Recently, Paul Krugman pointed out that advanced nations have to have debt that equals 100% of their gross national productivity before they are really in trouble. The USA is currently just shy of 60%, which means that we have about 6 trillion dollars of safety net to play with. This doesn’t at all mean that we don’t have to work like crazy to fix the economy and get rid of all the bad debt and toxic assets, but it does put it into a slightly different perspective. In trillion dollars, that means we have 6 degrees of separation from some other countries that are currently leaning way over a far steeper cliff. |
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Monday, April 20, 2009
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Even if the ratio of debt to gross domestic product is meaningful, though many would debate that, current estimates of toxic debt are massively under-estimated. Further, the real cost of the bailout is already 3-5 times greater than is being publicized.
Right the economic ship will be a tremendous challenge for President Obama.
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