Events in Spain need to be watched closely. Spain is in the midst of a credit crisis, a major debt crisis. The reality is Spain has tapped the financial markets through borrowing treasury bills. Spain is paying more than a percentage point higher in interest than a month ago!!!
High unemployment another of Spain’s financial woes.
Why should be watch these developments in Spain?
In the US we have at least a $12 TRILLION federal debt with government tax receipts of $2 trillion. Much of the debt is not on long term interest rates. There are groups debating what should the limit be on the federal debt. Should our federal debt limit be $20 Trillion, $25 Trillion, or UNLIMITED? What is forgotten is how or when will we stop growing our federal debt and begin to reduce the federal debt? More important what happens when, not if, the interest rates on our federal debt increase? That is exactly what is happening in Spain and several other nations with a deep federal debt.
The problem is we as a nation have elected a Congress which is spending more than we can afford. Fredrick Hayek noted that in a democracy the politician who promises the most often gets elected. His classic book “The Road to Serfdom” predicted exactly what is happening with our Congress today.
When, not if, the interest rate on our increasing federal trillion dollar debt rises, we will be forced to cut all our discretionary budgets, especially our military budget.
It is essential that we as a nation begin to live within our means.
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