2013, and the concern is to avoid financial cliff, the Democratic and Republican parties are still wrangling have not yet reached an agreement, seems that until the last minute will not see the results. (Agreement has been reached)
However, even if the end to avoid the dangerous , followed the U.S. federal debt ceiling will be more headache for the U.S. government, which is really difficult to solve the problem! Since 2008, the U.S. debt continues to rise and the huge federal budget deficit has been controversy between the two parties.
According to the Congressional Budget Office data, as of the end of 2008, the U.S. federal debt is equivalent to 40% of the country's annual economic output, a level slightly higher than the average of 37% over the past 40 years. But from that time onwards, this number straight to jump up. By the end of 2011, according to the Congressional Budget Office forecast, the federal debt will be close to 80% of GDP, the World War II the highest proportion!
U.S. federal debt increased substantially, mainly due after 2008, in response to the severe economic recession and persistently high unemployment rate (2008 to 2011), the Government has taken the economic policies of lower taxes and increased federal spending.
The balanced budget is the ideal state, only a balanced budget, will it be possible to repay the debt. The government budget deficit limit in the GDP of between 1% to 2%, can also be accepted. But in 2009 and 2010, the U.S. budget deficit has accounted for 10.0% and 8.9% of GDP since 1945, accounting for the highest proportion of the total GDP, the budget a substantial deficit, how might debt it? !
However, in 2009 ("TEA Party"), the Tea Party movement, especially to cater to the middle class of the Republican Party, and the high-income class. So, the Tea Party movement in the Republican "white-collar" ushered in a wave of new wave, especially in the 2010 mid-term election process, they shouted to reduce federal spending and stop increasing taxes. Those close to the tea party philosophy of the so-called "new" Republicans and "new" Republican House seats in the most greatly affected the 2011 debt ceiling political debate.
In early 2010, U.S. President Barack Obama established the Bowles Simpson Commission to propose a balanced budget in 2015. In December 2010, the Commission published a report on the recommendations failed to get enough votes in Congress has not been adopted, resulting in the entire 2011, the U.S. credit rating company Standard & Poor's and Moody's credit rating warning was issued with: because continued large deficits and increasing debt, U.S. Treasury bonds may be downgraded!
The 2011 long-term budget outlook according to the Congressional Budget Office analysis, if there is no major policy changes, huge budget deficits and growing debt has been plagued by the United States, this would reduce national saving, leading to higher interest rates, borrowing more debt to foreign countries, as well as reducing domestic investment - which in turn will reduce Americans' income growth, the United States is likely to embark on the road of the European sovereign debt crisis "!
Harvard University professor Niall Ferguson has pointed out: in the December 2009 cover story "Empire of the United States," Newsweek "," Historical experience shows that, when 20% of a country's fiscal revenue for debt principal and interest payment the country's finances will be faced with a serious crisis!
Such as Spain, from 1557 to 1696, the heavy debt burden led Spain 14 times national debt default; 1788, 62% of France's fiscal revenue is used to pay principal and interest on our debt, and soon led to the French Revolution; 1875, the Ottoman Empire 50 % of government revenue is used to pay the interest on the debt; British Empire before World War II, 44 percent of fiscal revenue is used to pay the interest on the debt, after the results are well known.
Single national debt of the United States has been as high as $ 16 trillion, while also various liabilities of $ 60 trillion, even 100,000,000,000,000 potential deficit of the social security fund Medicare! 16 trillion of GDP in the United States simply can not repay the huge debt of more than 10 times, not to mention the speed of the increase in the interest on the debt, far higher than the economic growth rate.
Before 2011, the United States triggered a debt ceiling crisis last cap raised to $ 14.294 trillion. August 3, 2011, the U.S. debt rose by $ 238 billion (about 60% of the new debt ceiling), a record of the history of the United States "one-day" debt increase in the highest single-day debt for the first time since World War II, more than 100 of the GDP %.
Two days later, on August 5, is also the first time, Standard & Poor's lowered the U.S. government's long-term credit rating lowered to AA + from AAA. NASDAQ and ASX, and the S & P100 fell 4%, the highest in July 2009 the largest decline in value of the commodity markets, gold prices fell also followed the spot price of crude oil below $ 86 a barrel.
In fact, history continues to repeat itself.
If the huge U.S. budget deficit and debt problems are not resolved, it will directly affect the market. Last week, precious metals fell across the board, the price of gold fell to close to $ 1,636 an ounce, lower than the average price of $ 1,656 an ounce in January of this year. And this is in the Fed places to launch QE3 or QE4 the results, otherwise it will fall even worse! This already ceased to exist a negative correlation between the dollar and the price of gold, gold lost the so-called "hedging," and that the U.S. dollar is again loose can not push up the price of gold up.
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