Congressman Mitch McConnell recently pointed out that the United States Congress is spending money at a rate of $1 billion per hour -- all of it financed with increased debt.

In this interview with Jan Helfeld, California Congressman Pete Stark argues that the more national debt we have, the wealthier we are as a country because "debt for a nation is different from debt for an individual or company." That was back when the national debt was $5 trillion. Today the national debt is $10,962,887,347,011 -- as I write this.

The economic firestorm that we are in the midst of is yet to be contained, or for that matter, completely understood.

Some things are very clear like the fact we spent more than we earned, as individuals and as a nation, for decades on end. That we know for sure, and regardless of who we blame the most for this situation there is no bigger economic mistake one can make.

This is something that I harp on often, and I expect I will keep on doing so because I do not have any reason to believe things will change; see: Ignore Washington -- keep saving; General Patton makes a point.

A digital clock in New York City counts up the U.S. National Debt. But the current administration broke the clock which only had enough digits to count up to $9,999,999,999,999. As Dick Cheney said, Ronald Reagan proved that deficits don't matter. I wonder whether this broken clock is proving Cheney wrong?

The clock has an interesting history. The now-deceased Manhattan real estate developer, Seymour Durst, built this sign in 1989 because he thought that the then $2.7 trillion debt was too high. The debt kept growing after he put up the sign but by the end of Bill Clinton's second term, it was down to around $5 trillion. Since January 2001, the national debt has grown to $11.3 trillion thanks to the $850 billion bailout bill.

The good news is that the clock, which currently counts the deficit by substituting a 1 for the $ sign that was there before, will be fixed next year -- adding two digits. Too bad fixing the clock won't make the U.S. economy any less perilous. At 81% of Gross Domestic Product (GDP), our national debt is way above the 60% that the IMF considers to be a risky borrower.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

The stance of currency traders as the U.S. Treasury's $700 billion bailout enters a House/Senate conference committee before floors votes and a transmittal to President Bush's desk? Stand aside, for now.

True, the dollar was holding its own Thursday at mid-day against the world's other major currencies, and the Dow was up about 250 points to 11,077 in what some called a 'euphoria rally,' but caution remains the order of the day, regarding the dollar, so says currency trader Andrew Resnick.

"There are still too many unknowns regarding the bailout bill to make an informed conclusion regarding the dollar's prospects at this juncture, so the best stance is standing aside," Resnick said. He added that he was presently flat, or had no open currency trading positions.

For the record, the dollar was slightly higher, up about one-half cent to $1.8401 versus the British pound, but down a quarter-cent to $1.4645 versus the euro. The greenback was also up about one-half yen to 106.56 versus Japan's yen.

The above moves are "statistically insignificant," given the basket of fiscal, monetary, financial sector, and economic unknowns relating to the United States economy, Resnick said.

"We won't know the dollar's fate until we know how much money the U.S. Treasury will spend, in what increments, its primary method of funding, what assets it will buy and at what prices, and how much money the [U.S.] government will have left to deal with other issues," Resnick said. "These are enormous issues, so the situation will remain clouded until we know more."

Many observers refer to the market as a forecasting mechanism. If so, today's 213 point rise could be a signal that investors anticipate an Obama win. I don't think today's reported 3.3% Gross Domestic Product (GDP) growth for the second quarter can explain the rise. Rather I think the market could be happy with the idea of taking a break from the failed tax cut and spend policies of the last eight years -- which have led to a record $490 billion federal deficit, a $9.8 trillion national debt, and the loss of $8 trillion in housing-related value.

Bloomberg News reports that GDP grew 3.3% thanks to a rise in exports to Europe -- still GDP growth was anticipated to hit 2.7% so today's figure -- which could be revised after the November election -- looked more favorable. Nevertheless, Bloomberg does not expect the so-called expansion to continue since the European economy is weakening and consumers burdened with falling home values -- the average home is down 16% -- and a tough job market -- will lead cut back their spending, which accounts for 70% of GDP growth. Bloomberg writes that "the number of Americans collecting unemployment benefits reached a five-year high last week."

Yesterday I was raked over the hot coals by several readers that feel we are doomed by a housing bubble that I would not accept. See: Housing Truth from Main Street; which turned out to be quite a controversial post.

I stand by most of what I wrote. However, there were plenty of valuable insights that are worth reflection among the ranting and raving. A particular comment by David Gross, although not very deep is important for its simple summary of many comments. It stimulated a response from me that I thought was worthy of a separate post and further discussion.

David's Comment

It could be GE, it could be Nike, or it could be something else. But keep your eyes and ears open folks. We are going to witness the great U.S. giveaway.

We keep hoping to sell our wares in China and we do. But only at a pace that is structurally managed by the Chinese to grossly favor them and continue to create huge trade imbalances here. These imbalances are financed by their accepting our Treasury notes in return. As they amass fantastic sums of capital at modest but stable rates of return on their investment, they allow us to keep buying their goods and stimulate still further imbalances. The interest payments compound and compound the problem too. They are truly giving us enough rope to hang ourselves.

In addition to our trade imbalances, we are expanding our Federal spending and increasing our national debt without hesitation -- as if we could just print money without any pain.

The Federal Reserve, meanwhile, believes it must continue to raise interest rates or watch the dollar sink in value due to the deficits and trade imbalances. It is not inflation that they are worried about per se, but the weakness (even collapse) of the dollar. This is very serious!

Now if you're the Chinese holding billions and trillions of U.S. dollars you are going to have to diversify your portfolio some day soon. Add to this the fact that holding dollar assets will depreciate in value and you have some powerful incentives to move from debt instruments to equities. Even Warren Buffett has been hedging against the dollar. This mean buying hard assets like real estate, gold, and most importantly U. S. companies which to them appear on sale.