Well there is a financial crisis. The CDO's the mortagage backed securities and the financial stocks are in a slump. But note that it does bring the world economy to its knees and most americans are not the loosers in this. American economy is going into recession but on a YTD basis for the month of Jan american stock market is the least effected compared to Europe and Asian markets.
A lot of people here are showing the per person debt that is accumulated by americans but note that just less than a decacde before the same americans were facing a crisis that they would have eliminated all the debt because of the budget surpluses. This would have caused some other financial problems for people who have invested in the Government bonds.
The debt that is seen is most external debt as america does not have a concept of internal and external debt. India too has a massive amount of debt and also runs huge deficits in the budgets in India most of debt is held by Indians in the form of Postal Savings, RBI Bonds etc so all in all even with the massive indian population the debt per person is massive in India when an internal and external debt is considered.
RE:Does it really matter to Americans
by rakesh dikshit on Feb 02, 2008 01:21 AM Permalink
The biggest form of debt America has created is by printing the greenback (Dollar Note) at approx US $2.34 ( cost fig quoted some time back) and selling it into the world mkt at full price of US 100 $ note - thereby taking a debt in the form of goods purchased for its consumption. This was possible because the Greenback is the currency in many countries including USA. In addition the world traded its commerce in US Currency and this led to more printing of notes as countries built their reserves in this supposedly strong denomination.
Lo and behold. The greenback is loosing its sheen and the economies have started shunning it on the sly. There is no open admittance of this trend but the rising Euro and Pound Sterling as well as others is just a pointer in the direction the Greenback is now dwindling towards. And the slide is slowly but surely declining a bit too fast of late for US liking. Any watcher of the USD:EUR rate would vouch for the same.Euro was below one US Dollar in 2003 end and now see where it is placed (read US Dollar). US Dollar has lost 50% of its sheen in just a three years.
The sub prime mortgage crisis is a phenomenon when the general public was roped into sharing of the Loot of the "borrowed surplus" with a gung ho attitude of the drivers in D.C. They started believeing in their own paper castles.
America has done well on foreign lands but its score in house has always been in complete disorder whenever chips are down.
