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Leaders needed meeting to decide to reduce debt

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My Views

By Alex Wimsatt

It’s a small world after all.

Never has this statement been more true than it is today as technology continues to advance, moving us closer and closer to one another.

Innovation has allowed us the capability to hold conversations with people on the other side of the planet in the blink of an eye and just as instantaneously, billions of dollars can be transferred from the U.S. to Germany, Thailand, Australia, anywhere in the world, all with the simple click of a button.

Distance has become irrelevant and the concept of globalization has created ever increasing economic interdependence among national economies all over the map.

Because of this globalization, the slightest shift in economic policy in one country has the potential of triggering a shockwave that could be felt round the world.

We saw this in 2007 when America fell into a recession after decades of irresponsible spending, lending and borrowing led to a global financial catastrophe.

Most recently we saw how the debt crisis and financial meltdown in Greece forced the major European powers and the international community to step in with billions of dollars in assistance to keep world markets from becoming more unstable than they already were.

Whether we like it or not, we as Americans have a major impact on the balance of the world economy, and just as other countries depend on our success, we depend on theirs as well.

As I followed the recent G20 Summit that took place in Canada, it dawned on me just how volatile the continuing financial crisis has become here and abroad.

Leaders from the world’s 20 biggest economies gathered in Toronto to discuss ways to improve the ailing world economy.

The issue on most leaders’ minds’ was debt.

The G8, which is the wealthiest, most influential group in the G20, met prior to the summit to discuss debt reduction and ending the world recession.

While the United Kingdom, France, Germany, Japan, Italy, Russia and Canada almost unanimously agreed that debt reduction was essential for their own countries’ financial stability, President Obama pushed for more spending, asking the international community to incur more debt for stimulus.

At the end of the summit, most of the major world powers agreed to cut government deficits in the most industrialized nations in half by 2013, allowing for each country to move at its‘ own pace.

Canada’s prime minister has already said that his government intended to cut spending and raise taxes to lower its debt, and other countries have made similar calls.

Many economists have argued that immediate international debt reductions would send the world into a depression if spending is cut too soon, which is a valid argument, but the world‘s major powers, including the U.S., cannot continue to put off until tomorrow what must be done today.

By no means do I consider myself an expert when it comes to economics, but the way I see it, it’s impossible to sustain the amount of debt the U.S. and other countries have incurred.

The major European powers that called for debt reduction saw the potential devastation that out of control debt could incur when they had to bail out Greece this past spring.

Shouldn’t the U.S. heed Europe’s call for tighter spending and debt reduction?

We have by far the largest debt of any country in the world and our president stood before world leaders asking for more spending.

It makes no sense to me.

I realize that the world depends upon American spending to sustain economic growth both domestically and abroad, but how long can it last?

The out of control spending and borrowing that began after the great depression has never stopped and we’ve seen it spiral out of control.

The U.S.’s national debt stands at over $13 trillion and climbing, according to usdebtclock.org.

That’s frightening. I can’t even fathom that amount of money.

What’s even more frightening is that we’re not the only ones with exorbitant debt.

How can we ever begin to reduce our debt if we don’t start taking steps toward living within our means?

Though cutting spending during a recession is not necessarily a good idea, swift action must be taken, even if it‘s uncomfortable. We have to get our house in order before we find ourselves homeless.

I applaud the G20’s pledge to cut deficits and I hope all the countries who’ve signed on will honor that commitment to work toward debt reduction.