Concord Coalition: Can Foreign Creditors Avert America's Day of Reckoning?
Here is a new message from the Concord Coalition about the fiscal crisis we face with a link to a full article about the topic.
"We would like to draw your attention to a new edition of Facing Facts Quarterly called “Can Foreign Creditors Avert America's Day of Reckoning?”
"We would like to draw your attention to a new edition of Facing Facts Quarterly called “Can Foreign Creditors Avert America's Day of Reckoning?”
In it, Neil Howe and Richard Jackson discuss how in the 1990s, many hoped that the United States would run large near-term budget surpluses while the baby boom was still in the workforce. Alas, that never happened. Instead, the United States faces the coming demographic gauntlet with the lowest national savings rate of any major developed country and a current account deficit that is already at record highs.
We are thus moving toward a future in which the health of our economy—and indeed, our national destiny—may depend as much on what foreign creditors do with their dollar holdings as on our own policy decisions.
The global-solution optimists to the contrary, this trend cannot continue indefinitely. It can, however, continue for a long time—and that’s precisely the problem. Indeed, the most serious downside to effortless global borrowing is how it allows a nation to put off needed policy reforms, thus making the ultimate adjustment more painful, when it would otherwise have to take action and raise savings rates early on.
Yet, there are no free lunches, even in a global economy. Sooner or later the United States, along with other aging developed economies, will need to bring consumption in line with savings. With boomers poised to begin retiring en masse over the next decade, the hour is already late. But if we face the difficult resource trade-offs now, there may still be time to change course. If we don’t, we will meet a day of reckoning. In the end, the future we bequeath to our children will be one of both diminished economic expectations and declining influence in world affairs.
For the full article, visit: http://www.concordcoalition.org/facing-facts/2008/080617-facingfacts.pdf "
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