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America's
Mountain 01 Debl
llankruptcy for Amcnca';
largest d ty
il.
vim1ally ccrtain:
<lllcnt•on now toros to
thc
tnOjl~
up opcrations.
But whole CV<r)onc ha\
ro–
cu~ed
has
aue:nuon
on thc
findn·
c1.1l '-'Orms \\hach hol\e
de,oured the 81g Applc.
a
far
more menacing problem ha,
¡tone relauvely unnottced . The
h'hole nanon
as hvmg be)·Ond liS
mcans. The cruth
1)
the Amen–
CHn economy \IL'i on a moun·
t:unous pilc of dcbt. Public und
pm·ate dcbt now total> more
thnn
$2.8
tnlhon. ubout
$13,000
for e•e'} man. wom.;n. and
chold in the United State..
lhe total figure> .;re
>0
lar~e
as to be incomprchenMble But
"h.il
·~ comprehen~oble
and lm·
porlllnl " that thc amounl of
moncy that
con~umtn~. b~tnls.
and corporations have on h¡uuJ
wuh which to meet thcar \ hOrt·
term, month-by-month Jcbt' is
;hnnkong,
A:,
more consumct\
l~e
the:
¡tamc of financia! hronkman–
'hlp. the) are tihng for
b.on~·
ruptcy 1n record numbcrs. The
BanlrupiC) Dovi<Jon of the U.S
couns progno;tocatc' that
"bankruptcy filing> for
1975
will
breal ever) record 111 the
book." a total of more than
230.000.
Corporations are dotng much
the same thmg. Currcntly. mO'it
corporations have on hnnd only
enou!h money to pa) otr nbout
half
of
thc11 shorHerm debt
Bcforc 1964. they hau thc
money to pay olf all
the~r
>hort·
term debt> and
~toll
ha\ e <ome
lcft o•er,
Furthcrmore. the amounl of
cash on haod woth which corpO·
rmion~
mee1
the
anltr~)l
pny·
mcnts on past borrowing is
trendiog Stcadily downward
What this mean\
t~
that ve'}
fe" American compnnoes woll
be able
10
do mueh borro-.ong
m thc ycars ahead. Yet thc
ne>~
dccade is a tome whcn Amen·
can ondustry
wtll
need a tremen–
dous mfusion of new machmes
and equipment.¡ustto maontain
its productivity.
rhe bankin g
C011110U illl)'
ha~n~l
been immune
lrom
loo~e
fi:.cal policies either. Smce the
begtnnmgofthe sixtoes. banker<
have
~et
astde
thc~r
tradlttOnal
cauoious
Wll)>
and
m~de
loan>
woth abandon
m the proce«s
making an
extraord•n~ry
num·
ber of bad loan;. A' thc
'le\·
cntoes bcgan. many banks
found that they had made the
classic rntstakc of borrowíng
short. at high interest
rute~.
:ond
TOTAL
U.S.DEBT:
ON ITS WAY
TOWARD
THREE
TRILLION
DOLLARS
$2.8
lending long, al low ra te>. The
squeeze has aiready contributed
to thc miSerable state of tbe
constructoon indu>try. whoch has
hada hard tome pa»mg on high
antere~t
rate\
to prospecuve:
buycrs.
Ballooning Go' ernmtnt Oebt
Buothe greatc>t danger of all
lies in
governmcn1
borrowmg.
State and loca l governmcnt
debt now cxcecd> S200 billion.
whilc thc federal government is
m hock to tht tune of over $606
billion.
"· .•
5PEND~I'l1 F'f",
•• / •
Thc
1m~rt·st
on the nauonal
debt alone
S3b bollion -
¡,
more th.on the entore federal
budgct
m
194~.
The feder.;l budget defie1t
thos )e•r "
S68
btlhon, money
which \\111 euher ha\t 10 come
out of savong>
.m~
1h•1 means
higher in1cre" rate< - or
be
printed
up
and that means
inOation. In fact. lhe only really
substantia l dill'erence hetween
New
York Cuy unu the Federal
go\'ernment
1\
lh.u
\Va~hmgton
can alv.a}' .ranl up the print·
mg
pr~
m ouJer to prc:\
tnt
a
defauiL
The pn<e of \lavtng otra run
of bankrupteoe,, eother business
or governmental. may "ell be a
¡amng do>C of hyper-mftation.
To prevcnt the fi nancia! do–
mino<< fr"m falling. the Federa l
Reserve woll hnvc no choice but
to create more mone)· out of
thon aor, lf
X
c-Jn't pa)
Y. Y
may not ha.r thc mone} topa)
L..
Euher e• cl')'bod)' gocs broke
or the govemment lloods thc
cconomy "11h paper
dolla~.
Wrong Phllnsophy
The ultunatc rc,ponsibihty
for the dcb1 pyromod - and the
inRauon
it
gcnern ted - re.sht
upon a "have-ot-now-pay-later"
syndrome that came to per·
mcatt Amcr•..:Jn thought
an che
1960s The attotude "as
L~at
a
couotty could en¡oy
~"'nomic
gtO\\th \\llhoUt firso producing
the wealth from "hich
thosc
bcnefi" could Oow And when
an cxpens1ve war was engaged
in. the
dec1~1011
wtt'>
made to
buy the guns
bou no1 oo cut
back on 1hc butter.
