”The US dollar is almost becoming like junk bonds,” Australian Joyce said.
A default by the U.S. government is a certainty in many analysts’ opinions because there is too much overall debt in their country. Total debt as a percentage of GDP is close to 400% and that’s not counting personal, business, finance, and government expenditure and debt.
The worse the US has seen debt per GDP was in the 1930s when it was 265%. In the 1930s, they did not have an aging population, no 70 trillion of unfunded liabilities on the books, and they did not rely on imports for 70% of oil and manufactured products they use.
Also, there was a semblance of morality in government and on Wall Street. Now the government has been captured by big financial interests who have lost any semblance of morality or patriotism, and there are clearly a corruption bunch of Critters Congress and bureaucrats who are supposed to be regulating them.
We are witnessing a wave of cascading default of debt, starting with subprime mortgages, and now prime and commercial mortgages. Next, we will see states and municipalities starting to default on their bond payments. If you look closely you can see it taking place right now. This is not something the television will tell you.
Australian Senator warns of U.S debt default
The Nationals Senate leader Barnaby Joyce is openly canvassing an economic upheaval that would dwarf the current global financial crisis, triggered by the US defaulting on its sovereign debt within the next few years.
In unusually pessimistic comments for a senior political figure, Senator Joyce said the US Government was running such large deficits and building up so much debt that it was in a similar position to Iceland or Germany before World War II.
In a Senate estimates hearing on Wednesday night, he asked Treasury secretary Ken Henry what would be the implications of an American debt default for the Australian economy.
Dr Henry warned that canvassing extreme scenarios could alarm the community.
”I don’t mind discussing hypotheticals in general … [but] one has to be careful not to discuss publicly hypotheticals that are that extreme,” Dr Henry said.
”I don’t, myself, consider that outcome to be a high probability outcome, certainly not one that I would want to say much about in a public forum.”
But Senator Joyce insisted yesterday that the dangers to the global economy from the run-up in US private and public sector debt were real and should be debated.
”It is the elephant in the room,” Senator Joyce told The Age. ”This is a huge risk that Australia faces. What is the game plan, what happens if it comes unstuck?
You can find the rest of the story from The Newspaper TheAge