Danik - you stole my line!! You pre-empted my next comment!!

And of course you are perfectly correct - Are the two candidates going to maintain the rate of increase of our borrowings and debt?

Just like the yuppy who borrows money from the bank, from the lenders, from his friends, from the pawnshop, to fund his excess ego and the extravagances it leads him into, someday he could be called to pay it back. But we forget another reality - in the meantime he has to pay INTEREST on his burgeoning debt.

So what is predicted for the future? Many say - it doesn't matter - we just owe this money to ourselves. WRONG!!. In 1983 only 13% of our debt was held by foreigner governments. The most recent estimates are that 50% of the debt in public hands is held by non-Americans. And as that debt grows, so will the cost of servicing it - the interest.

The graph below shows a truly frightening prediction, made not by some leftist Lithuanian economist, but by the GOA itself. The graph shows that in about 20 years time mandatory spending (primarily Social Security, Medicare, Medicaid, and interest on the national debt) will exceed tax revenue. Yes, these items will gobble up ALL of the government's income. Which means that all discretionary spending (e.g., defense, homeland security, law enforcement, education, etc.) will require borrowing and related deficit spending. Yep, Uncle Sam will need to borrow funds like some pauper to pay for your granddaughter's education. Government agencies have used language such as "unsustainable" and "trainwreck" to describe such a future (Wikipedia comment)

Yes, the baby boomers are going to cause a significant portion of this mandatory expenditure, but look at the big culprit, the red bit on the graph. That is the interest due on the national debt.

So before you wish for Bush to sally forth into Iran before November, think of the future economic well-being of your children or grandchildren. You may just be screwing them royally if your wishes come true. And when you vote in November, ask yourselves what is the greatest risk, another country having more non-existent WMDs, or our currency and economy being at the mercy of those who hold our promissory notes, our IOUs?

There is a current thread about how Russia is a 'has been'. Did you know that Russia holds 62 billion dollars of our red line? If they called it in tomorrow, the dollar of today would be but a distant memory, and YOU will need to be prepared to barge your way to the front of the line to try to withdraw your funds from your local bank. You will probably be too late.

As a country-risk analyst friend of mine calls it - "the paper H-bomb; far more subtle than WMDs but far more deadly".

Attached Images

Entitlement spending risks.jpg (15.1 KB, 2 views)