A few weeks ago, after I posted an article on the decreasing federal deficit, one reader raised the issue of the total outstanding debt (a record value), and I gave a tongue-in-cheek reply saying that nobody knows who we own that money and we should just not pay.
But it made me curious, so I looked for some figures on how is that 8.5 trillion debt structured, and here it is:
40.6%: Federal Reserve and government accounts. This is money that one part of the government owns to another part, so seriously, it doesn't count.
22.7%: Foreign and international. Ok, so we owe about 1.9 trillions to foreign countries. Considering how much money we gave to other countries over the history, I think they could give us a break. Just count how many foreign debts we completely erased. And actually, a careful analysis could find it more profitable to just invade those creditor countries and make them erase our debt. Maybe even impose a tribute and get some extra money to the budget.
6.5%: Private pension funds
6.3%: Mutual funds
5.4%: Misc others
4.2%: State and local governments. Well, state and local receive a lot of federal money, so if they still want it, they should ignore the debt.
4.2%: Commercial banks, S&Ls and credit unions
3.5%: State and local government pension funds
3.3%: US Savings Bonds
3.3%: Insurance companies. Everybody knows they make huge profits, so they can just pass on that debt since they still make a lot of money from ripping off customers.
So this leaves us with only 29.2%, or about 2.5 trillions of debt (mostly to pension funds, bonds and other securities), which I would say is totally manageable.
Thursday, October 26, 2006
Wednesday, October 25, 2006
The big picture on economy
An interesting article was published today by Jonah Goldberg in the National Review. Here are some of the things he argues:
Poverty, as defined for millennia, is pretty much nonexistent in the United States. Until very recently, poverty was defined by material scarcity of essentials, chiefly food, shelter and clothing. Today, some people go without these things, but scarcity isn’t the culprit.
To understand how subjective poverty in America is, one need only recognize the fact that most rich people from a century ago would be considered poor by today’s standards, and today’s poor would be considered rich by the standards of 1900. In 1900, 2 percent of homes had electricity, and 1 out of 10 homes had flush toilets. Today, pretty much all of them do. In other words, the tangible goods that defined wealth have been democratized.
Absurdly, according to the official measurements used by the federal government, fewer people lived in poverty in 1973 than today. But in 1973, most poor people didn’t have a car. Today, almost 75 percent of those officially in poverty have a motor vehicle. Today’s poor households, according to statistician Nicholas Eberstadt, are more likely to have telephones and televisions than non-poor families were in 1970. In the 1970s, undernourishment still factored into poverty. Today, obesity is a far bigger problem.
There are other factors that seem to be invisible to government bean counters. We live in a “knowledge economy,” but the folks who measure the gross domestic product don’t count the money spent on research and development (as well as money spent on training and education) as an investment. Instead, the government merely counts each iPod twice: “when it arrives from China, and when it sells. That, in effect, reduces Apple — one of the world’s greatest innovators — to a reseller of imported goods.”
Meanwhile, the single-most underreported good-news economic story of the 21st century so far is the explosion in American productivity. From 2000 to 2004, productivity in the United States grew by 17 percent. That is a staggering number which tells us more about the long-term health of the American economy than statistics about the GDP, unemployment or wage growth.
Poverty, as defined for millennia, is pretty much nonexistent in the United States. Until very recently, poverty was defined by material scarcity of essentials, chiefly food, shelter and clothing. Today, some people go without these things, but scarcity isn’t the culprit.
To understand how subjective poverty in America is, one need only recognize the fact that most rich people from a century ago would be considered poor by today’s standards, and today’s poor would be considered rich by the standards of 1900. In 1900, 2 percent of homes had electricity, and 1 out of 10 homes had flush toilets. Today, pretty much all of them do. In other words, the tangible goods that defined wealth have been democratized.
Absurdly, according to the official measurements used by the federal government, fewer people lived in poverty in 1973 than today. But in 1973, most poor people didn’t have a car. Today, almost 75 percent of those officially in poverty have a motor vehicle. Today’s poor households, according to statistician Nicholas Eberstadt, are more likely to have telephones and televisions than non-poor families were in 1970. In the 1970s, undernourishment still factored into poverty. Today, obesity is a far bigger problem.
There are other factors that seem to be invisible to government bean counters. We live in a “knowledge economy,” but the folks who measure the gross domestic product don’t count the money spent on research and development (as well as money spent on training and education) as an investment. Instead, the government merely counts each iPod twice: “when it arrives from China, and when it sells. That, in effect, reduces Apple — one of the world’s greatest innovators — to a reseller of imported goods.”
Meanwhile, the single-most underreported good-news economic story of the 21st century so far is the explosion in American productivity. From 2000 to 2004, productivity in the United States grew by 17 percent. That is a staggering number which tells us more about the long-term health of the American economy than statistics about the GDP, unemployment or wage growth.
Sunday, October 15, 2006
The hypocrisy of the "green" celebrities
I think everybody is sick of the various Hollywood celebrities touting their green lifestyle and fight for a better environment. For most of them, the main weapon is the hybrid car, their fantasy that driving a Prius will save the world. It's true that Priuses do great on gas, but the same celebrities usually fly private airplanes, which more than compensate for the few gallons of gas their hybrids save. TMZ has published a list of such extravagancies, among which we found:
- Brad Pitt has several hybrids, but his trip to Namibia used 11,000 gallons of jet fuel, which is enough to take a Prius to the moon.
- George Clooney has an electric car, but for his Tokyo trip he burned 7,000 gallons of fuel, which might have helped his car cross the Pacific 57 times.
- J-Lo drives a Prius, but her recent trip to New York (for which she allegedly refused to pay) burned enough gas to propel her hybrid for 45,000 miles.
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