Will US debt increase by $2 trillion in 2009?

The US national debt is expected to jump by as much as $2 trillion this year, thus putting more pressure on the American economy, a leading daily here said.

At present, the country's debt stands at nearly $10.7 trillion. Of this $3 trillion is held by foreign investors , with China ($652.9 billion) and Japan ($585.5 billion) being the top two creditors.

The soaring national debt would saddle taxpayers with huge new interest payments for years to come, the Washington Post said.

"Some analysts also worry that foreign investors, the largest United States creditors, may prove unable to absorb the skyrocketing debt, undermining confidence in the US as the bedrock of the global financial system," the Post wrote.

The newspaper said economists from across the political spectrum have endorsed the idea of going deeper into debt to combat the worst ever economic crisis since great depression of last century.

They argue that even with an increase of $2 trillion national debt, the United States is in relatively good financial shape as compared to other industrial nations.

Japan's public debt equalled 182% of its GDP in 2007 and that of Germany was 65%, the newspaper said referring to a forthcoming report by Scott Lilly, a senior fellow at the Centre for American Progress.
Even a $2 trillion increase would push the US debt to about 53 of the overall economy. This is "only a few percentage points above where it was in the early 1990s," Lilly was quoted as saying by the newspaper.

Source: Agencies

Chrysler gets $4-billion loan from US govt

Chrysler LLC said on Friday it has received an initial $4 billion emergency loan from the US government.

"This initial loan will allow the company to continue an orderly restructuring," Chrysler Chief Executive Bob Nardelli said in a statement.

But Chrysler later said its statement that talks continue between the US Treasury Department and Chrysler Financial about a loan should have been omitted.

Its earlier press release said a closing was expected in due course.

Two spokeswomen for the company could not immediately be reached by the media to clarify.

General Motors Corp received $4 billion in emergency loans on December 31.

Both Chrysler and GM have said they need the government cash to meet payouts to suppliers at a time when a plunge in auto sales has drained their cash holdings.

Under terms of the government bailout, Chrysler and GM will have to submit restructuring plans by mid-February and demonstrate that they are viable by the end of March.

Source: Agencies