Wednesday, November 12, 2008

IOUSA concise version

This presents a pretty clear picture of America today, sadly not many Americans wish to understand it.

2 Reflections:

Matt Sherman said...

This movie is really good at scaring you. Some of the projections are absolutely bone-chilling. But it largely overstates the problem — the deficit is currently at a manageable level of 3% of GDP. And we need to run a deficit in this economic downturn to ensure we don’t have skyrocketing rates of unemployment. The flim also ignores one of the best solutions to the “problem” — health care reform. If our health care system were as efficient as other industrialized nations, and if Medicare/Medicaid were able to take advantage of these lower costs, then our deficit problem would basically disappear. Check out the Center for Economic and Policy Research, they have a nice graphic that demonstrates this well: http://www.cepr.net/calculators/iousadeficit/calc_iousa_deficit.html

Rocko Chen said...

Thanks for the comment though I'm not sure about the deficit/GDP ratio, I've seen big variations via different sources; e.g. Morgan Stanley projects fiscal deficit to exceed 12.5% and national debt to reach 70% of the GDP next year.

Besides the economist forecasts and political arguments, you could also reference market implications. Credit Default Swaps on US Treasuries have past 40 basis points, implying unprecedented default risk.

Anyway I do agree that the movie does not provide enough focus on solutions.