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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (148592)	10/22/2004 12:20:58 AM
From: Michael Watkins	Read Replies (2) \| Respond to of 281500

I merely wanted to point out the interesting difference between some up and coming economies and the US. Debt/GDP is one measure, percentages do mask the enormity of the expanding debt burden in real dollars. Current account deficit is another significant issue, deemed "unsustainable" by most. Deemed unsustainable two years ago and the problem is only magnified by time and policy actions. Trouble is, the approaches being envisioned to deal with it lead to reduced growth and increased potential for unsettling disruptions. The potential for unsettling disruptions (dramatic currency devaluation being one such case) affecting the world and world relationships is quite high, when foreign holders have over 2,000 TRILLION in US debt instruments in play. Of that number, Asia hold over half the share of US debt - $1,204 TRILLION. That's a lot of zeros. $1,204,235,000,000 as of June 30 in fact. With sums like these in play, maybe the Debt/GDP ratio itself is a trivial matter. The economic equivalent of the arms race has been going on for some time now, but it feels like a bumpy patch is just around the corner...