The US government under Bush spent close to one trillion dollars, and now the Obama administration is promising to spend trillions in the years to come to stimulate the economy.
Meanwhile, the official US debt is close to 11 trillion dollars and climbing fast. The debt interest alone is becoming untenable. Last year (2008) US government paid $451 billion dollars interest on its debt. Add to this the Medicare and social security obligations and suddenly things look a lot worse than they appear.
In early February, the International Monetary Fund’s chief Dominique Strauss-Kahn said the world's advanced economies -- the U.S., Western Europe and Japan -- are "already in depression”. Gordon Brown, the UK’s Prime Minister also used the word "depression" to describe the global economy, although his aides quickly said it was a slip of the tongue.
Japan’s economy, the second largest in the world, contracted by 12.7 per cent on a seasonally adjusted annualised basis in the fourth quarter. All South East Asian economies are reporting severe slow down or outright contraction. Many believe that China is hiding the extent of the economic contraction of its economy.
Middle Eastern countries have also been severely affected by the financial crisis. Every country has slashed its expenditure with the accompanying slowing growth. Iranians, Saudis, Iraqis, Kuwaitis and others have also been forced to slow down or freeze many projects. One must not forget that many of these countries’ petro-dollars would otherwise be re-circulated back into the US and European economies.