When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC Monday.Read the rest here.
Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.
The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.
Taken together, Gross puts the total at "nearly $100 trillion," that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won't find a solution overnight.
"To think that we can reduce that within the space of a year or two is not a realistic assumption," Gross said in a live interview. "That's much more than Greece, that's much more than almost any other developed country. We've got a problem and we have to get after it quickly."
HT: T-19
2 comments:
The United States public debt of nearly $100 trillion is much worse than Greece's current (almost bankrupt) debt.
The U.S. government needs to reduce its spending significantly and implement some economic austerity measures quickly, or the U.S. is doomed to bankruptcy.
Folks: Big difference between actual incurred debt of Greece and that of the US. The latter is a contingent obligation... it is a so-called "moral obligation" or commitment. IF you think it will become actual debt, then talk to the Native Americans: The US has a very bold record of "change". You could even talk to GM's bond holders if you insist on more recent data.
That aside, Bill Gross has invested wisely in a single secular trend. He has never faced a rising secular trend in interest rates, so he hates the prospect. Welcome to the club. Doesn't mean he's right. Fact is, so far his bet has been widely wrong. Scaremonger tactics tend to beg the question whether he's just looking for someone to bail him out of a bad trade. Wide consensus a month ago was the US was headed down the tubes and the dollar "done". Since then, Europe is beating us to the roller coaster and the EU looks "done". US has more statistics to measure your pain and agony, but the premise that our decline is worse than anybody else's.... ignores history and context.
Cross your fingers: It will be a wild ride. But the optimists will force substantial change in policy here sooner than in Europe or Asia... not next week obviously, but sooner than you think. Downside here may be more limited than folks who missed predicting the last decline would like to believe.
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