Now thc realozatoon that the
econorn}
~>n't
one b1g rock·
cand) mountatn " coming
borne. "Ltberal" govemors such
as Mochael Dulal1> m Mas.a–
chu>ett> .tnd Jcr'} Brown in
Californw h•ve turned fiscal
conservauvc:~
Bro""· m fact.
believes that the ba>ic problem
is lhat therc ure finite
limits
to
what governmcnt can do. and
that tho•e ltnuts have been
rcached,
Still ol mJy be too littl<. too
late. Ca.hforniú
Bro~Nn
speab
of human nature as ..constant–
and ""eak" -
11
os
sull su=p–
úble to the .omethmg-for-noth–
ing demagogucry which
manofe>t> tt>clf 1n go,emmcnt
budgel\ all out of proportion to
what people are wolling, or able.
topay.
The late h"toroan Arnold
foynbee. who doed recently.
feared that dtmocracies would
be unable to cope woth the ero–
nomoc ""tacl)sms he foresaw
lying ¡ust ah<ad. and that. as a
result. they "ould be replaced
by totalitaroan reg1rnes. New
York ha; '>OWn the wmd.
1t
re·
maons '" be 'een whether the
whole nauon wi ll reap the
whirlwind, O
Vlarldwalall
by
Gene H Hogberg
SIPRI Shockers
STOC'KHOLM; Convcl'l>ing wi1h spokesmen in the vartOU>
g<>•<rnonent agencies here tn the benutoful Swedish capíml " an
onteresung expcricnce. Regardlc" of "hether one talb to thc
repre,entauve of the departmcnl of educauon or of >Oda!
"el
fa re.
wrrectoon. economtc plannong or natoonal dtfense. the reply "
neart) ai\\J)\ the
....
me
lO the que<>tl<>n or ho" Sweden ha> betn
able to achi.-·e \ucll • remarkably hogh \landard
of
living.
"\Vcll.
)OU
mu:\t
reah~e." come~
lhe tne\
Hable
r~ponsc.
••swedcn
hot~
not
becn at war for nearly
160
yea.,."
There are cer1ainly many othcr vahd rea>ons for Sweden'>
untque form of cgalitarian prosperity
¡,
gencrous amount of both
fcrttlc furmland and natural r"'ources:
a
highly sophisticated 11\·
dustroal base:
a
talented. edueuted "'ork lorcc that has tradtuonally
operatcd m harmony woth both mdu,try •nd govcrnment. rather
than on a hosule. adversa') rclatoonshtp
But perhops the factor of no v.arfarc <once Napoleonoc
u
mes
de>pote a conunuous and fomudablc outlay for national defensc to
pre<c"c
Swcden·~
neutralll) - really
IS
as
Slgntficant a rea<on
•<
the S"ede< thcmselves comend,
In thl> loght. 11's signoficant that here m Soockholm
os
head·
quartercd a unoqne organoz:tllon, thc Stockholm lnternalionnl
l'eacc Re,earch lnstotute, SIPRJ for short
lt
1S an indepcndcnt.
intcrnuuonn l research group dclvon¡; 1010 the problems of pe•ce
and
conft1C1.
w11h special emphJ>I) un di-;.armament and
.um~
regulal11.>n lt "'" founded m 1966 by the S"edish Parhament lO
commemorate Swedeo's 150;ear' of unbrolen peace,
SIPRI produces man) pubhcatl<lns d<>hng m depth \\oth thc
ent1re range of "ar and "eaporti topoc. from the
problem~
of
chemocal •nd btological warfare through the onternauonal arrru
tra.de to pre•enung tbe spread of nuclear weapons, But '" mO>I
prodogoous (and expensive: $25) eRort " i" annual yearbook en·
111led
IVorld Armmnents ami Dl;armnmttll.
lt> 1975 edition con·
taino many sobering faets. 111cludong:
• The total world military expend11urc for 1974 was $210
bollion Thos
os
abouo equal to the enure national income of the
poorer half ofmankind.
• The tradc in arms to
Th~rd
World oountries oncreased b)
40
per<ent bet"een 1973 and 1974. \1ore than half of the totdl
a.rrns supph<> m
1974
went to thc Moddle East. 27 percent "ent to
the l'er>••n Oulf >tates aJonc. where a buildup or unprecedented
proportoon'" 1aking place.
• 1974 was a record year for the number of countries con–
ducton¡; nuclear explosions. 35 nuclear explosions were cooductcd:
20 by !he U.S.S.R.•
5
by the U.S.A.. 7 by France. 1 by the U.K .. 1
by Chmn, nnd 1 by a newcomer to the nuclear club, India. Accord·
mg to SIPRI estomates 1.012 nuclear e•plosions have bcen con·
ducted Mnce
1945
• The explosoon of a nuclear devoce b) lndoa in May 1974
dramaucall; demonstrated that a count'} woth a >igndicant pe•ce·
fui nudear proy-•m can rcadoly and cheaply produce nuclear
explosoves, Tod•y. at least
20
countrtes could
be
10 a posotoon todo
M>.
By
1980,
therc could be over
30.
• Thc otratcgic arms lionotauon (SAL
T)
agreement> oon·
cludcd or dtscussed so far bc1wecn 1hc United States and thc
u.s.s.R. Wl ll nol preven! the>e countriC> from doubling or even
tnplmg
the~r
present warhead
mventorte~.
In addition, bolh the
warhead~
•nd theor delivery >y>tems are beong made more accu–
rate. penetrato>e and less •ulnerable
In >umma'). repons SIPRI.
~.-ent>
'" 1974 repeated the now
ramohar pauern or relativdy rapod progres. on mtlilllry technology
and littlc progress in attempts to control the nuclear aod oonven–
uonal orms roces takong place aeross thc globe:·
The SIPRI
re~archers
d<servc commendatioo for domg
cvcrythong m
the~r
power to poont out 1hcse gra•c threats to human
survival, But are the world's political lendcrs paying any (ttten·
tion?
o
WE"K t.NOING NOVEMBER 22.
197S