US NOT being the best country in the world. People confuse economic predominance with standard of living and patriotic view points. They often aren't related at all! In fact, there are already countries with better standards of living and more opportunities for immigrants and their poor than the US. The Scandanavian countries for instance. Also, I don't think anyone, including China WANTS all the pressure and debt it takes to remain at "#1". Thus, they all will continue to prop up as long as the world can continue this current version of capitalism. In 100 years, if we were to be alive, none of us would believe or even comprehend what the world economy will be like, much like how a businessman in 1909 couldn't begin to imagine today's world economy.

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Anonymous said...

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