How to solve the debt problem? Lets sell Alaska

Prospects over the looming "fiscal cliff" has become a ritual called round of hand-wringing relatively insoluble nature of the 16-trillionth of a debt problem. But there is a simple and elegant solution that does not involve tax increases or spending cuts, and only a fraction of the imagination.

Namely, to expose Alaska from the Bering Strait to the Beaufort Sea to the auction.

Absurd? No more absurd than the spectacle that unfolds as we approach the "budget cliff."

Wishing there would be plenty. Imagine how the country and even individuals to experience the competition by buying century.

First in line would be Russia, given its deep historical ties with the state. Over 126 years ruled the Russian Alaska, which is part of the United States a total of 145 years. Vladimir Putin, who has sought to restore the power and glory of Russia, might restore the seat of government in the former capital of Russian Alaska — Sitka, southern coastal city, which remained Russian Orthodox Church of St. Michael.

The next could be the Chinese Splurge and eager for energy resources and open spaces.

The Chinese could use their $ 3 trillion in reserves, most of which is invested in American debt to absorb the natural resources of Alaska and settle overcrowded and gassy Chinese cities.

The deal could be achieved simply by the abolition of the debt, and thus could avoid the financial chaos in the event that if China would throw these bonds on the open market.

Like many absurd ideas, this is on a confident legs, put on solid ground. The idea comes from a former high-ranking official from the Ministry of Finance of the United States Jim Millshteyna.

This proposal is reflected in his report to the U.S. on the problem of public debt in the conference Wharton School of Business.

According to Milstein, underneath it all there is a serious basis — countries that spend irresponsibly with little to ask from taxpayers in the end face the unpleasant choice.

In the sale of state assets is not unusual or far-fetched. When governments spend beyond their means, as a result they often have to turn to the International Monetary Fund, which assists with the condition — sell state property. For example, after the fall of communism in Eastern Europe sold off state-owned enterprises.

What can the sale of Alaska? It can reduce the federal debt by 10-25 per cent of gross domestic product by returning it to the controllable limits, which are considered as safe. Disclaimer of Alaska will also reduce interest payments on the national debt.

There is also a question on the 16 trillion dollar question: how long will purchase the sale of Alaska? How much we will have time before the federal government again begins to groan under the weight of unsustainable debt?

According to the Ministry of Finance, November 30, 11.6 trillion dollars debt were held by the public. This represents about 75 percent of GDP — dangerously close to 90 percent — a level that distinguished Harvard economist Kenneth Rogoff and Carmen Reinhart called unmanaged albatross that undermines growth and threatens the national solvency.

Let's say we get a better price for Alaska at $ 4 trillion. This will cut down on the hands of the company being debt to 7.6 trillion — about half of GDP.

But not for long. Obama's budget proposals suggest that the deficits from 2013 to 2017, the back will add $ 3.44 trillion to the national debt. Six years later, we again have to think about what to sell now, and this time we will no longer be in Alaska.

The solution, as suggested by Milstein, would be selling other assets. After all, this is exactly what happens with private companies: companies that operate through loans forced to restructure, cut back on unnecessary spending and focus on their most competitive core.

In addition to Alaska, the government has other areas. It owns 40 percent or more of the states of California, Nevada, Oregon, Idaho, Arizona, New Mexico and Wyoming. Then there is the oil-rich federal waters of the Outer Continental Shelf.

Milstein said that the proposed sale of federal assets to begin to confuse "the current crowd" of politicians and the compilers of the budget from the administration. He wanted to make it clear that the situation is so bad that may come to that.

"I think that such a sale would be a crime, but in the absence of compromise on spending and taxation policies, such sale may become a necessity, although it would be humiliating," he concludes.

Source Translation for mixednews — Molten

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