Pacific Views

There's Good Debt and Then There is Bad Debt

I find it refreshing to see that President Bush does think that adding to the debt of an already deeply indebted country is not a good thing. Too bad it is only Iraq that concerns him and not the country that he has sworn to honor and protect.

President Signs Wartime Supplemental
"I also appreciate that reconstruction funds for Iraq have been provided in the form of grants so that this struggling nation is not burdened with new debt at a moment of new hope."

Here at home, things are not quite so rosy.

Greenspan Warns on Gov't Budget Deficits
If the red ink is not brought under control by the time baby boomers start retiring, Greenspan said it could have "notable, destabilizing effects'" on future growth prospects as increased payouts for Social Security and Medicare collide with rising interest payments on the national debt.

Of course, the Greenspan blames Congress for the deficit and believe they need to "cut spending" to "fix" the problem.

This state of affairs would be bad if we only had to worry about the government debt, yet the problem extends into the private sphere where private debt adds to the ticking timebomb we face as a nation:

Will Debt Destroy Us Again?
Each day it seems that we see a new report of consumers gaining confidence and spending more. This would be wonderful, but for one thing: American consumers are already leveraged to the hilt. In September 2000, Bill Mann penned this classic Fool article detailing how rising corporate debt levels threatened continued economic growth. He picked on an industry that many predicted at the time would continue to grow apace: telecommunications. Some of the facts have changed, but the message is still very, very real: spending money you don't have is a long-term plan that is destined to fail.

America, the once mighty, is drowning in a flood of red ink under the watch of the chief CEO, President Bush.