Deficit? You call that a deficit?? Now THIS is a deficit!
February 24th, 2009 by Kent KedlWell … it had to happen some day. China is now in deficit spending. After nearly 60 years of a nearly completely debt free government, the Chinese government is now borrowing from future Zhangs, Wangs and Zhous. The recent announcement that China is going to announce a $139 billion deficit at the upcoming National People’s Congress has not really shocked anyone, but maybe it should. Could it be that China is becoming just like the rest of us? Perish the thought!
For decades – at least since the “opening up” of China in the early 90s – China’s focus on an export driven economy has paid HUGE dividends. The amount of foreign currency hoarded by the government is quite large. I am not sure how big (nor is anyone, really) but I estimate it at about 1 Squillion. I know that this is, technically, not a real number; but I think it should be. It represents a number that is not infinite, but for all intents and purposes it might as well be. It means, roughly, “enough money to keep officials in brand new Mercedes for decades to come.” Or something like that.
And not only is the government good at saving … the Chinese population, on average, has a savings rate of over 50%! My grandmother – who lived through two World Wars and a depression – was spending like an extra on Entourage compared to the average Chinese.
So if the government is saving so much and the people are saving so much, why is there a deficit in China? I have admitted in these pages to my nearly total lack of understanding of macro-economic concepts, but don’t you think that they could dip into the buffet of cash reserves and just swat that pesky deficit away? I mean, c’mon, do the math: 1 Squillion minus $139 billion = 1 Squillion take away a teeny-tiny bit.
The National Debt Clock estimates that the U.S. deficit stands at over $10.8 trillion and that each citizen’s share of that debt is about $35,000. For the average Chinese, however, their share of their own national debt is about $107.00 (notice the lack of commas and zeroes in that number).
According to economists, until December of last year, the average U.S. citizen saved –2% (Ed. Note: I am not sure how a negative number can be “saved” but these are the same people that talk about “negative growth”, so take that with a grain of salt). The good news is that they think this savings rate has moved north of zero. But still, let’s say that, on a good day with a tailwind, Americans are now saving +2% of their income … how long will it be until we can all afford to contribute to chipping away at the national debt? Do we need to send children out on Halloween with little cans in their hands, “Trick or Treat for the National Debt!!”? No, my friends, we are in deep doo-doo. And it is even more apparent when you compare our debt to that of the Chinese.
So Americans have two choices … we can whine and moan that our deficit is so huge and that there seems to be no way out. Or we can follow the immortal teachings of Luther who said “Sin and sin boldly” and be loud and proud about it. Unlike China’s pansy $139 billion, ours is a macho deficit. A manly deficit. Heck, we drop $139 billion in the hole in the average WEEK in the U.S.! And we are proud of it, dammit! Heroic odes to our debt should be penned some day and its glories sung to succeeding generations. I can’t wait for the day when one of my great grandchildren says to me, “Grandpa, tell me again how your generation dropped my generation into a morass of a deficit so deep that we will have to seek developing nation debt relief to even think about getting out of it … and yet you still held your heads high!” I get teary just thinking about it.
