Analysts: Growing Deficit Hobbles Economy

[deadparrot]

WASHINGTON - Like a person packing on pounds, the United States keeps adding to its flabby budget deficits, endangering the nation's economic health and the pocketbooks of ordinary Americans. Here's the worry: Persistent deficits will lead to higher borrowing costs for consumers and companies, slowing economic activity.

As Uncle Sam seeks to borrow ever more to finance those deficits, rates on Treasury securities would rise to entice investors. That would push up other interest rates, such as home mortgages, many auto loans, some home equity lines of credit and some credit cards.

"That's the pocketbook risk to the American consumer," said Greg McBride, a senior financial analyst at Bankrate.com, an online financial service.

For businesses, rates on corporate bonds would climb. It would become more expensive to borrow to pay for new plants and equipment and other capital investments.

http://news.yahoo.com/s/ap/20060115/ap_on_bi_ge/fiscal_fitness

[FlemingsGhost]

1. Somewhere, Grover Norquist is smirking.

So far, all goes according to plan ...

[90-percent]

2. persistant?

uh, shouldn't that be "created entirely by the GW Bush adminstration"

Until GWB came along; 8 years of Bill Clinton and the Dems fixed the staggering Generation ruining national debt.

-85% jimmy

[UpInArms]

17. a picture worth trillions

[FloridaPat]

21. These is where they get the crap that says * deficits are less then Reagan

But there is all that off-budget stuff he spends on - like the illegal invasion. These people are so good a tricks and lies.

[FloridaPat]

20. Reagan & Bush1 did a very good job of making huge deficits

before Clinton. They got the ball rolling.

[modrepub]

3. I'm waiting

I've been waiting for this crap to hit the fan for years. This isn't the first time. It never seemed to bother anyone before (Reagan) and it doesn't seem to bother anyone now. Anyone with half a wit would never lend us money, but they keep doing it. I'm just as nervous about this as any one here but the perpetual motion machine that is our economy just seems to keep going and going. Has the rest of the world decided we're just too big and important to let us fail?

[SharonAnn]

4. But is there any country enough to bail us out? I don't think so.

It's not the S & L fiasco where the U.S. Gov't bailed out the S & L industry.

we're obviously not big enough to bail ourselves out.

[modrepub]

16. No there isn't

But the corollary to your point is "Is there a country (or economy) big enough to not be affected by the imploding of the US economy if we begin to default?" With so may counties relying on us to buy their stuff I don't see how anyone can let us fail. It still amazes me that the Wall Street crowd celebrates the Repub party so much when they have so far demonstrated an inability to balance a check book.

[VegasWolf]

5. Well anyone who has an adjustable rate mortgage based on the

prime rate is sooo screwed. Amazing people couldn't see this coming after the huge RayGun deficits pushed home loans over 18%. Then again, people forgot the gas lessons of the 70's and went out and bought SUVs. So I guess it's really not too surprising after all.

[mom cat]

7. Those who ignore history are doomed to repeat it.

My reaction to the post is..."So ya finally noticed...Oops! Too late".

[Massacure]

6. And if it isn't interest that stings us, it will be inflation.

[lumpy]

9. No shit, inflation and then

economic depression, and foreign foreclosures. Meanwhile, outsourcing jobs overseas is continuing to grow.

[0007]

13. ...and like most third world counties, street roits and national

strikes are the order of the day.

[CAG]

8. This, and healthcare, will bankrupt us all, but all MSM can talk about

is aruba, brokeback mountain, a war on christmas, and dems being rude questioning a supreme court nominee.

You know, Perot was a nut, but at least he got the american people actually engaged in the deficit debate with his simple charts. I still am amazed that no democrat politician or any "fair and balanced" MSM can't seem to explain these basic consequences of deficit spending. We're simply living on a credit card . Sooner or later the bank (ie, China, europe) is going to foreclose on us. Its that simple.

[TomClash]

10. What rot

Too little investment? There's too much capital around. That's why rates have stayed low. This is what happens when you redistribute wealth upward.

[Nomen Tuum]

11. But isn't the Rapture coming next week?

When 90% of Congressional Republicans say they believe the rapture will come in a week or 2 and take them away, well, what do you expect?????

[pokercat999]

12. I wish something, anything would take them away....nt

[FloridaPat]

22. Wow. Just imagine this world without them! What a nice thought.

[teryang]

14. Interest rates will lag inflation until the democrats take power

Then the bankers will crank up the rates to stall the economy. That's how they do it. They've got to monetize the debt. At first inflation helps the big borrowers by reducing the relative value of debt. Once the currency is sufficiently devalued at a new lower level, then the interest rates will be cranked up.

This is what they did to President Carter.

[wordpix2]

15. as Big Oil profits boom and BushCorporatists make more $$$ than ever...

[90-percent]

18. turning point

Once we get a national DEPRESSION going, maybe Cheney will say; "Well, gee, I guess deficits DO MATTER!"

-85%

[zann725]

19. Arthur Miller's play, "American Clock" explains/predicts it all too well.

And predictably, though an excellent work...did NOT "run" long on Broadway. (Though I appreciated it.)