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America's Real Financial Crisis? It's Debt

US can't safely sell $700M in securities

By Rebecca Smith Hurd,  Newser User

Posted Sep 28, 2008 5:23 AM CDT
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(Newser) – Washington must stop selling debt as its top export if it wants to solve today's financial crisis, Justin Fox argues in Time. Political talk of the nation's staggering $731 billion deficit often centers on trade pacts and exchange rates. But "if the US simply stopped borrowing so much—if Washington balanced its budget and restrained financial companies from loading US households with ever more debt—the current account deficit would evaporate," writes Fox.

A federal bailout makes sense as a crisis-management tactic, but only in the short term. Long-term, America is incapable of safely selling off debt securities as it has for the past three years, Fox warns. But it's bound to be tough to change old habits. "Can you imagine John McCain or Barack Obama going around saying he wants to reduce your standard of living?" asks one financial expert. Concedes Fox: "Probably not."

To overcome its long-term financial woes, America must stop accumulating debt, Justin Fox argues in Time.
To overcome its long-term financial woes, America must stop accumulating debt, Justin Fox argues in "Time."   (Shutterstock)
Traders work on Citigroup's equities trading floor in New York earlier this year. Citigroup Inc. and Merrill Lynch & Co are scrambling again to secure major cash infusions.
Traders work on Citigroup's equities trading floor in New York earlier this year. Citigroup Inc. and Merrill Lynch & Co are scrambling again to secure major cash infusions.   (AP Photo/Mark Lennihan)
One solution to the financial crisis: balance the budget and quit letting banks loan Americans so much money.
One solution to the financial crisis: balance the budget and quit letting banks loan Americans so much money.   (Getty Images (by Event) Individuals)
To overcome its long-term financial woes, Washington must stop selling debt, Justin Fox argues in Time.
To overcome its long-term financial woes, Washington must stop selling debt, Justin Fox argues in "Time."   (Shutterstock)
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Foreign debt holders fear panic sales could cause global collapse
Bloomberg

European export credit agencies follow US lead
International Herald Tribune

 
debt • national debt • US exports • financial crisis

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