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Looks like taxes WILL have to increase in the U.S. There is no other way around this....they don't really blame Bush, so much as bad bookkeeping...



"THE NUMBERS are staggering -- a US$43-trillion hole in America's public finances that's getting worse every day. And the stakes are almost inconceivable for a generation of politicians and voters raised in relative prosperity, who've never known severe economic hardship. But that plush North American lifestyle to which we've all grown accustomed has been bought on credit, and the bill is rapidly nearing its due date. If the United States can't find a way to pay up, the results will spill beyond national borders, spreading economic misery far and wide. In Canada, the country whose financial well-being is most tightly tied to trade with the U.S., there wouldn't be a single region or industry left untouched by a fiscal shock south of the border.

As of February, the U.S. national debt stood at US$7.7 trillion. And this year, the country is projecting another record deficit of US$427 billion, increasing its debt by about US$1.2 billion a day. Thanks to low interest rates, the cost of borrowing all that money remains relatively low, amounting to about 8.6 per cent of the federal budget for 2005. But when rates rise, so will the cost of carrying that debt, and current White House forecasts suggest that by 2010, those yearly costs will hit US$314 billion.

In January 2001, George W. Bush took over leadership of a nation that was on its most solid financial footing in decades, thanks to years of strong economic growth and a booming stock market. That very month, the Congressional Budget Office projected that the federal government could expect US$5.6 trillion in surpluses over the coming 10 years. The key political issue of the day was how to spend the windfall. Bush's team was determined to return the money to the voters in the form of massive and widespread tax relief. What the world didn't know was that this surplus cash was largely illusory, the result of faulty bookkeeping.

The U.S. is heading for a massive demographic shift as baby boomers start retiring in three years. As they do, the costs of providing social programs and health care are going to soar. "It's not the deficits of today that are the big problem," says Josh Bivens, an economist with the non-partisan Economic Policy Institute in D.C. "It's that, if you make the Bush tax cuts permanent, you're going to have deficits as far as the eye can see."

In many ways, the U.S. must now emulate the program that Canada instituted in the 1990s to bring its deficit spending and surging national debt under control. That was done with higher taxes, billions in spending cuts and a sharp drop in the dollar's value, combined with healthy economic growth. But south of the border the size of the challenge is much larger, the stakes are higher, and it seems clear the standard of living that millions of Americans have come to take for granted will have to change."


http://www.macleans.ca/topstories/world/article.jsp?content=20050307_101541_101541
 

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Watching the Watchers
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the standard of living here has to change, everyone buys everything on credit. its ridiculous. Whether you know or not I own a mortgage company and I refinance people every week to pay off their credit cards, only to have them run them up and come back to me a year later. This is all well and good when home prices are skyrocketing and there is equity to use, but when that stops, these people are screwed. Actually Ive recently considered getting rid of my luxury cars, because im tired of seeing this credit nightmare played out over and over. Americans need to learn to be smarter with their purchases. Now the downside to americans smarting up, is that in a lot of ways our economy is run on credit, so long run, who knows......
 

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What get rid of the cars!Never
I buy everthing with my credit cards but pay it off every mont.
House is paid for, only the car and truck have payments, truck is 0%, car 1,9%.
But I know what you mean, I see these all the $400,000 in Toronto and 2 new cars in the drive. I make a good buck and still wonder what I am doing wrong but these other people must be in hawk to their eye balls.
What my point again?
 

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Watching the Watchers
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i see all types of peoples credit every week, and I can tell you the "joneses" are broke. The richest person I know who lives in a 15,000 square foot house drives a chrysler 300.
 

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Brett said:
i see all types of peoples credit every week, and I can tell you the "joneses" are broke. The richest person I know who lives in a 15,000 square foot house drives a chrysler 300.
I would hate to clean the floors and windows in that house :D
 

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its a tough biz, ive been in since i was 21, so its a little easier for me, but if you can hit it right you can make a ton of money....at this point we're seeing about 90% leaving the business in the first 12 months. I hire a loan officer every month and I currently have 9, so you can do the math on that and figure people dont stick around. The refi boom is over but the newbies keep pouring in.

All that is based on the US market, i dont know anything about the canadian mortgage market
 
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