Saturday, January 7, 2012

US Sinking Under Tides of Economic Crisis

Today, the United States is poor, not capable enough to govern and administer the world. The world's richest country has now become the world's most indebted country. The super power, which used to provide loans to others, is itself heavily indebted today. Today, the United States has trillions of debt, which it cannot pay.
What a good proverb that one has to pay for his deeds, or that what you sow so shall you reap. The United States has been impoverished by its recklessness and arrogance.
Causes and Reasons
If we go a little back, we can see that in 2000 Christian era (when Bill Clinton was relinquishing power to George W. Bush), the United States had a surplus amount of $300 dollars in its exchequer. However, when, in the wake of the 9/11 incidents, Bush resorted to huge military and financial spending, this surplus moved to negative, meaning that $300 billion expenditures were incurred in two years. In the subsequent two years, this expenditure doubled, rising to $600 billion. In the following two years, it further grew to $900 billion, and in 2009 it blew up to $1200 billion (meaning $1.2 trillion), and today we see that it has soared to $1700 billion (meaning $1.7 trillion), which has no precedence in the US history. It forced Washington to obtain loans to prop up its falling economy. It obtained heavy loans from Japan, China, Saudi Arabia, and other Gulf countries.
In Bush's first tenure, the debt of the United States was $ 7.6 trillion while in his second tenure, it rose to $10.6 trillion while today it has increased to $14.02 trillion. These figures show that half of this loan has been taken during the past six years (when wars in Afghanistan and Iraq were on their height). If this $14 trillion loan is divided among all the Americans, every American will have a debt of $453,000.
Economic experts say that the United States may spend $1.3 trillion more than the its revenue this year because the budget deficit is adding $ four billion to the national debts every day, and this loss is gradually leading the United States to sinking. This means that Washington borrows 41 cents of every dollar, which it spends. The finance minister had said that such an eventuality had never occurred in the US history.
Impact of War and Fragile Peace
A matter of more shame is the fact that both the parties blame each other for this big crisis, each of them absolving itself of the responsibility. The Congress is under compulsion to do one of the following two things: either it would have to raise the upper limit of procuring loan so the government can obtain more loans, or it would have to make a huge reduction in spending and budgets. Whatever it does would not prove beneficial because debt always grows in war and fragile peace, although not as much as Bush had incurred. He impoverished the state and handed it over to Barack Obama in a bankrupted condition.
Regrettable is the fact that almost equal to half of this $14 trillion, meaning $6 billion, is to be paid as mark-up. Although the actual mark-up is $900 billion but for several reasons, it increases to$6 trillion:
1. As the government cannot pay the debt, it has to pay more markup.
2. The lenders (governments, companies, banks, and individuals) increase the ratio of their mark-up.
3. As the government loses the trust of the lenders, every one avoids paying more loans or imposes conditions of their choice.
4. It maintains its high defense expenditure and budget, therefore, both the wars are continuing on borrowed money.
The Pentagon's budget for 2011 or the present year is $707 billion. An additional $200 billion is being specified for Afghanistan, Iraq, and the so-called war on terror. Why? The Soviet Union has collapsed and WARSAW Pact has also perished. Then why is it ransacking itself and the world? Why did it lost its 6,000 soldiers without any justification and threw $3 trillion into fire? That is the reason that the wars in Afghanistan and Iraq have left three questions unanswered:
1. Would the United States receive so much loss if there had not been these wars?
2. Would the United States be so much indebted if there had not been these wars?
3. Would the United States is such a massive economic crisis if there had not been these wars?
Not Accepting Bitter Reality
Naturally, the answers are in negative. The attacks on Afghanistan and Iraq and the huge military expenses in both the countries tumbled the stock market. The companies were plunged into losses and bankruptcy. A big financial crisis ensued in 2007-2008. It accelerated and intensified the financial and trade deficit, badly affecting the mortgage sector. The economy melted like snow. More loans were obtained. Excessive dollars were printed, which further lowered the dollar rate. It caused inflation and financial deficit grew further. Big companies got closer to closing down until the government provided billions of dollars to save them from collapse. Unemployment ensued, grew, and perpetuated. All these factors formed a chain, which has tied the hands and feet of the United States in such a manner that the latter finds it difficult, rather impossible, to get rid of it.
See, even the Soviet Union once did not accept that the Afghan war impaired it. The same way, today the United States is not accepting this bitter reality. So, the question is: If the base of this big crisis is not the Afghan war, what it is?
How and in how much time would the United States get itself out of the $14.2 trillion loan? The answer is totally obscure. Therefore, we can say that this is a very back-breaking and insurmountable crisis, which is gradually submerging the United States. Cannot we say that this huge tide is rising like those violent waves of the Red Sea, which had submerged Pharaoh?

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