Sunday, July 29, 2007

Is USA a failed state?

It seems that USA is falling in the category of the failed states because of its failing economy. Irrational economic and political policies are the main cause of current economic crises in the USA. It is spending billions of dollars on wars to destroy the world peace. However it got no money for poor Americans who are living below poverty line.

USA’s economy is in a dire shape. Current account and budget deficit is reaching record levels. However, there is no sign that American establishment is going to fix this problem and help more than 12% Americans who are living below poverty line. USA’s trade deficit was $763.6 billion in 2006. It is continuing to increase for the last five years in a row and there is no sign that it will come down to a reasonable level.

USA’s public debt was $59.1 trillion in 2006 if unfunded future liabilities such as Medicare and Social Security were added. Public debt is running at 64.7 % of the GDP (Gross Domestic Product). There will be a deficit of 47 trillion or nearly 500% of the current GDP due to underfunding of the Medicare and Social Security in decades to come according to a report of IMF. “Closing this fiscal gap would require an immediate and permanent 60 percent hike in the federal income tax yield, or a 50 percent cut in Social Security and Medicare benefits” according to IMF’s report.

It is inconceivable to comprehend the reasons behind the irresponsible policies of the American establishment, which has shown no concern for average American. “Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined” USA Today reported.

It would be interesting to see the reaction of the American people in the coming presidential election in the light of above facts. If American public do not take corrective action to avoid economic crises then it would have great consequences for the peace and security of the whole world.


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