Can the US pay back the borrowing?Greg Ip's article

Greg Ip is US economics editor of the Economist. Published by OUTLOOK, the Washington Post,January 11, 2009 on page B1,B4:-

Thanks to the advent of credit derivatives - financial contracts that allow investors to speculate on or protect against default - we can now observe how likely global markets think it is that Uncle Sam will renege on America's mounting debts.

The Obama administration should not focus on debt reduction now, which could actually undermine the prospects for a recovery in the REAL economy. With households and businesses trying to spend less and save more, the federal government must spend more and save less - that is borrow more - in order to prevent a self-feeding downward spiral in economic activity. Once the recession is over, getting our debt burdens down will hinge on Obama's and Congress's willingness to confront the looming cost of Social Security and Medicare benefits for the aging US population. That remains to be seen. Who has the definite answers?
Professor John K. Galbraith on Forecast: "There are those who don't know and those who don't know they don't know." Such may be educated guestimates!

Sino-American Economics is always in the works as long as China is holding US government securities as a friend of the United States in the global context.

Francis Shieh a.k.a. Xie Shihao,a lifelong learner to seek knowledge of economics in action apropos of beautiful rhetoric.

Sunday, January 11, 2009 at 10.06 a.m.