Getting to the Root Of the Problem
Published in Oriental Daily
(Hong Kong) on 17 May 2009
by Liu Meng-xiong (link to original)
Recently, U.S. President Barack Obama warned that if America continues to finance its huge government expenses through foreign debt, consumers will be threatened with rapidly surging inflation. He called on Congress to pass a credit card reform bill, claiming that it is "past time for rules that are fair and transparent" and to "ensure that the legacy of this recession is an American economy that rewards work and innovation; that is guided by fairness and responsibility; and that grows steadily into the future."
This stance is proof that Obama's knife is now pointed at the real cause of the financial tsunami.
Since the financial crisis, general opinion has blamed the financial system along with the greed and irresponsibility of Wall Street bankers for turning the financial markets into a gambling table. On a deeper level, the cause of the crisis was the way both the government and the people spent beyond their means without restraint.
The U.S. government carries a huge fiscal and trade deficit on a long-term basis. Americans live a deep-rooted lifestyle of small savings, high consumption, and high credit. The so-called financial tsunami is but the collapse of the way the government is financed and the way the people live. Obama's recognition of the root of the problem has set him on the right path toward resolving the issue.
The catch is that the financial tsunami has brought the entire U.S. financial system to a near collapse, and this has spread to the real economy, causing the most severe recession since the Great Depression.
In order to save the markets, the Bush administration spent 75 billion dollars, and the Obama administration has added on another 78.7 billion. The budget deficit this year is 1.3 trillion dollars. On top of that, the Fed is planning a 1.15 trillion dollar injection into the capital markets. To finance this spending, the only option, aside from printing money, is taking on foreign debt. At this point in time, Obama's claim that the U.S. cannot continue borrowing money from China is just fancy talk.
American citizens have taken for granted the buying of houses, cars, furniture, electronic appliances by installment. They don’t even stop to consider whether or not they have enough income to cover their expenses when they whip out their credit cards. High consumption and high credit breeds the relationships between the people and the banks. One is willing to sell; the other is willing to buy. It will not be an easy battle for Obama to challenge the power of habit.
As the saying goes, it’s “easier said than done,” indeed!
This stance is proof that Obama's knife is now pointed at the real cause of the financial tsunami.
Since the financial crisis, general opinion has blamed the financial system along with the greed and irresponsibility of Wall Street bankers for turning the financial markets into a gambling table. On a deeper level, the cause of the crisis was the way both the government and the people spent beyond their means without restraint.
The U.S. government carries a huge fiscal and trade deficit on a long-term basis. Americans live a deep-rooted lifestyle of small savings, high consumption, and high credit. The so-called financial tsunami is but the collapse of the way the government is financed and the way the people live. Obama's recognition of the root of the problem has set him on the right path toward resolving the issue.
The catch is that the financial tsunami has brought the entire U.S. financial system to a near collapse, and this has spread to the real economy, causing the most severe recession since the Great Depression.
In order to save the markets, the Bush administration spent 75 billion dollars, and the Obama administration has added on another 78.7 billion. The budget deficit this year is 1.3 trillion dollars. On top of that, the Fed is planning a 1.15 trillion dollar injection into the capital markets. To finance this spending, the only option, aside from printing money, is taking on foreign debt. At this point in time, Obama's claim that the U.S. cannot continue borrowing money from China is just fancy talk.
American citizens have taken for granted the buying of houses, cars, furniture, electronic appliances by installment. They don’t even stop to consider whether or not they have enough income to cover their expenses when they whip out their credit cards. High consumption and high credit breeds the relationships between the people and the banks. One is willing to sell; the other is willing to buy. It will not be an easy battle for Obama to challenge the power of habit.
As the saying goes, it’s “easier said than done,” indeed!
I am an american.
with no debt.
but I watch my country spend more than it makes.
the problem is not our politicans it is an american mentality of trying to maintain a standard of living in a nation with a rapid decline of wealth.
few in america will admit to that and the politicans dont dare tell americans the truth.
if they did they would not be reelected.
americans are in a great denial now and have decided to go with hope so they dont have to change.
our wars for profits and mega military budget and our industrial military complex is finally catching up to us.
we want super power status even it it means borrowing huge sums of money.
national ego thing.
few americans will understand my words, very few.