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Regardless of the short term benefits of making it *very cheap* to buy things from the US and living like kings when going on holiday/business over there the latest figures and forecasts are not good news in the long term. Especially for businesses that export to the USofA.

The Congressional Budget Office has said that the US budget deficit will reach a record $427 Billion in 2005! Now please remember that at the end of Clinton's reign there was a budget surplus (although I've forgotten how much). Now certainly the war in Iraq has a lot to blame for this figure, with Bush asking for another $80 billion only the other day. The CBO isn't predicting any improvements either with an estimated deficit of around $855billion for the years of 2006 to 2015. This looks like a positive reading of the problems though as other analysts have siad the figures don't take into account any further military costs or the potential $2-$3.8 TRILLION costs of the Presidents plans to revamp state pensions and extend tax cuts. Just what the country needs when it's so heavily in debt - more tax cuts!!!

Anyway, one of the big loosers seems to be public spending. With rising debts the administration has said they'll be looking at cutting public spending to help bring the deficit down. Hmm.... I wonder whom those cuts will be hitting whilst the rich get tax cuts?

The CBO has also said it envisages an 'orderly' decline in the dollar over the next two years. This is terrible news for companies that import to the States and is something that the European and Asian markets are already worried about. Countries such as China, who lend the States a hell of a lot of money at present, may be inclined to put some economic pressure on the US to get there house in order sooner rather than later or we'll be seeing an even worse worldwide economic decline and recession if we're not careful. It certainly looks like the old benchmark of £1 = $2 may go beyond even that! Not exactly the news people would be hoping for at the beginning of Bush's second term. One wonders if they'll be an America left for whomever succeeds him (be they Democrat or Republican) or whether the country will have to file for bankcruptcy and forfeit some of its States to countries such as China instead of meeting its repayments?

US Budget Deficit To Reach $427bn (BBC News Online; Tuesday 25th January 2005)

Comments

( 7 comments — Leave a comment )
corone
Jan. 26th, 2005 09:20 pm (UTC)
I think what we were all looking for in Bush's second term was a different president.
Maybe England can help by buying the colonies back again. :-)
heliograph
Jan. 26th, 2005 11:20 pm (UTC)
One hundred years ago the rate was $5 to £1. I'm not 100% sure, but I think that ratio held up until the Depression.

I see it impact on two things for me: 1) we won't be putting any prices on our books, and 2) I'll need to rely more on making money at Dragonmeet to justify going.
angusabranson
Jan. 26th, 2005 11:36 pm (UTC)
That's another downside I didn't think of. Less chance of the 'cool' Americans (or those living in America as the case may be) being able to come over to see us all!
heliograph
Jan. 26th, 2005 11:49 pm (UTC)
If you're of a conspiratorial frame of mind, you might assume the US government is doing this all on purpose. It:

1) Curtails travel by its citizens to foreign countries, and
2) Increases US jobs (if it's cheaper to make things here instead of overseas...)
angusabranson
Jan. 26th, 2005 11:51 pm (UTC)
Yeah, it had crossed my mind :p
silver_blue
Jan. 27th, 2005 09:19 am (UTC)
One advantage - makes it very practical to visit the US on holiday.

As I will hopefully be going to the States at least twice this year, or a purely selfish basis, the weaker the dollar the better.
pond823
Jan. 27th, 2005 01:52 pm (UTC)
Goddamn communist hippies proping up freedom again.
( 7 comments — Leave a comment )

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