P-Kroog in the NYT...
He makes two points. One is that we are NOT having a debt crisis. And he's clearly right,
in an unimportant way. It's important to keep track of a distinction. If I open a line of credit with a banker, then I get (say) $250k of "credit." Then, I borrow $50k. Compare me to someone else who has only borrowed $20k. Who has more of a debt crisis? It depends on the remaining credit of the other guy. If he has a credit line of $20k, and he has borrowed ALL of it, then he has a debt crisis. I have borrowed far more, $50k, but my credit is still fine, because lenders believe that I have a capacity to repay even more.
The amount of CREDIT the US has with the world is much, much bigger than the amount we have borrowed. So, no one is seriously worried about us repaying. Because a company that is bankrupt has no way of getting more revenues. But the US could easily collect enough revenues to service its debt, just by raising taxes by 20%. I think PK is underestimating the temporary effects of the Eurozone crisis, and our borrowing costs are artificially low because people just want to hold dollars and get out of Euros. So the reason people are buying T-bonds is NOT because they are US debt, but rather because they are US dollars. Still and all, sure, he's right about that. I worry that we are going to raise taxes in the future to pay for stupid spending now, but there is no "Crisis".
As for the Republicans, his second point....gosh, I hope so!
He makes two points. One is that we are NOT having a debt crisis. And he's clearly right,
in an unimportant way. It's important to keep track of a distinction. If I open a line of credit with a banker, then I get (say) $250k of "credit." Then, I borrow $50k. Compare me to someone else who has only borrowed $20k. Who has more of a debt crisis? It depends on the remaining credit of the other guy. If he has a credit line of $20k, and he has borrowed ALL of it, then he has a debt crisis. I have borrowed far more, $50k, but my credit is still fine, because lenders believe that I have a capacity to repay even more.
The amount of CREDIT the US has with the world is much, much bigger than the amount we have borrowed. So, no one is seriously worried about us repaying. Because a company that is bankrupt has no way of getting more revenues. But the US could easily collect enough revenues to service its debt, just by raising taxes by 20%. I think PK is underestimating the temporary effects of the Eurozone crisis, and our borrowing costs are artificially low because people just want to hold dollars and get out of Euros. So the reason people are buying T-bonds is NOT because they are US debt, but rather because they are US dollars. Still and all, sure, he's right about that. I worry that we are going to raise taxes in the future to pay for stupid spending now, but there is no "Crisis".
As for the Republicans, his second point....gosh, I hope so!
3 comments:
My take from the election is that the Republicans are doing fine. They won the white vote by a big margin but lost the election due to being seen as the white man's party.
The fact that republican voters flirted with Herman Cain a man with no political track record tells me that the rank and file Republican knows this is the problem. The party knows this and so Mia Love mayor of Saratoga Springs, Utah population 16,125 was given a speaking spot at the convention. The democrats know it an so they pumped money in to UT to beat Mia Love.
One poll that I saw showed that Romney polled 0% of the black vote further he only got about 1/3rd of the Hispanic vote and did not do much better among Asians.
The way I see it the Republicans only need to recruit a few minority candidates on the other hand the Democrats cannot continue to run minority candidates or they will further alienate white male voters.
I would like to see the republican party implode and the Democratic party split between the Social Democrats and Free Democrats (or some such thing) but I see the Republican party as still way too strong for that to come soon.
Ah, crazy old Uncle Paul.
An idealogue commenting on other idealogues and the commenting idealogue's ideology is framed as much better. Who would have thunk it! Go figure
So mungowitz you also believe that the conservative party like journalist p. Krugman tells us, is lead by an agenda of libertarians and that this is the problem? Or do you have a different opinion on the second point he makes?
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