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US Debt Exceeds Gross Domestic Product
AFP reports that the US Treasury borrowed $238 billion immediately after the debt ceiling deal was reached by Congress and the White House. This additional borrowing increased outstanding debt above 100 percent of US Gross Domestic Product (GDP).
New debt took the public debt total to $14.58 trillion, which exceeds the end-of-2010 GDP of $14.53 trillion. The official debt limit was hiked $400 billion and will be increased in stages over the next 18 months.
Other nations with debt exceeding GDP include Japan (229%), Greece (152%), Jamaica (137%), Lebanon (134%), Italy (120%), Ireland (114%), and Iceland (103%). The last year the USA debt exceeded 100 percent of GDP in public debt was 1947 – and by 1982 that percentage had fallen to 32.5%.
America’s high ratio of debt to GDP puts the AAA bond rating at risk, rating agencies have noted.
-- summarized from http://www.google.com/hostednews/afp/article/ALeqM5hu18Ed3hBnAs9vVR8e7oDqOHn_gg?docId=CNG.09344e04a4343e6da8865fa6aed02fa6.31
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Rick Newman of US News and World Report notes that the debt deal includes "six unwanted outcomes," which are
A slowing economy
More pressure on the national debt
More quantitative easing by the Fed
A downgrade of America’s credit rating
A loss of confidence in Washington
Even more uncertainty since all the toughest items will be decided by a "supercommittee" that hasn’t met. Fights over Medicare, Medicaid, Social Security and another quarrel over extending the tax cuts have to be dealt with. These unresolved but important issues cloud important decisions that businesses have to make in their own planning.
-- summarized from http://news.yahoo.com/6-unwanted-outcomes-debt-deal-201427952.html
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Afterword:
The European countries with large debts, particularly Greece and Italy, caused a bad day for European markets. The American stock markets opened skittish and the high debt numbers made things worse. The New York Exchange was down over 4% and the NASDAQ was down over 5%. USA investors don’t like the debt deal that Congress and the President signed.
Afterword:
The European countries with large debts, particularly Greece and Italy, caused a bad day for European markets. The American stock markets opened skittish and the high debt numbers made things worse. The New York Exchange was down over 4% and the NASDAQ was down over 5%. USA investors don’t like the debt deal that Congress and the President signed.
Note: The July 31 "Daily Quiddity" blog correctly noted that the debt agreement then being finalized would authorize a debt ceiling greater than US GDP
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